What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-08 · 195 added, 103 removed, 292 unchanged (51% of the section changed)

24 unchanged sentences

Our ultra-thin, lightweight and flexible thermal barriers are designed to allow battery manufacturers to achieve critical safety goals without sacrificing energy density.

In addition, we are seeking to leverage our patented carbon aerogel technology to develop industry-leading battery materials for use in lithium-ion battery cells.

Our carbon aerogel initiative seeks to increase the performance of lithium-ion battery cells to enable EV manufacturers to reduce charging time and the cost of EVs.

The commercial potential for our PyroThin thermal barriers and our carbon aerogel battery materials in the EV market is significant.

The commercial potential for our PyroThin thermal barriers in the EV market is significant.

We have entered into multi-year production contracts with a number of automotive EV OEM customers to supply fabricated, multi-part thermal barriers for use in the battery systems of their EV models.

These customers include General Motors LLC (GM),

Toyota, Scania, Automotive Cells Company, which is a battery cell joint venture between Stellantis N.V, Saft-TotalEnergies and Mercedes-Benz, Audi, a luxury brand of the Volkswagen Group, Volvo Truck, and a large EU battery manufacturer to supply a next generation vehicle platform of a major EU luxury sports car brand.

We are currently supplying thermal barrier production parts to both General Motors and Toyota, and thermal barrier prototype parts to a number of global manufacturers of EVs, grid storage and home battery systems.

These customers include General Motors LLC (GM), Toyota, Scania, Automotive Cells Company, which is a battery cell joint venture between Stellantis N.V, Saft-TotalEnergies and Mercedes-Benz, Audi, a luxury brand of the Volkswagen Group, Volvo Truck, and a large EU battery manufacturer to supply a next generation vehicle platform of a major EU luxury sports car brand.

We are currently supplying thermal barrier production parts to both

General Motors and Toyota, and thermal barrier prototype parts to a number of global manufacturers of EVs, grid storage and home battery systems.

During fiscal years 2024, 2023 and 2022, we sold $306.8 million, $110.1 million and $55.6 million, respectively, of our PyroThin thermal barriers.

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While we have agreed to purchase our requirement for certain Energy Industrial products from the contract manufacturer, we have no obligation to purchase any minimum quantity under the contract and we may terminate the contract at any time and for any or no reason.

Additionally, we have entered into a contract with Prodensa to establish OPE Manufacturer Mexico S de RL de CV, which assembles thermal barrier PyroThin products and operates an automated fabrication facility for PyroThin.

Additionally, we have entered into a contract with Prodensa to establish OPE Manufacturer Mexico S de RL de CV, a maquiladora located in Mexico (OPE), which assembles thermal barrier PyroThin products and operates an automated fabrication facility for PyroThin.

Pursuant to such contract, we pay Prodensa a management fee and have an option to purchase OPE from Prodensa after a period of 18 months.

As of March 31, 2025, we have notified Prodensa of our intent to purchase OPE.

We expect to meet our long-term Thermal Barrier program demand by maximizing capacity at our East Providence facility and utilizing a flexible supply strategy, including, but not limited to, using our external manufacturing capabilities, which currently support our Energy Industrial segment and are capable of delivering increased aerogel production capacity.

Accordingly, we have ceased construction at the previously planned Statesboro Plant.

We will be demobilizing the plant and are in the process of assessing options

to derive value from the assets, including potentially relocating certain equipment to improve and expand our existing manufacturing facility in East Providence.

On July 31, 2025, the purchase of OPE was completed for a nominal value in accordance with the terms of the agreement.

Financial Summary

Our revenue for the three months ended March 31, 2025 was $78.7 million, which represented a decrease of $15.8 million, or 17%, from $94.5 million for the three months ended March 31, 2024.

Net loss for the three months ended March 31, 2025 was $301.2 million and net loss per share was $3.67.

Net loss for the three months ended March 31, 2024 was $1.8 million and net loss per share was $0.02.

Our revenue for the six months ended June 30, 2025 was $156.7 million, which represented a decrease of $55.5 million, or 26%, from $212.2 million for the six months ended June 30, 2024.

Net loss for the six months ended June 30, 2025 was $310.3 million and net loss per share was $3.78.

Net income for the six months ended June 30, 2024 was $15.0 million and net income per share was $0.20.

Key Metrics and Non-GAAP Financial Measures

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Three Months Ended

Six Months Ended

(In thousands)

Net income (loss)

Depreciation and amortization

5 unchanged sentences

Adjusted EBITDA

(1) Represents non-cash stock-based compensation related to vesting and modifications of stock option grants, vesting of restricted stock units and vesting of restricted common stock, and cash settled stock-based compensation settled.

(1) Represents non-cash stock-based compensation related to vesting and modifications of stock option grants, restricted stock units and restricted common stock, and cash settled restricted stock units issued in March 2025.

Our financial performance, including such measures as net income (loss), earnings per share and Adjusted EBITDA, are affected by a number of factors including volume and mix of aerogel products sold, average selling prices, our material costs and manufacturing expenses, the costs associated with capacity expansions and start-up of additional production capacity, and the amount and timing of operating expenses.

9 unchanged sentences

Accordingly, we expect thermal barrier revenues to decline in 2025.

However, we are expecting an increase in energy industrial revenues.

We are projecting growth in energy industrial revenue due to expected volume growth in our core petrochemical and refinery markets, an anticipated increase in project-based demand and continued penetration of new markets.

We will continue to adjust to these developments, and we believe our ongoing cost reduction, including by reducing headcount, and improved production innovation and efficiency, will continue to benefit us.

As a result, we expect to experience a decline in net income and Adjusted EBITDA during 2025.

We also expect to incur reduced capital expenditures during 2025.

Additionally, we are projecting a decline in energy industrial revenue due to expected volume decline in our core markets and an anticipated decline in project-based demand.

We will continue to adjust to these developments, and we believe our ongoing cost reduction, including reduced headcount, and improved production innovation and efficiency, will benefit us.

As a result, we expect a decline in net income and Adjusted EBITDA during 2025.

We also expect reduced capital expenditures during 2025.

Components of Our Results of Operations

25 unchanged sentences

We expense research and development costs as incurred.

We expect to continue to devote substantial resources to the development of new aerogel technologies, including our carbon aerogel battery materials.

We expect to continue to devote substantial resources to the development of new aerogel technologies.

We believe that these investments are necessary to maintain and improve our competitive position.

8 unchanged sentences

Impairment of property, plant and equipment

In 2025, impairment of property, plant and equipment consists of impairment incurred on our previously planned Statesboro Plant.

In 2025, impairment of property, plant and equipment consists of impairment incurred on our previously planned Statesboro Plant and impairment of other property, plant and equipment in connection with a restructuring action.

During the fiscal year ended December 31, 2024, the impairment of equipment under development was the result of a charge for impairment of assets due to obsolescence following development of new and more efficient equipment.

9 unchanged sentences

Results of Operations

Three months ended March 31, 2025 compared to the three months ended March 31, 2024

Three months ended June 30, 2025 compared to the three months ended June 30, 2024

The following tables set forth a comparison of the components of our results of operations for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30,

($ in thousands)

2 unchanged sentences

Total revenue

Total revenue decreased $15.8 million, or 17%, to $78.7 million for the three months ended March 31, 2025 from $94.5 million in the comparable period in 2024.

The decrease in total revenue was the result of a decrease in thermal barrier revenue, offset by an increase in energy industrial revenue.

Energy industrial revenue increased by $0.7 million, or 3%, to $29.8 million for the three months ended March 31, 2025 from $29.1 million in the comparable period in 2024.

This increase was driven by an increase in the global petrochemical and refinery markets of North America, Asia, Europe, and Latin America, offset in part by a decrease in project-based demand in the subsea market.

Energy industrial revenue for the three months ended March 31, 2025 included $10.7 million to a North American distributor, in comparison to $7.5 million for the comparable period of 2024.

The average selling price per square foot of our energy industrial products increased by less than 1% for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

The increase in average selling price reflected the impact of price increases enacted in 2025 and a change in the mix of products sold, as we strive to maximize capacity in our aerogel manufacturing facility.

This increase in average selling price had the effect of increasing product revenue by $0.1 million for the three months ended March 31, 2025 from the comparable period in 2024.

In volume terms, energy industrial product shipments increased by 2% as measured by square feet of our energy industrial products shipped for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

The increase in volume had the effect of increasing product revenue by $0.6 million for the three months ended March 31, 2025 from the comparable period in 2024.

Thermal barrier revenue decreased by $16.5 million, or 25%, to $48.9 million for the three months ended March 31, 2025 from $65.4 million in the comparable period in 2024.

During the three months ended March 31, 2025 and 2024, thermal barrier revenue included $47.4 million and $60.6 million, respectively, to a major U.S.

Total revenue decreased $39.7 million, or 34%, to $78.0 million for the three months ended June 30, 2025 from $117.7 million in the comparable period in 2024.

The decrease in total revenue was the result of decreases in thermal barrier revenue and energy industrial revenue.

Energy industrial revenue decreased by $14.1 million, or 38%, to $22.8 million for the three months ended June 30, 2025 from $36.9 million in the comparable period in 2024.

This decrease was driven by a decrease in revenue from the global petrochemical and refinery markets of North America, Latin America and Europe, and project-based demand in the subsea market, offset in part by an increase in revenue from the global petrochemical and refinery market of Asia.

Energy industrial revenue for the three months ended June 30, 2025 included $1.7 million to a North American distributor, in comparison to $6.0 million for the comparable period of 2024.

The average selling price per square foot of our energy industrial products increased by less than 1% for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

The increase in average selling price reflected the impact of price increases enacted in 2025 and a change in the mix of products sold.

This increase in average selling price had the effect of increasing product revenue by less than $0.1 million for the three months ended June 30, 2025 from the comparable period in 2024.

In volume terms, energy industrial product shipments decreased by 39% as measured by square feet of our energy industrial products shipped for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

The decrease in volume had the effect of decreasing product revenue by $14.2 million for the three months ended June 30, 2025 from the comparable period in 2024.

Thermal barrier revenue decreased by $25.6 million, or 32%, to $55.2 million for the three months ended June 30, 2025 from $80.8 million in the comparable period in 2024.

During the three months ended June 30, 2025 and 2024, thermal barrier revenue included $53.8 million and $76.9 million, respectively, to a major U.S.

automotive OEM.

The decrease in thermal barrier revenue was driven by reduction in the volume of parts ordered by our OEM customer and lower contractual component price during the quarter compared to the same period in the prior year.

The decrease in thermal barrier revenue was driven by a reduction in the volume of parts ordered by our OEM customer and a lower contractual component price during the period compared to the same period in the prior year.

Cost of Revenue

Three Months Ended March 31,

Three Months Ended June 30,

($ in thousands)

3 unchanged sentences

Total cost of revenue

Total cost of revenue decreased $3.5 million, or 6%, to $55.9 million for the three months ended March 31, 2025 from $59.4 in the comparable period in 2024.

The decrease in total cost of revenue was the result of a decrease in thermal barrier cost of revenue, offset by an increase in energy industrial cost of revenue.

Energy industrial cost of revenue increased $0.6 million, or 3%, to $18.1 million for the three months ended March 31, 2025 from $17.5 million in the comparable period in 2024, primarily due to an increase in the volume of products shipped.

The $0.6 million increase was the result of a $5.3 million increase in material costs offset by a $4.7 million decrease in manufacturing and other operating costs due to lower volume of energy industrial products manufactured at our plant as we move manufacturing to the external manufacturing facility.

Thermal barrier cost of revenue decreased $4.1 million, or 10%, to $37.7 million for the three months ended March 31, 2025 from $41.8 million in the comparable period in 2024.

The $4.1 million decrease was the result of a $6.0 million decrease in material costs offset by a $1.9 million increase in manufacturing costs.

Three Months Ended March 31,

Total cost of revenue decreased $13.5 million, or 20%, to $52.7 million for the three months ended June 30, 2025 from $66.2 million in the comparable period in 2024.

The decrease in total cost of revenue was the result of a decrease in thermal barrier cost of revenue and energy industrial cost of revenue.

Energy industrial cost of revenue decreased $7.0 million, or 33%, to $14.5 million for the three months ended June 30, 2025 from $21.5 million in the comparable period in 2024, primarily due to a decrease in the volume of products shipped.

The $7.0 million decrease was the result of a $5.8 million decrease in material costs and a $1.2 million decrease in manufacturing and other operating costs.

Thermal barrier cost of revenue decreased $6.5 million, or 15%, to $38.2 million for the three months ended June 30, 2025 from $44.7 million in the comparable period in 2024.

The $6.5 million decrease was the result of a $17.0 million decrease in material costs, offset by a $6.3 million increase in manufacturing costs and a $4.2 million credit during the three months ended, June 30, 2024 for reimbursement of costs related to the impact from an engineering change, which did not repeat.

Material costs decreased primarily due to lower volume and operational efficiencies generating lower scrap.

Manufacturing costs increased due to unabsorbed overheads from the temporary partial shutdown of manufacturing lines to manage lower volumes.

Three Months Ended June 30,

($ in thousands)

3 unchanged sentences

Total gross profit

Gross profit decreased by $12.3 million, or 35%, to $22.8 million for the three months ended March 31, 2025 from $35.1 million in the comparable period in 2024.

Gross profit decreased by $26.2 million, or 51%, to $25.3 million for the three months ended June 30, 2025 from $51.5 million in the comparable period in 2024.

The decrease in gross profit was the result of the $39.7 million decrease in total revenue, partially offset by the $13.5 million decrease in total cost of revenue.

Research and Development Expenses

Three Months Ended March 31,

Three Months Ended June 30,

($ in thousands)

Research and development expenses

Research and development expenses decreased by $0.2 million, or 3%, to $4.3 million for the three months ended March 31, 2025 from $4.5 million in the comparable period in 2024.

The $0.2 million decrease reflects decreases in compensation and related costs of $0.2 million.

Research and development expenses as a percentage of total revenue increased to 6% of total revenue for the three months ended March 31, 2025 from 5% in the comparable period in 2024.

Research and development expenses decreased by $0.7 million, or 17%, to $3.8 million for the three months ended June 30, 2025 from $4.5 million in the comparable period in 2024.

The $0.7 million decrease reflects decreases in compensation and related costs, partially driven by a headcount reduction of $1.0 million, partially offset by an increase in other expenses of $0.3 million.

Research and development expenses as a percentage of total revenue was 5% of total revenue for each of the three months ended June 30, 2025 and 2024.

Sales and Marketing Expenses

Three Months Ended March 31,

Three Months Ended June 30,

($ in thousands)

Sales and marketing expenses

Sales and marketing expenses increased by less than $0.1 million, or 1%, to $8.4 million for the three months ended March 31, 2025 from $8.3 million in the comparable period in 2024.

Sales and marketing expenses as a percentage of total revenue increased to 11% of total revenue for the three months ended March 31, 2025 from 9% in the comparable period in 2024.

Sales and marketing expenses decreased by $2.6 million, or 27%, to $6.9 million for the three months ended June 30, 2025 from $9.5 million in the comparable period in 2024.

The $2.6 million decrease reflects decreases in compensation and related costs, partially driven by a headcount reduction of $1.9 million and $0.7 million in operating supplies and equipment.

Sales and marketing expenses as a percentage of total revenue increased to 9% of total revenue for the three months ended June 30, 2025 from 8% in the comparable period in 2024.

General and Administrative Expenses

Three Months Ended March 31,

Three Months Ended June 30,

($ in thousands)

General and administrative expenses

General and administrative expenses decreased by $4.2 million, or 24%, to $13.0 million for the three months ended March 31, 2025 from $17.2 million in the comparable period in 2024.

The $4.2 million decrease was the result of decreases in compensation and related costs of $4.3 million, foreign currency transaction losses of $1.1 million and depreciation and facility related expenses of $0.4 million, partially offset by an increase in insurance costs of $0.8 million, utilities expenditures of $0.7 million and other expenses of $0.1 million.

Compensation and related costs for the three months ended March 31, 2024 included $2.0 million of charge from the cancellation of the unearned performance-based restricted shares.

General and administrative expenses as a percentage of total revenue decreased to 17% for the three months ended March 31, 2025 from 18% in the comparable period in 2024.

General and administrative expenses decreased by $3.7 million, or 21%, to $13.8 million for the three months ended June 30, 2025 from $17.5 million in the comparable period in 2024.

The $3.7 million decrease was the result of decreases in compensation and related costs, partially driven by a headcount reduction of $1.9 million, foreign currency transaction losses of $1.2 million, professional fees of $0.9 million, and insurance costs of $0.3 million, partially offset by an increase in utilities expenditures of $0.6 million.

General and administrative expenses as a percentage of total revenue increased to 18% for the three months ended June 30, 2025 from 15% in the comparable period in 2024.

Restructuring and demobilization costs

1 unchanged sentence

The plan included reducing our headcount and ceasing construction of our previously planned Statesboro Plant.

Restructuring and demobilization costs include severance and other personnel costs of $3.1 million and facility closures and other costs associated with demobilization of $1.8 million for the three months ended June 30, 2025.

We did not incur restructuring, facility closure or demobilization costs for the three months ended June 30, 2024.

Impairment of property, plant and equipment

Impairment of property, plant and equipment costs increased $1.0 million for the three months ended June 30, 2025 from the comparable period in 2024, due to impairment incurred on research and development equipment.

We did not incur impairment of property, plant and equipment costs for the three months ended June 30, 2024.

Other Income (Expense), net

Three Months Ended June 30,

($ in thousands)

Other income (expense):

Interest expense, related party

Interest income (expense), net

Total other income (expense), net

The $3.0 million decrease in interest expense, related party for the three months ended June 30, 2025 is the result of the repurchase of the 2022 Convertible Note in August 2024.

The $3.8 million increase in interest expense, net for the three months ended June 30, 2025 is the result of a $4.5 million increase in interest expense from the MidCap Loan Facility and sale and leaseback transactions, offset by an increase in interest income of $0.7 million.

Income Tax Expense

Three Months Ended June 30,

($ in thousands)

Income tax expense

The $0.8 million of income tax expense for the three months ended June 30, 2025 is related to our maquiladora operations in Mexico, in addition to a provision for state income taxes of $0.4 million.

We incurred $0.9 million of income tax expense related to our maquiladora operations in Mexico for the comparable period in 2024.

Results of Operations

Six months ended June 30, 2025 compared to the six months ended June 30, 2024

The following tables set forth a comparison of the components of our results of operations for the periods presented:

Six Months Ended June 30,

Percentage of

($ in thousands)

Energy industrial

Thermal barrier

Total revenue

Total revenue decreased $55.5 million, or 26%, to $156.7 million for the six months ended June 30, 2025 from $212.2 million in the comparable period in 2024.

The decrease in total revenue was the result of decreases in thermal barrier revenue and energy industrial revenue.

Energy industrial revenue decreased by $13.4 million, or 20%, to $52.6 million for the six months ended June 30, 2025 from $66.0 million in the comparable period in 2024.

This decrease was driven by a decrease in revenue from the global petrochemical and refinery markets of North America, Europe, and Latin America, and in project-based demand in the subsea market, offset in part by an increase in revenue from the global petrochemical and refinery market of Asia.

Energy industrial revenue for the six months ended June 30, 2025 included $12.3 million to a North American distributor, in comparison to $13.5 million for the comparable period of 2024.

The average selling price per square foot of our energy industrial products increased by less than 1% for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

The increase in average selling price reflected the impact of price increases enacted in 2025 and a change in the mix of products sold.

This increase in average selling price had the effect of increasing product revenue by $0.1 million for the six months ended June 30, 2025 from the comparable period in 2024.

In volume terms, energy industrial product shipments decreased by 20% as measured by square feet of our energy industrial products shipped for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

The decrease in volume

had the effect of decreasing product revenue by $13.5 million for the six months ended June 30, 2025 from the comparable period in 2024.

Thermal barrier revenue decreased by $42.1 million, or 29%, to $104.1 million for the six months ended June 30, 2025 from $146.2 million in the comparable period in 2024.

During the six months ended June 30, 2025 and 2024, thermal barrier revenue included $101.2 million and $137.5 million, respectively, to a major U.S.

automotive OEM.

Cost of Revenue

Six Months Ended June 30,

($ in thousands)

Cost of revenue:

Energy industrial

Thermal barrier

Total cost of revenue

Total cost of revenue decreased $16.9 million, or 13%, to $108.6 million for the six months ended June 30, 2025 from $125.5 in the comparable period in 2024.

The decrease in total cost of revenue was the result of a decrease in thermal barrier cost of revenue and energy industrial cost of revenue.

Energy industrial cost of revenue decreased $6.4 million, or 16%, to $32.6 million for the six months ended June 30, 2025 from $39.0 million in the comparable period in 2024, primarily due to a decrease in the volume of products shipped.

The $6.4 million decrease was the result of a $6.5 million decrease in manufacturing and other operating costs due to lower volume of energy industrial products manufactured at our plant.

Thermal barrier cost of revenue decreased $10.5 million, or 12%, to $76.0 million for the six months ended June 30, 2025 from $86.5 million in the comparable period in 2024.

The $10.5 million decrease was the result of a $12.4 million decrease in material costs and a $2.6 million charge for engineering change during the six months ended June 30, 2024, which did not repeat, offset by a $4.5 million increase in manufacturing costs.

Material costs decreased primarily due to lower volume and operational efficiencies generating lower scrap.

Manufacturing costs increased due to unabsorbed overheads from the temporary partial shutdown of manufacturing lines to manage lower volumes.

Six Months Ended June 30,

($ in thousands)

Gross profit:

Energy industrial

Thermal barrier

Total gross profit (loss)

Gross profit decreased by $38.6 million, or 45%, to $48.1 million for the six months ended June 30, 2025 from $86.7 million in the comparable period in 2024.

The decrease in gross profit was the result of the $55.5 million decrease in total revenue, partially offset by the $16.9 million decrease in total cost of revenue.

Research and Development Expenses

Six Months Ended June 30,

($ in thousands)

Research and development expenses

Research and development expenses decreased by $0.9 million, or 10%, to $8.1 million for the six months ended June 30, 2025 from $9.0 million in the comparable period in 2024.

The $0.9 million decrease reflects decreases in compensation and related costs, partially driven by a headcount reduction of $1.2 million, operating supplies and equipment of $0.1 million and professional fees of $0.1 million, partially offset by an increase in utilities expenditures of $0.5 million.

Research and development expenses as a percentage of total revenue increased to 5% of total revenue for the three months ended June 30, 2025 from 4% in the comparable period in 2024.

Sales and Marketing Expenses

Six Months Ended June 30,

($ in thousands)

Sales and marketing expenses

Sales and marketing expenses decreased by $2.5 million, or 14%, to $15.3 million for the six months ended June 30, 2025 from $17.8 million in the comparable period in 2024.

The $2.5 million decrease reflects decreases in compensation and related costs, partially driven by a headcount reduction of $1.8 million, operating supplies and equipment of $0.6 million, and marketing expenditures of $0.2 million, partially offset by an increase in other expenses of $0.1 million.

Sales and marketing expenses as a percentage of total revenue increased to 10% of total revenue for the six months ended June 30, 2025 from 8% in the comparable period in 2024.

General and Administrative Expenses

Six Months Ended June 30,

($ in thousands)

General and administrative expenses

General and administrative expenses decreased by $7.8 million, or 23%, to $26.9 million for the six months ended June 30, 2025 from $34.7 million in the comparable period in 2024.

The $7.8 million decrease was the result of decreases in compensation and related costs, partially driven by a headcount reduction of $6.3 million, foreign currency transaction losses of $2.3 million, professional fees of $0.5 million and depreciation and facility related expenses of $0.5 million, partially offset by an increase in utilities expenditures of $1.3 million and insurance costs of $0.5 million.

Compensation and related costs for the six months ended June 30, 2024 included $2.0 million of charge from the cancellation of the unearned performance-based restricted shares.

General and administrative expenses as a percentage of total revenue was 17% for each of the six months ended June 30, 2025 and 2024.

Restructuring and demobilization costs

In February 2025, we announced and began implementing a restructuring plan to realign our operational focus to improve costs and align capital expenditure to anticipated long term demand.

The plan included reducing our headcount and ceasing construction of our previously planned Statesboro Plant.

In connection with the demobilization, we are no longer pursuing our application for a loan from the Department of Energy's Loan Programs Office and have withdrawn from the loan application process.

Restructuring and demobilization costs include severance and other personnel costs of $2.9 million, facility closures and other costs associated with demobilization of $0.8 million and write off of deferred financing costs of $6.2 million incurred in connection with pursuing financing for the construction of the plant.

We did not incur restructuring and demobilization costs for the three months ended March 31, 2024.

Restructuring and demobilization costs for the six months ended June 30, 2025 include severance and other personnel costs of $6.0 million, facility closures and other costs associated with demobilization of $2.6 million and write off of deferred financing costs of $6.2 million

incurred in connection with pursuing financing for the construction of the plant.

We did not incur restructuring and demobilization costs for the six months ended June 30, 2024.

Impairment of property, plant and equipment

Impairment of property, plant and equipment costs increased $283.9 million for the three months ended March 31, 2025 from the comparable period in 2024, due to impairment incurred of $286.6 million on our previously planned Statesboro Plant.

Impairment of $2.7 million for the three months ended March 31, 2024 was the result of a charge for impairment of equipment under development due to obsolescence following development of new and more efficient equipment.

Impairment of property, plant and equipment costs increased $284.9 million for the six months ended June 30, 2025 from the comparable period in 2024, due to impairment incurred of $286.6 million on our previously planned Statesboro Plant.

Impairment of $2.7 million for the six months ended June 30, 2024 was the result of a charge for impairment of equipment under development due to obsolescence following development of new and more efficient equipment.

Other Income (Expense), net

Three Months Ended March 31,

Six Months Ended June 30,

($ in thousands)

2 unchanged sentences

Interest expense, net

Total other income (expense), net

The $3.0 million decrease of interest expense, related party for the three months ended March 31, 2025 is the result of the repurchase of the convertible note in August 2024.

The $1.5 million increase in interest expense, net for the three months ended March 31, 2025 is the result of a $4.4 million increase in interest expense from the MidCap Loan Facility and sale and leaseback transactions, offset by $1.7 million of deferred financing costs written off related to the loan agreement with GM during the three months ended March 31, 2024 which did not repeat during the comparable period and an increase in interest income of $1.2 million.

The other income increase of $1.1 million for the three months ended March 31, 2025 is the result of a legal settlement payment to us.

Total interest income (expense), net

The $6.1 million decrease in interest expense, related party for the six months ended June 30, 2025 is the result of the repurchase of the convertible note in August 2024.

The $5.3 million increase in interest expense, net for the six months ended June 30, 2025 is the result of a $9.1 million increase in interest expense from the MidCap Loan Facility and sale and leaseback transactions, offset by $1.8 million of deferred financing costs written off related to the loan agreement with GM during the three months ended March 31, 2024 which did not repeat during the comparable period and an increase in interest income of $2.0 million.

The other income increase of $1.1 million for the six months ended June 30, 2025 is the result of a legal settlement payment to us.

Income Tax Expense

Three Months Ended March 31,

Six Months Ended June 30,

($ in thousands)

Income tax expense

The $1.1 million of income tax expense for the three months ended March 31, 2025 is related to our maquiladora operations in Mexico, in addition to a provision for state income taxes of less than $0.1 million.

The $1.9 million of income tax expense for the six months ended June 30, 2025 is related to our maquiladora operations in Mexico, in addition to a provision for state income taxes of $0.4 million.

We incurred $1.6 million of income tax expense related to our maquiladora operations in Mexico for the comparable period in 2024.

Liquidity and Capital Resources

We have experienced significant losses and invested substantial resources since our inception to develop, commercialize and protect our aerogel technology and to build a manufacturing infrastructure capable of supplying aerogel products at the volumes and costs required by our customers.

We have experienced significant costs and invested substantial resources since our inception to develop, commercialize and protect our aerogel technology and to build a manufacturing infrastructure capable of supplying aerogel products at the volumes and costs required by our customers.

These investments have included research and development and other operating expenses, capital expenditures, and investment in working capital balances.

Our long-term financial projections anticipate revenue growth, increasing levels of gross profit, and improved cash flows from operations.

To meet expected demand for our aerogel products, we plan to make additional productivity improvements in our existing East Providence facility and utilize a flexible supply strategy, including but not limited to use of our external manufacturing capabilities in China, which currently support our Energy Industrial segment and are capable of delivering increased aerogel production capacity.

To meet expected demand for our aerogel products, we plan to make additional productivity improvements in our existing

East Providence facility and utilize a flexible supply strategy, including but not limited to use of our external manufacturing capabilities in China, which currently support our Energy Industrial segment and are capable of delivering increased aerogel production capacity.

We expect that the productivity improvements in our existing East Providence facility as well as the supply from our external manufacturing facility will permit us to achieve our target revenue capacity in 2025 and in the long-term.

Accordingly, we have ceased construction at our previously planned Statesboro Plant.

We will be demobilizing the plant and are in the process of assessing options to derive value from the assets, including potentially relocating certain equipment to improve and expand our existing manufacturing facility in East Providence.

On August 19, 2024, we entered into the Credit Agreement with the Agent and the Lenders.

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At closing of the Credit Agreement, the Company drew $125.0 million from the Term Loan Facility and $43.0 million from the Revolving Facility.

The proceeds of the borrowings at closing, net of fees and costs, were used for repurchasing the 2022 Convertible

Notes for $150.0 million and for general corporate purposes.

On May 6, 2025, the Credit Agreement was amended adding Aspen Georgia as a Borrower and amending the MidCap Loan Facility.

See Part II – Other Information – Item 5 – Other Information for further details.

The proceeds of the borrowings at closing, net of fees and costs, were used for repurchasing the 2022 Convertible Notes for $150.0 million and for general corporate purposes.

On May 6, 2025, the Credit Agreement was amended to add Aspen Georgia as a Borrower and to amend the MidCap Loan Facility.

In January 2024 and September 2024, we entered into sale and leaseback arrangements, pursuant to which we sold certain equipment to an equipment leasing company for one-time cash payments of $5.0 million and $10.0 million, respectively, and leased back such equipment from the leasing company.

The associated monthly lease rents will be paid over the lease term of three years.

We believe that our March 31, 2025 cash and cash equivalents balance of $192.0 million, together with the funds available under the MidCap Loan Facility, will be sufficient to support current operating requirements, current research and development activities and the capital expenditures required to support the evolving commercial opportunities in the EV market and other strategic business opportunities.

We believe that our June 30, 2025 cash and cash equivalents balance of $167.6 million, together with the funds available under the MidCap Loan Facility, will be sufficient to support current operating requirements, current research and development activities and the capital expenditures required to support the evolving commercial opportunities in the EV market and other strategic business opportunities.

However, we may supplement our cash balance and available credit with equity financings, debt financings, equipment leasing, sale-leaseback transactions, customer prepayments or government grant and loan programs to provide the additional capital necessary to purchase the capital equipment, construct the new facilities and complete the aerogel capacity expansions required to support our evolving commercial opportunities and strategic business initiatives.

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Cash and cash equivalents consist primarily of cash, money market accounts, and sweep accounts on deposit with banks.

As of March 31, 2025, we had $192.0 million of unrestricted cash and cash equivalents.

As of June 30, 2025, we had $167.6 million of unrestricted cash and cash equivalents.

Analysis of Cash Flow

Three Months Ended

Six Months Ended

(In thousands)

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Net Cash Provided by (Used in) Operating Activities

During the three months ended March 31, 2025, we generated $5.6 million in net cash in operating activities, as compared to the use of $17.7 million in net cash during the comparable period in 2024, an increase in cash provided by operations of $23.3 million.

During the six months ended June 30, 2025, we generated $1.7 million in net cash in operating activities, as compared to the use of $10.9 million in net cash during the comparable period in 2024, an increase in cash provided by operations of $12.6 million.

This increase in cash provided by operations was the result of an increase in net cash generated by changes in operating assets and liabilities of $65.6 million, offset by a decrease in net loss adjusted for non-cash items of $53.0 million.

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Net cash used in investing activities is for capital expenditures for machinery and equipment principally to improve the throughput, efficiency and capacity of our East Providence facility, our automated fabrication facility in Mexico and construction costs for the previously planned Statesboro Plant.

Net cash used in investing activities for the three months ended March 31, 2025 and 2024 was $13.0 million and $25.9 million, respectively.

Net cash used in investing activities for the six months ended June 30, 2025 and 2024 was $25.9 million and $50.7 million, respectively.

Net Cash Provided by (Used in) Financing Activities

Net cash used in financing activities for the three months ended March 31, 2025 totaled $21.5 million and consisted of $13.2 million in cash used for the repayment of the revolver, $6.5 for the repayment of the Term Loan Facility, $1.2 in repayments of the finance obligation under the sale and leaseback transaction, $0.6 million for payments made for employee tax withholdings associated with the vesting of RSUs, and less than $0.1 million in cash used for fees and issuance costs.

Net cash provided by financing activities for the three months ended March 31, 2024 totaled $5.3 million and consisted of $5.0 million in proceeds from a sale and leaseback transaction and $1.4 million in proceeds from employee stock option exercises, offset by $1.1 million in cash used for payments made for employee tax withholdings associated with the vesting of restricted stock units.

Net cash used in financing activities for the six months ended June 30, 2025 totaled $29.1 million and consisted of $13.2 million in cash used for the repayment of the revolver, $13.0 for the repayment of the Term Loan Facility, $2.4 in repayments of the finance obligation under the sale and leaseback transaction, $0.6 million for payments made for employee tax withholdings associated with the vesting of RSUs, $0.2 million in proceeds from employee stock option exercises, and less than $0.1 million in cash used for fees and issuance costs.

Net cash provided by financing activities for the six months ended June 30, 2024 totaled $13.4 million and consisted of $5.0 million in proceeds from a sale and leaseback transaction and $10.1 million in proceeds from employee stock option exercises, offset by $1.1 million in cash used for payments made for employee tax withholdings associated with the vesting of restricted stock units, $0.5 million in repayments of a sales leaseback, and less than $0.1 million in cash used for fees and issuance costs.

Contractual Obligations and Commitments

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Forward-looking statements include, but are not limited to, statements about:

our expectations about the market for our aerogel products, in particular in the electric vehicle market, the energy infrastructure insulation market, the lithium-ion battery thermal barrier markets, and other markets we target;

our expectations about the market for our aerogel products, in particular in the EV market, the energy infrastructure insulation market, the lithium-ion battery thermal barrier markets, and other markets we target;

our beliefs in the appropriateness of our assumptions, the accuracy of our estimates regarding expenses, loss contingencies, future revenues, revenue capacity, future profits, uses of cash, available credit, capital requirements, and the need for additional financing to operate our business and for capital expenditures and to fund our planned strategic business initiatives;

the impact of new legislation on our financial statements;

the performance of our aerogel products;

our expectation that we will be successful in obtaining, enforcing and defending our patents against competitors and that such patents are valid and enforceable;

our expectations regarding decommissioning of the Statesboro Plant;

our expectations regarding decommissioning of and our plans for divesting the assets of the Statesboro Plant;

our estimates of annual production capacity;

beliefs about the commercial potential for our technology in the electric vehicle market;

beliefs about our ability to produce and deliver products to electric vehicle customers;

beliefs about the commercial potential for our technology in the EV market;

beliefs about our ability to produce

and deliver products to EV customers;

beliefs about our contracts with the major automotive manufacturers;

our expectations about the size and timing of awarded business in the electric vehicle market, future revenues and profit margins, arising from our supply relationship and contract with automotive OEMs and our ability to win more business and increase revenue in the electric vehicle market;

beliefs about the performance of our thermal barrier products in the battery systems of electric vehicles;

the current or future trends in the energy, energy infrastructure, chemical and refinery, LNG, sustainable building materials, electric vehicle thermal barrier, electric vehicle battery materials or other markets and the impact of these trends on our business;

our investments in the electric vehicle market;

our expectations about the size and timing of awarded business in the EV market, future revenues and profit margins, arising from our supply relationship and contract with automotive OEMs and our ability to win more business and increase revenue in the EV market;

beliefs about the performance of our thermal barrier products in the battery systems of EVs;

the current or future trends in the energy, energy infrastructure, chemical and refinery, LNG, sustainable building materials, EV thermal barrier, EV battery materials or other markets and the impact of these trends on our business;

our investments in the EV market;

our beliefs about the financial metrics that are indicative of our core performance;

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our expectations about future revenues, expenses, gross profit, net income (loss), income (loss) per share and Adjusted EBITDA, sources and uses of cash, capital requirements and the sufficiency of our existing cash balance and available credit;

our beliefs about the outcome, effects or estimated costs of current or potential litigation or their respective timing, including expected legal expense in

connection with our patent enforcement actions;

our beliefs about the outcome, effects or estimated costs of current or potential litigation or their respective timing, including expected legal expense in connection with our patent enforcement actions;

our expectations about future material costs and manufacturing expenses as a percentage of revenue;

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We are exposed to changes in interest rates in the normal course of our business.

As of March 31, 2025, we had unrestricted cash and cash equivalents of $192.0 million.

As of June 30, 2025, we had unrestricted cash and cash equivalents of $167.6 million.

These amounts were held for working capital and capital expansion purposes and were invested primarily in deposit accounts, money market accounts, and high-quality debt securities issued by the U.S.

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Due to the short-term nature of these investments, we believe that our exposure to changes in the fair value of our cash as a result of changes in interest rates is not material.

As of March 31, 2025, the Term Loan Facility had a principal balance of $112.0 million.

Under the terms of the Credit Agreement, the Term Loan Facility bears an interest rate equal to Term SOFR for a one-month interest period plus 4.50% per year, subject to a Term SOFR floor of 4.50% and a Term SOFR cap of 7.50%.

As of June 30, 2025, the Term Loan Facility had a principal balance of $105.5 million.

Under the terms of the Credit Agreement, as amended by Amendment No.

1, the Term Loan Facility bears an interest rate equal to Term SOFR for a one-month interest period plus 5.00% per year, subject to a Term SOFR floor of 4.50% and a Term SOFR cap of 7.50%.

Interest is paid monthly.

As of March 31, 2025, the Revolving Facility had a principal balance of $29.8 million.

As of June 30, 2025, the Revolving Facility had a principal balance of $29.8 million.

Our Revolving Facility bears interest at the Term SOFR plus 5.10% per annum.

Under the terms of the Credit Agreement, the Revolving Facility is subject to a Term SOFR floor of 2.50%.

Under the terms of the Credit Agreement, as amended by Amendment No.

1, the Revolving Facility is subject to a Term SOFR floor of 2.50%.

Interest is paid monthly.

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A hypothetical 100 basis point increase or decrease in interest rates would not have a material effect on the results of our operations.

As of March 31, 2025, we had $0.4 million of restricted cash to support our outstanding letters of credit to secure obligations under certain commercial contracts and other obligations.

As of June 30, 2025, we had $0.4 million of restricted cash to support our outstanding letters of credit to secure obligations under certain commercial contracts and other obligations.

Inflation Risk

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Certain transactions of the Company and its subsidiaries are denominated in currencies other than the functional currency.

During the three months ended March 31, 2025 and 2024, our largest exposures to foreign exchange rates consisted primarily of the Mexican Peso against the U.S.

Foreign currency transaction losses were $0.4 million for the three months ended March 31, 2025 and foreign currency transaction gains were $0.7 million for the three months ended March 31, 2024.

During the three months ended June 30, 2025 and 2024, our largest exposures to foreign exchange rates consisted primarily of the Mexican Peso against the U.S.

Foreign currency transaction gains were $0.8 million for the six months ended June 30, 2025 and foreign currency transaction losses were $1.5 million for the six months ended June 30, 2024.

The foreign currency transactions were recorded within operating expenses on the consolidated statements of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis