What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-07 · 156 added, 152 removed, 335 unchanged (48% of the section changed)

18 unchanged sentences

Thermal Barrier

We are actively developing a number of promising aerogel products and technologies for the EV market.

We have developed and are commercializing our proprietary line of PyroThin aerogel thermal barriers for use in battery packs in EVs.

We have developed a number of promising aerogel products and technologies for the EV market, including our proprietary line of PyroThin aerogel thermal barriers for use in battery packs in EVs.

Our PyroThin product is an ultra-thin, lightweight and flexible thermal barrier designed with other functional layers to impede the propagation of thermal runaway across multiple lithium-ion battery system architectures.

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

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.

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;

however, as discussed below under “Key Metrics and Non-GAAP Financial Measures”, our thermal barrier revenues have declined in 2025 as compared to the prior year.

Energy Industrial

We also design, develop and manufacture innovative, high-performance aerogel insulation used primarily in the energy industrial market.

We design, develop and manufacture innovative, high-performance aerogel insulation used primarily in the energy industrial market.

We believe our aerogel blankets deliver the best thermal performance of any widely used insulation product available on the market today and provide a combination of performance attributes unmatched by traditional insulation materials.

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Customers in these markets use our products for applications as diverse as military and commercial aircraft, trains, buses, appliances, apparel, footwear and outdoor gear.

As we continue to enhance our Aerogel Technology Platform, we believe we will have additional opportunities to address high-value applications in the global insulation market, and in a number of new, high-value markets, including hydrogen energy, filtration, water purification, and gas sorption.

We believe we will have additional opportunities to address high-value applications in the global insulation market, as well as in adjacent market opportunities such as energy storage applications, electrification applications and other potential adjacent applications subject to their commercial potential, the differentiation of our products, and the ability to leverage our existing manufacturing platform.

We market and sell our products primarily through a sales force based in North America, Europe and Asia.

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Manufacturing Operations

We manufacture our products using our proprietary technology at our facility in East Providence, Rhode Island.

We have operated the East Providence facility since 2008 and have increased our capacity in phases.

We manufacture our products using our proprietary technology at our facility in East Providence, Rhode Island, which we have operated since 2008.

During 2024, we converted our East Providence facility to support the growth of the thermal barrier program.

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.

We manage the capacity of our East Providence facility on an ongoing basis in order to meet expected demand for our aerogel products.

We also 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.

Pursuant to our supply contract with this contract manufacturer, they are obligated to deliver products to us as we issue purchase orders on an as-needed basis through the term of the contract.

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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, 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.

Additionally, we 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 paid Prodensa a management fee and have an option to purchase OPE from Prodensa after a period of 18 months.

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

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.

We expect to meet demand for our aerogel products by utilizing both our East Providence facility and our flexible supply strategy, including, but not limited to, using our external manufacturing capabilities.

Financial Summary

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.

Our revenue for the nine months ended September 30, 2025 was $229.8 million, which represented a decrease of $99.8 million, or 30%, from $329.6 million for the nine months ended September 30, 2024.

Net loss for the nine months ended September 30, 2025

was $316.6 million and net loss per share was $3.85.

Net income for the nine months ended September 30, 2024 was $2.0 million and net income per share was $0.03.

Key Metrics and Non-GAAP Financial Measures

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

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Income tax expense

Loss on extinguishment of debt

Restructuring and demobilization costs

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Adjusted EBITDA

(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.

(1) Represents non-cash stock-based compensation related to vesting and modifications of stock option grants, RSUs and restricted common stock, and cash settled RSUs 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, and the amount and timing of capital and operating expenses.

Accordingly, we expect that our net income (loss), earnings per share and Adjusted EBITDA will vary from period to period.

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Our OEM customers operate in a cyclical industry that is sensitive to shifting consumer trends, political and regulatory uncertainty and economic conditions in the markets they operate.

EV adoption rates in some of our customers’ markets are expected to be at a slower rate than originally expected and EV investment continues to be re-timed as demand expectations in North America and Europe are reset.

However, some of our OEM customers have been gaining market share from a low base volume and expect to continue to gain market share in 2025.

Furthermore, changes in government and economic policies, incentives, and tariffs may impact our customers and our production, sales, cost structure and the competitive landscape.

EV adoption rates in our customers’ markets have been lower than originally expected and these lower adoption rates are expected to continue.

As a result, EV investment continues to be re-timed as demand expectations in North America and Europe are reset.

Furthermore, changes in government and economic policies, incentives, and tariffs have impacted our customers and our production, sales, cost structure and the competitive landscape, and we expect that such factors will continue to impact us and our customers.

Additionally, our OEM customers continue to innovate which could result in engineering changes to the parts we supply primarily to reduce costs for our OEMs.

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Our customer supply agreements generally require step-downs in component pricing over the periods of production and OEMs have historically possessed significant leverage over their outside suppliers.

Accordingly, we expect thermal barrier revenues to decline in 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.

Thermal barrier revenues have declined in 2025 as compared to the prior year.

Additionally, we are projecting a decline in energy industrial revenue in 2025 as compared to the prior year due to volume decline in our core markets and project-based demand.

In response to these developments, we plan to continue our ongoing cost reduction measures, including reduced headcount, and our efforts to improve production innovation and efficiency.

As a result of the foregoing, we expect a decline in net income and Adjusted EBITDA during 2025 as compared to the prior year.

We also expect reduced capital expenditures during 2025 as compared to the prior year.

Components of Our Results of Operations

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We record deferred revenue for sales when (i) we have delivered products, but other revenue recognition criteria have not been satisfied, or (ii) payments have been received in advance of the completion of required performance obligations.

For the reasons discussed above, we expect that both our thermal barrier revenues and energy industrial revenues will decline in 2025 as compared to the prior year.

Cost of Revenue

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In addition, we provide warranties for our products and record the estimated cost within cost of revenue in the period that the related revenue is recorded or when we become aware that a potential warranty claim is probable and can be reasonably estimated.

As a result of these factors, material costs as a percentage of product revenue will vary from period to period due to changes in the mix of aerogel products sold, the costs of our raw materials or the estimated cost of warranties.

As a result of these factors, material costs as a percentage of product revenue will vary from period to period due to changes in the volume and mix of aerogel products sold, the costs of our raw materials or the estimated cost of warranties.

In addition, global supply chain disturbances, increased reliance on foreign materials procurement, industrial gas supply constraints, increases in the cost of our raw materials, engineering changes, higher prototype sales and other factors may significantly impact our material costs and have a material impact on our operations.

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We are also continuing to monitor the impact on our material costs, manufacturing expense, and cost of product revenue from engaging one or more external manufacturing facilities in China to supply our aerogel products, which began in 2024.

Our gross profit as a percentage of revenue is affected by a number of factors, including the volume of products produced and sold, the mix of products sold, average selling prices, our material and manufacturing costs, realized capacity utilization and the costs associated with expansions and start-up of production capacity.

Accordingly, we expect our gross profit to vary significantly in absolute dollars and as a percentage of revenue from period to period.

However, given the expected decrease in revenue in 2025 as compared to the prior year, we expect that our gross profit as a percentage of revenue will also decline over the same period.

Operating Expenses

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We expense research and development costs as incurred.

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.

We also expect to continue to invest in research and engineering personnel and the infrastructure required in support of their efforts.

While we expect to continue to devote resources to the development of new aerogel technologies and while we believe that such investments are necessary to maintain and improve our competitive position, we plan to reduce the overall amount of such expenditures in 2025 as compared to the prior year.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of personnel costs, incentive compensation, marketing programs, costs of new product and process introductions, travel and related costs, consulting expenses and facilities related costs.

We expect that sales and marketing expenses will decrease in absolute dollars but increase as a percentage of revenue in 2025 as compared to the prior year, given the expected decrease in revenue.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel costs, legal expenses, consulting and professional services, audit fees, compliance with securities, corporate governance and related laws and regulations, investor relations and insurance premiums, including director and officer insurance.

We expect that general and administrative expenses will decrease in absolute dollars but increase as a percentage of revenue in 2025 as compared to the prior year, given the expected decrease in revenue.

We expect that the patent enforcement actions, described in more detail under “Legal Proceedings” in Part I, Item 3 of our Annual Report and “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q, if protracted, could result in significant legal expense over the medium to long-term.

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Interest Income (Expense)

Interest expense consists of interest expense and amortization or write-off of deferred financing costs related to our other financing arrangements including a failed sale and leaseback arrangement accounted as a financing transaction and interest earned on the cash balances invested in deposit accounts, money market accounts, and high-quality debt securities issued by the U.S.

Interest expense consists of interest expense and amortization or write-off of deferred financing costs related to our other financing arrangements including our Amended MidCap Loan Facility, a failed sale and leaseback arrangement accounted as a financing transaction, and interest earned on the cash balances invested in deposit accounts, money market accounts, and high-quality debt securities issued by the U.S.

Provision for Income Taxes

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Results of Operations

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

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

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

Three Months Ended June 30,

Three Months Ended September 30,

($ in thousands)

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Total revenue

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.

Total revenue decreased $44.3 million, or 38%, to $73.0 million for the three months ended September 30, 2025 from $117.3 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.

Energy industrial revenue decreased by $2.4 million, or 9%, to $24.3 million for the three months ended September 30, 2025 from $26.7 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.

Energy industrial revenue for the three months ended September 30, 2025 included $4.6 million from a North American distributor, in comparison to $5.6 million for the comparable period of 2024.

The average selling price per square foot of our energy industrial products increased by 2% for the three months ended September 30, 2025, compared to the three months ended September 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.

This increase in average selling price had the effect of increasing product revenue by $0.4 million for the three months ended September 30, 2025 from the comparable period in 2024.

In volume terms, energy industrial product shipments decreased by 11% as measured by square feet of our energy industrial products shipped for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The decrease in volume had the effect of decreasing product revenue by $2.8 million for the three months ended September 30, 2025 from the comparable period in 2024.

Thermal barrier revenue decreased by $41.9 million, or 46%, to $48.7 million for the three months ended September 30, 2025 from $90.6 million in the comparable period in 2024.

During the three months ended September 30, 2025 and 2024, thermal barrier revenue included $46.6 million and $86.4 million, respectively, to a major U.S.

automotive OEM.

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Cost of Revenue

Three Months Ended June 30,

Three Months Ended September 30,

($ in thousands)

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Total cost of revenue

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.

Total cost of revenue decreased $16.1 million, or 24%, to $52.2 million for the three months ended September 30, 2025 from $68.3 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.

Energy industrial cost of revenue decreased $0.6 million, or 4%, to $15.4 million for the three months ended September 30, 2025 from $16.0 million in the comparable period in 2024, primarily due to a decrease in the volume of products shipped.

The $0.6 million decrease was the result of a $1.4 million decrease in manufacturing and other operating costs due to lower volume of energy industrial products shipped from our plant, offset in part by a $0.8 million increase in material costs.

Thermal barrier cost of revenue decreased $15.5 million, or 30%, to $36.8 million for the three months ended September 30, 2025 from $52.3 million in the comparable period in 2024.

The $15.5 million decrease was the result of a $10.7 million decrease in material costs and a $7.0 million decrease in manufacturing costs, offset by a $2.2 million credit during the three months ended September 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,

Manufacturing costs decreased due to lower volumes in comparison to the same period in 2024, benefits from the headcount reduction and other cost cutting efforts in 2025.

Three Months Ended September 30,

($ in thousands)

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Total gross profit

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.

Gross profit decreased by $28.2 million, or 58%, to $20.8 million for the three months ended September 30, 2025 from $49.0 million in the comparable period in 2024.

The decrease in gross profit was the result of the $44.3 million decrease in total revenue, partially offset by the $16.1 million decrease in total cost of revenue.

Research and Development Expenses

Three Months Ended June 30,

Three Months Ended September 30,

($ in thousands)

Research and development expenses

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.

Research and development expenses decreased by $2.1 million, or 46%, to $2.5 million for the three months ended September 30, 2025 from $4.6 million in the comparable period in 2024.

The $2.1 million decrease reflects decreases in compensation and related costs of $1.9 million, driven by a headcount reduction and a decrease in other expenditures of $0.2 million.

Research and development expenses as a percentage of total revenue decreased to 3% of total revenue for the three months ended September 30, 2025 from 4% in the comparable period in 2024.

Sales and Marketing Expenses

Three Months Ended June 30,

Three Months Ended September 30,

($ in thousands)

Sales and marketing expenses

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.

Sales and marketing expenses decreased by $2.7 million, or 30%, to $6.6 million for the three months ended September 30, 2025 from $9.3 million in the comparable period in 2024.

The $2.7 million decrease reflects decreases in compensation and related costs of $1.5 million, partially driven by a headcount reduction, employee related expenses of $0.5 million, marketing expenses of $0.3 million, $0.2 million in professional fees and a decrease in utilities expenses of $0.2 million.

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

General and Administrative Expenses

Three Months Ended June 30,

Three Months Ended September 30,

($ in thousands)

General and administrative expenses

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.

General and administrative expenses decreased by $4.2 million, or 24%, to $13.5 million for the three months ended September 30, 2025 from $17.7 million in the comparable period in 2024.

The $4.2 million decrease was the result of decreases in compensation and related costs of $4.0 million, partially driven by a headcount reduction and a decrease in other expenditures of $0.2 million.

General and administrative expenses as a percentage of total revenue increased to 19% for the three months ended September 30, 2025 from 15% in the comparable period in 2024.

Restructuring and demobilization costs

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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.

Restructuring and demobilization costs include severance and other personnel costs of $1.3 million and facility closures and other costs associated with demobilization of $0.3 million for the three months ended September 30, 2025.

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

Other Income (Expense), net

Three Months Ended June 30,

Three Months Ended September 30,

($ in thousands)

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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.

Loss on extinguishment of debt

Total other expense, net

The $1.5 million decrease in interest expense, related party for the three months ended September 30, 2025 is the result of the repurchase of the 2022 Convertible Note in August 2024.

The $1.8 million increase in interest expense, net for the three months ended September 30, 2025 is the result of a $2.2 million increase in interest expense from the MidCap Loan Facility and sale and leaseback transactions, offset by an increase in interest income of $0.4 million.

The $27.5 million loss on extinguishment of debt for the three months ended September 30, 2024 is the result of the repayment of the 2022 Convertible Note in August 2024.

Income Tax Expense

Three Months Ended June 30,

Three Months Ended September 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.

The $0.6 million of income tax expense for the three months ended September 30, 2025 is related to our maquiladora operations in Mexico, in addition to a provision for state income taxes of less than $(0.1) million.

We incurred $0.3 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

Nine months ended September 30, 2025 compared to the nine months ended September 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,

Nine Months Ended September 30,

Percentage of

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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.

Total revenue decreased $99.8 million, or 30%, to $229.8 million for the nine months ended September 30, 2025 from $329.6 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.

Energy industrial revenue decreased by $15.9 million, or 17%, to $76.9 million for the nine months ended September 30, 2025 from $92.8 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.

Energy industrial revenue for the nine months ended September 30, 2025 included $16.9 million from a North American distributor, in comparison to $19.1 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 nine months ended September 30, 2025, compared to the nine months ended September 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.

This increase in average selling price had the effect of increasing product revenue by $0.5 million for the nine months ended September 30, 2025 from the comparable period in 2024.

In volume terms, energy industrial product shipments decreased by 18% as measured by square feet of our energy industrial products shipped for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

decrease in volume had the effect of decreasing product revenue by $16.4 million for the nine months ended September 30, 2025 from the comparable period in 2024.

Thermal barrier revenue decreased by $84.0 million, or 35%, to $152.8 million for the nine months ended September 30, 2025 from $236.8 million in the comparable period in 2024.

During the nine months ended September 30, 2025 and 2024, thermal barrier revenue included $147.9 million and $223.8 million, respectively, to a major U.S.

automotive OEM.

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Cost of Revenue

Six Months Ended June 30,

Nine Months Ended September 30,

($ in thousands)

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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.

Total cost of revenue decreased $33.0 million, or 17%, to $160.8 million for the nine months ended September 30, 2025 from $193.8 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.

Energy industrial cost of revenue decreased $7.0 million, or 13%, to $48.0 million for the nine months ended September 30, 2025 from $55.0 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 $7.9 million decrease in manufacturing and other operating costs due to lower volume of energy industrial products manufactured at our plant, offset in part by a $0.9 million increase in material costs.

Thermal barrier cost of revenue decreased $26.0 million, or 19%, to $112.8 million for the nine months ended September 30, 2025 from $138.8 million in the comparable period in 2024.

The $26.0 million decrease was the result of a $23.2 million decrease in material costs, a $2.4 million decrease in manufacturing costs and a $0.4 million charge for an engineering change during the nine months ended September 30, 2024, 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.

Six Months Ended June 30,

Manufacturing costs decreased due to lower volumes in the comparable period in 2024 and from headcount reduction and other cost cutting efforts in 2025.

Nine Months Ended September 30,

($ in thousands)

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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.

Total gross profit

Gross profit decreased by $66.9 million, or 49%, to $68.9 million for the nine months ended September 30, 2025 from $135.8 million in the comparable period in 2024.

The decrease in gross profit was the result of the $99.8 million decrease in total revenue, partially offset by the $33.0 million decrease in total cost of revenue.

Research and Development Expenses

Six Months Ended June 30,

Nine Months Ended September 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.

Research and development expenses decreased by $3.0 million, or 22%, to $10.6 million for the nine months ended September 30, 2025 from $13.6 million in the comparable period in 2024.

The $3.0 million decrease reflects decreases in compensation and related costs of $3.1 million, driven by a headcount reduction, partially offset by an increase in other expenditures of $0.1 million.

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

Sales and Marketing Expenses

Six Months Ended June 30,

Nine Months Ended September 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.

Sales and marketing expenses decreased by $5.2 million, or 19%, to $21.9 million for the nine months ended September 30, 2025 from $27.1 million in the comparable period in 2024.

The $5.2 million decrease reflects decreases in compensation and related costs of $3.3 million, partially driven by a headcount reduction, marketing expenses of $0.6 million, operating supplies and equipment of $0.6 million, employee related expenses of $0.5 million and other expenditures of $0.2 million.

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

General and Administrative Expenses

Six Months Ended June 30,

Nine Months Ended September 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.

General and administrative expenses decreased by $12.1 million, or 23%, to $40.4 million for the nine months ended September 30, 2025 from $52.5 million in the comparable period in 2024.

The $12.1 million decrease was the result of decreases in compensation and related costs of $10.3 million, partially driven by a headcount reduction, foreign currency transaction losses of $2.0 million, employee related expenses of $0.9 million and professional fees of $0.8 million, partially offset by an increase in utilities expenses of $1.7 million and other expenditures of $0.2 million.

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

General and administrative expenses as a percentage of total revenue increased to 18% for the nine months ended September 30, 2025 from 16% in the comparable period in 2024.

Restructuring and demobilization costs

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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 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.

Restructuring and demobilization costs for the nine months ended September 30, 2025 include severance and other personnel costs of $7.3 million, facility closures and other costs associated with demobilization of $2.9 million and a 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 nine months ended September 30, 2024.

Impairment of property, plant and 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.

Impairment of property, plant and equipment costs increased $284.9 million, to $287.6 million, for the nine months ended September 30, 2025 from $2.7 million in the comparable period in 2024.

The increase was due to impairment of $286.6 million on our previously planned Statesboro Plant and impairment of $1.0 million incurred on research and development equipment.

Impairment of $2.7 million for the nine months ended September 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

Six Months Ended June 30,

Nine Months Ended September 30,

($ in thousands)

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Interest expense, net

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.

Loss on extinguishment of debt

Total other expense, net

The $7.6 million decrease in interest expense, related party for the nine months ended September 30, 2025 is the result of the repurchase of the convertible note in August 2024.

The $7.1 million increase in interest expense, net for the nine months ended September 30, 2025 is the result of a $11.3 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 $2.4 million.

The $27.5 million loss on extinguishment of debt for the nine months ended September 30, 2025 is the result of the repayment of the 2022 Convertible Note in August 2024.

The $1.7 million increase in other income for the three months ended September 30, 2025 is primarily due to a $1.1 million legal settlement payment to us.

Income Tax Expense

Six Months Ended June 30,

Nine Months Ended September 30,

($ in thousands)

Income tax expense

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.

The $2.5 million of income tax expense for the nine months ended September 30, 2025 is related to our maquiladora operations in Mexico and a provision for state income taxes of $0.3 million.

We incurred $1.9 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 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.

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.

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

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

At September 30, 2025, we are in compliance with the financial covenants set forth in the Amended MidCap Loan Facility.

However, given the decline in our revenues in 2025 as compared to the prior year, there can be no assurance that we will comply with one or more of these financial covenants as of the end of the fourth quarter of 2025.

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 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.

We believe that our September 30, 2025 cash and cash equivalents balance of $150.7 million will be sufficient to support current operating requirements and capital expenditures required to support our existing business in the energy industrial and EV markets for at least the next twelve months from the date of this Quarterly Report on Form 10-Q.

However, we expect that we will need to supplement our cash balance with anticipated cash flow from operations, as well as potential equity financings, debt financings, equipment leasing, sale-leaseback transactions, customer prepayments, or government grant and loan programs to provide the additional capital necessary to support the Company’s long-term growth strategy.

We believe that consummation of equity financings could potentially result in an ownership change under Section 382 of the Internal Revenue Code.

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

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

As of September 30, 2025, we had $150.7 million of unrestricted cash and cash equivalents.

Analysis of Cash Flow

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

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Net Cash Provided by (Used in) Operating Activities

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.

During the nine months ended September 30, 2025, we generated $16.7 million in net cash in operating activities, as compared to the generation of $9.9 million in net cash during the comparable period in 2024, an increase in cash provided by operations of $6.8 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 $81.8 million, offset by a decrease in net loss adjusted for non-cash items of $74.9 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 six months ended June 30, 2025 and 2024 was $25.9 million and $50.7 million, respectively.

Net cash used in investing activities for the nine months ended September 30, 2025 and 2024 was $35.0 million and $71.5 million, respectively.

Net Cash Provided by (Used in) Financing Activities

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.

Net cash used in financing activities for the nine months ended September 30, 2025 totaled $50.6 million and consisted of $28.0 million in cash used for the repayment of the Revolving Facility, $19.5 for the repayment of the Term Loan Facility, $3.7 in repayments of the finance obligation under the sale and leaseback transaction, $0.7 million for payments made for employee tax withholdings associated with the vesting of RSUs, $1.4 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 nine months ended September 30, 2024 totaled $35.6 million and consisted of $15.0 million in proceeds from a sales leaseback, $10.4 million in proceeds from employee stock option exercises, $119.7 in proceeds from the term loan, net of issues costs, and $42.7 in proceeds from the Revolving Facility, net of issuance costs, offset by $150.0 million in cash used for the repayment of the 2022 Convertible Note, $1.3 million in cash used for payments made for employee tax withholdings associated with the vesting of RSUs, $0.8 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 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;

our expectations about the market for our aerogel products, in particular in the EV market, the energy infrastructure market, and other markets we target;

the impact of new legislation on our financial statements;

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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 and our plans for divesting the assets 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 EV market;

beliefs about our ability to produce

and deliver products to EV customers;

beliefs about our ability to produce and deliver products to EV customers;

beliefs about our contracts with the major automotive manufacturers;

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

our expectations about the effect of manufacturing capacity on financial metrics such as Adjusted EBITDA;

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;

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our expectation about the ability of the Chinese external manufacturing facilities that we engage to consistently supply the aerogel product that we order in a timely manner;

our expectation to meet long-term aerogel demand by maximizing capacity at our East Providence facility and utilizing a flexible supply strategy, including, but not limited to, using external manufacturing capabilities;

the potential effects of tariffs on our business and results of operations;

our expectation to meet long-term aerogel demand by utilizing both our East Providence facility and our flexible supply strategy, including, but not limited to, using external manufacturing capabilities;

the effects of current and potential future tariffs on our business, our customers and our results of operations;

our expectations of future gross profit and the effect of manufacturing expenses, manufacturing capacity and productivity on gross profit;

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our expectations about short and long term (a) research and development (b) general and administrative and (c) sales and marketing expenses;

our expectations of revenue growth, increased gross profit, and improving cash flows over the long term;

our expectations regarding changes in revenue , gross profit, and cash flows;

our intentions about managing capital expenditures and working capital balances;

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

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

As of September 30, 2025, we had unrestricted cash and cash equivalents of $150.7 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 June 30, 2025, the Term Loan Facility had a principal balance of $105.5 million.

As of September 30, 2025, the Term Loan Facility had a principal balance of $99.0 million.

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

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Interest is paid monthly.

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

As of September 30, 2025, the Revolving Facility had a principal balance of $15.0 million.

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

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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 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.

As of September 30, 2025, we had $1.7 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 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.

During the three months ended September 30, 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 $0.2 million and $2.3 million for the nine months ended September 30, 2025 and September 30, 2024, respectively.

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