What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-13 compared with 2025-02-27 · 596 added, 459 removed, 1090 unchanged (49% of the section changed)

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Accordingly, we encourage investors, the media, and others interested in us to review the information that we share on the Investors section of our website, https://www.aerogel.com/ .

The information contained on, or that can be accessed through, our website is not a part of, or incorporated by reference in, this Annual Report on Form 10-K or our other filings with the SEC.

We have included our website address in this Annual Report on Form 10-K solely as an inactive textual reference.

Our core businesses are organized into two reportable segments:

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Thermal Barrier

We are actively developing a number of promising aerogel products and technologies for the electric vehicle (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 electric vehicle (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.

Our thermal barrier technology is designed to offer a unique combination of thermal management, mechanical performance and fire protection properties.

These properties enable EV manufacturers to achieve critical battery performance and safety goals.

In addition, the Company's 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 initiative in the EV market is significant.

These properties enable EV manufacturers to achieve critical battery performance and safety goals by impeding the propagation of thermal runaway in lithium-ion battery systems at the battery cell, module, and pack levels across multiple lithium-ion battery system architectures.

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

We have entered into multi-year production contracts with a number of automotive EV original equipment manufacturer (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 (ACC), 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 2024, 2023 and 2022, we sold $306.8 million, $110.1 million and $55.6 million, respectively, of our PyroThin thermal barriers.

These customers include General Motors LLC (GM), Scania, Automotive Cells Company, which is a battery cell joint venture between Stellantis N.V, Saft-TotalEnergies and Mercedes-Benz (ACC), 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 GM, Toyota, and ACC, and thermal barrier prototype parts to a number of global manufacturers of EVs, grid storage, and home battery systems.

During 2025, 2024 and 2023, we sold $168.9 million, $306.8 million and $110.1 million, respectively, of our PyroThin thermal barriers, primarily to GM.

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.

Our end-user customers select our products where thermal performance is critical and to save money, improve resource efficiency, enhance sustainability, preserve operating assets and protect workers.

Our insulation products help end-users to improve resource efficiency, reduce energy consumption, and reduce the carbon footprint of their operations.

These products enable compact system design, reduce installation time and costs, promote freight and logistics cost savings, reduce system weight, minimize required storage space, and enhance job site safety.

Our insulation products reduce the incidence of corrosion under insulation, which is a significant maintenance cost and safety issue in energy industrial facilities.

end-user customers select our products where thermal performance is critical and to save money, improve resource efficiency, enhance sustainability, preserve operating assets, and protect workers.

Our insulation is used by oil producers and the owners and operators of refineries, petrochemical plants, liquefied natural gas (LNG) facilities, power generating assets, and other energy industrial sites.

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We also derive revenue from a number of other end markets.

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.

Customers in these markets use our products for applications such as military aircrafts, trains, and buses.

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, including battery energy storage systems, 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 Aspen’s 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 Servicios de Consultora (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 December 31, 2024, 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 Aspen’s Energy Industrial segment and are capable of delivering increased aerogel production capacity.

Accordingly, we have ceased construction at our previously planned second manufacturing plant in Statesboro, Georgia.

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.

Underwritten Offering

In October 2024, we entered into an underwriting agreement (the Underwriting Agreement) with Goldman Sachs & Co.

LLC and Morgan Stanley & Co.

LLC (collectively, the Underwriters), pursuant to which we issued and sold an aggregate of 4,887,500 shares of our common stock, which included 637,500 shares pursuant to the Underwriters’ option to purchase additional shares of our common stock, to the Underwriters in a registered underwritten offering (the Offering).

The price to the public in the Offering was $20.00 per share.

The net proceeds to us from the Offering were approximately $93.2 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

Additionally, we entered into a contract with Prodensa Servicios de Consultora (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.

We subsequently purchased OPE for a nominal value in accordance with the terms of the agreement.

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.

MidCap Loan Facility

On August 19, 2024, we and Aspen Aerogels Rhode Island, LLC, a Rhode Island limited liability company (Aspen RI and, together with the Company, each, a Borrower and collectively, the Borrowers) entered into a Credit, Security and Guaranty Agreement (the Credit Agreement and the facilities provided thereunder, collectively, the MidCap Loan Facility), by and among the Borrowers, MidCap Funding IV Trust, as agent (the Agent), MidCap Financial Trust, as term loan servicer, the financial institutions or other entities from time to time party thereto as lenders (the Lenders), and the other parties party thereto as additional guarantors and/or borrowers from time to time.

The proceeds of the MidCap Loan Facility have been used in connection with the transaction contemplated by the Note Repurchase Agreement (as defined below), the payment of related fees and expenses and for working capital of the Company and its subsidiaries.

On August 19, 2024, we and Aspen Aerogels Rhode Island, LLC, a Rhode Island limited liability company (Aspen RI and, together with the Company, each, a Borrower and collectively, the Borrowers) entered into a Credit, Security and Guaranty Agreement (the Credit Agreement and the facilities provided thereunder, collectively, the MidCap Loan Facility), by and among the Borrowers, MidCap Funding IV Trust, as agent (the Agent), MidCap Financial Trust, as term loan servicer (the Term Loan Servicer), the financial institutions or other entities from time to time party thereto as lenders (the Lenders), and the other parties party thereto as additional guarantors and/or borrowers from time to time.

The proceeds of the MidCap Loan Facility were used to repurchase our outstanding convertible note, the payment of related fees and expenses and for working capital.

Loans borrowed under the MidCap Loan Facility mature on August 19, 2029.

The MidCap Loan Facility is comprised of (i) a term loan facility in an aggregate principal amount of $125.0 million (the Term Loan Facility) and (ii) an asset-based revolving credit facility in an aggregate principal amount not to exceed the lesser of (A) $100.0 million and (B) the value of the borrowing base (defined as the sum of (x) 85% of certain eligible accounts of the Borrowers and (y) the lesser of 85% of the NOLV (as defined in the Credit Agreement) or 85% of the cost of certain eligible inventory of the Borrowers) (the Revolving Facility).

Loans borrowed under the Term Loan Facility will bear an interest rate equal to Term SOFR (as defined in the Credit Agreement) 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%.

Loans borrowed under the Revolving Facility will bear an interest rate equal to Term SOFR plus 4.60% per year, subject to a Term SOFR floor of 2.50%.

The Term Loan Facility is subject to amortization of principal, payable quarterly on the last day of each quarter, commencing September 30, 2024, in an amount as set forth in the Credit Agreement with the remaining aggregate principal amount payable on the maturity date.

The Revolving Facility has a required minimum balance set at 30% of the average borrowing base during the immediate preceding month.

The Borrowers are required to pay the Lenders under the Revolving Facility an unused line fee of 0.30% of the average unused availability under the Revolving Facility, subject to the aforementioned minimum balance.

The MidCap Loan Facility is guaranteed by Aspen Aerogels Mexico Holdings and is secured by a lien on substantially all existing and after-acquired assets of the Loan Parties, including the equity interest in Aspen RI, Aspen Aerogels Mexico Holdings and Aspen Aerogels Georgia owned by us, in each case, subject to customary exceptions.

Aspen Aerogels Georgia is not a guarantor (thus not a Loan Party) and its assets are excluded from the collateral under the MidCap Loan Facility, subject to its entrance into the DOE Loan Documents (as defined in the Credit Agreement) within one year from the closing date of the MidCap Loan Facility.

To the extent the DOE Loan Documents will not be entered into within such one-year period, Aspen Aerogels Georgia will be obligated to become a Loan Party under the MidCap Loan Facility and pledge substantially all of its assets as security for the obligations thereunder.

Repurchase of Convertible Note

On August 19, 2024, we entered into a note purchase and sale agreement (the Note Repurchase Agreement) with Wood River Capital, LLC (Wood River), an entity affiliated with Koch Disruptive Technologies, LLC, pursuant to which we repurchased from Wood River $123.9 million in aggregate capitalized principal amount (inclusive of PIK interest paid through June 30, 2024) of Convertible Senior PIK Toggle Notes due 2027, dated February 18, 2022, as amended by Amendment No.

1 to Convertible Senior PIK Toggle Notes due 2027, dated November 28, 2022 (the Convertible Note), such aggregate amount being the entire outstanding amount of the Convertible Note, for a total purchase price of $150.0 million in cash, which amount equals to the Redemption Price (as defined in the Convertible Note).

Pursuant to the Note Repurchase Agreement, all rights and obligations, covenants and agreements under the Convertible Note and the underlying note purchase agreement were satisfied and discharged.

On May 6, 2025, the Borrowers and Aspen Aerogels Georgia, LLC, a Georgia limited liability company (Aspen Georgia), entered into that certain Amendment No.

1 and Joinder to Credit, Security and Guaranty Agreement (Amendment No.

1), by and among the Borrowers, Aspen Georgia, the Agent and the Lenders party thereto, amending the MidCap Loan Facility and on December 16, 2025, the Borrowers, Aspen Georgia, and Aspen Aerogels Mexico Holdings, LLC, a Delaware limited liability company (Aspen Mexico), entered into that certain Amendment No.

2 and Joinder to Credit, Security and Guaranty Agreement (Amendment No.

2), by and among the Borrowers, Aspen Georgia, Aspen Mexico, the Agent and the Lenders party thereto, further amending the MidCap Loan Facility (the MidCap Loan Facility, as amended by Amendment No.

1 and Amendment No.

2, the Amended MidCap Loan Facility).

The Amended MidCap Loan Facility is guaranteed by Aspen Mexico and Aspen Georgia (together with the Borrowers and any future subsidiaries that are required to become guarantors or borrowers pursuant to the terms of the Credit Agreement, collectively, the Loan Parties) and is secured by a lien on substantially all existing and after-acquired assets of the Loan Parties, including the equity interest in Aspen RI, Aspen Mexico and Aspen Georgia owned by us, in each case, subject to customary exceptions.

Pursuant to Amendment No.

1, the financial covenants under the MidCap Loan Facility were amended such that (a) the minimum Liquidity (as defined in the Amended MidCap Loan Facility) which must be maintained at all times has changed from $75 million to an amount equal to the greater of (i) $50 million and (ii) 85% of the then aggregate outstanding principal amount of the Term Loan Facility and (b) the minimum EBITDA level to be tested quarterly has changed to reflect a new range from $15 million to $50 million, with the next test set at $15 million with respect to the fiscal quarter ended June 30, 2025 and a $50 million level applicable commencing with the fiscal quarter ended December 31, 2027 and thereafter.

The Liquidity amount trigger of a cash dominion event was also reduced from $100 million to an amount equal to the greater of (i) $50 million and (ii) 85% of the then aggregate outstanding principal amount of the Term Loan Facility.

Pursuant to Amendment No.

2, the financial covenants under the MidCap Loan Facility have been amended such that (a) the applicable minimum liquidity threshold (both for (i) the minimum liquidity financial covenant, which must be maintained by the Company at all times and (ii) the “Cash Dominion Event” definition for purposes of triggering cash dominion) has changed from (i) an amount equal to the greater of (x) $50 million and (y) 85% of the then aggregate outstanding principal amount of the Term Loan (as defined in the Amended MidCap Loan Facility) to (ii) an amount equal to the greater of (x) $50 million and (y) 100% of the then aggregate outstanding principal amount of the Term Loan (as defined in the Amended MidCap Loan Facility) and (b) the minimum EBITDA (as defined in the Amended MidCap Loan Facility) financial maintenance covenant has been removed entirely.

The Amended MidCap Loan Facility includes representations and warranties, affirmative covenants (including reporting obligations), negative covenants and events of default that are usual and customary for facilities of this type, in each case, subject to certain permitted exceptions as set forth therein.

In addition, the mandatory prepayment provisions were revised to make clear that any mandatory prepayment of the loans under the Amended MidCap Loan Facility made with proceeds of an asset sale will be used to reduce the Company’s required amortization payments in direct order of maturity, and the basket for making permitted acquisitions under the Amended MidCap Loan Facility was reduced.

Financial Summary

On March 16, 2022, we entered into a sales agreement for an at-the-market offering program with Cowen and Company, LLC and Piper Sandler & Co., as our sales agents (the 2022 ATM offering program).

During the year ended December 31, 2022, we sold 5,241,400 shares of our common stock through the 2022 ATM offering program and received net proceeds of $72.7 million.

The 2022 ATM offering program was terminated on June 20, 2023.

On March 28, 2022, we sold to an affiliate of Koch, 1,791,986 shares of our common stock for aggregate gross proceeds of $50.0 million, pursuant to a securities purchase agreement, dated as of February 15, 2022, by and between us and the affiliate of Koch.

On November 29, 2022, we completed an underwritten public offering of 29,052,631 shares of our common stock at a public offering price of $9.50 per share.

We received net proceeds of $267.5 million after deducting underwriting discounts and commissions of $8.1 million and offering expenses of approximately $0.5 million.

In December 2023, we sold 6,060,607 shares of our common stock at an offering price of $12.38 per share in a registered direct offering for net proceeds of $74.4 million, after deducting offering expenses of approximately $0.6 million.

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GAAP financial statements included elsewhere in this Annual Report on Form 10-K, and not to rely on any single financial measure to evaluate our business.

The following table presents a reconciliation of net loss, the most directly comparable U.S.

The following table presents a reconciliation of net income (loss), the most directly comparable U.S.

GAAP measure, to Adjusted EBITDA for the years presented:

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Income tax expense

Restructuring and demobilization costs

Loss on disposal of property, plant and equipment

Impairment of property, plant and equipment

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 and modification of restricted common stock.

The following table presents a reconciliation of net loss, the most directly comparable U.S.

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

The following table presents a reconciliation of net income (loss), the most directly comparable U.S.

GAAP measure, to Adjusted EBITDA for the quarters presented:

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Income tax expense

Restructuring and demobilization costs

Loss on disposal of property, plant and equipment

Impairment of property, plant and equipment

Adjusted EBITDA

(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, the costs associated with capacity expansions and start-up of additional production capacity, and the amount and timing of operating expenses.

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

During 2024, we experienced strong volume growth in our thermal barrier products.

As a result, we experienced total revenue growth of 90% during the year.

Our expectation for 2025 revenue is based, in part, on our OEM customers’ production volume forecasts and targets.

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 are being considered to government and economic policies, incentives, and tariffs that may impact our customers and our production, sales, cost structure and the competitive landscape.

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.

Cost-cutting initiatives adopted by our customers may result in increased downward pressure on pricing.

Accordingly, we expect thermal barrier revenues could range from a decline to moderately higher 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 improved production innovation and efficiency, will continue to benefit us.

As a result, we expect to experience a decline to no or minimal growth in net income and Adjusted EBITDA during 2025.

We also expect to incur reduced capital expenditures during 2025.

During 2025, we experienced a significant decline in volume for our thermal barrier products, primarily driven by lower North American EV production levels.

As a result, total revenue decreased by 40% compared to the prior year.

Our expectation for 2026 thermal barrier revenue is based, in part, on our OEM customers’ production forecasts.

The automotive industry in which our OEM customers operate is cyclical and is sensitive to changes in consumer demand, regulatory environments, and broader economic conditions.

EV adoption rates in certain markets have been lower than previously anticipated, influenced in part by changes in regulatory frameworks and incentive programs as well as evolving consumer demand.

OEMs have adjusted production plans and investment timelines accordingly.

These actions have resulted in revised capacity plans and re-timed EV-related investments, particularly in North America.

In addition, changes in trade policy and other macroeconomic factors have impacted both our customers and our operating environment, and we expect these conditions to continue to influence demand.

OEM customers continue to pursue cost reduction and product redesign initiatives, which may result in engineering changes to the components we supply.

Our supply agreements generally include pricing step-down provisions over the production life of a program, consistent with industry practice.

We expect thermal barrier revenues to decline in 2026, primarily due to lower anticipated production volumes.

In February 2026, there was a fire at our manufacturing facility in East Providence, Rhode Island, which damaged one of our emissions control units and rendered it inoperable.

If our remaining emissions control unit were to fail or otherwise cease to operate before the damaged unit is replaced, or if demand for our products increases materially before our damaged emissions control is replaced, we may not able to meet customer demand for our products, which could have a material adverse impact our revenue and earnings.

We expect energy industrial revenue to increase in 2026, driven by anticipated volume growth in our core petrochemical and refinery markets, project-based demand, and continued penetration into adjacent applications.

In response to these developments, we plan to continue cost reduction measures, including reduced headcount and operational efficiency initiatives.

As a result, we expect Adjusted EBITDA to decline in 2026 primarily due to lower thermal barrier revenue.

However, we expect net loss to improve relative to 2025, as the impairment recorded for the previously planned second plant in Statesboro, Georgia is not expected to recur.

We also expect capital expenditures to decrease in 2026.

We recognize revenue from the sale of our energy industrial aerogel products and thermal barriers.

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Energy industrial revenue accounted for 38%, 32%, and 54% of total revenue for the years ended December 31, 2025, 2024 and 2023, respectively.

We experienced a 90% increase in total revenue during 2024 driven by the increase in our energy industrial business, particularly in North America, and continued growth in the EV market.

We experienced a 40% decrease in total revenue during 2025 driven by the decreases in our EV business and energy industrial business, particularly in Latin and North America.

A substantial majority of our revenue is generated from a limited number of direct customers, including distributors, contractors, fabricators, OEMs, partners and end-user customers.

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Cost of Revenue

Cost of product revenue consists primarily of materials and manufacturing expense.

Cost of product revenue consists primarily of materials and manufacturing expenses.

Cost of product revenue is recorded when the related product revenue is recognized.

Material is a significant component of cost of product revenue and includes fibrous batting, silica materials and additives.

Material is a significant component of cost of product revenue and includes fibrous batting, silica materials, CO 2 and other additives.

Material costs as a percentage of product revenue were 42%, 38% and 36% for the years ended December 31, 2025, 2024 and 2023, respectively.

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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.

We expect that material costs will increase in absolute dollars during 2025 due to projected growth in product shipments and contracts but remain stable as a percentage of revenue due to improved manufacturing, and fabrication yields and a favorable mix of products sold.

We expect that material costs will decrease in absolute dollars during 2026 due to projected decline in product shipments and contracts but remain stable as a percentage of revenue due to improved manufacturing, and fabrication yields and a favorable mix of products sold.

Manufacturing expense is also a significant component of cost of revenue.

Manufacturing expense includes labor, utilities, maintenance expense, and depreciation on manufacturing assets.

Manufacturing expense also includes stock-based compensation of

manufacturing employees and shipping costs.

Manufacturing expense also includes stock-based compensation of manufacturing employees and shipping costs.

Manufacturing expense as a percentage of product revenue was 33%, 22% and 46% for the years ended December 31, 2025, 2024 and 2023, respectively.

We expect that manufacturing expense will remain relatively flat in absolute dollars, due to ongoing cost reduction efforts, and increase as a percentage of revenue during 2025 due to lower expected revenues from the thermal barrier business, including the operation of an automated fabrication facility in Monterrey, Mexico.

We expect that manufacturing expense will decline in absolute dollars, due to ongoing cost reduction efforts, and increase as a percentage of revenue during 2026 due to lower expected revenues from the thermal barrier business.

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.

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Gross profit as a percentage of total revenue was 17%, 40%, and 24% for the years ended December 31, 2025, 2024 and 2023, respectively.

In the longer term, we expect gross profit to improve in absolute dollars and as a percentage of revenue due to expected increases in total revenue, production volumes and manufacturing productivity.

In addition, we expect the gross profit improvement derived from the increases in revenue, volume and productivity will be supported by the continued implementation of lower cost product formulations and realization of material purchasing efficiencies.

During 2026, we expect gross profit to decline in absolute dollars and as a percentage of revenue due to expected decreases in total revenue and production volumes, offset partially by manufacturing productivity.

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, including our carbon aerogel battery materials.

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.

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

Sales and Marketing Expenses

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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 our general and administrative expenses to increase as we add general and administrative personnel to support the anticipated growth of our business.

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

We expect our general and administrative expenses to decrease as we continue our ongoing cost reduction measures, including reduced headcount.

Restructuring and Demobilization Costs

Restructuring and demobilization costs consists of severance and other personnel costs, and costs associated with the demobilization of our previously planned Statesboro Plant.

Loss on Disposal of Property, Plant and Equipment

During the fiscal year ended December 31, 2025, loss on disposal of property, plant and equipment consists of charges to remeasure at fair value less costs to sell the assets of our previously planned Statesboro Plant which have been classified as assets held for sale.

Impairment of Property, Plant and Equipment

During the fiscal year ended December 31, 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 the development of new and more efficient equipment.

Interest Expense, Convertible Note - Related Party

Interest expense, convertible note - related party is net of the capitalized interest related to the $100.0 million in aggregate principal amount of our Convertible Senior PIK Toggle Notes.

Interest expense, convertible note - related party is net of the capitalized interest related to the $100.0 million in aggregate principal amount of our 2022 Convertible Note.

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.

Loss on Extinguishment of Debt

On August 19, 2024, we entered into the Note Purchase Agreement, pursuant to which we repurchased from Wood River $123.9 million in aggregate capitalized principal amount (inclusive of PIK interest paid through June 30, 2024) of the 2022 Convertible Note, such aggregate amount being the entire outstanding amount of the 2022 Convertible Note, for a total purchase price of $150.0 million in cash, which amount equals to the Redemption Price (as defined in the 2022 Convertible Note).

On August 19, 2024, we entered into a note purchase and sale agreement (the Note Repurchase Agreement) with Wood River, LLC (Wood River), an entity affiliated with Koch Disruptive Technologies, LLC (Koch), pursuant to which we repurchased from Wood River $123.9 million in aggregate capitalized principal amount (inclusive of PIK interest paid through June 30, 2024) of the 2022 Convertible Note, such aggregate amount being the entire outstanding amount of the 2022 Convertible Note, for a total purchase price of $150.0 million in cash, which amount equals to the Redemption Price (as defined in the 2022 Convertible Note).

Pursuant to the Note Repurchase Agreement, all rights and obligations, covenants and agreements under the 2022 Convertible Note and the Note Purchase Agreement were satisfied and discharged.

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Income from Employee Retention Credit

Employee retention credit consists of other income related to our submitted filings for CARES Employee Retention Credits.

Employee retention credit consists of other income related to our submitted filings for employee retention credits under the Coronavirus Aid, Relief and Economic Safety Act (the Employee Retention Credits).

Provision for Income Taxes

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General and administrative

Impairment of equipment under development

Restructuring and demobilization costs

Loss on disposal of property, plant and equipment

Impairment of property, plant and equipment

Total operating expenses

3 unchanged sentences

Interest income (expense), net

Loss on extinguishment of debt

Income from Employee Retention Credits

Loss on extinguishment of debt

Total other income (expense)

12 unchanged sentences

General and administrative

Restructuring and demobilization costs

Loss on disposal of property, plant and equipment

Impairment of equipment under development

3 unchanged sentences

Interest expense, convertible note - related party

Interest income, net

Interest expense, net

Loss on extinguishment of debt

Income from Employee Retention Credits

Total other income (expense)

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Total revenue

Total revenue increased $214.0 million, or 90%, to $452.7 million in 2024 from $238.7 million in 2023.

The increase in total revenue was the result of increases in both energy industrial and thermal barrier revenue.

Energy industrial revenue increased by $17.3 million, or 13%, to $145.9 million in 2024 from $128.6 million in 2023.

This increase was driven by a more favorable mix of product shipments in the global petrochemical and refinery markets, particularly in North America, Latin America, and Europe, offset, in part, by a decrease in maintenance-based demand in the global petrochemical and refinery markets in Asia and project-based demand in the subsea market.

Total revenue decreased $181.6 million, or 40%, to $271.1 million in 2025 from $452.7 million in 2024.

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

Energy industrial revenue decreased by $43.7 million, or 30%, to $102.2 million in 2025 from $145.9 million 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 years ended December 31, 2025 and 2024 included $24.1 million and $28.8 million in sales to Distribution, respectively.

The average selling price per square foot of our products increased by $0.58, or 13%, to $5.11 per square foot for the year ended December 31, 2024, from $4.53 per square foot for the year ended December 31, 2023.

The increase in average selling price reflected the impact of price increases enacted in 2024 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 approximately $16.6 million for the year ended December 31, 2024.

In volume terms, product shipments increased by 0.1 million square feet, or 1%, to 28.5 million square feet of aerogel products for the year ended December 31, 2024, as compared to 28.4 million square feet in the year ended December 31, 2023.

The increase in product volume had the effect of increasing product revenue by approximately $0.7 million for the year ended December 31, 2024.

Thermal barrier revenue was $306.8 million for the year ended December 31, 2024, as compared to $110.1 million for the year ended December 31, 2023.

The average selling price per square foot of our products decreased by $0.16, or 3%, to $4.95 per square foot for the year ended December 31, 2025, from $5.11 per square foot for the year ended December 31, 2024.

The decrease in average selling price reflected a change in the mix of products sold.

This decrease in average selling price had the effect of decreasing product revenue by approximately $3.3 million for the year ended December 31, 2025.

In volume terms, product shipments decreased by 7.9 million square feet, or 28%, to 20.6 million square feet of aerogel products for the year ended December 31, 2025, as compared to 28.5 million square feet for the year ended December 31, 2024.

The decrease in product volume had the effect of decreasing product revenue by approximately $40.4 million for the year ended December 31, 2025.

Thermal barrier revenue decreased by $137.9 million, or 45%, to $168.9 million in 2025 from $306.8 million in 2024.

Thermal barrier revenue for the year ended December 31, 2025 included $160.3 million to a major U.S.

automotive OEM and $5.9 million to a major Asian automotive OEM.

automotive OEM.

Thermal barrier revenue for the year ended December 31, 2024 included $291.2 million to a major U.S.

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Total cost of revenue

Total cost of revenue increased $88.0 million, or 48%, to $269.8 million in 2024 from $181.8 million in 2023.

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

Total cost of revenue decreased $44.7 million, or 17%, to $225.1 million in 2025 from $269.8 million in 2024 driven by declines in both thermal barrier and energy industrial cost of revenues.

Energy industrial cost of revenue decreased $22.4 million, or 26%, to $65.0 million from $87.4 million in the comparable period in 2024.

The $7.1 million decrease was the result of a $20.1 million decrease in manufacturing and other operating costs and a $13.0 million increase in material costs from the comparable period in 2023.

The decrease in manufacturing and other operating costs and

increase in material costs was the result of lower volume of energy industrial products manufactured at our plant as we move manufacturing to the external manufacturing facility.

Thermal barrier cost of revenue increased $95.1 million to $182.4 million as compared to $87.3 million in the comparable period in 2023.

The $95.1 million increase was the result of a $23.6 million increase in manufacturing costs and a $71.5 million increase in material costs resulting from the increase in volume from the comparable period in 2023.

The $22.4 million decrease was the result of a $13.7 million decrease in material costs and an $8.7 million decrease in manufacturing and other operating costs due to lower volume in comparison to the same period in 2024.

Thermal barrier cost of revenue decreased $22.3 million to $160.1 million as compared to $182.4 million in the comparable period in 2024.

The $22.3 million decrease was the result of a $44.4 million decrease in material cost, partially offset by accelerated depreciation of $22.1 million on certain assets whose useful lives were lowered to align utilization with revised expected demand.

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

Year Ended December 31,

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Total gross profit

Gross profit increased $126.0 million, or 221%, to $182.9 million in 2024 from $56.9 million in 2023.

The increase in gross profit was the result of the $214.0 million increase in total revenue, partially offset by the $88.0 million increase in total cost of revenue.

The increase in total cost of revenue was principally driven by the increase in material costs due to higher volume and overhead costs and additional resources to support our expected higher run-rate revenue in future periods for both our energy industrial and thermal barrier products.

Gross profit decreased $136.9 million, or 75%, to $46.0 million in 2025 from $182.9 million in 2024.

The decrease in gross profit was the result of the $181.6 million decrease in total revenue, partially offset by the $44.7 million decrease in total cost of revenue.

Research and Development Expenses

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Research and development expenses

Research and development expenses increased by $1.7 million, or 10%, to $18.1 million in 2024 from $16.4 million in 2023.

The $1.7 million increase was the result of increases in compensation and related costs of $1.0 million, depreciation and facility related expenses of $0.3 million, utilities expenses of $0.2 million, and other expenses of $0.2 million.

Research and development expenses as a percentage of total revenue decreased to 4% during the year ended December 31, 2024 from 7% in the comparable period in 2023 primarily due to the 90% increase in revenue from the comparable period in 2023.

Research and development expenses decreased by $4.7 million, or 26%, to $13.4 million in 2025 from $18.1 million in 2024.

The $4.7 million decrease was the result of decreases in compensation and related costs of $4.4 million, driven by a headcount reduction, operating supplies and equipment of $0.4 million, and professional fees of $0.2 million, partially offset by an increase in other expenditures of $0.3 million.

Research and development expenses as a percentage of total revenue increased to 5% during the year ended December 31, 2025 from 4% in the comparable period in 2024 primarily due to the 40% decrease in revenue from the comparable period in 2024.

Sales and Marketing Expenses

2 unchanged sentences

Sales and marketing expenses

Sales and marketing expenses increased by $2.7 million, or 8%, to $35.7 million in 2024 from $33.0 million in 2023.

The increase was the result of increases in depreciation and facility related expenses of $0.7 million, travel related expenses of $0.7 million, compensation and related costs of $0.6 million, utilities expenses of $0.4 million, and other expenses of $0.3 million.

Sales and marketing expenses as a percentage of total revenue decreased to 8% in 2024 from 14% in 2023 primarily due to the 90% increase in revenue from the comparable period in 2023.

Sales and marketing expenses decreased by $7.5 million, or 21%, to $28.2 million in 2025 from $35.7 million in 2024.

The decrease was the result of decreases in compensation and related costs of $5.2 million, driven by a headcount reduction, employee-related expenses of $1.0 million, marketing expenses of $0.6 million, operating supplies and equipment of $0.5 million, and other expenditures of $0.2 million.

Sales and marketing expenses as a percentage of total revenue increased to 10% in 2025 from 8% in 2024 primarily due to the 40% decrease in revenue from the comparable period in 2024.

General and Administrative Expenses

2 unchanged sentences

General and administrative expenses

General and administrative expenses increased by $14.3 million, or 25%, to $71.1 million in 2024 from $56.8 million in 2023.

The $14.3 million increase was the result of additional staffing costs combined with increases in compensation and related costs of $5.6 million, foreign currency transaction losses of $3.4 million, insurance costs of $2.7 million, utilities expenditures of $2.3 million, and other costs of $0.3 million.

Compensation and related costs include $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 16% in 2024 from 24% in 2023 primarily due to the 90% increase in revenue from the comparable period in 2023.

Impairment of Equipment Under Development

The $3.5 million 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.

General and administrative expenses decreased by $15.3 million, or 22%, to $55.8 million in 2025 from $71.1 million in 2024.

The $15.3 million decrease was the result of decreases in compensation and related costs of $15.9 million, driven by a headcount reduction, employee-related expenses of $0.7 million, foreign currency transaction losses of $2.4 million and professional fees of $1.6 million, partially offset by an increase in bad debt expense of $3.3 million, utilities expenses of $1.7 million and other expenditures of $0.3 million.

Compensation and related costs for the year ended December 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 increased to 21% in 2025 from 16% in 2024 primarily due to the 40% decrease in revenue from the comparable period in 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.

During each of the three months ended June 30, 2025, September 30, 2025 and December 31, 2025, we announced further headcount reductions to realign our operations and to improve costs.

Restructuring and demobilization costs for the year ended December 31, 2025 include

severance and other personnel costs of $8.2 million, facility closures and other costs associated with demobilization of $3.1 million and a write off of deferred financing costs of $6.2 million incurred in connection with pursuing financing for the construction of the Statesboro Plant.

We did not incur restructuring and demobilization costs for the year ended December 31, 2024.

Loss on Disposal of Property, Plant and Equipment

Loss on disposal of property, plant and equipment consists of $18.2 million in charges to remeasure at fair value less costs to sell the assets of our previously planned Statesboro Plant which have been classified as assets held for sale.

Impairment of property, plant and equipment

Impairment of property, plant and equipment costs increased $287.7 million, to $291.2 million, for the year ended December 31, 2025 from $3.5 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 $4.6 million incurred on research and development equipment and construction in progress that are no longer needed due to lower forecasted demand in the Thermal Barrier business.

Impairment of $3.5 million for the comparable period in 2024 was the result of a charge for impairment of assets due to obsolescence following development of new and more efficient equipment.

Other Income (Expense), net

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Interest expense, related party

Interest income (expense), net

Interest expense, net

Loss on extinguishment of debt

Income from Employee Retention Credits

Total other income (expense), net

Other income (expense), net decreased by $42.8 million to $39.4 million in 2024 from $3.4 million in 2023.

The $42.8 million increase was the result of a $27.5 million loss on extinguishment of debt, $6.1 million net impact of capitalized interest relating to our Convertible Note in the comparable period in 2023, $1.8 million of deferred financing costs related to the GM Loan Agreement (which was terminated on August 16, 2024), a $2.2 million income from Employee Retention Credits in the comparable period in 2023 not repeated in 2024, a $0.9 million decrease of interest income, and a $4.3 million increase of interest expense.

The $7.6 million decrease in interest expense, related party for the year ended December 31, 2025 is the result of the repurchase of the 2022 Convertible Note in August 2024.

The $6.3 million increase in interest expense, net for the year ended December 31, 2025 is the result of a $9.9 million increase in interest expense from the Amended 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 (the GM Loan Agreement) during the three months ended March 31, 2024 which did not repeat during the comparable period, and an increase in interest income of $1.8 million.

The $27.5 million loss on extinguishment of debt for the year ended December 31, 2025 is the result of the repayment of the 2022 Convertible Note in August 2024.

The $1.8 million increase in other income for the year ended December 31, 2025 is primarily due to a $1.1 million legal settlement payment to us.

Income Tax Expense

The $1.7 million of income tax expense for the year ended December 31, 2024 is related to our maquiladora operations in Mexico.

We did not incur income tax expense for the comparable period in 2023.

The $2.4 million of income tax expense for the year ended December 31, 2025 consists of $2.1 million relating to our maquiladora operations in Mexico and a provision for state income taxes of $0.3 million.

We incurred $1.7 million of income tax expense related to our maquiladora operations in Mexico for the comparable period in 2024.

Year ended December 31, 2024 compared to year ended December 31, 2023

10 unchanged sentences

General and administrative

Impairment of equipment under development

Total operating expenses

Loss from operations

Income (loss) from operations

Other income (expense)

Interest expense, convertible note - related party

Interest income (expense), net

Gain on extinguishment of debt

Interest income, net

Loss on extinguishment of debt

Income from Employee Retention Credits

Total other income (expense)

Income tax expense

Net income (loss)

Year Ended December 31,

6 unchanged sentences

Energy industrial revenue increased by $17.3 million, or 13%, to $145.9 million in 2024 from $128.6 million in 2023.

This increase was driven by a more favorable mix of product shipments in the global petrochemical and refinery markets, particularly in Latin America, project-based demand in the subsea market, offset, in part, by a decrease in maintenance-based demand in the global petrochemical and refinery markets in North America, Europe, and Asia.

Energy industrial revenue for the years ended December 31, 2023 and 2022, included $33.6 million and $39.3 million in sales to Distribution International, Inc., respectively.

Energy industrial revenue for the years ended December 31, 2024 and 2023 included $28.8 million and $33.6 million in sales to Distribution, respectively.

The increase in average selling price reflected the impact of price increases enacted in 2023 and a change in the mix of products sold, as we strive to maximize capacity in our aerogel manufacturing facility.

The increase in average selling price reflected the impact of price increases enacted in 2024 and a change in the mix of products sold, as we strived to maximize capacity in our aerogel manufacturing facility.

This increase in average selling price had the effect of increasing product revenue by approximately $16.6 million for the year ended December 31, 2024.

In volume terms, product shipments decreased by 4.2 million square feet, or 13%, to 28.4 million square feet of aerogel products for the year ended December 31, 2023, as compared to 32.6 million square feet in the year ended December 31, 2022.

The decrease in product volume had the effect of decreasing product revenue by approximately $16.1 million for the year ended December 31, 2023.

The increase in product volume had the effect of increasing product revenue by approximately $0.7 million for the year ended December 31, 2024.

Thermal barrier revenue was $306.8 million for the year ended December 31, 2024, as compared to $110.1 million for the year ended December 31, 2023.

15 unchanged sentences

Energy industrial cost of revenue decreased $7.1 million, or 7%, to $87.4 million from $94.5 million in the comparable period in 2023.

The $11.5 million decrease was the result of a $11.4 million decrease in material costs and a $0.1 million decrease in manufacturing and other operating costs from the comparable period in 2022.

The decrease in material costs was the result of the lower revenue volume from the comparable period in 2022, and lower raw material costs in 2023 compared to 2022.

The $7.1 million decrease was the result of a $20.1 million decrease in manufacturing and other operating costs and a $13.0 million increase in material costs from the comparable period in 2023.

The decrease in manufacturing and other operating costs and increase in material costs was the result of lower volume of energy industrial products manufactured at our plant as we moved manufacturing to the external manufacturing facility.

Thermal barrier cost of revenue increased $95.1 million to $182.4 million as compared to $87.3 million in the comparable period in 2023.

The $17.9 million increase was the result of a $5.8 million increase in material costs and a $12.1 million increase in manufacturing costs.

The increase in material costs was the result of the increase in revenue volume from the comparable period in 2022, offset by lower raw material prices in 2023 compared to 2022.

The increase in manufacturing costs was driven by increases in depreciation and facility costs of $7.1 million and utilities expenses of $3.3 million and other manufacturing and operating costs of $1.7 million.

Year Ended December 31,

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The increase in gross profit was the result of the $214.0 million increase in total revenue, partially offset by the $88.0 million increase in total cost of revenue.

The increase in total cost of revenue was principally driven by the increase in overhead costs and additional resources to support our expected higher run-rate revenue in future periods for both our energy industrial and thermal barrier products.

Research and Development Expenses

2 unchanged sentences

Research and development expenses

Research and development expenses decreased by $0.5 million, or 3%, to $16.4 million in 2023 from $16.9 million in 2022.

The $0.5 million decrease was the result of decreases in professional fees of $1.5 million, operating material and supplies costs of $0.7 million, compensation and related costs of $0.6 million, partially offset by an increase in depreciation and facility related expenses of $2.1 million and other research and development expenses of $0.2 million.

Research and development expenses as a percentage of total revenue decreased to 7% during the year ended December 31, 2023 from 9% in the comparable period in 2022, primarily due to the decrease in professional fees.

Research and development expenses increased by $1.7 million, or 10%, to $18.1 million in 2024 from $16.4 million in 2023.

Sales and Marketing Expenses

3 unchanged sentences

Sales and marketing expenses increased by $2.7 million, or 8%, to $35.7 million in 2024 from $33.0 million in 2023.

The increase was the result of increases in depreciation and facility related expenses of $2.9 million and compensation and related costs of $2.1 million, partially offset by a decrease in operating material and supplies costs of $0.8 million.

Sales and marketing expenses as a percentage of total revenue decreased to 8% in 2024 from 14% in 2023 primarily due to the 90% increase in revenue from the comparable period in 2023.

4 unchanged sentences

General and administrative expenses increased by $14.3 million, or 25%, to $71.1 million in 2024 from $56.8 million in 2023.

The $18.3 million increase was the result of increases in compensation and related costs of $15.3 million and professional fees of $3.6 million, offset by a decrease in other costs of $0.6 million.

General and administrative expenses as a percentage of total revenue increased to 24% in 2023 from 21% in 2022 primarily due to increased expenditures associated with the growth in our human resource, finance, information technology and general management organizations in preparation for the anticipated growth in our business.

Compensation and related costs included a $2.0 million charge from the cancellation of the unearned performance-based restricted shares.

General and administrative expenses as a percentage of total revenue decreased to 16% in 2024 from 24% in 2023 primarily due to the 90% increase in revenue from the comparable period in 2023.

Impairment of Property, Plant and Equipment

The $3.5 million impairment of property, plant and equipment for the year ended December 31, 2024 was the result of a charge for impairment of assets due to obsolescence following development of new and more efficient equipment.

Other Income (Expense), net

3 unchanged sentences

Interest expense, related party

Interest income, net

Interest income (expense), net

Loss on extinguishment of debt

Income from Employee Retention Credits

Total other income (expense), net

Other income (expense), net increased by $6.9 million to $3.4 million in 2023 from $(3.5) million in 2022.

The $6.9 million increase was the result of $4.9 million of interest income, $2.2 million of Employee Retention Credits and a $(0.2) million net impact of capitalized interest relating to our Convertible Note in the comparable period in 2022.

Other income (expense), net decreased by $42.8 million to $39.4 million in 2024 from $3.4 million in 2023.

The $42.8 million increase was the result of a $27.5 million loss on extinguishment of debt, $6.1 million net impact of capitalized interest relating to our 2022 Convertible Note in the comparable period in 2023, $1.8 million of deferred financing costs related to the GM Loan Agreement (which was terminated on August 16, 2024), $2.2 million of income from Employee Retention Credits in the comparable period in 2023 not repeated in 2024, a $0.9 million decrease of interest income, and a $4.3 million increase of interest expense.

Income Tax Expense

The $1.7 million of income tax expense for the year ended December 31, 2024 was related to our maquiladora operations in Mexico.

We did not incur income tax expense for the comparable period in 2023.

Liquidity and Capital Resources

1 unchanged sentence

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.

Accordingly, we have ceased construction at our previously planned second manufacturing plant in Statesboro, Georgia.

On October 16, 2024, we announced that the U.S.

Department of Energy (DOE) Loan Programs Office provided us a conditional commitment for a proposed loan of up to $670.6 million (the Loan) under the Advanced Technology Vehicles Manufacturing loan program within DOE’s Loan Programs Office (LPO) for financing the construction of our previously planned second aerogel manufacturing facility (the Statesboro Plant) in Statesboro, Georgia.

On February 12, 2025, we announced that we had stopped construction on the Statesboro Plant and are demobilizing the project.

In connection with the demobilization, we are no longer pursuing our application for the Loan from the DOE’s LPO and have withdrawn from the Loan application process.

During the year ended December 31, 2022, we sold 5,241,400 shares of our common stock through the 2022 ATM offering program and received net proceeds of $72.7 million.

On November 29, 2022, we completed an underwritten public offering of 29,052,631 shares of our common stock at a public offering price of $9.50 per share.

We received net proceeds of $267.5 million after deducting underwriting discounts and commissions of $8.1 million and offering expenses of approximately $0.5 million.

In February 2022, we sold and issued to an affiliate of Koch $100.0 million in aggregate principal amount of our Convertible Senior PIK Toggle Notes.

In addition, in March 2022, pursuant to a securities purchase agreement dated February 15, 2022, we sold to an affiliate of Koch 1,791,986 shares of our common stock, at a price of $27.902 per share, for net proceeds of $49.9 million after deducting fees and offering expenses of $0.1 million.

On December 19, 2023, we entered into a securities purchase agreement with certain institutional investors named therein, pursuant to which we issued and sold, in a registered direct offering directly to the Investors an aggregate of 6,060,607 shares of our common stock at an offering price of $12.38 per share.

We received net proceeds of $74.4 million, after deducting offering expenses of approximately $0.6 million.

In November 2022, we entered into a loan agreement (the GM Loan Agreement) with General Motors Holdings LLC (GM), an entity affiliated with General Motors LLC, which provides for a multi-draw senior secured term loan (the GM Loan) in an aggregate principal amount of up to $100.0 million, available to the Company on a delayed draw basis beginning January 1, 2023 to September 30, 2023, subject to certain conditions precedent to funding.

In September 2023, we amended the GM Loan Agreement to (i) extend the draw period for the delayed GM Loan to a period beginning on the date that is twelve months prior to the date agreed upon by the Company and GM for the start of production at the Statesboro Plant and ending on March 31, 2024 (or any later date approved in writing by GM at its sole discretion);

(ii) extend the maturity date of the GM Loan from March 31, 2025 to September 30, 2025;

and (iii) add financial covenants measured starting from the fiscal quarter ending December 31, 2024 and at the end of each fiscal quarter thereafter.

We did not draw on the GM Loan.

On August 16, 2024, we and GM entered into a termination letter (the GM Termination Letter) to terminate and payoff in full all obligations outstanding under the GM Loan Agreement.

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

The MidCap Loan Facility under the Credit Agreement is comprised of (i) the Term Loan Facility in an aggregate principal amount of $125.0 million and (ii) the Revolving Facility in an aggregate principal amount not to exceed the lesser of $100.0 million and the value of the Borrowing Base (as defined in the Credit Agreement).

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

The Amended MidCap Loan Facility under the Credit Agreement is comprised of (i) the Term Loan Facility in an aggregate principal amount of $125.0 million and (ii) the Revolving Facility in an aggregate principal amount not to exceed the lesser of $100.0 million and the value of the Borrowing Base (as defined in the Credit Agreement).

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.

In October 2024, we entered into the Underwriting Agreement with the Underwriters, pursuant to which we issued and sold an aggregate of 4,887,500 shares of our common stock, which included 637,500 shares pursuant to the Underwriters’ option to purchase additional shares of our common stock, to the Underwriters in the Offering.

In October 2024, we entered into an underwriting agreement with Goldman Sachs & Co.

LLC and Morgan Stanley & Co.

LLC (the Underwriters), pursuant to which we issued and sold an aggregate of 4,887,500 shares of our common stock, which included 637,500 shares pursuant to the Underwriters’ option to purchase additional shares of our common stock, to the Underwriters in an underwritten registered direct offering (the Offering).

The price to the public in the Offering was $20.00 per share.

The net proceeds to us from the Offering were approximately $93.2 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

The net proceeds to us from the Offering were approximately $93.2 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

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 December 31, 2024 cash and cash equivalents balance of $220.9 million will be sufficient to support current operating requirements, current research and development activities and the initial capital expenditures required to support the evolving commercial opportunities in the EV market and other strategic business opportunities for at least the next twelve months.

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 December 31, 2025 cash and cash equivalents balance of $156.9 million will be sufficient to support current operating requirements, current research and development activities and capital expenditures required to support our existing business in the energy industrial and EV markets for at least 12 months from the date of this Annual Report on Form 10-K.

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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Operating Activities

During 2024, we provided $45.5 million in net cash from operating activities, as compared to the use of $42.6 million in net cash during 2023, a decrease in the use of cash of $88.2 million.

During 2025, we generated $32.9 million in net cash from operating activities, as compared to the generation of $45.5 million in net cash during 2024, a decrease in cash provided by operations of $12.6 million.

This decrease in the cash provided by operations was the result of a decrease in net income adjusted for non-cash items of $112.1 million, offset by a decrease in cash used by changes in working capital of $99.5 million.

During 2024, we generated $45.5 million in net cash from operating activities, as compared to the use of $42.6 million in net cash during 2023, a decrease in the use of cash of $88.2 million.

This decrease in the use of cash was the result of net income adjusted for non-cash items of $108.0 million, and a decrease in cash used by changes in working capital of $19.8 million.

During 2023, we used $42.6 million in net cash in operating activities, as compared to the use of $94.4 million in net cash during 2022, a decrease in the use of cash of $51.8 million.

This decrease in the use of cash was the result of the decrease in net loss adjusted for non-cash items of $44.8 million, and a decrease in cash used by changes in working capital of $7.0 million.

Investing Activities

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 engineering designs for the planned aerogel manufacturing facility in Statesboro, Georgia.

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 2025 and 2024 totaled $37.4 million and $86.3 million, respectively.

Financing Activities

net of issuance costs, offset by $150.0 million in cash used for the repayment of the convertible note, $6.5 million in cash used for repayments from the term loan, $1.3 million in cash used for payments made for employee tax withholdings associated with the vesting of restricted stock units, and $0.9 million in repayments of a sales leaseback.

Net cash provided by financing activities in 2023 totaled $75.5 million and consisted of net proceeds from the registered direct offering of common stock of $74.2 million and $1.7 million in proceeds from employee stock option exercises, offset, in part, by $0.4 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 in 2025 totaled $58.1 million and consisted of $28.0 million in cash used for the repayment of the Revolving Facility, $26.0 million for the repayment of the Term Loan Facility, $5.2 million in repayments of the finance obligation under the sale and leaseback transaction, $0.8 million for payments made for employee tax withholdings associated with the

vesting of RSUs, which were partially offset by proceeds of $1.7 million from employee stock option exercises, $0.2 million in proceeds from employee stock purchase plan purchases and less than $0.1 million in cash used for fees and issuance costs.

Net cash provided by financing activities in 2024 totaled $122.0 million and consisted of $14.9 million in proceeds from a sales leaseback, $10.4 million in proceeds from employee stock option exercises, $120.1 million in proceeds from the Term Loan, net of issues costs, and $42.1 in proceeds from the revolving line of credit, net of issuance costs, $93.2 million in proceeds from the registered direct offering of common stock, net of issuance costs, partially offset by $150.0 million in cash used for the repayment of the 2022 Convertible Note, $6.5 million in cash used for repayments from the Term Loan Facility, $1.3 million in cash used for payments made for employee tax withholdings associated with the vesting of RSUs, and $0.9 million in repayments of a sales leaseback.

Capital Spending and Future Capital Requirements

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As of December 31, 2025, we had capital commitments of approximately $12.3 million, which included commitments for which we have entered into contracts as well as commitments authorized by our Board of Directors.

These commitments relate to the enhancement of our existing production lines in our East Providence facility and our fabrication operation in Mexico, and the previously planned aerogel manufacturing facility in Statesboro, Georgia and consist primarily of costs for equipment and construction.

As indicated in the overview of the liquidity and capital resources section, 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 Aspen’s Energy Industrial segment and are capable of delivering increased aerogel production capacity.

Accordingly, we have ceased construction at our previously planned second manufacturing plant in Statesboro, Georgia.

In the meantime, we expect to be able to substantially reduce our planned capital expenditures for 2025.

We intend to fund capital expenditures related to the expansion of capacity of our existing manufacturing facility with our existing cash balance and anticipated cash flows from operations.

We plan to fund the capital expenditures required to build a carbon aerogel battery materials facility, with additional equity financings, debt financings, equipment leasing, sale-leaseback transactions, customer prepayments, government grant and loan programs or credit facilities.

These commitments relate to the enhancement of our existing production lines in our East Providence facility and our fabrication operation in Mexico, and consist primarily of costs for equipment.

As indicated in the overview of the liquidity and capital resources section, 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 supports our Energy Industrial segment and are capable of delivering increased aerogel production capacity.

Accordingly, we expect to be able to substantially reduce our planned capital expenditures for 2026.

We intend to fund capital expenditures related to additional productivity improvements in our manufacturing facility with our existing cash balance and anticipated cash flows from operations.

Contractual Obligations and Commitments

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Monterrey, Mexico;

and Pawtucket, Rhode Island for research, administrative, fabrication, and warehousing purposes under leases expiring between March 31, 2025 and April 30, 2034.

and Pawtucket, Rhode Island for research, administrative, fabrication, and warehousing purposes under leases expiring between July 31, 2026 and April 30, 2034.

See “Item 2 — Properties.” We also lease vehicles and equipment under non-cancelable operating leases that expire at various dates.

Thermal Barrier Contract

We are party to production contracts with GM, to supply fabricated, multi-part thermal barriers, or Barriers, for use in the battery system of its next-generation EVs, or Contracts.

Pursuant to the Contracts, we are obligated to supply Barriers at fixed annual prices and at volumes to be specified by the OEM up to a daily maximum quantity through the respective terms of the agreements, which expire at various times from 2026 through 2034.

While the OEM has agreed to purchase its requirement for Barriers for locations to be designated from time to time by the OEM, it has no obligation to purchase any minimum quantity of Barriers under the

We are party to production contracts with GM to supply fabricated, multi-part thermal barriers (the Barriers) for use in the battery system of its current and next-generation EVs (the Contracts).

In addition, the OEM may terminate the Contracts any time and for any or no reason.

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MidCap Loan Facility

On August 19, 2024, we and Aspen RI entered into the Credit Agreement, by and among the Borrowers, the Agent, MidCap Financial Trust, as term loan servicer, the Lenders, and the other parties party thereto as additional guarantors and/or borrowers from time to time.

The proceeds of the MidCap Loan Facility have been used in connection with the transaction contemplated by the Note Repurchase Agreement, the payment of related fees and expenses and for working capital of the Company and its subsidiaries.

Loans borrowed under the MidCap Loan Facility mature on August 19, 2029.

The MidCap Loan Facility is comprised of (i) the Term Loan Facility in an aggregate principal amount of $125.0 million and (ii) the Revolving Facility in an aggregate principal amount not to exceed the lesser of (A) $100.0 million and (B) the value of the borrowing base (defined as the sum of (x) 85% of certain eligible accounts of the Borrowers and (y) the lesser of 85% of the NOLV or 85% of the cost of certain eligible inventory of the Borrowers).

Loans borrowed under the Revolving Facility will bear an interest rate equal to Term SOFR plus 4.60% per year, subject to a Term SOFR floor of 2.50%.

The Revolving Facility has a required minimum balance set at 30% of the average borrowing base during the immediate preceding month.

The Borrowers will have the right to prepay the loans outstanding under the MidCap Loan Facility (or, with respect to the Revolving Facility, terminate the commitments thereunder), subject to a premium equal to 3.0% of the amount prepaid or terminated, as applicable, during the first year after the closing date, which premium will be decreased to 2.0% during the second year after the closing date and to 1.0% thereafter.

On August 19, 2024, we and Aspen RI entered into the Credit Agreement and the facilities provided thereunder, by and among the Borrowers, the Agent, the Term Loan Servicer, the Lenders, and the other parties party thereto as additional guarantors and/or borrowers from time to time.

The proceeds of the MidCap Loan Facility were used to repurchase our outstanding convertible note that was issued to Wood River, an entity affiliated with Koch, the payment of related fees and expenses and for working capital.

Loans borrowed under the Amended MidCap Loan Facility mature on August 19, 2029.

On May 6, 2025, the Borrowers and Aspen Georgia entered into Amendment No.

1, by and among the Borrowers, Aspen Georgia, the Agent and the Lenders party thereto, amending the MidCap Loan Facility, and on December 16, 2025, the Loan Parties

entered into Amendment No.

2, by and among the Loan Parties, the Agent, the Term Loan Servicer, and the Lenders party thereto, which amends that certain Credit, Security and Guaranty Agreement, dated as of August 19, 2024, by and among the Credit Parties, the Agent, the Term Loan Servicer, the Lenders, and the other parties party thereto as additional guarantors and/or borrowers from time to time.

The Amended MidCap Loan Facility is guaranteed by Aspen Mexico and Aspen Georgia and is secured by a lien on substantially all existing and after-acquired assets of the Loan Parties, including the equity interest in Aspen RI, Aspen Mexico and Aspen Georgia owned by us, in each case, subject to customary exceptions.

Pursuant to Amendment No.

1, the financial covenants under the MidCap Loan Facility were amended such that (a) the minimum Liquidity (as defined in the Amended MidCap Loan Facility) which must be maintained at all times has changed from $75 million to an amount equal to the greater of (i) $50 million and (ii) 85% of the then aggregate outstanding principal amount of the Term Loan Facility and (b) the minimum EBITDA level to be tested quarterly has changed to reflect a new range from $15 million to $50 million, with the next test set at $15 million with respect to the fiscal quarter ended March 31, 2026 and a $50 million level applicable commencing with the fiscal quarter ended December 31, 2027 and thereafter.

In addition, the Amended MidCap Loan Facility includes representations and warranties, affirmative covenants (including reporting obligations), negative covenants and events of default that are usual and customary for facilities of this type, in each case, subject to certain permitted exceptions as set forth therein.

Pursuant to Amendment No.

2, the financial covenants under the MidCap Loan Facility have been amended such that (a) the applicable minimum liquidity threshold (both for (i) the minimum liquidity financial covenant, which must be maintained by the Company at all times and (ii) the “Cash Dominion Event” definition for purposes of triggering cash dominion) has changed from (i) an amount equal to the greater of (x) $50 million and (y) 85% of the then aggregate outstanding principal amount of the Term Loan (as defined in the Amended MidCap Loan Facility) to (ii) an amount equal to the greater of (x) $50 million and (y) 100% of the then aggregate outstanding principal amount of the Term Loan and (b) the minimum EBITDA (as defined in the Amended MidCap Loan Facility) financial maintenance covenant has been removed entirely.

In addition, the mandatory prepayment provisions were revised to make clear that any mandatory prepayment of the loans under the MidCap Loan Facility made with proceeds of an asset sale will be used to reduce the Company’s required amortization payments in direct order of maturity, and the basket for making permitted acquisitions under the MidCap Loan Facility was reduced.

Convertible Note - Related Party

On August 19, 2024, we entered into the Note Repurchase Agreement with Wood River, pursuant to which we repurchased from Wood River the Convertible Note), such aggregate amount being the entire outstanding amount of the Convertible Note, for a total purchase price of $150.0 million in cash, which amount equals to the Redemption Price (as defined in the Convertible Note).

On August 19, 2024, we entered into the Note Repurchase Agreement with Wood River, pursuant to which we repurchased from Wood River $123.9 million in aggregate capitalized principal amount of the 2022 Convertible Note, such aggregate amount being the entire outstanding amount of the 2022 Convertible Note, for a total purchase price of $150.0 million in cash, which amount equals to the Redemption Price (as defined in the 2022 Convertible Note).

Pursuant to the Note Repurchase Agreement, all rights and obligations, covenants and agreements under the 2022 Convertible Note and the underlying note purchase agreement were satisfied and discharged.

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Recently Issued Accounting Standards

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies.

Recently issued standards typically do not require adoption until a future effective date.

Prior to their effective date, the Company evaluates the pronouncements to determine the potential effects of adoption to its consolidated financial statements.

Prior to their effective date, we evaluate the pronouncements to determine the potential effects of adoption to our consolidated financial statements.

Standards Implemented Since December 31, 2024

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-07 Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures to enhance disclosures about significant segment expenses.

This ASU is effective for our fiscal year 2024 and interim periods in fiscal year 2025.

Standards to be Implemented

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures that requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.

This ASU is effective for our fiscal year 2025.

Early adoption is permitted.

We are currently evaluating income tax disclosures related to our annual report for fiscal year 2025.

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures (ASU 2023-09) that requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures including additional information about income taxes paid.

Topic 740 is effective for fiscal year 2025.

Effective January 1, 2025, we adopted ASU 2023-09 on a prospective basis.

See Note (17) to the consolidated financial statements for more information.

Standards to be Implemented After December 31, 2025

Although there are several other new accounting pronouncements issued by the FASB, we do not believe any of these accounting pronouncements had or will have a material impact on our consolidated financial statements.

We believe that the impact of recently issued accounting standards that are not yet effective will not have a material impact on our consolidated financial statements.

Critical Accounting Policies and Estimates

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See Note (2) to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information about these critical accounting policies, as well as a description of our other significant accounting policies.

Revenue Recognition

We recognize revenue from the sale of our energy industrial aerogel products and thermal barriers.

Revenue is recognized upon the satisfaction of contractual performance obligations.

Products are typically delivered without significant post-sale obligations to customers other than standard warranty obligations for product defects.

We provide warranties for our products and record the estimated cost within cost of sales in the period that the revenue is recorded.

Our standard warranty period extends one to two years from the date of shipment, depending on the type of product purchased.

Our warranties provide that our products will be free from defects in material and workmanship, and will, under normal use, conform to the specifications for the product.

We recorded warranty expense of $1.4 million during the year ended December 31, 2024.

We recorded warranty expense of $0.5 million and $0.2 million during the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2024, we had satisfied all outstanding warranty claims.

Stock-based Compensation

We maintain an equity incentive plan pursuant to which our Board of Directors may grant qualified and nonqualified stock options, restricted stock, restricted stock units and other stock-based awards to board members, officers, key employees and others who provide or have provided service to us.

We maintain an equity incentive plan pursuant to which our Board of Directors may grant qualified and nonqualified stock options, restricted stock, RSUs and other stock-based awards to board members, officers, key employees and others who provide or have provided service to us.

We measure the costs associated with stock-based awards based on their estimated fair value at date of grant.

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The following assumptions were used to estimate the fair value of the option awards:

Year Ended December 31,

Weighted-average assumptions:

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Expected volatility

Risk free rate

Risk free interest rate

Expected dividend yield

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We based the simulation model on the Black Scholes option-pricing model and a number of other complex assumptions including (i) whether the vesting condition would be satisfied within the time-vesting periods, and (ii) the date the common stock price target would be achieved per the terms of the agreement.

Inventory Valuation

Our inventories are stated at the lower of cost and net realizable value.

We write down our inventories for estimated obsolescence equal to the difference between the cost of the inventory and its net realizable value based upon an aging analysis of the inventory on hand utilizing specific reserve percentages, specifically known inventory-related risks (such as technological obsolescence), and assumptions about future demand.

Determining net realizable value and establishing reserves for excess and obsolete inventory require management to make estimates about future consumption of our products and how those expectations compare to our historical consumption experience.

Because these assumptions may change as customer demand shifts, inventory valuation represents a critical accounting estimate.

In order to determine what costs can be included in the valuation of inventories, we determine normal capacity for our manufacturing facilities based on historical patterns.

If our estimates regarding customer demand are inaccurate, or market conditions or technology change in ways that are less favorable than those projected by management, we may be required to take excess capacity charges in accordance with U.S.

GAAP, which could have an adverse effect on our operating results.

No significant changes were made to the methodologies used to estimate inventory reserves during the year ended December 31, 2025.

Impairment of the Statesboro Plant

During the three months ended March 31, 2025, we recorded an impairment charge related to construction in progress associated with our Statesboro Plant construction project.

The initial impairment was triggered by the decision, as part of a restructuring plan, to cease construction at our previously planned Statesboro Plant and demobilize the site, which required management to reassess the recoverability of the project’s capitalized costs based on updated estimates of future economic benefits.

To support this assessment, management engaged an independent third-party valuation specialist to assist in determining fair value.

This evaluation involved significant management judgment and resulted in recognition of an impairment charge.

At December 31, 2025, we recorded an additional loss based on updated information indicating that the fair value less cost to sell of the Statesboro Plant assets classified as held for sale were lower than their carrying value.

Management again utilized the same independent third-party valuation specialist to update the fair value analysis which reflected changes in expected market conditions, potential buyer interest and estimated disposal costs.

Both the initial impairment and the subsequent loss required management to apply significant judgment in determining fair value.

These assessments relied heavily on management’s judgment regarding expected market conditions and disposal costs, and changes in these assumptions could materially affect the valuation.

These charges were specific to events that occurred during the year ended December 31, 2025, and did not result in changes to our overall impairment policies or methodologies for evaluating long-lived assets.

QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK

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As of December 31, 2025, we had $1.7 million of restricted cash to support our outstanding letters of credit.

As of December 31, 2024, we had $114.7 million of term loan outstanding and $42.1 million of revolver loan outstanding.

Loans borrowed under the Term Loan Facility will bear interest rate equal to Term SOFR (as defined in the Credit Agreement) 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%.

Loans borrowed under the Revolving Facility will bear an interest rate equal to Term SOFR plus 4.60% per year, subject to a Term SOFR floor of 2.50%.

As of December 31, 2025, we had $90.6 million of Term Loan outstanding and $14.3 million of revolving line of credit outstanding.

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 (as defined in the Credit Agreement) 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.

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

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.

Therefore, fluctuations in interest rates will impact our consolidated financial statements.

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The majority of our revenue, receivables, purchases and debts are denominated in U.S.

As we expand our presence in international markets, to the extent we are required to enter into agreements denominated in a currency other than the US dollar, our results of operations and cash flows may increasingly be subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates.

As we expand our presence in international markets, to the extent we are required to enter into agreements denominated in a currency other than the U.S.

dollar, our results of operations and cash flows may increasingly be subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates.

Certain of our and our subsidiaries’ transactions are denominated in currencies other than the functional currency.

During the fiscal year ended December 31, 2025, our largest exposures to foreign exchange rates consisted primarily of the Mexican Peso against the U.S.

For the fiscal years ended December 31, 2024 and 2022, we had foreign exchange losses of $2.8 million and $0.2 million.

For the fiscal years ended December 31, 2025 and 2024, we had foreign exchange losses of $0.5 million and $2.8 million, respectively.

For the fiscal year ended December 31, 2023, we had foreign exchange gains of $0.5 million.

The foreign currency transaction gains and losses were recorded within operating expenses on the consolidated statements of operations.

Capital Market Risk

We generate our revenue from the sale of our products, but in the future we may raise funds through other sources.

One possible source of funding is through further securities offerings.

Our ability to raise funds in this manner depends upon capital market forces affecting our stock price among other things.

FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

To the To the Stockholders and Board of Directors

To the Stockholders and the Board of Directors

Aspen Aerogels, Inc.:

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We have audited the accompanying consolidated balance sheets of Aspen Aerogels, Inc.

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes and financial statement schedules II (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes and financial statement schedule II (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in

accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Impairment of the Statesboro Plant

As discussed in Note 2 to the consolidated financial statements, long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.

If the carrying amount of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group.

As described in Notes 5 and 19 to the consolidated financial statements, in February 2025 the Company decided to cease construction at its previously planned Statesboro Plant and demobilize the site.

As a result, the Company recorded impairment charges of $286.6 million during the year and the Statesboro Plant assets were classified as held for sale as of December 31, 2025.

We identified the evaluation of the impairment assessment of the Statesboro Plant as a critical audit matter.

The carrying value of the Statesboro Plant exceeded its estimated fair value, which was calculated based on certain assumptions that were determined to involve a high degree of judgment and estimation by the Company.

We performed a sensitivity analysis as a risk assessment procedure over the assumptions used to estimate the fair value of the Statesboro Plant and determined that market rent, discount rate, terminal capitalization rate and remaining construction costs represented the significant assumptions.

These assumptions were challenging to test as they represented subjective determinations of future market, economic conditions and remaining construction activity that were sensitive to variation.

Minor changes to those assumptions could have had a significant effect on the estimated fair value of the Statesboro Plant.

Additionally, the audit effort associated with this estimate required specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s impairment assessment of long-lived assets, including controls related to determining the significant assumptions used to estimate the fair value of the Statesboro Plant.

We evaluated the reasonableness of the remaining construction costs by comparing them to executed agreements and assessing the remaining construction costs estimated by the Company to bring the property to a condition suitable for general use based on actual costs incurred.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

• evaluating the market rent used by the Company by comparing it against a market rent range that was independently developed using publicly available signed lease data for comparable properties

• evaluating the discount rate used by the Company by comparing it against a market-oriented discount rate range that was independently developed using published investor surveys specific to development property types

• evaluating the terminal capitalization rate used by the Company by comparing it to a terminal capitalization rate range that was independently developed using sales of comparable investment grade real estate assets.

Net realizable value of certain inventories

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We identified the evaluation of the estimated net realizable value of certain inventories as a critical audit matter.

A high degree of auditor judgment was required to evaluate the Company’s assumption of future demand through future consumption, including whether past consumption is indicative of future consumption and the related effect on the net realizable value of certain inventories.

A high degree of auditor judgment was required to evaluate the Company’s assumption of future demand through future consumption, including

whether past consumption is indicative of future consumption and the related effect on the net realizable value of certain inventories.

The following are the primary procedures we performed to address this critical audit matter.

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Boston, Massachusetts

February 27, 2025

March 13, 2026

ASPEN AEROGELS, INC.

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Property, plant and equipment, net

Assets held for sale

Operating lease right-of-use assets

Finance lease right-of-use assets

Other long-term assets

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Operating lease liabilities

Finance lease liabilities

Long term debt - current portion

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Long term debt

Convertible note - related party

Finance obligation for sale and leaseback transactions long-term

Operating lease liabilities long-term

Finance lease liabilities long-term

Total liabilities

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General and administrative

Impairment of equipment under development

Restructuring and demobilization costs

Loss on disposal of property, plant and equipment

Impairment of property, plant and equipment

Total operating expenses

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Balance at December 31, 2022

Stock compensation expense

Issuance of restricted stock

Vesting of restricted stock units

Proceeds from employee stock option exercises

Proceeds from at-the-market offering, net of commissions and fees of $ 2,269 and issuance costs of $ 616

Proceeds from private placement of common stock, net of fees and issuance costs of $ 137

Proceeds from underwritten public offering, net of underwriting discounts and commissions of $ 8,052 and issuance costs of $ 452

Increase in debt discount due to modification of convertible note – related party

Balance at December 31, 2022

Stock compensation expense

Stock-based compensation expense

Issuance of restricted stock

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Balance at December 31, 2023

Stock compensation expense

Stock-based compensation expense

Issuance of restricted stock

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Balance at December 31, 2024

Stock-based compensation expense

Vesting of restricted stock units

Proceeds from employee stock option exercises

Issuance costs from offering of common stock

Acquisition of variable interest entity

Proceeds from employee stock purchase plan

Balance at December 31, 2025

See accompanying notes to consolidated financial statements.

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Impairment of property, plant and equipment

Loss on disposal of property, plant and equipment

Deferred taxes

Reduction in the carrying amount of operating lease right-of-use assets

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Deferred revenue

Operating lease liabilities

Operating lease and other liabilities

Net cash provided by (used in) operating activities

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Cash flows from financing activities:

Proceeds from underwritten public offering, net of underwriting discounts, commissions and issuance costs

Proceeds from issuance of convertible note related party

Issuance costs from convertible note

Proceeds from employee stock option exercises

Payments made for employee restricted stock tax withholdings

Proceeds from at-the-market offering net of commissions, fees and issuance costs of $ 2,885

Proceeds from registered direct offering of common stock

Fees and issuance costs from registered direct offering of common stock

Proceeds from private placement of common stock

Proceeds from employee stock purchase plan

Fees and issuance costs from private placement of common stock

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Proceeds from term loan

Issuance costs from term loan and revolver

Proceeds from revolver

Issuance costs from term loan and revolving line of credit

Proceeds from revolving line of credit

Repayment of revolving line of credit

Proceeds from sale and leaseback transactions

Repayment of finance obligation for sale and leaseback transactions

Repayment of prepayment liability

Net cash provided by financing activities

Repayment of lease and other finance obligations

Net cash (used in) provided by financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash

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Capitalized Interest

Increase in debt discount due to modification of convertible note – related party

Changes in accrued capital expenditures

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The Company has developed and commercialized its proprietary line of PyroThin ® aerogel thermal barriers for use in battery packs in EVs.

In addition, the Company is developing applications for its aerogel technology in the battery materials market and a number of other high-potential markets.

The Company's core businesses is organized into two reportable segments:

Energy Industrial and Thermal Barrier.

The Company's core business is organized into two reportable segments:

Thermal Barrier and Energy Industrial.

The Company maintains its corporate offices in Northborough, Massachusetts.

The Company has four wholly owned subsidiaries:

Aspen Aerogels Rhode Island, LLC ("Aspen RI"), Aspen Aerogels Germany, GmbH, Aspen Aerogels Georgia, LLC, and Aspen Aerogels Mexico Holdings, LLC ("Aspen Mexico").

Additionally, we engaged Prodensa Servicios de Consultora 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.

OPE is currently owned by Prodensa, which charges a management fee.

There is an option for OPE to be purchased by the Company after a period of 18 months.

As of December 31, 2024 , the Company has notified Prodensa of the intent to purchase OPE.

During the period between inception and the exercise of the purchase option, OPE operations are consolidated within the Company financial statements.

During the year ended December 31, 2024, the Company earned a net income of $ 13.4 million, generated $ 45.5 million of cash from operations and used $ 86.3 million of cash for capital expenditures.

The Company has five wholly owned subsidiaries:

Aspen Aerogels Rhode Island, LLC (Aspen RI), Aspen Aerogels Germany, GmbH, Aspen Aerogels Georgia, LLC (Aspen Georgia), Aspen Aerogels Mexico Holdings, LLC (Aspen Mexico), and OPE Manufacturer Mexico S de RL de CV (OPE), a maquiladora located in Mexico.

OPE was established under an agreement between the Company and Prodensa Servicios de Consultora (Prodensa) during 2022 to assemble thermal barrier PyroThin products and operate an automated fabrication facility for PyroThin.

Pursuant to the agreement, Prodensa owned OPE and charged a management fee, and the Company had an option to purchase OPE from Prodensa after a period of 18 months.

The Company subsequently purchased OPE for a nominal value in accordance with the terms of the agreement.

During the period between inception and the exercise of the option to purchase OPE, OPE operations were consolidated within the Company financial statements as OPE was a variable interest entity (VIE) with the Company as the primary beneficiary.

The purchase of OPE was accounted for as an equity transaction.

During the year ended December 31, 2025, the Company incurred a net loss of $ 389.6 million, generated $ 32.9 million of cash from operations and used $ 37.4 million of cash for capital expenditures.

The Company had unrestricted cash and cash equivalents of $ 156.9 million as of December 31, 2025.

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

On August 19, 2024, the Company and Aspen RI (each, a Borrower and collectively, the Borrowers) entered into a Credit, Security and Guaranty Agreement (the Credit Agreement and the facilities provided thereunder, collectively, the MidCap Loan Facility) with MidCap Funding IV Trust, as agent (the Agent), MidCap Financial Trust, as term loan servicer, and the financial institutions or other entities from time to time party thereto as lenders (the Lenders), with respect to the MidCap Loan Facility, which is comprised of (i) the Term Loan Facility in an aggregate principal amount of $ 125.0 million and (ii) the Revolving Facility in an aggregate principal amount not to exceed the lesser of $ 100.0 million and the value of the Borrowing Base (as defined in the Credit Agreement).

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 of the 2022 Convertible Notes (as defined below) for $ 150.0 million and for general corporate purposes.

On August 19, 2024, the Company and Aspen RI (each, a Borrower and collectively, the Borrowers) entered into a Credit, Security and Guaranty Agreement (the Credit Agreement and the facilities provided thereunder, collectively, the MidCap Loan Facility) with MidCap Funding IV Trust, as agent (the Agent), MidCap Financial Trust, as term loan servicer (the Term Loan Servicer), and the financial institutions or other entities from time to time party thereto as lenders (the Lenders), with respect to the MidCap Loan Facility, which is comprised of (i) the Term Loan Facility in an aggregate principal amount of $ 125.0 million (the Term Loan Facility) and (ii) the Revolving Facility in an aggregate principal amount not to exceed the lesser of $ 100.0 million and the value of the borrowing base (defined as the sum of (x) 85 % of certain eligible accounts of the Borrowers and (y) the lesser of 85 % of the NOLV (as defined in the Credit Agreement) or 85 % of the cost of certain eligible inventory of the Borrowers (the Borrowing Base) (the Revolving Facility).

At closing of the transactions contemplated by 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 to repurchase the 2022 Convertible Note (as defined below) for $ 150.0 million and for general corporate purposes.

The amount available to the Company at December 31, 2025 under the Revolving Facility was $ 9.5 million.

In October 2024, the Company entered into an underwriting agreement (the Underwriting Agreement) with Goldman Sachs & Co.

On May 6, 2025, the Credit Agreement was amended to add Aspen Georgia as a Borrower and to amend the minimum Liquidity, the minimum EBITDA and the Liquidity amount trigger for a Cash Dominion Event (each as defined in the Amended MidCap Loan Facility (as defined in Note (7))).

On December 16, 2025, the Credit Agreement was further amended to change the applicable minimum Liquidity threshold and to entirely remove the minimum EBITDA financial maintenance covenant.

As of December 31, 2025, the Company is in compliance with the financial covenants set forth in the Amended MidCap Loan Facility.

See Note (7) for further details.

In October 2024, the Company entered into an underwriting agreement with Goldman Sachs & Co.

LLC and Morgan Stanley & Co.

LLC (collectively, the Underwriters), pursuant to which the Company issued and sold an aggregate of 4,887,500 shares of the Company’s common stock, which included 637,500 shares pursuant to the Underwriters’ option to purchase additional shares of common stock of the Company, to the Underwriters in a registered underwritten offering (the Offering).

LLC (collectively, the Underwriters), pursuant to which the Company issued and sold an aggregate of 4,887,500 shares of the Company’s common stock, which included 637,500 shares pursuant to the Underwriters’ o ption to purchase additional shares of common stock of the Company, to the Underwriters in a registered underwritten offering (the Offering).

The price to the public in the Offering was $ 20.00 per share.

The net proceeds to the Company from the Offering were approximately $ 93.2 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

In November 2022, the Company entered into a loan agreement (the GM Loan Agreement) with General Motors Holdings LLC (GM), an entity affiliated with General Motors LLC, which provides for a multi-draw senior secured term loan (the GM Loan) in an aggregate principal amount of up to $ 100.0 million, available to the Company on a delayed draw basis beginning January 1, 2023 to September 30, 2023 , subject to certain conditions precedent to funding.

In September 2023, the Company amended the GM Loan

Agreement to (i) extend the draw period for the GM Loan to a period beginning on the date that is twelve months prior to the date agreed upon by the Company and GM for the start of production at an aerogel manufacturing facility in Statesboro, Georgia (the Plant) and ending on March 31, 2024 (or any later date approved in writing by GM at its sole discretion);

In November 2022, the Company entered into a loan agreement (the GM Loan Agreement) with General Motors Holdings LLC (GM), an entity affiliated with General Motors LLC, which provided for a multi-draw senior secured term loan (the GM Loan) in an aggregate principal amount of up to $ 100.0 million, available to the Company on a delayed draw basis beginning January 1, 2023 to September 30, 2023 , subject to certain conditions precedent to funding.

In September 2023, the Company amended the GM Loan Agreement to (i) extend the draw period for the GM Loan to a period beginning on the date that is 12 months prior to the date agreed upon by the Company and GM for the start of production at an aerogel manufacturing facility in Statesboro, Georgia (the Statesboro Plant), which construction has since been terminated, and ending on March 31, 2024 (or any later date approved in writing by GM at its sole discretion);

(ii) extend the maturity date of the GM Loan from March 31, 2025 to September 30, 2025;

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The Company has not drawn, and no longer has the ability to draw on the GM Loan.

The associated unamortized deferred financing costs of $ 1.7 million were written off to interest expense upon the expiration of the draw period.

On August 16, 2024, the Company and GM entered into the GM Termination Letter to terminate and payoff in full all obligations outstanding under the GM Loan Agreement.

The Company has developed a number of promising aerogel products and technologies for the EV market.

The Company will continue to invest in research and development of next-generation aerogel products and manufacturing process technologies.

The Company believes that the commercial potential for the Company’s products and technology in the EV market is significant.

The Company expects its existing cash balance will be sufficient to support current operating requirements, current research and development activities and the capital expenditures required to support the evolving commercial opportunity in the EV market and other strategic business initiatives.

However, the Company may supplement its cash balance 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, establish the operations and complete the aerogel capacity expansions required to support these evolving commercial opportunities and strategic business initiatives.

The associated unamortized deferred financing costs of $ 1.7 million were written off to interest expense during the year ended December 31, 2024, upon the expiration of the draw period.

On August 16, 2024, the Company and GM entered into the a termination letter to terminate and pay off in full all obligations outstanding under the GM Loan Agreement.

The Company expects its existing cash balance will be sufficient to support current operating requirements and capital expenditures required to support the Company’s existing business in the EV and energy industrial markets for at least 12 months from the date of this Annual Report on Form 10-K.

However, the Company expects that it will need to supplement its 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.

(2) Summary of Basis of Presentation and Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements of the Company include the accounts of all its subsidiaries which are majority-owned, controlled by the Company or a variable interest entity (VIE) where the Company is the primary beneficiary.

The accompanying consolidated financial statements of the Company include the accounts of all its subsidiaries which are majority-owned, controlled by the Company or a VIE where the Company is the primary beneficiary.

All significant intercompany accounts and transactions have been eliminated in consolidation.

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A VIE is defined as an entity in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.

The Company consolidates a VIE in accordance with ASC 810, Consolidation (ASC 810) when it is the primary beneficiary of such VIE.

The Company consolidates a VIE in accordance with ASC 810, Consolidation when it is the primary beneficiary of such VIE.

As primary beneficiary, the Company has both the power to direct the activities that most significantly impact the economic performance of the VIE and a right to receive benefits or absorb losses of the entity that could be potentially significant to the VIE.

The Company is required to reconsider its evaluation of whether to consolidate a VIE each reporting period, based upon changes in the facts and circumstances pertaining to the VIE.

The Company evaluates the initial consolidation of each consolidated VIE, which includes a determination of whether the VIE constitutes the definition of a business in accordance with ASC 805, Business Combinations (ASC 805), by considering if substantially all of the fair value of the gross assets within the VIE are concentrated in either a single identifiable asset or group of single identifiable assets.

The Company evaluates the initial consolidation of each consolidated VIE, which includes a determination of whether the VIE constitutes the definition of a business in accordance with ASC 805, Business Combinations, by considering if substantially all of the fair value of the gross assets within the VIE are concentrated in either a single identifiable asset or group of single identifiable assets.

Upon consolidation, the Company recognizes the assets acquired, the liabilities assumed, and any third-party ownership of membership interests as non-controlling interest as of the consolidation or acquisition date, measured at their relative fair values.

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The preparation of the consolidated financial statements requires the Company to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant items subject to such estimates and assumptions include allowances for doubtful accounts, sales returns and allowances, product warranty costs, inventory valuation, the carrying amount of property and equipment, right-of-use assets, lease liabilities, stock-based compensation, and deferred income taxes.

Significant items subject to such estimates and assumptions include allowances for doubtful accounts, sales returns and allowances, assets held for sale, product warranty costs, inventory valuation, the carrying amount of property and equipment, right-of-use assets, lease liabilities, stock-based compensation, and deferred income taxes.

The Company evaluates its estimates and assumptions on an on-going basis using historical experience and other factors, including current economic conditions, which are believed to be reasonable under the circumstances.

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The Company reviews the allowance for doubtful accounts quarterly.

During the year ended December 31, 2024, the Company recorded a charge for estimated customer uncollectible accounts receivable of $ 0.2 million.

During the year ended December 31, 2023, the Company recorded a charge for estimated customer uncollectible accounts receivable of less than $ 0.1 million.

During the year ended December 31, 2022, the Company recorded a charge for estimated customer uncollectible accounts receivable of $ 0.1 million.

During the years ended December 31, 2025, 2024, and 2023, the Company recorded a charge for estimated customer uncollectible accounts receivable of $ 3.5 million, $ 0.2 million, and $ 0.1 million, respectively.

Allowance for doubtful accounts was $ 4.2 million and $ 1.3 million at December 31, 2025 and 2024, respectively.

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Inventory consists of finished products, work-in-process, and raw materials.

Inventories are carried at lower of cost, determined using the first-in, first-out (FIFO) method, and net realizable value.

Cost includes materials, labor and manufacturing overhead.

Inventories are carried at lower of cost and net realizable value.

The Company utilizes a standard costing system including materials, labor, and manufacturing overhead, capitalizing variances between estimated and actual production costs during periods of normal production.

Manufacturing overhead is allocated to the costs of conversion based on normal capacity of the Company’s production facility.

Abnormal freight, handling costs and material waste are expensed in the period it occurs.

The Company periodically reviews its inventories and makes provisions as necessary for estimated excess, obsolete or damaged goods to ensure values approximate the lower of cost and net realizable value.

The Company periodically reviews its inventories and makes provisions as necessary for estimated excess, obsolete or damaged goods to e nsure values approximate the lower of cost and net realizable value.

The amount of any such provision is equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand, selling prices and market conditions.

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Impairments of construction in progress are charged to operating expenses upon the determination of no future use.

Other assets primarily include long-term deposits.

Impairment of Long-Lived Assets

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Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

Assets held for sale

A disposal group is reported as held for sale when management has approved or received approval to sell and is committed to a formal plan, the disposal group is available for immediate sale, the disposal group is being actively marketed, the sale is anticipated to occur during the next 12 months and certain other specified criteria are met.

A disposal group classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell.

Other assets primarily include long-term deposits and cloud computing costs.

Revenue Recognition

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All shares of restricted stock are not transferable until vested.

Restricted stock or RSUs are typically issued to non-employee directors and typically vests over a one-year period from the date of issuance.

Restricted stock, or RSUs, issued to non-employee directors typically vests over a one-year period from the date of issuance.

RSUs are issued to employees and typically vest over a three-year period from the date of issuance.

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The Company’s chief operating decision maker is the Chief Executive Officer.

The Company’s chief operating decision

maker reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire Company.

The Company’s chief operating decision maker reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire Company.

The Company presently views its operations and manages its business as two operating segments.

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The Company determines whether an arrangement is a lease at inception.

For leases where the Company is the lessee, a lease liability and a right-of-use (ROU) asset is recognized for all leases, with the exception of short-term leases with terms of twelve months or less.

For leases where the Company is the lessee, a lease liability and a right-of-use (ROU) asset is recognized for all leases, with the exception of short-term leases with terms of 12 months or less.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s payment obligations under the lease.

Operating lease ROU assets and liabilities are recognized based on the present value of lease payments over the lease term.

For finance leases, the lease liability is initially measured in the same manner and date as for operating leases and is subsequently presented at amortized cost using the effective interest method.

To measure its lease liabilities, the Company uses its incremental borrowing rate or the rate implicit in the lease, if available.

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The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Finance lease ROU assets are generally amortized on a straight-line basis over the lease term with the interest expense on the lease liability recorded using the interest method.

The amortization and interest expense are recorded separately in the Consolidated Statement of Operations.

For operating leases, the amortization of the ROU asset and the interest expense on the lease liability are not separately recorded;

rather, the lease cost is recognized on a straight-line basis over the lease term as a single-line item in the Consolidated Statement of Operations.

The Company elected the short-term lease recognition exemption for all leases that qualify.

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However, in the case of equipment leases, the Company accounts for lease and non-lease components as a single component.

Refer to Note 11.

Leases for additional information.

See Note (11) for further details.

Sale and Leaseback Accounting

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For the fiscal year ended December 31, 2023, the Company had foreign exchange gains of $ 0.5 million.

Employee Retention Credits

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act was signed into law, providing numerous tax provisions and other stimulus measures, including the Employee Retention Credit:

a refundable tax credit against certain employment taxes.

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the Employee Retention Credits.

We qualified for the Employee Retention Credits in the third and fourth quarters of 2020 and the first quarter of 2021.

In September 2023, we submitted filings for CARES Employee Retention Credits totaling $ 2.2 million that are reported in the accompanying condensed consolidated balance sheet within prepaid expenses and other current assets as of December 31, 2023, and in the accompanying statement of operations for the year ended December 31, 2023.

Recently Issued Accounting Standards

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies.

Recently issued standards typically do not require adoption until a future effective date.

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Standards Implemented Since December 31, 2024

Effective January 1, 2025, the Company adopted ASU 2023-09 on a prospective basis.

See Note (17) for more information.

Standards to be Implemented After December 31, 2025

This ASU is effective for the Company’s fiscal year 2025.

Early adoption is permitted.

The Company is currently evaluating income tax disclosures related to its annual report for fiscal year 2025.

Although there are several other new accounting pronouncements issued by the FASB, the Company does not believe any of these accounting pronouncements had or will have a material impact on its Consolidated Financial Statements.

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Applying the practical expedient in paragraph ASC 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less.

The Company did not have any contracts outstanding at both December 31, 2024 and December 31, 2023 and did not enter into any contracts during each of the years ended December 31, 2024 and 2023 that contained a significant financing component.

The Company did not have any contracts outstanding at either December 31, 2025 or December 31, 2024 and did not enter into any contracts during each of the years ended December 31, 2025 and 2024 that contained a significant financing component.

The Company records deferred revenue for product sales when (i) the Company has 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.

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Although thermal barrier products are customized with no alternative use to the Company, the Company does not always have an enforceable right to payment.

Under the provisions of ASC 606, the Company recognizes revenue at a point in time when transfer of the control of the products is passed to the customer according to the terms of

the contract, including under bill and hold arrangements.

Under the provisions of ASC 606, the Company recognizes revenue at a point in time when transfer of the control of the products is passed to the customer according to the terms of the contract, including under bill and hold arrangements.

The timing of revenue recognition is assessed on a contract-by-contract basis.

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The Company currently estimates return liabilities using historical rates of return, current quarter credit sales, and specific items of exposure on a contract-by-contract basis.

Sales return reserves were approximately $ 0.3 million and $ 0.2 million at December 31, 2024 and December 31, 2023, respectively.

Sales return reserves were approximately $ 0.3 million at both December 31, 2025 and December 31, 2024.

Shipping and Handling Costs

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Latin America

United States

Total revenue

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Latin America

United States

Total revenue

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Latin America

United States

Total revenue

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During the year ended December 31, 2025, the Company recognized $ 2.2 million of revenue that was included in deferred revenue at December 31, 2024.

A contract liability is recorded when consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services under the terms of the contract.

A contract asset is recorded when the Company satisfies a performance obligation by transferring a promised good or service and has earned the right to consideration from its customer.

When there is a conditional right to consideration, these items are included within other assets on the consolidated balance sheets.

When there is an unconditional right to consideration, these items are included within accounts receivable on the consolidated balance sheets.

A contract liability is recorded when consideration is received, or such consideration is unconditio nally due, from a customer prior to transferring goods or services under the terms of the contract.

Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met.

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Depreciation expense was $ 45.2 million, $ 22.5 million and $ 15.3 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Construction in progress totaled $ 352.6 million and $ 314.7 million at December 31, 2024 and 2023, respectively.

The balance at December 31, 2024 and 2023 included engineering designs and construction costs totaling $ 323.6 million and $ 279.7 million, respectively, for a planned aerogel manufacturing facility in Statesboro, Georgia.

The Company incurred $ 0.0 million and $ 6.1 million in capitalized interest for the years ended December 31, 2024 and December 31, 2023, respectively, for the construction in progress in Statesboro, Georgia.

In February 2025, as part of a restructuring plan, the Company decided to cease construction at its previously planned Statesboro Plant and demobilize the site.

In connection with the same, the Company adjusted the construction in progress balance to its fair value and recorded impairment charges of $ 286.6 million during the three months ended March 31, 2025.

The Company plans to divest the assets of the Statesboro Plant through broker-assisted sales.

At June 30, 2025, certain of the assets of the Statesboro Plant met the criteria to be classified as held for sale and are separately classified on the balance sheet.

At December 31, 2025, the remaining assets of the Statesboro Plant met the criteria to be classified as held for sale.

At December 31, 2025, the carrying value of assets classified as held for sale is $ 32.7 million and a loss of $ 18.2 million was recorded to reflect the remeasured fair value and cost to sell, which is included in loss on disposal of property, plant and equipment in the consolidated statement of operations.

The construction in progress balance at December 31, 2025 and December 31, 2024 included $ 0.0 million and $ 323.6 million, respectively, for the Statesboro Plant.

During the second quarter of fiscal year 2025, the Company implemented additional actions under the restructuring plan, which included headcount reduction and rationalizing research and development programs.

As a result of the restructuring plan, the Company recorded impairment charges of $ 1.0 million during the year ended December 31, 2025, which are included in impairment of property, plant and equipment in the consolidated statement of operations.

During the fourth quarter of fiscal year 2025, a large Thermal Barrier customer notified the Company of its lower forecasted long-term demand requirements and requested the Company submit a claim for certain losses incurred.

Further, EV adoption rates are expected to be lower following the termination in the United States of certain consumer tax incentives for EV purchases.

These developments have caused the Company to reassess its capacity requirements.

In connection with the same, the Company revised the useful lives of certain assets to align utilization with the revised expected demand and recognized accelerated depreciation of $ 22.2 million.

Additionally, the Company recognized $ 3.6 million of impairment related to construction in progress assets that are no longer needed due to the lower forecasted demand.

The Company submitted the claim with the Thermal Barrier customer in November 2025.

See Note (20) for further details.

The Company recorded impairment charges of approximately $ 7.6 million during the year ended December 31, 2024, for equipment that will no longer be needed in manufacturing following customer directed engineering changes to a part it manufactures and for other property, plant and equipment that have become obsolete following development of new and more efficient equipment.

The impairment charges of $ 7.6 million during the year ended December 31, 2024 consist of $ 4.1 million impairment included in cost of revenue and $ 3.5 million included in impairment of equipment under development on the Company's consolidated statement of operations.

The impairment charges of $ 7.6 million during the year ended December 31, 2024 consist of $ 4.1 million impairment included in cost of revenue and $ 3.5 million included in impairment of equipment u nder development on the Company's consolidated statement of operations.

The Company received reimbursement for the losses incurred in connection with the customer-directed engineering changes which was recorded as an offset to the impairment loss recognized in cost of revenue.

There were no impairments of property, plant and equipment during the year ended December 31, 2023.

Fair value of long-lived assets is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved and a review of appraisals or other market indicators and management estimates.

As such, the Company has determined that the fair value measurements of long-lived assets principally fall in Level 3 of the fair value hierarchy.

(6) Accrued Expenses

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Loans borrowed under the MidCap Loan Facility mature on August 19, 2029.

The MidCap Loan Facility is comprised of (i) the Term Loan Facility in an aggregate principal amount of $ 125 million and (ii) the Revolving Facility in an aggregate principal amount not to exceed the lesser of (A) $ 100 million and (B) the value of the borrowing base (defined as the sum of (x) 85 % of certain eligible accounts of the Borrowers and (y) the lesser of 85 % of the NOLV or 85 % of the cost of certain eligible inventory of the Borrowers).

Loans borrowed under the Term Loan Facility will bear interest rate equal to Term SOFR (as defined in the Credit Agreement) 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 %.

Loans borrowed under the Term Loan Facility bear interest rate equal to Term SOFR (as defined in the Credit Agreement) 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 %.

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Additionally, the Borrowers are required to pay an origination fee of $ 1.3 million annually on the anniversary of the closing date.

Loans borrowed under the Revolving Facility will bear an interest rate equal to Term SOFR plus 4.60 % per year, subject to a Term SOFR floor of 2.50 %.

Loans borrowed under the Revolving Facility bear an interest rate equal to Term SOFR plus 4.60 % per year, subject to a Term SOFR floor of 2.50 %.

The Revolving Facility has a required minimum balance set at 30 % of the average Borrowing Base during the immediate preceding month.

The Borrowers are required to pay the Lenders under the Revolving Facility an unused line fee of 0.30 % of the average unused availability under the Revolving Facility, subject to the aforementioned minimum balance.

The MidCap Loan Facility is guaranteed by Aspen Mexico and is secured by a lien on substantially all existing and after-acquired assets of the Loan Parties, including the equity interest in Aspen RI, Aspen Mexico and Aspen Aerogels Georgia owned by the Company, in each case, subject to customary exceptions.

The MidCap Loan Facility is guaranteed by Aspen Mexico and is secured by a lien on substantially all existing and after-acquired assets of the Loan Parties, including the equity interest in Aspen RI, Aspen Mexico and Aspen Georgia owned by the Company, in each case, subject to customary exceptions.

At the entrance into the Credit Agreement in August 2024, Aspen Georgia was not a guarantor (and thus not a Loan Party) and its assets were excluded from the collateral under the MidCap Loan Facility.

However, as further described below, on May 6, 2025, Aspen Georgia became a Loan Party under the MidCap Loan Facility.

The Credit Agreement includes representations and warranties, affirmative covenants (including reporting obligations), negative covenants and events of default that are usual and customary for facilities of this type, in each case, subject to certain permitted exceptions as set forth therein.

The Credit Agreement includes financial covenants for the benefit of the Lenders, including (i) a covenant to maintain Liquidity (as defined therein) equal to or greater than $ 75.0 million at all times and (ii) a covenant to maintain EBITDA (as defined therein) equal to or greater than the specified applicable amount set forth in the Credit Agreement, tested quarterly with the first test set at $ 45.0 million commencing with the fiscal quarter ended September 30, 2024.

The Borrowers will have the right to prepay the loans outstanding under the MidCap Loan Facility (or, with respect to the Revolving Facility, terminate the commitments thereunder), subject to a premium equal to 3.0 % of the amount prepaid or terminated, as applicable, during the first year after the closing date, which premium will be decreased to 2.0 % during the second year after the closing date and to 1.0 % thereafter.

The Borrowers will be required to mandatorily prepay the loans outstanding under the Term Loan Facility with, among other things, certain casualty insurance proceeds or proceeds from non-ordinary course assets sales (which will also be subject to the aforementioned premium).

The Borrowers will be required to mandatorily prepay the balance outstanding under the Revolving Facility (i) if the outstandings exceed the borrowing base in an aggregate amount equal to that excess or (ii) upon a cash dominion event of all the funds deposited in the lockbox account during the cash dominion period.

The Borrowers have the right to prepay the loans outstanding under the MidCap Loan Facility (or, with respect to the Revolving Facility, terminate the commitments thereunder), subject to a premium equal to 3.0 % of the amount prepaid or terminated, as applicable, during the first year after the closing date, which premium will be decreased to 2.0 % during the second year after the closing date and to 1.0 % thereafter.

The Borrowers are required to mandatorily prepay the loans outstanding under the Term Loan Facility with, among other things, certain casualty insurance proceeds or proceeds from non-ordinary course assets sales (which will also be subject to the aforementioned premium).

The Borrowers are required to mandatorily prepay the balance outstanding under the Revolving Facility (i) if the outstandings exceed the Borrowing Base in an aggregate amount equal to that excess or (ii) upon a cash dominion event of all the funds deposited in the lockbox account during the cash dominion period.

A cash dominion event is triggered (x) upon the occurrence of any Specified Event of Default (as defined in the Credit Agreement to include payment default, failure to deliver monthly or annual financials, financial covenant breach or bankruptcy) or any event of default arising from the failure to comply with the requirement to deliver a monthly Borrowing Base certificate, in each case, after any applicable grace period set forth in the Credit Agreement and/or cure rights applicable thereto or (y) if the Liquidity is less than $ 100 million.

MidCap debt consists of the following:

First Amendment to MidCap Loan Facility

On May 6, 2025, the Company, Aspen RI, Aspen Mexico and Aspen Georgia entered into that certain Amendment No.

1 and Joinder to Credit, Security and Guaranty Agreement (Amendment No.

1), by and among the Company, Aspen RI, Aspen Mexico, Aspen Georgia, the Agent, the Term Loan Servicer, and the Lenders party thereto, amending the MidCap Loan Facility.

Under Amendment No.

1, Aspen Georgia became a borrower under the Amended MidCap Loan Facility and has (a) guaranteed the obligations of the Credit Parties (as defined in the Amended MidCap Loan Facility (defined below)) and (b) granted Agent for the benefits of the Lenders a lien on substantially all of its existing and after-acquired assets, in each case, subject to customary exceptions.

As a result of Amendment No.

1, the applicable margin under the MidCap Loan Facility was amended such that upon the effectiveness of Amendment No.

1, (a) (i) Loans borrowed under the Term Loan Facility will bear an interest rate equal to Term SOFR for 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 % and (ii) Loans borrowed under the Revolving Facility will bear an interest rate equal to Term SOFR for one-month interest period plus 5.10 % per year, subject to a Term SOFR floor of 2.50 %, in each case of (i) and (ii), until the first Pricing Date (as defined in the Amended MidCap Loan Facility as the date five business days after the delivery of a compliance certificate to the Agent for the most recently ended fiscal quarter) after December 31, 2025 and (b) on such first Pricing Date and as thereafter adjusted on each Pricing Date (i) Loans borrowed under the Term Loan Facility will bear interest equal to Term SOFR for one-month interest period plus a margin equal to (x) if the recently reported EBITDA (as defined in the Amended MidCap Loan Facility) is equal to or above $ 50 million, 4.50 % or (y) if the recently reported EBITDA is below $ 50 million, 5.00 %, in each case of (x) and (y), subject to a Term SOFR floor of 4.50 % and a Term SOFR cap of 7.50 %, and (ii) Loans borrowed under the Revolving Facility will bear an interest rate equal to Term SOFR for one-month interest period plus a margin equal to (x) if the recently reported EBITDA is equal to or above $ 50 million, 4.60 % or (y) if the recently reported EBITDA is below $ 50 million, 5.10 %, in each case of (x) and (y), subject to a Term SOFR floor of 2.50 %.

The schedule for amortization of principal of the Term Loan Facility (which remains payable on the last day of each fiscal quarter with remaining principal amount payable on the maturity date) was also updated with new amounts as set forth in the Amended MidCap Loan Facility.

Pursuant to Amendment No.

1, the financial covenants under the MidCap Loan Facility were amended such that (a) the minimum Liquidity which must be maintained at all times has changed from $ 75 million to an amount equal to the greater of (i) $ 50 million and (ii) 85 % of the then aggregate outstanding principal amount of the Term Loan Facility and (b) the minimum EBITDA level to be tested quarterly was changed to reflect a new range from $ 15 million to $ 50 million, with the next test set at $ 15 million with respect to the fiscal quarter ended March 31, 2026 and a $ 50 million level applicable commencing with the fiscal quarter ended December 31, 2027 and thereafter.

The Liquidity amount trigger of a cash dominion event was also reduced from $ 100 million to an amount equal to the greater of (i) $ 50 million and (ii) 85 % of the then aggregate outstanding principal amount of the Term Loan Facility.

Second Amendment to MidCap Loan Facility

On December 16, 2025, the Company, Aspen RI, Aspen Mexico and Aspen Georgia (together with the Company, Aspen RI and Aspen Mexico, collectively, the Credit Parties) entered into that certain Amendment No.

2 to Credit, Security and Guaranty Agreement (Amendment No.

2), by and among the Credit Parties, the Agent, the Term Loan Servicer, and the Lenders party thereto, which amends the Credit Agreement and the facilities provided thereunder, (the MidCap Loan Facility, as amended by Amendment No.

1 and Amendment No.

2, the Amended MidCap Loan Facility), by and among the Credit Parties, the Agent, the Term Loan Servicer, the Lenders, and the other parties party thereto as additional guarantors and/or borrowers from time to time.

Pursuant to Amendment No.

2, the financial covenants under the MidCap Loan Facility have been amended such that (a) the applicable minimum liquidity threshold (both for (i) the minimum liquidity financial covenant, which must be maintained by the Company at all times and (ii) the “Cash Dominion Event” definition for purposes of triggering cash dominion) has changed from (i) an amount equal to the greater of (x) $ 50 million and (y) 85 % of the then aggregate outstanding principal amount of the Term Loan (as defined in the Amended MidCap Loan Facility) to (ii) an amount equal to the greater of (x) $ 50 million and (y) 100 % of the then aggregate outstanding principal amount of the Term Loan and (b) the minimum EBITDA (as defined in the Amended MidCap Loan Facility) financial maintenance covenant has been removed entirely.

MidCap term loan consists of the following:

(In thousands)

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Long term portion

The Revolving Facility had an outstanding balance of $ 42.1 million as of December 31, 2024, net of unamortized issuance costs.

MidCap revolving line of credit consists of the following:

(In thousands)

Revolving line of credit

Revolving line of credit issuance costs

During the year ended December 31, 2025, the Company repaid $ 28.0 million of the revolving line of credit.

The amount available to the Company at December 31, 2025 under the Revolving Facility was $ 9.5 million.

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The transactions contemplated by the Note Purchase Agreement closed on February 18, 2022.

The maturity date of the 2022 Convertible Note is February 18, 2027 , subject to earlier conversion, redemption, or repurchase.

The 2022 Convertible Note is a senior unsecured obligation of the Company and ranks equal in right of payment to all senior unsecured indebtedness of the Company and will rank senior in right of payment to any indebtedness that is contractually subordinated to the 2022 Convertible Note.

The maturity date of the 2022 Convertible Note was February 18, 2027 , subject to earlier conversion, redemption, or repurchase.

The 2022 Convertible Note was a senior unsecured obligation of the Company and ranked equal in right of payment to all senior unsecured indebtedness of the Company and would rank senior in right of payment to any indebtedness that was contractually subordinated to the 2022 Convertible Note.

On August 19, 2024, the Company entered into a note purchase and sale agreement with Wood River (the Note Repurchase Agreement), pursuant to which the Company repurchased from Wood River $ 123.9 million in aggregate capitalized principal amount (inclusive of PIK interest paid through June 30, 2024) of the 2022 Convertible Note, such aggregate amount being the entire outstanding amount of the 2022 Convertible Note, for a total purchase price of $ 150.0 million in cash, which amount equals to the Redemption Price (as defined in the 2022 Convertible Note).

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The Redemption Price less capitalized principal amount and accrued interest to redemption date, of $ 24.6 million along with unamortized deferred issuance costs was classified in the income statement as Loss on Extinguishment of Debt.

In accordance with ASU 2020-06, the 2022 Convertible Note is accounted for as a single unit of account and consists of the following:

(In thousands)

Convertible note, principal

Payment in-kind

Discount on convertible note, net of accumulated amortization

Debt issuance costs, net of accumulated amortization

Convertible note

In general, fair values determined by Level 1 inputs utilize observable inputs such as quoted prices in active markets for identical assets or liabilities.

Fair values determined by Level 2 inputs utilize data points that are either directly or indirectly observable, such as quoted prices for similar instruments in active markets, interest rates and yield curves.

Fair values determined by Level 3 inputs utilize unobservable data points in which there is little or no market data, which require the Company to develop its own assumptions for the asset or liability.

The 2022 Convertible Note did not have current observable inputs such as recent trading prices (Level 3) and was measured at fair value using a combination of option pricing and discounted cash flow models and incorporate management’s assumptions for stock price, volatility and risk rate.

The Company estimated the fair value of the 2022 Convertible Note was approximately $ 118.2 million as of December 31, 2023.

However, as the Company has not elected to utilize the fair value option, it was carried at amortized cost of $ 115.0 million.

(9) Related Party Transactions

2022 Convertible Note

During the year ended December 31, 2022, the Company issued the 2022 Convertible Note to Wood River, an entity affiliated with Koch Strategic Platforms, LLC.

During the year ended December 31, 2022, the Company issued the 2022 Convertible Note to Wood River, an entity affiliated with Koch.

The Company repurchased the 2022 Convertible Note on August 19, 2024.

See Note (8) Convertible Note – Related Party for additional detail.

For the years ended December 31, 2024, 2023, and 2022 interest expense on the related party convertible note was $ 7.5 million, $ 5.3 million, and $ 5.1 million, respectively.

Common Stock Sales

On March 28, 2022, the Company sold 1,791,986 shares of common stock to Wood River at a purchase price equal to $ 27.902 per share, for aggregate gross proceeds of approximately $ 50.0 million.

On November 28, 2022, the Company sold 10,526,316 shares of common stock to Wood River at a purchase price equal to $ 9.50 per share, for aggregate gross proceeds of approximately $ 100.0 million, in an underwritten offering of common stock.

During the year ended December 31, 2022, the Company recorded costs of $ 8.9 million as a component of construction in progress in connection with the planned aerogel manufacturing facility in Statesboro, Georgia in fees from an entity affiliated with Koch Strategic Platforms, LLC for project management services.

During the year ended December 31, 2022, the Company sold 135,870 shares of its common stock to Robert M.

Gervis, a director of the Company at the time, in the Company’s at-the-market offering pursuant to a sales agreement, dated March 16, 2022, by and among the Company and Cowen and Company, LLC and Piper Sandler & Co.

(the Sales Agreement), for net proceeds of $ 4.4 million.

See Note (8) for additional details.

For the years ended December 31, 2024 and 2023 interest expense on the related party convertible note was $ 7.5 million and $ 5.3 million, respectively.

The Company had $ 2.8 million in accounts payable as of December 31, 2023, due to Wood River for project management service.

On March 27, 2024, the Company entered into a Settlement and Release Agreement with Wood River to settle the accounts payable for $ 1.2 million, which was paid during the three months ended June 30, 2024.

(10) Other Income (Expense)

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For the years ended December 31, 2025, 2024, and 2023 interest income (expense), net, included interest income of $ 7.5 million, $ 5.7 million, and $ 8.7 million, respectively, primarily related to interest earned on unrestricted cash and cash equivalents.

For the year ended December 31, 2024, interest income (expense), net included MidCap related interest on the term loan and revolver.

For the years ended December 31, 2025 and 2024, interest income (expense), net included interest expense related to the Amended MidCap Loan Facility of $ 15.9 million and $ 6.9 million, respectively.

Employee Retention Credits

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was signed into law, providing numerous tax provisions and other stimulus measures, including the Employee Retention Credit:

a refundable tax credit against certain employment taxes.

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the Employee Retention Credits.

The CARES Act provides an employee retention credit (CARES Employee Retention Credit), which is a refundable tax credit against certain employment taxes of up to $ 5,000 per employee for eligible employers.

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The Company qualified for the tax credit under the CARES Act for qualified wages for the years ended December 31, 2020 and 2021.

In September 2023, the Company submitted filings for CARES Employee Retention Credits totaling $ 2.2 million that are reported in the accompanying condensed consolidated balance sheet within prepaid expenses and other current assets as of December 31, 2023 and 2024, and in the accompanying statement of operations for the year ended December 31, 2023.

(11) Leases & Sale and Leaseback

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Under these agreements, the Company is obligated to pay annual rent, real estate taxes, and certain other operating expenses.

The Company also leases equipment under operating leases.

The Company’s operating leases expire at various dates through 2034 .

During 2016, the Company entered into an agreement to extend its lease of approximately 51,650 square feet of office space in Northborough, Massachusetts.

The lease commenced on January 1, 2017 and will expire on December 31, 2031 .

The annual base rent associated with the lease was $ 492,000 during 2024 and is increasing by approximately 3 % annually for the term of the lease.

The lease also requires the payment by the Company of its pro rata share of real estate taxes and certain other expenses.

Prior to the expiration of the lease, the Company will have the right to extend the lease for an additional term of five years .

Under the terms of the lease extension, the landlord provided the Company with an allowance of $ 1.2 million to be utilized for improvements to the leased premises.

These amounts were considered a lease incentive and were excluded from the Company’s ROU assets upon its adoption of ASU 2016-02 on January 1, 2019.

At December 31, 2024 and 2023 , the Company had capitalized $ 1.2 million in associated leasehold improvement costs.

The Company incurred operating lease costs of $ 5.9 million and $ 5.3 million during the years ended December 31, 2024 and 2023, respectively.

Cash payments related to operating lease liabilities were $ 5.6 million and $ 4.9 million during the years ended December 31, 2024 and 2023, respectively.

At December 31, 2024, the weighted average remaining lease term for operating leases was 7.6 years.

At December 31, 2024, the weighted average discount rate for operating leases was 12.1 % .

The Company also leases equipment under operating and finance leases.

The Company’s leases expire at various dates through 2034 .

Maturities of operating lease liabilities at December 31, 2025 are as follows:

Operating Leases

Finance Leases

(In thousands)

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Total lease liabilities

As of December 31, 2024 , the Company had no additional operating real estate or equipment leases that would commence during 2025.

The Company incurred operating lease costs of $ 6.4 million and $ 5.9 million during the years ended December 31, 2025 and 2024, respectively.

Cash payments related to operating lease liabilities were $ 6.2 million and $ 5.6 million during the years ended December 31, 2025 and 2024, respectively.

At December 31, 2025, the weighted average remaining lease term for operating leases was 6.9 years.

At December 31, 2025, the weighted average discount rate for operating leases was 12.1 % .

The Company incurred finance lease costs of $ 1.1 million during the year ended December 31, 2025.

Cash payments related to finance lease liabilities were $ 2.0 million during the year ended December 31, 2025.

The Company did no t incur any finance lease costs or make any cash payments during the comparable 2024 period.

As of December 31, 2025, the weighted average remaining lease term for finance leases was 2.5 years and the weighted average discount rate for finance leases was 10.1 % .

Sale and leaseback transaction

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The transactions were considered as failed sale and leaseback transactions and accordingly, were accounted as financing transactions.

The Company did not recognize gain on any of the proceeds received from the lessor that contractually constitute payments to acquire the assets subject to these arrangements.

Instead, the sale proceeds received were accounted for as finance obligations.

The sale proceeds received were accounted for as finance obligations.

The monthly lease rents will be paid over the term of three years and will be allocated between interest expense and principal repayment of the financial liability.

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Cloud Computing Agreement

The Company is party to multiple cloud computing agreements that are service contracts for enterprise resource planning software and payroll services.

The amortization period of a cloud computing agreement was adjusted during the year ended December 31, 2024 to align with implementation of a new agreement that will begin to amortize during 2025.

The amortization associated with the payroll services agreement began during the year ended December 31, 2024 and will amortize over a period of five years .

The Company is party to multiple cloud computing agreements that are service contracts for enterprise resource planning (ERP) software programs and payroll services.

The amortization period of the cloud computing agreement for the existing ERP software program was adjusted during the year ended December 31, 2024, to align with implementation of a new ERP software and is now fully amortized.

During the year ended December 31, 2025, the Company updated the implementation date of the new ERP software to January 2026, which will begin to amortize thereafter.

The amortization associated with the payroll services agreement began during the year ended December 31, 2024 and is being

amortized over a period of five years.

The capitalized implementation costs are classified on the consolidated balance sheets as follows:

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Thermal Barrier Contract

The Company is party to production contracts with GM to supply fabricated, multi-part thermal barriers (Barriers) for use in the battery system of its next-generation EVs (Contracts).

Pursuant to the Contracts, the Company is obligated to supply Barriers at fixed annual prices and at volumes to be specified by the OEM up to a daily maximum quantity through the respective terms of the agreements, which expire at various times from 2026 through 2034.

The Company is party to production contracts with GM to supply fabricated, multi-part thermal barriers (Barriers) for use in the battery system of its current and next-generation EVs (Contracts).

Pursuant to the Contracts, the Company is obligated to supply Barriers at fixed periodic prices and at volumes to be specified by the OEM up to a daily maximum quantity through the respective terms of the agreements, which expire at various times from 2030 through 2034 and, in certain cases, may be extended by GM .

While the OEM has agreed to purchase its requirement for Barriers from the Company for locations to be designated from time to time by the OEM, it has no obligation to purchase any minimum quantity of Barriers under the Contracts.

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The Company had letters of credit outstanding of $ 0.4 million at December 31, 2024 and these letters of credit were secured by the Company’s restricted cash.

Federal, State and Local Environmental Regulations

The Company is subject to federal, state and local environmental laws and regulations.

These laws generally provide for control of pollutants released into the environment and require responsible parties to undertake remediation.

Penalties may be imposed for noncompliance.

The Company is, from time to time, a party to litigation that arises in the normal course of its business operations.

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The Company’s thermal barrier products provide quality and warranty provisions customary in the automotive industry.

The Company recorded warranty expense of $ 1.4 million during the year ended December 31, 2024 .

The Company recorded warranty expense of $ 0.5 million during the year ended December 31, 2023 .

The Company recorded warranty expense of $ 0.2 million during the year ended December 31, 2022 .

The Company recorded warranty expense of $ 0.8 million, $ 1.4 million, and $ 0.5 million during the years ended December 31, 2025, 2024, and 2023 , respectively.

(13) Stockholders’ Equity

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Under the terms of the plan, the Company’s employees may contribute a percentage of their pretax earnings.

During the year ended December 31, 2024, 2023, and 2022, the Company provided matching contributions of $ 1.6 million, $ 1.5 million, and $ 1.2 million, respectively.

(15) Employee Stock Ownership Plans

During the years ended December 31, 2025, 2024, and 2023, the Company provided matching contributions of $ 1.4 million, $ 1.6 million, and $ 1.5 million, respectively.

(15) Stock Based Compensation

Effective June 12, 2014, the Company adopted the 2014 Employee, Director and Consultant Equity Incentive Plan (the 2014 Equity Plan).

Under the 2014 Equity Plan, the Company was authorized to grant incentive stock options (ISOs), non-qualified stock options (NSOs), restricted stock, restricted stock units (RSUs) and other stock-based awards.

Under the 2014 Equity Plan, the Company was authorized to grant incentive stock options (ISOs), non-qualified stock options (NSOs), restricted stock, RSUs and other stock-based awards.

Stock options under the 2014 Equity Plan were granted with an exercise price not less than the fair market value of the Company’s common stock at the date of grant.

The 2023 Equity Plan was approved by stockholders at the Company’s annual meeting of stockholders on June 1, 2023 as the successor to the 2014 Equity Plan, and no further awards may be made under the 2014 Equity Plan after that date.

The Aspen Aerogels 2023 Equity Incentive Plan (the 2023 Equity Plan) was approved by stockholders at the Company’s annual meeting of stockholders held on June 1, 2023 as the successor to the 2014 Equity Plan, and no further awards may be made under the 2014 Equity Plan after that date.

Under the 2023 Equity Plan, the Company may grant ISOs, NSOs, restricted stock, RSUs and other stock-based awards.

Stock options under the 2023 Equity Plan are to be granted with an exercise price not less than the fair market value of the Company’s common stock at the date of grant.

Stock options under the 2023 Equity Plan are to be granted with an exercise price not less than the fair market value of the Company’s common stock at the date o f grant.

Equity awards granted to employees generally vest over a service period of three to four years .

Restricted stock, RSUs and stock options granted to nonemployee directors generally vest over a one-year service period.

The Company’s stockholders approved the Aspen Aerogels Amended and Restated 2023 Equity Incentive Plan (the Restated 2023 Equity Plan) at the Company’s annual meeting of stockholders held on April 30, 2025 (the 2025 Annual Meeting).

The Restated 2023 Equity Plan was previously approved by the Company’s Board of Directors (the Board).

As amended and restated, the number of shares of the Company’s common stock reserved for issuance under the Restated 2023 Equity Plan has been increased by 3,850,000 shares to 16,971,994 shares and the term of the 2023 Restated Equity Plan has been extended until April 29, 2035.

As of December 31, 2025 , 4,356,250 shares of common stock were reserved for issuance upon the exercise or vesting of outstanding stock-based awards granted under the Company’s equity incentive plans.

Any cancellations or forfeitures of awards outstanding under the 2023 Equity Plan or the 2014 Equity Plan will result in the shares reserved for issuance pursuant to such awards becoming available for grant under the 2023 Equity Plan.

As of December 31, 2024, the Company has either reserved in connection with statutory tax withholdings or issued a total of 5,981,915 shares under the Company’s equity incentive plans.

As of December 31, 2024, there were 2,184,830 shares of common stock available for future grant under the 2023 Equity Plan.

During the year ended December 31, 2024, the Company granted 250,968 restricted common stock units (RSUs) with a grant date fair value of $ 4.1 million and non-qualified stock options (NSOs) to purchase 581,658 shares of common stock with a grant date

fair value of $ 6.5 million to employees under its equity incentive plans.

The RSUs and NSOs granted to employees will vest over a three-year period from the applicable vesting commencement date.

During the year ended December 31, 2024, the Company also granted 13,264 shares of restricted common stock with a grant date fair value of $ 0.4 million and NSOs to purchase 11,618 shares of common stock with a grant date fair value of $ 0.2 million to its non-employee directors under the 2023 Equity Plan.

The restricted common stock and NSOs granted to non-employee directors vest upon the earlier of the date that is the one-year anniversary of the grant date or the day prior to the Company’s annual meeting of stockholders to be held in 2025.

Any cancellations or forfeitures of awards outstanding under the Restated 2023 Equity Plan, the 2014 Equity Plan or the 2001 Equity Incentive Plan, as amended, will result in the shares reserved for issuance pursuant to such awards becoming available for grant under the Restated 2023 Equity Plan.

As of December 31, 2025 , the

Company has either reserved in connection with statutory tax withholdings or issued a total of 6,689,149 shares under the Company’s equity incentive plans.

As of December 31, 2025 , there were 5,926,595 shares of common stock available for future grant under the Restated 2023 Equity Plan.

At the 2025 Annual Meeting, the Company’s stockholders also approved the Aspen Aerogels Employee Stock Purchase Plan (the ESPP).

The ESPP was previously approved by the Board.

The objective of the ESPP is to offer eligible employees of the Company and its designated subsidiaries the ability to purchase shares of the Company’s common stock at a 15 % discount from the fair market value of the stock as determined on specific dates at six-month intervals, subject to various limitations under the ESPP.

4,000,000 shares of the Company’s common stock are authorized for issuance under the ESPP.

The offering periods for the ESPP generally start on the first trading day on or after June 1st and December 1st of each year.

The first offering period for the ESPP commenced on the first trading day after June 1, 2025 and ended on November 30, 2025, with the second offering period commencing on the first trading day after December 1, 2025 and ending on May 31, 2026.

During the year ended December 31, 2025 , $ 0.1 million of stock-based compensation was recognized for the ESPP.

Stock-based compensation is included in cost of sales or operating expenses, as applicable, and consists of the following:

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Total stock-based compensation

The Company recognizes forfeitures on stock-based payments as they occur.

During the years ended December 31, 2025, 2024 and 2023, stock-based compensation includes $( 3.8 ) million, $( 0.1 ) million and $( 0.2 ) million, respectively, for forfeitures recorded during the period.

Stock Options Valuation and Amortization Method

During the year ended December 31, 2025, the Company granted NSOs to purchase 461,154 shares of common stock with a grant date fair value of $ 2.5 million to its employees and granted NSOs to purchase 45,525 shares of common stock with a grant date fair value of $ 0.2 million to its non-employee directors under the Restated 2023 Equity Plan.

The NSOs granted to employees will vest over a three-year period from the applicable vesting commencement date and is amortized on a straight-line basis over the requisite service period of the options.

The NSOs granted to non-employee directors vest upon the earlier of the date that is the one-year anniversary of the grant date or the day prior to the Company’s annual meeting of stockholders to be held in 2026.

The fair value of each stock option is estimated as of the date of grant using the Black-Scholes option-pricing model.

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Each assumption is set forth and discussed below.

The Company used a Monte-Carlo Simulation model to estimate the original grant date fair value of the CEO Options as well as the subsequent modifications.

The simulation model was based on the Black-Scholes option-pricing model and a number of complex assumptions including (i) whether the vesting condition is satisfied within the time-vesting periods, and (ii) the date the common stock price target is met per the terms of the agreement.

For stock options with a service condition, the fair value is amortized on a straight-line basis over the requisite service period of the options, which is generally a three-year vesting period from the date of grant.

Expected Term

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Estimated Forfeitures

The Company records the impact of forfeitures of service-based awards under the provisions of ASU 2016-09 at the time an award is forfeited.

Estimated forfeitures are excluded from the calculation of fair value of stock options as the Company records the impact of forfeitures of service-based awards under the provisions of ASU 2016-09 at the time an award is forfeited.

Assumptions Utilized

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Expected volatility

Risk free rate

Risk free interest rate

Expected dividend yield

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Exercisable at December 31, 2025

Expected to vest at December 31, 2024

Expected to vest after December 31, 2025

As of December 31, 2025, total unrecognized compensation cost related to non-vested service-based options granted under the Company’s equity incentive plans was $ 3.2 million.

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Restricted Stock Awards and Restricted Stock Units

The Company values restricted stock awards and RSUs based on the closing price of our shares on the date of grant.

RSUs have time-based vesting conditions and typically vest over three or four years .

Restricted stock awards issued to nonemployee directors generally vest in full one year from the date of grant.

During the year ended December 31, 2025 , the Company granted 327,104 RSUs with a grant date fair value of $ 2.5 million to its employees and granted 51,850 shares of restricted common stock with a grant date fair value of $ 0.3 million to its non-employee directors under the Restated 2023 Equity Plan.

The RSUs granted to employees will vest over a three-year period from the applicable vesting commencement date.

The restricted common stock granted to non-employee directors vest upon the earlier of the date that is the one-year anniversary of the grant date or the day prior to the Company’s annual meeting of stockholders to be held in 2026.

The Company values restricted stock awards and RSUs based on the closing price of its common stock on the date of grant.

The following table provides detail of grants, vesting, and forfeitures of RSUs during 2025:

2 unchanged sentences

Restricted stock awards granted during 2025 are considered issued and outstanding common stock and are excluded from the table above.

As of December 31, 2024, there were 13,264 shares of restricted stock outstanding which were granted to nonemployee directors.

The total intrinsic value of restricted stock and RSUs that vested in 2025 and 2024 was $ 2.3 million and $ 3.7 million, respectively.

As of December 31, 2024, 573,894 of the total shares of restricted stock and RSUs outstanding will vest upon the fulfillment of service conditions.

As of December 31, 2024, total unrecognized compensation cost related to restricted stock awards issued to nonemployee directors of $ 0.2 million, and RSUs of $ 4.5 million is expected to be recognized over a weighted average period of 0.44 years and 1.81 years respectively.

During the year ended December 31, 2021, the Company awarded 461,616 shares of restricted common stock to its Chief Executive Officer with vesting subject to the achievement of certain volume weighted average common stock price targets, over a three -to- five year period.

The Company valued the shares using a Monte-Carlo simulation model to estimate the grant date fair value utilizing an expected volatility of 59.3 % and a risk free rate of 0.89 %.

On June 2, 2022, the Company issued 53,590 shares of restricted common stock, pursuant to a performance-based restricted stock agreement, to each of certain employees, with vesting in tranches, subject to achievement of certain time and performance vesting conditions, as defined, over a three -to- five year period.

The Company used a Monte-Carlo simulation model to estimate the grant date fair value utilizing an expected volatility of 63.4 % and a risk free rate of 2.92 %.

On March 5, 2024, the Compensation and Leadership Development Committee (the Committee) of the Board of Directors of the Company approved the cancellation of the outstanding, unearned portion of the performance-based restricted shares granted to certain employees pursuant to the 2014 Equity Plan on June 29, 2021 (to Chief Executive Officer) and June 2, 2022 (to certain other employees).

The Committee determined that based on current market conditions, the likelihood of achievement of any of the remaining performance hurdles applicable to the unearned restricted shares is remote, and that the unearned restricted shares therefore had ceased to have incentive value for the grantees.

As of December 31, 2025, 411,596 of the total shares of RSUs outstanding will vest upon the fulfillment of service conditions.

As of December 31, 2025, total unrecognized compensation cost related to RSUs of $ 2.3 million is expected to be recognized over a weighted average period of 1.72 years.

Performance Stock Units

During the year ended December 31, 2025, the Company issued an aggr egate of 654,217 performance sh are units (the PSU Awards) to certain employees.

Each PSU Award provides the grantee with the opportunity to earn between 0 % and 200 % of the target number of performance share units, based on the Company’s total stockholder return for a three-year performance period (January 1, 2025 through December 31, 2027) relative to the total stockholder return of the components of the Russell 2000 Index.

Vesting of any performance share units so earned generally is also contingent upon the grantee’s continued employm ent (or other service) with the Company through the third anniversary of the date of grant, and any vested performance share units will be settled in shares of the Company’s common stock at (or shortly after) vesting.

The PSU Awards had a total aggregate fair value of $ 7.4 million at the time of grant.

The Company uses the Monte-Carlo simulation model to determine the grant date fair value of the PSU Awards.

In addition to the input assumptions used in the Black-Scholes model, the Monte-Carlo simulation model factors into the valuation the probability that the specific market condition may or may not be satisfied.

Stock-based compensation expense for awards with a market condition is recognized on a straight-line basis over the requisite service period for each such award.

The following table provides detail of grants, vesting, and forfeitures of PSUs during 2025:

Balance at December 31, 2024

Balance at December 31, 2025

As of December 31, 2025, total unrecognized compensation cost related to PSUs of $ 2.9 million is expected to be recognized over a weighted average period of 2.18 years.

On March 5, 2024, the Compensation and Leadership Development Committee of the Board (the Committee) approved the cancellation of the outstanding, unearned portion of the performance-based restricted shares granted to certain employees pursuant to the 2014 Equity Plan on June 29, 2021 (to Chief Executive Officer) and June 2, 2022 (to certain other employees).

value for the grantees.

On March 6, 2024, the Company entered into cancellation agreements, pursuant to which the applicable employees agreed to such cancellation.

The cancelled unearned restricted shares were added to the number of shares available for awards under the Company’s 2023 Equity Incentive Plan.

The cancelled unearned restricted shares were added to the number of shares available for awards under the Restated 2023 Equity Plan.

For financial accounting purposes, the cancellation of the unearned restricted shares resulted in the immediate charge of approximately $ 2.2 million of unamortized stock compensation costs of which $ 2.0 million is included in the general and administrative expenses and $ 0.2 million is included in research and development expenses in the accompanying consolidated statement of operations.

Cash-settled Awards

During the year ended December 31, 2025, the Company granted RSUs that vest over a period of three years which are settled in cash.

The Company has accounted for these as liability-classified awards and accordingly changes in the market value of the instruments will be recorded to costs of revenue or operating expense, as applicable, over the vesting period of the award.

The fair value of a liability-classified award is determined on a quarterly basis beginning at the grant date until final vesting.

These awards will be settled on the vesting dates and the maximum liability is capped at 200 % of the fair value of the award at the grant date.

At December 31, 2025, the fair value of these awards were $ 0.5 million.

(16) Net Income (Loss) Per Share

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Net income (loss) per share, diluted

Potentially dilutive common shares that were excluded from the computation of diluted net loss per share because they were anti-dilutive consist of the following:

Potentially dilutive common shares that were excluded from the computation of diluted net income (loss) per share because they were anti-dilutive consist of the following:

Year ended December 31,

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The Company excludes the shares issued in connection with restricted stock awards from the calculation of basic weighted average common shares outstanding until the restrictions lapse.

For each of the years ended December 31, 2025 and 2023, there was no dilutive impact of the common stock options, RSUs, or restricted stock awards.

(17) Income Taxes

The Company incurred net operating income for the year ended December 31, 2024 and net operating loss for the years ended December 31, 2023 and 2022.

The Company incurred net operating losses and recorded a full valuation allowance against net deferred tax assets for all prior periods.

Accordingly, t he Company has not recorded a provision for federal or state income taxes.

The Company recorded income tax expense of $ 1.7 million for the year ended December 31, 2024 associated with its Mexican maquiladora operations.

There was no respective income tax for the years ended December 31, 2023 and 2022.

The reconciliation between the U.S.

statutory income tax rate and the Company’s effective rate consists of the following:

The Company incurred net operating losses for the years ended December 31, 2025 and 2023, and net operating income for the year ended December 31, 2024.

The Company incurred net operating losses and recorded a full valuation allowance against net

deferred tax assets for all prior periods.

Accordingly, the Company has not recorded a provision for federal income taxes for the years ended December 31, 2025 or 2024.

The following table summarizes the (loss) income before the (benefit) provision:

Year Ended December 31,

Loss before income tax expense

The Company has recorded a provision for state income taxes of $ 0.3 million during the year ended December 31, 2025 .

The Company has incurred $ 2.1 million and $ 1.7 million of income tax expense related to its foreign operations, primarily its Mexican maquiladora operations for the years ended December 31, 2025 and 2024, respectively.

There was no respective income tax for the year ended December 31, 2023.

Income taxes included in the Consolidated Statement of Operations are as follows:

Year ended December 31,

(In thousands)

Current income tax expense

Deferred income tax (benefit)

Total income tax (benefit)

The table below represents cash paid (refunds received) for income taxes.

For the Year Ended December 31,

(In thousands)

Aggregated state and local jurisdictions

Net cash paid (refunds received) for income taxes

The tables below represent a reconciliation of the U.S.

federal statutory income tax rate to effective tax rate.

The Company has adopted the guidance in ASU 2023-09 on a prospective basis.

The following table reflects the reconciliation rate for 2025 under the new guidance.

Effective Rate

(In thousands)

federal income tax at statutory rate

State and local income taxes, net of federal income tax effect

Foreign tax effects

Changes in valuation allowances

Nontaxable or nondeductible items

Stock-based compensation

Other reconciling items

Effective income tax rate

The table below represents a reconciliation of the U.S.

federal statutory tax rate to effective tax rate for the years ended December 31, 2024 and 2023 under the disclosure requirements prior to the adoption of ASU 2023-09.

Year Ended December 31,

federal income tax statutory rate

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The net change in the valuation allowance for the year ended December 31, 2025 , was an increase of $ 82.0 million.

The Company has recorded a full valuation allowance against its deferred tax assets due to the uncertainty associated with the utilization of the net operating loss carryforwards and other future deductible items.

The Company has recorded a full valuation allowance against its federal and state net deferred tax assets due to the uncertainty associated with the utilization of the net operating loss carryforwards and other future deductible items.

In assessing the realizability of deferred tax assets, the Company considers all available evidence, historical and prospective, with greater weight given to historical evidence, in determining whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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For each of the years ended December 31, 2025, 2024 and 2023 , the Company did no t have any material unrecognized tax benefits and thus no interest and penalties related to unrecognized tax benefits were recorded.

In addition, the Company does no t expect that the amount of unrecognized tax benefits will change significantly within the next twelve months.

The Company files a federal income tax return in the United States and income tax returns in various state and foreign jurisdictions.

All tax years are open for examination by the taxing authorities for both federal and state purposes.

The Tax Cuts and Jobs Act (“TCJA”) requires taxpayers to capitalize and amortize research and development (R&D) expenditures under section 174 for tax years beginning after December 31, 2021.

This rule became effective for the Company during 2022.

Capitalized R&D costs were $ 66.3 million as of December 31, 2024 .

The Company will amortize these costs for tax purposes over 5 years for R&D performed in the U.S.

and over 15 years for R&D performed outside the U.S.

In 2024 , all R&D was performed in the U.S.

The Tax Cuts and Jobs Act requires taxpayers to capitalize and amortize research and development (R&D) expenditures under Section 174 of the Internal Revenue Code for tax years beginning after December 31, 2021.

R&D costs performed in the United States are amortized over 5 years and over 15 years for R&D performed outside the United States.

This rule became effective for the Company during 2022 and resulted in the net capitalization of R&D expenses of $ 51.4 million as of December 31, 2024.

All costs were incurred in the United States.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which allows for immediate deduction of R&D costs performed in the United States.

Expenses related to R&D performed outside the United States will continue to be capitalized and amortized over 15 years .

This is applicable for tax years beginning after December 31, 2024.

OBBBA also provides certain eligible taxpayers with the option to accelerate the deduction of the remaining unamortized domestic R&D costs incurred during taxable years ending after December 31, 2021 and before January 1, 2025 over one or two years or continue to amortize the remaining unamortized cost over the remaining 5 year lives.

The Company intends to continue amortizing the domestic R&D costs over the remaining 5 year lives.

Previously unamortized Capitalized R&D costs is $ 37.4 million as of December 31, 2025.

(18) Segment Information

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The Company’s chief operating decision maker is the Chief Executive Officer .

The Company’s chief operating decision maker reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire

The Company’s chief operating decision maker reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire Company.

The Company reports two segments:

Energy Industrial and Thermal Barrier.

We evaluate segment performance based on the segment profit (loss) before corporate expenses.

Thermal Barrier and Energy Industrial.

The Company evaluates segment performance based on the segment profit (loss) before corporate expenses.

Summarized below are the Revenue, Cost of Goods Sold, and Segment Operating Profit for each reporting segment:

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Thermal barrier

Total gross profit

Corporate expenses

Restructuring and demobilization costs

Loss on disposal of property, plant and equipment

Impairment of property, plant and equipment

Operating profit (loss)

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Total assets of reportable segments

Construction in progress

Construction in progress and held for sale

All other corporate assets

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International

(19) Subsequent Events

The Company has evaluated subsequent events through February 27, 2025, the date of issuance of the consolidated financial statements for the year ended December 31, 2024.

In February 2025, the Company decided to cease construction at its previously planned second manufacturing plant in Statesboro, Georgia and demobilize the site.

The Company is in the process of assessing options to derive value from the assets, including potentially relocating certain equipment to improve and expand its existing manufacturing facility in East Providence.

(19) Restructuring and Demobilization Costs

In February 2025, the Company announced and began implementing a restructuring plan to realign the Company’s operational focus to improve costs and align capital expenditure to anticipated long-term demand.

The plan included reducing the Company’s headcount and ceasing construction of the Company's previously planned Statesboro Plant.

In connection with the demobilization, the Company is no longer pursuing its application for a loan from the Department of Energy’s Loan Programs Office and has withdrawn from the loan application process.

The Company will assess the impact of the demobilization on the $ 332.4 million capitalized construction and interest costs.

If necessary, the Company will adjust the capitalized value to its salvage value in accordance with U.S.

The Company may incur additional costs associated with the demobilization of the site.

Further, the Company expects to write off deferred financing costs of $ 6.1 million incurred in connection with pursuing financing for the construction of the plant.

During each of the three months ended June 30, 2025, September 30, 2025 and December 31, 2025, the Company announced further headcount reductions to realign the Company’s operation and to improve costs.

As a result of the restructurings and the demobilization, the Company incurred the charges shown in the following table.

Property, plant and equipment write-downs are included within impairment expenses in the consolidated statements of operations.

December 31, 2025

(In thousands)

Severance and other personnel costs

Demobilization costs

Deferred financing costs write-off

(20) Subsequent Events

The Company has evaluated subsequent events through March 13, 2026, the date of issuance of the consolidated financial statements for the year ended December 31, 2025.

As discussed in Note (5), during the fourth quarter of 2025, a large Thermal Barrier customer notified the Company of its lower forecasted long-term demand requirements and requested the Company submit a claim for certain losses incurred.

The Company submitted the claim with the customer in November 2025.

On January 27, 2026, the Company accepted a settlement of $ 37.6 million to cover the Company's claims and expects to receive the funds later in the first quarter of 2026.

VALUATION AND QUALIFYING ACCOUNTS

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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-K

Item 7. Management’s Discussion and Analysis