ASPEN AEROGELS INC 10-K

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto included in this Annual Report on Form 10-K. In addition to historical information, some of the information contained in the following discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking information that involves risks, uncertainties and assumptions. You should read the Risk Factors set forth in Item 1A of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our actual results and the timing of events could differ materially from those anticipated by these forward looking statements. Investors and others should note that we routinely use the Investors section of our website to announce material information to investors and the marketplace. While not all of the information that we post on the Investors section of our website is of a material nature, some information could be deemed to be material. 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. Products Our core businesses are organized into two reportable segments: Thermal Barrier and Energy Industrial. The following describes our key product offerings and new product innovations by reportable segment. Thermal Barrier 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 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), 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 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 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. Our 65 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. Our Pyrogel® and Cryogel® product lines have undergone rigorous technical validation by industry leading end-users and achieved significant market adoption. We also derive revenue from a number of other end markets. 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. The efforts of our sales force are supported by a small number of sales consultants with extensive knowledge of a particular market or region. Our sales force is responsible for establishing and maintaining customer and partner relationships, delivering highly technical information and ensuring high-quality customer service. Our salespeople work directly with end-user customers and engineering firms to promote the qualification, specification and acceptance of our aerogel and thermal barrier products. We also rely on an existing and well-established channel of qualified insulation distributors and contractors in more than 50 countries around the world to ensure rapid delivery of our aerogel products and strong end-user support. Manufacturing Operations 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. 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. The contract automatically renews year-to-year unless either party notifies the other of its intention not to renew the contract. 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 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 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. 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). 66 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 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. In October 2024, we sold 4,887,500 shares of our common stock at an offering price of $20.00 per share in a registered direct offering for net proceeds of $93.2 million, after deducting offering expenses of approximately $0.7 million. Key Metrics and Non-GAAP Financial Measures We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. Adjusted EBITDA We use Adjusted EBITDA, a non-GAAP financial measure, as a means to assess our operating performance. We define Adjusted EBITDA as net income (loss) before interest expense, taxes, depreciation, amortization, stock-based compensation expense and other items, from time to time, which we do not believe are indicative of our core operating performance. Adjusted EBITDA is a supplemental measure of our performance that is not presented in accordance with U.S. GAAP. Adjusted EBITDA should not be considered as an alternative to net income (loss) or any other measure of financial performance calculated and presented in accordance with U.S. GAAP. In addition, our definition and presentation of Adjusted EBITDA may not be comparable to similarly titled measures presented by other companies. We use Adjusted EBITDA: • as a measure of operating performance because it does not include the impact of items that we do not consider indicative of our core operating performance; • for planning purposes, including the preparation of our annual operating budget; 67 • to allocate resources to enhance the financial performance of our business; and • as a performance measure used under our bonus plan. We also believe that the presentation of Adjusted EBITDA provides useful information to investors with respect to our results of operations and in assessing the performance and value of our business. Various measures of EBITDA are widely used by investors to measure a company’s operating performance without regard to items that can vary substantially from company to company depending upon financing and accounting methods, book values of assets, capital structures and the methods by which assets were acquired. Although measures similar to Adjusted EBITDA are frequently used by investors and securities analysts in their evaluation of companies, we understand that Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for net income (loss), income (loss) from operations, net cash provided by (used in) operating activities or an analysis of our results of operations as reported under U.S. GAAP. Some of these limitations are: • Adjusted EBITDA does not reflect our historical cash expenditures or future requirements for capital expenditures or other contractual commitments; • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA does not reflect stock-based compensation expense; • Adjusted EBITDA does not reflect our income tax expense or cash requirements to pay our income taxes; • Adjusted EBITDA does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments on our debt; • although depreciation, amortization and impairment charges are non-cash charges, the assets being depreciated, amortized or impaired will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for these replacements; and • other companies in our industry may calculate EBITDA or Adjusted EBITDA differently than we do, limiting their usefulness as a comparative measure. Because of these limitations, our Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to reinvest in the growth of our business or as a measure of cash available for us to meet our obligations. To properly and prudently evaluate our business, we encourage you to review the U.S. 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 income (loss), the most directly comparable U.S. GAAP measure, to Adjusted EBITDA for the years presented: Year Ended December 31, 2025 2024 2023 ($ in thousands) Net income (loss) $ (389,552 ) $ 13,375 $ (45,811 ) Depreciation and amortization 45,157 22,526 15,318 Stock-based compensation (1) 9,173 12,855 10,954 Other (income) expense 8,930 11,959 (3,392 ) Loss on extinguishment of debt — 27,487 — Income tax expense 2,394 1,714 — Restructuring and demobilization costs 17,510 — — Loss on disposal of property, plant and equipment 18,162 — — Impairment of property, plant and equipment 291,164 — — Adjusted EBITDA $ 2,938 $ 89,916 $ (22,931 ) (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. 68 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: Three Months Ended Three Months Ended 2025 2024 March 31 June 30 Sept. 30 Dec. 31 March 31 June 30 Sept. 30 Dec. 31 ($ in thousands) Net income (loss) $ (301,249 ) $ (9,056 ) $ (6,334 ) $ (72,913 ) $ (1,835 ) $ 16,818 $ (12,970 ) $ 11,362 Depreciation and amortization 5,793 5,796 5,393 28,175 5,786 5,986 5,321 5,433 Stock-based compensation (1) 2,073 3,211 2,642 1,247 4,706 2,971 2,630 2,548 Other (income) expense 832 3,080 2,392 2,626 3,515 2,302 2,616 3,526 Loss on extinguishment of debt — — — — — — 27,487 — Income tax expense 1,076 821 594 (97 ) 756 866 267 (175 ) Restructuring and demobilization costs 9,790 4,938 1,568 1,214 — — — — Loss on disposal of property, plant and equipment — — — 18,162 — — — — Impairment of property, plant and equipment 286,612 955 — 3,597 — — — — Adjusted EBITDA $ 4,927 $ 9,745 $ 6,255 $ (17,989 ) $ 12,928 $ 28,943 $ 25,351 $ 22,694 (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 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. Revenue 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. 69 We record deferred revenue for product sales when (i) we have delivered products but other revenue recognition criteria have not been satisfied or (ii) payments have been received in advance of the completion of required performance obligations. The following table sets forth the total revenue for the periods presented: Year Ended December 31, 2025 2024 2023 ($ in thousands) Revenue: Energy industrial $ 102,198 $ 145,867 $ 128,639 Thermal barrier 168,905 306,832 110,079 Total $ 271,103 $ 452,699 $ 238,718 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 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. Our ten largest customers accounted for approximately 84% of our total revenue during the year ended December 31, 2025, and we expect that most of our revenue will continue to come from a relatively small number of customers for the foreseeable future. In 2025, sales to GM and Distribution International, Inc. (Distribution) represented 59% and 9% of our total revenue, respectively. In 2024, sales to GM and Distribution represented 64% and 6% of our total revenue, respectively. In 2023, sales to GM and Distribution represented 41% and 14% of our total revenue, respectively. For each of the noted periods, there were no other customers that represented 10% or more of our total revenues. We conduct business across the globe and a substantial portion of our revenue is generated outside of the United States. Total revenue from outside of the United States, based on shipment destination, amounted to $99.0 million, or 37% of our total revenue, $194.2 million, or 43% of our total revenue, and $87.7 million, or 37% of our total revenue, in the years ended December 31, 2025, 2024 and 2023, respectively. Cost of Revenue 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, 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. Material costs as a percentage of product revenue vary from product to product due to differences in average selling prices, material requirements, product thicknesses, and manufacturing yields. In addition, we provide warranties for our products and record the estimated cost within cost of revenue in the period that the related revenue is recorded or when we become aware that a potential warranty claim is probable and can be reasonably estimated. As a result of these factors, material costs as a percentage of product revenue will vary from period to period due to changes in the mix of aerogel products sold, the costs of our raw materials or the estimated cost of warranties. 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 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 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 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. 70 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. Gross Profit Our gross profit as a percentage of revenue is affected by a number of factors, including the volume of products produced and sold, the mix of products sold, average selling prices, our material and manufacturing costs, realized capacity utilization and the costs associated with expansions and start-up of production capacity. Accordingly, we expect our gross profit to vary significantly in absolute dollars and as a percentage of revenue from period to period. Gross profit as a percentage of total revenue was 17%, 40%, and 24% for the years ended December 31, 2025, 2024 and 2023, respectively. 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 Operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Operating expenses include personnel costs, legal fees, professional fees, service fees, insurance premiums, travel expense, facilities related costs and other costs, expenses and fees. The largest component of our operating expenses is personnel costs, consisting of salaries, benefits, incentive compensation and stock-based compensation. In any particular period, the timing and extent of personnel additions or reductions, legal activities, including patent enforcement actions, marketing programs, research efforts and a range of similar activities or actions could materially affect our operating expenses, both in absolute dollars and as a percentage of revenue. Research and Development Expenses Research and development expenses consist primarily of expenses for personnel engaged in the development of next generation aerogel compositions, form factors and manufacturing technologies. These expenses also include testing services, prototype expenses, consulting services, trial formulations for new products, equipment depreciation, facilities costs and related overhead. We expense research and development costs as incurred. We expect to continue to devote substantial resources to the development of new aerogel technologies. Sales and Marketing Expenses Sales and marketing expenses consist primarily of personnel costs, incentive compensation, marketing programs, travel and related costs, consulting expenses and facilities related costs. General and Administrative Expenses General and administrative expenses consist primarily of personnel costs, legal expenses, consulting and professional services, audit fees, compliance with securities, corporate governance and related laws and regulations, investor relations and insurance premiums, including director and officer insurance. We expect our general and administrative expenses to decrease as we continue our ongoing cost reduction measures, including reduced headcount. 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 expenses over time. 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. 71 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 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 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. government. Loss on Extinguishment of Debt 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. 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. Income from Employee Retention Credit 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 We have incurred net losses since inception with the exception of the year ended December 31, 2024, and have not recorded benefit provisions for U.S. federal income taxes or state income taxes since the tax benefits of our net losses have been offset by valuation allowances due to the uncertainty associated with the utilization of net operating loss carryforwards. We record tax expenses in connection with our Mexican maquiladora operations. At December 31, 2025, we had $372.3 million of net operating losses available to offset future federal income tax, if any, of which $145.0 million expire on various dates through December 31, 2037. Net operating losses of $227.3 million generated from 2018 through 2025 have an unlimited carryforward . 72 Results of Operations The following tables set forth our results of operations for the periods presented: Year Ended December 31, 2025 2024 2023 ($ in thousands) Revenue $ 271,103 $ 452,699 $ 238,718 Cost of revenue 225,105 269,802 181,797 Gross profit 45,998 182,897 56,921 Operating expenses Research and development 13,416 18,050 16,356 Sales and marketing 28,200 35,677 33,008 General and administrative 55,774 71,125 56,760 Restructuring and demobilization costs 17,510 — — Loss on disposal of property, plant and equipment 18,162 — — Impairment of property, plant and equipment 291,164 3,510 — Total operating expenses 424,226 128,362 106,124 Income (loss) from operations (378,228 ) 54,535 (49,203 ) Other income (expense) Interest expense, convertible note - related party — (7,550 ) (5,328 ) Interest income (expense), net (10,716 ) (4,409 ) 6,534 Income from Employee Retention Credits — — 2,186 Loss on extinguishment of debt — (27,487 ) — Other income 1,786 Total other income (expense) (8,930 ) (39,446 ) 3,392 Income tax expense (2,394 ) (1,714 ) — Net income (loss) $ (389,552 ) $ 13,375 $ (45,811 ) 73 Year ended December 31, 2025 compared to year ended December 31, 2024 The following tables set forth our results of operations for the periods presented: Year Ended December 31, Year Ended December 31, 2025 2024 $ Change % Change 2025 2024 ($ in thousands) (Percentage of total revenue) Revenue $ 271,103 $ 452,699 $ (181,596 ) (40 )% 100 % 100 % Cost of revenue 225,105 269,802 (44,697 ) (17 )% 83 % 60 % Gross profit 45,998 182,897 (136,899 ) (75 )% 17 % 40 % Operating expenses Research and development 13,416 18,050 (4,634 ) (26 )% 5 % 4 % Sales and marketing 28,200 35,677 (7,477 ) (21 )% 10 % 8 % General and administrative 55,774 71,125 (15,351 ) (22 )% 21 % 16 % Restructuring and demobilization costs 17,510 — 17,510 100 % 6 % — % Loss on disposal of property, plant and equipment 18,162 — 18,162 100 % 7 % — % Impairment of equipment under development 291,164 3,510 287,654 NM 107 % 1 % Total operating expenses 424,226 128,362 295,864 230 % 156 % 28 % Income (loss) from operations (378,228 ) 54,535 (432,763 ) (794 )% 140 % 12 % Other income (expense) Interest expense, convertible note - related party — (7,550 ) 7,550 100 % — % 2 % Interest expense, net (10,716 ) (4,409 ) (6,307 ) 143 % 4 % 1 % Loss on extinguishment of debt — (27,487 ) 27,487 100 % — % 6 % Other income 1,786 — 1,786 100 % 1 % — % Total other income (expense) (8,930 ) (39,446 ) 30,516 (77 )% 3 % 9 % Income tax expense (2,394 ) (1,714 ) (680 ) 40 % 1 % 0 % Net income (loss) $ (389,552 ) $ 13,375 $ (402,927 ) 3,013 % 144 % 3 % Revenue Year Ended December 31, 2025 2024 Change Percentage of Percentage of Amount Revenue Amount Revenue Amount Percentage ($ in thousands) Revenue: Energy industrial $ 102,198 38% $ 145,867 32% $ (43,669 ) (30)% Thermal barrier 168,905 62% 306,832 68% (137,927 ) (45)% Total revenue $ 271,103 100% $ 452,699 100% $ (181,596 ) (40)% 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. 74 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 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. Thermal barrier revenue for the year ended December 31, 2024 included $291.2 million to a major U.S. automotive OEM and $5.9 million to a major Asian automotive OEM. Energy industrial revenue as a percentage of total revenue was 38% and 32% of total revenue in 2025 and in 2024, respectively. Thermal barrier revenue was 62% and 68% of total revenue in 2025 and in 2024, respectively. Cost of Revenue Year Ended December 31, 2025 2024 Change % of Related % of Related Amount Revenue Amount Revenue Amount Percentage ($ in thousands) Cost of revenue: Energy industrial $ 64,992 64% $ 87,425 60% $ (22,433 ) (26)% Thermal barrier 160,113 95% 182,377 59% (22,264 ) (12)% Total cost of revenue $ 225,105 83% $ 269,802 60% $ (44,697 ) (17)% 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 $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 $22.1 million on certain assets whose useful lives were lowered to align utilization with revised expected demand. Material costs decreased primarily due to lower volume and operational efficiencies generating lower scrap. Gross Profit Year Ended December 31, 2025 2024 Change Percentage Percentage Amount of Revenue Amount of Revenue Amount Percentage ($ in thousands) Gross profit: Energy industrial $ 37,206 36% $ 58,442 40% $ (21,236 ) (36)% Thermal barrier 8,792 5% 124,455 41% (115,663 ) (93)% Total gross profit $ 45,998 17% $ 182,897 40% $ (136,899 ) (75)% 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 $44.7 million decrease in total cost of revenue. 75 Research and Development Expenses Year Ended December 31, Change 2025 2024 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) Research and development expenses $ 13,416 5% $ 18,050 4% $ (4,634 ) (26)% 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 $0.3 million. Research and development expenses as a percentage of total revenue increased to 5% during the year ended December 31, 2025 from 4% in the comparable period in 2024 primarily due to the 40% decrease in revenue from the comparable period in 2024. Sales and Marketing Expenses Year Ended December 31, Change 2025 2024 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) Sales and marketing expenses $ 28,200 10% $ 35,677 8% $ (7,477 ) (21)% 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 $0.2 million. Sales and marketing expenses as a percentage of total revenue increased to 10% in 2025 from 8% in 2024 primarily due to the 40% decrease in revenue from the comparable period in 2024. General and Administrative Expenses Year Ended December 31, Change 2025 2024 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) General and administrative expenses $ 55,774 21% $ 71,125 16% $ (15,351 ) (22)% 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 76 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 $3.5 million for the comparable period in 2024 was the result of a charge for impairment of assets due to obsolescence following development of new and more efficient equipment. Other Income (Expense), net Year Ended December 31, Change 2025 2024 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) Other income (expense): Interest expense, related party $ — 0% $ (7,550 ) 2% $ 7,550 (100)% Interest expense, net (10,716 ) 4% (4,409 ) 1% (6,307 ) 143% Loss on extinguishment of debt — 0% (27,487 ) 6% 27,487 (100)% Other income 1,786 1% — 0% 1,786 100% Total other income (expense), net $ (8,930 ) 3% $ (39,446 ) 9% $ 30,516 (77)% 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 $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. 77 Year ended December 31, 2024 compared to year ended December 31, 2023 The following tables set forth our results of operations for the periods presented: Year Ended December 31, Year Ended December 31, 2024 2023 $ Change % Change 2024 2023 ($ in thousands) (Percentage of total revenue) Revenue $ 452,699 $ 238,718 $ 213,981 90 % 100 % 100 % Cost of revenue 269,802 181,797 88,005 48 % 60 % 76 % Gross profit 182,897 56,921 125,976 221 % 40 % 24 % Operating expenses Research and development 18,050 16,356 1,694 10 % 4 % 7 % Sales and marketing 35,677 33,008 2,669 8 % 8 % 14 % General and administrative 71,125 56,760 14,365 25 % 16 % 24 % Impairment of equipment under development 3,510 — 3,510 100 % 1 % — % Total operating expenses 128,362 106,124 22,238 21 % 28 % 44 % Income (loss) from operations 54,535 (49,203 ) 103,738 (211 )% 12 % 21 % Other income (expense) Interest expense, convertible note - related party (7,550 ) (5,328 ) (2,222 ) 42 % 2 % 2 % Interest income, net (4,409 ) 6,534 (10,943 ) (167 )% 1 % 3 % Loss on extinguishment of debt (27,487 ) — (27,487 ) (100 )% 6 % — % Income from Employee Retention Credits — 2,186 (2,186 ) (100 )% — % 1 % Total other income (expense) (39,446 ) 3,392 (42,838 ) (1,263 )% 9 % 1 % Income tax expense (1,714 ) — (1,714 ) (100 )% 0 % — % Net income (loss) $ 13,375 $ (45,811 ) $ 59,186 129 % 3 % 19 % Revenue Year Ended December 31, Change 2024 2023 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) Revenue: Energy industrial $ 145,867 32% $ 128,639 54% $ 17,228 13% Thermal barrier 306,832 68% 110,079 46% 196,753 179% Total revenue $ 452,699 100% $ 238,718 100% $ 213,981 90% 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. 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 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 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 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. 78 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. Thermal barrier revenue for the year ended December 31, 2024 included $291.2 million to a major U.S. automotive OEM and $5.9 million to a major Asian automotive OEM. Thermal barrier revenue for the year ended December 31, 2023 included $97.5 million to a major U.S. automotive OEM and $5.5 million to a major Asian automotive OEM. Energy industrial revenue as a percentage of total revenue was 32% and 54% of total revenue in 2024 and in 2023, respectively. Thermal barrier revenue was 68% and 46% of total revenue in 2024 and in 2023, respectively. Cost of Revenue Year Ended December 31, Change 2024 2023 Amount Percentage of Related Revenue Amount Percentage of Related Revenue Amount Percentage ($ in thousands) Cost of revenue: Energy industrial $ 87,425 60% $ 94,477 73% $ (7,052 ) (7)% Thermal barrier 182,377 59% 87,320 79% 95,057 109% Total cost of revenue $ 269,802 60% $ 181,797 76% $ 88,005 48% 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. 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 $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 $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. Gross Profit Year Ended December 31, Change 2024 2023 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage Gross profit: Energy industrial $ 58,442 40% $ 34,162 27% $ 24,280 71% Thermal barrier 124,455 41% 22,759 21% 101,696 447% Total gross profit $ 182,897 40% $ 56,921 24% $ 125,976 221% 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 $88.0 million increase in total cost of revenue. The increase in total cost of revenue was principally driven by the increase in material costs due to higher volume and overhead costs and additional resources to support our expected higher run-rate revenue in future periods for both our energy industrial and thermal barrier products. 79 Research and Development Expenses Year Ended December 31, Change 2024 2023 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) Research and development expenses $ 18,050 4% $ 16,356 7% $ 1,694 10% 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 $0.2 million. Research and development expenses as a percentage of total revenue decreased to 4% during the year ended December 31, 2024 from 7% in the comparable period in 2023 primarily due to the 90% increase in revenue from the comparable period in 2023. Sales and Marketing Expenses Year Ended December 31, Change 2024 2023 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) Sales and marketing expenses $ 35,677 8% $ 33,008 14% $ 2,669 8% 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 $0.3 million. Sales and marketing expenses as a percentage of total revenue decreased to 8% in 2024 from 14% in 2023 primarily due to the 90% increase in revenue from the comparable period in 2023. General and Administrative Expenses Year Ended December 31, Change 2024 2023 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) General and administrative expenses $ 71,125 16% $ 56,760 24% $ 14,365 25% 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 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 $3.5 million impairment of property, plant and equipment for the year ended December 31, 2024 was the result of a charge for impairment of assets due to obsolescence following development of new and more efficient equipment. 80 Other Income (Expense), net Year Ended December 31, Change 2024 2023 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) Other income (expense): Interest expense, related party $ (7,550 ) 2% $ (5,328 ) 2% $ (2,222 ) 42% Interest income (expense), net (4,409 ) 1% 6,534 3% (10,943 ) (167)% Loss on extinguishment of debt (27,487 ) 6% — 0% (27,487 ) (100)% Income from Employee Retention Credits — 0% 2,186 1% (2,186 ) (100)% Total other income (expense), net $ (39,446 ) 9% $ 3,392 1% $ (42,838 ) (1,263)% 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 Overview We have experienced significant losses and invested substantial resources since our inception to develop, commercialize and protect our aerogel technology and to build a manufacturing infrastructure capable of supplying aerogel products at the volumes and costs required by our customers. These investments have included research and development and other operating expenses, capital expenditures, and investment in working capital balances. 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 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 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, 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. 81 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 support our long-term growth strategy. We believe that consummation of equity financings could potentially result in an ownership change under Section 382 of the Internal Revenue Code. Such an ownership change would lead to the use of our net operating loss carryforwards being restricted. Our inability to use a substantial portion of our net operating loss carryforwards would result in a higher effective tax rate and adversely affect our financial condition and results of operations. Primary Sources of Liquidity Our principal sources of liquidity are currently our cash and cash equivalents, availability under the Revolving Facility, and cash generated by ongoing operations. Cash and cash equivalents consist primarily of cash, money market accounts, and sweep accounts on deposit with banks. As of December 31, 2025, we had $156.9 million of cash and cash equivalents and $9.5 million of availability under the Revolving Facility. See “Risk Factors - Risks Related to Our Business and Strategy – We will require additional capital to pursue our growth strategy, but we may not be able to obtain additional financing on acceptable terms or at all” in this Annual Report on Form 10-K for the year ended December 31, 2025. Analysis of Cash Flow The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2025 2024 2023 ($ in thousands) Net cash provided by (used in): Operating activities $ 32,872 $ 45,549 $ (42,612 ) Investing activities (37,449 ) (86,262 ) (175,455 ) Financing activities (58,129 ) 122,018 75,477 Net increase (decrease) in cash (62,706 ) 81,305 (142,590 ) Cash and cash equivalents, beginning of period 221,276 139,971 282,561 Cash and cash equivalents, end of period $ 158,570 $ 221,276 $ 139,971 Operating Activities 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. 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 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 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 82 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 We have made capital expenditures primarily to develop and expand our manufacturing capacity. Our capital expenditures totaled $37.4 million in 2025, $86.3 million in 2024 and $175.5 million in 2023. 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 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 Operating Leases We lease office space for our corporate offices in Northborough, Massachusetts, which expires in 2031. We also lease additional facilities in East Providence, Rhode Island; Marlborough, Massachusetts; Monterrey, Mexico; 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 (the Barriers) for use in the battery system of its current and next-generation EVs (the 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 2030 through 2034 and, in certain cases, may be extended by GM. 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 Contracts. In addition, the OEM may terminate the Contracts any time and for any or no reason. All other terms of the Contracts are generally consistent with the OEM’s standard purchase terms, including quality and warranty provisions customary in the automotive industry. MidCap Loan Facility 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 83 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. 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. 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 $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. Purchase Commitments As of December 31, 2025, we had purchase commitments of approximately $36.2 million, which included capital commitments of $12.3 million. Purchase commitments related to capital expenditures are anticipated to be spent over the next three years, while our remaining purchase commitments are anticipated to be spent throughout 2026. Purchase obligations relate primarily to open purchase orders for capital expenditures, inventories, and goods and services. Purchase obligations are entered into with various vendors in the normal course of business and are consistent with our expected requirements. Recently Issued Accounting Standards 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, we evaluate the pronouncements to determine the potential effects of adoption to our consolidated financial statements. 84 Standards Implemented Since December 31, 2024 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 Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses and related disclosures. We believe that the estimates, assumptions and judgments involved in these accounting policies have the greatest potential impact on our financial statements; and therefore, we consider these to be our critical accounting policies. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions. 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. 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, 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. We recognize the cost of stock-based awards as service, performance or market conditions are met. Future expense amounts for any particular quarterly or annual period could be affected by changes in our assumptions or changes in market conditions. Stock Options We use the Black-Scholes option-pricing model to estimate the fair value of stock option awards. The determination of the estimated fair value of stock option awards is based on a number of complex and subjective assumptions. These assumptions include the determination of the estimated fair value of the underlying security, the expected volatility of the underlying security, a risk-free interest rate, the expected term of the option, and the forfeiture rate for the award class. The following assumptions were used to estimate the fair value of the option awards: Year Ended December 31, 2025 2024 2023 Weighted-average assumptions: Expected term (in years) 5.95 5.99 6.12 Expected volatility 79.77 % 75.04 % 70.04 % Risk free interest rate 4.03 % 4.11 % 4.08 % Expected dividend yield — % — % — % • The expected term represents the period that our stock-based awards are expected to be outstanding and is determined using the simplified method described in ASC Topic 718, Compensation — Stock Compensation , for all grants. We believe this is a better representation of the estimated life than our actual limited historical exercise behavior. • For the years ended December 31, 2025, 2024 and 2023, we used our historical volatility as a basis to estimate expected volatility in the valuation of stock options. 85 • The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. • We use an expected dividend yield of zero, since we do not intend to pay cash dividends on our common stock in the foreseeable future, nor have we paid dividends on our common stock in the past. For stock options that contain a market condition, we use a Monte-Carlo Simulation model to estimate the grant date fair value of awards expected to vest. 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. 86 Item 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure results primarily from fluctuations in interest rates as well as from inflation. In the normal course of business, we are exposed to market risks, including changes in interest rates which affect our line of credit under our revolving credit facility as well as cash flows. We may also face additional exchange rate risk in the future as we expand our business internationally. Interest Rate Risk We are exposed to changes in interest rates in the normal course of our business. At December 31, 2025, we had unrestricted cash and cash equivalents of $156.9 million. These amounts were held for working capital and capital expansion purposes and were invested primarily in deposit accounts, money market accounts, and high-quality debt securities issued by the U.S. government via cash sweep accounts at major financial institutions in North America. Due to the short-term nature of these investments, we believe that our exposure to changes in the fair value of our cash as a result of changes in interest rates is not material. As of December 31, 2025, we had $1.7 million of restricted cash to support our outstanding letters of credit. 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. A rising interest rate environment will increase the amount of interest paid on these loans. A hypothetical 100 basis point increase or decrease in interest rates would not have a material effect on the results of our operations. Inflation Risk Although we expect that our operating results will be influenced by general economic conditions, we do not believe that inflation has had a material effect on our results of operations during the periods presented in this report. However, our business may be affected by inflation in the future. Foreign Currency Exchange Risk We are subject to inherent risks attributed to operating in a global economy. The majority of our revenue, receivables, purchases and debts are denominated in U.S. dollars. 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. dollar. 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. 87 Item 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors Aspen Aerogels, Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Aspen Aerogels, Inc. 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. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective 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. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. 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. 88 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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 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 As discussed in Note 2 to the consolidated financial statements, inventories are stated at the lower of cost and net realizable value. As of December 31, 2025, the Company held inventories of $47.6 million. The excess, obsolete or damaged goods provision recorded for inventories is equal to the difference between the cost of inventory and the estimated net realizable value, which is based upon assumptions about future demand, selling prices, and market conditions. 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 89 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. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s inventory process. This included a control related to the Company’s process to estimate future consumption. We assessed the Company’s assumption related to future consumption and its correlation to past consumption by inquiring of relevant Company personnel regarding the impact of relevant changes to the overall business environment, including key customers and product lines. We compared the actual quantities of inventory on hand to actual consumption during the current year and subsequent to year-end to evaluate whether the historic and subsequent period consumption supported the Company’s assumption related to future consumption. We recalculated the Company’s estimate of the inventory provision based on the actual quantities of inventory on hand compared to the estimate of future consumption. /s/ KPMG LLP We have served as the Company’s auditor since 2002. Boston, Massachusetts March 13, 2026 90 ASPEN AEROGELS, INC. Consolidated B alance Sheets December 31, 2025 2024 (In thousands, except share and per share data) Assets Current assets: Cash and cash equivalents $ 156,857 $ 220,882 Restricted cash 1,713 394 Accounts receivable, net of allowances of $ 4,172 and $ 1,265 35,270 109,104 Inventories 38,249 47,551 Prepaid expenses and other current assets 9,964 31,517 Total current assets 242,053 409,448 Property, plant and equipment, net 98,400 459,276 Assets held for sale 32,712 — Operating lease right-of-use assets 18,014 20,854 Finance lease right-of-use assets 6,131 — Other long-term assets 9,369 5,566 Total assets $ 406,679 $ 895,144 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 13,243 $ 44,361 Accrued expenses 12,952 36,495 Deferred revenue 1,259 2,199 Finance obligation for sale and leaseback transactions 4,443 4,028 Operating lease liabilities 3,245 3,279 Finance lease liabilities 1,768 — Long term debt - current portion 25,115 19,750 Total current liabilities 62,025 110,112 Revolving line of credit 14,346 42,131 Long term debt 65,455 94,961 Finance obligation for sale and leaseback transactions long-term 4,953 10,087 Operating lease liabilities long-term 21,138 23,148 Finance lease liabilities long-term 3,244 — Total liabilities 171,161 280,439 Commitments and contingencies (Note 12) Stockholders' equity: Preferred stock, $ 0.00001 par value; 5,000,000 shares authorized, no shares issued or outstanding at December 31, 2025 and 2024 — — Common stock, $ 0.00001 par value; 250,000,000 shares authorized, 82,711,351 and 82,040,468 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively — — Additional paid-in capital 1,285,297 1,274,932 Accumulated deficit ( 1,049,779 ) ( 660,227 ) Total stockholders' equity 235,518 614,705 Total liabilities and stockholders' equity $ 406,679 $ 895,144 See accompanying notes to consolidated financial statements. 91 ASPEN AEROGELS, INC. Consolidated Statem ents of Operations Year Ended December 31, 2025 2024 2023 (In thousands, except share and per share data) Revenue $ 271,103 $ 452,699 $ 238,718 Cost of revenue 225,105 269,802 181,797 Gross profit 45,998 182,897 56,921 Operating expenses Research and development 13,416 18,050 16,356 Sales and marketing 28,200 35,677 33,008 General and administrative 55,774 71,125 56,760 Restructuring and demobilization costs 17,510 — — Loss on disposal of property, plant and equipment 18,162 — — Impairment of property, plant and equipment 291,164 3,510 — Total operating expenses 424,226 128,362 106,124 Income (loss) from operations ( 378,228 ) 54,535 ( 49,203 ) Other income (expense) Interest expense, convertible note - related party — ( 7,550 ) ( 5,328 ) Interest income (expense), net ( 10,716 ) ( 4,409 ) 6,534 Income from Employee Retention Credits — — 2,186 Loss on extinguishment of debt — ( 27,487 ) — Other income 1,786 — — Total other income (expense) ( 8,930 ) ( 39,446 ) 3,392 Income (loss) before income tax expense ( 387,158 ) 15,089 ( 45,811 ) Income tax expense ( 2,394 ) ( 1,714 ) — Net income (loss) $ ( 389,552 ) $ 13,375 $ ( 45,811 ) Net income (loss) per share: Basic $ ( 4.73 ) $ 0.17 $ ( 0.66 ) Diluted $ ( 4.73 ) $ 0.17 $ ( 0.66 ) Weighted-average common shares outstanding: Basic 82,328,484 77,535,121 69,439,034 Diluted 82,328,484 80,306,690 69,439,034 See accompanying notes to consolidated financial statements. 92 ASPEN AEROGELS, INC. Consolidated Statements of St ockholders’ Equity (In thousands, except share and per share data) Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity Shares Value Shares Value Balance at December 31, 2022 — $ — 69,994,963 $ — $ 1,075,226 $ ( 627,791 ) $ 447,435 Net loss — — — — — ( 45,811 ) ( 45,811 ) Stock-based compensation expense — — — — 10,954 — 10,954 Issuance of restricted stock — — 44,928 — — — — Vesting of restricted stock units — — 79,151 — ( 420 ) — ( 420 ) Proceeds from employee stock option exercises — — 323,502 — 1,659 — 1,659 Proceeds from registered direct offering of common stock, net of fees and issuance costs of $ 623 — — 6,060,607 — 74,377 — 74,377 Issuance costs from underwritten public offering — — — — ( 139 ) ( 139 ) Balance at December 31, 2023 — $ — 76,503,151 $ — $ 1,161,657 $ ( 673,602 ) $ 488,055 Net income — — — — — 13,375 13,375 Stock-based compensation expense — — — — 10,681 — 10,681 Issuance of restricted stock — — 13,264 — — — — Vesting of restricted stock units — — 137,240 — ( 1,289 ) — ( 1,289 ) Proceeds from employee stock option exercises — — 1,254,994 — 10,364 — 10,364 Proceeds from registered direct offering of common stock, net of fees and issuance costs of $ 686 — — 4,887,500 — 93,154 — 93,154 Cancellation of restricted stock — — ( 679,796 ) — 2,174 — 2,174 Employee restricted stock awards withheld for tax — — ( 75,885 ) — ( 1,809 ) — ( 1,809 ) Balance at December 31, 2024 — $ — 82,040,468 $ — $ 1,274,932 $ ( 660,227 ) $ 614,705 Net loss — — — — — ( 389,552 ) ( 389,552 ) Stock-based compensation expense — — — — 8,628 — 8,628 Vesting of restricted stock units — — 199,297 — ( 765 ) — ( 765 ) Proceeds from employee stock option exercises — — 407,316 — 1,718 — 1,718 Issuance costs from offering of common stock — — — — 205 — 205 Acquisition of variable interest entity — — — — 403 — 403 Proceeds from employee stock purchase plan — — 64,270 176 176 Balance at December 31, 2025 — $ — 82,711,351 $ — $ 1,285,297 $ ( 1,049,779 ) $ 235,518 See accompanying notes to consolidated financial statements. 93 ASPEN AEROGELS, INC. Consolidated Statem ents of Cash Flows Year Ended December 31, 2025 2024 2023 (In thousands) Cash flows from operating activities: Net income (loss) $ ( 389,552 ) $ 13,375 $ ( 45,811 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 45,157 22,526 15,318 Accretion of interest on convertible note - related party — 7,083 4,403 Amortization of convertible note issuance costs — 24 37 Amortization of debt issuance costs 3,637 1,139 — Amortization of debt discount due to modification of convertible note – related party — 443 888 Loss on extinguishment of debt — 27,487 — Deferred financing costs written off — 1,829 — Provision for bad debt 3,538 247 ( 93 ) Stock-based compensation expense 8,628 12,855 10,954 Impairment of property, plant and equipment 291,626 7,613 — Loss on disposal of property, plant and equipment 18,162 — — Deferred taxes ( 416 ) — — Reduction in the carrying amount of operating lease right-of-use assets 3,534 1,886 2,859 Changes in operating assets and liabilities: Accounts receivable 70,296 ( 39,356 ) ( 12,552 ) Inventories 9,302 ( 8,362 ) ( 16,651 ) Prepaid expenses and other assets 18,172 ( 19,835 ) ( 7,401 ) Accounts payable ( 19,453 ) 7,341 4,583 Accrued expenses ( 23,310 ) 11,855 6,808 Deferred revenue ( 940 ) ( 117 ) ( 3,530 ) Operating lease and other liabilities ( 5,509 ) ( 2,484 ) ( 2,424 ) Net cash provided by (used in) operating activities 32,872 45,549 ( 42,612 ) Cash flows from investing activities: Capital expenditures ( 37,449 ) ( 86,262 ) ( 175,455 ) Net cash used in investing activities ( 37,449 ) ( 86,262 ) ( 175,455 ) Cash flows from financing activities: Proceeds from employee stock option exercises 1,718 10,364 1,659 Payments made for employee restricted stock tax withholdings ( 765 ) ( 1,289 ) ( 420 ) Proceeds from registered direct offering of common stock — 93,840 75,000 Fees and issuance costs from registered direct offering of common stock ( 28 ) ( 686 ) ( 623 ) Proceeds from employee stock purchase plan 176 — — Fees and issuance costs from private placement of common stock — — ( 139 ) Repayment of convertible note — ( 150,029 ) — Repayment of term loan ( 26,000 ) ( 6,500 ) — Proceeds from term loan — 125,000 — Issuance costs from term loan and revolving line of credit — ( 5,797 ) — Proceeds from revolving line of credit — 43,000 — Repayment of revolving line of credit ( 28,000 ) — — Proceeds from sale and leaseback transactions — 14,983 — Repayment of lease and other finance obligations ( 5,230 ) ( 868 ) — Net cash (used in) provided by financing activities ( 58,129 ) 122,018 75,477 Net (decrease) increase in cash, cash equivalents and restricted cash ( 62,706 ) 81,305 ( 142,590 ) Cash, cash equivalents and restricted cash at beginning of period 221,276 139,971 282,561 Cash, cash equivalents and restricted cash at end of period $ 158,570 $ 221,276 $ 139,971 Supplemental disclosures of cash flow information: Interest paid $ 12,220 $ 7,007 $ 1 Income taxes paid $ 4,134 $ — $ — Supplemental disclosures of non-cash activities: Right-of-use assets obtained in exchange for new operating lease liabilities $ 24 $ 5,131 $ 10,380 Capitalized Interest $ — $ — $ 6,084 Changes in accrued capital expenditures $ ( 11,665 ) $ ( 14,074 ) $ ( 8,217 ) See accompanying notes to consolidated financial statements. 94 ASPEN AEROGELS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Description of Business Nature of Business Aspen Aerogels, Inc. (the Company) is an aerogel technology company that designs, develops and manufactures innovative, high-performance aerogel materials used primarily in the energy industrial, sustainable insulation materials, and electric vehicle (EV) markets. The Company has provided high-performance aerogel insulation to the energy industrial and sustainable insulation markets for nearly two decades. The Company has developed and commercialized its proprietary line of PyroThin ® aerogel thermal barriers for use in battery packs in EVs. 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 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. Liquidity 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. In January 2024 and September 2024 , the Company entered into sale and leaseback arrangements, pursuant to which the Company 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 . 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. 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. 95 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’ 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 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; and (iii) add financial covenants measured starting from the fiscal quarter ending December 31, 2024 and at the end of each fiscal quarter thereafter. 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 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 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. A VIE is an entity that lacks one or more of the characteristics of a voting interest entity. 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 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, 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. 96 Use of Estimates 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, 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. Management adjusts such estimates and assumptions when facts and circumstances warrant. Illiquid credit markets, volatile equity markets, and declines in business investment can increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. Cash and Cash Equivalents Cash equivalents include short-term, highly liquid instruments, which consist of money market accounts and high-quality debt securities issued by the U.S. government via cash sweep accounts. All cash and cash equivalents are maintained with major financial institutions in North America. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk. Restricted Cash As of December 31, 2025, the Company had $ 1.7 million of restricted cash to support its outstanding letters of credit. Concentration of Credit Risk Financial instruments, which potentially expose the Company to concentrations of credit risk, consist principally of accounts receivable. The Company’s customers are primarily insulation distributors, insulation contractors, insulation fabricators and select energy and automotive end-users located throughout the world. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral to secure accounts receivable. The Company maintains an allowance for doubtful accounts based on its assessment of the collectability of accounts receivable. The Company reviews the allowance for doubtful accounts quarterly. 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. The Company does not have any off-balance-sheet credit exposure related to its customers. For the year ended December 31, 2025 , two customers represented 59 % and 9 % of total revenue, respectively. For the year ended December 31, 2024 , two customers represented 64 % and 6 % of total revenue, respectively. For the year ended December 31, 2023 , two customers represented 41 % and 14 % of total revenue, respectively. At December 31, 2025 , the Company had two customers which accounted for 41 % and 13 % of accounts receivable, respectively. At December 31, 2024 , the Company had two customers which accounted for 80 % and 5 % of accounts receivable, respectively. Inventories Inventory consists of finished products, work-in-process, and raw materials. 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 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. 97 Prepaid expenses and other current assets Prepaid expenses and other current assets primarily include value added tax and income tax receivables, prepayments of future services, and payments for pre-billed inventories. Property, Plant and Equipment, Net Property, plant and equipment are stated at cost. Expenditures for maintenance and repairs are charged to expense as incurred. Expenditures for major betterments are capitalized as additions to property, plant and equipment. Depreciation on plant and equipment is calculated on the straight-line method over the estimated useful lives of the assets. Assets related to leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. Assets utilized in the Company’s operations that are taken out of service with no future use are charged to cost of revenue or operating expenses, depending on the department in which the asset was utilized. Impairments of construction in progress are charged to operating expenses upon the determination of no future use. Impairment of Long-Lived Assets 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. Recognition and measurement of a potential impairment is performed on assets grouped with other assets and liabilities at the lowest level where identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to future undiscounted net cash flows expected to be generated by the asset or asset group. 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. 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 Other assets primarily include long-term deposits and cloud computing costs. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606). See Note (3) for further details. Warranty The Company provides warranties for its products and records the estimated cost within cost of revenue in the period that the related revenue is recorded. The Company’s standard warranty period extends to one year from the date of shipment. This standard warranty provides that the Company’s products will be free from defects in material and workmanship, and will, under normal use, conform to the specifications for the product. The Company’s products may be utilized in systems that involve new technical demands and new configurations. Accordingly, the Company regularly reviews and assesses whether warranty reserves should be recorded in the period the related revenue is recorded. For an initial shipment of product for use in a system with new technical demands or new configurations and where the Company is unsure of meeting the customer’s specifications, the Company will defer the recognition of product revenue and related costs until written customer acceptance is obtained. 98 Shipping and Handling Costs Shipping and handling costs are classified as a component of cost of revenue. Customer payments of shipping and handling costs are recorded as product revenue. Stock-based Compensation The Company grants share-based awards to its employees and non-employee directors. All share-based awards granted, including grants of stock options, restricted stock and restricted stock units (RSUs), are recognized in the statement of operations based on their fair value as of the date of grant. Expense is recognized on a straight-line basis over the requisite service period for all awards with service conditions. For performance-based awards, the grant date fair value is recognized as expense when the condition is probable of being achieved, and then on a graded basis over the requisite service period. The Company uses the Black-Scholes option-pricing model to determine the fair value of service-based option awards. The Black-Scholes model requires the use of a number of complex and subjective assumptions including fair value of the underlying security, the expected volatility of the underlying security, a risk-free interest rate and the expected term of the option. The fair value of restricted stock and RSUs is determined using the closing price of the Company’s common stock on the date of grant. All shares of restricted stock are not transferable until vested. 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. The fair value of restricted stock and RSUs upon which vesting is solely service-based is expensed ratably over the vesting period. If the service condition for shares of restricted stock is not met for any reason, the shares of unvested restricted stock will be forfeited and returned to the Company. For stock awards that contain a market condition, the Company uses the Monte-Carlo simulation model to determine the fair value of the awards. In addition to the input assumptions used in the Black-Scholes model, the Monte-Carlo simulation model factors the probability that the specific market condition may or may not be satisfied into the valuation. 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. Research and Development Costs incurred in the Company’s research and development activities include compensation and related costs, services provided by third-party contractors, materials and supplies and are classified as research and development expenses as incurred. Earnings per Share The Company calculates net income (loss) per common share based on the weighted-average number of common shares outstanding during each period. Potential common stock equivalents are determined using the treasury stock method. The weighted-average number of common shares included in the computation of diluted net income (loss) gives effect to all potentially dilutive common equivalent shares, including outstanding stock options and RSUs. Common equivalent shares are excluded from the computation of diluted net loss per share if their effect is antidilutive. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. The Company accounts for uncertain tax positions using a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Differences between tax positions taken in a tax return and amounts recognized in the financial statements are recorded as adjustments to income taxes payable or receivable, or adjustments to deferred taxes, or both. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company recognizes penalties and interest related to uncertain tax positions, if any, as a component of income tax expense. 99 Segments Operating segments are identified as components of an enterprise about which separate, discrete financial information is available for evaluation by the chief operating decision maker in making decisions on how to allocate resources and assess performance. 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 presently views its operations and manages its business as two operating segments. Leases The Company accounts for leases in accordance with FASB ASC Topic 842, Leases. 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 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. The Company calculates its incremental borrowing rate using a synthetic credit rating analysis based on Moody’s Building Materials Industry Rating Methodology. ROU assets also include any direct costs and prepaid lease payments but exclude any lease incentives received. 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. 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. For leases that qualify for this exemption, the Company does not recognize ROU assets or lease liabilities. For lease agreements with lease and non-lease components, the Company accounts for each component separately. However, in the case of equipment leases, the Company accounts for lease and non-lease components as a single component. See Note (11) for further details. Sale and Leaseback Accounting The Company has entered into sale and leaseback transactions for certain equipment within its plants. Due to the Company not meeting criteria to account for the transfer of the assets as a sale, sale accounting is precluded. Accordingly, the Company uses the financing method to account for these transactions. Under the financing method of accounting for a sale and leaseback, the Company does not derecognize the assets and does not recognize as revenue any of the sale proceeds received from the lessor that contractually constitutes payment to acquire the assets subject to these arrangements. Instead, the sale proceeds received are accounted for as finance obligations and leaseback payments made by the Company are allocated between interest expense and a reduction to the finance obligation. Interest on the finance obligation is calculated using the Company’s incremental borrowing rate at the inception of the arrangement on the outstanding finance obligation. Foreign Currency Transactions The Company converts foreign currency transactions recognized in the Consolidated Statements of Operations to U.S. dollars by applying the exchange rate prevailing on the date of the transaction. Gains and losses arising from foreign currency transactions and the effects of remeasuring monetary assets and liabilities are recorded in general and administrative expenses, net in the Consolidated Statements of Operations. The Company had foreign exchange losses of $ 0.5 million and $ 2.8 million for the fiscal years ended December 31, 2025 and 2024, respectively. For the fiscal year ended December 31, 2023, the Company had foreign exchange gains of $ 0.5 million. 100 Recently Issued Accounting Standards 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. Standards Implemented Since December 31, 2024 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. 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 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. The Company believes that the impact of recently issued accounting standards that are not yet effective will not have a material impact on its consolidated financial statements. (3) Revenue from Contracts with Customers Revenue Recognition Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (i) identification of the contract with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the separate performance obligations in the contract; and (v) recognition of the revenue associated with performance obligations as they are satisfied. The Company applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone-selling prices of the promised products or services underlying each performance obligation. The Company determines standalone-selling prices based on the price at which the performance obligation is sold separately. If the standalone-selling price is not observable through past transactions, the Company estimates the standalone-selling price considering available information such as market conditions and internally approved pricing guidelines related to the performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. 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 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. 101 Thermal Barriers The Company supplies fabricated, multi-part thermal barriers for use in battery packs in the EV market. These thermal barriers are customized to meet customer specifications. 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. The timing of revenue recognition is assessed on a contract-by-contract basis. Energy Industrial The Company generally enters into contracts containing one type of performance obligation. For a majority of the contracts, the Company recognizes revenue at a point in time when transfer of control of the products is passed to the customer, which is generally upon delivery according to contractual shipping terms within customer purchase orders. For a limited number of customer arrangements for customized products with no alternative use to the Company and an enforceable right to payment for progress completed to date, the Company recognizes revenue over time using units of production to measure progress toward satisfying the performance obligations. Units of production represent work performed as we do not generate significant work in process and thereby best depicts the transfer of control to the customer. Customer invoicing terms for contracts for which revenue is recognized under the over time methodology are typically based on certain milestones within the production and delivery schedule. The timing of revenue recognition is assessed on a contract-by-contract basis. The Company also enters into rebate agreements with certain customers. These agreements may be considered an additional performance obligation of the Company or variable consideration within a contract. Rebates are recorded as a reduction of revenue in the period the related revenue is recognized. A corresponding liability is recorded as a component of deferred revenue on the consolidated balance sheets. These arrangements are primarily based on the customer attaining contractually specified sales volumes. The Company estimates the amount of its sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related revenue is recognized. 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 at both December 31, 2025 and December 31, 2024. Shipping and Handling Costs Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in the cost of product revenue. The associated amount of revenue recognized includes the consideration to which the Company expects to be entitled to receive in exchange for incurring these shipping and handling costs. Disaggregation of Revenue In the following tables, revenue is disaggregated by primary geographical region and source of revenue: December 31, 2025 U.S. International Total (In thousands) Geographical region Asia $ — $ 31,129 $ 31,129 Canada — 2,466 2,466 Europe — 17,870 17,870 Latin America — 47,556 47,556 United States 172,082 — 172,082 Total revenue $ 172,082 $ 99,021 $ 271,103 Source of revenue Energy industrial $ 54,637 $ 47,561 $ 102,198 Thermal barrier 117,445 51,460 168,905 Total revenue $ 172,082 $ 99,021 $ 271,103 102 December 31, 2024 U.S. International Total (In thousands) Geographical region Asia $ — $ 29,321 $ 29,321 Canada — 19,265 19,265 Europe — 45,027 45,027 Latin America — 100,568 100,568 United States 258,518 — 258,518 Total revenue $ 258,518 $ 194,181 $ 452,699 Source of revenue Energy industrial $ 63,761 $ 82,106 $ 145,867 Thermal barrier 194,757 112,075 306,832 Total revenue $ 258,518 $ 194,181 $ 452,699 December 31, 2023 U.S. International Total (In thousands) Geographical region Asia $ — $ 35,698 $ 35,698 Canada — 2,033 2,033 Europe — 42,731 42,731 Latin America — 7,219 7,219 United States 151,037 — 151,037 Total revenue $ 151,037 $ 87,681 $ 238,718 Source of revenue Energy industrial $ 52,838 $ 75,801 $ 128,639 Thermal barrier 98,199 11,880 110,079 Total revenue $ 151,037 $ 87,681 $ 238,718 Contract Balances The following table presents changes in the Company’s contract liabilities during the year ended December 31, 2025: Balance at December 31, 2024 Additions Deductions Balance at December 31, 2025 (In thousands) Contract liabilities Deferred revenue Energy industrial $ 2,199 $ 1,942 $ ( 2,882 ) $ 1,259 Total contract liabilities $ 2,199 $ 1,942 $ ( 2,882 ) $ 1,259 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 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. 103 (4) Inventories Inventories consist of the following: December 31, 2025 2024 (In thousands) Raw material $ 8,179 $ 13,671 Work in process 5,522 9,664 Finished goods 24,548 24,216 Total $ 38,249 $ 47,551 (5) Property, Plant and Equipment, Net Property, plant and equipment consist of the following: December 31, 2025 2024 Useful life (In thousands) Construction in progress $ 9,258 $ 352,567 — Buildings 27,045 27,032 30 years Machinery and equipment 224,619 201,789 3 — 10 years Computer equipment and software 7,760 9,794 3 years Leasehold improvements 25,561 24,843 Shorter of useful life or lease term Total 294,243 616,025 Accumulated depreciation and amortization ( 195,843 ) ( 156,749 ) Property, plant and equipment, net $ 98,400 $ 459,276 Depreciation expense was $ 45.2 million, $ 22.5 million and $ 15.3 million for the years ended December 31, 2025, 2024 and 2023, respectively. 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. 104 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 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. 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 Accrued expenses consist of the following: December 31, 2025 2024 (In thousands) Employee compensation $ 2,929 $ 19,371 Other accrued expenses 10,023 17,124 Total $ 12,952 $ 36,495 (7) Debt On August 19, 2024, the Borrowers entered into the Credit Agreement, by and among the Borrowers, the Agent, the Lenders and the other parties party thereto as additional guarantors and/or borrowers from time to time. 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. 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 %. 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 Borrowers are required to pay the Lenders an exit fee of $ 2.5 million on the maturity date. 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 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 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. 105 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. 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. 106 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 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. MidCap term loan consists of the following: December 31, December 31, 2025 2024 (In thousands) Term loan 92,500 118,500 Exit fee 1,152 264 Term loan issuance costs ( 3,082 ) ( 4,053 ) Total debt 90,570 114,711 Current portion 25,115 19,750 Long term portion 65,455 94,961 MidCap revolving line of credit consists of the following: December 31, December 31, 2025 2024 (In thousands) Revolving line of credit 15,000 43,000 Exit fee 45 - Revolving line of credit issuance costs ( 699 ) ( 869 ) Total debt 14,346 42,131 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. (8) Convertible Note - Related Party 2022 Convertible Note On February 15, 2022, the Company entered into a note purchase agreement (the Note Purchase Agreement) with Wood River Capital LLC (Wood River), an entity affiliated with Koch Strategic Platforms, LLC (Koch), relating to the issuance and sale to Wood River of convertible note (the 2022 Convertible Note) in the aggregate principal amount of $ 100.0 million. The transactions contemplated by the Note Purchase Agreement closed on February 18, 2022. 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). 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. 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. 107 (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. The Company repurchased the 2022 Convertible Note on August 19, 2024. 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. Other 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) Interest income (expense), net 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 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. The tax credit is equal to 50 % of qualified wages paid to employees during a quarter, capped at $ 10,000 of qualified wages per employee through December 31, 2020. Additional relief provisions were passed by the United States government, which extend and slightly expand the qualified wage caps on these credits through December 31, 2021. Based on these additional provisions, the tax credit is now equal to 70 % of qualified wages paid to employees during a quarter, and the limit on qualified wages per employee has been increased to $ 10,000 of qualified wages per quarter. 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, which amounts were collected during the year ended December 31, 2025. (11) Leases & Sale and Leaseback The Company leases office, laboratory, warehouse and fabrication space in Massachusetts, Rhode Island and Monterrey, Mexico under operating leases. 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 and finance leases. The Company’s leases expire at various dates through 2034 . 108 Maturities of operating lease liabilities at December 31, 2025 are as follows: Year Operating Leases Finance Leases (In thousands) 2026 5,912 2,177 2027 5,071 2,881 2028 4,984 370 2029 4,540 152 2030 4,486 105 Thereafter 11,108 - Total lease payments 36,101 5,685 Less imputed interest ( 11,718 ) ( 673 ) Total lease liabilities $ 24,383 $ 5,012 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 In January and September 2024 , the Company entered into sale and leaseback arrangements, pursuant to which the Company sold certain equipment to an equipment leasing company for one-time cash payments of $ 5.0 million and $ 10.0 million, respectively, leased back such equipment from the leasing company. The transactions were considered as failed sale and leaseback transactions and accordingly, were accounted as financing transactions. 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. The outstanding finance obligation balance as of December 31, 2025 was $ 9.4 million. Maturities of finance obligations for sale and leaseback at December 31, 2025 are as follows: Year Finance Obligation (In thousands) 2026 5,601 2027 5,279 Total lease payments 10,880 Less imputed interest ( 1,484 ) Total lease liabilities $ 9,396 (12) Commitments and Contingencies Cloud Computing Agreement 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 109 amortized over a period of five years. The capitalized implementation costs are classified on the consolidated balance sheets as follows: December 31, December 31, 2025 2024 (In thousands) Cloud computing costs included in other current assets $ 37 $ 637 Cloud computing costs included in other assets 8,709 4,299 Amortization of cloud computing costs ( 1,621 ) ( 1,053 ) Total capitalized cloud computing costs $ 7,125 $ 3,883 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 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. In addition, the OEM may terminate the Contracts any time and for any or no reason. All other terms of the Contracts are generally consistent with the OEM’s standard purchase terms, including quality and warranty provisions that are customary in the automotive industry. Charges for Engineering Change In January 2024, the Company was notified by a customer of an engineering change to one of the parts the Company manufactures for that customer to enable incremental productivity and support a set of broader system level changes that could drive higher demand for its parts. The Company submitted claims to the customer for reimbursement for estimated inventory and equipment losses incurred by the Company and its vendors due to potential obsolescence. In connection with the same, during the three months ended March 31, 2024, the Company recognized a charge of $ 6.8 million, net of contractual recoverable of $ 1.9 million, in cost of revenues for inventory obsolescence and impairment of equipment. The claims were fully approved and recovered by December 31, 2024, and the reimbursements were recognized as an offset to the charge the Company recognized in cost of revenues. Letters of Credit The Company has provided certain customers with letters of credit securing obligations under commercial contracts. As of December 31, 2025, the Company had $ 1.7 million of restricted cash to support our outstanding letters of credit. 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. Litigation The Company is, from time to time, a party to litigation that arises in the normal course of its business operations. See Part I, Item 3 (“Legal Proceedings”) of this Annual Report on Form 10-K for a description of certain of the Company’s current legal proceedings. The Company is not presently a party to any litigation for which it believes a loss is probable requiring an amount to be accrued or a possible loss contingency requiring disclosure. 110 Purchase Commitments As of December 31, 2025, the Company had purchase commitments of approximately $ 36.2 million, which included capital commitments of $ 12.3 million. Purchase commitments related to capital expenditures are anticipated to be spent over the next three years , while the Company's remaining purchase commitments are anticipated to be spent throughout 2026. Purchase obligations relate primarily to open purchase orders for capital expenditures, inventories, and goods and services. Purchase obligations are entered into with various vendors in the normal course of business and are consistent with the Company's expected requirements. Warranty The Company offers warranties to its customers depending upon the specific product. The Company’s standard warranty period for energy industrial products extends to one year from the date of shipment. This standard warranty provides that the Company’s products will be free from defects in material and workmanship, and will, under normal use, conform to the specifications for the product. The Company’s thermal barrier products provide quality and warranty provisions customary in the automotive industry. 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 At December 31, 2025 and 2024 , the Company was authorized to issue 255,000,000 shares of stock, of which 250,000,000 shares were designated as common stock and 5,000,000 shares were designated as preferred stock. (14) Employee Benefit Plan The Company sponsors the Aspen Aerogels, Inc. 401(k) Plan. Under the terms of the plan, the Company’s employees may contribute a percentage of their pretax earnings. 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, 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 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 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 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 111 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: Year Ended December 31, 2025 2024 2023 (In thousands) Cost of product revenue $ 451 $ 773 $ 583 Research and development expenses 269 1,140 799 Sales and marketing expenses 1,545 1,692 1,484 General and administrative expenses 6,908 9,250 8,088 Total stock-based compensation $ 9,173 $ 12,855 $ 10,954 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. Key inputs into this formula included expected term, expected volatility, expected dividend yield and the risk-free rate. Each assumption is set forth and discussed below. Expected Term The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. Accordingly, the Company uses the simplified method to calculate the expected term for options granted. Expected Volatility In 2025, 2024 and 2023 , the Company used its historical volatility as a basis to estimate expected volatility in the valuation of stock options. Expected Dividend The Company uses an expected dividend yield of zero . The Company does not intend to pay cash dividends on its common stock in the foreseeable future, nor has it paid dividends on its common stock in the past. 112 Risk-free Interest Rate The Company uses a risk-free interest rate based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. Estimated Forfeitures 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 The following information relates to the fair value of the option awards estimated by use of the Black-Scholes option-pricing model: Year Ended December 31, 2025 2024 2023 Weighted average assumptions: Expected term (in years) 5.95 5.99 6.12 Expected volatility 79.77 % 75.04 % 70.04 % Risk free interest rate 4.03 % 4.11 % 4.08 % Expected dividend yield 0.00 % 0.00 % 0.00 % Weighted average fair value: Grant-date fair value of options granted $ 5.36 $ 11.36 $ 4.91 Grant-date fair value of options vested $ 7.75 $ 7.59 $ 9.63 Aggregate intrinsic value of options exercised $ 1,270,187 $ 22,805,464 $ 1,652,567 Outstanding Options The following table summarizes information about stock options outstanding: Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value ($ in thousands, except share and per share data) Options outstanding at December 31, 2024 4,394,619 $ 6.00 $ 9.88 6.56 $ 18,259,582 Granted 506,679 $ 5.36 $ 7.58 Forfeited ( 672,414 ) $ 6.28 $ 9.23 Expired ( 228,202 ) $ 6.92 $ 11.94 Exercised ( 407,316 ) $ 2.15 $ 4.22 $ 1,270,187 Options outstanding at December 31, 2025 3,593,366 $ 6.22 $ 10.17 4.96 $ — Exercisable at December 31, 2025 2,543,973 $ 6.24 $ 10.63 3.62 $ — Expected to vest after December 31, 2025 1,049,393 $ 6.17 $ 9.06 8.17 $ — 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. The unrecognized compensation cost for the service-based options is expected to be recognized over a weighted average period of 1.07 years. Restricted Stock Awards and Restricted Stock Units 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. 113 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: Restricted Stock Units Weighted Average Grant Date Fair Value Balance at December 31, 2024 560,630 $ 12.95 Granted 378,954 7.46 Vested ( 299,918 ) 12.23 Forfeited ( 228,070 ) 10.62 Balance at December 31, 2025 411,596 $ 9.72 Restricted stock awards granted during 2025 are considered issued and outstanding common stock and are excluded from the table above. 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, 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: Performance Stock Units Weighted Average Grant Date Fair Value Balance at December 31, 2024 — $ — Granted 654,217 11.31 Vested — — Forfeited ( 302,929 ) 11.49 Balance at December 31, 2025 351,288 $ 11.15 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). 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 114 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 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 The computation of basic and diluted net income (loss) per share consists of the following: Year ended December 31, 2025 2024 2023 (In thousands, except share and per share data) Numerator: Net income (loss) $ ( 389,552 ) $ 13,375 $ ( 45,811 ) Denominator: Weighted average shares outstanding, basic 82,328,484 77,535,121 69,439,034 Weighted average shares outstanding, diluted 82,328,484 80,306,690 69,439,034 Net income (loss) per share, basic $ ( 4.73 ) $ 0.17 $ ( 0.66 ) Net income (loss) per share, diluted $ ( 4.73 ) $ 0.17 $ ( 0.66 ) 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, 2025 2024 2023 Common stock options 3,593,366 141,134 5,234,194 Restricted common stock units 411,596 2,979 574,247 Restricted common stock awards — 218 881,674 Convertible note, if converted — — 3,951,833 Total 4,004,962 144,331 10,641,948 The potential dilutive shares from common stock options, restricted common stock units, restricted common stock awards, and the 2022 Convertible Note were excluded from the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive for the periods presented. 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 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 115 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, 2025 U.S. $ ( 389,309 ) Foreign 2,151 Loss before income tax expense $ ( 387,158 ) 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, 2025 (In thousands) Current income tax expense Federal $ — State 323 Foreign 2,487 Deferred income tax (benefit) Federal — State — Foreign ( 416 ) Total income tax (benefit) $ 2,394 The table below represents cash paid (refunds received) for income taxes. For the Year Ended December 31, 2025 (In thousands) Federal $ — Aggregated state and local jurisdictions 391 Foreign Other 139 Mexico 3,604 Net cash paid (refunds received) for income taxes $ 4,134 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. 116 December 31, 2025 2025 Tax Expense Effective Rate (In thousands) U.S. federal income tax at statutory rate $ ( 81,303 ) 21.00 % State and local income taxes, net of federal income tax effect 251 ( 0.06 )% Foreign tax effects Other 58 ( 0.01 )% Mexico Other ( 31 ) 0.01 % Safe Harbor 1,874 ( 0.48 )% Tax credits 935 ( 0.24 )% Changes in valuation allowances 78,726 ( 20.33 )% Nontaxable or nondeductible items Other 73 ( 0.02 )% Stock-based compensation 2,672 ( 0.69 )% Other reconciling items ( 861 ) 0.22 % Effective income tax rate $ 2,394 ( 0.62 )% 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, 2024 2023 U.S. federal income tax statutory rate 21 % 21 % Permanent differences 12 % — State tax, net of federal benefit 3 % 7 % Changes in valuation allowance for deferred tax assets 9 % ( 17 )% Stock-based compensation ( 29 )% ( 7 )% Research credits ( 8 )% — % Other ( 5 )% 2 % State rate change ( 3 )% ( 6 )% Foreign 11 % — % Effective tax rate 11 % — 117 The tax effects of temporary differences between financial statement and tax accounting that gave rise to significant portions of the Company’s deferred tax assets and deferred tax liabilities at December 31, 2025 and 2024 are presented below: December 31, 2025 2024 (In thousands) Deferred tax assets: Net operating loss carryforwards $ 81,875 $ 71,026 Stock-based compensation 3,072 4,197 Operating lease liabilities 5,696 6,732 Capitalized research and development 9,152 12,250 Tax credit carryforwards 4,717 6,358 Depreciation 76,569 — Reserves and accruals 4,273 7,491 Interest expense limitation 8,311 6,354 Total gross deferred tax assets 193,665 114,408 Deferred tax liabilities: Depreciation — ( 2,715 ) Operating lease right-of-use assets ( 4,209 ) ( 5,061 ) Total deferred tax liabilities ( 4,209 ) ( 7,776 ) Total deferred tax assets and liabilities 189,456 106,632 Valuation allowance ( 188,637 ) ( 106,632 ) Net deferred tax asset $ 819 $ — 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 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. The ultimate realization of the Company’s deferred tax assets generally is dependent upon generation of future taxable income. At December 31, 2025 , the Company had $ 372.3 million of net operating losses available to offset future federal income, if any, of which $ 145.0 million expire on various dates through December 31, 2037 . Net operating losses of $ 227.3 million generated from 2018 through 2025 have an unlimited carryforward. At December 31, 2025 , the Company had $ 258.0 million of apportioned net operating losses available to offset future state taxable income, if any, and which begin to expire at various dates between 2026 and 2044 . 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. 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 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. 118 (18) Segment Information Operating segments are identified as components of an enterprise about which separate, discrete financial information is available for evaluation by the chief operating decision maker in making decisions on how to allocate resources and assess performance. 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 reports two segments: 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: Year Ended Year Ended Revenue Cost of Goods Sold December 31 December 31 2025 2024 2023 2025 2024 2023 (In thousands) Energy industrial $ 102,198 $ 145,867 $ 128,639 $ 64,992 $ 87,425 $ 94,477 Thermal barrier 168,905 306,832 110,079 160,113 182,377 87,320 Total $ 271,103 $ 452,699 $ 238,718 $ 225,105 $ 269,802 $ 181,797 Year Ended Segment Operating Profit (Loss) December 31 2025 2024 2023 (In thousands) Energy industrial $ 37,206 $ 58,442 $ 34,162 Thermal barrier 8,792 124,455 22,759 Total gross profit $ 45,998 $ 182,897 $ 56,921 Corporate expenses 97,390 128,362 106,124 Restructuring and demobilization costs 17,510 — — Loss on disposal of property, plant and equipment 18,162 — — Impairment of property, plant and equipment 291,164 — — Operating profit (loss) ( 378,228 ) 54,535 ( 49,203 ) Other (expense) income, net ( 8,930 ) ( 39,446 ) 3,392 Income tax expense ( 2,394 ) ( 1,714 ) — Net income (loss) $ ( 389,552 ) $ 13,375 $ ( 45,811 ) Year Ended Depreciation Expense December 31, 2025 2024 2023 (In thousands) Energy industrial $ 10,633 $ 11,685 $ 10,720 Thermal barrier 34,524 10,841 4,598 Consolidated depreciation expense $ 45,157 $ 22,526 $ 15,318 119 Total Assets December 31, 2025 2024 (In thousands) Energy industrial $ 93,111 $ 103,453 Thermal barrier 69,550 159,934 Total assets of reportable segments 162,661 263,387 Construction in progress and held for sale 41,970 352,567 All other corporate assets 202,048 279,190 $ 406,679 $ 895,144 Information about the Company’s total revenues, based on shipment destination or services location, is presented in the following table: Year Ended December 31, 2025 2024 2023 ($ in thousands) Revenue: U.S. $ 172,082 $ 258,518 $ 151,037 International 99,021 194,181 87,681 Total $ 271,103 $ 452,699 $ 238,718 (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. 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. Year Ended December 31, 2025 (In thousands) Severance and other personnel costs $ 8,270 Demobilization costs 3,067 Deferred financing costs write-off 6,173 Total $ 17,510 (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. 120 Schedule II VALUATION AND QUALIFYING ACCOUNTS (in thousands) Description Balance at Beginning of Year Charges to Costs and Expenses (a) Recoveries of Costs and Expenses (b) Deductions to Allowances for Uncollectible Accounts (c) Charges to (Deductions from) Other Accounts (d) Balance at End of Year Year Ended December 31, 2025: Allowances for uncollectible accounts and sales returns and allowances $ 1,265 3,538.00 — — ( 631 ) $ 4,172 Year Ended December 31, 2024: Allowances for uncollectible accounts and sales returns and allowances $ 230 247 — — 788 $ 1,265 Year Ended December 31, 2023: Allowances for uncollectible accounts and sales returns and allowances $ 255 ( 93 ) — — 68 $ 230 (a) Represents allowances for uncollectible accounts established through general and administrative expenses. (b) Represents recoveries of allowances for uncollectible accounts established through general and administrative expenses. (c) Represents actual write-offs of uncollectible accounts. (d) Represents net change in allowances for sales returns, recorded as contra-revenue. 121 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.