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Item 2. Management’s Discussion and Analysis

2026-05-08 compared with 2025-11-06 · 186 added, 249 removed, 242 unchanged (64% of the section changed)

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The following information should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2025, filed with the U.S.

Securities and Exchange Commission (SEC) on February 27, 2025, which we refer to as the Annual Report.

Securities and Exchange Commission (SEC) on March 13, 2026, as amended on March 23, 2026, which we refer to as the Annual Report.

Certain matters discussed in this Quarterly Report on Form 10-Q may be deemed to be forward-looking statements that involve risks and uncertainties.

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

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

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

Our core businesses are organized into two reportable segments:

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Thermal Barrier

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

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.

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

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

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

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

battery systems.

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

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

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

These customers include General Motors LLC (GM), Toyota, Scania, Automotive Cells Company, which is a battery cell joint venture between Stellantis N.V., Saft-TotalEnergies and Mercedes-Benz (collectively, ACC), Volvo, and Volvo Truck.

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.

Our patented aerogel products and manufacturing technologies are significant assets.

Silica aerogels are complex structures in which 97% of the volume consists of air trapped between intertwined clusters of amorphous silica solids.

We believe these extremely low-density solids provide superior thermal and acoustic insulating properties.

Although silica aerogels are usually fragile materials, we have developed innovative and proprietary manufacturing processes that enable us to produce industrially robust aerogel insulation cost-effectively and at commercial scale.

Our aerogel thermal barrier products are designed to enable our customers to enhance the safety and performance of their lithium-ion battery systems.

These barriers are designed to impede 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 believe our array of aerogel insulation product attributes provides strong competitive advantages over traditional insulation.

Energy Industrial

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

Many of our insulation products also offer strong fire protection, which is a critical performance requirement in the markets we service.

We believe our array of product attributes provides strong competitive advantages over traditional insulation.

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

Our insulation 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.

Our Pyrogel® and Cryogel® aerogel insulation 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 as diverse as military and commercial aircraft, trains, buses, appliances, apparel, footwear and outdoor gear.

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

Customers in these markets have used 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.

Our technologically advanced insulation products are targeted at the multi-billion dollar global market for energy industrial insulation materials.

Our products replace traditional insulation in existing facilities during regular maintenance, upgrades, and capacity expansions.

In addition, our aerogel products are also specified for use in new-build energy industrial facilities.

We have grown our business by forming technical and commercial relationships with industry leaders that have allowed us to optimize our products to meet the particular demands of target market sectors.

We have benefited from our technical and commercial relationships with ExxonMobil in the oil refinery and petrochemical sectors, and with TechnipFMC in the offshore oil sector.

We will continue our strategy of working with innovative companies to target and penetrate additional opportunities in the energy industrial and sustainable insulation materials markets.

We believe that our long-term record of success positions us for future growth and the opportunity to gain market share in the energy industrial and sustainable insulation markets.

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

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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.

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 help provide 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 manufacture our products using our proprietary technology at our facility in East Providence, Rhode Island, which we have operated since 2008, as well as by utilizing our external manufacturing facility in China.

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.

We also utilize a flexible supply strategy, including, but not limited to, use of our external manufacturing facility in China, which currently support our Energy Industrial segment.

We are working closely with our external manufacturing facility as we seek to expand its capabilities to support our Energy Industrial and Thermal Barrier segments and to enhance short- and long-term supply flexibility.

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

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

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

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

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

We expect to meet 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.

Additionally, we previously 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.

On April 8, 2026, an explosion occurred at our manufacturing facility in East Providence, Rhode Island.

The incident related to a high temperature oven and resulted in damage to a portion of the facility’s production space and temporary cessation of operations.

As of May 8, 2026, the facility remains offline.

We continue to work with the relevant authorities to execute a plan to resume operations, which restart is dependent on the continued progress of mechanical, operational and safety reviews and our work with local and state agencies.

To date, we believe we have mitigated any significant commercial impact of the disruption by working through inventory and by leveraging the capacity of our external manufacturing facility.

However, our ability to continue to mitigate the impacts of the disruption assume that the staged restart of our East Providence manufacturing facility proceeds as we currently expect, and that we are able to continue to meet customer demand for our products through a combination of restored production in East Providence, production at our external manufacturing facility and other efforts to mitigate the impact of the disruptions.

If we are unable to resume normal operations at our manufacturing facility in East Providence in a timely manner or manufacture the full array of our products, it may impact our ability to meet customer demand, which could have a material adverse impact on our business, results of operations and financial condition.

Even if we are successful in our mitigation efforts, if we experience increased customer demand, we may be unable to produce sufficient product to meet such increased customer demand, which could have a material adverse impact on our business, results of operations and financial condition.

Financial Summary

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

Net loss for the nine months ended September 30, 2025

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

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

Our revenue for the three months ended March 31, 2026 was $37.9 million, which represented a decrease of $40.8 million, or 52%, from $78.7 million of revenue for the three months ended March 31, 2025.

Net loss for the three months ended March 31, 2026 was $23.7 million and net loss per share was $0.29.

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

Revenue for the three months ended March 31, 2026 includes $3.5 million of revenue from a settlement agreement with a customer for $37.6 million for a claim for certain losses incurred arising from lower forecasted long-term demand by the customer which is being deferred and recognized as revenue over a period of approximately two years.

Key Metrics and Non-GAAP Financial Measures

We regularly review a number of metrics, including the following key metric, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.

We regularly review a number of metrics, including the following non-GAAP key metric, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.

Adjusted EBITDA

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GAAP financial statements included elsewhere in this Quarterly Report on Form 10-Q, 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.

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

GAAP measure, to Adjusted EBITDA for the periods presented:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Net income (loss)

Depreciation and amortization

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Other expense

Income tax expense

Loss on extinguishment of debt

Income tax (benefit) expense

Restructuring and demobilization costs

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Adjusted EBITDA

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

(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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Accordingly, we expect that our net 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 thermal barrier revenue decreased by 67% 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 continue to decline in 2026 compared to 2025, primarily due to lower anticipated production volumes.

In addition, we have experienced operational disruptions at our manufacturing facility in East Providence, Rhode Island in 2026, which have adversely impacted our manufacturing capacity and are expected to increase near-term costs.

In January 2026, there was a fire at our manufacturing facility in East Providence, Rhode Island.

The January 2026 fire damaged one of our emissions control units and rendered it inoperable.

Subsequently, on April 8, 2026, an explosion occurred at our manufacturing facility in East Providence, Rhode Island.

The incident related to a high temperature oven and resulted in damage to a portion of the facility’s production space and temporary cessation of operations.

As of May 8, 2026, the facility remains offline.

To date, we believe we have mitigated any significant commercial impact of the disruption by working through inventory and by leveraging the capacity of our external manufacturing facility.

These efforts to mitigate the disruption at our East Providence manufacturing facility and expand the external manufacturing facility’s capabilities, including expedited freight and expedited repair costs related to our East Providence manufacturing facility, are expected to result in increased costs of revenue and increased general and administrative expenses during 2026.

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.

We expect Adjusted EBITDA to decline in 2026 primarily due to lower thermal barrier revenue, as well as the increased costs of revenue and increased general and administrative expenses during 2026 related to the supply disruptions and mitigation efforts resulting from the operational disruptions at our East Providence manufacturing facility.

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

We also expect capital expenditures to decrease in 2026.

Components of Our Results of Operations

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

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

For the reasons discussed above, we expect that our thermal barrier revenues will decline in 2026 as compared to the prior year, while energy industrial revenues are expected to increase.

Cost of Revenue

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

During 2026, we expect to incur increased costs of revenue due to the supply disruptions and mitigation efforts resulting from the operational disruptions at our East Providence manufacturing facility.

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

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

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

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

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

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

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.

Operating Expenses

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We expense research and development costs as incurred.

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

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, costs of new product and process introductions, travel and related costs, consulting expenses and facilities related costs.

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

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

During 2026, while we expect to continue our ongoing cost reduction measures, we expect our general and administrative expenses to increase due to the impact of supply disruptions and mitigation efforts resulting from the operational disruptions at our East Providence manufacturing facility.

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

Restructuring and Demobilization Costs

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

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

Impairment of property, plant and equipment

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

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

Interest Expense, Convertible Note - Related Party

Interest expense, convertible note - related party is net of the capitalized interest related to the 2022 Convertible Note which we sold and issued to Wood River.

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

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.

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.

Interest Expense, net

Interest expense, net 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 (as defined below), a failed sale and leaseback arrangement accounted as a financing transaction, and interest earned on the cash balances invested in deposit accounts, money market accounts, and high-quality debt securities issued by the U.S.

Provision for Income Taxes

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 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.

federal 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 provisions for state income taxes and our Mexican maquiladora operations.

Results of Operations

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

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

Three Months Ended September 30,

($ in thousands)

Energy industrial

Thermal barrier

Total revenue

Total revenue decreased $44.3 million, or 38%, to $73.0 million for the three months ended September 30, 2025 from $117.3 million in the comparable period in 2024.

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

Energy industrial revenue decreased by $2.4 million, or 9%, to $24.3 million for the three months ended September 30, 2025 from $26.7 million in the comparable period in 2024.

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

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

The average selling price per square foot of our energy industrial products increased by 2% for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

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

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

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

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

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

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

automotive OEM.

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

Cost of Revenue

Three Months Ended September 30,

($ in thousands)

Cost of revenue:

Energy industrial

Thermal barrier

Total cost of revenue

Total cost of revenue decreased $16.1 million, or 24%, to $52.2 million for the three months ended September 30, 2025 from $68.3 million in the comparable period in 2024.

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

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

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

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

The $15.5 million decrease was the result of a $10.7 million decrease in material costs and a $7.0 million decrease in manufacturing costs, offset by a $2.2 million credit during the three months ended September 30, 2024 for reimbursement of costs related to the impact from an engineering change, which did not repeat.

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

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

Three Months Ended September 30,

($ in thousands)

Gross profit:

Energy industrial

Thermal barrier

Total gross profit

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

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

Research and Development Expenses

Three Months Ended September 30,

($ in thousands)

Research and development expenses

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

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

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

Sales and Marketing Expenses

Three Months Ended September 30,

($ in thousands)

Sales and marketing expenses

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

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

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

General and Administrative Expenses

Three Months Ended September 30,

($ in thousands)

General and administrative expenses

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

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

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

Restructuring and demobilization costs

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.

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

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

Other Income (Expense), net

Three Months Ended September 30,

($ in thousands)

Other income (expense):

Interest expense, related party

Interest income (expense), net

Loss on extinguishment of debt

Total other expense, net

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

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

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

Income Tax Expense

Three Months Ended September 30,

($ in thousands)

Income tax expense

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

We incurred $0.3 million of income tax expense related to our maquiladora operations in Mexico for the comparable period in 2024.

Results of Operations

Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

Three months ended March 31, 2026 compared to the three months ended March 31, 2025

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

Nine Months Ended September 30,

Percentage of

Three Months Ended March 31,

($ in thousands)

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Total revenue

Total revenue decreased $99.8 million, or 30%, to $229.8 million for the nine months ended September 30, 2025 from $329.6 million in the comparable period in 2024.

Total revenue decreased $40.8 million, or 52%, to $37.9 million for the three months ended March 31, 2026 from $78.7 million in the comparable period in 2025.

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

Energy industrial revenue decreased by $15.9 million, or 17%, to $76.9 million for the nine months ended September 30, 2025 from $92.8 million in the comparable period in 2024.

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

Energy industrial revenue for the nine months ended September 30, 2025 included $16.9 million from a North American distributor, in comparison to $19.1 million for the comparable period of 2024.

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

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

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

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

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

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

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

Energy industrial revenue decreased by $8.2 million, or 28%, to $21.6 million for the three months ended March 31, 2026 from $29.8 million in the comparable period in 2025.

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

Energy industrial revenue for the three months ended March 31, 2026 included $4.7 million and $3.6 million from two North American distributors, in comparison to $2.5 million and $10.7 million for the comparable period of 2025.

The average selling price per square foot of our energy industrial products decreased by 5% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

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 $1.1 million for the three months ended March 31, 2026 from the comparable period in 2025.

In volume terms, energy industrial product shipments decreased by 24% as measured by square feet of our energy industrial products shipped for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

The decrease in volume had the effect of decreasing product revenue by $7.1 million for the three months ended March 31, 2026 from the comparable period in 2025.

Thermal barrier revenue decreased by $32.6 million, or 67%, to $16.3 million for the three months ended March 31, 2026 from $48.9 million in the comparable period in 2025.

During the three months ended March 31, 2026 and 2025, thermal barrier revenue included $11.2 million and $47.4 million, respectively, from a major U.S.

automotive OEM.

Thermal Barrier revenue for the three months ended March 31, 2026 includes $3.5 million of revenue from a settlement agreement with a customer for $37.6 million for a claim for certain losses incurred arising from lower forecasted long-term demand by the customer which is being deferred and recognized as revenue over a period of approximately two years.

Cost of Revenue

Nine Months Ended September 30,

Three Months Ended March 31,

($ in thousands)

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Total cost of revenue

Total cost of revenue decreased $33.0 million, or 17%, to $160.8 million for the nine months ended September 30, 2025 from $193.8 in the comparable period in 2024.

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

Energy industrial cost of revenue decreased $7.0 million, or 13%, to $48.0 million for the nine months ended September 30, 2025 from $55.0 million in the comparable period in 2024, primarily due to a decrease in the volume of products shipped.

The $7.0 million decrease was the result of a $7.9 million decrease in manufacturing and other operating costs due to lower volume of energy industrial products manufactured at our plant, offset in part by a $0.9 million increase in material costs.

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

The $26.0 million decrease was the result of a $23.2 million decrease in material costs, a $2.4 million decrease in manufacturing costs and a $0.4 million charge for an engineering change during the nine months ended September 30, 2024, which did not repeat.

Total cost of revenue decreased $22.3 million, or 40%, to $33.6 million for the three months ended March 31, 2026 from $55.9 million in the comparable period in 2025.

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

Energy industrial cost of revenue increased $0.2 million, or 1%, to $18.3 million for the three months ended March 31, 2026 from $18.1 million in the comparable period in 2025, primarily due to a higher volume of energy industrial products manufactured at our plant and allocation received of overheads during temporary plant shutdown.

The $0.2 million increase resulted from a $5.7 million increase in manufacturing and other operating costs, partially offset by a $5.5 million decrease in material costs due to lower volume.

The higher manufacturing costs were driven by a shift in production of energy industrial products from an external facility to our plant compared to the prior year, combined with the allocation of overheads during our temporary plant shutdown.

Thermal barrier cost of revenue decreased $22.5 million, or 59%, to $15.3 million for the three months ended March 31, 2026 from $37.8 million in the comparable period in 2025.

The $22.5 million decrease was the result of a $13.9 million decrease in manufacturing costs and an $8.6 million decrease in material costs.

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

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

Nine Months Ended September 30,

Manufacturing costs decreased due to lower volumes in comparison to the same period in 2025, benefits from the headcount reduction and other cost cutting efforts in 2026 offset by the allocations of overheads during our temporary plant shutdown.

Three Months Ended March 31,

($ in thousands)

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Total gross profit

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

Total gross profit decreased by $18.5 million, or 81%, to $4.3 million in gross profit for the three months ended March 31, 2026 from $22.8 million in the comparable period in 2025.

The decrease in gross profit was the result of the $40.8 million decrease in total revenue, partially offset by the $22.3 million decrease in total cost of revenue.

Research and Development Expenses

Nine Months Ended September 30,

Three Months Ended March 31,

($ in thousands)

Research and development expenses

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

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

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

Research and development expenses decreased by $1.6 million, or 37%, to $2.7 million for the three months ended March 31, 2026 from $4.3 million in the comparable period in 2025.

The $1.6 million decrease reflects decreases in compensation and related costs of $1.0 million, driven by a headcount reduction, a decrease in utility expenses of $0.5 million and a decrease in other expenditures of $0.1 million.

Research and development expenses as a percentage of total revenue increased to 7% of total revenue for the three months ended March 31, 2026 from 6% in the comparable period in 2025.

Sales and Marketing Expenses

Nine Months Ended September 30,

Three Months Ended March 31,

($ in thousands)

Sales and marketing expenses

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

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

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

Sales and marketing expenses decreased by $1.7 million, or 20%, to $6.7 million for the three months ended March 31, 2026 from $8.4 million in the comparable period in 2025.

The $1.7 million decrease reflects decreases in compensation and related costs of $1.4 million, partially driven by a headcount reduction, freight related expenses of $0.2 million and other expenses of $0.1 million.

Sales and marketing expenses as a percentage of total revenue increased to 18% of total revenue for the three months ended March 31, 2026 from 11% in the comparable period in 2025.

General and Administrative Expenses

Nine Months Ended September 30,

Three Months Ended March 31,

($ in thousands)

General and administrative expenses

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

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

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

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

General and administrative expenses increased by $2.3 million, or 17%, to $15.3 million for the three months ended March 31, 2026 from $13.0 million in the comparable period in 2025.

The $2.3 million increase was the result of a $1.9 million increase in property taxes, $1.1 million increase in bonus expense, $0.5 million increase in professional fees, $0.4 million increase in foreign currency losses, $0.3 million increase in information technology costs and a $0.1 million increase in other expenses, offset by a decrease in base compensation and benefit costs of $1.5 million and $0.5 million decrease in insurance costs.

General and administrative expenses as a percentage of total revenue increased to 40% for the three months ended March 31, 2026 from 17% in the comparable period in 2025.

Restructuring and Demobilization Costs

During the three months ended March 31, 2026, we began implementing a restructuring plan to consolidate the operations of the automated fabrication facility in Mexico to improve costs.

The plan includes reducing our headcount in Mexico and consolidating facilities.

In connection with the restructuring, we incurred $0.4 million of severance costs for headcount reduction.

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.

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

Restructuring and demobilization costs for the nine months ended September 30, 2025 include severance and other personnel costs of $7.3 million, facility closures and other costs associated with demobilization of $2.9 million and a write off of deferred financing costs of $6.2

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

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

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

Impairment of property, plant and equipment

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

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

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

Impairment of property, plant and equipment costs for the three months ended March 31, 2025 was due to impairment incurred of $286.6 million on our previously planned Statesboro Plant.

Other Income (Expense), net

Nine Months Ended September 30,

Three Months Ended March 31,

($ in thousands)

Other income (expense):

Interest expense, related party

Interest expense, net

Loss on extinguishment of debt

Total other expense, net

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

The $7.1 million increase in interest expense, net for the nine months ended September 30, 2025 is the result of a $11.3 million increase in interest expense from the MidCap Loan Facility and sale and leaseback transactions, offset by $1.8 million of deferred financing costs written off related to the loan agreement with GM during the three months ended March 31, 2024 which did not repeat during the comparable period and an increase in interest income of $2.4 million.

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

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

Income Tax Expense

Nine Months Ended September 30,

The $1.2 million increase in interest expense, net for the three months ended March 31, 2026 is primarily due to the result of a decrease in interest income of $1.3 million.

The other income decrease of $1.1 million for the three months ended March 31, 2026 is primarily due to the result of a legal settlement payment to us in the comparable period in 2025.

Income Tax Benefit (Expense)

Three Months Ended March 31,

($ in thousands)

Income tax expense

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

We incurred $1.9 million of income tax expense related to our maquiladora operations in Mexico for the comparable period in 2024.

Income tax benefit (expense)

The $0.3 million of income tax benefit for the three months ended March 31, 2026 is related to a benefit of $0.3 million related to the Mexican maquiladora operations offset by provision for state income taxes of less than $0.1 million and provision for income tax related to German operations of less than $0.1 million.

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

Liquidity and Capital Resources

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

costs required by our customers.

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.

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

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

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

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

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

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

On August 19, 2024, we entered into the 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, MidCap Financial Trust, as term loan servicer, and the financial institutions or other entities from time to time party thereto as lenders, as subsequently amended (the Amended MidCap Loan Facility).

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 (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 (as defined in the Credit Agreement) (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 for repurchasing the $100.0 million aggregate principal amount convertible note issued to Wood River Capital, LLC, an entity affiliated with Koch Strategic Platforms, LLC, for $150.0 million and for general corporate purposes.

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

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

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.

We believe that our March 31, 2026 cash and cash equivalents balance of $173.9 million will be sufficient to support current operating requirements and capital expenditures required to support our existing business in the energy industrial and EV markets for at least the next twelve months from the date of this Quarterly Report on Form 10-Q.

However, we 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.

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

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

As of March 31, 2026, we had $173.9 million of unrestricted cash and cash equivalents.

Analysis of Cash Flow

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

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Financing activities

Net decrease in cash

Net increase (decrease) in cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Net Cash Provided by (Used in) Operating Activities

During the nine months ended September 30, 2025, we generated $16.7 million in net cash in operating activities, as compared to the generation of $9.9 million in net cash during the comparable period in 2024, an increase in cash provided by operations of $6.8 million.

Net Cash Provided by Operating Activities

During the three months ended March 31, 2026, we generated $34.1 million in net cash in operating activities, as compared to the generation of $5.6 million in net cash during the comparable period in 2025, an increase in cash provided by operations of $28.5 million.

This increase in cash provided by operations was the result of an increase in net cash generated by changes in operating assets and liabilities of $37.1 million offset by a decrease in net loss adjusted for non-cash items of $8.6 million.

Cash generated by operating activities during the three months ended March 31, 2026, includes $37.6 million for settlement of a claim with a Thermal Barrier customer which is being deferred and recognized as revenue over a period of approximately two years.

Net Cash Used in 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 the nine months ended September 30, 2025 and 2024 was $35.0 million and $71.5 million, respectively.

Net Cash Provided by (Used in) Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2025 totaled $50.6 million and consisted of $28.0 million in cash used for the repayment of the Revolving Facility, $19.5 for the repayment of the Term Loan Facility, $3.7 in repayments of the finance obligation under the sale and leaseback transaction, $0.7 million for payments made for employee tax withholdings associated with the vesting of RSUs, $1.4 million in proceeds from employee stock option exercises, and less than $0.1 million in cash used for fees and issuance costs.

Net cash provided by financing activities for the nine months ended September 30, 2024 totaled $35.6 million and consisted of $15.0 million in proceeds from a sales leaseback, $10.4 million in proceeds from employee stock option exercises, $119.7 in proceeds from the term loan, net of issues costs, and $42.7 in proceeds from the Revolving Facility, net of issuance costs, offset by $150.0 million in cash used for the repayment of the 2022 Convertible Note, $1.3 million in cash used for payments made for employee tax withholdings associated with the vesting of RSUs, $0.8 million in repayments of a sales leaseback, and less than $0.1 million in cash used for fees and issuance costs.

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 for 2025 construction costs for the previously planned Statesboro Plant.

Net cash used in investing activities for the three months ended March 31, 2026 and 2025 was $1.4 million and $13.0 million, respectively.

Net Cash Used in Financing Activities

Net cash used in financing activities for the three months ended March 31, 2026 totaled $15.8 million and consisted of $7.6 million in cash used for the repayment of the Revolving Facility, $6.5 million for the repayment of the Term Loan Facility, $1.5 million in repayments of the finance obligation under the sale and leaseback transaction, and $0.2 million for payments made for employee tax withholdings associated with the vesting of RSUs.

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

Contractual Obligations and Commitments

1 unchanged sentence

Recent Accounting Pronouncements

Information regarding new accounting pronouncements is included in "Note 2.

Significant Accounting Policies." to our unaudited consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

Information regarding new accounting pronouncements is included in Note (2) to our unaudited consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

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Our actual results may differ from these estimates under different assumptions and conditions.

See our Annual Report and "Note 2.

Significant Accounting Policies." to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information about these critical accounting policies, as well as a description of our other significant accounting policies.

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

Certain Factors That May Affect Future Results of Operations

8 unchanged sentences

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

our expectations regarding decommissioning of and our plans for divesting the assets of the

Statesboro Plant;

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

our estimates of annual production capacity;

2 unchanged sentences

beliefs about our contracts with the major automotive manufacturers;

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

our expectations about the size and timing of awarded business in the EV market, future revenues and

profit margins, arising from our supply relationship and contract with automotive OEMs and our ability to win more business and increase revenue in the EV market;

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

2 unchanged sentences

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

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

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

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

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

our ability to resume operations at the East Providence manufacturing facility;

our ability to manufacture the full array of our products at the facility and to meet expected customer demand;

our ability to mitigate the potential impacts from the operational disruption on our business, operations and financial performance;

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

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our intentions about managing capital expenditures and working capital balances;

our expectations and beliefs regarding the flexibility and efficiency of the MidCap facility;

our expectations and beliefs regarding the flexibility and efficiency of the Amended MidCap Loan Facility;

and our expectations about potential sources of future financing.

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All forward-looking statements are management’s present expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially and adversely from those described in the forward-looking statements.

These risks include, but are not limited to, those set forth in this Quarterly Report on Form 10-Q and under the heading “Risk Factors” contained in Item 1A of our Annual Report.

These risks include, but are not limited to, those under the heading “Risk Factors” contained in Item 1A of our Annual Report.

In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this Quarterly Report on Form 10-Q might not occur.

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

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

As of March 31, 2026, we had unrestricted cash and cash equivalents of $173.9 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.

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

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

As of March 31, 2026, we had $86.0 million of the Term Loan Facility outstanding and $7.1 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 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%.

1 to the Credit Agreement, 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.

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

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

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%.

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

Interest is paid monthly.

2 unchanged sentences

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

As of September 30, 2025, we had $1.7 million of restricted cash to support our outstanding letters of credit to secure obligations under certain commercial contracts and other obligations.

As of March 31, 2026, we had $1.7 million of restricted cash to support our outstanding letters of credit.

Inflation Risk

3 unchanged sentences

We are subject to inherent risks attributed to operating in a global economy.

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

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

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

Foreign currency transaction losses were $0.2 million and $2.3 million for the nine months ended September 30, 2025 and September 30, 2024, respectively.

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

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

As we expand our presence in international markets, to the extent we are required to enter into agreements denominated in a currency other than the 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 three months ended March 31, 2026 and 2025, our largest exposures to foreign exchange rates consisted primarily of the Mexican Peso against the U.S.

For the three months ended March 31, 2026 and 2025, we had foreign exchange losses of less than $0.1 million and $0.4 million, respectively.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis