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What changed in ASPEN AEROGELS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ASPEN AEROGELS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+591 added−607 removedSource: 10-K (2025-02-27) vs 10-K (2024-03-07)

Top changes in ASPEN AEROGELS INC's 2024 10-K

591 paragraphs added · 607 removed · 424 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

100 edited+37 added−31 removed123 unchanged
Biggest changeThe major end-user markets that drive demand for our products include oil refining, petrochemical, natural gas and LNG production and storage, onshore oil production, offshore oil production and power generation. Global energy demand is expected to increase in the long-term and, to serve this growing demand, we believe our end-user customers will continue to invest in major energy industrial projects.
Biggest changeAccordingly, we believe that demand for insulation for maintenance purposes in comparison to capital projects is less affected by volatility associated with economic cycles, energy prices and other macroeconomic factors. The major end-user markets that drive demand for our products include oil refining, petrochemical, natural gas and LNG production and storage, onshore oil production, offshore oil production and power generation.
Pursuant to the GM Contracts, we are obligated to supply Barriers at fixed annual prices and at volumes to be specified by GM up to a daily maximum quantity through the respective terms of the agreements, which expire at various times from 2026 through 2034.
Pursuant to the GM Contracts, we are obligated to supply the Barriers at fixed annual prices and at volumes to be specified by GM up to a daily maximum quantity through the respective terms of the agreements, which expire at various times from 2026 through 2034.
We believe that our aerogel technology has allowed us to create superior insulation products and will allow us to continue to grow our share of the energy industrial materials and thermal barrier markets.
We believe that our aerogel technology has allowed us to create superior insulation products and will allow us to continue to grow our share of the thermal barrier markets and energy industrial materials.
Our Customers and End-Users Customers Energy Industrial Our primary customers in the energy industrial market are distributors, installation contractors and fabricators that stock, install and customize insulation products, components and systems for technically sophisticated end-users that require high-performance insulation. • Distributors: We currently operate through a global network of insulation distributors.
Energy Industrial Our primary customers in the energy industrial market are distributors, installation contractors and fabricators that stock, install and customize insulation products, components and systems for technically sophisticated end-users that require high-performance insulation. • Distributors: We currently operate through a global network of insulation distributors.
We purchase silica precursors from several suppliers in the United States, Europe and Asia, including China. Based on the current level of demand for our products, we believe that an adequate long-term supply of silica precursors is available.
We purchase silica precursors from several suppliers in the United States, Europe and Asia, including China. Based on the current level of demand for our products, we believe that an adequate long-term supply of silica precursors is available.
Compensation and Benefits At Aspen Aerogels, we view our employees as our most valuable asset and have taken great steps to offer a comprehensive suite of compensation and benefits to ensure the physical, emotional and financial well-being of our employees. Our goal is to attract and retain the best and brightest talent and remain competitive within our industry.
At Aspen Aerogels, we view our employees as our most valuable asset and have taken great steps to offer a comprehensive suite of compensation and benefits to ensure the physical, emotional and financial well-being of our employees. Our goal is to attract and retain the best and brightest talent and remain competitive within our industry.
Over time, these companies have used our products in an increasing range of applications and throughout an increasing number of their facilities. • Petrochemical: We believe our aerogel blankets are used by all of the world’s 20 largest petrochemical companies including Reliance Industries, Formosa Petrochemical, and LyondellBasell Industries, among others. • Natural Gas and LNG: Our products are in use at facilities operated by PTT LNG, ExxonMobil, and Dominion Energy, among others. • Onshore: Our aerogel blankets are in use in several Canadian oil sands facilities owned and operated by Suncor Energy, ConocoPhillips and Husky Energy, among others. • Offshore: Our products are currently used in subsea projects off the coast of Brazil, in the Gulf of Mexico, in the North Sea, off the coast of Malaysia and off the west coast of Africa.
Over time, these companies have used our products in an increasing range of applications and throughout an increasing number of their facilities. • Petrochemical: We believe our aerogel blankets are used by all of the world’s 20 largest petrochemical companies including Reliance Industries, Formosa Petrochemical, and LyondellBasell Industries, among others. 13 • Natural Gas and LNG: Our products are in use at facilities operated by PTT LNG, ExxonMobil, and Dominion Energy, among others. • Onshore: Our aerogel blankets are in use in several Canadian oil sands facilities owned and operated by Suncor Energy, ConocoPhillips and Husky Energy, among others. • Offshore: Our products are currently used in subsea projects off the coast of Brazil, in the Gulf of Mexico, in the North Sea, off the coast of Malaysia and off the west coast of Africa.
See “Risk Factors — Risks Related to Our Business and Strategy — Shortages of the raw materials used 15 in the production of our products, increases in the cost of such materials or disruptions in our supply chain could adversely impact our financial condition and results of operations.” We seek to lower our manufacturing costs, while maintaining appropriate performance characteristics, and to improve the per square foot costs of our aerogel blankets by optimizing our formulations to reduce material costs, by enhancing manufacturing process controls to improve yields, by realizing price reductions from existing vendors, by qualifying new vendors and by reducing shipping costs.
See “Risk Factors — Risks Related to Our Business and Strategy — Shortages of the raw materials used in the production of our products, increases in the cost of such materials or disruptions in our supply chain could adversely impact our financial condition and results of operations.” We seek to lower our manufacturing costs, while maintaining appropriate performance characteristics, and to improve the per square foot costs of our aerogel blankets by optimizing our formulations to reduce material costs, by enhancing manufacturing process controls to improve yields, by realizing price reductions from existing vendors, by qualifying new vendors and by reducing shipping costs.
See “Risk Factors — A substantial portion of our revenue comes from sales in foreign countries, and we may expand our operations outside of the United States, which subjects us to increased economic, foreign exchange, operational, and political risks that could increase our costs and make it difficult for us to operate profitably.” 13 End-Users The end-users of our aerogel blankets and thermal barriers include some of the largest and most well-capitalized companies in the world.
See “Risk Factors — A substantial portion of our revenue comes from sales in foreign countries, and we may expand our operations outside of the United States, which subjects us to increased economic, foreign exchange, operational, and political risks that could increase our costs and make it difficult for us to operate profitably.” End-Users The end-users of our aerogel blankets and thermal barriers include some of the largest and most well-capitalized companies in the world.
Many of our competitors have greater market presence, larger market share, longer operating histories, stronger name recognition, larger customer bases and significantly greater financial, technical, sales and marketing, manufacturing and other resources than we have and may be better able to withstand volatility within the industry and throughout the 6 economy as a whole, while retaining greater operating and financial flexibility.
Many of our competitors have greater market presence, larger market share, longer operating histories, stronger name recognition, larger customer bases and significantly greater financial, technical, sales and marketing, manufacturing and other resources than we have and may be better able to withstand volatility within the industry and throughout the economy as a whole, while retaining greater operating and financial flexibility.
As part of the material qualification process established by these companies, a new insulation or thermal barrier product must meet general industry standards, such as consensus standards developed by ASTM International, and, in many 11 cases, company-specific internal standards to be considered and approved for use or designed into vehicle platforms.
As part of the material qualification process established by these companies, a new insulation or thermal barrier product must meet general industry standards, such as consensus standards developed by ASTM International, and, in many cases, company-specific internal standards to be considered and approved for use or designed into vehicle platforms.
In addition, some insulation contractors provide end-users with project engineering and design services. 12 • Fabricators: We currently sell directly to a small network of fabricators that design, customize and manufacture insulation components and systems for use in the energy industrial, sustainable insulation materials, transportation, appliance and apparel markets. • Direct Sales to End-Users: In certain instances, we sell directly to end-users in the energy industrial insulation market.
In addition, some insulation contractors provide end-users with project engineering and design services. • Fabricators: We currently sell directly to a small network of fabricators that design, customize and manufacture insulation components and systems for use in the energy industrial, sustainable insulation materials, transportation, appliance and apparel markets. • Direct Sales to End-Users: In certain instances, we sell directly to end-users in the energy industrial insulation market.
We have also developed and commercialized a proprietary line of aerogel-based thermal barriers for use in battery packs of EVs and energy storage systems. The market for our thermal barrier products encompasses batteries used in mobile platforms, including automobiles, trucks, buses and light aircraft, and fixed platforms, including home storage, grid storage and other commercial applications.
We have developed and commercialized a proprietary line of aerogel-based thermal barriers for use in battery packs of EVs and energy storage systems. The market for our thermal barrier products encompasses batteries used in mobile platforms, including automobiles, trucks, buses and light aircraft, and fixed platforms, including home storage, grid storage and other commercial applications.
We believe our current expansion plans and available manufacturing technology advancements will enhance profit potential, increase operating cash flow capability, and offer 9 attractive returns on incremental invested capital. In addition, we will focus our development efforts on new products and next generation technology with application in new, high value market segments.
We believe our current expansion plans and available manufacturing technology advancements will enhance profit potential, increase operating cash flow capability, and offer attractive returns on incremental invested capital. In addition, we will focus our development efforts on new products and next generation technology with application in new, high value market segments.
Cryogel X201 is targeted to OEMs that design, produce and sell refrigerated appliances, cold storage equipment and aerospace systems. • In 2024, consistent with our current expectations and plans for the growth of our business, we discontinued production of our Spaceloft® sustainable insulation materials, including Spaceloft Grey and Spaceloft A2.
Cryogel X201 is targeted to OEMs that design, produce and sell refrigerated appliances, cold storage equipment and aerospace systems. 10 • In 2024, consistent with our current expectations and plans for the growth of our business, we discontinued production of our Spaceloft® sustainable insulation materials, including Spaceloft Grey and Spaceloft A2.
Our sales force also works directly with end-users and engineering firms to promote qualification, specification, and wider acceptance of our products in existing and new applications. In the energy industrial market, we rely heavily on the existing and well-established channel of distributors and contractors to deliver products to our customers.
Our sales force also works directly with end-users and engineering firms to promote qualification, specification, and wider acceptance of our products in existing and new applications. In the energy industrial market, we rely heavily on the existing and well-established channel of distributors and 11 contractors to deliver products to our customers.
In general, insulation distributors stock, sell and distribute aerogel materials to insulation contractors and end-users. The distribution of our product outside of the United States is at times conducted under agreements that provide for exclusivity by geography linked to annual purchase volume minimums.
In general, insulation distributors stock, sell and distribute aerogel materials to insulation contractors and end-users. The distribution of our product outside of the United States is at times conducted under agreements that provide for exclusivity by geography linked to annual 12 purchase volume minimums.
If we are unable to compete successfully, we may not be able to increase or maintain our market share and revenues.” Our market share was approximately 3% of the estimated multi-billion dollar annual global market for energy industrial insulation materials during 2022.
If we are unable to compete successfully, we may not be able to increase or maintain our market share and revenues.” 6 Our market share was approximately 3% of the estimated multi-billion dollar annual global market for energy industrial insulation materials during 2022.
The multi-billion global lithium-ion battery market continues to grow and evolve rapidly. Our thermal barrier technology offers a unique combination of thermal management, mechanical performance, and fire protection properties that enables EV manufacturers to achieve critical battery performance and safety goals.
The multi-billion dollar global lithium-ion battery market continues to grow and evolve rapidly. Our thermal barrier technology offers a unique combination of thermal management, mechanical performance, and fire protection properties that enables EV manufacturers to achieve critical battery performance and safety goals.
While GM has agreed to purchase its requirement for Barriers from us at locations to be designated from time to time by them, it has no obligation to purchase any minimum quantity of Barriers under the GM Contracts. In addition, GM may terminate the GM Contracts at any time and for any or no reason.
While GM has agreed to purchase its requirement for the Barriers from us at locations to be designated from time to time by them, it has no obligation to purchase any minimum quantity of the Barriers under the GM Contracts. In addition, GM may unilaterally terminate the GM Contracts at any time and for any or no reason.
The markets for these materials are generally competitive and multiple sources of supply exist for all of our raw materials. However, from time-to-time, we have experienced a significant increase in the price of certain silica precursors due to supply imbalances in the silanes market.
The markets for these materials are generally competitive and multiple sources of supply exist for all of our raw 9 materials. However, from time-to-time, we have experienced a significant increase in the price of certain silica precursors due to supply imbalances in the silanes market.
In order to capture the opportunities in our end markets, we have a network of sales professionals and qualified distributors in more than 50 countries around the world. 7 • Strong Installed Base with Industry-leading Energy Customers.
In order to capture the opportunities in our end markets, we have a network of sales professionals and qualified distributors in more than 50 countries around the world. • Strong Installed Base with Industry-leading Energy Customers.
Pyrogel XTE was initially designed for use in refineries and petrochemical facilities, but has proven to have wide applicability throughout the energy industrial market. Pyrogel XTE is optimized for high temperature 10 applications between 100° C and 400° C.
Pyrogel XTE was initially designed for use in refineries and petrochemical facilities, but has proven to have wide applicability throughout the energy industrial market. Pyrogel XTE is optimized for high temperature applications between 100° C and 400° C.
Our direct ownership of manufacturing operations in East Providence, RI allows us to maintain control of proprietary process technologies and to control product quality. We also closely monitor the manufacturing process and quality control of the aerogels supplied by our external manufacturing facilities in China.
Our direct ownership of manufacturing operations in East Providence allows us to maintain control of proprietary process technologies and to control product quality. We also closely monitor the manufacturing process and quality control of the aerogels supplied by our external manufacturing facilities in China.
A substantial portion of our sales are to shipment destinations located outside of the United States, including France, Norway, Thailand, Canada, Germany, Taiwan, Great Britain, Colombia, and South Korea.
A substantial portion of our sales are to shipment destinations located outside of the United States, including Mexico, France, Norway, Thailand, Canada, Germany, Taiwan, Great Britain, Colombia, and South Korea.
We have entered into production contracts with GM to supply fabricated, multi-part thermal barriers (Barriers) for use in the battery system of its next-generation EVs, or the GM Contracts.
We have entered into production contracts with GM to supply fabricated, multi-part thermal barriers (the Barriers) for use in the battery system of its next-generation EVs (the GM Contracts).
We employ statistical processes and quality controls in our manufacturing systems. We routinely measure and monitor thermal conductivity, hydrophobicity and other key properties of the aerogel blankets produced in our manufacturing operations. We are ISO 9001:2015 certified. 14 We have operated the East Providence, RI facility since 2008 and have increased our capacity in phases since that time.
We employ statistical processes and quality controls in our manufacturing systems. We routinely measure and monitor thermal conductivity, hydrophobicity and other key properties of the aerogel blankets produced in our manufacturing operations. We are ISO 9001:2015 certified. We have operated the East Providence facility since 2008 and have increased our capacity in phases since that time.
As of December 31, 2023, we have contracted with a contract manufacturer in China to produce supplemental supply of our Pyrogel XTE and Cryogel Z products. Our production of aerogel blankets at our East Providence, RI facility utilizes a continuous process and consists of the following key steps: • Sol Preparation.
As of December 31, 2024, we have contracted with a contract manufacturer in China to produce supplemental supply of our Pyrogel XTE and Cryogel Z products. Our production of aerogel blankets at our East Providence, RI facility utilizes a continuous process and consists of the following key steps: • Sol Preparation.
Our materials scientists and engineers also seek to develop enhanced chemical and process technologies to improve yields, lower manufacturing costs and improve product performance.
Our materials scientists and engineers also seek to develop enhanced chemical and process technologies to improve yields, lower manufacturing costs and improve product 15 performance.
We maintain our corporate offices in Northborough, Massachusetts. We are required to file annual, quarterly and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended, or the Exchange Act, with the Securities and Exchange Commission, or the SEC. SEC filings are available at the SEC’s website at https://www.sec.gov.
We maintain our corporate offices in Northborough, Massachusetts. We are required to file annual, quarterly and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the Exchange Act), with the SEC. SEC filings are available at the SEC’s website at https://www.sec.gov.
It applies to the Company enterprise-wide and to all associates with whom Aspen Aerogels conducts business.
It applies to the Company enterprise-wide and to all associates with whom Aspen conducts business.
We have an installed base of more than 475 million square feet of insulation, representing more than $1.4 billion in cumulative product sales since 2008. Through our relationships with industry-leading energy industrial customers, our products have undergone rigorous testing and technical validation and are now in use at most of the world’s largest oil producers, refiners and petrochemical companies.
We have an installed base of more than 500 million square feet of insulation, representing more than $1.5 billion in cumulative product sales since 2008. Through our relationships with industry-leading energy industrial customers, our products have undergone rigorous testing and technical validation and are now in use at most of the world’s largest oil producers, refiners and petrochemical companies.
We also have an ongoing patent infringement action against Beerenberg Services AS and Beerenberg Korea Ltd. at the Seoul District Court and against Beerenberg Korea Ltd., and Bronx (China) Co., Ltd. at the Korea Trade Commission (KTC) in connection with the alleged infringement of the Korean counterparts of our patents previously asserted successfully in Germany and also an additional Korean patent family covering high performance aerogel compositions.
We also have an ongoing patent infringement action against Beerenberg Services AS and Beerenberg Korea Ltd. at the Seoul District Court and against Beerenberg Korea Ltd., and Bronx (China) Co., Ltd. at the Seoul Administrative Court under appeal from the Korea Trade Commission (KTC) in connection with the alleged infringement of the Korean counterparts of our patents previously asserted successfully in Germany and also an additional Korean patent family covering high performance aerogel compositions.
During this period, we have sold over $1.4 billion of our insulation products globally, representing an installed base of more than 475 million square feet of insulation. We believe that our long-term record of success positions us for future growth and continued gain in market share in the energy industrial and sustainable insulation markets.
During this period, we have sold over $1.5 billion of our insulation products globally, representing an installed base of more than 500 million square feet of insulation. We believe that our long-term record of success positions us for future growth and continued gain in market share in the energy industrial and sustainable insulation markets.
Our Aerogel Technology Platform ® is the result of extensive research and development dedicated to new aerogel compositions, form factors and manufacturing technologies. Our intellectual property portfolio is supported by 433 issued patents, with an additional 383 pending, in U.S. and foreign jurisdictions in areas related to product design, chemistry, process technology and market applications.
Our Aerogel Technology Platform ® is the result of extensive research and development dedicated to new aerogel compositions, form factors and manufacturing technologies. Our intellectual property portfolio is supported by 354 issued patents, with an additional 435 pending, in U.S. and foreign jurisdictions in areas related to product design, chemistry, process technology and market applications.
Nano Tech Co., Ltd., Beerenberg AS, IBIH Advanced Materials Co., Ltd., Nameite New Materials Technology Co., Ltd., Guizhou Aerospace Wujiang Electro-Mechanical Equipment Co., Ltd., Shenzhen Aerogel Technology Co., Ltd., and a growing number of other competitors that manufacture, sell or resell aerogel-based insulation products.
Ltd., IBIDEN Co., Ltd., Guangdong Alison Hi-Tech Co., Ltd. Nano Tech Co., Ltd., Beerenberg AS, IBIH Advanced Materials Co., Ltd., Nameite New Materials Technology Co., Ltd., Guizhou Aerospace Wujiang Electro-Mechanical Equipment Co., Ltd., Shenzhen Aerogel Technology Co., Ltd., and a growing number of other competitors that manufacture, sell or resell aerogel-based insulation products.
Our process allows the ethanol to be extracted without causing the solid matrix in the gel to collapse from capillary forces. Our material costs were 36%, 51%, and 48% of product revenue for the years ended December 31, 2023, 2022 and 2021, respectively.
Our process allows the ethanol to be extracted without causing the solid matrix in the gel to collapse from capillary forces. Our material costs were 38%, 36%, and 51% of product revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
Our material costs were 36%, 51%, and 48% of product revenue for the years ended December 31, 2023, 2022 and 2021, respectively. The materials used in the production of our products consist primarily of several silica precursors, fiber batting, and other additives.
Our material costs were 38%, 36%, and 51% of product revenue for the years ended December 31, 2024, 2023 and 2022, respectively. The materials used in the production of our products consist primarily of several silica precursors, fiber batting, and other additives.
All other terms of the GM Contracts are generally consistent with automotive original equipment manufacturer (OEMs’) standard purchase terms, including quality and warranty provisions customary in the automotive industry.
All other terms of the GM Contracts are generally consistent with automotive OEMs’ standard purchase terms, including quality and warranty provisions customary in the automotive industry.
We are currently supplying thermal barrier production parts to both 3 General Motors and Toyota, and thermal barrier prototype parts to a number of global manufacturers of EVs, grid storage and home battery systems. During 2023, we sold $110.1 million of our PyroThin thermal barriers. During 2022, we sold $55.6 million of our PyroThin thermal barriers.
We are currently supplying thermal barrier production parts to both General Motors and Toyota, and thermal barrier prototype parts to a number of global manufacturers of EVs, grid storage and home battery systems. During 2024, 2023 and 2022, we sold $306.8 million, $110.1 million and $55.6 million, respectively, of our PyroThin thermal barriers.
We are currently supplying thermal barrier production parts to both GM and Toyota. We are also supplying thermal barrier prototype parts to a number of other U.S., European and Asian manufacturers of EVs, grid storage and home battery systems.
We are currently supplying thermal barrier production parts to GM, Toyota and Scania, among others. We are also supplying thermal barrier prototype parts to a number of other U.S., European and Asian manufacturers of EVs, grid storage and home battery systems.
As of December 31, 2023, we had eight trademark registrations in the United States, and 81 trademark registrations in foreign jurisdictions, including the European Union, United Kingdom, Japan, China, Canada, Mexico, India, South Korea and Brazil. Additionally, we had two pending US trademark applications and four 16 pending foreign trademark applications.
As of December 31, 2024, we had eight trademark registrations in the United States, and 81 trademark registrations in foreign jurisdictions, including the European Union, United Kingdom, Japan, China, Canada, Mexico, India, South Korea and Brazil. Additionally, we had one pending US trademark applications and two pending foreign trademark applications.
Our Investor Relations Department can be contacted at Aspen Aerogels, Inc., 30 Forbes Road, Northborough, MA 01532, Attention: Investor Relations; telephone: 508-691-1111; e-mail: ir@aerogel.com. Human Capital Resources As of December 31, 2023, we had 548 full-time employees. Of our employees, 517 are located in the United States and 31 are located abroad.
Our Investor Relations Department can be contacted at Aspen Aerogels, Inc., 30 Forbes Road, Northborough, MA 01532, Attention: Investor Relations; telephone: 508-691-1111; e-mail: ir@aerogel.com. Human Capital Resources As of December 31, 2024, we had 554 full-time employees. Of our employees, 520 are located in the United States and 34 are located abroad.
As of December 31, 2023, we employed 548 people, including material scientists, engineers, manufacturing line operators, sales personnel, administrative staff, and management. Additionally, we engaged Prodensa Servicios de Consultora to establish OPE Manufacturer Mexico S de RL de CV, a maquiladora located in Mexico, which manufactures thermal barrier PyroThin products and operates an automated fabrication facility for PyroThin.
As of December 31, 2024, we employed 554 people, including material scientists, engineers, manufacturing line operators, sales personnel, administrative staff, and management. Additionally, we engaged Prodensa to establish OPE Manufacturer Mexico S de RL de CV, a maquiladora located in Mexico, which assembles thermal barrier PyroThin products and operates an automated fabrication facility for PyroThin.
A comprehensive paid parental leave program provides Aspen US employees the financial security and flexibility to provide necessary care for themselves and their families; flexibility that improves productivity, job satisfaction and increases employee retention and engagement. 17 Diversity, Equity and Inclusion We respect and celebrate our employees by striving to create a diverse and inclusive environment in which people thrive.
A comprehensive paid parental leave program provides Aspen US employees the financial security and flexibility to provide necessary care for themselves and their families; flexibility that improves productivity, job satisfaction and increases employee retention and engagement. Employee Engagement and Workplace Culture We respect and celebrate our employees by striving to create an inclusive environment in which people thrive.
Further details of this cross license are set forth in our prior Annual Reports on Form 10-K and in other filings. Our Company We are a corporation organized under the laws of Delaware. We own three wholly owned subsidiaries: Aspen Aerogels Rhode Island, LLC, Aspen Aerogels Germany, GmbH and Aspen Aerogels Georgia, LLC.
Further details of this cross license are set forth in our prior Annual Reports on Form 10-K and in other filings. 16 Our Company We are a corporation organized under the laws of Delaware. We own four wholly owned subsidiaries: Aspen RI, Aspen Aerogels Germany, GmbH, Aspen Aerogels Georgia, LLC and Aspen Aerogels Mexico Holdings, LLC.
Pyrogel and Cryogel have undergone rigorous technical validation by industry-leading end-users and achieved significant market adoption. Our insulation product revenue has grown from $17.2 million in 2008 to $128.6 million in 2023, representing a compound annual growth rate of 14%.
Pyrogel and Cryogel have undergone rigorous technical validation by industry-leading end-users and achieved significant market adoption. Our insulation product revenue has grown from $17.2 million in 2008 to $145.9 million in 2024, representing a compound annual growth rate of 15%.
Our research and development expenditures were $16.4 million, $16.9 million, and $11.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Our research and development expenditures were $18.1 million, $16.4 million, and $16.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.
We also rely on trade secrets, trademarks, licensing agreements, confidentiality and nondisclosure agreements and continuing technological innovation to safeguard our intellectual property rights and develop and maintain our competitive edge. As of December 31, 2023, we owned 75 issued U.S. patents, 51 pending U.S. patent applications, 358 issued foreign patents and 332 pending foreign patent applications.
We also rely on trade secrets, trademarks, licensing agreements, confidentiality and nondisclosure agreements and continuing technological innovation to safeguard our intellectual property rights and develop and maintain our competitive edge. As of December 31, 2024, we owned 83 issued U.S. patents, 63 pending U.S. patent applications, 271 issued foreign patents and 372 pending foreign patent applications.
Silica aerogels are complex structures in which 97% of the volume consists of air trapped between intertwined clusters of amorphous silica solids. These extremely low-density solids provide superior thermal and acoustic insulating properties.
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. These extremely low-density solids provide superior thermal and acoustic insulating properties.
Additionally, we engaged Prodensa Servicios de Consultora to establish OPE Manufacturer Mexico S de RL de CV, a maquiladora located in Mexico, which manufactures thermal barrier PyroThin products and operates an automated fabrication facility for PyroThin.
Additionally, we have entered into a contract with Prodensa Servicios de Consultora (Prodensa) to establish OPE Manufacturer Mexico S de RL de CV, a maquiladora located in Mexico (OPE), which assembles thermal barrier PyroThin products and operates an automated fabrication facility for PyroThin.
There can also be no assurance that our contract manufacturing strategy of meeting the demand of our energy industrial customers with supply from one or more external manufacturing facilities in China will provide us with adequate manufacturing capacity or supply for that expected demand.
Nonetheless, there can also be no assurance that our contract manufacturing strategy of meeting the demand of our 8 customers with supply from one or more external manufacturing facilities in China and our existing East Providence Facility will provide us with adequate manufacturing capacity or supply for that expected demand.
From 2008 through 2023, our energy industrial revenue has grown at a compound annual growth rate of 14% to $128.6 million. Furthermore, demand for our thermal barrier aerogel products has significantly grown, generating $110.1 million of revenue in 2023 compared to $55.6 million of revenue in 2022 and $6.7 million of revenue in 2021.
From 2008 through 2024, our energy industrial revenue has grown at a compound annual growth rate of 15% to $145.9 million. Furthermore, demand for our thermal barrier aerogel products has significantly grown, generating $306.8 million of revenue in 2024 compared to $110.1 million of revenue in 2023 and $55.6 million of revenue in 2022.
Business Ethics and Integrity Our Code of Business Conduct and Ethics provides Aspen Aerogels employees with a clear understanding of the principles of business conduct and ethics that are expected of them and to aid them with a framework for making ethical decisions in compliance with applicable law.
Business Ethics and Integrity Our Code of Business Conduct and Ethics, as updated in November 2024, provides our employees with a clear understanding of the principles of business conduct and ethics that are expected of them and supports them with a framework for making ethical decisions in compliance with applicable law.
Total revenue generated from outside of the United States amounted to $87.7 million or 37% of total revenue, $66.4 million or 37% of total revenue and $54.8 million or 45% of total revenue, in the years ended December 31, 2023, 2022 and 2021, respectively. In addition, we may continue to expand our operations outside of the United States.
Total revenue generated from outside of the United States amounted to $194.2 million or 43% of total revenue, $87.7 million or 37% of total revenue and $66.4 million or 37% of total revenue, in the years ended December 31, 2024, 2023 and 2022, respectively. As we grow, we may continue to expand our operations outside of the United States.
We have provided high-performance aerogel insulation to the energy industrial and sustainable insulation markets for nearly two decades. We have developed and commercialized our proprietary line of PyroThin® aerogel thermal barriers for use in battery packs in EVs. In addition, we are developing applications for our aerogel technology in the battery materials market and a number of other high-potential markets.
We have provided high-performance aerogel insulation to the energy industrial and sustainable insulation markets for nearly two decades. We have developed and commercialized our proprietary line of PyroThin ® aerogel thermal barriers for use in battery packs in EVs.
In 2022, GM and Distribution International, Inc. represented 25% and 22%, respectively, of our total revenue and were our only customers representing 10% or more of our revenue for that period. Distribution International, Inc. represented 28% of our total revenue in 2021 and was our only customer representing 10% or more of our revenue for that period.
(Distribution) represented 41% and 14%, respectively, of our total revenue and were our only customers representing 10% or more of our revenue for that period. In 2022, GM and Distribution represented 25% and 22%, respectively, of our total revenue and were our only customers representing 10% or more of our revenue for that period.
During 2021, our first full year of serving the EV and energy storage market, we sold $6.7 million of our PyroThin thermal barriers. We are engaged in system development and quoting activities with a wide range of additional prospective customers in the broader e-mobility and energy storage markets. • Proven, Scalable Business Model.
During 2023 and 2022, we sold $110.1 and $55.6 million of our 7 PyroThin thermal barriers, respectively. We are engaged in system development and quoting activities with a wide range of additional prospective customers in the broader e-mobility and energy storage markets. • Proven, Scalable Business Model.
These markets are global, well-established and include large and well-capitalized end-users. The energy industrial market includes companies operating refinery, petrochemical, oil production, and liquefied natural gas (LNG) production and storage facilities. The energy industrial market also includes firms operating gas, coal, nuclear, hydro and solar thermal power generating plants and district energy systems.
The energy industrial market includes companies operating refinery, petrochemical, oil production, and liquefied natural gas (LNG) production and storage facilities. The energy industrial market also includes firms operating gas, coal, nuclear, hydro and solar thermal power generating plants and district energy systems.
While our competitors offer many traditional insulation products that are priced below our products on a per-unit basis, we believe our products have superior performance attributes and may have the lowest cost on a fully-installed basis or offer significant life-cycle cost savings. Competition in the thermal barrier market is evolving.
While our competitors offer many traditional insulation products that are priced below our products on a per-unit basis, we believe our products have superior performance attributes and may have the lowest cost on a fully-installed basis or offer significant life-cycle cost savings. We compete in the aerogel materials market with Armacell International S.A., JIOS Aerogel Pte.
In addition, we will leverage our Aerogel Technology Platform to develop innovative, aerogel-enhanced products for applications outside of the global insulation market. 8 Key elements of our strategy include: • Leverage Aerogel Technology Platform in the EV Market. We plan to build upon the commercial success of our industry-leading PyroThin thermal barriers within the battery systems of EVs.
Key elements of our strategy include: • Leverage Aerogel Technology Platform in the EV Market. We plan to build upon the commercial success of our industry-leading PyroThin thermal barriers within the battery systems of EVs.
Our existing and prospective customers range from start-ups to the largest automotive manufacturers in the world. We typically supply thermal barrier products to our automotive OEM customers through purchase orders, which are generally governed by general terms and conditions established by the OEM.
We typically supply thermal barrier products to our automotive OEM customers through purchase orders, which are generally governed by general terms and conditions established by the OEM.
Insulation systems in the energy industrial market are designed to maintain hot and cold process equipment, piping and storage tanks at optimal temperatures, to protect plant and equipment from the elements and from the risk of fire, and to protect workers. This market is served by a well-organized, well-established worldwide network of distributors, contractors, and engineers.
Insulation systems in the energy industrial market are designed to maintain hot and cold process equipment, piping and storage tanks at optimal temperatures, to protect plant and equipment from the elements and from the risk of fire, and to protect workers.
Our product revenue is generated by sales to customers around the world. In 2023, 63% of our product revenue was generated in the United States, 18% in Europe, 15% in Asia, 3% in Latin America, and 1% in Canada, based on shipment destination.
Our product revenue is generated by sales to customers around the world. In 2024, 57% of our product revenue was generated in the United States, 22% in Latin America, 10% in Europe, 6% in Asia, and 4% in Canada, based on shipment destination.
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 our markets. We believe our array of product attributes provides strong competitive advantages over traditional insulation.
Many of our insulation products also offer strong fire protection, which is a critical performance requirement in our markets. We believe our array of product attributes provides strong competitive advantages over traditional insulation.
We also will pursue high-value opportunities for our aerogel insulation products within the sustainable insulation materials market and a diverse set of new markets.
We also will pursue high-value opportunities for our aerogel insulation products within the sustainable insulation materials market and a diverse set of new markets. In addition, we will leverage our Aerogel Technology Platform to develop innovative, aerogel-enhanced products for applications outside of the global insulation market.
These battery materials have the potential to increase the energy density of the battery cells, thus enabling an increase in the driving range of EVs. 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.
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.
Demand for insulation in the energy industrial market is composed of demand associated with new-build construction of facilities, capital expansions and related capital projects, as well as with routine, non-discretionary maintenance programs within existing facilities. Capital expansions and related capital projects in the energy industrial market are driven primarily by overall economic growth and projected growth in energy demand.
This market is served by a well-organized, well-established worldwide network of distributors, contractors, and engineers. 5 Demand for insulation in the energy industrial market is composed of demand associated with new-build construction of facilities, capital expansions and related capital projects, as well as with routine, non-discretionary maintenance programs within existing facilities.
These customers include General Motors, Toyota, Scania, Automotive Cells Company (or ACC, a battery cell joint venture between Stellantis N.V, Saft-TotalEnergies and Mercedes-Benz), and Audi, a luxury brand of the Volkswagen Group.
These customers include General Motors LLC (GM), Toyota, Scania, Automotive Cells Company, which is a battery cell joint venture between Stellantis N.V, Saft-TotalEnergies and Mercedes-Benz (ACC), Audi, a luxury brand of the Volkswagen Group, Volvo Truck, and a large EU battery manufacturer to supply a next generation vehicle platform of a major EU luxury sports car brand.
Our products are installed in more than 50 countries worldwide. Energy Industrial • Oil Refining: We believe our products have been installed in more than 30% of the world’s 640 refineries. In addition, we believe our aerogel blankets are used by 24 of the world’s 25 largest refining companies including ExxonMobil, Shell and Chevron, among others.
In addition, we believe our aerogel blankets are used by 24 of the world’s 25 largest refining companies including ExxonMobil, Shell and Chevron, among others.
For the years ended December 31, 2023, 2022 and 2021, based on shipment destination, our U.S. revenue was $151.0 million, $114.0 million, and $66.8 million, respectively, and our international revenue was $87.7 million, $66.4 million, and $54.8 million, respectively. Our Markets and Competition Our principal markets are the energy industrial insulation market and the EV market.
For the years ended December 31, 2024, 2023 and 2022, based on shipment destination, our U.S. revenue was $258.5 million, $151.0 million, and $114.0 million, respectively, and our international revenue was $194.2 million, $87.7 million, and $66.4 million, respectively.
We believe we offer the best technology available for the management of thermal runaway in the EV market. Manufacturing Operations We manufacture our products using our proprietary technology at our facility in East Providence, Rhode Island. We have operated the East Providence facility since 2008 and have increased our capacity in phases.
Manufacturing Operations We manufacture our products using our proprietary technology at our facility in East Providence, Rhode Island. We have operated the East Providence facility since 2008 and have increased our capacity in phases. During 2024, we converted our East Providence facility to support the growth of the thermal barrier program.
Furthermore, our adversaries may have significant resources and interest to litigate and therefore, these litigation matters could be protracted and may ultimately involve significant legal expenses. We believe that having distinctive names is an important factor in marketing our products, and therefore we use trademarks to brand some of our products, including Pyrogel, PyroThin and Cryogel.
We believe that having distinctive names is an important factor in marketing our products, and therefore we use trademarks to brand some of our products, including Pyrogel, PyroThin and Cryogel.
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.
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 core businesses are organized into two reportable segments: Energy Industrial and Thermal Barrier. The following describes our key product offerings and new product innovations by reportable segment. Energy Industrial We design, develop and manufacture innovative, high-performance aerogel insulation used primarily in the energy industrial and sustainable insulation markets.
In addition, we are developing applications for our aerogel technology in the battery materials market and a number of other high-potential markets. Our core businesses are organized into two reportable segments: Energy Industrial and Thermal Barrier. The following describes our key product offerings and new product innovations by reportable segment.
We are working with a number of these suppliers to plan for our potential future needs and to develop our processes to reduce the long-term cost impact of these materials. We are also considering investing in the technology and the capital assets required to produce certain critical silica precursors in our planned aerogel manufacturing facility in Bulloch County, Georgia.
We are working with a number of these suppliers to plan for our potential future needs and to develop our processes to reduce the long-term cost impact of these materials.
We are working with a number of suppliers to plan for our potential future needs and to develop our processes to reduce the long-term cost impact of these materials. We are also considering investing in the technology and the capital assets required to produce certain critical silica precursors in our planned aerogel manufacturing facility in Bulloch County, Georgia.
We are working with a number of suppliers to plan for our potential future needs and to develop our processes to reduce the long-term cost impact of these 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.
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.
We expect to face increasing competition within the thermal barrier market over the next several years as new entrants seek to develop and market their own technologies and solutions. We compete in the aerogel materials market with Armacell International S.A., JIOS Aerogel Pte. Ltd., IBIDEN Co., Ltd., Guangdong Alison Hi-Tech Co., Ltd.
We expect to face increasing competition within the thermal barrier market over the next several years as new entrants seek to develop and market their own technologies and solutions. In the energy industrial insulation market, we compete with traditional insulation materials based on product performance, price, availability and proximity to the customer.
These OEMs develop products incorporating our aerogel blankets for applications in a diverse set of markets including military aircraft, trains, buses, appliances, apparel, footwear and outdoor gear. While these are not presently our core markets, we anticipate that we may allocate a growing portion of our manufacturing capacity to serve these markets in the long term.
We also sell our products for use in the sustainable insulation materials and other end markets, including for the fabrication of insulation parts by OEMs. These OEMs develop products incorporating our aerogel blankets for applications in a diverse set of markets including military aircraft, trains, buses, appliances, apparel, footwear and outdoor gear.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSuch risks include, but are not limited to: • We have incurred annual net losses since our inception, and we may continue to incur net losses in the future and may never reach profitability. 18 • Our efforts in developing, selling, and supplying products in EV market may subject us to increased financial, operational, and legal risks that could materially adversely impact our business, financial conditions, and results of operations and may also increase our costs and make it difficult for us to operate profitably. • We will require significant additional capital to pursue our growth strategy, but we may not be able to obtain additional financing on acceptable terms or at all. • Our estimates regarding market opportunity for our products in the EV market and the assumptions on which our financial targets and our planned production capacity increases are based may prove to be inaccurate, which may cause our actual results to materially differ from such targets, which may adversely affect our future profitability, cash flows, and stock price. • Shortages of the raw materials used in the production of our products, increases in the cost of such materials or disruptions in our supply chain could have a material adverse impact on our financial condition and results of operations. • Our working capital requirements involve estimates based on demand and production expectations and may decrease or increase beyond those currently anticipated, which could materially harm our results of operations and financial condition. • The cyclical nature of automotive sales and production can adversely affect our business.
Biggest changeSuch risks include, but are not limited to: • We have previously incurred annual net losses, and we may continue to incur net losses in the future and may never reach profitability. • 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. • Our efforts in developing, selling, and supplying products in EV market may subject us to increased financial, operational, and legal risks that could materially adversely impact our business, financial conditions, and results of operations and may also increase our costs and make it difficult for us to operate profitably. • We have engaged third-party external manufacturing facilities in China to supplement our supply of our aerogel products.
The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The New York Stock Exchange and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.
The Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act), the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The New York Stock Exchange and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Exchange Act that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Exchange Act that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
If we are unable to compete successfully, we may not be able to increase or maintain our market share and revenues. • The qualification process for our products can be lengthy and unpredictable, potentially delaying adoption of our products and causing us to incur significant expense, potentially without recovery. • Our revenue may fluctuate, which may result in a high degree of variability in our results of operations and make it difficult for us to plan based on our future outlook and to forecast our future performance. • The results of our operations could be materially adversely affected if our operating expenses incurred do not correspond with the timing of our revenues. • If we fail to achieve the increase in production capacity that our long-term growth requires in a timely manner, or at all, our growth may be hindered and our business or results of operations may be materially adversely affected. • If the expected growth in the demand for our products does not follow each of our planned capacity expansions, then our business and results of operations will be materially adversely affected. • A substantial portion of our revenue comes from sales in foreign countries and we are planning to expand our operations outside of the United States, which subjects us to increased economic, trade, foreign exchange, operational, and political risks that could materially adversely impact our business, financial conditions and results of operations and also increase our costs and make it difficult for us to operate profitably. • We may face certain product liability or warranty claims on our products, including from improper installation of our products by third parties.
If we are unable to compete successfully, we may not be able to increase or maintain our market share and revenues. • The qualification process for our products can be lengthy and unpredictable, potentially delaying adoption of our products and causing us to incur significant expense, potentially without recovery. • Our revenue may fluctuate, which may result in a high degree of variability in our results of operations and make it difficult for us to plan based on our future outlook and to forecast our future performance. 19 • The results of our operations could be materially adversely affected if our operating expenses incurred do not correspond with the timing of our revenues. • If we fail to achieve the increase in production capacity that our long-term growth requires in a timely manner, or at all, our growth may be hindered and our business or results of operations may be materially adversely affected. • If the expected growth in the demand for our products does not follow each of our planned capacity expansions, then our business and results of operations will be materially adversely affected. • A substantial portion of our revenue comes from sales in foreign countries and we are planning to expand our operations outside of the United States, which subjects us to increased economic, trade, foreign exchange, operational, and political risks that could materially adversely impact our business, financial conditions and results of operations and also increase our costs and make it difficult for us to operate profitably. • We may face certain product liability or warranty claims on our products, including from improper installation of our products by third parties.
Factors that may influence the purchase and use of EVs include: • perceptions about EV quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of EVs; • perceptions about vehicle safety in general, in particular safety issues that may be attributed to the use of advanced technology, including vehicle electronics and regenerative braking systems; • the decline of an EV’s range resulting from (i) deterioration over time in the battery’s ability to hold a charge or (ii) operation in colder weather; • concerns about electric grid capacity and reliability, which could derail efforts to promote EVs as a practical solution to vehicles that require gasoline; • the environmental consciousness of consumers; • volatility in the cost of oil and gasoline; • safety concerns around EVs generally and battery systems in particular; and • access to charging stations, standardization of EVs charging systems and consumers’ perceptions about convenience and cost to charge an EV; The influence of any of the factors described above may cause current or potential customers not to purchase EVs and could impact the widespread consumer adoption of EVs, which would materially adversely affect our business, operating results, financial condition and prospects.
Factors that may influence the purchase and use of EVs include: • perceptions about EV quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of EVs; • perceptions about vehicle safety in general, in particular safety issues that may be attributed to the use of advanced technology, including vehicle electronics and regenerative braking systems; • the decline of an EV’s range resulting from (i) deterioration over time in the battery’s ability to hold a charge or (ii) operation in colder weather; • concerns about electric grid capacity and reliability, which could derail efforts to promote EVs as a practical solution to vehicles that require gasoline; • the environmental consciousness of consumers; • volatility in the cost of oil and gasoline; • safety concerns around EVs generally and battery systems in particular; and 34 • access to charging stations, standardization of EVs charging systems and consumers’ perceptions about convenience and cost to charge an EV; The influence of any of the factors described above may cause current or potential customers not to purchase EVs and could impact the widespread consumer adoption of EVs, which would materially adversely affect our business, operating results, financial condition and prospects.
Any such security breach or interruption, as well as any action by us or our employees or contractors that might be inconsistent with the rapidly evolving data privacy and security laws and regulations applicable within the United States and 44 elsewhere where we conduct business, could result in enforcement actions by U.S. states, the U.S. federal government or foreign governments, liability or sanctions under data privacy laws that protect personally identifiable information, regulatory penalties, other legal proceedings such as but not limited to private litigation, the incurrence of significant remediation costs, disruptions to our development programs, business operations and collaborations, diversion of management efforts and damage to our reputation, which could harm our business and operations.
Any such security breach or interruption, as well as any action by us or our employees or contractors that might be inconsistent with the rapidly evolving data privacy and security laws and regulations applicable within the United States and elsewhere where we conduct business, could result in enforcement actions by U.S. states, the U.S. federal government or foreign governments, liability or sanctions under data privacy laws that protect personally identifiable information, regulatory penalties, other legal proceedings such as but not limited to private litigation, the incurrence of significant remediation costs, disruptions to our development programs, business operations and collaborations, diversion of management efforts and damage to our reputation, which could harm our business and operations.
The GDPR sets out a number of requirements that must be complied with when handling the personal data of EU based 50 data subjects, including: providing expanded disclosures about how their personal data will be used; higher standards for organizations to demonstrate that they have obtained valid consent or have another legal basis in place to justify their data processing activities; the obligation to appoint data protection officers in certain circumstances; new rights for individuals to be “forgotten” and rights to data portability, as well as enhanced current rights (e.g. access requests); the principal of accountability and demonstrating compliance through policies, procedures, training and audit; and a new mandatory data breach regime.
The GDPR sets out a number of requirements that must be complied with when handling the personal data of EU based data subjects, including: providing expanded disclosures about how their personal data will be used; higher standards for organizations to demonstrate that they have obtained valid consent or have another legal basis in place to justify their data processing activities; the obligation to appoint data protection officers in certain circumstances; new rights for individuals to be “forgotten” and rights to data portability, as well as enhanced current rights (e.g. access requests); the principal of accountability and demonstrating compliance through policies, procedures, training and audit; and a new mandatory data breach regime.
The current economic landscape resulting in higher interest rates presents further challenges in obtaining financing on acceptable terms or at all. 20 In addition, we may consider strategic acquisitions of complementary businesses or technologies to grow our business, which would require significant capital and could increase our capital requirements related to future operation of the acquired business or technology.
The current economic landscape resulting in higher interest rates presents further challenges in obtaining financing on acceptable terms or at all. In addition, we may consider strategic acquisitions of complementary businesses or technologies to grow our business, which would require significant capital and could increase our capital requirements related to future operation of the acquired business or technology.
If such disturbances persist and manifest in different forms, they present additional substantial operational difficulties that would have a material adverse effect on our ability to meet our customer demands or fulfill our contractual obligations to our customers. Additionally, our suppliers may prioritize their resources for any long-term commitments to third parties and to our detriment.
If such disturbances persist and manifest in different forms, they present additional substantial operational difficulties that would have a material adverse effect on our ability to meet our customer demands or fulfill our contractual obligations to our customers. 29 Additionally, our suppliers may prioritize their resources for any long-term commitments to third parties and to our detriment.
In regions where labor costs are significantly lower than in the United States and Europe, the cost benefits of reduced installation times may not be adequate to overcome the relatively high price of our products and may make it more difficult for us to grow our revenue in those regions. 33 The insulation markets we serve are highly competitive.
In regions where labor costs are significantly lower than in the United States and Europe, the cost benefits of reduced installation times may not be adequate to overcome the relatively high price of our products and may make it more difficult for us to grow our revenue in those regions. The insulation markets we serve are highly competitive.
Prolonged periods of little or no economic growth could 31 decrease demand for oil and gas, which, in turn, could result in lower demand for our products and a negative impact on our results of operations and cash flows. This risk increases as we seek to increase the project-based revenue as a percentage of the total revenue.
Prolonged periods of little or no economic growth could decrease demand for oil and gas, which, in turn, could result in lower demand for our products and a negative impact on our results of operations and cash flows. This risk increases as we seek to increase the project-based revenue as a percentage of the total revenue.
This could expose us to significantly greater risk of liability for warranty expenses and/or for defects, failures or accidents involving the final products sold to the consumer. • Automotive OEMs purchasing from us may have certain rights to intellectual property developed by us in connection with our work for that OEM.
This could expose us to significantly greater risk of liability for warranty expenses and/or for defects, failures or accidents involving the final products sold to the consumer. 21 • Automotive OEMs purchasing from us may have certain rights to intellectual property developed by us in connection with our work for that OEM.
With the support of such third parties, we are seeking to focus our technical development and accelerate the potential commercialization of these carbon aerogel materials in the EV market. 34 Unlike the other markets for which we have previously developed thermal solutions, the EV market may be more demanding technically, financially, and in other ways.
With the support of such third parties, we are seeking to focus our technical development and accelerate the potential commercialization of these carbon aerogel materials in the EV market. Unlike the other markets for which we have previously developed thermal solutions, the EV market may be more demanding technically, financially, and in other ways.
Ltd., IBIDEN Co., Ltd., Guangdong Alison Hi-Tech Co, Ltd., Nano Tech Co, Ltd, IBIH Advanced Materials Co., Ltd., Nameite New Materials Technology Co., Ltd., Guizhou Aerospace Wujiang Electro-Mechanical Equipment Co., Ltd., Shenzhen Aerogel Technology Co., Ltd., and a variety of other companies based in Asia that have developed or are developing and/or marketing products using aerogel technology similar to our technology.
Ltd., IBIDEN Co., Ltd., Guangdong Alison Hi-Tech Co, Ltd., Nano Tech Co, Ltd, IBIH Advanced Materials Co., Ltd., Nameite New 40 Materials Technology Co., Ltd., Guizhou Aerospace Wujiang Electro-Mechanical Equipment Co., Ltd., Shenzhen Aerogel Technology Co., Ltd., and a variety of other companies based in Asia that have developed or are developing and/or marketing products using aerogel technology similar to our technology.
If the EV landscape evolves in such direction, the demand for our products will not materialize or not meet our current forecasts, plans and expectations, which will have a material adverse effect on our business and operations. 25 Our current thermal barrier product is compatible with pouch and prismatic cells, but not cylindrical cells.
If the EV landscape evolves in such direction, the demand for our products will not materialize or not meet our current forecasts, plans and expectations, which will have a material adverse effect on our business and operations. Our current thermal barrier product is compatible with pouch and prismatic cells, but not cylindrical cells.
Such fluctuations may be due to a number of factors, including the following, some of which are beyond our control: • volume and timing of orders for our products; • quarterly and yearly variations in our or our competitors’ results of operations; • our announcement or our competitors’ announcements regarding new products, product enhancements, significant contracts, number of distributors, acquisitions or strategic investments; • announcements or speculation regarding the activities or plans of our automotive OEM customers and the perceived impact on their demand for our products; • announcements of technological innovations relating to aerogels, thermal management and energy industrial insulation; • results of operations or projections that vary from the expectations of securities analysts and investors; • the periodic nature of our sales cycles, in particular for capital projects in the energy industrial market; • our ability to develop, obtain regulatory clearance or approval for and market new and enhanced products on a timely basis; • future sales of our common stock, including sales by our executive officers, directors and significant stockholders and their respective affiliates; • announcements by third parties of significant claims or proceedings against us, including with regard to intellectual property and product liability; • changes in accounting principles; and • general U.S. and global economic conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
Such fluctuations may be due to a number of factors, including the following, some of which are beyond our control: • volume and timing of orders for our products; • quarterly and yearly variations in our or our competitors’ results of operations; • our announcement or our competitors’ announcements regarding new products, product enhancements, significant contracts, number of distributors, acquisitions or strategic investments; • announcements or speculation regarding the activities or plans of our automotive OEM customers and the perceived impact on their demand for our products; • announcements of technological innovations relating to aerogels, thermal management and energy industrial insulation; • results of operations or projections that vary from the expectations of securities analysts and investors; • the periodic nature of our sales cycles, in particular for capital projects in the energy industrial market; • our ability to develop, obtain regulatory clearance or approval for and market new and enhanced products on a timely basis; • future sales of our common stock, including sales by our executive officers, directors and significant stockholders and their respective affiliates; • announcements by third parties of significant claims or proceedings against us, including with regard to intellectual property and product liability; • changes in accounting principles; • general U.S. and global economic conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors; and • other risks described herein.
Such an event, or the perception of such an event, could quickly result in our direct and end-user customers replacing our products with traditional insulation materials which could have a material adverse effect on our results of operations. 41 Our activities and operations are subject to numerous health and safety laws and regulations.
Such an event, or the perception of such an event, could quickly result in our direct and end-user customers replacing our products with traditional insulation materials which could have a material adverse effect on our results of operations. Our activities and operations are subject to numerous health and safety laws and regulations.
These applications and data encompass a wide variety of business-critical information including research and development information, commercial information, and business and financial information. We face four primary risks relative to protecting this critical information: loss of access; inappropriate or unauthorized disclosure; inappropriate or unauthorized modification; and inadequate monitoring of our controls over the first three risks.
These applications and data encompass a wide variety of business-critical information including research and development information, 43 commercial information, and business and financial information. We face four primary risks relative to protecting this critical information: loss of access; inappropriate or unauthorized disclosure; inappropriate or unauthorized modification; and inadequate monitoring of our controls over the first three risks.
Any delay in the development or launch of a new product could result in our not being the first to market, which could compromise our competitive position. Even if we manage to develop and introduce new products, such products may not address market needs or otherwise compete with third-party products.
Any delay in the development or launch of a new product could result in our not being the first to market, which could compromise our competitive position. Even if we manage to develop and 36 introduce new products, such products may not address market needs or otherwise compete with third-party products.
Based on these analyses, we determined that it is more likely than not that an ownership change occurred on June 18, 2014 upon the closing of our IPO, resulting in an annual limitation on the use of our net operating losses and other tax attributes as of such date.
Based on our 2014 analyses, we determined that it is more likely than not that an ownership change occurred on June 18, 2014 upon the closing of our IPO, resulting in an annual limitation on the use of our net operating losses and other tax attributes as of such date.
The forward-looking statements contained in this report are made as of the date of this report, and we do not assume, and specifically disclaim, any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Item 1B. UNRESOLVE D STAFF COMMENTS None.
The forward-looking statements contained in this report are made as of the date of this report, and we do not assume, and specifically disclaim, any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Item 1B. UNRESOLVE D STAFF COMMENTS None. 56
Although we have not had to make material expenditures to satisfy these requirements to date, in the future, we may incur additional 43 costs to comply with these requirements and failure to do so could disrupt the operation of our facility or could subject us to liability for environmental remediation.
Although we have not had to make material expenditures to satisfy these requirements to date, in the future, we may incur additional costs to comply with these requirements and failure to do so could disrupt the operation of our facility or could subject us to liability for environmental remediation.
During 2014, we performed analyses pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, as well as similar state provisions, in order to determine whether any limitations might exist on the utilization of net operating losses and other tax attributes.
During 2014 and in 2024, we performed analyses pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, as well as similar state provisions, in order to determine whether any limitations might exist on the utilization of net operating losses and other tax attributes.
Based on these factors, and the fact that our automotive OEM customers’ product programs are anticipated to encompass large volumes, our customers are able to negotiate 27 favorable pricing. Accordingly, we are subject to substantial continuing pressure from automotive OEMs to reduce the price of our products.
Based on these factors, and the fact that our automotive OEM customers’ product programs are anticipated to encompass large volumes, our customers are able to negotiate favorable pricing. Accordingly, we are subject to substantial continuing pressure from automotive OEMs to reduce the price of our products.
The loss or interruption of the service of any of 36 these individuals or our inability to attract or retain other qualified personnel or advisors could have a material adverse effect on our business, financial condition, and results of operations and could significantly reduce our ability to manage our operations and implement our strategy.
The loss or interruption of the service of any of these individuals or our inability to attract or retain other qualified personnel or advisors could have a material adverse effect on our business, financial condition, and results of operations and could significantly reduce our ability to manage our operations and implement our strategy.
Regulatory changes contemplated in several regions may substantially increase these risks. Changes in the products or manufacturing processes may require the customers to perform an extensive re-qualification process, which our customers may not want to undertake for various reasons, resulting in the customer switching to competing products.
Regulatory changes contemplated in several regions may substantially increase these risks. Changes in the products or manufacturing processes may require the customers to perform an extensive re-qualification process, which our customers may not want to undertake for various reasons, resulting in the 41 customer switching to competing products.
The listing of our common stock on The New York Stock Exchange does not assure that a meaningful, consistent and liquid trading market currently exists or will exist in the future. We cannot predict whether a more active market for our common stock will develop in the future.
The 51 listing of our common stock on The New York Stock Exchange does not assure that a meaningful, consistent and liquid trading market currently exists or will exist in the future. We cannot predict whether a more active market for our common stock will develop in the future.
Any potential greenhouse gas regulations, while potentially helpful in the adoption of EVs, could have the impact of increasing energy costs, reducing the demand for hydrocarbons, decreasing profitability and return on investment in the energy industry, and leading to a sustained downturn in the energy industry.
Any potential greenhouse gas regulations, while potentially helpful in the adoption of EVs, could have the impact of increasing energy costs, reducing the demand for hydrocarbons, decreasing profitability and return on 32 investment in the energy industry, and leading to a sustained downturn in the energy industry.
We operate and sell our products in many parts of the world that have experienced governmental corruption to 39 some degree and, in certain circumstances, strict compliance with anti-corruption, anti-bribery and anti-kickback laws may conflict with local customs and practices.
We operate and sell our products in many parts of the world that have experienced governmental corruption to some degree and, in certain circumstances, strict compliance with anti-corruption, anti-bribery and anti-kickback laws may conflict with local customs and practices.
The contracts we enter into with our direct customers generally do not include long-term commitments or minimum volumes that ensure future sales of our products. In addition, we understand that our direct customers’ contracts with end-user customers also generally do not include such commitments or 40 minimums.
The contracts we enter into with our direct customers generally do not include long-term commitments or minimum volumes that ensure future sales of our products. In addition, we understand that our direct customers’ contracts with end-user customers also generally do not include such commitments or minimums.
In some instances, the research and development activities that we conduct under contract with private third parties may produce intellectual property to which we may not have ownership or exclusive rights and will be unable to protect or monetize.
In some instances, the research and development activities that we conduct under contract with private 48 third parties may produce intellectual property to which we may not have ownership or exclusive rights and will be unable to protect or monetize.
While we are investing considerable capital and other resources based on what we believe to be the currently 21 identified needs of the industry, our belief as to the current needs of the industry may be incorrect or our technology, products or other resources may not be applicable to the future needs of the industry.
While we are investing considerable capital and other resources based on what we believe to be the currently identified needs of the industry, our belief as to the current needs of the industry may be incorrect or our technology, products or other resources may not be applicable to the future needs of the industry.
Our business operations and sales in countries outside of the United States are subject to anti-corruption, anti-bribery and anti-kickback laws and regulations, including restrictions imposed by the FCPA, as well as the United Kingdom Bribery Act of 2010, or UK Bribery Act.
Our business operations and sales in countries outside of the United States are subject to anti-corruption, anti-bribery and anti-kickback laws and regulations, including restrictions imposed by the FCPA, as well as the United Kingdom Bribery Act of 2010 (the UK Bribery Act).
We are aware of patents and patent applications generally relating to aspects of our technologies filed by, and issued to, third parties. We cannot determine with certainty whether patents or patent applications of other parties may materially affect our ability to conduct our business.
We are aware of patents and patent applications generally relating to aspects of our technologies filed by, and issued to, third parties. We cannot determine with certainty whether patents or patent applications of other parties may 47 materially affect our ability to conduct our business.
We continue to develop and refine the 49 manufacturing technologies used to produce our aerogel products and believe that we have already developed, and will continue to develop, significant know-how related to these technologies. However, trade secrets can be difficult to protect.
We continue to develop and refine the manufacturing technologies used to produce our aerogel products and believe that we have already developed, and will continue to develop, significant know-how related to these technologies. However, trade secrets can be difficult to protect.
As a result, 48 third parties may be able to obtain patents with claims relating to our product forms, applications and/or manufacturing processes which they could attempt to assert against us or our end-users.
As a result, third parties may be able to obtain patents with claims relating to our product forms, applications and/or manufacturing processes which they could attempt to assert against us or our end-users.
In addition, there is a risk that one or more of our current service providers, external manufacturing facilities or other third parties with which we conduct business may not survive difficult economic times, the ongoing conflict between Russia and Ukraine, the conflict in the Middle East, the instability of the banking sector, and the uncertainty associated with current worldwide economic conditions, which could directly affect our ability to attain our operating goals on schedule and on budget.
In addition, there is a risk that one or more of our current service providers, external manufacturing facilities or other third parties with which we conduct business may not survive difficult economic times, the ongoing conflict between Russia and Ukraine, the conflict in the Middle East, the tensions in Asia, the instability of the banking sector, and the uncertainty associated with current worldwide economic conditions, which could directly affect our ability to attain our operating goals on schedule and on budget.
Consequently, we could lose existing and future business and our ability to develop, market and sell our insulation could be harmed. 19 • We may incur significant costs complying with environmental, health and safety laws and related claims, and failure to comply with these laws and regulations could expose us to significant liabilities, which could materially adversely affect our results of operations. • Breakdowns, security breaches, loss of data, and other disruptions of our information technology systems could compromise sensitive information related to our business, prevent us from accessing critical information, and expose us to liability, which would cause our business and reputation to suffer. • Our ability to use our net operating loss carryforwards may be subject to limitation, which could result in a higher effective tax rate and adversely affect our financial condition and results of operations. • We may be adversely affected by the effects of inflation. • The impact of the Russian invasion of Ukraine and the conflict in the Middle East on the global economy, energy supplies and raw materials is uncertain, but may prove to negatively impact our business and operations. • Our inability to protect our intellectual property rights and trade secrets could negatively affect our business and results of operations. • We have initiated intellectual property litigation that is and will continue to be costly, and could limit or invalidate our intellectual property rights, divert time and efforts away from business operations, require us to pay damages and/or costs and expenses and/or otherwise have a material adverse impact on our business, and we could become subject to additional such intellectual property litigation in the future. • Because we are a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting.
Consequently, we could lose existing and future business and our ability to develop, market and sell our insulation could be harmed. • We may incur significant costs complying with environmental, health and safety laws and related claims, and failure to comply with these laws and regulations could expose us to significant liabilities, which could materially adversely affect our results of operations. • Breakdowns, security breaches, loss of data, and other disruptions of our information technology systems could compromise sensitive information related to our business, prevent us from accessing critical information, and expose us to liability, which would cause our business and reputation to suffer. • Our ability to use our net operating loss carryforwards may be subject to limitation, which could result in a higher effective tax rate and adversely affect our financial condition and results of operations. • We may be adversely affected by the effects of inflation. • The impact of the Russian invasion of Ukraine, and the conflict in the Middle East and tensions between China and Taiwan on the global economy, energy supplies and raw materials is uncertain, but may prove to negatively impact our business and operations. • Our inability to protect our intellectual property rights and trade secrets could negatively affect our business and results of operations. • We have initiated intellectual property litigation that is and will continue to be costly, and could limit or invalidate our intellectual property rights, divert time and efforts away from business operations, require us to pay damages and/or costs and expenses and/or otherwise have a material adverse impact on our business, and we could become subject to additional such intellectual property litigation in the future. • Because we are a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting.
We may not be in a position to find alternate suppliers in a timely manner to continue to operate consistent with our obligations to or expectations of our customers. 29 We may encounter manufacturing challenges in the EV market.
We may not be in a position to find alternate suppliers in a timely manner to continue to operate consistent with our obligations to or expectations of our customers. We may encounter manufacturing challenges in the EV market.
Many factors could prevent our existing and future potential manufacturing facilities from producing at expected, projected or targeted nameplate capacities or could cause us to reduce the scale or scope of future capacity expansions or facilities, including: • inability to retain, manage and train a skilled workforce; • the challenges of operating technically advanced or higher volume equipment than currently employed at our existing facility in East Providence, Rhode Island; • improper operation of the manufacturing equipment; • decreases in our manufacturing yields due to the inefficient use of the materials needed to make our products in our manufacturing process; • the availability of raw materials at reasonable costs to support the levels of production that we anticipate at these facilities; • strikes or labor disputes; and • damage to the manufacturing equipment due to design and engineering flaws, construction difficulties or operator error.
Many factors could prevent our existing and future potential manufacturing facilities from producing at expected, projected or targeted nameplate capacities or could cause us to reduce the scale or scope of future capacity expansions or facilities, including: • inability to retain, manage and train a skilled workforce; • the challenges of operating technically advanced or higher volume equipment than currently employed at our existing East Providence facility; 38 • improper operation of the manufacturing equipment; • decreases in our manufacturing yields due to the inefficient use of the materials needed to make our products in our manufacturing process; • the availability of raw materials at reasonable costs to support the levels of production that we anticipate at these facilities; • strikes or labor disputes; and • damage to the manufacturing equipment due to design and engineering flaws, construction difficulties or operator error.
The volatility in oil prices and declines in oil prices, which are often associated with unrelated world events, such as the tensions between Russia and Ukraine and political instability in Ukraine, as well as the conflict in the Middle East, and other areas in the world, have resulted, from time to time, in a reduction in capital expenditures by many companies in the energy industry, and in particular by end-users of our products involved in the construction and expansion of offshore and onshore oil and gas production facilities.
The volatility in oil prices and declines in oil prices, which are often associated with unrelated world events, such as the tensions between Russia and Ukraine and political instability in Ukraine, as well as the conflict in the Middle East and tensions between China and Taiwan, and other areas in the world, have resulted, from time to time, in a reduction in capital expenditures by many companies in the energy industry, and in particular by end-users of our products involved in the construction and expansion of offshore and onshore oil and gas production facilities.
Thus, competing silicon-rich anode solutions, even if more expensive, may provide better mid-term solutions for increased energy densities before long-term solutions such as lithium metal anodes become viable.
Thus, competing silicon-rich anode solutions, even if more 35 expensive, may provide better mid-term solutions for increased energy densities before long-term solutions such as lithium metal anodes become viable.
All of these measures will require significant expenditures and will demand the attention of management. At certain points in the past, significant growth in demand for our products has put our management and operating systems under strain.
All of these measures will require additional expenditures and will demand the attention of management. At certain points in the past, significant growth in demand for our products has put our management and operating systems under strain.
A substantial portion of our sales are to destinations outside of the United States, including France, Norway, Thailand, Canada, Germany, Taiwan, Great Britain, Colombia, and South Korea.
A substantial portion of our sales are to destinations outside of the United States, including Mexico, France, Norway, Thailand, Canada, Germany, Taiwan, Great Britain, Colombia, and South Korea.
Among other things, the CPRA established a new regulatory authority, the California Privacy Protection Agency, which is tasked with enacting new regulations under the CPRA and will have expensed enforcement authority.
Among other things, the CPRA established a new 49 regulatory authority, the California Privacy Protection Agency, which is tasked with enacting new regulations under the CPRA and will have expensed enforcement authority.
We are subject to the risks arising from adverse changes in market and economic and political conditions, both domestically and globally, including trends toward protectionism and nationalism, other unfavorable changes in economic conditions as well as disruptions in global credit and financial markets, such as inflation, failures and instability in U.S. and international banking systems, downgrades of the U.S. credit rating, rising interest rates, slower economic growth or a recession, and other events beyond our control, such as natural disasters, pandemics, epidemics, political instability, and armed conflicts and wars, including the ongoing conflict between Russia and Ukraine, and the conflict in the Middle East.
We are subject to the risks arising from adverse changes in market and economic and political conditions, both domestically and globally, including trends toward protectionism and nationalism, other unfavorable changes in economic conditions as well as disruptions in global credit and financial markets, such as inflation, failures and instability in U.S. and international banking systems, downgrades of the U.S. credit rating, rising interest rates, slower economic growth or a recession, and other events beyond our control, such as natural disasters, pandemics, epidemics, political instability, and armed conflicts and wars, including the ongoing conflict between Russia and Ukraine, the conflict in the Middle East and tensions between China and Taiwan.
These factors could involve financial institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.
These factors could involve financial institutions or financial services industry companies with which we 31 have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.
Accordingly, in the event of a significant disruption to our sole manufacturing facility or third-party external manufacturing facilities in China, or breakdown of any of the production lines at our sole manufacturing facility in East Providence, RI, we currently do not expect that we would have sufficient inventory in stock to meet demand until the production lines return to operation or our third-party external manufacturing facilities in China deliver the required aerogel products.
Accordingly, in the event of a significant disruption to our sole manufacturing facility or third-party external manufacturing facilities in China, or breakdown of any of the production lines at our sole manufacturing facility in East Providence, we currently do not expect 27 that we would have sufficient inventory in stock to meet demand until the production lines return to operation or our third-party external manufacturing facilities in China deliver the required aerogel products.
If GM were to switch to using cylindrical cells for their primary Ultium platform, our current thermal barrier product would not be compatible, resulting in reduced demand for our product from one of our key automotive OEM customers, which would adversely affect our business and results of operations.
If GM were to switch to using cylindrical cells for their platform, our current thermal barrier product would not be compatible, resulting in reduced demand for our product from one of our key automotive OEM customers, which would adversely affect our business and results of operations.
Under Section 302 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, as a part of each of these reports, our chief executive officer and chief financial officer are required to evaluate and report their conclusions regarding the effectiveness of our disclosure controls and procedures and to certify that they have done so.
Under Section 302 of the Sarbanes-Oxley Act as a part of each of these reports, our chief executive officer and chief financial officer are required to evaluate and report their conclusions regarding the effectiveness of our disclosure controls and procedures and to certify that they have done so.
This assessment is required to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. Our independent registered public accounting firm is required to formally attest to the effectiveness of our internal control over financial reporting for the year ended December 31, 2023 and subsequent years.
This assessment is required to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. Our independent registered public accounting firm is required to formally attest to the effectiveness of our internal control over financial reporting for the year ended December 31, 2024 and subsequent years.
Our success will depend in large part on our ability to manage the effects of continued global political and economic uncertainty, including those related to the ongoing recent tensions between Russia and Ukraine, the conflict in the Middle East, and political instability in Ukraine, especially in our international markets.
Our success will depend in large part on our ability to manage the effects of continued global political and economic uncertainty, including those related to the ongoing recent tensions between Russia and Ukraine and the political instability in Ukraine, the conflict in the Middle East and tensions between China and Taiwan, especially in our international markets.
The negative cumulative cash flows from operating activities during the three-year period were exacerbated by cash flows used in investing activities to maintain, enhance and expand our manufacturing operations during the same time period. As a result, we experienced negative total cash flows during the three-year period.
The negative cumulative cash flows from operating activities during 2023 and 2022 were exacerbated by cash flows used in investing activities to maintain, enhance and expand our manufacturing operations during the same time period. As a result, we experienced negative total cash flows during the three-year period.
In addition, suppliers of our raw materials have intermittently been unable to supply the materials that we require to manufacture our products according to our schedules. The future impact of similar COVID-19 related disruptions to our business cannot be accurately estimated at this time.
In addition, suppliers of our raw materials have intermittently been unable to supply the materials that we require to manufacture our products according to our schedules. The future impact of similar related disruptions to our business cannot be accurately estimated at this time.
We are currently selling thermal barrier production parts to GM and Toyota, and prototype thermal barrier parts to a number of other companies. We are also continuing our efforts to develop additional thermal barrier products for sale to others in the EV market.
We are currently selling thermal barrier production parts to GM, Toyota and Scania, among others, and prototype thermal barrier parts to a number of other companies. We are also continuing our efforts to develop additional thermal barrier products for sale to others in the EV market.
Currently, one of our automotive OEMs, GM, plans to use pouch and prismatic cells in its future EVs under its primary Ultium platform, which we expect will be a significant source of demand for our products.
Currently, one of our automotive OEMs, GM, plans to use pouch and prismatic cells in its future EVs under its platform, which we expect will be a significant source of demand for our products.
Our restated certificate of incorporation provides that, subject to limited exceptions, a state or federal court located within the State of Delaware will be the exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our restated certificate of incorporation or our restated bylaws, or (4) any other action asserting a claim against us that is governed by the internal affairs doctrine.
Our restated certificate of incorporation provides that, subject to limited exceptions, a state or federal court located within the State of Delaware will be the exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action asserting a claim against us arising pursuant to any provision of the DGCL, our restated certificate of incorporation or our restated bylaws, or (4) any other action asserting a claim against us that is governed by the internal affairs doctrine.
A rapid progress towards technologies such as solid electrolytes, safer electrode active materials (such as LFP cathodes) may provide a better balance of energy density and safety, render our premium thermal barriers obsolete and have a material adverse effect on our business, financial condition and results of operations.
A rapid progress towards technologies such as solid electrolytes, safer electrode active materials (such as lithium iron phosphate (LFP) cathodes) may provide a better balance of energy density and safety, render our premium thermal barriers obsolete and have a material adverse effect on our business, financial condition and results of operations.
Failure to become and remain profitable may adversely affect the market price of our common stock and our ability to raise capital and continue operations. We will require significant additional capital to pursue our growth strategy, but we may not be able to obtain additional financing on acceptable terms or at all.
Failure to remain profitable may adversely affect the market price of our common stock and our ability to raise capital and continue operations. 20 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.
While the potential economic impact of the coronavirus outbreak may be difficult to assess or predict, a widespread pandemic could result in significant or sustained disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.
While the potential economic impact of a future public health outbreak may be difficult to assess or predict, a widespread pandemic could result in significant or sustained disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.
A substantial amount of our expected sales in the EV market in 2024 are expected to be to a single customer. The substantial majority of our sales to distributors are transacted on a purchase order basis.
A substantial amount of our expected sales in the EV market in 2025 are expected to be to a single customer. The substantial majority of our sales to distributors are transacted on a purchase order basis.
Our vendors and service providers may also be the targets of the risks described above, including cyberattacks, ransomware, malicious software, phishing schemes, and fraud. From time to time, we get notifications that such vendors experienced cyber security breaches.
Our vendors and service providers may also be the targets of the risks described above, including cyberattacks, ransomware, malicious software, phishing schemes, fraud and the increased use of AI. From time to time, we get notifications that such vendors experienced cyber security breaches.
If we default under the terms of the Loan Agreement beyond the applicable grace period, if any, GM may declare all amounts outstanding under the Loan Agreement to be immediately due and payable and terminate all unused commitments to extend further credit under the Loan Agreement.
If we default under the terms of the Credit Agreement beyond the applicable grace period, if any, the Lenders may declare all amounts outstanding under the Credit Agreement to be immediately due and payable and terminate all unused commitments to extend further credit under the Credit Agreement.
A substantial majority of our revenue is generated from sales to a limited number of direct customers, including distributors, contractors, OEMs, partners and end-user customers. For the years ended December 31, 2023, 2022 and 2021, total revenue from our top ten direct customers represented 80%, 72%, and 68% of our revenues, respectively.
A substantial majority of our revenue is generated from sales to a limited number of direct customers, including distributors, contractors, OEMs, partners and end-user customers. For the years ended December 31, 2024, 2023 and 2022, total revenue from our top ten direct customers represented 84%, 80%, and 72% of our revenues, respectively.
These forward-looking statements include, among other things, statements about: • the expected future growth of the market for our aerogel products and our continued gain in market share, in particular in the EV market, the energy industrial insulation market, the lithium-ion battery thermal barrier markets, and other markets we target; • our beliefs about the competitive strengths and value propositions of our technology and our products and our ability to gain additional market share and enter into new markets based on those strengths; • our expectation that our investment in incremental manufacturing and operating expense will sustain long-term growth in our existing markets and develop new business opportunities; • our plans to continue to develop and optimize aerogel products for high-value applications within the sustainable insulation materials market and our plan to realize revenue from this market; • our plans and expectations to partner with industry leaders in the battery and EV market or such partnerships resulting in products and technologies or otherwise resulting in meaningful financial results; • 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; 55 • our pursuit of high-value opportunities for our aerogel products within different segments of the EV market, the global insulation market, including the sustainable insulation materials market, and our plans to leverage our aerogel technology platform to develop innovative, aerogel enhanced products for applications in new markets; • our plans to focus additional resources to continue to grow our share of the EV market and the energy industrial insulation market; • the current or future trends in the energy, energy industrial, chemical and refinery, liquid natural gas, or LNG, sustainable insulation materials, EV thermal barrier, EV battery materials or other markets and the impact of these trends on our business; • our investments in the EV market and aerogel technology platform; • our pursuit of and the expected greater adoption of our products in the LNG and power generation markets and our expectation that product revenue will be generated in large part by demand for insulation associated with scheduled plant shutdowns, or turnarounds, and other maintenance-related projects; • our expectation that our products will be specified during the design phase in a growing number of new plant construction and capital expansion projects and our expectation that we will have an increasing percentage of our products sold for use in capital projects; • our expectation that the growth in global energy demand and EV market will result in increased new-build and large capacity expansion projects, driving demand for our aerogel products; • our plans to continue our strategy of working with innovative companies to target and penetrate additional market opportunities; • our plans to develop strategic partnerships to facilitate market penetration beyond the energy industrial and sustainable insulation materials market, as well as the expected goals and priorities of such strategic partnerships; • our belief that an adequate long-term supply of silica-precursors and other raw materials is available and that our plans to reduce reliance on precursors susceptible to significant price fluctuations will be successful; • our belief that we can strategically increase our capacity to meet the demand or that we will be able to make such capacity increases in a timely manner; • our expectation in our ability to implement lower cost product formulations and realize material purchasing efficiencies; • our belief that our portfolio of patents, trade secrets and know-how present a significant barrier to potential new entrants in the production of aerogel blanket insulation; • our expectation that we will be successful in enforcing and defending our patents against competitors and that such patents are valid and enforceable, as well as our expectations about the costs and consequences of our current or potential future patent litigation and the potential for additional patent litigation; • our belief that our products possess strong competitive advantages over traditional insulation materials, including the superior thermal performance and the thin, easy-to-use and durable blanket form of our products; • our belief that we can finance the construction and development of our second manufacturing facility in Statesboro, Georgia and continued productivity improvements to our second manufacturing facility and all related thermal assembly facilities and equipment and that we may obtain the required additional funding, which may include one or more equity, equity-linked or debt financings, in the future to complete these projects; • our expectations regarding the investment to open a second manufacturing facility in Georgia, the extended construction and commissioning timeframe for the planned second manufacturing facility, our efforts to manage the construction of the second plant to align with our expectations of demand from EV customers; • the anticipated aerogel capacity expansion as a result of the planned second manufacturing facility in Georgia and the expected commencement of production; • our beliefs about the Department of Energy loan application process; • our belief that our end-use customers will continue to invest in major energy industrial projects; • our expectation that we will continue to sell our products in the sustainable insulation materials and other end markets; • our expectations that our work with partners will accelerate the commercialization of these carbon aerogel anode materials in the EV market; 56 • our belief that the potential for significant technological innovation in traditional insulation materials is limited and that new high-performance materials will be required to meet evolving market requirements for energy efficient insulation systems; • our belief that our aerogel products and manufacturing processes are proprietary and that we can protect our patents, trade secrets and know-how associated therewith; • our belief that we can continue to improve the cost efficiency of our manufacturing process, that our current expansion plans offer attractive returns on incremental invested capital, and that we will focus our development efforts on new products and next generation technology with application in new, high value market segments; • our belief that we will have opportunities to address additional high value applications in the multi-billion dollar global insulation market, and that we are well-positioned to leverage a decade’s worth of research and development to design and commercialize disruptive aerogel products for a wide array of new markets; • our expectations about future material costs and manufacturing expenses as a percentage of revenue, including the impact of engaging one or more external manufacturing facilities in China for the supplemental supply of our energy industrial products; our expectation about the ability of the Chinese external manufacturing facilities that we engage to consistently supply the aerogel product that we order in a timely manner; • our belief that our products have the lowest cost on a fully-installed basis or offer significant life-cycle cost savings in energy industrial and certain other applications as compared to traditional insulation materials; • our plans to continue to expand our global sales force and distribution network to support anticipated growth in customers and demand for our products and our plans to seek to promote greater enterprise-wide utilization of our products by existing end-use customers; • our expectations and projections about future revenues, revenue growth, costs, expenses, production volumes, manufacturing productivity, gross profit, profitability, net loss, loss per share and Adjusted EBITDA, sources and uses of cash, liquidity, cash flow, capital requirements and the sufficiency of our existing cash balance and available credit; • our expectations that most of our revenue will continue to come from a relatively small number of customers for the foreseeable future; • our expectations of long-term revenue growth, with increasing levels of gross profit and improved cash flows from operations and our expectations that we will incur significant capital expenditures related to the expansion of our manufacturing capacity to support this expected long-term growth in demand; • our expectations that the operating expenses will increase in absolute dollars and decrease as a percentage of revenue in 2024 and in the long term, our research and development expenses will increase in absolute dollars and decrease as a percentage of revenue in 2024 and in the long term, our sales and marketing expenses will increase in absolute dollars and decrease as a percentage of revenue in 2024 and in the long term, and our general and administrative expenses will increase in absolute dollars and decrease as a percentage of revenue in 2024 and in the long term; • our expectation to continue to increase investment in research and development in our efforts to enhance and expand our aerogel technology platform; • our expectations about the impact of new accounting pronouncements on our consolidated financial statements and related disclosures; • our belief that our experienced and dedicated leadership team will provide us with a competitive advantage in the industry; • our belief of our technological and market leadership in aerogels; • the expected future development of new aerogel technologies; • our expectations about limitations of net operating losses; • our expectation of rising interest rates and operating costs; • rising inflation; • our expectation of starting up our planned second plant and our ability to do so at a cost consistent with our prior estimates; 57 • our beliefs about our Mexico thermal barrier assembly facility and its timely operations, its ability to meet the demand, the growth in thermal barrier demand to match the assembly operation and vice versa; and • our ability to shift thermal barrier assembly operations from East Providence, Rhode Island to Mexico in a timely manner.
These forward-looking statements include, among other things, statements about: • the expected future growth of the market for our aerogel products and our continued gain in market share, in particular in the EV market, the energy industrial insulation market, the lithium-ion battery thermal barrier markets, and other markets we target; • our beliefs about the competitive strengths and value propositions of our technology and our products and our ability to gain additional market share and enter into new markets based on those strengths; • our expectation that our investment in incremental manufacturing and operating expense will sustain long-term growth in our existing markets and develop new business opportunities; • our plans to continue to develop and optimize aerogel products for high-value applications within the sustainable insulation materials market and our plan to realize revenue from this market; • our plans and expectations to partner with industry leaders in the battery and EV market or such partnerships resulting in products and technologies or otherwise resulting in meaningful financial results; • 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 pursuit of high-value opportunities for our aerogel products within different segments of the EV market, the global insulation market, including the sustainable insulation materials market, and our plans to leverage our aerogel technology platform to develop innovative, aerogel enhanced products for applications in new markets; • our plans to focus additional resources to continue to grow our share of the EV market and the energy industrial insulation market; • the current or future trends in the energy, energy industrial, chemical and refinery, LNG, sustainable insulation materials, EV thermal barrier, EV battery materials or other markets and the impact of these trends on our business; • our investments in the EV market and aerogel technology platform; • our pursuit of and the expected greater adoption of our products in the LNG and power generation markets and our expectation that product revenue will be generated in large part by demand for insulation associated with scheduled plant shutdowns, or turnarounds, and other maintenance-related projects; 54 • our expectation that our products will be specified during the design phase in a growing number of new plant construction and capital expansion projects and our expectation that we will have an increasing percentage of our products sold for use in capital projects; • our expectation that the growth in global energy demand and EV market will result in increased new-build and large capacity expansion projects, driving demand for our aerogel products; • our plans to continue our strategy of working with innovative companies to target and penetrate additional market opportunities; • our plans to develop strategic partnerships to facilitate market penetration beyond the energy industrial and sustainable insulation materials market, as well as the expected goals and priorities of such strategic partnerships; • our belief that an adequate long-term supply of silica-precursors and other raw materials is available and that our plans to reduce reliance on precursors susceptible to significant price fluctuations will be successful; • our belief that we can strategically increase our capacity to meet the demand or that we will be able to make such capacity increases in a timely manner; • our expectation in our ability to implement lower cost product formulations and realize material purchasing efficiencies; • our belief that our portfolio of patents, trade secrets and know-how present a significant barrier to potential new entrants in the production of aerogel blanket insulation; • our expectation that we will be successful in enforcing and defending our patents against competitors and that such patents are valid and enforceable, as well as our expectations about the costs and consequences of our current or potential future patent litigation and the potential for additional patent litigation; • our belief that our products possess strong competitive advantages over traditional insulation materials, including the superior thermal performance and the thin, easy-to-use and durable blanket form of our products; • our belief that we can make additional productivity improvements in our existing East Providence facility and utilize a flexible supply strategy, including but not limited to use of our external manufacturing capabilities in China, which currently support Aspen’s Energy Industrial segment and are capable of delivering increased aerogel production capacity for 2025 and beyond; • our belief that our end-use customers will continue to invest in major energy industrial projects; • our expectation that we will continue to sell our products in the sustainable insulation materials and other end markets; • our expectations that our work with partners will accelerate the commercialization of these carbon aerogel anode materials in the EV market; • our belief that the potential for significant technological innovation in traditional insulation materials is limited and that new high-performance materials will be required to meet evolving market requirements for energy efficient insulation systems; • our belief that our aerogel products and manufacturing processes are proprietary and that we can protect our patents, trade secrets and know-how associated therewith; • our belief that we can continue to improve the cost efficiency of our manufacturing process, that our current expansion plans offer attractive returns on incremental invested capital, and that we will focus our development efforts on new products and next generation technology with application in new, high value market segments; • our belief that we will have opportunities to address additional high value applications in the multi-billion dollar global insulation market, and that we are well-positioned to leverage a decade’s worth of research and development to design and commercialize disruptive aerogel products for a wide array of new markets; • our expectations about future material costs and manufacturing expenses as a percentage of revenue, including the impact of engaging one or more external manufacturing facilities in China for the supplemental supply of our aerogel products; our expectation about the ability of the Chinese external manufacturing facilities that we engage to consistently supply the aerogel product that we order in a timely manner; • our belief that our products have the lowest cost on a fully-installed basis or offer significant life-cycle cost savings in energy industrial and certain other applications as compared to traditional insulation materials; 55 • our plans to continue to expand our global sales force and distribution network to support anticipated growth in customers and demand for our products and our plans to seek to promote greater enterprise-wide utilization of our products by existing end-use customers; • our expectations and projections about future revenues, revenue growth, costs, expenses, production volumes, manufacturing productivity, gross profit, profitability, net loss, loss per share and Adjusted EBITDA, sources and uses of cash, liquidity, cash flow, capital requirements and the sufficiency of our existing cash balance and available credit; • our expectations that most of our revenue will continue to come from a relatively small number of customers for the foreseeable future; • our expectations of long-term revenue growth, with increasing levels of gross profit and improved cash flows from operations and our expectations that we will incur significant capital expenditures related to the expansion of our manufacturing capacity to support this expected long-term growth in demand; • our expectations that the operating expenses will decrease in absolute dollars and decrease as a percentage of revenue in 2025, our research and development expenses will decrease in absolute dollars and increase as a percentage of revenue in 2025, our sales and marketing expenses will decrease in absolute dollars and decrease as a percentage of revenue in 2025, and our general and administrative expenses will decrease in absolute dollars and decrease as a percentage of revenue in 2025; • our expectation to continue to increase investment in research and development in our efforts to enhance and expand our aerogel technology platform; • our expectations about the impact of new accounting pronouncements on our consolidated financial statements and related disclosures; • our belief that our experienced and dedicated leadership team will provide us with a competitive advantage in the industry; • our belief of our technological and market leadership in aerogels; • the expected future development of new aerogel technologies; • our expectations about limitations of net operating losses; • our expectation of rising interest rates and operating costs; • rising inflation; • our expectation of starting up our planned second plant and our ability to do so at a cost consistent with our prior estimates; • our beliefs about our Mexico thermal barrier assembly facility and our external manufacturing facility in China, and their timely operations, their ability to meet the demand, the growth in thermal barrier demand to match the assembly operation and vice versa; and • our ability to shift thermal barrier assembly operations from East Providence, Rhode Island to Mexico in a timely manner.
Pursuant to Section 404a of the Sarbanes-Oxley Act, we have furnished a report by management on the effectiveness of our internal control over financial reporting for the fiscal year ended December 31, 2023 and will continue to do so in each year thereafter.
Pursuant to Section 404(a) of the Sarbanes-Oxley Act, we have furnished a report by management on the effectiveness of our internal control over financial reporting for the fiscal year ended December 31, 2024 and will continue to do so in each year thereafter.
In connection with our engagement of external manufacturing facilities in China, we expect to implement customary manufacturer safeguards onsite, such as the use of confidentiality agreements with employees, to protect our proprietary information and technologies during the manufacturing process of our aerogel products for the energy industrial market.
In connection with our engagement of external manufacturing facilities in China, we expect to implement customary manufacturer safeguards onsite, such as the use of confidentiality agreements with employees, to protect our proprietary information and technologies during the manufacturing process of our aerogel products.
Further, if we are liquidated, GM’s right to repayment, as well as the right to repayment of other lenders under any additional debt financing, would be senior to the rights of the holders of our common stock. GM’s interests as a lender may not always be aligned with our interests.
Further, if we are liquidated, the Lenders’ right to repayment, as well as the right to repayment of other lenders under any additional debt financing, would be senior to the rights of the holders of our common stock. The Lenders’ interests as lenders may not always be aligned with our interests.
In addition, as a Delaware corporation, we are subject to Delaware law, including Section 203 of the Delaware General Corporation Law.
In addition, as a Delaware corporation, we are subject to Delaware law, including Section 203 of the DGCL.
If our interests come into conflict with those of GM, including in the event of a default or an Event of Default (as defined in the Loan Agreement) under the Loan Agreement, GM may choose to act in its self-interest, which could adversely affect the success of our current and future collaborative efforts with GM.
If our interests come into conflict with those of the Lenders, including in the event of a default or an Event of Default (as defined in the Credit Agreement) under the 28 Credit Agreement, the Lenders may choose to act in its self-interest, which could adversely affect the success of our current and future collaborative efforts with the Lenders.
The term of the contract will automatically extend for additional one-year periods 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.
The term of the contract will automatically extend for additional one-year periods unless either party notifies the other of its intention not to renew the contract. While we have agreed to purchase our requirement for certain aerogel products, we have no obligation to purchase any minimum quantity under the contract.
Uncertain factors relating to the COVID-19 pandemic include the duration of the outbreak, the severity of the disease, the effect of various mutated variants of the virus in circulation, the availability of vaccines, the rate of vaccination in the various geographies, and the actions, or perception of actions that may be taken, to contain or treat its impact, including declarations of states of emergency, business closures, manufacturing restrictions and a prolonged period of travel, commercial and/or other similar restrictions and limitations.
Uncertain factors relating to the outbreak of a future public health epidemic include the duration of the outbreak, the severity of the disease, the effect of various mutated variants of the virus in circulation, the availability of vaccines, the rate of vaccination in the various geographies, and the actions, or perception of actions that may be taken, to contain or treat its impact, including declarations of states of emergency, business closures, manufacturing restrictions and a prolonged period of travel, commercial and/or other similar restrictions and limitations.
We are party to a production contract with a contract manufacturer in China to produce certain of our Energy Industrial products. Pursuant to the contract, the contract manufacturer is obligated to deliver products to us as we issue purchase orders on an as needed basis through the term of the agreement, which expires in 2024.
We are party to a production contract with a contract manufacturer in China to produce certain of our aerogel products. Pursuant to the contract, the contract manufacturer is obligated to deliver products to us as we issue purchase orders on an as needed basis through the term of the agreement, which expires in 2025.
We estimate that sales to end-user customers in the energy industry accounted for approximately 54% of our 2023 revenues and we expect that they will continue to account for a significant portion of our future revenues.
We estimate that sales to end-user customers in the energy industry accounted for approximately 32% of our 2024 revenues and we expect that they will continue to account for a significant portion of our future revenues.
Our potential inability to adequately protect our intellectual property as a result of engaging external manufacturing facilities in China for the supplemental supply of our aerogel products for our customers in the energy industrial market could negatively impact our performance.
Our potential inability to adequately protect our intellectual property as a result of engaging external manufacturing facilities in China for the supplemental supply of our aerogel products could negatively impact our performance.
Either the enforcement by GM upon its declaration to accelerate the obligations under the Loan Agreement or the renegotiation of the Loan Agreement’s terms, each as mentioned above, could adversely affect our operations.
Either the enforcement by the Lenders upon its declaration to accelerate the obligations under the Credit Agreement or the renegotiation of the Credit Agreement’s terms, each as mentioned above, could adversely affect our operations.
Where we consider it appropriate, our strategy is to seek patent protection in the United States and other countries on technologies used in or relating to our aerogel product forms, applications and manufacturing technologies. As of December 31, 2023, we had 75 issued U.S. patents and 358 issued foreign patents.
Where we consider it appropriate, our strategy is to seek patent protection in the United States and other countries on technologies used in or relating to our aerogel product forms, applications and manufacturing technologies. As of December 31, 2024, we had 83 issued U.S. patents and 271 issued foreign patents.
No consistent policy regarding the breadth of patent claims has emerged to date in the United States and the landscape could become more uncertain in view of future rule changes by the USPTO, the introduction of patent reform legislation and decisions in patent law cases by the federal courts including the United States Supreme Court.
No consistent policy regarding the breadth of patent claims has emerged to date in the United States and the landscape could become more uncertain in view of future rule changes by the USPTO, the introduction of patent reform legislation and decisions in patent law cases by the federal courts including the United States Supreme Court. 46 The patent landscape outside of the United States is even less predictable.
If we are unable to repay the amounts due under the Loan Agreement upon such GM’s declaration, GM could proceed against the collateral granted to it to secure the obligations under the Loan Agreement (including, but not limited to taking control of our pledged assets and foreclosing on other collateral).
If we are unable to repay the amounts due under the Credit Agreement upon such Lenders’ declaration, the Lenders could proceed against the collateral granted to it to secure the obligations under the Credit Agreement (including, but not limited to taking control of our pledged assets and foreclosing on other collateral).
We continue to monitor any adverse impact that the outbreak of war in Ukraine and the subsequent institution of sanctions against Russia by the United States and several European and Asian countries may have on the global economy in general, on our business and operations and on the businesses and operations of our suppliers and customers.
We continue to monitor any adverse impact that the outbreak of war in Ukraine and the subsequent institution of sanctions against Russia by the United States and several European and Asian countries may have on the global economy in general, on our business and operations and on the businesses and operations of our suppliers and customers, as well as the ongoing tensions between China and Taiwan.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+2 added−1 removed16 unchanged
Biggest changeTo provide for the availability of critical data and systems, maintain regulatory compliance, manage our material risks from cybersecurity threats, and protect against and respond to cybersecurity incidents, we undertake the following activities: • monitor emerging data protection laws and implement changes to our processes that are designed to comply with such laws; • through our policies, practices and contracts (as applicable), require employees, as well as third parties that provide services on our behalf, to treat confidential information and data with care; 58 • employ technical safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence; • provide regular, mandatory training for our employees, Board members and certain contractors regarding cybersecurity threats as a means to equip them with effective tools to address cybersecurity threats and incident response preparedness, and to communicate our evolving information security policies, standards, processes and practices; • conduct regular phishing email simulations for all employees and contractors with access to our email systems to enhance awareness and responsiveness to possible threats; • conduct annual cybersecurity management and incident training for current employees involved in our systems and processes that handle sensitive data; • run tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes and technologies; • leverage the NIST incident handling framework to help us identify, protect, detect, respond and recover when there is an actual or potential cybersecurity incident; and • carry information security risk insurance that provides protection against the potential losses arising from a cybersecurity incident.
Biggest changeTo provide for the availability of critical data and systems, maintain regulatory compliance, manage our material risks from cybersecurity threats, and protect against and respond to cybersecurity incidents, we undertake the following activities: • monitor emerging data protection laws and implement changes to our processes that are designed to comply with such laws; • through our policies, practices and contracts (as applicable), require employees, as well as third parties that provide services on our behalf, to treat confidential information and data with care; • employ technical safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence; • provide regular, mandatory training for our employees, Board members and certain contractors regarding cybersecurity threats as a means to equip them with effective tools to address cybersecurity threats and incident response preparedness, and to communicate our evolving information security policies, standards, processes and practices; • conduct regular phishing email simulations for all employees and contractors with access to our email systems to enhance awareness and responsiveness to possible threats; • conduct annual cybersecurity management and incident training for current employees involved in our systems and processes that handle sensitive data; • run tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes and technologies; • leverage the NIST incident handling framework to help us identify, protect, detect, respond and recover when there is an actual or potential cybersecurity incident; and • carry cybersecurity risk insurance that provides protection against the potential losses arising from a cybersecurity incident. 57 Our incident response plan coordinates the activities we take to prepare for, detect, respond to and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate damage to our business and reputation.
As discussed in more detail under “Cybersecurity Governance” below, our Audit Committee provides oversight of our cybersecurity risk management and strategy processes, which are led by our Chief Financial Officer, Chief Legal Officer, Chief Information Officer and Director of Information Security.
As discussed in more detail under “Cybersecurity Governance” below, our Audit Committee provides oversight of our cybersecurity risk management and strategy processes, which are led by our Director of Information Security, our Chief Financial Officer and our Chief Legal Officer.
Our cybersecurity risk management and strategy processes, which are discussed in greater detail above, are led by our Chief Information Officer, Director of Information Security, Chief Financial Officer and Chief Legal Officer.
Our cybersecurity risk management and strategy processes , which are discussed in greater detail above, are led by our Director of Information Security, Chief Financial Officer and Chief Legal Officer.
Our Board of Directors is actively involved in oversight of our risk management activities, and cybersecurity represents an important element of our overall approach to risk management. Our cybersecurity policies, standards, processes and practices are based on recognized frameworks established by the National Institute of Standards and Technology, or NIST, the International Organization for Standardization and other applicable industry standards.
Our Board of Directors is actively involved in oversight of our risk management activities, and cybersecurity represents an important element of our overall approach to risk management. Our cybersecurity policies, standards, processes and practices are based on recognized frameworks established by the National Institute of Standards and Technology (NIST) the International Organization for Standardization and other applicable industry standards.
Such individuals have collectively over 40 years of prior work experience in various roles involving managing information security, developing cybersecurity strategy, implementing effective information and cybersecurity programs, as well as several relevant degrees and certifications, including Certified Information Security Manager, Certified Information Systems Auditor, Certified Information Systems Security Professional, Global Information Assurance Certification, Certified Professional Hacker.
Such individuals have collectively over 30 years of prior work experience in various roles involving managing information security, developing cybersecurity strategy, implementing effective information and cybersecurity programs, as well as several relevant degrees and certifications, including Certified Information Security Manager, Certified Information Systems Auditor, Certified Information Systems Security Professional, Global Information Assurance Certification, Certified Professional Hacker.
Material cybersecurity threat risks are also considered during separate board meeting discussions of important matters like enterprise risk management, operational budgeting, business continuity planning, mergers and acquisitions, brand management, and other relevant matters.
Material cybersecurity threat risks are also considered during separate Board meeting discussions of important matters like enterprise risk management, operational budgeting, business continuity planning and disaster recovery, product management, and other relevant matters.
As discussed above, these management team members report to the Audit Committee of our Board of Directors about cybersecurity threat risks, among other cybersecurity related matters, on a quarterly basis.
As discussed above, these management team members and other relevant subject matter experts report to the Audit Committee of our Board of Directors, as well as the Cybersecurity Subcommittee of the Audit Committee , about material cybersecurity threat risks, among other cybersecurity related matters, on a quarterly basis. 58
In such sessions, our Audit Committee generally receives materials discussing current and emerging material cybersecurity threat risks, and describing our ability to mitigate those risks, as well as recent developments, evolving standards, technological developments and information security considerations arising with respect to our peers and third parties, and discusses such matters with our Director of Information Security and Chief Information Officer.
Our Audit Committee, and its Cybersecurity Subcommittee receive materials discussing current and emerging material cybersecurity threat risks, and describing our ability to mitigate those risks, as well as recent developments, evolving standards, technological developments and information security considerations arising with respect to our peers and third parties.
Our Audit Committee also receives prompt and timely information regarding any cybersecurity incident that meets established reporting thresholds, as well as ongoing updates regarding any such incident until it has been addressed. 59 Members of our Audit Committee and Board of Directors are also encouraged to regularly engage in conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs.
Members of our Audit Committee and Board of Directors are also encouraged to regularly engage in conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs.
Removed
Our incident response plan coordinates the activities we take to prepare for, detect, respond to and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate damage to our business and reputation.
Added
Our Audit Committee receives prompt and timely information regarding any known or suspected cybersecurity incident that meets established reporting thresholds, as well as ongoing updates regarding any such incident until it has been addressed.
Added
In addition, our Audit Committee has established a Cybersecurity Subcommittee, comprised of four Audit Committee members and members of management, including the Director of Information Security, Chief Financial Officer, and Chief Legal Officer, which meets quarterly to review materials concerning the ongoing maturation of the Company’s cybersecurity program, the effectiveness of its information security controls, and current and emerging material cybersecurity threat risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe table below shows a summary of the square footage of these locations as of December 31, 2023: Leased Properties by Location (In square ft.) East Providence, RI 201,033 Marlborough, MA 58,965 Monterrey, MX 266,381 Northborough, MA 56,650 Pawtucket, RI 46,400 Statesboro, GA 58,716
Biggest changeThe table below shows a summary of the square footage of these locations as of December 31, 2024: Leased Properties by Location (In square ft.) East Providence, RI 200,569 Marlborough, MA 58,965 Monterrey, MX 266,381 Northborough, MA 56,650 Statesboro, GA 62,031
We lease additional spaces for research, administrative, manufacturing, and warehousing purposes in six locations in the United States and two in Mexico under leases expiring between January 31, 2024 and April 30, 2034.
We lease additional spaces for research, administrative, manufacturing, and warehousing purposes in six locations in the United States and two in Mexico under leases expiring between March 31, 2025 and April 30, 2034.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

7 edited+9 added−2 removed22 unchanged
Biggest changeIn July 2023, we filed a motion to compel arbitration, and in February 2024, the Court granted our motion and stayed the litigation pending arbitration. To the extent APN seeks to pursue claims in an arbitration proceeding, Aspen intends to continue to vigorously defend this matter, including seeking its legal costs.
Biggest changeTo the extent APN seeks to pursue claims in an arbitration proceeding, Aspen intends to continue to vigorously defend this matter, including seeking its legal costs. Due to their nature, it is difficult to predict the outcome or the costs involved in any litigation or administrative proceedings, including any appeals process.
On July 5, 2021, AMA informed us that it has decided not to appeal the denial of June 24, 2021. We subsequently learned that AMA had also made a criminal complaint against our chief executive officer for defamation in 60 connection with the Press Release.
On July 5, 2021, AMA informed us that it has decided not to appeal the denial of June 24, 2021. We subsequently learned that AMA had also made a criminal complaint against our chief executive officer for defamation in connection with the Press Release.
Other Litigation Matters In October 2022, we were served with a summons from Aerogels Poland Nanotechnology LLC (“APN”), a former distributor of our products in Poland with whom we previously terminated our distribution agreements because of APN’s failure to pay amounts due to us.
Other Litigation Matters In October 2022, we were served with a summons from Aerogels Poland Nanotechnology LLC (APN), a former distributor of our products in Poland with whom we previously terminated our distribution agreements because of APN’s failure to pay amounts due to us.
In July 2023, the experts filed their final report, which confirmed the conclusions from their preliminary report. On July 26, 2023, we filed a motion for preliminary injunction requesting the court to enjoin AMA’s sale of infringing aerogel products supplied by Nano Tech Co. Ltd. During September 2023, we and AMA submitted technical briefs regarding our motion for preliminary injunction.
In July 2023, the experts filed their final report, 59 which confirmed the conclusions from their preliminary report. On July 26, 2023, we filed a motion for preliminary injunction requesting the court to enjoin AMA’s sale of infringing aerogel products supplied by Nano Tech Co. Ltd.
On October 27, 2023, the judge issued an order dismissing our motion. On November 7, 2023, we appealed the judge’s decision to a panel of the Court of Genoa and a hearing was held on November 29, 2023.
During September 2023, we and AMA submitted technical briefs regarding our motion for preliminary injunction. On October 27, 2023, the judge issued an order dismissing our motion. On November 7, 2023, we appealed the judge’s decision to a panel of the Court of Genoa and a hearing was held on November 29, 2023.
In addition to the foregoing, we have been and may be from time to time a party to other legal proceedings that arise in the ordinary course of business and to other patent enforcement actions to assert our patent rights. 61 Item 4. MINE SAF ETY DISCLOSURES Not applicable. 62 PART II
Furthermore, the counterparties in these proceedings may have significant resources and interest to litigate and therefore, these litigation matters could be protracted and may ultimately involve significant legal expenses. 60 In addition to the foregoing, we have been and may be from time to time a party to other legal proceedings that arise in the ordinary course of business and to other patent enforcement actions to assert our patent rights.
As of December 31, 2023, the main patent infringement proceedings are ongoing, and the appeal decision is pending. • On April 18, 2023, we filed a patent infringement complaint at the Seoul Central District Court and a petition for investigation of unfair trade practices in the Korea Trade Commission (KTC).
This settlement concludes our legal action against AMA regarding the unauthorized sale of infringing aerogel insulation materials in Europe. • On April 18, 2023, we filed a patent infringement complaint at the Seoul Central District Court and a petition for investigation of unfair trade practices in the Korea Trade Commission (KTC).
Removed
From September through November, the parties submitted opinions regarding validity and infringement to the KTC. As of December 31, 2023, the KTC proceedings are ongoing, and there have been no substantive activities in the District Court case.
Added
In February 2024, the Court issued an order dismissing our appeal, and the proceedings continued throughout 2024. In January 2025, we reached a mutual agreement to resolve our patent infringement action against AMA, and the Court issued an order removing the case from the docket on January 28, 2025.
Removed
Due to their nature, it is difficult to predict the outcome or the costs involved in any litigation or administrative proceedings, including any appeals process. Furthermore, the counterparties in these proceedings may have significant resources and interest to litigate and therefore, these litigation matters could be protracted and may ultimately involve significant legal expenses.
Added
In April 2024, the Korea Trade Commission (“KTC”) concluded its investigation into unfair international trade practices by Beerenberg Korea Ltd. and Bronx (China) Co., Ltd., with a decision that our asserted composition patent claims were invalid and our asserted process patent claims were not infringed. The KTC decision is under appeal in the Seoul Administrative Court.
Added
In October 2024, the Korean Intellectual Property Trial and Appeal Board (“IPTAB”) issued decisions in invalidation actions filed by Beerenberg Korea Ltd. against our patents finding the patents invalid.
Added
In November 2024, the Korean IPTAB issued a decision in the invalidation action filed in September 2023 by LG Chem Ltd. against one of the Korean patents opposed by Beerenberg, also finding the patent invalid. In December 2024, the Korean IPTAB issued decisions in invalidation actions filed by Bronx (China) Co., Ltd. against our process patents finding the patents invalid.
Added
We disagree with the IPTAB decisions in the Beerenberg, LG Chem, and Bronx oppositions. We disagree with the IPTAB decisions in both the Beerenberg and LG Chem oppositions. Pro forma appeals at the Korean IP High Court were filed in January 2025 in the Beerenberg oppositions and in February 2025 in the LG Chem opposition.
Added
The Bronx opposition decisions are also subject to appeal to the Korean IP High Court. Our patent infringement case against Beerenberg Services AS and Beerenberg Korea Ltd. at the Seoul District Court remains stayed pending the final outcome of the IPTAB proceedings and the associated appeals.
Added
The opposition filed in August 2023 by LG Chem Ltd. at the Japanese Patent Office against a Japanese counterpart of the Korean patents was concluded in our favor with a decision to maintain the patent and issuance of new Certificate of Patent on May 3, 2024.
Added
In July 2023, we filed a motion to compel arbitration, and in February 2024, the Court granted our motion and stayed the litigation pending arbitration. On March 7, 2024, APN filed a Notice of Appeal, indicating its intent to appeal the Court’s decision ordering arbitration. However, APN has yet to perfect its appeal.
Added
Item 4. MINE SAF ETY DISCLOSURES Not applicable. 61 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed2 unchanged
Biggest changeStock Performance Graph This performance graph is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference in any filing by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Biggest changeStock Performance Graph This performance graph is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference in any filing by us under the Securities Act or the Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
(c) Purchases of Equity Securities By the Issuer and Affiliated Purchasers . We did not repurchase any of our equity securities during the year ended December 31, 2023. Item 6. [RESERVED] 63
(c) Purchases of Equity Securities By the Issuer and Affiliated Purchasers . We did not repurchase any of our equity securities during the year ended December 31, 2024. 62 Item 6. [RESERVED]
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STO CKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Dividend Policy Our common stock is trading on The New York Stock Exchange, or NYSE, under the symbol “ASPN.” As of March 5, 2024, there were approximately 42 stockholders of record of our common stock.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STO CKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Dividend Policy Our common stock is trading on The New York Stock Exchange (NYSE), under the symbol “ASPN.” As of February 25, 2025, there were approximately 31 stockholders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

107 edited+65 added−79 removed67 unchanged
Biggest changeThe $6.9 million increase was the result of $4.9 million of interest income, $2.2 million of Employee Retention Credits and a $(0.2) million net impact of capitalized interest relating to our Convertible Note in the comparable period in 2022. 75 Year ended December 31, 2022 compared to year ended December 31, 2021 The following tables set forth our results of operations for the periods presented: Year Ended December 31, Year Ended December 31, 2022 2021 $ Change % Change 2022 2021 ($ in thousands) (Percentage of total revenue) Revenue $ 180,364 $ 121,622 $ 58,742 48% 100% 100% Cost of revenue 175,388 111,685 63,703 57% 97% 92% Gross profit 4,976 9,937 (4,961 ) (50)% 3% 8% Operating expenses Research and development 16,930 11,441 5,489 48% 9% 9% Sales and marketing 28,792 16,581 12,211 74% 16% 14% General and administrative 38,499 22,514 15,985 71% 21% 19% Total operating expenses 84,221 50,536 33,685 67% 47% 42% Loss from operations (79,245 ) (40,599 ) (38,646 ) 95% (44)% (33)% Other income (expense) Interest expense, convertible note - related party (5,110 ) — (5,110 ) 100% (3)% 0% Interest income (expense), net 1,617 (229 ) 1,846 (806)% 1% 0% Gain on extinguishment of debt — 3,734 (3,734 ) 100% —% 3% Total other income (expense) (3,493 ) 3,505 (6,998 ) (200)% (2)% 3% Net loss $ (82,738 ) $ (37,094 ) $ (45,644 ) (123)% (46)% (30)% Revenue Year Ended December 31, Change 2022 2021 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) Revenue: Energy industrial $ 124,807 69% $ 114,958 95% $ 9,849 9% Thermal barrier 55,557 31% 6,664 5% 48,893 NM Total revenue $ 180,364 100% $ 121,622 100% $ 58,742 48% The following chart sets forth product shipments in square feet associated with recognized revenue, including revenue recognized over time, for the periods presented: Year Ended December 31, Change 2022 2021 Amount Percentage Product shipments in square feet (in thousands) 32,589 34,557 (1,968 ) (6)% Total revenue increased $58.7 million, or 48%, to $180.3 million in 2022 from $121.6 million in 2021.
Biggest changeNet operating losses of $159.0 million generated from 2018 through 2023 have an unlimited carryforward . 70 Results of Operations The following tables set forth our results of operations for the periods presented: Year Ended December 31, 2024 2023 2022 ($ in thousands) Revenue $ 452,699 $ 238,718 $ 180,364 Cost of revenue 269,802 181,797 175,388 Gross profit 182,897 56,921 4,976 Operating expenses Research and development 18,050 16,356 16,930 Sales and marketing 35,677 33,008 28,792 General and administrative 71,125 56,760 38,499 Impairment of equipment under development 3,510 — — Total operating expenses 128,362 106,124 84,221 Income (loss) from operations 54,535 (49,203 ) (79,245 ) Other income (expense) Interest expense, convertible note - related party (7,550 ) (5,328 ) (5,110 ) Interest income (expense), net (4,409 ) 6,534 1,617 Loss on extinguishment of debt (27,487 ) — — Income from Employee Retention Credits — 2,186 — Total other income (expense) (39,446 ) 3,392 (3,493 ) Income tax expense (1,714 ) — — Net income (loss) $ 13,375 $ (45,811 ) $ (82,738 ) 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 NM 1 % 0 % 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 ) NM (6 )% 0 % 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 ) NM (0 )% (— )% Net income (loss) $ 13,375 $ (45,811 ) $ 59,186 129 % 3 % (19 )% 71 Revenue Year Ended December 31, 2024 2023 Change Percentage of Percentage of Amount Revenue Amount 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 $238.7 million in 2023.
Cost of Revenue Year Ended December 31, 2023 2022 Change % of Related % of Related Amount Revenue Amount Revenue Amount Percentage ($ in thousands) Cost of revenue: Energy industrial $ 94,477 73% $ 105,963 85% $ (11,486 ) (11)% Thermal barrier 87,320 79% 69,425 125% 17,895 26% Total cost of revenue $ 181,797 76% $ 175,388 97% $ 6,409 4% Total cost of revenue increased $6.4 million, or 4%, to $181.8 million in 2023 from $175.4 million in 2022.
Cost of Revenue Year Ended December 31, Change 2023 2022 Amount Percentage of Related Revenue Amount Percentage of Related Revenue Amount Percentage ($ in thousands) Cost of revenue: Energy industrial $ 94,477 73% $ 105,963 85% $ (11,486 ) (11)% Thermal barrier 87,320 79% 69,425 125% 17,895 26% Total cost of revenue $ 181,797 76% $ 175,388 97% $ 6,409 4% Total cost of revenue increased $6.4 million, or 4%, to $181.8 million in 2023 from $175.4 million in 2022.
Financing Activities Net cash provided by financing activities in 2023 totaled $75.5 million and consisted of net proceeds from the registered direct offering of common stock of $74.2 million and $1.7 million in proceeds from employee stock option exercises, offset, in part, by $0.4 million in cash used for payments made for employee tax withholdings associated with the vesting of restricted stock units.
Net cash provided by financing activities in 2023 totaled $75.5 million and consisted of net proceeds from the registered direct offering of common stock of $74.2 million and $1.7 million in proceeds from employee stock option exercises, offset, in part, by $0.4 million in cash used for payments made for employee tax withholdings associated with the vesting of restricted stock units.
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; 67 • 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.
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.
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. 83 Revenue Recognition We recognize revenue from the sale of our energy industrial aerogel products and thermal barriers.
See note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information about these critical accounting policies, as well as a description of our other significant accounting policies. Revenue Recognition We recognize revenue from the sale of our energy industrial aerogel products and thermal barriers.
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.
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. 83
GAAP financial statements included elsewhere in this Annual Report on Form 10-K, and not to rely on any single financial measure to evaluate our business. The following table presents a reconciliation of net loss, the most directly comparable U.S.
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. 66 The following table presents a reconciliation of net loss, the most directly comparable U.S.
Research and Development Expenses Year Ended December 31, Change 2023 2022 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) Research and development expenses $ 16,356 7% $ 16,930 9% $ (574 ) (3)% Research and development expenses decreased by $0.5 million, or 3%, to $16.4 million in 2023 from $16.9 million in 2022.
Research and Development Expenses Year Ended December 31, Change 2023 2022 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) Research and development expenses $ 16,356 7% $ 16,930 9% $ (574 ) (3)% 76 Research and development expenses decreased by $0.5 million, or 3%, to $16.4 million in 2023 from $16.9 million in 2022.
This increase was driven by a more favorable mix of product shipments in the global petrochemical and refinery markets, particularly in Asia and North America, project-based demand in the subsea market, offset, in part, by a decrease in maintenance-based demand in the global petrochemical and refinery markets in Europe.
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.
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.
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 80 Contracts. In addition, the OEM may terminate the Contracts any time and for any or no reason.
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. 73 Energy industrial cost of revenue decreased $11.5 million, or 11%, to $94.5 million from $106.0 million in the comparable period in 2022.
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 $11.5 million, or 11%, to $94.5 million from $106.0 million in the comparable period in 2022.
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. Thermal barrier revenue for the year ended December 31, 2022 included $45.8 million to a major U.S. automotive OEM and $5.1 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. 75 automotive OEM and $5.5 million to a major Asian automotive OEM. Thermal barrier revenue for the year ended December 31, 2022 included $45.8 million to a major U.S. automotive OEM and $5.1 million to a major Asian automotive OEM.
Gross Profit Year Ended December 31, 2023 2022 Change Percentage Percentage Amount of Revenue Amount of Revenue Amount Percentage ($ in thousands) Gross profit: Energy industrial $ 34,162 27% $ 18,844 15% $ 15,318 81% Thermal barrier 22,759 21% (13,868 ) (25)% 36,627 264% Total gross profit $ 56,921 24% $ 4,976 3% $ 51,945 1,044% Gross profit increased $51.9 million, or 1,044%, to $56.9 million in 2023 from $5.0 million in 2022.
Gross Profit Year Ended December 31, Change 2023 2022 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage Gross profit: Energy industrial $ 34,162 27% $ 18,844 15% $ 15,318 81% Thermal barrier 22,759 21% (13,868 ) (25)% 36,627 (264)% Total gross profit $ 56,921 24% $ 4,976 3% $ 51,945 1044% Gross profit increased $51.9 million, or 1,044%, to $56.9 million in 2023 from $5.0 million in 2022.
However, we plan to supplement our cash balance and available credit with equity financings, debt financings, equipment leasing, sale-leaseback transactions, customer prepayments or government grant and loan programs to provide the additional capital necessary to purchase the capital equipment, construct the new facilities and complete the aerogel capacity expansions required to support our evolving commercial opportunities and strategic business initiatives.
However, we may supplement our cash balance and available credit with equity financings, debt financings, equipment leasing, sale-leaseback transactions, customer prepayments or government grant and loan programs to provide the additional capital necessary to purchase the capital equipment, construct the new facilities and complete the aerogel capacity expansions required to support our evolving commercial opportunities and strategic business initiatives.
We believe this is a better representation of the estimated life than our actual limited historical exercise behavior. • For the years ended December 31, 2023, 2022 and 2021, we used our historical volatility as a basis to estimate expected volatility in the valuation of stock options. • The risk-free interest rate is based on U.S.
We believe this is a better representation of the estimated life than our actual limited historical exercise behavior. • For the years ended December 31, 2024, 2023 and 2022, we used our historical volatility as a basis to estimate expected volatility in the valuation of stock options. • The risk-free interest rate is based on U.S.
We expect that material costs will increase in absolute dollars during 2024 due to projected growth in product shipments and contracts but remain stable as a percentage of revenue due to improved manufacturing, and fabrication yields and a favorable mix of products sold. Manufacturing expense is also a significant component of cost of revenue.
We expect that material costs will increase in absolute dollars during 2025 due to projected growth in product shipments and contracts but remain stable as a percentage of revenue due to improved manufacturing, and fabrication yields and a favorable mix of products sold. Manufacturing expense is also a significant component of cost of revenue.
Accordingly, we expect that our net income (loss), earnings per share and Adjusted EBITDA will vary from period to period. During 2023, we experienced strong volume growth in our thermal barrier products. As a result, we experienced total revenue growth of 32% during the year.
Accordingly, we expect that our net income (loss), earnings per share and Adjusted EBITDA will vary from period to period. During 2024, we experienced strong volume growth in our thermal barrier products. As a result, we experienced total revenue growth of 90% during the year.
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 24%, 3%, and 8% for the years ended December 31, 2023, 2022 and 2021, respectively.
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 40%, 24%, and 3% for the years ended December 31, 2024, 2023 and 2022, respectively.
These commitments relate to the enhancement of our existing production lines in our East Providence facility and our fabrication operation in Mexico, and the planned aerogel manufacturing facility in Bulloch County, Georgia and consist primarily of costs for equipment and construction.
These commitments relate to the enhancement of our existing production lines in our East Providence facility and our fabrication operation in Mexico, and the previously planned aerogel manufacturing facility in Statesboro, Georgia and consist primarily of costs for equipment and construction.
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 40%, 46% and 44% for the years ended December 31, 2023, 2022 and 2021, respectively.
Manufacturing expense includes labor, utilities, maintenance expense, and depreciation on manufacturing assets. Manufacturing expense also includes stock-based compensation of 68 manufacturing employees and shipping costs. Manufacturing expense as a percentage of product revenue was 22%, 46% and 44% for the years ended December 31, 2024, 2023 and 2022, respectively.
Provision for Income Taxes We have incurred net losses since inception 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.
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.
The following assumptions were used to estimate the fair value of the option awards: Year Ended December 31, 2023 2022 2021 Weighted-average assumptions: Expected term (in years) 6.12 5.97 5.96 Expected volatility 70.04 % 61.85 % 59.80 % Risk free rate 4.08 % 2.13 % 0.86 % 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.
The following assumptions were used to estimate the fair value of the option awards: Year Ended December 31, 2024 2023 2022 Weighted-average assumptions: Expected term (in years) 5.99 6.12 5.97 Expected volatility 75.04 % 70.04 % 61.85 % Risk free rate 4.11 % 4.08 % 2.13 % Expected dividend yield — % — % — % 82 • 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.
On March 16, 2022, we entered into a sales agreement for an ATM offering program with Cowen and Company, LLC and Piper Sandler & Co., as our sales agents, or the 2022 ATM offering program.
Financial Summary On March 16, 2022, we entered into a sales agreement for an at-the-market offering program with Cowen and Company, LLC and Piper Sandler & Co., as our sales agents (the 2022 ATM offering program).
Our ten largest customers accounted for approximately 80% of our total revenue during the year ended December 31, 2023, and we expect that most of our revenue will continue to come from a relatively small number of customers for the foreseeable future. In 2023, sales to GM and Distribution International, Inc. represented 41% and 14% of our total revenue, respectively.
Our ten largest customers accounted for approximately 84% of our total revenue during the year ended December 31, 2024, and we expect that most of our revenue will continue to come from a relatively small number of customers for the foreseeable future. In 2024, sales to GM and Distribution International, Inc.
In the meantime, and until we ramp up construction, we expect to be able to substantially reduce our planned capital expenditures for 2024. 81 We intend to fund capital expenditures related to the expansion of capacity of our existing manufacturing facility with our existing cash balance and anticipated cash flows from operations.
In the meantime, we expect to be able to substantially reduce our planned capital expenditures for 2025. We intend to fund capital expenditures related to the expansion of capacity of our existing manufacturing facility with our existing cash balance and anticipated cash flows from operations.
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.
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.
Capital Spending and Future Capital Requirements We have made capital expenditures primarily to develop and expand our manufacturing capacity. Our capital expenditures totaled $175.5 million in 2023, $178.0 million in 2022 and $13.8 million in 2021.
Capital Spending and Future Capital Requirements We have made capital expenditures primarily to develop and expand our manufacturing capacity. Our capital expenditures totaled $86.3 million in 2024, $175.5 million in 2023 and $178.0 million in 2022.
This decrease in the use of cash was the result of the decrease in net loss adjusted for non-cash items of $44.8 million, and a decrease in cash used by changes in working capital of $7.0 million.
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.
As of December 31, 2023, we had capital commitments of approximately $202.6 million, which included commitments for which we have entered into contracts as well as commitments authorized by our Board of Directors.
As of December 31, 2024, we had capital commitments of approximately $172.4 million, which included commitments for which we have entered into contracts as well as commitments authorized by our Board of Directors.
We are also continuing to monitor the impact of engaging one or more external manufacturing facilities in China to supply our aerogel products for the energy industrial market beginning in 2024 on our manufacturing expense and cost of product revenue.
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.
We believe that our December 31, 2023 cash and cash equivalents balance of $139.7 million will be sufficient to support current operating requirements, current research and development activities and the initial capital expenditures required to support the evolving commercial opportunities in the EV market and other strategic business opportunities.
We believe that our December 31, 2024 cash and cash equivalents balance of $220.9 million will be sufficient to support current operating requirements, current research and development activities and the initial capital expenditures required to support the evolving commercial opportunities in the EV market and other strategic business opportunities for at least the next twelve months.
We recorded warranty expense of $0.5 million during the year ended December 31, 2023. We recorded warranty expense of $0.2 million during the year ended December 31, 2022. We recorded warranty expense of less than $0.1 million during the year ended December 31, 2021. As of December 31, 2023, we had satisfied all outstanding warranty claims.
We recorded warranty expense of $1.4 million during the year ended December 31, 2024. We recorded warranty expense of $0.5 million and $0.2 million during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2024, we had satisfied all outstanding warranty claims.
We also expect that the patent enforcement actions, described in more detail under “Legal Proceedings” in Part I, Item 3 of this Annual Report on Form 10-K, if protracted, could result in significant legal expense over the medium to long-term. We expect that our general and administrative expenses will increase in absolute dollars and decrease as a percentage of revenue.
We also expect that the patent enforcement actions, described in more detail under “Legal Proceedings” in Part I, Item 3 of this Annual Report on Form 10-K, if protracted, could result in significant legal expense over the medium to long-term.
Net operating losses of $164.3 million generated from 2018 through 2023 have an unlimited carryforward . 71 Results of Operations The following tables set forth our results of operations for the periods presented: Year Ended December 31, 2023 2022 2021 ($ in thousands) Revenue $ 238,718 $ 180,364 $ 121,622 Cost of revenue 181,797 175,388 111,685 Gross profit 56,921 4,976 9,937 Operating expenses Research and development 16,356 16,930 11,441 Sales and marketing 33,008 28,792 16,581 General and administrative 56,760 38,499 22,514 Total operating expenses 106,124 84,221 50,536 Loss from operations (49,203 ) (79,245 ) (40,599 ) Other income (expense) Interest expense, convertible note - related party (5,328 ) (5,110 ) — Interest income (expense), net 6,534 1,617 (229 ) Gain on extinguishment of debt — — 3,734 Income from Employee Retention Credits 2,186 — — Total other income (expense) 3,392 (3,493 ) 3,505 Net loss $ (45,811 ) $ (82,738 ) $ (37,094 ) Year ended December 31, 2023 compared to year ended December 31, 2022 The following tables set forth our results of operations for the periods presented: Year Ended December 31, Year Ended December 31, 2023 2022 $ Change % Change 2023 2022 ($ in thousands) (Percentage of total revenue) Revenue $ 238,718 $ 180,364 $ 58,354 32 % 100 % 100 % Cost of revenue 181,797 175,388 6,409 4 % 76 % 97 % Gross profit 56,921 4,976 51,945 1,044 % 24 % 3 % Operating expenses Research and development 16,356 16,930 (574 ) (3 )% 7 % 9 % Sales and marketing 33,008 28,792 4,216 15 % 14 % 16 % General and administrative 56,760 38,499 18,261 47 % 24 % 21 % Total operating expenses 106,124 84,221 21,903 26 % 44 % 47 % Loss from operations (49,203 ) (79,245 ) 30,042 (38 )% (21 )% (44 )% Other income (expense) Interest expense, convertible note - related party (5,328 ) (5,110 ) (218 ) 100 % (2 )% -3 % Interest income, net 6,534 1,617 4,917 304 % 3 % 1 % Income from Employee Retention Credits 2,186 — 2,186 100 % 1 % — % Total other income (expense) 3,392 (3,493 ) 6,885 (197 )% 1 % (2 )% Net loss $ (45,811 ) $ (82,738 ) $ 36,927 45 % (19 )% (46 )% 72 Revenue Year Ended December 31, 2023 2022 Change Percentage of Percentage of Amount Revenue Amount Revenue Amount Percentage ($ in thousands) Revenue: Energy industrial $ 128,639 54% $ 124,807 69% $ 3,832 3% Thermal barrier 110,079 46% 55,557 31% 54,522 98% Total revenue $ 238,718 100% $ 180,364 100% $ 58,354 32% The following chart sets forth energy industrial product shipments in square feet associated with recognized revenue, including revenue recognized over time, for the periods presented: Year Ended December 31, Change 2023 2022 Amount Percentage Product shipments in square feet (in thousands) 28,392 32,589 (4,197 ) (13 )% Total revenue increased $58.3 million, or 32%, to $238.7 million in 2023 from $180.4 million in 2022.
We did not incur income tax expense for the comparable period in 2023. 74 Year ended December 31, 2023 compared to year ended December 31, 2022 The following tables set forth our results of operations for the periods presented: Year Ended December 31, Year Ended December 31, 2023 2022 $ Change % Change 2023 2022 ($ in thousands) (Percentage of total revenue) Revenue $ 238,718 $ 180,364 $ 58,354 32% 100% 100% Cost of revenue 181,797 175,388 6,409 4% 76% 97% Gross profit 56,921 4,976 51,945 1,044% 24% 3% Operating expenses Research and development 16,356 16,930 (574 ) (3)% 7% 9% Sales and marketing 33,008 28,792 4,216 15% 14% 16% General and administrative 56,760 38,499 18,261 47% 24% 21% Total operating expenses 106,124 84,221 21,903 26% 44% 47% Loss from operations (49,203 ) (79,245 ) 30,042 (38)% (21)% (44)% Other income (expense) Interest expense, convertible note - related party (5,328 ) (5,110 ) (218 ) 100% (2)% -3% Interest income (expense), net 6,534 1,617 4,917 304% 3% 1% Gain on extinguishment of debt 2,186 — 2,186 100% 1% —% Total other income (expense) 3,392 (3,493 ) 6,885 (197)% 1% (2)% Net loss $ (45,811 ) $ (82,738 ) $ 36,927 45% (19)% (46)% Revenue Year Ended December 31, Change 2023 2022 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) Revenue: Energy industrial $ 128,639 54% $ 124,807 69% $ 3,832 3% Thermal barrier 110,079 46% 55,557 31% 54,522 98% Total revenue $ 238,718 100% $ 180,364 100% $ 58,354 32% Total revenue increased $58.3 million, or 32%, to $238.7 million in 2023 from $180.4 million in 2022.
In any particular period, the timing and extent of personnel additions or reductions, legal activities, including patent enforcement actions, marketing programs, research efforts and a range of similar activities or actions could materially affect our operating expenses, both in absolute dollars and as a percentage of revenue. 70 Research and Development Expenses Research and development expenses consist primarily of expenses for personnel engaged in the development of next generation aerogel compositions, form factors and manufacturing technologies.
In any particular period, the timing and extent of personnel additions or reductions, legal activities, including patent enforcement actions, marketing programs, research efforts and a range of similar activities or actions could materially affect our operating expenses, both in absolute dollars and as a percentage of revenue.
GAAP measure, to Adjusted EBITDA for the years presented: Year Ended December 31, 2023 2022 2021 ($ in thousands) Net loss $ (45,811 ) $ (82,738 ) $ (37,094 ) Depreciation and amortization 15,318 9,222 9,440 Stock-based compensation (1) 10,954 9,385 5,176 Gain on the extinguishment of debt — — (3,734 ) Other (income) expense (3,392 ) 3,493 229 Adjusted EBITDA $ (22,931 ) $ (60,638 ) $ (25,983 ) (1) Represents non-cash stock-based compensation related to vesting and modifications of stock option grants, vesting of restricted stock units and vesting and modification of restricted common stock.
GAAP measure, to Adjusted EBITDA for the years presented: Year Ended December 31, 2024 2023 2022 ($ in thousands) Net income (loss) $ 13,375 $ (45,811 ) $ (82,738 ) Depreciation and amortization 22,526 15,318 9,222 Stock-based compensation (1) 12,855 10,954 9,385 Other (income) expense 11,959 (3,392 ) 3,493 Loss on extinguishment of debt 27,487 — — Income tax expense 1,714 — — Adjusted EBITDA $ 89,916 $ (22,931 ) $ (60,638 ) (1) Represents non-cash stock-based compensation related to vesting and modifications of stock option grants, vesting of restricted stock units and vesting and modification of restricted common stock.
Manufacturing Operations We manufacture our products using our proprietary technology at our facility in East Providence, Rhode Island. We have operated the East Providence facility since 2008 and have increased our capacity in phases.
Manufacturing Operations We manufacture our products using our proprietary technology at our facility in East Providence, Rhode Island. We have operated the East Providence facility since 2008 and have increased our capacity in phases. During 2024, we converted our East Providence facility to support the growth of the thermal barrier program.
The following table sets forth the total revenue for the periods presented: Year Ended December 31, 2023 2022 2021 ($ in thousands) Revenue: Energy industrial $ 128,639 $ 124,807 $ 114,958 Thermal barrier 110,079 55,557 6,664 Total $ 238,718 $ 180,364 $ 121,622 Energy industrial revenue accounted for 54%, 69%, and greater than 95% of total revenue for the years ended December 31, 2023, 2022 and 2021, respectively.
The following table sets forth the total revenue for the periods presented: Year Ended December 31, 2024 2023 2021 ($ in thousands) Revenue: Energy industrial $ 145,867 $ 128,639 $ 124,807 Thermal barrier 306,832 110,079 55,557 Total $ 452,699 $ 238,718 $ 180,364 Energy industrial revenue accounted for 32%, 54%, and 69% of total revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
Net cash used in investing activities for 2023 and 2022 totaled $175.5 million and $178.0 million, respectively.
Net cash used in investing activities for 2024 and 2023 totaled $86.3 million and $175.5 million, respectively.
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.
We also expect to incur reduced capital expenditures during 2025. 67 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.
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.
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.
The decrease in gross profit was the result of the $63.7 million increase in total cost of revenue, partially offset by the $58.7 million increase in total revenue.
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.
During the year ended December 31, 2022, we sold 5,241,400 shares of our common stock through the 2022 ATM offering program and received net proceeds of $72.7 million. The 2022 ATM offering program was terminated on June 20, 2023. On February 3, 2021, we entered into a supply agreement with Silbond Corporation for the purchase of certain silanes products.
During the year ended December 31, 2022, we sold 5,241,400 shares of our common stock through the 2022 ATM offering program and received net proceeds of $72.7 million. The 2022 ATM offering program was terminated on June 20, 2023.
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, which in 2021 included a gain on the extinguishment of debt.
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.
During 2022, we used $94.4 million in net cash in operating activities, as compared to the use of $18.6 million in net cash during 2021, an increase in the use of cash of $75.8 million.
During 2023, we used $42.6 million in net cash in operating activities, as compared to the use of $94.4 million in net cash during 2022, a decrease in the use of cash of $51.8 million.
We are currently evaluating segment expense disclosures related to its annual report for fiscal year 2024. In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures that requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.
This ASU is effective for our fiscal year 2024 and interim periods in fiscal year 2025. 81 Standards to be Implemented In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures that requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.
Total revenue from outside of the United States, based on shipment destination, amounted to $87.7 million, or 37% of our total revenue, $66.4 million, or 37% of our total revenue, and $54.8 million, or 45% of our total revenue, in the years ended December 31, 2023, 2022 and 2021, respectively. 69 Cost of Revenue Cost of product revenue consists primarily of materials and manufacturing expense.
Total revenue from outside of the United States, based on shipment destination, amounted to $194.2 million, or 43% of our total revenue, $87.7 million, or 37% of our total revenue, and $66.4 million, or 37% of our total revenue, in the years ended December 31, 2024, 2023 and 2022, respectively.
The Loan Agreement provides for a multi-draw senior secured term loan in an aggregate principal amount of up to $100.0 million, or the Loan, available to the Borrower to draw on a delayed draw basis after January 1, 2023 to September 30, 2023, subject to certain conditions precedent to funding.
In November 2022, we entered into a loan agreement (the GM Loan Agreement) with General Motors Holdings LLC (GM), an entity affiliated with General Motors LLC, which provides for a multi-draw senior secured term loan (the GM Loan) in an aggregate principal amount of up to $100.0 million, available to the Company on a delayed draw basis beginning January 1, 2023 to September 30, 2023, subject to certain conditions precedent to funding.
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. Square Foot Operating Metric We price our energy industrial product and measure our shipments in square feet.
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. 65 Adjusted EBITDA We use Adjusted EBITDA, a non-GAAP financial measure, as a means to assess our operating performance.
The $5.5 million increase was the result of increases in compensation and related costs of $2.5 million, professional fees and materials costs of $1.1 million, equipment and lease costs of $0.9 million, depreciation expenses of $0.7 million and other research and development expenses of $0.3 million.
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.
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.
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.
Recently Issued Accounting Standards From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies. Recently issued standards typically do not require adoption until a future effective date.
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, or FASB, or other standard setting bodies. Recently issued standards typically do not require adoption until a future effective date.
We have entered into production contracts with certain major OEMs, including General Motors LLC, or GM, to supply fabricated, multi-part thermal barriers for use in the battery system of its next-generation EVs.
Thermal Barrier Contract We are party to production contracts with GM, to supply fabricated, multi-part thermal barriers, or Barriers, for use in the battery system of its next-generation EVs, or Contracts.
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.
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. Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.
We plan to fund the capital expenditures required to build a carbon aerogel battery materials facility, and to construct a new aerogel blanket manufacturing facility with additional equity financings, debt financings, equipment leasing, sale-leaseback transactions, customer prepayments, government grant and loan programs or credit facilities.
We plan to fund the capital expenditures required to build a carbon aerogel battery materials facility, with additional equity financings, debt financings, equipment leasing, sale-leaseback transactions, customer prepayments, government grant and loan programs or credit facilities. Contractual Obligations and Commitments Operating Leases We lease office space for our corporate offices in Northborough, Massachusetts, which expires in 2031.
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.
Material costs as a percentage of product revenue were 38%, 36% and 51% for the years ended December 31, 2024, 2023 and 2022, 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.
The increase in total revenue was the result of increases in both energy industrial and thermal barrier revenue. Energy industrial revenue increased by $9.8 million, or 9%, to $124.8 million in 2022 from $115.0 million in 2021.
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.
We expect that manufacturing expense will increase in absolute dollars and decrease as a percentage of revenue during 2024 due to increased staffing and spending levels in support of our thermal barrier business, including the operation of an automated fabrication facility in Monterrey, Mexico.
We expect that manufacturing expense will remain relatively flat in absolute dollars, due to ongoing cost reduction efforts, and increase as a percentage of revenue during 2025 due to lower expected revenues from the thermal barrier business, including the operation of an automated fabrication facility in Monterrey, Mexico.
Investing Activities Net cash used in investing activities is for capital expenditures for machinery and equipment principally to improve the throughput, efficiency and capacity of our East Providence facility, our automated fabrication facility in Mexico and engineering designs for the planned aerogel manufacturing facility in Bulloch County, Georgia.
This decrease in the use of cash was the result of the decrease in net loss adjusted for non-cash items of $44.8 million, and a decrease in cash used by changes in working capital of $7.0 million. 79 Investing Activities Net cash used in investing activities is for capital expenditures for machinery and equipment principally to improve the throughput, efficiency and capacity of our East Providence facility, our automated fabrication facility in Mexico and engineering designs for the planned aerogel manufacturing facility in Statesboro, Georgia.
The decrease in product volume had the effect of decreasing product revenue by approximately $6.6 million for the year ended December 31, 2022. Thermal barrier revenue was $55.6 million for the year ended December 31, 2022, as compared to $6.7 million for the year ended December 31, 2021.
The increase in product volume had the effect of increasing product revenue by approximately $0.7 million for the year ended December 31, 2024. Thermal barrier revenue was $306.8 million for the year ended December 31, 2024, as compared to $110.1 million for the year ended December 31, 2023.
The increase was the result of increases in depreciation and facility related expenses of $2.9 million and compensation and related costs of $2.1 million, partially offset by a decrease in operating material and supplies costs of $0.8 million. 74 Sales and marketing expenses as a percentage of total revenue decreased to 14% in 2023 from 16% in 2022 primarily due to the 32% increase in revenue from the comparable period in 2022.
The increase was the result of increases in depreciation and facility related expenses of $2.9 million and compensation and related costs of $2.1 million, partially offset by a decrease in operating material and supplies costs of $0.8 million.
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.
The $6.9 million increase was the result of $4.9 million of interest income, $2.2 million of Employee Retention Credits and a $(0.2) million net impact of capitalized interest relating to our Convertible Note in the comparable period in 2022. 77 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 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, including our carbon aerogel battery materials.
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 may, from time to time, enter into leasing arrangements including sale and leaseback financing arrangements. In January 2024, we entered into a sale and leaseback arrangement, pursuant to which we sold certain equipment to the Leasing Company for a one-time cash payment of $5.0 million and leased back such equipment from the Leasing Company.
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 these investments are necessary to maintain and improve our competitive position. We also expect to continue to invest in research and engineering personnel and the infrastructure required in support of their efforts. We expect our research and development expenses will increase in absolute dollars and decrease as a percentage of revenue in 2024 and the longer term.
We expect to continue to devote substantial resources to the development of new aerogel technologies, including our carbon aerogel battery materials. We believe that these investments are necessary to maintain and improve our competitive position. We also expect to continue to invest in research and engineering personnel and the infrastructure required in support of their efforts.
The increase was the result of increases in compensation and related costs of $7.2 million, operating material and supplies costs of $1.8 million, travel related costs of $1.6 million, marketing costs of $0.8 million and professional fees and other expenses of $0.8 million.
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 $0.3 million.
Sales and marketing expenses as a percentage of total revenue increased to 16% in 2022 from 14% in 2021 primarily due to elevated levels of compensation associated with an increase in sales and marketing personnel.
Sales and marketing expenses as a percentage of total revenue decreased to 14% in 2023 from 16% in 2022 primarily due to the 32% increase in revenue from the comparable period in 2022.
Sales and Marketing Expenses Year Ended December 31, Change 2022 2021 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) Sales and marketing expenses $ 28,792 16% $ 16,581 14% $ 12,211 74% Sales and marketing expenses increased by $12.2 million, or 74%, to $28.8 million in 2022 from $16.6 million in 2021.
Sales and Marketing Expenses Year Ended December 31, Change 2024 2023 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ 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.
At December 31, 2023, we had $358.9 million of net operating losses available to offset future federal income tax, if any, of which $194.6 million expire on various dates through December 31, 2038.
We record tax expenses in connection with our Mexican maquiladora operations. At December 31, 2024, we had $315.3 million of net operating losses available to offset future federal income tax, if any, of which $156.3 million expire on various dates through December 31, 2037.
Energy industrial revenue for the years ended December 31, 2022 and 2021, included $39.3 million and $34.1 million in sales to Distribution International, Inc., respectively.
Energy industrial revenue for the years ended December 31, 2024 and 2023, included $28.8 million and $33.6 million in sales to Distribution, respectively.
GAAP measure, to Adjusted EBITDA for the quarters presented: Three Months Ended Three Months Ended 2023 2022 March 31 June 30 Sept. 30 Dec. 31 March 31 June 30 Sept. 30 Dec. 31 ($ in thousands) Net loss $ (16,796 ) $ (15,423 ) $ (13,073 ) $ (519 ) $ (19,484 ) $ (24,050 ) $ (29,595 ) $ (9,609 ) Depreciation and amortization 2,704 3,503 4,550 4,561 2,129 2,032 2,531 2,530 Stock-based compensation (1) 2,267 2,710 2,789 3,188 1,828 2,295 2,590 2,672 Other (income) expense (2,112 ) (1,621 ) (1,561 ) 1,902 860 1,404 1,286 (57 ) Adjusted EBITDA $ (13,937 ) $ (10,831 ) $ (7,295 ) $ 9,132 $ (14,667 ) $ (18,319 ) $ (23,188 ) $ (4,464 ) (1) Represents non-cash stock-based compensation related to vesting and modifications of stock option grants, vesting of restricted stock units and vesting and modification of restricted common stock.
GAAP measure, to Adjusted EBITDA for the quarters presented: Three Months Ended Three Months Ended 2024 2023 March 31 June 30 Sept. 30 Dec. 31 March 31 June 30 Sept. 30 Dec. 31 ($ in thousands) Net income (loss) $ (1,835 ) $ 16,818 $ (12,970 ) $ 11,362 $ (16,796 ) $ (15,423 ) $ (13,073 ) $ (519 ) Depreciation and amortization 5,786 5,986 5,321 5,433 2,704 3,503 4,550 4,561 Stock-based compensation (1) 4,706 2,971 2,630 2,548 2,267 2,710 2,789 3,188 Other (income) expense 3,515 2,302 2,616 3,526 (2,112 ) (1,621 ) (1,561 ) 1,902 Loss on extinguishment of debt — — 27,487 — — — — — Income tax expense 756 866 267 (175 ) — — — — Adjusted EBITDA $ 12,928 $ 28,943 $ 25,351 $ 22,694 $ (13,937 ) $ (10,831 ) $ (7,295 ) $ 9,132 (1) Represents non-cash stock-based compensation related to vesting and modifications of stock option grants, vesting of restricted stock units and vesting and modification of restricted common stock.
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.
We have developed and are commercializing 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.
We conduct business across the globe and a substantial portion of our revenue is generated outside of the United States.
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.
The increase in total cost of revenue was the result of an increases in thermal barrier and energy industrial cost of revenue. Energy industrial cost of revenue increased $5.5 million, or 5%, to $106.0 million from $100.5 million in the comparable period in 2021.
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.
Products Our core businesses are organized into two reportable segments: Energy Industrial and Thermal Barrier. The following describes our key product offerings and new product innovations by reportable segment. Energy Industrial We design, develop and manufacture innovative, high-performance aerogel insulation used primarily in the energy industrial and sustainable insulation materials markets.
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 are actively developing a number of promising aerogel products and technologies for the electric vehicle (EV) market.
The $58.2 million increase was the result of a $17.0 million increase in material costs and a $41.2 million increase in manufacturing costs. The increase in material costs was the result of the increase in revenue volume from the comparable period in 2021.
The $7.1 million decrease was the result of a $20.1 million decrease in manufacturing and other operating costs and a $13.0 million increase in material costs from the comparable period in 2023.
The increase in total cost of revenue was principally driven by the increase in overhead costs and additional resources to support our expected higher run-rate revenue in future periods for both our energy industrial and thermal barrier products. 77 Research and Development Expenses Year Ended December 31, Change 2022 2021 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage ($ in thousands) Research and development expenses $ 16,930 9% $ 11,441 9% $ 5,489 48% Research and development expenses increased by $5.5 million, or 48%, to $16.9 million in 2022 from $11.4 million in 2021.
The increase in total cost of revenue was principally driven by the increase in material costs due to higher volume and overhead costs and additional resources to support our expected higher run-rate revenue in future periods for both our energy industrial and thermal barrier products.
See “ Risk Factors - Risks Related to Our Business and Strategy - We will require significant additional capital to pursue our growth strategy, but we may not be able to obtain additional financing on acceptable terms or at all ” in this Annual Report on Form 10-K for the year ended December 31, 2022. 80 Analysis of Cash Flow The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2023 2022 2021 ($ in thousands) Net cash provided by (used in): Operating activities $ (42,612 ) $ (94,399 ) $ (18,628 ) Investing activities (175,455 ) (177,974 ) (13,778 ) Financing activities 75,477 478,370 92,474 Net increase (decrease) in cash (142,590 ) 205,997 60,068 Cash and cash equivalents, beginning of period 282,561 76,564 16,496 Cash and cash equivalents, end of period $ 139,971 $ 282,561 $ 76,564 Operating Activities During 2023, we used $42.6 million in net cash in operating activities, as compared to the use of $94.4 million in net cash during 2022, a decrease in the use of cash of $51.8 million.
Analysis of Cash Flow The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2024 2023 2022 ($ in thousands) Net cash provided by (used in): Operating activities $ 45,549 $ (42,612 ) $ (94,399 ) Investing activities (86,262 ) (175,455 ) (177,974 ) Financing activities 122,018 75,477 478,370 Net increase (decrease) in cash 81,305 (142,590 ) 205,997 Cash and cash equivalents, beginning of period 139,971 282,561 76,564 Cash and cash equivalents, end of period $ 221,276 $ 139,971 $ 282,561 Operating Activities During 2024, we provided $45.5 million in net cash from operating activities, as compared to the use of $42.6 million in net cash during 2023, a decrease in the use of cash of $88.2 million.
Cost of product revenue is recorded when the related product revenue is recognized. Material is a significant component of cost of product revenue and includes fibrous batting, silica materials and additives. Material costs as a percentage of product revenue were 36%, 51% and 48% for the years ended December 31, 2023, 2022 and 2021, respectively.
Cost of Revenue Cost of product revenue consists primarily of materials and manufacturing expense. Cost of product revenue is recorded when the related product revenue is recognized. Material is a significant component of cost of product revenue and includes fibrous batting, silica materials and additives.
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.
We experienced a 90% increase in total revenue during 2024 driven by the increase in our energy industrial business, particularly in North America, and continued growth in the EV market. A substantial majority of our revenue is generated from a limited number of direct customers, including distributors, contractors, fabricators, OEMs, partners and end-user customers.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe terminated our revolving credit facility agreement on November 28, 2022. 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.
Biggest changeInflation 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.
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, 2023, we had $0.2 million of restricted cash to support our outstanding letters of credit.
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, 2024, we had $0.4 million of restricted cash to support our outstanding letters of credit.
Interest Rate Risk We are exposed to changes in interest rates in the normal course of our business. At December 31, 2023, we had unrestricted cash and cash equivalents of $139.7 million.
Interest Rate Risk We are exposed to changes in interest rates in the normal course of our business. At December 31, 2024, we had unrestricted cash and cash equivalents of $220.9 million.
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. Virtually all of our revenue, receivables, purchases and debts are denominated in U.S. dollars. 86
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.
Added
As of December 31, 2024, we had $114.7 million of term loan outstanding and $42.1 million of revolver loan outstanding.
Added
Loans borrowed under the Term Loan Facility will bear interest rate equal to Term SOFR (as defined in the Credit Agreement) for a one-month interest period plus 4.50% per year, subject to a Term SOFR floor of 4.50% and a Term SOFR cap of 7.50%.
Added
Loans borrowed under the Revolving Facility will bear an interest rate equal to Term SOFR plus 4.60% per year, subject to a Term SOFR floor of 2.50%. 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.
Added
A hypothetical 100 basis point increase or decrease in interest rates would not have a material effect on the results of our operations.
Added
As we expand our presence in international markets, to the extent we are required to enter into agreements denominated in a currency other than the US dollar, our results of operations and cash flows may increasingly be subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates.
Added
During the fiscal year ended December 31, 2024, 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, 2024 and 2022, we had foreign exchange losses of $2.8 million and $0.2 million.
Added
For the fiscal year ended December 31, 2023, we had foreign exchange gains of $0.5 million. 84

Other ASPN 10-K year-over-year comparisons