Financial Performance - For the three months ended March 31, 2023, the company reported a net loss of $7.5 million, compared to a net loss of $3.0 million for the same period in 2022, primarily due to increased expenses related to the Arq Acquisition and decreased demand for AC and chemical products [110]. - Total revenues for the three months ended March 31, 2023, were $20.8 million, a decrease of 21% from $26.4 million in the same period of 2022, driven by lower sales volumes and unfavorable product mix [111]. - Operating expenses for the three months ended March 31, 2023, increased to $11.5 million, up 39% from $8.2 million in the same period of 2022, largely due to higher payroll, legal, and professional fees related to the Arq Acquisition [115]. - Consolidated Adjusted EBITDA loss for the three months ended March 31, 2023 was $7.7 million, a significant decrease from an Adjusted EBITDA of $0.88 million in the same period of 2022 [129]. - Cash flows used in operating activities decreased by $19.8 million, primarily due to a net loss of $7.5 million and a decrease in accounts payable and accrued expenses of $10.8 million [133]. Acquisition and Capital Expenditures - The company completed the Arq Acquisition on February 1, 2023, for a total purchase consideration of $31.2 million, consisting of common and preferred stock [105]. - The company expects to incur between $40.0 million and $45.0 million in capital expenditures for 2023, including $27.0 million to $30.0 million for growth capital related to the Arq acquisition [137]. - The company anticipates significant capital expenditures associated with the Arq acquisition, including quarterly interest payments beginning in March 2023 [136]. Financing and Cash Flow - The company entered into a term loan agreement for $10.0 million on February 1, 2023, with an interest rate of either Adjusted Term SOFR plus a margin of 9.00% or Base Rate plus a margin of 8.00% [106]. - Cash flows provided by financing activities increased by $23.9 million, primarily due to net borrowings of $8.5 million on the Term Loan and net proceeds from the PIPE Investment of $15.2 million [135]. - Cash and restricted cash increased from $76.4 million as of December 31, 2022 to $79.1 million as of March 31, 2023 [131]. - The company expects that cash on hand as of March 31, 2023 will provide sufficient liquidity to fund required contractual obligations and operating losses for the next 12 months [136]. Market and Economic Factors - The average natural gas spot prices for the three months ended March 31, 2023, were $2.65 per MMBtu, down from $4.66 per MMBtu in the same period of 2022, impacting demand for coal-fired power generation [113]. - The company expects a slight increase in consumables revenue in the second half of 2023 compared to the first half, driven by changes in customer and product mix, despite anticipated decreases in volumes due to alternative energy prices [113]. Other Financial Metrics - Interest expense for the three months ended March 31, 2023, increased significantly to $534,000, compared to $86,000 in the same period of 2022, primarily due to the new term loan [124]. - The company recorded an income tax benefit related to out-of-period state income tax refunds for the three months ended March 31, 2023, despite a pretax loss of $7.5 million [125]. - The company reported a cash distribution from equity method investees of $0.64 million for the three months ended March 31, 2023, down from $2.51 million in the same period of 2022 [129]. - As of March 31, 2023, the company had outstanding surety bonds totaling $7.5 million related to reclamation of the Five Forks Mine [138].

Financial Performance - Total revenues for 2022 were $102.987 million, a 3% increase from $100.294 million in 2021, driven primarily by a 20% increase in consumables revenue to $102.987 million[104]. - Consumables revenue for the year ended December 31, 2022, increased by $11.8 million year over year, primarily due to higher volumes sold and improved pricing, offset by an unfavorable product mix impact of approximately $1.4 million[106]. - Net loss for the year ended December 31, 2022, was $8.9 million compared to a net income of $60.4 million in 2021, representing a year-over-year decrease of $69.3 million[117]. - Adjusted EBITDA for 2022 was $1.3 million, a significant decline from $84.9 million in 2021, indicating a decrease of approximately 98.5%[117]. - Cash distributions from equity method investees decreased by $68.1 million in 2022, totaling $5.9 million compared to $74.0 million in 2021, primarily due to the cessation of material operations by Tinuum Group and Tinuum Services[120]. - The company reported an income tax expense of $0.2 million for 2022, with an effective tax rate of (2)%, compared to $15.7 million and 21% in 2021[112]. Costs and Expenses - Consumables cost of revenues increased by 23% to $80.465 million in 2022, up from $65.576 million in 2021, reflecting higher production costs[104]. - Operating expenses for the year ended December 31, 2022, totaled $34.6 million, an increase of 16% from $29.9 million in 2021, driven by a 51% increase in legal and professional fees[107]. - Legal and professional fees rose by $3.2 million year over year, primarily due to costs associated with the Arq Acquisition[108]. - The gross margin for consumables decreased in 2022, negatively impacted by higher raw material and transportation costs, totaling $0.8 million in Tinuum Group royalties[106]. Acquisitions and Investments - The Arq Acquisition completed on February 1, 2023, involved a total purchase consideration of $31.2 million, enhancing the company's product offerings in carbon technology[95]. - A PIPE Investment closed on February 1, 2023, for approximately $15.4 million at a purchase price of $4.00 per common share[96]. - Transaction costs related to the Arq Acquisition amounted to $5.0 million, included in the net loss for the year ended December 31, 2022[115]. Debt and Financing - A Loan Agreement was entered into on February 1, 2023, with a term of 48 months and an interest rate margin of 9.00% paid in cash and 5.00% paid in kind[97]. - The company closed a PIPE Investment for an aggregate purchase price of $15.4 million and entered into a Loan Agreement for $10.0 million, receiving $8.5 million in net proceeds[118]. Future Expectations - The company expects to continue inventory purchases in 2023, albeit at reduced levels compared to 2022, due to high demand for AC products[92]. - The company expects a slight increase in consumables revenue for 2023, driven by changes in customer and product mix, despite anticipated decreases in volumes due to alternative energy prices[106]. - Capital expenditures for 2023 are expected to be between $40.0 million and $45.0 million, a significant increase from $9.5 million incurred in 2022, with 65% allocated to growth projects[126]. Tax and Deferred Assets - As of December 31, 2022, the company had a valuation allowance of $88.3 million on deferred tax assets, indicating a lack of expected taxable income to utilize these assets[112]. - The company recognizes deferred tax assets only if they are more likely than not to be realized, considering future taxable income and tax-planning strategies[135]. - Changes in estimates for deferred tax assets could materially impact the company's effective tax rate[135]. Regulatory and Compliance - The company must maintain a minimum cash balance of $5.0 million starting March 31, 2023[131]. - The company is required to achieve a minimum annual revenue of $70.0 million for the fiscal year ending December 31, 2023, increasing to $85.0 million for 2024, and $100.0 million for any fiscal year thereafter[131]. - The company must achieve a minimum EBITDA of $3.0 million for the fiscal year ending December 31, 2024, and $16.0 million for any fiscal year thereafter[131]. - The loan to value (LTV) ratio must not exceed 0.40:1.00 during an LTV Trigger Period starting after the fiscal quarter ending September 30, 2023[131]. Asset Management - As of December 31, 2022, Marshall Mine, LLC had outstanding liabilities of approximately $4.9 million, expected to be discharged upon the sale of the mine[94]. - As of December 31, 2022, the company had outstanding surety bonds totaling $24.1 million related to reclamation obligations for the Five Forks Mine and Marshall Mine[127]. - The company expects to fund mine reclamation costs from cash on hand and anticipates closing the sale of equity interests in Marshall Mine, LLC in the first half of 2023[128]. - Reclamation costs for the Five Forks Mine ARO are allocated to expense over the life of the related mine assets and adjusted periodically[133]. - The Marshall Mine ARO is based on a capped fee structure, with costs adjusted quarterly based on actual reclamation costs[134]. Accounting Policies - The company applies the acquisition method for business combinations, requiring significant estimates and assumptions regarding fair values of acquired assets and liabilities[132]. - The company evaluates long-lived assets and intangibles for impairment at least annually, measuring impairment losses based on the excess of carrying amounts over estimated fair values[132].

Revenue and Earnings - For the three months ended June 30, 2022, total revenues increased to $24.7 million, a 17% increase from $21.1 million in the same period of 2021, primarily driven by a 42% increase in consumables revenue[103]. - Total revenues for the six months ended June 30, 2022, increased to $51.1 million, up 17% from $43.7 million in the same period of 2021[122]. - Consumables revenues for the three months ended June 30, 2022, reached $24.7 million, up $7.3 million from $17.4 million in the prior year, with higher product volumes contributing $4.6 million and favorable pricing mix adding approximately $2.0 million[105]. - Consumables revenues for the six months ended June 30, 2022, rose by $15.2 million, or 42%, primarily driven by higher product volumes and favorable selling prices[122]. - For the three months ended June 30, 2022, earnings from equity method investments decreased to $2.4 million from $21.1 million in the same period of 2021, a decline of 89%[116]. - The company recognized $3.1 million in equity earnings from Tinuum Group for the six months ended June 30, 2022, compared to $35.5 million in the same period of 2021, a decrease of 92%[135]. - For the six months ended June 30, 2022, the company recorded a pretax loss of $3.4 million compared to a pretax income of $39.8 million for the same period in 2021, leading to no income tax expense for 2022[139]. Operating Expenses - Operating expenses for the three months ended June 30, 2022, totaled $7.6 million, an increase of 28% from $5.9 million in the prior year, driven by higher legal and professional fees and general administrative expenses[109]. - Operating expenses for the six months ended June 30, 2022, totaled $15.8 million, an increase of 11% from $14.2 million in the same period of 2021[126]. - Legal and professional fees increased by 15% to $3.7 million for the six months ended June 30, 2022, primarily due to costs related to the strategic alternatives review process[128]. Cash Flow and Liquidity - Cash flows from operating activities decreased by $16.4 million to $1.8 million for the six months ended June 30, 2022, compared to $18.2 million for the same period in 2021[148]. - Cash and restricted cash increased from $88.8 million as of December 31, 2021 to $90.8 million as of June 30, 2022[147]. - The company anticipates that cash on hand as of June 30, 2022 will provide sufficient liquidity to fund operations for the next 12 months[151]. - As of June 30, 2022, the total cash payable under the Amended Retention Agreements is $2.5 million, expected to be funded from cash on hand[153]. Strategic Outlook and Market Conditions - The company expects to continue purchasing inventory through the remainder of 2022 to meet increased customer demand, which is anticipated to negatively impact gross margins due to higher operational costs[105]. - The company anticipates that product price increases announced in Q2 2022 will help offset inflation in operating costs and improve gross margins despite the loss of certain power generation customers[105]. - The company is evaluating strategic alternatives that may impact future revenues, margins, and cash flows[157]. - The impact of adverse global macroeconomic conditions, including rising interest rates and inflationary pressures, is being closely monitored[157]. - Future levels of research and development activities are projected to increase, focusing on enhancing technology effectiveness[157]. - The company is focused on opportunities to provide solutions to U.S. coal-related businesses to comply with regulations and improve efficiency[157]. Internal Controls and Compliance - The company has identified a material weakness in its internal controls over financial reporting as of June 30, 2022, but believes the financial statements present fairly in all material aspects[161]. - Remediation procedures have been implemented to address internal control weaknesses, with enhanced monitoring and periodic reviews established[162]. Acquisitions and Reimbursements - The Marshall Mine acquisition was completed for a nominal cash price, and reclamation activities are materially completed as of June 30, 2022, with Norit reimbursing $10.2 million over a 13-year term for reclamation costs[100]. - The carrying value of the Reclamation Reimbursement was $9.0 million as of February 25, 2022, and the company received $8.5 million in cash for full payment under the Change in Control provision of the Supply Agreement[99]. - As of February 25, 2022, the Reclamation Reimbursement was $9.0 million, with $8.5 million received in cash, resulting in a loss of $0.5 million recognized in "Other income (expense)"[138]. Future Expectations - The company expects to incur $11.0 million in capital expenditures for 2022, an increase from $7.6 million in 2021, primarily for improvements to the Red River Plant[152]. - Outstanding surety bonds related to the Marshall Mine and Five Forks Mine amounted to $24.1 million as of June 30, 2022[154]. - The company anticipates effects from increased pricing of AC products due to rising supply and logistics costs[157]. - Expected supply and demand dynamics for AC products and services are under review, with increasing competition noted in the market[157]. - Future capital expenditures required for business operations are being assessed[157]. - The effectiveness of technologies and the benefits they provide are being evaluated as part of ongoing strategic planning[157].

Financial Performance - For the three months ended September 30, 2021, the company recognized net income of $24.3 million, compared to net income of $5.0 million for the same period in 2020, representing a significant increase [129]. - Total revenues for the three months ended September 30, 2021, were $28.854 million, an increase of 48% from $19.471 million in the same period of 2020 [130]. - Total revenues for the nine months ended September 30, 2021 were $69,584,000, a 61% increase from $43,217,000 in the same period in 2020 [150]. - Total other income increased by $16,881,000, totaling $25,535,000 for the three months ended September 30, 2021, a 195% increase compared to the same period in 2020 [142]. - Consolidated EBITDA for the nine months ended September 30, 2021, was $76.3 million, compared to a loss of $10.6 million in the same period of 2020 [170]. - Consolidated Adjusted EBITDA for the nine months ended September 30, 2021, was $75.8 million, compared to $31.7 million in the same period of 2020 [170]. Revenue Sources - Consumables revenues increased by 56% to $24.689 million for the three months ended September 30, 2021, driven by higher product volumes and favorable pricing mix [132]. - Consumables revenues increased by $24,465,000, totaling $57,696,000 for the nine months ended September 30, 2021, a 74% increase compared to the prior year [150]. - The APT segment includes revenues from the sale of AC and chemical products, which are used to purify coal-fired utilities and other markets [172]. - The APT segment operating income for the three months ended September 30, 2021, was $4,591,000, compared to a loss of $3,280,000 in the same period of 2020 [185]. Expenses and Costs - Payroll and benefits expenses increased by $0.4 million due to Retention Agreements, despite a headcount reduction of approximately $0.1 million, resulting in a total of $2,637,000 for the three months ended September 30, 2021, a 15% increase from the prior year [135]. - Legal and professional fees decreased by $0.2 million, totaling $1,106,000 for the three months ended September 30, 2021, a 16% decrease compared to the same period in 2020 [137]. - General and administrative expenses decreased by $0.1 million, totaling $1,715,000 for the three months ended September 30, 2021, a 10% decrease from the prior year [138]. - Depreciation, amortization, depletion, and accretion expenses increased by $0.4 million, totaling $2,145,000 for the three months ended September 30, 2021, a 21% increase compared to the same period in 2020 [139]. - Interest expense decreased by $1.6 million to $1.4 million for the nine months ended September 30, 2021, primarily due to a reduction in the principal balance of the Senior Term Loan [166]. Investments and Equity - Earnings from equity method investments increased by $12,677,000, totaling $22,195,000 for the three months ended September 30, 2021, a 133% increase from the prior year [142]. - Earnings from equity method investments for the three months ended September 30, 2021, were $22,195,000, a significant increase of 132.6% compared to $9,518,000 in the same quarter of 2020 [177]. - The company recognized $55.5 million in equity earnings from Tinuum Group for the nine months ended September 30, 2021, compared to $20.5 million in the same period of 2020 [164]. - Cash distributions from equity method investees for the nine months ended September 30, 2021, totaled $66,751,000, an increase from $42,228,000 in the same period of 2020 [181]. Future Outlook - The company expects earnings and distributions from its RC segment to substantially cease as of December 31, 2021, due to the winding down of Tinuum Group's operations [122]. - The company expects a material adverse effect on financial condition and consolidated operating results beginning in 2022 due to the wind-down of Tinuum Group and Tinuum Services operations [180]. - Future cash flows from Tinuum are expected to range from $12 million to $14 million, driven by 16 invested facilities as of September 30, 2021 [188]. - The company is focusing on growth in target APT markets, including water purification, food and beverage, and pharmaceuticals, with potential size and demand being evaluated [206]. Cash Flow and Capital Expenditures - Cash and cash equivalents increased from $35.9 million as of December 31, 2020 to $82.1 million as of September 30, 2021, with a net change of $46.2 million [197]. - Cash flows provided by operating activities decreased by $10.2 million to $24.7 million for the nine months ended September 30, 2021 compared to $34.9 million for the same period in 2020 [199]. - Cash flows from investing activities increased by $44.5 million primarily from distributions from equity earnings in excess of cumulative earnings [200]. - For 2021, capital expenditures are expected to be $9.8 million, up from $7.1 million in 2020, primarily due to product-specific capital related to the Supply Agreement [196]. Regulatory and Market Conditions - The company anticipates the expiration of the IRC Section 45 tax credit period in 2021, which may lead to a wind down of the business and loss of revenue from Tinuum Group and Tinuum Services [206]. - The company is facing increasing competition in the APT market, which could affect market share and pricing strategies [206]. - There is an expectation of increased pricing for APT products, which may impact revenue and market positioning [206]. Legal and Compliance - The company is involved in ongoing litigation and claims related to its business operations, as detailed in the financial statements [213]. - The company has not reported any changes in internal control over financial reporting that materially affect its operations during the fiscal quarter ended September 30, 2021 [211]. - The effectiveness of the company's disclosure controls and procedures was confirmed as effective as of September 30, 2021 [210].

Financial Performance - For the three months ended March 31, 2021, the company recognized net income of $13.7 million compared to a net loss of $1.9 million for the same period in 2020, representing a significant turnaround in financial performance [129]. - Total revenues for the three months ended March 31, 2021, were $21.1 million, an increase of 72% from $12.3 million in the same period of 2020, driven by higher product volumes and favorable pricing [131]. - Earnings from equity method investments increased significantly to $18.3 million in Q1 2021, up 121% from $8.3 million in Q1 2020 [141]. - Total other income for the three months ended March 31, 2021, was $17.9 million, a 152% increase from $7.1 million in the same period last year [141]. - The company recognized $4.5 million in income tax expense for Q1 2021, compared to $0.4 million in Q1 2020, driven by a pretax income of $18.2 million [146]. - Consolidated EBITDA for the three months ended March 31, 2021, was $21.2 million, compared to $1.9 million in Q1 2020 [149]. - Consolidated Adjusted EBITDA increased to $26.1 million in Q1 2021 from $10.8 million in Q1 2020 [149]. - The RC segment reported operating income of $22.3 million for Q1 2021, significantly up from $3.5 million in Q1 2020 [154]. - The APT segment generated revenues of $17.0 million in Q1 2021, compared to $9.2 million in Q1 2020 [154]. - Earnings from Tinuum Group increased to $16,362,000 for the three months ended March 31, 2021, compared to $6,438,000 in the same period of 2020, representing a 153% increase [155]. - Earnings from Tinuum Services rose to $1,950,000 for the three months ended March 31, 2021, up from $1,838,000 in the prior year, reflecting a 6% increase [155]. - RC Segment operating income increased to $22,271,000 for the three months ended March 31, 2021, compared to $10,860,000 in the same period of 2020, marking a 105% increase [159]. - Cash distributions from equity method investees were $23.3 million in Q1 2021, compared to $17.1 million in Q1 2020 [149]. - Cash distributions from Tinuum Group for the three months ended March 31, 2021, were $19,749,000, an increase of $6,000,000 compared to $13,764,000 in the same period of 2020 [164]. Revenue Sources - Consumables revenue increased by 85% to $17.0 million for the three months ended March 31, 2021, primarily due to $7.1 million from the Supply Agreement and a favorable pricing mix of $2.1 million [132]. - License royalties from related parties increased to $4.1 million for the three months ended March 31, 2021, up from $3.0 million in the same period of 2020, attributed to higher tonnage produced using M-45 Technology [133]. Operational Changes - The company expects earnings and distributions from its RC segment to substantially cease as of December 31, 2021, due to the wind down of Tinuum Group and Tinuum Services following the expiration of the Section 45 tax credit [123]. - The company entered into a 15-year Supply Agreement with Cabot on September 30, 2020, which is expected to provide material incremental volume and lower operating cost efficiencies [124]. - The acquisition of Marshall Mine was completed for a nominal cash purchase price, with reclamation costs estimated at approximately $19.7 million, of which Cabot will reimburse $10.2 million [126]. - The company incurred cash flow impacts of up to $3.0 million due to a Plant Incident at the Red River Plant, which was shut down for repairs for approximately one week [123]. - The company deferred payroll tax payments totaling $0.4 million under the CARES Act, with repayment scheduled for 2021 and 2022 [128]. - Power generation from coal-fired power dispatch increased approximately 37% for the three months ended March 31, 2021, compared to the same quarter in 2020, indicating a recovery in demand [132]. Cash Flow and Capital Expenditures - Cash and cash equivalents increased from $35.9 million as of December 31, 2020 to $52.2 million as of March 31, 2021, representing a net change of $16.3 million [173]. - Cash flows from operating activities for the three months ended March 31, 2021 increased by $8.7 million compared to the same period in 2020, primarily due to an increase in net income from a loss of $15.6 million in 2020 [174]. - Cash flows from investing activities increased by $6.6 million for the three months ended March 31, 2021, primarily from distributions from equity earnings in excess of cumulative earnings [175]. - Cash flows used in financing activities decreased by $0.9 million for the three months ended March 31, 2021, mainly due to a reduction in dividends paid by $4.5 million [176]. - The company expects to spend $9.5 million in capital expenditures in 2021, an increase from $7.1 million in 2020, primarily for product-specific capital related to the Supply Agreement [171]. - The company expects annual capital expenditures to average approximately $5.0 million in 2022 and beyond [172]. Future Outlook - The company anticipates a significant wind down of operations by the end of 2021 due to the expiration of the Section 45 tax credit period, which will adversely affect financial results [158]. - Future cash flows from Tinuum are expected to range from $50 million to $60 million through 2021, driven by 23 invested facilities as of March 31, 2021 [164]. - The company plans to fund the remaining portion of Reclamation Costs from cash on hand and cash generated from the Supply Agreement [172]. - The company expects material incremental volume and lower operating cost efficiencies from the Supply Agreement, contributing to future operating cash flows [172]. Debt and Obligations - As of March 31, 2021, the company had $4.7 million of borrowing availability under its Line of Credit with no outstanding borrowings [168]. - The Senior Term Loan requires quarterly principal payments of $6,000,000, with a total principal payment of $10,000,000 made for the three months ended March 31, 2021 [167]. - As of March 31, 2021, the company had outstanding surety bonds of $36.7 million related to performance requirements under reclamation contracts [178]. - The company anticipates that obligations secured by surety bonds will be performed in the ordinary course of business, with no continuing obligations expected [178]. - The company has not reported any material changes to its contractual obligations outside of the ordinary course of business as of March 31, 2021 [177].