Toronto, Ontario--(Newsfile Corp. - July 10, 2024) - Argo Gold Inc's. (CSE: ARQ) (OTC Pink: ARBTF) (XFRA: A2ASDS) (XSTU: A2ASDS) (XBER: A2ASDS) ("Argo" or the "Company") May 2024 oil production was a total of 3,375 barrels for the month, averaging 109 barrels per day. Oil prices averaged CDN$79.43 per barrel and Argo's May oil revenue was $268,111 and net operating cash flow was $175,732. About Argo Gold Argo Gold is a Canadian mineral exploration and development company, and an oil producer. Information on ...

Arq, Inc. (NASDAQ:ARQ) Q1 2024 Results Conference Call May 9, 2024 9:00 AM ET Company Participants Anthony Nathan - Head of Investor Relations Robert Rasmus - President and Chief Executive Officer Stacia Hansen - Treasurer and Chief Accounting Officer Conference Call Participants Gerry Sweeney - Roth Capital Mark Silverberg - ICR Operator Good day and welcome to the Arq First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. Later, there will be a question and answer ses ...

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Arq, Inc improved its Q1 2024 net loss to $3.4 million and generated positive operating cash flow, though total assets slightly decreased due to capital expenditures [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets decreased slightly to $229.8 million from year-end 2023, driven by a reduction in cash, while total liabilities also saw a minor decrease | (in thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total current assets** | $72,038 | $86,461 | | Cash | $35,227 | $45,361 | | Property, plant and equipment, net | $103,645 | $94,649 | | **Total Assets** | **$229,798** | **$235,502** | | **Total current liabilities** | $21,967 | $23,048 | | **Total Liabilities** | **$54,634** | **$57,102** | | **Total Stockholders' Equity** | **$175,164** | **$178,400** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue grew 4.5% to $21.7 million in Q1 2024, leading to a significantly reduced operating loss of $3.0 million and a net loss that was halved compared to the prior-year period | (in thousands, except per share data) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | **Revenue** | **$21,740** | **$20,805** | | Cost of revenue | $13,713 | $17,175 | | **Operating loss** | **$(2,980)** | **$(7,827)** | | **Net loss** | **$(3,419)** | **$(7,508)** | | **Loss per common share (Basic & Diluted)** | **$(0.09)** | **$(0.32)** | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company achieved positive operating cash flow of $0.5 million in Q1 2024, a stark contrast to the prior year's cash use, while investing activities increased due to plant expansion | (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $526 | $(17,705) | | Net cash used in investing activities | $(9,647) | $(2,897) | | Net cash (used in) provided by financing activities | $(1,013) | $23,260 | | **(Decrease) increase in Cash and Restricted Cash** | **$(10,134)** | **$2,658** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's business, the 2023 Arq Acquisition, significant debt obligations, major capital commitments for its Red River Plant, and the extension of its Tax Asset Protection Plan - In February 2023, the company acquired Legacy Arq to secure feedstock and a manufacturing facility in Corbin, Kentucky, to produce Arq Powder, which will be used to create **GAC products starting by the end of 2024**[26](index=26&type=chunk)[45](index=45&type=chunk) - The company executed a contract in January 2024 for the construction of a GAC facility at its Red River Plant, with expected completion by the end of 2024 and estimated total costs of **$75.0 - $80.0 million**[91](index=91&type=chunk)[93](index=93&type=chunk) - The company's Tax Asset Protection Plan (TAPP), designed to protect its net operating losses, was amended in April 2024 to **extend its duration to December 31, 2025** (or December 31, 2024, if stockholder approval is not obtained)[107](index=107&type=chunk)[108](index=108&type=chunk) | (in thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | CFG Loan due February 2027 | $10,000 | $10,000 | | CTB Loan due January 2036 | $9,394 | $9,527 | | Finance lease obligations | $3,183 | $3,465 | | **Total Debt Obligations (net)** | **$20,662** | **$20,927** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses improved Q1 2024 results driven by pricing, the impact of the Red River Plant expansion, and future capital expenditure plans funded by cash and potential financing [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Q1 2024 revenue rose 4% due to higher pricing and product mix, while operating expenses declined significantly due to the absence of prior-year acquisition-related costs - Revenue increase in Q1 2024 was driven by **higher pricing and a better product mix**, which offset lower sales volumes to power generation customers who switched to cheaper natural gas[139](index=139&type=chunk) - SG&A expenses decreased by **$3.6 million**, largely because Q1 2023 included significant legal, consulting, and severance costs associated with the Arq Acquisition[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - The EPA's new PFAS drinking water regulation, issued in April 2024, is expected to drive a **material increase in demand for GAC** in the water purification market[135](index=135&type=chunk) [Non-GAAP Financial Measures](index=26&type=section&id=Non-GAAP%20Financial%20Measures) The company's Adjusted EBITDA loss improved substantially to $1.1 million in Q1 2024 from $7.7 million in the prior-year period, which included significant one-time transaction costs | (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net loss | $(3,419) | $(7,508) | | EBITDA loss | $(1,144) | $(4,988) | | **Adjusted EBITDA loss** | **$(1,144)** | **$(7,683)** | [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) With $35.2 million in cash, management believes liquidity is sufficient for the next year's operations and major capital projects, supported by planned debt refinancing - Principal sources of liquidity as of March 31, 2024, were **$35.2 million in cash on hand** and cash from operations[162](index=162&type=chunk)[165](index=165&type=chunk) - The company expects to spend between **$55 and $60 million** on the Red River Plant expansion and between **$5 and $10 million** to complete the commissioning of the Corbin Facility during 2024[169](index=169&type=chunk) - To fund the completion of the Red River Plant, the company anticipates using cash on hand, cash generation, customer prepayments, and a **planned refinancing and expansion of the CFG Loan**[168](index=168&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Arq, Inc is not required to provide this information - The information under this item is **not required to be provided** by smaller reporting companies[177](index=177&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective as of the quarter-end and is currently integrating the internal controls of the recently acquired Legacy Arq business - The principal executive officer and principal financial officer concluded that **disclosure controls and procedures were effective** as of March 31, 2024[178](index=178&type=chunk) - The company is integrating Legacy Arq's internal controls and will incorporate them into the annual report on internal control for the **year ending December 31, 2024**[179](index=179&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material pending legal proceedings as of March 31, 2024 - As of March 31, 2024, there were **no material pending legal proceedings** to which the Company is a party[96](index=96&type=chunk)[183](index=183&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201a.%20Risk%20Factors) The company's previously disclosed risk factors from its 2023 annual report remain materially unchanged - There have been **no material updates to risk factors** from those disclosed in the fiscal year 2023 annual report on Form 10-K[184](index=184&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued shares to its CEO to complete a prior subscription agreement and made no share repurchases during the quarter - On April 24, 2024, the company received **$0.8 million** and issued **422,221 shares** of common stock to CEO Robert Rasmus, fulfilling a subscription agreement[185](index=185&type=chunk) - **No shares were repurchased** during the three months ended March 31, 2024, and the company has **$7.0 million remaining** under its stock repurchase program[187](index=187&type=chunk) [Item 4. Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety violation information and related regulatory matters are provided in an exhibit to this report - Mine safety disclosures required by Regulation S-K are included in **Exhibit 95.1** to this Quarterly Report[190](index=190&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the quarterly report, including corporate governance documents and material contracts

[Executive Summary & Company Overview](index=1&type=section&id=Executive%20Summary%20%26%20Company%20Overview) [Q1 2024 Performance Highlights](index=1&type=section&id=Q1%202024%20Performance%20Highlights) Arq Corporation achieved significant year-over-year performance improvement in Q1 2024, primarily driven by enhanced PAC gross margins, securing its first GAC contract, and progressing the Red River expansion project on schedule for Q4 2024 commissioning - Q1 2024 performance significantly improved year-over-year, primarily due to enhanced **PAC gross margins**[1](index=1&type=chunk) - Successfully signed the first GAC contract, securing **20% of capacity** with attractive pricing[1](index=1&type=chunk) - The Red River expansion project is on schedule for commissioning in **Q4 2024**, with an expected payback period of **three years or less**[1](index=1&type=chunk) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) [Q1 2024 Key Financial Metrics](index=1&type=section&id=Q1%202024%20Key%20Financial%20Metrics) In Q1 2024, Arq's revenue grew 4% year-over-year to $21.7 million, driven by a 16% increase in average selling price (ASP) and optimized product mix, despite a 6% decline in volume, while gross margin doubled to 37%, with significant reductions in net loss and adjusted EBITDA loss, reflecting improved profitability Q1 2024 Key Financial Metrics | Metric | Q1 2024 (Million USD) | Q1 2023 (Million USD) | YoY Change | Notes | | :--- | :---: | :---: | :---: | :--- | | Revenue | 21.7 | 20.8 | +4% | ASP increased 16%, product mix optimized, offsetting 6% volume decline | | Gross Margin | 37% | 17% | +20 percentage points | Driven by ASP increase and operational cost management | | Net Loss | (3.4) | (7.5) | Improved 4.1 | Significant improvement | | Adjusted EBITDA Loss | (1.1) | (7.7) | Improved 6.6 | Significant improvement | | Cash and Restricted Cash (End of Period) | 44.0 | 54.2 | -10.2 | Primarily for Red River and Corbin facility investments | | FY 2024 Capex Forecast | 60-70 | 55-60 (Original Forecast) | +5-10 | Primarily due to increased steel and concrete costs for Red River expansion | - Average Selling Price (ASP) achieved double-digit year-over-year growth for the fourth consecutive quarter, increasing by approximately **16% in Q1 2024**[4](index=4&type=chunk) [Recent Business Highlights](index=1&type=section&id=Recent%20Business%20Highlights) [Strategic and Operational Achievements](index=1&type=section&id=Strategic%20and%20Operational%20Achievements) The company achieved several key strategic and operational advancements in Q1 2024, including signing its first GAC supply contract, initiating Corbin facility commissioning, progressing the Red River GAC facility expansion, and benefiting from new EPA PFAS drinking water regulations expected to drive market demand - Signed the first Granular Activated Carbon (GAC) supply contract with a customer, projecting **5 million pounds** of annual supply at pricing significantly above average PAC prices, with deliveries expected to commence in **Q1 2025**[4](index=4&type=chunk) - The Corbin facility began commissioning in **April 2024**, expected to complete in **May**, supporting asphalt waste feedstock for Red River GAC production[4](index=4&type=chunk) - Strategic expansion of the Red River GAC facility continues to progress, with construction on track for commissioning in **Q4 2024** as planned[4](index=4&type=chunk) - The U.S. Environmental Protection Agency (EPA) issued its first national primary drinking water regulation for six PFAS compounds, significantly lowering permissible PFAS levels and expected to drive strong demand for Arq solutions and GAC products[4](index=4&type=chunk) - Advisors have been appointed to plan the refinancing and expansion of the company's term loan[4](index=4&type=chunk) [CEO Commentary](index=2&type=section&id=CEO%20Commentary) [Business Momentum and Strategic Validation](index=2&type=section&id=Business%20Momentum%20and%20Strategic%20Validation) CEO Bob Rasmus highlighted significant Q1 progress, achieving revenue growth and margin expansion, with expectations for continued full-year financial improvement, while the first GAC contract validates the company's strategy, and new EPA regulations reinforce Arq's critical role in environmental solutions - CEO Bob Rasmus stated that Q1 results demonstrate clear business momentum and improvement, with revenue growth and margin expansion driven by **higher pricing and cost management**[5](index=5&type=chunk) - Full-year financial performance is expected to continue improving, with the foundational PAC business projected to be **cash flow positive for FY 2024**[5](index=5&type=chunk) - The signing of the first GAC supply contract is a significant strategic milestone, validating the company's strategy and expanded solutions while **de-risking the Red River plant expansion**[5](index=5&type=chunk) - New EPA drinking water regulations uniquely position the company to help businesses meet stricter requirements, with investments significantly improving the growth trajectory and making Arq a **key enabler of environmental integrity goals** in the U.S. and globally[5](index=5&type=chunk) [First Quarter 2024 Results](index=2&type=section&id=First%20Quarter%202024%20Results) [Revenue Performance](index=2&type=section&id=Revenue%20Performance) Q1 2024 revenue reached $21.7 million, a 4% year-over-year increase, primarily driven by a significant rise in average selling price (ASP) and a favorable product mix, despite a 6% decline in sales volume Revenue Performance | Metric | Q1 2024 (Million USD) | Q1 2023 (Million USD) | YoY Change | | :--- | :---: | :---: | :---: | | Revenue | 21.7 | 20.8 | +4% | | Average Selling Price (ASP) | Approx 16% increase | - | - | | Sales Volume | 6% decrease | - | - | [Cost of Revenue and Gross Margin](index=2&type=section&id=Cost%20of%20Revenue%20and%20Gross%20Margin) Q1 2024 cost of revenue decreased 20% year-over-year to $13.7 million, primarily due to ongoing operational cost management, with gross margin consequently doubling to 37%, up from 17% in the prior year period Cost of Revenue and Gross Margin | Metric | Q1 2024 (Million USD) | Q1 2023 (Million USD) | YoY Change | | :--- | :---: | :---: | :---: | | Cost of Revenue | 13.7 | 17.2 | -20% | | Gross Margin | 37% | 17% | +20 percentage points | [Operating Expenses](index=2&type=section&id=Operating%20Expenses) In Q1 2024, selling, general, and administrative (SG&A) expenses significantly decreased, while research and development (R&D) expenses increased due to product qualification testing Operating Expenses | Metric | Q1 2024 (Million USD) | Q1 2023 (Million USD) | YoY Change | | :--- | :---: | :---: | :---: | | Selling, General and Administrative Expenses | 7.7 | 11.3 | -3.6 | | Research and Development Expenses | 1.6 | 0.7 | +0.9 | - SG&A expenses decreased primarily due to reductions in salaries and benefits, and legal and professional service fees, partially offset by increased board compensation and rent expenses[8](index=8&type=chunk) - R&D expenses increased primarily due to product qualification testing with potential early adopters during the GAC contract signing process[9](index=9&type=chunk) [Operating Loss](index=2&type=section&id=Operating%20Loss) Q1 2024 operating loss narrowed to $3.0 million, a significant improvement from $7.8 million in the prior year, primarily driven by cost reductions and higher product sales pricing Operating Loss | Metric | Q1 2024 (Million USD) | Q1 2023 (Million USD) | YoY Change | | :--- | :---: | :---: | :---: | | Operating Loss | (3.0) | (7.8) | Improved 4.8 | [Interest Expense and Income Tax](index=2&type=section&id=Interest%20Expense%20and%20Income%20Tax) Q1 2024 interest expense increased to $0.8 million, primarily from a $10 million term loan related to the February 2023 Arq acquisition, with income tax expense being negligible in both quarters Interest Expense and Income Tax | Metric | Q1 2024 (Million USD) | Q1 2023 (Million USD) | YoY Change | | :--- | :---: | :---: | :---: | | Interest Expense | 0.8 | 0.5 | +0.3 | | Income Tax Expense | 0 | 0 | 0 | [Net Loss and EPS](index=2&type=section&id=Net%20Loss%20and%20EPS) Q1 2024 net loss was $3.4 million, with a diluted loss per share of $0.09, a significant improvement from the prior year's $7.5 million net loss and $0.32 diluted loss per share, driven by improved gross margin and reduced SG&A costs Net Loss and EPS | Metric | Q1 2024 (Million USD) | Q1 2023 (Million USD) | YoY Change | | :--- | :---: | :---: | :---: | | Net Loss | (3.4) | (7.5) | Improved 4.1 | | Diluted Loss Per Share | (0.09) | (0.32) | Improved 0.23 | [Adjusted EBITDA Loss](index=2&type=section&id=Adjusted%20EBITDA%20Loss) Q1 2024 adjusted EBITDA loss narrowed to $1.1 million, a substantial improvement from $7.7 million in the prior year, primarily due to reduced net loss and increased net interest expense Adjusted EBITDA Loss | Metric | Q1 2024 (Million USD) | Q1 2023 (Million USD) | YoY Change | | :--- | :---: | :---: | :---: | | Adjusted EBITDA Loss | (1.1) | (7.7) | Improved 6.6 | [Capex and Balance Sheet](index=3&type=section&id=Capex%20and%20Balance%20Sheet) [Capital Expenditures and Cash Position](index=3&type=section&id=Capital%20Expenditures%20and%20Cash%20Position) Q1 2024 capital expenditures increased to $9.6 million, primarily for the expansion of Red River and Corbin facilities, with total cash and restricted cash at period-end being $44.0 million, a decrease from year-end 2023, reflecting strategic capital outlays Capital Expenditures | Metric | Q1 2024 (Million USD) | Q1 2023 (Million USD) | YoY Change | | :--- | :---: | :---: | :---: | | Capital Expenditures | 9.6 | 3.5 | +6.1 | Cash and Debt Position | Metric | March 31, 2024 (Million USD) | December 31, 2023 (Million USD) | QoQ Change | | :--- | :---: | :---: | :---: | | Cash and Restricted Cash | 44.0 | 54.2 | -10.2 | | Total Debt (including finance leases) | 20.7 | 20.9 | -0.2 | - Increased capital expenditures were primarily for the ongoing expansion of the Red River and Corbin facilities[15](index=15&type=chunk) - Total debt slightly decreased, primarily due to principal payments made during the quarter[16](index=16&type=chunk) [Strategic Investments and Updated 2024 Capex Forecast](index=3&type=section&id=Strategic%20Investments%20and%202024%20Capex%20Forecast%20Updates) [Updated 2024 Capex Forecast](index=3&type=section&id=Updated%202024%20Capex%20Forecast) The company raised its full-year 2024 capital expenditure forecast to $60-70 million, an increase of $5-10 million from previous guidance, primarily due to higher-than-expected steel and concrete costs for the Red River Phase 1 expansion, while reaffirming the investment payback period is expected to be three years or less Updated 2024 Capex Forecast | Metric | Updated FY 2024 Forecast (Million USD) | Previous Forecast (Million USD) | Change (Million USD) | | :--- | :---: | :---: | :---: | | Total Capital Expenditures | 60-70 | 55-60 | +5-10 | | Red River Phase 1 Expansion Project | 55-60 | - | - | - The increase in capital expenditures is primarily driven by increased steel and concrete requirements and costs for the **Red River Phase 1 expansion project**[18](index=18&type=chunk) - The company expects to fund 2024 capital expenditures through existing cash, cash generation, cost reductions, potential customer prepayments, and the refinancing and expansion of its term loan[19](index=19&type=chunk) [Conference Call and Webcast Information](index=3&type=section&id=Conference%20Call%20and%20Webcast%20Information) [Q1 2024 Earnings Call Details](index=3&type=section&id=Q1%202024%20Earnings%20Call%20Details) Arq Corporation has scheduled a conference call for Thursday, May 9, 2024, at 9:00 AM ET to discuss Q1 2024 results, with investors able to register to participate via webcast on the company's website or through a designated link, or by phone - The conference call is scheduled for **Thursday, May 9, 2024, at 9:00 AM ET**[20](index=20&type=chunk) - Participation in the webcast is available via the investor relations section of Arq's website or through the registration link: **https://www.webcast-eqs.com/login/arq050924**[20](index=20&type=chunk) - Dial-in numbers are **(800) 867-4593** (domestic U.S.) or **(785) 424-1037** (international)[20](index=20&type=chunk) [About Arq](index=3&type=section&id=About%20Arq) [Company Profile](index=3&type=section&id=Company%20Profile) Arq (NASDAQ: ARQ) is a diversified environmental technology company dedicated to producing products that contribute to a cleaner and safer planet and actively reduce environmental impact, as North America's only vertically integrated producer of activated carbon products, offering innovative, hard-to-source, and high-demand products - Arq is a diversified environmental technology company whose products aim to enable a **cleaner, safer planet** and reduce environmental impact[21](index=21&type=chunk) - The company is North America's **only vertically integrated producer of activated carbon products**, providing reliable domestic supply and innovative offerings[21](index=21&type=chunk) - The company leverages its expertise to develop breakthrough solutions for removing harmful chemicals and pollutants from **water, land, and air**[21](index=21&type=chunk) [Caution on Forward-Looking Statements](index=3&type=section&id=Caution%20on%20Forward-Looking%20Statements) [Forward-Looking Statements Disclaimer](index=3&type=section&id=Forward-Looking%20Statements%20Disclaimer) This press release contains forward-looking statements as defined by Section 21E of the Securities Exchange Act of 1934, concerning the company's future activities, events, or developments, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations, and investors should consult the company's SEC filings for further risk discussions - This press release contains forward-looking statements intended to identify future activities, events, or developments[22](index=22&type=chunk) - Forward-looking statements involve various risks and uncertainties, including but not limited to regulatory changes, economic conditions, market demand, competition, technological difficulties, financing capabilities, and inflation impacts, which could cause actual results to differ materially from expectations[22](index=22&type=chunk)[23](index=23&type=chunk) - Investors should consult the company's SEC filings, particularly risk factor disclosures, for additional discussion of risks and uncertainties related to the company's business and securities ownership[23](index=23&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2024, the company's total assets were $229.8 million, total liabilities were $54.6 million, and total shareholders' equity was $175.2 million, with both total assets and total liabilities slightly decreasing compared to December 31, 2023 Condensed Consolidated Balance Sheets | Metric (Thousand USD) | March 31, 2024 | December 31, 2023 | | :--- | :---: | :---: | | **ASSETS** | | | | Cash | 35,227 | 45,361 | | Total current assets | 72,038 | 86,461 | | Property, plant and equipment, net | 103,645 | 94,649 | | Total assets | 229,798 | 235,502 | | **LIABILITIES AND STOCKHOLDERS’ EQUITY** | | | | Total current liabilities | 21,967 | 23,048 | | Long-term debt | 18,127 | 18,274 | | Total liabilities | 54,634 | 57,102 | | Total stockholders’ equity | 175,164 | 178,400 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) In Q1 2024, the company achieved $21.7 million in revenue, a 4% increase year-over-year, with cost control and improved gross margins leading to significant reductions in both operating loss and net loss, and diluted loss per share decreasing to $0.09 Condensed Consolidated Statements of Operations | Metric (Thousand USD) | Q1 2024 | Q1 2023 | | :--- | :---: | :---: | | Revenue | 21,740 | 20,805 | | Cost of revenue (exclusive of depreciation and amortization) | 13,713 | 17,175 | | Selling, general and administrative expenses | 7,666 | 11,283 | | Research and development expenses | 1,625 | 732 | | Operating loss | (2,980) | (7,827) | | Net loss | (3,419) | (7,508) | | Basic loss per share | (0.09) | (0.32) | | Diluted loss per share | (0.09) | (0.32) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2024, operating activities generated $0.526 million in cash, investing activities had a net outflow of $9.6 million, and financing activities had a net outflow of $1.0 million, with total cash and restricted cash at period-end being $44.0 million, a $10.1 million decrease from the beginning of the period Condensed Consolidated Statements of Cash Flows | Metric (Thousand USD) | Q1 2024 | Q1 2023 | | :--- | :---: | :---: | | Net cash provided by (used in) operating activities | 526 | (17,705) | | Net cash used in investing activities | (9,647) | (2,897) | | Net cash provided by (used in) financing activities | (1,013) | 23,260 | | Cash and restricted cash (end of period) | 44,019 | 79,090 | - Operating cash flow turned positive, reflecting improved operational efficiency[31](index=31&type=chunk) - Increased cash outflow from investing activities was primarily for the acquisition of property, plant, and intangible assets, reflecting strategic capital expenditures in the Red River and Corbin facilities[31](index=31&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=8&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) [EBITDA and Adjusted EBITDA Reconciliation](index=8&type=section&id=EBITDA%20and%20Adjusted%20EBITDA%20Reconciliation) The company provides EBITDA and Adjusted EBITDA as non-GAAP financial measures to supplement GAAP net loss, believing these metrics better reflect core operational performance, with Q1 2024 Adjusted EBITDA loss significantly narrowing to $1.1 million - EBITDA is defined as earnings before interest, taxes, depreciation, and amortization, with Adjusted EBITDA further adjusting for non-cash items like equity in earnings of unconsolidated affiliates and gain on sale of assets[32](index=32&type=chunk) - The company believes non-GAAP measures assist management in evaluating operational performance and facilitate comparisons of operating results across periods by excluding certain expenses, gains, and losses that may vary widely[33](index=33&type=chunk) EBITDA and Adjusted EBITDA Reconciliation | Metric (Thousand USD) | Q1 2024 | Q1 2023 | | :--- | :---: | :---: | | Net loss | (3,419) | (7,508) | | Depreciation, amortization, depletion and accretion | 1,716 | 2,137 | | Interest expense, net | 432 | 289 | | EBITDA loss | (1,144) | (4,988) | | Adjusted EBITDA loss | (1,144) | (7,683) |

Arq, Inc. (NASDAQ:ARQ) Q4 2023 Results Conference Call March 13, 2024 9:00 AM ET Company Participants Ryan Coleman - Investor Relations Bob Rasmus - Chief Executive Officer and President Kim Hansen - VP of Finance Conference Call Participants Gerry Sweeney - Roth Capital Operator Greetings. Welcome to Arq's Fourth Quarter and Full Year 2023 Earnings Call. At this time all participants will be in listen only mode. A question-and-answer session will follow the formal presentation [Operator Instructions]. Plea ...

[Executive Summary](index=1&type=section&id=Executive%20Summary) [Financial and Business Highlights](index=1&type=section&id=Financial%20and%20Business%20Highlights) Arq achieved its first positive net income since Q4 2021, with strong Q4 2023 financial performance and strategic GAC project advancement Q4 2023 Key Financial Metrics | Metric | Q4 2023 | Change vs. Q4 2022 | Key Drivers | | :--- | :--- | :--- | :--- | | **Revenue** | $28.1 million | +20% YoY | Higher selling prices, positive product mix, take-or-pay revenue | | **Gross Margin** | 50% | Nearly Doubled | Higher revenue, focus on profitability, cost management | | **Net Income** | $3.3 million | Positive (from loss) | First positive net income since Q4 2021 | | **Adjusted EBITDA** | $7.2 million | Positive (from loss) | Second consecutive quarter of positive Adjusted EBITDA | - **Corporate Rebranding**: Completed rebrand and began trading under the new Nasdaq ticker "**ARQ**" to reflect its evolution into an environmental technology company - **PAC Portfolio Optimization**: Prioritized profitability over volume, leading to **positive cash flow** from the PAC business in Q4 2023 - **GAC Growth Projects**: The Corbin facility optimization is on track for **Q2 2024**, and the Red River GAC facility expansion is targeted for commissioning in **Q4 2024** - **European Market Expansion**: Entered a framework for a definitive supply agreement with LSR Materials to serve the European water purification market, targeting PFAS [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO highlighted strong Q4 2023 PAC momentum, confirmed GAC projects on schedule, and reaffirmed attractive Red River economics despite cost increases - The company's primary focus is on executing high-return strategic growth projects in the robust GAC market, with commissioning of the Red River facility expected in **Q4 2024**[4](index=4&type=chunk)[6](index=6&type=chunk) - The cost to complete the Red River Phase 1 expansion has increased due to higher construction and equipment costs, but the project's investment economics remain **attractive**[6](index=6&type=chunk) - The expansion will be funded through a combination of cash on hand, cash generation, cost reductions, potential customer prepayments, and debt refinancing, with **no plans to issue equity**[6](index=6&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) [Fourth Quarter 2023 Results](index=2&type=section&id=Fourth%20Quarter%202023%20Results) Arq reported a significant Q4 2023 turnaround, with strong revenue growth and gross margin expansion, leading to positive operating and net income Q4 2023 vs. Q4 2022 Performance | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | **Revenues** | $28.1 million | $23.4 million | +20.1% | | **Gross Margin** | 49.8% | 25.4% | +24.4 pts | | **Operating Income (Loss)** | $3.1 million | ($3.4 million) | Improved by $6.5 million | | **Net Income (Loss)** | $3.3 million | ($3.2 million) | Improved by $6.5 million | | **Diluted EPS** | $0.10 | ($0.17) | Improved by $0.27 | | **Adjusted EBITDA** | $7.2 million | ($1.2 million) | Improved by $8.4 million | - The increase in other operating expenses to **$10.9 million** was mainly driven by higher payroll and G&A expenses associated with the acquisition of Arq Limited subsidiaries[9](index=9&type=chunk) [Full Year 2023 Results](index=2&type=section&id=Full%20Year%202023%20Results) Full year 2023 revenues decreased **3.7%** to **$99.2 million**, and despite improved gross margin, higher operating expenses led to an increased net loss Full Year 2023 vs. Full Year 2022 Performance | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | **Revenues** | $99.2 million | $103.0 million | -3.7% | | **Gross Margin** | 32.1% | 21.9% | +10.2 pts | | **Operating Loss** | ($13.3 million) | ($12.1 million) | Increased Loss | | **Net Loss** | ($12.2 million) | ($8.9 million) | Increased Loss | | **Diluted EPS** | ($0.42) | ($0.48) | Improved Loss per Share | | **Adjusted EBITDA (Loss)** | ($2.6 million) | $1.3 million | Declined | - The decline in Adjusted EBITDA was mainly driven by higher operating costs, which included **$4.9 million** in one-time transaction costs for the legacy Arq acquisition and **$1.7 million** in severance expenses[28](index=28&type=chunk) [Capital Expenditures and Strategic Projects](index=2&type=section&id=Capital%20Expenditures%20and%20Strategic%20Projects) [Capex & Balance Sheet](index=2&type=section&id=Capex%20%26%20Balance%20Sheet) Capital expenditures more than tripled to **$27.5 million** in 2023, reducing cash and increasing total debt due to strategic growth projects Key Financial Position Changes (as of Dec 31, 2023) | Metric | 2023 | 2022 | Change Driver | | :--- | :--- | :--- | :--- | | **Capital Expenditures** | $27.5 million | $8.9 million | Ongoing strategic growth projects (Red River, Corbin) | | **Cash & Restricted Cash** | $54.2 million | $76.4 million | Capital expenditures for facility expansions | | **Total Debt** | $20.9 million | $4.6 million | $10.0 million term loan for legacy Arq acquisition | [Red River Update & 2024 Capex Forecast](index=2&type=section&id=Red%20River%20Update%20%26%202024%20Capex%20Forecast) Arq forecasts **$55-60 million** in 2024 capex, primarily for the Red River GAC expansion, which saw a **36%** budget increase but remains on track for Q4 2024 commissioning - The 2024 capex forecast is **$55-60 million**, with **$45-50 million** for the Red River Phase 1 project[17](index=17&type=chunk) - The Red River capex forecast increased by **~36%** due to: - **~45%** from construction cost inflation and an accelerated workweek - **~45%** from increased equipment costs and design changes for greater efficiency - **~10%** from other items like engineering fees[18](index=18&type=chunk) - The project is expected to be funded via cash, cash generation, cost initiatives, potential customer prepayments, and debt refinancing, without issuing new equity[20](index=20&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2023, Arq's total assets increased to **$235.5 million**, driven by property, plant, and equipment, with liabilities growing to **$57.1 million** Selected Balance Sheet Data (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total current assets** | $86,461 | $105,662 | | Cash | $45,361 | $66,432 | | **Property, plant and equipment, net** | $94,649 | $34,855 | | **Total Assets** | **$235,502** | **$181,164** | | **Total current liabilities** | $23,048 | $23,884 | | **Long-term debt, net** | $18,274 | $3,450 | | **Total Liabilities** | **$57,102** | **$41,185** | | **Total stockholders' equity** | **$178,400** | **$139,979** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Q4 2023 saw a net income of **$3.3 million**, a significant improvement, though the full year 2023 net loss widened to **$12.2 million** due to lower revenue and higher operating expenses Statement of Operations Highlights (in thousands) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total revenue** | $28,104 | $23,409 | $99,183 | $102,987 | | **Gross Profit** | $13,999 | $5,936 | $31,860 | $22,522 | | **Operating income (loss)** | $3,104 | ($3,374) | ($13,335) | ($12,068) | | **Net income (loss)** | $3,290 | ($3,167) | ($12,249) | ($8,917) | | **Diluted EPS** | $0.10 | ($0.17) | ($0.42) | ($0.48) | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Full year 2023 saw **$16.7 million** net cash used in operations and **$28.5 million** in investing, partially offset by **$22.9 million** from financing, decreasing cash by **$22.3 million** Cash Flow Summary for Year Ended Dec 31 (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | **Net cash used in operating activities** | ($16,653) | ($6,061) | | **Net cash used in investing activities** | ($28,535) | ($4,608) | | **Net cash provided by (used in) financing activities** | $22,909 | ($1,679) | | **Decrease in Cash and Restricted Cash** | **($22,279)** | **($12,348)** | [Non-GAAP Reconciliation](index=9&type=section&id=Non-GAAP%20Reconciliation) The company reconciled Q4 2023 Net Income of **$3.3 million** to **$7.2 million** Adjusted EBITDA, and FY2023 Net Loss of **$12.2 million** to **$2.6 million** Adjusted EBITDA loss Reconciliation of Net (Loss) Income to Adjusted EBITDA (in thousands) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | **Net (loss) income** | $3,290 | ($3,167) | ($12,249) | ($8,917) | | Depreciation, amortization, etc. | $3,267 | $1,651 | $10,543 | $6,416 | | Interest expense (income), net | $346 | ($66) | $1,168 | $97 | | Income tax expense | $186 | $209 | $153 | $209 | | **EBITDA (EBITDA Loss)** | $7,216 | ($1,246) | $123 | ($1,687) | | Other Adjustments | ($37) | ($1) | ($2,732) | $2,961 | | **Adjusted EBITDA (EBITDA loss)** | **$7,179** | **($1,245)** | **($2,609)** | **$1,274** |

[PART I](index=3&type=section&id=PART%20I) [Item 1. Business](index=3&type=section&id=Item%201.%20Business) Arq, Inc. is an environmental technology company providing AC and chemical solutions for air, water, and soil treatment, expanding GAC products via the Legacy Arq acquisition - Arq, Inc. is an environmental technology company specializing in consumable air, water, and soil treatment solutions, including activated carbon (AC) and chemical technologies[12](index=12&type=chunk)[13](index=13&type=chunk) - The company acquired Legacy Arq in February 2023 to gain access to bituminous coal waste reserves, a manufacturing facility, and patented processes to produce Arq Powder, a feedstock for new advanced granular activated carbon (GAC) products[13](index=13&type=chunk)[22](index=22&type=chunk) - In February 2024, the company officially changed its name to Arq, Inc. and commenced trading under the ticker symbol **'ARQ'**[13](index=13&type=chunk) [General Company Overview](index=3&type=section&id=General) - Arq, Inc. is an environmental technology company focused on selling consumable air, water, and soil treatment solutions, including activated carbon (AC) and chemical technologies[12](index=12&type=chunk)[13](index=13&type=chunk) - The company's proprietary AC products help customers reduce contaminants like mercury and PFAS to meet environmental regulations[12](index=12&type=chunk) - Key acquisitions include ADA Carbon Solutions, LLC in 2018 and Legacy Arq in February 2023, providing access to new feedstocks and manufacturing capabilities for advanced GAC products[13](index=13&type=chunk) [Products and Markets](index=3&type=section&id=Products%20and%20Markets) - Activated carbon (AC) is a specialized sorbent material used to remove impurities from gas, water, soil, and other streams, manufactured as powdered activated carbon (PAC), granular activated carbon (GAC), and colloidal carbon product (CCP)[15](index=15&type=chunk) - Key markets include coal-fired power generation (mercury control), municipal water and air treatment, industrial applications, and soil/groundwater remediation, with demand driven by increasing environmental regulations[16](index=16&type=chunk)[17](index=17&type=chunk)[20](index=20&type=chunk) - The acquisition of Legacy Arq provides access to bituminous coal waste reserves and a manufacturing facility to produce Arq Powder, expected to be used as a feedstock for high-quality GAC products by the end of **2024**[22](index=22&type=chunk) - Arq Powder also has potential as an additive in new markets like asphalt, offering a lower carbon footprint[22](index=22&type=chunk) [Sales and Customers](index=5&type=section&id=Sales%20and%20Customers) - The company sells consumables primarily through its internal sales group, generally under contracts ranging from one to five years[23](index=23&type=chunk) - Revenue from the top three customers comprised approximately **37% of consumables revenue** for the year ended December 31, 2023, indicating significant customer concentration[23](index=23&type=chunk) [Seasonality](index=5&type=section&id=Seasonality) - Revenue is generally higher in the first and third fiscal quarters due to weather-dependent power generation (heating/cooling demands) and increased impurities in water sources during summer and rainy seasons[24](index=24&type=chunk)[27](index=27&type=chunk) - Sales volumes are highly dependent on coal consumption at coal-fired power plants, affected by prices of competing energy sources like natural gas and renewables[25](index=25&type=chunk)[26](index=26&type=chunk) [Competition](index=6&type=section&id=Competition) - Primary competitors in the AC consumables industry include Cabot Norit Americas, Inc., Calgon Carbon, and Donau Carbon Company[28](index=28&type=chunk) [Sources and Availability of Raw Materials](index=6&type=section&id=Sources%20and%20Availability%20of%20Raw%20Materials) - The principal raw material for AC manufacturing is lignite coal, sourced from the company's **100% owned Five Forks Mine** in Louisiana[29](index=29&type=chunk) - The Arq Acquisition in 2023 secured a second feedstock, Arq Powder, made from bituminous coal waste, which will be used for GAC products[30](index=30&type=chunk) - The company aims for a fully integrated supply chain with both bituminous coal fines (Corbin Facility) and lignite coal (Five Forks Mine) to produce GAC and PAC products[30](index=30&type=chunk) [Facilities](index=6&type=section&id=Facilities) - The company owns and operates the Red River Plant in Louisiana for AC manufacturing and the Corbin Facility in Kentucky for processing bituminous coal waste into Arq Powder[34](index=34&type=chunk) - Construction of a new GAC facility at the Red River Plant commenced in January 2024, with commissioning expected by the end of **2024**, at an estimated cost of **$62 million to $67 million**[34](index=34&type=chunk) - Commissioning activities at the Corbin Facility are expected to begin in the first half of **2024**, with total construction and commissioning costs estimated between **$10 million and $15 million**[35](index=35&type=chunk) [Research and Development Activities](index=7&type=section&id=Research%20and%20Development%20Activities) Research and Development Costs | Year Ended December 31, | R&D Costs (in millions) | | :---------------------- | :---------------------- | | 2023 | $3.3 | | 2022 | $2.1 | [Legislation and Environmental Regulations](index=7&type=section&id=Legislation%20and%20Environmental%20Regulations) - The U.S. EPA's MATS Rule, effective April 2012, requires coal- and oil-fired Electric Utility Steam Generating Units (EGUs) to control hazardous air pollutants, including mercury, driving demand for the company's products[38](index=38&type=chunk) - The EPA reaffirmed the 'appropriate and necessary' finding for MATS in February 2023 and proposed an update in April 2023 to reduce mercury emission limits for lignite coal-fired EGUs[39](index=39&type=chunk)[95](index=95&type=chunk) - New regulations are emerging, including the EPA's PFAS Strategic Roadmap (October 2021) and a proposed National Primary Drinking Water Regulation (NPDWR) for six PFAS substances (March 2023), which could significantly increase demand for AC in water purification[44](index=44&type=chunk) - International regulations, such as the Minimata Convention on Mercury and proposed EU directives for urban wastewater treatment, are expected to expand the global market for activated carbon products[45](index=45&type=chunk)[46](index=46&type=chunk) [Mining Environmental and Reclamation Matters](index=9&type=section&id=Mining%20Environmental%20and%20Reclamation%20Matters) - The company's coal mining operations are subject to federal, state, and local environmental regulations, including SMCRA, requiring permits and reclamation[47](index=47&type=chunk)[48](index=48&type=chunk) - As of December 31, 2023, the company posted surety bonds of approximately **$7.5 million** for the Five Forks Mine and **$3.0 million** for the Corbin Facility for reclamation obligations[49](index=49&type=chunk) [Intellectual Property](index=9&type=section&id=Intellectual%20Property) - As of December 31, 2023, the company held **83 U.S. patents** and **8 international patents**, with **13 U.S.** and **2 international applications pending**[50](index=50&type=chunk) - The Arq Acquisition added **87 patents and patent applications**, including **7 granted U.S. patents**, **10 pending U.S. applications**, **19 granted international patents**, and **51 pending international applications**[50](index=50&type=chunk) - The company also owned over **50 trademark registrations and applications** globally, with an additional **33** obtained from the Arq Acquisition[52](index=52&type=chunk) [Safety, Health and Environment](index=9&type=section&id=Safety,%20Health%20and%20Environment) - Operations are subject to numerous federal, state, and local SH&E Regulations, including permit requirements for facilities and mine health and safety laws for the Five Forks Mine[53](index=53&type=chunk) [Employees](index=9&type=section&id=Employees) - As of December 31, 2023, the company employed **173 personnel**, with **171 full-time**[54](index=54&type=chunk) [Arq Acquisition Details](index=9&type=section&id=Arq%20Acquisition) - On February 1, 2023, Arq, Inc. acquired Legacy Arq's subsidiaries for **$31.2 million**, consisting of **3,814,864 shares of common stock** (**$12.4 million**) and **5,294,462 shares of Series A Convertible Preferred Stock** (**$18.8 million**)[55](index=55&type=chunk)[340](index=340&type=chunk) - Stockholders approved the conversion of all Series A Preferred Stock into **5,362,926 shares of Common Stock** on June 13, 2023[56](index=56&type=chunk) - A PIPE Investment of approximately **$15.4 million** was completed on February 1, 2023, with subscribers purchasing **3,842,315 shares of Common Stock** at **$4.00 per share**[57](index=57&type=chunk) - A **$10.0 million term loan (CFG Loan)** was secured on February 1, 2023, with a **48-month term** and interest rates tied to SOFR or Base Rate plus margins, and included the issuance of a warrant to purchase **325,457 shares of Common Stock**[59](index=59&type=chunk) [Item 1A. Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from Legacy Arq integration, capital needs, regulatory dependence, competition, and potential tax asset limitations - The company's ability to meet projected construction timelines, costs, and production ramp-up for Red River Plant upgrades and to generate demand for new GAC products is uncertain, potentially harming financial results[68](index=68&type=chunk)[69](index=69&type=chunk) - Managing expanded operations post-Arq Acquisition poses substantial challenges, with no assurance of realizing expected operating efficiencies, cost savings, or revenue enhancements[70](index=70&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - Manufacturing Legacy Arq's products and GAC products requires significant capital, and failure to obtain additional financing in **2024** could delay business plan execution[71](index=71&type=chunk) - Demand for products is highly dependent on environmental laws and regulations; changes, delays, or repeal of such regulations (e.g., MATS, PFAS) could adversely affect the business[90](index=90&type=chunk)[91](index=91&type=chunk)[95](index=95&type=chunk) - The company operates in a highly competitive market, with larger and more established competitors, which could impede growth and financial results[97](index=97&type=chunk) - Reduction of coal consumption by North American electricity generators due to alternative energy sources (natural gas, renewables) could decrease demand for the company's products[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - The company's ability to utilize its tax assets (NOLs and Tax Credits) could be limited by an 'ownership change' under IRC Sections 382 and 383, despite the Tax Asset Protection Plan (TAPP)[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk)[128](index=128&type=chunk)[130](index=130&type=chunk) [Item 1B. Unresolved Staff Comments](index=27&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report [Item 1C. Cybersecurity](index=27&type=section&id=Item%201C.%20Cybersecurity) The company integrates cybersecurity risk management into overall operations, with audit committee oversight, but operational disruption risk remains - The company has established policies and processes for assessing, identifying, and managing material risks from cybersecurity threats, integrated into its overall risk management[142](index=142&type=chunk) - Third-party service providers assist in monitoring and testing safeguards, including external penetration testing and real-time vulnerability assessments[143](index=143&type=chunk) - A formal information security awareness training program for all employees includes phishing tests and data protection best practices[145](index=145&type=chunk) - The audit committee oversees cybersecurity risk management, receiving quarterly briefings from the VP of IT, who has approximately **five years of cybersecurity experience**[148](index=148&type=chunk)[149](index=149&type=chunk) - To date, no cybersecurity incidents have materially affected the company or its operations, but the risk of operational disruption remains[147](index=147&type=chunk) [Item 2. Properties](index=29&type=section&id=Item%202.%20Properties) The company owns or leases office and manufacturing facilities in Colorado, Louisiana (Red River Plant, Five Forks Mine), and Kentucky (Corbin Facility) - The company leases approximately **24,000 square feet** for its corporate headquarters and primary R&D laboratory in Colorado[150](index=150&type=chunk) - In Louisiana, the company owns the Red River Plant (**61 acres**) and leases approximately **141,000 square feet** for production, distribution, and storage[150](index=150&type=chunk) - In Kentucky, the company leases approximately **470 acres** for the Corbin Facility, where it processes bituminous coal waste[151](index=151&type=chunk) - As of December 31, 2023, the company owned or controlled about **1,975 acres of coal land** for surface mining at the Five Forks Mine in Louisiana and approximately **380 acres of land** containing bituminous coal waste at the Corbin Facility[152](index=152&type=chunk)[153](index=153&type=chunk) [Item 3. Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various ordinary course legal proceedings, with no significant matters reported as of December 31, 2023 - The company is subject to various pending or threatened legal actions and proceedings in the ordinary course of business[155](index=155&type=chunk) - No significant legal proceedings were reported as of December 31, 2023[403](index=403&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures required by the Dodd-Frank Wall Street Reform and Consumer Protection Act are included in Exhibit 95 of this report - Mine safety disclosures are provided in Exhibit 95 to the report, as required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K[156](index=156&type=chunk) [PART II](index=30&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades as 'ARQ' on Nasdaq, with no foreseeable cash dividends, a $7.0 million repurchase program, and recent equity issuances - Effective February 1, 2024, the company's common stock trades on the Nasdaq Global Market under the symbol **'ARQ'**, previously 'ADES'[159](index=159&type=chunk) - The company does not intend to declare or pay cash dividends in the foreseeable future, with the most recent payment in March 2020[160](index=160&type=chunk) - As of March 5, 2024, there were **875 holders of record** of the common stock[161](index=161&type=chunk) - A PIPE Investment on February 1, 2023, involved the purchase of **3,842,315 shares of Common Stock** for **$15.4 million**[162](index=162&type=chunk) - The CEO, Mr. Robert Rasmus, subscribed for and purchased **950,000 shares of common stock** for **$1.8 million** in July 2023[163](index=163&type=chunk) - The company has a stock repurchase program with **$7.0 million remaining** as of December 31, 2023, but no purchases were made in Q4 2023, and future repurchases are unlikely in the near term[165](index=165&type=chunk) [Item 6. Reserved](index=31&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's financial performance, highlighting revenue and cost drivers, the impact of the Arq Acquisition, and liquidity, with a focus on 2023 results [Overview](index=32&type=section&id=Overview) - Arq, Inc. is an environmental technology company primarily engaged in selling consumable air and water treatment solutions based on Activated Carbon (AC)[169](index=169&type=chunk) - The company's products help customers reduce contaminants like mercury and PFAS to meet environmental regulations in coal-fired power generation, industrial, and water treatment markets (APT market)[169](index=169&type=chunk) - The February 2023 acquisition of Legacy Arq provides access to bituminous coal waste reserves and a manufacturing facility (Corbin Facility) to produce Arq Powder, a feedstock for new GAC products, expected to begin manufacturing by end of **2024**[171](index=171&type=chunk) [Drivers of Demand and Key Factors Affecting Profitability](index=32&type=section&id=Drivers%20of%20Demand%20and%20Key%20Factors%20Affecting%20Profitability) - Changes in manufacturing production and sales volumes[173](index=173&type=chunk) - Changes in price and product mix[173](index=173&type=chunk) - Changes in coal-fired dispatch and electricity power generation sources[173](index=173&type=chunk) - Changes in demand for contaminant removal within water treatment facilities[173](index=173&type=chunk) [Components of Revenue, Expenses and Equity Method Investees](index=32&type=section&id=Components%20of%20Revenue,%20Expenses%20and%20Equity%20Method%20Investees) - Revenue primarily comes from the sale of AC products and other chemical-based technologies in the APT market[175](index=175&type=chunk) - Consumables cost of revenue includes all direct production costs, such as labor, materials, additives, and coal costs[176](index=176&type=chunk) - A royalty is paid to Tinuum Group for certain M-Prove product sales after the expiration of the Section 45 Tax Credit Program, included in Consumables cost of revenue[177](index=177&type=chunk) - Operating expenses include payroll and benefits (excluding direct labor), legal and professional fees, general and administrative costs (including R&D), and depreciation, amortization, depletion, and accretion[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) - Other income (expense), net, includes earnings from equity method investments (primarily Tinuum Group), interest income, interest expense, and other miscellaneous items[182](index=182&type=chunk)[183](index=183&type=chunk) [Results of Operations (2023 vs. 2022)](index=33&type=section&id=Results%20of%20Operations) Total Revenue and Cost of Revenue (in thousands) | Category | 2023 | 2022 | Change ($) | Change (%) | | :------------------------ | :------ | :------- | :--------- | :--------- | | Consumables Revenue | $99,183 | $102,987 | $(3,804) | (4)% | | Total Revenue | $99,183 | $102,987 | $(3,804) | (4)% | | Consumables Cost of Revenue | $67,323 | $80,465 | $(13,142) | (16)% | - Consumables revenue decreased by **$3.8 million (4%)** year-over-year, primarily due to lower volumes sold (**$20.0 million decrease**) driven by lower natural gas prices reducing coal-fired generation[186](index=186&type=chunk) - Partially offset by improved pricing (**$10.6 million increase**), **$4.7 million** from minimum quantity contract settlements, and **$0.7 million** from favorable product mix[187](index=187&type=chunk) - Consumables gross margin, exclusive of depreciation and amortization, increased due to MQ contracts and decreased feedstock/additive costs, despite lower volumes[187](index=187&type=chunk) Operating Expenses (in thousands) | Operating Expenses | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------------------- | :------ | :------ | :--------- | :--------- | | Payroll and benefits | $15,154 | $10,540 | $4,614 | 44% | | Legal and professional fees | $9,588 | $9,455 | $133 | 1% | | General and administrative | $12,641 | $8,145 | $4,496 | 55% | | Depreciation, amortization, depletion and accretion | $10,543 | $6,416 | $4,127 | 64% | | Gain on sale of Marshall Mine, LLC | $(2,695) | $0 | $(2,695) | * | | Other | $(36) | $34 | $(70) | (206)% | | **Total Operating Expenses** | **$45,195** | **$34,590** | **$10,605** | **31%** | - Payroll and benefits increased by **$4.9 million** due to Legacy Arq employees (including **$1.1 million severance** for former executives) and **$1.7 million severance** for three executive employees, partially offset by decreased incentive compensation and retention bonuses[190](index=190&type=chunk) - General and administrative expenses rose by **$2.5 million** due to Legacy Arq (including **$1.2 million rent/occupancy**) and **$2.0 million** from increases in insurance, R&D, travel, recruiting, and director compensation[193](index=193&type=chunk) - Depreciation, amortization, depletion, and accretion increased by **$2.8 million** from Arq Acquisition assets and **$1.0 million** from higher depreciation absorption in inventory due to higher production volumes[194](index=194&type=chunk) Other Income (Expense), Net (in thousands) | Category | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | :--------- | | Earnings from equity method investments | $1,623 | $3,541 | $(1,918) | (54)% | | Interest expense | $(3,014) | $(336) | $(2,678) | 797% | | Other | $2,630 | $155 | $2,475 | 1,597% | | **Total Other Income, Net** | **$1,239** | **$3,360** | **$(2,121)** | **(63)%** | - Earnings from equity method investments decreased by **$1.9 million (54%)** due to Tinuum Group and Tinuum Services winding down operations[198](index=198&type=chunk) - Interest expense increased significantly by **$2.7 million (797%)** due to **$2.0 million** from the **$10 million CFG Loan** and **$0.5 million** from the **$10 million CTB Loan** assumed in the Arq Acquisition[199](index=199&type=chunk) - Other income increased by **$2.5 million**, primarily driven by **$1.8 million** in interest income from cash sweep accounts[200](index=200&type=chunk) - The company reported a net loss of **$12.2 million** in 2023, compared to **$8.9 million** in 2022[262](index=262&type=chunk) - Income tax expense was **$0.2 million** in both 2023 and 2022, with an effective rate of **(1)%** and **(2)%** respectively, primarily due to permanent differences, increased valuation allowance on deferred tax assets, and stock-based compensation[201](index=201&type=chunk)[202](index=202&type=chunk) - As of December 31, 2023, the company fully reserved for its net deferred tax assets with a valuation allowance of **$98.8 million**, up from **$88.3 million** in 2022, due to forecasts of future taxable losses[205](index=205&type=chunk) [Non-GAAP Financial Measures](index=38&type=section&id=Non-GAAP%20Financial%20Measures) - The company uses non-GAAP measures like EBITDA (earnings before interest, taxes, depreciation, and amortization) and Adjusted EBITDA to supplement GAAP financial information[211](index=211&type=chunk) - Adjusted EBITDA is defined as EBITDA reduced by non-cash equity earnings and gain on sale of Marshall Mine, and increased by cash distributions from equity method investments, loss on early settlement of long-term receivable, and loss on change in estimate, asset retirement obligations[211](index=211&type=chunk) EBITDA and Adjusted EBITDA Reconciliation (in thousands) | Category | 2023 | 2022 | | :---------------------------------------------- | :-------- | :-------- | | Net loss | $(12,249) | $(8,917) | | Depreciation, amortization, depletion and accretion | 10,543 | 6,416 | | Amortization of Upfront Customer Consideration | 508 | 508 | | Interest expense, net | 1,168 | 97 | | Income tax expense | 153 | 209 | | **EBITDA (EBITDA Loss)** | **$123** | **$(1,687)** | | Cash distributions from equity method investees | 1,623 | 5,933 | | Equity earnings | (1,623) | (3,541) | | Gain on sale of Marshall Mine, LLC | (2,695) | — | | Loss (gain) on change in estimate, asset retirement obligation | (37) | 34 | | Loss on early settlement of an account receivable | — | 535 | | **Adjusted (EBITDA Loss) EBITDA** | **$(2,609)** | **$1,274** | - Net loss for 2023 and 2022 included **$4.9 million** and **$5.0 million**, respectively, in transaction and integration costs related to the Arq Acquisition. 2023 also included **$4.9 million** of Legacy Arq payroll and benefit costs and **$1.7 million** of severance expense[215](index=215&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) - As of December 31, 2023, principal liquidity sources included cash on hand (**$45.4 million**, excluding **$8.8 million restricted cash**) and operations[216](index=216&type=chunk)[259](index=259&type=chunk) - Principal uses of liquidity in 2023 included business operating expenses, capital and spare parts expenditures, lease obligations, reclamation payments, and payment for the sale of Marshall Mine, LLC[217](index=217&type=chunk) - The PIPE Investment provided **$15.4 million**, and the CFG Loan provided **$8.5 million net proceeds** in February 2023[216](index=216&type=chunk) Cash Distributions from Equity Method Investments (in thousands) | Investee | 2023 | 2022 | | :-------------- | :------ | :------ | | Tinuum Group | $1,148 | $3,455 | | Tinuum Services | $475 | $2,476 | | Other | $0 | $2 | | **Total** | **$1,623** | **$5,933** | - Cash distributions from equity method investments decreased by **$4.3 million** in 2023 compared to 2022, primarily due to Tinuum Group and Tinuum Services winding down operations[218](index=218&type=chunk) Summary of Cash Flows (in thousands) | Cash Flows From | 2023 | 2022 | Change ($) | | :-------------------- | :--------- | :--------- | :--------- | | Operating activities | $(16,653) | $(6,061) | $(10,592) | | Investing activities | $(28,535) | $(4,608) | $(23,927) | | Financing activities | $22,909 | $(1,679) | $24,588 | | **Net change in Cash and Restricted Cash** | **$(22,279)** | **$(12,348)** | **$(9,931)** | - Cash used in operating activities increased by **$10.6 million**, primarily due to increased net loss, gain on sale of Marshall Mine, decreased distributions from equity method investees, and a net decrease in working capital[220](index=220&type=chunk) - Cash used in investing activities increased by **$23.9 million**, mainly due to increased acquisition of property, equipment, and intangibles related to the Arq Acquisition, payment for Marshall Mine disposal, and increased mine development costs[221](index=221&type=chunk) - Cash provided by financing activities increased by **$24.6 million**, driven by **$16.2 million** from common stock issuance (including related parties) and **$8.5 million net proceeds** from the CFG Loan Agreement[222](index=222&type=chunk) - The company expects cash on hand as of December 31, 2023, to provide sufficient liquidity for the next **12 months**[225](index=225&type=chunk) - Capital expenditures for **2024** are projected to be **$45 million to $50 million** for the Red River Plant expansion and **$5 million to $10 million** for Corbin Facility commissioning, dependent on additional funding and environmental permits[227](index=227&type=chunk) Contractual Obligations as of December 31, 2023 (in thousands) | Obligation | Total | Less than 1 year | 1-3 years | 4-5 years | After 5 years | | :---------------------- | :------- | :--------------- | :-------- | :-------- | :------------ | | CFG Loan | $12,199 | $0 | $0 | $12,199 | $0 | | CTB Loan | $13,413 | $1,110 | $2,220 | $2,220 | $7,863 | | Finance lease obligations | $3,666 | $2,274 | $1,307 | $85 | $0 | | Operating lease obligations | $18,559 | $3,139 | $5,747 | $2,595 | $7,078 | | **Total** | **$47,837** | **$6,523** | **$9,274** | **$17,099** | **$14,941** | [Critical Accounting Policies and Estimates](index=42&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Business Combinations, including asset acquisitions: Requires significant estimates and assumptions for fair value allocation of acquired assets and liabilities[234](index=234&type=chunk) - Carrying value of long-lived assets and intangibles: Reviewed annually for impairment using income or market approaches, involving estimates of future cash flows, useful lives, and discount rates[235](index=235&type=chunk)[236](index=236&type=chunk) - Asset Retirement Obligations (AROs): Estimates future reclamation and remediation costs, timing, and scope, which can materially impact earnings[238](index=238&type=chunk)[239](index=239&type=chunk) - Income Taxes: Involves judgment in determining tax expense, deferred tax assets/liabilities, and valuation allowances based on future operating results and tax planning strategies[240](index=240&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not required for smaller reporting companies - The information under this Item is not required to be provided by smaller reporting companies[242](index=242&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=45&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements for 2023 and 2022, with an unqualified opinion, highlighting the critical audit matter of acquired asset valuation - The consolidated financial statements for Arq, Inc. and Subsidiaries as of and for the years ended December 31, 2023 and 2022, are presented, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows[246](index=246&type=chunk)[248](index=248&type=chunk) - Moss Adams LLP, the independent registered public accounting firm, issued an unqualified opinion, stating the financial statements present fairly, in all material respects, the company's financial position and results of operations[248](index=248&type=chunk) - A critical audit matter was the valuation of acquired property, plant, and equipment (**$39.2 million**) and developed technology intangible assets (**$7.7 million**) from the Arq Acquisition, due to significant management judgment in projecting future financial performance and complex auditor evaluation of assumptions like revenue growth, production capacity, and discount/royalty rates[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk) [Note 1 - Summary of Operations and Significant Accounting Policies](index=53&type=section&id=Note%201%20-%20Summary%20of%20Operations%20and%20Significant%20Accounting%20Policies) - Arq Inc. is an environmental technology company selling AC and chemical solutions for air, water, and soil treatment, with manufacturing, mining, and logistics operations in Louisiana and Kentucky[273](index=273&type=chunk)[274](index=274&type=chunk) - The February 2023 Arq Acquisition secured access to feedstock, a manufacturing facility, and patented processes to produce GAC products from bituminous coal waste[275](index=275&type=chunk) - The company consolidates wholly-owned subsidiaries and VIEs where it is the primary beneficiary, and uses the equity method for investments where it has significant influence (e.g., **42.5% in Tinuum Group**, **50.0% in Tinuum Services**)[276](index=276&type=chunk)[277](index=277&type=chunk) - Revenue from consumables is recognized at the point of time when control transfers, typically upon shipment or delivery. For Minimum Quantity Contracts (MQ Contracts), revenue is recognized when a shortfall is probable, quantifiable, and the company elects to enforce billing[304](index=304&type=chunk)[306](index=306&type=chunk) - Research and development costs were **$3.3 million** in 2023 and **$2.1 million** in 2022, expensed as incurred[317](index=317&type=chunk) - The company adopted ASU 2016-13 (Credit Losses) effective January 1, 2023, with no material impact, and is evaluating ASU 2023-09 (Income Tax Disclosures) effective for fiscal years beginning after December 15, 2024[336](index=336&type=chunk)[337](index=337&type=chunk) [Note 2 - Arq Acquisition](index=60&type=section&id=Note%202%20-%20Arq%20Acquisition) - On February 1, 2023, Arq, Inc. acquired Legacy Arq's subsidiaries for a total consideration of **$31.2 million**, comprising **$12.4 million** in common stock and **$18.8 million** in Series A Convertible Preferred Stock[338](index=338&type=chunk)[340](index=340&type=chunk) - The acquisition resulted in **$8.7 million** in expensed acquisition-related costs[338](index=338&type=chunk)[340](index=340&type=chunk) Final Purchase Price Allocation (in thousands) | Category | Amount | | :---------------------------- | :---------- | | Fair value of assets acquired | $55,330 | | Fair Value of liabilities assumed | $24,125 | | **Net assets acquired** | **$31,205** | - Identified intangible assets included **$7.7 million** in developed technology with a weighted average useful life of **20 years**[342](index=342&type=chunk) - All Series A Preferred Stock was converted into **5,362,926 shares of Common Stock** on June 13, 2023, following stockholder approval[344](index=344&type=chunk)[350](index=350&type=chunk) - A PIPE Investment on February 1, 2023, generated **$15.4 million** from the sale of **3,842,315 shares of Common Stock**[351](index=351&type=chunk) Unaudited Pro Forma Financial Information (in thousands) | Category | 2023 | 2022 | | :-------- | :--------- | :--------- | | Revenue | $99,183 | $102,987 | | Net loss | $(11,119) | $(75,788) | [Note 3 - Inventories, net](index=63&type=section&id=Note%203%20-%20Inventories,%20net) - Inventories are valued at the lower of average cost or net realizable value, consisting primarily of raw materials and finished goods for AC products[283](index=283&type=chunk) Inventories, Net (in thousands) | Category | 2023 | 2022 | | :------------------ | :-------- | :-------- | | Product inventory | $9,524 | $9,479 | | Raw material inventory | $10,169 | $8,349 | | **Total** | **$19,693** | **$17,828** | [Note 4 - Property, Plant and Equipment](index=64&type=section&id=Note%204%20-%20Property,%20Plant%20and%20Equipment) Property, Plant and Equipment, Net (in thousands) | Category | 2023 | 2022 | | :---------------------------- | :--------- | :--------- | | Land and land improvements | $1,225 | $1,225 | | Plant and operating equipment | $81,266 | $33,180 | | Furniture and fixtures | $1,765 | $1,709 | | Machinery and equipment | $2,478 | $2,116 | | Leasehold improvements | $2,149 | $2,149 | | Construction in progress | $25,059 | $6,373 | | **Total Cost** | **$113,942** | **$46,752** | | Less accumulated depreciation | $(19,293) | $(11,897) | | **Total Net** | **$94,649** | **$34,855** | - Depreciation expense for the years ended December 31, 2023 and 2022 was **$8.5 million** and **$4.9 million**, respectively[361](index=361&type=chunk) - ROU assets related to finance lease obligations were **$1.7 million** in 2023 and **$2.6 million** in 2022, net of accumulated depreciation[360](index=360&type=chunk) [Note 5 - Revenue](index=64&type=section&id=Note%205%20-%20Revenue) - All material performance obligations related to revenue recognized were satisfied at a point in time for 2023 and 2022[362](index=362&type=chunk) - Approximately **8% of Consumables revenue** in both 2023 and 2022 was generated in Canada, with the rest in the U.S.[362](index=362&type=chunk) - In December 2023, the company recognized **$4.7 million** of consumables revenue from the settlement of certain minimum quantity contracts (MQ Contracts)[363](index=363&type=chunk) Receivables, Net (in thousands) | Category | 2023 | 2022 | | :------------------ | :-------- | :-------- | | Trade receivables, net | $11,289 | $13,789 | | Unbilled receivables | $4,862 | $0 | | Other | $41 | $75 | | **Total** | **$16,192** | **$13,864** | [Note 6 - Debt Obligations](index=65&type=section&id=Note%206%20-%20Debt%20Obligations) Debt Obligations (in thousands) | Category | 2023 | 2022 | | :---------------------------- | :--------- | :-------- | | CFG Loan due February 2027 | $10,000 | $0 | | CTB Loan due January 2036 | $9,527 | $0 | | Finance lease obligations | $3,465 | $4,581 | | Unamortized debt discounts | $(815) | $0 | | Unamortized debt issuance costs | $(1,250) | $0 | | Less: Current maturities | $(2,653) | $(1,131) | | **Total long-term debt obligations** | **$18,274** | **$3,450** | - The **$10.0 million CFG Loan**, closed February 1, 2023, provided **$8.5 million net cash proceeds** after OID and issuance costs, matures February 1, 2027, and bears interest at Adjusted Term SOFR or Base Rate plus margins (**9% cash, 5% PIK**)[369](index=369&type=chunk)[372](index=372&type=chunk) - The CFG Loan is secured by substantially all company assets (excluding CTB Loan collateral) and includes covenants for minimum unrestricted cash (**$5.0 million**), annual revenue (**$70.0 million for 2023, $85.0 million for 2024**), and Consolidated EBITDA (**$3.0 million for 2024**)[376](index=376&type=chunk) - The **$10.0 million CTB Loan**, assumed in the Arq Acquisition, matures January 27, 2036, bears **6.0% interest** through January 2026, and requires monthly principal and interest payments of **$0.1 million**[377](index=377&type=chunk)[378](index=378&type=chunk) - The CTB Loan Modification Agreement (June 2, 2023) waived certain financial delivery and covenant requirements for 2021-2023 and required an additional **$0.7 million deposit** into an Interest Reserve Account[379](index=379&type=chunk)[380](index=380&type=chunk) [Note 7 - Leases](index=67&type=section&id=Note%207%20-%20Leases) Lease ROU Assets and Liabilities (in thousands) | Category | 2023 | 2022 | | :-------------------------------------- | :--------- | :--------- | | Operating lease right-of-use assets, net | $10,592 | $7,734 | | Total operating lease obligation | $10,814 | $7,857 | | Finance lease right-of-use assets, net | $1,694 | $2,565 | | Total finance lease obligations | $3,465 | $4,581 | Lease Financial Information (in thousands) | Category | 2023 | 2022 | | :-------------------------------- | :------ | :------ | | Total lease cost | $6,880 | $5,569 | | Operating cash flows from finance leases | $258 | $307 | | Operating cash flows from operating leases | $2,887 | $2,923 | | Financing cash flows from finance leases | $1,130 | $1,246 | | Weighted-average remaining lease term - finance leases | 1.8 years | 2.8 years | | Weighted-average remaining lease term - operating leases | 7.6 years | 4.1 years | | Weighted-average discount rate - finance leases | 5.9% | 5.9% | | Weighted-average discount rate - operating leases | 11.3% | 6.9% | Future Lease Payments as of December 31, 2023 (in thousands) | Year | Operating Lease Commitments | Finance Lease Commitments | Total Lease Commitments | | :-------- | :-------------------------- | :------------------------ | :---------------------- | | 2024 | $3,139 | $2,274 | $5,413 | | 2025 | $2,930 | $935 | $3,865 | | 2026 | $2,817 | $372 | $3,189 | | 2027 | $1,464 | $85 | $1,549 | | 2028 | $1,131 | $0 | $1,131 | | Thereafter | $7,078 | $0 | $7,078 | | **Total Lease Payments** | **$18,559** | **$3,666** | **$22,225** | | Less: Imputed interest | $(7,745) | $(201) | $(7,946) | | **Present value of lease payments** | **$10,814** | **$3,465** | **$14,279** | [Note 8 - Commitments and Contingencies](index=69&type=section&id=Note%208%20-%20Commitments%20and%20Contingencies) - As of December 31, 2023, the company had outstanding surety bonds totaling **$11.2 million** for reclamation of the Five Forks Mine (**$7.5 million**), Corbin Facility (**$3.0 million**), and Mine 4 (**$0.7 million**)[394](index=394&type=chunk)[395](index=395&type=chunk) - Restricted cash of **$8.5 million** was pledged as collateral for surety bonds as of December 31, 2023[396](index=396&type=chunk) - In January 2024, the company executed a contract for the construction of a GAC facility at the Red River Plant, with estimated costs between **$62.0 million and $67.0 million**[398](index=398&type=chunk) - The company has limited obligations related to Tinuum Group, including guarantees and a contractual liability of **$1.7 million** as of December 31, 2023, related to the Tinuum Group Obligation[400](index=400&type=chunk)[401](index=401&type=chunk)[455](index=455&type=chunk) - A separation agreement with former CEO Mr. Marken resulted in severance payments, accelerated vesting of restricted stock, and continued eligibility for PSUs, with a liability of **$0.4 million** as of December 31, 2023[402](index=402&type=chunk) [Note 9 - Marshall Mine, LLC](index=70&type=section&id=Note%209%20-%20Marshall%20Mine,%20LLC) - On March 27, 2023, the company sold all membership interests in Marshall Mine, LLC for a **$2.2 million cash payment** and the buyer's assumption of **$4.9 million in liabilities**[404](index=404&type=chunk) - The sale resulted in a gain of approximately **$2.7 million** recognized in the Statement of Operations for 2023[404](index=404&type=chunk) [Note 10 - Supplemental Financial Information](index=71&type=section&id=Note%2010%20-%20Supplemental%20Financial%20Information) Prepaid Expenses and Other Current Assets (in thousands) | Category | 2023 | 2022 | | :-------------------------------- | :------ | :------ | | Prepaid expenses | $2,430 | $2,570 | | Prepaid income taxes and income tax refunds | $349 | $2,573 | | Other | $2,436 | $2,395 | | **Total** | **$5,215** | **$7,538** | Other Long-Term Assets, Net (in thousands) | Category | 2023 | 2022 | | :-------------------------------- | :--------- | :--------- | | Right of use assets, operating leases, net | $10,592 | $7,734 | | Spare parts, net | $9,147 | $6,789 | | Upfront customer consideration | $5,967 | $6,475 | | Mine reclamation asset, net | $1,955 | $1,641 | | Intangible assets, net | $7,899 | $847 | | Mine development costs, net | $7,377 | $5,478 | | Other long-term assets | $2,663 | $1,683 | | **Total** | **$45,600** | **$30,647** | - Mine development costs for the Five Forks Mine are depleted over an estimated **14-year life**[407](index=407&type=chunk) - The Highview Investment, an investment in a power storage company, is recorded at cost less impairment, with no changes to carrying value in 2023 or 2022[408](index=408&type=chunk)[409](index=409&type=chunk) Other Current Liabilities (in thousands) | Category | 2023 | 2022 | | :-------------------------------- | :------ | :------ | | Current portion of operating lease obligations | $1,944 | $2,724 | | Sales, use and other taxes payable | $948 | $1,039 | | Current portion of mine reclamation liability | $182 | $548 | | Other current liabilities | $2,718 | $2,334 | | **Total** | **$5,792** | **$6,645** | Other Long-Term Liabilities (in thousands) | Category | 2023 | 2022 | | :-------------------------------- | :--------- | :--------- | | Mine reclamation liabilities | $5,981 | $7,985 | | Operating lease obligations, long-term | $8,870 | $5,133 | | Other | $929 | $733 | | **Total** | **$15,780** | **$13,851** | Mine Reclamation Liabilities (AROs) (in thousands) | Category | 2023 | 2022 | | :-------------------------------------- | :------ | :------ | | Asset retirement obligations, beginning of year | $8,533 | $9,959 | | Asset retirement obligations assumed | $1,500 | $0 | | Accretion | $582 | $611 | | Liabilities settled | $(4,866) | $(2,071) | | Changes due to scope and timing of reclamation | $414 | $34 | | **Asset retirement obligations, end of year** | **$6,163** | **$8,533** | Interest Expense (in thousands) | Category | 2023 | 2022 | | :-------------- | :------ | :------ | | Interest on CFG Loan | $2,029 | $0 | | Interest on CTB Loan | $545 | $0 | | Other | $440 | $336 | | **Total** | **$3,014** | **$336** | Other Income (in thousands) | Category | 2023 | 2022 | | :------------ | :------ | :------ | | Interest income | $1,846 | $239 | | Other | $784 | $(84) | | **Total** | **$2,630** | **$155** | [Note 11 - Stockholders' Equity](index=73&type=section&id=Note%2011%20-%20Stockholders'%20Equity) - The Board is authorized to issue preferred stock, but none were outstanding as of December 31, 2023 and 2022[414](index=414&type=chunk) - Common stockholders have one vote per share, are entitled to dividends when declared, and receive remaining assets upon liquidation after creditors and preferred stockholders[415](index=415&type=chunk)[416](index=416&type=chunk) - Equity transactions in 2023 included the issuance of **3,814,864 common shares** and **5,294,462 Series A Preferred Stock** for the Arq Acquisition, a **$15.4 million PIPE Investment** for **3,842,315 common shares**, and the conversion of all Series A Preferred Stock into **5,362,926 common shares**[417](index=417&type=chunk)[419](index=419&type=chunk) - The company has a Stock Repurchase Program with **$7.0 million remaining** as of December 31, 2023, but no repurchases were made in Q4 2023[421](index=421&type=chunk) [Note 12 - Stock-Based Compensation](index=74&type=section&id=Note%2012%20-%20Stock-Based%20Compensation) - The company's 2022 Omnibus Incentive Plan permits grants of various equity awards to employees, directors, and consultants, with **190,281 shares authorized** for issuance as of December 31, 2023[422](index=422&type=chunk) - Stock-based compensation expense is measured at grant date fair value and expensed over the vesting/performance period, with forfeitures recognized when incurred[424](index=424&type=chunk)[425](index=425&type=chunk)[426](index=426&type=chunk) Stock-Based Compensation Expense (in thousands) | Category | 2023 | 2022 | | :------------------------ | :------ | :------ | | RSA expense | $1,887 | $1,679 | | PSU expense | $650 | $302 | | Stock option expense | $111 | $0 | | **Total** | **$2,648** | **$1,981** | Unrecognized Compensation Cost as of December 31, 2023 (in thousands) | Category | Unrecognized Compensation Cost | Expected Weighted-Average Period of Recognition (in years) | | :------------------------ | :----------------------------- | :------------------------------------------------------- | | RSA expense | $1,412 | 1.67 | | Stock option expense | $618 | 2.54 | | PSU expense | $994 | 1.36 | | **Total** | **$3,024** | **1.30** | - As of December 31, 2023, **790,005 non-vested RSAs** were outstanding, with a weighted-average grant date fair value of **$3.10**[433](index=433&type=chunk) - As of December 31, 2023, **968,918 PSUs** were outstanding, with a weighted-average grant date fair value of **$2.06** and an aggregate intrinsic value of **$2.9 million**[434](index=434&type=chunk) - As of December 31, 2023, **1,000,000 stock options** were outstanding with a weighted-average exercise price of **$3.00** and a remaining contractual term of **9.54 years**[436](index=436&type=chunk) [Note 13 - Income Taxes](index=77&type=section&id=Note%2013%20-%20Income%20Taxes) Sources of Pretax Loss (in thousands) | Category | 2023 | 2022 | | :------- | :-------- | :-------- | | Domestic | $(9,123) | $(8,708) | | Foreign | $(2,973) | $0 | | **Total** | **$(12,096)** | **$(8,708)** | Provision for Income Taxes (in thousands) | Category | 2023 | 2022 | | :------------------------ | :------ | :------ | | Current portion of income tax expense | $153 | $209 | | Deferred portion of income tax expense (benefit) | $0 | $0 | | **Total income tax expense** | **$153** | **$209** | | Effective tax rate | (1)% | (2)% | Deferred Tax Assets and Liabilities (in thousands) | Category | 2023 | 2022 | | :---------------------------- | :--------- | :--------- | | Total deferred tax assets | $112,307 | $99,302 | | Less valuation allowance | $(98,836) | $(88,293) | | Deferred tax assets | $13,471 | $11,009 | | Less: Deferred tax liabilities | $(13,471) | $(11,009) | | **Net deferred tax assets** | **$0** | **$0** | - As of December 31, 2023, the company concluded it is more likely than not that it will not generate sufficient taxable income to realize its net deferred tax assets, resulting in a **100% valuation allowance of $98.8 million**[443](index=443&type=chunk) Net Operating Loss and Tax Credit Carryforwards (in thousands) | Category | 2023 | Beginning Expiration Year | Ending Expiration Year | | :-------------------------------------- | :-------- | :------------------------ | :--------------------- | | Federal net operating loss carryforwards | $10,177 | 2035 | Indefinite | | Foreign net operation loss carryforwards | $3,629 | Indefinite | Indefinite | | State and other net operating loss carryforwards | $3,211 | 2025 | Indefinite | | Federal tax credit carryforwards | $86,125 | 2032 | 2041 | - The company performed an IRC Section 382 analysis as of the Arq Acquisition Date and determined no ownership change occurred for Arq, Inc., but believes Legacy Arq experienced ownership changes prior to acquisition, potentially limiting its tax assets[450](index=450&type=chunk)[451](index=451&type=chunk) - The Tax Asset Protection Plan (TAPP) was extended to December 31, 2024, to deter acquisitions of **4.99% or more** of outstanding common stock without Board approval, aiming to protect the ability to utilize tax assets[452](index=452&type=chunk) [Note 14 - Major Customers](index=80&type=section&id=Note%2014%20-%20Major%20Customers) Revenue from Major Customers | Customer | Revenue Type | 2023 | 2022 | | :------- | :----------- | :--- | :--- | | A | Consumables | 19% | 18% | | B | Consumables | 9% | 11% | [Note 15 - Related Party Transactions](index=80&type=section&id=Note%2015%20-%20Related%20Party%20Transactions) - For 2023, the company recognized **$0.7 million** in Tinuum Group Royalty expense, included in consumables cost of revenue[454](index=454&type=chunk) - As of December 31, 2023 and 2022, the company had an outstanding liability of **$1.7 million** related to its contractual amount due under the Tinuum Group Obligation[455](index=455&type=chunk) [Note 16 - Defined Contribution Savings Plans](index=80&type=section&id=Note%2016%20-%20Defined%20Contribution%20Savings%20Plans) - The company sponsors a 401(k) Plan for eligible employees, making cash contributions based on percentages of eligible compensation[456](index=456&type=chunk) 401(k) Plans Employer Contributions (in thousands) | Year Ended December 31, | Contributions | | :---------------------- | :------------ | | 2023 | $613 | | 2022 | $552 | [PART III](index=84&type=section&id=PART%20III) [Item 10. Directors, Executive Officers and Corporate Governance](index=84&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive proxy statement - Information required by this Item is incorporated by reference from the Registrant's definitive proxy statement to be filed no later than **120 days** after the end of the fiscal year[470](index=470&type=chunk) [Item 11. Executive Compensation](index=84&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's definitive proxy statement - Information required by this Item is incorporated by reference from the Registrant's definitive proxy statement to be filed no later than **120 days** after the end of the fiscal year[471](index=471&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=84&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information for beneficial owners and management is incorporated by reference, with details on equity compensation plan issuances - Information on security ownership of certain beneficial owners and management is incorporated by reference from the definitive proxy statement[472](index=472&type=chunk) - As of December 31, 2023, **190,281 securities** remained available for future issuance under equity compensation plans approved by security holders[473](index=473&type=chunk) - Outstanding options, warrants, and rights included **1,000,000 non-qualified stock options** (weighted-average exercise price **$3.00**), **790,005 unvested restricted stock awards**, and **968,918 unvested performance share units**[473](index=473&type=chunk) [Item 13. Certain Relationships and Related Transaction and Director Independence](index=84&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transaction%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's definitive proxy statement - Information required by this Item is incorporated by reference from the Registrant's definitive proxy statement to be filed no later than **120 days** after the end of the fiscal year[474](index=474&type=chunk) [Item 14. Principal Accountant Fees and Services](index=84&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's definitive proxy statement - Information required by this Item is incorporated by reference from the Registrant's definitive proxy statement to be filed no later than **120 days** after the end of the fiscal year[475](index=475&type=chunk) [PART IV](index=85&type=section&id=PART%20IV) [Item 15. Exhibits and Financial Statement Schedules](index=85&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules, including corporate documents, incentive plans, agreements, and certifications, with financial statements filed as part of Item 8 - The report includes consolidated financial statements of Arq, Inc. as part of Item 8[478](index=478&type=chunk) - All financial statement schedules are omitted because the required information is either not applicable, not present in sufficient amounts, or already included in the consolidated financial statements and notes[478](index=478&type=chunk) - A comprehensive list of exhibits is filed, including corporate governance documents (e.g., Certificate of Incorporation, Bylaws), incentive plans (2017 and 2022 Omnibus Incentive Plans), various agreements (e.g., Securities Purchase Agreement, Term Loan and Security Agreement), and certifications (e.g., Principal Executive Officer and Principal Financial Officer certifications)[478](index=478&type=chunk)[479](index=479&type=chunk)[480](index=480&type=chunk) [Item 16. Form 10-K Summary](index=89&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided in this report[486](index=486&type=chunk)

As filed with the Securities and Exchange Commission on January 4, 2024 No. 333- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ____________________________ ADVANCED EMISSIONS SOLUTIONS, INC. (Exact name of registrant as specified in its charter) (I.R.S. Employer Identification Number) 8051 E. Maplewood Ave., Suite 210 Greenwood Village, CO 80111 (720) 598-3500 (Address, including zip code, and telephone number, includ ...

United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________ FORM 10-Q ______________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37822 ______________________________________ Advanced Emissions ...

[PART I. - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity changes, cash flows, and detailed notes for specified periods [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Summarizes the company's financial position through its condensed consolidated balance sheets as of June 30, 2023, and December 31, 2022 Balance Sheet Summary (June 30, 2023 vs. December 31, 2022) | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $233,714 | $181,164 | | Total Liabilities | $58,899 | $41,185 | | Total Stockholders' Equity | $174,815 | $139,979 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's financial performance through condensed consolidated statements of operations for the three and six months ended June 30, 2023, and 2022 Statements of Operations (Three Months Ended June 30) | Metric | 2023 (in thousands) | 2022 (in thousands) | | :-------------------------------------------------- | :------------------ | :------------------ | | Total Revenues | $20,445 | $24,739 | | Total Operating Expenses | $26,532 | $27,475 | | Operating Loss | $(6,087) | $(2,736) | | Net Loss | $(5,856) | $(326) | | Basic Loss per Common Share | $(0.21) | $(0.02) | Statements of Operations (Six Months Ended June 30) | Metric | 2023 (in thousands) | 2022 (in thousands) | | :-------------------------------------------------- | :------------------ | :------------------ | | Total Revenues | $41,250 | $51,141 | | Total Operating Expenses | $55,164 | $57,212 | | Operating Loss | $(13,914) | $(6,071) | | Net Loss | $(13,364) | $(3,359) | | Basic Loss per Common Share | $(0.53) | $(0.18) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Outlines the changes in stockholders' equity for the six months ended June 30, 2023, reflecting capital transactions and net loss Stockholders' Equity Changes (January 1, 2023 to June 30, 2023) | Item | Amount (in thousands) | | :-------------------------------------------------- | :-------------------- | | Balances, January 1, 2023 | $139,979 | | Stock-based compensation | $1,108 | | Issuance of common stock pursuant to Arq Acquisition, net of offering costs | $12,437 | | Issuance of common stock related to PIPE Investment, net of offering costs | $15,220 | | Issuance of warrant | $826 | | Repurchase of common shares to satisfy minimum tax withholdings | $(160) | | Preferred stock dividends declared on redeemable preferred stock | $(157) | | Net loss | $(13,364) | | Balances, June 30, 2023 | $174,815 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Presents the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2023, and 2022 Cash Flow Summary (Six Months Ended June 30) | Activity | 2023 (in thousands) | 2022 (in thousands) | | :------------------------------------------ | :------------------ | :------------------ | | Net cash (used in) provided by operating activities | $(21,159) | $1,758 | | Net cash (used in) provided by investing activities | $(10,482) | $1,305 | | Net cash provided by (used) in financing activities | $22,792 | $(1,024) | | (Decrease) increase in Cash and Restricted Cash | $(8,849) | $2,039 | | Cash and Restricted Cash, end of period | $67,583 | $90,819 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering various accounting policies and transactions [Note 1 - Basis of Presentation](index=8&type=section&id=Note%201%20-%20Basis%20of%20Presentation) Describes the company's business, recent significant acquisitions, financing activities, and the basis for financial statement preparation - Advanced Emissions Solutions, Inc. (ADES) is an environmental technology company manufacturing and selling activated carbon (AC) and chemical technologies for air and water treatment, primarily for coal-fired power generation, industrial, and water treatment markets, also owning the Five Forks Mine for raw material supply[20](index=20&type=chunk) - On February 1, 2023, ADES acquired Arq Ltd.'s subsidiaries for **$31.2 million**, consisting of common stock and Series A Convertible Preferred Stock, with Arq focused on transforming coal waste into microfine carbon powder (Arq Powder) for granular activated carbon (GAC) production, expected to begin in H2 2024[21](index=21&type=chunk)[22](index=22&type=chunk) - On February 1, 2023, the Company entered into a **$10.0 million** Term Loan with CF Global (a related party), receiving net cash proceeds of **$8.5 million** after discounts and issuance costs, and issued a warrant to purchase 325,457 shares of Common Stock to CFG[23](index=23&type=chunk)[24](index=24&type=chunk) - On February 1, 2023, the Company completed a PIPE Investment, selling **3,842,315 shares** of Common Stock for **$15.4 million** at **$4.00 per share** to certain subscribers, including existing Arq Ltd. shareholders[25](index=25&type=chunk) Loss per Common Share (Three and Six Months Ended June 30) | Metric | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | | :-------------------------- | :------------------------------- | :----------------------------- | | Basic Loss per Share | $(0.21) | $(0.53) | | Diluted Loss per Share | $(0.21) | $(0.53) | [Note 2 - Arq Acquisition](index=10&type=section&id=Note%202%20-%20Arq%20Acquisition) Details the acquisition of Arq Ltd.'s subsidiaries, including purchase consideration, asset allocation, and pro forma financial effects - The total purchase consideration for the Arq Acquisition was **$31.2 million**, allocated to acquired assets and assumed liabilities, including **$12.4 million** for common stock and **$18.8 million** for preferred shares, with acquisition-related costs of **$8.7 million** expensed[42](index=42&type=chunk) Acquired Assets and Assumed Liabilities (as of Acquisition Date, in thousands) | Category | Amount | | :-------------------------------- | :------- | | Fair value of assets acquired | $55,330 | | Fair Value of liabilities assumed | $24,125 | | Net assets acquired | $31,205 | - Developed technology was identified as an intangible asset with a fair value of **$7.7 million** and a weighted-average useful life of **20 years**[45](index=45&type=chunk) - On June 13, 2023, stockholders approved the conversion of all outstanding Series A Preferred Stock into Common Stock[47](index=47&type=chunk) Arq Financial Performance (Acquisition Date to June 30, 2023, in thousands) | Metric | Amount | | :------- | :------- | | Revenues | $0 | | Net loss | $(6,756) | Pro Forma Effects of Arq Acquisition (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | | :------- | :--- | :--- | | Revenues | $41,250 | $51,141 | | Net loss | $(9,925) | $(38,965) | [Note 3 - Marshall Mine](index=13&type=section&id=Note%203%20-%20Marshall%20Mine) Discusses the sale of Marshall Mine, LLC, including the cash payment received and liabilities assumed - On March 27, 2023, the Company completed the sale of Marshall Mine, LLC, receiving a **$2.2 million** cash payment from the buyer, who assumed approximately **$4.9 million** in liabilities, resulting in a recognized gain of **$2.7 million** for the six months ended June 30, 2023[57](index=57&type=chunk) [Note 4 - Revenues](index=13&type=section&id=Note%204%20-%20Revenues) Provides a breakdown of receivables and geographical revenue concentration for consumables Receivables, net (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :-------------------- | :-------------- | :---------------- | | Trade receivables, net | $10,235 | $13,789 | | Other receivables | $72 | $75 | | Total Receivables, net | $10,307 | $13,864 | - For the three and six months ended June 30, 2023, approximately **5%** and **9%** of Consumables revenues, respectively, were generated in Canada, with all other revenues from the U.S[60](index=60&type=chunk) [Note 5 - Inventories, net](index=13&type=section&id=Note%205%20-%20Inventories,%20net) Presents a detailed breakdown of product and raw material inventories, net, for specified periods Inventories, net (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :-------------------- | :-------------- | :---------------- | | Product inventory, net | $12,205 | $9,479 | | Raw material inventory | $10,833 | $8,349 | | Total inventories, net | $23,038 | $17,828 | [Note 6 - Debt Obligations](index=14&type=section&id=Note%206%20-%20Debt%20Obligations) Outlines the company's debt obligations, including term loans, finance leases, and associated covenants Total Debt Obligations (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :-------------- | :---------------- | | Term Loan due February 2027, related party | $10,000 | $0 | | Arq Loan due January 2036 | $9,787 | $0 | | Finance lease obligations | $4,004 | $4,581 | | Unamortized debt discounts | $(943) | $0 | | Unamortized debt issuance costs | $(1,424) | $0 | | Total long-term debt obligations | $19,830 | $3,450 | - The Term Loan includes covenants requiring a minimum unrestricted cash balance of **$5.0 million**, minimum annual revenue (**$70.0 million** for FY2023, **$85.0 million** for FY2024, **$100.0 million** thereafter), and minimum Consolidated EBITDA (**$3.0 million** for FY2024, **$16.0 million** thereafter)[66](index=66&type=chunk) - On June 2, 2023, the Arq Loan was modified, clarifying terms, waiving certain financial delivery requirements and covenants for 2021-2023, and requiring Borrowers to establish operating bank accounts with the Bank by September 30, 2023[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) [Note 7 - Leases](index=16&type=section&id=Note%207%20-%20Leases) Details the company's lease right-of-use assets, lease liabilities, and total lease costs for operating and finance leases Lease ROU Assets and Liabilities (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :------------------------------------------ | :-------------- | :---------------- | | Operating lease right-of-use assets, net | $11,292 | $7,734 | | Total operating lease obligation | $11,381 | $7,857 | | Finance lease right-of-use assets, net | $2,120 | $2,565 | | Total finance lease obligations | $4,004 | $4,581 | Total Lease Cost (in thousands) | Category | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | | :-------------------- | :------------------------------- | :----------------------------- | | Finance lease cost | $286 | $577 | | Operating lease cost | $1,035 | $2,017 | | Short-term lease cost | $242 | $651 | | Variable lease cost | $56 | $64 | | Total lease cost | $1,619 | $3,309 | [Note 8 - Commitments and Contingencies](index=18&type=section&id=Note%208%20-%20Commitments%20and%20Contingencies) Discusses outstanding retention liabilities, surety bonds, cash collateral, and the absence of significant legal proceedings - The outstanding Retention Liability of **$1.4 million** as of December 31, 2022, was paid in full in January 2023[85](index=85&type=chunk) - As of June 30, 2023, the Company had **$7.5 million** in surety bonds for Five Forks Mine, **$3.0 million** for Corbin Facility land, and **$0.7 million** for Mine 4, with cash collateral of **$8.6 million** posted as long-term restricted cash[86](index=86&type=chunk)[87](index=87&type=chunk)[89](index=89&type=chunk) - The **$16.6 million** surety bond related to Marshall Mine was released upon its sale on March 27, 2023[88](index=88&type=chunk) - No significant legal proceedings were outstanding as of June 30, 2023[91](index=91&type=chunk) [Note 9 - Supplemental Financial Information](index=19&type=section&id=Note%209%20-%20Supplemental%20Financial%20Information) Provides additional details on other long-term assets, current and long-term liabilities, and mine reclamation liabilities Other Long-Term Assets, Net (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :-------------- | :---------------- | | Right of use assets, operating leases, net | $11,292 | $7,734 | | Intangible assets, net | $8,222 | $847 | | Spare parts, net | $7,647 | $6,789 | | Upfront Customer Consideration | $6,221 | $6,475 | | Mine development costs, net | $6,629 | $5,478 | | Mine reclamation asset, net | $1,591 | $1,641 | | Other | $2,622 | $1,683 | | Total other long-term assets, net | $44,224 | $30,647 | Other Current and Long-Term Liabilities (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :-------------- | :---------------- | | Other current liabilities | $6,375 | $6,645 | | Other long-term liabilities | $15,135 | $13,851 | Mine Reclamation Liabilities (ARO) (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :-------------- | :---------------- | | Asset retirement obligations, beginning of period | $8,533 | $9,959 | | Asset retirement obligations assumed (Corbin ARO, Mine 4 ARO) | $1,500 | $0 | | Liabilities settled (Marshall Mine ARO removal) | $(4,844) | $(2,071) | | Asset retirement obligations, end of period | $5,492 | $8,533 | [Note 10 - Equity Method Investments](index=21&type=section&id=Note%2010%20-%20Equity%20Method%20Investments) Reports earnings, obligations, royalties, and cash distributions from equity method investees, primarily Tinuum Group - For the three and six months ended June 30, 2023, earnings from Tinuum Group were **$0.2 million** and **$0.9 million**, respectively, a decrease from **$2.1 million** and **$3.1 million** in the comparable 2022 periods, primarily due to Tinuum Group winding down services[104](index=104&type=chunk)[175](index=175&type=chunk) - The Company's portion of the Tinuum Group Obligation was **$1.7 million** as of June 30, 2023, and December 31, 2022[105](index=105&type=chunk) - The Company recognized **$0.3 million** and **$0.5 million** in Tinuum Group Royalties for the three and six months ended June 30, 2023, respectively, on sales of M-Prove products[106](index=106&type=chunk) Cash Distributions from Equity Method Investees (Six Months Ended June 30, in thousands) | Category | 2023 | 2022 | | :-------------------------------------------------- | :--- | :--- | | Distributions from equity method investees, return on investment | $0 | $2,297 | | Distributions from equity method investees in excess of investment basis | $1,100 | $3,316 | | Total Distributions | $1,100 | $5,613 | [Note 11 - Stockholders' Equity](index=22&type=section&id=Note%2011%20-%20Stockholders'%20Equity) Details changes in stockholders' equity, including stock issuances, warrant grants, share repurchases, and the Tax Asset Protection Plan - On February 1, 2023, **3,814,864 shares** were issued for the Arq Acquisition and **3,842,315 shares** for the PIPE Investment[112](index=112&type=chunk) - All Series A Preferred Stock was converted into Common Stock on the Conversion Date (June 13, 2023) following stockholder approval[114](index=114&type=chunk) - **325,857 Warrant Shares** were issued as consideration for the Term Loan, recorded at an estimated fair value of **$0.8 million** to Additional Paid-in Capital[115](index=115&type=chunk) - **$7.0 million** remained under the stock repurchase program as of June 30, 2023[116](index=116&type=chunk) - The Board approved the Sixth Amendment to the Tax Asset Protection Plan (TAPP), extending its duration to December 31, 2024, to protect the Company's ability to utilize net operating losses and tax credits[121](index=121&type=chunk) [Note 12 - Stock-Based Compensation](index=23&type=section&id=Note%2012%20-%20Stock-Based%20Compensation) Presents the total stock-based compensation expense and unrecognized compensation costs for various equity awards Total Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | | :-------------------------------- | :------------------------------- | :----------------------------- | | RSA expense | $416 | $904 | | PSU expense | $129 | $204 | | Total stock-based compensation expense | $545 | $1,108 | Unrecognized Compensation Cost (as of June 30, 2023, in thousands) | Category | Unrecognized Compensation Cost | Expected Weighted Average Period of Recognition (in years) | | :-------------------------------- | :----------------------------- | :------------------------------------------------------- | | RSA expense | $2,418 | 2.24 | | PSU expense | $930 | 2.24 | | Total unrecognized stock-based compensation expense | $3,348 | 2.24 | [Note 13 - Income Taxes](index=24&type=section&id=Note%2013%20-%20Income%20Taxes) Explains the company's income tax benefit and effective tax rate, noting the impact of a full valuation allowance - For the three and six months ended June 30, 2023 and 2022, the Company recorded no income tax benefit (or a minimal benefit of **$33 thousand** for H1 2023) and an effective tax rate of **0%** due to a full valuation allowance against deferred tax assets, based on a forecast of pretax loss[129](index=129&type=chunk) [Note 14 - Subsequent Events](index=24&type=section&id=Note%2014%20-%20Subsequent%20Events) Reports on significant events occurring after the reporting period, including CEO appointment and related compensation agreements - On July 14, 2023, Robert Rasmus was appointed President and CEO, effective July 17, 2023, succeeding Greg Marken, and was also appointed to the Board[133](index=133&type=chunk) - Mr. Rasmus agreed to purchase **950,000 shares** of common stock for **$1.8 million** (approximately **$1.90 per share**)[134](index=134&type=chunk) - Greg Marken's separation agreement includes severance payments, accelerated vesting of **49,715 restricted stock shares**, and continued eligibility for pro rata PSU vesting (totaling **61,763 target PSUs**), with the Company expecting to record an **$0.8 million** liability for severance[135](index=135&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operational results, highlighting the Arq Acquisition's impact, demand drivers, and liquidity for the periods ended June 30, 2023 [Overview](index=26&type=section&id=Overview) Provides a high-level introduction to the company's business, recent strategic transactions, and key profitability drivers - Advanced Emissions Solutions, Inc. (ADES) is an environmental technology company specializing in activated carbon (AC) and chemical-based solutions for air and water treatment, serving coal-fired utilities, industrials, and municipal water customers, with raw materials sourced from its lignite mine[139](index=139&type=chunk) - The Company completed the Arq Acquisition, entered into a Term Loan, and executed a PIPE Investment, all on February 1, 2023, significantly impacting its financial structure and future operations[140](index=140&type=chunk)[142](index=142&type=chunk)[144](index=144&type=chunk) - Profitability is influenced by sales of consumables for various markets, manufacturing and sales volumes, average selling price and product mix, coal-fired dispatch and electricity generation sources, and demand for water contaminant removal[145](index=145&type=chunk) [Drivers of Demand and Key Factors Affecting Profitability](index=26&type=section&id=Drivers%20of%20Demand%20and%20Key%20Factors%20Affecting%20Profitability) Analyzes factors influencing product demand and profitability, including natural gas prices and weather conditions - For Q2 and H1 2023, demand for products from coal-fired power generation customers decreased due to lower natural gas prices (Q2 2023 average **$2.16/MMBtu** vs. Q2 2022 average **$7.47/MMBtu**) and mild temperatures, leading to reduced coal-fired generation[146](index=146&type=chunk)[151](index=151&type=chunk) - Natural gas prices are expected to remain low through 2023, which is anticipated to negatively impact sales volumes, even with potentially higher summer temperatures[146](index=146&type=chunk) [Marshall Mine](index=27&type=section&id=Marshall%20Mine) Details the sale of Marshall Mine, LLC, including the financial impact and liabilities assumed - The sale of Marshall Mine, LLC closed on March 27, 2023, involving a **$2.2 million** cash payment to the buyer and the assumption of **$4.9 million** in liabilities, resulting in a **$2.7 million** gain for the six months ended June 30, 2023[147](index=147&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Compares the company's financial performance for the three and six months ended June 30, 2023, against the prior year - Net loss significantly increased to **$5.9 million** for Q2 2023 (from **$0.3 million** in Q2 2022) and **$13.4 million** for H1 2023 (from **$3.4 million** in H1 2022), primarily due to increased expenses from the Arq Acquisition and decreased demand for AC and chemical products[148](index=148&type=chunk) [Comparison of the Three Months Ended June 30, 2023 and 2022](index=27&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030,%202023%20and%202022) Compares the company's revenues, costs, and operating expenses for the three months ended June 30, 2023, and 2022 Revenue & Cost of Revenue (Q2 YoY, in thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------------------------------- | :--- | :--- | :--------- | :--------- | | Consumables Revenues | $20,445 | $24,739 | $(4,294) | (17)% | | Consumables cost of revenue | $15,336 | $19,910 | $(4,574) | (23)% | - Consumables revenue decreased primarily due to **$6.4 million** lower volumes sold (driven by low natural gas prices and mild weather) and **$0.1 million** unfavorable product mix, partially offset by **$2.2 million** higher pricing[151](index=151&type=chunk) - Consumables gross margin increased due to decreased feedstock and additive prices, despite higher fixed costs as a percentage of total costs due to lower production volumes[152](index=152&type=chunk) Other Operating Expenses (Q2 YoY, in thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------------------ | :--- | :--- | :--------- | :--------- | | Payroll and benefits | $3,555 | $2,519 | $1,036 | 41% | | Legal and professional fees | $1,868 | $1,555 | $313 | 20% | | General and administrative | $3,345 | $1,869 | $1,476 | 79% | | Depreciation, amortization, depletion and accretion | $2,428 | $1,588 | $840 | 53% | - Operating expenses increased due to the addition of Arq employees, higher legal and professional fees related to the Arq Acquisition and intellectual property, increased general and administrative expenses from Arq operations (**$0.9 million**) and other corporate costs (**$0.6 million**), and higher depreciation/amortization from Arq assets (**$0.9 million**)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) Other Income (Expense) (Q2 YoY, in thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Earnings from equity method investments | $462 | $2,389 | $(1,927) | (81)% | | Interest expense | $(834) | $(90) | $(744) | 827% | | Other | $603 | $111 | $492 | 443% | - Other income decreased primarily due to lower equity method earnings as Tinuum Group and Services wound down, and increased interest expense from the Term Loan (**$0.5 million**) and Arq Loan (**$0.2 million**), partially offset by **$0.5 million** in interest income from cash on hand[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) [Comparison of the Six Months Ended June 30, 2023 and 2022](index=29&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030,%202023%20and%202022) Compares the company's revenues, costs, and operating expenses for the six months ended June 30, 2023, and 2022 Revenue & Cost of Revenue (H1 YoY, in thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------------------------------- | :--- | :--- | :--------- | :--------- | | Consumables Revenues | $41,250 | $51,141 | $(9,891) | (19)% | | Consumables cost of revenue | $32,511 | $41,417 | $(8,906) | (22)% | - Consumables revenue decreased primarily due to **$12.9 million** lower volumes sold and **$1.0 million** unfavorable product mix, partially offset by **$4.0 million** higher pricing[166](index=166&type=chunk) - Consumables gross margin was negatively impacted by decreased volumes, but offset by lower feedstock prices and increased product prices[167](index=167&type=chunk) Other Operating Expenses (H1 YoY, in thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------------------------------- | :--- | :--- | :--------- | :--------- | | Payroll and benefits | $8,254 | $5,145 | $3,109 | 60% | | Legal and professional fees | $6,406 | $3,727 | $2,679 | 72% | | General and administrative | $6,123 | $3,795 | $2,328 | 61% | | Depreciation, amortization, depletion and accretion | $4,565 | $3,094 | $1,471 | 48% | | Gain on sale of Marshall Mine, LLC | $(2,695) | $0 | $(2,695) | * | - Payroll and benefits increased by **$3.2 million** due to Arq employees (including **$1.1 million** severance), offset by a **$0.7 million** decrease in retention bonuses[169](index=169&type=chunk) - Legal and professional fees increased by **$2.4 million** due to non-recurring Arq Acquisition costs[170](index=170&type=chunk) - General and administrative expenses increased by **$1.5 million** from Arq operations (**$0.7 million** rent) and **$0.8 million** from other corporate costs[171](index=171&type=chunk) - Depreciation and amortization increased by **$1.5 million** from Arq assets[172](index=172&type=chunk) Other Income (Expense) (H1 YoY, in thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Earnings from equity method investments | $1,100 | $3,222 | $(2,122) | (66)% | | Interest expense | $(1,368) | $(176) | $(1,192) | 677% | | Other | $785 | $(334) | $1,119 | (335)% | - Other income decreased primarily due to lower equity method earnings as Tinuum Group and Services wound down, and increased interest expense from the Term Loan (**$0.9 million**) and Arq Loan (**$0.3 million**), partially offset by **$0.8 million** in interest income on cash, contrasting with a **$0.5 million** loss in 2022 from early settlement of a receivable[175](index=175&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) [Non-GAAP Financial Measures](index=32&type=section&id=Non-GAAP%20Financial%20Measures) Presents and reconciles non-GAAP financial measures, including Consolidated EBITDA and Adjusted EBITDA Consolidated EBITDA and Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(5,856) | $(326) | $(13,364) | $(3,359) | | EBITDA (loss) | $(2,993) | $1,443 | $(7,980) | $107 | | Adjusted EBITDA (loss) | $(2,993) | $2,188 | $(10,675) | $3,067 | - EBITDA is net income (loss) adjusted for depreciation, amortization, depletion, accretion, upfront customer consideration amortization, net interest expense, and income taxes[182](index=182&type=chunk) - Adjusted EBITDA further adjusts EBITDA for non-cash equity earnings, gain on sale of Marshall Mine, cash distributions from equity method investments, loss on early settlement of long-term receivable, and loss on change in estimate for asset retirement obligation[182](index=182&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's cash position, cash flow activities, future capital requirements, and funding strategies - Cash and restricted cash decreased from **$76.4 million** as of December 31, 2022, to **$67.6 million** as of June 30, 2023[186](index=186&type=chunk) Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2023 | 2022 | | :------------------------------------------ | :--- | :--- | | Operating activities | $(21,159) | $1,758 | | Investing activities | $(10,482) | $1,305 | | Financing activities | $22,792 | $(1,024) | - Cash flows used in operating activities increased by **$22.9 million**, primarily due to higher net loss, non-cash gain on Marshall Mine sale, decrease in accounts payable, increase in other long-term assets, and decreased distributions from equity method investees[187](index=187&type=chunk) - Cash flows used in investing activities increased by **$11.8 million**, mainly due to higher property, plant, and equipment additions, increased mine development costs, decreased distributions from equity earnings, and a cash payment for Marshall Mine sale, partially offset by cash acquired in Arq Acquisition[188](index=188&type=chunk) - Cash flows provided by financing activities increased by **$23.8 million**, driven by **$8.5 million** net borrowings from the Term Loan and **$15.2 million** net proceeds from the PIPE Investment[189](index=189&type=chunk) - Material cash requirements are expected to be funded by cash on hand for the next 12 months, despite increased liabilities from the Arq Acquisition and significant capital expenditures[190](index=190&type=chunk) - For 2023, capital expenditures are forecast between **$40.0 million** and **$45.0 million**, including **$13.0 million-$15.0 million** for Red River Plant improvements and **$27.0 million-$30.0 million** for growth capital to modify Red River and Corbin Plants for Arq Powder feedstock[191](index=191&type=chunk) - As of June 30, 2023, the Company had outstanding surety bonds totaling **$7.5 million** for Five Forks Mine and **$3.0 million** for Corbin Facility reclamation, backed by **$7.7 million** in restricted cash collateral[192](index=192&type=chunk)[193](index=193&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that the information regarding quantitative and qualitative disclosures about market risk is not required for smaller reporting companies, which the registrant is - The Company is a smaller reporting company and is not required to provide information under this Item[201](index=201&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2023. The business acquired from Arq was excluded from the assessment of internal control over financial reporting for this period, as permitted by SEC guidance - Principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of June 30, 2023[202](index=202&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2023, and the acquired Arq business was excluded from the assessment of internal control over financial reporting for this period[203](index=203&type=chunk) [PART II. - OTHER INFORMATION](index=37&type=section&id=PART%20II.%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 8 'Commitments and Contingencies' for information regarding legal actions and proceedings, stating that no significant legal proceedings were outstanding as of June 30, 2023 - Information on legal proceedings is referenced in Note 8 'Commitments and Contingencies' of the financial statements[206](index=206&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section updates the Company's risk factors from the 2022 Form 10-K, specifically highlighting a new material risk related to potential bank failures or other events affecting financial institutions, which could adversely impact the Company's liquidity and operations due to its concentration of cash deposits in one bank - No material updates to risk factors from the 2022 Form 10-K, except for a new risk related to bank failures or other events affecting financial institutions[207](index=207&type=chunk) - The Company primarily uses one U.S. bank, with most cash deposits exceeding FDIC limits, and failure of this bank or adverse conditions in financial markets could disrupt access to cash, impact liquidity, or limit transaction processing[208](index=208&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section indicates that there were no unregistered sales of equity securities or use of proceeds to report for the period - No information to report under this item[210](index=210&type=chunk) [Item 3. Defaults Upon Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities to report for the period - No information to report under this item[211](index=211&type=chunk) [Item 4. Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section notes that the required mine safety disclosures are provided in Exhibit 95.1 of this Quarterly Report - Mine safety disclosures are included in Exhibit 95.1[212](index=212&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) This section indicates that there was no other information to report for the period - No information to report under this item[213](index=213&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report, including amendments to the Tax Asset Protection Plan, loan modification agreements, officer certifications, mine safety disclosures, and XBRL interactive data files - Lists various exhibits filed with the report, including the Sixth Amendment to the Tax Asset Protection Plan, Loan Modification Agreement, Certifications of Principal Executive and Financial Officers, Mine Safety Disclosure Exhibit, and XBRL documents[215](index=215&type=chunk) [Signatures](index=39&type=section&id=Signatures) This section contains the official signatures of the Company's Chief Executive Officer and Chief Accounting Officer, certifying the report's submission on August 9, 2023 - The report was signed by Robert Rasmus (Chief Executive Officer) and Morgan Fields (Chief Accounting Officer) on August 9, 2023[218](index=218&type=chunk)