What changed in this filing

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Item 9A. Controls and Procedures

2022-03-08 compared with 2021-03-10 · 218 added, 235 removed, 643 unchanged (41% of the section changed)

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Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2020.

Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of December 31, 2021 due to a material weakness in our internal control over financial reporting described below.

Management’s Report on Internal Control over Financial Reporting

8 unchanged sentences

Under the supervision of, and with the participation of our management, including the principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control-Integrated Framework in 2013, issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2020.

Based on this evaluation, our management concluded that our internal control over financial reporting was not effective as of December 31, 2021 due to the material weakness described below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

During the assessment process, we identified deficiencies in the design and operation of controls over (1) the selection and application of accounting principles;

(2) the monitoring of interpretative guidance of previously adopted accounting standards;

and (3) the annual review of policies and procedures related to material accounts.

These deficiencies in combination were evaluated as having a reasonable possibility that a material misstatement would not be prevented or detected on a timely basis resulting in a material weakness in our internal controls.

As a result of these deficiencies, as described in Note 2 to the consolidated financial statements included in Item 8.

"Financial Statements and Supplementary Data," the Company identified and corrected immaterial errors in previously reported revenues due to freight revenue being improperly classified as consumables cost of revenue instead of consumables revenues.

The material weakness did not result in a material misstatement of our historical consolidated financial statements.

Management developed a plan to remediate the material weakness described above.

Remediation efforts include (1) changes to the design of controls relating to the selection and application of accounting principles and the evaluation of changes in interpretative guidance relating to previously implemented accounting standards and (2) implementing an annual review of key accounting policies.

The implementation of the remediation plan is in progress, and we expect to design and implement these changes in internal controls during the first half of fiscal year 2022.

Changes in Internal Control Over Financial Reporting

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Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers, and Corporate Governance

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Total — 880,564

(1) Includes the Amended and Restated 2007 Equity Incentive Plan, as amended, the Amended and Restated 2010 Non-Management Compensation and Incentive Plan, as amended, and the 2017 Omnibus Incentive Plan.

(1) Includes securities registered for issuance under the ADA-ES Profit Sharing Retirement Plan and the 2017 Omnibus Incentive Plan.

(2) The number of securities is reduced by 531,623 shares of restricted common stock for which restrictions have not lapsed.

29 unchanged sentences

8-K 001-37822 4.4 April 9, 2020

4.6 Fourth Amendment to Tax Asset Protection Plan dated as of April 9, 2021, by and between the Company and Computershare Trust Company, N.A., as rights agent

8-K 001-37822 4.5 April 13, 2021

10.1 Advanced Emissions Solutions, Inc.

1 unchanged sentence

8-K 001-37822 10.1 June 22, 2017

10.2 Form of Employment Agreement dated August 27, 2014, among L.

Heath Sampson, ADA-ES, Inc.

and Advanced Emissions Solutions, Inc., as amended **

10-K 000-54992 10.19 February 29, 2016

10.2 Rider to Employment Agreement dated August 27, 2014 between Heath Sampson and ADA-ES, Inc.

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10.3 Form of Amendment No.

2 to Employment Agreement of Greg Marken and Theodore Sanders **

2 to Employment Agreement of Greg Marken **

10-Q 001-37822 10.1 August 6, 2018

10.5 Employment Agreement dated May 7, 2020, between the Company and Christine Bellino **

8-K 001-37822 10.1 May 11, 2020

10.4 Release of Claims and Separation Agreement dated as of June 30, 2020, between the Company and Heath Sampson

4 unchanged sentences

8-K 001-37822 10.1 March 3, 2021

10.7 Form of Retention Agreement dated May 5, 2021 of Greg Marken and Morgan Fields **, ***

10-Q 001-37822 10.4 May 10, 2021

10.8 Retention Agreement dated May 5, 2021 between the Company and Joe Wong **, ***

10-Q 001-37822 10.5 May 10, 2021

Description Form File No.

1 unchanged sentence

Exhibit Filing Date

10.9 Employment Agreement dated May 7, 2020, between the Company and Christine Bellino **, ***

8-K 001-37822 10.1 May 11, 2020

10.10 Second Amended and Restated Operating Agreement of Clean Coal Solutions, LLC dated May 27, 2011, by and among Clean Coal Solutions, LLC, ADA-ES, Inc., GSFS Investments I Corp.

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10-K 000-50216 10.49 March 15, 2012

10.20 Exclusive Right to Lease Agreement dated May 27, 2011 between Clean Coal Solutions, LLC and GSFS Investments I Corp ***

10-Q/A 000-50216 10.84 September 28, 2011

10.21 ADA-ES, Inc.

Limited Guaranty for the benefit of GSFS Investments I Corp.

dated May 27, 2011

10-Q 000-50216 10.86 August 12, 2011

10.22 ADA-ES, Inc.

Limited Guaranty for the benefit of GS RC Investments LLC dated November 21, 2011

10-K 000-50216 10.44 March 15, 2012

10.23 ADA-ES, Inc.

Limited Guaranty for the benefit of GS RC Investments LLC dated December 15, 2011

10-K 000-50216 10.50 March 15, 2012

10.21 M-45 Technology License Agreement between ADA-ES, Inc.

1 unchanged sentence

10-Q 000-50216 10.58 November 9, 2012

10.25 Undertaking and Assumption Agreement by and among Advanced Emissions Solutions, Inc., ADA-ES, Inc., and ADA Environmental Solutions, LLC dated as of July 1, 2013

10-Q 000-54992 10.62 November 12, 2013

10.26 2013 Loan and Security Agreement by and among ADA-ES, Inc., Advanced Emissions Solutions, Inc., and CoBiz Bank d/b/a Colorado Business Bank in the State of Colorado dated as of September 19, 2013

10-K 000-54992 10.69 February 29, 2016

Description Form File No.

Incorporated by Reference

Exhibit Filing Date

10.27 Thirteenth Amendment of 2013 Loan and Security Agreement by and among ADA-ES, Inc., Advanced Emissions Solutions, Inc., and CoBiz Bank d/b/a Colorado Business Bank in the State of Colorado dated as of December 7, 2018

8-K 001-37822 10.2 December 13, 2018

10.28 Fourteenth Amendment of 2013 Loan and Security Agreement by and among ADA-ES,Inc., Advanced Emissions Solutions, Inc., and BOK, NA d/b/a Bank of Oklahoma dated as of September 29, 2020

8-K 001-37822 10.1 September 29, 2020

10.29 Purchase and Sale Agreement by and among Energy Capital Partners I, LP, Energy Capital Partners I-A, LP, Energy Capital Partners I-B IP, LP, Energy Capital Partners I (Crowfoot IP), LP, and Carbon Solutions Management, LLC, as Sellers, and Advanced Emissions Solutions, Inc., as Purchaser, dated as of November 15, 2018

8-K 001-37822 2.1 November 15, 2018

10.30 Term Loan and Security Agreement among Advanced Emissions Solutions, Inc., certain subsidiaries as Guarantors, the Bank of New York Mellon as administrative agent, and Apollo dated as of December 7, 2018

8-K 001-37822 10.1 December 13, 2018

10.31 First Amendment to Term Loan and Security Agreement dated April 20, 2020, among the Company, the Company’s Subsidiaries named therein, the Lenders named therein and The Bank of New York Mellon as administrative agent to the Lenders

8-K 001-37822 10.2 April 22, 2020

10.22 Lignite Mining Agreement between Demery Resources Company, L.L.C.

7 unchanged sentences

10-Q 001-37822 10.1 November 12, 2019

10.35 Promissory Note of the Company dated April 21, 2020, made under the Paycheck Protection Program sponsored by the U.S.

Small Business Administration through BOK, NA dba Bank of Oklahoma

8-K 001-37822 10.1 April 22, 2020

10.25 Master Agreement for Supply of Furnace Products between ADA Carbon Solutions, LLC and Cabot Norit Americas, Inc.

8-K 001-37822 10.1 September 30, 2020

Description Form File No.

Incorporated by Reference

Exhibit Filing Date

10.26 Amended and Restated Lignite Mining Agreement among Caddo Creek Resources Company, L.L.C., ADA Carbon Solutions (Operations), LLC, Marshall Mine, LLC and The North American Coal Corporation dated as of September 30, 2020 ***

8-K 001-37822 10.2 September 30, 2020

10.27 Fifteenth Amendment of 2013 Loan and Security Agreement by and among ADA-ES,Inc., Advanced Emissions Solutions, Inc., and BOK, NA d/b/a Bank of Oklahoma dated as of March 23, 2021

8-K 001-37822 10.1 March 29, 2021

10.28 Sixteenth Amendment of 2013 Loan and Security Agreement by and among ADA-ES,Inc., Advanced Emissions Solutions, Inc., and BOK, NA d/b/a Bank of Oklahoma dated as of July 29, 2021

8-K 001-37822 10.1 July 29, 2021

21.1 Subsidiaries of Advanced Emissions Solutions, Inc.

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Pursuant to 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a) *

31.2 Certification of Principal Finan cial Officer of Advanced Emissions Solutions, Inc.

31.2 Certification of Principal Financial Officer of Advanced Emissions Solutions, Inc.

Pursuant to 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a) *

Description Form File No.

Incorporated by Reference

Exhibit Filing Date

32.1 Certification of Principal Executive Officer and Principal Financial Officer of Advanced Emissions Solutions, Inc.

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*** – Portions of this exhibit have been omitted pursuant to a request for confidential treatment.

The non-public information has been separately filed with the Securities and Exchange Commission.

Filings for the Company were made under the name ADA-ES, Inc.

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001-37822) starting on July 6, 2016.

(1) Tinuum Group, LLC and Subsidiaries;

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Report of Independent Auditors

The Board of Managers and Members of

To the Board of Managers and Members

Tinuum Group, LLC

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of Tinuum Group, LLC and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2020 and 2019, and the related consolidated statements of operations, members’ equity, and cash flows for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America;

this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.

The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.

Accordingly, we express no such opinion.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Report on the Audit of the Financial Statements

We have audited the consolidated financial statements of Tinuum Group, LLC and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and the related consolidated statements of operations, members’ equity, and cash flows for the years then ended and the related notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Tinuum Group, LLC and its subsidiaries as of December 31, 2021 and 2020, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS).

Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.

We are required to be independent of Tinuum Group, LLC and its subsidiaries and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Tinuum Group, LLC and its subsidiaries as of December 31, 2020 and 2019, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Tinuum Group, LLC and its subsidiaries’ ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with GAAS, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Tinuum Group, LLC and its subsidiaries’ internal control.

Accordingly, no such opinion is expressed.

• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Tinuum Group, LLC and its subsidiaries’ ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.

Emphasis of Matter Regarding Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, with cash inflows ending in January 2022 and with legislation to extend the production tax credit (PTC) expiration date not in process or having been passed, management has assumed the reduced emissions fuel (REF) facilities and the related PTCs will expire as scheduled by December 31, 2021, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern.

The accompanying consolidated financial statements have been prepared assuming that Tinuum Group, LLC and its subsidiaries will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, with the expiration of the production tax credit (PTC) as of December 31, 2021 all third-party investor contracts have expired or been terminated and Tinuum Group, LLC and its subsidiaries have terminated reduced emissions fuel production as of December 31, 2021, which has led to cash inflows ending in January 2022.

To date, management has not developed an alternative business strategy that would support continued business operations.

Given these events and conditions, substantial doubt exists about the Tinuum Group, LLC and its subsidiaries’ ability to continue as a going concern.

Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1.

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March 4, 2022

TINUUM GROUP, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of December 31, 2021 and 2020

(in thousands)

CURRENT ASSETS

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Accounts receivable 7,727 8,029

Related party receivables 102 —

Income tax receivable — 5,966

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Contract receivables – long term — 4,122

Contract costs – long term — 5,226

Other assets, net — 19

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Statement continues on the next page

The accompanying notes are an integral part of the consolidated financial statements

TINUUM GROUP, LLC AND SUBSIDIARIES

7 unchanged sentences

Related party payables 6,636 7,653

Deferred revenue – current 11,898 9,810

Line of credit — 5,500

Note payable to customer – current 5,400 21,600

Secured promissory notes – current 6,313 —

Deferred revenue — 11,898

Note payable to customer — 5,400

Secured promissory notes — 6,313

Asset retirement obligations 1,795 —

Accrued retention compensation 1,835 —

Total current liabilities 15,558 44,278

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Accrued retention compensation — 3,116

Secured promissory notes – long term — 6,491

Note payable to customer – long term — 5,400

TOTAL LIABILITIES 15,558 49,464

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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 11,417 15,648

(LOSS) INCOME FROM OPERATIONS (51,359) 67,335

LOSS FROM OPERATIONS (42,419) (51,359)

OTHER (INCOME) EXPENSE

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TOTAL OTHER (INCOME) EXPENSE (1,018) 582

(LOSS) INCOME BEFORE INCOME TAXES (51,941) 67,705

LOSS BEFORE INCOME TAXES (41,401) (51,941)

Deferred tax benefit (9,769) (18,979)

Income tax expense 1,061 1,137

NET (LOSS) INCOME (34,099) 67,240

NET LOSS (32,693) (34,099)

Loss attributable to noncontrolling interests 126,948 91,501

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BALANCES, JANUARY 1, 2020 $ 117,006 $ 28,967 $ 35,588 $ 181,561

Change in accounting principle 74,463 13,141 — 87,604

Member contributions — — 113,465 113,465

Member distributions (106,577) (18,808) — (125,385)

Member distributions, noncontrolling interests — — (13,917) (13,917)

Net income available to members 48,792 8,610 — 57,402

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CASH FLOWS FROM OPERATING ACTIVITIES

Net (loss) income (34,099) 67,240

Net loss (32,693) (34,099)

Adjustments to reconcile net income to net cash provided by operating activities:

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Assets sold as part of REF Facility transaction — (12)

Loss on sale of assets 264 1,803

(Gain)/loss on sale of assets (384) 264

Impairment of REF facilities (15) 2,968

Loss on removal of asset retirement obligation (194) (129)

Gain on removal of asset retirement obligation (131) (194)

Accretion of asset retirement obligation 399 184

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Proceeds from sale of fixed assets 250 99

Net cash used in investing activities (5,549) (17,685)

Net cash provided by/(used) in investing activities 250 (5,549)

CASH FLOWS FROM FINANCING ACTIVITIES

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Repayments under line of credit — (14,400)

Borrowings (repayments) on note payable to customer (21,600) —

Repayments on note payable to customer (5,400) (21,600)

Repayments under secured promissory note (6,313) (178)

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Net cash used in financing activities (76,596) (53,115)

NET INCREASE IN CASH 6,099 18,230

NET (DECREASE)/INCREASE IN CASH (22,384) 6,099

The accompanying notes are an integral part of the consolidated financial statements.

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NON-CASH TRANSACTIONS

Customer note for contract costs $ — $ 27,000

Capitalized contract costs — 600

Asset proceeds included in reduction of accounts payable $ 154 $ —

Capital expenditures included in related party payables — 429

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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Tinuum Group, LLC (together with its subsidiaries, "Tinuum" or "TG" or the "Company") develops, manages, sells and leases facilities ("REF Facilities") used in the production and sale of reduced emissions fuel.

The production and sale of reduced emissions fuel (refined coal or "REF") via these REF Facilities qualifies for production tax credits that are available under Section 45 of the Internal Revenue Code ("PTCs").

The production and sale of REF via these REF Facilities qualifies for production tax credits that are available under Section 45 of the Internal Revenue Code ("PTCs").

The value of the PTC is adjusted annually based on inflation adjustment factors published in the Federal Register.

The 2021 and 2020 PTC rates were $7.384 and $7.301 per ton of REF produced, respectively.

The PTC period expired as of December 31, 2021 and as a result the Company has ceased production of REF.

Tinuum is owned 42.5% by ADA-ES, Inc.

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ADA, NexGen, and GSFS are collectively referred to herein as the “Members.”

Tinuum placed in service two REF Facilities prior to January 1, 2010 and 26 additional REF Facilities prior to January 1, 2012.

Tinuum placed in service 28 REF Facilities prior to January 1, 2012.

Each REF Facility has demonstrated the required emissions reductions from the production of REF to qualify for PTCs.

The REF produced at these REF Facilities is burned at coal-fired generation stations (the owner of which is a "Generator") and is expected to continue to qualify for PTCs for a period of 10 years following the applicable placed in service date.

The two REF Facilities that were placed in service prior to January 1, 2010 no longer qualified for PTCs as of December 31, 2019.

The remaining 26 REF Facilities that were placed in service prior to January 1, 2012 will no longer qualify for PTCs as of December 31, 2021.

At December 31, 2020 and 2019, respectively, 23 and 20 REF Facilities had been sold to or were under lease with third-party investors ("TP Investors") who utilize the REF Facilities to produce REF (each of these REF Facilities is owned or leased by a "Producer Entity").

The REF produced at these REF Facilities is burned at coal-fired generation stations (the owner of which is a "Generator") and continues to qualify for PTCs for a period of 10 years following the applicable placed in service date.

The 28 REF Facilities, of which 23 were operating during the year ended December 31, 2021, no longer qualified for PTCs as of December 31, 2021.

Two of the REF Facilities’ ability to produce PTCs ended during December 2019 since those two REF Facilities were placed in service in 2009.

REF Facilities were either sold to or were under lease with third-party investors ("TP Investors") who utilize the REF Facilities to produce REF (each of these REF Facilities is owned or leased by a “Producer Entity”).

Some of the Producer Entities are owned or leased exclusively by a TP Investor and some are owned or leased by a TP Investor with some ownership percentage retained by the Company.

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In instances where Tinuum retains certain member interests in a Producer Entity, PTCs generated are allocated to Tinuum in proportion to its member interests and are therefore available for the benefit of Tinuum’s Members.

As of December 31, 2020, 23 REF Facilities had been sold or were under lease to TP Investors.

For the year ended December 31, 2021, 23 REF Facilities were owned or leased by TP Investors for some portion of the year ranging from six to nearly twelve months.

All 23 REF Facilities had ceased operations as of December 31, 2021.

Tinuum Services, LLC ("TS"), operates and maintains the REF Facilities under respective operating and maintenance agreements.

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All intercompany balances and transactions have been eliminated in consolidation.

Going Concern

Currently, with the expiration of the PTCs as of December 31, 2021, all TP Investor contracts have expired or been terminated and the Company has terminated REF production, which has led to cash inflows to TG ending in January 2022.

To date, management has not developed an alternative business strategy that would support continued business operations.

Management continues to engage in efforts to pursue an extension of the PTC period by the U.S.

Congress, though at present no such

TINUUM GROUP, LLC AND SUBSIDIARIES

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(in thousands)

Going Concern

Currently, with cash inflows ending in January 2022 and with legislation to extend the PTC expiration date not in process or having been passed, management has assumed the REF Facilities and the related PTCs will expire as scheduled by December 31, 2021.

To date, management has not developed an alternative business strategy and thus management currently expects that 100% of the business operations will be wound down in 2022, which decision will be subject to approval by the Members.

The Company’s line of credit expired on December 31, 2020 and debt financing is no longer available.

Management has budgeted, and is planning, to reserve enough cash from the final cash inflows of 2021 and 2022 to satisfy anticipated remaining liabilities and obligations, including identified contingent liabilities that have been asserted by December 31, 2021.

extension has been adopted.

In the event of a PTC extension in a timely manner, management would investigate any opportunity to continue REF production.

Debt financing is no longer available to the Company.

Management has budgeted, and is planning, to reserve enough cash from the final cash inflows of 2021 and 2022 to satisfy anticipated remaining liabilities and obligations.

These cash reserves will be utilized to conduct an orderly wind down of business operations.

No new business opportunities or cash inflows are expected to occur.

The only exception to management’s plan would be if the U.S.

Congress were to extend the PTC expiration date beyond December 31, 2021.

If that event were to occur in a timely manner or prior to decommissioning of REF Facilities, management would seek to renegotiate its contracts with the various TP Investors and the host stations at which the REF Facilities are located and to continue to operate the business until the latter expiration date.

The decision to commence liquidation of the Company will be subject to approval by the Members.

Management has concluded that these factors, in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern.

The consolidated financial statements have been prepared on a basis which assumes the Company will be able to continue as a going concern and contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.

The consolidated financial statements have been prepared on a basis which assumes the Company will be able to continue as a going concern and contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.

Use of Estimates

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Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.

Significant estimates include the estimated contingent revenues recognized related to revenues recognized at a point-in-time, the estimated useful lives associated with REF Facilities and assumptions associated with asset retirement obligations ("ARO").

Ultimate realization of assets and settlement of liabilities in the future could differ from those estimates.

During the third quarter of 2019, the Company reevaluated the estimated useful life of its REF Facilities.

As a result, the Company determined that the estimated useful life of the REF Facilities should be reduced from 20 years as originally estimated to the remainder of the 10 year period from the date the REF Facility was originally placed in service.

The Company accounted for the change in the useful life of the REF Facilities as a change in accounting estimate beginning August 1, 2019.

For the year ended December 31, 2019, the impact of the change in estimate resulted in a decrease in net income of $11,644.

Significant estimates include the estimated contingent revenues recognized related to revenues recognized at a point-in-time, assumptions associated with asset retirement obligations (“ARO”) and the final realization of remediation efforts, and the estimate for any outstanding contingent liabilities.

Ultimate realization of assets and settlement of liabilities in the future could differ from these estimates.

Cash and Cash Equivalents

6 unchanged sentences

Accounts receivable consist primarily of payments due from TP Investors that own or lease the REF Facilities.

The carrying amount of accounts receivable may be reduced by a valuation allowance that reflects management's best estimate of amounts

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020 and 2019

(in thousands)

that will not be collected.

The carrying amount of accounts receivable may be reduced by a valuation allowance that reflects management's best estimate of amounts that will not be collected.

Under the Company’s agreements, interest can accrue on delinquent balances.

9 unchanged sentences

The Company records an ARO liability equal to the fair value of the estimated cost to retire a REF Facility.

The ARO liability is initially recorded in the period in which the obligation meets the definition of a liability, which is generally when a REF Facility is installed at a generation station ("Site").

The ARO liability is initially recorded in the period in which the obligation meets the definition of a liability, which is generally when a REF

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 and 2020

(in thousands)

Facility is installed at a generation station ("Site").

The ARO liability is estimated by the Company based on legal removal requirements, historical removal experience, and anticipated future inflation rates.

1 unchanged sentence

The liability is increased over time to reflect the change in its present value, and the capitalized cost is depreciated over the useful life of the related long-lived asset.

The ARO liability is removed when the Company is relieved of its removal obligation due to either completion of the removal activities at a generation station or a transfer of the responsibility for the REF Facility removal to a third-party.

The ARO liability is removed when the Company is relieved of its removal obligation due to either completion of the removal activities at a Site or a transfer of the responsibility for the REF Facility removal to a third party.

The Company reevaluates the adequacy of its recorded ARO liability at least annually.

Actual costs of asset retirements, such as removing the REF Facility from a generation station and related site restoration, are charged against the related liability.

Actual costs of asset retirements, such as removing the REF Facility from a Site and related Site restoration, are charged against the related liability.

Any difference between costs incurred upon settlement of an ARO and the recorded liability is recognized in other expense as a gain or loss in the Company’s consolidated statements of operations.

4 unchanged sentences

The costs associated with the exclusive CyClean™ license are included in other assets, net on the consolidated balance sheets and are being amortized over the useful economic life of the technology, or approximately 14 years, using the straight-line method.

Amortization expense was $5 for each of the years ended December 31, 2020 and 2019.

Amortization expense was $0 and $5 for each of the years ended December 31, 2021 and 2020, respectively.

Impairment of Long-Lived Assets

4 unchanged sentences

As part of the Company’s on-going monitoring of its REF Facilities, the Company evaluated the REF Facility assets for potential impairment as of December 31, 2020.

Given the expiration of the original PTC period, December 31, 2021, the fact that no extension of the PTC period has been passed by Congress, and the fact that the Company does not have an expectation of additional future cash flows associated with the REF Facilities beyond the PTC period, any REF Facilities that have not been invested by TP Investors have been considered to be impaired.

Impairment was assessed based upon the future

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020 and 2019

(in thousands)

undiscounted cash flows of each REF Facility as compared to its net book value.

As a result, the Company recognized an impairment loss of $2,968 as of and for the year ended December 31, 2020.

At December 31, 2019, there were no such impairments.

Given the expiration of the original PTC period, December 31, 2021, and the fact that the Company does not have an expectation of additional future cash flows associated with the REF Facilities beyond the PTC period, any REF Facilities that had not been invested by TP Investors have been considered to be impaired.

Impairment was assessed based upon the future undiscounted cash flows of each REF Facility as compared to its net book value.

As a result, the Company recognized an impairment loss of $15 and $2,968 as of and for the years ended December 31, 2021 and 2020, respectively.

Revenue Recognition

5 unchanged sentences

REF Facility revenues are recognized based upon the type of contract with the TP Investor.

Generally, the Company has three types of contracts with customers (a) Leases, (b) Member Interest Purchase Agreements ("MIPA") and (c) Asset Purchase Agreements ("APA").

Generally, the Company has three types of contracts with customers (a) Leases, (b) Member Interest Purchase Agreements ("MIPAs") and (c) Asset Purchase Agreements ("APAs").

In all instances the contracts relate to the use of the REF Facility and the related sublicensed patented technology which is necessary for each Producer Entity to produce REF utilizing the REF Facility.

4 unchanged sentences

Throughout the revenue cycle, the Company evaluates contractual evidence, monitors performance and evaluates variable consideration changes.

For the Leases and MIPA contracts, revenue is recognized "over time" using the output method, utilizing actual REF production volumes.

In these agreements where a prepayment is received, that amount is recorded as deferred revenue and is amortized into revenue in accordance with the amortization period of the respective TP Investor agreement.

For the Leases and MIPAs, revenue is recognized “over time” using the output method, utilizing actual REF production volumes.

In these agreements where a prepayment is received, that amount is recorded as deferred revenue and is amortized

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 and 2020

(in thousands)

into revenue in accordance with the amortization period of the respective TP Investor agreement.

Contingent consideration associated with Leases or MIPAs is recorded based upon actual REF production volumes achieved, constrained by any contractual limitations or by production volumes that management estimates could occur.

5 unchanged sentences

Changes in estimates for variable consideration can occur for a variety of reasons, including but not limited to (i) annual inflation adjustment factors being different from what was originally estimated and (ii) changes in actual versus expected production volumes of REF.

For the year ended December 31, 2020, the impact of the change in estimate resulted in a decrease in revenues of $1,129.

For the years ended December 31, 2021 and 2020, the impact of the change in estimate resulted in a decrease in revenues of $2,643 and $1,129, respectively.

Generally, the REF Facility is collateral for the outstanding contract receivable balances recorded by Tinuum.

1 unchanged sentence

Contracts with variable consideration are billed quarterly in arrears, once production volumes are known, under similar payment terms.

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020 and 2019

(in thousands)

Reduced Emissions and Unrefined Fuel

The Company’s consolidated VIEs, which are Producer Entities, purchase and take title to feedstock fuel under purchase agreements with each respective Generator or other supplier of feedstock fuel.

Each Producer Entity purchases chemicals from third-party vendors and applies them to the feedstock fuel to produce REF utilizing REF Facilities.

Each Producer Entity purchases chemicals from third-party vendors and applies them to the feedstock fuel to produce REF utilizing the REF Facility.

The REF is sold by the Producer Entities, under REF sale agreements, to a Generator or to another third party at the discretion of the manager of each Producer Entity, as permitted under the applicable Generator agreements.

16 unchanged sentences

In these instances, the Company records and pays the applicable tax directly to the state agency.

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 and 2020

(in thousands)

One of the Company’s consolidated VIEs has elected to be a C corporation for federal and state income tax purposes.

5 unchanged sentences

In January 2021, the Company was notified that one of its consolidating VIEs was selected for audit by the IRS.

Tinuum is the partnership representative and intends to cooperate with the IRS audit requirements.

Reclassifications

Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation.

These reclassifications had no effect on previously reported results of operations or Members’ equity.

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020 and 2019

(in thousands)

Tinuum is the partnership representative and cooperated with the IRS audit requirements.

The audit was completed by the IRS during 2021 with no proposed adjustments.

Recent Accounting Pronouncements

Effective January 1, 2019, the Company adopted ASC 606, Revenue from Contracts with Customers , and ASC 842, Leases .

As a result, the Company reassessed its revenue generating contracts and determined that the contracts previously accounted for as leases under ASC 840 no longer met the control criteria of a lease and the MIPAs and APAs, previously accounted for via analogy to ASC 840, were required to be analyzed and recorded utilizing the guidance in ASC 606.

The Company recorded the cumulative effect of applying the new revenue standard as an adjustment to the opening balance of Members’ equity.

The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

The Company does not believe that there are any new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 2 - FIXED ASSETS

Reduced Emissions Fuel Facilities

Each of the REF Facilities and related components that were placed in service by the Company in 2009 and 2011 have demonstrated the qualified emissions reductions to qualify for PTCs.

Each of the REF Facilities and related components that were placed in service by the Company demonstrated the qualified emissions reductions to qualify for PTCs.

REF Facilities are stated at historical cost.

Depreciation is calculated using the straight-line method over a 10 year period, commencing with the original placed in service date in 2009 or 2011, as appropriate.

The two REF Facilities originally placed in service in 2009 were fully depreciated as of December 31, 2019.

Depreciation is calculated using the straight-line method over a 10 year period, commencing with the original placed in service date.

All REF Facilities were fully depreciated as of December 31, 2021.

Furniture, Fixtures and Equipment

10 unchanged sentences

Depreciation expense was $24,101 and $28,175, for the years ended December 31, 2021 and 2020, respectively.

During 2021 the Company reevaluated certain REF Facility equipment for which an impairment reserve had been recognized in 2020.

Certain REF Facility equipment was either disposed of or sold, resulting in an adjustment to the impairment reserve.

Under the site license agreements between the Producer Entities or Tinuum and the Generators, Tinuum may be required to return the Site upon which the REF Facility is located to its original condition at the end of the applicable contract period.

1 unchanged sentence

The ARO liability was estimated by the Company using estimated and historical facility removal costs and anticipated future inflation rates.

This estimated future value was discounted to its present value using the Company’s credit-adjusted risk-free rate.

This estimated future value was discounted to its present value using the Company’s credit-adjusted risk-free

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 and 2020

(in thousands)

The carrying value of the asset is depreciated on a straight-line basis over the remaining estimated life of the REF Facility asset group.

4 unchanged sentences

For the years ended December 31, 2021 and 2020, within operating expenses, the Company recorded $399 and $184 of accretion expense, respectively.

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020 and 2019

(in thousands)

The following table describes changes to the Company’s ARO liability for the years ended December 31, 2021 and 2020:

1 unchanged sentence

Liabilities incurred, net — 631

Removal of liability (194) (129)

Gain on removal of liability (131) (194)

Accretion 399 184

18 unchanged sentences

Estimates of variable consideration are estimated based upon contractual terms, historical experience and projected REF production volumes.

Nine and eight, respectively, of the REF Facility transactions with TP Investors are transactions with a related party as of December 31, 2020 and 2019.

Nine REF Facility transactions with TP Investors are transactions with a related party as of December 31, 2021 and 2020.

These transactions generally have terms that extend to the date ten years after the placed in service date for the particular REF Facility, subject to earlier termination by the TP Investor at periodic intervals or upon the occurrence of specified events.

As of December 31, 2021 all transactions with a related party TP Investor had been terminated.

Under the various TP Investor agreements, Tinuum has committed to provide the REF Facility and the related sublicense for a term as identified in each contract.

Most of the agreements expire in 2021 or by the first quarter of 2022.

Most of the agreements expired in 2021 or will expire by the first quarter of 2022.

Generally, payments are made quarterly to Tinuum on a net 10 to 30 days basis, in advance of the respective quarter.

The following is an estimate of the cash flows expected to be received from TP Investors through December 31, 2021, assuming no variations in estimated production volumes, no modifications of payments, non-renewals or early terminations of contracts.

It is possible that future payments from TP Investors may be modified or reduced.

Future REF Facility payments, including any eliminated in consolidation, are based on the estimated levels of REF production.

TINUUM GROUP, LLC AND SUBSIDIARIES

2 unchanged sentences

(in thousands)

2021 $ 154,805

Future REF Facility payments, including any eliminated in consolidation, are based on the 2021 levels of REF production and are $9,753 for 2022.

In December 2019, the Company agreed to provide a future price concession to a significant customer.

A portion of the price concession is provided via a note payable (“Customer Note”) under which the Company would make monthly principal and interest payments to the customer commencing in January 2020 and continuing through March 2021.

A portion of the price concession was provided via a note payable (“Customer Note”) under which the Company would make monthly principal and interest payments to the customer commencing in January 2020 and continuing through March 2021.

The Customer Note was $27,000 and the Company recorded the amount as contract costs on the consolidated balance sheet and allocated the payments to the customer as a reduction to the transaction price of the existing contracts with the customer.

The reduction in the transaction price is being recorded monthly, commencing with the contract date of December 2019 through the end of the term of the payments of March 31, 2021.

The reduction in the transaction price was recorded monthly, commencing with the contract date of December 2019 through the end of the term of the payments of March 31, 2021.

The reduction in the transaction price is recorded as production volumes are achieved (over time).

7 unchanged sentences

NOTE 5 - VARIABLE INTEREST ENTITIES

For the years ended December 31, 2020 and 2019, the Company consolidates nine and seven entities, respectively, (the "TG VIEs") that were created as REF production companies.

For the years ended December 31, 2021 and 2020, the Company consolidates nine entities (the “TG VIEs”) that were created as REF production companies.

The operations include the purchase of feedstock fuel from a Generator, application of chemicals utilizing that Producer Entity’s REF Facility, and the subsequent sale of REF to the Generator.

In all nine of the TG VIEs, CCS-AE, LLC ("CCS-AE"), a subsidiary of the Company, or another Tinuum entity is the Managing Member and holds a 0.2% or 1.0% member interest, depending on the transaction.

In all nine of the TG VIEs, CCS-AE, LLC (“CCS-AE”), a subsidiary of the Company, or another Tinuum entity is the manager (“Managing Member”) and holds a 0.2% or 1.0% member interest, depending on the transaction.

As the Managing Member of the TG VIEs, CCS-AE or Tinuum directs the activities that are considered most significant to the entities.

7 unchanged sentences

Under certain of the TG VIE agreements, capital call limitations exist, limiting the amount of capital calls if certain operational costs are exceeded.

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020 and 2019

(in thousands)

NOTE 6 - NOTES PAYABLE

1 unchanged sentence

In September 2019, the 2013 Revolver (“Revolver”) with BOK Financial (“BOK”), was amended and replaced with the Fifth Amendment to the Revolver (“Fifth Amendment”).

The Fifth Amendment expired on December 31, 2020 and was not renewed.

The Fifth Amendment expired on December 31, 2020 and was not renewed and all balances were fully repaid.

Under the Fifth Amendment, prior to expiration, the available borrowing limit was:

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 and 2020

(in thousands)

Available Borrowing Limit

4 unchanged sentences

Amounts outstanding under the Fifth Amendment were repaid at the option of the Company.

Any undrawn balance during the years ended December 31, 2020 and 2019, was subject to a quarterly unused facility fee in the amount of 0.826% annually.

Any undrawn balance during the years ended December 31, 2020, was subject to a quarterly unused facility fee in the amount of 0.826% annually.

Interest on outstanding balances was payable monthly and was accrued at the greater of 5.5% per annum or the prime rate (as defined in the agreement) plus 1.0%.

2 unchanged sentences

These accounts were not restricted by the Fifth Amendment.

Tinuum was required to be in compliance with certain covenants under the Fifth Amendment, including tangible net worth as defined in the agreement.

As of December 31, 2019, the Company was in compliance with the loan covenants.

As of December 31, 2019, the outstanding balance on the Revolver was $5,500.

Customer Note

As mentioned in Note 4, in December 2019, the Company agreed to provide a future price concession to a significant customer via a Customer Note.

The Company makes monthly principal and interest payments to the customer.

Payments commenced in January 2020 and extend through March 2021.

As of December 31, 2020 and 2019, respectively, the Customer Note balance was $5,400 and $27,000.

The Company made monthly principal and interest payments to the customer.

Payments commenced in January 2020 and extended through March 2021, when the Customer Note was fully repaid.

As of December 31, 2020, the Customer Note balance was $5,400.

The Customer Note bears interest at 8% per annum.

Under the Customer Note, Tinuum has agreed to maintain a Cash Reserve Account of $3,000, to limit additional indebtedness to $7,000 (plus amounts to finance Company insurance premiums plus a maximum of $500 for finance leases) and to maintain compliance with certain loan covenants.

At December 31, 2020 and 2019, respectively, the Company was in compliance with the Customer Note covenants.

At December 31, 2020, the Company was in compliance with the Customer Note covenants.

Secured Promissory Note

2 unchanged sentences

The amount of principal and interest owed is dependent upon the amount of feedstock fuel purchased and reduced emissions and unrefined fuel sold between the two parties and is net settled on a monthly basis.

The Note is collateralized by the feedstock fuel inventory.

The Note was collateralized by the feedstock fuel inventory.

The Note bears interest at a per annum rate equal to the short-term applicable federal rate announced by the IRS in December of each year.

2 unchanged sentences

All outstanding amounts owed under the Note are due and payable on the earlier of December 31, 2021 or the termination or expiration of the Feedstock Coal Purchase Agreement between the TG VIE and the Generator.

The Note was fully repaid as of December 31, 2021.

As of December 31, 2021 and 2020, respectively, the outstanding balance on the Note was $0 and $4,327 with interest payable of $0 and $16, respectively.

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020 and 2019

(in thousands)

In June 2018, a second VIE consolidated into the consolidated financial statements of the Company, entered into an $1,986 secured promissory note (“2018 Note”) with a Generator to fund the initial purchase of feedstock fuel.

4 unchanged sentences

All outstanding amounts owed under the 2018 Note are due and payable on the earlier of December 31, 2025, or the termination or expiration of the Feedstock Coal Purchase Agreement between the Company and the Generator.

At each of December 31, 2020 and 2019, the outstanding balance on the Note was $1,986.

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 and 2020

(in thousands)

As of December 31, 2021 and 2020, respectively, the outstanding balance on the Note was $0 and $1,986.

Interest payable of $1 and $3 was recorded as of December 31, 2021 and 2020, respectively.

15 unchanged sentences

As a result, the quarterly estimated funding is presented as an income tax receivable in the consolidated balance sheets.

The income tax receivable as of December 31, 2020 and 2019, consists of:

As of December 31, 2021, an income tax payable is being presented as the estimated funding exceeded the actual TP investor provision.

The income tax payable as of December 31, 2021 is included in accrued liabilities in the consolidated balance sheets and consists of:

Net operating losses $ 28

1 unchanged sentence

Production tax credits —

Total deferred tax assets $ 5,966 $ 904

Net operating loss carryforwards can be carried forward indefinitely and the PTCs can be carried forward for 20 years.

TP Investor provision modification (93)

Income tax payable $ (65)

TINUUM GROUP, LLC AND SUBSIDIARIES

2 unchanged sentences

(in thousands)

The income tax receivable as of December 31, 2020 consists of:

Net operating losses $ 1,026

Deferred tax liability (21)

Production tax credits 4,961

Income tax receivable $ 5,966

Net operating loss carryforwards can be carried forward indefinitely and the PTCs can be carried forward for 20 years.

For the years ended December 31, 2021 and 2020, income tax expense (benefit) consisted of the following:

6 unchanged sentences

(a) (b) (c) (d)

As of December 31, 2020

Accounts payable $ 3,454 $ 4,179 $ — $ 20

As of December 31, 2019

Accounts payable $ 4,104 $ 6,134 $ 20 $ 20

Accounts Receivable as of the Year Ended

December 31, 2021 $ 102 $ — $ — $ —

Accounts Payable as of the Year Ended

December 31, 2021 $ 2,467 $ 4,154 $ — $ 15

December 31, 2020 3,454 4,179 — 20

Revenues Recognized During the Year Ended

11 unchanged sentences

For the years ended December 31, 2021 and 2020, the Company acquired $0 and $5,549, respectively, of capital assets from its related party, TS.

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 and 2020

(in thousands)

For the year ended December 31, 2021, TS incurred, on the Company’s behalf, proceeds related to the sale of fixed assets in the amount of $250.

NOTE 10 - COMMITMENTS

3 unchanged sentences

In December 2015 the Company was assigned, by TS, a Master Supply Agreement with a chemical vendor.

Under the agreement the Company had a commitment commencing January 1, 2015, for minimum purchase quantities of the specified chemical that if not achieved would require a shortfall payment amount ("Shortfall") to be paid to the vendor on a monthly

TINUUM GROUP, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020 and 2019

(in thousands)

Any Shortfall payment required would be applied to future chemical purchases once certain minimum volume levels were achieved.

1 unchanged sentence

Beginning in August 2020, the Company started utilizing the prepaid deposit balance through ongoing chemical usage.

As of December 31, 2020, the balance was $10,632, and is included within other current assets in the Company’s consolidated balance sheets.

The Company anticipates utilizing the prepaid deposit balance by the end of 2021.

The prepaid deposit balance was fully utilized as of December 31, 2021 and therefore the balance was $0 at December 31, 2021.

As of December 31, 2020, the balance was $10,632 and was included within other current assets in the Company’s consolidated balance sheets.

Retention Compensation

4 unchanged sentences

The potential estimated liability under these contracts is approximately $750.

Any executive employee who does not have an employment contract and all non-executive employees have a retention bonus agreement with a defined dollar amount that is payable by the Company upon the earlier of the Company's initiation of an involuntary termination or the employee remaining with the Company until the defined retention date within their agreement.

All non-executive employees have a retention bonus agreement with a defined dollar amount that is payable by the Company upon the earlier of the Company’s initiation of an involuntary termination or the employee remaining with the Company until the defined retention date within their agreement.

Any employees electing to voluntarily terminate employment with the Company prior to their defined retention date will forfeit their retention bonus amount.

The Company has determined these retention program costs to be reasonably estimable and probable for the year ended December 31, 2020.

As a result, the Company has recognized a retention compensation liability and compensation expense of $3,116 as of and for the year ended December 31, 2020.

No amount was recognized as of December 31, 2019.

Compensation expense of $3,116 and $2,048 was recognized for the years ended December 31, 2021 and 2020, respectively.

A remaining liability of $3,613 is recorded and of this amount $1,835 is included in other current liabilities for TG employees and $1,778 is in the related party payables related to TS employees with retention dates in 2022.

401k Profit Sharing Plan and Other Benefits

3 unchanged sentences

Company contributions charged to benefits expense was $157 and $194 for the years ended December 31, 2021 and 2020, respectively.

As of January 24, 2022, the Company has initiated the termination of the Plan.

Accordingly, employees will be required to roll over their balances under the termination provisions stipulated by the Plan.

Tinuum’s ROU asset and lease liability are comprised of its lease for its corporate office space.

3 unchanged sentences

Operating lease expense for each of the years ended December 31, 2021 and 2020 was $197 and $199 respectively.

Operating leases are included in the ROU assets within fixed assets, net, and lease liabilities are included within accrued liabilities on the consolidated balance sheets.

Real estate taxes and common area maintenance charges are expensed as incurred as operating expenses and are not included in the lease payments.

As of December 31, 2020, future annual lease payments under lease agreements through December 31, 2022 are as follows:

Total lease payments 465

interest expense (27)

Present value of lease liabilities $ 438

NOTE 11 - CONCENTRATIONS

The COVID-19 pandemic developed rapidly in 2020.

Measures taken by federal and local governments to contain the virus have affected economic activity, locally as well as nationally.

The Company's production of REF has to date been considered an element of power generation and therefore been considered an essential function under various government policies restricting business activity.

The Company has taken a number of steps to monitor and mitigate the effects of COVID-19 on its operations

Operating leases are included in the ROU assets within fixed assets, net, and lease liabilities are included within accrued liabilities on the consolidated balance

TINUUM GROUP, LLC AND SUBSIDIARIES

2 unchanged sentences

(in thousands)

and customers, such as safety and health measures for its employees.

At this stage, the impact on the financial and operational results has not been significant and based on the Company’s experience to date this is expected to remain the case.

The Company will continue to follow the applicable government policies and advice and, in parallel, the Company will continue to pursue operational modifications to allow continued REF production without jeopardizing the health of the Company’s employees or those of its customers.

The Company’s operations are currently dependent upon TP Investors leasing or purchasing REF Facilities.

Further, under the terms of the various TP Investor agreements, the agreements may be subject to termination or modification by the TP Investor at periodic intervals or upon the occurrence of specified events which include amendments to Section 45 of the Internal Revenue Code.

The termination or modification of all or a material portion of any TP Investor agreements would have a significant adverse impact on the Company’s future operations and financial condition.

Additionally, the production and sale of REF is dependent upon the plant operations of specific generating stations where the REF Facilities are located.

Production at these locations could be impacted by the COVID-19 pandemic, the demand for electricity, the amount of fuel burned as compared to other electricity generation fuel sources utilized by the utility to produce electricity, disruptions due to foreseen or unforeseen plant outages, or changes in government regulations related to electricity generation or coal burning activities.

Certain of the chemicals utilized by the Company to produce REF are available from a limited number of vendors in the United States.

The Company's future operations may be materially and adversely affected if the Company encounters difficulty procuring these chemicals, the quality of available chemicals deteriorates or there are significant price increases for the chemicals.

Real estate taxes and common area maintenance charges are expensed as incurred as operating expenses and are not included in the lease payments.

As of December 31, 2021, future annual lease payments under lease agreements through December 31, 2022 are $233 less $7 of interest expense, reflecting a present value of lease liabilities of $226.

NOTE 11 - CONCENTRATIONS

The Company’s operations were dependent upon TP Investors leasing or purchasing REF Facilities.

Further, under the terms of the various TP Investor agreements, the agreements were subject to termination or modification by the TP Investor at periodic intervals or upon the occurrence of specified events which included amendments to Section 45 of the Internal Revenue Code.

The termination or modification of all or a material portion of any TP Investor agreements would have had a significant adverse impact on the Company’s future operations and financial condition.

Additionally, the production and sale of REF was dependent upon the plant operations of specific generating stations where the REF Facilities were located.

Production at these locations could have been impacted by the demand for electricity, the amount of fuel burned by the utility to produce electricity, disruptions due to foreseen or unforeseen plant outages, or changes in government regulations related to electricity generation or coal burning activities.

Certain of the chemicals utilized by the Company to produce REF were available from a limited number of vendors in the United States.

The Company's operations could have been materially and adversely affected if the Company encountered difficulty procuring these chemicals, the quality of available chemicals deteriorated or there were significant price increases for the chemicals.

NOTE 12 - SUBSEQUENT EVENTS

4 unchanged sentences

By /s/ Greg P.

Marken By /s/ Christine A.

Marken Christine A.

Interim Chief Executive Officer (Principal Executive Officer) Chief Accounting Officer (Principal Financial and Accounting Officer)

Marken By /s/ Morgan Fields

Marken Morgan Fields

Chief Executive Officer (Principal Executive Officer) Chief Accounting Officer (Principal Financial and Accounting Officer)

March 8, 2022 Date:

1 unchanged sentence

Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By /s/ Carol Eicher By /s/ Brian Leen

Carol Eicher, Director Brian Leen, Director

March 10, 2021 Date:

March 10, 2021

By /s/ Gilbert Li By /s/ R.

Gilbert Li, Director R.

Carter Pate, Director

By /s/ Carol Eicher By /s/ Gilbert Li

Carol Eicher, Director Gilbert Li, Director

March 8, 2022 Date:

7 unchanged sentences

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

What changed 10-K

Item 9A. Controls and Procedures