17 unchanged sentences
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022 and 2021, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 8, 2023 expressed an unqualified opinion on the Company’s internal control over financial reporting.
Basis for Opinion
1 unchanged sentence
Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
+Added: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
1 unchanged sentence
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
−Removed: The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
−Removed: As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
−Removed: Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks.
2 unchanged sentences
We believe that our audits provide a reasonable basis for our opinion.
−Removed: Critical Audit Matter
−Removed: The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Income Taxes – Realizability of Deferred Tax Assets
−Removed: As described in Notes 1 and 18 to the consolidated financial statements, the Company recognizes deferred income taxes for the effects of temporary differences between the tax basis of an asset or liability and their reported amounts in the accompanying consolidated balance sheet.
−Removed: These temporary differences result in taxable or deductible amounts in future years.
−Removed: Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized.
−Removed: As of December 31, 2021, the Company concluded it is more likely than not that the Company will not generate sufficient taxable income within the applicable net operating loss and tax credit carry-forward periods to realize any of its net deferred tax assets, which resulted in a valuation allowance of $87.5 million.
−Removed: We identified the realizability of deferred tax assets as a critical audit matter due to the Company’s tax structure and the significant judgments and estimates made by management to determine that sufficient taxable income will not be generated to realize a portion of deferred tax assets prior to expiration.
−Removed: This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate management’s estimates of taxable income prior to expiration.
−Removed: The primary procedures we performed to address this critical audit matter included:
−Removed: • Recalculating the mathematical accuracy of management’s accounting for the previously described taxes, which included supporting calculations, schedules, and reconciliations.
−Removed: • Reading and evaluating management’s documentation of the accounting for income taxes, including their analysis of the valuation allowance.
−Removed: This includes relevant significant accounting policies, and information obtained by management from third party tax specialists which details management’s basis for the accounting and impact to the consolidated financial statements, inclusive of relevant positive and negative evidence available and utilized in performing the analysis.
−Removed: • Obtaining and evaluating the supporting tax analyses and documentation prepared by management as a framework and initial support for audit procedures.
−Removed: This includes gaining an understanding of the Company’s estimation process, the Company’s deferred tax calculations, which also integrates management’s analysis of valuation allowances, current tax expenses (benefits), and IRC Section 45 credits.
−Removed: • Consulting with internal tax specialists in evaluating management’s calculation of its provision for income taxes and that the significant judgments used were applied consistently with the tax code.
−Removed: • Evaluating whether significant estimates and judgments used were consistent with past performance related to said estimates, the consistency of future forecasts and projections based on current operating and market conditions and future expectations, and that all were consistent with evidence obtained in procedures performed in other areas of the audit.
−Removed: • Evaluating the adequacy of the Company’s disclosure in Notes 1 and 18 in relation to the income taxes.
+Added: Critical Audit Matters
+Added: Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: We determined that there are no critical audit matters.
/s/ Moss Adams LLP
8 unchanged sentences
Current assets:
−Removed: Cash, cash equivalents and restricted cast $ 78,753 $ 30,932
+Added: Cash $ 66,432 $ 78,753
Receivables, net 13,864 12,622
6 unchanged sentences
34,855 30,171
−Removed: Intangible assets, net 1,237 1,964
−Removed: Equity method investments 2,391 7,692
−Removed: Deferred tax assets, net — 10,604
Other long-term assets, net 30,647 36,871
2 unchanged sentences
Current liabilities:
−Removed: Accounts payable $ 10,009 $ 7,849
−Removed: Accrued payroll and related liabilities 6,477 3,257
+Added: Accounts payable and accrued expenses $ 16,108 $ 16,486
Current portion of long-term debt 1,131 1,011
28 unchanged sentences
Consumables cost of revenues, exclusive of depreciation and amortization 80,465 65,576
−Removed: Other cost of revenues, exclusive of depreciation and amortization — ( 563 )
Payroll and benefits 10,540 11,315
2 unchanged sentences
Depreciation, amortization, depletion and accretion 6,416 7,933
−Removed: Gain on change in estimate, asset retirement obligation ( 2,702 ) —
−Removed: Impairment of long-lived assets — 26,103
−Removed: Gain on settlement — ( 1,129 )
+Added: Loss (gain) on change in estimate, asset retirement obligation 34 ( 2,702 )
Total operating expenses 115,055 95,442
−Removed: Operating income (loss) 4,852 ( 40,981 )
+Added: Operating (loss) income ( 12,068 ) 4,852
Other income (expense):
4 unchanged sentences
Total other income 3,360 71,221
−Removed: Income (loss) before income tax expense 76,073 ( 13,791 )
+Added: (Loss) income before income tax expense ( 8,708 ) 76,073
Income tax expense 209 15,672
−Removed: Net income (loss) $ 60,401 $ ( 20,302 )
−Removed: Earnings (loss) per common share (Note 1):
+Added: Net (loss) income $ ( 8,917 ) $ 60,401
+Added: (Loss) earnings per common share (Note 1):
Basic $ ( 0.48 ) $ 3.31
12 unchanged sentences
Repurchase of common shares to satisfy tax withholdings ( 45,729 ) — — — ( 246 ) — ( 246 )
−Removed: Cash dividends declared on common stock — — — — — ( 4,580 ) ( 4,580 )
−Removed: Repurchase of common shares — — ( 20,613 ) ( 159 ) — — ( 159 )
−Removed: Net loss — — — — — ( 20,302 ) ( 20,302 )
+Added: Accrued dividends cancelled on common stock — — — — — 9 9
+Added: Net income — — — — — 60,401 60,401
Balances, December 31, 2021 23,460,212 $ 23 ( 4,618,146 ) $ ( 47,692 ) $ 102,106 $ 92,864 $ 147,301
2 unchanged sentences
Accrued dividends cancelled on common stock — — — — — 2 2
−Removed: Net income — — — — — 60,401 60,401
+Added: Net loss — — — — — ( 8,917 ) ( 8,917 )
Balances, December 31, 2022 23,788,319 $ 24 ( 4,618,146 ) $ ( 47,692 ) $ 103,698 $ 83,949 $ 139,979
6 unchanged sentences
Cash flows from operating activities
−Removed: Net income (loss) $ 60,401 $ ( 20,302 )
−Removed: Adjustments to reconcile net income (loss) to net cash provided by operating activities:
−Removed: Deferred income tax expense 10,604 3,491
+Added: Net (loss) income $ ( 8,917 ) $ 60,401
+Added: Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation, amortization, depletion and accretion 6,416 7,933
−Removed: Amortization of debt discount and debt issuance costs 945 1,418
+Added: Earnings from equity method investments ( 3,541 ) ( 68,726 )
Operating lease expense 2,709 2,038
−Removed: Gain on extinguishment of debt ( 3,345 ) —
−Removed: Gain on change in estimate, asset retirement obligation ( 2,702 ) —
−Removed: Impairment of long-lived assets — 26,103
−Removed: Gain on settlement — ( 1,129 )
−Removed: Recovery of accounts receivable and other receivables ( 36 ) ( 990 )
Stock-based compensation expense 1,981 1,927
−Removed: Earnings from equity method investments ( 68,726 ) ( 30,978 )
+Added: Loss (gain) on change in estimate, asset retirement obligation 34 ( 2,702 )
+Added: Deferred income tax expense — 10,604
+Added: Amortization of debt discount and debt issuance costs — 945
+Added: Gain on extinguishment of debt — ( 3,345 )
Other non-cash items, net 496 ( 209 )
−Removed: Changes in operating assets and liabilities, net of effects of acquired businesses:
+Added: Changes in operating assets and liabilities:
Receivables, net ( 1,312 ) 540
3 unchanged sentences
Other long-term assets, net 245 ( 4,270 )
−Removed: Accounts payable 1,977 ( 196 )
−Removed: Accrued payroll and related liabilities 3,220 233
+Added: Accounts payable and accrued expenses ( 911 ) 5,197
Other current liabilities 1,008 ( 8,279 )
2 unchanged sentences
Distributions from equity method investees, return on investment 2,297 22,944
−Removed: Net cash provided by operating activities 25,999 54,048
+Added: Net cash (used in) provided by operating activities $ ( 6,061 ) $ 25,999
Years Ended December 31,
5 unchanged sentences
Proceeds from sale of property and equipment 1,253 895
−Removed: Net cash provided by (used in) investing activities 44,378 ( 7,466 )
+Added: Net cash (used in) provided by investing activities ( 4,608 ) 44,378
Cash flows from financing activities
1 unchanged sentence
Principal payments on finance lease obligations ( 1,246 ) ( 1,190 )
−Removed: Dividends paid ( 93 ) ( 4,979 )
−Removed: Borrowings from Paycheck Protection Program Loan — 3,305
Repurchase of shares to satisfy tax withholdings ( 388 ) ( 246 )
−Removed: Repurchase of common shares — ( 159 )
+Added: Dividends paid ( 45 ) ( 93 )
Net cash used in financing activities ( 1,679 ) ( 17,529 )
−Removed: Increase in Cash, Cash Equivalents and Restricted Cash 52,848 18,852
−Removed: Cash, Cash Equivalents and Restricted Cash, beginning of year 35,932 17,080
−Removed: Cash, Cash Equivalents and Restricted Cash, end of year $ 88,780 $ 35,932
+Added: (Decrease) increase in Cash and Restricted Cash ( 12,348 ) 52,848
+Added: Cash and Restricted Cash, beginning of year 88,780 35,932
+Added: Cash and Restricted Cash, end of year $ 76,432 $ 88,780
Supplemental disclosure of cash flow information:
Cash paid for interest $ 334 $ 524
−Removed: Cash paid (received) for income taxes $ 8,882 $ ( 84 )
+Added: Cash paid for income taxes $ 3 $ 8,882
Supplemental disclosure of non-cash investing and financing activities:
+Added: Acquisition of property and equipment under finance lease $ 1,641 $ —
Change in accrued purchases for property and equipment $ 532 $ 183
Change in asset retirement obligation $ — $ 121
−Removed: Acquisition of property and equipment under finance lease $ — $ 158
−Removed: Dividends payable $ — $ 32
See Notes to the Consolidated Financial Statements.
5 unchanged sentences
Advanced Emissions Solutions, Inc.
−Removed: ("ADES" or the "Company") is a Delaware corporation with its principal office located in Greenwood Village, Colorado and operations located in Louisiana.
+Added: ("ADES" or the "Company") is a Delaware corporation with its principal office located in Greenwood Village, Colorado and manufacturing, mining and logistic operations located in Louisiana.
The Company is principally engaged in the sale of consumable air and water treatment options including activated carbon ("AC") and chemical technologies.
−Removed: The Company's proprietary technologies in the advanced purification technologies ("APT") market enable customers to reduce air and water contaminants, including mercury and other pollutants, to maximize utilization levels and to improve operating efficiencies to meet the challenges of existing and pending emission control regulations.
−Removed: Through its wholly-owned subsidiary, ADA Carbon Solutions, LLC ("Carbon Solutions"), the Company manufactures and sells AC used to capture and remove contaminants for coal-fired power plants, industrial and water treatment markets.
−Removed: Carbon Solutions also owns an associated lignite mine ("Five Forks Mine") that supplies the primary raw material for manufacturing AC.
−Removed: Through its equity ownership in Tinuum Group, LLC ("Tinuum Group") and Tinuum Services, LLC ("Tinuum Services"), both of which are unconsolidated entities, the Company generates substantial earnings.
−Removed: Tinuum Group provides reduction of mercury and nitrogen oxide ("NOx") emissions at select coal-fired power generators through the production and sale of refined coal ("RC") that qualifies for tax credits ("Section 45 tax credits") under the Internal Revenue Code ("IRC") Section 45 - Production Tax Credit (the "Section 45 tax credit program").
−Removed: The Company also earns royalties for technologies that are licensed to Tinuum Group and used at certain RC facilities to enhance combustion and reduced emissions of NOx and mercury from coal burned to generate electrical power.
−Removed: Tinuum Services operates and maintains the RC facilities under operating and maintenance agreements with Tinuum Group and owners or lessees of the RC facilities.
−Removed: Effective December 31, 2021, the Section 45 tax credit program expired and, as a result, both Tinuum Group and Tinuum Services ceased operations and are winding down their respective businesses.
−Removed: Beginning in 2022, our equity earnings generated from both Tinuum Group and Tinuum Services are expected to be minimal.
−Removed: In addition, license royalties earned from Tinuum Group ceased as of December 31, 2021.
+Added: The Company's proprietary technologies in the advanced purification technologies ("APT") market enable customers to reduce air and water contaminants, including mercury and other pollutants, to maximize utilization levels and to improve operating efficiencies to meet the challenges of existing and pending air quality and water regulations.
+Added: The Company manufactures and sells AC and other chemicals used to capture and remove contaminants for coal-fired power, industrial and water treatment markets.
+Added: The Company also owns an associated lignite mine (the "Five Forks Mine") which supplies the primary raw material for manufacturing AC.
+Added: Through December 31, 2021, the Company generated substantial earnings from its equity ownership in Tinuum Group, LLC ("Tinuum Group") and Tinuum Services, LLC ("Tinuum Services"), both of which are unconsolidated entities.
+Added: Both Tinuum Group and Tinuum Services ceased material operations effective December 31, 2021 as a result of the expiration of a tax credit program under Internal Revenue Code Section 45 - Production Tax Credit (the "Section 45 Tax Credit Program").
+Added: Tinuum Group provided reduction of mercury and nitrogen oxide ("NOx") emissions at select coal-fired power generators through the production and sale of refined coal ("RC") that qualified for tax credits under the Section 45 Tax Credit Program ("Section 45 tax credits").
+Added: The Company also earned royalties for technologies which were licensed to Tinuum Group and used at certain RC facilities to enhance combustion and reduce emissions of NOx and mercury from coal burned to generate electrical power.
+Added: Tinuum Services operated and maintained the RC facilities under operating and maintenance agreements with Tinuum Group and owners or lessees of the RC facilities.
+Added: Presently, both Tinuum Group and Tinuum Services continue to wind-down their operations.
Principles of Consolidation
1 unchanged sentence
All significant intercompany balances and transactions have been eliminated in consolidation.
−Removed: All investments in partially owned entities for which the Company has greater than 20% ownership are accounted for using the equity method based on the legal form of the Company's ownership percentage and are included in the Equity method investments line item in the Consolidated Balance Sheets.
−Removed: As of December 31, 2021, the Company holds equity interests of 42.5 % and 50.0 % in Tinuum Group and Tinuum Services, LLC ("Tinuum Services"), respectively.
−Removed: Cash, cash equivalents and restricted cash
−Removed: Cash and cash equivalents include bank deposits and other highly liquid investments purchased with an original maturity of three months or less.
−Removed: Restricted cash primarily consists of a surety bond indemnification agreement (the "Surety Agreement") associated with reclamation of a mine.
−Removed: As of December 31, 2020, restricted cash also consisted of minimum cash balance requirements under a line of credit agreement (the "Line of Credit") with a bank (the "Lender").
−Removed: Restricted cash is classified consistent with the underlying obligation.
−Removed: Receivables, net
−Removed: Receivables, net are recorded at net realizable value, which includes an appropriate allowance for estimated uncollectible amounts to reflect any loss anticipated on the receivables balances.
−Removed: Increases and decreases in the allowance for doubtful accounts are established based upon changes in the credit quality of receivables and are included as a component of the General and administrative line item in the Consolidated Statements of Operations.
−Removed: The allowance for doubtful accounts is based on historical experience, general economic conditions and the credit quality of specific accounts.
+Added: All investments in partially owned entities for which the Company has greater than 20% ownership are accounted for using the equity method based on the legal form of the Company's ownership percentage and are included in the Other long-term assets, net line item in the Consolidated Balance Sheets.
+Added: As of December 31, 2022, the Company holds equity interests of 42.5 % and 50.0 % in Tinuum Group and Tinuum Services, respectively.
+Added: Cash and restricted cash
+Added: Cash consists of cash on hand and bank deposits.
+Added: Restricted cash is comprised of posted cash collateral required under a surety bond contract related to the Five Forks Mine and the Company's mine located at Marshall, Texas.
+Added: Concentration of credit risk
+Added: As of December 31, 2022, the Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents.
+Added: The Company holds cash and cash equivalents at two financial institutions as of December 31, 2022.
+Added: If those institutions were unable to perform their obligations, the Company would be at risk regarding the amount of its cash balance in excess of the federal deposit insurance corporation limits ($ 250 thousand).
+Added: Fair value measurements
+Added: The carrying amounts of our cash, restricted cash, accounts receivable, accounts payable and other current liabilities approximate fair value as recorded due to the short-term nature of these instruments.
Advanced Emissions Solutions, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements
+Added: Receivables, net
+Added: Receivables, net are recorded at net realizable value, which includes an appropriate allowance for estimated uncollectible amounts to reflect any loss anticipated on the receivables.
+Added: Increases and decreases in the allowance for doubtful accounts are established based upon changes in the credit quality of receivables and are included as a component of the General and administrative line item in the Consolidated Statements of Operations.
+Added: The allowance for doubtful accounts is based on historical experience, general economic conditions and the credit quality of specific accounts and was no t material as of December 31, 2022 and 2021.
Inventories, net
−Removed: Inventories, net are stated at the lower of average cost or net realizable value and consist principally of raw materials and finished goods related to the Company's AC and chemical product offerings.
+Added: Inventories, net are stated at the lower of average cost or net realizable value and consist principally of raw materials and finished goods related to the Company's AC and chemical products.
The cost of inventory is determined using the average cost method.
10 unchanged sentences
As of December 31,
−Removed: (in thousands, except years) Weighted Average Useful Life (in years) Cost Net of Accumulated Amortization Cost (1)
−Removed: Net of Accumulated Amortization
+Added: (in thousands, except years) Weighted Average Remaining Amortization Period (in years) Cost Net of Accumulated Amortization Cost Net of Accumulated Amortization
Customer relationships 0.9 $ 835 $ 226 $ 835 $ 470
2 unchanged sentences
Total $ 2,932 $ 847 $ 2,896 $ 1,237
−Removed: (1) As of December 31, 2020, cost was inclusive of the write down of intangibles to fair value based on the impairment charge taken during the year ended December 31, 2020 and further described in Note 6.
Included in the Consolidated Statements of Operations is amortization expense related to intangible assets of $ 0.5 million and $ 0.9 million for the years ended December 31, 2022 and 2021, respectively.
−Removed: The estimated future amortization expense for existing intangible assets as of December 31, 2021 is expected to be $ 0.2 million for each of the five succeeding fiscal years.
+Added: The estimated future amortization expense for existing intangible assets as of December 31, 2022 is expected to be $ 0.4 million for the year ended December 31, 2023 and less than $ 0.1 million for each of the four succeeding fiscal years.
The investments in entities in which the Company does not have a controlling interest (financial or operating), but where it has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method of accounting.
1 unchanged sentence
Under the equity method of accounting, an investee company’s financial statements are not consolidated in the Company’s Consolidated Balance Sheets and Consolidated Statements of Operations;
−Removed: however, the Company’s share of the earnings or losses of the investee company is reported in the "Earnings from equity method investments" line item in the Consolidated Statements of Operations, and the Company’s carrying value in an equity method investee company is reported in the "Equity method investments"line in the Consolidated Balance Sheets.
−Removed: When the Company receives distributions in excess of the carrying value of the investment and has not guaranteed any obligations of the investee and/or is not required to provide additional funding to the investee, the Company recognizes such excess distributions as equity method earnings in the period the distributions occur.
−Removed: When the investee subsequently reports income, the Company does not record its share of such income until it equals the amount of distributions in excess of carrying value that were previously recognized in income.
−Removed: During the years ended December 31, 2021 and 2020, the Company had no guarantees or requirements to provide additional funding to investees.
+Added: however, the Company’s share of the earnings or losses of the investee is reported in the "Earnings from equity method investments" line item in the Consolidated
Advanced Emissions Solutions, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements
−Removed: Additionally, when the Company's carrying value in an equity method investment is zero, and the Company has not guaranteed any obligations of the investee and/or is not required to provide additional funding to the investee, the Company will not recognize its share of any reported losses by the investee until future earnings are generated to offset previously unrecognized losses.
−Removed: As a result, equity income or loss reported in the Company's Consolidated Statements of Operations for certain equity method investees may differ from a mathematical calculation of net income or loss attributable to its equity interest based on the percentage ownership of the Company's equity interest and the net income or loss attributable to equity owners as shown in the investee company's statements of operations.
−Removed: Likewise, distributions from equity method investees are reported in the Consolidated Statements of Cash Flows as "return on investment" in Operating cash flows until such time as the carrying value in an equity method investee company is reduced to zero;
+Added: Statements of Operations, and the Company’s carrying value in an equity method investee is reported in the "Other long-term assets, net" line in the Consolidated Balance Sheets.
+Added: The Company recognizes equity earnings (loss) from equity method investments based on it percentage ownership in the investee.
+Added: The Company recognizes distributions received in excess of the carrying value of an equity method investment as equity method earnings in the period the distributions occur to the extent that the Company has not guaranteed any obligations of the investee or is not contractually required to provide additional funding to the investee.
+Added: Subsequent earnings from investees where the Company has recognized earnings from distributions in excess of the carrying value of the equity method investment are recognized for the excess of cumulative earnings over previously recognized earnings from distributions.
+Added: Additionally, when the Company's carrying value in an equity method investment is zero, and the Company has not guaranteed any obligations of the investee or is not required to provide additional funding to the investee, the Company will not recognize its share of any reported losses by the investee until future earnings are generated to offset previously unrecognized losses.
+Added: Therefore, equity income (loss) reported in the Company's Consolidated Statements of Operations for certain equity method investees may differ from a mathematical calculation of net income or loss attributable to its equity interest based on the percentage ownership of the Company's equity interest and the net income or loss attributable to equity owners as shown in the investee's statements of operations.
+Added: Distributions from equity method investees are reported in the Consolidated Statements of Cash Flows as "return on investment" in Operating cash flows until such time as the carrying value in an equity method investee is reduced to zero.
Thereafter, such distributions are reported as "distributions in excess of cumulative earnings" in Investing cash flows.
9 unchanged sentences
The Company performs an evaluation of the recoverability of the carrying value of property, plant and equipment to determine if facts and circumstances indicate that their carrying values may be impaired.
−Removed: Impairment charges are recorded to "Operating expenses" in the Consolidated Statements of Operations.
Amortization of finance leased assets is included in depreciation expense and is calculated using the straight-line method over the term of the lease.
5 unchanged sentences
For short-term leases (leases with terms of less than one year), the Company expenses lease payments on a straight-line basis over the lease term.
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
Variable lease payments represent payments made by a lessee for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date of a lease other than the passage of time.
Variable lease payments that are based on an index or rate, calculated by using the index or rate that exists on the lease commencement date, are included in the measurement of a lease liability.
−Removed: Certain of the Company’s operating leases for office facilities contain variable lease components that are not based on an index or rate, and the Company recognizes these payments as lease expense in the period in which the obligation for those payments is incurred.
+Added: Certain of the Company’s operating leases for office facilities contain variable lease components that are not based on an index or rate, and the Company recognizes these payments as variable lease expense in the period in which the obligation for those payments is incurred.
The Company calculates lease liabilities based on the present value of lease payments discounted by the rate implicit in the lease or, if not readily determinable, the Company’s incremental borrowing rate.
1 unchanged sentence
Interest on finance lease liabilities is determined in each period during the lease term as the amount that produces a constant periodic discount rate on the remaining balance of the lease liability.
−Removed: ROU assets under finance leases are amortized over the remaining
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: lease term on a straight-line basis.
−Removed: Interest expense related to finance lease liabilities and amortization of ROU assets under finance leases are included in the "Interest expense" and "Depreciation, amortization, depletion and accretion" line item, respectively, in the Consolidated Statements of Operations.
+Added: ROU assets under finance leases are amortized over the remaining lease term on a straight-line basis.
+Added: Interest expense related to finance lease liabilities and amortization of ROU assets under finance leases are included in the "Interest expense" and "Depreciation, amortization, depletion and accretion" line items, respectively, in the Consolidated Statements of Operations.
Operating lease liabilities are subsequently measured at the present value of the lease payments not yet paid, discounted using the discount rate for the lease established at the inception date of the lease.
10 unchanged sentences
Parts and supply costs are determined using the lower of cost or estimated replacement cost.
−Removed: Parts are recorded as maintenance expenses in the period in which they are consumed.
+Added: Parts are recorded as maintenance expenses or capitalized in the period in which they are consumed or put into use.
Spare parts are reported in the "Other long-term assets, net" line item in the Consolidated Balance Sheets.
5 unchanged sentences
The Company uses estimates and judgments in determining the nature and timing of satisfaction of performance obligations, the standalone selling price ("SSP") of performance obligations and the allocation of the transaction price to multiple performance obligations, if any.
−Removed: The Company’s revenue components are Consumables sales and License royalties.
−Removed: The Company is principally engaged in the sale of consumable products that utilize AC and chemical based technologies to a broad range of customers, including coal-fired utilities, water treatment plants, and other diverse markets.
−Removed: Our proprietary technologies and associated product offerings provide purification solutions to enable our customers to reduce certain contaminants and pollutants and thus maximize utilization levels and improve operating efficiencies to meet the challenges of existing and potential regulations.
−Removed: The sale of consumable products is comprised of a single performance obligation and is recognized at the point in time when control transfers and our obligation has been fulfilled, which is when the product is shipped or delivered to a customer.
−Removed: Performance obligations for the sale of consumable products do not extend beyond one year.
−Removed: The Company performs shipping and handling activities through the use of third-party shippers and such activities occur prior to a customer obtaining control of goods.
−Removed: As such, the Company accounts for these these activities as fulfillment activities and not as separate performance obligations.
−Removed: Shipping and handling costs incurred by the Company in delivering products to
+Added: The Company’s revenue component is Consumables sales, but for 2021 also included License royalties.
Advanced Emissions Solutions, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements
−Removed: customers are billed to customers and are included in the transaction price and included in the "Revenues - Consumables" line item in the Consolidated Statements of Operations.
+Added: The Company is principally engaged in the sale of consumable products that utilize AC and chemical-based technologies to a broad range of customers, including coal-fired utilities, water treatment plants, and other diverse markets.
+Added: The Company's proprietary technologies and associated product offerings provide purification solutions to enable our customers to reduce certain contaminants and pollutants and thus maximize utilization levels and improve operating efficiencies to meet the challenges of existing and potential regulations.
+Added: The sale of consumable products is comprised of a single performance obligation and is recognized at the point in time when control transfers and the Company's obligation has been fulfilled, which is when the product is shipped or delivered to a customer.
+Added: Performance obligations for the sale of consumable products do not extend beyond one year.
+Added: The Company performs shipping and handling activities through the use of third-party shippers and such activities occur prior to a customer obtaining control of goods.
+Added: As such, the Company accounts for these activities as fulfillment activities and not as separate performance obligations.
+Added: Shipping and handling costs incurred by the Company in delivering products to customers are billed to customers and are included in the transaction price and included in the "Revenues - Consumables" line item in the Consolidated Statements of Operations.
Costs for shipping and handling activities incurred by the Company are included in the "Consumables Cost of revenues, excluding depreciation and amortization" line item in the Consolidated Statements of Operations.
−Removed: License royalties, related party
−Removed: The Company generates revenues from royalties ("M-45 Royalties") earned under a licensing arrangement ("M-45 License") of its M-45 TM and M-45-PC TM emissions control technologies ("M-45 Technology") between the Company and Tinuum Group.
−Removed: The Company recognizes M-45 Royalties at a point in time based on the use of the M-45 Technology at certain RC facilities or through Tinuum Group’s use of licensed technology for rates in excess of amounts allowed for RC application.
−Removed: The amount of M-45 Royalties recognized is generally based on a percentage of pre-tax margins (as defined in the M-45 License) of the RC facilities using the M-45 Technology.
+Added: License royalties earned from Tinuum Group
+Added: Through December 2021, the Company generated revenues from royalties ("M-45 Royalties") earned under a licensing arrangement ("M-45 License") of its M-45 TM and M-45-PC TM emissions control technologies ("M-45 Technology") between the Company and Tinuum Group, a related party.
+Added: The Company recognized M-45 Royalties at a point in time based on the use of the M-45 Technology at certain RC facilities (the "M-45 Facilities") or through Tinuum Group’s use of licensed technology for rates in excess of amounts allowed for RC application.
+Added: The amount of M-45 Royalties recognized was generally based on a percentage of pre-tax margins (as defined in the M-45 License) of the M-45 Facilities.
+Added: License royalties payable to Tinuum Group
+Added: In December 2022, the Company and Tinuum Group entered into an agreement (the "Tinuum Group Royalty Agreement") whereby the Company pays Tinuum Group a royalty (the "Tinuum Group Royalty") for certain of the Company's sales of its M-Prove TM products after the expiration of the Section 45 Tax Credit Program (beginning January 1, 2022) to certain of the M-45 Facilities.
+Added: The Tinuum Group Royalty is calculated based on "Net Profit" (as defined in the Tinuum Royalty Agreement) on the Company's sales of M-Prove TM product to certain of the M-45 Facilities.
+Added: The Tinuum Group Royalty Agreement is for an initial term of five years with automatic renewals of five years unless the Company and Tinuum Group agree to terminate it.
+Added: For the year ended December 31, 2022, the Company recognized $ 0.8 million of Tinuum Group Royalties, which are included in the "Consumables cost of revenues, excluding depreciation and amortization" line item in the Consolidated Statement of Operations.
Practical Expedients and Exemptions
1 unchanged sentence
Sales and other taxes that are collected concurrently with revenue-producing activities are excluded from revenue.
−Removed: The Company generally expenses sales commissions when incurred because the amortization period of the asset that the Company would have recognized is one year or less.
+Added: The Company generally expenses sales commissions when incurred, as the amortization period of the asset that the Company would have recognized is one year or less.
These costs are recorded in sales and marketing expenses in the "General and administrative" line item in the Consolidated Statements of Operations.
−Removed: Cost of Revenues
−Removed: Cost of revenues includes all labor, fringe benefits, subcontract labor, additive and coal costs, materials, equipment, supplies, travel costs and any other costs and expenses directly related to the Company’s production of revenues.
+Added: Consumables Cost of Revenues
+Added: Consumables cost of revenues includes all labor, fringe benefits, subcontract labor, additive and coal costs, materials, equipment, supplies, travel costs and any other costs and expenses directly related to the Company’s production of revenues.
Payroll and Benefits
1 unchanged sentence
Payroll and benefits costs exclude direct labor included in Cost of revenues.
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
Legal and Professional
5 unchanged sentences
Asset Retirement Obligations
−Removed: Asset retirement obligations ("ARO") are comprised of mine reclamation activities required under operating agreements related to the Five Forks Mine and the Marshall Mine (as defined in Note 4) and are recognized when incurred and recorded as liabilities at fair value.
+Added: Asset retirement obligations ("ARO") are comprised of mine reclamation activities required under operating agreements related to the Five Forks Mine and Marshall Mine (as defined below) and are recognized when incurred and recorded as liabilities at fair value.
An ARO is accreted over time through periodic charges to earnings.
−Removed: Accounting for reclamation and remediation obligations requires the Company to make estimates of future costs unique to a specific mining operation that the Company expects to incur to complete the reclamation and remediation work required to comply with existing laws and regulations.
+Added: Accounting for AROs requires the Company to make estimates of future costs unique to a specific mining operation that the Company expects to incur to complete the reclamation and remediation work required to comply with existing laws and regulations.
AROs are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation costs.
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
Five Forks Mine
10 unchanged sentences
Marshall Mine (refer to Note 3)
−Removed: Reclamation costs related to the Marshall Mine are largely based on a capped fee structure based on the initial estimate of the total costs of reclamation, which provides for certain contingencies that could increase or decrease the reclamation fee based on the reclamation agreement executed between the Company and the Marshall Mine operator.
+Added: Reclamation costs related to the Marshall Mine are largely based on a capped fee structure based on the initial estimate of the total costs of reclamation, which provides for certain contingencies that could increase or decrease the reclamation fee based on the reclamation agreement executed between the Company and the operator of the Marshall Mine.
The timing of payments and actual reclamation costs may change and the Company accounts for these changes on a quarterly basis.
4 unchanged sentences
In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
The Company records uncertain tax positions on the basis of a two-step process whereby (1) the Company determines whether it is more-likely-than-not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
−Removed: Based on its ownership in Tinuum Group, the Company records its pro-rata share for interest expense resulting from the sale of, or lease income generated from, RC facilities that are treated as installment sales for federal income purposes, pursuant to IRS section 453A ("Section 453A").
−Removed: Section 453A requires taxpayers using the installment method to pay an interest charge ("453A interest") on the portion of the tax liability that is deferred under the installment method.
−Removed: The Company recognizes 453A interest and other interest and penalties related to unrecognized tax benefits in the "Interest expense" line item in the Consolidated Statements of Operations.
Stock-Based Compensation
3 unchanged sentences
Stock-based compensation expense related to non-employee directors and consultants is included in the "General and administrative" line item in the Consolidated Statements of Operations.
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
When a sufficient amount of available earnings exists at the time of a dividend declaration, dividends are charged to Retained earnings when declared.
4 unchanged sentences
The treasury stock method is used to determine the dilutive effect of potentially dilutive securities.
−Removed: Potentially dilutive securities consist of restricted stock awards ("RSA's"), as well as outstanding options to purchase common stock ("Stock Options") and contingent performance stock units ("PSU's") (collectively, "Potential dilutive shares").
−Removed: The dilutive effect, if any, for non-participating RSA's, Stock Options and PSU's is determined using the greater of dilution as calculated under the treasury stock method or the two-class method.
+Added: Potentially dilutive securities consist of restricted stock awards ("RSAs") and contingent performance stock units ("PSUs") (collectively, "Potential dilutive shares").
Potential dilutive shares are excluded from diluted earnings (loss) per share when their effect is anti-dilutive.
When there is a net loss for a period, all Potential dilutive shares are anti-dilutive and are excluded from the calculation of diluted loss per share for that period.
−Removed: Each PSU represents a contingent right to receive shares of the Company’s common stock, and the number of shares may range from zero to two times the number of PSU's granted on the award date depending upon the price performance of the Company's common stock as measured against a general index and a specific peer group index over requisite performance periods.
−Removed: The number of Potential dilutive shares related to PSU's is based on the number of shares of the Company's common stock, if any, that would be issuable at the end of the respective reporting period, assuming that the end of the reporting period is the end of the contingency period applicable to such PSU's.
−Removed: See Note 16 for additional information related to PSU's.
−Removed: The following table sets forth the calculations of basic and diluted earnings per common share:
+Added: Each PSU represents a contingent right to receive shares of the Company’s common stock, and the number of shares may range from zero to two times the number of PSUs granted on the award date depending upon the price performance of the Company's common stock as measured against a general index and a specific peer group index over requisite performance periods.
+Added: The number of Potential dilutive shares related to a PSU is based on the number of shares of the Company's common stock, if any, that would be issuable at the end of the respective reporting period, assuming that the end of the reporting period is the end of the contingency period applicable to a PSU.
+Added: See Note 12 for additional information related to PSUs.
+Added: The following table sets forth the calculations of basic and diluted earnings (loss) per common share:
Years Ended December 31,
(in thousands, except per share amounts) 2022 2021
−Removed: Net income (loss) $ 60,401 $ ( 20,302 )
+Added: Net (loss) income $ ( 8,917 ) $ 60,401
Basic weighted-average number of common shares outstanding 18,453 18,258
1 unchanged sentence
Diluted weighted-average shares outstanding 18,453 18,461
−Removed: Earnings (loss) per share - basic $ 3.31 $ ( 1.12 )
−Removed: Earnings (loss) per share - diluted $ 3.27 $ ( 1.12 )
−Removed: For the years ended December 31, 2021 and 2020, zero and 0.6 million weighted-average equity instruments, respectively, were outstanding but were not included in the computation of diluted earnings per share because their effect would have been anti-dilutive.
+Added: (Loss) earnings per share - basic $ ( 0.48 ) $ 3.31
+Added: (Loss) earnings per share - diluted $ ( 0.48 ) $ 3.27
+Added: For the years ended December 31, 2022 and 2021, 0.6 million and zero weighted-average equity instruments, respectively, were outstanding but were not included in the computation of diluted earnings per share because their effect would have been anti-dilutive.
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
Use of Estimates
5 unchanged sentences
• income taxes, including the valuation allowance for deferred tax assets and assessment of uncertain tax positions.
−Removed: Due to the coronavirus ("COVID-19") pandemic, there has been uncertainty and disruption in the global economy and financial markets.
−Removed: Additionally, due to COVID-19, overall power generation and coal-fired power demand may change, which could also
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: have a material adverse effect on the Company.
−Removed: The Company is not aware of any specific event or circumstance due to COVID-19 that would require an update to its estimates or judgments or a revision of the carrying values of its assets or liabilities through the date of this Report.
−Removed: These estimates may change as new events occur and additional information is obtained.
−Removed: Actual results could differ materially from these estimates under different assumptions or conditions
Risks and Uncertainties
−Removed: As of December 31, 2021, all RC facilities had ceased operations and Tinuum is expected to complete reclamation activities, as required, during 2022.
−Removed: The loss of earnings from both Tinuum Group and Tinuum Services will have a significant adverse impact on our financial position, results of operations and cash flows beginning in 2022 and beyond.
+Added: The Company is principally dependent on operations of its APT business and its cash on hand to provide liquidity over the near and long term.
+Added: The Company's revenues, sales volumes, earnings and cash flows are significantly affected by prices of competing power generation sources such as natural gas and renewable energy.
+Added: During periods of low natural gas prices, natural gas provides a competitive alternative to coal-fired power generation and therefore, coal consumption may be reduced, which in turn reduces the demand for the Company's products.
+Added: However, during periods of higher prices for competing power generation sources, there is generally an increase in coal consumption and thus demand for the Company's products also increases.
+Added: In addition, coal consumption and demand for the Company's products are affected by the demand for electricity, which is higher in the warmer and colder months of the year.
+Added: As a result, the Company's operating results are subject to seasonal variations whereby its revenues and cost of revenues tend to be higher in its first and third fiscal quarters compared to its second and fourth fiscal quarters.
+Added: Abnormal temperatures during the summer and winter months may significantly affect coal consumption and impurities within various municipalities' water sources, and thus impact the demand for the Company's products.
Reclassifications
1 unchanged sentence
Such reclassifications had no effect on the Company’s results of operations or financial position in any of the periods presented.
+Added: Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by a company's chief operating decision maker ("CODM"), or a decision-making group, in deciding how to allocate resources and in assessing financial performance.
+Added: As of December 31, 2022, the Company's CODM was the
+Added: Company's Chief Executive Officer, and the Company concluded that it had one reportable segment.
+Added: Given the wind-down of Tinuum Group and Tinuum Services and the impact on the Company's financial statements, including the method in which the CODM allocates resources, the Company determined the historical Refined Coal segment no longer met the qualitative or quantitative criteria to be considered a reporting segment under GAAP.
+Added: As a result, beginning January 1, 2022, the Company determined that it had one reportable segment and therefore has not provided segment reporting disclosures for both 2022 and 2021.
New Accounting Guidance
3 unchanged sentences
ASU 2016-13 is effective for "smaller reporting companies" (as defined by the Securities and Exchange Commission) for fiscal years beginning after December 15, 2022, including interim periods within those years, and must be adopted under a modified retrospective method approach.
−Removed: Entities may adopt ASU 2016-13 earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those years.
−Removed: The Company intends to adopt ASU 2016-13 effective January 1, 2023 and is currently evaluating the provisions of this standard and assessing its impact on the Company's financial statements and disclosures.
−Removed: The Company does not believe this standard will have a material impact on the Company's financial statements and disclosures.
−Removed: Note 2 - Restatement
−Removed: Subsequent to the filing of its Quarterly Report for the quarterly period ended September 30, 2021, the Company reassessed its presentation of shipping and handling costs billed to its customers in its Consolidated Statement of Operations for the year ended December 31, 2021.
−Removed: Historically, the Company has accounted for shipping and handling costs billed to customers as a reduction of consumables cost of revenues, as presented in the Consumables cost of revenues, exclusive of depreciation and amortization line item in the Consolidated Statements of Operations.
−Removed: Under Accounting Standards Codification 606 - Revenue from Contracts with Customers , shipping and handling costs billed to customers are considered a component of the total transaction price in a contract with a customer and should be presented as revenues.
−Removed: The Company concluded that its historical presentation of shipping and handling costs billed to customers as a component of cost of revenues rather than as a component of revenues was incorrect and that the Company's presentation of both the "Revenues - Consumables" and "Consumables cost of revenues, exclusive of depreciation and amortization" line items for the year ended December 31, 2020 should be restated.
−Removed: The impact of this error resulted in an understatement of both the "Revenues - Consumables" and "Consumables cost of revenues, exclusive of depreciation and amortization" line items in the Consolidated Statements of Operations for the year ended December 31, 2020, but had no impact to operating income (loss), income (loss) before income taxes, net income (loss) or earnings (loss) per share for these years.
−Removed: Further, there was no impact of this error to the Consolidated Balance Sheets, Consolidated Statements of Stockholders' Equity or Consolidated Statements of Cash Flow as of and for the year ended December 31, 2020.
+Added: Entities may adopt ASU 2016-13 earlier as of the fiscal years beginning after December 15, 2018, including
Advanced Emissions Solutions, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements
−Removed: A summary of the impact of this restatement for the year ended December 31, 2020 is included in the table below.
−Removed: A summary of the impact of this restatement for the quarterly periods ended March 31, 2021 and 2020:
−Removed: June 30, 2021 and 2020;
−Removed: September 30, 2021 and 2020 and December 31, 2020 are contained in Note 24.
−Removed: Year ended December 31, 2020
−Removed: (in thousands, except per share data) As previously reported Increase/(Decrease) As Restated
−Removed: Consumables $ 48,122 $ 5,786 $ 53,908
−Removed: Total revenues 61,577 5,786 67,363
−Removed: Consumables cost of revenues, exclusive of depreciation and amortization $ 45,176 $ 5,786 50,962
−Removed: Total operating expenses 102,558 5,786 108,344
−Removed: Operating loss $ ( 40,981 ) $ — $ ( 40,981 )
+Added: interim periods within those years.
+Added: The Company will adopt ASU 2016-13 effective January 1, 2023 and this standard will not have a material impact on the Company's financial statements and disclosures.
Note 2 - Customer Supply Agreement
−Removed: On September 30, 2020, the Company and Cabot Norit Americas, Inc., ("Cabot") entered into a supply agreement (the "Supply Agreement") pursuant to which the Company agreed to sell and deliver to Cabot, and Cabot agreed to purchase and accept from the Company certain lignite-based AC products ("Furnace Products").
+Added: On September 30, 2020, the Company and Norit Activated Carbon - Americas (f/k/a Cabot Norit Americas, Inc.) ("Norit") entered into a supply agreement (the "Supply Agreement") pursuant to which the Company agreed to sell and deliver to Norit, and Norit agreed to purchase and accept from the Company certain lignite-based AC products ("Furnace Products").
The term of the Supply Agreement is for 15 years with 10 -year renewal terms that are automatic unless either party provides three years prior notice of intention not to renew before the end of any term.
−Removed: In addition to the sale by the Company and purchase by Cabot of Furnace Products, the Company and Cabot have agreed to additional terms whereby Cabot reimburses the Company for certain capital expenditures incurred by the Company that are necessary to manufacture the Furnace Products.
−Removed: Reimbursements are comprised of revenues earned from capital expenditures incurred that will benefit both the Company and Cabot (referred to as "Shared Capital") and revenues earned from capital expenditures incurred that will benefit Cabot exclusively (referred to as "Specific Capital").
−Removed: In the event that Cabot ceases to make purchases under the Supply Agreement, Cabot is obligated to pay the balance of any outstanding payments for Specific Capital.
−Removed: Note 4 - Acquisition of Marshall Mine
−Removed: Concurrently with the execution of the Supply Agreement, on September 30, 2020, the Company entered into an agreement to purchase (the "Mine Purchase Agreement") from Cabot 100 % of the membership interests in Marshall Mine, LLC (the "Marshall Mine Acquisition") for a nominal purchase price.
+Added: Under the Supply Agreement, Norit also reimburses the Company for certain capital expenditures incurred by the Company that are necessary to manufacture the Furnace Products.
+Added: Reimbursements are comprised of revenues earned from capital expenditures incurred that will benefit both the Company and Norit (referred to as "Shared Capital") and revenues earned from capital expenditures incurred that will benefit Norit exclusively (referred to as "Specific Capital").
+Added: In the event that Norit ceases to make purchases under the Supply Agreement, Norit is obligated to pay the balance of any outstanding payments for Specific Capital.
+Added: Further, under the terms of the Supply Agreement, Norit was obligated to pay the Reclamation Reimbursement (defined in Note 3 below) to the Company for $ 10.2 million of the Reclamation Costs (defined in Note 3 below), inclusive of interest.
+Added: On February 25, 2022, the Company received $ 10.6 million in cash from Norit (the "Norit Payment") as a result of a change in control provision in the Supply Agreement (the "Change in Control"), which occurred as a result of the sale of Norit by its parent, Cabot Corporation.
+Added: Under the Change in Control, the Company received from Norit full payment of all amounts outstanding under the Reclamation Reimbursement, payment of all unbilled amounts related to Specific Capital for expenditures incurred through February 28, 2022 and payment of $ 0.8 million related to additional costs due to the third-party operator of Marshall Mine (the "Norit Reclamation Costs").
+Added: Under the Reclamation Contract (defined in Note 3 below), the Company was obligated to remit payment for the Norit Reclamation Costs to the third-party operator of Marshall Mine (defined in Note 3 below), and such payment was remitted in March 2022.
+Added: The Change in Control did not impact any other provisions of the Supply Agreement.
+Added: As of February 25, 2022, the carrying value of the Reclamation Reimbursement was $ 9.0 million, which included the principal balance, adjusted for accretion of interest and payments made to date.
+Added: Under the Change in Control, the Company received $ 8.5 million in cash for full payment of the outstanding Reclamation Reimbursement.
+Added: The Company concluded that the cash proceeds received represented an early payment of a receivable based on a change in contractual terms and accounted for the difference between the cash proceeds received and the carrying amount of the Reclamation Reimbursement of $ 0.5 million as a loss, which is included in the "Other income (expense)" line item in the Consolidated Statement of Operations for the year ended December 31, 2022.
+Added: Also, under the Change in Control, the Company received $ 1.3 million in advance of revenue to be recognized in future periods related to Specific Capital and recorded this amount as deferred revenue, which is recognized ratably over the remaining contractual term as stipulated in the Supply Agreement.
+Added: Note 3 - Marshall Mine
+Added: Concurrently with the execution of the Supply Agreement, on September 30, 2020, the Company entered into an agreement to purchase from Norit 100 % of the membership interests in Marshall Mine, LLC (the "Marshall Mine Acquisition") for a nominal purchase price.
Marshall Mine, LLC owns a lignite mine located outside of Marshall, Texas (the "Marshall Mine").
−Removed: The Company independently determined to immediately commence activities to shutter the Marshall Mine and to incur the associated reclamation costs.
−Removed: In conjunction with the execution of the Supply Agreement and the Mine Purchase Agreement, on September 30, 2020, the Company entered into a reclamation contract (the "Reclamation Contract") with a third party that provides a capped cost, subject to certain contingencies, in the initial amount of approximately $ 19.7 million plus an obligation to pay certain direct costs of approximately $ 3.6 million (collectively, the "Reclamation Costs") over the estimated reclamation period of 10 years (the "Reclamation Period").
−Removed: Under the terms of the Supply Agreement, Cabot is obligated to reimburse the Company for $ 10.2 million of the Reclamation Costs (the "Reclamation Reimbursement"), payments of which are due semi-annually over the estimated reclamation period and are inclusive of interest.
−Removed: In the event that Cabot has a change in control as described in the Supply Agreement, all outstanding balances of the Reclamation Reimbursement shall be due and payable in full.
−Removed: See further discussion of the Reclamation Costs and Reclamation Reimbursement in Note 5.
−Removed: As the owner of the Marshall Mine, the Company is required to post a surety bond to ensure performance of its reclamation activities and entered into the Surety Agreement on September 30, 2020.
−Removed: As of December 31, 2021, the Company had a $ 16.6 million surety bond (the "Surety Bond") posted with the local regulatory agency.
−Removed: The Surety Bond will remain in place until the Marshall Mine is fully shuttered, and it may be reduced in amount from time to time as the Company progresses with its reclamation activities.
−Removed: As of December 31, 2021 and 2020, for the obligations due under the Reclamation Contract, the
+Added: The Company concluded that the Marshall Mine did not have any remaining economic reserves and independently determined to immediately commence activities to shutter it.
+Added: Accordingly, on September 30, 2020, the Company and a third party entered into a reclamation contract (the "Reclamation Contract") for full reclamation of the Marshall Mine, which was expected to be completed by 2030.
+Added: Under the terms of the Supply Agreement, Norit was obligated to reimburse the Company for $ 10.2 million (the "Reclamation Reimbursement") for a portion of the total costs incurred under the Reclamation Contract (the "Reclamation Costs"), which was payable semi-annually over 13 years and inclusive of interest.
+Added: As discussed in Note 2, on February 25, 2022 as part of the Change in Control, Norit fully paid the outstanding amount owed under the Reclamation Reimbursement and has no further liability related to the Marshall Mine.
Advanced Emissions Solutions, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements
−Removed: Company posted cash collateral of $ 10.0 million and $ 5.0 million, respectively, which is reported as "Restricted Cash, long-term" in the Consolidated Balance Sheets.
−Removed: The Marshall Mine Acquisition included the acquisition of certain assets that will be consumed and the assumption of certain liabilities that will be paid in reclamation of the Marshall Mine, in addition to the incurrence of an obligation for the Reclamation Costs.
−Removed: The Company determined that the Marshall Mine Acquisition should be accounted for as an asset acquisition as it did not meet the definition of a business.
−Removed: The Company's conclusion was based on the Marshall Mine not having any economic reserves, as the Company commenced full reclamation as of September 30, 2020, and therefore lacked inputs.
−Removed: As the Marshall Mine Acquisition represented a transaction with a customer of net assets acquired and liabilities assumed from Cabot, the Company accounted for the excess of the fair value of liabilities assumed over assets acquired as upfront consideration transferred to a customer, Cabot (the "Upfront Customer Consideration").
−Removed: The amount of the Upfront Customer Consideration was recognized net of an additional asset recognized in the Marshall Mine Acquisition, which was comprised of a receivable from Cabot (the "Cabot Receivable") for the Reclamation Reimbursements.
−Removed: The Cabot Receivable is further discussed in Note 5.
−Removed: The total Upfront Customer Consideration is amortized on a straight-line basis as a reduction to revenue over the expected 15-year contractual period of the Supply Agreement.
−Removed: The Company paid a nominal cash amount to Cabot in the form of cash for the Marshall Mine and also assumed liabilities whose fair value exceeded the fair value of assets acquired.
−Removed: The net assets acquired and liabilities assumed and the additional assets recorded for the Marshal Mine Acquisition as of September 30, 2020 are shown in the table below.
−Removed: Subsequent to this date, the Company completed additional analysis and adjustments were made as noted in the table below:
−Removed: (in thousands) As Originally Reported Adjustments As Adjusted
−Removed: Assets acquired:
−Removed: Receivables $ — $ 513 $ 513
−Removed: Property, plant and equipment 3,863 — 3,863
−Removed: Spare parts 100 — 100
−Removed: Liabilities assumed:
−Removed: Accounts payable and accrued expenses ( 673 ) 160 ( 513 )
−Removed: Asset retirement obligation ( 21,328 ) — ( 21,328 )
−Removed: Net assets acquired and liabilities assumed from Marshall Mine acquisition ( 18,038 ) 673 ( 17,365 )
−Removed: Cabot receivable 9,749 — 9,749
−Removed: Upfront Customer Consideration $ 8,289 $ ( 673 ) $ 7,616
−Removed: The Company also evaluated the Marshall Mine entity as a VIE, and determined that because of its structure and closing-stage status, it does not have sufficient equity at-risk and would not likely be able to obtain additional subordinated financial support to complete its closing stage obligations.
−Removed: The Company purchased all of the membership interests in Marshall Mine, LLC and determined that it met the definition of a VIE and that the Company is the primary beneficiary.
−Removed: Therefore, Marshall Mine, LLC’s assets and liabilities are consolidated.
+Added: The Company accounted for the Marshall Mine Acquisition as an asset acquisition, and it included the acquisition of certain assets and assumption of certain liabilities as well as the incurrence of an obligation for the Reclamation Costs (the "Marshall Mine ARO").
+Added: As of December 31, 2022 and 2021, the carrying value of the Marshall Mine ARO was $ 4.7 million and $ 6.3 million, respectively.
+Added: As the Marshall Mine Acquisition represented a transaction with a customer of net assets acquired and liabilities assumed from Norit, the Company accounted for the excess of the fair value of liabilities assumed over assets acquired as upfront consideration transferred to a customer, Norit (the "Upfront Customer Consideration"), which was $ 7.6 million.
+Added: The amount of the Upfront Customer Consideration was also recognized net of the Reclamation Reimbursement.
+Added: The total Upfront Customer Consideration is being amortized as a reduction to revenues on a straight-line basis over the expected 15 -year contractual period of the Supply Agreement.
+Added: Amortization of the Upfront Customer Consideration is approximately $ 0.5 million per year.
+Added: As of June 30, 2021 and December 31, 2021, the Company significantly revised its estimate of future obligations owed for the reclamation of the Marshall Mine primarily based on scope reductions related to future reclamation requirements.
+Added: As a result, the Company reduced the Marshall Mine ARO by $ 1.9 million as of June 30, 2021 and $ 0.8 million as of December 31, 2021 and for the year ended December 31, 2021 recognized a gain on change in estimate of $ 2.7 million.
+Added: This is included as "Gain on change in estimate, asset retirement obligation" in the Consolidated Statement of Operations for the year ended December 31, 2021.
+Added: On September 2, 2022, (the "Agreement Date"), the Company entered into a Membership Interest Purchase Agreement (the "MM Purchase Agreement") with a third party (the "MM Buyer") to sell all of its membership interests in Marshall Mine, LLC to the MM Buyer (the "MM Sale") in exchange for a cash payment to be made by the Company to the MM Buyer of approximately $ 2.4 million (the "MM Purchase Price") and the assumption by the MM Buyer of certain liabilities of Marshall Mine, LLC.
+Added: The MM Buyer previously operated the Marshall Mine on behalf of Marshall Mine, LLC and is currently performing reclamation under the Reclamation Contract.
+Added: The MM Purchase Price is subject to adjustments for certain events that may occur during the period from the Agreement Date and the Closing Date (as defined below) as follows:
+Added: (1) increased or reduced as agreed upon by the Company and the MM Buyer (collectively, the "Parties");
+Added: (2) increased or decreased by income, proceeds, receipts and credits earned with respect to the assets and operations of Marshall Mine, LLC between signing and closing of the MM Sale, (3) increased by any amounts that are, or under US GAAP should be, accrued as liabilities of Marshall Mine LLC as of the closing of the MM Sale, as more fully described in the MM Purchase Agreement;
+Added: and (4) decreased by agreed amounts which escalate depending on the timing of closing if it occurs after January 1, 2023.
+Added: The obligations of the Parties to close the MM Sale (the "Closing Date") is subject to certain events, including (1) obtaining the approval of the Railroad Commission of Texas (the "Commission") for an operating permit in the name of the MM Buyer or an affiliate of the MM Buyer;
+Added: and (2) the MM Buyer replacing the Company’s surety bond with a reclamation performance bond, letter of credit or other form of security to which the MM Buyer or an affiliate of the MM Buyer is the principal that is satisfactory to the Commission.
+Added: The MM Purchase Agreement may be terminated:
+Added: (1) by mutual consent of the MM Buyer and the Company at any time prior to the Closing Date;
+Added: (2) by the MM Buyer or the Company, if the Closing has not occurred within one year after the Agreement Date, unless the failure of the consummation of the Closing shall be due to the failure of the party wishing to terminate to comply in all material aspects with the agreements and covenants contained therein;
+Added: (3) if there is a material breach (by either the MM Buyer or the Company) of any representation, warranty, covenant or agreement contained in the MM Purchase Agreement that is not cured within a specified time frame;
+Added: and (4) if the MM Sale is prohibited by governmental authority in a final, non-appealable order or applicable law.
+Added: As of December 31, 2022, Marshall Mine, LLC had outstanding liabilities of approximately $ 4.9 million, which the Company expects to be fully discharged upon payment of the MM Purchase Price.
+Added: Because the Closing Date is uncertain, primarily due to a date uncertain for the Parties to receive approval of the MM Buyer's operating permit and surety bond by the Commission, the Company is unable to determine the accounting period in which it will recognize the MM Sale.
Advanced Emissions Solutions, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements
−Removed: The following tables summarize the assets and liabilities of Marshall Mine and their classification in the Company's Consolidated Balance Sheets:
+Added: The following tables summarize the assets and liabilities of Marshall Mine, LLC and their classification in the Company's Consolidated Balance Sheets:
As of December 31,
1 unchanged sentence
Cash $ — $ 914 Current assets
−Removed: Cabot receivable, short-term 2,056 921 Current assets
−Removed: Property and equipment, net 1,968 3,254 Non-current assets
−Removed: Cabot receivable, long-term 6,846 8,852 Non-current assets
+Added: Norit receivable, short-term — 2,056 Current assets
Restricted cash 10,000 10,027 Non-current assets
−Removed: Upfront customer consideration 6,982 7,490 Non-current assets
−Removed: Other — 50 Non-current assets
+Added: Norit receivable, long-term — 6,846 Non-current assets
+Added: Property and equipment, net — 1,968 Non-current assets
$ 10,000 $ 21,811
3 unchanged sentences
$ 4,880 $ 7,386
−Removed: Note 5 - Marshall Mine Asset Retirement Obligation and related Cabot Receivable
−Removed: Asset Retirement Obligation
−Removed: In connection with the Supply Agreement, Mine Purchase Agreement and the Reclamation Contract, the Company assumed the obligation to reclaim and restore the land associated with the Marshall Mine.
−Removed: The Company determined that the Marshall Mine did not have any remaining economic reserves.
−Removed: As of September 30, 2020, the Company recorded an ARO (the "Marshall Mine ARO") as its best estimate for the total Reclamation Costs of $ 21.3 million as measured at the estimated future cash flows of $ 23.7 million, inclusive of contingency costs, discounted to their present value using a discount rate based on a credit-adjusted, risk-free rate of 7.0 %.
−Removed: As of June 30, 2021 and December 31, 2021, the Company revised its estimate of future obligations owed for the reclamation of the Marshall Mine primarily based on scope reductions related to future reclamation requirements.
−Removed: As a result, the Company reduced the Marshall Mine ARO by $ 1.9 million as of June 30, 2021 and $ 0.8 million as of December 31, 2021 and recorded a corresponding gain on change in estimate of $ 2.7 million for the year ended December 31, 2021.
−Removed: This is included as "Gain on change in estimate, asset retirement obligation" in the Consolidated Statement of Operations for the year ended December 31, 2021.
−Removed: Cabot Receivable
−Removed: As previously disclosed, under the terms of the related Supply Agreement, Cabot is obligated to pay the Reclamation Reimbursement to the Company for $ 10.2 million of the Reclamation Costs, inclusive of interest.
−Removed: As of September 30, 2020, the Company recorded the Cabot Receivable for the Reclamation Reimbursement at its estimated fair value, which was measured using a discounted cash flows valuation model that considered the estimated credit risk associated with the obligor’s (Cabot’s) future performance.
−Removed: Interest is accreted on a monthly basis and recognized as interest income.
−Removed: There were no significant related fees or costs associated with the Cabot Receivable.
−Removed: As of September 30, 2020, the Company recorded the Cabot Receivable at its estimated fair value of $ 9.7 million, reflecting a discount rate of approximately 1.5 % or $ 0.5 million.
−Removed: Allowances for this asset are assessed periodically, and no allowance was deemed necessary as of December 31, 2021 or 2020.
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: Note 6 - Impairment
−Removed: As part of its periodic review of the carrying value of long-lived assets, the Company assessed its long-lived assets for potential impairment.
−Removed: In assessing impairment of its APT segment's long-lived asset groups as of June 30, 2021, the Company considered factors such as the significant decline in both the APT segment's trailing twelve months revenues and current and future years’ forecasted revenues.
−Removed: These factors were largely due to the significant drop in coal-fired power dispatch amid historically low prices of alternative power generation sources, such as natural gas, leading to an increase in natural gas usage as well as other competing energy sources.
−Removed: As of June 30, 2020, the Company completed an undiscounted cash flow analysis of its APT segment's long-lived assets (the "Asset Group"), which were comprised of its manufacturing plant and related assets and its lignite mine assets.
−Removed: The estimated undiscounted cash flows from the Asset Group was $ 54.7 million, which was less than the carrying value of the Asset Group of $ 58.3 million.
−Removed: Accordingly, the Company completed an assessment of the Asset Group’s fair value and estimated the fair value of the Asset Group at $ 32.2 million.
−Removed: This resulted in an impairment and write-down of the Asset Group (the "Impairment Charge") of $ 26.1 million as of June 30, 2020.
−Removed: The Impairment Charge is reflected as "Impairment of long-lived assets" in the Consolidated Statement of Operations for the year ended December 31, 2020, and was allocated to the APT segment.
−Removed: The following table summarizes the allocation to the Asset Group of the Impairment Charge of $ 26.1 million recorded as of June 30, 2020:
−Removed: (in thousands)
−Removed: Property, plant and equipment, net $ 18,986
−Removed: Intangible assets, net 1,445
−Removed: Other long-term assets, net 5,672
−Removed: Total impairment $ 26,103
−Removed: The Company engaged an independent third party to perform the valuation of the Asset Group in order to determine the estimated fair value of the Asset Group.
−Removed: This valuation was based on the use of several established valuation models including an expected future discounted cash flow model using Level 3 inputs.
−Removed: Note 7 - COVID-19
−Removed: In March 2020, the federal government passed the Coronavirus Aid, Relief, and Security Act (the "CARES Act"), which
−Removed: provided among other things the creation of the Paycheck Protection Plan ("PPP"), which was sponsored and administered by the U.S.
−Removed: Small Business Administration ("SBA").
−Removed: On April 20, 2020, the Company executed a loan agreement (the "PPP Loan") under the PPP, evidenced by a promissory note, with BOK, NA dba Bank of Oklahoma ("BOK"), providing for $ 3.3 million in proceeds, which was funded to the Company on April 21, 2020.
−Removed: The PPP Loan was scheduled to mature on April 21, 2022, unless forgiven subject to terms and conditions established by the SBA.
−Removed: The Company initially recorded the PPP Loan as a debt obligation and accrued interest over its term.
−Removed: On July 27, 2021, the Company received formal notification in the form of a letter dated July 19, 2021 from BOK that the SBA
−Removed: approved the Company’s PPP Loan forgiveness application for the PPP Loan in the amount of $ 3.3 million (including accrued
−Removed: For the year ended December 31, 2021, the Company recorded a gain on extinguishment of the PPP Loan in the amount of $ 3.3 million in the Consolidated Statement of Operations, which is included as a component of "Other income (expense)."
−Removed: The CARES Act also provided the deferral of payroll tax payments for all payroll taxes incurred through December 31, 2020.
−Removed: The Company elected to defer payments of payroll taxes for the periods allowed under the CARES Act in the amount of $ 0.4 million and paid $ 0.2 million during the fourth quarter of 2021, with the balance due no later than December 31, 2022.
−Removed: Note 8 - Equity Method Investments
−Removed: Tinuum Group, LLC
−Removed: As of December 31, 2021 and 2020, the Company’s ownership in Tinuum Group was 42.5 %.
−Removed: Tinuum Group supplies technology, equipment and technical services to cyclone-fired and other boiler users, but its primary purpose is to place into operation facilities that produce and sell RC that lower emissions and therefore qualifies for Section 45 tax credits.
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: Refined Coal, LLC ("NexGen") and GSFS Investments I Corp.
−Removed: ("GSFS"), an affiliate of The Goldman Sachs Group, Inc.
−Removed: ("GS"), own the remaining 42.5 % and 15.0 %, respectively of Tinuum Group.
−Removed: GSFS' ownership interest is in the form of Class B units that do not have voting rights but provide certain preferences over ADA and NexGen as to liquidation and profit distribution.
−Removed: The Company determined that Tinuum Group is a VIE, however, it concluded that it was not the primary beneficiary and therefore did not consolidate Tinuum Group, and accounted for it under the equity method of accounting.
−Removed: The Company's conclusion that it was not the primary beneficiary was based on the Company's and NexGen's shared power of Tinuum Group.
−Removed: The following tables summarize the assets, liabilities and results of operations of Tinuum Group:
−Removed: As of December 31,
−Removed: (in thousands) 2021 2020
−Removed: Current assets $ 39,387 $ 142,440
−Removed: Non-current assets $ 220 $ 28,649
−Removed: Current liabilities $ 15,558 $ 44,278
−Removed: Non-current liabilities $ — $ 5,186
−Removed: Members equity attributable to Class A members $ 8,890 $ 59,221
−Removed: Member equity attributable to Class B members $ 9,887 $ 18,769
−Removed: Noncontrolling interests $ 5,272 $ 43,635
−Removed: Years Ended December 31,
−Removed: (in thousands) 2021 2020
−Removed: Gross profit $ 6,995 $ 6,649
−Removed: Operating, selling, general and administrative expenses 49,414 58,008
−Removed: Loss from operations ( 42,419 ) ( 51,359 )
−Removed: Other income 9,726 17,260
−Removed: Loss attributable to noncontrolling interest 126,948 91,501
−Removed: Net income available to Class A and B members $ 94,255 $ 57,402
−Removed: ADES equity earnings from Tinuum Group $ 61,837 $ 24,396
−Removed: For the year ended December 31, 2021, the Company recognized earnings from Tinuum Group's net income available to members that was different from its pro-rata share of Tinuum Group's net income available to members, as cash distributions for the year ended December 31, 2021 exceeded the carrying value of the Tinuum Group equity investment.
−Removed: For the year ended December 31, 2020, the Company recognized its pro-rata share of Tinuum Group's net income available to its members.
−Removed: The carrying value of the Company's investment in Tinuum Group is zero as long as the cumulative amount of distributions received from Tinuum Group exceeds the Company's cumulative pro-rata share of Tinuum Group's net income available to Class A members.
−Removed: For periods during which the ending balance of the Company's investment in Tinuum Group is zero , the Company only recognizes equity earnings from Tinuum Group to the extent that cash distributions are received from Tinuum Group during the period.
−Removed: For periods during which the ending balance of the Company's investment is greater than zero (e.g., when the cumulative earnings in Tinuum Group exceeds cumulative cash distributions received), the Company recognizes its pro-rata share of Tinuum Group's net income available to Class A members for the period, less any amount necessary to recover the cumulative earnings short-fall balance as of the end of the immediately preceding period.
−Removed: As shown in the table below, the Company’s carrying value in Tinuum Group for the years ended December 31, 2021 and 2020 was zero and $ 3.4 million, respectively.
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: The following table presents the Company's investment balance, equity earnings, cash distributions and cash distributions in excess of the investment balance for the years ended December 31, 2021 and 2020 ( in thousands ):
−Removed: Description Date(s) Investment balance ADES equity earnings (loss) Cash distributions Memorandum Account:
−Removed: Cash distributions and equity loss in (excess) of investment balance
−Removed: Beginning balance 12/31/2019 $ 32,280 $ — $ — $ —
−Removed: ADES proportionate share of net income from Tinuum Group 2020 activity 24,396 24,396 — —
−Removed: Cash distributions from Tinuum Group 2020 activity ( 53,289 ) — 53,289 —
−Removed: Total investment balance, equity earnings (loss) and cash distributions 12/31/2020 $ 3,387 $ 24,396 $ 53,289 $ —
−Removed: ADES proportionate share of net income from Tinuum Group 2021 activity 40,058 40,058 — —
−Removed: Cash distributions from Tinuum Group 2021 activity ( 65,224 ) — 65,224 —
−Removed: Adjustment for current year cash distributions in excess of investment balance 2021 activity 21,779 21,779 — ( 21,779 )
−Removed: Total investment balance, equity earnings and cash distributions 12/31/2021 $ — $ 61,837 $ 65,224 $ ( 21,779 )
−Removed: Additional information related to Tinuum Group is included in Item 15 - "Exhibits and Financial Statement Schedules" ("Item 15") of this Report.
−Removed: Tinuum Services, LLC
−Removed: In 2010, the Company, together with NexGen, formed Tinuum Services for the purpose of operating and maintaining RC facilities, including those RC facilities leased or sold to third parties.
−Removed: The Company determined that Tinuum Services is not a VIE and evaluated Tinuum Services for potential consolidation under the voting interest model.
−Removed: Because the Company does not own greater than 50 % of the outstanding voting shares, it has accounted for its investment in Tinuum Services under the equity method of accounting.
−Removed: As of December 31, 2021 and 2020, the Company’s investment in Tinuum Services was $ 2.4 million and $ 4.2 million, respectively.
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: The following tables summarize the assets, liabilities and results of operations of Tinuum Services:
−Removed: As of December 31,
−Removed: (in thousands) 2021 2020
−Removed: Current assets $ 159,013 $ 301,670
−Removed: Non-current assets $ 19 $ 45,575
−Removed: Current liabilities $ 14,343 $ 187,097
−Removed: Non-current liabilities $ — $ 6,451
−Removed: Equity $ 6,263 $ 8,483
−Removed: Noncontrolling interests $ 138,426 $ 145,214
−Removed: Years Ended December 31,
−Removed: (in thousands) 2021 2020
−Removed: Gross loss $ ( 68,465 ) $ ( 87,723 )
−Removed: Operating, selling, general and administrative expenses 166,075 171,095
−Removed: Loss from operations ( 234,540 ) ( 258,818 )
−Removed: Other income (expenses) 3,830 ( 1,282 )
−Removed: Loss attributable to noncontrolling interest 246,094 273,262
−Removed: Net income $ 15,384 $ 13,162
−Removed: Included in the Consolidated Statement of Operations of Tinuum Services for the years ended December 31, 2021 and 2020 were losses related to VIE entities that are consolidated within Tinuum Services.
−Removed: These losses do not impact the Company's equity earnings from Tinuum Services as 100 % of those losses are attributable to a noncontrolling interest and eliminated in the calculations of Tinuum Services' net income attributable to the Company's interest.
−Removed: The following table details the carrying value of the Company's respective equity method investments included in the "Equity method investments" line item on the Consolidated Balance Sheets and indicates the Company's maximum exposure to loss:
+Added: Note 4 - Revenues
+Added: For the years ended December 31, 2022 and 2021, all material performance obligations related to revenues recognized were satisfied at a point in time.
+Added: For the years ended December 31, 2022 and 2021, approximately 8 % and 12 %, respectively, of Consumables revenues were generated in Canada, and all other revenues were generated in the U.S.
+Added: Trade receivables
+Added: Trade receivables represent an unconditional right to consideration in exchange for goods or services transferred to a customer.
+Added: The Company invoices its customers in accordance with the terms of the contract.
+Added: Credit terms are generally net 30 - 45 days from the date of invoice .
+Added: The timing between the satisfaction of performance obligations and when payment is due from the customer is generally not significant.
+Added: The following table shows the components of the Company's Receivables, net:
As of December 31,
(in thousands) 2022 2021
−Removed: Equity method investment in Tinuum Group $ — $ 3,387
−Removed: Equity method investment in Tinuum Services 2,391 4,242
−Removed: Equity method investment in other — 63
−Removed: Total equity method investments $ 2,391 $ 7,692
−Removed: The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable.
−Removed: As of December 31, 2021, the Company concluded the carrying amount of its investment in Tinuum Services was not fully recoverable due to the remaining expected future cash distributions to be received as Tinuum Services shutters its operations in 2022 as a result of the expiration of the Section 45 tax credit period as of December 31, 2021.
−Removed: As a result, the Company wrote-down its investment in the amount of $ 0.7 million, which is included in the "Earnings from equity method investments" line item in the Consolidated Statement of Operations for the year ended December 31, 2021.
+Added: Trade receivables, net $ 13,789 $ 10,476
+Added: Other receivables 75 —
+Added: Norit Receivable - current — 2,146
+Added: Receivables, net $ 13,864 $ 12,622
+Added: Contract liabilities
+Added: As discussed in Note 2, the Company received $ 1.3 million in advance of revenue to be recognized in future periods related to Specific Capital and recorded this amount as deferred revenue in February 2022, which is recognized ratably over the remaining contractual term as stipulated in the Supply Agreement.
+Added: As of December 31, 2022, total deferred revenue related to Specific Capital was $ 1.0 million, of which the current portion is included in "Other current liabilities" and the long-term portion is included in "Other long-term liabilities" in the Consolidated Balance Sheet.
Advanced Emissions Solutions, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements
−Removed: The following table details the components of the Company's respective earnings or loss from equity method investments included in the "Earnings from equity method investments" line item in the Consolidated Statements of Operations:
−Removed: Year ended December 31,
−Removed: (in thousands) 2021 2020
−Removed: Earnings from Tinuum Group $ 61,837 $ 24,396
−Removed: Earnings from Tinuum Services 6,952 6,582
−Removed: Loss from other ( 63 ) —
−Removed: Earnings from equity method investments $ 68,726 $ 30,978
−Removed: The following table details the components of the cash distributions from the Company's respective equity method investments included as a component of cash flows from operating activities in the Consolidated Statements of Cash Flows.
−Removed: Distributions from equity method investees are reported in the Consolidated Statements of Cash Flows as "return on investment" in Operating cash flows until such time as the carrying value in an equity method investee company is reduced to zero ;
−Removed: thereafter, such distributions are reported as "distributions in excess of cumulative earnings" as a component of cash flows from investing activities.
−Removed: Year ended December 31,
−Removed: (in thousands) 2021 2020
−Removed: Distributions from equity method investees, return on investment
−Removed: Tinuum Group $ 14,142 $ 53,289
−Removed: Tinuum Services 8,802 9,152
−Removed: $ 22,944 $ 62,441
−Removed: Distributions from equity method investees in excess of cumulative earnings
−Removed: Tinuum Group $ 51,082 $ —
Note 5 - Inventories, net
5 unchanged sentences
$ 17,828 $ 7,850
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: Note 10 - Property, Plant and Equipment
−Removed: The cost basis and accumulated depreciation of property, plant and equipment at December 31, 2021 and 2020 are summarized in the table below:
−Removed: Life in Years As of December 31,
−Removed: (in thousands) 2021 2020
−Removed: Land and land improvements 0 - 31
−Removed: $ 1,225 $ 891
−Removed: Plant and operating equipment 2 - 29
−Removed: 31,266 25,703
−Removed: Furniture and fixtures 2 - 11
−Removed: Machinery and equipment 2 - 10
−Removed: Leasehold improvements 2 - 3
−Removed: Construction in progress 1,190 2,143
−Removed: 37,855 32,773
−Removed: Less accumulated depreciation ( 7,684 ) ( 3,340 )
−Removed: Total property, plant and equipment, net $ 30,171 $ 29,433
−Removed: Included in plant and operating equipment as of December 31, 2021 and 2020 is mining equipment financed under various lease facilities, and obligations due under these facilities are included in finance lease obligations in the Consolidated Balance Sheets.
−Removed: The total amount recorded for ROU assets as of December 31, 2021 and 2020 related to finance lease obligations was $ 1.7 million and $ 2.4 million, respectively, net of accumulated depreciation of $ 1.1 million and $ 0.5 million.
−Removed: Depreciation expense for the years ended December 31, 2021 and 2020 was $ 5.5 million and $ 6.8 million, respectively.
−Removed: Note 11 - Debt Obligations
−Removed: Years ended December 31,
−Removed: (in thousands) 2021 2020
−Removed: Finance lease obligations $ 4,163 $ 5,526
−Removed: Senior Term Loan principal, related party — 16,000
−Removed: net unamortized debt issuance costs — ( 465 )
−Removed: net unamortized debt discount — ( 480 )
−Removed: Senior Term Loan, net — 15,055
−Removed: PPP Loan — 3,305
−Removed: Total borrowings 4,163 23,886
−Removed: Current maturities ( 1,011 ) ( 18,441 )
−Removed: Total long-term borrowings $ 3,152 $ 5,445
−Removed: Senior Term Loan
−Removed: On December 7, 2018, the Company, and ADA-ES, Inc.
−Removed: ("ADA"), a wholly-owned subsidiary, and certain other subsidiaries of the Company as guarantors, The Bank of New York Mellon as administrative agent, and Apollo Credit Strategies Master Fund Ltd and Apollo A-N Credit Fund (Delaware) L.P., affiliates of a beneficial owner of greater than five percent of the Company's common stock and a related party, entered into the Senior Term Loan in the amount of $ 70.0 million, less original issue discount of $ 2.1 million.
−Removed: The Company also paid debt issuance costs of $ 2.0 million related to the Senior Term Loan.
−Removed: On June 1, 2021 and prior to the Senior Term Loan's maturity date, the Company paid the remaining principal balance of the Senior Term Loan and all remaining accrued interest through this date.
−Removed: The Company did not incur any prepayment fees associated with the early pay-off.
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: Line of Credit
−Removed: In September 2013, ADA, as borrower, the Company, as guarantor, entered into the Line of Credit with the Lender for an aggregate principal amount of $ 10.0 million that was secured by certain amounts due to the Company from certain Tinuum Group RC leases.
−Removed: The Line of Credit was amended 16 times from the period from December 2, 2013 through March 23, 2021, which included a reduction in the principal amount to $ 5.0 million in September 2018.
−Removed: On March 23, 2021, ADA, the Company and the Lender entered into an amendment to the Line of Credit (the "Fifteenth Amendment"), which extended the maturity date of the Line of Credit to December 31, 2021 and increased the minimum cash requirement from $ 5.0 million to $ 6.0 million.
−Removed: On July 29, 2021, the Company and the Lender entered into the Sixteenth Amendment (the "Sixteenth Amendment") to the Line of Credit.
−Removed: The Sixteenth Amendment amends certain terms and conditions related to collateral securing the Line of Credit.
−Removed: As of December 31, 2021 and 2020, there were no outstanding borrowings under the Line of Credit.
−Removed: The Line of Credit expired on December 31, 2021.
Note 6 - Leases
1 unchanged sentence
Year ended December 31,
−Removed: Leases 2021 2020
Operating Leases
14 unchanged sentences
ROU assets under finance leases are reported in the "Property, plant and equipment" line item, and finance lease liabilities are included in the "Current portion of long-term debt" and "Long-term debt, net of current portion" line items in the Consolidated Balance Sheets as of December 31, 2022 and 2021.
−Removed: Interest expense related to finance lease liabilities and amortization of ROU assets under finance leases are included in the "Interest expense" and "Depreciation, amortization, depletion and accretion" line respectively, in the Consolidated Statement of Operations for the years ended December 31, 2021 and 2020.
+Added: Interest expense related to finance lease liabilities and amortization of ROU assets under finance leases are included in the "Interest expense" and "Depreciation, amortization, depletion and accretion" line items respectively, in the Consolidated Statement of Operations for the years ended December 31, 2022 and 2021.
Advanced Emissions Solutions, Inc.
43 unchanged sentences
Present value of lease payments $ 7,857 $ 4,581 $ 12,438
−Removed: Note 13 - Revenues
−Removed: Trade receivables
−Removed: Trade receivables represent an unconditional right to consideration in exchange for goods or services transferred to a customer.
−Removed: The Company invoices its customers in accordance with the terms of the contract.
−Removed: Credit terms are generally net 30 from the date of invoice .
−Removed: The timing between the satisfaction of performance obligations and when payment is due from the customer is generally not significant.
−Removed: The Company records allowances for doubtful trade receivables when it is probable that the balances will not be collected.
−Removed: The following table shows the components of Trade receivables, net:
−Removed: As of December 31,
−Removed: (in thousands) 2021 2020
−Removed: Trade receivables $ 10,476 $ 12,241
−Removed: Allowance for doubtful accounts — ( 37 )
−Removed: Trade receivables, net $ 10,476 $ 12,204
−Removed: Cabot Receivable
−Removed: The following table shows the components of the Cabot Receivable:
−Removed: (in thousands) December 31, 2021 December 31, 2020
−Removed: Receivables, net $ 2,146 $ 921
−Removed: Other long-term assets, net 6,846 8,852
−Removed: Total Cabot Receivable $ 8,992 $ 9,773
−Removed: Upfront Customer Consideration
−Removed: As described in Note 4, as of September 30, 2020, the Company recorded an asset for Upfront Customer Consideration of $ 7.6 million in connection with the Supply Agreement, which is amortized on a straight-line basis as a reduction to revenue over the expected 15 -year contractual period of the Supply Agreement.
−Removed: The unamortized balance is included in Other long-term assets, net on the Company's Consolidated Balance Sheets as of December 31, 2021 and 2020.
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: Disaggregation of Revenue and Earnings from Equity Method Investments
−Removed: For the years ended December 31, 2021 and 2020, all performance obligations related to revenues recognized were satisfied at a point in time.
−Removed: The Company disaggregates its revenues by its major components its two operating segments, which are further discussed in Note 19 to the consolidated financial statements.
−Removed: In the APT segment for the year ended December 31, 2021 and 2020, approximately 13 % and 15 %, respectively, of APT revenue was generated in Canada.
−Removed: The following tables disaggregate revenues by major source for the year ended December 31, 2021 and 2020:
−Removed: Year ended December 31, 2021
−Removed: (in thousands) APT RC Total
−Removed: Revenue component
−Removed: Consumables $ 85,882 $ — $ 85,882
−Removed: License royalties, related party — 14,368 14,368
−Removed: Other 44 — 44
−Removed: Revenues from customers 85,926 14,368 100,294
−Removed: Earnings from equity method investments — 68,726 68,726
−Removed: Total revenues and earnings from equity method investments $ 85,926 $ 83,094 $ 169,020
−Removed: Year ended December 31, 2020
−Removed: (in thousands) APT RC Total
−Removed: Revenue component
−Removed: Consumables (1)
−Removed: $ 53,908 $ — $ 53,908
−Removed: License royalties, related party — 13,440 13,440
−Removed: Other 15 — 15
−Removed: Revenues from customers 53,923 13,440 67,363
−Removed: Earnings from equity method investments — 30,978 30,978
−Removed: Total revenues and earnings from equity method investments $ 53,923 $ 44,418 $ 98,341
−Removed: (1) Consumables revenues for the year ended December 31, 2020 have been restated.
−Removed: See restatement discussion in Note 2.
+Added: In November 2022, the Company executed a new lease for its corporate headquarters and primary laboratory commencing May 1, 2023 and expiring October 31, 2030.
+Added: Total commitments under the lease include aggregate rental payments of $ 3.3 million plus a pro rata portion of operating expenses related to the office and laboratory leased space, which is not included in the table above.
Note 7 - Commitments and Contingencies
−Removed: Legal Proceedings
−Removed: The Company is from time to time subject to, and is presently involved in, various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of its business.
−Removed: Such matters are subject to many uncertainties and outcomes, the financial impacts of which are not predictable with assurance and that may not be known for extended periods of time.
−Removed: The Company records a liability in its consolidated financial statements for costs related to claims, settlements, and judgments where management has assessed that a loss is probable, and an amount can be reasonably estimated.
−Removed: The Company did not have any significant legal proceedings.
+Added: Retention Agreements
+Added: On May 4, 2022, the Compensation Committee of the Board of Directors and the Board of Directors (the "Board") approved the amendment to retention agreements (the "Retention Agreements" and each a "Retention Agreement"), which had been executed in May 2021, between the Company and its executive officers and certain other key employees in order to maintain the Company's business operations while it pursues and executes on its strategic initiatives (the "Amended Retention Agreements").
+Added: Under the Amended Retention Agreements, employees will receive (i) 40 % of the original amount agreed to in the Retention Agreements ("Retention Pay") in August 2022;
+Added: (ii) 60 % of the Retention Pay on the earliest of (1) the date the employee’s employment is terminated without Cause or for Good Reason (as those terms are defined in the Retention Agreement or the employee’s employment agreement, as applicable), (2) 90 days after a Transaction Date or a Change in Control (as those terms are defined in the Retention Agreement or the employee’s employment agreement, as applicable), or (3) January 18, 2023;
+Added: and (iii) an additional lump sum payment, ranging from 10 % to 40 % of the Retention Pay, will also be paid at the earliest of (1) the date the employee’s employment is terminated without Cause or for Good Reason (as those terms are defined in the Retention Agreement or the employee’s employment agreement, as applicable), (2) 90 days after a Transaction Date or a Change in Control (as those terms are defined in the Retention Agreement or the employee’s employment agreement, as applicable), or (3) in January 2023.
+Added: In order to receive the Amended Retention Agreements payments, employees must remain employed at the Company through the dates above.
+Added: In August 2022, the Company paid out $ 1.0 million pursuant to the payment terms of the Amended Retention Agreements.
+Added: As of December 31, 2022, the total cash payable pursuant to the Amended Retention Agreements was $ 1.4 million, and is included in the "Other current liabilities" line item in the Consolidated Balance Sheet.
+Added: This amount was paid in January 2023.
+Added: Surety Bonds and Restricted Cash
+Added: As the owner of the Marshall Mine, the Company is required to post a surety bond with a regulatory commission.
+Added: As of December 31, 2022, the Company had posted a $ 16.6 million surety bond (the "MM Surety Bond") which will remain in place until the Marshall Mine is fully reclaimed, and may be further reduced in amount from time to time as the Company progresses with its reclamation activities or eliminated if the MM Sale is consummated.
+Added: As the owner of the Five Forks Mine, the Company is required to post a surety bond with a regulatory commission.
+Added: As of December 31, 2022 , the Company had posted a $ 7.5 million surety bond related to performance requirements associated with the Five Forks Mine.
Advanced Emissions Solutions, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements
−Removed: Restricted Cash
−Removed: As of December 31, 2021 and 2020, the Company had long-term restricted cash of $ 10.0 million and $ 5.0 million, respectively, as required under the Surety Agreement related to the Reclamation Contract.
−Removed: As of December 31, 2020, the Company had short-term restricted cash of $ 5.0 million as required under a minimum cash balance requirement of a Senior Term Loan covenant.
−Removed: As of December 31, 2021 , the Company had outstanding surety bonds of $ 24.1 million related to performance requirements under reclamation contracts associated with both the Five Forks Mine and the Marshall Mine.
−Removed: Other Commitments and Contingencies
+Added: As of December 31, 2022, the Company posted cash collateral of $ 10.0 million for both the Marshall Mine and Five Forks Mine as required by the Company's surety bond provider, which is reported as long-term restricted cash on the Consolidated Balance Sheets.
The Company also has certain limited obligations contingent upon future events in connection with the activities of Tinuum Group.
−Removed: The Company, NexGen and two entities affiliated with NexGen have provided GSFS with limited guaranties (the "Tinuum Group Party Guaranties") related to certain losses it may suffer as a result of inaccuracies or breach of representations and covenants.
+Added: The Company, NexGen Refined Coal, LLC ("NexGen") and two entities affiliated with NexGen have provided another Tinuum Group owner with limited guarantees (the "Tinuum Group Party Guarantees") related to certain losses it may suffer as a result of inaccuracies or breach of representations and covenants.
The Company also is a party to a contribution agreement with NexGen under which any party called upon to pay on a Tinuum Group Party Guaranty is entitled to receive contribution from the other party equal to 50 % of the amount paid.
−Removed: No liability or expense provision has been recorded by the Company related to this contingent obligation as the Company believes that it is not probable that a loss will occur with respect to Tinuum Group Party Guaranties.
−Removed: Note 15 - Stockholders' Equity
−Removed: The Company has two classes of capital stock authorized, common stock and preferred stock, which are described as follows:
−Removed: Preferred Stock
−Removed: The Company's Board of Directors (the "Board") is authorized to provide out of the unissued shares of Preferred Stock and to fix the number of shares constituting a series of Preferred Stock and, with respect to each series, to fix the number of shares and designation of such series, the voting powers, if any, the preferences and relative, participating, option or other special rights, if any, and any qualifications, limitations or restrictions thereof, of the shares of such series.
−Removed: As of December 31, 2021 and 2020, there were no shares of Preferred Stock designated or outstanding.
−Removed: Holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders.
−Removed: Additionally, holders of common stock are entitled to receive dividends when and if declared by the Board, subject to any statutory or contractual restrictions on payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding shares of preferred stock.
−Removed: Upon dissolution, liquidation or the sale of all or substantially all of the Company's assets, after payment in full of any amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of common stock will be entitled to receive the Company's remaining assets for distribution on a pro rata basis.
−Removed: Stock Repurchase Programs
−Removed: In November 2018, the Board authorized the Company to purchase up to $ 20.0 million of its outstanding common stock under a stock repurchase program (the "Stock Repurchase Program"), which was to remain in effect until December 31, 2019 unless otherwise modified by the Board.
−Removed: In November 2019, the Board authorized an incremental $ 7.1 million to the Stock Repurchase Program and provided that it will remain in effect until all amounts are utilized or it is otherwise modified by the Board.
−Removed: For the years ended December 31, 2021 and 2020, under the Stock Repurchase Program, the Company purchased zero and 20,613 shares of its common stock for cash of zero and $ 0.2 million, inclusive of commissions and fees, respectively.
−Removed: As of December 31, 2021, the Company had $ 7.0 million remaining under the Stock Repurchase Program.
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: Tax Asset Protection Plan
−Removed: federal income tax rules, and Section 382 of the Internal Revenue Code in particular, could substantially limit the use of net operating losses and other tax assets if the Company experiences an "ownership change" (as defined in the Internal Revenue Code).
−Removed: In general, an ownership change occurs if there is a cumulative change in the ownership of the Company by "5 percent stockholders" that exceeds 50 percentage points over a rolling three-year period.
−Removed: On May 5, 2017, the Board approved the declaration of a dividend of rights to purchase Series B Junior Participating Preferred Stock for each outstanding share of common stock as part of a tax asset protection plan (the "TAPP") designed to protect the Company’s ability to utilize its net operating losses and tax credits.
−Removed: The TAPP is intended to act as a deterrent to any person acquiring beneficial ownership of 4.99 % or more of the Company’s outstanding common stock.
−Removed: On April 9, 2021, the Board approved the Fourth Amendment to the TAPP ("Fourth Amendment") that amends the TAPP, as previously amended by the First, Second and Third Amendments that were approved the Board on April 6, 2018, April 5, 2019 and April 9, 2020, respectively.
−Removed: The Fourth Amendment amends the definition of "Final Expiration Date" under the TAPP to extend the duration of the TAPP and makes associated changes in connection therewith.
−Removed: At the Company's 2021 annual meeting of stockholders, the Company's stockholders approved the Fourth Amendment, thus the Final Expiration Date will be the close of business on December 31, 2022.
−Removed: Note 16 - Stock-Based Compensation
−Removed: On June 20, 2017, the Company's stockholders approved the 2017 Omnibus Incentive Plan (the "2017 Plan"), which permits grants of awards to employees, directors and non-employees.
−Removed: Awards may be in the form of shares, rights to purchase restricted stock, bonuses of restricted stock, or other rights or benefits as described under the 2017 Plan.
−Removed: As of December 31, 2021, the Company has 644,540 shares of its common stock authorized for issuance under the 2017 Plan.
−Removed: RSA's - Restricted Stock Awards ("RSA's") are typically granted with vesting terms of three years .
−Removed: The fair value of RSA's is determined based on the closing price of the Company’s common stock on the authorization date of the grant multiplied by the number of shares subject to the stock award.
−Removed: Compensation expense for RSA's is generally recognized over the vesting term on a straight-line basis.
−Removed: PSU's - Performance share units ("PSU's") generally vest over three years and are based on the grantee’s continuous service with the Company, performance measures or a combination of both.
−Removed: Each PSU represents a contingent right to receive shares of the Company’s common stock if the Company meets certain performance measures over the requisite period.
−Removed: Compensation expense is recognized for PSU awards on a straight-line basis over the vesting period based on the estimated fair value at the date of grant using a Monte Carlo simulation model.
−Removed: Risk-free interest rate - The risk-free interest rate for PSU's granted during the period was determined by using a zero-coupon, U.S.
−Removed: Treasury rate for the periods that coincided with the expected terms listed above.
−Removed: Dividends - As the PSU's granted receive dividend equivalent units, no discount was applied for any dividends declared.
−Removed: Expected volatility - To calculate expected volatility, the historical volatility of the Company's common stock was used.
−Removed: Performance period - The Company’s performance period is based upon the vesting term of the Company’s PSU awards.
−Removed: The Company recorded the following compensation expense related to the Stock Plans:
−Removed: Years Ended December 31,
+Added: No liability or expense provision has been recorded by the Company related to this contingent obligation as the Company believes that it is not probable that a loss will occur with respect to Tinuum Group Party Guarantees.
+Added: Legal Proceedings
+Added: The Company is from time to time subject to various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of its business.
+Added: Such matters are subject to many uncertainties and outcomes, the financial impacts of which are not predictable with assurance and that may not be known for extended periods of time.
+Added: The Company records a liability in its consolidated financial statements for costs related to claims, settlements, and judgments where management has assessed that a loss is probable and an amount can be reasonably estimated.
+Added: There were no significant legal proceedings as of December 31, 2022.
+Added: Note 8 - Property, Plant and Equipment
+Added: The cost basis and accumulated depreciation of property, plant and equipment at December 31, 2022 and 2021 are summarized in the table below:
+Added: Life in Years As of December 31,
(in thousands) 2022 2021
−Removed: RSA expense $ 1,816 $ 2,304
−Removed: PSU expense 111 192
−Removed: Total stock-based compensation expense $ 1,927 $ 2,496
−Removed: Stock-based compensation expense related to manufacturing employees and administrative employees is included in the "Consumables cost of revenues, excluding depreciation and amortization and "Payroll and benefits line items" in
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: the Consolidated Statements of Operations.
−Removed: Stock-based compensation expense related to non-employee directors and consultants is included in the "General and administrative" line item in the Consolidated Statements of Operations.
−Removed: The amount of unrecognized compensation cost as of December 31, 2021, and the expected weighted-average period over which the cost will be recognized is as follows:
−Removed: As of December 31, 2021
−Removed: (in thousands) Unrecognized Compensation Cost Expected Weighted-Average Period of Recognition (in years)
−Removed: RSA expense $ 1,961 1.79
−Removed: PSU expense 282 1.71
−Removed: Total unrecognized stock-based compensation expense $ 2,243 1.62
−Removed: Restricted Stock
−Removed: A summary of activity of RSA's for the year ended December 31, 2021 is presented in the following table:
−Removed: Restricted Stock Weighted-Average Grant Date Fair Value
−Removed: (in thousands, except for share and per share amounts) Awards RSA's
−Removed: For the year ended December 31, 2021
−Removed: Non-vested at January 1, 2021 373,860 $ 7.25
−Removed: Granted 445,383 $ 5.54
−Removed: Vested ( 206,894 ) $ 7.47
−Removed: Forfeited ( 80,726 ) $ 5.90
−Removed: Non-vested at December 31, 2021 531,623 $ 5.94
−Removed: The weighted-average grant date fair value of RSA's granted or modified for the years ended December 31, 2021 and 2020 was $ 5.54 and $ 5.20 , respectively.
−Removed: The total grant-date fair value of RSA's vested for the years ended December 31, 2021 and 2020 was $ 1.5 million and $ 3.4 million, respectively.
−Removed: The aggregate intrinsic value of non-vested RSA's outstanding as of December 31, 2021 was $ 3.5 million.
−Removed: PSU's outstanding remain unvested until the third anniversary of their issuance date, at which time the actual number of vested shares will be determined based on the actual price performances of the Company’s common stock relative to a broad stock index and a peer group performance index.
+Added: Land and land improvements 0 - 31
+Added: $ 1,225 $ 1,225
+Added: Plant and operating equipment 2 - 29
+Added: 33,180 31,266
+Added: Furniture and fixtures 2 - 11
+Added: Machinery and equipment 3 - 10
+Added: Leasehold improvements 3 - 12
+Added: Construction in progress 6,373 1,190
+Added: 46,752 37,855
+Added: Less accumulated depreciation ( 11,897 ) ( 7,684 )
+Added: Total property, plant and equipment, net $ 34,855 $ 30,171
+Added: Included in plant and operating equipment as of December 31, 2022 and 2021 is mining equipment financed under various lease facilities, and obligations due under these facilities are included in finance lease obligations in the Consolidated Balance Sheets.
+Added: The total amount recorded for ROU assets as of December 31, 2022 and 2021 related to finance lease obligations was $ 2.6 million and $ 1.7 million, respectively, net of accumulated depreciation of $ 2.0 million and $ 1.1 million.
+Added: Depreciation expense for the years ended December 31, 2022 and 2021 was $ 4.9 million and $ 5.5 million, respectively.
Advanced Emissions Solutions, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements
−Removed: A summary of PSU activity for the year ended December 31, 2021 is presented in the table below:
−Removed: Units Weighted-Average
−Removed: Fair Value Aggregate Intrinsic Value (in thousands) Weighted-Average
−Removed: Term (in years)
−Removed: For the year ended December 31, 2021
−Removed: PSU's outstanding, January 1, 2021 50,127 $ 6.17
−Removed: Granted 62,448 7.09
−Removed: Vested / Settled — —
−Removed: Forfeited / Canceled ( 24,549 ) 6.78
−Removed: PSU's outstanding, December 31, 2021 88,026 $ 6.17 $ 583 1.71
Note 9 - Supplemental Financial Information
9 unchanged sentences
Other long-term assets:
−Removed: Upfront customer consideration (1)
−Removed: $ 6,982 $ 7,490
−Removed: Cabot receivable (1)
Right of use assets, operating leases, net $ 7,734 $ 6,000
Spare parts, net 6,789 4,598
+Added: Upfront customer consideration (1)
Mine development costs, net 5,478 5,330
Mine reclamation asset, net 1,641 1,742
−Removed: Highview investment 552 552
+Added: Intangible assets, net 847 1,237
+Added: Norit receivable — 6,846
+Added: Equity method investments — 2,391
Other long-term assets 1,683 1,745
$ 30,647 $ 36,871
−Removed: (1) See further discussion of Upfront Customer Consideration in Note 4 and Cabot Receivable in Note 5.
+Added: (1) See further discussion of Upfront Customer Consideration in Note 3.
Spare parts include critical spares required to support plant operations.
Parts and supply costs are determined using the lower of cost or estimated replacement cost.
−Removed: Parts are recorded as maintenance expenses in the period in which they are consumed.
+Added: Parts are recorded as maintenance expenses or capitalized in the period in which they are consumed or put into use.
Mine development costs include acquisition costs, the cost of other development work and mitigation costs related to the Five Forks Mine and are depleted over the estimated life of the related mine reserves, which is estimated to be 12 years as of December 31, 2022.
1 unchanged sentence
Mine reclamation asset represents the ARO asset related to the Five Forks Mine and is depreciated over its estimated life.
−Removed: The Company holds a long-term investment (the "Highview Investment") in Highview Enterprises Limited ("Highview"), a London, England based developmental stage company specializing in power storage.
−Removed: In November 2014, the Company acquired an 8 % ownership interest in the common stock of Highview for $ 2.8 million in cash.
−Removed: The Company accounts for the
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: Highview Investment as an investment recorded at cost, less impairment, plus or minus observable changes in price for identical or similar investments of the same issuer.
+Added: Highview Investment
+Added: Other includes a long-term investment (the "Highview Investment") in Highview Enterprises Limited ("Highview"), a London, England based developmental stage company specializing in power storage.
+Added: The Company accounts for the Highview Investment as an investment recorded at cost, less impairment, plus or minus observable changes in price for identical or similar investments of the same issuer.
+Added: Fair value measurements, if any, represent Level 2 measurements.
The Highview Investment is evaluated for indicators of impairment such as an event or change in circumstances that may have a significant adverse effect on the fair value of the investment.
1 unchanged sentence
Since inception of Highview Investment, the Company has recognized $ 2.2 million of cumulative impairment losses.
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
The following table details the components of "Other current liabilities" and "Other long-term liabilities" as presented in the Consolidated Balance Sheets:
3 unchanged sentences
Current portion of operating lease obligations $ 2,724 $ 2,157
−Removed: Accrued interest — 69
Income and other taxes payable 1,039 807
3 unchanged sentences
Other long-term liabilities:
−Removed: Operating lease obligations, long-term $ 4,178 $ 1,109
Mine reclamation liabilities $ 7,985 $ 8,184
+Added: Operating lease obligations, long-term 5,133 4,178
$ 13,851 $ 12,362
+Added: (1) Include in Other current liabilities is $ 1.7 million related to the Repayment Agreement as defined in Note 10.
The Mine reclamation liability related to the Five Forks Mine is included in "Other long-term liabilities".
4 unchanged sentences
Asset retirement obligations, beginning of year $ 9,959 $ 21,447
−Removed: Asset retirement obligations assumed — 21,328
Accretion 611 1,102
5 unchanged sentences
Supplemental Consolidated Statements of Operations Information
−Removed: Gain on Settlement
−Removed: On December 29, 2020, the Company and a former customer (the "Parties") reached a settlement (the "Settlement") on various litigation matters (the "Litigation Matters") that resulted in the former customer (the "Former Customer") agreeing to pay to the Company cash of $ 2.5 million (the "Settlement Amount"), which was received on January 27, 2021.
−Removed: This payment was in exchange for full dissolution of all claims and counterclaims that the two Parties asserted or could have asserted against each other in the Litigation Matters, or which have arisen or may arise against each other but are presently unknown, arising out of or related to the Litigation Matters and related to any other of the Parties’ business dealings, conduct and/or transactions through
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: the date of the Settlement, including all claims for damages, fees, costs, sanctions, or any other amounts due or to become due in connection with the foregoing.
−Removed: The Company applied the Settlement Amount cash proceeds to both an outstanding trade account receivable and note receivable due from the Former Customer and recognized the excess cash received as a gain of $ 1.1 million, which is reported as "Gain on settlement" as a component of operating expenses in the Consolidated Statements of Operations for the year ended December 31, 2020.
Gain on Change in estimate, asset retirement obligation
7 unchanged sentences
Other 336 326
−Removed: $ 1,490 $ 3,920
+Added: Total Interest expense $ 336 $ 1,490
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
The following table details the components of "Other" in the Consolidated Statements of Operations:
2 unchanged sentences
Interest income $ 239 $ 326
+Added: Other ( 84 ) 314
+Added: Total Other income $ 155 $ 640
+Added: Note 10 - Equity Method Investments
+Added: Tinuum Group, LLC
+Added: The following table summarizes the results of operations of Tinuum Group:
+Added: Years Ended December 31,
+Added: (in thousands) 2022 2021
+Added: Gross profit $ 964 $ 6,995
+Added: Operating, selling, general and administrative expenses 4,275 49,414
+Added: Loss from operations ( 3,311 ) ( 42,419 )
+Added: Other income 1,231 9,726
+Added: (Income) loss attributable to noncontrolling interest ( 874 ) 126,948
+Added: Net (loss) income available to members $ ( 2,954 ) $ 94,255
+Added: ADES equity earnings from Tinuum Group $ 3,455 $ 61,837
+Added: As of December 31, 2022 and 2021, the carrying value of the Company's investment in Tinuum Group was zero as the cumulative amount of distributions received from Tinuum Group exceeded the Company's cumulative pro-rata share of Tinuum Group's net income available to Class A members.
+Added: As a result, for the years ended December 31, 2022 and 2021, the Company recognized earnings from Tinuum Group's net income available to members that was different from its pro-rata share of Tinuum Group's net income available to members.
+Added: In December 2022, the Company, certain of the other owners of Tinuum Group (collectively, the "Tinuum Group Owners") and Tinuum Group executed the Distribution and Repayment Agreement (the "Repayment Agreement").
+Added: Under the terms of the Repayment Agreement, the Tinuum Group Owners received cash distributions (the "Distributions") equal to their percentage ownership and also agreed to be contractually liable for certain contingent liabilities of Tinuum Group (the "Tinuum Group Obligation") in amounts equal to their percentage ownership.
+Added: In December 2022, the Company received its percentage share of the Distributions in the amount of $ 2.0 million and became contractually liable for $ 1.7 million of the Tinuum Group Obligation.
+Added: The Company recorded the Company's contractual obligation of $ 1.7 million as a liability in the "Other current liabilities" line item in the Consolidated Balance Sheet as of December 31, 2022, with the difference between the cash distribution of $ 0.3 million recorded to equity method earnings for the year ended December 31, 2022.
+Added: In the event that the Tinuum Group Obligation is discharged in its entirety or settled for an amount that is less than the total Tinuum Group Obligation, the Company will recognize future equity earnings for the difference in its contractual obligation amount and its pro rata share of the actual payment made by Tinuum Group, if any, for the Tinuum Group Obligation.
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: The following table presents the Company's investment balance, equity earnings, cash distributions and cash distributions in excess of the investment balance for the years ended December 31, 2022 and 2021 ( in thousands ):
+Added: Description Date(s) Investment balance ADES equity earnings (loss) Cash distributions Memorandum Account:
+Added: Cash distributions and equity loss in (excess) of investment balance
+Added: Beginning balance 12/31/2020 $ 3,387 $ — $ — $ —
+Added: ADES proportionate share of net income from Tinuum Group 2021 activity 40,058 40,058 — —
+Added: Cash distributions from Tinuum Group 2021 activity ( 65,224 ) — 65,224 —
+Added: Adjustment for current year cash distributions in excess of investment balance 2021 activity 21,779 21,779 — ( 21,779 )
+Added: Total investment balance, equity earnings (loss) and cash distributions 12/31/2021 $ — $ 61,837 $ 65,224 $ ( 21,779 )
+Added: ADES proportionate share of net loss from Tinuum Group 2022 activity ( 1,255 ) ( 1,255 ) — ( 1,255 )
+Added: Cash distributions from Tinuum Group 2022 activity ( 3,455 ) — 3,455 ( 3,455 )
+Added: Adjustment for current year cash distributions in excess of investment balance 2022 activity 4,710 4,710 — —
+Added: Total investment balance, equity earnings and cash distributions 12/31/2022 $ — $ 3,455 $ 3,455 $ ( 26,489 )
+Added: Tinuum Services, LLC
+Added: The following tables summarizes the results of operations of Tinuum Services:
+Added: Years Ended December 31,
+Added: (in thousands) 2022 2021
+Added: Gross profit (loss) $ 1,065 $ ( 68,465 )
+Added: Operating, selling, general and administrative expenses 2,800 166,075
+Added: Loss from operations ( 1,735 ) ( 234,540 )
+Added: Other income (expenses), net 1,159 3,830
+Added: Loss attributable to noncontrolling interest 323 246,094
+Added: Net (loss) income $ ( 253 ) $ 15,384
+Added: ADES equity earnings from Tinuum Services $ 85 $ 6,952
+Added: Included in the Consolidated Statement of Operations of Tinuum Services for the years ended December 31, 2022 and 2021 were losses related to VIE entities that are consolidated within Tinuum Services.
+Added: These losses do not impact the Company's equity earnings from Tinuum Services as 100 % of those losses are attributable to a noncontrolling interest and eliminated in the calculations of Tinuum Services' net income attributable to the Company's interest.
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: The following table presents the Company's investment balance, equity earnings, cash distributions and cash distributions in excess of the investment balance for the year ended December 31, 2022 ( in thousands ):
+Added: Description Date(s) Investment balance ADES equity earnings Cash distributions Memorandum Account:
+Added: Cash distributions and equity earnings in (excess) of investment balance
+Added: Beginning balance 12/31/2021 $ 2,391 $ — $ — $ —
+Added: ADES proportionate share of net loss from Tinuum Services 2022 activity ( 127 ) ( 127 ) — —
+Added: Cash distributions from Tinuum Services 2022 activity ( 2,476 ) — 2,476 —
+Added: Adjustment for current year cash distributions in excess of investment balance 2022 activity 212 212 — ( 212 )
+Added: Total investment balance, equity earnings and cash distributions 12/31/2022 $ — $ 85 $ 2,476 $ ( 212 )
+Added: The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable.
+Added: As of December 31, 2021, the Company concluded the carrying amount of its investment in Tinuum Services was not fully recoverable and as a result, wrote down its investment in the amount of $ 0.7 million, which is included in the "Earnings from equity method investments" line item in the Consolidated Statement of Operations for the year ended December 31, 2021.
+Added: The following table details the carrying value of the Company's respective equity method investments included in the "Other long-term assets, net" line item on the Consolidated Balance Sheets and indicates the Company's maximum exposure to loss:
+Added: As of December 31,
+Added: (in thousands) 2022 2021
+Added: Equity method investment in Tinuum Services — 2,391
+Added: Total equity method investments $ — $ 2,391
+Added: The following table details the components of the Company's respective earnings or loss from equity method investments included in the "Earnings from equity method investments" line item in the Consolidated Statements of Operations:
+Added: Year ended December 31,
+Added: (in thousands) 2022 2021
+Added: Earnings from Tinuum Group $ 3,455 $ 61,837
+Added: Earnings from Tinuum Services 85 6,952
+Added: Earnings (loss) from other 1 ( 63 )
+Added: Earnings from equity method investments $ 3,541 $ 68,726
+Added: The following table details the components of the cash distributions from the Company's respective equity method investments included as a component of cash flows from operating activities in the Consolidated Statements of Cash Flows.
+Added: Distributions from equity method investees are reported in the Consolidated Statements of Cash Flows as "return on investment" in Operating cash flows until such time as the carrying value in an equity method investee company is reduced to zero .
+Added: Thereafter, such distributions are reported as "distributions in excess of cumulative earnings" as a component of cash flows from investing activities.
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: Year ended December 31,
+Added: (in thousands) 2022 2021
+Added: Distributions from equity method investees, return on investment
+Added: Tinuum Services $ 2,297 $ 8,802
+Added: Tinuum Group — 14,142
+Added: $ 2,297 $ 22,944
+Added: Distributions from equity method investees in excess of cumulative earnings
+Added: Tinuum Group $ 3,455 $ 51,082
+Added: Tinuum Services 179 —
+Added: $ 3,636 $ 51,082
+Added: Note 11 - Stockholders' Equity
+Added: The Company has two classes of capital stock authorized, common stock and preferred stock, which are described as follows:
+Added: Preferred Stock
+Added: The Company's Board of Directors (the "Board") is authorized to provide out of the unissued shares of Preferred Stock and to fix the number of shares constituting a series of Preferred Stock and, with respect to each series, to fix the number of shares and designation of such series, the voting powers, if any, the preferences and relative, participating, option or other special rights, if any, and any qualifications, limitations or restrictions thereof, of the shares of such series.
+Added: As of December 31, 2022 and 2021, there were no shares of Preferred Stock designated or outstanding.
+Added: See further discussion of subsequent preferred stock designation and issuance in Note 17.
+Added: Holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders.
+Added: Additionally, holders of common stock are entitled to receive dividends when and if declared by the Board, subject to any statutory or contractual restrictions on payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding shares of preferred stock.
+Added: Upon dissolution, liquidation or the sale of all or substantially all of the Company's assets, after payment in full of any amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of common stock will be entitled to receive the Company's remaining assets for distribution on a pro rata basis.
+Added: Stock Repurchase Programs
+Added: In November 2018, the Board authorized the Company to purchase up to $ 20.0 million of its outstanding common stock under a stock repurchase program (the "Stock Repurchase Program"), which was to remain in effect until December 31, 2019 unless otherwise modified by the Board.
+Added: In November 2019, the Board authorized an incremental $ 7.1 million to the Stock Repurchase Program and provided that it will remain in effect until all amounts are utilized or it is otherwise modified by the Board.
+Added: As of December 31, 2022, the Company had $ 7.0 million remaining under the Stock Repurchase Program.
+Added: Tax Asset Protection Plan
+Added: federal income tax rules, and Section 382 of the Internal Revenue Code in particular, could substantially limit the use of Section 45 tax credits and other tax assets if the Company experiences an "ownership change" (as defined in the Internal Revenue Code).
+Added: In general, an ownership change occurs if there is a cumulative change in the ownership of the Company by "5 percent stockholders" that exceeds 50 percentage points over a rolling three-year period.
+Added: An entity that experiences an ownership change generally will be subject to an annual limitation on its pre-ownership change tax loss and credit carryforwards equal to the equity value of the entity immediately before the ownership change, multiplied by the long-term, tax-exempt rate posted monthly by the Internal Revenue Service ("IRS") (subject to certain adjustments).
+Added: The annual limitation would be increased each year to the extent that there is an unused limitation in a prior year.
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: On May 5, 2017, the Board approved the declaration of a dividend of rights to purchase Series B Junior Participating Preferred Stock for each outstanding share of common stock as part of a tax asset protection plan (the "TAPP"), which is designed to protect the Company’s ability to utilize its net operating losses and tax credits.
+Added: The TAPP is intended to act as a deterrent to any person acquiring beneficial ownership of 4.99 % or more of the Company’s outstanding common stock.
+Added: During the years 2018-2022, we executed amendments to the TAPP (the "TAPP Amendments"), which amended the definition of "Final Expiration Date under the TAPP to extend the duration of the TAPP and makes associated changes in connection therewith.
+Added: The most recent TAPP Amendment was approved at our 2022 annual meeting of stockholders and extended the Final Expiration Date to the close of business on December 31, 2023.
+Added: Note 12 - Stock-Based Compensation
+Added: On May 16, 2022, the Company's stockholders approved the 2022 Omnibus Incentive Plan (the "2022 Plan"), which permits grants of awards to employees, directors and consultants.
+Added: Awards may be in the form of options (both nonqualified stock options and incentive stock options), stock appreciation rights, restricted stock, restricted stock units, performance share units, and other stock-based awards and cash-based awards as described under the 2022 Plan.
+Added: As of December 31, 2022, the Company has 1,403,043 shares of its common stock authorized for issuance under the 2022 Plan.
+Added: On June 20, 2017, the Company's stockholders approved the 2017 Omnibus Incentive Plan (the "2017 Plan"), which permits grants of awards to employees, directors and non-employees.
+Added: Awards may be in the form of shares, rights to purchase restricted stock, bonuses of restricted stock, or other rights or benefits as described under the 2017 Plan.
+Added: As of December 31, 2022, the Company has zero shares of its common stock authorized for issuance under the 2017 Plan.
+Added: RSAs - Restricted Stock Awards ("RSA's") are typically granted with vesting terms of three years .
+Added: The fair value of RSAs is determined based on the closing price of the Company’s common stock on the authorization date of the grant multiplied by the number of shares subject to the stock award.
+Added: Compensation expense for RSAs is generally recognized over the vesting term on a straight-line basis.
+Added: PSUs - Performance share units ("PSU's") generally vest over three years and are based on the grantee’s continuous service with the Company, performance measures or a combination of both.
+Added: Each PSU represents a contingent right to receive shares of the Company’s common stock if the Company meets certain performance measures over the requisite period.
+Added: Compensation expense is recognized for PSU awards on a straight-line basis over the vesting period based on the estimated fair value at the date of grant using a Monte Carlo simulation model.
+Added: Risk-free interest rate - The risk-free interest rate for PSUs granted during the period was determined by using a zero-coupon, U.S.
+Added: Treasury rate for the periods that coincided with the expected terms listed above.
+Added: Dividends - As the PSUs granted receive dividend equivalent units, no discount was applied for any dividends declared.
+Added: Expected volatility - To calculate expected volatility, the historical volatility of the Company's common stock was used.
+Added: Performance period - The Company’s performance period is based on the vesting term of the Company’s PSU awards.
+Added: The Company recorded the following compensation expense related to the Stock Plans:
+Added: Years Ended December 31,
+Added: (in thousands) 2022 2021
+Added: RSA expense $ 1,679 $ 1,816
+Added: PSU expense 302 111
+Added: Total stock-based compensation expense $ 1,981 $ 1,927
+Added: Stock-based compensation expense related to manufacturing employees and administrative employees is included in the "Consumables cost of revenues, excluding depreciation and amortization" and "Payroll and benefits" line items in the Consolidated Statements of Operations.
+Added: Stock-based compensation expense related to non-employee directors and consultants is included in the "General and administrative" line item in the Consolidated Statements of Operations.
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: The amount of unrecognized compensation cost as of December 31, 2022, and the expected weighted-average period over which the cost will be recognized is as follows:
+Added: As of December 31, 2022
+Added: (in thousands) Unrecognized Compensation Cost Expected Weighted-Average Period of Recognition (in years)
+Added: RSA expense $ 2,489 1.75
+Added: PSU expense 561 1.32
+Added: Total unrecognized stock-based compensation expense $ 3,050 1.43
+Added: Restricted Stock
+Added: A summary of activity of RSAs for the year ended December 31, 2022 is presented in the following table:
+Added: Restricted Stock Weighted-Average Grant Date Fair Value
+Added: (in thousands, except for share and per share amounts) Awards RSA's
+Added: For the year ended December 31, 2022
+Added: Non-vested at January 1, 2022 531,623 $ 5.94
+Added: Granted 462,135 $ 5.69
+Added: Vested ( 267,973 ) $ 6.35
+Added: Forfeited ( 72,823 ) $ 5.96
+Added: Non-vested at December 31, 2022 652,962 $ 5.58
+Added: The weighted-average grant date fair value of RSAs granted or modified for the years ended December 31, 2022 and 2021 was $ 5.69 and $ 5.54 , respectively.
+Added: The total grant-date fair value of RSAs vested for the years ended December 31, 2022 and 2021 was $ 1.7 million and $ 1.5 million, respectively.
+Added: The aggregate intrinsic value of non-vested RSAs outstanding as of December 31, 2022 was $ 1.6 million.
+Added: PSUs outstanding remain unvested until the third anniversary of their issuance date, at which time the actual number of vested shares will be determined based on the actual price performances of the Company’s common stock relative to a broad stock index and a peer group performance index.
+Added: A summary of PSU activity for the year ended December 31, 2022 is presented in the table below:
+Added: Units Weighted-Average
+Added: Fair Value Aggregate Intrinsic Value (in thousands) Weighted-Average
+Added: Term (in years)
+Added: For the year ended December 31, 2022
+Added: PSU's outstanding, January 1, 2022 88,026 $ 6.65
+Added: Granted 60,565 9.59
+Added: Vested / Settled — —
+Added: Forfeited / Canceled — —
+Added: PSU's outstanding, December 31, 2022 148,591 $ 7.85 $ 361 1.32
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
Note 13 - Income Taxes
10 unchanged sentences
Effective tax rate ( 2 ) % 21 %
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: Income tax expense differed from the amount that would be computed by applying the U.S.
+Added: Income tax expense (benefit) differed from the amount that would be computed by applying the U.S.
statutory federal income tax rate of 21% to income before income taxes for the years ended December 31, 2022 and 2021 as follows:
11 unchanged sentences
Income tax expense $ 209 $ 15,672
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and their reported amounts in the accompanying Consolidated Balance Sheets.
5 unchanged sentences
Tax credits $ 86,125 $ 86,097
−Removed: Equity method investments 1,584 5,149
Net operating loss carryforwards 2,892 2,388
Intangible assets 2,638 5,126
−Removed: ARO, net of reimbursements — 2,167
Employee related liabilities 1,968 1,971
−Removed: Other investments 556 548
Operating lease obligations 1,828 1,585
+Added: ARO, net of reimbursements 1,448 —
+Added: Research and development capitalization 739 —
+Added: Other investments 518 556
+Added: Equity method investments 325 1,584
+Added: Inventory 315 —
+Added: Interest limitations 77 —
+Added: Other 429 138
Total deferred tax assets 99,302 99,445
3 unchanged sentences
Property and equipment and other ( 7,702 ) ( 8,203 )
−Removed: Upfront customer consideration ( 1,747 ) ( 1,847 )
Right of use operating lease assets ( 1,800 ) ( 1,497 )
+Added: Upfront customer consideration ( 1,507 ) ( 1,747 )
Inventory — ( 197 )
2 unchanged sentences
Net deferred tax assets $ — $ —
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
Accounting for income taxes requires that companies assess whether a valuation allowance should be recorded against a deferred tax asset based on an assessment of the amount of the deferred tax asset that is "more likely than not" to be realized.
5 unchanged sentences
As of December 31, 2022, the Company concluded it is more likely than not the Company will not generate sufficient taxable income within the applicable net operating loss and tax credit carry-forward periods to realize any of its net deferred tax assets.
−Removed: For the year ended December 31, 2021, the Company reduced a valuation allowance from December 31, 2020 by $ 1.3 million, but as of December 31, 2021 has a valuation allowance equal to 100 % of its net deferred tax assets.
+Added: For the year ended December 31, 2022, the Company increased a valuation allowance from December 31, 2021 by $ 0.8 million and as of December 31, 2022, has a valuation allowance equal to 100 % of its net deferred tax assets.
In reaching this conclusion, the Company primarily considered forecasts of future taxable losses.
−Removed: The following table presents the approximate amount of state net operating loss carryforwards and federal tax credit carryforwards available to reduce future taxable income, along with the respective range of years that the net operating loss and tax credit carryforwards would expire if not utilized:
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: The following table presents the approximate amount of federal and state net operating loss carryforwards and federal tax credit carryforwards available to reduce future taxable income, along with the respective range of years that the net operating loss and tax credit carryforwards would expire if not utilized:
As of December 31,
(in thousands) 2022 Beginning expiration year Ending expiration year
+Added: Federal net operating loss carryforwards $ 467 Indefinite Indefinite
State and other operating loss carryforwards $ 2,425 2026 2037
8 unchanged sentences
Interest and penalties related to uncertain tax positions are accrued and included in the "Interest expense" line item in the Consolidated Statements of Operations.
−Removed: Additionally, the Company recognizes interest expense related to the federal tax treatment of RC facilities at Tinuum Group in the "Interest expense "line item in the Consolidated Statements of Operations.
Additional information related to the components of "Interest expense" is included in Note 9.
4 unchanged sentences
The Company is generally no longer subject to state examinations by tax authorities for years before 2015.
−Removed: Note 19 - Business Segment Information
−Removed: Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by a company's chief operating decision maker ("CODM"), or a decision making group, in deciding how to allocate resources and in assessing financial performance.
−Removed: As of December 31, 2021, the Company's CODM was the Company's CEO.
−Removed: The Company's operating and reportable segments are organized by products and services provided.
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: As of December 31, 2021, the Company has two reportable segments:
−Removed: (1) Refined Coal ("RC");
−Removed: and (2) Advanced Purification Technologies ("APT").
−Removed: The business segment measurements provided to and evaluated by the CODM are computed in accordance with the principles listed below:
−Removed: • The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies except as described below.
−Removed: • Segment revenues include equity method earnings and losses from the Company's equity method investments.
−Removed: • Segment operating income (loss) includes segment revenues and allocation of certain corporate general and administrative expenses, which includes Payroll and benefits, General and administrative, and Depreciation, amortization, depletion and accretion.
−Removed: • RC segment operating income includes interest expense directly attributable to the RC segment .
−Removed: As of December 31, 2021 and 2020, substantially all of the Company's material assets were located in the U.S.
−Removed: and the majority of its customers are U.S.
−Removed: The following table presents the Company's operating segment results for the years ended December 31, 2021 and 2020:
−Removed: Years Ended December 31,
−Removed: (in thousands) 2021 2020
−Removed: Refined Coal:
−Removed: Earnings in equity method investments $ 68,726 $ 30,978
−Removed: License royalties, related party 14,368 13,440
−Removed: 83,094 44,418
−Removed: Advanced Purification Technologies:
−Removed: Consumables (1)
−Removed: 85,882 53,908
−Removed: 85,926 53,923
−Removed: Total segment reporting revenues 169,020 98,341
−Removed: Adjustments to reconcile to reported revenues:
−Removed: Earnings in equity method investments ( 68,726 ) ( 30,978 )
−Removed: Total reported revenues $ 100,294 $ 67,363
−Removed: Segment operating income (loss)
−Removed: $ 82,634 $ 42,689
−Removed: Advanced Purification Technologies (2)
−Removed: 5,649 ( 39,958 )
−Removed: Total segment operating income $ 88,283 $ 2,731
−Removed: (1) Revenues - Consumables for the year ended December 31, 2020 have been restated.
−Removed: See restatement discussion in Note 2.
−Removed: (2) Included in APT segment operating income (loss) for the years ended December 31, 2021 and 2020 was $ 7.4 million and $ 7.9 million, respectively, of depreciation, amortization, depletion and accretion expenses on mine and plant related long-lived assets and liabilities.
−Removed: Further included in the APT segment operating income for the year ended December 31, 2021 was $ 2.7 million related to a gain on change in estimate, asset retirement obligation.
−Removed: Additionally, included in APT segment operating loss for the year ended December 31, 2020 was an impairment charge of $ 26.1 million and the Gain on Settlement of $ 1.1 million.
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: A reconciliation of reportable segment operating income to consolidated income (loss) before income taxes is as follows:
−Removed: Years Ended December 31,
−Removed: (in thousands) 2021 2020
−Removed: Total reported segment operating income $ 88,283 $ 2,731
−Removed: Adjustments to reconcile to income (loss) before income tax expense attributable to the Company:
−Removed: Corporate payroll and benefits ( 2,478 ) ( 2,866 )
−Removed: Corporate legal and professional fees ( 6,014 ) ( 4,954 )
−Removed: Corporate general and administrative ( 3,358 ) ( 5,096 )
−Removed: Corporate depreciation and amortization ( 505 ) ( 551 )
−Removed: Corporate interest expense, net ( 854 ) ( 3,060 )
−Removed: Other income, net 999 5
−Removed: Income (loss) before income tax expense $ 76,073 $ ( 13,791 )
−Removed: Corporate general and administrative expenses include certain costs that benefit the business as a whole but are not directly related to one of the Company's segments.
−Removed: Such costs include, but are not limited to, accounting and human resources staff, information systems costs, legal fees, facility costs, audit fees and corporate governance expenses.
−Removed: A reconciliation of reportable segment assets to the Company's consolidated assets is as follows:
−Removed: As of December 31,
−Removed: (in thousands) 2021 2020
−Removed: Refined Coal (1)
−Removed: $ 4,884 $ 11,516
−Removed: Advanced Purification Technologies (2)
−Removed: 83,516 80,877
−Removed: Total segment assets 88,400 92,393
−Removed: Corporate (3)
−Removed: 97,036 54,278
−Removed: Consolidated $ 185,436 $ 146,671
−Removed: (1) Includes $ 2.4 million and $ 7.7 million of investments in equity method investees as of December 31, 2021 and 2020, respectively.
−Removed: (2) Includes $ 36.7 million and $ 34.6 million of long-lived assets, net.
−Removed: Expenditures for additions to long-lived assets were $ 7.4 million and $ 7.3 million, respectively, for the years ended December 31, 2021 and 2020.
−Removed: (3) Includes the Company's net deferred tax assets of zero and $ 10.6 million as of December 31, 2021 and 2020, respectively .
−Removed: Note 20 - Fair Value Measurements
−Removed: Fair Value of Financial Instruments
−Removed: The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, deposits and accrued expenses, approximate their fair values due to the short maturity of these instruments.
−Removed: T he carrying amounts of the Senior Term Loan and other obligations, including finance leases, approximate their fair values based on credit terms and market interest rates currently available for similar instruments.
−Removed: Accordingly, these instruments are not presented in the table below.
−Removed: The following table provides the estimated fair values of the remaining financial instruments:
−Removed: As of December 31, 2021 As of December 31, 2020
−Removed: (in thousands) Carrying Value Fair Value Carrying Value Fair Value
−Removed: Financial Instruments:
−Removed: Highview Investment $ 552 $ 552 $ 552 $ 552
−Removed: Highview Obligation $ 227 $ 227 $ 228 $ 228
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: Concentration of credit risk
−Removed: As of December 31, 2021, the Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents.
−Removed: The Company holds cash and cash equivalents at three financial institutions as of December 31, 2021.
−Removed: If those institutions were unable to perform their obligations, the Company would be at risk regarding the amount of its cash balance in excess of the federal deposit insurance corporation limits ($250 thousand).
−Removed: Assets and Liabilities Measured at Fair Value on a Recurring Basis
−Removed: As of December 31, 2021 and December 31, 2020, the Company had no material financial instruments carried and measured at fair value on a recurring basis.
−Removed: Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
−Removed: As disclosed in Note 4, the Company completed the asset acquisition of Marshall Mine, LLC.
−Removed: The estimated fair values of the assets acquired and liabilities assumed were determined based on Level 3 inputs.
−Removed: As disclosed in Note 6, the Company recorded an impairment charge related to the Asset Group based on a valuation model that included an expected future discounted cash flow model using Level 3 inputs.
−Removed: As noted in Note 17, the Company accounts for the Highview Investment as an investment recorded at cost, less impairment, plus or minus observable changes in price for identical or similar investments of the same issuer.
−Removed: Fair value measurements, if any, represent either Level 2 or Level 3 measurements.
Note 14 - Major Customers
1 unchanged sentence
Years ended December 31,
−Removed: Customer Revenue Type Segment(s) 2021 2020
−Removed: A License royalties, related party RC 14 % 20 %
+Added: Customer Revenue Type 2022 2021
+Added: A Consumables 18 % 14 %
B Consumables 11 % 8 %
C Consumables 8 % 10 %
−Removed: APT 10 % 11 %
−Removed: (1) Consumables revenues for the year ended December 31, 2020 have been restated.
−Removed: See restatement discussion in Note 2.
+Added: D License royalties, related party — % 14 %
Note 15 - Related Party Transactions
4 unchanged sentences
Receivable from related party - Tinuum Group (1) $ — $ 2,481
+Added: (1) Represents amount due for M-45 Royalties.
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
The following table shows the income recognized with related parties during the years ended December 31, 2022 and 2021:
2 unchanged sentences
License royalties, related party - Tinuum Group $ — $ 14,368
−Removed: The above Tinuum Group royalties are included in the "License royalties, related party" line in the Consolidated Statements of Operations.
−Removed: Advanced Emissions Solutions, Inc.
−Removed: and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
+Added: The above Tinuum Group royalties are included in the "License royalties, related party" line item in the Consolidated Statements of Operations.
+Added: Consumables Cost of Revenues
+Added: For the year ended December 31, 2022, the Company recognized $ 0.8 million of Tinuum Group Royalty expense, which is included in the "Consumables cost of revenues, exclusive of depreciation and amortization" line item in the Consolidated Statement of Operations.
+Added: Tinuum Group Obligation
+Added: As of December 31, 2022, the Company had an outstanding liability of $ 1.7 million related to its contractual amount due under the Tinuum Group Obligation, which is included in the "Other current liabilities" line item in the Consolidated Balance Sheet.
+Added: Refer to Note 10 for further discussion.
Note 16 - Defined Contribution Savings Plans
5 unchanged sentences
401(k) Plans employer contributions $ 552 $ 479
−Removed: Note 24 - Quarterly Financial Results (unaudited)
−Removed: Summarized quarterly results for the two years ended December 31, 2021 and December 31, 2020 are as follows:
−Removed: For the Quarter Ended
−Removed: (in thousands, except per share data) December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021
−Removed: Revenues $ 25,764 $ 30,858 $ 21,065 $ 22,607
−Removed: Cost of revenues 16,904 19,956 14,732 13,984
−Removed: Other operating expenses 8,076 (1) 7,603 5,894 8,293
−Removed: Operating income 784 3,299 439 330
−Removed: Earnings from equity method investments 6,782 22,195 21,437 18,312
−Removed: Other (expenses) income, net ( 86 ) 3,340 ( 343 ) ( 416 )
−Removed: Income before income tax expense 7,480 28,834 21,533 18,226
−Removed: Income tax expense 1,659 4,581 4,943 4,489
−Removed: Net income $ 5,821 $ 24,253 $ 16,590 $ 13,737
−Removed: Earnings per common share – basic $ 0.32 $ 1.33 $ 0.91 $ 0.76
−Removed: Earnings per common share – diluted $ 0.31 $ 1.31 $ 0.90 $ 0.75
−Removed: Weighted-average number of common shares outstanding
−Removed: Basic 18,302 18,292 18,271 18,166
−Removed: Diluted 18,545 18,489 18,398 18,274
−Removed: (1) During the fourth quarter of 2021, the Company recorded a gain on change in estimate, asset retirement obligation of $ 0.8 million related to the Company revising its estimate of future obligations owed for the reclamation of Marshall Mine as further described in Note 17.
+Added: Note 17 - Subsequent Events
+Added: Unless disclosed elsewhere in the notes to the Consolidated Financial Statements, the following is the significant matter that occurred subsequent to December 31, 2022.
+Added: On February 1, 2023 (the "Acquisition Date"), the Company entered into a securities purchase agreement (the "Purchase Agreement") with Arq Limited ("Arq Ltd."), a company incorporated under the laws of Jersey, pursuant to which the Company acquired all of the direct and indirect equity interests of Arq Limited’s subsidiaries (the "Arq Acquisition," and hereafter referred to as "Arq") in exchange for consideration (the "Purchase Consideration") totaling $ 31.2 million and consisting of (i) 3,814,864 shares of the Company's common stock, par value $ 0.001 per share (the "Common Stock"), valued at $ 12.4 million based on the closing price of the Common Stock on the Acquisition Date and (ii) 5,294,462 shares of the Company's Series A Convertible Preferred Stock, par value $ 0.001 per share (the "Series A Preferred Stock" or the "Preferred Shares"), valued at $ 18.8 million.
+Added: The Company also incurred $ 8.7 million in acquisition-related costs, which have been expensed as incurred.
+Added: Of the total Preferred Shares, 833,914 are being held in escrow (the "Escrow Shares") based on a contingent redemption feature, (the "Contingent Redemption Feature," as defined below).
+Added: The fair value of the Preferred Shares issued was determined to be $3.46 per Preferred Share on the Acquisition Date (the ("Preferred Share Price") plus the value of the Contingent Feature related to the Escrow Shares.
+Added: In connection with the issuance of the Series A Preferred Stock pursuant to the Purchase Agreement, the Company filed the Certificate of Designations of Preferred Stock for the Series A Preferred Stock (the "Certificate of Designations") with the Secretary of State of the State of Delaware.
+Added: Under the Certificate of Designations, 8.9 million preferred shares were designated as Series A Preferred Stock.
Advanced Emissions Solutions, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements
−Removed: For the Quarter Ended
−Removed: (in thousands, except per share data) December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020
−Removed: Revenues $ 19,743 $ 21,270 $ 12,726 $ 13,624
−Removed: Cost of revenues 12,076 16,812 8,659 12,852
−Removed: Other operating expenses 6,117 (1) 7,283 35,132 9,413
−Removed: Operating income (loss) 1,550 ( 2,825 ) ( 31,065 ) ( 8,641 )
−Removed: Earnings from equity method investments 5,019 9,518 8,168 8,273
−Removed: Other expenses, net ( 943 ) ( 864 ) ( 814 ) ( 1,167 )
−Removed: Income (loss) before income tax expense 5,626 5,829 ( 23,711 ) ( 1,535 )
−Removed: Income tax expense 5,196 (2) 854 103 358
−Removed: Net income (loss) $ 430 $ 4,975 $ ( 23,814 ) $ ( 1,893 )
−Removed: Earnings (loss) per common share – basic $ 0.02 $ 0.27 $ ( 1.32 ) $ ( 0.11 )
−Removed: Earnings (loss) per common share – diluted $ 0.02 $ 0.27 $ ( 1.32 ) $ ( 0.11 )
−Removed: Weighted-average number of common shares outstanding
−Removed: Basic 18,109 18,093 18,014 17,932
−Removed: Diluted 18,167 18,103 18,014 17,932
−Removed: (1) During the fourth quarter of 2020, the Company recorded a gain of 1.1 million related to the Settlement reached with the Former Customer as further described in Note 17.
−Removed: (2) During the fourth quarter of 2020, the Company recorded income tax expense of $ 5.2 million primarily due to an increase in the valuation allowance as of December 31, 2020 related to the Company's deferred tax assets.
−Removed: As discussed in Note 2, the Company concluded that its historical presentation of shipping and handling costs billed to customers as a component of cost of revenues rather than as a component of revenues was incorrect and that the Company's presentation of both the "Revenues - Consumables" and "Consumables cost of revenues, exclusive of depreciation and amortization" line items for the year ended December 31, 2020 should be restated.
−Removed: The impact of this error resulted in an understatement of both the "Revenues - Consumables" and "Consumables cost of revenues, exclusive of depreciation and amortization" line items in the Consolidated Statements of Operations for each of the quarters included in 2020 and for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021 and is shown below for those periods.
−Removed: The amounts reported above for the three months ended March 31, 2021 and 2020, the three months ended June 30, 2021 and 2020, the three months ended September 30, 2021 and 2020 and the three months ended December 31, 2020 have been restated for this error.
−Removed: There was no impact to operating income (loss), income (loss) before income taxes, net income (loss) or earnings (loss) to any of the 2021 or 2020 periods.
−Removed: The adjustments for restatement of the quarters ended September 30, 2021, June 30, 2021, and March 31, 2021 are as follows:
−Removed: For the Quarter Ended
−Removed: September 30, 2021 (Restated) June 30, 2021 (Restated) March 31, 2021 (Restated)
−Removed: Increase / (Decrease) Increase / (Decrease) Increase / (Decrease)
−Removed: Revenues 2,004 1,432 1,510
−Removed: Cost of revenues 2,004 1,432 1,510
−Removed: Operating income — — —
+Added: Arq's principal office is located in London, United Kingdom, with additional offices located in Lexington and Corbin, Kentucky near its main production facility.
+Added: Arq is an environmental technology company that has developed a process for transforming coal waste into a purified, microfine carbon powder ("Arq Powder") that can be used as an alternative to oil or in-ground mined coal to produce a range of carbon products.
+Added: With the completion of the Arq Acquisition, the Company intends to first sell Arq Powder as a feedstock to produce high-quality AC for use in water and air purification markets.
+Added: Series A Preferred Stock
+Added: Each share of Series A Preferred Stock will be automatically converted into a share of Common Stock upon approval by the stockholders of the Company.
+Added: Each share of Series A Preferred Stock is deemed to have an original issue price of $ 4.00 per share (the "Original Issue Amount").
+Added: The number of shares of Common Stock issued upon conversion of each share of Series A Preferred Stock shall be equal to the product of (i) the sum of (A) the Original Issue Amount plus (B) an amount equal to the cumulative amount of the accrued and unpaid dividends on such share at such time divided by (ii) the Original Issue Amount, subject to adjustment.
+Added: Holders of the Series A Preferred Stock are entitled to receive cumulative dividends which will accrue quarterly on the last day of each applicable quarter (whether or not declared or funds for their payment are lawfully available) and will be payable quarterly, in arrears, on the earlier to occur of (a) the date any dividend is paid to holders of Common Stock with respect to such quarter and (b) 30 days after the end of each quarter (the "Series A Quarterly Dividend") at the rate per share of Series A Preferred Stock equal to the greater of (i) if the Company declares a cash dividend on the Common Stock with respect to such quarter, the amount of the cash dividend that would be received by a holder of Common Stock in which such share of Series A Preferred Stock would be convertible on the record date for such cash dividend and (ii) an annual rate (the "Rate") of 8.0 % of the Original Issue Amount per annum compounded quarterly with respect to such quarter.
+Added: The Rate will increase by 2.0 % on the first day of the first quarter ending on or after the 635th day following the closing date of the first issuance of Series A Preferred Stock and on each subsequent anniversary of such date.
+Added: The Series A Quarterly Dividend is payable in cash or in additional shares of Series A Preferred Stock (the "Series A PIK Shares"), at the option of us.
+Added: The number of Series A PIK Shares to be issued shall be determined by dividing (i) the Series A Quarterly Dividend payable with respect to all shares of Series A Preferred Stock held by a holder thereof by (ii) the aggregate Original Issue Amount of all shares of Series A Preferred Stock held by a holder thereof, and each fractional Series A PIK Share will be rounded to the nearest whole Series A PIK Share (with 0.5 of a share being rounded down to 0.0).
+Added: In the event of the Company’s liquidation, dissolution or winding up, after payment or provision for payment of its debt and other liabilities, a holder of Series A Preferred Stock will receive a liquidating distribution equal to the amount of the cumulative accrued but unpaid dividends on each share of Series A Preferred Stock held by such holder.
+Added: After the payment to the holders of Series A Preferred Stock of such liquidation preference, the holders of outstanding shares of Series A Preferred Stock will participate pari passu with the holders of Common Stock on an as-converted basis in any remaining distributions out of the Company’s assets available for distribution to stockholders.
+Added: Holders of shares of Series A Preferred Stock will generally have no voting rights.
+Added: However, the Company is restricted from taking certain actions without the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock, including, but not limited to, amending the Company’s Certificate of Incorporation or Bylaws in a manner that adversely affects the rights of the Series A Preferred Stock or consummating a merger of the Company with or into another party or a sale of substantially of our assets.
+Added: If the approval by the stockholders of the Company of conversion of the Series A Preferred Stock has not been obtained, each outstanding share of Series A Preferred Stock will be redeemed by the Company on February 1, 2028 for cash, at a redemption price equal to the sum of (i) the product of (x) 140 % and (y) the Original Issue Amount, plus (ii) an amount equal to the cumulative amount of accrued and unpaid dividends on such share of Series A Preferred Stock.
+Added: Acquisition Accounting
+Added: The Company accounted for the Arq Acquisition as an acquisition of a business as of the Acquisition Date.
+Added: The fair value of the Purchase Consideration has been preliminarily allocated to the acquired assets and assumed liabilities based on their respective fair values as of the Acquisition Date.
+Added: The Company also incurred $ 8.7 million in acquisition-related costs (or transaction costs), which were expensed as incurred.
Advanced Emissions Solutions, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements
−Removed: The adjustments for restatement of the quarters ended December 31, 2020, September 30, 2020, June 30, 2020, and March 31, 2020 are as follows:
−Removed: For the Quarter Ended
−Removed: December 31, 2020 (Restated) September 30, 2020 (Restated) June 30, 2020 (Restated) March 31, 2020 (Restated)
−Removed: Increase / (Decrease) Increase / (Decrease) Increase / (Decrease) Increase / (Decrease)
+Added: Under the terms of the Purchase Agreement, the Escrow Shares are being withheld pending a determination by the IRS that no tax withholding is required on the Purchase Consideration issued to Arq Ltd.
+Added: (the "Arq Ltd.
+Added: Tax Liability").
+Added: The Company has estimated the fair value of the potential Arq Ltd.
+Added: Tax Liability at $ 3.3 million.
+Added: In the event that the IRS determines that no withholding is required by Arq Ltd.in connection with the Purchase Considered received by Arq Ltd., all of the Escrow Shares will be released and delivered to Arq Ltd.
+Added: In the event that the IRS determines that any amount of withholding is required by Arq Ltd., the Company has agreed to redeem a sufficient number of Escrow Shares to fund the required payment to the IRS, and that number of Escrow Shares will be returned to the Company (the "Contingent Redemption Feature").
+Added: The number of Escrow Shares to be returned to the Company is equal to the required withholding amount divided by the Original Issue Amount, not to exceed a maximum of 833,914 Escrow Shares, and is equal to $ 3.3 million based on the Original Issue Amount (the "Maximum Contingent Redemption Amount").
+Added: The fair value of the Escrow Shares is the Maximum Contingent Redemption Amount and the fair value of the non-escrowed Preferred Shares ("Non Escrow Shares") is the Preferred Share Price.
+Added: The Series A Preferred Stock contains a mandatory redemption feature in the event the Series A Preferred Stock is not converted prior to February 1, 2028.
+Added: The Company has determined that both the Escrow Shares and the Non Escrow Shares do not meet the definition of mandatorily redeemable financial instruments as there is a substantive conversion feature, and are therefore not classified as liabilities.
+Added: As both the Escrow Shares and Non Escrow Shares represent financial instruments that are redeemable for cash, SEC guidance mandates that preferred securities which are redeemable upon the occurrence of an event that is not solely within the control of the issuer be classified outside of permanent equity as "temporary equity." Accordingly, the Company has classified all of the Preferred Shares as temporary equity as of the Acquisition Date.
+Added: The following table provides the preliminary estimated fair values of the assets acquired and liabilities assumed as of the Acquisition Date:
+Added: (in thousands) Preliminary Purchase Price Allocation
+Added: Inventories, net 340
+Added: Prepaid expenses and other current assets 1,889
+Added: Property, plant and equipment, net 39,199
+Added: Other long-term assets, net 19,460
+Added: Total Assets $ 62,299
+Added: Accounts payable and accrued expenses $ 9,323
+Added: Other current liabilities —
+Added: Long-term debt, net of current portion 20,502
+Added: Other long-term liabilities 1,269
+Added: Total Liabilities $ 31,094
+Added: Total Preliminary Purchase Price $ 31,205
+Added: The intangible assets acquired are composed of Developed Technology and the estimated useful life is 10 years.
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: Unaudited Pro Forma Financial Information
+Added: The following represents the pro forma effects of the Arq Acquisition as if it had occurred on January 1, 2021.
+Added: The pro forma net (loss) income for each of the two years presented has been calculated after applying the Company’s accounting policies in effect for those years.
+Added: In addition, pro forma net (loss) income includes:
+Added: (1) for the year ended December 31, 2021, an increase in Payroll and benefits for compensation expense of $ 1.9 million payable to certain Arq employees triggered by change in control provisions in employment agreements as well as in employee severance agreements that is not recognized in the historical financial statements, assuming such amounts will be paid in cash;
+Added: (2) for the year ended December 31, 2022, a decrease in depreciation and amortization resulting from fair value adjustments to Property, plant, equipment of $ 0.9 million, and for the year ended 2021, an increase in depreciation and amortization resulting from fair value adjustments to Property, plant, equipment of $ 1.1 million;
+Added: (3) for each of the years ended December 31, 2022 and 2021, an increase in amortization resulting from fair value adjustments to Intangibles of $ 0.8 million (4) for the year ended December 31, 2022 and 2021, increases to interest expense for:
+Added: (a) the issuance of the Term Loan (as defined below) including stated interest and the amortization of the Term Loan's discount and issuance costs and (b) amortization of debt discount related to a fair value adjustment to an assumed term loan of Arq of $ 2.3 million and $ 2.2 million, respectively;
+Added: (5) the removal of $ 6.3 million of transaction costs incurred for the year ended December 31, 2022 but included as additional transaction costs for the year ended December 31, 2021;
+Added: and (6) for the year ended December 31, 2021, the addition of $ 5.9 million of transaction costs incurred for the period from January 1, 2023 through the Arq Acquisition Date, together with the income tax effects on (1) through (6).
+Added: Since Arq had no revenues for the years ended December 31, 2022 or 2021, pro forma revenues are the same as the Company's reported revenues for those years.
+Added: Years ended December 31,
+Added: (in thousands) 2022 2021
Revenues 102,987 100,294
−Removed: Cost of revenues 1,383 1,799 1,243 1,361
−Removed: Operating income — — — —
−Removed: Note 25 - Subsequent Events
−Removed: Unless disclosed elsewhere in the notes to the Consolidated Financial Statements, the following is the significant matter that occurred subsequent to December 31, 2021.
−Removed: On February 25, 2022, the Company received $ 10.6 million in cash from Cabot (the "Cabot Payment") as a result of a change in control provision in the Supply Agreement (the "Change in Control"), which occurred as a result of the sale of Cabot by its parent, Cabot Corporation.
−Removed: Under the Change in Control, the Company received from Cabot full payment of all amounts outstanding under the Reclamation Reimbursement, payment of all unbilled amounts related to Specific Capital for expenditures incurred through February 28, 2022 and payment of additional Reclamation Costs (the "Cabot Reclamation Costs").
−Removed: Under the Reclamation Contract, the Company is obligated to remit payment for the Cabot Reclamation Costs to the third party operator of Marshall Mine within a specified timeframe.
−Removed: The Company will account for the Cabot Payment in its March 31, 2022 quarter and does not anticipate any impacts to the Supply Agreement except as described above.
+Added: Net (loss) income ( 66,297 ) 5,344
+Added: Subscription Agreements
+Added: As a requirement of the Purchase Agreement, and on February 1, 2023, the Company entered into subscription agreements with certain persons (the "Subscribers") pursuant to which the Subscribers subscribed for and purchased 3,842,315 shares of Common Stock for an aggregate price of $ 15.4 million and at a price per share of $ 4.00 ("PIPE Investment").
+Added: As a requirement of the Arq Acquisition, the Company appointed three new directors to the Board (the "New Directors"), each of whom was a director of Arq Ltd and is considered a related party as of the Acquisition Date.
+Added: Each of the New Directors individually or through their affiliated entities were Subscribers in the PIPE Investment.
+Added: Loan Agreement
+Added: On August 19, 2022, the Company and CF Global Credit, LP ("CF Global") executed a commitment letter pursuant to which CF Global offered to provide a $ 10 million term loan (the "Term Loan") to the Company, of which $ 8.5 million was the net proceeds.
+Added: The proceeds of the Term Loan are intended to be utilized for the general corporate purposes of the Company and its subsidiaries.
+Added: As a requirement of the Purchase Agreement, and on February 1, 2023 (the "Closing Date"), the Company, as borrower, certain of its subsidiaries, as guarantors, and CF Global, as administrative agent and lender, entered into the Term Loan upon execution of a Term Loan and Security Agreement (the "Loan Agreement").
+Added: Capitalized terms used herein but not otherwise defined have the meaning set forth in the Loan Agreement.
+Added: CF Global is an affiliate of one of the Company's directors who was appointed on February 1, 2023 in conjunction with the Arq Acquisition.
+Added: This director is considered a related party effective February 1, 2023.
+Added: The Term Loan has a term of 48 months and bears interest at a rate equal to either (a) Adjusted Term SOFR (subject to a 1.00 % floor and a cap of 2.00 %) plus a margin of 9.00 % paid in cash and 5.00 % paid in kind or (b) Base Rate plus a margin of 8.00 % paid in cash and 5.00 % paid in kind, which interest on the Term Loan in each case shall be payable (or capitalized, in the case of in kind interest) quarterly in arrears.
+Added: Advanced Emissions Solutions, Inc.
+Added: and Subsidiaries
+Added: Notes to Consolidated Financial Statements
+Added: The Company is permitted to prepay the Term Loan at any time subject to the following prepayment premium:
+Added: (i) prior to the twelve (12) month anniversary of the Closing Date, the Make-Whole Amount (as defined below), (ii) thereafter but prior to the thirty-six (36) month anniversary of the Closing Date, 2.00 % of the outstanding principal amount of the Term Loan being repaid or prepaid or (iii) thereafter until the maturity date, 1.00 % of the outstanding principal amount of the Term Loan being repaid or prepaid.
+Added: The "Make-Whole Amount", with respect to any repayment or prepayment, is (i) an amount equal to all required interest payable (except for currently accrued and unpaid interest) on the aggregate principal amount of the Term Loan subject to such prepayment or repayment from the date of such prepayment or repayment through but excluding the date that is the first anniversary of the Closing Date calculated using an interest rate equal to (x) Adjusted Term SOFR for an interest period of one month in effect on the third U.S.
+Added: Government Securities Business Day prior to such prepayment or repayment plus (y) 14.00 % per annum and assuming all interest was paid in cash, plus (ii) a prepayment premium of 2.00 % on the aggregate principal amount of the Term Loan subject to such prepayment or repayment.
+Added: The Term Loan is secured by substantially all of the assets of the Company and its subsidiaries (including those acquired in Arq Acquisition), subject to customary exceptions.
+Added: The Loan Agreement includes, among others, the following covenants:
+Added: (1) beginning March 31, 2023 and as of the end of each fiscal quarter thereafter, the Company must maintain a minimum cash balance of $ 5.0 million;
+Added: (2) (x) as of December 31, 2023, for the fiscal year then ended, the Company must have a minimum annual revenue, on a consolidated basis, of $ 70.0 million, (y) as of December 31, 2024, for the fiscal year then ended, the Company must have a minimum annual revenue, on a consolidated basis, of $ 85.0 million and (z) for any fiscal year thereafter, the Company must have a minimum annual revenue, on a consolidated basis, of $ 100.0 million;
+Added: (3) (x) as of December 31, 2024, for the fiscal year then ended, the Company must have a minimum EBITDA of $ 3.0 million and (y) for any fiscal year thereafter, the Company must have a minimum EBITDA of $ 16.0 million;
+Added: and (4) beginning after the fiscal quarter ending September 30, 2023, during an LTV Trigger Period, the Company must not exceed a loan to value (based on the consolidated total assets of the Company and its subsidiaries) ratio of 0.40 :1.00.
+Added: In addition, in connection with the Loan Agreement and as consideration for the Term Loan, the Company agreed to issue to CF Global a warrant (the "Warrant") to purchase 325,457 shares of Common Stock.
+Added: The Warrant has an exercise price of $ 0.01 per share, subject to adjustment as set forth in the Warrant, is exercisable immediately and will expire on February 1, 2030.
+Added: The terms of the Warrant do not allow for cash exercise, and the Warrant may only be exercised pursuant to the terms thereof.
+Added: One of the New Directors is a principal of CF Global and both this director and CF Global are considered related parties as of the Acquisition Date.
+Added: Termination of Transaction Agreement
+Added: In connection with entry into the Purchase Agreement described above, that certain Transaction Agreement, dated August 19, 2022, by and among Elbert Holdings, Inc., Arq Ltd.
+Added: and the Company (the "Transaction Agreement") was terminated on February 1, 2023 pursuant to a termination agreement entered into by each of the parties to the Transaction Agreement.
+Added: The Transaction Agreement would have provided, subject to its terms and conditions, for a business combination of Arq Ltd.
+Added: and the Company.
+Added: By virtue of the termination of the Transaction Agreement, the Transaction Agreement became void and of no further force or effect, with no liability of the part of any party to the Transaction Agreement.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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.