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Item 9A. Controls and Procedures

2024-03-12 compared with 2023-03-08 · 58 added, 85 removed, 175 unchanged (45% of the section changed)

15 unchanged sentences

Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2023.

Remediation Efforts Related to Past Material Weaknesses

As reported in Item 9A of Annual Report on Form 10-K for the fiscal year ended December 31, 2021, we identified deficiencies in the design and operation of controls over (1) the selection and application of accounting principles;

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

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

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

As of December 31, 2022, we have implemented additional processes and procedures for the monitoring of interpretative guidance on previously adopted accounting standards and our annual review of policies and process narratives related to material financial statement components that have been deemed effective for the fiscal year ended December 31, 2022.

Moss Adams LLP, an independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting as of December 31, 2022 and its report is included herein.

We acquired Legacy Arq during the first quarter of 2023 (refer to Item 8.

Note 2 of this Report).

As permitted by Securities and Exchange Commission Staff interpretive guidance for newly acquired businesses, management excluded Legacy Arq from its evaluation of internal control over financial reporting as of December 31, 2023.

We are in the process of documenting and testing Legacy Arq's internal controls over financial reporting.

We will incorporate Legacy Arq into our annual report on internal control over financial reporting for our year ending December 31, 2024.

As of December 31, 2023, Legacy Arq net assets totaled $40.5 million.

Legacy Arq contributed $11.7 million of net loss in our Consolidated Statements of Operations for the year ended December 31, 2023 .

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) during the fourth quarter of 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

Advanced Emissions Solutions, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Advanced Emissions Solutions, Inc.

and subsidiaries’ (the "Company") 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 ("COSO").

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the consolidated balance sheets of Advanced Emissions Solutions, Inc.

and subsidiaries as of December 31, 2022 and 2021, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements") and our report dated March 8, 2023 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control over Financial Reporting included in Item 9A.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Moss Adams LLP

Denver, Colorado

March 8, 2023

We have served as the Company’s auditor since 2017.

Other Information

16 unchanged sentences

(1) Includes securities registered for issuance under the 2017 Omnibus Incentive Plan and 2022 Omnibus Incentive Plan.

(2) The number of securities is reduced by 652,962 shares of restricted common stock for which restrictions have not lapsed.

(2) Of these shares, 1,000,000 were subject to non-qualified stock options, 790,005 were subject to unvested restricted stock awards and 968,918 were subject to unvested performance share units.

(3) The restricted shares and RSUs were granted at full value, and therefore, have a weighted-average exercise price of $0.

Excluding restricted shares and PSUs from this calculation, the weighted-average exercise price of outstanding non-qualified stock options was $3.00 at December 31, 2023.

Certain Relationships and Related Transactions and Director Independence

3 unchanged sentences

Exhibits and Financial Statement Schedules

(a) The following consolidated financial statements of Advanced Emissions Solutions, Inc.

(a) The following consolidated financial statements of Arq, Inc.

are filed as part of this Report under Item 8:

8 unchanged sentences

10-Q 000-54992 3.1 August 9, 2013

3.2 Conformed Copy of the Bylaws of Advanced Emissions Solutions, Inc., as amended

10-K 001-37822 3.2 March 12, 2018

3.2 Certificate of Amendment to the Amended and Restated Certificate of Incorporation, effective February 1, 2024

8-K 001-37822 3.1 January 31, 2024

3.3 Certificate of Designation, Preferences, and Rights of Series B Junior Participating Preferred Stock of Advanced Emissions Solutions, Inc

2 unchanged sentences

8-K 001-37822 3.1 February 1, 2023

3.5 Amended and Restated Bylaws, effective February 1, 2024

8-K 001-37822 3.2 January 31, 2024

4.1 Form of Specimen Common Stock Certificate

12 unchanged sentences

8-K 001-37822 4.6 March 16, 2022

4.8 Sixth Amendment to Tax Asset Protection Plan dated as of April 13, 2023, by and between the Company and Computershare Trust Company, N.A., as rights agent.

8-K 001-37822 4.7 April 14, 2023

4.9 Form of Warrant

8-K 001-37822 4.1 February 1, 2023

4.10 Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 *

10.1 Advanced Emissions Solutions, Inc.

4 unchanged sentences

8-K 001-37822 10.1 May 17, 2022

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

and Advanced Emissions Solutions, Inc.

8-K 000-54992 10.66 September 2, 2014

10.4 Form of Amendment No.

2 to Employment Agreement of Greg Marken **

10-Q 001-37822 10.1 August 6, 2018

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

10-Q 001-37822 10.3 August 10, 2020

10.3 Form of Restricted Stock Award Agreement under the 2022 Omnibus Incentive Plan *,**

Description Form File No.

1 unchanged sentence

Exhibit Filing Date

10.6 Advisor Services Agreement dated as of July 1, 2020, between the Company and Heath Sampson

10.4 Form of Performance Stock Unit Agreement under the 2022 Omnibus Incentive Plan *,**

10.5 Form of Amendment No.

2 to Employment Agreement of Greg Marken **

10-Q 001-37822 10.1 August 6, 2018

10.7 Employment Agreement dated February 26, 2021 between the Company and Morgan Fields **, ***

8-K 001-37822 10.1 March 3, 2021

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

10-Q 001-37822 10.4 May 10, 2021

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

10-Q 001-37822 10.5 May 10, 2021

10.10 Form of Amended Retention Agreement dated May 8, 2022 of Greg Marken, Morgan Fields and Joe Wong **

10-Q 001-37822 10.1 May 9, 2022

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

8-K 001-37822 10.1 May 11, 2020

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

36 unchanged sentences

10-K 001-37822 10.44 March 18, 2019

Description Form File No.

Incorporated by Reference

Exhibit Filing Date

10.20 Third Amendment to the Second Amended and Restated Operating Agreement of Tinuum Group, LLC.

3 unchanged sentences

8-K 001-37822 10.1 September 30, 2020

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

8-K 001-37822 10.2 September 30, 2020

Description Form File No.

Incorporated by Reference

Exhibit Filing Date

10.22 Membership Interest Purchase Agreement between Caddo Creek Resources Company, L.L.C., as Buyer, and ADA Carbon Solutions (Operations), LLC, as Seller dated as of September 2, 2022 ***

8-K 001-37822 10.2 September 6, 2022

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

8-K 001-37822 10.1 March 29, 2021

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

8-K 001-37822 10.1 July 29, 2021

10.23 Securities Purchase Agreement, dated as of February 1, 2023, by and among Advanced Emissions Solutions, Inc.

8 unchanged sentences

Rose LLC, Arq Corbin LLC and Arq Corbin Land LLC, dated January 27, 2021 †

21.1 Subsidiaries of Advanced Emissions Solutions, Inc.

10-K 001-37822 10.35 March 8, 2023

10.27 Loan Modification Agreement, among Community Trust Bank, Inc.;

Corbin Project LLC, Arq Projects Holding Company LLC, Arq St.

Rose LLC, Arq Corbin LLC and Arq Corbin Land LLC, dated as of June 2, 2023

8-K 001-37822 10.1 June 6, 2023

10.28 Employment Agreement by and between Robert E.

Rasmus and Advanced Emissions Solutions, Inc., dated July 17, 2023

8-K 001-37822 10.2 July 17, 2023

10.29 Subscription Agreement by and between Robert E.

Rasmus, RER Legacy Investments II LLC and Advanced Emissions Solutions, Inc., dated July 17, 2023

8-K 001-37822 10.1 July 17, 2023

10.30 Inducement Award by and between Robert E.

Rasmus and Advanced Emissions Solutions, Inc., dated July 17, 2023 *,**

10.31 Employment Agreement by and between Jeremy D.

Williamson and Advanced Emissions Solutions, Inc., dated September 18, 2023

8-K 001-37822 10.3 September 18, 2023

10.32 Employment Agreement by and between Stacia Hansen and Advanced Emissions Solutions, Inc., dated November 6, 2023

8-K 001-37822 10.1 November 8, 2023

21.1 Subsidiaries of Arq, Inc.

23.1 Consent of Moss Adams LLP *

31.1 Certification of Principal Executive Officer of Advanced Emissions Solutions, Inc.

31.1 Certification of Principal Executive Officer of Arq, Inc.

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

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

31.2 Certification of Principal Financial Officer of Arq, Inc.

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

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

32.1 Certification of Principal Executive Officer and Principal Financial Officer of Arq, Inc.

Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

95 Mine Safety Disclosure Exhibit *

Description Form File No.

1 unchanged sentence

Exhibit Filing Date

95 Mine Safety Disclosure Exhibit *

97 Clawback Policy *

101 The following financial statements, formatted in XBRL:

4 unchanged sentences

** – Management contract or compensatory plan or arrangement.

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

*** – Portions of this exhibit have been omitted pursuant to Item 601(b)(10) as information that the Company customarily and actually treats that information as private or confidential and is not material.

† – Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

5 unchanged sentences

001-37822) starting on July 6, 2016.

On February 1, 2024, the Company changed its name to Arq, Inc.

2 unchanged sentences

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Advanced Emissions Solutions, Inc.

By /s/ Greg P.

Marken By /s/ Morgan Fields

Marken Morgan Fields

By /s/ Robert Rasmus By /s/ Stacia Hansen

Robert Rasmus Stacia Hansen

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

10 unchanged sentences

March 12, 2024

By /s/ Julian McIntyre By /s/ J.

Taylor Simonton

Julian McIntyre, Director J.

Taylor Simonton, Director

By /s/ Julian McIntyre By /s/ Laurie Bergman

Julian McIntyre, Director Laurie Bergman, Director

March 12, 2024 Date:

March 12, 2024

Spencer Wells

Spencer Wells, Director

Spencer Wells By /s/ Robert Rasmus

Spencer Wells, Director Robert Rasmus, Director

March 12, 2024 Date:

March 12, 2024

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

What changed 10-K

Item 9A. Controls and Procedures