Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a‑15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we have evaluated, under the supervision of and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act) as of the end of the period covered by this annual report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2023.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. The 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 our assets;
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 our management and directors; 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 our 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.
Under the supervision of, and with the participation of our management, including the principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control-Integrated Framework in 2013, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2023.
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.
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Item 9B. Other Information
None .
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
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PART III
Item 10. Directors, Executive Officers, and Corporate Governance
The information required by this Item is incorporated by reference to our definitive proxy statement for the Annual Meeting of Stockholders to be filed within 120 days from December 31, 2023.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference to our definitive proxy statement for the Annual Meeting of Stockholders to be filed within 120 days from December 31, 2023.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item concerning security ownership of certain beneficial owners and management is incorporated by reference to our definitive proxy statement for the Annual Meeting of Stockholders to be filed within 120 days from December 31, 2023, with the exception of the following information.
Securities Authorized for Issuance under Equity Compensation Plans
We have plans under which equity awards are authorized for grant or issuance as compensation to eligible employees, consultants, and members of the Board. Our stockholders have approved these plans. See Note 12 - Stock-Based Compensation included in Item 8 of this Report for further information about the material terms of our equity compensation plans. The following table is a summary of the shares of our common stock authorized for issuance under the equity compensation plans as of December 31, 2023:
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)
Equity compensation plans approved by security holders (1)
— (2)
$ 3.00 (3)
190,281
Equity compensation plans not approved by security holders — $ — —
Total — 190,281
(1) Includes securities registered for issuance under the 2017 Omnibus Incentive Plan and 2022 Omnibus Incentive Plan.
(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.
Item 13. Certain Relationships and Related Transactions and Director Independence
The information required by this Item is incorporated by reference to our definitive proxy statement for the Annual Meeting of Stockholders to be filed within 120 days from December 31, 2023.
Item 14. Principal Accountant Fees and Services
The information required by this Item is incorporated by reference to our definitive proxy statement for the Annual Meeting of Stockholders to be filed within 120 days from December 31, 2023.
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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) The following consolidated financial statements of Arq, Inc. are filed as part of this Report under Item 8:
(1) Financial Statements – see Index to Consolidated Financial Statements in Item 8;
(2) Financial Statement Schedules – All schedules are omitted because the required information is not applicable or is not present in amounts sufficient to require submission of the schedule or because the information required is included in the Consolidated Financial Statements and Notes thereto; and
(3) Exhibits – Those exhibits required by Item 601 of Regulation S-K and by paragraph (b) below.
(b) The following exhibits are filed as part of this Report or, where indicated, were heretofore filed and are hereby incorporated by reference:
Exhibit No. Description Form File No. Incorporated by Reference
Exhibit Filing Date
3.1 Second Amended and Restated Certificate of Incorporation of Advanced Emissions Solutions, Inc.
10-Q 000-54992 3.1 August 9, 2013
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
8-K 001-37822 3.1 May 8, 2017
3.4 Certificate of Designations of Series A Preferred Stock
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
10-Q 000-54992 4.1 August 9, 2013
4.2 Tax Asset Protection Plan dated as of May 5, 2017, by and between the Company and Computershare Trust Company, N.A., as rights agent, which includes as Exhibit B the Form of Rights Certificate
8-K 001-37822 3.2 May 8, 2017
4.3 First Amendment to Tax Asset Protection Plan dated as of April 6, 2018, by and between the Company and Computershare Trust Company, N.A., as rights agent
8-K 001-37822 4.2 April 11, 2018
4.4 Second Amendment to Tax Asset Protection Plan dated as of April 5, 2019, by and between the Company and Computershare Trust Company, N.A., as rights agent
8-K 001-37822 4.3 April 11, 2019
4.5 Third Amendment to Tax Asset Protection Plan dated as of April 8, 2020, by and between the Company and Computershare Trust Company, N.A., as rights agent
8-K 001-37822 4.4 April 9, 2020
4.6 Fourth Amendment to Tax Asset Protection Plan dated as of April 9, 2021, by and between the Company and Computershare Trust Company, N.A., as rights agent
8-K 001-37822 4.5 April 13, 2021
4.7 Fifth Amendment to Tax Asset Protection Plan dated as of March 15, 2022, by and between the Company and Computershare Trust Company, N.A., as rights agent
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. 2017 Omnibus Incentive Plan **
8-K 001-37822 10.1 June 22, 2017
10.2 Advanced Emissions Solutions, Inc. 2022 Omnibus Incentive Plan **
8-K 001-37822 10.1 May 17, 2022
10.3 Form of Restricted Stock Award Agreement under the 2022 Omnibus Incentive Plan *,**
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Exhibit No. Description Form File No. Incorporated by Reference
Exhibit Filing Date
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
10.6 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. and NexGen Refined Coal, LLC ***
10-Q/A 000-50216 10.33 September 28, 2011
10.7 The First Amendment to the Second Amended and Restated Operating Agreement of Clean Coal Solutions, LLC, by and among Clean Coal Solutions, LLC, ADA-ES, Inc., GSFS Investments I Corp. and NexGen Refined Coal, LLC dated September 9, 2011
10-Q 000-50216 10.89 November 14, 2011
10.8 Second Amendment to the Second Amended and Restated Operating Agreement of Clean Coal Solutions, LLC by and among ADA-ES, Inc., NexGen Refined Coal, LLC and GSFS Investments I Corp. dated July 31, 2012
10-Q 000-50216 10.59 November 9, 2012
10.9 Contribution Agreement dated May 27, 2011 between ADA-ES, Inc. and NexGen Refined Coal, LLC
10-Q 000-50216 10.87 August 12, 2011
10.10 Amended and Restated Limited Liability Company Operating Agreement by and between ADA-ES, Inc., NexGen Refined Coal, LLC and Clean Coal Solutions Services, LLC dated November 20, 2013
10-K 000-54992 10.38 February 29, 2016
10.11 Amended and Restated License Agreement between ADA-ES, Inc. and Clean Coal Solutions, LLC dated October 30, 2009
10-Q 000-50216 10.77 August 16, 2010
10.12 First Amendment to the Amended and Restated License Agreement between ADA-ES, Inc. and Clean Coal Solutions, LLC dated as of August 4, 2010
10-K 000-50216 10.81 March 28, 2011
10.13 Second Amendment to Amended and Restated License Agreement by and between ADA-ES, Inc. and Clean Coal Solutions, LLC dated as of July 23, 2013 ***
10-Q 000-54992 10.63 November 12, 2013
10.14 Technology Sublicense Agreement between ADA-ES, Inc., Clean Coal Solutions, LLC, and GS RC Investments LLC dated June 29, 2010
10-Q 000-50216 10.74 August 16, 2010
10.15 Amendment to Technology Sublicense Agreement between ADA-ES, Inc., GS RC Investments, LLC, and Clean Coal Solutions, LLC dated November 21, 2011 ***
10-K 000-54992 10.44 February 29, 2016
10.16 Amendment #2 to Technology Sublicense Agreement between ADE-ES, Inc, GS RC Investments, LLC, and Clean Coal Solutions, LLC dated December 15, 2011
10-K 000-50216 10.49 March 15, 2012
10.17 M-45 Technology License Agreement between ADA-ES, Inc. and Clean Coal Solutions, LLC dated July 27, 2012 ***
10-Q 000-50216 10.58 November 9, 2012
10.18 Lignite Mining Agreement between Demery Resources Company, L.L.C. and Five Forks Mining, LLC dated as of June 29, 2009 ***
10-K 001-37822 10.43 March 18, 2019
10.19 First Amendment to Lignite Mining Agreement between Demery Resources Company, L.L.C. and Five Forks Mining, LLC, dated as of March 22, 2017 ***
10-K 001-37822 10.44 March 18, 2019
10.20 Third Amendment to the Second Amended and Restated Operating Agreement of Tinuum Group, LLC. dated September 4, 2019 ***
10-Q 001-37822 10.1 November 12, 2019
10.21 Master Agreement for Supply of Furnace Products between ADA Carbon Solutions, LLC and Cabot Norit Americas, Inc. ***
8-K 001-37822 10.1 September 30, 2020
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Exhibit No. 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
10.23 Securities Purchase Agreement, dated as of February 1, 2023, by and among Advanced Emissions Solutions, Inc. and Arq Limited ***
8-K 001-37822 2.1 February 1, 2023
10.24 Registration Rights Agreement ***
8-K 001-37822 10.1 February 1, 2023
10.25 Term Loan and Security Agreement among Advanced Emissions Solutions, Inc., as Debtor, Certain Subsidiaries of Debtor, as Guarantors, CF Global Credit, LP, as Administrative Agent, and the Lenders, from time to time party hereto, dated as of February 1, 2023 ***
8-K 001-37822 10.2 February 1, 2023
10.26 Loan 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 January 27, 2021 †
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 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 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 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 *
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Exhibit No. Description Form File No. Incorporated by Reference
Exhibit Filing Date
97 Clawback Policy *
101 The following financial statements, formatted in XBRL: (i) Consolidated Balance Sheets as of December 31, 2023 and 2022, (ii) Consolidated Statements of Operations for the Years ended December 31, 2023 and 2022, (iii) Consolidated Statements of Changes in Stockholders’ Equity for the Years ended December 31, 2023 and 2022, (iv) Consolidated Statements of Cash Flows for the Years ended December 31, 2023 and 2022; and (v) Notes to the Consolidated Financial Statements. The information in Exhibit 101 is "furnished" and not "filed" as provided in Rule 401 of Regulation S-T.
Notes:
* – Filed herewith.
** – Management contract or compensatory plan or arrangement.
*** – 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. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the SEC.
Filings for the Company were made under the name ADA-ES, Inc. (File No. 000-50216) prior to July 1, 2013, the effective date of our reorganization, and under the name Advanced Emissions Solutions, Inc. (File No. 000-54992) starting on July 1, 2013. Filings for the Company were made under the name Advanced Emissions Solutions, Inc. (File No. 001-37822) starting on July 6, 2016. On February 1, 2024, the Company changed its name to Arq, Inc.
(c) Financial Statement Schedules. Please refer to Item 15(a) above.
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Item 16. Form 10-K Summary
None.
SIGNATURES
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.
Arq, Inc.
(Registrant)
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)
Date: March 12, 2024 Date: March 12, 2024
Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By /s/ Richard Campbell-Breeden By /s/ Jeremy Blank
Richard Campbell-Breeden, Director Jeremy Blank, Director
Date: March 12, 2024 Date: March 12, 2024
By /s/ Carol Eicher By /s/ Gilbert Li
Carol Eicher, Director Gilbert Li, Director
Date: March 12, 2024 Date: March 12, 2024
By /s/ Julian McIntyre By /s/ Laurie Bergman
Julian McIntyre, Director Laurie Bergman, Director
Date: March 12, 2024 Date: March 12, 2024
By /s/ L. Spencer Wells By /s/ Robert Rasmus
L. Spencer Wells, Director Robert Rasmus, Director
Date: March 12, 2024 Date: March 12, 2024
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