What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-03-05 compared with 2024-03-12 · 141 added, 92 removed, 252 unchanged (48% of the section changed)

4 unchanged sentences

Risks Related to Our Business

We may be unable to meet our projected construction timelines, costs and production ramp up for our capital upgrades at our Red River Plant, or we may experience difficulties in generating and maintaining demand for products manufactured there.

Our ability to increase production of GAC on a sustained basis is dependent on the construction and ramp of upgrades at our Red River Plant.

The construction of and commencement and ramp of production at this facility are subject to a number of uncertainties inherent in all new manufacturing operations.

These include ongoing liquidity requirements for funding the expansion of the facility, ongoing compliance with regulatory requirements, procurement and maintenance of construction materials and services, environmental and operational licenses and approvals for additional expansion, supply chain constraints, hiring, training and retention of qualified employees and the pace of bringing production equipment and processes online with the capability to manufacture high-quality GAC products at scale.

If we experience any issues or delays in meeting our projected timelines, costs, or production capacity for the upgrades at the Red River Plant, or generating and maintaining demand for the products we manufacture there, our business, prospects, operating results and financial condition may be harmed.

The Company anticipates financing the timely completion of the upgrades to our Red River Plant funded with cash on hand, cash generation, ongoing cost reduction initiatives, potential customer prepayments for GAC contracts, and a planned refinancing and potential expansion of our term loan.

If we are not able to secure additional financing, the project timeline for our Red River Plant expansion may be delayed beyond the end of 2024.

Our future financial results will suffer if we do not effectively manage our expanded operations following the Arq Acquisition.

Following the Arq Acquisition, the size of our business has increased.

Our future results depend, in part, upon our ability to manage this expanded business, which poses substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity.

There can be no assurance that we will be successful or that we will realize the expected operating efficiencies, cost savings, revenue enhancements and other benefits currently anticipated from the Arq Acquisition.

We may be unable to meet our projected commissioning timelines, costs and production ramp up for our capital upgrades at our Red River Plant, or we may experience difficulties in generating and maintaining demand for products manufactured there.

Our ability to increase production of GAC on a sustained basis is dependent on the construction, commissioning, and ramp of upgrades at our Red River Plant.

We have achieved mechanical completion of construction at our Red River Plant.

However, the commissioning, commencement and ramp of production at this facility are subject to a number of uncertainties inherent in all new manufacturing operations.

These include ongoing liquidity requirements for funding the expansion of the facility, ongoing compliance with regulatory requirements, environmental and operational licenses and approvals for additional expansion, supply chain constraints, hiring, training and retention of qualified employees and the pace of bringing production equipment and processes online with the capability to manufacture high-quality GAC products at scale.

In September 2024, we terminated an existing contract we had previously entered into with a third-party contractor for the construction of the GAC Facility at our Red River Plant after a number of construction delays and cost overruns became apparent.

We then moved the construction and project management functions for the GAC Facility internally in order to limit any further construction delays.

However, if we experience any further issues or delays in meeting our projected timelines, costs, or production capacity for the upgrades at our Red River Plant, or generating and maintaining demand for the products we manufacture there, our business, prospects, operating results and financial condition may be harmed.

We anticipate financing the completion and ramp-up of the GAC Facility with cash on hand, cash generation, ongoing cost reduction initiatives, and through borrowings on our Revolving Credit Facility.

Mechanical completion of construction of the GAC Facility was completed in January 2025.

We expect to complete commissioning activities and commence production at the GAC Facility by the end of the first quarter of 2025.

If we experience any further delays or unexpected additional costs such as those described above, the project timeline for our Red River Plant expansion may be delayed beyond the end of the first quarter of 2025.

Manufacturing Legacy Arq's products and GAC products requires significant capital.

Legacy Arq was a development stage entity that to date has not generated any revenue.

Legacy Arq has historically had operating losses and required multiple financing rounds to fund its business plan.

Legacy Arq was a development stage entity that, prior to the Arq Acquisition, had not generated any revenue.

Legacy Arq historically had operating losses and required multiple financing rounds to fund its business plan.

We are currently spending significant capital to execute our business plan to manufacture Legacy Arq’s products as a feedstock for GAC products.

A significant funding source is our cash on hand.

We are targeting the end of 2024 for our first commercial production of Legacy Arq products and the end of 2024 for our first commercial production of GAC products.

To meet these production timing goals, we will need to raise additional capital in 2024.

We have issued common stock in multiple equity offerings and entered into our Revolving Credit Facility to assist with funding these capital requirements, in addition to utilizing cash on hand.

We are targeting the end of the first quarter of 2025 for our first commercial production of Legacy Arq products and for our first commercial production of GAC products at our Red River Plant.

To meet these production timing goals and to fund ongoing production of our GAC products, we may need to raise additional capital.

We may not be successful in obtaining the required financing or, if financing is available to us, such financing may not be on terms that are favorable to us.

The failure to obtain financing in 2024 in order to enable the Company to produce Legacy Arq products and GAC products by the end of 2024 could result in a delay in executing our business plan.

The Arq Acquisition is requiring significant technological changes in manufacturing that may adversely affect the market acceptance of Legacy Arq’s products.

We will be producing new products that we have not yet sold commercially.

As such, production to date has not been at full throughput.

The failure to maintain adequate liquidity to enable the Company to produce Legacy Arq products and GAC products by the end of the first quarter of 2025 on a going forward basis could result in a delay in executing our business plan, which could have a material adverse effect on our business, operating results and financial condition.

Current and future indebtedness could adversely affect our financial condition and impair our ability to operate our business.

As of December 31, 2024, we had approximately $13.8 million outstanding and $16.2 million available under our Revolving Credit Facility.

In addition, upon completion of the Arq Acquisition, we assumed a term loan (the "CTB Loan") held by Legacy Arq with a financial institution ("CTB") in the principal amount of $10.0 million.

We may incur additional indebtedness.

Revolving Credit Facility contains a floating interest rate.

Our levels of indebtedness and higher interest rates could impact us as follows:

• require us to dedicate a substantial portion of our cash flow from operations to service indebtedness, thereby reducing the availability of cash flow to fund acquisitions or working capital;

• limit our flexibility in planning for, or reacting to, changes in our business;

• restrict us from exploiting business opportunities;

• make us more vulnerable to a downturn in our business or the economy;

• place us at a competitive disadvantage compared to our competitors with less indebtedness;

• require the consent of our existing lenders to incur additional indebtedness;

• limit our ability to borrow additional funds for acquisitions, working capital, or debt-service requirements;

• increase our cost of capital, including as a result of higher interest rates;

• decrease our future earnings;

• increase our exposure to the credit risks of bank group lenders or those institutions with which we maintain deposits.

Our Revolving Credit Agreement and CTB Loan contain financial and other restrictive covenants.

For example, the Revolving Credit Agreement includes financial covenants that require us to maintain a maximum leverage ratio and a minimum liquidity level (as these terms are defined in the Revolving Credit Agreement).

These covenants could limit our ability to engage in activities that are in our long-term best interests.

Our failure to comply with these covenants would result in an event of default that, if not waived, could result in the acceleration of all outstanding indebtedness.

Our Revolving Credit Facility and CTB Loan have maturity dates of December 27, 2029 and January 27, 2036, respectively.

In the future, we may be unable to obtain new financing or refinancing on acceptable terms.

See Note 5 "Debt Obligations" to the Consolidated Financial Statements included in Item 8 of this Report for further information.

The Arq Acquisition has required significant technological changes in manufacturing that may adversely affect the market acceptance of Legacy Arq’s products.

Upon completion and commencement of commercial production at our GAC Facility we will be producing GAC products that we have not yet sold commercially.

Legacy Arq’s manufacturing technology has been extensively tested at scale, but continuous operations represent risks including an inability to achieve the scale-up efficiencies that have been assumed in our business plan.

In turn, this could

impact throughput in the Corbin Facility, which could lead to lower production and higher operating costs.

In turn, this could impact throughput or yields at our Corbin Facility, which could lead to lower production and higher operating costs.

There is also risk of delays that are product-specific.

For example, we may not receive adequate customer acceptance or achieve acceptable performance given the specification differentiation between some of Legacy Arq’s products and the industry’s existing conventional products.

For example, we may not receive required state or municipal approval for our new GAC products in a timely manner, adequate customer acceptance of our new GAC products or achieve acceptable performance given the specification differentiation between some of Legacy Arq’s products and the industry’s existing conventional products.

These risks could have a material adverse effect on our business, operating results and financial condition.

1 unchanged sentence

Our initial use for Arq Powder is as a feedstock for AC, and although we believe current conditions are favorable as a result of excess demand versus supply, there can be no guarantee that this will continue.

Drivers of demand include factors beyond our control such as population growth and GDP growth, amongst others.

Drivers of demand include factors beyond our control such as population growth, regulatory requirements and gross domestic product growth, amongst others.

Any major global downturn could also materially negatively impact this demand.

New AC supply is driven by new manufacturing sites being built, and we have little visibility on what additional manufacturing capacity other manufacturers may add in the future.

Our business plan and commercial success also assumes selling Arq Powder into new markets, including as an additive into the carbon black and asphalt markets.

Although testing data and feedback from potential customers have been positive to date, there can be no assurance that these products will be commercially viable.

As we attempt to develop and grow Arq Powder utilization worldwide, our success will depend on our ability to correctly forecast demand in these new markets.

Our business plan and commercial success also assumes selling Arq Powder into new markets, including as an additive into the asphalt market.

Although testing data and feedback from potential customers have been generally positive to date, there can be no assurance that these products will be commercially viable.

As we attempt to develop and grow Arq Powder utilization worldwide, our success will depend on our ability to gain market acceptance and to correctly forecast demand in these new markets.

There is no assurance that we will be able to increase our business to meet targets globally, or that projections on which such targets are based will prove accurate, or that the pace of growth or coverage will meet customer expectations.

Our future financial results will suffer if we do not effectively manage our expanded operations following the Arq Acquisition.

Following the Arq Acquisition, the size of our business has increased.

Disruptions at any of our facilities could negatively impact our ability to meet customer supply requirements due to damage to or insufficient production capacity of the Red River Plant and may have a material adverse effect on our business, results of operations and financial condition.

We own and operate the Red River Plant, which is our sole manufacturing plant for producing and selling AC products to our customers, and are completing construction and commissioning activities on the Corbin Facility.

Our current and future ability to meet customer expectations, manage inventory, complete sales and achieve our objectives for operating efficiencies depends on the full-time operation of the Red River Plant, and the execution of our business plan depends on the completion of the Corbin Facility and the GAC expansion at the Red River Plant.

We own and operate the Red River Plant, which is our sole manufacturing plant for producing and selling AC products to our customers, and own and operate the Corbin Facility, which is our sole production facility for manufacturing Arq Powder.

Our current and future ability to meet customer expectations, manage inventory, complete sales and achieve our objectives for operating efficiencies depends on the full-time operation of the Red River Plant, and the execution of our business plan depends on the integration of the Corbin Facility as the primary source of feedstock for the GAC Facility's commissioning and ramp-up of commercial production.

We cannot replicate our manufacturing methods at another plant due to the limited availability of similar manufacturing plants, the additional costs incurred in supplying raw materials such as lignite to another plant, and the risk of revealing our confidential and proprietary technologies and manufacturing processes.

9 unchanged sentences

Further, as a result of the Arq Acquisition, we may be required to take write-offs or write-downs, restructuring and impairment or other charges that could negatively affect our business, assets, liabilities, prospects, outlook, financial condition and results of operations.

The failure to successfully integrate the Legacy Arq businesses in the expected timeframe could adversely affect our future business and financial performance.

The failure to continue to successfully integrate the Legacy Arq businesses in the expected timeframe could adversely affect our future business and financial performance.

The combination of two independent companies is a complex, costly and time-consuming process.

As a result, we have devoted significant management attention and resources to integrate Legacy Arq's business practices and operations.

We may not be successful in integrating the operations of Legacy Arq or otherwise realizing the anticipated benefits of the Arq Acquisition.

In addition, the integration of Legacy Arq may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships and diversion of management’s attention, and may cause our stock price to decline.

As a result, we have devoted and continue to devote significant management attention and resources to integrate Legacy Arq's operations, including in connection with the completion of our GAC Facility.

We may not be successful in integrating the operations of Legacy Arq or

otherwise realizing the anticipated benefits of the Arq Acquisition.

In addition, the continued integration of Legacy Arq may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships and diversion of management’s attention, and may cause our stock price to decline.

The difficulties of combining the operations of the two companies include, among others:

2 unchanged sentences

• the potential diversion of management’s focus and resources from other strategic opportunities and from operational matters;

• performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the Arq Acquisition and integrating the combined companies’ operations;

• performance shortfalls as a result of the diversion of management’s attention caused by integrating the combined companies’ operations;

• aligning and executing a new business strategy;

• retaining existing customers and attracting new customers;

• maintaining employee morale and retaining key management and other employees;

• maintaining employee morale and retaining key members of management and other employees;

• the disruption of, or the loss of momentum in, each company’s ongoing business or inconsistencies in standards, controls, systems, procedures and policies;

• integrating two unique business cultures, which may prove to be incompatible;

• the possibility of faulty assumptions underlying expectations regarding the integration process;

6 unchanged sentences

• managing tax costs or inefficiencies associated with integrating Legacy Arq's operations;

• unforeseen expenses or delays associated with the Arq Acquisition;

• unforeseen expenses or delays associated with the Arq Acquisition, including the completion of the GAC Facility;

• creating a logistics network to reliably allow use of Arq Powder as a feedstock in the GAC Facility;

• taking actions that may be required in connection with obtaining regulatory approvals.

4 unchanged sentences

If these anticipated capital expenditures are delayed, whether as a result of unanticipated challenges in permitting, construction or economic conditions, the cost of such activities may increase and the timing of projected revenue may be impacted.

Further, the costs of such construction activities may significantly exceed the budgeted costs.

Further, the costs of such construction activities have and may continue to significantly exceed the budgeted costs.

The costs of construction or other anticipated capital expenditures are subject to the effects of the current inflationary environment and we may not be able to successfully offset the effects of inflation.

See "Item 1A.

Risk Factors - We may be unable to meet our projected construction timelines, costs and production ramp up for our capital upgrades at our Red River Plant, or we may experience difficulties in generating and maintaining demand for products manufactured there." above for further information.

The synergies attributable to the Arq Acquisition may vary from expectations.

1 unchanged sentence

Our success will depend, in significant part, on our ability to successfully integrate the Legacy Arq business and realize the anticipated strategic benefits and synergies.

We believe that the combination of the two businesses will allow us to enter into more diversified, higher margin markets with our products.

We continue to believe that the combination of the two businesses will allow us to enter into more diversified, higher margin markets with our products.

However, achieving these goals requires, among other things, realization of the targeted cost synergies expected from the Arq Acquisition.

5 unchanged sentences

If these strategic relationships are not established or maintained, our business prospects may be limited, which could negatively impact our business and results of operations.

If we fail to develop or maintain an effective system of internal controls as we integrate Legacy Arq’s business operations and processes with ours, we may not be able to accurately report our financial results or prevent fraud.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.

As a result, stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our common stock.

1 unchanged sentence

If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed.

We cannot be certain that our efforts to develop and maintain an effective system of internal controls will be successful, will be able to maintain adequate controls over our financial processes and reporting in the future, or will be able to comply with our obligations under Section 404 of the Sarbanes-Oxley Act of 2002.

Any failure to develop or maintain effective internal controls, or difficulties encountered in implementing or improving internal controls, could harm our operating results or cause us to fail to meet our reporting obligations.

We cannot be certain that our efforts to maintain an effective system of internal controls will be successful, will be able to maintain adequate controls over our financial processes and reporting in the future, or will be able to comply with our obligations under Section 404 of the Sarbanes-Oxley Act of 2002.

As we continue to integrate Legacy Arq's operations, any failure to maintain effective internal controls, or difficulties encountered in implementing or improving internal controls, could harm our operating results or cause us to fail to meet our reporting obligations.

Ineffective internal controls could additionally lead to increased costs to remediate any failures and could cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our common stock.

The financial effects of Tinuum Group providing indemnification under performance guarantees of its RC facilities are largely unknown and could adversely affect our financial condition.

Tinuum Group, LCC ("Tinuum Group"), of which we hold a 42.5% ownership interest, indemnifies certain utilities and lessees of RC facilities for particular risks associated with the operations and tax treatment of those facilities.

The financial effects of Tinuum Group providing indemnification under performance guarantees of its refined coal ("RC") facilities are largely unknown and could adversely affect our financial condition.

Tinuum Group, LLC ("Tinuum Group"), of which we hold a 42.5% ownership interest, indemnifies certain utilities and lessees of RC facilities for particular risks associated with the operations and tax treatment of those facilities.

We have provided limited, joint and several guarantees of Tinuum Group’s obligations under those leases.

2 unchanged sentences

A pandemic, epidemic or outbreak of an infectious disease such as COVID-19 may materially adversely affect our business.

The global or national outbreak of an infectious disease, such as COVID-19, may cause disruptions to our business and operational plans, which may include (i) shortages of employees, (ii) inefficiencies, delays and additional costs in our manufacturing, sales and customer service efforts, (iii) recommendations of, or restrictions imposed by, government and health authorities, including quarantines, to address an infectious disease, such as the COVID-19 pandemic, and (iv) restrictions that

we impose, including facility shutdowns, to ensure the safety of employees and others.

The COVID-19 pandemic has had, and continues to have, a significant impact around the world, prompting governments and businesses to take unprecedented measures in response.

While it is not possible to predict their extent or duration, these disruptions may have a material adverse effect on our business, financial condition and results of operations.

The COVID-19 pandemic had a significant impact around the world, prompting governments and businesses to take unprecedented measures in response.

While it is not possible to predict the outbreak of any new infectious disease, the disruptions that may result from such an outbreak may have a material adverse effect on our business, financial condition and results of operations.

Demand for our products and services depends significantly on environmental laws and regulations related to emissions.

Uncertainty as to the future of such laws and regulations, changes to such laws and regulations or granting of extensions of compliance deadlines has had, and will likely continue to have, a material effect on our business.

A significant market driver for our existing products and services and those planned in the future are existing and expected environmental laws and regulations, particularly those addressing the reduction of mercury and other emissions from coal-fired electricity generating units and proposed regulation of PFAS and other pollutants.

If such laws and regulations are delayed, or are not enacted or are repealed or amended to be less strict, or include prolonged phase-in periods, or are not enforced, our business would be adversely affected by declining demand for such products and services.

For example, we expect consumables revenue to increase in the coming years as a result of EPA regulations of PFAS substances in drinking water finalized in April 2024.

If, as a result of the new U.S.

presidential administration or developments in administrative law jurisprudence, such laws and regulations are delayed, not enacted, repealed, amended to be less strict, or include prolonged phase-in periods, or are not enforced, our business would be adversely affected by declining demand for such products and services.

The implementation of environmental regulations regarding certain pollution control and permitting requirements has been delayed from time to time due to various lawsuits.

The uncertainty created by litigation and reconsideration of rule-making by the EPA has negatively impacted our business, results of operations and financial condition and will likely continue to do so.

In addition, the U.S.

Supreme Court's overturning of the Chevron Doctrine in 2024 may result in further litigation challenging the validity of current or proposed environmental regulations.

The uncertainty created by litigation and reconsideration of rule-making by the EPA or other regulatory agencies may negatively impact our business, results of operations and financial condition and will likely continue to do so.

To the extent federal, state and local legislation mandating that electric power generating companies serving a state or region purchase a minimum amount of power from renewable energy sources such as wind, hydroelectric, solar and geothermal, and such amount lessens demand for electricity from coal-fired plants, the demand for our products and services would likely decrease.

In January and February 2025, the new U.S.

presidential administration issued a series of executive orders ("EOs") that, among other things, (i) withdraws the U.S.

from the Paris Agreement, adopted at the 21st Conference of the Parties of the United Nations Framework Convention on Climate Change;

(ii) calls upon the EPA to submit a report on the continuing applicability of its endangerment finding for greenhouse gases under the Clean Air Act and issue guidance on the "social cost of carbon" to consider whether such metric should be eliminated, and (iii) directs federal executive departments and agencies to initiate a regulatory freeze for certain rules that have not taken effect, pending review by the newly appointed agency head.

Federal, state and international laws or regulations addressing emissions from coal-fired electricity generating units, climate change or other actions to limit emissions, including public opposition to new coal-fired electricity generating units, has caused and could continue to cause electricity generators to transition from coal to other fuel and power sources, such as natural gas, nuclear, wind, hydroelectric and solar.

2 unchanged sentences

In addition, public utility commissions may not allow utilities to charge consumers for, and pass on the cost of, emissions control technologies without federal or state mandates.

Our development operations at the Corbin Facility are subject to environmental permitting and regulations that can make operations expensive, or prohibit them altogether.

We use coal waste as a feedstock to produce Arq Powder, and the majority of coal waste sites targeted by us for development contain potential environmental liabilities.

Our development operations at our facilities are subject to environmental permitting and regulations that can make operations expensive, or prohibit them altogether.

For example, at our Corbin Facility, we use high-quality recovered bituminous coal fines as a feedstock to produce Arq Powder, and the majority of sites we target for development and extraction of such fines contain potential environmental liabilities.

Additionally, new CERCLA regulations and further regulations of PFAS substances may increase the costs of handling, transport, and disposal of PFAS-containing materials, including water treatment waste, such as spent GAC.

Therefore, we may be subject to potential risks and liabilities associated with pollution of the environment and the disposal of waste products that could occur as a result of these development and production activities.

7 unchanged sentences

Any future regulations regarding CO 2 emissions of coal reclamation and product manufacturing could also impact our future business.

Action by the EPA related to Mercury and Air Toxics Standards ("MATS") that decreases demand for our mercury removal products could have a material adverse effect on our business.

Our operating performance is largely dependent upon demand for mercury removal-related product, which is largely affected by the amount of coal-based power generation used in the U.S.

and the continued regulation of utilities under MATS.

Action by the EPA related to MATS that decreases demand for our mercury removal products could have a material adverse effect on our business.

Our operating performance is largely dependent upon demand for mercury removal-related products, which is largely affected by the amount of coal-based power generation used in the U.S.

and the continued regulation of utilities under the EPA's MATS Rule.

In May 2020, the EPA reconsidered and withdrew its 2016 "supplemental finding" associated with the cost benefit analysis of the MATS Rule.

4 unchanged sentences

On April 3, 2023, the EPA issued a proposed update to MATS that amongst other potential modifications, proposed a reduction to the mercury emission limits for lignite coal-fired EGUs.

Any final action taken by the EPA related to MATS that decreases demand for our products for mercury removal will have a negative effect on our financial results.

The timing and content of the proposed updates to the rule are unknown.

The failure of tariffs placed on U.S.

The EPA adopted the final rule on April 25, 2024.

However, there can be no assurance that the final rule will stand unchallenged, given the change in U.S.

presidential administration, related EOs and developments in administrative law jurisprudence.

Any action taken by the EPA related to MATS that decreases demand for our products for mercury removal will have a negative effect on our financial results.

The failure of tariffs or duties placed on U.S.

imports of Chinese AC to adequately address the impact of low-priced imports from China could have a material adverse effect on the competitiveness and financial performance of our business.

22 unchanged sentences

The price of natural gas has remained relatively competitive for power generation and the use of natural gas is perceived as having a lower environmental impact than burning coal.

Natural gas-fired plants are cheaper to construct, and permits to construct these plants

are easier to obtain, and ongoing costs of natural gas-fired plants associated with meeting environmental compliance are lower.

Natural gas-fired plants are cheaper to construct, and permits to construct these plants are easier to obtain, and ongoing costs of natural gas-fired plants associated with meeting environmental compliance are lower.

Possible advances in technologies and incentives, such as tax credits that enhance the economics of renewable energy sources, could make those sources more competitive than coal.

2 unchanged sentences

The loss of, or significant reduction in, revenue from our largest customers could adversely affect our business, financial condition or results of operations.

For 2023, we derived approximately 48% of our total consumable revenue from our five largest customers.

Our top three customers accounted for approximately 37% of our total consumable revenue for 2023.

If any of our five largest customers were to significantly reduce the quantities of consumables they purchase from us, it may adversely affect our business, financial condition and results of operations.

For 2024, we derived approximately 45% of our total revenue from our five largest customers.

Our top three customers accounted for approximately 36% of our total revenue for 2024.

While we attempt to mitigate such risk by entering into long-term contracts with minimum purchase obligations, if any of our five largest customers were to significantly reduce the quantities of consumables they purchase from us or cease purchasing from us altogether, it may adversely affect our business, financial condition and results of operations.

We depend on the services of our executives and other key employees, and the loss of one or more of these individuals could harm our business.

We believe that our success depends on retaining qualified executives and other key employees, especially in light of the specialized nature of our business.

These individuals have significant industry and Company-specific experience.

If we are unsuccessful at retaining or attracting qualified personnel, our business could be disrupted and our reputation could be harmed, adversely affecting our ability to achieve our business objectives.

Uncertain geopolitical conditions could adversely affect our business.

Uncertain geopolitical conditions, including the conflicts in the Middle East, the invasion of Ukraine, sanctions against Russia and other potential impacts on the world economy and currencies may cause disruptions in our business.

These include logistics delays or shortages in producing and shipping certain of our raw materials, increases in energy prices that could increase costs of certain of our raw materials, increases in transportation costs from overall higher gasoline prices and cyber-attacks targeted at U.S.

Uncertain geopolitical conditions, including in connection with the new U.S.

presidential administration, the conflicts in the Middle East, the invasion of Ukraine, sanctions against Russia, increased domestic and international tariffs and other potential impacts on the world economy and currencies may cause disruptions in our business.

power infrastructure that could impact demand for our products.

12 unchanged sentences

We may experience a shortage of reliable and adequate transport capacity and any material increase in transportation costs could have a material adverse effect on our results of operations.

We currently plan to transport our Arq Powder based filter cake produced at the Corbin Facility ("Wet Cake") to the Red River Plant by rail and truck.

We plan to transport our Arq Powder based feedstock produced at the Corbin Facility to the Red River Plant by rail and truck.

Additionally, we use rail and truck transport to deliver our products to our customers.

We may experience roadway or railway transportation disruptions that could have a material adverse effect on our operations or financial condition.

There can be no assurance that we will be able to secure sufficient truck or railway transport capacity to transport raw materials from the Corbin Facility to the Red River Plant.

There can be no assurance that we will be able to secure sufficient truck or railway transport capacity to transport raw materials from the Corbin Facility to the Red River Plant or our finished commercial products to our customers.

Further, in the event of railway transport shortages, there can be no assurance that road transportation will be able to satisfy the shortfall.

Potential transportation classifications of raw materials may require permitting, and special care and handling to transport such materials.

Potential transportation classifications of raw materials or spent product may require permitting, and special care and handling to transport such materials, including the transportation of spent PFAS filtration media.

In addition, any material increase in transportation costs could have a negative effect on the competitiveness of our future products, which may in turn have a material adverse effect on our business and results of operations.

2 unchanged sentences

Mining operations by their nature involve a high level of uncertainty and are often affected by risks and hazards outside of our control.

At the Five Forks Mine, the risks are primarily operational risks associated with the maintenance and operation of the heavy equipment required to dig and haul the lignite and risks relating to producing lower than expected lignite quality or recovery rates.

Additionally, the cost of inputs in our mining operation, most notably fuel cost, can create operational risks.

9 unchanged sentences

We may not be successful in achieving our growth expectations related to new products in our existing or new markets.

Our ability to bring new products to the market will depend on various factors, including, but not limited to, solving potential technical or manufacturing difficulties, competition and market acceptance, which may hinder the timeliness and cost to bring such products to production.

such products to production.

In addition, our anticipated production capacity for any new product, including our GAC products, may be limited if we experience material delays in commissioning or other areas as we ramp-up commercial production.

Further, there can be no assurance that costs incurred to develop new products will result in an increase in revenue.

8 unchanged sentences

Conversely, abnormally high loads on geographic electrical grids, resulting in increased demand of coal-fired power plants to produce electricity, could impact our ability to meet customer contracts and demands.

Failure to effectively monitor and respond to environmental, social or governance (“ESG”) matters, including our ability to set and meet reasonable goals related to climate change and sustainability efforts, may negatively affect our business and operations.

We are subject to risks related to environmental, social or governance (“ESG”) matters, including our ability to set and meet reasonable goals related to climate change and sustainability efforts, may negatively affect our business and operations.

Regulatory developments and stakeholder expectations relating to ESG matters are rapidly changing.

Concern over climate change has increased focus on the sustainability of practices and products in the markets we serve, and changes to laws and regulations regarding climate change mitigation may result in increased costs and disruption to operations.

Moreover, the standards by which ESG matters are measured are developing and evolving, and certain areas are subject to assumptions that could change over time.

If we are unable to recognize and respond to such developments, or if our existing practices and procedures are not adequate to meet new regulatory requirements, we may miss corporate opportunities, become subject to regulatory scrutiny or third-party claims, or incur costs to revise operations to meet new standards.

In 2024, we plan to publish our first corporate responsibility and sustainability tear sheet to address the impact of our operations on climate change and discuss material social, governance and environmental issues and our goals related to the same.

Any failure or perceived failure to achieve our sustainability goals or to act responsibly with respect to such matters may negatively impact our operations and/or financial condition.

Moreover, stakeholder expectations are not uniform, and both opponents and proponents of various ESG matters have increasingly engaged in a range of activism and action to advocate for their positions.

Navigating varying expectations of policymakers and other stakeholders has inherent costs, and any failure to successfully navigate such expectations may expose us to negative publicity, shareholder activism, and litigation or other engagement from stakeholders with opposing views, as well as the potential for civil investigations and enforcement by federal governmental authorities.

If we are unable to recognize and respond to such developments, or if our existing practices and procedures are not adequate to meet changing regulatory requirements, market standards or investor expectations, some of which may be conflicting, we may miss corporate opportunities, become subject to regulatory scrutiny, litigation or third-party claims, or incur costs to revise operations to meet new or revised standards.

Moreover, any harm to our reputation could impact employee engagement and retention and the willingness of customers and our partners to do business with us, which could have a material adverse effect on our business, results of operations and cash flows.

In 2024, we published our first corporate responsibility and sustainability tear sheet and inaugural ESG Report to address the impact of our operations on climate change and discuss material social, governance and environmental issues.

Any failure or perceived failure to act responsibly with respect to such matters may negatively impact our operations and/or financial condition.

While we monitor a broad range of ESG issues, there can be no assurance that we will manage such issues successfully, or that we will successfully meet the expectations of our stakeholders, consumers and employees.

22 unchanged sentences

Indemnification of third-party licensees of our technologies against intellectual property infringement claims concerning our licensed technology and our products could be financially significant to us.

may incur as a result of the alleged infringement of third-party rights caused by the use of our technologies and products.

We have agreed to indemnify licensees of our technologies (including Tinuum Group) and purchasers of our products, and we may enter into additional agreements with others under which we agree to indemnify and hold them harmless from losses they may incur as a result of the alleged infringement of third-party rights caused by the use of our technologies and products.

Infringement claims, which may be expensive and time-consuming to defend, could have a material adverse effect on our business, operating results and financial condition, even if we are successful in defending ourselves (and the indemnified parties) against them.

4 unchanged sentences

Our ability to utilize our tax assets to offset future income tax liability could be limited from an "ownership change."

In general, under IRC Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, ("IRC') a corporation that undergoes an "ownership change" is subject to limitations on its ability to utilize its pre-change net operating losses ("NOLs") and tax credits to offset future taxable income.

In general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, ("IRC') a corporation that undergoes an "ownership change" is subject to limitations on its ability to utilize its pre-change net operating losses ("NOLs") and tax credits to offset future taxable income.

In general, an ownership change occurs if the aggregate stock ownership of certain stockholders (generally 5% stockholders (as defined in IRC Section 382), applying certain look-through rules) increases by more than 50 percentage points during the testing period (generally a three-year lookback period).

8 unchanged sentences

To the extent that the Tax Assets do not otherwise become limited, we believe that we will have available a significant amount of Tax Assets in future years, and therefore the Tax Assets could be a substantial asset to us.

In connection with the Arq Acquisition and PIPE Investment, we issued additional shares of our common stock.

We performed an IRC Section 382 analysis as of the Acquisition Date and determined that we had not experienced an "ownership change" as of that date.

In connection with the Arq Acquisition and PIPE Investment, the May 2024 Private Placement and the September 2024 Offering, we issued additional shares of our common stock.

With respect to the Arq Acquisition and PIPE Investment, we performed an IRC Section 382 analysis as of the Acquisition Date and determined that we had not experienced an "ownership change" as of that date.

If we were to experience an "ownership change," it is possible that a significant portion of our Tax Assets could expire before we would be able to use them to offset future federal income tax liability.

1 unchanged sentence

We have not completed a formal IRC Section 382 analysis of Legacy Arq equity changes from its inception through the Acquisition Date, however, we believe that one or more "ownership changes" occurred during this time period as defined under Sections 382 and 383 and that a portion or all the Legacy Arq Tax Assets may subject to an annual limitation.

To mitigate the risk of an "ownership change," on May 5, 2017, our board of directors (the "Board") approved the Tax Asset Protection Plan (the "TAPP") and declared a dividend of one preferred share purchase right (each, a "Right") for each outstanding share of our common stock.

The TAPP was adopted in an effort to protect stockholder value by attempting to diminish the risk that our ability to use the ADES Tax Credits to reduce potential future federal income tax obligations may become substantially limited (the "Protection Plan").

During the years 2018-2023, 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.

To mitigate the risk of an "ownership change," on May 5, 2017, our Board approved the Tax Asset Protection Plan (the "TAPP") and declared a dividend of one preferred share purchase right (each, a "Right") for each outstanding share of our common stock.

The TAPP was adopted in an effort to protect stockholder value by attempting to diminish the risk that our ability to use the existing Tax Credits to reduce potential future federal income tax obligations may become substantially limited (the "Protection Plan").

During the years 2018 through 2024, 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.

The most recent TAPP Amendment was approved at our 2024 annual meeting of stockholders and extended the Final Expiration Date to the close of business on December 31, 2025.

2 unchanged sentences

The Board may, in its sole discretion, also exempt any person from triggering the Protection Plan.

In connection with the Arq Acquisition and PIPE Investment, we granted a waiver under the TAPP for certain shareholders to acquire more shares of our stock in the future, provided that such acquisition is not expected to, and does not, effect an "ownership change" under IRC Sections 382 and 383.

Despite the TAPP, our projections of what will effect an ownership change could be wrong, and with a waiver in place for certain shareholders, there is a risk that we experience an ownership change for purposes of IRC Sections 382 and 383 because of future acquisitions of our common stock.

In connection with the Arq Acquisition and PIPE Investment, the May 2024 Private Placement and the September 2024 Offering, we granted waivers under the TAPP for certain stockholders to allow such stockholders to acquire the shares offered in the respective offerings and acquire more shares of our stock in the future, provided that such acquisition is not expected to, and does not, effect an "ownership change" under IRC Sections 382 and 383.

Despite the TAPP, our projections of what will effect an ownership change could be wrong, and with a waiver in place for certain stockholders, there is a risk that we experience an ownership change for purposes of IRC Sections 382 and 383 because of future acquisitions of our common stock, which would limit the use of our existing Tax Assets.

Risks Related to Our Common Stock

6 unchanged sentences

• announcements of sales awards;

changes in supply and demand of components and materials;

• changes in supply and demand of our products and raw materials;

• adoption of new tax regulations or accounting standards affecting our industry;

2 unchanged sentences

• whether we are able and elect to pay cash dividends;

the continuation of repurchasing shares of common stock under stock repurchase programs;

• the continuation of repurchasing shares of common stock under our stock repurchase programs;

• the degree of trading liquidity in our common stock and general market conditions.

From January 1, 2024 to December 31, 2024, the closing price of our common stock ranged from $2.59 to $8.02 per share.

Stock price volatility over a given period may cause the average price at which we repurchase shares of our common stock to exceed the stock’s price at a given point in time.

Stock price volatility over a given period may cause the average price at which we repurchase shares of our common stock under our existing stock repurchase program to exceed the stock’s price at a given point in time.

We believe our stock price should reflect expectations of future growth and profitability.

18 unchanged sentences

We estimate our funding requirements in order to implement our growth plans.

If the actual funding required to implement growth initiatives should exceed funding estimates significantly, or our funds generated from our operations from such growth initiatives prove insufficient for such purposes, we may need to raise additional funds to meet these funding requirements.

These additional funds may be raised by issuing equity or debt securities or by borrowing from banks or other resources.

If the actual funding required to implement growth initiatives should exceed funding estimates significantly, or our funds generated from our operations from such growth

initiatives prove insufficient for such purposes, we may need to raise additional funds to meet these funding requirements.

For example, as previously disclosed, capital expenditures related to the GAC Facility in the fourth quarter of 2024 were above what was originally budgeted, bringing fiscal year 2024 capital expenditures to approximately $80 million.

Any additional funds required may be raised by issuing equity or debt securities or by borrowing from banks or other resources.

We cannot assure you that we will be able to obtain any additional financing on terms that are acceptable to us, or at all.

1 unchanged sentence

Such financing, even if obtained, may be accompanied by conditions that limit our ability to pay dividends or require us to seek lenders’ consent for payment of dividends, or restrict our ability to operate our business by requiring lender’s consent for certain corporate actions.

Further, if we raise additional funds through the issuance of new shares of our common stock, any shareholders who are unable or unwilling to participate in such an additional round of fund raising may suffer dilution of their investment.

Further, if we raise additional funds through the issuance of new shares of our common stock, any existing stockholders who are unable or unwilling to participate in such an additional round of fund raising may suffer dilution of their investment.

Certain Legacy Arq shareholders and participants in the PIPE Investment hold a significant portion of the voting power of our common stock.

3 unchanged sentences

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

What changed 10-K

Item 1A. Risk Factors