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Item 9A. Controls and Procedures

2025-03-05 compared with 2024-03-12 · 75 added, 34 removed, 199 unchanged (35% of the section changed)

18 unchanged sentences

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.

We incorporated 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 .

Our independent registered public accounting firm, Moss Adams LLP, has issued an attestation report on our internal control over financial reporting as of December 31, 2024.

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.

We acquired Legacy Arq during the first quarter of our fiscal year ended December 31, 2023.

As such, Legacy Arq's control environment and processes are included in the scope of our assessment of our internal controls over financial reporting beginning in the first quarter of our fiscal year ended December 31, 2024.

Other than as discussed above, during the three months ended December 31, 2024 there were no changes to our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

The Shareholders and the Board of Directors

Opinion on Internal Control over Financial Reporting

We have audited Arq, Inc.

(and subsidiaries)’s (the Company) internal control over financial reporting as of December 31, 2024, 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, 2024, 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 Arq, Inc.

(and subsidiaries) as of December 31, 2024 and 2023, with the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”) and our report dated March 5, 2025, 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 5, 2025

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

Other Information

During the three months ended December 31, 2024, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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.

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, 2024 under the headings "Corporate Governance", "Executive Compensation", "Delinquent Section 16(a) Reports", "Company Policies Relating to Executive Compensation- Insider Trading Policy " and "Information about our Executive Officers".

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.

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.

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, 2024 under the heading "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters", with the exception of the following information.

Securities Authorized for Issuance under Equity Compensation Plans

5 unchanged sentences

Equity compensation plans approved by security holders (1)

$ — 1,906,407

Equity compensation plans not approved by security holders 1,400,000 $ 3.00 (3)

Total 1,877,045 1,906,407

(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.

(1) Includes securities registered for issuance under the 2017 Omnibus Incentive Plan, 2022 Omnibus Incentive Plan and 2024 Omnibus Incentive Plan.

(2) Represent shares 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.

Excluding RSUs from this calculation, the weighted-average exercise price of outstanding non-qualified stock options was $3.00 at December 31, 2024.

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.

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.

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, 2024 under the headings "Independent Registered Public Accounting Firm" and "Audit Committee Approval of Services".

Exhibits and Financial Statement Schedules

16 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

3.5 Amended and Restated Bylaws of Arq, Inc., as amended

001-37822 3.1 May 8, 2024

4.1 Form of Specimen Common Stock Certificate

14 unchanged sentences

8-K 001-37822 4.7 April 14, 2023

4.9 Form of Warrant

8-K 001-37822 4.1 February 1, 2023

4.9 Se venth Amendment to Tax Asse t Protection Plan dated as of April 15, 2024, by and between the Company and Computershare Trust Company, N.

as rights agent

8-K 001-37822 4.1 April 16, 2024

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

001-37822 4.10

March 12, 2024

10.1 Advanced Emissions Solutions, Inc.

4 unchanged sentences

8-K 001-37822 10.1 May 17, 2022

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

Description Form File No.

1 unchanged sentence

Exhibit Filing Date

10.3 Form of Restricted Stock Award Agreement under the 2022 Omnibus Incentive Pla n **

10.1 March 12, 2024

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

10.1 March 12, 2024

10.5 Arq, Inc.

202 4 Omnibus Incentive P lan

001-37822 10.1 June 13, 2024

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.

44 unchanged sentences

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

10.22 Amendment to Master Agreement for Supply of Furnace Products, by and between Arq Solutions (Red River), LLC and Norit Americas, Inc., dated as of February 8, 2024 ***, †

8-K 001-37822 10.1 February 13, 2024

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

1 unchanged sentence

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

10.24 Loan Agreement among Community Trust Bank, Inc.;

6 unchanged sentences

8-K 001-37822 10.1 June 6, 2023

10.26 Securities Purchase Agreement dated as of May 15, 2024, by and among the Company and the Purchasers named therein.

8-K 001-37822 10.1 May 16, 2024

10.27 Registration Rights Agreement dated as of May 15, 2024, by and among the Company and the Purchasers named therein.

8-K 001-37822 10.2 May 16, 2024

10.28 Underwriting Agreement, dated September 20, 2024, by and between the Company and Canaccord Genuity LLC as representative of the underwriters named therein.

8-K 001-37822 1.1 September 20, 2024

10.29 Credit, Security and Guaranty Agreement, dated as of December 27, 2024, by and among Arq, Inc., certain subsidiaries of Arq, Inc., MidCap Funding IV Trust as agent, and the lenders from time to time party thereto.†

8-K 001-37822 10.1 January 2, 2025

10.30 Employment Agreement by and between Robert E.

1 unchanged sentence

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.

3 unchanged sentences

8-K 001-37822 10.1 November 8, 2023

E mployment Agreement by and between Clay S mith and Advanced E missions Solutions, I nc.

, dated April 26, 2024 .

19 A rq Insider Trading Policy *

21.1 Subsidiaries of Arq, Inc.

7 unchanged sentences

95 Mine Safety Disclosure Exhibit *

97 Clawback Policy

001-37822 97 March 12, 2024

Description Form File No.

1 unchanged sentence

Exhibit Filing Date

97 Clawback Policy *

101 The following financial statements, formatted in XBRL:

101 The following financial statements, formatted in Inline XBRL:

(i) Consolidated Balance Sheets as of December 31, 2024 and 2023, (ii) Consolidated Statements of Operations for the Years ended December 31, 2024 and 2023, (iii) Consolidated Statements of Changes in Stockholders’ Equity for the Years ended December 31, 2024 and 2023, (iv) Consolidated Statements of Cash Flows for the Years ended December 31, 2024 and 2023;

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.

* – Filed herewith.

104 The cover page from Arq, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2024, formatted in Inline XBRL (included as Exhibit 101)*

* – Filed or furnished herewith.

** – Management contract or compensatory plan or arrangement.

35 unchanged sentences

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

What changed 10-K

Item 9A. Controls and Procedures