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Item 1A. Risk Factors

2026-03-10 compared with 2025-03-05 · 145 added, 183 removed, 210 unchanged (61% of the section changed)

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A statement to the effect that the occurrence of a specified event may have a negative impact on our business, results of operations, profitability, financial condition, or the like, is intended to reflect the fact that such an event, if it occurs, would be likely to have a negative impact on your investment in Arq, but should not imply the likelihood of the occurrence of such specified event.

These disclosures reflect the Company’s beliefs and opinions as to factors that could materially and adversely affect the Company and its securities in the future.

References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.

The order in which the following risk factors are presented is not intended as an indication of the relative seriousness of any given risk.

Risks Related to Our Business

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, 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.

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 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.

Our growth plans are dependent on the successful commercial production of our GAC products, and we may be unable to achieve our growth goals if we fail to identify a solution to the design flaws at our GAC Facility, or fail to meet any revised project costs and anticipated production ramp-up periods associated with any further capital upgrades to our GAC Facility at our Red River Plant that may be necessary to remedy such flaws.

Our Company’s growth is dependent on our ability to successfully ramp-up production at our GAC Facility to nameplate capacity and to produce on-specification GAC products at such volumes on a consistent and sustained basis.

Initial mechanical completion of construction of our GAC Facility occurred in January 2025, and on August 6, 2025, we announced that we had successfully commissioned the GAC Facility and produced our first commercial volumes of on-specification GAC product.

However, after initial production runs, in December 2025, it became clear that ramp-up to nameplate capacity could not be accomplished without further modifications to the existing systems because of design flaws in our GAC Facility, on a standalone basis as well as in combination with the inherent variability of Corbin Wetcake, which we planned to use to manufacture our GAC products.

As a result, we have paused GAC production, idled the Corbin Facility as a cost saving measure, and have launched an engineering and production process optimization review, which will include an evaluation of potential GAC Facility design modifications and production economics at different scales.

Additionally, we now expect to transition away from using Corbin Wetcake for the production of our GAC products to a bituminous proven performance coal feedstock, which we believe can more effectively overcome design constraints.

In addition to the foregoing issues experienced to date, any further construction and commissioning of potential modifications and ramp-up of production at our GAC Facility will be subject to a number of other uncertainties inherent in all new construction and manufacturing operations, such as delays in procurement or construction, shortages of materials or availability of qualified contractors, liquidity requirements for funding the modifications to our GAC Facility, ongoing compliance with regulatory requirements, environmental and operational licenses and approvals for additional GAC Facility expansion, supply chain constraints (including in the supply of bituminous coal), hiring, training and retention of qualified employees and the pace of commissioning and bringing production equipment and processes online with the capability to manufacture high-quality GAC products at nameplate capacity.

If we experience any further issues or delays in identifying a solution to the design issues at our GAC Facility, or meeting any revised projected timelines, cost estimates, or anticipated production capacities associated with potential GAC Facility modifications, our growth as a business, future prospects, operating results and financial condition will be harmed.

Moreover, if further issues arise or the project becomes cost prohibitive, it could affect our overall business plans for the GAC Facility, which could have a material impact on our business and growth potential.

Executing on our business plan to produce GAC products at nameplate capacity has required, and may continue to require, significant capital, which may be more than anticipated and require us to seek additional financing.

To date, we have experienced construction delays and cost overruns in connection with the construction, initial commissioning and initial productions at our GAC Facility, which has caused the project to exceed the originally anticipated budget.

Due to the issues experienced to date at our GAC Facility, we have undertaken an engineering and production process optimization review, and depending on the results of such review may be required to spend significant additional capital to construct and place into service certain potential modifications to our GAC Facility to address design flaws and reach nameplate capacity.

To date, we have utilized cash on hand, issued common stock in multiple equity offerings and entered into a Revolving Credit

Facility to meet these capital funding requirements.

However, depending on the results of our optimization review, we may require additional financing for any additional capital costs associated with any potential GAC Facility modifications needed to resume GAC production and reach nameplate capacity.

Such financing may come from cash on hand, additional debt financing, or additional equity raises.

However, there can be no assurance that we will be successful in obtaining the required additional financing or, if financing is available to us, such financing may not be on terms that are favorable to us.

The failure to maintain adequate liquidity to enable the Company to resume GAC production, reach nameplate capacity, and produce our GAC products consistently at those volumes on a go 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, 2025, we had approximately $19.0 million outstanding and $1.4 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.

Further, we hold an amortized term loan (the "CTB Loan") associated with our Corbin Facility with Community Trust Bank, Inc.

("CTB") in the principal amount of $10.0 million.

As of December 31, 2025, we had $8.4 million outstanding under the CTB Loan.

However, we may need to incur additional indebtedness.

Our Revolving Credit Facility contains a floating interest rate.

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

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

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

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

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

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• 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.

Our Revolving Credit Agreement and CTB Loan currently 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).

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See Note 6 "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 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 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.

There could be no future demand for Legacy Arq’s products.

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, regulatory requirements and gross domestic product growth, amongst others.

There could be no future demand for our products, including for our Corbin Wetcake.

We originally planned to use Corbin Wetcake to manufacture our GAC products.

However, due to previously disclosed design challenges in our GAC Facility, we may be required to redesign, reconstruct and/or update the front-end of our GAC Facility to use a bituminous proven performance coal feedstock for the manufacture of our GAC products.

This would eliminate our internal usage requirements for Corbin Wetcake produced at our Corbin Facility, which has been temporarily idled as a cost-savings measure.

With respect to our AC products, we believe current conditions are favorable as a result of excess demand versus supply (especially in the GAC market), but there can be no guarantee that this will continue.

Drivers of demand for our AC products include factors beyond our control such as population growth, regulatory requirements including federal emissions regulations such as the MATS Rules or state or municipal approval requirements specifically for our GAC products which we may not achieve in a timely manner or at all, and gross domestic product growth, among other factors.

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 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.

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.

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 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.

New AC supply is driven by new manufacturing sites being

built, and we have little visibility on what additional manufacturing capacity our competitors or other manufacturers may add in the future.

Given that we no longer expect to use Corbin Wetcake to manufacture our GAC products at this time, our business plan and commercial success is now more dependent on selling Corbin Wetcake as an additive or feedstock into other markets, such as components for asphalt and asphalt emulsions, or for use in the purified coal and synthetic graphite industries.

In addition, we are exploring uses for certain rare earth minerals and critical elements that can be isolated during the manufacturing process at our Corbin Facility for use in a variety of applications.

These applications are currently in various stages of proof-of-concept testing or preliminary customer testing.

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

Our success in utilizing the Corbin Wetcake produced at our Corbin Facility will depend on our ability to gain market acceptance and to correctly forecast demand in these new markets.

There can be no assurance that we will be able to successfully expand our business into these new markets, or that such expansion will prove to be beneficial.

If we are unable to find demand for our Corbin Wetcake, it could have a material adverse effect on our business, operating results and financial condition.

Disruptions or underutilization 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.

We also own and operate the Corbin Facility, the primary purpose of which was producing Corbin Wetcake for the manufacture of our GAC products, as well as for potential uses in other industries.

During 2025, in order to reduce operating costs and manage inventory we periodically idled the Corbin Facility and it has been idled since January 1, 2026 in order to save on operating costs as we work to address ramp-up issues with our GAC Facility discussed above.

Our 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 current business plan depends on the successful identification of solutions to the issues experienced to date at our GAC Facility, the eventual ramp-up to nameplate capacity at our GAC Facility, and our ability to secure adequate feedstock for GAC 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.

If we experience a disruption at these facilities, due to natural disasters, extreme weather, other unanticipated problems such as labor difficulties, pandemics (including the COVID-19 pandemic), equipment failure, cyberattacks or other cybersecurity incidents, capacity expansion difficulties or unscheduled maintenance, we would suffer a loss of inventory to supply customers, likely incur additional costs to deliver products to our customers, and disrupt the ordinary course of our business.

In addition, if contractual demand exceeds manufacturing capacity, we would jeopardize our ability to fulfill obligations under our contracts, which could, in turn, result in reduced sales, profitability, contract penalties or terminations and damage to our customer relationships and could have a material adverse effect on our business.

If we experience additional disruptions at our manufacturing facilities, due to natural disasters, extreme weather, other unanticipated problems such as labor difficulties, pandemics or epidemics, equipment failure, cyberattacks or other cybersecurity incidents, capacity expansion difficulties or unscheduled maintenance, we would suffer a loss of inventory to supply customers, likely incur additional costs to deliver products to our customers, and disrupt the ordinary course of our business.

In addition, if contractual demand exceeds manufacturing capacity, it could jeopardize our ability to fulfill obligations under our contracts, which could, in turn, result in reduced sales, profitability, contract penalties or terminations and damage to our customer relationships and could have a material adverse effect on our business.

While we have insured our facilities against damage or destruction as well as for losses from business interruptions, there can be no assurance that any insurance coverage will be sufficient to cover any such losses.

Further, a prolonged disruption in our operations at the Red River Plant due to downtime or having to meet customer requirements that exceed our maximum manufacturing capacity would require us to seek alternative customer supply arrangements, which may not be on attractive terms to us or could lead to delays in distribution of products to our customers, either of which could have a material adverse effect on our business, results of operations and financial condition.

There can be no assurance that the Arq Acquisition will result in additional value for our stockholders.

There can be no assurance that the Arq Acquisition will provide greater value to our stockholders than that reflected in the current price of our common stock.

As a result of the Arq Acquisition, perceived uncertainties related to our future may result in the loss of potential business opportunities and volatility in the market price of our common stock, which may make it more difficult for us to attract and retain qualified personnel and business partners.

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

Although we conducted extensive due diligence in connection with the Arq Acquisition, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis.

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 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 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:

• managing a larger company;

• coordinating geographically separate organizations;

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

• 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 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;

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

• consolidating corporate and administrative infrastructures and eliminating duplicative operations;

• coordinating sales, distribution and marketing efforts;

• maintaining research and development technology momentum and leading customer technical collaboration progress;

• significant changes to current market conditions that may adversely affect the business plan;

• integrating IT, communications and other systems;

• changes in applicable laws and regulations;

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

• 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.

Many of these factors are outside of our control and any one of them could result in increased costs, decreased revenue and diversion of management’s time and energy, which could materially impact our business, financial condition and results of operations.

In addition, even if the operations of Legacy Arq are integrated successfully, we may not realize the full benefits from the Arq Acquisition, including the synergies, cost savings or growth opportunities that we expect.

These benefits may not be achieved within the anticipated timeframe, or at all.

Specifically, the realization of the full benefits from the Arq Acquisition is dependent on our ability to construct expansions to existing facilities and to integrate Arq Powder on the projected timeline and within the projected budget.

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 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.

We may fail to realize the anticipated benefits and synergies expected from the Arq Acquisition.

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 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.

These anticipated benefits and actual operating, technological, strategic and revenue opportunities may not be realized fully or at all, or may take longer to realize than expected.

If we are not able to achieve these objectives and realize the anticipated benefits and synergies expected from the Arq Acquisition within the anticipated timeframe or at all, our business, financial condition and operating results may be adversely impacted.

Strategic relationships upon which we rely on are subject to change, which may diminish our ability to conduct our operations.

Our ability to successfully produce Legacy Arq’s products and expand their utilization as intended depends on developing and maintaining close working relationships with industry participants.

In addition, the dynamics of maintaining these relationships with strategic partners may require us to incur expenses or undertake activities we would not otherwise be inclined to do.

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.

For example, since pausing production at our GAC Facility, we have had to procure alternative GAC products for certain of our customers at our expense.

These disruptions and requirements to procure alternative products for our customers could have a material adverse effect on our business, results of operations and financial condition.

We have and may in the future be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price.

There can be no assurance that issues or market conditions will not arise that may force us to write down or write off assets, restructure operations, or incur impairment or other charges that could result in losses and harm our financial condition.

Unexpected risks may arise, and previously known risks may materialize in a manner not consistent with our preliminary risk analysis.

We assess long-lived assets for impairment annually or more frequently if events or circumstances occur that indicate it is more likely than not that the carrying value of the long-lived assets exceeds their fair value.

To the extent the value of any

of our long-lived assets become impaired or are further impaired, we may be required to record non-cash impairment charges that could have a material adverse impact on our financial condition, results of operations and stock price.

As of December 31, 2025, we recorded an impairment on certain of our long-lived Corbin Facility assets and patents associated with the manufacturing process for producing Corbin Wetcake, which resulted in the Company recognizing an impairment charge of $44.8 million for the fiscal year ended December 31, 2025.

This impairment was primarily attributable to our decision to idle the Corbin Facility and cease the use of Corbin Wetcake as feedstock in the manufacturing of our GAC products.

See Note 2 - "Impairment" to the Consolidated Financial Statements included in Item 8 of this Report for further information.

We may not realize the anticipated benefits of acquisitions, joint ventures, and divestitures, or these benefits may take longer to realize than expected.

From time to time, we may make strategic acquisitions and divestitures and participate in joint ventures, such as the Arq Acquisition.

Acquisitions and joint ventures may involve significant challenges and risks, including that the acquisitions or joint ventures do not advance our business strategy or fail to produce satisfactory returns on investment.

Other risks include difficulties integrating acquisitions with our operations, applying internal control processes to these acquisitions (including those related to cybersecurity), assimilating new capabilities to meet our business needs, combining business cultures, failing to realize the anticipated benefits of acquisitions or joint ventures, or realized benefits being significantly delayed, including because the technologies or products acquired may not be complementary or compatible with our business strategy or product portfolio, may not broaden our market position, product portfolio or footprint, or enhance our ability to deliver value to our customers, and due diligence evaluations of potential transactions not identifying all of the business, legal, compliance, and financial risks to accurately estimate the impact of a particular acquisition or joint venture, including potential exposure to regulatory sanctions resulting from an acquisition target’s previous activities or costs associated with any quality issues with an acquisition target’s products or services.

For example, we planned to use Corbin Wetcake produced at our Corbin Facility in the production of our GAC products.

However, while the manufacturing technology has been extensively tested at scale, we encountered inherent variability of Corbin Wetcake during continuous operations that would require modifications of our manufacturing equipment and processes.

Due to these issues and other design issues, we now expect to transition away from using Corbin Wetcake to bituminous proven performance coal feedstock to produce our GAC products, which we believe can more effectively overcome design constraints.

As discussed elsewhere in this Report, these changes have negatively impacted our GAC production and will delay our ability to increase capacity.

Failure to establish strategic relationships in new industries may diminish our ability to conduct operations at our Corbin Facility.

Our ability to successfully utilize Corbin Wetcake depends on developing and maintaining close working relationships within new industries, including in the asphalt, asphalt emulsion, and synthetic graphite industries, among others.

In addition, the dynamics of creating new and maintaining these relationships with strategic partners may require us to incur expenses or undertake activities we would not otherwise be inclined to do.

If these strategic relationships are not established or maintained, we may be unable to utilize the Corbin Wetcake produced at our Corbin Facility, which could negatively impact our business and results of operations.

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.

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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.

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

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.

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Nevertheless, if any such obligations are triggered in the future, any substantial payments made under such guarantees could have a material adverse effect on our financial condition, results of operations and cash flows.

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 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.

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

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.

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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.

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.

However, in May 2025, the EPA announced that, along with extending the compliance deadline from April 2029 to April 2031, it intends to narrow the final rule to apply to only PFOA and PFOS, eliminating the other six PFAS substances from the final rule.

If, as a result of changes in agency priorities or developments in administrative law jurisprudence, such laws and regulations are delayed further, 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.

Federal and state 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.

The potential financial impact on us of future laws or regulations or public pressure will depend upon the degree to which electricity generators diminish their reliance on coal as a fuel source.

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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.

For example, prior to idling our Corbin Facility, the majority of sites we targeted for development and extraction of coal 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.

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Further, we cannot reasonably predict the impact that any such future laws or regulations or public opposition may have on our results of operations, financial condition or cash flows.

With the Arq Acquisition, we are subject to additional significant governmental regulations, which may negatively impact our operations and costs of conducting business.

Business – Legislation and Environmental Regulations” for further information.

Our Corbin Facility is subject to additional significant governmental regulations, which may negatively impact our operations and costs of conducting business.

The Corbin Facility's operations are governed by extensive laws and regulations, including:

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• environmental standards and regulations related to waste disposal, toxic substances, land use and environmental protection, including environmental protection regulations related to water and air.

Existing and possible future laws, regulations and permits governing operations and activities of energy waste companies, or more stringent implementation, could have a material adverse impact on our business and cause increases in capital expenditures or require abandonment or delays in our products.

During 2025, in order to reduce operating costs and manage inventory we periodically idled the Corbin Facility.

The Corbin Facility has been idled since January 1, 2026, as we work to address ramp-up issues with our GAC Facility discussed elsewhere in this Report.

However, even when idled, the Corbin Facility is subject to such laws and regulations.

Existing and possible

future laws, regulations and permits governing operations and activities of energy waste companies, or more stringent implementation, could have a material adverse impact on our business and cause increases in capital expenditures or require abandonment or delays in our products.

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 MATS that decreases demand for our mercury removal products could have a material adverse effect on our business.

Any action by the EPA related to the MATS Rule 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.

In this action, the EPA found that it was not "appropriate and necessary" to regulate Hazardous Air Pollutants ("HAP") emissions from coal- and oil-fired Electric Utility Steam Generating Units ("EGUs").

However, the EPA expressly stated that the reconsideration neither removed coal- and oil-fired EGUs from the list of sources that must comply with the MATS Rule, nor rescinded the MATS Rule, which has remained continuously in effect.

On February 9, 2022, the EPA published a new proposed rule revoking the May 2020 withdrawal of the 2016 supplemental finding and affirming that it is "appropriate and necessary" to regulate HAP emissions from coal- and oil-fired EGUs.

On February 15, 2023, the EPA issued a final rule revoking the May 2020 reconsideration and affirming that it is "appropriate and necessary" to regulate HAP emissions from coal- and oil-fired EGUs.

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.

and the continued regulation of Hazardous Air Pollutants ("HAP") emissions from coal- and oil-fired Electric Utility Steam Generating Units ("EGUs") and other utilities under the EPA's MATS Rule.

On February 15, 2023, the EPA issued a final rule re-affirming that it is "appropriate and necessary" to regulate HAP emissions from coal- and oil-fired EGUs.

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

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.

However, on June 17, 2025, the EPA proposed to repeal three provisions of the 2024 amendment to the MATS Rule, including loosening requirements for particulate matter and mercury emissions to pre-2024 levels (including for lignite coal-fired EGUs), as well as provisions relating to emissions monitoring systems.

On February 19, 2026, the EPA followed through with its proposal and finalized the repeal of the 2024 MATS amendment, reverting required compliance standards back to the existing standards set in 2012.

This, and any other action taken by the EPA related to MATS that decreases demand for our products for mercury removal may have a negative effect on our financial results.

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

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Department of Commerce.

To the extent the anti-dumping margins do not adequately address the degree to which imports are unfairly traded, the anti-dumping order may be less effective in reducing the volume of these low-priced AC imports in the U.S., which could negatively affect demand and/or pricing for our products.

In addition, China and other countries have been the subject of further tariffs by the current presidential administration.

To the extent the anti-dumping margins and new tariffs do not adequately address the degree to which imports are unfairly traded, the anti-dumping order and new tariffs may be less effective in reducing the volume of these low-priced AC imports in the U.S., which could negatively affect demand and/or pricing for our products.

The market for consumables and other products that provide pollutant reduction is highly competitive, and some of our competitors are significantly larger and more established than we are, which could adversely impede our growth opportunities and financial results.

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In addition, market competition could negatively impact our ability to maintain or raise prices or maintain or grow our market position.

Additionally, our competitors are significantly larger and/or more established companies in the market for consumables and other products that provide mercury emissions reduction, water treatment and air purification.

Additionally, some of our competitors are significantly larger and/or more established companies in the overall market for consumables and other products that provide mercury emissions reduction, water treatment and air purification.

Reduction of coal consumption by North American electricity power generators could result in less demand for our products and services.

If utilities significantly reduce the number of coal-fired electricity generating units or the amount of coal burned without a corresponding increase in the services required at the remaining units, this could reduce our revenue and materially and adversely affect our business, financial condition and results of operations.

The amount of coal consumed for North American electricity power generation is affected by, among other things, (1) the location, availability, quality and price of alternative energy sources for power generation, such as natural gas, fuel oil, nuclear, hydroelectric, wind, biomass and solar power;

hydroelectric, wind, biomass and solar power;

and (2) technological developments, including those related to competing alternative energy sources.

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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.

Any reduction in the amount of coal consumed by domestic electricity power generators, whether as a result of new power plants utilizing alternative energy sources or as a result of technological advances, could reduce the demand for our current products and services, thereby reducing our revenue and materially and adversely affecting our business and results of operations.

Further 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.

Any reduction in the amount of coal consumed by North American electricity power generators, whether as a result of new power plants utilizing alternative energy sources or as a result of technological advances, could reduce the demand for our current products and services, thereby reducing our revenue and materially and adversely affecting our business and results of operations.

Additionally, long-term changes in environmental regulation that threaten or preclude the use of coal or other fossil fuels as a primary fuel source for electricity production may result in the reduction or closure of a significant number of coal-fired electric generating units, and may adversely affect our business, financial condition and results of operations.

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Uncertain geopolitical conditions could adversely affect our business.

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.

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, higher prices due to tariffs, and cyber-attacks targeted at U.S.

power infrastructure that could impact demand for our products.

Uncertain geopolitical conditions, including in connection with uncertainty and changes in domestic and international U.S.

policy, as well as with respect to current international conflicts, sanction regimes, multinational institutions, increased frequency of cyber-attacks, trade policies (including tariffs and trade sanctions) and other potential impacts on the world economy and currencies may cause disruptions in our business.

These disruptions may result in logistics delays or shortages in producing, shipping, and receiving certain of our raw materials, increases in energy prices, increases in costs of certain of our raw materials, increases in transportation costs from overall higher fuel prices, higher prices due to tariffs, and other changes that could impact demand for our products.

Disruptions of supply chains may affect volatility in price and availability of raw materials.

The continuation of geopolitical conflicts in 2024 has continued to disrupt supply chains, resulting in cost increases for commodities, goods and services in many parts of the world.

The continuation of geopolitical conflicts in 2025 has continued to disrupt some supply chains, resulting in cost increases for commodities, goods and services in many parts of the world.

Disruptions of supply chains and higher costs may continue into 2026 and beyond.

The economic effects from these events over longer terms could negatively impact our business and results of operations.

The manufacturing and processing of our consumable products requires significant amounts of raw materials.

The manufacturing and processing of our consumable products requires significant amounts of raw materials, including bituminous proven performance coal feedstocks for our GAC products.

The price and availability of those raw materials can be impacted by factors beyond our control.

Our consumable products, exclusive of lignite coal, use a variety of additives.

Significant movements or volatility in the costs of additives could have an adverse effect on our working capital or results of operations.

Additionally, our consumable products, exclusive of lignite coal, use a variety of additives.

Significant movements or volatility in the costs of these raw materials or additives could have an adverse effect on our working capital or results of operations.

Additionally, we purchase certain raw materials from selected key suppliers.

While we have inventory of such raw materials, if any of these suppliers are unable to meet their obligations with us on a timely basis or at an acceptable price, we may be forced to incur higher costs to obtain the necessary raw materials or be unable to obtain the materials.

While we have inventory of such raw materials, if any of these suppliers are unable to meet their obligations with us on a timely basis

or at an acceptable price, we may be forced to incur higher costs to obtain the necessary raw materials or be unable to obtain the materials.

We may attempt to offset the increase in raw material costs or challenges in the supply of raw materials with price increases allowed in our contractual relationships, or through cost reduction efforts.

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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 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 use rail and truck transport to deliver our products to our customers and to receive the raw materials needed to manufacture our products at our Red River Plant.

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 or our finished commercial products to our customers.

There can be no assurance that we will be able to secure sufficient truck or railway transport capacity to transport raw materials 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.

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We own the Five Forks Mine, a lignite coal mine located in Louisiana, which is operated for us by a third party.

Our Corbin Facility is also a mining operation.

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 unfavorable recovery rates.

At our Corbin Facility, in addition to traditional mining operations risks, we face additional risks pertaining to reclamation requirements and related bonding.

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

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These include requirements to obtain and comply with various environmental-related permits for constructing any new facilities (or modifications to existing facilities) and operating all of our existing facilities.

Costs of complying with regulations could increase, as concerns related to greenhouse gases and climate change continue to emerge.

Our mining operations are also subject to permitting requirements.

Costs of complying with regulations could increase, as concerns related to greenhouse gas emissions, climate change, and land use, among other things, continue to develop and impact the regulatory regime applicable to our operations.

The enactment of new environmental laws and regulations and/or the more aggressive interpretation of existing requirements could require us to incur significant costs for compliance or capital improvements or limit our current or planned operations, any of which could have a material adverse effect on our earnings or cash flow.

We may attempt to offset the effects of these compliance costs through price increases, productivity improvements and cost reduction efforts.

We may attempt to offset the effects of these compliance costs through price increases, productivity improvements, changed operations or processes, and cost reduction efforts.

Our success in offsetting any such increased regulatory costs is largely influenced by competitive and economic conditions and could vary significantly depending on the market segment served.

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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.

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.

In addition, our anticipated production capacity for any new product, including our GAC products, may be limited if we continue to experience further material delays in identifying solutions to the design issues in our GAC

Facility and the eventual ramp-up to nameplate capacity at our GAC Facility, such as those we have experienced to date.

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

These factors or delays could affect our future operating results.

These factors or delays could affect our future financial condition and operating results.

Additionally, if we are unable to secure customer interest in Corbin Wetcake as an additive into other markets, such as a component for asphalt or for use in the purified coal and synthetic graphite industries or are unable to secure uses for certain rare earth minerals and critical elements that can be isolated during the manufacturing process at our Corbin Facility, our business prospects would be harmed.

Natural disasters or extreme weather could affect our operations and financial results.

We operate facilities, including the Red River Plant, Five Forks Mine and the Corbin Facility, that are exposed to natural hazards, such as floods, windstorms and hurricanes.

We operate facilities, including the Red River Plant, Five Forks Mine and the Corbin Facility, that are exposed to natural hazards, such as floods, freezes, windstorms and hurricanes.

Extreme weather events present physical risks that may become more frequent as a result of factors related to climate change.

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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.

Regulatory developments and stakeholder expectations relating to ESG matters are rapidly changing and are largely dependent on the stakeholder, customer, market, and/or government instrumentality in question.

For certain stakeholders, customers, markets and government instrumentalities, concern over climate change has increased focus on the sustainability of practices and products in some of the markets we serve or may potentially serve, and changes to laws and regulations regarding climate change mitigation may result in increased costs and disruption to operations.

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.

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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.

We publish an annual Sustainability Report to address the impact of our operations on and to 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.

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Experienced hackers, cybercriminals and perpetrators of threats may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns.

These perpetrators of cyberattacks also may be able to develop and deploy viruses, worms, malware and other malicious software programs that attack our information and networks or otherwise exploit any security vulnerabilities of our information and networks.

These perpetrators of

cyberattacks also may be able to develop and deploy viruses, worms, malware and other malicious software programs that attack our information and networks or otherwise exploit any security vulnerabilities of our information and networks.

Techniques used to obtain unauthorized access to or sabotage systems change frequently and often are not recognized until after they are launched against a target, and we may be unable to anticipate these techniques or to implement adequate preventative measures.

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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.

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.

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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).

An entity that experiences an ownership change generally is subject to an annual limitation on its pre-ownership change tax asset carryforwards.

An entity that experiences an

ownership change generally is subject to an annual limitation on its pre-ownership change tax asset carryforwards.

The annual limitation is increased each year to the extent that there is an unused limitation in a prior year.

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The Legacy Arq Tax Assets are comprised of NOL carryforwards, of which $8.8 million were incurred in the U.S.

Prior to the Arq Acquisition, Legacy Arq completed numerous equity offerings that resulted in ownership changes.

We have not completed a formal IRC Section 382 analysis of Legacy Arq's equity changes from Legacy Arq's inception through the date of the Arq Acquisition.

We believe that one or more "ownership changes" occurred prior to the date of the Arq Acquisition as defined under Sections 382 and 383 and that a portion or all of the Legacy Arq Tax Assets may be subject to an annual limitation.

Further, as of December 31, 2025, we had approximately $86.1 million of general business credit carryforwards (the "Tax Credits"), totaling approximately 73% of consolidated tax assets.

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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, 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.

Prior to the Acquisition Date, Legacy Arq completed numerous equity offerings that resulted in ownership changes.

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 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.

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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, 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.

In connection with various recent equity issuances, 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.

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The market price of our common stock may continue to be affected by numerous factors, including:

• market perception of the Arq Acquisition;

• the market’s perception of our ability to execute on our business plan with respect to our GAC products, GAC Facility and Corbin Wetcake;

• actual or anticipated fluctuations in our operating results and financial condition;

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From January 1, 2025 to December 31, 2025, the closing price of our common stock ranged from $3.20 to $7.73 per share.

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.

Future dividends are subject to declaration by the Board, and under our current stock repurchase program, we are not obligated to acquire any specific number of shares.

If we fail to meet expectations related to future growth, profitability, dividends, stock repurchases or other market expectations, our stock price may decline significantly, which could have a material adverse impact on our ability to obtain additional capital and erode investor confidence, which could further reduce the liquidity of our common stock.

We do not expect to repurchase additional shares of our common stock in the near term.

Our certificate of incorporation and bylaws contain provisions that may delay or prevent an otherwise beneficial takeover attempt of us.

We believe our stock price should reflect both current business operations as well as expectations of future growth and profitability.

Future dividends are subject to declaration by the Board, which we are not obligated to declare.

If we fail to meet expectations related to future growth, profitability, dividends, or other market expectations, our stock price may decline significantly, which could have a material adverse impact on our ability to obtain additional capital and erode investor confidence, which could further reduce the liquidity of our common stock.

On August 12, 2025, our Board terminated our existing stock repurchase plan.

We do not expect to adopt a stock repurchase program or declare a dividend in the near term.

Our certificate of incorporation and bylaws contain provisions that may delay or prevent an otherwise beneficial takeover attempt of our Company.

Certain provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders.

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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.

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.

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 were above what was originally budgeted, bringing fiscal year 2025 capital expenditures to approximately $9.1 million.

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

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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.

Certain Legacy Arq shareholders and participants in the PIPE Investment hold a significant percentage of our outstanding common stock, and such persons, acting individually or together, could have the ability to exert a substantial influence on actions requiring a stockholder vote.

Certain members of our management team and Board hold a significant portion of the voting power of our common stock.

Certain members of our management team and Board hold a significant percentage of our outstanding common stock, and such persons, acting individually or together, could have the ability to exert a substantial influence on actions requiring a stockholder vote.

The influence of these significant stockholders may be used in a manner that other stockholders may not support.

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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