What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-10 compared with 2025-03-05 · 254 added, 320 removed, 775 unchanged (43% of the section changed)

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Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm (Moss Adam LLP, Denver, Colorado, PCAOB ID:

Report of Independent Registered Public Accounting Firm (Baker Tilly US, LLP, Denver, Colorado, PCAOB ID:

Consolidated Balance Sheets as of December 31, 2025 and 2024

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Report of Independent Registered Public Accounting Firm

The Shareholders and the Board of Directors

To the Shareholders and the Board of Directors

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Arq, Inc.

(and subsidiaries) (the Company) as of December 31, 2024 and 2023, 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 subsidiaries) (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

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Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements;

and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ Moss Adams LLP

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of Impairment of Long-lived Assets

Critical Audit Matter Description

As described in Note 2 to the consolidated financial statements, as part of its periodic review for indicators of impairment in long-lived assets, the Company assessed its long-lived assets located at the Corbin Facility (“Corbin Asset Group”) and the GAC Facility assets located at the Red River Plant (“GAC Asset Group”) for potential impairment.

The Company concluded that indicators for impairment were evident with both of the asset groups, and as of December 31, 2025, completed recoverability tests based on an undiscounted cash flow analysis for both asset groups.

The Company determined for the Corbin Asset Group that the estimated undiscounted cashflows were less than its carrying value and the Corbin Asset Group was impaired.

The Company further determined that the GAC Asset Group was not impaired as the estimated undiscounted cashflows exceeded its carrying value.

As such, the Company completed an assessment of the Corbin Asset Group’s fair value, resulting in a $38.1 million impairment of net tangible assets and a $6.6 million impairment of intangible assets.

We identified the assessment of whether there were indicators of impairment and completion of the recoverability tests based on an undiscounted cash flow analysis for both the Corbin Asset Group and the GAC Asset Group, as well as the measurement of the impairment of the Corbin Asset Group, as a critical audit matter.

Auditing the Company’s impairment assessment of long-lived assets is especially challenging due to the high degree of auditor judgment in evaluating management’s indicators of potential impairment for certain asset groups and determining the future cash flows and estimated fair values, where applicable, for certain asset groups where indicators of impairment were determined to be present, including the involvement of fair value specialists.

How We Addressed the Matter in Our Audit

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included evaluating the design and testing the operating effectiveness of internal controls related to the Company’s impairment analysis.

Our audit procedures related to the matter included the following, among others:

Evaluating the significant judgments used by management in determining whether indicators of impairment were present, including searching for evidence contrary to such judgments.

Testing management’s process for determining the projected cash flows used in the recoverability test for each of the asset groups, which included evaluating the reasonableness of the underlying assumptions, including the term of the cash flows and forecasted growth rates, as well as testing the mathematical accuracy of the calculation.

With the assistance of fair value specialists, testing the estimated fair value of the Corbin Asset Group, including evaluating the appropriateness of the models used in the valuation, the reasonableness of certain significant assumptions used in the calculations, such as the percentage of physical deterioration of assets, the percentage of estimated obsolescence, and the sales comparison analysis, as well as testing the mathematical accuracy of the calculations.

Testing the carrying value of other assets included in the Corbin Asset Group that were determined to be fully impaired.

/s/ Baker Tilly US, LLP

Denver, Colorado

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Depreciation, amortization, depletion and accretion 11,747 8,594

Loss (gain) on sale of assets 64 ( 2,731 )

Impairment of long-lived assets 44,756 —

Loss on sale of assets 96 64

Total operating expenses 86,490 41,403

Operating loss ( 52,958 ) ( 1,959 )

Other (expense) income:

Earnings from equity method investments 127 1,623

Other income (expense):

Earnings from equity method investment 1,951 127

Interest expense ( 2,449 ) ( 3,257 )

Loss on extinguishment of debt — ( 1,422 )

Other 1,238 2,630

Total other (expense) income ( 3,314 ) 1,239

Other income 858 1,238

Total other income (expense) 360 ( 3,314 )

Loss before income taxes ( 52,598 ) ( 5,273 )

Income tax (benefit) expense ( 164 ) 153

Income tax expense (benefit) 12 ( 164 )

Net loss $ ( 52,610 ) $ ( 5,109 )

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Balances, January 1, 2024 37,791,084 $ 38 ( 4,618,146 ) $ ( 47,692 ) $ 154,511 $ 71,543 $ 178,400

Issuance of common stock upon conversion of preferred stock 5,362,926 5 — — 18,921 — 18,926

Issuance of common stock in public offering, net of offering costs 5,485,500 5 — — 26,649 — 26,654

Issuance of common stock related to private placement transaction, net of offering costs 2,142,858 2 — — 14,949 — 14,951

Issuance of common stock pursuant to Arq Acquisition, net of offering costs 3,814,864 4 — — 12,433 — 12,437

Stock-based compensation 616,684 1 — — 2,714 — 2,715

Issuance of common stock to related party 422,221 1 — — 799 — 800

Exercise of warrant, net 324,955 — — — — — —

Repurchase of common shares to satisfy minimum tax withholdings ( 143,372 ) — — — ( 1,135 ) — ( 1,135 )

Issuance of warrant — — — — 826 — 826

Preferred stock dividends declared on redeemable preferred stock — — — — — ( 157 ) ( 157 )

Net loss — — — — — ( 5,109 ) ( 5,109 )

Balances, December 31, 2024 46,639,930 $ 47 ( 4,618,146 ) $ ( 47,692 ) $ 198,487 $ 66,434 $ 217,276

Issuance of common stock in public offering, net of offering costs 5,485,500 5 — — 26,649 — 26,654

Issuance of common stock related to private placement transaction, net of offering costs 2,142,858 2 — — 14,949 — 14,951

Stock-based compensation 712,691 — — — 3,363 — 3,363

Issuance of common stock to related party 422,221 1 — — 799 — 800

Exercise of warrant, net 324,955 — — — — — —

Repurchase of common shares to satisfy minimum tax withholdings ( 4,227 ) — — — ( 66 ) — ( 66 )

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Net loss $ ( 52,610 ) $ ( 5,109 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Impairment of long-lived assets 44,756 —

Depreciation, amortization, depletion and accretion 11,747 8,594

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Operating lease expense 2,432 2,004

Loss from extinguishment of debt 1,422 —

Amortization of debt discount and debt issuance costs 359 601

Loss (gain) on sale of assets 64 ( 2,731 )

Earnings from equity method investments ( 127 ) ( 1,623 )

Loss on sale of long-term assets, net 96 64

Loss from extinguishment of debt — 1,422

Earnings from equity method investment ( 1,951 ) ( 127 )

Other non-cash items, net ( 678 ) 37

Changes in operating assets and liabilities:

Receivables and related party receivables 1,316 ( 2,264 )

Receivables ( 104 ) 1,316

Prepaid expenses and other assets ( 2,030 ) 1,166

Inventories, net 1,636 ( 2,571 )

Inventories 3,250 1,636

Other long-term assets, net ( 4,128 ) ( 2,166 )

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Other long-term liabilities ( 481 ) ( 1,764 )

Net cash provided by (used in) operating activities 10,477 ( 16,653 )

Net cash (used in) provided by operating activities ( 2,730 ) 10,477

Cash flows from investing activities

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Acquisition of mine development costs ( 531 ) ( 181 )

Proceeds from insurance recovery related to property and equipment 685 —

Distributions from equity method investee in excess of cumulative earnings 251 127

Proceeds from sale of property and equipment 10 150

Distributions from equity method investees in excess of cumulative earnings 127 1,623

Cash and restricted cash acquired in business acquisition — 2,225

Payment for disposal of Marshall Mine, LLC — ( 2,177 )

Net cash used in investing activities ( 8,161 ) ( 85,074 )

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Cash flows from financing activities

Net proceeds from common stock issued in public offering $ 26,654 $ —

Net proceeds from common stock issued in private placement transactions 14,951 15,220

Borrowings on revolving credit facility $ 128,941 $ 13,828

Net proceeds from common stock issued to related party 800 1,000

Repayments of revolving credit facility ( 123,818 ) —

Principal payments on notes payable ( 914 ) ( 10,544 )

Repurchase of common stock to satisfy tax withholdings ( 1,135 ) ( 230 )

Principal payments on finance lease obligations ( 447 ) ( 1,022 )

Repurchase of common stock to satisfy tax withholdings ( 66 ) ( 1,135 )

Net proceeds from common stock issued in public offering — 26,654

Net proceeds from common stock issued in private placement transactions — 14,951

Net proceeds from common stock issued to related party — 800

Payment of debt issuance costs — ( 633 )

Payment of debt extinguishment costs — ( 220 )

Net proceeds from CFG Loan, related party, net of discount and issuance costs — 8,522

Net cash provided by financing activities 3,696 42,679

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Purchase of property and equipment through note payable $ — $ 1,004

Equity issued as consideration for acquisition of business $ — $ 31,206

Paid-in-kind dividend on Series A Preferred Stock $ — $ 157

See Notes to the Consolidated Financial Statements.

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Nature of Operations

("Arq" or the "Company", formerly known as Advanced Emissions Solutions, Inc.) is a Delaware corporation with its principal office located in Greenwood Village, Colorado, with manufacturing, mining and logistics operations located in Louisiana and mining and manufacturing operations in Kentucky.

The Company is an environmental technology company and is principally engaged in the sale of consumable air, water, and soil treatment solutions, primarily based on activated carbon ("AC").

Arq Inc., together with its consolidated subsidiaries ("Arq" or the "Company", formerly known as Advanced Emissions Solutions, Inc.) is a Delaware corporation with its principal office located in Greenwood Village, Colorado, with manufacturing, mining and logistics operations located in Louisiana and coal recovery and manufacturing operations located in Kentucky.

The Company is an environmental technology company that is principally engaged in the sale of consumable air, water, and soil treatment solutions, primarily based on activated carbon ("AC").

The Company's proprietary AC products enable customers to reduce air, water, and soil contaminants, including mercury, per and polyfluoroalkyl substances ("PFAS") and other pollutants, to meet the challenges of existing and pending air quality and water regulations.

The Company manufactures and sells AC and other chemicals used to capture and remove impurities, contaminants, and pollutants for the coal-fired power generation, industrial, water treatment, and water and soil remediation markets, which we collectively refer to as the advanced purification technologies ("APT") market.

In February 2023, the Company acquired 100 % of the equity interests, assets and liabilities of the subsidiaries of Arq Limited, an environmental technology company incorporated under the laws of Jersey (the "Arq Acquisition," and hereafter the Arq Limited subsidiaries referred to as "Legacy Arq") to secure access to additional U.S.

based bituminous coal feedstock, a manufacturing facility located in Corbin, Kentucky (the "Corbin Facility") and certain patented processes to manufacture new advanced GAC products for sale into the APT and other markets.

Under this manufacturing process, the Company expects to be able to convert recovered bituminous coal fines into a purified, microfine carbon powder known as Arq powder TM ("Arq Powder").

See further discussion of the Arq Acquisition in Note 11.

The Company manufactures and sells AC and other chemicals used to capture and remove impurities, contaminants, and pollutants for the coal-fired power generation, industrial, water treatment, and water and soil remediation markets, which are collectively referred to as the advanced purification technologies ("APT") market.

The Company’s primary products are comprised of AC, which is produced from a variety of carbonaceous raw materials.

The Company’s AC products include powdered activated carbon ("PAC") and granular activated carbon ("GAC").

The Company owns a lignite coal mine located in Saline, Louisiana (the "Five Forks Mine") that currently supplies the primary raw material for the manufacturing of the majority of Company’s products at its facility in Coushatta, Louisiana (the "Red River Plant").

In addition, the Company leases land in Corbin, Kentucky where it operates a manufacturing facility (the "Corbin Facility") using a patented manufacturing process to reclaim bituminous coal fines into a purified, microfine carbon powder for high value applications (the "Corbin Wetcake").

Principles of Consolidation

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Cash consists of cash on hand and bank deposits.

Restricted cash is primarily comprised of posted cash collateral required under a surety bond contract related to a lignite mine in Louisiana (the "Five Forks Mine") and the Corbin Facility.

Restricted cash is primarily comprised of posted cash collateral required under a surety bond contract related to the Five Forks Mine and the Corbin Facility.

Concentration of credit risk

As of December 31, 2024, the Company holds cash that exceed the Federal Deposit Insurance Corporation ("FDIC") limits (currently $250 thousand) at two financial institutions.

As of December 31, 2025, the Company held cash that exceeded the Federal Deposit Insurance Corporation ("FDIC") limits (currently $250 thousand) at three financial institutions.

If a financial institution was unable to perform its obligations, the Company would be at risk regarding the amount of cash held in excess of the FDIC limits.

Fair value measurements

Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants on the measurement date.

The fair value hierarchy prioritizes inputs to valuation techniques as follows:

Quoted prices for identical instruments in active markets.

Quoted prices for similar instruments in active markets or identical instruments in inactive markets, or model-derived valuations with observable inputs.

Significant inputs to the valuation model are unobservable.

The carrying amounts of our cash, restricted cash, accounts receivable, accounts payable and other current liabilities approximate fair value as recorded due to the short-term nature of these instruments.

Other assets and liabilities are measured at fair value on a nonrecurring basis.

and Subsidiaries

Notes to Consolidated Financial Statements

Receivables, net

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The allowance for doubtful accounts is based on historical experience, general economic conditions and the credit quality of specific accounts and was no t material as of December 31, 2025 and 2024.

and Subsidiaries

Notes to Consolidated Financial Statements

Inventories, net

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Under the equity method of accounting, an investee company’s financial statements are not consolidated in the Company’s Consolidated Balance Sheets and Consolidated Statements of Operations;

however, the Company’s share of the earnings or losses of the investee is reported in the "Earnings from equity method investments" line item in the Consolidated Statements of Operations, and the Company’s carrying value in an equity method investee is reported in the "Other long-term assets, net" line in the Consolidated Balance Sheets.

however, the Company’s share of the earnings or losses of the investee is reported in the "Earnings from equity method investment" line item in the Consolidated Statements of Operations, and the Company’s carrying value in an equity method investee is reported in the "Other long-term assets, net" line in the Consolidated Balance Sheets.

The Company recognizes equity earnings from equity method investments based on its percentage ownership in the investee.

The Company recognizes distributions received in excess of the carrying value of an equity method investment as equity method earnings in the period the distributions occur to the extent that the Company has not guaranteed any obligations of the investee or is not contractually required to provide additional funding to the investee.

Subsequent earnings from investees where the Company has recognized earnings from distributions in excess of the carrying value of the equity method investment are recognized for the excess of cumulative earnings over previously recognized earnings from distributions.

Additionally, when the Company's carrying value in an equity method investment is zero, and the Company has not guaranteed any obligations of the investee or is not required to provide additional funding to the investee, the Company will not recognize its share of any reported losses by the investee until future earnings are generated to offset previously unrecognized losses.

and Subsidiaries

Notes to Consolidated Financial Statements

percentage ownership of the Company's equity interest and the net income or loss attributable to equity owners as shown in the investee's statements of operations.

investee or is not contractually required to provide additional funding to the investee.

Therefore, equity income (loss) reported in the Company's Consolidated Statements of Operations for certain equity method investees may differ from a mathematical calculation of net income or loss attributable to its equity interest based on the percentage ownership of the Company's equity interest and the net income or loss attributable to equity owners as shown in the investee's statements of operations.

Distributions from equity method investees are reported in the Consolidated Statements of Cash Flows as "return on investment" in Operating cash flows until such time as the carrying value in an equity method investee is reduced to zero.

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Finance lease liabilities are subsequently measured by increasing the carrying amount to reflect interest expense on the finance lease liability and reducing the carrying amount of the lease liability to reflect lease payments made during the period.

Interest on finance lease liabilities is determined in each period during the lease term as the amount that produces a constant periodic discount rate on the remaining balance of the lease liability.

Interest on finance lease liabilities is determined in each period during the lease term as the amount that produces a constant periodic

and Subsidiaries

Notes to Consolidated Financial Statements

discount rate on the remaining balance of the lease liability.

ROU assets under finance leases are amortized over the remaining lease term on a straight-line basis.

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Operating lease liabilities are subsequently measured at the present value of the lease payments not yet paid, discounted using the discount rate for the lease established at the inception date of the lease.

ROU assets under operating leases are subsequently measured at the amounts of the related operating lease liability, adjusted for, as applicable, prepaid or accrued lease payments,

and Subsidiaries

Notes to Consolidated Financial Statements

the remaining balance of any lease incentives received, unamortized initial direct costs and impairment.

ROU assets under operating leases are subsequently measured at the amounts of the related operating lease liability, adjusted for, as applicable, prepaid or accrued lease payments, the remaining balance of any lease incentives received, unamortized initial direct costs and impairment.

Lease expense from operating leases is recognized as a single lease cost over the remaining lease term on a straight-line basis.

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The Company recognizes revenue on MQ Contracts generally at the end of a contractual period and at a point in time when it has determined it will enforce billing the shortfall and the shortfall can be quantified.

and Subsidiaries

Notes to Consolidated Financial Statements

The Company performs shipping and handling activities through the use of third-party shippers and such activities occur prior to a customer obtaining control of goods.

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Costs for shipping and handling activities incurred by the Company are included in the "Cost of revenue, exclusive of depreciation and amortization" line item in the Consolidated Statements of Operations.

and Subsidiaries

Notes to Consolidated Financial Statements

Practical Expedients and Exemptions

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An ARO asset is depreciated over its estimated remaining life.

Accounting for AROs requires the Company to estimate future costs unique to a specific mining operation that the Company expects to incur to complete the reclamation and remediation work required to comply with existing laws and regulations.

AROs are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation costs.

On an annual basis, unless otherwise deemed necessary, the Company reviews its estimates and assumptions of its AROs.

Accounting for AROs requires the Company to estimate future costs

and Subsidiaries

Notes to Consolidated Financial Statements

unique to a specific mining operation that the Company expects to incur to complete the reclamation and remediation work required to comply with existing laws and regulations.

On an annual basis, unless otherwise deemed necessary, the Company reviews its estimates and assumptions of its AROs.

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

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If a sufficient amount of available earnings is not available, dividends declared are charged as a reduction to Additional paid-in capital.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed using the weighted-average number of shares of common stock outstanding during the reporting period.

Diluted earnings per share is computed in a manner consistent with that of basic earnings per share, while considering other potentially dilutive securities.

The treasury stock method is used to determine the dilutive effect of potentially dilutive securities.

Potentially dilutive securities consist of restricted stock awards ("RSAs") and contingent performance stock units ("PSUs") (collectively, "Potential dilutive shares").

Potential dilutive shares are excluded from diluted earnings (loss) per share when their effect is anti-dilutive.

When there is a net loss for a period, all Potential dilutive shares are anti-dilutive and are excluded from the calculation of diluted loss per share for that period.

Loss per Common Share

Basic loss per common share is computed using the weighted-average shares of common stock outstanding during the reporting period.

Diluted loss per share is computed in a manner consistent with that of basic loss per share, while considering other potentially dilutive securities.

Potentially dilutive securities consist of unvested restricted stock awards ("RSAs") and contingent performance stock units ("PSUs") (collectively, "Potential dilutive shares").

Potential dilutive shares are excluded from diluted weighted-average shares of common stock outstanding when their effect is anti-dilutive based on the treasury stock method.

When there is a net loss for a period, all Potential dilutive shares are anti-dilutive and are excluded from the calculation of diluted weighted-average shares of common stock outstanding for that period.

Each PSU represents a contingent right to receive shares of the Company’s common stock, and the number of shares may range from zero to two times the number of PSUs granted on the award date depending upon the price performance of the Company's common stock as measured against a general index and a specific peer group index over requisite performance periods.

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See Note 11 for additional information related to PSUs.

The following table sets forth the calculations of basic and diluted earnings (loss) per common share:

and Subsidiaries

Notes to Consolidated Financial Statements

The following table sets forth the calculations of basic and diluted loss per common share:

Years Ended December 31,

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Loss per share - diluted $ ( 1.27 ) $ ( 0.14 )

For the years ended December 31, 2024 and 2023, 2.4 million and 1.7 million weighted-average equity instruments, respectively, were outstanding but were not included in the computation of diluted earnings per share because their effect would have been anti-dilutive.

For the years ended December 31, 2025 and 2024, 2.5 million and 2.4 million weighted-average equity instruments, respectively, were outstanding but were not included in the computation of diluted loss per share because their effect would have been anti-dilutive.

Use of Estimates

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Risks and Uncertainties

The Company is principally dependent on operations of its APT business, its cash on hand, and availability under its recently secured revolving credit facility (the "Revolving Credit Facility") to provide liquidity over the near and long term.

The Company is principally dependent on operations of its APT business, its cash on hand, and availability under its secured revolving credit facility (the "Revolving Credit Facility") to provide liquidity over the near and long term.

The Company's revenue, sales volumes, earnings and cash flows are significantly affected by prices of competing power generation sources such as natural gas and renewable energy.

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Environmental Protection Agency regulations of PFAS substances in drinking water finalized in April 2024.

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

If, as a result of the current 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, the Company’s business would be adversely affected by declining demand for such products and services.

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Notes to Consolidated Financial Statements

Reclassifications

Certain balances have been reclassified from prior years to conform to the current year presentation.

Such reclassifications had no effect on the Company’s results of operations or financial position in any of the periods presented.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by a company's chief operating decision maker ("CODM"), or a decision-making group, in deciding how to allocate resources and in assessing financial performance.

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Recently Adopted

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

Upon adoption of this ASU, the company has disclosed significant segment expenses, the title and position of the CODM, and an explanation of how the reported measure of segment profit or loss is used by the CODM to assess segment performance and make resource allocation decisions.

Effective December 31, 2024, the company adopted the provisions of this ASU on a retrospective basis.

Refer to Note 16.

Recently Issued

In December 2023, the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

("ASU 2023-09").

ASU 2023-09 requires entities to disclose:

(1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) the disaggregation of income taxes paid by jurisdiction.

This update also makes several other changes to the income tax disclosure requirements.

For public entities, the amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and is required to be applied prospectively, but retrospective application is permitted.

The Company is currently evaluating the impact of ASU 2023-09 on its income tax disclosures.

Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires enhanced disclosures to certain income tax disclosures, most notably the effective tax rate reconciliation and income taxes paid.

The Company adopted ASU 2023-09 for the year ended December 31, 2025 on a retrospective basis.

Recently Issued

In November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses ("ASU 2024-03").

ASU 2024-03 requires entities to disclose disaggregated information related to certain costs and expenses, including amounts relating to purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion, for each income statement line item that contains those expenses.

For public entities, the amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

ASU 2024-03 is required to be applied prospectively, but retrospective application is permitted.

The Company is currently evaluating the impact of ASU 2024-03 on its financial statement disclosures.

In July 2025, the FASB issued Accounting Standards Update 2025-05, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05").

ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers.

Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets.

ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods in those years.

Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively.

The Company is currently evaluating the impact of ASU 2025-05 on its financial statements and disclosures.

Note 2 - Impairment

In December 2025, the Company terminated substantially all of the Corbin Facility employees and elected to idle indefinitely the Corbin Facility effective January 1, 2026.

As of December 31, 2025, the Company recorded a severance accrual for these employees in the amount of $ 0.3 million in accordance with employment agreements.

In the second half of 2025, the Corbin Facility had commenced producing Corbin Wetcake to be used in the manufacturing process at the GAC facility constructed at the Red River Plant (the "GAC Facility").

The GAC Facility was commissioned in August 2025.

Due to problems with the Corbin Wetcake composition and design flaws in our GAC Facility, the Company concluded that it was cost prohibitive to continue to produce GAC products using the Corbin Wetcake.

In January 2026, the Company temporarily ceased production of GAC products and began testing of a bituminous coal feedstock purchased from a third party to produce GAC products.

Based on these factors and as part of its periodic review for indicators of impairment in evaluating the carrying value of long-lived assets, the Company assessed its long-lived assets located at the Corbin Facility (the "Corbin Asset Group") and the GAC Facility assets located at the Red River Plant (the "GAC Asset Group") for potential impairment.

The Company concluded that indicators of impairment were evident with both of these asset groups, and as of December 31, 2025, completed recoverability tests based on an undiscounted cash flow analysis for both asset groups.

The Company determined for the Corbin Asset Group that the estimated undiscounted cash flows were less than its carrying value and the Corbin Asset Group was impaired.

The Company further determined that the GAC Asset Group was not impaired as the estimated undiscounted cash flows exceeded its carrying value.

and Subsidiaries

Notes to Consolidated Financial Statements

Accordingly, the Company completed a valuation of the Corbin Asset Group to estimate its fair value.

The Company engaged an independent third party to perform a valuation of the Corbin Asset Group as the basis of estimating its fair value.

This valuation was based on a cost approach to determine an estimate of "ordinary liquidation value" of the Corbin Asset Group and incorporated the use of Level 3 inputs.

The Company estimated the fair value of the Corbin Asset Group at $ 10.9 million and recorded an impairment charge (the "Corbin Impairment Charge") and corresponding write-down of the Corbin Asset Group in the amount of $ 38.1 million.

Included in this amount is also $ 0.3 million of Corbin Wetcake inventory that was written-off as of December 31, 2025.

In addition, the Company concluded that the intangible asset, developed technology, which comprised a number of patents and other intellectual property attributable to the proprietary manufacturing process for Corbin Wetcake, was also impaired and that its estimated fair value as of December 31, 2025 was zero .

Accordingly, the Company recorded an impairment charge (the "Developed Technology Impairment Charge") and a corresponding write-down of the developed technology in the amount of $ 6.6 million as of December 31, 2025.

The Corbin Impairment Charge and the Developed Technology Impairment Charge are included in "Impairment of long-lived assets" in the Consolidated Statements of Operations for the year ended December 31, 2025.

The following table summarizes the allocation of the Corbin Impairment Charge and the Developed Technology Impairment Charge as of December 31, 2025:

(in thousands) Corbin Impairment Charge Developed Technology Impairment Charge

Inventories, net $ 321 $ —

Property, plant and equipment, net 34,341 —

Other long-term assets, net 3,485 6,609

Total impairment $ 38,147 $ 6,609

Note 3 - Inventories, net

8 unchanged sentences

Note 4 - Property, Plant and Equipment

The cost basis and accumulated depreciation of property, plant and equipment at December 31, 2024 and 2023 are summarized in the table below:

The cost basis and accumulated depreciation of property, plant and equipment as of December 31, 2025 and 2024 are summarized in the table below:

Life in Years As of December 31,

23 unchanged sentences

Other receivables

The Company exercised its right under certain MQ Contracts and recognized $ 1.6 million and $ 4.7 million of revenue from MQ Contracts for the years ended December 31, 2024 and 2023, respectively.

The Company exercised its right under certain MQ Contracts and recognized $ 1.6 million of revenue from MQ Contracts for the year ended December 31, 2024.

The Company did not have material revenue from MQ Contracts for the year ended December 31, 2025.

Receivables from MQ contracts are included as "Other receivables" within Receivables, net on the Consolidated Balance Sheets.

5 unchanged sentences

Receivables, net $ 14,980 $ 14,876

As of January 1, 2024, Trade receivables, net and Other receivables were $ 11.3 million and $ 4.9 million, respectively.

and Subsidiaries

Notes to Consolidated Financial Statements

Contract assets

2 unchanged sentences

The Company did no t have material contract assets outstanding as of December 31, 2025 and 2024.

and Subsidiaries

Notes to Consolidated Financial Statements

Contract liabilities

6 unchanged sentences

Finance lease obligations 319 1,269

CFG Loan due February 2027, related party — 10,000

Other 1,031 1,004

7 unchanged sentences

In December 2024, the Company and certain of its subsidiaries entered into a credit agreement (the “Revolving Credit Agreement”) with MidCap Funding IV Trust (the "Lender"), providing for a five-year $ 30.0 million secured revolving credit facility (the "Revolving Credit Facility").

Pursuant to the terms of the Revolving Credit Facility, Arq may borrow up to $ 30.0 million, the availability of which is determined based on a borrowing base equal to percentages of certain eligible accounts receivable and inventory carrying balances of the Company and certain of its subsidiaries, less applicable reserves established under the Revolving Credit Facility (together, the "Revolving Loan Commitment"), in accordance with a formula set forth in the Revolving Credit Facility.

All borrowings under the Revolving Credit Facility are subject to the satisfaction of customary conditions, including the absence of default, the accuracy of representations and warranties in all material respects and the delivery of an updated borrowing base certificate on a periodic basis.

1 unchanged sentence

Borrowings under the Revolving Credit Facility bear interest at the Standard Overnight Financing Rate (SOFR) plus an applicable margin of 4.50 % per annum, subject to a SOFR floor of 2.50 % per annum.

In addition to paying interest on the outstanding loans under the Revolving Credit Facility, the Company is also required to pay an unused line fee equal to 0.50 % per annum in respect of unused commitments under the Revolving Credit Facility, a fee for failure to maintain a minimum balance under the Revolving Credit Facility, a collateral management fee under the Revolving Credit Facility equal to 0.25 % per annum of the amount outstanding under the Revolving Credit Facility, and certain other customary fees related to the Lender's administration of the Revolving Credit Facility.

If the Revolving Loan Commitment is terminated prior to its maturity date, the Company is required to make certain prepayment fees in an amount equal to (i) 2.00 % of the terminated amount of the Revolving Loan Commitment in the first year following the Closing Date, (ii) 1.00 % of the terminated amount of the Revolving Loan Commitment in the second year following the Closing Date, (iii) 0.50 % of the terminated amount of the Revolving Loan Commitment in the third year following the Closing Date and (iv) 0.00 % at any time thereafter.

In addition to paying interest on the outstanding loans under the Revolving Credit Facility, the Company is also required to pay an unused line fee equal to 0.50 % per annum in respect of unused commitments under the Revolving Credit Facility, a fee for failure to maintain a minimum balance under the Revolving Credit Facility, a collateral management fee equal to 0.25 % per annum of the amount outstanding under the Revolving Credit Facility, and certain other customary fees related to the Lender's administration of the Revolving Credit Facility.

and Subsidiaries

Notes to Consolidated Financial Statements

negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of their businesses.

In addition, the Revolving Credit Facility requires the Borrowers to maintain their aggregate Total Leverage Ratio at or below a maximum leverage ratio and to maintain a minimum cash balance of $ 5.0 million, in each case as specified in the Revolving Credit Facility.

year following the Closing Date, (iii) 0.50 % of the terminated amount of the Revolving Loan Commitment in the third year following the Closing Date and (iv) 0.00 % at any time thereafter.

The Revolving Credit Facility contains affirmative and negative covenants customarily applicable to senior secured credit facilities, including, without limitation, covenants that, among other things, require delivery of certain financial statements, projections and reports, require maintenance of property and insurance, limit or restrict the ability of the Company, subject to negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of their businesses.

In addition, the Revolving Credit Facility requires the Company and certain of its subsidiaries party thereto to maintain their aggregate Total Leverage Ratio at or below a maximum leverage ratio and to maintain minimum liquidity of $ 5.0 million, in each case as specified in the Revolving Credit Facility.

On each of May 6, 2025, December 9, 2025, January 28, 2026, and February 27, 2026, the Company entered into amendments to the Revolving Credit Agreement, all of which provided for, among other things, a revision to the borrowing availability calculation and a reduction in the minimum liquidity requirement for the period beginning May 6, 2025 through March 31, 2026.

As of April 1, 2026, the minimum liquidity requirement will reset to $ 5.0 million.

As of December 31, 2025, the Company's borrowings under the Revolving Credit Facility totaled $ 19.0 million.

On February 1, 2023, the Company, as borrower, certain of its subsidiaries, as guarantors, and CF Global ("CFG"), a related party, as administrative agent and lender, entered into a term loan (the "CFG Loan") in the amount of $ 10.0 million, less original issue discount ("OID") of $ 0.2 million, upon execution of a Term Loan and Security Agreement (the "CFG Loan Agreement").

The Company received net cash proceeds of $ 8.5 million after deducting the OID and debt issuance costs of $ 1.3 million.

One of the Company's directors is a principal with CFG.

The CFG Loan Agreement also required the issuance of a warrant (the "Warrant") to CFG to purchase 325,457 shares of the Company's common stock at an exercise price of $ 0.01 per share.

The Warrant had a term of 7 years and contained a cashless exercise provision.

On March 29, 2024, CFG exercised the warrant in full and the Company issued CFG 324,955 shares of its common stock, net of shares representing the exercise price of the warrant.

The Company allocated the cash proceeds of the CFG Loan to both the CFG Loan and the Warrant based on their relative fair values.

The amount allocated to the Warrant was recorded as a debt discount and is amortized to interest expense over the term of the CFG Loan.

The standalone fair value of the CFG Loan was based on a comparison of borrowings and associated credit ratings consistent with those of the Company.

As the Warrant was exercisable for $ 0.01 per share, the fair value was deemed to be equal to the fair value of the underlying shares, and accordingly, the fair value of the Warrant was determined as the number of shares issuable from the exercise of the Warrant (based on 1.0 % of post-transaction fully diluted share capital, as defined in the Purchase Agreement) multiplied by the closing share price of the Company's common stock on the Acquisition Date.

On December 27, 2024, the Company elected to prepay its outstanding balance under the CFG Loan and terminate the CFG Loan Agreement.

The Company made a final payment of $ 11.5 million to CF Global, which included payment of outstanding principal and accrued interest of $ 11.1 million, a prepayment premium of approximately $ 0.2 million, as determined by the prepayment provision of the CFG Loan Agreement, and was equal to 2.0 % of the carrying balance of the CFG Loan, and other fees and expenses amounting to approximately $ 0.2 million.

In connection with the termination of the CFG Loan Agreement, the Company recognized a loss of $ 1.4 million, which is presented within the Loss on extinguishment of debt line item in the Consolidated Statement of Operations for the year ended December 31, 2024.

Upon completion of the Arq Acquisition, the Company assumed a term loan (the "CTB Loan") held by certain Arq subsidiaries as set out in the CTB Loan (the "Arq Subsidiaries") with a financial institution ("CTB") in the principal amount of $ 10.0 million.

The Company recorded the CTB Loan on the Acquisition Date at its estimated fair value of $ 9.7 million, with the difference of $ 0.3 million between the estimated fair value and the principal amount recorded as a debt discount and recognized as interest expense over the term of the CTB Loan.

On February 1, 2023, the Company assumed a term loan (the "CTB Loan") in the principal amount of $ 10.0 million held by certain subsidiaries acquired by the Company on that date (the "Borrowers").

The Company initially recorded the CTB Loan at its estimated fair value of $ 9.7 million, with the difference of $ 0.3 million between the estimated fair value and the principal amount recorded as a debt discount and recognized as interest expense over the term of the CTB Loan.

The CTB Loan was originally entered into on January 27, 2021 and is comprised of two promissory notes (the "Notes"):

5 unchanged sentences

Interest is computed and payable on the outstanding principal as of the end of the prior month and the balance of the fixed monthly payment amount is applied to the outstanding principal.

The Notes carry a prepayment penalty of 3.0 % of the outstanding principal if paid prior to January 27, 2024, 2.0 % of the outstanding principal if paid prior to January 27, 2025 and 1.0 % of the outstanding principal if paid prior to January 27, 2026.

The Notes carry a prepayment penalty of 1.0 % of the outstanding principal if paid prior to January 27, 2026.

Thereafter, the Notes may be prepaid without penalty.

On June 2, 2023 (the "Amendment Date"), certain of the Arq Subsidiaries, which included Corbin Project LLC, Arq Projects Holding Company LLC, Arq St.

Rose LLC, Arq Corbin LLC and Arq Corbin Land LLC (collectively, the "Borrowers") and CTB entered into a loan modification agreement (the "CTB Loan Modification Agreement") to the CTB Loan, as amended by that certain letter agreement by and among CTB and Borrowers dated January 21, 2022, and as otherwise amended, modified

and Subsidiaries

Notes to Consolidated Financial Statements

and/or extended by the parties from time to time (collectively, the "CTB Loan Agreement").

As consideration for CTB entering into the CTB Loan Modification Agreement, the Borrowers agreed to pay a fee of $ 50,000 plus additional fees incurred by CTB and were required to deposit an additional $ 0.7 million into a deposit account (the "Interest Reserve Account" as defined in the CTB Loan Agreement), where the Interest Reserve Account is held as collateral by CTB.

The Borrowers may withdraw funds from the Interest Reserve Account beginning one year from the Amendment Date, subject to restrictions as stated in the CTB Loan Modification Agreement.

The CTB Loan Modification Agreement clarified and modified certain terms under the CTB Loan Agreement.

The principal clarifications and modifications are as follows:

• The Borrowers are not entitled to any further disbursements of proceeds under those promissory notes described in the CTB Loan Modification Agreement;

• CTB agreed to waive certain required financial covenants as of December 31, 2023;

• CTB is authorized to amend and/or amend and restate its then-current security instruments to include additional collateral represented by the Borrowers' acquisition of any equipment or other fixed and/or operating assets in which CTB does not then hold a lien or security interest.

The CTB Loan is secured by substantially all assets of the Borrowers and includes among others, the following covenants with respect to the Borrowers, which are tested annually (capitalized terms are defined in the CTB Loan Agreement):

2 unchanged sentences

(c) (i) net income plus interest, taxes, depreciation and amortization divided by (ii) interest expense plus current maturities on long-term debt greater than or equal to 1.25 to 1.

CTB agreed to waive certain required financial covenants as of December 31, 2024.

On March 5, 2026, the Company entered into an amendment to the CTB Loan (the "CTB Second Amendment").

Under the CTB Second Amendment, the lender waived the Company’s obligation to satisfy certain financial covenants for the fiscal year ending December 31, 2025 and suspended financial covenant testing for the fiscal year ending December 31, 2026.

As a condition of the waiver, the Company was required to increase its deposits held in reserve at CTB.

The carrying values of both the Revolving Credit Facility and the CTB Loan approximate their fair values as both instruments bear interest at rates indexed to market rates for similar instruments.

and Subsidiaries

Notes to Consolidated Financial Statements

Note 7 - Leases

9 unchanged sentences

Finance lease right-of-use assets, net of accumulated amortization (2)

$ 824 $ 1,694

Finance lease obligations, current $ 231 $ 855

2 unchanged sentences

(1) Operating lease assets are reported net of accumulated amortization of $ 6.6 million and $ 4.5 million as of December 31, 2025 and 2024, respectively.

and Subsidiaries

Notes to Consolidated Financial Statements

(2) Finance lease assets are reported net of accumulated amortization of $ 2.8 million and $ 3.2 million as of December 31, 2025 and 2024, respectively.

Finance leases

ROU assets under finance leases are reported in the "Property, plant and equipment" line item, and finance lease liabilities are included in the "Current portion of long-term debt" and "Long-term debt, net of current portion" line items in the Consolidated Balance Sheets as of December 31, 2024 and 2023.

Interest expense related to finance lease liabilities and amortization of ROU assets under finance leases are included in the "Interest expense" and "Depreciation, amortization, depletion and accretion" line items respectively, in the Consolidated Statement of Operations for the years ended December 31, 2024 and 2023.

ROU assets under finance leases are included in the "Property, plant and equipment" line item, and finance lease liabilities are included in the "Current portion of long-term debt" and "Long-term debt, net of current portion" line items, respectively, in the Consolidated Balance Sheets as of December 31, 2025 and 2024.

Interest expense related to finance lease liabilities and amortization of ROU assets under finance leases are included in the "Interest expense" and "Depreciation, amortization, depletion and accretion" line items, respectively, in the Consolidated Statements of Operations for the years ended December 31, 2025 and 2024.

Operating leases

ROU assets under operating leases are included in the " Other long-term assets " line item, and operating lease liabilities are included in " Other liabilities" and " Other long-term liabilities" line items, respectively, in the Consolidated Balance Sheets as of December 31, 2024 and 2023.

ROU assets under operating leases are included in the " Other long-term assets " line item, and operating lease liabilities are included in " Other current liabilities" and " Other long-term liabilities" line items, respectively, in the Consolidated Balance Sheets as of December 31, 2025 and 2024.

Lease expense for operating leases for the year ended December 31, 2025 was $ 5.7 million, of which $ 5.0 million is included in the "Cost of revenue, exclusive of depreciation and amortization" line item and $ 0.7 million is included in the "Selling, general and administrative" line item in the Consolidated Statement of Operations for the year ended December 31, 2025.

Lease expense for operating leases for the year ended December 31, 2024 was $ 5.3 million, of which $ 3.8 million is included in the "Cost of revenue, exclusive of depreciation and amortization" line item and $ 1.5 million is included in the "Selling, general and administrative" line item in the Consolidated Statement of Operations for the year ended December 31, 2024.

In 2025, the Company renewed its lease of land where the Corbin Facility is located (the "Corbin Lease") through August 31, 2030 in accordance with the Corbin Lease renewal term, which allows for automatic five-year renewals by the Company.

As of December 31, 2025 and based on the Company's decision to idle indefinitely the Corbin Facility, the Company revalued the Corbin Lease liability and the related ROU asset (the "Corbin ROU Asset") based on a reduction from its estimated expected

and Subsidiaries

Notes to Consolidated Financial Statements

termination date of August 31, 2040, to August 31, 2030.

The revaluation resulted in a reduction to both the Corbin Lease Liability and the Corbin ROU Asset in the amount of $ 0.8 million.

Lease financial information as of and for the years ended December 31, 2025 and 2024 is provided in the following table:

19 unchanged sentences

(1) Primarily includes common area maintenance, property taxes and insurance payable to lessors.

and Subsidiaries

Notes to Consolidated Financial Statements

The following table summarizes the Company's future lease payments under finance and operating leases as of December 31, 2025:

11 unchanged sentences

Present value of lease payments $ 8,928 $ 319 $ 9,247

and Subsidiaries

Notes to Consolidated Financial Statements

Note 8 - Commitments and Contingencies

9 unchanged sentences

This deposit is included in "Other long-term assets, net" in the Consolidated Balance Sheet as of December 31, 2025.

The Company has a customer supply agreement, which was renewed January 1, 2024, that requires the Company to post a performance bond in an amount equal to the annual contract value of $ 3.7 million.

and Subsidiaries

Notes to Consolidated Financial Statements

From time to time, the Company will enter into customer supply agreements which require the Company to obtain performance bonds equal to the annual contract values.

The most significant of these was renewed January 1, 2026 and requires the Company to post a performance bond in an amount equal to the annual contract value of $ 4.0 million.

As of December 31, 2025, the amount of performance bonds outstanding as required by other customer supply agreements was $ 0.2 million.

The Company also has certain limited obligations contingent upon future events in connection with the activities of Tinuum Group.

2 unchanged sentences

No liability or expense provision has been recorded by the Company related to this contingent obligation as the Company believes that it is not probable that a loss will occur with respect to Tinuum Group Party Guarantees.

In December 2022, the Company, certain of the other owners of Tinuum Group (collectively, the "Tinuum Group Owners") and Tinuum Group executed the Distribution and Repayment Agreement (the "Repayment Agreement").

Under the terms of the Repayment Agreement, the Tinuum Group Owners received cash distributions (the "Distributions") equal to their percentage ownership and also agreed to be contractually liable for certain contingent liabilities of Tinuum Group (the "Tinuum Group Obligation") in amounts equal to their percentage ownership.

In December 2022, the Company received its percentage share of the Distributions in the amount of $ 2.0 million and became contractually liable for $ 1.7 million of the Tinuum Group Obligation.

The Company recorded a liability related to the contractual obligation in the amount of $ 1.7 million , which is presented in the "Other current liabilities" line item in the Consolidated Balance Sheet as of December 31, 2024.

In the event that the Tinuum Group Obligation is discharged in its entirety or settled for an amount that is less than the total Tinuum Group Obligation, the Company will recognize future equity earnings for the difference in its contractual obligation amount and its pro rata share of the actual payment made by Tinuum Group, if any, for the Tinuum Group Obligation.

Under an agreement executed in December 2022 amongst certain owners of Tinuum Group, the Company became party to a distribution and repayment agreement (the "Repayment Agreement").

Under the terms of the Repayment Agreement, the Company became contractually liable for up to $ 1.7 million of a contingent liability of Tinuum Group (the "Tinuum Group Obligation") and recorded a liability of $ 1.7 million, which is presented in the "Other current liabilities" line item in the Consolidated Balance Sheet as of December 31, 2024.

In December 2025, the Company was released from its obligation under the Repayment Agreement, largely based on the expiration of the contingency, and the Tinuum Group Obligation was discharged in full.

The Company recognized a gain of $ 1.7 million related to the release of the liability, which is presented in the "Earnings from equity method investment" line item in the Consolidated Statements of Operations for the year ended December 31, 2025.

Legal Proceedings

5 unchanged sentences

The Company is now seeking to recover damages resulting from such negligence and contractual breaches.

On April 11, 2025, the design firm filed a counterclaim to recover certain fees associated with the services provided.

and Subsidiaries

8 unchanged sentences

Prepaid lender fees, net (1)

Prepaid income taxes and income tax refunds 233 349

Prepaid taxes and tax refunds 147 233

Other 1,826 1,414

3 unchanged sentences

Right of use assets, operating leases, net 6,793 9,312

Intangible assets, net 7,569 7,899

Mine development costs, net 6,763 7,010

1 unchanged sentence

Mine reclamation asset, net 1,645 1,620

Intangible assets, net 570 7,569

Other 2,680 2,581

17 unchanged sentences

Since inception of Highview Investment, the Company has recognized $ 2.2 million of cumulative impairment losses.

As of December 31, 2025 and 2024, the carrying value of the Highview Investment was $ 0.6 million and $ 0.6 million, respectively.

and Subsidiaries

4 unchanged sentences

Other current liabilities:

Sales, use and other taxes payable $ 2,325 $ 948

Current portion of operating lease obligations $ 2,842 $ 2,081

Sales, use and other taxes payable 1,304 2,325

Current portion of mine reclamation liability 1,037 1,037

4 unchanged sentences

Mine reclamation liabilities 5,719 5,242

Other 367 929

$ 11,868 $ 13,069

(1) Included in Other current liabilities as of December 31, 2024 and 2023 is $ 1.7 million related to the Repayment Agreement as defined in Note 7 .

(1) Included in Other current liabilities as of December 31, 2024 is $ 1.7 million related to the Repayment Agreement as defined in Note 8 .

The Mine reclamation liabilities represent AROs.

3 unchanged sentences

Asset retirement obligations, beginning of year $ 6,279 $ 6,163

Asset retirement obligations assumed (1)

Accretion 513 666

Liabilities settled ( 177 ) ( 77 )

( 77 ) ( 4,866 )

Changes due to scope and timing of reclamation 141 ( 473 )

2 unchanged sentences

Asset retirement obligations, long-term $ 5,719 $ 5,242

(1) Represents the Corbin Facility ARO and Mine 4 ARO in the amounts of $ 0.5 million and $ 1.0 million, respectively, assumed during the period ended December 31, 2023.

(2) Included in liabilities settled during the period ended December 31, 2023 is $ 4.7 million related to the removal of the ARO associated with Marshall Mine, LLC as a result of the sale of Marshall Mine, LLC in March 2023.

Supplemental Consolidated Statements of Operations Information

2 unchanged sentences

(in thousands) 2025 2024

Interest on CFG Loan $ 2,286 $ 2,029

Interest on Revolving Credit Facility $ 1,675 $ —

Interest on CTB Loan 554 567

Interest on CFG Loan — 2,286

Other 220 404

2 unchanged sentences

Notes to Consolidated Financial Statements

The following table details the components of "Other" in the Consolidated Statements of Operations:

Years Ended December 31,

(in thousands) 2024 2023

Interest income $ 1,103 $ 1,846

Other 135 784

Total Other income $ 1,238 $ 2,630

Note 10 - Stockholders' Equity

7 unchanged sentences

Equity Transactions

As discussed in Note 11:

• On February 1, 2023, and as consideration for the Arq Acquisition, the Company issued 3,814,864 shares of common stock and 5,294,462 shares of Series A Preferred Stock.

Additionally, the Company completed the PIPE Investment and sold 3,842,315 shares of common stock for cash proceeds of $ 15.4 million.

• On March 31, 2023, the Company declared a dividend of 68,464 Series A PIK Shares with respect to the accrued dividends on the Series A Preferred Stock, which was recorded at the estimated fair value of $ 0.2 million as of March 31, 2023 and was paid on April 21, 2023.

• On June 13, 2023, pursuant to stockholder approval, all shares of Series A Preferred Stock were converted into 5,362,926 shares of common stock.

On July 14, 2023, the Board appointed Mr.

Robert Rasmus to the positions of President and Chief Executive Officer effective July 17, 2023.

On July 17, 2023, the Company entered into a Subscription Agreement (the "Subscription Agreement") with Mr.

Rasmus and entities controlled by Mr.

Robert Rasmus and entities controlled by Mr.

Rasmus, in connection with his appointment as the Company’s President and Chief Executive Officer.

7 unchanged sentences

After deducting offering costs, the Company raised net cash proceeds of $ 15.0 million from the Private Placement.

and Subsidiaries

Notes to Consolidated Financial Statements

On September 20, 2024, the Company entered into an underwriting agreement (the "Underwriting Agreement") with certain underwriters, relating to the issuance and sale of 4,770,000 shares of the Company's common stock at a price to the public of $ 5.25 per share, as well as an overallotment option to purchase an additional 715,500 shares within 30 days following the date of the Underwriting Agreement (the "Public Offering").

2 unchanged sentences

In November 2018, the Board authorized the Company to purchase up to $ 20.0 million of its outstanding common stock under a stock repurchase program (the "Stock Repurchase Program").

In November 2019, the Board authorized an incremental $ 7.1 million to the Stock Repurchase Program and provided that it will remain in effect until all amounts are utilized or it is otherwise modified by the Board.

As of December 31, 2024, the Company had $ 7.0 million remaining under the Stock Repurchase Program.

On August 12, 2025, the Board voted to terminate the Stock Repurchase Program, under which $ 7.0 million was remaining at the time of its termination.

No shares were repurchased during the years ended December 31, 2025 and 2024.

Tax Asset Protection Plan

1 unchanged sentence

In general, an ownership change occurs if there is a cumulative change in the ownership of the Company by "5 percent stockholders" that exceeds 50 percentage points over a rolling three-year period.

An entity that experiences an ownership change generally will be subject to an annual limitation on its pre-ownership change tax loss and credit carryforwards equal to the equity value of the entity immediately before the ownership change, multiplied by the long-term, tax-exempt rate posted monthly by the Internal Revenue Service (subject to certain adjustments).

and Subsidiaries

Notes to Consolidated Financial Statements

the long-term, tax-exempt rate posted monthly by the Internal Revenue Service (subject to certain adjustments).

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

1 unchanged sentence

The TAPP is intended to act as a deterrent to any person acquiring beneficial ownership of 4.99 % or more of the Company’s outstanding common stock.

On April 12, 2024, the Board approved the Seventh Amendment to the TAPP (the "Seventh Amendment"), which amends the TAPP, as previously amended by the First, Second, Third, Fourth, Fifth and Sixth Amendments that were approved by the Board on April 6, 2018, April 5, 2019, April 9, 2020, April 9, 2021, March 15, 2022, and April 13, 2023, respectively.

The Seventh Amendment amends the definition of "Final Expiration Date" under the TAPP to extend the duration of the TAPP and makes associated changes in connection therewith.

Pursuant to the Seventh Amendment, the Final Expiration Date shall be the close of business on the earlier of (i) December 31, 2025 or (ii) December 31, 2024 if stockholder approval of the Seventh Amendment has not been obtained prior to such date.

At the Company's 2024 Annual Meeting of Stockholders held on June 10, 2024, the Company's stockholders approved the Seventh Amendment, thus the final expiration date will be the close of business on December 31, 2025.

On April 8, 2025, the Board approved the Eighth Amendment to the TAPP (the "Eighth Amendment"), which amends the TAPP, as previously amended by the First, Second, Third, Fourth, Fifth, Sixth and Seventh Amendments that were approved by the Board on April 6, 2018, April 5, 2019, April 9, 2020, April 9, 2021, March 15, 2022, April 13, 2023, and April 12, 2024, respectively.

The Eighth Amendment amends the definition of "Final Expiration Date" under the TAPP to extend the duration of the TAPP and makes associated changes in connection therewith.

Pursuant to the Eighth Amendment, the Final Expiration Date shall be the close of business on the earlier of (i) December 31, 2026 or (ii) December 31, 2025 if stockholder approval of the Eighth Amendment has not been obtained prior to such date.

On June 3, 2025, the Company's stockholders approved the Eighth Amendment, and therefore the Final Expiration Date is the close of business on December 31, 2026, unless the TAPP is further amended.

Note 11 - Stock-Based Compensation

5 unchanged sentences

As of December 31, 2025, the Company has zero shares of its common stock authorized for issuance under the 2022 Plan.

On June 20, 2017, the Company's stockholders approved the 2017 Omnibus Incentive Plan (the "2017 Plan"), which permits grants of awards to employees, directors and non-employees.

Awards may be in the form of shares, rights to purchase restricted

and Subsidiaries

Notes to Consolidated Financial Statements

stock, bonuses of restricted stock, or other rights or benefits as described under the 2017 Plan.

As of December 31, 2024, the Company has zero shares of its common stock authorized for issuance under the 2017 Plan.

RSAs - Restricted Stock Awards ("RSA's") are typically granted with vesting terms of three years .

10 unchanged sentences

• Performance period - The Company’s performance period is based on the vesting term of the Company’s PSU awards.

and Subsidiaries

Notes to Consolidated Financial Statements

Stock Options

8 unchanged sentences

• Expected term - The Company’s expected term of stock options was calculated using a simplified method whereby the midpoint between the vesting date and the end of the contractual term is utilized to compute the expected term, as the Company does not have sufficient historical data for options with similar vesting and contractual terms.

No stock options were granted during the year ended December 31, 2024.

The following table indicates the weighted average assumptions that were used related to the awards granted during the year ended December 31, 2023:

and Subsidiaries

Notes to Consolidated Financial Statements

Year ended December 31, 2023

Stock options granted:

Risk-free interest rate 4 %

Dividend yield — %

Volatility 62 %

Expected term (in years) 6

The Company recorded the following compensation expense related to the Stock Plans:

No stock options were granted during the years ended December 31, 2025 and 2024.

The Company recorded the following stock-based compensation expense for the years ended December 31, 2025 and 2024:

Years Ended December 31,

14 unchanged sentences

Total unrecognized stock-based compensation expense $ 5,058 1.49

and Subsidiaries

Notes to Consolidated Financial Statements

Restricted Stock

7 unchanged sentences

Non-vested at December 31, 2025 1,068,649 $ 4.97

and Subsidiaries

Notes to Consolidated Financial Statements

The weighted-average grant date fair value of RSAs granted or modified for the years ended December 31, 2025 and 2024 was $ 4.91 and $ 5.79 , respectively.

21 unchanged sentences

Options vested and exercisable at December 31, 2025 666,666 $ 3.00 $ 180 7.54

Note 11 - Arq Acquisition

On February 1, 2023 (the "Acquisition Date"), the Company entered into a securities purchase agreement (the "Purchase Agreement") with Arq Ltd.

for the Arq Acquisition in exchange for consideration (the "Purchase Consideration") totaling $ 31.2 million and consisting of (i) 3,814,864 shares of the Company's common stock, valued at $ 12.4 million based on the closing price of the common stock on the Acquisition Date and (ii) 5,294,462 shares of the Company's Series A Convertible Preferred Stock, par value $ 0.001 per share (the "Series A Preferred Stock" or the "Preferred Shares"), valued at $ 18.8 million.

The Company also incurred $ 8.7 million in acquisition-related costs, which were expensed as incurred.

Legacy Arq's principal location is in Corbin, Kentucky where it operates the Corbin Facility, which processes recovered bituminous coal fines into Arq Powder that can be used as an alternative to oil or in-ground mined coal to produce a range of carbon products.

With the completion of the Arq Acquisition, the Company intends to sell Arq Powder as a feedstock to produce high-quality AC for use in water and air purification markets.

The Company expects to begin using Arq Powder to produce granular activated carbon products during the first quarter of 2025.

The Company accounted for the Arq Acquisition as an acquisition of a business.

The total Purchase Consideration was $ 31.2 million and was allocated to the acquired assets and assumed liabilities of Legacy Arq based on their estimated fair values as of the Acquisition Date.

The Purchase Consideration was comprised of the fair values as of the Acquisition Date of 3,814,864

and Subsidiaries

Notes to Consolidated Financial Statements

shares of common stock, valued at $ 12.4 million, and 5,294,462 Preferred Shares, valued at $ 18.8 million.

The Company also incurred $ 8.7 million in acquisition-related costs, which were expensed as incurred and included in the "General and administrative" and "Legal and professional fees" line items in the Statements of Operations.

The following table provides the final purchase price allocation to the assets acquired and liabilities assumed as of the date of the Arq Acquisition:

(in thousands) Purchase Price Allocation

Fair value of assets acquired:

Prepaid expenses and other current assets 2,229

Restricted cash, long-term 814

Property, plant and equipment, net 39,159

Other long-term assets, net 11,717

Amount attributable to assets acquired 55,330

Fair value of liabilities assumed:

Accounts payable and accrued expenses 9,806

Current portion of long-term debt 494

Other current liabilities 103

Long-term debt, net of current portion 9,199

Other long-term liabilities 4,523

Amount attributable to liabilities assumed 24,125

Net assets acquired $ 31,205

The following represents the intangible asset identified as part of the Arq Acquisition and which is included in "Other long-term-assets, net" in the table above:

(in thousands) Amount Weighted Average Useful Life (years)

Developed technology $ 7,700 20

Series A Preferred Stock

In connection with the issuance of the Series A Preferred Stock pursuant to the Purchase Agreement, the Company filed the Certificate of Designations of Preferred Stock for the Series A Preferred Stock (the "Certificate of Designations") with the Secretary of State of the State of Delaware.

Under the Certificate of Designations, 8.9 million preferred shares were designated as Series A Preferred Stock.

On June 13, 2023 (the "Conversion Date"), the Company's stockholders approved the conversion of all of the outstanding shares of Series A Preferred Stock, including the "Escrow Shares," as defined below, and the corresponding issuance of shares of common stock.

Upon such approval, each outstanding share of Series A Preferred Stock was automatically converted into the number of shares of common stock described below.

Each share of Series A Preferred Stock was deemed to have an original issue price of $ 4.00 per share (the "Original Issue Amount").

The number of shares of common stock issued upon conversion of each share of Series A Preferred Stock was equal to the product of (i) the sum of (A) the Original Issue Amount plus (B) an amount equal to the cumulative amount of the accrued and unpaid dividends on such share at such time divided by (ii) the Original Issue Amount, subject to adjustment.

Holders of the Series A Preferred Stock were entitled to receive cumulative dividends, which accrued quarterly on the last day of each applicable quarter (whether or not declared or funds for their payment are lawfully available) and were payable quarterly, in arrears, on the earlier to occur of (a) the date any dividend is paid to holders of Common Stock with respect to such quarter and (b) 30 days after the end of each quarter (the "Series A Quarterly Dividend") at the rate per share of Series A

and Subsidiaries

Notes to Consolidated Financial Statements

Preferred Stock equal to the greater of (i) if the Company declared a cash dividend on the common stock with respect to such quarter, the amount of the cash dividend that would be received by a holder of Common Stock in which such share of Series A Preferred Stock would be convertible on the record date for such cash dividend and (ii) an annual rate (the "Rate") of 8.0 % of the Original Issue Amount compounded quarterly with respect to such quarter.

On March 31, 2023, the Company declared a dividend of 68,464 Series A PIK Shares with respect to the accrued dividends on the Preferred Shares for the first quarter of 2023 (the "PIK Dividend").

The PIK Dividend was recorded at the estimated fair value of $ 0.2 million as of March 31, 2023 and was paid on April 21, 2023.

Of the total Preferred Shares issued in the Arq Acquisition, 833,914 were held in escrow (the "Escrow Shares") based on a contingent redemption feature, (the "Contingent Redemption Feature," as defined below).

The fair value of the Preferred Shares issued was determined to be $ 3.46 per Preferred Share on the Acquisition Date (the "Preferred Share Price") plus the value of the Contingent Feature related to the Escrow Shares.

The Escrow Shares were converted into shares of common stock on the Conversion Date and continue to be held in escrow (the "Escrow Common Shares").

The Escrow Common Shares were withheld pending a determination by the IRS that no tax withholding is required on the Purchase Consideration issued to Arq Ltd.

(the "Arq Ltd.

Tax Liability").

The Company estimated the fair value of the potential Arq Ltd.

Tax Liability at $ 3.3 million.

In April 2024, the IRS determined that no withholding was required by Arq Ltd.

in connection with the Purchase Consideration received by Arq Ltd., all of the Escrow Common Shares were released and delivered to Arq Ltd.

The Series A Preferred Stock contained a mandatory redemption feature in the event the Preferred Shares, including future issuances of Series A Preferred Stock issued under dividend requirements, were not converted into shares of Common Stock prior to February 1, 2028.

The Company concluded that both the Escrow Shares and the Non Escrow Shares did not meet the definition of mandatorily redeemable financial instruments as there was a substantive conversion feature, and were therefore not classified as liabilities.

As both the Escrow Shares and Non Escrow Shares represented financial instruments that were redeemable for cash, SEC guidance mandates that preferred securities which are redeemable upon the occurrence of an event that is not solely within the control of the issuer be classified outside of permanent equity as "temporary equity." Accordingly, the Company classified and reported the Series A Preferred Stock as temporary equity and in the Consolidated Balance Sheet as of the Acquisition Date.

On the Conversion Date, all shares of Series A Preferred Stock were converted into 5,362,926 shares of Common Stock, and the Company reclassified all of the Series A Preferred Stock to Common Stock as of June 30, 2023.

PIPE Investment

On February 1, 2023 and pursuant to the Arq Acquisition, the Company entered into Subscription Agreements with certain persons (the "Subscribers"), which included existing shareholders of Arq Ltd., three of which were appointed to the Company's Board of Directors (the "Board"), pursuant to which the Subscribers subscribed for and purchased 3,842,315 shares of Common Stock for an aggregate purchase price of $ 15.4 million and at a price per share of $ 4.00 (such transaction, the "PIPE Investment").

and Subsidiaries

Notes to Consolidated Financial Statements

Unaudited Pro Forma Financial Information

The following represents the pro forma effects of the Arq Acquisition as if it had occurred on January 1, 2022.

The pro forma net loss has been calculated after applying the Company’s accounting policies in effect for those years.

In addition, pro forma net loss or the year ended December 31, 2023 includes:

(1) an increase in depreciation and amortization resulting from fair value adjustments to Property, plant, equipment of $ 0.2 million;

(2) an increase in amortization resulting from fair value adjustments to Intangibles of $ 0.1 million;

(3) an increase to interest expense for:

(a) the issuance of the CFG Loan including stated interest and the amortization of the CFG Loan's discount and issuance costs and (b) amortization of debt discount related to a fair value adjustment to the assumed CTB Loan of Arq of $ 0.2 million;

(4) the removal of $ 1.9 million of Payroll and benefits for compensation expense payable to certain Arq employees triggered by change in control provisions in employment agreements, as well as in employee severance agreements, for the year ended December 31, 2023;

(5) a decrease to general and administrative expenses resulting from fair value adjustments to operating leases acquired of $ 0.1 million, and (6) the addition of $ 2.4 million of transaction costs incurred for the period from January 1, 2023 through the Arq Acquisition Date, together with the income tax effects on (1) through (6).

Since Arq had no revenue for the year ended December 31, 2023, pro forma revenue is the same as the Company's reported revenue for that year.

Year ended December 31,

(in thousands) 2023

Revenue $ 99,183

Net loss $ ( 11,119 )

The amounts of year to date revenue and net loss for Arq for the period from the Acquisition Date to December 31, 2023 are as follows:

Year ended December 31,

(in thousands) 2023

Net loss $ ( 11,660 )

Note 12 - Income Taxes

5 unchanged sentences

$ ( 52,598 ) $ ( 5,273 )

and Subsidiaries

Notes to Consolidated Financial Statements

The provision for income taxes consists of the following:

Years Ended December 31,

(in thousands, except for rate) 2024 2023

Current portion of income tax (benefit) expense:

(in thousands) 2025 2024

Current portion of income tax expense (benefit):

Federal $ — $ —

State and other 12 ( 164 )

Deferred portion of income tax (benefit) expense:

Deferred portion of income tax expense (benefit):

State and other — —

Total income tax (benefit) expense $ ( 164 ) $ 153

Total income tax expense (benefit) $ 12 $ ( 164 )

Effective tax rate — % 3 %

Income tax (benefit) expense differed from the amount that would be computed by applying the U.S.

statutory federal income tax rate of 21% to loss before income taxes for the years ended December 31, 2024 and 2023 as follows:

As discussed in Note 1 above, the Company adopted ASU 2023-09 effective for the year ended December 31, 2025 on a retrospective basis.

The reconciliation of income taxes computed at the U.S.

federal statutory rate of 21 % to the effective rate for the years ended December 31, 2025 and 2024 is as follows:

Years ended December 31,

(in thousands) 2024 2023

Federal statutory rate $ ( 1,107 ) $ ( 2,540 )

(in thousands, except for rate) 2025 2024

Amount % of Pretax loss Amount % of Pretax loss

federal statutory tax rate $ ( 11,045 ) 21 % $ ( 1,107 ) 21 %

State income taxes, net of federal benefit (1)

Permanent differences ( 336 ) 755

Valuation allowances 1,493 1,385

Changes in tax rates ( 73 ) ( 74 )

10 — % ( 130 ) 3 %

Foreign tax effects - United Kingdom

Statutory tax rate difference between United Kingdom and U.S.

( 313 ) 1 % ( 73 ) 1 %

Valuation allowance 304 ( 1 ) % 459 ( 9 ) %

Other — — % 1 — %

Nontaxable or nondeductible items

Stock-based compensation 50 — % ( 363 ) 7 %

Return to provision and other true-ups ( 11 ) 144

Income tax (benefit) expense $ ( 164 ) $ 153

Nondeductible compensation — — % 53 ( 1 ) %

Other 43 — % 54 ( 1 ) %

Valuation allowances 10,969 ( 21 ) % 1,035 ( 20 ) %

Other adjustments ( 6 ) — % ( 93 ) 2 %

Effective tax rate $ 12 — % $ ( 164 ) 3 %

(1) State taxes in Texas comprise the majority (greater than 50%) of the tax effect in the category.

and Subsidiaries

24 unchanged sentences

Upfront customer consideration ( 1,347 ) ( 1,344 )

Equity method investments — ( 404 )

Total deferred tax liabilities ( 4,368 ) ( 13,363 )

11 unchanged sentences

Notes to Consolidated Financial Statements

Net cash paid (refunded) for income tax consisted of the following:

As of December 31,

(in thousands) 2025 2024

Federal $ — $ —

Texas ( 27 ) 20

Illinois — ( 150 )

Pennsylvania — 44

Other — ( 14 )

$ ( 27 ) $ ( 100 )

The following table presents the approximate amount of federal and state net operating loss carryforwards and federal tax credit carryforwards available to reduce future taxable income, along with the respective range of years that the net operating loss and tax credit carryforwards would expire if not utilized:

2 unchanged sentences

Federal net operating loss carryforwards $ 13,329 2035 Indefinite

Foreign net operation loss carryforwards $ 3,992 Indefinite Indefinite

Foreign net operating loss carryforwards $ 4,200 Indefinite Indefinite

State and other net operating loss carryforwards $ 4,735 2026 Indefinite

6 unchanged sentences

Balance as of December 31 $ — $ —

For the years ended December 31, 2024 and 2023, the Company did not record any adjustments or recognize interest expense for uncertain tax positions.

Interest and penalties related to uncertain tax positions are accrued and included in the "Interest expense" line item in the Consolidated Statements of Operations.

Additional information related to the components of "Interest expense" is included in Note 9.

For the year ended December 31, 2024, the Company did not record any adjustments or recognize interest expense for uncertain tax positions.

The Company files income tax returns in the U.S., various states and the United Kingdom.

6 unchanged sentences

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

In connection with the equity offerings completed at various dates during 2024, the Company issued additional shares of its common stock.

The Company performed an IRC Section 382 analysis as of those dates and determined that it had not experienced an ownership change as of those dates.

The Company acquired certain tax assets (the "Legacy Arq Tax Assets") in the Arq Acquisition, totaling approximately $ 12.5 million.

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

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

The Company has not completed a formal IRC Section 382 analysis of Legacy Arq equity changes from its inception through the Acquisition Date, however, the Company believes 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.

As of December 31, 2025, the Company performed an IRC Section 382 analysis and determined that it had not experienced an ownership change as of that date.

and Subsidiaries

Notes to Consolidated Financial Statements

Note 13 - Marshall Mine, LLC

On March 27, 2023, (the "MM Closing Date"), the Company completed the sale of all of its membership interests in Marshall Mine, LLC to a third party (the "Buyer") in exchange for cash payment of $ 2.2 million (the "MM Purchase Price") made by the Company to the Buyer and the assumption by the Buyer of certain liabilities of Marshall Mine, LLC.

As of the MM Closing Date, Marshall Mine, LLC had outstanding liabilities of approximately $ 4.9 million that were discharged upon payment of the MM Purchase Price by the Company, and the Company recognized a gain of approximately $ 2.7 million in the Statement of Operations for the year ended December 31, 2023.

In February 2023, the Company completed a business combination (the "Acquisition") in which it acquired certain tax assets (the "Acquisition Tax Assets") totaling approximately $ 12.5 million.

The Acquisition Tax Assets are comprised of net operating loss carryforwards, of which $ 8.8 million were in the U.S.

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

The Company has not completed a formal IRC Section 382 analysis of the acquiree's equity changes from acquiree's inception through the date of the Acquisition.

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

Note 13 - Related Party Transactions

Consumables Cost of Revenue

For the year ended December 31, 2024, the Company recognized $ 0.9 million of Tinuum Group Royalty expense, which is included in the "Cost of revenue, exclusive of depreciation and amortization" line item in the Consolidated Statement of Operations.

For the year ended December 31, 2025, the Company recognized $ 0.6 million of Tinuum Group Royalty expense, which is included in the "Cost of revenue, exclusive of depreciation and amortization" line item in the Consolidated Statements of Operations.

Tinuum Group Obligation

As of December 31, 2024 and 2023, the Company had an outstanding liability of $ 1.7 million related to its contractual amount due under the Tinuum Group Obligation, which is included in the "Other current liabilities" line item in the Consolidated Balance Sheet.

As of December 31, 2024, the Company had an outstanding liability of $ 1.7 million related to its contractual amount due under the Tinuum Group Obligation, which is included in the "Other current liabilities" line item in the Consolidated Balance Sheet as of December 31, 2024.

The Company recognized a gain of $ 1.7 million related to the release of the liability, which is presented in the "Earnings from equity method investments" line item in the Consolidated Statements of Operations for the year ended December 31, 2025.

Refer to Note 8 for further discussion.

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Note 15 - Segment Reporting

The Company has one reportable segment – advanced purification technologies or "APT." The APT segment primarily manufactures and sells AC based environmental remediation products, comprised of powdered activated carbon and granular activated carbon, and other chemicals used to capture and remove contaminants for coal-fired power generation, industrial, municipal water and air, water, and soil treatment and remediation markets.

The Company has one reportable segment – advanced purification technologies or "APT." The APT segment primarily manufactures and sells AC based environmental remediation products, comprised of PAC and GAC, and other chemicals used to capture and remove contaminants for coal-fired power generation, industrial, municipal water and air, water, and soil treatment and remediation markets.

The Company derives revenue primarily in the U.S.

1 unchanged sentence

The Company manufactures all of its finished goods at the Red River Plant.

The Company's chief operating decision maker ("CODM") is the Company's chief executive officer.

The Company's CODM is the Company's chief executive officer.

The Company's accounting policies of the APT segment are the same as those described in the summary of significant accounting policies which are provided in Note 1.

The CODM assesses performance for the APT segment and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

The CODM assesses performance for the APT segment and decides how to allocate resources based on net income that also is reported on the Consolidated Statements of Operations as consolidated net income.

The measure of segment assets is reported on the Consolidated Balance Sheets as total consolidated assets.

The CODM uses net income to evaluate income generated from APT assets (return on assets) in deciding how to allocate cash flows from operations within the APT segment.

Net income is used to monitor budget versus actual operating results in assessing performance of the APT segment.

The level of detail used in reviewing operating financial performance and managing the business is contained in the Company's Consolidated Statements of Operations.

and Subsidiaries

Notes to Consolidated Financial Statements

The level of detail used in reviewing operating financial performance and managing the business is contained in the Company's Consolidated Statements of Operations.

Products and services

The Company operates in one segment, APT, and all revenue reported to external customers represents sales of APT products and are presented in the Consolidated Statements of Operations.

The Company operates in one segment, APT, and all revenue reported represents sales of APT products to external customers and are presented in the Consolidated Statements of Operations.

Geographic areas

1 unchanged sentence

The table below shows revenue by country for the years ended December 31, 2025 and 2024.

Year ended December 31,

Years ended December 31,

(in thousands) 2025 2024

7 unchanged sentences

A Consumables 24 % 21 %

B Consumables 11 % 9 %

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data