What changed in this filing

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Item 1A. Risk Factors

2026-03-12 compared with 2025-03-17 · 108 added, 149 removed, 320 unchanged (45% of the section changed)

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● any inability of our customers to raise capital could adversely affect their ability to honor their obligations to us;

● our future ability to access the capital markets may be restricted as a result of future economic conditions, which could materially impact our ability to grow our business, including development of our coal reserves.

The stability and profitability of our operations could be adversely affected if our customers do not honor existing contracts or do not extend existing contracts or enter into new long-term contracts for electric power, capacity or coal.

In 2024, a significant portion of our electric power, capacity and coal sales were under contracts having a term greater than one year, which we refer to as long-term contracts.

In 2025, a significant portion of our electric power, accredited capacity and coal sales were under contracts having a term greater than one year, which we refer to as long-term contracts.

These contracts have historically provided a relatively secure market for the amount of production committed under the terms of the contracts.

From time to time, industry conditions could make it more difficult for us to enter into long-term contracts with our customers, and if supply exceeds demand in the electric power, capacity and coal industries, our customers may become less willing to lock in price or quantity commitments for an extended period of time.

From time to time, industry conditions could make it more difficult for us to enter into long-term contracts with our customers, and if supply exceeds demand in the accredited capacity, electric power and coal industries, our customers may become less willing to lock in price or quantity commitments for an extended period of time.

Accordingly, we may not be able to continue to obtain long-term sales contracts with reliable customers as existing contracts expire, which could subject an increasing portion of our revenue stream to the increased volatility of the spot market.

Our financial performance may be impacted by price fluctuations in the electric power markets, as well as fluctuations in coal markets and other market factors that are beyond the Company’s control.

Market prices for power, capacity, coal and other ancillary services are unpredictable and tend to fluctuate substantially.

Our financial performance may be impacted by price fluctuations in the electric power markets, as well as fluctuations in coal markets and other market factors that are beyond our control.

Market prices for electric power, accredited capacity, coal and other ancillary services are unpredictable and tend to fluctuate substantially.

Electric power generally must be produced concurrently with its use.

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While we currently sell a significant portion of our electric power pursuant to long-term contracts (where we may be less susceptible to day-to-day fluctuations), we also sell a material amount of power in the competitive wholesale market including through MISO.

A significant portion of the electricity we sell is used by residential and commercial customers for heating and air conditioning Long and short-term power prices may fluctuate substantially due to factors outside of the Company’s control, including:

● changes in generation capacity in the Company’s markets, including the addition of new supplies of power as a result of the development of new plants, expansion of existing plants, the continued operation of uneconomic power plants due to state subsidies, retirement of existing plants or addition of new transmission capacity;

A significant portion of the electricity we sell is used in residences and commercial businesses for heating and air conditioning.

Long and short-term power prices may fluctuate substantially due to factors outside of the Company’s control, including:

● changes in generation capacity in the Company’s markets, including the addition of new supplies of power as a result of the development of new plants, expansion of existing plants, retirement of existing plants or addition of new transmission capacity;

● electric supply disruptions, including plant outages and transmission disruptions;

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● changes in commodity prices and the supply and available inventory of commodities, including but not limited to natural gas, coal and oil;

● changes in the demand for power, or in patterns of power usage, including the potential development of demand-side management tools and practices, distributed generation, and more efficient end-use technologies;

● development of new fuels, new technologies and new forms of competition for the production of power;

● changes in the demand for electric power, or in patterns of power usage, including the potential development of demand-side management tools and practices, distributed generation, and more efficient end-use technologies;

● development of new fuels, new technologies and new forms of competition for the production of electric power;

● economic and political conditions;

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Some of our long-term sales contracts contain provisions allowing for the termination of the contract or the suspension of purchases by customers or, in certain cases, the renegotiation of prices.

Several of our long-term electric power, capacity and coal contracts contain provisions that allow the customer to suspend or terminate performance under the contract upon the occurrence or continuation of certain events that are beyond the customer’s reasonable control.

Several of our long-term electric power, accredited capacity and coal contracts contain provisions that allow the customer to suspend or terminate performance under the contract upon the occurrence or continuation of certain events that are beyond the customer’s reasonable control.

Such events could include force majeure, labor disputes, mechanical malfunctions and changes in government regulations, including, in the case of our coal contracts, changes in environmental regulations rendering use of our coal inconsistent with the customer’s environmental compliance strategies.

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In some circumstances, failure of the parties to agree on a price under a reopener provision can also lead to early termination of a contract.

We depend on a few customers for a significant portion of our revenues, and the loss of one or more significant customers could affect our ability to maintain the sales volume and price of our products.

In our Electric Operations, a material portion of our 2024 revenue was derived from a power purchase agreement with Hoosier (“PPA”), which we entered into as part of our acquisition of Hoosier Energy’s Merom Generation Station (“Merom”) in 2022.

The PPA (as amended in August 2023) expires at the end of 2028.

While we have subsequently added additional electric power customers and purchasers of accredited capacity, the loss of one or more of these material customers could have a material adverse effect on our business, financial condition and results of operations.

During 2024, we derived 89% of our delivered energy and 88% of our capacity sales revenue from three and four customers, respectively, each of which representing at least 10% of sales revenue.

Additionally, we derived 96% of our third-party coal sales from four customers, each representing at least 10% of coal sales.

We depend on a limited number of customers for a significant portion of our revenues, and the loss of one or more significant customers could affect our ability to maintain the sales volume, price of our products and profitability.

The following table shows consolidated operating revenue concentration greater than 10% in our Electric Operations segment in dollars and percentages for the periods presented:

Year Ended December 31,

(in thousands)

Electric Operations

The loss of one or more of these material customers without finding a replacement customer could have a material adverse effect on our business, financial condition and results of operations.

The following table shows consolidated operating revenue concentration greater than 10% in our Coal Operations segment in dollars and percentages for the periods presented:

Year Ended December 31,

(in thousands)

Coal Operations

If in the future we lose any of these customers without finding replacement customers willing to purchase an equivalent amount of coal on similar terms, or if these customers were to decrease the amounts of coal purchased or the terms, including pricing terms, on which they buy coal from us, it could have a material adverse effect on our business, financial condition and results of operations.

Our recent efforts to sell our accredited capacity to long-term customers may not be successful.

In light of the fact that the Company believes it holds a considerable portion of the remaining unsold accredited capacity in MISO Zone 6, covering Indiana and parts of western Kentucky, the Company has recently focused its efforts on entering into one or more long-term contracts for the sale of its energy and capacity to large load end user(s) through a utility or cooperative, including through a data center targeted Request for Proposal (RFP) undertaken in 2024.

This RFP resulted in a wholly owned subsidiary, Hallador Power Company, LLC, executing a Conversion Transaction Commitment Agreement with a leading global data center developer on January 2, 2025.

The transaction contemplated thereby remains subject to a number of conditions, including negotiation of definitive documentation and the selection of a utility partner and there can be no assurance that definitive agreements will be entered into or that the proposed transaction will be consummated on the terms or timeframe currently contemplated, or at all.

Failure to consummate the transaction contemplated by the Conversion Transaction Commitment Agreement and/or any other similar agreement(s) contemplated by the Company’s recent RFP efforts may have a material adverse effect on our business, financial condition and results of operations.

In light of the fact that the Company believes it holds a considerable portion of the remaining unsold accredited capacity in MISO Zone 6, covering Indiana and parts of western Kentucky, the Company has recently focused its efforts on entering into one or more long-term contracts for the sale of its accredited capacity and energy to large load end user(s) through a utility or cooperative.

Failure to enter into one or more long-term contracts may have a material adverse effect on our business, financial condition and results of operations.

Participation in MISO’s ERAS program may not achieve the benefits targeted by the Company and, if not successful, could have a material adverse effect on the Company’s business, financial condition and/or results of operations .

On November 3, 2025, Hallador Power submitted an application to MISO’s ERAS program (the “ERAS program”) to obtain an interconnection that would allow the Company to add up to an additional 515 MW of natural gas generation adjacent to Hallador Power’s Merom Generating Station.

On December 22, 2025, the Company received notice from MISO that its ERAS program application had been accepted by MISO, which is expected to move the Company into a 6- to 9-month MISO review and approval process to gain access to the power grid versus the traditional 4.5-year process.

MISO’s acceptance of the ERAS application for review does not guarantee that the Company’s application will ultimately be approved by MISO or, if approved, that the Company will be able to add additional 515 MW of natural gas generation , or any additional generation, to take advantage of the approved interconnection.

Participation in the ERAS program and construction and development of additional generation is capital intensive and includes construction, operational, financial, regulatory and legal risks that could impact the project’s viability and/or timeline, and the Company’s failure to achieve all or any of the targeted benefits of the ERAS program could have a material adverse effect on the Company’s business, financial condition and/or results of operations.

Expected demand growth from the technology sector, manufacturing and other users of electricity, which has driven recent improvements in the outlook for the competitive wholesale power generation market, may not actually occur or be sustained.

Recently, the market outlook for competitive wholesale power generation has improved largely based on expected future demand from several sources, including data centers and other technology sector requirements, re-shoring of manufacturing in the U.S., the electrification of industry, and other demand drivers.

Various factors including but not limited to unfavorable macroeconomic conditions, increases in energy efficiency or supply, or advances in technology, could result in lower-than-expected electricity demand and unfavorable market conditions for our power generating business and lower demand for coal from our coal mining operations.

A general economic slowdown or recession, a downturn in technology, manufacturing, or other sectors, an oversupply of natural gas, or various other economic

conditions could reduce electricity and coal demand and prices.

Improvements in energy efficiency, conservation efforts, and demand-side power management technologies, as well as other shifts in energy consumption, may reduce demand or slow demand growth, both from our power generating business and from our coal operations.

Furthermore, the penetration of renewable generation resources has, and may continue to have, negative effects on wholesale power prices and the economics of dispatchable generation units.

Advances in technology may also provide alternative methods to produce, dispatch, and store power, which could also lead to increased overall electricity supply.

Any of these factors could impact the dispatch, capacity factors, and value of our generation facility and adversely impact demand for our coal.

Our ability to collect payments from our customers could be impaired if their creditworthiness declines or if they fail to honor their contracts with us.

Our ability to receive payment for electric power, capacity and coal sold and delivered depends on the continued creditworthiness of our customers.

Our ability to receive payment for electric power, accredited capacity and coal sold and delivered depends on the continued creditworthiness of our customers.

If the creditworthiness of our customers declines significantly, our business could be adversely affected.

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Contractors that we use to provide employees at our power plant may experience work stoppages, slowdowns, lockouts or other labor disputes.

At Merom, our operator, Consolidated Asset Management Services (“CAMS”), employs represented workers.

At Merom, our operator, CAMS, employs represented workers.

While these workers are not Hallador Power employees, work stoppages, slowdowns, lockouts or other labor disputes within the CAMS workforce could adversely affect and disrupt our productivity and operations at the plant.

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However, all of our workforce may not remain union-free in the future, and legislative, regulatory or other governmental action could make it more difficult to remain union-free.

If some or all of our currently union-free operations were to become unionized, it could adversely

affect our productivity and increase the risk of work stoppages at our mining complexes.

If some or all of our currently union-free operations were to become unionized, it could adversely affect our productivity and increase the risk of work stoppages at our mining complexes.

In addition, even if we remain union-free, our operations could still be adversely affected by work stoppages at unionized companies, particularly if union workers were to orchestrate boycotts against our operations.

The operation and maintenance of the Merom facilities or future investment in the Merom facilities are subject to operational risks that could adversely affect our financial position, results of operations and cash flows.

In October 2022, the Company, through its subsidiary Hallador Power, completed its acquisition of Merom, our one Gigawatt Generating Station located in Sullivan County, Indiana pursuant to an Asset Purchase Agreement (“APA”) with Hoosier Energy.

The Company acquired Merom in October 2022.

The operation and maintenance of generating facilities like Merom involves many risks, including the performance by key contracted suppliers and maintenance providers;

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or the impact of unusual, adverse weather conditions or other natural events, as well as the risk of performance below expected levels of output or efficiency.

The Merom facilities contain older generating equipment, which even if maintained in accordance with good engineering practices, may require additional capital expenditures to continue operating at peak efficiency.

The Merom facilities contain older generating equipment, which even if maintained in accordance with good engineering and prudent utility practices, may require additional capital expenditures to continue operating at peak efficiency.

From time to time, the Merom facilities may experience transformer failures that may cause one or more of its units to be offline for an extended period of time.

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Additionally, supply chain shortages or delays on key operating components, including but not limited to, transformers, boiler equipment and chemicals or catalysts could materially and adversely impact our operations and reduce revenues or expose the company to significant cover damages related to longer term contracts.

In connection with the APA, the Company assumed certain decommissioning costs and environmental responsibilities.

In the event these assumed costs and responsibilities exceed the Company’s estimates, the Company may incur additional liabilities that could have an adverse effect on the Company’s business, financial results and prospects.

Facility outages could also subject us to market or contractual penalties.

Such increased costs, unplanned outages and market or contractual penalties could have an adverse effect on the Company’s business, financial results and prospects.

Completion of growth projects and future expansion could require significant amounts of financing that may not be available to us on acceptable terms, or at all.

We plan to fund capital expenditures for our current growth projects with existing cash balances, future cash flows from operations, borrowings under credit facilities and cash provided from the issuance of debt or equity.

Under our outstanding Form S-3 “universal shelf” registration statement, we have the ability, subject to market conditions, to access the debt and equity capital markets as needed, including through the use of our outstanding At-the -Market (“ATM”) offering program.

If we raise additional funds by issuing equity securities under our ATM program or otherwise, our stockholders may experience dilution.

Under our outstanding Form S-3 “universal shelf” registration statement, we have the ability, subject to market conditions, to access the debt and equity capital markets as needed.

At times, weakness in the energy sector in general and coal, in particular, has significantly impacted access to the debt and equity capital markets.

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Furthermore, additional growth projects and expansion opportunities may develop in the future that could also require significant amounts of financing that may not be available to us on acceptable terms or in the amounts we expect, or at all.

Various factors could adversely impact the debt and equity capital markets as well as our credit ratings or our ability to remain in compliance with the financial covenants under our then current debt agreements, which in turn could have a material adverse effect on our financial condition, results of operations and cash flows.

Various factors could adversely impact the debt and equity capital markets as well as our credit risk profile or our ability to remain in compliance with the financial covenants under our then current debt agreements, which in turn could have a material adverse effect on our financial condition, results of operations and cash flows.

If we are unable to finance our growth and future expansions as expected, we could be required to seek alternative financing, the terms of which may not be attractive to us, or to revise or cancel our plans.

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We may not recover our investments in our power, mining, and other assets, which may require us to recognize impairment charges related to those assets.

The value of our assets has from time to time been adversely affected by numerous uncertain factors, some of which are beyond our control, including, but not limited to unfavorable changes in the economic environments in which we operate, lower-than-expected coal pricing, technical and geological operating difficulties, an inability to economically extract our coal reserves and unanticipated increases in operating costs.

During the fourth quarter of 2024, we completed our annual impairment analysis, which was based upon the finalized operating plans of the Company, market driven pricing and cost trends.

As part of that analysis, the Company determined the carrying amount of its long-lived assets were not recoverable and recorded a non-cash, long-lived asset impairment charge of $215.1 million in the fourth quarter of 2024.

See “ Note 19 – Impairment of Coal Properties” to the Consolidated Finance Statements in this Form 10-K for further information on the impairment analysis.

The value of our assets has from time to time been adversely affected by numerous uncertain factors, some of which are beyond our control, including, but not limited to unfavorable changes in the economic environments in which we operate, lower-than-expected commodity pricing (including capacity, electric and coal), unplanned outages, technical and geological operating difficulties, an inability to economically extract our coal reserves and unanticipated increases in operating costs.

In 2024, the Company determined the carrying amount of its long-lived assets were not recoverable and recorded a non-cash, long-lived asset impairment charge of $215.1 million in the fourth quarter of 2024.

See “ Note 19 – Impairment of Coal Properties” to the Consolidated Financial Statements in this Form 10-K for further information on the impairment analysis.

The factors noted above may trigger the recognition of additional impairment charges in the future, which could have a substantial impact on our results of coal operations.

In the future, as investments in Merom become more significant, the value of those assets could be adversely affected by numerous uncertain factors, some of which are beyond our control, including, but not limited to unfavorable changes in the economic environments in which we operate, environmental, litigation, weather, and regulatory and/or legal changes.

In the future, as investments in Merom become more significant, the value of those assets could be adversely affected by numerous uncertain factors, some of which are beyond our control, including, but not limited to unfavorable changes in the economic environments in which we operate, commodity pricing, environmental, litigation, weather, and regulatory

and/or legal changes.

These factors may trigger the recognition of additional impairment charges in the future, which could have a substantial impact on our results of power operations.

If we are unable to comply with the covenants contained in our credit agreement, the lenders could declare all amounts outstanding to be due and payable and foreclose on their collateral, which could materially adversely affect our financial condition and operations.

As disclosed in “Note 4 – Bank Debt” to our consolidated financial statements, on September 27, 2024, we executed the First Amendment (“First Amendment”) to the Fourth Amended and Restated Credit Agreement, dated as of August 2, 2023 (as amended, the “Credit Agreement”), in which we adjusted existing covenants and added new ones:

(i) waived the Company’s Leverage Ratio requirement for the third and fourth quarters of 2024, increased the threshold to 5.50 to 1.00 for the first quarter of 2025, and decreased the threshold back to 2.25 to 1.00 for each fiscal quarter thereafter, (ii) the Debt Service Coverage Ratio requirement (1.25 to 1.00) was waived from third quarter of 2024 through the first quarter of 2025, (iii) added a maximum First Lien Leverage Ratio for the first quarter of 2025, calculated as of the end of each fiscal quarter for the trailing twelve months, not to exceed 3.50 to 1.00;

(iv) added a minimum liquidity requirement of $10.0 million, beginning on the First Amendment execution date and ending when the second quarter of 2025 compliance certificate is received, and (v) added a minimum quarterly EBITDA requirement, as defined in the First Amendment, of $5.0 million for the third quarter of 2024 through the first quarter of 2025.

As of December 31, 2024, our liquidity of $37.8 million and quarterly EBITDA of $6.2 million were in compliance with the requirements of the Credit Agreement.

Our ability to comply with the covenants in our credit agreement may be affected by changes in economic or business conditions or other events that are beyond our control.

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In the event of an event of default under our credit agreement, the lenders could declare all amounts outstanding to be due and payable and foreclose on their collateral, which could materially adversely affect our financial condition and operations.

See “ Note 4 – Bank Debt” to the Consolidated Financial Statements in this Form 10-K for further discussion of our credit facilities.

Our indebtedness may limit our ability to borrow additional funds or capitalize on business opportunities.

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Indeed, many investment funds focus on positive ESG business practices and sustainability scores when making investments, whereas other funds may use certain ESG criteria to “screen” certain sectors, such as coal or fossil fuels more generally, out of their investments.

In addition, investors,

particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with companies to require improved ESG disclosure or performance or sell their interests in the company, particularly if its ESG performance does not improve.

In addition, investors, particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with companies to require improved ESG disclosure or performance or sell their interests in the company, particularly if its ESG performance does not improve.

Moreover, certain members of the broader investment community may consider a company’s sustainability score as a reputational or other factor in making an investment decision.

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As new laws and regulations are enacted by legislators or adopted by regulators, requiring businesses to implement processes to enable customer access to their data and enhanced data protection and management standards, we cannot forecast the impact that they may have on the Company’s business.

Any non-compliance with laws may result in proceedings or actions against the Company by as many as 35 governmental entities or individuals.

Any non-compliance with laws may result in proceedings or actions against the Company by governmental entities or individuals.

Moreover, any inquiries or investigations, government penalties or sanctions, or civil actions by individuals may be costly to comply with, resulting in negative publicity, increased operating costs, significant management time and attention, and may lead to remedies that harm the business, including fines, demands or orders that existing business practices be modified or terminated.

Risks Related to our Industry

Risks Related to our Industries

Substantial or extended volatility in coal prices could negatively impact our results of operations in both our Electric Operations and Coal Operations segments.

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, volume optionality and multiple supply sources) and reliability of supply.

In addition, deregulation within the coal industry, including as a result of actions taken by the new Presidential Administration, may encourage new market entrants and could increase the number of competitors we face.

In addition, deregulation within the coal industry, may encourage new market entrants and could increase the number of competitors we face.

Some competitors could have, among other things, larger financial and operating resources, lower per ton cost of production, or relationships with specific transportation providers.

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We cannot predict further developments, and such increases could have a material adverse effect on our results of operations, financial position, and cash flows.

Further, there is uncertainty surrounding tariffs and international trade relations, and it is difficult for us to predict future trade measures and the impact they will have on our business and operations.

In early 2025, the new U.S.

Administration threatened and imposed tariffs on imports from various countries.

In response, some of these countries threatened or imposed tariffs on imports from the U.S.

How long current tariffs will remain in place, and whether the new Administration will enact the threatened tariffs or impose entirely new ones is uncertain.

These newly enacted tariffs, additional new tariffs and other trade measures could adversely affect our results of operations, financial position and cash flows.

In response to the tariffs imposed by the U.S., the European Union, Canada, Mexico and China have imposed tariffs on U.S.

goods and services.

The new tariffs, along with any additional tariffs or trade restrictions that may be implemented by the U.S.

Further, there is continuing uncertainty surrounding tariffs and international trade relations, and it is difficult for us to predict future trade measures and the impact they will have on our business and operations.

Tariffs or trade restrictions that may be implemented by the U.S.

or retaliatory trade measures or tariffs implemented by other countries, could result in reduced economic activity, increased costs in operating our business, reduced demand and changes in purchasing behaviors for thermal coal, limits on trade with the U.S.

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The amount of coal consumed by the domestic electric utility industry is affected primarily by the overall demand for electricity, environmental and other governmental regulations, and the price and availability of competing fuels for power plants such as nuclear, natural gas and fuel oil as well as alternative sources of energy.

Gas-fueled generation has the potential to displace a significant amount of coal-fired electric power generation in the near term, particularly from older, less efficient coal-fired powered generators.

Future environmental regulation of GHG emissions also could accelerate the use by utilities of fuels other than coal.

Natural gas fired generation has the potential to displace a significant amount of coal-fired electric power generation in the near term, particularly from older, less efficient coal-fired power plants.

Environmental regulation of GHG emissions also could accelerate the use by utilities of fuels other than coal.

In addition, federal and state mandates for increased use of electricity derived from renewable energy sources could affect demand for coal.

Such mandates, combined with other incentives to use renewable energy sources, such as tax credits, could make alternative fuel sources more competitive with coal.

Further, far-reaching federal regulations promulgated by the EPA in the last several years, such as CSAPR and MATS, have led to the premature retirement of coal-fired generating units and a significant reduction in the amount of coal-fired generating capacity in the U.S.

A decrease in coal consumption by the domestic electric utility industry could adversely affect the demand for or the price of coal, which could negatively impact our results of operations and reduce our cash from operations.

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Extensive environmental laws and regulations affect coal consumers and have corresponding effects on the demand for coal as a fuel source.

Federal, state and local laws and regulations extensively regulate the amount of sulfur dioxide, particulate matter, nitrogen oxides, mercury and other compounds emitted into the air and pollutants in wastewater from coal-fired electric power plants, which are the ultimate consumers of much of our coal.

Federal, state and local laws and regulations extensively regulate the amount of sulfur dioxide, PM, nitrogen oxides, mercury and other compounds emitted into the air and pollutants in wastewater from coal-fired electric power plants, which are the ultimate consumers of much of our coal.

These laws and regulations can require significant emission control expenditures for many coal-fired power plants, and various new and proposed laws and regulations could require further emission reductions and associated emission control expenditures.

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Our operations are subject to a series of risks resulting from climate change.

Combustion of fossil fuels, such as the coal we produce in our mining operations and the energy we produce in our electric operations, results in the emission of carbon dioxide into the atmosphere.

Combustion of fossil fuels, such as the coal we produce in our Coal Operations and the energy we produce in our Electric Operations, results in the emission of carbon dioxide into the atmosphere.

Concerns about the environmental impacts of such emissions have resulted in a series of regulatory, political, litigation, and financial risks for our business.

Global climate issues continue to attract public and scientific attention.

Many scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere could produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts and floods, and other climatic events.

Increasing government attention is being paid to global climate issues and to emissions of GHGs, including emissions due to fossil fuels.

Following the U.S.

Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain sources in the U.S., or constrain the emissions of power plants (though such emissions restraints have been subject to challenge).

Separately, various states and groups of states have adopted or are considering adopting legislation, regulations, or other regulatory initiatives that are focused on such areas as GHG cap-and-trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.

Internationally, the Paris Agreement requires member states to submit non-binding, individually-determined emissions reduction targets.

These commitments could further reduce demand and prices for fossil fuels.

Although the U.S.

had withdrawn from the Paris Agreement, the U.S.

rejoined the Agreement in 2021 and, in April 2021, established a goal of reducing economy-wide net GHG emissions 50- 52% below levels by 2030.

However, the new Trump Administration has recently announced its intention to withdraw from the Paris Agreement, so these targets from the Biden Administration may change.

Since the 2021 Biden Administration targets were announced, the Parties of the UN Framework Convention on Climate Change have met on several occasions, including at the 28th Conference to the Parties on the UN Framework Convention on Climate Change (“COP28”).

At the COP28, the Parties agreed to non-binding language calling on countries to transition away from fossil fuels in energy systems to achieve net zero emissions by 2050.

Although no legally binding commitment or timeline to phase out or phase down all fossil fuels was made, there can be no guarantees that countries will not seek to implement such a binding phase out in the future.

The full impact of these actions is uncertain at this time and it is unclear what additional initiatives may be adopted or implemented that may have adverse effects upon us and our operators’ operations.

Governmental, scientific, and public concern over climate change has also resulted in increased political risks.

For example, in January 2021, President Biden issued an executive order that commits to substantial action on climate change, calling for, among other things, the increased use of zero-emissions vehicles by the federal government, the elimination of subsidies provided to the fossil-fuel industry, a doubling of electricity generated by offshore wind by 2030, and increased emphasis on climate-related risks across governmental agencies and economic sectors.

While the Biden executive order has now been rescinded by the new Trump Administration, the political dynamic could change yet again in the future.

Other actions that may be pursued include restrictive requirements on new pipeline infrastructure or fossil-fuel export facilities or the promulgation of a carbon tax or cap and trade program.

Further, almost half of the states have begun to address GHG emissions, primarily through the planned development of emissions inventories, regional GHG cap and trade programs, or the establishment of renewable energy requirements for utilities.

Depending on the particular program, we or our customers could be required to control GHG emissions or to purchase and surrender allowances for GHG emissions resulting from our operations.

Litigation risks are also increasing.

Additionally, on March 6, 2024, the SEC adopted new rules relating to the disclosure of a range of climate-related data risks and opportunities, including financial impacts, physical and transition risks, related governance and strategy and GHG emissions, for certain public companies.

We are currently assessing this rule but at this time we cannot predict the ultimate impact of the rule on our business or those of our customers.

As a result of these final rules, we or our customers could incur increased costs related to the assessment and disclosure of climate-related risks and certain emissions metrics.

In addition, enhanced climate disclosure requirements could accelerate the trend of certain

stakeholders and lenders restricting or seeking more stringent conditions with respect to their investments in certain carbon intensive sectors.

Apart from governmental regulation, there are also increasing financial risks for fossil-fuel producers as stakeholders of fossil-fuel energy companies may elect in the future to shift some or all of their support into non-energy related sectors.

Institutional lenders who provide financing to fossil-fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect not to provide funding for fossil-fuel energy companies.

For example, at COP26, the Glasgow Financial Alliance for Net Zero (“GFANZ”) announced that commitments from over 450 firms across 45 countries had resulted in over $130 trillion in capital committed to net zero goals.

The various sub-alliances of GFANZ generally require participants to set short-term, sector-specific targets to transition their financing, investing, and/or underwriting activities to net zero emissions by 2050.

There is also a risk that financial institutions will be required to adopt policies that have the effect of reducing the funding provided to the fossil-fuel sector.

In late 2020, the Federal Reserve announced it had joined the Network for Greening the Financial System (“NGFS”), a consortium of financial regulators focused on addressing climate-related risks in the financial sector.

However, in January 2025 the Board of Governors of the US Federal Reserve System and Federal Deposit Insurance Corporation announced plans to withdrawing as members of the NGFS.

Although we cannot predict the effects of these actions, such limitation of investments in and financing, bonding, and insurance coverages for fossil-fuel energy companies could adversely affect our coal mining operations.

The adoption and implementation of new or more stringent international, federal, or state legislation, regulations, or other regulatory initiatives that impose more stringent standards for GHG emissions from fossil-fuel companies could result in increased costs of compliance or costs of consuming, and thereby reduce demand for coal, which could reduce the profitability of our interests.

Additionally, political, litigation, and financial risks could result in either us restricting or canceling mining activities, incurring liability for infrastructure damages as a result of climatic changes, or having an impaired ability to continue to operate in an economic manner.

One or more of these developments, as well as concerted conservation and efficiency efforts that result in reduced electricity consumption, and consumer and corporate preferences for non-fossil-fuel sources, including alternative energy sources, could cause prices and sales of our coal to materially decline and could cause our costs to increase and adversely affect our revenues and results of operations.

The adoption and implementation of new or more stringent international, federal, or state legislation, regulations, or other regulatory initiatives that impose more stringent standards for GHG emissions from fossil-fuel companies could result in increased costs of compliance or costs of consuming, and thereby reduce demand for coal and increase costs of our power generation operations, which could reduce the profitability of our interests.

One or more of these developments, as well as concerted conservation and efficiency efforts that result in reduced electricity consumption, and consumer and corporate preferences for non-fossil-fuel sources, including alternative energy sources, could cause prices and sales of capacity and electricity from Merom or of our coal to materially decline and could cause our costs to increase and adversely affect our revenues and results of operations.

Climate change may also result in various physical risks, such as the increased frequency or intensity of extreme weather events or changes in meteorological and hydrological patterns that could adversely impact our operations.

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In addition, government inspectors, under certain circumstances, may have the ability to order our operations to be shut down based on a perceived or actual violation of regulations concerning hazardous substances and other matters related to environmental protection.

These and other similar unforeseen impacts that our operations may have on the environment, as well as exposures to hazardous substances or wastes associated with our operations, could result in costs and liabilities that could adversely affect us.

Litigation resulting from disputes with our customers could result in substantial costs, liabilities, and loss of revenues.

From time to time we have disputes with our customers over the provisions of long-term coal supply contracts relating to, among other things, coal pricing, quality, quantity and the existence of specified conditions beyond our or our customers’ control that suspend performance obligations under the particular contract.

From time to time we have disputes with our customers over the provisions of long-term electric and coal supply contracts relating to, among other things, electric and coal pricing, coal quality, quantity and the existence of specified conditions beyond our or our customers’ control that suspend performance obligations under the particular contract.

Disputes could occur in the future, and we may not be able to resolve those disputes in a satisfactory manner, which could have a material adverse effect on our business, financial condition and results of operations.

Our profitability in our Coal Operations could decline due to unanticipated mine operating conditions and other events that are not within our control and that may not be fully covered under our insurance policies.

Our mining operations are influenced by changing conditions or events that can affect production levels and costs at particular mines for varying lengths of time and, as a result, can diminish our profitability.

Our profitability in our Electric and Coal Operations could decline due to unanticipated operating conditions and other events that are not within our control and that may not be fully covered under our insurance policies.

Our power plant and mining operations are influenced by changing conditions or events that can affect production levels and costs for varying lengths of time and, as a result, can diminish our profitability.

These conditions and events include, among others:

● mining and processing equipment failures and unexpected maintenance problems;

● processing equipment failures and unexpected maintenance problems;

● unavailability of required equipment;

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● weather conditions, such as heavy rains, flooding, ice and other natural events affecting operations, transportation or customers;

● accidental mine water discharges and other geological conditions;

● accidental water discharges and other geological conditions;

● seismic activities, ground failures, rock bursts or structural cave-ins or slides;

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● increased reclamation costs;

● inability to acquire, maintain or renew mining rights or permits in a timely manner, if at all;

● inability to acquire, maintain or renew mining rights or electric and mining permits in a timely manner, if at all;

● fluctuations in transportation costs and the availability or reliability of transportation;

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These conditions have the potential to significantly impact our operating results.

Prolonged disruption of production at any of our mines would result in a decrease in our revenues and profitability, which could materially adversely impact our quarterly or annual results.

Prolonged disruption of production would result in a decrease in our revenues and profitability, which could materially adversely impact our quarterly or annual results.

Our inability to obtain commercial insurance at acceptable rates or our failure to adequately reserve for self-insured exposures could increase our expenses and have a negative impact on our business.

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In addition, for certain types or levels of risk, such as risks associated with certain natural disasters or terrorist attacks, we may determine that we cannot obtain commercial insurance at acceptable rates, if at all.

Therefore, we may choose to forego or limit our purchase of relevant commercial insurance, choosing instead to self-insure one or more types or levels of risks.

Therefore, we may choose to

forego or limit our purchase of relevant commercial insurance, choosing instead to self-insure one or more types or levels of risks.

If we suffer a substantial loss that is not covered by commercial insurance or our self-insurance reserves, the loss and related expenses could harm our business and operating results.

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Implementing and complying with these laws and regulations has increased and will continue to increase our operational expense and have an adverse effect on our results of operation and financial position.

Anticipated changes in the U.S.

political environment, including those resulting from the change in Presidential Administration and control of Congress, and to regulatory agencies, may result in significant changes to regulatory framework and enforcements.

Changes in the U.S.

political environment, including those resulting from the new in Presidential Administration and control of Congress, and to regulatory agencies, may result in significant changes to regulatory framework and enforcements.

As a result of the 2024 presidential election, changes in the Presidency and both houses of Congress may result in significant changes in, and have resulted in uncertainty with respect to, legislation, regulation, implementation or repeal of laws and rules related to our industry, our coal products, and our electric power operations.

The new Presidential Administration has rescinded various prior Executive Orders and has issued new Executive Orders and taken other related executive actions.

Many of these policy changes will require further rulemaking actions or other formal steps

before they would become law.

Many of these policy changes will require further rulemaking actions or other formal steps before they would become law.

In addition, the new Administration has taken actions to reduce the number of federal employees and to eliminate certain federal agencies or reduce their authority.

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We continually monitor these developments in order to respond to the changing regulatory environment impacting our business.

While it is not possible to predict whether and when any such changes will occur, specific proposals discussed during and after the election, including the U.S.

withdrawal from the Paris Agreement, could harm our business, operating results and financial condition.

While it is not possible to predict whether and when any such changes will occur, could harm our business,

operating results and financial condition.

If we are slow or unable to adapt to any such changes, our business, operating results and financial condition could be adversely affected.

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The public has the right to comment on permit applications and otherwise participate in the permitting process, including through court intervention.

Accordingly, permits required to conduct our operations may not be issued, maintained, or renewed, or may not be issued or renewed in a timely fashion, or may involve requirements that restrict our ability to economically conduct our mining operations.

Limitations on our ability to conduct our mining operations due to the inability to obtain or renew necessary permits or similar approvals could reduce our production, cash flow, and profitability.

The EPA has begun reviewing permits required for the discharge of overburden from mining operations under Section 404 of the CWA.

Various initiatives by the EPA regarding these permits have increased the time required to obtain and the costs of complying with such permits.

In addition, the EPA previously exercised its “veto” power to withdraw or restrict the use of previously issued permits in connection with one of the largest surface mining operations in Appalachia.

The EPA’s action was ultimately upheld by a federal court.

As a result of these developments, we may be unable to obtain or experience delays in securing, utilizing or renewing Section 404 permits required for our operations, which could have an adverse effect on our results of operation and financial position.

Limitations on our ability to conduct our operations due to the inability to obtain or renew necessary permits or similar approvals could reduce our production, cash flow, and profitability.

In addition, some of our permits could be subject to challenges from the public, which could result in additional costs or delays in the permitting process, or even an inability to obtain permits, permit modifications or permit renewals necessary for our operations.

Inflation could result in higher costs and decreased profitability.

The U.S., European Union and other large economies have recently experienced inflation at a rate significantly higher than recent years.

Current and future inflationary effects may be driven by, among other things, governmental stimulus and monetary policies, supply chain disruptions and geopolitical instability, including the ongoing military conflict between Ukraine and Russia, and conflicts in the Middle East.

This recent inflation has resulted in rising prices, including increases in freight rates, prices for energy and other costs, and has adversely impacted us and may further impact us negatively in the future.

Sustained inflation could result in higher costs for transportation, energy, materials, supplies and labor.

The U.S., European Union and other large economies have recently experienced inflation at a rate significantly higher than recent decades.

This recent inflation has resulted in rising prices, including increases in labor costs, freight rates, prices for energy and other costs, and has adversely impacted us and may further impact us negatively in the future.

Our efforts to recover inflation-based cost increases from our customers may be hampered as a result of the structure of our contracts and competitive pressures.

Accordingly, substantial inflation may have an adverse

impact on our business, financial position, results of operations and cash flows.

Accordingly, substantial inflation may have an adverse impact on our business, financial position, results of operations and cash flows.

Inflation has also resulted in higher interest rates in the U.S., which could increase our cost of debt borrowing in the future.

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We have exposure to past increases in interest rates and may be affected further in the future.

Based on our current variable debt level of $44.0 million as of December 31, 2024, comprised of funds drawn on our outstanding bank debt, an increase of one percentage point in the interest rate will result in an increase in annual interest expense of slightly more than $0.4 million.

Based on our variable debt level of $30.0 million as of December 31, 2025, comprised of funds drawn on our outstanding bank debt, an increase of one percentage point in the interest rate will result in an increase in annual interest expense of $0.3 million.

Any indebtedness we incur in the future may also expose us to increased interest rates, whether as a result of higher fixed rates at the time such a new facility is entered into or because such new indebtedness accrues interest at a variable rate.

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Our future growth could be limited if we are unable to continue to make acquisitions, or if we are unable to successfully integrate the companies, businesses, or properties we acquire.

We may not be successful in consummating any

acquisitions and the consequences of undertaking these acquisitions are unknown.

We may not be successful in consummating any acquisitions and the consequences of undertaking these acquisitions are unknown.

Moreover, any acquisition could be dilutive to earnings.

Our ability to make acquisitions in the future could require significant amounts of financing that may not be available to us under acceptable terms and may be limited by restrictions under our existing or future debt agreements, competition from other companies for attractive opportunities or the lack of suitable acquisition candidates.

Expansions and acquisitions involve a number of risks, any of which could cause us not to realize the anticipated benefits.

Expansions and acquisitions involve a number of risks, including integration risk, which could cause us not to realize the anticipated benefits.

If we are unable to successfully integrate the companies, businesses, or properties we acquire, our profitability may decline, and we could experience a material adverse effect on our business, financial condition, or results of operations.

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● unanticipated changes in business, industry or general economic conditions that affect the assumptions underlying our rationale for pursuing the expansion or acquisition opportunity.

● the validity of our assumptions about estimated proved reserves, future production, prices, revenues, capital expenditures, and operating expenses;

● a decrease in our liquidity by using a significant portion of our cash generated from operations or borrowing capacity to finance acquisitions;

● a significant increase in our interest expense or financial leverage if we incur debt to finance acquisitions;

● the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which any indemnity we receive is inadequate;

● mistaken assumptions about the overall cost of equity or debt;

● our ability to obtain satisfactory title to the assets we acquire;

● an inability to hire, train or retain qualified personnel to manage and operate the acquired assets;

● the occurrence of other significant changes, such as impairment of properties, goodwill or other intangible assets, asset devaluation, or restructuring charges.

Any one or more of these factors could cause us not to realize the benefits anticipated to result from an expansion or acquisition.

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Steel prices and the prices of scrap steel, natural gas and coking coal consumed in the production of iron and steel fluctuate significantly and could change unexpectedly.

Our Electric Operations are also affected by many of these same commodity prices, including chemicals and catalysts necessary to operate the plant in accordance with environmental and other regulations, fuel oil, limestone, and raw materials used in the manufacture and maintenance of equipment throughout the plant.

Operations are also affected by many of these same commodity prices, including chemicals and catalysts necessary to operate the plant in accordance with environmental and other regulations, fuel oil, limestone, and raw materials used in the manufacture and maintenance of equipment throughout the plant.

Inflationary pressures have and could continue to lead to price increases affecting many of the components of our operating expenses such as fuel, steel, other materials and maintenance expense.

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If a vendor fails to deliver on its commitments, or if common carriers have difficulty providing capacity to meet demands for their services, we could experience reductions in our production or increased production costs, which could lead to reduced profitability and adversely affect our results of operations.

Inflationary pressures could significantly impair our operating profitability.

Any future inflationary or deflationary pressures could adversely affect the results of our operations.

For example, at times our results have been significantly impacted by price increases affecting many of the components of our operating expenses such as fuel, steel, maintenance expense, healthcare and labor.

In addition to potential cost increases, inflation could cause a decline in global or regional economic conditions that reduce demand for our electric power, capacity or coal and could adversely affect our results of operations.

The Russian-Ukrainian conflict, and sanctions brought against Russia, as well as other disruptions throughout Europe and the Middle East have caused significant market disruptions that may lead to increased volatility in the price of commodities.

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Globally, various governments have banned imports from Russia including commodities such as coal.

Additionally, the ongoing conflict between Israel and Hamas, as well as the increasing instability throughout the Middle East, could result in additional disruptions in the commodities markets, supply chain and the global economy.

Additionally, the increasing hostilities in the Middle East, including the recent conflict between Iran and Israel and the United States’ military actions against Iran, could result in additional disruptions in the commodities markets, supply chain and the global economy.

These events have caused volatility in the aforementioned commodity markets.

Although we have not experienced any material adverse effect on our results of operations, financial condition or cash flows as a result of the war or conflict or the resulting volatility from such events, such volatility, may significantly affect prices for our coal or the cost of supplies and equipment, as well as the prices of competing sources of energy for our electric power plant customers.

These events, along with trade and monetary sanctions, as well as any escalation of the conflicts and future developments, could significantly affect worldwide market prices and demand for our coal and cause turmoil in the capital markets and generally in the global financial system.

capital markets and generally in the global financial system.

Additionally, the geopolitical and macroeconomic consequences of these events and associated sanctions cannot be predicted, but could severely impact the world economy.

If any of these events occur, the resulting political instability and societal disruption could reduce overall demand for products, causing a reduction in our revenues or an increase in our costs and thereby materially and adversely affecting our results of operations.

The integration of any expansions or acquisitions that we complete will be subject to substantial risks.

Even if we make expansions or acquisitions that we believe will increase our revenue, any expansion acquisition involves potential risks, including, among other things: