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Item 8. Financial Statements and Supplementary Data

2026-03-12 compared with 2025-03-17 · 352 added, 409 removed, 580 unchanged (57% of the section changed)

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 12, 2026 expressed an unqualified opinion.

Change in accounting principle

As discussed in Notes 1 and 20 to the consolidated financial statements, the Company has adopted new accounting guidance in 2024 related to the disclosure of segment information in accordance with ASU 2023-07, Segment Reporting (Topic 280) .

The adoption was retrospectively applied to 2023.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that was 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.

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

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the 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 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 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.

Asset retirement obligations

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As described further in Note 1 to the consolidated financial statements, the Company’s asset retirement obligations are associated with retirement of long-lived assets and recognized at fair value at the time the obligations are incurred.

The Company reviews its asset retirement obligations at least annually and makes necessary adjustments for revisions of inputs and

assumptions utilized in the calculations.

The Company reviews its asset retirement obligations at least annually and makes necessary adjustments for revisions of inputs and assumptions utilized in the calculations.

The calculation of asset retirement obligations requires significant management judgment due to the inherent complexity in estimating the amount and timing of future reclamation activities.

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● We interviewed the Company’s professionals with specialized skill and knowledge regarding the regulatory requirements and mine plans.

Impairment of coal properties

As described further in Notes 1 and 19 to the consolidated financial statements, long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable.

When performing the impairment assessments, the Company projects undiscounted cash flows at the asset group level.

If the asset group is determined not to be recoverable, the Company, with the assistance of third-party valuation specialists, performs an analysis of the fair value of the asset group and recognizes an impairment loss when the fair value of the asset group is less than the carrying value.

As of December 31, 2024, the Company recorded asset impairment charges of $215.1 million associated with its coal properties.

The identification of impairment indicators and the calculation of the amount of impairment requires significant management judgment.

We identified the long-lived asset impairment assessment of coal properties as a critical audit matter.

The principal consideration for our determination that the long-lived asset impairment assessment of coal properties is a critical audit matter is due to the uncertainties and significant management judgment when estimating the fair value of the coal properties.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s forecasted future revenues and cash flows and evaluation of the reasonableness of the valuation model used.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Our audit procedures related to the long-lived asset impairment assessment of coal properties included the following, among others:

● We tested the design and operating effectiveness of internal controls over the identification of impairment indicators, estimation of fair value, and recognition processes.

● With the assistance of professionals with specialized skill and knowledge, we tested management’s process for calculating the asset impairment of coal properties, including evaluating the reasonableness of the valuation methodology and certain significant assumptions used in the calculations including the discount rate applied to the estimated future cash flows.

● We evaluated the qualifications of the third-party specialist engaged by the Company based on their credentials and experience.

● We evaluated the reasonableness of significant judgments including forecasted revenue and operating expenses.

We tested whether these forecasts were reasonable and consistent with historical performance and industry projections and conditions found in industry reports, as applicable.

/s/ GRANT THORNTON LLP

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Prepaid expenses

Assets held-for-sale

Total current assets

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Mine development

Construction work in process

Finance lease right-of-use assets

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Bank debt, net

Convertible notes payable

Convertible notes payable - related party

Long-term lease financing

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Additional paid-in capital

Retained earnings (deficit)

Retained deficit

Total stockholders’ equity

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General and administrative

Gain on disposal or abandonment of assets, net

Asset impairment

(Gain) loss on disposal or abandonment of assets, net

Settlement of litigation

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INCOME (LOSS) FROM OPERATIONS

Interest income

Interest expense (1)

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Other interest

Amortization:

Amortization of debt issuance costs

Total amortization

Total interest expense

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Net income (loss)

Adjustments to reconcile net income to net cash provided by operating activities:

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

Deferred income tax (benefit)

Equity method investment loss

Cash distribution - equity method investment

Depreciation, depletion and amortization

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Stock-based compensation

Amortization of contract asset and contract liabilities

Accretion on contract liabilities

Amortization of contract liabilities

Director fees paid in stock

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Net cash provided by operating activities

Hallador Energy Company

Consolidated Statements of Cash Flows

For the years ended December 31,

(in thousands)

CASH FLOWS FROM INVESTING ACTIVITIES:

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Taxes paid on vesting of RSUs

Net cash provided by (used in) financing activities

Net cash used in financing activities

Increase in cash, cash equivalents, and restricted cash

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Restricted cash

SUPPLEMENTAL CASH FLOW INFORMATION:

SUPPLEMENTAL CASH FLOW DISCLOSURES:

Cash paid for interest

SUPPLEMENTAL NON-CASH FLOW INFORMATION:

Change in capital expenditures included in accounts payable and prepaid expense

Non-cash change in capital expenditures related to accounts payable and prepaid expenses

Stock issued on redemption of convertible notes and interest

The accompanying notes are an integral part of these Consolidated Financial Statements

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Taxes paid on vesting of RSUs

Stock issued on redemption of convertible notes

Stock issued in ATM offering

Stock issued for director fees

BALANCE, DECEMBER 31, 2024

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Taxes paid on vesting of RSUs

Stock issued on redemption of convertible notes

Stock issued in ATM offering

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Basis of Presentation and Consolidation

The consolidated financial statements include the accounts of Hallador Energy Company (hereinafter, “we”, “our” or “us”) and our wholly owned subsidiaries Hallador Power Company, LLC (“Hallador Power”), Sunrise Coal, LLC (“Sunrise”), and Hourglass Sands, LLC (“Hourglass”), as well as Hallador Power and Sunrise’s wholly owned subsidiaries.

Hallador Energy Company (“Hallador” or the “Company”) is a vertically integrated, independent power producer (“IPP”) and fuel company with operations primarily in Indiana.

The Company operates across multiple stages of the energy supply chain, from accredited capacity and electricity to coal.

The Company’s consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”).

The consolidated financial statements include the accounts of Hallador and our wholly owned subsidiaries Hallador Power Company, LLC (“Hallador Power”), Sunrise Coal, LLC (“Sunrise”) as well as their respective subsidiaries and Hourglass Sands, LLC.

All significant intercompany accounts and transactions have been eliminated.

Hallador Power is engaged in the production of coal-fired electric power generation located in Sullivan County, Indiana.

Sunrise is engaged in the production of steam coal from mines located in western Indiana.

Our operations comprise Hallador Power that provides accredited capacity and energy to utilities and other energy market participants through the MISO interconnection, and Sunrise that mines bituminous coal in Indiana to serve various power plants in the Midwest and Southeast United States.

Segment Information

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In addition to these reportable segments, the Company has a “Corporate and Other and Eliminations” category, which is not significant enough, on a stand-alone basis, to be considered an operating segment.

Corporate and Other and Eliminations primarily consist of unallocated corporate costs and activities, including a 50 % interest in Sunrise Energy, LLC (“Sunrise Energy”), a private gas exploration company with operations in Indiana and Oaktown Gas, LLC, which we account for using the equity method.

During the fourth quarter of 2024, we sold our held-for-sale wholly-owned subsidiary Summit Terminal LLC, a logistics transport facility located on the Ohio River.

For further information, see “ Note 21 – Assets Held For Sale ” below.

Corporate and Other and Eliminations primarily consist of unallocated corporate costs and activities, including our 50 % interests in Sunrise Energy, LLC (“Sunrise Energy”), a private gas exploration company with operations in Indiana and Oaktown Gas, LLC, which we account for using the equity method.

The Electric Operations reportable segment includes electric power generation facilities of the Merom Power Plant (“Merom”).

The Coal Operations reportable segment includes our currently operating underground mining complex Oaktown 1 among other mining complexes and locations which operated throughout the year ended December 31, 2023 and were subsequently idled during the year ended December 31, 2024.

The Coal Operations reportable segment includes our currently operating underground mining complex Oaktown 1 among other mining complexes and locations most of which were idled during the year ended December 31, 2024.

Reclassifications

Amounts in the prior years consolidated financial statements are reclassified whenever necessary to conform to the current year’s presentation.

Amounts in the prior year’s consolidated financial statements are reclassified whenever necessary to conform to the current year’s presentation.

Any reclassification adjustments had no impact on prior year total assets, liabilities, net income or shareholders’ equity.

In the fourth quarter of 2024, the Company made certain reclassifications that reduced “other operating and maintenance costs” and increased “depreciation, depletion and amortization” on the Consolidated Statements of Operations for certain assets with a useful life of one to three years.

The entire adjustment is reflected in the fourth quarter of 2024.

Previous interim periods and prior year were not adjusted as the amounts were not material.

The amounts recognized in the fourth quarter of 2024 that are related to the first, second and third quarters of 2024 were $ 2.1 million, $ 2.6 million and $ 1.7 million, respectively.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

Actual amounts could differ from those estimates.

The most significant estimates and assumptions included in the preparation of the financial statements relate to:

(i) deferred income tax accounts, (ii) coal reserves, (iii) depreciation, depletion, and amortization, (iv) estimates used in our impairment analysis, and (v) estimates used in the calculation of asset retirement obligations (“ARO”) under the Federal Surface Mining Control and Reclamation Act of 1977 (“SMCRA”) and other state statues.

Cash and Cash Equivalents

Cash and cash equivalents include investments with maturities when purchased of three months or less.

Cash and cash equivalents include cash on hand and on deposit at financial institutions, including highly liquid investments with original maturities of three months or less.

Cash balances at individual banks may exceed the federally insured limit by the Federal Deposit Insurance Corporation.

The Company has not experienced any material losses in such accounts.

The Company has not historically experienced any losses in such accounts.

Restricted Cash

Restricted cash represents cash held by third parties primarily for future workers’ compensation claims and MISO escrow payments.

Workers’ compensation is based estimated claim liabilities and MISO escrow payments are based on power purchased or sold related to power demand and our power purchase agreements (“PPA”).

Restricted cash represents cash held by third parties primarily for future workers’ compensation claims and Midcontinent Independent System Operator’s ("MISO") escrow payments.

The amount restricted for workers’ compensation is based on estimated claim liabilities.

The amount restricted for MISO escrow payments is based on power purchased or sold through the MISO interconnection and our power purchase agreements (“PPA”).

Accounts Receivable

The timing of revenue recognition, billings and cash collections results in accounts receivable from customers.

Customers are invoiced as power is delivered or as coal is shipped or at periodic intervals in accordance with contractual terms.

Customers are invoiced at periodic intervals in accordance with contractual terms for delivered energy and accredited capacity.

Coal customers are invoiced upon shipment.

Coal invoices typically include customary adjustments for the resolution of price variability, such as coal quality thresholds.

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Inventory and Parts and Supplies

Inventory and parts and supplies are valued at the lower of cost or net realizable value determined using the first-in first-out method.

Inventory costs include labor, supplies, operating overhead, and other related costs incurred at or on behalf of the mining location or plant, including depreciation, depletion, and amortization of equipment, buildings, mineral rights, and mine development costs.

Contract Asset - Coal Purchase Agreement

Contract Asset - Coal Purchase Agreement, is the result of a coal purchase agreement with Hoosier whereby we purchased coal from Hoosier through May 31, 2023, at fixed prices which were below market prices at the date of entry into the agreement.

This agreement was entered into as consideration in our 2022 acquisition of Merom.

The asset was amortized to inventory as coal was purchased over the term of the agreement as the contract was fulfilled.

During the years ended December 31, 2023, $ 19.6 million was amortized, of which $ 30.7 million was recognized in operating expenses on the consolidated statements of operations.

The Coal Purchase Agreement term was from October 21, 2022 to May 31, 2023.

Coal inventory is valued at the lower of cost or net realizable value (“NRV”) determined using the first-in first-out method.

Coal inventory costs include labor, supplies, operating overhead, and other related costs incurred at or on behalf of the mining location or plant, including depreciation, depletion, and amortization of equipment, buildings, mineral rights, and mine development costs.

Parts and supplies inventory is stated at cost basis determined using the first-in first-out method, less a reserve for surplus and obsolescence.

Prepaid Expenses

Prepaid expenses include prepaid insurance and other prepaid balances with vendors for various services paid for in advance of use.

Prepaid expenses include prepaid insurance and other prepaid balances with vendors for various services paid in advance of use.

Advanced Royalties

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Advance royalties are included in other assets.

Plant Equipment and Mining Properties

The values of our Hallador Power property, plant and equipment were initially recorded at relative fair value based on the consideration paid upon closing of the acquisition of Merom in 2022.

Property, Plant and Equipment

The values of our Hallador Power’s property, plant and equipment were initially recorded at relative fair value based on the consideration paid upon closing of the acquisition of Merom in 2022.

Other equipment is recorded at cost.

Expenditures that extend the useful lives or increase the productivity of the assets are capitalized.

The cost of maintenance and repairs that do not extend the useful lives or increase the productivity of the assets are expensed as

Most power plant equipment is depreciated over the remaining estimated useful life of the Merom at the time of equipment acquisition, or seven to nine years .

The cost of maintenance and repairs that do not extend the useful lives or increase the productivity of the assets are expensed as incurred.

Most power plant equipment is depreciated over the estimated useful life of the assets ranging from six to nine years .

Construction work in process (“CWIP”) on the consolidated balance sheets represent costs incurred for the construction, development, and installation of property, plant, and equipment that are not yet ready for their intended use.

CWIP includes direct construction costs, labor, fees, and other directly attributable costs incurred during the construction period.

Costs are capitalized in CWIP as incurred and are not depreciated until the related asset is substantially complete and ready for its intended use.

Upon completion, the accumulated costs are reclassified from CWIP to the appropriate property and equipment category and depreciation is commenced based on the asset’s estimated useful life and applicable depreciation method.

In connection with MISO’s Expedited Resource Addition Study (“ERAS”) project, the Company has deposits totaling approximately $ 13.6 million as of December 31, 2025, related to project development activities.

These amounts are included in CWIP to the extent that they represent costs directly attributable to the project.

The deposit balance of approximately $ 12.9 million paid to MISO in 2025 is refundable in the event the project is terminated and therefore does not represent costs of assets that are ready for their intended use.

Accordingly, such amounts are not depreciated and remain classified as CWIP until the project advances to a stage at which the related assets are placed in service.

If the project is terminated, any refundable amounts will be reclassified as appropriate upon receipt.

Mining properties are recorded at cost.

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The cost of maintenance and repairs that do not extend the useful lives or increase the productivity of the assets are expensed as incurred.

Other than land and most mining equipment, mining properties are depreciated using the units-of-production method over the estimated recoverable reserves.

Most surface and underground mining equipment is depreciated using estimated useful lives ranging from three to fifteen years .

Mining properties are depreciated using the units-of-production method over the estimated recoverable reserves.

Mining equipment and other plant and equipment assets are depreciated using the straight-line method over their estimated useful life.

Most surface and underground mining equipment is depreciated using estimated useful lives ranging from one to fifteen years .

The Company reviews long-lived assets for impairment whenever events or changes in circumstances, known as triggering events, indicate that the carrying amount of a long-lived asset or asset group, may not be recoverable.

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The impairment analysis was based upon our coal mining operating plans, market driven pricing and cost trends.

As part of that analysis, the Company determined the carrying amount of its coal mining long-lived asset group was not recoverable and recorded a non-cash, long-lived asset impairment charge of $ 215.1 million in 2024.

See “ Note 19 – Impairment of Coal Properties ” below related to our 2024 impairment.

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Mine Development

Costs of developing new mines, including asset retirement obligation assets, or significantly expanding the capacity of existing mines, are capitalized and amortized using the units-of-production method over estimated recoverable reserves.

Asset Retirement Obligations (“ARO”) – Reclamation

At the time they are incurred, legal obligations associated with the retirement of long-lived assets are reflected at their estimated fair value, with a corresponding charge to mine development.

Obligations are typically incurred when the Company commences development of underground and surface mines and include reclamation of support facilities, refuse areas and slurry ponds.

Costs of developing new mines, including ARO assets, or significantly expanding the capacity of existing mines, are capitalized and amortized using the units-of-production method over estimated recoverable reserves.

ARO – Reclamation

Our operations are governed by various state and federal statues which establish reclamation and mine closure standards.

At the time they are incurred, legal obligations associated with the retirement of long-lived assets are reflected at their estimated fair value, with a corresponding increase to the respective assets.

Obligations are typically incurred when the Company commences development of underground and surface mines or acquires or expands power plant facilities.

Obligations include reclamation of support facilities, refuse areas, slurry ponds and our landfill.

Obligations are reflected at the present value of their future cash flows.

The Company reflects accretion of the obligations for the period from the date they are incurred through the date they are extinguished.

The ARO assets are amortized using the units-of-production method over estimated recoverable (proven and probable) reserves.

The ARO assets are amortized using straight line method over the useful life of the related asset.

The Company uses the credit-adjusted risk-free discount rates ranging from 7 % to 10 % to discount the obligation, inflation rates anticipated during the time to reclamation, and cost estimates prepared by its engineers inclusive of market risk premiums.

Federal and state laws require that mines be reclaimed in accordance with specific standards and approved reclamation plans, as outlined in mining permits.

Activities include reclamation of pit and support acreage at surface mines, sealing portals at underground mines, and reclamation of refuse areas and slurry ponds.

Federal and state laws

require that our properties be reclaimed in accordance with specific standards and approved reclamation plans, as outlined in applicable permits.

Activities include reclamation of pit and support acreage at surface mines, sealing portals at underground mines, reclamation of refuse areas, slurry ponds and our landfill.

The Company reviews its ARO at least annually and reflects revisions for permit changes, changes in estimated reclamation costs and changes in the estimated timing of such costs.

The change in estimate for the year ended December 31, 2023, was a result of a change in timing and acreage of expected reclamation of Merom.

There was no change in estimate for the year ended December 31, 2024.

In the event the Company is not able to perform reclamation, it has surety bonds at December 31, 2025 totaling $ 30.9 million to cover ARO.

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Contract Liabilities

Contract Liabilities include the PPA with Hoosier whereby Hallador Power is selling power to Hoosier through 2025 at fixed prices which were below market prices at the date the parties entered into the agreement.

Hallador Power also agreed to a reduction in future capacity payments as part of the acquisition consideration.

These agreements were entered into as consideration for the acquisition of Merom in 2022.

The agreement was amended August 31, 2023 to extend through 2028.

The amendment included additional obligations to Hoosier of $ 186.6 million, or $ 56.00 per MWh, as of December 31, 2024.

The power purchase agreement liability is amortized to electric sales revenue pro-rata over the term of the agreement as the contract is fulfilled.

During the years ended December 31, 2024 and 2023, amortization of the power purchase agreement contract liability totaled $ 47.1 million and $ 70.5 million, respectively.

The Power Purchase Agreement term is from October 21, 2022 to May 31, 2028.

The Capacity Payment Reductions occurred on May 31, 2023 and November 30, 2023 in the amount of $ 7.5 million each.

The contract liability relating to this contract totaled $ 43.5 million as of December 31, 2024.

We also have contract liabilities arising from PPA’s for capacity and physically delivered power entered into whereas the customers made advance payments to Hallador Power.

These contracts that have delivery periods through the Spring shoulder season ending May 31, 2025.

The liability will be amortized to electric sales revenue over the remaining term of the agreement as the contract is fulfilled.

The contract liability relating to these contracts totaled $ 42.0 million as of December 31, 2024.

During the year ended December 31, 2024, the Company entered into a $ 60.0 million prepaid physically delivered power contract.

The power purchase agreement term is from June 1, 2025 through December 31, 2026.

The power purchase agreement liability will be amortized to electric sales revenue pro-rata over the term of the agreement as the contract is fulfilled.

The contract liability, including $ 1.2 million of implied interest relating to this contract totaled $ 61.2 million as of December 31, 2024.

The Company records contract liabilities when consideration is received or due prior to the satisfaction of the performance obligations.

Contract liabilities are amortized to electric sales revenue pro-rata over the term of the agreements as the contracts are fulfilled.

Contract liabilities primarily relate to accredited capacity or physically delivered energy.

Business Interruption Insurance

The Company carries an insurance policy to cover insurance risks including business interruption.

There were no business interruption insurance settlements during the years ended December 31, 2025 and 2024.

Business interruption insurance is recorded to cost of operations in the consolidated statements of operations and cash provided by operating activities in the consolidated statement of cash flows.

Commitments and Contingencies

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We have concluded that the likelihood is remote that the ultimate resolution of any pending litigation or pending claims will be material or have a material adverse effect on our business, financial position, results of operations or liquidity.

See “Note 22 – Contingencies” related to our decision to settle certain litigation in February of 2025.

Fuel costs in our Electric Operations include coal purchased from Sunrise Coal and third parties to operate Merom.

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These fuel costs are expensed as the fuel is used.

The difference between Sunrise Coal’s cost to produce coal and the contracted sales price to Hallador Power is eliminated from fuel costs on the Consolidated Statements of Operations.

Income taxes are provided based on the liability method of accounting.

The difference between Sunrise Coal’s cost to produce coal and the contracted sales price to Hallador Power is eliminated in consolidation.

Income taxes are provided based on the asset and liability method of accounting.

The provision for income taxes is based on pretax financial income.

Deferred tax assets and liabilities are recognized for the future expected tax consequences of temporary differences between income tax and financial reporting and principally relate to differences in the tax basis of assets and liabilities and their reported amounts, using enacted tax rates in effect for the year in which differences are expected to reverse.

Net Income per Share

assets and liabilities and their reported amounts, using enacted tax rates in effect for the year in which differences are expected to reverse.

Earnings per Share

Basic earnings per share (“EPS”) are computed by dividing net earnings by the weighted average number of common shares outstanding for the period.

Diluted EPS attributable to common shareholders is computed by adjusting net earnings by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period.

Potential common shares include shares of restricted stock units as if the units issued by us were vested and convertible debt.

We apply the treasury stock method to account for the dilutive impact of its restricted stock units and the if converted method for its convertible notes.

Potential common shares include shares of restricted stock units as if the units issued by us were vested.

We apply the treasury stock method to account for the dilutive impact of its restricted stock units.

Anti-dilutive securities are excluded from diluted EPS.

As a result of determining the effect of potentially dilutive securities, in certain periods, diluted net loss per share is the same as the basic net loss per share for the periods presented.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

Actual amounts could differ from those estimates.

The most significant estimates included in the preparation of the financial statements relate to:

(i) deferred income tax accounts, (ii) coal reserves, (iii) SMCRA and other state statutes, (iv) depreciation, depletion, and amortization, (v) the lower of cost or net realizable value for our inventory (vi) estimates used in our impairment analysis, and (vii) estimates used in the calculation of ARO.

Long-term Contracts

Power Operations

As of December 31, 2024, we are committed to supply the following long-term delivered energy and capacity related to Hoosier and third-party customers:

Annual plant energy generation (in MWh) (in millions)

Hoosier PPA delivered energy (in MWh) (in millions)

Percentage of annual plant energy generation

Other customers delivered energy (in MWh) (in millions)

Percentage of annual plant energy generation

Plant capacity (in MW)

Hoosier PPA Capacity (in MW)

Percentage of annual plant capacity

Other customers capacity (in MW)

Percentage of annual plant capacity

For 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.

At December 31, 2024, 100 % of our accounts receivable were with three customers.

For 2023, we derived 100 % of our electric delivered energy generation from Hoosier and 91 % of our capacity sales revenue from three customers, each representing at least 10% of capacity sales revenue.

For the year ended December 31, 2023, 100 % of our electric sales and accounts receivable were with two customers.

Coal Operations

As of December 31, 2024, we are committed to supplying third-party customers 8.4 million tons of coal through 2028.

There are no coal contracts with price reopeners at December 31, 2024.

In addition, we are committed to supplying 9.2 million tons of coal to Merom through 2028 .

All committed tons to Merom are priced based upon the terms of the intercompany sales transactions.

For 2024, we derived 94 % of our third-party coal sales from three customers, each representing at least 10% of coal sales.

At December 31, 2024, 98 % of our coal operations accounts receivable was from four customers, each representing more than 10%.

For 2023, we derived 93 % of our third-party coal sales from five customers, each representing at least 10% of coal sales.

At December 31, 2023, 85 % of our coal operations accounts receivable was from four customers, each representing more than 10%.

As a result of determining the effect of potentially dilutive securities, in certain periods, diluted net loss per share may be the same as the basic net loss per share for the periods presented.

Stock-based Compensation

Stock-based compensation for restricted stock units is measured at the grant date based on the fair value of the award and is recognized as expense over the applicable vesting period of the stock award (generally two to four years ) using the straight-line method.

Stock-based compensation for restricted stock units is measured at the grant date based on the fair value of the award and is recognized as expense over the respective vesting period of the stock award using the straight-line method.

Recent Accounting Pronouncements - Adopted

The Company has adopted Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which is effective retrospectively for the year end December 31, 2024.

ASU 2023-07 primarily enhances disclosures about significant segment expenses regularly provided to the chief operating decision maker ("CODM"), the amount and composition of other segment items, and the title and position of the CODM.

The Company updated the “ Segment of Business ” footnote below to reflect changes for what the CODM reviews on a regular basis.

The Company updated its prior year information to conform to the current year presentation.

See “ Note 20 – Segments of Business ” for enhanced disclosures associated with the adoption of ASU 2023-07.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures ("ASU 2023-09").

The Company has adopted Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures ("ASU 2023-09"), which is effective for fiscal years beginning after December 15, 2024.

ASU 2023-09 primarily requires enhanced disclosures to (1) disclose specific categories in the rate reconciliation, (2) disclose the amount of income taxes paid and expensed disaggregated by federal, state, and foreign taxes, with further disaggregation by individual jurisdictions if certain criteria are met, and (3) disclose income (loss) from continuing operations before income tax (benefit) disaggregated between domestic and foreign.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact of adopting ASU 2023-09, but do not expect it to have a material effect on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-04, Debt - Debt With Conversion and Other Options (Subtopic 470-20):

Induced Conversion of Convertible Debt Instruments.

The objective of the standard is to improve the relevance and consistency in application of the induced conversion guidance in Subtopic 470-20, Debt with Conversion and Other

This standard will affect entities that settle convertible debt instruments for which the conversion privileges are changed to induce conversion.

The guidance will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.

The Company is currently evaluating the impact of the new standard on its financial statements and related disclosures.

Please see “ Note 7 – Income Taxes ” for additional information.

Recent Accounting Pronouncements Not Yet Adopted

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

Disaggregation of Income Statement Expenses.

The standard update improves the disclosures about a public business entity’s expenses by requiring more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation and amortization) included within income statement expense captions.

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

The update is intended to improve the disclosures about a public business entity’s expenses by requiring more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation and amortization) included within income statement expense captions.

The guidance will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

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(2) INVENTORY

Inventory is valued at lower of cost or net realizable value (“NRV”).

Inventory is valued at lower of cost or NRV.

As of December 31, 2025 and 2024, coal inventory includes NRV adjustments of $ 0.1 million and $ 0.3 million, respectively.

During 2025, as part of the Company’s routine inventory reconciliation process, a downward adjustment of $ 2.6 million was recorded to coal inventory.

(3) OTHER LONG-TERM ASSETS (IN THOUSANDS)

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(4) BANK DEBT

On March 13, 2023, we executed an amendment (“March 13 th Amendment”) to our credit agreement with PNC Bank, National Association (in its capacity as administrative agent, "PNC").

The primary purpose of the March 13 th Amendment was to convert $ 35.0 million of the outstanding balance on the revolver into a new term loan with a maturity date of March 31, 2024, and extend the maturity date of the revolver to May 31, 2024.

The March 13 th Amendment also reduced the total capacity under the revolver to $ 85.0 million and waived the maximum annual capital expenditure covenant for 2022 and increased the covenant for 2023 to $ 75.0 million.

Subsequent to December 31, 2022, and prior to the effective date of the March 13 th Amendment, we had borrowed an additional $ 17.0 million under the revolver.

Additionally, the March 13 th Amendment provided for the transition in interest rates from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) based pricing with ranges from SOFR plus 4.00 % to SOFR plus 5.00 %, depending on our leverage ratio.

On August 2, 2023, we executed an additional amendment (“August 2 nd Amendment”) to our credit agreement with PNC, which was accounted for as a debt extinguishment.

The primary purpose of the August 2 nd Amendment was to convert $ 65.0 million of the outstanding funded debt into a new term loan with a maturity of March 31, 2026, and enter into a revolver of $ 75.0 million with a maturity of July 31, 2026.

The August 2 nd Amendment increased the maximum annual capital expenditure limit to $ 100.0 million.

Prior to the March 13 th Amendment, bank debt was comprised of term debt ($ 5.5 million as of December 31, 2022) and a $ 120 million revolver ($ 79.7 million borrowed as of December 31, 2022).

The term debt amortization was to conclude with the final payment of $ 5.5 million in March 2023.

The revolver was to mature in September 2023.

Under the provision of the March 13 th Amendment, bank debt was comprised of term debt ($ 35.0 million as of March 13, 2023) and an $ 85.0 million revolver ($ 40.2 million borrowed as of March 13, 2023).

The term debt required payment of $ 10.0 million in June 2023 each quarter thereafter in 2023 and $ 5.0 million by March 31, 2024.

Under the August 2 nd Amendment, bank debt was comprised of term debt ($ 58.5 million borrowed as of December 31, 2023) and a $ 75.0

million revolver ($ 33.0 million borrowed as of December 31, 2023).

The term debt requires quarterly payments of $ 6.5 million beginning April 2024 through March 2026.

On September 27, 2024, the Company 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”), with PNC which was accounted for as a debt modification.

The Company is a party to a credit agreement with PNC Bank, National Association (“PNC”), in its capacity as administrative agent, which consists of a revolving credit facility of up to $ 75.0 million and a term loan.

The primary purpose of the First Amendment was to provide the Company with short-term covenant relief to pursue additional liquidity.

The First Amendment provides for additional flexibility for the Company to enter into prepaid forward power sale contracts, provided that the Company repays outstanding term loans under the Credit Agreement (“Term Loan”) with proceeds received from certain eligible power purchase agreements, up to a maximum of $ 20.0 million.

These required prepaid forward power sale Term Loan repayments, if any, will take the place of the $ 6.5 million quarterly Term Loan payments.

During the fourth quarter of 2024, the Company entered into a prepaid forward power sales contract in which $ 20.0 million of the proceeds were used to pay our required $ 6.5 million quarterly loan payments through the third quarter of 2025 and also reduced our fourth quarter 2025 payment to $ 6.0 million.

Furthermore, the First Amendment defines certain administrative changes which include, among other things, added requirements related to reporting, third party financial advisors, and appraisals on coal and power assets.

Bank debt was reduced by $ 47.5 million and increased by $ 6.3 million during the years ended December 31, 2024 and 2023, respectively.

Our debt is recorded at amortized cost, which approximates fair value due to the variable interest rates in the agreement and is collateralized primarily by our assets.

As of December 31, 2024, we had additional borrowing capacity of $ 30.6 million under the revolver and total liquidity of $ 37.8 million.

Our additional borrowing capacity is net of $ 19.4 million in outstanding letters of credit as of December 31, 2024 that were required to maintain surety bonds.

Furthermore, the First Amendment defined certain administrative changes which include, among other things, added requirements related to reporting, third party financial advisors, and appraisals on coal and power assets.

On June 27, 2025, the Company executed the Third Amendment (“Third Amendment”) to our Credit Agreement, which was accounted for as a debt modification.

The primary purpose of the Third Amendment was to provide additional operating flexibility for the remainder of 2025 by redefining covenants and deferring certain covenants until the third quarter of 2025.

During the second quarter of 2025, the Company entered into a $ 35.0 million prepaid forward power sales contract of which $ 19.0 million of the proceeds were deposited into a money market account with the administrative agent as a compensating balance.

The compensating balance was utilized to fully repay the outstanding term loan during the fourth quarter of 2025.

As of March 5, 2026, t he Company fully repaid its revolving credit facility.

Bank debt was reduced by $ 14.0 million and $ 47.5 million during the years ended December 31, 2025 and 2024, respectively.

Our debt is recorded at amortized cost, which approximates fair value due to the variable interest rates in the agreement and is collateralized by substantially all our assets.

As of December 31, 2025, we had additional borrowing capacity of $ 28.8 million under the revolving credit facility and total liquidity of $ 38.8 million.

Our additional borrowing capacity is net of $ 16.2 million in outstanding letters of credit as of December 31, 2025 that were required to maintain surety bonds or related to PPAs.

Liquidity consists of additional borrowing capacity and cash and cash equivalents.

PNC’s commitment to make additional advances, and their obligation to issue letters of credit, may be terminated or reduced upon the occurrence of certain events, including, but not limited to (a) an event of default as defined in the Credit Agreement, including, among other things:

(i) non-payment of principle, interest or other obligations;

(ii) breaches of covenants, including financial covenants;

(iii) breaches of representations and warranties;

(iv) cross-defaults to other indebtedness;

(v) change of control events;

and (vi) bankruptcy or insolvency events;

or (b) the failure to satisfy certain conditions at the time of a draw request.

Upon the occurrence of an event of default, PNC, at its option, may terminate its commitments and obligation to issue letters of credit, declare all outstanding borrowings immediately due and payable, require cash collateralization of outstanding letters of credit and exercise other rights and remedies available under the Credit Agreement.

Unamortized bank fees and other costs incurred in connection with our initial facility totaled $ 4.3 million.

Additional costs incurred with the First Amendment totaled $ 0.6 million .

These unamortized bank fees were deferred and are being amortized over the term of the loan.

During 2023 we recognized a loss on extinguishment of debt of $ 1.5 million for the write-off of unamortized loan fees related to the August 2 nd Amendment to our credit agreement, which was accounted for as a debt extinguishment.

The remaining costs were deferred and are being amortized over the term of the loan.

Additional costs incurred with our Credit Agreement amendments totaled $ 0.9 million, of which $ 0.3 million related to our Third Amendment .

These unamortized bank fees were deferred and are being amortized over the term of the Credit Agreement.

During 2025, we recognized a loss on extinguishment of debt of $ 0.6 million for the write-off of unamortized loan fees related to the Term Loan which was paid off in the fourth quarter of 2025.

The remaining costs deferred are being amortized over the term of the revolving credit facility.

Unamortized bank fees as of December 31, 2025 and 2024, were $ 0.3 million and $ 2.5 million, respectively.

Commitment fees on the unused portion of the facility are 0.50 % per annum.

Bank debt, less debt issuance costs, is presented below (in thousands):

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and (iii) 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.

The Third Amendment, among other things, deferred the Maximum Leverage Ratio and Minimum Debt Service Coverage Ratios until September 2025.

The Maximum Leverage Ratio requirement was changed to 3.00 to 1.00 for our fiscal quarter ending September 30, 2025, and is 2.25 to 1.00 thereafter.

The Debt Service Coverage Ratio requirement was changed to 3.25 to 1.00 as long as the Company maintains the required compensating balance, if not, the ratio remains at 1.25 to 1.00.

The Third Amendment removed the First Lien Leverage Ratio (as defined in the First Amendment to the Credit Agreement) while maintaining the minimum liquidity requirement of $ 10.0 million.

We were in compliance with all covenants defined in the Credit Agreement throughout the year and a s of December 31, 2025.

Interest Rate

The interest rate on the facility ranges from SOFR plus 4.00 % to SOFR plus 5.00 %, depending on our Leverage Ratio.

The interest rate on the PNC facility ranges from secured overnight financing rate (“SOFR ”) plus 4.00 % to SOFR plus 5.00 %, depending on our Leverage Ratio.

As of December 31, 2025, we were paying SOFR plus 4.25 % on the outstanding bank debt which equates to an all-in rate of 8.17 %.

Future Maturities (in thousands):

The Company’s total outstanding balance of $ 30.0 million on the revolving credit facility is scheduled to mature in 2026, with no amounts due in periods thereafter.

On March 5, 2026, Hallador entered into a credit agreement with Texas Capital Bank and Old National Bank, among others, that replaces the Credit Agreement with PNC Bank and includes a $ 75.0 million revolving credit facility (the "New Revolving Credit Facility") and a $ 45.0 million delayed draw term loan (the "Delayed Draw Term Loan", and together with the New Revolving Credit Facility, the "New Credit Facility").

The New Credit Facility bears interest with margins ranging from 2.25 % to 3.75 % above SOFR or the applicable base rate, subject to a SOFR floor of 1.00 %.

The applicable margin is determined based upon the Company's leverage ratio and the type of loan drawn.

The New Credit Facility includes a commitment fee of 0.50 % on any unused portions of the New Revolving Credit Facility.

If the Delayed Draw Term Loan occurs, which is subject to meeting certain conditions, the principal balance of the Delayed Draw Term Loan shall be due and payable in equal quarterly installments of 2.5 % of the original principal amount of such Delayed Draw Term Loan with a final payment of the remaining balance upon maturity.

The New Credit Facility matures on March 5, 2029, and is collateralized by substantially all our assets.

When drawn, the proceeds from the New Credit Facility may be used for ongoing working capital and general corporate purposes.

Liquidity at December 31, 2025, excludes the availability under the New Credit Facility.

(5) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (IN THOUSANDS)

Accounts payable

Accrued liabilities

Workers' compensation reserve

Accrued property taxes

Accrued payroll

Workers' compensation reserve

Group health insurance

Asset retirement obligation - current portion

Group health insurance

Total accounts payable and accrued liabilities

Revenue from Contracts with Customers

We account for a contract with a customer when the parties have approved the contract and are committed to performing their respective obligations, the rights of each party are identified, payment terms are identified, the contract has commercial substance, and it is probable substantially all of the consideration will be collected.

We account for contracts with customers when the parties have executed the contract and are committed to performing their respective obligations, the rights of each party are identified, payment terms are identified, the contract has commercial substance, and it is probable substantially all of the consideration will be collected.

We recognize revenue when we satisfy a performance obligation by transferring control of a good or service to a customer.

Electric operations

We concluded that for a Power Purchase Agreement (“PPA”) that is not determined to be a lease or derivative, the definition of a contract and the criteria in ASC 606, Revenue from Contracts with Customers (“ASC 606”), is met at the time a PPA is executed by the parties, as this is the point at which enforceable rights and obligations are established.

We concluded that for a Power Purchase Agreement (“PPA”) that is not determined to be a lease or derivative, the definition of a contract and the criteria in ASC 606, Revenue from Contracts with Customers (“ASC 606”), is met at the time the PPA is executed by the parties, as this is the point at which enforceable rights and obligations are established.

Accordingly, we concluded that a PPA that is not determined to be a lease or derivative constitutes a valid contract under ASC 606.

We recognize revenue daily, based on an output method of capacity made available as part of any stand-ready obligations for contract capacity performance obligations and daily, based on an output method of MWh of electricity delivered.

For the delivered energy performance obligation in the PPA with Hoosier, we recognize revenue daily for actual delivered electricity plus the amortization of the contract liability as a result of the Asset Purchase Agreement with Hoosier.

For the delivered energy to all other customers, we recognize revenue daily for the actual delivered electricity.

Under PPAs we recognize revenue daily, based on an output method of capacity made available as part of any stand-ready obligations for contracted accredited capacity performance obligations and daily, based on an output method of megawatt hour (“MWh”) of electricity delivered.

For PPAs, we recognize revenue daily for the actual delivered electricity.

For the prepaid PPAs, we recognize revenue daily for the funds received for the actual delivered electricity plus any accretion attributable to the time value of money.

W hen there is an outage at one of the generating units at Merom or energy hours at the Merom Hub are priced below our production cost, we have the option to make net hourly purchases of power in the MISO market to satisfy our obligations, which we record as cost of purchased power in our consolidated statements of operations.

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

Year Ended December 31,

(in thousands)

Electric Operations

The following table shows consolidated accounts receivable concentration greater than 10% from customers of our Electric Operations segment in dollars and percentages for the periods presented:

(in thousands)

Electric Operations

Coal operations

Our coal revenue is derived from sales to customers of coal produced at its facilities.

Our customers typically purchase coal directly from our mine sites where the sale occurs and where title, risk of loss, and control pass to the customer at that point.

Our coal revenue is derived from sales to customers of coal produced at our mining facilities.

Our customers typically purchase coal free on board from our mine sites where title, risk of loss, and control pass to the customer.

Our customers arrange for and bear the costs of transporting their coal from our mines to their plants or other specified discharge points.

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Price adjustments are made and billed in the month the coal sale was recognized based on quality standards that are specified in the coal sales agreement, such as British thermal unit (“Btu”) factor, moisture, ash, and sulfur content, and can result in either increases or decreases in the value of the coal shipped.

When applicable, we have constrained the expected value of variable consideration in our estimation of transaction price and only included this consideration to the extent that it is probable that a significant revenue reversal will not occur.

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

Year Ended December 31,

(in thousands)

Coal Operations

The following table shows consolidated accounts receivable concentration greater than 10% from customers of our Coal Operations segment in dollars and percentages for the periods presented:

(in thousands)

Coal Operations

Disaggregation of Revenue

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Electric operations

(in thousands)

Delivered energy (including contract liability amortization)

Accredited capacity

Total Electric Operations sales

Coal Operations

Outside third-party Indiana customers

Customers in Florida, North Carolina, Alabama and Georgia

(in thousands)

Third party Indiana customers

Customers in Florida, North Carolina and Georgia

Total Coal Operations sales

Performance Obligations

Electric Operations

We concluded that each megawatt hour (“MWh”) of delivered energy is capable of being distinct as a customer could benefit from each on its own by using/consuming it as a part of its operations.

We also concluded that the stand-ready obligation to be available to provide electricity is capable of being distinct as each unit of capacity provides an economic benefit to the holder and could be sold by the customer.

In accordance with our Asset Purchase Agreement (“Hoosier APA”) with Hoosier in which Hallador Power shall sell, and Hoosier shall buy, delivered energy quantities through 2025 at the contract price, which is $ 34.00 per MWh.

We have remaining delivered energy obligations to Hoosier totaling $ 59.0 million through 2025 as of December 31, 2024.

The agreement was amended August 31, 2023 to extend through 2028 .

The amendment included additional obligations to Hoosier of $ 186.6 million, or $ 56.00 per MWh, as of December 31, 2024.

In addition to delivered energy, under the Hoosier APA, Hallador Power shall provide a stand-ready obligation to provide electricity to MISO, also known as contract capacity.

The contract capacity that Hallador Power shall provide to Hoosier is 917 megawatts (“MW”) for contract year one, and on average 300 MW for contract years two to four.

Hoosier shall pay Hallador Power the capacity price of $ 5.80 per kilowatt month for the contract capacity.

We have remaining capacity obligations to Hoosier through 2025 totaling $ 18.6 million as of December 31, 2024.

The agreement was amended August 31, 2023, to extend through 2028 , with additional capacity obligation to Hoosier of $ 59.5 million as of December 31, 2024, at a price of $ 7.02 per kilowatt month for the contract capacity.

During the second quarter of 2024, the Company entered into an 11-month, $ 45.0 million prepaid physically delivered power contract in which Hallador will provide a total of 1,302,480 MWh.

Since the period between customer payment

and the transfer of promised services is less than one year, we have elected the practical expedient which allows us to not assess whether a customer contract has a significant financing component.

During the fourth quarter of 2024, we entered into a 19-month, $ 60.0 million prepaid physically delivered power contract in which Hallador will provide a total of 1,918,200 MWh.

As the total amount paid up-front by the customer differs from the stand-alone selling price of the transferred power, the Company concluded the contract contains a significant financing component.

The contract liability associated with the $ 60.0 million prepayment will be accreted over the agreement term based upon the Company’s incremental borrowing rate which approximates 10.3 %, and the accretion will be separately recognized as interest expense.

The Company also has additional PPA’s with customers for capacity whereas the customers made advance payments to Hallador Power in the amounts of $ 35.4 million and $ 35.3 million during the years ended December 31, 2024 and 2023, respectively.

The delivery periods related to these prepayments are June 1 through May 31.

The liability will be amortized to electric sales revenue as the contract is fulfilled.

Additionally, during the fourth quarter of 2024, we entered into three contracts in the amount of $ 52.1 million to provide a total of 1,389,600 MWh from December 2024 through December 2025.

We have energy and capacity obligations to customers, excluding the Hoosier APA, through 2029 totaling $ 230.8 million and $ 131.3 million, respectively, as of December 31, 2024 .

Coal Operations

A performance obligation is a promise in a contract with a customer to provide distinct goods or services.

Performance obligations are the unit of account for purposes of applying the revenue recognition standard and therefore determine when and how revenue is recognized.

Electric Operations

We concluded that each MWh of delivered energy is capable of being distinct as a customer could benefit from each on its own by using/consuming it as a part of its operations.

We also concluded that the stand-ready obligation to be available to provide electricity is capable of being distinct as each unit of accredited capacity provides an economic benefit to the holder and could be sold by the customer.

Coal Operations

In most of our coal contracts, the customer contracts with us to provide coal that meets certain quality criteria.

We consider each ton of coal a separate performance obligation and allocate the transaction price based on the base price per the contract, increased or decreased for quality adjustments.

We recognize revenue at a point in time as the customer does not have control over the asset at any point during the fulfillment of the contract.

For substantially all of our customers, this is supported by the fact that title and risk of loss transfer to the customer upon loading of the truck or railcar at the mine.

This is also the point at which physical possession of the coal transfers to the customer, as well as the right to receive substantially all benefits and the risk of loss in ownership of the coal.

We have remaining coal sales performance obligations relating to fixed priced contracts to third-party customers of approximately $ 460.4 million, which represent the average fixed prices on our committed contracts as of December 31, 2024.

We expect to recognize approximately 32.7 % of this coal sales revenue in 2025 , with the remainder recognized through 2028 .

The coal tons used to determine the remaining performance obligations are subject to adjustment in instances of force majeure and exercise of customer options to either take additional tons or reduce tonnage if such option exists in the customer contract.

We consider each ton of coal a separate performance obligation and allocate the transaction price using the base price per the contract, increased or decreased for quality adjustments.

The following table illustrates the balance of all current Electric and Coal Operations contracts allocated to performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2025 and disaggregated by segment and contract duration (in thousands).

Delivered energy revenue

Accredited capacity revenue

Coal Operations revenue (1)

Total revenue

(1) Coal Operations revenue consists of consolidated revenue excluding our intercompany revenues from Merom .

Contract Balances

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A receivable is an entity’s right to consideration that is unconditional.

Under the typical payment terms of our contracts with customers, the customer pays us a base price for the coal, increased or decreased for any quality adjustments, electricity, or capacity.

Under the typical payment terms of our contracts with customers, the customer pays us the contracted price for electricity or accredited capacity.

For coal contracts, the customer pays us a base price for the coal, increased or decreased for any quality adjustments.

Amounts billed and due are recorded as trade accounts receivable and included in accounts receivable in our consolidated balance sheets.

Accounts receivable from contracts with customers

Contract assets

Contract liabilities - current

Contract liabilities - long-term

Total contract liabilities

We received payments related to advanced capacity and advanced physically delivered energy of $ 160.0 million and $ 41.2 million for the years ending December 31, 2024 and 2023, respectively.

Of the amount of contract liabilities that we recorded as of the beginning of the period, we recognized $ 70.2 million and $ 123.6 million of electric revenue related to these advance contract liability payments for the years ended December 31, 2024 and 2023, respectively.

We do not currently have any other contracts in place where it would transfer coal, electricity or capacity in advance of knowing the final price, and thus do not have any other contract assets recorded.

Contract liabilities also arise when consideration is received in advance of performance.

Payments received prior to fulfilling our performance obligations are included in contract liabilities in our consolidated balance sheets.

When the Company receives customer payments more than one year in advance of the related performance obligations, in accordance with ASC 606, the Company adjusts the transaction price for the significant financing component associated with these contracts at risk adjusted market rates.

The resulting interest accretion is recognized as interest expense over the period between the customer payment date and the expected satisfaction of the performance obligation.

The following table shows our beginning and ending accounts receivable balances from contracts with customers for the periods presented (in thousands):

Accounts receivable from contracts with customers - beginning balance

Accounts receivable from contracts with customers - ending balance

As the Company fulfills its contractual obligations, we recognized those amounts in revenue.

The following table reconciles our beginning and ending contract liabilities for the periods presented (in thousands):

Total contract liabilities - beginning balance

Cash payments received on future contract obligations

Accretion on contract liabilities

Revenue recognized, cash payments received in prior period

Revenue recognized, cash payments received in current period

Total contract liabilities - ending balance

(7) INCOME TAXES

Our income tax is different than the expected amount computed using the applicable federal statutory income tax rate of 21 %.

The reasons for and effects of such differences for the years ended December 31st are below (in thousands):

Expected amount

State income taxes, net of federal benefit

Percentage depletion

Change in valuation allowance

Stock-based compensation

Return to provision adjustments

Nondeductible items

Total income tax expense

The deferred tax assets and liabilities resulting from temporary differences between book and tax basis are comprised of the following at December 31st (in thousands):

Effective January 1, 2025, the Company adopted an accounting standards update that provides guidance for reporting on income taxes and requires additional disclosures related to cash paid (received) for income taxes – net and the effective income tax rate.

The Company adopted the updated standard for income taxes using the full retrospective approach, which changed the presentation of certain information below.

Net income (loss) before income taxes consisted of the following (in thousands):

United States

Net Income (Loss) before income taxes

The federal and state income tax provision (benefit) is summarized as follows (in thousands):

Current tax expense:

State and local

Total current tax expense

Deferred tax expense (benefit):

State and local

Total deferred tax expense (benefit)

Total income tax expense (benefit):

State and local

Total income tax expense (benefit)

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.

The tax effects of significant items comprising the Company’s deferred taxes as of the years presented are as follows (in thousands):

Deferred tax assets:

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Net deferred tax liability

Our effective tax rate (“ETR”) for 2024 and 2023 was approximately 4 % and 9 % respectively.

The tax rate for the years ended December 31, 2024 and 2023 are not predictive of future tax rates.

Our ETR differs from the statutory rate due to statutory depletion in excess of tax basis, return to provision adjustments, stock-based compensation and changes in the valuation allowance.

The deduction for statutory depletion does not necessarily change proportionately to changes in income before income taxes.

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized.

In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

Due to historical cumulative losses over the prior three years as well as projected losses over the next year, we believe that it is not more likely than not that the benefit from certain federal and state deferred tax assets will be realized.

As such, we have recorded a full valuation allowance as of December 31, 2024.

The remaining federal NOLs generated in pre-2018 years of $ 19.5 million can offset 100% of future years’ taxable income.

The federal NOLs generated in post 2017 years of $ 104.9 million can offset 80% of future years’ taxable income.

The pre-2018 federal NOLs will expire in varying amounts from 2035 to 2037 if they are not utilized.

Indiana NOLs, which total $ 168.0 million, have a 20-year carryforward period and will expire in the years 2034 to 2044 if they are not utilized.

We have analyzed our filing positions in all of the federal and state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions, to determine whether the positions will be more likely than not be sustained by the applicable tax authority.

Tax positions not deemed to meet the more-likely-than-not threshold are not recorded as a tax benefit or expense in the current year.

We identified our federal tax return and our Indiana state tax return as “major” tax jurisdictions.

We believe that our income tax filing positions and deduction will be sustained on audit and do not anticipate any adjustments that will result in a material change to its consolidated financial position.

While not material, we record any penalties and interest as general and administrative expense.

Tax returns filed with the Internal Revenue Service and state entities generally remain subject to examination for three years after filing.

ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is more likely than not.

Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period.

Because of the Company’s recent history of operating losses, management believes that recognition of the deferred tax assets is currently not likely to be realized and, accordingly, has provided a valuation allowance.

The valuation allowance decreased by $ 8.3 million during 2025 and increased $ 49.7 million during 2024.

Net operating losses and tax credit carryforwards as of the financial statement date are as follows (in thousands):

Expiration Years

Net operating losses, federal (Post December 31, 2017)

Do not Expire

Net operating losses, federal (Pre January 1, 2018)

Net operating losses, state

Tax credits, federal

Tax credits, state

Net operating losses, foreign

Tax credits, foreign

The effective tax rate of the Company’s provision (benefit) for income taxes differs from the federal statutory rate as follows (amounts in thousands):

federal statutory tax rate

State and local income taxes, net of federal income tax effect

Enactment of new tax laws

Effect of cross-borders tax laws

Mine rescue credits

Indiana EDGE credit

Change in valuation allowance

Nondeductible items

Worldwide changes in unrecognized tax benefits

Prior period true-ups and other

Foreign tax effects

Total income tax expense (benefit)

In each year, the state and local income taxes which comprise the majority of the state and local income taxes, net of federal effect category are Indiana.

The cash paid for income taxes (net of refunds) during the year was as follows (in dollars) (in thousands):

State and local - Indiana

Total income taxes paid

On July 4, 2025, the United States Congress passed budget reconciliation bill H.R.1, referred to as the One Big Beautiful Bill Act (“OBBBA”).

The OBBBA contains several changes to corporate taxation, such as (i) the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, including 100% expensing of qualified depreciable assets, (ii) interest deductibility, (iii) the repeal or acceleration of the sunset of certain tax credits under the 2022 Inflation Reduction Act and (iv) the elimination of certain penalties for violations of certain regulatory credit programs.

The OBBBA has multiple effective dates with certain provisions effective in 2025 and others implemented through 2027.

The Company continues to analyze the impact of this legislation on its business and does not anticipate a material impact as a result.

(8) STOCK COMPENSATION PLANS

Restricted Stock Units (RSUs)

A portion of the total compensation offered by the Company to its employees and directors includes stock-based compensation in the form of RSUs.

The RSUs generally vest over a period of three years .

The table below shows the number of RSUs available for issuance at December 31, 2025:

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( 4,260,472 )

Non-vested grants

( 1,034,486 )

Unvested grants

RSUs available for future issuance

Non-vested grants at December 31, 2022

Granted – weighted average share price on grant date was $ 9.30

Non-vested grants as of December 31, 2023

Awarded - weighted average share price on award date was $ 5.69

Non-vested grants as of December 31, 2024

Unvested grants at December 31, 2023

Awarded - weighted average share price on grant date was $ 5.69

Unvested grants as of December 31, 2024

Awarded - weighted average share price on grant date was $ 16.96

Unvested grants as of December 31, 2025

RSU Vesting Schedule

Shares vested in 2024 had a value of $ 2.0 million based on the share price of $ 5.33 on their vesting dates.

Shares that vested in 2025 had a value of $ 10.6 million based on the average share price of $ 14.32 on their vesting dates.

Under our RSU plan, participants are allowed to relinquish shares to pay for their required statutory income taxes.

The outstanding RSUs have a value of $ 8.9 million based on the March 10, 2025 closing stock price of $ 8.60 .

For the years ended December 31, 2024 and 2023, stock-based compensation was $ 4.5 million and $ 3.6 million, respectively.

As of December 31, 2024, unrecognized stock compensation expense to be recognized over the remaining 3-year vesting period was $ 2.7 million, and we had 54,084 RSUs available for future issuance.

Stock-based compensation expense is included in labor and in general and administrative in the consolidated statements of operations.

For the years ended December 31, 2025 and 2024, stock-based compensation expense was $ 3.5 million and $ 4.5 million, respectively.

As noted in our Form 8-K filed with the SEC on June 2, 2025, on May 29, 2025, shareholders approved the Second Amended and Restated 2008 Restricted Stock Unit Plan (the “RSU Plan”) which, (i) increased the number of shares available for issuance by 2,000,000 shares, and (ii) extended the term of the RSU Plan until May 29, 2035.

As of December 31, 2025, unrecognized stock compensation expense to be recognized over the respective vesting period was $ 4.1 million.

RSUs are not allocated earnings and losses as they are considered non-participating securities.

Forfeitures are recognized as they occur.

Stock Options

We have no stock options outstanding.

(9) EMPLOYEE BENEFITS

Our employee benefit expenses for the years ended December 31st are below (in thousands):

Our employee benefit expenses for the years ended December 31 are below (in thousands):

Health benefits, including premiums

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Of the amounts in the above table, $ 13.2 million and $ 15.2 million are recorded in labor in the consolidated statements of operations for the years ended December 31, 2025 and 2024, respectively, with the remainder in general and administrative.

Our mine employees are also covered by workers’ compensation and such costs were approximately $ 4.0 million and $ 4.9 million for 2024 and 2023, respectively, and are recorded in “ labor ” in the consolidated statements of operations.

Workers’ compensation is a no-fault system by which individuals who sustain work-related injuries or occupational diseases are compensated.

Benefits and coverage are mandated by each state which includes disability ratings, medical claims, rehabilitation services, and death and survivor benefits.

We are partially self-insured for such claims, however, its operations are protected from these perils through stop-loss insurance policies.

Our maximum annual exposure is limited to $ 1.0 million per occurrence with a $ 4.0 million aggregate deductible.

We determine if an arrangement is an operating or finance lease at the inception of each contract.

The Company determines if an arrangement is an operating or finance lease at the inception of each contract.

If the contract is classified as an operating lease, we record a right-of-use (“ROU”) asset and corresponding liability reflecting the total remaining present value of fixed lease payments over the expected term of the lease agreement.

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If our lease does not provide an implicit rate in the contract, we use our incremental borrowing rate when calculating the present value.

We have operating leases for office space with remaining lease terms ranging from one month to approximately eight years .

We have operating leases for office space with remaining lease terms ranging from one month to approximately seven years .

As most of the leases do not provide an implicit rate, we calculate the ROU assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date.

Imputed interest on our operating leases was $ 0.3 million as of December 31, 2024.

At December 31, 2024 and 2023, respectively, we had approximately $ 0.7 million of ROU operating lease assets recorded within buildings and equipment on the consolidated balance sheets.

At December 31, 2025 and 2024, we had approximately $ 0.6 million and $ 0.7 million, respectively, of ROU operating lease assets recorded within buildings and equipment on the consolidated balance sheets.

Operating lease expense associated with ROU assets is recognized on a monthly basis over the lease term in operating costs on the consolidated statements of operation.

We entered into three finance leases during 2023 and five finance leases during 2024, which are accounted for as failed sale-leaseback transactions.

We previously entered into finance lease arrangements that are accounted for as failed sale-leaseback transactions.

Finance lease assets are included in finance lease right-of-use assets on the consolidated balance sheets and the associated finance lease liabilities are reflected within current portion of lease financing and long-term lease financing on the consolidated balance sheets as applicable.

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We had deferred financing fees of $ 0.1 million and $ 0.2 million at December 31, 2025 and 2024, respectively, in connection with entry into the finance leases.

These deferred financing fees will be amortized on a straight-line basis over the term of the finance leases.

Information related to leases was as follows as of December 31st (in thousands):

Information related to leases was as follows as of December 31 (in thousands):

Operating lease information:

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(11) SELF INSURANCE

We self-insure non-leased underground mining equipment.

Such equipment is allocated among four mining units dispersed over seven miles and seven mining units dispersed over eleven miles, at December 31, 2024 and 2023, respectively.

The historical cost of such equipment was approximately $ 227.8 million and $ 262.0 million as of December 31, 2024 and 2023, respectively.

We also self-insure for workers’ compensation claims under a guaranteed cost program.

Under this program, we are responsible for the first $ 1.0 million per claim up to an aggregate of $ 4.0 million annually.

Restricted cash of $ 3.4 million and $ 3.8 million as of December 31, 2024 and 2023, respectively, represents cash held and controlled by a third party and is restricted for future workers’ compensation claim payments.

The Company is self-insured for certain risks, including physical damage and operational liability, related to our non-leased underground mining equipment.

The Company records a liability for self-insured risks when a loss is both probable and reasonably estimable.

The Company had no accrual for self-insurance liabilities as of December 31, 2025 or December 31, 2024.

The Company also self-insures for workers’ compensation claims under a guaranteed cost program.

Under this program, the Company is responsible for the first $ 1.0 million per claim up to an aggregate of $ 4.0 million annually.

The Company has restricted cash of $ 5.3 million and $ 4.9 million as of December 31, 2025 and 2024, respectively, which represents cash held and controlled by third parties and is restricted primarily for future workers’ compensation claim payments.

The Company had $ 5.2 million and $ 4.3 million of workers’ compensation reserve as of December 31, 2025 and 2024, respectively, in accounts payable and accrued liabilities on the consolidated balance sheets.

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Diluted earnings per common share:

Net income (loss) - basic

Convertible Notes interest expense, net of tax

Net income (loss) - diluted

Weighted average shares outstanding - basic

Dilutive effects of if converted Convertible Notes

Dilutive effects of Restricted Stock Units

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Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

See asset impairment discussion below in Nonrecurring Fair Value Measurements sections below.

Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market activity).

ARO liabilities use Level 3 non-recurring fair value measures as further discussed in “ Note 1 – Summary of Significant Accounting Policies ”.

See asset impairment discussion below in the Nonrecurring Fair Value Measurements section below.

The carrying amounts for cash equivalents, accounts receivable, accounts payable, accrued and other liabilities, approximate fair value due to the short maturity of those instruments.

Nonrecurring Fair Value Measurements

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The discounted cash flow model was calculated using projected economics for the Coal Operations assets, using the Company’s mining plan and reserve estimates to be mined and sold at prevailing commodity prices, operating expenses, and production cost levels, which are classified as Level 3 inputs.

The discounted cash flow model was calculated using projected economics for our Coal Operations assets, using the Company’s mining plan and reserve estimates to be mined and sold at prevailing commodity prices, operating expenses, and production cost levels, which are classified as Level 3 inputs.

The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents, and restricted cash.

The Company’s cash and cash equivalent and restricted cash balances on deposit with financial institutions total $ 15.4 million and $ 12.2 million as of December 31, 2025 and 2024, respectively, which exceeded FDIC insured limits.

The Company regularly monitors these institutions’ financial condition.

The Company utilizes large and reputable banking institutions which it believes mitigates these risks.

The Company has not experienced any losses in such accounts.

(14) EQUITY METHOD INVESTMENTS

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Oaktown Gas, LLC operates an emission abatement project through the destruction of gases extracted from the Oaktown mines to generate carbon credits and other emissions offset credits.

The carrying value of the investment included in the consolidated balance sheets as of December 31, 2024 was $ 0.5 million.

The carrying value of the investment included in the consolidated balance sheets as of December 31, 2025 and 2024, was $ 0.7 million and $ 0.5 million, respectively.

(15) CONVERTIBLE NOTES

On July 29, 2022, we issued a $ 5.0 million senior unsecured convertible note (the “July 29 th Note”) to a related party affiliated with an independent member of our board of directors.

The July 29 th Note carried an interest rate of 8 % per annum with a maturity date of December 29, 2028.

For the period August 18, 2022, through August 17, 2024, the holder had the option to convert the July 29 th Note into shares of the Company’s common stock at a conversion price of $ 6.254 .

During the first quarter of 2024, the holders of the July 29 th Note converted them into 799,488 shares of common stock of the Company, and in connection with such early conversion, we elected to pay interest through August 2025 with 112,570 shares of common stock on the conversion date.

We recorded inducement expense which is reported in loss on extinguishment of debt in the condensed consolidated statements of operations in the amount of $ 0.6 million during the three months ended March 31, 2024.

As of December 31, 2024, the entire July 29 th Note had been converted to shares of common stock of the Company.

On August 8, 2022, we issued an additional $ 4.0 million of senior unsecured convertible notes (the “August 8 th Notes”) to related parties affiliated with independent members of our board of directors.

The August 8 th Notes carried an interest rate of 8 % per annum with a maturity date of December 29, 2028.

For the period August 18, 2022, through August 17, 2024, the holder had the option to convert the Notes into shares of the Company’s common stock at a conversion price of $ 6.254 .

Beginning August 8, 2025, we could elect to redeem the August 8 th Notes and the holder was obligated to surrender them at 100% of the outstanding principal balance together with any accrued unpaid interest.

Upon receipt of the redemption notice from the Company, the holder could have elected to convert the principal balance and accrued interest into the Company’s common stock.

During the first quarter of 2024, the holders converted $ 3.0 million of the August 8 th Notes into 479,693 shares of common stock of the Company, and in connection with such early conversion, we elected to pay interest through August 2025 with 67,542 shares of common stock on the conversion date.

During the same period, the holders also converted accrued interest into 57,564 shares of the Company’s common stock.

We recorded inducement expense which is reported in loss on extinguishment of debt during the first quarter of 2024 in the condensed consolidated statements of operations in the amount of $ 0.3 million .

During the second quarter of 2024, the holder converted the remaining $ 1.0 million of August 8 th Notes into 159,898 shares of common stock of the Company, and in connection with such early conversion, we paid accrued interest and additional shares of common stock of 5,099 and 25,003 , respectively, on the conversion date.

We recorded inducement expense which is reported in loss on extinguishment of debt during the second quarter of 2024 in the condensed consolidated statements of operations in the amount of $ 0.2 million.

As of December 31, 2024, the entire August 8 th Note had been converted to shares of common stock of the Company.

On August 12, 2022, we issued an additional $ 10.0 million senior unsecured convertible note (the “August 12 th Note”) to an unrelated party.

The August 12 th Note carried an interest rate of 8 % per annum with a maturity date of December 31, 2026.

For the period August 18, 2022, through the maturity date, the holder had the option to convert the August 12 th Note into shares of the Company’s common stock at a conversion price of $ 6.15 .

Beginning August 12, 2025, we could elect to redeem the August 12 th Note and the holder would have been obligated to surrender at 100% of the outstanding principal balance together with any accrued unpaid interest.

Upon receipt of the redemption notice from the Company, the holder could elect to convert the principal balance and accrued interest into the Company’s common stock.

During the three months ended March 31, 2024, the holder converted accrued interest into 65,041 shares of the Company’s common stock.

During the second quarter of 2024, the holder converted the $ 10.0 million August 12 th Note into 1,626,016 shares of common stock of the Company, and in connection with such early conversion, we paid accrued interest and additional shares of common stock of 49,716 and 224,268 , respectively, on the conversion date.

We recorded inducement expense which is reported in loss on extinguishment of debt in the condensed consolidated statements of operations in the amount of $ 1.7 million during the second quarter of 2024.

As of December 31, 2024, the entire August 12 th Note had been converted to shares of common stock of the Company.

The funds received from the issuance of the various notes described above were used to provide additional working capital to the Company.

The conversion price and number of shares of our common stock issuable upon conversion of the above notes are subject to adjustment from time to time for any subdivision or consolidation of our shares of common stock and other standard dilutive events.

During 2024, the Company issued 3.7 million shares in relation to the conversion of various previously issued convertible note instruments into shares of common stock.

In connection with these conversions, we recognized $ 2.8 million in inducement expenses that were reported in loss on extinguishment of debt in the consolidated statements of operations.

As of December 31, 2025 and 2024, there were no convertible debt instruments outstanding.

(16) NOTES PAYABLE – RELATED PARTIES

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Hardie has a pecuniary interest) in the principal amount of $ 500,000 .

The related party notes were paid off in June 2024 with proceeds from the prepaid physically delivered power contract mentioned above in “ Note 6 – Revenue ”.

The related party notes were paid off in June 2024 with proceeds from the prepaid physically delivered power contract.

(17) ORGANIZATIONAL RESTRUCTURING

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The reduction in workforce was communicated to employees on the Effective Date and implemented immediately, subject to certain administrative procedures.

The Reorganization Plan is designed to strengthen our financial and operational efficiency and create significant operational savings and higher margins in our coal segment.

This step will help to advance our transition from a company primarily focused on coal production to a more resilient and diversified integrated independent power producer (“IPP”).

The Reorganization Plan was designed to strengthen our financial and operational efficiency and create significant operational savings and higher margins in our Coal Operations Segment.

This step helped to advance our transition from a company primarily focused on coal production to a more resilient and diversified, vertically-integrated independent power producer (“IPP”).

As part of this initiative, we substantially idled production at our higher cost surface mines, Prosperity Mine, and Freelandville Mine, with minimal ongoing production.

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In connection with the Reorganization Plan, we incurred aggregate expenses of $ 1.9 million ( $ 1.1 million in the first quarter of 2024 and $ 0.8 million in the second quarter of 2024) that were included in labor in the consolidated statements of operations.

These charges related to compensation, tax, professional, and insurance related expenses and are considered one-time charges paid during 2024.

The coal mining properties asset group was

tested for impairment as result of the organizational restructuring passing the undiscounted recoverability test.

These charges included compensation, tax, professional, and insurance related expenses and were considered non-recurring charges paid during 2024.

See “ Note 19 – Impairment of Coal Properties ” for additional changes to the Company’s mining plans that occurred during the fourth quarter of 2024.

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The Agent may also terminate the Agreement, by notice to us, upon the occurrence of certain events described in the Sales Agreement.

During December 2023, we issued 794,000 shares of Common Stock under the ATM Program for net proceeds of $ 7.3 million.

On December 16, 2025, the Company increased the aggregate gross sales proceeds under the ATM Program from $ 50.0 million to $ 100.0 million by amending the Sales Agreement.

During the year ended December 31, 2025, we issued 697,227 shares of Common Stock under the ATM Program for net proceeds of $ 13.5 million.

During the year ended December 31, 2024, we issued 4,654,430 shares of Common Stock under the ATM Program for net proceeds of $ 34.5 million.

In January 2026, the Company delivered written notice to the Agent to terminate the Sales Agreement effective January 18, 2026.

As a result of the termination of the Sales Agreement, the Company will not offer or sell any further shares under the ATM Program.

(19) IMPAIRMENT OF COAL PROPERTIES

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This business plan review involves updates to its mining plans that take into account many factors, such as changes in market price trends, cost trends, expected demand trends, its latest engineering studies and current year operational and financial results.

During the fourth quarter of 2024, the Company began its annual business plan review.

The Company evaluated core hole samples at several of its mines, reviewing the quality of the mine seam and density of the coal.

Based upon market price trends, the Company believes the required course of action is to only produce those reserves that will allow it the lowest possible cost, and therefore capture the highest possible margins.

The core hole samples at the Oaktown 2 mine were of a lower quality and density than that of the Oaktown 1 mine.

As such, at the conclusion of the Company’s annual business plan review during the fourth quarter of 2024, it decided to temporarily seal the Oaktown 2 mine, and to focus coal production at the Oaktown 1 mine, which has lower recovery costs.

As a result of the Company’s decision to temporarily seal the Oaktown 2 mine, the Company determined a triggering event had occurred.

There were no impairments recorded during the year ended December 31, 2025 in connection with the annual review.

In 2024, the Company evaluated core hole samples at several of its mines, reviewing the quality of the mine seam and density of the coal.

The core hole samples at the Oaktown 2 mine were of a lower quality and density than those of the Oaktown 1 mine.

As such, at the conclusion of the Company’s annual business plan review in 2024, it decided to temporarily seal the Oaktown 2 mine, and to focus coal production at the Oaktown 1 mine, which has lower recovery costs.

As a result of the Company’s decision to temporarily seal the Oaktown 2 mine, the Company determined a triggering event had occurred in 2024.

The Company then completed an impairment review to determine if the carrying value of its coal properties were impaired.

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Coal Operations assets include all of our coal mining properties as these properties are all within the same asset group given the near proximity to one another and their sharing of personnel and assets used to fulfill customer contracts.

The Company utilized an estimated market participant discount rate of 11.5 % and assumed production that is consistent with our current mining plans and reserve estimates that equate to approximately 3.6 million tons per year until all reserves are produced as part of the analysis.

The Company utilized an estimated market participant discount rate of 11.5 % and assumed production that is consistent with our mining plans and reserve estimates that equate to approximately 3.6 million tons per year until all reserves are produced as part of the analysis.

The result of the discounted cash flow analysis confirmed that fourth quarter of 2024 changes to the mining plans caused the carrying amount of its coal properties to not be recoverable.

As a result, the Company recorded an impairment expense during the fourth quarter of 2024 of $ 215.1 million.

The Company did not record an impairment during the year ended December 31, 2023.

The Company did no t record an impairment during the year ended December 31, 2025.

(20) SEGMENTS OF BUSINESS

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Our sales region is in MISO Zone 6, which includes Indiana and a portion of western Kentucky.

Revenues from our Electric Operations segment consist primarily of delivered energy and capacity revenues.

Fuel costs included in our Electric Operations segment include the cost of coal purchased from our Coal Operations segment, which are based on multi-year contracts which approximate market prices at the time the contracts are entered into.

Our Coal Operations segment includes the Oaktown 1 and 2 underground mining complexes, as well as other currently idled mining facilities, which produce high-quality bituminous coal from the Illinois Basin.

Revenues from our Coal Operations segment consist of sales of coal to various third-parties and to Merom.

Coal sales to our Electric Operations are based on multi-year contracts which approximate market prices at the time the contracts are entered into.

Revenue from our Electric Operations segment consist primarily of delivered energy and accredited capacity revenue.

Fuel costs included in our Electric Operations segment include the cost of coal purchased from our Coal Operations segment, which is based on multi-year contracts that approximated market prices at the time the contracts were agreed.

Our Coal Operations segment includes the Oaktown 1 underground mining complex, as well as other currently idled mining facilities, which produce high-quality bituminous coal from the Illinois Basin.

Revenue from our Coal Operations segment consists of sales of coal to various third parties and to Merom.

Coal sales to our Electric Operations are based on multi-year contracts that approximated market prices at the time the contracts were agreed.

Intercompany coal sales and amounts above actual costs to produce the coal are eliminated in the consolidated statements of operations.

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Corporate and Other and Eliminations primarily consist of unallocated corporate costs and activities, including our equity method investments.

The CODM evaluates segment performance based upon EBITDA margin for each business segment.

EBITDA margin is calculated for each segment as follows:

For our Electric Operations segment, EBITDA margin is comprised of delivered energy revenues less certain significant segment expenses, which include (i) variable costs, (ii) other operating and maintenance costs, (iii) costs of purchased power, (iv) utilities, (v) labor and (vi) general and administrative costs.

Variable operating costs are comprised of fuel costs and certain other operating costs, such as limestone and soda ash.

For our Coal Operations segment, EBITDA margin is comprised of coal sales less certain significant segment expenses, which include (i) fuel, (ii) other operating and maintenance costs, (iii) utilities, (iv) labor and (v) general and administrative costs.

EBITDA margin for each segment is a key measure used by our CODM and provides information about our core operating performance, significant expenses and ability to generate cash flow.

Additionally, EBITDA margin provides investors with the financial analytical framework upon which our CODM bases financial, operational, compensation and planning decisions and presents a measurement that investors, rating agencies and debt holders have indicated is useful in assessing us and our results of operations.

Our CODM reviews variable costs, as defined above, in our Electric Operations segment in order to evaluate the efficiency of that segments operations.

The CODM evaluates segment performance based upon Segment EBITDA for each business segment.

Segment EBITDA is calculated for each segment as follows:

For our Electric Operations segment, Segment EBITDA is comprised of accredited capacity and delivered energy revenues less certain significant segment expenses, which include (i) variable costs comprised of fuel costs and certain other operating costs, such as limestone and soda ash, (ii) other operating and maintenance costs, (iii) costs of purchased power, (iv) utilities, (v) labor and (vi) general and administrative costs .

For our Coal Operations segment, Segment EBITDA is comprised of coal sales less certain significant segment expenses, which include (i) fuel, (ii) other operating and maintenance costs, (iii) utilities, (iv) labor and (v) general and administrative costs.

Segment EBITDA for each segment is a key measure used by our CODM and provides information about our core operating performance, significant expenses and ability to generate cash flow.

Additionally, Segment EBITDA provides investors with the financial analytical framework upon which our CODM bases financial, operational, compensation and planning decisions and presents a measurement that investors, rating agencies and debt holders have indicated is useful in assessing us and our results of operations.

Our CODM reviews variable costs, as defined above, in our Electric Operations segment in order to evaluate the efficiency of that segment’s operations.

Presented below are the Electric and Coal Operations key metrics reviewed by the CODM at December 31, 2025 (in thousands):

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Delivered energy

Capacity Revenue

Accredited capacity revenue

Electric sales

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General and administrative

Electric Operations — EBITDA Margin

Coal Operations — EBITDA Margin

(1) Other operating costs include costs for limestone, dibasic acid, ammonia, lime dust and soda ash.

Electric Operations — Segment EBITDA

Coal Operations — Segment EBITDA

(1) Other operating costs include costs for lime dust.

(2) Other operating and maintenance costs include all other operating and maintenance costs with the exceptions of those costs considered variable as discussed above in (1).

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Delivered energy

Capacity Revenue

Accredited capacity revenue

Electric sales

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General and administrative

Electric Operations — EBITDA Margin

Coal Operations — EBITDA Margin

(1) Other operating costs include costs for limestone, dibasic acid, ammonia, lime dust and soda ash.

Electric Operations — Segment EBITDA

Coal Operations — Segment EBITDA

(1) Other operating costs include costs for lime dust.

(2) Other operating and maintenance costs include all other operating and maintenance costs with the exceptions of those costs considered variable as discussed above in (1).

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Delivered energy

Capacity Revenue

Accredited capacity revenue

Other operating revenue

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Delivered energy

Capacity Revenue

Accredited capacity revenue

Other operating revenue

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Operating Revenues

Presented below is our reconciliation of EBITDA Margin to the most comparable GAAP account, income (loss) before income taxes at December 31, 2024 (in thousands):

Presented below is our reconciliation of Segment EBITDA to the most comparable GAAP account, income (loss) before income taxes at December 31, 2025 (in thousands):

Corporate and Other

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and Eliminations

Electric Operations — EBITDA Margin

Coal Operations — EBITDA Margin

Income (Loss) before Income Taxes

Other operating revenue

Depreciation, depletion and amortization

Asset Impairment

Asset Retirement Obligations Accretion

ARO accretion

Exploration costs

(Gain) loss on disposal or abandonment of assets, net

Interest income

Interest expense

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Equity method investment (loss)

Settlement of litigation

Corporate — general and administrative

Corporate — Other Operating and Maintenance Costs

Income (Loss) before Income Taxes

Presented below is our reconciliation of EBITDA Margin to the most comparable GAAP account, income (loss) before income taxes at December 31, 2023 (in thousands):

Segment EBITDA

Presented below is our reconciliation of Segment EBITDA to the most comparable GAAP account, income (loss) before income taxes at December 31, 2024 (in thousands):

Corporate and Other

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and Eliminations

Electric Operations — EBITDA Margin

Coal Operations — EBITDA Margin

Income (Loss) before Income Taxes

Other operating revenue

Amortization of Contract Asset

Depreciation, depletion and amortization

Asset Retirement Obligations Accretion

Asset impairment

ARO accretion

Exploration costs

(Gain) loss on disposal or abandonment of assets, net

Interest income

Interest expense

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Equity method investment (loss)

Settlement of litigation

Corporate — general and administrative

Corporate — other operating and maintenance costs

Income (Loss) before Income Taxes

Segment EBITDA

Presented below are our Electric and Coal Operations assets and capital expenditures at December 31, 2025 (in thousands):

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(21) ASSETS HELD FOR SALE

During the third quarter of 2024, the Company considered strategic alternatives with respect to its wholly-owned subsidiary Summit.

Summit primarily held property, plant and equipment.

On July 29, 2024, the Company entered into a ninety day right of first refusal (“ROFR”) with a potential buyer of Summit for $ 3.2 million.

As of July 29, 2024, Summit met the held-for-sale criteria, and its assets were included in "assets held-for-sale" in the current assets section of the consolidated balance sheets.

The Company recorded the Summit assets, once held for sale, at the lower of their carrying value or their estimated fair value less cost to sell.

The Company also did not record depreciation and amortization of $ 0.1 million ( $ 0.1 million after-tax) on assets held-for-sale and continued to do so while held-for-sale criteria was met.

Fair value is the amount at which an asset, liability or business could be bought or sold in a current transaction between willing parties and may be estimated using a number of techniques or may be observable using quoted market prices.

The Company used a market approach consisting of the contractual ROFR sales price, subject to prorations for property taxes and utilities, to determine the fair value, and subtracted estimated costs to sell from that calculated fair value.

The sale of Summit did not represent a strategic shift that has or will have a major effect on the Company, and as such, did not qualify for treatment as a discontinued operation.

The Company sold Summit on December 23, 2024 for $ 3.2 million.

The Company recorded a $ 1.7 million gain in “(Gain) loss on disposal or abandonment of assets, net” in its consolidated statements of operations.

During the third quarter of 2024, the Company considered strategic alternatives with respect to its wholly-owned subsidiary Summit Terminal LLC (“Summit”), which primarily held property, plant and equipment.

On July 29, 2024, the Company entered into a ninety-day right of first refusal agreement with a potential buyer and subsequently sold Summit on December 23, 2024 for $ 3.2 million.

As of July 29, 2024, Summit met the held-for-sale criteria but did not qualify for treatment as a discontinued operation, and its assets were included in assets held-for-sale in the current assets section of the consolidated balance sheets.

In connection with the sale, the Company recorded a $ 2.3 million loss in (Gain) loss on disposal or abandonment of assets, net in its 2024 consolidated statements of operations.

(22) CONTINGENCIES

Our Coal Operations subsidiary is party to litigation in which the plaintiffs allege violations of the Fair Labor Standards Act and state law due to alleged failure to compensate for time "donning" and "doffing" equipment and to account for certain bonuses in the calculation of overtime rates and pay.

In January 2025, we agreed to settle with the plaintiffs such litigation for $ 2.8 million, which is recorded in “accounts payable and accrued liabilities” on our consolidated balance sheets at December 31, 2024.

During 2024, our Coal Operations subsidiary was party to litigation in which the plaintiff’s alleged violations of the Fair Labor Standards Act and state law due to alleged failure to compensate for time "donning" and "doffing" equipment and to account for certain bonuses in the calculation of overtime rates and pay.

In January 2025, we agreed to settle with the plaintiffs such litigation for $ 2.8 million, which was recorded in operating expenses on our consolidated statements of

operations for the year ended December 31, 2024.

During the third quarter of 2025, we transferred $ 2.7 million into an escrow account and in late 2025 the settlement terms were approved by the court.

At December 31, 2025, there were no further amounts accrued on our consolidated balance sheet related to this litigation .

(23) SUBSEQUENT EVENTS

In January 2026 , the Company conducted a confidentially marketed public offering (the "CMPO") pursuant to a base prospectus and a final prospectus supplement that were filed with the SEC.

The Company sold a total of 3,194,444 shares of common stock, at a price to the public of $ 18.00 per share for aggregate gross proceeds of approximately $ 57.5 million, including the exercise of the underwriter’s option prior to deducting underwriting discounts, commissions, and other offering expenses of $ 3.3 million.

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