What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-07 · 196 added, 114 removed, 426 unchanged (42% of the section changed)

36 unchanged sentences

$ 17,938 $ 24,438

Notes payable - related party

Accounts payable and accrued liabilities

11 unchanged sentences

Convertible notes payable

10,000 10,000

Convertible notes payable - related party

Long-term lease financing

Deferred revenue

Deferred income taxes

11 unchanged sentences

Common stock, $ .01 par value, 100,000 shares authorized;

36,534 and 34,052 issued and outstanding, as of March 31, 2024 and December 31, 2023, respectively

42,599 and 34,052 issued and outstanding, as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

10 unchanged sentences

(in thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

SALES AND OPERATING REVENUES:

2 unchanged sentences

Total sales and operating revenues

Operating expenses

Other operating and maintenance costs

Depreciation, depletion and amortization

3 unchanged sentences

Total operating expenses

INCOME FROM OPERATIONS

INCOME (LOSS) FROM OPERATIONS

Interest expense (1)

Loss on extinguishment of debt

Equity method investment (loss) income

Equity method investment (loss)

NET INCOME (LOSS) BEFORE INCOME TAXES

15 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

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

Deferred income taxes

Equity loss (income) – Sunrise Energy

Deferred income tax (benefit)

Equity loss – Sunrise Energy

Cash distribution - Sunrise Energy

20 unchanged sentences

Payments on bank debt

Payments on lease financing

Borrowings of bank debt

Payments on lease financing

Proceeds from sale and leaseback arrangement

Issuance of related party notes payable

Payments on related party notes payable

Debt issuance costs

1 unchanged sentence

Net cash used in financing activities

Decrease in cash, cash equivalents, and restricted cash

Increase (decrease) in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash, beginning of period

14 unchanged sentences

Stockholders'

Balance, March 31, 2024

Stock-based compensation

Stock issued on vesting of RSUs

Taxes paid on vesting of RSUs

Stock issued on redemption of convertible notes

Stock issued in ATM offering

Balance, June 30, 2024

Balance, December 31, 2023

4 unchanged sentences

Stock issued in ATM offering

Balance, March 31, 2024

Balance, June 30, 2024

Common Stock Issued

Stockholders'

Balance, March 31, 2023

Stock-based compensation

Balance, June 30, 2023

Balance, December 31, 2022

2 unchanged sentences

Taxes paid on vesting of RSUs

Balance, March 31, 2023

Balance, June 30, 2023

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

GENERAL BUSINESS

The interim financial data is unaudited;

however, in our opinion, it includes all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the results for the interim periods.

The condensed consolidated financial statements included herein have been prepared pursuant to the Securities and Exchange Commission’s (the "SEC") rules and regulations;

accordingly, certain information and footnote disclosures normally included in generally accepted accounting principles ("GAAP") financial statements have been condensed or omitted.

The results of operations and cash flows for the three months ended March 31, 2024 , are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2024 .

Our organization and business, the accounting policies we follow, and other information are contained in the notes to our consolidated financial statements filed as part of our 2023 Annual Report on Form 10 -K .

This quarterly report should be read in conjunction with such Annual Report on Form 10 -K.

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

All significant intercompany accounts and transactions have been eliminated.

Certain reclassifications have been made to the Company’s prior period condensed consolidated financial information to conform to the current period presentation.

These presentation changes did not impact the Company’s condensed consolidated net income (loss), consolidated cash flows, total assets, total liabilities or total stockholders’ equity.

We strategically view and manage our operations through two reportable segments:

2 unchanged sentences

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

The Coal Operations reportable segment includes current operating mining complexes Oaktown 1 and 2 underground mines, Prosperity surface mine, Freelandville surface mine, and Carlisle wash plant.

The Coal Operations reportable segment includes mining complexes Oaktown 1 and 2 underground mines, Prosperity surface mine, Freelandville surface mine, and Carlisle wash plant.

On February 23, 2024, our Coal Operations Segment committed to a reorganization effort designed to strengthen its financial and operational efficiency and create significant operational savings and higher margins.

For further information, see “Note 16 – Organizational Restructuring” below.

The interim financial data is unaudited;

however, in our opinion, it includes all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the results for the interim periods.

The condensed consolidated financial statements included herein have been prepared pursuant to the Securities and Exchange Commission’s (the "SEC") rules and regulations;

accordingly, certain information and footnote disclosures normally included in generally accepted accounting principles ("GAAP") financial statements have been condensed or omitted.

The results of operations and cash flows for the three and six months ended June 30, 2024 , are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2024 .

This quarterly report should be read in conjunction with such Annual Report on Form 10 -K.

RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

11 unchanged sentences

Long-lived assets are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount of the assets may not be recoverable.

For the three -month periods ended March 31, 2024 and March 31, 2023, there were no impairment charges recorded for long-lived assets.

For the three and six -month periods ended June 30, 2024 and June 30, 2023, no impairment charges were recorded for long-lived assets.

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

As of March 31, 2024 , and December 31, 2023 , coal inventory includes NRV adjustments of $ 1.3 million and $ 2.0 million, respectively.

On March 13, 2023, we executed an amendment to our credit agreement with PNC Bank, National Association (in its capacity as administrative agent, "PNC"), administrative agent for our lenders under our credit agreement, which was accounted for as a debt modification.

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

The amendment reduced the total capacity under the revolver to $ 85.0 million from $ 120.0 million, waived the maximum annual capital expenditure covenant for 2022, and increased the covenant for 2023 to $ 75.0 million.

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

The primary purpose of the 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 amendment increased the maximum annual capital expenditure limit to $ 100.0 million.

Bank debt was reduced by $ 14.5 million during the three months ended March 31, 2024.

Under the terms of the August 2, 2023 amendment, bank debt is comprised of term debt ($ 58.5 million as of March 31, 2024) and a $ 75.0 million revolver ($ 18.5 million borrowed as of March 31, 2024).

The term debt requires quarterly payments of $ 6.5 million in April 2024 through maturity.

As of June 30, 2024 , and December 31, 2023 , coal inventory includes NRV adjustments of $ 0.9 million and $ 2.0 million, respectively.

At June 30, 2024, the Company had term debt of $ 45.5 million.

The term debt required quarterly payments of $ 6.5 million starting in April 2024 through maturity.

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 March 31, 2024 , we had an additional borrowing capacity of $ 37.9 million and total liquidity of $ 39.5 million.

Our additional borrowing capacity is net of $ 18.6 million in outstanding letters of credit as of March 31, 2024 , that were required to maintain surety bonds.

Bank debt was reduced by $ 46.0 million during the six months ended June 30, 2024.

As of June 30, 2024 , we had additional borrowing capacity of $ 54.4 million and total liquidity of $ 60.7 million.

Our additional borrowing capacity utilizes our $ 75.0 million revolver availability and reduces it by $ 20.6 million for outstanding letters of credit that we were required to maintain for surety bonds.

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

Unamortized bank fees and other costs incurred in connection with the initial facility and subsequent amendments totaled $ 2.5 million as of December 31, 2022.

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, 2023 amendment to our credit agreement, which was accounted for as a debt extinguishment.

Unamortized bank fees incurred with the March 13, 2023 and August 2, 2023 amendments totaled $ 1.6 million and $ 4.3 million, respectively.

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

Unamortized costs as of March 31, 2024 , and December 31, 2023 , were $ 3.2 million and $ 3.6 million, respectively.

Unamortized bank fees related to our term debt as of June 30, 2024 , and December 31, 2023 , were $ 2.8 million and $ 3.6 million, respectively.

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

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

18 unchanged sentences

The credit facility includes a Maximum Leverage Ratio (consolidated funded debt/trailing twelve months adjusted EBITDA), calculated as of the end of each fiscal quarter for the trailing twelve months, not to exceed 2.25 to 1.00.

As of March 31, 2024 , our Leverage Ratio of 1.58 was in compliance with the requirements of the credit agreement.

The credit facility requires a Minimum Debt Service Coverage Ratio (consolidated adjusted EBITDA/annual debt service) calculated as of the end of each fiscal quarter for the trailing twelve months of 1.25 to 1.00 through the credit facility's maturity.

As of March 31, 2024, our Debt Service Coverage Ratio of 2.88 was in compliance with the requirements of the credit agreement.

As of March 31, 2024, we were in compliance with all other covenants defined in the credit agreement.

As of June 30, 2024 , our Leverage Ratio of 2.12 was in compliance with the requirements of the credit agreement.

The credit facility also requires a Minimum Debt Service Coverage Ratio (consolidated adjusted EBITDA/annual debt service) calculated as of the end of each fiscal quarter for the trailing twelve months of 1.25 to 1.00 through the credit facility's maturity.

As of June 30, 2024, our Debt Service Coverage Ratio of 1.56 was in compliance with the requirements of the credit agreement.

As of June 30, 2024, we were in compliance with all other covenants defined in the credit agreement.

Interest Rate

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

As of March 31, 2024 , we were paying SOFR plus 4.50 % on the outstanding bank debt which equates to an all in rate of 10.0 %.

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (IN THOUSANDS)

As of June 30, 2024 , we were paying SOFR plus 5.00 % on the outstanding bank debt which equates to an all-in rate of 10.49 %.

Future Maturities (in thousands):

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of the following for the indicated dates (in thousands):

Accounts payable

32 unchanged sentences

Electric operations

For the three months ended March 31, 2024, electric sales revenue from delivered energy generation and capacity sales revenue was $ 47.0 million and $ 11.8 million, respectively.

For the three months ended March 31, 2023, electric sales revenue from delivered energy generation and capacity sales revenue was $ 76.4 million and $ 16.0 million, respectively.

Three Months Ended June 30,

Six Months Ended June 30,

Delivered energy (including contract liability amortization)

$ 39,973 $ 53,862 $ 86,955 $ 130,284

16,873 17,155 28,646 33,125

Total Electric Operations sales

$ 56,846 $ 71,017 $ 115,601 $ 163,409

Coal operations

For the three months ended March 31, 2024 and 2023, 36 % and 52 %, respectively, of our coal revenue was sold to outside third -party customers in the State of Indiana with the remainder sold to customers in Florida, North Carolina, Georgia, and Alabama.

Three Months Ended June 30,

Six Months Ended June 30,

Outside third-party Indiana customers

$ 15,048 $ 34,214 $ 33,152 $ 83,650

Customers in Florida, North Carolina, Alabama and Georgia

17,753 54,360 49,279 99,526

Total Coal Operations sales

$ 32,801 $ 88,574 $ 82,431 $ 183,176

Performance Obligations

2 unchanged sentences

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.

During 2022, we entered into an Asset Purchase Agreement (“APA”) with Hoosier (“Hoosier APA”) in which Hallador Power shall sell, and Hoosier shall buy, at least 70 % of the delivered energy quantities through 2025 at the contract price, which is $ 34.00 per MWh.

We have remaining delivered energy obligations to Hoosier totaling $ 99.3 million through 2025 as of March 31, 2024 .

The agreement was amended August 31, 2023 to extend through 2028 with additional obligations to Hoosier of $ 186.6 million as of March 31, 2024 .

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

During 2022, we entered into an Asset Purchase Agreement (“APA”) with Hoosier (“Hoosier APA”) 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 on the APA totaling $ 83.9 million through 2025 as of June 30, 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 June 30, 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 $ 35.2 million as of March 31, 2024 .

The agreement was amended August 31, 2023 to extend through 2028 with additional capacity obligations to Hoosier of $ 60.9 million as of March 31, 2024 .

We also have energy and capacity obligations outside of the Hoosier APA to customers through 2029 totaling $ 111.97 million and $ 163.51 million, respectively, as of March 31, 2024 .

We have $ 46.7 million of deferred revenue as of March 31, 2024 , related to these obligations.

We have remaining capacity obligations to Hoosier through 2025 totaling $ 30.0 million as of June 30, 2024 .

The agreement was amended August 31, 2023, to extend through 2028, with additional capacity obligations to Hoosier of $ 60.9 million as of June 30, 2024, at a price of $ 7.02 per kilowatt month for the contract capacity.

During the second quarter 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.

We have energy and capacity obligations to customers, excluding Hoosier, through 2029 totaling $ 152.0 million and $ 151.1 million, respectively, as of June 30, 2024 .

We have $ 45.0 million and $ 39.8 million of deferred revenue as of June 30, 2024 , related to the prepaid physically delivered power contract and other capacity obligations outside of the Hoosier APA, respectively.

Coal operations

4 unchanged sentences

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.

For substantially all 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 $ 270.2 million, which represents the average fixed prices on our committed contracts as of March 31, 2024.

We have remaining coal sales performance obligations relating to fixed priced contracts to third -party customers of approximately $ 207.7 million, which represents the average fixed prices on our committed contracts as of June 30, 2024.

We expect to recognize approximately 30.3 % of this coal sales revenue in 2024, with the remainder recognized through 2027 .

We have remaining performance obligations relating to coal sales contracts with price reopeners of approximately $ 155.0 million, which represents our estimate of the expected reopener price on committed contracts as of March 31, 2024.

We have remaining performance obligations relating to coal sales contracts with price reopeners of approximately $ 154.5 million, which represents our estimate of the expected reopener price on committed contracts as of June 30, 2024.

We expect to recognize all of this coal sales revenue 2025 through 2027.

7 unchanged sentences

As of January 1, 2023, accounts receivable for coal sales billed to customers was $ 16.3 million.

For the three months ended March 31, 2024 and 2023, we recorded income taxes using an estimated annual effective tax rate based upon projected annual income, forecasted permanent tax differences, discrete items, and statutory rates in states in which we operate.

The effective tax rate for the three months ended March 31.

2024 and 2023, was ~26% and ~ 13 %, respectively.

For the six months ended June 30, 2024 and 2023, we recorded income taxes using an estimated annual effective tax rate based upon projected annual income, forecasted permanent tax differences, discrete items, and statutory rates in states in which we operate.

The effective tax rate for the six months ended June 30, 2024 and 2023, was ~23% and ~11%, respectively.

Historically, our actual effective tax rates have differed from the statutory effective rate primarily due to the benefit received from statutory percentage depletion in excess of tax basis.

4 unchanged sentences

Vested - weighted average share price on vested date was $ 5.30

Non-vested grants as of March 31, 2024

For the three months ended March 31, 2024 and 2023, our stock compensation was $ 0.7 million and $ 1.2 million, respectively.

Non-vested grants as of June 30, 2024

For the three and six months ended June 30, 2024 our stock compensation was $ 1.6 million and $ 2.2 million, respectively.

For the three and six months ended June 30, 2023, our stock compensation was $ 0.8 million and $ 2.0 million, respectively.

Non-vested RSU grants will vest as follows:

The outstanding RSUs have a value of $ 2.7 million based on the March 28, 2024 closing stock price of $ 5.33 .

As of March 31, 2024, unrecognized stock compensation expense is $ 3.3 million, and we had 611,035 RSUs available for future issuance.

The outstanding RSUs have a value of $ 8.1 million based on the June 28, 2024 closing stock price of $ 7.77 .

As of June 30, 2024, unrecognized stock compensation expense is $ 5.7 million, and we had 48,761 RSUs available for future issuance.

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

We have operating leases for office space and processing facilities with remaining lease terms ranging from

As most of the leases do

not provide an implicit rate, we calculated the right-of-use assets and lease liabilities using its secured incremental borrowing rate at the lease commencement date.

During the fourth quarter of 2023, we entered into three finance leases which were accounted for as failed sale-leaseback transactions.

During the three months ended March 31, 2024, we entered into two finance leases with the same terms that were also accounted for as failed sale-leaseback transactions.

We have operating leases for office space and processing facilities with remaining lease terms ranging from 1 month to 8 years.

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

Imputed interest on our operating leases were $ 0.3 million and $ 0.3 million for the three and six months ended June 30, 2024.

six months ended

June 30, 2024, we entered into

four finance leases that were accounted for as failed sale-leaseback transactions.

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

Depreciation on our finance lease assets was $ 1.1 million for the three months ended March 31, 2024 .

Imputed interest expense on our lease liabilities was $ 0.3 million for the three months ended March 31, 2024 .

We deferred financing fees of $ 0.1 million at March 31, 2024 and December 31, 2023, respectively, in connection with entry into the finance leases.

Depreciation on our finance lease assets was

$ 1.1 million and

$ 2.2 million for the

six months ended

June 30, 2024

Imputed interest on our finance leases was

$ 0.1 million and

$ 2.0 million for the

six months ended

June 30, 2024

We deferred financing fees of

$ 0.1 million at

June 30, 2024 and

December 31, 2023, 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.

We did not have finance leases during the three months ended March 31, 2023.

The following table (in thousands) relates to our leases:

Three Months Ended March 31,

not have finance leases during the

six months ended

June 30, 2023.

The following information relates to our leases (dollar amounts in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Operating lease information:

Operating cash outflows from operating leases

$ 52 $ 52 $ 104 $ 104

Weighted average remaining lease term in years

7.6 0.95 7.6 0.95

Weighted average discount rate

10.5 % 6.0 % 10.5 % 6.0 %

Finance lease information:

Financing cash outflows from finance leases

$ 1,427 — $ 2,665 —

Proceeds from sale and leaseback arrangement

$ 1,856 — $ 3,783 —

Weighted average remaining lease term in years

2.64 — 2.64 —

Weighted average discount rate

Future minimum lease payments under non-cancellable leases as of March 31, 2024 , were as follows:

8.5 % — 8.5 % —

Future minimum lease payments under non-cancellable leases as of June 30, 2024, were as follows:

(In thousands)

5 unchanged sentences

$ 638 $ 16,903

As reflected within the following balance sheet line items:

Three Months Ended March 31,

The following are reflected within the indicated condensed consolidated balance sheet line items:

For the Six Months Ended June 30,

For the Year Ended December 31,

19 unchanged sentences

$ 16,903 $ 12,090

As of March 31, 2024 and December 31, 2023 , we had approximately $ 0.7 million, respectively, of right-of-use operating lease assets recorded within “ buildings and equipment ” on the condensed consolidated balance sheets.

SELF-INSURANCE

We self-insure our non-leased underground mining equipment.

Such equipment is allocated among seven mining units dispersed over eleven miles.

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

Restricted cash of $ 4.7 million and $ 4.3 million as of March 31, 2024 , and December 31, 2023 , respectively, represents cash held and controlled by a third party and is restricted for future workers’ compensation claim payments.

Such equipment was allocated among four mining units dispersed over seven miles and seven mining units dispersed over eleven miles, at June 30, 2024 and December 31, 2023, respectively.

The historical cost of such equipment was approximately $ 250.4 million and $ 262.0 million as of June 30, 2024 , and December 31, 2023 .

We also self-insure for workers’ compensation claims.

Restricted cash of $ 4.3 million as of June 30, 2024 , and December 31, 2023 , represents cash held and controlled by a third party and is restricted primarily for future workers’ compensation claim payments.

FAIR VALUE MEASUREMENTS

10 unchanged sentences

ARO liabilities use Level 3 non-recurring fair value measures .

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 $ 10.7 million and $ 7.1 million as of June 30, 2024 and December 31, 2023, 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.

EQUITY METHOD INVESTMENTS

1 unchanged sentence

Sunrise Energy, LLC, also plans to develop and explore for oil, natural gas, and coal-bed methane gas reserves on or near our underground coal reserves.

The carrying value of the investment included in our condensed consolidated balance sheets as of March 31, 2024 , and December 31, 2023 , was $ 2.6 million and $ 2.8 million, respectively.

The carrying value of the investment included in our condensed consolidated balance sheets as of June 30, 2024 , and December 31, 2023 , was $ 2.3 million and $ 2.8 million, respectively.

CONVERTIBLE NOTES

On July 29, 2022, we issued $ 5.0 million of senior unsecured convertible notes (collectively, with the subsequent 2022 issuances, the ("Notes”)) to a related party affiliated with an independent member of our board of directors.

The Note carries 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 has the option to convert the Note into shares of the Company's common stock at a conversion price of $ 6.254 .

During the three months ended March 31, 2024, the holders of the $ 5.0 million senior unsecured convertible notes 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 a loss on extinguishment of debt in the condensed consolidated statements of operations in the amount of $ 0.55 million during the three months ended March 31, 2024.

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

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

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 carries 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 has 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 a loss on extinguishment of debt in the condensed consolidated statements of operations in the amount of $ 0.6 million six months ended June 30, 2024.

As of June 30, 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 carry 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 has 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 may elect to redeem the Note and the holder shall be obligated to surrender the Note at 100% of the outstanding principal balance together with any accrued unpaid interest.

Beginning August 8, 2025, we may elect to redeem the August 8 th Notes and the holder shall be 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 may elect to convert the principal balance and accrued interest into the Company's common stock.

During the three months ended March 31, 2024, the holders converted $ 3.0 million senior unsecured convertible 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 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 a loss on extinguishment of debt in the condensed consolidated statements of operations in the amount of $ 0.30 million during the three months ended March 31, 2024.

On August 12, 2022, we issued an additional $ 10.0 million senior unsecured convertible note to an unrelated party.

The Note carries 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 has the option to convert the Note into shares of the Company's common stock at a conversion price of $ 6.15 .

Beginning August 12, 2025, we may elect to redeem the Note and the holder shall be obligated to surrender the Note at 100% of the outstanding principal balance together with any accrued unpaid interest.

We recorded a 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 a 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 June 30, 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 carries 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 has 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 may elect to redeem the August 12 th Note and the holder shall be 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 may 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 a 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 June 30, 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.

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

At March 31, 2024, accrued interest associated with the notes payable – related party on the condensed consolidated balance sheets was $ 0.1 million.

The related party notes were paid off in June 2024 with proceeds from the prepaid physically delivered power contract mentioned above in "Note 7 – Revenue".

ORGANIZATIONAL RESTRUCTURING

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We also focused our seven units of underground equipment on four units of our lowest cost production at our Oaktown Mine.

In connection with the Reorganization Plan, we incurred an aggregate of $ 1.9 million one -time charges, of which $ 0.8 million were included in accounts payable and accrued liabilities in the condensed consolidated balance sheets and $ 1.1 million were included in operating expenses in the condensed consolidated statements of operations.

The one -time charges were related to compensation, tax, professional, and insurance related expenses.

AT MARKET AGREEMENT

On December 18, 2023 , we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B.

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 operating expenses in the condensed consolidated statements of operations.

These charges related to compensation, tax, professional, and insurance related expenses and are considered one -time charges paid in the first six months of 2024.

AT THE MARKET AGREEMENT

On December 18, 2023 , we entered into an At The Market Issuance Sales Agreement (the “Sales Agreement”) with B.

Riley Securities, Inc.

(the “Agent”), pursuant to which we may issue and sell, from time to time, shares (the “Shares”) of our common stock, par value $ 0.01 per share (the “Common Stock”), with aggregate gross proceeds of up to $ 50.0 million through an “at-the-market” equity offering program under which the Agent will act as sales agent (the “ATM Program”).

Under the Sales Agreement, each of us have the right, by giving five ( 5 ) days’ notice, to terminate the Sales Agreement in its sole discretion.

Under the Sales Agreement, we or the Agent have the right, by giving five ( 5 ) days’ notice, to terminate the Sales Agreement in our and the Agents sole discretion.

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.

During the three months ended March 31, 2024 , we issued 710,623 shares of Common Stock under the ATM Program for net proceeds of $ 6.6 million.

During the three and six months ended June 30, 2024 , we issued 3,943,807 and 4,654,430 shares of Common Stock, respectively, under the ATM Program for net proceeds of $ 27.9 million and $ 34.5 million, respectively.

SEGMENTS OF BUSINESS

As of March 31, 2024, our operations are divided into two primary reportable segments, the Electric Operations and Coal Operations segments.

As of June 30, 2024, our operations are divided into two primary reportable segments, Electric Operations and Coal Operations.

The remainder of our operations, which are not significant enough on a stand-alone basis to warrant treatment as an operating segment, are presented as "Corporate and Other and Eliminations" and primarily are comprised of unallocated corporate costs and activities, including a 50 % interest in Sunrise Energy, LLC, which the Company accounts for using the equity method and our wholly-owned subsidiary Summit Terminal LLC, a logistics transport facility located on the Ohio River.

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Operating revenues

Electric operations

Electric operations (i)

$ 57,020 $ 71,103 $ 115,932 $ 163,597

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$ 90,914 $ 161,194 $ 200,586 $ 349,528

Operating expenses

Electric operations

$ 50,232 $ 61,847 $ 93,897 $ 135,636

Coal operations

57,750 86,735 136,077 168,920

Corporate and other and eliminations

( 9,782 ) ( 9,632 ) ( 24,835 ) ( 6,505 )

Consolidated operating expenses

$ 98,200 $ 138,950 $ 205,139 $ 298,051

Income (loss) from operations

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Corporate and other and eliminations

6,851 ( 4,429 ) 6,851 ( 4,429 )

Consolidated assets

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Coal operations

7,560 14,445 16,192 27,084

Corporate and other and eliminations

1 unchanged sentence

$ 13,170 $ 17,128 $ 28,044 $ 30,610

Electric operations revenue as of each period presented were comprised of the components noted below (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Operating revenues:

Capacity revenue

$ 16,873 $ 17,155 $ 28,646 $ 33,125

Delivered energy

27,893 34,307 62,087 77,382

Amortization of contract liability

12,080 19,555 24,868 52,902

Other operating revenue

174 86 331 188

Total Electric Operations revenue:

$ 57,020 $ 71,103 $ 115,932 $ 163,597

NET INCOME (LOSS) PER SHARE

The following table (in thousands, except per share amounts) sets forth the computation of basic earnings per share for the periods presented:

Three Months Ended March 31,

The following table (in thousands, except per share amounts) sets forth the computation of basic earnings (loss) per share for the periods indicated:

Three Months Ended June 30,

Six Months Ended June 30,

Basic earnings per common share:

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The following table (in thousands, except per share amounts) sets forth the computation of diluted net income (loss) per share:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Diluted earnings per common share:

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Dilutive effects of if converted Convertible Notes

— 3,224 — 3,163

Dilutive effects of Restricted Stock Units

4 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements