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What changed in Arq, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Arq, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+339 added−322 removedSource: 10-K (2026-03-10) vs 10-K (2025-03-05)

Top changes in Arq, Inc.'s 2025 10-K

339 paragraphs added · 322 removed · 214 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

57 edited+30 added−30 removed50 unchanged
Biggest changeIn some cases, forward-looking statements can be identified by words or phrases such as "anticipates," "believes," "expects," "intends," "plans," "estimates,", "may," "predicts," the negative expressions of such words, or similar expressions, and such forward-looking statements include, but are not limited to, statements or expectations regarding: (a) the anticipating timing of the completion of commissioning of the GAC Facility, ramp-up to full nameplate capacity at our Red River Plant, and commercial production of our GAC products; (b) the anticipated effects from fluctuations in the pricing of our AC products; (c) expected supply and demand for our AC products and services, including our GAC products; (d) the seasonal impact on our customers and their demand for our products; (e) the ability to continue to successfully integrate Legacy Arq's business and recognize the benefits and synergies from the Arq Acquisition; (f) the ability to continue to develop and utilize Legacy Arq’s products and technology and the anticipated timing for bringing such products to market; (g) our ability to access new markets for our GAC and other products; (h) any future plant capacity expansions or site development projects and our ability to finance any such projects; (i) the effectiveness of our technologies and the benefits they provide; (j) the timing of awards of, and work and related testing under, our contracts and agreements and their value; (k) probability of any loss occurring with respect to certain guarantees made by Tinuum Group; (l) the timing and amounts of or changes in future revenue, funding for our business and projects, margins, expenses, earnings, tax rates, cash flows, royalty payment obligations, working capital, liquidity and other financial and accounting measures; (m) the performance of obligations secured by our surety bonds; (n) the amount and timing of future capital expenditures needed to fund our business plan; (o) the impact of capital expenditure overruns on our business; (p) awards of patents designed to protect our proprietary technologies both in the U.S. and other countries; (q) the adoption and scope of regulations to control certain chemicals in drinking water and other environmental concerns and the impact of such regulations on our customers' and our businesses, including any increase or decrease in sales of our AC products resulting from such regulations; (r) the impact of adverse global macroeconomic conditions, including rising interest rates, recession fears and inflationary pressures, and geopolitical events or conflicts; (s) opportunities to effectively provide solutions to our current and future customers to comply with regulations, improve efficiency, lower costs and maintain reliability; and (t) the impact of prices of competing power generation sources such as natural gas and renewable energy on demand for our products.
Biggest changeIn some cases, forward-looking statements can be identified by words or phrases such as "anticipates," "believes," "expects," "intends," "plans," "estimates,", "may," "predicts," the negative expressions of such words, or similar expressions, and such forward-looking statements include, but are not limited to, statements or expectations regarding: (a) the future of our GAC Facility and Corbin Facility and the anticipated timing, results, and conclusions of our GAC business optimization review and the actions we may take upon the completion of such review; (b) the anticipated benefits of transitioning away from using Corbin Wetcake to a bituminous proven performance coal as a feedstock for our GAC products; (c) financial guidance for fiscal year 2026; (d) the anticipated effects from fluctuations in the pricing of our AC products; (e) expected supply and demand for our AC products and services, including our GAC products; (f) the seasonal impact on our customers and their demand for our products; (g) the future profitability and sustainability of our PAC business; (h) our ability to fund our business over the next twelve months; (i) our ability to access new markets for our feedstocks and other products, including renewable natural gas, asphalt, purified coal, rare earth minerals and synthetic graphite markets; 8 (j) any future plant development projects, including those that may be necessary to remediate design flaws in our GAC Facility, and our ability to finance any such projects; (k) the effectiveness of our technologies and the benefits and competitive advantages they provide; (l) the timing of awards of, and work and related testing under, our contracts and agreements and their value; (m) probability of any loss occurring with respect to certain guarantees made by Tinuum Group; (n) the timing and amounts of or changes in future revenue, funding for our business and projects, margins, expenses, earnings, tax rates, cash flows, royalty payment obligations, working capital, liquidity and other financial and accounting measures; (o) the performance of obligations secured by our surety bonds; (p) the amount and timing of future capital expenditures needed to fund our business plan; (q) the impact of capital expenditure overruns on our business; (r) the timing, adoption, and scope of regulations to control certain chemicals in drinking water and other environmental concerns and the impact of such regulations on our customers' and our businesses, including any increase or decrease in sales of our AC products resulting from such regulations; (s) the impact of adverse global macroeconomic conditions, including international and domestic tariffs, rising interest rates, recession fears and inflationary pressures, and geopolitical events or conflicts; (t) opportunities to effectively provide solutions to our current and future customers to comply with regulations, improve efficiency, lower costs and maintain reliability; (u) our near-term priorities and objectives and our long-term outlook regarding the growth of our business; and (v) the impact of prices of competing power generation sources such as natural gas and renewable energy on demand for our products.
Combined with the new CERCLA regulations, a final RCRA regulation of PFAS may increase the costs of the handling, transport, and disposal of PFAS-containing materials including water treatment waste. Federal MATS Affecting Electric Utility Steam Generating Units The EPA's final "MATS Rule" went into effect in April 2012.
Combined with the new CERCLA regulations, a final RCRA regulation of PFAS may increase the costs of handling, transport, and disposal of PFAS-containing materials including water treatment waste. Federal MATS Affecting Electric Utility Steam Generating Units The EPA's final "MATS Rule" went into effect in April 2012.
Demand for our AC products related to coal-fired electricity generation is highly dependent on the availability and cost of alternative energy sources, such as natural gas, solar and wind energy. We continue to pursue markets for our purification products outside of coal-fired power generation, including industrial applications, (such as waste-to-energy and cement making), water treatment and other markets.
Regardless, demand for our AC products related to coal-fired electricity generation is highly dependent on the availability and cost of alternative energy sources, such as natural gas, solar and wind energy. We continue to pursue markets for our purification products outside of coal-fired power generation, including industrial applications, (such as waste-to-energy and cement making), water treatment and other markets.
Our AC products include both powdered activated carbon ("PAC") and granular activated carbon ("GAC"), among others. Additionally, we own the Five Forks Mine, a lignite coal mine that currently supplies the primary raw material for the manufacturing of our products. Our predecessor, ADA-ES, Inc. ("ADA"), a Colorado corporation, was incorporated in 1997.
Our AC products include both powdered activated carbon ("PAC") and granular activated carbon ("GAC"), among others. Additionally, we own the Five Forks Mine, a lignite coal mine that currently supplies the primary raw material for the manufacturing of the majority of our products. Our predecessor, ADA-ES, Inc. ("ADA"), a Colorado corporation, was incorporated in 1997.
The MATS Rule sets a limit that we believe requires the capture of 80-90% plus of the mercury in the coal burned in electric power generation boilers as measured at the exhaust stack outlet for most plants. The MACT-based standards are also known as National Emission Standards for Hazardous Air Pollutants ("NESHAP").
The MATS Rule sets a limit that we believe requires the capture of 80-90% plus of the mercury in the coal burned in electric power generation boilers as measured at the exhaust stack outlet for most plants. The MACT-based standards are also known as National Emission Standards for Hazardous Air Pollutants.
Most of the North American coal-fired power generators and other industrial customers installed equipment to control air pollutants, such as 1 mercury, prior to or since the implementation of the Mercury and Air Toxics Standards ("MATS") by the U.S. Environmental Protection Agency ("EPA").
Most of the North American coal-fired power generators and other industrial customers installed equipment to control air pollutants, such as mercury, prior to or since the implementation of the Mercury and Air Toxics Standards ("MATS") by the U.S. Environmental Protection Agency ("EPA").
Power generation is weather dependent, with electricity and steam production varying in response to heating and cooling demands. As a result, our revenue is generally higher in our first and third fiscal quarters during the warmer and colder months of the year.
Power generation is weather dependent, with electricity and steam production varying in response to heating and cooling demands. As a result, our revenue is generally 2 higher in our first and third fiscal quarters during the warmer and colder months of the year.
In particular statements about our beliefs, plans, objectives, expectations, assumptions, future events or future performance contained in this report, including certain statements found in this Part I and 8 under the heading in Part II, Item 7 below, are forward-looking statements.
In particular, statements about our beliefs, plans, objectives, expectations, assumptions, future events or future performance contained in this report, including certain statements found in this Part I and under the heading in Part II, Item 7 below, are forward-looking statements.
Federal National Primary Drinking Water Regulation and other PFAS Regulations In October 2021, the EPA released its PFAS Strategic Roadmap, laying out its approach to addressing PFAS and other pollutants, which set a timeline by which the EPA planned to take certain actions through 2024, including establishing a national primary drinking water regulation for certain PFAS and taking Effluent Limitations Guidelines actions to regulate certain PFAS discharges from industrial categories.
Federal National Primary Drinking Water Regulation and other PFAS Regulations In October 2021, the EPA released its PFAS Strategic Roadmap, laying out its approach to addressing PFAS and other pollutants, which set a timeline by which the EPA planned to take certain actions, including establishing a national primary drinking water regulation for certain PFAS and taking Effluent Limitations Guidelines actions to regulate certain PFAS discharges from industrial categories.
Although surety bonds are usually non-cancelable during their term, many of these bonds are renewable on an annual basis and collateral requirements may change. As of December 31, 2024, we posted surety bonds of approximately $7.5 million and $3.0 million for reclamation of the Five Forks Mine and the Corbin Facility, respectively.
Although surety bonds are usually non-cancelable during their term, many of these bonds are renewable on an annual basis and collateral requirements may change. As of December 31, 2025, we posted surety bonds of approximately $7.5 million and $3.0 million for reclamation of the Five Forks Mine and the Corbin Facility, respectively.
During the fiscal year ended December 31, 2024, compliance with the regulations applicable to our operations did not have a material effect on our capital expenditures, earnings, or competitive position, and the cost of compliance with these laws and regulations is not expected to have a material adverse effect on our business in the future.
During the fiscal year ended December 31, 2025, compliance with the regulations applicable to our operations did not have a material effect on our capital expenditures, earnings, or competitive position, and the cost of compliance with these laws and regulations is not expected to have a material adverse effect on our business in the future.
During periods of low natural gas prices, natural gas provides a competitive alternative to coal-fired power generation and therefore, coal consumption for power generation may be reduced, which in turn reduces the demand for our products. In contrast, during periods of higher prices for competing power generation sources, coal consumption generally increases and thus demand for our products also increases.
During periods of low natural gas prices, natural gas provides a competitive alternative to coal-fired power generation and therefore, coal consumption for power generation may be reduced, which in turn reduces the demand for our products. In contrast, during periods of higher prices for competing power generation sources, coal consumption generally increases, which generally increases demand for our products.
Under the NPDWR, drinking water utilities have three years from the publication of the final rule, or until April 2027, to comply with monitoring requirements and have five years from the publication of the final rule, or until April 2029, to implement solutions that reduce the applicable PFAS substances below the MCLs.
Under the NPDWR, drinking water utilities have three years from the publication of the final rule, or until April 2027, to comply with monitoring requirements and initially had five years from the publication of the final rule, or until April 2029, to implement solutions that reduce the applicable PFAS substances below the MCLs.
On March 14, 2023, the EPA proposed a National Primary Drinking Water Regulation ("NPDWR") for six specific PFAS substances. On April 10, 2024, the EPA announced the final NPDWR, which established legally enforceable maximum contaminant levels ("MCL") for six PFAS substances, including a MCL for Perfluorooctane Acid ("PFOA") and Perfluorooctane Sulfonate ("PFOS") of 4.0 parts per trillion.
On March 14, 2023, the EPA proposed a National Primary Drinking Water Regulation ("NPDWR") for six specific PFAS substances. On April 10, 2024, the EPA announced the final NPDWR, which established 4 legally enforceable maximum contaminant levels ("MCL") for six PFAS substances, including a MCL for perfluorooctanoic acid ("PFOA") and perfluorooctane sulfonic acid ("PFOS") of 4.0 parts per trillion.
Additionally, our products and services are used for the reduction of certain pollutants and other contaminants and legislation and regulations that limit the amount of pollutants and other contaminants permitted in air, water and soil may increase or decrease the need for our products.
Additionally, our products and services are used for the reduction of certain pollutants and other contaminants and legislation and regulations that limit the amounts of pollutants and other contaminants permitted in air, water and soil may increase or decrease the need for our products.
Additionally, we believe enhanced environmental and health advisory issues will continue to drive demand for AC in rapidly developing countries. We continuously pursue opportunities to expand and diversify our customer base into markets for our purification products including industrial applications, water treatment plants and other end markets.
Additionally, we believe enhanced environmental and health advisory issues will continue to drive demand for AC in rapidly developing countries. We continuously pursue opportunities to expand and diversify our customer base in new and existing markets for our purification products including industrial applications, water treatment plants and other end markets.
Facilities We own and operate a manufacturing plant (the "Red River Plant"), located in Coushatta, Louisiana. We also operate a production and distribution facility located on land we lease in Coushatta. In addition, we own and operate the Corbin Facility, where we process bituminous coal fines and apply patented technology to produce Arq Powder.
Facilities We own and operate a manufacturing plant (the "Red River Plant"), located in Coushatta, Louisiana. We also operate a production and distribution facility located on land we lease in Coushatta. In addition, we own and operate the Corbin Facility, where we process bituminous coal fines and apply patented technology to produce Corbin Wetcake.
Arq Powder has unique properties, including low levels of impurities and small average particle size, which when used as a feedstock to produce certain carbon products may provide for advantages compared to lignite coal, other bituminous coals, or oil-based feedstocks in terms of cost and performance.
This feedstock has unique properties, including low levels of impurities and small average particle size, which when used to produce certain carbon products may provide for advantages compared to lignite coal, other bituminous coals, or oil-based feedstocks in terms of cost and performance.
We offer AC and other chemical products and work with customers as they develop and implement a compliance control strategy that utilizes the consumables solutions that fit their unique operating and pollution control configuration. Coal-fired power plants continue to be a significant, though declining, source of electricity generation in the United States ("U.S.").
In addition to offering AC and other chemical products, we work with customers as they develop and implement a compliance control strategy that utilizes our consumables solutions and that fits their unique operating and pollution control configuration. Coal-fired power plants continue to be a significant, though declining, source of electricity generation in the United States ("U.S.").
Revenue from our top three customers comprised approximately 36% of our revenue for the year ended December 31, 2024, and the loss of any of these customers would have a material adverse effect on our operating results. 2 Seasonality The timing of the sale of our consumable products is dependent upon several factors.
Revenue from our top three customers comprised approximately 42% of our revenue for the year ended December 31, 2025, and the loss of any of these customers would have a material adverse effect on our operating results. Seasonality The timing of the sale of our consumable products is dependent upon several factors.
Plants generally had four years to comply with the MATS Rule, and implementation of the MATS Rule is now largely completed. We estimate that 59% of the coal-fired units that were operating in December 2012 when the MATS Rule was finalized have been permanently shut down, leaving approximately 405 units in operation in the U.S. as of December 31, 2024.
Plants generally had four years to comply with the MATS Rule, and implementation of the MATS Rule is now largely completed. We estimate that 60% of the coal-fired units that were operating in December 2012 when the MATS Rule was finalized have been permanently shut down, leaving approximately 400 units in operation in the U.S. as of December 31, 2025.
On April 3, 2023, the EPA issued a proposed update to MATS that, amongst other potential modifications, proposed a reduction to the mercury emission limits for lignite coal-fired EGUs. The EPA adopted the final rule on April 25, 2024.
On April 3, 2023, the EPA issued a proposed amendment to the MATS Rule that, among other potential modifications, proposed a reduction to the mercury emission limits for lignite coal-fired EGUs. The EPA adopted the final rule on April 25, 2024.
During the year ended December 31, 2024, 19 U.S. and 41 international patents and applications from our patent portfolio were abandoned or allowed to expire, as we determined that they no longer represent future markets or economic opportunities for us. As of December 31, 2024, we owned over 50 trademark registrations and applications globally.
During the year ended December 31, 2025, 17 U.S. and 5 international patents and applications from our patent portfolio were abandoned or allowed to expire, as we determined that they no longer represent future markets or economic opportunities for us. As of December 31, 2025, we owned over 50 trademark registrations and applications globally.
During the year ended December 31, 2024, we were granted 3 new patents. Our existing patents generally have terms of 20 years from the effective date of filing, with our next patents expiring in 2025.
During the year ended December 31, 2025, we were granted 4 new patents. Our existing patents generally have terms of 20 years from the effective date of filing, with our next patents expiring in 2026.
Human Capital Resources We believe our success as an organization is enabled by the extensive expertise of our teams. As of December 31, 2024, we employed 203 people, of which 200 were employed full-time, across our four facilities and strive to maintain a robust company culture.
Human Capital Resources We believe our success as an organization is enabled by the extensive expertise of our teams. As of December 31, 2025 , we employed 202 people, of which 201 were employed full-time, across our four facilities and strive to maintain a robust company culture.
Actual events or results could differ materially from those discussed in the forward-looking statements as a result of various factors including, but not limited to, the timing and scope of new and pending regulations and any legal challenges to or extensions of compliance dates of them; the U.S. government’s failure to promulgate new regulations or enforce existing regulations that benefit our business; changes in laws and regulations, accounting rules, prices, economic conditions and market demand; availability, cost of and demand for alternative energy sources and other technologies and their impact on coal-fired power generation in the U.S.; technical, start up and operational difficulties; competition within the industries in which the Company operates; risks associated with our debt financing; our inability to effectively and efficiently commercialize new products, including our GAC products; our inability to effectively manage commissioning and startup of the GAC Facility at our Red River Plant; disruptions at any of our facilities, including by natural disasters or extreme weather; risks related to our information technology systems, including the risk of cyberattacks on our networks; failure to protect our intellectual property from infringement or claims that we have infringed on the intellectual property of others; our inability to obtain future financing or financing on terms that are favorable to us; our inability to ramp up our operations to effectively address recent and expected growth in our business; loss of key personnel; ongoing effects of the inflation and macroeconomic uncertainty, including from the new U.S. presidential administration, increased domestic and international tariffs, lingering effects of the pandemic and armed conflicts around the world, and such uncertainty's effect on market demand and input costs; availability of materials and equipment for our business; intellectual property infringement claims from third parties; pending litigation; factors relating to our business strategy, goals and expectations concerning the Arq Acquisition; our ability to maintain relationships with customers, suppliers and others with whom the Company does business and meet supply requirements; our results of operations and business generally; risks related to diverting management's attention from our ongoing business operations; costs related to the ongoing manufacturing of our products, including our GAC products; opportunities for additional sales of our AC products and end-market diversification; the rate of coal-fired power generation in the U.S.; the timing and cost of any future capital expenditures and the resultant impact to our liquidity and cash flows; and the other risk factors described in our filings with the SEC, including those described in Item 1A.
Actual events or results could differ materially from those discussed in the forward-looking statements as a result of various factors including, but not limited to, the timing and scope of new and pending regulations and any legal challenges to or extensions of compliance dates of them; the U.S. government’s failure to promulgate new regulations or enforce existing regulations that benefit our business; changes in laws and regulations, accounting rules, prices, economic conditions and market demand; availability, cost of and demand for 9 alternative energy sources and other technologies and their impact on coal-fired power generation in the U.S.; technical, start up and operational difficulties; competition within the industries in which the Company operates; risks associated with our debt financing; our inability to effectively and efficiently commercialize new products, including our GAC products; our inability to effectively identify solutions to the design flaws in GAC Facility at our Red River Plant or execute on any remedial measures or modifications thereto; disruptions at any of our facilities, including by natural disasters or extreme weather; risks related to our information technology systems, including the risk of cyberattacks on our networks; failure to protect our intellectual property from infringement or claims that we have infringed on the intellectual property of others; our inability to obtain future financing or financing on terms that are favorable to us; our inability to ramp up our operations to effectively address recent and expected growth in our business; loss of key personnel; ongoing effects of the inflation and macroeconomic uncertainty, including from increased domestic and international tariffs and armed conflicts around the world, and such uncertainty's effect on market demand and input costs; availability of materials and equipment for our business; intellectual property infringement claims from third parties; the impacts of any current or future write-downs or write-offs, restructuring, impairment or other charges; our failure to realize the anticipated benefits of acquisitions, joint ventures, and divestitures we may engage in; pending litigation; factors relating to our business strategy, goals and expectations, including our ability to execute on our GAC business plan; our ability to maintain relationships with customers, suppliers and others with whom the Company does business and meet supply requirements; our results of operations and business generally; risks related to diverting management's attention from our ongoing business operations; costs related to the ongoing manufacturing of our products, including costs necessary to resume GAC production; opportunities for additional sales of our AC products and end-market diversification, including for our Corbin Wetcake; the rate of coal-fired power generation in the U.S.; the timing and cost of any future capital expenditures and the resultant impact to our liquidity and cash flows; and the other risk factors described in our filings with the SEC, including those described in Item 1A.
In addition, certain states and certain municipal water treatment systems across the U.S. require pre-approval for the use of GAC products in their public water systems. Approval processes can vary in length from a number of days to multiple months. We have commenced the pre-approval process with a number of relevant state and municipal agencies.
In addition, certain states and certain municipal water treatment systems across the U.S. require pre-approval for the use of GAC products in their public water systems. Approval processes can vary in length from a number of days to multiple months.
Our expectations are based on certain assumptions, including without limitation, that: (a) coal will continue to be a significant source of fuel for electrical generation in the U.S.; (b) we will continue as a key supplier of consumables to the coal-fired power generation industry as it seeks to implement reduction of mercury emissions; (c) we will successfully complete commissioning of our GAC Facility and our GAC products will be accepted by the APT market; 9 (d) we will be able to obtain adequate capital and personnel resources to meet our operating needs and to fund anticipated growth and our indemnity obligations; (e) significant customers will continue to purchase consumables from us; (f) we will be able to establish and retain key business relationships with current and other companies; (g) orders we anticipate receiving will be received; (h) we will be able to formulate new consumables that will be useful to, and accepted by, the markets; (i) we will be able to effectively compete against others; (j) we will be able to meet any technical requirements of projects we undertake; and (k) existing environmental regulations stay in place and are adequately enforced.
Our expectations are based on certain assumptions, including without limitation, that: (a) coal will continue to be a significant source of fuel for electrical generation in the U.S.; (b) our foundational PAC business will continue to generate adequate revenues to, along with other sources of capital, operate our business and meet our obligations as they come due; (c) we will continue as a key supplier of consumables to the coal-fired power generation industry to reduce mercury emissions; (d) we will be able to obtain adequate capital and personnel resources to meet our operating needs and to fund anticipated growth and our indemnity obligations; (e) significant customers will continue to purchase consumables from us; (f) we will be able to establish and retain key business relationships with current and other companies; (g) orders we anticipate receiving will be received; (h) we will be able to formulate new consumables that will be useful to, and accepted by, the markets; (i) we will be able to effectively compete against others; (j) we will be able to meet any technical requirements of projects we undertake; and (k) existing environmental regulations stay in place and are adequately enforced.
Intellectual Property As of December 31, 2024, we held 84 U.S. patents and 10 international patents that were issued or allowed, 15 additional U.S. provisional patents or applications that were pending, and 36 international patent applications that were either pending or filed relating to different aspects of our technology.
Intellectual Property As of December 31, 2025, we held 74 U.S. patents and 16 international patents that were issued or allowed, 17 additional U.S. provisional patents or applications that were pending, and 36 international patent applications that were either pending or filed 6 relating to different aspects of our technology.
In October 2022, the European Commission proposed new directives for better and more cost-effective treatment of urban wastewater, which included among other things new standards on micropollutants and new monitoring requirements for microplastics. In January 2024, there was a provisional agreement that revised the October 2022 proposed directives.
In October 2022, the European Commission proposed new directives for better and more cost-effective treatment of urban wastewater, which included among other things new standards on micropollutants and new monitoring requirements for microplastics.
One of the major uses for PAC is for the treatment of taste and odor impurities caused by increased degradation of organic contaminants and natural materials in water that occurs predominately during the summer months. Additionally, the rainy season generally results in more demand for PAC products to water municipalities due to rain run-offs and contaminant dilution.
One of the major uses for PAC is for the treatment of taste and odor impurities caused by organic contaminants and natural materials in water that predominantly degrade during the summer months. Additionally, the rainy season generally results in more demand from water municipalities due to increased contaminated water volume from rain run-off.
Competition Our primary competitors in the AC consumables industry include Norit Americas, Inc., which is owned by One Equity Partners, and Calgon Carbon, which is owned by Kuraray Co., Ltd.
Competition Our primary competitors in the AC consumables industry include Norit Americas, Inc., which is owned by One Equity Partners, and Calgon Carbon, which is owned by Kuraray Co., Ltd. In addition to our primary competitors, we compete with other, smaller producers and distributors.
In February 2023, we acquired 100% of the equity interests, assets and liabilities of the subsidiaries of Arq Limited, an environmental technology company incorporated under the laws of Jersey (the "Arq Acquisition" or the "Transaction," and hereafter the Arq Limited subsidiaries referred to as "Legacy Arq") to secure access to additional U.S. based bituminous coal feedstock, a manufacturing facility located in Corbin, Kentucky (the "Corbin Facility") and certain patented processes to manufacture new advanced GAC products for sale into the APT and other markets.
In February 2023, we acquired 100% of the equity interests, assets and liabilities of the subsidiaries of Arq Limited, an environmental technology company incorporated under the laws of Jersey (the "Arq Acquisition" and hereafter the Arq Limited subsidiaries referred to as "Legacy Arq") to secure access to additional U.S. based bituminous coal feedstock and a manufacturing facility located in Corbin, Kentucky (the "Corbin Facility").
The Five Forks Mine is operated for us by a subsidiary of the North American Coal Company. We may also periodically purchase various ACs to supplement our inventory levels or to produce various products to serve certain AC markets. We purchase these various ACs through supply agreements or spot purchases with the producers.
The Five Forks Mine is operated for us by a subsidiary of the North American Coal Company. Through lignite coal production at the Five Forks Mine, we have a vertically integrated supply chain for our PAC products. We may also periodically purchase various ACs to supplement our inventory levels or to produce various products to serve certain AC markets.
The new rules allow the EPA to hold polluters financially responsible for contaminated sites and will also lead to these PFAS chemicals being listed as "hazardous materials" under the Hazardous Materials Transportation Act, which will require materials containing these chemicals to be transported using special protocols.
The rules, which became effective on July 8, 2024, allow the EPA to hold polluters financially responsible for contaminated sites and list these PFAS chemicals as "hazardous materials" under the Hazardous Materials Transportation Act, which require materials containing these chemicals to be transported using special protocols.
In water purification, the sale of our products depends on demand from municipal water treatment facilities that use these products. Depending on weather conditions and other environmental factors, the summer months historically have the highest demand for our PAC products in water treatment.
Demand for our water purification products is driven largely from municipal water treatment facilities. Depending on weather conditions and other environmental factors, the summer months historically have the highest demand for our water treatment products.
The manufacturing of AC is dependent upon these various additives, which are subject to price fluctuations and supply constraints. In addition, the number of suppliers who provide the necessary additives needed to manufacture our AC products is limited. We purchase these additives through supply agreements or spot purchases with the producers.
The manufacturing of these chemical products is dependent upon certain discrete additives, which are subject to price fluctuations and supply constraints. In addition, the number of suppliers who provide the necessary additives needed to manufacture our chemical products are limited.
Supply agreements with these producers are generally renewed on an annual basis. We also purchase additives that are included in certain chemical products for resale to our customers through contracts with suppliers. The manufacturing of these chemical products is dependent upon certain discrete additives, which are subject to price fluctuations and supply constraints.
We purchase these additives through supply agreements or spot purchases with the producers. Supply agreements with these producers are generally renewed on an annual basis. We also purchase additives that are included in certain chemical products for resale to our customers through contracts with suppliers.
Although final rules have not been issued, in February 2024 the EPA proposed changes to the Resource Conservation and Recovery Act ("RCRA") regulations by adding nine PFAS chemical compounds to its list of hazardous constituents.
In February 2024 the EPA proposed rule changes to the Resource Conservation and Recovery Act ("RCRA") regulations by adding nine PFAS chemical compounds to its list of hazardous constituents, which rules are expected to be finalized in April 2026.
The revised directive was adopted by the European Parliament and the Council on November 5, 2024, and is enforceable on European Union Member States, subject to the revised directive’s implementation period, which requires European Union Member State compliance by mid-2027. 5 Mining Environmental and Reclamation Matters Federal, state and local authorities regulate the U.S. coal mining industry with respect to matters such as employee health and safety and the environment, including the protection of air quality, water quality, wetlands, special status species of plants and animals, land uses, cultural and historic properties and other environmental resources identified during the permitting process.
Mining Environmental and Reclamation Matters Federal, state and local authorities regulate the U.S. coal mining industry with respect to matters such as employee health and safety and the environment, including the protection of air quality, water quality, wetlands, special status species of plants and animals, land uses, cultural and historic properties and other environmental resources identified during the permitting process.
For the years ended December 31, 2024 and 2023, we incurred research and development costs of $4.1 million and $3.3 million, respectively. Legislation and Environmental Regulations We are subject to various legislative enactments and regulations relating to the protection of the environment, health and safety, including the Occupational Safety and Health Act ("OSHA") and comparable state laws.
Legislation and Environmental Regulations We are subject to various legislative enactments and regulations relating to the protection of the environment, health and safety, including the Occupational Safety and Health Act ("OSHA") and comparable state laws.
The Revolving Credit Agreement provides for a secured revolving credit facility (the "Revolving Credit Facility") under which we may borrow up to $30,000,000 at any one time, the availability of which is determined based on a borrowing base equal to percentages of certain eligible accounts receivable and inventory carrying balances, less applicable reserves established under the Revolving Credit Agreement, in accordance with a formula set forth in the Revolving Credit Agreement.
Revolving Credit Facility Under the Credit, Security and Guaranty Agreement (the "Revolving Credit Agreement"), between us, certain of our subsidiaries, and MidCap Funding IV Trust, we maintain a secured revolving credit facility (the "Revolving Credit Facility"), under which we may borrow up to $30,000,000 at any one time, the availability of which is determined based on a borrowing base calculated in accordance with a formula set forth in the Revolving Credit Agreement.
Our facility remediates these reserves, using a patented manufacturing process to convert the recovered bituminous coal fines into a purified, microfine carbon powder known as Arq powder TM ("Arq Powder") for high value applications, such as for a raw material to produce GAC products.
Our facility remediates these reserves, using a patented manufacturing process to convert the recovered bituminous coal fines into a purified, microfine carbon powder ("Corbin Wetcake") for high value applications. In August 2025, we began to use Corbin Wetcake to produce high-quality GAC products for sale into the APT and other markets.
We offer a comprehensive benefits package for all eligible employees, including medical insurance, dental insurance, vision insurance, 401(k), paid time off, and paid maternity and paternity leave. 6 Learning, Development and Employee Engagement We offer a range of skills-based and compliance training programs, including environmental courses on topics including hazardous waste, water treatment, and environmental awareness, and a large number of safety courses.
Learning, Development and Employee Engagement We offer a range of skills-based and compliance training programs, including environmental courses on topics including hazardous waste, water treatment, and environmental awareness, as well as a large number of safety courses.
Please note, U.S. regulations are subject to continuing change, as further discussed in "Legislation and Environmental Regulations" included in Item 1 of this Report. The existing technologies for treatment of groundwater, including removal of contaminated soil for external treatment or landfill, pumping groundwater above the surface for treatment and/or installing treatment trenches or barriers often utilize PAC and GAC products.
The existing technologies for treatment of groundwater, including removal of contaminated soil for external treatment or landfill, pumping groundwater above the surface for treatment and/or installing treatment trenches or barriers often utilize PAC and GAC products.
Groundwater contamination has become a matter of increasing concern to federal and state governments as well as to the public, especially over recent years. The U.S. AC market may see significant growth from water purification markets, especially as implementation dates for new regulations issued by the EPA in April 2024 are nearing, with full compliance currently required by April 2029.
AC market may see significant growth from water purification markets, especially as implementation dates for new regulations issued by the EPA in April 2024 are nearing, with full compliance currently required by April 2029, although the EPA is expected to extend such compliance deadline to 2031.
We completed commissioning at our Corbin Facility in January 2025. Total construction and commissioning costs at the Corbin Facility were approximately $7 million for the year ended December 31, 2024. Research and Development Activities We conduct research and product development activities for further enhancement of our consumables.
Research and Development Activities We conduct research and product development activities for further enhancement of our consumables. For the years ended December 31, 2025 and 2024, we incurred research and development costs of $7.3 million and $4.1 million, respectively.
We anticipate that these new regulations will increase demand in the U.S. for PFAS water treatment products and services, including our GAC products. 4 On May 8, 2024, the EPA finalized new regulations that treat PFOS and PFOA as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA").
On May 8, 2024, the EPA finalized regulations that treat PFOS and PFOA as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA").
Other Legislation and Regulation Our manufacturing plants are subject to federal, state and local laws and regulations relating to discharge of substances into the environment and to the transportation, handling and disposal of such substances. The primary federal statutes that apply to our activities in the U.S. are the Clean Air Act and the Clean Water Act.
Coal-fired electricity generating units in the U.S. are subject to consent decrees that require the control of acid gases and particulate matter, in addition to mercury emissions. 5 Other Legislation and Regulation Our manufacturing plants are subject to federal, state and local laws and regulations relating to discharge of substances into the environment and to the transportation, handling and disposal of such substances.
However, many power generators need consumable products to complement the operation of installed equipment on a recurring basis to more effectively capture mercury and other contaminants.
However, many power generators need consumable products to complement the operation of 1 installed equipment on a recurring basis to more effectively capture mercury and other contaminants. AC is the most widely used technology to capture mercury due to product efficiency and effectiveness, and currently accounts for the majority of the mercury control consumables utilized in the North American market.
In response to this market opportunity, in late 2021, we developed a new CCP platform, FluxSorb RC, which is a treatment option in certain contaminated soil and groundwater remediation treatment sites.
In late 2021, we developed a new CCP platform, FluxSorb RC, which is a treatment option in certain contaminated soil and groundwater remediation treatment sites. Treatment with FluxSorb RC injects highly engineered ACs into the subsoil, also described as "in situ" treatment, to intercept the contamination plume or to treat the groundwater.
We make capital investments and expenditures to comply with environmental laws and regulations and to promote employee safety. To date, such expenditures have not had a significant adverse effect on our consolidated results of operations, financial position or cash flows. International Regulations There are various international regulations related to mercury control.
To date, such expenditures have not had a significant adverse effect on our consolidated results of operations, financial position or cash flows. International Regulations There are various international regulations related to mercury control. For example, in Canada, the Canada-Wide Standard ("CWS") was initially implemented in 2010, with increasingly stringent limits through 2020 and varying mercury emissions caps for each province.
With the acquisition of Legacy Arq in 2023, we secured a second feedstock, Arq Powder, which is made from high-quality recovered bituminous coal fines, for use in manufacturing of GAC products. Through internal testing, we have demonstrated that Arq Powder can be shaped and successfully activated using industrially available equipment and technology with our proprietary know-how.
Through internal testing, we have demonstrated that our Corbin Wetcake can be shaped and successfully activated using industrially available equipment and technology with our proprietary know-how.
State Mercury and Air Toxics Regulations Affecting EGUs In addition, certain states have their own mercury rules that are similar to or more stringent than the MATS Rule. Coal-fired electricity generating units in the U.S. are subject to consent decrees that require the control of acid gases and particulate matter, in addition to mercury emissions.
On February 19, 2026, the EPA followed through with its proposal and finalized the repeal of the 2024 MATS amendment, reverting required compliance standards back to the existing standards set in 2012. State Mercury and Air Toxics Regulations Affecting EGUs In addition, certain states have their own mercury rules that are similar to or more stringent than the MATS Rule.
We believe Arq Powder has additional potential to enable us to access new markets and applications. We intend to secure customer interest in Arq Powder as an additive into other markets, such as components for asphalt.
We intend to secure customer interest in Corbin Wetcake as an additive into other markets, such as a component for asphalt, or for use in the purified coal and synthetic graphite industries.
In addition, the number of suppliers who provide the necessary additives needed to manufacture our chemical products are limited.
See "Item 1. Business - Recent Developments" for further information. We purchase various additives utilized in the production of our AC products. The manufacturing of AC is dependent upon these various additives, which are subject to price fluctuations and supply constraints. In addition, the number of suppliers who provide the necessary additives needed to manufacture our AC products is limited.
For example, in Canada, the Canada-Wide Standard ("CWS") was initially implemented in 2010, with increasingly stringent limits through 2020 and varying mercury emissions caps for each province. In May 2017, the EU ratified the Minimata Convention on Mercury, triggering mercury control regulations with implementation starting in 2021.
In May 2017, the EU ratified the Minamata Convention on Mercury, triggering mercury control regulations which were implemented starting in 2021.
Removed
AC has been adopted as the most widely used technology to capture mercury due to product efficiency and effectiveness, and currently accounts for the majority of the mercury control consumables in the North American market.
Added
It remains unclear whether the EPA's February 12, 2026 decision to repeal the "endangerment finding" as it relates to the regulation of greenhouse gases will impact or reverse this trend.
Removed
An emerging technology generating increasing interest by site engineering firms and owners is injecting highly engineered ACs into the subsoil, also described as "in situ" treatment, to intercept the contamination plume or to treat the groundwater.
Added
Groundwater contamination has become a matter of increasing concern to federal and state governments as well as to the public, especially over recent years. The U.S.
Removed
We expect to begin using Arq Powder as a feedstock to produce high-quality GAC products by the end of the first quarter of 2025 for sale into the APT and other markets. We anticipate that our GAC products made using these highly purified recovered bituminous coal fines will have a materially lower carbon footprint than other coal-based competitor alternatives.
Added
We are in initial and advanced stages of testing with a number of relevant state and municipal agencies with promising results to date. U.S. regulations are subject to continuing change, as further discussed in "Legislation and Environmental Regulations" included in Item 1 of this Report.
Removed
These products utilizing Arq Powder are expected to have a lower carbon footprint compared to similar products utilizing conventional materials and have demonstrated other beneficial performance attributes during lab-scale customer testing. These applications are currently in various stages of proof of concept testing or preliminary customer testing.
Added
However, due to factors described below, we have since ceased use of Corbin Wetcake in production of our GAC products and idled our Corbin Facility. See "Item 1. Business - Recent Developments" for further information. We believe that Corbin Wetcake has the potential to supply new markets and applications.
Removed
In the U.S., the availability of feedstock for GAC manufacturing is limited, as it is either supplied by specialty mined coal or coconut husks, which need to be imported.
Added
In addition, we are exploring uses for certain rare earth minerals and critical elements that can be isolated during the manufacturing process at our Corbin Facility for use in a variety of applications. These applications are currently in various stages of proof of concept testing or preliminary customer testing.
Removed
Between the Corbin Facility and the Five Forks Mine, we have a fully integrated supply chain in multiple feedstocks - bituminous coal fines (Corbin Facility) and lignite coal (Five Forks Mine) to produce both GAC and PAC products. We purchase various additives utilized in the production of our AC products.
Added
We believe that our domestic supply chain, including access to our vertically integrated lignite feedstock for our PAC and other products, provides our Company with a competitive advantage over certain other market participants.
Removed
Mechanical completion of our GAC Facility was completed in January 2025. We expect to commence initial production of our proprietary GAC product at the GAC Facility by the end of the first quarter of 2025. For the year ended December 31, 2024, construction costs for the GAC Facility were approximately $80 million.
Added
We purchase these various ACs through supply agreements or spot purchases with the producers. With the acquisition of Legacy Arq in 2023, we secured a second feedstock at our Corbin Facility, which is made from high-quality recovered bituminous coal fines.
Removed
We offer competitive compensation to attract and retain the best people.
Added
We initially expected to use Corbin Wetcake in the production of GAC products; however, due to previously disclosed design flaws in the GAC Facility at our Red River Plant (each as defined below), on a standalone basis as well as in combination with the inherent variability of Corbin Wetcake, we now expect to use bituminous proven performance coal feedstock from other sources to produce our GAC products.
Removed
Recent Developments Revolving Credit Facility On December 27, 2024 (the "Closing Date"), we and certain of our subsidiaries entered into a Credit, Security and Guaranty Agreement (the "Revolving Credit Agreement") with MidCap Funding IV Trust, in its capacity as agent, the lenders from time to time party thereto, and any entities that become party thereto as Guarantors.
Added
Initial mechanical completion of our GAC Facility occurred in January 2025, and on August 6, 2025, we announced that we had successfully commissioned the GAC Facility and produced our first commercial volumes of on-specification GAC product, albeit at volumes below nameplate capacity.
Removed
The Revolving Credit Facility has a maturity date of December 27, 2029. Borrowings under the Revolving Credit Agreement bear interest at the Standard Overnight Financing Rate ("SOFR") plus an applicable margin of 4.50% per annum, subject to a SOFR floor of 2.50% per annum.
Added
However, after initial production runs, in December 2025, it became clear that ramp-up to nameplate capacity could not be accomplished without further modifications to the existing systems because of design flaws in our GAC Facility, on a standalone basis as well as in combination with the inherent variability of the Corbin Wetcake, which we planned to use to manufacture our GAC products.
Removed
September 2024 Equity Offering On September 20, 2024, we entered into an underwriting agreement (the "Underwriting Agreement") with Canaccord Genuity LLC, as the representative of the underwriters named therein (the "Underwriters"), relating to the issuance and sale (the "Offering") of 4,770,000 shares (the "Firm Shares") of the Company's common stock, par value $0.001 per share, at a price to the public of $5.25 per share.
Added
As a result, we have paused GAC production, idled the Corbin Facility as a cost saving measure, and have launched an engineering and production process optimization review, which will include an evaluation of potential GAC Facility design modifications and production economics at different scales.
Removed
Under the terms of the Underwriting Agreement, the Underwriters agreed to purchase the Firm Shares from the Company at a price of $4.935 per share.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

81 edited+42 added−51 removed81 unchanged
Biggest changeThese include ongoing liquidity requirements for funding the expansion of the facility, ongoing compliance with regulatory requirements, environmental and operational licenses and approvals for additional expansion, supply chain constraints, hiring, training and retention of qualified employees and the pace of bringing production equipment and processes online with the capability to manufacture high-quality GAC products at scale.
Biggest changeIn addition to the foregoing issues experienced to date, any further construction and commissioning of potential modifications and ramp-up of production at our GAC Facility will be subject to a number of other uncertainties inherent in all new construction and manufacturing operations, such as delays in procurement or construction, shortages of materials or availability of qualified contractors, liquidity requirements for funding the modifications to our GAC Facility, ongoing compliance with regulatory requirements, environmental and operational licenses and approvals for additional GAC Facility expansion, supply chain constraints (including in the supply of bituminous coal), hiring, training and retention of qualified employees and the pace of commissioning and bringing production equipment and processes online with the capability to manufacture high-quality GAC products at nameplate capacity.
Our levels of indebtedness and higher interest rates could impact us as follows: • require us to dedicate a substantial portion of our cash flow from operations to service indebtedness, thereby reducing the availability of cash flow to fund acquisitions or working capital; • limit our flexibility in planning for, or reacting to, changes in our business; • restrict us from exploiting business opportunities; • make us more vulnerable to a downturn in our business or the economy; • place us at a competitive disadvantage compared to our competitors with less indebtedness; • require the consent of our existing lenders to incur additional indebtedness; • limit our ability to borrow additional funds for acquisitions, working capital, or debt-service requirements; • increase our cost of capital, including as a result of higher interest rates; • decrease our future earnings; or • increase our exposure to the credit risks of bank group lenders or those institutions with which we maintain deposits.
Our levels of indebtedness and higher interest rates could impact us as follows: • require us to dedicate a substantial portion of our cash flow from operations to service indebtedness, thereby reducing the availability of cash flow to fund acquisitions or working capital; • limit our flexibility in planning for, or reacting to, changes in our business; • restrict us from exploiting business opportunities; • make us more vulnerable to a downturn in our business or the economy; • place us at a competitive disadvantage compared to our competitors with less indebtedness; • require the consent of our existing lenders to incur certain additional indebtedness; • limit our ability to borrow additional funds for acquisitions, working capital, or debt-service requirements; • increase our cost of capital, including as a result of higher interest rates; • decrease our future earnings; or • increase our exposure to the credit risks of bank group lenders or those institutions with which we maintain deposits.
The amount of coal consumed for North American electricity power generation is affected by, among other things, (1) the location, availability, quality and price of alternative energy sources for power generation, such as natural gas, fuel oil, nuclear, hydroelectric, wind, biomass and solar power; and (2) technological developments, including those related to competing alternative energy sources.
The amount of coal consumed for North American electricity power generation is affected by, among other things, (1) the location, availability, quality and price of alternative energy sources for power generation, such as natural gas, fuel oil, nuclear, 16 hydroelectric, wind, biomass and solar power; and (2) technological developments, including those related to competing alternative energy sources.
We have agreed to indemnify licensees of our technologies (including Tinuum Group) and purchasers of our products, and we may enter into additional agreements with others under which we agree to indemnify and hold them harmless from losses they may incur as a result of the alleged infringement of third-party rights caused by the use of our technologies and products.
We have agreed to indemnify licensees of our technologies (including Tinuum Group) and purchasers of our products, and we may enter into additional agreements with others under which we agree to indemnify and hold them harmless from losses they may incur as a result of the alleged infringement of third-party rights caused by our technologies and products.
Federal, state and international laws or regulations addressing emissions from coal-fired electricity generating units, climate change or other actions to limit emissions, including public opposition to new coal-fired electricity generating units, has caused and could continue to cause electricity generators to transition from coal to other fuel and power sources, such as natural gas, nuclear, wind, hydroelectric and solar.
Federal and state laws or regulations addressing emissions from coal-fired electricity generating units, climate change or other actions to limit emissions, including public opposition to new coal-fired electricity generating units, has caused and could continue to cause electricity generators to transition from coal to other fuel and power sources, such as natural gas, nuclear, wind, hydroelectric and solar.
If we fail to meet expectations related to future growth, profitability, dividends, stock repurchases or other market expectations, our stock price may decline significantly, which could have a material adverse impact on our ability to obtain additional capital and erode investor confidence, which could further reduce the liquidity of our common stock.
If we fail to meet expectations related to future growth, profitability, dividends, or other market expectations, our stock price may decline significantly, which could have a material adverse impact on our ability to obtain additional capital and erode investor confidence, which could further reduce the liquidity of our common stock.
Disruptions at any of our facilities could negatively impact our ability to meet customer supply requirements due to damage to or insufficient production capacity of the Red River Plant and may have a material adverse effect on our business, results of operations and financial condition.
Disruptions or underutilization at any of our facilities could negatively impact our ability to meet customer supply requirements due to damage to or insufficient production capacity of the Red River Plant and may have a material adverse effect on our business, results of operations and financial condition.
Any future regulations regarding CO 2 emissions of coal reclamation and product manufacturing could also impact our future business. Action by the EPA related to MATS that decreases demand for our mercury removal products could have a material adverse effect on our business.
Any future regulations regarding CO 2 emissions of coal reclamation and product manufacturing could also impact our future business. Any action by the EPA related to the MATS Rule that decreases demand for our mercury removal products could have a material adverse effect on our business.
Our consumable products, exclusive of lignite coal, use a variety of additives. Significant movements or volatility in the costs of additives could have an adverse effect on our working capital or results of operations. Additionally, we purchase certain raw materials from selected key suppliers.
Additionally, our consumable products, exclusive of lignite coal, use a variety of additives. Significant movements or volatility in the costs of these raw materials or additives could have an adverse effect on our working capital or results of operations. Additionally, we purchase certain raw materials from selected key suppliers.
While we have inventory of such raw materials, if any of these suppliers are unable to meet their obligations with us on a timely basis or at an acceptable price, we may be forced to incur higher costs to obtain the necessary raw materials or be unable to obtain the materials.
While we have inventory of such raw materials, if any of these suppliers are unable to meet their obligations with us on a timely basis 17 or at an acceptable price, we may be forced to incur higher costs to obtain the necessary raw materials or be unable to obtain the materials.
Existing and possible future laws, regulations and permits governing operations and activities of energy waste companies, or more stringent implementation, could have a material adverse impact on our business and cause increases in capital expenditures or require abandonment or delays in our products.
Existing and possible 15 future laws, regulations and permits governing operations and activities of energy waste companies, or more stringent implementation, could have a material adverse impact on our business and cause increases in capital expenditures or require abandonment or delays in our products.
Our Revolving Credit Agreement and CTB Loan contain financial and other restrictive covenants. For example, the Revolving Credit Agreement includes financial covenants that require us to maintain a maximum leverage ratio and a minimum liquidity level (as these terms are defined in the Revolving Credit Agreement).
Our Revolving Credit Agreement and CTB Loan currently contain financial and other restrictive covenants. For example, the Revolving Credit Agreement includes financial covenants that require us to maintain a maximum leverage ratio and a minimum liquidity level (as these terms are defined in the Revolving Credit Agreement).
Our ability to bring new products to the market will depend on various factors, including, but not limited to, solving potential technical or manufacturing difficulties, competition and market acceptance, which may hinder the timeliness and cost to bring 19 such products to production.
Our ability to bring new products to the market will depend on various factors, including, but not limited to, solving potential technical or manufacturing difficulties, competition and market acceptance, which may hinder the timeliness and cost to bring such products to production.
If the actual funding required to implement growth initiatives should exceed funding estimates significantly, or our funds generated from our operations from such growth 23 initiatives prove insufficient for such purposes, we may need to raise additional funds to meet these funding requirements.
If the actual funding required to implement growth initiatives should exceed funding estimates significantly, or our funds generated from our operations from such growth initiatives prove insufficient for such purposes, we may need to raise additional funds to meet these funding requirements.
The Corbin Facility's operations are governed by extensive laws and regulations, including: • laws and regulations related to exports, taxes and fees; 16 • labor standards and regulations related to the MSHA; and • environmental standards and regulations related to waste disposal, toxic substances, land use and environmental protection, including environmental protection regulations related to water and air.
The Corbin Facility's operations are governed by extensive laws and regulations, including: • laws and regulations related to exports, taxes and fees; • labor standards and regulations related to the MSHA; and • environmental standards and regulations related to waste disposal, toxic substances, land use and environmental protection, including environmental protection regulations related to water and air.
Our Revolving Credit Facility and CTB Loan have maturity dates of December 27, 2029 and January 27, 2036, respectively. In the future, we may be unable to obtain new financing or refinancing on acceptable terms. See Note 5 "Debt Obligations" to the Consolidated Financial Statements included in Item 8 of this Report for further information.
Our Revolving Credit Facility and CTB Loan have maturity dates of December 27, 2029 and January 27, 2036, respectively. In the future, we may be unable to obtain new financing or refinancing on acceptable terms. See Note 6 "Debt Obligations" to the Consolidated Financial Statements included in Item 8 of this Report for further information.
To the extent the anti-dumping margins do not adequately address the degree to which imports are unfairly traded, the anti-dumping order may be less effective in reducing the volume of these low-priced AC imports in the U.S., which could negatively affect demand and/or pricing for our products.
To the extent the anti-dumping margins and new tariffs do not adequately address the degree to which imports are unfairly traded, the anti-dumping order and new tariffs may be less effective in reducing the volume of these low-priced AC imports in the U.S., which could negatively affect demand and/or pricing for our products.
An entity that experiences an ownership change generally is subject to an annual limitation on its pre-ownership change tax asset carryforwards. The annual limitation is increased each year to the extent that there is an unused limitation in a prior year. 21 We acquired certain tax assets (the "Legacy Arq Tax Assets") in the Arq Acquisition, totaling approximately $12.5 million.
An entity that experiences an 20 ownership change generally is subject to an annual limitation on its pre-ownership change tax asset carryforwards. The annual limitation is increased each year to the extent that there is an unused limitation in a prior year. We acquired certain tax assets (the "Legacy Arq Tax Assets") in the Arq Acquisition, totaling approximately $12.5 million.
Any reduction in the amount of coal consumed by domestic electricity power generators, whether as a result of new power plants utilizing alternative energy sources or as a result of technological advances, could reduce the demand for our current products and services, thereby reducing our revenue and materially and adversely affecting our business and results of operations.
Any reduction in the amount of coal consumed by North American electricity power generators, whether as a result of new power plants utilizing alternative energy sources or as a result of technological advances, could reduce the demand for our current products and services, thereby reducing our revenue and materially and adversely affecting our business and results of operations.
During the years 2018 through 2024, we executed amendments to the TAPP (the "TAPP Amendments"), which amended the definition of "Final Expiration Date" under the TAPP to extend the duration of the TAPP and makes associated changes in connection therewith.
During the years 2018 through 2025, we executed amendments to the TAPP (the "TAPP Amendments"), which amended the definition of "Final Expiration Date" under the TAPP to extend the duration of the TAPP and makes associated changes in connection therewith.
In addition, if contractual demand exceeds manufacturing capacity, we would jeopardize our ability to fulfill obligations under our contracts, which could, in turn, result in reduced sales, profitability, contract penalties or terminations and damage to our customer relationships and could have a material adverse effect on our business.
In addition, if contractual demand exceeds manufacturing capacity, it could jeopardize our ability to fulfill obligations under our contracts, which could, in turn, result in reduced sales, profitability, contract penalties or terminations and damage to our customer relationships and could have a material adverse effect on our business.
The most recent TAPP Amendment was approved at our 2024 annual meeting of stockholders and extended the Final Expiration Date to the close of business on December 31, 2025.
The most recent TAPP Amendment was approved at our 2025 annual meeting of stockholders and extended the Final Expiration Date to the close of business on December 31, 2026.
Disruptions of supply chains may affect volatility in price and availability of raw materials. The continuation of geopolitical conflicts in 2024 has continued to disrupt supply chains, resulting in cost increases for commodities, goods and services in many parts of the world. Disruptions of supply chains and higher costs may continue into 2025 and beyond.
Disruptions of supply chains may affect volatility in price and availability of raw materials. The continuation of geopolitical conflicts in 2025 has continued to disrupt some supply chains, resulting in cost increases for commodities, goods and services in many parts of the world. Disruptions of supply chains and higher costs may continue into 2026 and beyond.
Possible advances in technologies and incentives, such as tax credits that enhance the economics of renewable energy sources, could make those sources more competitive than coal.
Further advances in technologies and incentives, such as tax credits that enhance the economics of renewable energy sources, could make those sources more competitive than coal.
We may attempt to offset the effects of these compliance costs through price increases, productivity improvements and cost reduction efforts. Our success in offsetting any such increased regulatory costs is largely influenced by competitive and economic conditions and could vary significantly depending on the market segment served.
We may attempt to offset the effects of these compliance costs through price increases, productivity improvements, changed operations or processes, and cost reduction efforts. Our success in offsetting any such increased regulatory costs is largely influenced by competitive and economic conditions and could vary significantly depending on the market segment served.
We face operational risks inherent in mining operations, and our mining operations have the potential to cause safety issues, including those that could result in significant personal injury. We own the Five Forks Mine, a lignite coal mine located in Louisiana, which is operated for us by a third party.
We face operational risks inherent in mining operations, and our mining operations have the potential to cause safety issues, including those that could result in significant personal injury. We own the Five Forks Mine, a lignite coal mine located in Louisiana, which is operated for us by a third party. Our Corbin Facility is also a mining operation.
Any major global downturn could also materially negatively impact this demand. New AC supply is driven by new manufacturing sites being built, and we have little visibility on what additional manufacturing capacity other manufacturers may add in the future.
Any major global downturn could also materially negatively impact this demand. New AC supply is driven by new manufacturing sites being 12 built, and we have little visibility on what additional manufacturing capacity our competitors or other manufacturers may add in the future.
If we experience a disruption at these facilities, due to natural disasters, extreme weather, other unanticipated problems such as labor difficulties, pandemics (including the COVID-19 pandemic), equipment failure, cyberattacks or other cybersecurity incidents, capacity expansion difficulties or unscheduled maintenance, we would suffer a loss of inventory to supply customers, likely incur additional costs to deliver products to our customers, and disrupt the ordinary course of our business.
If we experience additional disruptions at our manufacturing facilities, due to natural disasters, extreme weather, other unanticipated problems such as labor difficulties, pandemics or epidemics, equipment failure, cyberattacks or other cybersecurity incidents, capacity expansion difficulties or unscheduled maintenance, we would suffer a loss of inventory to supply customers, likely incur additional costs to deliver products to our customers, and disrupt the ordinary course of our business.
The loss of, or significant reduction in, revenue from our largest customers could adversely affect our business, financial condition or results of operations. For 2024, we derived approximately 45% of our total revenue from our five largest customers. Our top three customers accounted for approximately 36% of our total revenue for 2024.
The loss of, or significant reduction in, revenue from our largest customers could adversely affect our business, financial condition or results of operations. For 2025, we derived approximately 50% of our total revenue from our five largest customers. Our top three customers accounted for approximately 42% of our total revenue for 2025.
The market price of our common stock may continue to be affected by numerous factors, including: • market perception of the Arq Acquisition; • actual or anticipated fluctuations in our operating results and financial condition; • changes in laws or regulations and court rulings and trends in our industry; • announcements of sales awards; 22 • changes in supply and demand of our products and raw materials; • adoption of new tax regulations or accounting standards affecting our industry; • changes in financial estimates by securities analysts; • trends in social responsibility and investment guidelines; • whether we are able and elect to pay cash dividends; • the continuation of repurchasing shares of common stock under our stock repurchase programs; and • the degree of trading liquidity in our common stock and general market conditions.
The market price of our common stock may continue to be affected by numerous factors, including: • the market’s perception of our ability to execute on our business plan with respect to our GAC products, GAC Facility and Corbin Wetcake; • actual or anticipated fluctuations in our operating results and financial condition; • changes in laws or regulations and court rulings and trends in our industry; • announcements of sales awards; • changes in supply and demand of our products and raw materials; • adoption of new tax regulations or accounting standards affecting our industry; 21 • changes in financial estimates by securities analysts; • trends in social responsibility and investment guidelines; • whether we are able and elect to pay cash dividends; • the continuation of repurchasing shares of common stock under our stock repurchase programs; and • the degree of trading liquidity in our common stock and general market conditions.
Further, a prolonged disruption in our operations at the Red River Plant due to downtime or having to meet customer requirements that exceed our maximum manufacturing capacity would require us to seek alternative customer supply arrangements, which may not be on attractive terms to us or could lead to delays in distribution of products to our customers, either of which could have a material adverse effect on our business, results of operations and financial condition.
Further, a prolonged disruption in our operations at the Red River Plant due to downtime or having to meet customer requirements that exceed our maximum manufacturing capacity would require us to seek alternative customer supply arrangements, which may not be on attractive terms to us or could lead to delays in distribution of products to our customers.
The economic effects from these events over longer terms could negatively impact our business and results of operations. 18 The manufacturing and processing of our consumable products requires significant amounts of raw materials. The price and availability of those raw materials can be impacted by factors beyond our control.
The economic effects from these events over longer terms could negatively impact our business and results of operations. The manufacturing and processing of our consumable products requires significant amounts of raw materials, including bituminous proven performance coal feedstocks for our GAC products. The price and availability of those raw materials can be impacted by factors beyond our control.
For example, as previously disclosed, capital expenditures related to the GAC Facility in the fourth quarter of 2024 were above what was originally budgeted, bringing fiscal year 2024 capital expenditures to approximately $80 million. Any additional funds required may be raised by issuing equity or debt securities or by borrowing from banks or other resources.
For example, as previously disclosed, capital expenditures related to the GAC Facility were above what was originally budgeted, bringing fiscal year 2025 capital expenditures to approximately $9.1 million. 22 Any additional funds required may be raised by issuing equity or debt securities or by borrowing from banks or other resources.
Certain Legacy Arq shareholders and participants in the PIPE Investment hold a significant percentage of our outstanding common stock, and such persons, acting individually or together, could have the ability to exert a substantial influence on actions requiring a stockholder vote. The influence of these significant stockholders may be used in a manner that other stockholders may not support.
Certain members of our management team and Board hold a significant percentage of our outstanding common stock, and such persons, acting individually or together, could have the ability to exert a substantial influence on actions requiring a stockholder vote. The influence of these significant stockholders may be used in a manner that other stockholders may not support.
We are subject to risks related to environmental, social or governance (“ESG”) matters, including our ability to set and meet reasonable goals related to climate change and sustainability efforts, may negatively affect our business and operations. Regulatory developments and stakeholder expectations relating to ESG matters are rapidly changing.
We are subject to risks related to environmental, social or governance (“ESG”) matters, including our ability to set and meet reasonable goals related to climate change and sustainability efforts, may negatively affect our business and operations.
If these strategic relationships are not established or maintained, our business prospects may be limited, which could negatively impact our business and results of operations. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.
If these strategic relationships are not established or maintained, we may be unable to utilize the Corbin Wetcake produced at our Corbin Facility, which could negatively impact our business and results of operations. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.
If, as a result of the new U.S. presidential administration or developments in administrative law jurisprudence, such laws and regulations are delayed, not enacted, repealed, amended to be less strict, or include prolonged phase-in periods, or are not enforced, our business would be adversely affected by declining demand for such products and services. For example: 1.
If, as a result of changes in agency priorities or developments in administrative law jurisprudence, such laws and regulations are delayed further, not enacted, repealed, amended to be less strict, or include prolonged phase-in periods, or are not enforced, our business would be adversely affected by declining demand for such products and services.
Concern over climate change has increased focus on the sustainability of practices and products in the markets we serve, and changes to laws and regulations regarding climate change mitigation may result in increased costs and disruption to operations.
For certain stakeholders, customers, markets and government instrumentalities, concern over climate change has increased focus on the sustainability of practices and products in some of the markets we serve or may potentially serve, and changes to laws and regulations regarding climate change mitigation may result in increased costs and disruption to operations.
In connection with the Arq Acquisition and PIPE Investment, the May 2024 Private Placement and the September 2024 Offering, we granted waivers under the TAPP for certain stockholders to allow such stockholders to acquire the shares offered in the respective offerings and acquire more shares of our stock in the future, provided that such acquisition is not expected to, and does not, effect an "ownership change" under IRC Sections 382 and 383.
In connection with various recent equity issuances, we granted waivers under the TAPP for certain stockholders to allow such stockholders to acquire the shares offered in the respective offerings and acquire more shares of our stock in the future, provided that such acquisition is not expected to, and does not, effect an "ownership change" under IRC Sections 382 and 383.
We may not be successful in obtaining the required financing or, if financing is available to us, such financing may not be on terms that are favorable to us.
However, there can be no assurance that we will be successful in obtaining the required additional financing or, if financing is available to us, such financing may not be on terms that are favorable to us.
Further, if we raise additional funds through the issuance of new shares of our common stock, any existing stockholders who are unable or unwilling to participate in such an additional round of fund raising may suffer dilution of their investment.
Further, if we raise additional funds through the issuance of new shares of our common stock, any existing stockholders who are unable or unwilling to participate in such an additional round of fund raising may suffer dilution of their investment. Certain members of our management team and Board hold a significant portion of the voting power of our common stock.
At the Five Forks Mine, the risks are primarily operational risks associated with the maintenance and operation of the heavy equipment required to dig and haul the lignite and risks relating to producing lower than expected lignite quality or unfavorable recovery rates. Additionally, the cost of inputs in our mining operation, most notably fuel cost, can create operational risks.
At the Five Forks Mine, the risks are primarily operational risks associated with the maintenance and operation of the heavy equipment required to dig and haul the lignite and risks relating to producing lower than expected lignite quality or unfavorable recovery rates.
In addition, extreme and unusually cold or hot temperatures throughout the U.S. could result in abnormally high loads on geographic electrical grids that could result in the failure of coal-fired power plants to produce electricity.
Such events could disrupt our supply of raw materials or otherwise affect production, transportation and delivery of our products or affect demand for our products. In addition, extreme and unusually cold or hot temperatures throughout the U.S. could result in abnormally high loads on geographic electrical grids that could result in the failure of coal-fired power plants to produce electricity.
In 2024, we published our first corporate responsibility and sustainability tear sheet and inaugural ESG Report to address the impact of our operations on climate change and discuss material social, governance and environmental issues. Any failure or perceived failure to act responsibly with respect to such matters may negatively impact our operations and/or financial condition.
We publish an annual Sustainability Report to address the impact of our operations on and to discuss material social, governance and environmental issues. Any failure or perceived failure to act responsibly with respect to such matters may negatively impact our operations and/or financial condition.
The Legacy Arq Tax Assets are comprised of NOL carryforwards, of which $8.8 million were incurred in the U.S. Further, as of December 31, 2024, we had approximately $86.1 million of general business credit carryforwards (the "Tax Credits"), totaling approximately 75% of consolidated tax assets. Under the IRC and regulations promulgated by the U.S.
Further, as of December 31, 2025, we had approximately $86.1 million of general business credit carryforwards (the "Tax Credits"), totaling approximately 73% of consolidated tax assets. Under the IRC and regulations promulgated by the U.S.
As we continue to integrate Legacy Arq's operations, any failure to maintain effective internal controls, or difficulties encountered in implementing or improving internal controls, could harm our operating results or cause us to fail to meet our reporting obligations.
Any failure to maintain effective internal controls, or difficulties encountered in implementing or improving internal controls, could harm our operating results, cause us to fail to meet our reporting obligations or allow fraud to occur or go undetected.
These factors or delays could affect our future operating results. Natural disasters or extreme weather could affect our operations and financial results. We operate facilities, including the Red River Plant, Five Forks Mine and the Corbin Facility, that are exposed to natural hazards, such as floods, windstorms and hurricanes.
Natural disasters or extreme weather could affect our operations and financial results. We operate facilities, including the Red River Plant, Five Forks Mine and the Corbin Facility, that are exposed to natural hazards, such as floods, freezes, windstorms and hurricanes. Extreme weather events present physical risks that may become more frequent as a result of factors related to climate change.
We may experience a shortage of reliable and adequate transport capacity and any material increase in transportation costs could have a material adverse effect on our results of operations. We plan to transport our Arq Powder based feedstock produced at the Corbin Facility to the Red River Plant by rail and truck.
We may experience a shortage of reliable and adequate transport capacity and any material increase in transportation costs could have a material adverse effect on our results of operations. We use rail and truck transport to deliver our products to our customers and to receive the raw materials needed to manufacture our products at our Red River Plant.
Ineffective internal controls could additionally lead to increased costs to remediate any failures and could cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our common stock.
Ineffective internal controls could additionally lead to increased costs to remediate any failures and could cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our common stock. 14 The financial effects of Tinuum Group providing indemnification under performance guarantees of its refined coal ("RC") facilities are largely unknown and could adversely affect our financial condition.
The failure to maintain adequate liquidity to enable the Company to produce Legacy Arq products and GAC products by the end of the first quarter of 2025 on a going forward basis could result in a delay in executing our business plan, which could have a material adverse effect on our business, operating results and financial condition.
The failure to maintain adequate liquidity to enable the Company to resume GAC production, reach nameplate capacity, and produce our GAC products consistently at those volumes on a go forward basis could result in a delay in executing our business plan, which could have a material adverse effect on our business, operating results and financial condition.
We have not completed a formal IRC Section 382 analysis of Legacy Arq equity changes from its inception through the Acquisition Date, however, we believe that one or more "ownership changes" occurred during this time period as defined under Sections 382 and 383 and that a portion or all the Legacy Arq Tax Assets may subject to an annual limitation.
We believe that one or more "ownership changes" occurred prior to the date of the Arq Acquisition as defined under Sections 382 and 383 and that a portion or all of the Legacy Arq Tax Assets may be subject to an annual limitation.
These include logistics delays or shortages in producing and shipping certain of our raw materials, increases in energy prices that could increase costs of certain of our raw materials, increases in transportation costs from overall higher gasoline prices, higher prices due to tariffs, and cyber-attacks targeted at U.S. power infrastructure that could impact demand for our products.
These disruptions may result in logistics delays or shortages in producing, shipping, and receiving certain of our raw materials, increases in energy prices, increases in costs of certain of our raw materials, increases in transportation costs from overall higher fuel prices, higher prices due to tariffs, and other changes that could impact demand for our products.
Our current and future ability to meet customer expectations, manage inventory, complete sales and achieve our objectives for operating efficiencies depends on the full-time operation of the Red River Plant, and the execution of our business plan depends on the integration of the Corbin Facility as the primary source of feedstock for the GAC Facility's commissioning and ramp-up of commercial production.
Our ability to meet customer expectations, manage inventory, complete sales and achieve our objectives for operating efficiencies depends on the full-time operation of the Red River Plant, and the execution of our current business plan depends on the successful identification of solutions to the issues experienced to date at our GAC Facility, the eventual ramp-up to nameplate capacity at our GAC Facility, and our ability to secure adequate feedstock for GAC production.
We do not expect to repurchase additional shares of our common stock in the near term. Our certificate of incorporation and bylaws contain provisions that may delay or prevent an otherwise beneficial takeover attempt of us.
On August 12, 2025, our Board terminated our existing stock repurchase plan. We do not expect to adopt a stock repurchase program or declare a dividend in the near term. Our certificate of incorporation and bylaws contain provisions that may delay or prevent an otherwise beneficial takeover attempt of our Company.
There can be no assurance that we will be able to secure sufficient truck or railway transport capacity to transport raw materials from the Corbin Facility to the Red River Plant or our finished commercial products to our customers.
We may experience roadway or railway transportation disruptions that could have a material adverse effect on our operations or financial condition. There can be no assurance that we will be able to secure sufficient truck or railway transport capacity to transport raw materials to the Red River Plant or our finished commercial products to our customers.
Further, we cannot reasonably predict the impact that any such future laws or regulations or public opposition may have on our results of operations, financial condition or cash flows. With the Arq Acquisition, we are subject to additional significant governmental regulations, which may negatively impact our operations and costs of conducting business.
Further, we cannot reasonably predict the impact that any such future laws or regulations or public opposition may have on our results of operations, financial condition or cash flows. See “Item 1. Business – Legislation and Environmental Regulations” for further information.
Our ability to successfully produce Legacy Arq’s products and expand their utilization as intended depends on developing and maintaining close working relationships with industry participants. In addition, the dynamics of maintaining these relationships with strategic partners may require us to incur expenses or undertake activities we would not otherwise be inclined to do.
In addition, the dynamics of creating new and maintaining these relationships with strategic partners may require us to incur expenses or undertake activities we would not otherwise be inclined to do.
These perpetrators of cyberattacks also may be able to develop and deploy viruses, worms, malware and other malicious software programs that attack our information and networks or otherwise exploit any security vulnerabilities of our information and networks. 20 Techniques used to obtain unauthorized access to or sabotage systems change frequently and often are not recognized until after they are launched against a target, and we may be unable to anticipate these techniques or to implement adequate preventative measures.
Techniques used to obtain unauthorized access to or sabotage systems change frequently and often are not recognized until after they are launched against a target, and we may be unable to anticipate these techniques or to implement adequate preventative measures.
Additionally, new CERCLA regulations and further regulations of PFAS substances may increase the costs of handling, transport, and disposal of PFAS-containing materials, including water treatment waste, such as spent GAC.
For example, prior to idling our Corbin Facility, the majority of sites we targeted for development and extraction of coal fines contain potential environmental liabilities. Additionally, new CERCLA regulations and further regulations of PFAS substances may increase the costs of handling, transport, and disposal of PFAS-containing materials, including water treatment waste, such as spent GAC.
On February 15, 2023, the EPA issued a final rule revoking the May 2020 reconsideration and affirming that it is "appropriate and necessary" to regulate HAP emissions from coal- and oil-fired EGUs.
On February 15, 2023, the EPA issued a final rule re-affirming that it is "appropriate and necessary" to regulate HAP emissions from coal- and oil-fired EGUs. On April 3, 2023, the EPA issued a proposed amendment to the MATS rule that, among other potential modifications, proposed a reduction to the mercury emission limits for lignite coal-fired EGUs.
These include requirements to obtain and comply with various environmental-related permits for constructing any new facilities (or modifications to existing facilities) and operating all of our existing facilities. Costs of complying with regulations could increase, as concerns related to greenhouse gases and climate change continue to emerge.
These include requirements to obtain and comply with various environmental-related permits for constructing any new facilities (or modifications to existing facilities) and operating all of our existing facilities. Our mining operations are also subject to permitting requirements.
In connection with the Arq Acquisition, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could negatively affect our business, assets, liabilities, prospects, outlook, financial condition and results of operations.
We have and may in the future be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price.
We own and operate the Red River Plant, which is our sole manufacturing plant for producing and selling AC products to our customers, and own and operate the Corbin Facility, which is our sole production facility for manufacturing Arq Powder.
We own and operate the Red River Plant, which is our sole manufacturing plant for producing and selling AC products to our customers. We also own and operate the Corbin Facility, the primary purpose of which was producing Corbin Wetcake for the manufacture of our GAC products, as well as for potential uses in other industries.
Our operating performance is largely dependent upon demand for mercury removal-related products, which is largely affected by the amount of coal-based power generation used in the U.S. and the continued regulation of utilities under the EPA's MATS Rule. In May 2020, the EPA reconsidered and withdrew its 2016 "supplemental finding" associated with the cost benefit analysis of the MATS Rule.
Our operating performance is largely dependent upon demand for mercury removal-related products, which is largely affected by the amount of coal-based power generation used in the U.S. and the continued regulation of Hazardous Air Pollutants ("HAP") emissions from coal- and oil-fired Electric Utility Steam Generating Units ("EGUs") and other utilities under the EPA's MATS Rule.
Current and future indebtedness could adversely affect our financial condition and impair our ability to operate our business. As of December 31, 2024, we had approximately $13.8 million outstanding and $16.2 million available under our Revolving Credit Facility.
Current and future indebtedness could adversely affect our financial condition and impair our ability to operate our business. As of December 31, 2025, we had approximately $19.0 million outstanding and $1.4 million available under our Revolving Credit Facility. Further, we hold an amortized term loan (the "CTB Loan") associated with our Corbin Facility with Community Trust Bank, Inc.
Uncertain geopolitical conditions, including in connection with the new U.S. presidential administration, the conflicts in the Middle East, the invasion of Ukraine, sanctions against Russia, increased domestic and international tariffs and other potential impacts on the world economy and currencies may cause disruptions in our business.
Uncertain geopolitical conditions, including in connection with uncertainty and changes in domestic and international U.S. policy, as well as with respect to current international conflicts, sanction regimes, multinational institutions, increased frequency of cyber-attacks, trade policies (including tariffs and trade sanctions) and other potential impacts on the world economy and currencies may cause disruptions in our business.
Additionally, our competitors are significantly larger and/or more established companies in the market for consumables and other products that provide mercury emissions reduction, water treatment and air purification. 17 Reduction of coal consumption by North American electricity power generators could result in less demand for our products and services.
In addition, market competition could negatively impact our ability to maintain or raise prices or maintain or grow our market position. Additionally, some of our competitors are significantly larger and/or more established companies in the overall market for consumables and other products that provide mercury emissions reduction, water treatment and air purification.
Nevertheless, if any such obligations are triggered in the future, any substantial payments made under such guarantees could have a material adverse effect on our financial condition, results of operations and cash flows. A pandemic, epidemic or outbreak of an infectious disease such as COVID-19 may materially adversely affect our business.
Nevertheless, if any such obligations are triggered in the future, any substantial payments made under such guarantees could have a material adverse effect on our financial condition, results of operations and cash flows. Demand for our products and services depends significantly on environmental laws and regulations related to emissions and water quality.
Our business plan and commercial success also assumes selling Arq Powder into new markets, including as an additive into the asphalt market. Although testing data and feedback from potential customers have been generally positive to date, there can be no assurance that these products will be commercially viable.
Although testing data and feedback from potential customers have been generally positive to date, there can be no assurance that these products will become commercially viable. Our success in utilizing the Corbin Wetcake produced at our Corbin Facility will depend on our ability to gain market acceptance and to correctly forecast demand in these new markets.
We are currently spending significant capital to execute our business plan to manufacture Legacy Arq’s products as a feedstock for GAC products. We have issued common stock in multiple equity offerings and entered into our Revolving Credit Facility to assist with funding these capital requirements, in addition to utilizing cash on hand.
To date, we have utilized cash on hand, issued common stock in multiple equity offerings and entered into a Revolving Credit 11 Facility to meet these capital funding requirements.
However, there can be no assurance that the final rule will stand unchallenged, given the change in U.S. presidential administration, related EOs and developments in administrative law jurisprudence. Any action taken by the EPA related to MATS that decreases demand for our products for mercury removal will have a negative effect on our financial results.
This, and any other action taken by the EPA related to MATS that decreases demand for our products for mercury removal may have a negative effect on our financial results.
In addition, upon completion of the Arq Acquisition, we assumed a term loan (the "CTB Loan") held by Legacy Arq with a financial institution ("CTB") in the principal amount of $10.0 million. We may incur additional indebtedness. Our 11 Revolving Credit Facility contains a floating interest rate.
("CTB") in the principal amount of $10.0 million. As of December 31, 2025, we had $8.4 million outstanding under the CTB Loan. However, we may need to incur additional indebtedness. Our Revolving Credit Facility contains a floating interest rate.
We believe our stock price should reflect expectations of future growth and profitability. Future dividends are subject to declaration by the Board, and under our current stock repurchase program, we are not obligated to acquire any specific number of shares.
From January 1, 2025 to December 31, 2025, the closing price of our common stock ranged from $3.20 to $7.73 per share. We believe our stock price should reflect both current business operations as well as expectations of future growth and profitability. Future dividends are subject to declaration by the Board, which we are not obligated to declare.
In addition, our anticipated production capacity for any new product, including our GAC products, may be limited if we experience material delays in commissioning or other areas as we ramp-up commercial production. Further, there can be no assurance that costs incurred to develop new products will result in an increase in revenue.
In addition, our anticipated production capacity for any new product, including our GAC products, may be limited if we continue to experience further material delays in identifying solutions to the design issues in our GAC 18 Facility and the eventual ramp-up to nameplate capacity at our GAC Facility, such as those we have experienced to date.
However, if we experience any further issues or delays in meeting our projected timelines, costs, or production capacity for the upgrades at our Red River Plant, or generating and maintaining demand for the products we manufacture there, our business, prospects, operating results and financial condition may be harmed.
If we experience any further issues or delays in identifying a solution to the design issues at our GAC Facility, or meeting any revised projected timelines, cost estimates, or anticipated production capacities associated with potential GAC Facility modifications, our growth as a business, future prospects, operating results and financial condition will be harmed.
These risks could have a material adverse effect on our business, operating results and financial condition. There could be no future demand for Legacy Arq’s products.
There can be no assurance that we will be able to successfully expand our business into these new markets, or that such expansion will prove to be beneficial. If we are unable to find demand for our Corbin Wetcake, it could have a material adverse effect on our business, operating results and financial condition.
Further, as a result of the Arq Acquisition, we may be required to take write-offs or write-downs, restructuring and impairment or other charges that could negatively affect our business, assets, liabilities, prospects, outlook, financial condition and results of operations.
To the extent the value of any 13 of our long-lived assets become impaired or are further impaired, we may be required to record non-cash impairment charges that could have a material adverse impact on our financial condition, results of operations and stock price.
Although we conducted extensive due diligence in connection with the Arq Acquisition, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis.
Unexpected risks may arise, and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. We assess long-lived assets for impairment annually or more frequently if events or circumstances occur that indicate it is more likely than not that the carrying value of the long-lived assets exceeds their fair value.
Our initial use for Arq Powder is as a feedstock for AC, and although we believe current conditions are favorable as a result of excess demand versus supply, there can be no guarantee that this will continue. Drivers of demand include factors beyond our control such as population growth, regulatory requirements and gross domestic product growth, amongst others.
This would eliminate our internal usage requirements for Corbin Wetcake produced at our Corbin Facility, which has been temporarily idled as a cost-savings measure. With respect to our AC products, we believe current conditions are favorable as a result of excess demand versus supply (especially in the GAC market), but there can be no guarantee that this will continue.
Additionally, we use rail and truck transport to deliver our products to our customers. We may experience roadway or railway transportation disruptions that could have a material adverse effect on our operations or financial condition.
For example, since pausing production at our GAC Facility, we have had to procure alternative GAC products for certain of our customers at our expense. These disruptions and requirements to procure alternative products for our customers could have a material adverse effect on our business, results of operations and financial condition.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe response plan includes (1) detection, (2) analysis, which may include timely notice to our management and audit committee chair, (3) containment, (4) eradication, (5) recovery and (6) post-incident review. Annually, we execute a tabletop exercise to test our incident response plan documentation and process execution. We also maintain cybersecurity insurance to manage potential liabilities resulting from specific cybersecurity incidents.
Biggest changeWe maintain a cybersecurity incident response plan to help ensure a timely, consistent and compliant response to actual or attempted cybersecurity incidents impacting the Company. The response plan includes (1) detection, (2) analysis, which may include timely notice to our management and audit committee chair, (3) containment, (4) eradication, (5) recovery and (6) post-incident review.
We conduct risk assessments in the event of a material change in our business processes that may affect information systems that are vulnerable to such 24 cybersecurity threats through our normal change control processes.
We conduct risk assessments in the event of a material change in our business processes that may affect information systems that are vulnerable to such cybersecurity threats through our normal change control processes.
Despite security measures we have implemented, there is always the risk that certain cybersecurity incidents could materially disrupt operational systems limiting our ability to manufacture and deliver products to customers. Governance Our VP of IT has more than six years of experience in cybersecurity and oversees our cybersecurity policies and processes, including those described in "Risk Management and Strategy" above.
Despite security measures we have implemented, there is always the risk that certain cybersecurity incidents could materially disrupt operational systems limiting our ability to manufacture and deliver products to customers. Governance Our VP of IT has more than seven years of experience in cybersecurity and oversees our cybersecurity policies and processes, including those described in "Risk Management and Strategy" above.
We r outinely assess material risks from cybersecurity threats, including any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein. We engage third parties in connection with our risk assessment processes.
We r outinely assess material risks from cybersecurity threats, including any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein. We engage third parties in connection with our risk assessment program.
These risk assessments include identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks.
These risk assessments include identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks. 23 Following these risk assessments, we re-design, implement, and maintain reasonable safeguards to minimize identified risks; reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards.
As part of our overall risk management program, we monitor and test our safeguards and train our employees on the importance of these safeguards. We maintain a formal information security awareness training program for all employees that includes training on matters such as phishing, email security best practices and data protection.
We maintain a formal information security awareness training program for all employees that includes training on matters such as phishing, email security best practices and data protection. Employees also receive random phishing tests at regular intervals to further assess and mitigate overall risk.
Following these risk assessments, we re-design, implement, and maintain reasonable safeguards to minimize identified risks; reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards. We devote resources and personnel, including our VP of IT, who reports to our Chief Accounting Officer, to manage the risk assessment and mitigation process.
We devote resources and personnel, including our VP of IT, who reports to our Chief Accounting Officer, to manage the risk assessment and mitigation process. As part of our overall risk management program, we monitor and test our safeguards and train our employees on the importance of these safeguards.
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Employees also receive random phishing tests at regular intervals to further assess and mitigate overall risk. We maintain a cybersecurity incident response plan to help ensure a timely, consistent and compliant response to actual or attempted cybersecurity incidents impacting the Company.
Added
Annually, we execute a tabletop exercise to test our incident response plan documentation and process execution. We also maintain cybersecurity insurance to manage potential liabilities resulting from specific cybersecurity incidents.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease approximately 141,000 square feet in various locations in Louisiana that are used for production, distribution and storage. Kentucky - We lease approximately 470 acres in Corbin, Kentucky where we operate the Corbin Facility.
Biggest changeWe also lease approximately 141,000 square feet in various locations in Louisiana that are used for production, distribution and storage. Kentucky - We lease approximately 470 acres in Corbin, Kentucky where we operate the Corbin Facility. During 2025, as a cost saving measure, we periodically idled the Corbin Facility, and it has been idled since January 1, 2026.
Mining As of December 31, 2024, we owned or controlled, primarily through long-term leases, approximately 1,975 acres of land for surface coal mining located in Natchitoches Parish, Louisiana ("Five Forks"). The majority of the Five Forks land is leased for mineral rights and right-of-use purposes that expire at varying dates over the next 30 years and contain options to renew.
Mining As of December 31, 2025, we owned or controlled, primarily through long-term leases, approximately 1,975 acres of land for surface coal mining located in Natchitoches Parish, Louisiana ("Five Forks"). The majority of the Five Forks land is leased for mineral rights and right-of-use purposes that expire at varying dates over the next 30 years and contain options to renew.
The remaining land is owned by us. 25 We also have approximately 380 permitted acres of land at the Corbin Facility from which we recover a bituminous coal fine feedstock, which is leased through August 31, 2030 and contains options to renew for successive five year terms until all merchantable fines are removed from the premises.
The remaining land is owned by us. 24 We also have approximately 380 permitted acres of land at the Corbin Facility from which we recover bituminous coal fines, which is leased through August 31, 2030 and contains options to renew for successive five year terms until all merchantable fines are removed from the premises.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings From time to time, we are involved in various litigation matters arising in the ordinary course of our business. Information with respect to this item may be found in Note 7 "Commitments and Contingencies" to the Consolidated Financial Statements included in Item 8 of this Report. Item 4.
Biggest changeItem 3. Legal Proceedings From time to time, we are involved in various litigation matters arising in the ordinary course of our business. Information with respect to this item may be found in Note 8 "Commitments and Contingencies" to the Consolidated Financial Statements included in Item 8 of this Report. Item 4.
Mine Safety Disclosures The statement concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Report. 26 PART II
Mine Safety Disclosures The statement concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Report. 25 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers Share Repurchases We maintain a program to repurchase up to $20.0 million of shares of our common stock under a stock repurchase program (the "Stock Repurchase Program") through open market transactions at prevailing market prices, of which $7.0 million remained available at December 31, 2024.
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers Share Repurchases We previously maintained a stock repurchase program (the "Repurchase Program") which authorized us to repurchase up to $20.0 million of shares of our common stock through open market transactions at prevailing market prices.
Tax Withholding The following table contains information about common shares that we withheld from delivering to employees during the fourth quarter of 2024 to satisfy their respective tax obligations related to stock-based awards.
Tax Withholding The following table contains information about common shares that we withheld from delivering to employees during the fourth quarter of 2025 to satisfy their respective tax obligations related to stock-based awards.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Our Common Stock Effective February 1, 2024, our common stock is quoted on the Nasdaq Global Market under the symbol "ARQ." Prior to that, our common stock was quoted on the Nasdaq Global Market under the symbol "ADES." There is no assurance that an active trading market will provide adequate liquidity for our existing stockholders or for persons who may acquire our common stock in the future.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Our Common Stock Our common stock is quoted on the Nasdaq Global Market under the symbol "ARQ." There is no assurance that an active trading market will provide adequate liquidity for our existing stockholders or for persons who may acquire our common stock in the future.
Dividends Our most recent dividend payment was in March 2020. We do not intend to declare or pay cash dividends in the foreseeable future. Holders The Company had 805 holders of record of our common stock as of March 3, 2025.
Dividends Our most recent dividend payment was in March 2020. We do not intend to declare or pay cash dividends in the foreseeable future. Holders The Company had 665 holders of record of our common stock as of March 5, 2026.
Period Total Number of Common Shares Purchased Average Price Paid per Common Share Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Dollar Value) of Common Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2024 to October 31, 2024 — — N/A N/A November 1, 2024 to November 30, 2024 — $ — N/A N/A December 1, 2024 to December 31, 2024 2,319 $ 7.71 N/A N/A Item 6.
Period Total Number of Common Shares Purchased Average Price Paid per Common Share Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Dollar Value) of Common Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2025 to October 31, 2025 — — N/A N/A November 1, 2025 to November 30, 2025 — $ — N/A N/A December 1, 2025 to December 31, 2025 1,026 $ 3.68 N/A N/A Item 6.
Removed
No purchases were made during the three months ended December 31, 2024. It is unlikely for the foreseeable future that we will resume repurchasing shares of our common stock under the Stock Repurchase Program.
Added
On August 12, 2025, our Board of Directors terminated the Repurchase Program, of which $7.0 million remained at the time of termination. We ceased repurchases under the Repurchase Program during the three months ended March 31, 2020. No shares were repurchased during the three months ended December 31, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

59 edited+51 added−25 removed35 unchanged
Biggest changeConsumables revenue continues to be affected by electricity demand, driven by seasonal weather and related power generation needs, as well as competitor prices related to alternative power generation sources such as natural gas and renewables. 30 Operating Expenses A summary of the components of our operating expenses, exclusive of cost of revenue items (presented above), for the years ended December 31, 2024 and 2023 is as follows: Years Ended December 31, Change (in thousands, except percentages) 2024 2023 ($) (%) Operating expenses: Selling, general and administrative $ 28,695 $ 34,069 $ (5,374) (16) % Research and development 4,050 3,314 736 22 % Depreciation, amortization, depletion and accretion 8,594 10,543 (1,949) (18) % Loss (gain) on sale of assets 64 (2,731) 2,795 * $ 41,403 $ 45,195 $ (3,792) (8) % * Percent change in excess of 100% not considered meaningful.
Biggest changeWe expect the implementation of the announced regulations will drive a material increase in GAC demand in the water purification market. 30 Operating Expenses A summary of the components of our operating expenses, exclusive of cost of revenue items (presented above), for the years ended December 31, 2025 and 2024 is as follows: Years Ended December 31, Change (in thousands, except percentages) 2025 2024 ($) (%) Operating expenses: Selling, general and administrative $ 22,554 $ 28,695 $ (6,141) (21) % Research and development 7,337 4,050 3,287 81 % Depreciation, amortization, depletion and accretion 11,747 8,594 3,153 37 % Impairment of long-lived assets 44,756 — 44,756 * Loss on sale of assets 96 64 32 50 % $ 86,490 $ 41,403 $ 45,087 * * Percent change in excess of 100% not considered meaningful.
EBITDA and Adjusted EBITDA The following table reconciles net loss, our most directly comparable as-reported financial measure calculated in accordance with GAAP to EBITDA, Adjusted EBITDA and (Adjusted EBITDA Loss).
EBITDA and Adjusted EBITDA The following table reconciles net loss, our most directly comparable as-reported financial measure calculated in accordance with GAAP, to (EBITDA Loss), EBITDA and Adjusted EBITDA.
We review, on at least an annual basis, the future expected costs and the timing of such costs for AROs. Income Taxes We account for income taxes under the asset and liability method, which requires judgment in determining income tax expense and the related balance sheet amounts.
We review, on at least an annual basis, the future expected costs and the timing of such costs for AROs. 37 Income Taxes We account for income taxes under the asset and liability method, which requires judgment in determining income tax expense and the related balance sheet amounts.
Other (expense) income The remaining components of other (expense) income include interest income, interest expense and other miscellaneous items. 29 Results of Operations Presentation of Financial Results For comparison purposes, the following tables set forth our results of operations for the years presented in the Consolidated Financial Statements included in Item 8 of this Report.
Other (expense) income The remaining components of other (expense) income include interest income, interest expense and other miscellaneous items. Results of Operations Presentation of Financial Results For comparison purposes, the following tables set forth our results of operations for the years presented in the Consolidated Financial Statements included in Item 8 of this Report.
We expect that the obligations secured by these surety bonds will be performed in the ordinary course of business and in accordance with the applicable contractual terms. To the extent that the 36 obligations are performed, the related surety bonds may be released and collateral requirements may be reduced.
We expect that the obligations secured by these surety bonds will be performed in the ordinary course of business and in accordance with the applicable contractual terms. To the extent that the obligations are performed, the related surety bonds may be released and collateral requirements may be reduced.
Additional decreases in cash flows year over year provided by financing activities were due to costs associated with extinguishment of the CFG Loan and associated financing costs for the Revolving Credit Facility, both in 2024. Material Cash Requirements Our ability to continue to generate sufficient cash flow required to meet ongoing operational needs and obligations depends upon several factors.
Additional increases in cash flows year over year provided by financing activities were due to costs associated with extinguishment of the CFG Loan and associated financing costs for the Revolving Credit Facility, both in 2024. Material Cash Requirements Our ability to continue to generate sufficient cash flow required to meet ongoing operational needs and obligations depends upon several factors.
Income tax (benefit) expense For the year ended December 31, 2024, we reported income tax benefit of $0.2 million and an effective tax rate of 3%.
For the year ended December 31, 2024, we reported income tax expense of $0.2 million and an effective rate of 3%.
Tax Assets As of December 31, 2024, we had approximately $86.1 million in tax credit carryforwards. In the hypothetical event of an "ownership change," as defined by IRC Sections 382, utilization of general business credits ("Tax Credits") generated prior to the change would be subject to an annual limitation imposed by IRC Section 383 for Tax Credits.
Tax Assets As of December 31, 2025, we had approximately $86.1 million in tax credit carryforwards. In the hypothetical event of an "ownership change," as defined by IRC Sections 382, utilization of general business credits ("Tax Credits") generated prior to the change would be subject to an annual limitation imposed by IRC Section 383 for Tax Credits.
As of December 31, 2024, we concluded it is more likely than not we will not generate sufficient taxable income within the allowable carryforward periods to realize any of our net deferred tax assets, and fully reserved for such assets as of December 31, 2024.
As of December 31, 2025, we concluded it is more likely than not we will not generate sufficient taxable income within the allowable carryforward periods to realize any of our net deferred tax assets, and fully reserved for such assets as of December 31, 2025.
As of December 31, 2024, and as required by our surety bond provider, we held restricted cash of $8.5 million pledged as collateral related to performance requirements required under a reclamation contract for the Five Forks Mine and the Corbin Facility.
As of December 31, 2025, and as required by our surety bond provider, we held restricted cash of $8.5 million pledged as collateral related to performance requirements required under a reclamation contract for the Five Forks Mine and the Corbin Facility.
Our operating results are influenced by: (1) changes in our manufacturing production and sales volumes; (2) changes in price and product mix; (3) changes in coal-fired dispatch and electricity power generation sources; (4) changes in demand for contaminant removal within water treatment facilities; (5) changes in environmental regulations; and (6) state or municipal approval and customer acceptance for our new GAC products.
Our operating results are influenced by: (1) changes in our manufacturing production and sales volumes; (2) changes in price and product mix; (3) changes in coal-fired dispatch and electricity power generation sources; (4) changes in demand for contaminant removal within water treatment facilities; (5) changes in environmental regulations; and (6) state or municipal approval and customer acceptance of our new GAC products once production recommences.
We manufacture and sell AC and other chemicals used to capture and remove impurities, contaminants and pollutants for the coal-fired power generation, industrial, water treatment, and water and soil remediation markets, which we collectively refer to as the APT market. Our primary products are comprised of AC, which is produced from a variety of carbonaceous raw materials.
We manufacture and sell AC and other chemicals used to capture and remove impurities, contaminants, and pollutants for the coal-fired power generation, industrial, water treatment, and water and soil remediation markets, which we collectively refer to as the advanced purification technologies ("APT") market. Our primary products are comprised of AC, which is produced from a variety of carbonaceous raw materials.
The year-to-year comparison of financial results is not necessarily indicative of financial results that may be achieved in future years. This discussion and analysis compares 2024 results to 2023 results. For discussion and analysis that compares 2023 results to 2022 results, see Item 7.
The year-to-year comparison of financial results is not necessarily indicative of financial results that may be achieved in future years. This discussion and analysis compares 2025 results to 2024 results. For discussion and analysis that compares 2024 results to 2023 results, see "Item 7.
Based on current operating levels, we expect that our cash on hand and borrowing availability on the Revolving Credit Facility as of December 31, 2024 will provide sufficient liquidity to fund operations for the next 12 months.
Based on current operating levels, we expect that our cash on hand and borrowing availability under the Revolving Credit Facility as of December 31, 2025 will provide sufficient liquidity to fund operations for the next 12 months.
Our proprietary AC products enable customers to reduce air, soil, and water contaminants, including mercury, PFAS and other pollutants to meet the challenges of existing and pending air quality, soil, and water regulations.
Our proprietary AC products enable customers to reduce air, water, and soil contaminants, including mercury, per- and polyfluoroalkyl substances ("PFAS") and other pollutants, to meet the challenges of existing and pending air quality and water regulations.
Through December 31, 2021, we had substantial earnings from Tinuum Group and Tinuum Services, LLC ("Tinuum Services"). With the expiration of the tax credit program under IRC Section 45 afforded to producers of refined coal as of December 31, 2021, both Tinuum Group and Tinuum Services commenced winding down their operations related to the Section 45 tax credit program.
Through December 31, 2021, we had substantial earnings from Tinuum Group. With the expiration of the tax credit program under IRC Section 45 afforded to producers of refined coal as of December 31, 2021, Tinuum Group commenced winding down their operations related to the Section 45 tax credit program.
In connection with the equity offerings completed at various dates during 2024, we issued additional shares of our common stock. We performed an IRC Section 382 analysis as of those dates and determined that we had not experienced an ownership change as of those dates.
In connection with the equity offerings completed at various dates during 2024, we issued additional shares of our common stock. As of December 31, 2025, we performed an IRC Section 382 analysis and determined that we had not experienced an ownership change as of that date.
In reaching this conclusion, we primarily considered our pretax losses incurred over a cumulative three-year look-back period. As of December 31, 2024 and 2023, we had a valuation allowance of $101.6 million and $98.8 million, respectively, on our deferred tax assets.
In reaching this conclusion, we primarily considered our pretax losses incurred over a cumulative three-year look-back period. As of December 31, 2025 and 2024, we had a valuation allowance of $114.0 million and $101.6 million, respectively, on our deferred tax assets.
Depletion and accretion expense consists of depletion expense related to the depletion of mine development costs and the accretion of mine reclamation liabilities. Other (Expense) Income, net Earnings from equity method investments Earnings from equity method investments represent our share of earnings related to equity method investments, and in 2023 and 2024, primarily from Tinuum Group.
Depletion and accretion expense consists of depletion expense related to the depletion of mine development costs and the accretion of mine reclamation liabilities. Other (Expense) Income, net Earnings from equity method investment Earnings from equity method investment represents our share of earnings related to equity method investments, and in 2024 and 2025, primarily from Tinuum Group.
The difference between our reported income tax expense and the expected federal benefit of 2.5 million, as a result of pretax loss recognized for the year ended December 31, 2024, was primarily due to the expense of permanent differences related to acquisition-related costs and an increase in the valuation allowance on our deferred tax assets.
The difference between our reported income tax expense and the expected federal benefit of $1.1 million, as a result of pretax loss recognized for the year ended December 31, 2024, was primarily due to an increase in the valuation allowance on our deferred tax assets.
Cash flows from investing activities Cash flows used in investing activities for the year ended December 31, 2024 was $85.1 million compared to cash flows used in investing activities of $28.5 million for the year ended December 31, 2023.
Cash flows from investing activities Cash flows used in investing activities for the year ended December 31, 2025 was $8.2 million compared to cash flows used in investing activities of $85.1 million for the year ended December 31, 2024.
Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting estimates discussed below are critical to understanding our historical and future performance, as these estimates relate to the more significant areas involving management’s judgments and estimates.
We believe that the accounting estimates discussed below are critical to understanding our historical and future performance, as these estimates relate to the more significant areas involving management’s judgments and estimates.
We have not completed a formal IRC Section 382 analysis of Legacy Arq equity changes from its inception through the Acquisition Date, however, we believe that one or more "ownership changes" occurred during this time period as defined under Sections 382 and 383 and that a portion or all the Legacy Arq Tax Assets may be subject to an annual limitation. 33 Non-GAAP Financial Measures To supplement our financial information presented in accordance with U.S.
We believe that one or more "ownership changes" occurred prior to the date of the Arq Acquisition as defined under Sections 382 and 383 and that a portion or all the Legacy Arq Tax Assets may subject to an annual limitation. 33 Non-GAAP Financial Measures To supplement our financial information presented in accordance with U.S.
Cash Flows Cash and restricted cash decreased from $54.2 million as of December 31, 2023, to $22.2 million as of December 31, 2024, a decrease of $31.9 million.
Cash Flows Cash and restricted cash decreased from $22.2 million as of December 31, 2024, to $15.0 million as of December 31, 2025, a decrease of $7.2 million.
The Tinuum Group Royalty is included in Consumables cost of revenue. Other Operating Expenses Selling, general and administrative Selling, general and administrative costs include payroll and benefits costs, legal and professional fees, and general and administrative expenses.
The Tinuum Group Royalty is included in Consumables cost of revenue. The Tinuum Group Royalty Agreement expires at the end of 2027, with an option to extend. 28 Other Operating Expenses Selling, general and administrative Selling, general and administrative costs include payroll and benefits costs, legal and professional fees, and general and administrative expenses.
Cost of revenue Cost of revenue is comprised of all labor, fringe benefits, subcontract labor, additive and coal costs, materials, equipment, supplies, travel costs and any other costs and expenses directly related to the cost of production of consumables. 28 License Royalties Payable to Tinuum Group In December 2022, the Company and Tinuum Group entered into an agreement (the "Tinuum Group Royalty Agreement") whereby we pay Tinuum Group a royalty (the "Tinuum Group Royalty") for certain of our sales of M-Prove TM products after the expiration of the tax credit program under IRC Section 45 ("Section 45 Tax Credit Program") (beginning January 1, 2022) to certain refined coal production facilities owned and operated by Tinuum Group (the "Refined Coal Facilities").
License Royalties Payable to Tinuum Group In December 2022, the Company and Tinuum Group entered into an agreement (the "Tinuum Group Royalty Agreement") whereby we pay Tinuum Group a royalty (the "Tinuum Group Royalty") for certain of our sales of M-Prove TM products after the expiration of the tax credit program under IRC Section 45 ("Section 45 Tax Credit Program") (beginning January 1, 2022) to certain refined coal production facilities owned and operated by Tinuum Group (the "Refined Coal Facilities").
Our AC products include both PAC and GAC, among others. Additionally, we own the Five Forks Mine, a lignite coal mine that currently supplies the primary raw material for the manufacturing of our products.
Our AC products include both powdered activated carbon ("PAC") and granular activated carbon ("GAC"). Additionally, we own a lignite mine located in Saline, Louisiana (the "Five Forks Mine") that currently supplies the primary raw material for the manufacturing of the majority of our products.
For the year ended December 31, 2024, our principal uses of liquidity included: • capital expenditures, including those related to the Red River Plant expansion and commissioning of the Corbin Facility; • our business operating expenses; • payments on our lease obligations; and • payments on our debt obligations, including the extinguishment of the CFG Loan principal and accrued interest in the amount of $11.1 million.
For the year ended December 31, 2025, our principal uses of liquidity included: • capital expenditures, including those related to the Red River Plant expansion; • our business operating expenses; • payments on our lease obligations; and • payments on our debt obligations.
The difference between our reported income tax benefit and the expected federal benefit of $1.1 million, as a result of pretax loss recognized for the year ended December 31, 2024, was primarily due to an increase in the valuation allowance on our deferred tax assets offset by the benefit of permanent differences related to stock-based compensation.
The difference between our reported income tax benefit and the expected federal benefit of $11.0 million, as a result of pretax loss recognized for the year ended December 31, 2025, was primarily due to an increase in the valuation allowance.
Other (Expense) Income, net A summary of the components of our other (expense) income, net for the years ended December 31, 2024 and 2023 is as follows: Years Ended December 31, Change (Amounts in thousands, except percentages) 2024 2023 ($) (%) Other (expense) income: Earnings from equity method investments $ 127 $ 1,623 $ (1,496) (92) % Interest expense (3,257) (3,014) (243) 8 % Loss on extinguishment of debt (1,422) — (1,422) * Other 1,238 2,630 (1,392) (53) % Total other (expense) income $ (3,314) $ 1,239 $ (4,553) * * Percent change in excess of 100% not considered meaningful.
Other (Expense) Income, net A summary of the components of our other (expense) income, net for the years ended December 31, 2025 and 2024 is as follows: Years Ended December 31, Change (Amounts in thousands, except percentages) 2025 2024 ($) (%) Other income (expense): Earnings from equity method investment $ 1,951 $ 127 $ 1,824 * Interest expense (2,449) (3,257) 808 (25) % Loss on extinguishment of debt — (1,422) 1,422 (100) % Other income 858 1,238 (380) (31) % Total other income (expense) $ 360 $ (3,314) $ 3,674 * * Percent change in excess of 100% not considered meaningful.
EBITDA is defined as earnings before interest, taxes, depreciation and amortization, and Adjusted EBITDA is defined as EBITDA reduced by the non-cash impact of equity earnings from equity method investment, loss on extinguishment of debt, loss (gain) on sale of assets, increased by cash distributions from equity method investments, loss on change in estimate, asset retirement obligations and charges incurred in as a result of our financing activities.
EBITDA is defined as earnings before interest, taxes, depreciation and amortization, and Adjusted EBITDA is defined as EBITDA reduced by gains on insurance proceeds and the non-cash impact of earnings from equity method investments, and increased by loss on impairment, share-based compensation expense, GAC Facility pre-production feedstock, cash distributions from equity method investments, loss on extinguishment of debt, loss on sale of assets, and charges incurred as a result of our financing activities.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview We are an environmental technology company and are principally engaged in the sale of consumable air, water, and soil treatment solutions primarily based on AC.
The results of operations discussed in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" are those of Arq, Inc. and its consolidated subsidiaries, collectively, the "Company," "we," "our" or "us." Overview We are an environmental technology company that is principally engaged in the sale of consumable air, water and soil treatment solutions primarily based on activated carbon ("AC").
The increase in cash provided by operating activities was primarily due to the following: (1) a decrease in net loss of $7.1 million year over year; (2) a net increase in working capital of $17.8 million primarily as a result of significant payments made in 2023 on accounts payable and accrued expenses assumed in the Arq Acquisition, (3) a one-time $2.7 million gain on the sale of the Marshall Mine, LLC in 2023, and (4) a decrease in Earnings from equity method investments of $1.5 million.
This decrease in cash flows from operating activities was primarily due to the following: (1) an increase in net loss of $47.5 million year over year; (2) a net decrease in working capital of $11.3 million primarily as a result of significant payments made in 2025 on accounts payable and accrued expenses, as well as increases in prepaid expenses and other assets, and (3) an increase in Earnings from equity method investment of $1.8 million.
Partially offsetting the net increase in cash flows used in operating activities year over year was a decrease in Depreciation, amortization, depletion and accretion of $1.9 million.
Partially offsetting the net increase in cash flows used in operating activities year over year were increases in Impairment of long-lived assets of $44.8 million and Depreciation, amortization, depletion and accretion of $3.2 million.
Loss on extinguishment of debt Loss on extinguishment of debt increased year over year due to the write-off of deferred financing costs associated and unamortized debt discount with the termination of the CFG Loan. 32 Other The decrease in Other year over year is primarily driven by a decrease in interest income of $0.7 million as a result of lower cash on hand in 2024, and was driven by increased capital expenditures during 2024.
Other income The decrease in Other income year over year is primarily driven by a decrease in interest income of $1.0 million as a result of lower cash on hand in 2025, which was driven by increased capital expenditures during 2024 and 2025.
The following table summarizes our cash flows for the years ended December 31, 2024 and 2023, respectively: Years Ended December 31, (in thousands) 2024 2023 Change Cash provided by (used in): Operating activities $ 10,477 $ (16,653) $ 27,130 Investing activities (85,074) (28,535) (56,539) Financing activities 42,679 22,909 19,770 Net change in Cash and Restricted Cash $ (31,918) $ (22,279) $ (9,639) 35 Cash flows from operating activities Cash flows provided by operating activities for the year ended December 31, 2024 was $10.5 million compared to cash flows used in operating activities of $16.7 million for the year ended December 31, 2023.
The following table summarizes our cash flows for the years ended December 31, 2025 and 2024, respectively: Years Ended December 31, (in thousands) 2025 2024 Change Cash provided by (used in): Operating activities $ (2,730) $ 10,477 $ (13,207) Investing activities (8,161) (85,074) 76,913 Financing activities 3,696 42,679 (38,983) Net change in Cash and Restricted Cash $ (7,195) $ (31,918) $ 24,723 Cash flows from operating activities Cash flows used in operating activities for the year ended December 31, 2025 was $2.7 million compared to cash flows provided by operating activities of $10.5 million for the year ended December 31, 2024.
Earnings from equity method investments for the year ended December 31, 2023 represented cash distributions received from both Tinuum Group and Tinuum Services. Tinuum Group continues to wind down their services into 2025. The Tinuum Group Royalty Agreement expires at the end of 2027, with an option to extend.
Earnings from equity method investments Earnings from equity method investments for the year ended December 31, 2025 primarily represented recognition of earnings related to the discharge of the Tinuum Group Obligation. Earnings from equity method investments for the year ended December 31, 2024 represented cash distributions received from Tinuum Group. Tinuum Group continues to wind down their services into 2026.
As of December 31, 2024, our Consolidated Balance Sheet reflects a liability for ARO related to reclamation of the Five Forks Mine of $4.5 million. The table above also excludes amounts outstanding under our Revolving Credit Facility, as the timing and amount of repayments are uncertain and are based on the nature and timing of our operating cash flows.
The table above also excludes amounts outstanding under our Revolving Credit Facility, as the timing and amount of repayments are uncertain and are based on the nature and timing of our operating cash flows.
Contractual Obligations Contractual obligations as of December 31, 2024 are as follows: Payment Due by Period (in thousands) Total Less than 1 year 1-3 years 4-5 years After 5 years CTB Loan $ 12,303 $ 1,110 $ 2,220 $ 2,220 $ 6,753 Finance lease obligations 1,392 935 457 — — Operating lease obligations 16,206 3,128 4,606 2,438 6,034 $ 29,901 $ 5,173 $ 7,283 $ 4,658 $ 12,787 The table above excludes our asset retirement obligation ("ARO") related to reclamation of the Five Forks Mine, as the timing and amount of payments to satisfy the ARO are uncertain and are based on numerous factors including, but not limited to, the expected closure date of the Five Forks Mine.
Contractual Obligations Contractual obligations as of December 31, 2025 are as follows: Payment Due by Period (in thousands) Total Less than 1 year 1-3 years 4-5 years After 5 years CTB Loan $ 11,193 $ 1,110 $ 2,220 $ 2,220 $ 5,643 Finance lease obligations 337 250 87 — — Operating lease obligations 10,739 3,862 4,029 2,606 242 $ 22,269 $ 5,222 $ 6,336 $ 4,826 $ 5,885 The table above excludes our asset retirement obligations ("AROs") related to reclamation of the Five Forks Mine, for which we have recorded a liability of $4.9 million within our Consolidated Balance Sheet as of December 31, 2025, as the timing and amount of payments to satisfy the AROs are uncertain and are based on numerous factors including, but not limited to, the expected closure date of the Five Forks Mine.
Surety Bonds As of December 31, 2024, we had outstanding surety bonds with regulatory commissions totaling $11.1 million primarily related to the Five Forks Mine and the Corbin Facility.
The Company anticipates financing the capital expenditures with cash on hand, borrowing availability under the Revolving Credit Facility, and ongoing cost reduction initiatives. Surety Bonds As of December 31, 2025, we had outstanding surety bonds with regulatory commissions totaling $11.2 million primarily related to the Five Forks Mine and the Corbin Facility.
These increases were offset by decreases due to the prepayment of the principal of the CFG Loan of $10.0 million in 2024 and a net decrease in proceeds from common stock issued and sold in private placements of $0.5 million year over year.
These increases were offset by a net decrease in principal payments on notes payable of $9.9 million due to the prepayment of the principal of the CFG Loan of 35 $10.0 million in 2024.
Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. Our estimates are based on historical experience and other assumptions believed to be reasonable under the circumstances, and we evaluate these estimates on an ongoing basis.
Our estimates are based on historical experience and other assumptions believed to be reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.
Critical Accounting Policies and Estimates Our significant accounting policies are discussed in Note 1 to the Consolidated Financial Statements included in Item 8 of this Report. In presenting our financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the amounts reported therein.
In presenting our financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events.
Selling, general and administrative A summary of the components of selling, general and administrative expenses for the years ended December 31, 2024 and 2023, exclusive of cost of revenue items (presented above), is as follows: Years Ended December 31, Change (in thousands, except percentages) 2024 2023 ($) (%) Payroll and benefits $ 9,507 $ 13,491 $ (3,984) (30) % Legal and professional fees 5,587 9,210 (3,623) (39) % General and administrative 13,601 11,368 2,233 20 % Total Selling, general and administrative $ 28,695 $ 34,069 $ (5,374) (16) % Payroll and benefits Payroll and benefits expenses decreased year over year primarily due to expenses recorded during the year ended December 31, 2023 relating to severance expense of former executives, which comprised $1.7 million of the total payroll and benefit expense, and $1.1 million related to severance expense of former executives of Legacy Arq.
Selling, general and administrative A summary of the components of selling, general and administrative expenses for the years ended December 31, 2025 and 2024, exclusive of cost of revenue items (presented above), is as follows: Years Ended December 31, Change (in thousands, except percentages) 2025 2024 ($) (%) Payroll and benefits $ 6,876 $ 9,507 $ (2,631) (28) % Legal and professional fees 5,543 5,587 (44) (1) % General and administrative 10,135 13,601 (3,466) (25) % Total Selling, general and administrative $ 22,554 $ 28,695 $ (6,141) (21) % Payroll and benefits Payroll and benefits expenses decreased year over year primarily driven by the allocation of expense related to payroll and benefits of $1.6 million associated with our Corbin Facility to Cost of revenue, exclusive of depreciation and amortization as well as overall decreased salaries and wages.
The increase in cash used was primarily due to an increase in acquisition of property, equipment and intangibles, net, of $57.7 million primarily related to capital expenditures for our Red River Plant expansion, $2.2 million cash acquired as part of the Legacy Arq Acquisition in 2023, and a decrease in distributions from equity earnings in excess of cumulative earnings of $1.5 million.
The decrease in cash used was primarily due to a decrease in acquisition of property, equipment and intangibles, net, of $76.6 million primarily related to capital expenditures for our Red River Plant expansion in 2024. Partially offsetting the net decrease in cash flows used in investing activities year over year was an increase in mine development costs of $0.4 million.
Prior to the Acquisition Date, Legacy Arq completed numerous equity offerings that resulted in ownership changes.
The Legacy Arq Tax Assets are comprised of net operating loss carryforwards, of which $8.8 million were recognized in the U.S. Prior to the Arq Acquisition, the acquiree completed numerous equity offerings that resulted in ownership changes.
Research and development Research and development expenses increased year over year primarily due to increased research and development payroll costs and conducting product qualification testing with potential lead-adopters as part of our GAC contracting process. 31 Depreciation, amortization, depletion and accretion Depreciation. amortization, depletion and accretion expense decreased by approximately $1.9 million year over year primarily due to higher absorption of depreciation into cost of goods sold during 2024 compared to 2023, which resulted in lower expense of $2.0 million for the year ended December 31, 2024, and decreased amortization of leasehold improvements, customer relationships and developed technology of $0.6 million.
The increases were partially offset by expenses incurred during the year ended December 31, 2024 in connection with conducting product qualification testing with potential lead-adopters as part of the GAC contracting process. 31 Depreciation, amortization, depletion and accretion Depreciation. amortization, depletion and accretion expense increased by approximately $3.2 million year over year primarily due to property, plant and equipment acquired and placed in service during 2025 as a result of completion of the GAC Facility, which contributed $2.3 million of additional depreciation expense in 2025.
Loss on sale of assets was not significant for the year ended December 31, 2024.
Impairment of long-lived assets As referenced under this Item 7. above, we recorded an impairment charge of $44.8 million for the year ended December 31, 2025. Loss on sale of assets Loss on sale of assets was not significant for the years ended December 31, 2025 or 2024.
Year ended December 31, 2024 Compared to Year ended December 31, 2023 Total Revenue and Cost of Revenue A summary of the components of revenue and cost of revenue for the years ended December 31, 2024 and 2023 is as follows: Years Ended December 31, Change ( Amounts in thousands except percentages ) 2024 2023 ($) (%) Revenue $ 108,959 $ 99,183 $ 9,776 10 % Cost of revenue, exclusive of depreciation and amortization $ 69,515 $ 67,323 $ 2,192 3 % Revenue and cost of revenue For the years ended December 31, 2024 and 2023, revenue increased year over year primarily driven by the impact of favorable product mix of approximately $6.9 million and improved pricing for our products of approximately $4.9 million.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our Annual Report on Form 10-K for the year ended December 31, 2024. 29 Year ended December 31, 2025 Compared to Year ended December 31, 2024 Total Revenue and Cost of Revenue A summary of the components of revenue and cost of revenue for the years ended December 31, 2025 and 2024 is as follows: Years Ended December 31, Change ( Amounts in thousands except percentages ) 2025 2024 ($) (%) Revenue $ 120,336 $ 108,959 $ 11,377 10 % Cost of revenue, exclusive of depreciation and amortization $ 86,804 $ 69,515 $ 17,289 25 % Revenue and cost of revenue For the years ended December 31, 2025 and 2024, revenue increased year over year due to record activated carbon revenue.
We believe Arq Powder has additional potential to enable us to access new markets and applications. We intend to secure customer interest in Arq Powder as an additive into other markets, such as components for asphalt.
We intend to secure customer interest in Corbin Wetcake as an additive into other markets, such as a component for asphalt, or for use in the purified coal and synthetic graphite industries.
An impairment loss is measured and recorded for long-lived assets and intangibles based on the excess of their carrying amounts over their estimated fair values. Fair value is typically determined through the use of an income approach utilizing estimates of discounted pretax future cash flows or a market approach utilizing recent transaction activity for comparable assets.
An impairment loss is measured as the excess of the carrying value of an Asset Group over its estimated fair value. Fair value is determined based on various valuation models, including an income approach, a market approach and a cost approach. The use of these models entails the use of estimates and assumptions.
Cash flows from financing activities Cash flows provided by financing activities for the year ended December 31, 2024 increased by $19.8 million compared to the year ended December 31, 2023 primarily due to proceeds from the issuance and sale of our common stock in a public offering of $26.7 million and a net increase in borrowings year over year of $5.3 million associated with a borrowing on the Revolving Credit Facility in 2024 that exceeded proceeds from the CFG Loan in 2023.
These include proceeds from the issuance and sale of our common stock in both private and public offerings totaling $42.4 million and a net increase in borrowings year over year of $8.7 million on the Revolving Credit Facility.
In February 2023, we acquired 100% of the equity interests, assets and liabilities of the subsidiaries of Arq Limited, an environmental technology company incorporated under the laws of Jersey (hereafter the Arq Limited subsidiaries referred to as "Legacy Arq", and the acquisition itself referred to as the "Arq Acquisition") to secure access to additional U.S. based bituminous coal feedstock, a manufacturing facility located in Corbin, Kentucky (the "Corbin Facility") and certain patented processes as a means to manufacture new advanced GAC products for sale into the APT and other markets.
We completed the acquisition of 100% of the equity interest, assets and liabilities of the subsidiaries of Arq Limited, an environmental technology company incorporated under the laws of Jersey (the "Arq Acquisition" and hereafter the Arq Limited subsidiaries referred to as "Legacy Arq"), in which we acquired certain tax assets (the "Legacy Arq Tax Assets"), totaling approximately $12.5 million.
Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II of our Annual Report on Form 10-K for the year ended December 31, 2023.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of our operations should be read together with the audited Condensed Consolidated Financial Statements and notes of Arq, Inc. included in Item 1 of Part II, Item 8 of this Form 10-K.
Our outstanding borrowings under the Revolving Credit Facility were $13.8 million as of December 31, 2024.
Our outstanding borrowings under the Revolving Credit Facility were $19.0 million as of December 31, 2025. 36 Critical Accounting Policies and Estimates Our significant accounting policies are discussed in Note 1 to the Consolidated Financial Statements included in Item 8 of this Report.
For the year ended December 31, 2023, we reported income tax expense of $0.2 million and an effective rate of (1)%.
This decrease was partially offset by a gain related to an insurance claim related to equipment at our Five Forks Mine during the year ended December 31, 2025. 32 Income tax expense (benefit) For the year ended December 31, 2025, we reported income tax benefit of zero and an effective tax rate of zero.
Under this manufacturing process, we convert high-quality recovered bituminous coal fines into a purified, microfine carbon powder known as Arq powder TM ("Arq Powder") for high value applications, such as for a raw material to produce GAC products.
We also control bituminous coal waste reserves and own a manufacturing facility, both located in Corbin, Kentucky (the "Corbin Facility"), and a process to recover and purify the bituminous coal fines. Using the Corbin Facility's manufacturing process, we convert coal waste into a purified, microfine carbon powder for high value applications ("Corbin Wetcake").
These increases were partially offset by lower volumes sold, which negatively impacted revenue by $2.2 million. Product volumes decreased among power generation customers in 2024, primarily due to lower natural gas prices compared to 2023, which contributed to decreased utilization of coal-fired generation and decreased demand for our products.
The increase in product volumes was driven by sales to power generation customers during 2025, primarily due to higher natural gas prices compared to 2024 and overall increases in power demand.
Capital expenditures planned for 2025 are dependent on many factors, including the approval of certain environmental permits, and the pace and progression of the project, which may impact the timing and amount of capital expenditures.
Capital expenditures planned for 2026 are dependent on many additional factors, including delays in procurement or construction, shortages of materials or availability of qualified contractors, liquidity requirements for funding the modifications to our GAC Facility, ongoing compliance with regulatory requirements, and environmental and operational licenses and approvals for additional GAC Facility expansion, which may impact the timing and amount of capital expenditures.
Removed
We expect to begin using Arq Powder as a feedstock to produce high-quality GAC products by the end of the first quarter of 2025 for sale into the APT and other markets. We anticipate that our GAC products made using these highly purified recovered bituminous coal fines will have a materially lower carbon footprint than other coal-based competitor alternatives.
Added
On August 6, 2025, we announced that we had successfully commissioned our Red River Plant’s GAC Facility (the "GAC Facility") and produced our first commercial volumes of on-specification GAC product.
Removed
These products utilizing Arq Powder are expected to have a lower carbon footprint compared to similar products utilizing conventional materials and have demonstrated other beneficial performance attributes during lab-scale customer testing. These applications are currently in various stages of proof of concept testing or preliminary customer testing.
Added
However, after initial production runs, in December 2025, it became clear that ramp-up to nameplate capacity could not be accomplished without further modifications to the existing systems because of design flaws in our GAC Facility, on a standalone basis as well as in combination with the inherent variability of Corbin Wetcake, which we planned to use to manufacture our GAC products.
Removed
In February 2024, as part of a larger rebranding, the Company changed its name to Arq, Inc., and on February 1, 2024, our common stock commenced trading on the Nasdaq Global Market under the ticker symbol, "ARQ." Drivers of Demand and Key Factors Affecting Profitability Drivers of demand and current key factors affecting our profitability are sales of our AC products to the APT market.
Added
As a result, we have paused GAC production, idled the Corbin Facility as a cost saving measure, and have launched an engineering and production process optimization review, which will include an evaluation of potential GAC Facility design modifications and production economics at different scales.
Removed
We have recognized earnings in both 2023 and 2024 related to residual cash distributions received from Tinuum Group. Tinuum Services ceased operations and completed its wind down in 2024.
Added
Additionally, we now expect to transition away from using Corbin Wetcake for the production of our GAC products to a bituminous proven performance coal feedstock, which we believe can more effectively overcome design constraints. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Drivers of Demand and Key Factors Affecting Profitability" for further information.
Removed
Also offsetting the overall increase was a decrease in revenue recognized from the settlement of certain contracts with customers containing minimum quantity purchases ("MQ Contracts"). Consumables gross margin, exclusive of depreciation and amortization, increased for the year ended December 31, 2024 compared to 2023.
Added
As a result of the adverse impacts noted above related to the Corbin Facility and GAC production and as part of our periodic review of the carrying values of our long-lived assets, we performed an impairment analysis of the Corbin Facility long-lived assets (the "Corbin Asset Group") as of December 31, 2025.
Removed
The increase in gross margin was primarily driven by an increase in revenue resulting from increased pricing of our products, while the cost to manufacture our products increased between periods, partially due to increased variable production costs on lower production volumes during 2024.
Added
We determined that the estimated undiscounted cash flows for the Corbin Asset Group were less than its carrying value, and the Corbin Asset Group was impaired. The Company further determined that the GAC Facility assets were not impaired as the estimated undiscounted cash flows associated with the assets exceeded their carrying value.
Removed
Our consumables gross margin was negatively impacted by a decrease in volumes sold and lower revenue recognized from MQ Contracts in 2024 compared to 2023. We currently expect consumables revenue to increase in the coming years as a result of increased regulatory requirements finalized by the EPA in April 2024, especially with respect to PFAS substances.
Added
Accordingly, we completed a valuation of the Corbin Asset Group with the assistance of an independent third party to estimate its fair value. We estimated the fair value of the Corbin Asset Group at $10.9 million and recorded an impairment charge (the "Corbin Impairment Charge") and corresponding write-down of the Corbin Asset Group in the amount of $38.1 million.
Removed
However, there is substantial uncertainty regarding the future of these regulations in light of the change in the U.S. presidential administration. See "Legislation and Environmental Regulations" included in Item 1 and our risk factor discussion in Item 1A of this Report for further information.
Added
Included in this amount is also $0.3 million of Corbin Wetcake inventory that was written-off as of December 31, 2025.
Removed
Additionally, salaries and wages and other benefit-related expenses decreased by $1.0 million year over year primarily as a result of lower CEO compensation beginning in July 2023. Legal and professional fees Legal and professional fees decreased year over year primarily from decreased consulting, legal, and accounting costs incurred related to the acquisition of Legacy Arq during 2023.
Added
In addition, the Company concluded that the intangible asset, developed technology, which comprised a number of patents and other intellectual property attributable to the proprietary manufacturing process for Corbin Wetcake, was also impaired and that its estimated fair value as of December 31, 2025 was zero.
Removed
General and administrative General and administrative expenses increased year over year by approximately $2.2 million, primarily due to increases in franchise & use tax expenses, rent and occupancy expenses, outside construction-related labor and license and fee expenses, partially offset by decreases in property and liability insurance.
Added
Accordingly, the Company recorded an impairment charge and a corresponding write-down of the developed technology in the amount of $6.6 million as of December 31, 2025. We believe that Corbin Wetcake has the potential to enable us to access new markets and applications.
Removed
These decreases were partially offset by an increase in depreciation expense for property, plant and equipment acquired and placed in service during 2024. Loss (gain) on sale of assets For the year ended December 31, 2023, we recognized a one-time gain of $2.7 million on the sale of Marshall Mine, LLC.

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