ARQ 10-Q Quarterly Report Sept. 30, 2025 | Alphaminr
Advanced Emissions Solutions, Inc.
ALPHAMINR

ARQ 10-Q Quarter ended Sept. 30, 2025

Balance Sheet
Cash Flow
Income Statement
Debt
ADVANCED EMISSIONS SOLUTIONS, INC.
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United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
FORM 10-Q
______________________________________
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2025
or
☐ TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-37822
______________________________________
ARQ, INC.
(Exact name of registrant as specified in its charter)
______________________________________
Delaware 27-5472457
(State or other jurisdiction of
incorporation or organization) 		(I.R.S. Employer
Identification No.)
8051 E. Maplewood Ave. , Ste. 210 , Greenwood Village , CO
80111
(Address of principal executive offices) (Zip Code)
( 720 ) 598-3500
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
______________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common stock, par value $0.001 per share ARQ Nasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☒
Non-accelerated filer ☐ Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of November 3, 2025, there were 42,693,884 outstanding shares of Arq, Inc. common stock, par value $0.001 per share.



INDEX
PAGE



Part I. – FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Arq, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
As of
(in thousands, except share data) September 30, 2025 December 31, 2024
ASSETS
Current assets:
Cash $ 7,026 $ 13,516
Receivables, net 14,364 14,876
Inventories, net 15,744 19,314
Prepaid expenses and other current assets 6,793 4,650
Total current assets 43,927 52,356
Restricted cash, long-term 8,467 8,719
Property, plant and equipment, net of accumulated depreciation of $ 32,429 and $ 26,619 , respectively
180,724 178,564
Other long-term assets, net 44,828 44,729
Total Assets $ 277,946 $ 284,368
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 13,114 $ 21,017
Revolving credit facility 15,951 13,828
Current portion of long-term debt obligations 1,102 1,624
Other current liabilities 9,651 8,184
Total current liabilities 39,818 44,653
Long-term debt obligations, net of current portion 8,801 9,370
Other long-term liabilities 12,173 13,069
Total Liabilities 60,792 67,092
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock: par value of $ 0.001 per share, 50,000,000 shares authorized, none issued or outstanding
— —
Common stock: par value of $ 0.001 per share, 100,000,000 shares authorized, 47,307,611 and 46,639,930 shares issued, and 42,689,465 and 42,021,784 shares outstanding at September 30, 2025 and December 31, 2024, respectively
47 47
Treasury stock, at cost: 4,618,146 and 4,618,146 shares as of September 30, 2025 and December 31, 2024, respectively
( 47,692 ) ( 47,692 )
Additional paid-in capital 200,948 198,487
Retained earnings 63,851 66,434
Total Stockholders’ Equity 217,154 217,276
Total Liabilities and Stockholders’ Equity $ 277,946 $ 284,368

See Notes to the Condensed Consolidated Financial Statements.
1
Arq, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share data)
2025 2024 2025 2024
Revenue $ 35,074 $ 34,774 $ 90,905 $ 81,919
Cost of revenue, exclusive of depreciation and amortization 24,965 21,339 61,363 52,279
Operating expenses:
Selling, general and administrative 4,624 8,058 16,595 22,735
Research and development 2,566 787 6,137 3,341
Depreciation, amortization, depletion and accretion 3,758 2,716 8,424 6,090
(Gain) loss on sale of assets — ( 154 ) 118 ( 154 )
Total operating expenses 10,948 11,407 31,274 32,012
Operating (loss) income ( 839 ) 2,028 ( 1,732 ) ( 2,372 )
Other income (expense):
Earnings from equity method investments 83 127 238 127
Interest expense ( 587 ) ( 806 ) ( 1,905 ) ( 2,426 )
Other income 690 268 816 931
Total other income (expense) 186 ( 411 ) ( 851 ) ( 1,368 )
(Loss) income before income taxes ( 653 ) 1,617 ( 2,583 ) ( 3,740 )
Income tax expense — — — 30
Net (loss) income $ ( 653 ) $ 1,617 $ ( 2,583 ) $ ( 3,770 )
(Loss) income per common share (Note 1):
Basic $ ( 0.02 ) $ 0.04 $ ( 0.06 ) $ ( 0.11 )
Diluted $ ( 0.02 ) $ 0.04 $ ( 0.06 ) $ ( 0.11 )
Weighted-average number of common shares outstanding:
Basic 41,606 36,124 41,478 34,085
Diluted 41,606 37,442 41,478 34,085

See Notes to the Condensed Consolidated Financial Statements.


2
Arq, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)

Common Stock Treasury Stock
(in thousands, except share data)
Shares Amount Shares Amount Additional Paid-in Capital Retained Earnings Total Stockholders’
Equity
Balances, January 1, 2025 46,639,930 $ 47 ( 4,618,146 ) $ ( 47,692 ) $ 198,487 $ 66,434 $ 217,276
Stock-based compensation 142,683 — — — 736 — 736
Repurchase of common shares to satisfy minimum tax withholdings ( 214 ) — — — ( 42 ) — ( 42 )
Net income — — — — — 203 203
Balances, March 31, 2025 46,782,399 $ 47 ( 4,618,146 ) $ ( 47,692 ) $ 199,181 $ 66,637 $ 218,173
Stock-based compensation 414,763 — — — 734 — 734
Repurchase of common shares to satisfy minimum tax withholdings ( 958 ) — — — ( 6 ) — ( 6 )
Net loss — — — — — ( 2,133 ) ( 2,133 )
Balances, June 30, 2025 47,196,204 $ 47 ( 4,618,146 ) $ ( 47,692 ) $ 199,909 $ 64,504 $ 216,768
Stock-based compensation 113,436 — — — 1,053 — 1,053
Repurchase of common shares to satisfy minimum tax withholdings ( 2,029 ) — — — ( 14 ) — ( 14 )
Net loss — — — — — ( 653 ) ( 653 )
Balances, September 30, 2025 47,307,611 $ 47 ( 4,618,146 ) $ ( 47,692 ) $ 200,948 $ 63,851 $ 217,154

Common Stock Treasury Stock
(in thousands, except share data)
Shares Amount Shares Amount Additional Paid-in Capital Retained Earnings Total Stockholders’
Equity
Balances, January 1, 2024 37,791,084 $ 38 ( 4,618,146 ) $ ( 47,692 ) $ 154,511 $ 71,543 $ 178,400
Stock-based compensation 81,253 — — — 782 — 782
Repurchase of common shares to satisfy minimum tax withholdings ( 104,163 ) — — — ( 599 ) — ( 599 )
Exercise of warrant, net 324,955 — — — — — —
Net loss — — — — — ( 3,419 ) ( 3,419 )
Balances, March 31, 2024 38,093,129 $ 38 ( 4,618,146 ) $ ( 47,692 ) $ 154,694 $ 68,124 $ 175,164
Stock-based compensation ( 43,566 ) — — — 653 — 653
Issuance of common stock related to private placement transaction, net of offering costs 2,142,858 2 — — 14,949 — 14,951
Issuance of common stock to related party 422,221 1 — — 799 — 800
Net loss — — — — — ( 1,968 ) ( 1,968 )
Balances, June 30, 2024 40,614,642 $ 41 ( 4,618,146 ) $ ( 47,692 ) $ 171,095 $ 66,156 $ 189,600
Stock-based compensation 580,826 1 — — 749 — 750
Issuance of common stock in public offering, net of offering costs 5,485,500 5 — — 26,654 — 26,659
Repurchase of common shares to satisfy minimum tax withholdings ( 28,907 ) — — — ( 510 ) — ( 510 )
Net income — — — — — 1,617 1,617
Balances, September 30, 2024 46,652,061 $ 47 ( 4,618,146 ) $ ( 47,692 ) $ 197,988 $ 67,773 $ 218,116

See Notes to the Condensed Consolidated Financial Statements.
3
Arq, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Nine Months Ended September 30,
(in thousands)
2025 2024
Cash flows from operating activities
Net loss $ ( 2,583 ) $ ( 3,770 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization, depletion and accretion 8,424 6,090
Stock-based compensation expense 2,523 2,185
Operating lease expense 1,797 1,518
Amortization of debt discount and debt issuance costs 266 450
Loss (gain) on sale of long-term assets, net 118 ( 154 )
Earnings from equity method investments ( 238 ) ( 127 )
Other non-cash items, net ( 704 ) ( 113 )
Changes in operating assets and liabilities:
Receivables, net 1,196 ( 399 )
Prepaid expenses and other assets ( 2,326 ) 1,812
Inventories, net 2,906 2,486
Other long-term assets, net ( 2,367 ) ( 1,366 )
Accounts payable and accrued expenses ( 8,900 ) ( 2,611 )
Other current liabilities 687 1,467
Operating lease liabilities ( 435 ) ( 1,255 )
Other long-term liabilities ( 336 ) ( 945 )
Net cash provided by operating activities 28 5,268
Cash flows from investing activities
Acquisition of property, plant, equipment and intangible assets, net ( 7,793 ) ( 42,210 )
Acquisition of mine development costs ( 292 ) ( 167 )
Distributions from equity method investees in excess of cumulative earnings 238 127
Proceeds from sale of property and equipment — 150
Net cash used in investing activities ( 7,847 ) ( 42,100 )
Cash flows from financing activities
Borrowings on revolving credit facility 96,683 —
Repayments of revolving credit facility ( 94,560 ) —
Principal payments on notes payable ( 592 ) ( 404 )
Principal payments on finance lease obligations ( 392 ) ( 838 )
Repurchase of common stock to satisfy tax withholdings ( 62 ) ( 1,109 )
Net proceeds from common stock issued in public offering — 26,659
Net proceeds from common stock issued in private placement transactions — 14,951
Net proceeds from common stock issued to related party — 800
Net cash provided by financing activities 1,077 40,059
(Decrease) increase in Cash and Restricted Cash ( 6,742 ) 3,227
Cash and Restricted Cash, beginning of period 22,235 54,153
Cash and Restricted Cash, end of period $ 15,493 $ 57,380
Supplemental disclosure of non-cash investing and financing activities:
Change in accrued purchases for property and equipment $ 1,279 $ 8,199
Purchase of property and equipment through note payable $ — $ 258
See Notes to the Condensed Consolidated Financial Statements.
4
Arq, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note 1 - Organization and Basis of Presentation
Arq, Inc., together with its consolidated subsidiaries ("Arq" or the "Company"), is an environmental technology company that is principally engaged in the sale of consumable air, water, and soil treatment solutions, primarily based on activated carbon ("AC"). The Company's proprietary AC products enable customers to reduce air, water, and soil contaminants, including mercury, per and polyfluoroalkyl substances ("PFAS") and other pollutants, to meet the challenges of existing and pending air quality and water regulations. The Company manufactures and sells AC and other chemicals used to capture and remove impurities, contaminants, and pollutants for the coal-fired power generation, industrial, water treatment, and water and soil remediation markets, which are collectively referred to as the advanced purification technologies ("APT") market.
The Company’s primary products are comprised of AC, which is produced from a variety of carbonaceous raw materials. The Company’s AC products include powdered activated carbon ("PAC") and granular activated carbon ("GAC"). Additionally, the Company owns the Five Forks Mine, a lignite coal mine located in Saline, Louisiana, that currently supplies the primary raw material for the manufacturing of the Company’s products, and bituminous coal feedstock and a manufacturing facility located in Corbin, Kentucky (the "Corbin Facility").
The Company, formerly known as Advanced Emissions Solutions, Inc., is a Delaware corporation with its principal office located in Greenwood Village, Colorado, with manufacturing, mining and logistics operations located in Louisiana and coal recovery and manufacturing operations located in Kentucky.
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements of Arq are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") and with Article 10 of Regulation S-X of the Securities and Exchange Commission. In compliance with those instructions, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.
The unaudited Condensed Consolidated Financial Statements of Arq in this Quarterly Report on Form 10-Q ("Quarterly Report") are presented on a consolidated basis and include Arq and its wholly-owned subsidiaries. Also included within the unaudited Condensed Consolidated Financial Statements are the Company's unconsolidated equity investments, Tinuum Group, which is accounted for under the equity method of accounting, and Highview Enterprises Limited (the "Highview Investment"), which is accounted for in accordance with U.S. GAAP applicable to equity investments that do not qualify for the equity method of accounting.
Results of operations and cash flows for the interim periods are not necessarily indicative of the results that may be expected for the entire year. All significant intercompany transactions and accounts were eliminated in consolidation for all periods presented in this Quarterly Report.
In the opinion of management, these Condensed Consolidated Financial Statements include all normal and recurring adjustments considered necessary for a fair presentation of the results of operations, financial position, stockholders' equity and cash flows for the interim periods presented. These Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K"). Significant accounting policies disclosed therein have not changed.
(Loss) Earnings Per Share
Basic (loss) earnings per share is computed using the weighted-average number of shares of the Company's common stock outstanding during the reporting period. Diluted (loss) earnings per share is computed in a manner consistent with that of basic earnings per share, while considering the impact of common stock equivalents from other potentially dilutive securities.
For the three and nine months ended September 30, 2025 and September 30, 2024, potentially dilutive securities consist of unvested restricted stock awards ("RSAs"), stock options, and contingent performance stock units ("PSUs").
5
Arq, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table sets forth the calculations of basic and diluted (loss) earnings per share:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share amounts) 2025 2024 2025 2024
Net (loss) income $ ( 653 ) $ 1,617 $ ( 2,583 ) $ ( 3,770 )
Basic weighted-average number of common shares outstanding 41,606 36,124 41,478 34,085
Add: dilutive effect of equity instruments — 1,318 — —
Diluted weighted-average shares outstanding 41,606 37,442 41,478 34,085
(Loss) earnings per share - basic $ ( 0.02 ) $ 0.04 $ ( 0.06 ) $ ( 0.11 )
(Loss) earnings per share - diluted $ ( 0.02 ) $ 0.04 $ ( 0.06 ) $ ( 0.11 )
For the three and nine months ended September 30, 2025 and 2024, potentially dilutive securities of 2.7 million and 0.3 million and 2.6 million and 2.5 million shares of common stock, respectively, are outstanding but are not included in the calculation of diluted net (loss) earnings per share because the effect would be anti-dilutive.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. There have been no changes in the Company's critical accounting estimates from those that were disclosed in the 2024 Form 10-K. Actual results could differ from these estimates.
Fair value measurements
The carrying amounts of the Company's cash, restricted cash, accounts receivable, accounts payable and other current liabilities approximate fair value as recorded due to the short-term nature of these instruments.
Seasonality
The timing of the sale of the Company's products is dependent upon several factors. Power generation is weather dependent, with electricity and steam production varying in response to heating and cooling demands. As a result, the Company's revenue is generally higher in the first and third fiscal quarters during the warmer and colder months of the year. Abnormally high and low temperatures during the summer and winter months, respectively, may significantly increase coal consumption for electricity generation and warmer temperatures may cause increased impurities within various municipalities' water sources and thus increase the demand for the Company's products. Additionally, power generating units routinely schedule maintenance outages in the spring and/or fall depending on the operation of their boilers. During the period in which an outage may occur, which may range from one week to over a month, the Company's product sales may decrease.
Also, the Company's revenue and sales volumes are partially dependent upon the level of coal consumption at coal-fired power plants, which in turn is significantly affected by the prices of competing power generation sources, such as natural gas and renewables. 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 the Company's products. In contrast, during periods of higher prices for competing power generation sources, coal consumption generally increases, which generally increases demand for the Company's products.
Demand for the Company's 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 the Company's products used in water treatment. 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 rain run-off and increased contaminated water volume.
6
Arq, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
New Accounting Standards
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . ("ASU 2023-09"). ASU 2023-09 requires entities to disclose: (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) the disaggregation of income taxes paid by jurisdiction. This update also makes several other changes to the income tax disclosure requirements. For public entities, the amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and are required to be applied prospectively, but retrospective application is permitted. The Company intends to adopt ASU 2023-09 on a retrospective basis for the year ending December 31, 2025 and does not expect its adoption to have a material impact on the Company's consolidated financial statement disclosures.
In November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). ASU 2024-03 requires entities to disclose disaggregated information related to certain costs and expenses, including amounts relating to purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion, for each income statement line item that contains those expenses. For public entities, the amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. ASU 2024-03 is required to be applied prospectively, but retrospective application is permitted. The Company is currently evaluating the impact of ASU 2024-03 on its financial statement disclosures.
In July 2025, the FASB issued Accounting Standards Update 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05"). ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods in those years. Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively. The Company is currently evaluating the impact of ASU 2025-05 on its financial statements and disclosures.
Note 2 - Inventories, net
The following table summarizes the Company's inventories as of September 30, 2025 and December 31, 2024:
As of
(in thousands) September 30, 2025 December 31, 2024
Product inventory, net $ 8,238 $ 11,166
Raw material inventory 7,506 8,148
Total inventories, net
$ 15,744 $ 19,314
Note 3 - Revenue
For the three and nine months ended September 30, 2025 and 2024, all material performance obligations related to revenue recognized were satisfied at a point in time.
Trade receivables
Trade receivables represent an unconditional right to consideration in exchange for goods or services transferred to a customer. The Company invoices its customers in accordance with the terms of the contract. Credit terms are generally net 30 - 45 days from the date of invoice. The timing between the satisfaction of performance obligations and when payment is due from the customer is generally not significant.
Contract assets
Contract assets comprise unbilled receivables from customers and are included in Receivables, net in the Condensed Consolidated Balance Sheets. Unbilled receivables represent a conditional right to consideration in exchange for goods or services transferred to a customer. The Company did not have material unbilled receivables or other contract assets outstanding as of September 30, 2025 and December 31, 2024.
7
Arq, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table shows the components of the Company's Receivables, net:
As of
(in thousands) September 30, 2025 December 31, 2024
Trade receivables, net $ 13,679 $ 13,265
Other 685 1,611
Receivables, net $ 14,364 $ 14,876
Contract liabilities
Contract liabilities comprise deferred revenue, which represents an obligation to transfer goods or services to a customer for which the Company has received consideration from the customer and, if deliverable within one year or less, are included in "Other current liabilities" in the Condensed Consolidated Balance Sheets and, if deliverable outside of one year, are included in "Other long-term liabilities" in the Condensed Consolidated Balance Sheets. The Company did not have material contract liabilities outstanding as of September 30, 2025 and December 31, 2024.
Note 4 - Debt Obligations
As of
(in thousands) September 30, 2025 December 31, 2024
Revolving credit agreement $ 15,951 $ 13,828
CTB Loan due January 2036 8,552 8,983
Finance lease obligations 390 1,269
Other 1,204 1,004
26,097 25,084
Unamortized debt discounts ( 23 ) ( 24 )
Unamortized debt issuance costs ( 220 ) ( 238 )
25,854 24,822
Less: Current maturities ( 17,053 ) ( 15,452 )
Total long-term debt obligations $ 8,801 $ 9,370
Revolving Credit Agreement
On December 27, 2024, the Company and certain of its subsidiaries entered into a credit agreement (the “Revolving Credit Agreement”) with MidCap Funding IV Trust (the "Lender"), providing for a five-year $ 30.0 million secured revolving credit facility (the "Revolving Credit Facility"). Pursuant to the terms of the Revolving Credit Facility, Arq may borrow up to $ 30.0 million, the availability of which is determined based on a borrowing base equal to percentages of certain eligible accounts receivable and inventory carrying balances of the Company and certain of its subsidiaries, less applicable reserves established under the Revolving Credit Facility (together, the "Revolving Loan Commitment"), in accordance with a formula set forth in the Revolving Credit Agreement. All borrowings under the Revolving Credit Facility are subject to the satisfaction of customary conditions, including the absence of default, the accuracy of representations and warranties in all material respects and the delivery of an updated borrowing base certificate on a periodic basis. The Company's obligations under the Revolving Credit Facility are secured by first-priority liens on substantially all of the Company's assets, including, without limitation, all inventory, equipment, accounts, intellectual property and other assets, subject to certain negotiated exceptions.
Borrowings under the Revolving Credit Facility bear interest at the Standard Overnight Financing Rate (SOFR) plus an applicable margin of 4.50 % per annum, subject to a SOFR floor of 2.50 % per annum. In addition to paying interest on the outstanding loans under the Revolving Credit Facility, the Company is also required to pay an unused line fee equal to 0.50 % per annum in respect of unused commitments under the Revolving Credit Facility, a fee for failure to maintain a minimum balance under the Revolving Credit Facility, a collateral management fee equal to 0.25 % per annum of the amount outstanding under the Revolving Credit Facility, and certain other customary fees related to the Lender's administration of the Revolving Credit Facility. If the Revolving Loan Commitment is terminated prior to its maturity date, the Company is required to make certain prepayment fees in an amount equal to (i) 2.00 % of the terminated amount of the Revolving Loan Commitment in the first year following the Closing Date, (ii) 1.00 % of the terminated amount of the Revolving Loan Commitment in the second year following the Closing Date, (iii) 0.50 % of the terminated amount of the Revolving Loan Commitment in the third year following the Closing Date and (iv) 0.00 % at any time thereafter.
8
Arq, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Revolving Credit Facility contains affirmative and negative covenants customarily applicable to senior secured credit facilities, including, without limitation, covenants that, among other things, require delivery of certain financial statements, projections and reports, require maintenance of property and insurance, limit or restrict the ability of the Company, subject to negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of their businesses. In addition, the Revolving Credit Facility requires the Company and certain of its subsidiaries party thereto to maintain their aggregate Total Leverage Ratio at or below a maximum leverage ratio and to maintain minimum liquidity of $ 5.0 million, in each case as specified in the Revolving Credit Facility.
On May 6, 2025, the Company entered into an amendment to the Revolving Credit Agreement, which provided for, among other things, a revision to the borrowing availability calculation and a reduction in the minimum liquidity requirement for the period beginning May 6, 2025 through November 30, 2025. As of December 1, 2025, the minimum liquidity requirement returns to $ 5.0 million.
As of September 30, 2025, the Company's net borrowings under the Revolving Credit Facility totaled $ 16.0 million.
CTB Loan
On February 1, 2023, the Company assumed a term loan (the "CTB Loan") in the principal amount of $ 10.0 million held by certain subsidiaries acquired by the Company on that date (the "Borrowers"). The Company initially recorded the CTB Loan at its estimated fair value of $ 9.7 million, with the difference of $ 0.3 million between the estimated fair value and the principal amount recorded as a debt discount and recognized as interest expense over the term of the CTB Loan.
The CTB Loan was originally entered into on January 27, 2021 and is comprised of two promissory notes (the "Notes"): (1) "Note A" in the principal amount of $ 8.0 million, which is guaranteed by the U.S. Department of Agriculture; and (2) "Note B" in the principal amount of $ 2.0 million. The Notes mature on January 27, 2036 and bear interest at 6.0 % per annum through January 2026 and at the prime rate plus 2.75 % thereafter. The Company is required to make combined interest and principal payments monthly in the fixed amount of $ 0.1 million. Interest is computed and payable on the outstanding principal as of the end of the prior month and the balance of the fixed monthly payment amount is applied to the outstanding principal. The Notes carry a prepayment penalty of 3.0 % of the outstanding principal if paid prior to January 27, 2024, 2.0 % of the outstanding principal if paid prior to January 27, 2025 and 1.0 % of the outstanding principal if paid prior to January 27, 2026. Thereafter, the Notes may be prepaid without penalty.
The CTB Loan is secured by substantially all assets of the Borrowers and includes among others, the following covenants with respect to the Borrowers, which are tested annually (capitalized terms are defined in the CTB Loan Agreement): (a) Total Indebtedness to Net Worth greater than 4 to 1; (b) Balance Sheet Equity greater than or equal to 20 % of the book value of all assets of the Borrowers; (c) (i) net income plus interest, taxes, depreciation and amortization divided by (ii) interest expense plus current maturities on long-term debt greater than or equal to 1.25 to 1.
The carrying values of both the Revolving Credit Facility and the CTB Loan approximate their fair values as both instruments bear interest at rates indexed to market rates for similar instruments.
9
Arq, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 5 - Leases
The Company's operating and finance lease right-of-use ("ROU") assets and liabilities as of September 30, 2025 and December 31, 2024 consisted of the following items:
As of
(in thousands) September 30, 2025 December 31, 2024
Operating Leases
Operating lease right-of-use assets, net of accumulated amortization (1)
$ 8,880 $ 9,312
Operating lease obligations, current $ 2,588 $ 2,081
Long-term operating lease obligations 6,519 7,460
Total operating lease obligation $ 9,107 $ 9,541
Finance Leases
Finance lease right-of-use assets, net of accumulated amortization (2)
$ 331 $ 824
Finance lease obligations, current $ 226 $ 855
Long-term finance lease obligations 164 414
Total finance lease obligations $ 390 $ 1,269
(1) Operating lease ROU assets are reported net of accumulated amortization of $ 6.1 million and $ 4.5 million as of September 30, 2025 and December 31, 2024, respectively.
(2) Finance lease ROU assets are reported net of accumulated amortization of $ 2.7 million and $ 3.2 million as of September 30, 2025 and December 31, 2024, respectively.
Operating leases
ROU assets under operating leases are included in the " Other long-term assets " line item, and operating lease liabilities are included in " Other current liabilities " and " Other long-term liabilities " line items, respectively, in the Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024.
Lease expense for operating leases for the three and nine months ended September 30, 2025 was $ 1.4 million and $ 3.8 million, respectively, of which $ 1.2 million and $ 3.2 million, respectively, is included in the "Cost of revenue, exclusive of depreciation and amortization" line item, and $ 0.2 million and $ 0.6 million, respectively, is included in the "Selling, general and administrative" line item in the Condensed Consolidated Statements of Operations for those periods.
Lease expense for operating leases for the three and nine months ended September 30, 2024 was $ 1.3 million and $ 4.0 million, respectively, of which $ 0.9 million and $ 2.9 million, respectively, is included in the "Cost of revenue, exclusive of depreciation and amortization" line item, and $ 0.4 million and $ 1.1 million, respectively, is included in the "Selling, general and administrative" line item in the Condensed Consolidated Statements of Operations for those periods.
Finance leases
ROU assets under finance leases are included in the "Property, plant and equipment" line item, and finance lease liabilities are included in the "Current portion of long-term debt" and "Long-term debt, net of current portion" line items, respectively, in the Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024.
Interest expense related to finance lease obligations and amortization of ROU assets under finance leases are included in the "Interest expense" and "Depreciation, amortization, depletion and accretion" line items, respectively, in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024.
10
Arq, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Lease financial information as of and for the three and nine months ended September 30, 2025 and 2024 is provided in the following table:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2025 2024 2025 2024
Finance lease cost:
Amortization of right-of-use assets $ 124 $ 46 $ 341 $ 466
Interest on lease liabilities 33 50 104 149
Operating lease cost 924 773 2,685 2,448
Short-term lease cost 395 437 928 1,220
Variable lease cost (1)
76 104 162 313
Total lease cost $ 1,552 $ 1,410 $ 4,220 $ 4,596
Other Information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases $ 104 $ 149
Operating cash flows from operating leases $ 1,801 $ 1,512
Financing cash flows from finance leases $ 392 $ 838
Right-of-use assets obtained in exchange for new operating lease liabilities $ 1,366 $ 257
Weighted-average remaining lease term - finance leases 1.5 years 1.2 years
Weighted-average remaining lease term - operating leases 6.8 years 7.4 years
Weighted-average discount rate - finance leases 8.9 % 6.4 %
Weighted-average discount rate - operating leases 11.9 % 12.4 %
(1) Primarily includes common area maintenance, property taxes and insurance payable to lessors.
Note 6 - Commitments and Contingencies
Surety Bonds and Restricted Cash
As the owner of the Five Forks Mine, the Company is required to post a surety bond with a regulatory commission related to performance requirements associated with the Five Forks Mine. As of September 30, 2025 , the amount of this surety bond was $ 7.5 million .
The Company leases land adjacent to the Corbin Facility and is required to post surety bonds with a regulatory commission for reclamation. As of September 30, 2025, the amount of these surety bonds was $ 3.0 million.
The Company holds permits for an abandoned mine in West Virginia ("Mine 4") and is required to post a surety bond with a regulatory commission for reclamation. As of September 30, 2025, the amount of this surety bond was $ 0.7 million.
As of September 30, 2025 and December 31, 2024, the Company posted cash collateral of $ 8.5 million and $ 8.5 million, respectively, as required by the Company's surety bond providers, which is reported as long-term restricted cash in the Condensed Consolidated Balance Sheets. As of September 30, 2025, the Company holds a deposit of $ 0.4 million with a third party for collateral as required under a bonding arrangement for Mine 4. This deposit is included in "Other long-term assets, net" in the Condensed Consolidated Balance Sheets as of September 30, 2025.
The Company has a customer supply agreement that requires the Company to post a performance bond in an amount equal to the annual contract value of $ 4.0 million. As of September 30, 2025, the remaining commitment under this customer contract, which expires on December 31, 2025, was approximately $ 1.7 million.
11
Arq, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Tinuum Group
The Company has certain limited obligations contingent upon future events in connection with the activities of Tinuum Group. The Company, along with certain other owners of Tinuum Group, have provided another Tinuum Group owner with limited guarantees (the "Tinuum Group Party Guarantees") related to certain losses it may suffer as a result of inaccuracies or breach of representations and covenants. The Company also is a party to a contribution agreement under which any party called upon to pay on a Tinuum Group Party Guaranty is entitled to receive contribution from the other party equal to 50 % of the amount paid. No liability or expense provision has been recorded by the Company related to this contingent obligation as the Company believes that it is not probable that a loss will occur with respect to Tinuum Group Party Guarantees.
As of September 30, 2025 and December 31, 2024, the Company had a contractual obligation (the "Tinuum Group Obligation") of $ 1.7 million for its share of certain contingent liabilities of Tinuum Group as required under the Distribution and Repayment Agreement (the "Repayment Agreement") that was executed in December 2022 by the Company and certain owners of Tinuum Group. In the event that the Tinuum Group Obligation is discharged in its entirety or settled for an amount that is less than the total Tinuum Group Obligation, the Company will recognize future equity earnings for the difference in its contractual obligation amount and its pro rata share of the actual payment made by Tinuum Group, if any, for the Tinuum Group Obligation. The Tinuum Group Obligation is included in the "Other current liabilities" line item in the Condensed Consolidated Balance Sheets.
Legal Proceedings
The Company is from time to time subject to various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of its business. Such matters are subject to many uncertainties and outcomes, the financial impacts of which are not predictable with assurance and that may not be known for extended periods of time. The Company records a liability in its consolidated financial statements for costs related to claims, settlements and judgments where management has assessed that a loss is probable and an amount can be reasonably estimated.
On February 7, 2025, the Company announced that it had commenced legal proceedings against the firm engaged for design of the GAC facility constructed at the Red River Plant (the "GAC Facility"). The proceedings were commenced in the U.S. District Court, Western District of Louisiana, Shreveport Division. The Company believes that the design firm was, among other things, negligent and breached its contract with the Company and as a direct result, the Company suffered material damages including a material increase in costs and time delays associated with the project versus original forecasts. The Company seeks to recover damages resulting from such negligence and contractual breaches.
12
Arq, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 7 - Supplemental Financial Information
Supplemental Balance Sheet Information
The following table summarizes the components of Prepaid expenses and other current assets and Other long-term assets, net as presented in the Condensed Consolidated Balance Sheets:
As of
(in thousands) September 30, 2025 December 31, 2024
Prepaid expenses and other current assets:
Prepaid expenses $ 3,497 $ 2,021
Prepaid lender fees, net (1)
1,484 982
Prepaid income taxes and income tax refunds 159 233
Other 1,653 1,414
Total prepaid expenses and other current assets $ 6,793 $ 4,650
Other long-term assets, net:
Spare parts, net $ 11,721 $ 11,178
Right of use assets, operating leases, net 8,880 9,312
Intangible assets, net 7,285 7,569
Mine development costs, net 6,910 7,010
Upfront Customer Consideration (2)
5,878 5,459
Mine reclamation asset, net 1,533 1,620
Other 2,621 2,581
Total other long-term assets, net $ 44,828 $ 44,729
(1) Represents legal and administrative costs incurred to obtain the Revolving Credit Facility. This asset is being amortized on a straight-line basis over the five-year contractual period of the Revolving Credit Facility.
(2) Represents remaining balance on consideration paid to a customer under a long-term supply contract executed in 2020. This asset is being amortized as a reduction to revenue on a straight-line basis over the expected 15 -year contractual period of the contract.
Spare parts include critical spares required to support plant operations.
Mine development costs include acquisition costs, the cost of other development work and mitigation costs related to the Five Forks Mine and are depleted over the estimated life of the related mine reserves.
Mine reclamation asset, net represents an asset retirement obligation ("ARO") asset related to the Five Forks Mine and is depreciated over its estimated life.
As of September 30, 2025 and December 31, 2024, Other includes the Highview Investment in the amount of $ 0.6 million that is carried at cost, less impairment, plus or minus observable changes in price for identical or similar investments of the same issuer.
13
Arq, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table details the components of Other current liabilities and Other long-term liabilities as presented in the Condensed Consolidated Balance Sheets:
As of
(in thousands) September 30, 2025 December 31, 2024
Other current liabilities:
Current portion of operating lease obligations $ 2,588 $ 2,081
Sales, use and other taxes payable
1,484 2,325
Current portion of mine reclamation liability 1,037 1,037
Other (1)
4,542 2,741
Total other current liabilities $ 9,651 $ 8,184
Other long-term liabilities:
Operating lease obligations, long-term $ 6,519 $ 7,460
Mine reclamation liabilities 5,472 5,242
Other 182 367
Total other long-term liabilities $ 12,173 $ 13,069
(1) Included in Other current liabilities as of September 30, 2025 and December 31, 2024 is $ 1.7 million for the Tinuum Group Obligation as discussed in Note 6.
As of September 30, 2025 and December 31, 2024, the ARO related to the Five Forks Mine is included in Other long-term liabilities.
The Mine reclamation liabilities represent AROs. Changes in the AROs were as follows:
As of
(in thousands) September 30, 2025 December 31, 2024
Asset retirement obligations, beginning of period $ 6,279 $ 6,163
Accretion 383 666
Liabilities settled ( 153 ) ( 77 )
Changes due to scope and timing of reclamation — ( 473 )
Asset retirement obligations, end of period 6,509 6,279
Less current portion 1,037 1,037
Asset retirement obligations, long-term $ 5,472 $ 5,242

Supplemental Income Statement Information
Tinuum Group, LLC
As of September 30, 2025 and December 31, 2024, the Company's ownership interest in Tinuum Group, an equity method investment, was 42.5 %. For the three and nine months ended September 30, 2025, the Company recognized earnings from Tinuum Group of $ 0.1 million and $ 0.2 million, respectively. For the three and nine months ended September 30, 2024, the Company recognized earnings from Tinuum Group of $ 0.1 million. In 2025, Tinuum Group, LLC has continued to wind down its operations.
For the three and nine months ended September 30, 2025, the Company recognized expense of $ 0.1 million and $ 0.3 million, respectively, in Cost of revenue, exclusive of depreciation and amortization, related to royalties owed to Tinuum Group under an agreement for certain of the Company's sales of M-Prove TM products. For the three and nine months ended September 30, 2024, the Company recognized expense of $ 0.2 million and $ 0.7 million, respectively, in Cost of revenue, exclusive of depreciation and amortization, related to royalties owed to Tinuum Group under an agreement for certain of the Company's sales of M-Prove TM products.
14
Arq, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 8 - Stockholders' Equity
Stock Repurchase Program
On August 12, 2025, the Company's Board of Directors voted to terminate the Company's $ 20.0 million stock repurchase program, of which $ 7.0 million was remaining. The Company ceased repurchases under the stock repurchase program during the three months ended March 31, 2020. No shares were repurchased during the three and nine months ended September 30, 2025 or 2024.
Tax Asset Protection Plan
U.S. federal income tax rules, and Section 382 of the Internal Revenue Code in particular, could substantially limit the use of net operating losses and tax credits if the Company experiences an "ownership change" (as defined in the Internal Revenue Code). In general, an ownership change occurs if there is a cumulative change in the ownership of the Company by "5 percent stockholders" that exceeds 50 percentage points over a rolling three-year period.
An entity that experiences an ownership change generally will be subject to an annual limitation on its pre-ownership change tax loss and credit carryforwards equal to the equity value of the entity immediately before the ownership change, multiplied by the long-term, tax-exempt rate posted monthly by the Internal Revenue Service (subject to certain adjustments). The annual limitation would be increased each year to the extent that there is an unused limitation in a prior year.
On May 5, 2017, the Board approved the declaration of a dividend of rights to purchase Series B Junior Participating Preferred Stock for each outstanding share of common stock as part of a tax asset protection plan (the "TAPP"), which is designed to protect the Company’s ability to utilize its net operating losses and tax credits. The TAPP is intended to act as a deterrent to any person acquiring beneficial ownership of 4.99 % or more of the Company’s outstanding common stock.
On April 8, 2025, the Board approved the Eighth Amendment to the TAPP (the "Eighth Amendment"), which amends the TAPP, as previously amended by the First, Second, Third, Fourth, Fifth, Sixth and Seventh Amendments that were approved by the Board on April 6, 2018, April 5, 2019, April 9, 2020, April 9, 2021, March 15, 2022, April 13, 2023, and April 12, 2024, respectively. The Eighth Amendment amends the definition of "Final Expiration Date" under the TAPP to extend the duration of the TAPP and makes associated changes in connection therewith. Pursuant to the Eighth Amendment, the Final Expiration Date shall be the close of business on the earlier of (i) December 31, 2026 or (ii) December 31, 2025 if stockholder approval of the Eighth Amendment has not been obtained prior to such date. On June 3, 2025, the Company's stockholders approved the Eighth Amendment, and therefore the Final Expiration Date is the close of business on December 31, 2026, unless the TAPP is further amended.
Note 9 - Stock-Based Compensation
The Company grants equity-based awards to employees, non-employee directors and consultants that may include, but are not limited to, RSAs, PSUs, restricted stock units and stock options. Stock-based compensation expense related to manufacturing employees and administrative employees is included in the "Cost of revenue, exclusive of depreciation and amortization" and "Selling, general and administrative" line items, respectively, in the Condensed Consolidated Statements of Operations. Stock-based compensation expense related to non-employee directors and consultants is included in the "Selling, general and administrative" line item in the Condensed Consolidated Statements of Operations.
Total stock-based compensation expense for the three and nine months ended September 30, 2025 and 2024 was as follows:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2025 2024 2025 2024
RSA expense $ 683 $ 483 $ 1,724 $ 1,268
PSU expense 309 206 618 735
Stock option expense 61 61 181 182
Total stock-based compensation expense $ 1,053 $ 750 $ 2,523 $ 2,185
15
Arq, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The amount of unrecognized compensation cost as of September 30, 2025, and the expected weighted-average period over which the cost will be recognized is as follows:
As of September 30, 2025
(in thousands, except years)
Unrecognized Compensation Cost Expected Weighted-
Average Period of
Recognition (in years)
RSA expense $ 4,427 1.79
PSU expense 1,446 1.07
Stock option expense 193 0.79
Total unrecognized stock-based compensation expense $ 6,066 1.59
Restricted Stock Awards
RSAs are typically granted with vesting terms of three years . The fair value of RSAs is determined based on the closing price of the Company's common stock on the authorization date of the grant multiplied by the number of shares subject to the stock award. Compensation expense for RSAs is generally recognized on a straight-line basis over the entire vesting period.
A summary of RSA activity under the Company's various stock compensation plans for the nine months ended September 30, 2025 is presented below:
Restricted Stock Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2025 732,555 $ 4.99
Granted 675,995 $ 4.94
Vested ( 347,557 ) $ 4.91
Forfeited ( 26,937 ) $ 4.72
Non-vested at September 30, 2025 1,034,056 $ 4.99
Performance Share Units
Compensation expense for PSUs is recognized on a straight-line basis over the applicable service period, which is generally three years , based on the estimated fair value at the date of grant. The estimated fair value at the date of grant is determined using a Monte Carlo simulation model for those PSUs with market-based performance conditions. A summary of PSU activity for the nine months ended September 30, 2025 is presented below:
Units Weighted-Average
Grant Date
Fair Value 		Aggregate Intrinsic Value (in thousands) Weighted-Average
Remaining
Contractual
Term (in years)
PSUs outstanding at January 1, 2025 877,045 $ 2.94
Granted 141,064 $ 7.11
Vested / Settled (1)
( 33,619 ) $ 9.11
Forfeited / Canceled ( 5,643 ) $ 9.59
PSUs outstanding at September 30, 2025 978,847 $ 3.29 $ 7,009 1.03
(1) The number of units shown in the table above are based on target performance. The final number of shares of common stock issued may vary depending on the achievement of market or performance conditions established within the awards, which could result in the actual number of shares issued ranging from zero to a maximum of two times the number of units shown in the above table. For the nine months ended September 30, 2025, 21,824 shares of common stock were issued upon vesting of PSUs, net of shares withheld for settlement of payroll tax withholding obligations.
16
Arq, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Stock Options
Stock options vest over three years and have a contractual limit of ten years from the date of grant to exercise. The fair value of stock options granted is determined on the date of grant using the Black-Scholes option pricing model, and the related expense is recognized on a straight-line basis over the entire vesting period. The determination of the grant date fair value of stock options issued is affected by a number of variables, including the fair value of the Company’s common stock, the expected common stock price volatility over the expected term of the stock option, the expected term of the stock option, risk-free interest rates, and the expected dividend yield of the Company’s common stock.
Risk-free interest rate - The risk-free interest rate for stock options granted was determined by using a zero-coupon U.S. Treasury rate for the periods that coincided with the expected term of the options.
Dividend yield - An expected dividend yield of zero was included in the calculations, as the Company does not currently pay nor does it anticipate paying dividends on its common stock as of the grant date of the stock options.
Expected volatility - To calculate expected volatility, the historical volatility of the Company's common stock was used.
Expected term - The Company’s expected term of stock options was calculated using a simplified method whereby the midpoint between the vesting date and the end of the contractual term is utilized to compute the expected term, as the Company does not have sufficient historical data for options with similar vesting and contractual terms.
A summary of stock option activity for the nine months ended September 30, 2025 is presented below:
Number of Options
Outstanding and
Exercisable 		Weighted-Average
Exercise Price 		Aggregate Intrinsic Value (in thousands) Weighted-Average
Remaining Contractual
Term (in years)
Options outstanding at January 1, 2025 1,000,000 $ 3.00
Options granted — —
Options exercised — —
Options expired / forfeited — —
Options outstanding at September 30, 2025 1,000,000 $ 3.00 $ 4,160 7.79
Options vested and exercisable at September 30, 2025 666,666 $ 3.00 $ 2,773 7.79
Note 10 - Income Taxes
For the three and nine months ended September 30, 2025 and 2024, the Company's income tax expense and effective tax rates are presented below:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except for rate) 2025 2024 2025 2024
Income tax expense $ — $ — $ — $ 30
Effective tax rate — % — % — % 1 %
The Company recognized pretax losses for the three months ended September 30, 2025 and nine months ended September 30, 2025, but recognized no income tax benefit due to the recording of a full valuation allowance on its deferred tax assets. As a result, the effective rate for the three and nine months ended September 30, 2025 was zero .
The Company assesses a valuation allowance recorded against deferred tax assets at each reporting date. The determination of whether a valuation allowance for deferred tax assets is appropriate requires the evaluation of positive and negative evidence that can be objectively verified. Consideration must be given to all sources of taxable income available to realize deferred tax assets, including, as applicable, the future reversal of existing temporary differences, future taxable income forecasts exclusive of the reversal of temporary differences and carryforwards, taxable income in carryback years and tax planning strategies. In estimating income taxes, the Company assesses the relative merits and risks of the appropriate income tax treatment of transactions taking into account statutory, judicial and regulatory guidance.
17
Arq, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 11 - Segment Reporting
Overall
The Company has one reportable segment – advanced purification technologies or "APT." The APT segment primarily manufactures and sells AC based environmental remediation products, comprised of PAC and GAC, and other chemicals used to capture and remove contaminants for coal-fired power generation, industrial, municipal water and air, water, and soil treatment and remediation markets. The Company derives revenue primarily in the U.S. and manages the business activities on a consolidated basis. The Company manufactures all of its finished goods at the Red River Plant.
The Company's chief executive officer is its chief operating decision maker ("CODM"). The CODM assesses performance for the APT segment and decides how to allocate resources based on net income that also is reported on the Condensed Consolidated Statements of Operations as consolidated net income. The measure of segment assets is reported on the Condensed Consolidated Balance Sheets as total consolidated assets.
The CODM uses net income to evaluate income generated from APT assets (return on assets) in deciding how to allocate cash flows from operations within the APT segment. Net income is used to monitor budget versus actual operating results in assessing performance of the APT segment.
The level of detail used in reviewing operating financial performance and managing the business is contained in the Company's Condensed Consolidated Statements of Operations.
Products and services
The Company operates in one segment, APT, and all revenue reported represents sales of APT products to external customers and are presented in the Condensed Consolidated Statements of Operations.
Geographic areas
The Company is domiciled in the U.S. The table below shows revenue by country for the three and nine months ended September 30, 2025 and 2024.
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2025 2024 2025 2024
United States $ 33,279 $ 33,206 $ 85,219 $ 76,289
Canada 1,795 1,568 5,686 5,630
Total $ 35,074 $ 34,774 $ 90,905 $ 81,919
Note 12 - Subsequent Events
Unless disclosed elsewhere in the notes to the Condensed Consolidated Financial Statements, there were no significant matters that occurred subsequent to September 30, 2025.
18

Item 2. 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 unaudited Condensed Consolidated Financial Statements and notes of Arq, Inc. ("Arq" or the "Company") included elsewhere in Item 1 of Part I ("Item 1") of this Quarterly Report and with the audited consolidated financial statements and the related notes of Arq included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K").
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"). 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. 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. Our AC products include both powdered activated carbon ("PAC") and granular activated carbon ("GAC"). Additionally, we own the Five Forks Mine, a lignite mine located in Saline, Louisiana, that currently supplies the primary raw material for the manufacturing of our 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 for sale or further conversion to GAC products. Using the Corbin Facility's manufacturing process, we convert coal waste into a purified, microfine carbon powder known as Arq powder TM ("Arq Powder"). On August 6, 2025, we announced that we had reached initial commercial production levels at our Red River Plant's GAC Facility (the "Red River Project"), enabling us to use Arq Powder and other bituminous coal fines as a feedstock to manufacture high-quality GAC products for sale in the APT and other markets. The initial production ramp-up of the Red River Project was adversely impacted during the third quarter of 2025 by previously disclosed design flaws in our GAC Facility, both alone as well as in combination with the inherent variability of the Arq Powder feedstock used to manufacture our GAC products. As a result of these adverse impacts, we now expect to reach GAC nameplate capacity around mid-year 2026. We now also expect our final investment decision with respect to a potential second GAC line at our Red River Plant to coincide with reaching GAC nameplate capacity in mid-year 2026.
In addition to its use as a feedstock for our GAC products, 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, or for use in the purified coal and synthetic graphite industries. 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.
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. 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.
For the three and nine months ended September 30, 2025, we experienced an increase in demand for our products from certain coal-fired dispatch and electricity power generation customers compared to the same period in 2024. This was primarily due to higher natural gas prices in 2025, resulting in several large utility customers opting to use coal versus natural gas as a primary source for power generation, and the year to date impact of moderate to severe temperatures during the winter and summer seasons, resulting in higher demand for power generation compared to 2024. Additionally, demand for power generation has and continues to grow driven by macroeconomic trends, such as increased consumption related to data and computer centers, electric vehicles, and other large scale power consumers. We expect that natural gas prices will remain relatively consistent through 2025 due to increased demand for liquid natural gas exports, offset by increases in anticipated natural gas inventory levels.
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On April 10, 2024, the United States Environmental Protection Agency ("EPA") issued its first nationally enforceable PFAS National Primary Drinking Water Regulation, confirming a material tightening to an existing framework of guidance and regulations relating to the control and limitation of PFAS in municipal water. The regulatory changes were anticipated to phase in over an approximate five-year period; however, the EPA has indicated that it will potentially extend the compliance date from 2029 to 2031. We expect the implementation of the announced regulations will drive a material increase in GAC demand in the water purification market.
Results of Operations
For the three and nine months ended September 30, 2025, we recognized net loss of $0.7 million and $2.6 million, compared to net income of $1.6 million and net loss of $3.8 million for the three and nine months ended September 30, 2024, respectively. The most significant factors impacting results between periods for the three months ended September 30, 2025 and September 30, 2024 were increases in revenue due to improved pricing and demand for our products, offset by increased cost of revenue due to fixed production costs associated with initial production at our GAC Facility. Additionally, our results for the three and nine months ended September 30, 2025 were impacted by increased research and development expense attributed to pre-production testing and development of our GAC Facility and depreciation expense, partially offset by decreases in selling, general and administrative expenses.
The following sections provide additional information regarding these comparable periods. For comparability purposes, the following tables set forth our results of operations for the periods presented in the Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report. The current year period to prior year period comparisons of financial results may not be indicative of financial results to be achieved in future periods.
Comparison of the Three Months Ended September 30, 2025 and 2024
Revenue and Cost of revenue
A summary of the components of Revenue and Cost of revenue, exclusive of depreciation and amortization for the three months ended September 30, 2025 and 2024 is as follows:
Three Months Ended September 30, Change
(in thousands, except percentages)
2025 2024 ($) (%)
Revenue $ 35,074 $ 34,774 $ 300 1 %
Cost of revenue, exclusive of depreciation and amortization $ 24,965 $ 21,339 $ 3,626 17 %
Revenue and Cost of revenue
For the three months ended September 30, 2025, revenue increased from the comparable quarter in 2024 primarily driven by higher pricing, which contributed approximately $1.3 million of total revenue increase. The increase was offset by a decrease in volumes sold, causing a decrease of $0.9 million in revenue from the comparable quarter in 2024. The volume decreases were primarily attributable to the timing of sales between the three months ended June 30, 2025 and the three months ended September 30, 2025 in the water purification market. These decreases in volumes were largely offset by an overall increase in volumes sold to customers in the power-generation market, driven by continued higher natural gas prices between periods. The average Henry Hub natural gas spot prices ($/MMBtu) for the three months ended September 30, 2025 and 2024 were $3.03 and $2.11, respectively.
Gross margin, exclusive of depreciation and amortization, decreased primarily as a result of lower initial commercial phase GAC production volumes compared to higher fixed production costs at our Red River Plant and Corbin Facility, which previously had been recorded as general and administrative costs. Increased costs primarily related to direct labor, utilities, and equipment rental costs following the commencement of commercial operation of the GAC Facility. This resulted in an approximately $3.6 million increase in Cost of revenue, exclusive of depreciation and amortization for the three months ended September 30, 2025 compared to the comparable quarter in 2024.
We expect that revenue will continue to be positively impacted by our product price increases. As production of our GAC products at our Red River Plant increases, we expect that gross margin will improve as the impact of fixed production costs on our gross margin lessens. Further, we continue to focus on improving our product mix to higher margin products. Our revenues continue to be impacted by electricity demand driven by seasonal weather and power generation needs.
20

Operating Expenses
A summary of the components of our operating expenses for the three months ended September 30, 2025 and 2024 is as follows:
Three Months Ended September 30, Change
(in thousands, except percentages)
2025 2024 ($) (%)
Operating expenses:
Selling, general and administrative $ 4,624 $ 8,058 $ (3,434) (43) %
Research and development 2,566 787 1,779 *
Depreciation, amortization, depletion and accretion 3,758 2,716 1,042 38 %
Gain on sale of assets — (154) 154 (100) %
$ 10,948 $ 11,407 $ (459) (4) %
* Percent change in excess of 100% not considered meaningful.
Selling, General and Administrative
A summary of the components of selling, general and administrative expenses for the three months ended September 30, 2025 and 2024 is as follows:
Three Months Ended September 30, Change
(in thousands, except percentages)
2025 2024 ($) (%)
Payroll and benefits $ 1,089 $ 2,843 $ (1,754) (62) %
Legal and professional fees 1,128 1,430 (302) (21) %
General and administrative 2,407 3,785 (1,378) (36) %
Total Selling, general and administrative $ 4,624 $ 8,058 $ (3,434) (43) %

Payroll and benefits
Payroll and benefits expense decreased for the three months ended September 30, 2025 compared to the corresponding quarter in 2024 by approximately $1.8 million, primarily due to $1.2 million driven by decreased accrued incentive compensation related to a revision to anticipated metric achievement, and $0.5 million related to the allocation of salaries and wages and benefits-related expenses for production personnel at our Corbin Facility, which was commissioned in the first quarter of 2025 and resumed operations in August 2025, to Cost of revenue, exclusive of depreciation and amortization.
Legal and professional fees
Legal and professional fees decreased for the three months ended September 30, 2025 compared to the corresponding quarter in 2024 primarily due to decreased consulting fees incurred, partially offset by legal fees incurred in connection with ongoing litigation during the during the three months ended September 30, 2025.
General and administrative
General and administrative expenses decreased for the three months ended September 30, 2025 compared to the corresponding quarter in 2024 by approximately $1.4 million, primarily due to a decrease in rent and occupancy expenses due to the allocation of expense related to our lease of the Corbin Facility to Cost of revenue, exclusive of depreciation and amortization due to initial production runs during the quarter. Additional decreases during the three months ended September 30, 2025 were due to lower expenses associated with third-party services, state franchise taxes, sales and use taxes, and director fees.
Research and development
Research and development expense increased for the three months ended September 30, 2025 compared to the corresponding quarter in 2024 by 1.8 million, primarily due to feedstock consumed and other expenses incurred related to outside services engaged during the three months ended September 30, 2025 related to pre-commencement testing of the GAC Facility prior to reaching commercial production on August 6, 2025.
Depreciation, amortization, depletion and accretion
Depreciation, amortization depletion and accretion expense increased by approximately $1.0 million for the three months ended September 30, 2025 compared to the corresponding quarter in 2024, primarily due to a significant amount of plant and
21

equipment placed in service upon commissioning of our GAC Facility, partially offset by decreased depreciation expense related to a lower finance lease right of use asset base.
Other Income (Expense)
A summary of the components of other (expense) income for the three months ended September 30, 2025 and 2024 is as follows:
Three Months Ended September 30, Change
(in thousands, except percentages)
2025 2024 ($) (%)
Other income (expense):
Earnings from equity method investments $ 83 $ 127 $ (44) (35) %
Interest expense (587) (806) 219 (27) %
Other income 690 268 422 *
Total other income (expense) $ 186 $ (411) $ 597 *
* Percent change in excess of 100% not considered meaningful.
Earnings from equity method investments
Earnings from equity method investments for the three months ended September 30, 2025 and 2024 represented cash distributions from Tinuum Group. Tinuum Group continues to wind down its operations in 2025.
Interest expense
Interest expense decreased for the three months ended September 30, 2025 compared to the corresponding quarter in 2024 primarily due to lower average interest rates on the Company's outstanding debt facilities, partially offset by higher average outstanding balances in the current quarter.
Other income
Other income increased for the three months ended September 30, 2025 compared to the corresponding quarter in 2024 primarily due to a gain of $0.7 million related to an insurance claim related to mining equipment at our Five Forks Mine recognized in the three months ended September 30, 2025, partially offset by lower interest income of $0.2 million due to lower average balances in our cash sweep accounts during the current quarter compared to the prior year quarter.
Income tax expense
For the three months ended September 30, 2025 and 2024, we had pretax loss of $0.7 million and pretax income of $1.6 million, respectively. For the three months ended September 30, 2025, we had an effective tax rate of zero and recorded no income tax benefit due to the recording of a full valuation allowance on our deferred tax assets. For the three months ended September 30, 2024, we recorded no income tax expense based on our forecast of pretax loss for the year ended December 31, 2024.
Comparison of the Nine Months Ended September 30, 2025 and 2024
Total Revenue and Cost of revenue
A summary of the components of Revenue and Cost of revenue, exclusive of depreciation and amortization for the nine months ended September 30, 2025 and 2024 is as follows:
Nine Months Ended September 30, Change
(in thousands, except percentages)
2025 2024 ($) (%)
Revenue $ 90,905 $ 81,919 $ 8,986 11 %
Cost of revenue, exclusive of depreciation and amortization $ 61,363 $ 52,279 $ 9,084 17 %
22

Revenue and Cost of revenue
For the nine months ended September 30, 2025, revenue increased from the comparable period in 2024 primarily driven by higher pricing and increased volumes, which contributed revenue increases of approximately $5.7 million and $3.0 million, respectively. The increase in product sales volumes was in part due to demand from power generation customers primarily resulting from higher natural gas prices compared to the same period in 2024, which contributed to increased utilization of coal-fired generation and increased demand for our products. The average Henry Hub natural gas spot prices ($/MMBtu) for the nine months ended September 30, 2025 and 2024 were $3.45 and $2.11, respectively. In addition, revenue increased $0.3 million from the comparable period in 2024 from favorable product mix.
Gross margin, exclusive of depreciation and amortization, decreased for the nine months ended September 30, 2025 compared to the corresponding period in 2024. Gross margin for the nine months ended September 30, 2025 was primarily impacted by increases to Cost of revenue, exclusive of depreciation and amortization due to fixed production costs associated with the GAC Facility and amounts recognized upon completion of the Red River Project, as described above.
Operating Expenses
A summary of the components of our operating expense for the nine months ended September 30, 2025 and 2024 is as follows:
Nine Months Ended September 30, Change
(in thousands, except percentages)
2025 2024 ($) (%)
Operating expenses:
Selling, general and administrative $ 16,595 $ 22,735 $ (6,140) (27) %
Research and development 6,137 3,341 2,796 84 %
Depreciation, amortization, depletion and accretion 8,424 6,090 2,334 38 %
Loss (gain) on sale of assets 118 (154) 272 *
$ 31,274 $ 32,012 $ (738) (2) %
* Percent change in excess of 100% not considered meaningful.
Selling, General and Administrative
A summary of the components of selling, general and administrative expenses for the nine months ended September 30, 2025 and 2024 is as follows:
Nine Months Ended September 30, Change
(in thousands, except percentages)
2025 2024 ($) (%)
Payroll and benefits $ 4,752 $ 8,171 $ (3,419) (42) %
Legal and professional fees 4,269 4,436 (167) (4) %
General and administrative 7,574 10,128 (2,554) (25) %
Total Selling, general and administrative $ 16,595 $ 22,735 $ (6,140) (27) %
Payroll and benefits
Payroll and benefits decreased for the nine months ended September 30, 2025 compared to the corresponding period in 2024 by approximately $3.4 million, primarily due to $1.6 million driven by the allocation of expense related to payroll and benefits associated with our Corbin Facility to Cost of revenue, exclusive of depreciation and amortization, as well as overall decreased salaries and wages, an additional $1.5 million due to decreased accrued incentive compensation related to a revision to anticipated metric achievement and approximately $0.2 million due to lower employer payroll tax expenses driven by decreases in other payroll expenses.
Legal and professional fees
Legal and professional fees decreased for the nine months ended September 30, 2025 compared to the corresponding period in 2024 primarily due to decreased consulting expenses, partially offset by legal fees incurred related to litigation costs during the nine months ended September 30, 2025.
23

General and administrative
General and administrative expenses decreased for the nine months ended September 30, 2025 compared to the corresponding period in 2024 by approximately $2.6 million. This decrease was primarily due to lower rent and occupancy expenses of $1.0 million during the nine months ended September 30, 2025, which was primarily due to allocation of expenses related to lease of the Corbin Facility site to Cost of revenue, exclusive of depreciation and amortization, as initial production runs began during the period. Additional decreases were due to lower expenses related to third-party services, state franchise taxes, sales and use taxes, licenses and fees, director fees, and advertising.
Research and development
Research and development expense increased for the nine months ended September 30, 2025 compared to the corresponding period in 2024 by approximately $2.8 million. The increase was primarily due to expenses related to feedstock consumed and outside services engaged during initial testing of the GAC Facility of $2.9 million and $0.6 million, respectively, during the nine months ended September 30, 2025. The increases were partially offset by expenses incurred in connection with conducting product qualification testing with potential lead-adopters as part of our ongoing GAC contracting process and increased research and development payroll costs during the nine months ended September 30, 2024, which expenses and costs were not repeated during the current period.
Depreciation, amortization, depletion and accretion
Depreciation, amortization, depletion and accretion expense increased by approximately $2.3 million for the nine months ended September 30, 2025 compared to the corresponding period in 2024, primarily due to decreased absorption in inventory of $1.9 million driven by lower inventory balances, partially offset by decreased amortization on intangible assets that were fully amortized during nine months ended September 30, 2025.
Loss on sale of assets
Loss on sale of assets for the nine months ended September 30, 2025 related to the disposal of construction assets no longer in use. Gain on sale of assets for the nine months ended September 30, 2024 related to a gain on the sale of equipment.
Other Income (Expense)
A summary of the components of other income (expense) for the nine months ended September 30, 2025 and 2024 is as follows:
Nine Months Ended September 30, Change
(in thousands, except percentages)
2025 2024 ($) (%)
Other income (expense):
Earnings from equity method investments $ 238 $ 127 $ 111 87 %
Interest expense (1,905) (2,426) 521 (21) %
Other income 816 931 (115) (12) %
Total other income (expense) $ (851) $ (1,368) $ 517 (38) %
Earnings from equity method investments
Earnings from equity method investments for the nine months ended September 30, 2025 and 2024 represented cash distributions from Tinuum Group. Tinuum Group continues to wind down its operations in 2025.
Interest expense
Interest expense decreased for the nine months ended September 30, 2025 compared to the corresponding quarter in 2024 primarily due to lower average interest rates on the Company's outstanding debt facilities, partially offset by higher average outstanding balances in the current period.
Other income
The decrease in Other income for the nine months ended September 30, 2025 was primarily driven by a decrease in interest income of $0.7 million due to lower balances in the Company's cash sweep accounts during the current period compared to the prior year period, partially offset by a gain related to an insurance claim related to equipment at our Five Forks Mine during the nine months ended September 30, 2025.
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Income tax expense
For the nine months ended September 30, 2025 and 2024, we had pretax losses of $2.6 million and $3.7 million, respectively. For the nine months ended September 30, 2025, we had an effective tax rate of zero and recorded no income tax benefit due to the recording of a full valuation allowance on our deferred tax assets. For the nine months ended September 30, 2024 we had an effective tax rate of 1% as result of recording out of period state income tax expense related to a state assessment, but we recorded no federal income tax benefit for this period due to the recording of a full valuation allowance on our deferred tax assets.
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Non-GAAP Financial Measures
To supplement our financial information presented in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP"), we provide certain supplemental financial measures, including EBITDA and Adjusted EBITDA, which are measurements that are not calculated in accordance with U.S. GAAP. EBITDA is defined as earnings before interest, taxes, depreciation and amortization, and Adjusted EBITDA is defined as EBITDA reduced by non-cash gains, increased by GAC Facility pre-production feedstock, share-based compensation expense, other non-cash losses and non-recurring costs and fees. EBITDA and Adjusted EBITDA should be considered in addition to, and not as a substitute for, net (loss) income in accordance with U.S. GAAP as a measure of performance. See below for a reconciliation from net (loss) income, the nearest U.S. GAAP financial measure, to EBITDA and Adjusted EBITDA.
We believe that the EBITDA and Adjusted EBITDA measures are less susceptible to variances that affect the Company's operating performance. We include these non-GAAP measures because management uses them in the evaluation of our operating performance, and believe they help to facilitate comparison of operating results between periods. We believe the non-GAAP measures provide useful information to both management and users of the financial statements by excluding certain expenses, gains, and losses which can vary widely across different industries or among companies within the same industry and may not be indicative of core operating results and business outlook.
EBITDA and Adjusted EBITDA:
The following table reconciles net (loss) income, our most directly comparable as-reported financial measure calculated in accordance with U.S. GAAP, to EBITDA and Adjusted EBITDA.
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 2025 2024
Net (loss) income $ (653) $ 1,617 $ (2,583) $ (3,770)
Depreciation, amortization, depletion and accretion 3,758 2,716 8,424 6,090
Amortization of Upfront Customer Consideration 127 127 381 381
Interest expense, net 586 600 1,842 1,638
Income tax expense — — — 30
EBITDA $ 3,818 $ 5,060 $ 8,064 $ 4,369
Share-based compensation (1)
1,053 750 2,523 2,185
GAC Facility pre-production feedstock (2)
982 — 2,879 —
Gain on insurance proceeds (3)
(685) — (685) —
Financing costs — 228 — 228
(Gain) loss on sale of assets — (154) 118 (154)
Adjusted EBITDA $ 5,168 $ 5,884 $ 12,899 $ 6,628
(1) Represents non-cash stock-based compensation expenses that are included within "Cost of revenue, exclusive of depreciation and amortization" and "Selling, general and administrative" expenses in the Condensed Consolidated Statements of Operations. Previously reported Adjusted EBITDA for the three and nine months ended September 30, 2024 has been revised to include non-cash stock-based compensation expense.
(2) Represents expenses related to feedstock utilized in pre-production testing of our GAC Facility during the three and nine months ended September 30, 2025 included within "Research and development" expense in the Condensed Consolidated Statements of Operations.
(3) Represents non-cash gain related to an insurance claim related to equipment at our Five Forks Mine during the three and nine months ended September 30, 2025 included within "Other income" in the Condensed Consolidated Statements of Operations. We received the proceeds in October 2025.
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Liquidity and Capital Resources
Current Resources and Factors Affecting Our Liquidity
As of September 30, 2025, our principal sources of liquidity included:
• cash on hand of $7.0 million, excluding $8.5 million of restricted cash primarily pledged as collateral under a surety bond agreement;
• availability under our secured revolving credit facility (the "Revolving Credit Facility"), described in Note 4 of the Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report; and
• cash from operations.
As of September 30, 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.
Cash Flows
Cash and restricted cash decreased from $22.2 million as of December 31, 2024 to $15.5 million as of September 30, 2025. The following table summarizes our cash flows for the nine months ended September 30, 2025 and 2024:
Nine Months Ended September 30,
(in thousands)
2025 2024 Change
Cash and restricted cash provided by (used in):
Operating activities $ 28 $ 5,268 $ (5,240)
Investing activities (7,847) (42,100) 34,253
Financing activities 1,077 40,059 (38,982)
Net change in cash and restricted cash $ (6,742) $ 3,227 $ (9,969)
Cash flow from operating activities
Cash flows provided by operating activities for the nine months ended September 30, 2025 was zero, which represented a net decrease of $5.2 million from cash provided by operating activities for the nine months ended September 30, 2024 of $5.3 million. The net decrease in cash flow from operating activities was primarily attributable to net changes in working capital resulting in a decrease of $8.4 million in cash flow between periods, primarily due to increases in prepaid and other current asset balances and decreases in accounts payable and accrued expense balances. These decreases were partially offset by an increase in Depreciation, amortization, depletion and accretion of $2.3 million and a decrease in net loss for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 of $1.2 million.
Cash flow from investing activities
Cash flows used in investing activities decreased for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 by $34.3 million primarily as a result of a decrease in property, plant and equipment additions of $34.4 million from construction activities related to the commissioning of our Red River Plant.
Cash flow from financing activities
Cash flows provided by financing activities for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 decreased by $39.0 million primarily due to net proceeds of $42.4 million from common stock placements completed in 2024, offset by an increase in net borrowings on debt facilities of $2.1 million and a decrease in repurchase of common stock to satisfy tax withholdings of $1.0 million.
Material Cash Requirements
Our ability to continue to generate sufficient cash flow required to meet ongoing operational needs and obligations depends upon several factors. These include executing on our contracts and initiatives and increasing our share of the market for APT consumables, including increasing production to reach nameplate capacity of the Red River Plant, expanding our overall AC business into additional adjacent markets and increasing our gross margin from improving our customer and product mix.
Based on current operating levels, we expect that our cash on hand and borrowing availability under the Revolving Credit Facility as of September 30, 2025 will provide sufficient liquidity to fund operations for the next 12 months.
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Capital expenditures
During the nine months ended September 30, 2025, we continued to incur capital spend for additional equipment, labor, and project costs towards the completion of the Red River Project. On August 6, 2025, we announced completion of the commissioning phase of the Red River Project and achieved the first commercial production of our new GAC products. We incurred additional cost in excess of our originally forecasted amounts, which were funded with cash on hand, borrowing availability under the Revolving Credit Facility, and ongoing cost reduction initiatives.
During the remainder of 2025, we expect our capital expenditures to primarily relate to plant maintenance and improvements, including with respect to increasing production to reach nameplate capacity of the Red River Plant. Capital expenditures planned for the remainder of 2025 are dependent on many factors, which may impact the timing and amount of capital expenditures.
In January 2025, we commissioned the Corbin Facility. In April 2025, after a review of required commissioning material and inventory requirements for the remainder of 2025, we elected to temporarily reduce operations at our Corbin Facility. We resumed operations at the Corbin Facility in August 2025.
Surety Bonds
As of September 30, 2025, we had outstanding surety bonds with regulatory commissions totaling $11.2 million primarily related to the Five Forks Mine and the Corbin Facility. As of September 30, 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 indemnity agreements for the Five Forks Mine and the Corbin Facility. 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. However, in the event any surety bond is called, our indemnity obligations could require us to reimburse the surety bond provider.
Long Term Requirements
For a discussion of our long-term cash requirements, see Note 4 and Note 5 of the Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report.
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates have not changed from those reported in Part II, Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 2024 Form 10-K.
Recently Issued Accounting Standards
Refer to Note 1 of the Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report for information regarding recently issued accounting standards applicable to us.
Forward-Looking Statements Found in this Quarterly Report
This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that involve risks and uncertainties. Words or phrases such as "anticipates," "may," "believes," "expects," "intends," "plans," "estimates," "predicts," the negative expressions of such words, or similar expressions are used in this Quarterly Report to identify forward-looking statements. All statements that address activities, events or developments that the Company intends, expects or believes may occur in the future are forward-looking statements. These forward-looking statements include, but are not limited to, statements or expectations regarding:
(a) our ability to complete and the anticipated timing of the ramp-up to full nameplate capacity at our Red River Plant;
(b) the anticipated timing of a final investment decision regarding a potential second GAC line at the Red River Plant and our ability to execute on such a project;
(c) the potential operational and financial benefits of using lower-moisture coal to manufacture our GAC products;
(d) the anticipated effects from fluctuations in the pricing of our AC products;
(e) expected supply, demand and growth opportunities for our AC products and services, including our GAC products;
(f) the seasonal impact on our customers and their demand for our products;
(g) our ability to fund our business over the next twelve months;
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(h) our ability to access new markets for our feedstocks, GAC and other products, including renewable natural gas, asphalt, purified coal, rare earth minerals and synthetic graphite markets;
(i) future growth in the industries in which we currently operate or intend to operate, including renewable natural gas;
(j) any future plant capacity expansions or site development projects, the timing thereof and our ability to finance any such projects;
(k) the effectiveness of our technologies and products and the benefits they provide, including in potential new markets and applications;
(l) the timing of awards or extensions of, and work and related testing under, our contracts and agreements and their value;
(m) our ability to contract remaining GAC product volumes;
(n) future cash flows, profitability and other potential benefits expected from our GAC business;
(o) the future profitability and sustainability of our PAC business;
(p) the timing and amounts of or changes in future revenue, funding for our business and projects, margins, expenses, earnings, tax rates, cash flows, working capital, liquidity and other financial and accounting measures;
(q) the performance of obligations secured by our surety bonds;
(r) the amount, use and timing of future capital expenditures needed to fund our business plan and total anticipated capital expenditures for the current fiscal year;
(s) the impact of domestic and international tariffs on our business and the wider AC market;
(t) our ability to capitalize on potentially favorable market conditions;
(u) 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 demand and sales of our AC products resulting from such regulations;
(v) our near-term priorities and objectives and our long-term outlook regarding the growth of our business; and
(w) the impact of prices of competing power generation sources such as natural gas and renewable energy on demand for our products.
The forward-looking statements included in this Quarterly Report involve risks and uncertainties. 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; 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; pending litigation; factors relating to our business strategy, goals and expectations concerning the acquisition of Arq Limited; 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. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024. You are cautioned not to place undue reliance on the forward-looking statements made in this Quarterly Report and to consult filings we have made and will make with the SEC for
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additional discussion concerning risks and uncertainties that may apply to our business and the ownership of our securities. In addition to causing our actual results to differ, the factors listed above may cause our intentions to change from those statements of intention set forth in this Quarterly Report. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise. The forward-looking statements contained in this Quarterly Report are presented as of the date hereof, and we disclaim any duty to update such statements unless required by law.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The information under this Item is not required to be provided by smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a‑15(b) under the Exchange Act, we have evaluated, under the supervision of and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2025.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) during the fiscal quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are involved in litigation, claims and other proceedings related to the conduct of our business. Information with respect to this item may be found in Note 6 "Commitments and Contingencies" to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report.
Item 1A. Risk Factors
There have been no material updates to our risk factors as disclosed in the 2024 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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. 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 and nine months ended September 30, 2025.
Tax Withholding
The following table contains information about common shares that we withheld from delivering to employees during the third quarter of 2025 to satisfy their respective tax obligations related to stock-based awards.
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
July 1 to July 31, 2025 — $ — N/A N/A
August 1 to August 31, 2025 — $ — N/A N/A
September 1 to September 30, 2025 2,029 $ 7.00 N/A N/A
Item 4. Mine Safety Disclosures
The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this Quarterly Report.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the three months ended September 30, 2025, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits
Exhibit No. Description Form File No. Incorporated by Reference Exhibit Filing Date
3.1
10-Q
001-37822 3.1 May 8, 2024
3.2 10-Q 000-54992 3.1 August 9, 2013
3.3 8-K 001-37822 3.1 January 31, 2024
3.4 8-K 001-37822 3.1 February 1, 2023
3.5 8-K 001-37822 3.1 May 8, 2017
31.1
31.2
32.1
95.1
101.SCH XBRL Schema Document*
101.CAL XBRL Calculation Linkbase Document*
101.LAB XBRL Label Linkbase Document*
101.PRE XBRL Presentation Linkbase Document*
101.DEF Taxonomy Extension Definition Linkbase Document*
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*
Notes:
*    Filed herewith.

Filings for the Company were made under the name ADA-ES, Inc. (File No. 000-50216) prior to July 1, 2013, the effective date of our reorganization, and under the name Advanced Emissions Solutions, Inc. (File No. 000-54992) starting on July 1, 2013. Filings for the Company were made under the name Advanced Emissions Solutions, Inc. (File No. 001-37822) starting on July 6, 2016. On February 1, 2024, the Company changed its name to Arq, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Arq, Inc.
(Registrant)
November 5, 2025 By: /s/ Robert Rasmus
Robert Rasmus
Chief Executive Officer
(Principal Executive Officer)
November 5, 2025 By: /s/ Jay Voncannon
Jay Voncannon
Chief Financial Officer
(Principal Financial Officer)

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TABLE OF CONTENTS
Part I. Financial InformationItem 1. Condensed Consolidated Financial StatementsNote 1 - Organization and Basis Of PresentationNote 2 - Inventories, NetNote 3 - RevenueNote 4 - Debt ObligationsNote 5 - LeasesNote 6 - Commitments and ContingenciesNote 7 - Supplemental Financial InformationNote 8 - Stockholders' EquityNote 9 - Stock-based CompensationNote 10 - Income TaxesNote 11 - Segment ReportingNote 12 - Subsequent EventsItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II. Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits

Exhibits

3.1 Amended and Restated Bylaws of Arq, Inc., as amended 10-Q 001-37822 3.1 May 8, 2024 3.2 Second Amended and Restated Certificate of Incorporation of Advanced Emissions Solutions, Inc. 10-Q 000-54992 3.1 August 9, 2013 3.3 Certificate of Amendment to the Amended and Restated Certificate of Incorporation, effective February 1, 2024 8-K 001-37822 3.1 January 31, 2024 3.4 Certificate of Designations of Series A Preferred Stock 8-K 001-37822 3.1 February 1, 2023 3.5 Certificate of Designation, Preferences, and Rights of Series B Junior Participating Preferred Stock of Advanced Emissions Solutions, Inc. 8-K 001-37822 3.1 May 8, 2017 31.1 Certification of Principal Executive Officer of Arq, Inc. Pursuant to 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a)* 31.2 Certification of Principal Financial Officer of Arq, Inc. Pursuant to 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a)* 32.1 Certification of Principal Executive Officer and Principal Financial Officer of Arq, Inc. Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* 95.1 Mine Safety Disclosure Exhibit*