ades-20240630

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

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☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			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

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ARQ, INC.

(Exact name of registrant as specified in its charter)

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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:

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 August 8, 2024, there were 36,513,855 outstanding shares of Arq, Inc. common stock, par value $0.001 per share.

INDEX


		PAGE
PART I. - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	1
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and June 30, 2023	2
	Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Six Months Ended June 30, 2024 and June 30, 2023	3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and June 30, 2023	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

PART II. - OTHER INFORMATION

Item 1.	Legal Proceedings	31
Item 1a.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 4.	Mine Safety Disclosures	32

Item 6.	Exhibits	33
	Signatures	34

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)	June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash	$	28,478	$	45,361
Receivables, net	15,812		16,192

Inventories, net	22,648		19,693




Prepaid expenses and other current assets	4,280		5,215
Total current assets	71,218		86,461
Restricted cash, long-term	8,719		8,792
Property, plant and equipment, net of accumulated depreciation of $23,233 and $19,293, respectively	123,407		94,649





Other long-term assets, net	45,238		45,600
Total Assets	$	248,582	$	235,502
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	16,795	$	14,603
Current portion of debt obligations	2,419		2,653




Other current liabilities	7,393		5,792
Total current liabilities	26,607		23,048
Long-term debt obligations, net of current portion	17,978		18,274




Other long-term liabilities	14,397		15,780
Total Liabilities	58,982		57,102
Commitments and contingencies (Note 7)

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, 40,614,642 and 37,791,084 shares issued, and 35,996,496 and 33,172,938 shares outstanding at June 30, 2024 and December 31, 2023, respectively	41		38
Treasury stock, at cost: 4,618,146 and 4,618,146 shares as of June 30, 2024 and December 31, 2023, respectively	(47,692)		(47,692)
Additional paid-in capital	171,095		154,511
Retained earnings	66,156		71,543

Total Stockholders’ Equity	189,600		178,400
Total Liabilities and Stockholders’ Equity	$	248,582	$	235,502

See Notes to the Condensed Consolidated Financial Statements

Arq, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)	2024		2023		2024		2023






Revenue	$	25,405	$	20,445	$	47,145	$	41,250

Cost of revenue, exclusive of depreciation and amortization	17,227		15,336		30,940		32,511


Operating expenses:



Selling, general and administrative	7,011		7,994		14,677		19,277

Research and development	929		774		2,554		1,506

Depreciation, amortization, depletion and accretion	1,658		2,428		3,374		4,565
Gain on sale of Marshall Mine, LLC	—		—		—		(2,695)

Total operating expenses	9,598		11,196		20,605		22,653
Operating loss	(1,420)		(6,087)		(4,400)		(13,914)
Other (expense) income:
Earnings from equity method investments	—		462		—		1,100

Interest expense	(829)		(834)		(1,620)		(1,368)




Other	311		603		663		785
Total other (expense) income	(518)		231		(957)		517
Loss before income taxes	(1,938)		(5,856)		(5,357)		(13,397)
Income tax (expense) benefit	(30)		—		(30)		33
Net loss	$	(1,968)	$	(5,856)	$	(5,387)	$	(13,364)
Loss per common share (Note 1):
Basic	$	(0.06)	$	(0.21)	$	(0.16)	$	(0.53)
Diluted	$	(0.06)	$	(0.21)	$	(0.16)	$	(0.53)
Weighted-average number of common shares outstanding:
Basic	34,356		27,360		33,229		25,739
Diluted	34,356		27,360		33,229		25,739

See Notes to the Condensed Consolidated Financial Statements.

Arq, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)


	Common Stock			Treasury Stock
(Amounts 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		—

SEC Form 10-Q filed by Arq Inc.