ARQ

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How ARQ rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

37%

of sentences unchanged

Added

176

new sentences

Dropped

200

sentences removed

Length

−707

words, now 13,973

New in FY2025

Federal National Primary Drinking Water Regulation and other PFAS Regulations In October 2021, the EPA released its PFAS Strategic Roadmap, laying out its approach to addressing PFAS and other pollutants, which set a timeline by which the EPA planned to take certain actions, including establishing a national primary drinking water regulation for certain PFAS and taking Effluent Limitations Guidelines actions to regulate certain PFAS discharges from industrial categories.
On April 10, 2024, the EPA announced the final NPDWR, which established legally enforceable maximum contaminant levels ("MCL") for six PFAS substances, including a MCL for perfluorooctanoic acid ("PFOA") and perfluorooctane sulfonic acid ("PFOS") of 4.0 parts per trillion.
However, in May 2025, the EPA announced that, along with extending the compliance deadline as described below, it intends to narrow the final rule to apply to only PFOA and PFOS, eliminating the other six PFAS substances from the final rule.
Under the NPDWR, drinking water utilities have three years from the publication of the final rule, or until April 2027, to comply with monitoring requirements and initially had five years from the publication of the final rule, or until April 2029, to implement solutions that reduce the applicable PFAS substances below the MCLs.
The EPA has since indicated that it will likely extend the compliance date from April 2029 to April 2031 through a rule making expected to commence in Spring of 2026.
We anticipate that these new regulations, regardless of effective date, will increase demand in the U.S. for PFAS water treatment products and services, including our GAC products.
On May 8, 2024, the EPA finalized regulations that treat PFOS and PFOA as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA").
The rules, which became effective on July 8, 2024, allow the EPA to hold polluters financially responsible for contaminated sites and list these PFAS chemicals as "hazardous materials" under the Hazardous Materials Transportation Act, which require materials containing these chemicals to be transported using special protocols.
The final CERCLA rules have been the subject of ongoing litigation and on September 25, 2025, the EPA announced that it would continue to defend the final rule in court.
In February 2024 the EPA proposed rule changes to the Resource Conservation and Recovery Act ("RCRA") regulations by adding nine PFAS chemical compounds to its list of hazardous constituents, which rules are expected to be finalized in April 2026.
Combined with the new CERCLA regulations, a final RCRA regulation of PFAS may increase the costs of handling, transport, and disposal of PFAS-containing materials including water treatment waste.
The MACT-based standards are also known as National Emission Standards for Hazardous Air Pollutants.
We estimate that 60% of the coal-fired units that were operating in December 2012 when the MATS Rule was finalized have been permanently shut down, leaving approximately 400 units in operation in the U.S. as of December 31, 2025.
On February 12, 2026, the EPA announced that it was repealing the "endangerment finding" that allowed it to regulate greenhouse gas emissions.
It is unclear whether such repeal will impact the number of coal-fired units in operation.
On April 3, 2023, the EPA issued a proposed amendment to the MATS rule that, among other potential modifications, proposed a reduction to the mercury emission limits for lignite coal-fired EGUs.
However, on June 17, 2025, the EPA proposed to repeal three provisions of the 2024 amendment to the MATS Rule, including loosening requirements for particulate matter and mercury emissions to pre-2024 levels (including for lignite coal-fired EGUs), as well as provisions relating to emissions monitoring systems.
On February 19, 2026, the EPA followed through with its proposal and finalized the repeal of the 2024 MATS amendment, reverting required compliance standards back to the existing standards set in 2012.
In May 2017, the EU ratified the Minamata Convention on Mercury, triggering mercury control regulations which were implemented starting in 2021.
In January 2024, there was a provisional agreement that revised the October 2022 proposed directives to focus on challenges such as the presence of micropollutants in urban wastewater.
The revised directive was adopted by the European Parliament and the Council on November 5, 2024, went into force on January 1, 2025, and is enforceable on European Union Member States, subject to the revised directive’s implementation period, which requires European Union Member State compliance by mid-2027, with some exceptions.
As of December 31, 2025, we posted surety bonds of approximately $7.5 million and $3.0 million for reclamation of the Five Forks Mine and the Corbin Facility, respectively.
Intellectual Property As of December 31, 2025, we held 74 U.S. patents and 16 international patents that were issued or allowed, 17 additional U.S. provisional patents or applications that were pending, and 36 international patent applications that were either pending or filed relating to different aspects of our technology.
During the year ended December 31, 2025, we were granted 4 new patents.
Our existing patents generally have terms of 20 years from the effective date of filing, with our next patents expiring in 2026.
During the year ended December 31, 2025, 17 U.S. and 5 international patents and applications from our patent portfolio were abandoned or allowed to expire, as we determined that they no longer represent future markets or economic opportunities for us.
As of December 31, 2025, we owned over 50 trademark registrations and applications globally.
As of December 31, 2025 , we employed 202 people, of which 201 were employed full-time, across our four facilities and strive to maintain a robust company culture.
Learning, Development and Employee Engagement We offer a range of skills-based and compliance training programs, including environmental courses on topics including hazardous waste, water treatment, and environmental awareness, as well as a large number of safety courses.
Recent Developments GAC Engineering and Production Process Optimization Review As previously disclosed, on August 6, 2025, we announced that we had successfully commissioned our GAC Facility and produced our first commercial volumes of on-specification GAC product.
However, after initial production runs, in December 2025, it became clear that ramp-up to nameplate capacity could not be accomplished without further modifications to the existing systems because of design flaws in our GAC Facility.
As a result, we have paused GAC production, idled the Corbin Facility as a cost saving measure, and have launched an engineering and production process optimization review, which will include an evaluation of potential GAC Facility design modifications and production economics at different scales.
This decision follows independent testing results received in January 2026 demonstrating that our current thermal oxidizer can only support approximately 15 million pounds of annual GAC production, but will require additional modifications to achieve our original design capacity of 25 million pounds or higher.
Our analysis indicates that a 15 million pound per year scenario on a stand-alone basis does not provide sufficient returns to make it economically attractive.
The optimization review is expected to determine production scale, capital requirements, and return profiles before we commit to additional investment in our GAC Facility.
These constraints emerged as we prepared to transition from our Corbin Wetcake to bituminous proven performance coal, a solution which is expected to address previously announced design and feedstock variability challenges.
The current issues that we are experiencing with our thermal oxidizer and their impact on the capacity of our GAC Facility stem from the previously disclosed design flaws by the firm originally engaged to design our GAC Facility, with whom litigation remains ongoing.
Due to the issues described above, we do not expect material GAC revenue in fiscal year 2026.
Revolving Credit Facility Under the Credit, Security and Guaranty Agreement (the "Revolving Credit Agreement"), between us, certain of our subsidiaries, and MidCap Funding IV Trust, we maintain a secured revolving credit facility (the "Revolving Credit Facility"), under which we may borrow up to $30,000,000 at any one time, the availability of which is determined based on a borrowing base calculated in accordance with a formula set forth in the Revolving Credit Agreement.
On May 6, 2025, December 9, 2025, January 28, 2026, and February 27, 2026, we entered into the first amendment, the second amendment, the third amendment, and the fourth amendment to the Revolving Credit Agreement, respectively (together, the “Amendments”).

and 136 more.

Gone since FY2024

Federal National Primary Drinking Water Regulation and other PFAS Regulations In October 2021, the EPA released its PFAS Strategic Roadmap, laying out its approach to addressing PFAS and other pollutants, which set a timeline by which the EPA planned to take certain actions through 2024, including establishing a national primary drinking water regulation for certain PFAS and taking Effluent Limitations Guidelines actions to regulate certain PFAS discharges from industrial categories.
On April 10, 2024, the EPA announced the final NPDWR, which established legally enforceable maximum contaminant levels ("MCL") for six PFAS substances, including a MCL for Perfluorooctane Acid ("PFOA") and Perfluorooctane Sulfonate ("PFOS") of 4.0 parts per trillion.
Under the NPDWR, drinking water utilities have three years from the publication of the final rule, or until April 2027, to comply with monitoring requirements and have five years from the publication of the final rule, or until April 2029, to implement solutions that reduce the applicable PFAS substances below the MCLs.
We anticipate that these new regulations will increase demand in the U.S. for PFAS water treatment products and services, including our GAC products.
On May 8, 2024, the EPA finalized new regulations that treat PFOS and PFOA as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA").
The new rules allow the EPA to hold polluters financially responsible for contaminated sites and will also lead to these PFAS chemicals being listed as "hazardous materials" under the Hazardous Materials Transportation Act, which will require materials containing these chemicals to be transported using special protocols.
Although final rules have not been issued, in February 2024 the EPA proposed changes to the Resource Conservation and Recovery Act ("RCRA") regulations by adding nine PFAS chemical compounds to its list of hazardous constituents.
Combined with the new CERCLA regulations, a final RCRA regulation of PFAS may increase the costs of the handling, transport, and disposal of PFAS-containing materials including water treatment waste.
The MACT-based standards are also known as National Emission Standards for Hazardous Air Pollutants ("NESHAP").
We estimate that 59% of the coal-fired units that were operating in December 2012 when the MATS Rule was finalized have been permanently shut down, leaving approximately 405 units in operation in the U.S. as of December 31, 2024.
On April 3, 2023, the EPA issued a proposed update to MATS that amongst other potential modifications, proposed a reduction to the mercury emission limits for lignite coal-fired EGUs.
In May 2017, the EU ratified the Minimata Convention on Mercury, triggering mercury control regulations with implementation starting in 2021.
In January 2024, there was a provisional agreement that revised the October 2022 proposed directives.
The revised directive was adopted by the European Parliament and the Council on November 5, 2024, and is enforceable on European Union Member States, subject to the revised directive’s implementation period, which requires European Union Member State compliance by mid-2027.
As of December 31, 2024, we posted surety bonds of approximately $7.5 million and $3.0 million for reclamation of the Five Forks Mine and the Corbin Facility, respectively.
Intellectual Property As of December 31, 2024, we held 84 U.S. patents and 10 international patents that were issued or allowed, 15 additional U.S. provisional patents or applications that were pending, and 36 international patent applications that were either pending or filed relating to different aspects of our technology.
During the year ended December 31, 2024, we were granted 3 new patents.
Our existing patents generally have terms of 20 years from the effective date of filing, with our next patents expiring in 2025.
During the year ended December 31, 2024, 19 U.S. and 41 international patents and applications from our patent portfolio were abandoned or allowed to expire, as we determined that they no longer represent future markets or economic opportunities for us.
As of December 31, 2024, we owned over 50 trademark registrations and applications globally.
As of December 31, 2024, we employed 203 people, of which 200 were employed full-time, across our four facilities and strive to maintain a robust company culture.
Learning, Development and Employee Engagement We offer a range of skills-based and compliance training programs, including environmental courses on topics including hazardous waste, water treatment, and environmental awareness, and a large number of safety courses.
Recent Developments Revolving Credit Facility On December 27, 2024 (the "Closing Date"), we and certain of our subsidiaries entered into a Credit, Security and Guaranty Agreement (the "Revolving Credit Agreement") with MidCap Funding IV Trust, in its capacity as agent, the lenders from time to time party thereto, and any entities that become party thereto as Guarantors.
The Revolving Credit Agreement provides for a secured revolving credit facility (the "Revolving Credit Facility") under which we may borrow up to $30,000,000 at any one time, the availability of which is determined based on a borrowing base equal to percentages of certain eligible accounts receivable and inventory carrying balances, less applicable reserves established under the Revolving Credit Agreement, in accordance with a formula set forth in the Revolving Credit Agreement.
The Revolving Credit Facility has a maturity date of December 27, 2029.
Borrowings under the Revolving Credit Agreement bear interest at the Standard Overnight Financing Rate ("SOFR") plus an applicable margin of 4.50% per annum, subject to a SOFR floor of 2.50% per annum.
September 2024 Equity Offering On September 20, 2024, we entered into an underwriting agreement (the "Underwriting Agreement") with Canaccord Genuity LLC, as the representative of the underwriters named therein (the "Underwriters"), relating to the issuance and sale (the "Offering") of 4,770,000 shares (the "Firm Shares") of the Company's common stock, par value $0.001 per share, at a price to the public of $5.25 per share.
Under the terms of the Underwriting Agreement, the Underwriters agreed to purchase the Firm Shares from the Company at a price of $4.935 per share.
We also granted the Underwriters an option exercisable for 30 days from the date of the Underwriting Agreement to purchase up to an additional 715,500 shares of common stock, on the same terms and conditions (the "Option Shares," and, together with the Firm Shares, the "Offered Shares"), which was subsequently exercised by the Underwriters.
Net proceeds from the Offering were approximately $26.7 million, after deducting underwriting discounts and commissions and estimated offering expenses.
The Firm Shares and Option Shares were offered and sold pursuant to a prospectus supplement dated September 20, 2024 and an accompanying base prospectus that form a part of our registration statement on Form S-3 (File No. 333-281762) filed with the SEC on August 23, 2024, which became effective on September 4, 2024.
May 2024 Private Placement On May 15, 2024, we entered into a securities purchase agreement with certain accredited investors for the private placement of an aggregate of 2,142,858 shares of common stock, at a purchase price of $7.00 per share (the "Private Placement").
The aggregate gross proceeds for the Private Placement were approximately $15 million, before deducting offering expenses, and the Private Placement closed on May 16, 2024.
The Private Placement was exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act and in reliance on similar exemptions under applicable state laws.
Arq Acquisition On February 1, 2023 (the "Acquisition Date"), we entered into a Securities Purchase Agreement (the "Purchase Agreement") with Arq Ltd., pursuant to which we acquired all of the direct and indirect equity interests, assets and liabilities of Legacy Arq in exchange for consideration (the "Purchase Consideration") totaling $31.2 million and consisting of (i) 3,814,864 shares of our common stock, valued at $12.4 million and (ii) 5,294,462 shares of our Series A Convertible Preferred Stock, par value $0.001 per share (the "Series A Preferred Stock"), valued at $18.8 million.
On June 13, 2023, our stockholders approved the conversion of all of the outstanding shares of the Series A Preferred Stock and the corresponding issuance of 5,362,926 shares of common stock.
PIPE Investment and Loan Agreement On February 1, 2023, and in connection with the Arq Acquisition, we entered into subscription agreements with certain persons (the "Subscribers"), which included existing shareholders of Arq Ltd., three of which were appointed to our board of directors (the "Board"), pursuant to which the Subscribers subscribed for and purchased 3,842,315 shares of common stock for an aggregate purchase price of approximately $15.4 million and at a price per share of $4.00 (the "PIPE Investment").
The securities issued to the Subscribers under the Subscription Agreements were issued pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act, Rule 506 of Regulation D, which is promulgated thereunder, and Regulations S of the Securities Act.
The Company and its affiliates relied on this exemption from registration based in part on representations made by each of the Subscribers under the Subscription Agreements.
Pursuant to the terms of the Purchase Agreement, we entered into a Registration Rights Agreement (the "Registration Rights Agreement") with Arq Ltd. and the Subscribers to the Subscription Agreements described above.

and 160 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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