Arq (ARQ) FY2025 10-K Risk Factors: 11 New, 11 Dropped

What the changes say

Arq faces severe capital constraints, construction delays, and design flaws at its GAC facility, leading to a $44.8 million impairment.

What changed since the prior 10-K

New

NewRisks Related to Our Business
Executing on our business plan to produce GAC products at nameplate capacity has required, and may continue to require, significant capital, which may be more than anticipated and require us to seek additional financing
We experienced construction delays and cost overruns at our GAC facility, requiring potential additional capital for facility modifications to reach nameplate capacity.
NewRisks Related to Our Business
built, and we have little visibility on what additional manufacturing capacity our competitors or other manufacturers may add in the future
Since we no longer expect to use Corbin Wetcake for GAC products, our success depends on selling it as an asphalt additive or isolating rare earth minerals.
NewRisks Related to Our Business
We have and may in the future be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price
We may be forced to take write-downs, restructurings, or impairment charges that could harm our financial condition and stock price.
NewRisks Related to Our Business
of our long-lived assets become impaired or are further impaired, we may be required to record non-cash impairment charges that could have a material adverse impact on our financial condition, results of operations and stock price
We recorded a $44.8 million impairment charge in 2025 due to idling the Corbin Facility and ceasing the use of Corbin Wetcake as a GAC feedstock.
NewRisks Related to Our Business
We may not realize the anticipated benefits of acquisitions, joint ventures, and divestitures, or these benefits may take longer to realize than expected
We may not realize anticipated benefits from acquisitions like the Arq Acquisition, joint ventures, or divestitures.
NewRisks Related to Our Business
Failure to establish strategic relationships in new industries may diminish our ability to conduct operations at our Corbin Facility
Failure to establish strategic relationships in industries like asphalt or synthetic graphite may prevent us from utilizing Corbin Wetcake.
NewRisks Related to Our Business
hydroelectric, wind, biomass and solar power; and (2) technological developments, including those related to competing alternative energy sources
Natural gas and renewable energy continue to displace coal-fueled power generation, reducing demand for our coal-related products.
NewRisks Related to Our Business
or at an acceptable price, we may be forced to incur higher costs to obtain the necessary raw materials or be unable to obtain the materials
If we cannot pass on increased raw material costs to customers, our business and financial results will suffer.
NewRisks Related to Our Business
cyberattacks also may be able to develop and deploy viruses, worms, malware and other malicious software programs that attack our information and networks or otherwise exploit any security vulnerabilities of our information and networks
Cyberattacks and security breaches of our IT systems could disrupt our operations and expose us to third-party liabilities.
NewRisk related to tax matters
ownership change generally is subject to an annual limitation on its pre-ownership change tax asset carryforwards. The annual limitation is increased each year to the extent that there is an unused limitation in a prior year
Pre-ownership change tax asset carryforwards of $12.5 million from the Arq Acquisition and $86.1 million in business credits may be subject to annual limitations.
NewRisks Related to Our Common Stock
Certain members of our management team and Board hold a significant portion of the voting power of our common stock
Certain management members and Board directors hold significant voting power and could influence corporate actions against other stockholders' wishes.

Dropped

DroppedRisks Related to Our Business
We may be unable to meet our projected commissioning timelines, costs and production ramp up for our capital upgrades at our Red River Plant, or we may experience difficulties in generating and maintaining demand for products manufactured there
Uncertainties in commissioning and ramping up capital upgrades at the Red River Plant.
DroppedRisks Related to Our Business
Manufacturing Legacy Arq's products and GAC products requires significant capital
Legacy Arq was a development stage entity requiring significant capital and multiple financing rounds.
DroppedRisks Related to Our Business
The Arq Acquisition has required significant technological changes in manufacturing that may adversely affect the market acceptance of Legacy Arq’s products
DroppedRisks Related to Our Business
Our future financial results will suffer if we do not effectively manage our expanded operations following the Arq Acquisition
Technological changes and unproven commercial scale-up for Legacy Arq's manufacturing technology.
DroppedRisks Related to Our Business
There can be no assurance that the Arq Acquisition will result in additional value for our stockholders
DroppedRisks Related to Our Business
In connection with the Arq Acquisition, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could negatively affect our business, assets, liabilities, prospects, outlook, financial condition and results of operations
Challenges in managing expanded operations following the Arq Acquisition.
DroppedRisks Related to Our Business
The failure to continue to successfully integrate the Legacy Arq businesses in the expected timeframe could adversely affect our future business and financial performance
DroppedRisks Related to Our Business
The synergies attributable to the Arq Acquisition may vary from expectations
Uncertainty whether the Arq Acquisition will provide greater value or stock price volatility.
DroppedRisks Related to Our Business
Strategic relationships upon which we rely on are subject to change, which may diminish our ability to conduct our operations
Risks of unexpected write-downs or impairments specifically arising from the Arq Acquisition due diligence.
DroppedRisks Related to Our Business
A pandemic, epidemic or outbreak of an infectious disease such as COVID-19 may materially adversely affect our business
Failure to successfully integrate the Legacy Arq business within expected timeframes.
DroppedRisks Related to Our Common Stock
Certain Legacy Arq shareholders and participants in the PIPE Investment hold a significant portion of the voting power of our common stock
Synergies attributable to the Arq Acquisition may vary from expectations.

Reworded

89% rewrittenRisk related to tax matters
Our ability to utilize our tax assets to offset future income tax liability could be limited from an "ownership change."
Updated tax asset language regarding Section 382 ownership changes and annual limitations.
88% rewrittenRisks Related to Our Business
There could be no future demand for our products, including for our Corbin Wetcake
Added that GAC facility design challenges may require switching to a bituminous coal feedstock and idling the Corbin Facility.
Was: There could be no future demand for Legacy Arq’s products
83% rewrittenRisks Related to Our Business
The financial effects of Tinuum Group providing indemnification under performance guarantees of its refined coal ("RC") facilities are largely unknown and could adversely affect our financial condition
Added a sentence highlighting that demand for products depends significantly on environmental regulations related to emissions and water quality.
79% rewrittenRisks Related to Our Business
Uncertain geopolitical conditions could adversely affect our business
Updated geopolitical conditions to reference 2025/2026 U.S. policy uncertainties, sanction regimes, and trade policies.
72% rewrittenRisks Related to Our Business
Any action by the EPA related to the MATS Rule that decreases demand for our mercury removal products could have a material adverse effect on our business
Added specific EPA dates regarding the MATS Rule, including the April 2024 final rule adopting mercury emission limit reductions.
Was: Action by the EPA related to MATS that decreases demand for our mercury removal products could have a material adverse effect on our business
62% rewrittenRisks Related to Our Business
We may not be successful in achieving our growth expectations related to new products in our existing or new markets
Specified that GAC capacity limits are due to ongoing design issues and identifying solutions at the GAC facility.
55% rewrittenRisks Related to Our Business
The market for consumables and other products that provide pollutant reduction is highly competitive, and some of our competitors are significantly larger and more established than we are, which could adversely impede our growth opportunities and financial results
No substantive changes were made to the text describing high market competition.
55% rewrittenRisks Related to Our Business
Disruptions of supply chains may affect volatility in price and availability of raw materials
Updated supply chain disruption references from 2024 to 2025 and added bituminous coal feedstocks as a required raw material.
53% rewrittenRisks Related to Our Common Stock
Our stock price is subject to volatility
49% rewrittenRisks Related to Our Business
Disruptions or underutilization at any of our facilities could negatively impact our ability to meet customer supply requirements due to damage to or insufficient production capacity of the Red River Plant and may have a material adverse effect on our business, results of operations and financial condition
Was: Disruptions at any of our facilities could negatively impact our ability to meet customer supply requirements due to damage to or insufficient production capacity of the Red River Plant and may have a material adverse effect on our business, results of operations and financial condition
45% rewrittenRisks Related to Our Business
Information technology vulnerabilities and cyberattacks on our networks could have a material adverse impact on our business
38% rewrittenRisks Related to Our Business
Our Corbin Facility is subject to additional significant governmental regulations, which may negatively impact our operations and costs of conducting business
Was: With the Arq Acquisition, we are subject to additional significant governmental regulations, which may negatively impact our operations and costs of conducting business
34% rewrittenRisks Related to Our Business
The loss of, or significant reduction in, revenue from our largest customers could adversely affect our business, financial condition or results of operations
31% rewrittenRisks Related to Our Business
Current and future indebtedness could adversely affect our financial condition and impair our ability to operate our business
29% rewrittenRisks Related to Our Business
We may experience a shortage of reliable and adequate transport capacity and any material increase in transportation costs could have a material adverse effect on our results of operations
26% rewrittenRisks Related to Our Business
We face operational risks inherent in mining operations, and our mining operations have the potential to cause safety issues, including those that could result in significant personal injury
26% rewrittenRisks Related to Our Business
Our operations and products are subject to extensive safety, health and environmental requirements that could increase our costs and/or impair our ability to manufacture and sell certain products
24% rewrittenRisks Related to Our Business
We are subject to risks related to environmental, social or governance (“ESG”) matters, including our ability to set and meet reasonable goals related to climate change and sustainability efforts, may negatively affect our business and operations
24% rewrittenRisks Related to Our Business
The failure of tariffs or duties placed on U.S. imports of Chinese AC to adequately address the impact of low-priced imports from China could have a material adverse effect on the competitiveness and financial performance of our business
22% rewrittenRisks Related to Our Business
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our common stock

All 40 risk factors

Headings as the filing states them, in filing order.

Risks Related to Our Business

01Executing on our business plan to produce GAC products at nameplate capacity has required, and may continue to require, significant capital, which may be more than anticipated and require us to seek additional financingNew
02Current and future indebtedness could adversely affect our financial condition and impair our ability to operate our business31% rewritten
03There could be no future demand for our products, including for our Corbin Wetcake88% rewritten
04built, and we have little visibility on what additional manufacturing capacity our competitors or other manufacturers may add in the futureNew
05Disruptions or underutilization at any of our facilities could negatively impact our ability to meet customer supply requirements due to damage to or insufficient production capacity of the Red River Plant and may have a material adverse effect on our business, results of operations and financial condition49% rewritten
06We have and may in the future be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock priceNew
07of our long-lived assets become impaired or are further impaired, we may be required to record non-cash impairment charges that could have a material adverse impact on our financial condition, results of operations and stock priceNew
08We may not realize the anticipated benefits of acquisitions, joint ventures, and divestitures, or these benefits may take longer to realize than expectedNew
09Failure to establish strategic relationships in new industries may diminish our ability to conduct operations at our Corbin FacilityNew
10If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our common stock22% rewritten
11The financial effects of Tinuum Group providing indemnification under performance guarantees of its refined coal ("RC") facilities are largely unknown and could adversely affect our financial condition83% rewritten
12Our Corbin Facility is subject to additional significant governmental regulations, which may negatively impact our operations and costs of conducting business38% rewritten
13Any action by the EPA related to the MATS Rule that decreases demand for our mercury removal products could have a material adverse effect on our business72% rewritten
14The failure of tariffs or duties placed on U.S. imports of Chinese AC to adequately address the impact of low-priced imports from China could have a material adverse effect on the competitiveness and financial performance of our business24% rewritten
15The market for consumables and other products that provide pollutant reduction is highly competitive, and some of our competitors are significantly larger and more established than we are, which could adversely impede our growth opportunities and financial results55% rewritten
16hydroelectric, wind, biomass and solar power; and (2) technological developments, including those related to competing alternative energy sourcesNew
17The loss of, or significant reduction in, revenue from our largest customers could adversely affect our business, financial condition or results of operations34% rewritten
18We depend on the services of our executives and other key employees, and the loss of one or more of these individuals could harm our business
19Uncertain geopolitical conditions could adversely affect our business79% rewritten
20Disruptions of supply chains may affect volatility in price and availability of raw materials55% rewritten
21or at an acceptable price, we may be forced to incur higher costs to obtain the necessary raw materials or be unable to obtain the materialsNew
22We may experience a shortage of reliable and adequate transport capacity and any material increase in transportation costs could have a material adverse effect on our results of operations29% rewritten
23We face operational risks inherent in mining operations, and our mining operations have the potential to cause safety issues, including those that could result in significant personal injury26% rewritten
24Our operations and products are subject to extensive safety, health and environmental requirements that could increase our costs and/or impair our ability to manufacture and sell certain products26% rewritten
25We may not be successful in achieving our growth expectations related to new products in our existing or new markets62% rewritten
26Natural disasters or extreme weather could affect our operations and financial results
27We are subject to risks related to environmental, social or governance (“ESG”) matters, including our ability to set and meet reasonable goals related to climate change and sustainability efforts, may negatively affect our business and operations24% rewritten
28Information technology vulnerabilities and cyberattacks on our networks could have a material adverse impact on our business45% rewritten
29cyberattacks also may be able to develop and deploy viruses, worms, malware and other malicious software programs that attack our information and networks or otherwise exploit any security vulnerabilities of our information and networksNew

Risks Related to Intellectual Property

30Failure to protect our intellectual property or infringement of our intellectual property by a third party could have an adverse impact on our financial condition
31We may be subject to intellectual property infringement claims from third parties that are costly to defend and that may limit our ability to use the disputed technologies
32Indemnification of third-party licensees of our technologies against intellectual property infringement claims concerning our licensed technology and our products could be financially significant to us
33Our future success depends in part on our ongoing identification and development of intellectual property and our ability to invest in and deploy new products, services and technologies into the marketplace efficiently and cost effectively

Risk related to tax matters

34Our ability to utilize our tax assets to offset future income tax liability could be limited from an "ownership change."89% rewritten
35ownership change generally is subject to an annual limitation on its pre-ownership change tax asset carryforwards. The annual limitation is increased each year to the extent that there is an unused limitation in a prior yearNew

Risks Related to Our Common Stock

36Our stock price is subject to volatility53% rewritten
37Our certificate of incorporation and bylaws contain provisions that may delay or prevent an otherwise beneficial takeover attempt of our Company
38An increased focus on environmental, social and governance factors by institutional investors may negatively impact our access to capital and the liquidity of our stock price
39We require additional funding for our growth plans, and such funding may require us to issue additional shares of our common stock resulting in a dilution of your investment
40Certain members of our management team and Board hold a significant portion of the voting power of our common stockNew

Other Arq 10-Ks

FY2024 10-K risk factors
40 risks
Arq, Inc. faces high execution risks scaling its Red River Plant and GAC Facility following the Arq Acquisition. The company carries $13.8 million in debt under its Revolving Credit Facility and a $10.0 million CTB Loan. Concentration is high, with five customers generating 45% of 2024 revenue.
Filed Mar 05, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.