~~Conditions in the global economy may adversely affect our results~~

Table of ~~operations, financial condition and cash flows.~~Contents

The demand for our products have historically correlated closely with general economic growth rates. The occurrence of recessions or other periods of low or negative growth will typically have a direct adverse impact on our results of operations, financial condition and cash flows. Other factors that affect general economic conditions in the world or in a major region, such as changes in population growth rates or periods of civil unrest, also impact the demand for our products. Economic conditions that impair the functioning of financial markets and financial institutions also pose risks to us, including risks to the safety of our financial assets and to the ability of our partners and customers to fulfill their commitments to us.

In addition, the revenue and profitability of our operations have historically been subject to fluctuation, which makes future financial results less predictable. Our revenue, gross margin and profit vary among our products, customer groups and geographic markets. Overall gross margins and profitability in any given period are dependent partially on the product, customer and geographic mix reflected in that period's net revenue. In addition, newer geographic markets may be relatively less profitable due to investments associated with entering those markets and local pricing pressures. Market trends, competitive pressures, increased raw material or shipping costs, regulatory impacts and other factors may result in reductions in revenue or pressure on gross margins of certain segments in a given period which may necessitate adjustments to our operations.

To service our current, and any future, indebtedness, we will require a significant amount of cash, which may adversely affect our future results.

Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt service obligations

could harm our business, results of operations and financial condition. Our ability to make payments on and to refinance our indebtedness, and to fund working capital needs and planned capital expenditures, will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond our control.

If our business does not generate sufficient cash flow from operations or if future borrowings are not available to us in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs, we may need to refinance all or a portion of our indebtedness (or otherwise seek amendment or relief from the terms of our indebtedness), on or before the maturity thereof, sell assets, reduce or delay capital investments or seek to raise additional capital, any of which could have a material adverse effect on our operations. We might not generate sufficient cash flow to repay indebtedness as currently anticipated. In addition, we may not be able to effect any of these actions, if necessary, on commercially reasonable terms or at all. Our ability to restructure or refinance our indebtedness, will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments may limit or prevent us from taking any of these actions. Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance or restructure our obligations on commercially reasonable terms or at all, would have a material adverse effect on our business, results of operations and financial conditions.

~~There are certain hazards and risks inherent in our operations that could adversely affect those operations and results of operations and financial condition.~~

As a manufacturer and distributor of diversified chemical products, our business is subject to operating risks inherent in chemical manufacturing, storage, handling and transportation. These risks include, but are not limited to, fires, explosions, severe weather and natural disasters, mechanical failure, unscheduled downtime, loss of raw materials or our products, transportation interruptions, remediation, chemical spills, terrorist acts or war, discharges or releases of toxic or hazardous substances or gases. These hazards can cause personal injury and loss of life, severe damage to, or destruction of, property and equipment and environmental contamination. In addition, our suppliers are also subject to similar risks that may adversely impact our production capabilities. A significant limitation on our ability to manufacture products due to disruption of manufacturing operations or related infrastructure could have a material adverse effect on our results of operations and financial condition.

While we adapt our manufacturing and distribution processes and controls to minimize the inherent risk of our operations, to promote workplace safety and to minimize the potential for human error, we cannot completely eliminate the risk of accidental contamination or injury from hazardous or regulated materials, including injury of our employees, individuals who handle our products or goods treated with our products, or others who claim to have been exposed to our products, nor can we completely eliminate the unanticipated interruption or suspension of operations at our facilities due to such events. We may be held liable for significant damages or fines in the event of contamination or injury, and such assessed damages or fines could have a material adverse effect on our results of operations and financial conditions. Our property, business interruption and casualty insurance may not fully insure us against all potential hazards incidental to our business.

~~Increases in the costs of our raw materials could have an adverse effect on our financial condition and results of operations if those costs cannot be passed onto our customers.~~

Our results of operations are directly affected by the cost of raw materials. Since the cost of these primary raw materials comprise a significant amount of our total cost of goods sold, the selling prices for our products and therefore our total revenue is impacted by movements in these raw material costs, as well as the cost of other inputs. In the past we have experienced erratic and significant changes in the costs of these raw materials, the cost of which has generally correlated with changes in energy prices, supply and demand factors, and prices for natural gas and crude oil. In addition, product mix can have an impact on our overall unit selling prices, since we provide an extensive product offering and therefore experience a wide range of unit selling prices. Because of the significant portion of our cost of goods sold represented by these raw materials, our gross profit margins could be adversely affected by changes in the cost of these raw materials if we are unable to pass the increases on to our customers.

Due to volatile raw material prices, there can be no assurance that we can continue to recover raw material costs or retain customers in the future. For example, our logistics costs have increased substantially within the past three years, narrowing our profit margins. This may force us to increase our pricing, which could cause customers to consider competitors' products, some of which may be available at a lower cost. Significant loss of customers could result in a material adverse effect on our results of operations, financial condition and cash flows.

If the availability of our raw materials is limited, we may be unable to produce some of our products in quantities sufficient to meet customer demand or on favorable economic terms, which could have an adverse effect on our results of operations, financial condition and cash flows.

We use polyethylene waxes in our specialty synthetic wax segment and use additional non-primary raw materials in the production of our products in the specialty petrochemical segment and synthetic wax segment. Suppliers may not be able to meet our raw material requirements and we may not be able to obtain substitute supplies from alternative suppliers in sufficient quantities, on economic terms, or in a timely manner. A lack of timely availability of our raw materials in the quantities we require to produce our products could result in our inability to meet customer demand and could have a material adverse effect on our results of operations, financial condition and cash flows.

~~Certain activist stockholders actions could cause us to incur expense and hinder execution of our strategy.~~

While we seek to actively engage with our stockholders and consider their views on business and strategy, we could be subject to actions or proposals from our stockholders that do not align with our business strategies or the interests of our other stockholders. Responding to these stockholders could be costly and time-consuming, disrupt our business and operations and divert the attention of our management. Furthermore, uncertainties associated with such activities could negatively impact our ability to execute our strategic plan, retain customers and skilled employees and affect long-term growth. In addition, such activities may cause our stock price to fluctuate based on temporary or speculative market perceptions that do not necessarily reflect our business operations.

~~We expect to continue to incur capital expenditures and operating costs as a result of our compliance with existing and future environmental laws and regulations.~~

Our industry is subject to extensive laws and regulations related to the protection of the environment. These laws and regulations continue to increase in both number and complexity and affect our operations with respect to, among other things: the discharge of pollutants into the environment; emissions into the atmosphere (including greenhouse gas emissions); and restrictions, liabilities and obligations in connection with storage, transportation, treatment and disposal of hazardous substances and waste. We are also subject to laws and regulations that require us to operate and maintain our facilities to the satisfaction of applicable regulatory authorities. In addition, failure to comply with these laws or regulations, or failure to obtain required permits from applicable regulatory authorities, may expose us to fines, penalties or interruptions in operations. To the extent these capital expenditures or operating costs are not ultimately reflected in the prices of our products and services, or that we are subject to fines, penalties or other interruptions in our operations, our business, results of operations, financial position and cash flows may be adversely affected.

If we are unable to access third-party transportation for our raw materials and finished products, we may not be able to fulfill our obligations to our customers in a timely manner, which could have a material adverse effect on our results of operations, financial condition and cash flows.

We rely upon transportation provided by third parties (including common carriers, rail companies and trans-ocean cargo companies) to receive raw materials used in the production of our products and to deliver finished products to our customers. While we attempt to offset the risks associated with third-party transportation issues, including by managing our supplies of raw materials, such mitigation efforts may not be successful. If we are unable to access third-party transportation at economically attractive rates, or at all, or if there is any other significant disruption in the availability of third-party transportation, we may not be able to obtain sufficient quantities of raw materials (on favorable terms, or at all) to match the pace of production and/or we may not be able to fulfill our obligations to our customers in a timely manner, which could have a material adverse effect on our results of operations, financial condition and cash flows.

If we are not able to continue the technological innovation and successful commercial introduction of new products, our customers may turn to other producers to meet their requirements, which may adversely affect our results of operations, financial position and cash flows.

Our industry and the markets into which we sell our products experience periodic technological change and ongoing product improvements. In addition, our customers may introduce new generations of their own products, adopt new or different risk profiles, or require new technological and increased performance specifications that would require us to develop customized products. Our future growth and profitability will depend on our ability to maintain or enhance technological capabilities, develop and market products and applications that meet changing customer requirements and successfully anticipate or respond to technological changes in a cost effective and timely manner. Our inability to maintain a technological edge, innovate and improve our products could cause a decline in the demand and sales of our products and adversely affect our results of operations, financial position and cash flows.

~~We are subject to numerous regulations that could require us to modify our current business practices and incur increased costs.~~

We are subject to numerous regulations, including customs and international trade laws, export control, data privacy, antitrust laws and zoning and occupancy laws that regulate manufacturers generally and/or govern the importation, promotion and sale of our products, the operation of our facilities and our relationship with our customers, suppliers and competitors. In addition, we face risk associated with trade protection laws, policies and measures and other regulatory requirements affecting trade and investment, including loss or modification of exemptions for taxes and tariffs, imposition of new tariffs and duties and import and export licensing requirements. If these laws or regulations were to change or were violated by our management, employees, suppliers, buying agents or trading companies, the costs of certain goods could increase, or we could experience delays in shipments of our goods, be subject to fines or penalties, or suffer reputational harm, which could reduce demand for our products and hurt our business and negatively impact our results of operations. In addition, changes in federal and state minimum wage laws and other laws relating to employee benefits could cause us to incur additional wage and benefits costs, which could negatively impact our profitability.

Legal requirements are frequently changed and subject to interpretation, and we are unable to predict the ultimate cost of compliance with these requirements or their effects on our operations. We may be required to make significant expenditures or modify our business practices to comply with existing or future laws and regulations, which may increase our costs and materially limit our ability to operate our business.

Failure to successfully consummate extraordinary transactions, including the integration of other businesses, assets, products or technologies, or realize the financial and strategic goals that were contemplated at the time of any such transaction may adversely affect our future business, results of operations and financial condition.

As part of our business strategy, we from time to time explore possible investments, acquisitions, strategic alliances, joint ventures, divestitures and outsourcing transactions (collectively, "extraordinary transactions") in order to further our business objectives. To pursue this strategy successfully, we must identify suitable candidates for, and successfully complete, extraordinary transactions, some of which may be large and complex, and manage post-closing issues such as the integration of acquired businesses or employees. The expense and effort incurred in exploring and consummating extraordinary transactions, the time it takes to integrate an acquisition or our failure to integrate businesses successfully, could result in additional and/or unexpected expenses and losses. We also may not be successful in negotiating the terms of any potential extraordinary transactions, conducting thorough due diligence, financing an extraordinary transaction or effectively integrating the acquired business, product or technology into our existing business and operations. Our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business, product or technology. Moreover, we may incur significant expenses whether or not a contemplated extraordinary transaction is ultimately consummated.

Additionally, in connection with any extraordinary transaction we consummate, we many not fully realize all of the anticipated synergies and other benefits we expect to achieve (on our expected timeframe, or at all), and we may incur unanticipated expenses, write-downs, impairment charges or unforeseen liabilities that could negatively affect our business, financial condition and results of operations, disrupt relationships with current and new employees, customers and vendors, incur significant debt or have to delay or not proceed with announced transactions. Further, managing extraordinary transactions requires varying levels of management and employee resources, which may divert our attention from other business operations.

~~The adoption of climate change legislation or regulation could result in increased operating costs and reduced demand for our products.~~

The nature of our operations could make us subject to legislation or regulations affecting the emission of greenhouse gases. The U.S. Environmental Protection Agency has promulgated (and may in the future promulgate) regulations applicable to projects involving greenhouse gas emissions above a certain threshold, and the U.S. and certain states within the U.S. have enacted, or are considering, limitations on greenhouse gas emissions. Jurisdictions outside the U.S. are also addressing greenhouse gases by legislation or regulation. In addition, efforts have been made and continue to be made at the international level toward the adoption of international treaties or protocols that would address global greenhouse gas emissions. These limitations may include the adoption of cap and trade regimes, carbon taxes, restrictive permitting, increased efficiency standards and incentives or mandates for renewable energy. Any such requirements could make our products more expensive, lengthen project implementation times and reduce demand for hydrocarbons, as well as shift hydrocarbon demand toward relatively lower-carbon sources. Such legislation, regulation, treaties or protocols may also increase our compliance costs, such as for monitoring or sequestering emissions.

~~Adverse results of legal proceedings could materially adversely affect us.~~

We are subject to and may in the future be subject to a variety of legal proceedings and claims that arise out of the ordinary conduct of our business, including legal proceedings brought in non-U.S. jurisdictions. Results of legal proceedings cannot be predicted with certainty. Irrespective of its merits, litigation may be both lengthy and disruptive to our operations and may cause significant expenditure and diversion of management attention. We may be faced with significant monetary damages or injunctive relief against us that could have an adverse impact on our business and results of operations should we fail to prevail in certain matters.

~~Cost pressures could negatively impact AMAK's operating margins and expansion plans.~~

Cost pressures may continue to occur across the resources industry. As the prices for AMAK's products are determined by the global commodity markets in which it operates, AMAK does not generally have the ability to offset these cost pressures through corresponding price increases, which can adversely affect its operating margins or require changes in operations, including, but not limited to, temporary planned shutdowns. Notwithstanding AMAK's efforts to reduce costs, and a number of key cost inputs being commodity price-linked, the inability to reduce costs and a timing lag may adversely impact AMAK's operating margins for an extended period.

~~An impairment of goodwill could negatively impact our results of operations.~~

At least annually, we assess goodwill for impairment. If an initial qualitative assessment identifies that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is performed. We may also elect to skip the qualitative testing and proceed directly to quantitative testing. If the quantitative testing indicates that goodwill is impaired, the carrying value of goodwill is written down to fair value with a charge against earnings. Since we utilize a discounted cash flow methodology to calculate the fair value of our operating units, continued weak demand for a specific product line or business could result in an impairment charge. Accordingly, any determination requiring the write-off of a significant portion of goodwill could negatively impact our results of operations.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under the Credit Facilities are, and additional borrowings in the future may be, at variable rates of interest that expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed will remain the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. We may in the future enter into, interest rate swaps for our variable rate debt whereby we exchange floating for fixed rate interest payments in order to reduce exposure to interest rate volatility. However, any interest rate swaps into which we enter may not fully mitigate our interest rate risk.

In addition, our variable rate indebtedness may use the London Interbank Offer Rate (“LIBOR”) as a benchmark for establishing the interest rate. The LIBOR has been subject of national, international, and other regulatory guidance and proposals for reform. In July 2017, the U.K. Financial Conduct Authority (the “FCA”) announced that it intends to stop persuading or compelling banks to submit rates for calculation of LIBOR after 2021. On March 5, 2021, the ICE Benchmark Administration, which administers LIBOR, and the FCA announced that all LIBOR settings will either cease to be provided by any administrator, or no longer be representative immediately after December 31, 2021, for all non-U.S. dollar LIBOR settings and one-week and two-month U.S. dollar LIBOR settings, and immediately after June 30, 2023 for the remaining U.S. dollar LIBOR settings (the “LIBOR Announcement”).

These reforms and other pressures may cause LIBOR to disappear entirely or to perform differently than in the past. At this time, no consensus exists as to what rate or rates will become accepted alternatives to LIBOR, although on July 29, 2021, the Alternative Reference Rates Committee, a U.S.-based group convened by the U.S. Federal Reserve Board and the Federal Reserve Bank of New York, formally recommended the Secured Overnight Financing Rate (“SOFR”) as its preferred replacement rate for LIBOR. Given the inherent differences between LIBOR and SOFR, or any other alternative benchmark rate that may be established, there are many uncertainties regarding a transition from LIBOR, including but not limited to the need to amend all contracts with LIBOR as the referenced rate and how this will impact the cost of variable rate debt and certain derivative financial instruments, or whether the COVID-19 pandemic will have further effect on LIBOR transition plans. In addition, SOFR or other replacement rates may fail to gain market acceptance. The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the market value of and/or transferability of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations.

US dollar borrowings under the Credit Facilities currently bear interest at variable interest rates that use LIBOR. No modification has been made yet to the Credit Facilities as it pertains to US dollar borrowings as a result of the LIBOR Announcement, though changes will be required in the future. Currently, it is anticipated that the new benchmark for our US dollar borrowings will be one or more SOFR-based rates. The shift to SOFR from LIBOR is complex and may adversely affect our business, results of operations, financial condition liquidity and cash flows. The consequences of these developments cannot be entirely predicted, but could include an increase in our financing costs and our ability to access capital. We ~~are exposed~~do not expect the discontinuation of LIBOR as a reference rate in our debt agreements to ~~local business risks in different countries, which could~~ have a material adverse effect on our financial ~~condition and results of operations.~~

Although we do not have production operations and assets outside of the U.S., we do have a global portfolio of customers and thus we are subject to a variety of international market risks including, but not limited to:

~~ongoing instability~~position or changes in a country's or region's economic or political conditions, including inflation, recession, interest rate fluctuations, civil unrest and actual or anticipated military or political conflicts (including the potential impact of continued hostilities and conflict in Yemen on the operations of AMAK);

~~longer accounts receivable cycles and financial instability or credit risk among customers and distributors;~~

~~trade regulations and procedures and actions affecting production, pricing and marketing of products, including domestic and foreign customs and tariffs or other trade barriers;~~

~~regulations favoring local contractors or requiring foreign contractors to employ citizens of, or purchase supplies from, a local jurisdiction;~~

~~local labor conditions and regulations and the geographical dispersion of the workforce;~~

~~changes in the regulatory or legal environment;~~

~~differing technology standards or customer requirements;~~

~~import, export or other business licensing requirements or requirements relating to making foreign direct investments, which could~~materially affect our ~~ability to obtain favorable terms for labor and raw materials or lead to penalties or restrictions;~~interest expense.

~~data privacy regulations;~~

~~risk~~

Table of ~~non-compliance with the U.S. Foreign Corrupt Practices Act or similar anti-bribery legislation in other countries by agents or other third-party representatives;~~Contents

~~risk of nationalization of private enterprises by foreign governments (including the risk that AMAK's mining and exploration leases may be terminated by the Saudi Ministry of Petroleum and Minerals);~~

~~foreign currency exchange restrictions and fluctuations;~~

~~difficulties associated with repatriating cash generated or held abroad in a tax-efficient manner and changes in tax laws; and~~

~~fluctuations in freight costs and disruptions in the transportation and shipping infrastructure at important geographic points of exit and entry for our products and shipments.~~

Such economic and political uncertainties may materially and adversely affect our business, financial condition or results of operations in ways that cannot be predicted at this time. Although it is impossible to predict the occurrences or consequences of any such events, they could result in a decrease in demand for our products, make it difficult or impossible to deliver products to our customers or to receive raw materials from our suppliers and create delays and inefficiencies in our supply chain. We are also predominantly uninsured for losses and interruptions caused by terrorist acts, conflicts and wars.

~~We may have additional tax liabilities, which may adversely affect our financial position.~~

We are subject to income taxes and state taxes in the U.S. Significant judgment is required in determining our provision for income taxes. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different to that which is reflected in our consolidated financial statements. Should any tax authority take issue with our estimates, our results of operations, financial position and cash flows could be adversely affected.

The U.S. Tax Cuts and Jobs Act ("TCJA") was enacted on December 22, 2017, and introduces significant changes to U.S. income tax law. Accounting Standards Codification 740, Accounting for Income Taxes, requires companies to recognize the effects of tax law changes in the period of enactment. Effective in 2018, the TCJA made a number changes, such as reducing the U.S. statutory tax rate from 35% to 21%, creating new taxes on certain foreign sourced earnings and certain related-party payments, which are referred to as the global intangible low taxed income tax and the base erosion tax, respectively, establishing a dividends received deduction for dividends paid by foreign subsidiaries to the U.S., the elimination or limitation of certain deductions, and imposing a mandatory tax on previously unrepatriated earnings accumulated offshore. Due to the timing of the new tax law provided in the TCJA and the substantial changes it brings, the Staff of the SEC issued Staff Accounting Bulletin No. 118, which provides registrants with a measurement period to report the impact of the new US tax law. As a result, the recorded and estimated impacts of the TCJA may change in future periods, which may adversely affect our estimates, our results of operations, financial position and cash flows.

AMAK is also subject to various taxes in Saudi Arabia. While AMAK currently benefits from certain tax credits that reduce its overall tax liability, there can be no assurance that relevant tax authorities will continue to maintain such credits. In addition, there can be no assurances that future changes in tax law in Saudi Arabia will not result in increased tax liability to AMAK. A material increase in tax liability could have an adverse effect on AMAK's results of operations and financial condition, which may in turn have an adverse effect on our investment in AMAK.

~~We from time to time are subject to contingent liabilities. If any contingent liabilities become actual liabilities, our financial condition may be adversely affected.~~

We are subject to various contingent liabilities that may affect our liquidity and our ability to meet our obligations, including our limited corporate guarantee to SIDF in connection with AMAK's Loan to fund mining operations. To the extent any of our current or future contingent liabilities become actual liabilities, it may have an adverse effect on our financial condition.

~~We may be unable to recover our investment in AMAK, which could adversely affect our results of operations and financial condition.~~

We will only recover our investment in AMAK through the receipt of distributions or future share repurchases from AMAK or the sale of part or all of our interest in AMAK. If AMAK does not continue to be profitable, our ability to recover our investment will be adversely affected. Moreover, if AMAK continues to be profitable, there can be no assurance that the board of directors of AMAK will determine that it is in the best interests of AMAK and its shareholders to make distributions to its shareholders or to initiate additional share repurchases. In addition, we understand that AMAK is required to sell a portion of its equity to the public once AMAK has been profitable for two years. While the proceeds of such a sale might allow us to recover our investment in AMAK, there is no assurance that the market conditions for any such public sale will be favorable enough to allow us to recover our investment or that some or all of our shares in AMAK will be include in any such sale. To the extent we are unable to recover our investments in AMAK, our results of operations and financial condition may be adversely affected.

~~AMAK may have fewer mineral reserves than its estimates indicate.~~

Fluctuations in the price of commodities, variation in production costs or different recovery rates could result in AMAK's estimated reserves being revised in the future. If such a revision were to indicate a substantial reduction in proven or probable reserves at one or more of AMAK's projects, it could adversely affect our investment in AMAK.

~~Domestic or international terrorist attacks may disrupt our operations or otherwise have an adverse impact on our business.~~

It is possible that further acts of terrorism may be directed against the U.S. domestically or abroad, and such acts of terrorism could be directed against our investment in those locations. Moreover, chemical related assets, and U.S. corporations such as ours, may be at a greater risk of future terrorist attacks than other possible targets. The resulting damage from such an event could include loss of life, property damage or site closure. Any, or a combination, of these factors could adversely impact our results of operations, financial position and cash flows.

~~Increased information systems security threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products and services.~~

Increased information systems security threats and more sophisticated, targeted computer crime pose a risk to the security of our systems and networks and the confidentiality, availability, and integrity of our data, operations, and communications. While we attempt to mitigate these risks by employing a number of measures, including security measures, employee training, comprehensive monitoring of our networks and systems, and maintenance of backup and protective systems, if these measures prove inadequate, we could be adversely affected by, among other things, loss or damage of intellectual property, proprietary and confidential information, and communications or customer data, having our business operations interrupted and increased costs to prevent, respond to, or mitigate these cyber security threats. Any significant disruption or slowdown of our systems could cause customers to cancel orders or standard business processes to become inefficient or ineffective, which could adversely affect our results of operations, financial position and cash flows.

Implementation of changes to our enterprise resource planning ("ERP") system may adversely affect our business and results of operations or the effectiveness of internal controls over financial reporting.

During 2017, we implemented a new ERP system at our specialty petrochemical facility in order to better manage our business, and we continue to implement additional improvements to the system. ERP implementations are complex and time-consuming projects that involve substantial expenditures on system software and implementation activities over a significant period of time. If we do not effectively implement changes to ERP system, or if the system does not operate as intended, it could adversely affect our financial reporting systems and our ability to produce financial reports, the effectiveness of internal controls over financial reporting (including our disclosure controls and procedures), and our business and results of operations.

~~Item~~ITEM 1B. Unresolved Staff Comments.

None.

~~Item~~ITEM 2. Properties.

~~United States~~ Specialty ~~Petrochemical~~Petrochemicals Facility

SHR owns and operates a specialty ~~petrochemical~~petrochemicals facility ~~near~~located in Silsbee, Texas ~~which is~~ approximately 30 miles north of Beaumont ~~Texas,~~ and 90 miles east of Houston. The base SHR facility consists of ~~eight~~five operating units which, while interconnected, make distinct products through ~~different~~differing processes: (i) a Penhex Unit; (ii) a ~~Reformer;~~Reformer Unit; (iii) a Cyclo-pentane Unit; (iv) an Advanced Reformer unit; and (v) an ~~Aromatics Hydrogenation Unit; (vi)~~Isomerization Unit. In addition to the base plant, SHR operates three proprietary chemical production facilities for toll processing customers. The Reformer Unit, the Advanced Reformer unit, and the Cyclo-Pentane Unit further process streams produced by the Penhex Unit.

Our present total capacity at our Silsbee facility is 13,000 barrels per day of fresh feed; however, our air permits limit us to a ~~White Oil Fractionation Unit; (vii)~~maximum processing rate of 11,000 barrels per day. We also have a ~~Hydrocarbon Processing Demonstration Unit, and (viii) a P-Xylene Unit. All of these units are currently in operation. Our new~~ 4,000 ~~barrel~~barrels per day Advanced Reformer unit ~~successfully re-started in December 2018. This unit will provide~~which increases our capability to upgrade by-products produced from the Penhex Unit and provides security of hydrogen supply ~~for Penhex~~to the plant.

In support of the Specialty Petrochemicals segment, we own approximately 100 storage tanks with total capacity of approximately 294,000 barrels, and ~~custom processing projects as well as increase~~130 acres of land at the ~~value~~plant site, 70 acres of ~~our by-products.~~which are developed. We also own a truck and railroad loading terminal consisting of storage tanks, nine rail spurs, and truck and tank car loading facilities on approximately 63 acres of which 36 acres are developed.

GSPL owns ~~and operates~~ three 8-inch diameter pipelines (of which two are operational) and five 4-inch diameter pipelines, aggregating approximately 70 miles in length connecting ~~SHR's~~SHR’s facility to (1) a natural gas line, (2) ~~SHR's~~SHR’s truck and rail loading terminal and (3) a major petroleum products pipeline system owned by an unaffiliated third party. All pipelines are operated within Texas Railroad Commission and DOT regulations for maintenance and integrity.

~~United States~~ Specialty ~~Polyethylene Wax~~Waxes Facility

TC owns and operates a specialty ~~synthetic wax~~waxes facility from its 27.5 acre plant site located in Pasadena, Texas. ~~After the acquisition of the adjacent BASF facility ("B Plant") in 2016 the~~The plant contains several stainless steel reactors ranging in size from 3,300 to 16,000 gallons with overhead condensing systems, two 4,000 gallon glass line reactors, five Sandvik forming belts with pastillating capabilities, five high vacuum wiped film evaporators varying in size from 12 to 20 m², steel batch column with 10,000 gallon still pot and 20 theoretical stages of structured packing. This plant has the ability to crystallize and recover solids from the crystallization process. There are also three fully equipped, ~~laboratories onsite.~~on-site laboratories. With a base product offering of polyethylene waxes, TC is well suited to manage high molecular weight materials that must be managed in the molten state. In 2017, TC expanded its processing capabilities with the start-up of the hydrogenation/distillation unit. This $25 million investment provides TC's customers with state-of-the-art distillation and high-pressure hydrogenation capabilities. During 2018, TC experienced issues with the reliable operation of this unit in accordance with its design specifications. Efforts are underway to implement design corrections and fixes to improve the unit's capability and reliability. TC offers pastillating for waxes, polymers and resins, flaking capabilities, as well as solids packaging services.

~~Investment in AMAK~~

~~As of December 31, 2018, we owned~~TC also has a ~~33% interest in AMAK.~~

Prior to December 2008, we held a thirty year mining lease (which commenced on May 22, 1993) covering an approximate 44 square kilometer area in Najran Province in southwestern Saudi Arabia. The lease carried an option to renew or extend the term of the lease for additional periods not to exceed twenty years. The leasehydrogenation/distillation unit which expands its processing capabilities by providing state-of-the-art distillation and other related assets located in Saudi Arabia were contributed to AMAK in December 2008. The above-ground ore processing facility became fully operational during the second half of 2012. Late in the fourth quarter of 2015 AMAK temporarily closed the operation to preserve the assets in the ground while initiating steps to improve efficiencies and optimize operations. The facility resumed operation in the fourth quarter of 2016 and operating rates, metal recoveries and concentrate quality continued to improve steadily throughout 2017 and 2018.

AMAK shipped approximately 58,000, 28,000, and 51,000 metric tons of copper and zinc concentrate to outside smelters during 2018, 2017 and 2016, respectively. In 2014 AMAK initiated operation of its precious metal recovery circuit at the mill and produced gold and silver doré intermittently through 2014 and 2015. The precious metals circuit was recommissioned in fourth quarter of 2017 and produced commercial quantities of gold and silver bearing doré in 2018.

The facility includes an underground mine, ore-treatment plant and related infrastructures. The ore-treatment plant is comprised of primary crushing, ore storage, SAG milling and pebble crushing, secondary ball milling, pre-flotation, copper and zinc flotation, concentrate thickening, tailings filtration, cyanide leaching, reagent handling, tailings dam and utilities. Related infrastructure includes a 300 men capacity camp for single status accommodation for expatriates and Saudi employees, an on-site medical facility, a service building for 300 employees, on-site diesel generation of 10 megawatts, potable water supply, sewage treatment plant and an assay laboratory. The facilities at the Port of Jazan are comprised of unloading facilities, concentrate storage and reclamation and ship loading facilities.

Metal price assumptions follow SEC guidance not to exceed a three year trailing average. The following chart illustrates the change in metal prices from the previous three year average to current levels:

Average Price
For 2016-2018

Spot Price as of
12/31/18

Percentage
Increase (Decrease)

Gold per ounce $ 1,258.20
$ 1,279.00
(1.65 )%
Silver per ounce $ 16.62
$ 15.47
6.95 %
Copper per pound $ 2.93
$ 2.98
(5.78 )%
Zinc per pound $ 1.32
$ 1.25
4.82 %

Three mineralized zones, the Saadah, Al Houra and Moyeath, were outlined by initial diamond drilling. Based on the original 1994 WGM feasibility study as updated in 1996, 2005 and 2009 the following tables set forth a summary of the diluted recoverable, proven and probable mineralized materials of AMAK in the Al Masane area along with the estimated average grades of these mineralized materials as adjusted to reflect production that began in July 2012:

Zone
Proven Reserves
(Mtonnes)

Copper
(%)

Zinc
(%)

Gold
(g/t)

Silver
(g/t)

Saadah 0.45
1.5
3.7
0.8
21.0
Al Houra 0.03
0.8
3.8
0.7
21.0
Moyeath —
—
—
—
—
Total 0.48
1.4
3.7
0.8
21.0

Zone
Probable Reserves
(Mtonnes)

Copper
(%)

Zinc
(%)

Gold
(g/t)

Silver
(g/t)

Saadah 5.19
1.2
3.4
0.8
23.0
Al Houra 1.90
0.9
3.8
1.2
39.0
Moyeath 0.70
0.8
7.2
1.0
55.0
Total 7.79
1.1
3.9
0.9
29.0

Total proven and probable reserves 8.27

Less production through December 31, 2018 3.37

Remaining proven and probable reserves 4.90

For purposes of calculating proven and probable mineralized materials, a dilution of 5% at zero grade on the Saadah zone and 15% at zero grade on the Al Houra and Moyeath zones was assumed. A mining recovery of 80% was used for the Saadah zone and 88% for the Al Houra and Moyeath zones. Mining dilution is the amount of wall-rock adjacent to the ore body that is included in the ore extraction process. Base case cutoffs used were 5.0% zinc equivalent. Ore reserves were estimated using metal prices of USD $0.85 per pound for zinc, $2.50 per pound for copper, $800 per ounce for gold and $12.0 per ounce for silver.

Our rights to obtain additional mining licenses to other adjoining areas were also transferred to AMAK in December 2008 as part of our initial capital contribution. AMAK received formal approval in November 2015 of an additional 151 km² ~~or 37,313 acres of territory relatively close to the current mine. The new territory comprises the Guyan and Qatan exploration licenses covering 151 km~~² ~~and within the Guyan exploration license, a 10 km~~² or 2,471 acre mining lease which has potential for significant gold recovery. Some exploration holes were drilled in both Guyan and Qatan up to 40 years ago, but no reserves were attributed to these areas. Exploration activities were restarted in both of these areas during 2016, and SRK Consulting prepared a JORC compliant report in May 2017 showing approximately 99,000 ounces at the Jebel Guyan zone excluding other nearby prospects. The diamond drilling program continues at both the Jebel Guyan and Al Aqiq zones, testing depth and extension of mineralization with confirmed mineralization intersected at an additional 50 meters depth the Guyan zone. A JORC compliant reserve update is currently being studied by Mining One (Australia).

~~Historic three-year average commodity prices are shown in the following table:~~

Average Price in USD
2014-2016
2015-2017
2016-2018
Gold per ounce $ 1,224.96
$ 1,222.06
$ 1,258.20
Silver per ounce $ 17.29
$ 16.62
$ 16.62
Copper per pound $ 2.60
$ 2.50
$ 2.93
Zinc per pound $ 0.94
$ 1.05
$ 1.32

Proven mineralized materials are those mineral deposits for which quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes, and grade is computed from results of detailed sampling. For ore deposits to be proven, the sites for inspection, sampling and measurement must be spaced so closely and the geologic character must be so well defined that the size, shape, depth and mineral content of reserves are well established. Probable mineralized materials are those for which quantity and grade are computed from information similar to that used for proven mineralized materials, but the sites for inspection, sampling

and measurement are farther apart or are otherwise less adequately spaced. However, the degree of assurance, although lower than that for proven mineralized materials, must be high enough to assume continuity between points of observation.

The metallurgical studies conducted on the ore samples taken from the zones indicated that 84.7% of the copper and 78.0% of the zinc could be recovered in copper and zinc concentrates. Overall, gold and silver recovery from the ore was estimated to be 77.3% and 81.3%, respectively, partly into copper concentrate and partly as bullion through cyanide processing of zinc concentrates and mine tailings. Further studies recommended by consultants may improve those recoveries and thus the potential profitability of the project; however, there can be no assurances of this effect.

AMAK contracted with SRK Consulting for a reserves update in 2017 and SRK reported JORC compliant reserves in August 2017. The SRK reserves estimate has since been updated by AMAK resource geologist (Qualified Person - QP as defined in JORC Code) in January 2018 and February 2019 with additional drill-hole data (85 holes and 8,970 meters in 2017 and 91 holes and 9,134 meters in 2018) and more comprehensive geological information from actual mining fronts. AMAK's JORC Compliant Reserves (January 2019) are given below:

Ore Reserves (Probable+Proven)
Zone
(Tonnes)
(Mtonnes)

Copper
(%)

Zinc
(%)

Gold
(g/t)

Silver
(g/t)

Saadah 2.8
0.98
3.39
0.74
25.43
Al Houra 2.8
0.83
3.34
0.90
26.40
Moyeath 0.80
0.77
6.53
0.61
41.61
Total 6.4
0.89
3.78
0.79
27.87

~~Ore reserves were estimated using metal prices of USD $1.11 per pound for zinc, $2.50 per pound for copper, $1,200 per ounce for gold and $15.00 per ounce for silver.~~

~~Mineable (recoverable) reserves include:~~

~~20% sidewall dilution in the stope production~~

~~0.07Mt surface stockpiles~~

~~Mineable (recoverable) reserves exclude:~~

~~Mining of any mineralization less than mineable width of 1.0m~~

~~Sill Pillar (which was previously included). Technically, it is not mineable with current underground infrastructure and backfilling practices, so this pillar (0.6Mt) excluded from Reserves~~

~~All of the Moyeath orebody since it is categorized as Inferred~~

~~Any low grade (CuEq<1.01%) material (0.4Mt) which has to mined out and stored separately~~

The updated reserves reflect a 1.5M tonnes increase to the MRE of January 2018, due to additional drilling at Moyeath and Saadah orebodies. The depth of three orebodies are not tested yet and underground drilling will continue in 2019 and coming years to extend the orebody at depth.

Access and all mine services already exist at the Moyeath orebody and AMAK recently started ore mining in the last quarter of 2018. In 2019, AMAK estimates that approximately 50,000 tonnes will be mined out from Moyeath orebody. A drilling program of 8,000 meters (8 months) has been completed at Moyeath, which upgraded 0.8M tonnes of inferred class to indicated class, which eventually mine designed and included in the life of mine schedule. AMAK believes that the Moyeath orebody is high grade for zinc and average grade as a copper. AMAK believes that Moyeath is the most attractive opportunity for an extended life and higher zinc metal recovery through the life of mine.

The metallurgical recoveries are assumed as 83% for copper and 75% for zinc after 2019. Actual metal recoveries in 2018 increased throughout the year so that these recovery assumptions are realistic and in line with actual performance of the process plant.

~~The following table sets forth tonnage mined historically with average assay values per year:~~

Year Mine Head Grade Mill Throughput
%Cu
%Zn
dmt
2011 1.26
3.02
9,460
2012 1.18
3.39
399,892
2013 1.48
3.19
699,316
2014 1.22
3.15
670,812
2015 1.11
3.69
591,419
2016 —
—
—
2017 1.10
3.22
385,495
2018 1.10
3.27
699,885

~~The following table sets forth tonnage milled with average assay values and metallurgical recoveries per year:~~

Year Copper Concentrate Zinc Concentrate
dmt
%Cu
%Zn
Recovery
dmt
%Zn
%Cu
Recovery
2011 443
16.51
7.51
61.64
377
40.69
3.56
53.64
2012 15,944
23.91
5.46
80.62
20,738
50.03
1.16
76.54
2013 35,140
25.20
4.73
85.68
33,460
49.82
0.83
74.62
2014 28,476
24.20
4.31
84.24
31,600
51.02
0.70
76.26
2015 24,218
22.70
5.13
84.12
35,447
48.46
0.62
78.63
2016 —
—
—
—
—
—
—
—
2017 15,492
19.10
6.20
72.80
16,544
47.20
1.10
63.40
2018 27,508
22.59
5.25
80.78
33,735
49.36
1.27
72.73

~~The following table sets forth tonnage sold with concentrate assay values and value received per year:~~

Year Copper Concentrate Zinc Concentrate

dmt

%Cu

Value received
(in USD millions)

dmt

%Zn

Value received
(in USD millions)

2011 —
—
—
—
—
—
2012 5,488
23.51
$ 6.9
15,193
47.53
$ 8.7
2013 35,908
23.86
$ 80.8
38,430
47.79
$ 24.2
2014 25,691
24.20
$ 42.3
29,326
50.52
$ 21.0
2015 26,378
23.50
$ 34.6
24,547
49.68
$ 16.0
2016 —
—
—
15,845
48.28
$ 9.5
2017 13,940
19.00
$ 17.3
14,080
47.80
$ 16.9
2018 26,286
22.89
$ 37.9
31,272
48.13
$ 29.1

~~United States Mineral Interest~~

~~Our only mineral interest in the United States is its ownership interest in PEVM.~~ ~~See Item 1 – Business – United States Mineral Interests.~~high-pressure hydrogenation capabilities.

Offices

Outside of the facilities that we own, ~~SHR~~the Company has a leased corporate ~~and sales~~ office in Sugar Land, Texas.

~~Item~~ITEM 3. Legal Proceedings.

The Company is periodically named in legal actions arising from normal business activities. We evaluate the merits of these actions and, if we determine that an unfavorable outcome is probable and can be reasonably estimated, we will establish the necessary reserves. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect

on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.

~~Item~~ITEM 4. Mine Safety Disclosures.

Not applicable.

Table of Contents

PART II

~~Item~~ITEM 5. Market for ~~Registrant's~~Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

Our common stock traded on the New York Stock Exchange ~~("NYSE"~~(“NYSE”) under the symbol ~~"TREC"~~“TREC".

~~At March 4, 2019,~~As of February 25, 2022, there were approximately ~~535~~410 recorded holders (including brokers' accounts) of the ~~Company's~~Company’s common stock. We have not paid any dividends since our inception and have instead deployed earnings to fund the development of our business. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital expenditure requirements, restrictions contained in current and future financing instruments, and other factors that our board of directors deems relevant. In addition, our ability to pay dividends depends in part on our receipt of cash dividends and distributions from our subsidiaries. The terms of certain of our current debt instruments restrict the ability of our subsidiaries to pay dividends, as may the terms of any of our future debt or preferred securities.

Total Stockholder Return

The following graph compares the cumulative total stockholder return on our common stock against the NYSE Composite Index and the S&P Specialty Chemical Index, for the five years ending December 31, ~~2018.~~2021. The graph was constructed on the assumption that $100 was invested in our common stock and each comparative on December 31, ~~2013,~~2016, and that any dividends were fully reinvested.

Table of Contents

~~Item 6. Selected Financial Data.~~Issuer Purchases of Equity Securities

~~The following is a five-year summary~~Please see the below table for information regarding repurchases of ~~selected financial data for years~~the Company’s common stock made by the Company during the three months ended December 31, ~~(in thousands, except per share amounts) and should be read in conjunction with the information set forth in Part II, Item~~2021.


Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid Per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs(2)	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(2)
October 1, 2021 - October 31, 2021	—	$	—	—	$	—
November 1, 2021 - November 30, 2021	791,900	$	8.16	791,900	$	8,761,104
December 1, 2021 - December 31, 2021	7,500(1)	8.41(1)		—	$	—
Total	799,400	$	8.16	791,900	$	8,761,104

(1) Represents shares of our common stock withheld for satisfaction of tax liabilities of a holder of restricted shares. The value of such shares was calculated based on the closing price of our common stock on the New York Stock Exchange (“NYSE”) on the date when the withholding was made.

(2) Represents shares of our common stock purchased on the open market pursuant to the Company’s previously announced repurchase program for up to $20 million of the Company's common stock, which will expire in March 2023 (the “Share Repurchase Program”). The value of such shares was calculated based on the average purchase price of our common stock on the NYSE at the time the purchase was made. Repurchases under the Share Repurchase Program may be made at management's discretion from time to time on the open market, through privately negotiated transactions or through broker-negotiated purchases, in compliance with applicable securities law, including through a 10b5-1 Plan. The Company is not obligated to acquire any specific number of shares of our common stock under the Share Repurchase Program, which may be suspended for periods or discontinued at any time. The timing and the amount of any shares to be repurchased will be determined by management based on an evaluation of market conditions and other factors, including the Company’s stock price.

ITEM 6. [Reserved].

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations and Part II, Item 8. Financial Statements and Supplementary Data:~~

2018
2017
2016
2015
2014
Revenues $ 287,932
$ 245,143
$ 212,399
$ 241,976
$ 289,643
Net (Loss) Income (2,332 ) 18,009
19,428
18,598
15,571
Net (Loss) Income Per Share-Basic (0.10 ) 0.74
0.80
0.76
0.64
Net (Loss) Income Per Share-Diluted (0.10 ) 0.72
0.78
0.74
0.63
EBITDA (1) 15,319
24,742
41,694
39,639
29,814
Adjusted EBITDA (1) 20,619
31,710
31,008
47,317
33,027
Total Assets 329,968
327,326
290,484
257,791
230,782
Current Portion of Long-Term Debt 4,194
8,061
10,145
8,061
6,728
Total Long-Term Debt Obligations 98,288
91,021
73,107
73,169
72,430


~~(1)~~	Non-GAAP financial measure. See the information under the heading "Non-GAAP Financial Measures" below for additional information about this measures and a reconciliation to the most directly comparable financial measure under United States generally accepted accounting principles (“GAAP”).

~~Non-GAAP Financial Measures~~

We include in this Annual Report the non-GAAP financial measures of EBITDA, Adjusted EBITDA, and Adjusted Net Income (Loss) and provide reconciliations from our most directly comparable GAAP financial measure to those measures.

We believe these financial measures provide users of our financial statements with supplemental information that may be useful in evaluating our operating performance. We also believe that such non–GAAP measures, when read in conjunction with our operating results presented under GAAP, can be used to better assess our performance from period to period and relative to performance of other companies in our industry, without regard to financing methods, historical cost basis or capital structure. These measures are not measures of financial performance or liquidity under GAAP and should be considered in addition to, and not as a substitute for, analysis of our results under GAAP.

EBITDA and Adjusted EBITDA: We define EBITDA as net income (loss) plus interest expense (benefit) including derivative gains and losses, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA plus share–based compensation, plus restructuring and severance expenses, plus losses on extinguishment of debt, plus or minus equity in AMAK's earnings and losses or gains from equity issuances, and plus or minus gains or losses on acquisitions.

Adjusted Net Income (Loss): We define Adjusted Net Income (Loss) as net income (loss) plus or minus tax effected equity in AMAK's earnings and losses, minus tax effected restructuring and severance expenses, and adjustments for tax law changes in 2017.

The following table presents a reconciliation of net income (loss), our most directly comparable GAAP financial performance measure for each of the periods presented, to EBITDA, Adjusted EBITDA, and Adjusted Net Income.

2018
2017
2016
2015
2014
Net (Loss) Income $ (2,332 ) $ 18,009
$ 19,428
$ 18,598
$ 15,571

Interest expense 4,100
2,934
1,981
2,232
1,042
Derivative (gains) losses on interest rate swap —
(3 ) 4
(15 ) 378
Depreciation and amortization 14,358
10,961
9,777
9,060
5,676
Income tax (benefit) expense (807 ) (7,159 ) 10,504
9,764
7,147
EBITDA 15,319

24,742

41,694

39,639

29,814

Share-based compensation* 1,422
2,707
2,552
2,353
2,141
Bargain purchase gain on B Plant —
—
(11,549 ) —
—
Equity in losses of AMAK 901
4,261
1,479
5,325
1,072
Loss on extinguishment of debt 315
—
—
—
—
Restructuring and severance expenses 2,347
—
—
—
—
Gain from additional equity issuance by AMAK —
—
(3,168 ) —
—
Adjusted EBITDA $ 20,304

$ 31,710

$ 31,008

$ 47,317

$ 33,027

Net Income $ (2,332 ) $ 18,009
$ 19,428
$ 18,598
$ 15,571

Bargain purchase gain on B Plant —
—
(11,549 ) —
—
Equity in (earnings) losses of AMAK 901
4,261
1,479
5,325
1,072
Restructuring and severance expenses 2,347
—
—
—
—
Gain from additional equity issuance by AMAK —
—
(3,168 ) —
—
Total of adjustments 3,248
4,261
(13,238 ) 5,325
1,072
Taxes at statutory rate** (682 ) (895 ) 4,633
(1,864 ) (375 )
Tax effected adjustments 2,566

3,366

(8,605 )
3,461

697
Tax benefit of rate change from Tax Cuts and Jobs Act —
(10,307 ) —
—
—
Adjusted Net Income $ 234
$ 11,068
$ 10,823
$ 22,059
$ 16,268

* Reduced to reflect amount included in Restructuring and Severance Expenses.

** The Company used a statutory rate of 35% for 2014 through 2016. For 2017 and 2018 the Company estimated current taxable income to be zero and calculated deferred taxes using a statutory rate of 21% based on the enacted tax rate on December 22, 2017 (Note 2 and 16).

~~Item 7. Management's Discussion and Analysis of Financial Condition and Results of~~ Operations.

~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with Item 8. Financial Statements and Supplementary Data.

Forward Looking Statements

Some of the statements and information contained in this Annual Report on Form 10-K may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements regarding the ~~Company's~~Company’s financial position, business strategy and plans and objectives of the ~~Company's~~Company’s management for future operations and other statements that are not historical facts, are forward-looking statements. Forward-looking statements are often characterized by the use of words such as ~~"outlook," "may," "will," "should," "could," "expects," "plans," "anticipates," "contemplates," "proposes," "believes," "estimates," "predicts," "projects," "potential," "continue," "intend,"~~“outlook,” “may,” “will,” “can,” “shall,” “should,” “could,” “expects,” “plans,” “anticipates,” “contemplates,” “proposes,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “continue,” “intend,” or the negative of such terms and other comparable terminology, or by discussions of strategy, plans or intentions.

Forward-looking statements ~~are subject to~~involve known and unknown risks, uncertainties, assumptions, and other important factors that could cause the actual results, performance or our achievements, or industry results, to differ materially from ~~those~~historical results, any future results, or performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and factors include, but are not limited ~~to:~~to the impacts of the COVID-19 pandemic on our business, financial results and financial condition and that of our customers, suppliers, and other counterparties; general economic and financial conditions domestically and ~~internationally;~~internationally including the impact of rising inflation; insufficient cash flows from operating activities; ~~difficulties in obtaining financing;~~our ability to attract and retain key employees; feedstock and product prices; feedstock availability and our ability to access third party transportation; competition; industry cycles; natural disasters or other severe weather events, health epidemics and pandemics (including the COVID-19 pandemic) and terrorist attacks; our ability to consummate extraordinary transactions, including acquisitions, dispositions and other business combinations, and realize the financial and strategic goals of such transactions; technological developments and our ability to maintain, expand and upgrade our facilities; regulatory changes; environmental matters; lawsuits; outstanding debt and other financial and legal obligations; ~~lawsuits; competition; industry cycles; feedstock, product~~difficulties in obtaining additional financing on favorable conditions, or at all; local business risks in foreign countries, including civil unrest and ~~mineral prices; feedstock availability; technological developments;~~military or political conflict, local regulatory ~~changes; environmental matters; foreign government instability; foreign~~and legal environments and ~~political concepts;~~ foreign currency fluctuations; and other risks detailed in ~~this report under the headings~~ Part I, Item 1A. Risk Factors and this Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of

Table of Contents

Operations in this Annual Report on Form 10-K, and in our other filings with the SEC. Many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the COVID-19 pandemic and other natural disasters such as severe weather events.

There may be other factors of which we are currently unaware or deem immaterial that may cause our actual results to differ materially from the forward-looking statements. In addition, to the extent any inconsistency or conflict exists between the information included in this report and the information included in our prior releases, reports and other filings with the SEC, the information contained in this report updates and supersedes such information.

Forward-looking statements are based on current plans, estimates, assumptions and projections, and, therefore, you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events.

Overview

The following discussion and analysis of our financial results, as well as the accompanying ~~consolidated financial statements~~Consolidated Financial Statements and related notes to ~~consolidated financial statements~~Consolidated Financial Statements to which they refer, are the responsibility of ~~the management of the Company.~~our management. Our accounting and financial reporting fairly reflect our business model ~~involving~~which is based on the manufacturing and marketing of specialty ~~petrochemical~~petrochemicals products and ~~specialty waxes. Our business model involves the manufacture and sale of tangible products~~waxes and providing custom ~~processing~~manufacturing services.

Our ~~consistent~~preferred supplier position into the specialty petrochemicals market is derived from the combination of our reputation as a reliable supplier established over many years, the very high purity of our products, and a focused approach to ~~providing high purity products and quality services~~customer service. In specialty waxes, we are able to deliver to our customers ~~has helped~~a product performance and price point that we believe is unique to ~~sustain~~ our ~~current position as~~market; while the diversity of our custom processing assets and capabilities offers solutions to our customers that we believe are uncommon along the U.S. Gulf Coast. The specialty waxes business also delivers environmental circularity by using proprietary technology to convert waste products generated by suppliers' polyethylene production to high value solutions for our customers.

Enabling our success in these businesses is a ~~preferred supplier~~commitment to operational excellence which establishes a culture that prioritizes the safety of ~~various specialty petrochemical products.~~our employees and communities in which we operate, the integrity of our assets and regulatory compliance. This commitment drives a change to an emphasis on forward-looking, leading-indicators of our results and proactive steps to continuously improve our performance. We bring the same commitment to excellence to our commercial activities where we focus on the value proposition to our customers while understanding opportunities to maximize our value capture through service and product differentiation, supply chain and operating cost efficiencies and diversified supply options. We believe our focus on execution, meeting the needs of our customers, and growing our business while maintaining prudent control of our costs, will significantly contribute to enhanced stockholder value.

Business Environment and Risk Assessment

We continue to monitor the progression of COVID-19 and the recommended measures to curb the spread of the virus. Our guiding principle is, and has always been, the protection of our people and the communities in which we work, as well as maintaining the overall integrity of our assets. While the majority of our workforce has transitioned to a flexible work environment, we are continuing to follow the orders and guidance of federal, state, and local governmental agencies, as we maintain our own stringent protocols in an effort to mitigate the spread of the virus and protect the health of our employees, customers, and suppliers as well as the communities in which we work. Since the start of 2021, we have encouraged our workforce to receive vaccinations against COVID-19. However, new variants, particularly the Omicron and Delta variants, have engendered a resurgence of the virus in many regions. In the midst of changing conditions, we have nevertheless been able to continue to manage our business with minimal impact as we have throughout the COVID-19 pandemic.

Throughout 2021, we have seen a continued resurgence of demand due to the ongoing recovery of our business and the economy as a whole from the COVID-19 pandemic, which we expect to continue into 2022. However, numerous uncertainties remain regarding the potential future impact of the COVID-19 pandemic (including how the impact of the pandemic on our business and results of operations may change from quarter to quarter), including uncertainties related to the severity of the disease and the emergence of new variants, the continued duration of the pandemic, additional actions that may be taken by governmental authorities and other unintended consequences.

Our management will continue to actively monitor the impact of COVID-19 on our business, results of operations, financial condition, liquidity, suppliers, industry, investments, and workforce. We do not currently anticipate any material impairments, with respect to intangible assets, long–lived assets, or right of use assets, increases in allowances for credit losses from our customers, restructuring charges, other expenses, or changes in accounting judgments to have a material impact on our Consolidated Financial Statements.

Table of Contents

To date, our plants have continued to operate as normal, and the majority of our supply chain has remained intact, with adequate availability of raw materials. Although there have been some disruptions in global logistics channels, we have not experienced significant delays in fulfillment of customer orders. Inflation has negatively impacted our input costs, including those associated with logistics, over the course of 2021 and we are attempting to recover as much of these costs from customers as possible.

In February 2021, there was a prolonged period of sub-freezing temperatures and snow across the State of Texas and the region. This Texas freeze event resulted in significant negative impacts not only to our business but also to our customers along the Gulf Coast. As previously disclosed, we had an estimated negative impact to Adjusted EBITDA of approximately $3.5 million.

We believe we are well-positioned to participate in the USU.S. chemical industry growth driven by new investments and overall economic growth. While petrochemical prices are volatile on a short-term basis and depend on the demand of our customers' products, our investment decisions are based on our long-term business outlook using a disciplined approach in selecting and pursuing the most attractive investment opportunities.

Specialty ~~Petrochemical Operations~~Petrochemicals Segment

~~SHR's worldwide~~SHR’s specialty ~~petrochemical demand~~petrochemicals revenues and volumes increased ~~during 2018~~in 2021 compared to ~~2017.~~2020 due to the continued economic recovery following the pandemic downturn. Product sales revenue increased ~~19.3%~~36.7% driven ~~primarily~~ by ~~volume growth of 7.6%. Overall product~~significant price increases in our feedstock. Product prices ~~also increased~~were higher in 2021 compared to ~~2017 primarily due to~~2020 as we passed along price increases resulting from higher feedstock ~~costs in 2018 compared to 2017. We~~costs. During 2021, SHR continued to emphasize our competitive advantages achieved through our high quality products and outstanding customer service and responsiveness. We ~~are~~ also ~~focused on~~continued to make strides in improving ~~operations~~safety and plant reliability.

During ~~2018~~2021, natural gasoline feedstock ~~prices~~costs were ~~about 24%, or $0.28 per gallon,~~approximately 82% higher than ~~2017~~2020, reflecting higher crude oil prices. ~~After steadily increasing for most of 2018 feedstock prices declined sharply in the fourth quarter of 2018. About 60%~~Approximately 68% of our prime products are sold under formula pricing whereby feedstock ~~costs are~~price is passed along to the customer typically with a one month lag. ~~Thus, when~~Rising feedstock ~~prices start rising,~~costs throughout 2021 continued to cause a narrowing of margins in 2021, similar to what we ~~experience lower~~saw in the second half of 2020. Our by-product margins ~~as formula pricing lags feedstock costs. During most of 2018 prime products margins were pressured~~improved compared to 2020 due to ~~rising feedstock costs~~higher by-product component prices.

Specialty Waxes Segment

Sales revenues for our specialty waxes business was relatively flat in 2021 as compared to 2020 as we had slightly lower wax product revenues and higher custom processing revenues. Wax sales volumes were depressed due to extended disruptions to feed supply and production limitations at our Pasadena facility in the first quarter of 2021 resulting from the Texas freeze event. Our wax feed is based on certain by-products produced as a result of ~~greater competitive pricing pressure~~polyethylene production at major polyethylene producers' facilities on ~~prime~~the US Gulf Coast. Our wax feed supply was negatively impacted by producers' plant shut downs during the Texas freeze event.

Our Specialty Waxes products ~~sales~~are used in a variety of applications including: performance additives for hot melt adhesives; penetration and melting point modifiers for paraffin and microcrystalline waxes; lubrication and processing aides for plastics, PVC, rubber, and dry stir-in additives for inks. In oxidized forms, applications also include use in textile emulsions.

Non-GAAP Financial Measures

We include in this Annual Report on Form 10-K the non-GAAP financial measures of EBITDA from continuing operations and Adjusted EBITDA from continuing operations and provide reconciliations from our most directly comparable GAAP financial measure to those measures.

We believe these financial measures provide users of our financial statements with supplemental information that may be useful in evaluating our operating performance. We also believe that such non-GAAP measures, when read in conjunction with our operating results presented under GAAP, can be used to better assess our performance from period to period and relative to performance of other companies in our industry, without regard to financing methods, historical cost basis or capital structure. These measures are ~~based~~not measures of financial performance or liquidity under GAAP and should be considered in addition to, and not as a substitute for, analysis of our results under GAAP.

We define EBITDA from continuing operations as net income (loss) from continuing operations plus interest expense, income tax expense (benefit), and depreciation and amortization. In the third quarter of 2021, we redefined our non-GAAP measure Adjusted EBITDA to also exclude costs for professional services associated with M&A and strategic initiatives. We define Adjusted EBITDA from continuing operations as EBITDA from continuing operations net of the impact of items we do not consider indicative of our ongoing operating performance, including share-based compensation, gains or losses on ~~non-formula pricing. Our byproduct margins were under pressure~~disposal of assets, gains or losses on extinguishment of debt and costs for professional services associated with M&A and strategic initiatives. The historical presentation of Adjusted EBITDA in ~~the fourth quarter due~~this Annual Report on Form 10-K has been recast to conform to the ~~Advanced Reformer outage as we sold byproducts at prices below the cost~~revised definition.

Table of ~~feedstock.~~Contents

~~Specialty Wax Operations~~

~~Most wax markets are mature. Key applications~~The following table presents a reconciliation of net income (loss), our most directly comparable GAAP financial performance measure for our polyethylene waxes are in hot melt adhesives ("HMA"), plastic processing, PVC lubricants and inks, paints and coatings, where they act as surface or rheology modifiers. The HMA market is expected to grow at a higher rate than GDP growth due to growth in the developing markets and increases in packaging requirements due to changes in consumer purchasing (shift to home deliveries via the internet) in developed economies. Road marking paints are also expected to grow at rates exceeding GDP growth based upon an expectation that there will be infrastructure investment in the U.S. The PVC market is expected to grow at GDP rates; however, we expect to get more traction of our products within this market with acceptance of our new PVC grade waxes. The global wax market is benefiting from the reduction of paraffin wax availability from large refiners as they move toward more hydrocracking and hydroisomerization to produce group III lube oils and distillate. Our wax sales volume increased approximately 5% in 2018 from 2017 while revenues increased approximately 13%.

~~Restructuring and Severance Impact~~

During 2018, the Company incurred restructuring and severance expenses of $2.3 million which are included in General and Administrative Expenses. These expenses are primarily attributable to the termination of certain executives during 2018 as parteach of the ~~restructuring of executive management~~periods presented, to EBITDA from continuing operations and to the reduction in the workforce at our Silsbee, Texas facility in December 2018. These expenses relate to severance, stock compensation for continued vesting of time-vested shares issued under the Company's long-term incentive plan, and certain employee benefits including medical insurance and vacation. As of December 31, 2018, approximately $1.1 million had been incurred, and an additional liability of $1.2 million was accrued related to future benefits.Adjusted EBITDA from continuing operations.

~~Hurricane Harvey Impact~~


	2021		2020		2019		2018		2017
Net income (loss)	$	4,963	$	31,175	$	(14,974)	$	(2,332)	$	18,009
Income (loss) from discontinued operations, net of tax	—		26,209		(2,090)		(604)		(3,503)
Income (loss) from continuing operations	4,963		4,966		(12,884)		(1,728)		21,512

Interest expense	1,205		2,491		5,139		4,100		2,931
Derivative (gains) losses on interest rate swap	—		—		—		—		(3)
Depreciation and amortization	17,297		16,148		16,201		14,358		10,961
Income tax (benefit) expense*	(2,364)		(3,963)		(3,566)		(646)		(6,228)
EBITDA from continuing operations	21,101		19,642		4,890		16,084		29,173

Share-based compensation**	2,247		1,912		1,319		1,422		2,707
(Gain) loss on disposal of assets	(279)		39		680		—		—
Impairment of goodwill and certain intangibles	—		—		24,152		—		—
(Gain) loss on extinguishment of debt	(6,123)		—		—		315		—
Restructuring and severance expenses	—		—		—		2,347		—
Professional services associated with M&A and strategic initiatives	4,655		558		—		—		—
Adjusted EBITDA from continuing operations	$	21,601	$	22,151	$	31,041	$	20,168	$	31,880
* The Company estimated current taxable income to be zero and calculated deferred taxes using a statutory rate of 21% based on the enacted tax rate. (See Note 16 to the Consolidated Financial Statements.)
** Reduced to reflect amount included in Restructuring and severance expenses.

The financial impact of Hurricane Harvey to our company was significant. Harvey made landfall on the Texas Gulf Coast on August 25, 2017, and affected operations at both SHR and TC. We estimated the total negative impact to 2017 EBITDA ranged from approximately $1.5 million to $1.8 million. This included expenses related to generator rentals, overtime labor, and maintenance and repairs of approximately $0.7 million. This estimate also included lost sales due to outages at customer and supplier facilities. Neither of our facilities suffered any significant damage.

Liquidity and Capital Resources

Working Capital

Our approximate working capital days are summarized as follows:


	December 31, 2018	December 31, 2017	December 31, 2016		December 31, 2021	December 31, 2020	December 31, 2019
Days sales outstanding in accounts receivable	34.4	38.4	38.2	Days sales outstanding in accounts receivable	40.5	40.0	37.1
Days sales outstanding in inventory	21.0	27.5	30.2	Days sales outstanding in inventory	26.1	20.5	19.2
Days sales outstanding in accounts payable	24.2	27.3	22.9	Days sales outstanding in accounts payable	14.9	22.9	20.6
Days of working capital	31.1	38.5	45.5	Days of working capital	51.6	37.7	35.7

Table of ~~the Advanced Reformer unit. See discussion under "Capital Resources and Requirements" below for more detail.~~Contents

~~2016-2017~~

~~Capital expenditures increased 63.7% from 2016 to 2017. See discussion under "Capital Resources and Requirements" below for more detail.~~

Specialty ~~Wax~~Waxes Segment

2018
2017
Change
%Change
(thousands of dollars)
Product Sales $ 27,017
$ 23,819
$ 3,198
13.4 %
Processing Fees 11,236
10,943
293
2.7 %
Gross Revenue $ 38,253

$ 34,762

$ 3,491
10.0 %

Volume of wax sales (thousand pounds) 37,264
35,393
1,871
5.3 %

Cost of Sales 36,318
34,369
1,949
5.7 %
Gross Margin 5.1 % 1.1 % 4.0 % 363.6 %
General & Administrative Expense 5,053
4,931
122
2.5 %
Depreciation and Amortization* 5,376
4,589
787
17.1 %
Capital Expenditures $ 2,854
$ 14,015
$ (11,161 ) (79.6 )%

*Includes $5,285 and $4,503 for 2017 and 2016, respectively, which is included in cost of sales

2017
2016
Change
%Change
(thousands of dollars)
Product Sales $ 23,819
$ 20,319
$ 3,500
17.2 %
Processing Fees 10,943
10,052
891
8.9 %
Gross Revenue $ 34,762

$ 30,371

$ 4,391
14.5 %

Volume of wax sales (thousand pounds) 35,393
33,891
1,502
4.4 %

Cost of Sales 34,369
26,338
8,031
30.5 %
Gross Margin 1.1 % 13.3 % (12.2 )% (91.5 )%
General & Administrative Expense 4,931
4,818
113
2.3 %
Depreciation and Amortization* 4,589
3,908
681
17.4 %
Capital Expenditures $ 14,015
$ 17,547
$ (3,532 ) (20.1 )%

*Includes $4,503 and $3,828 for 2017 and 2016, respectively, which is included in cost of sales


	2021			2020			Change			% Change
	(thousands of dollars)
Product Sales	$	29,246		$	25,321		$	3,925		15.5	%
Processing	9,353			10,955			(1,602)			(14.6)	%
Gross Revenue	$	38,599		$	36,276		$	2,323		6.4	%

Volume of specialty waxes sales (pounds)	35,838			36,387			(549)			(1.5)	%

Cost of Sales	$	36,843		$	34,782		$	2,061		5.9	%
Gross Margin (Loss)	4.5		%	4.1		%	0.4		%
General & Administrative Expense	4,653			5,160			(507)			(9.8)	%
Depreciation and Amortization*	6,108			5,522			586			10.6	%
Adjusted EBITDA	3,119			1,961			1,158			59.1	%
Capital Expenditures	2,519			1,995			524			26.3	%
*Includes $6,017 and $5,428 for 2021 and 2020, respectively, which is included in cost of sales

Product Sales

~~2017-2018~~

Product sales revenue increased ~~13.4% and~~15.5% while product sales volume ~~increased 5.3%~~decreased 1.5% from ~~2017~~2020 to ~~2018~~2021. The increase in revenues was primarily ~~due~~driven by higher selling prices as compared to ~~higher on-purpose PE wax sales which benefited from continued growth in growth in our high value waxes.~~2020. Polyethylene wax sales saw volume ~~increases of 3.5%~~remain flat and revenue from polyethylene wax increased approximately ~~15.4% both~~16.2% as a result of ~~greater~~higher sales ~~volume and a higher value sales mix.~~prices. Average wax sales price ~~was~~increased approximately ~~9% higher~~17.5% in ~~2018~~2021 compared to ~~2017.~~

~~2016-2017~~

Product sales revenue increased 17.2% and product sales volume increased 4.4% from 2016 to 2017 primarily due to on-purpose PE wax sales which we were distributing in Latin America for a third party as well as, significant growth in our high value waxes. Polyethylene wax sales saw volume increases of 1.3% and revenue increases of 12.8%. 2020.

Processing Fees

~~2017-2018~~

Processing fees ~~increased 2.7%~~decreased 14.6% from ~~2017~~2020 to ~~2018 primarily due to greater revenues from hydrogenation/distillation unit. Growth~~2021. Processing fees were negatively impacted by the Texas freeze event in February 2021 and reduced customer demand for custom processing ~~revenue in 2018 continued to be hampered~~services driven by ~~operational and reliability issues especially related to~~ the ~~hydrogenation/distillation unit which started up in the second half of 2017.~~COVID-19 pandemic.

~~2016-2017~~

Processing fees increased 8.9% from 2016 to 2017 primarily due to the addition of new customers and an increase in existing customer volumes. Growth was limited by significant operational issues in existing equipment and in the new hydrogenation/distillation unit.

Capital Resources and Requirements

Capital expenditures increased $0.8 million, or 6%, from 2020 to 2021. During 2021 we expended approximately $3.8 million on upgrades to the pipeline for GSPL, approximately $1.5 million to replace and upgrade tanks and towers, and $1.1 million on a new consolidated truck entrance resulting in improved security and plant access.

At December 31, 2021, we had $30.5 million in cash and cash equivalents and borrowing availability of approximately $75.0 million on our Revolving Facility. We believe the Company is able to support its operating requirements and capital expenditures through internally generated funds supplemented with cash on our balance sheet and availability under our ARC

Table of Contents

Agreement in both the short-term (i.e., the next 12 months) and the long-term (i.e. beyond the next 12 months). See Note 13 to the Consolidated Financial Statements for additional discussion regarding credit availability.

Our material cash requirements include the following contractual and other obligations.

Debt. Long-term debt obligations approximate $42.2 million as discussed in Note 13 of the Notes to Consolidated Financial Statements.

Leases. The majority of our approximately $8.7 million of operating lease obligations are for railcars as discussed in Note 9 of the Notes to Consolidated Financial Statements.

Other Purchase Obligations. Purchase obligations of approximately $19.7 million are primarily related to commitments for our undelivered feedstock and capital construction projects as discussed in Note 14 of the Notes to Consolidated Financial Statements.

Results of Operations

Our A nnual Report on Form 10-K for the year ended December 31, 2020 includes a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2020 compared to the year ended December 31, 2019 in Item 7 of Part II, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Comparison of Years 2021 and 2020

The tables containing financial and operating information set forth below are presented to facilitate the discussion of the results of operations, and should not be considered a substitute for, and should be read in conjunction with, the Consolidated Financial Statements.

Specialty Petrochemicals Segment


	2021			2020			Change			% Change
	(thousands of dollars)
Specialty Petrochemicals Product Sales	$	228,293		$	167,054		$	61,239		36.7	%
Processing	5,798			5,296			502			9.5	%
Gross Revenue	$	234,091		$	172,350		$	61,741		35.8	%

Volume of Sales (gallons)
Specialty Petrochemicals Products	78,236			75,101			3,135			4.2	%
Prime Products	65,044			61,650			3,394			5.5	%
By-products	13,192			13,451			(259)			(1.9)	%

Cost of Sales	$	207,271		$	145,166		$	62,105		42.8	%
Gross Margin	11.5		%	15.8		%	(4.3)		%
Total Operating Expense*	77,186			70,224			6,962			9.9	%
Natural Gas Expense*	7,189			3,737			3,452			92.4	%
Operating Labor Costs*	12,605			16,138			(3,533)			(21.9)	%
Transportation Costs*	22,550			22,181			369			1.7	%
General & Administrative Expense	11,809			10,618			1,191			11.2	%
Depreciation**	11,183			10,611			572			5.4	%
Adjusted EBITDA	25,895			26,398			(503)			(1.9)	%
Capital Expenditures	11,633			11,334			299			2.6	%
*Included in cost of sales
**Includes $10,398 and $9,872 for 2021 and 2020 which is included in cost of sales and operating expenses

Gross Revenue

Gross revenue for the Specialty Petrochemicals segment increased from 2020 to 2021 by approximately 35.8% due to an increase in specialty petrochemicals sales volume and an increase in average selling prices. Increase in selling price was primarily attributable to higher feedstock costs in 2021, which impacts pricing for our formula customers.

Table of Contents

Specialty Petrochemicals Product Sales

Specialty petrochemicals product sales revenue increased 36.7% from 2020 to 2021 due to an increase in total sales volume of 4.2% and an increase in average selling price of 31.2%. Much of the increase in sales volume was due to higher demand as the industry continued to recover from the COVID-19 pandemic, primarily driven by higher sales to polyethylene end-use markets. Sales to other end-use markets were also generally stronger compared to 2020, with the exception of oil sands, which has continued to decline. By-product sales volumes declined 1.9% as compared to 2020 as we operated our Advanced Reformer at lower rates to build prime product inventory in preparation for turnaround work early in 2022. By-products are produced as a result of prime product production and their margins are significantly lower than margins for our prime products.

Our average selling price increased primarily because of higher feedstock costs. A large portion of our prime products sales are contracted with pricing formulas which are tied to prior month natural gasoline prices which is our primary feedstock. Average delivered feedstock price for 2021 was approximately 83% higher than 2020 as natural gasoline prices rose with crude oil prices throughout 2021. Additionally, prices for by-products in 2021 were higher than in 2020 due to higher prices for the components in our by-products stream. This also contributed to higher overall selling price.

Foreign sales volume accounted for approximately 18.5% of specialty petrochemicals sales volume and approximately 19.9% of revenue for specialty petrochemicals product sales during 2021 as compared to approximately 23.6% of volume and approximately 25.4% of revenue for specialty petrochemicals product sales during 2020. Excluding oil sands, foreign sales volumes in 2021 were 0.6 million gallons, an increase of approximately 5%, as compared to 2020, primarily due to recovery of customer demand resulting from global economic recovery from the COVID-19 pandemic.

Processing Fees

Processing fees increased approximately 9.5% from 2020 to 2021 primarily due to renegotiated contracts which raised revenues.

Cost of Sales

~~2017-2018~~(includes but is not limited to raw materials, total operating expense, natural gas, operating labor and transportation)

Cost of Sales increased ~~5.7%~~42.8% from ~~2017~~2020 to ~~2018~~2021 due to ~~increases~~higher raw material costs, higher operating expense and the increase in ~~labor, maintenance, utilities and depreciation which were partially offset by lower wax material costs. Labor~~sales volume. Our average delivered feedstock cost per gallon increased approximately ~~due~~83% from 2020 to ~~increased overtime~~2021 mostly tracking the increase in crude oil price. The price of natural gasoline is highly correlated with the price of crude oil. Natural gasoline is the heavier liquid component remaining after ethane, propane and the addition of personnel to support the new hydrogenation/distillation unit which came on line in 2017 as well as to support other custom processing projects. Maintenance costs increased primarily as a result of the start-up of hydrogenation/distillation and the related operating issues in 2018. Utility costs increased mainly due to greater consumption.

~~2016-2017~~

~~Cost of Sales increased 30.5%~~mixed butanes are removed from ~~2016 to 2017 due to increases in material cost, labor, freight, equipment maintenance, and~~liquids produced by natural gas ~~utilities. Material cost~~wells. The material is a commodity product in the oil/petrochemical markets and generally is readily available.

Total Operating Expense(includes but is not limited to natural gas, operating labor, depreciation, and transportation)

Total Operating Expense increased 9.9% from 2020 to 2021 or approximately $7.0 million. The key driver for the increase was higher natural gas costs.

Natural gas expense increased approximately 92% from 2020 to 2021 primarily due to ~~material~~a increase in the average per unit cost. Consumption was slightly higher than in 2020 primarily due to higher sales volume. The average price per MMBTU for 2021 was higher by approximately 107% from 2020 while volume remained relatively flat.

Gross Margin

Gross margin decreased from 15.8% of gross revenue in 2020 to 11.5% of gross revenue in 2021. The decrease in gross margin was driven by a decrease in margins for prime products offset by an increase in margins for by-products. Prime product margins were reduced due to higher feedstock and operating costs ~~associated with the on-purpose PE wax sales we distributed into Latin America~~primarily for ~~a third party. Labor~~freight and utilities, while by-product margins increased due to increased overtime and the addition of personnel to operate the new hydrogenation/distillation unit when it came online in 2017. Freight increased due to the increase in shipments and a change in our shipping terms. We now ship most products with destination terms. Equipment maintenance increased primarily due to the addition of B Plant and the introduction of new custom processing projects. Natural gas utilities increased due to an increase in the per unit cost and in volume consumed because of B Plant and the new hydrogenation/distillation unit.higher component prices.

General and Administrative Expense

~~2017-2018~~

General and Administrative costs increased ~~2.5%~~11.2% from ~~2017~~2020 to ~~2018.~~

~~2016-2017~~

~~General and Administrative costs increased 2.3% from 2016 to 2017~~2021 primarily due to ~~an increase in sales personnel, property taxes, and property~~higher insurance ~~due to the addition of B Plant.~~

~~Depreciation and Amortization~~

~~2017-2018~~

~~Depreciation and amortization increased 17.1% from 2017 to 2018 primarily due to start up of the hydrogenation/distillation project in the second half of 2017.~~

~~2016-2017~~

~~Depreciation and amortization increased 17.4% from 2016 to 2017 primarily due to the addition of B Plant and the hydrogenation/distillation project coming online in 2017.~~costs.

Capital Expenditures

~~2017-2018~~

Capital expenditures in 2021 decreased 2.6% or approximately $0.3 million from ~~approximately $14.0 million to $2.9 million or 79.6% from 2017 to 2018 primarily due to the completion and~~2020.

Table of ~~the hydrogenation/distillation project in 2017.~~Contents

~~2016-2017~~

~~Capital expenditures decreased 20.1% from 2016 to 2017 primarily due to the completion of the hydrogenation/distillation project in 2017.~~

~~Corporate~~Specialty Waxes Segment


	2021			2020			Change			% Change
	(thousands of dollars)
Product Sales	$	29,246		$	25,321		$	3,925		15.5	%
Processing	9,353			10,955			(1,602)			(14.6)	%
Gross Revenue	$	38,599		$	36,276		$	2,323		6.4	%

Volume of specialty waxes sales (pounds)	35,838			36,387			(549)			(1.5)	%

Cost of Sales	$	36,843		$	34,782		$	2,061		5.9	%
Gross Margin (Loss)	4.5		%	4.1		%	0.4		%
General & Administrative Expense	4,653			5,160			(507)			(9.8)	%
Depreciation and Amortization*	6,108			5,522			586			10.6	%
Adjusted EBITDA	3,119			1,961			1,158			59.1	%
Capital Expenditures	2,519			1,995			524			26.3	%
*Includes $6,017 and $5,428 for 2021 and 2020, respectively, which is included in cost of sales

2018
2017
Change
%Change
(in thousands)
General & Administrative Expense $ 8,275
$ 7,413
$ 862
11.6 %
Depreciation 50
62
$ (12 ) (19.4 )%
Equity in losses of AMAK 901
4,261
$ (3,360 ) (78.9 )%
Product Sales

2017
2016
Change
%Change
(in thousands)
General & Administrative Expense $ 7,413
$ 6,445
$ 968
15.0 %
Depreciation 62
43
$ 19
44.2 %
Equity in losses of AMAK 4,261
1,479
$ 2,782
188.1 %
Gain from additional equity issuance by AMAK —
(3,168 ) $ 3,168
(100.0 )%

~~General and Administrative Expenses~~

~~2017-2018~~

~~General corporate expenses~~Product sales revenue increased 15.5% while product sales volume decreased 1.5% from ~~2017~~2020 to 2018 primarily due to restructuring and severance expenses, offset by the cancellation and reversal of stock compensation expense and other post retirement benefits awarded to Mr. Hatem El Khalidi. See Note 14 for further discussion.

~~2016-2017~~

~~General corporate expenses increased from 2016 to 2017 primarily due to an~~2021. The increase in officer compensation, accounting fees, and legal fees. Officer compensation increased in 2017 due to the addition of an officer in late 2016 and and an accrual for executive bonuses. Accounting and legal fees increased due to additional time required for restatements issues and other matters.

~~Equity in Losses of AMAK/Gain on Equity Issuance of AMAK~~

~~2017-2018~~

~~Equity in Losses of AMAK decreased 78.9% from 2017 to 2018 due to a number of reasons as discussed below.~~

~~The mine~~revenues was ~~fully operational in 2018~~primarily driven by higher selling prices as compared to ~~operating on an improving basis throughout 2017. In 2017 costs~~2020. Polyethylene wax sales saw volume remain flat and revenue from polyethylene wax increased approximately 16.2% as a result of higher sales prices. Average wax sales price increased approximately 17.5% in 2021 compared to 2020.

Processing Fees

Processing fees decreased 14.6% from 2020 to 2021. Processing fees were ~~increased as the mine was not operating at full capacity. Metal prices remained strong in 2018.~~

~~Shipments increased 105% from 2017 to 2018 as indicated in the table below. AMAK volumes in dry metric tons (dmt) for 2018 and 2017 were as follows:~~

2018
2017
Variance
Ore tons processed 699,885
385,495
314,390
Concentrate to the port
Copper 26,070
15,326
10,744
Zinc 31,989
16,606
15,383
58,059

31,932

26,127

Shipments
Copper 26,286
13,940
12,346
Zinc 31,272
14,080
17,192
57,558

28,020

29,538

~~2016-2017~~

~~Equity in Losses of AMAK increased 188.1% from 2016 to 2017 due to a number of reasons as discussed below.~~

The mine operated on an improving basis throughout 2017 while operations were closed for almost all of 2016. However, in 2017 because the mine was not operating at full capacity but was working toward that goal, costs increased. Also, 2016 was positively affectednegatively impacted by the ~~settlement from certain liabilities. Metal prices were strong~~Texas freeze event in ~~2017 with zinc prices hitting a ten year high during~~February 2021 and reduced customer demand for custom processing services driven by the ~~year. There were no unusual items in 2017.~~COVID-19 pandemic.

Capital Resources and Requirements

~~2017-2018~~

Capital expenditures ~~decreased 58%~~increased $0.8 million, or 6%, from ~~2017~~2020 to ~~2018. The majority of the decrease was due to completion of the Advanced Reformer unit.~~2021. During ~~2018~~2021 we expended approximately ~~$14.9~~$3.8 million on upgrades to the pipeline for GSPL, approximately $1.5 million to ~~complete the Advanced Reformer unit which includes $1 million insurance deductible related to the February 2018 fire~~replace and ~~$3 million for the catalyst replacement in December 2018, $1.3 million for a rail spur addition~~upgrade tanks and ~~$0.5 million for a truck loading rack.~~

~~2016-2017~~

~~Capital expenditures increased 27.4% from 2016 to 2017. The majority of the increase was due to the construction projects for the hydrogenation/distillation unit~~towers, and ~~the Advanced Reformer unit. During 2017 we expended $10.8~~$1.1 million on ~~the hydrogenation/distillation project, $0.9 million to upgrade B Plant, $32.5 million to construct the Advanced Reformer unit, $1.9 million for railspur addition, $1.0 million for additional tankage~~a new consolidated truck entrance resulting in improved security and ~~upgrades to existing tankage, $0.9 million for transport trucks, and $3.7 million on various~~ plant ~~improvements and equipment.~~access.

At December 31, ~~2018, there was~~2021, we had $30.5 million in cash and cash equivalents and borrowing availability of approximately ~~$18~~$75.0 million ~~available~~ on ~~the Company's line of credit.~~our Revolving Facility. We believe ~~that~~the Company is able to support its operating ~~cash flows along with credit availability will be sufficient to finance our 2019 operations~~requirements and capital ~~expenditures.~~expenditures through internally generated funds supplemented with cash on our balance sheet and availability under our ARC

~~The table below summarizes~~

Table of Contents

Our material cash requirements include the following contractual and other obligations.

Debt. Long-term debt obligations approximate $42.2 million as discussed in Note 13 of the ~~Company:~~Notes to Consolidated Financial Statements.

Payments due by period
Contractual Obligations Total

Less than
1 year

1-3 years
3-5 years
More than 5 years
(thousands of dollars)
Operating Lease Obligations $ 18,131
$ 3,670
$ 7,001
$ 5,395
$ 2,065
Purchase Obligations 124
124
—
—
—
Long-Term Debt Obligations 103,312
4,375
98,937
—
—
Total $ 121,567

$ 8,169

$ 105,938

$ 5,395

$ 2,065

Leases. The majority of our approximately $8.7 million of operating lease obligations are for railcars as discussed in Note 9 of the Notes to Consolidated Financial Statements.

Results of Operations

Comparison of Years 2021 and 2020

The tables containing financial and operating information set forth below are ~~primarily related~~presented to ~~commitments for our capital construction projects. The anticipated source~~facilitate the discussion of ~~funds for payments due within three years that relate to contractual obligations is from a combination of continuing operations supplemented with borrowings under our credit facility.~~

~~Impact of Inflation~~

~~Our~~the results of operations, and ~~financial condition are presented based on historical cost. While it is difficult to accurately measure~~should not be considered a substitute for, and should be read in conjunction with, the ~~impact of inflation, we do not believe the overall effects of inflation, if any, on our results of operations and financial condition have been material.~~

~~Investment in AMAK~~

~~Information concerning our investment in AMAK is set forth in Note 10 of the Notes to~~ Consolidated Financial Statements.

Specialty Petrochemicals Segment

~~New~~


	2021			2020			Change			% Change
	(thousands of dollars)
Specialty Petrochemicals Product Sales	$	228,293		$	167,054		$	61,239		36.7	%
Processing	5,798			5,296			502			9.5	%
Gross Revenue	$	234,091		$	172,350		$	61,741		35.8	%

Volume of Sales (gallons)
Specialty Petrochemicals Products	78,236			75,101			3,135			4.2	%
Prime Products	65,044			61,650			3,394			5.5	%
By-products	13,192			13,451			(259)			(1.9)	%

Cost of Sales	$	207,271		$	145,166		$	62,105		42.8	%
Gross Margin	11.5		%	15.8		%	(4.3)		%
Total Operating Expense*	77,186			70,224			6,962			9.9	%
Natural Gas Expense*	7,189			3,737			3,452			92.4	%
Operating Labor Costs*	12,605			16,138			(3,533)			(21.9)	%
Transportation Costs*	22,550			22,181			369			1.7	%
General & Administrative Expense	11,809			10,618			1,191			11.2	%
Depreciation**	11,183			10,611			572			5.4	%
Adjusted EBITDA	25,895			26,398			(503)			(1.9)	%
Capital Expenditures	11,633			11,334			299			2.6	%
*Included in cost of sales
**Includes $10,398 and $9,872 for 2021 and 2020 which is included in cost of sales and operating expenses

Gross Revenue

Table of Contents

Specialty Petrochemicals Product Sales

Processing Fees

Processing fees increased approximately 9.5% from 2020 to 2021 primarily due to renegotiated contracts which raised revenues.

Cost of Sales(includes but is not limited to raw materials, total operating expense, natural gas, operating labor and transportation)

Cost of Sales increased 42.8% from 2020 to 2021 due to higher raw material costs, higher operating expense and the increase in sales volume. Our average delivered feedstock cost per gallon increased approximately 83% from 2020 to 2021 mostly tracking the increase in crude oil price. The price of natural gasoline is highly correlated with the price of crude oil. Natural gasoline is the heavier liquid component remaining after ethane, propane and mixed butanes are removed from liquids produced by natural gas wells. The material is a commodity product in the oil/petrochemical markets and generally is readily available.

Total Operating Expense(includes but is not limited to natural gas, operating labor, depreciation, and transportation)

Total Operating Expense increased 9.9% from 2020 to 2021 or approximately $7.0 million. The key driver for the increase was higher natural gas costs.

Natural gas expense increased approximately 92% from 2020 to 2021 primarily due to a increase in the average per unit cost. Consumption was slightly higher than in 2020 primarily due to higher sales volume. The average price per MMBTU for 2021 was higher by approximately 107% from 2020 while volume remained relatively flat.

Gross Margin

General and Administrative Expense

General and Administrative costs increased 11.2% from 2020 to 2021 primarily due to higher insurance costs.

Capital Expenditures

Capital expenditures in 2021 decreased 2.6% or approximately $0.3 million from 2020.

Table of Contents

Specialty Waxes Segment


	2021			2020			Change			% Change
	(thousands of dollars)
Product Sales	$	29,246		$	25,321		$	3,925		15.5	%
Processing	9,353			10,955			(1,602)			(14.6)	%
Gross Revenue	$	38,599		$	36,276		$	2,323		6.4	%

Volume of specialty waxes sales (pounds)	35,838			36,387			(549)			(1.5)	%

Cost of Sales	$	36,843		$	34,782		$	2,061		5.9	%
Gross Margin (Loss)	4.5		%	4.1		%	0.4		%
General & Administrative Expense	4,653			5,160			(507)			(9.8)	%
Depreciation and Amortization*	6,108			5,522			586			10.6	%
Adjusted EBITDA	3,119			1,961			1,158			59.1	%
Capital Expenditures	2,519			1,995			524			26.3	%
*Includes $6,017 and $5,428 for 2021 and 2020, respectively, which is included in cost of sales

Product Sales

Product sales revenue increased 15.5% while product sales volume decreased 1.5% from 2020 to 2021. The increase in revenues was primarily driven by higher selling prices as compared to 2020. Polyethylene wax sales saw volume remain flat and revenue from polyethylene wax increased approximately 16.2% as a result of higher sales prices. Average wax sales price increased approximately 17.5% in 2021 compared to 2020.

Processing Fees

Processing fees decreased 14.6% from 2020 to 2021. Processing fees were negatively impacted by the Texas freeze event in February 2021 and reduced customer demand for custom processing services driven by the COVID-19 pandemic.

Cost of Sales

Cost of Sales increased approximately $2.1 million, or 5.9%, from 2020 to 2021. This increase was driven by higher polyethylene wax feed cost.

General and Administrative Expense

General and Administrative costs decreased 9.8% from 2020 to 2021 driven by lower bonus accruals and compensation costs, partially offset by increased insurance costs.

Capital Expenditures

Capital expenditures increased from approximately $2.0 million to $2.5 million or 26.3% from 2020 to 2021, primarily due to restoration costs associated with the damage to pipes and other plant equipment resulting from the Texas freeze event in February 2021.

Corporate Segment


	2021		2020		Change		%Change
	(in thousands)
General & Administrative Expense	$	14,838	$	9,125	$	5,713	62.6	%

Corporate expenses increased $5.7 million from 2020 to 2021 primarily due to one-time costs for professional services associated with M&A and strategic initiatives of approximately $4.7 million as well as higher insurance costs.

Recently Adopted Accounting ~~Standards~~Pronouncements

In ~~May 2014~~December 2019, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued Accounting Standards Update ~~("ASU"~~(“ASU”) ~~2014-9,~~ ~~Revenue from Contracts with Customers~~ ~~("ASU 2014-9"). ASU 2014-9 supersedes the revenue recognition requirements of FASB Accounting Standards Codification ("ASC") Topic 605,~~ ~~Revenue Recognition~~ ~~and most industry-specific guidance throughout~~No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting ~~Standards Codification, resulting~~for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance was effective for us in the ~~creation~~first quarter of ~~FASB ASC Topic 606,~~ ~~Revenue from Contracts with Customers~~. ASU 2014-9 requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. This ASU provides alternative methods of retrospective adoption and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017.2021. The ~~Company completed its assessment of the impact of the~~ adoption of ASU 2014-9 across all revenue streams. This included reviewing current accounting policies and practices to identify potential differences that would result from applying the requirements under the new standard. We completed contract reviews and validated resultsthis guidance did not have a material impact on our consolidated financial statements.

Table of ~~applying the new revenue guidance (Note 2). See Revenue Recognition policy note.~~Contents

Recent Accounting Pronouncements Not Yet Adopted

In ~~February 2016,~~March 2020, the FASB issued ASU No. ~~2016-02, Leases~~2020–04, Reference Rate Reform (Topic ~~842).~~848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04), which provides guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying generally accepted accounting principles to contracts, hedging relationships, and other transactions impacted by reference rate reform. The provisions of ASU 2020-04 apply only to those transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. This update will increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This updateguidance is effective ~~for annual~~from March 12, 2020 through December 31, 2022 and ~~interim reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. Early~~ adoption is permitted. In July 2018, the FASB issued ASU No. 2018-11, Targeted Improvements to ASC 842, Leases. ASU 2018-11 provided entities with an alternative modified transition method to elect not to recast the comparative periods presented when adopting ASC 842. The new standard provides a number of optional practical expedients in transition. The Company expects to elect: (1) the ‘package of practical expedients’, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification, and initial direct costs and (2) the use-of-hindsight. In addition, the new standard provides practical expedients for an entity’s ongoing accounting that the Company anticipates making, such as the (1) the election for certain classes of underlying asset to not separate non-lease components from lease components and (2) the election for short-term lease recognition

exemption for all leases that qualify. The Company will adopt ASU 842 as of January 1, 2019, using the alternative modified transition method. In preparation of adopting ASC 842, the Company is implementing additional internal controls to enable future preparation of financial information in accordance with ASC 842. The Company has also substantially completed its evaluation ofoptional. We are currently evaluating the impact on the Company’s lease portfolio. The Company believes the largest impact will be on the consolidated balance sheets for the accounting of facilities-related leases, which represents a majority of its operating leases it has entered into as a lessee. These leases will be recognized under the new standard as right of use assets (“ROU”) operating lease liabilities. The Company will also be required to provide expanded disclosures for its leasing arrangements. As of December 31, 2018, the Company had approximately $18.1 million of undiscounted future minimum operating lease commitments that are not recognized on its consolidated balance sheets as determined under the current standard. For a lessee, the results of operations are not expected to significantly change after adoption of the new standard. While substantially complete, the Company is still in the process of finalizing its evaluation of the effect of ASU ~~842~~2020-04 on the Company’s financial statements and disclosures, including the determination of the Company’s incremental borrowing rate for each of the operating leases to estimate the interest rate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. The Company will finalize its accounting assessment and quantitative impact of the adoption during the first quarter of fiscal year 2019.our Consolidated Financial Statements.

~~In January 2017 the FASB issued ASU No. 2017-4,~~ ~~Intangibles – Goodwill and Other (Topic 350)~~. The amendments in ASU 2017-4 simplify the measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Instead, under these amendments, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss should not exceed the total amount of goodwill allocated to that reporting unit. The amendments are effective for public business entities for the first interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company has goodwill from prior business combination and performs an annual impairment test or more frequently if changes or circumstances occur that would more-likely-than-not reduce the fair value of the reporting unit below its carrying value. During the year ended December 31, 2018, the Company performed its impairment assessment and determined the fair value of the aggregated reporting units exceed the carrying value, such that the Company's goodwill was not considered impaired. Although the Company cannot anticipate future goodwill impairment assessments, based on the most recent assessment, it is unlikely that an impairment amount would need to be calculated and, therefore, the Company does not anticipate a material impact from these amendments to the Company's financial position and results of operations. The current accounting policies and processes are not anticipated to change, except for the elimination of the Step 2 analysis.

~~In February 2018 the FASB issued ASU No. 2018-2,~~ ~~Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~. ASU 2018-2 was issued to address the income tax accounting treatment of the stranded tax effects within other comprehensive income due to the prohibition of backward tracing due to an income tax rate change that was initially recorded in other comprehensive income due to the enactment of the Tax Cuts and Jobs Act (TCJA) on December 22, 2017, which changed the Company's income tax rate from 35% to 21%. The amendments to the ASU changed US GAAP whereby an entity may elect to reclassify the stranded tax effect from accumulated other comprehensive income to retained earnings. The amendments of the ASU may be adopted in total or in part using a full retrospective or modified retrospective method. The amendments of the ASU are effective for periods beginning after December 15, 2018. The Company believes there will be no material impact to the consolidated financial statements as a result of this update.

~~In June 2018, the FASB issued ASU No. 2018–07,~~ ~~Improvements to Nonemployee Share–Based Payment Accounting~~. ASU 2018–07 simplifies the accounting for share–based payments to nonemployees by aligning it with the accounting for share–based payments to employees, with certain exceptions. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company is assessing the effect of ASU 2018–02 on its consolidated financial statements.

Critical Accounting ~~Policies~~Estimates

Our ~~consolidated financial statements~~Consolidated Financial Statements are based on the selection and application of significant accounting policies. The preparation of ~~consolidated financial statements~~Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of net sales, expenses and allocated charges during the reported period. Actual results could differ from those estimates. However, we are not currently aware of any reasonably likely events or circumstances that would result in materially different results.

We believe the following accounting policies and estimates are critical to understanding the financial reporting risks present currently. These matters, and the judgments and uncertainties affecting them, are essential to understanding our reported results. See Note 2 to the ~~Notes to the~~ Consolidated Financial Statements for further information.

Discontinued Operations

Assets that are sold or classified as held for sale are classified as discontinued operations provided that the disposal represents a strategic shift that has (or will have) a major effect on our operations and financial results (e.g., a disposal of a major geographical area, a major line of business, a major equity method investment or other major parts of an entity).

Inventories

~~Finished~~For SHR, finished products and feedstock are recorded at the lower of cost, determined on the first-in, first-out method ~~("FIFO"~~(“FIFO”);, or ~~market for SHR.~~market. For TC, inventory is recorded at the lower of cost or market as follows: (1) raw material cost is calculated using the weighted-average cost method and (2) product inventory cost is calculated using the specific cost method. See Note ~~7 to the Notes~~5 to the Consolidated Financial Statements for more information.

~~Beginning January 1, 2017, due to expansion of our plant assets at SHR and TC, we began inventorying spare parts for the repair and maintenance of our plant, pipeline and equipment.~~

Revenue recognition

~~The Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 606 ("ASC 606"),~~ ~~Revenue from Contracts with Customers,~~ ~~and its amendments~~with a date of the initial application of January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below. ASC 606 outlines a single comprehensive model for an entity to use in accounting for revenue arising from all contracts with customers, except where revenues are in scope of another accounting standard. ASC 606 superseded the revenue recognition requirements in ASC Topic 605, "~~Revenue~~ Recognition", and most industry specific guidance. ASC Topic 606 sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity is required to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods and services. ASC 606 also requires certain additional revenue-related disclosures.

The Company applied the modified retrospective approach under ASC 606 which allows for the cumulative effect of adopting the new guidance on the date of initial application. Use of the modified retrospective approach means the Company's comparative periods prior to initial application are not restated. The initial application was applied to all contracts at the date of the initial application. The Company has determined that the adjustments using the modified retrospective approach did not have a material impact on the date of the initial application along with the disclosure of the effect on prior periods.

Accounting Policy

~~Beginning on January 1, 2018, revenue~~Revenue is measured based on a consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. In evaluating when a customer has control of the asset we primarily consider whether the transfer of legal title and physical delivery has occurred, whether the customer has significant risks and rewards of ownership, and whether the customer has accepted delivery and a right to payment exists. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of product sales and processing. The Company does not offer material rights of return or service-type warranties.

~~For 2017 the Company recognized revenue according to FASB ASC Topic 605 ("ASC 605"), "Revenue Recognition"~~, when: (1) the customer accepted delivery of the product and title had been transferred or when the service was performed and the Company had no significant obligations remaining to be performed; (2) a final understanding as to specific nature and terms of the agreed upon transaction had occurred; (3) price was fixed and determinable; and (4) collection was assured. Product sales generally met these criteria, and revenue was recognized, when the product was delivered or title was transferred to the customer. Sales revenue was presented net of discounts, allowances, and sales taxes. Freight costs billed to customers were recorded as a component of revenue. Revenues received in advance of future sales of products or prior to the performance of services were presented as deferred revenues. Shipping and handling costs were classified as cost of product sales and processing and were expensed as incurred.

Nature of goods and services

The following is a description of principal activities – separated by reportable segments – from which the Company generates its revenue. For more detailed information about reportable segments, disaggregation of revenues, and contract balance disclosures, see Note ~~17.~~

17 to the Consolidated Financial Statements.

Specialty ~~petrochemical segment~~Petrochemicals Segment

polypropylene, expandable polystyrene, poly-iso/urethane foams, crude oil from the Canadian tar sands, and in the catalyst support industry. ~~SHR's specialty petrochemical~~SHR’s Specialty Petrochemicals products are typically transported to customers by rail car, tank truck, iso-container and ship.

Product Sales - The Company sells individual (distinct) products to its customers on a stand-alone basis (point-of-sale) without any further integration. There is no significant modification of any one or more products sold to fulfill another promised product or service within any of the ~~Company's~~Company’s product sale transactions. The amount of consideration received for product

Table of Contents

sales is stated within the executed invoice with the customer. Payment for prime product sales is typically due and collected 30 to 60 days subsequent to point of sale.

Processing Fees - The ~~Company's~~Company’s services consist of processing customer supplied feedstocks into custom products including, if requested, services for forming, packaging, and arranging shipping. Pursuant to ~~Tolling Agreements~~tolling agreements the customer retains title to the feedstocks and processed products. The performance obligation in each ~~Tolling Agreement~~tolling agreement transaction is the processing of customer provided feedstocks into custom products and is satisfied over time. The amount of consideration received for product sales is stated within the executed invoice with the customer. Payment is typically due and collected within 30 days subsequent to point of sale.

Specialty ~~Wax segment~~Waxes Segment

The ~~specialty wax~~Specialty Waxes segment of the Company manufactures and sells specialty polyethylene and poly alpha olefin waxes and also provides custom processing services for customers.

Processing Fees - The ~~Company's~~Company’s promised services consist of processing customer supplied feedstocks into custom products including, if requested, services for forming, packaging, and arranging shipping. Pursuant to ~~Tolling Agreements~~tolling agreements and ~~Purchase Order Arrangements,~~purchase order arrangements, the customer typically retains title to the feedstocks and processed products. The performance obligation in each ~~Tolling Agreement~~tolling agreement transaction and ~~Purchase Order Arrangement~~purchase order arrangement is the processing of customer provided feedstocks into custom products and is satisfied over time. The amount of consideration received for product sales is stated within the executed invoice with the customer. Payment is typically due and collected within 30 days subsequent to point of sale.

Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable from estimated future undiscounted cash flows. If the estimated future undiscounted cash flows are less than the carrying value of the assets, ~~we calculate~~the impairment amount is calculated as the amount ~~of impairment if the~~by which carrying value ~~of the long-lived assets~~ exceeds the fair value of the long-lived assets. Our long-lived assets include our specialty ~~petrochemical~~petrochemicals facility and our specialty ~~synthetic wax~~waxes facility.

Our specialty ~~petrochemical~~petrochemicals facility and specialty ~~synthetic wax~~waxes facility are currently our revenue generating assets. The facilities were in full operation at December 31, ~~2018.~~2021.

Goodwill and other intangible assets

Goodwill and indefinite-lived intangible assets are tested for impairment at least annually; however, these tests are performed more frequently when events or changes in circumstances indicate that the asset may be impaired. Impairment exists when carrying value exceeds fair value.

Definite-lived intangible assets are being amortized using discounted estimated future cash flows over the term of the related agreements. We continually evaluate the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they will be removed from the consolidated balance sheets.

See Note ~~9 to the Notes~~10 to the Consolidated Financial Statements for additional information.

Investment in AMAK (Discontinued Operations)

~~We account~~Prior to the completion of the sale of our ownership interest in AMAK, we accounted for our investment in AMAK using the equity method of accounting under which we ~~record~~recorded in income our share of ~~AMAK's~~AMAK’s income or loss for each period. The amount recorded iswas also adjusted to reflect the amortization of certain differences between the basis in our investment in AMAK and our share of the net assets of AMAK as reflected in ~~AMAK's~~AMAK’s financial statements. Any proceeds received from or payments made to AMAK ~~are~~were recorded as decreases or increases in the balance of our investment. See Note ~~10 to the Notes~~6 to the Consolidated Financial Statements.

We assess our investment in AMAK for impairment when events are identified, or there are changes in circumstances that may have an adverse effect on the fair value of the investment. We consider recoverable ore reserves and the amount and timing of the cash flows to be generated by the production of those reserves, as well as, recent equity transactions within AMAK. Factors which

may affect carrying value include, but are not limited to, mineral prices, capital cost estimates, equity transactions, the estimated operating costs of any mines and related processing, ore grade and related metallurgical characteristics, the design of any mines and the timing of any mineral production. There are no assurances that we will not be required to take a material write-down of any of our mineral properties.

Environmental Liabilities

Our operations are subject to the rules and regulations of the TCEQ which inspects the facilities at various times for possible violations relating to air, water and industrial solid waste requirements. As noted in Item 1. Business, evidence of groundwater contamination was discovered at SHR in 1993. The recovery process, initiated in 1998, is proceeding as planned and is expected to continue for many years. See Note 14 to the ~~Notes to the~~ Consolidated Financial Statements.

Table of Contents

Share-Based Compensation

We expense the cost of director and employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments. For options we use the Black-Sholes model to calculate the fair value of the equity instrument on the grant date. See Note 15 to the ~~Notes to the~~ Consolidated Financial Statements.

~~Off Balance Sheet Arrangements~~

Off balance sheet arrangements as defined by the SEC means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the registrant is a party, under which the registrant has (i) obligations under certain guarantees or contracts, (ii) retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangements, (iii) obligations under certain derivative arrangements, and (iv) obligations arising out of a material variable interest in an unconsolidated entity. Our guarantee for AMAK's debt is considered an off balance sheet arrangement. ~~Please see further discussion under "Investment in AMAK" in Item 1. Business.~~

Income Taxes

~~In determining~~We record deferred tax assets and liabilities to account for the expected future tax consequences of events that have been recognized in our ~~income~~financial statements and our tax ~~provision, we~~returns. We routinely assess ~~the likelihood~~ our deferred tax assets ~~will be recovered through future taxable income. Based on this assessment,~~and reduce such assets by a valuation allowance ~~against all or a portion of our deferred tax asset that will,~~if we deem it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. ~~If these estimates, assumptions, or actual results~~In assessing the need for adjustments to existing valuation allowances, we consider all available positive and negative evidence.

We regularly assess and, if required, establish accruals for uncertain tax positions that could result from assessments of ~~operations change in the future,~~additional tax by taxing jurisdictions where we ~~may reverse the valuation allowance against deferred~~operate. We recognize a tax ~~assets. Income~~benefit from an uncertain tax ~~liabilities are determined based on judgment and estimates assuming~~position when it is more likely than not that the position will be sustained upon examination, bybased on the technical merits of the position. These accruals for uncertain tax positions are subject to a ~~taxing authority.~~significant amount of judgment and are reviewed and adjusted on a periodic basis in light of changing facts and circumstances considering the progress of ongoing tax audits, court proceedings, changes in applicable tax laws, including tax case rulings and legislative guidance, or expiration of the applicable statute of limitations. See Note 16 to the ~~Notes to the~~ Consolidated Financial Statements.

On December 22, 2017, Public Law No. 115-97, also known as, the Tax Cuts and Jobs Act ("TCJA") was enacted. The TCJA included a number of changes to existing U.S. tax laws that impacted the Company, most notably a reduction of the U.S. federal corporate income tax rate from a maximum of 35% to a flat 21% for tax years effective January 1, 2018. The TCJA also implemented a territorial tax system, provided for a one-time deemed repatriation tax on unrepatriated foreign earnings, eliminated the alternative minimum tax ("AMT"), making AMT credit carryforwards refundable, and permits the acceleration of depreciation for certain assets placed into service after September 27, 2017. In addition the TJCA created prospective changes beginning in 2018, including repeal of the domestic manufacturing deduction, acceleration of tax revenue recognition, capitalization of research and development expenditures, additional limitations on executive compensation and limitations on the deductibility of interest.

The Company elected to recognize the income tax effects of the TCJA in its financial statements in accordance with Staff Accounting Bulletin 118 (SAB 118), which provides guidance for the application of ASC Topic 740 ~~Income Taxes~~, in the reporting period in which the TCJA was signed into law. Under SAB 118 when a Company does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA it will recognize provisional amounts if a reasonable estimate can be made. After the analysis, the Company did not identify any items for which the income tax effects of the TCJA have not been completed and a reasonable estimate could not be determined as of December 31, 2018.

~~The changes to existing U.S. tax laws as a result of the TCJA, which will have the most significant impact on the Company's federal income taxes are as follows:~~

Reduction of the U.S. Corporate Income Tax Rate - The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the TCJA, the Company revalued its ending net deferred tax liabilities at December 31, 2017. The reduction in the corporate income tax rate resulted in the Company recording $10.3 million benefit from deferred taxes in the year ending December 31, 2017.

Acceleration of Depreciation - The Company recognized a reduction to net deferred tax assets attributable to the accelerated depreciation for certain assets placed into service after September 27, 2017. This adjustment resulted in an increase in income tax receivable of approximately $961,000 in the year ending December 31, 2017.

~~Item~~ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk.

The market risk inherent in our financial instruments represents the potential loss resulting from adverse changes in interest rates, foreign currency rates and commodity prices. Our exposure to interest rate changes results from our variable rate debt instruments which are vulnerable to changes in short term United States prime interest rates. At December 31, ~~2018, 2017~~2021, 2020 and ~~2016,~~2019, we had approximately ~~$103.3~~$43.3 million, ~~$99.6~~$46.6 million, and ~~$84.0~~$83.9 million, respectively, in variable rate debt outstanding, excluding deferred financing costs. A hypothetical 10% change in interest rates underlying these borrowings would result in annual changes in our earnings and cash flows of approximately ~~$433,000, $405,000~~$0.1 million, $0.1 million, and ~~$275,000~~$0.4 million at December 31, ~~2018, 2017~~2021, 2020 and ~~2016,~~2019, respectively.

We do not view exchange rates exposure as significant and have not acquired or issued any foreign currency derivative financial instruments.

We purchase all of our raw materials, consisting of feedstock and natural gas, on the open market. The cost of these materials is a function of non-formula market oil and gas prices. As a result, our revenues and gross margins could be affected by changes in the price and availability of feedstock and natural gas. As market conditions dictate, from time to time we engage in various hedging techniques including financial swap and option agreements. We do not use such financial instruments for trading purposes and are not a party to any leveraged derivatives. Our policy on such hedges is to buy positions as opportunities present themselves in the market and to hold such positions until maturity, thereby offsetting the physical purchase and price of the materials.

At the end of ~~2018,~~2021, market risk for ~~2019~~2022 was estimated as a hypothetical 10% increase in the cost of natural gas and feedstock over the market price prevailing on December 31, ~~2018.~~2021. Assuming that ~~2019~~2022 total specialty ~~petrochemical~~petrochemicals product sales volumes stay at the same rate as ~~2018,~~2021, the 10% market risk increase will result in an increase in the cost of natural gas and feedstock of approximately ~~$11.9~~$14.8 million in fiscal ~~2019.~~2022.

~~Item~~ITEM 8. Financial Statements and Supplementary Data.

The ~~consolidated financial statements~~Consolidated Financial Statements of the Company and the consolidated financial statement schedules, including the report of our independent registered public accounting firm (Firm ID 5127) thereon, are set forth beginning on Page F-1.

~~Item~~ITEM 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

~~Item~~ITEM 9A. Controls and Procedures.


~~(a)~~	~~Disclosure Controls and Procedures.~~

(a)Disclosure Controls and Procedures.

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)) under the Exchange Act that are designed to provide reasonable assurance that the information that we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the ~~SEC's~~SEC’s rules and forms, and such information is accumulated and communicated to our management, including our Chief Executive Office and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. It should be noted that because of inherent limitations, our disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objective of the disclosure controls and procedures are met.

As required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules

Table of Contents

13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were effective at a reasonable assurance level to ensure that the information that we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure because of the material weakness in our internal control over financial reporting described below.


~~(b)~~	~~Management's Annual Report on Internal Control over Financial Reporting.~~

(b)Management’s Annual Report on Internal Control over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process that is designed under the supervision of our Chief Executive Officer and Chief Financial Officer, and effected by our Board of Directors, management and other personnel, to provide assurance regarding financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Our internal control of financial reporting includes those policies and procedures that:

•Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures recorded by us are being made only in accordance with authorizations of our management and Board of Directors; and

•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Management has conducted its evaluation of the effectiveness of our internal control over financial reporting as of December 31, ~~2018,~~2021, based upon the framework in Internal Control – Integrated Framework (2013) by the Committee of Sponsoring Organizations of the Treadway Commission. ~~Management's~~Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing the operating effectiveness of our internal control over financial reporting. Management reviewed the results of the assessment with the Audit Committee of the Board of Directors. Based on its assessment and review with the Audit Committee, management concluded that our internal control over financial reporting was effective as of December 31, ~~2018.~~2021.


~~(c)~~	~~Attestation Report of the Registered Public Accounting Firm.~~

(c)Attestation Report of the Registered Public Accounting Firm.

BKM Sowan Horan, LLP, an independent registered public accounting firm, has audited the ~~consolidated financial statements~~Consolidated Financial Statements included in this Annual Report on Form 10-K and, as part of their audit, has issued their report, included herein, on the effectiveness of our internal control over financial reporting.

(d) Changes in Internal Control over Financial Reporting.

There have been no changes in our internal control over financial reporting during the fourth quarter of ~~2018~~2021 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting. From time to time, we make changes to our internal control over financial reporting that are intended to enhance its effectiveness and which do not have a material effect on our overall internal control over financial reporting.

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Trecora Resources

Opinion on Internal Control over Financial Reporting

We have audited Trecora Resources’ (the Company’s) internal control over financial reporting as of December 31, ~~2018,~~2021, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2018,~~2021, based on criteria established in Internal Control-Integrated Framework (2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the balance sheets and the related statements of operations, stockholders’ equity, and cash flows of the Company, and our report dated March ~~15, 2019,~~10, 2022, expressed an unqualified opinion.

~~Basis for Opinion~~

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying ~~Management’s Annual Report on Internal Control Over Financial Reporting~~. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

~~Definition and Limitations of Internal Control over Financial Reporting~~

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~/s/ BKM Sowan Horan, LLP~~

~~Addison, Texas~~

~~March 15, 2019~~

~~Item 9B. Other Information.~~

~~None.~~

~~PART III~~

~~Item 10. Directors, Executive Officers and Corporate Governance.~~

~~Incorporated by reference from our Proxy Statement for our 2019 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the year ended December 31, 2018.~~

We have adopted a code of ethics entitled Standards of Business Conduct that applies to all of the Company's directors, officers and employees, including its principal executive officer, principal financial officer, principal accounting officer and controller, and to persons performing similar functions. A copy of the Standards of Business Conduct is available on our website.

~~Item 11. Executive Compensation.~~

~~Incorporated by reference from our Proxy Statement for our 2019 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the year ended December 31, 2018.~~

~~Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.~~

~~Incorporated by reference from our Proxy Statement for our 2019 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the year ended December 31, 2018.~~

~~Item 13. Certain Relationships, Related Transactions, and Director Independence.~~

~~Incorporated by reference from our Proxy Statement for our 2019 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the year ended December 31, 2018.~~

~~Item 14. Principal Accounting Fees and Services.~~

~~Incorporated by reference from our Proxy Statement for our 2019 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the year ended December 31, 2018.~~

~~PART IV~~

~~ITEM 15. Exhibits, Financial Statement Schedules.~~

~~(a)1. The following financial statements are filed with this Report:~~

~~Reports of Independent Registered Public Accounting Firm~~

~~Consolidated Balance Sheets dated December 31, 2018 and 2017~~

~~Consolidated Statements of Income for the three years ended December 31, 2018~~

~~Consolidated Statement of Stockholders' Equity for the three years ended December 31, 2018~~

~~Consolidated Statements of Cash Flows for the three years ended December 31, 2018~~

~~Notes to Consolidated Financial Statements~~

~~2. The following financial statement schedules are filed with this Report:~~

~~Schedule II -- Valuation and Qualifying Accounts for the three years ended December 31, 2018.~~

~~3. The following financial statements are filed with this Report:~~

~~The financial statements of Al Masane Al Kobra Mining Company (AMAK) for the years ended December 31, 2018, 2017, and 2016, required by Rule 3-09 of Regulation S-X.~~

4. The following documents are filed or incorporated by reference as exhibits to this Report. Exhibits marked with an asterisk (*) are filed herewith. Exhibits marked with a plus sign (+) are management contracts or a compensatory plan, contract or arrangement.



~~Exhibit~~ ~~Number~~	~~Description~~
~~3(a)~~	Amended and Restated Certificate of Incorporation of Trecora Resources, (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on May 21, 2018 (File No. 001-33926))
~~3(b)~~	~~Amended and Restated Bylaws of Trecora Resources (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on May 21, 2018 (File No. 001-33926))~~
~~10(a)+~~	Employment Contract dated October 1, 2014, between Trecora Resources and Peter M. Loggenberg, Ph.D. (incorporated by reference to Exhibit 10(c) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (file No. 001-33926))
~~10(b)+~~	Severance Agreement and Covenant not to Compete, Solicit and Disclose dated October 1, 2014, between Trecora Resources and Subsidiaries and Peter M. Loggenberg, Ph.D. (incorporated by reference to Exhibit 10(d) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (file No. 001-33926))
~~10(c)+~~	First Amendment to Employment Contract, effective as of March 7, 2018, between Trecora Resources and Peter Loggenberg, Ph.D. (incorporated by reference to Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 (File No. 001–33926))
~~10(d)*+~~	~~Employment Contract, dated as of December 3, 2018, between Trecora Resources and Patrick D. Quarles~~
~~10(e)+~~	Retirement Agreement, dated as of June 7, 2018, between Trecora Resources and Connie J. Cook (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 (File No. 001-33926))
~~10(f)+~~	Consulting Agreement, dated as of July 1, 2018, between Trecora Resources and Connie J. Cook (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 (File No. 001-33926))
~~10(g)*+~~	~~Separation and Release Agreement, dated as of December 14, 2018, between Trecora Resources and Simon Upfill-Brown~~
~~10(h)*+~~	~~Amended and Restated Consulting Agreement, dated as of December 14, 2018, between Trecora Resources and Nicholas N. Carter~~
~~10(i)+~~	Trecora Resources Stock and Incentive Plan, as amended by the First Amendment (incorporated by reference to Appendix C to the Company’s Definitive Proxy Statement on Schedule 14A filed on April 10, 2018)
~~10(j)+~~	~~Second Amendment to the Trecora Resources Stock and Incentive Plan (incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A filed on April 10, 2018)~~
~~10(k)+~~	Form of Trecora Resources Stock and Incentive Plan Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (file No. 001-33926))
~~10(l)+~~	Form of Trecora Resources Stock and Incentive Plan Amended and Restated Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10(c) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (file No. 001-33926))
~~10(m)~~	Articles of Association of Al Masane Al Kobra Mining Company, dated July 10, 2006 (incorporated by reference to Exhibit 10(m) to the Company's Annual Report on Form 10-K for the year ended December 31, 2009 (file No. 001-33926))
~~10(n)~~	~~Bylaws of Al Masane Al Kobra Mining Company (incorporated by reference to Exhibit 10(n) to the Company's Annual Report on Form 10-K for the year ended December 31, 2009 (file No. 001-33926))~~



~~Exhibit~~ ~~Number~~	~~Description~~
~~10(o)~~	Letter Agreement dated August 5, 2009, between Trecora Resources and the other Al Masane Al Kobra Company shareholders named therein (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on August 27, 2009 (file No. 001-33926))
~~10(p)~~	Limited Guarantee dated October 24, 2010, between Trecora Resources and the Saudi Industrial Development Fund (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on October 27, 2010 (file No. 001-33926)
~~10(q)~~	Amended and Restated Credit Agreement, dated as of October 1, 2014, among Texas Oil & Chemical Co. II, Inc., as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer (incorporated by reference to Exhibit 10.2 to the Company's Form 8–K filed on October 3, 2014 (file No. 001–33926))
~~10(r)~~	Second Amendment to Amended and Restated Credit Agreement, dated as of March 28, 2017, among Texas Oil & Chemical Co. II, Inc., as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer (incorporated by reference to Exhibit 99.1 to the Company's form 8–K filed on March 30, 2017 (file No. 001-33926))
~~10(s)~~	Third Amendment to Amended and Restated Credit Agreement, dated as of July 25, 2017, among Texas Oil & Chemical Co. II, Inc., as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer (incorporated by reference to Exhibit 99.1 to the company's Form 8–K filed on July 27, 2017 (file No. 001–33926))
~~10(t)~~	Fourth Amendment to Amended and Restated Credit Agreement, dated as of July 31, 2018, among Texas Oil & Chemical Co. II, Inc., as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders from time to time party thereto, Citibank, N.A., as an L/C Issuer, and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K dated July 31, 2018 (File No. 001-33926))
~~10(u)~~	Fifth Amendment to Amended and Restated Credit Agreement, dated as of December 19, 2018, among Texas Oil & Chemical Co. II, Inc., as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders from time to time party thereto, Citibank, N.A., as an L/C Issuer, and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K dated December 14, 2018 (File No. 001-33926))
21	~~Subsidiaries of Trecora Resources (incorporated by reference to Exhibit 21 to the Company's Annual Report on Form 10-K for the year ended December 31, 2014 (File 001-33926))~~
23.1*	~~Consent of Independent Registered Public Accounting Firm, BKM Sowan Horan, LLP~~
23.2*	~~Consent of Independent Registered Public Accounting Firm, Mamdouh Al Majed & Faisal Al-Enzi~~
24*	~~Power of Attorney (set forth on the signature page hereto)~~
31.1*	~~Certification of Chief Executive Officer pursuant to Rule 13a–14(a) or 15d–14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes–Oxley Act of 2002~~
31.2*	~~Certification of Chief Financial Officer pursuant to Rule 13a–14(a) or 15d–14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes–Oxley Act of 2002~~
32*	~~Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
~~101.INS~~	~~XBRL Instance Document~~
~~101.SCH~~	~~XBRL Taxonomy Schema Document~~
~~101.CAL~~	~~XBRL Taxonomy Calculation Linkbase Document~~
~~101.LAB~~	~~XBRL Taxonomy Label Linkbase Document~~
~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~
~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~


~~(b)~~	~~Exhibits required by Regulation 601 S-K~~

~~See (a) 3 of this Item 15~~


~~(c)~~	~~Financial Statement Schedules~~

~~See (a) 2 of this Item 15~~

~~SIGNATURES~~

Pursuant to the requirements of Section 13 or 15(d) 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.



	~~TRECORA RESOURCES~~

~~Dated: March 15, 2019~~	~~By:~~	~~/s/ Patrick Quarles~~
		~~Patrick Quarles~~
		~~Chief Executive Officer and President~~

KNOW ALL MEN BY THESE PRESENTS that each of the undersigned directors and officers of Trecora Resources hereby constitutes and appoints Patrick Quarles and Sami Ahmad his or her true and lawful attorney-in-fact and agent, for him or her and in his or her name, place and stead, in any and all capacities, with full power to act alone, to sign any and all amendments to this Report, and to file each such amendment to the Report, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant in the capacities indicated on March 15, 2019.



~~Signature~~	~~Title~~
~~/s/ Patrick Quarles~~ ~~Patrick Quarles~~	~~Chief Executive Officer and President~~ ~~(principal executive officer)~~
~~/s/ Sami Ahmad~~ ~~Sami Ahmad~~	~~Chief Financial Officer~~ ~~(principal financial officer)~~
~~/s/ Christopher Groves~~ ~~Christopher Groves~~	~~Corporate Controller~~ ~~(principal accounting officer)~~
~~/s/ Karen A. Twitchell~~ ~~Karen A. Twitchell~~	~~Chair of the Board and Director~~
~~/s/ Gary K. Adams~~ ~~Gary K. Adams~~	~~Director~~
~~/s/ Pamela R. Butcher~~ ~~Pamela R. Butcher~~	~~Director~~
~~/s/ Nicholas Carter~~ ~~Nicholas Carter~~	~~Director~~
~~/s/ Joseph P. Palm~~ ~~Joseph P. Palm~~	~~Director~~



~~INDEX TO FINANCIAL STATEMENTS~~	~~Page~~
~~Report of Independent Registered Public Accounting Firm~~	~~F-2~~

~~Consolidated Balance Sheets at December 31, 2018 and 2017~~	~~F-3~~

~~Consolidated Statements of Income For the Years Ended December 31, 2018, 2017 and 2016~~	~~F-5~~

~~Consolidated Statement of Stockholders' Equity For the Years Ended December 31, 2018, 2017 and 2016~~	~~F-6~~

~~Consolidated Statements of Cash Flows For the Years Ended December 31, 2018, 2017 and 2016~~	~~F-7~~

~~Notes to Consolidated Financial Statements~~	~~F-9~~

~~INDEX TO FINANCIAL STATEMENT SCHEDULES~~

~~Schedule II – Valuation and Qualifying Accounts For the Three Years Ended December 31, 2018~~	~~F-39~~

~~Financial Statements of Al Masane Al Kobra Mining Company for the Years Ended December 31, 2018, 2017 and 2016~~	~~F-40~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~To the Board of Directors and~~

~~Stockholders of Trecora Resources~~

~~Opinion on the Financial Statements~~

We have audited the accompanying consolidated balance sheets of Trecora Resources and Subsidiaries (the Company) as of December 31, 2018 and 2017, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the years in the three–year period ended December 31, 2018 and the related notes and schedules listed in the index at Item 15(a) (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in ~~Internal Control—Integrated Framework (2013)~~ ~~issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 15, 2019, expressed an unqualified opinion.~~

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Definition and Limitations of Internal Control over Financial Reporting

/s/ BKM Sowan Horan, LLP

Dallas, Texas

March 10, 2022

Table of Contents

ITEM 9B. Other Information.

None.

ITEM 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.

None.

PART III

ITEM 10. Directors, Executive Officers and Corporate Governance.

Incorporated by reference from our Proxy Statement for our 2022 Annual Meeting of Stockholders to be filed with the SEC pursuant to Regulation 14A within 120 days after the end of the year ended December 31, 2021.

We have adopted a Code of Business Conduct and Ethics that applies to all of the Company’s directors, officers and employees, including its principal executive officer, principal financial officer, principal accounting officer and controller, and to persons performing similar functions. A copy is available on our website at www.trecora.com. We intend to disclose future amendments to our Code of Business Conduct and Ethics and any grant of a waiver from a provision of our Code of Business Conduct and Ethics requiring disclosure under applicable SEC rules on our website.

ITEM 11. Executive Compensation.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

ITEM 13. Certain Relationships and Related Transactions, and Director Independence.

ITEM 14. Principal Accounting Fees and Services.

PART IV

ITEM 15. Exhibits, Financial Statement Schedules.

(a) 1. The following financial statements are filed with this Report:

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets dated December 31, 2021 and 2020

Consolidated Statements of Operations for the three years ended December 31, 2021

Consolidated Statement of Stockholders' Equity for the three years ended December 31, 2021

Consolidated Statements of Cash Flows for the three years ended December 31, 2021

Notes to Consolidated Financial Statements

2. The following financial statement schedules are filed with this Report:

Schedule II -- Valuation and Qualifying Accounts for the three years ended December 31, 2021

3. The following documents are filed or incorporated by reference as exhibits to this Report. Exhibits marked with an asterisk (*) are filed herewith. Exhibits marked with a plus sign (+) are management contracts or a compensatory plan, contract or arrangement. The below exhibit marked with a degree sign (°) has been redacted in part, in compliance with Regulation S-K Item 601. The Company agrees to furnish supplementally an unredacted copy of such exhibit to the Securities and Exchange Commission upon its request.


Exhibit Number			Description
2.1			Share Sale and Purchase Agreement, dated as of September 22, 2019, among Trecora Resources, Al Masane Al Kobra Mining Company and the other purchasers named therein (incorporated by reference to Exhibit 2.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 (file No. 001-33926))

Table of Contents


Exhibit Number			Description
2.2			Letter Agreement Amendment to the Share Sale and Purchase Agreement, dated November 24, 2019, among Trecora Resources, Al Masane Al Kobra Mining Company and the other purchasers named therein (incorporated by reference to Exhibit 2.2 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (file No. 001-33926))
2.3			Letter Agreement Amendment to the Share Sale and Purchase Agreement, dated January 16, 2020, among Trecora Resources, Al Masane Al Kobra Mining Company and the other purchasers named therein (Incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed on January 22, 2020 (file No. 001-33926))
2.4			Letter Agreement Amendment to the Share Sale and Purchase Agreement, dated March 23, 2020, among Trecora Resources, Al Masane Al Kobra Mining Company and the other purchasers named therein (incorporated by reference to Exhibit 2.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (file No. 001-33926))
3.1			Amended and Restated Certificate of Incorporation of Trecora Resources (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 21, 2018 (file No. 001-33926))
3.2			Amended and Restated Bylaws of Trecora Resources (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 21, 2018 (file No. 001-33926))
4.1			Description of Securities Registered under Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (file No. 001-33926))
10.1+			Employment Contract, dated October 1, 2014, between Trecora Resources and Peter M. Loggenberg, Ph.D. (incorporated by reference to Exhibit 10(c) to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (file No. 001-33926))
10.2+			Severance Agreement and Covenant not to Compete, Solicit and Disclose, dated October 1, 2014, between Trecora Resources and Subsidiaries and Peter M. Loggenberg, Ph.D. (incorporated by reference to Exhibit 10(d) to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (file No. 001-33926))
10.3+			First Amendment to Employment Contract, effective as of March 7, 2018, between Trecora Resources and Peter Loggenberg, Ph.D. (incorporated by reference to Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 (file No. 001–33926))
10.4+			Letter Agreement, dated as of February 21, 2019, between Trecora Resources and Peter M. Loggenberg, Ph.D. (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 (file No. 001-33926))
10.5+			Employment Contract, dated as of December 3, 2018, between Trecora Resources and Patrick D. Quarles (incorporated by reference to Exhibit 10(d) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (file No. 001-33926))
10.6+			Letter Agreement, dated as of May 15, 2019, between Trecora Resources and Sami Ahmad (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 (file No. 001-33926))
10.7+*			Letter Agreement, dated as of May 8, 2020, between Trecora Resources and Michael Silberman
10.8+*			Letter Agreement, dated as of April 19, 2021, between Trecora Resources and Rafael Pons
10.9+			Retirement Agreement, dated as of April 19, 2021, between Trecora Resources and John R. Townsend (incorporated by reference to Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 (file No. 001-33926))
10.10+			Trecora Resources Change of Control Severance Plan (incorporated by reference to Exhibit 10.11 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (file No. 001-33926))
10.11+*			Form of Indemnification Agreement entered into by each director and officer of the Company
10.12+			Trecora Resources Stock and Incentive Plan, as amended by the First Amendment (incorporated by reference to Appendix C to the Company’s Definitive Proxy Statement on Schedule 14A filed on April 10, 2018)
10.13+			Second Amendment to the Trecora Resources Stock and Incentive Plan (incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A filed on April 10, 2018)
10.14+			Form of Trecora Resources Stock and Incentive Plan Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 (file No. 001-33926))
10.15+			Form of Trecora Resources Stock and Incentive Plan Restricted Stock Unit Agreement (Time-Based Grants) (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (file No. 001-33926))

Table of Contents


Exhibit Number			Description
10.16+			Form of Trecora Resources Stock and Incentive Plan Restricted Stock Unit Agreement (Performance-Based Grants) (incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 (file No. 001-33926))
10.17			Form of Trecora Resources Stock and Incentive Plan Restricted Stock Unit Agreement (Time-Based) (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 (file No. 001-33926))
10.18			Form of Trecora Resources Stock and Incentive Plan Restricted Stock Unit Agreement (Performance-Based)(incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 (file No. 001-33926))
10.19+			Arabian American Development Company Non-Employee Director Stock Option Plan adopted April 7, 2008 (incorporated by reference to Exhibit B to the Company’s Form DEF 14A filed April 30, 2008 (file No. 001-33926))
10.20+			Summary of Trecora Resources Annual Bonus Program (incorporated by reference to Exhibit 10.14 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (file No. 001-33926))
10.21°			Second Amended and Restated Natural Gasoline Supply and Handling Agreement, dated as of May 1, 2020, between Martin Operating Partnership L.P. and South Hampton Resources, Inc. (incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 (file No. 001-33926))
10.22			Amended and Restated Credit Agreement, dated as of October 1, 2014, among Texas Oil & Chemical Co. II, Inc., as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer (incorporated by reference to Exhibit 10.2 to the Company’s Form 8–K filed on October 3, 2014 (file No. 001–33926))
10.23			Second Amendment to Amended and Restated Credit Agreement, dated as of March 28, 2017, among Texas Oil & Chemical Co. II, Inc., as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer (incorporated by reference to Exhibit 99.1 to the Company’s form 8–K filed on March 30, 2017 (file No. 001-33926))
10.24			Third Amendment to Amended and Restated Credit Agreement, dated as of July 25, 2017, among Texas Oil & Chemical Co. II, Inc., as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer (incorporated by reference to Exhibit 99.1 to the company’s Form 8–K filed on July 27, 2017 (file No. 001–33926))
10.25			Fourth Amendment to Amended and Restated Credit Agreement, dated as of July 31, 2018, among Texas Oil & Chemical Co. II, Inc., as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders from time to time party thereto, Citibank, N.A., as an L/C Issuer, and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated July 31, 2018 (file No. 001-33926))
10.26			Fifth Amendment to Amended and Restated Credit Agreement, dated as of December 19, 2018, among Texas Oil & Chemical Co. II, Inc., as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders from time to time party thereto, Citibank, N.A., as an L/C Issuer, and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated December 14, 2018 (file No. 001-33926))
10.27			Sixth Amendment to Amended and Restated Credit Agreement, dated as of March 29, 2019, among Texas Oil & Chemical Co. II, Inc., as Borrower, certain subsidiaries of the borrower, as Guarantors, The Lenders from time to time party thereto, Citibank, N.A., as an L/C Issuer, and Bank of America, N.A. as Administrative agent, Swingline Lender and an L/C Issuer (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed April 2, 2019 (file No. 001-33926))
10.28			Seventh Amendment to Amended and Restated Credit Agreement, dated as of May 8, 2020, among Texas Oil & Chemical Co. II, Inc., as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders from time to time party thereto, Citibank, N.A., as an L/C Issuer, and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 (file No. 001-33926))
10.29			Eighth Amendment to Amended and Restated Credit Agreement, dated as of May 3, 2021, among Texas Oil & Chemical Co. II, Inc., as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders from time to time party thereto, Citibank, N.A., as an L/C Issuer, and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer (incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 (file No. 001-33926))
21*			Subsidiaries of Trecora Resources
23.1*			Consent of Independent Registered Public Accounting Firm, BKM Sowan Horan, LLP

Table of Contents


Exhibit Number			Description
24*			Power of Attorney (set forth on the signature page hereto)
31.1*			Certification of Chief Executive Officer pursuant to Rule 13a–14(a) or 15d–14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes–Oxley Act of 2002
31.2*			Certification of Chief Financial Officer pursuant to Rule 13a–14(a) or 15d–14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes–Oxley Act of 2002
32*			Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS			XBRL Instance Document
101.SCH			XBRL Taxonomy Schema Document
101.CAL			XBRL Taxonomy Calculation Linkbase Document
101.LAB			XBRL Taxonomy Label Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
104*			Cover Page Interactive Data File (formatted as inline XBRL and included as Exhibit 101)

ITEM 16. Form 10-K Summary.

None.

Table of Contents

SIGNATURES


	TRECORA RESOURCES

Dated: March 10, 2022	By:	/s/ Patrick Quarles
		Patrick Quarles
		Chief Executive Officer and President


Signature			Title
/s/ Patrick Quarles Patrick Quarles			Chief Executive Officer, President and Director (principal executive officer)
/s/ Sami Ahmad Sami Ahmad			Chief Financial Officer (principal financial officer)
/s/ Christopher Groves Christopher Groves			Corporate Controller (principal accounting officer)
/s/ Karen A. Twitchell Karen A. Twitchell			Chair of the Board and Director
/s/ Gary K. Adams Gary K. Adams			Director
/s/ Pamela R. Butcher Pamela R. Butcher			Director
/s/ Nicholas Carter Nicholas Carter			Director
/s/ Adam C. Peakes Adam C. Peakes			Director
/s/ Janet S. Roemer Janet S. Roemer			Director

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Trecora Resources

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Trecora Resources and Subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2021 and the related notes and schedules listed in the index at Item 15(a) (collectively referred to as the “Consolidated Financial Statements”). In our opinion, the Consolidated Financial Statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 10, 2022, expressed an unqualified opinion.

Basis for Opinion

These ~~financial statements~~Consolidated Financial Statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s ~~financial statements~~Consolidated Financial Statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the ~~financial statements~~Consolidated Financial Statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the ~~financial statements,~~Consolidated Financial Statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the ~~financial statements.~~Consolidated Financial Statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the ~~financial statements.~~Consolidated Financial Statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the Consolidated Financial Statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the Consolidated Financial Statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the Consolidated Financial Statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate audit opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Recoverability of the Specialty Waxes segment long-lived assets

The Company’s Specialty Waxes segment has total assets of $79.9 million, including Net Plant, Pipeline, and Equipment of $58.1 million and Net Intangibles Assets of $11.1 million. The Company considers the Specialty Waxes segment to be a single long lived asset group. A long-lived asset (asset group) shall be tested for recoverability whenever events or changes in circumstances indicate that it’s carrying amount may not be recoverable. For the year ended December 31, 2021, the Specialty Waxes segment had a net loss of $0.8 million.

We identified the recoverability of the Specialty Waxes segment long-lived assets as a critical audit matter because of the significant estimates and assumptions management used in the undiscounted cash flow analysis. Performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the following:

•We obtained an understanding and evaluated the design of internal controls over management’s evaluation of the recoverability of long-lived assets based on the Company’s undiscounted cash flows analysis.

•We evaluated management’s ability to forecast future sales, gross profit and future capital needs by comparing actual results to management’s historical forecasts.

F-2

Table of Contents

•We evaluated the reasonableness of significant assumptions in the undiscounted cash flow analysis, including future sales, operating costs, gross profit, and capitalization rates. In addition, we tested the mathematical accuracy of the undiscounted cash flows analysis.

•We evaluated whether the assumptions were consistent with evidence obtained in other areas of the audit.

/s/ BKM Sowan Horan, LLP

We have served as the Company’s auditor since 2010.

~~Addison,~~Dallas, Texas

March ~~15, 2019~~

10, 2022

F-3

TRECORA RESOURCES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

December 31,
2018
2017
(thousands of dollars)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,735
$ 3,028
Trade receivables, net (Note 5) 27,112
25,779
Inventories (Note 7) 16,539
18,450
Prepaid expenses and other assets (Note 6) 4,664
3,645
Taxes receivable 182
5,584

Total current assets 55,232
56,486

PLANT, PIPELINE, AND EQUIPMENT – AT COST
268,419
245,761
LESS ACCUMULATED DEPRECIATION (73,762 ) (63,240 )

PLANT, PIPELINE, AND EQUIPMENT, NET (Note 8) 194,657
182,521

GOODWILL (Note 9) 21,798
21,798
OTHER INTANGIBLE ASSETS, net (Note 9) 18,947
20,808
INVESTMENT IN AMAK (Note 10) 38,746
45,125
MINERAL PROPERTIES IN THE UNITED STATES (Note 11) 588
588

TOTAL ASSETS $ 329,968
$ 327,326

LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 19,106
$ 18,347
Accrued liabilities (Note 13) 5,439
3,961
Current portion of post-retirement benefit (Note 22) 19
305
Current portion of long-term debt (Note 12) 4,194
8,061
Current portion of other liabilities 733
870

Total current liabilities 29,491
31,544

LONG-TERM DEBT, net of current portion (Note 12) 98,288
91,021
POST- RETIREMENT BENEFIT, net of current portion (Note 22) 358
897

OTHER LIABILITIES , net of current portion 994
1,611
DEFERRED INCOME TAXES (Note 16) 15,676
17,242

Total liabilities 144,807
142,315

COMMITMENTS AND CONTINGENCIES (Note 14)

Table of Contents


TRECORA RESOURCES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
	December 31,
	2021		2020
	(thousands of dollars)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	30,535	$	55,664
Trade receivables, net (Note 4)	32,811		25,301
Inventories (Note 5)	21,134		12,945

Prepaid expenses and other assets (Note 7)	4,313		9,198
Taxes receivable	—		2,788
Total current assets	88,793		105,896



PLANT, PIPELINE, AND EQUIPMENT, NET (Note 8)	185,521		187,104
OPERATING LEASE ASSETS, NET (Note 9)	8,170		10,528

INTANGIBLE ASSETS, NET (Note 10)	11,056		12,893
MINERAL PROPERTIES (Note 11)	—		412
TOTAL ASSETS	$	293,540	$	316,833

LIABILITIES
CURRENT LIABILITIES
Accounts payable	$	12,075	$	14,447

Accrued liabilities (Note 12)	5,873		6,857

Current portion of long-term debt (Note 13)	4,194		4,194
Current portion of operating lease (Note 9)	3,227		3,195
Current portion of other liabilities	626		891
Total current liabilities	25,995		29,584

CARES ACT, PPP Loans	—		6,123
LONG-TERM DEBT, net of current portion (Note 13)	37,707		41,901

OPERATING LEASE LONG TERM (Note 9)	4,923		7,333
OTHER LIABILITIES, net of current portion	417		968
DEFERRED INCOME TAXES (Note 16)	24,525		26,517
Total liabilities	93,567		112,426

COMMITMENTS AND CONTINGENCIES (Note 14)	0		0

EQUITY
Common Stock ‑ authorized 40 million shares of $.10 par value; issued 25.0 and 24.8 million in 2021 and 2020, respectively, and outstanding 23.6 and 24.8 million in 2021 and 2020, respectively	2,499		2,483
Additional Paid-in Capital	63,260		61,311
Common Stock in Treasury, at cost 1.4 and nil million shares in 2021 and 2020, respectively	(11,486)		—
Retained Earnings	145,700		140,324
Total Trecora Resources Stockholders' Equity	199,973		204,118
Non-controlling interest	—		289
Total equity	199,973		204,407

TOTAL LIABILITIES AND EQUITY	$	293,540	$	316,833

F-4

TRECORA RESOURCES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

December 31,
2018
2017
(thousands of dollars)

EQUITY
Common Stock ‑ authorized 40 million shares of $.10 par value; issued 24.6 and 24.5 million in 2018 and 2017, respectively, and outstanding 24.5 and 24.3 million in 2018 and 2017, respectively 2,463
2,451
Additional Paid-in Capital 58,294
56,012
Common Stock in Treasury, at cost 0.1 million and 0.2 million shares in 2018 and 2017, respectively (8 ) (196 )
Retained Earnings 124,123
126,455
Total Trecora Resources Stockholders' Equity 184,872
184,722
Noncontrolling interest 289
289
Total equity 185,161
185,011

TOTAL LIABILITIES AND EQUITY $ 329,968
$ 327,326

~~TRECORA RESOURCES AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~For the years ended December 31,~~

Table of Contents

2018
2017
2016
(thousands of dollars)
Revenues
Specialty petrochemical and product sales $ 269,780
$ 227,334
$ 193,581
Processing fees 18,152
17,809
18,818
287,932

245,143

212,399
Operating costs and expenses
Cost of specialty petrochemical, product sales, and processing (including depreciation and amortization of $13,618, $10,089, and $9,016, respectively) 260,114
203,582
172,497
Gross Profit 27,818

41,561

39,902

General and Administrative Expenses
General and administrative 22,396
22,587
20,434
Restructuring and severance (Note 21) 2,347
—
—
Depreciation 740
872
761
25,483

23,459

21,195

Operating income 2,335
18,102
18,707

Other income (expense)
Interest expense (4,100 ) (2,931 ) (1,985 )
Loss on extinguishment of debt (315 ) —
—
Bargain purchase gain from acquisition (Note 3) —
—
11,549
Equity in losses of AMAK (Note 10) (901 ) (4,261 ) (1,479 )
Gain from additional equity issuance by AMAK (Note 10) —
—
3,168
Miscellaneous expense (158 ) (60 ) (28 )
(5,474 )
(7,252 )
11,225

Income (loss) before income tax expense (3,139 )
10,850

29,932

Income tax benefit (expense) 807
7,159
(10,504 )

Net income (loss) attributable to Trecora Resources $ (2,332 )
$ 18,009

$ 19,428

Net income (loss) per common share
Basic earnings (loss) per share (dollars) $ (0.10 ) $ 0.74
$ 0.80
Diluted earnings (loss) per share (dollars) $ (0.10 ) $ 0.72
$ 0.78

Weighted average number of common
shares outstanding
Basic 24,438
24,294
24,284
Diluted 24,438
25,129
24,982


TRECORA RESOURCES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31,

	2021		2020		2019
	(thousands of dollars)
Revenues
Product sales	$	257,539	$	192,375	$	243,314
Processing fees	15,151		16,251		15,645
	272,690		208,626		258,959
Operating costs and expenses
Cost of sales and processing (including depreciation and amortization of $16,415, $15,300, and $15,361, respectively)	244,114		179,948		220,444
Gross Profit	28,576		28,678		38,515

General and Administrative Expenses
General and administrative	26,123		24,334		24,386
Professional services associated with M&A and strategic initiatives	4,655		558		—
Impairment of goodwill and certain intangibles (Note 10)	—		—		24,152

Depreciation	882		848		840
	31,660		25,740		49,378

Operating income (loss)	(3,084)		2,938		(10,863)

Other expenses
Interest expense	1,205		2,491		5,139
Gain on extinguishment of debt	(6,123)		—		—
(Gain) loss on disposal of assets	(279)		39		680
Miscellaneous income	(486)		(595)		(232)
	(5,683)		1,935		5,587

Income (loss) from continuing operations before income tax benefit	2,599		1,003		(16,450)

Income tax benefit	2,364		3,963		3,566





Income (loss) from continuing operations	4,963		4,966		(12,884)

Income (loss) from discontinued operations, net of tax	—		26,209		(2,090)

Net income (loss)	$	4,963	$	31,175	$	(14,974)

Basic income (loss) per common share:
Net income (loss) from continuing operations (dollars)	$	0.20	$	0.20	$	(0.52)
Net income (loss) from discontinued operations, net of tax (dollars)	$	—	$	1.06	$	(0.08)
Net income (loss) (dollars)	$	0.20	$	1.26	$	(0.60)

Basic weighted average number of common shares outstanding	24,459		24,802		24,698

Diluted income (loss) per common share:
Net income (loss) from continuing operations (dollars)	$	0.20	$	0.20	$	(0.52)
Net income (loss) from discontinued operations, net of tax (dollars)	$	—	$	1.03	$	(0.08)
Net income (loss) (dollars)	$	0.20	$	1.23	$	(0.60)

Diluted weighted average number of common shares outstanding	25,081		25,356		24,698

F-5

Table of Contents

TRECORA RESOURCES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the years ended December 31, ~~2018, 2017,~~2021, 2020, and ~~2016~~2019


	TRECORA RESOURCES STOCKHOLDERS
				Additional								Non-
	Common Stock			Paid-In		Treasury		Retained				Controlling		Total
	Shares	Amount		Capital		Stock		Earnings		Total		Interest		Equity
	(thousands)
January 1, 2019	24,626	$	2,463	$	58,294	$	(8)	$	124,123	$	184,872	$	289	$	185,161

Stock options
Issued to Directors	—	—		—		—		—		—		—		—
Issued to Employees	—	—		—		—		—		—		—		—
Restricted stock units
Issued to Directors	—	—		353		—		—		353		—		353
Issued to Employees	—	—		883		—		—		883		—		883
Common stock
Issued to Directors	20	1		—		8		—		9		—		9
Issued to Employees	104	11		—		—		—		11		—		11
Net Loss	—	—		—		—		(14,974)		(14,974)		—		(14,974)

December 31, 2019	24,750	$	2,475	$	59,530	$	—	$	109,149	$	171,154	$	289	$	171,443




Restricted stock units
Issued to Directors	—	—		1,369		—		—		1,369		—		1,369
Issued to Employees	—	—		420		—		—		420		—		420
Common stock
Issued to Directors	56	5		(5)		—		—		—		—		—
Issued to Employees	27	3		(3)		—		—		—		—		—
Net Loss	—	—		—		—		31,175		31,175		—		31,175

December 31, 2020	24,833	$	2,483	$	61,311	$	—	$	140,324	$	204,118	$	289	$	204,407




Restricted stock units
Issued to Directors	—	—		436		—		—		436		—		436
Issued to Employees	—	—		1,529		—		—		1,529		—		1,529
Common stock
Issued to Directors	72	7		(7)		—		—		—		—		—
Issued to Employees	85	9		(9)		—		—		—		—		—
Disposition of Non-Controlling Interest	—	—		—		—		413		413		(289)		124
Stock Repurchases	—	—		—		(11,486)		—		(11,486)		—		(11,486)
Net Income	—	—		—		—		4,963		4,963		—		4,963

December 31, 2021	24,990	$	2,499	$	63,260	$	(11,486)	$	145,700	$	199,973	$	—	$	199,973

F-6

TRECORA RESOURCES STOCKHOLDERS
Additional Non-
Common Stock Paid-In Treasury Retained Controlling Total
Shares Amount Capital Stock Earnings Total Interest Equity
(thousands)

January 1, 2016 24,158
$ 2,416
$ 50,662
$ —
$ 89,018
$ 142,096
$ 289
$ 142,385

Stock options
Issued to Directors —
—
173
—
—
173
—
173
Issued to Employees —
—
1,234
—
—
1,234
—
1,234
Issued to Former Director —
—
48
—
—
48
—
48
Restricted common stock —
—
Issued to Directors —
—
254
—
—
254
—
254
Issued to Employees —
—
783
—
—
783
—
783
Common stock —
—
Issued to Directors 13
2
58
—
—
60
—
60
Issued to Employees 51
3
(8 ) 16
—
11
—
11
Treasury stock transferred from TOCCO to TREC —
30
270
(300 ) —
—
—
—
Net Income —
—
—
—
19,428
19,428
—
19,428

December 31, 2016 24,222

$ 2,451

$ 53,474

$ (284 )
$ 108,446

$ 164,087

$ 289

$ 164,376

Stock options
Issued to Directors —
—
100
—
—
100
—
100
Issued to Employees —
—
1,171
—
—
1,171
—
1,171
Restricted stock units
Issued to Directors —
—
310
—
—
310
—
310
Issued to Employees —
—
1,136
—
—
1,136
—
1,136
Common stock
Issued to Directors 29
—
(84 ) 29
—
(55 ) —
(55 )
Issued to Employees 57
—
(92 ) 56
—
(36 ) —
(36 )
Warrants exercised 3
—
(3 ) 3
—
—
—
—
Net Income —
—
—
—
18,009
18,009
—
18,009

December 31, 2017 24,311

$ 2,451

$ 56,012

$ (196 )
$ 126,455

$ 184,722

$ 289

$ 185,011

Stock options
Issued to Directors —
—
(10 ) —
—
(10 ) —
(10 )
Issued to Employees —
—
154
—
—
154
—
154
Cancellations (see Note 15) —
—
(680 ) —
—
(680 ) (680 )
Restricted stock units
Issued to Directors —
—
338
—
—
338
—
338
Issued to Employees —
—
1,939
—
—
1,939
—
1,939
Common stock
Issued to Directors 188
10
489
89
—
588
—
588
Issued to Employees 183
2
127
155
—
284
—
284

Table of Contents


TRECORA RESOURCES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,

	2021		2020		2019
	(thousands of dollars)
OPERATING ACTIVITIES
Net Income (Loss)	$	4,963	$	31,175	$	(14,974)
Income (Loss) from Discontinued Operations	—		26,209		(2,090)
Income (Loss) from Continuing Operations	$	4,963	$	4,966	$	(12,884)
Adjustments to reconcile Income (Loss) from Continuing Operations to Net Cash Provided by Operating Activities:
Depreciation and Amortization	15,459		14,306		14,345
Amortization of Intangible Assets	1,837		1,842		1,856

Stock-based Compensation	2,247		1,912		1,250
Deferred Income Taxes	(1,992)		14,553		(2,993)

Bad Debt Expense (Recoveries)	—		—		(23)
Amortization of Loan Fees	181		181		181
Gain on Extinguishment of Debt	(6,123)		—		—
(Gain) Loss on Disposal of Assets	(279)		39		680
Impairment of Goodwill and Certain Intangibles	—		—		24,152

Changes in Operating Assets and Liabilities:
(Increase) Decrease in Trade Receivables	(7,510)		1,018		816
(Increase) Decrease in Taxes Receivable	2,788		(2,606)		—
(Increase) Decrease in Inventories	(8,189)		680		2,914
(Increase) Decrease in Prepaid Expenses and Other Assets	4,885		(2,403)		(304)
Increase (Decrease) in Other Liabilities	(599)		(5,746)		543
Increase (Decrease) in Accounts Payable and Accrued Liabilities	(3,293)		831		(4,944)

Net Cash Provided by Operating Activities - Continuing Operations	4,375		29,573		25,589
Net Cash Used in Operating Activities - Discontinued Operations	—		(4,008)		(468)
Net Cash Provided by Operating Activities	4,375		25,565		25,121
INVESTING ACTIVITIES

Additions to Plant, Pipeline and Equipment	(14,152)		(13,351)		(10,079)
Proceeds from Sale of Property, Plant and Equipment	319		—		—
Proceeds from PEVM	535		150		27
Net Cash Used in Investing Activities - Continuing Operations	(13,298)		(13,201)		(10,052)
Net Cash Provided by Investing Activities - Discontinued Operations	—		68,530		4,021
Net Cash Provided by (Used in) Investing Activities	(13,298)		55,329		(6,031)
FINANCING ACTIVITIES

Net Cash Paid Related to Stock-Based Compensation	(345)		(123)		(305)
Additions to CARES Act, PPP Loans	—		6,123		—
Additions to Long-Term Debt	—		20,000		2,000
Repayment of Long-Term Debt	(4,375)		(57,375)		(21,375)
Purchase of Treasury Stock	(11,486)		—		—
Net Cash Used in Financing Activities	(16,206)		(31,375)		(19,680)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(25,129)		49,519		(590)

F-7

Table of Contents

Stock Exchange (see Notes 10 & 18) (65 ) —
(66 ) (65 ) —
(131 ) —
(131 )
Warrants 9
—
(9 ) 9
—
—
—
—
Net Income (Loss) —
—
—
—
(2,332 ) (2,332 ) —
(2,332 )

December 31, 2018 24,626

$ 2,463

$ 58,294

$ (8 )
$ 124,123

$ 184,872

$ 289

$ 185,161


TRECORA RESOURCES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,

	2021		2020		2019
	(thousands of dollars)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	55,664		6,145		6,735
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	30,535	$	55,664	$	6,145

Supplemental disclosure of cash flow information:
Cash payments for interest	$	986	$	2,266	$	4,731
Cash payments (net of refunds) for taxes	$	(3,029)	$	(11,069)	$	53

Supplemental disclosure of non-cash items:
Capital expansion amortized to depreciation expense	$	236	$	821	$	792
Cash held in escrow by AMAK	$	—	$	1,877	$	—
Foreign taxes paid by AMAK	$	—	$	270	$	—

F-8

TRECORA RESOURCES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31,

2018
2017
2016
(thousands of dollars)
Operating activities
Net income (loss) attributable to Trecora Resources $ (2,332 ) $ 18,009
$ 19,428
Adjustments to reconcile net income (loss) attributable
to Trecora Resources to net cash provided by operating activities:
Depreciation 12,497
9,100
7,896
Amortization of intangible assets 1,861
1,861
1,880
Unrealized gain on derivative instruments —
(58 ) (119 )
Share-based compensation 1,753
2,707
2,552
Deferred income taxes (1,566 ) (5,841 ) 8,697
Postretirement obligation (825 ) (11 ) 271
Bargain purchase gain from acquisition —
—
(11,549 )
Equity in loss of AMAK 901
4,261
1,479
Gain from additional equity issuance by AMAK —
—
(3,168 )
Bad debt expense 152
—
90
Amortization of loan fees 261
247
272
Loss on extinguishment of debt 315
—
—
Changes in operating assets and liabilities:
Increase in trade receivables (1,485 ) (3,586 ) (2,809 )
(Increase) decrease in taxes receivable 5,401
(1,601 ) 3,689
(Increase) decrease in inventories 1,911
(579 ) (2,067 )
Increase in prepaid expenses and other assets (1,222 ) (806 ) (1,022 )
Increase (decrease) in other liabilities 33
142
(174 )
Increase in accounts payable and accrued liabilities 2,240
6,983
3,168
Net cash provided by operating activities 19,895
30,828
28,514

Investing activities
Additions to plant, pipeline and equipment (25,285 ) (51,584 ) (38,484 )
Acquisition of B Plant —
—
(2,011 )
Proceeds from AMAK share repurchase (Note 10) 5,347
—
—
Advances to AMAK, net 67
(107 ) (14 )
Net cash used in investing activities (19,871 ) (51,691 ) (40,509 )

Financing Activities
Issuance of common stock —
25
11
Net cash received (paid) related to stock-based compensation 860
(106 ) —
Additions to long-term debt 18,177
26,000
8,000
Repayment of long-term debt (15,354 ) (10,417 ) (6,250 )
Net cash provided by in financing activities 3,683
15,502
1,761

Table of Contents

TRECORA RESOURCES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31,

2018
2017
2016
(thousands of dollars)

Net increase (decrease) in cash and cash equivalents 3,707
(5,361 ) (10,234 )

Cash and cash equivalents at beginning of year 3,028
8,389
18,623

Cash and cash equivalents at end of year $ 6,735
$ 3,028
$ 8,389

Supplemental disclosure of cash flow information:
Cash payments for interest $ 4,560
$ 3,540
$ 2,545
Cash payments (net of refunds) for taxes $ (4,182 ) $ 92
$ (1,630 )

Supplemental disclosure of non-cash items:
Capital Expansion amortized to depreciation expense $ 787
$ 840
$ 1,047
Estimated earnout liability (Note 3) $ —
$ —
$ 733
Stock exchange (Notes 10 & 18) $ 131
$ —
$ —

NOTE 1 - BUSINESS AND OPERATIONS OF THE COMPANY

Trecora Resources ~~formerly Arabian American Development Company,~~ (the ~~"Company"~~“Company”) was organized as a Delaware corporation in 1967. The ~~Company's~~Company’s principal business activities are the manufacturing of various specialty ~~petrochemical~~petrochemicals products, specialty waxes and providing custom processing services. The Company owns 33% of a Saudi Arabian joint stock company, Al Masane Al Kobra Mining Company ("AMAK") (see Note 10) and approximately 55% of the capital stock of a Nevada mining company, Pioche Ely Valley Mines, Inc. ("PEVM"), which does not conduct any substantial business activity but owns undeveloped properties in the United States.

The ~~Company's~~Company’s specialty ~~petrochemical~~petrochemicals operations are primarily conducted through a wholly-owned subsidiary, Texas Oil and Chemical Co. II, Inc. ~~("TOCCO"~~(“TOCCO”). TOCCO owns all of the capital stock of South Hampton Resources, Inc. ~~("SHR"~~(“SHR”) and Trecora Chemical, Inc. ~~("TC"~~(“TC”). SHR owns all of the capital stock of Gulf State Pipe Line Company, Inc. ~~("GSPL"~~(“GSPL”). SHR owns and operates a specialty ~~petrochemical~~petrochemicals product facility ~~near~~in Silsbee, Texas which manufactures high purity hydrocarbons used primarily in polyethylene, packaging, polypropylene, expandable polystyrene, poly-iso/urethane foams, Canadian tar sands, and in the catalyst support industry. TC owns and operates a facility located in Pasadena, Texas which manufactures specialty waxes and provides custom processing services. These specialty waxes are used in the production of coatings, hot melt adhesives and lubricants. GSPL owns and operates pipelines that connect the SHR facility to a natural gas line, to ~~SHR's~~SHR’s truck and rail loading terminal and to a major petroleum pipeline owned by an unaffiliated third party.

The Company owned approximately 55% of the capital stock of a Nevada mining company, Pioche Ely Valley Mines, Inc. (“PEVM”), which did not conduct any substantial business activity and sold all of its remaining assets in 2021. PEVM was legally dissolved in February 2022. For more information, see Note 11.

The Company also previously owned 33% of a Saudi Arabian joint stock company, Al Masane Al Kobra Mining Company (“AMAK”). On October 2, 2019, we announced that we had entered into a Share Sale and Purchase Agreement (as amended, the “Purchase Agreement”) pursuant to which we agreed to sell our entire investment in AMAK. The share sale was completed on September 28, 2020. For more information, see Note 6.

We attribute revenues to countries based upon the origination of the transaction. All of our revenues for the years ended December 31, ~~2018, 2017,~~2021, 2020, and ~~2016,~~2019, originated in the United States. In addition, all of our long-lived assets are in the United States.

For convenience in this report, the terms ~~"Company"~~“Company", ~~"our"~~“our", ~~"us"~~“us", “we" or ~~"we"~~“TREC" may be used to refer to Trecora Resources and its subsidiaries.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation – The ~~consolidated financial statements~~Consolidated Financial Statements include the balance sheets, statements of ~~income,~~operations, stockholders' equity, and cash flows of the Company, TOCCO, TC, SHR, GSPL and PEVM. Other entities which are not controlled but over which the Company has the ability to exercise significant influence ~~such as AMAK,~~ are accounted for using the equity method of accounting. All intercompany profits, transactions and balances have been eliminated.

Cash, Cash Equivalents and Short-Term Investments – Our principal banking and short-term investing activities are with local and national financial institutions. Short-term investments with an original maturity of three months or less are classified as cash equivalents.

Inventories – ~~Finished~~For SHR, finished products and feedstock are recorded at the lower of cost, determined on the first-in, first-out method (FIFO), or ~~market for SHR.~~market. For TC, inventory is recorded at the lower of cost or market as follows: (1) raw material cost is calculated using the weighted-average cost method and (2) product inventory cost is calculated using the specific cost method.

Trade Receivables and Allowance for Doubtful Accounts – We evaluate the collectability of our trade receivables and adequacy of the allowance for doubtful accounts based upon historical experience and any specific customer financial difficulties of which we become aware. For the year ended December 31, ~~2018,~~2021, there was no change in the allowance for doubtful accounts balance. For the year ended December 31, 2020, we decreased the balance by $129,000 due to collections of previously allowed for receivables. For the year ended December 31, 2019, we increased the balance by $152,000 due to concerns regarding collectability for a specific customer. For the year ended December 31, 2017, the allowance balance was not increased. In 2016, we increased the balance by $90,000 due to an increase in sales in countries where there is a greater risk of default and limited recourse should this occur. We track customer balances and past due amounts to determine if customers may be having financial difficulties. This, along with historical experience and a working knowledge of each customer, helps determine accounts that should be written off. ~~No amounts were~~Amounts written off were nil, $129,000 and nil in ~~2018~~2021, 2020 and 2019, respectively.

Discontinued Operations – Assets that are sold or ~~2017. During 2016 we wrote off one account~~classified as held for ~~approximately $93,000.~~

~~Notes Receivable~~ ~~– We periodically make changes in or expand~~sale are classified as discontinued operations provided that the disposal represents a strategic shift that has (or will have) a major effect on our ~~custom processing units at the request of the customer. The cost to make these changes is shared by the customer. Upon completion~~operations and financial results (e.g., a disposal of a ~~project~~major geographical area, a ~~non-interest note receivable is recorded with~~major line of business, a major equity method investment or other major parts of an ~~imputed interest rate. There were no notes receivable outstanding as~~entity).

F-9

Table of December 31, 2018. The interest rate used on outstanding notes during December 31, 2018 and 2017 was 4%. The unearned interest was reflected as a discount against the note balance. The Company evaluates the collectability of notes based upon a working knowledge of the customer. The notes are receivable from custom processing customers with whom we maintain a close relationship. Thus, all amounts due under the notes receivable are considered collectible, and no allowance was recorded at December 31, 2018 and 2017, respectively.Contents

Plant, Pipeline and Equipment – Plant, pipeline and equipment are stated at cost. Depreciation is provided over the estimated service lives using the straight-line method. Gains and losses from disposition are included in operations in the period incurred. Maintenance and repairs are expensed as incurred. Major renewals and improvements are capitalized.

Interest costs incurred to finance expenditures during construction phase are capitalized as part of the historical cost of constructing the assets. Construction commences with the development of the design and ends when the assets are ready for use. Capitalized interest costs are included in plant, pipeline and equipment and are depreciated over the service life of the related assets.

Labor costs incurred to self-construct assets are capitalized as part of the historical cost the assets. Construction commences with the development of the design and ends when the assets are ready for use. Capitalized labor costs are included in plant, pipeline and equipment and are depreciated over the service life of the related assets.

Platinum catalyst is included in plant, pipeline and equipment at cost. Amortization of the catalyst is based upon cost less estimated salvage value of the catalyst using the straight line method over the estimated useful life (see Note 8).

Leases – The Company enters into leases as a lessee for rail cars, rail equipment, office space and office equipment in the ordinary course of business. When procuring services, or upon entering into a contract, the Company determines whether an arrangement contains a lease at its inception. As part of that evaluation the Company considers whether there is an implicitly or explicitly identified asset in the arrangement and whether the Company, as the lessee, has the right to control the use of that asset. The Company also reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised. All leases with a term of more than 12 months are recognized as right-of-use (“ROU”) assets and associated lease liabilities in the combined balance sheet. Lease liabilities are measured at the lease commencement date and determined using the present value of the lease payments not yet paid, at the Company’s incremental borrowing rate, which approximates the rate at which the Company would borrow on a secured basis. The interest rate implicit in the lease is generally not determinable in the transactions where the Company is the lessee. The ROU asset equals the lease liability adjusted for any initial direct costs, prepaid rent and lease incentives.

All of the Company’s leases are classified as operating leases. The leases include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company made a policy election to not recognize leases with a lease term of 12 months or less in the combined balance sheet. Lease expense for these leases is recognized on a straight-line basis over the lease term.

Goodwill and Other Intangible Assets – ~~Goodwill represents the future economic benefits arising from other assets acquired in the acquisition of TC that are not individually identified and separately recognized.~~ Goodwill and indefinite-lived intangible assets are tested for impairment at least annually; however, these tests are performed more frequently when events or changes in circumstances indicate that the asset may be impaired. Impairment exists when carrying value exceeds fair value. Estimates of fair value are based on appraisals, market prices for comparable assets, or internal estimates of future net cash flows.

Definite-lived intangible assets consist of customer relationships, licenses, permits and developed ~~technology that were acquired as part of the Acquisition of TC.~~technology. The majority of these assets are being amortized using discounted estimated future cash flows over the term of the related agreements. Intangible assets associated with customer relationships are being amortized using the discounted estimated future cash flows method based upon assumed rates of annual customer attrition. We continually evaluate the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they will be removed from the consolidated balance sheets.

Business Combinations and Related Business Acquisition Costs – Assets and liabilities associated with business acquisitions are recorded at fair value using the acquisition method of accounting. We allocate the purchase price of acquisitions based upon the fair value of each component which may be derived from various observable and unobservable inputs and assumptions. We may use third-party valuation specialists to assist us in this allocation. Initial purchase price allocations are preliminary and subject to revision within the measurement period, not to exceed one year from the date of acquisition. The fair value of property, plant and equipment and intangible assets are based upon the discounted cash flow method that involves inputs that are not observable in the market (Level 3). Goodwill assigned represents the amount of consideration transferred in excess of the fair value assigned to identifiable assets acquired and liabilities assumed.

Business acquisition costs are expensed as incurred and are reported as general and administrative expenses in the consolidated statements of income. We define these costs to include ~~finder's~~finder’s fees, advisory, legal, accounting, valuation, and other professional consulting fees, as well as, travel associated with the evaluation and effort to acquire specific businesses.

Investment in AMAK (Discontinued Operations) – ~~We account~~Prior to the completion of the sale of our ownership interest in AMAK, we accounted for our investment in AMAK using the equity method of accounting under which we ~~record~~recorded in income our share of ~~AMAK's~~AMAK’s income or loss for each period. The amount recorded iswas also adjusted to reflect the amortization of certain differences between the basis in our investment in AMAK and our share of the net assets of AMAK aswas reflected in ~~AMAK's~~AMAK’s financial statements (see Note ~~10)~~6). Any proceeds received from or payments made to AMAK ~~are~~were recorded as decreases or increases in the balance of our investment.

~~We assess our investment in AMAK for impairment when events are identified, or there are changes in circumstances that may have an adverse effect on the fair value~~

F-10

Table of the investment. We consider recoverable ore reserves, changes in commodity prices, and the amount and timing of the cash flows to be generated by the production of those reserves, as well as, recent equity transactions within AMAK.Contents

Other Assets – Other assets include a license used in specialty ~~petrochemical~~petrochemicals operations, spare parts inventory and certain specialty ~~petrochemical~~petrochemicals assets. ~~Beginning January 1, 2017, due to the expansion of our plant assets at SHR and TC, we began inventorying spare parts for the repair and maintenance of our plant, pipeline and equipment.~~ Spare parts are accounted for ~~on the first-in, first-out method (FIFO).~~using FIFO.

Long-Lived Assets Impairment – Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable based on the undiscounted net cash flows to be generated from the ~~asset's~~asset’s use. The amount of the impairment loss to be recorded is calculated by the excess of the ~~asset's~~asset’s carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis although other factors including the state of the economy are considered.

Revenue Recognition – ~~The Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 606 ("ASC 606"),~~ Revenue ~~from Contracts with Customers,~~ ~~and its amendments~~with a date of the initial application of January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below. ASC 606 outlines a single comprehensive model for an entity to use in accounting for revenue arising from all contracts with customers, except where revenues are in scope of another accounting standard. ASC 606 superseded the revenue

~~recognition requirements in ASC Topic 605, "Revenue~~ Recognition", and most industry specific guidance. ASC Topic 606 sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity is required to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods and services. ASC 606 also requires certain additional revenue-related disclosures.

~~Accounting Policy~~

~~Beginning on January 1, 2018, revenue~~ is measured based on a consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. In evaluating when a customer has control of the asset we primarily consider whether the transfer of legal title and physical delivery has occurred, whether the customer has significant risks and rewards of ownership, and whether the customer has accepted delivery and a right to payment exists. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of product sales and processing. The Company does not offer material rights of return or service-type warranties.

~~For the year ended December 31, 2017 the Company recognized revenue according to FASB ASC Topic 605 ("ASC 605"), "Revenue Recognition"~~, when: (1) the customer accepted delivery of the product and title had been transferred or when the service was performed and the Company had no significant obligations remaining to be performed; (2) a final understanding as to specific nature and terms of the agreed upon transaction had occurred; (3) price was fixed and determinable; and (4) collection was assured. Product sales generally met these criteria, and revenue was recognized, when the product was delivered or title was transferred to the customer. Sales revenue was presented net of discounts, allowances, and sales taxes. Freight costs billed to customers were recorded as a component of revenue. Revenues received in advance of future sales of products or prior to the performance of services were presented as deferred revenues. Shipping and handling costs were classified as cost of product sales and processing and were expensed as incurred.

~~Nature of goods and services~~

Specialty ~~petrochemical~~Petrochemicals segment

The ~~specialty petrochemical~~Specialty Petrochemicals segment of the Company produces eight high purity hydrocarbons and other petroleum based products including isopentane, normal pentane, isohexane and hexane. These products are used in the production of polyethylene, packaging, polypropylene, expandable polystyrene, poly-iso/urethane foams, crude oil from the Canadian tar sands, and in the catalyst support industry. ~~SHR's~~SHR’s specialty ~~petrochemical~~petrochemicals products are typically transported to customers by rail car, tank truck, iso-container and ship.

Product Sales – The Company sells individual (distinct) products to its customers on a stand-alone basis (point-of-sale) without any further integration. There is no significant modification of any one or more products sold to fulfill another promised product or service within any of the ~~Company's~~Company’s product sale transactions. The amount of consideration received for product sales is stated within the executed invoice with the customer. Payment for prime product sales is typically due and collected 30 to 60 days subsequent to point of sale.

Processing Fees – The ~~Company's~~Company’s services consist of processing customer supplied feedstocks into custom products including, if requested, services for forming, packaging, and arranging shipping. Pursuant to Tolling Agreements the customer retains title to the feedstocks and processed products. The performance obligation in each Tolling Agreement transaction is the processing of customer provided feedstocks into custom products and is satisfied over time. The amount of consideration received for product sales is stated within the executed invoice with the customer. Payment is typically due and collected within 30 days subsequent to point of sale.

Specialty ~~Wax~~Waxes segment

The ~~specialty wax~~Specialty Waxes segment of the Company manufactures and sells specialty polyethylene and poly alpha olefin waxes and also provides custom processing services for customers.

Product Sales – The Company sells individual (distinct) products to its customers on a stand-alone basis (point-of-sale) without any further integration. There is no significant modification of any one or more products sold to fulfill another promised product or service within any of the ~~Company's~~Company’s product sale transactions. The amount of consideration received for product sales is stated within the executed invoice with the customer. Payment is typically due and collected within 30 days subsequent to point of sale.

Processing Fees – The ~~Company's~~Company’s promised services consist of processing customer supplied feedstocks into custom products including, if requested, services for forming, packaging, and arranging shipping. Pursuant to Tolling Agreements and Purchase Order Arrangements, the customer typically retains title to the feedstocks and processed products. The performance obligation in each Tolling Agreement transaction and Purchase Order Arrangement is the processing of customer provided feedstocks into custom products and is satisfied over time. The amount of consideration received for product sales is stated within the executed invoice with the customer. Payment is typically due and collected within 30 days subsequent to point of sale.

Shipping and Handling Costs – Shipping and handling costs are classified as cost of product sales and processing and are expensed as incurred.

F-11

Table of Contents

Retirement Plan – We offer employees the benefit of participating in a 401(k) plan. We match 100% up to 6% of pay with vesting occurring over 2 years. For the years ended December 31, ~~2018, 2017,~~2021, 2020, and ~~2016,~~2019, matching contributions of approximately ~~$1,502,000, $1,412,000,~~$1.3 million, $1.3 million, and ~~$1,195,000,~~$1.3 million, respectively, were made on behalf of employees.

Environmental Liabilities – Remediation costs are accrued based on estimates of known environmental remediation exposure. Ongoing environmental compliance costs, including maintenance and monitoring costs, are expensed as incurred.

Other Liabilities – We periodically make changes in or expand our custom processing units at the request of the customer. The cost to make these changes is shared by the customer. Upon completion of a project a note receivable and a deferred liability are recorded to recover the project costs which are then capitalized. At times instead of a note receivable being established, the customer pays an upfront cost. The amortization of other liabilities is recorded as a reduction to depreciation expense over the life of the contract with the customer. As of December 31 of each year, depreciation expense was offset and reduced by approximately ~~$0.8~~$0.2 million, $0.8 million, and ~~$1.0~~$0.8 million, for ~~2018, 2017,~~2021, 2020, and ~~2016,~~2019, respectively.

Net Income Per Share – We compute basic income per common share based on the weighted-average number of common shares outstanding. Diluted income per common share is computed based on the weighted-average number of common shares outstanding plus the number of additional common shares that would have been outstanding if potential dilutive common shares, consisting of stock options, unvested restricted stock units, and shares which could be issued upon conversion of debt, had been issued (see Note 18).

Foreign Currency – The functional currency for the Company and each of the ~~Company's~~Company’s subsidiaries is the US dollar (USD). Transaction gains or losses as a result of transactions denominated and settled in currencies other than the USD are reflected in the statements of income as foreign exchange transaction gains or losses. We do not employ any practices to minimize foreign currency risks. The functional and reporting currency of AMAK is the Saudi Riyal (SR). In June 1986 the SR was officially pegged to the USD at a fixed exchange rate of 1 USD to 3.75 SR; therefore, we translate SR into our reporting currency of the USD for income statement and balance sheet purposes using the fixed exchange rate. As of December 31, ~~2018, 2017~~2021, 2020 and ~~2016,~~2019, foreign currency translation adjustments were not significant.

Management Estimates – The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include allowance for doubtful accounts receivable and inventory obsolescence; assessment of impairment of our long-lived assets ~~goodwill,~~and intangible ~~assets and investments,~~assets; litigation liabilities, post-retirement benefit obligations, ~~guarantee obligations,~~ environmental liabilities, ~~income taxes~~and current and deferred ~~tax valuation allowances.~~income taxes. Actual results could differ from these estimates.

In early 2020, the World Health Organization declared the rapidly spreading coronavirus disease (“COVID-19”) outbreak a pandemic. This pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts on the Company’s results of operations and financial position at December 31, 2021. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of the Consolidated Financial Statements. These estimates may change, as new events occur and additional information is obtained.

Share-Based Compensation – We recognize share-based compensation of stock options granted based upon the fair value of options on the grant date using the Black-Scholes pricing model (see Note 15). Share-based compensation expense recognized during the period is based on the fair value of the portion of share-based payments awards that is ultimately expected to vest. Share-based compensation expense recognized in the consolidated statements of operations for the years ended December 31, ~~2018, 2017,~~2021, 2020, and ~~2016~~2019 includes compensation expense based on the estimated grant date fair value for awards that are ultimately expected to vest, and accordingly has been reduced for estimated forfeitures. Estimated forfeitures at the time of grant are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

~~Guarantees –~~ ~~We may enter into agreements which contain features that meet the definition of a guarantee under FASB ASC 460 "Guarantees" (see Note 14). These arrangements create two types of obligations:~~


a)	We have a non-contingent and immediate obligation to stand ready to make payments if certain future triggering events occur. For certain guarantees, a liability is recognized for the stand ready obligation at the inception of the guarantee; and


b)	We have an obligation to make future payments if those certain future triggering events do occur. A liability for the payment under the guarantee is recognized when 1) it becomes probable that one or more future events will occur, triggering the requirement to make payments under the guarantee and 2) when the payment can be reasonably estimated.

Fair Value – The carrying value of cash and cash equivalents, trade receivables, taxes receivable, accounts payable, accrued liabilities, and other liabilities approximate fair value due to the immediate or short-term maturity of these financial instruments. The fair value of variable rate long term debt and notes payable reflect recent market transactions and approximate carrying value. We used other observable inputs that would qualify as Level 2 inputs to make our assessment of the approximate fair value of our cash and cash equivalents, trade receivables, taxes receivable, accounts payable, accrued liabilities, other liabilities, notes payable and variable rate long term debt. ~~The fair value of the derivative instruments are described below.~~

We measure fair value by ASC Topic 820 Fair Value. ASC Topic 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC Topic 820 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard amends numerous accounting pronouncements but does not require any new fair value measurements of reported balances. ASC Topic 820 emphasizes that fair value, among other things, is based on exit price versus entry price, should include assumptions about risk such as nonperformance risk in liability fair values, and is a market-based measurement, not

F-12

Table of Contents

an entity-specific measurement. When considering the assumptions that market participants would use in pricing the asset or liability, ASC Topic 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting ~~entity's~~entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The fair value hierarchy prioritizes inputs used to measure fair value into three broad levels.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

~~Derivatives~~ – We record derivative instruments as either an asset or liability measured at fair value. Changes in the derivative instrument's fair value are recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative instrument's gains and losses to offset related results on the hedged item in the income statement, to the extent effective, and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting.

Income Taxes – Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company maintains a valuation allowance for a deferred tax asset when it is deemed to be more likely than not that some or all of the deferred tax asset will not be realized.

Our estimate of the potential outcome of any uncertain tax issues is subject to ~~management's~~management’s assessment of relevant risks, facts, and circumstances existing at that time. We use a more likely than not threshold for financial statement recognition and measurement of tax position taken or expected to be taken in a tax return. To the extent that our assessment of such tax position changes, the change in estimate is recorded in the period in which the determination is made. We report tax-related interest and penalties as a component of income tax expense.

On December 22, 2017, Public Law No. 115-97 known as the Tax Cuts and Jobs Act (TCJA) was enacted. The TCJA included a number of changes to existing U.S. tax laws that impact the Company, most notably a reduction of the U.S. federal corporate income tax rate from a maximum of 35 percent to a flat 21 percent for tax years effective January 1, 2018. The TCJA also implemented a territorial tax system, provided for a one-time deemed repatriation tax on unrepatriated foreign earnings, eliminated the alternative minimum tax (AMT), made AMT credit carryforwards refundable, and permitted the acceleration of depreciation for certain assets placed into service after September 27, 2017. In addition the TJCA created prospective changes beginning in 2018, including repeal of the domestic manufacturing deduction, acceleration of tax revenue recognition,

~~capitalization of research and development expenditures, additional limitations on executive compensation and limitations on the deductibility of interest.~~

The Company has elected to recognize the income tax effects of the TCJA in its financial statements in accordance with Staff Accounting Bulletin 118 (SAB 118), which provides guidance for the application of ASC Topic 740 ~~Income Taxes~~, in the reporting period in which the TCJA was signed into law. Under SAB 118 when a Company does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA it will recognize provisional amounts if a reasonable estimate can be made. If a reasonable estimate cannot be made then no impact is recognized for the effect of the TCJA. SAB 118 permits an up to one year measurement period to finalize the measurement of the impact of the TCJA.

~~Reclassifications~~ ~~– Certain reclassifications have been made to prior year balances to conform with the current year presentation.~~

Subsequent Events – The Company has evaluated subsequent events through March ~~15, 2019,~~10, 2022, the date that the ~~consolidated financial statements~~Consolidated Financial Statements were approved by management.

~~New~~Recently Adopted Accounting Pronouncements

~~In May 2014 the~~Effective January 1, 2020, we adopted Financial Accounting ~~Standards~~Standard Board ~~("FASB"~~(“FASB”) ~~issued~~ Accounting Standards Update ~~("ASU"~~(“ASU”) ~~2014-9,~~ ~~Revenue from Contracts with Customers~~ ~~("ASU 2014-9"). ASU 2014-9 supersedes~~2016-13, Measurement of Credit Losses on Financial Instruments, which changed the ~~revenue~~way entities recognize impairment of most financial assets. Short-term and long-term financial assets, as defined by the standard, are impacted by immediate recognition ~~requirements~~ of ~~FASB Accounting Standards Codification ("ASC") Topic 605,~~ ~~Revenue Recognition~~ ~~and most industry-specific guidance throughout the Accounting Standards Codification, resulting~~estimated credit losses in the ~~creation of FASB ASC Topic 606,~~ ~~Revenue from Contracts with Customers. ASU 2014-9 requires entities to recognize revenue in a way that depicts~~financial statements, reflecting the ~~transfer of promised goods or services to customers in an~~net amount ~~that reflects the consideration to which the entity expects~~expected to be entitled to in exchange for those goods or services. This ASU provides alternative methods of retrospective adoption and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017.collected. The ~~Company completed its assessment of the impact of the~~ adoption of ASU 2014-9 across all revenue streams. This included reviewing current accounting policies and practices to identify potential differences that would result from applying the requirements under the new standard. We completed contract reviews and validated results of applying the new revenue guidance (Note 2). See Revenue Recognition policy note.this standard did not have a material impact on our Consolidated Financial Statements.

In ~~February 2016,~~December 2019, the FASB issued ASU No. ~~2016-02, Leases~~2019-12, Income Taxes (Topic ~~842).~~740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This ~~update~~guidance will increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This update isbe effective for ~~annual~~us in the first quarter of 2021 on a prospective basis, and ~~interim reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. Early~~early adoption is permitted. The Company does not expect that the adoption of this guidance will have a material impact on our Consolidated Financial Statements.

Recent Accounting Pronouncements Not Yet Adopted

In ~~July 2018,~~March 2020, the FASB issued ASU No. ~~2018-11, Targeted Improvements to ASC 842, Leases. ASU 2018-11 provided entities with an alternative modified transition method to elect not to recast~~2020–04, Reference Rate Reform (Topic 848): Facilitation of the ~~comparative periods presented when adopting ASC 842. The new standard provides a number~~Effects of ~~optional practical expedients in transition. The Company expects to elect: (1) the ‘package of practical expedients’~~Reference Rate Reform on Financial Reporting (ASU 2020-04), which ~~permits it not~~provides guidance to ~~reassess under~~alleviate the ~~new standard its prior conclusions about lease identification, lease classification,~~burden in accounting for reference rate reform by allowing certain expedients and ~~initial direct costs~~exceptions in applying generally accepted accounting principles to contracts, hedging relationships, and ~~(2) the use-of-hindsight. In addition, the new standard provides practical expedients for an entity’s ongoing accounting~~other transactions impacted by reference rate reform. The provisions of ASU 2020-04 apply only to those transactions that ~~the Company anticipates making, such as the (1) the election for certain classes of underlying asset~~reference LIBOR or another reference rate expected to ~~not separate non-lease components~~be discontinued due to reference rate reform. This guidance is effective from ~~lease components~~March 12, 2020 through December 31, 2022 and (2) the election for short-term lease recognition exemption for all leases that qualify. The Company will adopt ASU 842 as of January 1, 2019, using the alternative modified transition method. In preparation of adopting ASC 842, the Companyadoption is ~~implementing additional internal controls to enable future preparation of financial information in accordance with ASC 842. The Company has also substantially completed its evaluation of~~optional. We are currently evaluating the impact on the Company’s lease portfolio. The Company believes the largest impact will be on the consolidated balance sheets for the accounting of rail cars, equipment and office leases, which represents a majority of its operating leases it has entered into as a lessee. These leases will be recognized under the new standard as right of use assets (“ROU”) operating lease liabilities. The Company will also be required to provide expanded disclosures for its leasing arrangements. As of December 31, 2018, the Company had approximately $18.1 million of undiscounted future minimum operating lease commitments that are not recognized on its consolidated balance sheets as determined under the current standard. For a lessee, the results of operations are not expected to significantly change after adoption of the new standard. While substantially complete, the Company is still in the process of finalizing its evaluation of the effect of ASU ~~842~~2020-04 on the Company’s financial statements and disclosures, including the determination of the Company’s incremental borrowing rate for each of the operating leases to estimate the interest rate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. The Company will finalize its accounting assessment and quantitative impact of the adoption during the first quarter of fiscal year 2019.our Consolidated Financial Statements.

unit. The amendments are effective for public business entities for the first interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company has goodwill from prior business combination and performs an annual impairment test or more frequently if changes or circumstances occur that would more-likely-than-not reduce the fair value of the reporting unit below its carrying value. During the year ended December 31, 2018, the Company performed its impairment assessment and determined the fair value of the aggregated reporting units exceed the carrying value, such that the Company's goodwill was not considered impaired. Although the Company cannot anticipate future goodwill impairment assessments, based on the most recent assessment, it is unlikely that an impairment amount would need to be calculated and, therefore, the Company does not anticipate a material impact from these amendments to the Company's financial position and results of operations. The current accounting policies and processes are not anticipated to change, except for the elimination of the Step 2 analysis.

NOTE 3 ~~– ACQUISITION OF B PLANT~~

On May 2, 2016, we purchased the idle BASF facility adjacent to our TC facility in exchange for $2.0 million in cash, transaction costs of approximately $11,000 plus an earnout provision calculated through calendar year 2020 based upon revenue generated by the facility but limited to $1.8 million. The cash payment was funded by working capital. The purchased facility includes production equipment similar to TC's plus equipment that broadens TC's capabilities and potential markets. The 6.5-acre site also includes substantial storage capacity, several rail and truck loading sites and utility tie-ins to TC. We refer to the facility as "B Plant".

We have accounted for the purchase in accordance with the acquisition method of accounting under Financial Accounting Standards Board Accounting Standards Codification Topic 805 "Business Combinations" ("ASC 805"). In accordance with ASC 805, we used our best estimates and assumptions to assign fair value to the tangible assets and liabilities acquired at the acquisition date.

~~The assets and liabilities acquired have been included in our consolidated balance sheets and our consolidated statements of income since the date of acquisition.~~

~~We recorded an $11.5 million bargain purchase gain on the transaction as calculated in the table below (in thousands).~~

Cash paid $ 2,011

Estimated earnout liability 733

Purchase Price $ 2,744

Fixed assets at FMV
Land 980

Site improvements 30

Buildings 1,350

Production equipment 11,933

14,293
Bargain purchase gain $ 11,549

~~The business acquired had been idle for the periods presented thus proforma financial presentation would be identical to our consolidated results. We began operating the new facility in June 2016.~~

~~NOTE 4~~ - CONCENTRATIONS OF REVENUES AND CREDIT RISK

We sell our products and services to companies in the chemical, plastics, and petroleum industries. We perform periodic credit evaluations of our customers and generally do not require collateral from our customers. For the ~~year~~years ended December 31, ~~2018,~~2021, 2020, and 2019, one customer accounted for ~~17.0%~~13.4%, 15.4%, and 15.0%, respectively, of consolidated product revenue. For the year ended December 31, 2017, one customer accounted for 19.6% of consolidated product revenue. For the year ended December 31, 2016, one customer accounted for 20.1% of consolidated product revenue. The associated accounts receivable balances for ~~those customers~~this customer, ExxonMobil and their affiliates, were approximately ~~$11.0~~$4.6 million and $4.1 million at December 31, ~~2018,~~2021 and ~~$5.8 million at December 31, 2017. The carrying amount of accounts receivable approximates fair value at December 31, 2018, and 2017.~~

~~Accounts receivable serves as collateral for our amended and restated loan agreement (see Note 12).~~2020, respectively.

We market our products in many foreign jurisdictions. For the years ended December 31, ~~2018, 2017~~2021, 2020, and ~~2016, specialty petrochemical product sales~~2019, revenue in foreign jurisdictions accounted for approximately ~~35.4%~~19.0%, ~~20.8%~~24.0%, and ~~23.5%~~21.9% of ~~total product sales~~consolidated revenue, respectively.

F-13

Table of Contents

SHR utilizes one major supplier ~~for its~~to purchase all our feedstock supply. The feedstock is a commodity product commonly available from other suppliers if needed. ~~The percentage of feedstock purchased from the supplier during 2018, 2017, and 2016 was 100%, 100.0% and 99%, respectively.~~ At December 31, ~~2018,~~2021, and ~~2017,~~2020, we owed the supplier approximately ~~$4.7~~$3.4 million and ~~$8.5~~$4.4 million, respectively, for feedstock purchases.

We hold our cash with various financial institutions that are insured by the Federal Deposit Insurance Corporation up to $250,000. At times during the year, cash balances may exceed this limit. We have not experienced any losses in such accounts and do not believe we are exposed to any significant risk of loss related to cash.

NOTE 54 – TRADE RECEIVABLES

~~Trade receivables, net, at December 31, consisted of the following:~~


Trade receivables, net, at December 31, consisted of the following:
	2021		2020
	(thousands of dollars)
Trade receivables	$	33,111	$	25,601
Less allowance for doubtful accounts	(300)		(300)
Trade receivables, net	$	32,811	$	25,301

2018
2017
(thousands of dollars)
Trade receivables $ 27,564
$ 26,079
Less allowance for doubtful accounts (452 ) (300 )

Trade receivables, net $ 27,112

$ 25,779

~~Trade receivables~~Accounts receivable serves as collateral for our amended and restated loan agreement with a domestic bank (see Note ~~12)~~13).

NOTE ~~6 – PREPAID EXPENSES AND OTHER ASSETS~~

~~Prepaid expenses and other assets at December 31 are summarized as follows:~~

2018 2017
(thousands of dollars)
Prepaid license $ 2,419
$ 1,919
Spare parts 1,597
954
Other prepaid expenses and assets 648
772
Total $ 4,664

$ 3,645

Beginning January 1, 2017, due to the expansion of our plant assets at SHR and TC, we began inventorying spare parts for the repair and maintenance of our plant, pipeline and equipment. Prepaid catalyst has been reclassified into Plant, Pipeline & Equipment to conform to current year reporting.

~~NOTE 7~~5 – INVENTORIES

~~Inventories include the following at December 31:~~


Inventories include the following at December 31:					Inventories include the following at December 31:
	2018		2017			2021		2020
	(thousands of dollars)					(thousands of dollars)
Raw material	$	4,742	$	3,703	Raw material	$	2,348	$	2,580
Work in process	173		27		Work in process	212		138
Finished products	11,624		14,720		Finished products	18,574		10,227

Total inventory	$	16,539	$	18,450	Total inventory	$	21,134	$	12,945

Table of shares with certain shareholders whereby such shareholders traded 65,000 common shares of TREC in exchange for 24,489 shares of our AMAK stock. The 65,000 shares were accounted for as treasury stock.Contents

NOTE 19 ~~- QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)~~

The quarterly results of operations shown below are derived from unaudited financial statements for the eight quarters ended December 31, 2018 (in thousands, except per share data, rounding may apply):

Year Ended December 31, 2018

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Total

Revenues $ 71,741
$ 68,106
$ 73,416
$ 74,669
$ 287,932
Gross profit 10,140
8,142
6,842
2,694
27,818
Net income (loss) 2,352
2,215
(1,609 ) (5,290 ) (2,332 )
Basic EPS (1) $ 0.10
$ 0.09
$ (0.07 ) $ (0.22 ) $ (0.10 )
Diluted EPS (1) $ 0.09
$ 0.09
$ (0.07 ) $ (0.22 ) $ (0.10 )

Year Ended December 31, 2017

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter (2)

Total

Revenues $ 55,542
$ 62,115
$ 61,508
$ 65,978
$ 245,143
Gross profit 10,618
11,107
9,870
9,966
41,561
Net income 1,487
832
1,718
13,972
18,009
Basic EPS (1) $ 0.06
$ 0.03
$ 0.07
$ 0.58
$ 0.74
Diluted EPS (1) $ 0.06
$ 0.03
$ 0.07
$ 0.56
$ 0.72


~~(1)~~	Basic and diluted earnings per share are computed independently for each of the quarters presented based on the weighted average number of common shares outstanding during that period. Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted earnings per share.


~~(2)~~	~~As discussed in Note 16 the TCJA changed the federal corporate income tax rates from 35% to 21% resulting in a benefit from deferred taxes of approximately $10.3 million.~~

~~NOTE 20~~ – RELATED PARTY TRANSACTIONS

~~Consulting fees of approximately $28,000, $27,000 and $33,000 were incurred during 2018, 2017, and 2016, respectively from IHS Global FZ LLC of which~~In November 2020, Company Director ~~Gary K. Adams held~~Adam C. Peakes joined Merichem Company as Executive Vice President and Chief Financial Officer. The Company incurred expenses of less than $0.1 million during each of the ~~position of Chief Advisor – Chemicals until April 1, 2017.~~years ended December 31, 2021, 2020, and 2019, respectively, for Merichem Company. At December 31, ~~2018,~~2021 and ~~2017,~~2020, we had no outstanding ~~liability~~liabilities payable to ~~IHS Global FZ LLC.~~Merichem Company of less than $0.1 million and $0.1 million, respectively.

Consulting fees of approximately ~~$94,000, $74,000~~nil , nil and ~~$73,000~~$0.1 million were incurred during ~~2018, 2017,~~2021, 2020, and ~~2016,~~2019, respectively, from ~~Chairman of the Board,~~ Nicholas ~~Carter.~~Carter, Director and former CEO. Due to his history and experience with the Company and to provide continuity after his retirement, a ~~three year~~ consulting agreement was entered into with Mr. Carter in July ~~2015.~~2015, which terminated effective December 31, 2019.

NOTE 20 – POST-RETIREMENT OBLIGATIONS

As previously disclosed, the Company entered into agreements with certain former executive officers to provide certain welfare benefits. At December 31, ~~2018,~~2021 and ~~2017, we had no outstanding liability payable to Mr. Carter.~~

~~NOTE 21 – RESTRUCTURING AND SEVERENCE EXPENSES~~

~~During 2018, the Company incurred restructuring~~2020, respectively, approximately $0.3 million and ~~severance expenses of approximately $2.3~~$0.3 million related to changes in executive management and the completion of projects in our specialty petrochemical segment. These expenses relate to severance, stock compensation for continued vesting of time-vested shares issued under the Company's long-term incentive plans, and certain employee benefits including medical insurance and vacation. As of December 31, 2018, approximately $1.2 million remains unpaid and is included in accrued liabilities.

~~NOTE 22- POST-RETIREMENT OBLIGATIONS~~

In January 2008, an amended retirement agreement was entered into with Mr. Hatem El Khalidi; however, on May 9, 2010, the Board of Directors terminated the agreement due to actions of Mr. El Khalidi. See Note 14. All amounts which had not met termination dates remained recorded until a resolution was achieved. The matter was resolved on May 25, 2018 and as of June 30, 2018, post-retirement obligations of approximately $1.0 million for Mr. El Khalidi have been reversed. As of December 31, 2017, approximately $1.0 million remained outstanding and was included in post-retirement benefits.

In July 2015 and June 2018, we entered into retirement agreements with our former CEO, Nicholas Carter, and our former VP of Accounting & Compliance, Connie Cook. Mr. Carter's agreement provides continued welfare benefits for him and his wife for life at the same cost sharing basis as regular employees. Ms. Cook's agreement provides continued welfare benefits for her and her husband until eligible for Medicare. Approximately $377,000 and $249,000 was outstanding ~~at December 31, 2018, and 2017, respectively,~~ and included in ~~post-retirement benefits.~~other liabilities. For the period ended December 31, ~~2018,~~2021, and ~~2017,~~2020, approximately ~~$18,000~~$0.00 million and ~~$16,000,~~$0.01 million, respectively, had been paid.

F-26

Table of Contents

TRECORA RESOURCES AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

Three years ended December 31, ~~2018~~2021


Description	Beginning balance	Additions	Deductions	Ending balance
ALLOWANCE FOR DEFERRED TAX ASSET

December 31, 2019	225,622	—	—	225,622
December 31, 2020	225,622	—	—	225,622
December 31, 2021	225,622	—	(225,622)	—


Description	Beginning balance	Additions	Deductions	Ending balance
ALLOWANCE FOR DOUBTFUL ACCOUNTS

December 31, 2019	452,000	—	(23,000)	429,000
December 31, 2020	429,000	—	(129,000)	300,000
December 31, 2021	300,000	—	—	300,000

F-27

Description
Beginning
balance

Charged
(credited)
to earnings
Deductions
Ending
balance
ALLOWANCE FOR DEFERRED
TAX ASSET

December 31, 2016 376,037
—
—
376,037
December 31, 2017 376,037
(150,415 ) —
225,622
December 31, 2018 225,622
—
—
225,622

Description
Beginning
balance

Charged
to earnings
Deductions
Ending
balance
ALLOWANCE FOR DOUBTFUL
ACCOUNTS

December 31, 2016 210,000
183,339
(93,339 ) 300,000
December 31, 2017 300,000
—
—
300,000
December 31, 2018 300,000
152,000
—
452,000

~~AL MASANE AL KOBRA MINING COMPANY~~

~~Financial Statements~~

~~with~~

~~Report of Independent Registered Public Accounting Firm~~

~~December 31, 2018, 2017, and 2016~~



	~~Page~~

~~Report of Independent Registered Public Accounting Firm~~	1

~~Financial Statements:~~

~~Balance Sheets~~	~~2 - 3~~

~~Statements of Operations~~	4

~~Statements of Changes in Shareholders' Equity~~	5

~~Statements of Cash Flows~~	~~6 - 7~~

~~Notes to Financial Statements~~	~~8 - 18~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~To the Board of Directors and~~

~~Shareholders of Al Masane Al Kobra Mining Company~~

~~Najran, Kingdom of Saudi Arabia~~

~~Opinion on the Financial Statements~~

We have audited the accompanying balance sheets of Al Masane Al Kobra Mining Company (the Company) as of December 31, 2018 and 2017, and the related statements of operations, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2018, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

~~Basis for Opinion~~

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~/s/ Mamdouh Al Majed & Faisal Al-Enzi~~

~~Certified Public Accountants~~

~~We have served as the Company’s auditor since 2013.~~

~~Riyadh, Kingdom of Saudi Arabia~~

~~March 6, 2019~~

~~AL MASANE AL KOBRA MINING COMPANY~~

~~Balance Sheets~~

December 31,
2018
2017
(Expressed in Saudi Riyals)
ASSETS
Current assets:
Cash and cash equivalents 31,510,496
32,325,537
Accounts receivable 16,235,035
8,213,816
Inventories 45,871,120
27,226,932
Advances to shareholders (Note 1) 52,562,028
—
Advances to contractors and other 19,168,765
19,731,780

Total current assets 165,347,444

87,498,065

Non-current assets:
Property and equipment, net 634,856,075
693,801,671
Development costs, net 155,281,525
191,528,180
Deferred mine closure costs 5,955,999
6,700,499

Total non-current assets 796,093,599

892,030,350

961,441,043

979,528,415

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities 28,756,945
22,672,618
Zakat and income tax liability 5,400,000
3,516,673
Due to shareholders —
453,816
Capital lease obligation, current portion 193,206
—
Long-term debt, current portion 30,000,000
65,000,000

Total current liabilities 64,350,151

91,643,107

Non-current liabilities
Provision for mine closure costs 16,063,136
15,519,938
Capital lease obligation, net of current portion 359,811
—
Long-term debt, net of current portion and
deferred finance costs 266,258,712
229,082,810
End-of-service indemnities 3,649,889
2,518,529
Deferred income taxes 3,792,785
11,017,714

Total non-current liabilities 290,124,333

258,138,991

~~AL MASANE AL KOBRA MINING COMPANY~~

~~Balance Sheets - (Continued)~~

December 31,
2018
2017
(Expressed in Saudi Riyals)
Commitments and contingencies (Note 14)

Shareholders' equity
Share capital 820,000
780,000
Share premium —
37,546
Accumulated deficit (213,033 ) (187,800 )

Total shareholders' equity 606,967

629,746

961,441
979,528

~~AL MASANE AL KOBRA MINING COMPANY~~

~~Statements of Operations~~

December 31,
2018 2017 2016
(Expressed in Saudi Riyals)
Revenues 263,377,273
136,629,881
37,202,504

Costs of revenues 255,313,296
162,388,373
101,743,839

Operating income (loss) 8,063,977

(25,758,492 )
(64,541,335 )

General and
administrative expenses 29,475,998
28,299,733
26,957,555

Loss from operations (21,412,021 )
(54,058,225 )
(91,498,890 )

Other income (expense)
Gain on forgiveness of liabilities and
spare parts (Note 8) —
—
65,345,250
Finance charges (5,969,821 ) (6,103,680 ) (6,043,410 )
Other income 323,575
893,524
260,953

(5,646,246 )
(5,210,156 )
59,562,793

Loss before Zakat and income tax (27,058,267 ) (59,268,381 ) (31,936,097 )

Zakat and income tax benefit (expense) 1,824,929
(3,627,193 ) (3,596,244 )

Net loss (25,233,338 )
(62,895,574 )
(35,532,341 )

~~AL MASANE AL KOBRA MINING COMPANY~~

~~Statements of Changes in Shareholders' Equity~~

(Expressed in Saudi Riyals)
Retained
Earnings
Share Share (Accumulated
Capital Premium Deficit) Total

Balance at December 31, 2015 740,000,000
—
(89,372,188 ) 650,627,812

Issuance of share capital and premium 40,000,000
37,546,420
—
77,546,420

Net loss —
—
(35,532,341 ) (35,532,341 )

Balance at December 31, 2016 780,000,000

37,546,420

(124,904,529 )
692,641,891

Net loss —
—
(62,895,574 ) (62,895,574 )

Balance at December 31, 2017 780,000,000

37,546,420

(187,800,103 )
629,746,317

Issuance of share premium —
2,453,580
—
2,453,580

Conversion of share premium to share capital 40,000,000
(40,000,000 ) —
—

Net loss —
—
(25,233,338 ) (25,233,338 )

Balance at December 31, 2018 820,000,000
—
(213,033,441 ) 606,966,559

~~AL MASANE AL KOBRA MINING COMPANY~~

~~Statements of Cash Flows~~

December 31,
2018
2017
2016
(Expressed in Saudi Riyals)
Cash flows from operating activities:
Net loss (25,233,338 ) (62,895,574 ) (35,532,341 )
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 125,507,864
83,547,586
43,768,238
Accretion of deferred mine closure costs 543,198
524,829
507,081
Amortization of deferred finance costs 2,175,902
1,610,733
2,147,644
Gain on forgiveness of liabilities —
—
(65,345,250 )
Deferred income taxes (7,224,929 ) 417,966
1,718,258
Changes in operating assets and liabilities:
Accounts receivable (8,021,219 ) (8,213,816 ) 28,351,618
Inventories (18,644,188 ) (11,351,752 ) 15,754,952
Advances to contractors and other 563,016
(3,944,995 ) (6,186,357 )
Accounts payable and accrued liabilities 6,084,327
9,638,009
3,511,632
Zakat and income tax liability 1,883,327
1,583,048
679,206
Pre-export advance payment —
—
(9,150,880 )
End-of-service indemnities 1,131,360
1,037,893
(264,797 )

Net cash provided by (used in) operating activities 78,765,320

11,953,927

(20,040,996 )

Cash flows from investing activities:
Additions to property and equipment (28,945,309 ) (31,550,443 ) (29,246,001 )

~~AL MASANE AL KOBRA MINING COMPANY~~

~~Statements of Cash Flows - (Continued)~~

December 31,
2018 2017 2016
(Expressed in Saudi Riyals)
Cash flows from financing activities:
Issuance of share capital and premium 2,453,580
—
75,092,840
Payments on capital lease obligations (72,788 ) —
—
Payments on long-term debt —
(5,000,000 ) —
Net advances from (to) shareholders (53,015,844 ) 403,147
299,231

Net cash provided by (used in) financing activities (50,635,052 )
(4,596,853 )
75,392,071

Increase (decrease) in cash and cash equivalents (815,041 ) (24,193,369 ) 26,105,074

Cash and cash equivalents, beginning of year 32,325,537
56,518,906
30,413,832

Cash and cash equivalents, end of year 31,510,496

32,325,537

56,518,906

Supplemental cash flow information

Cash paid for interest 3,927,778
3,686,000
3,895,766

Cash paid for Zakat and income tax 3,212,813
1,626,179
1,198,780

Supplemental disclosure of non-cash items

Assets acquired through capital lease obligations 625,805
—
—

~~Note 1 – Organization and Business~~

~~Organization~~

Al Masane Al Kobra Mining Company is a Saudi Arabian closed joint stock company approved by the Minister of Commerce and Industry Decree Number 247/Q dated 9/10/1428 (October 21, 2007) and registered in Jeddah under Commercial Registration No. 4030175345 on 7/1/1429 (January 16, 2008). During 2015, the head office was moved from Jeddah to Najran. Accordingly, Najran Commercial Registration No. 5950017523 dated 03/11/1431H (October 11, 2010) was modified to be the main Commercial Registration. Unless the context requires otherwise, references to “we”, “us”, “our”, “AMAK”, and the “Company” are intended to mean Al Masane Al Kobra Mining Company. All amounts are expressed in Saudi Riyals (SR) unless otherwise noted.

During 2009 the authorized capital of the Company was 450,000,000 consisting of 45 million shares of 10 each of which 50% were issued for cash. The remaining 50% were issued for the contribution of mining rights and assets from Trecora Resources (Trecora) subject to Trecora’s liability for a loan in the amount of 41,250,000 due to the Ministry of Finance and National Economy. The mining rights in Al Masane mine were originally granted by Royal Decree Number M/17 effective 1/12/1413 (May 22, 1993) for a period of thirty years, with a right of renewal for a further period of twenty years to Trecora. The mining rights granted Trecora the right of exploitation in Al Masane mine located in Najran, Saudi Arabia, with an area of 44 square kilometers for a surface rental of 10,000 per square kilometer per year, i.e. 440,000 per year. As per the Ministry of Petroleum and Mineral Resources resolution dated 13/9/1429 (13/9/2008) and the ministry subsequent letter dated 2/1/1430 (30/12/2008), the aforementioned rights were transferred to us.

During 2011 the Company increased its authorized share capital by SR50,000,000 to SR500,000,000 and issued 5,000,000 shares of 10 each at a price of SR28 each resulting in a share premium of SR90,000,000. The entire 5,000,000 shares were issued for cash to Arab Mining Company (ARMICO) headquartered in Amman, Jordan.

During 2013 the Company increased its authorized share capital by SR50,000,000 to SR550,000,000 and issued 5,000,000 shares of 10 each at a price of SR30 each resulting in a share premium of SR100,000,000. The shares were issued for cash to existing shareholders.

~~During 2015 the Company increased its authorized share capital by SR190,000,000 to SR 740,000,000 and issued 19,000,000 shares of 10 each by transferring from share premium accounts.~~

During 2016 the Company increased its authorized share capital by SR40,000,000 to SR 780,000,000 and issued 4,000,000 shares of 10 each at a price of SR20 each resulting in a share premium of SR35,092,840.

~~During 2018 the Company increased share premium by SR2,453,580 for shares that were previously issued.~~

~~During 2018 the Company increased its authorized share capital by SR40,000,000 to SR820,000,000 and issued 4,000,000 shares of 10 each by transferring from share premium accounts.~~

During the Company’s Extraordinary General Assembly Meeting in October of 2018, the shareholders approved to repurchase 2,500,000 shares from the shareholders at a price of SR30 each and to register these shares as treasury shares. In December 2018, the Board unanimously approved this proposal and authorized the CEO to proceed with the repurchase. The Company began advancing shareholders their portion of these proceeds in anticipation of completing and finalizing the treasury stock repurchase in 2019. As of December 31, 2018, the Company had advanced SR52,562,028 to shareholders.

~~Except for Trecora and ARMICO, all other shareholders are Saudi nationals or companies wholly owned by Saudi nationals. Our ownership is as follows:~~

Shares
Ownership
Percentage
Saudi shareholders 38,349,184
46.8
Trecora (US Company) 27,402,876
33.4
ARMICO (Pan Arab Organization) 16,247,940
19.8

82,000,000
100.00

~~Business and operations~~

Our principal activity is to produce zinc and copper concentrates and silver and gold doré as per the license Number 993/2 dated 16/7/1428 (July 31, 2007) issued by Saudi Arabian General Investment Authority (SAGIA). We commenced our commercial production on July 1, 2012. During 2015, we received a new mining lease for an area near our current mining area for the Guyan ancient mine.

On 16/11/1428 (November 26, 2007), while the Company was in the registration process, the Company signed a contract with China National Geological and Mining Corporation (CGM) for underground mine rehabilitation, pre-production activity, and on-going mine development/production and with Nesma & Partners Contracting Company Limited (Nesma) for engineering, procurement, construction, commissioning and hand over of the concentrator surface works and the related infrastructure facilities. The handover of these facilities was finalized on November 28, 2011. In late 2014, we renegotiated a more favorable plant operations and maintenance contract with CGM. CGM ran our mining operations until November 2015, at which time the Board of Directors cancelled the CGM and Nesma contract and temporarily suspended operations of the Company. See Note 8.

This planned, temporary shutdown of the facility was due to the continued depressed commodity price environment as well as needs for renovation and maintenance. Our focus during the renovation focused on improving recoveries overall and upgrading the precious metals circuit through the installation of SART (sulfidization, acidification, recycling, and thickening) modifications which are expected to lower chemical use, thereby reducing operating costs. In February 2016, we entered into a new operating and rehabilitation contract with a different vendor under more favorable terms.

~~We resumed operations in the first quarter of 2017 and generated enough ore for two shipments in 2017. In 2018, we resumed our schedule of 4 shipments a year.~~

~~Note 2 - Summary of Significant Accounting Policies~~

~~The accompanying financial statements have been prepared using U.S. generally accepted accounting principles. The following is a summary of our significant accounting policies:~~

~~Cash and cash equivalents~~

~~We consider all highly-liquid investments purchased with an original maturity of three months or less to be cash equivalents.~~

~~Accounts receivable~~

We evaluate the collectability of our accounts receivable and the adequacy of the allowance for doubtful accounts based upon historical experience and any specific customer financial difficulties of which the Company becomes aware. During the years ended December 31, 2018, 2017, and 2016, we sold our concentrates and doré pursuant to a sales contract with one customer. No amounts have been written off for the years ended December 31, 2018, 2017, and 2016. In addition, we determined that an allowance for doubtful accounts was not necessary at December 31, 2018 and 2017.

~~Inventories~~

The components of inventories include mill stockpiles, precious metal doré, chemicals, and mining supplies. Inventories are stated at the lower of weighted-average cost or market. Costs of mill stockpiles inventory include labor and benefits, supplies, energy, depreciation, depletion, amortization, and other necessary costs incurred with the extraction and processing of ore. Corporate general and administrative costs are not included in inventory costs.

Because it is generally impracticable to determine the minerals contained in mill stockpiles by physical count, reasonable estimation methods are employed. The quantity of material delivered to the mill stockpiles is based on surveyed volumes of mined material and daily production records. Expected mineral recovery rates from the mill stockpiles are determined by various metallurgical testing methods.

~~Property and equipment~~

Property and equipment is carried at cost less accumulated depreciation. Expenditures for replacements and improvements are capitalized. Costs related to periodic maintenance are expensed as incurred. Depletion of the mining assets is determined using the unit-of-production method based on total estimated proven and probable reserves. Depletion and amortization using the unit-of-production method is recorded upon extraction of the ore, at which time it is allocated to inventory cost and then included as a component of cost of goods sold. Other assets are depreciated on a straight-line basis over their estimated useful lives ranging from 3 to 20 years.

Borrowing costs that are directly attributable to the acquisition, construction or production of assets are capitalized as part of the cost of those assets. Assets under construction are capitalized in the construction in progress account. Upon completion, the cost of the related asset is transferred to the appropriate category of property and equipment.

~~Development costs~~

Mineral exploration costs, as well as drilling and other costs incurred for the purpose of converting mineral resources to proven and probable reserves or identifying new mineral resources are charged to expense as incurred. Development costs are capitalized beginning after proven and probable reserves have been established. Development costs include costs incurred in mine pre-production activities undertaken to gain access to proven and probable reserves, including shafts, drifts, ramps, permanent excavations, infrastructure and removal of overburden. These costs are deferred net of the proceeds from the sale of any production during the development period and then amortized using an estimated unit-of-production method. If a mine is no longer considered economical, the accumulated costs are charged to the statement of operations in the year in which the determination is made.

~~Asset impairment~~

We review and evaluate our long-lived assets for impairment when events or changes in circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are evaluated for impairment under the two-step model. When events or circumstance suggest impairment of long-lived assets, estimated undiscounted future net cash flows are calculated using future estimated commodity prices, proven and probable reserves, and estimated net proceeds from the disposition of assets on retirement, less operating, sustaining capital, and reclamation costs. If it is determined that an impairment exists, an impairment loss is measured as the amount by which the asset carrying value exceeds its fair value. Fair value is generally determined using valuation techniques such as estimated future cash flows. Because the cash flows used to assess recoverability of our long-lived assets and measure fair value of our mining operations require us to make several estimates and assumptions that are subject to risk and uncertainty, changes in these estimates and assumptions could result in the impairment of our long-lived asset values.

~~Based on our evaluation, we recorded no impairment losses during the years ended December 31, 2018, 2017 and 2016.~~

~~End-of-service indemnities~~

Employee end-of-service benefits are accrued for the benefit of employees under the terms and conditions of Saudi Labor Law and Regulations and their employment contracts. End-of-service indemnities are provided for and accrued in the financial statements based on the respective employees' salaries and length of service.

~~Pre-export Advances~~

At times we receive advances on a pre-export basis against a portion of our inventory on hand prior to shipment. These advances bear interest at 2.5% and are repaid from the proceeds from final concentrate sales. We did not have an outstanding advance liability at December 31, 2018 and 2017.

~~Foreign currency~~

Our functional currency is the Saudi Riyal (SR). In June 1986, the Saudi Riyal was officially pegged to the U.S. Dollar at a fixed exchange rate of 1 U.S. Dollar to 3.75 riyals. Foreign currency transactions are translated into Saudi Riyals at the rates of exchange prevailing at the time of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rates prevailing at that date. Any gains and losses from settlement and translation of foreign currency transactions are included in the statement of operations. There were no material foreign-currency exchange gains or losses or translation adjustments during the years ended December 31, 2018, 2017, and 2016.

~~Leasing arrangements~~

We periodically lease operating equipment, facilities, and office buildings. Rentals payable under operating leases are charged to the statements of operations on a straight-line basis over the term of the relevant lease. For any capital leases, the present value of future minimum lease payments at the inception of the lease is reflected as an asset and a liability in the balance sheet. Amounts due within one year are classified as short-term liabilities and the remaining balance as long-term liabilities. Finance charges are charged to the statement of operations.

~~Operating lease expense amounted to approximately SR1,619,000, SR1,454,000 and SR442,000 for the years ended December 31, 2018, 2017 and 2016, respectively.~~

~~Environmental costs~~

Environmental costs are expensed or capitalized, depending upon their future economic benefits. Accruals for such expenditures are recorded when it is probable that obligations have been incurred and the costs can reasonably be estimated. Ongoing compliance costs are expensed as incurred.

~~Asset retirement obligations and costs~~

We record the fair value of our estimated asset retirement obligations (AROs) associated with tangible long-lived assets in the period in which the obligation is incurred. AROs associated with long-lived assets are those for which there is a legal obligation to settle under various laws, statues, or regulations. These obligations, which are initially estimated based on discounted cash flow estimates, are accreted to full value over time through charges to cost of revenues. In addition, asset retirement costs (ARCs) are capitalized as part of the related asset’s carrying value and are depreciated (primarily on a unit-of-production basis) over the asset’s respective useful life. Our AROs consist primarily of costs associated with mine reclamation and closure activities and are included in deferred mine closure costs on the accompanying balance sheets. At least annually, we review our ARO estimates for changes in the projected timing and changes in cost estimates and additional AROs incurred during the period.

~~Zakat and income tax~~

We are subject to the Regulations of the General Authority of Zakat and Tax (GAZT) in the Kingdom of Saudi Arabia. Under these regulations, Zakat is payable at 2.5% on the basis of the portion of our Zakat base attributable to our Saudi stockholders, and income tax is payable at 20% on the portion of our taxable income attributable to our non-Saudi stockholders. Zakat and income tax are provided on an accrual basis. Any difference in the estimate is recorded when the final assessment is approved, at which time the provision is cleared.

We account for deferred income taxes on non-Saudi owners utilizing an asset and liability method, whereby deferred tax assets and liabilities are recognized based on the tax effects of temporary differences between the financial statements and the income tax basis of assets and liabilities, as measured by the effective tax rate. When appropriate, we evaluate the need for a valuation allowance based on a more likely than not threshold to reduce deferred tax assets to estimated recoverable amounts.

We account for uncertain income tax positions using a threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We report tax-related interest and penalties as a component of Zakat and income tax expense. We recognized no material adjustment for unrecognized income tax liabilities. Zakat and income tax returns for the years from 2010 to 2017 are currently under review with GAZT.

~~Reclassifications~~

~~Certain reclassifications have been made to the prior periods to conform with current year presentation.~~

~~Revenue recognition~~

We sell our products pursuant to sales contracts entered into with a customer who acts as an intermediary and resells our products to end users. Revenue is recognized when title and risk of loss pass to the customer and when collectability is reasonably assured. The passing of title and risk of loss to the customer is based on terms of the sales contract, generally upon shipment or delivery of product.

Sales are recorded based on a provisional sales price or a final sales price calculated in accordance with the terms specified in the relevant sales contract. Under the long-established structure of sales agreements prevalent in the industry, the copper and zinc contained in concentrate is generally provisionally priced at the time of shipment. The provisional price received at the time of shipment is later adjusted to a final price based on quoted monthly average spot prices on the London Metal Exchange (LME) for a specified future month. We record revenues at the time of shipment (when title and risk of loss pass) based on then-current LME prices, and we account for any changes between the sales price recorded at the time of shipment and subsequent changes in the LME prices through the date of final pricing as gains or losses from a derivative embedded in the sales contract (a futures contract initiated at the date of shipment and settled upon the determination of the final price) which is bifurcated and separately accounted for at fair value. See Note 16.

Revenues from concentrate sales are recorded net of treatment and refining charges. These allowances are a negotiated term of each contract. Treatment and refining charges represent payments or price adjustments to smelters and refiners and are either fixed, or in certain cases, vary with the price of metals (referred to as price participation).

~~Management estimates~~

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant areas requiring the use of management estimates include mineral reserve estimation; useful asset lives for depreciation and amortization; zakat and income taxes; environmental obligations; reclamation and closure costs; estimates of recoverable materials in mill stockpiles; fair value of embedded derivatives; end-of-service indemnities; and

~~asset impairment, including estimates used to derive future cash flows associated with those assets. Actual results could differ from these estimates.~~

~~Recent accounting pronouncements~~

In May 2014 the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 supersedes the revenue recognition requirements of FASB Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition and most industry-specific guidance throughout the Accounting Standards Codification, resulting in the creation of FASB ASC Topic 606, Revenue from Contracts with Customers. ASU 2014-09 requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. For nonpublic companies this ASU provides alternative methods of retrospective adoption and is effective for fiscal years and interim periods beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating the impact of these amendments, although it does not expect the amendments to have a significant impact to the Company’s financial position or results of operation.

In February 2016 the FASB issued ASU No. 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing all lease transactions (with terms in excess of 12 months) on the balance sheet as a lease liability and a right-of-use asset (as defined). The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with earlier application permitted. Upon adoption, the lessee will apply the new standard retrospectively to all periods presented or retrospectively using a cumulative effect adjustment in the year of adoption. The Company has several lease agreements for which the amendments will require the Company to recognize a lease liability to make lease payments and a right-of-use asset which will represent its right to use the underlying asset for the lease term. As permitted by the amendments, the Company is anticipating electing an accounting policy to not recognize lease assets and lease liabilities for leases with a term of twelve months or less. The Company is currently reviewing the amendments to ensure it is fully compliant by the adoption date and does not expect to early adopt. In addition, the Company will change its current accounting policies to comply with the amendments with such changes as mentioned above.

~~Subsequent events~~

We have evaluated events and transactions subsequent to the date of the financial statements for matters requiring recognition or disclosure in the financial statements. The accompanying financial statements consider events through March 6, 2019, the date on which the financial statements were available to be issued.

~~Note 3 – Liquidity and Capital Resources~~

As shown in the financial statements, we have incurred three consecutive years of net losses however, the Company resumed full operations and had operating income and cash provided from operations during the year ended December 31, 2018. In addition, we expect to update our mineral resources and life of mine in 2019 with the expectation that the life of mine will be extended another two years. We believe that our continued operations and the adjusted repayment terms of our outstanding debt will provide us the necessary liquidity and capital resources.

~~Note 4 – Inventories~~

~~Inventories consisted of the following at:~~

December 31,
2018
2017
Ore concentrates 17,020,657
12,118,132
Stockpile ore 19,134,297
9,417,626
Precious metal dore 2,159,192
—
Explosives 1,134,728
485,668
Chemicals and other 6,422,246
5,205,506

45,871,120

27,226,932

~~As discussed in Note 2, we can receive advances on a pre-export basis on our mill stockpiles.~~

~~Note 5 – Advances to Contractors and Other~~

~~Advances to contractors and other consisted of the following at:~~

December 31,
2018
2017
Advances to contractors 15,127,502
11,992,870
Prepaid expenses 1,196,218
4,385,449
Other miscellaneous advances and receivables 2,845,045
3,353,461

19,168,765

19,731,780

~~Note 6 – Property and Equipment~~

~~Property and equipment, net consisted of the following at:~~

December 31,
2018
2017
Buildings 191,041,157
191,041,157
Leasehold improvements 1,838,317
1,838,317
Heavy equipment 118,125,568
110,259,122
Motor vehicles 22,467,300
22,783,108
Civil works 15,662,671
15,582,921
Tailings dam 23,042,594
22,684,394
Plant and machinery 324,372,695
315,029,454
Mining assets – rehabilitation costs 98,894,826
98,894,826
Mining assets – underground development costs 267,128,896
254,832,012
Construction in progress 5,106,409
5,532,817

1,067,680,433

1,038,478,128

Less accumulated depreciation, depletion and amortization (432,824,358 ) (344,676,457 )

634,856,075

693,801,671

~~Property and equipment serve as collateral for the SIDF loan agreement (see Note 10).~~

Depreciation, depletion and amortization expense related to property and equipment was approximately, SR88,000,000 and SR64,300,000 for years ended December 31, 2018 and 2017. During 2016, the mine was temporarily closed for renovation, therefore, no amortization or depletion was recorded on certain mining assets.

~~Note 7 – Development Costs~~

~~Development costs, net consisted of the following at:~~

December 31,
2018
2017
Cost 289,973,237
289,973,237
Accumulated amortization (134,691,712 ) (98,445,057 )

155,281,525

191,528,180

Development costs are amortized using the unit of production method upon extraction of the ore. Amortization expenses related to development costs was approximately SR36,250,000 and SR 18,200,000 for the year ended December 31, 2018 and 2017, respectively.

~~Note 8 – Accounts Payable, Accrued Liabilities and Forgiveness of Liabilities~~

~~Accounts payable and accrued liabilities consisted of the following at:~~

December 31,
2018
2017
Accounts payable and accrued liabilities 26,925,170
17,858,012
Other 381,763
2,802,493
Accrued salaries and payroll expenses 1,450,012
2,012,113

28,756,945

22,672,618

On March 31, 2016, the Company entered into finalization and discharge memorandums of understanding (MOU’s) with their former mine operator CGM and subcontractor Nesma where certain contracts were cancelled. These contracts included the EPC Surface Works Contract and Subcontract (CGM/NESMA) dated November 26, 2007, the Underground Mining Contract (CGM) dated June 29, 2010, the 1st Surface Works O&M Contract (CGM) dated July 3, 2011, and the 2nd Surface Works O&M Contract (CGM) dated November 3, 2014 (collectively, the Contracts).

The MOU’s were binding agreements between the Company, CGM and Nesma. All of CGM’s spare parts on site related to the Contracts reverted to and became the property of the Company. CGM received payment of approximately SR4,500,000 and forfeited their rights to the spare parts that had an economic value of approximately SR34,477,500. The spare parts were recorded at SR4,500,000 and were included in property and equipment, net on the balance sheets. Under the MoU’s, CGM and Nesma did not receive any further payments from the Company as full settlement against the deterioration of property, plant and equipment which exceeded normal wear and tear and any other breach of contracts. In recognition of certain financial losses incurred by the Company, CGM and NESMA forfeited the recovery of all remaining amounts due under the Contracts. The total amounts of liabilities recorded on the Company’s books as of March 31, 2016 were approximately SR65,345,000 which were written off to other income on the statement of operations for the year ended December 31, 2016. There were no outstanding or unresolved claims and all parties have fulfilled their obligations in connection with the Contracts.

~~Note 9 – Zakat and Income Tax~~

We have submitted our Zakat and income tax return for the year ended December 31, 2017 and have obtained our 2017 Zakat certificate. We are in the process of preparing and submitting our Zakat and income tax return for the year 2018.

The Zakat base for the Saudi shareholders was positive in 2018, 2017 and 2016 and the corresponding Zakat expense and liability has been recorded. There was a taxable profit attributable to our non–Saudi (foreign) shareholders in 2018 and the current income tax expense and liability has also been recorded. There was no taxable profit attributable to our non-Saudi (foreign) shareholders for 2017 and 2016, therefore, no current income tax liability is due in those years.

~~The components of Zakat and income tax benefit (expense) are as follows:~~

Years ended December 31,
2018
2017
2016
Deferred income tax benefit 12,961,569
8,617,706
6,694,909
Change in valuation allowance (5,736,640 ) (9,035,670 ) (8,413,167 )
Current Zakat and income tax expense (5,400,000 ) (3,209,229 ) (1,877,986 )

Zakat and income tax benefit (expense) 1,824,929

(3,627,193 )
(3,596,244 )

The difference between the effective income tax rate and the statutory rate for non-Saudi shareholders of 20% for the years ended December 31, 2018, 2017, and 2016, relates to changes in the valuation allowance and adjustments to estimates in depreciation.

~~Tax effects of temporary differences that give rise to significant portions of non-Saudi owners deferred tax assets and deferred tax liabilities were as follows:~~

December 31,
2018
2017
Deferred tax assets:
Loss carryforward 42,194
42,884
Other 657
469

42,851

43,352
Deferred tax liabilities:
Property and Equipment (7,806 ) (21,236 )

Net deferred tax asset 35,045

22,116
Valuation allowance (38,837 ) (33,134 )

Net deferred tax liability (3,793 )
(11,018 )

At December 31, 2018 and 2017, we had tax loss carryforwards totaling approximately SR210,970,000 and SR214,418,000. Tax losses may be carried forward indefinitely subject to certain annual limitations for non-Saudi shareholders. We have provided a valuation allowance in 2018 and 2017 against a portion of our gross deferred tax assets because of uncertainties regarding their realization.

~~Note 10 - Long-term Debt~~

During 2010, the Company entered into a loan agreement with the Saudi Industrial Development Fund (SIDF) for SR330,000,000 to finish the development of the mine and provide working capital. The loan originally matured in 2019, however, the agreement was amended during 2015 to adjust the maturity date to 2022 as well as the repayment schedule. We did not make certain scheduled loan repayments due in 2017 and 2018 and engaged with SIDF to renegotiate the terms of the debt. In July 2018, we amended our agreement with SIDF to adjust the repayment schedule and extend the maturity date to 2024. Under the terms of the agreement with SIDF, we are required to maintain certain financial covenants, among other requirements. The loan agreement is collateralized by all the assets of Company and is guaranteed by the shareholders.

~~Long-term debts are summarized as follows at:~~

December 31,
2018
2017
SIDF loan agreement 305,000,000
305,000,000
Deferred finance charges (8,741,288 ) (10,917,190 )
Total debt 296,258,712
294,082,810

Less current portion 30,000,000
65,000,000

Total long-term debt, less current portion 266,258,712
229,082,810

Deferred finance costs are comprised of SIDF loan origination charges which are capitalized and amortized over the period of the related loan which approximates the interest method. Loan fees of SR8,741,288 and SR10,917,190 net of accumulated amortization are included net with long-term debt at December 31, 2018 and 2017. Amortization of loan fees amounted to approximately SR1,639,000, SR1,611,000, and SR2,148,000 for the years ended December 31, 2018, 2017, and 2016, respectively.

~~The repayment schedule is as follows:~~

Years Ending
December 31,

2019 30,000,000
2020 50,000,000
2021 60,000,000
2022 60,000,000
2023 70,000,000
Thereafter 35,000,000

305,000,000

~~Note 11 – End-of-Service Indemnities~~

~~The change in the end-of-service indemnities provision is as follows:~~

Years Ended December 31,
2018
2017
Balance, beginning of year 2,518,529
1,480,636
Provision for the year 1,347,418
1,375,024
Paid during the year (216,058 ) (337,131 )
Balance, end of year 3,649,889

2,518,529

~~Note 12 – Asset Retirement Obligations~~

During 2012, we recorded an ARO for deferred mine closure costs of approximately SR12,843,000. These deferred mine closure costs are being amortized over the estimated life of the mine. Amortization expense was approximately SR745,000, SR1,117,000, and SR1,117,000 for the years ended December 31, 2018, 2017, and 2016.

~~Deferred mine closure costs consisted of the following at:~~

December 31,
2018
2017
Cost 12,842,625
12,842,625
Accumulated amortization (6,886,626 ) (6,142,126 )

5,955,999

6,700,499

~~A summary of changes in our provision for mine closure costs is as follows:~~

Years Ended December 31,
2018
2017
2016
Balance, beginning of year 15,519,938
14,995,109
14,488,028
Accretion expense 543,198
524,829
507,081

Balance, end of year 16,063,136

15,519,938

14,995,109

ARO costs may increase or decrease significantly in the future as a result of changes in regulations, changes in engineering designs and technology, permit modifications or updates, changes in mine plans, inflation or other factors and as actual reclamation spending occurs.

~~Note 13 – General and Administrative Expenses~~

~~A summary of general and administrative expenses is as follows:~~

Years Ended December 31,
2018
2017
2016
Wages, salaries and related costs 17,036,965
14,837,901
10,195,511
Mine closure and environmental 1,287,698
1,641,580
1,623,831
Office expenses 9,287,218
6,589,090
5,491,679
Travel and accommodation 593,046
2,958,938
1,477,413
Professional fees 1,271,071
2,272,224
8,169,121

29,475,998

28,299,733

26,957,555

~~Note 14~~ - ~~Commitments and Contingencies~~

~~Operating lease obligations~~

Our lease commitment for our surface mining lease was initially granted for a period of 30 years through 2024. The lease allows for renewal for an additional 20 years. We also have leases for our corporate offices and three residential villas in Najran through 2025. There is also a mining lease that covers the Guyan area for a period of 20 years. A summary of these commitments are as follows:

Years Ending
December 31,

2019 990,000
2020 990,000
2021 990,000
2022 990,000
2023 550,000
Thereafter 1,650,000

6,160,000

~~Capital lease obligations~~

We lease certain equipment vehicles under capital lease obligations that are set to expire at various dates through 2021. The future minimum lease payments under the capital lease obligations are as follows for the years ending December 31,:

2019 250,526
2020 250,526
2021 147,558
Total minimum lease payments 648,610
Less deferred financial charges (95,593 )
Total capital lease obligations 553,017
Less: current portion of capital lease obligations 193,206
Total long term portion, net current portion 359,811

~~Note 15 - Fair Value Measurement~~

Fair value accounting guidance includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).



~~Level 1~~	~~Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;~~



~~Level 2~~	Quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data by correlation or other means; and



~~Level 3~~	~~Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).~~

~~We did not have any significant transfers in or out of Levels 1, 2, or 3 in 2018 or~~ ~~2017. The embedded derivatives in our provisional sales contracts are considered Level 2 measurements.~~

~~Note 16~~–~~Embedded Derivatives~~

As described in Note 2 under Revenue Recognition, our concentrate sales contracts provide for provisional pricing based on the LME price at the time of shipment as specified in the contract. Sales contracts with a provisional sales price contain an embedded derivative (i.e., the price settlement mechanism that is settled after the time of delivery) that is required to be bifurcated from the host contract. The host contract is the sale of the metals contained in the concentrates at the then-current LME price as defined in the contract. Mark-to-market price fluctuations recorded through the settlement date are reflected in revenues for sales contracts. Our embedded derivatives at December 31, 2018 and 2017, were not significant to the financial statements.



ý☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Fiscal Year Ended December 31, ~~2018~~2021 OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Transition Period from ___________ to ________



Delaware (State or other jurisdiction of incorporation or organization)			75-1256622 (I.R.S. Employer Identification No.)
1650 Hwy 6 S, Suite 190 Sugar Land, TX (Address of principal executive offices)			77478 (Zip code)



Title of ~~Class~~each class	Trading Symbol(s)	Name of each exchange on which registered
Common ~~stock,~~Stock, par value $0.10 per share	TREC	New York Stock Exchange



Large accelerated filer ☐			Accelerated filer ý
Non-accelerated filer ☐			Smaller reporting company ☐☒
Emerging growth company ☐


PART I
ITEM 1. BUSINESS
			General	1
			Business Segments	1
			Specialty Petrochemicals Operations	1
			Specialty Waxes Operations	2
			Mineral Interests	2
			Environmental	3
			Human Capital Management	3
			COVID-19 Response	4
			Competition	4
			Available Information	4

~~PART I~~
~~ITEM 1. BUSINESS~~
	~~General~~	1
	~~Business Segments~~	1
	~~United States Specialty Petrochemical Operations~~	1
	~~United States Specialty Synthetic Wax Operations~~	3
	~~United States Mineral Interests~~	3
	~~Environmental~~	4
	~~Personnel~~	4
	~~Competition~~	4
	~~Investment in AMAK~~	4
	~~Available Information~~	8

ITEM 1A. RISK FACTORS		8 4

ITEM 1B. UNRESOLVED STAFF COMMENTS				15 14

ITEM 2. PROPERTIES				16 14

ITEM 3. LEGAL PROCEEDINGS				20 14

ITEM 4. MINE SAFETY DISCLOSURES				20 14

PART II
ITEM 5. MARKET FOR ~~REGISTRANT'S~~REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES				21 15

ITEM 6. ~~SELECTED FINANCIAL DATA~~[RESERVED]				22 16

ITEM 7. ~~MANAGEMENT'S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
			Forward Looking Statements	23 16
			Overview	24 17
			Business Environment & Risk Assessment	24 17
			Liquidity and Capital Resources	25 19
			Results of Operations	29 21
			~~New~~Recent Accounting ~~Standards~~Pronouncements	38 23
			Critical Accounting Policies	39 24

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK				42 26

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA				42 26

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE				43 26

ITEM 9A. CONTROLS AND PROCEDURES				43 26

ITEM 9B. OTHER INFORMATION				46 29

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS				29

PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE				46 29

ITEM 11. EXECUTIVE COMPENSATION				46 29

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS				46 29

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE				46 29

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES				46 29

PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES				46 29

ITEM 16. FORM 10-K SUMMARY				32


~~(2)~~	~~TOCCO – Texas Oil & Chemical Co. II, Inc. – Wholly owned subsidiary of TREC and parent of SHR and TC~~


~~(3)~~	~~SHR – South Hampton Resources, Inc. – Specialty petrochemical segment and parent of GSPL~~


~~(4)~~	~~GSPL – Gulf State Pipe Line Co, Inc. – Pipeline support for the specialty petrochemical segment~~


~~(5)~~	~~TC – Trecora Chemical, Inc. – Specialty wax segment~~



	Average Price For 2016-2018		Spot Price as of 12/31/18		Percentage Increase (Decrease)
Gold per ounce	$	1,258.20	$	1,279.00	(1.65	)%
Silver per ounce	$	16.62	$	15.47	6.95	%
Copper per pound	$	2.93	$	2.98	(5.78	)%
Zinc per pound	$	1.32	$	1.25	4.82	%



Zone	Proven Reserves (Mtonnes)	Copper (%)	Zinc (%)	Gold (g/t)	Silver (g/t)
Saadah	0.45	1.5	3.7	0.8	21.0
Al Houra	0.03	0.8	3.8	0.7	21.0
Moyeath	—	—	—	—	—
Total	0.48	1.4	3.7	0.8	21.0

Zone	Probable Reserves (Mtonnes)	Copper (%)	Zinc (%)	Gold (g/t)	Silver (g/t)
Saadah	5.19	1.2	3.4	0.8	23.0
Al Houra	1.90	0.9	3.8	1.2	39.0
Moyeath	0.70	0.8	7.2	1.0	55.0
Total	7.79	1.1	3.9	0.9	29.0

Total proven and probable reserves	8.27
Less production through December 31, 2018	3.37
Remaining proven and probable reserves	4.90



	Average Price in USD
	2014-2016		2015-2017		2016-2018
Gold per ounce	$	1,224.96	$	1,222.06	$	1,258.20
Silver per ounce	$	17.29	$	16.62	$	16.62
Copper per pound	$	2.60	$	2.50	$	2.93
Zinc per pound	$	0.94	$	1.05	$	1.32



Ore Reserves (Probable+Proven) Zone	(Tonnes) (Mtonnes)	Copper (%)	Zinc (%)	Gold (g/t)	Silver (g/t)
Saadah	2.8	0.98	3.39	0.74	25.43
Al Houra	2.8	0.83	3.34	0.90	26.40
Moyeath	0.80	0.77	6.53	0.61	41.61
Total	6.4	0.89	3.78	0.79	27.87



Year	Mine Head Grade		Mill Throughput
	%Cu	%Zn	dmt
2011	1.26	3.02	9,460
2012	1.18	3.39	399,892
2013	1.48	3.19	699,316
2014	1.22	3.15	670,812
2015	1.11	3.69	591,419
2016	—	—	—
2017	1.10	3.22	385,495
2018	1.10	3.27	699,885



Year	Copper Concentrate				Zinc Concentrate
	dmt	%Cu	%Zn	Recovery	dmt	%Zn	%Cu	Recovery
2011	443	16.51	7.51	61.64	377	40.69	3.56	53.64
2012	15,944	23.91	5.46	80.62	20,738	50.03	1.16	76.54
2013	35,140	25.20	4.73	85.68	33,460	49.82	0.83	74.62
2014	28,476	24.20	4.31	84.24	31,600	51.02	0.70	76.26
2015	24,218	22.70	5.13	84.12	35,447	48.46	0.62	78.63
2016	—	—	—	—	—	—	—	—
2017	15,492	19.10	6.20	72.80	16,544	47.20	1.10	63.40
2018	27,508	22.59	5.25	80.78	33,735	49.36	1.27	72.73



	2018			2017			Change			%Change
	(in thousands)
Specialty Petrochemical Product Sales	$	242,763		$	203,515		$	39,248		19.3	%
Processing Fees	6,916			6,866			50			0.7	%
Gross Revenue	$	249,679		$	210,381		$	39,298		18.7	%

Volume of specialty petrochemical sales (thousand gallons)	89,644			83,326			6,318			7.6	%
Volume of prime product sales (thousand gallons)	69,403			63,990			5,413			8.5	%

Cost of Sales	$	223,796		$	169,213		$	54,583		32.3	%
Gross Margin	10.4		%	19.6		%	(9.2		)%	(46.9	)%
Total Operating Expense*	73,096			58,740			14,356			24.4	%
Natural Gas Expense*	5,645			4,912			733			14.9	%
Operating Labor Costs*	18,040			15,608			2,432			15.6	%
Transportation Costs*	29,580			25,282			4,298			17.0	%
General & Administrative Expense	11,413			10,243			1,170			11.4	%
Depreciation**	8,932			6,310			2,622			41.6	%

Capital Expenditures	$	22,431		$	37,569		$	(15,138	)	(40.3	)%



	2017			2016			Change			%Change
	(in thousands)
Specialty Petrochemical Product Sales	$	203,515		$	173,262		$	30,253		17.5	%
Processing Fees	6,866			8,766			(1,900		)	(21.7	)%
Gross Revenue	$	210,381		$	182,028		$	28,353		15.6	%

Volume of specialty petrochemical sales (thousand gallons)	83,326			76,372			6,954			9.1	%
Volume of prime product sales (thousand gallons)	63,990			58,441			5,549			9.5	��%

Cost of Sales	$	169,213		$	146,159		$	23,054		15.8	%
Gross Margin	19.6		%	19.7		%	(0.1		)%	(0.5	)%
Total Operating Expense*	58,740			58,536			204			0.3	%
Natural Gas Expense*	4,912			3,301			1,611			48.8	%
Operating Labor Costs*	15,608			16,094			(486		)	(3.0	)%
Transportation Costs*	25,282			24,138			1,144			4.7	%
General & Administrative Expense	10,243			9,172			1,071			11.7	%
Depreciation**	6,310			5,825			485			8.3	%

Capital Expenditures	$	37,569		$	22,948		$	14,621		63.7	%



	2018	2017	Variance
Ore tons processed	699,885	385,495	314,390
Concentrate to the port
Copper	26,070	15,326	10,744
Zinc	31,989	16,606	15,383
	58,059	31,932	26,127

Shipments
Copper	26,286	13,940	12,346
Zinc	31,272	14,080	17,192
	57,558	28,020	29,538



	Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(thousands of dollars)
Operating Lease Obligations	$	18,131	$	3,670	$	7,001	$	5,395	$	2,065
Purchase Obligations	124		124		—		—		—
Long-Term Debt Obligations	103,312		4,375		98,937		—		—
Total	$	121,567	$	8,169	$	105,938	$	5,395	$	2,065


INDEX TO FINANCIAL STATEMENTS			Page
Report of Independent Registered Public Accounting Firm			F-2

Consolidated Balance Sheets at December 31, 202 1 and 20 20			F-4

Consolidated Statements of Operations For the Years Ended December 31, 202 1 , 20 20 and 201 9			F-5

Consolidated Statement of Stockholders' Equity For the Years Ended December 31, 202 1 , 20 20 and 201 9			F-6

Consolidated Statements of Cash Flows For the Years Ended December 31, 202 1 , 20 20 and 201 9			F-7

Notes to Consolidated Financial Statements			F-9

INDEX TO FINANCIAL STATEMENT SCHEDULES

Schedule II – Valuation and Qualifying Accounts For the Three Years Ended December 31, 202 1			F-39



Stock Exchange (see Notes 10 & 18)	(65	)	—		(66		)	(65		)	—			(131		)	—		(131		)
Warrants	9		—		(9		)	9			—			—			—		—
Net Income (Loss)	—		—		—			—			(2,332		)	(2,332		)	—		(2,332		)

December 31, 2018	24,626		$	2,463	$	58,294		$	(8	)	$	124,123		$	184,872		$	289	$	185,161



Cash paid	$	2,011
Estimated earnout liability	733
Purchase Price			$	2,744

Fixed assets at FMV
Land	980
Site improvements	30
Buildings	1,350
Production equipment	11,933
			14,293
Bargain purchase gain			$	11,549


	Years Ended December 31,
	2020		2019
	(thousands of dollars)
Saudi administration and transaction expenses	$	(2,452)	$	(187)
Equity in earnings (losses) of AMAK	702		(986)
Gain (loss) on sale of equity interest	34,926		(1,473)
Income (loss) from discontinued operations before taxes	33,176		(2,646)
Tax (expense) benefit	(6,967)		556
Income (loss) from discontinued operations, net of tax	$	26,209	$	(2,090)


Results of Operations	Nine Months Ended September 30,		Year Ended December 31,
	2020		2019
	(thousands of dollars)
Sales	$	62,633	$	78,350
Cost of sales	(55,728)		(69,620)
Gross profit	6,905		8,730
Selling, general, and administrative	(4,985)		(13,047)
Operating income (loss)	1,920		(4,317)
Other (expense) income	(346)		558
Finance and interest expense	(1,211)		(1,450)
Income (loss) before Zakat and income taxes	363		(5,209)
Zakat and income tax (expense) benefit	(490)		(1,801)
Net loss	$	(127)	$	(7,010)


Financial Position	September 30,
	2020
	(thousands of dollars)
Current assets	$	29,799
Noncurrent assets	209,814
Total assets	$	239,613

Current liabilities	$	40,919
Long term liabilities	79,122
Stockholders' equity	119,572
	$	239,613


Prepaid expenses and other assets at December 31 are summarized as follows:
	2021		2020
	(thousands of dollars)
Prepaid license	$	500	$	403
Prepaid insurance	1,145		4,241
Spare parts	2,114		2,376

Cash held by AMAK for foreign taxes (see Note 6)	—		1,877
Other prepaid expenses and assets	554		301
Total	$	4,313	$	9,198


Plant, pipeline and equipment include the following at December 31:							Plant, pipeline and equipment include the following at December 31:
	2018			2017				2021		2020
	(thousands of dollars)							(thousands of dollars)
Platinum catalyst	$	1,612		$	1,612		Platinum catalyst	$	1,478	$	1,580
Catalyst	3,131			779			Catalyst	4,325		4,325
Land	5,428			5,428			Land	5,428		5,428
Plant, pipeline and equipment	253,905			186,946			Plant, pipeline and equipment	282,780		270,149
Construction in progress	4,343			50,996			Construction in progress	7,213		6,422
Total plant, pipeline and equipment	268,419			245,761			Total plant, pipeline and equipment	301,224		287,904
Less accumulated depreciation	(73,762		)	(63,240		)	Less accumulated depreciation	(115,703)		(100,800)
Net plant, pipeline and equipment	$	194,657		$	182,521		Net plant, pipeline and equipment	$	185,521	$	187,104


		December 31,
($ in thousands)	Classification in the Consolidated Statements of Operations	2021		2020		2019
Operating lease cost (a)	Cost of sales, exclusive of depreciation and amortization	$	4,366	$	4,088	$	4,361
Operating lease cost (a)	Selling, general and administrative	135		137		137
Total operating lease cost		$	4,501	$	4,225	$	4,498

Finance lease cost:
Amortization of right-of-use assets	Depreciation	—		—		—
Interest on lease liabilities	Interest Expense	—		—		—
Total finance lease cost		$	—	$	—	$	—

Total lease cost		$	4,501	$	4,225	$	4,498

(a) Short-term lease costs were approximately $0.8 million, $0.5 million and nil as of December 31, 2021, 2020 and 2019, respectively.


		December 31,
($ in thousands)	Classification on the Consolidated Balance Sheets	2021		2020
Assets:
Operating	Operating lease assets	$	8,170	$	10,528
Finance	Property, plant, and equipment	—		—
Total leased assets		$	8,170	$	10,528

Liabilities:
Current
Operating	Current portion of operating lease liabilities	$	3,227	$	3,195
Finance	Short-term debt and current portion of long-term debt	—		—
Noncurrent
Operating	Operating lease liabilities	4,923		7,333
Finance	Long-term debt	—		—
Total lease liabilities		$	8,150	$	10,528


($ in thousands)	Operating Leases		Finance Leases
2022	$	3,511	$	—
2023	2,619		—
2024	1,298		—
2025	1,123		—
2026	149		—

Total lease payments	$	8,700	$	—
Less: Interest	550		—
Total lease obligations	$	8,150	$	—


	December 31, 2021
Intangible assets subject to amortization (Definite-lived)	Gross		Accumulated Amortization		Net
Customer relationships	$	16,852	$	(8,145)	$	8,707
Non-compete agreements	94		(94)		—
Licenses and permits	1,471		(808)		663
Developed technology	6,131		(4,445)		1,686




Total	$	24,548	$	(13,492)	$	11,056



~~Name~~	~~Percentage Owned~~
~~Various Saudi shareholders~~	~~46.73~~	%
~~Trecora Resources~~	~~33.41~~	%
~~Armico~~	~~19.86~~	%
~~Total~~	~~100.00~~	%


Accrued liabilities at December 31 are summarized as follows:
	2021		2020
	(thousands of dollars)
Accrued state taxes	$	192	$	125
Accrued payroll	3,123		2,282
Accrued royalties	294		260
Accrued officer compensation	989		1,053
Accrued professional expenses	287		559
Accrued foreign taxes	—		1,054
Other liabilities	988		1,524
Total	$	5,873	$	6,857



Year Ending December 31,	Long-Term Debt
	(thousands of dollars)
2019	4,375
2020	4,375
2021	4,375
2022	4,375
2023	85,812
Total	103,312


Long-term debt and long-term obligations at December 31 are summarized as follows:
	2021		2020
	(thousands of dollars)
Revolving facility	$	—	$	—
Term loan facility	42,188		46,563

Loan fees	(287)		(468)

Total long-term debt	41,901		46,095

Less current portion including loan fees	4,194		4,194

Total long-term debt, less current portion including loan fees	$	37,707	$	41,901



	Stock Options and Warrants		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life	Intrinsic Value (in thousands)
Outstanding at January 1, 2018	1,323,587		$	7.82
Granted	—		—
Expired	—		—
Exercised	(377,757	)	5.21
Forfeited	(200,000	)	3.40
Outstanding at December 31, 2018	745,830		$	10.33	4.6	$	—
Expected to vest	—		$	—	0.0	$	—
Exercisable at December 31, 2018	745,830		$	10.33	4.6	$	—


A summary of the status of the Company’s stock option and warrant awards is as follows:
	Stock Options and Warrants	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life	Intrinsic Value (in thousands)
Outstanding at January 1, 2021	487,000	$	10.87
Granted	—	—
Expired	—	—
Exercised	(20,000)	4.09
Forfeited	—	—
Outstanding at December 31, 2021	467,000	$	11.16	1.9	$	—
Expected to vest	—	$	—	0.0	$	—
Exercisable at December 31, 2021	467,000	$	11.16	1.9	$	—