10-Q

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549 

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2022
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:001-34743

“COAL KEEPS YOUR LIGHTS ON”		“COAL KEEPS YOUR LIGHTS ON”
HALLADOR ENERGY COMPANY (www.halladorenergy.com)

Colorado (State of incorporation)	84-1014610 (IRS Employer Identification No.)
1183 East Canvasback Drive, Terre Haute, Indiana (Address of principal executive offices)	47802 (Zip Code)

Registrant’s telephone number, including area code: 812.299.2800

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Common Shares, $.01 par value	HNRG	Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of August 12, 2022, we had 32,982,605 shares of common stock outstanding.

TABLE OF CONTENTS 

PART I - FINANCIAL INFORMATION	3
ITEM 1. FINANCIAL STATEMENTS (Unaudited)	3
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Operations	4
Condensed Consolidated Statements of Cash Flows	5
Condensed Consolidated Statements of Stockholders’ Equity	6
Notes to Condensed Consolidated Financial Statements	7
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21
ITEM 4. CONTROLS AND PROCEDURES	21
PART II - OTHER INFORMATION	22
ITEM 4. MINE SAFETY DISCLOSURES	22
ITEM 5. OTHER INFORMATION	22
ITEM 6. EXHIBITS	23
SIGNATURES	24

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS   

Hallador Energy Company 

Condensed Consolidated Balance Sheets 

(in thousands, except per share data) 

(unaudited) 

	June 30,			December 31,
	2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	8,882		$	2,546
Restricted cash		3,491			3,283
Accounts receivable		17,155			13,584
Inventory		13,806			7,699
Parts and supplies		12,247			10,015
Prepaid expenses		999			2,112
Total current assets		56,580			39,239
Property, plant and equipment:
Land and mineral rights		115,771			115,837
Buildings and equipment		355,053			342,782
Mine development		123,274			112,575
Total property, plant and equipment		594,098			571,194
Less - accumulated depreciation, depletion and amortization		(286,960	)		(268,370	)
Total property, plant and equipment, net		307,138			302,824
Investment in Sunrise Energy		3,883			3,545
Other assets		8,134			8,372
Total Assets	$	375,735		$	353,980
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of bank debt, net	$	13,222		$	23,098
Accounts payable and accrued liabilities		47,973			41,528
Total current liabilities		61,195			64,626
Long-term liabilities:
Bank debt, net		113,607			84,667
Deferred income taxes		3,094			2,850
Asset retirement obligations		13,437			14,025
Other		1,579			1,577
Total long-term liabilities		131,717			103,119
Total liabilities		192,912			167,745
Redeemable noncontrolling interests		4,000			4,000
Stockholders' equity:
Preferred stock, $.10 par value, 10,000 shares authorized; none issued and outstanding		—			—
Common stock, $.01 par value, 100,000 shares authorized; 32,983 and 30,785 issued and outstanding, respectively		330			308
Additional paid-in capital		114,212			104,126
Retained earnings		64,281			77,801
Total stockholders’ equity		178,823			182,235
Total liabilities, redeemable noncontrolling interests, and stockholders’ equity	$	375,735		$	353,980

See accompanying notes.

3

Hallador Energy Company 

Condensed Consolidated Statements of Operations

(in thousands, except per share data) 

(unaudited) 

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
SALES AND OPERATING REVENUES:
Coal sales	$	64,161		$	54,600		$	121,171		$	100,479
Other revenues		1,768			1,038			3,665			1,854
Total revenue		65,929			55,638			124,836			102,333
EXPENSES:
Operating expenses		51,394			42,456			105,995			76,465
Depreciation, depletion and amortization		11,164			9,715			20,695			20,022
Asset retirement obligations accretion		250			373			496			736
Exploration costs		215			159			272			217
General and administrative		3,722			3,383			6,871			6,204
Total operating expenses		66,745			56,086			134,329			103,644
LOSS FROM OPERATIONS		(816	)		(448	)		(9,493	)		(1,311	)
Interest expense (1)		(2,337	)		(2,182	)		(4,121	)		(4,080	)
Equity method investment income		188			63			338			63
LOSS BEFORE INCOME TAXES		(2,965	)		(2,567	)		(13,276	)		(5,328	)
INCOME TAX EXPENSE (BENEFIT):
Current		—			—			—			—
Deferred		421			397			244			(1,332	)
Total income tax expense (benefit)		421			397			244			(1,332	)
NET LOSS	$	(3,386	)	$	(2,964	)	$	(13,520	)	$	(3,996	)
NET LOSS PER SHARE:
Basic and diluted	$	(0.11	)	$	(0.10	)	$	(0.44	)	$	(0.13	)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic and diluted		30,809			30,613			30,797			30,612
(1) Interest Expense:
Bank interest		1,712			2,307			3,422			4,443
Other interest		58			—			58			—
Non-cash interest:
Change in interest rate swap valuation		(250	)		(766	)		(867	)		(1,614	)
Amortization of debt issuance costs		817			641			1,508			1,251
Total non-cash interest		567			(125	)		641			(363	)
Total interest expense	$	2,337		$	2,182		$	4,121		$	4,080

See accompanying notes.

4

Hallador Energy Company 

Condensed Consolidated Statements of Cash Flows 

(in thousands) 

(unaudited)

	Six Months Ended June 30,
	2022			2021
OPERATING ACTIVITIES:
Net loss	$	(13,520	)	$	(3,996	)
Deferred income taxes		244			(1,332	)
Equity income – Sunrise Energy		(338	)		(63	)
Depreciation, depletion, and amortization		20,695			20,022
Gain on sale of assets		(367	)		—
Change in fair value of interest rate swaps		(867	)		(1,614	)
Change in fair value of fuel hedge		—			(379	)
Amortization of debt issuance costs		1,508			1,251
Asset retirement obligations accretion		496			736
Cash paid on asset retirement obligation reclamation		(1,184	)		—
Stock-based compensation		108			567
Provision for loss on customer contracts		159			—
Change in operating assets and liabilities:
Accounts receivable		(3,571	)		28
Inventory		(6,107	)		(7,682	)
Parts and supplies		(2,232	)		(392	)
Prepaid expenses		705			(108	)
Accounts payable and accrued liabilities		4,065			5,652
Other		485			198
Cash provided by operating activities		279			12,888
INVESTING ACTIVITIES:
Capital expenditures		(22,903	)		(10,837	)
Proceeds from sale of equipment		758			—
Cash used in investing activities		(22,145	)		(10,837	)
FINANCING ACTIVITIES:
Payments on bank debt		(14,700	)		(18,875	)
Borrowings of bank debt		33,700			11,250
Issuance of convertible note payable		1,000			—
Issuance of related party convertible notes payable		9,000			—
Debt issuance costs		(590	)		(418	)
Taxes paid on vesting of RSUs		—			(2	)
Cash provided by (used in) financing activities		28,410			(8,045	)
Increase (decrease) in cash, cash equivalents, and restricted cash		6,544			(5,994	)
Cash, cash equivalents, and restricted cash, beginning of period		5,829			12,071
Cash, cash equivalents, and restricted cash, end of period	$	12,373		$	6,077
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH CONSIST OF THE FOLLOWING:
Cash and cash equivalents	$	8,882		$	2,582
Restricted cash		3,491			3,495
	$	12,373		$	6,077
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	4,055		$	4,446
SUPPLEMENTAL NON-CASH FLOW INFORMATION:
Change in capital expenditures included in accounts payable and prepaid expense	$	2,004		$	3,613
Debt issuance costs included in accounts payable and accrued liabilities	$	853		$	—
Convertible notes payable and related party convertible notes payable converted to common stock	$	10,000		$	—

See accompanying notes.

5

 Hallador Energy Company 

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands) 

(unaudited)

					Additional					Total
	Common Stock Issued				Paid-in		Retained			Stockholders'
	Shares		Amount		Capital		Earnings			Equity
Balance, March 31, 2022		30,785	$	308	$	104,181	$	67,667		$	172,156
Stock-based compensation		—		—		53		—			53
Stock issued on redemption of convertible note		232		2		998		—			1,000
Stock issued on redemption of related party convertible notes		1,966		20		8,980		—			9,000
Net loss		—		—		—		(3,386	)		(3,386	)
Balance, June 30, 2022		32,983	$	330	$	114,212	$	64,281		$	178,823
Balance, December 31, 2021		30,785	$	308	$	104,126	$	77,801		$	182,235
Stock-based compensation		—		—		108		—			108
Stock issued on redemption of convertible note		232		2		998		—			1,000
Stock issued on redemption of related party convertible notes		1,966		20		8,980		—			9,000
Net loss		—		—		—		(13,520	)		(13,520	)
Balance, June 30, 2022		32,983	$	330	$	114,212	$	64,281		$	178,823

						Additional						Total
	Common Stock Issued					Paid-in			Retained			Stockholders'
	Shares			Amount		Capital			Earnings			Equity
Balance, March 31, 2021		30,613		$	306	$	103,679		$	80,523		$	184,508
Stock-based compensation		—			—		285			—			285
Net loss		—			—		—			(2,964	)		(2,964	)
Balance, June 30, 2021		30,613		$	306	$	103,964		$	77,559		$	181,829
Balance, December 31, 2020		30,610		$	306	$	103,399		$	81,555		$	185,260
Stock-based compensation		—			—		567			—			567
Stock issued on vesting of RSUs		4			—		—			—			—
Taxes paid on vesting of RSUs		(1	)		—		(2	)		—			(2	)
Net loss		—			—		—			(3,996	)		(3,996	)
Balance, June 30, 2021		30,613		$	306	$	103,964		$	77,559		$	181,829

See accompanying notes.

6

Hallador Energy Company

Notes to Condensed Consolidated Financial Statements

(unaudited) 

(1) GENERAL BUSINESS

The interim financial data is unaudited; however, in our opinion, it includes all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the results for the interim periods. The condensed consolidated financial statements included herein have been prepared pursuant to the Securities and Exchange Commission's ( the "SEC") rules and regulations; accordingly, certain information and footnote disclosures normally included in generally accepted accounting principles ("GAAP") financial statements have been condensed or omitted.

The results of operations and cash flows for the three and six months ended June 30, 2022, are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2022.

Our organization and business, the accounting policies we follow, and other information are contained in the notes to our consolidated financial statements filed as part of our 2021 Annual Report on Form 10-K. This quarterly report should be read in conjunction with such Annual Report on Form 10-K.

In  August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The update simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and limiting the number of embedded conversion features separately recognized from the primary contract. The guidance also includes targeted improvements to the disclosures for convertible instruments and earnings per share. This was early adopted on January 1, 2022 and did not have a significant impact on our consolidated financial position and consolidated results of operations.

The condensed consolidated financial statements include the accounts of Hallador Energy Company (hereinafter known as “we, us, or our”) and its wholly-owned subsidiaries Sunrise Coal, LLC (Sunrise) and Hourglass Sands, LLC (Hourglass), and Sunrise’s wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Sunrise is engaged in the production of steam coal from mines located in western Indiana.

As announced in our Form 8-K filed on February 18, 2022, on February 14, 2022, Hallador Energy Company, through its subsidiary Hallador Power Company, LLC, entered into an Asset Purchase Agreement (the "Purchase Agreement") to acquire Hoosier Energy’s 1-Gigawatt Merom Generating Station (Merom) located in Sullivan County, Indiana, in return for assuming certain decommissioning costs and environmental responsibilities. The transaction, which includes a 3.5-year power purchase agreement (PPA), is anticipated to close in September 2022, upon obtaining required governmental and financial approvals.

Going Concern - Alleviation of Substantial Doubt

In accordance with ASU 2014-15, “ Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (Subtopic 205-40), we have evaluated whether there are conditions and events, considered in the aggregate, which raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that our financials are issued. We performed the analysis, and our overall assessment was there were conditions or events, considered in the aggregate as of June 30, 2022, which raised substantial doubt about our ability to continue as a going concern within the next year, but such doubt was adequately mitigated by our plans to address the substantial doubt.

Also, during our analysis and overall assessment as we were preparing our Form 10-Q in April for the quarter ended  March 31, 2022, we determined that we were in violation of one of our financial covenants for the quarter ended  March 31, 2022 due to lower than expected Adjusted EBITDA, a significant non-GAAP factor in the calculation of the ratio, and could be in violation of financial covenants in future quarters, which management determined raises substantial doubt about the Company’s ability to continue as a going concern.  These factors did not exist when we filed our Form 10-K on March 28, 2022 as we were projecting at the time that all covenants would be met for the next twelve months and beyond.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. During our analysis and overall assessment in July for the quarter ended June 30, 2022, it became clear that we were likely to violate one or more of our financial covenants for the quarter ending September 30, 2022 due to lower than expected Adjusted EBITDA, a significant non-GAAP factor in the calculation of the ratios.  This factor raised substantial doubt about the Company's ability to continue as a going concern.  Management's plans were to seek an amendment to the credit agreement to provide relief or obtain a waiver of the projected violations.

7

 

In August 2022, as disclosed in Note 5, we executed an amendment to our credit agreement providing relief on the covenants in question until the time our internal projections show we will again meet the covenants in the quarter ending December 31, 2022.

Accordingly, the above factors have alleviated substantial doubt about the entity's ability to continue as a going concern.

(2) LONG-LIVED ASSET IMPAIRMENTS

Long-lived assets are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount of the assets may not be recoverable.  For the three and six month periods ended June 30, 2022 and for the three and six month periods ended June 30, 2021, there were no impairment charges recorded for long-lived assets.

(3) INVENTORY

Inventory is valued at lower of average cost or net realizable value (NRV).  As of June 30, 2022, and December 31, 2021, coal inventory includes NRV adjustments of $5.7 million and $3.8 million, respectively.

(4) OTHER LONG-TERM ASSETS (in thousands)

	June 30,		December 31,
	2022		2021
Advanced coal royalties	$	6,464	$	6,678
Other		1,670		1,694
Total other assets	$	8,134	$	8,372

(5) BANK DEBT

On March 25, 2022, we executed an amendment to our credit agreement with PNC, administrative agent for our lenders.  The primary purpose of the amendment was to return the allowable leverage ratio and debt service coverage ratio to their December 31, 2021 levels through September 30, 2022, with the debt service coverage waived for March 31, 2022.

On May 20, 2022, we executed an additional amendment to our credit agreement with PNC, administrative agent for our lenders.  The primary purpose of this amendment was to modify the allowable leverage ratio and debt service coverage ratio through June 30, 2022, to provide relief for current and anticipated covenant violations.

On August 5, 2022, we executed an additional amendment to our credit agreement with PNC, administrative agent for our lenders.  The primary purpose of this amendment was to modify the allowable leverage ratio and debt service coverage ratio through September 30, 2022 to provide relief for anticipated covenant violations.

Bank debt is comprised of term debt ($16.5 million as of June 30, 2022) and a $120 million revolver ($114.2 million borrowed as of June 30, 2022).  The term debt amortization concludes with the final payment in March 2023.  The revolver matures in September 2023.  Our debt is recorded at amortized cost, which approximates fair value due to the variable interest rates in the agreement and is collateralized primarily by our assets.

8

 

Liquidity

As of June 30, 2022, with the provisions of the amendments, we had additional borrowing capacity of $0.1 million and total liquidity of $9.0 million.  Our additional borrowing capacity is net of $5.7 million in outstanding letters of credit as of June 30, 2022, that were required to maintain surety bonds.  Liquidity consists of our additional borrowing capacity and cash and cash equivalents.

Fees

Unamortized bank fees and other costs incurred in connection with the initial facility and subsequent amendments totaled $4.0 million as of December 31, 2021. Additional costs incurred with the March 25, 2022 and May 20, 2022 amendments were $0.6 million and $0.9 million, respectively.  These costs were deferred and are being amortized over the term of the loan. Unamortized costs as of June 30, 2022, and December 31, 2021, were $3.9 million and $4.0 million, respectively.

Bank debt, less debt issuance costs, is presented below (in thousands):

	June 30,			December 31,
	2022			2021
Current bank debt	$	16,538		$	25,725
Less unamortized debt issuance cost		(3,316	)		(2,627	)
Net current portion	$	13,222		$	23,098
Long-term bank debt	$	114,200		$	86,013
Less unamortized debt issuance cost		(593	)		(1,346	)
Net long-term portion	$	113,607		$	84,667
Total bank debt	$	130,738		$	111,738
Less total unamortized debt issuance cost		(3,909	)		(3,973	)
Net bank debt	$	126,829		$	107,765

Covenants

The credit facility includes a Maximum Leverage Ratio (consolidated funded debt/trailing twelve months adjusted EBITDA), calculated as of the end of each fiscal quarter for the trailing twelve months, not to exceed the amounts below:

Fiscal Periods Ending	Ratio
June 30, 2022	6.00 to 1.00
September 30, 2022	4.50 to 1.00
December 31, 2022	2.50 to 1.00
March 31, 2023 and thereafter	2.25 to 1.00

As of June 30, 2022, our Leverage Ratio of 3.27 was in compliance with the 6.0 covenant defined in the current and prior amendments.

Beginning December 31, 2022, the credit facility requires a Minimum Debt Service Coverage Ratio (consolidated adjusted EBITDA/annual debt service) calculated as of the end of each fiscal quarter for the trailing twelve months of 1.25 to 1.00 through the maturity of the credit facility.

Interest Rate

The interest rate on the facility ranges from LIBOR plus 2.75% to LIBOR plus 4.00%, depending on our Leverage Ratio, with a LIBOR floor of 0.50%.  We entered into swap agreements to fix the LIBOR component of the interest rate at 2.92% on the entire amount of the declining term loan balance and on $52.7 million of the revolver. Those agreements matured in May 2022.  At June 30, 2022, we are paying LIBOR plus 4.0% on the outstanding bank debt.

9

 

Paycheck Protection Program

As previously reported in the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 16, 2020, we entered into a Paycheck Protection Program Promissory Note and Agreement on April 15, 2020, evidencing an unsecured $10 million loan (the “PPP Loan”) under the Paycheck Protection Program (or “PPP”) made through First Financial Bank, N.A., (the "Lender"). The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration (the “SBA”).

Under the terms of the CARES Act, PPP loan recipients can apply for forgiveness. The SBA can grant forgiveness of all or a portion of loans made under the PPP if the recipients use the PPP loan proceeds for eligible purposes, including payroll costs, mortgage interest, rent or utility costs, and meet other requirements regarding, among other things, the maintenance of employment and compensation levels. The Company used the PPP Loan proceeds for qualifying expenses and applied for the forgiveness of the PPP Loan in accordance with the terms of the CARES Act.

On July 23, 2021, we received a notification from the Lender that the SBA approved our PPP Loan forgiveness application for the entire PPP Loan balance of $10 million, together with interest accrued thereon. The Lender notified us that the forgiveness payment was received on July 26, 2021.  The forgiveness of the PPP Loan was recognized as other income.

The SBA retains the right to review the Company's loan file for a period subsequent to the date the loan is forgiven, with the potential for the SBA to pursue legal remedies at its discretion.

(6) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (in thousands)

	June 30,		December 31,
	2022		2021
Accounts payable	$	31,099	$	27,835
Accrued property taxes		2,006		2,529
Accrued payroll		4,792		2,413
Workers' compensation reserve		3,346		2,560
Group health insurance		2,250		1,800
Fair value of interest rate swaps		—		867
Other		4,480		3,524
Total accounts payable and accrued liabilities	$	47,973	$	41,528

(7) REVENUE 

Revenue from Contracts with Customers

We account for a contract with a customer when the parties have approved the contract and are committed to performing their respective obligations, the rights of each party are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. We recognize revenue when we satisfy a performance obligation by transferring control of a good or service to a customer.  We utilize the normal purchase normal sales exception for all long-term sales contracts.

Our revenue is derived from sales to customers of coal produced at our facilities. Our customers typically purchase coal directly from our mine sites or our Princeton Loop, where the sale occurs and where title, risk of loss, and control pass to the customer at that point. Our customers arrange for and bear the costs of transporting their coal from our mines to their plants or other specified discharge points. Our customers are typically domestic utility companies. Our coal sales agreements with our customers are fixed-priced, fixed-volume supply contracts, or include a pre-determined escalation in price for each year. Price re-opener and index provisions may allow either party to commence a renegotiation of the contract price at a pre-determined time. Price re-opener provisions may automatically set a new price based on prevailing market price or, in some instances, require us to negotiate a new price, sometimes within specified ranges of prices. The terms of our coal sales agreements result from competitive bidding and extensive negotiations with customers. Consequently, the terms of these contracts vary by customer.

10

 

Coal sales agreements will typically contain coal quality specifications. With coal quality specifications in place, the raw coal sold by us to the customer at the delivery point must be substantially free of magnetic material and other foreign material impurities and crushed to a maximum size as set forth in the respective coal sales agreement. Price adjustments are made and billed in the month the coal sale was recognized based on quality standards that are specified in the coal sales agreement, such as Btu factor, moisture, ash, and sulfur content, and can result in either increases or decreases in the value of the coal shipped.

Disaggregation of Revenue

Revenue is disaggregated by primary geographic markets, as we believe this best depicts how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors. 83% and 85% of our coal revenue for the three and six months ended June 30, 2022 was sold to customers in the State of Indiana with the remainder sold to customers in Florida.  73% and 75% of our coal revenue for the three and six months ended June 30, 2021 respectively, was sold to customers in the State of Indiana with the remainder sold to customers in Florida, Georgia, and North Carolina.

Performance Obligations

A performance obligation is a promise in a contract with a customer to provide distinct goods or services. Performance obligations are the unit of account for purposes of applying the revenue recognition standard and therefore determine when and how revenue is recognized. In most of our contracts, the customer contracts with us to provide coal that meets certain quality criteria. We consider each ton of coal a separate performance obligation and allocate the transaction price based on the base price per the contract, increased or decreased for quality adjustments.

We recognize revenue at a point in time, as the customer does not have control over the asset at any point during the fulfillment of the contract. For substantially all of our customers, this is supported by the fact that title and risk of loss transfer to the customer upon loading of the truck or railcar at the mine. This is also the point at which physical possession of the coal transfers to the customer, as well as the right to receive substantially all benefits and the risk of loss in ownership of the coal.

We have remaining performance obligations relating to fixed-priced contracts of approximately $724 million, which represent the average fixed prices on our committed contracts as of June 30, 2022. We expect to recognize approximately 82% of this revenue in 2022 and 2023, with the remainder recognized thereafter. 

We have remaining performance obligations relating to contracts with price re-openers of approximately $166 million, which represents our estimate of the expected re-opener price on committed contracts as of June 30, 2022. We expect to recognize all of this revenue beginning in 2024.

The tons used to determine the remaining performance obligations are subject to adjustment in instances of force majeure and exercise of customer options to either take additional tons or reduce tonnage if such option exists in the customer contract.

Contract Balances

Under ASC 606, the timing of when a performance obligation is satisfied can affect the presentation of accounts receivable, contract assets, and contract liabilities. The main distinction between accounts receivable and contract assets is whether consideration is conditional on something other than the passage of time. A receivable is an entity’s right to consideration that is unconditional. Under the typical payment terms of our contracts with customers, the customer pays us a base price for the coal, increased or decreased for any quality adjustments. Amounts billed and due are recorded as trade accounts receivable and included in accounts receivable in our condensed consolidated balance sheets. As of January 1, 2021, accounts receivable for coal sales billed to customers was $14.4 million.  We do not currently have any contracts in place where we would transfer coal in advance of knowing the final price of the coal sold, and thus do not have any contract assets recorded. Contract liabilities arise when consideration is received in advance of performance.

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(8) INCOME TAXES

For the six months ended June 30, 2022, we recorded income taxes using an estimated annual effective tax rate based upon projected annual income, forecasted permanent tax differences, discrete items and statutory rates in states in which we operate. For the six months ended June 30, 2021, we utilized a discrete period method to calculate taxes, as we did not believe the annual effective tax rate method would have represented a reliable estimate.  The effective tax rate for the six months ended June 30, 2022, and 2021 was ~(2)% and ~25%, respectively. Historically, our actual effective tax rates have differed from the statutory effective rate primarily due to the benefit received from statutory percentage depletion in excess of tax basis. The deduction for statutory percentage depletion does not necessarily change proportionately to changes in income (loss) before income taxes.

(9) STOCK COMPENSATION PLANS

Non-vested grants at December 31, 2021	183,000
Awarded - price $2.42	10,000
Vested	—
Forfeited	(7,500	)
Non-vested grants at June 30, 2022	185,500

For the three and six months ended June 30, 2022 our stock compensation was $0.1 million and $0.1 million, respectively.  For the three and six months ended June 30, 2021, our stock compensation was $0.3 million and $0.6 million, respectively.

Non-vested RSU grants will vest as follows:

Vesting Year	RSUs Vesting
2023		185,500

The outstanding RSUs have a value of $1.0 million based on the June 30, 2022, closing stock price of $5.41.

At June 30, 2022, we had 1,398,671 RSUs available for future issuance.

(10) LEASES

We have operating leases for office space with remaining lease terms ranging from 17 months to 28 months. As most of the leases do not provide an implicit rate, we calculated the right-of-use assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date. We currently do not have any finance leases outstanding.

Information related to leases was as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Operating lease information:
Operating cash outflows from operating leases		53		$	50		$	111		$	97
Weighted average remaining lease term in years		1.74			2.69			1.74			2.69
Weighted average discount rate		6.0	%		6.0	%		6.0	%		6.0	%

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Future minimum lease payments under non-cancellable leases as of June 30, 2022, were as follows:

Year	Amount
	(In thousands)
2022	$	104
2023		174
2024		59
Total minimum lease payments	$	337
Less imputed interest		(8	)
Total operating lease liability	$	329
As reflected on balance sheet:
Accounts payable and accrued liabilities	$	208
Other long-term liabilities		121
Total operating lease liability	$	329

At June 30, 2022, and December 31, 2021, we had approximately $329,000 and $424,000, respectively, of right-of-use operating lease assets recorded within “buildings and equipment” on the condensed consolidated balance sheets.

(11) SELF-INSURANCE

We self-insure our underground mining equipment. Such equipment is allocated among seven mining units dispersed over ten miles. The historical cost of such equipment was approximately $269 million and $260 million as of June 30, 2022, and December 31, 2021, respectively.

Restricted cash of $3.5 million and $3.3 million as of June 30, 2022, and December 31, 2021, respectively, represents cash held and controlled by a third party and is restricted for future workers’ compensation claim payments.

(12) NET LOSS PER SHARE

We compute net loss per share using the two-class method, which is an allocation formula that determines net loss per share for common stock and participating securities, which for us are our outstanding RSUs.

The following table (in thousands, except per share amounts) sets forth the computation of net loss per share:

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Numerator:
Net loss	$	(3,386	)	$	(2,964	)	$	(13,520	)	$	(3,996	)
Less loss allocated to RSUs		18			30			79			41
Net loss allocated to common shareholders	$	(3,368	)	$	(2,934	)	$	(13,441	)	$	(3,955	)

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(13) FAIR VALUE MEASUREMENTS

We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. We consider active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. We have no Level 1 instruments.

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. We have no Level 2 instruments.

Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market activity). Our Level 3 instruments are comprised of interest rate swaps and impairment measurements.  The fair values of our swaps were estimated using discounted cash flow calculations based upon forward interest-rate yield curves.  The notional values of our two interest rate swaps were $52.7 million and $22.1 million when they matured in  May 2022.  Although we utilize third-party broker quotes to assess the reasonableness of our prices and valuation, we do not have sufficient corroborating market evidence to support classifying these assets and liabilities as Level 2.  Certain properties' asset retirement obligation liabilities use Level 3 non-recurring fair value measures.

The following table summarizes our financial assets and liabilities measured on a recurring basis at fair value at June 30, 2022, and December 31, 2021, by the respective level of the fair value hierarchy (in thousands):

	Level 1		Level 2		Level 3		Total
December 31, 2021
Liabilities:
Interest rate swaps	$	—	$	—	$	867	$	867
June 30, 2022
Liabilities:
Interest rate swaps	$	—	$	—	$	—	$	—

The table below highlights the change in fair value of the interest rate swaps which are based on a discounted future cash flow model (in thousands):

Ending balance, December 31, 2021	$	(867	)
Change in estimated fair value		867
Ending balance, June 30, 2022	$	—

 

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(14) EQUITY METHOD INVESTMENTS

We own a 50% interest in Sunrise Energy, LLC, which owns gas reserves and gathering equipment and generates revenue from gas sales. Sunrise Energy plans to continue developing and exploring for oil, gas, and coal-bed methane gas reserves on or near our underground coal reserves. The carrying value of the investment included in our condensed consolidated balance sheets as of June 30, 2022, and December 31, 2021, was $3.9 million and $3.5 million, respectively.

(15) CONVERTIBLE NOTES

On May 2, 2022, and May 20, 2022, we issued senior unsecured convertible notes (the "Notes") to five parties, in the aggregate principal amount of $10 million, with $9 million going to related parties affiliated with independent members of our board of directors and the remainder to a non-affiliated party. The funds received from the Notes were used to provide additional working capital to the Company. The Notes were scheduled to mature on December 29, 2028, and accrue interest at 8% per annum, with interest payable on the date of the maturity. Pursuant to the terms of the Notes, the holders of the Notes may convert the entire principal balance and all accrued and unpaid interest then outstanding during the period beginning June 1, 2022, and ending on May 31, 2027, into shares of the Company Common Stock (the "Conversion Shares") at a conversion price the greater of (i)$3.33 and (ii) the 30-day trailing volume-weighted average sales price for the Common Stock on the Nasdaq Capital Market ending on and including the date on which this Note is converted. Each Conversion Share will consist of one share of our common stock. The conversion price and number of shares of the Company’s Common Stock issuable upon conversion of the Notes are subject to adjustment from time to time for any subdivision or consolidation of the Company’s shares and other standard dilutive events. At any time on or after June 1, 2025, the Company may, at its option and upon 30 days' written notice provided to the Holders, elect to redeem the Notes (in whole and not in part) and the Holders shall be obligated to surrender the Notes, at a redemption price equal to 100% of the outstanding Principal Balance, together with any accrued but unpaid interest thereon to the redemption date. After receipt of such redemption notice from the Company, the Holder may, at its option, elect to convert the Principal Balance and accrued interest into Conversion Shares by giving written notice of such election to the Company no later than 5 days prior to the date fixed for redemption.

In June, the four holders of the $9 million related party convertible notes converted them into 1,965,841 shares of common stock of the Company and the one holder of the $1 million convertible note converted it into 231,697 shares of common stock pursuant to the terms of the notes and their related agreements.

(16) SUBSEQUENT EVENTS

On July 29, 2022, as reported on Form 8-K on August 4, 2022, we issued $5 million of a senior unsecured convertible note to a related party affiliated with an independent member of our board of directors.  The note carries an interest rate of 8% per annum with a maturity date of December 29, 2028.  For the period August 18, 2022 through August 17, 2024, the holder has the option to convert the notes into shares of the Company's common stock at a conversion price of $6.254.  Beginning August 18, 2025, the Company may elect to redeem the note and the holder shall be obligated to surrender the note at 100% of the outstanding principal balance together with any accrued unpaid interest.  Upon receipt of the redemption notice from the Company, the holder may elect to convert the principal balance and accrued interest into conversion shares.

On August 5, 2022, as reported on Form 8-K on August 11, 2022, we executed an amendment to our credit agreement with PNC as discussed in Note 5 to these consolidated financial statements.

On August 8, 2022, as reported on Form 8-K on August 11, 2022, we issued $4 million of senior unsecured convertible notes to related parties affiliated with independent members of our board of directors.  The notes carry an interest rate of 8% per annum with a maturity date of December 29, 2028.  For the period August 18, 2022 through August 17, 2024, the holder has the option to convert the notes into shares of the Company's common stock at a conversion price of $6.254.  Beginning August 8, 2025, the Company may elect to redeem the note and the holder shall be obligated to surrender the note at 100% of the outstanding principal balance together with any accrued unpaid interest.  Upon receipt of the redemption notice from the Company, the holder may elect to convert the principal balance and accrued interest into conversion shares.

On August 12, 2022, we issued a $10 million senior unsecured convertible note to an unrelated party.  The note carries an interest rate of 8% per annum with a maturity date of December 31, 2026.  For the period August 18, 2022 through the maturity date, the holder has the option to convert the notes into shares of the Company's common stock at a conversion price of $6.15.  Beginning August 12, 2025, the Company may elect to redeem the note and the holder shall be obligated to surrender the note at 100% of the outstanding principal balance together with any accrued unpaid interest.  Upon receipt of the redemption notice from the Company, the holder may elect to convert the principal balance and accrued interest into conversion shares.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION UPDATES THE MD&A SECTION OF OUR 2021 ANNUAL REPORT ON FORM 10-K AND SHOULD BE READ IN CONJUNCTION THEREWITH.

Our condensed consolidated financial statements should also be read in conjunction with this discussion. The following analysis includes a discussion of metrics on a per ton basis derived from the condensed consolidated financial statements, which are considered non-GAAP measurements.  These metrics are significant factors in assessing our operating results and profitability.

Thermal coal demand and pricing remain strong due to the increased demand for electricity and constrained growth in thermal coal production. Labor shortages, global supply chain interruptions, and environmental and political pressures are limiting the ability of operators to increase thermal coal production to meet domestic and international demand. In addition, higher natural gas prices and boycotts on Russian coal caused by the war in Ukraine are further amplifying the tightness in thermal coal markets. Due to these factors, the near-term outlook for thermal coal prices is positive.

OVERVIEW

I. Q2 2022 Net Loss $3.4 million.

a. In Q2, Hallador made significant progress reducing operating costs and adding new sales contracts that will begin shipping in Q4 2022.

b. Our margins improved in Q2 by over $6 per ton over Q1 2022.  Further margin expansion is expected in Q4 and 2023 as a result of dramatically higher priced sales contracts.

c. 1.6 million tons were shipped at an average sales price of $40.23 during the quarter.  Remaining tons to ship for 2022 are expected to average over $49 per ton. 

d. Production:  Q2 2022 production costs were $31.83 per ton, which represents a $7.71 per ton decrease from Q1 2022.

e. Cash Flow & Debt:  During Q2, our operating cash flow decreased $2.7 million and we increased our bank debt by $10.7 million as we started to build inventory and increased capital expenditures to prepare for the opening of the Prosperity and Freelandville mines in Q3 2022.

i. As of June 30, 2022, our bank debt was $130.7 million, liquidity was $9.0 million, and our leverage ratio came in at 3.27X, within our covenant of 6.00X.

II. Q3 2022 Activity

a. Financing

i. We were successful in executing an amendment with our banks increasing our debt to EBITDA covenant for Q3 and waiving our debt service coverage ratio for Q3 as disclosed in Note 5 to our condensed consolidated financial statements, thereby alleviating the going concern that we reported in Q1.  We expect to be in compliance with all bank covenants going forward.

ii. In August, we issued an additional $19 million in convertible notes to add to our June 30, 2022 liquidity of $9.0 million.  The notes were purchased by parties affiliated with two of our board members and one non-affiliated party.

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b. Sales

i. During the quarter, we added 2.2 million tons of new coal contracts priced at over $125 per ton to be delivered during the last half of 2022 through 2025.  The majority of these tons are to be delivered the last half of 2022 through 2023, which is expected to materially increase our margins during this period and put the Company in position to be net debt free by the end of 2023.  The delivery of all of these tons could be delayed by transport logistics

c. Production

i Production volumes improved during Q2 with production of 1.8 million tons, the highest production level since 2019.   We expect to increase production with the existing Oaktown Mining Complex, Hallador’s new Prosperity Surface Mine near Petersburg, IN and new surface production near Freelandville, IN.  Production from both Prosperity and Freelandville are higher cost and is expected to increase total mining cost structure to $34 - $35 per ton in Q4 2022 and $36 per ton through 2023.  

III. Q3 & Q4 2022 Activity

a. Merom Generating Station

i. We anticipate completing the acquisition of the Merom Power Plant in Q3 2022, subject to certain regulatory and financial approvals.

IV. 2023

a. Coal & Power

i. Our current 2023 average sales price is ~$17 per ton higher than the first half of 2022.

ii. Traditionally, Hallador has generated $50 million of Adjusted EBITDA, a significant non-GAAP measure, annually. In 2023, we expect our Adjusted EBITDA, a significant non-GAAP measure, to grow to over $160 million, primarily as a result of the additional higher-priced coal contracts.

V.  Solid Sales Position Through 2023

	Contracted		Estimated
	tons		price
Year	(millions)*		per ton
2022 (Q3-Q4)		4.0		49.00
2023 (annual)		6.7		58.00
2024-2027 (total)		7.0		**
		17.7

___________

* Contracted tons are subject to adjustment in instances of force majeure and exercise of customer options to either take additional tons or reduce tonnage if such option exists in the customer contract.

**Unpriced or partially priced tons.

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LONG-LIVED ASSET IMPAIRMENT REVIEW

See Note 2 to our condensed consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

I. Liquidity and Capital Resources

a. As set forth in our condensed consolidated statements of cash flows, cash provided by operations was $0.3 million and $12.9 million for the six months ended June 30, 2022 and 2021

i. Operating margins from coal decreased during the first six months of 2022 by $8.3 million when compared to the first six months of 2021.

1. Our operating margins were $5.37 per ton in the first six months of 2022 compared to $9.39 in the first six months of 2021 as a direct result of increased operating costs.  Margins are expected to increase to ~$20 per ton starting in Q4 2022.

2. We shipped 3.0 million tons in the first half of 2022 and expect to ship a total of 6.5 to 7.0 million tons in 2022.

b. Our projected capex budget for the remainder of 2022 is $15 million, of which approximately one-half is anticipated for maintenance capex.  We also have scheduled payments on long-term debt totaling $11.0 million over the last six months of the year.  

c. We expect cash provided by operations and additional borrowing either from our revolver or other sources, if necessary, to fund our maintenance capital expenditures and debt service for the remainder of the year.  We raised $9 million in May 2022 in senior unsecured promissory notes from related parties and $1 million from an non-affiliated party.  In August 2022 we  raised an additional $9 million from related parties and $10 million from a non-affiliated entity.  The additional margins expected to begin in Q4 from the higher priced coal contracts will significantly enhance our ability to pay for capital expenditures and debt service.

d. In the first half of 2022, we generated lower than expected EBITDA due to elevated cash costs related to: i) a temporary decrease in efficiency, as new hires were integrated into the workforce to support more shifts required to fulfill the increase in contracted tonnage, and ii) supply constraints and vendor cost increases. We amended our bank agreement in May 2022, and again in August 2022, to provide covenant relief to maintain our liquidity levels as costs are anticipated and have begun to improve over the remainder of 2022.

e. See Note 5 to our condensed consolidated financial statements for additional discussion about our bank debt and related liquidity.

II. Material Off-Balance Sheet Arrangements

a. Other than our surety bonds for reclamation, we have no material off-balance sheet arrangements. In the event we are not able to perform reclamation, which is presented as asset retirement obligations (ARO) in our accompanying condensed consolidated balance sheets, we have surety bonds totaling $23.4 million to pay for ARO.

CAPITAL EXPENDITURES (capex)

For the first six months of 2022, capex was $22.9 million allocated as follows (in millions):

Oaktown – maintenance capex	$	10.4
Oaktown – investment		10.4
Other		2.1
Capex per the Condensed Consolidated Statements of Cash Flows	$	22.9

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Quarterly coal sales and cost data (in thousands, except per ton and percentage data) are provided below. Per ton calculations below are based on tons sold.

All Mines	3rd 2021			4th 2021			1st 2022			2nd 2022			T4Qs
Tons produced		1,440			1,447			1,397			1,762			6,046
Tons sold		2,042			1,554			1,377			1,595			6,568
Coal sales	$	79,036		$	64,388		$	57,010		$	64,161		$	264,595
Average price/ton	$	38.71		$	41.43		$	41.40		$	40.23		$	40.29
Wash plant recovery in %		73	%		70	%		67	%		71	%
Operating costs	$	67,694		$	54,583		$	54,443		$	50,776		$	227,496
Average cost/ton	$	33.15		$	35.12		$	39.54		$	31.83		$	34.64
Margin	$	11,342		$	9,805		$	2,567		$	13,385		$	37,099
Margin/ton	$	5.55		$	6.31		$	1.86		$	8.39		$	5.65
Capex	$	7,238		$	9,975		$	9,082		$	13,821		$	40,116
Maintenance capex	$	2,324		$	3,302		$	4,481		$	7,600		$	17,707
Maintenance capex/ton	$	1.14		$	2.12		$	3.25		$	4.76		$	2.70

All Mines	3rd 2020			4th 2020			1st 2021			2nd 2021			T4Qs
Tons produced		1,234			1,233			1,592			1,292			5,351
Tons sold		1,585			1,613			1,174			1,403			5,775
Coal sales	$	64,754		$	64,925		$	45,879		$	54,600		$	230,158
Average price/ton	$	40.85		$	40.25		$	39.08		$	38.92		$	39.85
Wash plant recovery in %		71	%		68	%		74	%		69	%
Operating costs	$	46,444		$	54,640		$	33,907		$	42,364		$	177,355
Average cost/ton	$	29.30		$	33.87		$	28.88		$	30.20		$	30.71
Margin	$	18,310		$	10,285		$	11,972		$	12,236		$	52,803
Margin/ton	$	11.55		$	6.38		$	10.20		$	8.72		$	9.14
Capex	$	3,995		$	6,661		$	5,720		$	5,117		$	21,493
Maintenance capex	$	1,365		$	2,342		$	2,343		$	1,049		$	7,099
Maintenance capex/ton	$	0.86		$	1.45		$	2.00		$	0.75		$	1.23

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2022 vs. 2021 (first six months)

For the first six months of 2022, we sold 2,972,000 tons at an average price of $40.77 per ton. For the first six months of 2021, we sold 2,577,000 tons at an average price of $38.99 per ton. The increase in average price per ton was expected and is the result of our changing contract mix caused by the expiration of contracts and acquisition of new contracts.  We expect to sell 6.5 to 7.0 million tons during 2022 with the remaining tons sold at an average price in excess of $49 per ton.  Pricing for 2023 is expected to be in excess of $58 per ton.

Operating costs for all coal mines averaged $35.40 per ton and $29.60 per ton for the six months ended June 30, 2022, and 2021, respectively. Oaktown's costs over that same period were $33.63 and $27.55, respectively.  Our operating costs for the quarter are higher than our prior guidance as explained in the overview.

Other revenues increased $1.8 million during the first six months of 2022 when compared to 2021 due to additional income from coal storage fees, royalty income on mineral interests, and increased scrap prices and volume.

General and administrative expense increased $0.7 million during the first six months of 2022 when compared to 2021 primarily as a result of legal and due diligence costs related to the acquisition of Merom. We expect general and administrative expense for the remainder of 2021 to be $6 - $7 million.

Our Sunrise Coal employees and contractors totaled 836 at June 30, 2022, compared to 716 at June 30, 2021.

2022 v. 2021 (second quarter)

For the second quarter 2022, we sold 1,595,000 tons at an average price of $40.23 per ton.  For the second quarter 2021, we sold 1,403,000 tons at an average price of $38.92 per ton.  The increase in average price per ton was expected and is the result of our changing contract mix caused by the expiration of contracts and acquisition of new contracts.  

Operating costs for all coal mines averaged $31.83 per ton in 2022 and $30.20 per ton in 2021. Oaktown's costs over that same period were $29.87 and $27.85, respectively. See the overview for additional discussion of operating costs.

Other revenues increased $0.7 million over Q2 2021 due to additional income from coal storage fees, royalty income on mineral interests, and increased scrap prices and volume.

Depreciation, depletion and amortization increased $1.4 million in large part as a significant amount of our assets are depreciated and amortized based on production which was higher in Q2 2022.

General and administrative expense increased $0.3 million during the quarter as a result of legal and due diligence costs related to the acquisition of Merom. 

EARNINGS (LOSS) PER SHARE

	3rd 2021		4th 2021			1st 2022			2nd 2022
Basic and diluted	$	0.26	$	(0.25	)	$	(0.33	)	$	(0.11	)

	3rd 2020		4th 2020			1st 2021			2nd 2021
Basic and diluted	$	0.06	$	(0.15	)	$	(0.03	)	$	(0.10	)

INCOME TAXES

Our effective tax rate (ETR) is estimated at ~(2)% and ~25% for the six months ended June 30, 2022, and 2021, respectively.  For the six months ended June 30, 2022, we recorded income taxes using an estimated annual effective tax rate based upon projected annual income, forecasted permanent tax differences, discrete items and statutory rates in states in which we operate. For the six months ended June 30, 2021, we utilized a discrete period method to calculate taxes, as we did not believe the annual effective tax rate method would have represented a reliable estimate. Our ETR differs from the statutory rate due primarily to statutory depletion in excess of tax basis and changes in the valuation allowance. The deduction for statutory percentage depletion does not necessarily change proportionately to changes in income (loss) before income taxes.

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GOVERNMENT IMPOSITION REIMBURSEMENTS

Some of our legacy coal contracts allow us to pass on to our customers certain costs incurred resulting from changes in costs to comply with mandates issued by Mine Safety and Health Administration (MSHA) or other government agencies. After applying the provisions of ASU 2014-09, as of June 30, 2022, we do not consider unreimbursed costs from our customers related to these compliance matters to be material and have constrained such amounts and will recognize them when they can be estimated with reasonable certainty.

RESTRICTED STOCK GRANTS

See “Item 1. Financial Statements - Note 9. Stock Compensation Plans” for a discussion of RSUs.

CRITICAL ACCOUNTING ESTIMATES

We believe that the estimates of our coal reserves, our interest rate swaps, our asset retirement obligation liabilities, our deferred tax accounts, our valuation of inventory, the estimates used in our impairment analysis, and management's plans related to our going concern evaluation are our critical accounting estimates.

The reserve estimates are used in the depreciation, depletion and amortization calculations and our internal cash flow projections. If these estimates turn out to be materially under or over-stated, our depreciation, depletion and amortization expense and impairment test may be affected.

The fair value of our interest rate swaps and asset retirement obligation liabilities is determined using a discounted future cash flow model based on the key assumption of anticipated future interest rates and related credit adjustment considerations.

We have analyzed our filing positions in all of the federal and state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. We identified our federal tax return and our Indiana state tax return as “major” tax jurisdictions. We believe that our income tax filing positions and deductions would be sustained on audit and do not anticipate any adjustments that will result in a material change to our consolidated financial position.

Inventory is valued at lower of average cost or net realizable value (NRV).  Anticipated utilization of low sulfur, higher-cost coal from our Ace in the Hole mine has the potential to create NRV adjustments as our estimated need changes.

Management’s evaluation of going concern is an estimate and when there is an indication of substantial doubt about the ability to continue as a going concern, management must assess its plans and evaluate whether management’s plans are probable of alleviating such going concern.  No assurance can be given that management's plans to show continued improvement in production and sales prices will be fully realized or that the acquisition of the Merom Generating Station will proceed as planned. 

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

No material changes from the disclosure in our 2021 Annual Report on Form 10-K.

ITEM 4.  CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS

We maintain a system of disclosure controls and procedures that are designed for the purpose of ensuring that information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our CEO, CFO, and CAO as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our CEO, CFO, and CAO of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our CEO, CFO, and CAO concluded that our disclosure controls and procedures are effective.

There have been no changes to our internal control over financial reporting during the quarter ended June 30, 2022, that materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

21

PART II - OTHER INFORMATION

ITEM 4.  MINE SAFETY DISCLOSURES

See Exhibit 95.1 to this Form 10-Q for a listing of our mine safety violations.

ITEM 5.  OTHER INFORMATION

On August 12, 2022, the Company issued a senior unsecured convertible note (the "Note") to one unrelated party, ALJ Regional Holdings, Inc. ($10.0 million of principal purchased). The funds received from the Notes will be used to provide additional working capital to the Company. The Notes will mature on December, 2026 and will accrue interest at 8% per annum, which interest will be payable on the date of the maturity.

Pursuant to the terms of the Notes, the holders of the Notes may convert the entire principal balance and all accrued and unpaid interest then outstanding during the period beginning August 18, 2022 and ending on the Maturity Date into shares of the Company Common Stock (the "Conversion Shares") at a conversion price equal to $6.15.  The conversion price and number of shares of the Company’s Common Stock issuable upon conversion of the Note are subject to adjustment from time to time for any subdivision or consolidation of the Company’s shares and other standard dilutive events.

At any time on or after August 12, 2025, the Company may, at its option and upon 30 days written notice provided to the Holders, elect to redeem the Notes (in whole and not in part) and the Holders shall be obligated to surrender the Notes, at a redemption price equal to 100% of the outstanding Principal Balance, together with any accrued but unpaid interest thereon to the redemption date.  After receipt of such redemption notice from the Company, the Holder may, at its option, elect to convert the Principal Balance and accrued interest into Conversion Shares by giving written notice of such election to the Company no later than 5 days prior to the date fixed for redemption.

The foregoing description of the Note is qualified in its entirety by reference to the full text of such documents, a copy of which is attached to this Report as Exhibit 10.14, which are incorporated herein by reference.

The issuance of the Note was and, upon conversion of the Note, the issuances of any conversion shares issued thereunder will be, exempt from registration under Section 4(a)(2) and/or Rule 506(b) of Regulation D as promulgated by the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), as transactions by an issuer not involving any public offering.

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ITEM 6.  EXHIBITS

Exhibit No.	Document
10.1	Hallador Energy Company Unsecured Convertible Promissory Note dated May 2, 2022 - Charles R. Wesley, IV Revocable Trust U/A dated October 30, 2020 (1)
10.2	Hallador Energy Company Unsecured Convertible Promissory Note dated May 2, 2022 - Lubar Opportunities Fund I, LLC (1)
10.3	Hallador Energy Company Unsecured Convertible Promissory Note - dated May 2, 2022 - NextG Partners LLC (1)
10.4	Hallador Energy Company Unsecured Convertible Promissory Note - dated May 2, 2022 - Hallador Alternative Asset Fund, LLC (1)
10.5	Hallador Energy Company Unsecured Convertible Promissory Note dated May 20, 2022 - NextG Partners, LLC (2)
10.6	Hallador Energy Company Unsecured Convertible Promissory Note dated May 20 2022 - Hallador Alternative Asset Fund, LLC (2)
10.7	Hallador Energy Company Unsecured Convertible Promissory Note dated May 20l 2022, - Lubar Opportunities Fund I, LLC (2)
10.8	Hallador Energy Company Unsecured Convertible Promissory Note dated May 20 2020 - Murchison Capital Partners, LP (2)
10.9	Hallador Energy Company Convertible Note Purchase Agreement dated July 29, 2022 (2)
10.10	Hallador Energy Company Unsecured Convertible Promissory Note dated July 29, 2022 - Lubar Opportunities Fund I LLC (3)
10.11	Hallador Energy Company Unsecured Convertible Promissory Note dated August 8, 2022 - Lubar Opportunities Fund I, LLC (4)
10.12	Hallador Energy Company Unsecured Convertible Promissory Note dated August 8, 2022 - Hallador Alternative Assets Fund, LLC (4)
10.13	Hallador Energy Company Unsecured Convertible Promissory Note dated August 12, 2022 - ALJ *
10.14	Seventh Amendment to the Third Amended and Restated Credit Agreement dated May 20, 2022(2)
10.15	Eighth Amendment to the Third Amended and Restated Credit Agreement dated August 5 2022 (4)
31.1	SOX 302 Certification - Chairman, President and Chief Executive Officer*
31.2	SOX 302 Certification - Chief Financial Officer*
31.3	SOX 302 Certification - Chief Accounting Officer*
32	SOX 906 Certification*
95.1	Mine Safety Disclosures*
101.INS	Inline XBRL Instance Document*
101.SCH	Inline XBRL Schema Document*
101.CAL	Inline XBRL Calculation Linkbase Document*
101.LAB	Inline XBRL Labels Linkbase Document*
101.PRE	Inline XBRL Presentation Linkbase Document*
101.DEF	Inline XBRL Definition Linkbase Document*
104	Cover Page Interactive Data File (embedded with the Inline XBRL document)*

________________________________

* Filed Herewith

⁽¹⁾ IBR to Form 8-K filed May 6, 2022

⁽²⁾ IBR to March 31, 2022, Form 10-Q

⁽³⁾ IBR to Form 8-K filed August 4, 2022

⁽⁴⁾ IBR to Form 8-K filed August 11, 2022

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HALLADOR ENERGY COMPANY
Date: August 15, 2022	/S/ LAWRENCE D. MARTIN
	Lawrence D. Martin, CFO
Date: August 15, 2022	/S/ R. TODD DAVIS
	R. Todd Davis, CAO

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EX-10.13

Exhibit 10.1

NEITHER THIS UNSECURED CONVERTIBLE PROMISSORY NOTE (THIS “NOTE”) NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES. THIS NOTE AND SUCH SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. THE HOLDER OF THIS NOTE OR THE SECURITIES ISSUED UPON CONVERSION OF THIS NOTE MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THIS NOTE AND ANY SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS.

HALLADOR ENERGY COMPANY

UNSECURED CONVERTIBLE PROMISSORY NOTE

$10,000,000                                                       Original Issue Date: August 12, 2022

Subject to the terms and conditions of this Note, for value received, Hallador Energy Company, a Colorado corporation (the “Company”), hereby promises to pay to the order of ALJ Regional Holdings, Inc. (“Holder”), the principal sum of Ten Million Dollars ($10,000,000) (the “Principal Balance”), together with accrued interest, as set forth in this Note.

The following is a statement of the rights of the Holder and the terms and conditions to which this Note is subject, and to which Holder, by the acceptance of this Note, agrees.

1. DEFINITIONS. The following definitions shall apply for purposes of this Note.

“Applicable Rate” means a rate equal to the lower of: (a) the Highest Lawful Rate; and (b) eight percent (8%) per annum.

“Business Day” means a weekday on which banks are open for general banking business in Indiana.

“Change of Control” means (i) any consolidation, merger or other business combination of the Company with or into any other corporation or other entity or person (whether or not the Company is the surviving corporation), or any other corporate reorganization or transaction or series of related transactions in which in any of such events the voting shareholders of the Company prior to such event cease to own 50.1% or more of the voting power, or corresponding voting equity interests, of the surviving entity after such event, (ii) any person (as defined in Section 13(d) of the Exchange Act), together with its affiliates and associates (as such terms are defined in Rule 405 under the Securities Act), but excluding the Holder together with its affiliates and associates, beneficially owns or is deemed to beneficially own (as described in Rule 13d-3 under the Exchange Act without regard to the 60-day exercise period) in excess of 35% of the Company’s voting power, (iii) there is a replacement of more than one-half of the members of the Company’s Board of Directors which is not approved by those individuals who are members of the Company’s Board of Directors on the Original Issue Date, (iv) in one or a series of related transactions, there is a sale or transfer of all or substantially all of the assets of the Company, determined on a consolidated basis, or (v) the Company enters into any agreement providing for an event set forth in (i), (ii), (iii) or (iv) above.

“Common Stock” means the common stock of the Company, par value $0.01.

“Conversion Price” means $6.15.

“Conversion Shares” means the shares of Common Stock issuable upon conversion of this Note.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Highest Lawful Rate” means the maximum non-usurious rate of interest, as in effect from time to time, which may be charged, contracted for, reserved, received or collected by Holder in connection with this Note under applicable law.

“Lost Note Documentation” means documentation reasonably satisfactory to the Company with regard to a lost or stolen Note, including, if required by the Company, an affidavit of lost note and an indemnification agreement by Holder in favor of the Company with respect to such lost or stolen Note.

“Maturity Date” means the earlier of (i) December 31, 2026, and (ii) the time at which the Balance of this Note is due and payable upon an Event of Default; provided, however that if the Event of Default is cured as permitted in this Note, then the Maturity Date shall not thereafter be deemed to have occurred with regard to such Event of Default under this clause (ii).

“Note” means this Unsecured Convertible Promissory Note.

“Original Issue Date” means the date of the first issuance of this Note, regardless of any transfers of the Note and regardless of the number of instruments which may be issued to evidence this Note.

“Person” means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other entity or any governmental authority.

“Principal Market” means the Nasdaq Capital Market, or such other principal market or exchange on which the Common Stock is then listed

for trading.

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the Original Issue Date, between the Company and the Holder, in the form of Exhibit A attached hereto.

“Securities Act” means the Securities Act of 1933, as amended.

“Trading Day” means any day during which the Principal Market is open for trading.

“VWAP” means the daily dollar volume-weighted average sale price for the Common Stock on the Principal Market on any particular Trading Day during the period beginning at 9:30 a.m., New York City Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York City Time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg through its “Volume at Price” functions or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York City Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York City Time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by the OTC Markets. If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as determined by the Company. All such determinations of VWAP shall be appropriately and equitably adjusted in accordance with the provisions set forth herein for any stock dividend, stock split, stock combination or other similar transaction.

2. INTEREST; PAYMENT; RANKING.

2.1     Interest. Interest shall accrue on the Principal Balance semi-annually at the Applicable Rate, beginning on the Original Issue Date until the entire Principal Balance and accrued but unpaid interest is paid in full (or until the date on which this Note redeemed or converted, as provided herein). Accrued interest on this Note shall be computed on the basis of a 365-day year. Any interest due hereunder shall be payable by the Company in cash or, at the election of the Company, in shares of Common Stock (or a combination thereof). Such in-kind payment of interest at any time will be calculated valuing the Common Stock at the lower of (a) the Conversion Price, or (b) the 30-Trading Day trailing VWAP, with the final number of shares of Common Stock issuable with respect to such in-kind payment rounded up to the next whole share.

2.2    Payment. The Principal Balance and all accrued and unpaid interest due hereunder shall be paid to the Holder in U.S. dollars on the Maturity Date. The Company shall make such payments by wire transfer of immediately available funds for the account of the Holder as the Holder may designate from time to time and notify in writing to the Company at least three Business Days prior to the Maturity Date. If the Maturity Date falls on a day that is not a Business Day, the required payment will be made on the next succeeding Business Day and no interest on such payment will accrue in respect of the delay.

2.3     No Prepayment. Other than as expressly permitted under this Note, the Company may not pay any unpaid Principal Balance or accrued but unpaid interest of this Note before the Maturity Date.

2.4     Ranking. This Note shall rank senior or pari passu to all existing unsecured indebtedness of the Company, and senior or pari passu to all future unsecured indebtedness of the Company, but subordinate to all current and future secured indebtedness of the Company.

3. CONVERSION.

3.1     Optional Conversion. At any time during the period beginning on August 18, 2022 and ending on the Maturity Date, the entire Principal Balance and all accrued and unpaid interest then outstanding under this Note shall, at the option of the Holder, be convertible (in whole, not in part) into Conversion Shares at the Conversion Price. The Holder shall effect such conversion by providing the Company a conversion notice. Such conversion notice shall specify the entire Principal Balance and accrued but unpaid interest to be converted, the effective Conversion Price, and the effective date of conversion. The shares of Common Stock issuable upon exercise of the conversion of the Note shall constitute “Registrable Securities” pursuant to the Registration Rights Agreement.

3.2     Mechanics of Conversion. Not later than five Business Days after any conversion date, the Company shall issue, or cause to be issued to the Holder the number of Conversion Shares being acquired upon the conversion of this Note. Upon conversion, this Note shall no longer be deemed to be outstanding and all rights with respect to this Notes shall immediately cease and terminate at the date of conversion, except only the right to receive Conversion Shares in exchange therefor as provided herein, and to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided herein. The Holder agrees to surrender this Note to the Company (or Lost Note Documentation where applicable) as soon as practicable after conversion, and the Holder shall not be entitled to receive any certificates representing the Conversion Shares issuable upon conversion of this Note unless and until Holder has surrendered the original of this Note (or Lost Note Documentation where applicable).

3.3     No Fractional Shares. No fractional shares shall be issued upon conversion of this Note. If upon any conversion of this Note, a fraction of a share would otherwise be issued, then in lieu of such fractional share, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.

3.4     Reservation of Shares. The Company agrees that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less than such aggregate number of shares of the Common Stock as shall be issuable upon the conversion of this Note. The Company agrees that all Conversion Shares that shall be so issuable shall, upon issue in accordance with the terms herein, be duly authorized, validly issued, fully paid and nonassessable. If the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes (the “Required Minimum”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Minimum for the Notes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of such failure (the “Authorized Share Failure”), but in no event later than 60 days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its Board of Directors to recommend to the stockholders that they approve such proposal. If despite the Company’s reasonable best efforts the increase is not approved, the Company shall cause an additional stockholder meeting to be held every three (3) months thereafter until such approval is obtained. Immediately upon receipt of such approval the Company shall file the amendment to its certificate of incorporation with the Secretary of State of the State of Colorado to effect the increase.

3.5     Adjustment to Conversion Price. If the Company at any time subdivides (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced, and if the Company at any time combines (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant to this Section 3.5 shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this Section 3.5 occurs during the period that a Conversion Price is calculated hereunder, then the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.

3.6     Limitations on Conversion. Notwithstanding anything herein to the contrary, the Holder shall not attempt to convert any portion of this Note and the Company shall not issue to the Holder any Conversion Shares to the extent such shares, after giving effect to such issuance and when added to the number of shares of Common Stock issued and issuable to the Holder and the other persons and entities (the “Other Purchasers”) that purchased unsecured convertible notes from the Company in May 2022 and July 2022 and on the Original Issue Date (the “Prior Issuances”) (whether such shares of Common Stock issuable to the Other Purchasers were (i) issuable upon conversion of convertible notes or other securities issued in the Prior Issuances, (ii) issuable upon conversion of convertible notes or other securities issued after the date hereof, or (iii) otherwise issued after the date hereof in transactions not involving a public offering within the meaning of the rules and regulations of the Nasdaq Stock Market that would, under NASDAQ rules, be aggregated with the Conversion Shares issued or issuable upon conversion of the Note) , would result in the Holder (and its affiliates) being issued Common Stock that in the aggregate would exceed (i) 19.99% of the number of shares of Common Stock outstanding (the “Maximum Aggregate Ownership Amount”), or (ii) 19.99% of the total voting power of the Company’s securities outstanding that are entitled to vote on a matter being voted on by holders of the Common Stock (the “Maximum Aggregate Voting Amount”), unless and until the Company obtains shareholder approval permitting such issuance in accordance with applicable rules of the NASDAQ Capital Market (or any other applicable national securities exchange) (“Stockholder Approval”). For purposes of this Section 3.6, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10- K, as the case may be, filed with the Securities and Exchange Commission, (y) a more recent public announcement by the Company, or (z) any other notice by the Company or the Company's transfer agent setting forth the number of shares of Common Stock outstanding. If on any attempted conversion of this Note the resulting issuance of Conversion Shares to the Holder and Common Stock to the Other Purchasers (and their respective affiliates) would result in the Holder (and its affiliates) and the Other Purchasers (and their respective affiliates) exceeding the Maximum Aggregate Ownership Amount or the Maximum Aggregate Voting Amount and the Company shall not have previously obtained Stockholder Approval at the time of conversion, then the Company shall only issue to the Holder such number of Shares as may be issued below the Maximum Aggregate Ownership Amount or Maximum Aggregate Voting Amount (taking into account the number of Shares issued or issuable to the Other Purchasers), as the case may be.

4.   REDEMPTION.

4.1     Optional Redemption. At any time on or after the third anniversary of the Original Issue Date, the Company may, at its option and upon 30 days written notice provided to the Holder, elect to redeem the Note (in whole and not in part) and the Holder shall be obligated to surrender the Note, at a redemption price equal to 100% of the outstanding Principal Balance, together with any accrued but unpaid interest thereon to the redemption date. Notwithstanding the preceding or anything in Section 3 to the contrary, after receipt of such redemption notice from the Company, the Holder may, at its option, elect to convert the Principal Balance and accrued interest into Conversion Shares as set forth in Section 3 by giving written notice of such election to the Company no later than 5 days prior to the date fixed for redemption.

4.2     Change of Control Transactions. In the event the Company enters into a definitive agreement to consummate a Change of Control, the Company may, at its option and upon ten Business Days prior written notice to the Holder, elect to redeem the Note (in whole and not in part), and the Holder shall be obligated to surrender the Note, at a redemption price equal to 100% of the outstanding Principal Balance, together with any accrued but unpaid interest thereon to the redemption date. Notwithstanding the preceding or anything in Section 3 to the contrary, after receipt of such redemption notice from the Company, the Holder may, at its option, elect to convert the Principal Balance and accrued interest into Conversion Shares as set forth in Section 3 by giving written notice of such election to the Company no later than 15 days prior to the date fixed for redemption.

5. REPRESENTATIONS AND WARRANTIES.

5.1    Representations and Warranties of the Company. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado, and has the power and authority to own, lease and operate its properties and carry on its business as now conducted. The execution, delivery and performance by the Company of this Note is within the power of the Company and has been duly authorized by all necessary actions on the part of the Company. This Note constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. The performance and consummation of the transactions contemplated by this Note do not and will not: (i) violate any material judgment, statute, rule or regulation applicable to the Company; (ii) result in the acceleration of any material debt or contract to which the Company is a party or by which it is bound; or (iii) result in the creation or imposition of any lien on any property, asset or revenue of the Company or the suspension, forfeiture, or nonrenewal of any material permit, license or authorization applicable to the Company, its business or operations. The convertible notes issued to the Other Purchasers are convertible into a total of approximately 3,637,538 shares of Common Stock. The Company will obtain Stockholder Approval prior to reducing its shares of outstanding common stock below the number of shares reported on its Form 10-Q filed with the Securities and Exchange Commission on May 23, 2022 if such reduction would cause the total number of shares of Common Stock issuable to the Holder and issued or issuable to the Other Purchasers to exceed the Maximum Aggregate Ownership Amount or the Maximum Aggregate Voting Amount.

5.2    Representations and Warranties of Holder. Holder has full legal capacity, power and authority to execute and deliver this Note and to perform its obligations hereunder. This Note constitutes a valid and binding obligation of Holder, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

5.3    Other Representations and Warranties of Holder. Holder is an accredited investor as such term is defined in Rule 501 of Regulation D under the Act. Holder shall furnish any additional information requested by the Company to assurance compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Note and the Common Stock issuable upon conversion of the Note (the “Securities”). Holder has been advised that the Securities have not been registered under the Securities Act, or any state securities laws by reason of specific exemptions under the provisions thereof which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of Holder’s representations as expressed herein. Holder understands that the Securities are “restricted securities” under U.S. federal and applicable state securities law and cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available. If an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Securities and on requirements relating to the Company which are outside of Holder’s control, and which the Company is under no obligation, and may not be able, to satisfy. Holder is purchasing this Note and the shares of Common Stock that may be acquired by the Holder hereunder for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and Holder has no present intention of selling, granting any participation in, or otherwise distributing the same. Holder has such knowledge and experience in financial and business matters that the Holder is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment without impairing Holder’s financial condition and is able to bear the economic risk of such investment for an indefinite period of time. Holder understands that no public market now exists for the Note and that the Company has made no assurances that a public market will ever exist for the Note. Holder acknowledges that it has received all the information it considers necessary or appropriate to enable it to make an informed decision concerning an investment in the Securities. Holder further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities. Holder confirms that the Company has not given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Securities. In deciding to purchase the Securities, Holder is not relying on the advice or recommendations of the Company and Holder has made its own independent decision that the investment in the Securities is suitable and appropriate for Holder. Holder understands that no federal or state agency has passed upon the merits or risks of an investment in the Securities or made any finding or determination concerning the fairness or advisability of this investment. Holder, and its officers, directors, employees, agents, stockholders or partners have not either directly or indirectly, including through a broker or finder solicited offers for or offered or sold the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act. Holder acknowledges that neither the Company nor any other person or entity offered to sell the Securities to it by means of any form of general solicitation or advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.

6. EVENTS OF DEFAULT. Each of the following events shall constitute an “Event of Default” hereunder:

(a)    The Company fails to make any payment when due under this Note on the applicable due date or within five Business Days after written notice of such failure has been given by Holder to the Company;

(b)    The Company fails to comply with its obligation to convert or redeem this Note as described herein, and such default continues for a period of five Business Days;

(c)    Any representation or warranty made by the Company under or in connection with the issuance of this note shall prove to have been incorrect in any material respect when made;

(d)    Except for defaults or events of defaults existing as of the Original Issue Date (or defaults or events of default that will exist due to circumstances existing as of the Original Issue Date), any default after any cure period under, or acceleration prior to maturity of, any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company in excess of $1,000,000, or for money borrowed the repayment of which is guaranteed by the Company for in excess of $1,000,000, whether such indebtedness or guarantee now exists or shall be created hereafter;

(e)    A receiver is appointed for any material part of the Company’s property, the Company makes a general assignment for the benefit of creditors, or the Company becomes a debtor or alleged debtor in a case under the U.S. Bankruptcy Code or becomes the subject of any other bankruptcy or similar proceeding for the general adjustment of its debts or for its liquidation; or

(f)    The Company’s Board of Directors adopts a resolution for the liquidation, dissolution or winding up of the Company.

If an Event of Default occurs and is continuing, the Holder may declare all of the then outstanding Principal Balance any accrued but unpaid interest due thereon, to be due and payable immediately, except that (i) in the case of an Event of Default arising from events described in clauses (e) and (f) of this Section 6, this Note shall become due and payable without further action or notice, and (ii) in the case of an Event of Default arising from the event described in clause (b) of this Section 6, the Holder may seek specific performance or other equitable relief with respect to its rights to convert the Note pursuant to Section 3.

7. GENERAL PROVISIONS.

7.1    Waivers. The Company and all endorsers of this Note hereby waive notice, presentment, protest and notice of dishonor.

7.2    Attorneys’ Fees. In the event any party is required to engage the services of an attorney for the purpose of enforcing this Note, or any provision thereof, each party shall bear its own expenses and costs, including attorneys’ fees.

7.3    Transfer; Successors and Assigns. Subject to compliance with applicable securities laws, this Note, and all rights, privileges and obligations hereunder, may be assigned by Holder to any transferee that is an affiliate of Holder, provided that the transferee executes and delivers an acknowledgement that such transferee agrees to be subject to, and bound by, all the terms and conditions of this Note, and the terms and conditions of such assigned Note shall inure to the benefit of and be binding upon such transferee. None of the rights, privileges, or obligations set forth in, arising under, or created by this Note may be assigned or transferred by the Company without the prior consent in writing of Holder. Except as otherwise provided, the terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties.

7.4    Governing Law. This Note shall be governed by and construed under the internal laws of the State of Colorado, without reference to principles of conflict of laws or choice of laws.

7.5    Headings. The headings and captions used in this Note are used only for convenience and are not to be considered in construing or interpreting this Note. All references in this Note to sections and exhibits shall, unless otherwise provided, refer to sections hereof and exhibits attached hereto, all of which exhibits are incorporated herein by this reference.

7.6    Notices. All notices and other communications given or made pursuant to this Note shall be in writing and shall be deemed effectively given upon the earlier of actual receipt, or (a) personal delivery to the party to be notified, (b) when sent, if sent by electronic mail during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) Business Day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next Business Day delivery, with written verification of receipt.

7.7    Interest Rate Limitation. Anything herein to the contrary notwithstanding, if during any period for which interest is computed hereunder, the amount of interest computed on the basis provided for in this Note, together with all fees, charges and other payments which are treated as interest under applicable law, as provided for herein or in any other document executed in connection herewith, would exceed the amount of such interest computed on the basis of the Highest Lawful Rate, then the Company shall not be obligated to pay, and Holder shall not be entitled to charge, collect, receive, reserve or take, interest in excess of the Highest Lawful Rate, and during any such period the interest payable hereunder shall be computed on the basis of the Highest Lawful Rate.

7.8    Amendments and Waivers. This Note may not be amended and provisions hereunder may not be waived without the written consent of each of the Company and Holder.

7.9    Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, then such provision(s) shall be excluded from this Note to the extent they are held to be unenforceable and the remainder of this Note shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms.

[Signature page follows]

IN WITNESS WHEREOF, the Company has caused this Unsecured Convertible Promissory Note to be signed in its name as of the date first written above.

THE COMPANY

Hallador Energy Company

By:/s/LAWRENCE D. MARTIN

Lawrence D. Martin

Chief Financial Officer

Address: 1183 E. Canvasback Drive

Terre Haute, Indiana 47802

Attn:         Lawrence D. Martin, Chief Financial Officer

Email:         lmartin@halladorenergy.com

AGREED AND ACKNOWLEDGED:

HOLDER

ALJ Regional Holdings, Inc.

By:/S/JESS M. RAVICH

Jess M. Ravich

Chief Executive Officer

Address: 244 Madison Avenue, PMB #358

New York, New York 10016

Attn:         Jess M. Ravich

Email:         jessravich@gmail.com

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Brent K. Bilsland, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of Hallador Energy Company;

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.       The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.       The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

August 15, 2022	/s/ BRENT K. BILSLAND
	Brent K. Bilsland, Chairman, President and CEO

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Lawrence D. Martin, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of Hallador Energy Company;

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.       The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.       The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 

August 15, 2022	/s/LAWRENCE D. MARTIN
	Lawrence D. Martin, CFO

EX-31.3

Exhibit 31.3

CERTIFICATION

I, R. Todd Davis, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of Hallador Energy Company;

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.       The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.       The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 

August 15, 2022	/S/R. TODD DAVIS
	R. Todd Davis, CAO

EX-32

Exhibit 32 

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report (the "Report"), of Hallador Energy Company (the "Company"), on Form 10-Q for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof the undersigned, in the capacities and date indicated below, each hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 15, 2022	By:	/S/BRENT K. BILSLAND
		Brent K. Bilsland, Chairman, President and CEO
	By:	/S/LAWRENCE D. MARTIN
		Lawrence D. Martin, CFO
	By:	/S/R. TODD DAVIS
		R. Todd Davis, CAO

EX-95.1

Exhibit 95.1

MINE SAFETY DISCLOSURES

Our principles at Sunrise Coal, LLC are safety, honesty, and compliance. We firmly believe that these values compose a dedicated workforce and with that, come high production. The core to this is our strong training programs that include accident prevention, workplace inspection and examination, emergency response and compliance. We work with the Federal and State regulatory agencies to help eliminate safety and health hazards from our workplace and increase safety and compliance awareness throughout the mining industry.

We are regulated by the Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (“Mine Act”). MSHA inspects our mines on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. We present information below regarding certain violations which MSHA has issued with respect to our mines. While assessing this information please consider that the number and cost of violations will vary depending on the MSHA inspector and can be contested and appealed, and in that process, are often reduced in severity and amount, and are sometimes dismissed.

The disclosures listed below are provided pursuant to the Dodd-Frank Act. We believe that the following disclosures comply with the requirements of the Dodd-Frank Act; however, it is possible that future SEC rule making may require disclosures to be filed in a different format than the following. 

The table that follows outline required disclosures and citations/orders issued to us by MSHA during the 2nd Quarter 2022. The citations and orders outlined below may differ from MSHA`s data retrieval system due to timing, special assessed citations, and other factors.

Definitions:

Section 104(a) Significant and Substantial Citations “S&S”: An alleged violation of a mining safety or health standard or regulation where there exists a reasonable likelihood that the hazard outlined will result in an injury or illness of a serious nature.

Section 104(b) Orders:  Failure to abate a 104(a) citation within the period of time prescribed by MSHA. The result of which is an order of immediate withdraw of non-essential persons from the affected area until MSHA determines the violation has been corrected.

Section 104(d) Citations and Orders: An alleged unwarrantable failure to comply with mandatory health and safety standards.

Section 107(a) Orders: An order of withdraw for situations where MSHA has determined that an imminent danger exists.

Section 110(b)(2) Violations: An alleged flagrant violation issued by MSHA under section 110(b)(2) of the Mine Act.

Pattern or Potential Pattern of Violations: A pattern of violations of mandatory health or safety standards that are of such a nature as could have significantly and substantially contributed to the cause and effect of coal mine health or safety hazards under section 104(e) of the Mine Act or a potential to have such a pattern.

Contest of Citations, Orders, or Proposed Penalties: A contest proceeding may be filed with the Commission by the operator or miners/miner’s representative to challenge the issuance or penalty of a citation or order issued by MSHA.

MSHA Federal Mine ID#`s:

12-02465 – Carlisle Preparation Plant

12-02460 – Ace in the Hole Mine

12-02394 – Oaktown Fuels No. 1

12-02418 – Oaktown Fuels No. 2 

12-02462 – Oaktown Fuels Preparation Plant

12-02249 – Prosperity Mine

	2nd Quarter 2022
	Section		Section		Section		Section		Section		Proposed
	104(a)		104(b)		104(d)		107(a)		110(b)(2)		MSHA
	Citations		Orders		Citations/Orders		Orders		Violations		Assessments
											(In thousands)
Mine ID#
12‐02465		0		0		0		0		0	$	-
12‐02460		0		0		0		0		0	$	-
12‐02394		15		0		0		0		0	$	20.00
12‐02418		2		0		0		0		0	$	2.10
12‐02462		0		0		0		0		0	$	-
12‐02249		0		0		0		0		0	$	-
	Section		Section
	104(e)		104(e)		Mining		Legal		Legal		Legal
	Notice		POV		Related		Actions		Actions		Actions
	Yes/No		Yes/No		Fatalities		Pending		Initiated		Resolved
Mine ID#
12‐02465	No		No			0		0		0		0
12‐02460	No		No			0		0		0		0
12‐02394	No		No			0		0		0		0
12‐02418	No		No			0		0		0		0
12‐02462	No		No			0		0		0		0
12‐02249	No		No			0		0		0		0
	Contest of		Contest		Complaints		Complaints		Applications		Appeals of
	Citations/		of		of		of Discharge/		of Temp.		Decisions/
	Orders		Penalties		Compensation		Discrimination		Relief		Orders
Mine ID#
12‐02465		0		0		0		0		0		0
12‐02460		0		0		0		0		0		0
12‐02394		0		0		0		0		0		0
12‐02418		0		0		0		0		0		0
12‐02462		0		0		0		0		0		0
12‐02249		0		0		0		0		0		0

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2022	Aug. 12, 2022
Document Information [Line Items]
Entity Central Index Key	0000788965
Entity Registrant Name	HALLADOR ENERGY CO
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2022
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	001-34743
Entity Incorporation, State or Country Code	CO
Entity Tax Identification Number	84-1014610
Entity Address, Address Line One	1183 East Canvasback Drive
Entity Address, City or Town	Terre Haute
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	47802
City Area Code	812
Local Phone Number	299.2800
Title of 12(b) Security	Common Shares, $.01 par value
Trading Symbol	HNRG
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		32,982,605

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 8,882	$ 2,546
Restricted cash	3,491	3,283
Accounts receivable	17,155	13,584
Inventory	13,806	7,699
Parts and supplies	12,247	10,015
Prepaid expenses	999	2,112
Total current assets	56,580	39,239
Property, plant and equipment:
Land and mineral rights	115,771	115,837
Buildings and equipment	355,053	342,782
Mine development	123,274	112,575
Total property, plant and equipment	594,098	571,194
Less - accumulated depreciation, depletion and amortization	(286,960)	(268,370)
Total property, plant and equipment, net	307,138	302,824
Investment in Sunrise Energy	3,883	3,545
Other assets	8,134	8,372
Total Assets	375,735	353,980
Current liabilities:
Current portion of bank debt, net	13,222	23,098
Accounts payable and accrued liabilities	47,973	41,528
Total current liabilities	61,195	64,626
Long-term liabilities:
Bank debt, net	113,607	84,667
Deferred income taxes	3,094	2,850
Asset retirement obligations	13,437	14,025
Other	1,579	1,577
Total long-term liabilities	131,717	103,119
Total liabilities	192,912	167,745
Redeemable noncontrolling interests	4,000	4,000
Stockholders' equity:
Preferred stock, $.10 par value, 10,000 shares authorized; none issued and outstanding	0	0
Common stock, $.01 par value, 100,000 shares authorized; 32,983 and 30,785 issued and outstanding, respectively	330	308
Additional paid-in capital	114,212	104,126
Retained earnings	64,281	77,801
Total stockholders’ equity	178,823	182,235
Total liabilities, redeemable noncontrolling interests, and stockholders’ equity	$ 375,735	$ 353,980

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares shares in Thousands	Jun. 30, 2022	Dec. 31, 2021
Preferred stock, par value (in dollars per share)	$ 0.10	$ 0.10
Preferred stock, shares authorized (in shares)	10,000	10,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100,000	100,000
Common stock, shares issued (in shares)	32,983	30,785
Common stock, shares outstanding (in shares)	32,983	30,785

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
SALES AND OPERATING REVENUES:
Coal sales		$ 64,161	$ 54,600	$ 121,171	$ 100,479
Other revenues		1,768	1,038	3,665	1,854
Total revenue		65,929	55,638	124,836	102,333
EXPENSES:
Operating expenses		51,394	42,456	105,995	76,465
Depreciation, depletion and amortization		11,164	9,715	20,695	20,022
Asset retirement obligations accretion		250	373	496	736
Exploration costs		215	159	272	217
General and administrative		3,722	3,383	6,871	6,204
Total operating expenses		66,745	56,086	134,329	103,644
LOSS FROM OPERATIONS		(816)	(448)	(9,493)	(1,311)
Interest expense (1)	[1]	(2,337)	(2,182)	(4,121)	(4,080)
Equity method investment income		188	63	338	63
LOSS BEFORE INCOME TAXES		(2,965)	(2,567)	(13,276)	(5,328)
Current		0	0	0	0
Deferred		421	397	244	(1,332)
Total income tax expense (benefit)		421	397	244	(1,332)
NET LOSS		$ (3,386)	$ (2,964)	$ (13,520)	$ (3,996)
NET LOSS PER SHARE:
Basic and diluted (in dollars per share)		$ (0.11)	$ (0.10)	$ (0.44)	$ (0.13)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic and diluted (in shares)		30,809	30,613	30,797	30,612
(1) Interest Expense:
Bank interest		$ 1,712	$ 2,307	$ 3,422	$ 4,443
Other interest		58	0	58	0
Non-cash interest:
Change in interest rate swap valuation		(250)	(766)	(867)	(1,614)
Amortization of debt issuance costs		817	641	1,508	1,251
Total non-cash interest		567	(125)	641	(363)
Total interest expense	[1]	$ 2,337	$ 2,182	$ 4,121	$ 4,080

[1] Bank interest

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
OPERATING ACTIVITIES:
Net loss	$ (3,386)	$ (2,964)	$ (13,520)	$ (3,996)
Deferred income taxes	421	397	244	(1,332)
Equity income – Sunrise Energy	(188)	(63)	(338)	(63)
Depreciation, depletion and amortization	11,164	9,715	20,695	20,022
Gain on sale of assets			(367)	0
Amortization of debt issuance costs	817	641	1,508	1,251
Asset retirement obligations accretion	250	373	496	736
Cash paid on asset retirement obligation reclamation			(1,184)	0
Stock-based compensation			108	567
Provision for loss on customer contracts			159	0
Change in operating assets and liabilities:
Accounts receivable			(3,571)	28
Inventory			(6,107)	(7,682)
Parts and supplies			(2,232)	(392)
Prepaid expenses			705	(108)
Accounts payable and accrued liabilities			4,065	5,652
Other			485	198
Cash provided by operating activities			279	12,888
INVESTING ACTIVITIES:
Capital expenditures			(22,903)	(10,837)
Proceeds from sale of equipment			758	0
Cash used in investing activities			(22,145)	(10,837)
FINANCING ACTIVITIES:
Payments on bank debt			(14,700)	(18,875)
Borrowings of bank debt			33,700	11,250
Debt issuance costs			(590)	(418)
Taxes paid on vesting of RSUs			0	(2)
Cash provided by (used in) financing activities			28,410	(8,045)
Increase (decrease) in cash, cash equivalents, and restricted cash			6,544	(5,994)
Cash, cash equivalents, and restricted cash, beginning of period			5,829	12,071
Cash, cash equivalents, and restricted cash, end of period	12,373	6,077	12,373	6,077
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH CONSIST OF THE FOLLOWING:
Cash and cash equivalents	8,882	2,582	8,882	2,582
Restricted cash	3,491	3,495	3,491	3,495
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Ending Balance	$ 12,373	$ 6,077	12,373	6,077
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest			4,055	4,446
SUPPLEMENTAL NON-CASH FLOW INFORMATION:
Change in capital expenditures included in accounts payable and prepaid expense			2,004	3,613
Debt issuance costs included in accounts payable and accrued liabilities			853	0
Convertible notes payable and related party convertible notes payable converted to common stock			10,000	0
Senior Unsecured Convertible Notes [Member] | Non-affiliated Party [Member]
FINANCING ACTIVITIES:
Issuance of convertible note payable			1,000	0
Senior Unsecured Convertible Notes [Member] | Four Board Members [Member]
FINANCING ACTIVITIES:
Issuance of related party convertible notes payable			9,000	0
Interest Rate Swap [Member]
OPERATING ACTIVITIES:
Change in fair value of derivative			(867)	(1,614)
Fuel Hedge [Member]
OPERATING ACTIVITIES:
Change in fair value of derivative			$ 0	$ (379)

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Senior Unsecured Convertible Notes [Member] Non-affiliated Party [Member] Common Stock [Member]	Senior Unsecured Convertible Notes [Member] Non-affiliated Party [Member] Additional Paid-in Capital [Member]	Senior Unsecured Convertible Notes [Member] Non-affiliated Party [Member] Retained Earnings [Member]	Senior Unsecured Convertible Notes [Member] Non-affiliated Party [Member]	Senior Unsecured Convertible Notes [Member] Four Board Members [Member] Common Stock [Member]	Senior Unsecured Convertible Notes [Member] Four Board Members [Member] Additional Paid-in Capital [Member]	Senior Unsecured Convertible Notes [Member] Four Board Members [Member] Retained Earnings [Member]	Senior Unsecured Convertible Notes [Member] Four Board Members [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2020									30,610
Balance at Dec. 31, 2020									$ 306	$ 103,399	$ 81,555	$ 185,260
Stock-based compensation									0	567	0	567
Net loss									$ 0	0	(3,996)	(3,996)
Stock issued on vesting of RSUs (in shares)									4
Stock issued on vesting of RSUs									$ 0	0	0	0
Taxes paid on vesting of RSUs (in shares)									(1)
Taxes paid on vesting of RSUs									$ 0	(2)	0	(2)
Balance (in shares) at Jun. 30, 2021									30,613
Balance at Jun. 30, 2021									$ 306	103,964	77,559	181,829
Balance (in shares) at Mar. 31, 2021									30,613
Balance at Mar. 31, 2021									$ 306	103,679	80,523	184,508
Stock-based compensation									0	285	0	285
Net loss									$ 0	0	(2,964)	(2,964)
Balance (in shares) at Jun. 30, 2021									30,613
Balance at Jun. 30, 2021									$ 306	103,964	77,559	181,829
Balance (in shares) at Dec. 31, 2021									30,785
Balance at Dec. 31, 2021									$ 308	104,126	77,801	182,235
Stock-based compensation									0	108	0	108
Stock issued on redemption of convertible note (in shares)	232
Stock issued on redemption of convertible note	$ 2	$ 998	$ 0	$ 1,000
Stock issued on redemption of related party convertible notes					$ 20	$ 8,980	$ 0	$ 9,000
Net loss									$ 0	0	(13,520)	(13,520)
Balance (in shares) at Jun. 30, 2022									32,983
Balance at Jun. 30, 2022									$ 330	114,212	64,281	178,823
Balance (in shares) at Mar. 31, 2022									30,785
Balance at Mar. 31, 2022									$ 308	104,181	67,667	172,156
Stock-based compensation									0	53	0	53
Stock issued on redemption of convertible note (in shares)	232
Stock issued on redemption of convertible note	$ 2	$ 998	$ 0	$ 1,000
Stock issued on redemption of related party convertible notes					$ 20	$ 8,980	$ 0	$ 9,000
Net loss									$ 0	0	(3,386)	(3,386)
Balance (in shares) at Jun. 30, 2022									32,983
Balance at Jun. 30, 2022									$ 330	$ 114,212	$ 64,281	$ 178,823
Stock issued on redemption of related party convertible notes (in shares)					1,966

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Note 1 - General Business

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Significant Accounting Policies [Text Block]

(1) GENERAL BUSINESS

The interim financial data is unaudited; however, in our opinion, it includes all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the results for the interim periods. The condensed consolidated financial statements included herein have been prepared pursuant to the Securities and Exchange Commission's ( the "SEC") rules and regulations; accordingly, certain information and footnote disclosures normally included in generally accepted accounting principles ("GAAP") financial statements have been condensed or omitted.

The results of operations and cash flows for the three and six months ended June 30, 2022, are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2022.

Our organization and business, the accounting policies we follow, and other information are contained in the notes to our consolidated financial statements filed as part of our 2021 Annual Report on Form 10-K. This quarterly report should be read in conjunction with such Annual Report on Form 10-K.

In  August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The update simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and limiting the number of embedded conversion features separately recognized from the primary contract. The guidance also includes targeted improvements to the disclosures for convertible instruments and earnings per share. This was early adopted on January 1, 2022 and did not have a significant impact on our consolidated financial position and consolidated results of operations.

The condensed consolidated financial statements include the accounts of Hallador Energy Company (hereinafter known as “we, us, or our”) and its wholly-owned subsidiaries Sunrise Coal, LLC (Sunrise) and Hourglass Sands, LLC (Hourglass), and Sunrise’s wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Sunrise is engaged in the production of steam coal from mines located in western Indiana.

As announced in our Form 8-K filed on February 18, 2022, on February 14, 2022, Hallador Energy Company, through its subsidiary Hallador Power Company, LLC, entered into an Asset Purchase Agreement (the "Purchase Agreement") to acquire Hoosier Energy’s 1-Gigawatt Merom Generating Station (Merom) located in Sullivan County, Indiana, in return for assuming certain decommissioning costs and environmental responsibilities. The transaction, which includes a 3.5-year power purchase agreement (PPA), is anticipated to close in September 2022, upon obtaining required governmental and financial approvals.

Going Concern - Alleviation of Substantial Doubt

In accordance with ASU 2014-15, “ Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (Subtopic 205-40), we have evaluated whether there are conditions and events, considered in the aggregate, which raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that our financials are issued. We performed the analysis, and our overall assessment was there were conditions or events, considered in the aggregate as of June 30, 2022, which raised substantial doubt about our ability to continue as a going concern within the next year, but such doubt was adequately mitigated by our plans to address the substantial doubt.

Also, during our analysis and overall assessment as we were preparing our Form 10-Q in April for the quarter ended  March 31, 2022, we determined that we were in violation of one of our financial covenants for the quarter ended  March 31, 2022 due to lower than expected Adjusted EBITDA, a significant non-GAAP factor in the calculation of the ratio, and could be in violation of financial covenants in future quarters, which management determined raises substantial doubt about the Company’s ability to continue as a going concern.  These factors did not exist when we filed our Form 10-K on March 28, 2022 as we were projecting at the time that all covenants would be met for the next twelve months and beyond.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. During our analysis and overall assessment in July for the quarter ended June 30, 2022, it became clear that we were likely to violate one or more of our financial covenants for the quarter ending September 30, 2022 due to lower than expected Adjusted EBITDA, a significant non-GAAP factor in the calculation of the ratios.  This factor raised substantial doubt about the Company's ability to continue as a going concern.  Management's plans were to seek an amendment to the credit agreement to provide relief or obtain a waiver of the projected violations.

In August 2022, as disclosed in Note 5, we executed an amendment to our credit agreement providing relief on the covenants in question until the time our internal projections show we will again meet the covenants in the quarter ending December 31, 2022.

Accordingly, the above factors have alleviated substantial doubt about the entity's ability to continue as a going concern.

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Note 2 - Long-lived Asset Impairments

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Asset Impairment Charges [Text Block]

(2) LONG-LIVED ASSET IMPAIRMENTS

Long-lived assets are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount of the assets may not be recoverable.  For the three and six month periods ended June 30, 2022 and for the three and six month periods ended June 30, 2021, there were no impairment charges recorded for long-lived assets.

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Note 3 - Inventory

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Inventory Disclosure [Text Block]

(3) INVENTORY

Inventory is valued at lower of average cost or net realizable value (NRV).  As of June 30, 2022, and December 31, 2021, coal inventory includes NRV adjustments of $5.7 million and $3.8 million, respectively.

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Note 4 - Other Long-term Assets

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Other Assets Disclosure [Text Block]

(4) OTHER LONG-TERM ASSETS (in thousands)

	June 30,		December 31,
	2022		2021
Advanced coal royalties	$	6,464	$	6,678
Other		1,670		1,694
Total other assets	$	8,134	$	8,372

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Note 5 - Bank Debt

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Debt Disclosure [Text Block]

(5) BANK DEBT

On March 25, 2022, we executed an amendment to our credit agreement with PNC, administrative agent for our lenders.  The primary purpose of the amendment was to return the allowable leverage ratio and debt service coverage ratio to their December 31, 2021 levels through September 30, 2022, with the debt service coverage waived for March 31, 2022.

On May 20, 2022, we executed an additional amendment to our credit agreement with PNC, administrative agent for our lenders.  The primary purpose of this amendment was to modify the allowable leverage ratio and debt service coverage ratio through June 30, 2022, to provide relief for current and anticipated covenant violations.

On August 5, 2022, we executed an additional amendment to our credit agreement with PNC, administrative agent for our lenders.  The primary purpose of this amendment was to modify the allowable leverage ratio and debt service coverage ratio through September 30, 2022 to provide relief for anticipated covenant violations.

Bank debt is comprised of term debt ($16.5 million as of June 30, 2022) and a $120 million revolver ($114.2 million borrowed as of June 30, 2022).  The term debt amortization concludes with the final payment in March 2023.  The revolver matures in September 2023.  Our debt is recorded at amortized cost, which approximates fair value due to the variable interest rates in the agreement and is collateralized primarily by our assets.

Liquidity

As of June 30, 2022, with the provisions of the amendments, we had additional borrowing capacity of $0.1 million and total liquidity of $9.0 million.  Our additional borrowing capacity is net of $5.7 million in outstanding letters of credit as of June 30, 2022, that were required to maintain surety bonds.  Liquidity consists of our additional borrowing capacity and cash and cash equivalents.

Fees

Unamortized bank fees and other costs incurred in connection with the initial facility and subsequent amendments totaled $4.0 million as of December 31, 2021. Additional costs incurred with the March 25, 2022 and May 20, 2022 amendments were $0.6 million and $0.9 million, respectively.  These costs were deferred and are being amortized over the term of the loan. Unamortized costs as of June 30, 2022, and December 31, 2021, were $3.9 million and $4.0 million, respectively.

Bank debt, less debt issuance costs, is presented below (in thousands):

	June 30,			December 31,
	2022			2021
Current bank debt	$	16,538		$	25,725
Less unamortized debt issuance cost		(3,316	)		(2,627	)
Net current portion	$	13,222		$	23,098
Long-term bank debt	$	114,200		$	86,013
Less unamortized debt issuance cost		(593	)		(1,346	)
Net long-term portion	$	113,607		$	84,667
Total bank debt	$	130,738		$	111,738
Less total unamortized debt issuance cost		(3,909	)		(3,973	)
Net bank debt	$	126,829		$	107,765

Covenants

The credit facility includes a Maximum Leverage Ratio (consolidated funded debt/trailing twelve months adjusted EBITDA), calculated as of the end of each fiscal quarter for the trailing twelve months, not to exceed the amounts below:

Fiscal Periods Ending	Ratio
June 30, 2022	6.00 to 1.00
September 30, 2022	4.50 to 1.00
December 31, 2022	2.50 to 1.00
March 31, 2023 and thereafter	2.25 to 1.00

As of June 30, 2022, our Leverage Ratio of 3.27 was in compliance with the 6.0 covenant defined in the current and prior amendments.

Beginning December 31, 2022, the credit facility requires a Minimum Debt Service Coverage Ratio (consolidated adjusted EBITDA/annual debt service) calculated as of the end of each fiscal quarter for the trailing twelve months of 1.25 to 1.00 through the maturity of the credit facility.

Interest Rate

The interest rate on the facility ranges from LIBOR plus 2.75% to LIBOR plus 4.00%, depending on our Leverage Ratio, with a LIBOR floor of 0.50%.  We entered into swap agreements to fix the LIBOR component of the interest rate at 2.92% on the entire amount of the declining term loan balance and on $52.7 million of the revolver. Those agreements matured in May 2022.  At June 30, 2022, we are paying LIBOR plus 4.0% on the outstanding bank debt.

Paycheck Protection Program

As previously reported in the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 16, 2020, we entered into a Paycheck Protection Program Promissory Note and Agreement on April 15, 2020, evidencing an unsecured $10 million loan (the “PPP Loan”) under the Paycheck Protection Program (or “PPP”) made through First Financial Bank, N.A., (the "Lender"). The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration (the “SBA”).

Under the terms of the CARES Act, PPP loan recipients can apply for forgiveness. The SBA can grant forgiveness of all or a portion of loans made under the PPP if the recipients use the PPP loan proceeds for eligible purposes, including payroll costs, mortgage interest, rent or utility costs, and meet other requirements regarding, among other things, the maintenance of employment and compensation levels. The Company used the PPP Loan proceeds for qualifying expenses and applied for the forgiveness of the PPP Loan in accordance with the terms of the CARES Act.

On July 23, 2021, we received a notification from the Lender that the SBA approved our PPP Loan forgiveness application for the entire PPP Loan balance of $10 million, together with interest accrued thereon. The Lender notified us that the forgiveness payment was received on July 26, 2021.  The forgiveness of the PPP Loan was recognized as other income.

The SBA retains the right to review the Company's loan file for a period subsequent to the date the loan is forgiven, with the potential for the SBA to pursue legal remedies at its discretion.

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Note 6 - Accounts Payable and Accrued Liabilities

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

(6) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (in thousands)

	June 30,		December 31,
	2022		2021
Accounts payable	$	31,099	$	27,835
Accrued property taxes		2,006		2,529
Accrued payroll		4,792		2,413
Workers' compensation reserve		3,346		2,560
Group health insurance		2,250		1,800
Fair value of interest rate swaps		—		867
Other		4,480		3,524
Total accounts payable and accrued liabilities	$	47,973	$	41,528

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Note 7 - Revenue

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

(7) REVENUE 

Revenue from Contracts with Customers

We account for a contract with a customer when the parties have approved the contract and are committed to performing their respective obligations, the rights of each party are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. We recognize revenue when we satisfy a performance obligation by transferring control of a good or service to a customer.  We utilize the normal purchase normal sales exception for all long-term sales contracts.

Our revenue is derived from sales to customers of coal produced at our facilities. Our customers typically purchase coal directly from our mine sites or our Princeton Loop, where the sale occurs and where title, risk of loss, and control pass to the customer at that point. Our customers arrange for and bear the costs of transporting their coal from our mines to their plants or other specified discharge points. Our customers are typically domestic utility companies. Our coal sales agreements with our customers are fixed-priced, fixed-volume supply contracts, or include a pre-determined escalation in price for each year. Price re-opener and index provisions may allow either party to commence a renegotiation of the contract price at a pre-determined time. Price re-opener provisions may automatically set a new price based on prevailing market price or, in some instances, require us to negotiate a new price, sometimes within specified ranges of prices. The terms of our coal sales agreements result from competitive bidding and extensive negotiations with customers. Consequently, the terms of these contracts vary by customer.

Coal sales agreements will typically contain coal quality specifications. With coal quality specifications in place, the raw coal sold by us to the customer at the delivery point must be substantially free of magnetic material and other foreign material impurities and crushed to a maximum size as set forth in the respective coal sales agreement. Price adjustments are made and billed in the month the coal sale was recognized based on quality standards that are specified in the coal sales agreement, such as Btu factor, moisture, ash, and sulfur content, and can result in either increases or decreases in the value of the coal shipped.

Disaggregation of Revenue

Revenue is disaggregated by primary geographic markets, as we believe this best depicts how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors. 83% and 85% of our coal revenue for the three and six months ended June 30, 2022 was sold to customers in the State of Indiana with the remainder sold to customers in Florida.  73% and 75% of our coal revenue for the three and six months ended June 30, 2021 respectively, was sold to customers in the State of Indiana with the remainder sold to customers in Florida, Georgia, and North Carolina.

Performance Obligations

A performance obligation is a promise in a contract with a customer to provide distinct goods or services. Performance obligations are the unit of account for purposes of applying the revenue recognition standard and therefore determine when and how revenue is recognized. In most of our contracts, the customer contracts with us to provide coal that meets certain quality criteria. We consider each ton of coal a separate performance obligation and allocate the transaction price based on the base price per the contract, increased or decreased for quality adjustments.

We recognize revenue at a point in time, as the customer does not have control over the asset at any point during the fulfillment of the contract. For substantially all of our customers, this is supported by the fact that title and risk of loss transfer to the customer upon loading of the truck or railcar at the mine. This is also the point at which physical possession of the coal transfers to the customer, as well as the right to receive substantially all benefits and the risk of loss in ownership of the coal.

We have remaining performance obligations relating to fixed-priced contracts of approximately $724 million, which represent the average fixed prices on our committed contracts as of June 30, 2022. We expect to recognize approximately 82% of this revenue in 2022 and 2023, with the remainder recognized thereafter. 

We have remaining performance obligations relating to contracts with price re-openers of approximately $166 million, which represents our estimate of the expected re-opener price on committed contracts as of June 30, 2022. We expect to recognize all of this revenue beginning in 2024.

The tons used to determine the remaining performance obligations are subject to adjustment in instances of force majeure and exercise of customer options to either take additional tons or reduce tonnage if such option exists in the customer contract.

Contract Balances

Under ASC 606, the timing of when a performance obligation is satisfied can affect the presentation of accounts receivable, contract assets, and contract liabilities. The main distinction between accounts receivable and contract assets is whether consideration is conditional on something other than the passage of time. A receivable is an entity’s right to consideration that is unconditional. Under the typical payment terms of our contracts with customers, the customer pays us a base price for the coal, increased or decreased for any quality adjustments. Amounts billed and due are recorded as trade accounts receivable and included in accounts receivable in our condensed consolidated balance sheets. As of January 1, 2021, accounts receivable for coal sales billed to customers was $14.4 million.  We do not currently have any contracts in place where we would transfer coal in advance of knowing the final price of the coal sold, and thus do not have any contract assets recorded. Contract liabilities arise when consideration is received in advance of performance.

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Note 8 - Income Taxes

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(8) INCOME TAXES

For the six months ended June 30, 2022, we recorded income taxes using an estimated annual effective tax rate based upon projected annual income, forecasted permanent tax differences, discrete items and statutory rates in states in which we operate. For the six months ended June 30, 2021, we utilized a discrete period method to calculate taxes, as we did not believe the annual effective tax rate method would have represented a reliable estimate.  The effective tax rate for the six months ended June 30, 2022, and 2021 was ~(2)% and ~25%, respectively. Historically, our actual effective tax rates have differed from the statutory effective rate primarily due to the benefit received from statutory percentage depletion in excess of tax basis. The deduction for statutory percentage depletion does not necessarily change proportionately to changes in income (loss) before income taxes.

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Note 9 - Stock Compensation Plans

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

(9) STOCK COMPENSATION PLANS

Non-vested grants at December 31, 2021	183,000
Awarded - price $2.42	10,000
Vested	—
Forfeited	(7,500	)
Non-vested grants at June 30, 2022	185,500

For the three and six months ended June 30, 2022 our stock compensation was $0.1 million and $0.1 million, respectively.  For the three and six months ended June 30, 2021, our stock compensation was $0.3 million and $0.6 million, respectively.

Non-vested RSU grants will vest as follows:

Vesting Year	RSUs Vesting
2023		185,500

The outstanding RSUs have a value of $1.0 million based on the June 30, 2022, closing stock price of $5.41.

At June 30, 2022, we had 1,398,671 RSUs available for future issuance.

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Note 10 - Leases

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

(10) LEASES

We have operating leases for office space with remaining lease terms ranging from 17 months to 28 months. As most of the leases do not provide an implicit rate, we calculated the right-of-use assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date. We currently do not have any finance leases outstanding.

Information related to leases was as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Operating lease information:
Operating cash outflows from operating leases		53		$	50		$	111		$	97
Weighted average remaining lease term in years		1.74			2.69			1.74			2.69
Weighted average discount rate		6.0	%		6.0	%		6.0	%		6.0	%

Future minimum lease payments under non-cancellable leases as of June 30, 2022, were as follows:

Year	Amount
	(In thousands)
2022	$	104
2023		174
2024		59
Total minimum lease payments	$	337
Less imputed interest		(8	)
Total operating lease liability	$	329
As reflected on balance sheet:
Accounts payable and accrued liabilities	$	208
Other long-term liabilities		121
Total operating lease liability	$	329

At June 30, 2022, and December 31, 2021, we had approximately $329,000 and $424,000, respectively, of right-of-use operating lease assets recorded within “buildings and equipment” on the condensed consolidated balance sheets.

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Note 11 - Self-Insurance

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Self Insurance [Text Block]

(11) SELF-INSURANCE

We self-insure our underground mining equipment. Such equipment is allocated among seven mining units dispersed over ten miles. The historical cost of such equipment was approximately $269 million and $260 million as of June 30, 2022, and December 31, 2021, respectively.

Restricted cash of $3.5 million and $3.3 million as of June 30, 2022, and December 31, 2021, respectively, represents cash held and controlled by a third party and is restricted for future workers’ compensation claim payments.

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Note 12 - Net Loss Per Share

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Earnings Per Share [Text Block]

(12) NET LOSS PER SHARE

We compute net loss per share using the two-class method, which is an allocation formula that determines net loss per share for common stock and participating securities, which for us are our outstanding RSUs.

The following table (in thousands, except per share amounts) sets forth the computation of net loss per share:

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Numerator:
Net loss	$	(3,386	)	$	(2,964	)	$	(13,520	)	$	(3,996	)
Less loss allocated to RSUs		18			30			79			41
Net loss allocated to common shareholders	$	(3,368	)	$	(2,934	)	$	(13,441	)	$	(3,955	)

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Note 13 - Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Fair Value Measurement and Measurement Inputs, Recurring and Nonrecurring [Text Block]

(13) FAIR VALUE MEASUREMENTS

We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. We consider active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. We have no Level 1 instruments.

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. We have no Level 2 instruments.

Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market activity). Our Level 3 instruments are comprised of interest rate swaps and impairment measurements.  The fair values of our swaps were estimated using discounted cash flow calculations based upon forward interest-rate yield curves.  The notional values of our two interest rate swaps were $52.7 million and $22.1 million when they matured in  May 2022.  Although we utilize third-party broker quotes to assess the reasonableness of our prices and valuation, we do not have sufficient corroborating market evidence to support classifying these assets and liabilities as Level 2.  Certain properties' asset retirement obligation liabilities use Level 3 non-recurring fair value measures.

The following table summarizes our financial assets and liabilities measured on a recurring basis at fair value at June 30, 2022, and December 31, 2021, by the respective level of the fair value hierarchy (in thousands):

	Level 1		Level 2		Level 3		Total
December 31, 2021
Liabilities:
Interest rate swaps	$	—	$	—	$	867	$	867
June 30, 2022
Liabilities:
Interest rate swaps	$	—	$	—	$	—	$	—

The table below highlights the change in fair value of the interest rate swaps which are based on a discounted future cash flow model (in thousands):

Ending balance, December 31, 2021	$	(867	)
Change in estimated fair value		867
Ending balance, June 30, 2022	$	—

 

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Note 14 - Equity Method Investments

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

(14) EQUITY METHOD INVESTMENTS

We own a 50% interest in Sunrise Energy, LLC, which owns gas reserves and gathering equipment and generates revenue from gas sales. Sunrise Energy plans to continue developing and exploring for oil, gas, and coal-bed methane gas reserves on or near our underground coal reserves. The carrying value of the investment included in our condensed consolidated balance sheets as of June 30, 2022, and December 31, 2021, was $3.9 million and $3.5 million, respectively.

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Note 15 - Convertible Notes

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Convertible Notes Disclosure [Text Block]

(15) CONVERTIBLE NOTES

On May 2, 2022, and May 20, 2022, we issued senior unsecured convertible notes (the "Notes") to five parties, in the aggregate principal amount of $10 million, with $9 million going to related parties affiliated with independent members of our board of directors and the remainder to a non-affiliated party. The funds received from the Notes were used to provide additional working capital to the Company. The Notes were scheduled to mature on December 29, 2028, and accrue interest at 8% per annum, with interest payable on the date of the maturity. Pursuant to the terms of the Notes, the holders of the Notes may convert the entire principal balance and all accrued and unpaid interest then outstanding during the period beginning June 1, 2022, and ending on May 31, 2027, into shares of the Company Common Stock (the "Conversion Shares") at a conversion price the greater of (i)$3.33 and (ii) the 30-day trailing volume-weighted average sales price for the Common Stock on the Nasdaq Capital Market ending on and including the date on which this Note is converted. Each Conversion Share will consist of one share of our common stock. The conversion price and number of shares of the Company’s Common Stock issuable upon conversion of the Notes are subject to adjustment from time to time for any subdivision or consolidation of the Company’s shares and other standard dilutive events. At any time on or after June 1, 2025, the Company may, at its option and upon 30 days' written notice provided to the Holders, elect to redeem the Notes (in whole and not in part) and the Holders shall be obligated to surrender the Notes, at a redemption price equal to 100% of the outstanding Principal Balance, together with any accrued but unpaid interest thereon to the redemption date. After receipt of such redemption notice from the Company, the Holder may, at its option, elect to convert the Principal Balance and accrued interest into Conversion Shares by giving written notice of such election to the Company no later than 5 days prior to the date fixed for redemption.

In June, the four holders of the $9 million related party convertible notes converted them into 1,965,841 shares of common stock of the Company and the one holder of the $1 million convertible note converted it into 231,697 shares of common stock pursuant to the terms of the notes and their related agreements.

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Note 16 - Subsequent Events

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Subsequent Events [Text Block]

(16) SUBSEQUENT EVENTS

On July 29, 2022, as reported on Form 8-K on August 4, 2022, we issued $5 million of a senior unsecured convertible note to a related party affiliated with an independent member of our board of directors.  The note carries an interest rate of 8% per annum with a maturity date of December 29, 2028.  For the period August 18, 2022 through August 17, 2024, the holder has the option to convert the notes into shares of the Company's common stock at a conversion price of $6.254.  Beginning August 18, 2025, the Company may elect to redeem the note and the holder shall be obligated to surrender the note at 100% of the outstanding principal balance together with any accrued unpaid interest.  Upon receipt of the redemption notice from the Company, the holder may elect to convert the principal balance and accrued interest into conversion shares.

On August 5, 2022, as reported on Form 8-K on August 11, 2022, we executed an amendment to our credit agreement with PNC as discussed in Note 5 to these consolidated financial statements.

On August 8, 2022, as reported on Form 8-K on August 11, 2022, we issued $4 million of senior unsecured convertible notes to related parties affiliated with independent members of our board of directors.  The notes carry an interest rate of 8% per annum with a maturity date of December 29, 2028.  For the period August 18, 2022 through August 17, 2024, the holder has the option to convert the notes into shares of the Company's common stock at a conversion price of $6.254.  Beginning August 8, 2025, the Company may elect to redeem the note and the holder shall be obligated to surrender the note at 100% of the outstanding principal balance together with any accrued unpaid interest.  Upon receipt of the redemption notice from the Company, the holder may elect to convert the principal balance and accrued interest into conversion shares.

On August 12, 2022, we issued a $10 million senior unsecured convertible note to an unrelated party.  The note carries an interest rate of 8% per annum with a maturity date of December 31, 2026.  For the period August 18, 2022 through the maturity date, the holder has the option to convert the notes into shares of the Company's common stock at a conversion price of $6.15.  Beginning August 12, 2025, the Company may elect to redeem the note and the holder shall be obligated to surrender the note at 100% of the outstanding principal balance together with any accrued unpaid interest.  Upon receipt of the redemption notice from the Company, the holder may elect to convert the principal balance and accrued interest into conversion shares.

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Going Concern [Policy Text Block]

Going Concern - Alleviation of Substantial Doubt

In accordance with ASU 2014-15, “ Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (Subtopic 205-40), we have evaluated whether there are conditions and events, considered in the aggregate, which raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that our financials are issued. We performed the analysis, and our overall assessment was there were conditions or events, considered in the aggregate as of June 30, 2022, which raised substantial doubt about our ability to continue as a going concern within the next year, but such doubt was adequately mitigated by our plans to address the substantial doubt.

Also, during our analysis and overall assessment as we were preparing our Form 10-Q in April for the quarter ended  March 31, 2022, we determined that we were in violation of one of our financial covenants for the quarter ended  March 31, 2022 due to lower than expected Adjusted EBITDA, a significant non-GAAP factor in the calculation of the ratio, and could be in violation of financial covenants in future quarters, which management determined raises substantial doubt about the Company’s ability to continue as a going concern.  These factors did not exist when we filed our Form 10-K on March 28, 2022 as we were projecting at the time that all covenants would be met for the next twelve months and beyond.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. During our analysis and overall assessment in July for the quarter ended June 30, 2022, it became clear that we were likely to violate one or more of our financial covenants for the quarter ending September 30, 2022 due to lower than expected Adjusted EBITDA, a significant non-GAAP factor in the calculation of the ratios.  This factor raised substantial doubt about the Company's ability to continue as a going concern.  Management's plans were to seek an amendment to the credit agreement to provide relief or obtain a waiver of the projected violations.

In August 2022, as disclosed in Note 5, we executed an amendment to our credit agreement providing relief on the covenants in question until the time our internal projections show we will again meet the covenants in the quarter ending December 31, 2022.

Accordingly, the above factors have alleviated substantial doubt about the entity's ability to continue as a going concern.

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Note 4 - Other Long-term Assets (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Other Assets, Noncurrent [Table Text Block]

	June 30,		December 31,
	2022		2021
Advanced coal royalties	$	6,464	$	6,678
Other		1,670		1,694
Total other assets	$	8,134	$	8,372

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Note 5 - Bank Debt (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Debt [Table Text Block]

	June 30,			December 31,
	2022			2021
Current bank debt	$	16,538		$	25,725
Less unamortized debt issuance cost		(3,316	)		(2,627	)
Net current portion	$	13,222		$	23,098
Long-term bank debt	$	114,200		$	86,013
Less unamortized debt issuance cost		(593	)		(1,346	)
Net long-term portion	$	113,607		$	84,667
Total bank debt	$	130,738		$	111,738
Less total unamortized debt issuance cost		(3,909	)		(3,973	)
Net bank debt	$	126,829		$	107,765

Schedule of Line of Credit Facilities [Table Text Block]

Fiscal Periods Ending	Ratio
June 30, 2022	6.00 to 1.00
September 30, 2022	4.50 to 1.00
December 31, 2022	2.50 to 1.00
March 31, 2023 and thereafter	2.25 to 1.00

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Note 6 - Accounts Payable and Accrued Liabilities (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

	June 30,		December 31,
	2022		2021
Accounts payable	$	31,099	$	27,835
Accrued property taxes		2,006		2,529
Accrued payroll		4,792		2,413
Workers' compensation reserve		3,346		2,560
Group health insurance		2,250		1,800
Fair value of interest rate swaps		—		867
Other		4,480		3,524
Total accounts payable and accrued liabilities	$	47,973	$	41,528

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Note 9 - Stock Compensation Plans (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Disclosure of Share-Based Compensation Arrangements by Share-Based Payment Award [Table Text Block]

Non-vested grants at December 31, 2021	183,000
Awarded - price $2.42	10,000
Vested	—
Forfeited	(7,500	)
Non-vested grants at June 30, 2022	185,500

Share-Based Payment Arrangement, Restricted Stock Unit, Activity [Table Text Block]

Vesting Year	RSUs Vesting
2023		185,500

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Note 10 - Leases (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Lease, Cost [Table Text Block]

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Operating lease information:
Operating cash outflows from operating leases		53		$	50		$	111		$	97
Weighted average remaining lease term in years		1.74			2.69			1.74			2.69
Weighted average discount rate		6.0	%		6.0	%		6.0	%		6.0	%

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

Year	Amount
	(In thousands)
2022	$	104
2023		174
2024		59
Total minimum lease payments	$	337
Less imputed interest		(8	)
Total operating lease liability	$	329
As reflected on balance sheet:
Accounts payable and accrued liabilities	$	208
Other long-term liabilities		121
Total operating lease liability	$	329

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Note 12 - Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Numerator:
Net loss	$	(3,386	)	$	(2,964	)	$	(13,520	)	$	(3,996	)
Less loss allocated to RSUs		18			30			79			41
Net loss allocated to common shareholders	$	(3,368	)	$	(2,934	)	$	(13,441	)	$	(3,955	)

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Note 13 - Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	Level 1		Level 2		Level 3		Total
December 31, 2021
Liabilities:
Interest rate swaps	$	—	$	—	$	867	$	867
June 30, 2022
Liabilities:
Interest rate swaps	$	—	$	—	$	—	$	—

Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

Ending balance, December 31, 2021	$	(867	)
Change in estimated fair value		867
Ending balance, June 30, 2022	$	—

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Note 1 - General Business (Details Textual)	1 Months Ended
	Sep. 30, 2022
Hoosier Energy [Member] | Forecast [Member]
Long-Term Contract for Purchase of Electric Power, Term (Year)	3 years 6 months

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Note 2 - Long-lived Asset Impairments (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Asset Impairment Charges, Total	$ 0	$ 0	$ 0	$ 0

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Note 3 - Inventory (Details Textual) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Inventory Adjustments, Total	$ 5.7	$ 3.8

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Note 4 - Other Long-term Assets - Other Long-term Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Advanced coal royalties	$ 6,464	$ 6,678
Other	1,670	1,694
Total other assets	$ 8,134	$ 8,372

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Note 5 - Bank Debt (Details Textual) $ in Thousands		6 Months Ended
	Apr. 15, 2020 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022	May 20, 2022 USD ($)	Mar. 25, 2022 USD ($)	Dec. 31, 2021 USD ($)	Jul. 23, 2021 USD ($)
Long-Term Debt, Gross		$ 130,738				$ 111,738
Debt Issuance Costs, Net, Total		$ 3,909				3,973
Leverage Ratio		3.27
London Interbank Offered Rate (LIBOR) [Member] | Interest Rate Swap [Member]
Derivative, Basis Spread on Variable Rate		4.00%
Credit Agreement [Member]
Debt Instrument, Unused Borrowing Capacity, Amount		$ 100
Debt Instrument, Liquidity		9,000
Letters of Credit Outstanding, Amount		5,700
Debt Issuance Costs, Net, Total		$ 3,900		$ 900	$ 600	$ 4,000
Debt Instrument, Covenant, Maximum Total Leverage Ratio		6.0
Credit Agreement [Member] | Interest Rate Swap [Member]
Derivative, Fixed Interest Rate		2.92%
Credit Agreement [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Variable Rate Floor	0.50%
Credit Agreement [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate	2.75%
Credit Agreement [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate	4.00%
Credit Agreement [Member] | After September 30, 2022 [Member]
Debt Instrument, Covenant, Minimum Debt Service Coverage Ratio			1.25
Credit Agreement [Member] | Term Loan [Member]
Long-Term Debt, Gross		$ 16,500
Credit Agreement [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity		120,000
Long-Term Line of Credit, Total		114,200
Credit Agreement [Member] | Revolving Credit Facility [Member] | Interest Rate Swap [Member]
Derivative, Notional Amount		$ 52,700
Paycheck Protection Program CARES Act [Member]
Proceeds from Notes Payable, Total	$ 10,000
Notes Payable, Total							$ 10,000

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Note 5 - Bank Debt - Bank Debt, Less Debt Issuance Costs (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current bank debt	$ 16,538	$ 25,725
Less unamortized debt issuance cost	(3,316)	(2,627)
Net current portion	13,222	23,098
Long-term bank debt	114,200	86,013
Less unamortized debt issuance cost	(593)	(1,346)
Net long-term portion	113,607	84,667
Total bank debt	130,738	111,738
Less total unamortized debt issuance cost	(3,909)	(3,973)
Net bank debt	$ 126,829	$ 107,765

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Note 5 - Bank Debt - Maximum Leverage Ratio (Details) - Credit Agreement [Member]	Jun. 30, 2022
Period Ending June 30, 2022 [Member]
June 30, 2022	6.00
Period Ended September 30, 2022 [Member]
June 30, 2022	4.50
Period Ended December 31, 2022 [Member]
June 30, 2022	2.50
Period Ending March 31, 2023 and Thereafter [Member]
June 30, 2022	2.25

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Note 6 - Accounts Payable and Accrued Liabilities - Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Accounts payable	$ 31,099	$ 27,835
Accrued property taxes	2,006	2,529
Accrued payroll	4,792	2,413
Workers' compensation reserve	3,346	2,560
Group health insurance	2,250	1,800
Fair value of interest rate swaps	0	867
Other	4,480	3,524
Total accounts payable and accrued liabilities	$ 47,973	$ 41,528

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Note 7 - Revenue 1 (Details Textual) - Coal [Member] - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Jan. 01, 2021
Accounts Receivable, after Allowance for Credit Loss, Total					$ 14.4
Revenue from Contract with Customer Benchmark [Member] | Geographic Concentration Risk [Member] | INDIANA
Concentration Risk, Percentage	83.00%	73.00%	85.00%	75.00%

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Note 7 - Revenue 2 (Details Textual) $ in Millions	Jun. 30, 2022 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | Fixed-Price Contract [Member]
Revenue, Remaining Performance Obligation, Amount	$ 724
Revenue, Remaining Performance Obligation, Percentage	82.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	2 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | Contracts with Price Reopeners [Member]
Revenue, Remaining Performance Obligation, Amount	$ 166
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year

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Note 8 - Income Taxes (Details Textual)	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Effective Income Tax Rate Reconciliation, Percent, Total	(2.00%)	25.00%

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Note 9 - Stock Compensation Plans (Details Textual) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-Based Payment Arrangement, Expense	$ 0.1	$ 0.3	$ 0.1	$ 0.6
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Outstanding	$ 1.0		$ 1.0
Share Price (in dollars per share)	$ 5.41		$ 5.41
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant (in shares)	1,398,671		1,398,671

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Note 9 - Stock Compensation Plans - RSU Activity (Details) - Restricted Stock Units (RSUs) [Member]	6 Months Ended
	Jun. 30, 2022 shares
Non-vested grants (in shares)	183,000
Awarded - price $2.42 (in shares)	10,000
Forfeited (in shares)	(7,500)
Non-vested grants (in shares)	185,500

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Note 9 - Stock Compensation Plans - Vesting of Non-vested RSU Grants (Details)	Jun. 30, 2022 shares
Restricted Stock Units (RSUs) [Member] | Vesting in 2023 [Member]
RSUs vesting (in shares)	185,500

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Note 10 - Leases (Details Textual) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Operating Lease, Right-of-Use Asset	$ 329,000
Buildings and Equipment [Member]
Operating Lease, Right-of-Use Asset		$ 424,000
Minimum [Member]
Lessee, Operating Lease, Remaining Lease Term (Month)	17 months
Maximum [Member]
Lessee, Operating Lease, Remaining Lease Term (Month)	28 months

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Note 10 - Leases - Information Related to Leases (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Operating cash outflows from operating leases	$ 53	$ 50	$ 111	$ 97
Weighted average remaining lease term in years (Year)	1 year 8 months 26 days	2 years 8 months 8 days	1 year 8 months 26 days	2 years 8 months 8 days
Weighted average discount rate	6.00%	6.00%	6.00%	6.00%

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Note 10 - Leases - Future Minimum Lease Payments (Details) $ in Thousands	Jun. 30, 2022 USD ($)
2022	$ 104
2023	174
2024	59
Total minimum lease payments	337
Less imputed interest	(8)
Accounts Payable and Accrued Liabilities and Other Noncurrent Liabilities [Member]
Total operating lease liability	329
Accounts Payable and Accrued Liabilities [Member]
Accounts payable and accrued liabilities	208
Other Noncurrent Liabilities [Member]
Other long-term liabilities	$ 121

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Note 11 - Self-Insurance (Details Textual) $ in Thousands	Jun. 30, 2022 USD ($) item	Dec. 31, 2021 USD ($)	Jun. 30, 2021 USD ($)
Restricted Cash and Cash Equivalents, Total	$ 3,491	$ 3,283	$ 3,495
Future Workers' Compensation Claim Payments [Member]
Restricted Cash and Cash Equivalents, Total	$ 3,500	3,300
Mining Properties and Mineral Rights [Member]
Number of Mining Units	7
Area of Real Estate Property | item	10
Operating Lease, Liability, Total	$ 269,000	$ 260,000

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Note 12 - Net Loss Per Share - Computation of Net Income(Loss) Allocated to Common Shareholders (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Net loss	$ (3,386)	$ (2,964)	$ (13,520)	$ (3,996)
Less loss allocated to RSUs	18	30	79	41
Net loss allocated to common shareholders	$ (3,368)	$ (2,934)	$ (13,441)	$ (3,955)

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Note 13 - Fair Value Measurements (Details Textual) $ in Millions	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)
Interest Rate Swap [Member]
Derivative, Number of Instruments Held, Total	2
Interest Rate Swap, One [Member]
Derivative, Notional Amount		$ 52.7
Interest Rate Swap, Two [Member]
Derivative, Notional Amount	$ 22.1

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Note 13 - Fair Value Measurements - Financial Assets and Liabilities Measured on a Recurring Basis at Fair Value (Details) - Interest Rate Swap [Member] - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Derivate liabilities	$ 0	$ 867
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Derivate liabilities	0	0
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Derivate liabilities	0	0
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Derivate liabilities	$ 0	$ 867

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Note 13 - Fair Value Measurements - Change in Fair Value of the Fuel Hedges and Interest Rate Swaps (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($)
Balance	$ (867)
Change in estimated fair value	867
Balance	$ 0

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Note 14 - Equity Method Investments (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Equity Method Investments	$ 3,883	$ 3,545
Sunrise Energy, LLC [Member]
Equity Method Investment, Ownership Percentage	50.00%
Equity Method Investments	$ 3,900	$ 3,500

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Note 15 - Convertible Notes (Details Textual) - Senior Unsecured Convertible Notes [Member] $ / shares in Units, $ in Thousands	1 Months Ended		6 Months Ended
	Jun. 30, 2022 USD ($) shares	May 20, 2022 USD ($) $ / shares	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)
Proceeds from Convertible Debt		$ 10,000
Debt Instrument, Interest Rate, Stated Percentage		8.00%
Debt Instrument, Convertible, Conversion Price (in dollars per share) | $ / shares		$ 3.33
Conversion Share to Common Stock, Ratio		1
Four Affiliated Individuals [Member]
Convertible Debt, Total	$ 9,000		$ 9,000
Affiliated Individual [Member]
Convertible Debt, Total	$ 1,000		1,000
Four Board Members [Member]
Proceeds from Related Party Debt		$ 9,000	9,000	$ 0
Debt Conversion, Converted Instrument, Shares Issued (in shares) | shares	1,965,841
Non-affiliated Party [Member]
Proceeds from Convertible Debt			$ 1,000	$ 0
Debt Conversion, Converted Instrument, Shares Issued (in shares) | shares	231,697

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Note 16 - Subsequent Events (Details Textual) - Senior Unsecured Convertible Notes [Member] - USD ($) $ / shares in Units, $ in Millions	Aug. 12, 2022	Aug. 08, 2022	Jul. 29, 2022	May 20, 2022
Debt Instrument, Interest Rate, Stated Percentage				8.00%
Debt Instrument, Convertible, Conversion Price (in dollars per share)				$ 3.33
Director [Member] | Subsequent Event [Member] | Conversion Price 6 Point 254, Maturity Date December 2028 [Member]
Proceeds from Related Party Debt			$ 5
Debt Instrument, Interest Rate, Stated Percentage			8.00%
Debt Instrument, Convertible, Conversion Price (in dollars per share)			$ 6.254
Director [Member] | Subsequent Event [Member] | Conversion Price 6 Point 15, Maturity Date December 2028 [Member]
Proceeds from Related Party Debt		$ 4
Debt Instrument, Interest Rate, Stated Percentage		8.00%
Debt Instrument, Convertible, Conversion Price (in dollars per share)		$ 6.254
Non-affiliated Party [Member] | Subsequent Event [Member] | Conversion Price 6 Point 254, Maturity Date December 2026 [Member]
Proceeds from Related Party Debt	$ 10
Debt Instrument, Interest Rate, Stated Percentage	8.00%
Debt Instrument, Convertible, Conversion Price (in dollars per share)	$ 6.15