TRECORA RESOURCES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS (UNAUDITED)

THREE MONTHS ENDED
NINE MONTHS
ENDED

SEPTEMBER 30, SEPTEMBER 30,
2017 2016
2017
2016
(thousands of dollars)
REVENUES
  Petrochemical and Product Sales $ 58,030 $ 52,115 $ 165,945 $ 143,662
  Processing Fees 3,478 5,027 13,220 14,534
61,508 57,142 179,165 158,196

OPERATING COSTS AND EXPENSES
  Cost of Sales and Processing
    (including depreciation and amortization of $2,565, $2,373, $7,311, and $6,620, respectively) 51,638 48,237 147,570 125,946

   GROSS PROFIT 9,870 8,905 31,595 32,250

GENERAL AND ADMINISTRATIVE EXPENSES
  General and Administrative 5,660 4,585 17,621 15,525
  Depreciation 245 192 655 556
5,905 4,777 18,276 16,081

OPERATING INCOME 3,965 4,128 13,319 16,169

OTHER INCOME (EXPENSE)
  Interest Expense (795 ) (568 ) (2,109 ) (1,803 )
  Bargain purchase gain from acquisition -- -- -- 11,549
  Equity in Earnings (Losses) of AMAK (897 ) (2,089 ) (5,161 ) 2,261
  Gain from Additional Equity Issuance by AMAK -- 3,168 -- 3,168
  Miscellaneous Income (Expense) 22 (72 ) (42 ) 38
(1,670 ) 439 (7,312 ) 15,213

  INCOME BEFORE INCOME TAXES 2,295 4,567 6,007 31,382

  INCOME TAXES 577 1,768 1,970 11,107

  NET INCOME 1,718 2,799 4,037 20,275

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST -- -- -- --

NET INCOME ATTRIBUTABLE TO TRECORA RESOURCES $ 1,718 $ 2,799 $ 4,037 $ 20,275

Basic Earnings per Common Share
  Net Income Attributable to Trecora Resources (dollars) $ 0.07 $ 0.12 $ 0.17 $ 0.83

  Basic Weighted Average Number of Common Shares Outstanding 24,304 24,223 24,267 24,304

Diluted Earnings per Common Share
  Net Income Attributable to Trecora Resources (dollars) $ 0.07 $ 0.11 $ 0.16 $ 0.81

  Diluted Weighted Average Number of Common Shares Outstanding 25,157 24,921 25,082 24,964


	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
	2021		2020		2021		2020
	(thousands of dollars, except per share amounts)
REVENUES
Product sales	$	70,422	$	43,570	$	186,647	$	137,460
Processing fees	4,215		4,177		11,424		13,028
	74,637		47,747		198,071		150,488

OPERATING COSTS AND EXPENSES
Cost of sales and processing (including depreciation and amortization of $4,180, $3,887, $12,317 and $11,373, respectively)	65,663		39,290		175,731		127,786

GROSS PROFIT	8,974		8,457		22,340		22,702

GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative	8,923		5,766		23,928		18,729
Depreciation	218		209		670		637
	9,141		5,975		24,598		19,366

OPERATING INCOME (LOSS)	(167)		2,482		(2,258)		3,336

OTHER INCOME (EXPENSE)

Interest expense	(319)		(508)		(918)		(2,159)
Gain on extinguishment of debt	2,188		—		2,188		—
Miscellaneous income, net	(30)		(13)		213		(7)
	1,839		(521)		1,483		(2,166)

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	1,672		1,961		(775)		1,170

INCOME TAX (EXPENSE) BENEFIT	211		(853)		509		3,942

INCOME (LOSS) FROM CONTINUING OPERATIONS	1,883		1,108		(266)		5,112

INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX	—		21,324		—		26,179

NET INCOME (LOSS)	$	1,883	$	22,432	$	(266)	$	31,291

Basic Earnings (Loss) per Common Share
Net income (loss) from continuing operations (dollars)	$	0.08	$	0.04	$	(0.01)	$	0.21
Net income from discontinued operations, net of tax (dollars)	—		0.86		—		1.06
Net income (loss) (dollars)	$	0.08	$	0.90	$	(0.01)	$	1.27

Basic weighted average number of common shares outstanding	24,341		24,817		24,562		24,795

Diluted Earnings (Loss) per Common Share
Net income (loss) from continuing operations (dollars)	$	0.08	$	0.04	$	(0.01)	$	0.20
Net income from discontinued operations, net of tax (dollars)	—		0.84		—		1.04
Net income (loss) (dollars)	$	0.08	$	0.88	$	(0.01)	$	1.24

Diluted weighted average number of common shares outstanding	24,952		25,394		24,562		25,179

See notes to consolidated financial statements.

~~Table of Contents~~


Table of Contents
			2

TRECORA RESOURCES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)

TRECORA RESOURCES STOCKHOLDERS
COMMON STOCK
ADDITIONAL
PAID-IN

TREASURY

RETAINED

NON-
CONTROLLING
TOTAL
SHARES AMOUNT CAPITAL STOCK EARNINGS TOTAL INTEREST EQUITY
(thousands) (thousands of dollars)
JANUARY 1, 2017 24,222 $ 2,451 $ 53,474 $ (284 ) $ 108,446 $ 164,087 $ 289 $ 164,376

Stock options
  Issued to Directors - - 90 - - 90 - 90
  Issued to Employees - - 884 - - 884 - 884
Restricted Common Stock
  Issued to Directors - - 230 - - 230 - 230
  Issued to Employees - - 801 - - 801 - 801
Common stock
  Issued to Directors 25 - (79 ) 25 - (54 ) - (54 )
  Issued to Employees 56 - (56 ) 56 - - - -
Net Income - - - - 4,037 4,037 - 4,037

September 30, 2017 24,303 $ 2,451 $ 55,344 $ (203 ) $ 112,483 $ 170,075 $ 289 $ 170,364

THREE MONTHS ENDED SEPTEMBER 30

~~See notes to consolidated financial statements.~~

~~Table of Contents~~

~~TRECORA RESOURCES AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)~~

NINE MONTHS ENDED
SEPTEMBER 30,
2017 2016
(thousands of dollars)
OPERATING ACTIVITIES
  Net Income $ 4,037 $ 20,275
  Adjustments to Reconcile Net Income
    To Net Cash Provided by Operating Activities:
    Depreciation 6,570 5,761
    Amortization of Intangible Assets 1,396 1,415
    Unrealized Gain on Derivative Instruments (51 ) (89 )
    Share-based Compensation 2,005 1,882
    Deferred Income Taxes 1,571 6,851
    Postretirement Obligation (8 ) 186
    Bargain purchase gain - (11,549 )
    Equity in (earnings) losses of AMAK 5,161 (2,261 )
    Gain from Additional Equity Issuance by AMAK - (3,168 )
    Amortization of loan fees 154 213
  Changes in Operating Assets and Liabilities:
    Increase in Trade Receivables (545 ) (355 )
    Decrease in Taxes Receivable 218 4,094
    (Increase) Decrease in Inventories 5,022 (2,573 )
    (Increase) Decrease in Prepaid Expenses and Other Assets 387 (1,494 )
    Increase in Accounts Payable and Accrued Liabilities 3,356 1,304
    Increase (Decrease) in Other Liabilities 281 (418 )

    Net Cash Provided by Operating Activities 29,554 20,074

INVESTING ACTIVITIES
  Additions to Plant, Pipeline and Equipment (39,250 ) (25,860 )
  Cash paid for acquisition of BASF facility - (2,011 )
  Advances to AMAK, net (86 ) -
    Cash Used in Investing Activities (39,336 ) (27,871 )

FINANCING ACTIVITIES
  Issuance of Common Stock 25 11
  Payments related to tax withholding for stock-based compensation (80 ) -
  Addition to Long-Term Debt 14,000 3,000
  Repayment of Long-Term Debt (8,333 ) (6,250 )

    Net Cash Provided by (Used in) Financing Activities 5,612 (3,239 )

NET DECREASE IN CASH (4,170 ) (11,036 )

CASH AT BEGINNING OF PERIOD 8,389 18,623

CASH AND AT END OF PERIOD $ 4,219 $ 7,587

Supplemental disclosure of cash flow information:
  Cash payments for interest $ 3,034 $ 1,804
  Cash payments for taxes, net of refunds $ 227 $ 277
Supplemental disclosure of non-cash items:
  Capital expansion amortized to depreciation expense $ 642 $ 829
   Estimated earnout liability
$ - $ 733


	TRECORA RESOURCES STOCKHOLDERS
	COMMON STOCK			ADDITIONAL PAID-IN		TREASURY		RETAINED				NON- CONTROLLING		TOTAL
	SHARES	AMOUNT		CAPITAL		STOCK		EARNINGS		TOTAL		INTEREST		EQUITY
	(thousands)	(thousands of dollars)
June 30, 2021	24,973	$	2,497	$	62,138	$	(5,000)	$	138,175	$	197,810	$	289	$	198,099

Restricted Stock Units
Issued to Directors	—	—		439		—		—		439		—		439
Issued to Employees	—	—		133		—		—		133		—		133
Common Stock
Issued to Directors	—	—		—		—		—		—		—		—
Issued to Employees	—	—		—		—		—		—		—		—
Stock Repurchases	—	—		—		—		—		—		—		—
Net Income	—	—		—		—		1,883		1,883		—		1,883

September 30, 2021	24,973	$	2,497	$	62,710	$	(5,000)	$	140,058	$	200,265	$	289	$	200,554

June 30, 2020	24,817	$	2,482	$	60,386	$	—	$	118,008	$	180,876	$	289	$	181,165





Restricted Stock Units
Issued to Directors	—	—		113		—		—		113		—		113
Issued to Employees	—	—		376		—		—		376		—		376
Common Stock
Issued to Directors	—	—		—		—		—		—		—		—
Issued to Employees	—	—		—		—		—		—		—		—


Net Income	—	—		—		—		22,432		22,432		—		22,432

September 30, 2020	24,817	$	2,482	$	60,875	$	—	$	140,440	$	203,797	$	289	$	204,086

See notes to consolidated financial statements.

~~Table of Contents~~


Table of Contents
			3

TRECORA RESOURCES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30


	TRECORA RESOURCES STOCKHOLDERS
	COMMON STOCK			ADDITIONAL PAID-IN		TREASURY		RETAINED				NON- CONTROLLING		TOTAL
	SHARES	AMOUNT		CAPITAL		STOCK		EARNINGS		TOTAL		INTEREST		EQUITY
	(thousands)	(thousands of dollars)
January 1, 2021	24,833	$	2,483	$	61,311	$	—	$	140,324	$	204,118	$	289	$	204,407

Restricted Stock Units
Issued to Directors	—	—		304		—		—		304		—		304
Issued to Employees	—	—		1,109		—		—		1,109		—		1,109
Common Stock
Issued to Directors	68	7		(7)		—		—		—		—		—
Issued to Employees	72	7		(7)		—		—		—		—		—
Stock Repurchases	—	—		—		(5,000)		—		(5,000)		—		(5,000)
Net Loss	—	—		—		—		(266)		(266)		—		(266)

September 30, 2021	24,973	$	2,497	$	62,710	$	(5,000)	$	140,058	$	200,265	$	289	$	200,554

January 1, 2020	24,750	$	2,475	$	59,530	$	—	$	109,149	$	171,154	$	289	$	171,443

Restricted Stock Units
Issued to Directors	—	—		308		—		—		308		—		308
Issued to Employees	—	—		1,044		—		—		1,044		—		1,044
Common Stock
Issued to Directors	28	3		(3)		—		—		—		—		—
Issued to Employees	39	4		(4)		—		—		—		—		—
Net Income	—	—		—		—		31,291		31,291		—		31,291

September 30, 2020	24,817	$	2,482	$	60,875	$	—	$	140,440	$	203,797	$	289	$	204,086


Table of Contents
			4

TRECORA RESOURCES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	NINE MONTHS ENDED SEPTEMBER 30,
	2021		2020
	(thousands of dollars)
OPERATING ACTIVITIES
Net Income (Loss)	$	(266)	$	31,291
Income from Discontinued Operations	—		26,179
Income (Loss) from Continuing Operations	$	(266)	$	5,112
Adjustments to Reconcile Income (Loss) from Continuing Operations To Net Cash Provided by Operating Activities:
Depreciation and Amortization	11,604		10,629
Amortization of Intangible Assets	1,382		1,382

Stock-based Compensation	1,695		1,423
Deferred Income Taxes	(96)		14,168
Postretirement Obligation	(22)		(1)
Bad Debt Expense	—		(1)
Amortization of Loan Fees	136		136
(Gain) Loss on Disposal of Assets	(280)		9
Gain on Extinguishment of Debt	(2,188)		—
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Trade Receivables	(6,657)		3,665
Decrease in Insurance Receivables	—		1,148
(Increase) Decrease in Taxes Receivable	1,843		(16,675)
(Increase) Decrease in Inventories	(2,674)		2,514
(Increase) Decrease in Prepaid Expenses and Other Assets	2,554		(1,370)
Increase (Decrease) in Accounts Payable and Accrued Liabilities	2,426		(950)
Increase (Decrease) in Other Liabilities	(141)		510
Net Cash Provided by Operating Activities - Continuing Operations	9,316		21,699
Net Cash Used in Operating Activities - Discontinued Operations	—		(4,124)
Net Cash Provided by Operating Activities	9,316		17,575
INVESTING ACTIVITIES
Additions to Property, Plant and Equipment	(12,295)		(10,309)
Proceeds from Sale of Property, Plant and Equipment	281		150
Net Cash Used in Investing Activities - Continuing Operations	(12,014)		(10,159)
Net Cash Provided by Investing Activities - Discontinued Operations	—		68,530
Net Cash Provided by (Used in) Investing Activities	(12,014)		58,371
FINANCING ACTIVITIES
Repurchase of Common Stock	(5,000)		—
Net Cash Paid Related to Stock-Based Compensation	(282)		(71)
Additions to CARES Act, PPP Loans	—		6,123
Additions to Long-Term Debt	—		20,000
Repayments of Long-Term Debt	(3,281)		(56,281)
Net Cash Used in Financing Activities - Continuing Operations	(8,563)		(30,229)
NET (DECREASE) INCREASE IN CASH	(11,261)		45,717
CASH AT BEGINNING OF PERIOD	55,664		6,145
CASH AT END OF PERIOD	$	44,403	$	51,862
Supplemental disclosure of cash flow information:
Cash payments for interest	$	744	$	2,023
Cash payments for taxes, net of refunds	$	(2,140)	$	3,000
Supplemental disclosure of non-cash items:
Capital expansion amortized to depreciation expense	$	225	$	690

Foreign taxes paid by AMAK	$	1,054	$	240

See notes to consolidated financial statements.


Table of Contents
			5

TRECORA RESOURCES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. GENERAL

Organization

Trecora Resources (the ~~"Company"~~“Company”), was incorporated in the State of Delaware in 1967. ~~Our~~The Company's principal business activities are the manufacturing of various specialty ~~hydrocarbons and synthetic~~petrochemical products, specialty waxes and providing custom processing services.

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

The Company owns approximately 55% of the ~~"Company" are intended~~capital stock of a Nevada mining company, Pioche Ely Valley Mines, Inc. (“PEVM”), which does not conduct any substantial business activity but owns undeveloped properties in the United States.

The Company also previously owned 33% of a Saudi Arabian joint stock company, Al Masane Al Kobra Mining Company (“AMAK”). The final closing of the sale of our ownership interest in AMAK was completed on September 28, 2020. For more information, see Note 5.

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

~~This document includes the following abbreviations:~~

~~(1)~~

~~TREC – Trecora Resources~~

~~(2)~~

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

~~(3)~~

~~SHR – South Hampton Resources, Inc. – Petrochemical segment and parent of GSPL~~

~~(4)~~

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

~~(5)~~

~~TC – Trecora Chemical, Inc. – Specialty wax segment~~

~~(6)~~

~~AMAK – Al Masane Al Kobra Mining Company – Mining equity investment – 33% ownership~~

~~(7)~~

~~PEVM – Pioche Ely Valley Mines, Inc. – Inactive mine - 55% ownership~~

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ~~("GAAP"~~(“GAAP”) for interim financial information and in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and, therefore, should be read in conjunction with the financial statements and related notes contained in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2020.

The unaudited condensed consolidated financial statements included in this document have been prepared on the same basis as the annual ~~condensed~~ financial statements and in management's opinion reflect all adjustments, including normal recurring adjustments, necessary to present fairly the Company's financial position, results of operations and cash flows for the interim periods presented. We have made estimates and judgments affecting the amounts reported in this document. The actual results that we experience may differ materially from our estimates. In the opinion of management, the disclosures included in these financial statements are adequate to make the information presented not misleading.

Operating results for the nine months ended September 30, ~~2017,~~2021 are not necessarily indicative of results for the year ending December 31, ~~2017.~~

2021.

We currently operate in ~~two~~2 segments, ~~specialty petrochemical products~~Specialty Petrochemicals and ~~specialty synthetic waxes.~~Specialty Waxes. All revenue originates from sources in the United ~~States' sources,~~States and all long-lived assets owned are located in the United States.

In addition, we own a 33% interest in AMAK, a Saudi Arabian closed joint stock company which owns, operates and is developing mining assets in Saudi Arabia. We account for our investment under the equity method of accounting. See Note 17.

Certain reclassifications have been made to the Consolidated Balance Sheet for the year ended December 31, 2016, related to our adoption of Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2015-17 as noted below in Note 2.

~~The impact of the adoption ASU 2015-17 on the Company's previously issued December 31, 2016, balance sheet is as follows:~~

~~Table of Contents~~

As Originally
Reported

As Retrospectively
Adjusted

(in thousands)
Deferred income tax asset, current $ 1,615 $ -
Total current assets 57,562 55,947
Total assets 292,099 290,484
Deferred income tax liability, noncurrent 24,698 23,083
Total liabilities 127,723 126,108
Total liabilities and equity 292,099 290,484

2. RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

In ~~May 2014~~December 2019, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued Accounting Standards Update ~~("ASU"~~(“ASU”) ~~2014-09,~~ ~~Revenue from Contracts with Customers~~ ~~("ASU 2014-09"). ASU 2014-09 supersedes the revenue recognition requirements of FASB Accounting Standards Codification ("ASC") Topic 605,~~ ~~Revenue Recognition~~ ~~and most industry-specific guidance throughout~~No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting ~~Standards Codification, resulting~~for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance was effective for us in the ~~creation~~first quarter of ~~FASB ASC Topic 606,~~ ~~Revenue from Contracts with Customers. ASU 2014-09 requires entities to recognize revenue in a way that depicts the transfer~~2021. The adoption of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. This ASU provides alternative methods of retrospective adoption and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption would be permitted butthis guidance did not ~~before annual periods beginning after December 15, 2016. The Company is evaluating the impact of these amendments, although it does not expect the amendments to~~ have a ~~significant~~material impact ~~to the Company's~~on our consolidated financial position or results of operation. The amendments could potentially impact the accounting procedures and processes over the recognition of certain revenue sources. The Company has begun developing processes and procedures to ensure it is fully compliant with these amendments at the date of adoption.statements.

Recent Accounting Pronouncements Not Yet Adopted


Table of Contents
			6

In ~~November 2015~~March 2020, the FASB issued ASU No. ~~2015-17,~~ ~~Income Taxes~~2020–04, Reference Rate Reform (Topic ~~740)~~848): ~~Balance Sheet Classification~~Facilitation of ~~Deferred Taxes.~~the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04), which provides guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying generally accepted accounting principles to contracts, hedging relationships, and other transactions impacted by reference rate reform. The ~~new standard eliminates the current requirement for organizations~~provisions of ASU 2020-04 apply only to ~~present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will~~those transactions that reference LIBOR or another reference rate expected to be ~~required~~discontinued due to ~~classify all deferred tax assets and liabilities as noncurrent. The amendments are~~reference rate reform. This guidance is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company implemented ASU 2015-17 by classifying all of it deferred tax assets (liabilities) as noncurrent on January 1, 2017. See Note 1 for effect to the Balance Sheet forfrom March 12, 2020 through December 31, ~~2016~~

~~In February 2016 the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842), to increase transparency~~2022 and ~~comparability among organizations by recognizing all lease transactions (with terms in excess of 12 months) on the balance sheet as a lease liability and a right-of-use asset (as defined). The ASU~~adoption is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with earlier application permitted. Upon adoption, the lessee will apply the new standard retrospectively to all periods presented or retrospectively using a cumulative effect adjustment in the year of adoption. The Company has several lease agreements for which the amendments will require the Company to recognize a lease liability to make lease payments and a right-of-use asset which will represent its right to use the underlying asset for the lease term. The Company isoptional. We are currently reviewing the amendments to ensure it is fully compliant by the adoption date and does not expect to early adopt. As permitted by the amendments, the Company is anticipating electing an accounting policy to not recognize lease assets and lease liabilities for leases with a term of twelve months or less. The Company is currently in the process of fully evaluating the amendments and will subsequently implement new processes which are not expected to significantly change since the Company already has processes for certain lease agreements that recognize the lease assets and lease liabilities. In addition, the Company will change its current accounting policies to comply with the amendments with such changes as mentioned above.impact of ASU 2020-04 on our consolidated financial statements.

~~In March 2016 the FASB issued ASU No. 2016-09,~~ ~~Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~, which will reduce complexity in accounting standards related to share-based payment transactions, including, among others, (1) accounting for income taxes, (2) classification of excess tax benefits on the statement of cash flow, (3) forfeitures, and (4) statutory tax withholding requirements. The ASU is effective for annual reporting periods beginning on or after December 15, 2016, and interim periods within those annual periods. The Company implemented the amendments as of January 1, 2017. The stock based compensation plan has not historically generated material amounts of excess tax benefits or deficiencies and, therefore, there is no material change in the Company's financial position or results of operation, as a result of adopting this Update. For additional information on the stock-based compensation plan, see Note 13.

~~Table of Contents~~

~~In January 2017 the FASB issued ASU No. 2017-04,~~ ~~Intangibles – Goodwill and Other (Topic 350).~~ The amendments in ASU 2017-04 simplify the measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Instead, under these amendments, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss should not exceed the total amount of goodwill allocated to that reporting unit. The amendments are effective for public business entities for the first interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company has goodwill from a prior business combination and performs an annual impairment test or more frequently if changes or circumstances occur that would more-likely-than-not reduce the fair value of the reporting unit below its carrying value. During the year ended December 31, 2016, the Company performed its impairment assessment and determined the fair value of the aggregated reporting units exceed the carrying value, such that the Company's goodwill was not considered impaired. Although the Company cannot anticipate future goodwill impairment assessments, based on the most recent assessment, it is unlikely that an impairment amount would need to be calculated and, therefore, the Company does not anticipate a material impact from these amendments to the Company's financial position and results of operations. The current accounting policies and processes are not anticipated to change, except for the elimination of the Step 2 analysis.

3. TRADE RECEIVABLES


Trade receivables, net consisted of the following:
	September 30, 2021		December 31, 2020
	(thousands of dollars)
Trade receivables	$	32,258	$	25,601
Less allowance for doubtful accounts	(300)		(300)
Total trade receivables, net	$	31,958	$	25,301

Trade receivables ~~net, consisted of the following:~~

September 30, 2017 December 31, 2016
(thousands of dollars)
Trade receivables $ 23,038 $ 22,493
Less allowance for doubtful accounts (300 ) (300 )
Trade receivables, net $ 22,738 $ 22,193

~~Trade receivables serves~~serve as collateral for our amended and restated credit agreement. See Note ~~10.~~11.

4. ~~PREPAID EXPENSES AND OTHER ASSETS~~

~~Prepaid expenses and other assets consisted of the following:~~

September 30, 2017 December 31, 2016
(thousands of dollars)
Prepaid license $ 1,919 $ 1,919
Prepaid catalyst 55 187
Prepaid insurance 255 797
Other prepaid expenses and assets 1,047 608
Total $ 3,276 $ 3,511

5. INVENTORIES

~~Inventories included the following:~~

September 30, 2017 December 31, 2016
(thousands of dollars)
Raw material $ 2,390 $ 3,627
Work in process 66 12
Finished products 9,960 14,232
Spare parts �� 433 -
Total inventory $ 12,849 $ 17,871

Effective January 1, 2017, we changed the inventory basis of SHR to FIFO. We believe that the use of FIFO more accurately reflects current inventory valuation. The drop in crude oil prices over the last several years has caused LIFO

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value of inventory to be above the FIFO value for each period presented. There was no LIFO reserve in any of the periods in this filing; therefore, no change is reflected in our current statements for the retrospective application.

Prior to this change, the difference between the calculated value of inventory under the FIFO and LIFO bases generated either a recorded LIFO reserve (i.e., where FIFO value exceeds the LIFO value) or an unrecorded negative LIFO reserve (i.e., where LIFO value exceeds the FIFO value). In the latter case, in order to ensure that inventory was reported at the lower of cost or market and in accordance with ASC 330-10, we did not increase the stated value of our inventory to the LIFO value. At December 31, 2016, LIFO value of petrochemical inventory exceeded FIFO; therefore, in accordance with the above policy, no LIFO reserve was recorded.


Inventories consisted of the following:
	September 30, 2021		December 31, 2020
	(thousands of dollars)
Raw material	$	1,928	$	2,580
Work in process	187		138
Finished products	13,504		10,227
Total inventories	$	15,619	$	12,945

Inventory serves as collateral for our amended and restated credit agreement. See Note ~~10.~~

11.

Inventory included ~~petrochemical~~Specialty Petrochemicals products in transit valued at approximately ~~$2.7~~$4.0 million and ~~$2.1~~$3.6 million at September 30, ~~2017,~~2021 and December 31, ~~2016,~~2020, respectively.

~~Beginning January 1, 2017, due~~5. INVESTMENT IN AMAK AND DISCONTINUED OPERATIONS

On September 28, 2020, the Company completed the final closing of the sale of its ownership interest in AMAK (the “Share Sale”) to AMAK and certain existing shareholders of AMAK and their assignees (collectively, the “Purchasers”). The Share Sale was completed in multiple closings pursuant to a Share Sale and Purchase Agreement, dated September 22, 2019 (which we refer to herein as the “Purchase Agreement”), among the Company, AMAK, and other Purchasers and resulted in aggregate gross proceeds to the ~~expansion~~Company of ~~our plant assets~~Saudi Riyals (“SAR”) 265 million (approximately $70 million) (before taxes and expenses).

As a condition to the effectiveness of the Purchase Agreement, the Purchasers advanced 5% of the purchase price (or approximately $3.5 million) in the form of a non-refundable deposit. Pursuant to the Purchase Agreement, (i) with respect to any Purchaser that completed the purchase of all or a portion of the ordinary shares allotted to it under the Purchase Agreement on or before March 31, 2020, the non-refundable deposit paid by such Purchaser (or a portion of such deposit for a partial closing) was credited toward the purchase price of the ordinary shares being purchased and (ii) with respect to any Purchasers that completed the purchase of all or a portion of their allotted ordinary shares after March 31, 2020 but on or before September 28, 2020, an amount equal to 50% of the non-refundable deposit paid by such Purchasers was forfeited to the Company as liquidated damages and such amount was not applied to the purchase price paid by the applicable Purchaser.

On March 26, 2020, the Company and one Purchaser completed the first closing of the Share Sale (the “First Closing”). In connection with the First Closing, the Company sold 4,000,000 ordinary shares for aggregate gross proceeds (before taxes and transaction expenses) of SAR 40 million (or approximately $10.7 million) (inclusive of the full amount of the Purchaser’s non-refundable deposit previously paid of $0.5 million). The Company recorded a foreign tax payable of approximately $0.3 million related to the First Closing.

During the third quarter of 2020, the Company completed additional closings of the Share Sale with respect to its remaining ownership interest in AMAK. In connection with these closings, the Company sold a total of 22,467,422 ordinary shares for


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aggregate gross proceeds (before taxes and transaction expenses) of SAR 224 million (or approximately $59.9 million) (inclusive of $1.5 million which constituted 50% of the non-refundable deposits previously paid by certain Purchasers). As none of the third quarter 2020 closings were completed prior to March 31, 2020, the remaining portion of the initial deposits (approximately $1.5 million) were forfeited to the Company as liquidated damages and were not applied to the purchase price. These amounts were included in income from discontinued operations, net of tax. The Company recorded a foreign tax payable of approximately $1.1 million related to the third quarter 2020 closings which were subsequently paid in the first quarter of 2021.

In connection with the completion of the Share Sale, the Company and AMAK entered into an agreement whereby AMAK agreed to withhold approximately $2.1 million of the purchase price to pay the Company’s estimated tax obligations in Saudi Arabia. The Company finalized the necessary tax returns in the Kingdom of Saudi Arabia and paid approximately $1.3 million in foreign taxes. All foreign taxes paid created a foreign tax credit to offset U.S. taxes. The Company collected the remaining excess funds of approximately $0.8 million in August 2021.

As previously disclosed, and as a result of the Company’s investment in AMAK, the Company was required to execute a limited guarantee on October 24, 2010 (the “Guarantee”) of up to 41% of a loan (the “Loan”) by the Saudi Industrial Development Fund (“SIDF”) to AMAK to fund the construction of the AMAK facilities and to provide working capital needs. The provision of personal or corporate guarantees, as applicable, by each shareholder of AMAK was a condition to SIDF providing the Loan. Pursuant to the Purchase Agreement, the Purchasers (other than AMAK) agreed, upon the completion of the Share Sale, to assume the Company’s obligation under the Guarantee (proportionately based upon such Purchaser’s percentage acquisition of ordinary shares in the Share Sale). While a formal written release of the Company from the Guarantee was not obtained from SIDF prior to closing, the Company believes that the Purchasers’ assumption of the Company’s obligation under the Guarantee effectively eliminates the Company’s liability arising under the Guarantee.

As the sale of the Company's interest in AMAK was completed as of September 28, 2020, there is no applicable 2021 financial information to present and it is thereby omitted for comparison purposes.

Included in discontinued operations for 2020 are the following:


	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
	(thousands of dollars)
Saudi administration and transaction expenses	$	(2,605)	$	(2,490)
Equity in earnings of AMAK	682		455
Gain on sale of equity interest	28,510		35,173
Income from discontinued operations before taxes	26,587		33,138
Tax expense	(5,263)		(6,959)
Income from discontinued operations, net of tax	$	21,324	$	26,179

AMAK's financial statements were prepared in the functional currency of AMAK which is the SAR. In June 1986, the SAR was officially pegged to the U. S. Dollar at ~~SHR~~a fixed exchange rate of 1 USD to 3.75 SAR.


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The summarized results of operations and ~~TC, we began inventorying spare parts~~financial position for 2020 for AMAK are as follows:

Results of Operations


	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
	(thousands of dollars)
Sales	$	23,943	$	62,632
Cost of sales	18,644		53,294
Gross profit	5,299		9,338
Selling, general, and administrative	3,808		8,850
Operating income (loss)	1,491		488
Other income	16		33
Finance and interest expense	(237)		(871)
Income (loss) before Zakat and income taxes	1,270		(350)
Zakat and income tax (benefit)	(240)		859
Net Income (Loss)	$	1,510	$	(1,209)

Financial Position


	December 31, 2020
	(thousands of dollars)
Current assets	$	29,799
Noncurrent assets	209,814
Total assets	$	239,613

Current liabilities	$	40,919
Long term liabilities	79,122
Stockholders' equity	119,572
	$	239,613

The equity in the earnings (losses) of AMAK included in income (loss) from discontinued operations, net of tax, on the condensed consolidated statements of operations for the ~~repair~~three and ~~maintenance of our plant, pipeline and equipment.~~

~~6. PLANT, PIPELINE AND EQUIPMENT~~

~~Plant, pipeline and equipment consisted~~nine months ended September 30, 2020, is comprised of the following:


	Three Months Ended September 30, 2020	Nine Months Ended September 30, 2020
	(thousands of dollars)
AMAK Net Income (Loss)	1,510	(1,209)


Company's share of income (loss) reported by AMAK*	345	(555)
Amortization of difference between Company's investment in AMAK and Company's share of net assets of AMAK	337	1,010
Equity in earnings of AMAK	682	455
* Percentage of Ownership varies during the period.

September 30, 2017 December 31, 2016
(thousands of dollars)
Platinum catalyst metal $ 1,612 $ 1,612
Land 5,428 5,376
Plant, pipeline and equipment 183,472 154,107
Construction in progress 42,930 33,391
Total plant, pipeline and equipment 233,442 194,486
Less accumulated depreciation (61,394 ) (54,477 )
Net plant, pipeline and equipment $ 172,048 $ 140,009

For additional information, see NOTE 6, “INVESTMENT IN AMAK AND DISCONTINUED OPERATIONS” to the consolidated financial statements set forth in our Annual Report on Form 10–K for the year ended December 31, 2020.

~~Plant, pipeline,~~


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			9

6. PREPAID EXPENSES AND OTHER ASSETS


Prepaid expenses and other assets consisted of the following:
	September 30, 2021		December 31, 2020
	(thousands of dollars)
Prepaid license	$	—	$	403
Prepaid insurance premiums	2,748		4,241
Spare parts	2,219		2,376

Cash held in escrow by AMAK	—		1,877
Other prepaid expenses and assets	1,676		301
Total prepaid expenses and other assets	$	6,643	$	9,198

7. PROPERTY, PLANT AND EQUIPMENT


Property, plant and equipment consisted of the following:
	September 30, 2021		December 31, 2020
	(thousands of dollars)
Platinum catalyst metal	$	1,553	$	1,580
Catalyst	4,325		4,325
Land	5,428		5,428
Plant, pipeline and equipment	280,427		270,149
Construction in progress	8,199		6,422
Total property, plant and equipment	$	299,932	$	287,904
Less accumulated depreciation	(112,365)		(100,800)
Total property, plant and equipment, net	$	187,567	$	187,104

Property, plant and equipment serve as collateral for our amended and restated credit agreement. See Note ~~10.~~11.

~~Interest~~Labor capitalized for construction was approximately ~~$218,000~~$0.1 million and ~~$52,000~~$0.1 million for the three months and ~~$878,000~~$0.5 million and ~~$124,000~~$0.1 million for the nine months ended September 30, ~~2017,~~2021 and ~~September 30, 2016,~~2020, respectively.

Construction in progress during the first nine months of ~~2017~~2021 included costs for rebuild and restoration of a distillation tower. Construction in progress during the first nine months of 2020 included Advanced Reformer unit improvements and pipeline maintenance at SHR and equipment ~~purchased for the hydrogenation/distillation project~~modifications at TC.

8. LEASES

The Company leases certain rail cars, rail equipment, office space and ~~updates to B Plant equipment~~office equipment. The Company determines if a contract is a lease at the ~~TC facility; new reformer unit, tankage upgrades,~~inception of the arrangement. The Company reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised.

Leases with an ~~addition to~~initial term of 12 months or less are not recorded on the ~~rail spur at SHR.~~condensed consolidated balance sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term.

The Company has no finance leases.

~~Amortization relating to the platinum catalyst which is included in cost of sales was~~


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The components of lease expense were as follows:
($ in thousands)	Classification in the Condensed Consolidated Statements of Income	Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
Operating lease cost (a)	Cost of sales, exclusive of depreciation and amortization	$	1,124	$	1,115	$	3,132	$	3,036
Operating lease cost (a)	Selling, general and administrative	33		34		102		102







Total lease cost		$	1,157	$	1,149	$	3,234	$	3,138

(a) Short-term lease costs were approximately $0$0.2 million and ~~$25,000~~$0.2 million for the three months and ~~$25,000~~$0.5 million and ~~$72,000~~$0.3 million for the nine months ended September 30, ~~2017,~~2021 and ~~2016,~~2020, respectively.

The Company had no variable lease expense, as defined by ASC 842, during the periods.

~~7. GOODWILL AND~~


($ in thousands)	Classification on the Condensed Consolidated Balance Sheets	September 30, 2021		December 31, 2020
Assets:
Operating	Operating lease assets	$	8,746	$	10,528

Total lease right-of-use assets, net		$	8,746	$	10,528

Liabilities:
Current:
Operating	Current portion of operating lease liabilities	$	3,302	$	3,195

Noncurrent:
Operating	Operating lease liabilities	5,444		7,333

Total lease liabilities		$	8,746	$	10,528


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2021		2020		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	924	$	925	$	2,727	$	2,806


Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	610	$	37	$	630	$	37


	September 30, 2021		September 30, 2020
Weighted-average remaining lease term (in years):
Operating leases	3.2		3.9

Weighted-average discount rate:
Operating leases	4.5	%	4.5	%

Most of the Company’s lease contracts do not provide a readily determinable implicit rate. For these contracts, the Company’s estimated incremental borrowing rate is based on information available at the inception of the lease.


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As of September 30, 2021, maturities of lease liabilities were as follows:
($ in thousands)	Operating Leases
2021	$	934
2022	3,439
2023	2,547
2024	1,233
2025	1,094
Thereafter	118
Total lease payments	$	9,365
Less: Interest	619
Total lease obligations	$	8,746

9. INTANGIBLE ASSETS, NET

~~Goodwill and intangible~~Intangible assets were recorded in relation to the acquisition of TC on October 1, 2014.


The following tables summarize the gross carrying amounts and accumulated amortization of intangible assets by major class:
	September 30, 2021
	Gross		Accumulated Amortization		Net
	(thousands of dollars)
Customer relationships	$	16,852	$	(7,864)	$	8,988
Non-compete agreements	94		(94)		—
Licenses and permits	1,471		(786)		685
Developed technology	6,131		(4,292)		1,839
Total	$	24,548	$	(13,036)	$	11,512

~~The following tables summarize the gross carrying amounts and accumulated amortization of intangible assets by major class (in thousands):~~

~~Table of Contents~~

September 30, 2017
Intangible assets subject to amortization
(Definite-lived)
Gross
Accumulated
Amortization
Net
Customer relationships $ 16,852 $ (3,370 ) $ 13,482
Non-compete agreements 94 (57 ) 37
Licenses and permits 1,471 (364 ) 1,107
Developed technology 6,131 (1,839 ) 4,292
24,548 (5,630 ) 18,918
Intangible assets not subject to amortization
(Indefinite-lived)

Emissions Allowance 197 - 197
Trade name 2,158 - 2,158
Total $ 26,903 $ (5,630 ) $ 21,273

	December 31, 2016
Intangible assets subject to amortization (Definite-lived)	Gross		Accumulated Amortization			Net
									December 31, 2020
									Gross		Accumulated Amortization		Net
									(thousands of dollars)
Customer relationships	$	16,852	$	(2,527	)	$	14,325	Customer relationships	$	16,852	$	(7,022)	$	9,830
Non-compete agreements		94		(43	)		51	Non-compete agreements	94		(94)		—
Licenses and permits		1,471		(285	)		1,186	Licenses and permits	1,471		(707)		764
Developed technology		6,131		(1,379	)		4,752	Developed technology	6,131		(3,832)		2,299
		24,548		(4,234	)		20,314
Intangible assets not subject to amortization (Indefinite-lived)
Emissions Allowance		197		-			197
Trade name		2,158		-			2,158
Total	$	26,903	$	(4,234	)	$	22,669	Total	$	24,548	$	(11,655)	$	12,893

Amortization expense for intangible assets included in cost of sales was approximately $0.5 million and $0.5 million for the three months ~~ended September 30, 2017,~~ and ~~2016, was approximately $466,000~~$1.4 million and ~~$471,000 and~~$1.4 million for the nine months ended September 30, ~~2017~~2021 and ~~2016, was approximately $1,396,000 and $1,415,000,~~2020, respectively.

Based on identified intangible assets that are subject to amortization as of September 30, ~~2017,~~2021, we expect future amortization expenses for each period to be as ~~follows (in thousands):~~follows:

Remainder of
2017

2018

2019

2020
2021
Thereafter

Customer relationships $ 282 $ 1,123 $ 1,123 $ 1,123 1,123 $ 8,710
Non-compete agreements 5 19 12 - - -
Licenses and permits 26 106 106 106 106 656
Developed technology 153 613 613 613 613 1,687
Total future amortization expense $ 466 $ 1,861 $ 1,854 $ 1,842 $ 1,842 $ 11,053

~~8. NET INCOME PER COMMON SHARE ATTRIBUTABLE TO TRECORA RESOURCES~~

The following table (in thousands, except per share amounts) sets forth the computation of basic and diluted net income per share attributable to Trecora Resources for the three and nine months ended September 30, 2017, and 2016, respectively.


	Total		Remainder of 2021		2022		2023		2024		2025		2026		Thereafter
	(thousands of dollars)
Customer relationships	$	8,988	$	281	$	1,123	$	1,123	1,123		1,123		1,123		$	3,092

Licenses and permits	685		22		86		86		86		86		86		233
Developed technology	1,839		153		613		613		460		—		—		—
Total future amortization expense	$	11,512	$	456	$	1,822	$	1,822	$	1,669	$	1,209	$	1,209	$	3,325

~~Table of Contents~~


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Three Months Ended
September 30, 2017

Three Months Ended
September 30, 2016

Per Share Per Share
Income Shares Amount Income Shares Amount
Basic Net Income per Share:
Net Income Attributable to Trecora Resources $ 1,718 24,304 $ 0.07 $ 2,799 24,223 $ 0.12

Unvested restricted stock grant 379 304
Dilutive stock options outstanding 474 394

Diluted Net Income per Share:
Net Income Attributable to Trecora Resources $ 1,718 25,157 $ 0.07 $ 2,799 24,921 $ 0.11

Nine Months Ended
September 30, 2017

Nine Months Ended
September 30, 2016

Per Share Per Share
Income Shares Amount Income Shares Amount
Basic Net Income per Share:
Net Income Attributable to Trecora Resources $ 4,037 24,267 $ 0.17 $ 20,275 24,304 $ 0.83

Unvested restricted stock grant 360 297
Dilutive stock options outstanding 455 363

Diluted Net Income per Share:
Net Income Attributable to Trecora Resources $ 4,037 25,082 $ 0.16 $ 20,275 24,964 $ 0.81

~~At September 30, 2017, and 2016, 1,334,087 and 1,348,437 potential common stock shares, respectively were issuable upon the exercise of options and warrants.~~

9.10. ACCRUED LIABILITIES


Accrued liabilities consisted of the following:
	September 30, 2021		December 31, 2020
	(thousands of dollars)
State taxes	$	107	$	125
Property taxes	2,347		—
Payroll	2,653		2,282
Royalties	143		260
Officer compensation	1,134		1,053
Legal	1,384		—
AMAK foreign taxes and transaction costs	—		1,613

Other	3,276		1,524
Total accrued liabilities	$	11,044	$	6,857

~~Accrued liabilities consisted of the following:~~

September 30, 2017 December 31, 2016
(thousands of dollars)
Accrued property taxes $ 2,188 $ -
Accrued payroll 1,563 1,097
Accrued officer compensation 900 -
Accrued shortfall fees 586 -
Other 1,067 920
Total $ 6,304 $ 2,017

~~10.~~11. LIABILITIES AND LONG-TERM DEBT

Senior Secured Credit Facilities

~~On October 1, 2014, we entered into an Amended~~As of September 30, 2021, the Company had no outstanding borrowings under the senior secured revolving credit facility (the “Revolving Facility”) and ~~Restated Credit Agreement ("ARC"~~approximately $42.9 million in borrowings outstanding under the senior secured term loan facility (the “Term Loan Facility”) (and, together with the ~~lenders which from time~~Revolving Facility, the “Credit Facilities”), in each case, under the Company's amended and restated credit agreement (as amended, the “ARC Agreement”). In addition, the Company had approximately $75 million of availability under our Revolving Facility at September 30, 2021. TOCCO’s ability to ~~time are parties~~make additional borrowings under the Revolving Facility at September 30, 2021 was limited by, and in the future may be limited by, the Company's obligation to maintain compliance with the covenants contained in the ARC ~~and Bank~~Agreement (including maintenance of ~~America, N.A., as Administrative Agent for the Lenders, and Merrill Lynch, Pierce, Fenner & Smith Incorporated as Lead Arranger. On March 28, 2017, we entered into~~ a ~~Second Amendment to the ARC with terms which increase the Maximum~~maximum Consolidated Leverage Ratio ~~financial covenant of 3.25x to 4.00x at March 31, 2017,~~ and ~~4.25x at June 30, 2017, before stepping down to 3.75x at September 30, 2017, 3.50x at December 31, 2017, and reverting to the original financial covenant of 3.25x at March 31, 2018.~~

~~Table of Contents~~

~~For Fiscal Quarter Ending~~	~~Maximum Consolidated Leverage Ratio~~
~~March 31, 2017~~	~~4.00 to 1.00~~
~~June 30, 2017~~	~~4.25 to 1.00~~
~~September 30, 2017~~	~~3.75 to 1.00~~
~~December 31, 2017~~	~~3.50 to 1.00~~
~~March 31, 2018 and each fiscal quarter thereafter~~	~~3.25 to 1.00~~

~~The Second Amendment also reduces the Minimum~~minimum Consolidated Fixed Charge Coverage Ratio ~~of 1.25x to 1.10x at March 31, 2017, 1.05x at June 30, 2017 and September 30, 2017, 1.10x at December 31, 2017, before reverting to~~(each as defined in the ~~original financial covenant of 1.25x at March 31, 2018.~~

~~For Fiscal Quarter Ending~~	~~Minimum Consolidated Fixed Charge Coverage Ratio~~
~~March 31, 2017~~	~~1.10 to 1.00~~
~~June 30, 2017~~	~~1.05 to 1.00~~
~~September 30, 2017~~	~~1.05 to 1.00~~
~~December 31, 2017~~	~~1.10 to 1.00~~
~~March 31, 2018 and each fiscal quarter thereafter~~	~~1.25 to 1.00~~

~~Also, under the terms of the Second Amendment, two additional levels of pricing were added – levels 4 and 5.~~

Level

Consolidated Leverage Ratio

LIBOR Margin

Base Rate Margin

Commitment Fee
1 Less than 1.50 to 1.00 2.00% 1.00% 0.25%
2 Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00 2.25% 1.25% 0.25%
3 Greater than or equal to 2.00 to 1.00 but less than 3.00 to 1.00 2.50% 1.50% 0.375%
4 Greater than or equal to 3.00 to 1.00 but less than 3.50 to 1.00 2.75% 1.75% 0.375%
5 Greater than or equal to 3.50 to 1.00 3.00% 2.00% 0.375%

~~We were in compliance with all covenants at September 30, 2017.~~

ARC Agreement)).

On ~~July 25, 2017, Texas Oil & Chemical Co. II, Inc. ("TOCCO"), South Hampton Resources, Inc. ("SHR"), Gulf State Pipe Line Company, Inc. ("GSPL"),~~May 3, 2021, TOCCO, SHR, GSPL and ~~Trecora Chemical, Inc. ("TC")~~TC (SHR, GSPL and TC collectively, the "Guarantors") entered into ~~a Third~~an Eighth Amendment to Amended and Restated Credit Agreement ~~("3rd Amendment"~~(the “Eighth Amendment”) ~~with~~which amended the ~~lenders which~~definition of Consolidated EBITDA for any Measurement Period (as defined in the ARC Agreement) (including any Measurement Period containing the quarter ended March 31, 2021) to allow for certain add backs not to exceed $5.0 million in the aggregate for the 2021 fiscal year related to charges, expenses and losses arising from ~~time to time are parties~~or related to the ~~Amended~~prolonged period of sub-freezing temperatures and ~~Restated Credit Agreement (collectively,~~snow across the ~~"Lenders")~~State of Texas and ~~Bank~~the region in February 2021 (the “Texas freeze event”).

For each fiscal quarter after December 31, 2019, TOCCO must maintain a maximum Consolidated Leverage Ratio of ~~America, N.A.,~~3.50 to 1.00 (subject to temporary increase following certain acquisitions). TOCCO's Consolidated Leverage Ratio was 1.20 and 1.34 as of September 30, 2021 and June 30, 2021, respectively. Additionally, TOCCO must maintain a ~~national banking association,~~minimum Consolidated Fixed Charge Coverage Ratio as ~~Administrative Agent~~of the end of any fiscal quarter of 1.15 to 1.00. TOCCO's Consolidated Fixed Charge Coverage Ratio was 2.95 and 3.07 as of September 30, 2021 and December 31, 2020, respectively.

The maturity date for the ~~Lenders. The 3rd Amendment increased the Revolving Facility from $40,000,000 to $60,000,000. There were no other changes to the Revolving Facility. Under the~~ ARC ~~as amended, we have a $60.0 million revolving line of credit which matures on October 1, 2019.~~Agreement is July 31, 2023. As of September 30, ~~2017, and December 31, 2016, there was a long-term amount of $23.0 million and $9.0 million outstanding, respectively. The~~2021, the year to date effective interest rate onfor the ~~loan varies according to several options. Interest on~~Credit Facilities was 1.86%. The ARC Agreement contains a number of customary affirmative and negative covenants and the ~~loan is paid monthly and~~Company was in compliance with those covenants as of September 30, 2021.

For a ~~commitment fee~~summary of ~~between 0.25% and 0.375% is due quarterly on the unused portion~~additional terms of the ~~loan. At September 30, 2017, approximately $37.0 million was available to be drawn. Under the Second Amendment we could draw $31.0 million and maintain compliance with our covenants.~~

Under the ARC, we also borrowed $70.0 million in a single advance term loan (the "Acquisition Loan") to partially finance the acquisition of TC. Interest on the Acquisition Loan is payable quarterly using a ten year commercial style amortization. Principal is also payable on the last business day of each March, June, September and December in an amount equal to $1,750,000, provided that the final installment on the September 30, 2019, maturity date shall be in an amount equalCredit Facilities, see NOTE 13, “LONG-TERM DEBT AND LONG-TERM OBLIGATIONS” to the then outstanding unpaid principal balance of the Acquisition Loan. At September 30, 2017, there was a short-term amount of $7.0 million and a long-term amount of $42.0 million outstanding. At December 31, 2016, there was a short-term amount of $8.8 million and a long-term amount of $47.3 million outstanding.

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~~Under the ARC, we also had the right to borrow $25.0 million~~consolidated financial statements set forth in a multiple advance loan ("Term Loans"). Borrowing availability under the Term Loans ended on December 31, 2015. The Term Loans converted from a multiple advance loan to a "mini-perm" loan once certain obligations were fulfilled such as certification that construction of D-Train was completed in a good and workmanlike manner, receipt of applicable permits and releases from governmental authorities, and receipt of releases of liens from the contractor and each subcontractor and supplier. Interest on the Term Loans is paid monthly. At September 30, 2017, there was a short-term amount of $1.3 million and a long-term amount of $16.3 million outstanding. At December 31, 2016, there was a short-term amount of $1.7 million and a long-term amount of $17.3 million outstanding.

Debt issuance costs of approximately $0.6 million and $0.7 million for the periods ended September 30, 2017, and December 31, 2016, have been netted against outstanding loan balances. The interest rate on all of the above loans varies according to several options as defined in the ARC. At September 30, 2017, and December 31, 2016, the rate was 3.74% and 3.27%, respectively.

~~The following table summarizes the carrying amounts and debt issuance costs of our long-term debt (in thousands):~~

September 30, 2017 December 31, 2016

Acquisition loan $ 49,000 $ 56,000
Term loan 17,666 19,000
Revolving facility 23,000 9,000
Total 89,666 84,000
Less debt issuance costs 594 748
Carrying balance of debt $ 89,072 $ 83,252

~~11. FAIR VALUE MEASUREMENTS~~

~~The following items are measured at fair value on a recurring basis subject to disclosure requirements of ASC Topic 820 at September 30, 2017, and December 31, 2016:~~

~~Assets and Liabilities Measured at Fair Value on a Recurring Basis~~

Fair Value Measurements Using
September 30, 2017 Level 1 Level 2 Level 3
(thousands of dollars)
Liabilities:
Interest rate swap $ 7 - $ 7 -

Fair Value Measurements Using
December 31, 2016 Level 1 Level 2 Level 3
(thousands of dollars)
Liabilities:
Interest rate swap $ 58 - $ 58 -

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

~~Interest Rate Swap~~

In March 2008 we entered into an interest rate swap agreement with Bank of America related to a $10.0 million term loan secured by plant, pipeline and equipment. The interest rate swap was designed to minimize the effect of changes in the London InterBank Offered Rate ("LIBOR") rate. We had designated the interest rate swap as a cash flow hedge under ASC Topic 815, ~~Derivatives and Hedging~~; however, due to the ARC, we felt that the hedge was no longer entirely effective. Due to the time required to make the determination and the immateriality of the hedge, we began treating it as ineffective as of October 1, 2014.

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We assess the fair value of the interest rate swap using a present value model that includes quoted LIBOR rates and the nonperformance risk of the Company and Bank of America based on the Credit Default Swap Market (Level 2 of fair value hierarchy).

We have consistently applied valuation techniques in all periods presented and believe we have obtained the most accurate information available for the types of derivative contracts we hold. See discussion of our derivative instruments in Note 12.

~~12. DERIVATIVE INSTRUMENTS~~

~~Interest Rate Swap~~

In March 2008, we entered into a pay-fixed, receive-variable interest rate swap agreement with Bank of America related to a $10.0 million (later increased to $14 million) term loan secured by plant, pipeline and equipment. The effective date of the interest rate swap agreement was August 15, 2008, and terminates on December 15, 2017. The notional amount of the interest rate swap was $1.0 million and $1.75 million at September 30, 2017, and December 31, 2016, respectively. We receive credit for payments of variable rate interest made on the term loan at the loan's variable rates, which are based upon the London InterBank Offered Rate (LIBOR), and pay Bank of America an interest rate of 5.83% less the credit on the interest rate swap. We originally designated the transaction as a cash flow hedge according to ASC Topic 815, ~~Derivatives and Hedging~~. Beginning on August 15, 2008, the derivative instrument was reported at fair value with any changes in fair value reported within other comprehensive income (loss) in the Company's Statement of Stockholders' Equity. We entered into the interest rate swap to minimize the effect of changes in the LIBOR rate.

Due to the ARC discussed in Note 10, we believe that the hedge is no longer entirely effective; therefore, we began treating the interest rate swap as ineffective at that point. The changes in fair value are now recorded in the Statement of Income. For the three months ended September 30, 2017, an unrealized loss of approximately $1,000 and a realized loss of approximately $14,000 were recorded. For the nine months ended September 30, 2017, an unrealized gain of approximately $1,000 and a realized loss of approximately $53,000 were recorded. For the three months ended September 30, 2016, an unrealized gain of approximately $5,000 and a realized loss of approximately $30,000 were recorded. For the nine months ended September 30, 2016, an unrealized loss of approximately $9,000 and a realized loss of approximately $100,000 were recorded.

~~The following table shows (in thousands) the impact the agreement had on the financial statements:~~

September 30, 2017 December 31, 2016

Fair value of interest rate swap - liability $ 7 $ 58

~~13. STOCK-BASED COMPENSATION~~

Stock-based compensation of approximately $716,000 and $608,000 during the three months and $2,005,000 and $1,882,000 during the nine months ended September 30, 2017, and 2016, respectively, was recognized.

~~Restricted Stock Unit Awards~~

On June 16, 2017, we awarded approximately 127,000 shares of restricted stock units to officers at a grant date price of $11.40. One-half of the restricted stock units vest ratably over three years. The other half vests at the end of three years based upon the performance metrics of return on invested capital and earnings per share growth. The number of shares actually granted will be adjusted based upon relative performance to our peers. Compensation expense recognized during the three and nine months ended September 30, 2017, was approximately $121,000 and $161,000, respectively.

Director compensation of approximately $56,000 and $19,000 during the three months and $169,000 and $32,000 during the nine months ended September 30, 2017, and 2016, respectively, was recognized related to restricted stock unit awards granted to directors vesting through 2020.

Officer compensation of approximately $106,000 and $105,000 was recognized during the three months and $316,000 and $246,000 during the nine months ended September 30, 2017, and 2016, respectively, related to restricted stock unit awards granted to officers. One-half of the restricted stock units vest ratably over three years. The other half vests at the end of the three years based upon the performance metrics of return on invested capital and earnings per share growth. The number of shares actually granted will be adjusted based upon relative performance to our peers.

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Director compensation of approximately $0 and $19,000 was recognized during the three months and $6,000 and $124,000 during the nine months ended September 30, 2017, and 2016, respectively, related to an award of restricted stock units to a director. The restricted stock unit award vests over 4 years in 20% increments.

Director compensation of approximately $19,000 and $19,000 during the three months and $56,000 and $40,000 during the nine months ended September 30, 2017, and 2016, respectively, was recognized related to restricted stock unit grants vesting through 2020.

Employee compensation of approximately $108,000 and $108,000 during the three months and $323,000 and $323,000 for the nine months ended September 30, 2017, and 2016, respectively, was recognized related to restricted stock units with a 4 year vesting period which was awarded to officers. This restricted stock vests through 2019.

~~Restricted stock units activity in the first nine months of 2017 was as follows:~~

Shares of Restricted
Stock Units

Weighted Average Grant Date Price per Share

Outstanding at January 1, 2017 350,891 $ 11.44
   Granted 127,281 $ 11.40
   Forfeited (21,201 ) $ 10.52
   Vested (78,362 ) $ 12.00
Outstanding at September 30, 2017 378,608 $ 11.37

~~Stock Option and Warrant Awards~~

~~A summary of the status of our stock option awards and warrants is presented below:~~

Number of Stock Options & Warrants

Weighted Average Exercise Price per Share

Weighted
Average
Remaining
Contractual
Life

Outstanding at January 1, 2017 1,348,437 $ 7.79
   Granted -- --
   Exercised (14,350 ) 2.90
   Expired -- --
   Cancelled -- --
   Forfeited -- --
Outstanding at September 30, 2017 1,334,087 $ 7.84 4.5
Exercisable at September 30, 2017 989,087 $ 8.19 4.8

~~The fair value of the options granted were calculated using the Black Scholes option valuation model with the assumptions as disclosed in prior quarterly and annual filings.~~

Directors' compensation of approximately $30,000 and $30,000 during the three months and $90,000 and $143,000 during the nine months ended September 30, 2017, and 2016, respectively, was recognized related to options to purchase shares vesting through 2017.

Employee compensation of approximately $277,000 and $308,000 during the three months and $884,000 and $926,000 during the nine months ended September 30, 2017, and 2016, respectively, was recognized related to options with a 4 year vesting period which were awarded to officers and key employees. These options vest through 2018.

Post-retirement compensation of approximately $0 and $0 was recognized during the three months and $0 and $49,000 during the nine months ended September 30, 2017, and 2016, related to options awarded to Mr. Hatem El Khalidi in July

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2009. On May 9, 2010, the Board of Directors determined that Mr. El Khalidi forfeited these options and other retirement benefits when he made various demands against the Company and other AMAK Saudi shareholders which would benefit him personally and were not in the best interests of the Company and its shareholders. The Company is litigating its right to withdraw the options and benefits and as such, these options and benefits continue to be shown as outstanding. See further discussion in Note 19.

~~See~~ the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2020.

PPP Loans

On May 6, 2020, SHR and TC (collectively, the “Borrowers”) received loan proceeds from loans (the “PPP Loans”) under the United States Small Business Administration Paycheck Protection Program in an aggregate principal amount of approximately $6.1 million. The PPP Loans are evidenced by unsecured promissory notes each payable to Bank of America, N.A. The Borrowers fully utilized the PPP Loans to cover payroll and benefits costs in accordance with the relevant terms and conditions of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loans mature on May 6, 2022, and bear interest at a stated rate of 1.0% per annum. The Company filed a forgiveness application for ~~additional information.~~SHR on June 30, 2021 and for TC on July 26, 2021. On September 8, 2021, the Company was notified of full forgiveness for the PPP


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Loan for TC of approximately $2.2 million. This is recognized as gain on extinguishment of debt in the financial statements. The Company expects to receive full forgiveness of the SHR PPP Loan in accordance with the provisions of the CARES Act.

Debt Issuance Costs

Debt issuance costs of approximately $0.9 million were incurred in connection with the fourth amendment to the ARC Agreement in July 2018. Unamortized debt issuance costs of approximately $0.3 million and $0.5 million for the periods ended September 30, 2021 and December 31, 2020, have been netted against outstanding loan balances.


Long-term debt and long-term obligations are summarized as follows:
	September 30, 2021		December 31, 2020
	(thousands of dollars)
Revolving Facility	$	—	$	—
Term Loan Facility	43,281		46,563

Loan fees	(332)		(468)
Total long-term debt	42,949		46,095
Less current portion including loan fees	4,194		4,194
Total long-term debt, less current portion including loan fees	$	38,755	$	41,901

12. COMMITMENTS AND CONTINGENCIES

Litigation

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

Supplier Agreements

In accordance with our supplier agreements, on a recurring monthly basis, the Company commits to purchasing a determined volume of feedstock in anticipation of upcoming requirements. Feedstock purchases are invoiced and recorded when they are delivered. As of September 30, 2021 and December 31, 2020, the value of the remaining undelivered feedstock approximated $18.0 million and $9.2 million, respectively.

From time to time, we may incur shortfall fees due to feedstock purchases being below the minimum amounts prescribed by our agreements with our suppliers. Shortfall fee expenses were approximately $0.4 million and $0.2 million for the three months and $0.8 million and $1.2 million for the nine months ended September 30, 2021 and 2020, respectively.

Environmental Remediation

Amounts charged to expense for various activities related to environmental monitoring, compliance, and improvements were approximately $0.3 million and $0.2 million for the three months and $0.9 million and $0.7 million for the nine months ended September 30, 2021 and 2020, respectively.

13. STOCKHOLDERS' EQUITY

In March 2021, the Company’s Board of Directors authorized the repurchase of up to $20 million in common stock by March 2023 (the “Share Repurchase Program”). The share repurchases will be executed from time to time on the open market, through privately negotiated transactions or through broker-negotiated purchases, in compliance with applicable securities law. The timing and amount of any shares of the Company’s stock that are repurchased under the Share Repurchase Program will be determined by the Company’s management based on its evaluation of market conditions and other factors, including the Company’s stock price, although the Share Repurchase Program may be suspended or discontinued at any time. In connection with the Share Repurchase Program, the Company deposited funds with a broker to facilitate the repurchases. The Company repurchased no shares during the three months and 633,273 shares for approximately $5.0 million during the nine months ended September 30, 2021, respectively.

14. STOCK-BASED COMPENSATION

The Stock Option Plan for Key Employees, as well as, the Non-Employee Director Stock Option Plan (hereinafter collectively referred to as the “Stock Option Plans”), were approved by the Company’s stockholders in July 2008. The Stock Option Plans allot for the issuance of up to 1,000,000 shares.


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The Trecora Resources Stock and Incentive Plan (the “Plan”) was approved by the Company’s stockholders in June 2012. As amended, the Plan allots for the issuance of up to 2.5 million shares in the form of stock options or restricted stock unit awards.

The Company recognized stock-based compensation expense of approximately $0.6 million and $0.5 million for the three months and $1.7 million and $1.4 million for the nine months ended September 30, 2021 and 2020, respectively.

Stock Options and Warrant Awards

Stock options and warrants granted under the provisions of the Stock Option Plans permit the purchase of our common stock at exercise prices equal to the closing price of Company common stock on the date the options were granted. The options have terms of 10 years and generally vest ratably over terms of 4 to 5 years. There were no stock options or warrant awards issued during the three or nine months ended September 30, 2021 or 2020, respectively.

A summary of the status of the Company’s stock option and warrant awards is as follows:


	Stock Options and Warrants	Weighted Average Exercise Price Per Share	Weighted Average Remaining Contractual Life	Intrinsic Value (in thousands)
Outstanding at January 1, 2021	487,000	10.87
Granted	—	—
Exercised	(20,000)	4.09
Forfeited	—	—
Outstanding at September 30, 2021	467,000	11.16	2.1	$	—
Expected to vest	—			$	—
Exercisable at September 30, 2021	467,000	11.16	2.1	$	—

The aggregate intrinsic value of options was calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock. At September 30, 2021, options to purchase approximately 0.1 million shares of common stock were in-the-money.

Since no options were granted, the weighted average grant-date fair value per share of options granted during the three and nine months ended September 30, 2021 and 2020, respectively, was zero.

The Company has no non-vested outstanding options as of September 30, 2021.

Restricted Stock Unit Awards

Generally, restricted stock unit awards are granted annually to officers and directors of the Company under the provisions of the Plan. Restricted stock units are also granted ad hoc to attract or retain key personnel, and the terms and conditions under which these restricted stock units vest vary by award. The fair market value of restricted stock units granted is equal to the Company’s closing stock price on the date of grant. Restricted stock units granted to directors vest ratably over a 1 year period, while restricted stock units granted to officers generally vest ratably over 3 years. Certain awards also include vesting provisions based on performance metrics measured over a 3 year period. Upon vesting, the restricted stock units are settled by issuing one share of the Company's common stock per unit.


A summary of the status of the Company's restricted stock units activity is as follows:
	Shares of Restricted Stock Units	Weighted Average Grant Date Price per Share
Outstanding at January 1, 2021	567,563	7.39
Granted	337,443	7.30
Forfeited	(121,448)	7.98
Vested	(172,114)	7.65
Outstanding at September 30, 2021	611,444	7.40
Expected to vest	611,444

15. INCOME TAXES

We file an income tax return in the U.S. federal jurisdiction and a margin tax return in Texas. Previously, the Texas Comptroller selected the R&D credit calculations related to the 2014 and 2015 calendar years for audit. The state of Texas


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suspended examination of the 2014 and 2015 calendar years in order to perform a comprehensive review of audit procedures to provide consistency. During the fourth quarter of 2019, we received notice that Texas had completed review of its procedures and initiated additional requests for information which has been submitted for their review. We do not expect any material changes related to the Texas audits. Our federal and Texas tax returns remain open for examination for the years 2017 through 2020. As of September 30, 2021 and December 31, 2020, respectively, we recognized no adjustments for uncertain tax positions or related interest and penalties.

The effective tax rate varies from the federal statutory rate of 21%, primarily as a result of foreign tax credits, state tax expense and stock based compensation for the nine months ended September 30, 2021 and 2020. We continue to maintain a valuation allowance against certain deferred tax assets, specifically for mining claims for PEVM, where realization is not certain.

The CARES Act provided stimulus measures to companies impacted by the COVID-19 pandemic, which included the ability to defer payment for employer payroll taxes, utilize net operating loss (“NOL”) carrybacks, increased the limitation on the deductibility of interest expense, technical corrections to allow accelerated tax depreciation on qualified improvement property, as well as allowing qualified business to apply for loans and grants. We filed carryback claims allowed under these provisions and have collected all amounts, including interest. The remaining approximately $2.5 million related to our second and final NOL carryback claims, including approximately $0.1 million of interest income, was received in April 2021.

16. SEGMENT INFORMATION

We operate through business segments according to the nature and economic characteristics of our products as well as the manner in which the information is used internally by our key decision maker, who is our Chief Executive Officer. Segment data may include rounding differences.

Our ~~petrochemical~~Specialty Petrochemicals segment includes SHR and GSPL. Our ~~specialty wax~~Specialty Waxes segment is TC. We also separately identify our corporate overhead which includes ~~financing and~~ administrative activities such as legal, accounting, consulting, investor relations, officer and director compensation, corporate insurance, and other administrative costs.


	Three Months Ended September 30, 2021
	Specialty Petrochemicals		Specialty Waxes		Corporate		Consolidated
	(in thousands)
Product sales	$	61,938	$	8,484	$	—	$	70,422
Processing fees	1,419		2,796		—		4,215
Total revenues	63,357		11,280		—		74,637
Operating income (loss) before depreciation and amortization	7,258		2,041		(4,953)		4,346
Operating income (loss)	4,413		489		(5,069)		(167)
Income (loss) from continuing operations before taxes	4,062		2,671		(5,061)		1,672
Depreciation and amortization	2,844		1,553		—		4,397
Capital expenditures	3,416		215		—		3,631

Three Months Ended September 30, 2017
Petrochemical Specialty Wax Corporate Consolidated
(in thousands)
Product sales $ 52,440 $ 5,590 $ - $ 58,030
Processing fees 1,519 1,959 - 3,478
Total revenues 53,959 7,549 - 61,508
Operating profit (loss) before depreciation and amortization 9,319 (587 ) (1,957 ) 6,775
Operating profit (loss) 7,735 (1,795 ) (1,975 ) 3,965
Profit (loss) before taxes 7,149 (1,975 ) (2,879 ) 2,295
Depreciation and amortization 1,584 1,208 18 2,810
Capital expenditures 9,426 1,991 - 11,417

Nine Months Ended September 30, 2017
Petrochemical Specialty Wax Corporate Consolidated
(in thousands)
Product sales $ 147,339 $ 18,606 $ - $ 165,945
Processing fees 5,078 8,142 - 13,220
Total revenues 152,417 26,748 - 179,165
Operating profit (loss) before depreciation and amortization 26,294 969 (5,978 ) 21,285
Operating profit (loss) 21,610 (2,264 ) (6,027 ) 13,319
Profit (loss) before taxes 19,750 (2,534 ) (11,209 ) 6,007
Depreciation and amortization 4,684 3,233 49 7,966
Capital expenditures 27,203 12,047 - 39,250

Three Months Ended September 30, 2016
Petrochemical Specialty Wax Corporate Consolidated
(in thousands)
Product sales $ 47,250 $ 4,865 $ - $ 52,115
Processing fees 2,909 2,118 - 5,027
Total revenues 50,159 6,983 - 57,142
Operating profit (loss) before depreciation and amortization 7,813 118 (1,238 ) 6,693
Operating profit (loss) 6,366 (987 ) (1,251 ) 4,128
Profit (loss) before taxes 5,812 (1,063 ) (182 ) 4,567
Depreciation and amortization 1,447 1,105 13 2,565
Capital expenditures 5,411 4,066 - 9,477


	Three Months Ended September 30, 2020
	Specialty Petrochemicals		Specialty Waxes		Corporate		Consolidated
	(in thousands)
Product sales	$	37,580	$	5,990	$	—	$	43,570
Processing fees	1,644		2,533		—		4,177
Total revenues	39,224		8,523		—		47,747
Operating income (loss) before depreciation and amortization	8,538		89		(2,050)		6,577
Operating income (loss)	5,871		(1,337)		(2,052)		2,482
Income (loss) from continuing operations before taxes	5,311		(1,293)		(2,057)		1,961
Depreciation and amortization	2,667		1,427		2		4,096
Capital expenditures	2,084		641		—		2,725


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	Nine Months Ended September 30, 2021
	Specialty Petrochemicals		Specialty Waxes		Corporate		Consolidated
	(in thousands)
Product sales	$	164,359	$	22,288	$	—	$	186,647
Processing fees	4,200		7,224		—		11,424
Total revenues	168,559		29,512		—		198,071
Operating income (loss) before depreciation and amortization	19,570		2,881		(11,973)		10,478
Operating income (loss)	11,137		(1,666)		(11,729)		(2,258)
Income (loss) from continuing operations before taxes	10,474		533		(11,782)		(775)
Depreciation and amortization	8,433		4,547		6		12,986
Capital expenditures	10,675		1,620		—		12,295


	Nine Months Ended September 30, 2020
	Specialty Petrochemicals		Specialty Waxes		Corporate		Consolidated
	(in thousands)
Product sales	$	119,202	$	18,258	$	—	$	137,460
Processing fees	4,047		8,981		—		13,028
Total revenues	123,249		27,239		—		150,488
Operating income (loss) before depreciation and amortization	20,002		2,009		(6,665)		15,346
Operating income (loss)	12,097		(2,084)		(6,677)		3,336
Income (loss) from continuing operations before taxes	9,901		(1,980)		(6,751)		1,170
Depreciation and amortization	7,905		4,093		13		12,011
Capital expenditures	9,067		1,242		—		10,309


	September 30, 2021
	Specialty Petrochemicals	Specialty Waxes	Corporate	Eliminations	Consolidated
	(in thousands)


Intangible assets, net	—	11,512	—	—	11,512
Total assets	298,885	81,477	118,986	(191,543)	307,805


	December 31, 2020
	Specialty Petrochemicals	Specialty Waxes	Corporate	Eliminations	Consolidated
	(in thousands)


Intangible assets, net	—	12,893	—	—	12,893
Total assets	298,198	83,108	127,260	(191,733)	316,833

17. NET INCOME (LOSS) PER COMMON SHARE

The following tables set forth the computation of ~~Contents~~

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February 2021.


Specialty Waxes Segment	Nine Months Ended September 30,
	2021			2020			Change		% Change
	(thousands of dollars)
Product Sales	$	22,288		$	18,258		$	4,030	22.1	%
Processing	7,224			8,981			(1,757)		(19.6)	%
Gross Revenue	$	29,512		$	27,239		$	2,273	8.3	%

Volume of specialty wax sales (thousand pounds)	27,411			27,361			50		0.2	%

Cost of Sales	$	27,588		$	25,132		$	2,456	9.8	%
Gross Margin (Loss)	6.5		%	7.7		%			(1.2)	%
General & Administrative Expense	3,522			4,120			(598)		(14.5)	%
Depreciation and Amortization*	4,547			4,093			454		11.1	%
Capital Expenditures	$	1,620		$	1,242		$	378	30.4	%

~~Total Operating Expense~~

Total Operating Expense decreased 0.8% during the first nine months of 2017 from 2016. Natural gas, labor, and transportation are the largest individual expenses in this category; however, not all of these decreased.

The cost of natural gas purchased increased 47.4% during 2017 from 2016 due to an increase in the average per unit cost and consumption. The average price per MMBTU for the first nine months of 2017 was $3.32 whereas, for 2016 the per-unit cost was $2.44. Volume consumed increased to approximately 1,075,000 MMBTU from about 989,000 MMBTU.

~~Labor costs were lower by 1.7% primarily due to maintenance labor being capitalized to construction in progress.~~

Transportation costs were higher by 2.6% primarily due to an increase in the number of isocontainer shipments during the first nine months of 2017. These shipments increased 112.6% and are generally used for overseas shipments.

In addition, during 2016 we saw increases in plant maintenance and expenses associated with installation of a processing unit for which we were reimbursed at cost plus a markup fee. These were minimal during 2017.

~~General and Administrative Expense~~

General and Administrative costs for the first nine months of 2017 from 2016 increased by 16.0% primarily due to an increase in our property tax accrual because of the expiration of abatements. Group insurance and administrative labor costs also increased.

~~Depreciation~~

~~Depreciation increased 11.2% during the first nine months of 2017 from 2016 primarily due to 2016 capital expenditures increasing our depreciable base.~~

~~Capital Expenditures~~

Capital Expenditures increased 61.8% during the first nine months of 2017 from 2016 primarily due to expenditures related to construction of the new advanced reformer unit. Due to delays caused by the impact of the hurricane and issues with improper welding by the supplier of certain equipment in the reactor section of the new unit, we now expect the advanced reformer unit to come online toward the end of first quarter 2018.

~~Specialty Wax Segment~~

2017 2016 Change %Change
(thousands of dollars)
Product Sales $ 18,606 $ 14,585 $ 4,021 27.6 %
Processing 8,142 7,766 376 4.8 %
Gross Revenue $ 26,748 $ 22,351 $ 4,397 19.7 %

   Volume of wax sales (thousand pounds) 28,281 24,126 4,155 17.2 %

  Cost of Sales $ 25,219 $ 18,880 $ 6,339 33.6 %
  Gross Margin 5.7 % 15.5 % (9.8 %) (63.2 %)
  General & Administrative Expense 3,729 3,582 147 4.1 %
  Depreciation and Amortization* 3,233 2,945 288 9.8 %
  Capital Expenditures $ 12,047 $ 11,059 $ 988 8.9 %

*Includes ~~$3,169~~$4,478 and ~~$2,877~~$4,022 for ~~2017~~2021 and ~~2016,~~2020, respectively, which is included in cost of sales


Table of Contents
			31

Product Sales

~~Product~~Specialty Wax segment product sales revenue increased ~~27.6%~~approximately $4.0 million, or 22.1%, during the first nine months of ~~2017~~2021 from the first nine months of ~~2016~~2020. Product sales revenue increased as we were successful in increasing selling prices for our specialty waxes in excess of increases in wax feed costs. Specialty wax sales volume increased slightly, while average selling prices increased due to higher wax pricing and a change in mix of sales to domestic versus export customers. Our wax feed is based on certain by-products produced as a result of polyethylene production at major polyethylene producers' facilities on the US Gulf Coast.

Processing

Processing revenues were $7.2 million in the first nine months of 2021, a decrease of 19.6% from the first nine months of 2020, or about $1.8 million. The decrease was primarily due to ~~on-purpose PE~~the continuing pandemic along with the impact of the Texas freeze event in February 2021.

Cost of Sales

Cost of Sales increased 9.8%, or nearly $2.5 million, in the first nine months of 2021 compared to the first nine months of 2020. This increase was driven by higher polyethylene wax ~~sales which we are distributing in Latin America for a third party~~feed cost and higher purchase prices as well as ~~significant growth~~increased utility charges related to the Texas freeze event.

General and Administrative

General and administrative expenses decreased approximately $0.6 million in ~~our high value waxes. Polyethylene wax sales saw volume increases~~the first nine months of 2021 compared to the first nine months of 2020.

Depreciation

Depreciation for the first nine months of 2021 was $4.5 million, a $0.5 million increase from the first nine months of 2020.

Capital Expenditures

Capital Expenditures were approximately ~~16.9%,~~$1.6 million in the first nine months of 2021 compared with $1.2 million in the first nine months of 2020. Capital expenditures primarily relate to restoration costs associated with the damage to pipes and ~~revenue from these sales increased 20.8%. As mentioned above, we continue~~other plant equipment due to ~~make good progress~~the Texas freeze event in ~~developing high value markets for our by-product polyethylene waxes.~~

~~Table of Contents~~

February 2021.


Corporate Segment	Nine Months Ended September 30,
	2021		2020		Change		% Change
	(thousands of dollars)
General & Administrative Expense	$	11,722	$	6,664	$	5,058	75.9	%

~~Processing~~

~~Processing revenues~~General corporate expenses increased ~~4.8%~~by $5.1 million during the first nine months of ~~2017~~2021 from the first nine months of ~~2016 due~~2020. The increase is primarily attributable to increased volumes with existing customers and a number of new contracts and small trials. Processing revenue generated from B Plant was approximately $2.2 million, from the new distillation unit was approximately $0.2 million, and from the new hydrogenation unit was approximately $0.1 million. Excluding the $1.6 million non-use fee that occurredone-time costs for the last time in the first quarter of 2016, custom processing revenues were up over 32% over 2016 numbers. This revenue increase occurred despite the start-up difficulties with the hydrogenation unit resulting in negligible processing revenues from that unit. Further, faulty equipment in another unit caused an extended shutdown of this unit resulting in further loss of revenue.

~~Cost of Sales~~

Cost of Sales increased 33.6% during the first nine months of 2017 from the first nine months of 2016 due to increases in material cost, labor, freight, repairs and maintenance of manufacturing equipment, and natural gas utilities.

~~Material cost increased approximately 69.4% due to material costs~~professional services associated with ~~the on-purpose PE wax sales we distributed into Latin America~~M&A and strategic initiatives as noted above and to support the additional sales volume of polyethylene wax sales. Labor increased approximately 22.8% due to increased overtime and the addition of new personnel in preparation for the start-up of the new hydrogenation/distillation project. Freight increased approximately 155.7% due to a change in shipping terms. We now ship most products with destination terms. Repairs and maintenance of equipment increased approximately 33.8% primarily due to the addition of B Plant and the introduction of new custom processing projects. Natural gas utilities increased approximately 84.4% due to an increase in per unit costwell as ~~mentioned above and an increase in volume consumed because of B Plant and the new hydrogenation/distillation unit.~~higher insurance costs.

~~General and Administrative Expense~~

General and Administrative costs for the first nine months of 2017 from 2016 increased 4.1% primarily due to an increase in sales personnel, property taxes, and property insurance due to the addition of B Plant.

~~Depreciation~~

~~Depreciation increased 9.8% during the first nine months of 2017 from 2016 primarily due to addition of B Plant.~~

~~Capital Expenditures~~

Capital Expenditures increased 8.9% during the first nine months of 2017 from the first nine months of 2016 primarily due to expenditures for construction in progress including the hydrogenation/distillation project and various other smaller projects. The hydrogenation/distillation project is complete; therefore, going forward we expect capital expenditures to return to a more normal level.

~~Corporate Segment~~

2017 2016 Change %Change
(thousands of dollars)
General & Administrative Expense $ 5,978 $ 5,128 $ 850 16.6 %
Equity in earnings (losses) of AMAK (5,161 ) 2,261 (7,422 ) (328.3 %)
Gain from additional equity issuance by AMAK - 3,168 (3,168 ) (100.0 %)

~~General and Administrative Expenses~~

General corporate expenses increased 16.6% during first nine months 2017 from first nine months 2016 primarily due to an increase in officer compensation. Officer compensation increased because of the accrual in 2017 for executive bonuses. During 2016 we reversed the accrual for bonuses when it was determined they would not be awarded.

~~Equity in Earnings (Losses) of AMAK/Gain from Additional Equity Issuance by AMAK~~


Investment in AMAK - Discontinued Operations	Nine Months Ended September 30,
	2021		2020		Change		% Change
	(thousands of dollars)
Equity in earnings of AMAK	$	—	$	455	$	(455)	(100.0)	%

Equity in earnings ~~(losses)~~ of AMAK decreased ~~during first nine months 2017 from first nine months 2016 primarily~~ due to the recognition in 2016 of a gain from a settlement which was reached with the former operator of the facility and a gain on an additional equity issuance by AMAK. In addition, the facility recording no sales in second quarter 2017 (please see Note

~~Table of Contents~~

~~17 to the consolidated financial statements for the impact on our statements). Also, during 2016 the facility was not operating; therefore, their expenses were less.~~

~~AMAK Summarized Income Statement~~

Nine Months Ended
September 30,

2017 2016
(thousands of dollars)
Sales $ 11,965 $ 9,921

Gross loss (11,515 ) (7,556 )
General, administrative and other expenses 6,942 6,986
Loss from operations (18,457 ) (14,542 )
Gain on settlement with former operator - 17,440
Net income (loss) $ (18,457 ) $ 2,898

The team at AMAK continued to upgrade personnel and work on improving operations throughout the quarter. Shipments of concentrate to the port continue to show steady improvement – along with quality and recoveries. We reported on initial Guyan exploration results. Exploration continues both at Guyan and the surrounding areas with a similar geological profile. Exploration results which should extend the life of the copper and zinc mine assets are expected later this year.

~~Guarantee of Saudi Industrial Development Fund ("SIDF") Loan to AMAK~~

As discussed in Note 19 to the consolidated financial statements, as a condition of the Loan from the SIDF in the principal amount of 330.0 million SR (US$88.0 million) to AMAK, we were required to execute a Guarantee of up to 41% of the Loan. The decision to provide a limited corporate guarantee in favor of AMAK was difficult as we considered numerous facts and circumstances. One of the factors considered was that without the US$88.0 million from the SIDF, construction activity on the project would likely have ceased. Another factor considered was that prior to making a firm commitment regarding funding, the SIDF performed its own exhaustive due diligence of the project and obviously reached the conclusion that the project is viable and capable of servicing the debt. Yet another factor considered was our ability to reach agreement with various AMAK Saudi shareholders whereby they agreed to use best efforts to have their personal guarantees stand ahead of and pay required payments to SIDF before our corporate guarantee. Finally, we researched numerous loans made by the SIDF to others and were unable to find a single instance where the SIDF actually called a guarantee or foreclosed on a project. Based on the above, we determined that it was in the best interest of the Company and its shareholders to provide the limited corporate guarantee to facilitate completion of the ~~mining project~~sale of our ownership interest in ~~a timely manner. We also determined that~~AMAK during the ~~stand-in-front agreement~~third quarter of 2020. See Note 5 for additional discussion.

Contractual Obligations

Our contractual obligations are summarized in ~~conjunction with the actual value~~Part II, Item 7. “Management's Discussion and Analysis of ~~plant~~Financial Condition and equipment on the ground should act in concert to minimize any exposure arising from the corporate guarantee. The total amount outstanding to the SIDF at September 30, 2017, was 305.0 million Saudi Riyals (US$81.3 million).

~~Critical Accounting Policies and Estimates~~

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

~~Other critical accounting policies are more fully described in Note 2 of the Notes to Consolidated Financial Statements included~~Operations,” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020. There have been no other material changes to the contractual obligation amounts disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.

Critical Accounting Policies and Estimates


Table of Contents
			32

Critical accounting policies are more fully described in Note 2, “RECENT ACCOUNTING PRONOUNCEMENTS” to the consolidated financial statements set forth in our Annual Report on Form 10-K for the year ended December 31, 2020. The preparation of consolidated financial statements in accordance with generally accepted accounting principles requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period reported. By their nature, these estimates, assumptions and judgments are subject to an inherent degree of uncertainty. We base our estimates, assumptions and judgments on historical experience, market trends and other factors that are believed to be reasonable under the circumstances. Estimates, assumptions and judgments are reviewed on an ongoing basis and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Actual results may differ from these estimates under different assumptions or conditions. Our critical accounting policies and estimates have been discussed with the Audit Committee of the Board of ~~Directors. We believe there have been no material~~

~~Table of Contents~~

~~changes to our critical accounting policies~~Directors and ~~estimates compared to those~~ discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2016, except for~~2020. For the ~~change in inventory valuation method from LIFO~~nine months ended September 30, 2021, there were no significant changes to ~~FIFO as described in Note 5.~~these policies.

Recent and New Accounting Standards

See Note 2 ~~to the Consolidated Financial Statements~~ for a summary of recent accounting guidance.

Off Balance Sheet Arrangements

As of September 30, 2021, we do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial statements, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

~~Derivative Instrument Risk~~

~~Refer to Note 12~~For quantitative and qualitative disclosure about market risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on ~~page 13 of this~~ Form ~~10-Q.~~

~~Interest Rate Risk~~

~~Refer to Note 12 on page 13 of this Form 10-Q.~~

10–K for the year ended December 31, 2020. There have been no material changes in the Company's exposure to market risk from the disclosure included in ~~the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016.~~such report.

ITEM 4. CONTROLS AND PROCEDURES.

~~(a)~~

~~Evaluation of disclosure controls and procedures. Our chief executive officer and chief financial officer,~~(a)Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Chief Financial Officer, with the participation of management, have evaluated the effectiveness of our "disclosure controls and procedures" (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934) and determined that our disclosure controls and procedures were not effective as of the end of the period covered by this report due to the material weakness in internal control over financial reporting as described below.

~~Material Weakness in Internal Control over Financial Reporting~~

~~As described~~ ~~in Management's Report On Internal Control Over Financial Reporting in Item 9A~~ of our ~~Annual Report on Form 10-K for~~“disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15(d)-15(e) under the ~~year ended December 31, 2016, we~~Securities Exchange Act of 1934) and determined that ~~we did not maintain~~our disclosure controls and procedures were effective ~~internal control over the accounting for our investment in AMAK. Specifically, controls were not~~ ~~appropriately designed, adequately documented and operating effectively related to the accounting for: (1) our equity in earnings of AMAK; and (2) changes in our ownership percentage in AMAK~~ as ~~the result~~ of the ~~sale and issuance~~end of ~~shares of AMAK to other investors. As a result of~~the period covered by this ~~material weakness, we restated our financial statements for the three months ended June 30, 2016, and September 30, 2016, respectively.~~ ~~This~~report.

(b)Changes in internal control ~~deficiency did not result in any material adjustments to our consolidated financial statements for the year ended December 31, 2016.~~

Although we have made progress in the remediation of this issue, as indicated below, sufficient time needs to pass before we can conclude that newly implemented controls are operating effectively and that the material weakness has been adequately remediated. Notwithstanding the material weakness. There were no significant changes in our internal control over financial reporting wethat occurred during the three months ended September 30, 2021, that have concluded that the interim condensed consolidated financial statements and other financial information included in this Quarterly Report on Form 10-Q, fairly present in all material respects our financial condition, results of operations and cash flows as of, and for, the periods presented.

~~Remediation of Material Weakness in Internal Control over Financial Reporting~~

~~During second quarter 2017 we developed and implemented a comprehensive remediation plan.~~ ~~We believe the enhanced procedures will remediate the material weakness we have identified and generally strengthen~~materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Since, we have not completed the testing and evaluation of the operating effectiveness of controls, the previously disclosed material weaknesses remain unremediated as of September 30, 2017. Once we complete testing and our evaluation of the effectiveness of the controls by the end of the year, we expect to conclude that the material weaknesses have been remediated.

~~Table of Contents~~

~~(b)~~
~~Changes in internal control. Other than the efforts discussed immediately above in "Remediation~~Table of Material Weakness in Internal Control over Financial Reporting", there was no change in our internal control over financial reporting that occurred during the quarter ended September 30, 2017, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.Contents
			33

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is periodically named in legal actions arising from normal business activities. The Company evaluates the merits of these actions and, if it determines that an unfavorable outcome is probable and can be reasonably estimated, the Company will establish the necessary reserves. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.

ITEM 1A. RISK FACTORS.

Readers of this Quarterly Report on Form 10–Q should carefully consider the risks described in the Company's other reports and filings filed with or furnished to the SEC, including the Company's prior and subsequent reports on Forms 10-K, 10-Q and 8-K, in connection with any evaluation of the Company's financial position, results of operations and cash flows.

The risks and uncertainties in the Company's most recent Annual Report on Form 10-K are not the only risks that the Company faces. Additional risks and uncertainties not presently known or those that are currently deemed immaterial may also affect the Company's operations. Any of the risks, uncertainties, events or circumstances described therein could cause the Company's future financial condition, results of operations or cash flows to be adversely affected. There have been no material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020.

ITEM 6. EXHIBITS.

The following documents are filed or incorporated by reference as exhibits to this Report. Exhibits marked with an asterisk (*) are filed ~~herewith and exhibits marked with a double asterisk (**) are furnished~~ herewith.

~~Exhibit~~ ~~Number~~	~~Description~~
~~10(a)~~Exhibit Number		~~Third Amendment to Amended and Restated Credit Agreement~~ dated as of July 25, 2017, among Texas Oil & Chemical Co. II, Inc. and certain subsidiaries and Bank of America, N.A. as administrative agent (incorporated by reference to Exhibit 99.2 to the Company's Form 8-K filed on July 27, 2017 (file No. 001-33926)) Description
10(b)* 31.1*		~~Form of Trecora Resources Stock and Incentive Plan Restricted Stock Unit Agreement~~
10(c)*	~~Form of Trecora Resources Stock and Incentive Plan Amended and Restated Restricted Stock Unit Agreement~~
~~31.1~~**	Certification of Chief Executive Officer pursuant to Rule ~~13A-14(A)~~13a-14(a) of the Securities Exchange Act of 1934
~~31.2~~** 31.2*		Certification of Chief Financial Officer pursuant to Rule ~~13A-14(A)~~13a-14(a) of the Securities Exchange Act of 1934
~~32.1~~** 32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
~~32.2~~** 32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		XBRL Instance Document (XBRL tags are embedded within the Inline XBRL document)
101.SCH*		XBRL Taxonomy Schema Document
101.CAL*		XBRL Taxonomy Calculation Linkbase Document
101.LAB*		XBRL Taxonomy Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
104*		Cover Page Interactive Data File (formatted as inline XBRL and included as Exhibit 101)

~~Table of Contents~~

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.

~~DATE: November 8, 2017~~ ~~TRECORA RESOURCES~~

~~(Registrant)~~

~~By:~~ ~~/s/Sami Ahmad~~

~~Sami Ahmad~~

~~Chief~~


	TRECORA RESOURCES

Dated: November 4, 2021	By:	/s/ Sami Ahmad
		Sami Ahmad
		Principal Financial Officer and Duly Authorized Officer

~~Table of Contents~~


Table of Contents
			34

~~DELAWARE~~	~~75-1256622~~
Delaware		75-1256622
(State or other jurisdiction of		(I.R.S. ~~employer incorporation or~~Employer Identification No.)
incorporation or organization)		~~identification no.)~~


1650 Hwy 6 South,	Suite 190	77478
Sugar Land, ~~Texas~~	~~(Zip code)~~Texas
(Address of principal executive offices)		(Zip code)


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


PART I – FINANCIAL INFORMATION
ITEM 1. Financial Statements
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of ~~Income~~Operations	2
	Condensed Consolidated Statement of Stockholders' Equity	3
	Condensed Consolidated Statements of Cash Flows	4 5
	Notes to Condensed Consolidated Financial Statements	5 6

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		20

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk		31 33

ITEM 4. Controls and Procedures		31 33
	PART II – OTHER INFORMATION
ITEM 1. Legal Proceedings		32 34

ITEM 1A. Risk Factors		32 34



ITEM 6. Exhibits		32 34


	SEPTEMBER 30, 2017 (unaudited)			DECEMBER 31, 2016				September 30, 2021 (Unaudited)		December 31, 2020
ASSETS	(thousands of dollars)						ASSETS	(thousands of dollars, except par value)
Current Assets							Current Assets
Cash	$	4,219		$	8,389		Cash	$	44,403	$	55,664

Trade receivables, net		22,738			22,193		Trade receivables, net	31,958		25,301
Inventories		12,849			17,871		Inventories	15,619		12,945

Prepaid expenses and other assets		3,276			3,511		Prepaid expenses and other assets	6,643		9,198
Taxes receivable		3,764			3,983		Taxes receivable	945		2,788
Total current assets		46,846			55,947		Total current assets	99,568		105,896

Plant, pipeline and equipment, net		172,048			140,009
Property, plant and equipment, net							Property, plant and equipment, net	187,567		187,104

Goodwill		21,798			21,798

Intangible assets, net		21,273			22,669		Intangible assets, net	11,512		12,893
Investment in AMAK		44,225			49,386
Lease right-of-use assets, net							Lease right-of-use assets, net	8,746		10,528
Mineral properties in the United States		588			588		Mineral properties in the United States	412		412
Other assets		21			87

TOTAL ASSETS	$	306,799		$	290,484		TOTAL ASSETS	$	307,805	$	316,833

LIABILITIES							LIABILITIES
Current Liabilities							Current Liabilities
Accounts payable	$	12,381		$	13,306		Accounts payable	$	12,686	$	14,447
Current portion of derivative instruments		7			58
Accrued liabilities		6,304			2,017		Accrued liabilities	11,044		6,857
Current portion of post-retirement benefit		308			316

Current portion of long-term debt		8,061			10,145		Current portion of long-term debt	4,194		4,194
Current portion of lease liabilities							Current portion of lease liabilities	3,302		3,195
Current portion of CARES Act, PPP Loans							Current portion of CARES Act, PPP Loans	3,935		—
Current portion of other liabilities		1,131			870		Current portion of other liabilities	542		891
Total current liabilities		28,192			26,712		Total current liabilities	35,703		29,584

CARES Act, PPP Loans, net of current portion							CARES Act, PPP Loans, net of current portion	—		6,123
Long-term debt, net of current portion		81,011			73,107		Long-term debt, net of current portion	38,755		41,901
Post-retirement benefit, net of current portion		897			897		Post-retirement benefit, net of current portion	312		320
Lease liabilities, net of current portion							Lease liabilities, net of current portion	5,444		7,333
Other liabilities, net of current portion		1,681			2,309		Other liabilities, net of current portion	617		648
Deferred income taxes		24,654			23,083		Deferred income taxes	26,420		26,517
Total liabilities		136,435			126,108		Total liabilities	107,251		112,426

COMMITMENTS AND CONTINGENCIES (Note 12)							COMMITMENTS AND CONTINGENCIES (Note 12)	0		0

EQUITY							EQUITY
Common stock‑authorized 40 million shares of $.10 par value; issued 24.5 million in 2017 and 2016 and outstanding 24.3 million and 24.2 million shares in 2017 and 2016, respectively		2,451			2,451
Common stock - authorized 40 million shares of $0.10 par value; issued 25.0 million and 24.8 million and outstanding 24.4 million and 24.8 million in 2021 and 2020, respectively							Common stock - authorized 40 million shares of $0.10 par value; issued 25.0 million and 24.8 million and outstanding 24.4 million and 24.8 million in 2021 and 2020, respectively	2,497		2,483
Additional paid-in capital		55,344			53,474		Additional paid-in capital	62,710		61,311
Common stock in treasury, at cost		(203	)		(284	)
Treasury stock, at cost (0.6 million shares)							Treasury stock, at cost (0.6 million shares)	(5,000)		—
Retained earnings		112,483			108,446		Retained earnings	140,058		140,324
Total Trecora Resources Stockholders' Equity		170,075			164,087		Total Trecora Resources Stockholders' Equity	200,265		204,118
Noncontrolling Interest		289			289
Non-controlling Interest							Non-controlling Interest	289		289
Total equity		170,364			164,376		Total equity	200,554		204,407

TOTAL LIABILITIES AND EQUITY	$	306,799		$	290,484		TOTAL LIABILITIES AND EQUITY	$	307,805	$	316,833

	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2017			2016			2017			2016
	(thousands of dollars)
REVENUES
Petrochemical and Product Sales	$	58,030		$	52,115		$	165,945		$	143,662
Processing Fees		3,478			5,027			13,220			14,534
		61,508			57,142			179,165			158,196

OPERATING COSTS AND EXPENSES
Cost of Sales and Processing
(including depreciation and amortization of $2,565, $2,373, $7,311, and $6,620, respectively)		51,638			48,237			147,570			125,946

GROSS PROFIT		9,870			8,905			31,595			32,250

GENERAL AND ADMINISTRATIVE EXPENSES
General and Administrative		5,660			4,585			17,621			15,525
Depreciation		245			192			655			556
		5,905			4,777			18,276			16,081

OPERATING INCOME		3,965			4,128			13,319			16,169

OTHER INCOME (EXPENSE)
Interest Expense		(795	)		(568	)		(2,109	)		(1,803	)
Bargain purchase gain from acquisition		--			--			--			11,549
Equity in Earnings (Losses) of AMAK		(897	)		(2,089	)		(5,161	)		2,261
Gain from Additional Equity Issuance by AMAK		--			3,168			--			3,168
Miscellaneous Income (Expense)		22			(72	)		(42	)		38
		(1,670	)		439			(7,312	)		15,213

INCOME BEFORE INCOME TAXES		2,295			4,567			6,007			31,382

INCOME TAXES		577			1,768			1,970			11,107

NET INCOME		1,718			2,799			4,037			20,275

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST		--			--			--			--

NET INCOME ATTRIBUTABLE TO TRECORA RESOURCES	$	1,718		$	2,799		$	4,037		$	20,275

Basic Earnings per Common Share
Net Income Attributable to Trecora Resources (dollars)	$	0.07		$	0.12		$	0.17		$	0.83

Basic Weighted Average Number of Common Shares Outstanding		24,304			24,223			24,267			24,304

Diluted Earnings per Common Share
Net Income Attributable to Trecora Resources (dollars)	$	0.07		$	0.11		$	0.16		$	0.81

Diluted Weighted Average Number of Common Shares Outstanding		25,157			24,921			25,082			24,964

	NINE MONTHS ENDED
	SEPTEMBER 30,
	2017			2016
	(thousands of dollars)
OPERATING ACTIVITIES
Net Income	$	4,037		$	20,275
Adjustments to Reconcile Net Income
To Net Cash Provided by Operating Activities:
Depreciation		6,570			5,761
Amortization of Intangible Assets		1,396			1,415
Unrealized Gain on Derivative Instruments		(51	)		(89	)
Share-based Compensation		2,005			1,882
Deferred Income Taxes		1,571			6,851
Postretirement Obligation		(8	)		186
Bargain purchase gain		-			(11,549	)
Equity in (earnings) losses of AMAK		5,161			(2,261	)
Gain from Additional Equity Issuance by AMAK		-			(3,168	)
Amortization of loan fees		154			213
Changes in Operating Assets and Liabilities:
Increase in Trade Receivables		(545	)		(355	)
Decrease in Taxes Receivable		218			4,094
(Increase) Decrease in Inventories		5,022			(2,573	)
(Increase) Decrease in Prepaid Expenses and Other Assets		387			(1,494	)
Increase in Accounts Payable and Accrued Liabilities		3,356			1,304
Increase (Decrease) in Other Liabilities		281			(418	)

Net Cash Provided by Operating Activities		29,554			20,074

INVESTING ACTIVITIES
Additions to Plant, Pipeline and Equipment		(39,250	)		(25,860	)
Cash paid for acquisition of BASF facility		-			(2,011	)
Advances to AMAK, net		(86	)		-
Cash Used in Investing Activities		(39,336	)		(27,871	)

FINANCING ACTIVITIES
Issuance of Common Stock		25			11
Payments related to tax withholding for stock-based compensation		(80	)		-
Addition to Long-Term Debt		14,000			3,000
Repayment of Long-Term Debt		(8,333	)		(6,250	)

Net Cash Provided by (Used in) Financing Activities		5,612			(3,239	)

NET DECREASE IN CASH		(4,170	)		(11,036	)

CASH AT BEGINNING OF PERIOD		8,389			18,623

CASH AND AT END OF PERIOD	$	4,219		$	7,587

Supplemental disclosure of cash flow information:
Cash payments for interest	$	3,034	$	1,804
Cash payments for taxes, net of refunds	$	227	$	277
Supplemental disclosure of non-cash items:
Capital expansion amortized to depreciation expense	$	642	$	829
Estimated earnout liability	$	-	$	733

	As Originally Reported		As Retrospectively Adjusted
	(in thousands)
Deferred income tax asset, current	$	1,615	$	-
Total current assets		57,562		55,947
Total assets		292,099		290,484
Deferred income tax liability, noncurrent		24,698		23,083
Total liabilities		127,723		126,108
Total liabilities and equity		292,099		290,484

	September 30, 2017			December 31, 2016
	(thousands of dollars)
Trade receivables	$	23,038		$	22,493
Less allowance for doubtful accounts		(300	)		(300	)
Trade receivables, net	$	22,738		$	22,193

	Remainder of 2017		2018		2019		2020		2021		Thereafter
Customer relationships	$	282	$	1,123	$	1,123	$	1,123		1,123	$	8,710
Non-compete agreements		5		19		12		-		-		-
Licenses and permits		26		106		106		106		106		656
Developed technology		153		613		613		613		613		1,687
Total future amortization expense	$	466	$	1,861	$	1,854	$	1,842	$	1,842	$	11,053

	Three Months Ended September 30, 2017						Three Months Ended September 30, 2016
					Per Share						Per Share
	Income		Shares		Amount		Income		Shares		Amount
Basic Net Income per Share:
Net Income Attributable to Trecora Resources	$	1,718		24,304	$	0.07	$	2,799		24,223	$	0.12

Unvested restricted stock grant				379						304
Dilutive stock options outstanding				474						394

Diluted Net Income per Share:
Net Income Attributable to Trecora Resources	$	1,718		25,157	$	0.07	$	2,799		24,921	$	0.11

	Nine Months Ended September 30, 2017						Nine Months Ended September 30, 2016
					Per Share						Per Share
	Income		Shares		Amount		Income		Shares		Amount
Basic Net Income per Share:
Net Income Attributable to Trecora Resources	$	4,037		24,267	$	0.17	$	20,275		24,304	$	0.83

Unvested restricted stock grant				360						297
Dilutive stock options outstanding				455						363

Diluted Net Income per Share:
Net Income Attributable to Trecora Resources	$	4,037		25,082	$	0.16	$	20,275		24,964	$	0.81

Level	Consolidated Leverage Ratio	LIBOR Margin	Base Rate Margin	Commitment Fee
1	Less than 1.50 to 1.00	2.00%	1.00%	0.25%
2	Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00	2.25%	1.25%	0.25%
3	Greater than or equal to 2.00 to 1.00 but less than 3.00 to 1.00	2.50%	1.50%	0.375%
4	Greater than or equal to 3.00 to 1.00 but less than 3.50 to 1.00	2.75%	1.75%	0.375%
5	Greater than or equal to 3.50 to 1.00	3.00%	2.00%	0.375%

	September 30, 2017		December 31, 2016

Acquisition loan	$	49,000	$	56,000
Term loan		17,666		19,000
Revolving facility		23,000		9,000
Total		89,666		84,000
Less debt issuance costs		594		748
Carrying balance of debt	$	89,072	$	83,252

			Fair Value Measurements Using
	September 30, 2017		Level 1		Level 2		Level 3
	(thousands of dollars)
Liabilities:
Interest rate swap	$	7		-	$	7		-

	September 30, 2017		December 31, 2016

Fair value of interest rate swap - liability	$	7	$	58

	Shares of Restricted Stock Units			Weighted Average Grant Date Price per Share

Outstanding at January 1, 2017		350,891		$	11.44
Granted		127,281		$	11.40
Forfeited		(21,201	)	$	10.52
Vested		(78,362	)	$	12.00
Outstanding at September 30, 2017		378,608		$	11.37

	Number of Stock Options & Warrants			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life

Outstanding at January 1, 2017		1,348,437		$	7.79
Granted		--			--
Exercised		(14,350	)		2.90
Expired		--			--
Cancelled		--			--
Forfeited		--			--
Outstanding at September 30, 2017		1,334,087		$	7.84		4.5
Exercisable at September 30, 2017		989,087		$	8.19		4.8

	Three Months Ended September 30, 2017
	Petrochemical		Specialty Wax			Corporate			Consolidated
	(in thousands)
Product sales	$	52,440	$	5,590		$	-		$	58,030
Processing fees		1,519		1,959			-			3,478
Total revenues		53,959		7,549			-			61,508
Operating profit (loss) before depreciation and amortization		9,319		(587	)		(1,957	)		6,775
Operating profit (loss)		7,735		(1,795	)		(1,975	)		3,965
Profit (loss) before taxes		7,149		(1,975	)		(2,879	)		2,295
Depreciation and amortization		1,584		1,208			18			2,810
Capital expenditures		9,426		1,991			-			11,417

	Nine Months Ended September 30, 2017
	Petrochemical		Specialty Wax			Corporate			Consolidated
	(in thousands)
Product sales	$	147,339	$	18,606		$	-		$	165,945
Processing fees		5,078		8,142			-			13,220
Total revenues		152,417		26,748			-			179,165
Operating profit (loss) before depreciation and amortization		26,294		969			(5,978	)		21,285
Operating profit (loss)		21,610		(2,264	)		(6,027	)		13,319
Profit (loss) before taxes		19,750		(2,534	)		(11,209	)		6,007
Depreciation and amortization		4,684		3,233			49			7,966
Capital expenditures		27,203		12,047			-			39,250

	Three Months Ended September 30, 2016
	Petrochemical		Specialty Wax			Corporate			Consolidated
	(in thousands)
Product sales	$	47,250	$	4,865		$	-		$	52,115
Processing fees		2,909		2,118			-			5,027
Total revenues		50,159		6,983			-			57,142
Operating profit (loss) before depreciation and amortization		7,813		118			(1,238	)		6,693
Operating profit (loss)		6,366		(987	)		(1,251	)		4,128
Profit (loss) before taxes		5,812		(1,063	)		(182	)		4,567
Depreciation and amortization		1,447		1,105			13			2,565
Capital expenditures		5,411		4,066			-			9,477

	Nine Months Ended September 30, 2016
	Petrochemical		Specialty Wax			Corporate			Consolidated
	(in thousands)
Product sales	$	129,076	$	14,585		$	-		$	143,661
Processing fees		6,769		7,766			-			14,535
Total revenues		135,845		22,351			-			158,196
Operating profit (loss) before depreciation and amortization		25,699		2,774			(5,128	)		23,345
Operating profit (loss)		21,488		(171	)		(5,148	)		16,169
Profit before taxes*		19,696		11,427			259			31,382
Depreciation and amortization		4,211		2,945			20			7,176
Capital expenditures		16,812		11,059			-			27,871


	Three Months Ended September 30, 2021					Three Months Ended September 30, 2020
	Income		Shares	Per Share Amount		Income		Shares	Per Share Amount
	(in thousands, except per share amounts)
Basic:
Net income from continuing operations	$	1,883	24,341	$	0.08	$	1,108	24,817	$	0.04
Unvested restricted stock units			611					577

Diluted:
Net income from continuing operations	$	1,883	24,952	$	0.08	$	1,108	25,394	$	0.04

	Nine Months Ended September 30, 2021					Nine Months Ended September 30, 2020
	Loss		Shares	Per Share Amount		Income		Shares	Per Share Amount
	(in thousands, except per share amounts)
Basic:
Net income (loss) from continuing operations	$	(266)	24,562	$	(0.01)	$	5,112	24,795	$	0.21
Unvested restricted stock units			—					384
Diluted:
Net income (loss) from continuing operations	$	(266)	24,562	$	(0.01)	$	5,112	25,179	$	0.20

	Year Ended December 31, 2016
	Petrochemical		Specialty Wax		Corporate		Eliminations			Consolidated
	(in thousands)
Goodwill and intangible assets, net	$	-	$	44,467	$	-	$	-		$	44,467
Total assets		219,376		113,676		106,428		(148,996	)		290,484

	September 30,		December 31,
	2017		2016
	(Thousands of Dollars)
Current assets	$	22,839	$	22,860
Noncurrent assets		247,335		251,741
Total assets	$	270,174	$	274,601

Current liabilities	$	26,315	$	8,005
Long term liabilities		78,265		82,546
Shareholders' equity		165,594		184,050
	$	270,174	$	274,601

	September 30, 2017		December 31, 2016		September 30, 2016
Days sales outstanding in accounts receivable		34.6		38.2		34.3
Days sales outstanding in inventory		19.6		30.2		31.8
Days sales outstanding in accounts payable		18.9		22.9		16.0
Days of working capital		35.4		45.5		50.2


The change in cash is summarized as follows:							The change in cash is summarized as follows:	Nine Months Ended September 30,
	2017			2016				2021		2020
Net cash provided by (used in)	(thousands of dollars)						Net cash provided by (used in)	(thousands of dollars)
Operating activities	$	29,554		$	20,074		Operating activities	$	9,316	$	17,575
Investing activities		(39,336	)		(27,871	)	Investing activities	(12,014)		58,371
Financing activities		5,612			(3,239	)	Financing activities	(8,563)		(30,229)
Decrease in cash	$	(4,170	)	$	(11,036	)
Increase (decrease) in cash							Increase (decrease) in cash	$	(11,261)	$	45,717
Cash	$	4,219		$	7,587		Cash	$	44,403	$	51,862

·
Inventory decreased approximately $5.0 million (due to an effort to decrease inventory on hand at both facilities and downtime associated with the hurricane which impacted production) as compared to an increaseTable of ~~approximately $2.6 million in 2016 (due to lower sales volume);~~Contents
			26


Specialty Petrochemicals Segment	Three Months Ended September 30,
	2021			2020			Change		% Change
	(thousands of dollars)
Product Sales	$	61,938		$	37,580		$	24,358	64.8	%
Processing	1,419			1,644			(225)		(13.7)	%
Gross Revenue	$	63,357		$	39,224		$	24,133	61.5	%

Volume of Sales (gallons)
Specialty Petrochemicals Products	20,862			17,868			2,994		16.8	%
Prime Product Sales	17,180			14,734			2,446		16.6	%
By-product Sales	3,682			3,134			548		17.5	%

Cost of Sales	$	56,069		$	30,732		25,337		82.4	%
Gross Margin	11.5		%	21.7		%			(10.2)	%
Total Operating Expense*	19,543			17,122			2,421		14.1	%
Natural Gas Expense*	1,735			867			868		100.1	%
Operating Labor Costs*	2,901			4,046			(1,145)		(28.3)	%
Transportation Costs*	5,936			5,645			291		5.2	%
General & Administrative Expense	2,681			2,438			243		10.0	%
Depreciation and Amortization**	2,844			2,667			177		6.6	%
Capital Expenditures	3,416			2,084			1,332		63.9	%