Smart Sand Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the Annual Period Ended December 31, 2023

OR

For the Transition Period from ___ to ___

Commission file number 001-37936

(Exact name of registrant as specified in its charter)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes¨ No x

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

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

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

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

As of June 30, 2023, the last business day of the registrant’s second fiscal quarter of 2023, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $45,913,727 based on the closing price of $1.64 per share, as reported on NASDAQ on that date.

Number of shares of common shares outstanding, par value $0.001 per share as of March 4, 2024 was 43,008,960.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s proxy statement for the 2024 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended December 31, 2023.

TABLE OF CONTENTS

Certain Definitions

The following definitions apply throughout this annual report unless the context requires otherwise:

Disclaimer Regarding Forward-looking Statements and Risk Factor Summary

This Annual Report on Form 10-K contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this Annual Report on Form 10-K are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate’’, “estimate’’, “expect”, “project”, “plan”, “intend”, “believe”, “may”, “will”, “should”, “can have”, “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth or initiatives, strategies or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expected, including without limitation:

•fluctuations in demand for frac sand;

•the cyclical nature of our customers’ businesses;

•operating risks that are beyond our control, such as changes in the price and availability of transportation, natural gas or electricity; unusual or unexpected geological formations or pressures; pit wall failures or rock falls; or unanticipated ground, grade or water conditions;

•our dependence on our Oakdale mine and processing facility for a significant portion of our current sales;

•decreased usage of rail terminals that we operate;

•the level of activity in the oil and natural gas industries;

•the development of either effective alternative proppants or new processes to replace hydraulic fracturing;

•increased competition from new or existing sources of sand supply, including frac sand mines in locations located close to, or within, the oil and gas basins;

•federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing and the potential for related regulatory action or litigation affecting our customers’ operations, including restrictions on oil and gas development and possible bans on hydraulic fracturing;

•potential negative litigation outcomes;

•scarcity of supplies necessary to run our business;

•barriers to entry in the industrial sand market;

•actions by the Organization of the Petroleum Exporting Countries or Russia;

•our rights and ability to mine our properties and process sand and our renewal or receipt of the required permits and approvals from governmental authorities and other third parties;

•our ability to successfully compete in the frac and industrial sand market;

•loss of, or reduction in, business from our largest customers;

•increasing costs or a lack of dependability or availability of transportation services and transload network access or infrastructure, including the potential impact of train derailments;

•increases in the prices of, or interruptions in the supply of, natural gas, electricity, diesel fuel, propane, or any other energy sources;

•loss of or diminished access to water;

•our ability to successfully complete acquisitions or integrate acquired businesses;

•our ability to fully protect our intellectual property rights;

•our ability to make capital expenditures to maintain, develop and increase our asset base and our ability to obtain needed capital or financing on satisfactory terms;

•restrictions imposed by our indebtedness on our current and future operations;

•border restrictions;

•global pandemics;

•contractual obligations that require us to deliver minimum amounts of frac sand or purchase minimum amounts of products or services;

•the accuracy of our estimates of mineral reserves and resource deposits;

•a shortage of skilled labor and rising costs in the frac sand mining and manufacturing industries;

•our ability to attract and retain key personnel;

•our ability to maintain satisfactory labor relations;

•our ability to maintain effective quality control systems at our mining, processing and production facilities and rail terminals;

•seasonal and severe weather conditions;

•the results of political and civil unrest;

•fluctuations in our sales and results of operations due to seasonality and other factors;

•interruptions or failures in our information technology systems, including cyber-attacks;

•the impact of international or domestic terrorism or an armed conflict, including the conflicts in Ukraine and the Middle East;

•extensive and evolving environmental, mining, health and safety, licensing, reclamation and other regulation (and changes in their enforcement or interpretation);

•silica-related health issues and corresponding litigation;

•our ability to acquire, maintain or renew financial assurances related to the reclamation and restoration of mining property; and

•other factors disclosed in Item I A. “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the effect of known or unknown factors, and it is impossible for us to anticipate all factors that could affect our actual results. The risk factors summarized below could materially harm our business, operating results and/or financial condition, impair our future prospects and/or cause the price of our common stock to decline. These risks are discussed more fully under Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K. Material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, the following:

•our business and financial performance depend on the level of activity in the oil and natural gas industry;

•a material portion of our revenues have been generated from sales with a limited number of customers;

•we are exposed to the credit risk of our customers;

•our proppant sales are subject to fluctuations in market pricing;

•we face significant competition that may cause us to lose market share;

•we may be required to make substantial capital expenditures to maintain and grow our asset base and we may not realize enough of a return on such capital expenditures to cover their costs;

•the inability to obtain needed capital or financing on satisfactory terms, or at all;

•inaccuracies in estimates of volumes and qualities of our sand reserves could result in lower than expected sales and higher than expected cost of production;

•if we are unable to make acquisitions on economically acceptable terms, our future growth could be limited;

•restrictions in our ABL Credit Facility may limit our ability to capitalize on potential acquisitions and other business opportunities;

•we face distribution and logistical challenges in our business;

•we may be adversely affected by decreased demand for frac sand due to the development of effective alternative proppants or new processes to replace hydraulic fracturing;

•an increase in the supply of frac sand having similar characteristics as the frac sand we produce could make it more difficult for us to renew or replace our existing contracts on favorable terms, or at all;

•our long-term take-or-pay contracts may preclude us from taking advantage of increasing prices for frac sand or mitigating the effect of increased operational costs during the term of those contracts;

•our operations are subject to operational hazards and unforeseen interruptions for which we may not be adequately insured;

•our business relies significantly on railroads to deliver our products, and any delays in rail transportation could adversely impact our business.

•increases in the price or a significant interruption in the supply of natural gas, electricity or any other energy sources, of which our production process consumes large amounts, could adversely impact our production costs;

•increases in the price of diesel fuel could adversely affect our transportation costs;

•a facility closure entails substantial costs, and if we close one of our facilities sooner than anticipated, our results of operations may be adversely affected;

•our operations are dependent on our rights and ability to mine our properties and on our having renewed or received the required permits and approvals from governmental authorities and other third parties;

•a shortage of skilled labor together with rising labor costs in the excavation industry, which may further increase operating costs;

•our business may suffer if we lose, or are unable to attract and retain, key personnel;

•failure to maintain effective quality control systems at our mining, processing and production facilities may negatively affect our ability to conduct business;

•seasonal and severe weather conditions may reduce our ability to process and deliver our products;

•our cash flow fluctuates on a seasonal basis, which may limit our ability to operate;

•we do not own the land on which our transload facilities are located, which inherently limits our rights at those facilities;

•a terrorist attack or armed conflict may affect our ability to conduct business;

•diminished access to water may affect our ability to process sand;

•we may be subject to interruptions or failures in our information technology systems, including cyber-attacks;

•if we are unable to fully protect our intellectual property rights, we may suffer a loss in our competitive advantage;

•we may be adversely affected by disputes regarding intellectual property rights of third parties;

•we currently rely on a limited number of suppliers for certain equipment and materials to build our SmartSystems, and our reliance on a limited number of suppliers for such equipment and materials exposes us to risks including price and timing of delivery;

•unsatisfactory safety performance may negatively affect our customer relationships and cause us to fail to retain existing customers or attract new customers;

•we may be subject to legal claims, such as personal injury and property damage;

•a financial downturn could negatively affect us;

•our future results will suffer if we do not effectively manage our expanded operations;

•federal, state and local legislative and regulatory initiatives or mandates relating to hydraulic fracturing, such as oil and gas leasing moratoriums, and the potential for related litigation could result in increased costs, additional operating restrictions or delays for our customers, which could cause a decline in the demand for our frac sand or restrict our ability to maximize profits;

•we and our customers are subject to extensive regulations, including environmental and occupational health and safety regulations, that impose, and will continue to impose, significant costs and liabilities, and future regulations, or more stringent enforcement of existing regulations, could increase those costs and liabilities;

•we are subject to the Federal Mine Safety and Health Act of 1977, which imposes stringent health and safety standards on numerous aspects of our operations;

•our inability to acquire, maintain or renew financial assurances related to the reclamation and restoration of mining property may increase cash outlay or limit our ability to operate our processing facilities; and

•climate change legislation and regulatory initiatives could negatively affect our business.

All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other filings with the Securities and Exchange Commission (the “SEC”) and public communications. You should evaluate all forward-looking statements made in this Annual Report on Form 10-K in the context of these risks and uncertainties.

We caution users of the financial statements that the important factors referenced above may not contain all of the factors that may be important to every user. In addition, we cannot make assurances that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this Annual Report on Form 10-K are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.