Adams Resources & Energy Inc

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading Item 1A. Risk Factors included in our 2023 Form 10-K and the risk factors and other cautionary statements contained in our other SEC filings, which co. Any of these risks could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our businesses, financial con, financial condition, operating results and stock price.

Except as set forth below, there have been no material changes in our Risk Factors from those disclosed in Item 1A of our 2023 Form 10-K or our other SEC filings.

Risks Related to the Proposed Merger

The announcement and pendency of the proposed acquisition of the Company could adversely impact our business, financial condition or future results. Additional risand results of operations.

On November 11, 2024, we entered into an Agreement and Plan of Merger (the Merger Agreement) by and among the Company, Tres Energy LLC, a Texas limited liability company (Parent), and ARE Acquisition Corporation, a Delaware corporation and a direct, wholly owned subsidiary of Parent (Merger Sub), pursuant to which Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the Merger). If the Merger is consummated, our securities will be delisted from the NYSE American and deregistered under the Securities Exchange Act of 1934 as promptly as practicable after the effective time of the Merger. Uncertainty about the effect of the Merger on our employees, customers, and other parties may have an adverse effect on our business, financial condition and results of operation regardless of whether the Merger is completed. These risks and uncertainties notto our business include the following, all of which could be exacerbated by a delay in the completion of the Merger:

the impairment of our ability to attract, retain, and motivate our employees, including key personnel;

the diversion of significant management time and resources toward completion of the Merger;

difficulties maintaining relationships with currently known to us or that we currently deem to be immaterial astomers, suppliers, and other business partners;

delays or deferments of certain business decisions by our customers, suppliers and other business partners;

the inability to pursue alternative business opportunities or make appropriate changes to our business because the Merger Agreement requires us to use reasonable best efforts to conduct our business in the ordinary course and to preserve our business organization intact and maintain existing relations with key business partners and governmental entities, and refrain from taking certain actions without Parents consent prior to the completion of the Merger;

litigation related to the Merger and the costs related thereto; and

the incurrence of significant costs, expenses, and fees for professional services and other transaction costs in connection with the Merger.

42

Litigation relso may materially adversely affecating to the Merger may be filed against us and our Board of Directors, which could prevent or delay the completion of the Merger or result in the payment of damages.

Litigation relating to the Merger may be filed against us and our Board of Directors. Among other remedies, these claimants could seek damages and/or seek to enjoin the Merger and the other transactions contemplated by the Merger Agreement. The outcome of any litigation is uncertain and any such lawsuits could prevent or delay the completion of the Merger and result in significant costs. Any such actions may create uncertainty relating to the Merger and may be costly and distracting to management.

Failure to consummate the Merger within the expected timeframe or at all could adversely impact our business, financial condition or future resultsand results of operations.

The completion of the Merger is subject to the satisfaction or waiver of certain customary mutual closing conditions, including (a) the approval of our stockholders holding at least a majority of the outstanding shares of our common stock entitled to vote on the adoption of the Merger Agreement, and (b) the absence of any order, injunction, decree or law issued or enforced by any governmental authority of competent jurisdiction that prohibits, renders illegal or enjoins the consummation of the Merger. There have been no  obligation of each party to consummate the Merger is also conditioned upon certain unilateral closing conditions, including the other partys representations and warranties being accurate (subject to certain customary materiality exceptions), the other party having in all material changes in our Risk Factors from thorespects performed and complied with its covenants in the Merger Agreement and, in Parents case, the absence of a material adverse effect with respect to us. There can be no assurance that these conditions will be satisfied in a timely manner or at all or that the Merger will be completed.

If the Merger is not completed, including as a result of our stockholders failing to adopt the Merger Agreement, our stockholders will not receive any payment for their shares in connection with the Merger. Instead, we will remain an independent public company, and our shares will continue to be traded on the NYSE American stock exchange. Our ongoing business may be materially adversely affected and we would be subject to a number of risks, including the following:

we may experience negative publicity, which could have an adverse disclosed in Item 1A of our 2023 Form 10-K or our other SEC fileffect on our ongoing operations including, but not limited to, retaining and attracting customers, suppliers, and other business partners;

we would incur significant costs in future periods relating to the Merger, such as legal, accounting, financial advisor and other professional services fees, which may relate to activities that we would not have undertaken other than to complete the Merger;

we may be required to pay a cash termination fee as required under the Merger Agreement, which may require us to use available cash that would have otherwise been available for general corporate purposes or other uses and could affect the structure, pricing and terms proposed by a third party seeking to acquire or merge with us or deter such third party from making a competing acquisition proposal; and

the Merger Agreement places certain restrictions on the conduct of our business, which may have delayed or prevented us from undertakings business opportunities that, absent the Merger Agreement, we may have pursued.

If the Merger is not consummated, the risks described above may materialize and they may have a material adverse effect on our business operations, financial condition, results of operations, and stock price, especially to the extent that the current market price of our common stock reflects an assumption that the Merger will be completed.