Revenue Performance - Revenues for Q2 2022 were $6,368 million, an increase of $1,150 million or 22% compared to Q2 2021[87]. - The APC technology segment generated revenues of $2,738 million for Q2 2022, a 178% increase from $986 million in Q2 2021[88]. - The FUEL CHEM technology segment reported revenues of $3,630 million for Q2 2022, a decrease of $602 million or 14% from Q2 2021[89]. Gross Margin and Expenses - Consolidated gross margin for Q2 2022 was 42%, down from 50% in Q2 2021, primarily due to decreased operating segment gross margins[90]. - Selling, general and administrative expenses (SG&A) for Q2 2022 were $2,874 million, a decrease of $83 million from $2,957 million in Q2 2021, with SG&A as a percentage of revenues decreasing to 45% from 57%[92]. - Research and development expenses for Q2 2022 were $289 million, down from $315 million in Q2 2021, focusing on new product development and technologies[94]. Tax and Cash Position - The consolidated effective tax rate is projected to be approximately 0% for 2022, significantly lower than the federal income tax rate of 21%[95]. - Cash and cash equivalents as of June 30, 2022, totaled $33,298 million, with working capital of $36,953 million and no outstanding debt[99]. Investment and Backlog - The company plans to invest $10,000 million in held-to-maturity debt securities of U.S. Treasuries and U.S. Government Agency securities[107]. - The consolidated APC backlog as of June 30, 2022, was $10,547 million, with a global sales pipeline estimated between $50 million and $75 million[86]. Financing and Liabilities - Fuel Tech raised gross proceeds of $25.812 million from a private placement of 5,000,000 shares of Common Stock and 2,500,000 warrants, with associated fees of $1.783 million[110]. - The Company received $1.556 million in loan proceeds from the Paycheck Protection Program, which was fully forgiven on January 8, 2021, resulting in a reduction of non-current liabilities and recognition of other income[111]. - There was no change in the warranty liability balance during the six months ended June 30, 2022[112]. Currency Fluctuations - Fuel Tech's earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates, with no hedging contracts in place due to the immaterial nature of transactions[114].

Financial Data and Key Metrics Changes - For Q1 2022, consolidated revenues rose by 10% to $5.5 million from $5 million in Q1 2021, driven by an increase in APC segment revenue [17][6] - Consolidated gross margin was 41.4%, down from 46.9% in Q1 2021, reflecting lower gross profit margins from both operating segments [17][18] - The net loss for Q1 2022 was $998,000 or $0.03 per share, compared to net income of $398,000 or $0.01 per share in Q1 2021 [20][21] Business Line Data and Key Metrics Changes - APC revenues increased by approximately $1.3 million to $2.2 million in Q1 2022, reflecting project execution timing and revenue generation from new orders [17][6] - FUEL CHEM revenues declined to $3.4 million from $4.1 million in Q1 2021, primarily due to decreased power generation demand [17][18] - APC gross margin was 35.2%, down from 41.5% in Q1 2021, while FUEL CHEM gross margin declined from 48% to 45.5% [18][20] Market Data and Key Metrics Changes - The backlog for the APC segment rose to $9.6 million as of March 31, 2022, from $9.1 million at the end of 2021, with expectations of $6.7 million being recognized in the next 12 months [18][19] - The company is pursuing a global sales pipeline of $50 million to $75 million, with $5.3 million of new orders announced in Q1 2022 [7][6] Company Strategy and Development Direction - The company is focusing on expanding its FUEL CHEM program and exploring new applications for its chemical technology, particularly in the context of decarbonization and emissions control [9][11] - The DGI initiative is being developed with high expectations for commercialization, targeting one to two commercial applications by the end of 2022 [13][15] - The company is also monitoring regulatory changes, such as the EPA's proposed updates to the CASPER rule, which could create new opportunities for its technologies [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about revenue growth for 2022, expecting total revenues to show a modest improvement from 2021 [9][6] - The company is closely watching market dynamics and customer inquiries related to new environmental regulations, which could drive demand for its products [10][12] - Management acknowledged the challenges posed by reduced power generation demand but anticipates a seasonal increase in demand during the summer months [8][28] Other Important Information - The company reported total cash of more than $35 million and no debt as of March 31, 2022, indicating a strong financial position [20][21] - SG&A expenses remained stable at $3.1 million, with a decrease in SG&A as a percentage of revenue from 61.6% in Q1 2021 to 55.2% in Q1 2022 [20][17] Q&A Session Summary Question: Revenue cadence for the rest of the year - Management expects a general improvement in revenue, particularly in Q3, driven by chemical technologies and backlog [24][26] Question: Gross margin expectations - FUEL CHEM margins are expected to improve towards historical levels of approximately 50% as revenue increases, while APC margins are targeted between 30% to 35% for the full year [26][25] Question: Power generation demand - Management noted a decrease in base customers but anticipates an uptick in demand as summer approaches, with new customer acquisition in the FUEL CHEM segment [28][27] Question: DGI applications - The company targets one to two commercial applications for DGI by the end of 2022, focusing on smaller scale systems for various end markets [29][29] Question: Water treatment technology development - Management explained delays due to COVID-19 but is now finalizing performance testing for DGI, with expectations to go to market soon [33][32] Question: Sales initiatives and market approach - The company utilizes a combination of internal sales force and manufacturing representatives, with a focus on specific industries for water treatment [41][40]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Fuel Tech's unaudited condensed consolidated financial statements for Q1 2022, detailing balance sheets, operations, comprehensive income, equity, cash flows, and accounting notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202022%20and%20December%2031%2C%202021) Condensed Consolidated Balance Sheets (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :--------------------------------- | :------------- | :---------------- | | Total Assets | $49,621 | $49,974 | | Total Liabilities | $4,488 | $3,774 | | Total Stockholders' Equity | $45,133 | $46,200 | | Cash and cash equivalents | $34,174 | $35,893 | | Accounts receivable, net | $4,795 | $3,259 | | Total current liabilities | $3,982 | $3,223 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202022%20and%202021) Condensed Consolidated Statements of Operations (in thousands, except per-share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (YoY) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Revenues | $5,535 | $5,033 | +10.0% | | Cost of sales | $3,245 | $2,675 | +21.3% | | Operating loss | $(984) | $(1,157) | -15.0% | | Net (loss) income | $(998) | $398 | N/A (loss vs. income) | | Basic net (loss) income per common share | $(0.03) | $0.01 | N/A | | Diluted net (loss) income per common share | $(0.03) | $0.01 | N/A | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202022%20and%202021) Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Net (loss) income | $(998) | $398 | | Foreign currency translation adjustments | $(70) | $(193) | | Comprehensive (loss) income | $(1,068) | $205 | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202022%20and%202021) Changes in Total Stockholders' Equity (in thousands) | Metric | Balance at Dec 31, 2021 | Net Loss | Foreign Currency Adjustments | Stock Compensation | Taxes Paid on Equity Awards | Balance at Mar 31, 2022 | | :--------------------------------- | :---------------------- | :--------- | :--------------------------- | :----------------- | :-------------------------- | :---------------------- | | Total Stockholders' Equity | $46,200 | $(998) | $(70) | $18 | $(17) | $45,133 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202022%20and%202021) Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(1,746) | $(225) | | Net cash used in investing activities | $(53) | $(4) | | Net cash (used in) provided by financing activities | $(17) | $23,977 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(1,814) | $23,525 | | Cash, cash equivalents, and restricted cash at end of period | $35,240 | $36,131 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. General](index=9&type=section&id=1.%20General) - Fuel Tech develops and provides proprietary technologies for **air pollution control** (NOx reduction, particulate matter mitigation), **process optimization** (**FUEL CHEM**), **water treatment** (**DGI™ Dissolved Gas Infusion Systems**), and advanced engineering services, leveraging Computational Fluid Dynamics modeling[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - The company continues to face **significant risks** from the **COVID-19 pandemic**, including **reductions in demand** and **project delays**, and potential impacts from **geopolitical events** like the Russia-Ukraine conflict on **raw material prices** and **energy policy**[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Restricted Cash Reconciliation (in thousands) | Metric | March 31, 2022 | March 31, 2021 | | :--------------------------------- | :------------- | :------------- | | Cash and cash equivalents | $34,174 | $35,711 | | Restricted cash included in current assets | $1,066 | $150 | | Restricted cash included in long-term assets | $— | $270 | | Total cash, cash equivalents, and restricted cash | $35,240 | $36,131 | - Inventories, primarily equipment for resale and spare parts, are valued at the **lower of cost or net realizable value** using the **weighted-average cost method** and are periodically evaluated for obsolescence[30](index=30&type=chunk) [Note 3. Revenue](index=10&type=section&id=3.%20Revenue) Disaggregated Revenue by Product Technology (in thousands) | Product Technology | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (YoY) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Air Pollution Control technology solutions | $1,841 | $373 | +393.6% | | Total Air Pollution Control technology revenues | $2,204 | $907 | +143.0% | | FUEL CHEM technology solutions | $3,331 | $4,126 | -19.3% | | Total Revenues | $5,535 | $5,033 | +10.0% | Disaggregated Revenue by Geography (in thousands) | Geography | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (YoY) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | United States | $3,688 | $4,463 | -17.4% | | Asia | $1,374 | $120 | +1045.0% | | Total Foreign Revenues | $1,847 | $570 | +224.0% | | Total Revenues | $5,535 | $5,033 | +10.0% | - Contract assets for APC technology projects **increased from $1,277 thousand** at December 31, 2021, to **$2,222 thousand** at March 31, 2022, reflecting billing subsequent to revenue recognition. Remaining performance obligations for APC technology totaled **$9,552 thousand** as of March 31, 2022, with approximately **$7,403 thousand** expected to be recognized over the next 12 months[34](index=34&type=chunk)[38](index=38&type=chunk) [Note 4. Restructuring Activities](index=12&type=section&id=4.%20Restructuring%20Activities) - Fuel Tech is in the process of **suspending its APC business in China**, a restructuring effort initiated in **January 2019** to prioritize resource allocation and reduce costs[40](index=40&type=chunk) China Operations Financials (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenues | $1 | $11 | | Net (loss) income | $(13) | $25 | China Net Assets (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :--------------------------------- | :------------- | :---------------- | | Total assets | $1,232 | $1,235 | | Total liabilities | $98 | $92 | | Total net assets | $1,134 | $1,143 | [Note 5. Accumulated Other Comprehensive Loss](index=13&type=section&id=5.%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated Other Comprehensive Loss (in thousands) | Metric | March 31, 2022 | March 31, 2021 | | :--------------------------------- | :------------- | :------------- | | Balance at beginning of period | $(1,604) | $(1,370) | | Foreign currency translation adjustments | $(70) | $(193) | | Total accumulated other comprehensive loss | $(1,674) | $(1,563) | [Note 6. Treasury Stock](index=13&type=section&id=6.%20Treasury%20Stock) - Treasury stock **increased to 976,006 shares** (cost of **$2,251 thousand**) at March 31, 2022, from 963,509 shares (cost of **$2,234 thousand**) at December 31, 2021, due to shares withheld for employee tax obligations on vested restricted stock units[44](index=44&type=chunk) [Note 7. Earnings per Share](index=13&type=section&id=7.%20Earnings%20per%20Share) Weighted-Average Shares Outstanding | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Basic weighted-average shares | 30,267,000 | 27,510,000 | | Diluted weighted-average shares | 30,267,000 | 27,737,000 | - For Q1 2022, basic and diluted EPS were both **$(0.03)** because all outstanding stock awards, warrants, and convertible loan notes were considered **anti-dilutive** due to the net loss[45](index=45&type=chunk) [Note 8. Stock-Based Compensation](index=14&type=section&id=8.%20Stock-Based%20Compensation) - Fuel Tech's Incentive Plan allows for various stock-based awards, with **2,616,298 shares available** as of March 31, 2022[48](index=48&type=chunk) Stock-Based Compensation Expense (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Stock options and restricted stock units, net of forfeited | $18 | $20 | - As of March 31, 2022, there was **no unrecognized compensation cost** related to non-vested stock options or restricted stock units[53](index=53&type=chunk)[54](index=54&type=chunk) [Note 9. Warrants](index=15&type=section&id=9.%20Warrants) Warrants Outstanding at March 31, 2022 | Range of Exercise Price | Number Outstanding/Exercisable | Weighted Average Remaining Life in Years | Weighted Average Exercise Price | | :---------------------- | :----------------------------- | :--------------------------------------- | :------------------------------ | | $5.10 | 2,500,000 | 4.37 | $5.10 | | $6.45 | 350,000 | 4.37 | $6.45 | | Total | 2,850,000 | | | [Note 10. Debt Financing](index=16&type=section&id=10.%20Debt%20Financing) - The company received a **$1,556 thousand Paycheck Protection Program (PPP) loan** in April 2020, which was **fully forgiven** by the SBA on January 8, 2021, and recorded as other income in the Condensed Consolidated Statement of Operations[58](index=58&type=chunk)[59](index=59&type=chunk) [Note 11. Business Segment and Geographic Financial Data](index=16&type=section&id=11.%20Business%20Segment%20and%20Geographic%20Financial%20Data) - Fuel Tech operates in **two reportable segments**: **Air Pollution Control** (NOx reduction, particulate matter control) and **FUEL CHEM** (chemical processes for boiler optimization)[62](index=62&type=chunk) Segment Net Sales and Gross Margin (in thousands) | Metric | APC Segment (Q1 2022) | FUEL CHEM Segment (Q1 2022) | Total (Q1 2022) | APC Segment (Q1 2021) | FUEL CHEM Segment (Q1 2021) | Total (Q1 2021) | | :--------------------------------- | :-------------------- | :-------------------- | :-------------- | :-------------------- | :-------------------- | :-------------- | | Revenues from external customers | $2,204 | $3,331 | $5,535 | $907 | $4,126 | $5,033 | | Gross margin | $775 | $1,515 | $2,290 | $376 | $1,982 | $2,358 | | Operating income (loss) from operations | $775 | $1,515 | $(984) | $376 | $1,982 | $(1,157) | Geographic Revenues and Assets (in thousands) | Metric | March 31, 2022 | March 31, 2021 | December 31, 2021 | | :--------------------------------- | :------------- | :------------- | :---------------- | | Revenues - United States | $3,688 | $4,463 | N/A | | Revenues - Foreign | $1,847 | $570 | N/A | | Total Revenues | $5,535 | $5,033 | N/A | | Assets - United States | $46,142 | N/A | $46,271 | | Assets - Foreign | $3,479 | N/A | $3,703 | | Total Assets | $49,621 | N/A | $49,974 | [Note 12. Accrued Liabilities](index=18&type=section&id=12.%20Accrued%20Liabilities) Other Accrued Liabilities (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :--------------------------------- | :------------- | :---------------- | | Contract liabilities | $522 | $390 | | Other accrued liabilities | $477 | $471 | | Total other accrued liabilities | $999 | $861 | [Note 13. Commitments and Contingencies](index=18&type=section&id=13.%20Commitments%20and%20Contingencies) - Fuel Tech records liabilities for **probable and estimable contingent losses** and discloses reasonably possible material losses, but management believes **no pending loss contingencies will materially affect its financial position or results**[68](index=68&type=chunk)[69](index=69&type=chunk) - The warranty liability balance remained **unchanged at $159 thousand** at March 31, 2022, and December 31, 2021, based on historical claims analysis[71](index=71&type=chunk) [Note 14. Income Taxes](index=18&type=section&id=14.%20Income%20Taxes) - The company's effective tax rate was **0.0% for Q1 2022 and Q1 2021**, significantly lower than the **21% federal statutory rate**, primarily due to a **full valuation allowance** on deferred tax assets in the U.S., China, and Italy[72](index=72&type=chunk) [Note 15. Subsequent Events](index=19&type=section&id=15.%20Subsequent%20Events) - On April 6, 2022, Fuel Tech entered into a **2022 Executive Performance RSU Award Agreement**, where officers can earn RSUs based on achieving at least **$1 million in 2022 operating income**, with awards vesting over three years[74](index=74&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion of Fuel Tech's Q1 2022 financial condition and results, covering operational environment, COVID-19, segment performance, revenue, costs, and liquidity [Overview](index=20&type=section&id=Overview) - **Q1 2022 was challenging** due to the shift from **coal-fired to gas-fired and renewable energy plants**, and ongoing **COVID-19 impacts**[76](index=76&type=chunk) - Fuel Tech is investing in new **water pollution control and treatment technologies** and expects **cost control efforts** and diminishing pandemic effects to lead to an **improved market outlook**[76](index=76&type=chunk) [COVID-19 Pandemic and Geopolitical Events](index=20&type=section&id=COVID-19%20Pandemic%20and%20Geopolitical%20Events) - The **COVID-19 pandemic** continues to pose **significant risks**, causing **reductions in demand** and **project delays** due to customer/supplier distress and market volatility[77](index=77&type=chunk) - **Geopolitical events**, specifically the **Russia-Ukraine conflict**, may impact new/existing projects, **raw material/energy prices**, and regulatory policy, with the ultimate effects on the company being **highly uncertain**[77](index=77&type=chunk) [Key Operating Factors](index=20&type=section&id=Key%20Operating%20Factors) - **FUEL CHEM segment revenues and operating profits declined** in Q1 2022 due to a **permanent plant retirement** and **reduced customer demand**[78](index=78&type=chunk) - The Air Pollution Control (APC) business **improved significantly in Q1 2022** due to project execution and new orders, with a consolidated APC backlog of **$9,552 thousand** and a global sales pipeline of **$50-75 million**[79](index=79&type=chunk)[81](index=81&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) [Revenues](index=20&type=section&id=Revenues) Revenue Performance (in thousands) | Segment | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (YoY) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Total Revenues | $5,535 | $5,033 | +10.0% | | APC technology segment revenues | $2,204 | $907 | +143.0% | | FUEL CHEM® technology segment revenues | $3,331 | $4,126 | -19.3% | [Cost of sales and gross margin](index=21&type=section&id=Cost%20of%20sales%20and%20gross%20margin) Gross Margin Performance | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (YoY) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Consolidated gross margin percentage | 41% | 47% | -6 percentage points | | APC gross margin | 35% | 41% | -6 percentage points | | FUEL CHEM gross margin | 45% | 48% | -3 percentage points | [Selling, general and administrative](index=21&type=section&id=Selling%2C%20general%20and%20administrative) SG&A Expenses (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (YoY) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | SG&A expenses | $3,054 | $3,100 | -1.5% | | SG&A as a percentage of revenues | 55% | 62% | -7 percentage points | [Research and development](index=21&type=section&id=Research%20and%20development) R&D Expenses (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (YoY) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | R&D expenses | $220 | $415 | -47.0% | - R&D efforts are focused on new product development for commercial applications outside traditional markets, including **DGI™ Dissolved Gas Infusion Systems** for water and wastewater treatment, aiming for **reduced energy and installation costs**[85](index=85&type=chunk) [Income tax](index=21&type=section&id=Income%20tax) - Income tax expense was **$0 for Q1 2022 and Q1 2021**, with a projected **0% effective tax rate for 2022**, mainly due to a **full valuation allowance** on deferred tax assets in the U.S., China, and Italy[86](index=86&type=chunk) [Other (expense) income, net](index=21&type=section&id=Other%20%28expense%29%20income%2C%20net) Other (Expense) Income, Net (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (YoY) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Other (expense) income, net | $(10) | $1,558 | -100.6% | - The **significant decrease in other income** was primarily due to the **forgiveness of the $1,556 thousand Paycheck Protection Program Loan** (plus **$10 thousand accrued interest**) in Q1 2021, which did not recur in Q1 2022[87](index=87&type=chunk) [Liquidity and Sources of Capital](index=21&type=section&id=Liquidity%20and%20Sources%20of%20Capital) - Fuel Tech had a **net loss of $984 thousand** and **used $1,746 thousand in operating cash** in Q1 2022[88](index=88&type=chunk) - As of March 31, 2022, the company had **$35,240 thousand in cash** (including restricted cash) and **$37,474 thousand in working capital**, which management believes is adequate to fund planned operations for the next 12 months[89](index=89&type=chunk)[94](index=94&type=chunk) - Operating activities **used $1,746 thousand cash in Q1 2022**, primarily due to increased accounts receivable and net loss, while Q1 2021 **used $225 thousand cash**, impacted by the PPP loan forgiveness. Financing activities **used $17 thousand in Q1 2022** (taxes on equity awards) compared to **providing $23,977 thousand in Q1 2021** (private placement proceeds)[90](index=90&type=chunk)[91](index=91&type=chunk)[93](index=93&type=chunk) [Contingencies and Contractual Obligations](index=23&type=section&id=Contingencies%20and%20Contractual%20Obligations) - The warranty liability balance remained **unchanged during Q1 2022**, and management does not believe any pending loss contingencies will **materially impact the company's financial position, results of operations, or cash flows**[99](index=99&type=chunk)[69](index=69&type=chunk) [Forward-Looking Statements](index=23&type=section&id=Forward-Looking%20Statements) - The report contains **forward-looking statements**, which are subject to **risks and uncertainties** detailed in the company's Form 10-K, and Fuel Tech disclaims any obligation to update them[100](index=100&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Addresses Fuel Tech's exposure to market risks, primarily foreign currency exchange rate fluctuations, noting no hedging instruments are used due to immateriality - Fuel Tech's earnings and cash flow are subject to **foreign currency exchange rate fluctuations**, but the company does not use hedging instruments due to the **immaterial nature of the transactions**[101](index=101&type=chunk) [Item 4. Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Details evaluation of Fuel Tech's disclosure controls and procedures, confirming effectiveness and reporting no material changes in internal control [Evaluation of Disclosure Controls and Procedures](index=23&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Fuel Tech's disclosure controls and procedures were evaluated by the **CEO and principal financial officer** as of March 31, 2022, and deemed **effective** in ensuring timely and accurate reporting[102](index=102&type=chunk) [Changes in Internal Control over Financial Reporting](index=23&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - **No material changes in internal control over financial reporting** occurred during the quarter ended March 31, 2022[103](index=103&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) Fuel Tech is not involved in any legal proceedings expected to have a material adverse effect on its business, financial condition, or results - Fuel Tech is not currently involved in any litigation expected to have a **material adverse effect** on its business, financial condition, results of operations, or prospects[105](index=105&type=chunk) [Item 1A. Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) Risk factors from the Annual Report on Form 10-K for fiscal year ended December 31, 2021, have not materially changed - The risk factors from the Annual Report on Form 10-K for fiscal year ended December 31, 2021, have **not materially changed**[106](index=106&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period - **No unregistered sales of equity securities or use of proceeds** were reported[107](index=107&type=chunk) [Item 6. Exhibits](index=25&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including CEO/CFO certifications and Inline XBRL documents - The exhibits include **CEO and CFO certifications** (31.1, 31.2, 32), various **Inline XBRL documents** (101.1-101.6), and the **Cover Page Interactive Data File** (104)[110](index=110&type=chunk) SIGNATURES [Signatures](index=26&type=section&id=Signatures) Contains official signatures for the Form 10-Q, certifying its submission by the registrant's authorized officers - The report was signed on **May 10, 2022**, by **Vincent J. Arnone (President and CEO)** and **Ellen T. Albrecht (Acting Treasurer and Controller)**[113](index=113&type=chunk)

Financial Performance - Revenues for the year ended December 31, 2021, were $24,261 million, an increase of $1,711 million or 8% compared to 2020[128]. - U.S. revenues increased by $893 million or 5%, while international revenues increased by $818 million or 21%[129]. - Revenues for the FUEL CHEM technology segment were $17,365 million, an increase of $3,372 million or 24% compared to 2020[131]. - Consolidated gross margin percentage increased to 49% in 2021 from 47% in 2020[132]. - The net income for 2021 was $54,000, compared to a net loss of $4,278,000 in 2020, showing a significant turnaround[169]. - Total revenues for Fuel Tech in 2021 were $23,979,000, an increase from $20,000,000 in 2020, with international revenues contributing $4,746,000, representing 20% of total revenues[178]. - Total revenues for the year ended December 31, 2021, were $24,261 million, an increase of 7.6% from $22,550 million in 2020[246]. Cost Management - In 2021, the Company reduced selling, general, and administrative expenses by 11% compared to fiscal 2020[86]. - Selling, general and administrative expenses decreased by $1,545 million or 11% from 2020 to 2021[134]. - Research and development expenses increased to $1,332 million in 2021 from $1,177 million in 2020, focusing on new product development[135]. - The company reported a stock compensation expense of $82,000 in 2021, down from $290,000 in 2020, reflecting cost management efforts[173]. - Costs related to the defined contribution retirement savings plan were $206 million in 2021, down from $222 million in 2020[236]. Cash Flow and Liquidity - Cash and cash equivalents at December 31, 2021, were $35,893 million, up from $10,640 million at the end of 2020[140]. - Operating activities provided cash of $761 million for the year ended December 31, 2021, primarily due to a decrease in accounts receivable balances[141]. - The company experienced a net cash increase of $24,448,000 in 2021, ending the year with cash, cash equivalents, and restricted cash totaling $37,054,000[173]. - The company has sufficient cash and working capital to operate its base Air Pollution Control and FUEL CHEM businesses for the next 12 months[145]. - Total current assets increased to $41,465 in 2021 from $21,073 in 2020, reflecting a significant improvement in liquidity[165]. Project and Contract Management - The APC business faced project delays and cancellations, resulting in a consolidated backlog of $9,119 and a global sales pipeline of $50-75 million[90]. - As of December 31, 2021, contract assets for APC technology projects were approximately $1,277, down from $2,079 in 2020[108]. - Contract liabilities decreased to $390 in 2021 from $850 in 2020, indicating improved cash flow management[109]. - Remaining performance obligations amounted to $9,119 million as of December 31, 2021, with an expected revenue recognition of approximately $5,608 million over the next 12 months[252]. Investment and Technology Development - The Company continues to invest in new technologies for water pollution control and treatment, expanding its product offerings[86]. - Fuel Tech's research and development efforts focus on air pollution control technologies, with significant investments made to enhance its proprietary portfolio[177]. - The company has installed over 1,200 units with APC technology, providing performance guarantees based on operational conditions[221]. Shareholder and Stock Information - The company issued 5,000,000 shares of common stock and 2,500,000 warrants in a private placement, generating gross proceeds of $25,812 million[273]. - The calculated fair value allocated to the warrants is $7,337 million, recorded as Additional paid in capital[275]. - As of December 31, 2021, there were 434,500 stock options outstanding with a weighted-average exercise price of $3.05[283]. - The company had basic weighted-average shares of 29,585,000 in 2021, up from 24,691,000 in 2020, indicating an increase in share count[238]. Tax and Deferred Assets - The effective income tax rate for 2021 was 20.6%, compared to (1.4)% in 2020[259]. - Deferred tax assets totaled $14,916 million as of December 31, 2021, down from $15,963 million in 2020[259]. - As of December 31, 2021, the company has approximately $27,701 million of U.S. net operating loss carryforwards available to offset future U.S. taxable income[266].

Financial Data and Key Metrics Changes - Consolidated revenues for Q3 2021 declined to $7.6 million from $8.2 million in Q3 2020, reflecting higher revenues in the FUEL CHEM segment offset by a decline in the APC segment [18] - Net income was $678,000, or $0.02 per diluted share, compared to net income of $2.4 million, or $0.09 per diluted share in Q3 2020, which included a $2.6 million insurance settlement [22] - Adjusted EBITDA was $0.9 million in Q3 2021 compared to $2.7 million in the same period last year [22] - Consolidated gross margin for Q3 2021 was 49.2% of revenues, compared to 72.4% in Q3 2020, including the insurance settlement [20] Business Line Data and Key Metrics Changes - FUEL CHEM segment revenues increased to $5.6 million from $5.3 million in Q3 2020, benefiting from the current installed base and higher power demand [18][8] - APC segment revenues declined to $1.9 million in Q3 2021 from $2.9 million in Q3 2020, primarily due to project delays and cancellations related to the COVID-19 pandemic [19] - APC gross margin in Q3 2021 was $810,000 or 41.7% of revenue, compared to a significantly inflated margin in Q3 2020 due to an insurance settlement [19] Market Data and Key Metrics Changes - The company reported a backlog of $8.2 million in the APC segment as of September 30, 2021, which includes $4.5 million of new contract awards announced in Q3 2021 [20] - The global sales pipeline for the APC segment increased to $50 million to $75 million from $40 million to $50 million [11] Company Strategy and Development Direction - The company is broadening its portfolio of environmental remediation solutions, particularly with the DGI business focused on wastewater treatment [9] - The company is pursuing new opportunities both domestically and internationally for its FUEL CHEM technology, including addressing emissions from high sulfur fuel oil in Mexico [10] - The company is monitoring the infrastructure bill in Congress, which may include options beyond traditional renewable energy, potentially benefiting Fuel Tech [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the next 12 to 18 months, noting an increase in contract opportunities and larger dollar value contracts [36] - The company anticipates some pressure on the FUEL CHEM business due to the planned shutdown of a long-term installation [9] - Management indicated that they do not expect dramatic increases in SG&A expenses unless resources are added to support the DGI initiative [35] Other Important Information - Cash and cash equivalents were reported at $35.2 million as of September 30, 2021, with no debt [23] - SG&A expenses declined by 12% compared to Q3 2020, reflecting decreases in employee-related costs [21] Q&A Session Summary Question: Impact of FUEL CHEM customer shutting down operations - Management expects approximately a 3% to 5% impact in revenues from the shutdown of one particular customer [30] Question: Potential to make up for lost revenues - Management indicated that there are opportunities to recover the lost revenue from other customers, with visibility into potential new contracts [31] Question: Expectations for operating costs moving forward - Management expects SG&A expenses to remain stable, with potential increases only if resources are added for the DGI initiative [35] Question: Prospects for revenue growth in the next 12 to 18 months - Management noted an increase in larger contract opportunities, which had not been seen in the past two years due to COVID-19 [36]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to______. Commission file number: 001-33059 FUEL TECH, INC. (Exact name of registrant as specified in its charter) Delaware 20-5657551 (State or ot ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited financial statements, management's analysis, market risk disclosures, and control procedures [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2021, with comparisons to 2020 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The company's financial position significantly strengthened by June 30, 2021, driven by increased cash and equity following a private placement Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $36,194 | $10,640 | | **Total Assets** | $50,061 | $30,088 | | **Total Liabilities** | $4,163 | $7,767 | | **Total Stockholders' Equity** | $45,898 | $22,321 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenues grew 25% year-over-year for the six months ended June 30, 2021, with a dramatic improvement in net loss due to a PPP loan forgiveness Statement of Operations Summary (Six Months Ended June 30, in thousands) | Metric | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Revenues | $10,251 | $8,179 | +25.3% | | Operating Loss | $(1,846) | $(5,107) | Improvement | | Net Loss | $(380) | $(5,111) | Improvement | | Diluted Net Loss per Share | $(0.01) | $(0.21) | Improvement | Statement of Operations Summary (Three Months Ended June 30, in thousands) | Metric | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Revenues | $5,218 | $4,401 | +18.6% | | Operating Loss | $(689) | $(2,424) | Improvement | | Net Loss | $(778) | $(2,544) | Improvement | | Diluted Net Loss per Share | $(0.03) | $(0.10) | Improvement | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities provided cash, and a private placement significantly boosted the company's cash balance to $36.6 million Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $229 | $(3,414) | | Net cash used in investing activities | $(237) | $(122) | | Net cash provided by financing activities | $23,977 | $1,550 | | **Net increase (decrease) in cash** | **$23,956** | **$(2,244)** | - Financing activities were dominated by **$25.8 million** in proceeds from a private placement of common stock, net of **$1.8 million** in costs[17](index=17&type=chunk) - Operating cash flow benefited from a non-cash gain of **$1.56 million** on the forgiveness of a Paycheck Protection Plan (PPP) loan[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail a February 2021 private placement, January 2021 PPP loan forgiveness, and segment revenue performance - On February 11, 2021, the company completed a private placement, selling **5,000,000 shares** of common stock and **2,500,000 warrants**, generating gross proceeds of **$25.8 million**[26](index=26&type=chunk) - The company received full forgiveness of its **$1.56 million** Paycheck Protection Program (PPP) loan on January 8, 2021, which was recognized as other income[81](index=81&type=chunk)[82](index=82&type=chunk) Revenue by Segment (Six Months Ended June 30, in thousands) | Segment | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Air Pollution Control Technology | $1,893 | $3,133 | -39.6% | | FUEL CHEM | $8,358 | $5,046 | +65.6% | | **Total Revenues** | **$10,251** | **$8,179** | **+25.3%** | - Remaining performance obligations, representing booked orders for future work, totaled **$4.9 million** as of June 30, 2021, primarily from the APC segment[54](index=54&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses revenue growth driven by the FUEL CHEM segment, improved gross margin, and strengthened liquidity - The FUEL CHEM segment's revenue increased by **72% in Q2** and **66% in the first half of 2021**, driven by new accounts, increased power demand, and recovery from COVID-19 impacts[114](index=114&type=chunk) - The Air Pollution Control (APC) segment's revenue decreased by **49% in Q2** and **40% in the first half of 2021**, attributed to the timing of project execution and a decline in backlog[112](index=112&type=chunk) - Consolidated gross margin for the first six months of 2021 increased to **48%** from **26% in 2020**, primarily due to the higher proportion of revenue from the high-margin FUEL CHEM segment[115](index=115&type=chunk) - The company's cash balance was **$36.6 million** as of June 30, 2021, and management believes it has sufficient working capital to operate for the next 12 months[120](index=120&type=chunk)[121](index=121&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company identifies immaterial foreign currency and interest rate risks, stating no hedging instruments are used - The company's earnings and cash flow are subject to fluctuations from foreign currency exchange rates, but the risk is considered immaterial[127](index=127&type=chunk) - Exposure to interest rate changes is primarily from its debt facility, but a hypothetical **100 basis point** adverse move would not have a materially adverse effect on interest expense[128](index=128&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective, with no material changes to internal controls over financial reporting during the quarter - The Chief Executive Officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[129](index=129&type=chunk) - There were no material changes in the company's internal control over financial reporting during the quarter[130](index=130&type=chunk) [PART II. OTHER INFORMATION](index=30&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, unregistered equity sales, and exhibits [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any litigation expected to materially affect its business, financial condition, or operations - The company is not currently involved in any litigation where an adverse outcome is expected to have a material effect on its business[132](index=132&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - The risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020, have not materially changed[133](index=133&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds for the period - The company reported 'None' for this item, indicating no unregistered sales of equity securities during the period[134](index=134&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed with the report include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and Inline XBRL data files[137](index=137&type=chunk) [Signatures](index=32&type=section&id=SIGNATURES) The report was duly signed on August 10, 2021, by the President and Chief Executive Officer, and Acting Treasurer and Controller - The report was duly signed on August 10, 2021, by Vincent J. Arnone, President and Chief Executive Officer, and Ellen T. Albrecht, Acting Treasurer and Controller[140](index=140&type=chunk)

Fuel Tech, Inc. (NASDAQ:FTEK) Q1 2021 Earnings Conference Call May 13, 2021 10:00 AM ET Company Participants Devin Sullivan - Investor Relations Vince Arnone - President and Chief Executive Officer Ellen Albrecht - Principal Financial Officer Conference Call Participants Sameer Joshi - H.C. Wainwright Pete Enderlin - MAZ Partners George Gaspar - Private Investor Operator Greetings. Welcome to the Fuel Tech First Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to______. Commission file number: 001-33059 FUEL TECH, INC. (Exact name of registrant as specified in its charter) Delaware 20-5657551 (State or other ...

Financial Data and Key Metrics Changes - Consolidated revenues for Q4 2020 increased by 26.5% to $6.2 million from $4.9 million in Q4 2019, reflecting higher revenue from both APC and FUEL CHEM segments [40] - Consolidated gross margin for Q4 2020 was 41.9%, compared to 0.1% in Q4 2019, which was impacted by a $2 million warranty charge [44] - Net loss from continuing operations for Q4 2020 was $1.5 million, or a loss of $0.07 per share, compared to a net loss of $2.3 million, or $0.10 per share, in Q4 2019 [47] Business Line Data and Key Metrics Changes - APC segment revenues increased to $2.5 million from $1.7 million, primarily due to project timing and completions [41] - FUEL CHEM segment revenues rose to $3.7 million from $3.2 million, driven by the installation of equipment on new coal-fired units and recovery of more normalized run rates [43] - APC backlog at the end of Q4 2020 was $5.3 million, with $4.9 million being domestic [41] Market Data and Key Metrics Changes - The global sales pipeline is estimated at approximately $40 million to $50 million, with about $25 million domestic and $15 million international, primarily in Europe [84] - The company is monitoring state-level activities related to new environmental guidelines that may create opportunities for retrofitting emissions control technology [20] Company Strategy and Development Direction - The company aims to return its base business segments to profitability while focusing on the commercial development of DGI Technology [15][36] - Plans include maintaining a lean operating structure and aligning SG&A closely with anticipated growth, with annual breakeven revenue estimated between $25 million and $30 million [38] - The company is exploring strategic solutions to expedite market discovery of DGI Technology and assess business landscapes for APC and FUEL CHEM segments [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the outlook for 2021, despite challenges related to contract awards and the lingering impact of COVID-19 [10][11] - The company expects an increase in APC project award activity and moderate revenue improvement compared to 2020 [22][36] - Management is closely watching the actions of the Biden administration but does not anticipate immediate material impacts on business activities [20] Other Important Information - The company raised gross proceeds of $25.8 million in February 2021, resulting in approximately $37 million in cash and no debt [12] - The company has a cumulative net operating loss of $25.5 million, which is expected to result in minimal income tax expense for 2021 [52] Q&A Session Summary Question: What are the particular areas of focus for 2021? - The company is focusing on the development and commercialization of DGI Technology and returning base business segments to profitability [59] Question: What is the visibility in terms of timeline for revenues from Mexico? - The company expects to see some revenues from Mexico in 2021, but the exact timeline is uncertain [65][70] Question: How does the sales pipeline compare to previous years? - The current sales pipeline is slightly smaller than historically, lacking larger contract value opportunities [74][76] Question: What is the current reserve for doubtful accounts related to China? - The reserve for doubtful accounts in China is approximately $1 million against a total possible collectability of about $2 million [100][101]