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]

Table of Contents SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________ Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2020 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 it ...