ftek20240331

ftek20240331_10q.htm

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, 2024

☐	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 jurisdiction of

incorporation of organization)

(I.R.S. Employer

Identification Number)

Fuel Tech, Inc.

27601 Bella Vista Parkway

Warrenville, IL 60555-1617

630-845-4500

www.ftek.com

(Address and telephone number of principal executive offices)

________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	FTEK	NASDAQ

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

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

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

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

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

On April 30, 2024 there were outstanding 30,385,297 shares of Common Stock, par value $0.01 per share, of the registrant.

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	1
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2024 and 2023	3
	Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2024 and 2023	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19
Item 4.	Controls and Procedures	19
PART II.	OTHER INFORMATION	20
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 6.	Exhibits	20
SIGNATURES		21

	March 31,			December 31,
	2024			2023
ASSETS
Current assets:
Cash and cash equivalents	$	11,382		$	17,578
Short-term investments		11,872			12,136
Accounts receivable, less current expected credit loss of $111 and $111, respectively		7,104			6,729
Inventories, net		537			439
Prepaid expenses and other current assets		1,295			1,439
Total current assets		32,190			38,321
Property and equipment, net of accumulated depreciation of $18,763 and $18,703, respectively		4,572			4,539
Goodwill		2,116			2,116
Other intangible assets, net of accumulated amortization of $483 and $468, respectively		343			358
Right-of-use operating lease assets, net		582			609
Long-term investments		8,879			3,664
Other assets		764			781
Total assets	$	49,446		$	50,388
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,852		$	2,421
Accrued liabilities:
Operating lease liabilities - current		105			81
Employee compensation		1,289			1,252
Other accrued liabilities		1,284			1,934
Total current liabilities		4,530			5,688
Operating lease liabilities - non-current		512			533
Deferred income taxes, net		172			172
Other liabilities		276			281
Total liabilities		5,490			6,674
Stockholders’ equity:
Common stock, $.01 par value, 40,000,000 shares authorized, 31,361,303 and 31,361,303 shares issued, and 30,385,297 and 30,385,297 shares outstanding, respectively		313			313
Additional paid-in capital		164,957			164,853
Accumulated deficit		(117,248	)		(117,529	)
Accumulated other comprehensive loss		(1,891	)		(1,748	)
Nil coupon perpetual loan notes		76			76
Treasury stock, at cost		(2,251	)		(2,251	)
Total stockholders’ equity		43,956			43,714
Total liabilities and stockholders’ equity	$	49,446		$	50,388

	Three Months Ended
	March 31,
	2024			2023
Revenues	$	4,957		$	7,287
Costs and expenses:
Cost of sales		2,928			4,482
Selling, general and administrative		3,345			3,245
Research and development		376			218
		6,649			7,945
Operating loss		(1,692	)		(658	)
Interest expense		—			(5	)
Interest income		311			339
Other income (expense), net		1,673			(90	)
Income (loss) before income taxes		292			(414	)
Income tax expense		(11	)		—
Net income (loss)	$	281		$	(414	)
Net income (loss) per common share:
Basic net income (loss) per common share	$	0.01		$	(0.01	)
Diluted net income (loss) per common share	$	0.01		$	(0.01	)
Weighted-average number of common shares outstanding:
Basic		30,385,000			30,296,000
Diluted		30,756,000			30,296,000

										Accumulated			Nil
					Additional					Other			Coupon
	Common Stock				Paid-in		Accumulated			Comprehensive			Perpetual		Treasury
	Shares		Amount		Capital		Deficit			Loss			Loan Notes		Stock			Total
Balance at December 31, 2022		30,296	$	313	$	164,422	$	(115,991	)	$	(1,728	)	$	76	$	(2,251	)	$	44,841
Net loss		—		—		—		(414	)		—			—		—			(414	)
Foreign currency translation adjustments		—		—		—		—			86			—		—			86
Stock compensation expense		—		—		89		—			—			—		—			89
Balance at March 31, 2023		30,296	$	313	$	164,511	$	(116,405	)	$	(1,642	)	$	76	$	(2,251	)	$	44,602

	As of
Held-to-maturity debt securities:	March 31, 2024			December 31, 2023
Amortized cost	$	20,751		$	15,800
Gross unrecognized gains		6			—
Gross unrecognized losses		(92	)		(86	)
Fair value	$	20,665		$	15,714

	Amortized Cost		Fair Value
Within one year	$	11,872	$	11,824
After one year through two years		8,879		8,841
Total	$	20,751	$	20,665

At January 1, 2023	$	110
Provision charged to expense		24
(Write-offs) / Recoveries		(23	)
At December 31, 2023	$	111
Provision charged to expense		—
(Write-offs) / Recoveries		—
At March 31, 2024	$	111

					Weighted- Average
	Number		Weighted-		Remaining		Aggregate
	of		Average		Contractual		Intrinsic
	Options		Exercise Price		Term		Value
Outstanding on January 1, 2024		270,500	$	3.09
Granted		—		—
Exercised		—		—
Expired or forfeited		—		—
Outstanding on March 31, 2024		270,500	$	3.09		1.31	$	11
Exercisable on March 31, 2024		270,500	$	3.09		1.31	$	11

				Weighted Average
				Grant Date
	Shares			Fair Value
Unvested restricted stock units at January 1, 2024		1,762,248		$	1.29
Granted		106,000			1.10
Forfeited		(425,100	)		1.26
Unvested restricted stock units at March 31, 2024		1,443,148		$	1.20

Exercise Price	Number Outstanding/Exercisable		Weighted Average Remaining Life in Years	Weighted Average Exercise Price
$5.10		2,500,000	2.37	$	5.10
$6.45		350,000	2.37	$	6.45
		2,850,000

	Three Months Ended
	March 31,
	2024			2023
Operating Activities
Net income (loss)	$	281		$	(414	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation		80			79
Amortization		16			11
Non-cash interest income on held-to-maturity securities		(9	)		(95	)
Stock-based compensation, net of forfeitures		104			89
Changes in operating assets and liabilities:
Accounts receivable		1,250			990
Employee retention credit receivable		(1,677	)		—
Inventory		(99	)		(116	)
Prepaid expenses, other current assets and other non-current assets		151			51
Accounts payable		(563	)		934
Accrued liabilities and other non-current liabilities		(609	)		(519	)
Net cash (used in) provided by operating activities		(1,075	)		1,010
Investing Activities
Purchases of equipment and patents		(114	)		(30	)
Purchases of debt securities		(7,641	)		(9,685	)
Maturities of debt securities		2,750			1,000
Net cash used in investing activities		(5,005	)		(8,715	)
Financing Activities
Net cash provided by financing activities		—			—
Effect of exchange rate fluctuations on cash		(116	)		75
Net decrease in cash and cash equivalents		(6,196	)		(7,630	)
Cash and cash equivalents at beginning of period		17,578			23,328
Cash and cash equivalents at end of period	$	11,382		$	15,698

	Three Months Ended
	March 31,
	2024		2023
Air Pollution Control
Technology solutions	$	1,664	$	2,982
Spare parts		199		174
Ancillary revenue		455		403
Total Air Pollution Control technology revenues		2,318		3,559
FUEL CHEM
FUEL CHEM technology solutions		2,639		3,728
Total Revenues	$	4,957	$	7,287

	Three Months Ended
	March 31,
	2024		2023
United States	$	3,595	$	5,981
Foreign Revenues
Latin America		315		—
Europe		856		579
Asia		191		727
Total Foreign Revenues		1,362		1,306
Total Revenues	$	4,957	$	7,287

	Three Months Ended
	March 31,
	2024		2023
Products transferred at a point in time	$	3,293	$	4,305
Products and services transferred over time		1,664		2,982
Total Revenues	$	4,957	$	7,287

	Air Pollution			FUEL CHEM
Three months ended March 31, 2024	Control Segment			Segment			Other			Total
Revenues from external customers	$	2,318		$	2,639		$	—		$	4,957
Cost of sales		(1,428	)		(1,500	)		—			(2,928	)
Gross margin		890			1,139			—			2,029
Selling, general and administrative		—			—			(3,345	)		(3,345	)
Research and development		—			—			(376	)		(376	)
Operating income (loss) from operations	$	890		$	1,139		$	(3,721	)	$	(1,692	)

	Air Pollution			FUEL CHEM
Three months ended March 31, 2023	Control Segment			Segment			Other			Total
Revenues from external customers	$	3,559		$	3,728		$	—		$	7,287
Cost of sales		(2,594	)		(1,888	)		—			(4,482	)
Gross margin		965			1,840			—			2,805
Selling, general and administrative		—			—			(3,245	)		(3,245	)
Research and development		—			—			(218	)		(218	)
Operating income (loss) from operations	$	965		$	1,840		$	(3,463	)	$	(658	)

a.	Exhibits (all filed herewith)
	31.1	Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act of 2002
	31.2	Certification of principal financial officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002
	32	Certification of CEO and principal financial officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002
	101.1	Inline INSXBRL Instance Document - The Instance Document does not appear in the Interactive Data File because its Inline XBRL tags are embedded within the Inline XBRL document.
	101.2	Inline SCHXBRL Taxonomy Extension Schema Document
	101.3	Inline CALXBRL Taxonomy Extension Calculation Linkbase Document
	101.4	Inline DEFXBRL Taxonomy Extension Definition Linkbase Document
	101.5	Inline LABXBRL Taxonomy Extension Label Linkbase Document
	101.6	Inline PREXBRL Taxonomy Extension Prevention Linkbase Document
	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Date: May 7, 2024	By:	/s/ Vincent J. Arnone
		Vincent J. Arnone
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: May 7, 2024	By:	/s/ Ellen T. Albrecht
		Ellen T. Albrecht
		Vice President, Chief Financial Officer and Treasurer
		(Principal Financial Officer)

SEC Form 10-Q filed by Fuel Tech Inc.