ftek20210930

ftek20210930_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

September 30, 2021

☐	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 October 31, 2021 there were outstanding 30,263,791 shares of Common Stock, par value $0.01 per share, of the registrant.

Table of Contents

FUEL TECH, INC.

Form 10-Q for the nine-month period ended September 30, 2021

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2021 and 2020	3
	Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September, 2021 and 2020	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	22
PART II.	OTHER INFORMATION	23
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 6.	Exhibits	24
SIGNATURES		25

Table of Contents

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements

FUEL TECH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)(in thousands, except share and per share data)

	September 30,			December 31,
	2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	35,161		$	10,640
Restricted cash		891			1,595
Accounts receivable, net		5,062			6,548
Inventories, net		128			97
Prepaid expenses and other current assets		1,064			2,193
Total current assets		42,306			21,073
Property and equipment, net of accumulated depreciation of $18,582 and $26,889, respectively		5,293			5,220
Goodwill		2,116			2,116
Other intangible assets, net of accumulated amortization of $871 and $757, respectively		475			553
Restricted cash		270			371
Right-of-use operating lease assets		283			394
Other assets		296			361
Total assets	$	51,039		$	30,088
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,354		$	2,353
Accrued liabilities:
Operating lease liabilities - current		128			149
Employee compensation		701			930
Other accrued liabilities		1,829			2,099
Total current liabilities		4,012			5,531
Operating lease liabilities - non-current		147			237
Long-term borrowings		—			1,556
Deferred income taxes, net		134			134
Other liabilities		302			309
Total liabilities		4,595			7,767
Stockholders’ equity:
Common stock, $.01 par value, 40,000,000 shares authorized, 31,227,300 and 25,639,702 shares issued, and 30,263,791 and 25,228,951 shares outstanding, respectively		312			262
Additional paid-in capital		164,178			140,138
Accumulated deficit		(114,305	)		(114,603	)
Accumulated other comprehensive loss		(1,583	)		(1,370	)
Nil coupon perpetual loan notes		76			76
Treasury stock, at cost		(2,234	)		(2,182	)
Total stockholders’ equity		46,444			22,321
Total liabilities and stockholders’ equity	$	51,039		$	30,088

See notes to condensed consolidated financial statements.

Table of Contents

FUEL TECH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except share and per-share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Revenues	$	7,559		$	8,155		$	17,810		$	16,334
Costs and expenses:
Cost of sales		3,840			2,249			9,150			8,299
Selling, general and administrative		2,801			3,184			8,858			9,825
Research and development		340			285			1,070			880
		6,981			5,718			19,078			19,004
Operating income (loss)		578			2,437			(1,268	)		(2,670	)
Interest expense		(5	)		(9	)		(14	)		(15	)
Interest income		1			3			4			16
Other income (expense),net		104			(55	)		1,586			83
Income (loss) before income taxes		678			2,376			308			(2,586	)
Income tax expense		—			—			(10	)		(149	)
Net income (loss)	$	678		$	2,376		$	298		$	(2,735	)
Net income (loss) per common share:
Basic net income (loss) per common share	$	0.02		$	0.10		$	0.01		$	(0.11	)
Diluted net income (loss) per common share	$	0.02		$	0.09		$	0.01		$	(0.11	)
Weighted-average number of common shares outstanding:
Basic		30,264,000			24,701,000			29,356,000			24,656,000
Diluted		30,335,000			25,120,000			29,482,000			24,656,000

See notes to condensed consolidated financial statements.

Table of Contents

FUEL TECH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2021			2020		2021			2020
Net income (loss)	$	678		$	2,376	$	298		$	(2,735	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(153	)		268		(213	)		189
Comprehensive income (loss)	$	525		$	2,644	$	85		$	(2,546	)

See notes to condensed consolidated financial statements.

Table of Contents

FUEL TECH, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)(in thousands of dollars or shares, as appropriate)

The following summarizes the changes in total stockholders' equity for the three and nine months ended September 30, 2020:

											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, 2019		24,592		$	254	$	139,560	$	(110,325	)	$	(1,778	)	$	76	$	(1,612	)	$	26,175
Net loss		—			—		—		(2,567	)		—			—		—			(2,567	)
Foreign currency translation adjustments		—			—		—		—			(231	)		—		—			(231	)
Stock compensation expense		—			—		81		—			—			—		—			81
Common shares issued upon vesting of restricted stock units		55			—		—		—			—			—		—			—
Treasury shares withheld		(11	)		—		—		—			—			—		(5	)		(5	)
Balance at March 31, 2020		24,636		$	254	$	139,641	$	(112,892	)	$	(2,009	)	$	76	$	(1,617	)	$	23,453
Net loss		—			—		—		(2,544	)		—			—		—			(2,544	)
Foreign currency translation adjustments		—			—		—		—			152			—		—			152
Stock compensation expense		—			—		69		—			—			—		—			69
Common shares issued upon vesting of restricted stock units		66			1		—		—			—			—		(1	)		—
Treasury shares withheld		(1	)		—		—		—			—			—		—			—
Balance at June 30, 2020		24,701		$	255	$	139,710	$	(115,436	)	$	(1,857	)	$	76	$	(1,618	)	$	21,130
Net loss		—			—		—		2,376			—			—		—			2,376
Foreign currency translation adjustments		—			—		—		—			268			—		—			268
Stock compensation expense		—			—		57		—			—			—		—			57
Balance at September 30, 2020		24,701		$	255	$	139,767	$	(113,060	)	$	(1,589	)	$	76	$	(1,618	)	$	23,831

The following summarizes the changes in total stockholders' equity for the three and nine months ended September 30, 2021:

Accumulated

Nil

Additional

Other

Coupon

Common Stock

Paid-in

Accumulated

Comprehensive

Perpetual

Treasury

Shares

SEC Form 10-Q filed by Fuel Tech, Inc.