ftek20230930

ftek20230930_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, 2023

☐	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, 2023 there were outstanding 30,385,297 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, 2023

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022	3
	Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2023 and 2022	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	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

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,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	13,483		$	23,328
Short-term investments		14,802			2,981
Accounts receivable, net		7,696			7,729
Inventories, net		325			392
Prepaid expenses and other current assets		1,041			1,395
Total current assets		37,347			35,825
Property and equipment, net of accumulated depreciation of $18,727 and $18,557, respectively		4,364			4,435
Goodwill		2,116			2,116
Other intangible assets, net of accumulated amortization of $452 and $406, respectively		376			397
Right-of-use operating lease assets, net		462			197
Long-term investments		4,883			6,360
Other assets		771			794
Total assets	$	50,319		$	50,124
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	2,872		$	2,710
Accrued liabilities:
Operating lease liabilities - current		103			125
Employee compensation		618			1,105
Other accrued liabilities		1,838			826
Total current liabilities		5,431			4,766
Operating lease liabilities - non-current		348			66
Deferred income taxes, net		177			177
Other liabilities		275			274
Total liabilities		6,231			5,283
Stockholders’ equity:
Common stock, $.01 par value, 40,000,000 shares authorized, 31,361,303 and 31,272,303 shares issued, and 30,385,297 and 30,296,297 shares outstanding, respectively		313			313
Additional paid-in capital		164,752			164,422
Accumulated deficit		(116,990	)		(115,991	)
Accumulated other comprehensive loss		(1,812	)		(1,728	)
Nil coupon perpetual loan notes		76			76
Treasury stock, at cost		(2,251	)		(2,251	)
Total stockholders’ equity		44,088			44,841
Total liabilities and stockholders’ equity	$	50,319		$	50,124

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,
	2023			2022			2023			2022
Revenues	$	7,988		$	8,017		$	20,736		$	19,920
Costs and expenses:
Cost of sales		4,376			4,345			12,323			11,280
Selling, general and administrative		2,966			3,273			9,126			9,201
Research and development		513			207			1,144			716
		7,855			7,825			22,593			21,197
Operating income (loss)		133			192			(1,857	)		(1,277	)
Interest expense		(5	)		(4	)		(15	)		(13	)
Interest income		322			92			968			101
Other income (expense), net		9			34			(95	)		158
Income (loss) before income taxes		459			314			(999	)		(1,031	)
Income tax expense		—			—			—			(9	)
Net income (loss)	$	459		$	314		$	(999	)	$	(1,040	)
Net income (loss) per common share:
Basic net income (loss) per common share	$	0.02		$	0.01		$	(0.03	)	$	(0.03	)
Diluted net income (loss) per common share	$	0.01		$	0.01		$	(0.03	)	$	(0.03	)
Weighted-average number of common shares outstanding:
Basic		30,385,000			30,296,000			30,336,000			30,287,000
Diluted		30,627,000			30,371,000			30,336,000			30,287,000

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,
	2023			2022			2023			2022
Net income (loss)	$	459		$	314		$	(999	)	$	(1,040	)
Other comprehensive (loss) income:
Foreign currency translation adjustments		(122	)		(155	)		(84	)		(447	)
Comprehensive income (loss)	$	337		$	159		$	(1,083	)	$	(1,487	)

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, 2022:

												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, 2021		30,264		$	312	$	164,199		$	(114,549	)	$	(1,604	)	$	76	$	(2,234	)	$	46,200
Net loss		—			—		—			(998	)		—			—		—			(998	)
Foreign currency translation adjustments		—			—		—			—			(70	)		—		—			(70	)
Stock compensation expense		—			—		18			—			—			—		—			18
Common shares issued upon vesting of restricted stock units		45			1		(1	)		—			—			—		—			—
Taxes paid on behalf of equity award participants		(13	)		—		—			—			—			—		(17	)		(17	)
Balance at March 31, 2022		30,296		$	313	$	164,216		$	(115,547	)	$	(1,674	)	$	76	$	(2,251	)	$	45,133
Net loss		—			—		—			(356	)		—			—		—			(356	)
Foreign currency translation adjustments		—			—		—			—			(222	)		—		—			(222	)
Stock compensation expense		—			—		28			—			—			—		—			28
Balance at June 30, 2022		30,296		$	313	$	164,244		$	(115,903	)	$	(1,896	)	$	76	$	(2,251	)	$	44,583
Net income		—			—		—			314			—			—		—			314
Foreign currency translation adjustments		—			—		—			—			(155	)		—		—			(155	)
Stock compensation expense		—			—		90			—			—			—		—			90
Balance at September 30, 2022		30,296		$	313	$	164,334		$	(115,589	)	$	(2,051	)	$	76	$	(2,251	)	$	44,832

The following summarizes the changes in total stockholders' equity for the three and nine months ended September 30, 2023:

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

)

(2,251

)

44,841

Net loss

—

SEC Form 10-Q filed by Fuel Tech Inc.