What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-04 compared with 2024-03-11 · 136 added, 97 removed, 922 unchanged (20% of the section changed)

1 unchanged sentence

Report of Independent Registered Public Accounting Firm

Stockholders and the Board of Directors of Fuel Tech, Inc.

To the Stockholders and the Board of Directors of Fuel Tech, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Fuel Tech, Inc.

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

and its subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

60 unchanged sentences

Short-term investments

10,184 12,136

Accounts receivable, less current expected credit loss of $ 106 and $ 111 , respectively

42 unchanged sentences

For the years ended December 31,

$ 25,133 $ 27,081

Costs and expenses:

Cost of sales

14,510 15,425

Selling, general and administrative

13,761 12,803

Research and development

Total costs and expenses

29,835 29,739

Operating loss

( 4,702 ) ( 2,658 )

Interest expense

Interest income

Other expense, net

Other income (expense), net

Loss before income taxes

( 1,866 ) ( 1,469 )

Income tax expense

( 77 ) ( 69 )

$ ( 1,943 ) $ ( 1,538 )

Net loss per common share:

Basic net loss per common share

$ ( 0.06 ) $ ( 0.05 )

Diluted net loss per common share

$ ( 0.06 ) $ ( 0.05 )

Weighted-average number of common shares outstanding:

30,572,000 30,348,000

See notes to consolidated financial statements.

3 unchanged sentences

For the years ended December 31,

$ ( 1,943 ) $ ( 1,538 )

Other comprehensive loss:

Foreign currency translation adjustments

( 167 ) ( 20 )

Total other comprehensive loss

( 167 ) ( 20 )

Comprehensive loss

$ ( 2,110 ) $ ( 1,558 )

See notes to consolidated financial statements.

3 unchanged sentences

Additional Paid-in

Accumulated Other Comprehensive

Nil Coupon Perpetual Loan

Accumulated Other Comprehensive Nil Coupon Perpetual Loan

Balance at December 31, 2022

30,296 313 164,422 ( 115,991 ) ( 1,728 ) 76 ( 2,251 ) $ 44,841

— — — ( 1,538 ) — — — ( 1,538 )

Foreign currency translation adjustments

— — — — ( 20 ) — — ( 20 )

Stock compensation expense

Common stock issued upon vesting of restricted stock units

Treasury shares withheld

— — 389 — — — — 389

Exercise of stock options

44 — 42 — — — — 42

Common shares issued upon vesting of restricted stock units

45 — — — — — — —

Balance at December 31, 2023

30,385 313 164,853 ( 117,529 ) ( 1,748 ) 76 ( 2,251 ) $ 43,714

— — — ( 1,943 ) — — — ( 1,943 )

Foreign currency translation adjustments

— — — — ( 167 ) — — ( 167 )

Stock compensation expense

Exercise of stock options

— — 446 — — — — 446

Common shares issued upon vesting of restricted stock units

406 4 ( 4 ) — — — — —

Taxes paid on behalf of equity award participants

( 83 ) — — — — — ( 95 ) ( 95 )

Balance at December 31, 2024

30,708 $ 317 $ 165,295 $ ( 119,472 ) $ ( 1,915 ) $ 76 $ ( 2,346 ) $ 41,955

See notes to consolidated financial statements.

4 unchanged sentences

OPERATING ACTIVITIES

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

$ ( 1,943 ) $ ( 1,538 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Loss on sale of equipment

Non-cash interest income on held-to-maturity securities

( 132 ) ( 433 )

Provision for credit losses, net of recoveries

3 unchanged sentences

Accounts receivable

( 1,127 ) 1,039

Employee retention credit receivable

Prepaid expenses, other current assets and other non-current assets

1 unchanged sentence

Accrued liabilities and other non-current liabilities

Net cash provided by (used in) operating activities

( 312 ) 1,239

Net cash (used in) provided by operating activities

( 3,433 ) 696

INVESTING ACTIVITIES

Purchases of equipment and patents

( 378 ) ( 418 )

Purchases of debt securities

( 18,060 ) ( 14,026 )

Maturities of debt securities

Net cash used in investing activities

( 5,443 ) ( 6,444 )

FINANCING ACTIVITIES

1 unchanged sentence

Taxes paid on behalf of equity award participants

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

Effect of exchange rate fluctuations on cash

( 97 ) ( 44 )

Net decrease in cash and cash equivalents

( 9,068 ) ( 5,750 )

Cash and cash equivalents at beginning of period

17,578 23,328

Cash and cash equivalents at end of period

$ 8,510 $ 17,578

Supplemental Cash Flow Information:

Cash paid for:

Cash income taxes paid, net

Non-cash transfer from other non-current assets to property and equipment

See notes to consolidated financial statements.

17 unchanged sentences

Foreign currency changes did not have a material impact on the calculation of these percentages.

We have foreign offices in Beijing, China and Gallarate, Italy.

We have a foreign office in Gallarate, Italy.

Basis of Presentation

4 unchanged sentences

All intercompany transactions have been eliminated.

Geopolitical and Unexpected Events

Management cannot predict the full impact of geopolitical and unexpected events which may impact new or existing projects and prices and availability of raw materials, energy and other materials.

Political, Geopolitical and Unexpected Events

Management cannot predict the full impact of political, geopolitical and unexpected events which may impact new or existing projects and prices and availability of raw materials, energy and other materials.

These events may also impact energy and regulatory policy nationally or regionally for the impacted regions.

36 unchanged sentences

$ 8,510 $ 17,578

In June 2022, the Board of Directors approved a plan to invest up to $ 10,000 of excess capital in debt securities, or held in money market funds until such investments can be made, with BMO Harris Bank N.A (BMO Harris).

In December 2022, the Board of Directors approved an additional transfer of $ 10,000 of excess capital into the investment account.

The Company's investment policy provides for $ 20,000 in funds at BMO Harris Bank (BMO Harris) to be invested in held-to-maturity debt securities.

A portion of the funds invested are restricted as collateral under the Investment Collateral Security agreement (see Note 11 ).

At December 31, 2023 , the amount of funds collateralized under the Investment Collateral Security agreeme nt is $ 1,356 relating to existing standby letters of credit that is comprised of $ 904 with varying maturity dates and expire no later tha n November 30, 2025.

At December 31, 2024 , the amount of funds collateralized under the Investment Collateral Security agreeme nt is $ 2,790 relating to existing standby letters of credit that is comprised of $ 1,860 with varying maturity dates and expire no later tha n June 30, 2026.

Our investments in debt securities consist of United States (US) Treasury securities, including Notes, Bonds, and Bills, and US Government Agency securities, which are designated as held-to-maturity (HTM) and stated at amortized cost.

The Company has the positive intent and ability to hold these investments to maturity and does not expect to sell any debt securities before maturity to settle an obligation under the Investment Collateral Security agreement.

The maturities of our HTM investments range from three to thirty-six months.

The typical maturities of our HTM investments range from three to thirty-six months.

HTM debt investments with original maturities of approximately three months or less from the date of purchase are classified within cash and cash equivalents.

18 unchanged sentences

10,875 10,876

$ 21,059 $ 21,076

Foreign Currency Risk Management

7 unchanged sentences

Allowance for Credit Losses

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016 - 13, Financial Instruments - Credit Losses (Topic 326 ):

Measurement of Credit Losses on Financial Instruments, and in November 2019, the FASB issued ASU 2019 - 10, Financial Instruments - Credit Losses (Topic 326 ), Derivatives and Hedging (Topic 815 ), and Leases (Topic 842 ).

This guidance requires the measurement of all expected losses based on historical experience, current conditions and reasonable and supportable forecasts.

For trade receivables and other financial instruments, we are required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable.

The Company adopted these ASUs on January 1, 2023 using the prospective method.

Application of the amendments did not require a cumulative-effect adjustment to retained earnings as of the effective date and did not have a material impact on our financial statements.

Beginning on January 1, 2023, Fuel Tech will use the caption Allowance for Credit Losses and our expected credit loss model to calculate the allowance.

Fuel Tech measures expected credit losses based on historical experience, current conditions and reasonable and supportable forecasts per the guidance set forth in Accounting Standards Update (ASU) 2019 - 10, Financial Instruments - Credit Losses (Topic 326 ), Derivatives and Hedging (Topic 815 ), and Leases (Topic 842 ).

For trade receivables and other financial instruments, we use a forward-looking expected loss model for recognizing credit losses which reflects losses that are probable.

For the general risk categories, the Company uses historical losses over a fixed period, excluding certain write-off activity that was not considered credit loss events, to determine the historical credit loss.

19 unchanged sentences

The Company estimates the balance of excess and obsolete inventory by analyzing inventory by age using last used and original purchase date and existing sales pipeline for which the inventory could be used.

The table below sets forth the components of the Excess and Obsolete Inventory Reserve for the years ended December 31.

Balance at January 1 Provision charged to expense

Write-offs / Recoveries

Balance at December 31

$ 927 $ — $ — $ 927

$ 927 $ ( 56 ) $ ( 258 ) $ 613

The excess and obsolete inventory reserve balance was $ 613 at December 31, 2024 and 2023 .

Foreign Currency Translation and Transactions

17 unchanged sentences

Research and Development

Research and development costs are expensed as incurred.

Research and development costs are expensed as incurred, except in the case of costs incurred related to capitalizable equipment.

Research and development projects funded by customer contracts are reported as part of cost of goods sold.

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Quoted market prices and other valuation techniques are used to determine expected cash flows.

We performed a detailed analysis of potential long-lived asset impairment during the fourth quarter of 2024 and determined no impairment exists.

There was no impairment recorded during 2024 or 2023

Revenue Recognition

25 unchanged sentences

We generally recognize revenue for these arrangements at a point in time based on our evaluation of when the customer obtains control of the promised goods or services.

On occasion, Fuel Tech will engineer and sell its chemical pumping equipment.

These projects are similar in nature to the APC projects described above and for those projects where control transfers over time, revenue is recognized based on the extent of progress towards completion of the single performance obligation.

For projects containing multiple performance obligations, the Company allocates the transaction price based on the estimated standalone selling price.

The Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract.

The Company utilizes key assumptions to determine the stand-alone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs.

Variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated are consistent with the amounts the Company would expect to receive for the satisfaction of each performance obligation.

The consideration allocated to each performance obligation is recognized as revenue when control is transferred for the related goods or services.

For performance obligations which consist of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress.

The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

The Company receives payments from its customers based on billing schedules established in each contract.

Up-front payments and fees are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements.

Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional.

Cost of Sales

32 unchanged sentences

Our stock-based employee compensation plan, referred to as the Fuel Tech, Inc.

2014 Long-Term Incentive Plan (Incentive Plan), was adopted in May 2014 and allows for awards to be granted to participants in the form of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and bonuses or other forms of share-based or non-share-based awards or combinations thereof.

Participants in the Incentive Plan may be our directors, officers, employees, consultants or advisors (except consultants or advisors in capital-raising transactions) as the directors determine are key to the success of our business.

There are a maximum of 5,884,076 shares that may be issued or reserved for awards to participants under the Incentive Plan as of December 31, 2023 .

Based on the existing issued or reserved awards in Incentive Plan, there are 645,650 shares available to be used for future awards to participants in the Incentive Plan as of December 31, 2023 .

2024 Long-Term Incentive Plan ( 2024 Plan), was adopted in June 2024 and replaced our prior incentive plan which was approved by our stockholders in 2014 (LTIP).

No further grants will be made from the LTIP.

Awards granted under the LTIP that were outstanding upon adoption of the 2024 Plan will be added to the shares available to be used for future awards to participants in the Incentive Plans if the awards are forfeited or otherwise canceled or upon expiration.

The 2024 Plan and LTIP are referred to collectively as the Incentive Plans.

The Incentive Plans allow for awards to be granted to participants in the form of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and bonuses or other forms of share-based or non-share-based awards or combinations thereof.

Participants in the Incentive Plans may be our directors, officers, employees, consultants or advisors (except consultants or advisors in capital-raising transactions) as the directors determine are key to the success of our business.

There are a maximum of 4,215,272 shares that may be issued or reserved for awards to participants under the Incentive Plans as of December 31, 2024 .

Based on the existing issued or reserved awards under the Incentive Plans, there are 2,957,150 shares available to be used for future awards to participants in the Incentive Plans as of December 31, 2024 .

Defined Contribution Plan

9 unchanged sentences

At December 31, 2024 and 2023 , we had weighted-average outstanding equity awards of 168,900 and 390,900 , respectively, and 2,850,000 warrants in both periods, which were antidilutive or represent out-of-the-money options for the purpose of calculation of the diluted earnings per share.

As of December 31, 2023 and 2022 , 246,500 and 42,600 incremental equity awards were antidilutive because of the net loss in the year then ended, respectively.

As of December 31, 2024 and 2023 , 274,900 and 246,500 incremental equity awards were antidilutive, respectively, because of the net loss in the year then ended.

These equity awards could potentially dilute basic EPS in future years.

14 unchanged sentences

We h ad no customer that accounted for greater than 10% of our current assets as of December 31, 2024 .

For the year ended December 31, 2022 , we had three customers which individually represented greater than 10% of revenues.

Two customers primarily contributed revenues to the FUEL CHEM technology segment and one contributed revenue to the APC technology segment.

In total these three customers represented 48 % of consolidated revenues.

For the year ended December 31, 2023 , we had two customers which individually represented greater than 10% of revenues.

These two customers contributed revenues to the FUEL CHEM technology segment.

In total these two customers represented 36 % of consolidated revenues.

We had no customer that accounted for greater than 10% of our current assets as of December 31, 2023 .

7 unchanged sentences

We use the cost method to account for common stock repurchases.

During the years ended December 31, 2023 and 2022 , we withheld 0 and 12,497 shares of our common stock, valued at approximately $ 0 and $ 17 , respectively, to settle personal tax withholding obligations that arose as a result of restricted stock units that vested.

During the year ended December 31, 2024 , we withheld 83,050 shares of our common stock, valued at approximately $ 95 , to settle personal tax withholding obligations that arose as a result of restricted stock units that vested.

There were no shares withheld during the year ended December 31, 2023 to settle personal tax withholding obligations as a result of restricted stock unit vesting.

Refer to Note 5, “Treasury Stock,” for further discussion.

Recently Issued Accounting Pronouncements

November 2023, the FASB issued ASU

07, Segment Reporting (Topic

Improvements to Reportable Segment Disclosures, which provides guidance for additional disclosures around segment reporting.

The standard will become effective for annual periods beginning on

January 1, 2024 for Fuel Tech and for interim periods thereafter.

Application of the amendments is retrospective.

The Company is reviewing the impact of this new pronouncement and expects to incorporate the additional disclosures in the Segment note when the ASU is adopted.

December 2023, the FASB issued ASU

09, Income Taxes (Topic

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures, which provides guidance for additional disclosures around the tax rate reconciliation and other tax disclosures.

The standard will become effective for annual periods beginning on

January 1, 2025 for Fuel Tech.

The standard will become effective for the annual reporting period beginning on January 1, 2025 for Fuel Tech.

Application of the amendments should be applied prospectively but retrospective application is permitted.

The Company is reviewing the impact of this new pronouncement and expects to incorporate the additional disclosures in the Tax note when the ASU is adopted.

In November 2024, the FASB issued ASU 2024 - 03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses, which requires public business entities to disclose in the notes to their financial statements disaggregated information about certain costs and expenses in both annual and interim filings.

The standard will become effective for the annual reporting period beginning January 1, 2027 for Fuel Tech.

The Company is reviewing the impact of this new pronouncement and expects to incorporate the additional disclosures in the relevant footnotes when the ASU is adopted.

On March 27, 2020, the U.S.

government enacted the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") to provide certain relief as a result of the COVID- 19 pandemic.

The CARES Act provides tax relief, along with other stimulus measures, including a provision for an Employee Retention Credit (“ERC”), which allows for employers to claim a refundable tax credit against the employer share of Social Security tax for qualifying periods in 2020 and 2021.

Under the provisions of the CARES Act, the Company is eligible for a refundable employee retention credit subject to certain criteria.

As there is no authoritative guidance under U.S.

GAAP on accounting for government assistance to for-profit business entities, we account for the ERC by analogy to International Accounting Standard ("IAS") 20, Accounting for Government Grants and Disclosure of Government Assistance.

In accordance with IAS 20, management determined it has reasonable assurance for receipt of the ERC and recorded the ERC benefit of $1,677 as other income on the Consolidated Statement of Operations for the year ended December 31, 2024 and as a component of Accounts Receivable on the Consolidated Balance Sheet as of December 31, 2024.

REVENUE RECOGNITION

18 unchanged sentences

Foreign Revenues

Pacific Rim and other

Total Foreign Revenues

13 unchanged sentences

Generally, billing occurs subsequent to revenue recognition, resulting in contract assets.

For the FUEL CHEM technology segment, deliveries made in the current period but billed in subsequent periods are also considered contract assets.

These assets are reported on the Consolidated Balance Sheet on a contract-by-contract basis at the end of each reporting period.

At December 31, 2024 , 2023 , and 2022 contract assets for APC technology projects were approximately $ 2,075 , $ 2,285 , and $ 3,082 , respectively, and are included in accounts receivable on the consolidated balance sheets.

There were no contract assets for the FUEL CHEM technology segment as of December 31, 2023 , 2022 , and 2021 .

However, the Company will periodically bill in advance of costs incurred before revenue is recognized, resulting in contract liabilities.

7 unchanged sentences

As of December 31, 2024 , the aggregate amount of the transaction price allocated to remaining performance obligations was $ 6,175 .

The Company expects to recognize revenue on approximately $ 7,389 of the remaining performance obligations over the next 12 months.

The Company expects to recognize revenue on approximately $ 4,515 of the remaining performance obligations over the next 12 months with the remaining recognized thereafter.

Practical Expedients and Exemptions

9 unchanged sentences

Unbilled receivables

Receivable for employee retention credit

Other short-term receivables

7 unchanged sentences

On August 16, 2022, President Biden signed into law the Inflation Reduction Act (IRA) of 2022, which, among other things, imposes a new 15% corporate Alternative Minimum Tax (AMT) based on audited financial statement income ("AFSI") applicable to corporations with a three -year average AFSI over $1 billion.

The AMT is effective for the 2023 tax year and, if applicable, corporations must pay the greater of the regular corporate income tax or the AMT.

The AMT was effective starting with the 2023 tax year and, if applicable, corporations must pay the greater of the regular corporate income tax or the AMT.

Although NOL carryforwards created through the regular corporate income tax system cannot be used to reduce the AMT, financial statement net operating losses can be used to reduce AFSI and the amount of AMT owed.

2 unchanged sentences

Based on interim guidance issued by the U.S.

Treasury in late December 2022, the Company was not subject to the AMT in 2023.

Treasury in late December 2022, the Company was not subject to the AMT in 2023 or 2024.

Further, the Company believes that it is more likely than not it will not be subject to the AMT beginning 2025.

9 unchanged sentences

The components of loss before taxes for the years ended December 31, are as follows:

Origin of (loss) income before taxes

Origin of loss before taxes

United States

2 unchanged sentences

$ ( 1,866 ) $ ( 1,469 )

Significant components of income tax benefit (expense) for the years ended December 31 are as follows:

Significant components of income tax expense for the years ended December 31, are as follows:

( 51 ) ( 19 )

( 22 ) ( 55 )

Total current

22 unchanged sentences

( 9.0 )% ( 6.7 )%

Net Operating Loss expiration

( 144.3 )% — %

Other Deferred true up

6.4 % ( 6.6 )%

Global Intangible Low-Taxed Income (GILTI) inclusion

( 1.1 )% ( 1.7 )%

Income tax (expense) benefit effective rate

Income tax expense effective rate

( 2.9 )% ( 4.8 )%

5 unchanged sentences

Net operating loss carryforwards

12,048 12,158

Credit carry-forwards

4 unchanged sentences

Deferred tax liabilities:

( 296 ) ( 238 )

Intangible assets

22 unchanged sentences

$ 326 144 $ 470

We recognize interest and penalties related to unrecognized tax benefits in income tax expense for all periods presented.

If upon examination interest and penalties related to unrecognized tax benefits were assessed, they would be included in income tax expense for all periods presented.

There were no interest and penalties recognized in income tax expense during the years ended December 31, 2024 and 2023 .

67 unchanged sentences

STOCK-BASED COMPENSATION

Under our stock-based employee compensation plan, referred to as the Fuel Tech, Inc.

2014 Long-Term Incentive Plan (Incentive Plan), awards may be granted to participants in the form of Non-Qualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, RSUs, Performance Awards, Bonuses or other forms of share-based or non-share-based awards or combinations thereof.

There are a maximum of 5,884,076 shares that may be issued or reserved for awards to participants under the Incentive Plan.

At December 31, 2023 , we had 645,650 equity awards available for issuance under the Incentive Plan.

Our stock-based employee compensation plan, referred to as the Fuel Tech, Inc.

2024 Long-Term Incentive Plan ( 2024 Plan), was adopted in June 2024 and replaced our prior incentive plan which was approved by our stockholders in 2014 (LTIP).

No further grants will be made from the LTIP.

The 2024 Plan and LTIP are referred to collectively as the Incentive Plans.

Under the Incentive Plans, awards may be granted to participants in the form of Non-Qualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, RSUs, Performance Awards, Bonuses or other forms of share-based or non-share-based awards or combinations thereof.

There are a maximum of 4,215,272 shares that may be issued or reserved for awards to participants under the Incentive Plans.

At December 31, 2024 , we had 2,957,150 equity awards available for issuance under the Incentive Plans.

We did not record any excess tax benefits within income tax expense for the years ended December 31, 2024 and 2023 .

45 unchanged sentences

176,000 1.2 $ 1.94

94,500 0.4 5.22

270,500 1.6 $ 3.09

As of and for the 12 months ended December 31, 2024 , there was no non-vested stock option activity and no total unrecognized compensation cost related to non-vested stock options granted under the Incentive Plan.

Fuel Tech received proceeds of $ 42 and $ 0 from the exercise of stock options in the years ended December 31, 2023 and 2022 ., respectively.

There were no options exercised during the year ended December 31, 2024 .

Fuel Tech received proceeds of $ 42 from the exercise of stock options during the year ended December 31, 2023 .

It is our policy to issue new shares upon option exercises, loan conversions, and vesting of restricted stock units.

5 unchanged sentences

Compensation cost, adjusted for estimated forfeitures, is amortized on a straight-line basis over the requisite service period.

In addition to the time vested RSUs, the Company entered into a 2023 Executive Performance RSU Award Agreement (the “2023 Agreement”) with certain officers, including its President and Chief Executive Officer, Chief Financial Officer and Senior Vice President, Sales (each a “2023 Participating Executive”) pursuant to which each 2023 Participating Executive will have the opportunity to earn a specified amount of RSUs based on Fuel Tech’s performance in 2023 and 2024.

In addition to the time vested RSUs, in 2023 the Company entered into an Executive Performance RSU Award Agreement (the “Agreement”) with certain officers, including its President and Chief Executive Officer, Chief Financial Officer and Senior Vice President, Sales (each a “Participating Executive”) pursuant to which each Participating Executive will have the opportunity to earn a specified amount of RSUs based on Fuel Tech’s performance in 2023 and 2024.

The target amount of RSUs for each of four possible RSU award components is set for each Participating Executive for 2023 and 2024.

The amount, if any, of actual RSU awards to be issued is contingent on performance by the Participating Executive and the Company in the performance areas and for the measurement periods set forth in the Agreement as determined by the Company.

The Agreement provides for four possible RSU awards:

3 unchanged sentences

All RSUs are valued at the date of grant based on the closing price of the Company’s common stock on the grant date.

There were 106,000 RSU awards granted to Participating Executives in 2024 based on the Company's performance during the year ended December 31, 2023 .

The amount, if any, of actual RSU awards to be issued for the year ended December 31, 2024 is contingent on performance by the Participating Executive and the Company in the performance areas and for the measurement periods set forth in the Agreement as determined by the Company.

During the years ended December 31, 2024 and 2023 , there were 406,026 and 45,000 restricted stock units that vested with a grant date fair value of $ 536 and $ 62 , respectively.

10 unchanged sentences

( 425,100 ) 1.26

( 406,026 ) 1.32

Unvested restricted stock units at December 31, 2024

19 unchanged sentences

As of December 31, 2024 , we had outstanding bank performance guarantees and letters of credit in the amount of $ 1,860 in support of equipment construction contracts that have not completed their final acceptance test or that are still operating under a warranty period.

The performance guarantees and letters of credit expire in dates ranging from March 2024 through November 2025.

The performance guarantees and letters of credit expire on dates ranging from April 2025 through June 2026.

The expiration dates may be extended if the project completion dates are extended.

7 unchanged sentences

The warranty liability balance was $ 159 at December 31, 2024 and 2023 .

The terms of the Company’s three primary office space lease arrangements are as follows:

The terms of the Company’s two primary office space lease arrangements are as follows:

The Gallarate, Italy building lease, for approximately 1,335 square feet, runs through April 30, 2031.

2 unchanged sentences

This facility serves as an outside warehouse facility.

The Overland Park, KS lease, for approximately 600 square feet, runs through October 15, 2024.

This facility serves primarily as a sales office.

The Company also has three additional operating leases related to certain office equipment and company leased vehicles and one short-term lease.

The Company also has two additional operating leases related to certain office equipment and one short-term lease.

Our leases have remaining lease terms of 0.3 years to 6.3 years.

5 unchanged sentences

Total lease cost

The weighted average remaining lease term was 6.58 years as of December 31, 2023 .

The weighted average discount rate was 8.00 % as of December 31, 2023 .

The weighted average remaining lease terms were 6.18 years and 6.58 years as of December 31, 2024 and 2023 , respectively.

The weighted average discount rates were 8.25 % and 8.00 % as of December 31, 2024 and 2023 , respectively.

Remaining maturities of our existing lease liabilities as of December 31, 2024 were as follows:

12 unchanged sentences

DEBT FINANCING

On June 30, 2022, the Company entered into an Investment Collateral Security agreement to use for the sole purpose of issuing standby letters of credit that replaces the former Cash Collateral agreement with BMO Harris.

The Investment Collateral Security agreement requires us to pledge our investments as collateral for 150 % of the aggregate face amount of outstanding standby letters of credit.

The Company's Investment Collateral Security agreement with BMO Harris is used for the sole purpose of issuing standby letters of credit and requires us to pledge our investments as collateral for 150 % of the aggregate face amount of outstanding standby letters of credit.

The Company pays 250 basis points on the face values of outstanding letters of credit.

16 unchanged sentences

There are no inter-segment sales that require elimination.

We evaluate performance and allocate resources based on gross margin by reportable segment.

Our Chief Executive Officer (CEO) serves as our Chief Operating Decision Maker (CODM) and is responsible for reviewing segment performance and making decisions regarding resource allocation.

We evaluate performance and allocate resources based on revenue and gross margin by reportable segment.

We do not allocate selling, general and administrative expenses, interest, other non-operating income or expense items, or taxes to segments.

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

33 unchanged sentences

Assets are those directly associated with operations of the geographic area.

We manage our assets on a total company basis, not by operating segment.

Therefore, our CODM does not regularly review any asset information by operating segment and accordingly, we do not report asset information by operating segment.

For the years ended December 31,

1 unchanged sentence

$ 17,802 $ 21,397

Other Foreign

$ 25,133 $ 27,081

7 unchanged sentences

The transition associated with the suspension of the APC business includes staff rationalization, supplier and partner engagement, and the monetization of certain assets.

The remaining transition activities include the execution of the remaining activities to satisfy the requirements for the remaining APC projects in China (with a backlog totaling approximately $ 3 ) and those related to subsidiary closure.

The following table presents our revenues and net loss in China for the years ended December 31, 2024 and 2023 :

13 unchanged sentences

$ 721 $ 1,279

Warranty reserve (Note 9)

Deferred revenue

Warranty reserve (Note 9)

Accrued professional fees

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data