What changed in this filing

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Item 1. Financial Statements

2025-05-12 compared with 2024-11-06 · 104 added, 169 removed, 373 unchanged (42% of the section changed)

3 unchanged sentences

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

September 30,

Current assets:

45 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Costs and expenses:

2 unchanged sentences

Research and development

Operating (loss) income

Interest expense

Operating loss

Interest income

Other (expense) income, net

Income (loss) before income taxes

(Loss) income before income taxes

Income tax expense

Net income (loss)

Net income (loss) per common share:

Basic net income (loss) per common share

Diluted net income (loss) per common share

Net (loss) income

Net (loss) income per common share:

Basic net (loss) income per common share

Diluted net (loss) income per common share

Weighted-average number of common shares outstanding:

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Net income (loss)

Net (loss) income

Other comprehensive income (loss):

Foreign currency translation adjustments

Comprehensive income (loss)

Comprehensive (loss) income

See notes to condensed consolidated financial statements.

2 unchanged sentences

(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, 2023:

The following summarizes the changes in total stockholders' equity for the three months ended March 31, 2024:

Comprehensive

3 unchanged sentences

Balance at March 31, 2024

Foreign currency translation adjustments

Stock compensation expense

Exercise of stock options

Common shares issued upon vesting of restricted stock units

Balance at June 30, 2023

Foreign currency translation adjustments

Stock compensation expense

Balance at September 30, 2023

The following summarizes the changes in total stockholders' equity for the three and nine months ended September 30, 2024:

The following summarizes the changes in total stockholders' equity for the three months ended March 31, 2025:

Comprehensive

2 unchanged sentences

Stock compensation expense

Balance at March 31, 2024

Foreign currency translation adjustments

Stock compensation expense

Common shares issued upon vesting of restricted stock units

Taxes paid on behalf of equity award participants

Balance at June 30, 2024

Foreign currency translation adjustments

Stock compensation expense

Balance at September 30, 2024

Balance at March 31, 2025

See notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating Activities

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

Net (loss) income

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

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

6 unchanged sentences

Accrued liabilities and other non-current liabilities

Net cash (used in) provided by operating activities

Net cash provided by (used in) operating activities

Investing Activities

2 unchanged sentences

Maturities of debt securities

Net cash used in investing activities

Net cash provided by (used in) investing activities

Financing Activities

Taxes paid on behalf of award participants

Proceeds from exercise of stock options

Net cash (used in) provided by financing activities

Taxes paid on behalf of equity award participants

Net cash used in financing activities

Effect of exchange rate fluctuations on cash

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

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

16 unchanged sentences

All significant intercompany transactions and balances have been eliminated.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year ending December 31, 2024 .

The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full year ending December 31, 2025 .

For further information, refer to the audited consolidated financial statements and footnotes thereto included in Fuel Tech’s Annual Report on Form 10 -K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission.

5 unchanged sentences

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 Statement of Operations for the nine months ended September 30, 2024 and as a component of Accounts Receivable on the Balance Sheet as of September 30, 2024 .

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 Statement of Operations for the year ended December 31, 2024 and as a component of Accounts Receivable on the Balance Sheet as of March 31, 2025 .

Summary of Significant Accounting Policies

In 2022, the Board of Directors approved a plan to invest up to $ 20,000 of excess capital in debt securities, or hold in money market funds until such investments can be made, with BMO Harris Bank N.A (BMO Harris).

The Company's investment policy provides for $ 20,000 in funds at BMO Harris Bank, N.A.

(BMO Harris) to be invested in debt securities.

The funds are held in money market funds until they are invested in those securities.

A portion of the funds invested are restricted as collateral under the Investment Collateral Security agreement (see Note 10 ).

At September 30, 2024 , the amount of funds collateralized under the Investment Collateral Security agreement is $ 2,584 relating to existing standby letters of credit that is comprised of $ 281 with varying maturity dates that expire no later than September 30, 2025 and $ 2,303 with the latest maturity date no later than June 30, 2026.

At March 31, 2025 , the amount of funds collateralized under the Investment Collateral Security agreement is $ 3,186 relating to existing standby letters of credit that is comprised of $ 2,608 with varying maturity dates that expire no later than March 31, 2026 and $ 578 with the latest maturity date no later than February 28, 2027.

We consider all highly liquid debt investments with original maturities from the date of purchase of three months or less as cash equivalents.

12 unchanged sentences

Held-to-maturity debt securities:

September 30, 2024

March 31, 2025

December 31, 2024

5 unchanged sentences

$ 19,396 $ 21,076

The following table provides the amortized cost and fair value of debt securities by maturities at September 30, 2024 :

The following table provides the amortized cost and fair value of debt securities by maturities at March 31, 2025 :

Amortized Cost

2 unchanged sentences

After one year through two years

10,881 10,986

After two years through three years

$ 19,349 $ 19,396

Inventories consist primarily of equipment constructed for resale and spare parts and are stated at the lower of cost or net realizable value, using the weighted-average cost method.

At September 30, 2024 and December 31, 2023 , inventory included equipment constructed for resale of $ 197 and $ 207 , respectively, and spare parts, net of reserves, of $ 244 and $ 232 , respectively.

At March 31, 2025 and December 31, 2024 , inventory included equipment constructed for resale of $ 176 and spare parts, net of reserves, of $ 358 and $ 221 , respectively.

Usage is recorded in cost of sales in the period that parts were issued to a project, used to service equipment, or sold to customers.

Equipment constructed for resale that is in process is recorded in Other assets.

In process equipment for inventory recorded as Other assets was $ 597 and $ 618 as of September 30, 2024 and December 31, 2023 , respectively.

In process equipment for inventory recorded as Other assets was $ 46 and $ 44 as of March 31, 2025 and December 31, 2024 , respectively.

In ventories are periodically evaluated to identify obsolete or otherwise impaired parts and are written off when management determines usage is not probable.

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

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 ).

The Company accounts for expected credit losses under Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 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.

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

8 unchanged sentences

(Write-offs) / Recoveries

At September 30, 2024

At March 31, 2025

Disaggregated Revenue by Product Technology

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

Air Pollution Control

1 unchanged sentence

$ 571 $ 1,664

424 1,339 1,428 1,938

Ancillary revenue

246 462 1,226 1,305

Total Air Pollution Control technology revenues

3,224 3,711 9,491 10,692

FUEL CHEM technology solutions

4,627 4,277 10,359 10,044

Total Revenues

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

United States

2 unchanged sentences

Latin America

208 157 816 310

1,526 1,001 4,070 2,400

664 1,190 1,445 2,089

Total Foreign Revenues

2,398 2,348 6,331 4,799

Total Revenues

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Products transferred at a point in time

1 unchanged sentence

Products and services transferred over time

2,554 1,910 6,837 7,449

Total Revenues

4 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 Condensed Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period.

At September 30, 2024 , December 31, 2023 , and December 31, 2022 , contract assets for APC technology projects were approximately $ 2,839 , $ 2,285 , and $ 3,082 , respectively.

There were no contract assets for the FUEL CHEM technology segment as of September 30, 2024 , December 31, 2023 , and December 31, 2022 .

At March 31, 2025 , December 31, 2024 , and December 31, 2023 , contract assets for APC technology projects were approximately $ 572 , $ 2,075 , and $ 2,285 , respectively.

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

These liabilities are reported on the Condensed Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period.

Contract liabilities were $ 775 , $ 1,279 , and $ 372 at September 30, 2024 , December 31, 2023 , and December 31, 2022 , respectively, and are included in other accrued liabilities on the Condensed Consolidated Balance Sheets.

Changes in the contract asset and liability balances during the nine -month period ended September 30, 2024 were not materially impacted by any other items other than amounts billed and revenue recognized as described previously.

Revenue recognized that was included in the contract liability balance at the beginning of the period was $ 20 and $ 1,241 for the three and nine months ended September 30, 2024 , respectively, and $ 0 and $ 368 for the three and nine months ended September 30, 2023 , respectively, which represented revenue from progress towards completion of our APC technology contracts.

As of September 30, 2024 and December 31, 2023 , we had no construction contracts in progress that were identified as a loss contract.

Contract liabilities were $ 627 , $ 721 , and $ 1,279 at March 31, 2025 , December 31, 2024 , and December 31, 2023 , respectively, and are included in other accrued liabilities on the Condensed Consolidated Balance Sheets.

Changes in the contract asset and liability balances during the three -month period ended March 31, 2025 were not materially impacted by any other items other than amounts billed and revenue recognized as described previously.

Revenue recognized that was included in the contract liability balance at the beginning of the period was $ 372 and $ 1,121 for the three months ended March 31, 2025 and 2024 , respectively, which represented revenue from progress towards completion of our APC technology contracts.

As of March 31, 2025 and December 31, 2024 , we had no construction contracts in progress that were identified as a loss contract.

Remaining Performance Obligations

Remaining performance obligations represents the transaction price of APC technology booked orders for which work has not been performed.

As of September 30, 2024 , the aggregate amount of the transaction price allocated to remaining performance obligations was $ 6,444 .

As of March 31, 2025 , the aggregate amount of the transaction price allocated to remaining performance obligations was $ 10,328 .

The Company expects to recognize revenue on approximately $ 6,924 of the remaining performance obligations over the next 12 months with the remaining recognized thereafter.

1 unchanged sentence

The components of accounts receivable are as follows:

September 30, 2024

March 31, 2025

December 31, 2024

11 unchanged sentences

This action was part of Fuel Tech’s ongoing operational improvement initiatives designed to prioritize resource allocation, reduce costs, and drive profitability for the Company on a global basis.

The transition associated with the suspension of the APC business which has taken place through September 30, 2024 includes staff rationalization and reduction, supplier and partner engagement, and the monetization of certain assets.

The transition associated with the suspension of the APC business which has taken place through March 31, 2025 includes staff rationalization and reduction, supplier and partner engagement, and the monetization of certain assets.

The remaining transition activities include the execution of the 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 for the three and nine months ended September 30, 2024 and 2023 in China as follows:

The following table presents our revenues and net loss for the three months ended March 31, 2025 and 2024 in China as follows:

Three Months Ended

Nine Months Ended

September 30,

Total revenues

( 18 ) ( 13 )

( 13 ) ( 17 ) ( 41 ) ( 36 )

The following table presents net assets in China as of September 30, 2024 and December 31, 2023 :

September 30, 2024

The following table presents net assets in China as of March 31, 2025 and December 31, 2024 :

March 31, 2025

December 31, 2024

6 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Foreign currency translation

Balance at beginning of period

$ ( 1,915 ) $ ( 1,748 )

Other comprehensive income (loss):

1 unchanged sentence

Total accumulated other comprehensive loss

$ ( 1,780 ) $ ( 1,891 )

In all periods presented, there were no tax impacts related to rate changes and no amounts were reclassified to earnings.

Treasury Stock

Common stock held in treasury totaled 1,059,056 and 976,006 with a cost of $ 2,346 and $2,251 at September 30, 2024 and December 31, 2023 , respectively.

Common stock held in treasury totaled 1,083,399 and 1,059,056 with a cost of $ 2,370 and $ 2,346 at March 31, 2025 and December 31, 2024 , respectively.

These shares were withheld from employees to settle personal tax withholding obligations that arose as a result of restricted stock units that vested.

3 unchanged sentences

Out-of-money stock options and warrants are excluded from diluted earnings per share because they are unlikely to be exercised and would be anti- dilutive if they were exercised.

For the three months ended September 30, 2024 and 2023 , basic earnings per share has been adjusted to include dilutive options and RSUs.

For the nine months ended September 30, 2024 and 2023 , basic earnings per share is equal to diluted earnings per share because all outstanding stock awards, warrants, and convertible loan notes are considered anti-dilutive during periods of net loss.

The following table sets forth the weighted-average shares used in calculating the earnings per share for the three and nine months ended September 30, 2024 and 2023 :

For the three months ended March 31, 2025 , basic earnings per share is equal to diluted earnings per share because all outstanding stock awards, warrants, and convertible loan notes are considered anti-dilutive during periods of net loss.

For the three months ended March 31, 2024 , basic earnings per share has been adjusted to include dilutive options and RSUs.

The following table sets forth the weighted-average shares used in calculating the earnings per share for the three months ended March 31, 2025 and 2024 :

Three Months Ended

Nine Months Ended

September 30,

Basic weighted-average shares

1 unchanged sentence

Unexercised options and unvested RSUs

140,000 242,000 — —

Diluted weighted-average shares

30,718,000 30,756,000

For the three and nine months ended September 30, 2024 , Fuel Tech had weighted-average outstanding equity awards of 132,000 and 283,700 , respectively, and warrants of 2,850,000 in both periods, which were antidilutive or represent out-of-the-money options for the purpose of the calculation of diluted earnings per share.

For the nine months ended September 30, 2024 , Fuel Tech had 279,000 incremental equity awards that were excluded from the computation of diluted earnings per share as the inclusion of such would have been anti-dilutive due to a net loss in the period.

These equity awards could potentially dilute basic earnings per share in future years.

For the three and nine months ended September 30, 2023 , Fuel Tech had weighted-average outstanding equity awards of 246,500 and 382,200 , respectively, and warrants of 2,850,000 in both periods, which were antidilutive or represent out-of-the-money options for the purpose of the calculation of diluted earnings per share.

For the nine months ended September 30, 2023 , Fuel Tech had incremental equity awards of 250,500 that were excluded from the computation of diluted earnings per share as the inclusion of such would have been anti-dilutive due to a net loss in the period.

For the three months ended March 31, 2025 and 2024 , Fuel Tech had weighted-average outstanding equity awards of 135,900 and 263,800 , respectively, and warrants of 2,850,000 in both periods, which were antidilutive or represent out-of-the-money options for the purpose of the calculation of diluted earnings per share.

For the three months ended March 31, 2025 , Fuel Tech had 322,700 incremental equity awards that were excluded from the computation of diluted earnings per share as the inclusion of such would have been anti-dilutive due to a net loss in the period.

These equity awards could potentially dilute basic earnings per share in future years.

6 unchanged sentences

There are a maximum of 3,233,237 shares that may be issued or reserved for awards to participants under the Incentive Plans.

As of September 30, 2024 , Fuel Tech had 2,600,000 shares available for issuance under the Incentive Plans.

We did not record any excess tax benefits within income tax expense for the three and nine months ended September 30, 2024 and 2023 .

Given the Company has a full valuation allowance on its deferred tax assets, there were no excess tax benefits to record for the three and nine months ended September 30, 2024 and 2023 .

As of March 31, 2025 , Fuel Tech had 2,485,543 shares available for issuance under the Incentive Plans.

We did not record any excess tax benefits within income tax expense for the three months ended March 31, 2025 and 2024 .

Given the Company has a full valuation allowance on its deferred tax assets, there were no excess tax benefits to record for the three months ended March 31, 2025 and 2024 .

In addition, we account for forfeitures of awards based on an estimate of the number of awards expected to be forfeited and adjust the estimate when it is no longer probable that the employee will fulfill the service condition.

Stock-based compensation is included in selling, general, and administrative costs in our Condensed Consolidated Statements of Operations.

The components of stock-based compensation for the three and nine months ended September 30, 2024 and 2023 were as follows:

The components of stock-based compensation for the three months ended March 31, 2025 and 2024 were as follows:

Three Months Ended

Nine Months Ended

September 30,

Stock options and restricted stock units, net of forfeitures

$ 109 $ 101 $ 337 $ 288

After-tax effect of stock-based compensation

$ 109 $ 101 $ 337 $ 288

Stock Options

9 unchanged sentences

and ( 3 ) expected life of the option – an estimate based on historical experience including the effect of employee terminations.

Stock option activity for Fuel Tech’s Incentive Plans for the nine months ended September 30, 2024 was as follows:

Stock option activity for Fuel Tech’s Incentive Plans for the three months ended March 31, 2025 was as follows:

Weighted- Average

3 unchanged sentences

Expired or forfeited

( 94,500 ) 5.22

Outstanding on September 30, 2024

Outstanding on March 31, 2025

176,000 $ 1.94 0.93 $ 4

Exercisable on September 30, 2024

Exercisable on March 31, 2025

176,000 $ 1.94 0.93 $ 4

As of September 30, 2024 , there was no unrecognized compensation cost related to non-vested stock options granted under the Incentive Plans.

As of March 31, 2025 , there was no unrecognized compensation cost related to non-vested stock options granted under the Incentive Plans.

Restricted Stock Units

2 unchanged sentences

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

In addition to the time vested RSUs, 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 “2024 Participating Executive”) pursuant to which each 2024 Participating Executive will have the opportunity to earn a specified amount of restricted stock units (RSUs) based on Fuel Tech’s performance in 2024.

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

In addition to the time vested RSUs, in 2025 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 restricted stock units (RSUs) based on Fuel Tech’s performance in 2025 and 2026.

The target amount of RSUs for each of four possible RSU award components is set for each Participating Executive for 2025 and 2026.

The amount 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:

“Look-Back RSUs,” “Total Revenue RSUs,” “New Business Growth RSUs,” and “Operating Income Growth” RSUs.

“Look-Back RSUs,” “Total Revenue RSUs,” “New Business Revenue RSUs,” and “Operating Income” RSUs.

If the Look-Back RSU’s are awarded, these RSUs will follow a vesting schedule that provides for vesting of one - third of the granted Look-Back RSUs after the first anniversary of the grant determination date, one - third after the second anniversary date and one - third after the third anniversary date.

If the Total Revenue RSUs, New Business Growth RSUs, or Operating Income Growth RSUs targets are achieved, these RSU’s will follow a vesting schedule whereby 100 % of the granted RSUs will vest one year following the grant determination date.

If the Total Revenue RSUs, New Business Revenue RSUs, or Operating Income RSUs targets are achieved, these RSU’s will follow a vesting schedule whereby 100 % of the granted RSUs will vest one year following the grant determination date.

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

At September 30, 2024 , there is $ 972 of unrecognized compensation cost related to all non-vested share-based compensation arrangements granted under the Incentive Plan.

At March 31, 2025 , there is $ 1,149 of unrecognized compensation cost related to all non-vested share-based compensation arrangements granted under the Incentive Plan.

That cost is expected to be recognized over the remaining requisite service period of 2.26 yea rs.

A summary of restricted stock unit activity for the nine months ended September 30, 2024 is as follows:

A summary of restricted stock unit activity for the three months ended March 31, 2025 is as follows:

Weighted Average

3 unchanged sentences

( 425,100 ) 1.18

Unvested restricted stock units at September 30, 2024

Unvested restricted stock units at March 31, 2025

1,492,744 $ 1.11

The fair value of restricted stock that vested during the nine -month period ended September 30, 2024 was $ 462 .

The fair value of restricted stock that vested during the three -month period ended March 31, 2025 was $ 101 .

Deferred Directors Fees

2 unchanged sentences

In accordance with Accounting Standards Codification (ASC) 718, Fuel Tech accounts for these awards as equity awards as opposed to liability awards.

During the nine -month periods ended September 30, 2024 and 2023 , Fuel Tech recorded no stock-based compensation expense under the Deferred Plan.

The following table summarizes information about warrants outstanding and exercisable at September 30, 2024 :

During the three -month periods ended March 31, 2025 and 2024 , Fuel Tech recorded no stock-based compensation expense under the Deferred Plan.

The following table summarizes information about warrants outstanding and exercisable at March 31, 2025 :

Exercise Price Number Outstanding/Exercisable Weighted Average Remaining Life in Years Weighted Average Exercise Price

2 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.

There are no financial covenants set forth in the Investment Collateral Security agreement.

At September 30, 2024 , the Company had outstanding standby letters of credit totaling approximately $ 1,722 under the Investment Collateral Security agreement.

At September 30, 2024 , the investments held as collateral totaled $ 2,584 .

At March 31, 2025 , the Company had outstanding standby letters of credit totaling approximately $ 2,124 under the Investment Collateral Security agreement.

At March 31, 2025 , the investments held as collateral totaled $ 3,186 .

Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instruments.

6 unchanged sentences

ULTRA ® technology creates ammonia at a plant site using safe urea for use with any SCR application.

Electrostatic Precipitator technologies make use of electrostatic precipitator products and services to reduce particulate matter.

Electrostatic Precipitator (ESP) technologies make use of electrostatic precipitator products and services to reduce particulate matter.

Flue Gas Conditioning systems are chemical injection systems offered in markets outside the U.S.

3 unchanged sentences

There are no inter-segment sales that require elimination.

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 reviewing 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 (Note 1 in our annual report on Form 10 -K).

We do not review assets by reportable segment, but rather, in aggregate for the Company as a whole.

Information about reporting segment net sales and gross margin from operations is provided below:

Air Pollution

Three months ended September 30, 2024

Control Segment

Revenues from external customers

Cost of sales

Selling, general and administrative

Research and development

Operating income (loss) from operations

Air Pollution

Three months ended September 30, 2023

Control Segment

Revenues from external customers

Cost of sales

Selling, general and administrative

Research and development

Operating income (loss) from operations

Information about reporting segment net sales and gross margin from continuing operations is provided below:

Air Pollution

Nine months ended September 30, 2024

Three months ended March 31, 2025

Control Segment

Revenues from external customers

$ 1,303 $ 5,079 $ — $ 6,382

Cost of sales

( 878 ) ( 2,545 ) — ( 3,423 )

425 2,534 — 2,959

Selling, general and administrative

— — ( 3,341 ) ( 3,341 )

Research and development

— — ( 570 ) ( 570 )

Operating income (loss) from operations

$ 425 $ 2,534 $ ( 3,911 ) $ ( 952 )

Air Pollution

Nine months ended September 30, 2023

Three months ended March 31, 2024

Control Segment

Revenues from external customers

$ 2,318 $ 2,639 $ — $ 4,957

Cost of sales

( 1,428 ) ( 1,500 ) — ( 2,928 )

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 )

Geographic Segment Financial Data

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

United States

September 30,

$ 5,359 $ 3,595

$ 6,382 $ 4,957

United States

$ 42,788 $ 44,430

$ 46,709 $ 48,797

Accrued Liabilities

The components of other accrued liabilities are as follows:

September 30, 2024

March 31, 2025

December 31, 2024

Contract liabilities (Note 3)

Deferred revenue

Warranty reserve (Note 13)

Accrued professional fees

Deferred revenue

Other accrued liabilities

Total other accrued liabilities

$ 1,339 $ 1,615

Commitments and Contingencies

9 unchanged sentences

This approach provides an aggregate warranty accrual that is historically aligned with actual warranty claims experienced.

There was no change in the warranty liability balance included in the other accrued liabilities line of the Condensed Consolidated Balance Sheets during the nine months ended September 30, 2024 and 2023 .

The warranty liability balance was $ 159 at September 30, 2024 and December 31, 2023 .

The Company’s effective tax rate is approximately 42.9 % and 0.0 % for the nine -month periods ended September 30, 2024 and 2023 , respectively.

The Company's effective tax rate differs from the statutory federal tax rate of 21 % for the nine -month periods ended September 30, 2024 and 2023 primarily due to a full valuation allowance recorded on our United States, China and Italy deferred tax assets since we cannot anticipate when or if we will have sufficient taxable income to utilize the deferred tax assets in the future.

There was no change in the warranty liability balance included in the other accrued liabilities line of the Condensed Consolidated Balance Sheets during the three months ended March 31, 2025 and 2024 .

The warranty liability balance was $ 159 at March 31, 2025 and December 31, 2024 .

The Company’s effective tax rate is approximately 0.0 % and 3.8 % for the three -month periods ended March 31, 2025 and 2024 , respectively.

The Company's effective tax rate differs from the statutory federal tax rate of 21 % for the three -month periods ended March 31, 2025 and 2024 primarily due to a full valuation allowance recorded on our United States, China and Italy deferred tax assets since we cannot anticipate when or if we will have sufficient taxable income to utilize the deferred tax assets in the future.

Further, our effective tax rate differs from the statutory federal tax rate due to state taxes, differences between U.S.

and foreign tax rates, foreign losses incurred with no related tax benefit, non-deductible commissions, and non-deductible meals and entertainment expenses for the nine -month periods ended September 30, 2024 and 2023 .

Fuel Tech had no unrecognized tax benefits as of September 30, 2024 and December 31, 2023 .

and foreign tax rates, foreign losses incurred with no related tax benefit, non-deductible commissions, and non-deductible meals and entertainment expenses for the three -month periods ended March 31, 2025 and 2024 .

FUEL TECH, INC.

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-Q

Item 1. Financial Statements