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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

June 30, 2022

or

☐ | 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 July 31, 2022 there were outstanding 30,296,297 shares of Common Stock, par value $0.01 per share, of the registrant.

Table of Contents

FUEL TECH, INC.

Form 10-Q for the six-month period ended June 30, 2022

INDEX

|  | Page
PART I. FINANCIAL INFORMATION |
Item 1. | Financial Statements (Unaudited) | 1
| Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 | 1
| Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 | 2
| Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021 | 3
| Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2022 and 2021 | 4
| Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 | 5
| Notes to Condensed Consolidated Financial Statements | 6
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 20
Item 4. | Controls and Procedures | 20
PART II. | OTHER INFORMATION | 21
Item 1. | Legal Proceedings | 21
Item 1A. | Risk Factors | 21
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 21
Item 6. | Exhibits | 22
SIGNATURES | 23

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)

|  | June 30, |  |  | December 31, |
|  | 2022 |  |  | 2021 |
ASSETS |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 31,308 |  |  | $ | 35,893 |
Restricted cash and cash equivalents |  |  | 1,990 |  |  |  | 891 |
Accounts receivable, net |  |  | 6,424 |  |  |  | 3,259 |
Inventories, net |  |  | 405 |  |  |  | 348 |
Prepaid expenses and other current assets |  |  | 856 |  |  |  | 1,074 |
Total current assets |  |  | 40,983 |  |  |  | 41,465 |
Property and equipment, net of accumulated depreciation of $18,379 and $18,243, respectively |  |  | 4,556 |  |  |  | 4,609 |
Goodwill |  |  | 2,116 |  |  |  | 2,116 |
Other intangible assets, net of accumulated amortization of $369 and $341, respectively |  |  | 416 |  |  |  | 448 |
Restricted cash |  |  | — |  |  |  | 270 |
Right-of-use operating lease assets |  |  | 236 |  |  |  | 242 |
Other assets |  |  | 811 |  |  |  | 824 |
Total assets |  | $ | 49,118 |  |  | $ | 49,974 |
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |
Accounts payable |  | $ | 2,348 |  |  | $ | 1,561 |
Accrued liabilities: |  |  |  |  |  |  |  |
Operating lease liabilities - current |  |  | 118 |  |  |  | 113 |
Employee compensation |  |  | 677 |  |  |  | 688 |
Other accrued liabilities |  |  | 887 |  |  |  | 861 |
Total current liabilities |  |  | 4,030 |  |  |  | 3,223 |
Operating lease liabilities - non-current |  |  | 111 |  |  |  | 122 |
Deferred income taxes, net |  |  | 139 |  |  |  | 139 |
Other liabilities |  |  | 255 |  |  |  | 290 |
Total liabilities |  |  | 4,535 |  |  |  | 3,774 |
Stockholders’ equity: |  |  |  |  |  |  |  |
Common stock, $.01 par value, 40,000,000 shares authorized, 31,272,303 and 31,227,300 shares issued, and 30,296,297 and 30,263,791 shares outstanding, respectively |  |  | 313 |  |  |  | 312 |
Additional paid-in capital |  |  | 164,244 |  |  |  | 164,199 |
Accumulated deficit |  |  | (115,903 | ) |  |  | (114,549 | )
Accumulated other comprehensive loss |  |  | (1,896 | ) |  |  | (1,604 | )
Nil coupon perpetual loan notes |  |  | 76 |  |  |  | 76 |
Treasury stock, at cost |  |  | (2,251 | ) |  |  | (2,234 | )
Total stockholders’ equity |  |  | 44,583 |  |  |  | 46,200 |
Total liabilities and stockholders’ equity |  | $ | 49,118 |  |  | $ | 49,974 |

See notes to condensed consolidated financial statements.

1

Table of Contents

FUEL TECH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

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

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Revenues |  | $ | 6,368 |  |  | $ | 5,218 |  |  | $ | 11,903 |  |  | $ | 10,251 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of sales |  |  | 3,690 |  |  |  | 2,635 |  |  |  | 6,935 |  |  |  | 5,310 |
Selling, general and administrative |  |  | 2,874 |  |  |  | 2,957 |  |  |  | 5,928 |  |  |  | 6,057 |
Research and development |  |  | 289 |  |  |  | 315 |  |  |  | 509 |  |  |  | 730 |
|  |  | 6,853 |  |  |  | 5,907 |  |  |  | 13,372 |  |  |  | 12,097 |
Operating loss |  |  | (485 | ) |  |  | (689 | ) |  |  | (1,469 | ) |  |  | (1,846 | )
Interest expense |  |  | (4 | ) |  |  | (5 | ) |  |  | (9 | ) |  |  | (9 | )
Interest income |  |  | 8 |  |  |  | 2 |  |  |  | 9 |  |  |  | 3 |
Other income (expense), net |  |  | 134 |  |  |  | (76 | ) |  |  | 124 |  |  |  | 1,482 |
Loss before income taxes |  |  | (347 | ) |  |  | (768 | ) |  |  | (1,345 | ) |  |  | (370 | )
Income tax expense |  |  | (9 | ) |  |  | (10 | ) |  |  | (9 | ) |  |  | (10 | )
Net loss |  | $ | (356 | ) |  | $ | (778 | ) |  | $ | (1,354 | ) |  | $ | (380 | )
Net loss per common share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic net loss per common share |  | $ | (0.01 | ) |  | $ | (0.03 | ) |  | $ | (0.04 | ) |  | $ | (0.01 | )
Diluted net loss per common share |  | $ | (0.01 | ) |  | $ | (0.03 | ) |  | $ | (0.04 | ) |  | $ | (0.01 | )
Weighted-average number of common shares outstanding: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 30,296,000 |  |  |  | 30,264,000 |  |  |  | 30,282,000 |  |  |  | 28,895,000 |
Diluted |  |  | 30,296,000 |  |  |  | 30,264,000 |  |  |  | 30,282,000 |  |  |  | 28,895,000 |

See notes to condensed consolidated financial statements.

2

Table of Contents

FUEL TECH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands)

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Net loss |  | $ | (356 | ) |  | $ | (778 | ) |  | $ | (1,354 | ) |  | $ | (380 | )
Other comprehensive (loss) income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments |  |  | (222 | ) |  |  | 133 |  |  |  | (292 | ) |  |  | (60 | )
Comprehensive loss |  | $ | (578 | ) |  | $ | (645 | ) |  | $ | (1,646 | ) |  | $ | (440 | )

See notes to condensed consolidated financial statements.

3

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 six months ended June 30, 2021:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 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, 2020 |  |  | 25,229 |  |  | $ | 262 |  |  | $ | 140,138 |  |  | $ | (114,603 | ) |  | $ | (1,370 | ) |  | $ | 76 |  |  | $ | (2,182 | ) |  | $ | 22,321 |
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 398 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 398 |
Foreign currency translation adjustments |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (193 | ) |  |  | — |  |  |  | — |  |  |  | (193 | )
Stock compensation expense |  |  | — |  |  |  | — |  |  |  | 20 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 20 |
Common stock issued in connection with private placement, net |  |  | 5,000 |  |  |  | 50 |  |  |  | 23,979 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 24,029 |
Common shares issued upon vesting of restricted stock units |  |  | 50 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Taxes paid on behalf of equity award participants |  |  | (15 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (52 | ) |  |  | (52 | )
Balance at March 31, 2021 |  |  | 30,264 |  |  | $ | 312 |  |  | $ | 164,137 |  |  | $ | (114,205 | ) |  | $ | (1,563 | ) |  | $ | 76 |  |  | $ | (2,234 | ) |  | $ | 46,523 |
Net loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (778 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (778 | )
Foreign currency translation adjustments |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 133 |  |  |  | — |  |  |  | — |  |  |  | 133 |
Stock compensation expense |  |  | — |  |  |  | — |  |  |  | 20 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 20 |
Balance at June 30, 2021 |  |  | 30,264 |  |  | $ | 312 |  |  | $ | 164,157 |  |  | $ | (114,983 | ) |  | $ | (1,430 | ) |  | $ | 76 |  |  | $ | (2,234 | ) |  | $ | 45,898 |

The following summarizes the changes in total stockholders' equity for the three and six months ended June 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 |

See notes to condensed consolidated financial statements.

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FUEL TECH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

|  | Six Months Ended |
|  | June 30, |
|  | 2022 |  |  | 2021 |
Operating Activities |  |  |  |  |  |  |  |
Net loss |  | $ | (1,354 | ) |  | $ | (380 | )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |  |  |  |  |  |  |
Depreciation |  |  | 182 |  |  |  | 319 |
Amortization |  |  | 50 |  |  |  | 71 |
Loss on disposal of equipment |  |  | — |  |  |  | 13 |
Provision for doubtful accounts, net of recoveries |  |  | 43 |  |  |  | 23 |
Stock-based compensation, net of forfeitures |  |  | 46 |  |  |  | 40 |
Gain of forgiveness on Paycheck Protection Plan Loan |  |  | — |  |  |  | (1,556 | )
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | (3,245 | ) |  |  | 3,079 |
Inventories |  |  | (58 | ) |  |  | (97 | )
Prepaid expenses, other current assets and other non-current assets |  |  | 205 |  |  |  | 681 |
Accounts payable |  |  | 812 |  |  |  | (943 | )
Accrued liabilities and other non-current liabilities |  |  | (2 | ) |  |  | (1,021 | )
Net cash (used in) provided by operating activities |  |  | (3,321 | ) |  |  | 229 |
Investing Activities |  |  |  |  |  |  |  |
Purchases of equipment and patents |  |  | (138 | ) |  |  | (237 | )
Net cash used in investing activities |  |  | (138 | ) |  |  | (237 | )
Financing Activities |  |  |  |  |  |  |  |
Proceeds from sale of common stock issued in connection with private placement |  |  | — |  |  |  | 25,812 |
Costs related to sale of common stock issued in connection with private placement |  |  | — |  |  |  | (1,783 | )
Taxes paid on behalf of equity award participants |  |  | (17 | ) |  |  | (52 | )
Net cash (used in) provided by financing activities |  |  | (17 | ) |  |  | 23,977 |
Effect of exchange rate fluctuations on cash |  |  | (280 | ) |  |  | (13 | )
Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents |  |  | (3,756 | ) |  |  | 23,956 |
Cash, cash equivalents, and restricted cash and cash equivalents at beginning of period (Note 2) |  |  | 37,054 |  |  |  | 12,606 |
Cash, cash equivalents and restricted cash and cash equivalents at end of period (Note 2) |  | $ | 33,298 |  |  | $ | 36,562 |

See notes to condensed consolidated financial statements.

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FUEL TECH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

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

1. General

Organization

Fuel Tech, Inc. and subsidiaries ("Fuel Tech", the "Company", "we", "us" or "our") develops and provides proprietary technologies for air pollution control, process optimization, water treatment, and advanced engineering services. These technologies enable customers to operate in a cost-effective and environmentally sustainable manner.

The Company’s nitrogen oxide (NOx) reduction technologies reduce nitrogen oxide emissions from boilers, furnaces, and other stationary combustion sources. To reduce NOx emissions, our technologies utilize advanced combustion modification techniques and post-combustion NOx control approaches including non-catalytic, catalytic, and combined systems. The Company also provides solutions for the mitigation of particulate matter, including particulate control with electrostatic precipitator products and services, and using flue gas conditioning systems which modify the ash properties of particulate for improved collection efficiency. The Company’s FUEL CHEM® technology improves the efficiency, reliability, fuel flexibility, boiler heat rate, and environmental status of combustion units by controlling slagging, fouling, corrosion, and opacity. Water treatment technologies include DGI™ Dissolved Gas Infusion Systems which utilize a patented nozzle to deliver supersaturated oxygen solutions and other gas-water combinations to target process applications or environmental issues. This infusion process has a variety of applications in the water and wastewater industries, including remediation, aeration, biological treatment, and wastewater odor management.

Many of Fuel Tech’s products and services rely heavily on the Company’s Computational Fluid Dynamics modeling capabilities, which are enhanced by internally developed, high-end visualization software.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Exchange Act. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for the fair statement of Fuel Tech's financial position, cash flows, and results of operations for the periods presented. All significant intercompany transactions and balances have been eliminated. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year ending December 31, 2022. 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, 2021 as filed with the Securities and Exchange Commission.

COVID-19 Pandemic and Geopolitical Events

The effects of the coronavirus (COVID-19) global pandemic have presented significant risks to the Company, not all of which the Company is able to fully evaluate or even foresee at the current time. Although the impact of the pandemic is difficult to quantify, the Company has experienced, and may continue to experience, reductions in demand for certain of our products due to the delay or abandonment of ongoing or anticipated projects due to our customers’, suppliers’ and other third parties’ financial distress or concern regarding the volatility of global markets.

Geopolitical events and global economic sanctions resulting from the ongoing conflict between Russia and Ukraine may impact new or existing projects and the 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.

Management cannot predict the full impact of the COVID-19 pandemic and geopolitical events on the Company’s sales and marketing channels and supply chain, and as a result, the ultimate extent of the effects on the Company is highly uncertain and will depend on future developments. Such effects could exist for an extended period of time. The Company continues to monitor the potential impacts on the business.

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2. Summary of Significant Accounting Policies

Restricted cash and cash equivalents

Restricted cash as of June 30, 2021 represent funds that are restricted to satisfy any amount borrowed against the Company's Cash Collateral Security agreement with BMO Harris Bank N.A (Cash Collateral Security agreement). In June 2022, the Company replaced the former Cash Collateral Security agreement with an Investment Collateral Security agreement with BMO Harris Bank N.A (Investment Collateral Security agreement) where existing standby letters of credit are collateralized by amounts held in the Company's investment funds (see Note 10). At June 30, 2022, the amount of funds collateralized under the Investment Collateral Security agreement is $1,990 relating to existing standby letters of credit with varying maturity dates and expire no later than June 30, 2023.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash and cash equivalents reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows:

|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |
Cash |  | $ | 23,298 |  |  | $ | 36,194 |
Cash equivalents |  |  | 8,010 |  |  |  | — |
Restricted cash and cash equivalents included in current assets |  |  | 1,990 |  |  |  | 98 |
Restricted cash included in long-term assets |  |  | — |  |  |  | 270 |
Total cash, cash equivalents, and restricted cash and cash equivalents shown in the Condensed Consolidated Statements of Cash Flows |  | $ | 33,298 |  |  | $ | 36,562 |

Investments

In June 2022, the Board of Directors approved a plan to invest up to $10 million 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). At June 30, 2022, $10,000 was invested in a money market fund with the intent to purchase debt securities in the near term. A portion of the funds invested are restricted as collateral under the Investment Collateral Security agreement (see Note 10).

We consider all highly liquid debt investments with original maturities from the date of purchase of three months or less as cash equivalents. Cash equivalents include investments in money market funds. Carrying value of cash equivalents approximates fair value due to the maturities of 3 months or less.

Our investments in debt securities consist of Unites States (US) Treasury securities, including Notes, Bonds, and Bills, and US Government Agency securities, that 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 3 to 36 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. HTM debt investments with original maturities at the date of purchase greater than approximately three months and remaining maturities of less than one year are classified as short-term investments. HTM debt investments with remaining maturities beyond one year are classified as other long-term investments. Interest income, including amortization of premium and accretion of discount, are included on the Condensed Consolidated Statements of Operations in Interest income under the effective yield method. Discounts or premiums are included in the effective yield and amortized on a straight-line until maturity.

Inventories

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 June 30, 2022 and December 31, 2021, inventory included equipment constructed for resale of $208 and $227, respectively, and spare parts, net of reserves of $197 and $121, 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. Inventories 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.

3. Revenue

Disaggregated Revenue by Product Technology

The following table presents our revenues disaggregated by product technology:

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Air Pollution Control |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Technology solutions |  | $ | 1,966 |  |  | $ | 223 |  |  | $ | 3,807 |  |  | $ | 596 |
Spare parts |  |  | 262 |  |  |  | 236 |  |  |  | 358 |  |  |  | 416 |
Ancillary revenue |  |  | 510 |  |  |  | 527 |  |  |  | 777 |  |  |  | 881 |
Total Air Pollution Control technology revenues |  |  | 2,738 |  |  |  | 986 |  |  |  | 4,942 |  |  |  | 1,893 |
FUEL CHEM |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
FUEL CHEM technology solutions |  |  | 3,630 |  |  |  | 4,232 |  |  |  | 6,961 |  |  |  | 8,358 |
Total Revenues |  | $ | 6,368 |  |  | $ | 5,218 |  |  | $ | 11,903 |  |  | $ | 10,251 |

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Disaggregated Revenue by Geography

The following table presents our revenues disaggregated by geography, based on the location of the end-user:

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
United States |  | $ | 4,279 |  |  | $ | 4,588 |  |  | $ | 7,967 |  |  | $ | 9,051 |
Foreign Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Latin America |  |  | 60 |  |  |  | 142 |  |  |  | 129 |  |  |  | 217 |
Europe |  |  | 922 |  |  |  | 301 |  |  |  | 1,326 |  |  |  | 676 |
Asia |  |  | 1,107 |  |  |  | 187 |  |  |  | 2,481 |  |  |  | 307 |
Total Foreign Revenues |  |  | 2,089 |  |  |  | 630 |  |  |  | 3,936 |  |  |  | 1,200 |
Total Revenues |  | $ | 6,368 |  |  | $ | 5,218 |  |  | $ | 11,903 |  |  | $ | 10,251 |

Timing of Revenue Recognition

The following table presents the timing of our revenue recognition:

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Products transferred at a point in time |  | $ | 4,402 |  |  | $ | 4,995 |  |  | $ | 8,096 |  |  | $ | 9,655 |
Products and services transferred over time |  |  | 1,966 |  |  |  | 223 |  |  |  | 3,807 |  |  |  | 596 |
Total Revenues |  | $ | 6,368 |  |  | $ | 5,218 |  |  | $ | 11,903 |  |  | $ | 10,251 |

Contract Balances

The timing of revenue recognition, billings, and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Condensed Consolidated Balance Sheets. In our Air Pollution Control (APC) technology segment, amounts are billed as work progresses in accordance with agreed-upon contractual terms. 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 unbilled receivables (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 June 30, 2022, December 31, 2021, and December 31, 2020, contract assets for APC technology projects were approximately $1,106, $1,277, and $2,079, respectively, and at December 31, 2020, contract assets for the FUEL CHEM technology segment were approximately $269, and are included in accounts receivable on the Condensed Consolidated Balance Sheets. There were no contract assets for the FUEL CHEM technology segment as of June 30, 2022 or December 31, 2021.

However, 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 $578, $390, and $850 at June 30, 2022, December 31, 2021, and December 31, 2020, respectively, and are included in other accrued liabilities on the Condensed Consolidated Balance Sheets.

Changes in the contract asset and liability balances during the six month period ended June 30, 2022, 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 $250 for the three and six months ended June 30, 2022, respectively, and $49 and $157 for three and six months ended June 30, 2021, respectively, which represented primarily revenue from progress towards completion of our APC technology contracts.

As of June 30, 2022 and December 31, 2021, we had no construction contracts in progress that were identified as a loss contract.

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Remaining Performance Obligations

Remaining performance obligations represents the transaction price of APC technology booked orders for which work has not been performed. As of June 30, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was $10,547. The Company expects to recognize revenue on approximately $8,414 of the remaining performance obligations over the next 12 months with the remaining recognized thereafter.

Accounts Receivable

The components of accounts receivable are as follows:

|  | As of |
|  | June 30, 2022 |  |  | December 31, 2021 |
Trade receivables |  | $ | 5,500 |  |  | $ | 2,122 |
Unbilled receivables |  |  | 1,106 |  |  |  | 1,277 |
Other short-term receivables |  |  | 78 |  |  |  | 83 |
Allowance for doubtful accounts |  |  | (260 | ) |  |  | (223 | )
Total accounts receivable |  | $ | 6,424 |  |  | $ | 3,259 |

4. Restructuring Activities

On January 18, 2019, the Company announced a planned suspension of its APC business operation in China. 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 June 30, 2022 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 $6) in addition to collection efforts for the remaining accounts receivable.

The following table presents our revenues and net loss for 2022 and 2021 in China as follows:

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Total revenues |  | $ | — |  |  | $ | 4 |  |  | $ | 1 |  |  | $ | 15 |
Net loss |  |  | (38 | ) |  |  | (63 | ) |  |  | (51 | ) |  |  | (38 | )

Total assets primarily consist of cash, accounts receivable, contract assets, prepaid expenses, and other current assets. Total liabilities consist of accounts payable and certain accrued liabilities.

The following table presents net assets in China as follows:

|  | As of |
|  | June 30, 2022 |  |  | December 31, 2021 |
Total assets |  | $ | 1,121 |  |  | $ | 1,235 |
Total liabilities |  |  | 85 |  |  |  | 92 |
Total net assets |  | $ | 1,036 |  |  | $ | 1,143 |

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5. Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss by component were as follows:

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Foreign currency translation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | (1,674 | ) |  | $ | (1,563 | ) |  | $ | (1,604 | ) |  | $ | (1,370 | )
Other comprehensive (loss) income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments (1) |  |  | (222 | ) |  |  | 133 |  |  |  | (292 | ) |  |  | (60 | )
Total accumulated other comprehensive loss |  | $ | (1,896 | ) |  | $ | (1,430 | ) |  | $ | (1,896 | ) |  | $ | (1,430 | )

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

6. Treasury Stock

Common stock held in treasury totaled 976,006 and 963,509 with a cost of $2,251 and $2,234 at June 30, 2022 and December 31, 2021, respectively. These shares were withheld from employees to settle personal tax withholding obligations that arose as a result of restricted stock units that vested in the periods presented.

7. Earnings per Share

Basic earnings per share excludes the dilutive effects of stock options, restricted stock units (RSUs), warrants, and the nil coupon non-redeemable convertible unsecured loan notes. Diluted earnings per share includes the dilutive effect of the nil coupon non-redeemable convertible unsecured loan notes, RSUs, warrants, and unexercised in-the-money stock options, except in periods of net loss where the effect of these instruments is anti-dilutive. 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 and six months ended June 30, 2022 and 2021, 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 six months ended June 30, 2022 and 2021.

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Basic weighted-average shares |  |  | 30,296,000 |  |  |  | 30,264,000 |  |  |  | 30,282,000 |  |  |  | 28,895,000 |
Conversion of unsecured loan notes |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Unexercised options and unvested RSUs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Diluted weighted-average shares |  |  | 30,296,000 |  |  |  | 30,264,000 |  |  |  | 30,282,000 |  |  |  | 28,895,000 |

For the three and six months ended June 30, 2022, Fuel Tech had weighted-average outstanding equity awards of 583,000 and 466,000, respectively, and warrants of 2,850,000 in both periods, which were antidilutive for the purpose of the calculation of diluted earnings per share. For the three and six months ended June 30, 2022, Fuel Tech had 23,000 and 36,000, respectively, of 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. Fuel Tech had 160,000 weighted average equity awards outstanding at June 30, 2021 that were not dilutive for the purpose of inclusion in the calculation of diluted earnings per share.

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8. 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. 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 5,600,676 shares that may be issued or reserved for awards to participants under the Incentive Plan. As of June 30, 2022, Fuel Tech had 1,809,250 shares available for share-based awards under the Incentive Plan.

We did not record any excess tax benefits within income tax expense for the three and six months ended June 30, 2022 and 2021. 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 six months ended June 30, 2022 and 2021. In addition, we account for forfeitures of awards based on an estimate of the number of awards expected to be forfeited and adjusting 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 six months ended June 30, 2022 and 2021 were as follows:

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Stock options and restricted stock units, net of forfeitures |  | $ | 28 |  |  | $ | 20 |  |  | $ | 46 |  |  | $ | 40 |
After-tax effect of stock-based compensation |  | $ | 28 |  |  | $ | 20 |  |  | $ | 46 |  |  | $ | 40 |

Stock Options

Stock options granted to employees under the Incentive Plans have a 10-year life and they vest as follows: 50% after the second anniversary of the award date, 25% after the third anniversary, and the final 25% after the fourth anniversary of the award date. Fuel Tech calculates stock compensation expense for employee option awards based on the grant date fair value of the award, less expected annual forfeitures, and recognizes expense on a straight-line basis over the four-year service period of the award. Stock options granted to members of our board of directors vest immediately. Stock compensation for these awards is based on the grant date fair value of the award and is recognized in expense immediately.

Fuel Tech uses the Black-Scholes option pricing model to estimate the grant date fair value of employee stock options. The principal variable assumptions utilized in valuing options and the methodology for estimating such model inputs include: (1) risk-free interest rate – an estimate based on the yield of zero–coupon treasury securities with a maturity equal to the expected life of the option; (2) expected volatility – an estimate based on the historical volatility of Fuel Tech’s Common Stock for a period equal to the expected life of the option; 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 six months ended June 30, 2022 was as follows:

|  |  |  |  |  |  |  |  |  | Weighted- Average |  |  |  |  |
|  | Number |  |  | Weighted- |  |  | Remaining |  |  | Aggregate |
|  | of |  |  | Average |  |  | Contractual |  |  | Intrinsic |
|  | Options |  |  | Exercise Price |  |  | Term |  |  | Value |
Outstanding on January 1, 2022 |  |  | 434,500 |  |  | $ | 3.05 |  |  |  |  |  |  |  |  |
Granted |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Exercised |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Expired or forfeited |  |  | (50,000 | ) |  |  | 3.55 |  |  |  |  |  |  |  |  |
Outstanding on June 30, 2022 |  |  | 384,500 |  |  | $ | 2.98 |  |  |  | 2.94 |  |  | $ | 24 |
Exercisable on June 30, 2022 |  |  | 384,500 |  |  | $ | 2.98 |  |  |  | 2.94 |  |  | $ | 24 |

As of June 30, 2022, there was no unrecognized compensation cost related to non-vested stock options granted under the Incentive Plans.

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Restricted Stock Units

RSUs granted to employees vest over time based on continued service (typically vesting over a period between two to four years), and RSUs granted to directors vest after a one year vesting period based on continued service. Such time-vested RSUs are valued at the date of grant using the intrinsic value method based on the closing price of the Common Shares on the grant date. Compensation cost, adjusted for estimated forfeitures, is amortized on a straight-line basis over the requisite service period.

At June 30, 2022, there is $916 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 2.80 years.

A summary of restricted stock unit activity for the six months ended June 30, 2022 is as follows:

|  |  |  |  |  | Weighted Average |
|  |  |  |  |  | Grant Date |
|  | Shares |  |  | Fair Value |
Unvested restricted stock units at January 1, 2022 |  |  | 45,003 |  |  | $ | 1.51 |
Granted |  |  | 807,048 |  |  |  | 1.32 |
Forfeited |  |  | — |  |  |  | — |
Vested |  |  | (45,003 | ) |  |  | 1.51 |
Unvested restricted stock units at June 30, 2022 |  |  | 807,048 |  |  | $ | 1.32 |

The fair value of restricted stock that vested during the six month period ending June 30, 2022 was $68.

Deferred Directors Fees

In addition to the Incentive Plans, Fuel Tech has a Deferred Compensation Plan for Directors (Deferred Plan). Under the terms of the Deferred Plan, Directors can elect to defer Directors’ fees for shares of Fuel Tech Common Stock that are issuable at a future date as defined in the agreement. In accordance with Accounting Standards Codification (ASC) 718, Fuel Tech accounts for these awards as equity awards as opposed to liability awards. During the six month periods ended June 30, 2022 and 2021, Fuel Tech recorded no stock-based compensation expense under the Deferred Plan.

9. Warrants

The following table summarizes information about warrants outstanding and exercisable at June 30, 2022:

Range of Exercise Price |  |  | Number Outstanding/Exercisable |  |  | Weighted Average Remaining Life in Years |  |  | Weighted Average Exercise Price |
$5.10 |  |  |  | 2,500,000 |  |  | 4.12 |  |  | $ | 5.10 |
$6.45 |  |  |  | 350,000 |  |  | 4.12 |  |  | $ | 6.45 |
|  |  |  | 2,850,000 |  |  |  |  |  |  |  |

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10. 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 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 June 30, 2022, the Company had outstanding standby letters of credit totaling approximately $1,326 under the Investment Collateral Security agreement. At June 30, 2022, the investments held as collateral totaled $1,990. Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instruments.

On April 17, 2020, the Company received $1,556 in loan proceeds from the Paycheck Protection Program (PPP), established pursuant to the Coronavirus Aid, Relief, and Economic Security Act and administered by the U.S. Small Business Administration (SBA). The unsecured loan is evidenced by a promissory note of the Company dated April 15, 2020 in the principal amount of $1,556, issued to BMO Harris Bank N.A., the lender.

On January 8, 2021, the Company received full forgiveness from the SBA for the entire balance of loan proceeds used to fund its qualified payroll expenses. The Company accounted for the PPP Loan as debt in accordance with Financial Accounting Standards Board (FASB) ASC 470, Debt and accrued interest in accordance with the interest method under FASB ASC 835-30. When the loan was forgiven, the Company reduced the non-current liability by the amount forgiven and recorded other income in the Condensed Consolidated Statements of Operations.

11. Business Segment and Geographic Financial Data

Business Segment Financial Data

We segregate our financial results into two reportable segments representing two broad technology segments as follows:

| • | The Air Pollution Control technology segment includes technologies to reduce NOx emissions in flue gas generated by the firing of natural gas or coal from boilers, incinerators, furnaces, and other stationary combustion sources. These include Over-Fire Air systems, NOxOUT® and HERT™ Selective Non-Catalytic Reduction systems, and Selective Catalytic Reduction (SCR) systems. Our SCR systems can also include Ammonia Injection Grid, and Graduated Straightening Grid GSG™ systems to provide high NOx reductions at significantly lower capital and operating costs than conventional SCR systems. 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. Flue Gas Conditioning systems are chemical injection systems offered in markets outside the U.S. and Canada to enhance electrostatic precipitator and fabric filter performance in controlling particulate emissions.

| • | The FUEL CHEM® technology segment, which uses chemical processes in combination with advanced Computational Fluid Dynamics and Chemical Kinetics Modeling boiler modeling, for the control of slagging, fouling, corrosion, opacity and other sulfur trioxide-related issues in furnaces and boilers through the addition of chemicals into the furnace using TIFI® Targeted In-Furnace Injection™ technology.

The “Other” classification includes those profit and loss items not allocated to either reportable segment. There are no inter-segment sales that require elimination.

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

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

|  | Air Pollution |  |  | FUEL CHEM |  |  |  |  |  |  |  |  |
Three months ended June 30, 2022 |  | Control Segment |  |  | Segment |  |  | Other |  |  | Total |
Revenues from external customers |  | $ | 2,738 |  |  | $ | 3,630 |  |  | $ | — |  |  | $ | 6,368 |
Cost of sales |  |  | (1,802 | ) |  |  | (1,888 | ) |  |  | — |  |  |  | (3,690 | )
Gross margin |  |  | 936 |  |  |  | 1,742 |  |  |  | — |  |  |  | 2,678 |
Selling, general and administrative |  |  | — |  |  |  | — |  |  |  | (2,874 | ) |  |  | (2,874 | )
Research and development |  |  | — |  |  |  | — |  |  |  | (289 | ) |  |  | (289 | )
Operating income (loss) from operations |  | $ | 936 |  |  | $ | 1,742 |  |  | $ | (3,163 | ) |  | $ | (485 | )

|  | Air Pollution |  |  | FUEL CHEM |  |  |  |  |  |  |  |  |
Three months ended June 30, 2021 |  | Control Segment |  |  | Segment |  |  | Other |  |  | Total |
Revenues from external customers |  | $ | 986 |  |  | $ | 4,232 |  |  | $ | — |  |  | $ | 5,218 |
Cost of sales |  |  | (507 | ) |  |  | (2,128 | ) |  |  | — |  |  |  | (2,635 | )
Gross margin |  |  | 479 |  |  |  | 2,104 |  |  |  | — |  |  |  | 2,583 |
Selling, general and administrative |  |  | — |  |  |  | — |  |  |  | (2,957 | ) |  |  | (2,957 | )
Research and development |  |  | — |  |  |  | — |  |  |  | (315 | ) |  |  | (315 | )
Operating income (loss) from operations |  | $ | 479 |  |  | $ | 2,104 |  |  | $ | (3,272 | ) |  | $ | (689 | )

|  | Air Pollution |  |  | FUEL CHEM |  |  |  |  |  |  |  |  |
Six months ended June 30, 2022 |  | Control Segment |  |  | Segment |  |  | Other |  |  | Total |
Revenues from external customers |  | $ | 4,942 |  |  | $ | 6,961 |  |  | $ | — |  |  | $ | 11,903 |
Cost of sales |  |  | (3,231 | ) |  |  | (3,704 | ) |  |  | — |  |  |  | (6,935 | )
Gross margin |  |  | 1,711 |  |  |  | 3,257 |  |  |  | — |  |  |  | 4,968 |
Selling, general and administrative |  |  | — |  |  |  | — |  |  |  | (5,928 | ) |  |  | (5,928 | )
Research and development |  |  | — |  |  |  | — |  |  |  | (509 | ) |  |  | (509 | )
Operating income (loss) from operations |  | $ | 1,711 |  |  | $ | 3,257 |  |  | $ | (6,437 | ) |  | $ | (1,469 | )

|  | Air Pollution |  |  | FUEL CHEM |  |  |  |  |  |  |  |  |
Six months ended June 30, 2021 |  | Control Segment |  |  | Segment |  |  | Other |  |  | Total |
Revenues from external customers |  | $ | 1,893 |  |  | $ | 8,358 |  |  | $ | — |  |  | $ | 10,251 |
Cost of sales |  |  | (1,038 | ) |  |  | (4,272 | ) |  |  | — |  |  |  | (5,310 | )
Gross margin |  |  | 855 |  |  |  | 4,086 |  |  |  | — |  |  |  | 4,941 |
Selling, general and administrative |  |  | — |  |  |  | — |  |  |  | (6,057 | ) |  |  | (6,057 | )
Research and development |  |  | — |  |  |  | — |  |  |  | (730 | ) |  |  | (730 | )
Operating income (loss) from operations |  | $ | 855 |  |  | $ | 4,086 |  |  | $ | (6,787 | ) |  | $ | (1,846 | )

Geographic Segment Financial Data

Information concerning our operations by geographic area is provided below. Revenues are attributed to countries based on the location of the end-user. Assets are those directly associated with operations of the geographic area.

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 4,279 |  |  | $ | 4,588 |  |  | $ | 7,967 |  |  | $ | 9,051 |
Foreign |  |  | 2,089 |  |  |  | 630 |  |  |  | 3,936 |  |  |  | 1,200 |
|  | $ | 6,368 |  |  | $ | 5,218 |  |  | $ | 11,903 |  |  | $ | 10,251 |

|  | June 30, |  |  | December 31, |
|  | 2022 |  |  | 2021 |
Assets: |  |  |  |  |  |  |  |
United States |  | $ | 45,934 |  |  | $ | 46,271 |
Foreign |  |  | 3,184 |  |  |  | 3,703 |
|  | $ | 49,118 |  |  | $ | 49,974 |

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12. Accrued Liabilities

The components of other accrued liabilities are as follows:

|  | As of |
|  | June 30, 2022 |  |  | December 31, 2021 |
Contract liabilities (Note 3) |  | $ | 578 |  |  | $ | 390 |
Other accrued liabilities |  |  | 309 |  |  |  | 471 |
Total other accrued liabilities |  | $ | 887 |  |  | $ | 861 |

13. Commitments and Contingencies

Fuel Tech is subject to various claims and contingencies related to, among other things, workers compensation, general liability (including product liability), and lawsuits. The Company records liabilities where a contingent loss is probable and can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The Company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred.

From time to time we are involved in litigation with respect to matters arising from the ordinary conduct of our business. In the opinion of management, based upon presently available information, either adequate provision for anticipated costs have been accrued or the ultimate anticipated costs will not materially affect our consolidated financial position, results of operations, or cash flows. We do not believe we have any pending loss contingencies that are probable or reasonably possible of having a material impact on our consolidated financial position, results of operations or cash flows.

Fuel Tech issues a standard product warranty with the sale of its products to customers. Our recognition of warranty liability is based primarily on analyses of warranty claims experienced in the preceding years as the nature of our historical product sales for which we offer a warranty are substantially unchanged. 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 six months ended June 30, 2022 and 2021. The warranty liability balance was $159 at June 30, 2022 and December 31, 2021.

14. Income Taxes

The Company’s effective tax rate is approximately 0.7% and 2.6% for the six month periods ended June 30, 2022 and 2021, respectively. The Company's effective tax rate differs from the statutory federal tax rate of 21% for the six month periods ended June 30, 2022 and 2021 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 six month periods ended June 30, 2022 and 2021. Income generated in the six months ended June 30, 2021 attributed to the gain on forgiveness of the Paycheck Protection Plan loan is tax exempt.

Fuel Tech had no unrecognized tax benefits as of June 30, 2022 and December 31, 2021.

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15. Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements.

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FUEL TECH, INC.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

In the second quarter of 2022, the Company continued to experience a challenging operational environment resulting from the ongoing substitution of gas-fired and renewable energy plants for coal-fired installations and the ongoing impacts of geopolitical events and the coronavirus (COVID-19) global pandemic. We continue to invest in new technologies to expand our product offerings into the water pollution control and treatment market. In June, the Board approved a plan to invest excess capital to provide returns on excess cash, while preserving capital and managing liquidity. Our capital resources are sufficient for our immediate and longer-term needs, and we continue to enjoy the services and support of a dedicated workforce. We expect that our cost control efforts will maintain our existing levels of operating expenditures and the diminishing effects of the pandemic should lead to an improved market outlook.

COVID-19 Pandemic and Geopolitical Events

The effects of the COVID-19 global pandemic have presented significant risks to the Company, not all of which the Company is able to fully evaluate or even foresee at the current time. Although the impact of the pandemic is difficult to quantify, the Company has experienced, and may continue to experience, reductions in demand for certain of our products due to the delay or abandonment of ongoing or anticipated projects due to our customers’, suppliers’ and other third parties’ financial distress or concern regarding the volatility of global markets. Geopolitical events and global economic sanctions resulting from the ongoing conflict between Russia and Ukraine may impact new or existing projects and the 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. Management cannot predict the full impact of the COVID-19 pandemic and geopolitical events on the Company’s sales and marketing channels and supply chain, and as a result, the ultimate extent of the effects on the Company is highly uncertain and will depend on future developments. Such effects could exist for an extended period of time. The Company continues to monitor the potential impacts on the business.

Key Operating Factors

Our FUEL CHEM segment experienced a decline in revenues and segment operating profits in the quarter compared to 2021. FUEL CHEM faced some headwinds in the quarter due to the loss of one customer from permanent plant retirement and the reduction in demand from other customers due to climate and operating and maintenance scheduling.

Our Air Pollution Control (APC) business experienced improvement in the quarter compared to 2021, due to the execution on projects awarded in the second half of 2021 and the first half of 2022. We are also encouraged by the pace and depth of our business development activities, which reflects an increased focus on global emissions protocols across a variety of fuel sources. Our Consolidated APC backlog at June 30, 2022 was $10,547 and our global sales pipeline is in the $50 -75 million range.

Results of Operations

Revenues

Revenues for the three month periods ending June 30, 2022 and 2021 were $6,368 and $5,218, respectively, representing an increase of $1,150, or 22%, versus the same period last year. Revenues for the six month periods ending June 30, 2022 and 2021 were $11,903 and $10,251, respectively, representing an increase of $1,652, or 16%, versus the same period last year.

The APC technology segment generated revenues of $2,738 for the three month period ended June 30, 2022, representing an increase of $1,752, or 178%, from the prior year amount of $986. The APC technology segment generated revenues of $4,942 and $1,893 for the six month periods ended June 30, 2022 and 2021, respectively, representing an increase of $3,049, or 161%. These increases in APC revenue were primarily related to timing of project execution and new APC orders announced during 2021 and continuing through the first six months of 2022. Consolidated APC backlog at June 30, 2022 was $10,547 versus backlog at December 31, 2021 of $9,119. Our current backlog consists of U.S. domestic projects totaling $8,303 and international projects totaling $2,244.

The FUEL CHEM® technology segment generated revenues of $3,630 and $4,232 for the three month periods ended June 30, 2022 and 2021, respectively, representing a decrease of $602, or 14%. The FUEL CHEM® technology segment generated revenues of $6,961 and $8,358 for the six month periods ended June 30, 2022 and 2021, respectively, representing a decrease of $1,397, or 17%. The decreases in FUEL CHEM revenue for the three and six months ended June 30, 2022 as compared to the same period of the prior year were partially due to the loss of one customer due to permanent plant retirement and unforeseen plant outages.

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Cost of sales and gross margin

Consolidated gross margin percentage for the three month periods ended June 30, 2022 and 2021 were 42% and 50%, respectively. Gross margin decreased versus the comparable period due to the decrease in both operating segment gross margins. For the three month periods ended June 30, 2022 and 2021 the APC gross margin decreased to 34% from 49%, respectively, primarily due to product and project mix. FUEL CHEM gross margins decreased to 48% from 50% in the current quarter due to the decrease in revenue volume and higher material, freight, and labor costs.

Consolidated gross margin percentage for the six month periods ended June 30, 2022 and 2021 were 42% and 48%, respectively. Gross margin decreased versus the comparable period due to the decrease in both operating segment gross margins. For the six month periods ended June 30, 2022 and 2021 the APC gross margin decreased to 35% from 45%, respectively, primarily due to product and project mix. FUEL CHEM gross margins decreased to 47% from 49% in the current quarter due to the decrease in revenue volume and higher material, freight, and labor costs.

Selling, general and administrative

Selling, general and administrative expenses (SG&A) were $2,874 and $2,957 for the three month periods ended June 30, 2022 and 2021, respectively. For the three month period ended June 30, 2022 the decrease of $83 is primarily the result of decreases in outside services of $48, depreciation expense of $33, certain administrative overhead expenses for our international operations of $24, and other costs of $55, partially offset by increases in employee related costs of $44 and travel costs of $33. For the three month periods ending June 30, 2022 and 2021, SG&A as a percentage of revenues decreased to 45% from 57%. The decrease versus the comparable period is primarily due to the increase in overall revenues and the decrease in SG&A in the current year.

SG&A expenses were $5,928 and $6,057 for the six month periods ended June 30, 2022 and 2021, respectively. For the six month period ended June 30, 2022 the decrease of $129 is primarily the result of decreases in depreciation expense of $58, employee related costs of $40, outside services of $27, and other costs of $64, partially offset by increases in travel costs of $54 and certain administrative overhead expenses for our international operations of $6. For the six month periods ending June 30, 2022 and 2021, SG&A as a percentage of revenues decreased to 50% from 59%. The decrease versus the comparable period is primarily due to the increase in overall revenues and the decrease in SG&A in the current year.

Research and development

Research and development expenses for the three and six month periods ended June 30, 2022 were $289 and $509, respectively, and for the same periods in 2021 were $315 and $730, respectively. The decreases in expenditures were related to reduced employee related costs and timing of execution on current project initiatives. The expenditures in our research and development expenses are focused on new product development efforts in the pursuit of commercial applications for technologies outside of our traditional markets, and in the development and analysis of new technologies that could represent incremental market opportunities. This includes water treatment technologies and more specifically, our DGI™ Dissolved Gas Infusion Systems, an innovative alternative to current aeration technology. This infusion process has a variety of applications in the water and wastewater industries, including remediation, treatment, biological activity, and wastewater odor management. DGI technology benefits include reduced energy consumption, installation costs, and operating costs, while improving treatment performance.

Income tax

Income tax expense for both of the three and six month periods ended June 30, 2022 was $9. Income tax expense for both of the three and six month periods ended June 30, 2021 was $10. The Company is projecting a consolidated effective tax rate of approximately 0% for 2022, which is lower than the federal income tax rate of 21%. The Company's effective tax rate differs from the statutory federal tax rate of 21% for the three and six month periods ended June 30, 2022 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.

Other (expense) income, net

Other income, net was $134 for the three month period ended June 30, 2022 compared to Other expense, net of $76 for the same period in 2021. Other income (expense), net changed $210 mainly due to transactional foreign exchange gain/loss.

Other income, net was $124 for the six month period ended June 30, 2022 compared to $1,482 for the same period in 2021. Other income, net decreased $1,358 due to the forgiveness of the Paycheck Protection Program Loan in 2021 consisting of $1,556 of principal and $10 of accrued interest.

Liquidity and Sources of Capital

We have losses from operations during the six month period ended June 30, 2022 totaling $1,469. Our cash used by operations for this same period totaled $3,321.

Our cash and cash equivalent balance as of June 30, 2022 totaled $33,298, which includes $8,010 of cash equivalents and $1,990 of restricted cash equivalents, and our working capital totaled $36,953. We have no outstanding debt other than our outstanding letters of credit, under our Investment Collateral Security agreement with BMO Harris Bank, N.A. (the Investment Collateral Security agreement), which does not have any financial covenants. We expect to continue operating under this arrangement for the foreseeable future.

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Operating activities used cash of $3,321 for the six month period ended June 30, 2022, primarily due to an increase in accounts receivable balances of $3,245 due to the timing of project milestone billings and the net loss from continuing operations, partially offset by removals of non-cash items from our net loss from continuing operations for depreciation and amortization of $232, increases in accounts payable balances of $812, and a decrease in other assets of $205.

Operating activities provided $229 of cash for the six month period ended June 30, 2021, primarily due to decreases in our accounts receivable balance of $3,079 and prepaid expenses and other current and non-current assets of $681 and the add back of non-cash items from our net loss including depreciation and amortization of $390, partially offset by the add back of a non-cash items from our net loss for the gain on the Paycheck Protection Program Loan forgiveness of $1,556 and decreases in our accounts payable balance of $943 and accrued liabilities and other non-current liabilities of $1,021.

Investing activities used cash of $138 and $237 for the six month periods ended June 30, 2022 and 2021, respectively. Investing activities for the six month periods ended June 30, 2022 and 2021 primarily consisted of purchases of equipment.

Financing activities used cash of $17 for the six month period ended June 30, 2022 compared to cash provided of $23,977 for the six month period ended June 30, 2021. In 2022, the financing activity was related to the taxes paid on behalf of the equity award participants on the vesting of restricted stock units. In 2021, the Company issued common stock in connection with the private placement offering. Proceeds from the private placement offering were $25,812, partially offset by the costs related to the offering of $1,783.

The effects of the COVID-19 global pandemic have presented significant risks to the Company, not all of which the Company is able to fully evaluate or even foresee at the current time. Although the impact of the pandemic is difficult to quantify, the Company has experienced, and may continue to experience, reductions in demand for certain of our products due to the delay or abandonment of ongoing or anticipated projects due to our customers’, suppliers’ and other third parties’ financial distress or concern regarding the volatility of global markets. Other directly or indirectly COVID-19 related effects, such as supply chain disruptions and travel restrictions, have been impacting operations and financial performance to varying degrees. We continue to monitor our liquidity needs and in response to our recent periods of declines in revenue and net losses have taken measures to reduce expenses and restructure operations which we feel are necessary to ensure we maintain sufficient working capital and liquidity to operate the business and invest in our future. We have evaluated our ongoing business needs and considered the cash requirements of our base business of Air Pollution Control and FUEL CHEM, as well as our efforts to wind-down our APC operations in China. This evaluation included consideration of the following: a) customer and revenue trends in our APC and FUEL CHEM business segments, b) current operating structure and expenditure levels, and c) the costs of winding down our APC operations in China as well as other research and development initiatives. Based on this analysis, management believes that currently we have sufficient cash and working capital to operate our base APC and FUEL CHEM businesses. We believe our current cash position and net cash flows expected to be generated from operations are adequate to fund planned operations of the Company for the next 12 months.

We expect additional capital expenditures in 2022 for maintenance of field equipment, computer and systems, and general office equipment. We expect to fund our capital expenditures with cash from operations or cash on hand.

In June 2022, the Board of Directors approved an investment plan that would hold $10,000 in funds at BMO Harris Bank (BMO Harris) to be invested in held-to-maturity debt securities of United States (US) Treasuries, including Notes, Bonds, and Bills, or US Government Agency securities. The funds would be held in money market funds until they are invested in those securities. The investments would be structured to create a maturity “ladder” where the proceeds from maturities are re-invested to maintain a balance of short- and long-term investments based on the expected business needs. Maturities will be between three and thirty-six months. This strategy allows the Company to provide returns on excess cash, while managing liquidity and minimizing exposure to interest rate fluctuations.

On June 30, 2022, the Company entered into the Investment Collateral Security agreement to use for the sole purpose of issuing standby letters of credit, which replaces the Cash Collateral Security agreement with BMO Harris Bank, N.A. (the Former Collateral agreement). 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 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 June 30, 2022, the Company had outstanding standby letters of credit totaling approximately $1,326 under the Investment Collateral Security agreement. At June 30, 2022, the investments held as collateral totaled $1,990. Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instruments.

On June 19, 2019, the Company entered into the Former Collateral agreement to use for the sole purpose of issuing standby letters of credit. The Former Collateral agreement requires us to pledge as cash collateral 105% of the aggregate face amount of outstanding standby letters of credit. The Company paid 250 basis points on the face values of outstanding letters of credit. There were no financial covenants set forth in the Former Collateral agreement. At June 30, 2022, the Company had no outstanding standby letters of credit under the Former Collateral agreement.

On February 11, 2021, Fuel Tech entered into a securities purchase agreement to issue and sell, in a private placement, 5,000,000 shares of Common Stock and 2,500,000 warrants exercisable for a total of 2,500,000 shares of Common Stock with an exercise price of $5.10 per Warrant Share, at a purchase price of $5.1625 per Share and associated warrant. The gross proceeds to the Company from the Private Placement were $25,812, before deducting placement agent fees and offering expenses of $1,783.

In 2020, the Company received $1,556 in loan proceeds from the Paycheck Protection Program, established pursuant to the Coronavirus Aid, Relief, and Economic Security Act and administered by the U.S. Small Business Administration (SBA). On January 8, 2021 the Company received full forgiveness from the SBA for the entire balance of loan proceeds used to fund its qualified payroll expenses. When the loan was forgiven, the Company reduced the non-current liability by the amount forgiven and recorded other income in the Condensed Consolidated Statements of Operations.

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Contingencies and Contractual Obligations

Fuel Tech issues a standard product warranty with the sale of its products to customers as discussed in Note 13. There was no change in the warranty liability balance during the six months ended June 30, 2022.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements,” as defined in Section 21E of the Securities Exchange Act of 1934, as amended, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and reflect Fuel Tech’s current expectations regarding future growth, results of operations, cash flows, performance and business prospects, and opportunities, as well as assumptions made by, and information currently available to, our management. Fuel Tech has tried to identify forward-looking statements by using words such as “anticipate,” “believe,” “plan,” “expect,” “estimate,” “intend,” “will,” and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to Fuel Tech and are subject to various risks, uncertainties, and other factors, including, but not limited to, those discussed in Fuel Tech’s Annual Report on Form 10-K for the year ended December 31, 2021 in Item 1A under the caption “Risk Factors,” which could cause Fuel Tech’s actual growth, results of operations, financial condition, cash flows, performance and business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Fuel Tech undertakes no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances or for any other reason. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in Fuel Tech’s filings with the Securities and Exchange Commission.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Fuel Tech’s earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates. We do not enter into foreign currency forward contracts nor into foreign currency option contracts to manage this risk due to the immaterial nature of the transactions involved.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Fuel Tech maintains disclosure controls and procedures and internal controls designed to ensure (a) that information required to be disclosed in Fuel Tech’s filings under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (b) that such information is accumulated and communicated to management, including the principal executive and financial officer, as appropriate to allow timely decisions regarding required disclosure. Fuel Tech’s Chief Executive Officer and principal financial officer have evaluated the Company’s disclosure controls and procedures, as defined in Rules 13a – 15(e) and 15d -15(e) of the Exchange Act, as of the end of the period covered by this report, and they have concluded that these controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There has been no change in the Company's internal control over financial reporting during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are from time to time involved in litigation incidental to our business. We are not currently involved in any litigation in which we believe an adverse outcome would have a material effect on our business, financial conditions, results of operations, or prospects.

Item 1A. Risk Factors

The risk factors included in our Annual Report on Form 10-K for fiscal year ended December 31, 2021 have not materially changed.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

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Item 6. Exhibits

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

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FUEL TECH, INC.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 10, 2022 | By: | /s/ Vincent J. Arnone
|  | Vincent J. Arnone
|  | President and Chief Executive Officer
|  | (Principal Executive Officer)

Date: August 10, 2022 | By: | /s/ Ellen T. Albrecht
|  | Ellen T. Albrecht
|  | Vice President, Chief Financial Officer and Treasurer
|  | (Principal Financial Officer)

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