# EDGAR Filing Document

**Accession Number:** 0000846913
**File Stem:** 0001437749-23-005674
**Filing Date:** 2023-3
**Character Count:** 27104
**Document Hash:** 18a093e8c7eac321390a66b81cfa6dbe
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-23-005674.hdr.sgml**: 20230307

**ACCESSION NUMBER**: 0001437749-23-005674

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20230307

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230307

**DATE AS OF CHANGE**: 20230307

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** FUEL TECH, INC.
- **CENTRAL INDEX KEY:** 0000846913
- **STANDARD INDUSTRIAL CLASSIFICATION:** INDUSTRIAL & COMMERCIAL FANS & BLOWERS & AIR PURIFYING EQUIP [3564]
- **IRS NUMBER:** 205657551
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-33059
- **FILM NUMBER:** 23713062

**BUSINESS ADDRESS:**
- **STREET 1:** 27601 BELLA VISTA PARKWAY
- **CITY:** WARRENVILLE
- **STATE:** IL
- **ZIP:** 60555
- **BUSINESS PHONE:** 6308454431

**MAIL ADDRESS:**
- **STREET 1:** 27601 BELLA VISTA PARKWAY
- **CITY:** WARRENVILLE
- **STATE:** IL
- **ZIP:** 60555

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** FUEL TECH N V
- **DATE OF NAME CHANGE:** 19930510

ftek20230220_8k.htm

**United States**

**Securities And Exchange Commission**

**Washington, D.C. 20549**

**FORM **8-K**

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934**

Date of Report (Date of earliest event reported) March 7, 2023

**FUEL TECH, INC.**

(Exact name of registrant as specified in its charter)

---

| | | |
|:---|:---|:---|
| **Delaware**<br> (State or other jurisdiction<br> of incorporation) | **001-33059**<br> (Commission<br> File Number) | **20-5657551**<br> (IRS Employer<br> Identification No.) |

---

**Fuel Tech, Inc.**

**27601 Bella Vista Parkway**

**Warrenville**, **IL 60555-1617**

**630**-**845-4500**

**(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 |

---

**Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provision:**

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

------

**ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.**

On March 7, 2023, Fuel Tech, Inc. ("Fuel Tech" or the "Registrant") issued a press release which contained, among other things, an announcement of Fuel Tech's financial results for the fourth quarter and for the full year ended December 31, 2022. A copy of the Press Release is furnished as Exhibit 99.1 to this Form 8-K.

**ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.**

**(a) Financial Statements of Businesses Acquired.**

None.

**(b) Pro Forma Financial Information.**

None.

**(d) Exhibits.**

**<u>Exhibit No.</u> <u>Description</u>**

99.1 [Release of Fuel Tech, Inc. dated March 7, 2023.](ex_478004.htm)

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)<br>

**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 hereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **Fuel Tech, Inc.**<br> (Registrant) | **Fuel Tech, Inc.**<br> (Registrant) |
| Date: March 7, 2023 |  |  |
|  | By:  | <u>/s/ Ellen T. Albrecht</u> |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ellen T. Albrecht<br> Vice President, Chief Financial Officer and Treasurer |

---

## Exhibit 99.1

**Exhibit 99.1**

![ex_478004img001.jpg](ex_478004img001.jpg)

---

| | | |
|:---|:---|:---|
| CONTACT: | Vince Arnone  | Devin Sullivan |
|  | President and CEO  | Managing Director |
|  | (630) 845-4500 | The Equity Group Inc. |
|  |  | (212) 836-9608 |

---

**<u>FOR IMMEDIATE RELEASE</u>**

**<u>FUEL TECH REPORTS 2022 FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS</u>**

**WARRENVILLE, Ill.** – **March 7, 2023 - Fuel Tech, Inc. (NASDAQ: FTEK)**, a technology company providing advanced engineering solutions for the optimization of combustion systems, emissions control, and water treatment in utility and industrial applications, today reported financial results for the fourth quarter and full year ended December 31, 2022.

"We achieved our highest annual revenue since 2019, maintained tight expense control, and made significant progress towards commercializing our Dissolved Gas Infusion (DGI<sup>TM</sup>) technology business segment with respect to technology, market development, and leadership," said Vincent J. Arnone, President and CEO. "We ended the year in a strong financial position, with $32.7 million in cash and investments, and no long-term debt.

"Our Air Pollution Control (APC) business performed well, driven by approximately $10 million of new project awards announced during 2022, with an emphasis on our ULTRA, SCR and SNCR emissions control solutions both domestically and abroad. During the current first quarter of 2023, we announced $5 million in new APC contract awards which provided a solid start to the year for this segment. We remain encouraged by the pace and depth of new business development within APC which is reflected in a global sales pipeline of $50 - $75 million, much of which is being driven by regulatory requirements, plant expansions, and equipment upgrade requirements. Revenues at our FUEL CHEM® segment declined modestly year-over-year, with segment gross margin essentially unchanged and at historic levels.

"Last week we announced the hiring of William (Bill) Decker as Vice President Water and Wastewater Treatment Technologies. In this newly created role, Bill will lead the growth and development of our DGI technology, including business development, sales and marketing, and new product development and commercialization. Bill brings decades of relevant industry knowledge, contacts, and know-how to DGI and we are excited to work together to usher in the next exciting chapter of Fuel Tech's growth and evolution."

------

Mr. Arnone concluded, " The outlook for our business segments in 2023 is promising, and we are pursuing a robust pipeline of new business opportunities. We continue to believe that an increasing focus on global emissions protocols across a variety of fuel sources, and the associated legislation that should result from these initiatives will provide avenues of long-term growth and opportunity for our Company. We expect that total revenue for full year 2023 will improve modestly from 2022, driven primarily by improved sales within APC, offset by a slight decline in anticipated results within FUEL CHEM for the current year. With the addition of experienced leadership in support of DGI, we expect to accelerate our water and wastewater treatment activities with an eye towards securing our first contracts this year."

**<u>Q4 2022 Consolidated Results Overview</u>**

Consolidated revenues for the fourth quarter ended December 31, 2022 ("Q4 2022") rose to $7.0 million from $6.5 million in the fourth quarter ended December 31, 2021 ("Q4 2021"), reflecting higher revenues from the FUEL CHEM segment due to climate factors and related improved dispatch levels for the power generation facilities that use our program, offset by lower APC revenues due in large part to the timing of project execution.

Consolidated gross margin for Q4 2022 fell to 42.8% of revenues from 50.2% of revenues in Q4 2021, reflecting changes in product and project mix and increased supply chain costs in our APC segment.

SG&A expenses declined to $3.1 million from $3.2 million in Q4 2021, reflecting lower employee expenses and office and administrative costs relating to our foreign subsidiaries.

Operating loss for the quarter was essentially unchanged at $(0.2) million, reflecting a shift in margin contribution from product mix despite increased revenues and lower operating expenses.

Net loss in Q4 2022 was $(0.4) million, or $(0.01) per share, compared to net loss of $(0.2) million, or $(0.01) per share, in Q4 2021.

Consolidated APC segment backlog at December 31, 2022 was $8.2 million compared to $9.1 million at December 31, 2021.

APC revenues decreased to $2.9 million from $3.1 million in Q4 2021 and gross margin declined to 35.4% of revenue from 55.6% of revenue due to changes in product mix and increased supply chain costs.

FUEL CHEM segment revenues rose to $4.1 million from $3.4 million in Q4 2021, and gross margin improved to 48.1% from 45.3% in Q4 2021.

Adjusted EBITDA loss was $(0.3) million in Q4 2022 compared to Adjusted EBITDA loss of $(0.05) million in Q4 2021.

------

**<u>2022 Full Year Overview</u>**

Consolidated revenues for 2022 rose to $26.9 million from $24.3 million, reflecting a 54% increase in APC revenues offset by a 6% decline in FUEL CHEM revenues.

Consolidated gross margin for full year 2022 and 2021 was 43.2% and 49%, respectively, reflecting the factors cited above.

SG&A expenses for 2022 increased to $12.3 million, or 45.6% of revenues, from $12.1 million, or 49.7% of revenues, in 2021.

Operating loss was $(1.5) million in 2022 and 2021.

Net loss for 2022 was $(1.4) million, or $(0.05) per diluted share, compared to a net income of $0.1 million, or $0.00 per diluted share, in 2021. Net income in 2021 included other income of $1.6 million reflecting full forgiveness of the loan proceeds from the Paycheck Protection Program, established pursuant to the CARES Act.

Adjusted EBITDA loss was $(0.9) million in 2022 compared to an Adjusted EBITDA loss of $(.7) million in 2021.

**<u>Financial Condition</u>**

At December 31, 2022, cash and cash equivalents were $23.3 million, short-term investments were $3.0 million, and long-term investments totaled $6.4 million. Stockholders' Equity at December 31, 2022 was $44.9 million, or $1.48 per share, and the Company had no debt.

**<u>Conference Call</u>**

Management will host a conference call on Wednesday, March, 8, 2023 at 10:00 am ET / 9:00 am CT to discuss the results and business activities. Interested parties may participate in the call by dialing:

● (877) 423-9820 (*Domestic*) or

● (201) 493-6749 (*International*)

The conference call will also be accessible via the Upcoming Events section of the Company's web site at <u>www.ftek.com</u>. Following management's opening remarks, there will be a question-and-answer session. Questions may be asked during the live call, or alternatively, you may e-mail questions in advance to <u>dsullivan@equityny.com</u>. For those who cannot listen to the live broadcast, an online replay will be available at <u>www.ftek.com</u>.

------

**<u>About Fuel Tech</u>**

Fuel Tech develops and commercializes state-of-the-art 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. Fuel Tech is a leader in nitrogen oxide (NO<sub>x</sub>) reduction and particulate control technologies and its solutions have been in installed on over 1,200 utility, industrial and municipal units worldwide. 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 exceptional Computational Fluid Dynamics modeling capabilities, which are enhanced by internally developed, high-end visualization software. For more information, visit Fuel Tech's web site at <u>www.ftek.com</u>.

**<u>NOTE REGARDING FORWARD-LOOKING STATEMENTS</u>**

This press release 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 in Item 1A under the caption "Risk Factors," and subsequent filings under the Securities Exchange Act of 1934, as amended, 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.

------

**Fuel Tech, Inc.**

**Consolidated Balance Sheets**

(*in thousands of dollars, except share and per-share data*)

---

| | | |
|:---|:---|:---|
|  | December 31, | December 31, |
|  | 2022 | 2021 |
| **ASSETS** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp; Cash and cash equivalents | $23328 | $35893 |
| &nbsp;&nbsp;&nbsp; Restricted cash |  | 891 |
| &nbsp;&nbsp;&nbsp; Short-term investments | 2981 |  |
| &nbsp;&nbsp;&nbsp; Accounts receivable, net | 7729 | 3259 |
| &nbsp;&nbsp;&nbsp; Inventories, net | 392 | 348 |
| &nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | 1395 | 1074 |
| Total current assets | 35825 | 41465 |
| Property and equipment, net | 4435 | 4609 |
| Goodwill | 2116 | 2116 |
| Other intangible assets, net | 397 | 448 |
| Restricted cash |  | 270 |
| Right-of-use operating lease assets | 197 | 242 |
| Long-term investments | 6360 |  |
| Other assets | 794 | 824 |
| Total assets | $50124 | $49974 |
| **LIABILITIES AND STOCKHOLDERS**' **EQUITY** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp; Accounts payable | $2710 | $1561 |
| &nbsp;&nbsp;&nbsp; Accrued liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities - current | 125 | 113 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employee compensation | 1105 | 688 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other accrued liabilities | 826 | 861 |
| Total current liabilities | 4766 | 3223 |
| Operating lease liabilities - non-current | 66 | 122 |
| Deferred income taxes | 177 | 139 |
| Other liabilities | 274 | 290 |
| Total liabilities | 5283 | 3774 |
| Commitments and contingencies (Note 9) |  |  |
| Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp; 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 in 2022 and 2021, respectively | 313 | 312 |
| &nbsp;&nbsp;&nbsp; Additional paid-in capital | 164422 | 164199 |
| &nbsp;&nbsp;&nbsp; Accumulated deficit | (115956) | (114549) |
| &nbsp;&nbsp;&nbsp; Accumulated other comprehensive loss | (1728) | (1604) |
| &nbsp;&nbsp;&nbsp; Nil coupon perpetual loan notes | 76 | 76 |
| &nbsp;&nbsp;&nbsp; Treasury stock, at cost (Note 5) | (2251) | (2234) |
| Total stockholders' equity | 44876 | 46200 |
| Total liabilities and stockholders' equity | $50124 | $49974 |

---

See notes to consolidated financial statements.

------

**Fuel Tech, Inc.**

**Consolidated Statements of Operations**

(*in thousands of dollars, except share and per-share data*)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended | Three Months Ended | Twelve Months Ended | Twelve Months Ended |
|  | December 31, | December 31, | December 31, | December 31, |
|  | 2022 | 2021 | 2022 | 2021 |
| **Revenues** | $7021 | $6451 | $26941 | $24261 |
| **Costs and expenses:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Cost of sales | 4018 | 3213 | 15298 | 12363 |
| &nbsp;&nbsp;&nbsp; Selling, general and administrative | 3074 | 3197 | 12275 | 12055 |
| &nbsp;&nbsp;&nbsp; Research and development | 179 | 262 | 895 | 1332 |
|  | 7271 | 6672 | 28468 | 25750 |
| **Operating income (loss)** | (250) | (221) | (1527) | (1489) |
| Interest expense | (4) | 2 | (17) | (19) |
| Interest income | 101 | (16) | 202 | 6 |
| Other income, net | (204) | 104 | (46) | 1570 |
| **Income (loss) before income taxes** | (357) | (240) | (1388) | 68 |
| Income tax expense | (45) | (4) | (54) | (14) |
| **Net income (loss)** | $(402) | $(244) | $(1442) | $54 |
| **Net income (loss) per common share:** |  |  |  |  |
| **Basic net income (loss) per common share** | $(0.01) | $(0.01) | $(0.05) | $0.00 |
| **Diluted net income (loss) per common share** | $(0.01) | $(0.01) | $(0.05) | $0.00 |
| **Weighted-average number of common shares outstanding:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Basic | 30296000 | 30264000 | 30289000 | 29585000 |
| &nbsp;&nbsp;&nbsp; Diluted | 30296000 | 30264000 | 30289000 | 29694000 |

---

See notes to consolidated financial statements.

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**Fuel Tech, Inc.**

**Consolidated Statements of Comprehensive Loss**

(*in thousands of dollars*)

---

| | | |
|:---|:---|:---|
|  | For the years ended December 31, | For the years ended December 31, |
|  | 2022 | 2021 |
| Net (loss) income | $(1442) | $54 |
| Other comprehensive loss: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation adjustments | (124) | (234) |
| Total other comprehensive loss | (124) | (234) |
| Comprehensive loss | $(1566) | $(180) |

---

See notes to consolidated financial statements.

------

**Fuel Tech, Inc.**

**Consolidated Statements of Cash Flows**

(*in thousands of dollars*)

---

| | | |
|:---|:---|:---|
|  | For the years ended December 31, | For the years ended December 31, |
|  | 2022 | 2021 |
| **OPERATING ACTIVITIES** |  |  |
| Net (loss) income | $(1442) | $54 |
| Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |  |  |
| Depreciation | 352 | 584 |
| Amortization | 88 | 157 |
| Loss on sale of equipment |  | 54 |
| Non-cash interest income on held-to-maturity securities | (5) |  |
| Provision for doubtful accounts, net of recoveries | (106) | (619) |
| Deferred income taxes | 38 | 5 |
| Stock-based compensation, net of forfeitures | 224 | 82 |
| Gain of forgiveness on Paycheck Protection Plan Loan |  | (1556) |
| Changes in operating assets and liabilities: |  |  |
| Accounts receivable | (4448) | 3794 |
| Inventories | (45) | (252) |
| Prepaid expenses, other current assets and other non-current assets | (314) | 634 |
| Accounts payable | 1159 | (772) |
| Accrued liabilities and other non-current liabilities | 360 | (1404) |
| Net cash (used in) provided by operating activities | (4139) | 761 |
| **INVESTING ACTIVITIES** |  |  |
| Purchases of equipment and patents | (206) | (84) |
| Purchases of debt securities | (9777) |  |
| Maturities of debt securities | 500 |  |
| Net cash used in investing activities | (9483) | (84) |
| **FINANCING ACTIVITIES** |  |  |
| Proceeds from sale of common stock issued in connection with private placement |  | 25812 |
| Costs related to sale of common stock issued in connection with private placement |  | (1783) |
| Taxes paid on behalf of equity award participants | (17) | (52) |
| Net cash (used in) provided by financing activities | (17) | 23977 |
| Effect of exchange rate fluctuations on cash | (87) | (206) |
| **Net (decrease) increase in cash, cash equivalents and restricted cash** | (13726) | 24448 |
| Cash, cash equivalents and restricted cash at beginning of period | 37054 | 12606 |
| **Cash, cash equivalents and restricted cash at end of period** | $23328 | $37054 |

---

See notes to consolidated financial statements.

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**Fuel Tech, Inc.**

**Segment Data- Reporting Segments**

(*in thousands of dollars*)

(in thousands)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Air Pollution | FUEL CHEM |  |  |
| Three months ended December 31, 2022 | Control Segment | Segment | Other | Total |
| Revenues from external customers | $2927 | $4094 | $— | $7021 |
| Cost of sales | (1892) | (2126) |  | (4018) |
| Gross margin | 1035 | 1968 |  | 3003 |
| Selling, general and administrative |  |  | (3074) | (3074) |
| Research and development |  |  | (179) | (179) |
| Operating income (loss) from operations | $1035 | $1968 | $(3253) | $(250) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Air Pollution | FUEL CHEM |  |  |
| Three months ended December 31, 2021 | Control Segment | Segment | Other | Total |
| Revenues from external customers | $3059 | $3392 | $— | $6451 |
| Cost of sales | (1357) | (1856) |  | (3213) |
| Gross margin | 1702 | 1536 |  | 3238 |
| Selling, general and administrative |  |  | (3197) | (3197) |
| Research and development |  |  | (262) | (262) |
| Operating income (loss) from operations | $1702 | $1536 | $(3459) | $(221) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| For the year ended December 31, 2022 | Air Pollution<br> Control Segment | FUEL CHEM<br> Segment | Other | Total |
| Revenues from external customers | $10597 | $16344 | $— | $26941 |
| Cost of sales | (6924) | (8374) |  | (15298) |
| Gross margin | 3673 | 7970 |  | 11643 |
| Selling, general and administrative |  |  | (12275) | (12275) |
| Research and development |  |  | (895) | (895) |
| Operating income (loss) from continuing operations | $3673 | $7970 | $(13170) | $(1527) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| For the year ended December 31, 2021 | Air Pollution<br> Control Segment | FUEL CHEM<br> Segment | Other | Total |
| Revenues from external customers | $6896 | $17365 | $— | $24261 |
| Cost of sales | (3529) | (8834) |  | (12363) |
| Gross margin | 3367 | 8531 |  | 11898 |
| Selling, general and administrative |  |  | (12055) | (12055) |
| Research and development |  |  | (1332) | (1332) |
| Operating income (loss) from continuing operations | $3367 | $8531 | $(13387) | $(1489) |

---

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**Fuel Tech, Inc.**

**Geographic Segment Financial Data**

*(in thousands of dollars)*

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.

---

| | | |
|:---|:---|:---|
| <u>For the years ended December 31,</u> | 2022 | 2021 |
| Revenues: |  |  |
| &nbsp;&nbsp;&nbsp; United States | $20311 | $19515 |
| &nbsp;&nbsp;&nbsp; Foreign | 6630 | 4746 |
|  | $26941 | $24261 |

---

---

| | | |
|:---|:---|:---|
| <u>As of December 31,</u> | 2022 | 2021 |
| Assets: |  |  |
| &nbsp;&nbsp;&nbsp; United States | $47007 | $46271 |
| &nbsp;&nbsp;&nbsp; Foreign | 3117 | 3703 |
|  | $50124 | $49974 |

---

------

**FUEL TECH, INC.**

RECONCILIATION OF GAAP NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA

(Unaudited)

(in thousands)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended<br> December 31, | Three Months Ended<br> December 31, | Twelve Months Ended<br> December 31, | Twelve Months Ended<br> December 31, |
|  | 2022 | 2021 | 2022 | 2021 |
| Net (Loss) Income | $(402) | $(244) | $(1442) | $54 |
| &nbsp;&nbsp;&nbsp; Interest expense, net | (97) | 3 | (185) | 13 |
| &nbsp;&nbsp;&nbsp; Income tax expense (benefit) | 45 | 4 | 54 | 14 |
| &nbsp;&nbsp;&nbsp; Depreciation expense | 85 | 127 | 352 | 584 |
| &nbsp;&nbsp;&nbsp; Amortization expense | 18 | 43 | 88 | 157 |
| **EBITDA** | (351) | (67) | (1133) | 822 |
| &nbsp;&nbsp;&nbsp; Gain on Forgiveness of Paycheck Protection Plan loan |  |  |  | (1566) |
| &nbsp;&nbsp;&nbsp; Intangible assets abandonment |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Stock compensation expense | 88 | 21 | 224 | 82 |
| **ADJUSTED EBITDA** | $(263) | $(46) | $(909) | $(662) |

---

**Adjusted EBITDA**

To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles in the United States (GAAP), the Company has provided an Adjusted EBITDA disclosure as a measure of financial performance. Adjusted EBITDA is defined as net income (loss) before interest expense, income tax expense (benefit), depreciation expense, amortization expense, stock compensation expense, and intangible assets abandonment and building impairment. The Company's reference to these non-GAAP measures should be considered in addition to results prepared in accordance with GAAP standards, but are not a substitute for, or superior to, GAAP results.

Adjusted EBITDA is provided to enhance investors' overall understanding of the Company's current financial performance and ability to generate cash flow, which we believe is a meaningful measure for our investor and analyst communities. In many cases non-GAAP financial measures are utilized by these individuals to evaluate Company performance and ultimately determine a reasonable valuation for our common stock. A reconciliation of Adjusted EBITDA to the nearest GAAP measure of net income (loss) has been included in the above financial table.