ftek20200630

10-Q 1 ftek20210331_10q.htm FORM 10-Q ftek20200630_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

March 31, 2021

☐	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, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

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 April 30, 2021 there were outstanding 30,263,791 shares of Common Stock, par value $0.01 per share, of the registrant.

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	1
	Condensed Consolidated Statements of Operations for the Three-Month Periods Ended March 31, 2021 and 2020	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three-Month Period Ended March 31, 2021 and 2020	3
	Condensed Consolidated Statements of Stockholders' Equity for the Three-Month Period Ended March 31, 2021 and 2020	4
	Condensed Consolidated Statements of Cash Flows for the Three-Month Period Ended March 31, 2021 and 2020	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	22
PART II.	OTHER INFORMATION	23
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 6.	Exhibits	24
SIGNATURES		25

	March 31,			December 31,
	2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	35,711		$	10,640
Restricted cash		150			1,595
Accounts receivable, net		4,601			6,548
Inventories, net		156			97
Prepaid expenses and other current assets		1,771			2,193
Total current assets		42,389			21,073
Property and equipment, net of accumulated depreciation of $27,007 and $26,889, respectively		5,041			5,220
Goodwill		2,116			2,116
Other intangible assets, net of accumulated amortization of $791 and $757, respectively		529			553
Restricted cash		270			371
Right-of-use operating lease assets		350			394
Other assets		348			361
Total assets	$	51,043		$	30,088
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,466		$	2,353
Accrued liabilities:
Operating lease liabilities - current		148			149
Employee compensation		699			930
Other accrued liabilities		1,580			2,099
Total current liabilities		3,893			5,531
Operating lease liabilities - non-current		194			237
Long-term borrowings		—			1,556
Deferred income taxes, net		134			134
Other liabilities		299			309
Total liabilities		4,520			7,767
Stockholders’ equity:
Common stock, $.01 par value, 40,000,000 shares authorized, 31,227,300 and 25,639,702 shares issued, and 30,263,791 and 25,228,951 shares outstanding, respectively		312			262
Additional paid-in capital		164,137			140,138
Accumulated deficit		(114,205	)		(114,603	)
Accumulated other comprehensive loss		(1,563	)		(1,370	)
Nil coupon perpetual loan notes		76			76
Treasury stock, at cost		(2,234	)		(2,182	)
Total stockholders’ equity		46,523			22,321
Total liabilities and stockholders’ equity	$	51,043		$	30,088

	Three Months Ended
	March 31,
	2021			2020
Revenues	$	5,033		$	3,778
Costs and expenses:
Cost of sales		2,675			2,251
Selling, general and administrative		3,100			3,886
Research and development		415			324
		6,190			6,461
Operating loss		(1,157	)		(2,683	)
Interest expense		(4	)		(3	)
Interest income		1			11
Other income, net		1,558			226
Income (loss) before income taxes		398			(2,449	)
Income tax expense		—			(118	)
Net income (loss)	$	398		$	(2,567	)
Net income (loss) per common share:
Basic net income (loss) per common share	$	0.01		$	(0.10	)
Diluted net income (loss) per common share	$	0.01		$	(0.10	)
Weighted-average number of common shares outstanding:
Basic		27,510,000			24,597,000
Diluted		27,737,000			24,597,000

											Accumulated			Nil
						Additional					Other			Coupon
	Common Stock					Paid-in		Accumulated			Comprehensive			Perpetual		Treasury
	Shares			Amount		Capital		Deficit			Income (Loss)			Loan Notes		Stock			Total
Balance at December 31, 2019		24,592		$	254	$	139,560	$	(110,325	)	$	(1,778	)	$	76	$	(1,612	)	$	26,175
Net loss		—			—		—		(2,567	)		—			—		—			(2,567	)
Foreign currency translation adjustments		—			—		—		—			(231	)		—		—			(231	)
Stock compensation expense		—			—		81		—			—			—		—			81
Common shares issued upon vesting of restricted stock units		55			—		—		—			—			—		—			—
Treasury shares withheld		(11	)		—		—		—			—			—		(5	)		(5	)
Balance at March 31, 2020		24,636		$	254	$	139,641	$	(112,892	)	$	(2,009	)	$	76	$	(1,617	)	$	23,453

	As of
	March 31, 2021			December 31, 2020
Trade receivables	$	4,231		$	5,015
Unbilled receivables		1,196			2,348
Other short-term receivables		51			20
Allowance for doubtful accounts		(877	)		(835	)
Total accounts receivable	$	4,601		$	6,548

					Weighted- Average
	Number		Weighted-		Remaining		Aggregate
	of		Average		Contractual		Intrinsic
	Options		Exercise Price		Term		Value
Outstanding on January 1, 2021		484,500	$	3.57
Granted		—		—
Exercised		—		—
Expired or forfeited		—		—
Outstanding on March 31, 2021		484,500	$	3.57		3.46	$	307,020
Exercisable on March 31, 2021		484,500	$	3.57		3.46	$	307,020

				Weighted Average
				Grant Date
	Shares			Fair Value
Unvested restricted stock units at January 1, 2021		100,005		$	4.08
Granted		—			—
Forfeited		—			—
Vested		(50,002	)		1.50
Unvested restricted stock units at March 31, 2021		50,003		$	6.65

	Shares
Outstanding on December 31, 2020		—
Granted		2,850,000
Exercised		—
Outstanding as of March 31, 2021		2,850,000

Range of Exercise Price	Number Outstanding/Exercisable		Weighted Average Remaining Life in Years	Weighted Average Exercise Price
$5.10		2,500,000	5.44	$	5.10
$6.45		350,000	5.44	$	6.45
		2,850,000

	Air Pollution			FUEL CHEM
Three months ended March 31, 2021	Control Segment			Segment			Other			Total
Revenues from external customers	$	907		$	4,126		$	—		$	5,033
Cost of sales		(531	)		(2,144	)		—			(2,675	)
Gross margin		376			1,982			—			2,358
Selling, general and administrative		—			—			(3,100	)		(3,100	)
Research and development		—			—			(415	)		(415	)
Operating income (loss) from continuing operations	$	376		$	1,982		$	(3,515	)	$	(1,157	)

	Three Months Ended
	March 31,
	2021			2020
Operating Activities
Net income (loss)	$	398		$	(2,567	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation		168			163
Amortization		34			43
Loss on disposal of equipment		2			—
Provision for doubtful accounts, net of recoveries		47			—
Stock-based compensation, net of forfeitures		20			81
Gain of forgiveness on Paycheck Protection Plan Loan		(1,556	)		—
Changes in operating assets and liabilities:
Accounts receivable		1,831			795
Inventories		(59	)		(104	)
Prepaid expenses, other current assets and other non-current assets		422			99
Accounts payable		(874	)		(313	)
Accrued liabilities and other non-current liabilities		(658	)		(102	)
Net cash used in operating activities		(225	)		(1,905	)
Investing Activities
Purchases of equipment and patents		(4	)		(14	)
Net cash used in investing activities		(4	)		(14	)
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		(52	)		(5	)
Net cash provided by (used in) financing activities		23,977			(5	)
Effect of exchange rate fluctuations on cash		(223	)		(441	)
Net increase (decrease) in cash, cash equivalents and restricted cash		23,525			(2,365	)
Cash, cash equivalents, and restricted cash at beginning of period (Note 2)		12,606			13,501
Cash, cash equivalents and restricted cash at end of period (Note 2)	$	36,131		$	11,136

	Three Months Ended
	March 31,
	2021		2020
Air Pollution Control
Technology solutions	$	373	$	729
Spare parts		180		199
Ancillary revenue		354		268
Total Air Pollution Control Technology revenues		907		1,196
FUEL CHEM
FUEL CHEM technology solutions		4,126		2,582
Total Revenues	$	5,033	$	3,778

	Three Months Ended
	March 31,
	2021		2020
United States	$	4,463	$	3,097
Foreign Revenues
Latin America		75		146
Europe		375		393
Asia		120		142
Total Foreign Revenues		570		681
Total Revenues	$	5,033	$	3,778

	Three Months Ended
	March 31,
	2021		2020
Products transferred at a point in time	$	4,660	$	3,049
Products and services transferred over time		373		729
Total Revenues	$	5,033	$	3,778

	Air Pollution			FUEL CHEM
Three months ended March 31, 2020	Control Segment			Segment			Other			Total
Revenues from external customers	$	1,196		$	2,582		$	—		$	3,778
Cost of sales		(765	)		(1,486	)		—			(2,251	)
Gross margin		431			1,096			—			1,527
Selling, general and administrative		—			—			(3,886	)		(3,886	)
Research and development		—			—			(324	)		(324	)
Operating income (loss) from continuing operations	$	431		$	1,096		$	(4,210	)	$	(2,683	)

Year Ending December 31,	Operating Leases
2021 (excluding the three months ended March 31, 2021)		131
2022		122
2023		115
2024		26
Thereafter		7
Total lease payments	$	401
Less imputed interest		(59	)
Total	$	342

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	INSXBRL Instance Document
	101.2	SCHXBRL Taxonomy Extension Schema Document
	101.3	CALXBRL Taxonomy Extension Calculation Linkbase Document
	101.4	DEFXBRL Taxonomy Extension Definition Linkbase Document
	101.5	LABXBRL Taxonomy Extension Label Linkbase Document
	101.6	PREXBRL Taxonomy Extension Prevention Linkbase Document

Date: 05/12/2021	By:	/s/ Vincent J. Arnone
		Vincent J. Arnone
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: 05/12/2021	By:	/s/ Ellen T. Albrecht
		Ellen T. Albrecht
		Acting Treasurer and Controller
		(Principal Financial Officer)

SEC Form 10-Q filed by Fuel Tech, Inc.