10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2019

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)

  ________________________________

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  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  x    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	x	Smaller reporting company	x
		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  x

On April 30, 2019 there were outstanding 24,186,824 shares of Common Stock, par value $0.01 per share, of the registrant.

FUEL TECH, INC.

Form 10-Q for the three-month period ended March 31, 2019

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018	1
	Condensed Consolidated Statements of Operations for the Three-Month Periods Ended March 31, 2019 and 2018	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three-Month Periods Ended March 31, 2019 and 2018	3
	Condensed Consolidated Statements of Stockholders' Equity as of March 31, 2019 and December 31, 2018	4
	Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 2019 and 2018	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	21
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 6.	Exhibits	23
SIGNATURES		24

PART I.        FINANCIAL INFORMATION

Item 1.        Financial Statements

FUEL TECH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share data)

	March 31, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	7,135		$	12,039
Restricted cash	6,020			6,020
Accounts receivable, net of allowance for doubtful accounts of $1,441 and $1,411, respectively	17,787			18,399
Inventories, net	801			957
Prepaid expenses and other current assets	3,104			3,184
Income taxes receivable	131			118
Total current assets	34,978			40,717
Property and equipment, net of accumulated depreciation of $26,758 and $26,528, respectively	6,003			5,976
Goodwill	2,116			2,116
Other intangible assets, net of accumulated amortization of $6,640 and $6,608, respectively	1,147			1,164
Right-of-use operating lease assets	1,411			—
Assets held for sale	413			485
Other assets	1,177			1,261
Total assets	$	47,245		$	51,719
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	6,339		$	9,499
Accrued liabilities:
Operating lease liabilities - current	558			—
Employee compensation	1,160			1,563
Other accrued liabilities	4,900			6,099
Total current liabilities	12,957			17,161
Operating lease liabilities - non-current	845			—
Deferred income taxes	173			171
Other liabilities	287			335
Total liabilities	14,262			17,667
COMMITMENTS AND CONTINGENCIES (Note 14)
Stockholders’ equity:
Common stock, $.01 par value, 40,000,000 shares authorized, 24,833,383 and 24,825,891 shares issued, and 24,186,824 and 24,170,585 shares outstanding, respectively	248			248
Additional paid-in capital	139,088			138,992
Accumulated deficit	(103,762		)	(102,495		)
Accumulated other comprehensive loss	(1,181		)	(1,285		)
Nil coupon perpetual loan notes	76			76
Treasury stock, at cost	(1,486		)	(1,484		)
Total stockholders’ equity	32,983			34,052
Total liabilities and stockholders’ equity	$	47,245		$	51,719

See notes to condensed consolidated financial statements.

1

FUEL TECH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

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

	Three Months Ended   March 31,
	2019			2018
Revenues	$	10,155		$	12,791
Costs and expenses:
Cost of sales	6,141			7,766
Selling, general and administrative	4,458			4,921
Restructuring charge	595			—
Research and development	266			288
	11,460			12,975
Operating loss from continuing operations	(1,305		)	(184		)
Interest expense	(1		)	—
Interest income	2			2
Other expense	25			(8		)
Loss from continuing operations before income taxes	(1,279		)	(190		)
Income tax expense	—			(1		)
Net loss from continuing operations	(1,279		)	(191		)
Loss from discontinued operations (net of income tax benefit of $0 in 2019 and 2018)	(10		)	(25		)
Net loss	$	(1,289	)	$	(216	)
Net loss per common share:
Basic
Continuing operations	$	(0.05	)	$	(0.01	)
Discontinued operations	$	—		$	—
Basic net loss per common share	$	(0.05	)	$	(0.01	)
Diluted
Continuing operations	$	(0.05	)	$	(0.01	)
Discontinued operations	$	—		$	—
Diluted net loss per common share	$	(0.05	)	$	(0.01	)
Weighted-average number of common shares outstanding:
Basic	24,177,000			24,146,000
Diluted	24,177,000			24,146,000

See notes to condensed consolidated financial statements.

2

FUEL TECH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands)

	Three Months Ended   March 31,
	2019			2018
Net loss	$	(1,289	)	$	(216	)
Other comprehensive income (loss):
Foreign currency translation adjustments	104			415
Unrealized losses from marketable securities, net of tax	—			(1		)
Total other comprehensive income	104			414
Comprehensive income (loss)	$	(1,185	)	$	198

See notes to condensed consolidated financial statements.

3

Fuel Tech, Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands of dollars or shares, as appropriate)

	Common Stock				Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Nil Coupon Perpetual Loan Notes		Treasury Stock			Total
	Shares		Amount
Balance at December 31, 2017	24,133		$	248	$	138,760		$	(102,672	)	$	(768	)	$	76	$	(1,472	)	$	34,172
Net loss								(216		)									(216		)
Foreign currency translation adjustments											415								415
Unrealized loss on marketable securities, net of tax								(1		)									(1		)
Stock compensation expense					(59		)												(59		)
Common shares issued upon vesting of restricted stock units	45		—																—
Treasury shares withheld	(10	)														(10		)	(10		)
Adoption of ASC 606								205											205
Balance at March 31, 2018	24,168		$	248	$	138,701		$	(102,684	)	$	(353	)	$	76	$	(1,482	)	$	34,506
Balance at December 31, 2018	24,170		$	248	$	138,992		$	(102,495	)	$	(1,285	)	$	76	$	(1,484	)	$	34,052
Net loss								(1,289		)									(1,289		)
Foreign currency translation adjustments											104								104
Unrealized loss on marketable securities, net of tax																			—
Stock compensation expense					96														96
Common shares issued upon vesting of restricted stock units	18		—																—
Treasury shares withheld	(2	)														(2		)	(2		)
Adoption of ASC 842								22
Balance at March 31, 2019	24,186		$	248	$	139,088		$	(103,762	)	$	(1,181	)	$	76	$	(1,486	)	$	32,983

See notes to condensed consolidated financial statements.

4

FUEL TECH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	Three Months Ended   March 31,
	2019			2018
Operating Activities
Net loss	$	(1,289	)	$	(216	)
Loss from discontinued operations	10			25
Net loss from continuing operations	(1,279		)	(191		)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	244			195
Amortization	32			53
Loss on disposal of equipment	—			15
Provision for doubtful accounts, net of recoveries	—			(62		)
Stock-based compensation, net of forfeitures	96			(59		)
Changes in operating assets and liabilities:
Accounts receivable	720			32
Inventories	154			(68		)
Prepaid expenses, other current assets and other non-current assets	187			113
Accounts payable	(3,174		)	186
Accrued liabilities and other non-current liabilities	(1,870		)	(2,751		)
Net cash used in operating activities - continuing operations	(4,890		)	(2,537		)
Net cash used in operating activities - discontinued operations	(10		)	(25		)
Net cash used in operating activities	(4,900		)	(2,562		)
Investing Activities
Purchases of equipment and patents	(279		)	(62		)
Proceeds from the sale of equipment	55			2
Net cash used in investing activities	(224		)	(60		)
Financing Activities
Taxes paid on behalf of equity award participants	(2		)	(10		)
Net cash used in financing activities	(2		)	(10		)
Effect of exchange rate fluctuations on cash	222			433
Net decrease in cash, cash equivalents and restricted cash	(4,904		)	(2,199		)
Cash, cash equivalents, and restricted cash at beginning of period (Note 2)	18,059			14,386
Cash, cash equivalents and restricted cash at end of period (Note 2)	$	13,155		$	12,187

See notes to condensed consolidated financial statements.

5

FUEL TECH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2019

(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") provides advanced engineered solutions for the optimization of combustion systems in utility and industrial applications. Our primary focus is on the worldwide marketing and sale of NOx reduction technologies as well as our FUEL CHEM program. The Company’s NOx reduction technologies reduce nitrogen oxide emissions from boilers, furnaces and other stationary combustion sources.

Our FUEL CHEM program is based on proprietary TIFI^® Targeted In-Furnace™ Injection technology, in combination with advanced Computational Fluid Dynamics (CFD) and Chemical Kinetics Modeling (CKM) boiler modeling, in the unique application of specialty chemicals to improve the efficiency, reliability and environmental status of combustion units by controlling slagging, fouling, corrosion, opacity and other sulfur trioxide-related issues in the boiler.

Our business is materially dependent on the continued existence and enforcement of air quality regulations, particularly in the United States. We have expended significant resources in the research and development of new technologies in building our proprietary portfolio of air pollution control, fuel and boiler treatment chemicals, computer modeling and advanced visualization technologies.

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 a fair presentation of the statements for the periods presented. All significant intercompany transactions and balances have been eliminated. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the full year ending December 31, 2019. 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, 2018 as filed with the Securities and Exchange Commission.

2.    Summary of Significant Accounting Policies

Restricted cash

Restricted cash represents funds that are restricted to satisfy any amount borrowed against the Company's existing revolving credit facility (the Facility) with JPMorgan Chase Bank, N.A. The balance of restricted cash totaling $6,020 will remain through the Maturity Date of the Facility. Refer to Note 10 Debt Financing for further information on the Facility.

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

	March 31, 2019		March 31, 2018
Cash and cash equivalents	$	7,135	$	5,667
Restricted cash included in current assets	6,020		1,520
Restricted cash included in long-term assets	—		5,000
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows	$	13,155	$	12,187

6

Leases

On January 1, 2019, we adopted ASC 842 using the modified retrospective method outlined in ASU 2018-11, “Leases (Topic 842) Targeted Improvements.” Refer to Note 12 for further details regarding the effect of adoption. We determine if an arrangement is a lease at inception. Operating leases are included in right-of-use ("ROU") operating lease assets, operating lease liabilities - current, and operating lease liabilities - non-current on our Consolidated Balance Sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which we elected the practical expedient to not separate lease and non-lease components for the majority of our leases. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component. We also elected the practical expedient to keep leases with an initial term of 12 months or less off of the consolidated balance sheet.

3.    Revenue

The Company recognizes revenue when control of the promised goods or services is transferred to our customers, in amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Fuel Tech’s sales of products to customers represent single performance obligations. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

We generally expense sales commissions on a ratable basis when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses within the Condensed Consolidated Statements of Operations.

FUEL CHEM

Revenues from the sale of chemical products are recognized when control transfers to customer upon shipment or delivery of the product based on the applicable shipping terms. We generally recognize revenue for these arrangements at a point in time based on our evaluation of when the customer obtains control of the promised goods or services.

Air Pollution Control Technology

Fuel Tech’s APC contracts are typically six to eighteen months in length. A typical contract will have three or four critical operational measurements that, when achieved, serve as the basis for us to invoice the customer via progress billings. At a minimum, these measurements will include the generation of engineering drawings, the shipment of equipment and the completion of a system performance test.

As part of most of its contractual APC project agreements, Fuel Tech will agree to customer-specific acceptance criteria that relate to the operational performance of the system that is being sold. These criteria are determined based on modeling that is performed by Fuel Tech personnel, which is based on operational inputs that are provided by the customer. The customer will warrant that these operational inputs are accurate as they are specified in the binding contractual agreement. Further, the customer is solely responsible for the accuracy of the operating condition information; typically all performance guarantees and equipment warranties granted by us are voidable if the operating condition information is inaccurate or is not met.

7

Since control transfers over time, revenue is recognized based on the extent of progress towards completion of the single performance obligation. Fuel Tech uses the cost-to-cost input measure of progress for our contracts since it best depicts the transfer of assets to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost input measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred. Costs to fulfill include all internal and external engineering costs, equipment charges, inbound and outbound freight expenses, internal and site transfer costs, installation charges, purchasing and receiving costs, inspection costs, warehousing costs, project personnel travel expenses and other direct and indirect expenses specifically identified as project- or product-line related, as appropriate (e.g. test equipment depreciation and certain insurance expenses).

Fuel Tech has installed over 1,000 units with APC technology and normally provides performance guarantees to our customers based on the operating conditions for the project. As part of the project implementation process, we perform system start-up and optimization services that effectively serve as a test of actual project performance. We believe that this test, combined with the accuracy of the modeling that is performed, enables revenue to be recognized prior to the receipt of formal customer acceptance.

Disaggregated Revenue by Product Technology

The following table presents our revenues disaggregated by product technology:

	Three Months Ended   March 31,
	2019		2018
Air Pollution Control
Technology solutions	$	4,741	$	7,722
Spare parts	149		300
Ancillary revenue	899		561
Total Air Pollution Control Technology revenues	5,789		8,583
FUEL CHEM
FUEL CHEM technology solutions	4,366		4,208
Total Revenues	$	10,155	$	12,791

Disaggregated Revenue by Geography

The following table presents our revenues disaggregated by geography, based on the billing addresses of our customers:

	Three Months Ended   March 31,
	2019		2018
United States	$	8,815	$	10,242
Foreign Revenues
South America	175		335
Europe	617		1,454
Asia	548		760
Total Foreign Revenues	1,340		2,549
Total Revenues	$	10,155	$	12,791

8

Timing of Revenue Recognition

The following table presents the timing of our revenue recognition:

	Three Months Ended   March 31,
	2019	2018
Products transferred at a point in time	5,414	5,069
Products and services transferred over time	4,741	7,722
Total Revenues	10,155	12,791

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 consolidated balance sheets. In our Air Pollution Control 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. These assets are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. At March 31, 2019 and December 31, 2018, contract assets were approximately $6,736 and $5,540, respectively, and are included in accounts receivable on the consolidated balance sheets.

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 consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. Contract liabilities were $902 and $1,234, at March 31, 2019 and December 31, 2018, respectively, and are included in other accrued liabilities on the consolidated balance sheets.

Changes in the contract asset and liability balances during the three month period ended March 31, 2019, were not materially impacted by any other items other than amounts billed and revenue recognized as described previously. During the three months ended March 31, 2019, revenue recognized that was included in the contract liability balance at the beginning of the period was $224, which represented primarily revenue from progress towards completion of our Air Pollution Control technology contracts. During the three months ended March 31, 2018, revenue recognized that was included in the contract liability balance at the beginning of the period was$1,942 and represented primarily revenue from progress towards completion of our Air Pollution Control technology contracts.

As of March 31, 2019, we had six construction contracts in progress that were identified as loss contracts and a provision for losses of $124 was recorded in other accrued liabilities on the consolidated balance sheet. Refer to Footnote 14 for an accrual related to certain non-conformance issues with a U.S. customer associated with equipment that requires remedy under the warranty provision of the customer contract. As of December 31, 2018, we had five construction contracts in progress that were identified as loss contracts and a provision for losses in the amount of $123 was recorded in other accrued liabilities on the consolidated balance sheet.

Remaining Performance Obligations

Remaining performance obligations, represents the transaction price of Air Pollution Control technology booked orders for which work has not been performed. As of March 31, 2019, the aggregate amount of the transaction price allocated to remaining performance obligations was $12,219. The Company expects to recognize revenue on approximately $11,892 of the remaining performance obligations over the next 12 months with the remaining recognized thereafter.

4.    Discontinued Operations

During the second quarter of 2017, the Company suspended all operations associated with the Fuel Conversion business segment. The components of the net assets of the Fuel Conversion discontinued operations are Assets held for sale (which consists primarily of certain equipment) on the Consolidated Balance Sheets totaling $413 and $485 as of March 31, 2019 and December 31, 2018, respectively. The Company sold certain equipment within Assets held for sale for the three-month periods ended March 31, 2019 of $55. Additionally, the Company entered into an agreement with a potential buyer for the remaining equipment within Assets held for sale which provided a non-refundable deposit of $20 for the option to purchase for $500 (less applicable commission to the third party equipment reseller) by May 21, 2019 or withdraw without any further obligation.

In addition, accrued severance of $35 and $65 is included in the other accrued liabilities line of the Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018, respectively. A total of $30 was paid for the three-months ended March 31, 2019, $30 will be paid in the second quarter of 2019 and the remaining $5 will be paid in the third quarter of 2019.

The Fuel Conversion business segment had no other assets or liabilities associated with it.

The activity of the Fuel Conversion discontinued operations consisted primarily of storage costs for the certain equipment held in Assets held for sale of $10 and $25 for the three-month periods ended March 31, 2019 and 2018, respectively. The Fuel Conversion business segment had no revenues associated with it.

5.    Restructuring Activities

On January 18, 2019, the Company announced a planned suspension of its Air Pollution Control (“APC”) business operation in China (“Beijing Fuel Tech”). This action is 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 is underway, and includes staff rationalization, supplier and partner engagement, and the monetization of certain assets. The Company expects to complete the process during the second half of 2019.

The following table presents our revenues and net loss in China for the three month periods ended March 31, 2019 and 2018:

	2019			2018
Total revenues	$	338		$	659
Net loss	(850		)	(533		)

The following table presents net assets in China for the three months ended March 31, 2019 and 2018:

	2019			2018
Total assets	$	7,719		$	12,126
Total liabilities	(2,809		)	(4,642		)
Total net assets	4,910			7,484

Total assets primarily consist of accounts receivable, contract assets, inventory, prepaid expenses and property, plant and equipment. Total liabilities consist of accounts payable and certain accrued liabilities.

The Company expects to incur approximately $632 of severance costs relating to the suspension of the APC business in China, of which $257 was paid for the three months ended March 31, 2019 and $375 are expected to be paid in the second quarter of 2019.

On January 23, 2019, the Company notified the landlord of our intention to early terminate the lease on July 22, 2019. The Company incurred an early termination penalty of $63, which is included in restructuring expense and other accrued liabilities for the three months ended March 31, 2019. The Company expects to incur other disposal costs including contractual termination payments or other miscellaneous expenses but an estimated amount or range of amounts has not yet been determined.

9

The Company recorded restructuring charges of $595 and $0 for the three months ended March 31, 2019 and 2018, respectively. The charge consisted primarily of one-time severance costs of $532 and the early termination penalty for our lease associated with the suspension of our APC business in China of $63. The following is a reconciliation of the accrual for the workforce reduction that is included within the "Accrued Liabilities - Employee Compensation" line of the consolidated balance sheets for the three months ending March 31, 2019 and 2018:

	Three Months Ended March 31,
	2019			2018
Restructuring liability at beginning of period	$	65		$	391
Amounts expensed	595			—
Amounts paid	(287		)	(109		)
Restructuring liability at end of period	$	373		$	282

6.    Accumulated Other Comprehensive Loss

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

	Three months ended March 31,
	2019			2018
Foreign currency translation
Balance at beginning of period	$	(1,285	)	$	(772	)
Other comprehensive loss:
Foreign currency translation adjustments (1)	104			416
Balance at end of period	$	(1,181	)	$	(356	)
Available-for-sale marketable securities
Balance at beginning of period	$	—		$	4
Other comprehensive income:
Net unrealized holding loss (2)	—			(1		)
Balance at end of period	$	—		$	3
Total accumulated other comprehensive loss	$	(1,181	)	$	(353	)

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

(2) In all periods presented, there were no realized holding gains or losses and therefore no amounts were reclassified to earnings.

10

7.    Treasury Stock

Common stock held in treasury totaled 656,844 and 655,306 with a cost of $1,486 and $1,484 at March 31, 2019 and December 31, 2018, 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.

8.    Earnings per Share

Basic earnings per share excludes the dilutive effects of stock options, restricted stock units (RSUs), 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, 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 are excluded from diluted earnings per share because they are anti-dilutive. For the three months ended March 31, 2019 and 2018, basic earnings per share is equal to diluted earnings per share because all outstanding stock awards 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 months ended March 31, 2019 and 2018.

	Three Months Ended   March 31,
	2019	2018
Basic weighted-average shares	24,177,000	24,146,000
Conversion of unsecured loan notes	—	—
Unexercised options and unvested RSUs	—	—
Diluted weighted-average shares	24,177,000	24,146,000

Fuel Tech had 1,280,000 and 1,318,000 weighted average equity awards outstanding at March 31, 2019 and 2018, respectively, that were not dilutive for the purposes of inclusion in the calculation of diluted earnings per share but could potentially become dilutive in future periods.

9.    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, Restricted Stock Units (“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 March 31, 2019, Fuel Tech had 1,970,271 shares available for share-based awards under the 2014 Plan.

We did not record any excess tax benefits within income tax expense for the three months ended March 31, 2019. Given the Company has a full valuation allowance on its deferred tax assets, there were no excess tax benefits to record for the three months ended March 31, 2019. 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 Consolidated Statements of Operations. The components of stock-based compensation for the three months ended March 31, 2019 and 2018 were as follows:

	Three Months Ended   March 31,
	2019		2018
Stock options and restricted stock units, net of forfeited	$	96	$	(59	)
Tax benefit of stock-based compensation expense	—		—
After-tax effect of stock-based compensation	$	96	$	(59	)

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

11

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 three months ended March 31, 2019 was as follows:

	Number of Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding on January 1, 2019	932,500	$	4.68
Granted	—	—
Exercised	—	—
Expired or forfeited	—	—
Outstanding on March 31, 2019	932,500	$	4.68	4.42	$	131
Exercisable on March 31, 2019	932,500	$	4.68	4.42	$	131

As of March 31, 2019, there was no unrecognized compensation cost related to non-vested stock options granted under the Incentive Plans.

Restricted Stock Units

Restricted stock units (RSUs) granted to employees vest over time based on continued service (typically vesting over a period between two and four years). 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.

In addition to the time vested RSUs, the Company entered into a 2019 Executive Performance RSU Award Agreement (the “2019 Agreement”) with certain officers, including its President and Chief Executive Officer and Principal Financial Officer and Controller pursuant to which each 2019 Participating Executive will have the opportunity to earn a specified amount of restricted stock units (RSUs). The amount of RSUs awarded, if any, will be based on the Company’s achievement of varying levels of operating income before the impact of incentive pay (but including adjustments to reflect the payment of sales commissions) in fiscal 2019 (“Operating Income”), as determined by the Company, in its sole discretion. Nevertheless, no Participating Executive will be entitled to any such RSUs unless the Company achieves a minimum of $2 million in Operating Income in 2019. If awarded, such RSUs will vest in equal amounts (i.e., 1/3, 1/3 and 1/3) over three years commencing one year after the grant date based on continued service. Such RSUs are valued at the date of grant using the intrinsic value method based on the closing price of the Company’s common stock on the grant date.

At March 31, 2019, there is $657 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 1.93 years.

A summary of restricted stock unit activity for the three months ended March 31, 2019 is as follows:

	Shares		Weighted Average Grant Date Fair Value
Unvested restricted stock units at January 1, 2019	1,110,277		$	1.21
Granted	165,000		1.49
Forfeited	—		—
Vested	(17,777	)	1.27
Unvested restricted stock units at March 31, 2019	1,257,500		$	—

12

The fair value of restricted stock that vested during the three month period ending March 31, 2019 was $22.

Deferred Directors Fees

In addition to the Incentive Plans, Fuel Tech has a Deferred Compensation Plans 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 ASC 718, Fuel Tech accounts for these awards as equity awards as opposed to liability awards. In the three-month periods ended March 31, 2019 and 2018, Fuel Tech recorded no stock-based compensation expense under the Deferred Plan.

10.    Debt Financing

The Company is obligated under a U.S. Domestic credit facility with (the Facility) with JPMorgan Chase Bank, N.A. (JPM Chase) which provides for maximum revolving credit borrowings of $5,500 and matures on June 28, 2019. Fuel Tech can use this Facility for cash advances and standby letters of credit. The Facility is secured by $5,500 in cash held by the Company in a separate restricted use designated JPM Chase deposit account and has the Company’s Italian subsidiary, Fuel Tech S.r.l., as a guarantor. Outstanding borrowings under the Facility bear interest at a rate of LIBOR plus 300 basis points. There are no financial covenants set forth in this amendment to the Facility. The Company is actively pursuing the renewal of its U.S. Domestic credit facility and intends to renew the U.S. Domestic credit facility at its maturity. As of March 31, 2019 and December 31, 2018, there were no outstanding borrowings on the credit facility.

At March 31, 2019 and December 31, 2018, the Company had outstanding standby letters of credit and bank guarantees totaling approximately $5,255 and $5,028, respectively, under the Facility in connection with contracts in process. Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instruments. The Company pays a commitment fee of 0.25% per year on the unused portion of the revolving credit facility. At March 31, 2019 and December 31, 2018, approximately $245 and $443 was available for future borrowings under the Facility.

Beijing Fuel Tech Environmental Technologies Company, Ltd. (Beijing Fuel Tech), is obligated under a revolving credit facility (the China Facility) agreement with JPM Chase which provides for maximum revolving credit borrowings of RMB 2.625 million (approximately $391) and matures on June 30, 2019. The Facility is secured by $520 in cash held by the Company in a separate restricted use designated JPM Chase deposit account. The China Facility bears interest at a rate of 140% of the People’s Bank of China (PBOC) Base Rate, and is guaranteed by the Company. Beijing Fuel Tech can use this facility for cash advances and bank guarantees. As of March 31, 2019 and December 31, 2018, Beijing Fuel Tech had no cash borrowings under the China Facility. At March 31, 2019 and December 31, 2018, we had no outstanding standby letters of credit and bank guarantees on its Beijing Fuel Tech revolving credit facility in connection with contracts in process. At March 31, 2019 and December 31, 2018, approximately $391 and $382 was available for future borrowings. As a result of the announcement of the suspension of the Air Pollution Control business in Beijing, the Company intends to not renew the China Facility upon its expiration on June 30, 2019.

In the event of default on either the domestic facility or the China facility, the cross default feature in each allows the lending bank to accelerate the payments of any amounts outstanding and may, under certain circumstances, allow the bank to cancel the facility. If the Company were unable to obtain a waiver for a breach of covenant and the bank accelerated the payment of any outstanding amounts, such acceleration may cause the Company’s cash position to deteriorate or, if cash on hand were insufficient to satisfy the payment due, may require the Company to obtain alternate financing to satisfy the accelerated payment.

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 NO_x emissions in flue gas from boilers, incinerators, furnaces and other stationary combustion sources. These include Low and Ultra Low NO_x Burners (LNB and ULNB), Over-Fire Air (OFA) systems, NO_xOUT^® and HERT™ Selective Non-Catalytic Reduction (SNCR) systems, and Advanced Selective Catalytic Reduction (ASCR^™) systems. Our ASCR systems include ULNB, OFA, and SNCR components, along with a downsized SCR catalyst, Ammonia Injection Grid (AIG), and Graduated Straightening Grid GSG™ systems to provide high NO_x reductions at significantly lower capital and operating costs than conventional SCR systems. The NO_xOUT CASCADE^® and NO_xOUT-SCR^® processes are more basic, using just SNCR and SCR catalyst components. ULTRA™ technology creates ammonia at a plant site using safe urea for use with any SCR application. 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.

13

• The FUEL CHEM^® technology segment, which uses chemical processes in combination with advanced CFD and CKM 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.

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

Three months ended March 31, 2019	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	5,789		$	4,366		$	—		$	10,155
Cost of sales	(3,889		)	(2,252		)	—			(6,141		)
Gross margin	1,900			2,114			—			4,014
Selling, general and administrative	—			—			(4,458		)	(4,458		)
Restructuring charge	(595		)	—			—			(595		)
Research and development	—			—			(266		)	(266		)
Operating income (loss) from continuing operations	$	1,305		$	2,114		$	(4,724	)	$	(1,305	)

 `

Three months ended March 31, 2018	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	8,583		$	4,208		$	—		$	12,791
Cost of sales	(5,597		)	(2,169		)	—			(7,766		)
Gross margin	2,986			2,039			—			5,025
Selling, general and administrative	—			—			(4,921		)	(4,921		)
Research and development	—			—			(288		)	(288		)
Operating income (loss) from continuing operations	$	2,986		$	2,039		$	(5,209	)	$	(184	)

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

	Three Months Ended   March 31,
	2019		2018
Revenues:
United States	$	8,815	$	10,242
Foreign	1,340		2,549
	$	10,155	$	12,791

14

	March 31, 2019		December 31, 2018
Assets:
United States	$	34,141	$	36,784
Foreign	13,104		14,935
	$	47,245	$	51,719

12.    Leases

Adoption of ASC 842, "Leases"

On January 1, 2019, we adopted ASC 842 using the modified retrospective method outlined in ASU 2018-11 "Leases (Topic 842) Targeted Improvements." Results for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts are not adjusted and continue to be reported in accordance with our legacy accounting under Accounting Standards Codification Topic 840: Leases (ASC 840). The Company recorded the transition to ASC 842 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented.

We have elected the package of practical expedients permitted under the transition guidance, which among other things, allow us to carry forward the historical accounting relating to lease identification and classification for existing leases upon adoption. We have also elected the practical expedient to not separate lease and non-lease components for the majority of our leases and the election to keep leases with an initial term of 12 months or less off of the consolidated balance sheet.

The cumulative effect of the changes made to our January 1, 2019 consolidated balance sheet for the adoption of ASC 842 were as follows:

	Balance at December 31, 2018			Adjustments Upon Adoption of ASC 842			Balance at January 1, 2019
Assets
Right-of-use operating lease assets	$	—		$	1,592		$	1,592
Liabilities
Other accrued liabilities	6,099			(22		)	6,077
Operating lease liabilities - current	—			650			650
Operating lease liabilities - non-current	—			942			942
Equity
Accumulated deficit	(102,495		)	22			(102,473		)

The adjustment made to the January 1, 2019 consolidated balance sheet related to an accrued liability for lease escalation clauses in certain of our leases under ASC 840 which is a cumulative-effect adjustment to the opening balance of accumulated deficit upon the adoption of ASC 842.

Leases

We have operating leases for eight leased office space locations and certain office equipment. Our leases have remaining lease terms of 1 year to 6 years. Our leases do not contain any material residual value guarantees or material restricted covenants and we currently have no material sublease arrangements. We have no financing leases as defined under ASC 842.

Total operating lease expense for the three-months ended March 31, 2019 is as follows:

	For the three months ended March 31, 2019
Operating lease cost	$	172
Short-term lease cost	68
Total lease cost	$	240

The weighted average remaining lease term was 4.25 years as of March 31, 2019. The weighted average discount rate was 3.73% as of March 31, 2019.

15

Remaining maturities of our existing lease liabilities as of March 31, 2019 were as follows:

Year Ending December 31,	Operating Leases
2019 (excluding the three months ended March 31, 2019)	$	491
2020	306
2021	214
2022	157
2023	148
Thereafter	197
Total lease payments	$	1,513
Less imputed interest	(110		)
Total	$	1,403

The following is the balance sheet classification of our existing lease liabilities as of March 31, 2019:

Operating lease liabilities - current	$	558
Operating lease liabilities - non-current	845
Total operating lease liabilities	$	1,403

Supplemental cash flow information related to leases was as follows:

	For the three months ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	171
Leased assets obtained in exchange for new operating lease liabilities	163

13.    Accrued Liabilities

The components of other accrued liabilities are as follows:

	As of
	March 31, 2019		December 31, 2018
Contract liabilities (Note 3)	$	902	$	1,234
Accrued remediation contingency (Note 14)	1,223		—
Other accrued liabilities	2,775		4,865
Total other accrued liabilities	$	4,900	$	6,099

14.    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.

16

During the fourth quarter of 2018, the Company was notified of certain non-conformance issues with a U.S. customer associated with equipment that requires remedy under the warranty provision of the contract. Thus far, the Company is working to resolve this matter including addressing the non-conformance issues without resorting to litigation. During the first quarter of 2019, the Company filed the claim with our insurance carrier and recorded $973 as expected insurance proceeds from our insurance carrier and $1,223 (including the insurance policy deductible of $250) as an accrued liability associated with the completion of the non-conformance issues identified with our customer for the three months ended March 31, 2019. The Company currently has $500 of accounts receivable which is past due associated with this project. Upon satisfactory completion of non-conformance issues identified with the customer, the Company expects to collect the remaining accounts receivable due from the customer.

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 during the three-months ended March 31, 2019 and 2018. The warranty liability balance was $159 at March 31, 2019 and 2018.

15.    Income Taxes

The Company’s effective tax rate is 0% for the three-month periods ended March 31, 2019 and 2018, respectively. The Company's effective tax rate differs from the statutory federal tax rate of 21% for the three-month periods ended March 31, 2019 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 three- month periods ended March 31, 2019 and 2018.

On April 3, 2019, the Company received notice from the Internal Revenue Service that our U.S. income tax return for the year ended December 31, 2016 is currently under audit.

Fuel Tech had no unrecognized tax benefits as of March 31, 2019 and December 31, 2018.  

16.    Goodwill and Other Intangibles

Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. Fuel Tech has two reporting units for goodwill evaluation purposes: the FUEL CHEM^® technology segment and the APC technology segment. There is no goodwill associated with our APC segment.  At both March 31, 2019 and December 31, 2018, our entire goodwill balance of $2,116 was allocated to the FUEL CHEM^® technology segment.

Goodwill is allocated to each of our reporting units after considering the nature of the net assets giving rise to the goodwill and how each reporting unit would enjoy the benefits and synergies of the net assets acquired. There were no indications of goodwill impairment in the three months ended March 31, 2019 and 2018.

Fuel Tech reviews other intangible assets, which include customer lists and relationships, covenants not to compete, patent assets, tradenames, and acquired technologies, for impairment on a recurring basis or when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event that impairment indicators exist, a further analysis is performed and if the sum of the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. Management considers historical experience and all available information at the time the estimates of future cash flows are made, however, the actual cash values that could be realized may differ from those that are estimated.

There were no indications of intangible asset impairments for the three month period ended March 31, 2019.

FUEL TECH, INC.

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

Results of Operations

Revenues for the three month periods ending March 31, 2019 and 2018 were $10,155 and $12,791, respectively, representing a decrease of $2,636 or 21% versus the same period last year.

17

The Air Pollution Control (APC) technology segment generated revenues of $5,789 for the three month period ending March 31, 2019, representing a decrease of $2,794 or 33% from the prior year amount of $8,583, respectively. The decrease in APC revenue was principally related to timing of project execution and the decline in backlog of $12.4 million at December 31, 2018 versus $22.1 million at December 31, 2017, resulting from lower new APC orders announced during 2018.

Consolidated APC backlog at March 31, 2019 was $12,219 versus backlog at December 31, 2018 of $12,384. Our current backlog consists of U.S. domestic projects totaling $9,954 and international projects totaling $2,265.

The FUEL CHEM^® technology segment generated revenues of $4,366 for the three months ended March 31, 2019, representing an increase of $158 or 4% from the the prior year amount of $4,208. We remain focused on attracting new customers in our FUEL CHEM business, for both coal and noncoal applications, but our ability to attract new coal customers continues to be affected by the soft electric demand market and fuel switching as a result of low natural gas price.

Consolidated gross margin percentage for the three month periods ended March 31, 2019 and 2018 was 40% and 39%. The gross margin percentage for the APC technology segment for the three month periods ended March 31, 2019 and 2018 was 33% and 35%, respectively. The decrease in gross margin is primarily due to project mix and timing of project execution as well as a $250 charge related to remediation efforts for certain non-conformance issues with a U.S customer. For further information, refer to Note 14 - Contingencies.

For the FUEL CHEM technology segment, the gross margin percentage remained consistent at 48% for the three month periods ending March 31, 2019 and 2018.

Selling, general and administrative expenses (SG&A) were $4,458 and $4,921 for the three month periods ended March 31, 2019 and 2018, respectively. For the three month period ended March 31, 2019, this represents a decrease of $463. The decrease was primarily the result of a reduction in administrative costs relating to foreign subsidiaries of $522, largely driven by the suspension of the APC business operation in China. SG&A as a percentage of revenues increased to 44% from 38% in the three month periods ending March 31, 2019 and 2018. The increase in SG&A percentage is primarily attributed to the decrease in revenues due to the timing of project execution as well as lower new APC orders announced during 2018.

During the second quarter of 2017, the Company suspended all operations associated with the Fuel Conversion business segment. The activity of the Fuel Conversion discontinued operations consisted primarily of storage costs for the certain equipment held in Assets held for sale for the three month periods ended March 31, 2019 and 2018 of $10 and $25, respectively. The Fuel Conversion business segment had no revenues associated with it. The overall decline in the discontinued operations for the three month period ending March 31, 2019 in comparison to the same period in 2018 is due to the overall wind-down of operations for the Fuel Conversion discontinued operations.

On January 18, 2019, the Company announced a planned suspension of its APC business operation in China. This action is 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 Company recorded restructuring charges of $595 and $0 for the three months ended March 31, 2019 and 2018, respectively. The charge consisted primarily of one-time severance payments and the early termination penalty for our lease associated with the suspension of our APC business in China. For further information related to restructuring, refer to Note 5 - Restructuring Activities.

Research and development expenses for the three month periods ended March 31, 2019 and 2018 was $266 and $288, respectively. The expenditures in our research and development expenses were 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 that include DGI™ Dissolved Gas Infusion Systems, an innovative alternative to current aeration technology. This technology has not yet met the criteria to be a separate operating segment under ASC 280 Segment Reporting. This infusion process has a variety of applications in the water and waste water 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 (benefit) expense for the three month periods ended March 31, 2019 and 2018 were $0 and $(1), respectively. The Company is projecting a consolidated effective tax rate of 0% for 2019 which was 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 months ended March 31, 2019 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

18

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.

On January 1, 2019, we adopted ASC 842 using the modified retrospective method outlined in ASU 2018-11 "Leases (Topic 842) Targeted Improvements." Results for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts are not adjusted and continue to be reported in accordance with our legacy accounting under Accounting Standards Codification Topic 840: Leases (ASC 840). The Company recorded the transition to ASC 842 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented.

We have elected the package of practical expedients permitted under the transition guidance, which among other things, allow us to carry forward the historical accounting relating to lease identification and classification for existing leases upon adoption. We have also elected the practical expedient to not separate lease and non-lease components for the majority of our leases and the election to keep leases with an initial term of 12 months or less off of the consolidated balance sheet. Refer to Footnote 12 to the Consolidated Financial Statements for the impact of the adoption of ASC 842.

Liquidity and Sources of Capital

At March 31, 2019, Fuel Tech had unrestricted cash and cash equivalents and short-term investments on hand of $7,135 (excluding restricted cash of $6,020) and working capital of $22,021 versus $12,039 (excluding restricted cash of $6,020) and $23,556 at December 31, 2018, respectively.

Operating activities used cash of $4,900 during the three month period ended March 31, 2019. This decrease in cash from operations was due to our net loss of $1,289, a decrease in our accrued liabilities and other non-current liabilities of $1,870, a decrease in accounts payable of $3,174, offset by cash provided by a decrease in accounts receivable of $720, prepaid and other assets of $187 and the effect of non-cash charges of $526.

Investing activities used cash of $224 during the three month period ended March 31, 2019 and primarily related to net cash used for purchases of equipment and patents.

Financing activities used cash of $2 during the three month period ended March 31, 2019 all of which related to cash used for the acquisition of common shares held in treasury that were withheld for taxes due by employees upon vesting of restricted stock units.

The Company is obligated under a U.S. Domestic credit facility with (the Facility) with JPMorgan Chase Bank, N.A. (JPM Chase) which provides for maximum revolving credit borrowings of $5,500 and matures on June 28, 2019. Fuel Tech can use this Facility for cash advances and standby letters of credit. The Facility is secured by $5,500 in cash held by the Company in a separate restricted use designated JPM Chase deposit account and has the Company’s Italian subsidiary, Fuel Tech S.r.l., as a guarantor. Outstanding borrowings under the Facility bear interest at a rate of LIBOR plus 300 basis points. There are no financial covenants set forth in this amendment to the Facility. The Company is actively pursuing the renewal of its U.S. Domestic credit facility and intends to renew the U.S. Domestic credit facility at its maturity. As of March 31, 2019 and December 31, 2018, there were no outstanding borrowings on the credit facility.

At March 31, 2019 and December 31, 2018, the Company had outstanding standby letters of credit and bank guarantees totaling approximately $5,255 and $5,028, respectively, under the Facility in connection with contracts in process. Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instruments. The Company pays a commitment fee of 0.25% per year on the unused portion of the revolving credit facility. At March 31, 2019 and December 31, 2018, approximately $245 and $443 was available for future borrowings under the Facility.

Beijing Fuel Tech Environmental Technologies Company, Ltd. (Beijing Fuel Tech), is obligated under a revolving credit facility (the China Facility) agreement with JPM Chase which provides for maximum revolving credit borrowings of RMB 2.625 million (approximately $391) and matures on June 30, 2019. The Facility is secured by $520 in cash held by the Company in a separate restricted use designated JPM Chase deposit account. The China Facility bears interest at a rate of 140% of the People’s Bank of China (PBOC) Base Rate, and is guaranteed by the Company. Beijing Fuel Tech can use this facility for cash advances and bank guarantees. As of March 31, 2019 and December 31, 2018, Beijing Fuel Tech had no cash borrowings under the China Facility. At March 31, 2019 and December 31, 2018, we had no outstanding standby letters of credit and bank guarantees on its Beijing Fuel Tech revolving credit facility in connection with contracts in process. At March 31, 2019 and December 31, 2018, approximately $391 and $382 was available for future borrowings. As a result of the announcement of the suspension of the Air Pollution Control business in Beijing, the Company intends to not renew the China Facility upon its expiration on June 30, 2019.

19

In the event of default on either the domestic facility or the China facility, the cross default feature in each allows the lending bank to accelerate the payments of any amounts outstanding and may, under certain circumstances, allow the bank to cancel the facility. If the Company were unable to obtain a waiver for a breach of covenant and the bank accelerated the payment of any outstanding amounts, such acceleration may cause the Company’s cash position to deteriorate or, if cash on hand were insufficient to satisfy the payment due, may require the Company to obtain alternate financing to satisfy the accelerated payment.

We continue to monitor our liquidity needs and in response to our continued 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 sustained losses from continuing operations during the three month period ended March 31, 2019 totaling $1,289. Our cash used from continuing operations for this same period totaled $4,890. We have taken measures to reduce our expense infrastructure and our ability to operate our base businesses prospectively is based on our ability to secure new orders in the APC business and our ability to successfully execute existing APC projects in line with our internal budgets.

Our cash balance as of March 31, 2019 totaled $13,155 (including restricted cash of $6,020), and our working capital totaled $22,021. We do not have any outstanding debt obligations other than our letters of credit, and our current credit agreement does not have any financial covenants as we have moved to a cash collateralized line of credit with our lender.

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-up our Fuel Conversion business and 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 up our Fuel Conversion business and 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.

Contingencies and Contractual Obligations

Fuel Tech issues a standard product warranty with the sale of its products to customers as discussed in Note 14. There was no change in the warranty liability balance during the three months ended March 31, 2019.

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, 2018 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

Foreign Currency Risk Management

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.

Fuel Tech is also exposed to changes in interest rates primarily due to its debt facilities (refer to Note 10 to the consolidated financial statements). A hypothetical 100 basis point adverse move in interest rates along the entire interest rate yield curve would not have a materially adverse effect on interest expense during the upcoming year ended December 31, 2019.

20

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

Beginning January 1, 2019, we adopted ASC 842 "Leases". It did not have a material impact on our ongoing net income; however, we implemented changes to our processes related to accounting for leases and related internal controls. These changes included the development of new policies related to the new leasing framework, training, ongoing contract review requirements, and gathering of information to comply with disclosure requirements.

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.

21

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, 2018 have not materially changed.

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

None

22

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	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

23

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: 5/13/2019	By:	/s/ Vincent J. Arnone
		Vincent J. Arnone
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: 5/13/2019	By:	/s/ James M. Pach
		James M. Pach
		Vice President, Treasurer and Controller
		(Principal Financial Officer)

24

EX-31.1

Exhibit 31.1

I, Vincent J. Arnone, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fuel Tech, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: 5/13/2019	By:	/s/ Vincent J. Arnone
		Vincent J. Arnone
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

I, James M. Pach, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fuel Tech, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: 5/13/2019	By:	/s/ James M. Pach
		James M. Pach
		Vice President, Treasurer and Controller
		(Principal Financial Officer)

EX-32

Exhibit 32

The undersigned in their capacities as Chief Executive Officer and Principal Financial Officer of the Registrant do hereby certify that:

(i) this report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Registrant as of, and for, the periods presented in the report.

Date: 5/13/2019	By:	/s/ Vincent J. Arnone
		Vincent J. Arnone
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: 5/13/2019	By:	/s/ James M. Pach
		James M. Pach
		Vice President, Treasurer and Controller
		(Principal Financial Officer)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (the “Act”) this certification accompanies the Report and shall not, except to the extent required by the Act, be deemed filed by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Fuel Tech, Inc. and will be retained by Fuel Tech, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Apr. 30, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	FUEL TECH, INC.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		24,186,824
Amendment Flag	false
Entity Central Index Key	0000846913
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus (Q1,Q2,Q3,FY)	Q1

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 7,135,000	$ 12,039,000
Restricted cash	6,020,000	6,020,000
Accounts receivable, net of allowance for doubtful accounts of $1,441 and $1,411, respectively	17,787,000	18,399,000
Inventories, net	801,000	957,000
Prepaid expenses and other current assets	3,104,000	3,184,000
Income taxes receivable	131,000	118,000
Total current assets	34,978,000	40,717,000
Property and equipment, net of accumulated depreciation of $26,758 and $26,528, respectively	6,003,000	5,976,000
Goodwill	2,116,000	2,116,000
Other intangible assets, net of accumulated amortization of $6,640 and $6,608, respectively	1,147,000	1,164,000
Right-of-use operating lease assets	1,411,000	0
Assets held for sale	413,000	485,000
Other assets	1,177,000	1,261,000
Total assets	47,245,000	51,719,000
Current liabilities:
Accounts payable	6,339,000	9,499,000
Accrued liabilities:
Operating lease liabilities - current	558,000	0
Employee compensation	1,160,000	1,563,000
Other accrued liabilities	4,900,000	6,099,000
Total current liabilities	12,957,000	17,161,000
Operating lease liabilities - non-current	845,000	0
Deferred income taxes	173,000	171,000
Other liabilities	287,000	335,000
Total liabilities	14,262,000	17,667,000
COMMITMENTS AND CONTINGENCIES (Note 14)
Stockholders’ equity:
Common stock, $.01 par value, 40,000,000 shares authorized, 24,833,383 and 24,825,891 shares issued, and 24,186,824 and 24,170,585 shares outstanding, respectively	248,000	248,000
Additional paid-in capital	139,088,000	138,992,000
Accumulated deficit	(103,762,000)	(102,495,000)
Accumulated other comprehensive loss	(1,181,000)	(1,285,000)
Nil coupon perpetual loan notes	76,000	76,000
Treasury stock, at cost	(1,486,000)	(1,484,000)
Total stockholders’ equity	32,983,000	34,052,000
Total liabilities and stockholders’ equity	$ 47,245,000	$ 51,719,000

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Revenues	$ 10,155	$ 12,791
Costs and expenses:
Cost of sales	6,141	7,766
Selling, general and administrative	4,458	4,921
Restructuring charge	595	0
Research and development	266	288
Costs and expenses:	11,460	12,975
Operating loss from continuing operations	(1,305)	(184)
Interest expense	(1)	0
Interest income	2	2
Other expense	25	(8)
Loss from continuing operations before income taxes	(1,279)	(190)
Income tax expense	0	(1)
Net loss from continuing operations	(1,279)	(191)
Loss from discontinued operations (net of income tax benefit of $0 in 2019 and 2018)	(10)	(25)
Net loss	$ (1,289)	$ (216)
Basic
Continuing operations (in dollars per share)	$ (0.05)	$ (0.01)
Discontinued operations (in dollars per share)	0.00	0.00
Basic net loss per common share (in dollars per share)	(0.05)	(0.01)
Diluted
Continuing operations (in dollars per share)	(0.05)	(0.01)
Discontinued operations (in dollars per share)	0.00	0.00
Diluted net loss per common share (in dollars per share)	$ (0.05)	$ (0.01)
Weighted-average number of common shares outstanding:
Basic (in shares)	24,177,000	24,146,000
Diluted (in shares)	24,177,000	24,146,000

XML

Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Income tax benefit	$ 0	$ 0

XML

Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 1,441	$ 1,411
Accumulated depreciation	26,758	26,528
Accumulated amortization	$ 6,640	$ 6,608
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	24,833,383	24,825,891
Common stock outstanding (in shares)	24,186,824	24,170,585

XML

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement of Comprehensive Income [Abstract]
Net loss	$ (1,289)	$ (216)
Other comprehensive income (loss):
Foreign currency translation adjustments	104	415
Unrealized losses from marketable securities, net of tax	0	(1)
Total other comprehensive income	104	414
Comprehensive income (loss)	$ (1,185)	$ 198

XML

Consolidated Statements of Stockholders’ Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total accumulated other comprehensive loss	Nil Coupon Perpetual Loan Notes	Treasury Stock
Balance (in shares) at Dec. 31, 2017		24,133
Balance at beginning of period at Dec. 31, 2017	$ 34,172	$ 248	$ 138,760	$ (102,672)	$ (768)	$ 76	$ (1,472)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(216)			(216)
Foreign currency translation adjustments	415				415
Unrealized losses from marketable securities, net of tax	(1)			(1)
Stock compensation expense	(59)		(59)
Common shares issued upon vesting of restricted stock units (in shares)		45
Common shares issued upon vesting of restricted stock units	0	$ 0
Treasury shares withheld (in shares)		(10)
Treasury shares withheld	(10)						(10)
Adoption of ASC	205			205
Balance (in shares) at Mar. 31, 2018		24,168
Balance at end of period at Mar. 31, 2018	34,506	$ 248	138,701	(102,684)	(353)	76	(1,482)
Balance (in shares) at Dec. 31, 2018		24,170
Balance at beginning of period at Dec. 31, 2018	34,052	$ 248	138,992	(102,495)	(1,285)	76	(1,484)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(1,289)			(1,289)
Foreign currency translation adjustments	104				104
Unrealized losses from marketable securities, net of tax	0
Stock compensation expense	96		96
Common shares issued upon vesting of restricted stock units (in shares)		18
Common shares issued upon vesting of restricted stock units	0	$ 0
Treasury shares withheld (in shares)		(2)
Treasury shares withheld	(2)						(2)
Adoption of ASC				22
Balance (in shares) at Mar. 31, 2019		24,186
Balance at end of period at Mar. 31, 2019	$ 32,983	$ 248	$ 139,088	$ (103,762)	$ (1,181)	$ 76	$ (1,486)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating Activities
Net loss	$ (1,289)	$ (216)
Loss from discontinued operations	10	25
Net loss from continuing operations	(1,279)	(191)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	244	195
Amortization	32	53
Loss on disposal of equipment	0	15
Provision for doubtful accounts, net of recoveries	0	(62)
Stock-based compensation, net of forfeitures	96	(59)
Changes in operating assets and liabilities:
Accounts receivable	720	32
Inventories	154	(68)
Prepaid expenses, other current assets and other non-current assets	187	113
Accounts payable	(3,174)	186
Accrued liabilities and other non-current liabilities	(1,870)	(2,751)
Net cash used in operating activities - continuing operations	(4,890)	(2,537)
Net cash used in operating activities - discontinued operations	(10)	(25)
Net cash used in operating activities	(4,900)	(2,562)
Investing Activities
Purchases of equipment and patents	(279)	(62)
Proceeds from the sale of equipment	55	2
Net cash used in investing activities	(224)	(60)
Financing Activities
Taxes paid on behalf of equity award participants	(2)	(10)
Net cash used in financing activities	(2)	(10)
Effect of exchange rate fluctuations on cash	222	433
Net decrease in cash, cash equivalents and restricted cash	(4,904)	(2,199)
Cash, cash equivalents, and restricted cash at beginning of period (Note 2)	18,059	14,386
Cash, cash equivalents and restricted cash at end of period (Note 2)	$ 13,155	$ 12,187

XML

General

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General

General

Organization

Fuel Tech, Inc. and subsidiaries ("Fuel Tech", the "Company", "we", "us" or "our") provides advanced engineered solutions for the optimization of combustion systems in utility and industrial applications. Our primary focus is on the worldwide marketing and sale of NOx reduction technologies as well as our FUEL CHEM program. The Company’s NOx reduction technologies reduce nitrogen oxide emissions from boilers, furnaces and other stationary combustion sources.

Our FUEL CHEM program is based on proprietary TIFI^® Targeted In-Furnace™ Injection technology, in combination with advanced Computational Fluid Dynamics (CFD) and Chemical Kinetics Modeling (CKM) boiler modeling, in the unique application of specialty chemicals to improve the efficiency, reliability and environmental status of combustion units by controlling slagging, fouling, corrosion, opacity and other sulfur trioxide-related issues in the boiler.

Our business is materially dependent on the continued existence and enforcement of air quality regulations, particularly in the United States. We have expended significant resources in the research and development of new technologies in building our proprietary portfolio of air pollution control, fuel and boiler treatment chemicals, computer modeling and advanced visualization technologies.

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 a fair presentation of the statements for the periods presented. All significant intercompany transactions and balances have been eliminated. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the full year ending December 31, 2019. 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, 2018 as filed with the Securities and Exchange Commission.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Restricted cash

Restricted cash represents funds that are restricted to satisfy any amount borrowed against the Company's existing revolving credit facility (the Facility) with JPMorgan Chase Bank, N.A. The balance of restricted cash totaling $6,020 will remain through the Maturity Date of the Facility. Refer to Note 10 Debt Financing for further information on the Facility.

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

	March 31, 2019		March 31, 2018
Cash and cash equivalents	$	7,135	$	5,667
Restricted cash included in current assets	6,020		1,520
Restricted cash included in long-term assets	—		5,000
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows	$	13,155	$	12,187

Leases

On January 1, 2019, we adopted ASC 842 using the modified retrospective method outlined in ASU 2018-11, “Leases (Topic 842) Targeted Improvements.” Refer to Note 12 for further details regarding the effect of adoption. We determine if an arrangement is a lease at inception. Operating leases are included in right-of-use ("ROU") operating lease assets, operating lease liabilities - current, and operating lease liabilities - non-current on our Consolidated Balance Sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which we elected the practical expedient to not separate lease and non-lease components for the majority of our leases. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component. We also elected the practical expedient to keep leases with an initial term of 12 months or less off of the consolidated balance sheet.

XML

Revenue

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

The Company recognizes revenue when control of the promised goods or services is transferred to our customers, in amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Fuel Tech’s sales of products to customers represent single performance obligations. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

We generally expense sales commissions on a ratable basis when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses within the Condensed Consolidated Statements of Operations.

FUEL CHEM

Revenues from the sale of chemical products are recognized when control transfers to customer upon shipment or delivery of the product based on the applicable shipping terms. We generally recognize revenue for these arrangements at a point in time based on our evaluation of when the customer obtains control of the promised goods or services.

Air Pollution Control Technology

Fuel Tech’s APC contracts are typically six to eighteen months in length. A typical contract will have three or four critical operational measurements that, when achieved, serve as the basis for us to invoice the customer via progress billings. At a minimum, these measurements will include the generation of engineering drawings, the shipment of equipment and the completion of a system performance test.

As part of most of its contractual APC project agreements, Fuel Tech will agree to customer-specific acceptance criteria that relate to the operational performance of the system that is being sold. These criteria are determined based on modeling that is performed by Fuel Tech personnel, which is based on operational inputs that are provided by the customer. The customer will warrant that these operational inputs are accurate as they are specified in the binding contractual agreement. Further, the customer is solely responsible for the accuracy of the operating condition information; typically all performance guarantees and equipment warranties granted by us are voidable if the operating condition information is inaccurate or is not met.

Since control transfers over time, revenue is recognized based on the extent of progress towards completion of the single performance obligation. Fuel Tech uses the cost-to-cost input measure of progress for our contracts since it best depicts the transfer of assets to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost input measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred. Costs to fulfill include all internal and external engineering costs, equipment charges, inbound and outbound freight expenses, internal and site transfer costs, installation charges, purchasing and receiving costs, inspection costs, warehousing costs, project personnel travel expenses and other direct and indirect expenses specifically identified as project- or product-line related, as appropriate (e.g. test equipment depreciation and certain insurance expenses).

Fuel Tech has installed over 1,000 units with APC technology and normally provides performance guarantees to our customers based on the operating conditions for the project. As part of the project implementation process, we perform system start-up and optimization services that effectively serve as a test of actual project performance. We believe that this test, combined with the accuracy of the modeling that is performed, enables revenue to be recognized prior to the receipt of formal customer acceptance.

Disaggregated Revenue by Product Technology

The following table presents our revenues disaggregated by product technology:

	Three Months Ended   March 31,
	2019		2018
Air Pollution Control
Technology solutions	$	4,741	$	7,722
Spare parts	149		300
Ancillary revenue	899		561
Total Air Pollution Control Technology revenues	5,789		8,583
FUEL CHEM
FUEL CHEM technology solutions	4,366		4,208
Total Revenues	$	10,155	$	12,791

Disaggregated Revenue by Geography

The following table presents our revenues disaggregated by geography, based on the billing addresses of our customers:

	Three Months Ended   March 31,
	2019		2018
United States	$	8,815	$	10,242
Foreign Revenues
South America	175		335
Europe	617		1,454
Asia	548		760
Total Foreign Revenues	1,340		2,549
Total Revenues	$	10,155	$	12,791

Timing of Revenue Recognition

The following table presents the timing of our revenue recognition:

	Three Months Ended   March 31,
	2019	2018
Products transferred at a point in time	5,414	5,069
Products and services transferred over time	4,741	7,722
Total Revenues	10,155	12,791

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 consolidated balance sheets. In our Air Pollution Control 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. These assets are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. At March 31, 2019 and December 31, 2018, contract assets were approximately $6,736 and $5,540, respectively, and are included in accounts receivable on the consolidated balance sheets.

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 consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. Contract liabilities were $902 and $1,234, at March 31, 2019 and December 31, 2018, respectively, and are included in other accrued liabilities on the consolidated balance sheets.

Changes in the contract asset and liability balances during the three month period ended March 31, 2019, were not materially impacted by any other items other than amounts billed and revenue recognized as described previously. During the three months ended March 31, 2019, revenue recognized that was included in the contract liability balance at the beginning of the period was $224, which represented primarily revenue from progress towards completion of our Air Pollution Control technology contracts. During the three months ended March 31, 2018, revenue recognized that was included in the contract liability balance at the beginning of the period was$1,942 and represented primarily revenue from progress towards completion of our Air Pollution Control technology contracts.

As of March 31, 2019, we had six construction contracts in progress that were identified as loss contracts and a provision for losses of $124 was recorded in other accrued liabilities on the consolidated balance sheet. Refer to Footnote 14 for an accrual related to certain non-conformance issues with a U.S. customer associated with equipment that requires remedy under the warranty provision of the customer contract. As of December 31, 2018, we had five construction contracts in progress that were identified as loss contracts and a provision for losses in the amount of $123 was recorded in other accrued liabilities on the consolidated balance sheet.

Remaining Performance Obligations

Remaining performance obligations, represents the transaction price of Air Pollution Control technology booked orders for which work has not been performed. As of March 31, 2019, the aggregate amount of the transaction price allocated to remaining performance obligations was $12,219. The Company expects to recognize revenue on approximately $11,892 of the remaining performance obligations over the next 12 months with the remaining recognized thereafter.

XML

Discontinued Operations

3 Months Ended

Mar. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

During the second quarter of 2017, the Company suspended all operations associated with the Fuel Conversion business segment. The components of the net assets of the Fuel Conversion discontinued operations are Assets held for sale (which consists primarily of certain equipment) on the Consolidated Balance Sheets totaling $413 and $485 as of March 31, 2019 and December 31, 2018, respectively. The Company sold certain equipment within Assets held for sale for the three-month periods ended March 31, 2019 of $55. Additionally, the Company entered into an agreement with a potential buyer for the remaining equipment within Assets held for sale which provided a non-refundable deposit of $20 for the option to purchase for $500 (less applicable commission to the third party equipment reseller) by May 21, 2019 or withdraw without any further obligation.

In addition, accrued severance of $35 and $65 is included in the other accrued liabilities line of the Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018, respectively. A total of $30 was paid for the three-months ended March 31, 2019, $30 will be paid in the second quarter of 2019 and the remaining $5 will be paid in the third quarter of 2019.

The Fuel Conversion business segment had no other assets or liabilities associated with it.

The activity of the Fuel Conversion discontinued operations consisted primarily of storage costs for the certain equipment held in Assets held for sale of $10 and $25 for the three-month periods ended March 31, 2019 and 2018, respectively. The Fuel Conversion business segment had no revenues associated with it.

XML

Restructuring Activities

3 Months Ended

Mar. 31, 2019

Restructuring and Related Activities [Abstract]

Restructuring Activities

Restructuring Activities

On January 18, 2019, the Company announced a planned suspension of its Air Pollution Control (“APC”) business operation in China (“Beijing Fuel Tech”). This action is 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 is underway, and includes staff rationalization, supplier and partner engagement, and the monetization of certain assets. The Company expects to complete the process during the second half of 2019.

The following table presents our revenues and net loss in China for the three month periods ended March 31, 2019 and 2018:

	2019			2018
Total revenues	$	338		$	659
Net loss	(850		)	(533		)

The following table presents net assets in China for the three months ended March 31, 2019 and 2018:

	2019			2018
Total assets	$	7,719		$	12,126
Total liabilities	(2,809		)	(4,642		)
Total net assets	4,910			7,484

Total assets primarily consist of accounts receivable, contract assets, inventory, prepaid expenses and property, plant and equipment. Total liabilities consist of accounts payable and certain accrued liabilities.

The Company expects to incur approximately $632 of severance costs relating to the suspension of the APC business in China, of which $257 was paid for the three months ended March 31, 2019 and $375 are expected to be paid in the second quarter of 2019.

On January 23, 2019, the Company notified the landlord of our intention to early terminate the lease on July 22, 2019. The Company incurred an early termination penalty of $63, which is included in restructuring expense and other accrued liabilities for the three months ended March 31, 2019. The Company expects to incur other disposal costs including contractual termination payments or other miscellaneous expenses but an estimated amount or range of amounts has not yet been determined.

The Company recorded restructuring charges of $595 and $0 for the three months ended March 31, 2019 and 2018, respectively. The charge consisted primarily of one-time severance costs of $532 and the early termination penalty for our lease associated with the suspension of our APC business in China of $63. The following is a reconciliation of the accrual for the workforce reduction that is included within the "Accrued Liabilities - Employee Compensation" line of the consolidated balance sheets for the three months ending March 31, 2019 and 2018:

	Three Months Ended March 31,
	2019			2018
Restructuring liability at beginning of period	$	65		$	391
Amounts expensed	595			—
Amounts paid	(287		)	(109		)
Restructuring liability at end of period	$	373		$	282

XML

Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2019

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

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

	Three months ended March 31,
	2019			2018
Foreign currency translation
Balance at beginning of period	$	(1,285	)	$	(772	)
Other comprehensive loss:
Foreign currency translation adjustments (1)	104			416
Balance at end of period	$	(1,181	)	$	(356	)
Available-for-sale marketable securities
Balance at beginning of period	$	—		$	4
Other comprehensive income:
Net unrealized holding loss (2)	—			(1		)
Balance at end of period	$	—		$	3
Total accumulated other comprehensive loss	$	(1,181	)	$	(353	)

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

(2) In all periods presented, there were no realized holding gains or losses and therefore no amounts were reclassified to earnings.

XML

Treasury Stock

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Treasury Stock

Treasury Stock

Common stock held in treasury totaled 656,844 and 655,306 with a cost of $1,486 and $1,484 at March 31, 2019 and December 31, 2018, 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.

XML

Earnings per Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

Basic earnings per share excludes the dilutive effects of stock options, restricted stock units (RSUs), 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, 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 are excluded from diluted earnings per share because they are anti-dilutive. For the three months ended March 31, 2019 and 2018, basic earnings per share is equal to diluted earnings per share because all outstanding stock awards 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 months ended March 31, 2019 and 2018.

	Three Months Ended   March 31,
	2019	2018
Basic weighted-average shares	24,177,000	24,146,000
Conversion of unsecured loan notes	—	—
Unexercised options and unvested RSUs	—	—
Diluted weighted-average shares	24,177,000	24,146,000

Fuel Tech had 1,280,000 and 1,318,000 weighted average equity awards outstanding at March 31, 2019 and 2018, respectively, that were not dilutive for the purposes of inclusion in the calculation of diluted earnings per share but could potentially become dilutive in future periods.

XML

Stock-Based Compensation

3 Months Ended

Mar. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

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, Restricted Stock Units (“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 March 31, 2019, Fuel Tech had 1,970,271 shares available for share-based awards under the 2014 Plan.

We did not record any excess tax benefits within income tax expense for the three months ended March 31, 2019. Given the Company has a full valuation allowance on its deferred tax assets, there were no excess tax benefits to record for the three months ended March 31, 2019. 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 Consolidated Statements of Operations. The components of stock-based compensation for the three months ended March 31, 2019 and 2018 were as follows:

	Three Months Ended   March 31,
	2019		2018
Stock options and restricted stock units, net of forfeited	$	96	$	(59	)
Tax benefit of stock-based compensation expense	—		—
After-tax effect of stock-based compensation	$	96	$	(59	)

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 three months ended March 31, 2019 was as follows:

	Number of Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding on January 1, 2019	932,500	$	4.68
Granted	—	—
Exercised	—	—
Expired or forfeited	—	—
Outstanding on March 31, 2019	932,500	$	4.68	4.42	$	131
Exercisable on March 31, 2019	932,500	$	4.68	4.42	$	131

As of March 31, 2019, there was no unrecognized compensation cost related to non-vested stock options granted under the Incentive Plans.

Restricted Stock Units

Restricted stock units (RSUs) granted to employees vest over time based on continued service (typically vesting over a period between two and four years). 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.

In addition to the time vested RSUs, the Company entered into a 2019 Executive Performance RSU Award Agreement (the “2019 Agreement”) with certain officers, including its President and Chief Executive Officer and Principal Financial Officer and Controller pursuant to which each 2019 Participating Executive will have the opportunity to earn a specified amount of restricted stock units (RSUs). The amount of RSUs awarded, if any, will be based on the Company’s achievement of varying levels of operating income before the impact of incentive pay (but including adjustments to reflect the payment of sales commissions) in fiscal 2019 (“Operating Income”), as determined by the Company, in its sole discretion. Nevertheless, no Participating Executive will be entitled to any such RSUs unless the Company achieves a minimum of $2 million in Operating Income in 2019. If awarded, such RSUs will vest in equal amounts (i.e., 1/3, 1/3 and 1/3) over three years commencing one year after the grant date based on continued service. Such RSUs are valued at the date of grant using the intrinsic value method based on the closing price of the Company’s common stock on the grant date.

At March 31, 2019, there is $657 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 1.93 years.

A summary of restricted stock unit activity for the three months ended March 31, 2019 is as follows:

	Shares		Weighted Average Grant Date Fair Value
Unvested restricted stock units at January 1, 2019	1,110,277		$	1.21
Granted	165,000		1.49
Forfeited	—		—
Vested	(17,777	)	1.27
Unvested restricted stock units at March 31, 2019	1,257,500		$	—

The fair value of restricted stock that vested during the three month period ending March 31, 2019 was $22.

Deferred Directors Fees

In addition to the Incentive Plans, Fuel Tech has a Deferred Compensation Plans 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 ASC 718, Fuel Tech accounts for these awards as equity awards as opposed to liability awards. In the three-month periods ended March 31, 2019 and 2018, Fuel Tech recorded no stock-based compensation expense under the Deferred Plan.

XML

Debt Financing

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Debt Financing

Debt Financing

The Company is obligated under a U.S. Domestic credit facility with (the Facility) with JPMorgan Chase Bank, N.A. (JPM Chase) which provides for maximum revolving credit borrowings of $5,500 and matures on June 28, 2019. Fuel Tech can use this Facility for cash advances and standby letters of credit. The Facility is secured by $5,500 in cash held by the Company in a separate restricted use designated JPM Chase deposit account and has the Company’s Italian subsidiary, Fuel Tech S.r.l., as a guarantor. Outstanding borrowings under the Facility bear interest at a rate of LIBOR plus 300 basis points. There are no financial covenants set forth in this amendment to the Facility. The Company is actively pursuing the renewal of its U.S. Domestic credit facility and intends to renew the U.S. Domestic credit facility at its maturity. As of March 31, 2019 and December 31, 2018, there were no outstanding borrowings on the credit facility.

At March 31, 2019 and December 31, 2018, the Company had outstanding standby letters of credit and bank guarantees totaling approximately $5,255 and $5,028, respectively, under the Facility in connection with contracts in process. Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instruments. The Company pays a commitment fee of 0.25% per year on the unused portion of the revolving credit facility. At March 31, 2019 and December 31, 2018, approximately $245 and $443 was available for future borrowings under the Facility.

Beijing Fuel Tech Environmental Technologies Company, Ltd. (Beijing Fuel Tech), is obligated under a revolving credit facility (the China Facility) agreement with JPM Chase which provides for maximum revolving credit borrowings of RMB 2.625 million (approximately $391) and matures on June 30, 2019. The Facility is secured by $520 in cash held by the Company in a separate restricted use designated JPM Chase deposit account. The China Facility bears interest at a rate of 140% of the People’s Bank of China (PBOC) Base Rate, and is guaranteed by the Company. Beijing Fuel Tech can use this facility for cash advances and bank guarantees. As of March 31, 2019 and December 31, 2018, Beijing Fuel Tech had no cash borrowings under the China Facility. At March 31, 2019 and December 31, 2018, we had no outstanding standby letters of credit and bank guarantees on its Beijing Fuel Tech revolving credit facility in connection with contracts in process. At March 31, 2019 and December 31, 2018, approximately $391 and $382 was available for future borrowings. As a result of the announcement of the suspension of the Air Pollution Control business in Beijing, the Company intends to not renew the China Facility upon its expiration on June 30, 2019.

In the event of default on either the domestic facility or the China facility, the cross default feature in each allows the lending bank to accelerate the payments of any amounts outstanding and may, under certain circumstances, allow the bank to cancel the facility. If the Company were unable to obtain a waiver for a breach of covenant and the bank accelerated the payment of any outstanding amounts, such acceleration may cause the Company’s cash position to deteriorate or, if cash on hand were insufficient to satisfy the payment due, may require the Company to obtain alternate financing to satisfy the accelerated payment.

XML

Business Segment and Geographic Financial Data

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Business Segment and Geographic Financial Data

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 NO_x emissions in flue gas from boilers, incinerators, furnaces and other stationary combustion sources. These include Low and Ultra Low NO_x Burners (LNB and ULNB), Over-Fire Air (OFA) systems, NO_xOUT^® and HERT™ Selective Non-Catalytic Reduction (SNCR) systems, and Advanced Selective Catalytic Reduction (ASCR^™) systems. Our ASCR systems include ULNB, OFA, and SNCR components, along with a downsized SCR catalyst, Ammonia Injection Grid (AIG), and Graduated Straightening Grid GSG™ systems to provide high NO_x reductions at significantly lower capital and operating costs than conventional SCR systems. The NO_xOUT CASCADE^® and NO_xOUT-SCR^® processes are more basic, using just SNCR and SCR catalyst components. ULTRA™ technology creates ammonia at a plant site using safe urea for use with any SCR application. 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 CFD and CKM 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.

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

Three months ended March 31, 2019	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	5,789		$	4,366		$	—		$	10,155
Cost of sales	(3,889		)	(2,252		)	—			(6,141		)
Gross margin	1,900			2,114			—			4,014
Selling, general and administrative	—			—			(4,458		)	(4,458		)
Restructuring charge	(595		)	—			—			(595		)
Research and development	—			—			(266		)	(266		)
Operating income (loss) from continuing operations	$	1,305		$	2,114		$	(4,724	)	$	(1,305	)

 `

Three months ended March 31, 2018	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	8,583		$	4,208		$	—		$	12,791
Cost of sales	(5,597		)	(2,169		)	—			(7,766		)
Gross margin	2,986			2,039			—			5,025
Selling, general and administrative	—			—			(4,921		)	(4,921		)
Research and development	—			—			(288		)	(288		)
Operating income (loss) from continuing operations	$	2,986		$	2,039		$	(5,209	)	$	(184	)

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

	Three Months Ended   March 31,
	2019		2018
Revenues:
United States	$	8,815	$	10,242
Foreign	1,340		2,549
	$	10,155	$	12,791

	March 31, 2019		December 31, 2018
Assets:
United States	$	34,141	$	36,784
Foreign	13,104		14,935
	$	47,245	$	51,719

XML

Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

Leases

Adoption of ASC 842, "Leases"

On January 1, 2019, we adopted ASC 842 using the modified retrospective method outlined in ASU 2018-11 "Leases (Topic 842) Targeted Improvements." Results for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts are not adjusted and continue to be reported in accordance with our legacy accounting under Accounting Standards Codification Topic 840: Leases (ASC 840). The Company recorded the transition to ASC 842 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented.

We have elected the package of practical expedients permitted under the transition guidance, which among other things, allow us to carry forward the historical accounting relating to lease identification and classification for existing leases upon adoption. We have also elected the practical expedient to not separate lease and non-lease components for the majority of our leases and the election to keep leases with an initial term of 12 months or less off of the consolidated balance sheet.

The cumulative effect of the changes made to our January 1, 2019 consolidated balance sheet for the adoption of ASC 842 were as follows:

	Balance at December 31, 2018			Adjustments Upon Adoption of ASC 842			Balance at January 1, 2019
Assets
Right-of-use operating lease assets	$	—		$	1,592		$	1,592
Liabilities
Other accrued liabilities	6,099			(22		)	6,077
Operating lease liabilities - current	—			650			650
Operating lease liabilities - non-current	—			942			942
Equity
Accumulated deficit	(102,495		)	22			(102,473		)

The adjustment made to the January 1, 2019 consolidated balance sheet related to an accrued liability for lease escalation clauses in certain of our leases under ASC 840 which is a cumulative-effect adjustment to the opening balance of accumulated deficit upon the adoption of ASC 842.

Leases

We have operating leases for eight leased office space locations and certain office equipment. Our leases have remaining lease terms of 1 year to 6 years. Our leases do not contain any material residual value guarantees or material restricted covenants and we currently have no material sublease arrangements. We have no financing leases as defined under ASC 842.

Total operating lease expense for the three-months ended March 31, 2019 is as follows:

	For the three months ended March 31, 2019
Operating lease cost	$	172
Short-term lease cost	68
Total lease cost	$	240

The weighted average remaining lease term was 4.25 years as of March 31, 2019. The weighted average discount rate was 3.73% as of March 31, 2019.

Remaining maturities of our existing lease liabilities as of March 31, 2019 were as follows:

Year Ending December 31,	Operating Leases
2019 (excluding the three months ended March 31, 2019)	$	491
2020	306
2021	214
2022	157
2023	148
Thereafter	197
Total lease payments	$	1,513
Less imputed interest	(110		)
Total	$	1,403

The following is the balance sheet classification of our existing lease liabilities as of March 31, 2019:

Operating lease liabilities - current	$	558
Operating lease liabilities - non-current	845
Total operating lease liabilities	$	1,403

Supplemental cash flow information related to leases was as follows:

	For the three months ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	171
Leased assets obtained in exchange for new operating lease liabilities	163

XML

Accrued Liabilities

3 Months Ended

Mar. 31, 2019

Payables and Accruals [Abstract]

Accrued Liabilities

Accrued Liabilities

The components of other accrued liabilities are as follows:

	As of
	March 31, 2019		December 31, 2018
Contract liabilities (Note 3)	$	902	$	1,234
Accrued remediation contingency (Note 14)	1,223		—
Other accrued liabilities	2,775		4,865
Total other accrued liabilities	$	4,900	$	6,099

XML

Contingencies

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Contingencies

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.

During the fourth quarter of 2018, the Company was notified of certain non-conformance issues with a U.S. customer associated with equipment that requires remedy under the warranty provision of the contract. Thus far, the Company is working to resolve this matter including addressing the non-conformance issues without resorting to litigation. During the first quarter of 2019, the Company filed the claim with our insurance carrier and recorded $973 as expected insurance proceeds from our insurance carrier and $1,223 (including the insurance policy deductible of $250) as an accrued liability associated with the completion of the non-conformance issues identified with our customer for the three months ended March 31, 2019. The Company currently has $500 of accounts receivable which is past due associated with this project. Upon satisfactory completion of non-conformance issues identified with the customer, the Company expects to collect the remaining accounts receivable due from the customer.

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 during the three-months ended March 31, 2019 and 2018. The warranty liability balance was $159 at March 31, 2019 and 2018.

XML

Income Taxes

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s effective tax rate is 0% for the three-month periods ended March 31, 2019 and 2018, respectively. The Company's effective tax rate differs from the statutory federal tax rate of 21% for the three-month periods ended March 31, 2019 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 three- month periods ended March 31, 2019 and 2018.

On April 3, 2019, the Company received notice from the Internal Revenue Service that our U.S. income tax return for the year ended December 31, 2016 is currently under audit.

Fuel Tech had no unrecognized tax benefits as of March 31, 2019 and December 31, 2018.

XML

Goodwill and Other Intangibles

3 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangibles

Goodwill and Other Intangibles

Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. Fuel Tech has two reporting units for goodwill evaluation purposes: the FUEL CHEM^® technology segment and the APC technology segment. There is no goodwill associated with our APC segment.  At both March 31, 2019 and December 31, 2018, our entire goodwill balance of $2,116 was allocated to the FUEL CHEM^® technology segment.

Goodwill is allocated to each of our reporting units after considering the nature of the net assets giving rise to the goodwill and how each reporting unit would enjoy the benefits and synergies of the net assets acquired. There were no indications of goodwill impairment in the three months ended March 31, 2019 and 2018.

Fuel Tech reviews other intangible assets, which include customer lists and relationships, covenants not to compete, patent assets, tradenames, and acquired technologies, for impairment on a recurring basis or when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event that impairment indicators exist, a further analysis is performed and if the sum of the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. Management considers historical experience and all available information at the time the estimates of future cash flows are made, however, the actual cash values that could be realized may differ from those that are estimated.

There were no indications of intangible asset impairments for the three month period ended March 31, 2019.

XML

General (Policies)

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

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 a fair presentation of the statements for the periods presented. All significant intercompany transactions and balances have been eliminated. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the full year ending December 31, 2019. 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, 2018 as filed with the Securities and Exchange Commission.

XML

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

New Accounting Pronouncements

Leases

On January 1, 2019, we adopted ASC 842 using the modified retrospective method outlined in ASU 2018-11, “Leases (Topic 842) Targeted Improvements.” Refer to Note 12 for further details regarding the effect of adoption. We determine if an arrangement is a lease at inception. Operating leases are included in right-of-use ("ROU") operating lease assets, operating lease liabilities - current, and operating lease liabilities - non-current on our Consolidated Balance Sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which we elected the practical expedient to not separate lease and non-lease components for the majority of our leases. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component. We also elected the practical expedient to keep leases with an initial term of 12 months or less off of the consolidated balance sheet.

Revenue Recognition

The Company recognizes revenue when control of the promised goods or services is transferred to our customers, in amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Fuel Tech’s sales of products to customers represent single performance obligations. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

We generally expense sales commissions on a ratable basis when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses within the Condensed Consolidated Statements of Operations.

FUEL CHEM

Revenues from the sale of chemical products are recognized when control transfers to customer upon shipment or delivery of the product based on the applicable shipping terms. We generally recognize revenue for these arrangements at a point in time based on our evaluation of when the customer obtains control of the promised goods or services.

Air Pollution Control Technology

Fuel Tech’s APC contracts are typically six to eighteen months in length. A typical contract will have three or four critical operational measurements that, when achieved, serve as the basis for us to invoice the customer via progress billings. At a minimum, these measurements will include the generation of engineering drawings, the shipment of equipment and the completion of a system performance test.

As part of most of its contractual APC project agreements, Fuel Tech will agree to customer-specific acceptance criteria that relate to the operational performance of the system that is being sold. These criteria are determined based on modeling that is performed by Fuel Tech personnel, which is based on operational inputs that are provided by the customer. The customer will warrant that these operational inputs are accurate as they are specified in the binding contractual agreement. Further, the customer is solely responsible for the accuracy of the operating condition information; typically all performance guarantees and equipment warranties granted by us are voidable if the operating condition information is inaccurate or is not met.

Since control transfers over time, revenue is recognized based on the extent of progress towards completion of the single performance obligation. Fuel Tech uses the cost-to-cost input measure of progress for our contracts since it best depicts the transfer of assets to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost input measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred. Costs to fulfill include all internal and external engineering costs, equipment charges, inbound and outbound freight expenses, internal and site transfer costs, installation charges, purchasing and receiving costs, inspection costs, warehousing costs, project personnel travel expenses and other direct and indirect expenses specifically identified as project- or product-line related, as appropriate (e.g. test equipment depreciation and certain insurance expenses).

Fuel Tech has installed over 1,000 units with APC technology and normally provides performance guarantees to our customers based on the operating conditions for the project. As part of the project implementation process, we perform system start-up and optimization services that effectively serve as a test of actual project performance. We believe that this test, combined with the accuracy of the modeling that is performed, enables revenue to be recognized prior to the receipt of formal customer acceptance.

XML

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Schedule of Cash, Cash Equivalents, and Restricted Cash

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

	March 31, 2019		March 31, 2018
Cash and cash equivalents	$	7,135	$	5,667
Restricted cash included in current assets	6,020		1,520
Restricted cash included in long-term assets	—		5,000
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows	$	13,155	$	12,187

XML

Revenue (Tables)

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table presents the timing of our revenue recognition:

	Three Months Ended   March 31,
	2019	2018
Products transferred at a point in time	5,414	5,069
Products and services transferred over time	4,741	7,722
Total Revenues	10,155	12,791

The following table presents our revenues disaggregated by product technology:

	Three Months Ended   March 31,
	2019		2018
Air Pollution Control
Technology solutions	$	4,741	$	7,722
Spare parts	149		300
Ancillary revenue	899		561
Total Air Pollution Control Technology revenues	5,789		8,583
FUEL CHEM
FUEL CHEM technology solutions	4,366		4,208
Total Revenues	$	10,155	$	12,791

Revenue Disaggregated by Geography

The following table presents our revenues disaggregated by geography, based on the billing addresses of our customers:

	Three Months Ended   March 31,
	2019		2018
United States	$	8,815	$	10,242
Foreign Revenues
South America	175		335
Europe	617		1,454
Asia	548		760
Total Foreign Revenues	1,340		2,549
Total Revenues	$	10,155	$	12,791

XML

Restructuring Activities (Tables)

3 Months Ended

Mar. 31, 2019

Restructuring and Related Activities [Abstract]

Restructuring

The following table presents our revenues and net loss in China for the three month periods ended March 31, 2019 and 2018:

	2019			2018
Total revenues	$	338		$	659
Net loss	(850		)	(533		)

The following table presents net assets in China for the three months ended March 31, 2019 and 2018:

	2019			2018
Total assets	$	7,719		$	12,126
Total liabilities	(2,809		)	(4,642		)
Total net assets	4,910			7,484

Reconciliation of restructuring accrual

The following is a reconciliation of the accrual for the workforce reduction that is included within the "Accrued Liabilities - Employee Compensation" line of the consolidated balance sheets for the three months ending March 31, 2019 and 2018:

	Three Months Ended March 31,
	2019			2018
Restructuring liability at beginning of period	$	65		$	391
Amounts expensed	595			—
Amounts paid	(287		)	(109		)
Restructuring liability at end of period	$	373		$	282

XML

Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2019

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

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

	Three months ended March 31,
	2019			2018
Foreign currency translation
Balance at beginning of period	$	(1,285	)	$	(772	)
Other comprehensive loss:
Foreign currency translation adjustments (1)	104			416
Balance at end of period	$	(1,181	)	$	(356	)
Available-for-sale marketable securities
Balance at beginning of period	$	—		$	4
Other comprehensive income:
Net unrealized holding loss (2)	—			(1		)
Balance at end of period	$	—		$	3
Total accumulated other comprehensive loss	$	(1,181	)	$	(353	)

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

(2) In all periods presented, there were no realized holding gains or losses and therefore no amounts were reclassified to earnings.

XML

Earnings per Share (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table sets forth the weighted-average shares used in calculating the earnings per share for the months ended March 31, 2019 and 2018.

	Three Months Ended   March 31,
	2019	2018
Basic weighted-average shares	24,177,000	24,146,000
Conversion of unsecured loan notes	—	—
Unexercised options and unvested RSUs	—	—
Diluted weighted-average shares	24,177,000	24,146,000

XML

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

The components of stock-based compensation for the three months ended March 31, 2019 and 2018 were as follows:

	Three Months Ended   March 31,
	2019		2018
Stock options and restricted stock units, net of forfeited	$	96	$	(59	)
Tax benefit of stock-based compensation expense	—		—
After-tax effect of stock-based compensation	$	96	$	(59	)

Schedule of Stock Option Activity

Stock option activity for Fuel Tech’s Incentive Plans for the three months ended March 31, 2019 was as follows:

	Number of Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding on January 1, 2019	932,500	$	4.68
Granted	—	—
Exercised	—	—
Expired or forfeited	—	—
Outstanding on March 31, 2019	932,500	$	4.68	4.42	$	131
Exercisable on March 31, 2019	932,500	$	4.68	4.42	$	131

Schedule of Nonvested Restricted Stock Units Activity

A summary of restricted stock unit activity for the three months ended March 31, 2019 is as follows:

	Shares		Weighted Average Grant Date Fair Value
Unvested restricted stock units at January 1, 2019	1,110,277		$	1.21
Granted	165,000		1.49
Forfeited	—		—
Vested	(17,777	)	1.27
Unvested restricted stock units at March 31, 2019	1,257,500		$	—

XML

Business Segment and Geographic Financial Data (Tables)

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

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

Three months ended March 31, 2019	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	5,789		$	4,366		$	—		$	10,155
Cost of sales	(3,889		)	(2,252		)	—			(6,141		)
Gross margin	1,900			2,114			—			4,014
Selling, general and administrative	—			—			(4,458		)	(4,458		)
Restructuring charge	(595		)	—			—			(595		)
Research and development	—			—			(266		)	(266		)
Operating income (loss) from continuing operations	$	1,305		$	2,114		$	(4,724	)	$	(1,305	)

 `

Three months ended March 31, 2018	Air Pollution Control Segment			FUEL CHEM Segment			Other			Total
Revenues from external customers	$	8,583		$	4,208		$	—		$	12,791
Cost of sales	(5,597		)	(2,169		)	—			(7,766		)
Gross margin	2,986			2,039			—			5,025
Selling, general and administrative	—			—			(4,921		)	(4,921		)
Research and development	—			—			(288		)	(288		)
Operating income (loss) from continuing operations	$	2,986		$	2,039		$	(5,209	)	$	(184	)

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area

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

	Three Months Ended   March 31,
	2019		2018
Revenues:
United States	$	8,815	$	10,242
Foreign	1,340		2,549
	$	10,155	$	12,791

Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country

	March 31, 2019		December 31, 2018
Assets:
United States	$	34,141	$	36,784
Foreign	13,104		14,935
	$	47,245	$	51,719

XML

Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Schedule of Cumulative Effect of Changes to Balance Sheet

The cumulative effect of the changes made to our January 1, 2019 consolidated balance sheet for the adoption of ASC 842 were as follows:

	Balance at December 31, 2018			Adjustments Upon Adoption of ASC 842			Balance at January 1, 2019
Assets
Right-of-use operating lease assets	$	—		$	1,592		$	1,592
Liabilities
Other accrued liabilities	6,099			(22		)	6,077
Operating lease liabilities - current	—			650			650
Operating lease liabilities - non-current	—			942			942
Equity
Accumulated deficit	(102,495		)	22			(102,473		)

Schedule of Lease Costs

Supplemental cash flow information related to leases was as follows:

	For the three months ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	171
Leased assets obtained in exchange for new operating lease liabilities	163

Total operating lease expense for the three-months ended March 31, 2019 is as follows:

	For the three months ended March 31, 2019
Operating lease cost	$	172
Short-term lease cost	68
Total lease cost	$	240

Supplemental cash flow information related to leases was as follows:

	For the three months ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	171
Leased assets obtained in exchange for new operating lease liabilities	163

Lessee, Operating Lease, Liability, Maturity

Remaining maturities of our existing lease liabilities as of March 31, 2019 were as follows:

Year Ending December 31,	Operating Leases
2019 (excluding the three months ended March 31, 2019)	$	491
2020	306
2021	214
2022	157
2023	148
Thereafter	197
Total lease payments	$	1,513
Less imputed interest	(110		)
Total	$	1,403

Assets And Liabilities, Lessee

The following is the balance sheet classification of our existing lease liabilities as of March 31, 2019:

Operating lease liabilities - current	$	558
Operating lease liabilities - non-current	845
Total operating lease liabilities	$	1,403

XML

Accrued Liabilities (Tables)

3 Months Ended

Mar. 31, 2019

Payables and Accruals [Abstract]

Schedule of other accrued liabilities

The components of other accrued liabilities are as follows:

	As of
	March 31, 2019		December 31, 2018
Contract liabilities (Note 3)	$	902	$	1,234
Accrued remediation contingency (Note 14)	1,223		—
Other accrued liabilities	2,775		4,865
Total other accrued liabilities	$	4,900	$	6,099

XML

Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Balance of total restricted cash	$ 6,020
Cash and cash equivalents	7,135	$ 12,039	$ 5,667
Restricted cash included in current assets	6,020	6,020	1,520
Restricted cash included in long-term assets	0		5,000
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows	$ 13,155	$ 18,059	$ 12,187	$ 14,386

XML

Revenue - Revenues Disaggregated by Product Technology (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disaggregation of Revenue [Line Items]
Total Revenues	$ 10,155	$ 12,791
Air Pollution Control
Disaggregation of Revenue [Line Items]
Total Revenues	5,789	8,583
Air Pollution Control | Technology solutions
Disaggregation of Revenue [Line Items]
Total Revenues	4,741	7,722
Air Pollution Control | Spare parts
Disaggregation of Revenue [Line Items]
Total Revenues	149	300
Air Pollution Control | Ancillary revenue
Disaggregation of Revenue [Line Items]
Total Revenues	899	561
FUEL CHEM
Disaggregation of Revenue [Line Items]
Total Revenues	4,366	4,208
FUEL CHEM | Technology solutions
Disaggregation of Revenue [Line Items]
Total Revenues	$ 4,366	$ 4,208

XML

Revenue - Disaggregated Revenue by Geography (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disaggregation of Revenue [Line Items]
Total Revenues	$ 10,155	$ 12,791
United States
Disaggregation of Revenue [Line Items]
Total Revenues	8,815	10,242
South America
Disaggregation of Revenue [Line Items]
Total Revenues	175	335
Europe
Disaggregation of Revenue [Line Items]
Total Revenues	617	1,454
Asia
Disaggregation of Revenue [Line Items]
Total Revenues	548	760
Total Foreign Revenues
Disaggregation of Revenue [Line Items]
Total Revenues	$ 1,340	$ 2,549

XML

Revenue - Timing of Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disaggregation of Revenue [Line Items]
Total Revenues	$ 10,155	$ 12,791
Products transferred at a point in time
Disaggregation of Revenue [Line Items]
Total Revenues	5,414	5,069
Products and services transferred over time
Disaggregation of Revenue [Line Items]
Total Revenues	$ 4,741	$ 7,722

XML

Revenue - Additional Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) contract	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($) contract
Revenue from Contract with Customer [Abstract]
Unbilled receivables, current	$ 6,736		$ 5,540
Billings in excess of cost, current	902		$ 1,234
Revenue recognized, included in contract liability balance	$ 224	$ 1,942
Number of contracts identified as loss contracts | contract	6		5
Provision for losses on contracts	$ 124		$ 123
Remaining performance obligations	12,219
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01
Revenue from Contract with Customer [Abstract]
Remaining performance obligations	$ 11,892

XML

Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Mar. 31, 2018	May 21, 2019	Dec. 31, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets held for sale			$ 413			$ 485
Loss from discontinued operations			(10)	$ (25)
Fuel Conversion Segment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Severance costs			30
Fuel Conversion Segment | Accrued Liabilities
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Accrued severance charges			35			65
Sold | Fuel Conversion Segment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets held for sale						$ 0
Held-for-sale | Fuel Conversion Segment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Deposits			$ 20
Scenario, Forecast | Fuel Conversion Segment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Severance costs	$ 5	$ 30
Scenario, Forecast | Held-for-sale | Fuel Conversion Segment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal consideration					$ 500

XML

Restructuring Activities - Charges (Details) - USD ($) $ in Thousands		3 Months Ended
	Jan. 23, 2019	Jun. 30, 2019	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Restructuring Cost and Reserve [Line Items]
Total Revenues			$ 10,155	$ 12,791
Net loss			(1,289)	(216)
Total assets			47,245		$ 51,719
Liabilities			(14,262)		(17,667)
Payments for restructuring			287	109
Restructuring charge			595	0
CHINA
Restructuring Cost and Reserve [Line Items]
Total Revenues			338	659
Net loss			(850)	$ (533)
Total assets			7,719		12,126
Liabilities			(2,809)		(4,642)
Net Assets			4,910		$ 7,484
CHINA | Employee Severance
Restructuring Cost and Reserve [Line Items]
Restructuring, expected cost			632
Payments for restructuring			257
Restructuring charge			532
CHINA | Facility Closing
Restructuring Cost and Reserve [Line Items]
Restructuring charge	$ 63		$ 63
Scenario, Forecast | CHINA | Employee Severance
Restructuring Cost and Reserve [Line Items]
Payments for restructuring		$ 375

XML

Restructuring Activities - Reserve (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Restructuring Reserve [Roll Forward]
Restructuring liability, beginning balance	$ 65	$ 391
Amounts expensed	595	0
Amounts paid	(287)	(109)
Restructuring liability, ending balance	$ 373	$ 282

XML

Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Increase (Decrease) in Accumulated Other Comprehensive Loss [Roll Forward]
Balance at beginning of period	$ 34,052	$ 34,172
Balance at end of period	32,983	34,506
Foreign currency translation
Increase (Decrease) in Accumulated Other Comprehensive Loss [Roll Forward]
Balance at beginning of period	(1,285)	(772)
Total other comprehensive (loss) income	104	416
Balance at end of period	(1,181)	(356)
Available-for-sale marketable securities
Increase (Decrease) in Accumulated Other Comprehensive Loss [Roll Forward]
Balance at beginning of period	0	4
Other comprehensive (loss) income	0	(1)
Balance at end of period	0	3
Total accumulated other comprehensive loss
Increase (Decrease) in Accumulated Other Comprehensive Loss [Roll Forward]
Balance at beginning of period	(1,285)	(768)
Balance at end of period	$ (1,181)	$ (353)

XML

Treasury Stock (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Equity [Abstract]
Treasury stock (in shares)	656,844,000	655,306,000
Cost of common stock held in treasury	$ 1,486	$ 1,484

XML

Earnings per Share - Basic Earnings Per Share (Details) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Basic weighted-average shares (in shares)	24,177,000	24,146,000
Conversion of unsecured loan notes (in shares)	0	0
Unexercised options and unvested RSUs (in shares)	0	0
Diluted weighted-average shares (in shares)	24,177,000	24,146,000

XML

Earnings per Share (Details) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)	1,280,000	1,318,000

XML

Stock-Based Compensation (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	May 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 96,000	$ (59,000)
Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares originally reserved (in shares)			5,600,676
Number of shares available for grant (in shares)	1,970,271
Incentive Plan | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	10 years
Award service period (in years)	4 years
Unrecognized compensation costs	$ 0
Incentive Plan | Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 657,000
Unrecognized compensation cost, period of recognition (in years)	1 year 11 months 5 days
Incentive Plan | Restricted Stock Units (RSUs) | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	2 years
Incentive Plan | Restricted Stock Units (RSUs) | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
Incentive Plan | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of stock vested	$ 22,000
Incentive Plan | Second Anniversary of Award Date | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percent of options vesting	50.00%
Incentive Plan | Third Anniversary of Award Date | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percent of options vesting	25.00%
Incentive Plan | Fourth Anniversary of Award Date | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percent of options vesting	25.00%
2019 Executive Performance RSU Award Agreement | Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years
Required operating income	$ 2,000,000
Period before vesting begins	1 year
Deferred Plan | Deferred Compensation
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 0	$ 0

XML

Stock-Based Compensation - Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock options and restricted stock units, net of forfeited	$ 96	$ (59)
Tax benefit of stock-based compensation expense	0	0
After-tax effect of stock-based compensation	$ 96	$ (59)

XML

Stock-Based Compensation Stock-Based Compensation - Stock Option Activity (Details) - Stock Options - Incentive Plan	3 Months Ended
	Mar. 31, 2019 USD ($) $ / shares shares
Number of Options
Outstanding, beginning of period (in shares) | shares	932,500
Granted (in shares) | shares	0
Exercised (in shares) | shares	0
Expired or forfeited (in shares) | shares	0
Outstanding, end of period (in shares) | shares	932,500
Number of Shares, exercisable (in shares) | shares	932,500
Weighted- Average Exercise Price
Outstanding, beginning of period (in dollars per share) | $ / shares	$ 4.68
Granted (in dollars per share) | $ / shares	0.00
Exercised (in dollars per share) | $ / shares	0.00
Expired or forfeited (in dollars per share) | $ / shares	0.00
Outstanding, end of period (in dollars per share) | $ / shares	4.68
Weighted average exercise price, exercisable (in dollars per share) | $ / shares	$ 4.68
Weighted- Average Remaining Contractual Term, Outstanding	4 years 5 months 1 day
Weighted- Average Remaining Contractual Term, Exercisable	4 years 5 months 1 day
Aggregate Intrinsic Value, Outstanding | $	$ 131
Aggregate Intrinsic Value, Exercisable | $	131
Unrecognized compensation costs | $	$ 0

XML

Stock-Based Compensation - Restricted Stock Unit Activity (Details) - Incentive Plan - Restricted Stock	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Shares (in shares)
Beginning balance (in shares) | shares	1,110,277
Granted (in shares) | shares	165,000
Forfeited (in shares) | shares	0
Vested (in shares) | shares	(17,777)
Ending balance (in shares) | shares	1,257,500
Weighted Average Grant Date Fair Value (in Dollars per share)
Beginning balance (in dollars per share) | $ / shares	$ 1.21
Granted (in dollars per share) | $ / shares	1.49
Forfeited (in dollars per share) | $ / shares	0.00
Vested (in dollars per share) | $ / shares	1.27
Ending balance (in dollars per share) | $ / shares	$ 0.00

XML

Debt Financing (Details)			3 Months Ended
	Oct. 19, 2018 CNY (¥)	Jun. 29, 2018	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Oct. 19, 2018 USD ($)
Domestic Line of Credit
Line of Credit Facility [Line Items]
Letters of credit, amount outstanding			$ 5,255,000	$ 5,028,000
Line of credit, commitment fee percentage			0.25%
Line of credit, remaining borrowing capacity			$ 245,000	443,000
China Facility
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity | ¥	¥ 2,625,000.000
China Facility | Base Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate (as percent)		140.00%
Standby Letters of Credit
Line of Credit Facility [Line Items]
Line of credit, remaining borrowing capacity			391,000	382,000
U.S. Domestic Credit Facility | Revolving Credit Facility | LIBOR
Line of Credit Facility [Line Items]
Basis spread on variable rate (as percent)	3.00%
Amended Amount
Line of Credit Facility [Line Items]
Letters of credit, amount outstanding			$ 0	$ 0
Amendment 2018 | Revolving Credit Facility
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity					$ 5,500,000
China Facility | Revolving Credit Facility
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity					391,000
Restricted cash					$ 520,000

XML

Business Segment and Geographic Financial Data (Details)	3 Months Ended
	Mar. 31, 2019 segment
Segment Reporting [Abstract]
Number of reportable segments	2

XML

Business Segment and Geographic Financial Data - Reporting Segment Net Sales and Gross Margin (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Segment Reporting Information [Line Items]
Revenues from external customers	$ 10,155	$ 12,791
Cost of sales	(6,141)	(7,766)
Gross margin	4,014	5,025
Selling, general and administrative	(4,458)	(4,921)
Restructuring charge	(595)	0
Research and development	(266)	(288)
Operating loss from continuing operations	(1,305)	(184)
Air Pollution Control Segment
Segment Reporting Information [Line Items]
Revenues from external customers	5,789	8,583
Cost of sales	(3,889)	(5,597)
Gross margin	1,900	2,986
Selling, general and administrative	0	0
Restructuring charge	(595)
Research and development	0	0
Operating loss from continuing operations	1,305	2,986
FUEL CHEM Segment
Segment Reporting Information [Line Items]
Revenues from external customers	4,366	4,208
Cost of sales	(2,252)	(2,169)
Gross margin	2,114	2,039
Selling, general and administrative	0	0
Research and development	0	0
Operating loss from continuing operations	2,114	2,039
Other
Segment Reporting Information [Line Items]
Selling, general and administrative	(4,458)	(4,921)
Research and development	(266)	(288)
Operating loss from continuing operations	$ (4,724)	$ (5,209)

XML

Business Segment and Geographic Financial Data - Operations by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues:
Revenues	$ 10,155	$ 12,791
United States
Revenues:
Revenues	8,815	10,242
Foreign
Revenues:
Revenues	$ 1,340	$ 2,549

XML

Business Segment and Geographic Financial Data - Assets by Geographic Area (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
ASSETS
Assets	$ 47,245	$ 51,719
United States
ASSETS
Assets	34,141	36,784
Foreign
ASSETS
Assets	$ 13,104	$ 14,935

XML

Leases - Adoption of ASC 842 (Details) - USD ($)	Mar. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
ASSETS
Right-of-use operating lease assets	$ 1,411,000	$ 1,592,000	$ 0
Liabilities
Other accrued liabilities	4,900,000	6,077,000	6,099,000
Operating lease liabilities - current	558,000	650,000	0
Operating lease liabilities - non-current	845,000	942,000	0
Equity
Accumulated deficit	$ (103,762,000)	(102,473,000)	$ (102,495,000)
Accounting Standards Update 2016-02
ASSETS
Right-of-use operating lease assets		1,592,000
Liabilities
Other accrued liabilities		(22,000)
Operating lease liabilities - current		650,000
Operating lease liabilities - non-current		942,000
Equity
Accumulated deficit		$ 22,000

XML

Leases - Lease Cost (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) lease_arrangement
Lessee, Lease, Description [Line Items]
Number of lease arrangements | lease_arrangement	8
Operating lease cost	$ 172
Short-term lease cost	68
Total lease cost	$ 240
Weighted average remaining lease term	4 years 3 months
Weighted average discount rate	3.73%
Minimum
Lessee, Lease, Description [Line Items]
Term of lease	1 year
Maximum
Lessee, Lease, Description [Line Items]
Term of lease	6 years

XML

Leases - Lease Maturity (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Leases [Abstract]
2019 (excluding the three months ended March 31, 2019)	$ 491
2020	306
2021	214
2022	157
2023	148
Thereafter	197
Total lease payments	1,513
Less imputed interest	(110)
Total	$ 1,403

XML

Leases - Balance Sheet Classification (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Leases [Abstract]
Operating lease liabilities - current	$ 558	$ 650	$ 0
Operating lease liabilities - non-current	845	$ 942	$ 0
Total operating lease liabilities	$ 1,403

XML

Leases - Supplemental Cash Flow (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Leases [Abstract]
Cash paid for amounts included in the measurement of lease liabilities	$ 171
Leased assets obtained in exchange for new operating lease liabilities	$ 163

XML

Accrued Liabilities (Details) - USD ($)	Mar. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Payables and Accruals [Abstract]
Contract liabilities (Note 3)	$ 902,000		$ 1,234,000
Accrued remediation contingency (Note 14)	1,223,000		0
Other accrued liabilities	2,775,000		4,865,000
Total other accrued liabilities	$ 4,900,000	$ 6,077,000	$ 6,099,000

XML

(Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Loss Contingencies [Line Items]
Expected insurance proceeds	$ 973,000
Accrued remediation contingency (Note 14)	1,223,000		$ 0
Insurance deductible	250,000
Accounts receivable	17,787,000		$ 18,399,000
Change in warranty liability balance	0	$ 0
Warranty liability balance	159,000	$ 159,000
Customer One
Loss Contingencies [Line Items]
Accounts receivable	$ 500,000

XML

Income Taxes (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Effective income tax rate	0.00%	0.00%
Federal tax rate (as a percent)	21.00%
Unrecognized tax benefits	$ 0		$ 0

XML

Goodwill and Other Intangibles (Details)	3 Months Ended
	Mar. 31, 2019 USD ($) reporting_unit	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)
Goodwill [Line Items]
Number of reporting units | reporting_unit	2
Goodwill	$ 2,116,000		$ 2,116,000
Goodwill impairments	0	$ 0
Air Pollution Control Segment
Goodwill [Line Items]
Goodwill	$ 0
FUEL CHEM Segment
Goodwill [Line Items]
Goodwill			$ 2,116,000