FUEL TECH, INC.

Fuel Tech, Inc. is a leading technology company engaged in the worldwide development, commercialization and application of sustainable state-of-the-art proprietary technologies for air pollution control, process optimization, water treatment and advanced engineering services. The company operates in the air pollution control and water treatment markets, serving customers in the electric utility, industrial, pulp and paper, waste-to-energy, university and district heating sectors. The future growth of the APC technology segment is dependent upon the adoption and enforcement of environmental regulations in the U.S. and globally, with the Clean Air Act and state-level mandates serving as primary regulatory drivers. In the European Union, the Best Available Reference Technology emission guidelines continue to be implemented gradually, with the last major update reducing NOx limit values by up to 25% ¹, creating opportunities for upgrades of first-generation NOx abatement systems. The company's FUEL CHEM segment is influenced by the continued use of coal for global electricity production, with coal accounting for approximately 17% ² of all U.S. electricity generation and roughly 33% ³ of global electricity generation in 2025.

Competition for the APC segment includes companies such as Babcock Power, Babcock & Wilcox Company, CECO Environmental, Mitsubishi, Southern Environmental, Chemithon, Inc., and Yara. For the FUEL CHEM segment, competitors include specialty chemical companies such as Imerys, Environmental Energy Services, Inc., and SUEZ Water Technologies. The company states that no technologically comparable substantive competition currently exists for its TIFI technology, which is designed primarily for slag control and SO3 abatement, though there can be no assurance that such lack of substantive competition will continue. During 2025, the company's five largest customers accounted for approximately 58% ⁴ of net revenues, with the largest customer accounting for approximately 21% ⁵ of net revenues, all of which contributed revenues to the FUEL CHEM business segment.

The company generates revenue through two broad technology segments: Air Pollution Control and FUEL CHEM. The APC segment includes technologies to reduce NOx emissions in flue gas, including NOxOUT SNCR systems and ASCR Advanced Selective Catalytic Reduction systems, along with particulate control through ESP products and services and Flue Gas Conditioning systems. The FUEL CHEM segment revolves around the unique application of specialty chemicals to improve the efficiency, reliability and environmental status of combustion units, utilizing proprietary TIFI Targeted In-Furnace Injection technology. The company also has water treatment technologies including DGI Dissolved Gas Infusion Systems, which are currently in the demonstration phase. Many products and services rely heavily on Computational Fluid Dynamics and Chemical Kinetics Modeling capabilities, enhanced by internally developed, high-end visualization software.

The APC segment's NOx reduction technologies include NOxOUT and Advanced SNCR systems, ASCR Advanced Selective Catalytic Reduction systems, and SCR reagent supply systems including the ULTRA and U2A processes for safe ammonia generation and UDI Urea Direct Injection systems, along with aqueous and anhydrous ammonia storage and delivery systems. These technologies have been installed on over 2,000 ⁶ units worldwide. The APC segment's particulate control technologies include ESP products and services with experience on units up to 700 MW ⁷, and Flue Gas Conditioning systems using sulfur trioxide and ammonia-based conditioning agents, installed on more than 600 ⁸ units worldwide. Sales of APC products were $8.9 million ⁹ and $11.2 million ¹⁰ for the years ended December 31, 2025 and 2024, respectively. The FUEL CHEM segment uses chemical injection programs to control slagging, fouling, corrosion, opacity and acid plume, as well as the formation of sulfur trioxide, ammonium bisulfate, particulate matter, sulfur dioxide, and carbon dioxide, with experience on more than 100 ¹¹ applications worldwide. Sales of FUEL CHEM products were $17.8 million ¹² and $13.9 million ¹³ for the years ended December 31, 2025 and 2024, respectively.

The company owns 32 ¹⁴ granted patents worldwide including 12 ¹⁵ US patents and 20 ¹⁶ non-US patents, with five ¹⁷ patent applications pending including three ¹⁸ in the U.S. and two ¹⁹ in non-U.S. jurisdictions. These patents and applications cover some 37 ²⁰ inventions, 23 ²¹ associated with the NOx reduction business, five ²² associated with the FUEL CHEM business, and nine ²³ associated with water treatment. Granted patents have expiration dates ranging from December of 2028 ²⁴ to August of 2042 ²⁵. At December 31, 2025, the company had 77 ²⁶ employees, 72 ²⁷ in North America and five ²⁸ in Europe. The employee turnover rate in 2025 was approximately 16% ²⁹. Consolidated APC segment backlog at December 31, 2025 was $7.0 million ³⁰ versus $6.2 million ³¹ at December 31, 2024, with the company expecting to recognize revenue on approximately $6.0 million ³² of the backlog over the next 12 months.

The company owns an office building in Warrenville, Illinois with approximately 40,000 ³³ square feet of office space. The Gallarate, Italy building lease, for approximately 1,335 ³⁴ square feet, runs through April 30, 2031 ³⁵. The Aurora, IL warehouse lease, for approximately 11,000 ³⁶ square feet, runs through March 31, 2031 ³⁷. The company is not aware of having experienced any material cybersecurity incidents and is not aware of any existent cybersecurity threats that would materially affect business strategy, results of operations or financial conditions.

For the fiscal year ended December 31, 2025, total revenues were $27.0 million ³⁸ compared to $25.4 million ³⁹ for the fiscal year ended December 31, 2024. Net income was $0.3 million ⁴⁰ for 2025 compared to net income of $0.4 million ⁴¹ for 2024. Basic and diluted earnings per share were $0.01 ⁴² for both 2025 and 2024 ⁴³.

The company expects that there will be further opportunities to implement its technologies globally in 2026. The DGI Dissolved Gas Infusion Systems technology is currently in the demonstration phase and the company expects additional revenue generating demonstrations and opportunities throughout 2026. Third party validation testing of the efficiency of transferring oxygen to a treatment basin has been completed and results have been published. In the European market, new NOx abatement opportunities are being identified and followed in hydrogen production, chemical production and in petrochemical industries. Middle Eastern countries have become a major focus for European engineering companies due to local initiatives for reducing pollution and improving tourism, and Fuel Tech's NOx control technologies can be integrated into both new and existing combustion systems supplied into this market.

In South Africa, the state-owned utility Eskom and metallurgical companies are continuing with refurbishing aging ESPs and adding FGC technology to further improve ESP performance, with Fuel Tech well placed to compete for this business with local partner Lesedi. In India, new biomass fired boilers are expected to be outfitted with SNCR technology, and particulate matter emission reductions continue to present an ongoing opportunity for Fuel Tech's FGC technology, to be implemented through a collaboration with local partner ISGEC. The growth of natural gas in the U.S. for industrial applications in support of traditional electricity generation, as well as the increased demand in support of the growth of data centers which require significant power generation capability, has increased the need for SCR technology since it often meets the definition of BACT and is required on new industrial units.

The filing does not contain specific margin or cost outlook targets.

The company's FUEL CHEM technology segment is dependent, in part, upon a supply of magnesium hydroxide. On March 4, 2009, the company entered into a Restated Product Supply Agreement with Martin Marietta Magnesia Specialties, LLC to assure the continuance of a stable supply of magnesium hydroxide products for requirements in the U.S. and Canada, which is renegotiated annually. Pursuant to the PSA, MMMS supplies the company with magnesium hydroxide products manufactured pursuant to its specifications and the company has agreed to purchase from MMMS 100% of its requirements for such products for customers in the U.S. and Canada. There can be no assurance that the company will be able to obtain a stable source of magnesium hydroxide in markets outside the U.S.

The filing does not contain specific R&D spending levels, capital expenditure plans, share repurchase authorization amounts, or dividend policy figures.

The company faces structural headwinds from the energy transition, as the significant decreases in recent years in the levelized cost of energy for renewable sources of power generation, along with ongoing changes in government, investor, customer and consumer policies related to climate change, have in some cases adversely affected, and are expected to continue to affect, the demand for and competitiveness of products and services related to carbonaceous fuel-based power generation. Reduced coal-fired electricity demand across the U.S. has led to production declines, with contributing factors including lower natural gas prices, increased cost of environmental compliance, constrained funding for capital projects, and the increased production of electricity from renewable sources such as wind and solar.

On January 9, 2026, the EPA finalized amendments to the New Source Performance Standards for Stationary Combustion Turbines, determining that combustion controls, rather than SCR technology, constitute the 'Best System of Emission Reduction' for many new, modified, or reconstructed turbines, particularly those with a heat rating of less than 850 MMBtu/h (typically units of 100MW or less). If customers are not legally required to achieve the ultra-low NOx levels that the company's SCR systems provide, the order pipeline for 100MW and smaller units may decline significantly. The company's business will be adversely impacted to the extent that regulations are repealed or amended to significantly reduce the level of required NOx or particulate matter reduction, or to the extent that regulatory authorities delay or otherwise minimize enforcement of existing laws.

The company's product portfolio lacks diversification, with only two broad technology segments, meaning an adverse development in either could have a significantly greater impact than if the company maintained more diverse operations. The company faces substantial competition in both segments, with APC competitors including Babcock Power, Babcock & Wilcox, CECO Environmental, Mitsubishi, and Yara, and FUEL CHEM competitors including Imerys, Environmental Energy Services, and SUEZ Water Technologies. Customer concentration is a material risk, as the five largest customers accounted for approximately 58% ⁴⁴ of net revenues in 2025, with the largest customer alone representing approximately 21% ⁴⁵ of net revenues, all within the FUEL CHEM segment. The company's business is significantly dependent on continuing air pollution control regulations and enforcement, and the January 9, 2026 EPA amendments to NSPS for Stationary Combustion Turbines, which determined that combustion controls rather than SCR constitute the Best System of Emission Reduction for many units under 850 MMBtu/h, could materially reduce demand for SCR systems. The energy transition toward renewable power generation sources has adversely affected and is expected to continue to affect demand for products related to carbonaceous fuel-based power generation.

Management's message emphasizes that the company is a leading technology company engaged in the worldwide development, commercialization and application of sustainable state-of-the-art proprietary technologies. The forward-looking statements in the filing reflect management'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, management. The strategic priorities emphasized include success in winning new contract awards, improving operational performance, and increasing or maintaining margins through implementation of operational changes, restructuring and other cost reduction measures. Management also highlights the importance of investments in research and development and new products, services and platforms, and the ability to launch new products in a cost-effective manner.