FUEL TECH INC

Previous wording

In 2023, the Company continued to successfully execute on existing orders resulting in improved performance in the APC segment. We continue to invest in development of new technologies to expand our product offerings into the water and waste-water treatment market. Our capital resources are sufficient for our immediate and longer-term needs, and we continue to enjoy the services and support of a dedicated workforce. We expect that our cost control efforts will maintain our existing levels of operating expenditures and the diminishing effects of the pandemic should lead to an improved market outlook.

Current wording

In 2024, the Company continued to successfully execute on existing orders. We continue to invest in development of new technologies to expand our product offerings into the water and waste-water treatment market. Our capital resources are sufficient for our immediate and longer-term needs, and we continue to enjoy the services and support of a dedicated workforce. We expect that our cost control efforts will maintain our existing levels of operating expenditures and the diminishing effects of the pandemic should lead to an improved market outlook.

Previous wording

Our APC business experienced improvement in 2023, compared to 2022, due to the execution of projects awarded in the second half of 2022 and in 2023. Sales growth experienced headwinds in the United States due to regulatory unclarity resulting from legal challenges to the Cross State Air Pollution Control rule. We are encouraged by the pace and depth of our business development activities, which reflects an increased focus on global emissions protocols across a variety of fuel sources. Our Consolidated APC backlog at year end was $7,458 and our global sales pipeline has increased to $50 -75 million range.

Current wording

Our APC business experienced a decline in revenues and segment operating profits in 2024 compared to 2023 primarily due to customer-driven project delays and project timing. Despite this, we are encouraged by the pace and depth of our business development activities, which reflect an increased focus on global emissions protocols across a variety of fuel sources. Our Consolidated APC backlog at year end was $6,175.

Previous wording

The Air Pollution Control technology segment includes technologies to reduce NOx emissions in flue gas generated by the firing of natural gas or coal from boilers, incinerators, furnaces and other stationary combustion sources. These include SCR systems, NOxOUT and HERT™ SNCR systems. Our SCR systems can also include AIG, and GSG™ systems to provide high NOx reductions at significantly lower capital and operating costs than conventional SCR systems. ULTRA® technology creates ammonia at a plant site using safe urea for use with any SCR application. ESP technologies make use of electrostatic precipitator products and services to reduce particulate matter. FGC 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. We distribute our products through our direct sales force and third-party sales agents.

Current wording

The Air Pollution Control technology segment includes technologies to reduce NOx emissions in flue gas generated by the firing of natural gas, biomass or coal from boilers, incinerators, furnaces and other stationary combustion sources. These include SCR systems and NOxOUT and HERT™ SNCR systems. Our SCR systems can also include AIG, and GSG™ systems to provide high NOx reductions at significantly lower capital and operating costs than conventional SCR systems. ULTRA® technology creates ammonia at a plant site using safe urea for use with any SCR application. ESP technologies make use of electrostatic precipitator products and services to reduce particulate matter. FGC 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. We distribute our products through our direct sales force and third-party sales agents.

Previous wording

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 coal-fired furnaces and boilers through the addition of chemicals into the furnace using TIFI® Targeted In-Furnace Injection™ technology. Fuel Tech sells its FUEL CHEM program through its direct sales force and agents to industrial and utility power-generation facilities. FUEL CHEM programs have been installed on combustion units in North America, Europe, China, and India, treating a wide variety of solid and liquid fuels, including coal, heavy oil, biomass and municipal waste. The FUEL CHEM program improves the efficiency, reliability and environmental status of plants operating in the electric utility, industrial, pulp and paper, waste-to-energy, university and district heating markets and offers numerous operational, financial and environmental benefits to owners of boilers, furnaces and other combustion units.

Current wording

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 coal-fired furnaces and boilers through the addition of chemicals into the furnace using TIFI® Targeted In-Furnace Injection™ technology. Fuel Tech sells its FUEL CHEM program through its direct sales force and agents to industrial and utility power-generation facilities. FUEL CHEM programs have been installed on combustion units in North America, Europe, and the Pacific Rim, treating a wide variety of solid and liquid fuels, including coal, heavy oil, biomass and municipal waste. The FUEL CHEM program improves the efficiency, reliability and environmental status of plants operating in the electric utility, industrial, pulp and paper, waste-to-energy, university and district heating markets and offers numerous operational, financial and environmental benefits to owners of boilers, furnaces and other combustion units.

Previous wording

The key market dynamic for both technology segments is the continued use of fossil fuels, especially coal, as the principal fuel source for global electricity production. In 2023, coal accounted for approximately 14% of all U.S. electricity generation and roughly 36% of global electricity generation. Major coal consumers include China, the U.S. and India.

Current wording

The key market dynamic for both technology segments is the continued use of fossil fuels, especially coal, as the principal fuel source for global electricity production. In 2024, coal accounted for approximately 15% of all U.S. electricity generation and roughly 35% of global electricity generation. Major coal consumers include China, the U.S. and India.

Previous wording

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (GAAP), which require us to make estimates and assumptions. We believe that our accounting policies (see Note 1 to the consolidated financial statements), involve a higher degree of judgment, estimates and assumptions and are deemed critical. We routinely discuss our critical accounting policies with the Audit Committee of the Board of Directors.

Current wording

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (GAAP), which require us to make estimates and assumptions. We believe that certain accounting policies (see Note 1 to the consolidated financial statements) involve a higher degree of judgment, estimates and assumptions and are deemed critical. We routinely discuss our critical accounting policies with the Audit Committee of the Board of Directors.

Previous wording

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 December 31, 2023,2022, and 2021 contract assets for APC technology projects were approximately$2,285 and$3,082, and $1,277, respectively, and are included in accounts receivable on the consolidated balance sheets. There were no contract assets for the FUEL CHEM technology segment as of December 31, 2023,2022, and 2021.

Current wording

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 December 31, 2024,2023, and 2022 contract assets for APC technology projects were approximately$2,075,$2,285, and $3,082, respectively, and are included in accounts receivable on the consolidated balance sheets.

Previous wording

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$1,279,$372, and $390 at December 31, 2023,2022, and 2021, respectively, and are included in other accrued liabilities on the consolidated balance sheets.

Current wording

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$721,$1,279, and $372 at December 31, 2024,2023, and 2022, respectively, and are included in other accrued liabilities on the consolidated balance sheets.

Previous wording

Goodwill is not amortized, but rather is reviewed annually (in the fourth quarter) or more frequently if indicators arise, for impairment. We do not have any indefinite-lived intangible assets other than goodwill. Such indicators include a decline in expected cash flows, a significant adverse change in legal factors or in the business climate, unanticipated competition, a decrease in our market capitalization to an amount less than the carrying value of our assets, or slower growth rates, among others.

Current wording

Goodwill is not amortized but rather is reviewed annually as of the first day of the fourth quarter, or more frequently if indicators arise, for impairment. Such indicators include a decline in expected cash flows, a significant adverse change in legal factors or in the business climate, unanticipated competition, a decrease in our market capitalization to an amount less than the carrying value of our assets, or slower growth rates, among others. We do not have any indefinite-lived intangible assets other than goodwill.

Previous wording

The application of our DCF model in estimating the fair value of each reporting segment is based on the ‘net asset’ approach to business valuation. In using this approach for each reportable segment, we forecast segment revenues and expenses out to perpetuity and then discount the resulting cash flows to their present value using an appropriate discount rate. The forecast considers, among other items, the current and expected business environment, expected changes in the fixed and variable cost structure as the business grows, and a revenue growth rate that we feel is both achievable and sustainable. The discount rate used is composed of a number of identifiable risk factors, including equity risk, company size, and certain company-specific risk factors such as our debt-to-equity ratio, among other factors, that when added together, results in a total return that a prudent investor would demand for an investment in our Company.

Current wording

The application of our DCF model in estimating the fair value of each reporting segment is based on the ‘net asset’ approach to business valuation. In using this approach for each reportable segment, we forecast segment revenues and expenses out to perpetuity and then discount the resulting cash flows to their present value using an appropriate discount rate. The forecast considers, among other items, the current and expected business environment, expected changes in the fixed and variable cost structure as the business grows, and a revenue growth rate that we feel is both achievable and sustainable. The discount rate used is composed of a number of identifiable risk factors, including equity risk, company size, and certain company-specific risk factors such as our debt-to-equity ratio, among other factors, that when added together, results in a total return that a prudent investor would demand for an investment in our Company. In the event the estimated fair value of a reporting unit per the DCF model is less than the carrying value, we would record an impairment charge for the amount by which the carrying value exceeds the estimated fair value of the reporting unit.

Previous wording

Impairment of Long-Lived Assets and Amortizable Intangible Assets

Current wording

Impairment of Long-Lived Assets

Previous wording

Long-lived assets, including property and equipment and intangible assets, are reviewed for impairment when events and circumstances indicate that the carrying amount of the assets (or asset group) may not be recoverable. If impairment indicators exist, we perform a more detailed analysis and an impairment loss is recognized when either estimated future undiscounted cash flows expected to result from the use of the asset (or asset group) and its eventual disposition are less than the carrying amount or the determined fair value is less than the carrying amount. This process of analyzing impairment involves examining the operating condition of individual assets (or asset group) and estimating a fair value based upon current condition, relevant market factors and the remaining estimated operational life compared to the asset’s remaining depreciable life. Quoted market prices and other valuation techniques are used to determine expected fair value. Due to the existence of impairment indicators, we performed a more detailed analysis of potential long-lived and intangible asset impairment in the APC technology asset group during the fourth quarter of 2023 and determined no impairment exists. There was no impairment recorded during 2023.

Current wording

Under the guidance set forth in Accounting Standards Update (ASU) 2014-08, Property, Plant and Equipment (Topic 360), long-lived assets, including property and equipment and intangible assets, are reviewed for impairment when events and circumstances indicate that the carrying amount of the assets (or asset group) may not be recoverable. If impairment indicators exist, we perform a more detailed analysis and an impairment loss is recognized when either estimated future undiscounted cash flows expected to result from the use of the asset (or asset group) and its eventual disposition are less than the carrying amount or the determined fair value is less than the carrying amount. This process of analyzing impairment involves examining the operating condition of individual assets (or asset group) and estimating a fair value based upon current condition, relevant market factors and the remaining estimated operational life compared to the asset’s remaining depreciable life. Quoted market prices and other valuation techniques are used to determine expected fair value. We performed a detailed analysis of potential long-lived asset impairment during the fourth quarter of 2024 and determined no impairment exists. There was no impairment recorded during 2024.

Previous wording

Deferred tax assets represent deductible temporary differences and net operating loss and tax credit carryforwards. A valuation allowance is recognized if it is more likely than not that some portion of the deferred tax asset will not be realized. At the end of each reporting period, management reviews the realizability of the deferred tax assets. As part of this review, we consider if there are taxable temporary differences that could generate taxable income in the future, if there is the ability to carry back the net operating losses or credits, if there is a projection of future taxable income, and if there are any tax planning strategies that can be readily implemented. As required by ASC 740 "Income Taxes", a valuation allowance must be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. This assessment resulted in a valuation allowance on our deferred tax assets of $15,699 and $15,627 at December 31, 2023 and 2022, respectively.

Current wording

Deferred tax assets represent deductible temporary differences and net operating loss and tax credit carryforwards. A valuation allowance is recognized if it is more likely than not that some portion of the deferred tax asset will not be realized. At the end of each reporting period, management reviews the realizability of the deferred tax assets. As part of this review, we consider if there are taxable temporary differences that could generate taxable income in the future, if there is the ability to carry back the net operating losses or credits, if there is a projection of future taxable income, and if there are any tax planning strategies that can be readily implemented. As required by ASC 740 "Income Taxes", a valuation allowance must be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. This assessment resulted in a valuation allowance on our deferred tax assets of $13,697 and $15,699 at December 31, 2024 and 2023, respectively.

Previous wording

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides guidance for additional disclosures around the tax rate reconciliation and other tax disclosures. The standard will become effective for annual periods beginning on January 1, 2025 for Fuel Tech. Application of the amendments should be applied prospectively but retrospective application is permitted. The Company is reviewing the impact of this new pronouncement and expects to incorporate the additional disclosures in the Tax note when the ASU is adopted.

Current wording

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides guidance for additional disclosures around the tax rate reconciliation and other tax disclosures. The standard will become effective for the annual reporting period beginning on January 1, 2025 for Fuel Tech. Application of the amendments should be applied prospectively but retrospective application is permitted. The Company is reviewing the impact of this new pronouncement and expects to incorporate the additional disclosures prospectively in the Tax note when the ASU is adopted.

Previous wording

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which provides guidance for additional disclosures around segment reporting. The standard will become effective for annual periods beginning on January 1, 2024 for Fuel Tech and for interim periods thereafter. Application of the amendments is retrospective. The Company is reviewing the impact of this new pronouncement and expects to incorporate the additional disclosures in the Segment note when the ASU is adopted.

Current wording

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to disclose in the notes to their financial statements disaggregated information about certain costs and expenses in both annual and interim filings. The standard will become effective for the annual reporting period beginning January 1, 2027 for Fuel Tech. The Company is reviewing the impact of this new pronouncement and expects to incorporate the additional disclosures in the relevant footnotes when the ASU is adopted.

Previous wording

Revenues for the years ended December 31, 2023 and 2022 were $27,081 and $26,941, respectively. The year-over-year increase of $140 or 1%, was driven by the increase in revenue in our APC technology segment in our U.S. operations, partially offset by a decrease in our FUEL CHEM technology segment. Our U.S. revenues increased by $751, or 4%, from $20,311 in 2022 to $21,062 in 2023, and our international revenues decreased by $611, or 9%, from $6,630 in 2022 to $6,019 in 2023.

Current wording

Revenues for the years ended December 31, 2024 and 2023 were $25,133 and $27,081, respectively. The year-over-year decrease of $1,948 or 7%, was driven by the decrease in revenue in our APC technology segment in our U.S. operations, partially offset by an increase in our FUEL CHEM technology segment revenues. Our U.S. revenues decreased by $3,595, or 17%, from $21,397 in 2023 to $17,802 in 2024, and our international revenues increased by $1,647, or 29%, from $5,684 in 2023 to $7,331 in 2024.

Previous wording

Revenues for the APC technology segment were $13,483 for the year ended December 31, 2023, an increase of $2,886, or 27%, versus fiscal 2022. The increase in APC revenue for the twelve-month period ending December 31, 2023 in comparison to the prior year amount was principally related to the timing of project execution and new APC orders. Consolidated APC backlog was $7,458 and $8,245 at December 31, 2023 and 2022, respectively. Our backlog at December 31, 2023 consists of U.S. domestic projects totaling $6,878 and international projects totaling $580.

Current wording

Revenues for the APC technology segment were $11,242 for the year ended December 31, 2024, a decrease of $2,241, or 17%, versus fiscal 2023. The decrease in APC revenue for the twelve-month period ending December 31, 2024 in comparison to the prior year amount was principally related to the timing of project execution and customer driven delays. Consolidated APC backlog was $6,175 and $7,458 at December 31, 2024 and 2023, respectively. Our backlog at December 31, 2024 consists of U.S. domestic projects totaling $1,877 and international projects totaling $4,298.

Previous wording

Revenues for the FUEL CHEM technology segment for the year ended December 31, 2023 were $13,598, a decrease of $2,746, or 17%, versus fiscal 2022. The decrease in FUEL CHEM revenue was due to dispatch/demand and unforeseen plant outages. We remain focused on attracting new customers in our FUEL CHEM business, for both coal and non-coal applications. Our ability to attract new coal customers continues to be affected by the electric demand market and fuel switching as a result of low natural gas prices.

Current wording

Revenues for the FUEL CHEM technology segment for the year ended December 31, 2024 were $13,891, an increase of $293, or 2%, versus fiscal 2023. The increase in FUEL CHEM revenue was due primarily to renewed orders from previously dormant customers as well as the addition of a new customer following a successful site demonstration. We remain focused on attracting new customers in our FUEL CHEM business for both coal and non-coal applications. Our ability to attract new coal customers continues to be affected by the electric demand market, fuel switching as a result of low natural gas prices, and growth of renewable wind and solar power.

Previous wording

Consolidated cost of sales for the years ended December 31, 2023 and 2022 were $15,425 and $15,298, respectively. Consolidated gross margin percentages for the years ended December 31, 2023 and 2022 were 43% and 43%, respectively. The gross margins for the APC technology segment increased to 38% in 2023 from 35% in 2022. The overall increase in gross margin in the APC technology segment is primarily due to product and project mix. Gross margin percentage for the FUEL CHEM technology segment decreased to 48% from 49% for the years ended December 31, 2023 and 2022.

Current wording

Consolidated cost of sales for the years ended December 31, 2024 and 2023 was $14,510 and $15,425, respectively. Consolidated gross margin percentages for the years ended December 31, 2024 and 2023 were 42% and 43%, respectively. The gross margins for the APC technology segment decreased to 37% in 2024 from 38% in 2023. The overall decrease in gross margin in the APC technology segment is primarily due to product and project mix. Gross margin percentage for the FUEL CHEM technology segment decreased to 46% from 48% for the years ended December 31, 2024 and 2023. This decrease is primarily due to demonstration costs and other administrative costs associated with new and previously dormant accounts.

Previous wording

Selling, general and administrative expenses for the years ended December 31, 2023 and 2022 were $12,803 and $12,275, respectively. The increase of $528, or 4%, is attributed to the following:

Current wording

Selling, general and administrative expenses for the years ended December 31, 2024 and 2023 were $13,761 and $12,803, respectively. The increase of $958, or 7%, is primarily attributed to the following:

Previous wording

Depreciation and amortization are calculated using the straight-line method and included in selling, general and administrative expense. For the years ended December 31, 2023 and 2022, the Company recorded depreciation of $281 and $352 and amortization of $61 and $88, respectively.

Current wording

Depreciation and amortization are calculated using the straight-line method and included in selling, general and administrative expense. For the years ended December 31, 2024 and 2023, the Company recorded depreciation of $403 and $281 and amortization of $57 and $61, respectively.

Previous wording

Research and development expenses were $1,511 and $895 for the years ended December 31, 2023 and 2022, 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 increase was mainly attributed to water treatment technologies and more specifically, our DGI® Dissolved Gas Infusion Systems, an innovative alternative to current gas transfer and chemical replacement technologies. This infusion process has a variety of applications in the water and wastewater segments, including irrigation, treatment of natural waters, supply of oxygen for biological remediation, wastewater odor management, pH adjustment, re-carbonization, etc. DGI® technology benefits include improved treatment performance and reduced treatment time, and the potential for reduced energy consumption, along with lower installation and operating costs. Third party validation testing of the efficiency of transferring oxygen to a treatment basin has been completed and results have been published.

Current wording

Research and development expenses were $1,564 and $1,511 for the years ended December 31, 2024 and 2023, 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. Expenditures were mainly attributed to water treatment technologies and more specifically, our DGI® Dissolved Gas Infusion Systems, an innovative alternative to current gas transfer and chemical replacement technologies. This infusion process has a variety of applications in the water and wastewater segments, including irrigation, treatment of natural waters, supply of oxygen for biological remediation, wastewater odor management, pH adjustment, re-carbonization, etc. DGI® technology benefits include improved treatment performance and reduced treatment time, and the potential for reduced energy consumption, along with lower installation and operating costs. Third party validation testing of the efficiency of transferring oxygen to a treatment basin has been completed and results have been published.

Previous wording

Interest income was $1,300 for the year ended December 31, 2023 compared to $202 for the same period in 2022. Interest income increased due to the interest income on the held-to-maturity (HTM) debt securities and money market funds.

Current wording

Interest income was $1,251 for the year ended December 31, 2024 compared to $1,300 for the same period in 2023. Interest income decreased due to a decrease in the balance held in money market funds.

Previous wording

Other expense, net was $90 for the year ended December 31, 2023 compared to Other expense, net of $46 for the same period in 2022. The change of $44 is due primarily to an increase in bank fees associated with our standby letters of credit.

Current wording

Other income, net was $1,585 for the year ended December 31, 2024 compared to Other expense, net of $90 for the same period in 2023. The increase of $1,675 is due primarily to the employee retention credit.

Previous wording

For the year ended December 31, 2023, we recorded an income tax expense of $69 on pre-tax loss of $1,469. Our effective tax rates were (-4.7% and (3.9)% for the years ended December 31, 2023 and 2022, respectively. For the year ended December 31, 2022, we recorded an income tax expense of $54 on pre-tax income of $1,388. The effective tax rate for the year ended December 31, 2023 differed from the federal statutory rate of 21% as a result of establishing a deferred tax liability associated with a certain book-to-tax timing difference.

Current wording

For the year ended December 31, 2024, we recorded an income tax expense of $77 on pre-tax loss of $1,866. Our effective tax rates were (2.9)% and (4.8)% for the years ended December 31, 2024 and 2023, respectively. For the year ended December 31, 2023, we recorded an income tax expense of $69 on pre-tax income of $1,469. The effective tax rate for the year ended December 31, 2024 differed from the federal statutory rate of 21% as a result of establishing a deferred tax liability associated with a certain book-to-tax timing difference.

Previous wording

At December 31, 2023, we had cash and cash equivalents of$17,578 (which includes $5,083 of cash equivalents) and working capital of$32,633 versus cash and cash equivalents of$23,328 (which includes $10,768 of cash equivalents) and working capital of$31,059 at December 31, 2022. We have no outstanding debt other than our outstanding letters of credit, under our Investment Collateral Security agreement with BMO Harris Bank, N.A. (the Investment Collateral Security agreement), which does not have any financial covenants. We expect to continue operating under this arrangement for the foreseeable future.

Current wording

At December 31, 2024, we had cash and cash equivalents of$8,510 (which includes $631 of cash equivalents) and working capital of$23,764 versus cash and cash equivalents of$17,578 (which includes $5,083 of cash equivalents) and working capital of$32,633 at December 31, 2023. We have no outstanding debt other than our outstanding letters of credit, under our Investment Collateral Security agreement with BMO Harris Bank, N.A. (the Investment Collateral Security agreement), which does not have any financial covenants. We expect to continue operating under this arrangement for the foreseeable future.

Previous wording

Operating activities used cash of$4,139 for the year ended December 31, 2022, primarily due to an increase in accounts receivable balances of $4,448, an increase in prepaid expenses and other assets of $314, and an adjustment for non-cash items from our net loss from continuing operations for the provision for credit losses of $106, partially offset by increases in accounts payable balances of $1,159 and accrued liabilities and other non-current liabilities of $360, and adjustments for non-cash items from our net loss from continuing operations for depreciation and amortization of $440 and stock compensation expense of $224.

Current wording

Operating activities used cash of $3,433 for the year ended December 31, 2024, primarily due to the employee retention credit receivable of $1,677, an increase in accounts receivable balances of $1,127, a decrease in accrued liabilities and other non-current liabilities of $312, and adjustments for non-cash items from our net loss from continuing operations for non-cash interest income on held-to-maturity securities of $132, partially offset by a decrease in prepaid expenses, other current assets, and other non-current assets of $292, an increase in accounts payable balances of $519, a decrease in inventory balances of $41, and adjustments for non-cash items from our net loss from continuing operations for depreciation and amortization of $460 and stock compensation expense of $446.

Previous wording

Operating activities provided cash of $696 for the year ended December 31, 2023, primarily due to a decrease in accounts receivable balances of $1,039, an increase in accrued liabilities and other non-current liabilities of $1,239, partially offset by an increase in accounts payable balances of $295 and adjustments for non-cash items from our net loss from continuing operations for interest income on held-to-maturity securities of $433, depreciation and amortization of $342 and stock compensation expense of $389.

Current wording

Operating activities provided cash of$696 for the year ended December 31, 2023, primarily due to a decrease in accounts receivable balances of $1,039 and an increase in accrued expenses and other non-current liabilities of $1,239, partially offset by an increase in accounts payable balances of $295 and adjustments for non-cash items from our net loss from continuing operations for interest income on held-to-maturity securities of $433, depreciation and amortization of $342 and stock compensation expense of $389.

Previous wording

Investing activities used cash of $6,444 and $9,483 for the years ended December 31, 2023 and 2022, respectively. Investing activities for the years ended December 31, 2023 and 2022 primarily consisted of purchases of HTM debt securities as investments of $14,026 and $9,777, respectively, and the purchases of equipment and patent related costs and of $418 and $206, respectively. Investing activities for the years ended December 31, 2023 and 2022 were partially funded by the maturities of debt securities of $8,000 and $500, respectively.

Current wording

Investing activities used cash of $5,443 and $6,444 for the years ended December 31, 2024 and 2023, respectively. Investing activities for the years ended December 31, 2024 and 2023 primarily consisted of purchases of HTM debt securities as investments of $18,060 and $14,026, respectively, and the purchases of equipment and patent related costs of $378 and $418, respectively. Investing activities for the years ended December 31, 2024 and 2023 were partially funded by the maturities of debt securities of $12,995 and $8,000, respectively.

Previous wording

Financing activities provided$42 and used$17 of cash for the years ended December 31, 2023 and 2022. In 2023, the finan cing activity was related to proceeds from the exercise of stock options. In 2022, financing activities were related to taxes paid on behalf of the equity award participants on the vesting of restricted stock units.

Current wording

Financing activities used cash of$95 and provided cash of$42 for the years ended December 31, 2024 and 2023. In 2024, the financing activity was related to taxes paid on behalf of equity award participants on the vesting of restricted stock units. In 2023, the finan cing activity was related to proceeds from the exercise of stock options.

Previous wording

We continue to monitor our liquidity needs and in response to our recent periods of net losses have taken measures to reduce expenses and restructure operations which we feel are necessary to ensure we maintain sufficient working capital and liquidity to operate the business and invest in our future. We have evaluated our ongoing business needs, and considered the cash requirements of our base business of Air Pollution Control and FUEL CHEM. This evaluation included consideration of the following customer and revenue trends in our APC and FUEL CHEM business segments current operating structure and expenditure levels, and other research and development initiatives. Based on this analysis, management believes that currently we have sufficient cash and working capital to operate our base APC and FUEL CHEM businesses. We believe our current cash position and net cash flows expected to be generated from operations are adequate to fund planned operations of the Company for the next 12 months.

Current wording

We continue to monitor our liquidity needs and in response to our recent periods of net losses have taken measures to reduce expenses and restructure operations which we feel are necessary to ensure we maintain sufficient working capital and liquidity to operate the business and invest in our future. We have evaluated our ongoing business needs and considered the cash requirements of our base business of Air Pollution Control and FUEL CHEM. This evaluation included consideration of customer and revenue trends in our APC and FUEL CHEM business segments, current operating structure and expenditure levels, and other research and development initiatives. Based on this analysis, management believes that currently we have sufficient cash and working capital to operate our base APC and FUEL CHEM businesses. We believe our current cash position and net cash flows expected to be generated from operations are adequate to fund planned operations of the Company for the next 12 months.

Previous wording

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

Current wording

The Company's investment policy provides for $20,000 in funds at BMO Harris Bank (BMO Harris) to be invested in held-to-maturity debt securities of United States (US) Treasuries, including Notes, Bonds, and Bills, or US Government Agency securities. The funds are held in money market funds until they are invested in those securities. The investments are structured to create a maturity “ladder” where the proceeds from maturities are re-invested to maintain a balance of short- and long-term investments based on the expected business needs. Maturities are between three and thirty-six months.

Previous wording

On June 30, 2022, the Company entered into the Investment Collateral Security agreement to use for the sole purpose of issuing standby letters of credit, which replaces the Cash Collateral Security agreement with BMO Harris Bank, N.A. (the Former Collateral agreement). The Investment Collateral Security agreement requires us to pledge our investments as collateral for 150% of the aggregate face amount of outstanding standby letters of credit. The Company pays 250 basis points on the face values of outstanding letters of credit. There are no financial covenants set forth in the Investment Collateral Security agreement. At December 31, 2023, the Company had outstanding standby letters of credit totaling approximately$904 under the Investment Collateral Security agreement. At December 31, 2023, the investments held as collateral totaled$1,356. Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instru ments. The outstanding standby letters of credit mature as follows:

Current wording

The Company's Investment Collateral Security agreement with BMO Harris is used for the sole purpose of issuing standby letters of credit and requires us to pledge our investments as collateral for 150% of the aggregate face amount of outstanding standby letters of credit. The Company pays 250 basis points on the face values of outstanding letters of credit. There are no financial covenants set forth in the Investment Collateral Security agreement. At December 31, 2024, the Company had outstanding standby letters of credit totaling approximately$1,860 under the Investment Collateral Security agreement. At December 31, 2024, the investments held as collateral totaled$2,790. Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instru ments. The outstanding standby letters of credit mature as follows: