FUEL TECH, INC.

Unpacking FUEL TECH, INC.'s 2025 Annual Report

1. Business Overview

FUEL TECH, INC. tackles tough environmental challenges, offering specialized solutions through two core segments: Air Pollution Control (APC) and FUEL CHEM® technologies.

• Air Pollution Control (APC): This segment provides advanced systems, such as Advanced Selective Catalytic Reduction (ASCR®), to significantly cut down harmful emissions. These solutions help industrial clients meet strict environmental benchmarks, including U.S. Best Available Control Technology (BACT) and European BREF requirements.
• FUEL CHEM®: This segment focuses on optimizing industrial processes by treating fuel and exhaust gases. Using proprietary methods like TIFI® Targeted In-Furnace Injection™ (sometimes alongside Dissolved Gas Infusion (DGI®)), FUEL CHEM® prevents common operational problems such as slag buildup, fouling, corrosion, and sulfur-related issues.

Essentially, FUEL TECH provides industrial clients with proprietary technologies and specialized services to improve air quality and boost operational efficiency.

2. Financial Performance

• Public Float: The market value of common stock held by non-affiliates stood at approximately $70.9 million as of June 30, 2025.
• Shares Outstanding: The company had approximately 30.7 million shares of common stock outstanding as of February 28, 2026.

3. Risk Factors

Investors should be aware of several key risks:

• Customer Concentration: FUEL TECH relies heavily on a small number of customers within its FuelChem Technology segment. In 2024, two customers generated a substantial portion of segment sales, growing to three customers in 2025. Losing even one of these key customers could significantly harm the company's financial performance and operations.
• Cybersecurity Risks: The company faces ongoing risks from cyber threats, including data breaches and system outages. FUEL TECH's IT department actively manages daily threats, and an "Information Technology Steering Committee" (comprising the CEO, CFO, General Counsel, and Head of IT) conducts monthly reviews. The Board's Audit Committee oversees these efforts. Despite these robust measures, no system can guarantee complete immunity from cyberattacks.
• Regulatory Changes: FUEL TECH's business is highly sensitive to environmental regulations. Rule changes from authorities like the U.S. Environmental Protection Agency (EPA) or European BREF requirements directly affect demand for its Air Pollution Control and FUEL CHEM® technologies. While stricter regulations could open new opportunities, relaxed standards might reduce demand for the company's solutions, potentially impacting revenue and profitability.

4. Management Discussion & Analysis (MD&A) Highlights

The direct involvement of top management (CEO, CFO, and General Counsel) in monthly cybersecurity reviews underscores a strategic commitment to protecting company assets and operations from digital threats.

5. Financial Health

The company utilizes "Nil Coupon Nonredeemable Convertible Unsecured Loan Notes." These notes represent a form of unsecured debt that pays no regular interest but can be converted into company stock under specific conditions.

6. Competitive Position

FUEL TECH holds a specialized niche, using proprietary technologies like ASCR® and TIFI® to stand out from competitors. The company designs its solutions to meet stringent environmental regulations from bodies like the U.S. Environmental Protection Agency (EPA) and European BREF requirements, operating in a highly regulated and technically demanding industry. FUEL TECH competes on the effectiveness and efficiency of its proprietary technologies, which reduce emissions and improve operational performance for its clients.