Note 9 - Warrants

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Warrants Disclosure [Text Block]

9.      Warrants

On February 11, 2021, Fuel Tech entered into a securities purchase agreement to issue and sell, in a private placement, 5,000,000 shares of Common Stock and 2,500,000 warrants exercisable for a total of 2,500,000 shares of Common Stock with an exercise price of $5.10 per Warrant Share, at a purchase price of $5.1625 per Share and associated warrant. The gross proceeds to the Company from the Private Placement were $25,812, before deducting placement agent fees and offering expenses of $1,783. Subject to certain ownership limitations, the Warrants are immediately exercisable upon issuance and expire on the five and one-half year anniversary of the effective date of the registration statement registering the Warrant Shares for resale.  In addition, the Company issued to the placement agent Warrants to purchase up to 350,000 shares of Common Stock.  The Placement Agent Warrants are exercisable at an exercise price of $6.45 per share of Common Stock and expire on the five and one-half year anniversary of the effective date of the registration statement registering the Shares and the Warrant Shares for resale.

Fuel Tech uses the Black-Scholes option pricing model to estimate the grant date fair value of the warrants. The principal variable assumptions utilized in valuing warrants and the methodology for estimating such model inputs are: (1) risk-free interest rate of 0.59%, an estimate based on the yield of zero–coupon treasury securities with a maturity equal to the expected life of the warrant; (2) expected volatility of 94.66% – an estimate based on the historical volatility of Fuel Tech’s Common Stock for a period equal to the expected life of the warrant; and (3) expected life of the warrant of five and one-half years based on the term of the warrant. 

The calculated fair value allocated to the warrants is $7,337.  This amount has been recorded as Additional paid in capital - warrants and is shown net in the Additional paid in capital line of the condensed consolidated balance sheets.  

The issuance of warrants to purchase shares of the Company's common stock are summarized as follows:

	Shares
Outstanding on December 31, 2020		—
Granted		2,850,000
Exercised		—
Outstanding as of September 30, 2021		2,850,000

The following table summarizes information about warrants outstanding and exercisable at September 30, 2021:

Range of Exercise Price	Number Outstanding/Exercisable		Weighted Average Remaining Life in Years	Weighted Average Exercise Price
$5.10		2,500,000	4.87	$	5.10
$6.45		350,000	4.87	$	6.45
		2,850,000