Tracy Krumme – VP, IR and Corporate Communications Doug Bailey – Chairman, President and CEO David Collins – SVP, Treasurer and CFO Ellen Albrecht – VP and Controller

Jeremy Sussman – Brean Murray Carret & Company Rick Hoss – Roth Capital Partners John Quealy – Canaccord Genuity Dan Mannes – Avondale Partners Jeff Osborne – Stifel Nicolaus Graham Mattison – Lazard Capital Markets Carter Shoop – Deutsche Bank

Good day ladies and gentlemen, and welcome to second quarter 2010 Fuel Tech Incorporated earnings conference call. My name is Lumida, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator instructions) As a reminder, this call is being recorded for replay purposes. I will now like to turn this presentation over to your host for today’s call, Ms. Tracy Krumme, Vice President of Investor Relations and Corporate Communications. You may proceed ma’am.

Thank you. Good morning everyone. Thank you for participating on today’s conference call to discuss our second quarter results. Joining me on the call this morning is Doug Bailey, Chairman, President and Chief Executive Officer; David Collins, Senior Vice President, Treasurer, and Chief Financial Officer; and Ellen Albrecht, Vice President and Controller. As a reminder, the matters discussed in this conference call except for historical information are forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in our forward-looking statements. The factors that could cause results to differ materially are included in our filings with the SEC. The information contained in this call is accurate only as of the date discussed and investors should not assume that statements made in this call remain operative at a later date. Fuel Tech undertakes no obligation to update any information discussed in this call and as a reminder, this conference call is being broadcast over the Internet and can be accessed at our Website, www.ftek.com. With that said, I would now like to turn the call over to Doug Bailey. Doug, please go ahead.

Thank you Tracy and good morning to everyone. We appreciate all of you joining us on this call. Our financial results for the second quarter include revenues of $18.9 million, which were virtually flat from the comparable prior-year period. We recorded a net loss for the quarter of $0.3 million or a loss of $0.01 per diluted share, which was the same result for the second quarter of 2009. In a few minutes, Dave Collins, our newly appointed Senior Vice President, Treasurer and Chief Financial Officer who will discuss our financial operating results in greater detail. Dave will also cover our balance sheet in detail. It remains exceptionally strong with cash and cash equivalents of $21.1 million, $33.4 million in working capital and debt of only $2.2 million. We have an attractive business model which generates significant amount of positive cash flow with topline growth. As most of you know, Fuel Tech is a fully integrated company that uses the extensive suite of technologies, provide boiler optimization and efficiency improvements along with air pollution reduction and control solutions to utility and industrial customers worldwide. For reporting purposes, we broadly group these technologies into two principal business segments. One is the return on investment driven specialty chemical business for efficiency improvements that we call FUEL CHEM, and the second is a regulatory driven business for air pollution controls or APC that consists of capital projects. To begin with our FUEL CHEM business, segment revenues were $9.6 million for the quarter, down 1% from the comparable 2009 quarter. Gross margins were 48% for the quarter, up from 42% in the same quarter last year. This margin increase was principally driven by costs associated with international demonstrations in the prior year that did not occur in 2010. In 2009, the downturn in US economy had a significant impact on energy demand and to some extent, the situation will continue today. In particular, electricity demand fell almost 4% last year, while coal consumption in power generating stations declined over 10%, marking the greatest annual decline in electricity generation since 1938. This drop in demand resulted in a dampening of electric generating loads causing units to be run at reduced power levels or even shut down for a period of time. This situation has impacted our FUEL CHEM segment as certain clients scale back or temporarily turned off chemical injection on units utilizing FUEL CHEM programs. Our realized growth rate therefore was moderated by those curtailments resulting from overall weak power market. So far this year, we have announced the receipt of three commercial FUEL CHEM orders from two existing domestic electric utility customers. All of these orders were from existing FUEL CHEM customers and as a result, you are able to receive straight commercial status without the need for a demonstration, reflecting a trend that we are increasingly experiencing. This summer much warmer than the last summer resulting in more demand for air-conditioning. Cooling degree days during June was 28% higher than June 2009. The US Energy Information Administration or EIA estimate that total consumption of electricity across all sectors during the first half of this year increased by 3.8% from the first half of 2009. Consumption is expected to show similar year-over-year growth of 3.5% during the second half of 2010. While electricity demand is up, there is more of a demand in natural gas assets and continued alterative energy growth. Several major producers have shut down smaller coal-fired assets, while boosting production via combined cycle plant. Power generating stations are under continuous pressure to achieve maximum availability, highest efficiency and minimum environmental emissions at the lowest possible cost. In recent years, the increased fuel flexibility has become more critical financially and operationally than ever before. The growing diversion in pricing for major US coal fields is a powerful driver for our business, as we feel these are increasingly attractive to the compelling economic benefit, a shift in translation focus generally one of the fuels with the highest heat content and fewest operational issues with a lower price, lower quality coals originating in Illinois Basin and Powder River Basin. Given the slagging and fouling challenges caused by high levels of sodium found in TRP coals, whereas iron and sulfur found in ILB coal beds, this ongoing shift in fuel preference should enable Fuel Tech to market its programs to an expanded standard base Powder River Basin coal users. From everything we see in here, we expect a simpler second half in terms of domestic coal-fired generation, and I would also say that we would expect margins to consumer as well. The key for FUEL CHEM is to advance the significant selling efforts in place and this is being done. We also expect coal pricing in the third and fourth quarters as well as the 2011 to again assist our efforts as additional producers will be looking for fuel flexibility as a competitive strategy, and we fit into this strategy very well. Now, turning to our Air Pollution Control or APC business segment, we generated revenues of $9.3 million in the second quarter, up 1% from the comparable 2009 quarter. This slight increase reflects favorable timely completion on existing capital project orders for pollution control equipment. Gross margins were 35% in the quarter, down from 49% in the second quarter of 2009. This margin decrease reflects a sales mix with a lower percentage of equipment supply project and a higher percentage of large projects that involve added installation services that typically have lower margins. Our APC backlog at June 30th was $21 million, which was unchanged from the first quarter of 2010. Thus through to the quarter-end, we announced an additional $6.4 million in pollution control orders reflecting an increase in trends in this segment’s quarter activity. We are especially pleased to have announced five SNCR orders in the give months since signing coal alliance agreement with a major domestic power producer. We are working with this value client on its compliance plan and we anticipate receiving additional orders in the future. Now, on the regulatory front, the Environmental Protection Agency EPA, released on July 6th its draft of the much anticipated proposed Transport Rule, which is intended to replace the Clean Air Interstate Rule or CAIR. To recap, for those of you who may not be fully familiar with the history of this rule, in 2005, the EPA issued the Clean Air Interstate Rule to reduce sulfur dioxide and hydrogen oxide emission from the 28 eastern states. On July 11th, 2008, the US Appeals Court for the District of Columbia ruled unanimously the vacant CAIR in its entirety. The court later modified its decision in the summer of 2008 from vacatur to a remand, allowing CAIR to remain in effect until a new rule was promulgated by the EPA. Under the court’s ruling, the EPA had to revise a rule consistent with the court’s July 2008 retention. The Clean Air Transport Rule is the EPA’s response to the court’s concerns. The proposed Transport Rule would replace the EPA’s 2005 CAIR rule to address sulfur dioxide, nitrogen oxide NOx, fossil fuel power plant emissions across state lines. These which react in the atmosphere form fine particles in ground-level ozone and are transported to long distances making it quite difficult for other states to achieve national clean air standards. Among other requirements, the proposed Transport Rule calls for further emissions reductions in 31 states versus 28 previously, plus the District of Columbia beginning in 2012. Currently, the Transport Rule is expected to be finalized around June 2011. The EPA estimate annual compliance cost at $2.8 billion in 2014, and for this some 50 gigawatts of additional SCR level NOx reduction by 2014. While the final requirements of the proposed rule are under review and the final structure of the rule is yet to be determined, we view the proposed accelerated compliance schedule and the incremental NOx reduction requirements as a positive driver for our future business. As prospective customers take steps toward implementing their compliance plans in a capital constrained environment, we believe our flexible suite of technologies, which enables a layered approach to NOx control, will be a preferred solution. There is also a bill sponsored by Senator Carper and Senator Alexander, known as the Carper Alexander Bill, which would be a legislating fix and put the rest to questions of whether the EPA’s proposed Transport Rule addresses all of the legal requirements to comply with the existing Clean Air Act. This Bill addresses NOx and SOx emissions on a national level with two separate trading zones and a cap on mercury emissions with no trading through amendments to the Clean Air Act. If enacted, it would greatly clarify the rules within which emitters must operate and would allow facility owners to make some informed capital deployment decisions to reduce emissions. The issuance of the final Transport Rule or the proposed Carper Alexander Bill, either alone or in combination should provide much needed regulatory clarity, not to mention expected tighter NOx controls and compliance timelines, which would greatly benefit Fuel Tech. Utilities are now in the planning phase anticipating all possible outcomes. We expect ramp-up of new products starting 2011 to meet these compliance dates. Fuel Tech has the most complete suite of NOx control technologies of any company we know and we will use that suite to build our competitive advantage. From the first step a customer takes to control NOx, Fuel Tech offers a client one-stop shopping for all its control needs. This includes systems such as low and ultralow NOx burners, along with over fire air systems that are designed to limit the initial creation of NOx and combustion process. We also offer an advanced selective catalytic production or ASCR system designed to reduce created NOx at a capital cost comparatively lower than other solutions. Moving to the domestic APC market, the market in China is dependent upon regulatory requirements. We believe this market will not emerge in a major way as we have assessed before until the country is into its 12th five-year plan, which begins on January 1st 2012. The Chinese Ministry of Environmental Protection NOx Control Technology Policy Directive sets the framework for this five-year plan. Later this year, we expect to see specific regulations set forth at the level of the provinces, which will implement that national policy. It is of note that Fuel Tech’s current suite of solution fits very nicely into the specific NOx control technologies called out into the policy for various plant situations based upon size, age, and type of coal consumed. During the second quarter, we announced the Low NOx Burners, Over-Fire Air, and NOxOUT selective non-catalytic reduction projects for two pulverized coal boilers at an industrial plant in Guangzhou City, the capital of Guangdong province. Equipment deliveries for this project which is designed to satisfy NOx emissions requirements in anticipation of the upcoming Asian Games, are scheduled for the third quarter of 2010. This contract represents our third NOx control order and seventh unit award in Guangzhou City, where the Asian Games are scheduled to commence in November of 2010. Additionally, this is our first Low NOx Burner Over-Fire Air project in China. We are encouraged that we will receive additional Power Technology Policy Directive, which sets the framework for the next five-year plan states that low NOx combustion technologies are the first priority of consideration for the plants. So much work has gone into position in Fuel Tech for the important NOx control market in China and we do expect to be quite successful in here over the next decade. Now, I would like to turn the call over to our new Senior Vice President, Treasurer and Chief Financial Officer, Dave Collins who is one week into his job, and he will discuss our financial results in greater detail. Thanks Dave.

Thank you Doug, and good morning everyone. I would like to start by saying how excited I am about these new opportunities before me. I have had the pleasure of being involved with Fuel Tech for the last four years as their Audit Partner. During this time, I have worked closely with the management team and the Board of Directors in operational and financial reporting matters. Prior to my joining Fuel Tech, I spent 22 years in public accounting, the majority of it was with large international public accounting firms. During those years, I have worked with over a dozen public companies, assisting with both debt and equity capital transactions. I have worked through numerous acquisitions and divestitures and assisted those companies with complex financial reporting and structural transactions. I look forward to putting my collective experiences to work, to ensure that Fuel Tech and its shareholders realize their true potential in the marketplace. Now, I would like to turn the attention back to our quarterly results. As Doug mentioned, consolidated revenues for the June quarter and first six months were $18.9 million and $36.5 million respectively. These results were consistent with the same prior-year periods. Our FUEL CHEM segment reported record sales of $19 million for the first six months of 2010. While our APC segment revenues were flat with the prior year, our backlog at the end of June of remained strong at $21 million. We recorded a breakeven net income figure for the first six months of 2010, while our operating income for the first six months has improved $3 million over the prior year. Now, I would like to talk about our two segments in more detail. FUEL CHEM segment reported revenues of $9.6 million for the current quarter and $18 million for the first six months of 2010. While the quarter revenues were flat with the prior-year period, the six-month revenues increased $772,000 or 4.2% over the prior year. As we discussed last quarter contributing to the six-month revenue growth was the one-time risk-share payment recognized during the first quarter, which totaled approximately $2 million and related to a successful demonstration conducted during the second half of 2009. As of June 30th, 2010, the company’s did not have any contingent risk-share payment. For the current quarter, our FUEL CHEM revenues generated some coal in nine coal units were flat with the prior-year quarter. For the first six months of 2010, our coal-generated revenues have increased by $1.2 million, which does include the $2 million risk-share payment or 7%, offset by a climb of $425,000 non-coal fired units revenues over the prior year. Excluding the $2 million risk-share payment, our FUEL CHEM segment revenues for the first six months of 2010 would have been down 6.5%. Thus far in 2010, we have announced three new commercial FUEL CHEM programs, the latest being just last week. Of the three new additions, one unit began pumping during the first quarter and the other two are expected to come online before the end of 2010. Our international FUEL CHEM demonstrations are ongoing despite current delays at customer site. These delays are customer origin and we remain ready to complete the demonstration upon notification. Quarterly gross margin for the FUEL CHEM segment increased 6.2% in the current quarter to 47.8% from 41.6% in the prior year. This increase was principally driven by costs associated with international demonstrations in the prior year that did not recur in 2010. The six-month gross margin for FUEL CHEM has increased by 10.2% to 51.3% from 41.1% in the prior year. 5% of this six-month margin improvement is due to the risk-share revenues recognized in the first quarter and reasons mentioned previously. FUEL CHEM segment's gross margin for the remainder of 2010 are expected to be in line with this levels. APC segment revenue increased marginally in the current quarter to $9,291,000, an increase of $114,000 over the prior year. For the first six months of 2010, APC’s segment revenue decreased by $491,000 or 2.7% to $17,506,000. This slight decrease was due to the timing of progress work on short contracts. Our backlog of $21 million at the end of June which comprised of domestic backlog of $15 million and international backlog of $6 million, which includes $4.5 million to China. A majority of the current backlog is expected to be worked out during the remainder of 2010. Recent announcements since the quarter end have increased our current backlog to more than $27 million. We expect to see continued order activity in APC segment as full regulations are further clarified and as international business continues to expand. Gross margin for the APC segment for the current quarter was 34.9% versus 48.9% in the prior year. Gross margin percentages for the six-month period were 35.4% versus 38.8% year ago. Contributing to the lower gross margin were the more concentrated mix of lower margin equipment and installation projects. One major project in particular that combined significant lower margin installation work will continue for the next two quarters and we therefore expect that our APC segment margins will remain suppressed for the remainder of the year. On a consolidated basis, gross margin declined 3.7% in the current quarter to 41.5% from 45.2% in the prior year. Consolidated gross margins for the six-month period increased by 3.7% to 43.7% from 40.0% in the prior year. Reasons for this variance has been previously discussed. Selling, general and administrative costs were down $858,000 in the current quarter and $1.5 million for the first six months compared to the prior year. A majority of this positive variance for the current quarter can be attributed to reduce stock compensation expense. For the six-month period, a large portion of reduced SG&A cost savings can be attributed to a reallocation of corporate resources. We will continue to monitor our SG&A spending and where needed take action to maintain reasonable expense levels. Investment in research and development activity was up slightly in the current quarter and six months period over the prior year. We continue to look for specific development opportunities within our existing portfolio of products, and we will be opportunistic in identifying in new development projects as our markets continue to develop. Tax rate for the remainder of 2010 is expected to be 50%, principally due to the significance of permanent items within the overall rate, any increase in operating profit above expected levels with a group of permanent add backs and reduce our overall rates. Net loss for the current quarter was $309,000 compared with a loss of $278,000 in the prior year. Our six-month net income has improved by $1,745,000 over the prior year from a loss of $1,840,000 to a loss of just $95,000. Included in our reported results for the three and six-month periods of 2010 are non-cash stock compensation charges of $1,189,000 and $2,519,000 respectively. Our stock compensation charges have declined by $647,000 for the first six months of 2010, and we expect to see this trend continuing through 2011 and 2012 as the large stock option grant in 2006 becomes fully vested. Our cash balance remains strong at $21 million and our working capital is $33.4 million, which provides us with an unique opportunity to make investment decisions quickly. Quarterly cash flow for the first six months totaled $1.3 million. Cash used in investing activities was predominantly related to the purchase of equipment of our FUEL CHEM demonstrations and commercial programs. Cash used in financing activities is attributed to a repayment of a portion of debt in China used for the startup of our Beijing Fuel Tech office. Fuel Tech’s domestic and international markets in sales activity continues at a strong pace, especially in our APC business segment. While we are encouraged about our business prospects for the remainder of 2010, we do not believe it is prudent to provide any additional quantitative revenue or earnings guidance at this time. I look forward to a long and prosperous career with Fuel Tech, and will speak with all of you in the very near future. Now, I would like to ask the operator to please open up the line for questions.

Operator, please open up the line for questions.

(Operator instructions) And your first question comes from the line of Jeremy Sussman from Brean Murray. Please proceed Jeremy Sussman – Brean Murray Carret & Company: Hi good morning.

Good morning Jeremy. Jeremy Sussman – Brean Murray Carret & Company: I am just wondering, can you give us, I appreciate your comments on the Transport Rule, and maybe to follow up on that, can you give us a sense, I know it’s not a long period of time since the proposal came out, but if there has sort of been any change in discussions with customers at all sense then or if you have gotten any feedback on how they are looking at this?

I don’t think there’s a substantial impact on that dialog or think that everyone is still waiting on final rule clarification. The customers that we are working with are proceeding with the available controlled technologies in light of what they see the long-term trend to be regardless of whether Transport Rule or Carper Alexander that’s enacted. Probably those customers that are operating in states that their dominant producer maybe wondering what the cap and trade rules will be on the interstate basis which still has not been finalized because they have lesser alternative. Generally speaking, our Caucasian activity remains strong. I think we are going to see a very strong second half in APC, particularly domestically as well as in China. But I think that it’s just a little bit too soon to say that what we know about the regulatory announcements, we are giving people final comment clarity. Jeremy Sussman – Brean Murray Carret & Company: Great. And then just a follow-up, I appreciate that. On the FUEL CHEM side, you talked about, you told you will be switching away from high heat content Appalachian coal to an Illinois Basin and Powder River Basin type coal. Can you give us a sense if at this point utilities are leading one direction over the other, Illinois or PRB and you sort of have a preference for one or the other?

Well, it wasn’t that long, we are switching to Central Appalachian coals, but obviously it depends upon the geographic location with both the mine mouth price and the delivered transportation costs, the BTU value, the burning characteristics, all of those factors of course play into the fuel sourcing decisions. Generally speaking, they of course make contracts that may in the short-run forget that fuel switching, or if they are planning a fuel switching, they may be committed to a contract remain in term as well as inventories to look through. So, these are kind of long cycle phenomenon, but generally speaking, I would say there is a favorable trend towards more use of particularly Illinois Basin received expanded investments and capacities in mines there with strong demand interest in those coals. It’s a well developed field as you know. You are also seeing the trend away from certain traditional mining methods in the east such as mom and pop environmentally. And so, that’s going to eventually reduce capacity there. The Powder River Basin of course produces over half of nation’s coal output, and will remain a strong supplier of coal to our region of states. So, it is very much a competitive market between all three coal fields, and import export demand factors also influence pricing supply, but generally speaking, I would say our outlook over the next year is increasing units of generalization and moderately increasing use of Powder River Basin over Central Appalachian coals. Jeremy Sussman – Brean Murray Carret & Company: That’s great. And certainly encouraging to see the backlog up on the APC side, thanks.

You bet.

And your next question comes from the line of Rick Hoss from Roth Capital Partners. Please proceed. Rick Hoss – Roth Capital Partners: Hi good morning.

Good morning. Rick Hoss – Roth Capital Partners: On the FUEL CHEM, how many are suspended currently?

Of our coal-fired units, over half are not operating, and a great portion of oil as you know is not operating. They is just not lot of demand for oil-fired units. It’s been a significant phenomenal trend over the last year-and-a-half during this recession with electricity demand down. Even if the units are running and they are idle back at night, they are able to shut load and shut flag and have lesser demand for fuel in those units. So, we are certainly in a trough period I think where we have seen units started, and I can divide them into perhaps three categories. One is that we really do solve a problem for based upon your refuel strategy, and it’s very effective. It’s continuing to provide great return on investment and a steady revenue. It’s constantly resold because it’s not under multi-year contract or using one stand, but there is a base business, which we are operating today, and it’s very steady. There is also some units that have been down for a while. I am talking about one or two years that are beginning to reevaluate coming back. And we made that a priority, because we think there is little bit of customer education that can benefit their understanding needs and goes back to the fuel switching, fuel flexibility strategy that is a (inaudible) cheaper to purchase. So, we are beginning to see some signs of some of those returning. Then there is some in the middle that just simply don’t require a program because we are not slagging or they are simply titled. And so we have little opportunities to bring those units back on line. That being said, that does not deter our selling efforts, because there are many, many other plants out there, and particularly existing customers who have additional units. They understand, they realize the benefits of the program, they certainly are ideal target customers to expand the program, because they realize that. Others who haven’t tried it have to be sold. So, I think that’s sort of a three columns I would put the customer base into. Rick Hoss – Roth Capital Partners: So, if every single unit was running, then we would be well over 15.9 [ph] on a quarterly basis, is that correct?

Yes, well over twice what you are seeing. Rick Hoss – Roth Capital Partners: Yes, okay.

But we are also seeing another trend which has been factored in and that is the FUEL CHEM program is increasingly being sold on larger megawatt sized units, and while that counts as a unit, you can have a 900 megawatt unit and a 100 megawatt unit, and obviously one shares a lot more FUEL CHEM product than the smaller one. So, because we are increasingly showing performance on larger units, I would say we are expecting to see on average in improving transit revenue growth per unit. Rick Hoss – Roth Capital Partners: Okay. And then, as far as China goes, there is a demo for a while, and I think there is a demo in India for a while, and then did those ever convert to commercial status or what the status on those?

The commercial demonstration in China that was running 2009 has not gone commercial as of yet. There is another demonstration in China that is currently ongoing. As far as India is concerned, we ran a demonstration in 2009. We received an extension for that demonstration, which will start up in the latter half of this year. Rick Hoss – Roth Capital Partners: And what has been the reluctance for the, you said the China’s demo to go to full commercial?

There is still I guess clarification for the customer on return on investment, also just such use of technology. So, they were happy with the demonstration. The results were favorable, and it’s just internal delays.

I think we largely expect the China market near term to be driven by the Air Pollution Control segment. FUEL CHEM will develop. It will develop more slowly, but it’s the regulations that are driving APC projects. And I think you are going to see some significant growth particularly next year. We are already beginning to see signs of bookings that we have in our pipeline, much of which will be realized in 2011, but indeed our second half in 2010 for China would be higher, measurably than the first half on a small base, but that begins to accelerate dramatically into 2010 [ph]. FUEL CHEM on the other hand I think will be a slower growing market there. The big market is slower growing. So, it’s just a little early to indicate the likelihood of significant revenues and FUEL CHEM chose some more demonstration projects go commercial and more products you will see there. Rick Hoss – Roth Capital Partners: Perfect thanks.

You bet.

And your next question comes from the line of John Quealy from Canaccord Genuity. Please proceed. John Quealy – Canaccord Genuity: Hi good morning folks and welcome today. Going back to the APC backlog, and Doug, I am sorry if you mentioned this, can we talk about the relative mix in that APC backlog, whether it’s by technology, what I am really trying to get is by the margin profile, if we should be expecting this margins, given that APC visibility in the next several quarters?

Both Ellen and I could answer that. We have contracted projects that will continue to produce recognized revenue domestically in the APC segment for the second half of 2010. A significant portion of those revenues are for low NOx Over-Fire Air programs and there is one program in particular that has a large amount of revenue, but it also includes a lot of engineered and procurement construction lower modular associated with it. So, revenues are significant for that project. Average margins are lower simply because it’s a blend of our traditional APC margin plus some work we have chose the contract for, but at a traditional EPC type margin. We also are seeing from the existing contracted projects use of the HERT system that came from the ACT acquisition as well as traditional SNCR. In the third quarter, we already see some additional bookings and expected further bookings and I largely expect those to be SNCR. So, you are seeing a nice mix. Low NOx Burners and Over-Fire Air combustion, modification solution. HERT and SNCR are both technologies used for post combustion. While are still actively quoting, our advanced SNCR, we have not announced any major projects yet, but we do expect to see – those will be larger revenue projects as well. We are working on those optimistically in China. John Quealy – Canaccord Genuity: And my second question, on the FUEL CHEM, just so I understand the moving pieces. So, almost 50% of the coal units are offline due to obviously the demand in spark spread perhaps and yet coal-fired revenue only down 1% year-on-year. Was there one-time items that are causing that relative flatness? And then secondarily, can you talk about the units that are still online using FUEL CHEM? Are they base load units for utility or a geography because clearly it seems like some folks continue to use the process in the chemical quite robustly?

Well, there is two elements to answer your question with respect to the number of the units and the revenue we reported. As we stated, part of our revenue mix was utilization of about 2 million share, that was in quarter one, not quarter two. That was the work actually performed in 2009. And that happened to be for relatively large units. And so, as we put the systems in place on larger units, we are seeing greater revenue per unit, even if the number of units has not gone up or has declined. So, there is a little bit more concentration of those revenues as we book those units, but when we look at the other units that customers such as those have, the market potential or expanded use knowing their fuel programs that are in place and their enhanced slagging problems, we think that as we demonstrate the success not only with the existing products using FUEL CHEM business, but very importantly with some new products that we are developing for the FUEL CHEM business that will lower the cost through these utility customers while using a proven performance. I think we will see expanded growth with the existing customer base. John Quealy – Canaccord Genuity: Okay, great. And then my last question, bigger picture going back to the Transport Rule in some of the business that you folks are booking now, Doug, what are your customers telling you with regards to if they think the Transport Rule is going to take hold or a multi-pollutant strategy with the new Congressional session in the beginning of the year. Can you talk about what your customers are saying about the likely outcome and what you are looking for, for indication to that?

I don’t have any direct quotations to offer you from customers. Like us, they are trying to assess what the final rule formulation will be. Whether it goes via the Transport Rule or the Carper Alexander, one thing is clear is that NOx emissions must come down sooner. There is a lot of discussion as to the policy around whether mercury reductions are going to be included in the legislation. That is actively being debated relative to requiring a 90% site-by-site reduction. And whether or not that will be separated from the SOX and NOx rules or coupled with it remains to be legislated. Ellen, do you have any other comment? I am not in a position to really offer you what I would consider really good quotational evidence at this early stage of hearing about the Transport Rule. John Quealy – Canaccord Genuity: That’s helpful. Thanks Doug.

I would say the other thing I would add is, is we need clarification on whether cap and trade policies will be limited or for expanded interstate rule. That is a big deal because to the extent there is going be more interstate trading allowed or not allowed that has an important impact on the number of units that will require implementation of control technologies versus selling credits. You know the NOx credit market in variable province. So, that has been a little wind in our face in terms of selling our solutions where they can buy those credits. So, I would hope maybe by the next call, we could probably give you a little clearer answer because it might be more clear to us as well.

And your next question comes from the line of Dan Mannes from Avondale. Please proceed. Dan Mannes – Avondale Partners: Good morning. A quick follow-up question on the Transport Rule. Looking back to your experience in 2005 or actually it would be before 2005 when the Clean Air Interstate Rule was proposed and obviously there was a lot of questions at that point about that proposal versus conflicting proposals coming out of Congress. Is your experience in sort of the '05 to '07 timeframe, is that at all instructive in considering what things are going to look like now or is the much shorter timeframe under the Clean Air Transport rule? Do you think that will be a bigger driver? I am just trying to get my arms around if there is any historical precedence for the time we are in now?

Well, if my memory serves me, the CAIR required NOx reductions to take stepwise effects by 2009 and then again by 2015, I believe. And so definitely there was some effort between 2005 and 2009 to comply with those requirements. That being said, there still was quite a bit of cap and trade allowed. We are in this time period between 2009 and 2015, where the year 2010, while it may sound like there is a lot of time, there certainly is not a lot of time if the requirements get tightened or moved up by the end of the year. So, I don't think they are comparable periods, because of the two different stepwise legislative requirements. I think what is different today is the intense capital costs associated with SCR compared to alternative blended solutions such as what Fuel Tech has to offer coupled with just general better understanding of how to reduce NOx from both its creation to its removal is going to put us in a period of less intensive investment in SCRs such as you saw, you know, in the prior decade compared to what I see in the decade going forward. It is just a general observation. Dan Mannes – Avondale Partners: Sure. And understanding it’s kind of hard to handicap that given the uncertainty, but I imagine it was fairly uncertain then to, and it did end applying out there I at least relative to the DIA’s expectations or at least EPA’s, it seems like there could be more SNCRs put in and maybe they had expected, I think EPA tends to think a lot more utilities who put SCRs and they end up looking for lower cost solutions.

Certain things that the SNCR market was lot in well. Dan Mannes – Avondale Partners: Got it. And then briefly, just shifting over to SG&A. The first and second quarter, you were about $800,000 below prior year, and I know you mentioned the roll-off of the stock-based comp. Is that a similar level of change year-over-year or in the fourth quarter, it looks like maybe we already start lapping when some of those reductions occurred?

That is correct. We did see an increase year-over-year, a decrease about $630,000, and we do expect that to continue. Dan Mannes – Avondale Partners: Even in through until Q4 or just for Q3?

No, we will expect the change in Q3, but we will see a drop in Q4 as well. Dan Mannes – Avondale Partners: :

That is the primary for the quarter. On a year-to-date level, as Dave mentioned, there is some savings due to some reallocation of corporate resources. Dan Mannes – Avondale Partners: Okay.

And we should continue to see throughout the remainder of the year. Dan Mannes – Avondale Partners: Great. And then one final question. Any update you can give us on a CEO search? Is that something that, is that a priority or, Doug, getting back in the CEO role and focusing, are you may be comfortable being in that role for an extended period of time?

I was comfortable stepping into the role, and I am even more comfortable being in the role. You know, we just had a board meeting and a report on the CEO search was made. We have a search firm that has identified candidates. Most of those candidates have been, you know, resume screened, telephone interviewed and moving towards the face-to-face interview stage with our recruiter. I think the board is very pleased with the way the management team is operating. We have brought Dave Collins onboard. I had identify him when I stepped into the job as my preferred choice and that received the enthusiastic support not only of fellow management who knew Dave over the past four years but all of our board. We did have a CFO search going on at that time. I did not find the candidates that was producing when I stepped in to see that pipeline to be those that measured up to Dave. So, we focused on getting Dave onboard. Obviously we had to change our audit firm. That went smoothly. We are now with (inaudible). And so after I assumed the role we did commence the CEO search. The Board basically says they don't want to make a mistake. They want to make sure if they are going to bring somebody in from the outside that, that person has got top credentials and so whatever time it takes. Sitting here today, I don't know if someone who walks on water is going to show up two weeks from now or six months from now. I have known the company as an investor in the company and a member of its board for 12 years. I have known of the company for 12 years prior to that. So, I think having a working knowledge of the company, having served in this role on multiple occasions before for other affiliate companies we have been involved in, I find it a pleasure to perform the job, a great team of people with whom to work, and I can assure you that the job of the CEO is being carried out and we are making decisions and driving the company forward. Whatever that timeline is, I will be the CEO and serve at the pleasure of the Board and it will be the ultimate decision based upon the candidate screen. Dan Mannes – Avondale Partners: Sounds great. Appreciate the color.

You bet. Back in 2004, when I stepped as the Interim CEO, it lasted two-and-a-half years in another company. I have no idea what that may be but I told the Board I am prepared to serve in that role.

: Jeff Osborne – Stifel Nicolaus: Yes good morning. Just had one quick one, I think you mentioned that there were seven units that you have installed in the Guangdong province, and I was just trying to get a sense of through the competitive process over the last 12 to 18 months in that region, do you have a sense of what your share was, basically if you lost units, what type of technology were they using and what type of competitive pressures were you seeing? Thank you.

That is a good question. And I recall we did an analysis of that, and we did it based upon the projects that went out for quotation. I am sorry, I don't have it before me, but I will use my best recollection. We looked at the number of projects that went out for bid and the number that we actually won, and if my recollection serves me, I would say that we realized about a 25% win rate when we adjusted for those that got canceled or jobs that perhaps some bidders were not eligible for. There certainly might have been some that we withdrew, but my rough recollection is it was a 25% share. Jeff Osborne – Stifel Nicolaus: Great, thank you very much.

And certainly we could give you a little bit more detail on that if you wanted to do so on an offline call. Jeff Osborne – Stifel Nicolaus: Perfect, thank you.

(Operator instructions) Our next question comes from the line of Graham Mattison from Lazard Capital. Please proceed Graham Mattison – Lazard Capital Markets: Hi good morning everyone.

Good morning. Graham Mattison – Lazard Capital Markets: You guys always had some great traction with your alliance customer. Could you give something, are you actively working to build additional alliance agreements, and if so is there something we might be seeing in the second half of the year or more of a 2011?

We have done several alliance agreements in the past, obviously being able to work with certain power producers for multiple units within their fleet is obviously preferred. The current alliance agreement we have we are seeing additional projects come online before year end. As far as additional alliance agreements with other customers, that is a possibility for the future, but as far as the remainder of 2010, currently what we are working on is the one that we have already announced and just expanding within their fleet. Graham Mattison – Lazard Capital Markets: Got you. Okay, helpful. And then given your cash balance, now I was just wondering if you could sort of comment on the M&A outlook that you are seeing out there? Is this something you are actively looking at just given some of the internal things you are going through right now as a company and just your thoughts on that market?

Sure, this is always some level of dialog or investigation. Currently, there is nothing that we are doing that is likely to be resulting in any near-term announcement. Some things get studied over a fairly longer period of time. But even in the four months or so I have been in this position I know of at least, you know, one such opportunity that caught my attention. But I would say the priority is to focus on the base business and to solidify its growth rate and profitability in a way that commends my priority attention. I believe that is my responsibility to the Board and shareholders. But we are always putting our eyes out looking for things that could potentially fit. Graham Mattison – Lazard Capital Markets: Great, very helpful. I will jump back in queue, thank you.

And your next question comes from the line of Carter Shoop from Deutsche Bank. Please proceed. Carter Shoop – Deutsche Bank: Yes, good morning. Carter Shoop from Deutsche Bank. Doug, given the volatility in the executive suite over the past six months, and now we have a CFO in place, help us understand what your priorities are as the Interim CEO. Can you walk through one, two, three bullet points about what your top priorities are at this point?

Absolutely. The changes were limited to two positions as you know, John Graham announced he was stepping aside for another opportunity. We didn't lose any momentum, there was no turmoil. Ellen did a very capable job and we commend her for her role as Interim Chief Financial Officer and who had the ability to call upon any resources we needed either from Grant Thornton or other members of management, so we did fine there. Clearly, the Board was looking to see the company turn around its stock performance, realized its growth rate, and the decision was made to have me serve as Interim Chief Executive Officer, and so the transition between John Norris whom I have worked with for a number of years when he came in even as a consultant and stepped in the job of CEO to his last day of employment was very smooth and my focus was to, a, create a culture in the organization that was one, motivated to win, succeed and be profitably rewarded. So early on, I focused on things that drove higher morale, higher spirits, and put in place an incentive system based upon 10 key results that we identified, five in each business segment and one related to team work excellence and commitment, and we put that key results incentive plans in place, and I think that has inspired our employees and focused their attention on things that really count and made a difference. I found that the existing incentive plan that was more based upon corporate financial goals was not well understood and we needed things that were really clear and understandable and objectives that people could make an impact on. So, we got that done. We obviously had to attend ourselves to bringing in the much needed hires such as Dave. That was a process that took time, because it required us to consider a decision to hire Dave as he was employed by our audit firm and we knew we had to change audit firms, but the assessment of that was one that we were betting on someone who was a proven person and really know our business, understand it and step into the job and accelerate. You could comment on saying do you want to wait for the next CEO to pick his or her CFO. My answer to that was why do that. You have an incumbent management team who will fill their job not knowing who is going to be the next CEO. Dave was no different. He was willing to accept that uncertainty. But they knew who I was, and so I focused on getting the management team priorities clear that translate into returning the company to growth. I have also looked at areas that are both well organized and maybe not so well organized in the company and to the extent that we need to realize the organizational structure around those priorities, we will be doing so. The other thing I have made as a priority is to return the company's commitment to new products and developing new processes and technologies that will create a future. Our APC segment is well established, we are a known player. Some of those technologies are more mature and some are coming off patent. We added to that portfolio to acquisitions, I think that positions us well. But we need to further strengthen our competitive condition on an intellectual property basis there. The same thing with FUEL CHEM. We need products, new chemistry formulations that can make our FUEL CHEM business more competitive, because we see (inaudible). So, I see from the Board channeled through me, the priority has been to better understand our markets to put in place plans that drive growth and to build that foundation growth on things that are really, level of plant. You know, for example, China is a very, very big market. That market cannot be measured just in terms of the number of power plants or boilers operated. We have to think about how we want to execute in that market knowing that we will have significant competition and what kind of A team of players will we need to put in place over there. So, I expect a lot of our resources to be caliber that will create a business presence and a standalone company that can very well be as big as Fuel Tech is today with the right business plan. So, a lot of back-to-basics planning. Turning the culture into one that is very sales marketing driven and one that is very supported by enthusiastic engineering and technology resources that are going to not only execute for the projects that we have efficiently to line up customers, but also to filter time to developing the new products and processes that we will be able to sell in the years ahead. That is my priority.

And this concludes the question-and-answer session. I will now like to turn the conference over to Mr. Doug Bailey for closing remarks. You may proceed, sir.

Thank you very much operator. We are glad we have received those questions, and I certainly stand ready as Tracy, Dave and Ellen do to take any individual calls if you like further clarity. The business is doing well despite the economy. I think it’s tested our business model in a way that it shows the resilience it is, and I am looking forward to seeing markets that we serve grow, because we are finding those opportunities grow despite what the economy is doing. And it’s a pleasure to have the job that I have, to be able to work with people I do, and have the investors and shareholders that we have. We appreciate your support greatly. As you know, I am a major investor in this company myself, and so my lot is cast with you, and I stand ready to take your questions at any point in time. Some people might be seeing me tomorrow at the Canaccord Genuity Conference, and I look forward to those questions as well. Thank you operator, thank you all for attending and we look forward to the next call.

My pleasure, sir. Ladies and gentlemen, that concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.