374Water, Inc. Q2 FY2025 earnings call

• 374Water is an industrial technology and services company focused on transforming the waste management landscape with its proprietary AirSCWO system, which can destroy solid and liquid organic waste and generate safe dischargeable water, mineral byproducts, vent gas and recoverable thermal energy.
• In Q1 2025, the company ruggedized and optimized its AS system, upgraded pre - and post - treatment systems, and achieved waste destruction results north of 99.99% including PFAS contaminants. Secured a waste destruction services contract with the University of North Carolina at Chapel Hill Collaboratory. Supercritical water oxidation technology was named by the EPA as an emerging PFAS destruction technology and a U.S. Army Corps of Engineers approved solution for PFAS destruction.
• In mid - Q2 2025, signed a term sheet with Crystal Clean to establish a waste destruction services facility. Began the biosolids destruction project in Orlando. Completed system improvements on the Orange County Sanitation project's AS6 system, started OCSAN FAT, and received provisional consent for permits. Deployed mobile AS system to Peterson Space Force Base.
• In Q3 2025, deployed AS6 system to Detroit for DIU destruction project. Strengthened Board of Directors with additions of Steve Jones and Jim Pawloski. AirSCWO technology sets the company apart in the waste treatment industry. The company has 4 distinct AS models and a go - to - market strategy focused on diversified markets with multiple procurement options for customers.
• Waste destruction services strategy has three components: on - site permanent waste destruction services, off - site centralized TSDF waste destruction services and on - site mobile waste destruction services. Estimates on revenue potential for different AS models were provided.

For the second quarter of 2025, revenue totaled $600,000 compared to $37,000 in the prior year. The approximately $560,000 increase in revenues is primarily due to an increase in full - scale demonstration service revenues as the company completed Phase 1 of demonstration in wastewater processing under a customer contract, resulting in approximately $270,000 of revenue, an increase in treatability studies of approximately $200,000 and recognition of equipment revenues of approximately $85,000 during the 3 months ended June 30, 2025. Total operating expenses increased 45% to $4.4 million for the 3 months ended June 30, 2025, compared to $3 million in the prior year period. The net loss for the 3 months ended June 30, 2025, was $4.6 million as compared with $2.9 million in the prior year. Cash and cash equivalents as of June 30, 2025, was $2.1 million as compared to $10.7 million as of December 31, 2024. As of June 30, 2025, working capital was $4.6 million compared to $7.3 million as of June 30, 2024.

• Based on current and anticipated future demand and the conversion of pipeline into actionable backlog, the company believes it is on a credible path to achieving $250 million to $500 million in annual revenues in 5 years.
• For the second quarter of 2025, revenue was $600,000 compared to $37,000 in the prior year. Total operating expenses increased, and net loss increased. The company projects to have adequate cash to support 2025 business plans and is pursuing additional capital raising opportunities.
• The company continues to maintain line of sight to $2 million to $6 million in revenue for the remainder of 2025.

• The stock price was impacted by factors such as the exit of several shareholders, short selling brought about by a large institutional investor who participated in the last capital raise, and NASDAQ eligibility challenges. The company has proactively responded to these issues but still faces risks related to these factors.

Q: Congratulations on all the progress. First question is on the North Carolina contract for destruction services that you got for the state destroying firefighting foam. Maybe just some further color on kind of that opportunity. What's sort of the first step and what's the ultimate kind of market there?

A: Yes. So in terms of that exact opportunity, so we have picked up the AFFF firefighting foam, and we're going to begin processing that here over the next month or so. So the initial contract is worth about $1 million. And then going forward, it's significantly higher if we win subsequent rounds of that. They have a tremendous amount of AFFF that's kind of left over that they would like to fully destroy. In terms of the market overall, we are responding to many different RFPs from the different states as well as we're starting to see those from the federal government as well. So I think in large part, you can say kind of game is on, and they're now looking to proactively destroy those immense stockpiles of it. And we're talking millions and millions of gallons of AFFF. So a big opportunity for us.

Q: Michael Jay Mathison: Congratulations on all the milestones you guys. So you got so much going on. I just want to make sure I've understood everything. The arrangement with the University of North Carolina, Chapel Hill, do you have a revenue target from that, first of all?

A: Yes. So the initial contract is $400,000. And then we naturally would like to get the next step of that process or next phase, which could be worth up to multimillions.