374Water Releases Second Quarter 2024 Results and Provides Business Update

Rhea-AI Summary

374Water Inc. (NASDAQ:SCWO) released its Q2 2024 results and provided a business update. Key highlights include:

1. Deployment of AirSCWO system to Orlando for biosolids waste treatment and PFAS destruction demonstrations.
2. Revenue decreased 26% to $37,000 in Q2 2024 compared to Q2 2023.
3. Total operating expenses increased from $3.5 million in H1 2023 to $4.9 million in H1 2024.
4. Working capital of $7.2 million as of June 30, 2024, with no outstanding debt.
5. Successful completion of pharmaceutical waste testing using AirSCWO technology.
6. Release of a white paper on AirSCWO technology's potential for lithium-ion battery waste processing.

The company estimates a global market opportunity in the hundreds of billions of dollars for its waste destruction technology.

Positive

• Successful deployment of AirSCWO system to Orlando's Iron Bridge Water Pollution Control Facility
• Completion of pharmaceutical waste testing demonstrating efficacy in destroying contaminants
• Strong working capital position of $7.2 million with no outstanding debt
• Estimated global market opportunity in the hundreds of billions of dollars

Negative

• 26% decrease in Q2 2024 revenue to $37,000 compared to Q2 2023
• 59% decrease in H1 2024 revenue to $352,000 compared to H1 2023
• Increase in total operating expenses from $3.5 million in H1 2023 to $4.9 million in H1 2024

Insights

Financial Analyst

374Water's Q2 2024 results reveal concerning trends. Revenue declined 26% year-over-year for the quarter and 59% for the six-month period. This significant drop is attributed to reduced progress on their sold unit, suggesting potential delays or issues in product development. Operating expenses increased by 40%, from $3.5 million to $4.9 million, driven by higher R&D, G&A and professional fees. While these investments may support future growth, they're currently outpacing revenue generation.

The $7.2 million working capital provides a short-term cushion, but the company needs to accelerate commercialization to justify its increased spending. The lack of debt is positive, but without substantial revenue growth, 374Water may need to seek additional funding in the near future. Investors should closely monitor the company's progress in Orlando and its ability to convert technology advancements into tangible sales.

Environmental Technology Expert

374Water's AirSCWO technology shows promise in addressing critical environmental challenges. The successful deployment to Orlando's Iron Bridge facility marks a significant milestone, potentially validating the technology's real-world applicability. The completion of pharmaceutical waste testing demonstrates versatility in handling complex waste streams, a important factor in the waste management industry.

The white paper on lithium-ion battery waste processing is particularly intriguing, as it targets a rapidly growing environmental concern. If AirSCWO can effectively handle battery waste, it could open up a substantial market opportunity. However, the company needs to rapidly transition from testing and demonstrations to commercial applications. The estimated market size of "hundreds of billions of dollars" seems optimistic and investors should seek concrete evidence of market penetration and revenue generation in the coming quarters.

Market Research Analyst

374Water's market positioning is intriguing but faces challenges. The company is targeting three key sectors: municipal, federal and industrial markets, with a focus on organic waste destruction. The deployment in Orlando and PFAS destruction demonstrations for federal agencies indicate potential interest from both municipal and government sectors.

However, the substantial decrease in revenue raises questions about market readiness and the company's ability to convert interest into sales. The emphasis on strategic TSDF (Treatment, Storage and Disposal Facility) partnerships could be important for market penetration, but concrete progress in this area is not yet evident. The lithium-ion battery waste solution, if successful, could be a game-changer, given the growing electric vehicle market. Investors should watch for signs of market traction, particularly in the form of new contracts or partnerships, to validate the company's ambitious market size estimates.

New Management Team Advances AirSCWO Technology, Deploys to City of Orlando

DURHAM, NC / ACCESSWIRE / August 15, 2024 / 374Water Inc. (NASDAQ:SCWO), a global leader in organic waste destruction technology for the federal, municipal and industrial markets, today provides a business update and reports its financial results for the second quarter and six months ended June 30, 2024.

Chirs Gannon, President and CEO of 374Water commented: "In just one quarter as a new executive leadership team, we have made significant progress on our path towards commercializing our AirSCWO technology by taking meaningful steps in the four priority areas outlined when I took the helm as CEO: (1) fulfill contractual commitments to demonstrate the efficacy of our AirSCWO technology; (2) commercialize our AirSCWO system and expand our market opportunity; (3) secure strategic TSDF partnerships; and (4) expand our manufacturing and engineering capabilities. Notably, we deployed our AirSCWO system to the City of Orlando where we will treat biosolids waste and complete previously announced PFAS destruction demonstrations for federal agencies. This deployment aligns with our broader strategy to address the pressing need for effective, clean waste destruction solutions. We have made substantial progress in our AirSCWO product development activities and have seen material improvements in our technology. We believe deploying to Orlando will showcase our technology's versatility and effectiveness, accelerate the path towards commercialization, and provide the foundation to achieve our near and long-term goals. We estimate the global market opportunity for our waste destruction technology across our municipal, federal and industrial markets to be measured in the hundreds of billions of dollars and we are committed to efficiently scaling our technology while creating value for our stakeholders."

Financial Highlights

• For the three-month period ended June 30, 2024, the Company generated revenue of approximately $37,000 which compares to approximately $50,000 for the three months ending June 30, 2023, a 26% decrease.

• For the six-month period ended June 30, 2024, the Company generated revenue of approximately $352,000 which compares to approximately $851,000 for the six months ending June 30, 2023, a 59% decrease.

  • Our revenue is primarily based on progress toward completion of our sold unit and also includes the sale of treatability services. Costs associated with our sold unit have started to decline as we reach the end of our fabrication and testing, which have had a direct correlation to the reduced revenue recognized in this period under our percentage of completion revenue recognition method. This has had a direct impact on our change in revenue in the first half of 2024 compared to the first half of 2023.

• Total operating expenses increased from $3.5 million in the first half of 2023 to $4.9 million in the first half of 2024, driven primarily by an increase in our research and development expenses of approximately $474,000, increase in our general and administrative expenses of approximately $250,000, increase in our professional fees of approximately $677,000.

  • The increases in research and development and general and administrative expenses stem from our continued effort to commercialize our AirSCWO systems and our strategic growth plan to ensure we have sufficient personnel and an executive team to support our expected growth.

  • The increase in our professional fees are primarily non-recurring expenses related to the settlement of a legal matter and the changes in our executive leadership and board of directors that occurred during the quarter ended June 30, 2024.

Capital Structure

• As of June 30, 2024, we have working capital of $7.2 million, consisting of $8.8 million of current assets comprised primarily of cash, receivables and inventory offset by $1.5 million of current liabilities comprised of accounts payable and accrued expenses arising from the normal course of business. We currently have no outstanding debt obligations.

Business Highlights

• The Company announced the election of our Board of Directors, overwhelmingly approved by stockholders, including Richard H. Davis, Marc Deshusses, Deanna Rene Estes, Chris Gannon, Terry Merrell, Buddie Joe (BJ) Penn, and James Vanderhider.

• Deborah Cooper was appointed as the Company's new Chief Administrative Officer (CAO), bringing over 20 years of administrative leadership experience in the technology and environmental sectors, where she has excelled in streamlining operations and enhancing organizational efficiency.

• The AirSCWO system was successfully deployed and delivered to Orlando's Iron Bridge Water Pollution Control Facility. This deployment marks a significant milestone in our partnership with the City of Orlando and reinforces our commitment to fulfilling customer contracts.

• The Company announced the successful completion of pharmaceutical waste testing using its innovative AirSCWO technology. The results demonstrated exceptional efficacy in destroying pharmaceutical contaminants, which we believe will position the Company as a leader in addressing complex waste streams.

• The Company released a comprehensive white paper detailing the potential of its AirSCWO technology to address lithium-ion battery waste. The paper highlights the technology's potential to safely and efficiently process hazardous battery materials and to offer a sustainable solution to a growing environmental challenge.

Earnings Conference Call

Management will hold a conference call at 10:00 am Pacific Time (1:00 pm Eastern Time) on Thursday, August 15, 2024, to provide a more detailed business update, discussion of quarterly results and conduct a Q&A session. Participants who wish to join the conference by telephone can access the call by dialing (Toll Free) 888-506-0062 or (International) 973-528-0011. Participants may join the live webcast by accessing it at the webcast registration link here: https://www.webcaster4.com/Webcast/Page/3040/51011

A webcast replay will be available through August 29, 2024 on the Investors Section of the Company's website at https://374water.com/2022-investor-presentation/.

For more on AirSCWO or about our team, visit 374Water.com or follow us on LinkedIn.

About 374Water

374Water Inc. (NASDAQ:SCWO) is a global cleantech company providing innovative solutions addressing wastewater treatment and waste management issues within the municipal, federal and industrial markets. 374Water's AirSCWO technology is designed to efficiently destroy and mineralize a broad spectrum of organic non-hazardous and hazardous organic wastes producing safe dischargeable water streams, safe mineral effluent, safe vent gas, and recoverable heat energy. 374Water's AirSCWO technology has the potential to assist its customers to meet discharge requirements, reduce or eliminate disposal costs, remove bottlenecks, and reduce litigation and other risks. 374Water continues to be a leader in innovative waste treatment solutions, dedicated to creating a greener future and eradicating harmful pollutants. Learn more by visiting www.374water.com and follow us on LinkedIn.

Cautionary Language on Forward-Looking Statements

Certain statements in this communication are "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements relate to future events or our future financial performance, including statements relating to our ability to execute on our strategic plan, the anticipated benefits of our move to Orlando and our progress toward commercialization, and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or our achievements or those of our industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements may be identified by the use of words like "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "project," "consider," "predict," "potential," "feel," or other comparable terminology. The Company has based these forward-looking statements on its current expectations, assumptions, estimates, beliefs, and projections. While the Company believes these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which involve factors or circumstances that are beyond the Company's control. These and other important factors, including those discussed under "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, as well as the Company's subsequent filings with the SEC, may cause actual results, performance, or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements herein are made only as of the date they were first issued, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Investor Contact:
Heather Crowell
ir@374water.com

Media Contact:
Christian Rizzo
media@374water.com

374Water Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

		June 30, 2024 (Unaudited)				December 31, 2023
Assets
Current Assets:
Cash		$	5,083,482			$	10,445,404
Accounts receivable, net of allowance			57,437				64,792
Other accounts receivable			24,801				39,749
Unbilled accounts receivable			1,771,609				1,494,553
Inventory, net			1,016,231				2,276,677
Prepaid expenses			856,580				581,085
Total Current Assets			8,810,140				14,902,260
Property and equipment, net			260,154				230,971
Equipment-in-process			2,148,062				-
Intangible asset,net			981,335				988,029
Other assets			15,709				-
Total Long-Term Assets			3,405,260				1,219,000
Total Assets		$	12,215,400			$	16,121,260
Liabilities and Stockholders Equity
Current Liabilities:
Accounts payable and accrued expenses		$	892,275			$	572,297
Accrued contract loss provision			600,000				500,000
Accrued legal settlement			-				135,000
Unearned Revenue			32,768				130,000
Other liabilities			11,743				36,787
Total Current Liabilities			1,536,786				1,374,084
Total Liabilities			1,536,786				1,374,084
Stockholders Equity
Common stock: 200,000,000 common shares authorized, par value $0.0001 per share, 132,932,335 and 132,667,107 shares
outstanding at June 30, 2024 and December 31, 2023, respectively			13,292				13,266
Additional paid-in capital			31,573,140				30,684,943
Accumulated deficit			(20,910,289				) (15,953,504)
Accumulated other income			2,471				2,471
Total Stockholders Equity			10,678,614				14,747,176
Total Liabilities & Stockholders Equity		$	12,215,400			$	16,121,260

374Water Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited )
Three Months Ended Six Months Ended

		June 30, Three Months Ended								June 30, Six Months Ended
		2024				2023				2024				2023
Revenue		$	36,821			$	49,863			$	352,099			$	851,321
Cost of goods sold			43,543				45,257				660,841				765,403
Gross margin			(6,722	)			4,606				(308,742	)			85,918
Operating Expenses
Research and development			566,568				271,964				1,101,715				627,869
Compensation and related expenses			777,825				733,121				1,429,429				1,451,881
Professional fees			615,987				92,285				868,692				191,857
General and administrative			1,051,998				676,333				1,511,725				1,261,995
Total Operating Expenses			3,012,378				1,773,703				4,911,561				3,533,602
Loss from Operations			(3,019,100	)			(1,769,097	)			(5,220,303	)			(3,447,684	)
Other Income
Interest income			74,192				74,967				178,812				112,826
Other income			12,588				43,553				84,706				43,938
Total Other Income			86,780				118,520				263,518				156,764
Net Loss before Income Taxes			(2,932,320	)			(1,650,577	)			(4,956,785	)			(3,290,920	)
Provision for Income Taxes			-				-				-				-
Net Loss		$	(2,932,320	)		$	(1,650,577	)		$	(4,956,785	)		$	(3,290,920	)
Net Loss per Share - Basic and Diluted		$	(0.02	)		$	(0.01	)		$	(0.04	)		$	(0.03	)
Weighted Average Common Shares Outstanding			132,801,137				129,389,098				132,735,552				128,274,091
Comprehensive loss:
Net Loss		$	(2,932,320	)		$	(1,650,577	)		$	(4,956,785	)		$	(3,290,920	)
Change in foreign currency translation			-				4,943				-				5,438
Total comprehensive loss		$	(2,932,320	)		$	(1,645,634	)		$	(4,956,785	)		$	(3,285,482	)

374Water Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 2024 and 2023

			Six Months Ended June 30, 2024				Six Months Ended June 30, 2023
Net loss		$	(4,956,785	)		$	(3,290,920	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization			50,953				44,281
Issuance of common stock for services			342,600				-
Stock-based compensation			458,584				514,934
Change in foreign currency translation			-				5,767
Gain on legal settlement			(22,303	)			-
Inventory reserve			50,000				-
Changes in operating assets and liabilities:
Accounts receivable			7,355				(17,526	)
Other accounts receivable			14,948				-
Unbilled accounts receivable			(277,056	)			(790,863	)
Inventory			(608,838	)			(143,785	)
Prepaid expenses			(275,495	)			(52,998	)
Other assets			(15,709	)			-
Accounts payable and accrued expenses			319,978				(1,115,353	)
Accrued contract loss provision			100,000				-
Unearned Revenue			(97,232	)			(17,048	)
Other Liabilities			(25,044	)			(13,528	)
Net cash used in operating activities			(4,934,044	)			(4,877,039	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment			(46,093	)			(7,303	)
Purchases of equipment-in-process			(328,778	)			-
Increase in intangible assets			(27,349	)			(5,623	)
Proceeds from the sale of investments			-				1,963,430
Net cash provided by (used in) investing activities			(402,220	)			1,950,504
CASH FLOWS FROM FINANCING ACTIVITIES
Net (issuance costs) proceeds from the sale of commonstock			(25,658	)			13,478,959
Net cash provided by (used in) financing activities			(25,658	)			13,478,959
Net increase (decrease) in cash			(5,361,922	)			10,552,424
Cash, beginning of period			10,445,404				4,046,937
Cash, end of period		$	5,083,482			$	14,599,361
Supplemental cash flow disclosures
Cash paid for interest		$	-			$	-
Cash paid for taxes		$	-			$	-
Supplemental disclosure investing activities
Reclassification of inventory to equipment-in-process		$	1,819,284			$	-

SOURCE: 374Water, Inc.

View the original press release on accesswire.com

FAQ

What were 374Water's (SCWO) Q2 2024 financial results?

374Water (SCWO) reported revenue of $37,000 for Q2 2024, a 26% decrease from Q2 2023. Total operating expenses increased to $4.9 million in H1 2024 from $3.5 million in H1 2023.

What major milestone did 374Water (SCWO) achieve in Q2 2024?

374Water (SCWO) successfully deployed its AirSCWO system to Orlando's Iron Bridge Water Pollution Control Facility for biosolids waste treatment and PFAS destruction demonstrations.

How did 374Water (SCWO) perform in pharmaceutical waste testing?

374Water (SCWO) successfully completed pharmaceutical waste testing using its AirSCWO technology, demonstrating exceptional efficacy in destroying pharmaceutical contaminants.

What is 374Water's (SCWO) financial position as of June 30, 2024?

As of June 30, 2024, 374Water (SCWO) had working capital of $7.2 million, consisting of $8.8 million in current assets and $1.5 million in current liabilities, with no outstanding debt obligations.