Q2 2024 374Water Inc Earnings Call

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Operator: Greetings and welcome to the 374Water 2nd Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Speaker Change: Greetings and welcome to the three seven for water second quarter 2024 earnings call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Operator: As a reminder, the conference is being recorded.

Speaker Change: As a reminder, the conference is being recorded.

Heather Crowell: I would now like to turn the call over to our host, Heather Crowell, Investor Relations.

Speaker Change: I would now like to turn the call over to our host Heather Crowell Investor Relations Ma'am the floor is yours.

Heather Crowell: Mom, the floor is yours. Hello, everyone. My name is Heather Crowell, and I'm here today with President and Chief Executive Officer Chris Gannon and our Chief Financial Officer, Adrienne Anderson. During today's call, we may make projections and other forward-looking statements under the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995 regarding future events or the future financial performance of the company. These statements may discuss our business, economic and market outlook, growth expectations, new products and their performance, cost structure and business strategy. Forward looking statements are based on information currently available to us and on management's beliefs, assumptions, estimates, and or projections.

Hello, everyone. My name is Heather Crowell, and I'm here today, with President and Chief Executive Officer, Chris Gannon, and our Chief Financial Officer, Adrian Anderson during today's call, we may make projections and other forward looking statements under the Safe Harbor provisions contained in the private Securities Litigation Reform Act of 1995.

Speaker Change: Guarding future events or the future financial performance of the company.

Speaker Change: These statements may discuss our business economic and market outlook growth expectations, new products and their performance cost structure and business strategy.

Speaker Change: We're looking statements are based on information currently available to us and on management's beliefs assumptions estimates and our projections.

Heather Crowell: So we're looking statements are not guarantees of future performance and are subject to risk, uncertainties and other factors. We refer you to documents the company files from time to time with the SEC, specifically the company's Forum 10-K and Forum 10-Q. These documents identify important factors that could cause actual results to differ materially from those contained in our projections or forward looking statements. All statements made during this call are made only as of today, August 15, 2024. And the company expressly disclaims any intent or obligation to update any forward looking statements made during this call to reflect subsequent events or circumstances, unless required by law.

Speaker Change: Forward looking statements are not guarantees of future performance and are subject to risks uncertainties and other factors.

Speaker Change: We refer you to documents the company files from time to time with the SEC specifically the company's Form 10-K and Form 10-Q. These documents identify important factors that could cause actual results to differ materially from those contained in our projections or forward looking statements.

Speaker Change: All statements made during this call are made only as of today August 15th 2024, and the company expressly disclaims any intent or obligation to update any forward looking statements made during this call to reflect subsequent events or circumstances unless required by law.

Heather Crowell: Note that our earnings release and transcript will be available on the investor relations page of our website.

Speaker Change: Note that our earnings release and transcript will be available on the Investor Relations page of our website at this point I will turn the call over to our President and CEO, Chris Gannon.

Chris Gannon: At this point, I will turn the call over to our President and CEO, Chris Gannon. Thank you, Heather. Good morning, everyone, and thank you for joining us today. We have a lot to cover, as much has been accomplished since our last call three months ago. During this period, we materially advanced our air flow technology along the path towards commercialization, as well as expanded its ability to destroy a wide-range organic waste stream. In addition, we deployed our AERSCO system to Orlando and are now actively integrating our technology into their wastewater treatment plant. Further, we temporarily relocated our core manufacturing operations to a large facility just outside Orlando to accommodate our increased manufacturing footprint needs.

Chris Gannon: Thank you Heather good morning, everyone and thank you for joining us today.

Chris Gannon: We have a lot to cover as much has been accomplished since our last call three months ago. During this period.

Speaker Change: <unk> advanced our aerospace <unk> technology, along the path towards commercialization as well as expanded its ability to destroy a wide range of organic waste streams.

Speaker Change: In addition, we deployed our air score system to Orlando and are now actively integrating our technology into their wastewater treatment plant.

Speaker Change: Further we temporarily relocated our core manufacturing operations to a large facility just outside of Orlando.

To accommodate our increased manufacturing footprint needs and finally, we made multiple key hires across our organization. We will cover these and other important matters during our time together.

Chris Gannon: And finally, we made multiple key hires across our organization. We will cover these and other important matters during our time together.

Chris Gannon: I'd like to start with a discussion of our technology. We believe our AERSQLO system sits at the forefront of clean tech innovation, offering a vital solution to global wastewater treatment and waste destruction challenges. The core of our system is our patented supercritical water oxidation technology designed to permanently destroy and mineralize a broad spectrum of organic non-hazardous and hazardous waste streams, producing dischargeable clean water, safe mineral effluent, safe vent gas, and recoverable heat energy. Our technology is designed to handle traditional wastes such as biosolids, landfill leachate, oily sludge, foam fractionates, military waste, and organic industrial waste, as well as emerging contaminants such as PFAS, pesticides, and microplastics from municipal, federal, and industrial waste streams. We have made substantial progress in our AERSQL product development activities and have seen material improvements in our technology as we continue along the path towards commercialization.

Speaker Change: I'd like to start with a discussion of our technology. We believe our aerospace systems sits at the forefront of clean Tech innovation offering a vital solution to global wastewater treatment and a waste destruction challenges.

Speaker Change: The core of our system is our patented supercritical water oxidation technology designed to permanently destroy and mineralized a broad spectrum of working in a non hazardous and hazardous waste streams, producing discharge pool clean water safe mineral affluent safe.

Speaker Change: <unk> gas and recoverable heat energy.

Speaker Change: Our technology is designed to handle traditional ways, such as biosolids landfill leachate oily sludge bone Fractionate mill.

Speaker Change: Military ways and organic industrial ways as well as emerging contaminants such as P boss.

Speaker Change: Pesticides and micro plastics from municipal federal and industrial waste streams.

Speaker Change: We have made substantial progress in our aerospace product development activities and has seen material improvements in our technology as we continue along the path towards commercialization.

Chris Gannon: Recent improvements have enhanced system reliability, precision, and efficiency, which we believe have prepared us for large scale deployment. Based on the testing conducted at Merrill Brothers for the past 18 months, we upgraded our reactor design to broaden its capabilities, upgrade our intake feed process to harden and improve reliability under severe conditions, improved and distributed our electrical systems to be simpler and more reliable, and upgraded trim fueling and temperature control systems for precise process control, enabling the AERSCO system to operate at steady state when processing waste. These improvements were all aimed at simplifying operations and improving reliability.

Speaker Change: Recent improvements have enhanced system reliability precision and efficiency, which we believe has prepared us for large scale deployment.

Speaker Change: Based on the testing conducted at marrow brothers for the past 18 months, we upgraded our reactor design to broaden its capabilities.

Speaker Change: Upgrade our intake feed process to harden and improve reliability under severe conditions improved and distributed our electrical systems to be simpler and more reliable and upgraded trim fueling and temperature control systems for precise.

Speaker Change: <unk> control, enabling the air square assistant to operate at steady state when processing waste.

Speaker Change: These improvements were all aimed at simplifying operations and improving reliability.

Chris Gannon: With this progress, the AERSCO system has been moved to Orlando to begin demonstrating its capabilities to process sludge for an extended duration under a full load while being fed online directly from Orlando's wastewater treatment facility. In addition to sludge processing, we will also conduct demonstrations processing other PFAS contaminated materials, including AFFF. We are now integrating our system into Orlando's operations.

Speaker Change: With this progress the aerospace system has been moved to Orlando to begin demonstrating its capabilities to process sludge for an extended duration <unk> with full load while being fed online directly from orlando's wastewater treatment facility in.

Speaker Change: In addition to sludge processing, we will also conduct demonstrations processing other P fast contaminated materials, including a triple out.

Speaker Change: We are now integrating our system into Orlando's operations, and I will discuss our Orlando deployment more fully later in this call.

Chris Gannon: and I will discuss our Orlando deployment more fully later in this call.

Chris Gannon: We currently plan to offer four commercial-scale air suos models to meet the construction capacity needs we see across our municipal, federal, and industrial end markets. Our AS-1 is designed to process up to one metric ton of wet waste per day. This unit is a highly mobile unit designed for rapid deployment for site cleanup and other emergency services at municipal, federal, and industrial facilities. Over the short term, we intend to utilize this highly mobile unit to perform on-site short duration destruction demonstrations throughout the U.S. Our AS-6 is designed to process up to six metric tons of wet waste per day and is also mobile.

Speaker Change: We currently plan to offer for commercial scale Air Squoze models to meet the destruction capacity needs, we see across our municipal federal and industrial end markets.

Speaker Change: Our E. S. One is designed to process up to one metric ton of wet waste per day. This unit is a highly mobile unit designed for rapid deployment for site cleanup and other emergency services at municipal federal and industrial facilities.

Speaker Change: Over the short term, we intend to utilize this highly mobile unit to perform onsite short duration destruction demonstrations throughout the U S.

Speaker Change: <unk> six is designed to process up to six metric tons of wet waste per day and it was also mobile.

Chris Gannon: The AS-6 will service small municipal and industrial wastewater and water treatment plants and federal agency sites. Our AS30 is designed to process up to 30 metric tons of wet waste per day, and will be semi-permanent. We believe the AS30 will generate strong demand within our municipal and industrial segments who process upwards of 6 million gallons per day of wastewater, and we envision this unit to be ideal for regional TSDFs and landfills. Our AS100 is designed to process up to 100 metric tons of wet waste per day and will be a permanent installation. We believe the AS100 will be ideal for large or regional municipal and industrial facilities.

Speaker Change: Yeah, six will service small municipal and industrial wastewater and water treatment plants and federal agency sites.

Speaker Change: Our S. 30 is designed to process up to 30 metric tons of wet waste per day.

Speaker Change: Will it be semi permanent.

Speaker Change: We believe the a S 30 will generate strong demand within our municipal and industrial segments, who process upwards of 6 million gallons per day of wastewater and we envision this unit to be ideal for regional T. S D ops and landfills.

Speaker Change: Our S. 100 is designed to process up to 100 metric tons of wet waste per day and will be a permanent installation.

Speaker Change: We believe the S 100 will be ideal for large or regional municipal and industrial facilities.

Chris Gannon: The AS100 is a bespoke system which we will design based on specific customer needs.

Speaker Change: The S 100 is a disposal system, which we will design based on specific customer needs.

Chris Gannon: Now let's turn to the wastewater treatment and destruction market. We believe the global market opportunity for our AERSCO waste destruction technology to be measured in the hundreds of billions of dollars. While the global market is truly massive, we consciously decided to focus our efforts on cultivating the U.S. market first and have pulled back from international engagement at this time. With this in mind, we have a robust pipeline of municipal, federal, and industrial opportunities worth approximately $1.6 billion and growing. As public awareness of emerging contaminants grows, traditional technologies focused on waste removal, such as land application, landfill, incineration, deep well injection, and hauling and storage, which changed the market decades ago, are now increasingly viewed as insufficient as they only move the problem and liability from one medium, one geography, and one organization to another.

Speaker Change: Now, let's turn to the wastewater treatment and destruction market, we believe the global market opportunity for our air slow waste destruction technology to be measured in the hundreds of billions of dollars.

Speaker Change: While the global market is truly massive we consciously decided to focus our efforts on cultivating the U S market first and have pulled back from international engagement at this time.

Speaker Change: With this in mind, we have a robust pipeline of municipal federal.

Speaker Change: And then industrial opportunities worth approximately $1 6 billion and growing.

Speaker Change: There's public awareness of emerging contaminants grows traditional technologies focused on waste renewable such as land application landfill incineration deep well injection and hauling and storage, which changed the market decades ago are now increasingly viewed as.

Speaker Change: Insufficient because they only moved the problem in liability from one medium.

Speaker Change: One geography, and one organization to another.

Chris Gannon: We believe our commercial scale AIRSQO system will offer a comprehensive and final solution for the most challenging organic wet waste. This elegant, effective process is designed to eliminate organic waste, preventing toxins from entering our lands, waters, and bodies. From a cost perspective, we believe our technology is competitive with current waste removal alternatives when concerning all cradle-to-grave costs, including future liabilities. Legal settlements and federal remediation budgets indicate substantial financial obligations associated with these liabilities. Recent EPA regulations, state mandates. and the bipartisan concerns over emerging contaminants ensure that stricter and more robust disposal practices and requirements will continue regardless of the November election.

Speaker Change: We believe our commercial scale air Squoze system will offer a comprehensive and final solution for their most challenging organic wet ways.

Speaker Change: This elegant effective processes designed to eliminate organic waste preventing toxins from entering our lands waters and bodies.

Speaker Change: I'm a cost perspective, we believe our technology is competitive with current waste removal alternatives when concerning all cradle to grave costs, including future liabilities.

Speaker Change: Legal settlements and federal remediation budgets indicate substantial financial obligations associated with these liabilities.

Speaker Change: Recent EPA regulations state mandates.

Speaker Change: And the bipartisan concerns of our emerging contaminants ensure that stricter and more robust disposal practices and requirements will continue.

Speaker Change: Regardless of the November election. These developments are accelerating the transition, which was already well underway to emerging commercial scale destruction solutions like our <unk> system.

Chris Gannon: These developments are accelerating the transition, which was already well underway, to emerging commercial scale destruction solutions like our air flow system.

Chris Gannon: With this background in mind, let's discuss the markets in which we participate. First, the $120 billion U.S. Municipal Wastewater and Drinking Water Management Market, which includes over 16,000 wastewater plants that treat 34 billion gallons of wastewater daily and produce 87,000 wet tons of sludge daily. Approximately 200 water utilities which produce 4 billion cubic feet or 29 billion gallons of spent GAC or ion exchange resin annually, 950 municipal landfills, which produce leachate that is discharged to wastewater treatment plants. and more than 52,000 state and local firefighting units, which are storing millions of gallons of toxic firefighting foam called AFFF.

Speaker Change: With this background in mind, let's discuss the markets in which we participate.

Speaker Change: First the 120 billion U S municipal wastewater and drinking water management market.

Speaker Change: Which includes over 16000 wastewater plants that treat 34 billion gallons of wastewater daily and produce 87000 wet tons of sludge daily.

Speaker Change: Approximately 200 water utilities, which produced 4 billion cubic feet.

Speaker Change: Our 29 billion gallons of spent gap or ion exchange resin annually.

Speaker Change: 950 municipal landfills, which produce leachate that is discharged to wastewater treatment plants.

Speaker Change: And more than 52000 state and local firefighting, yes, which are storing millions of gallons of toxic firefighting foam.

Speaker Change: Called a triple left.

Chris Gannon: All these sectors have waste streams, which must be disposed of or destroyed.

Speaker Change: All of these sectors have waste streams, which must be disposed of or destroyed.

Speaker Change: Second the 15 billion U S. Federal waste management market includes 715 D. O D sites 50 D O E sites and 150 airports under the oversight of the F E E.

Chris Gannon: Second, the $15 billion U.S. Federal Waste Management Market includes 715 DOD sites, 50 DOE sites, and 150 airports under the oversight of the FAA. These agencies have stockpiles of waste streams such as AFFF firefighting foam, chemicals, narcotics, biosolids, and other waste which must be treated, stored, or destroyed. To highlight the magnitude of the issue, the federal government recently appropriated $400 million to clean up Peace Air Force Base in New Hampshire. This is only one of 715 DOD sites which require cleanup. In fact, industry experts have estimated DOD cleanup alone will cost $250 billion, and we believe this number could grow materially over time.

Speaker Change: These agencies have stockpiles of waste streams, such as a triple left firefighting foam chemicals, narcotics, biosolids, and other waste, which must be treated stored or destroyed.

Speaker Change: To highlight the magnitude of the issue the federal government recently appropriated for $100 million to clean up piece Air Force base in New Hampshire.

Speaker Change: This is only one of 715, Dod sites, which require cleanup.

Speaker Change: In fact industry experts have estimated D O D cleanup alone will cost 250 billion and.

Speaker Change: And we believe this number could grow materially over time.

Chris Gannon: Third, the $80 billion U.S. industrial waste management market includes a diverse group of industries from landfills and oil and gas to healthcare and battery manufacturing verticals. Industrial manufacturing facilities generate tons and tons of organic waste annually that are either pre-treated on-site and discharged to wastewater treatment plants, treated and directly discharged into our water bodies, or transported off-site for expensive treatment and disposal of final residuals. Downstream handlers and disposal facilities are now beginning to reject waste material because of the increasing threat of liability and remediation costs. There currently is no final and permanent destruction solution for these waste streams. Our goal is to be that solution.

Speaker Change: Third the 80 billion U S industrial waste management market includes a diverse group of industries from landfills in oil and gas to health care in battery manufacturing verticals.

Speaker Change: Industrial manufacturing facilities generate tons and tons of organic waste annually that are either pretreated onsite and discharge to wastewater treatment plants treated it indirectly discharged into our water bodies or transfer it off site.

Speaker Change: Pensive treatment and disposal of final residuals downstream handlers and disposal facilities are now beginning to reject waste material because of the increasing threat of liability and remediation costs.

Speaker Change: There are currently has no final and permanent destruction solution for these waste streams. Our goal is to be that solution.

Chris Gannon: While the industrial market is a broad category, we are actively pursuing opportunities within the landfill leachate, oil and gas, pharmaceutical and battery markets. We recently highlighted the applicability of our technology in the Pharmaceutical Industry and Lithium-Ion Battery Manufacturing and Recycling Industry. Together, these two industries represent a market opportunity of more than one billion annually in the U.S. alone.

Speaker Change: While the industrial market is a broad category, we are actively pursuing opportunities within the landfill leachate oil and gas pharmaceutical and battery markets.

Speaker Change: We recently highlighted the applicability of our technology.

Speaker Change: In the pharmaceutical industry in lithium ion battery manufacturing and recycling industry.

Speaker Change: Together. These two industries represent a market opportunity of more than 1 billion annually in the U S alone.

Chris Gannon: During future calls, we will further elaborate on the opportunities we are pursuing within the industrial market segment.

Speaker Change: During future calls we will further elaborate on the opportunities we are pursuing within the industrial market segment.

Speaker Change: Fourth the U S treatment storage and disposal facility or T. S. D F market and includes more than 860 or see our a operating permitted sites in the U S. This market consists of independent service providers, who offer waste disposal solutions to the broader market.

Chris Gannon: Fourth, the U.S. Treatment, Storage, and Disposal Facility, or TSDF, market includes more than 860 RCRA-operating permitted sites in the U.S. This market consists of independent service providers who offer waste disposal solutions to the broader market. Private companies with their own on-site disposal technologies and military sites. TSDF storage techniques include containers, tanks, drip pads, and waste piles. TSDF treatment techniques include various processes, such as blending, neutralizing, incinerating, and land treatment, which are designed to make waste less hazardous, alter its composition, or outright destroy it. And TSDF waste disposal methods include landfilling, deep well injection, and outright storage.

Speaker Change: Private companies with their own onsite disposal technologies and military sites.

Speaker Change: T S. T F storage techniques include containers tanks, drip pads and waste piles.

Speaker Change: He SDF treatment techniques include various processes, such as blending neutralizing incinerating inland treatment, which are designed to make waste less hazardous alter its composition or outright destroy it and T. S. D. F waste disposal methods include landfilling deep.

Speaker Change: Well injection and outright storage.

Chris Gannon: Customers in all three markets that we target, municipal, federal, and industrial, work with TSDFs across the U.S. for certain ways, at times exclusively.

Speaker Change: Customers in all three markets that we target municipal federal and industrial work with T. S. The apps across the U S for certain ways at times exclusively.

Chris Gannon: Now let's turn to our near-term areas of focus. During our Q1 call, we discussed our intention to meet our contractual obligations within the municipal and federal markets. commercialize AirSquo and expand our market opportunities. Secure Strategic Disposal Facility Partnership. expand our team. and expand our laboratory, engineering and manufacturing operations.

Speaker Change: Now, let's turn to our near term areas of focus.

Speaker Change: During our Q1 call we discussed our intention to meet our contractual obligations within the municipal and federal markets.

Commercial wise are slow and expand our market opportunities.

Speaker Change: Secure strategic disposal facility partnerships.

Speaker Change: Expand our team.

Speaker Change: And expand our laboratory engineering and manufacturing operations.

Chris Gannon: First, let's turn to our intentions to meet our contractual obligations. On the municipal side, we are contracted to perform waste destruction demonstrations with the City of Orlando Water Reclamation Division, which is the fifth largest wastewater facility in Florida, and Orange County Sanitation District, the third largest wastewater treatment facility in California. On the federal side, we have signed waste destruction demonstration contracts with multiple federal agencies, which must be completed during 2024 and 2025. As mentioned earlier, we've deployed our air flow systems in the City of Orlando's Iron Bridge Water Pollution Control Facility, and our technology is now on site.

Speaker Change: First let's turn to our intentions to meet our contractual obligations.

On the municipal side, we are contracted to perform waste destruction demonstrations with the city of Orlando water Reclamation Division.

Speaker Change: Which is the fifth largest wastewater facility in Florida, and Orange County, Sanitation district, the third largest wastewater treatment facility in California.

Speaker Change: On the federal side, we have signed waste destruction demonstration contracts with multiple federal agencies.

Speaker Change: Which must be completed during 2024 and 2025.

Speaker Change: As mentioned earlier, we've deployed our air square assistant of the city of Orlando's Iron Bridge water pollution control facility and our technology is now on site.

Chris Gannon: Our team has begun integrating our technology into Orlando's operations, a process estimated to take four to six weeks. Note, we have shared pictures of the Orlando facility and our technology on site through social media. during our Orlando residency. We are planning a seven month full scale demonstration where we will process biosolids as well as complete several previously announced federal agency PFAS destruction demonstrations.

Speaker Change: Our team has begun integrating our technology into Orlando's operations, a process estimated to take four to six weeks.

Note, we have shared pictures of the Orlando facility, and our technology onsite through social media.

Speaker Change: During our Orlando residency.

Speaker Change: We are planning a seven month, both scale demonstration, where we will process bio solids as well as complete several previously announced federal agency P fast destruction demonstrations.

Chris Gannon: We will provide updates once our system is operational. 374Water is also building a second air flow system for delivery to Orange County Sanitation in 2025. Prior to this deployment, we will complete a factory acceptance test and, upon delivery, the system will undergo a six-month operational period managed by 374Water engineers. followed by another six-month operational period managed by OCSAN staff. Following our successful demonstrations, the City of Orlando and OCSAN have announced their intentions to upgrade to our larger AS30 system and have already secured relevant funding. Following the AS-30 installations, OC-SAN also intends to purchase multiple AS-100 units to manage waste for their entire plant.

Speaker Change: We will provide updates once our system is operational.

Speaker Change: 374 water is also building a second aerospace system.

Speaker Change: For delivery to Orange County, sanitation in 2025 prior.

Speaker Change: Prior to this deployment, we will complete a factory acceptance test and upon delivery.

Speaker Change: System will undergo a six month operational period managed by 374 water engineers.

OCC: <unk> by another six month operational period managed by OCC and staff.

OCC: Following our successful demonstrations the city of Orlando and Oc San have announced their intentions to upgrade to our larger a S 30 system and have already secured relevant funding.

OCC: Following the a F 30 installations.

OCC: C. San also intends to purchase multiple a S 100 units to manage waste for their entire plan.

Chris Gannon: The city of Orlando has expressed a similar intent. These municipal and federal destruction demonstrations mark important milestones in our efforts to advance our air flow technology and serve as critical proof points on the efficacy of our technology. We also believe these demonstrations will generate even further demand across our municipal, federal, and industrial market segments.

OCC: The city of Orlando has expressed a similar in town.

OCC: These municipal and federal destruction demonstrations Mark important milestones in our efforts to advance our aerospace technology and serve as a critical proof points on the efficacy of our technology.

OCC: We also believe these demonstrations will generate even further demand across our municipal federal and industrial market segments.

Chris Gannon: Second, we are focused on commercializing our AERSQLO technology and expanding its use case. To this end, we are building additional air school units to increase the pace of waste destruction demonstrations and accelerate our technology development efforts across waste streams. To be clear, my mandate over the next 12 to 18 months is to commercialize our AeroScope system. We are currently building a second AS6 earmarked for OC-SAN and have plans to build a third to complete other large-scale demonstrations and extended customer residencies. We are also building our first mobile AS1 unit and plan to begin building a second in the near term.

OCC: Second we are focused on commercializing our air square technology in expanding its use case.

OCC: To this end we are building additional air school units to increase the pace of wastes destruction demonstrations and accelerate our technology development efforts across all waste streams.

OCC: To be clear my mandate over the next 12 to 18 months is to commercialize our aerospace system.

OCC: We are currently building a second asics earmarked for Oc, Sam and have plans to build a third to complete other large scale demonstrations and extended customer residencies.

OCC: We are also building our first mobile as one unit and plan to begin building a second in the near term.

Chris Gannon: Until now, our capacity to complete waste destruction demonstrations has been limited due to having only one AERSCO system. The construction of these AS-1 units will help reduce the spottle neck, allowing us to more rapidly conduct waste destruction demonstrations across our market vertical. In addition, we plan to begin designing the AS30 unit in 2024 and hope to begin manufacturing our first unit sometime in 2025. We currently envision the first two AS-30 units will be earmarked for the City of Orlando and OC-San. Though we are also fielding interest from other industry participants across these larger capacity units as well.

OCC: Until now our capacity to complete waste destruction demonstrations has been limited due to having only one air school system.

Speaker Change: The construction of these E. S. One units will help reduce this bottleneck, allowing us to more rapidly conduct waste destruction demonstrations across our market verticals.

Speaker Change: In addition, we plan to begin designing the a F 30 unit in 2024 and hope to begin manufacturing our first unit sometime in 2025.

Speaker Change: We currently envision the first two F 30 units will be earmarked for the city of Orlando and Oc Sam.

Speaker Change: So we're also fielding interest from other industry participants across these larger capacity units as well.

Speaker Change: Our air score system also includes pre treatment and post treatment solutions.

Chris Gannon: Our AERSCO system also includes pre-treatment and post-treatment solutions. These solutions include dewatering, buffering, and pH control, to name a few features. These solutions ensure our air flow system receive waste in the right form for ease of processing and destruction. As we encounter new forms of waste, the pre- and post-treatment processes may be adjusted or refined.

Speaker Change: These solutions include dewatering buffering and ph control to name a few features.

Speaker Change: These solutions and ensure our air slow system received waste in the right form for ease of processing and destruction.

Speaker Change: As we encounter new forms of waste.

Speaker Change: The pre and post treatment processes may be adjusted or refined.

Chris Gannon: Finally, our laboratory has been extremely active, completing a wide range of aerosol treatability studies across industries. Our lab has been so busy, in fact, we made the decision to more than double our lab and testing capacity. We use our lab-based AERSQLO system to qualify the treatability of waste streams and the process parameters for our commercial-scale AERSQLO system. In addition to being a vital R&D tool, this is a revenue-generating business for our company and our initial sales tool for demonstrating the capabilities of our AERSQLO technology.

Speaker Change: Finally, our laboratory has been extremely active completing a wide range of error squoze credibility studies across industries.

Speaker Change: Our lab has been so busy in fact, we made the decision to more than double our lab and testing capacity.

Speaker Change: We use our lab based aerospace system to qualify the treaty ability of waste streams in the process parameters for our commercial scale aerospace system.

Speaker Change: In addition to being a vital R&D tool. This is a revenue generating business for our company and.

Speaker Change: And our initial sales tool for demonstrating the capabilities of our aerospace technology.

Chris Gannon: Third, we are in active discussions with TSDF partners to build our destruction as a service business. Our strategy here is multifold. First, we seek to create partnerships with independent service providers in relevant geographies across the U.S. These entities not only hold the necessary federal and state non-hazardous and hazardous waste permits, but also accept millions of gallons or tons of waste every year from customers in our three markets. We believe these onsite deployments could secure joint long-term recurring revenue opportunities for our destruction as a service business and our TSDF partners. Second, we seek to partner with private companies that operate their own permitted disposal technologies.

Speaker Change: Third we are in active discussions with T. S D up partners to build our destruction as a service business.

Our strategy here is multi fold.

Speaker Change: First we seek to create partnerships with independent service providers and relevant junior Agra fees across the U S.

Speaker Change: These entity is not only hold the necessary federal and state non hazardous and hazardous waste permits, but also except millions of gallons or tons of waste every year from customers in our three markets.

Speaker Change: We believe these onsite deployments could secured joint long term recurring revenue opportunities for our destruction as a service business and our T. S. D F partners.

Second we seek to partner with private companies that operate their own permitted disposal technologies.

Chris Gannon: Increasingly, chemical, petroleum, pesticide, pharmaceutical, semiconductor, and other heavy industrial manufacturers operate their own disposal facilities and technologies to save cost, limit liability, and increase sustainability. We believe our waste destruction technology could be appealing to this subset of customers also. As we move forward, there are multiple revenue models we will explore in this sub-vertical. The deployment to TSDS also allows us to test and demonstrate our air flow technology on additional hazardous waste streams we would otherwise be unable to process. In addition, this will enable us to work in concert with our TSDF partners and local, state, and federal regulators transparently, especially for highly sensitive waste like certain military waste.

Speaker Change: Increasingly chemical petroleum pesticide pharmaceutical semiconductor and other heavy industrial manufacturers.

Speaker Change: Operator, our own disposal facilities technologies to save cost limit liability and increase sustainability.

Speaker Change: We believe our waste destruction technology could be appealing to this subset of customers also.

Speaker Change: As we move forward there are multiple revenue models, we will explore in this sub vertical.

Speaker Change: Theres, a falling out to T. S. D. S. Also allows us to test and demonstrate our air square technology on additional hazardous waste streams, we would otherwise be unable to process.

Speaker Change: In addition, this will enable us to work in concert with our T. S Yep partners and local state and federal regulators transparently, especially for highly sensitive wastes like certain military ways.

Chris Gannon: Further, these deployments should also enable us to develop bespoke air flow systems to meet their specific customer needs. Finally, the emergence of the PFAS Forever Chemicals Destruction Market, for example, the destruction of AFFF, GAC, IX, to name just a few, is a tailwind which should increase demand for destruction technology at TSDF sites, as certain customers will require waste destruction to take place at these permitted facilities.

Speaker Change: Further these deployments should also enable us to develop the spoke aerospace systems to meet their specific customer needs.

Speaker Change: Finally, the emergence of the P fast forever chemicals destruction market for example, the destruction of a triple S. Gag I ask to name just a few as a tailwind which should increase demand for destruction technology at T. S. T upsides.

Speaker Change: As certain customers will require wastes disruptions that take place at these permitted facilities.

Chris Gannon: Fourth, we are investing in our personnel across our organization to increase the pace of technology innovation and accelerate product commercialization. We recently bolstered the leadership team with the addition of Debbie Cooper, our Chief Administrative Officer and Chief of Staff. Deb has tremendous experience building and transforming organizations and has been a great asset in helping us create more structure across our operations. as well as building out our strategic plan to enhance our ability to execute on our obligations while scaling operations to exploit new ones.

Speaker Change: Fourth we are investing in our personnel across our organization to increase the pace of technology innovation and accelerate product commercialization.

Speaker Change: We recently bolstered the leadership team with the addition of Debbie Cooper, our Chief administrative officer and Chief of staff.

Speaker Change: Deb has tremendous experience building and transforming organizations and has been a great asset in helping us create more structure across our operations.

Speaker Change: As well as building out our strategic plan to enhance our ability to execute on our obligations, while scaling operations to exploit new ones.

Chris Gannon: I would also like to announce and welcome Pete Mandel as the newest member of our leadership team. Pete is joining the organization as our full-time in-house general counsel and will be starting with us on August 19th. Pete brings deep experience in corporate and securities law, serving in multiple general counsel roles, along with extensive experience working in big law. He will be a key advisor to our business and member of our leadership team as we continue to build our business, secure strategic partnerships, and execute on our initiatives.

I would also like to announce and welcome Pete Mandel as the newest member of our leadership team.

Speaker Change: It is joining the organization as our full time in house General Counsel and will be starting with US on August 19.

Speaker Change: Pete brings deep experience in corporate and securities laws, serving in multiple general counsel rolls.

Speaker Change: Along with extensive experience working in big law.

He will be a key advisor to our business and member of our leadership team as we continue to build our business secure strategic partnerships and execute on our initiatives.

Chris Gannon: I would like to thank Jeff Quick, who has served in both GC and interim CEO roles. for all his contributions to our company over the past two years. Jeff will be providing an extended transition period with Pete to ensure continuity.

Speaker Change: I would like to thank Jeff quick who has served in both G C and interim CEO roles for all his contributions to our company over the past two years.

Speaker Change: Jeff will be providing an extended transition period with Pete to ensure continuity.

Chris Gannon: In addition, we initiated a search for a Chief Technology Officer, which is an important new position at 374Water. The CTL will be charged with scaling our research, development, and engineering organization to bring an added structure to our company and accelerate our technology development and commercialization process. We have partnered with Spencer Stewart to assist us in securing the right CTO. Additionally, we are actively recruiting engineers, field personnel, lab technicians, and manufacturing talent to more rapidly commercialize our technology, complete technology demonstrations, and engineer and build additional systems of various sizes.

Speaker Change: In addition, we initiated a search for a chief Technology Officer, which is an important new position at $3 74 water.

The C T L will be charged with scaling our research development and engineering organization to bring the added structure to our company and accelerate our technology development and commercialization process.

Speaker Change: We have partnered with Spencer Stuart to assist us in securing the right C T O.

Additionally, we are actively recruiting engineers field personnel lab technicians and manufacturing talent to more rapidly commercialize our technology complete technology demonstrations and engineer and build additional systems of various sizes.

Chris Gannon: Finally, we are expanding our engineering, manufacturing, and laboratory facilities to support our enhanced pace of technology development and product commercialization, as well as to better serve our customers. We recently completed our residency at the Merrill Brothers HQ in Kokomo, Indiana, where we were not only actively running, developing and demonstrating our AERSCO technology, but also manufacturing our AERSCO system and dewatering skids. As part of our deployment to Orlando, we secured a short-term lease on a significantly larger dedicated manufacturing facility nearby to continue the construction of our second AS-6 unit, as well as begin manufacturing a highly mobile AS-1.

Speaker Change: Finally, we are expanding our engineering manufacturing and laboratory facilities to support our enhanced pace of technology development and product commercialization as well as to better serve our customers.

Speaker Change: We recently completed a residency at the marrow brothers HQ in Kokomo, Indiana, where we were not only actively running developing and demonstrating our air score technology, but also manufacturing our <unk> system and the watering skids.

Speaker Change: As part of our deployment Orlando, we secured a short term leased on a significantly larger dedicated manufacturing facility nearby.

Speaker Change: To continue the construction of our second a S. Six unit as well as begin manufacturing a highly mobile a S. One.

Chris Gannon: We will remain here until early next year when we plan to secure an even larger facility to house our core engineering and manufacturing operations. We also previously announced our intention to double the size and capacity of our lab operations. and we will be accomplishing this with our move to a new facility in September. This expansion includes the addition of a new AERSCO system, as well as new service offerings, which will enable us to broaden our capabilities and provide faster results for our growing list of clients. In addition, we believe this expansion will allow us to more rapidly validate the effectiveness of our airscope technology across a broad range of organic waste streams to further expand the application use case.

Speaker Change: We will remain here until early next year, when we plan to secure an even larger facility to house, our core engineering and manufacturing operations.

We also previously announced our intention to double the size and capacity of our lab operations.

Speaker Change: And we will be accomplishing this with our move to a new facility in September.

Speaker Change: This expansion includes the addition of a new Air School system as well as new service offerings, which will enable us to broaden our capabilities and provide faster results for our growing list of clients.

Speaker Change: In addition, we believe this expansion will allow us to more rapidly validate the effectiveness of our air square technology across a broad range of organic waste streams to further expand the application use case.

Chris Gannon: We are actively working on optimizing our operational efficiencies and exploring new market opportunities, all aimed at long-term value creation while remaining steadfast in our commitment to innovation and excellence.

Speaker Change: We are actively working on optimizing our operational efficiencies and exploring new market opportunities all aimed at long term value creation, while remaining steadfast in our commitment to innovation and excellence.

Chris Gannon: A primary financial goal for the company is to extend its runway while scaling the business. During our future earnings calls, we will provide further updates on our near-term strategic activities, as well as provide a more in-depth discussion of our long-term strategy and playbook process. While we have a lot of work to do, the future is truly bright. And I'm excited to be here.

Speaker Change: A primary financial goal for the company is to extend its runway while scaling the business.

Speaker Change: During our future earnings calls, we will provide further updates on our near term strategic activities as well as provide a more in depth discussion of our long term strategy and playbook process.

Speaker Change: While we have a lot of work to do the future is truly bright and I'm excited to be here with that I will turn the call over to Adrian to update you on our financials.

Adrienne Anderson: With that, I will turn the call over to Adrienne to update you on our financial Thank you, Chris. Today, I'll discuss our financial results for the second quarter of 2024, which reflect our business evolution as we begin scaling our business and enhancing our financial position. I'll touch on a few key matrix for the first half of 24. During the first half of the year, the company generated revenue of $352,000 compared to $851,000 for the six months of 2023. As we start to reach the end of the assembly and fabrication work on our sold unit, our direct cost decline, which have a direct correlation toward decline in revenue of $499,000 in the first half of 24 compared to 23.

Adrian: Thank you Chris.

Adrian: Today I'll discuss our financial results for the second quarter of 'twenty, 'twenty, four which reflects our business evolution as we began scaling our business and enhancing our financial position.

Adrian: I'll touch on a few key matrix for the first half of 'twenty four.

Adrian: During the first half of the year the company generated revenue of $352000 compared to $851000 for the six months of 2020 three.

As we start to reach the end of the assembly and fabrication work on are sold unit.

Adrian: Our direct cost decline, which have a direct correlation to our decline in revenue.

Adrian: $499000 in the first half of 'twenty four compared to 23.

Adrienne Anderson: This is based on our percentage of completion revenue recognition method. Further, during the second quarter, we focused our attention on deploying our owned Aresquo unit to the City of Orlando for the waste destruction demonstrations previously discussed. 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, an increase in our general and administrative expenses of approximately $250,000, and an increase in our professional fees of approximately $677,000. The increases in our research and development and general and administrative expenses stem from our continued effort to commercialize our air flow system and our strategic growth plan to ensure we have sufficient personnel and an executive team to support our expected growth.

Adrian: This is based on our percentage of completion revenue recognition method.

Adrian: Further during the second quarter, we focused our attention on the coin are owned Eric quote unit to the city of Orlando for the waste destruction demonstrations previously discussed.

Adrian: Total operating expenses increased from $3 5 million in the first half of 'twenty three to $4 9 million in the first half of 'twenty four.

Adrian: Driven primarily by an increase in our research and development expenses of approximately $474000.

Adrian: An increase in our general and administrative expenses of approximately $250000.

Adrian: And an increase in our professional fees of approximately $677000.

Adrian: The increases in our research and development and general and administrative expenses.

Adrian: And from our continued effort to commercialize our air School system and our strategic growth plan to ensure we have sufficient personnel and an executive team to support our expected growth.

Adrienne Anderson: The increase in our professional fees are primarily non-reoccurring expenses related to the settlement of a legal matter and changes in our executive leadership and board of directors that occurred during the quarter ended June 30th, 24. As of June 30, 2024, we have a 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 rising from the normal course of business.

Adrian: The increase in our professional fees are primarily non reoccurring expenses related to the settlement of a legal matter and changes in our executive leadership and board of directors that occurred during the quarter ended June 30 of 'twenty four.

Adrian: As of June 30th 24, we have a working capital of $7.2 million, consisting of $8 $8 million of current assets comprise.

Comprised primarily of cash receivables and inventory.

Adrian: Offset by $1.5 million of current liabilities comprised of accounts payable and accrued expenses.

Rising from the normal course of business.

Adrienne Anderson: We currently have no outstanding debt obligation.

Adrian: We currently have no outstanding debt obligations.

Chris Gannon: With that, I will turn the call back over to Chris. Thanks, Adrienne.

Speaker Change: With that I will turn the call back over to Chris.

Speaker Change: Thanks, Adrian we would like to move to Q&A.

Operator: We would like to move to Q&A. Thank you. Ladies and gentlemen, the floor is now open for your questions. If you have any questions or comments, please press star one on your telephone at this time. If you wish to remove your questions, you may press start. We ask that while posing your question, you please pick up your handset, if on speakerphone, to provide optimum sound quality. Please hold while we poll for questions.

Chris Gannon: Thank you ladies and gentlemen, the floor is now open for your questions.

Speaker Change: If you have any questions or comments. Please press star one on your telephone at this time if.

Speaker Change: If you wish to remove your question you May press Star two.

Speaker Change: We ask the wild posing your question you. Please pickup your handset if on speaker phone to provide optimum sound quality.

Speaker Change: These hold while we poll for questions.

Thank you.

Tate Sullivan: Our first question is coming from Tate Sullivan with Maxim Group. Your line is Thank you. Thank you. And thank you for the comments. Can you talk about what what you liked about Orlando, in terms of moving the first system to be deployed in Orlando and then also delete space there? Did you also look at other states or other cities?

Speaker Change: Our first question is coming from Tate Sullivan with Maxim Group Your line is life.

Speaker Change: Thank you. Thank you and thank you for the comments.

Speaker Change: You talk about what what you liked about Orlando in terms of moving the first system to be deployed in Orlando and then also the lease space. There did you also look at other states or other cities as well. Please yeah. Yeah, yeah. It's a great great question. So when we were looking at.

Chris Gannon: Yeah, yeah, great, great question.

Chris Gannon: So when we were looking at deploying our technology, we were initially contemplating and had announced previously that we were going to move to out to California, and it's specifically Orange County sanitation. The reality is, is that the. facility or our relationship with with, you know, going down to Florida was was such that we were actually able to perform other tests, not just biosolids tests at that facility. So for us, it was much more optimal at this stage to go there to complete those tests.

Speaker Change: Playing our technology, we were initially contemplating and it hadn't had announced previously that we were going to move too far out to California, and it's specifically Orange County sanitation.

Speaker Change: The reality is is that the.

Speaker Change: Facility or our relationship with them.

Speaker Change: With going down to a.

Speaker Change: Florida was was such that we were actually able to perform other tests not just biosolids tests at that facility. So for US. It was much more optimal at this stage to go there to complete those tests.

Chris Gannon: In conjunction with that, because we were busting at the seams in terms of our manufacturing, needing more space, we also chose to move down our manufacturing operations for the time being down to the Orlando area to continue to build out units. Ultimately, we are looking at multiple other geographies for our much larger manufacturing facility, though we have not made any decision there yet. And you mentioned the two inputs for the Orlando unit in terms of biosolids and PFOS tests. How will that work? Will you have to unhook the unit from the biosolids stream and then do it on biosolids or combine the inputs?

Speaker Change: In conjunction with that because.

Speaker Change: Because we were busting at the seams in terms of our manufacturer needing more space. We also chose to move down.

Speaker Change: Our manufacturing operations for the time being down to.

Speaker Change: The Orlando area to continue to build out units.

Speaker Change: Ultimately we are looking at multiple other geographies for our much larger manufacturing facility, though.

Speaker Change: We have not made any decision there yet.

Speaker Change: And then on.

Speaker Change: And you mentioned the two inputs for the Orlando.

Speaker Change: In terms of bio solids and T Force tests.

Speaker Change: How will that work well you have to Unhook the unit from from the bio solid stream and then do it on Biopharma, Eric combined the inputs.

Chris Gannon: How will you manage that process with two separate? Yeah, we'll do them in separate tests. Yeah.

Speaker Change: You manage that process with two separate yeah, we'll do them.

Speaker Change: Separate tests, yeah. So we have we'll do biosolids processing and then we will separately.

Chris Gannon: So we'll do biosolids processing and then we'll separately perform these other tests and it's an easy change out in terms of those waste streams. and then you you mentioned some service revenue and I know you're you're developing those that opportunity and more to come but you did have services revenue in the second quarter can you describe what some of that is? Yeah, those are really related to our laboratory test. So we have a very active lab, which we are increasing the size of that quite dramatically, and about to move into a new facility, which is actually going to triple the square feet we have for our lab tests, where we're doing destruction, early destruction demonstrations.

Speaker Change: Perform these other tests and it's an easy change out.

Speaker Change: In terms of that weight those waste streams.

Hugh: Okay, and then Hugh you mentioned, some service revenue and I know Youre youre developing those at that opportunity and more to come but you did have services revenue in the second quarter can you describe.

Hugh: What some of that is true.

Hugh: Yeah, those are really related to our laboratory tests. So we have a very active lab, which we are increasing the size of that.

Speaker Change: Right dramatically on.

Speaker Change: And about to move into a new facility, which is actually going to triple the square feet. We have for our lab tests, where we're doing destruction early destruction demonstrations.

Chris Gannon: And then we move to much larger demonstrations, you know, the commercial scale as necessary. and customers, industrial customers, municipal customers pay you to see how you destroy their material. That's correct. Yeah. So what they're, what they're doing is they're, they're paying us to understand the efficacy or the capability of our air flow system to destroy their waste. And so it's across the board in terms of all of the different markets and verticals that we are pursuing. We are receiving waste streams from them. We bring them on site into our lab, and then we perform these destruction tests, sometimes with them in person, other times, you know, with them remote, but we are doing that and we are seeing an increase, I think, naturally, but a dramatic increase in demand for those types of services.

Speaker Change: And then when you move to much larger demonstrations the commercial scale as necessary.

Speaker Change: And customers industrial customers municipal customers pay you to see how you destroy.

Speaker Change: Theyre material Thats correct. So what they are what they're doing is they're they're paying us too.

Speaker Change: Understand the efficacy or the capability of our air Squoze system to destroy their waste streams.

Speaker Change: And so it's across the board in terms of all of the different.

Speaker Change: Markets and verticals that we are pursuing we are receiving a waste streams from them.

Bring them on site into our lab and then we perform these destruction tests, sometimes with them in person and other times, you know with them remote but we are doing that and we are seeing it.

Speaker Change: Increase I think naturally, but a dramatic increase in demand for those types of services.

Speaker Change: And similar to that when the unit is operational and Orlando will you be paying will CW ob paint for the operating cost for the unit or or will.

Chris Gannon: and similar to that when the unit is operational in Orlando, will you be paying, will FCWO be paying for the operating costs of the unit or will the city of Orlando? Oh, yeah, no, it'll it'll be And then related to that, I noticed shifting the inventory to equipment and process in the quarter. So even when the first unit is operational, will you still retain ownership of that? I can answer that, Chris. We do still maintain ownership of the unit in Orlando and for the foreseeable future. believe that will be an owned asset at this point.

Speaker Change: Or will that municipal Orlando city to Orlando.

Speaker Change: Oh, yeah, no it'll it'll be us.

Speaker Change: Okay.

Speaker Change: And in pain, Okay, and then related to that I notice shifting inventory to equipment and process in the quarter. So even when the when the first unit is operational will you still have retained ownership of that equipment as well.

Speaker Change: Okay, I can answer that Chris.

Speaker Change: We do still maintain ownership of the unit in Orlando and for the foreseeable future.

Speaker Change: I believe that will be it an owned asset at this point.

Chris Gannon: So since we deployed the unit to Orlando, we reclassified the cost of that unit from inventory to a long-term asset.

Speaker Change: So since we deployed the unit to Orlando, we reclassified the cost of that unit from inventory to a long term asset.

Speaker Change: Understood and then last for me and thank you for all the question is you mentioned a lot of.

Chris Gannon: And the last for me, and thank you for all the questions, is you mentioned a lot of indications of interest you would frame, the future units from our from California and Orlando for the larger units, or are they actual contracts at this point? Yeah, so we have direct, direct interest on the, the AirSquad 30s. And, you know, those are all funded at this point.

Speaker Change: The indications that interest you would frame it up.

Speaker Change: The future units from art from California in Orlando for the larger units or are they actual contracts at this point how would you frame.

Speaker Change: Okay.

Speaker Change: Yeah, So we have direct.

Speaker Change: The direct interest on the air Squoze thirties.

Speaker Change: Those are all funded at this point and then we're in discussions with both organizations to move then from that to the much larger.

Tate Sullivan: And then we're in discussions with both organizations to move in from that to the, a much larger, you know, the, the hundreds, AS100 Okay, well, thank you for all that. Yeah, absolutely. Thank you so much for the question. Thank you.

Speaker Change: Hundreds.

Speaker Change: Yes, one hundreds.

Speaker Change: Excellent okay, well, thank you for all the updates.

Speaker Change: Yeah, absolutely. Thank you so much for the questions.

Speaker Change: Thank you once again, if you have any questions or comments. Please press star one on your telephone keypad.

Operator: Once again, if you have any questions or comments, please press star one on your telephone.

Graham Price: Our next question is coming from Graham Price with Raymond James, your line is Hi. Good afternoon. Thanks for taking the questions.

Speaker Change: Our next question is coming from Graham price with Raymond James Your line is live.

Graham Price: Hi, good afternoon, thanks for taking the questions.

Graham Price: So, first one for me, just wondering, for both Orlando and Orange County, I was wondering if you can give a sense of how long the demonstration phase will take before the agency feels ready to move into full-scale deployment. I just wanted to clarify, is that the seven months that you mentioned earlier, or is that a longer time? Yeah, no, exactly. Yeah, thanks for the question. And great to have have you on the call here. Our demonstration with the city of Orlando is that seven month time period. And, you know, during that period, maybe we'll have early indications and they want to jump to, you know, immediately move to the 30.

Speaker Change: So first one for me just wondering for Dural Orlando in Orange County, I was wondering if you can give a sense of how long the demonstration phase will take before the agency feels ready to move into full scale deployment.

Speaker Change: Want to clarify is that the seven months that you.

Speaker Change: You mentioned earlier or is that.

Speaker Change: A longer timeframe.

Speaker Change: Yeah, no exactly yes. Thanks for the question and great to have have you on the call here.

Speaker Change: Our demonstration with the city of Orlando is that seven month time period.

Speaker Change: And during that period, maybe we'll have early indications and they want to jump too.

Speaker Change: You know immediately moved to the 30 <unk>, but yeah, that's the seven months as far as.

Chris Gannon: But yeah, that's the seven months as far as Orange County sanitation, we have to, you know, kind of periods, it's a total of a 12 month demonstration, where we are running the unit ourselves for six months on site. And then it transitions in as we're training up their personnel, it would transition to their personnel running the unit for another six. Again, as we go through those, those demonstrations, you know, we'll be obviously having more active dialogues with both organizations, which may accelerate the development and purchase of the 30. Okay, got it.

Speaker Change: Orange County sanitation, we have to you know kind of periods. It's a total of 12 months demonstration.

Speaker Change: Where we are running the unit ourselves off for six months on site and then it transitions as we're training up their personnel it would transition to their personnel running the unit for another six again as we go through those.

Speaker Change: Demonstrations you know.

Speaker Change: It will be obviously, having more active dialogues with both organizations.

Speaker Change: Which may accelerate the development and in and purchase of the Thirty's.

Okay got it and then maybe along those same lines can.

Chris Gannon: And maybe along those same lines, can you talk about some of the key metrics that that they'll be watching to make those determinations? Well, the throughput and the ability to process waste, the how long it takes between, let's call it down cycles to do any repairs and maintenance and so forth. So they're, they're the key for them is they want to have a technology that is, you know, fit for purpose and that we can schedule maintenance and so forth. And right now we are focused on a, you know, five days on kind of two days off schedule and with with them in the test.

Speaker Change: Can you talk about some of the key metrics that that there'll be watching to make those determinations.

Speaker Change: Well it'll be throughput and the ability to process the waste.

Speaker Change: How long it takes between a let's call it down cycles to do any.

Speaker Change: Repairs and maintenance and so forth. So they're there the key for them is they want to have a technology that is fit for purpose and that we can schedule.

Speaker Change: Maintenance and so forth and right now we are focused on a you know five days on two days off schedule.

Speaker Change: And with with them in the tests.

Chris Gannon: got it understood.

Got it understood.

Chris Gannon: And then maybe lastly, for me, thinking more broadly, wondering how you think about the EPA's regulation of PFAS. how that might change if we see a change in administration. Yeah, great question. I mean, something we talk about internally all the time. I think in many ways the trains left the station on a lot of that, you know, and and when you look at the amount of litigation that's occurring in in the space, you know, and certainly on the industrial side with with Dow and others, you're talking about hundreds and hundreds of billions of dollars of potential awards that will take place.

Then.

Speaker Change: Maybe lastly for me.

Speaker Change: Speaking more broadly I was wondering how you think about.

Speaker Change: About the Epa's regulation of PFS and how that might.

Speaker Change: Change if we see a change in administration.

Speaker Change: Yeah, Great question I mean, it's something we talk about internally all the time I think in many ways. The train's left the station on a lot of that you know.

Speaker Change: And when you look at the amount of litigation that's occurring.

Speaker Change: In the space are you know certainly on the industrial side with with Dow and others, you're talking about hundreds and hundreds of billions of dollars of potential.

Speaker Change:

Speaker Change: Words are that will take place and so for me, while our new administration may slightly change.

Graham Price: And so for me, while a new administration may slightly change the overall, and this is all speculative of course, but the old, you know, the required implementation time period From my perspective, the trains left the station and we're seeing an incredible amount of interest. around our technology to deal with these PFAS contaminants. Got it. Understood. Thank you very much. I'll jump back in the queue. All right. Thanks so much. Thank you.

Speaker Change: The the overall and this is all speculative of course, but Oh.

Speaker Change: The required implementation time period.

Speaker Change: From my perspective, the train has left the station and we're seeing an incredible amount of interest.

Speaker Change: Around our technology to deal with these P fast contaminants.

Speaker Change: Got it understood. Thank you very much I'll jump back in the queue alright. Thanks, so much.

Speaker Change: Thank you.

Jim Hanlon: Our next question is coming from Jim Hanlon, who's a private investor.

Speaker Change: Our next question is coming from Jim Hamlin Who's a private investor Your line is live.

Jim Hanlon: Your line is Thank you for taking questions. My concern is the rate of cash burn doesn't look like it's gonna last more than six months or so. Maybe you could address that issue. Yeah, yeah, for sure. Thanks for the question. And thanks for being on the line here, Jim. Look, we are evaluating our cash, you know, position currently and, and looking at ways to improve that, you know, ultimately, our business, you know, it does, we are in a situation where we are, you know, utilizing cash to run our operations. So we definitely are focused on, you know, fixing that issue.

Jim Hamlin: Thank you for taking the question my concern is.

Jim Hamlin: Our rate of cash burn.

Jim Hamlin: Looks like it's going to.

Speaker Change: Well, it's more than six months or so maybe you could address that issue.

Jim Hamlin: Hugh.

Jim Hamlin: Oh, Yeah, Yeah for sure. Thanks for the question and thanks for being on the line here Jim.

Jim Hamlin: We are evaluating our cash.

Position currently in and looking at ways to improve that.

Jim Hamlin: Ultimately our business. It does we are in a situation where we are.

Utilizing cash to run our operations. So we definitely are focused on fixing that issue.

Chris Gannon: Fixing it in terms of getting some income in or further shareholder dilution. Well, we're definitely looking at additional revenue coming in through these various tests, large scale demonstrations and so forth. That's, that's part of the equation. We're also evaluating both additional debt and equity financing.

Let's take it in terms of getting some income in new or further shareholder dilution.

Jim Hamlin: Well, we're definitely looking at additional revenue coming in through these various test large scale demonstrations and so forth.

Jim Hamlin: That's part of the equation, we're also evaluating both additional debt and equity financing.

Jim Hamlin: Cool.

Chris Gannon: Any more you can add to that, I'm just concerned as a shareholder, where the price is now and for the dilution of the share price. I mean, at the end of the day, we are will need to raise additional capital. And, you know, there's multiple sources for that. So our goal is to do to raise capital in the least dilutive way to our shareholders.

Jim Hamlin: Anything more you can there.

Jim Hamlin: I'm just concerned of the shareholder.

Jim Hamlin: There is a price there's no further dilution of the <unk>.

Speaker Change: Sure Bruce.

Speaker Change: I mean, if the idea of the day, we are we will need to raise additional capital and theres multiple sources for that so our goal is to do.

Speaker Change: To raise capital in the least dilutive way to our shareholders.

Jim Hanlon: That makes sense for the long Well, thank you for taking my questions. Thanks, Jim. Thank you.

Bruce: That makes sense for the long term.

Bruce: Well, thank you for taking my questions.

Jim Hamlin: Thanks, Jim.

Speaker Change: Thank you.

Chris Gannon: As we have no further questions on the lines at this time, I will hand it back to Mr. Gannon for any closing comments. Great. Thanks so much, everyone, for joining us today. And we look forward to speak with you during future earnings calls and upcoming investor engagement activities.

Speaker Change: We have no further questions on the lines at this time I will hand, it back to Mr. Gannon for any closing comments great. Thanks, So much everyone for joining us today, and we look forward to speak with you during future earnings calls and.

Speaker Change: Coming investor engagement activities.

Chris Gannon: Bye for now.

Speaker Change: For now.

Operator: Thank you, ladies and gentlemen, this does conclude today's call, you may disconnect your lines at this time and have a wonderful day and we thank you for your participation.

Speaker Change: Thank you ladies and gentlemen, this does conclude today's call.

Speaker Change: You may disconnect your lines at this time and have a wonderful day and we thank you for your participation.