Q1 2025 374Water Inc Earnings Call
Operator: Greetings. Thank you for standing by and welcome to the 374Water First Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode.
Greetings, Thank you for standing by and welcome to the three seven for water first quarter 2025 financial results Conference call.
Speaker Change: At this time all participants are in a listen only mode.
Operator: A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
Speaker Change: <unk> and answer session will follow the formal presentation.
As a reminder, this conference is being recorded.
Chris Tyson: At this time, I would like to hand the call to Chris Tyson, Executive Vice President of MZ Group. Please go ahead. Thank you, Operator.
Speaker Change: At this time I would like to hand, the call to Chris Tyson Executive Vice President of MZ Group. Please go ahead.
Speaker Change: Thank you operator.
Chris Tyson: Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates, or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation.
Speaker Change: Before we begin the formal presentation I would like to remind everyone that statements made on the call and webcast may include predictions estimates or other information that might be considered forward looking while these forward looking statements represent our current judgment on what the future holds they are subject to risks and uncertainties that could cause actual.
Speaker Change: Our results to differ materially you were cautioned not to place undue reliance on these forward looking statements, which reflect our opinions only as of the date of this presentation.
Chris Tyson: Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions.
Speaker Change: Keep in mind that we are not obligating ourselves to revise or publicly released the result.
Speaker Change: Of any revision to these forward looking statements in light of new information or future events.
Speaker Change: Throughout today's discussion we will attempt to present some important factors relating to our business that may affect our predictions you should also review our most recent Form 10-Q and 10-K for a more complete discussion of these factors and other risks, particularly under the heading risk factors.
Chris Tyson: You should also review our most recent Form 10-Q and 10-K for a more complete discussion of these factors and other risks, particularly under the heading risk factors.
Chris Tyson: Your host today, President and Chief Executive Officer, Mr. Chris Gannon, and Chief Financial Officer, Mr. Russell Kline, will present results of operations for the first quarter ended March 31, 2025. A press release detailing these results crossed the wire this afternoon at 4.01 PM Eastern Time and is available in the Investor Relations section of the company's website, 374Water.com.
Speaker Change: Your host today, President and Chief Executive Officer, Mr. Chris Gannon, and Chief Financial Officer, Mr. Russell Klein will present results of operations for the first quarter ended March 31 2025.
Speaker Change: A press release detailing these results crossed the wire. This afternoon at 401 P. M. Eastern time and is available in the Investor Relations section of the company's website reached 74 water Dot com.
Chris Gannon: I will now turn the call over to 374Water's President and Chief Executive Officer, Chris Gannon. Chris, the floor is yours. Thank you, Chris. Good afternoon, everyone, and thank you for joining us today. 374Water is an industrial technology and services company focused on transforming the waste management landscape. Our proprietary air slope system offers a groundbreaking solution for the destruction of solid and liquid organic waste. both non-hazardous and hazardous across municipal, federal, and industrial sectors. Our technology not only eliminates waste, but also generates safe, dischargeable water, mineral byproducts, bent gas, and recoverable thermal energy. We are targeting $450 billion waste destruction and management market that is increasingly demanding sustainable next generation solutions.
Speaker Change: I will now turn the call over to 374 waters, President and Chief Executive Officer, Chris Caton, Chris the floor is yours.
Speaker Change: Thank you Chris Good afternoon, everyone and thank you for joining us today.
Speaker Change: Suddenly for water is an industrial technology and services company focused on transforming the waste management landscape.
Speaker Change: Proprietary air Squoze system offers a groundbreaking solution for the destruction of solid and liquid organic waste.
Speaker Change: Non hazardous and hazardous.
Speaker Change: Cross municipal federal and industrial sectors.
Speaker Change: Technology, not only eliminates waste, but also generate space discharge for water.
Speaker Change: Mineral byproducts.
Speaker Change: Yeah.
Speaker Change: Recoverable thermal energy.
Speaker Change: We are targeting 450 billion dollar waste destruction and management market that is increasingly dumped mending sustainable next generation solution.
Chris Gannon: Our air system is uniquely positioned to meet this need, offering a scalable, modular, and customizable platform that can replace or augment conventional, often inefficient waste management approach. We've built a flexible commercial model that includes waste destruction as a service. Capital Sales and Leases, allowing us to address diverse customer needs and to drive adoption across market segments. With a growing backlog and revised sales pipeline, our goal is to convert opportunities into revenue over the coming months. Based on our current trajectory, discussions with potential partners, and market demand, we believe we are on a path towards achieving $250 to $500 million in annual revenue in five years.
Speaker Change: Our are slow.
Speaker Change: Is uniquely positioned to meet this need offering a scalable modular and customizable platform.
Speaker Change: Can replace or augment conventional often inefficient waste management approaches.
Speaker Change: We built a flexible commercial model that includes waste destruction as a service.
Speaker Change: Capital sales and leases, allowing us to address diverse customer needs and to drive adoption across market segments.
Speaker Change: With a growing backlog and robust sales pipeline our goal is to convert these.
Speaker Change: These into revenue over the coming months.
Speaker Change: Based on our current trajectory discussions with potential partners and market to me.
Speaker Change: We believe we are on a path towards achieving 250 to 500 million in annual revenue in five years.
Chris Gannon: As a reminder, our mission is to help create and preserve a clean and healthy environment that sustains life.
Speaker Change: As a reminder, our mission is to help create and preserve a clean and healthy environment.
Speaker Change: Stay in place.
Chris Gannon: Moving on to our operational highlights and business updates for 2025 year to date. I would like to discuss some of the team's accomplishments this year, building on the foundational steps we took in 2024 to position the company for long term success. In Q1, we continue to ruggedize and optimize our AS system, upgrading our pre and post-treatment systems, and further refining and expanding our destruction capabilities across solid and liquid waste. We made great progress in Orlando with the initial phase of our deployment focused on demonstrating the effectiveness of our airflow system to destroy AFFF firefighting foam, granular activated carbon, and ion exchange resin.
Speaker Change: Moving on to our operational highlights and business updates for 2025 year to date I would like to discuss some of the teams accomplishments. This year building on the foundational steps we took in 2024.
Speaker Change: In addition, the company for long term success.
Speaker Change: In Q1, we continue to ruggedized to optimize our system upgrading our pre and post treatment systems, and further refining and expanding our destruction capabilities across solid and liquid waste.
Speaker Change: We made great progress in Orlando with the initial phase of our deployment focused on demonstrating the effectiveness of our aerospace system.
Speaker Change: Troy, a triple a firefighting foam granular activated carbon and ion exchange resin.
Chris Gannon: The test results achieved north of 99.99% PFAS elimination across these waste streams. reinforcing the efficacy of our solution, further supporting our launching of waste disruption services. Supercritical water oxidation technology has also gained further validation, having been named by the EPA as an emerging PFAS destruction technology. We also secured a waste destruction services contract with the University of North Carolina at Chapel Hill Collaboratory to destroy AFFF firefighting foam on behalf of the state. If we are awarded additional materials, this multi-phase contract could be worth north of $5 million in future revenues to our company. And we also continue to advance partner negotiations with RCRA Part B treatment, storage, and disposal facility operators to establish regional waste destruction service operations across North America.
Speaker Change: The test results achieved north of $99, 99% he saw elimination across these waste streams Ryan.
Speaker Change: Reinforcing the efficacy of our solution.
Speaker Change: Further supporting our launching of waste destruction services.
Speaker Change: Supercritical water oxidation technology has also gained further validation having been named by the EPA as an emerging P fast destruction technology.
Speaker Change: We also secured a waste destruction services come on track with the University of North Carolina at Chapel Hill collaborative Laurie destroy a trigger firefighting foam on behalf of the state.
Speaker Change: If we are awarded additional materials. This multi phased contract could be worth north of 5 million in future revenues to our company.
Speaker Change: And we also continue to advance partner negotiations with Rick or a part D treatment storage and disposal facility operators, who established regional waste destruction service operations across North America.
Chris Gannon: During Q2, we signed a Waste Destruction Services term sheet with Crystal Queen, a leading provider of specialized environmental and waste management solutions to commercial and industrial end markets to conduct operations at their RCRA Part B CSBS facility in O'Haga. We also shifted our focus to our 90-day biosolids destruction campaign in Orlando, which unlocks meaningful revenue. Our main focus here has been improving run duration and system reliability. particularly on components outside of the reactor. All improvements identified are being made to the AS units slated to be shipped to OCSAM, which is in line with our mutual agreement.
Speaker Change: During Q2, we signed a waste construction services term sheet with crystal clean a leading provider of specialized environmental and waste management solutions to commercial and industrial end markets.
Speaker Change: Conductor operations at their retro a part D. Yeah, yeah facility in Ohio.
Speaker Change: We also shifted our focus to our 90 day biosolids destruction campaign in Orlando, which unlocks meaningful revenue.
Speaker Change: Our main focus here has been improving run duration and system reliability.
Speaker Change: Particularly I'm kind of outside of the reactor.
Speaker Change: Oh goodness identified are being made to the a S units slated to be ship Oh C. Sam which is in line with our mutual agreement.
Chris Gannon: While we still plan to begin mobilizing equipment to OC-SAN in June, full system installation is likely to be delayed by a few months to complete further upgrades to the AS system and as OC-SAN secures requisite permits. Finally, we will be deploying an AS6 unit to Detroit, Michigan, in partnership with Arcadis for a DOD demonstration. We believe these activities have actively de-risked our business and placed us on the path to achieving material waste destruction service revenue in the future.
Speaker Change: Well, we still plan to begin mobilizing equipment to Oc stand in June full system installation is likely to be delayed by a few months.
Speaker Change: Further upgrades to the a S system and as OCC and secures requisite permits.
Speaker Change: Finally, we will be deploying in a S. Six unit to Detroit, Michigan and in partnership with our cadence for a D O D demonstration.
Speaker Change: We believe these activities have actively derisk, our business and places us on the path to achieving material waste destruction service revenue in the future.
Chris Gannon: To support our growth, we've also strengthened our leadership team and board of directors. We welcomed Raj Melkote as Chief Technology Officer, whose global engineering expertise will be instrumental in driving continuous product innovation and commercialization. Raj has already hit the ground running and he is having a materially positive impact.
Speaker Change: To support our growth we've also strengthened our leadership team and board of directors.
Raj: We welcome Raj.
Speaker Change: As Chief Technology Officer.
Speaker Change: His global engineering expertise will be instrumental in driving continuous product innovation and commercialization.
Speaker Change: Raj has already hit the ground running and he is having a materially positive impact.
Chris Gannon: Steve Jones, former CEO of Kavanta, has joined our board of directors, his strong background in leadership positions in environmental services, corporate governance, and commercial strategy are valuable assets to the company. Additionally, we appointed James Pulaski as an advisor, and he has also been appointed for election as a director at our annual meeting. Mr. Pulaski brings extensive executive experience from Veolia, North America and environmental services, as well as DuPont. which will be invaluable to our company growth.
Speaker Change: Steve Jones, former CEO banter has joined our board of directors.
Speaker Change: His strong background and leadership positions in environmental services corporate governance, and commercial strategy are valuable assets to the company.
Speaker Change: Additionally, we appointed James Koloski as an advisor and he has also been appointed for election as a director at our annual meeting.
Speaker Change: Mr. Polaski brings extensive executive experience from Veolia in North America.
Speaker Change: Buyer mental services.
Speaker Change: As well as Dupont.
Speaker Change: Which will be invaluable to our company growth.
Chris Gannon: We believe our technology has the potential to deliver scalable, commercial-grade waste destruction solutions, which would set us apart in a fragmented and outdated waste treatment industry. Our product roadmap includes four distinct AERSQL models, each designed to address a range of customer requirements with varying needs. These include our Ultramobile AS1, the Mobile AS6, the semi-permanent AS30 and our high-capacity customizable AS100+. which will be designed for large scale site specific deployment. Currently, we are close to completing the manufacturing of our AS-1 and AS-6 units to meet existing contracts and scheduled demonstrations. In parallel, we are designing our AS30 for potential production beginning this year, and we are progressing long sales cycle high value opportunities for our AS100 plus units with municipal customers.
Speaker Change: We believe our technology has the potential to deliver scalable commercial are great ways to destruction solutions, which will set us apart in a fragmented and outdated waste treatment industry.
Speaker Change: Our product roadmap includes four distinct air school mottos, each designed to address a range of customer requirements with varying needs.
Speaker Change: These include our ultra mobile S. One so mobile a S. Six.
Speaker Change: So semi permanent a S 30, and our high capacity customizable E F 100, plus.
Speaker Change: Which will be designed for large scale site specific deployment.
Speaker Change: Currently we are close to completing the manufacturing of our S. One and six units to meet existing contracts and schedule demonstrations.
Speaker Change: In parallel we are designing our a F 30 for potential production beginning this year.
Speaker Change: We are progressing long sales cycle high value opportunities for our S 100, plus units with municipal customers.
Chris Gannon: We believe we're at a pivotal inflection point in the commercialization of our business. We are tracking multiple near term opportunities for AS capital sales and leases, as well as other waste destruction service opportunities in 2025. We look forward to sharing material updates on these opportunities as we advance them throughout the year.
Speaker Change: We believe we're at a pivotal inflection point in the commercialization of our business.
Speaker Change: We are tracking multiple near term opportunities for E S capital sales and leases as well as other wastes destruction service opportunities in 2025.
Speaker Change: We look forward to sharing material updates on these opportunities as we advance them throughout the year.
Chris Gannon: Let me now provide a high-level overview of our current and near-term operational footprint. Today we operate facilities in Florida and North Carolina. In the near term, we are preparing to deploy air flow systems to four key locations. Orange County Sanitation District in California. Clean Earth in Detroit, Michigan, for the DIU-DOD initiative to focus on commercial-scale PFAS destruction solutions for military and federal installations. Peterson Space Base in Colorado.
Speaker Change: Let me now provide a high level overview of our current and near term operational footprint.
Speaker Change: Today, we operate facilities in Florida, and North Carolina.
Speaker Change: In the near term we are preparing to deploy are slow systems to four key locations.
Speaker Change: Orange County, Sanitation district in California.
Speaker Change: Clean Earth in Detroit, Michigan for the D. R U D O D.
Speaker Change: No.
Speaker Change: So scale pathos destruction solutions for military and federal installations.
Speaker Change: Peterson P space in Colorado.
Chris Gannon: Finally, we have signed a non-binding term sheet to establish our first waste destruction service operation at Crystal Queens, Ohio, TSDF facility. Our Waste Disruption Services Term Sheet with Crystal Clean is based on a revenue sharing and system hosting model. When the full agreement is finalized, Crystal Clean will not only host our AERSCO system at the RCRA Part B, CSDF in Oregon, Ohio, but also provide waste hauling, processing, storage, and other services. In addition, the term sheet contemplates that we will jointly and individually market waste destruction services to municipal, federal, and industrial customers. We are very excited to work with Krista Kleeman in the near future.
Speaker Change: Finally, we have signed a non binding term sheet to establish our first waste destruction service operation at Crystal Queens, Ohio T. S T a facility.
Speaker Change: Our waste destruction services term sheet with Crystal clean is based on a revenue sharing and system hosting model.
Speaker Change: When the full agreement is finalized.
Speaker Change: You'll clean will not only host our air School system, that's a retro part D C up in Oregon, Ohio, but also provide waste hauling.
Speaker Change: Assessing storage and other services.
Speaker Change: In addition, the term sheet contemplates that we will jointly and individually market waste destruction services municipal federal and industrial customers.
Speaker Change: We are very excited to work with crystal clean in the near future.
Chris Gannon: We were also selected to participate in a highly anticipated the Department of Defense initiative focused on commercial scale PFAS solutions for military and federal installations and will be mobilizing to Detroit shortly. As previously noted, we have already demonstrated the effectiveness and adaptability of our AERSCO technology at federal agencies on the majority of waste streams we will be processing in Detroit. We believe our system is poised to provide a permanent solution for federal agencies here. In addition, the government has indicated the Detroit DIU demonstration should unlock the federal government and military's golden ticket, enabling them to directly contract with Arcadis and 374Water without going through lengthy competitive bid process.
Speaker Change: We were also selected to participate in a highly anticipated epic apartment, a defense initiative focused on commercial scale L. P fast solutions for military and federal installations and will be mobilized into Detroit shortly.
Speaker Change: Previously noted we have already demonstrated the effectiveness and the adaptability of our Air School technology for federal agencies on the majority of the waste streams, we leave your processing in Detroit.
Speaker Change: We believe our system is poised to provide a permanent solution for federal agencies here.
Speaker Change: In addition, the government indicated the Detroit D. I use demonstration should unlock the federal government and military Golden ticket.
Speaker Change: Enabling them to directly contract with our Kate Us and 374 Walker.
Speaker Change: Going through lengthy competitive bid processes.
Chris Gannon: As you can imagine, we are quite excited about the potential here.
Speaker Change: As you can imagine we are quite excited about the potential here.
Chris Gannon: Further, in March, we secured a contract with the state of North Carolina to destroy a triple left under the state's Responsible Firefighting Foam Management Act. We're proud to be supporting this important initiative through a partnership with the University of North Carolina at Chapel Hill Collaboratory, one of the most ambitious state-led PFAS destruction efforts to date. The initial phase of the program targets the treatment of 1,000 gallons of AFFL. with a phased expansion plan that could scale to as much as 29,000 gallons.
Speaker Change: Further in March we secured a contract with the state of North Carolina.
Troy: Troy a triple what.
Troy: Under the state's responsible firefighting foam managed Manhattan.
Troy: We're proud to be supporting this important initiative through a partnership with the University of North Carolina at Chapel Hill Laboratory, where the most ambitious state led P fast destruction average to date.
Initial phase of the program targets the treatment of 1000 gallons a day triple out.
Troy: With a phased expansion plan that could scale to as much as 29000 gallons.
Chris Gannon: This effort positions 374Water as a leader in PFAS remediation and sets the stage for future large-scale environmental cleanup projects.
Troy: This effort positions 374 water is a leader in P fast remediation.
Troy: Set the stage for future large scale environmental cleanup projects.
Chris Gannon: Let's now turn to our go to market strategy and commercial momentum. Our approach is intentionally diversified and focused on well-established end markets that require advanced waste destruction solutions like our AERSCO system. We offer customers multiple procurement options to meet varying operational and budgetary needs, including capital purchases, leases, and waste destruction services. We're seeing strong interest from municipal officials, many of whom are eager to begin waste destruction operations and are evaluating both capital purchase, lease and waste destruction service models. On the federal side, the U.S. government has made significant commitments to the removal and destruction of PFAS and other cannabinoids from military and civilian facilities.
Troy: Let's now turn to our go to market strategy and commercial momentum.
Troy: Our approach is intentionally diversified and focused on well established end markets that require advanced waste destruction solutions like our air School system.
Speaker Change: Will you offer customers multiple corporate chairman options.
Speaker Change: Meet very operational and.
Speaker Change: And budgetary needs, including capital purchases leases and wastes destruction services.
Speaker Change: We're seeing strong interest for municipal officials.
Speaker Change: Many of whom are eager to begin waste destruction operations.
Speaker Change: Are you, adding both capital purchase lease and waste destruction service models.
Speaker Change: On the federal side. The U S. Government has made significant commitments to the removal and destruction ethos and the other Canadian Barnett from military and civilian facilities.
Chris Gannon: With hundreds of millions of dollars already appropriated for this effort, we believe 374Water is well positioned to compete for and secure a meaningful share of this work. We're also continuing to ramp up efforts to capture industrial waste destruction opportunities. which we see as a significant and growing revenue stream.
Speaker Change: With hundreds of millions of dollars already appropriated for the soccer, we believe 374 water is well positioned to compete for it.
Speaker Change: Secure a meaningful share of this work.
Speaker Change: We're also continuing to ramp up efforts to capture industrial waste construction opportunities.
Speaker Change: Should we see as a significant.
Speaker Change: Growing revenue stream.
Chris Gannon: Most recently, the U.S. EPA announced new major action to combat PFAS contamination. Underscoring the federal government's commitment to safeguard public health through preventing PFAS from entering drinking water systems and holding polluters responsible. We believe the EPA stance on PFAS provides positive tailwinds for our air flow platform.
Speaker Change: Most recently the U S E T H announced new major action to combat P fast contamination.
Speaker Change: Underscoring the federal government's commitment to safeguard public health.
Speaker Change: Vantiv P fast from entering drinking water systems and are holding polluters responsible.
Speaker Change: We believe the EPA stance on P. Fast provides positive tailwind for our air scale platform.
Chris Gannon: We are also advancing strategic partnership discussions with multiple other TSDS to establish on-site waste destruction services operations. In addition to our Crystal Clean Term Sheet, our internal goal is to finalize one or more additional TSDF Definitive Agreements yet this year. Our team continues to actively pursue and expand these commercial channels, and we look forward to updating you on our progress in the quarters ahead.
Speaker Change: We are also advancing strategic partnership discussions with multiple other TSB, yes to.
Speaker Change: Onsite waste destruction services operation.
Speaker Change: In addition to our crystal clean term sheet.
Speaker Change: Our internal goal is to find out is one or more additional T. S. T. A definitive agreements yet this year.
Speaker Change: Our team continues to actively pursue and expand these commercial channels.
Speaker Change: We look forward to updating you on our progress in the quarters ahead.
Chris Gannon: We've discussed the clear and growing market demand for our air flow waste destruction technology. As we look ahead, we believe we are entering a pivotal phase for scaling our technology and the business. Again, our growth strategy is driven by a mix of capital equipment sales, leases, and waste destruction services. We intend to capture this growth through strategic partnerships, continued market development, and geographic expansion across our core municipal, federal, and industrial verticals, with an initial focus on the U.S. market.
Speaker Change: We've discussed the clear and growing market demand for our erstwhile waste destruction technology as.
Speaker Change: As we look ahead, we believe we are entering a pivotal phase for scaling our technology and the business.
Speaker Change: Again, our growth strategy is driven by a mix of capital equipment sales.
Speaker Change: He says in waste disruption services.
Speaker Change: Uh-huh tend to capture this growth through strategic partnerships.
Speaker Change: Continued market development and geographic expansion across our core municipal federal and industrial verticals with an initial focus on the U S market.
Chris Gannon: Looking to the remainder of 2025, we have line of sight to generate 4 to 6 million in revenue. Based on current and anticipated future demand, we believe we are on a credible path to achieving $250 to $500 million in annual revenue in five years.
Speaker Change: Looking to the remainder of 2025, we have line of sight to generate four to 6 million in revenue.
Speaker Change: Based on current and anticipated future demand. We believe we are an incredible past achieving 250 for $500 million in annual revenue in five years.
Russell Kline: With that, I'll now turn the call over to Russell Kline, our Chief Financial Officer, to walk through our financial results for the first quarter of 2025.
Russell Klein: With that I'll now turn the call over to Russell <unk>, our Chief Financial Officer.
Russell Klein: Walk through our financial results for the first quarter of 2025.
Russell Kline: Russell Kline, Chief Financial Officer, Thank you, Chris. For the three months ended March 31, 2025, the company generated revenue of $543,000 compared to $315,000 in the prior year quarter. The company's business has been focused on the development and commercialization of our air school system. Revenue is primarily attributable to equipment manufacturing services, demonstrations, and from treatability study services. During the first quarter, we completed a full scale demonstration for a customer, resulting in an increase in our services revenue of $376,000, offset by a decrease in equipment manufacturing revenue of approximately $162,000.
Speaker Change: Thank you Chris for the three months ended March 31, 2025, the company generated revenue of 543000 compared to 315000 in the prior year quarter.
Speaker Change: The company's business has been focused on the development and commercialization of our Air School systems.
Revenue was primarily attributable to equipment manufacturing services demonstrations and from treat ability study services.
Speaker Change: During the first quarter, we completed a full scale demonstration for our customer resulting in an increase in our services revenue of 376000.
Speaker Change: All set by a decrease in equipment manufacturing revenue of approximately 162000.
Russell Kline: Total operating expenses increased 106% to $3.9 million for the three months ended March 31, 2025, compared to $1.9 million in the prior year quarter. The increase was primarily due to an increase in professional fees of $0.5 million, an increase of $0.9 million in general and administrative expenses, and an increase in compensation and related expenses of $0.6 million. The increase in our professional fees are primarily non-recurring expenses related to settlement of a legal matter and recruiting fees related to the increase in headcount. The increases in general and administrative expenses and compensation expenses stem from increased stock-based compensation, continued efforts to establish our executive team, as well as the relocation of our manufacturing facility, and continued commercialization and growth efforts.
Speaker Change: Total operating expenses increased 106% to $3 9 million for the three months ended March 31, 2025, compared to $1 9 million in the prior year quarter. The increase was primarily due to an increase in professional fees of <unk> 5 million, an increase of <unk> $9 million in general and administrative expenses and <unk>.
Speaker Change: An increase in compensation and related expenses of <unk> 6 million.
Speaker Change: The increase in our professional fees are primarily nonrecurring expenses related to the settlement of a legal matter and recruiting fees related to the increase in head count.
Speaker Change: The increases in general and administrative expenses and compensation expenses stemmed from increased stock based compensation continued efforts to establish our executive team as well as the relocation of our manufacturing facility and continued commercialization and growth efforts.
Russell Kline: Net loss for the three months ended March 31, 2025 was $3.7 million as compared with $2.0 million in the prior year quarter. cash and cash equivalents as of March 31 2025 was 6.9 million as compared to 10.7 million as of December 31 2024. As of March 31 2025, working capital was 8.7 million compared to 11.7 million as of March 31 2024. Based upon our current cash position, we project to have adequate cash to support our 2025 business plans.
Speaker Change: Net loss for the three months ended March 31, 2025 was 3.7 million as compared with 2.0 million than.
Speaker Change: In the prior year quarter.
Speaker Change: Cash and cash equivalents as of March 31, 2025 was $6 9 million as compared to $10 7 million as of December 31, 2024.
Speaker Change: As of March 31, 2025, working capital was $8 7 million compared to $11 7 million as of March 31 2024.
Speaker Change: Based upon our current cash position, we project to have adequate cash to support our 2025 business plans. We are reviewing capital opportunities and are in active discussions with possible strategic partners to support our business growth I.
Russell Kline: We are reviewing capital opportunities and are in active discussions with possible strategic partners to support our business growth.
Chris Gannon: I will now hand the call back to Chris for his closing comments. Thank you, Russell. As we look ahead to the remainder of 2025, we are building on the solid groundwork laid in 2024. to transition 374Water into a high growth company generating material revenue. Our mission is clear to provide scalable, effective waste destruction solutions for markets that urgently need The demand for advanced environmental technologies is accelerating, and we believe 374Water is uniquely positioned for leadership in this sector. Our air flow technology directly addresses a critical global challenge, which is the safe, scalable destruction of waste streams. We are targeting large underserved markets, namely municipal, federal and industrial, where traditional waste destruction solutions are no longer sufficient.
Speaker Change: I will now hand, the call back to Chris for his closing comments.
Chris: Thank you Russell.
Speaker Change: We look ahead to the remainder of 2025, we are building on the solid groundwork laid in 2024.
Speaker Change: The transition III 70 pour water into a high growth company.
Speaker Change: Generating material revenues.
Speaker Change: Our mission is clear to provide scalable active waste destruction solutions for markets to urgently either.
Speaker Change: The demand for advanced environmental technologies is accelerating.
Speaker Change: We believe 370 for water is uniquely positioned for leadership in the sector.
Speaker Change: Our air score technology directly addresses a critical global challenge.
Speaker Change: Which is the safe scalable destruction of waste streams.
Speaker Change: We are targeting large underserved markets, namely municipal federal and industrial.
Speaker Change: Or traditional waste construction solutions are no longer sufficient.
Chris Gannon: Our strategy to create a national network of TSDS facilities is sound and will enable us to unlock material contracts. Regulatory momentum, particularly around PFAS and other contaminants, is creating tailwinds that reinforce the need for our solution. Our system is scalable and customizable, enabling us to serve a wide range of customers and waste profiles. Our commercial model is flexible with options for waste destruction services. Capital Sales and Leases, providing multiple revenue streams. and we believe we have a growing pipeline of real waste destruction services, capital sale and lease opportunities to support our near and long-term revenue target.
Speaker Change: Our strategy to create a national network of T. S. P. S facility, the sound and will enable us to unlock material contract.
Speaker Change: Regulatory momentum, particularly around <unk> and other contaminants is creating tailwind that reinforce the need for our solution.
Speaker Change: Our system is scalable and customizable, enabling us to serve a wide range of customers and waste profiles.
Speaker Change: Our commercial model is flexible with options for waste destruction services.
Speaker Change: Capital sales and leases.
Speaker Change: <unk> multiple revenue streams.
And we believe we have a growing pipeline of real wastes destruction services capital sale and lease opportunities.
Speaker Change: To support our near and long term revenue targets.
Chris Gannon: Taken together, we believe these pillars position us for strong, sustainable growth. We are executing against a clear roadmap, expanding our team and strategically deploying capital. We believe 2025 will be a breakout year as we move towards growth and long-term market leadership.
Speaker Change: Taken together, we believe these pillars position us for strong sustainable growth.
Speaker Change: We are executing against a clear roadmap expanding our team and strategically deploying capital.
Speaker Change: We believe 2025 will be a breakout year as we move towards growth and long term market leadership.
Chris Gannon: We continue to see the potential to drive meaningful environmental impact while disrupting industries, and we are energized by the opportunities ahead and grateful for your continued support.
Speaker Change: We continue to see the potential to drive meaningful environmental impact would be.
Dropping industries.
Speaker Change: We are energized by the opportunities ahead and are grateful for your continued support.
Chris Gannon: With that, I'd like to thank everyone for joining us today.
Speaker Change: With that I'd like to thank everyone for joining us today.
Operator: I will now hand the call over to the operator to begin our question and answer session.
Speaker Change: I'll now hand, the call over to the operator to begin our question and answer session.
Operator: Operator, please go ahead. Thank you. To ask a question, you may press star then one.
Speaker Change: Operator, Please go ahead.
Speaker Change: Thank you to ask a question you May Press Star then one if you're using a speaker phone. Please pick up your handset before pressing the keys.
Operator: If you're using a speakerphone, please pick up your handset before pressing the key. to remove yourself from the queue, you may press star, then.
Sure.
Speaker Change: Yourself from the queue you May press Star then two.
Operator: At this time, we will pause momentarily to assemble our raft.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Michael Matheson: Today's first question comes from Michael Matheson with Sidoti. Please go ahead. Good afternoon, gentlemen, and congratulations on all the milestones in the quarter.
Speaker Change: Today's first question comes from Michael Nathanson with Sidoti. Please go ahead.
Michael Nathanson: Good afternoon, gentlemen, and congratulations on all the milestones in the quarter.
Chris Gannon: The Crystal Clean deal really caught my eye. You mentioned you expect one more perhaps in balance of the year. Do you have a forecast for what a typical destruction as a service deal? Generated Revenue.
Michael Nathanson: The crystal clean deal it really caught my eye you mentioned you expect one more perhaps I can balance of the year.
Michael Nathanson: Do you have a forecast for what a typical destruction as a service deal with Gen.
Michael Nathanson: Generating revenue.
Russell Kline: Well, hey, Michael, thanks so much for being on the call. And for the question, I'll let Russell address the economic. But yes, to just kind of put a finer point on the TSDF side, we are in discussions with multiple different TSDF players across the United States, and in advanced discussions there. And so the goal, ultimately, is to set up regional facilities to cover the entire United States. So those are the ongoing conversations. Crystal Clean, wonderful organization. They have additional, they have additional RCRA TSDF facilities coming online shortly as well. So again, there's a lot, a lot of work going on in that realm right now.
Russell Klein: Hey, Michael Thanks, so much for being on the call and for the question I'll, Let Russell address the economics, but yes. So to see just kind of put a finer point on the T. S. D upside and we are in discussions with multiple different TST off players across the United States.
Russell Klein: And in advance discussions there and so the goal ultimately is to set up a regional facilities to cover the entire United States. So those are the ongoing conversations.
Russell Klein: The Queen wonderful organization. They have additional they have additional Rick Ross T S. Yet facilities coming online shortly as well. So again, there's a lot a lot of work.
Chris Gannon: And we're very excited about it.
Russell Klein: In that realm, right now and we're very excited about it but to the economics Russell compute address that.
Russell Kline: But to the economics, Russell, could you address that? Thank you, Chris. And Michael, thank you for the question. The revenue potential will, of course, depend on the type of material being processed and the size of the AERSQO unit. We expect to initially start with an AERSQO-6, and then our plans would be going forward to increase that capacity with our AERSQO-30 unit. And on the AERSQO-30, we project that the revenue potential for that unit will be between $12 and $20 million on an annual basis, depending upon the type of material being processed and the related utilization.
Speaker Change: Thank you, Chris and Michael Thank you for the question.
Speaker Change: The revenue potential will of course depend on the type of material being processed and the size of the.
Speaker Change: Air Squirrel unit and we expect to initially start with them are Squoze six and then what our plans would be going forward too.
Speaker Change: This increase that capacity with our air Square 30 unit and on the Air score 30, we project that the revenue potential for that unit.
Speaker Change: It will be between 12 and $20 million on an annual basis.
Speaker Change: Depending upon the type of material being processed and the related utilization.
Russell Kline: And that's what we're excited about, this opportunity to launch and continue to grow our waste destruction service business. Thank you.
Speaker Change: That's what we're excited about this opportunity.
Speaker Change: Two launch and continue to grow our waste construction service business.
Michael Matheson: That's a big number.
Speaker Change: Thank you that's a big number.
Speaker Change:
Chris Gannon: Looking at other high leverage opportunities, when do you think the Department of Defense demo was expected to wrap up? So that that's a several month process, so we'll be mobilizing there shortly, starting to mobilize in June, be on site in July. And then we will, you know, we have a number of months to complete those demonstrations. I think what's important there is that we've already done all of those demonstrations for for the military, for the federal government. So this is the kind of the hopefully the last step in that process to again, secure that that the opportunity to bid directly on very large scale contracts.
Speaker Change: Looking at either a high leverage opportunities when do you think the department of defense demo was expected to wrap up.
Speaker Change: So that that's a several month process will be mobilizing there.
Speaker Change: Shortly starting to mobilize in in June.
Speaker Change: Be onsite in July and then we will you know we have a number of months to complete the demonstrations I think what's important.
Speaker Change: There is that we've already done all of those demonstrations for or the military for the federal government. So this is the kind of the hopefully the last step in that process. So again secure that that the opportunity to bid directly on very large scale.
Chris Gannon: The other gating item for us there was having a RCRA permitted site, TSDF facility, and we are solving that issue as well. So, again, I'm pretty, I think we are collectively very excited about the future there and doing more for for the government for the military. Great.
Speaker Change: Tracks the other gating item for US there I was having a retro permitted site a T.
Speaker Change: Yes, yeah.
Speaker Change: Facility.
Speaker Change: And we are solving that issue as well so again I'm pretty I think we are collectively very excited about the future there and doing more or for the government for the military.
Chris Gannon: And if I could just wrap up with one last question, the aqueous foam destruction for North Carolina, when would that be expected to start? So we're actually in the process of arranging to pick up the initial 1,000 gallons of that. And we will be starting, you know, within the next month or so on that work.
Speaker Change: Great and if I could just wrap up with one last question.
Speaker Change: The aqueous firm destruction for North Carolina, Yeah, when would that be expected to start and finish.
Speaker Change: So we're actually in the process.
Speaker Change: Arranging to pick up the initial 1000 gallons of that and we will be starting you know within the next month or so on that work.
Michael Matheson: Terrific. Thanks again and congrats. Thank you.
Speaker Change: That's terrific, thanks, again and congrats on the quarter.
Speaker Change: Thank you.
Speaker Change: Thank you.
Operator: As a reminder, to ask a question, you may press star, then one on your telephone keypad.
Speaker Change: A reminder to ask a question you May Press Star then one on your telephone keypad.
Speaker Change: Okay.
Chris Gannon: Seeing no further questions at this time, I would now like to turn the call back over to Mr. Gannon for his closing remarks. Great. Thanks so much, Operator. I'd like to once again thank everyone for joining our conference call today. And we look forward to continuing to update you on our go forward progress and growth. If you have any additional questions, please reach out to the MZ group as an initial step.
Speaker Change: Seeing no further questions at this time I would now like to turn the call back over to Mr. Gannon for his closing remarks.
Gannon: Great. Thanks, so much operator, I'd like to once again, thank everyone for joining our conference call today, and we look forward to continuing to update you on our go forward progress in growth if.
Gannon: If you have any additional questions. Please reach out to MZ group as an initial step that concludes our first quarter 2025 update call. Thank you everybody and I look forward to talking to you again very shortly.
Chris Gannon: That concludes our first quarter 2025 update call. Thank you, everybody, and I look forward to talking to you again very shortly.
Operator: The conference is now concluded. Thank you for your participation.
Speaker Change: The conference has now concluded. Thank you for your participation you may now disconnect your lines.
Operator: You may now disconnect your lines.
Gannon: Okay.
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Unknown Executive: Shops for Sale! Thank you. www.mustwatch.eu www.mustwatch.eu
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