374Water's Q3 2025: Contradictions Emerge on Crystal Clean Partnership, North Carolina Timelines, Revenue Projections, and Manufacturing Capacity

Date of Call: November 12, 2025

Financials Results

• Revenue: $760,000 (Q3 2025), up from $81,000 in Q3 2024; revenue primarily from waste destruction services; company projects ~$4.0M for full-year 2025 and $6.0M–$8.0M for 2026.

Guidance:

• 2025 revenue projected at approximately $4.0M based on year-to-date activity and Q4 milestones.
• 2026 revenue guidance of $6.0M–$8.0M (roughly 50%–100% growth vs expected 2025 revenues).
• Cash runway extended into Q2 2026 after approximately $7M ATM proceeds; additional capital required and actively pursued.
• Operational milestones: OC San FAT and startup late Q4 2025/early Q1 2026; Olathe equipment sale revenue expected later in 2025; North Carolina AFFF Phase 1 processing underway.

Business Commentary:

* Revenue and Financial Performance: - 374Water reported revenue of $760,000 for Q3 2025, up approximately $679,000 from the prior year, driven by an increase in service revenues. - The increase was largely due to the completion of waste destruction service projects. - Total operating expenses increased by 64% to $4.6 million, reflecting material increases in commercial activities and deployment costs.

• Market Expansion and Strategic Partnerships:
• 374Water signed a waste destruction services collaboration agreement with Crystal Clean, enhancing its market reach in the industrial waste space.
• The company is targeting a significant market segment for its waste destruction services, which is largely underserved.

• 374Water is actively pursuing additional capital raising opportunities to fund its growth initiatives.

• Technological Advancements and Deployments:

• The company successfully deployed its AirSCWO technology at the Colorado School of Mines and Department of Defense project, effectively treating PFAS-contaminated waste.
• Significant progress was made in commercial scale field demonstrations, enhancing the company's technology's versatility and scalability.

• 374Water anticipates additional DoD projects and opportunities due to the successful demonstrations of its technology.

• Leadership Transition and Growth Outlook:

• Stephen Jones was appointed as Interim President and CEO, with a focus on the commercialization of the company's supercritical water oxidation technology and waste destruction services.
• Jones expressed confidence in achieving 2026 revenue in the $6 million to $8 million range, representing a 50% to 100% increase over expected 2025 revenue.
• The growth is expected from waste destruction services and capital sales of equipment to customers, with a strategic focus on increasing through

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly emphasized momentum and validation: “we now have a line of sight towards 2026 revenue that is expected to be in the $6 million to $8 million range,” noted ATM proceeds of “approximately $7 million, extending our cash runway into the second quarter of 2026,” and described recent commercial wins and DoD/TSDF demonstrations as evidence of traction.

Q&A:

• Question from Rob Brown (Lake Street Capital Markets): How is the TSDF pipeline progressing and what are the steps to build it?
  Response: Engaged with many U.S. TSDF operators; Crystal Clean is first host partner; strategy is to deploy host-site AirSCWO units (own-and-operate) and prioritize opportunities with highest return on capital.

• Question from Rob Brown (Lake Street Capital Markets): How is the North Carolina AFFF contract phased and what's the timeline for the larger phase?
  Response: Phase 1 processing is underway (management stated first phase as ~1,000 tons / ~60,000 gallons in the Q&A), samples are being taken by NC representatives, and timing for a Phase 2 decision is TBD based on their review.

• Question from Rob Brown (Lake Street Capital Markets): What is the expected mix in 2026 between waste destruction services and capital sales?
  Response: 2026 will include both waste destruction services and capital sales (including Olathe and other bids); management prefers services for higher EBITDA but will pursue equipment sales with O&M agreements as needed.

• Question from Michael Mathison (Sidoti & Company, LLC): Can you provide details on the Crystal Clean deal, especially revenue-sharing terms?
  Response: Management declined to disclose specific commercial terms on the call; host customers can receive compensation via lease payments, revenue share, or reduced usage fees and deal structures are flexible.

• Question from Michael Mathison (Sidoti & Company, LLC): How many sales/business development people do you have now?
  Response: Approximately seven business developers; ~80% of staff are market-facing (operations, manufacturing, R&D, BD), and management indicated they may add BD resources to penetrate the market faster.

• Question from Michael Mathison (Sidoti & Company, LLC): Is the midpoint of 2026 guidance (~$7M) likely to achieve operating breakeven or should we look to 2027?
  Response: Timing depends on rollout pace and loading fixed costs; management's expectation is cash-flow positive around 2027, making 2026 breakeven uncertain.

• Question from Webcast (Anonymous): Can you provide additional color on third-quarter performance?
  Response: Q3 revenue rose significantly year-over-year off a low base, primarily from completed waste destruction projects; management is confident in the ~$4M 2025 target and sees traction supporting 2026 guidance.

• Question from Webcast (Anonymous): Any additional observations from your first month as interim CEO?
  Response: Focus areas are increasing unit throughput (continuous improvement/Lean Six Sigma), recent reactor and heating-block upgrades, a pricing study to optimize returns, and concentrating BD on highest-return opportunities.

• Question from Webcast (Anonymous): What is your view of the PFAS destruction market?
  Response: Described as massive and segmented across three verticals—industrial/TSDF partners, municipal biosolids, and federal AFFF—highlighting a large addressable market (~$450B waste destruction market) with differentiated pricing and significant global opportunity.

Contradiction Point 1

Crystal Clean Deal and Partnership Strategy

It involves key details of a partnership deal and the company's strategy for TSDF partnerships, which are crucial for expanding business and market penetration.

Can you provide details on the Crystal Clean deal, particularly the revenue sharing agreements? - Michael Jay Mathison (Sidoti & Company, LLC)

2025Q3: The Crystal Clean deal involves a waste destruction services model. The host customer receives some benefit through lease payments, revenue share, or lower costs. We'll provide services at their location and process waste, such as AFFF, while they may also utilize our system for their own waste needs. - Stephen Jones(Interim President, CEO & Director)

What is the revenue target for the UNC contract, and when will the Crystal Clean facility be operational? - Michael Jay Mathison (Sidoti & Company, LLC)

2025Q2: With Crystal Clean, we're close to finalizing the agreement, with an estimated 4 months for construction and operations. - Christian M. Gannon (CEO, President & Director)

Contradiction Point 2

Timeline for North Carolina Contract

It pertains to the timeline for a major contract execution, which is vital for revenue projections and business expectations.

How is the North Carolina contract structured, and what is the timeline for the second phase? - Rob Brown (Lake Street Capital Markets)

2025Q3: We are currently in the process of destroying this AFFF. If selected for the second phase, we could process an additional 28,000 gallons of AFFF. The timing for North Carolina's decision-making is uncertain. - Stephen Jones(Interim President, CEO & Director)

Can you discuss the North Carolina destruction services contract and its market potential? - Rob Brown (Lake Street Capital)

2025Q2: The initial contract is worth about $1 million for destroying AFFF firefighting foam. The market overall has significant potential as there are large stockpiles of AFFF to be destroyed. We are responding to many RFPs from states and starting to see opportunities at the federal level. - Christian M. Gannon (CEO, President & Director)

Contradiction Point 3

Revenue Potential of Waste Destruction Service Deals

It involves differing projections for the revenue potential of waste destruction service deals, which could impact investor expectations and financial planning.

Can you provide details on the pipeline in the TSDF facilities segment? What are the steps to activate it? - Rob Brown (Lake Street Capital Markets)

2025Q3: We are working to partner with TSDF operators to host our units on-site. The business model will involve these TSDF operators using our technology for their own waste needs and processing government materials like AFFF. We're focusing on opportunities that offer the highest internal returns. - Stephen Jones(Interim President, CEO & Director)

Can you provide a revenue forecast for a typical destruction-as-a-service deal? - Michael Matheson (Sidoti)

2025Q1: The revenue potential of waste destruction service deals depends on the type of material processed and the unit size. Initially, we will start with an AirSCWO 6, and later increase capacity with an AirSCWO 30 unit. We project the revenue potential for the AirSCWO 30 unit to be between $12 million and $20 million annually, depending on the material processed and utilization. - Russell Kline(CFO)

Contradiction Point 4

Timeline for the North Carolina AFFF Destruction Project

It concerns the timeline for a critical project, which could affect operational planning and execution.

What is the structure of the North Carolina contract, and when is the second phase scheduled? - Rob Brown (Lake Street Capital Markets)

2025Q3: The first phase involves processing 1,000 gallons of AFFF for North Carolina. We are currently in the process of destroying this AFFF. - Stephen Jones(Interim President, CEO & Director)

When is the aqueous film destruction in North Carolina expected to start and finish? - Michael Matheson (Sidoti)

2025Q1: We are arranging to pick up the initial 1,000 gallons of AFFF for the North Carolina project and will start within the next month. - Chris Gannon(President and Chief Executive Officer)

Contradiction Point 5

Manufacturing Capacity and Expansion

It directly impacts the company's ability to scale production, meet demand, and potentially influence revenue and market growth.

How do you see the mix between waste services and capital sales in the 2026 outlook? - Rob Brown (Lake Street Capital Markets)

2025Q3: Currently, 374Water can manufacture two to four systems concurrently, covering various system sizes like AirSCWO 1 and AS6. While the capacity is sufficient for current needs, expansion will be necessary as demand increases. Manufacturing is currently done at the City of Orlando's water reclamation facility. - Chris Gannon(CFO)

What is the current manufacturing capacity of AS systems, and does it limit the company's growth? - Jeff Grampp (Alliance Global Partners)

2024Q4: Currently, 374Water can manufacture two to four systems concurrently, covering various system sizes like AirSCWO 1 and AS6. While the capacity is sufficient for current needs, expansion will be necessary as demand increases. Manufacturing is currently done at the City of Orlando's water reclamation facility. - Chris Gannon(CFO)