374Water's Q3 2025: Contradictions Emerge on Market Strategy, Sales Force, and AFFF Processing Timelines

Date of Call: November 12, 2025

Financials Results

• Revenue: $760,000 for Q3 2025, up from $81,000 in Q3 2024

Guidance:

• Revenue for the remainder of 2025 projected to be approximately $4 million.
• Revenue guidance for calendar 2026 projected at $6 million to $8 million (~50%–100% increase vs expected 2025).
• Cash runway extended into Q2 2026 after ~$7M ATM proceeds, but additional capital raising is required to fund growth.
• OC San FAT and deployment expected late Q4 2025/early Q1 2026; portion of Olathe capital-sale revenue expected to be recognized in 2025.
• Actively pursuing strategic partners and investors to fund waste-destruction service expansion.

Business Commentary:

* Strengthening Financial Performance: - 374Water reported revenue of $760,000 for Q3 2025, which is $679,000 higher than the prior year, representing an approximately 884% increase. - The growth in revenue was primarily driven by an increase in service revenues from waste destruction service projects.

• Expansion of Waste Destruction Services:

• 374Water signed a waste destruction services collaboration agreement with Crystal Clean, indicating significant growth in their service offerings.

• This expansion is part of an ongoing strategy to address market demand across various waste verticals, including TSDF facilities.

• Investment in AirSCWO 6 Unit:

• The company anticipates the startup of the AirSCWO 6 unit in Q4 2025 or early Q1 2026 at OC San, which is expected to increase waste destruction capacity and improve system performance.

• This investment is aimed at enhancing processing capabilities while maintaining ongoing treatment needs of the OC San facility.

• Shareholder Value and Growth Strategy:

• 374Water's 2026 revenue projections range from $6 million to $8 million, marking a 50% to 100% increase compared to expected 2025 revenues.

• This growth is underpinned by a focus on converting potential business opportunities and achieving breakthroughs in key projects, such as those related to waste destruction services and capital sale of equipment.

Sentiment Analysis:

Overall Tone: Positive

• Management: "we now have a line of sight towards 2026 revenue... in the $6 million to $8 million range." CFO: "gross proceeds of approximately $7 million, extending our cash runway into the second quarter of 2026." CEO: "we executed PFAS destruction... demonstrating the effectiveness, scalability and versatility of our technology." Management repeatedly emphasized wins (Crystal Clean, Olathe, DoD work) and focus on scaling throughput and higher‑margin services.

Q&A:

• Question from Rob Brown (Lake Street Capital Markets): How is the TSDF pipeline progressing and what are the steps to get it going?
  Response: Company is actively discussing placements with many TSDF operators (Crystal Clean is first); intends to site AirSCWO units as host installations and prioritize near-term, high‑IRR opportunities to convert pipeline into revenue.

• Question from Rob Brown (Lake Street Capital Markets): For the North Carolina contract, how is the phasing set up and timing for the larger second phase?
  Response: First phase (processing now) is underway — described in Q&A as ~1,000 tons (~60,000 gallons) — samples are being taken by NC parties; timing for the decision on the larger ~28,000‑gallon second phase is undetermined.

• Question from Rob Brown (Lake Street Capital Markets): For the 2026 outlook, how do you see the mix between waste services and capital sales?
  Response: 2026 is expected to include both waste‑destruction services (launch/expansion) and some capital sales; management prefers services for higher EBITDA and valuation but will accommodate equipment sales with O&M to capture customer demand.

• Question from Michael Mathison (Sidoti & Company, LLC): Can you give detail on the Crystal Clean deal, particularly revenue‑sharing agreements?
  Response: Management declined to disclose commercial terms publicly; indicated host customers receive a benefit via lease payment, revenue share or reduced usage cost and structures are flexible per partner.

• Question from Michael Mathison (Sidoti & Company, LLC): How many sales/business development people do you have among ~50 employees?
  Response: About 80% of employees are market‑facing; roughly seven business developers currently in the field and management believes they could add a few more to accelerate penetration.

• Question from Michael Mathison (Sidoti & Company, LLC): Given the 2026 revenue midpoint (~$7M), is operating income breakeven feasible in 2026 or should investors look to 2027?
  Response: Timing depends on rollout pace and contract conversions; management's hope is cash flow positive in 2027, but 2026 breakeven is uncertain and contingent on scaling sales and loading fixed costs.

• Question from Webcast (Unaffiliated): Can you provide additional color on third quarter performance?
  Response: Q3 sales accelerated materially year‑over‑year from a low base; management is confident in meeting ~ $4M revenue for 2025 and sees strong traction heading into 2026 guidance of $6M–$8M.

• Question from Webcast (Unaffiliated): Any additional observations after a month as interim CEO?
  Response: Key focuses are increasing AirSCWO throughput via continuous improvement (Lean Six Sigma, reactor upgrades), concentrating resources on highest‑return opportunities, and conducting a pricing study to optimize project economics.

• Question from Webcast (Unaffiliated): What is your view of the PFAS destruction market?
  Response: Market is massive (~$450B waste destruction market) with three target verticals—industrial/TSDFs, municipal, and federal AFFF—presenting domestic and international opportunities; company is organizing go‑to‑market and pricing per vertical.

Contradiction Point 1

Market Outlook and Business Strategy

It reflects differing perspectives on the company's market approach and growth strategy, which can influence investor expectations and business direction.

What is the current status and your approach for TSDF facilities? - Rob Brown(Lake Street Capital Markets)

2025Q3: Our strategy is to act as a host customer, with the AirSCWO unit being placed on-site for their PFAS needs and for processing government materials like AFFF. - Stephen Jones(Interim President, CEO & Director)

What are the next steps for the Colorado School of Mines DoD project and how does it integrate with the DoD system? - Rob Brown(Lake Street Capital)

2025Q2: We're positioning ourselves as a technology provider, not necessarily as a waste company. We're not going to go out and build a bunch of facilities. - Christian M. Gannon(CEO, President & Director)

Contradiction Point 2

Sales Force and Market Penetration

Discrepancies in the reported size and composition of the sales force suggest differing perspectives on resource allocation and market penetration strategy, which can impact revenue growth and client acquisition.

How many of 374Water's employees are salespeople? - Michael Mathison(Sidoti & Company, LLC)

2025Q3: Approximately 80% of 374Water’s employees are engaged in market-facing roles such as operations, manufacturing, R&D, and business development. Currently, there are around 7 business developers... - Stephen Jones(Interim President, CEO & Director)

What is the size of the sales force for these opportunities? - Michael Jay Mathison(Sidoti)

2025Q2: We have a team of 4 direct business development sales professionals and a corporate development individual focusing on the TSDF world. - Christian M. Gannon(CEO, President & Director)

Contradiction Point 3

North Carolina AFFF Processing Timeline

It directly impacts the expected timeline for the processing of AFFF in North Carolina, which could affect the company's revenue projections and investor expectations.

What is the timeline and phasing setup for the North Carolina contract? - Rob Brown (Lake Street Capital Markets)

2025Q3: The first phase involves processing 1,000 tons of AFFF, which is underway with positive results. - Stephen Jones(CEO)

When is the aqueous film destruction in North Carolina expected to start and finish? - Michael Mathison (Sidoti & Company, LLC)

2025Q1: So, we are actually in the process of arranging to pick up the initial 1,000 gallons of that and we will be starting within the next month or so on that work. - Chris Gannon(CEO)

Contradiction Point 4

Manufacturing Capacity and Constraints

It directly impacts the company's ability to scale its operations and meet demand, which can affect revenue and market penetration.

How is the 2026 revenue outlook split between waste services and capital sales? - Rob Brown (Lake Street Capital Markets)

2025Q3: 374Water has the capacity to manufacture roughly two to four systems at a time, which includes systems of different sizes. We are currently manufacturing systems at the City of Orlando's water reclamation facility, and we have neighboring facilities for further expansion. - Stephen Jones(CEO)

What is your current manufacturing capacity, and is it a constraint on company growth? - Jeff Grampp (Alliance Global Partners)

2024Q4: 374Water has the capacity to manufacture roughly two to four systems at a time, which includes systems of different sizes. We are currently manufacturing systems at the City of Orlando's water reclamation facility, and we have neighboring facilities for further expansion. - Chris Gannon(President & CEO)

Contradiction Point 5

Revenue Potential of AirSCWO Units

It involves changes in the expected revenue potential of AirSCWO units, which are critical for understanding the company's financial projections and growth strategy.

How is the 2026 revenue guidance split between waste services and capital sales? - Michael Mathison (Sidoti & Company, LLC)

2025Q3: The revenue potential will of course depend on the type of material being processed and the size of the AirSCWO unit. - Russell Kline(CFO)

How much revenue would a typical destruction-as-a-service deal generate? - Michael Mathison (Sidoti & Company, LLC)

2025Q1: We expect to initially start with an AirSCWO 6 and then our plants would be going forward to increase that capacity with our AirSCWO 30 unit. And on the AirSCWO 30, we project that the revenue potential for that unit will be between $12 million and $20 million on an annual basis depending upon the type of material being processed and the related utilization. - Russell Kline(CFO)