374Water Releases Q2 2023 Results and Defines Path Forward while Preparing to Deploy First Commercial AirSCWO Unit

Leading California public agency expects to begin AirSCWO operations in November

DURHAM, NC / ACCESSWIRE / August 9, 2023 / 374Water Inc. (NASDAQ:SCWO) , a global social impact and cleantech company offering a revolutionary commercial waste management solution for the environment, today provides a business update and reports its financial results for the quarter ended June 30, 2023.

"It's been a busy quarter and first half of the year as we pursue our goal of revolutionizing waste management - concentrating on operational execution with a sharp focus on delivering our first commercial AirSCWO 6 system to OC San later this year," said Kobe Nagar, 374Water Chairman and CEO. "We are keen to leverage forthcoming opportunities. Our accomplishments thus far provide a robust foundation for an exciting future. Our innovative technology signifies a paradigm shift in tackling environmental issues, encompassing PFAS elimination and the treatment of diverse waste streams globally. Aligned with these objectives, we are strategically advancing our operations and refining our product portfolio to accommodate heightened demand from larger-scale customers."

Nagar continued, "Many factors are fueling the demand for our product offering, giving rise to the need to scale our business as well as our confidence in our growth trajectory. In the United States alone, 292 million tons of solid waste is produced annually and wastewater treatment facilities process approximately 34 billion gallons of wastewater every day. Pending EPA regulations mandating clean water and landfills nearing capacity creates an urgent need for innovative technologies and reliable solutions, supporting our demand projections."

Financial Highlights

  • For the six month period ended June 30, 2023, the Company generated revenue of $851,000 which compares to $1,304,000 for the six months ended June 30, 2022, a 35% decrease. Revenue for the quarter decreased 95% to $50,000, compared to last year's quarter of $1,031,000.
    • The decrease in revenue is primarily attributed to a long sales cycle. During the six and three months ending June 30, 2022, our contracts included a greater number of conditions, as compared to the six and three months ending June 30, 2023, thereby allowing us to generate increased revenue. As a growing business with a product that is capital intensive, it is expected that our revenues will fluctuate on a quarter-over-quarter basis.
  • Total Operating Expenses increased as the Company makes strides in building its pipeline while commercializing and improving its technology:
    • For the six month period ended June 30, 2023, Total Operating Expenses increased 58% to $3,534,000 from $2,242,000 driven primarily by an increase in Compensation and Related expenses to $1,452,000 from $701,000 and an increase in General and Administrative expenses to $1,262,000 from $641,000.
    • For the quarter ended June 30, 2023, Total Operating Expenses increased 32% to $1,774,000 from $1,343,000. Compensation and Related Expenses grew to $733,000 from $399,000. General and Administrative expenses increased to $676,000 from $380,000.
      • For the six and three month periods, Compensation and Related expenses increased primarily due to increases in payroll and benefit expenses as a result of growing our talented and capable workforce to meet our scaling objectives.
      • For the six and three month periods, General and Administrative expenses increased primarily as a result of increased marketing expenses thoughtfully incurred to expand our customer base and brand awareness.

Capital Structure

  • As of June 30, 2023 the Company had working capital of $17,820,000 compared to $7,061,000 at December 31, 2022. This increase in working capital provides sufficient capital to execute on the Company's goals and objectives.

Operational Highlights

  • The Company continued to make great progress in preparing to ship ANA, the first commercial-grade AirSCWO system to Orange County Sanitation District.
  • At the same time, our second system, Genesis, is also underway with an anticipated completion at the end of 2023 to become our first service fleet system.
  • The Company formed a strategic partnership with The Environmental Group Limited (EGL) to combat PFAS contamination in Australia and New Zealand. Under the agreement, EGL will act as an exclusive provider of 374Water's AirSCWO technology throughout Australia and New Zealand
  • The Company announced its AirSCWO units will optionally include a newly launched HEC-Prime engine that converts waste heat into renewable electricity.

"We continue to make progress toward our long term growth objectives, while managing our expenses and capital outlays," said Israel Abitbol, 374Water Chief Financial Officer. "Finalizing delivery of our first commercial unit has been a key priority as this proof of concept should aid in crystallizing future revenues."

Upcoming Events

As part of its robust investor engagement plan, the Company is participating in several upcoming investor events:

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

About 374Water

374Water Inc . ( Nasdaq:SCWO ), is a global cleantech, social impact company whose mission is to preserve a clean and healthy environment that sustains life. We are pioneering a new era of sustainable waste management that supports a circular economy and enables organizations to achieve their environmental, social, and governance (ESG) and sustainability goals. Follow us on LinkedIn .

Cautionary Language

This press release contains "forward-looking statements," as that term is defined under the Private Securities Litigation Reform Act of 1995 (PSLRA), which statements may be identified by words such as "expects," "plans," "projects," "will," "may," "anticipates," "believes," "should," "intends," "estimates," and other words of similar meaning.

Investor Contact:
Heather Crowell
ir@374water.com

Media Contact:
Christian Rizzo
media@374water.com

374Water Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
June 30, 2023 (Unaudited) and December 31, 2022

2023 2022
Assets
Current Assets:
Cash
$ 14,599,361 $ 4,046,937
Accounts receivable, net of allowance of $406 and $0
17,526 -
Unbilled accounts receivable
1,709,027 918,164
Inventory
1,804,495 1,660,710
Investments
- 1,944,464
Prepaid expenses
206,453 153,455
Total Current Assets
18,336,862 8,723,730
Long-Term Assets:
Equipment, net
139,965 143,079
Intangible asset, net
1,021,781 1,050,022
Total Long-Term Assets
1,161,746 1,193,101
Total Assets
$ 19,498,608 $ 9,916,831
Liabilities and Stockholders` Equity
Current Liabilities:
Accounts payable and accrued expenses
$ 334,229 $ 1,449,582
Deferred revenue
183,061 200,109
Other liabilities
- 13,528
Total Current Liabilities
517,290 1,663,219
Total Liabilities
517,290 1,663,219
Stockholders` Equity
Preferred stock: 50,000,000 authorized; par value $0.0001 per share, nil issued and outstanding at June 30, 2023 and December 31, 2022
- -
Common stock: 200,000,000 common shares authorized, par value $0.0001 per share, 130,679,012 and 126,702,545 shares outstanding at June 30, 2023 and December 31, 2022, respectively
13,067 12,669
Additional paid-in capital
30,103,715 16,110,221
Accumulated (deficit)
(11,140,902 ) (7,849,982 )
Accumulated other comprehensive loss
5,438 (19,296 )
Total Stockholders` Equity
18,981,318 8,253,612
Total Liabilities and Stockholders` Equity
$ 19,498,608 $ 9,916,831

374Water Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the three and six months ended June 30, 2023 and 2022
(Unaudited)

Three months ended
June 30,
Six months ended
June 30,
2023 2022 2023 2022
Revenue
$ 49,863 $ 1,030,528 $ 851,321 $ 1,303,759
Cost of Goods Sold
45,257 902,508 765,403 1,150,494
Gross Profit
4,606 128,020 85,918 153,265
Operating Expenses
Research and development
271,964 422,695 627,869 608,348
Compensation and related expenses
733,121 399,448 1,451,881 700,683
Professional Fees
92,285 141,104 191,857 291,760
General and administrative
676,333 379,661 1,261,995 641,067
Total Operating Expenses
1,773,703 1,342,908 3,533,602 2,241,858
Loss from Operations
(1,769,097 ) (1,214,888 ) (3,447,684 ) (2,088,593 )
Other Income (Expense)
Interest income
74,967 613 112,826 1,453
Other income
43,553 - 43,938 7
Total Other Income (Expense)
118,520 613 156,764 1,460
Net Loss before Income Taxes
(1,650,577 ) (1,214,275 ) (3,290,920 ) (2,087,133 )
Provision for Income Taxes
- - - -
Net Loss
$ (1,650,577 ) $ (1,214,275 ) $ (3,290,920 ) $ (2,087,133 )
Other comprehensive loss
Change in foreign currency translation
4,943 (771 ) 5,438 (771 )
Change in unrealized loss on marketable securities
- (11,243 ) - (11,243 )
Total other comprehensive gain (loss)
4,943 (12,014 ) 5,438 (12,014 )
Total comprehensive loss
(1,645,634 ) (1,226,289 ) (3,285,482 ) (2,099,147 )
Net Loss per Share - Basic and Diluted
$ (0.01 ) $ (0.01 ) $ (0.03 ) $ (0.02 )
Weighted Average Common Shares Outstanding - Basic and Diluted
129,389,098 126,680,895 128,274,091 126,591,017

374Water Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 2023 and 2022 (Unaudited)

2023 2022
Cash Flows from Operating Activities
Net loss
$ (3,290,920 ) $ (2,087,133
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense
44,281 33,174
Stock based compensation
514,934 236,470
Change in foreign currency translation
5,767 -
Changes in operating assets and liabilities:
Accounts receivable
(17,526 ) (242,816
Unbilled accounts receivable
(790,863 ) -
Inventory
(143,785 ) -
Prepaid expenses
(52,998 ) (309,234
Accounts payable and accrued expenses
(1,115,353 ) 619,652
Deferred revenue
(17,048 ) 732,620
Other liabilities
(13,528 ) (6,465
Cash Provided by (Used In) Operating Activities
(4,877,039 ) (1,023,731
Cash Flows from Investing Activities
Purchase of marketable securities
- (6,999,927
Purchase of equipment
(7,303 ) (6,608
Increase in intangible assets
(5,623 ) (494
Cash Provided by (Used In) Investing Activities
(12,926 ) (7,007,029
Cash Flow from Financing Activities
Proceeds from the sale of investments
1,963,430 -
Proceeds from the issuance of common stock
13,478,959 -
Cash Provided by Financing Activities
15,442,389 -
Net Increase in Cash
10,552,424 (8,030,760
Cash, Beginning of the Period
4,046,937 11,131,175
Cash, End of the Period
$ 14,599,361 $ 3,100,415
NON-CASH FINANCING ACTIVITIES
Conversion of preferred stock to common stock
$ - $ 133
License agreement
17 Years
$ 1,028,114 $ - $ 63,149 $ 964,965
Patents
20 Years
34,742 52,292 1,977 85,057
Total
$ 1,062,856 $ 52,292 $ 65,126 $ 1,050,022

SOURCE: 374Water Inc.



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