374Water Inc.

Previous wording

374Water Inc. (the “Company”, “374Water”, “We”, or “Our”) is a global industrial technology and services company providing innovative solutions addressing global organic waste destruction/treatment and waste management issues within the Municipal, Federal, and Industrial markets. 374Water offers our proprietary AirSCWO system, which is designed to efficiently destroy and mineralize a broad spectrum of non-hazardous and hazardous organic wastes producing safe dischargeable water streams, safe mineral effluent, safe vent gas, and recoverable heat energy. Importantly, our AirSCWO system eliminates recalcitrant organic wastes without creating waste byproducts. Our AirSCWO system effectively converts solid and liquid wastes such as sewage sludge, biosolids, food waste, hazardous and non-hazardous waste, and forever chemicals (e.g., “per-and polyfluoroalkyl substances” or “PFAS”) into recoverable resources including water, minerals, and heat energy.

Current wording

374Water Inc. (the “Company”, “374Water”, “We”, or “Our”) is a global industrial technology and services company providing innovative solutions addressing global organic waste destruction/treatment and waste management issues within the Municipal, Federal, and Industrial markets. 374Water offers our proprietary AirSCWO system, which is designed to efficiently destroy a broad spectrum of non-hazardous and hazardous organic wastes producing safe dischargeable water streams, safe mineral effluent, safe vent gas, and recoverable heat energy. Importantly, our AirSCWO system eliminates recalcitrant organic wastes without creating waste byproducts. Our AirSCWO system effectively treats solid and liquid wastes such as forever chemicals (e.g., “per-and polyfluoroalkyl substances” or “PFAS”), hazardous and non-hazardous waste, sewage sludge, and biosolids, into recoverable resources including water, minerals, and heat energy.

Previous wording

During the first half of 2025, we continued to execute our plan towards reaching critical business milestones. Our first half of 2025 achievements to date include (i) continuing ruggedizing and optimizing our AirSCWO system to effectively and continuously process a variety of organic waste streams; (ii) completing first phase of demonstration and bio-sludge processing using our first commercial scale AirSCWO system at the City of Orlando Iron Bridge Water Reclamation Facility; (iii) completing various federal waste destruction demonstrations; (iv) securing a waste destruction services contract for aqueous film forming firefighting form (“AFFF”) with the University of North Carolina at Chapel Hill Collaboratory; and (v) strengthening our leadership team and organization.

Current wording

During 2025, we continued to execute our plan towards reaching critical business milestones. Other year to date achievements include (i) completing first phase of demonstration and bio-sludge processing using our first commercial scale AirSCWO system at the City of Orlando Iron Bridge Water Reclamation Facility;; (ii) securing a waste destruction services contract for aqueous film forming firefighting form (“AFFF”) with the University of North Carolina at Chapel Hill Collaboratory; and (iii) strengthening our leadership team and organization.

Previous wording

Our business has been focused on the development and commercialization of our supercritical water oxidation (SCWO) systems and bench and full-scale demonstrations. During the six months ended June 30, 2025, we generated $594,967 in revenue from equipment manufacturing and services, specifically full-scale demonstrations and treatability studies, compared to $36,821 of revenues during the three months ended June 30, 2024. The approximate $558,000 increase in revenues is primarily due to an increase in equipment revenues of approximately $85,000, an increase in our bench scale treatability studies of approximately $202,000 and an increase in our full-scale demonstration service revenues as we completed one month of demonstration and wastewater processing under our City of Orlando contract resulting in approximately $271,000 of revenues during the three months ended June 30, 2025.

Current wording

Our business has been focused on the development and commercialization of our supercritical water oxidation (SCWO) systems and full-scale demonstrations. During the nine months ended September 30, 2025, we generated $760,417 in revenue from services, specifically full-scale demonstrations and treatability studies compared to $81,490 of revenues during the three months ended September 30, 2024. The approximate $679,000 increase in revenues is primarily due to an increase in our service revenues of approximately $643,000 from the completion of full-scale demonstrations, and $36,000 in equipment revenues.

Previous wording

Cost of revenues include all direct material, labor and subcontractor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation. The increase in our cost of revenues is directly attributable to the increase in our revenues as well as a $230,000 increase in our estimated accrued loss provision on our equipment contract during the six months ended June 30, 2025.

Current wording

Cost of revenues include all direct material, labor and subcontractor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation. The increase in our cost of revenues is directly attributable to the increase in our revenues.

Previous wording

Our research and development expenses decreased to $1,064,757, during the six months ended June 30, 2025, as compared to $1,101,715 in the same period of 2024, primarily due to a temporary reduction in personnel in this department during the current period to focus on our revenue generating activities, partially offset by an increase in stock based compensation of approximately $38,000. We anticipate our research and development expenses to increase as we build up our resources to continue our efforts to commercialize our systems.

Current wording

Our research and development expenses increased to $755,944 during the three months ended September 30, 2025, as compared to $424,579 in the same period of 2024, an increase of approximately $331,000 primarily due to an increase in labor and contract labors as we build up our resources to continue our efforts to commercialize our systems.

Previous wording

Our general and administrative expenses increased to $1,184,689 during the three months ended June 30, 2025, as compared to $822,818 in the same period of 2024, an increase of approximately $362,000 primarily because of an increase in depreciation expense of approximately $116,00 due to the capitalization of our owned unit in the fourth quarter 2024, an increase in travel and related expenses of approximately $164,000 due to our increased headcount, and an increase of approximately $82,000 in general administrative expenses.

Current wording

Our general and administrative expenses increased to $1,462,625 during the three months ended September 30, 2025, as compared to $644,334 in the same period of 2024, an increase of approximately $818,000 primarily from an increase in travel and related expenses of approximately $249,000 due to our increased head count, an increase in depreciation expense of approximately $123,000 due to the capitalization of our owned unit in the fourth quarter 2024, an increase in stock-based compensation to our board of directors of $144,000 due to fully vested grants made during the three months ended September 30, 2025, and an increase of approximately $302,000 in other general administrative expenses due to increased headcount and infrastructure.

Previous wording

Our business has been focused on the development and commercialization of our supercritical water oxidation (SCWO) systems and bench and full-scale demonstrations. Our revenues increased to $1,138,067 during the six months ended June 30, 2025 compared to $352,099 in the previous period. The approximate $786,000 increase in revenues is primarily due to an increase in service revenues of approximately $873,000 from the completion of two full-scale demonstrations, which generated approximately $474,000 of revenues, the completion of one month of demonstration and wastewater processing under our City of Orlando contract, which generated approximately $271,000 of revenues, and the completion of bench scale treatability studies, which generated approximately $174,000 of revenues compared to approximately $46,000 during the six months ended June 30, 2024, an increase of approximately $128,000. These increases were offset with a decrease in our equipment revenue of approximately $87,000.

Current wording

Our business has been focused on the development and commercialization of our supercritical water oxidation (SCWO) systems and bench and full-scale demonstrations. Our revenues increased to $1,898,484 during the nine months ended September 30, 2025 compared to $433,589 in the previous period. The approximate $1,465,000 increase in revenues is primarily due to an increase in service revenues of approximately $1,516,000 from the completion of two full-scale demonstrations and mobile bench-scale demonstration, which generated approximately $1,199,000 of revenues, the completion of one month of demonstration and wastewater processing under our City of Orlando contract, which generated approximately $271,000 of revenues, and the completion of bench scale treatability studies, which generated approximately $174,000 of revenues compared to approximately $128,000 during the nine months ended September 30, 2024, an increase of approximately $46,000. These increases were offset with a decrease in our equipment revenue of approximately $51,000.

Previous wording

Cost of revenues include all direct material, labor and subcontractor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation. The increase in our cost of revenues is directly attributable to the increase in our revenues as well as a $230,000 increase in our estimated accrued loss provision on our equipment contract recording during the six months ended June 30, 2025.

Current wording

Cost of revenues include all direct material, labor and subcontractor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation. The increase in our cost of revenues is directly attributable to the increase in our revenues as well as a $230,000 increase in our estimated accrued loss provision on our equipment contract recording during the nine months ended September 30, 2025.

Previous wording

Our research and development expenses decreased to $531,170 during the three months ended June 30, 2025, as compared to $566,568 in the same period of 2024, a decrease of approximately $35,000 primarily due to a temporary reduction in personal in this department during the current period to focus on our revenue generating activities, partially offset by an increase in stock-based compensation of approximately $19,000. We anticipate our research and development expenses to increase as we build up our resources to continue our efforts to commercialize our systems.

Current wording

Our research and development expenses increased to $1,820,701, during the nine months ended September 30, 2025, as compared to $1,526,294 in the same period of 2024, an increase of approximately $294,000, primarily due to an increase in labor and contract labor of $183,000 as we build up our resources to continue our efforts to commercialize our systems and an increase in stock-based compensation of approximately $111,000.

Previous wording

Our compensation and related expenses increased to $3,672,252 during the six months ended June 30, 2025, as compared to $1,797,695 in the same period of 2024, an increase of approximately $1,875,000, primarily from increased payroll and fringe benefit expenses of $1,113,000 due to a significant increase in headcount and our executive team and an increase in our stock-based compensation of approximately $762,000.

Current wording

Our compensation and related expenses increased to $5,769,832 during the nine months ended September 30, 2025, as compared to $3,010,273 in the same period of 2024, an increase of approximately $2,760,000, primarily from increased payroll and fringe benefit expenses of $1,613,000 due to a significant increase in operational headcount and our executive team and an increase in our stock-based compensation of approximately $1,147,000.

Previous wording

Our professional fees increased to $1,421,239 during the six months ended June 30, 2025, as compared to $868,692 in the same period of 2024, an increase of approximately $553,000 primarily from an increase in recruiting services of approximately $634,000 due to headcount increases in our operations department and the replacement of a board of director, and an increase in accounting and auditing fees of approximately $78,000, offset by a decrease in legal fees of approximately $159,000, .

Current wording

Our professional fees increased to $1,678,467 during the nine months ended September 30, 2025, as compared to $1,367,702 in the same period of 2024, an increase of approximately $311,000 primarily from an increase in recruiting services of approximately $544,000 due to headcount increases in our operations department and the addition of new directors to our board of directors, and an increase in accounting, auditing and consulting fees of approximately $17,000, offset by a decrease in legal fees of approximately $264,000, primarily due to a legal matter with our former CEO that was settled in April 2025.

Previous wording

Our general and administrative expenses increased to $2,127,129 during the six months ended June 30, 2025, as compared to $1,143,459 in the same period of 2024, an increase of approximately $984,000. This increase is primarily because of an increase in depreciation expense of approximately $214,000 due to the capitalization of our owned unit in the fourth quarter of 2024, an increase in investor and public relations services of $97,000, an increase in rent expense of approximately $57,000 from our North Carolina lab lease which commenced in October 2024, an increase in travel and related expenses of approximately $233,000 due to our increased headcount, an increase in relocation expenses of approximately $161,000 as we moved our manufacturing and operations locations to Florida and an increase of approximately $222,000 in general administrative expenses.

Current wording

Our general and administrative expenses increased to $3,589,754 during the nine months ended September 30, 2025, as compared to $1,788,117 in the same period of 2024, an increase of approximately $1,802,000. This increase is primarily because of an increase in depreciation expense of approximately $337,000 due to the capitalization of our owned unit in the fourth quarter of 2024, an increase in investor and public relations services of $268,000, an increase in rent expense of approximately $84,000 from our North Carolina lab lease which commenced in October 2024, an increase in travel and related expenses of approximately $483,000 due to our increased headcount and operational deployments, an increase in relocation expenses of approximately $100,000 as we moved our manufacturing and operations locations to Florida and an increase of approximately $530,000 in general administrative expenses due to our increased headcount and infrastructure.

Previous wording

In accordance with ASU No. 2014-15 Presentation of Financial Statements – Going Concern (subtopic 205-40), the Company’s management evaluates whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. At June 30, 2025, the Company had working capital of $4,643,965 and an accumulated deficit of $36,666,480. For the six months ended June 30, 2025, the Company incurred a net loss of $8,278,862 and used $7,621,070 of net cash in operations for the period. These conditions raise substantial doubt regarding our ability to continue as a going concern.

Current wording

In accordance with ASU No. 2014-15 Presentation of Financial Statements – Going Concern (subtopic 205-40), the Company’s management evaluates whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. At September 30, 2025, the Company had working capital of $1,904,259 and an accumulated deficit of $41,015,504. For the nine months ended September 30, 2025, the Company incurred a net loss of $12,627,886 and used $10,205,171 of net cash in operations for the period. These conditions raise substantial doubt regarding our ability to continue as a going concern.

Previous wording

Presently, the Company will need additional debt or equity financing or a combination of both to continue its operations and meet its financial obligations for at least the next twelve months from the date these unaudited condensed interim consolidated financial statements were issued and beyond. We may consume available resources more rapidly than currently anticipated, resulting in the need for additional funding. We expect to incur continuing losses and negative cash flows from operations for the foreseeable future.

Current wording

Presently, the Company will need additional debt or equity financing or a combination of both to continue its operations and meet its financial obligations for at least the next twelve months from the date these unaudited condensed interim consolidated financial statements were issued and beyond. We may consume available resources more rapidly than currently anticipated, resulting in the need for additional funding. We expect to incur continuing losses and negative cash flows from operations for the foreseeable future. We do not believe we have sufficient cash on hand or cash flows from operations to fund our obligations over the next twelve months and will need additional capital from debt or equity financing to fund our operations.

Previous wording

Since inception, we have financed our operations principally through the sale of debt and equity securities and operating cash flows. We have an “at-the-market” (ATM) equity offering under which we may issue up to $15.1 million of common stock, subject to applicable law. During the six months ended June 30, 2025, we raised approximately $332,400 of net proceeds from the sale of shares of common stock through the ATM. The Company is evaluating strategies to obtain the required additional funding for future operations.

Current wording

Since inception, we have financed our operations principally through the sale of debt and equity securities and operating cash flows. We have an “at-the-market” (ATM) equity offering under which we may issue up to $15.1 million of common stock, subject to applicable law. At September 30, 2025, approximately $13.1 million remains available to be sold in the Company’s at-the-market offerings, subject to various limitations. During the nine months ended September 30, 2025, we raised approximately $1.9 million of net proceeds from the sale of shares of common stock through the ATM. The Company is evaluating strategies to obtain the required additional funding for future operations through debt or equity financing.

Previous wording

We used $7,621,070 of cash in operating activities for the six months ended June 30, 2025 compared to $4,934,044 of cash used in operating activities for the corresponding period in 2024, an increase of $2,687,026. The increase in cash used in operating activities was primarily due to the increase in our net loss of $3,322,077 and increase in operating cash outflows from changes in operating assets and liabilities of $257,060 partially offset by an increase in noncash expenses of $892,111. The cash used in operations was primarily to fund operations as well as our working capital requirements.

Current wording

We used $10,205,171 of cash in operating activities for the nine months ended September 30, 2025 compared to $7,497,734 of cash used in operating activities for the corresponding period in 2024, an increase of $2,707,437. The increase in cash used in operating activities was primarily due to the increase in our net loss of $4,969,284, partially offset by an increase in net operating cash inflows from changes in operating assets and liabilities of $626,871 and an increase in noncash expenses of $1,634,976. The cash used in operations was primarily to fund operations as well as our working capital requirements.

Previous wording

We used $901,823 of cash in investing activities for the six months ended June 30, 2025 compared to $402,220 of cash used in investing activities for the corresponding period in 2024, an increase of $499,603. The increase in cash used by investing activities for the six months ended June 30, 2025 was primarily due to a $526,952 increase in purchases of property and equipment and equipment-in-process, partially offset by a decrease of $27,349 in purchases of intangible assets.

Current wording

We used $1,358,794 in cash in investing activities for the nine months ended September 30, 2025 compared to $999,207 of cash used in investing activities for the corresponding period in 2024, a decrease of $359,587. The decrease in cash used by investing activities for the nine months ended September 30, 2025 was primarily due to a $335,214 decrease in equipment-in-process and intangible assets purchases, partially offset by an increase or property and equipment purchases of $694,801.

Previous wording

We received $20,264 of cash from financing activities for the six months ended June 30, 2025 compared to using $25,658 in financing activities for the corresponding period in 2024, an increase of $45,922. The increase in cash received from investing activities was primarily due to $24,000 of proceeds received from the exercise of a stock option, partially offset by $1,955 of payments toward a note payable used for equipment financing during the six months ended June 30, 2025 compared to $25,658 of net equity issuance costs incurred during the six months ended June 30, 2024.

Current wording

We received $1,845,649 of cash from financing activities for the nine months ended September 30, 2025 compared to receiving $11,912 in financing activities for the corresponding period in 2024, an increase of $1,833,737. The increase in cash received from financing activities was primarily due to an increase of $1,899,184 of proceeds from the sale of common stock, an increase of $600,000 from a secured promissory note, an increase in $24,000 of proceeds received from the exercise of a stock option, offset by $39,467 of payments on a note payable used for equipment financing and a financing liability as well as $649,980 for the repurchase of a warrant.