374Water Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 12, 2025

Key Takeaways

  • Positive Sentiment: Three seventy four Water's AirFlow system achieved >99.99% destruction of PFAS waste to non-detect levels, prompting the launch of its waste destruction services and a contract with UNC Chapel Hill worth $1 M initially and up to $5 M+ in future phases.
  • Positive Sentiment: The company signed a term sheet with Crystal Clean to host a waste destruction services facility at its Ohio TSDF site on a revenue-sharing model, moving toward a definitive agreement and commercial operations in the coming months.
  • Negative Sentiment: Second quarter revenue rose to $600 K from $37 K a year ago, but operating expenses increased 45% to $4.4 M and net loss widened to $4.6 M, while cash declined to $2.1 M, prompting a new ATM facility and ongoing capital-raising efforts.
  • Positive Sentiment: The Board was strengthened with former CEOs Steve Jones (Covanta/ReWorld) and Jim Pawlowski (Veolia North America/DuPont), enhancing governance and commercial strategy expertise in environmental and water markets.
  • Negative Sentiment: Shares remain under pressure despite securing a 180-day NASDAQ delisting waiver and ending ties with a large investor involved in short-selling, leaving valuation and compliance risks ahead.
AI Generated. May Contain Errors.
Earnings Conference Call
374Water Q2 2025
00:00 / 00:00

Transcript Sections

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Operator

Greetings, and welcome to the three seventy four Water Second Quarter twenty twenty five Financial Results Conference Call. At this time, all participants are in listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. At this time, I will hand the call to Chris Tyson, Executive Vice President of MZ Group.

Christopher Tyson
EVP & Partner at MZ North America

Thank you, operator. 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. 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.

Christopher Tyson
EVP & Partner at MZ North America

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 ks for a more complete discussion of these factors and other risks particularly under the heading Risk Factors. 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 second quarter ended 06/30/2025.

Christopher Tyson
EVP & Partner at MZ North America

A press release detailing these results crossed the wire this afternoon at 04:01PM Eastern Time and is available in the Investor Relations section of the company's website 374water.com. I will now turn the call over to 374Water's President and CEO, Chris Gannon. Chris, the floor is yours.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Thank you, Chris. Good afternoon, everyone, and thank you all for joining us today. We very much appreciate your support, collaboration, and constructive feedback from our shareholders. As your active engagement demonstrates your profound commitment to three seventy four Water's mission. With that, let's jump in.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Three seventy four Water is an industrial technology and services company focused on transforming the waste management landscape. Our proprietary airflow system offers a ground baking 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, vent gas, and recoverable thermal energy. We are targeting the $450,000,000,000 waste destruction and management market that is increasingly demanding sustainable next generation solutions. Our AirScore systems are well positioned to meet this need.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

We are building a flexible commercial model that includes waste destruction services, as well as capital sale and lease options that include service management agreements, allowing us to address diverse customer needs and to drive adoption across market segments. Based on our current trajectory, discussions with potential partners, and market demand, we believe we are well positioned to meet our growth targets for 2025 and drive material revenue growth in 2026 and beyond. Quite simply, we are operating and executing better than ever before as we transition the company to growth. Moving on to our operational highlights and business updates for 2025 year to date. I would like to discuss some of the team's many accomplishments yet this year.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

In Q1, we continue to ruggedize and optimize our AS system, upgrade our pre and post treatment systems, and further demonstrate our destruction capabilities across many additional solid and liquid waste. In fact, the initial phase of our Orlando deployment was focused on the destruction of AFFF, gas, IX, and other PFAS contaminated waste. In all cases, we achieved waste destruction results north of 99.99%, including PFAS contaminants, and often to achieve destruction to non detect levels, meaning no trace elements were measurable. These results reinforce the effectiveness of our AirSquad solutions and support our decision to launch our waste destruction services business and begin aggressively pursuing meaningful revenue opportunities there. On the heels of launching this business line, we 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.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

If we are awarded additional phases of this project, this contract could be worth more than $5,000,000 in future revenues to our company. In addition, we are actively responding to AFFF destruction RFPs from state and local municipalities and are beginning to receive opportunities at the federal level. We are also pursuing large near term opportunities for the destruction of spent media, including PFAS contaminated GAC, IX, and Foamate. We believe we are well positioned to capitalize on these opportunities due to our AS system scale, versatility, and throughput. Further, during this period, supercritical water oxidation technology, in additional validation, have been named by the EPA as an emerging PFAS destruction technology, as well as being a U.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

S. Army Corps of Engineers approved solution for PFAS destruction. In mid Q2, we signed a term sheet with Crystal Clean to establish a waste destruction services facility at their RCRA Part B TSCF facility in Oregon, Ohio. And we believe we are advancing towards finalizing the definitive agreement. We are very excited about partnering with Crystal Clean.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Our agreement is based on a revenue sharing and system hosting model. The agreement also includes jointly and digitally marketed waste destruction services to municipal, federal, and industrial customers. In the coming months, we will provide further updates on the timing for constructing, commissioning, and launching our first WDS operations. As a reminder, it is our intention to establish waste destruction service facilities across North America and are in discussions with multiple PSDF players to accomplish this goal. During this period, we also began our biosolids destruction project in Orlando, which upon completion will trigger additional payments under the agreement.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

We believe successful completion of the destruction project may lead to an increased scope of work and additional long term revenue from Orlando. We have completed, billed, and collected on the first phase. We will begin phase two of the Orlando duration run this week. The latest update on the Orange County Sanitation Project is all new system improvements identified are being implemented on their AS6 system, consistent with our agreement. We completed manufacturing the AS system in late July and have completed our internal factor acceptance test, or FAT.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

We begin the OC SANFAT this week and estimate this will take us through much of September. We have also started mobilization planning for the AS system, dewatering skid, and other systems, and remain optimistic on our late September shipment to California. In addition, we received provisional consent for all permits necessary to operate our AS system at OCSaN. Further, in June, we deployed our mobile AS system to clean up PFAS contaminated fomate destruction project at Peterson Space Force Base in collaboration with the DoD Environmental Security Technology Certification Program in the Colorado School of Mines. Our AS system performed extremely well during this month long deployment.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

And in July, we demobilized our system back to North Carolina to execute on other contracted work. The feedback received from the DoD has been extremely positive, and we look forward to sharing destruction statistics once approved or released by the government. Turning to Q3, in July, we deployed an AS6 system to Detroit, Michigan for the DIU destruction project that will be conducted from August to October. We are now operational. This project showcases our AS system's ability to treat multiple concentrated toxic PFAS waste streams, including granular activated carbon, ion exchange resin, and stillbonds, all generated from ongoing federal AFFF remediation.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

We expect to achieve excellent results and become a pre approved waste destruction vendor to the DoD. The DoD is already spending hundreds of millions of dollars for remediation and waste destruction. We expect our work in Detroit will lead to recurring WDS contract awards. We also recently announced the destruction of PFAS contaminated biosolids at north of 99.99% and often at non detect levels. PFAS is truly a public health disaster and thankfully state and local municipalities, federal agencies, and industrial players are now acting.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

In addition, to support our growth, we strengthened our Board of Directors with the addition of two incredibly successful, experienced, and connected former CEOs in the industries we operate. Steve Jones joined our board in April. Steve served as CEO of Covanta, now known as ReWorld, which he grew throughout his tenure. His strong background in leadership in environmental services, corporate governance, and commercial strategy will be invaluable to our company. Steve also sits on several other public company boards providing a broad and deeply experienced perspective.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Jim Pawlowski was also elected to our board in June. Jim served as CEO of Regeneration and Recovery Solutions at Veolia North America, who achieved built and scaled throughout his tenure and he remains a key strategic advisor to Veolia. Jim also spent twenty five years at DuPont, where he held multiple strategic operational leadership roles. Jim brings extensive water, wastewater, environmental solutions expertise to our company, as well as deep connections across these markets. We believe these board additions and the major milestones progress made across our markets place us on a solid path to scale our business.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Our AirSchool technology delivers scalable waste destruction solutions, which we believe sets us apart in a fragmented and outdated waste treatment industry. We are at a pivotal inflection point in the commercialization of our business as we begin to convert our 1,800,000,000.0 of identified opportunities into revenue. We are pursuing near term opportunities for AF Capital sales and leases with the municipal and federal customers, as well as waste destruction services contracts across all markets and TSDF partner opportunities. As a reminder, we intend to offer four distinct AS models, each designed to address a wide range of customer solid and liquid waste destruction and capacity needs. Our models include our ultra mobile AS1, the mobile AS6, the semi permanent AS30, and our high capacity AS100 plus Our first AS1 system is coming off the line and should be ready for deployment to revenue generating WDS work later this month.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

We plan to manufacture and deploy more of these systems in 2026 to seed our mobile waste destruction service fleet. We believe this mobile fleet will allow us to unlock substantial on-site federal government work and complete industrial projects to open these markets. Our two AS6 systems are now on-site in Orlando and Clean Earth's TSDS facility in Detroit. The units will then be deployed to OC SAN and our first RCRA TSDSWDS site. In addition, we have completed our modularized AS6 system design, so future builds will provide greater mobility, ease of setup, and better R and M access.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Turning to our AS30 system, we are currently designing the system for potential start up fabrication before year end and initial deployment in 2026. We intend to utilize the AS6 to expand our TSDF waste destruction service capacity. We are tracking significant demand for this system size for municipal wastewater treatment facilities, as well as burgeoning industrial opportunities. Importantly, once our AS system is constructed, we believe we will have a significant competitive advantage over other destruction options, given our system's capability and capacity. We anticipate our AS30 system will also create a modular, scalable platform for our largest capacity AS100 plus systems, which we plan to begin designing in 2026.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

We continue to monitor long sales cycle, high value opportunities for our AS100 plus systems with large municipal customers, which we intend to convert to revenue in coming years. Let's now turn to our go to market strategy and commercial momentum. Our approach is intentionally diversified and focused on well established markets that require advanced waste destruction solutions like our AirSquo system. We offer customers multiple procurement options to meet varying operational and budgetary needs, including capital purchase and leases, which include a management or service component and pure play 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 WDS models.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

We look forward to announcing additional AS sales, which include a large WDS component. On the federal side, the US government has made significant commitments to the removal and destruction of PFAS and other contaminants from military and civilian facilities. With hundreds of millions of dollars already appropriated for this effort, we believe three seventy four Water is well positioned to compete for and secure a meaningful share of these waste disruption services work. We are actively completing current DoD projects and are focused on establishing our TSCF waste destruction service operations to unlock this large market opportunity. We also continue to ramp up efforts to capture industrial waste destruction opportunities and are actively conducting initial feasibility projects with potential partners, which we see as a significant and growing revenue stream.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

In addition, the US EPA announced new major actions 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 accountable. We believe the EPA's stance on PFAS provides positive tailwinds for our AS platform. Finally, we are also materially advancing strategic partnership discussions with multiple TSDS to establish on-site WDS operations. In addition to our Crystal Clean agreement, our internal goal is to finalize one or more additional TSDF agreements this year, with more to follow in 2026. I would now like to discuss our waste destruction services strategy and how we intend to unlock recurring revenues.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Our strategy has three components, on-site permanent waste destruction services, off-site centralized TSDF waste destruction services, and on-site mobile waste destruction services. First, our on-site permanent WDS. We are receiving strong interest from potential municipal, federal, and industrial market participants for turnkey airflow waste destruction operations. Whether these organizations choose to purchase our AS systems outright or enter a WDS agreement, we see the potential for $3.74 Water to permanently operate these units on behalf of these customers for long term service contracts. We are currently pursuing multiple opportunities across our AS6, AS30, and AS100 plus systems.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Second, turning to our centralized TSDF waste destruction service strategy, our intention is to establish a network of eight to 10 TSDF waste destruction service operations across North America over the next several years to service all major geographic markets. Our TSDF waste destruction service partnership model will initially utilize our AS6 units. And once our AS30s are available, we plan to utilize them to provide a significantly greater waste destruction capacity, reduced per gallon or per ton operating costs, and materially improved revenue sharing opportunities with TSDS partners. Finally, our mobile waste destruction service fleet strategy. We see a large market opportunity to provide on-site mobile WDS for federal and industrial sites that have some of the most sensitive and hazardous waste.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

For those customers that don't want to transport certain waste, we plan to offer on demand waste destruction services through a fleet of mobile AS systems. We plan to initially utilize our AS1 system, one of which is coming off the line this month, and then intend to expand with our now modularized and mobile AS6s. Down the road, we envision a fleet of AS units traveling around North America. With that, I'll now turn the call over to Russell.

Russell Kline
Russell Kline
CFO at 374Water

Thank you, Chris. As mentioned, we are aggressively pursuing our three pronged waste destruction services strategy and believe it is sound. Based on initial internal assumptions and modeling, we estimate each mobile AS one has the potential to generate more than 2,000,000 in annual revenue as the mobile fleet will generate higher tipping fees due to the nature of on-site destruction. We plan to build an initial fleet of mobile AS units serving North America and will naturally expand this mobile fleet as the market demands. We currently estimate that each AS one will cost us roughly 2,000,000 to build including vehicle with a payback period of approximately two to two and a half years.

Russell Kline
Russell Kline
CFO at 374Water

Based on initial internal assumptions and modeling, we estimate our AS six has the potential to generate 3 to 5,000,000 in recurring annual revenue and margins of 30 to 50%. We plan to initially utilize the AS6 at TSDF waste destruction service facilities, and we also plan to utilize these modularized solutions as part of our mobile waste destruction services fleet. As it relates to TFDF waste destruction services operation, we currently estimate that each facility will cost roughly 4.5 to 6,000,000 to build with a payback period of approximately one point five to two point five years. Based on initial internal assumptions and modeling, we estimate our AS30s have the potential to generate from 12 to 20,000,000 in recurring revenues and gross margins of more than 50%. Once ready, we plan to utilize AS30s at RCRA TSDF partner facilities to dramatically increase our waste destruction capacity, decrease operating costs on a gallon and ton basis, and increased revenues.

Russell Kline
Russell Kline
CFO at 374Water

It is important to note these figures are based on non hazardous waste tipping fees, which we believe will be materially higher when processing hazardous waste. Looking to the remainder of 2025, we continue to maintain line of sight to 2 to 4 to 6,000,000 in revenue. Importantly, we continue to make progress in our Orlando biosolids destruction project and our OC Sand factory acceptance test and expected delivery. We have already started our Detroit DAU project. We completed our Peterson DOD work and will begin processing the North Carolina AFFF destruction work.

Russell Kline
Russell Kline
CFO at 374Water

In addition, we are working to finalize our TSDF agreement and then prepare the facility to begin waste destruction service operations. We are negotiating possible unit AS sales where we could recognize revenue yet this year. Based on current and anticipated future demand and the fact that we are beginning to convert pipeline into actionable backlog, we believe we are on a credible path to achieving $250,000,000 to $500,000,000 in annual revenues in five years. For the 2025, revenue totaled 600,000 compared to 37,000 in the prior year. Our business has been focused on the development and commercialization of our AirSquale systems to fulfill ongoing projects.

Russell Kline
Russell Kline
CFO at 374Water

The approximately $560,000 increase in revenues is primarily due to an increase in full scale demonstration service revenues as the company completed phase one of demonstration and wastewater processing under a customer contract resulting in approximately 270,000 of revenue, an increase in treatability studies of approximately 200,000 and recognition of equipment revenues of approximately 85,000 during the three months ended 06/30/2025. Total operating expenses increased 45% to $4,400,000 for the three months ended 06/30/2025, compared to $3,000,000 in the prior year period. The increase was primarily due to an increase in compensation and related expenses of 1,000,000 as the company increased staffing levels for manufacturing, deployment, and research and development teams. In addition, there was an increase of 400,000.0 in general and administrative expenses related to supporting expanded operations. Net loss for the three months ended 06/30/2025 was 4,600,000.0 as compared with 2,900,000.0 in the prior year.

Russell Kline
Russell Kline
CFO at 374Water

Cash and cash equivalents as of 06/30/2025 was 2,100,000.0 as compared to 10,700,000.0 as of 12/31/2024. As of 06/30/2025, working capital was 4,600,000.0 compared to 7,300,000.0 as of 06/30/2024. Based upon our current cash position, we project to have adequate cash to support our 2025 business plans. To supplement operating cash needs, we established a new at the market facility and are actively pursuing additional capital raising opportunities to fund waste destruction services and other growth initiatives. I will now hand the call back to Chris for his closing comments.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Thank you, Russell. Three seventy four Water's mission is clear, provide scalable, effective waste destruction solutions to markets that urgently need them. The demand for advanced, innovative, technology is accelerating, And we believe three seventy four Water is uniquely positioned for leadership in our sector. Our Erosquiva technology directly addresses a critical global challenge, which is the safe, scalable destruction of waste streams. We are targeting large underserved markets, municipal, federal and industrial, where traditional waste destruction solutions are not sufficient.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Our strategy to create a national network of TCF waste destruction service facilities and mobile waste destruction service fleet is sound and will enable us to unlock material contracts. Regulatory momentum, particularly around PFAS and other contaminants, creates additional tailwinds reinforcing the need for our solution. Our system is scalable and customizable, enabling us to serve a wide range of customer profiles. Our commercial model is flexible with options for waste destruction services, capital sales and leases, providing multiple revenue streams. And we have an actionable backlog and growing pipeline of waste destruction services and capital sale opportunities to support our near and long term revenue targets.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Taken together, we believe these pillars position us for strong, sustainable growth. We're executing against a clear roadmap, expanding our team and strategically deploying capital. We anticipate 2025 will be a breakout year as we move towards growth and long term market leadership. Finally, I'd like to take a moment to address some of the recent calls from shareholders concerned about our stock price. Many have been investors for years and are deeply concerned about our valuation.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

And we share those concerns. We believe our stock price was impacted by a number of factors, including among others, this exit of several shareholders, this corresponding short selling brought about by a large institutional investor who participated in our last capital raise and our NASDAQ eligibility challenges. We have proactively responded to these issues. For instance, we've successfully parted ways with the institutional investor and we received a NASDAQ delisting waiver notice providing one hundred and eighty day extension. We believe that if we can successfully manage those risks and scale our business in line with our business strategy, the positive results we expect over the near term can lead to stock price recovery.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

We intend to share many meaningful developments over the next several months that I believe will further showcase our transition to growth, as well as our ability to materially unlock our opportunities. With these announcements, we believe we are incredibly well positioned to capitalize on the amazing work completed over the past fourteen months. In closing, the leadership team, employees, and board are committed to continued operational execution and business expansion. We are all laser focused on fulfilling the company's mission, deliver best in class waste destruction solutions to customers, and aggressively scale the company to benefit our shareholders. With that, I'd like to thank everyone for joining us today.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

I will now hand the call over to the operator to begin our question and answer session. Operator, please go ahead.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue.

Operator

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question comes from Rob Brown with Lake Street Capital. Please go ahead.

Rob Brown
Founding Partner, Senior Equity Research Analyst at Lake Street Capital Markets

Good afternoon. Congratulations on all the progress.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Hey, Rob. Thanks so much for on the call.

Rob Brown
Founding Partner, Senior Equity Research Analyst at Lake Street Capital Markets

First question is on the, I think, North Carolina contract for obstruction services that I think you got for the state in destroying firefighting foam. Maybe just some further color on kind of that opportunity. What's sort of the first step and what's the ultimate kind of market there?

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Yes, so in terms of that exact opportunity, so we have picked up AFFF firefighting foam and we're going to begin processing that here over the next month or so. So the initial contract is worth about a million dollars and then going forward it's significantly higher if we win subsequent rounds of that. They have a tremendous amount AFFF that's kind of left over that they would like to fully destroy. In terms of the market overall though, we are responding to many different RFPs from the different states, as well as we're starting to see those from the federal government as well. So I think in large part, can say kind of game is on and they're now looking to proactively destroy those immense stockpiles of it.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

And we're talking millions and millions of gallons of AFFF. So big opportunity for us.

Rob Brown
Founding Partner, Senior Equity Research Analyst at Lake Street Capital Markets

Okay, great. This leads, I think, into my next question. Establishing the multiple waste destruction kind of facilities, and I know you've got one sort of in the works, but how long does that take to roll out sort of a national fleet or set of partnerships? And what does that look like, I guess, over the next couple of years? How many per year? And how does that kind of ramp?

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Well, thanks for that question. In terms of the way I think about that and the way we're thinking about it just generally internally is that we would like to have between eight and ten initial facilities across North America, which would also include Canada, Alaska, and so forth. And there are, of course, quite a number of very large TSDF players in the market. And so we're talking to all of the major players. So when you think about an organization like Crystal Clean, for example, we are talking about going to their TSDF facility in Ohio.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

That's their first facility. They're adding more TSDF facilities here over the course of this year. And we would certainly love to go to those facilities as well. But the idea is to put a TSDF facility ultimately with AS30 systems across The US up into Canada, up into Alaska.

Rob Brown
Founding Partner, Senior Equity Research Analyst at Lake Street Capital Markets

Okay, great. And I guess one more question, if I can sneak it in here. Colorado School of Mines DoD kind of project, I think you said that was completed. But what's sort of the next steps and how does that kind of get into the DoD system and what does that project sort of enable in terms of next steps?

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Yeah, so we've been doing a lot of work with the DoD and other kind of military agencies, if you will, at the federal level. The work that we did at Peterson Space Force Base was just one many of those projects. That went extremely well. We've gotten some really great feedback as well from the government on that. And we believe that results that we'll see with that waste destruction work there will be similar to what we've seen elsewhere on that same material.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Now we're at the DIU, with the DIU up in Detroit at Clean Earth's facility there. I think we have online some pictures of that facility and how that looks. The goal there is we're destroying over the course of essentially six weeks different types of waste that will are all ones that the federal government is looking to destroy and allocating dollars to right now. And so we believe that will then set us up to bid on some very, very large contracts over the very near term. A part of the strategy though for us is that we also need to be at these RCRA TSDF sites, and therefore our partnership model with those players.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

The federal government very much wants to send waste to RCRA PSDF facilities that can handle or take in hazardous and non hazardous waste. So those two key issues are at play for us and that's why we're executing as we are.

Rob Brown
Founding Partner, Senior Equity Research Analyst at Lake Street Capital Markets

Okay, great. Thanks again, and I'll turn it over.

Operator

Thank you. Our next question comes from Michael Matheson with Sidoti. Please go ahead.

Michael Mathison
Michael Mathison
Senior Equity Analyst at Sidoti & Company

Congratulations on all the milestones, you guys.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Thanks, Michael. Thanks so much for being here.

Michael Mathison
Michael Mathison
Senior Equity Analyst at Sidoti & Company

Oh, great. So we got so much going on. I just wanna make sure I've understood everything. The arrangement with University of North Carolina, Chapel Hill, do you have a revenue target from that, first of all?

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Yeah. So the initial contract is 400,000 And then we naturally would like to get the next step of that process or next phase, which could be worth up to multimillions.

Michael Mathison
Michael Mathison
Senior Equity Analyst at Sidoti & Company

Okay. All right. And we've talked in previous calls about all the leverage you get from waste destruction as a service. So the first of the big guys that may go into production on that crystal clean. Do we have a sense of when they'll be operational?

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Yes. So we are still working to finalize our definitive agreement with them. I think we're quite close. And then we will immediately move into the construction of that facility. And we've been in the background already working on that, but we haven't broken ground yet.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

So once we start that, I would anticipate roughly four months or so to get up and running there.

Michael Mathison
Michael Mathison
Senior Equity Analyst at Sidoti & Company

Okay. Would you be able to disclose for me the size of effectively the sales force, the people you have out there trying to drum up business with all these opportunities?

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Yes, so absolutely. So currently, we have a team of four direct business development sales professionals. And then we also have a corporate development individual as well that is working with us specifically primarily focused on the TSDF world.

Michael Mathison
Michael Mathison
Senior Equity Analyst at Sidoti & Company

Okay, great. Well, so again, it's great to see all the progress and it's great to see that turn into revenue. You're doing so much better than last year. I heard you say that you're sticking to the targets you set in January for revenue?

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Correct. Okay.

Michael Mathison
Michael Mathison
Senior Equity Analyst at Sidoti & Company

And are you also sticking to the target of a positive gross margin

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

We provide that as a target? I don't recall doing that specifically.

Michael Mathison
Michael Mathison
Senior Equity Analyst at Sidoti & Company

I don't mean to hang you on it. It came out of some of the discussions we had back in January. But just to clarify then, it sounds like that may be an ambition, not a real target at this point. I think that's fair. Okay, good.

Michael Mathison
Michael Mathison
Senior Equity Analyst at Sidoti & Company

Well, again, congratulations and I wish you a successful Q3. Thank you for taking my call.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Thank you so much for your time. Thank you, Michael.

Michael Mathison
Michael Mathison
Senior Equity Analyst at Sidoti & Company

Very good.

Operator

Thank you. Ladies and gentlemen, as there are no further questions, I would now like to turn the call back Gannon for his closing remarks.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

Thank you, operator. And I'd like to once again thank everyone for joining our call today. We look forward to continuing to update you on our ongoing progress in growth over the coming months. If you were unable to get any of your questions answered, please reach out to IRR firm MZ Group and they'll be happy to assist you. And we're also happy to once again host you down in Orlando or other areas so you can see our technology in action.

Chris Gannon
Chris Gannon
CEO, President & Director at 374Water

That concludes our second quarter twenty twenty five update call. Thank you very much, and have a great day.

Operator

Thank you. Ladies and gentlemen, the conference of three forty seven Water Inc. Has now concluded. Thank you for your participation. You may now disconnect your lines.

Executives
    • Chris Gannon
      Chris Gannon
      CEO, President & Director
    • Russell Kline
      Russell Kline
      CFO
Analysts
    • Christopher Tyson
      EVP & Partner at MZ North America
    • Rob Brown
      Founding Partner, Senior Equity Research Analyst at Lake Street Capital Markets
    • Michael Mathison
      Senior Equity Analyst at Sidoti & Company
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