The following discussion and analysis should be read in conjunction with the financial statements and accompanying notes contained elsewhere in this document.
Critical Accounting Policies
The consolidated financial statements of
Common stock purchase warrants
The Company accounts for common equity warrants in accordance with ASC Topic 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity (“ASC 815-40”). Based on the provisions of ASC 815-40, the Company classifies as equity any contract that (i) requires physical settlement or net settlement in shares, or (ii) gives the Company the choice between net settlement in cash or settlement in its own shares (physical settlement or net quota-share settlement). The Company classifies as assets or liabilities any contract that (i) requires net cash settlement, including a net cash settlement requirement of the contract if an event occurs and such event is beyond the control of the Company), or ( (ii) gives the counterparty a choice of net cash settlement or equity settlement (physical settlement or net equity settlement). All warrants outstanding at
14 Table of Contents Intellectual Property
The Company tests finite-life intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses an estimate of the undiscounted cash flows over the remaining life of its long-lived assets, or related group of assets, if applicable, to determine whether the assets to be held and used will be realizable. In the event of an impairment, the Company would discount future cash flows using its then-estimated incremental borrowing rate to estimate the amount of the impairment.
We account for stock-based compensation based on ASC Topic 718-Stock Compensation, which requires stock options and other stock-based payments to be expensed based on fair value of each stock option granted. The fair value of each stock option is estimated at the grant date using the Black-Scholes valuation model. This model requires management to estimate expected volatility, expected dividends and expected duration as inputs to the valuation model.
company which was incorporated on
As a result of the merger, the former shareholders of 374Water Private Company own 65.8% of our issued and outstanding common shares and 53.8% of our issued and outstanding voting shares (which include preferred shares on a converted base).
Following the merger, 374Water is focused on being a clean technology and social impact company providing disruptive technology that addresses the looming challenges of environmental pollution. We focus on a new era of sustainable waste stream management that promotes circular economy initiatives and enables organizations to achieve sustainability goals and create green impact. Our vision is a waste-free world and our mission is to preserve a clean and healthy environment that supports life.
We have developed proprietary waste stream treatment systems based on Supercritical Water Oxidation (SCWO). The term used for the process is AirSCWOTM. SCWO harnesses the unique properties of water in its supercritical phase (above 374oC and 221 Bar) to convert organic matter into energy and safe products that can be recovered and used. AirSCWOTM systems are essentially waste stream independent and capable of handling a variety of complex, hazardous and non-hazardous waste streams, opening up opportunities for multiple applications in various vertical markets globally. More relevantly, technology is changing the landscape by addressing environmental challenges that until now have been considered insurmountable (due to science/engineering or financial barriers), a good example being the global PFAS crisis.
We are currently outsourcing the manufacturing of the AirSCWOTM systems to our strategic partner in the United States,
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Systems are supplied to multiple vertical markets and our revenue model includes both equipment sales and long-term service agreements based on throughput and capacity (waste purchase agreements). Our market penetration strategy combines direct sales channels to customers and distribution partners, depending on the specific market and territory. In some cases, systems may be white-labeled and sold as part of a larger solution set.
Since our inception, we have focused on the development, testing and marketing of our clean energy electric power generation systems. Since the closing of the 374Water merger, our activities have focused on the development and commercialization of 374Water’s supercritical water oxidation (SCWO) systems. We have generated
Cash and capital resources
Since its inception, we have funded our business primarily through the sale of debt and equity securities. From
We believe these funds will meet our working capital requirements for the next 12 months. There can be no assurance that such funds will be sufficient to fund our operating plan and commercialize our systems or that we will be able to raise additional necessary funds on a commercially reasonable basis or at all.
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