Forward Looking Statements
Readers are cautioned that the statements in this Report that are not descriptions of historical facts may be forward-looking statements that are subject to risks and uncertainties. This Report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are based on the beliefs of our management, as well as on assumptions made by and information currently available to us as of the date of this Report. When used in this Report, the words "plan," "will," "may," "anticipate," "believe," "estimate," "expect," "intend," "project" and similar expressions are intended to identify such forward-looking statements. Although we believe these statements are reasonable, actual actions, operations and results could differ materially from those indicated by such forward-looking statements as a result of the risk factors included in our 2020 Annual Report, or other factors. We must caution, however, that this list of factors may not be exhaustive and that these or other factors, many of which are outside of our control, could have a material adverse effect on us and our ability to achieve our objectives. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above.
The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein.
Critical Accounting Policies
The condensed consolidated financial statements of
Accounting for Uncertainty in Income Taxes
The Company follows the provisions of ASC Topic 740-10, "Accounting for Uncertainty in Income Taxes" which clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
Based on our evaluation, we have concluded that there are no significant
uncertain tax positions requiring recognition in our condensed consolidated
financial statements. Our evaluation was performed for the tax years ended
We may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. In the event we have received an assessment for interest and/or penalties, it has been classified in the condensed consolidated financial statements as general and administrative expense.
Revenue Recognition
Revenues for the nine and three months ended
Common Stock Purchase Warrants
The Company accounts for common stock purchase 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 contracts that (i) require physical settlement or net-share
settlement, or (ii) gives the Company a choice of net-cash settlement or
settlement in its own shares (physical settlement or net-share settlement). The
Company classifies as assets or liabilities any contracts that (i) require
net-cash settlement including a requirement to net cash settle the contract if
an event occurs and if that event is outside the control of the Company), or
(ii) give the counterparty a choice of net-cash settlement or settlement in
shares (physical settlement or net-share settlement). As of
15 Table of Contents Stock-based compensation.
We account for stock-based compensation based on ASC Topic 718-Stock Compensation which requires expensing of stock options and other share-based payments based on the fair value of each stock option awarded. The fair value of each stock option is estimated on the date of grant using the Black-Scholes valuation model. This model requires management to estimate the expected volatility, expected dividends, and expected term as inputs to the valuation model.
Overview
On
Immediately following the Merger, 374Water changed its name to 374Water
Since the closing of the 374Water Merger, our business has been focused on development and commercialization of 374Water's supercritical water oxidation (SCWO) systems, which include PowerVerde expanders. Our business is subject to significant risks, including the risks inherent in our research and development efforts, uncertainties associated with obtaining and enforcing patents and intense competition.
Results of Operations
Three Months Ended
Since inception, we have focused on the development, testing and
commercialization of our clean energy electric power generation systems. Since
the closing of the 374Water Merger, our business has been focused on development
and commercialization of 374Water's supercritical water oxidation (SCWO)
systems, which include PowerVerde expanders. We generated
Nine Months Ended
Since inception, we have focused on the development, testing and
commercialization of our clean energy electric power generation systems. Since
the closing of the 374Water Merger, our business has been focused on development
and commercialization of 374Water's supercritical water oxidation (SCWO)
systems, which include PowerVerde expanders. We generated
16 Table of Contents
Liquidity and Capital Resources
In
We have financed our operations since inception principally through the sale of
debt and equity securities. As of
We believe that these funds will satisfy our working capital needs for the next 12 months. There can be no assurance that these funds will be sufficient to finance our plan of operations and commercialize our systems or that we will be able to raise any necessary additional funds on a commercially reasonable basis or at all.
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