374Water (SCWO) risk factors, FY2024 10-K

Risks Related to Our Business and General Economic Conditions

1. 01Our management team may not be able to successfully implement our business strategies
2. 02We may be unable to obtain required licenses from third parties for product development
3. 03We face competition in our industry, and we may be unable to attract customers and maintain a viable business
4. 04We may incur liabilities to customers as a result of warranty claims or failure to meet performance guarantees, which could reduce our profitability
5. 05Natural disasters and other catastrophic events beyond our control could adversely affect our business operations and financial performance
6. 11A sustainable market for our products may never develop
7. 12Our ability to treat hazardous wastes on a commercially viable basis is unproven, which could have a detrimental effect on our ability to generate or sustain revenues
8. 13We have a limited operating history with no material revenues
9. 14Our business and results of operations may be adversely affected if we are unable to recruit and retain qualified management
10. 15Our products may have defects, which could damage our reputation, decrease market acceptance of our products, cause us to lose customers and revenue and result in costly litigation or liability
11. 16Our ability to generate revenue will depend in part on government contracts which expose us to the uncertainties of governmental budgetary and funding constraints and local, national and international political conditions and events
12. 17We have identified material weaknesses in our internal control over financial reporting, which may have a material adverse effect on our results of operations and financial condition for future periods
13. 18Significant disruptions of our information technology systems or breaches of our data security could adversely affect our business
14. 19If we fail to manage growth or to prepare for product scalability effectively, it could have an adverse effect on our employee efficiency, product quality, working capital levels and results of operations
15. 20We may be adversely affected by the effects of inflation
16. 21We are required to obtain permits in different areas of the world in order to utilize our products in such regions. Our need to apply for and receive permits could substantially limit our ability to operate and grow our business
17. 22We have in the past and may in the future be involved in litigation matters or other legal proceedings that are expensive and time consuming
18. 23Our business, operations, and product and service offerings are subject to and affected by many federal, state, local and foreign environmental laws and regulations, including those enacted in response to climate change concerns
19. 24If we become subject to claims relating to handling, storage, release or disposal of hazardous materials, we could incur significant cost and time to comply
20. 25Our business activities also create a risk of contamination or injury to our employees, customers or third parties, from the use, treatment, storage, transfer, handling and/or disposal of these materials
21. 26Failure to effectively treat emerging contaminants could result in material liabilities
22. 27Wastewater operations entail significant risks that may impose significant costs
23. 28We enter into various contracts in the normal course of our business, some or all of which may require us to indemnify the other party to the contract. In the event we have to perform under these indemnification provisions, it could have an adverse effect on our business, financial condition and results of operations
24. 29United States trade policies and other factors beyond the Company’s control, including the imposition of tariffs and retaliatory tariffs, may adversely impact our business, financial condition, and results of operations

Risks Related to Our Intellectual Property

1. 06We may have difficulty in protecting our intellectual property and may incur substantial costs to defend ourselves in patent infringement litigation
2. 34We may have difficulty in protecting our intellectual property and may incur substantial costs to defend ourselves in patent infringement litigation
3. 35At this time, we rely primarily on a combination of patents, trade secrets, copyright and trademark laws, and confidentiality procedures to protect our proprietary technology, which is our principal asset
4. 36competitors may register patents in technologies relevant to our business areas
5. 37We may become subject to claims of infringement or misappropriation of the intellectual property rights of others, which could prohibit us from developing our products, require us to obtain licenses from third parties or to develop non-infringing alternatives and subject us to substantial monetary damages
6. 38We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property
7. 39We may need to depend on certain technologies that are licensed to us. We would not control these technologies and any loss of our rights to them could prevent us from selling our products
8. 40the priority of invention of patented technology

Risks Related to our Reliance on Third Parties

1. 07Our suppliers may fail to deliver materials and parts according to schedules, prices, quality and volumes that are acceptable to us, or we may be unable to manage these materials and parts effectively
2. 41Our suppliers may fail to deliver materials and parts according to schedules, prices, quality and volumes that are acceptable to us, or we may be unable to manage these materials and parts effectively
3. 42Failure by third parties to supply or manufacture components of our products or to deploy our systems timely or properly could adversely affect our business, financial condition and results of operations

Risks Related to our Common Stock and Capital Structure

1. 08The market price of our common stock historically has been highly volatile and is likely to continue to be volatile, and you could lose all or part of your investment
2. 09The interests of our principal stockholders, officers and directors, who collectively beneficially own a significant amount of our common stock, may not coincide with yours and such stockholders will have the ability to control decisions with which you may disagree
3. 10We incur costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives
4. 43The market price of our common stock historically has been highly volatile and is likely to continue to be volatile, and you could lose all or part of your investment
5. 44Trading volume of our common stock
6. 45Because we are a “smaller reporting company,” we may take advantage of certain scaled disclosures available to us, resulting in holders of our securities receiving less Company information than they would receive from a public company that is not a smaller reporting company
7. 46We do not intend to pay dividends on our common stock for the foreseeable future
8. 47If securities or industry analysts do not publish research about our business, or publish negative reports about our business, our share price and trading volume could decline
9. 48Future sales or potential sales of our common stock in the public market could cause our share price to decline
10. 49Provisions in our Amended and Restated Certificate of Incorporation and Bylaws and of Delaware law may prevent or delay an acquisition of the Company, which could decrease the trading price of our common stock
11. 50Limit our ability to enter into business combination transactions with certain stockholders
12. 51We may not regain compliance with the continued listing requirements of The Nasdaq Capital Market
13. 52The Company intends to elect an additional Independent Director to the Board as soon as practicable and prior to the expiration of this cure period. However, there can be no assurance that the Company will successfully regain compliance with Nasdaq Listing Rule 5605(b)(1) within the applicable cure period

Risks Related to Our Financial Position and Capital Requirements

1. 30Our business currently does not generate sufficient revenues to meet our capital requirements and we do not expect that it will do so in the near future
2. 31Our financial results depend on successful project execution and may be adversely affected by cost overruns, failure to meet customer schedules or other execution issues
3. 32We have inadequate capital and need for additional financing to accomplish our business and strategic plans. Terms of subsequent financing, if any, may adversely impact your investment in our securities
4. 33Our research and development expenses may increase in the future