374Water Inc. — financial distress indicators
Financial-health summary
374Water Inc.'s reported numbers place it in the 'Very weak' financial-health band (distress score 75/100). The main indicators are cash runway under 12 months, losses in each of the last 3 years and revenue collapse. Independently, the Ohlson accounting model puts its 1-year failure probability at 100% and the market-implied (Merton) default probability is 1.7%. In its favour: cash on hand covers all debt (net-cash balance sheet).
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
At the current free-cash-flow burn, cash covers ~1 months.
Going-concern standard: management must assess ability to continue for 12 months (ASC 205-40). Runway below that horizon forces dilution, asset sales or default.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Revenue changed -52% year over year.
A >30% sales drop typically breaches leverage covenants and starves fixed-cost coverage.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
O-score 10.57 → model probability 100%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Price is -62% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
Operating margin fell from -1162% to -9834% in two years.
Sharp margin compression signals loss of pricing power or cost control.
Revenue declined every year for three years.
Structural, not cyclical, decline.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Cash on hand covers all debt (net-cash balance sheet).
- High insider/promoter ownership (43%) aligns management with survival.
📰 Recent news scan
- 374Water to present new PFAS destruction data at WEFTEC 2026Yahoo Finance · 2026-09-22
- 374Water to Present New Supercritical Water Oxidation Destruction Data at WEFTEC 2026Yahoo Finance · 2026-09-22
- 374Water wraps up mobile AirSCWO campaign for Minnesota PFAS projectYahoo Finance · 2026-09-15
- 374Water Completes $600,000 Waste Destruction Services in St. Cloud, MNYahoo Finance · 2026-09-15
- 374Water outlines growth strategy around AirSCWO technologyYahoo Finance · 2026-09-09
- 374Water Unveils Strategy to Scale AirSCWO into a Global Waste Destruction PlatformYahoo Finance · 2026-09-09
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do 374Water Inc.'s financial-health indicators show?
As of 2026-10-08, 374Water Inc.'s public financial data places it in the 'Very weak' band with a distress score of 75/100, driven by cash runway under 12 months, losses in each of the last 3 years and revenue collapse. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is 374Water Inc.'s financial distress score?
75/100 ('Very weak'). Ohlson O-score 10.57 (model 1-year failure probability 100%). Merton distance-to-default 2.13 σ (model default probability 1.7%).
What works in 374Water Inc.'s favour?
Cash on hand covers all debt (net-cash balance sheet). High insider/promoter ownership (43%) aligns management with survival.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
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Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.