Greetings, and welcome to CitroTech Third Quarter 2026 Financial Results Conference Call. All lines are in a listen-only mode. Later, we will conduct a question-and-answer session. If you should require operator assistance at any time, press star zero. Today's call is being recorded. I would now like to turn the call over to Mr. Brett Maas of Hayden IR. Please go ahead, sir.
Thank you, operator. This call today is being hosted by Wes Bolsen, Chief Executive Officer, and any questions can be sent to citr@haydenir.com, and they'll be answered following this call. We appreciate the opportunity to review the third quarter results and recent business highlights. Before we get started, let me remind you this call is being recorded and webcast. During this call, management may make forward-looking statements. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the cautionary text regarding forward-looking statements in the earnings release and shareholder letter issued today, Tuesday, November 10. Well, actually, it's November 11, which applies to the content of this call. I'd like to now turn the call over to Wes Bolsen, CEO. Wes, please go ahead.
Thank you, Brett. Before I get started this morning, I want to recognize that today is Veterans Day, and I want to thank everyone who has served and is currently serving in our military. Many who've served in the military continue their commitment to service after transitioning to civilian life by joining the fire service, protecting our homes, our families, and our communities. I want to take this opportunity to extend my sincere thank you to all of our veterans, as well as those who put their lives at risk every day to protect our communities from the threat of wildfire. Your courage, dedication, and commitment to service do not go unnoticed. With that, I'll now turn to my comments on CitroTech's third quarter earnings call.
CitroTech provides critical solutions that are becoming the industry standard for fire retardant-treated wood, proactive fire prevention and protection of infrastructure and assets from the threat of wildfire. In the third quarter, we focused on expanding our partner network and increasing sales, reducing costs, and working on projects alongside our partner, Hexion, to deliver the next generation of fire retardant-treated wood and engineered wood products. Let's start with the financial performance and the cost discipline that's been put in place by the great team that I get to work with every day at CitroTech. I'm proud to report that third quarter 2026 revenue increased 130% year over year to $664,000, up from $288,212 in the third quarter of 2025. We achieved this milestone despite a couple of significant purchase orders shifting by just a couple of weeks from the third quarter into the fourth quarter.
Just as important as our top line momentum is how carefully we're managing our cash and building operating leverage. In the third quarter of 2026, we cut our losses from operations nearly in half, down to $2.3 million compared to $4.2 million in Q3 of last year. In October, we took a major step forward, strengthening our balance sheet by closing an underwritten public offering that generated $5.6 million in gross proceeds. Notably, the offering was structured entirely with common stock, with no warrants attached, which we view as a positive outcome given the challenging capital markets environment. Another notable highlight is that our own leadership stepped up alongside our shareholders. Our Board Chair and Director, Craig Huff, through BoltRock Holdings LLC, purchased $500,000 of common stock at the $2.50 offering price, as publicly reported in his Section 16 filings with the SEC.
This additional capital gives us the runway we need to sign and execute commercial contracts, build inventory ahead of 2027 wildfire season, and keep pushing forward with the US Forest Service towards achieving Qualified Products List, or QPL, status. What I'm most excited to talk about are the operational achievements that are starting to drive our commercial momentum. The certified partner network that we're building is becoming an engine of our scalable, repeatable revenue strategy, enabling trained operators to deploy CitroTech and CitroSafe systems across the Western United States. After growing from 13 partners at the end of Q2 to over 20 in August, our network expanded to 31 trained and certified partners as of September 30th, 2026.
We're experiencing tremendous interest from leaders in the industry that want to switch from legacy retardants to a fire retardant that is safe not only for their customers and the environment, but also for their own employees. In response to this growing demand for CitroTech and our CitroSafe systems, we will host our fifth certified partner training cohort on December 7th and 8th in Oceanside, California, where we plan to train an additional five to 10 partners. Following the training, we'll bring all of our great partners together with our entire team for a holiday celebration. We view our certified partners as an extension of our CitroTech family, not simply as vendors or distribution channels. We believe that relationship-driven approach sets us apart and makes a difference in the way that we work together to grow the business.
Our partners are stepping up on the front lines, both in proactive prevention and in emergency asset protection. A great recent example of this is All Risk Shield during the Norte Fire in Orange County, California. That fire, which broke out on October 16th, burned 570 acres and injured two firefighters. While the official cause remains under investigation, having our partners out there actively protecting assets in those moments demonstrates the real-world value of this network. All Risk Shield is a great example of a leader in the industry, moving to a product that we believe is among the safest and most effective products in the industry based on current testing data. Finally, it's incredibly rewarding to see our innovation and our real-world impact gaining recognition on a national stage.
TIME Magazine recently named CitroTech one of its best inventions of 2026, providing meaningful validation of what we believe is the disruptive potential of our platform, standing out as the first and only long-term fire retardant recognized by the EPA Safer Choice Program and tested to UL GREENGUARD Gold standards. America has been built on innovation, and CitroTech is proud to emerge as a leader in the environmentally safe fire prevention and protection market. We're a platform for broader fire tech to circle around, whether that's predictive capabilities of artificial intelligence, the leading drone makers in the industry, or even equipment and service providers. As a public company, CitroTech is helping to unite leaders in our industry and to deliver the best solutions to our customers.
As for expansion, turning to our municipal and regional expansion, the early success we're seeing in San Diego is serving as a blueprint for broader adoption. San Diego has continued buying and deploying CitroTech throughout the second half of the year, especially in ecologically sensitive areas where heavy metal-containing phosphate-based retardants simply aren't an option. Building on that momentum, we took a huge step forward across Southern California in the third quarter. in August, we hosted what I lovingly call the Big Burn Showcase. This was out in Los Angeles County that brought together six county fire agencies, more than 30 fire chiefs, top decision-makers from utilities, and at least five of our commercial partners. That live demonstration validated in real-world conditions what we believe the US Forest Service testing has indicated.
CitroTech has performed favorably in both safety and efficacy evaluations relative to other fire retardants that have been tested. Since that showcase, we've seen growing interest in CitroTech among county fire chiefs. We believe that firsthand validation is going to accelerate our adoption heading into 2027, whether that's for utilities, railroads, transportation agencies, or even counties using CitroTech to protect high-risk corridors, prevent ignitions around homeless encampments, or to contain prescribed burns. Leadership in both state and federal governments is starting to take notice of CitroTech's role in advancing wildfire prevention and asset protection solutions. When I turn to some of the technological developments, our field deployments in the third quarter also gave us some incredibly real-world use cases for how our technology protects critical infrastructure. For instance, during Q3, we treated wooden railroad bridges in East L.A., where fire ignitions had been a recurring problem in the past.
Not long after treatment, arson-related fires were set near the bridges on two separate occasions. While surrounding structures sustained significant damage, the CitroTech-treated wooden railroad ties were left charred but unburned. That was a significant real-world validation for us and a major proof point, not only for that railroad, but for the others in the industry as well. On top of that, we kicked off a milestone utility deployment in the Western United States, where we sprayed a 50-foot radius around transmission lines and a 20-foot radius away from distribution lines. We believe the utility has been extremely pleased with both the application and the results, which really underscores the massive opportunity we see to help utilities prevent catastrophic ignitions from their assets and protect their utility infrastructure from incoming fire.
We expect to expand our operations with utilities in the 2027 fire season, subject to customer demand and available resources. Turning to fire retardant-treated lumber and engineered wood products, our HexiTech joint venture with Hexion is moving along well and achieved a milestone in the third quarter. We first started testing at CitroTech, we were testing it on Douglas fir, a very common wood in the Western U.S. But in Q3, HexiTech successfully passed outside burn testing across other major wood species like spruce-pine-fir and southern yellow pine. This represents a significant milestone for us because it creates an opportunity for HexiTech to start replacing traditional fire retardant-treated lumber, which requires pressure treatment process, while expanding our total addressable market in fire-treated building materials.
On the insurance front, as property insurers reassess their exposure and coverage in fire-prone regions, we continue to advance conversations both at CitroTech as well as through our certified partners with some of the largest insurance carriers in the country. Based on our conversations, we believe many carriers are increasingly reluctant to have heavy metal phosphate-based retardants sprayed around the homes of their insured clients. We also hear that some carriers have concerns about reliance on water-based sprinkler systems that depend on municipal and backup water infrastructure. We believe insurers are increasingly interested in long-term fire retardant solutions for home defense systems. That shift puts our non-toxic treatments and CitroSafe defense systems in the driver's seat to help solve residential insurability challenges and reduce risks for homeowners. In conclusion, looking ahead, we continue to significantly strengthen our position.
When you combine the operational execution with our strengthened balance sheet and the real-world validation we're seeing across utilities, municipalities, and wood product applications, we have tremendous confidence heading into 2027. We continue to accelerate the build-out of our partner network, proving the effectiveness of the technology across major wood species and critical infrastructure. We believe we've secured sufficient capital to reach several significant upcoming milestones in our current operating plan. Simply put, we're entering 2027 with a strong operational position, and we're focused on working to convert a growing pipeline into what we believe can become high-margin, repeatable, recurring revenue for our shareholders. Thank you again for joining us this morning and for your continued support. I'll now turn the call back over to Brett Maas at Hayden IR to walk through the questions submitted by investors, as well as potentially a couple of others. Brett, back to you.
Thank you, Wes. Operator, you can go ahead and take our analyst from Northland, please.
Thank you. We'll hear from Robert Brooks with Northland. Please go ahead.
Hey, good morning, team, and thank you for taking the question. Wanted to ask on the certified partner network, obviously, that seems like a really big piece of the story going forward of driving adoption, right? So, was curious to hear what are the right qualities you want out of a business trying to join the certified partner network? Have you turned down certain applicants because they weren't the right fit? Then lastly, have you given thought to what the right level of partners will be? I'm guessing it's still multiples above the current 31, but is it more like something in the hundreds or like 1,000 plus?
Yeah. Thanks, Bobby. Appreciate the question. We are very proud of our growing certified partner network, and that's why we are turning down people, to answer that question in the middle, because we want the best partners. We want the trained partners. It's not they're going to some training that somebody's making money off of it to try to teach them something. It's coming in, and we're actually giving them the chemistry, the details behind it. We're giving them the capabilities, Bobby, to go out and actually are kind of like our frontline sales force. They're going out and doing the things that need to be done to homes as well. Sometimes that's home hardening or helping homeowners with defensible space. I mentioned a couple times, we're proud.
I mean, there's 31, but I mentioned All Risk Shield, and there's some others in that that are just doing a great job going out. These are everywhere from the high-end insurance companies, the multi-million dollar homes, down to mom and pop. Everybody's home matters to them. So, what I see is some of those partners, Bobby, are going to actually expand out, build out almost their own franchise and say, "Hey, our company is going to serve across multiple states and multiple geographies." We're already seeing that. So, I actually don't see it in the thousands. Maybe 100 or something at some point, but just because this is personal, this is local. These are partners who believe that CitroTech is the answer, and they're coming to us. That's why it's an application process.
I mean, from our website, you have to apply to get into the certified partner network program. That is why we are hosting. We have had to cut off. In cohort four, we had to tell people, "I am sorry, it is full," because we want to give dedicated time to those certified partners. You can hear me passionately talking about these are our partners. We are going to celebrate our holiday, Christmas with them, because these are our friends that we are building out in the industry, and we are going to welcome in people who have capabilities, people, trucks, equipment, already going out to the homes, know the communities that already are doing maybe some home hardening, vent screens, and doing other things on the home.
Adding CitroTech onto their business makes so much sense, because it is going to be much better than a water-based sprinkler system or people out trying to do those kind of water-based defense systems. Long-term fire retardant is where the industry is moving, and those partners want the best product to be going out. I hope I answered all the questions there, Bobby. If not, please feel free to add on to that.
Yeah, no, absolutely. You hit them all. Appreciate that. This bridge, the East L.A. bridges, that sounds like a really profound, real-world test, right? A real-world result is probably the better way to say it.
Yeah.
From my perspective, it is hard to see why the railroad would not then immediately place a bigger order. I am sure I am just not thinking of all the nuances the large company needs to clear for a new innovative product. I was just hoping to get a sense of your view of when these companies or when these larger companies are seeing these incredible results, what are the factors holding them back from placing a larger order and covering all their bridges across America with CitroTech?
Man, I love your question because you are actually completely right, and you are even right that sometimes getting the wheel in motion, we all know, takes a lot more effort. That was a monumental real-world application. Like I said, it is not just, and I have not named, and I probably will not name the carrier, but there is only a small number of powerful rail carriers, and they talk to each other. They work with one another on fire prevention, bridge, and asset protection. I mean, these guys talk to each other, and they are all going, "Hey, you got to use CitroTech." What is the problem? Putting the wheel in motion. Honestly, SAP and getting in the supplier network and getting the paperwork. I mean, as an entrepreneur, paperwork frustrates me. I want to move, I want to go, I want to start protecting. So they did.
In fact, some of the sales that you saw in Q3 were from that. Some of the sales that I hope and anticipate in Q4. What I can say, Bobby, is California and some of the other states, maybe fire season will start to slow down. We call it the shoulder season. We actually are seeing some other fires and fire risk picking up in, say, something like Texas. We are seeing some concern and some real concern. You look at El Niño patterns. So we may be able to do some additional work with some partners, some institutional enterprise customers before the end of the year based on some of the results that we are seeing. So you are not wrong. It is just getting the wheel in motion. But that means really good things for us in 2027. That is the forward-looking statement.
But I am hoping it was really, really good for momentum moving into 2027.
Got it. That is super helpful. It seems like over the last year, your team has really leaned into testing and collecting data to really prove out and have data-driven answers to prove the effectiveness of the solution. Is that a fair statement? Secondly, maybe just expand on what has been some of the best data you have compiled over the last year that really helps elevate or ramp up potential customer discussions.
Yeah, I'll put that in two categories. One is kind of our wildland fire side, and two is through our joint venture with Hexion. I'll start with the Hexion side. It's an amazing organization. I mean, couldn't have a better partner that comes into their long-term customers, the leading engineered wood product companies. I mean, there's nobody better in the industry than Hexion to do this. But they're going to come in, and they're going to lead with science. They're going to lead with the facts of what CitroTech is doing, how it's working, the burn test, the large-scale test, the different woods, the pieces. This is what is, again, laying that foundation for an amazing long-term joint venture that is our science plus their strength built with more scientists and R&D and engineering and new technology and the things that are going into that.
Always lead with facts and data. When you can have the best technology in the industry, you want to bring the science with it. You are correct that maybe people wish it moved faster, but if you move a little slower at the beginning, it leads to faster in the long term by real adoption by the end customers. Flipping to the wildland fire side, when you think about out in the field, that Big Burn Showcase, the thing we did, it wasn't just one fire chief or one little burn. I mean, we're talking 15-foot flames, 1,000 degrees, burning through an area with a head fire, a backfire, trying to light fire in the middle of it.
One of the fire chiefs joked that, "If I can't light where CitroTech's been treating with a drip torch, it's sure not going to light on fire with a few embers or things blowing into that vegetation." I mean, it was an eye-opening moment. I mean, these guys have worked with the standard legacy retardants for decades, and their eyes were open to say, "We've never seen something like this." That's the real world, not just the railroad bridge that we talked about, not just some of those other things that are Seeing is believing, because these are the guys putting their lives at risk every day and saying, "Hey, when I put down a line of CitroTech, when I do something, I need to know that it's going to protect." And that's why they pushed the product to its limits, and I think we surpassed what they're doing.
In addition, though, I've got a great team. Our Head of Business, Kevin Schaff, is leading amazing data. Andrew Hotsko. I get to work with an amazing team, bringing cone calorimeter tests and different testing and science and working with universities. We need to lead to the market. We need to lead to insurers. They want to know that this is the safest and most effective product to be putting out around homes. You are correct. The customers are asking the questions, and we're going to deliver both science and proven validation.
That's really helpful and exciting to hear, and I can definitely agree. Having seen it myself, seeing is believing, and it's a pretty incredible product when you see it in person or see it happen in person. So appreciate it, Wes, and I'll return to the queue.
Thank you.
Thank you. Couple questions. Can you define the timeframe of what is considered a historical fire season? Expand upon how that might be changing in the Southern Hemisphere. Are the seasons reversed in the Northern Hemisphere? You kind of touched on that a little bit with Bobby, but can the company go after business in different timeframes throughout the year, just so people understand the landscape?
Yeah, I think, Brett, the focus of CitroTech has been U.S.-based. I think that's to make sure we establish ourselves and don't get stretched too thin. But we absolutely are looking at some international opportunities where things move around the globe based on fire season. But like I said in one of my earlier comments was, fire season can move inside the U.S. We may still have some significant fire risk. It used to be fire season was kind of like, everybody thinks May to September. We had our partners treating red flag warnings last week in Southern California. We've had fires in Colorado, like the Marshall Fire or others in December and January, or in the Palisades. I think we have to be prepared 12 months a year.
I think we have to have CitroTech in the hands of people across, and I say the Western U.S., it is really across the U.S. We have got a great new partner down in the Southeast, Global Fireproof Solutions, doing a great job for us. Came in, got training, expanding down in the Southeast. These are the kind of things where more and more of these certified partners are getting trained, capable product, CitroTech product in their hands, and then starting to reorder. So we are having some of those partners reorder based on, "Hey, we are going out to protect homes and properties." You have not heard me say, "Hey, now we are going into Australia, Spain, France, et cetera," yet. We do have product up in Canada. We have talked about that. We have a partner up there that we are working with.
It is not just U.S., but as that fire season is now 12 months a year, as weather patterns change, we are looking at where is there high-risk fire threat situations, heavy winds, red flag warnings, particularly dangerous situations. Anytime there is ever going to be a public safety power shutoff, a PSPS event, you should be using CitroTech. Safest, most effective way of saying, "Hey, let us prevent an ignition during this, and maybe we would not have to shut off as much power if we needed to in every area." These are all things we are talking about for where CitroTech is going to be used, I believe, in the future.
Great. The expansion of the certified partner network will certainly help with that. Can you talk to the cost of Citro-infused wood products versus current products that are out there and how this could be a cost benefit for builders and others considering purchase?
Yeah. Thanks, Brett. The HexiTech joint venture is handling the commercialization of CitroTech-treated lumber, wood products, and building materials, and we anticipate it is going to be very comparable, maybe better even, than pretty intense pressure-treated process. When you have to incise wood to get fire retardancy, FR-treated lumber, you are weakening that wood. By definition, incising it or impregnating it, whatever word you would like to use, poking it weakens that wood. CitroTech has the ability to spray onto that lumber or to even dip it. They call it dip coating. These are methods and processes that are exceptional. Again, back to Bobby's question, we are going to work with the science though. We are going to work with the facts behind making sure the CitroTech-treated FR lumber is going to deliver the characteristics to go out to the builders.
We are having a lot of great conversations with builders saying, "Hey, this could be tremendous for us in how we build, not having to ship lumber off." The time, let alone the cost, the time of shipping off lumber, having it pressured, fire retardant treated, and then having it shipped back, that makes so many unknowns for builders that I believe this is going to move upstream and builders will start to demand CitroTech-treated lumber in the long term.
Great. Thank you. I do want to acknowledge we did have a few questions submitted that the company cannot answer, given that answering them would violate non-disclosure agreements and for general competitive purposes. So answers to some of those questions may be disclosed publicly at a later date. Wes, thank you for your time and everybody for joining. This concludes the questions that have been submitted for our Q3 CitroTech earnings call. I would like to thank you for joining and remind you that if you have additional questions, please send those to citr@haydenir.com, and if we are able to answer them publicly, we will. We can follow up with you individually at that time. Operator, we will conclude the call. Thank you, everyone.
Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.