UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
FOR THE QUARTERLY PERIOD
ENDED:
For the transition period from __________ to __________
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
(Address of principal executive offices, Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Ticker symbol(s) | Name of each exchange on which registered | ||
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Indicate by check mark
whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Indicate by check mark
whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
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☒ | Smaller reporting company |
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| Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐
No
As of November 19, 2025,
there were
TABLE OF CONTENTS
| Page | ||
| PART I | 1 | |
| Item 1. | Financial Statements. | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 20 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 24 |
| Item 4. | Controls and Procedures. | 24 |
| PART II | 25 | |
| Item 1. | Legal Proceedings. | 25 |
| Item 1A. | Risk Factors. | 25 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 25 |
| Item 3. | Defaults Upon Senior Securities. | 25 |
| Item 4. | Mine Safety Disclosures. | 25 |
| Item 5. | Other Information. | 25 |
| Item 6. | Exhibits. | 25 |
| SIGNATURES | 26 | |
i
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ORIGINCLEAR, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
|
September 30,
2025 |
December 31,
2024 |
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| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ |
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$ |
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| Contracts receivable, net |
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| Investment in marketable securities, at fair value |
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| Contract assets |
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| Prepaid assets and other current assets |
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| Assets of discontinued operations |
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| Total Current Assets | $ |
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$ |
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| Property and equipment, net |
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| Other Assets | ||||||||
| Security deposit |
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| Investment in marketable securities, at fair value |
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| Operating lease right of use asset (Note 4) |
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| Total Other Assets |
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| TOTAL ASSETS | $ |
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$ |
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| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ |
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$ |
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| Accrued expenses |
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| Cumulate dividends payable on preferred stock |
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| Contract liabilities |
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| Operating lease liabilities |
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| Warranty reserve |
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| Loans payable |
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| Related party loan |
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| Tax liability 83(b) |
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| Derivative liabilities |
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Redeemable non- convertible preferred stock,
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| Convertible secured promissory notes (Note 8) |
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| Convertible promissory notes |
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| Liabilities discontinued operations (Note 3) |
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| TOTAL CURRENT LIABILTIES | $ |
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$ |
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| Long-Term Liabilities | ||||||||
| Convertible promissory notes, net of current |
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| Operating lease liabilities, net of current |
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| TOTAL LONG-TERM LIABILITIES |
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| TOTAL LIABILITIES | $ |
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$ |
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| COMMITMENTS AND CONTINGENCIES (Note 13) | ||||||||
| Mezzanine Equity, preferred stock (Note 5) |
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| SHAREHOLDERS’ DEFICIT | ||||||||
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Preferred stock, $
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Common stock, $
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| Additional paid-in capital |
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| Noncontrolling interest |
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(
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| Stock Payable |
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- | ||||||
| Accumulated other comprehensive loss |
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| Accumulated deficit |
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(
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| TOTAL SHAREHOLDERS’ DEFICIT | $ |
(
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) | $ |
(
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| TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | $ |
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$ |
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See accompanying Notes to Consolidated Financial Statements.
1
ORIGINCLEAR, INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
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September 30,
2025 |
September 30,
2024 |
September 30,
2025 |
September 30,
2024 |
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| Revenue | $ |
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$ |
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$ |
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$ |
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| Cost of revenue |
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| Gross (loss) profit |
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| Operating expenses | ||||||||||||||||
| Selling and marketing |
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| General and administrative |
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| Total Operating expenses |
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| Loss from Operations |
(
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(
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(
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| Other Income (Expense) | ||||||||||||||||
| Gain (loss) on conversion of debt |
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| Gain (loss) on preferred stock conversion |
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| Gain (loss) on issuance of promissory notes |
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| Impairment of receivable - SPAC |
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| Gain (loss) on extinguishment of payables |
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| Gain/Loss on exchange of stock |
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| Unrealized (loss) gain - investment securities |
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(
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| Preferred stock incentive expense |
(
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(
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| Loss on share settlement | - |
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| Debt conversion adjustment - note purchase agreements |
(
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(
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| Gain on common stock redemption |
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| Change in derivate liability and debt conversions |
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| Interest and dividend expense |
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(
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(
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| TOTAL OTHER EXPENSE |
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| Net (loss) income from continued operations |
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| Net income (loss) from discontinued operations |
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(
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(
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| Net (loss) | $ |
(
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) | $ |
(
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) | $ |
(
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) | $ |
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| Less: Net income (loss) attributable to noncontrolling interest |
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(
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| Net income (loss) attributable to OCLN | $ |
(
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) | $ |
(
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) | $ |
(
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) | $ |
(
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| Basic and diluted income (loss) per share from continuing operations | $ |
(
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) | $ |
(
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) | $ |
(
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) | $ |
(
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| Bais and diluted income (loss) per share from discontinued operations | $ |
(
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) | $ |
(
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) | $ |
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$ |
(
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| WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING, BASIC AND DILUTED (in shares) |
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See accompanying Notes to Consolidated Financial Statements.
2
ORIGINCLEAR, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Shareholders’ Deficit
(Unaudited)
| NINE MONTHS ENDED SEPTEMBER 30 | ||||||||||||||||||||||||||||||||||||||||||||
| Additional | Other | Non- | ||||||||||||||||||||||||||||||||||||||||||
| Preferred stock | Mezzanine | Common Stock | Paid-in- | Subscription | Comprehensive | Controlling | Accumulated | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Equity | Shares | Amount | Capital | Payable | Loss | Interest | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
(
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) | $ |
(
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) | $ |
(
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) | $ |
(
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| Rounding | - | - |
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| Shares redeemed/cancelled for Note Purchase Agreement |
(
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(
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(
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(
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| Common stock issued for alternative vesting |
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| Common stock issued for conversion settlement |
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| Common stock issued for conversion of Series O Preferred stock |
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| Common stock issued for conversion of Series Q Preferred stock |
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| Common stock issued for conversion of Series R Preferred stock |
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| Common stock issued for conversion of Series S Preferred stock |
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| Common stock issued for conversion of Series W Preferred stock |
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| Common stock issued for conversion of Series Y Preferred stock |
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| Common stock issued at fair value for services |
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| Common stock issued for Series O Preferred stockdividends |
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| Common stock issued through a Reg A to investors for cash |
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| Issuances of Series Y Preferred stock through private placement | - |
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- | |||||||||||||||||||||||||||||||||||||||||
| Exchange of Series F Preferred stock for Series Q preferred stock | - |
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- | |||||||||||||||||||||||||||||||||||||||||
| Exchange of Series K Preferred Stock for Series W Preferred stock | - |
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- | |||||||||||||||||||||||||||||||||||||||||
| Issuance of warrants | - | - |
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| Net loss | - | - |
(
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(
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(
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| Balance at September 30, 2024 (unaudited) |
|
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
(
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) | $ |
(
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) | $ |
(
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) | $ |
(
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) | ||||||||||||||||||||
| NINE MONTHS ENDED SEPTEMBER 30 | ||||||||||||||||||||||||||||||||||||||||||||
| Additional | Other | Non- | ||||||||||||||||||||||||||||||||||||||||||
| Preferred stock | Mezzanine | Common Stock | Paid-in- | Stock | Comprehensive | Controlling | Accumulated | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Equity | Shares | Amount | Capital | Payable | Loss | Interest | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 |
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$ |
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$ |
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$ |
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$ | $ |
(
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) | $ |
(
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) | $ |
(
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) | $ |
(
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) | ||||||||||||||||||||||
| Rounding | - |
(
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) | - |
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(
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| Derecognition of Hong Kong Technologies Ltd. | - | - |
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| Shares redeemed/cancelled for Note Purchase Agreement | - |
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- | |||||||||||||||||||||||||||||||||||||||||
| Temporary equity, shares converted (Series Y) |
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| Shares issued for compensation |
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| Shares issued for services |
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| Shares issued for Regulation A |
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| Shares issued for redeeming Series A |
(
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(
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| Shares redeemed/cancelled for OZ NPAs |
(
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(
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| Shares issued for Series O dividends |
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| Shares issued for WODI note conversions |
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| Shares issued, WODI Series A for cash | - | - | - |
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| Shares issued for alternate vesting | - | - |
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| Contributed Capital |
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| Net Loss | - | - |
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(
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| Balance at September 30, 2025 (unaudited) |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ | $ |
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$ |
(
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) | $ |
(
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See accompanying Notes to Consolidated Financial Statements.
3
ORIGINCLEAR, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
|
Nine Months Ended
September 30, |
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| 2025 | 2024 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net (loss) income from continued operations | $ |
(
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) | $ |
(
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) | ||
| Net income (loss) from discontinued operations |
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(
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| Adjustments to reconcile net income to net cash | ||||||||
| Unrealized (gain) loss on derivative liabilities |
(
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| Depreciation and amortization |
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| Net unrealized loss on fair value of securities |
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| Shares issued for alternate vesting |
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| Loss on subisidary closure |
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| Shares issued for compensation |
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| Shares issued for services |
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| Loss on extinguishment of debt (non-cash) |
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| Loss from conversion of preferred stock |
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| Gain on redemption of common stock |
(
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| Loss on share settlement |
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| Loss on issuance of debt |
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| Amortization of debt discount |
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| Impairment of receivables |
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| Gain on settlement of equity instrument |
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| Gain on extinguishment of liabilities |
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| Changes in operating assets and liabilities: | ||||||||
| Contracts receivable |
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| Contract assets |
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(
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| Right-of-use assets |
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| Change in discontinued operations |
(
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| Prepaid expenses and other current assets |
(
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(
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| Security deposits |
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(
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| Accounts payable |
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| Lease liability |
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| Accrued expenses and other current liabilities |
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| Contract liabilities |
(
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| Net cash used in operating activities |
(
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(
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| Cash Flows from Investing Activities: | ||||||||
| Purchase of note receivable (SPAC investment) |
(
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| Proceeds from payments of long-term receivables |
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| Purchases of property and equipment |
(
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(
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| Net cash used in investing activities |
(
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(
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| Cash Flows from Financing Activities: | ||||||||
| Repayment of SBA loan |
(
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(
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| Payments on line of credit |
(
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| Proceeds from merchant cash advances |
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| Payments on merchant cash advances |
(
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| Proceeds from related party loans |
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| Repayments of loans from related parties |
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| Dividends paid on preferred stock |
(
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| Proceeds from convertible secured promissory notes |
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| Proceeds from the issuance of common stock (Regulation A and D) |
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| Proceeds from affiliate funding (OZ Fund) |
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| Proceeds from issuance of warrants |
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| Contributed Capital |
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| Proceeds from preferred stock (classified as mezzanine equity) |
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| Net cash provided by financing activities |
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| Net change in Cash | ||||||||
| Net increase (decrease) in cash and cash equivalents |
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(
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) | |||||
| Cash and cash equivalents, beginning of period |
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| Cash and cash equivalents, end of period | $ |
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$ |
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| Supplemental Disclosures of Cash Flow Information | ||||||||
| Cash paid for interest and dividends | $ |
|
$ |
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| Cash paid for income taxes | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF NON CASH TRANSACTIONS | ||||||||
| Issuance of Series O preferred stock dividends | $ |
|
$ |
|
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| Conversion of mezzanine classified as preferred stock to common stock | $ |
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$ |
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| Conversion of WODI debt and accrued interest | $ |
|
$ | |||||
| Reclassification from liability to mezzanine equity | $ | $ |
|
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| Redemption of common stock | $ |
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$ | |||||
| OCI derecognition | $ |
|
$ | |||||
| Adoption of ASC 842 | $ | $ |
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|||||
See accompanying Notes to Consolidated Financial Statements.
4
ORIGINCLEAR, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(unaudited)
| 1. | Organization and Line of Business |
The accompanying unaudited condensed consolidated financial statements of OriginClear, Inc. (“OCLN” or the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), including Regulation S-X, Rule 10-01. These financial statements do not include all of the disclosures required for annual financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and notes included in its Form 10-K for the year ended December 31, 2024.
Subsidiaries
The Company’s primary operating subsidiary is Water On Demand, Inc. (“WODI”), formed on September 21, 2023, through the merger of Progressive Water Treatment, Inc. (“PWT”) with a newly created majority-owned entity. PWT, acquired by OCLN in 2015, remains WODI’s only active business unit. PWT engineers and manufactures custom water treatment solutions for commercial and industrial customers.
The Modular Water Systems (“MWS”) division, previously focused on pre-fabricated infrastructure for decentralized treatment, was fully deactivated during the second quarter of 2025. On May 8, 2025, WODI’s Board approved the wind-down of MWS as part of a strategic shift away from direct equipment competition. Disposal of remaining MWS assets was completed as of September 30, 2025. (See Note 3.)
Water On Demand #1, Inc. (“WOD #1”) is a Delaware statutory series entity managed by the Company. Capital raised under the Company’s ongoing Series Y offering is aggregated in WOD #1 and advanced to WODI through intercompany transactions which are eliminated in consolidation.
During the quarter ended June 30, 2025, the Company completed the formal dissolution of its inactive subsidiary OriginClear Technologies Ltd. (“OCHK”), a Hong Kong entity with no operations or assets since 2016. All remaining immaterial balances, including equity, liabilities, and accumulated foreign currency translation adjustments, were derecognized through non-cash journal entries in accordance with ASC 810. The elimination of OCHK resulted in a reclassification within equity that had no impact on the Company’s results of operations or cash flows.
Joint Venture
September 16, 2025, the Company entered
into a joint venture agreement with Block40X Inc. to form a Wyoming limited liability company (the “Block40X JV”) to develop
and manage Bitcoin mining facilities in the United States. Each party holds a
On September 26, 2025, the Company
entered into a joint venture agreement with Bitmern Investments LLC, a subsidiary of Bitmern Technologies LLC, to form a Florida limited
liability company (the “Bitmern JV”). Ownership of the Bitmern JV is allocated
As of September 30, 2025, neither the Block40X JV nor the Bitmern JV had a material impact on the Company’s consolidated financial statements.
Basis of presentation
The accompanying interim financial statements reflect all normal and recurring adjustments necessary for a fair presentation of the financial position and results of operations for the periods presented. Operating results for the three- and nine-months ending September 30, 2025, are not necessarily indicative of results that may be expected for the full fiscal year or any other future period. All intercompany accounts have been eliminated in consolidation.
5
Going concern
These consolidated financial statements have been prepared on a going concern basis. However, recurring losses, negative operating cash flows and significant liquidity constraints have led the Company’s auditors to express substantial doubt about its ability to continue as a going concern. Management is actively pursuing additional financing through convertible notes and preferred stock offerings while leveraging existing backlog and receivables. There can be no assurance that required financing will be available or on terms acceptable to the Company, and any future financing may involve restrictive covenants or shareholder dilution.
| 2. | Summary of significant accounting policies |
The interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and SEC Regulation S-X Rule 10-01. Except for the updates described below, the Company’s significant accounting policies are unchanged from those disclosed in Note 2 to the audited consolidated financial statements in the 2024 Form 10-K and should be read in conjunction therewith.
Use of estimates
Management uses estimates in preparing financial statements. Key estimates include revenue recognition, allowance for doubtful accounts, fair value of derivatives and investments, stock-based compensation, warranty reserves, and deferred tax valuation allowances.
Revenue recognition
The Company follows ASC 606. Product revenue is recorded at shipment when control transfers. Construction-type contracts are recognized over time using an input-cost method that depicts transfer of control to the customer. Contract losses are recognized immediately when determined. Contract receivables, contract assets, and contract liabilities reflect the timing difference between performance and customer billing.
Loss per share
Basic loss per share is net loss divided by weighted-average common shares. Diluted loss per share is the same as basic because all potential common shares are anti-dilutive.
Fair value of financial instruments
Financial assets and liabilities measured at fair value are classified under ASC 820’s three-level hierarchy. Derivative liabilities are Level 3 and are remeasured at each period end. No material changes in valuation techniques or inputs have occurred since December 31, 2024, so interim disclosure of Level 1 and Level 2 hierarchy tables is omitted per ASC 820-10-50-2A.
The following table reconciles the Company’s Level 3 derivative liabilities for the nine months ended September 30, 2025:
| Total | (Lvl 1) | (Lvl 2) | (Lvl 3) | |||||||||||||
| Convertible notes liability | $ |
(
|
) | $ | $ | $ |
(
|
) | ||||||||
| Warrants liability |
(
|
) |
(
|
) | ||||||||||||
| Total derivative liability | $ |
(
|
) | $ |
(
|
) | ||||||||||
Leases
Under ASC 842, right-of-use assets and lease liabilities are recognized at lease commencement based on the present value of lease payments. Short-term leases (12 months or less) are expensed as incurred.
Stock-based compensation
Equity awards are measured at grant-date fair value and recognized over vesting periods under ASC 718. Warrants issued for services or financing are recorded at fair value on the grant date.
6
Derivatives
The Company evaluates all instruments for embedded derivative features and records derivatives at fair value with changes recognized in earnings. A binomial lattice model is used for valuation; classification between liability and equity is reassessed each period.
Equity Investments and Joint Ventures
The Company accounts for investments
in entities over which it exercises significant influence but does not have control under the equity method of accounting (ASC 323).
Under this method, the investment is initially recorded at cost and adjusted each period for the Company’s proportionate share
of the investee’s net income or loss and other comprehensive income, if applicable. When the Company’s share of cumulative
losses exceeds the carrying amount of the investment, the balance is reduced to
The Company’s joint ventures, including Block40X LLC, Bitmern LLC, and Enviromaintenance LLC, are each accounted for under this method. As of September 30, 2025, none of these ventures had material assets, liabilities, or operations, and no earnings or losses were recognized.
Other policies
Policies for consolidation, cash and cash equivalents, contract assets and liabilities, prepaid expenses, property and equipment, goodwill and indefinite-lived intangibles, marketable securities, work-in-process, recently issued pronouncements, and reclassifications remain as disclosed in the 2024 Form 10-K.
Interim reporting
Footnote disclosure that would duplicate the 2024 Form 10-K such as detailed loss-per-share reconciliation tables, property and equipment roll-forwards, or full fair-value hierarchy tables is omitted for this interim filing under Regulation S-X Rule 10-01, including property roll forwards, full EPS tables, and fair value levels 1 and 2.
Recently issued accounting pronouncements
Management has evaluated all recently issued accounting standards and does not expect any to have a material effect on the Company’s condensed consolidated financial statements.
Reclassifications
Certain prior-period amounts have been reclassified to conform to the current-period presentation with no effect on previously reported net loss or shareholders’ deficit.
| 3. | Discontinued Operations |
In the second quarter of 2025, the Company finalized its plan to wind down its Modular Water Systems (“MWS”) business unit following the resignation of MWS’s lead executive and a strategic review of operations. Management concluded that MWS no longer aligned with the Company’s long-term objectives and ceased all activity during the quarter. The business met the criteria for discontinued operations under ASC 205-20.
All prior period financial information has been recast to reflect MWS as a discontinued operation. The wind-down was completed shortly after quarter-end, and no material costs are expected in future periods.
As previously disclosed, in the second
quarter of 2025 the Company terminated the technology license agreement in connection with the settlement with MWS’s former lead
executive. The Company reversed $
7
Summary of Results of Discontinued Operations
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ |
(
|
) | $ |
|
$ |
|
$ |
|
|||||||
| Cost of revenue |
|
|
|
|
||||||||||||
| Gross profit (loss) |
(
|
) |
(
|
) |
|
(
|
) | |||||||||
| Operating expenses |
|
|
|
|
||||||||||||
| Other income |
|
|||||||||||||||
| Income (loss) from discontinued | $ |
(
|
) | $ |
(
|
) | $ |
|
$ |
(
|
) | |||||
Summary Balance Sheet of Discontinued Operations
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Current Assets | ||||||||
| Cash and cash equivalents |
|
|
||||||
| Contract assets | $ | $ |
|
|||||
| Contracts receivable, net |
|
|
||||||
| Total assets of discontinued | $ |
|
$ |
|
||||
| Current Liabilities | ||||||||
| Accounts payable | $ |
|
$ |
|
||||
| Contract liabilities |
|
|||||||
| Accrued expenses |
|
|||||||
| Total liabilities of discontinued | $ |
|
$ |
|
||||
| 4. | Leases |
The Company leases its production facility at 5225 W. Houston Street, Sherman, Texas under a non-cancellable operating lease that commenced on July 1, 2024, and expires on July 31, 2029 (61 months). The lease is triple-net; the Company pays all property taxes, insurance, and maintenance. The lease is accounted for under ASC 842.
Right-of-use asset and Lease liability
At commencement the Company recorded
a ROU asset and corresponding lease liability measured at the present value of future lease payments, discounted at the Company’s
Lease expense
For the nine months ended September
30, 2025, lease-related expenses included ROU amortization of $
8
Maturity of lease liability
Future minimum lease payments as of September 30, 2025, are as follows:
| Period | Amount | |||
| Year 1 (remainder of fiscal year) | $ |
|
||
| Year 2 |
|
|||
| Year 3 |
|
|||
| Year 4 |
|
|||
| Year 5 and thereafter |
|
|||
| Total Lease Payments | $ |
|
||
| Less: Present Value Discount |
(
|
) | ||
| Total Lease Liability | $ |
|
||
The lease contains no purchase options, residual value guarantees, or extension or termination options that the Company is reasonably certain to exercise.
| 5. | Equity |
OriginClear, Inc. Preferred Stock
Series C
On March 14, 2017, the Board issued
Series D-1
On April 13, 2018,
Redeemable Non-Convertible Preferred stock
During the nine months ended September
30, 2025, the Company had the following series of non-convertible preferred stock classified as liabilities.
| Series |
Stated value
per share |
Dividend
rate |
Convertible |
Shares
Outstanding |
Aggregate
Balance |
|||||||||||||||
| F | $ |
|
|
|
|
|
|
|||||||||||||
| G | $ |
|
|
|
|
|
|
|||||||||||||
| I | $ |
|
|
|
|
|
|
|||||||||||||
| K | $ |
|
|
|
|
|
|
|||||||||||||
| Preferred stock outstanding |
|
$ |
|
|||||||||||||||||
These are non-convertible preferred
stock series carrying
9
Mezzanine Equity Preferred Stock Outstanding
During the nine months ended September
30, 2025, the Company had the following series of convertible or redeemable preferred stock classified as mezzanine equity.
| Series |
Stated value
per share |
Dividend rate | Convertible |
Shares
Outstanding |
Aggregate
Balance |
|||||||||||
| J | $ |
|
|
|
|
$ |
|
|||||||||
| L | $ |
|
|
|
|
|
||||||||||
| M | $ |
|
|
|
|
|
||||||||||
| O | $ |
|
|
|
|
|
||||||||||
| P | $ |
|
|
|
|
|
||||||||||
| Q | $ |
|
|
|
|
|
||||||||||
| R | $ |
|
|
|
|
|
||||||||||
| S | $ |
|
|
|
|
|
||||||||||
| U | $ |
|
|
|
|
|
||||||||||
| W | $ |
|
|
|
|
|
||||||||||
| Y | $ |
|
|
|
|
|
||||||||||
| Total Mezzanine Equity |
|
$ |
|
|||||||||||||
Series Y Preferred Stock
On December 6, 2021, the Company designated
During the nine months ended September
30, 2025, the Company raised $
Restricted Stock Grants – Alternative Vesting
During the quarter ended September
30, 2025, the Company approved an additional batch of
As of September 30, 2025, the Company
recorded $
Redemption of OCLN shares and Issuance of WODI Series A
During the second quarter of 2025,
the Company redeemed
The OCLN shares redeemed were measured
at the closing price on the applicable redemption dates. The equity value of the WODI Series A Preferred Stock issued in the program was
$
10
OriginClear, Inc. Common Stock
Nine months ended September 30, 2025, the Company:
| ● |
issued
for
compensation with fair market value of $
|
| ● |
issued
|
| ● |
issued
|
| ● |
redeemed/cancelled
|
| ● |
redeemed/cancelled
|
| ● |
issued
|
| ● |
issued
|
| ● | for further details on the conversion of debt see Note 9. |
Nine Months Ended September 30, 2024
| ● |
issued
|
| ● |
issued
|
| ● |
issued
|
| ● |
issued
|
| ● |
issued
|
| ● |
redeemed
|
|
| ● |
issued
|
As of September 30, 2025,
Water on Demand, Inc. Equity
Common Stock
As of September 30, 2025, WODI had
11
Preferred Stock
On January 14, 2025,
WODI amended its Certificate of Formation to authorize three classes of preferred stock reserving (i)
During the nine months ending September 30, 2025, WODI raised $
The table below summarizes key features and outstanding balances for each class as of September 30, 2025.
| Class |
Shares
Authorized |
Shares
Outstanding |
Terms | |||||||
| Series A | $ |
|
|
|
||||||
| Series B | $ |
|
|
|||||||
| Series C | $ |
|
|
|
||||||
No Series B shares have been issued to date. The
| 6. | Noncontrolling Interest |
WODI is a majority owned subsidiary
of OriginClear, which holds approximately
The condensed consolidated financial statements include the assets, liabilities, revenues, expenses, and cashflows of WODI, with elimination of intercompany transactions between OCLN and WODI. The equity section of the condensed consolidated balance sheet includes a component for noncontrolling interest, representing the minority shareholders’ proportionate share of WODI’s net assets.
The following table summarizes the changes in noncontrolling interest for the nine months ended September 30, 2025:
| Description | As of September 30, 2025 | |||
| Beginning noncontrolling interest | $ |
(
|
) | |
| rounding |
|
|||
| Net income (loss) attributive to NCI |
|
|||
| Ending noncontrolling interest | $ |
|
||
| 7. | Restricted Stock Grants and Warrants - OCLN |
Restricted Stock Grants
The Company has outstanding performance-based
RSGAs with its chief executive officer, directors, employees, and consultants. Shares vest only upon achievement of two cumulative, trailing-twelve-month
milestones: (i) consolidated gross revenue of at least $
The Board subsequently approved an alternative vesting mechanism: if a milestone is not achieved but the fair-market value (“FMV”) of the Company’s common stock on a scheduled vesting date is below the FMV on the RSGA effective date, the number of shares that vest is adjusted so that the aggregate FMV of the vested shares equals the grant-date FMV. Once either Company performance milestone is met, only the original milestone-based vesting schedule will apply to any remaining unvested shares.
12
Warrants
A summary of OCLN’s warrant activity and related information for the nine months ended September 30, 2025, is as follows:
| September 30, 2025 | ||||||||
|
Number of
warrants |
Weighted average
exercise price |
|||||||
| Outstanding - beginning of year |
|
$ |
|
|||||
| Granted |
|
$ |
|
|||||
| Exercised | $ | |||||||
| Expired |
(
|
) | $ |
(
|
) | |||
| Outstanding - end of period |
|
$ |
|
|||||
During the nine months ended September
30, 2025, the Company granted
At September 30, 2025, the weighted average remaining contractual life of warrants outstanding:
|
Exercisable
Prices |
Warrants
Outstanding |
Warrants
Exercisable |
Weighted
Average |
|||||||||||
| $ |
|
|
|
|
||||||||||
| $ |
|
|
|
|
||||||||||
| $ |
|
|
|
|
||||||||||
| $ |
|
|
|
|
||||||||||
| $ |
|
|
|
|
||||||||||
| $ |
|
|
|
|
||||||||||
| $ | - | - | - | - | ||||||||||
|
|
|
|||||||||||||
WODI Warrants Issued
During the nine months ended September 30, 2025, in connection with its
private placement of Series A Preferred Stock, WODI issued fully vested warrants exercisable for a total of
| 8. | Joint Venture |
On September 16, 2025, the Company entered into a joint venture agreement with Block40X Inc.
(“Block40X”), a Wyoming corporation, to form a Wyoming limited liability company (the “Block40X JV”). Each
party holds a
13
In connection with the agreement, the Company granted Block40X restricted stock equal to
approximately
The Block40X JV is governed by a three-member board of managers, consisting of one representative from each party and one independent manager. Distributions of available cash will be made to members pro rata after reserves for obligations. The agreement includes standard termination provisions, including failure to meet funding milestones or material breach. Management has determined that the Block40X JV will be accounted for under the equity method in accordance with ASC 323. As of September 30, 2025, the Block40X JV had no material assets, liabilities, or operations, and no impact on the consolidated financial statements.
On September 26, 2025, the Company
entered into a joint venture agreement with Bitmern Investments LLC, a subsidiary of Bitmern Technologies LLC, to form a Florida
limited liability company (the “Bitmern JV”). Ownership of the Bitmern JV is allocated
The Bitmern JV is intended to finance, develop, and operate large-scale Bitcoin mining hosting facilities, beginning with a pilot project of up to 500 MW in the United States. Bitmern’s contributions include site origination, project management, hosting operations, technical expertise, and related intellectual property. The Company’s contributions consist of financing activities, capital markets strategy, and compliance support. The Bitmern JV is governed by a three-member board of managers, with each party appointing one representative and jointly selecting an independent member. Bitmern appoints the Chair and Chief Executive Officer. Major decisions, including debt incurrence, equity issuances, and material contracts, require supermajority approval.
Management has determined that the Bitmern JV will be accounted for under the equity method in accordance with ASC 323. As of September 30, 2025, the Bitmern JV had no material assets, liabilities, or operations, and no impact on the consolidated financial statements.
| 9. | Convertible Promissory Notes |
OriginClear, Inc.
As of September 30, 2025, the outstanding unsecured convertible promissory notes are as follows:
| Convertible promissory notes | $ |
|
||
| Less current portion |
|
|||
| Total long-term liabilities | $ |
|
Maturities of long-term debt for the next five years are as follows:
| Period ending September 30, | Amount | |||
| 2025 (remaining 3 months) |
|
|||
| 2026 |
|
|||
| 2027 | ||||
| 2028 |
|
|||
| 2029 | ||||
| $ |
|
|||
14
As of September 30, 2025, the Company had the following unsecured convertible promissory notes outstanding:
| Note Description | Balance | Classification | Terms & Features | |||||
| 2014-2015 Notes | $ |
|
|
|
||||
| OID Notes | $ |
|
|
|
||||
| 2025 Notes | $ |
|
|
|
||||
| Dec 2015 Note | $ |
|
|
|
||||
| Sept 2016 Note | $ |
|
|
|
||||
| Nov 2020 Note | $ |
|
|
|
||||
| Jan 2021 Note | $ |
|
|
|
||||
Derivative Liability - OriginClear
Due to variable conversion features,
all OriginClear notes are treated as derivative liabilities under ASC 815. The notes are not considered conventional, and the notes do
not qualify for equity classification. As of September 30, 2025, the derivative liability related to these notes was $
WODI
As of December 31, 2024, WODI had $
During the nine months ended September
30, 2025, WODI Sponsorship LLC issued unsecured convertible notes of $
| 10. | Revenue from Contracts with Customers |
The Company recognized revenue in accordance with ASC 606. Equipment contracts and custom-pump station projects are satisfied over time; revenue is measured using an input-cost method that reflects the transfer of control to the customer. Component sales, service work, rental income, and training are point-in-time arrangements recognized upon shipment or completion of services. Contract losses are recorded immediately when identified. Indirect and corporate costs are expensed as incurred.
Disaggregated revenue
| Nine months ended September 30 | 2025 | 2024 | ||||||
| Equipment Contracts | $ |
|
$ |
|
||||
| Pump Stations |
|
|||||||
| Component Sales |
|
|
||||||
| Services Sales |
|
|
||||||
| Commission & Training | ||||||||
| $ |
|
$ |
|
|||||
15
Revenue recognition for other sales arrangements, such as component sales and service sales, remained materially consistent during the periods presented.
Contract balances
| Contract assets | Contract liabilities | |||||||
| Balance at December 31, 2024 | $ |
|
$ |
|
||||
| Revenue recognized |
|
(
|
) | |||||
| Cash collected / reclassifications |
(
|
) |
|
|||||
| Balance at September 30, 2025 | $ |
|
$ |
|
||||
Contract assets represent revenue recognized in excess of amounts billed; contract liabilities represent billings in excess of revenue recognized. All contract balances are classified as current because they are expected to settle within the normal operating cycle of the respective contracts. No material impairment of contract assets was recorded, and no significant changes in contract-estimate methodologies occurred during the period.
| 11. | Financial Assets |
Equity Security – Water Technologies International, Inc. (“WTII”)
As of September
30, 2025, the Company held
| 12. | Loans Payable |
Small Business Administration (EIDL) Loan
On June 12, 2020, the Company received
a $
Related Party Loans Payable
As of September 30, 2025, the Company had two outstanding promissory notes issued to its CEO, reviewed and approved by the Board under the Company’s Related Party Transaction Policy for general corporate purposes.
The first note, issued on
The second note, issued on
As of September 30, 2025, the combined
outstanding balance of both notes was $
16
| 13. | Water on Demand, Inc. (“WODI”) |
Water on Demand, Inc. (“WODI”)
is a majority-owned subsidiary of OriginClear, Inc., which held
Strategic Developments
On April 14, 2023, WODI acquired the MWS business unit from OriginClear, Inc. including related assets, patents, and intellectual property. Subsequently, on September 21, 2023, WODI merged with PWT, a Texas-based water solutions provider with a 20-year history in delivering commercial and industrial water treatment solutions. The combined entity operated under the WODI name for preparation for a proposed Nasdaq listing via merger with FRLA.
On December 9, 2024, the proposed business combination with FRLA was terminated due to increasing regulatory costs, extended timelines, and changing market conditions. FLRA subsequently dissolved and returned capital to its shareholders.
On May 8, 2025, WODI’s Board approved the wind-down of the MWS business unit, eliminating overlapping product lines and streamlining operations around PWT’s standardized, financeable systems. WODI no longer pursues new business under the MWS brand. (see note 3).
WODI is now focused on integrating PWT’s water purification technologies into long-term service agreements and public-private infrastructure financing vehicles, supported by WODI and its affiliates as well as other capital sources.
Convertible Notes
As of December
31, 2024, WODI had $
Restricted-Stock Grant Agreements
Between August 12, 2022,
and August 3, 2023, WODI approved restricted-stock grant agreements covering up to
| 14. | Commitments and Contingencies |
Facility Lease
The Company leases its production facility
at 5225 W. Houston, Sherman, Texas, under a non-cancelable operating lease that began July 1, 2024. (see Note 4) The lease is triple-net,
and the current monthly base rent is $
Warranty Reserve
PWT projects are generally warranted
against defects in materials and workmanship for one year from the date of completion, with certain construction areas and materials
having extended guarantees. Based on historical experience, known risks related to critical components, and management’s assessment,
the Company recorded a warranty reserve of $
17
Litigation
There were no material developments during the quarter in the action with Process Solutions, Inc. or other legal proceedings previously described in the Company’s Form 10-K filed April 18, 2024. Management does not believe the ultimate resolution of these matters will have a material adverse effect on the condensed consolidated financial statements.
No other commitments, guarantees, or contingent liabilities requiring disclosure were identified as of September 30, 2025.
| 15. | Related Party |
Promissory Notes to CEO
On September 24, 2024, the Company
issued a promissory note to its CEO with a principal amount of $
Takeoff Services Inc
On September 9, 2024, certain Company officers formed Takeoff Services Inc. (“TSI”), an independent entity focused on supporting early-stage fundraising. There is no asset transfer between TSI and the Company. The parties are evaluating a potential collaboration under a non-binding MOU, which may allow the Company to identify TSI clients for possible incubation.
PPM Marketing
WODI has engaged PPM Marketing, an entity affiliated with a member of its executive team, to provide consulting and advisory services for its fundraising initiatives. These services include creative content development, funnel creation and management, lead management, and related campaign support. The arrangement is monitored in accordance with the Company’s related party transaction policy. The affiliate executive was appointed CEO of Water on Demand, Inc. effective July 1, 2025.
| 16. | Reporting Segments |
As of September 30, the Company had
In addition to these reportable segments,
two corporate categories are maintained for financial reporting. WODI Corporate, encompassing Water on Demand, Inc.’s parent-level
functions such as subsidiary oversight, strategic planning, and capital formation; and OCLN Corporate, which comprises OriginClear, Inc.’s
public compliance, investor relations and administrative support.
18
| Reportable Segments: | PWT | WODI Corporate | OCLN Corporate | Total | ||||||||||||
| For the three months ended September 30, 2025 | ||||||||||||||||
| Revenue | $ |
|
$ | $ | $ |
|
||||||||||
| Gross profit |
|
(
|
) |
|
||||||||||||
| General and administrative expenses |
|
|
|
|
||||||||||||
| Operating income (loss) |
|
(
|
) |
(
|
) |
(
|
) | |||||||||
| Segment assets |
|
|
|
|
||||||||||||
| Gross profit as a % of revenue |
|
% |
|
% | ||||||||||||
| For the three months ended September 30, 2024 | ||||||||||||||||
| Revenue | $ |
|
$ | $ | $ |
|
||||||||||
| Gross profit (loss) |
|
(
|
) |
|
||||||||||||
| General and administrative expenses |
|
|
|
|
||||||||||||
| Operating loss |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Segment assets |
|
|
|
|
||||||||||||
| Gross profit as a % of revenue |
|
% |
|
% | ||||||||||||
| For the nine months ended September 30, 2025 | ||||||||||||||||
| Revenue | $ |
|
$ | $ | $ |
|
||||||||||
| Gross profit |
|
(
|
) |
|
||||||||||||
| General and administrative expenses |
|
|
|
|
||||||||||||
| Operating income (loss) |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Segment assets |
|
|
|
|
||||||||||||
| Gross profit as a % of revenue |
|
% |
|
% | ||||||||||||
| For the nine months ended Septemer 30, 2024 | ||||||||||||||||
| Revenue | $ |
|
$ | $ |
|
$ |
|
|||||||||
| Gross profit (loss) |
|
(
|
) |
|
||||||||||||
| General and administrative expenses |
|
|
|
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| 17. | Subsequent Events |
Management has evaluated subsequent events in accordance with ASC 855 and has identified the following events requiring disclosure.
The equity and financing transactions occurring after September 30, 2025, and through the filing date are summarized below:
OriginClear, Inc.
On October 22, 2025,
On October 22, 2025,
On October 22, 2025,
Water on Demand, Inc.
On November 7, 2025 an aggregate of
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10Q includes forward-looking statements (e.g., “believes,” “expects,” “may”) as defined under the Securities Act of 1933 and the Exchange Act of 1934. These are based on current expectations and are subject to risks and uncertainties that could cause actual outcomes to differ materially. The statements speak only as of the date of this report, and the Company undertakes no obligation to update them unless required by law. This discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this report.
Overview
OriginClear, Inc. (“OriginClear,” “OCLN,” or the “Company”) was incorporated in Nevada on June 1, 2007, and now operates as the Clean Water Innovation Hub™, with a primary focus on supporting the growth and development of its majority-owned subsidiary, Water on Demand, Inc. (“WODI”).
WODI holds Progressive Water Treatment, Inc. (“PWT”), headquartered in Sherman, Texas, as its sole active revenue-producing business. PWT designs, manufactures, and services custom-engineered water treatment systems for commercial and industrial applications.
During the second quarter of 2025, the WODI Board of Directors approved the wind-down of Modular Water Systems (“MWS”), a previously active design-build unit within WODI. As of September 30, 2025, MWS is no longer in operation, and its financial results are presented as discontinued operations in this report.
Concurrently, WODI formally shifted its strategic focus from manufacturing operations to organization of a financial technology, specifically the development of its infrastructure Fund. This fund will be organized as an Opportunity Zone Fund (“OZF”) designed to finance decentralized water treatment systems in underserved communities while leveraging federal tax incentives to attract private capital. The fund has been formed but had not yet raised external capital as of September 30, 2025.
Recent Developments
On October 14, 2025, the Company announced its intent to form a strategic joint venture with Georgetown, Texas-based Enviromaintenance to deploy and operate mobile wastewater treatment plants throughout Texas. The partnership is designed to serve industrial customers with immediate water treatment needs, particularly in areas where centralized services are limited or unavailable.
This new venture builds on prior collaboration plans for the sale of standardized systems within the Greater Central Texas Region, spanning from Waco to San Antonio. Under the proposed structure, Water On Demand, through its affiliate, will provide capital for the acquisition of waste removal and recycling mobile vacuum trucks, while Enviromaintenance will purchase, operate, and manage these units utilizing its proprietary wastewater treatment technology within an exclusive Texas territory.
On May 8, 2025, WODI executed a transition agreement with the former President of MWS to terminate the IP license, eliminate all accrued royalty obligations, and complete the MWS wind-down.
In July 2024, PWT relocated to a 12,000-square-foot production facility at 5225 W. Houston Street, Sherman, Texas, under a triple-net lease with monthly base rent of $13,313.
The Company, Water on Demand Inc., is a C-Corporation and is in the process of qualifying as a Qualified Opportunity Zone Business (“QOZB”). It also intends to create a wholly owned WODI LLC, which pays the Company to operate the business, such as administrative and contract management fees. Capital for WODI LLC is intended to be contributed by WODI QOZ Fund, designed to become a Qualified Opportunity Fund, in exchange for membership interests. The Company is also the General Partner of the fund, WODI Sponsorship LLC (“WODIS”), which is designed to earn a portion of prospective Fund distributions. The Company is currently selling and/or granting memberships in WODIS to accredited investors, while Regulation A+ investors receive common shares in The Company itself.
The WOD QOZ Fund is currently authorized to raise up to $100 million, with plans underway to increase this cap to $200 million to support expanded project demand.
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The diagram below illustrates the organizational relationships and capital flow among OriginClear’s QOZB entities, including Water on Demand, Inc. (the QOZB), its wholly owned subsidiary (WODI LLC), the external capital-raising vehicle (WODI QOZ Fund), and the carried-interest sponsor (WODI Sponsorship LLC).
Joint Venture
On September 16, 2025, the Company entered into a joint venture with Block40X Inc. to form a Wyoming limited liability company (the “Block40X JV”) to develop and manage Bitcoin mining facilities in the United States. Each party holds a 50% membership interest. In connection with the agreement, the Company granted Block40X restricted stock equal to approximately 5% of the Company’s outstanding common shares. The Block40X JV had no material operations, assets, or liabilities as of September 30, 2025 and will be accounted for under the equity method of accounting.
On September 26, 2025, the Company entered into a joint venture agreement with Bitmern Investments LLC, a subsidiary of Bitmern Technologies LLC, to form a Florida limited liability company (the “Bitmern JV”). Under the agreement, Bitmern holds a 60% ownership interest, and the Company holds 40%. The purpose of the Bitmern JV is to finance, develop, construct, and manage large-scale Bitcoin mining hosting facilities, beginning with a pilot project of up to 500 MW in the United States, with potential expansions. Bitmern will contribute technical expertise, project management, hosting operations, and related intellectual property, while the Company will contribute financing capabilities, capital markets strategy, and compliance support. The Bitmern JV will be governed by a three-member board of managers, with each party appointing one representative and jointly selecting an independent member. Bitmern appoints the Chair and Chief Executive Officer of the JV. The Bitmern JV had not commenced operations or recorded any material assets or liabilities as of September 30, 2025, and will be accounted for under the equity method of accounting.
Results of Operations for the three months ended September 30, 2025, and 2024.
Revenue and Cost of Goods Sold
Revenue for the three months ended September 30, 2025, was $1,708,782, compared to $583,491 for the same period in 2024, increased $1,125,291 (193%). The incline was primarily driven by higher equipment contract revenue.
Cost of goods sold increased to $1,227,164 in 2025, from $512,352 in 2024, an increase of $714,812 (140%). As a result, the Company recorded a gross profit of $481,618 compared to a profit of $71,139 in the third quarter of 2024.
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Selling and Marketing
Selling and marketing expenses were $332,513 for the quarter ended September 30, 2025, a decrease of $464,798 (589%) from $797,311 in 2024. The decrease reflects reduced advertising and commissions, as well as fewer project-specific marketing initiatives compared to the prior-year period.
General and Administrative Expenses
General and administrative expenses totaled $468,468 for the quarter, compared to $1,472,994 in 2024, a decrease of $1,004,526 (68%). Lower legal and professional fees contributed to the decrease, partially offset by increased payroll and benefit costs in the current period.
Other Income and (Expenses)
Other income (expense) for the three months ended September 30, 2025 was $(2,746,436), compared $(304,140) in 2024, a change of $(2,445,296). The swing was driven by a $1,699,058 gain on preferred stock conversion in 2024 (nil in 2025). A $1,255,178 loss on redemption of common stock in 2024 (nil in 2025). Lastly, a $1,716,476 loss on change in derivative liability and debt conversion in 2025 vs. a $756,395 gain in 2024.
Net Loss
Net loss for the three months ended September 30, 2025, was $(3,332,820) compared with net loss of $(2,774,472) for the same period in 2024, a change of $558,348. This also includes loss from discontinued operations of $(264,021) vs a loss of $(271,166) in the prior period. The change was driven by lower gross profit and swing in other income (expense), including reduced derivative gains and the absence of one-time favorable items recorded in the prior period.
Derivative values are highly sensitive to the Company’s stock price, volatility, interest rates, and other contractual terms: shifts in these inputs can produce significant period-to-period fluctuations in reported results.
Results of Operations for the nine months ended September 30, 2025, and 2024.
Revenue and Cost of Sales
Revenue for the nine months ended September 30, 2025, was $4,055,252, compared to $2,577,468 in 2024, an increase of $1,477,784 (57%). The increase was driven by higher sales volumes in certain product lines.
Cost of goods sold rose to $3,726,983 from $1,976,412, an increase of $1,750,571 (89%), reflecting the higher cost base associated with the increased volume and project mix. As a result, gross profit was $328,269 compared to a profit of $601,056 in 2024, and gross margin declined from 23% to (8%).
Selling and Marketing Expenses
Selling and marketing expenses for the nine months ended September 30, 2025, and 2024, were $984,084, compared to $2,024,434 in 2024, a decrease of $1,040,350 (51%). The decrease was attributable to lower commissions, and decreased spending on advertising and promotional campaigns.
General and Administrative Expenses
General and administrative expenses totaled $2,320,659 for the nine months ended September 30, 2025, compared to $3,598,920 in 2024, a decrease of $1,278,261. The decline was driven by lower legal and professional services, partially offset by increases in payroll and benefit related costs.
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Other Income and (Expenses)
Other expense for the nine months ended September 30, 2025, was $(9,104,175), compared with $(10,694,301) in 2024, an improvement of $1,590,126. The change was driven by a $2,035,246 gain on remeasurement of derivative liabilities in 2025, compared to a $(5,837,116) loss in 2024, and a $(513,345 ) loss on extinguishment of payables in the current period versus a $30,646 gain in the prior year.
The 2024 period also included a $(1,580,508) SPAC receivable impairment and a $(1,679,349) debt conversion adjustment that did not recur in 2025.
Net Loss
Net loss for the nine months ended September 30, 2025, was $(11,617,118) compared with $(16,329,231) for the same period in 2024, an improvement of $4,712,113. The reduction in net loss was largely due to lower total operating expenses and the swing in fair value adjustments to derivative liabilities, partially offset by higher cost of goods sold and interest expense.
Derivative values are highly sensitive to the Company’s stock price, volatility, interest rates, and other contractual terms: shifts in these inputs can produce significant period-to-period fluctuations in reported results.
Liquidity and Capital Resources
Overview
Liquidity reflects the Company’s ability to fund operations and meet obligations. The Company has historically relied on capital raises and continues to pursue financing through convertible notes, equity offerings, and strategic partnerships.
The financial statements were prepared assuming the Company will continue as a going concern. The Company has incurred recurring losses and held cash of $756,729 as of September 30, 2025. Management believes continued investor support and access to capital markets will be necessary to sustain operations.
Summary of Cash Flows for the Nine Months Ended September 30
| Category | 2025 | 2024 | ||||||
| Net cash used in operating activities | $ | (2,332,836 | ) | $ | (3,145,013 | ) | ||
| Net cash used in investing activities | $ | (33,020 | ) | $ | (1,495,008 | ) | ||
| Net cash provided by financing activities | $ | 2,751,070 | $ | 4,395,719 | ||||
| Net increase (decrease) in cash and cash equivalents | $ | 385,214 | $ | (244,301 | ) | |||
Capital Expenditures
Apart from modest tenant improvements at the Sherman facility, the Company does not anticipate significant capital expenditure over the next twelve months. However, Growth initiatives for the anticipated OZ-fund model will require external capital, which may be raised through equity or debt offerings.
Critical Accounting Policies
The Company’s critical accounting policies, as described in its 2024 Form 10-K, remain unchanged. They include revenue recognition under ASC 606, expected-credit-loss measurement under ASC 326, fair-value accounting for derivatives under ASC 815, impairment testing for long-lived and indefinite-lived assets under ASC 360 and ASC 350, stock-based compensation under ASC 718, warranty-reserve estimation, and valuation-allowance assessment for deferred tax assets. Management’s judgments and estimates in applying these policies could materially affect the financial statements.
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Trends and Outlook
Management expects revenue for the remainder of 2025 to be driven by PWT’s backlog. The wind-down of MWS eliminates a low-margin manufacturing line and allows resources to be redirected to financing activities. The Company’s ability to raise additional capital on reasonable terms will be critical to funding operations and executing its decentralized water-finance strategy.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditure.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, and is not required to provide the information required by this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, management concluded that our disclosure controls and procedures were not effective as of that date. This conclusion reflects the constraints of a small finance team and the complexity and timing of certain non-routine transactions this quarter, including debt and equity conversions.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the fiscal quarter ending September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Internal Controls
Internal controls provide reasonable, not absolute, assurance and, due to inherent limitations may not prevent or detect all misstatements.
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PART II
Item 1. Legal Proceedings.
On March 5, 2024, Process Solutions, Inc. (“PSI”) filed a lawsuit against PWT in the Court of Common Pleas in Hamilton County, Ohio alleging breach of contract and seeking damages. The matter has since been resolved and closed, with no resulting claims or counterclaims by either party. Otherwise, the Company has no legal proceedings.
Item 1A. Risk Factors.
Not required for a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
As of the date of this filing, the Company remains in default on four preferred stock series that have reached their contractual redemption dates. The defaults comprise of the following: 50 shares of Series F Preferred Stock with an aggregate redemption price of $50,000 that became due on September 1 2020; 25 shares of Series G Preferred Stock with an aggregate redemption price of $25,000 that became due on April 30 2021; 25 shares of Series I Preferred Stock with an aggregate redemption price of $25,000 that became due between May 2 2021 and June 10 2021; and 297 shares of Series K Preferred Stock with an aggregate redemption price of $297,150 that became due between August 5 2021 and March 26 2022. The cumulative unpaid redemption obligation is $397,150. No penalties have been assessed, and no waivers or amended terms have been negotiated to date. Management plans to address these in connection with its ongoing capital-raising and liability-management efforts.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
Item 6. Exhibits.
|
Exhibit
Number |
Description of Exhibit | |
| 31.1 | Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.* | |
| 31.2 | Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.* | |
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | |
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | |
| 101.INS | Inline XBRL Instance Document.* | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema.* | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase.* | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase.* | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase.* | |
| 101.PRE | Inline XBRL Extension Presentation Linkbase.* | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).* |
| * | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
November 19, 2025
| ORIGINCLEAR, INC. | |
| /s/ T. Riggs Eckelberry | |
| T. Riggs Eckelberry | |
| Chief Executive Officer | |
| (Principal Executive Officer) and |
| /s/ Prasad Tare | |
| Prasad Tare | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
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