OriginClear (OCLN) Q1 2026: revenue up 43% amid higher net loss and going-concern risk
Rhea-AI Filing Summary
OriginClear, Inc. reported a larger quarterly loss despite strong revenue growth. For the three months ended March 31, 2026, revenue rose 43% to $2,002,880, driven mainly by equipment contracts and pump station sales. Gross profit increased to $554,128, but higher cost of goods sold and significant non‑operating charges weighed on results.
The company recorded a net loss of $2,073,530 versus a loss of $767,034 a year earlier, mainly due to a $909,505 loss from changes in derivative liabilities and a $320,000 loss on debt conversion. Cash and cash equivalents improved to $3,310,171, yet assets of $5,065,164 remain far below total liabilities of $27,533,912, leaving shareholders’ deficit at $29,566,468.
Auditors have expressed substantial doubt about OriginClear’s ability to continue as a going concern, citing recurring losses, negative operating cash flows, and tight liquidity. Management is pursuing financing through convertible notes, preferred stock, and strategic partnerships, while shifting focus to its Water On Demand subsidiary and new joint ventures in digital infrastructure and Bitcoin mining that had no material operations as of March 31, 2026. The company also remains in default on $397,150 of redeemable preferred stock redemptions and reports a $13,037,500 derivative liability tied to convertible notes.
Positive
- Revenue and gross profit growth: Q1 2026 revenue rose 43% year over year to $2,002,880, with gross profit increasing to $554,128 as core water-system operations produced positive segment operating income.
- Improved liquidity versus prior year: Cash and cash equivalents increased to $3,310,171 at March 31, 2026, supported by $969,671 of net cash provided by financing activities and strong contract collections from customers.
Negative
- Going concern and deep shareholders’ deficit: Auditors expressed substantial doubt about the company’s ability to continue as a going concern as liabilities of $27,533,912 far exceed $5,065,164 of assets, resulting in a $29,566,468 shareholders’ deficit.
- Large derivative and convertible note overhang: A $13,037,500 derivative liability and $2,617,692 of unsecured convertible promissory notes create significant earnings volatility and potential dilution tied to variable conversion terms.
- Increasing net loss despite higher sales: Net loss widened to $2,073,530 from $767,034 a year earlier, driven by derivative losses and debt-conversion charges, offsetting operating improvements.
- Preferred stock redemption defaults: The company remains in default on four non-convertible preferred stock series with a cumulative unpaid redemption obligation of $397,150 and no waivers or amended terms in place.
Insights
Revenue is growing, but heavy leverage, derivatives, and going-concern risk dominate the picture.
OriginClear posted Q1 2026 revenue of $2,002,880, up 43% year over year, with gross profit of $554,128. Core water-system operations through PWT generated positive segment operating income, helped by lower general and administrative costs versus 2025.
However, the company remains highly leveraged. Total liabilities of $27,533,912 sit against assets of only $5,065,164, and shareholders’ deficit is $29,566,468. A large Level 3 derivative liability of $13,037,500 tied to convertible notes, plus $2,617,692 of unsecured convertible promissory notes, exposes shareholders to ongoing fair-value swings and potential dilution.
Auditors have expressed substantial doubt about the ability to continue as a going concern, and the company is in default on preferred stock redemptions totaling $397,150. Management’s strategy relies on continued access to capital markets and execution of Water On Demand and digital infrastructure joint ventures, which had no material operations as of March 31, 2026. Until financing and liability management progress, balance-sheet risk remains elevated.
Key Figures
Key Terms
going concern financial
derivative liabilities financial
mezzanine equity financial
equity method financial
Qualified Opportunity Zone Business financial
Level 3 financial
Earnings Snapshot
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED:
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number:
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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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 | ☐ |
☒ | Smaller reporting company | ||
| Emerging growth company | ||
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
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TABLE OF CONTENTS
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Item 1. | Financial Statements. |
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
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Item 4. | Controls and Procedures. |
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Item 1. | Legal Proceedings. |
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Item 1A. | Risk Factors. |
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
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Item 3. | Defaults Upon Senior Securities. |
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Item 4. | Mine Safety Disclosures. |
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Item 5. | Other Information. |
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Item 6. | Exhibits. |
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SIGNATURES |
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ORIGINCLEAR, INC. AND SUBSIDIARIES
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See accompanying Notes to Consolidated Financial Statements.
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ORIGINCLEAR, INC. AND SUBSIDIARIES
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ORIGINCLEAR, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Shareholders’ Deficit
(Unaudited)
THREE MONTHS ENDED MARCH 31, 2025 |
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See accompanying Notes to Consolidated Financial Statements.
| 3 |
| Table of Contents |
ORIGINCLEAR, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
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| ||
Right-of-use assets |
|
|
|
|
|
| ||
Change in discontinued operations |
|
|
|
|
|
| ||
Prepaid expenses and other current assets |
|
|
|
|
| ( | ) | |
Security deposits |
|
| ( | ) |
|
|
| |
Accounts payable |
|
|
|
|
| ( | ) | |
Lease liability |
|
| ( | ) |
|
| ( | ) |
Accrued expenses and other current liabilities |
|
|
|
|
|
| ||
Contract liabilities |
|
| ( | ) |
|
| ( | ) |
Net cash used in operating activities |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
|
|
| ( | ) | |
Net cash used in investing activities |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
Repayment of SBA loan |
|
| ( | ) |
|
| ( | ) |
Repayment of Tony Lonstein loan |
|
| ( | ) |
|
|
| |
Repayments of loans from related parties |
|
| ( | ) |
|
| ( | ) |
Dividends paid on preferred stock |
|
| ( | ) |
|
|
| |
Proceeds from convertible secured promissory notes |
|
|
|
|
|
| ||
Proceeds from issuance of common stock (Reg A & D) |
|
|
|
|
|
| ||
Proceeds from issuance of Series A preferred stock |
|
|
|
|
|
| ||
Common interest issued for OriginSpark PPM |
|
|
|
|
|
| ||
Proceeds from preferred stock (mezzanine equity) |
|
|
|
|
|
| ||
Net cash provided by financing activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net change in Cash |
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
|
|
|
| ||
Cash and cash equivalents, beginning of period |
|
|
|
|
|
| ||
Cash and cash equivalents, end of period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information |
|
|
|
|
|
|
|
|
Cash paid for interest and dividends |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF NON CASH TRANSACTIONS |
|
|
|
|
|
|
|
|
Issuance of Series O preferred stock dividends |
| $ |
|
| $ |
| ||
Conversion of mezzanine preferred stock to common stock |
| $ |
|
| $ |
| ||
See accompanying Notes to Consolidated Financial Statements.
| 4 |
| Table of Contents |
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, 2025.
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. Currently, all production activity in the division has been shut down and the Company is in the process of finalizing the remaining balance sheet items. (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.
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 50% membership interest. The purpose of the Block40X JV is to finance, develop, construct, and manage Bitcoin mining facilities in the United States.
In connection with the agreement, the Company granted Block40X restricted stock equal to approximately 5% of the Company’s common shares outstanding on the effective date, pursuant to the Company’s existing restricted stock grant agreement. The Company’s contributions consist of funding and financing activities. Block40X’s contributions consist of site origination, technical expertise, and assistance with financing and tax modeling. Additional contributions, if required, will be made pro rata or as otherwise agreed.
| 5 |
| Table of Contents |
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 March 31, 2026, 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 60% to Bitmern Investments LLC and 40% to the Company.
The Bitmern JV is intended to finance, develop, and operate large-scale Bitcoin mining hosting facilities, beginning with a pilot project of up to 200 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 March 31, 2026, the Bitmern JV had no material assets, liabilities, or operations, and no impact on the consolidated financial statements.
During the fourth quarter of 2025, the Company formed OriginSpark Holdings LLC (“OriginSpark”), a Wyoming limited liability company, to pursue potential investments and joint venture opportunities related to digital infrastructure and data center development activities. Investments in OSH will also get percentage ownership in the Bitmern and Block40X JV’s. As of March 31, 2026, OriginSpark was in process of raising capital and has no operating activity.
On January 27, 2026, the Company, through Water On Demand, Inc., entered into a joint venture arrangement with a third party to pursue mobile water treatment infrastructure opportunities through a Texas-based entity. The joint venture is structured as a 50/50 owned entity with shared governance between the parties. Management has determined that the joint venture will be accounted for under the equity method in accordance with ASC 323. As of March 31, 2026, the joint venture is in startup planning and has no material assets, liabilities, operations, or impact on the 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 months ending March 31, 2026, 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.
Going concern
These consolidated financial statements have been prepared on a going concern basis. 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.
| 6 |
| Table of Contents |
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 2025 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 measured at each end of the period. No material changes in valuation techniques or inputs have occurred since December 31, 2025, 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 three months ended March 31, 2026:
|
| 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.
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.
| 7 |
| Table of Contents |
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 zero, and additional losses are recognized only to the extent the Company has committed to providing financial support.
The Company’s joint ventures and equity method investments, including the Block40X JV, Bitmern-OriginSpark JV LLC, and GridWater Inc., are accounted for under this method. As of March 31, 2026, 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 2025 Form 10-K.
Interim reporting
Footnote disclosure that would duplicate the 2025 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 in 2025, and no material costs are expected in future periods.
Summary of Results of Discontinued Operations
|
| Three Months Ended March 31, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Revenue |
| $ |
|
| $ |
| ||
Cost of revenue |
|
|
|
|
|
| ||
Gross profit (loss) |
|
|
|
|
|
| ||
Operating Expenses |
|
|
|
|
|
|
|
|
Selling and marketing |
|
|
|
|
|
| ||
General and administrative |
|
|
|
|
|
| ||
Total Operating expenses |
|
|
|
|
|
| ||
Income from Operations |
|
|
|
|
|
| ||
NET INCOME (LOSS) FROM ASSETS-HELD-FOR-SALE |
| $ |
|
| $ |
| ||
| 8 |
| Table of Contents |
Summary Balance Sheet of Discontinued Operations
|
| March 31, |
|
| December 31, |
| ||
|
| 2026 |
|
| 2025 |
| ||
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 three months ended March 31, 2026, lease-related expenses included ROU amortization of $
Maturity of lease liability
Future minimum lease payments as of March 31, 2026, are as follows:
Period |
| Amount |
| |
Year 1 (remainder of fiscal year) |
| $ |
| |
Year 2 |
|
|
| |
Year 3 |
|
|
| |
Year 4 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.
| 9 |
| Table of Contents |
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
At March 31, 2026, the Company had the following series of non-convertible preferred stock classified as liabilities. These instruments are subject to mandatory redemption provisions or dividend terms that require classification outside of liability rather than equity.
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
| 10 |
| Table of Contents |
Mezzanine Equity Preferred Stock Outstanding
At March 31, 2026, the Company had the following series of convertible or redeemable preferred stock classified as mezzanine equity. These securities are either subject to redemption features or conversion terms that are not solely within the Company’s control.
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 |
|
|
|
|
|
|
|
|
|
| $ |
| ||||
Restricted Stock Grants – Alternative Vesting
During prior periods, the Company approved restricted stock grants (“RSGs”) to certain employees and consultants under alternative vesting arrangements. In accordance with ASC 718, the Company recorded the related grant date fair value based on the closing price of the Company’s common stock on the applicable grant dates.
During the quarter ended March 31, 2026, no additional restricted stock grants were vested or issued under the alternative vesting program. The related obligations associated with previously approved restricted stock grants remained recorded on the Company’s books and records as of March 31, 2026.
OriginClear, Inc. Common Stock
In Q1 2026 the Company:
| · | issued an aggregate of |
|
|
|
| · | issued an aggregate of |
|
|
|
| · | issued |
|
|
|
| · | issued an aggregate of |
|
|
|
| · | issued an aggregate of |
|
|
|
| · | issued an aggregate of |
After these transactions,
| 11 |
| Table of Contents |
In Q1 2025 the Company:
| · | issued |
|
|
|
| · | issued |
|
|
|
| · | issued |
|
|
|
| · | issued |
The Company redeemed
Water On Demand, Inc. Equity
Common Stock
As of March, 31, 2026, WODI had
Preferred Stock
As of March 31, 2026, WODI had three authorized series of preferred stock.
The table below summarizes the authorized, outstanding and key features for each class as of March 31, 2026.
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 53.43% of the voting equity as of March 31, 2026. The remaining 46.57% is held by unaffiliated third-party investors as noncontrolling interest in the condensed consolidated financial statements.
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 three months ended March 31, 2026:
|
| As of March 31, |
| |
Description |
| 2026 |
| |
Beginning noncontrolling interest |
| $ |
| |
Net income (loss) attributive to NCI |
|
|
| |
Ending noncontrolling interest |
| $ |
| |
| 12 |
| Table of Contents |
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.
As of March 31, 2026, neither milestone had been met; accordingly, no new stock-based compensation expense has been recognized.
Warrants
A summary of OCLN’s warrant activity and related information for the three months ended March 31, 2026, is as follows:
|
| March 31, 2026 |
| |||||
|
| Number of warrants |
|
| Weighted average exercise price |
| ||
Outstanding - beginning of year |
|
|
|
| $ |
| ||
Granted |
|
| - |
|
| $ |
| |
Exercised |
|
| - |
|
| $ |
| |
Expired |
|
| ( | ) |
| $ | ( | ) |
Outstanding - end of period |
|
|
|
| $ |
| ||
| 13 |
| Table of Contents |
At March, 31, 2026, the weighted average remaining contractual life of warrants outstanding:
Exercisable Prices |
|
| Warrants Outstanding |
|
| Warrants Exercisable |
|
| Weighted Average |
| ||||
| $ |
|
|
|
|
|
|
|
|
|
| ||||
| $ |
|
|
|
|
|
|
|
|
|
| ||||
| $ |
|
|
|
|
|
|
|
|
|
| ||||
| $ |
|
|
|
|
|
|
|
|
|
| ||||
| $ |
|
|
|
|
|
|
|
|
|
| ||||
| $ |
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
WODI Warrants Issued
During the three months ended March 31, 2026, 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
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 March 31, 2026, 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
| 14 |
| Table of Contents |
The Bitmern JV is intended to finance, develop, and operate large-scale Bitcoin mining hosting facilities, beginning with a pilot project of up to 200 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 March 31, 2026, the Bitmern JV had no material assets, liabilities, or operations, and no impact on the consolidated financial statements.
During the fourth quarter of 2025, the Company formed OriginSpark Holdings LLC (“OriginSpark”), a Wyoming limited liability company, to pursue potential investments and joint venture opportunities related to digital infrastructure and data center development activities. Investments in OSH will also get percentage ownership in the Bitmern and Block40X JV’s. As of March 31, 2026, OriginSpark was in process of raising capital and has no operating activity.
On January 27, 2026, the Company, through Water On Demand, Inc., entered into a separate joint venture arrangement with a third party to pursue mobile water treatment infrastructure opportunities through a Texas-based entity. The joint venture is structured as a 50/50 owned entity with shared governance between the parties. Management has determined that the joint venture will be accounted for under the equity method in accordance with ASC 323. As of March 31, 2026, the venture had no material assets, liabilities, operations, or impact on the consolidated financial statements.
9. | Convertible Promissory Notes |
OriginClear, Inc.
As of March 31, 2026, 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 March 31, 2026 |
| Amount |
| |
2027 |
| $ |
| |
2028 |
|
|
| |
|
| $ |
| |
| 15 |
| Table of Contents |
As of March 31, 2026, 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 March 31, 2026, the derivative liability related to these notes was $
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.
| 16 |
| Table of Contents |
Disaggregated revenue
Three months ended March 31 |
| 2026 |
|
| 2025 |
| ||
Equipment Contracts |
| $ |
|
| $ |
| ||
Pump Stations |
|
|
|
|
|
| ||
Component Sales |
|
|
|
|
|
| ||
Services Sales |
|
|
|
|
|
| ||
Commission & Training |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
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, 2025 |
| $ |
|
|
|
| ||
Revenue recognized |
|
| ( | ) |
|
|
| |
Cash collected / reclassifications |
|
|
|
|
| ( | ) | |
Balance at March 31, 2026 |
| $ |
|
|
|
| ||
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 March 31, 2026, 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 March 31, 2026, the Company had outstanding promissory notes issued to its former CEO, reviewed and approved by the Board under the Company’s Related Party Transaction Policy for general corporate purposes.
The note, issued on
| 17 |
| Table of Contents |
13. | Water On Demand, Inc. (“WODI”) |
Water On Demand, Inc. (“WODI”) is a 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 in 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).
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 $
| 18 |
| Table of Contents |
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 9, 2026. 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 March 31, 2026.
15. | Related Party |
Promissory Notes to CEO
Promissory Note for $100,000
On December 17, 2025, the Company issued a promissory note to the CEO with a principal amount of $
The promissory notes was reviewed and approved by the Company’s Board of Directors in accordance with the Company’s Related Party Transaction Policy. The proceeds from the notes will be used for general corporate purposes.
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 |
The Company reports financial results by operating segment under ASU 2023-07, “Segment Reporting (Topic 280); improvements to Reportable Segment Disclosures which enhances the existing guidance in ASC 280. The Chief Executive Officer serves as the Chief Operating Decision Maker (CODM) and evaluates segment performance based on revenue, gross profit, and operating income and allocates resources accordingly.
As of March 31, 2026, the Company had two reportable segments. PWT and MWS. PWT is a legacy Texas based engineering and fabrication company focused on commercial and industrial water treatment solutions. MWS is reported as discontinued operations. (see Note 3).
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. Segment disclosures allocate revenues, expenses and assets in line with operational responsibility and financial control.
| 19 |
| Table of Contents |
Reportable Segments: |
|
|
Water System Solution Engineering |
|
|
|
Modular/ Prefabricated and Conveyance Systems |
|
|
|
WODI Corporate |
|
|
|
OCLN Corporate |
|
|
|
Total |
|
For the three months ended March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income (loss) |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | ||
Segment assets (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Gross profit as a % of revenue |
|
| % |
|
| - |
|
|
| - |
|
|
| - |
|
|
| % | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||
Gross profit (loss) |
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating loss |
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) | ||
Segment assets (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Gross profit as a % of revenue |
|
| - |
|
|
| % |
|
| - |
|
|
| - |
|
|
| % | ||
(a) Total Segment assets do not include assets of discontinued operations.
17. | Subsequent Events |
Management has evaluated subsequent events in accordance with ASC 855 and has not identified any events requiring disclosure.
There were no material equity or financing transactions occurring after March 31, 2026 through the filing date.
| 20 |
| Table of Contents |
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 focuses primarily on supporting the growth and development of its majority-owned subsidiary, Water On Demand, Inc. (“WODI”).Water On Demand
WODI has a wholly owned subsidiary PWT Tech 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 March 31, 2026, 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 toward the development of a water infrastructure financing platform, including its Opportunity Zone Fund strategy. The fund structure was designed to support financing for decentralized water treatment systems in underserved communities while utilizing available federal tax incentive structures. The fund had been formed but had not raised external capital as of March 31, 2026.
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.
Water On Demand, Inc. is a C-Corporation and its subsidiary, WODI LLC, as a Qualified Opportunity Zone Business (“QOZB”). It also created a wholly owned subsidiary WODI Sponsor LLC, which operates the business, and performs functions such as administration and contract management. Capital for WODI Sponsor LLC will be raised by selling membership units in the entity to limited partners. WODI is the General Partner of WODI Sponsor LLC. The WOD QOZ Fund was established to support future project-related capital raising activities.
| 21 |
| Table of Contents |
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 March 31, 2026 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 pursue potential digital infrastructure and hosting opportunities in the United States. Bitmern contributes technical expertise, project management, hosting operations, and related intellectual property, while the Company contributes financing activities, capital markets strategy, and compliance support. The Bitmern JV had not commenced material operations as of March 31, 2026 and is accounted for under the equity method of accounting.
During the fourth quarter of 2025, the Company formed OriginSpark Holdings LLC (“OriginSpark”), a Wyoming limited liability company, to pursue potential investments and joint venture opportunities related to digital infrastructure and data center development activities. Investments in OSH will also get percentage ownership in the Bitmern and Block40X JV’s. As of March 31, 2026, OriginSpark was in process of raising capital and has no operating activity.
On January 27, 2026, the Company, through Water On Demand, Inc., entered into a separate joint venture arrangement with a third party to pursue mobile water treatment infrastructure opportunities through a Texas-based entity. The joint venture is structured as a 50/50 owned entity with shared governance between the parties. Management has determined that the joint venture will be accounted for under the equity method in accordance with ASC 323. As of March 31, 2026, the venture had no material assets, liabilities, operations, or impact on the consolidated financial statements.
| 22 |
| Table of Contents |
Results of Operations for the three months ended March 31, 2026 and 2025.
Revenue and Cost of Goods Sold
Revenue for the three months ended March 31, 2026, was $2,002,880, compared to $1,404,671 for the same period in 2025, increased $598,209 (43%). The increase was primarily driven by higher equipment contracts and pump station sales revenue.
Cost of goods sold increased to $1,448,752 in 2026, from $900,017 in 2025, an increase of $548,735 (61%). As a result, the Company recorded a gross profit of $554,128 compared to a profit of $504,654 in the first quarter of 2025.
Selling and Marketing
Selling and marketing expenses were $406,862 for the quarter ended March 31, 2026, an increase of $83,329 (26%) from $323,533 in 2025. The increase reflects increased advertising and commissions, as well as more project-specific marketing initiatives compared to the prior-year period.
General and Administrative Expenses
General and administrative expenses totaled $648,630 for the quarter, compared to $1,112,072 in 2025, a decrease of $463,442 (42%). Lower legal and professional fees contributed to the decrease as well as decreased payroll and benefit costs in the current period.
Other Income and (Expenses)
Other income (expense) for the three months ended March 31, 2026 was $(1,572,166), compared to $76,914 in 2025, a change of $(1,649,080). The swing was primarily driven by a $909,505 loss on change in derivative liability and a $320,000 loss on debt conversion
Net Loss
Net loss for the three months ended March 31, 2026, was $(2,073,530) compared with net loss of $(767,034) for the same period in 2025, a change of $1,306,496. The change was primarily driven by an increase in derivative losses and higher expenses associated with debt conversions.
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 $3,310,171 as of March 31, 2026. Management believes continued investor support and access to capital markets will be necessary to sustain operations.
Summary of Cash Flows for the Three Months Ended March 31
Category |
| 2026 |
|
| 2025 |
| ||
Net cash used in operating activities |
| $ | 1,512,493 |
|
| $ | (221,342 | ) |
Net cash used in investing activities |
| $ | - |
|
| $ | (7,500 | ) |
Net cash provided by financing activities |
| $ | 969,671 |
|
| $ | 1,576,522 |
|
Net increase (decrease) in cash and cash equivalents |
| $ | 2,482,164 |
|
| $ | 1,347,680 |
|
| 23 |
| Table of Contents |
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 2025 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.
Trends and Outlook
Management expects revenue for the remainder of 2026 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 March 31, 2026, 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.
| 24 |
| Table of Contents |
PART II
Item 1. Legal Proceedings.
None
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.
None.
| 25 |
| Table of Contents |
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. |
| 26 |
| Table of Contents |
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.
May 26, 2026
ORIGINCLEAR, INC. |
|
|
|
/s/ Cory Mertes |
|
Cory Mertes |
|
Chief Executive Officer and Chief Financial Officer |
|
(Principal Executive Officer) |
|
| 27 |