OriginClear, Inc. 2025 Annual Report: Key Highlights and Critical Investor Information

Executive Summary

OriginClear, Inc. (OTC: OCLN) has published its Annual Report for the fiscal year ended December 31, 2025. The report details the company’s financial performance, ongoing business strategy, and significant risks and uncertainties facing shareholders. As a company focused on creating, incubating, or accelerating businesses in the water industry and related sectors, OriginClear’s financials and governance present several critical points for investors to consider.

Key Points from the Report

• Business Model and Strategy:
  • OriginClear operates as a Corporate Water Incubation Holding (CWIH), aiming to partner with or develop businesses in the water industry, taking equity positions and earning management fees.
  • Primary strength lies in securing capital for these businesses, achieving commercial proof of concept, and facilitating growth by leveraging retail corporate development and management experience.
  • As of the report date, the company employs approximately 32 full-time employees.
• Financial Performance and Position:
  • OriginClear has not been profitable since its inception in 2007.
  • As of December 31, 2025, the company reported an accumulated deficit of \$(155,711,198) and a shareholders’ deficit of \$(28,382,938).
  • Operating cash flow was negative, with \$(3,587,663) used in operating activities for 2025 (versus \$(3,745,242) in 2024).
  • Net cash provided by financing activities was \$4,079,530 in 2025, mainly from secured promissory notes and preferred stock offerings.
  • The company remains dependent on raising additional capital to continue operations and support future growth.
• Going Concern Uncertainty:
  • The company’s independent registered public accountants issued a “going concern” warning, citing substantial doubt about the company’s ability to continue in business without raising additional funds or generating sufficient future sales.
  • Failure to secure additional financing may result in reduced operations or cessation of business entirely.
• Capital Structure and Dilution Risk:
  • The company has a complex capital structure, with multiple classes of convertible preferred stock, convertible notes, and outstanding warrants, all of which may dilute existing common shareholders upon conversion.
  • Equity financing is likely to further dilute current shareholders, and variable conversion prices for preferred stock could result in unpredictable dilution.
  • As of April 10, 2026, there were approximately 16,211,457 shares of common stock outstanding.
• Corporate Governance and Control:
  • T. Riggs Eckelberry, CEO and holder of Series C Preferred Stock, controls 51% of the shareholder voting power, effectively determining the outcome of all shareholder votes and corporate policy.
  • The Board of Directors has the authority to issue additional preferred shares with preferential rights without shareholder approval, increasing the risk of further dilution or shifts in control.
• Market Listing and Stock Liquidity:
  • OriginClear’s common stock is quoted on the OTC Pink Open Market, not on a national exchange, resulting in limited liquidity and potentially greater volatility.
  • The stock is classified as a “penny stock,” subjecting it to additional trading restrictions and making it less attractive to institutional investors and margin loan providers.
  • Historical volatility and significant price swings increase the risk of investment losses and potential securities litigation.
• Dividend Policy:
  • The company has never paid cash dividends and does not intend to do so in the foreseeable future. All profits, if any, are expected to be retained for business operations and capital requirements.
  • Outstanding preferred stock is entitled to dividends before payments can be made to common shareholders.
• Internal Controls and Compliance:
  • Management concluded that internal controls over financial reporting were ineffective due to a lack of segregation of duties arising from a small staff size.
  • While no material weaknesses were identified, this deficiency could result in delayed or incomplete disclosures. Additional analysis and procedures were performed to ensure GAAP compliance for the reported period.
  • There was no attestation by an independent registered public accountant, as the company is a smaller reporting company and currently exempt from this requirement.
• Recent Trends and Events:
  • No off-balance sheet arrangements were reported that could have a current or future effect on the company’s financial condition.
  • No unregistered securities sales during the year, except for previously disclosed transactions and a Regulation A offering by the Water on Demand, Inc. subsidiary.

Critical and Potentially Price-Sensitive Disclosures for Shareholders

• Going Concern Doubt: The explicit warning from auditors about the company’s ability to continue as a going concern is highly material. Should OriginClear fail to raise capital, it may be forced to reduce or cease operations—potentially rendering shares worthless.
• Significant Shareholder Dilution Risk: The company’s reliance on convertible securities, variable conversion rates, and additional equity raises means current shareholders face ongoing and potentially substantial dilution.
• CEO Control: With more than 51% voting power in the hands of a single executive, minority shareholders have little influence over major strategic or governance decisions.
• Penny Stock Status and OTC Market Listing: This status severely limits liquidity and may deter institutional investment, further impacting share price and making it difficult for investors to enter or exit positions.
• Internal Control Deficiency: Management’s conclusion of ineffective controls increases the risk of delayed financial reporting or missed material disclosures, which could erode investor confidence and negatively impact the share price.
• Lack of Dividends: Investors relying on income should note the absence of dividends, with all potential returns dependent on share price appreciation—currently uncertain given the company’s financial position.

Conclusion

OriginClear, Inc. remains a speculative investment with significant risks. The company’s substantial accumulated deficit, need for continued financing, and ongoing risk of dilution and control concentration all present material risks to shareholders. While the company is pursuing growth strategies in the water industry and has taken steps to strengthen its internal controls, its financial challenges and penny stock status require careful consideration by current and potential investors.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with a qualified financial advisor before making investment decisions. Past performance is not indicative of future results. OriginClear, Inc. is a speculative investment with significant risks, including the potential for total loss of invested capital.

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