ORIGINCLEAR, INC.  MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

ORIGINCLEAR, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

This Quarterly Report on Type 10-Q comprises forward-looking statements which are
topic to plenty of dangers and uncertainties, a lot of that are past our
management, which can embody statements about our:



  ? enterprise technique;




  ? monetary technique;




  ? mental property;




  ? manufacturing;




  ? future working outcomes; and




       ?   plans, goals, expectations, and intentions contained on this
           report that aren't historic.




All statements, aside from statements of historic reality included on this
report, concerning our technique, mental property, future operations,
monetary place, estimated revenues and losses, projected prices, prospects,
plans and goals of administration are forward-looking statements. When utilized in
this report, the phrases "may," "imagine," "anticipate," "intend," "estimate,"
"anticipate," "mission" and comparable expressions are meant to establish
forward-looking statements, though not all forward-looking statements include
such figuring out phrases. All forward-looking statements converse solely as of the date
of this report. You shouldn't place undue reliance on these forward-looking
statements. Though we imagine that our plans, intentions and expectations
mirrored in or steered by the forward-looking statements we make on this
report are affordable, we can provide no assurance that these plans, intentions or
expectations might be achieved.  These statements could also be discovered beneath
"Administration's Dialogue and Evaluation of Monetary Situation and Outcomes of
Operations," in addition to on this report typically. Precise occasions or outcomes might
differ materially from these mentioned in forward-looking statements because of this
of varied components.  In gentle of those dangers and uncertainties, there may be no
assurance that the forward-looking statements contained on this submitting will in
reality happen.



Organizational Historical past



OriginClear, Inc. ("we", "us", "our", the "Firm" or "OriginClear") was
included on June 1, 2007 beneath the legal guidelines of the State of Nevada. We have now been
engaged in enterprise operations since June 2007. In 2015, we moved into the
commercialization part of our marketing strategy having beforehand been primarily
concerned in analysis, improvement and licensing actions. Our principal
workplaces are positioned at 13575 58th Avenue North, Suite 200, Clearwater, FL 33760.
Our predominant phone quantity is (727) 440-4603. Our web site deal with is
www.OriginClear.com. The knowledge contained on, linked to or that may be
accessed through our web site shouldn't be a part of this report.



Overview of Enterprise



OriginClear is an organization that right now, develops distinctive water property for eventual
launch as their very own corporations. This new function was indicated water know-how
firm which has developed in-depth capabilities over the eight years because it
started to function within the water trade.



As a part of this new mission, OriginClear’s property, subsidiaries and product choices include:

? The mental property of Daniel M. Early (the “Prior IP”),

           consisting of 5 patents and associated knowhow and commerce 

secret, who

           are meant to take the place of the functions for the corporate's
           unique know-how developments.




       ?   The model, Modular Water Methods (MWS), that includes merchandise
           differentiated by the Early IP and complemented with extra knowhow
           and commerce secrets and techniques. MWS is in business operation and operates as a
           division of Progressive Water Remedy, Inc. ("PWT"), a completely owned
           subsidiary of the Firm based mostly in McKinney, Texas. The Firm is
           at the moment growing MWS as a discrete line of enterprise for an eventual
           spinoff. As well as, the Firm intends to separate the

EveraMOD Pump

           Station product line as a standalone enterprise.




                                       26





       ?   PWT is accountable for a big proportion of the corporate's
           income, specializing in engineered water therapy options and
           customized therapy techniques. We imagine that PWT has knowhow with
           mental property potential.



? OriginClear incubated a brand new outsourced water therapy enterprise

           known as Water On Demand ("WOD").




          o   The WOD mannequin intends to supply personal companies water
              self-sustainability as a service - the power to pay for water
              therapy and purification companies on a per-gallon foundation. That is
              generally often called Design-Construct-Personal-Function or "DBOO".




          o   4 subsidiaries have been established to accommodate capital devoted
              to this program ("the WOD Subsidiaries"). For effectivity, the
              Firm is reorganizing these subsidiaries right into a single WOD
              Subsidiary.




          o   On April 13, 2022, the Firm's Board of Administrators authorized the
              plan to spin off its Water On Demand enterprise right into a newly fashioned
              wholly-owned subsidiary, Water On Demand Inc. ("WODI"), which is able to
              maintain the property, liabilities, mental property and enterprise
              operations of the Water On Demand enterprise. WODI is designed to
              choose tasks, absolutely qualify them, present financing for DBOO
              service contracts, and thereafter handle property, contracts, shoppers,
              traders, strategic companions and distributors.




As they're topic to a safety warranty by the Firm, the WOD Subsidiaries,
and the capital raised for them by way of the Firm's Collection Y providing, shall
proceed to be held by the Firm. This capital might be made accessible to WODI
to be deployed, topic to a deliberate administration contract.



Growing Water Companies



The Firm develops and incubates companies in its function because the Clear Water
Innovation Hub™ ("CWIB"). The mission of CWIB normally, is to create beneficial
properties by way of an incubation course of that leads to the launching of
beneficial spinoffs that add worth to the world's water trade.



The primary such spinoff was on April 13, 2022, when the Firm's Board of
Administrators authorized the plan to spin off its Water On Demand enterprise right into a
newly fashioned wholly-owned subsidiary, Water On Demand Inc., which is able to maintain the
property, liabilities, mental property and enterprise operations of the Water
On Demand enterprise.


We are able to anticipate different corporations to emerge, because the Firm introduced on
April 26, 2022:

“The launch of Water on Demand is the primary of a number of anticipated business property spin-offs. The Firm’s different business properties embody Modular Water Methods, which holds a grasp license to 5 key worldwide patents for extremely sturdy, pre-engineered modular merchandise from water therapy and pumping. A proprietary know-how, MWS is sometimes called the “design foundation” for tasks, which suggests opponents can not simply undermine MWS.”

(https://www.originclear.com/company-news/originclear-to-launch-water-on-demand-fintech-startup)

CWIB’s day-to-day actions embody:



       1.  Constructing a line of customer-facing water manufacturers to broaden international market
           presence and technical experience. These embody the wholly-owned
           subsidiary, Progressive Water Remedy, Inc., and the Modular Water
           Methods model.




                                       27





       2.  Managing relationships with companions worldwide who're licensees and
           enterprise companions.

       3.  Growing the potential of companions to construct techniques and to ship
           Operation & Upkeep ("O&M") functionality at scale, to help Water
           On Demand outsourced therapy and purification applications.

       4.  Proceed to check the streamlining of water property and royalties
           by way of the blockchain, as a part of the $H2O™ idea. Right now
           there isn't any plan to actively develop a blockchain-based asset.

       5.  Put together properties for eventual spinoff.




On July 8, 2022, the Firm introduced that it booked mixed buy orders
in extra of $5 million within the first 9 months of 2022, greater than double the
order quantity for the comparable interval in 2021.



On September 21, 2022, the corporate introduced its collaboration with PhilanthroInvestors™ to develop off-grid housing options. PhilanthroInvestors™ promotes human well-being whereas attaining monetary return.

https://www.originclear.com/company-news/originclear-teams-up-with-real-estate-leader-for-off-grid-housing


On October 18, 2022, the Firm introduced that its pump station product line is
exhibiting business success. Often known as EveraMOD within the Modular Water Methods (MWS)
lineup, this sturdy, modular system is being adopted by clients, typically as a
easy but very important retrofit for present, out of date installations.



Moreover, the corporate has indicated that it could create EveraMOD as the subsequent unbiased firm beneath CWIB.

https://www.originclear.com/company-news/originclears-pump-station-line-rapidly-expands


On October 25, 2022, the Firm introduced that it entered an Fairness Financing
Settlement with GHS Investments (GHS). Pursuant to the Settlement, GHS has agreed
to buy as much as $25.0 million in registered widespread inventory, with timing and
quantities of the purchases to be decided on the sole discretion of the Firm.

On November 7, 2022, the Firm introduced that it retained The Basile Legislation Agency,
P.C. (www.thebasilelawfirm.com), to discover a possible enterprise mixture
with a NASDAQ-listed Particular Goal Acquisition Company (SPAC). OriginClear
cautions {that a} particular SPAC has not been definitively recognized, the
potential phrases are unknown, and there's no assurance any transaction might
happen.



Milestones


Progressive Water Remedy Inc.

On October 1, 2015the Firm finalized the acquisition of dallas-based
Progressive Water Remedy Inc. (“PWT”), a designer, builder and repair supplier for a variety of commercial water therapy functions. PWT, together with MWS, different proprietary applied sciences and potential future acquisitions, goals to supply a complementary end-to-end providing to satisfy rising enterprise demand for outsourced water therapy.


PWT's Enterprise



Since 1995, PWT has been designing and manufacturing an entire line of water
therapy techniques for municipal, industrial and pure water functions. PWT
designs and manufactures an entire line of water therapy techniques for
municipal, industrial and pure water functions. Its uniqueness is its capability
to achieve an in-depth understanding of buyer's wants after which to design and
construct an built-in water therapy system utilizing a number of applied sciences to
present an entire answer for its clients.



PWT makes use of a variety of applied sciences, together with chemical injection, media
filters, membrane, ion trade and SCADA (supervisory management and information
acquisition) know-how in turnkey techniques. PWT additionally affords a broad vary of
companies together with upkeep contracts, retrofits and alternative help.
As well as, PWT rents tools in contracts of various period. Prospects are
primarily served in the US and Canada, with the corporate's attain
extending worldwide from Siberia to Argentina to the Center East.



PWT Milestones


Within the first quarter of 2019, the Firm elevated the variety of producer representatives for its enterprise models, PWT and Modular Water Methods (“MWS”).


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On Nov 7, 2019, the Firm revealed a case research exhibiting how its Modular Water
System might assist automotive dealerships broaden into rural land. The case research
reveals how point-of-use therapy solves lack of entry to the general public sewer
system.



On March 5, 2020the corporate introduced disruptive costs for pumps and raise stations, saying its precast modules with a lifespan of as much as 100 years now compete with precast concrete.



On April 15, 2021, the Firm introduced that its Progressive Water Remedy
division is now delivery BroncBoost™, its workhorse Booster Pump Station
tools line. Engineered and in-built Texas, BroncBoost permits clients to
management water circulation charges and stress for mission essential water distribution
techniques.



On August 25, 2021, PWT entered right into a Grasp Providers Settlement (MSA) with a
giant US public utility firm for water filtration techniques that may present
course of water at three energy vegetation. The utility issued a purchase order order for
roughly $1.8 million, for the primary energy plant. The whole buy value
payable to PWT beneath the MSA is roughly $5 million, topic to sure
situations, together with receipt and acceptance by PWT of extra buy
orders. We anticipate the general contract to take as much as two years to ship from
the date of the MSA.



Modular Water Methods



On June 22, 2018, OriginClear signed an unique worldwide licensing settlement
with Daniel "Dan" Early P. E. for his proprietary know-how for prefabricated
water transport and therapy techniques. On July 19, 2018, the Firm started
incubating its Modular Water Remedy Division (MWS) round Mr. Early's
know-how and perspective clients. The Firm has funded the event of
this division with inside money circulation. In Q1 of 2020, the Firm absolutely
built-in MWS with wholly-owned Progressive Water Remedy Inc. The Firm is
at the moment growing MWS as a discrete line of enterprise for an eventual spinoff.
Mr. Early at the moment serves as Chief Engineer for OriginClear.



On July 19, 2018, the Firm launched its Modular Water Remedy Division,
providing a novel product line of prefabricated water transport and therapy
techniques. Daniel "Dan" Early P.E. (Skilled Engineer) heads the Modular Water
Methods ("MWS") division. On June 25, 2018, Dan Early granted the Firm a
worldwide, unique non-transferable license to the know-how and knowhow
behind MWS (See "Mental Property"). A ten-year renewal on Might 20, 2020
added the proper to sublicense and create manufacturing joint ventures. On July
25, 2018, MWS acquired its first order, for a brewery wastewater therapy
plant.



With PWT and different corporations as fabricators and assemblers, MWS designs,
manufactures and delivers prefabricated water transport (pump and raise stations)
beneath the EveraMOD™ model; and wastewater therapy plant ("WWTP") merchandise
beneath the EveraSKID™ and EveraTREAT™ manufacturers to clients and end-users that are
required to scrub their very own wastewater, resembling colleges, small communities,
institutional amenities, actual property developments, factories, and industrial
parks.


On September 28, 2021the corporate introduced that MWS has deployed its pilot Pondster™ model modular lagoon therapy system in a Cell residence park (MHP) or trailer park, in Troy, Alabama.

On June 16, 2022 the Firm introduced that MWS had acquired buy orders for roughly $1.5 million in Might 2022. This in comparison with $1,774,880 in orders for the entire of 2021.



On July 25, 2022 the Firm introduced that decentralized water therapy, lengthy
pioneered by OriginClear's Modular Water Methods™ (MWS), is now being mandated
by main US cities to recycle water in giant new buildings.



On August 12, 2022 the Firm introduced the inaugural supply and set up
of its pre-engineered EveraBOX™ to implement a low-risk Liquid Ammonium Sulfate
(LAS) disinfectant system for Pennsylvania's Beaver Falls Municipal Water
Authority (BFMA). Typical of MWS merchandise, EveraBOX is manufactured utilizing
cheap, long-lasting Excessive-Density Polyethylene (HDPE) or Polypropylene (PP)
supplies. These supplies have confirmed to be much less affected by provide chain
points at the moment impacting metallic and fiberglass building.



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Water on Demand™: a brand new strategic path.



OriginClear can be growing a brand new outsourced water therapy enterprise known as
"Water On Demand": or "WOD" as a possible income supply. The WOD mannequin intends
to supply personal companies the power to pay for water therapy and
purification companies on a per-gallon foundation. That is generally often called
Design-Construct-Personal-Function or "DBOO". On April 13, 2021, we introduced formation of
a wholly-owned subsidiary known as Water On Demand #1, Inc. ("WOD #1") to pursue
capitalization of the tools required. The WOD Subsidiaries, Water On Demand
#2, Inc. ("WOD #2"), Water On Demand #3, Inc. ("WOD #3"), Water On Demand #4,
Inc. ("WOD #4") had been individually created to allow elective segmenting of capital
swimming pools in accordance with strategic partnerships. The Firm is now simplifying this
construction by inserting all funds in WOD #1 and monitoring the partnerships inside
that firm. As they're topic to a safety warranty by the Firm, the WOD
Subsidiaries, and the capital raised for them by way of the Firm's Collection Y
providing, shall proceed to be held by the Firm. This capital might be made
accessible to WODI to be deployed, topic to a deliberate administration contract.



The Firm intends to pilot an preliminary DBOO contract and subsequently work with regional water utility corporations to construct and function the water therapy techniques it funds. Extra financing hubs might be created in international monetary facilities.



Delegating the constructing and working of WOD-financed techniques to regional water
corporations beneath efficiency contract, with the purpose of growing a community of
such companions, is predicted to allow speedy scale-up of the WOD program, and the
accomplice community would create a excessive barrier to entry for opponents.



On April 13, 2022, the Firm's Board of Administrators authorized the plan to spin
off its Water On Demand enterprise right into a newly fashioned wholly-owned subsidiary,
Water On Demand Inc., which is able to maintain the property, liabilities, mental
property and enterprise operations of the Water On Demand enterprise.



The Firm stipulates that it has excluded the WOD Subsidiaries, and all
capital already raised and to be raised sooner or later in its Collection Y providing,
from this task of property and can make the capital accessible as a part of a
deliberate administration contract. The Firm intends to additionally register a Regulation A
providing by WODI which is meant to build up capital for WODI to direct
towards WOD tasks.



To allow speedy scaling, WODI doesn't initially intend to construct, keep or
service the water therapy techniques it funds, however as a substitute contract with
regional water service corporations to hold out these features. On April 6, 2022,
an settlement in precept was reached to work with the primary of those meant
contractors, Envirogen Applied sciences (www.envirogen.com), a 30-year worldwide
supplier of environmental know-how and course of options
(www.originclear.com/company-news/originclear-and-envirogen-to-partner-on-water-on-demand).
Future sources to construct, keep and repair these financed techniques might come
from acquisitions; nevertheless, these usually are not actively being deliberate.



On the time of this submitting, WODI had no employees or unbiased sources. Beneath a
potential administration companies contract, OCLN is offering all staffing and
administrative sources, in addition to entry to the funds it has raised for WOD
investments.



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Market Alternative



On a world foundation, solely twenty % (20%) of all sewage and thirty %
(30%) of all industrial waste are ever handled. Water leakage leads to the
lack of thirty-five % (35%) of all clear water throughout the planet. Slicing
that quantity in half would offer clear water for 100 million individuals. This can be a
state of affairs of nice hazard, but in addition nice potential.



We imagine companies can not depend on large, centralized water utilities
to satisfy the problem. That's the reason increasingly enterprise customers are doing their
personal water therapy and recycling. Whether or not by selection or necessity, these
companies that spend money on onsite water techniques achieve a tangible asset on their
enterprise and actual property and may get pleasure from higher water high quality at a decrease price,
particularly if handled water is recycled.



We imagine self-reliant companies are quietly constructing "decentralized water
wealth" for themselves whereas additionally serving to their communities. Environmental,
social and governance (ESG) investing pointers, which drive a couple of quarter of
all professionally managed property all over the world, particularly embody the important thing
issue of how properly firms handle water.



 As civil infrastructure ages and fails and because the prices for brand spanking new and alternative
infrastructure improve 12 months over 12 months, we imagine engineers and end-users will
seek for new methods and strategies of deploying water and wastewater techniques that
are cheaper to ship and far cheaper to personal and function with
the mission intent of considerably growing the alternative intervals
at the moment skilled by typical supplies of building and standard
product supply fashions.


Scale back danger by way of outsourcing



Inflation of water charges vastly exceeds core inflation (see Determine 2), creating
a danger for managers of companies served by municipalities. We imagine this
creates an incentive for self-treatment; however these companies might lack the
capital for giant water plant expenditures, and the in-house experience to handle
them. Outsourcing by way of what we name Water on Demand™ signifies that these
corporations don't have to fret about the issue, both financing it or
managing it.



For example, in data know-how, few corporations function their very own server
in-house powering their web site. Fairly, such servers are sometimes managed by
professionals by way of a service degree settlement. Within the water trade, when
utilized to outsourced water therapy, a service degree settlement is called O&M
settlement. When the seller retains possession of the tools, the idea is
expanded to "Personal and Function", an extension of the essential "Design and Construct", for
a full providing often called DBOO, which is similar to the photo voltaic power
applications often called Energy Buy Agreements ("PPAs").



Beneath such a plan, a enterprise can outsource its wastewater therapy by merely
signing on the dotted line; immediately avoiding most capital expense, and the
hassle of managing one thing that may be a distraction from their core enterprise.



We imagine that is financially and operationally engaging to industrial,
agricultural and business water customers, whereas OriginClear's Water On Demand
program can doubtlessly drive speeded-up offers and extra income streams from
offering water therapy as a service.



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The megatrend of decentralization


                               [[Image Removed]]



                                    Determine 1



An up to date report of October 2018, "Public Spending on Transportation and Water
Infrastructure, 1956 to 2017"
(www.cbo.gov/system/information?file=2018-10/54539-Infrastructure.pdf), acknowledged that
The Federal Authorities's and State and Native Governments' Spending on Water
Utilities, together with water provide and wastewater therapy amenities, was $4
billion in 2016 - a drop of about $13 billion since 1976!



As municipalities proceed to be underfunded (Determine 1) with rising water charges
(Determine 2), companies are more and more selecting to deal with and purify their very own
water, in a pattern often called Decentralized Water, first described within the Lux
Analysis presentation of June 28, 2016.
(https://members.luxresearchinc.com/research/report/20060).



                                       32





                               [[Image Removed]]

                                    Determine 2



Based on the Lux Analysis information, the unmet infrastructure wants of America's
150,000+ water techniques will exceed $100 billion per 12 months by 2025. And the current
Infrastructure Funding and Jobs Act solely offered one-time funding of $55
billion, which is lower than one 12 months's deficit.



It is this underfunding that creates the water high quality points we see in locations like Flint, Michigan and Jackson, Mississippi.



It's not reasonable to anticipate this underfunding of central water to be resolved
anytime quickly. The choice is to easily cut back the load on these central
techniques. Since trade and agriculture collectively account for 89% of all water
demand in the US (https://ourworldindata.org/water-use-stress), we
can allow business customers to purify their very own wastewater, thereby enabling
water districts to give attention to serving residential customers - attaining a serious social
justice victory by merely unburdening the central amenities.



Self-treatment is a win-win, too - as a result of companies can do higher by treating
their very own water; for example, implementing recycling of the water they pay for,
and controlling their very own prices.



However to make such a decentralization program work, capital is required. Most
companies merely don't have it of their capital plan to deal with their very own water.
Now, with Water On Demand, they will neglect about investing in capital and
experience: they will merely proceed to pay on the meter as they all the time have, however
to a micro-utility that sits on their very own premises.



Know-how particularly developed for decentralization.



In 2018, OriginClear launched its Modular Water Methods (MWS) division
(www.modularwater.com), headed by Daniel M. Early, P.E., a pioneer of on-site or
decentralized water therapy on this nation. Supported by its proprietary
know-how, this division already serves companies doing their very own water
therapy. These modular techniques may be simply put to work for pre-funded,
pay-per-gallon functions, doubtlessly making a barrier to entry for different
corporations desirous to do the identical.



                                       33





Additionally, the moveable nature of a few of these prefabricated, drop-in-place Modular
Water Methods might present a aggressive profit for a pure service mannequin the place
the tools stays the property of the Firm, as a result of their mobility
allows a point of repossession within the occasion the consumer fails to pay their
month-to-month invoice. We imagine this can be a key aggressive benefit.



Lastly, we may contract the MWS know-how to Water On Demand working companions to design, construct and function techniques, thereby attaining each acceptance of this know-how and a standardized “fleet” of put in techniques.

Implementation of water on demand



On March 17, 2021, OriginClear included Water On Demand #1 Inc. ("WOD#1") in
Nevada as a completely owned subsidiary to function and handle our Water on Demand
enterprise.



In November 2021, the Firm created extra Water on Demand subsidiaries -
Water on Demand # 2, Inc. (WOD # 2), Water on Demand # 3, Inc. (WOD # 3) and
Water on Demand # 4, Inc. (WOD # 4) had been individually created to allow elective
segmenting of capital swimming pools in accordance with strategic partnerships. The Firm is
now simplifying this construction by inserting all funds in WOD #1 and monitoring the
partnerships inside that firm. As they're topic to a safety warranty by
the Firm, the WOD Subsidiaries, and the capital raised for them by way of the
Firm's Collection Y providing, shall proceed to be held by the Firm. This
capital might be made accessible to WODI to be deployed, topic to a deliberate
administration contract.



The Society wants funding to run its Water on Demand initiative. As of the interval ended September 30, 2022the Firm acquired international financing within the quantity of $2,604,639 by way of the sale of its Collection Y most well-liked shares devoted to the Water on Demand program.



The Firm is now actively evaluating potential shoppers for a take a look at of water
therapy and purification companies on a pay-per-gallon foundation, however a primary
settlement has not been reached. Additionally, the Firm, as represented by OCLN, is in
early stage talks with companions to ship DBOO companies, with the Firm
offering financing and contract administration companies. Within the occasion such talks do
not succeed, the Firm, represented beneath contract by OCLN, would want to
implement its personal sources for such DBOO companies.



On April 6, 2022, the Firm agreed in precept to an association with
Houston-based, worldwide water service firm Envirogen Applied sciences for
sure operations and upkeep (O&M) features, the primary of a possible
collection of such partnerships, meant to allow Water On Demand to give attention to
finance and asset administration whereas the water trade advantages from a gradual
stream of pre-capitalized tasks.

(https://www.originclear.com/company-news/originclear-and-envirogen-to-partner-on-water-on-demand)


On April 13, 2022, the Firm introduced the formation of Water On Demand, Inc.
("WODI") as a completely owned subsidiary and its plans to switch every of the WOD
subsidiaries and all property, mental property and operations associated to the
Water On Demand enterprise to WODI. The Firm now stipulates that it has
excluded the WOD Subsidiaries, and all capital already raised and to be raised
sooner or later in its Collection Y providing, from this task of property and can
make the capital accessible as a part of a deliberate administration contract. The Firm
intends to additionally register a Regulation A providing by WODI which is meant to
accumulate capital for WODI to direct towards WOD tasks.



On June 29, 2022 the Firm introduced the launch of its $300 Million providing
(the "Reg D Providing") to be carried out on behalf of its wholly-owned subsidiary,
Water on Demand, Inc. ("WODI"). The providing of the securities is made pursuant
to an exemption from registration beneath Rule 506(c) of Regulation D, to
accredited traders solely. Water On Demand is designed to supply clear water
techniques to companies and communities as a managed service with none capital
requirement.  As a consequence of a deliberate separate submitting of a Regulation A+ Providing (the
"Reg A Providing"), the Firm has determined to restrict the Reg D Providing to $20
million in whole.



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Advisory help for OriginClear



In September 2020, OriginClear introduced that Philanthroinvestors had entered a
strategic settlement with the Firm and had listed the Firm on its new Water
Philanthroinvestors program. On the similar time, the Firm appointed
Philanthroinvestors Founder, Ivan Anz and CEO, Arte Maren to OriginClear's Board
of Advisors.



$H2O™



On Might 10, 2021, OriginClear filed "System And Technique For Water Remedy
Incentive", a patent utility for utilizing blockchain know-how and
non-fungible tokens ("NFT") to simplify the distribution of funds on
outsourced water therapy and purification companies billed on a pay-per-gallon
foundation forward of inflation, or Water On Demand. The Firm lately filed a PCT
utility pertaining to the invention.



On Might 16, 2021, the Firm utilized for a registered trademark for the mark
$H2O (additionally known as H2O) because the blockchain system representing this
exercise. The present submitting foundation is "Intent-to-use foundation" (beneath Trademark Act
Part 1(b)).


On June 10, 2021the named firm Ricardo Fabiani Garciakey OriginClear
investor and a seasoned technologist, on the Firm board of administrators. Mr. Garcia helps plan the eventual deployment of $H2O.



There isn't a energetic improvement effort for $H2O. Relying on the ultimate kind that
$H2O takes, we might encounter regulatory issues that we can not assure we
will overcome. In that occasion, we might fall again on abnormal monetary fee
techniques. Neither our Water on Demand or different present enterprise fashions depend on
any blockchain system for operation, and we are able to accomplish our operational objectives
utilizing abnormal monetary and foreign money channels. The Firm doesn't intend to
incorporate a blockchain system in any registered providing.



ClearAqua™



OriginClear is at the moment exploring a utility coin, or token, named ClearAqua,
The Water Coin For The World™, which might implement a grassroots community for
alerts, resulting in actionable proposals for water tasks. There isn't a
assurance this token might be issued or if issued, might be profitable. ClearAqua
shouldn't be required for OriginClear's core enterprise.



We filed, on an intent-to-use foundation, US Trademark functions on July 21, 2021,
for the Mark, CLEARAQUA. We additionally engaged San Diego-based Baja Applied sciences Inc.
("Baja") who wrote a preliminary white paper, however no different motion has been taken
and ClearAqua shouldn't be in energetic improvement right now. The Firm doesn't
intend to include a coin, token or cryptocurrency in any registered
providing.



Acquisitions and potential incubations



The Firm, in its function because the CWIB, seeks to incubate or purchase companies
that assist industrial water customers obtain water self-sustainability. We imagine
that assembling a bunch of such water therapy and water administration companies
is doubtlessly a chance for spinoffs and elevated Firm worth for the
stockholders.



We're significantly curious about corporations which efficiently execute on
Design-Construct-Personal-Function or DBOO. These corporations are rising quick, as a result of
more durable rules, water scarcities and common outsourcing traits are driving
industrial and agricultural water therapy customers to delegate their water
drawback to service suppliers. As International Water Intelligence identified of their
report on October 30, 2015, "Water is usually perceived as a secondary significance,
with end-users more and more desirous to focus solely on their very own core enterprise.
That is driving a transfer away from inside water personnel in the direction of exterior
service consultants to take management of water points." Exterior service consultants are
sometimes small-privately owned and regionally operated. Making a community of such
suppliers may result in huge economies of scale by way of sharing of finest
practices, applied sciences, and clients and will characterize a serious barrier to
entry for Water On Demand's opponents.



The Firm cautions that appropriate acquisition candidates might not be recognized
and even when recognized, the Firm might not have enough capital to finish
the acquisition and/or definitive settlement might not be reached.
Internally-incubated companies, equally, might not change into business successes.



                                       35




Patents and mental property



On June 25, 2018, Dan Early granted the Firm a worldwide, unique
non-transferable license to mental property consisting of 5 issued US
patents, and design software program, CAD, advertising and marketing, design and specification paperwork
("Early IP").



On Might 20, 2020, we agreed on a renewal of the license for a further ten
years, with three-year extensions. We additionally gained the proper to sublicense, and,
with approval, to create ISO-compliant manufacturing joint ventures.



The Early IP consists of mixed safety on the supplies and configurations
of full packaged water therapy techniques, constructed into containers. The patents
include the next:



                                                                        Date
                                                                       Patent    Expiration
#             Description                       Patent No.             Issued       Date
1   Wastewater System & Technique         US 8,372,274 B2                

12/02/13 07/16/31

                                       Functions: WIPO, Mexico
2   Metal Strengthened HDPE Rainwater    US 8,561,633 B2                

10/22/13 05/16/32

Harvest

3   Wastewater Remedy System CIP    US 8,871,089 B2                10/28/14    05/07/32
4   Scum Elimination System for Liquids    US 9,205,353 B2                12/08/15    02/19/34
5   Transportable, Metal Strengthened HDPE    US 9,217,244 B2                12/22/15    10/20/31
    Pump Station CIP




On Might 10, 2021, OriginClear introduced that it had filed "System And Technique For
Water Remedy Incentive", a patent utility for utilizing blockchain know-how
and non-fungible tokens (NFT) to simplify the distribution of funds on
outsourced water therapy and purification companies billed on a pay-per-gallon
foundation forward of inflation.



With the rising want for native, point-of-use or point-of-discharge water
therapy options, the Modular Water Methods licensed IP household is the core to
a conveyable, built-in, transportable, plug-and-play system that, in contrast to different
packaged options, may be manufactured in collection, have an extended life and are
extra respectful of the setting.



The widespread attribute of this IP household is the usage of a cloth of building (Structural Strengthened ThermoPlastic), for the containers which is:


       ?   extra sturdy: an estimated 75 to 100-year life cycle versus a
           few many years for metallic, or 40 to 50 years most for concrete;

? simpler to fabricate: the container manufacturing course of may be automated;

           and

       ?   recyclable and may be made out of biomaterials




As well as, patents US 8,372,274 and US 8,871,089 (1 and three) relate to the use
of vessels or containers made out of this materials mixed with a configuration
of purposeful modules, or course of, for common water therapy.



Different subsequent patents, which construct on the unique claims, give attention to extra focused functions. These patents describe a given mixture of modules designed contained in the vessel to satisfy a particular water therapy problem.

Extension of the PWT and MWS Enterprise-Strains

In April 2019we have now accomplished the enlargement of our producer’s consultant community to serve each PWT and MWS for lead technology.


                                       36





Starting with its first set up, PWT constructed MWS elements. The Firm is
at the moment growing MWS as a discrete line of enterprise for an eventual spinoff,
and MWS techniques are constructed and assembled by a community of fabrication companions. In
addition, the Firm is growing the EveraMOD Pump Station product line as a
standalone enterprise.



Important Accounting Insurance policies



The Securities and Change Fee ("SEC") defines "essential accounting
insurance policies" as people who require utility of administration's most tough,
subjective or complicated judgments, typically because of the necessity to make estimates
in regards to the impact of issues which are inherently unsure and will change in
subsequent intervals. Not all the accounting insurance policies require administration to
make tough, subjective or complicated judgments or estimates. Nonetheless, the
following insurance policies might be deemed to be essential inside the SEC definition.



Income Recognition



We acknowledge income when companies are carried out, and on the time of cargo of
merchandise, offered that proof of an association exists, title and danger of
loss have handed to the shopper, charges are fastened or determinable, and assortment
of the associated receivable is fairly assured.



Revenues and associated prices on building contracts are acknowledged because the
efficiency obligations for work are glad over time in accordance with
Accounting Requirements Codification ("ASC") 606, Income from Contracts with
Prospects. Beneath ASC 606, income and related revenue, might be acknowledged as
the shopper obtains management of the products and companies promised within the contract
(i.e., efficiency obligations). All un-allocable oblique prices and company
common and administrative prices are charged to the intervals as incurred.
Nonetheless, within the occasion a loss on a contract is foreseen, the Firm will
acknowledge the loss, as it's decided. Revisions in price and revenue estimates
through the course of the contract are mirrored within the accounting interval in
which the information for the revisions change into recognized. Provisions for estimated losses
on uncompleted contracts are made within the interval by which such losses are
decided. Adjustments in job efficiency, job situations, and estimated
profitability, together with these arising from contract penalty provisions, and
remaining contract settlements, might lead to revisions to prices and revenue, which
are acknowledged within the interval the revisions are decided.



Use of Estimates



The preparation of economic statements in conformity with typically accepted
accounting rules requires administration to make estimates and assumptions that
have an effect on the reported quantities of property and liabilities, disclosure of contingent
property and liabilities on the date of the monetary statements, and the reported
quantities of revenues and bills through the reporting interval. Precise outcomes
may differ from these estimates. Vital estimates embody estimates used
to evaluate the Firm's goodwill, impairments and estimations of long-lived
property, income recognition on proportion of completion sort contracts,
allowances for uncollectible accounts, stock valuation, valuations of
non-cash capital inventory issuances and the valuation allowance on deferred tax
property. The Firm bases its estimates on historic expertise and on numerous
different assumptions which are believed to be affordable within the circumstances, the
outcomes of which kind the premise for making judgments in regards to the carrying values
of property and liabilities that aren't readily obvious from different sources.
Precise outcomes might differ from these estimates beneath completely different assumptions or
situations.


Honest worth of economic devices

The honest worth of economic devices requires the communication of knowledge on the honest worth, whether or not or not acknowledged on the stability sheet, when it’s potential to estimate this worth. From September 30, 2022quantities reported for money, pay as you go bills, accounts payable and accrued liabilities approximate honest worth resulting from their quick maturity.


                                       37




Outcomes of operations for the three months ended September 30, 2022 in comparison with the three months ended September 30, 2021.


Income and Value of Gross sales



For the three months ended September 30, 2022, we had income of $3,366,061
in comparison with $1,120,687 for the three months ended September 30, 2021. Value of
gross sales for the three months ended September 30, 2022 was $2,542,887 in comparison with
$790,336 for the three months ended September 30, 2021. Income and price of
gross sales elevated primarily resulting from our subsidiary's improve in income.



Our gross margin was $823,174 and $330,351 for the three months ended September 30, 2022 and 2021, respectively.

Gross sales and advertising and marketing bills



For the three months ended September 30, 2022, we had promoting and advertising and marketing
bills of $712,420, in comparison with $636,481 for the three months ended September
30, 2021.  The rise in promoting and advertising and marketing bills was primarily resulting from
a rise in advertising and marketing expense.



Basic and administrative bills

For the three months ended September 30, 2022we had common and administrative bills of $1,085,044 in comparison with $1,006,041 for the three months ended
September 30, 2021. The rise normally and administrative bills is especially attributable to a rise in skilled and authorized charges and exterior companies.



Different Revenue and (Bills)



Different revenue and (bills) elevated by $47,787,918 to $(28,067,729) for the
three months ended September 30, 2022, in comparison with $19,720,189 for the three
months ended September 30, 2021. The rise was due primarily to a rise
in loss on non-cash accounts related to the change in honest worth of the
derivatives within the quantity of $47,405,884, with an total improve in different
bills within the quantity of $382,034.



Web Revenue/(Loss)



Our internet loss elevated by $47,468,166 to $(29,071,051) for the three months
ended September 30, 2022, in comparison with internet revenue of $18,397,115 for the three
months ended September 30, 2021. Nearly all of the rise in internet loss was
due primarily to a rise in different bills related to the online change in
honest worth of spinoff devices estimated every interval. These estimates are
based mostly on a number of inputs, together with the market value of our inventory, curiosity
charges, our inventory value, volatility, variable conversion costs based mostly on market
costs outlined within the respective agreements and possibilities of sure
outcomes based mostly on managements' estimates. These inputs are topic to
important modifications from interval to interval, due to this fact, the estimated honest worth
of the spinoff liabilities will fluctuate from interval to interval, and the
fluctuation could also be materials.



Outcomes of operations for the 9 months ended September 30, 2022 in comparison with the 9 months ended September 30, 2021.


Income and Value of Gross sales



For the 9 months ended September 30, 2022, we had income of $7,768,133
in comparison with $2,848,287 for the 9 months ended September 30, 2021. The price of
gross sales for the 9 months ended September 30, 2022 was $6,484,235 in comparison with
$2,237,282 for the 9 months ended September 30, 2021. Income and price of
gross sales elevated primarily resulting from our subsidiary's improve in income.



Our gross margin was $1,283,898 and $611,005 for the 9 months ended September 30, 2022 and 2021, respectively.

Gross sales and advertising and marketing bills

For the 9 months ended September 30, 2022we had gross sales and advertising and marketing bills of $1,825,170in comparison with $2,201,045 for the 9 months ended
September 30, 2021. The lower in promoting and advertising and marketing bills is especially attributable to a lower in advertising and marketing and investor relations bills.


                                       38




Basic and administrative bills



Basic and administrative bills had been $2,900,203 for the 9 months ended
September 30, 2022, in comparison with $2,785,713 for the 9 months ended September
30, 2021. The rise normally and administrative bills was primarily due
to a rise in skilled and authorized charges.



Different Revenue and (Bills)



Different revenue and (bills) elevated by $24,467,149 to $(30,421,325) for the
9 months ended September 30, 2022, in comparison with $(5,954,176) for the 9
months ended September 30, 2021. The rise was due primarily to a rise
in loss on non-cash accounts related to the change in honest worth of the
derivatives within the quantity of $25,029,945, with an total lower in different
bills within the quantity of $562,796.



Web Revenue/(Loss)



Our internet loss for the 9 months ended September 30, 2022 was $(33,894,246),
in comparison with internet lack of $(10,363,963) for the 9 months ended September 30,
2021. Nearly all of the rise in internet loss was due primarily to a rise
in different bills related to the loss on internet change in spinoff
devices estimated every interval. These estimates are based mostly on a number of inputs,
together with the market value of our inventory, rates of interest, our inventory value,
volatility, variable conversion costs based mostly on market costs outlined within the
respective agreements and possibilities of sure outcomes based mostly on
managements' estimates. These inputs are topic to important modifications from
interval to interval, due to this fact, the estimated honest worth of the spinoff
liabilities will fluctuate from interval to interval, and the fluctuation could also be
materials.


Money and capital sources



Liquidity is the power of an organization to generate funds to help its present
and future operations, fulfill its obligations, and in any other case function on an
ongoing foundation. Vital components within the administration of liquidity are funds
generated by operations, ranges of accounts receivable and accounts payable and
capital expenditures.



The condensed consolidated monetary statements have been ready on a going
concern foundation of accounting, which contemplates continuity of operations,
realization of property and liabilities and commitments within the regular course of
enterprise. The accompanying condensed consolidated monetary statements don't
mirror any changes which may outcome if the Firm is unable to proceed
as a going concern. The Firm has not generated important income, and has
detrimental money flows from operations, which increase substantial doubt in regards to the
Firm's capability to proceed as a going concern. The flexibility of the Firm to
proceed as a going concern and appropriateness of utilizing the going concern foundation
relies upon, amongst different issues, elevating extra capital and growing
gross sales. We obtained funds from traders through the 9 months ending September
30, 2022. No assurance may be provided that any future financing might be accessible
or, if accessible, that will probably be on phrases which are passable to the Firm.
Even when the Firm is ready to acquire extra financing, it could include
restrictions on our operations, within the case of debt financing, or trigger
substantial dilution for our stockholders, in case of fairness financing.



In reference to our sale of Collection M Most well-liked Shares made pursuant to Regulation A beneath securities legislation, we could also be topic to cancellation requests. If this occurs, it may have a detrimental impact on our liquidity.



At September 30, 2022 and December 31, 2021, we had money of $1,751,226 and
$706,421, together with restricted money of $1,266,391 and $433,951, respectively and
a working capital deficit of $37,858,994 and $12,826,008, respectively.  The
improve in working capital deficit was due primarily to a rise in non-cash
spinoff liabilities, accounts payable, contract property, money and accrued
bills, with a lower in convertible promissory notes, contracts
liabilities, mortgage payable and contract receivables.



Through the interval ended September 30, 2022, we raised an combination of $4,525,782
from the sale of most well-liked inventory in personal placements. Our capability to proceed
as a going concern relies upon elevating capital from financing transactions
and future income.



Web money utilized in working actions was $3,483,023 for the 9 months ended
September 30, 2022, in comparison with $3,560,033 for the prior interval ended September
30, 2021. The lower in money utilized in working actions was primarily resulting from
a lower in contract liabilities, contract property, and pay as you go bills, with
a rise in and accounts payable and accrued bills.



Web money flows utilized in investing actions had been $17,138 for the 9 months ended September 30, 2022in comparison with $13,500 for the earlier interval ended
September 30, 2021. The rise in money utilized in investing actions is especially because of the buy of fastened property through the present interval.


                                       39





Web money flows offered by financing actions was $4,554,966 for the 9
months ended September 30, 2022, as in comparison with $3,716,241 for the 9 months
ended September 30, 2021. The rise in money offered by financing actions
was due primarily to a rise in proceeds for issuance of most well-liked inventory. To
date we have now principally financed our operations by way of the sale of our widespread
and most well-liked inventory and the issuance of debt.



We don't have any materials commitments for capital expenditures through the subsequent
twelve months. Though our proceeds from the issuance of securities collectively
with income from operations are at the moment adequate to fund our working
bills within the close to future, we might want to increase extra funds within the
future in order that we are able to keep and broaden our operations. Due to this fact, our future
operations are depending on our capability to safe extra financing, which
might not be accessible on acceptable phrases, or in any respect. Financing transactions might
embody the issuance of fairness or debt securities, acquiring credit score amenities,
or different financing mechanisms. Moreover, if we challenge extra fairness or
debt securities, stockholders might expertise extra dilution or the brand new
fairness securities might have rights, preferences or privileges senior to these of
present holders of our widespread inventory. The lack to acquire extra capital
might limit our capability to develop and will cut back our capability to proceed to
conduct enterprise operations. If we're unable to acquire extra financing, we
might should curtail our advertising and marketing and improvement plans and probably stop our
operations.



We have now estimated our present common burn, and imagine that we have now property to
be certain that we are able to perform with out liquidation for a restricted time, resulting from our
money readily available, rising income, and our capability to lift cash from our investor
base. Primarily based on the aforesaid, we imagine we have now the power to proceed our
operations for the quick future and can be capable to understand property and
discharge liabilities within the regular course of operations. Nonetheless, there can not
be any assurance that any of the aforementioned assumptions will come to
fruition and as such we might solely be capable to perform for a short while.



Off-balance sheet preparations

We have now no off-balance sheet preparations which are moderately more likely to have a present or future impact on our monetary situation, revenues and outcomes of operations, liquidity or capital expenditures.

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