Executive Summary

Q3 2021 revenue grew 20% sequentially to $1.12M and 22% year-over-year; gross profit rose 87% q/q to $0.33M, while operating loss narrowed vs Q2 to $(1.32)M .
Reported net income of $18.40M and diluted EPS of $0.02 were driven primarily by a large non-cash gain on net change in derivative liabilities ($19.80M), implying low-quality earnings; core operations remained loss-making .
No formal quantitative guidance was issued; management highlighted momentum in Progressive Water Treatment (PWT) and Modular Water Systems (MWS) and introduced funding for the Water On Demand program post-quarter, a potential narrative catalyst .
Commercial traction improved: PWT received a $1.8M purchase order under a ~$5M MSA with a large US power utility, and firm orders YTD increased sharply; these may support future revenue, though timing is uncertain .

What Went Well and What Went Wrong

What Went Well

“We are very pleased with the progress of our Progressive Water Treatment and Modular Water Treatment divisions,” said CEO Riggs Eckelberry, underscoring execution breadth across business lines .
COO Tom Marchesello: “With the launch of our Water On Demand pre-funded water equipment program, we believe that the year ahead is promising,” signaling emerging financing-led demand enablement .
Sequential improvements: revenue +20% q/q ($1.12M vs $0.93M), gross profit +87% q/q ($0.33M vs $0.18M), and operating loss narrowed to $(1.32)M from $(1.93)M in Q2 .

What Went Wrong

Operating expenses remained elevated ($1.65M in Q3 vs $1.17M in Q3’20) with higher selling/marketing and G&A, sustaining operating losses despite top-line gains .
Reported profitability was dominated by non-cash derivative revaluation gains ($19.80M), masking underlying losses from operations; quality-of-earnings risk persists .
An impairment of assets held for sale ($0.116M) and ongoing going concern language highlight balance sheet fragility and liquidity constraints .

Financial Results

Metric	Q3 2020	Q2 2021	Q3 2021
Sales ($USD)	$917,320	$931,422	$1,120,687
Cost of Goods Sold ($USD)	$934,708	$754,922	$790,336
Gross Profit ($USD)	$(17,388)	$176,500	$330,351
Total Operating Expenses ($USD)	$1,166,334	$2,106,179	$1,653,425
Operating Income ($USD)	$(1,183,722)	$(1,929,679)	$(1,323,074)
Other (Income) Expense ($USD)	$6,201,888	$(8,973,824)	$19,720,189
Net Income ($USD)	$5,018,166	$(10,903,503)	$18,397,115
EPS (Basic) ($)	$0.27	$(0.07)	$0.09
EPS (Diluted) ($)	$0.03	$(0.07)	$0.02
Weighted Avg Shares (Basic)	18,643,531	152,856,918	197,669,804
Weighted Avg Shares (Diluted)	146,074,997	152,856,918	795,174,058

Segment breakdown: OriginClear reports a single operating segment; no segment revenue disclosure available .

KPIs and balance updates:

KPI	Q2 2021	Q3 2021
Contract Receivables ($USD)	$424,550	$712,006
Contract Liabilities ($USD)	$301,116	$538,706
Firm Orders (PWT, YTD) ($USD)	N/A	$9,188,252
Firm Orders (MWS, YTD) ($USD)	N/A	$1,154,950

Estimate comparison: Wall Street consensus (S&P Global) for Q3 2021 EPS and revenue was unavailable; no estimate comparison could be made (see Estimates Context).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2021	None disclosed	None disclosed	Maintained (no formal guidance)
Margins/OpEx/Tax/OI&E	FY 2021	None disclosed	None disclosed	Maintained (no formal guidance)
Program updates	N/A	WOD concept announced (Q2)	Initial funding for WOD #1 post-quarter; pilot discussions	Directional update (positive narrative)

Earnings Call Themes & Trends

No Q3 2021 earnings call transcript was available; themes drawn from MD&A and press materials.

Topic	Previous Mentions (Q2 2021)	Current Period (Q3 2021)	Trend
Water On Demand (DBOO)	Concept announced; building WOD #1 and evaluating pilot; acquiring real estate for financing	Received initial funding for WOD #1 post-quarter; began talks with a pilot client	Positive progression toward commercialization
Blockchain/$H2O & ClearAqua	Patent filing and $H2O trademark; intent-to-use; advisor engagement	ClearAqua engagement; white paper drafting; regulatory evaluation; continued $H2O development plans	Advancing but pre-commercial; regulatory-dependent
Commercial traction (PWT/MWS)	Discussed BroncBoost shipments; building rep network	PWT signed MSA; $1.8M PO issued; MWS deployed Pondster with rapid quality improvement; firm orders up YTD	Strengthening pipeline; potential revenue tailwind
Supply chain/COVID impact	COVID impact cited for revenue declines	YTD revenue slightly below prior year; sequential improvement; continued caution	Improving sequentially, but lingering headwinds
Legal/regulatory	Various settlements progressing	PPP loan forgiveness recognized; multiple legal settlements closed	De-risking legacy matters; improving cash recognition
R&D execution	Lower R&D spend vs prior year	R&D at $0 in Q3; focus on commercialization and programs	Reduced spend; strategic pivot to operations

Management Commentary

CEO: “We are very pleased with the progress of our Progressive Water Treatment and Modular Water Treatment divisions,” highlighting operational execution across manufacturing and modular systems .
COO: “With the launch of our Water On Demand pre-funded water equipment program, we believe that the year ahead is promising,” indicating confidence in new financing-led go-to-market .
MD&A emphasized WOD funding and pilot discussions beginning post-quarter, aligning the strategic narrative toward recurring, service-based cash flows .

Q&A Highlights

No Q3 2021 earnings call transcript was found; therefore, no Q&A highlights or guidance clarifications are available for this period [ListDocuments results showed 0 transcripts].

Estimates Context

We attempted to retrieve S&P Global consensus for Q3 2021 (EPS and revenue), but were unable to access estimates due to request limits; thus, no comparison to Wall Street consensus is provided [GetEstimates error].
Given microcap OTC coverage dynamics, consensus may be sparse; investors should anchor on disclosed operational results and pipeline metrics .

Key Takeaways for Investors

Sequential operational improvement: revenue +20% q/q and gross profit +87% q/q with narrower operating loss versus Q2; continued focus on scaling PWT/MWS could sustain momentum .
Reported profitability quality is low: net income and EPS reflect non-cash derivative liability gains; core operations remain loss-making, requiring caution in interpreting the headline beat .
Commercial pipeline strengthening: PWT MSA with a large utility ($1.8M PO; ~$5M total potential) and rising firm orders could underpin future revenue, albeit with lengthy delivery timelines typical in water projects .
Strategic financing pivot: Water On Demand funding and pilot discussions began post-quarter, a potential catalyst to convert backlog into recurring cash flows; execution and O&M capability build-out are key .
Liquidity and balance sheet risks: Going concern language, working capital deficit, preferred stock redemption defaults, and derivative liabilities warrant close monitoring; capital raises remain integral .
No formal guidance: Absent quantitative guidance, investors should track order intake, contract receivables/liabilities, and milestone progress on WOD commercialization to gauge trajectory .
Near-term trading implications: Headlines around WOD funding and utility MSA may support narrative; however, the reliance on derivative revaluation for net income could limit fundamental rerating until operating profitability improves .

Note: Consensus estimates via S&P Global were unavailable for Q3 2021 due to access limits; no estimate comparison is included.

ORIGINCLEAR, INC. (OCLN)·Q3 2021 Earnings Summary