With the continued growth in urbanization has come a new problem, access to resources. Over time, one of the main problems turned to the access to clean water, an important resource in any urban environment. The provision of this resource was, therefore, a major problem, one which needed to be solved.
Companies have since then worked hard to ensure that the above is achieved. Over time, the need has arisen for efficiency in the provision of this critical service and firms have thus been working towards ensuring that their systems are the best possible and most efficient both as a way to cut costs as well as provide the highest service to their clients. At this point is where OriginClear Inc (OTCMKTS:OCLN) comes into the picture.
OriginClear Inc has been engaged in the water purification business since 2015, employing its expertise in the field to come up with different purification solutions that better their clients’ operations. These solutions are tailored to their clients; thus, each client will enjoy a specific product which betters their purification for all the volumes they have.
Despite the above positive outlook, the firm has been undergoing a severe bearish run, one which has seen their share price decline drastically from $.05 earlier in the year to under $.003 earlier this month. This decline, with its negative weighting on the shareholders’ capital gains, has negatively weighed on the firm, bringing to question factors such as whether their strategic drift was actually well crafted.
The above-mentioned bear run can be seen in the chart below:
However, with the passing of the last few days, it seems like the firm has also been bouncing back. Despite the change being minor, the share price has begun to bounce back. Rising from $.0027 to $.0033 in just two days has been no mean feat for the firm. This 22% increase is a major leap for the firm especially given the aforementioned bear run.
This price action is also visible in the chart below:
The above increment has brought with it a positive outlook on the firm’s value proposition and, in the process, led us to have a look at this very value proposition. This report provides a synopsis of the same.
OCLN: An Overview
Prior to looking at the firm’s specifics, let us have a look at their history.
OriginClear was founded back in 2007 with its headquarters based in Los Angeles, California. Back then, the firm was known as OriginOil, Inc and it operated in the oil industry. However, back in April 2015, the firm changed its operations, venturing into the water segment. It currently has a proprietary technology: The Electro Water Separation technology, which it licenses globally to aid in the treatment of polluted water as well as removal of pollutants using minimal chemicals, energy, and materials. The company also designs and manufactures water treatment lines for municipal and industrial applications as well as offering a wide range of water-related services to any of their clients over different durations.
OCLN has been covering a number of options, one being a specific division which has been aiding in the purification of water as well as their acquisition and M&A segment which deals with the firm’s transactions. Each of these is discussed in the next section.
The Modular Water Division
Earlier this year, the firm launched its modular water division. The division would oversee the sale of the company’s product: Modular Water Systems (MWS).
The division has been a significant success for them as it has thus far brought in about $250,000 in revenues to the company with $60,000 having come in over the first month of operations and the remaining $190,000 having come in by September. Presently, it has been forecast that the firm will generate about $1 million in revenues over the period ending December 2018, a significant leap for them.
With this, it is expected that their revenue base will be strengthened, further boosting their potential and valuation. Going forward, their valuation based especially on the price to sales multiple is expected to rise, therefore, the firm is expected to go higher, serving as excellent news for their investors.
The TCA Team
OCLN has maintained their position by holding on to TCA Capital International Group as their transaction advisory team. TCA has been given the role of identification of potential mergers and acquisitions, divestitures, consolidations as well as other business combinations as well as structuring and advising on potential transactions.
The move comes as OCLN continues to execute their strategy of acquiring favorable assets which will see them grow their business. According to the firm’s Managing Director, Patrick Primavera:
“We plan to evaluate and work toward an accretive acquisition, and to work to horizontally expand the business through the acquisition of industry competitors.”
With the OriginClear’s CEO, Riggs Eckelberry holding that water firms grow by acquisition, it becomes clear that TCA is now playing a critical role in the operations and strategy of OCLN.
With the additional revenue as well as continued growth in the firm, it is clear why the firm’s share price has been on an upward path. Their strategy seems to have been successfully executed thus far and, should they meet the specific revenue forecasts, the firm’s shareholders will be smiling their way to higher capital gains.
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Disclosure: We have no position in OCLN and have not been compensated for this article.