OriginClear, Inc. has informed Fortune Rise Acquisition Corporation (FRLA) that its privately held subsidiary, Water On Demand Inc. (WODI), is terminating the Business Combination Agreement that was signed on October 23, 2023. The planned merger was intended to make WODI a publicly listed entity. However, the deal has been called off due to delays in the registration process, resulting in mounting costs and uncertainties for both companies.
Termination of the Merger Agreement
On December 12, 2024, a Mutual Termination Agreement was signed by FRLA and WODI, officially ending the Business Combination Agreement. The termination is effective immediately, in line with Section 7.1(a) of the original agreement. Since the deal was first initiated, WODI has faced persistent delays in the registration of its S-4 Registration Statement. These delays led to increased costs and created an unpredictable environment, leading to the decision to terminate the merger.
“We concluded that continued delays in the registration process could push the closing date of the business combination to as late as March 2025, or beyond,” said Eckelberry, CEO of OriginClear. “This would result in significant additional expenses, uncertainty in market conditions, and potential listing complications, all of which could harm the interests of our shareholders.”
Focus Shift and Future Plans
Despite the setback, the termination of the merger agreement is seen as an opportunity to pivot and refocus resources on expanding Water On Demand’s operations. Eckelberry noted, “While we are disappointed by the result, we believe this presents an excellent opportunity to direct our capital and resources into growing Water On Demand. Other companies in the water-as-a-service sector have seen tremendous success and achieved notable exits. We are confident that Water On Demand is positioned to compete with these players.”
Eckelberry acknowledged that, while success is never guaranteed, there are precedents for success in this space. “Though there’s no certainty of comparable returns, we believe there are ample opportunities for Water On Demand and its shareholders.”
One of the key drivers for this optimism is the ongoing crisis in the U.S. infrastructure, particularly concerning sewer main breaks and water infrastructure failures. “Sewer breaks and infrastructure issues are happening daily, and it’s clear that the U.S. needs to urgently address these problems,” Eckelberry commented. “Water-as-a-managed service represents the future, and we are determined to help spread this concept rapidly in our target markets.”
Water On Demand’s Continued Focus on Regulation A+ Offering
In light of the termination of the business combination, WODI plans to resume its offering under Regulation A, which had been previously paused due to the merger discussions. Eckelberry emphasized, “Regulation A+ provides a well-established path that we believe gives us more control over the process. We feel that focusing on this approach is in the best interests of our shareholders, and will allow us to stay on track in making a substantial impact in the water industry.”
By moving forward with a Regulation A offering, WODI is looking to raise funds while maintaining greater flexibility and control over the growth of its operations. The company aims to leverage its position in the water-as-a-service industry, which is poised to play a crucial role in addressing the nation’s pressing water infrastructure challenges.
Preserving Shareholder Value and Looking Ahead
Eckelberry and the Board of Directors have made the decision to terminate the merger in order to preserve shareholder value, despite the unfortunate turn of events. The focus now shifts to executing the company’s growth strategy independently. “We believe this decision will preserve shareholder value and allow us to focus on expanding Water On Demand and its mission in the water industry,” said Eckelberry.
With the water-as-a-service market growing in importance due to ongoing infrastructure challenges and increasing demand for sustainable water management, WODI remains optimistic about its future prospects. The company intends to capitalize on the growing market for water technology and services while continuing to innovate in the sector. The decision to end the merger is seen as a strategic move, aimed at ensuring the long-term success and stability of Water On Demand, as well as safeguarding the interests of its stakeholders.
Conclusion
The termination of the business combination with Fortune Rise Acquisition Corporation marks a significant shift in Water On Demand’s path, but the company remains committed to its mission. As it pivots away from the public listing route, WODI will focus its efforts on expanding its operations and continuing to innovate in the water-as-a-service market. With the ongoing challenges in U.S. water infrastructure, Water On Demand sees a growing opportunity to make a meaningful impact in the sector, while continuing to prioritize shareholder value and long-term growth.
