10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED:  September 30, 2014

☐    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: ________________

ORIGINOIL, INC.

 (Exact name of registrant as specified in its charter)

Nevada	26-0287664
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 
5645 West Adams Blvd

Los Angeles, CA 90016

(Address of principal executive offices, Zip Code)

(323) 939-6645

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒     No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒      No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐    No ☒

The number of shares of registrant’s common stock outstanding, as of November 13, 2014 was 95,821,319.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	18
Item 4.	Controls and Procedures.	18
Item 1.	Legal Proceedings.	19
Item 1A.	Risk Factors.	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	19
Item 3.	Defaults Upon Senior Securities.	19
Item 4.	Mine Safety Disclosures.	19
Item 5.	Other Information.	19
Item 6.	Exhibits.	21
SIGNATURES		22

2

PART I - FINANCIAL INFORMATION ORIGINOIL, INC.

ORIGINOIL, INC.

CONDENSED BALANCE SHEETS

	September 30, 2014			December 31, 2013
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	593,549		$	821,448
Work in progress		181,958			21,049
Prepaid expenses		26,763			34,531
TOTAL CURRENT ASSETS		802,270			877,028
NET PROPERTY AND EQUIPMENT		81,245			74,204
OTHER ASSETS
Other asset		37,038			40,000
Trademark		4,467			4,467
Security deposit		10,247			9,650
TOTAL OTHER ASSETS		51,752			54,117
TOTAL ASSETS	$	935,267		$	1,005,349
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities
Accounts payable	$	74,965		$	114,803
Accrued expenses		183,656			262,518
Deferred income		-			50,000
Derivative liabilities		6,116,754			1,031,484
Convertible promissory notes, net of discount of $775,818 and $971,964, respectively		2,340,837			953,989
Total Current Liabilities		8,716,212			2,412,794
Long Term Liabilities
Obligation to issue common stock		-			105,754
TOTAL LIABILITIES		8,716,212			2,518,548
SHAREHOLDERS' DEFICIT
Preferred stock, $0.0001 par value, 25,000,000 shares authorized		-			-
Common stock, $0.0001 par value, 1,000,000,000 shares authorized
92,834,572 and 53,664,505 shares issued and outstanding, respectively		9,283			5,366
Preferred treasury stock, 1,000 and 0 shares outstanding, respectively		-			-
Additional paid in capital		39,638,090			34,811,538
Accumulated deficit		(47,428,318	)		(36,330,103	)
TOTAL SHAREHOLDERS' DEFICIT		(7,780,945	)		(1,513,199	)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$	935,267		$	1,005,349

The accompanying notes are an integral part of these condensed financial statements

3

ORIGINOIL, INC.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended						Nine Months Ended
	September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
Sales	$	6,785		$	40,500		$	166,195		$	140,500
Cost of Goods Sold		949			19,866			106,919			50,510
Gross Profit		5,836			20,634			59,276			89,990
Operating Expenses
Selling and general and administrative expenses		894,442			1,689,260			4,595,518			3,349,921
Research and development		276,358			318,244			755,795			755,595
Depreciation and amortization expense		4,550			4,508			12,520			11,263
Total Operating Expenses		1,175,350			2,012,012			5,363,833			4,116,779
Loss from Operations		(1,169,514	)		(1,991,378	)		(5,304,557	)		(4,026,789	)
OTHER INCOME/(EXPENSE)
Realized gain on investment		-			-			6,353			-
Fair value of discounted warrants		-			(645,398	)		-			(645,398	)
Gain/(Loss) on change in derivative liability		19,062			1,103,300			(3,932,264	)		(1,232,828	)
Commitment fee		(53,715	)		(213,229	)		(92,255	)		(997,893	)
Interest expense		(509,937	)		(248,152	)		(1,775,492	)		(1,036,329	)
TOTAL OTHER INCOME/(EXPENSE)		(544,590	)		(3,479	)		(5,793,658	)		(3,912,448	)
NET LOSS	$	(1,714,104	)	$	(1,994,857	)	$	(11,098,215	)	$	(7,939,237	)
BASIC AND DILUTED LOSS PER SHARE	$	(0.02	)	$	(0.05	)	$	(0.15	)	$	(0.27	)
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING,
BASIC AND DILUTED		88,116,466			41,620,654			74,966,622			29,367,986

The accompanying notes are an integral part of these unaudited condensed financial statements

4

ORIGINOIL, INC.

CONDENSED STATEMENT OF SHAREHOLDERS' DEFICIT

NINE MONTHS ENDED SEPTEMBER 30, 2014

(UNAUDITED)

										Additional
	Preferred stock					Common stock				Paid-in		Accumulated
	Shares			Amount		Shares		Amount		Capital		Deficit			Total
Balance at December 31, 2013		-			-		53,664,505	$	5,366	$	34,811,538	$	(36,330,103	)	$	(1,513,199	)
Common stock issued at fair value for services		-			-		8,382,018		838		1,683,827		-			1,684,665
Common stock issuance for conversion of debt		-			-		24,633,152		2,463		1,763,714		-			1,766,177
Common stock issued upon exercise of warrants for cash		-			-		5,000,000		500		749,500		-			750,000
Common stock issuance of supplemental shares		-			-		1,109,531		111		197,897		-			198,008
Preferred stock issued		1,000			-		-		-		-		-			-
Preferred treasury stock		(1,000	)		-		-		-		-		-			-
Common stock issued for purchase of asset		-			-		45,366		5		6,995		-			7,000
Beneficial conversion feature		-			-		-		-		277,160		-			277,160
Stock and warrant compensation cost		-			-		-		-		147,459		-			147,459
Net loss for the nine months ended September 30, 2014		-			-		-		-		-		(11,098,215	)		(11,098,215	)
Balance at September 30, 2014		-		$	-		92,834,572	$	9,283	$	39,638,090	$	(47,428,318	)	$	(7,780,945	)

The accompany notes are an integral part of these unaudited condensed financial statement

5

ORIGINOIL, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended
	September 30, 2014			September 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(11,098,215	)	$	(7,939,237	)
Adjustment to reconcile net loss to net cash used in operating activities
Depreciation & amortization		12,520			11,263
Gain on sale of investment		(6,353	)		-
Common stock and warrants issued for services		1,684,665			793,751
Stock and warrant compensation expense		147,459			223,277
Change in valuation of derivative liability		3,932,264			943,375
Debt discount and original issue discount  recognized as interest expense		1,626,313			922,152
Non cash commitment fee expense		92,255			1,320,810
Fair value of discounted warrants		-			704,575
Changes in Assets and Liabilities
(Increase) Decrease in:
Accounts receivable		-			5,000
Prepaid expenses		7,768			65,811
Work in progress		(160,909	)		(28,934	)
Other asset		1,903			1,200
Increase (Decrease) in:
Accounts payable		343,693			(20,245	)
Accrued expenses		34,485			7,718
Deferred income		(50,000	)		-
NET CASH USED IN OPERATING ACTIVITIES		(3,432,152	)		(2,989,484	)
CASH FLOWS USED FROM INVESTING ACTIVITIES:
Purchase of fixed assets		(12,562	)		(45,089	)
Patent expenditures		-			(131,477	)
Proceeds from sale of investment, at cost		6,815			-
CASH USED IN INVESTING ACTIVITIES		(5,747	)		(176,566	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments for unsecured debt		-			(10,000	)
Proceeds from convertible promissory notes		2,460,000			1,580,000
Proceeds for issuance of common stock		750,000			2,387,271
NET CASH PROVIDED BY FINANCING ACTIVITIES		3,210,000			3,957,271
NET INCREASE/(DECREASE) IN CASH		(227,899	)		791,221
CASH BEGINNING OF PERIOD		821,448			507,355
CASH END OF PERIOD	$	593,549		$	1,298,576
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	1,282		$	-
Taxes paid	$	-		$	-
SUPPLEMENTAL DISCLOSURES OF NON CASH TRANSACTIONS
Conversion of accounts payable into a convertible note	$	383,531		$	290,560
Common stock issued for cashless exercise of warrants	$	-		$	33
Common stock issued for conversion of debt	$	1,220,139		$	1,851,786
Beneficial conversion feature on convertible note	$	277,160		$	-
Common stock issued for fixed asset	$	7,000		$	-
Fair value of options issued to officer in prior year	$	-		$	209,000

The accompanying notes are an integral part of these unaudited condensed financial statements

6

ORIGINOIL, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2014

1.            Basis of Presentation

The accompanying unaudited condensed financial statements of OriginOil, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included.  Operating results for the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.  For further information refer to the financial statements and footnotes thereto included in the Company's Form 10-K for the year ended December 31, 2013.

Going Concern

The accompanying condensed financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business.  The accompanying condensed financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company has not generated significant revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion. Management believes the existing shareholders, the prospective new investors and future sales will provide the additional cash needed to meet the Company’s obligations as they become due, and will allow the development of its core business operations. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for the Company’s stockholders, in case of equity financing.

2.            SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Revenue Recognition

The Company recognizes revenue upon delivery of equipment, provided that evidence of an arrangement exists, title, and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured.  Title to the equipment is transferred to the customer once the last payment is received. The Company records revenue as it is received, and the equipment has been fully accepted by the customer. Generally, the Company extends credit to its customers and does not require collateral.  The Company does not ship a product until it has either a purchase agreement or rental agreement signed by the customer with a payment arrangement.  

Loss per Share Calculations

Basic loss per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include securities or other contracts to issue common stock that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the nine months ended September 30, 2014, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.

For the period ended September 30, 2014, the Company has excluded 2,084,882 exercisable options, 31,013,923 warrants outstanding, and notes convertible into 28,344,776 shares of common stock, because their impact on the loss per share is anti-dilutive.

Stock-Based Compensation

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

7

ORIGINOIL, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2014 

2.            SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (Continued)

Fair Value of Financial Instruments

Fair Value of Financial Instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of September 30, 2014, the balances reported for cash, prepaid expenses, accounts payable, and accrued expenses approximate the fair value because of their short maturities.

The Company adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

· Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

· Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

· Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. 

The following table presents certain liabilities of the Company’s financial assets measured and recorded at fair value on the Company’s balance sheets on a recurring basis and their level within the fair value hierarchy as of September 30, 2014:

	Total		(Level 1)		(Level 2)		(Level 3)
Derivative Liability	$	6,116,754	$	-	$	-	$	6,116,754
Total liabilities measured at fair value	$	6,116,754	$	-	$	-	$	6,116,754

The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:

Beginning balance as of January 1, 2014	$	1,031,484
Fair value of derivative liabilities issued		1,153,007
Conversion of notes payable		(2,997,359	)
Loss on change in derivative liability		6,929,622
Ending balance as of September 30, 2014	$	6,116,754

Use of Estimates

The preparation of the condensed financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing the Company’s stock options, warrants, convertible notes, derivative liabilities and common stock issued for services, among other items. Actual results could differ from these estimates.

Recently Issued Accounting Pronouncements 

Management has reviewed recently issued accounting pronouncements and has adopted the following;

On August 27, 2014, the Company adopted the amendment to ASU 2014-15 on Presentation of Financial Statements Going Concern (Subtopic 205-40). The amendment provides for guidance to reduce diversity in the timing and content of footnote disclosures. The amendment requires management to assess the Company’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. The Company has to define the term of substantial doubt, which has to be evaluated every reporting period including interim periods. Management has to provide principles for considering the mitigating effect of its plan, and disclose when substantial doubt is alleviated as well as when it is not alleviated. The Company is required to assess managements plan for a period of one year after the financial statements are issued (or available to be issued). The amendment is effective for annual periods ending after December 15, 2016. Early adoption is permitted. The Company does not believe the accounting standards currently adopted will have a material effect on the accompanying condensed financial statements.

8

ORIGINOIL, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2014

3.            CAPITAL STOCK

On August 13, 2014, the Company filed an amendment to its Articles of Incorporation to increase its authorized shares of common stock to 1,000,000,000 shares. There was no change to the 25,000,000 authorized shares of preferred stock or par value. The total number of authorized shares increased to 1,025,000,000.

Preferred Stock

During the nine months ended September 30, 2014, the Company issued 1,000 shares of Series A Preferred Stock to the CEO of the Company, which did not have a dividend rate or liquidation preference, and were not convertible into shares of common stock. The preferred stock gave the CEO voting rights of 51%, which remained issued and outstanding until September 1, 2014. The shares were automatically redeemed by the Company at par value, and are presented in the financial statements as preferred treasury stock.

Common Stock

During the nine months ended September 30, 2014, the Company issued 8,382,018 shares of common stock for services with prices ranging from $0.15 up to $0.21 with a total fair value of $1,684,665.

During the nine months ended September 30, 2014, the Company issued 5,000,000 shares of common stock upon exercise of warrants to purchase 5,000,000 shares of common stock for cash in the amount of $750,000.

During the nine months ended September 30, 2014, the Company issued 45,366 shares of common stock for the purchase of an asset with a fair value of $7,000.

Issuance of supplemental shares

During the year ended December 31, 2013, the Company raised aggregate proceeds of $2,267,542 from the sale of 12,274,616 units of common stock and warrants. Subsequent to sale of the common stock units discussed above, the Company entered into a supplemental agreement with the subscribers of the original subscription agreement. Under the terms of the supplemental agreement, if at any time within eighteen (18) months following the issuance of shares (the "Adjustment Period") the market price (as defined below) of the Company's common stock is less than the price per share, then the price per share shall be reduced one time to the market price (the "Adjusted Price") such that the Company shall promptly issue additional shares of the Company's common stock to the subscriber for no additional consideration, in an amount sufficient that the aggregate purchase price, when divided by the total number of shares purchased thereunder plus those shares of common stock issued as a result of the dilutive Issuance will equal the adjusted price.  ''Market Price" is defined as the average closing price of the Company's common stock for any ten (10) consecutive trading days during the Adjustment Period.

The Company considered the effects of the above and determined that as of December 31, 2013 it should record a provision to reflect its potential obligation to issue such shares.  The Company is accounting for this liability as of each reporting period until the defined adjustment period has terminated.  Based upon its calculation, the Company recorded an obligation at December 31, 2013, to issue shares with a fair value of $105,754. During the nine months ended September 30, 2014, the Company issued 1,109,531 of these shares, which has reduced its liability.

4.            CONVERTIBLE PROMISSORY NOTES

On various dates the Company entered into unsecured convertible Notes (the “Convertible Promissory Notes” or “Notes”), that mature between six and nine months from the date of issuance and bear interest at 10% per annum. The Notes mature on various dates through March 29, 2015. The Notes may be converted into shares of the Company’s common stock at conversion prices ranging from the lesser of $0.14 to $0.30 (subject to adjustment for stock splits, dividends, combinations and other similar transactions) or 50% of the lowest trade price on any trade day following issuance of the Notes.  The Notes include customary default provisions related to payment of principal and interest and bankruptcy or creditor assignment.  In the event of default, the Notes shall become immediately due and payable at the mandatory default amount. The mandatory default amount is 150% of the Note amount and such mandatory default amount shall bear interest at 10% per annum.  In addition, for as long as the Notes or other convertible notes in effect between the purchaser and the Company are outstanding, if the Company issues any security with terms more favorable than the terms of the Notes or such other convertible notes or a term was not similarly provided to the purchaser of the Notes or such other convertible notes, then such more favorable or additional term shall, at the purchaser’s option, become part of the Notes and such other convertible notes. The conversion feature of the Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Notes. As of December 31, 2013, the outstanding principal balance was $1,530,000. During the nine months ended September 30, 2014, the Company issued an additional $2,460,000 of these Notes, and converted $1,530,000 in aggregate principal, plus accrued interest of $90,848 into 23,366,020 shares of common stock. As of September 30, 2014, the Notes aggregate remaining balance is $2,460,000. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $1,562,016 during the nine months ended September 30, 2014.

As of September 30, 2014, the Company had original issue discount in the amount of $273,125 outstanding (the OID Notes”). The OID Notes are unsecured convertible promissory notes that includes an original issue discount and one time interest, which has been fully amortized. The OID Notes were extended and matured on various dates through September 19, 2014. On each maturity date, each note was extended one year from its maturity date through September 19, 2015. The OID Notes are convertible into shares of the Company’s common stock at a conversion price initially of $0.4375. In addition, so long as the OID Notes or other convertible note transactions currently in effect between the Company and the holders are outstanding, upon any issuance by the Company of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the holders in these OID Notes, then such additional or more favorable term shall at the OID Notes holders’ option become a part of any or all of the outstanding OID Notes with the holders. On June 10, 2014, a holder of a note with a more favorable term converted a note at a price of $0.0605, which became part of this note due to the reset provision mentioned above. The conversion feature of the notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the notes

9

ORIGINOIL, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2014

4.            CONVERTIBLE NOTES PAYABLE (Continued)

On June 20, 2012, the Company received an initial advance of $100,000, plus warrants to purchase an aggregate of up to 153,846 shares of the Company’s common stock. The funds were received in consideration of the sale of a 10% unsecured convertible promissory note, with an aggregate sum of up to $400,000, plus warrants to purchase an aggregate of up to 615,385 shares of the Company’s common stock at a purchase price of $0.65 per share. The note originally matured six months from the date of each purchase made under the note, and bore interest at a rate of 10% per annum, which increased to 15% when the note was not repaid by September 18, 2012. The Note was originally convertible into shares of the Company’s common stock at a conversion price of $0.65. The warrants may be exercised at any time for a period of four years from the date of issuance at an exercise price of $0.65. On February 15, 2013, the Company and the lender entered into an amendment to the note providing for, among other things, an extension of the maturity date of the note until July 21, 2013 and the amendment of the conversion price of the note to the lesser of $0.65 or 70% of the average of the three lowest closing prices in the 25 trading days previous to a conversion. During the months of June and December, 2013, the lender advanced another $250,000 under the securities purchase agreement and the Company issued 307,692 warrants to acquire shares of the Company’s common stock, bringing the total principal received under the note to $350,000. During the nine months ended September 30, 2014, the lender converted the notes in full for a principal amount of $122,828, plus accrued interest of $22,500, leaving a remaining principal balance of $0. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $62,764 during the nine months ended September 30, 2014.

The Company evaluated the financing transactions in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion feature of the convertible promissory notes was not afforded the exemption for conventional convertible instruments due to its variable conversion rate. The note has no explicit limit on the number of shares issuable so they did not meet the conditions set forth in current accounting standards for equity classification. The Company elected to recognize the note under paragraph 815-15-25-4, whereby, there would be a separation into a host contract and derivative instrument. The Company elected to initially and subsequently measure the note in its entirety at fair value, with changes in fair value recognized in earnings. The Company recorded a derivative liability representing the imputed interest associated with the embedded derivative. The derivative liability is adjusted periodically according to the stock price fluctuations.

Beneficial Conversion Feature

On September 29, 2014, the Company issued a convertible note in exchange for an accounts payable in the amount of $383,351, which can be converted into shares of the Company’s common stock after March 29, 2015. The note was accounted for under ASC 470, and will be re-evaluated after March 29, 2015. The note has a zero stated interest rate, and the conversion price shall be equal to 75% of the average three lowest last sale prices traded during the 25 trading days immediately prior to conversion. The note did not meet the criteria of a derivative, and was accounted for as a beneficial conversion feature, which will be amortized over the life of the note and recognized as interest expense in the financial statements. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $1,537 during the nine months ended September 30, 2014.

5.            DERIVATIVE LIABILITIES

The convertible notes issued and described in Note 5 do not have fixed settlement provisions because their conversion prices are not fixed. The conversion features have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations. At December, 31, 2013, the outstanding fair value of the derivative liabilities amounted to $1,031,484.

During the nine months ended September 30, 2014, convertible notes in the amount of $1,652,828 were converted. As a result of the conversion of these notes, the Company recorded a gain of $2,997,359 due to the extinguishment of the corresponding derivative liability. Furthermore, during the nine months ended September 30, 2014, the Company recognized a loss of $6,929,622 to account for the change in fair value of the derivative liabilities. At September 30, 2014, the fair value of the derivative liability was $6,116,754.

For purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used Black Scholes option valuation model. The significant assumptions used in the Black Scholes valuation of the derivative are as follows:

Risk free interest rate	.02% - .13	%
Stock volatility factor	75.25% - 117.67	%
Weighted average expected option life	6 - 9 months
Expected dividend yield	None

10

ORIGINOIL, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2014

6.            OPTIONS AND WARRANTS

Options

The Board of Directors adopted the OriginOil, Inc., 2009 Incentive Stock Option Plan (the “2009 Plan”) for the purposes of granting stock options to its employees and others providing services to the Company, which reserves and sets aside for the granting of options for 500,000 shares of common stock.

On May 25, 2012, the Board of Directors adopted a new OriginOil, Inc., 2012 Incentive Stock Option Plan (the “2012 Plan”) for the purposes of granting stock options to its employees and others providing services to the Company, which reserves and sets aside for the granting of options for 1,000,000 shares of common stock.  

On June 14, 2013, the Board of Directors adopted a new OriginOil, Inc., 2013 Incentive Stock Option Plan (the “2013 Plan”) for the purposes of granting stock options to its employees and others providing services to the Company, which reserves and sets aside for the granting of options for 4,000,000 shares of common stock.  Options granted under the 2009 Plan, 2012 Plan and 2013 Plan (the “Plans”), may be either incentive stock options or nonqualified options and shall be administered by the Company's Board.  Each option shall state the number of shares to which it pertains. The exercise price will be determined by the holders percentage owned as follows: If the holder owns more than 10% of the total combined voting power or value of all classes of stock of the Company, then the exercise price for incentive stock options will be no less than 110% of the fair market value of the stock as of the date of grant; if the person is not a 10% holder, then the exercise price will be no less than 100% of the fair market value of the stock as of the date of grant. Notwithstanding any other provision of the Plans or of any option agreement, each option shall expire on the date specified in the option agreement, which date shall not be later than the tenth (10th) anniversary from the date of grant. If the status of an employee terminates for any reason other than disability or death, then the optionee or their representative shall have the right to exercise the portion of any Options which were exercisable as of the date of such termination, in whole or in part, not less than 30 days nor more than three (3) months after such termination.

During the nine months ended September 30, 2014, the Company did not grant any incentive stock options, but recognized compensation costs of $147,459 based on the fair value of the options vested for the nine months ended September 30, 2014.

A summary of the Company’s stock option activity and related information follows:

	September 30, 2014
				Weighted
	Number			average
	of			exercise
	Options			price
Outstanding, beginning of period		4,684,643		$	0.53
Granted		-			-
Exercised		-			-
Forfeited/Expired		(1,000,000	)		0.45
Outstanding, end of period		3,684,643		$	0.49
Exercisable at the end of period		2,084,882		$	0.47
Weighted average fair value of options granted during the period				$	-

The weighted average remaining contractual life of options outstanding issued under the Plans as of September 30, 2014 was as follows:

						Weighted
						Average
		Stock		Stock		Remaining
Exercisable		Options		Options		Contractual
Prices		Outstanding		Exercisable		Life (years)
$	0.43 - 7.20		1,351,978		1,024,674		0.98 - 8.96
$	0.29 - 0.44		2,332,665		1,060,208		8.96
			3,684,643		2,084,882

The intrinsic value of the outstanding options, as of September 30, 2014 was $0, as they are underwater. 

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ORIGINOIL, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS – (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2014 

6.            OPTIONS AND WARRANTS (Continued)

Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. Stock-based compensation expense recognized in the financial statements of operations during the nine months ended September 30, 2014, included compensation expense for the stock-based payment awards granted prior to, but not yet vested, as of September 30, 2014 based on the grant date fair value estimated.

Warrants 

During the nine months ended September 30, 2014, the Company did not grant any warrants.

A summary of the Company’s warrant activity and related information follows:

	September 30, 2014
				Weighted
				average
				exercise
	Options			price
Outstanding -January 1, 2014		42,033,596		$	0.31
Granted		-			-
Exercised		(5,000,000	)		0.15
Forfeited		(6,019,673	)		2.40
Outstanding - September 30, 2014		31,013,923		$	0.23

At September 30, 2014, the weighted average remaining contractual life of warrants outstanding: 

						Weighted
						Average
						Remaining
Exercisable		Warrants		Warrants		Contractual
Prices		Outstanding		Exercisable		Life (years)
$	0.15 - 0.65		29,587,718		29,587,718	0.25 - 3.70
$	0.26 - 5.70		866,362		866,362	0.85 - 3.97
$	$0.90 - 9.00		559,843		559,843	0.00 - 8.13
			31,013,923		31,013,923

The intrinsic value of 24,000,000 of the outstanding warrants, as of September 30, 2014 was $1,680,000, and the remaining 7,023,923 warrants intrinsic value was $0, as they are underwater. 

7.            SUBSEQUENT EVENTS

Management evaluated subsequent events as of the date of the financial statements pursuant to ASC TOPIC 855, and reported the following events:

During the subsequent period through October 22, 2014, in connection with certain one-time make good agreements, the Company issued an aggregate of 217,350 shares of its common stock at a fair value of $36,506 to certain holders of its common stock.

On October 30, 2014, holders of convertible notes converted an aggregate outstanding principal amount of $155,000, plus unpaid interest of $11,551 into an aggregate of 2,715,952 shares of the Company’s common stock.

During the subsequent period through November 3, 2014, the Company issued 53,445 shares of common stock for services at a fair value of $9,446.

On November 13, 2014, the Company’s board of directors adopted a Restricted Stock Award Plan (the “Plan”). The Plan is intended to aid in retaining and recruiting key directors, officers, employees, directors or consultants and to motivate them by providing incentives through the granting of restricted stock based awards. The Company’s board of directors or its compensation committee (when constituted) will administer the Plan. The administrator of the Plan has broad authority under the Plan to, among other things, select grantees and determine the number of shares that are to be subject to awards and the terms and conditions of awards. The Company’s directors, officers, employees and consultants are eligible to participate under the Plan. A total of 70,000,000 shares of common stock have been reserved for awards under the Plan. At the same time that the Plan was adopted, the Company’s board of directors authorized the grant of restricted stock awards providing for the grant of 66,050,000 shares of common stock under the Plan including the grant of 40,000,000 shares of common stock to T. Riggs Eckelberry, 10,000,000 shares of common stock to Nicholas Eckelberry, 5,000,000 shares of common stock to William Charneski, and 5,000,000 shares of common stock to Jean-Louis Kindler. The terms of the grants are set forth in individual restricted stock award agreements which set forth the terms and conditions of the grants including the vesting and issuance criteria.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Form 10-Q contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control, which may include statements about our:

● business strategy;

● financial strategy;

● intellectual property;

● production;

● future operating results; and

● plans, objectives, expectations and intentions contained in this report that are not historical.

All statements, other than statements of historical fact included in this report, regarding our strategy, intellectual property, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this report, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this report. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this report are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved.  These statements may be found under “Management's Discussion and Analysis of Financial Condition and Results of Operations,” as well as in this report generally.  Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors.  In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur 

Organizational History

OriginOil, Inc. (“we”, “us”, “our”, the “Company” or “OriginOil”) was incorporated on June 1, 2007 under the laws of the State of Nevada.  We have only been engaged in our current and proposed business operations since June 2007, and to date, we have been primarily involved in research and development activities.  Our principal offices are located at 5645 West Adams Blvd., Los Angeles, California 90016. Our telephone number is (323) 939-6645. Our website address is www.originoil.com.   Our website and the information contained on our website are not incorporated into this quarterly report.

Overview of Business

We have developed a breakthrough water cleanup technology for the oil and gas, algae and other water-intensive industries.

Unlike other technologies, our patent-pending Electro Water Separation™ (EWS) process rapidly and efficiently removes oil and suspended solids from large quantities of water without the need for chemicals.

EWS, our breakthrough water cleanup technology, is a high-speed, chemical-free process that efficiently extracts suspended contaminants from very large quantities of water.  It is the core technology powering OriginOil’s innovative product line that spans multiple industries. These include:

Algae Harvesting

EWS is used cost-effectively to harvest algae, intact and bacteria-free, without chemicals, at a continuously high flow rate. Systems can be operated in parallel for increased throughput rates. Built-in intelligence ensures a minimum of operator intervention.

Today, algae is finding important traction as animal feed, especially fish, where it can replace fish meal with a healthier and much less expensive feedstock. OriginOil’s technology is critical to efficiently harvesting the algae that is being trialed for aquaculture and animal feeding applications.

Oil and Gas Water Cleanup

When applied to the oil and gas industry, EWS technology is used in a continuous process to remove oils, suspended solids, insoluble organics and bacteria from produced and frac flowback water in well operations. This allows the water to be easily recycled for future fracking operations or disposed of safely.

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Waste Remediation (still in prototype phase)

In many applications, such as agriculture, fish farming and animal farming, EWS can efficiently remove organic contaminants and pathogens from incoming or outgoing water supplies.

Business Model for All Applications

Our long-term business model is based on licensing this technology to distributors, manufacturers, engineering service firms, and specialty operators, as well as fuel refiners, chemical and oil companies. We are not in the business of producing and marketing oil or fuel as an end product, nor of engaging in volume manufacturing.

At this early stage, to prove our systems for wide-scale distribution and licensing, we must build, sell and support our system to companies making use of such systems.

In Oil & Gas, we have built a product line called CLEAN-FRAC which combines EWS with best-of-breed downstream processes for a complete solution that service companies can put to work immediately. They can continue to be customers, or transition to the licensing model.

We have only been engaged in our current and proposed business operations since June 2007. While continuing to engage in research and development, we recently moved into the commercialization phase of our business plan, as we received our first seven-figure purchase order for a CLEAN-FRAC system from a service company customer in the Arabian Peninsula, and a licensee recently received an order for four systems to be delivered to a customer in the Caribbean.

Recent Developments

● On January 8, 2014, we announced that we have agreed to supply our water management solutions to a new East Asian hydroponics venture backed by Orix Corp., Japan’s largest financial services and leasing company.                

● On January 21, 2014, we announced that Ennesys recently closed a funding round of 300,000 euros through Wicap Ennesys, a special vehicle created by French crowdfunding site Wiseed, multiplying our seed investment in the joint venture by thirty times.          

● On January 28, 2014, we announced we’ll collaborate with Israel’s AquaGreen Fish Farms, Ltd to further streamline zero-discharge aquaculture systems for the production of chemical free seafood.                    

● On February 11, 2014, we announced plans to open a satellite office in the Houston, Texas “Energy Corridor” to be headed by veteran Dow Chemical manager Bill Charneski who has been named general manager of our Petro unit and will divide his time between the Los Angeles headquarters and the new office.

● On March 5, 2014, we announced that the National Algae Association (NAA) has selected our entry-level algae harvester for its model demonstration site, which features best-of-breed algae production systems in permanent operation.

● On April 15, 2014, we announced that we recently agreed to a collaborative exchange of equipment and information with the Catalina Sea Ranch, the first offshore shellfish ranch in U.S. Federal waters.

● On April 22, 2014, we announced a series of showcases to demonstrate the successful removal of frac flowback and produced water pollutants with the P1000 demonstration-scale unit. The roadshow will begin in May on Colorado’s Western Slope and continue on to Texas and California.    

● On April 30, 2014, we announced that weekly demonstrations of our algae harvesting process at Houston’s National Algae Association (NAA) are popular draws for new algae producers now investing in commercial-scale algae production systems.

● On May 7, 2014, we announced that we intend to pursue growth through acquisition of one or more service companies with proven ability to treat frac flowback and produced water in the oil and gas industry.

● On May 14, 2014, we announced plans to launch a product line that can treat frack water from end to end. This product, CLEAN-FRAC™, is based on our P1000 platform, which is designed to process 1000 barrels per day of frac flowback and produced water.        

● On May 21, 2014, we announced that Burgan One Commercia Establishment (BG-1) has signed a non-exclusive licensing agreement to design, manufacture and distribute water treatment products that incorporate OriginOil technology for the oil & gas and other waste treatment markets in the Middle East. 

● On June 4, 2014, we announced that CLEAN-FRAC™ 1000, our new demonstration-scale frac water treatment system, was shown to successfully remove oil and contaminants at a showcase for media, public officials and prospective customers. 

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● On June 11, 2014, we announced that we recently demonstrated our ability to match laboratory performance in the field when we operated at a 1000 barrel per day capacity on contaminated water from a salt water disposal well in Western Colorado.

● On June 16, 2014, we and TriSep Corporation, announced that our EWS, combined with TriSep’s iSep™ ultrafiltration (UF) membranes, effectively removes nearly all oil, turbidity, and bacteria, providing a full solution for drillers to efficiently recycle water flowing back from fracking and production.    

● On June 24, 2014, we announced that E3 Services and Solutions, LLC, an acquirer and integrator of industrial technologies in fuel, food and health sectors, has agreed to license EWS for integration in systems designed to reclaim water from hydraulic fracturing and industrial operations.      

● On July 2, 2014, we demonstrated the very low energy cost of our Electro Water Separation™ (EWS) technology in treating frac flowback and produced water during large-scale testing at a salt water disposal well in Western Colorado.

● On July 5, 2014, our board of directors dismissed Weinberg & Company, PA as our independent registered public accounting firm and appointed Liggett Vogt & Webb, PA as our new independent registered public accounting firm.

● On July 10, 2014, we announced that in company testing, EWS was found to efficiently generate chlorine dioxide (CLO2), an important pre-treatment step for frac flowback and produced water and other applications.

● On July 15, 2014, we announced that Pearl H20, an affiliate of PACE and our first licensee, installed a commercial scale 1200 bbl/day Pearl Blue™ treatment system last month for demonstration and began a performance testing phase for treating frac flowback and produced water from the Monterey shale formation.

● On August 7, 2014, we announced the publication of independent laboratory results verifying dramatic effectiveness in treating flowback water at a rate greater than 1,000 barrels per day from a disposal site in Western Colorado.

● On August 25, 2014, we announced EWS was selected by Gulf Energy, an oil service company with major customers in Oman, Yemen and Saudi Arabia, as the technology provider for the company’s new oil services business in frack and produced water treatment and reuse.        

● On September 4, 2014, we announced plans to demonstrate OriginOil’s CLEAN-FRAC™ solution at a disposal well site in the Permian Basin to STW’s customers in the Permian and Eagle Ford regions

● On September 11, 2014, we announced that we will provide algae harvesting technology for the low-cost algae growth system from Algasol Renewables.

● On September 22, 2014, we announced Delta, Colorado-based Industrial Systems Inc. has sold four industrial systems, powered by OriginOil’s EWS, to Synergy Resources for produced water and oily waste treatment in Trinidad and Tobago.

● On October 21, 2014, we announced that Gulf Energy, an oil service company with major customers across the Arabian Peninsula, has signed a commercial order for a $1.4M CLEAN-FRAC™ 5000 system, designed to process five thousand barrels per day (bpd), for the company’s growing oil services business.

● On October 22, 2014, we announced that we received our third international patent for our core technology from the China Patent Office.

Critical Accounting Policies

The Securities and Exchange Commission ("SEC") defines "critical accounting policies" as those that require application of management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Not all of the accounting policies require management to make difficult, subjective or complex judgments or estimates. However, the following policies could be deemed to be critical within the SEC definition. 

Revenue Recognition

We recognize revenue when services are performed, and at the time of shipment of products, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured.

15

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements. Significant estimates made in preparing these financial statements include the estimate of useful lives of property and equipment, the deferred tax valuation allowance, and the fair value of stock options. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Fair value of financial instruments requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of September 30, 2014, the amounts reported for cash, prepaid expenses, accounts payable and accrued expenses approximate the fair value because of their short maturities.

Recently Issued Accounting Pronouncements

Management adopted a recently issued accounting pronouncement during the three months ended September 30, 2014, as disclosed in the Notes to the financial statements included in this report.

Results of Operation

Results of Operations for the three months ended September 30, 2014 compared to the three months ended September 30, 2013.

Revenue and Cost of Sales

Revenue for the three months ended September 30, 2014 and 2013 was $6,785 and $40,500, respectively. Cost of sales for the three months ended September 30, 2014 and 2013, was $949 and $19,866, respectively. 

To date we have had minimal revenues due to our focus on product development and testing. In addition, we are not focused on immediate sales of equipment, but on licensing or private labeling type transactions, which we believe has the potential to yield stronger long term revenue.

Operating Expenses

Selling and General Administrative Expenses

Selling and general administrative (“SG&A”) expenses decreased by $794,818 to $894,442 for the three months ended September 30, 2014, compared to $1,689,260 for the three months ended September 30, 2013. The decrease in SG&A expenses was due primarily to a decrease in marketing and investor relations of $474,906, outside services expense of $329,029, non-cash stock compensation expense of $102,733, professional fees of $37,700, salaries of $18,883, offset by an increase in patent legal fees of $166,044 with an overall decrease in other SG&A expenses of $2,389.

Research and Development Cost

Research and development (“R&D”) costs decreased by $41,886 to $276,358 for the three months ended September 30, 2014, compared to $318,244 for the three months ended September 30, 2013. The decrease in overall R&D costs was primarily due to a decrease in material supplies and testing for EWS appliances.

Other Income and Expenses

Other income and (expenses) increased by $541,111 to ($544,590) for the three months ended September 30, 2014, compared to ($3,479) for the three months ended September 30, 2013. The increase was the result of an increase in non-cash accounts associated with the fair value of the derivatives in the amount of $1,084,238, amortization of debt discount in the amount of $234,772 and interest expense of $27,013, offset by a decrease in fair value of warrant discount of $645,398 and commitment fees of $159,514.

Net Loss

Our net loss decreased by $280,753 to $1,714,104 for the three months ended September 30, 2014, compared to a net loss of $1,994,857 for the three months ended September 30, 2013. The majority of the decrease in net loss was due primarily to an increase in other income and (expenses) of $541,111, with a decrease in total operating expenses of $836,662 and gross profit of $14,798. Currently operating costs exceed revenue because sales are not yet sufficient to cover costs.  We cannot assure of when or if revenue will exceed operating costs.

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Results of Operations for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013.

Revenue and Cost of Sales

Revenue for the nine months ended September 30, 2014 and 2013 was $166,195 and $140,500, respectively. Cost of sales for the nine months ended September 30, 2014 and 2013, was $106,919 and $50,510, respectively. The increase in revenue and cost of sales for the current period was due to an increase in equipment sold and the related material supplies and contractor fees for equipment production.

To date we have had minimal revenues due to our focus on product development and testing.  In addition, we are not focused on immediate sales of equipment but on licensing or private labeling type transactions, which we believe has the potential to yield stronger long term revenue.

Operating Expenses

Selling and General Administrative Expenses

Selling and general administrative (“SG&A”) expenses increased by $1,245,597 to $4,595,518 for the nine months ended September 30, 2014, compared to $3,349,921 for the nine months ended September 30, 2013. The increase in SG&A expenses was due primarily to an increase in marketing and investor relations of $504,138, professional fees of $265,193, outside services of $501,885, travel in the amount of $58,900 with an overall decrease in non-cash stock compensation expense of $75,818 and other SG&A of $8,701.

Research and Development Cost

Research and development (“R&D”) costs for the nine months ended September 30, 2014 was $755,795, compared to $755,595 for the nine months ended September 30, 2013. R&D costs have consisted of material supplies and testing for EWS appliances.

Other Income and Expenses

Other income and (expenses) increased by $1,881,210 to ($5,793,658) for the nine months ended September 30, 2014, compared to ($3,912,448) for the nine months ended September 30, 2013. The increase was the result of an increase in non-cash accounts associated with the fair value of the derivatives in the amount of $2,699,436, amortization of debt discount of $704,162, gain on investment of $6,353, and interest expense of $35,001, offset by a decrease in commitment fees of $905,638 and fair value of discounted warrants of $645,398.

Net Loss

Our net loss increased by $3,158,978 to $11,098,215 for the nine months ended September 30, 2014, compared to a net loss of $7,939,237 for the nine months ended September 30, 2013. The majority of the increase in net loss was due to an increase in other income and (expenses) in the amount of $1,881,210 and total operating expenses of $1,247,054, with a decrease in gross profit of $30,714.  Currently operating costs exceed revenue because sales are not yet sufficient to cover costs.  We cannot assure of when or if revenue will exceed operating costs.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

The condensed financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying condensed financial statements do not reflect any adjustments that might result if we are unable to continue as a going concern. During the nine months ended September 30, 2014, we did not generate significant revenue, incurred a net loss of $11,098,215 and cash used in operations of $3,432,152. As of September 30, 2014, we had a working capital deficiency of $7,913,942 and a shareholders’ deficit of $7,780,945. These factors, among others raise substantial doubt about our ability to continue as a going concern. Our independent auditors, in their report on our audited financial statements for the year ended December 31, 2013 expressed substantial doubt about our ability to continue as a going concern. The ability of us to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion. We have obtained funds from our shareholders in the nine months ended September 30, 2014, and have standing purchase orders and open invoices with customers. Management believes this funding will continue from our current investors and has also obtained funding from new investors. Management believes the existing shareholders, the prospective new investors and future revenue will provide the additional cash needed to meet our obligations as they become due, and will allow the development of our core business operations.

At September 30, 2014 and December 31, 2013, we had cash of $593,549 and $821,448, respectively and working capital deficit of $7,913,942 and $1,535,766, respectively.  The increase in working capital deficit was due primarily to an increase in non-cash derivative liabilities, convertible notes, and work-in-process, with a decrease in cash, prepaid expenses, other assets, accrued expenses and accounts payable.

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During the first nine months of 2014, we raised an aggregate of $2,460,000 in an offering of unsecured convertible notes. Our ability to continue as a going concern is dependent upon raising capital from financing transactions and future revenue.

Net cash used in operating activities was $3,432,152 for the nine months ended September 30, 2014, compared to $2,989,484 for the prior period ended September 30, 2013. The increase of $442,668 in cash used in operating activities was due to the net decrease in accounts receivable, prepaid expenses, and deferred income, with an increase in work in progress, accrued expenses, accounts payable, and net loss due to an increase in non-cash accounts associated with the derivatives. Currently operating costs exceed revenue because sales are not yet significant.

Net cash flows used in investing activities was $5,747 for the nine months ended September 30, 2014, as compared to $176,566 for the prior period ended September 30, 2013. The net decrease in cash used in investing activities was due to a decrease in patent expenditures and the purchase of fixed assets, with an increase in the partial sale of an investment compared to the prior period.

Net cash flows provided by financing activities was $3,210,000 for the nine months ended September 30, 2014, as compared to $3,957,271 for the prior period ended September 30, 2013. The decrease in cash provided by financing activities was due to a decrease in equity financing offset by an increase in debt financing with the issuance of convertible notes. To date we have principally financed our operations through the sale of our common stock and the issuance of debt.

We do not have any material commitments for capital expenditures during the next twelve months.  Although our proceeds from the issuance of convertible debt together with revenue from operations are currently sufficient to fund our operating expenses, we will need to raise additional funds in the future so that we can expand our operations. Therefore, our future operations are dependent on our ability to secure additional financing.  Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we may have to curtail our marketing and development plans and possibly cease our operations.

We have estimated our current average burn, and believe that we have assets to ensure that we can function without liquidation over the next nine months, due to our cash on hand, growing revenue, and our ability to raise money from our investor base.  Based on the aforesaid, we believe we have the ability to continue our operations for the foreseeable future and will be able to realize assets and discharge liabilities in the normal course of operations.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive Officer and Principal Financial Officer), as appropriate, to allow for timely decisions regarding required disclosure.

As required by SEC Rule 15d-15(b), our Chief Executive Officer and Chief Financial Officer carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report. Based on the foregoing evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC filings and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure about our internal control over financial reporting.

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Changes in Internal Controls

There have been no changes in our internal control over financial reporting during the most recent fiscal quarter ended September 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1.  Legal Proceedings.

None.

Item 1A. Risk Factors.  

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information.

Management Restricted Stock Grant Awards

The following disclosure would have otherwise been filed on Form 8-K under the heading “Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers”:

As previously reported, our board of directors authorized the grant of an aggregate of 62,500,000 shares of our common stock to certain key management members (including T. Riggs Eckelberry, our Chief Executive Officer and Chairman, Nicholas Eckelberry, our co-founder and brother of T. Riggs Eckelberry, William Charneski, our General Manager, Petro Division and Jean-Louis Kindler, our Chief Commercial Officer and director). The shares were eligible for issuance subject to the satisfaction of certain performance criteria and if such performance criteria were met, the shares would then become eligible for vesting on a monthly basis. Prior to the issuance of any of the shares, each of the grantees mutually agreed with us to the termination of the restricted stock grant agreements.

On November 13, 2014, our board of directors adopted a Restricted Stock Award Plan (the “Plan”). The Plan is intended as an aid to retaining and recruiting key directors, officers, employees, directors or consultants and to motivate them by providing incentives through the granting of restricted stock based awards. Our board of directors or our compensation committee (when constituted) will administer the Plan. The administrator of the Plan has broad authority under the Plan to, among other things, select grantees and determine the number of shares that are to be subject to awards and the terms and conditions of awards. Our directors, officers, employees and consultants are eligible to participate under the Plan. A total of 70,000,000 shares of common stock have been reserved for awards under the Plan.

At the same time that the Plan was adopted, our board of directors authorized the grant of restricted stock awards providing for the grant of an aggregate of 66,050,000 shares of common stock under the Plan including the grant of 40,000,000 shares of common stock to T. Riggs Eckelberry, 10,000,000 shares of common stock to Nicholas Eckelberry, 5,000,000 shares of common stock to William Charneski, and 5,000,000 shares of common stock to Jean-Louis Kindler. The terms of the grants are set forth in individual restricted stock award agreements which set forth the terms and conditions of the grants including the vesting and issuance criteria.

In the case of the restricted stock award agreement to T. Riggs Eckelberry, the shares shall become eligible for monthly vesting in two tranches upon the earlier of July 1, 2015 and the first date that any other grantee’s restricted stock grant becomes eligible for monthly vesting subject to the satisfaction of the following performance goals: (i) 40% shall become eligible for vesting if the Company market capitalization exceeds $15 million (market capitalization defined as our shares of common stock issued and outstanding multiplied by the average closing trade price of our common stock on the 10 trading days immediately prior to the date of determination); and (ii) 60% shall become eligible for vesting if our market capitalization exceeds $20 million.

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In the case of restricted stock award agreements to all other grantees other than T. Riggs Eckelberry, the shares shall become eligible for monthly vesting in two tranches subject to the satisfaction of the following performance goals: (i) 40% shall become eligible for vesting if our consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $2,500,000 for the trailing twelve month period; and (ii) 60% shall become eligible for vesting if our consolidated net profit, calculated in accordance with GAAP, equals or exceeds $500,000 for the trailing twelve month period as reported in our quarterly or annual financial statements.

According to the restricted stock award agreements, the shares associated with a particular performance goal that have been met shall become eligible for vesting on a monthly basis according to the following formula:

Monthly Number of Vested Shares =	Vesting Percentage x Prior Monthly Trade Value
	Fair Market Value of the Company’s Shares

“Vesting Percentage” is defined as the product (expressed as a percentage) of (a) 10%, multiplied by (b) a fraction, (1) the numerator of which is the number of shares that are eligible for vesting at the date of determination, and (2) the denominator of which shall be the number of shares issued under the Plan at the date of determination, and which shall initially be 66,050,000. “Prior Monthly Trade Value” is defined as the aggregate sum of the Daily Trade Value in a calendar month immediately before the date of determination.  The “Daily Trade Value” is defined as the closing trade price of our shares of common stock multiplied by the daily trade volume. “Fair Market Value” is defined the average of the trailing 10 closing trade prices of our common stock on the last 10 trading days of the month immediately prior to the date of determination as quoted on the public securities trading market on which our common stock is then traded; provided, that if our common stock is not then publicly trading or quoted, “Fair Market Value” shall be determined by our board of directors in good faith. If our common stock is no longer publicly traded, then our board of directors in good faith shall determine the Monthly Number of Vested Shares. If the Prior Monthly Trade Value is less than $50,000, then no shares that are eligible for vesting shall vest for that month.

The restricted stock award agreements provide that if the grantee ceases to provide any services to us, then the shares associated with the unmet performance goals as of the date of such cessation shall immediately be forfeited as of the date of such cessation.  The shares associated with any performance goals met prior to the date the grantee ceases to provide any services to us shall continue to vest in accordance with the terms of the restricted stock award agreements. Any shares that have not vested within 5 years of becoming eligible for vesting shall be forfeited.

The restricted stock award agreements also provide that if the fair market value of our common stock on the date of issuance is less than the fair market value (as defined above) of our common stock on November 13, 2014 (the date of grant), then the number of shares shall be increased so that the aggregate fair value of shares issuable equals the aggregate fair value that such number of shares would have had on November 13, 2014.

A copy of the Plan and the form of Restricted Stock Award Agreement for T. Riggs Eckelberry and all other grantees are attached hereto as Exhibits 10.1 through 10.3, respectively and incorporated herein by reference.

Consultant Issuances

The following disclosure would have otherwise been filed on Form 8-K under the heading “Item 3.02 Unregistered Sales of Equity Securities”:

Between October 31, 2014 and November 3, 2014, we issued an aggregate of 33,243 shares of our common stock in lieu of cash consideration. In addition, on November 13, 2014, our board of directors authorized the issuance of 2,750,000 shares of our common stock to a consultant.

The securities above were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering and the securities were acquired for investment purposes only and not with a view to or for sale in connection with any distribution thereof.

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Conversion of Notes

On October 30, 2014, a holder of a convertible promissory note converted an aggregate principal and interest amount of $166,551 into an aggregate of 2,715,952 shares of our common stock.

The securities above were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act since, among other things, the transaction did not involve a public offering.

Make Good Issuances

In connection with one-time make good agreements, between October 13, 2014 and October 22, 2014, holders of shares of our common stock submitted exercise notices resulting in the issuance of 217,350 shares of our common stock.

The securities above were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act since, among other things, the transaction did not involve a public offering.

Item 6.  Exhibits.

Exhibit  Number	Description of Exhibit
10.1	Restricted Stock Award Plan
10.2	Form of Restricted Stock Award Agreement (CEO)
10.3	Form of Restricted Stock Award Agreement (Team Management other than CEO)
31	Certification by Chief Executive Officer and Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
32	Certification by Chief Executive Officer and Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code.
101.INS	XBRL Instance Document.*
101.SCH	XBRL Taxonomy Extension Schema.*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.*
101.DEF	XBRL Taxonomy Extension Definition Linkbase.*
101.LAB	XBRL Taxonomy Extension Label Linkbase.*
101.PRE	XBRL Extension Presentation Linkbase.*

* Attached as Exhibit 101 to this report are the following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 formatted in XBRL (eXtensible Business Reporting Language): (i) the Balance Sheets, (ii) the Statement of Operations, (iii) the Statement of Shareholders’ Equity, (iv) the Statement of Cash Flow, and (v) Notes to Financial Statements.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ORIGINOIL, INC.
By:	/s/ T Riggs Eckelberry
	T Riggs Eckelberry
	Chief Executive Officer (Principal Executive Officer)
	and Acting Chief Financial Officer
	(Principal Accounting and Financial Officer)
	November 14, 2014

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EX-10.1

Exhibit 10.1

OriginOil, Inc.

RESTRICTED STOCK AWARD PLAN

This OriginOil, Inc. Restricted Stock Award Plan (the "Plan") is intended as an incentive, to retain in the employ of and as directors, officers, consultants, advisors and employees to OriginOil, Inc. a Nevada corporation (the “Company”), persons of training, experience and ability, to attract new directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage the sense of proprietorship and to stimulate the active interest of such persons in the development and financial success of the Company.

The Company intends that the Plan meet the requirements of Rule 16b-3 (“Rule 16b-3”) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that transactions of the type specified in subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of the Company pursuant to the Plan will be exempt from the operation of Section 16(b) of the Exchange Act. In all cases, the terms, provisions, conditions and limitations of the Plan shall be construed and interpreted consistent with the Company’s intent as stated in these recitals.

1. Definitions.

(a) "Award" means the grant of a restricted stock award to a Grantee pursuant to such terms, conditions and limitations as the Board or Committee may establish in order to fulfill the objectives of the Plan.

(b) "Award Agreement" means an agreement between the Company and a Grantee that sets forth the terms, conditions and limitations applicable to a Award.

(c) "Board" means the Board of Directors of the Company.

(d) "Committee" means the Compensation Committee of the Company's Board, or such other committee of the Board that is designated by the Board to administer the Plan, composed of not less than two members of the Board who are (i) “Independent Directors” (as such term is defined under the rules of the NASDAQ Stock Market), (ii) “Non-Employee Directors” (as such term is defined in Rule 16b-3) and (iii) “Outside Directors” (as such term is defined in Section 162(m) of the Code), which shall serve at the pleasure of the Board.

(e) “Common Stock” means the authorized common stock, par value $0.001 per share, as described in the Company’s Articles of Incorporation.

(f) "Company" means OriginOil, Inc. and its subsidiaries including subsidiaries of subsidiaries.

(g) “Eligible Individual” means an employee, officer, director, consultant or advisor of the Company (provided that in the case of any consultant or advisor, such persons are natural persons, provide bona fide services to the Company and the services are not in connection with any offer or sale of securities in a capital raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities).

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(h) "Fair Market Value" means the fair market value of the Company's issued and outstanding Stock as determined in good faith by the Board or Committee.

(i) "Grantee" means an Eligible Individual to whom an award has been made under the Plan.

(j) "Securities Act" means the Securities Act of 1933, as amended from time to time.

(k) "Stock" - means the Company’s Common Stock, or any other securities that are substituted for Stock as provided in Section 7.

2. Administration. The Plan shall be administered by the Board, provided however, that the Board may delegate such administration to the Committee. Subject to the provisions of the Plan, the Board or the Committee shall have authority to (a) grant in its discretion Awards; (b) determine in good faith the fair market value of the Stock covered by any Awards; (c) determine which Eligible Individuals shall receive Awards and the number of shares, restrictions, terms and conditions to be included in such Awards; (d) construe and interpret the Plan; (e) promulgate, amend and rescind rules and regulations relating to its administration, and correct defects, omissions and inconsistencies in the Plan or any Awards; (f) consistent with the Plan and with the consent of the Grantee, as appropriate, amend any outstanding Awards; (g) determine the duration and purpose of leaves of absence which may be granted to Grantees without constituting termination of their employment for the purpose of the Plan or any Awards; and (h) make all other determinations necessary or advisable for the Plan's administration. The interpretation and construction by the Board of any provisions of the Plan or selection of Grantees shall be conclusive and final. No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award made thereunder.

3. Stock.

(a) Authorized Stock: Stock subject to Awards may be either unissued or reacquired Stock.

(b) Number of Shares: Subject to adjustment as provided in Section 7 of the Plan, the total number of shares of Stock which may be purchased or granted directly by Awards shall not exceed 70,000,000 (Seventy Million). If any shares of Stock subject to an Award are forfeited or if any Award is otherwise terminated without issuance of shares of Stock, the shares of Stock subject to such Award shall to the extent of such forfeiture or termination, again be available for Awards under the Plan.

(c) Reservation of Shares: The Company shall reserve and keep available at all times during the term of the Plan such number of shares as shall be sufficient to satisfy the requirements of the Plan. If, after reasonable efforts, which efforts shall not include the registration of the Plan or Awards under the Securities Act, the Company is unable to obtain authority from any applicable regulatory body, which authorization is deemed necessary by legal counsel for the Company for the lawful issuance of shares hereunder, the Company shall be relieved of any liability with respect to its failure to issue and sell the shares for which such requisite authority was so deemed necessary unless and until such authority is obtained.

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4. Eligibility and Participation.

(a) Eligible Individuals Awards may be granted pursuant to the Plan only to persons who are Eligible Individuals at the time of the grant thereof.

(b) Grant of Awards. Subject to the express provisions of the Plan, the Board or Committee shall determine which Eligible Individuals shall be granted Awards from time to time. In making grants, the Board or Committee shall take into consideration the contribution the potential Grantee has made or may make to the success of the Company and such other considerations as the Board or Committee may from time to time specify.

(c) Date of Grant. The date on which an Award is granted shall be the date specified by the Board or Committee as the effective date or date of grant of an Award or, if the Board or Committee does not so specify, shall be the date as of which the Board or Committee adopts the resolution approving the offer of an Award to an individual, including the specification of the number (or method of determining the number) of shares of Stock, even though certain terms of the Award Agreement may not be determined at that time and even though the Award Agreement may not be executed or delivered until a later time. In no event shall a Grantee gain any rights in addition to those specified by the Board or Committee in its grant, regardless of the time that may pass between the grant of the Award and the actual execution or delivery of the Award Agreement by the Company or the Grantee. The Board or Committee may invalidate an Award at any time before the Award Agreement is signed by the Grantee signature is required) or is delivered to the Grantee (if signature is not required), and such Award shall be treated as never having been granted.

(d) Award Agreements. Each Award granted under the Plan shall be evidenced by an Award Agreement that incorporates those terms that the Board or Committee shall deem necessary or desirable. More than one Award may be granted under the Plan to the same Eligible Individual and be outstanding concurrently.

(e) No Right to Award. The adoption of the Plan shall not be deemed to give any person a right to be granted an Award.

5. Restricted Stock Awards. All or part of any Awards under the Plan may be subject to conditions established by the Board or the Committee, and set forth in the Award Agreement, which may include, but are not limited to, continuous service with the Company, achievement of specific business objectives, increases in specified indices, attaining growth rates and other comparable measurements of Company performance and shall be subject to the terms and conditions set forth in this Section 5. 

(a) Restrictions.  All shares of Awards granted pursuant to the Plan shall be subject to the following conditions:

(i) Transferability.  Subject to applicable securities laws, the shares may not be sold, transferred or otherwise alienated or hypothecated until the shares of Stock vest under the terms of the Award Agreement.

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(ii)           Other Conditions.  The Board or Committee may impose other conditions on any shares granted as Awards pursuant to the Plan as it may deem advisable, including, without limitation, restrictions under the Securities Act, the requirements of any securities exchange upon which the shares or shares of the same class are then listed, and any state securities law applicable to the shares.

(b) Expiration of Restrictions.  The restrictions imposed in Section 5(a) on Awards shall lapse as determined by the Board or Committee and set forth in the applicable Award Agreement, and the Company shall promptly cause to be delivered to the Grantee of the Award a certificate representing the number of shares for which restrictions have lapsed, free of any restrictive legend relating to the lapsed restrictions.  Each Award may have a different restriction period, in the discretion of the Board or Committee.  The Board or Committee may, in its discretion, prospectively reduce the restriction period applicable to a particular Award.  

(c) Changes in Accounting Rules.  Notwithstanding any other provision of the Plan to the contrary, if, during the term of the Plan, any changes in the financial or tax accounting rules applicable to Awards shall occur that, in the sole judgment of the Board or Committee, may have a material adverse effect on the reported earnings, assets, or liabilities of the Company, the Board or Committee shall have the right and power to modify as necessary any then outstanding Awards as to which the applicable restrictions have not been satisfied.

(d) Rights as Stockholder.  The Board or Committee may, in its discretion, determine what rights, if any, the Grantee shall have with respect to the Awards granted or sold, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto.

(e) Other Agreement Provisions.  The Award Agreements relating to Awards shall contain such provisions in addition to those required by the Plan as the Board or Committee may deem advisable.

6. Amendment, Modification, Suspension or Discontinuance of the Plan. The Board or Committee may, insofar as permitted by law, from time to time, with respect to any shares at the time not subject to outstanding Awards, suspend or terminate the Plan or revise or amend it in any respect whatsoever; provided, however, no such action shall alter or impair the rights and obligations in any material respect under any Award outstanding as of the date thereof without the written consent of the Grantee thereunder. No Award may be issued while the Plan is suspended or after it is terminated, but the rights and obligations under any Award issued while the Plan is in effect shall not be impaired by suspension or termination of the Plan.

7. Capital Change of the Company. In the event of any change in the outstanding Stock by reason of a stock split, stock dividend, combination or reclassification of shares, recapitalization, merger, or similar event, the Board or the Committee may adjust proportionally the number of shares of Stock reserved under the Plan, and covered by outstanding Awards. In the event of any other change affecting the Stock or any distribution (other than normal cash dividends) to holders of Stock, such adjustments as may be deemed equitable by the Board or the Committee, including adjustments to avoid fractional shares, shall be made to give proper effect to such event. In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board or the Committee shall be authorized to issue or assume Awards by means of substitution of new Award Agreements for previously issued Awards or an assumption of previously issued Awards.

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8. Tax Withholding. The Company shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery of an Award or vesting of shares under an Award, an appropriate number of shares for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. If Stock is used to satisfy tax withholding, such stock shall be valued based on the Fair Market Value when the tax withholding is required to be made.

9. No Commitment to Retain. The grant of an Award pursuant to the Plan shall not be construed to imply or to constitute evidence of any agreement, express or implied, on the part of the Company to retain the Grantee as an employee or in any other capacity.

10. Notice. Any written notice to the Company required by any of the provisions of the Plan shall be addressed to the chief personnel officer or to the chief executive officer of the Company, and shall become effective when it is received by the office of the chief personnel officer or the chief executive officer.

11. Indemnification of Board. In addition to such other rights or indemnifications as they may have as directors or otherwise, and to the extent allowed by applicable law, the members of the Board and the Committee shall be indemnified by the Company against the reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with the defense of any claim, action, suit or proceeding, or in connection with any appeal thereof, to which they or any of them may be a party by reason of any action taken, or failure to act, under or in connection with the Plan or any Award granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such claim, action, suit or proceeding, except in any case in relation to matters as to which it shall be adjudged in such claim, action, suit or proceeding that such Board or Committee member is liable for negligence or misconduct in the performance of his or her duties; provided that within sixty (60) days after institution of any such action, suit or Board proceeding the member involved shall offer the Company, in writing, the opportunity, at its own expense, to handle and defend the same.

12. Governing Law. The Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the Code or the securities laws of the United States, shall be governed by the law of the State of Nevada and construed accordingly.

13. Effective and Termination Dates. The Plan shall become effective on the date it is adopted and approved by Board. The Plan shall terminate ten years later, subject to earlier termination by the Board pursuant to Section 6.

The foregoing OriginOil, Inc. Restricted Stock Award Plan was duly adopted and approved by the Board of Directors on November 13, 2014.

OriginOil, Inc
By:	/s/ T. Riggs Eckelberry
	T. Riggs Eckelberry Chief Executive Officer

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EX-10.2

Exhibit 10.2

ORIGINOIL, INC.

RESTRICTED STOCK AWARD AGREEMENT

This Restricted Stock Award Agreement (the “Agreement”) is made and entered into as of , (the “Effective Date”) by and between OriginOil, Inc., a Nevada corporation (the “Company”), and the person named below (the “Grantee”).

Grantee: T. Riggs Eckelberry

Address: _________________

Total Number of Shares to Be Granted: 40,000,000

1. Grant of Restricted Stock. The Board of Directors of the Company, subject to the terms and provisions of the OriginOil, Inc. Restricted Stock Award Plan, as amended (the “Plan”) hereby awards to the Grantee, effective as of the Effective Date, the number of shares (the “Shares”) of common stock, par value $0.001 per share, set forth above as restricted stock (the “Restricted Stock”) on the following terms and conditions. As used in this Agreement, the term “Shares” shall mean shares of Restricted Stock granted under this Agreement, and all securities received (i) in replacement of the Shares, (ii) as a result of stock dividends or stock splits with respect to the Shares, (iii) in replacement of the Shares in a merger, recapitalization, reorganization or similar corporate transaction; and (iv) pursuant to an adjustment to the number of Shares issuable on any vesting date by virtue of Section 2.6 of this Agreement.

2. Eligibility for Vesting and Issuance. The Shares of Restricted Stock shall become eligible for vesting, and shall vest and be issued to the Grantee, upon the satisfaction of the conditions set forth in Section 2.1 and 2.2 of this Agreement. The Restricted Shares are forfeitable as set forth in Section 2.3 and Section 2.4 of this Agreement.

2.1 Schedule of Company Performance Goals. Shares of Restricted Stock shall become eligible for vesting (and shall become “Eligible Restricted Shares”) for each Company Performance Goal attained as follows:

Restricted Shares	Company Performance Goals
40%	The Company's Market Capitalization exceeds $15,000,000.  Market Capitalization shall mean the total number of shares of issued and outstanding common stock, multiplied by the average closing trade price of the Company's common stock on the 10 trading days immediately  prior to the date of determination.
60%	The Company's Market Capitalization exceeds $20,000,000.  Market Capitalization shall mean the total number of shares of issued and outstanding common stock, multiplied by the average closing trade price of the Company's common stock on the 10 trading days immediately  prior to the date of determination.

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2.2 Vesting and Issuance of Eligible Restricted Shares. Eligible Restricted Shares shall vest, beginning upon the earlier of (i) July 1, 2015, and (ii) the first date that any other Eligible Individual’s shares of restricted stock become eligible for monthly vesting under an Award Agreement entered into with such Eligible Individual (the “Vesting Commencement Date”), as follows. From and after the Vesting Commencement Date, the Eligible Restricted Shares shall vest on a monthly basis, based on the following formula:

	Vesting Percentage x Prior Monthly Trade Value
Monthly Vested Shares =	Fair Market Value of the Company’s Shares

For the purposes of this Agreement,

(i) the “Prior Monthly Trade Value” of the Company’s Shares shall mean the aggregate sum of the Daily Trade Value in the calendar month immediately before the date of determination.

(ii) the “Daily Trade Value” is defined as the closing trade price of the Company’s Shares multiplied by the daily trade volume. For example, if the closing trade price was $1.00 and the daily trade volume on that day was 500,000 shares, then the Daily Trade Value for that day would be $500,000.

(iii) the “Vesting Percentage” shall mean the product (expressed as a percentage) of (a) 10%, multiplied by (b) a fraction, (1) the numerator of which is the number of Eligible Restricted Shares at the date of determination, and (2) the denominator of which shall be the number of shares issued under the Plan at the date of determination, and which shall initially be 66,050,000. For example, if the numerator is 16,000,000 and the denominator is 66,050,000, then the Vesting Percentage shall be 2.4224%.

(iv) the “Fair Market Value” shall equal the average of the trailing ten (10) closing trade prices of the Company’s common stock on the last ten (10) trading days of the month immediately prior to the date of determination as quoted on the public securities trading market on which the Company’s common stock is then traded; provided, that if the Company’s common stock is not then publicly trading or quoted, “Fair Market Value” shall be determined by the Company’s Board of Directors in good faith.

If the Company’s common stock is no longer publicly traded, then the Board of Directors in good faith shall determine the Monthly Vested Shares.

If the Prior Monthly Trade Value is less than $50,000, then zero Eligible Restricted Shares shall vest for that month.

By way of example only, if the Vesting Percentage is 2.4224%, the Prior Monthly Trade Value is $10,000,000 and the Fair Market Value is $1.00, then the number of Monthly Vested Shares shall be 242,241.

The Monthly Vested Shares, if any, shall be issued to the Grantee within five (5) business days after the last day of each month.

2

2.3 Forfeiture. Grantee shall forfeit all vesting rights for any Eligible Restricted Shares that have not vested within five (5) years of the date that the Eligible Restricted Shares became eligible for vesting.

2.4 Termination. If the Grantee ceases to provide any services to the Company as officer, director, employee or consultant, for any reason before the date that the Company Performance Goals have been met (it being understood that if the Grantee continues without interruption to serve thereafter in one or more capacities as officer, director, employee or consultant of the Company this shall not be considered a cessation of service), then the Shares of Restricted Stock associated with the unmet Company Performance Goals as of the date of such cessation of services shall immediately be forfeited as of the date of such cessation of services. The Eligible Restricted Shares associated with any Company Performance Goals met prior to the date the Grantee ceases to provide any services to the Company shall continue to vest in accordance with Sections 2.2 of this Agreement.

2.5 Title to Shares. The exact spelling of the name(s) under which Grantee shall take title to the Shares is:

Grantee desires to take title to the Shares as follows:

[ ] Individual, as separate property

[ ] Husband and wife, as community property

[ ] Joint Tenants

2.6 Adjustment to Number of Shares. The Company agrees that if the Fair Market Value of the Company’s common stock on the Monthly Vesting Date is less than the Fair Market Value of the Company’s common stock on the Effective Date, then the number of Monthly Vested Shares issuable (assuming all conditions are satisfied) within ten business days of the Monthly Vesting Date shall be increased so that the aggregate Fair Market Value of Monthly Vested Shares issuable equals the aggregate Fair Market Value that such number of Shares would have had on the Effective Date.

3. Representations and Warranties of Grantee. Grantee represents and warrants to the Company that:

3.1 Agrees to Terms of this Agreement. Grantee has received a copy of this Agreement and the Plan, has read and understands the terms of this Agreement and the Plan, and agrees to be bound by its terms and conditions.

3.2 Access to Information. Grantee has had access to all information regarding the Company and its present and prospective business, assets, liabilities and financial condition that Grantee reasonably considers important in making the decision to acquire the Shares, and Grantee has had ample opportunity to ask questions of the Company's representatives concerning such matters and this investment.

3

3.3 Understanding of Risks. Grantee is fully aware of: (i) the highly speculative nature of the investment in the Shares; (ii) the financial hazards involved; (iii) the qualifications and backgrounds of the management of the Company; and (iv)the tax consequences of investment in the Shares. Grantee is capable of evaluating the merits and risks of this investment, has the ability to protect Grantee's own interests in this transaction and is financially capable of bearing a total loss of this investment.

4. Form S-8. The Company shall use commercially reasonable efforts to file a Form S-8 with the U.S. Securities and Exchange Commission to register the Shares of Restricted Stock.

5. Restrictions on Transfer. Until the Shares of Restricted Stock vest in accordance with the terms herein, the Grantee shall not transfer the Grantee’s rights to such Shares of Restricted Stock or to any rights related thereto.  Any attempt to transfer unvested Shares of Restricted Stock or any rights related thereto, whether by transfer, pledge, hypothecation or otherwise and whether voluntary or involuntary, by operation of law or otherwise, shall not vest the transferee with any interest or right in or with respect to such Shares of Restricted Stock or such related rights.

6. Market Standoff Agreement. Grantee agrees in connection with any registration of the Company's securities that, upon the request of the Company or the underwriters managing any public offering of the Company's securities, Grantee shall not sell or otherwise dispose of any Eligible Restricted Shares without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) after the effective date of such registration requested by such underwriters and subject to all restrictions as the Company or the underwriters may specify. Grantee further agrees to enter into any agreement reasonably required by the underwriters to implement the foregoing.

7. Rights as a Stockholder. Subject to the terms and conditions of this Agreement, Grantee shall have all of the rights of a stockholder of the Company with respect to the Shares after the Shares of Restricted Stock vest and until such time as Grantee disposes of the Shares.

8. Tax Consequences. GRANTEE UNDERSTANDS THAT GRANTEE MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF GRANTEE'S ACQUISITION OR DISPOSITION OF THE SHARES. GRANTEE REPRESENTS (i) THAT GRANTEE HAS CONSULTED WITH A TAX ADVISER THAT GRANTEE DEEMS ADVISABLE IN CONNECTION WITH THE ACQUISITION OR DISPOSITION OF THE SHARES AND (ii) THAT GRANTEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.

9. Compliance with Laws and Regulations. The issuance and transfer of the Shares of Restricted Stock shall be subject to and conditioned upon compliance by the Company and Grantee with all applicable state and federal laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company's common stock may be listed or quoted at the time of such issuance or transfer.

4

10. Agreement Subject to Plan. This Award is made pursuant to the Plan and shall be interpreted to comply therewith. A copy of such Plan is available to Grantee, at no charge, at the principal office of the Company. Any undefined terms used herein shall bear such meaning as ascribed to them in the Plan. Any provision of this Agreement inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan.

11. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Grantee and Grantee's heirs, executors, administrators, legal representatives, successors and assigns.

12. Governing Law; Severability. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Nevada as such laws are applied to agreements between Nevada residents entered into and to be performed entirely within Nevada, excluding that body of laws pertaining to conflict of laws. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, then such provision shall be enforced to the maximum extent possible and the other provisions shall remain fully effective and enforceable.

13. Notices. Any notice required to be given or delivered to the Company shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Grantee shall be in writing and addressed to Grantee at the address indicated above or to such other address as Grantee may designate in writing from time to time to the Company. All notices shall be deemed effectively given upon personal delivery, (i) three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested), (ii) one (1) business day after its deposit with any return receipt express courier (prepaid), or (iii) one (1) business day after transmission by facsimile or email.

14. Further Instruments. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.

15. Headings; Counterparts. The captions and headings of this Agreement are included for ease of reference only and shall be disregarded in interpreting or construing this Agreement. All references herein to Sections shall refer to Sections of this Agreement. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same agreement.

16. Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersedes all prior understandings and agreements, whether oral or written, between the parties hereto with respect to the specific subject matter of this Agreement.

17. Equitable Adjustments. The number of Restricted Shares, Monthly Vested Shares, Eligible Restricted Shares and Shares, the Company’s Market Capitalization and similar figures set forth herein shall be equitably adjusted in the sole discretion of the Company to offset the effect of stock splits or similar events.

[Intentionally blank]

5

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized representative and Grantee has executed this Agreement as of the Effective Date.

OriginOil, Inc.	Grantee
By:
	(Signature)
(Please print name)	(Please print name)
Chief Executive Officer
(Please print title)

6

Spouse Consent

The undersigned spouse of _______________________ (the “Grantee”) has read, understands, and hereby approves the Restricted Stock Grant Agreement between OriginOil, Inc., a Nevada corporation (the “Company”) and Grantee (the “Agreement”). In consideration of the Company's granting my spouse the right to purchase the Shares as set forth in the Agreement, the undersigned hereby agrees to be irrevocably bound by the Agreement and further agrees that any community property interest shall similarly be bound by the Agreement. The undersigned hereby appoints Grantee as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement.

Date:________________________________

Print Name of Grantee's Spouse	Signature of Grantee's Spouse
	Address:
(Please print title)
	☐ Check this box if you do not have a spouse.

7

EX-10.3

Exhibit 10.3 

ORIGINOIL, INC.

RESTRICTED STOCK AWARD AGREEMENT

This Restricted Stock Award Agreement (the “Agreement”) is made and entered into as of , (the “Effective Date”) by and between OriginOil, Inc., a Nevada corporation (the “Company”), and the person named below (the “Grantee”).

Grantee: ___________________________________

Address: ___________________________________

Total Number of Shares to Be Granted: ___________

1. Grant of Restricted Stock. The Board of Directors of the Company, subject to the terms and provisions of the OriginOil, Inc. Restricted Stock Award Plan, as amended (the “Plan”) hereby awards to the Grantee, effective as of the Effective Date, the number of shares (the “Shares”) of common stock, par value $0.001 per share, set forth above as restricted stock (the “Restricted Stock”) on the following terms and conditions. As used in this Agreement, the term “Shares” shall mean shares of Restricted Stock granted under this Agreement, and all securities received (i) in replacement of the Shares, (ii) as a result of stock dividends or stock splits with respect to the Shares, (iii) in replacement of the Shares in a merger, recapitalization, reorganization or similar corporate transaction; and (iv) pursuant to an adjustment to the number of Shares issuable on any vesting date by virtue of Section 2.6 of this Agreement.

2. Eligibility for Vesting and Issuance The Shares of Restricted Stock shall become eligible for vesting, and shall vest and be issued to the Grantee, upon the satisfaction of the conditions set forth in Section 2.1 and 2.2 of this Agreement. The Restricted Shares are forfeitable as set forth in Section 2.3 and Section 2.4 of this Agreement.

2.1 Schedule of Company Performance Goals. Shares of Restricted Stock shall become eligible for vesting (and shall become “Eligible Restricted Shares”) for each Company Performance Goal attained as follows:

Restricted Shares	Company Performance Goals
[40%]	The Company’s consolidated gross revenue, calculated in accordance with generally accepted accounting principles, consistently applied, equals or exceeds $2,500,000 for the trailing twelve-month period as reported in the Company’s quarterly or annual financial statements
[60%]	The Company’s consolidated net profit, calculated in accordance with generally accepted accounting principles, consistently applied, equals or exceeds $500,000 for the trailing twelve-month period as reported in the Company’s quarterly or annual financial statements.

1

2.2 Vesting and Issuance of Eligible Restricted Shares. Eligible Restricted Shares shall vest on a monthly basis, based on the following formula:

	Vesting Percentage x Prior Monthly Trade Value
Monthly Vested Shares =	Fair Market Value of the Company’s Shares

For the purposes of this Agreement,

(i) the “Prior Monthly Trade Value” of the Company’s Shares shall mean the aggregate sum of the Daily Trade Value in the calendar month immediately before the date of determination.

(ii) the “Daily Trade Value” is defined as the closing trade price of the Company’s Shares multiplied by the daily trade volume. For example, if the closing trade price was $1.00 and the daily trade volume on that day was 500,000 shares, then the Daily Trade Value for that day would be $500,000.

(iii) the “Vesting Percentage” shall mean the product (expressed as a percentage) of (a) 10%, multiplied by (b) a fraction, (1) the numerator of which is the number of Eligible Restricted Shares at the date of determination, and (2) the denominator of which shall be the number of shares issued under the Plan at the date of determination, and which shall initially be 66,050,000. For example, if the numerator is 1,000,000 and the denominator is 66,050,000, then the Vesting Percentage shall be 0.1514%.

(iv) the “Fair Market Value” shall equal the average of the trailing ten (10) closing trade prices of the Company’s common stock on the last ten (10) trading days of the month immediately prior to the date of determination as quoted on the public securities trading market on which the Company’s common stock is then traded; provided, that if the Company’s common stock is not then publicly trading or quoted, “Fair Market Value” shall be determined by the Company’s Board of Directors in good faith.

If the Company’s common stock is no longer publicly traded, then the Board of Directors in good faith shall determine the Monthly Vested Shares.

If the Prior Monthly Trade Value is less than $50,000, then zero Eligible Restricted Shares shall vest for that month.

By way of example only, if the Vesting Percentage is 0.1514%, the Prior Monthly Trade Value is $10,000,000 and the Fair Market Value is $1.00, then the number of Monthly Vested Shares shall be 15,140.

The Monthly Vested Shares, if any, shall be issued to the Grantee within five (5) business days after the last day of each month.

2.3 Forfeiture. Grantee shall forfeit all vesting rights for any Eligible Restricted Shares that have not vested within five (5) years of the date that the Eligible Restricted Shares became eligible for vesting.

2.4 Termination. If the Grantee ceases to provide any services to the Company as officer, director, employee or consultant, for any reason before the date that the Company Performance Goals have been met (it being understood that if the Grantee continues without interruption to serve thereafter in one or more capacities as officer, director, employee or consultant of the Company this shall not be considered a cessation of service), then the Shares of Restricted Stock associated with the unmet Company Performance Goals as of the date of such cessation of services shall immediately be forfeited as of the date of such cessation of services. The Eligible Restricted Shares associated with any Company Performance Goals met prior to the date the Grantee ceases to provide any services to the Company shall continue to vest in accordance with Sections 2.2 of this Agreement.

2

2.5 Title to Shares. The exact spelling of the name(s) under which Grantee shall take title to the Shares is:

Grantee desires to take title to the Shares as follows:

[ ] Individual, as separate property

[ ] Husband and wife, as community property

[ ] Joint Tenants

2.6 Adjustment to Number of Shares. The Company agrees that if the Fair Market Value of the Company’s common stock on the Monthly Vesting Date is less than the Fair Market Value of the Company’s common stock on the Effective Date, then the number of Monthly Vested Shares issuable (assuming all conditions are satisfied) within ten business days of the Monthly Vesting Date shall be increased so that the aggregate Fair Market Value of Monthly Vested Shares issuable equals the aggregate Fair Market Value that such number of Shares would have had on the Effective Date.

3. Representations and Warranties of Grantee. Grantee represents and warrants to the Company that:

3.1 Agrees to Terms of this Agreement. Grantee has received a copy of this Agreement and the Plan, has read and understands the terms of this Agreement and the Plan, and agrees to be bound by its terms and conditions.

3.2 Access to Information. Grantee has had access to all information regarding the Company and its present and prospective business, assets, liabilities and financial condition that Grantee reasonably considers important in making the decision to acquire the Shares, and Grantee has had ample opportunity to ask questions of the Company's representatives concerning such matters and this investment.

3.3 Understanding of Risks. Grantee is fully aware of: (i) the highly speculative nature of the investment in the Shares; (ii) the financial hazards involved; (iii) the qualifications and backgrounds of the management of the Company; and (iv) the tax consequences of investment in the Shares. Grantee is capable of evaluating the merits and risks of this investment, has the ability to protect Grantee's own interests in this transaction and is financially capable of bearing a total loss of this investment.

4. Form S-8. The Company shall use commercially reasonable efforts to file a Form S-8 with the U.S. Securities and Exchange Commission to register the Shares of Restricted Stock.

3

5. Restrictions on Transfer. Until the Shares of Restricted Stock vest in accordance with the terms herein, the Grantee shall not transfer the Grantee’s rights to such Shares of Restricted Stock or to any rights related thereto.  Any attempt to transfer unvested Shares of Restricted Stock or any rights related thereto, whether by transfer, pledge, hypothecation or otherwise and whether voluntary or involuntary, by operation of law or otherwise, shall not vest the transferee with any interest or right in or with respect to such Shares of Restricted Stock or such related rights.

6. Market Standoff Agreement. Grantee agrees in connection with any registration of the Company's securities that, upon the request of the Company or the underwriters managing any public offering of the Company's securities, Grantee shall not sell or otherwise dispose of any Eligible Restricted Shares without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) after the effective date of such registration requested by such underwriters and subject to all restrictions as the Company or the underwriters may specify. Grantee further agrees to enter into any agreement reasonably required by the underwriters to implement the foregoing.

7. Rights as a Stockholder. Subject to the terms and conditions of this Agreement, Grantee shall have all of the rights of a stockholder of the Company with respect to the Shares after the Shares of Restricted Stock vest and until such time as Grantee disposes of the Shares.

8. Tax Consequences. GRANTEE UNDERSTANDS THAT GRANTEE MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF GRANTEE'S ACQUISITION OR DISPOSITION OF THE SHARES. GRANTEE REPRESENTS (i) THAT GRANTEE HAS CONSULTED WITH A TAX ADVISER THAT GRANTEE DEEMS ADVISABLE IN CONNECTION WITH THE ACQUISITION OR DISPOSITION OF THE SHARES AND (ii) THAT GRANTEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.

9. Compliance with Laws and Regulations. The issuance and transfer of the Shares of Restricted Stock shall be subject to and conditioned upon compliance by the Company and Grantee with all applicable state and federal laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company's common stock may be listed or quoted at the time of such issuance or transfer.

10. Agreement Subject to Plan. This Award is made pursuant to the Plan and shall be interpreted to comply therewith. A copy of such Plan is available to Grantee, at no charge, at the principal office of the Company. Any undefined terms used herein shall bear such meaning as ascribed to them in the Plan. Any provision of this Agreement inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan.

4

11. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Grantee and Grantee's heirs, executors, administrators, legal representatives, successors and assigns.

12. Governing Law; Severability. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Nevada as such laws are applied to agreements between Nevada residents entered into and to be performed entirely within Nevada, excluding that body of laws pertaining to conflict of laws. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, then such provision shall be enforced to the maximum extent possible and the other provisions shall remain fully effective and enforceable.

13. Notices. Any notice required to be given or delivered to the Company shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Grantee shall be in writing and addressed to Grantee at the address indicated above or to such other address as Grantee may designate in writing from time to time to the Company. All notices shall be deemed effectively given upon personal delivery, (i) three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested), (ii) one (1) business day after its deposit with any return receipt express courier (prepaid), or (iii) one (1) business day after transmission by facsimile or email.

14. Further Instruments. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.

15. Headings; Counterparts. The captions and headings of this Agreement are included for ease of reference only and shall be disregarded in interpreting or construing this Agreement. All references herein to Sections shall refer to Sections of this Agreement. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same agreement.

16. Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersedes all prior understandings and agreements, whether oral or written, between the parties hereto with respect to the specific subject matter of this Agreement.

17. Equitable Adjustments. The number of Restricted Shares, Monthly Vested Shares, Eligible Restricted Shares and Shares, the Company’s Market Capitalization and similar figures set forth herein shall be equitably adjusted in the sole discretion of the Company to offset the effect of stock splits or similar events.

[Intentionally blank]

5

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized representative and Grantee has executed this Agreement as of the Effective Date.

OriginOil, Inc.	Grantee
By:
	(Signature)
(Please print name)	(Please print name)
Chief Executive Officer
(Please print title)

6

Spouse Consent

The undersigned spouse of _______________________ (the “Grantee”) has read, understands, and hereby approves the Restricted Stock Grant Agreement between OriginOil, Inc., a Nevada corporation (the “Company”) and Grantee (the “Agreement”). In consideration of the Company's granting my spouse the right to purchase the Shares as set forth in the Agreement, the undersigned hereby agrees to be irrevocably bound by the Agreement and further agrees that any community property interest shall similarly be bound by the Agreement. The undersigned hereby appoints Grantee as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement.

Date:________________________________

Print Name of Grantee's Spouse	Signature of Grantee's Spouse
	Address:
(Please print title)
	☐ Check this box if you do not have a spouse.

7

EX-31

EXHIBIT 31

CERTIFICATION

I, T Riggs Eckelberry, certify that:

1. I have reviewed this quarterly report on Form 10-Q of OriginOil, Inc., for the quarter ended September 30, 2014;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 14, 2014

/s/ T Riggs Eckelberry

T Riggs Eckelberry

Chief Executive Officer
(Principal Executive Officer)

and Acting Chief Financial Officer

(Principal Accounting and Financial Officer)

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of OriginOil, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, T Riggs Eckelberry, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

November 14, 2014	/s/ T Riggs Eckelberry
	T Riggs Eckelberry
	Chief Executive Officer (Principal Executive Officer)
	and Acting Chief Financial Officer (Principal Accounting and Financial Officer)

XML

Options and Warrants (Details) (Stock Options, USD $)	9 Months Ended
	Sep. 30, 2014
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of Options, outstanding, beginning of period	4,684,643
Number of Options, granted
Number of Options, exercised
Number of Options, forfeited/expired	(1,000,000)
Number of Options, outstanding, end of period	3,684,643
Number of Options, exercisable at the end of period	2,084,882
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Weighted average exercise price, outstanding, beginning of period	$ 0.53
Weighted average exercise price, granted
Weighted average exercise price, exercised
Weighted average exercise price, forfeited/expired	$ 0.45
Weighted average exercise price, outstanding, end of period	$ 0.49
Weighted average exercise price, exercisable at the end of period	$ 0.47
Weighted average fair value of options granted during the period

XML

Capital Stock

9 Months Ended

Sep. 30, 2014

Equity [Abstract]

CAPITAL STOCK

3.            CAPITAL STOCK

On August 13, 2014, the Company filed an amendment to its Articles of Incorporation to increase its authorized shares of common stock to 1,000,000,000 shares. There was no change to the 25,000,000 authorized shares of preferred stock or par value. The total number of authorized shares increased to 1,025,000,000.

Preferred Stock

During the nine months ended September 30, 2014, the Company issued 1,000 shares of Series A Preferred Stock to the CEO of the Company, which did not have a dividend rate or liquidation preference, and were not convertible into shares of common stock. The preferred stock gave the CEO voting rights of 51%, which remained issued and outstanding until September 1, 2014. The shares were automatically redeemed by the Company at par value, and are presented in the financial statements as preferred treasury stock.

Common Stock

During the nine months ended September 30, 2014, the Company issued 8,382,018 shares of common stock for services with prices ranging from $0.15 up to $0.21 with a total fair value of $1,684,665.

During the nine months ended September 30, 2014, the Company issued 5,000,000 shares of common stock upon exercise of warrants to purchase 5,000,000 shares of common stock for cash in the amount of $750,000.

During the nine months ended September 30, 2014, the Company issued 45,366 shares of common stock for the purchase of an asset with a fair value of $7,000.

Issuance of supplemental shares

During the year ended December 31, 2013, the Company raised aggregate proceeds of $2,267,542 from the sale of 12,274,616 units of common stock and warrants. Subsequent to sale of the common stock units discussed above, the Company entered into a supplemental agreement with the subscribers of the original subscription agreement. Under the terms of the supplemental agreement, if at any time within eighteen (18) months following the issuance of shares (the "Adjustment Period") the market price (as defined below) of the Company's common stock is less than the price per share, then the price per share shall be reduced one time to the market price (the "Adjusted Price") such that the Company shall promptly issue additional shares of the Company's common stock to the subscriber for no additional consideration, in an amount sufficient that the aggregate purchase price, when divided by the total number of shares purchased thereunder plus those shares of common stock issued as a result of the dilutive Issuance will equal the adjusted price.  ''Market Price" is defined as the average closing price of the Company's common stock for any ten (10) consecutive trading days during the Adjustment Period.

The Company considered the effects of the above and determined that as of December 31, 2013 it should record a provision to reflect its potential obligation to issue such shares.  The Company is accounting for this liability as of each reporting period until the defined adjustment period has terminated.  Based upon its calculation, the Company recorded an obligation at December 31, 2013, to issue shares with a fair value of $105,754. During the nine months ended September 30, 2014, the Company issued 1,109,531 of these shares, which has reduced its liability.

XML

Options and Warrants (Detail Textuals) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	May 25, 2012	Mar. 31, 2014 2009 Incentive Stock Option Plan	Jun. 14, 2013 2013 Incentive Stock Option Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock shares reserves and sets aside for the granting of options (in shares)			1,000,000	500,000	4,000,000
Determination of exercise price by holders percentage description	If the holder owns more than 10% of the total combined voting power or value of all classes of stock of the Company, then the exercise price for incentive stock options will be no less than 110% of the fair market value of the stock as of the date of grant; if the person is not a 10% holder, then the exercise price will be no less than 100% of the fair market value of the stock as of the date of grant.
Employee Termination	Not less than 30 days nor more than three (3) months after such termination.
Stock Compensation Expense	$ 147,459	$ 223,277
Outstanding warrants	24,000,000
Intrinsic value	1,680,000
Exercised Intrinsic value	$ 7,023,923

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Options and Warrants (Details 3) (USD $)	9 Months Ended
	Sep. 30, 2014
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Warrants Outstanding	31,013,923
Warrants Exercisable	31,013,923
Warrant [Member] | Range One [Member]
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Exercisable Prices Lower limit	$ 0.15
Exercisable Prices Upper limit	$ 0.65
Warrants Outstanding	29,587,718
Warrants Exercisable	29,587,718
Warrant [Member] | Range One [Member] | Minimum [Member]
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Weighted Average Remaining Contractual Life (years)	3 months
Warrant [Member] | Range One [Member] | Maximum [Member]
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Weighted Average Remaining Contractual Life (years)	3 years 8 months 12 days
Warrant [Member] | Range Two [Member]
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Exercisable Prices Lower limit	$ 0.26
Exercisable Prices Upper limit	$ 5.70
Warrants Outstanding	866,362
Warrants Exercisable	866,362
Warrant [Member] | Range Two [Member] | Minimum [Member]
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Weighted Average Remaining Contractual Life (years)	10 months 6 days
Warrant [Member] | Range Two [Member] | Maximum [Member]
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Weighted Average Remaining Contractual Life (years)	3 years 11 months 19 days
Warrant [Member] | Range Three [Member]
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Exercisable Prices Lower limit	$ 0.90
Exercisable Prices Upper limit	$ 9.00
Warrants Outstanding	559,843
Warrants Exercisable	559,843
Warrant [Member] | Range Three [Member] | Minimum [Member]
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Weighted Average Remaining Contractual Life (years)	0 years
Warrant [Member] | Range Three [Member] | Maximum [Member]
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Weighted Average Remaining Contractual Life (years)	8 years 1 month 17 days

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Subsequent Events (Details) (USD $)	9 Months Ended		0 Months Ended
	Sep. 30, 2014	Sep. 30, 2014 Convertible Promissory Notes [Member]	Nov. 13, 2014 Subsequent Event [Member]	Nov. 03, 2014 Subsequent Event [Member]	Oct. 22, 2014 Subsequent Event [Member]	Oct. 30, 2014 Subsequent Event [Member] Convertible Promissory Notes [Member]	Nov. 13, 2014 Subsequent Event [Member] Riggs Eckelberry [Member]	Nov. 13, 2014 Subsequent Event [Member] Nicholas Eckelberry [Member]	Nov. 13, 2014 Subsequent Event [Member] William Charneski [Member]	Nov. 13, 2014 Subsequent Event [Member] Jean Louis Kindler [Member]
Subsequent Event [Line Items]
Restricted stock award grant			66,050,000				40,000,000	10,000,000	5,000,000	5,000,000
Outstanding principal amount						$ 155,000
Unpaid interest						11,551
Common stock issued for services (in shares)			70,000,000	53,445
Aggregate common stock		23,366,020			217,350	2,715,952
Common stock issued at fair value for services	$ 1,684,665			$ 9,446	$ 36,506

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.            SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Revenue Recognition

The Company recognizes revenue upon delivery of equipment, provided that evidence of an arrangement exists, title, and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured.  Title to the equipment is transferred to the customer once the last payment is received. The Company records revenue as it is received, and the equipment has been fully accepted by the customer. Generally, the Company extends credit to its customers and does not require collateral.  The Company does not ship a product until it has either a purchase agreement or rental agreement signed by the customer with a payment arrangement.  

Loss per Share Calculations

Basic loss per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include securities or other contracts to issue common stock that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the nine months ended September 30, 2014, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.

For the period ended September 30, 2014, the Company has excluded 2,084,882 exercisable options, 31,013,923 warrants outstanding, and notes convertible into 28,344,776 shares of common stock, because their impact on the loss per share is anti-dilutive.

Stock-Based Compensation

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

Fair Value of Financial Instruments

Fair Value of Financial Instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of September 30, 2014, the balances reported for cash, prepaid expenses, accounts payable, and accrued expenses approximate the fair value because of their short maturities.

The Company adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

· Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

· Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

· Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. 

The following table presents certain liabilities of the Company’s financial assets measured and recorded at fair value on the Company’s balance sheets on a recurring basis and their level within the fair value hierarchy as of September 30, 2014:

	Total		(Level 1)		(Level 2)		(Level 3)
Derivative Liability	$	6,116,754	$	-	$	-	$	6,116,754
Total liabilities measured at fair value	$	6,116,754	$	-	$	-	$	6,116,754

The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:

Beginning balance as of January 1, 2014	$	1,031,484
Fair value of derivative liabilities issued		1,153,007
Conversion of notes payable		(2,997,359	)
Loss on change in derivative liability		6,929,622
Ending balance as of September 30, 2014	$	6,116,754

Use of Estimates

The preparation of the condensed financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing the Company’s stock options, warrants, convertible notes, derivative liabilities and common stock issued for services, among other items. Actual results could differ from these estimates.

Recently Issued Accounting Pronouncements 

Management has reviewed recently issued accounting pronouncements and has adopted the following;

On August 27, 2014, the Company adopted the amendment to ASU 2014-15 on Presentation of Financial Statements Going Concern (Subtopic 205-40). The amendment provides for guidance to reduce diversity in the timing and content of footnote disclosures. The amendment requires management to assess the Company’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. The Company has to define the term of substantial doubt, which has to be evaluated every reporting period including interim periods. Management has to provide principles for considering the mitigating effect of its plan, and disclose when substantial doubt is alleviated as well as when it is not alleviated. The Company is required to assess managements plan for a period of one year after the financial statements are issued (or available to be issued). The amendment is effective for annual periods ending after December 15, 2016. Early adoption is permitted. The Company does not believe the accounting standards currently adopted will have a material effect on the accompanying condensed financial statements.

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Condensed Balance Sheets (USD $)	Sep. 30, 2014	Dec. 31, 2013
CURRENT ASSETS
Cash	$ 593,549	$ 821,448
Work in progress	181,958	21,049
Prepaid expenses	26,763	34,531
TOTAL CURRENT ASSETS	802,270	877,028
NET PROPERTY AND EQUIPMENT	81,245	74,204
OTHER ASSETS
Other asset	37,038	40,000
Trademark	4,467	4,467
Security deposit	10,247	9,650
TOTAL OTHER ASSETS	51,752	54,117
TOTAL ASSETS	935,267	1,005,349
Current Liabilities
Accounts payable	74,965	114,803
Accrued expenses	183,656	262,518
Deferred income		50,000
Derivative liabilities	6,116,754	1,031,484
Convertible promissory notes, net of discount of $775,818 and $971,964, respectively	2,340,837	953,989
Total Current Liabilities	8,716,212	2,412,794
Long Term Liabilities
Obligation to issue common stock		105,754
TOTAL LIABILITIES	8,716,212	2,518,548
SHAREHOLDERS' DEFICIT
Preferred stock, $0.0001 par value, 25,000,000 shares authorized
Common stock, $0.0001 par value, 1,000,000,000 shares authorized 92,834,572 and 53,664,505 shares issued and outstanding, respectively	9,283	5,366
Preferred treasury stock, 1,000 and 0 shares outstanding, respectively
Additional paid in capital	39,638,090	34,811,538
Accumulated deficit	(47,428,318)	(36,330,103)
TOTAL SHAREHOLDERS' DEFICIT	(7,780,945)	(1,513,199)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$ 935,267	$ 1,005,349

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Condensed Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (11,098,215)	$ (7,939,237)
Adjustment to reconcile net loss to net cash used in operating activities
Depreciation & amortization	12,520	11,263
Gain on sale of investment	(6,353)
Common stock and warrants issued for services	1,684,665	793,751
Stock and warrant compensation expense	147,459	223,277
Change in valuation of derivative liability	3,932,264	1,232,828
Debt discount and original issue discount recognized as interest expense	1,626,313	922,152
Non cash commitment fee expense	92,255	997,893
Fair value of discounted warrants		704,575
(Increase) Decrease in:
Accounts receivable		5,000
Prepaid expenses	7,768	65,811
Work in progress	(160,909)	(28,934)
Other asset	1,903	1,200
Increase (Decrease) in:
Accounts payable	343,693	(20,245)
Accrued expenses	34,485	7,718
Deferred income	(50,000)
NET CASH USED IN OPERATING ACTIVITIES	(3,432,152)	(2,989,484)
CASH FLOWS USED FROM INVESTING ACTIVITIES:
Purchase of fixed assets	(12,562)	(45,089)
Patent expenditures		(131,477)
Proceeds from sale of investment, at cost	6,815
CASH USED IN INVESTING ACTIVITIES	(5,747)	(176,566)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments for unsecured debt		(10,000)
Proceeds from convertible promissory notes	2,460,000	1,580,000
Proceeds for issuance of common stock	750,000	2,387,271
NET CASH PROVIDED BY FINANCING ACTIVITIES	3,210,000	3,957,271
NET INCREASE/(DECREASE) IN CASH	(227,899)	791,221
CASH BEGINNING OF PERIOD	821,448	507,355
CASH END OF PERIOD	593,549	1,298,576
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	1,282
Taxes paid
SUPPLEMENTAL DISCLOSURES OF NON CASH TRANSACTIONS
Conversion of accounts payable into a convertible note	383,531	290,560
Common stock issued for cashless exercise of warrants		33
Common stock issued for conversion of debt	1,766,177	1,851,786
Beneficial conversion feature on convertible note	277,160
Common stock issued for fixed asset	7,000
Fair value of options issued to officer in prior year		$ 209,000

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Convertible Promissory Notes (Details) (USD $)	9 Months Ended		0 Months Ended	1 Months Ended	9 Months Ended		1 Months Ended		9 Months Ended			9 Months Ended		0 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Feb. 15, 2013 Securities Purchase Agreement [Member]	Jun. 20, 2012 Securities Purchase Agreement [Member]	Sep. 30, 2014 Securities Purchase Agreement [Member]	Feb. 15, 2013 Minimum Securities Purchase Agreement [Member]	Dec. 31, 2013 Convertible Promissory Notes [Member]	Jun. 30, 2013 Convertible Promissory Notes [Member]	Sep. 30, 2014 Convertible Promissory Notes [Member]	Sep. 30, 2014 Convertible Promissory Notes [Member] Minimum	Sep. 30, 2014 Convertible Promissory Notes [Member] Maximum	Sep. 30, 2014 OID Notes [Member]	Jun. 10, 2014 OID Notes [Member]	Sep. 29, 2014 Beneficial conversion feature (member)
Short-term Debt [Line Items]
Aggregate principal amount debt	$ 1,652,828			$ 400,000			$ 350,000		$ 2,460,000
Debt instrument interest rate				10.00%					10.00%
Conversion price of debt				$ 0.65		$ 0.65				$ 0.14	$ 0.30	$ 0.4375	$ 0.0605
Conversion price per share of debt, Description									50% of the lowest trade price on any trade day following issuance of the Notes.
Debt instrument debt default									The mandatory default amount is 150% of the Note amount and such mandatory default amount shall bear interest at 10% per annum.
Sale of common stock price per share				$ 0.65
Debt conversion converted amount	1,766,177	1,851,786			122,828		1,530,000		1,530,000
Common stock issued for conversion of debt (in shares)									23,366,020
Original issue discount on promissory notes	273,125											273,125
Interest and extension fee amount					22,500				90,848
Debt instrument maturity date												Sep. 19, 2014		Mar. 29, 2015
Security purchase agreement				100,000
Number of common stock called by warrants (in shares)				615,385
Aggregate purchase of warrants				153,846			307,692
Exercise price of warrants (in dollars per share)				$ 0.65
Increased interest rate				15.00%
Percentage of average of lowest closing prices			70.00%											75.00%
Number of trading days previous to conversion			25 days											25 days
Unsecured convertible promissory issued							250,000	250,000
Warrants exercised period				4 years
Recognized interest expense					62,764				1,562,016					1,537
Conversion of accounts payable into a convertible note	$ 383,531	$ 290,560												$ 383,351

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Derivative Liabilities (Details Textual) (USD $)	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Derivative Liabilities (Textual)
Fair value of derivative liabilities	$ 6,116,754	$ 1,031,484
Aggregate principal amount	1,652,828
Gain on extinguishment of debt	2,997,359
Loss on change in derivative liability	$ 6,929,622

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Basis of Presentation

9 Months Ended

Sep. 30, 2014

Basis of Presentation [Abstract]

BASIS OF PRESENTATION

1.            Basis of Presentation

The accompanying unaudited condensed financial statements of OriginOil, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included.  Operating results for the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.  For further information refer to the financial statements and footnotes thereto included in the Company's Form 10-K for the year ended December 31, 2013.

Going Concern

The accompanying condensed financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business.  The accompanying condensed financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company has not generated significant revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion. Management believes the existing shareholders, the prospective new investors and future sales will provide the additional cash needed to meet the Company’s obligations as they become due, and will allow the development of its core business operations. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for the Company’s stockholders, in case of equity financing

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Condensed Balance Sheets (Parentheticals) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Discount on debt (in dollars)	$ 775,818	$ 971,964
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	25,000,000	25,000,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	92,834,572	53,664,505
Common stock, shares outstanding	92,834,572	53,664,505
Preferred treasury stock shares outstanding	1,000	0

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Options and Warrants (Tables)

9 Months Ended

Sep. 30, 2014

Options and Warrants [Abstract]

Schedule of company's stock option activity and related information

	September 30, 2014
				Weighted
	Number			average
	of			exercise
	Options			price
Outstanding, beginning of period		4,684,643		$	0.53
Granted		-			-
Exercised		-			-
Forfeited/Expired		(1,000,000	)		0.45
Outstanding, end of period		3,684,643		$	0.49
Exercisable at the end of period		2,084,882		$	0.47
Weighted average fair value of options granted during the period				$	-

Schedule of weighted average remaining contractual life of options outstanding issued under the plan

						Weighted
						Average
		Stock		Stock		Remaining
Exercisable		Options		Options		Contractual
Prices		Outstanding		Exercisable		Life (years)
$	0.43 - 7.20		1,351,978		1,024,674		0.98 - 8.96
$	0.29 - 0.44		2,332,665		1,060,208		8.96
			3,684,643		2,084,882

Schedule of company's warrant activity and related information

	September 30, 2014
				Weighted
				average
				exercise
	Options			price
Outstanding -January 1, 2014		42,033,596		$	0.31
Granted		-			-
Exercised		(5,000,000	)		0.15
Forfeited		(6,019,673	)		2.40
Outstanding - September 30, 2014		31,013,923		$	0.23

Schedule of weighted average remaining contractual life of warrants outstanding

						Weighted
						Average
						Remaining
Exercisable		Warrants		Warrants		Contractual
Prices		Outstanding		Exercisable		Life (years)
$	0.15 - 0.65		29,587,718		29,587,718	0.25 - 3.70
$	0.26 - 5.70		866,362		866,362	0.85 - 3.97
$	$0.90 - 9.00		559,843		559,843	0.00 - 8.13
			31,013,923		31,013,923

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 13, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	ORIGINOIL INC
Entity Central Index Key	0001419793
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2014
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		95,821,319

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Summary of Significant Accounting Policies (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	$ 6,116,754
Total liabilities measured at fair value	6,116,754
Fair Value, Measurements, Recurring | (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability
Total liabilities measured at fair value
Fair Value, Measurements, Recurring | (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability
Total liabilities measured at fair value
Fair Value, Measurements, Recurring | (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	6,116,754	1,031,484
Total liabilities measured at fair value	$ 6,116,754

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Condensed Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Statement [Abstract]
Sales	$ 6,785	$ 40,500	$ 166,195	$ 140,500
Cost of Goods Sold	949	19,866	106,919	50,510
Gross Profit	5,836	20,634	59,276	89,990
Operating Expenses
Selling and general and administrative expenses	894,442	1,689,260	4,595,518	3,349,921
Research and development	276,358	318,244	755,795	755,595
Depreciation and amortization expense	4,550	4,508	12,520	11,263
Total Operating Expenses	1,175,350	2,012,012	5,363,833	4,116,779
Loss from Operations	(1,169,514)	(1,991,378)	(5,304,557)	(4,026,789)
OTHER INCOME/(EXPENSE)
Realized gain on investment			6,353
Fair value of discounted warrants		(645,398)		(645,398)
Gain/(Loss) on change in derivative liability	19,062	1,103,300	(3,932,264)	(1,232,828)
Commitment fee	(53,715)	(213,229)	(92,255)	(997,893)
Interest expense	(509,937)	(248,152)	(1,775,492)	(1,036,329)
TOTAL OTHER INCOME/(EXPENSE)	(544,590)	(3,479)	(5,793,658)	(3,912,448)
NET LOSS	$ (1,714,104)	$ (1,994,857)	$ (11,098,215)	$ (7,939,237)
BASIC AND DILUTED LOSS PER SHARE	$ (0.02)	$ (0.05)	$ (0.15)	$ (0.27)
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING, BASIC AND DILUTED	88,116,466	41,620,654	74,966,622	29,367,986

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Options And Warrants

9 Months Ended

Sep. 30, 2014

Options and Warrants [Abstract]

OPTIONS AND WARRANTS

6.            OPTIONS AND WARRANTS

Options

The Board of Directors adopted the OriginOil, Inc., 2009 Incentive Stock Option Plan (the “2009 Plan”) for the purposes of granting stock options to its employees and others providing services to the Company, which reserves and sets aside for the granting of options for 500,000 shares of common stock.

On May 25, 2012, the Board of Directors adopted a new OriginOil, Inc., 2012 Incentive Stock Option Plan (the “2012 Plan”) for the purposes of granting stock options to its employees and others providing services to the Company, which reserves and sets aside for the granting of options for 1,000,000 shares of common stock.  

On June 14, 2013, the Board of Directors adopted a new OriginOil, Inc., 2013 Incentive Stock Option Plan (the “2013 Plan”) for the purposes of granting stock options to its employees and others providing services to the Company, which reserves and sets aside for the granting of options for 4,000,000 shares of common stock.  Options granted under the 2009 Plan, 2012 Plan and 2013 Plan (the “Plans”), may be either incentive stock options or nonqualified options and shall be administered by the Company's Board.  Each option shall state the number of shares to which it pertains. The exercise price will be determined by the holders percentage owned as follows: If the holder owns more than 10% of the total combined voting power or value of all classes of stock of the Company, then the exercise price for incentive stock options will be no less than 110% of the fair market value of the stock as of the date of grant; if the person is not a 10% holder, then the exercise price will be no less than 100% of the fair market value of the stock as of the date of grant. Notwithstanding any other provision of the Plans or of any option agreement, each option shall expire on the date specified in the option agreement, which date shall not be later than the tenth (10th) anniversary from the date of grant. If the status of an employee terminates for any reason other than disability or death, then the optionee or their representative shall have the right to exercise the portion of any Options which were exercisable as of the date of such termination, in whole or in part, not less than 30 days nor more than three (3) months after such termination.

During the nine months ended September 30, 2014, the Company did not grant any incentive stock options, but recognized compensation costs of $147,459 based on the fair value of the options vested for the nine months ended September 30, 2014.

A summary of the Company’s stock option activity and related information follows:

	September 30, 2014
				Weighted
	Number			average
	of			exercise
	Options			price
Outstanding, beginning of period		4,684,643		$	0.53
Granted		-			-
Exercised		-			-
Forfeited/Expired		(1,000,000	)		0.45
Outstanding, end of period		3,684,643		$	0.49
Exercisable at the end of period		2,084,882		$	0.47
Weighted average fair value of options granted during the period				$	-

The weighted average remaining contractual life of options outstanding issued under the Plans as of September 30, 2014 was as follows:

						Weighted
						Average
		Stock		Stock		Remaining
Exercisable		Options		Options		Contractual
Prices		Outstanding		Exercisable		Life (years)
$	0.43 - 7.20		1,351,978		1,024,674		0.98 - 8.96
$	0.29 - 0.44		2,332,665		1,060,208		8.96
			3,684,643		2,084,882

The intrinsic value of the outstanding options, as of September 30, 2014 was $0, as they are underwater. 

Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. Stock-based compensation expense recognized in the financial statements of operations during the nine months ended September 30, 2014, included compensation expense for the stock-based payment awards granted prior to, but not yet vested, as of September 30, 2014 based on the grant date fair value estimated.

Warrants 

During the nine months ended September 30, 2014, the Company did not grant any warrants.

A summary of the Company’s warrant activity and related information follows:

	September 30, 2014
				Weighted
				average
				exercise
	Options			price
Outstanding -January 1, 2014		42,033,596		$	0.31
Granted		-			-
Exercised		(5,000,000	)		0.15
Forfeited		(6,019,673	)		2.40
Outstanding - September 30, 2014		31,013,923		$	0.23

At September 30, 2014, the weighted average remaining contractual life of warrants outstanding: 

						Weighted
						Average
						Remaining
Exercisable		Warrants		Warrants		Contractual
Prices		Outstanding		Exercisable		Life (years)
$	0.15 - 0.65		29,587,718		29,587,718	0.25 - 3.70
$	0.26 - 5.70		866,362		866,362	0.85 - 3.97
$	$0.90 - 9.00		559,843		559,843	0.00 - 8.13
			31,013,923		31,013,923

The intrinsic value of 24,000,000 of the outstanding warrants, as of September 30, 2014 was $1,680,000, and the remaining 7,023,923 warrants intrinsic value was $0, as they are underwater. 

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Derivative Liabilities

9 Months Ended

Sep. 30, 2014

Derivative Liabilities [Abstract]

DERIVATIVE LIABILITIES

5.            DERIVATIVE LIABILITIES

The convertible notes issued and described in Note 5 do not have fixed settlement provisions because their conversion prices are not fixed. The conversion features have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations. At December, 31, 2013, the outstanding fair value of the derivative liabilities amounted to $1,031,484.

During the nine months ended September 30, 2014, convertible notes in the amount of $1,652,828 were converted. As a result of the conversion of these notes, the Company recorded a gain of $2,997,359 due to the extinguishment of the corresponding derivative liability. Furthermore, during the nine months ended September 30, 2014, the Company recognized a loss of $6,929,622 to account for the change in fair value of the derivative liabilities. At September 30, 2014, the fair value of the derivative liability was $6,116,754.

For purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used Black Scholes option valuation model. The significant assumptions used in the Black Scholes valuation of the derivative are as follows:

Risk free interest rate	.02% - .13	%
Stock volatility factor	75.25% - 117.67	%
Weighted average expected option life	6 - 9 months
Expected dividend yield	None

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Derivative Liabilities (Details)	9 Months Ended
	Sep. 30, 2014
Significant assumptions used for black scholes valuation of the derivative
Expected dividend yield
Minimum [Member]
Significant assumptions used for black scholes valuation of the derivative
Risk free interest rate	0.02%
Stock volatility factor	75.25%
Weighted average expected option life	6 months
Maximum [Member]
Significant assumptions used for black scholes valuation of the derivative
Risk free interest rate	0.13%
Stock volatility factor	117.67%
Weighted average expected option life	9 months

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Summary of Significant Accounting Policies (Details 1) (USD $)	9 Months Ended
	Sep. 30, 2014
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items]
Loss on change in derivative liability	$ 6,929,622
Ending balance	6,116,754
Level 3 | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items]
Beginning balance	1,031,484
Fair value of derivative liabilities issued	1,153,007
Conversion of notes payable	(2,997,359)
Loss on change in derivative liability	6,929,622
Ending balance	$ 6,116,754

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2014

Summary of Significant Accounting Policies [Abstract]

Schedule of fair value of financial instruments

	Total		(Level 1)		(Level 2)		(Level 3)
Derivative Liability	$	6,116,754	$	-	$	-	$	6,116,754
Total liabilities measured at fair value	$	6,116,754	$	-	$	-	$	6,116,754

Reconciliation of the derivative liability for which Level 3 inputs

Beginning balance as of January 1, 2014	$	1,031,484
Fair value of derivative liabilities issued		1,153,007
Conversion of notes payable		(2,997,359	)
Loss on change in derivative liability		6,929,622
Ending balance as of September 30, 2014	$	6,116,754

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Subsequent Events

9 Months Ended

Sep. 30, 2014

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

7.            SUBSEQUENT EVENTS

Management evaluated subsequent events as of the date of the financial statements pursuant to ASC TOPIC 855, and reported the following events:

During the subsequent period through October 22, 2014, in connection with certain one-time make good agreements, the Company issued an aggregate of 217,350 shares of its common stock at a fair value of $36,506 to certain holders of its common stock.

On October 30, 2014, holders of convertible notes converted an aggregate outstanding principal amount of $155,000, plus unpaid interest of $11,551 into an aggregate of 2,715,952 shares of the Company’s common stock.

During the subsequent period through November 3, 2014, the Company issued 53,445 shares of common stock for services at a fair value of $9,446.

On November 13, 2014, the Company’s board of directors adopted a Restricted Stock Award Plan (the “Plan”). The Plan is intended to aid in retaining and recruiting key directors, officers, employees, directors or consultants and to motivate them by providing incentives through the granting of restricted stock based awards. The Company’s board of directors or its compensation committee (when constituted) will administer the Plan. The administrator of the Plan has broad authority under the Plan to, among other things, select grantees and determine the number of shares that are to be subject to awards and the terms and conditions of awards. The Company’s directors, officers, employees and consultants are eligible to participate under the Plan. A total of 70,000,000 shares of common stock have been reserved for awards under the Plan. At the same time that the Plan was adopted, the Company’s board of directors authorized the grant of restricted stock awards providing for the grant of 66,050,000 shares of common stock under the Plan including the grant of 40,000,000 shares of common stock to T. Riggs Eckelberry, 10,000,000 shares of common stock to Nicholas Eckelberry, 5,000,000 shares of common stock to William Charneski, and 5,000,000 shares of common stock to Jean-Louis Kindler. The terms of the grants are set forth in individual restricted stock award agreements which set forth the terms and conditions of the grants including the vesting and issuance criteria.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

Summary of Significant Accounting Policies [Abstract]

Revenue Recognition

Revenue Recognition

The Company recognizes revenue upon delivery of equipment, provided that evidence of an arrangement exists, title, and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured.  Title to the equipment is transferred to the customer once the last payment is received. The Company records revenue as it is received, and the equipment has been fully accepted by the customer. Generally, the Company extends credit to its customers and does not require collateral.  The Company does not ship a product until it has either a purchase agreement or rental agreement signed by the customer with a payment arrangement.

Loss per Share Calculations

Loss per Share Calculations

Basic loss per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include securities or other contracts to issue common stock that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the nine months ended September 30, 2014, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.

For the period ended September 30, 2014, the Company has excluded 2,084,882 exercisable options, 31,013,923 warrants outstanding, and notes convertible into 28,344,776 shares of common stock, because their impact on the loss per share is anti-dilutive.

Stock-Based Compensation

Stock-Based Compensation

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair Value of Financial Instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of September 30, 2014, the balances reported for cash, prepaid expenses, accounts payable, and accrued expenses approximate the fair value because of their short maturities.

The Company adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

· Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

· Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

· Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. 

The following table presents certain liabilities of the Company’s financial assets measured and recorded at fair value on the Company’s balance sheets on a recurring basis and their level within the fair value hierarchy as of September 30, 2014:

	Total		(Level 1)		(Level 2)		(Level 3)
Derivative Liability	$	6,116,754	$	-	$	-	$	6,116,754
Total liabilities measured at fair value	$	6,116,754	$	-	$	-	$	6,116,754

The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:

Beginning balance as of January 1, 2014	$	1,031,484
Fair value of derivative liabilities issued		1,153,007
Conversion of notes payable		(2,997,359	)
Loss on change in derivative liability		6,929,622
Ending balance as of September 30, 2014	$	6,116,754

Use of Estimates

Use of Estimates

The preparation of the condensed financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing the Company’s stock options, warrants, convertible notes, derivative liabilities and common stock issued for services, among other items. Actual results could differ from these estimates.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Management has reviewed recently issued accounting pronouncements and has adopted the following;

On August 27, 2014, the Company adopted the amendment to ASU 2014-15 on Presentation of Financial Statements Going Concern (Subtopic 205-40). The amendment provides for guidance to reduce diversity in the timing and content of footnote disclosures. The amendment requires management to assess the Company’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. The Company has to define the term of substantial doubt, which has to be evaluated every reporting period including interim periods. Management has to provide principles for considering the mitigating effect of its plan, and disclose when substantial doubt is alleviated as well as when it is not alleviated. The Company is required to assess managements plan for a period of one year after the financial statements are issued (or available to be issued). The amendment is effective for annual periods ending after December 15, 2016. Early adoption is permitted. The Company does not believe the accounting standards currently adopted will have a material effect on the accompanying condensed financial statements.

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Derivative Liabilities (Tables)

9 Months Ended

Sep. 30, 2014

Derivative Liabilities [Abstract]

Schedule of derivative liabilities at fair value

Risk free interest rate	.02% - .13	%
Stock volatility factor	75.25% - 117.67	%
Weighted average expected option life	6 - 9 months
Expected dividend yield	None

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Capital Stock (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Apr. 13, 2014
Capital Stock (Textual)
Common stock issued at fair value for services	$ 1,684,665
Common stock issued upon exercise of warrants for cash	750,000
Sale of common stock		2,267,542
Sale of common stock, shares		12,274,616
Supplemental agreement terms		Under the terms of the supplemental agreement, if at any time within eighteen (18) months following the issuance of shares
Market price description		The average closing price of the Company's common stock for any ten (10) consecutive trading days during the Adjustment Period.
Obligation to issue common stock		105,754
Preferred stock, shares authorized	25,000,000	25,000,000	25,000,000
Common stock, shares authorized	1,000,000,000	1,000,000,000	1,000,000,000
Shares authorized			1,025,000,000
Purchase of an asset with a fair value	6,116,754
Series A Preferred Stock [Member] | Chief Executive Officer and Director [Member]
Capital Stock (Textual)
Stock issued	1,000
Preferred stock, voting rights	Voting rights of 51%, which remained issued and outstanding until September 1, 2014
Common Stock [Member]
Capital Stock (Textual)
Common stock issued for services (in shares)	8,382,018
Common stock issued at fair value for services	838
Common stock issued upon exercise of warrants for cash	500
Common stock issued upon exercise of warrants for cash (in shares)	5,000,000
Common stock issuance of supplemental shares (in shares)	1,109,531
Stock issued	7,000
Purchase of an asset with a fair value	$ 45,366
Common Stock [Member] | Minimum [Member]
Capital Stock (Textual)
Issue price of common stock issued for services at fair value (in dollars per share)	$ 0.15
Common Stock [Member] | Maximum [Member]
Capital Stock (Textual)
Issue price of common stock issued for services at fair value (in dollars per share)	$ 0.21

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Options and Warrants (Details 1) (Stock Options, 2009 Plan, 2012 Plan, and 2013 Plan, USD $)	9 Months Ended
	Sep. 30, 2014
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Stock Options Outstanding	3,684,643
Stock Options Exercisable	2,084,882
Range One [Member]
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Exercisable Prices Lower limit	$ 0.43
Exercisable Prices Upper limit	$ 7.20
Stock Options Outstanding	1,351,978
Stock Options Exercisable	1,024,674
Range One [Member] | Minimum [Member]
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Weighted Average Remaining Contractual Life (years)	11 months 23 days
Range One [Member] | Maximum [Member]
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Weighted Average Remaining Contractual Life (years)	8 years 11 months 16 days
Range Two [Member]
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items]
Exercisable Prices Lower limit	$ 0.29
Exercisable Prices Upper limit	$ 0.44
Stock Options Outstanding	2,332,665
Stock Options Exercisable	1,060,208
Weighted Average Remaining Contractual Life (years)	8 years 11 months 16 days

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Condensed Statement of Shareholders' Deficit (Unaudited) (USD $)	Preferred stock	Common stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2013		$ 5,366	$ 34,811,538	$ (36,330,103)	$ (1,513,199)
Balance (in shares) at Dec. 31, 2013		53,664,505
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued at fair value for services		838	1,683,827		1,684,665
Common stock issued at fair value for services (in shares)		8,382,018
Common stock issued for conversion of debt		2,463	1,763,714		1,766,177
Common stock issued for conversion of debt (in shares)		24,633,152
Common stock issued upon exercise of warrants for cash		500	749,500		750,000
Common stock issued upon exercise of warrants for cash (in shares)		5,000,000
Common stock issuance of supplemental shares		111	197,897		198,008
Common stock issuance of supplemental shares (in shares)		1,109,531
Preferred stock issued	1,000	7,000
Preferred treasury stock	(1,000)
Common stock issued for purchase of asset		5	6,995		7,000
Common stock issued for purchase of asset, Shares		45,366
Beneficial conversion feature			277,160		277,160
Stock and warrant compensation cost			147,459		147,459
Net loss for the nine months ended September 30, 2014				(11,098,215)	(11,098,215)
Balance at Sep. 30, 2014		$ 9,283	$ 39,638,090	$ (47,428,318)	$ (7,780,945)
Balance (in shares) at Sep. 30, 2014		92,834,572

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Convertible Promissory Notes

9 Months Ended

Sep. 30, 2014

Convertible Promissory Notes [Abstract]

CONVERTIBLE PROMISSORY NOTES

4.            CONVERTIBLE PROMISSORY NOTES

On various dates the Company entered into unsecured convertible Notes (the “Convertible Promissory Notes” or “Notes”), that mature between six and nine months from the date of issuance and bear interest at 10% per annum. The Notes mature on various dates through March 29, 2015. The Notes may be converted into shares of the Company’s common stock at conversion prices ranging from the lesser of $0.14 to $0.30 (subject to adjustment for stock splits, dividends, combinations and other similar transactions) or 50% of the lowest trade price on any trade day following issuance of the Notes.  The Notes include customary default provisions related to payment of principal and interest and bankruptcy or creditor assignment.  In the event of default, the Notes shall become immediately due and payable at the mandatory default amount. The mandatory default amount is 150% of the Note amount and such mandatory default amount shall bear interest at 10% per annum.  In addition, for as long as the Notes or other convertible notes in effect between the purchaser and the Company are outstanding, if the Company issues any security with terms more favorable than the terms of the Notes or such other convertible notes or a term was not similarly provided to the purchaser of the Notes or such other convertible notes, then such more favorable or additional term shall, at the purchaser’s option, become part of the Notes and such other convertible notes. The conversion feature of the Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Notes. As of December 31, 2013, the outstanding principal balance was $1,530,000. During the nine months ended September 30, 2014, the Company issued an additional $2,460,000 of these Notes, and converted $1,530,000 in aggregate principal, plus accrued interest of $90,848 into 23,366,020 shares of common stock. As of September 30, 2014, the Notes aggregate remaining balance is $2,460,000. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $1,562,016 during the nine months ended September 30, 2014.

As of September 30, 2014, the Company had original issue discount in the amount of $273,125 outstanding (the OID Notes”). The OID Notes are unsecured convertible promissory notes that includes an original issue discount and one time interest, which has been fully amortized. The OID Notes were extended and matured on various dates through September 19, 2014. On each maturity date, each note was extended one year from its maturity date through September 19, 2015. The OID Notes are convertible into shares of the Company’s common stock at a conversion price initially of $0.4375. In addition, so long as the OID Notes or other convertible note transactions currently in effect between the Company and the holders are outstanding, upon any issuance by the Company of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the holders in these OID Notes, then such additional or more favorable term shall at the OID Notes holders’ option become a part of any or all of the outstanding OID Notes with the holders. On June 10, 2014, a holder of a note with a more favorable term converted a note at a price of $0.0605, which became part of this note due to the reset provision mentioned above. The conversion feature of the notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the notes

On June 20, 2012, the Company received an initial advance of $100,000, plus warrants to purchase an aggregate of up to 153,846 shares of the Company’s common stock. The funds were received in consideration of the sale of a 10% unsecured convertible promissory note, with an aggregate sum of up to $400,000, plus warrants to purchase an aggregate of up to 615,385 shares of the Company’s common stock at a purchase price of $0.65 per share. The note originally matured six months from the date of each purchase made under the note, and bore interest at a rate of 10% per annum, which increased to 15% when the note was not repaid by September 18, 2012. The Note was originally convertible into shares of the Company’s common stock at a conversion price of $0.65. The warrants may be exercised at any time for a period of four years from the date of issuance at an exercise price of $0.65. On February 15, 2013, the Company and the lender entered into an amendment to the note providing for, among other things, an extension of the maturity date of the note until July 21, 2013 and the amendment of the conversion price of the note to the lesser of $0.65 or 70% of the average of the three lowest closing prices in the 25 trading days previous to a conversion. During the months of June and December, 2013, the lender advanced another $250,000 under the securities purchase agreement and the Company issued 307,692 warrants to acquire shares of the Company’s common stock, bringing the total principal received under the note to $350,000. During the nine months ended September 30, 2014, the lender converted the notes in full for a principal amount of $122,828, plus accrued interest of $22,500, leaving a remaining principal balance of $0. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $62,764 during the nine months ended September 30, 2014.

The Company evaluated the financing transactions in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion feature of the convertible promissory notes was not afforded the exemption for conventional convertible instruments due to its variable conversion rate. The note has no explicit limit on the number of shares issuable so they did not meet the conditions set forth in current accounting standards for equity classification. The Company elected to recognize the note under paragraph 815-15-25-4, whereby, there would be a separation into a host contract and derivative instrument. The Company elected to initially and subsequently measure the note in its entirety at fair value, with changes in fair value recognized in earnings. The Company recorded a derivative liability representing the imputed interest associated with the embedded derivative. The derivative liability is adjusted periodically according to the stock price fluctuations.

Beneficial Conversion Feature

On September 29, 2014, the Company issued a convertible note in exchange for an accounts payable in the amount of $383,351, which can be converted into shares of the Company’s common stock after March 29, 2015. The note was accounted for under ASC 470, and will be re-evaluated after March 29, 2015. The note has a zero stated interest rate, and the conversion price shall be equal to 75% of the average three lowest last sale prices traded during the 25 trading days immediately prior to conversion. The note did not meet the criteria of a derivative, and was accounted for as a beneficial conversion feature, which will be amortized over the life of the note and recognized as interest expense in the financial statements. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $1,537 during the nine months ended September 30, 2014.

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Options and Warrants (Details 2) (Warrant, USD $)	9 Months Ended
	Sep. 30, 2014
Warrant
Class Of Warrant Or Right [Roll Forward]
Warrants, outstanding -beginning of period	42,033,596
Warrants, granted
Warrants, exercised	(5,000,000)
Warrants, forfeited	(6,019,673)
Warrants, outstanding - end of period	31,013,923
Class Of Warrant Or Right, Weighted Average Exercise Price [Roll Forward]
Weighted average exercise price, outstanding - beginning of year	$ 0.31
Weighted average exercise price, granted
Weighted average exercise price, exercised	$ 0.15
Weighted average exercise price, forfeited	$ 2.40
Weighted average exercise price, outstanding - end of year	$ 0.23

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Summary of Significant Accounting Policies (Detail Textuals)	9 Months Ended
	Sep. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	28,344,776
Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	2,084,882
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	31,013,923