What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-22 compared with 2023-03-22 · 88 added, 69 removed, 139 unchanged (53% of the section changed)

9 unchanged sentences

As such, our independent registered public accounting firm was not required to, and thus did not, audit our internal control structure.

Management's Report on Internal Control over Financial Reporting

Management's Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting.

3 unchanged sentences

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the audited consolidated financial statements.

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the Company's management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2022 based on the criteria set forth in the Internal Control –

Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commissions (2013).

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the Company's management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2023 based on the criteria set forth in the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commissions (2013).

Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures as of December 31, 2023 were not effective due to material weaknesses in internal controls over financial reporting.

Material weaknesses as of December 31, 2023

A material weakness is a deficiency, or combination thereof, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses we identified related to the following:

Ineffective information technology general controls (ITGC’s) in the areas of user access and program change-management over certain information technology systems that support the Company’s financial reporting processes Additionally, management has identified a material weakness in its internal control over financial reporting related to information technology general controls in the areas of service organization control report review.;

The lack of formal documentation of the design, and related execution of, certain transactional level controls related to disbursements, procurement, and inventory management and valuation;

Ineffective design and operation of process level controls over the existence and accuracy of revenue transactions.

Management's Remediation Initiatives

In response to the identified material weaknesses, our management, with oversight from the Company’s Audit Committee, has been and will continue to dedicate necessary resources to enhance the Company’s internal control over financial reporting and remediate the identified material weaknesses.

As an example of such remediation, the Company in 2023 hired additional employees into the finance department, and we plan to continue to work on remediating the material weaknesses during 2024 by improving competencies and processes.

6 unchanged sentences

Our CEO and CFO have certified that, based on their knowledge, the financial statements, and other financial information included in this Form 10-K, fairly present in all material respects the financial condition, results of operations, and cash flows of the Company as of, and for, the periods presented in this Form 10-K.

Changes in Internal Control

During the most recently completed fiscal quarter, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Internal Controls

8 unchanged sentences

Other Information

Departure of Directors or Certain Officers;

Election of Directors;

Appointment of Certain Officers;

Compensatory Arrangements of Certain Officers.

On March 19, 2024, the board of directors of the Company appointed Phillip Massie Price as Interim Chief Financial Officer of the Company, effective April 1, 2024.

Price, 32, has served the Company as its Head of Finance since January 2022.

Prior to serving the Company, from April 2021, Mr.

Price was the Chief Accountant and Administration Manager at Vektus A/S.

a consultancy firm that sells and supports Dynamics NAV/Dynamics 265 Business Central, Microsoft’s comprehensive business management solution.

Prior to his time with Vektus, from June 2020, Mr.

Price was the Business Controller at K.W.

Bruun Import A/S, one of the largest car importers in the Nordic region.

Prior to K.W.

Bruun, from 2013, Mr.

Price was an auditor at inforevision, an accounting and consultancy firm.

Price holds a Bsc.

in Economics and Business Administration and a Msc.

in Business Economics and Auditing from Copenhagen Business School.

On January 28, 2022, the Company (through its wholly owned Danish subsidiary) and Mr.

Price entered into an Employment Contract, effective January 3, 2022 ( as amended, the “Employment Contract”).

In connection with Mr.

Price’s appointment as Interim Chief Financial Officer, the Company and Mr.

Price entered into an addendum to his Employment Contract (the “Addendum”) which provides that for so long as Mr.

Price serves as Interim Chief Financial Officer, he shall be paid a salary of 100,000 DKK (appr.

$14,660 ) per month and will be eligible to receive an annual bonus of up to 300,000 DKK (appr.

The foregoing descriptions of the Employment Contract and the Addendum are not complete and are in summary form only and are qualified in their entirety by reference to the full text of the Employment Contract and Addendum, which are filed as Exhibits 10.16, and 10.17 to this Annual Report on Form 10 -K, respectively.

Price does not have any family relationships with any of the Company’s other officers or directors and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404 (a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

1 unchanged sentence

Directors, Executive Officers and Corporate Governance

The information required by this Item 10 is incorporated herein by reference to our Definitive Proxy Statement relating to our 2023 Annual Meeting of Stockholders.

We intend to file such Definitive Proxy Statement with the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

The information required by this Item 10 is incorporated herein by reference to our Definitive Proxy Statement relating to our 2024 Annual Meeting of Stockholders or alternatively will be included, by amendment to this Form 10-K under cover of Form 10-K/A no later than 120-days after the end of our fiscal year covered by this report.

Executive Compensation

5 unchanged sentences

Principal Accountant Fees and Services

The information required by this Item 14 will be included in the Definitive Proxy Statement referenced above in Item 10 and is incorporated herein by reference. 

Exhibits and Financial Statement Schedules

(a)         

Financial Statements and Schedules

The financial statements are set forth under Item 

8 of this Annual Report.

The following financial statement schedule for the years ended December 31, 2022 and December 31, 2021 

is included in this Annual Report on Form 10 -K:

Valuation and Qualifying Accounts for the years ended December 31, 2022 

and December 31, 2021.

The financial statements are set forth under Item 8 of this Annual Report.

The following financial statement schedule for the years ended December 31, 2023 and December 31, 2022 is included in this Annual Report on Form 10 -K:

Valuation and Qualifying Accounts for the years ended December 31, 2023 and December 31, 2022.

Bad debt expense

82,066 ( 24,534 )

Reserve for obsolete inventory

404,160  

162,651  

177,953 404,160

Year Ended December 31, 2023

Allowance for inventory obsolescence

$ 268,470  

$ 404,160  

$ 663,227  

$ 663,227 $ 177,953 $ 26,278 $ 867,458

Allowance for doubtful accounts

409,076  

59,559  

$ 677,546  

$ 379,626  

59,559 82,066 ( 6,713 ) 134,912

$ 722,786  

$ 722,786 $ 260,019 $ 19,565 $ 1,002,370

Year Ended December 31, 2022

Allowance for inventory obsolescence

$ 723,949  

$ 162,651  

$ 268,470 $ 404,160 $ ( 9,403 ) $ 663,227

$ 268,470  

Allowance for doubtful accounts

498,044  

409,076  

$ 1,221,993  

$ 134,152  

409,076 ( 24,534 ) ( 324,983 ) 59,559

$ 677,546  

$ 677,546 $ 379,626 $ ( 334,386 ) $ 722,786

Allowance for doubtful accounts at the beginning of the period

$ 409,076  

$ 498,044  

$ 59,559 $ 409,076

Bad debt expense

82,066 ( 24,534 )

Receivables written off during the periods

( 10,298 ) ( 295,778 )

Effect of currency translation

3,585 ( 29,205 )

Allowance for doubtful accounts at the end of the period

$ 59,559  

$ 409,076  

$ 134,912 $ 59,559

( 1 ) Includes write-offs, the impact of foreign currency exchange rates.

1 unchanged sentence

Financial statement schedules have been omitted since they are either not required, not applicable, or the information is otherwise included.

(b)            

Articles of Incorporation, as amended as of May 21, 2021

Incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K as filed with the SEC on March 30, 2022

Articles of Incorporation, as amended as of November 13, 2023

Filed herewith

Amended and Restated Bylaws

Incorporated by reference to Exhibit 3.4 to the Company’s Quarterly Report on Form 10-Q as filed with the SEC on May 15, 2012

Form of Pre-Funded Warrant

Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K as filed with the SEC on June 2, 2020

Form of Amendment to Pre-Funded Warrant

Incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q as filed with the SEC on November 9, 2020

Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of LiqTech International, Inc.

Incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q as filed with the SEC on November 14, 2017

Incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q as filed with the SEC on November 9, 2020

Description of our Common Stock

Incorporated by reference to Exhibit 4.3 to the Company’s Annual Report on Form 10-K as filed with the SEC on March 30, 2020

Form of Pre-Funded Common Stock Purchase Warrant

Incorporated by reference to Exhibit 4.3 to the Company’s Annual Report on Form 10-K as filed with the SEC on March 30, 2020

Form of Pre-Funded Warrant

Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K as filed with the SEC on August 20, 2021

3 unchanged sentences

Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K as filed with the SEC on June 27, 2022

Form of Warrant

Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K as filed with the SEC on October 19, 2023

Lease Agreement for Industriparken 22C, 2750 Ballerup, Denmark

Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K/A as filed with the SEC on November 15, 2011 (translated in English)

Form of Securities Purchase Agreement, by and among the Company and the purchasers named therein

Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K as filed with the SEC on June 2, 2020

Form of Registration Rights Agreement, by and among the Company and the investors named therein

Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K as filed with the SEC on June 2, 2020

Lease Contract for Benshoej Industrivej 24, 9500 Hobro

Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K as filed with the SEC on December 5, 2019

Securities Purchase Agreement, by and among the Company and HT Investments MA, LC

Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K as filed with the SEC on March 30, 2021

Form of Senior Convertible Note due 2023

Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K as filed with the SEC on March 30, 2021

Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K as filed with the SEC on December 5, 2019

Form of Exchange Agreement

Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K as filed with the SEC on August 20, 2021

Lease Agreement for the China Premises

Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K as filed with the SEC on September 28, 2021

Executive Services Agreement by and between Liqtech Holding A/S and Simon Stadil  

Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K as filed with the SEC on November 30, 2021

Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K as filed with the SEC on August 20, 2021

Executive Service Agreement by and between Liqtech Holding A/S and Simon Stadil

Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K as filed with the SEC on November 30, 2021

LiqTech International, Inc.

2013 Share Incentive Plan

Incorporated by reference to the Company’s Form S-8 as filed with the SEC on January 27, 2014

Incorporated by reference to Exhibit 99.1 to the Company’s Form S-8 as filed with the SEC on January 27, 2014

Note and Warrant Purchase Agreement, by and among the Company and the Purchasers

3 unchanged sentences

Incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K as filed with the SEC on June 27, 2022

Executive Services Agreement, dated July 26, 2022, by and between LiqTech Holdings A/S and Fei Chen

First Amendment to Note and Warrant Purchase Agreement

Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 19, 2023

Form of Allonge No.

Included in Exhibit 10.11

Executive Service Agreement, dated July 26, 2022, by and between LiqTech Holdings A/S and Fei Chen

Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K as filed with the SEC on August 1, 2022

1 unchanged sentence

2022 Equity Incentive Plan

Incorporated by reference to Annex A to the Company’s Proxy Statement pursuant to Section 14(a) of the Exchange Act filed with the SEC on October 3, 2022

Exclusivity Agreement for Collaboration, Marketing and Deployment of Products and Associated Services, dated November 11, 2022, by and between the Company and NESR

Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K as filed with the SEC on November 17, 2022

Employment Contract, dated January 28, 2022, by and between LiqTech Holdings A/S and Phillip Massie Price

Filed herewith

Addendum to Employment Contract, dated March 20, 2024, by and between LiqTech Holdings A/S and Phillip Massie Price

Filed herewith

List of Subsidiaries

11 unchanged sentences

Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002

Furnished herewith

Furnished herewith

Clawback Policy

Filed herewith

Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

12 unchanged sentences

Provided herewith

* Denotes management contract or compensatory plan, contract or arrangement.

Denotes a management contract or compensatory plan or arrangement.

Form 10-K Summary

3 unchanged sentences

March 22, 2024

Fei Chen 

Chief Executive Officer and Principal Executive Officer

In accordance with the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the dates indicated.

/s/ Mark Vernon

/s/ Alexander Buehler

Chairman of the Board of Directors

March 22, 2024

Alexander Buehler

President, Chief Executive Officer, Principal Executive Officer and Director

3 unchanged sentences

March 22, 2024

/s/ Alexander Buehler

March 22, 2023

Alexander Buehler

/s/ Peyton Boswell

4 unchanged sentences

Richard Meeusen

/s/ Martin Kunz

March 22, 2024

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures