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Item 9A. Controls and Procedures

2025-03-28 compared with 2024-03-22 · 61 added, 51 removed, 176 unchanged (39% of the section changed)

20 unchanged sentences

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 information technology general controls (ITGC’s) in the areas of user access and program change-management over certain IT 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 ITGCs in the areas of control report reviews for service organization;

The lack of formal documentation of the design, and related execution of, certain transaction 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.

19 unchanged sentences

Over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

While management believes that the steps that we have taken and plan to continue to take will improve the overall system of internal control over financial reporting and will remediate identified material weaknesses, the material weaknesses cannot be considered remediated until the applicable relevant controls operate for a sufficient period of time.

While management believes that the steps that we have taken and plan to take will improve the overall system of internal control over financial reporting and will remediate identified material weaknesses, the material weaknesses cannot be considered remediated until the applicable relevant controls operate for a sufficient period of time.

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.

Entry into a Material Definitive Agreement.

As previously disclosed in the Current Report on Form 8 -K of LiqTech International, Inc.

(the “ Company ”) filed with the Securities and Exchange Commission (the “ SEC ”) on June 27, 2022, on June 22, 2022, the Company issued and sold senior promissory notes in an aggregate principal amount of $6.0 million (the “ Original Notes ”) and issued warrants to purchase an aggregate of 531,250 shares of common stock, $0.001 par value, of the Company (“ Common Stock ”) at an exercise price of $5.20 per share (the “ Original Warrants ”) to 21 April Fund, L.P.

and 21 April Fund, Ltd., affiliates of Bleichroeder L.P.

(collectively, the “ Purchasers ”), pursuant to a note and warrant purchase agreement entered into with the Purchasers (the “ Note and Warrant Purchase Agreement ”).

As previously disclosed in the Current Report on Form 8 -K of the Company filed with the SEC on October 19, 2023, on October 13, 2023, the Company and the Purchasers entered into an amendment to the Note and Warrant Purchase Agreement (the “ First Amendment ”) and Allonge No.

1 to each of the Original Notes (the Original Notes, as so amended by the Allonge No.

1, the “ First Amended Notes ”) effective as of September 30, 2023, to, among other things, extend the maturity date for the Original Notes to January 1, 2026.

On March 26, 2025, the Company and the Purchasers entered into a second amendment to the Note and Warrant Purchase Agreement (the “ Second Amendment ”) and Allonge No.

2 to each of the First Amended Notes (collectively, the “ Allonges ” and the First Amended Notes, as so amended by the Allonges, the “ Second Amended Notes ”), pursuant to which the Company and the Purchasers amended the First Amended Notes to extend the maturity date from January 1, 2026 to May 1, 2027 ( the “ Maturity Date ”), and provide that, beginning on January 1, 2026, the Second Amended Notes will bear interest at a rate of 10% per annum payable semi-annually or, if at any time that the Second Amended Notes are outstanding, the Second Amended Notes are not repaid on or before the Maturity Date or an Event of Default (as defined in the Second Amended Notes) occurs, a rate of 13% per annum, which will increase by 1% each month that the Second Amended Notes remain unpaid, up to a maximum of 16% per annum, payable monthly (the “ Default Interest ”).

Pursuant to the Second Amendment, the Company may pay the accrued interest on the Second Amended Notes, other than the Default Interest, in cash or in shares of Common Stock at its election, subject certain limitations set forth in the Second Amended Notes.

In addition, pursuant to the Second Amendment, the Company and the Purchasers agreed to amend and restate the Original Warrants (the “ Amended and Restated Warrants ”) to extend the expiration date to December 31, 2029 and to reset the exercise price to $2.00 per share.

The foregoing descriptions of the Second Amendment, the Allonges and the Amended and Restated Warrants are qualified in their entirety by reference to the full text of the Second Amendment, the form of Allonge No.

2 and the form of Amended and Restated Warrant, copies of which are attached hereto as Exhibit 10.19, Exhibit 10.20 and Exhibit 4.9, respectively, and which are incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

The information provided in Item 1.01 above with respect to the issuance of the Amended and Restated Warrants and the Second Amended Notes to the Purchasers is incorporated into this Item 3.02 by reference.

The Amended and Restated Warrants and the Second Amended Notes were issued to the Purchasers in reliance on the private offering exemption from registration provided by Section 4 (a)( 2 ) of the Securities Act of 1933, as amended (the “ Securities Act ”), and Regulation D promulgated thereunder.

The Company has relied and will rely on this exemption based in part on representations and warranties made by each of the Purchasers in the Second Amendment as to their qualification as “accredited investors,” as defined pursuant to Rule 501 (a) of Regulation D promulgated under the Securities Act.

The Amended and Restated Warrants and the Second Amended Notes, and any shares of Common Stock issuable upon exercise or repayment thereof, as applicable, have not been registered under the Securities Act or applicable state securities laws and may not be offered or sold in the United States absent registration under the Securities Act or an exemption from such registration requirements.

Item 408 (a) – Insider Trading Arrangements and Policies

During the quarter ended December 31, 2024, no director or Section 16 officer adopted, modified, or terminated any “Rule 10b5 - 1 trading arrangement” or “non-Rule 10b5 - 1 trading arrangement” (in each case, as defined in Item 408 (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 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.

The information required by Item 10 is incorporated herein by reference to our Definitive Proxy Statement relating to our 2025 Annual Meeting of Stockholders.

Alternatively, it will be included in an amendment to this Form 10-K, filed under cover of Form 10-K/A, no later than 120 days after the end of the fiscal year covered by this report.

Executive Compensation

18 unchanged sentences

$ 867,458 $ 404,306 $ ( 62,640 ) $ 1,209,124

Allowance for doubtful accounts

Allowance for current expected credit losses

134,912 528,846 ( 26,202 ) 637,556

3 unchanged sentences

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

Allowance for doubtful accounts

Allowance for current expected credit losses

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

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

Allowance for doubtful accounts at the beginning of the period

Allowance for current expected credit losses at the beginning of the period

$ 134,912 $ 59,559

3 unchanged sentences

( 49,577 ) ( 10,298 )

Effect of currency translation

Effect of exchange rate changes

( 26,202 ) 3,585

Allowance for doubtful accounts at the end of the period

Allowance for current expected credit losses at the end of the period

$ 637,556 $ 134,912

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

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

Schedules other than that listed above are omitted because the conditions requiring their filing do not exist or because the required information is provided in the Consolidated Financial Statements, including the Notes thereto.

1 unchanged sentence

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

Filed herewith

Incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K as filed with the SEC on March 22, 2024

Amended and Restated Bylaws

11 unchanged sentences

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 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

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 September 27, 2024

Form of Warrant

Incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K as filed with the SEC on September 27, 2024

Form of Amended and Restated Warrant

Included in Exhibit 10.19

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

2 unchanged sentences

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

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.

9 unchanged sentences

Form of Allonge No.

Included in Exhibit 10.11

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

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

6 unchanged sentences

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

Filed herewith

Incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K as filed with the SEC on March 22, 2024

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

Incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K as filed with the SEC on March 22, 2024

Securities Purchase Agreement, by and among the Company and the investors named therein

Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K as filed with the SEC on September 27, 2024

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

Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K as filed with the SEC on September 27, 2024

Service Agreement between Liqtech Holding A/S and David Kowalczyk, dated January 27, 2025.

Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K as filed with the SEC on January 31, 2025

Separation Agreement between Liqtech Holding A/S and Phillip Massie Price, dated March 20, 2025

Filed herewith

Second Amendment to Note and Warrant Purchase Agreement

Filed herewith

Form of Allonge No.

Included in Exhibit 10.19

Code of Conduct and Ethics

Filed herewith

List of Subsidiaries

13 unchanged sentences

Clawback Policy

Filed herewith

Incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K as filed with the SEC on March 22, 2024

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)

13 unchanged sentences

Denotes a management contract or compensatory plan or arrangement.

Schedules and similar attachments to this Exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

The Company agrees to furnish supplementally a copy of such omitted materials to the SEC upon request.

Form 10-K Summary

11 unchanged sentences

March 28, 2025

/s/ Simon Stadil

Chief Financial Officer, Principal Financial and Accounting Officer

/s/ Phillip Massie Price

Interim Chief Financial Officer, Principal Financial and Accounting Officer

March 28, 2025

Phillip Massie Price

/s/ Peyton Boswell

7 unchanged sentences

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