Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
LIQTECH INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31,
December 31,
2025
2024
(Unaudited)
Assets
Current Assets:
Cash and restricted cash
$
10,447,432
$
10,868,728
Accounts receivable, net
3,440,023
2,396,056
Inventories, net
5,714,955
5,541,192
Contract assets
850,986
1,666,698
Prepaid expenses and other current assets
459,619
168,443
Total Current Assets
20,913,015
20,641,117
Non-Current Assets:
Property and equipment, net
6,451,419
6,618,822
Operating lease right-of-use assets
4,469,577
4,450,822
Deposits and other assets
469,447
456,658
Intangible assets, net
38,885
39,367
Goodwill
228,495
220,693
Total Non-Current Assets
11,657,823
11,786,362
Total Assets
$
32,570,838
$
32,427,479
The accompanying notes are an integral part of these condensed consolidated financial statements.
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LIQTECH INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
March 31,
December 31,
2025
2024
(Unaudited)
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable
$
1,759,043
$
1,300,966
Accrued expenses
2,554,525
2,491,479
Current portion of finance lease liabilities
486,220
458,347
Current portion of operating lease liabilities
569,435
544,197
Contract liabilities
138,810
109,319
Total Current Liabilities
5,508,033
4,904,308
Non-Current Liabilities:
Deferred tax liability
59,660
57,960
Finance lease liabilities, net of current portion
1,665,330
1,600,931
Operating lease liabilities, net of current portion
3,900,142
3,906,625
Loan from related party, net of current portion
1,120,044
-
Notes payable, net
5,251,593
5,303,563
Total Non-Current Liabilities
11,996,769
10,869,079
Total Liabilities
17,504,802
15,773,387
Stockholders' Equity:
Preferred stock; par value $0.001, 2,500,000 shares authorized, 0 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively
-
-
Common stock; par value $0.001, 50,000,000 shares authorized and 9,606,024 and 9,475,443 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively
9,606
9,475
Additional paid-in capital
109,682,187
109,274,166
Accumulated deficit
( 88,618,830
)
( 86,267,438
)
Accumulated other comprehensive loss
( 6,013,765
)
( 6,362,111
)
Total Stockholders' Equity
15,059,198
16,654,092
Noncontrolling Interest
6,838
-
Total Equity
15,066,036
16,654,092
Total Liabilities and Equity
$
32,570,838
$
32,427,479
The accompanying notes are an integral part of these condensed consolidated financial statements.
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LIQTECH INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended
March 31,
2025
2024
Revenue
$
4,617,541
$
4,235,344
Cost of goods sold
4,492,485
3,964,242
Gross Profit
125,056
271,102
Operating Expenses:
Selling expenses
718,016
517,579
General and administrative expenses
1,362,246
1,544,731
Research and development expenses
230,123
254,812
Total Operating Expenses
2,310,385
2,317,122
Loss from Operations
( 2,185,329
)
( 2,046,020
)
Other Income (Expense):
Interest and other income
68,751
69,086
Interest expense
( 48,283
)
( 71,719
)
Amortization of debt discount
( 168,030
)
( 146,040
)
Gain (loss) on foreign currency transactions
35,516
255,536
Gain (loss) on disposal of property and equipment
( 61,306
)
( 463,577
)
Total Other Expense
( 173,352
)
( 356,714
)
Loss Before Income Taxes
( 2,358,681
)
( 2,402,734
)
Income tax benefit
( 339
)
( 14,439
)
Net Loss
$
( 2,358,342
)
$
( 2,388,295
)
Net Loss attributable to noncontrolling interest
( 6,950
)
-
Net Loss attributable to LiqTech International, Inc.
( 2,351,392
)
( 2,388,295
)
Loss Per Common Share – Basic and Diluted
$
( 0.25
)
$
( 0.41
)
Weighted-Average Common Shares Outstanding – Basic and Diluted
9,602,354
5,804,702
The accompanying notes are an integral part of these condensed consolidated financial statements.
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LIQTECH INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS (UNAUDITED)
For the Three Months Ended
March 31,
2025
2024
Net Loss
$
( 2,358,342
)
$
( 2,388,295
)
Loss on foreign currency translation adjustments
348,346
( 543,580
)
Total Other Comprehensive Loss
$
( 2,009,996
)
$
( 2,931,875
)
Net loss attributable to non-controlling interests
6,950
-
Total Other Comprehensive Loss Attributable to LiqTech International, Inc.
$
( 2,003,046
)
$
( 2,931,875
)
The accompanying notes are an integral part of these condensed consolidated financial statements.
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LIQTECH INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS ’ EQUITY (UNAUDITED)
Accumulated
Non-
Additional
Other
Total
controlled
Common Stock
Paid-in
Accumulated
Comprehensive
Stockholders’
Interest in
Total
Shares
Amount
Capital
Deficit
Income (Loss)
Equity
Subsidiaries
Equity
Balance at December 31, 2024
9,475,443
9,475
109,274,166
( 86,267,438
)
( 6,362,111
)
16,654,092
-
16,654,092
Common stock issued in settlement of RSUs
158,975
159
( 159
)
-
-
-
-
-
Tax withholdings paid related to stock-based compensation
( 28,394
)
( 28
)
( 53,065
)
-
-
( 53,093
)
-
( 53,093
)
Warrants issued in connection with Senior Promissory Notes
-
-
220,000
-
-
220,000
-
220,000
Stock-based compensation
-
-
241,245
-
-
241,245
-
241,245
Currency translation, net
-
-
-
-
348,346
348,346
-
348,346
Net loss
-
-
-
( 2,351,392
)
-
( 2,351,392
)
-
( 2,351,392
)
Capital contribution from noncontrolling interest
-
-
-
-
-
-
13,788
13,788
Net loss attributable to noncontrolling interest
-
-
-
-
-
-
( 6,950
)
( 6,950
)
Balance at March 31, 2025
9,606,024
9,606
109,682,187
( 88,618,830
)
( 6,013,765
)
15,059,198
6,838
15,066,036
The accompanying notes are an integral part of these condensed consolidated financial statements.
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LIQTECH INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS ’ EQUITY (UNAUDITED)
Accumulated
Non-
Additional
Other
Total
controlled
Common Stock
Paid-in
Accumulated
Comprehensive
Stockholders’
Interest in
Total
Shares
Amount
Capital
Deficit
Income (Loss)
Equity
Subsidiaries
Equity
Balance at December 31, 2023
5,727,310
5,727
98,796,357
( 75,922,180
)
( 5,603,888
)
17,276,016
-
17,276,016
Common Stock issued in settlement of RSUs
110,028
110
( 110
)
-
-
-
-
-
Tax withholdings paid related to stock-based compensation
( 29,998
)
( 30
)
30
-
-
-
-
-
Stock-based compensation
-
-
193,321
-
-
193,321
-
193,321
Currency translation, net
-
-
-
-
( 543,580
)
( 543,580
)
-
( 543,580
)
Net loss
-
-
-
( 2,388,295
)
-
( 2,388,295
)
-
( 2,388,295
)
Balance at March 31, 2024
5,807,340
5,807
98,989,598
( 78,310,475
)
( 6,147,468
)
14,537,462
-
14,537,462
The accompanying notes are an integral part of these condensed consolidated financial statements.
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LIQTECH INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended
March 31,
2025
2024
Cash Flows from Operating Activities:
Net loss
$
( 2,358,342
)
$
( 2,388,295
)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization
442,002
541,375
Amortization of debt discount
168,030
146,040
Stock-based compensation
241,245
193,321
Amortization of right-of-use assets
134,824
135,382
Deferred taxes
( 339
)
( 14,439
)
(Gain) loss on disposal of property and equipment
61,306
463,577
Changes in assets and liabilities:
Accounts receivable
( 933,161
)
396,168
Inventories
21,532
( 358,764
)
Contract assets
850,839
( 20,565
)
Prepaid expenses and other current assets
( 334,468
)
( 350,048
)
Accounts payable
405,038
( 231,373
)
Accrued expenses
114,203
( 513,197
)
Operating lease liabilities
( 134,824
)
( 136,339
)
Contract liabilities
24,929
180,456
Net Cash used in Operating Activities
( 1,297,186
)
( 1,956,701
)
Cash Flows from Investing Activities:
Purchase of property and equipment
( 163,465
)
( 389,443
)
Proceeds from the disposal of property and equipment
52,605
941,230
Net Cash used in Investing Activities
( 110,860
)
551,787
Cash Flows from Financing Activities:
Repayments of finance lease liabilities
( 113,637
)
( 1,009,437
)
Proceeds from related party loan
1,089,571
-
Capital contribution from noncontrolling interest
13,788
-
Net Cash provided by Financing Activities
989,722
( 1,009,437
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
( 2,973
)
( 281,617
)
Net Change in Cash, Cash Equivalents, and Restricted Cash
( 421,297
)
( 2,695,968
)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period
10,868,729
10,422,181
Cash, Cash Equivalents, and Restricted Cash at End of Period
$
10,447,432
$
7,726,213
The accompanying notes are an integral part of these condensed consolidated financial statements.
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LIQTECH INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended
March 31,
2025
2024
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest
$
46,593
$
69,610
Cash paid for income taxes
-
-
Non-Cash Investing and Financing Activities
Financed purchases of property and equipment
$
137,691
$
77,988
The accompanying notes are an integral part of these condensed consolidated financial statements.
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LIQTECH INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – BASIS OF PRESENTATION AND OTHER INFORMATION
The accompanying unaudited condensed consolidated financial statements of LiqTech International, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10 -Q of Regulation S- X. They do not include all the information and footnotes required by GAAP for complete financial statements. The December 31, 2024 consolidated balance sheet data were derived from audited financial statements but does not include all disclosures required by GAAP. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10 -K, as filed with the Securities and Exchange Commission on March 28, 2025. The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Company’s Annual Report on Form 10 -K. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, consisting solely of normal recurring adjustments, have been made. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 .
Recently Adopted Accounting Pronouncements
In August 2023, the FASB issued ASU 2023 - 05, “ Business Combinations — Joint Venture Formations (Subtopic 805 - 60 ): Recognition and Initial Measurement ,” which requires a newly-formed joint venture to apply a new basis of accounting to its contributed net assets, resulting in the joint venture initially measuring its contributed net assets at fair value on the formation date. ASU 2023 - 05 is effective for all joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted for joint ventures formed before the effective date. The adoption of ASU 2023 - 05 did not have a material impact on the Company’s condensed consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023 - 09, “ Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures ,” which enhances the transparency and decision usefulness of income tax disclosures by requiring; ( 1 ) consistent categories and greater disaggregation of information in the rate reconciliation and ( 2 ) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.
In November 2024, the FASB issued ASU 2024 - 03, “ Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses ,” which requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization included in each relevant expense caption presented on the statement of operations. The standard also requires disclosure of qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity’s definition of selling expenses. ASU 2024 - 03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.
The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to its condensed consolidated financial statements.
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NOTE 2 – NONCONTROLLING INTEREST
In January 2025, the Company established a joint venture Nantong JiTRI LiqTech Green Energy Technology Co., Ltd (the “JV”) in which it holds a 90 % ownership interest. The remaining 10 % is owned by an unrelated third party. The primary focus of the JV is to develop and commercialize systems for the marine water treatment market in China. The JV is fully consolidated in the Company’s condensed financial statements, and the 10% noncontrolling interest is presented separately in the consolidated balance sheet within equity and in the consolidated statement of operations as a component of net income (loss).
As part of the JV agreement, LiqTech has agreed to make our technology available to the JV and to transfer the utilization rights necessary for operations in the marine scrubber market in China. In February 2025, the JV received R&D funding of RMB 8,000,000 (approximately USD 1.1 million) from the JV partner to support capability development and system construction. The funding is classified as a long-term loan in the financial statements and may be increased to up to RMB 10,000,000 within 12 months if certain technical and commercial milestones are achieved.
The loan bears a fixed annual interest rate of 12 % per annum and has no set maturity date. At the sole discretion of LiqTech, the loan may be either converted into equity of the JV in connection with future capital increases or equity injections, or it may be repaid in full with accrued interest. There is no separate default rate beyond the stated contractual interest, and no mandatory repayment terms exist unless elected by LiqTech.
As of March 31, 2025 , the noncontrolling interest in the JV amounted to $ 6,838 and reflects the third party’s share of the JV’s net assets and net loss for the period.
NOTE 3 – DISAGGREGATION OF REVENUES AND SEGMENT REPORTING
The Company operates in three reportable segments: Water, Ceramics, and Plastics.
The Company sells products throughout the world, and sales by geographical region are as follows for the three months ended March 31, 2025 and 2024 :
For the Three Months
Ended March 31,
2025
2024
Americas
$ 2,233,901 $ 1,197,197
Asia-Pacific
134,455 342,961
Europe
2,249,185 2,650,915
Middle East & Africa
- 44,271
Total revenue
$ 4,617,541 $ 4,235,344
The Company’s sales by segment are as follows for the three months ended March 31, 2025 and 2024 :
For the Three Months
Ended March 31,
Revenues
2025
2024
Water
$ 2,693,722 $ 1,548,666
Ceramics
953,846 1,806,336
Plastics
969,973 880,342
Corporate
- -
Total revenues
$ 4,617,541 $ 4,235,344
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The Company’s income and total assets by segment are as follows:
For the Three Months
Ended March 31,
Net loss
2025
2024
Water
$ ( 73,345 ) $ ( 434,488 )
Ceramics
( 1,003,561 ) ( 978,673 )
Plastics
( 117,480 ) ( 273,768 )
Corporate
( 1,163,956 ) ( 701,366 )
Total net loss
( 2,358,342 ) ( 2,388,295 )
As of
March 31,
December 31,
Total assets
2025
2024
Water
$ 8,356,601 $ 8,235,726
Ceramics
10,644,618 10,679,025
Plastics
1,986,104 1,670,644
Corporate
11,583,515 11,842,084
Total assets
$ 32,570,838 $ 32,427,479
NOTE 4 – ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following on March 31, 2025 , and December 31, 2024 :
March 31,
December 31,
2025
2024
Trade accounts receivable
$
4,101,003
$
3,033,612
Allowance for current expected credit losses
( 660,980
)
( 637,556
)
Total accounts receivable, net
$
3,440,023
$
2,396,056
The roll-forward of the allowance for doubtful accounts for the periods ended March 31, 2025 and December 31, 2024 is as follows:
March 31,
December 31,
2025
2024
Allowance for current expected credit losses at the beginning of the period
$
637,556
$
134,912
Bad debt expense
12,007
578,423
Receivables written off during the periods
( 11,123
)
( 49,577
)
Effect of exchange rate changes
22,540
( 26,202
)
Allowance for current expected credit losses at the end of the period
$
660,980
$
637,556
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NOTE 5 – INVENTORIES
Inventories consisted of the following on March 31, 2025 , and December 31, 2024 :
March 31,
December 31,
2025
2024
Raw materials
$
2,837,155
$
2,734,781
Work in process
2,428,645
2,435,280
Finished goods and filtration systems
1,708,563
1,580,255
Reserve for obsolescence
( 1,259,408
)
( 1,209,124
)
Total inventories, net
$
5,714,955
$
5,541,192
Inventory valuation adjustments for excess and obsolete inventory are calculated based on current inventory levels, movements, expected useful lives, and estimated future demand for the products.
NOTE 6 – CONTRACT ASSETS AND CONTRACT LIABILITIES
The roll-forward of Contract assets and Contract liabilities for the periods ended March 31, 2025 and December 31, 2024 is as follows:
March 31,
December 31,
2025
2024
Cost incurred
$
1,688,134
$
2,512,901
Unbilled project deliveries
-
51,442
VAT
158,137
93,961
Other receivables
2,757
20,972
Prepayments
( 1,136,852
)
( 1,121,897
)
$
712,176
$
1,557,379
Distributed as follows:
Contract assets
$
850,986
$
1,666,698
Contract liabilities
( 138,810
)
( 109,319
)
$
712,176
$
1,557,379
NOTE 7 – LEASES
The Company leases certain vehicles, real property, production equipment and office equipment under lease agreements. The Company evaluates each lease to determine its appropriate classification as an operating lease or finance lease for financial reporting purposes. The majority of our operating leases are non-cancelable leases for production and office space in Hobro and Copenhagen, Denmark.
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During the three months ended March 31, 2025 , cash paid for amounts included for the measurement of finance lease liabilities was $ 116,413 , and the Company recorded finance lease expenses in other income (expenses) of $ 31,779 .
During the three months ended March 31, 2025 , cash paid for amounts included for the measurement of operating lease liabilities was $ 210,187 , and the Company recorded operating lease expense of $ 210,187 .
Supplemental balance sheet information related to leases as of March 31, 2025 and December 31, 2024 was as follows:
March 31,
December 31,
2025
2024
Operating leases:
Operating lease right-of-use assets
$ 4,469,577 $ 4,450,822
Operating lease liabilities – current
$ 569,435 $ 544,197
Operating lease liabilities – long-term
$ 3,900,142 3,906,625
Total operating lease liabilities
$ 4,469,577 $ 4,450,822
Finance leases:
Property and equipment, at cost
$ 4,227,205 $ 4,082,864
Accumulated depreciation
( 1,290,157 ) ( 1,157,025 )
Property and equipment, net
$ 2,937,048 $ 2,925,839
Finance lease liabilities – current
$ 486,220 $ 458,347
Finance lease liabilities – long-term
1,665,330 1,600,931
Total finance lease liabilities
$ 2,151,550 $ 2,059,278
Weighted average remaining lease term:
Operating leases
7.9 8.1
Finance leases
3.2 3.1
Weighted average discount rate:
Operating leases
6.8 % 6.8 %
Finance leases
5.3 % 5.5 %
Maturities of lease liabilities at March 31, 2025 were as follows:
Operating
Finance
Leases
Leases
2025
$ 642,225 $ 458,098
2026
847,771 575,187
2027
847,771 1,088,086
2028
724,828 116,638
2029
478,942 164,036
Thereafter
2,203,675 41,907
Total payment under lease agreements
5,745,212 2,443,952
Less imputed interest
( 1,275,635 ) ( 292,402 )
Total lease liabilities
$ 4,469,577 $ 2,151,550
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NOTE 8 – LONG-TERM DEBT
The components of notes payable are as follows:
March 31,
December 31,
2025
2024
Senior promissory notes
$ 6,000,000 $ 6,000,000
Less: unamortized debt discount
( 748,407 ) ( 696,437 )
Total senior promissory notes payable, net
$ 5,251,593 $ 5,303,563
Current portion of senior promissory notes payable
- -
Senior promissory notes payable, less current portion
5,251,593 5,303,563
Total senior promissory notes payable, net
$ 5,251,593 $ 5,303,563
For the three months ended March 31, 2025, and 2024 , the Company recognized interest expense of $ 0 and $0, respectively, and $ 168,030 and $ 146,040 , respectively, on the Senior Promissory Notes related to the amortization of debt issuance costs.
NOTE 9 – AGREEMENTS AND COMMITMENTS
Contingencies – From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business.
Product Warranties – The Company provides a standard warranty for its systems, generally for a period of one to three years after customer acceptance. The Company estimates the costs that may be incurred under its standard warranty programs and records a liability for such costs at the time product revenue is recognized.
In addition, the Company sells an extended warranty for certain systems, which generally provides a warranty for up to four years from the date of commissioning. The specific terms and conditions of the warranties vary depending upon the product sold and the country in which the installation occurred. Revenue received for the sale of extended warranty contracts is deferred and recognized in the same manner as the costs incurred to perform under the warranty contracts.
The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Factors that affect the warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and the cost per claim.
Changes in the Company’s current and long-term warranty obligations included in accrued expenses on the balance sheet, as of March 31, 2025 and December 31, 2024 , were as follows:
March 31,
December 31,
2025
2024
Balance at January 1
$ 621,031 $ 629,100
Warranty costs charged to cost of goods sold
63,942 100,726
Utilization charges against reserve
- ( 72,736 )
Foreign currency effect
23,744 ( 36,059 )
Balance at the end of the period
$ 708,717 $ 621,031
NOTE 10 – STOCKHOLDERS ’ EQUITY
Common Stock – The Company has 50,000,000 authorized shares of Common Stock, $ 0.001 par value. As of March 31, 2025 and December 31, 2024 , there were 9,606,024 and 9,475,443 shares of Common Stock issued and outstanding, respectively.
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Stock Issuances
During the three months ended March 31, 2025 , the Company has made the following issuances of Common Stock:
On January 1, 2025, the Company issued 30,703 shares of Common Stock to settle RSUs. The RSUs were valued at $ 81,886 for services provided by management in 2024 . The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2024 .
On January 3, 2025, the Company issued 52,350 shares of Common Stock to settle RSUs. The RSUs were valued at $ 183,750 for services provided by the Board of Directors in 2024 . The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2024 .
On January 3, 2024, the Company issued 75,921 shares of Common Stock to settle RSUs. The RSUs were valued at $ 245,899 for services provided by management in 2024 . The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2024 . In connection with the issuance, 28,394 shares of Common Stock, with a total value of $ 53,097 , were withheld from vesting to settle tax withholdings associated with stock-based compensation.
Warrants
On March 26, 2025, the Company entered into a Second Amendment to the Note and Warrant Purchase Agreement (the "Second Amendment") originally dated June 22, 2022, with the holders of the Company’s senior promissory notes. In connection with the Second Amendment, the parties executed Allonge No. 2 (the "Allonges") to each of the existing amended notes, resulting in an extension of the maturity date from January 1, 2026 to May 1, 2027.
Additionally, pursuant to the Allonges, beginning on January 1, 2026, the notes will bear interest at a rate of 10 % per annum, payable semiannually. In the event of a default or if the notes are not repaid on or before the new maturity date, the interest rate increases to 13 % per annum, with a monthly 1 % step-up up to a cap of 16 % per annum, payable monthly. Accrued interest (excluding default interest) may be paid in cash or in shares of common stock, at the Company’s election, subject to certain limitations.
As part of the transaction, the Company and the noteholders also agreed to amend and restate the related warrants, reducing the exercise price from $ 5.20 to $ 2.00 per share and extending the expiration date to December 31, 2029. The repricing resulted in an incremental change in warrant value of $ 220,000 .
The following is a summary of the periodic changes in warrants outstanding for the three months ended March 31, 2025, and 2024 :
2025
2024
Outstanding, December 31
11,391,225 5,021,354
Warrants issued in connection with public offering and private placement
- -
Exercises and conversions
- -
Outstanding, March 31
11,391,225 5,021,354
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Stock-based Compensation
In 2013, the Company’s Board of Directors adopted a Share Incentive Plan (the “Incentive Plan”). Under the terms and conditions of the Incentive Plan, the Board of Directors is empowered to grant stock awards, including RSUs, to officers, directors, and consultants of the Company. At March 31, 2025 , 26,042 RSUs were granted and outstanding under the Incentive Plan. Directors of the Company receive share compensation consisting of annual grants of $ 36,750 ($ 73,500 for the Chairman of the Board) in RSUs per annum with one -year vesting.
In 2022, the Company’s Board of Directors adopted an Equity Incentive Plan (the “2022 Incentive Plan”). Under the terms and conditions of the 2022 Incentive Plan, the Board of Directors is empowered to grant stock awards, including RSUs, to officers and directors of the Company. At March 31, 2025 , 528,529 RSUs were granted and outstanding under the 2022 Incentive Plan.
The Company recognizes compensation costs for RSU grants to Directors and management based on the stock price on the date of the grant.
The Company recognized stock-based compensation expense related to RSU grants of $ 241,245 and $ 193,321 for the three -month periods ended March 31, 2025, and 2024 , respectively. On March 31, 2025 , the Company had $ 1,067,746 of unrecognized compensation cost related to non-vested stock grants.
A summary of the status of the RSUs as of March 31, 2025 and changes during the period are presented below:
March 31, 2025
Weighted
Average
Aggregated
Number of
Grant-Date
Intrinsic
units
Fair value
Value
Outstanding, December 31, 2024
357,903 $ 3.25 $ -
Granted
376,431 1.97 -
Vested and settled with share issuance
( 158,975 ) 3.22 -
Forfeited
( 20,788 ) 2.33 -
Outstanding, March 31, 2025
554,571 $ 2.42 $ -
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NOTE 11 – LOSS PER SHARE
Basic and diluted net income (loss) per common share is determined by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. For the periods where there is a net loss, stock options, warrants, and RSUs have been excluded from the calculation of diluted net loss per common share because their effect would be anti-dilutive. Consequently, the weighted average number of shares of Common Stock used to calculate both basic and diluted net loss per common share is the same for the reported periods.
As of March 31, 2025 , the Company had 554,571 RSUs, 5,299,879 prefunded warrants, and 6,091,346 warrants, all exercisable for shares of Common Stock.
As of March 31, 2024 , the Company had 405,298 RSUs, 3,390,008 prefunded warrants, and 1,091,346 warrants, all exercisable for shares of Common Stock.
NOTE 12 – SIGNIFICANT CUSTOMERS AND CONCENTRATIONS
The following table presents customers accounting for 10% or more of the Company’s revenue:
For the Three Months
Ended March 31,
2025
2024
Customer A
44 % 22 %
* Zero or less than 10%
The following table presents customers accounting for 10% or more of the Company’s Accounts receivable:
March 31,
December 31,
2025
2024
Customer A
16 % 20 %
Customer B
39 % * %
* Zero or less than 10%
As of March 31, 2025 , approximately 93 % of the Company’s assets were located in Denmark, 4 % were located in China, and 3 % were located in the U.S. As of December 31, 2024 , approximately 86 % of the Company’s assets were located in Denmark, 0 % were located in China, and 14 % were located in the U.S.
NOTE 13 – SUBSEQUENT EVENTS
None.
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ITEM 2. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this quarterly report. In addition, the following discussion should be read in conjunction with our annual report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 28, 2025 and the financial statements and notes thereto. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Overview
LiqTech International, Inc. is a clean technology company that provides state-of-the-art gas and liquid purification products by manufacturing ceramic silicon carbide filters and membranes as well as developing industry-leading and fully automated filtration solutions and systems. For more than two decades, we have developed and manufactured products of re-crystallized silicon carbide. We specialize in three business areas: ceramic membranes for liquid filtration systems, ceramic diesel particulate filters (DPFs) to control soot exhaust particles and black carbon emission from diesel engines, and plastic components for usage across various industries. Using nanotechnology, we develop proprietary products using patented silicon carbide technology. Our products are based on innovative silicon carbide membranes that facilitate new applications and improve existing technologies. We market our products from our offices in Denmark and through local representatives and distributors. The products are shipped directly to customers from our production facilities in Denmark.
The terms “LiqTech”, “we”, “our”, “us”, the “Company” or any derivative thereof, as used herein, refer to LiqTech International, Inc., a Nevada corporation, together with its direct and indirect wholly-owned subsidiaries, which we collectively refer to herein as our “Subsidiaries”.
At present, we conduct our operations in the Kingdom of Denmark and China, with locations in the Copenhagen area, Hobro and Shanghai.
Our Strategy
Our strategy is to leverage our core competencies in material science, advanced filtration, and systems integration, creating differentiated products with compelling value propositions to penetrate attractive end markets with regulatory tailwinds and sustainability implications. Essential imperatives associated with our strategy include the following:
●
Develop and reinforce new products and applications to provide clean water and reduce pollution. We currently provide water filtration systems for commercial pool owners, scrubber technology providers, shipowners, and ship operators as well as tailored filtration systems for oil & gas operators and services companies. We are expanding our range of products to better leverage existing customer relationships and develop new relationships within the oil & gas, marine, chemical, and other industries.
●
Better penetrate existing end markets where our value proposition is strong. We have successfully sold products and installed systems into several end market segments--including automotive/transportation, clean water and pool filtration, marine, industrial wastewater, chemicals/petrochemicals, and oil & gas applications. We are focused on targeting and developing new customers in these end markets while working with distributors, agents, and partners to access other important geographic markets.
●
Develop new end markets for our core products and applications . Our existing products and systems are relevant for and valuable to other end markets, and we regularly evaluate opportunities to develop strategic partners to perfect new applications and validate associated value propositions.
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Results of Operations
The financial information below is derived from our unaudited condensed consolidated financial statements included elsewhere in this report.
Comparison of the Three Months Ended March 31, 2025, and March 31, 2024
The following table sets forth our revenues, expenses, and net loss for the three months ended March 31, 2025, and 2024:
Three Months Ended March 31,
Period to Period Change
As a %
As a %
Percent
2025
of Sales
2024
of Sales
Variance
%
Revenue
$
4,617,541
100.0
%
$
4,235,344
100.0
%
$
382,197
9.0
%
Cost of goods sold
4,492,485
97.3
3,964,242
93.6
528,243
13.3
Gross Profit (Loss)
125,056
2.7
271,102
6.4
(146,046
)
(53.9
)
Operating Expenses
Selling expenses
718,016
15.5
517,579
12.2
200,437
38.7
General and administrative expenses
1,362,246
29.5
1,544,731
36.5
(182,485
)
(11.8
)
Research and development expenses
230,123
5.0
254,812
6.0
(24,689
)
(9.7
)
Total Operating Expenses
2,310,385
50.0
2,317,122
54.7
(6,737
)
(0.3
)
Loss from Operation
(2,185,329
)
(47.3
)
(2,046,020
)
(48.3
)
(139,309
)
6.8
Other Income (Expense)
Interest and other income
68,751
1.5
69,086
1.6
(335
)
(0.5
)
Interest expense
(48,283
)
(1.0
)
(71,719
)
(1.7
)
23,436
(32.7
)
Amortization of debt discount
(168,030
)
(3.6
)
(146,040
)
(3.4
)
(21,990
)
15.1
Gain on currency transactions
35,516
0.8
255,536
6.0
(220,020
)
(86.1
)
Loss on disposal of property and equipment
(61,306
)
(1.3
)
(463,577
)
(10.9
)
402,271
(86.8
)
Total Other Income (Expense)
(173,352
)
(3.8
)
(356,714
)
(8.4
)
183,362
(51.4
)
Loss Before Income Taxes
(2,358,681
)
(51.1
)
(2,402,734
)
(56.7
)
44,053
(1.8
)
Income tax benefit
(339
)
(0.0
)
(14,439
)
(0.3
)
14,100
(97.7
)
Net Loss
$
(2,358,342
)
(51.1
)%
$
(2,388,295
)
(56.4
)%
$
29,953
(1.3
)%
Net Loss attributable to Noncontrolling Interest
(6,950
)
(0.2
)
-
-
(6,950
)
-
Net Loss attributable to LiqTech International, Inc.
(2,351,392
)
(50.9
)
(2,388,295
)
(56.4
)
36,903
(1.5
)
Revenues
Revenue for the three months ended March 31, 2025 was $4,617,541 compared to $4,235,344 for the same period in 2024, representing an increase of $382,197, or 9.0%. The favorable change was attributable to an increase in liquid filtration systems, specifically a full-scale system delivery to the U.S., and increased sales of plastics products, partly offset by a decrease in deliveries of ceramic membranes and DPFs. The Company believes that the decrease in sales of ceramic membranes and DPFs reflects temporary market conditions, with customers awaiting potential interest rate cuts.
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Gross Profit (Loss)
Gross profit for the three months ended March 31, 2025 was $125,056 (representing a gross loss margin of 2.7%) compared to a gross profit of $271,102 (representing a gross profit margin of 6.4%) for the same period in 2024, marking a decrease of $146,046, or 53.9%. This decline was primarily driven by the low gross profit margin related to the delivery of a full-scale liquid filtration system to the U.S., caused by associated development costs for the system. Also impacting gross profit was, the underutilization of our manufacturing capacity as a direct result of the decline in ceramic membranes and DPFs. This impact were partly offset by lower depreciation expenses. Included in the gross profit was depreciation of $392,292 and $451,644 for the three months ended March 31, 2025, and 2024, respectively.
Expenses
Total operating expenses for the three months ended March 31, 2025 were $2,310,385, representing a decrease of $6,737, or 0.3%, compared to $2,317,122 for the same period in 2024.
Selling expenses for the three months ended March 31, 2025 were $718,016 compared to $517,579 for the same period in 2024, representing an increase of $200,437, or 38.7%. The increase in selling expenses is mainly related to lower sales commissions in 2024, along with the cost associated with the newly formed joint venture, Nantong JiTRI LiqTech Green Energy Technology Co., Ltd. The primary focus of the JV is to develop and commercialize systems for the marine water treatment market in China. The increase was partially offset by decreased bad debt expense and lower depreciation.
General and administrative expenses for the three months ended March 31, 2025 were $1,362,246 compared to $1,544,731 for the same period in 2024, representing a decrease of $182,485, or 11.8%. The decrease was mainly attributable to non-recurring costs in the comparable period related to recruitment expenses associated with the CFO transition along with savings on external consulting services during this period. Included in general and administrative expenses were non-cash compensation of $241,245 and $193,321 for the three months ended March 31, 2025, and 2024, respectively.
Research and development expenses for the three months ended March 31, 2025 were $230,123 compared to $254,812 for the same period in 2024, representing a decrease of $24,689, or 9.7%. The decrease was primarily attributed to a reduction in the average number of employees engaged in research and development activity as the Company streamlined and centralized the R&D function, partially offset by increased patent costs.
Other Income (Expenses)
Other expenses for the three months ended March 31, 2025 were $173,352 compared to other expenses of $356,714 for the comparable period in 2024, representing a favorable change of $183,362, or 51.4%. The change was primarily attributable to significant losses on the disposal of property and equipment in the prior-year period, partially offset by a lower gain on currency transactions for the three months ended March 31, 2025 as well as increased debt discount amortization due to the extension of the maturity date for the senior promissory notes.
Net Loss
As a result of the cumulative effect of the factors described above, we had a net loss for the three months ended March 31, 2025 of $2,358,342 compared to $2,388,295 for the comparable period in 2024, representing a decrease in net loss of $29,953, or 1.3%.
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Liquidity and Capital Resources
The Company has historically financed operations through offerings of equity or debt instruments, internally generated cash from operations, and our available lines of credit. On March 31, 2025, we had cash of $10,447,432 and net working capital of $15,404,982, and on December 31, 2024, we had cash of $10,868,728 and net working capital of $15,736,809. On March 31, 2025, our net working capital had decreased by $331,827 compared to December 31, 2024, mainly as a result of a reduction in cash and cash equivalents to fund operating losses.
Based on current projections, which are subject to significant uncertainties--including the duration and severity of global macroeconomic issues, trade wars and associated tariffs, geopolitical instability, commodity price volatility, and continued global supply chain disruptions--the Company believes that the cash on hand, as well as ongoing cash generated from operations, will be sufficient to cover its capital requirements and committed investments for the next 12 months.
While the Company anticipates that its proactive measures will be sufficient to protect the business over the coming 12 months, the Company cannot predict the specific duration and severity of the unfavorable market dynamics that may adversely affect the business. In the future, the Company may experience reduced or changed demand for its products and services, especially if there is a global recession, structural shift in regulation, or the continuation of escalating interest rates and tariffs that adversely impact the investment decisions of our customers.
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Cash Flows
Three months ended March 31, 2025 compared to three months ended March 31, 2024
Cash flows from operating activities for the period ending March 31, 2025 derived from the net loss for the period, adjusted for non-cash items and changes in assets and liabilities. Cash flows used in operating activities for the three months ended March 31, 2025 were $1,297,186, representing a favorable change of $659,516 compared to cash flows used in operating activities of $1,956,702 for the three months ended March 31, 2024. The cash flows used in operating activities for the period consists mainly of the net loss of $2,358,343, adjusted for depreciation and other non-cash-related items of $1,047,068, increase in accounts receivables of $933,161, partially offset by decrease in contract assets of $850,839.
Cash flows used in investing activities were $110,860 for the three months ended March 31, 2025 as compared to cash flows from investing activities of $551,787 for the three months ended March 31, 2024, representing an unfavorable change of $662,647. The investing activities include general purchases of production equipment to continue optimizing production throughput and the internal production of rental assets, partly offset by proceeds from the disposition of production equipment in our Ballerup facility.
Cash flows provided from financing activities were $989,722 for the three months ended March 31, 2025 compared to cash flows used by financing activities of $1,009,437 for the three months ended March 31, 2024, representing a favorable change of $1,999,159. The finance activities include proceeds from a long term loan received and capital contribution from noncontrolling interest in the JV. Additionally, in the comparing period finance activities included the repayment of a lease agreement.
Off Balance Sheet Arrangements
As of March 31, 2025, we had no off-balance sheet arrangements. We are not aware of any material transactions that are not disclosed in our consolidated financial statements.
Significant Accounting Policies and Critical Accounting Estimates
The methods, estimates, and judgments that we use in applying our accounting policies have a significant impact on the results that we report in our consolidated financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Our most critical accounting estimates include:
●
The assessment of revenue recognition, which impacts revenue and cost of sales;
●
the assessment of allowance for product warranties, which impacts gross profit;
●
the assessment of collectability of accounts receivable, which impacts operating expenses if and when we record bad debt or adjust the allowance for doubtful accounts;
●
the assessment of recoverability of long-lived assets, which impacts gross profit or operating expenses if and when we record asset impairments or accelerate their depreciation;
●
the recognition and measurement of current and deferred income taxes (including the measurement of uncertain tax positions), which impact our provision for taxes;
●
the valuation of inventory, which impacts gross profit; and
●
the recognition and measurement of loss contingencies, which impact gross profit or operating expenses when we recognize a loss contingency, revise the estimate for a loss contingency, or record an asset impairment.
Recently Enacted Accounting Standards
For a description of accounting changes and recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements, see “Note 1: Recently Enacted Accounting Standards” in the accompanying financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are not required to provide quantitative and qualitative disclosures about market risk because we are a smaller reporting company.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.