What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-27 compared with 2025-03-28 · 255 added, 142 removed, 813 unchanged (33% of the section changed)

4 unchanged sentences

Consolidated Statements of Operations for the years ended December 31, 2025 and 2024

Consolidated Statement of Comprehensive Loss for the years ended December 31, 2024 and 2023

Consolidated Statement of Stockholders ’ Equity for the years ended December 31, 2024 and 2023

Consolidated Statement of Cash Flows for the years ended December 31, 2024 and 2023

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2025 and 2024

Consolidated Statements of Stockholders ’ Equity for the years ended December 31, 2025 and 2024

Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024

Notes to the Consolidated Financial Statements

5 unchanged sentences

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph Regarding Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has negative operating cash flow which raises substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 2.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

26 unchanged sentences

Obtaining an understanding and testing management’s process for developing the standard costing model and overhead allocations.

Assessing the accuracy, completeness, and reasonableness of the costs included in the standard costing model, including overhead allocations to ensure all costs capitalized were appropriate, complete and proper.

Evaluating the appropriateness and reasonableness of the assumptions used by management to allocate costs to specific inventory products, including assessing the reasonableness of production times, labor requirement and energy usage utilized.

Performing cost testing on raw material inputs purchased by tracing the recorded costs to supporting third party invoices.

Assessing the accuracy, completeness, and reasonableness of the costs included in the standard costing model, including overhead allocations, to ensure all capitalized costs were appropriate, complete, and proper.

Performing c ost testing on raw material inputs purchased by tracing the recorded costs to supporting third party invoices

Revenue Recognition – Contracts with Multiple Performance Obligations

12 unchanged sentences

Examining revenue arrangements on a test basis, including assessing the key terms and conditions of the arrangements and testing the identification, evaluation, and accounting of the performance obligation for conformity with relevant authoritative guidance.

Performing procedures to test the completeness and accuracy of the data used to determine estimated stand-alone selling price.

Evaluating the reasonableness of the approaches used to determine estimated stand-alone selling price.

Performing procedures to test the completeness and accuracy of the data used to determine estimated stand-alone selling prices.

Evaluatingthe reasonableness of the approaches used to determine estimated stand-alone selling prices.

/s/ Sadler, Gibb & Associates, LLC

We have served as the Company’s auditor since 2018.

March 28, 2025

February 27, 2026

LIQTECH INTERNATIONAL, INC.

52 unchanged sentences

3,929,234 3,906,625

Notes payable, net

Loan from related party, net of current portion

Notes payable, net of debt discounts

5,510,545 5,303,563

16 unchanged sentences

10,433,326 16,654,092

Total Liabilities and Stockholders' Equity

Noncontrolling Interest

10,372,236 16,654,092

Total Liabilities and Equity

$ 27,278,097 $ 32,427,479

The accompanying notes are an integral part of these consolidated financial statements.

21 unchanged sentences

445,496 178,834

Interest expense

Interest and other expense

( 315,458 ) ( 167,556 )

5 unchanged sentences

( 65,667 ) ( 456,282 )

Loss on assets held for sale

- ( 439,388 )

Total Other Expense

5 unchanged sentences

$ ( 8,601,940 ) $ ( 10,345,258 )

Net Loss attributable to noncontrolling interest

Net Loss attributable to LiqTech International, Inc.

( 8,527,683 ) ( 10,345,258 )

Loss Per Common Share – Basic and Diluted

10 unchanged sentences

1,152,938 ( 758,223 )

Other Comprehensive Loss

Total Other Comprehensive Loss

$ ( 7,449,002 ) $ ( 11,103,481 )

Net loss attributable to non-controlling interests

Total Other Comprehensive Loss Attributable to LiqTech International, Inc.

$ ( 7,374,745 ) $ ( 11,103,481 )

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Years Ended December 31, 2025, and 2024

Stockholders’

Balance, December 31, 2024

4 unchanged sentences

( 28,394 ) ( 28 ) ( 53,065 ) - - ( 53,093 ) - ( 53,093 )

Issuance of common shares, warrants and prefunded warrants in connection with a private offering

Warrants issued in connection with Senior Promissory Notes

- - 220,000 - - 220,000 - 220,000

1 unchanged sentence

- - 987,072 - - 987,072 - 987,072

Capital contribution from noncontrolling interest

- - - - - - 13,788 13,788

Currency translation, net

7 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Years Ended December 31, 2025, and 2024

Stockholders’

Balance, December 31, 2023

2 unchanged sentences

148,002 148 ( 148 ) - - - - -

Fractional shares from individual shareholder round-up following reverse split

Tax withholdings paid related to stock-based compensation

( 29,998 ) ( 30 ) ( 104,910 ) - - ( 104,940 ) - ( 104,940 )

Warrants issued in connection with Senior Promissory Notes

Issuance of common shares, warrants and prefunded warrants in connection with a private offering

3,630,129 3,630 9,918,433 - - 9,922,063 - 9,922,063

1 unchanged sentence

- - 664,434 - - 664,434 - 664,434

Foreign currency translation adjustments

Currency translation, net

- - - - ( 758,223 ) ( 758,223 ) - ( 758,223 )

21 unchanged sentences

( 1,454 ) ( 38,837 )

Loss on disposal of assets held for sale

(Gain) loss on disposal of property and equipment

Loss on disposal of property and equipment

65,667 456,282

15 unchanged sentences

17,337 ( 261,223 )

Assets held for sale

Net Cash used in Operating Activities

10 unchanged sentences

( 508,302 ) ( 1,428,763 )

Proceeds from sale and leaseback agreement

Proceeds from issuance of common stock and prefunded warrants

Proceeds from related party loan

Capital contribution from noncontrolling interest

Net Cash provided by Financing Activities

15 unchanged sentences

Cash paid for interest

$ 157,286 $ 160,926

Cash paid for income taxes

Non-Cash Financing Activities

Non-Cash Investing and Financing Activities

Financed purchases of property and equipment

$ 149,532 $ 166,443

The accompanying notes are an integral part of these consolidated financial statements.

19 unchanged sentences

LiqTech Water Projects A/S, a Danish corporation (“LiqTech Water Projects”), incorporated on July 28, 2020, that is a dormant company without activity.

LiqTech Emission Control A/S, a Danish corporation (“LiqTech Emission Control”), incorporated on March 1, 2021, that is a dormant company without activity.

Nantong JiTRI LiqTech Green Energy Technology Co., Ltd., a Chinese corporation (“LiqTech JiTRI”), incorporated on December 6, 2024, as a joint venture in which the Company holds a 90 % ownership stake.

31 unchanged sentences

These receivables are recorded at the time of sale, net of an allowance for current expected credit losses.

In accordance with FASB ASC Topic 326, “ Financial Instruments – Credit Losses ,” the Company estimates expected credit losses based on historical bad debt experience, the aging of accounts receivable, the current creditworthiness of customers, prevailing economic conditions, and reasonable and supportable forward-looking information.

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic

Financial Instruments –

Credit Losses ,” the Company estimates expected credit losses based on historical bad debt experience, the aging of accounts receivable, the current creditworthiness of customers, prevailing economic conditions, and reasonable and supportable forward-looking information.

Accounts receivable balances are written off when they are determined to be uncollectible.

The roll-forward of the allowance for current expected credit losses as of December 31, 2024, and 2023 were as follows:

The roll-forward of the allowance for current expected credit losses for the year ended

December 31, 2025, and December 31, 2024 were as follows:

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

2 unchanged sentences

29,439 578,423

Receivables written off during the periods

Receivables written off during the period

( 608,331 ) ( 49,577 )

3 unchanged sentences

$ 137,969 $ 637,556

Inventories directly purchased is carried at the lower of cost or net realizable value, as determined on the first -in, first -out (“FIFO”) method.

Inventories directly purchased are carried at the lower of cost or net realizable value, as determined on the first -in, first -out (“FIFO”) method.

For inventories produced, standard costs that approximate actual cost on the FIFO method are used to value inventories.

3 unchanged sentences

Inventory valuation adjustments for excess and obsolete inventories are calculated based on current inventories levels, movement, expected useful lives, and estimated future demand for our products.

The Company has elected to not recognize lease assets and liabilities with an initial term of 12 months or less and to not separate lease and non-lease components.

The Company has elected to not recognize lease assets and liabilities with an initial term of 12 months or less, are Insignificant in value, and to not separate lease and non-lease components.

The Company’s accounting for finance leases remains substantially unchanged.

11 unchanged sentences

Long-Lived Assets

The Company assesses the impairment of long-lived assets when events or changes in circumstances indicate that the carrying value of the assets or the asset grouping may not be recoverable.

The Company assesses the impairment of long-lived assets when events or changes in circumstances indicate that the carrying value of the assets or the asset grouping

not be recoverable.

Factors that the Company considers in deciding when to perform an impairment review include significant under-performance of a business or product line in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in its use of the assets.

The Company measures the recoverability of assets that will continue to be used in its operations by comparing the carrying value of the asset grouping to its estimate of the related total future undiscounted net cash flows.

If an asset grouping’s carrying value is not recoverable through the related undiscounted cash flows, the asset grouping is considered to be impaired.

If an asset grouping’s carrying value is

not recoverable through the related undiscounted cash flows, the asset grouping is considered to be impaired.

The impairment is measured by comparing the difference between the asset grouping’s carrying value and its fair value.

3 unchanged sentences

If the Company determines that the useful lives of assets are shorter than it had originally estimated, the Company accelerates the rate of depreciation over the assets’ new, shorter useful lives.

Management has analyzed the impact of the current economic climate on its financial statements as of December 31, 2024 , and has determined that the changes to its significant judgements and estimates did not have a material impact with respect to goodwill, intangible assets, or long-lived assets.

During the years ended December 31, 2024, and 2023 , no impairment charges for long-lived assets were recorded.

Management has analyzed the impact of the current economic climate on its financial statements as of

December 31, 2025 , and has determined that the changes to its significant judgements and estimates did

not have a material impact with respect to goodwill, intangible assets, or long-lived assets.

During the years ended

December 31, 2025, and 2024 ,

no impairment charge of long-lived assets has been recorded.

Goodwill and Intangible assets

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The determination of the value of the intangible assets acquired involves certain judgments and estimates.

These judgments can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital.

Acquired intangible assets with determinable useful lives are amortized on a straight-line or accelerated basis over the estimated periods benefited, ranging from one to ten years.

Customer relationships and other non-contractual intangible assets with determinable lives are amortized over periods of five years.

These judgments can include, but are

not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital.

Acquired intangible assets with determinable useful lives are amortized on a straight-line or accelerated basis over the estimated periods benefited, ranging from

Customer relationships and other non-contractual intangible assets with determinable lives are amortized over periods of

The Company evaluates the recoverability of long-lived assets by comparing the carrying amount of an asset to estimated future net undiscounted cash flows generated by the asset.

If such assets are considered to be impaired, the impairment recognized is measured as the amount by which the carrying value of the assets exceeds the fair value of the assets.

The evaluation of recoverability involves estimates of future operating cash flows based upon certain forecasted assumptions, including, but not limited to, revenue growth rates, gross profit margins, and operating expenses over the expected remaining useful life of the related asset.

The evaluation of recoverability involves estimates of future operating cash flows based upon certain forecasted assumptions, including, but

not limited to, revenue growth rates, gross profit margins, and operating expenses over the expected remaining useful life of the related asset.

A shortfall in these estimated operating cash flows could result in an impairment charge in the future.

Goodwill is not amortized but is evaluated annually for impairment at the reporting unit level as of December 31 or when indicators of a potential impairment are present.

not amortized but is evaluated annually for impairment at the reporting unit level or when indicators of a potential impairment are present.

The Company estimates the fair value of the reporting unit using the discounted cash flow and market approaches.

Forecasts of future cash flows are based on the Company’s best estimate of future net sales and operating expenses, using primarily expected category expansion, pricing, market segment fundamentals, and general economic conditions.

During the years ended December 31, 2024, and 2023 , no impairment charge for goodwill was recorded.

During the years ended

December 31, 2025, and 2024 ,

no impairment charge for goodwill was recorded.

Revenue Recognition

The Company records revenue in accordance with FASB ASC Topic 606, “ Revenue from Contracts with Customers .” Revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

To achieve this core principle, the Company applies the following five -step approach:

The Company records revenue in accordance wit

h FASB ASC Topic 606, “

Rev enue from Contracts with Customers .” Revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

To achieve this core principle, the Company applies the following

five -step approach:

1 ) identify the contract with the customer;

2 unchanged sentences

4 ) allocate the transaction price to performance obligations in the contract;

and ( 5 ) recognize revenue when or as a performance obligation is satisfied.

5 ) recognize revenue when or as a performance obligation is satisfied.

The Company sells products throughout the world.

Sales by geographical region for the year ended December 31, 2024, and 2023 were as follows:

Sales by geographical region for the years ended

December 31, 2025, and 2024 were as follows:

% Distribution

9 unchanged sentences

For the Year Ended December 31

Systems and Aftermarket

50 % 38 % $ 8,243,681 $ 5,538,741

Filters and Membranes

24 % 39 % 4,006,105 5,634,973

2 unchanged sentences

100 % 100 % $ 16,507,558 $ 14,604,618

For Water (systems and aftermarket), Ceramics (diesel particulate filters and membranes), and Plastics (components), revenue is recognized when performance obligations specified within the terms of a contract with the customer are satisfied, which occurs when control of the product transfers to the customer or when services are rendered by the Company.

For Systems and Aftermarket, Filters and Membranes, and Components, revenue is recognized when performance obligations specified within the terms of a contract with the customer are satisfied, which occurs when control of the product transfers to the customer or when services are rendered by the Company.

The majority of the Company's sales contracts contain performance obligations satisfied at a point in time when title along with risks and rewards of ownership have transferred to the customer.

4 unchanged sentences

The Company's standard payment terms vary by the type and location of the customer and the products or services offered.

Generally, the time between when revenue is recognized and when payment is due is not significant.

Generally, the time between when revenue is recognized and when payment is due is

not significant.

Pre-payments received prior to satisfaction of performance obligations are recorded as a contract liability.

Considering the relatively short time between revenue recognition and receipt of payment, significant financing components do not exist between the Company and its customers.

Considering the relatively short time between revenue recognition and receipt of payment, financing components do

not exist between the Company and its customers.

For contracts with customers that include multiple performance obligations, judgment is required to determine whether performance obligations specified in these contracts are distinct and should be accounted for as separate revenue transactions for recognition purposes.

For such arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price.

Standalone selling prices are generally determined based on the prices charged to customers or using an expected cost-plus margin.

System sales are recognized when the Company transfers control to the customer based upon sales and delivery conditions specified in the sales contract.

Standalone selling prices are generally determined based on the prices charged to customers or using expected cost-plus margin.

System sales are recognized when the Company transfers control to the customer based upon sales and delivery conditions specified in the sales contract, or for larger projects in line with completion.

This typically occurs upon shipment of the system from the production facility but can also occur upon other agreed delivery terms.

In connection with the completion of the system, it is normal procedure to issue a Factory Acceptance Test (“FAT”) asserting that the customer has accepted the performance of the system as it is being shipped from our production facility in Hobro.

As part of the performance obligation, the customer is normally offered commissioning services (final assembly and configuration at a place designated by the customer), and this commissioning is therefore considered a second performance obligation and is valued at cost, with the addition of a standard gross margin.

This second performance obligation is recognized as revenue at the time of the commissioning services being rendered together with the cost incurred.

Part of the invoicing to the customer is also attributed to the commissioning, and at transfer of the control of the system (i.e., the first performance obligation), this portion is recognized as Contract liabilities.

Aftermarket sales represent parts, extended warranties, and maintenance services.

In connection with the completion of the system, it is normal procedure to issue a FAT (Factory Acceptance Test) asserting that the customer has accepted the performance of the system as it is being shipped from our production facility in Hobro.

second performance obligation and is valued at cost, with the addition of a standard gross profit.

second performance obligation is recognized as revenue at the time of the commissioning services being rendered together with the cost incurred.

Part of the invoicing to the customer is also attributed to the commissioning, and at transfer of the control of the system (i.e., the

first performance obligation), this portion is recognized as contract liabilities.

Aftermarket sales represent spare parts, extended warranties, and maintenance services.

For the sale of aftermarket parts, the Company transfers control and recognizes revenue when parts are shipped to the customer.

2 unchanged sentences

The Company recognizes revenue for extended warranty and maintenance agreements based on the standalone selling price over the life of the contract.

The Company has received long-term contracts for grants from government entities for the development and use of silicon carbide membranes in various water filtration and treatment applications and historically in the installation of various water filtration systems.

We measure the transfer of control of the performance obligation on long-term contracts utilizing the cost-to-cost measure of progress, with cost of revenue including direct costs such as labor and materials.

We measure transfer of control of the performance obligation on long-term contracts utilizing the cost-to-cost measure of progress, with cost of revenue including direct costs such as labor and materials.

Under the cost-to-cost approach, the use of estimated costs to complete each performance obligation is a significant variable in the process of determining recognized revenue and a significant factor in the accounting for such performance obligations.

The timing of when we bill our customers is generally dependent upon advance billings terms, milestone billings based on completion of certain phases of the work, or when services are provided or products are shipped.

The timing of when we bill our customers is generally dependent upon advance billings terms, milestone billings based on completion of certain phases of the work or when services are provided, or when products are shipped.

Projects with performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of cumulative billings are reported on our balance sheet as Contract assets.

1 unchanged sentence

Contracts Assets and Contract Liabilities

Contract assets are the Company’s rights to consideration in exchange for goods or services and are recognized when a performance obligation has been satisfied but has not yet been billed.

Contract assets are the Company’s rights to consideration in exchange for goods or services and are recognized when a performance obligation has been satisfied but has

not yet been billed.

When the Company issues invoices to the customer, and the billing is higher than the capitalized Contract assets, the net amount is transferred to Contract liabilities.

Contract assets/liabilities are transferred to revenue and cost of goods sold when the right to consideration is unconditional and billed per the terms of the contractual agreement.

Contract assets also include unbilled receivables, which usually comprise the last invoice remaining after the delivery of the water treatment unit, where revenue is recognized at the transfer of control based upon signed acceptance of the unit by the customer.

Most commonly, this invoice is sent to the customer at commissioning of the product or no later than 12 months after delivery.

Contract assets/liabilities are transferred to revenue and cost of revenues when the right to consideration is unconditional and billed per the terms of the contractual agreement.

Contract assets also include unbilled receivables, which usually comprise the last invoice remaining after the delivery of the System unit, where revenue is recognized at the transfer of control based upon signed acceptance of the unit by the customer.

Most commonly, this invoice is sent to the customer at commissioning of the product or

no later than

12 months after delivery.

Further included in Contract Assets are short-term receivables such as VAT and other receivables.

The roll-forward of contract assets and liabilities for the year ended December 31, 2024, and 2023 were as follows:

The roll-forward of contract assets and contract liabilities for the years ended

December 31, 2025, and 2024 were as follows:

Cost incurred

2 unchanged sentences

234,984 93,961

93,961 329,980

Other receivables

1 unchanged sentence

( 1,403,702 ) ( 1,121,897 )

Deferred Revenue

$ 592,865 $ 1,557,379

13 unchanged sentences

Included in operating expense for the years ended December 31, 2025, and 2024 were $ 1,163,651 and $ 1,352,060 , respectively, of research and development costs.

Income taxes are accounted for under the asset and liability method in accordance with ASC 740, “ Income Taxes .” Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Income taxes are accounted for under the asset and liability method in accordance with ASC

Income Taxes .” Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and establish a valuation allowance if, based on the weight of available evidence, it believes it is more likely than not that all or a portion of the deferred tax assets will not be realized.

The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not the position will be sustainable upon examination by the taxing authority, including resolution of any related appeals or litigation processes.

The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and establishes a valuation allowance if, based on the weight of available evidence, it believes it is more likely than

not that all or a portion of the deferred tax assets will

not be realized.

The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than

not the position will be sustainable upon examination by the taxing authority, including resolution of any related appeals or litigation processes.

This evaluation is based on all available evidence and assumes that the tax authorities have full knowledge of all relevant information concerning the tax position.

The tax benefit recognized is measured as the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement.

The tax benefit recognized is measured as the largest amount that has a greater than

50% likelihood of being realized upon ultimate settlement.

The Company recognizes interest accrued and penalties related to unrecognized tax benefits in income tax expense.

Loss Contingencies

The Company is subject to various legal and administrative proceedings along with asserted and potential claims, accruals related to product warranties, and potential asset impairments (loss contingencies) that arise in the ordinary course of business.

We are subject to various legal and administrative proceedings along with asserted and potential claims, accruals related to product warranties, and potential asset impairments (loss contingencies) that arise in the ordinary course of business.

An estimated loss from such contingencies is recognized as a charge to income if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

2 unchanged sentences

Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable.

To estimate the losses associated with repairing and replacing parts in connection with product warranties, the Company makes judgments with respect to customer claim rates.

At least quarterly, the Company reviews the status of each significant matter, and it may revise its estimates.

These revisions could have a material impact on the Company’s results of operations and financial position.

To estimate the losses associated with repairing and replacing parts in connection with product warranties, we make judgments with respect to customer claim rates.

At least quarterly, we review the status of each significant matter, and we

may revise our estimates.

These revisions could have a material impact on our results of operations and financial position.

Loss Per Share

4 unchanged sentences

Stock-Based Compensation

Stock-based awards granted to qualified employees, non-employee directors, and consultants are measured at fair value at the grant date and recognized as an expense in accordance with ASC Topic 718, “ Share-Based Payments .” For service-based awards, stock-based compensation is recognized on a straight-line basis over the requisite service period, which is generally the vesting period.

Stock-based awards granted to qualified employees, non-employee directors, and consultants are measured at fair value and recognized as an expense in accordance with ASC Topic

Share-Based Payments .” For service-based awards, stock-based compensation is recognized on a straight-line basis over the requisite service period, which is generally the vesting period.

The fair value of our stock options is estimated using a Black-Scholes option valuation model.

2 unchanged sentences

Warrant Liabilities

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants in accordance with ASC 480, “ Distinguishing Liabilities from Equity ,” and ASC 815 - 40, “ Contracts in Entity ’ s Own Equity .” This assessment, which requires the use of professional judgment, considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815 - 40, including whether the warrants are indexed to the Company’s own shares and whether the events where holders of the warrants could potentially require net cash settlement are within the Company’s control, among other conditions for equity classification.

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants in accordance with ASC

Distinguishing Liabilities from Equity ,” and ASC

Contracts in Entity ’

s Own Equity .” This assessment, which requires the use of professional judgment, considers whether the warrants are freestanding financial instruments pursuant to ASC

480, meet the definition of a liability pursuant to ASC

480, and meet all of the requirements for equity classification under ASC

40, including whether the warrants are indexed to the Company’s own shares and whether the events where holders of the warrants could potentially require net cash settlement are within the Company’s control, among other conditions for equity classification.

Warrant liabilities are recognized at fair value, with changes in fair value recognized in the consolidated statement of operations each period.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.

We provide credit, in the normal course of business.

We perform ongoing credit evaluations of our customers and maintain allowances for potential credit losses.

Due to the diversified nature and number of customers, concentrations of credit risk with respect to accounts receivable are limited.

Concentrations

One customer accounted for 12 % of the Company’s revenue for the year ended December 31, 2025.

No customers accounted for more than 10% of the revenue for the year ended December 31, 2024.

The Company’s accounts receivable from four customers made up 58 % of the total balance as of December 31, 2025.

The Company’s accounts receivable from one customer made up 18 % of the total balance as of December 31, 2024.

No supplier accounted for more than 10% of the Company’s purchases of inventory for the year ended December 31, 2025 or year ended December 31, 2024.

Fair Value of Financial Instruments

9 unchanged sentences

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures , which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about reportable segment’s profit or loss and assets that are currently required annually.

ASU 2023 - 07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

These amendments are to be applied retrospectively.

The Company adopted ASU 2023 - 07 retrospectively on December 31, 2024.

See Note 12 for further details.

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 consolidated financial statements.

Recently Issued Accounting Pronouncements

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.

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.

2 unchanged sentences

The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024 - 03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220 - 40 ) , which requires additional disclosures around specific expense categories in the notes to the financial statements.

The additional annual disclosures are effective for our year ending December 31, 2027, and the additional interim disclosures are effective in 2028.

These disclosures will be applied prospectively.

The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

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 Company is currently evaluating the impact this standard will have on its consolidated financial statements.

The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to its 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 consolidated financial statements.

In July 2025, the FASB issued ASU 2025 - 05, Financial Instruments—Credit Losses (Topic 326 ).

This guidance contains amendments that provide decision-useful information to investors and other financial statement users while reducing the time and effort necessary to analyze and estimate credit losses for current accounts receivable and current contract assets.

The amendments will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.

Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance.

The Company is currently evaluating the impact of ASU 2025 - 05 on its condensed consolidated financial statements and related disclosures.

NOTE 2 - GOING CONCERN

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern.

The Company has incurred recent operating losses and used cash in its operations, which raises substantial doubt about its ability to continue as a going concern for the twelve months following the issuance of these financial statements.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management continues to implement cost optimization and operational initiatives intended to improve liquidity and support a sustainable path toward profitability.

The Company is actively evaluating financing alternatives, including potential debt or equity financing and other strategic arrangements, to strengthen its capital position.

While there can be no assurance that such funding will be obtained on acceptable terms, Management’s plans are intended to improve liquidity and support the Company’s ability to continue operations;

however, there can be no assurance these plans will be successful.

As of December 31, 2025, the Company had cash and cash equivalents of $ 5,070,385 , net working capital of $ 11,237,788 , an accumulated deficit of $ 94,795,121 and total assets and liabilities of $ 27,278,097 and $ 16,905,861 , respectively.

NOTE 3 - INVENTORIES

Inventories consisted of the following on December 31, 2025, and 2024 :

Furnace parts and supplies

Raw materials

80 unchanged sentences

2,425,418 45,118

2,128,429 57,288

Total payment under lease agreements

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The warrants qualified for equity classification and were reported within Additional Paid-In Capital.

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 "2025 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 2025 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 components of notes payable are as follows:

5 unchanged sentences

5,510,545 5,303,563

Current portion of senior promissory notes payable

Senior promissory notes payable, less current portion

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For the years ended December 31, 2025 , and 2024 , the Company recognized amortization of debt discount of $ 426,982 and $ 615,522 , respectively.

Loan from related party

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 utilization available to th e JV and to transfer the utilization rights necessary for operations in the marine water treatment market in China.

In February 2025, the JV received R&D funding of RMB 8,000,000 (approximately $ 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 10,00

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.

NOTE 9 - AGREEMENTS, COMMITMENTS AND CONTINGENCIES

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$ 9,349,631 and $ 7,795,000 for the tax components of LiqTech Holding, LiqTech Ceramics, LiqTech Water, LiqTech Plastics, LiqTech Emission Control, and LiqTech Water Projects, respectively;

and $ 0 and $ 479,000 for LiqTech China, respectively, as management could not determine that it was more likely than not that sufficient income could be generated by these components to realize the resulting net operating loss carry-forwards and other deferred tax assets of these components.

The change in the valuation allowance for the year ended December 31, 2024 , was an increase of $ 511,000 for the US component, an increase of $ 1,492,000 for the Danish component, and a decrease of $ 479,000 for the Chinese component.

and $ 193,481 and $ 0 for Nantong JiTRi Liqtech China, respectively, as management could not determine that it was more likely than not that sufficient income could be generated by these components to realize the resulting net operating loss carry-forwards and other deferred tax assets of these components.

The change in the valuation allowance for the year ended December 31, 2025 , was an increase of $ 541,107 for the US component, an increase of $ 1,206,995 for the Danish component, and an increase of $ 193,481 for the Chinese component.

The change in the valuation allowance for the year ended December 31, 2024 , was an increase of $ 511,000 , $ 1,492,000 , and $ 479,000 for the US, Danish, and Chinese components, respectively.

10 unchanged sentences

( 72,734 ) ( 323,115 )

Excess of book over tax work in progress

Valuation allowance

2 unchanged sentences

Distributed as:

Long-term deferred tax asset

Long-term deferred tax liability

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Non-deductible expenses

1,054 0.0 % 1,259 0.0 %

Change in valuation allowance

5 unchanged sentences

Current income taxes:

$ - $ ( 148,668 )

Current tax (benefit)

2 unchanged sentences

( 295,706 ) ( 156,342 )

Work in progress

- ( 442,964 )

Net operating loss carryover

37 unchanged sentences

On January 1, 2025, the Company issued 30,703 shares of Common Stock to settle RSUs.

The RSUs were valued at $ 73,500 for services provided by the Board of Directors in 2023 .

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 Company's board of directors (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, 2025, 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, 29,998 shares of Common Stock, with a total value of $ 104,940 , were retired to settle tax withholdings associated with stock-based compensation.

On June 24, 2024 , the Company issued 11,932 shares of Common Stock to settle RSUs.

The RSUs were valued at $ 36,750 for services provided by the Board of Directors from 2023 to 2024 .

The Company recognized the stock-based compensation of the award over the requisite service period from 2023 to 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.

On April 30, 2025, the Company issued 8,019 shares of Common Stock to settle RSUs.

The RSUs were valued at $ 11,868 for services provided by management.

On September 12, 2025, the Company issued 13,021 shares of Common Stock to settle RSUs.

The RSUs were valued at $ 116,667 for services provided by management in the last 12 months.

The Company recognized the stock-based compensation of the award over the requisite service period during the period ended September 30, 2024 .

On September 27, 2024 , the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company agreed to issue and sell an aggregate of 3,630,129 shares of Common Stock, 1,369,871 pre-funded warrants to purchase shares of Common Stock, and warrants to purchase up to an aggregate of 5,000,000 shares of Common Stock, for gross proceeds of up to $ 10 million.

The combined purchase price of one share of Common Stock and one accompanying warrant to purchase one share of Common Stock is $ 2.00 .

The combined purchase price of one pre-funded warrant and one accompanying warrant to purchase one share of Common Stock under the Purchase Agreement is $ 1.999 .

The Company agreed to issue the Common Stock, warrants, and pre-funded warrants in two tranches:

(i) a first tranche comprised of 29,227 shares of Common Stock, 555,302 pre-funded warrants, and warrants to purchase an aggregate of 584,529 shares of Common Stock (collectively, the “First Tranche Securities”);

and (ii) a second tranche comprised of 3,600,902 shares of Common Stock, 814,569 pre-funded warrants, and warrants to purchase an aggregate of 4,415,471 shares of Common Stock (collectively, the “Second Tranche Securities”).

On September 27, 2024 , in connection with the closing of the first tranche, the Company sold and issued the First Tranche Securities for gross proceeds of approximately $ 1.2 million.

On November 12, 2024 , in connection with the closing of the second tranche, the Company sold and issued the Second Tranche Securities for gross proceeds of approximately $ 8.8 million.

The RSUs were valued at $ 58,333 for services provided by management.

In connection with the issuance, 13,021 shares of Common Stock, with a total value of $ 58,333 , were withheld from vesting to settle tax withholdings associated with stock-based compensation.

On May 17, 2022, the Company entered a warrant purchase agreement with existing stockholders to purchase 3,803,133 shares of Common Stock at an offering price of $ 3.992 per prefunded warrant, which represents the offering price of $ 4.00 per share of the Company’s Common Stock less the $ 0.008 per share exercise price for each pre-funded warrant.

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Warrants issued in connection with public offering and private placement

6,369,871 531,250

Exercises and conversions

Outstanding, December 31

3 unchanged sentences

Under the terms and conditions of the Incentive Plan, the Board of Directors is empowered to grant RSUs to officers, directors, and consultants of the Company.

At December 31, 2024 , 26,040 RSUs were granted and outstanding under the Incentive Plan.

At December 31, 2025 , 0 RSUs were 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.

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NOTE 13 – SEGMENT REPORTING

The Company operates in three segments:

Water, Ceramics, and Plastics.

The Company operates through three reportable segments:

Systems and Aftermarket, Filters and Membranes, and Components.

Each segment comprises multiple sub-segments that leverage a shared production infrastructure and centralized supporting functions.

The Company’s Chief Operating Decision-Maker (“CODM”) is Executive Management, consisting of the Chief Executive Officer, and Chief Financial & Operating Officer.

Revenue information at both the segment and sub-segment levels is reviewed regularly as part of daily operational management.

Profitability and asset information is available and evaluated at the segment level on a monthly basis.

Resource allocation decisions are made at the segment level and are assessed on a quarterly basis.

The Company’s reportable segment information for the years ended December 31, 2025, and 2024 were as follows:

For the Year Ended

Systems and Aftermarket

$ 8,243,681 $ 5,538,741

Filters and Membranes

4,006,105 5,634,973

4 unchanged sentences

For the Year Ended

Systems and Aftermarket

$ 6,788,273 $ 4,351,092

Filters and Membranes

5,235,530 6,586,323

1 unchanged sentence

$ 15,257,035 $ 14,353,713

For the Year Ended

Operating Expenses

Systems and Aftermarket

$ 2,880,970 $ 3,584,182

Filters and Membranes

1,711,413 1,777,979

1,204,430 1,327,436

3,762,410 3,049,157

Total Operating Expenses

$ 9,559,223 $ 9,738,754

For the Year Ended

Other Income (Expense) and Income tax benefit

Systems and Aftermarket

$ ( 229,037 ) $ 247,309

Filters and Membranes

( 172,237 ) ( 593,471 )

( 8,661 ) 40,000

116,695 ( 551,247 )

Total Other Income (Expense) and Income tax benefit

$ ( 293,240 ) $ ( 857,409 )

For the Year Ended

Systems and Aftermarket

$ ( 1,654,600 ) $ ( 2,149,224 )

Filters and Membranes

( 3,113,075 ) ( 3,322,800 )

( 322,394 ) ( 1,304,295 )

( 3,511,871 ) ( 3,568,939 )

Total net loss

$ ( 8,601,940 ) $ ( 10,345,258 )

Systems and Aftermarket

$ 10,210,357 $ 8,235,726

Filters and Membranes

10,139,656 10,679,025

3 unchanged sentences

NOTE 14 - SIGNIFICANT CUSTOMERS / CONCENTRATION

The Company did not have any customers accounting for 10% or more of net sales in the reported periods.

As a result, there is no significant customer concentration that would materially impact the Company's financial position or results of operations.

The following table presents customers accounting for 10% or more of the Company’s revenue:

For the Year Ended

* Zero or less than 10%

The following table presents customers accounting for 10% or more of the Company’s accounts receivable:

Customer C 20 % * %

Customer D 16 % * %

Customer E 10 % * %

* Zero or less than 10%

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The Company is recognizing the stock-based compensation of the award over the requisite service period.

On January 31, 2025 , the Company announced the appointment of David Kowalczyk as its new Chief Financial Officer and Chief Operating Officer ("CFOO"), effective March 1, 2025.

In connection with this appointment, Phillip Massie Price, the Company’s Interim Chief Financial Officer, and the Company mutually agreed that Mr.

Price will step down as Interim CFO effective March 1, 2025.

Price will continue to serve as the Company’s principal financial officer until April 30, 2025, after which he will depart from the Company.

Kowalczyk is an experienced finance executive with over 20 years of professional experience across multiple industries and ownership structures.

He holds a Bachelor of Science in Economics and Business Administration, a Master of Science in Accounting and Auditing, and a Master of Science in Finance and Investments from Copenhagen Business School.

He also has extensive experience in technology and R&D-driven companies.

On March 26, 2025, the Company entered into a Second Amendment to the Note and Warrant Purchase Agreement 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 to each of the existing amended notes, resulting in an extension of the maturity date from January 1, 2026 to May 1, 2027.

Additionally, beginning on January 1, 2026, the notes will bear interest at a rate of 10 % per annum, payable semi-annually.

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.

The Company evaluated the Second Amendment under ASC 855 and concluded that it represents a non-recognized subsequent event.

While it does not impact the financial statements as of December 31, 2024, it is disclosed herein due to its significance.

On January 3, 2026 , the Company issued 41,417 common shares to settle RSUs.

The RSUs were valued at $ 82,265 for services provided by the senior leadership team and key employees in 2025 .

The Company is recognizing the stock-based compensation of the award over the requisite service period.

On February 1, 2026 , the Company issued 25,867 common shares to settle RSUs.

The RSUs were valued at $ 47,336 for services provided by management in 2025 .

The Company is recognizing the stock-based compensation of the award over the requisite service period.

On February 1, 2026 , the Company issued 7,389 common shares to settle RSUs.

The RSUs were valued at $ 15,630 for services provided by the senior leadership team and key employees in 2025 .

The Company is recognizing the stock-based compensation of the award over the requisite service period.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data