LIQTECH INTERNATIONAL INC 10-Q

liqt20260630_10q.htm UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2026 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36210 LiqTech International, Inc. (Exact name of registrant as specified in its charter) Nevada 20-1431677 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Industriparken 22C , DK 2750 Ballerup , Denmark (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: + 45 3131 5941 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading symbol(s) Name of each exchange on which registered Common Stock, $0.001 par value LIQT The Nasdaq Stock Market LLC Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one): Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒ As of August 12, 2026, there were 32,947,841 shares of Common Stock, $0.001 par value per share, outstanding. LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES Quarterly Report on Form 10-Q For the Period Ended June 30, 2026 TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION 5 Item 1. Financial Statements 5 Condensed Consolidated Balance Sheets as of June 30, 2026 (unaudited) and December 31, 2025 5 Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2026 and June 30, 2025 (unaudited) 7 Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2026 and June 30, 2025 (unaudited) 8 Condensed Consolidated Statements of Stockholders ’ Equity for the Three and Six Months ended June 30, 2026 and June 30, 2025 (unaudited) 9 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and June 30, 2025 (unaudited) 11 Notes to Condensed Consolidated Financial Statements (unaudited) 13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3. Quantitative and Qualitative Disclosures About Market Risk 29 Item 4. Controls and Procedures 30 PART II. OTHER INFORMATION 31 Item 1. Legal Proceedings 31 Item 1A. Risk Factors 31 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 31 Item 3. Defaults Upon Senior Securities 31 Item 4. Mine Safety Disclosures 31 Item 5. Other Information 31 Item 6. Exhibits 32 SIGNATURES 34 2 FORWARD-LOOKING STATEMENTS Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” regarding the plans and objectives of management for future operations and market trends and expectations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving the continued expansion of our business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future political, legislative, economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. This is especially underlined by the potential impacts from the prevailing macro-economic uncertainty on the Company, including the related effects to our business operations, results of operations, cash flows, and financial position. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Quarterly Report on Form 10-Q will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Forward-looking statements include, but are not limited to, statements concerning: ● The potential adverse effects on our operations and financial performance from armed conflicts or geopolitical tensions; ● The potential adverse impact of global trade restrictions, tariffs and geopolitical tensions on our business and supply chain; ● The potential negative impact of prolonged energy market volatility and supply disruptions on our business; ● The potential adverse impact of health crises, pandemics, and public health emergencies on our business, financial condition, and operations; ● Our dependence on a few major customers and the ability to maintain future relationships with one or more of these major customers; ● Our ability to operate with financial stability and secure access to external financing and adequate liquidity; ● Our ability to secure and source supplies of raw materials and key components in due time and at competitive prices; ● Our ability to achieve revenue growth and penetrate new markets; ● Our dependence on the expertise and experience of our management team and the retention of key employees; ● Our reliance and access to qualified personnel to expand our business; ● Our ability to adapt to potentially adverse changes in legislative, regulatory and political frameworks; ● Changes in interest rates or tightening of debt capital markets; ● Changes in emissions and environmental regulations, and potential further tightening of emission standards; 3 ● The exposure to potentially adverse tax consequences; ● Our ability to compete under changing governmental standards by which our products are evaluated; ● The financial impact from the fluctuation and volatility of foreign currencies; ● The potential monetary costs of defending our intellectual property rights; ● Our ability to successfully protect our intellectual property rights and manufacturing know-how; ● The possibility of a dispute over intellectual property developed in conjunction with third parties with whom we have contractual relationships; ● The possibility that we could become subject to litigation that could be costly, limit or cancel our intellectual property rights or divert time and efforts away from our business operations; ● The potential negative impact to the sale of our products caused by technological advances of our competitors; ● The potential liability for environmental harm or damages resulting from technical faults or failures of our products; ● The possibility that an investor located within the United States may not be able to, or find it difficult to, enforce any judgments obtained in United States courts because a significant portion of our assets and some of our officers and directors may be located outside of the United States; ● The possibility that we may not be able to develop and maintain an effective system of internal control over financial reporting, leading to inaccurate reports of our financial results; ● The possibility of breaches in the security of our information technology systems; ● The liability risk of our compliance to environmental laws and regulations; and ● The potential negative impact of more stringent environmental laws and regulations as governmental agencies seek to improve minimum standards. Any forward-looking statement made by us herein speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. 4 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS LIQTECH INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 2026 2025 Assets Current Assets: Cash and restricted cash $ 15,655,731 $ 5,070,385 Accounts receivable, net 5,230,837 3,429,992 Inventories, net 5,956,679 6,479,321 Contract assets 340,260 733,851 Prepaid expenses and other current assets 526,348 245,702 Total Current Assets 27,709,855 15,959,251 Non-Current Assets: Property and equipment, net 5,284,603 5,845,323 Operating lease right-of-use assets 4,157,532 4,643,680 Deposits and other assets 529,036 545,573 Intangible assets, net 25,759 36,125 Goodwill 240,307 248,145 Total Non-Current Assets 10,237,237 11,318,846 Total Assets $ 37,947,092 $ 27,278,097 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 LIQTECH INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) June 30, December 31, 2026 2025 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable $ 1,403,902 $ 1,552,890 Accrued expenses 2,485,634 1,795,382 Notes payable 1,050,000 - Line of credit 88,428 - Current portion of finance lease liabilities 496,797 517,759 Current portion of operating lease liabilities 717,820 714,446 Contract liabilities 98,300 140,986 Total Current Liabilities 6,340,881 4,721,463 Non-Current Liabilities: Deferred tax liability 60,914 63,654 Finance lease liabilities, net of current portion 1,127,729 1,415,908 Operating lease liabilities, net of current portion 3,439,712 3,929,234 Loan from related party 1,179,042 1,265,057 Notes payable, net of debt discounts - 5,510,545 Total Non-Current Liabilities 5,807,397 12,184,398 Total Liabilities 12,148,278 16,905,861 Stockholders' Equity: Preferred stock; par value $ 0.001 , 2,500,000 shares authorized, 0 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively - - Common stock; par value $ 0.001 , 50,000,000 shares authorized and 32,947,841 and 9,627,064 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively 32,948 9,627 Additional paid-in capital 131,755,874 110,427,993 Accumulated deficit ( 100,521,598 ) ( 94,795,121 ) Accumulated other comprehensive loss ( 5,357,003 ) ( 5,209,173 ) Total Stockholders' Equity 25,910,221 10,433,326 Noncontrolling Interest ( 111,407 ) ( 61,090 ) Total Equity 25,798,814 10,372,236 Total Liabilities and Equity $ 37,947,092 $ 27,278,097 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 LIQTECH INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For The Three Months Ended For the Six Months Ended June 30, June 30, 2026 2025 2026 2025 Revenue $ 4,363,752 $ 4,957,489 $ 8,500,072 $ 9,575,030 Cost of goods sold 3,998,213 4,472,911 7,740,789 8,965,396 Gross Profit 365,539 484,578 759,283 609,634 Operating Expenses: Selling expenses 835,836 812,568 1,816,510 1,530,584 General and administrative expenses 1,589,775 1,539,323 3,003,920 2,901,569 Research and development expenses 271,745 242,556 547,879 472,679 Total Operating Expenses 2,697,356 2,594,447 5,368,309 4,904,832 Loss from Operations ( 2,331,817 ) ( 2,109,869 ) ( 4,609,026 ) ( 4,295,198 ) Other Income (Expense): Interest and other income 22,378 64,605 39,235 133,356 Interest and other expense ( 231,160 ) ( 63,466 ) ( 440,224 ) ( 111,749 ) Amortization of debt discount ( 401,951 ) ( 84,318 ) ( 489,455 ) ( 252,348 ) Gain (loss) on foreign currency transactions ( 94,457 ) 34,060 ( 263,013 ) 69,576 Gain (loss) on disposal of property and equipment ( 15,058 ) ( 2,158 ) ( 15,058 ) ( 63,464 ) Total Other Expense ( 720,248 ) ( 51,277 ) ( 1,168,515 ) ( 224,629 ) Loss Before Income Taxes ( 3,052,065 ) ( 2,161,146 ) ( 5,777,541 ) ( 4,519,827 ) Income tax benefit ( 370 ) ( 360 ) ( 747 ) ( 699 ) Net Loss $ ( 3,051,695 ) $ ( 2,160,786 ) $ ( 5,776,794 ) $ ( 4,519,128 ) Net Loss attributable to noncontrolling interest ( 35,330 ) ( 8,901 ) ( 50,317 ) ( 15,851 ) Net Loss attributable to LiqTech International, Inc. ( 3,016,365 ) ( 2,151,885 ) ( 5,726,477 ) ( 4,503,277 ) Loss Per Common Share – Basic and Diluted $ ( 0.14 ) $ ( 0.14 ) $ ( 0.32 ) $ ( 0.30 ) Weighted-Average Common Shares Outstanding – Basic and Diluted 20,808,160 14,906,781 18,033,180 14,906,781 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 LIQTECH INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) For the Three Months Ended For the Six Months Ended June 30, June 30, 2026 2025 2026 2025 Net Loss ( 3,051,695 ) ( 2,160,786 ) ( 5,776,794 ) ( 4,519,128 ) Loss on foreign currency translation adjustments ( 15,203 ) 794,429 ( 147,830 ) 1,142,775 Total Other Comprehensive Loss $ ( 3,066,898 ) $ ( 1,366,357 ) $ ( 5,924,624 ) $ ( 3,376,353 ) Net loss attributable to non-controlling interests 35,330 8,901 50,317 15,851 Total Other Comprehensive Loss Attributable to LiqTech International, Inc. $ ( 3,031,568 ) $ ( 1,357,456 ) $ ( 5,874,307 ) $ ( 3,360,502 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 8 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, 2025 9,627,064 9,627 110,427,993 ( 94,795,121 ) ( 5,209,173 ) 10,433,326 ( 61,090 ) 10,372,236 Common stock issued in settlement of RSUs 394,226 394 ( 394 ) - - - - - Tax withholdings paid related to stock-based compensation ( 73,449 ) ( 73 ) ( 182,426 ) - - ( 182,499 ) - ( 182,499 ) Stock-based compensation - - 218,325 - - 218,325 - 218,325 Currency translation, net - - - - ( 132,627 ) ( 132,627 ) - ( 132,627 ) Net loss - - - ( 2,710,112 ) - ( 2,710,112 ) - ( 2,710,112 ) Net loss attributable to noncontrolling interest - - - - - - ( 14,987 ) ( 14,987 ) Balance at March 31, 2026 9,947,841 9,948 110,463,498 ( 97,505,233 ) ( 5,341,800 ) 7,626,413 ( 76,077 ) 7,550,336 Common stock issued in settlement of RSUs - - - - - - - - Tax withholdings paid related to stock-based compensation - - - - - - - - Capital raise 20,000,000 20,000 18,077,051 - - 18,097,051 - 18,097,051 Repayment of note 3,000,000 3,000 2,997,000 - - 3,000,000 - 3,000,000 Stock-based compensation - - 218,325 - - 218,325 - 218,325 Currency translation, net - - - - ( 15,203 ) ( 15,203 ) - ( 15,203 ) Net loss - - - ( 3,016,365 ) - ( 3,016,365 ) - ( 3,016,365 ) Net loss attributable to noncontrolling interest - - - - - - ( 35,330 ) ( 35,330 ) Balance at June 30, 2026 32,947,841 32,948 131,755,874 ( 100,521,598 ) ( 5,357,003 ) 25,910,221 ( 111,407 ) 25,798,814 The accompanying notes are an integral part of these condensed consolidated financial statements. 9 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 Common stock issued in settlement of RSUs 8,019 8 ( 8 ) - - - - - Stock-based compensation - - 230,553 - - 230,553 - 230,553 Currency translation, net - - - - 795,338 795,338 ( 909 ) 794,429 Net loss - - - ( 2,151,885 ) - ( 2,151,885 ) - ( 2,151,885 ) Net loss attributable to noncontrolling interest - - - - - - ( 8,901 ) ( 8,901 ) Balance at June 30, 2025 9,614,043 9,614 109,912,732 ( 90,770,715 ) ( 5,218,427 ) 13,933,204 ( 2,972 ) 13,930,232 The accompanying notes are an integral part of these condensed consolidated financial statements. 10 LIQTECH INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, 2026 2025 Cash Flows from Operating Activities: Net loss $ ( 5,776,794 ) $ ( 4,519,128 ) Adjustments to reconcile net loss to net cash used in operations: Depreciation and amortization 658,434 900,766 Amortization of debt discount and accrued interest 489,455 252,348 Stock-based compensation 436,650 471,798 Amortization of right-of-use assets 347,688 281,639 Deferred taxes ( 747 ) ( 699 ) Loss on disposal of property and equipment ( 15,058 ) 63,464 Changes in assets and liabilities: Accounts receivable ( 1,955,382 ) ( 1,307,919 ) Inventories 504,990 652,828 Contract assets 379,463 678,102 Prepaid expenses and other current assets ( 291,144 ) ( 227,584 ) Accounts payable ( 107,475 ) 74,808 Accrued expenses 679,736 71,919 Operating lease liabilities ( 347,688 ) ( 281,639 ) Contract liabilities ( 39,158 ) ( 18,539 ) Net Cash used in Operating Activities ( 5,037,030 ) ( 2,907,836 ) Cash Flows from Investing Activities: Purchase of property and equipment ( 277,646 ) ( 102,342 ) Proceeds from the disposal of property and equipment 20,124 54,457 Net Cash used in Investing Activities ( 257,522 ) ( 47,885 ) Cash Flows from Financing Activities: Repayments of finance lease liabilities ( 254,067 ) ( 240,849 ) Proceeds from issuance of common stock, net of discounts and commissions 18,106,656 - Proceeds from related party loan - 1,084,616 Proceeds from line of credit 90,568 - Payments on notes payable, net ( 3,000,000 ) - Proceeds from notes payable 1,000,000 - Acquisition of common stock for tax withholding obligations ( 182,499 ) - Capital contribution from noncontrolling interest - 12,729 Net Cash provided by (used in) Financing Activities 15,760,658 856,496 Effect of exchange rate changes on cash, cash equivalents and restricted cash 119,240 ( 96,054 ) Net Change in Cash, Cash Equivalents, and Restricted Cash 10,585,346 ( 2,195,279 ) Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 5,070,385 10,868,728 Cash, Cash Equivalents, and Restricted Cash at End of Period $ 15,655,731 $ 8,673,449 The accompanying notes are an integral part of these condensed consolidated financial statements. 11 LIQTECH INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, 2026 2025 Supplemental Disclosures of Cash Flow Information: Cash paid for interest $ 310,549 $ 107,753 Non-Cash Investing and Financing Activities Financed purchases of property and equipment - 149,219 Issued common stock for debt cancellation $ 3,000,000 $ - The accompanying notes are an integral part of these condensed consolidated financial statements. 12 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 and Article 8 of Regulation S- X. They do not include all the information and footnotes required by GAAP for complete financial statements. The December 31, 2025 consolidated balance sheet data were derived from audited financial statements but do 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, 2025 included in the Company’s Annual Report on Form 10 -K, as filed with the Securities and Exchange Commission on February 27, 2026. 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 and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 . Recently Adopted 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. 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 has adopted this standard. 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 has adopted this standard. Recently Issued Accounting Pronouncements Not Yet Adopted 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. 13 NOTE 2 – NONCONTROLLING INTEREST AND LOANS FROM RELATED PARTIES 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, the Company has agreed to make our technology utilization available to the 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 USD 1.2 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 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 the Company. As of June 30, 2026 , the noncontrolling interest in the JV amounted to $( 111,407 ) and reflects the third party’s share of the JV’s net assets and net loss for the period. 14 NOTE 3 – DISAGGREGATION OF REVENUES AND SEGMENT REPORTING 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 sells products throughout the world, and sales by geographical region are as follows for the three and six months ended June 30, 2026 and 2025 : For the Three Months For the Six Months Ended June 30, Ended June 30, Revenues 2026 2025 2026 2025 Americas $ 452,774 $ 1,252,870 $ 703,576 $ 3,486,771 Asia-Pacific 1,012,125 376,413 1,637,678 510,868 Europe 2,898,853 3,205,345 6,158,818 5,454,530 Middle East & Africa - 122,861 - 122,861 Total revenue $ 4,363,752 $ 4,957,489 $ 8,500,072 $ 9,575,030 The Company’s reportable segment information for the three and six months ended June 30, 2026 and 2025 were as follows: For the Three Months For the Six Months Ended June 30, Ended June 30, Revenues 2026 2025 2026 2025 Systems and Aftermarket $ 2,408,368 $ 2,442,696 $ 4,197,663 $ 5,136,418 Filters and Membranes 1,041,613 1,299,412 2,348,612 2,253,258 Components 913,771 1,215,381 1,953,797 2,185,354 Corporate - - - - Total revenues $ 4,363,752 $ 4,957,489 $ 8,500,072 $ 9,575,030 For the Three Months For the Six Months Ended June 30, Ended June 30, Cost of goods sold 2026 2025 2026 2025 Systems and Aftermarket $ 1,865,188 $ 1,870,609 $ 3,154,401 $ 4,029,736 Filters and Membranes 1,219,614 1,637,245 2,741,388 3,138,315 Components 913,411 963,905 1,845,000 1,794,290 Corporate - 1,152 - 3,055 Total cost of goods sold 3,998,213 4,472,911 7,740,789 8,965,396 For the Three Months For the Six Months Ended June 30, Ended June 30, Operating expenses 2026 2025 2026 2025 Systems and Aftermarket $ 855,134 $ 655,462 $ 1,638,769 $ 1,266,949 Filters and Membranes 466,279 421,614 914,092 787,974 Components 383,872 287,082 756,979 541,239 Corporate 992,071 1,230,289 2,058,469 2,308,670 Total operating expenses 2,697,356 2,594,447 5,368,309 4,904,832 For the Three Months For the Six Months Ended June 30, Ended June 30, Other Expenses 2026 2025 2026 2025 Systems and Aftermarket $ 20,255 $ 193,595 $ 43,029 $ 259,546 Filters and Membranes 23,192 31,146 45,554 121,123 Components 6,581 2,443 8,893 5,693 Corporate 670,220 ( 175,907 ) 1,071,039 ( 161,733 ) Total other expenses 720,248 51,277 1,168,515 224,629 15 For the Three Months For the Six Months Ended June 30, Ended June 30, Net loss 2026 2025 2026 2025 Systems and Aftermarket $ ( 332,209 ) $ ( 276,970 ) $ ( 638,536 ) $ ( 419,813 ) Filters and Membranes ( 667,472 ) ( 790,593 ) ( 1,352,422 ) ( 1,794,154 ) Components ( 390,093 ) ( 37,689 ) ( 657,075 ) ( 155,169 ) Corporate ( 1,661,921 ) ( 1,055,534 ) ( 3,128,761 ) ( 2,149,992 ) Total net loss ( 3,051,695 ) ( 2,160,786 ) ( 5,776,794 ) ( 4,519,128 ) As of June 30, December 31, Total assets 2026 2025 Systems and Aftermarket $ 10,182,207 $ 10,210,357 Filters and Membranes 9,041,440 10,139,656 Components 1,734,710 1,942,818 Corporate 16,988,735 4,985,266 Total assets $ 37,947,092 $ 27,278,097 NOTE 4 – ACCOUNTS RECEIVABLE Accounts receivable consisted of the following on June 30, 2026 , and December 31, 2025 : June 30, December 31, 2026 2025 Trade accounts receivable $ 5,397,075 $ 3,567,961 Allowance for current expected credit losses ( 166,238 ) ( 137,969 ) Total accounts receivable, net $ 5,230,837 $ 3,429,992 The roll-forward of the current expected credit losses for the periods ended June 30, 2026 and December 31, 2025 is as follows: June 30, December 31, 2026 2025 Allowance for current expected credit losses at the beginning of the period $ 137,969 $ 637,556 Bad debt expense 32,627 29,439 Receivables written off during the period - ( 608,331 ) Effect of exchange rate changes ( 4,358 ) 79,305 Allowance for current expected credit losses at the end of the period $ 166,238 $ 137,969 16 NOTE 5 – INVENTORIES Inventories consisted of the following on June 30, 2026 , and December 31, 2025 : June 30, December 31, 2026 2025 Raw materials $ 3,277,671 $ 3,282,184 Work in process 1,926,673 2,402,158 Finished goods and filtration systems 1,668,618 1,755,674 Reserve for obsolescence ( 916,283 ) ( 960,695 ) Total inventories, net $ 5,956,679 $ 6,479,321 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 Contract assets and Contract liabilities for the periods ended June 30, 2026 and December 31, 2025 is as follows: June 30, December 31, 2026 2025 Cost incurred $ 1,751,121 $ 1,750,757 VAT 243,777 234,984 Other receivables 19,005 10,826 Prepayments ( 1,771,943 ) ( 1,403,702 ) $ 241,960 $ 592,865 Distributed as follows: Contract assets $ 340,260 $ 733,851 Contract liabilities ( 98,300 ) ( 140,986 ) $ 241,960 $ 592,865 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. 17 During the six months ended June 30, 2026 , cash paid for amounts included for the measurement of finance lease liabilities was $ 254,067 and the Company recorded finance lease expenses in other income (expenses) of $ 58,091 . During the six months ended June 30, 2026 , cash paid for amounts included for the measurement of operating lease liabilities was $ 495,963 and the Company recorded operating lease expense of $ 497,193 . Supplemental balance sheet information related to leases as of June 30, 2026 and December 31, 2025 was as follows: June 30, December 31, 2026 2025 Operating leases: Operating lease right-of-use assets $ 4,157,532 $ 4,643,680 Operating lease liabilities – current $ 717,820 $ 714,446 Operating lease liabilities – long-term $ 3,439,712 3,929,234 Total operating lease liabilities $ 4,157,532 $ 4,643,680 Finance leases: Property and equipment, at cost $ 4,445,721 $ 4,590,723 Accumulated depreciation ( 1,831,747 ) ( 1,703,252 ) Property and equipment, net $ 2,613,974 $ 2,887,471 Finance lease liabilities – current $ 496,797 $ 517,759 Finance lease liabilities – long-term 1,127,729 1,415,908 Total finance lease liabilities $ 1,624,526 $ 1,933,667 Weighted average remaining lease term: Operating leases 4.7 6.0 Finance leases 2.0 2.5 Weighted average discount rate: Operating leases 6.6 % 6.7 % Finance leases 5.2 % 5.3 % Maturities of lease liabilities at June 30, 2026 were as follows: Operating Finance Leases Leases 2026 485,037 299,499 2027 971,684 1,138,405 2028 822,661 121,500 2029 521,330 171,425 2030 519,206 27,064 Thereafter 1,828,294 16,737 Total payment under lease agreements 5,148,212 1,774,630 Less imputed interest ( 990,680 ) ( 150,104 ) Total lease liabilities $ 4,157,532 $ 1,624,526 18 NOTE 8 – DEBT The components of notes payable are as follows: June 30, December 31, 2026 2025 Senior promissory notes $ - $ 6,000,000 Less: unamortized debt discount - ( 489,455 ) Total senior promissory notes payable, net $ - $ 5,510,545 Senior promissory notes payable, less current portion - 5,510,545 Total senior promissory notes payable, net $ - $ 5,510,545 For the six months ended June 30, 2026, and 2025 , the Company recognized amortization of debt discount of $ 489,455 and $ 252,348 , re spectively. During the six months ended June 30, 2026 interests of $ 261,370 was recognized. The note including interest was repaid in June 2026. On May 22, 2026, the Company entered into a short-term financing arrangement pursuant to which it issued promissory notes in an aggregate principal amount of $ 1.1 million for cash proceeds of $ 1.0 million, reflecting an original issue discount of $ 0.1 million. The notes had an initial term of two months and the proceeds were used for working capital requirements. In May 2026, the Company entered into a $ 88,428 (RMB 600,000 ) credit facility with Bank of Jiangsu, available through May 21, 2027. Borrowings under the facility are subject to the bank’s approval, with interest rates and other terms determined at the time of each individual borrowing. On June 8, 2026, the Company fully settled its $ 6.0 million senior promissory notes. Of the outstanding principal, $ 3.0 million was settled through the issuance of 3.0 million shares of common stock at $ 1.00 per share, and the remaining $ 3.0 million was repaid in cash, together with accrued interest. Following the transaction, no amounts remained outstanding under the senior promissory notes. 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 June 30, 2026 and December 31, 2025 , were as follows: June 30, December 31, 2026 2025 Balance at January 1 $ 524,828 $ 621,031 Warranty costs charged to cost of goods sold ( 90,350 ) ( 87,466 ) Utilization charges against reserve - ( 78,958 ) Foreign currency effect ( 14,443 ) 70,221 Balance at the end of the period $ 420,035 $ 524,828 NOTE 10 – STOCKHOLDERS ’ EQUITY Common Stock – The Company has 50,000,000 authorized shares of Common Stock, $ 0.001 par value. As of June 30, 2026 and December 31, 2025 , there were 32,947,841 and 9,627,064 shares of Common Stock issued and outstanding, respectively. 19 Stock Issuances During the six months ended June 30, 2026 , the Company has made the following issuances of Common Stock: On January 26, 2026, the Company issued 136,998 shares of Common Stock to settle RSUs. The RSUs were valued at $ 271,256 for services provided by the Company's board of directors (the "Board of Directors") in 2025 . The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2025 . On January 27, 2026, the Company issued 63,149 shares of Common Stock to settle RSUs. The RSUs were valued at $ 137,549 for services provided by the Company's Senior Leadership Team (the "SLT") in 2025 . The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2025 . On January 27, 2026, the Company issued 87,374 shares of Common Stock to settle RSUs. The RSUs were valued at $ 230,741 for services provided by management in 2025 . The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2025 . In connection with the issuance, 67,840 shares of Common Stock, with a total value of $ 172,198 , were withheld from vesting to settle tax withholdings associated with stock-based compensation. On February 12, 2026, the Company issued 7,389 shares of Common Stock to settle RSUs. The RSUs were valued at $ 14,630 for services provided by the Company's SLT in 2025 . The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2025 . On February 12, 2026, the Company issued 25,867 shares of Common Stock to settle RSUs. The RSUs were valued at $ 47,337 for services provided by management in 2025 . The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2025 . In connection with the issuance, 5,589 shares of Common Stock, with a total value of $ 10,228 , were withheld from vesting to settle tax withholdings associated with stock-based compensation. On June 8, 2026, the Company issued 20,000,000 shares of Common Stock in a public offering. The shares were priced at $ 1.00 per share, and net proceed before company advisor costs was $ 18,400,000 . Total underwriting discounts and offering costs were $ 293,344 . On June 8, 2026, the Company issued 3,000,000 shares of Common stock at a share price of $ 1.00 in exchange for the cancellation of $ 3.0 million of outstanding senior promissory notes in a private placement . The remaining $ 3.0 million of outstanding senior promissory notes were repaid with cash. Warrants On June 8, 2026, the Company issued 800,000 underwriter warrants to the underwriter in the public offering. The warrants have an exercise price of $ 1.25 . The warrants were classified as equity instruments and measured at fair value using the Black-Scholes option pricing model. As the warrants were issued as compensation for services directly attributable to the public offering, their fair value of $ 512,192 was recorded as an increase to additional paid-in capital with an equal reduction to additional paid-in capital as an equity issuance cost. Accordingly, the issuance of the warrants had no impact on net income or total stockholders’ equity. The following is a summary of the periodic changes in warrants outstanding for the six months ended June 30, 2026, and 2025 : 2026 2025 Outstanding, December 31 11,391,225 11,391,225 Warrants issued in connection with public offering and private placement 800,000 - Outstanding, June 30 12,191,225 11,391,225 20 Stock-based Compensation 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 June 30, 2026 , 309,527 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 $ 218,325 and $ 230,552 for the three -month periods ended June 30, 2026, and 2025 , respectively. On June 30, 2026 , the Company had $ 1,208,819 of unrecognized compensation cost related to non-vested stock grants. A summary of the status of the RSUs as of June 30, 2026 and changes during the period are presented below: June 30, 2026 Weighted Average Aggregated Number of Grant-Date Intrinsic units Fair value Value Outstanding, December 31, 2025 703,753 $ 2.21 $ - Vested and settled with share issuance ( 320,777 ) 2.19 - Forfeited ( 73,449 ) 2.48 - Outstanding, June 30, 2026 309,527 $ 2.17 $ - 21 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 June 30, 2026 , the Company had 309,527 RSUs, 5,299,879 prefunded warrants, and 6,891,346 warrants, all exercisable for shares of Common Stock. As of June 30, 2025 , the Company had 554,571 RSUs, 5,299,879 prefunded warrants, and 6,091,346 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 For the Six Months Ended June 30, Ended June 30, 2026 2025 2026 2025 Customer A 19 % * % 10 % * % Customer B * % 11 % * % * % Customer C * % * % * % 20 % * Zero or less than 10% The following table presents customers accounting for 10% or more of the Company’s Accounts receivable: June 30, December 31, 2026 2025 Customer A 13 % * % Customer B 13 % 11 % Customer C 10 % 22 % Customer D * % 18 % * Zero or less than 10% As of June 30, 2026 , approximately 87 % of the Company’s assets were located in Denmark, 3 % were located in China, and 10 % were located in the U.S. As of December 31, 2025 , approximately 97 % of the Company’s assets were located in Denmark, 3 % were located in China, and 0 % were located in the U.S. NOTE 13 – SUBSEQUENT EVENTS On July 22, 2026, the Company fully repaid the outstanding promissory notes of $ 1,100,000 including discount. Following the repayment, the Company had no remaining obligations under the notes. 22 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 February 27, 2026 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. We specialize in three business areas: ceramic membranes and membrane incorporated 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. We assemble our marine water treatment systems in China with silicon carbon membranes delivered from 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, the U.S. and China, with locations in the Copenhagen area, Hobro, Fort Worth, US and Nantong, China. Our Strategy Our strategy is to leverage our core competencies in material science, advanced filtration, systems integration, and application knowledge, creating differentiated products with compelling value propositions to penetrate attractive end markets with customer needs and regulatory tailwind. 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, dual fuel marine vessels, shipowners, and ship operators as well as tailored filtration systems for oil & gas operators, industrial 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 penetration of 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, chemical/petrochemical, 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. ● Optimization of operation efficiency. We focus on sales & operations planning, supply chain stability and product cost reduction. 23 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 June 30, 2026, and June 30, 2025 The following table sets forth our revenues, expenses, and net loss for the three months ended June 30, 2026, and 2025: Three Months Ended June 30, Period to Period Change As a % As a % Percent 2026 of Sales 2025 of Sales Variance % Revenue $ 4,363,752 100.0 % $ 4,957,489 100.0 % $ (593,737 ) (12.0 )% Cost of goods sold 3,998,213 91.6 4,472,911 90.2 (474,698 ) (10.6 ) Gross Profit (Loss) 365,539 8.4 484,578 9.8 (119,039 ) (24.6 ) Operating Expenses Selling expenses 835,836 19.2 812,568 16.4 23,268 2.9 General and administrative expenses 1,589,775 36.4 1,539,323 31.1 50,452 3.3 Research and development expenses 271,745 6.2 242,556 4.9 29,189 12.0 Total Operating Expenses 2,697,356 61.8 2,594,447 52.3 102,909 4.0 Loss from Operation (2,331,817 ) (53.4 ) (2,109,869 ) (42.6 ) (221,948 ) 10.5 Other Income (Expense) Interest and other income 22,378 0.5 64,605 1.3 (42,227 ) (65.4 ) Interest expense (231,160 ) (5.3 ) (63,466 ) (1.3 ) (167,694 ) 264.2 Amortization of debt discount (401,951 ) (9.2 ) (84,318 ) (1.7 ) (317,633 ) 376.7 Gain (loss) on foreign currency transactions (94,457 ) (2.2 ) 34,060 0.7 (128,517 ) (377.3 ) Gain (loss) on disposal of property and equipment (15,058 ) (0.3 ) (2,158 ) (0.0 ) (12,900 ) 597.8 Total Other Income (Expense) (720,248 ) (16.5 ) (51,277 ) (1.0 ) (668,971 ) 1,304.6 Loss Before Income Taxes (3,052,065 ) (69.9 ) (2,161,146 ) (43.6 ) (890,919 ) 41.2 Income tax benefit (370 ) (0.0 ) (360 ) (0.0 ) (10 ) 2.8 Net Loss $ (3,051,695 ) (69.9 )% $ (2,160,786 ) (43.6 )% $ (890,909 ) 41.2 % Net Loss attributable to Noncontrolling Interest (35,330 ) (0.8 ) (8,901 ) (0.2 ) (26,429 ) 296.9 Net Loss attributable to LiqTech International, Inc. (3,016,365 ) (69.1 ) (2,151,885 ) (43.4 ) (864,480 ) 40.2 Revenues Revenue for the three months ended June 30, 2026 was $4,363,752 compared to $4,957,489 for the same period in 2025, representing a decrease of $593,737, or 12.0%. The decrease was solely attributable to a reduction in system sales, reflecting a significant Water for Energy delivery in 2025 that did not recur in 2026. Within the Systems segment, sales to both the Pool and Marine segments increased significantly. Furthermore, deliveries of Filters were on par with last year, while Components declined during the period. 24 Gross Profit (Loss) Gross profit for the three months ended June 30, 2026 was $365,539 (representing a gross profit margin of 8.4%) compared to a gross profit of $484,578 (representing a gross profit margin of 9.8%) for the same period in 2025 , marking an decline of $119,039 , or 24.6% . This decline was driven by the decrease in revenue, mix towards, less high value system sales, lower utilization of our manufacturing capacity to preserve costs partly offset by procurement effects. Included in the gross profit was depreciatio n of $274,530 and $412,291 for the three months ended June 30, 2026 , and 2025 , respectively. Expenses Total operating expenses for the three months ended June 30, 2026 were $2,697,356 , representing an increase of $102,909 , or 4.0% , compared to $2,594,447 for the same period in 2025 . Approximately 60% of the increase continue to be related to foreign exchange rate developments, as the average USD/DKK exchange rate for the three months ended June 30, was 6.43 in 2026 and 6.58 in 2025. Selling expenses for the three months ended June 30, 2026 were $835,836 compared to $812,568 for the same period in 2025 , representing an increase of $23,268 , or 2.9% . Excluding the impact of foreign exchange rate developments, costs increased primarily due to the full-year effect of hires within the joint venture in China, Nantong JiTRI LiqTech Green Energy Technology Co., Ltd. (the “JV”), as well as continued investments in the sales organization across the U.S. and Europe, and annualization of the Service Center cost in the U.S. General and administrative expenses for the three months ended June 30, 2026 were $1,589,775 compared to $1,539,323 for the same period in 2025 , representing an increase of $50,452 , or 3.3% . Adjusting for foreign exchange rate developments, expenses remained stable and below general inflation, as filling of open positions were covered by savings on other overhead expenses. Included in general and administrative expenses were non-cash compensation of $218,252 and $230,552 for the three months ended June 30, 2026, and 2025 , respectively. Research and development expenses for the three months ended June 30, 2026 were $271,745 compared to $242,556 for the same period in 2025 , representing an increase of $29,189 , or 12.0% . The increase was primarily attributed to membrane development costs and cost related to development of Marine systems and Pool systems. Other Income (Expenses) Other expenses for the three months ended June 30, 2026 were $720,248 compared to other expenses of $51,277 for the comparable period in 2025 , representing an increase of $668,971 , or 1304.6%. The change was primarily attributable to amortization of debt discount, accrued interests on the senior promissory notes and losses on foreign currency transactions for the three months ended June 30, 2026 Net Loss As a result of the cumulative effect of the factors described above, we reported a net loss for the three months ended June 30, 2026 of $3,051,695 compared to $2,160,786 for the comparable period in 2025 , representing an increase in net loss of $890,909 , or 41.2% . 25 Comparison of the Six Months Ended June 30, 2026, and June 30, 2025 The following table sets forth our revenues, expenses, and net loss for the six months ended June 30, 2026, and 2025: Six Months Ended June 30, Period to Period Change As a % As a % Percent 2026 of Sales 2025 of Sales Variance % Revenue $ 8,500,072 100.0 % $ 9,575,030 100.0 % $ (1,074,958 ) (11.2 )% Cost of goods sold 7,740,789 91.1 8,965,396 93.6 (1,224,607 ) (13.7 ) Gross Profit (Loss) 759,283 8.9 609,634 6.4 149,649 24.5 Operating Expenses Selling expenses 1,816,510 21.4 1,530,584 16.0 285,926 18.7 General and administrative expenses 3,003,920 35.3 2,901,569 30.3 102,351 3.5 Research and development expenses 547,879 6.4 472,679 4.9 75,200 15.9 Total Operating Expenses 5,368,309 63.2 4,904,832 51.2 463,477 9.4 Loss from Operation (4,609,026 ) (54.2 ) (4,295,198 ) (44.9 ) (313,828 ) 7.3 Other Income (Expense) Interest and other income 39,235 0.5 133,356 1.4 (94,121 ) (70.6 ) Interest and other expense (440,224 ) (5.2 ) (111,749 ) (1.2 ) (328,475 ) 293.9 Amortization of debt discount (489,455 ) (5.8 ) (252,348 ) (2.6 ) (237,107 ) 94.0 Gain (loss) on foreign currency transactions (263,013 ) (3.1 ) 69,576 0.7 (332,589 ) (478.0 ) Gain (loss) on disposal of property and equipment (15,058 ) (0.2 ) (63,464 ) (0.7 ) 48,406 (76.3 ) Total Other Expense (1,168,515 ) (13.7 ) (224,629 ) (2.3 ) (943,886 ) 420.2 Loss Before Income Taxes (5,777,541 ) (68.0 ) (4,519,827 ) (47.2 ) (1,257,714 ) 27.8 Income Tax Benefit (747 ) (0.0 ) (699 ) (0.0 ) (48 ) 6.9 Net Loss $ (5,776,794 ) (68.0 )% $ (4,519,128 ) (47.2 )% $ (1,257,666 ) 27.8 % Net Loss attributable to Noncontrolling Interest (50,317 ) (0.6 ) (15,851 ) (0.2 ) (34,466 ) 217.4 Net Loss attributable to LiqTech International, Inc. (5,726,477 ) (67.4 ) (4,503,277 ) (47.0 ) (1,223,200 ) 27.2 Revenues Revenue for the six months ended June 30, 2026 was $8,500,072 compared to $9,575,030 for the same period in 2025, representing a decrease of $1,074,958, or 11.2%. The decrease was mainly attributable to a reduction in system sales, reflecting a significant Water for Energy delivery in 2025 that did not recur in 2026. Within the Systems segment, sales to both the Pool and Marine segments increased significantly. Furthermore, deliveries of Filters increased while Components declined during the period. 26 Gross Profit (Loss) Gross profit for the six months ended June 30, 2026 was $759,283 (representing a gross profit margin of 8.9%) compared to a gross profit of $609,634 (representing a gross profit margin of 6.4%) for the same period in 2025 , marking an increase of $149,649 , or 24.5% . This increase was primarily driven by mix towards higher value system sales, better utilization of our manufacturing capacity, procurement effects on prices, and low depreciation expenses. Included in the gross profit was depreciatio n of $604,536 and $804,583 for the six months ended June 30, 2026 , and 2025 , respectively. Expenses Total operating expenses for the six months ended June 30, 2026 were $5,368,309 , representing an increase of $463,477 , or 9.4%, compared to $4,904,832 for the same period in 2025 . Approximately 60% of the increase relates to foreign exchange rate developments, as the average USD/DKK exchange rate for the six months ended March 31st, was 6.40 in 2026 and 6.85 in 2025. Selling expenses for the six months ended June 30, 2026 were $1,816,510 compared to $1,530,584 for the same period in 2025 , representing an increase of $285,926 , or 18.7%. Excluding the impact of foreign exchange rate developments, costs increased primarily due to the full-year effect of hires within the joint venture in China, Nantong JiTRI LiqTech Green Energy Technology Co., Ltd. (the “JV”), as well as continued investments in the sales organization across the U.S. and Europe, and annualization of the Service Center cost in the U.S. General and administrative expenses for the six months ended June 30, 2026 were $3,003,920 compared to $2,901,569 for the same period in 2025 , representing an increase of $102,351 , or 3.5% . Adjusting for foreign exchange rate developments, expenses remained stable and well below general inflation, as filing of open positions were covered by savings on other overhead expenses. Included in general and administrative expenses were non-cash compensation of $436,650 and $471,797 for the six months ended June 30, 2026, and 2025 , respectively. Research and development expenses for the six months ended June 30, 2026 were $547,879 compared to $472,679 for the same period in 2025 , representing an increase of $75,200 , or 15.9%. The increase was primarily attributed to membrane development costs and cost related to development of Marine systems and Pool systems. Other Income (Expenses) Other expenses for the six months ended June 30, 2026 were $1,168,515 compared to other expenses of $224,629 for the comparable period in 2025 , representing an increase of $943,886 , or 420.2% . The change was primarily attributable to losses on foreign currency transactions, lower interest income, and accrued interests on the senior promissory notes, and higher amortization of debt discount for the six months ended June 30, 2026. Net Loss As a result of the cumulative effect of the factors described above, we reported a net loss for the six months ended June 30, 2026 of $5,776,794 compared to $4,519,128 for the comparable period in 2025 , representing an increase in net loss of $1,257,666 , or 27.8% . 27 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 June 30, 2026, we had cash of $15,655,731 and net working capital of $21,368,974, and on December 31, 2025, we had cash of $5,070,385 and net working capital of $11,237,788. On June 30, 2026, our net working capital had increased by $10,131,186 compared to December 31, 2025, mainly as a result of the capital raise. 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. For example, 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 escalating interest rates and tariffs. On May 22, 2026, the Company issued and sold 9.09% original issue discount promissory notes in an aggregate principal amount of $1.1 million to affiliates of Bleichroeder L.P. and Laurence W. Lytton for aggregate cash proceeds of $1.0 million. The notes had a two-month term and did not bear interest prior to maturity. If not repaid at maturity, the notes bear interest at 10% per annum, increasing by 1% for each month they remain outstanding, up to a maximum of 16% per annum. The proceeds from the notes were used for working capital and general corporate purposes. On June 4, 2026, the Company entered into an underwriting agreement with Konik Capital Partners, LLC, a division of T.R. Winston & Company, LLC, relating to the issuance and sale of 20,000,000 shares of the Company’s common stock at a public offering price of $1.00 per share. The offering closed on June 8, 2026, resulting in net proceeds to the Company of approximately $18.0 million, after deducting underwriting discounts and commissions and estimated offering expenses. In connection with the offering, the Company issued to the underwriter warrants to purchase up to 800,000 shares of common stock at an exercise price of $1.25 per share. The underwriter warrants are exercisable beginning 180 days following the commencement of sales in the offering and expire five years following such commencement date. In connection with the closing of the offering, the Company also issued 3,000,000 shares of common stock to affiliates of Bleichroeder L.P., 21 April Fund, L.P. and 21 April Fund, Ltd. in exchange for the cancellation of $3.0 million of outstanding senior promissory notes in a concurrent private placement. The remaining $3.0 million principal amount outstanding under the senior promissory notes was repaid in cash from the proceeds of the offering. Accordingly, the full $6.0 million outstanding principal amount under the senior promissory notes was settled in connection with the transaction through a combination of $3.0 million in common stock and $3.0 million in cash. 28 Cash Flows Six months ended June 30, 2026 compared to six months ended June 30, 2025 Cash flows used in operating activities for the six months ended June 30, 2026 were $5,037,030 representing an increase of $2,129,194 compared to cash flows used in operating activities of $2,907,836 for the six months ended June 30, 2025. The cash flows used in operating activities for the period consist mainly of the net loss of $5,776,794, adjusted for depreciation and other non-cash-related items of $1,916,422, an increase in accounts receivables of $1,955,382, prepaid expenses and current account payables of $398,619, and partially offset by an increase in accrued expenses of $679,736. Cash flows used in investing activities were $257,552 for the six months ended June 30, 2026 as compared to cash flows used in investing activities of $47,885 for the six months ended June 30, 2025, representing a change of $209,637. The investing activities include general purchases of production equipment to continue optimizing production throughput and the internal production of rental assets. For the six months ended June 30, 2026, the main additions were investments in assembly equipment in our JV in China and in the U.S. Service Center. Cash flows provided from financing activities were $15,760,658 for the six months ended June 30, 2026 compared to cash flows used by financing activities of $856,496 for the six months ended June 30, 2025, representing a change of $14,904,162. Financing activities primarily consisted of proceeds from the issuance of common stock, net of discounts and commissions of $18,106,656, and proceeds from a $1,000,000 shareholder loan, being partly offset by the repayment of the $3,000,000 note payable. Additionally, in the prior-year period, the Company received proceeds from a long-term loan as well as a capital contribution from the noncontrolling interest in the joint venture. Off Balance Sheet Arrangements As of June 30, 2026 , 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: Basis of Presentation and Other Information” 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. 29 ITEM 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the design and effectiveness of our internal controls over financial reporting and disclosure controls and procedures (pursuant to Rule 13a-15(b) and (c) under the Exchange Act) as of the end of the period covered by this Quarterly Report. A material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a misstatement of the registrant's financial statements will not be prevented or detected on a timely basis. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures as of June 30, 2026 were not effective as of the period covered by this Quarterly Report due to material weaknesses in internal controls over financial reporting. For more information on material weaknesses identified by management, please refer to our Form 10-K filed on February 27, 2026 for the year ended December 31, 2025 . Changes in Internal Control over Financial Reporting There was no change in our internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Management's Remediation Initiatives In response to the identified material weaknesses, our management, with oversight from the Company’s Audit Committee, has been and will continue to dedicate necessary resources to enhance the Company’s internal control over financial reporting and remediate the identified material weaknesses. As an example of such remediation, the Company in 2025 hired additional employees into the finance department, and we plan to continue to work on remediating the material weaknesses during 2026 by improving competencies and processes. Further, the Company is evaluating an ERP reimplementation along with other IT programs to help reinforce its controls and processes, and these investments are an important step in the remediation of the material weaknesses. During 2022, the Company introduced an updated Delegation of Authority, with the overall purpose to provide clarity for all employees on the extent to which they can commit the Company and at the same time provide the Company with assurance that decisions about agreements are made by the appropriate functions and employees. Lastly, the Company has started the process of redesigning and ensuring documentation of all processes and procedures related to the financial reporting process to ensure the effective design and operation of process-level controls. While management believes that the steps that we have taken and plan to take will improve the overall system of internal control over financial reporting and will remediate identified material weaknesses, the material weaknesses cannot be considered remediated until the applicable relevant controls operate for a sufficient period of time. Limitations on the Effectiveness of Internal Controls An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. 30 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. For a description of contingencies, see “Note 9 – Agreements And Commitments”. ITEM 1A. RISK FACTORS There have been no material changes to the risk factors discussed in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 27, 2026. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS We did not sell any equity securities during the quarter ended March 31, 2026 in transactions that were not registered under the Securities Act other than as previously disclosed in our other filings with the SEC. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURES None. ITEM 5. OTHER INFORMATION (c) Insider Trading Plans During the quarter ended June 30, 2026 , no director or Section 16 officer adopted, modified, or terminated any “Rule 10b5 - 1 trading arrangement” or “non-Rule 10b5 - 1 trading arrangement” (in each case, as defined in Item 408 (a) of Regulation S-K). 31 ITEM 6. EXHIBITS 3.1 Articles of Incorporation, as amended as of November 13, 2023 Incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K as filed with the SEC on March 22, 2024 (File No. 001-36210) 3.2 Amended and Restated Bylaws Incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-Q as filed with the SEC on May 14, 2025 (File No. 001-36210) 4.1 Form of Underwriter’s Warrant Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K as filed with the SEC on June 09, 2026 (File No. 001-36210) 10.1 Note Purchase Agreement, by and among the Company and the Investors, dated May 22, 2026 Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on May 26, 2026 (File No. 001-36210) 10.2 Form of Note Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the SEC on May 26, 2026 (File No. 001-36210) 10.3 Debt Cancellation Agreement, by and among the Company and the affiliates of Bleichroeder L.P., 21 April Fund, L.P., and 21 April Fund, Ltd., dated May 26, 2026 Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on June 01, 2026 (File No. 001-36210) 10.4 Underwriting agreement, dated June 4, 2026, by and between LiqTech International, Inc. and Konik Capital Partners, LLC, a division of T.R. Winston and Company, LLC Incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K as filed with the SEC on June 09, 2026 (File No. 001-36210) 10.5 Registration Rights Agreement, dated June 8, 2026, by and between LiqTech International, Inc. and affiliates of Bleichroeder L.P., 21 April Fund, L.P., and 21 April Fund, Ltd. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on June 09, 2026 (File No. 001-36210) 32 31.1 Certifications of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 31.2 Certifications of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 32.1 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002 Furnished herewith 32.2 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002 Furnished herewith 101. INS Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) Provided herewith 101. CAL Inline XBRL Taxonomy Extension Calculation Link base Document Provided herewith 101. DEF Inline XBRL Taxonomy Extension Definition Link base Document Provided herewith 101. LAB Inline XBRL Taxonomy Label Link base Document Provided herewith 101. PRE Inline XBRL Extension Presentation Link base Document Provided herewith 101. SCH Inline XBRL Taxonomy Extension Scheme Document Provided herewith 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). Provided herewith 33 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LiqTech International, Inc. Dated: August 12, 2026 /s/ Fei Chen Fei Chen, Chief Executive Officer (Principal Executive Officer) Dated: August 12, 2026 /s/ David Noerby Foss Kowalczyk David Noerby Foss Kowalczyk, Chief Financial and Operating Officer (Principal Financial, and Accounting) 34