LIQT 10-K & 10-Q changes, risk factors and insider trading
Liqtech International Inc. · Nasdaq · Misc Industrial & Commercial Machinery & Equipment · CIK 1307579 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We will require substantial capital investment in the future, and our inability to raise adequate capital could affect our ability to continue as a going concern.”
Removed heading “Changes in U.S. Generally Accepted Accounting Principles (“GAAP”) could adversely affect our financial results and may require significant changes to our internal accounting systems and processes.”
Largest changes
“Our business operates in a global market and is subject to risks arising from increasing trade restrictions, geopolitical tensions, and shifting regulatory frameworks. In recent years, governments have imposed new tariffs, sanctions, and export controls, particularly in relation to advanced technologies, critical raw materials, and industrial goods. Trade conflicts between major economies, such as the United States and China, as well as evolving sanctions on Russia, have created uncertainty in supply chains and increased the complexity of cross-border trade. …”see in full comparison
“We will require substantial capital investment in the future, and our inability to raise adequate capital could affect our ability to continue as a going concern.”see in full comparison
“In April/May 2025, the global tariff landscape began to quickly change with the U.S. implementing new and/or increased tariffs on various foreign countries, either generally or with respect to certain products. Certain foreign countries, including China and those in the EU, have, and may continue to, change their tariff policies in response to changes in the U.S. tariff policy. …”see in full comparison
“We will require significant funding to continue our operations and advance our development of new products. Our ability to raise additional capital, on timely and favorable terms or at all, will depend on various factors, including macroeconomic conditions, future commodity prices, our exploration success, and market conditions. If these factors deteriorate, our ability to raise capital to fund ongoing operations and business activities could be significantly impacted. …”see in full comparison
“Changes in U.S. Generally Accepted Accounting Principles (“GAAP”) could adversely affect our financial results and may require significant changes to our internal accounting systems and processes.”see in full comparison
In any case, litigation may be necessary to enforce, protect, or defend our intellectual property rights or to determine the validity and scope of the intellectual property rights of others. Any litigation could be unsuccessful, cause us to incur substantial costs, divert resources and the efforts of our personnel away from daily operations, harm our reputation, and/or result in the impairment of our intellectual property rights.see in full comparisonIn some cases, litigation may be threatened or brought by a patent-holding company or other adverse patent owner who has no relevant product revenues and against which our patents may provide little or no deterrence.If we are found to infringe any patents, we could be required to (1) pay substantial monetary damages, including lost profits, reasonable royalties, and/or treble damages if an infringement is found to be willful and/or (2) totally discontinue or substantially modify any products or processes that are found to be in violation of another party’s intellectual property rights.If our competitors are able to use our technology without payment to us, our ability to compete effectively could be harmed.
Full comparison: every changed paragraph (23)
We will require substantial capital investment in the future, and our inability to raise adequate capital could affect our ability to continue as a going concern.
We will require significant funding to continue our operations and advance our development of new products. Our ability to raise additional capital, on timely and favorable terms or at all, will depend on various factors, including macroeconomic conditions, future commodity prices, our exploration success, and market conditions. If these factors deteriorate, our ability to raise capital to fund ongoing operations and business activities could be significantly impacted. If we cannot obtain adequate additional financing, we may have to substantially curtail our exploration and development activities or sell assets, which could materially and adversely affect our business plan. Inadequate financial resources could also raise substantial doubt about our ability to continue as a going concern.
Our business has undergone significant changes in the past few years to help restore financial flexibility to the Company through an enhanced capital structure, improved profitability, reduced investments, and changes to the organization. Our ability to achieve financial breakeven is heavily dependent on external macroeconomic and competitive industry dynamics that are outside of our control; therefore, our business may not achieve its financial objectives in a period with increased competition or weakening market fundamentals.
The continuation of the war between Ukraine and Russia as well as the war/armed conflict related to Hamas/Israel and the situation in the Red SeaSea, including tensions with Iran, fuels uncertainty and risk to our business as we rely on the ability to manufacture, ship, service, and operate across multiple jurisdictions. The wars may result in sanctions and increased uncertainties, thus restricting our ability to service our clients and execute orders globally due to supply chain risk, import/export restrictions, and increased demand uncertainty. Additionally, if customers are not successful in generating sufficient revenue or are precluded from securing financing due to the ongoing wars, they may not be able to pay, or may delay payment of, owed amounts to the Company for the provision of products and services. Any inability of current or new potential customers to purchase or pay for our products may adversely affect our sales, earnings, and cash flow.
Global trade restrictionsrestrictions, tariffs, and geopolitical tensions could adversely impact our business and supply chain
In April/May 2025, the global tariff landscape began to quickly change with the U.S. implementing new and/or increased tariffs on various foreign countries, either generally or with respect to certain products. Certain foreign countries, including China and those in the EU, have, and may continue to, change their tariff policies in response to changes in the U.S. tariff policy. These recent tariffs and the subsequent retaliatory tariffs could increase the cost of goods for our products or reduce our ability to sell products globally, particularly in China and the U.S., which may adversely affect our operating results and financial condition. So far, these new tariffs and trade policies have not had a significant impact on our business operations and financial results, primarily due to our prior efforts to accumulate and maintain inventories at favorable cost. There is no guarantee, however, that we can avoid the impact of tariff and related economic effects in the future, and these trade measures and retaliations may directly impact our business by increasing trade-related costs or affecting the demand for our products globally. Any further unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand for our products and services, impacting the competitive position of our products. If any new tariffs, legislation, and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular, if the U.S. government takes retaliatory trade actions due to the recent trade tension, such changes could have an adverse effect on our business, financial condition, and results of operations.
Our business operates in a global market and is subject to risks arising from increasing trade restrictions, geopolitical tensions, and shifting regulatory frameworks. In recent years, governments have imposed new tariffs, sanctions, and export controls, particularly in relation to advanced technologies, critical raw materials, and industrial goods. Trade conflicts between major economies, such as the United States and China, as well as evolving sanctions on Russia, have created uncertainty in supply chains and increased the complexity of cross-border trade. More recently, the change in administration in the U.S. elevates the potential for trade conflict and tariffs on imports, which could potentially impact our business.
New or expanded trade restrictions, including export controls on key materials or technologies used in our products, could disrupt our supply chain, limit our ability to source critical components, and increase costs. Additionally, changes in import/export regulations or retaliatory trade policies from foreign governments could affect our ability to serve certain markets or delay customer orders.
Prolonged periodperiods of energy market volatility and supply disruptions could negatively impact our business
Our business has been right-sized to help protect our profitability and cash flow; however, we remain exposed to near-term market fundamentals as we rely on short lead-time products and orders that may be cancelled if customers are facing weakened end-market demand or increased uncertainty.
Authorities worldwide continue to implement measures to mitigate potential future outbreaks, including vaccination campaigns, travel restrictions, and quarantine protocols,protocols; however, new infectious diseases or resurgences of existing ones could lead to disruptions in our supply chain, temporary facility closures, labor shortages, and delays in customer orders. Additionally, prolonged health crises could negatively impact the financial position of our customers or suppliers, increasing the risk of delayed payments, order cancellations, or defaults on contractual obligations.
Our business has undergone significant changes in the past few years to help restore financial flexibility to the Company through an enhanced capital structure, improved profitability, reduced investments, and changes to the organization. Our ability to achieve financial beak-even is heavily dependent on external macroeconomic and competitive industry dynamics that are outside of our control; therefore, our business may not achieve its financial objectives in a period with increased competition or weakening market fundamentals.
Global health crises such as the COVID-19 pandemic or significant macroeconomic uncertainty exacerbated by current or future geopolitical conflicts and high inflationary pressure can significantly impact our Company, customers, and suppliers. For example, the global shipping industry has been negatively impacted by the coronavirus outbreak and may be further adversely affected by an extended shutdown of various businesses or delayed implementation of regulatory frameworks and environmental policies. This, in turn, could adversely affect the demand for our marine scrubberswater systems as shipowners delay or even cancel their orders for new closed-loop scrubber systems.orders.
Our international operations are exposed to potential adverse tax consequence.consequences.
Our international operations create a risk of potentially adverse tax consequences. Taxes on income in future internationally basedinternationally-based operations are dependent upon acceptance of our operational practices and intercompany transfer pricing by local tax authorities as being on an arm's length basis. Due to inconsistencies among taxing authorities in application of the arm's length standard, transfer pricing challenges by tax authorities could, if successful, materially increase our consolidated income tax expense. We may be subject to tax audits, and an audit could result in the assessment of additional income tax against us. This could have a material adverse effect on our operating results or cash flows in the period or periods for which that determination is made and could result in increases to our overall tax expense in subsequent periods.
Our reporting currency is the United States Dollar ($). Because of our activities in Denmark, the European Continent, MiddleChina, East,the U.S., and other countries, we are exposed to fluctuations in foreign currency rates. Most income and expense-related transactions are denominated in currencies other than the reporting currency, and a certain portion of the excess cash balances may be held in other currencies or in bank accounts outside of the United States, causing risks of currency fluctuations when translating balances to the reporting currency at the end of the reporting period. We may manage the risk to such exposure through active cash flow management, and in some cases, by entering into foreign currency futures and option contracts; however, we can make no assurance that such actions will be sufficient to offset a material adverse effect on our operations in the future. As of December 31, 2024,2025, we have not entered into any derivative contracts to hedge our currency exposure.
In any case, litigation may be necessary to enforce, protect, or defend our intellectual property rights or to determine the validity and scope of the intellectual property rights of others. Any litigation could be unsuccessful, cause us to incur substantial costs, divert resources and the efforts of our personnel away from daily operations, harm our reputation, and/or result in the impairment of our intellectual property rights. In some cases, litigation may be threatened or brought by a patent-holding company or other adverse patent owner who has no relevant product revenues and against which our patents may provide little or no deterrence. If we are found to infringe any patents, we could be required to (1) pay substantial monetary damages, including lost profits, reasonable royalties, and/or treble damages if an infringement is found to be willful and/or (2) totally discontinue or substantially modify any products or processes that are found to be in violation of another party’s intellectual property rights. If our competitors are able to use our technology without payment to us, our ability to compete effectively could be harmed.
The majority of our officers and some of our directors are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets may be located outside of the United States. As a result, it may be difficult for an investor to affecteffect service of process or enforce within the United States any judgments obtained against us or such officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. In addition, there is uncertainty as to whether the courts of other jurisdictions would recognize or enforce judgments of United States courts obtained against us or our directors and officers predicated upon the civil liability provisions of the securities laws of the United States or any state thereof or be competent to hear original actions brought in other jurisdictions against us or such officers and directors predicated upon the securities laws of the United States or any state thereof.
Accordingly, we will not receive a significant amount, or potentially any, additional funds upon the exercise of the pre-funded warrants. To the extent such pre-funded warrants are exercised, additional shares of common stock will be issued for nominal or no additional consideration, which will result in substantial dilution to the then-existing holders of our common stock and will increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of our common stock, causing our stock price to decline.
The trading market for our common stock will depend in part on research and reports that industry or financial analysts publish about us or our business. Furthermore, if onean or more of the analysts who cover usanalyst downgrades us, the industry in which we operate, or the stock of any of our competitors, the price of our common stock may decline. If onethe oranalyst more of these analysts ceasesdiscontinues coverage altogether, we could lose visibility, which could also lead to a decline in the price of our common stock.
As a “smaller reporting company” (as defined in Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”)), we are not required and may not include a Compensation Discussion and Analysis section in our proxy statements, provide only three years of business information, provide fewer years of selected financial datadata, and have other “scaled” disclosure requirements that are less comprehensive than issuers that are not “smaller reporting companies,” which could make our stock less attractive to potential investors and could make it more difficult for stockholders to sell their shares.
Changes in U.S. Generally Accepted Accounting Principles (“GAAP”) could adversely affect our financial results and may require significant changes to our internal accounting systems and processes.
We prepare our consolidated financial statements in conformity with GAAP. These principles are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC, and various bodies formed to interpret and create appropriate accounting principles and guidance. The FASB periodically issues new accounting standards on a variety of topics. For information regarding new accounting standards, please refer to Note 1, “Description of Business and Significant Accounting Policies – Recent Accounting Pronouncements,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. These and other such standards generally result in different accounting principles, which may significantly impact our reported results or could result in variability of our financial results.
Management's Discussion & Analysis (MD&A)
New heading “Going Concern and Management’s Plans”
Removed heading “Goodwill and Intangible assets”
Removed heading “Warrant Liabilities”
Largest changes
“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. …”see in full comparison
“Goodwill is 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.”see in full comparison
“The financial statements included herein for the period ended December 31, 2025, have been prepared under the assumption that the Company will continue as a going concern and contemplate the realization of assets and settlement of liabilities in the normal course of business. 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. …”see in full comparison
Selling expenses for the year ended December 31,see in full comparison2024,2025, were$2,725,239,$2,718,047, compared to$4,298,905$2,725,239 for the same period in2023,2024, representing a decrease of$1,573,666,$7,192, or36.6%.0.3%. Thisdeclinedecrease wasprimarilypartly driven byafullreductionyear effect of savings made inexecutive2024officers,andalonglower account receivable write-offs and provision needs. This were partly offset by costs associated withreductionsthe newly formed joint venture inbonusChina,payouts,NantongtravelJiTRIcosts,LiqTechmarketingGreenexpenses,Energy Technology Co., Ltd.(the "JV"). The primary focus of the JV is to develop and commercialize systems for the marine water treatment market in China. Costs for outbound distribution, including tariffs, and expenditures related to external sales consultancyservices.servicesThe decrease was partially offset byalso increasedbadindebt expenses.2025.
Full comparison: every changed paragraph (51)
On January 31, 2025, LiqTech announced appointment of David Kowalczyk as Chief Financial and Operating Officer On February 20, 2025, LiqTech received supplier approval water treatment system for the WinGD Dual-Fuel Engine On March 11, 2025, LiqTech expanded distribution coverage in the Irish swimming pool water filtration system market On May 13, 2025, LiqTech International Signed distribution and Partnership Agreement with NAF Aquatics for U.S. commercial swimming pool market On June 25, 2025, LiqTech' s Advanced Oily Wastewater Filtration was selected by North Star BlueScope Steel On September 15, 2025, LiqTech expanded its U.S. presence with Texas service center to support produced water and industrial filtration solutions On November 20, 2025, Jitri LiqTech broke ground on marine-focused R&D Test Center and Localization Facility in China and completes regional spare parts warehouse
On January 10, 2024, Simon Stadil tendered his resignation as Chief Financial Officer of the Company, effective as of April 10, 2024.
On February 14, 2024, the Company entered into a distribution agreement with Razorback Direct for produced water treatment solutions in the U.S.
On March 19, 2024, the Board of Directors of the Company appointed Phillip Massie Price as Interim Chief Financial Officer of the Company, effective April 1, 2024.
On May 7, 2024, the Company entered into a distribution agreement with Dan Marine Group for marine water treatment solutions for the Chinese market.
On May 14, 2024, the Company entered into a distribution agreement with Franman for marine water treatment solutions for the Greek Market.
On July 25, 2024, the Company entered into a distribution agreement with Danbee Marine Co. for marine water treatment solutions for the South Korean market.
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 approximately $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, which closed on September 27, 2024; 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, which closed on November 12, 2024.
On November 7, 2024, the Company announced the establishment of a joint venture in China for the marine water treatment market.
Revenue for the year ended December 31, 2024,2025, was $14,604,618$16,507,558 compared to $18,001,652$14,604,618 for the same period in 2023,2024, representing aan decreaseincrease of $3,397,034,$1,902,940, or 18.9%.13.0%. The declineincrease was mainly due to reducedincreased deliveries of liquidsystems filtration(Pool, systems,Energy plastics& products, ceramic membranes,Industry), and aftermarketcomponents sales,(plastics), partly offset by increaseddecreased sales of DPFs.filters.
The increase in deliveries of systems was mainly driven by increased deliveries of pool filtration systems and water treatment systems for industrial applications. The increase in components was mainly related to machine building for the food & beverage industry. The decrease in sales of filters was primarily driven by a refocusing of our strategy to capitalize on sub segments where we see increased future demand for DPFs outside of the automotives sector.
The decrease in deliveries of liquid filtration systems was mainly driven by reduced deliveries of pool filtration systems and marine scrubber systems. The decline in aftermarket sales was primarily due to remediation work carried out in the same period of 2023, which did not recur in 2024. The reduction in sales of plastic products was largely due to a significant one-time sale recorded in 2023 that did not recur in the current period. The increase in sales of DPFs was primarily driven by the effective execution of strategies designed to capitalize on the increased demand for DPFs.
Gross profit for the year ended December 31, 2024,2025, was $1,250,523 (or a gross profit margin of 7.6%), compared to $250,905 (or a gross profit margin of 1.7%), compared to $2,775,476 (or a gross profit margin of 15.4%) for the same period in 2023,2024, representing aan decreaseincrease of $2,524,571,$999,618, or approximately 91.0%.398.4%. This declineincrease in gross profit can be attributed to theboth decreasean increase in revenue, resulting in lower overall activity levels and underutilization of our manufacturing capacity,revenue as well as ana unfavorablemore favorable sales mix, which resulted in a lowerhigher proportion of high-margin products suchwithin asour liquidSystems filtrationsegment. systemsWe anddid, ceramichowever, membranes.continue Specifically,to theinvest in deliveries of containerized oil and gas pilot systems to the MiddleU.S., East and the U.S.which contributed to lower-than-usual margins, reflecting a strategic decision aimed at demonstrating and validating the value proposition associated with our technology and seeding the market for future growth. ThisDespite approachthe significant improvement in both gross profit and gross profit margin, we continue to see an underutilization of our manufacturing capacity that has provena successful,material, securingadverse effect on profitability. The continued refocusing of the company led to an order for a full-scale system scheduled for delivery in 2025. Additionally, a thorough inventory review ledand to necessaryrelated adjustments for obsolescence and slow-moving items.inventory items, which also had an unfavorable impact on gross profit margin. The declineincrease in gross profit was partly offsetsupported by decreased depreciation as well as continued initiatives aimed at optimizing manufacturing processes, which have improved profitability within DPF and ceramic membrane production.processes. Included in the gross profit was depreciation of $1,830,553$1,519,439 and $2,598,095$1,830,553 for the years ended December 31, 2024,2025, and 2023,2024, respectively.
Total operating expenses for the year ended December 31, 2024,2025, were $9,738,754,$9,559,223, representing a decrease of $835,772,$179,531, or 7.9%,1.8%, compared to $10,574,526$9,738,754 for the same period in 2023.2024. In local currency, the cost decrease was higher driven by a DKK/USD appreciation of 3.9% for the full year.
Selling expenses for the year ended December 31, 2024,2025, were $2,725,239,$2,718,047, compared to $4,298,905$2,725,239 for the same period in 2023,2024, representing a decrease of $1,573,666,$7,192, or 36.6%.0.3%. This declinedecrease was primarilypartly driven by afull reductionyear effect of savings made in executive2024 officers,and alonglower account receivable write-offs and provision needs. This were partly offset by costs associated with reductionsthe newly formed joint venture in bonusChina, payouts,Nantong travelJiTRI costs,LiqTech marketingGreen expenses,Energy Technology Co., Ltd.(the "JV"). The primary focus of the JV is to develop and commercialize systems for the marine water treatment market in China. Costs for outbound distribution, including tariffs, and expenditures related to external sales consultancy services.services The decrease was partially offset byalso increased badin debt expenses.2025.
General and administrative expenses for the year ended December 31, 2024,2025, were $5,661,455$5,677,525 compared to $4,856,779$5,661,455 for the same period in 2023,2024, representing an increase of $804,676,$16,070, or 16.6%.0.3%. The increase was primarily due to newlyhigher createdlegal positionsexpenses, inthe supplyfilling chainof andopen projectpositions, management,including the CFO, as well as higher legal expenses, insurance costs, and recruitment costs associated with the resignations of our CFO and VP of Sales. Additionally, one-time expenses were incurred for the relocation of our plastics production facility. The increase was also partially attributable to the release of bonus provisions in the comparable period of 2023.costs. Included in general and administrative expenses was non-cash compensation of $664,434$987,072 and $627,904$664,434 for the years ended December 31, 2024,2025, and 2023,2024, respectively. Non-cash compensation increased due to a 2025 conversion of 50% of the Board fee and 10% of Senior Leadership Team salary to stock awards and due to this being the second year of a new three-year, long-term incentive plan program for the Senior Leadership Team.
Research and development expense for the year ended December 31, 2024,2025, was $1,352,060$1,163,651 compared to $1,418,842$1,352,060 for the same period in 2023,2024, representing a decrease of $66,782,$188,409, or 4.7%.13.9%. The decrease was primarily due to a more focused R&D strategy with fewer ongoing projects and a reduced average number of employees engaged in external research and development activities, as the Company streamlined and centralized its R&D function. This was partially offset by one-time exit costs associated with a loss-making external development project.activities.
Total Other expense for the year ended December 31, 2024,2025, was $896,246$294,694 compared to $978,302$896,246 for the comparable period in 2023,2024, representing decreaseda expensedecrease of $82,056,$601,552, or 8.4%.67.1%. The decrease was primarily attributable to areduced gainlosses on currency transactions resulting from the EUR/DKK decline against the USD during the period and a loss on assets held for sale in the comparable period in 2023. This decrease in other expenses was partially offset by a non-cash loss related to the disposal of property and equipment, decreasedincreased interest income, and higherlower debt discount amortization costs due to the extension of the maturity date for the senior promissory notes, with additional warrants issued as consideration for the extension.notes.
As a result of the cumulative effect of the factors described above, we hadreported a net loss for the year ended December 31, 2024,2025, of $10,345,258$8,601,940 compared to $8,571,145$10,345,258 for the comparable period in 2023,2024, representing an increaseimprovement in net loss of $1,774,113,$1,743,318, or 20.7%.16.9%.
Going Concern and Management’s Plans
The financial statements included herein for the period ended December 31, 2025, have been prepared under the assumption that the Company will continue as a going concern and contemplate the realization of assets and settlement of liabilities in the normal course of business. 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. The Company has experienced operating losses and cash outflows from continuing operations and may require additional funding to support operations for the twelve months following the issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Management has implemented cost optimization and operational initiatives designed to improve liquidity and support a sustainable path toward profitability, supported by an updated strategic focus and strengthened leadership. The Company continues to evaluate financing alternatives and strategic opportunities to enhance its capital position. While there can be no assurance that additional funding will be obtained on favorable terms, management believes its ongoing initiatives position the Company to support operations and advance its strategic objectives.
Cash used by operating activities is net loss adjusted for certain non-cash items and changes in assets and liabilities. Cash used by operating activities for the year ended December 31, 2024,2025, was $7,534,072$6,108,176 compared to cash used by operating activities of $4,183,918$7,534,072 for the year ended December 31, 2023,2024, representing an increaseimprovement of $3,350,154.$1,425,896. The cash used by operating activities for the year ended December 31, 2024,2025, consists mainly of the net loss for the year ofwhich $(10,345,258)improved by $1,743,318, adjusted by depreciation and other non-cash items of $4,432,671.which decreased $657,120. Further, changes in assets and liabilities included a decrease in$339,698 accountsprimarily payabledue of $1,050,406, a decrease in accrued expenses of $908,607, andto an increase in inventoriesthe development in account payables from 2024 to 2025 of $587,806,$1,150,188 partlyrelated offsetto byinventory build up of Pool systems and a decrease in contract assets ofrelating $1,102,791to fewer ongoing research and adevelopment decrease in accounts receivable of $620,116.projects.
Net cash used in investing activities was $217,930 for the year ended December 31, 2025, as compared to $424,036 for the year ended December 31, 2024, as compared to $2,886,036 for the year ended December 31, 2023, representing a decrease of $2,462,000.$206,106. The investing activities include general purchases of production equipment to continue optimizing production throughput and the internal production of rental assets, partly offset by proceeds from the disposition of production equipment in our Ballerup facility. With our current strategic focus and the excess capacity already in place, we expect capital expenditures to be significantly lower than historical levels, allowing us to leverage our existing infrastructure.
Cash provided by financing activities was $719,287 for the year ended December 31, 2025, as compared to $8,493,300 for the year ended December 31, 2024, as compared to $580,645 for the year ended December 31, 2023, representing ana increasedecrease of $7,912,655.$7,774,013 or 92%. The increasedecrease was mainly driven by the equity raise, generating net proceeds of $9,922,063 from the issuance of common stock and prefunded warrants, partly offset by the repayment of lease agreementswarrants in connection with the sales of production equipment in Ballerup as mentioned above.2024.
The roll-forward of the allowance for current expected credit losses for the year ended December 31, 2024, and December 31, 2023 were as follows:
Goodwill and Intangible assets
The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business, with the residual purchase price recorded as goodwill. 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.
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. 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 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.
Management has analyzed the impact of the current economic climate on its financial statements as of December 31, 2024,2025, 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, 2024, and 2023, no impairment charge of long-lived assets has been recorded.
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: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied.
The Company sells products throughout the world. Sales by geographical region for the years ended December 31, 2024, and 2023 were as follows:
The Company’s sales by product line for the years ended December 31, 2024, and 2023 were as follows:
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. 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. This generally occurs when the product is shipped or accepted by the customer. Revenue for service contracts is recognized as the services are provided. Revenue is measured as the amount of consideration expected to be received in exchange for transferring the goods or providing services. The satisfaction of performance obligations under the terms of a revenue contract generally gives rise to the right to receive payment from the customer. 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. 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, financing components do not exist between the Company and its customers.
System sales are recognized when the Company transfers control to the customer based upon sales and delivery conditions specified in the sales contract. 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 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. 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 profit. 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. For the sale of aftermarket parts, the Company transfers control and recognizes revenue when parts are shipped to the customer. When customers are given the right to return eligible parts and accessories, the Company estimates the expected returns based on an analysis of historical experience. The Company adjusts estimated revenues at the earlier of when the most likely amount of consideration expected to be received changes or when the consideration becomes fixed. The Company recognizes revenue for extended warranty and maintenance agreements based on the standalone selling price over the life of the contract.
Contract assets also include unbilled receivables, which usually comprise the last invoice remaining after the delivery of the water treatment unit,system, 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. FurtherAlso included in Contract Assets are short-term receivables such as VAT and other receivables.
The Company records revenue in accord ance 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: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied.
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 been transferred to the customer. This generally occurs when the product is shipped or accepted by the customer. Revenue for service contracts is recognized as the services are provided. Revenue is measured as the amount of consideration expected to be received in exchange for transferring the goods or providing services. The satisfaction of performance obligations under the terms of a revenue contract generally gives rise to the right to receive payment from the customer. 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. 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, financing components do not exist between the Company and its customers.
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 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. 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 profit. 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 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. When customers are given the right to return eligible parts and accessories, the Company estimates the expected returns based on an analysis of historical experience. The Company adjusts estimated revenues at the earlier of when the most likely amount of consideration expected to be received changes or when the consideration becomes fixed. The Company recognizes revenue for extended warranty and maintenance agreements based on the standalone selling price over the life of the contract.
The roll-forward of contract assets and contract liabilities for the years ended December 31, 2024, and 2023 were as follows:
Income Taxes
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. 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 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 Company recognizes interest accrued and penalties related to unrecognized tax benefits in income tax expense.
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 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. The fair value of our stock options is estimated using a Black-Scholes option valuation model. Restricted stock awards are valued based on the closing stock price on the date of grant. The Company has elected to recognize forfeitures as they occur.
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. Warrant liabilities are recognized at fair value, with changes in fair value recognized in the consolidated statement of operations each period.
What changed in the latest 10-Q
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.
Largest changes
“We will require significant funding to continue our operations and advance our development of new products. Our ability to raise additional capital, on timely and favorable terms or at all, will depend on various factors, including macroeconomic conditions, future commodity prices, our exploration success, and market conditions. If these factors deteriorate, our ability to raise capital to fund ongoing operations and business activities could be significantly impacted. …”see in full comparison
“We will require substantial capital investment in the future, and our inability to raise adequate capital could affect our ability to continue as a going concern.”see in full comparison
Full comparison: every changed paragraph (2)
We will require substantial capital investment in the future, and our inability to raise adequate capital could affect our ability to continue as a going concern.
We will require significant funding to continue our operations and advance our development of new products. Our ability to raise additional capital, on timely and favorable terms or at all, will depend on various factors, including macroeconomic conditions, future commodity prices, our exploration success, and market conditions. If these factors deteriorate, our ability to raise capital to fund ongoing operations and business activities could be significantly impacted. If we cannot obtain adequate additional financing, we may have to substantially curtail our exploration and development activities or sell assets, which could materially and adversely affect our business plan. Inadequate financial resources could also raise substantial doubt about our ability to continue as a going concern.
Management's Discussion & Analysis (MD&A)
New heading “Comparison of the Six Months Ended June 30, 2026, and June 30, 2025”
New heading “Other Income (Expenses)”
Removed heading “Gross Profit (Loss)”
Largest changes
“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.”see in full comparison
The Company has historically financed operations through offerings of equity or debt instruments, internally generated cash from operations, and our available lines of credit. Onsee in full comparisonMarchJune31,30, 2026, we had cash of$2,732,739$15,655,731 and net working capital of$8,483,730,$21,368,974, and on December 31, 2025, we had cash of $5,070,385 and net working capital of $11,237,788. OnMarchJune31,30, 2026, our net working capital haddecreasedincreased by$2,754,058$10,131,186 compared to December 31, 2025, mainly as a result ofa reduction in cash and cash equivalents used to fund operating losses The Company has experienced operating losses and cash outflows from continuing operations and will require additional funding to support operations forthetwelvecapitalmonths following the issuance of these financial statements. These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.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.”see in full comparison
“Comparison of the Six Months Ended June 30, 2026, and June 30, 2025”see in full comparison
“Management has implemented cost optimization operational initiatives and working capital control designed to improve liquidity and support a sustainable path toward profitability, supported by an updated strategic focus and strengthened leadership. The Company continues to evaluate financing alternatives and strategic opportunities to enhance its capital position. While there can be no assurance that additional funding will be obtained on favorable terms, management believes its ongoing initiatives position the Company to support operations and advance its strategic objectives.”see in full comparison
Full comparison: every changed paragraph (37)
LiqTech International, Inc. is a clean technology company that provides state-of-the-art gas and liquid purification products by manufacturing ceramic silicon carbide filters and membranes as well as developing industry-leading and fully automated filtration solutions and systems. For more than two decades, we have developed and manufactured products of re-crystallized silicon carbide. We specialize in three business areas: ceramic membranes 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.
At present, we conduct our operations in the Kingdom of Denmark, the U.S. and China, with locations in the Copenhagen area, Hobro, Fort WorthWorth, US and Nantong.Nantong, China.
Comparison of the Three Months Ended MarchJune 31,30, 2026, and MarchJune 31,30, 2025
The following table sets forth our revenues, expenses, and net loss for the three months ended MarchJune 31,30, 2026, and 2025:
Revenues
Revenue for the three months ended MarchJune 31,30, 2026 was $4,136,320$4,363,752 compared to $4,617,541$4,957,489 for the same period in 2025, representing a decrease of $481,221,$593,737, or 10.4%.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,Filters Membranes,were andon par with last year, while Components increaseddeclined during the period.
Gross Profit (Loss)
Gross profit for the three months ended MarchJune 31,30, 2026 was $393,744$365,539 (representing a gross profit margin of 9.5%8.4%) compared to a gross profit of $125,056$484,578 (representing a gross profit margin of 2.7%9.8%) for the same period in 2025, marking an increasedecline of $268,688,$119,039, or 214.9%.24.6%. This increasedecline was primarily driven by the decrease in revenue, mix towardstowards, higherless high value system sales, betterlower utilization of our manufacturing capacity,capacity to preserve costs partly offset by procurement effects on prices, and low depreciation expenses.effects. Included in the gross profit was depreciation of $330,006$274,530 and $392,292$412,291 for the three months ended MarchJune 31,30, 2026, and 2025, respectively.
Total operating expenses for the three months ended MarchJune 31,30, 2026 were $2,670,953,$2,697,356, representing an increase of $360,568,$102,909, or 15.6%,4.0%, compared to $2,310,385$2,594,447 for the same period in 2025. Approximately 60% of the increase relatescontinue to be related to foreign exchange rate developments, as the average USD/DKK exchange rate for the three months ended MarchJune 31st,30, was 6.3856.43 in 2026 and 7.0926.58 in 2025.
Selling expenses for the three months ended MarchJune 31,30, 2026 were $980,674$835,836 compared to $718,016$812,568 for the same period in 2025, representing an increase of $262,658,$23,268, or 36.6%.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 MarchJune 31,30, 2026 were $1,414,145$1,589,775 compared to $1,362,246$1,539,323 for the same period in 2025, representing an increase of $51,899,$50,452, or 3.8%.3.3%. Adjusting for foreign exchange rate developments, expenses remained stable and below general inflation, as filingfilling 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 $241,245$230,552 for the three months ended MarchJune 31,30, 2026, and 2025, respectively.
Research and development expenses for the three months ended MarchJune 31,30, 2026 were $276,134$271,745 compared to $230,123$242,556 for the same period in 2025, representing an increase of $46,011,$29,189, or 20.0%.12.0%. The increase was primarily attributed to membrane development costs and cost related to development of Marine systems and Pool systems.
Other expenses for the three months ended MarchJune 31,30, 2026 were $448,267$720,248 compared to other expenses of $173,352$51,277 for the comparable period in 2025, representing an increase of $274,915,$668,971, or 158.6%.1304.6%. The change was primarily attributable to lossesamortization onof foreigndebt currency transactions, lower interest income, anddiscount, accrued interests on the senior promissory notes, partly balanced by lower amortization of debt discount,notes and alosses decreaseon offoreign netcurrency interest expensestransactions for the three months ended MarchJune 31,30, 2026 As a result of the cumulative effect of the factors described above, we reported a net loss for the three months ended MarchJune 31,30, 2026 of $2,725,099$3,051,695 compared to $2,358,342$2,160,786 for the comparable period in 2025, representing an increase in net loss of $366,757,$890,909, or 15.6%.41.2%.
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:
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.
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 depreciation 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.
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%.
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 MarchJune 31,30, 2026, we had cash of $2,732,739$15,655,731 and net working capital of $8,483,730,$21,368,974, and on December 31, 2025, we had cash of $5,070,385 and net working capital of $11,237,788. On MarchJune 31,30, 2026, our net working capital had decreasedincreased by $2,754,058$10,131,186 compared to December 31, 2025, mainly as a result of a reduction in cash and cash equivalents used to fund operating losses The Company has experienced operating losses and cash outflows from continuing operations and will require additional funding to support operations for the twelvecapital months following the issuance of these financial statements. These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.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.
Management has implemented cost optimization operational initiatives and working capital control designed to improve liquidity and support a sustainable path toward profitability, supported by an updated strategic focus and strengthened leadership. The Company continues to evaluate financing alternatives and strategic opportunities to enhance its capital position. While there can be no assurance that additional funding will be obtained on favorable terms, management believes its ongoing initiatives position the Company to support operations and advance its strategic objectives.
ThreeSix months ended MarchJune 31,30, 2026 compared to threesix months ended MarchJune 31,30, 2025
Cash flows used in operating activities for the threesix months ended MarchJune 31,30, 2026 were $1,941,544$5,037,030 representing an increase of $644,358$2,129,194 compared to cash flows used in operating activities of $1,297,186$2,907,836 for the threesix months ended MarchJune 31,30, 2025. The cash flows used in operating activities for the period consistsconsist mainly of the net loss of $2,725,099,$5,776,794, adjusted for depreciation and other non-cash-related items of $835,210,$1,916,422, an increase in accounts receivables of $317,277,$1,955,382, prepaid expenses and other current assetsaccount payables of $399,522,$398,619, and partially offset by an increase in accountsaccrued payableexpenses of $526,117.$679,736.
Cash flows used in investing activities were $269,724$257,552 for the threesix months ended MarchJune 31,30, 2026 as compared to cash flows used in investing activities of $110,860$47,885 for the threesix months ended MarchJune 31,30, 2025, representing a change of $158,864.$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 threesix months ended MarchJune 31,30, 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 $(311,911)$15,760,658 for the threesix months ended MarchJune 31,30, 2026 compared to cash flows used by financing activities of $989,722$856,496 for the threesix months ended MarchJune 31,30, 2025, representing a change of $1,301,633.$14,904,162. Financing activities primarily consisted of repaymentsproceeds of lease obligations andfrom the acquisitionissuance of common stockstock, tonet satisfyof taxdiscounts withholdingand obligations.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.
As of MarchJune 31,30, 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.
LIQT insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 2 Form 4 filings (2 insiders, 1 trade date, 750,000 shares, about $750.0K) and open-market sales in 0 filings. Net open-market shares: 750,000 (purchases minus sales); net value about $750.0K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-06-08 | Bleichroeder Lp |
Other | 3,000,000 | $1.00 | $3.0M |
| 2026-06-05 | Wowk Robert |
Open-market purchase | 50,000 | $1.00 | $50.0K |
| 2026-06-05 | Bleichroeder Lp |
Open-market purchase | 700,000 | $1.00 | $700.0K |
Well-known investors holding LIQT (13F)
None of the 59 investors we track reported a position in their latest 13F.