LIQTECH INTERNATIONAL INC

Previous wording

At present, we conduct our operations in the Kingdom of Denmark and China, with locations in the Copenhagen area, Hobro and Shanghai.

Current wording

At present, we conduct our operations in the Kingdom of Denmark and China, with locations in the Copenhagen area, Hobro and Nantong.

Previous wording

Total operating expenses for the three months ended March 31, 2025 were $2,310,385, representing a decrease of $6,737, or 0.3%, compared to $2,317,122 for the same period in 2024.

Current wording

Total operating expenses for the three months ended June 30, 2025 were $2,594,447, representing a decrease of $209,283, or 7.5%, compared to $2,803,730 for the same period in 2024.

Previous wording

Research and development expenses for the three months ended March 31, 2025 were $230,123 compared to $254,812 for the same period in 2024, representing a decrease of $24,689, or 9.7%. The decrease was primarily attributed to a reduction in the average number of employees engaged in research and development activity as the Company streamlined and centralized the R&D function, partially offset by increased patent costs.

Current wording

Research and development expenses for the three months ended June 30, 2025 were $242,556 compared to $407,292 for the same period in 2024, representing a decrease of $164,736, or 40.4%. The decrease was primarily attributed to one-time exit costs of a loss-making external development project in the prior-year period and additionally, a reduction in the average number of employees engaged in research and development activity as the Company streamlined and centralized the R&D function.

Previous wording

Revenue for the three months ended March 31, 2025 was $4,617,541 compared to $4,235,344 for the same period in 2024, representing an increase of $382,197, or 9.0%. The favorable change was attributable to an increase in liquid filtration systems, specifically a full-scale system delivery to the U.S., and increased sales of plastics products, partly offset by a decrease in deliveries of ceramic membranes and DPFs. The Company believes that the decrease in sales of ceramic membranes and DPFs reflects temporary market conditions, with customers awaiting potential interest rate cuts.

Current wording

Revenue for the six months ended June 30, 2025 was $9,575,030 compared to $8,720,406 for the same period in 2024, representing an increase of $854,624, or 9.8%. The favorable change was attributable to an increase in liquid filtration systems, specifically a full-scale PureFlow™ system delivery and pool filtration systems, increased sales of plastics products, and increased sales of ceramic membranes, partially offset by a decrease in deliveries of DPFs.

Previous wording

Gross profit for the three months ended March 31, 2025 was $125,056 (representing a gross loss margin of 2.7%) compared to a gross profit of $271,102 (representing a gross profit margin of 6.4%) for the same period in 2024, marking a decrease of $146,046, or 53.9%. This decline was primarily driven by the low gross profit margin related to the delivery of a full-scale liquid filtration system to the U.S., caused by associated development costs for the system. Also impacting gross profit was, the underutilization of our manufacturing capacity as a direct result of the decline in ceramic membranes and DPFs. This impact were partly offset by lower depreciation expenses. Included in the gross profit was depreciation of $392,292 and $451,644 for the three months ended March 31, 2025, and 2024, respectively.

Current wording

Gross profit for the six months ended June 30, 2025 was $609,634 (representing a gross profit margin of 6.4%) compared to a gross profit of $988,313 (representing a gross profit margin of 11.3%) for the same period in 2024, marking a decrease of $378,679, or 38.3%. This decline was primarily driven by the low gross profit margin related to the delivery of a first time full-scale PureFlow™ liquid filtration system to the U.S., caused by associated development costs for the system. Also impacting gross profit was the underutilization of our manufacturing capacity following the decline in DPFs sales. This impact was partially offset by lower depreciation expenses. Included in the gross profit was depreciation of $804,583 and $893,580 for the six months ended June 30, 2025, and 2024, respectively.

Previous wording

Selling expenses for the three months ended March 31, 2025 were $718,016 compared to $517,579 for the same period in 2024, representing an increase of $200,437, or 38.7%. The increase in selling expenses is mainly related to lower sales commissions in 2024, along with the cost associated with the newly formed joint venture, Nantong JiTRI LiqTech Green Energy Technology Co., Ltd. The primary focus of the JV is to develop and commercialize systems for the marine water treatment market in China. The increase was partially offset by decreased bad debt expense and lower depreciation.

Current wording

Selling expenses for the six months ended June 30, 2025 were $1,530,584 compared to $1,372,701 for the same period in 2024, representing an increase of $157,883, or 11.5%. The increase in selling expenses was mainly related to lower sales commissions in 2024, along with the cost associated with the newly formed joint venture, Nantong JiTRI LiqTech Green Energy Technology Co., Ltd. The primary focus of the JV is to develop and commercialize systems for the marine water treatment market in China. The increase was partially offset by decreased bad debt expense and lower depreciation.

Previous wording

General and administrative expenses for the three months ended March 31, 2025 were $1,362,246 compared to $1,544,731 for the same period in 2024, representing a decrease of $182,485, or 11.8%. The decrease was mainly attributable to non-recurring costs in the comparable period related to recruitment expenses associated with the CFO transition along with savings on external consulting services during this period. Included in general and administrative expenses were non-cash compensation of $241,245 and $193,321 for the three months ended March 31, 2025, and 2024, respectively.

Current wording

General and administrative expenses for the six months ended June 30, 2025 were $2,901,569 compared to $3,086,047 for the same period in 2024, representing a decrease of $184,478, or 6.0%. The decrease was mainly attributable to non-recurring costs in the comparable period related to recruitment expenses associated with the CFO transition along with savings on external consulting services during this period. Included in general and administrative expenses were non-cash compensation of $471,798 and $359,938 for the six months ended June 30, 2025, and 2024, respectively.

Previous wording

Other expenses for the three months ended March 31, 2025 were $173,352 compared to other expenses of $356,714 for the comparable period in 2024, representing a favorable change of $183,362, or 51.4%. The change was primarily attributable to significant losses on the disposal of property and equipment in the prior-year period, partially offset by a lower gain on currency transactions for the three months ended March 31, 2025 as well as increased debt discount amortization due to the extension of the maturity date for the senior promissory notes.

Current wording

Other expenses for the six months ended June 30, 2025 were $224,629 compared to other expenses of $396,045 for the comparable period in 2024, representing a favorable change of $171,416, or 43.3%. The change was primarily attributable to significant losses on the disposal of property and equipment in the prior-year period, partially offset by a lower gain on currency transactions for the six months ended June 30, 2025.

Previous wording

As a result of the cumulative effect of the factors described above, we had a net loss for the three months ended March 31, 2025 of $2,358,342 compared to $2,388,295 for the comparable period in 2024, representing a decrease in net loss of $29,953, or 1.3%.

Current wording

As a result of the cumulative effect of the factors described above, we had a net loss for the six months ended June 30, 2025 of $4,519,128 compared to $4,499,995 for the comparable period in 2024, representing a decrease in net loss of $19,133, or 0.4%.

Previous wording

The Company has historically financed operations through offerings of equity or debt instruments, internally generated cash from operations, and our available lines of credit. On March 31, 2025, we had cash of $10,447,432 and net working capital of $15,404,982, and on December 31, 2024, we had cash of $10,868,728 and net working capital of $15,736,809. On March 31, 2025, our net working capital had decreased by $331,827 compared to December 31, 2024, mainly as a result of a reduction in cash and cash equivalents to fund operating losses.

Current wording

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, 2025, we had cash of $8,673,449 and net working capital of $14,311,974, and on December 31, 2024, we had cash of $10,868,728 and net working capital of $15,736,809. On June 30, 2025, our net working capital had decreased by $1,424,835 compared to December 31, 2024, mainly as a result of a reduction in cash and cash equivalents to fund operating losses.

Previous wording

While the Company anticipates that its proactive measures will be sufficient to protect the business over the coming 12 months, the Company cannot predict the specific duration and severity of the unfavorable market dynamics that may adversely affect the business. In the future, the Company may experience reduced or changed demand for its products and services, especially if there is a global recession, structural shift in regulation, or the continuation of escalating interest rates and tariffs that adversely impact the investment decisions of our customers.

Current wording

While the Company anticipates that its proactive measures will be sufficient to protect the business over the coming 12 months, the Company cannot predict the specific duration and severity of the unfavorable market dynamics that may adversely affect the business. In the future, the Company may experience reduced or changed demand for its products and services, especially if there is a global recession, structural shift in regulation, or the escalating interest rates and tariffs that adversely impact the investment decisions of our customers.

Previous wording

Three months ended March 31, 2025 compared to three months ended March 31, 2024

Current wording

Six months ended June 30, 2025 compared to six months ended June 30, 2024

Previous wording

Cash flows from operating activities for the period ending March 31, 2025 derived from the net loss for the period, adjusted for non-cash items and changes in assets and liabilities. Cash flows used in operating activities for the three months ended March 31, 2025 were $1,297,186, representing a favorable change of $659,516 compared to cash flows used in operating activities of $1,956,702 for the three months ended March 31, 2024. The cash flows used in operating activities for the period consists mainly of the net loss of $2,358,343, adjusted for depreciation and other non-cash-related items of $1,047,068, increase in accounts receivables of $933,161, partially offset by decrease in contract assets of $850,839.

Current wording

Cash flows from operating activities for the period ending June 30, 2025 derived from the net loss for the period, adjusted for non-cash items and changes in assets and liabilities. Cash flows used in operating activities for the six months ended June 30, 2025 were $2,907,836 representing a favorable change of $871,843 compared to cash flows used in operating activities of $3,779,679 for the six months ended June 30, 2024. The cash flows used in operating activities for the period consists mainly of the net loss of $2,549,812, when adjusted for depreciation and other non-cash-related items of $1,969,316, increase in accounts receivables of $1,307,919, partially offset by decrease in contract assets of $678,102 and inventories of $652,828.

Previous wording

Cash flows used in investing activities were $110,860 for the three months ended March 31, 2025 as compared to cash flows from investing activities of $551,787 for the three months ended March 31, 2024, representing an unfavorable change of $662,647. The investing activities include general purchases of production equipment to continue optimizing production throughput and the internal production of rental assets, partly offset by proceeds from the disposition of production equipment in our Ballerup facility.

Current wording

Cash flows used in investing activities were $47,885 for the six months ended June 30, 2025 as compared to cash flows from investing activities of $333,171 for the six months ended June 30, 2024, representing an unfavorable change of $381,056. 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 disposal of production equipment in our Ballerup facility.

Previous wording

Cash flows provided from financing activities were $989,722 for the three months ended March 31, 2025 compared to cash flows used by financing activities of $1,009,437 for the three months ended March 31, 2024, representing a favorable change of $1,999,159. The finance activities include proceeds from a long term loan received and capital contribution from noncontrolling interest in the JV. Additionally, in the comparing period finance activities included the repayment of a lease agreement.

Current wording

Cash flows provided from financing activities were $856,496 for the six months ended June 30, 2025 compared to cash flows used by financing activities of $1,115,153 for the six months ended June 30, 2024, representing a favorable change of $1,971,649. The finance activities include proceeds from a long-term loan and capital contribution from the noncontrolling interest in the JV. Additionally, in the prior-year period, finance activities included the repayment of a lease agreement.