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 Nantong.

Current wording

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

Previous wording

Our strategy is to leverage our core competencies in material science, advanced filtration, and systems integration, creating differentiated products with compelling value propositions to penetrate attractive end markets with regulatory tailwinds and sustainability implications. Essential imperatives associated with our strategy include the following:

Current wording

Our strategy is to leverage our core competencies in material science, advanced filtration, and systems integration, creating differentiated products with compelling value propositions to penetrate attractive end markets with value creation regulatory tailwinds and sustainability implications. Essential imperatives associated with our strategy include the following:

Previous wording

Revenue for the three months ended June 30, 2025 was $4,957,489 compared to $4,485,062 for the same period in 2024, representing an increase of $472,427, or 10.5%. The favorable change was attributable to an increase in liquid filtration systems, specifically an increase in pool system deliveries and aftermarket sales, increased sales of plastics products, and increased sales of ceramic membranes, partially offset by a decrease in deliveries of DPFs.

Current wording

Revenue for the three months ended September 30, 2025 was $3,807,274 compared to $2,478,221 for the same period in 2024, representing an increase of $1,329,053, or 53.6%. The favorable change was attributable to an increase in liquid filtration systems, specifically an increase in pool system deliveries and aftermarket sales, along with increased sales of plastics products, partially offset by a decrease in deliveries of DPFs.

Previous wording

Gross profit for the three months ended June 30, 2025 was $484,578 (representing a gross profit margin of 9.8%) compared to a gross profit of $717,211 (representing a gross profit margin of 16.0%) for the same period in 2024, marking a decrease of $232,633, or 32.4%. This decline was primarily driven by the underutilization of our manufacturing capacity following the decline in DPFs sales. Gross profit was further impacted by increased provisions and write-offs for slow-moving inventory also linked to the DPF activity. This impact was partially offset by lower depreciation expenses. Included in the gross profit was depreciation of $412,291 and $441,936 for the three months ended June 30, 2025, and 2024, respectively.

Current wording

Gross profit for the three months ended September 30, 2025 was$747,878 (representing a gross profit margin of 19.6%) compared to a gross profit loss of$209,533 (representing a gross profit margin of -8.5%) for the same period in 2024, marking an increase of$957,411, or 456.9%. This increase was primarily driven by system sales utilization of our manufacturing capacity for membranes and low depreciation expenses offset by write-offs for slow-moving inventory linked to DPF activity. Included in the gross profit was depreciation of$371,654 and$478,902 for the three months ended September 30, 2025, and 2024, respectively.

Previous 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.

Current wording

Total operating expenses for the three months ended September 30, 2025 were$2,080,880, representing a decrease of$299,560, or 12.6%, compared to$2,380,440 for the same period in 2024.

Previous wording

Selling expenses for the three months ended June 30, 2025 were $812,568 compared to $855,122 for the same period in 2024, representing a decrease of $42,554, or 5.0%. The decrease in selling expenses is mainly related to the release of bad debt provision due to aging improvements and lower depreciation. The decrease was partially offset by costs 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.

Current wording

Selling expenses for the three months ended September 30, 2025 were$541,259 compared to$610,713 for the same period in 2024, representing a decrease of$69,454, or 11.4%. The decrease in selling expenses is related to the release of a bad debt provision due to aging improvements as well as lower depreciatio,n partially offset by costs associated with the newly formed joint venture in China, Nantong JiTRI LiqTech Green 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.

Previous wording

General and administrative expenses for the three months ended June 30, 2025 were $1,539,323 compared to $1,541,316 for the same period in 2024, representing a decrease of $1,993, or 0.1%. While overall expenses remained stable, an increase in non-cash compensation was offset by corresponding decrease in salaries. Included in general and administrative expenses were non-cash compensation of $230,553 and $166,617 for the three months ended June 30, 2025, and 2024, respectively.

Current wording

General and administrative expenses for the three months ended September 30, 2025 were$1,270,195 compared to$1,491,366 for the same period in 2024, representing a decrease of$221,171, or 14.8%. While overall expenses remained stable, an increase in non-cash compensation was offset by corresponding decrease in salaries. Included in general and administrative expenses were non-cash compensation of $258,538 and $157,000 for the three months ended September 30, 2025, and 2024, respectively.

Previous 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.

Current wording

Research and development expenses for the three months ended September 30, 2025 were$269,426 compared to$278,361 for the same period in 2024, representing a decrease of$8,935, or 3.2%. The decrease was primarily attributed to one-time exit costs of a loss-making external development project in the prior-year period and, 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

Other expenses for the three months ended June 30, 2025 were $51,277 compared to other expenses of $39,331 for the comparable period in 2024, representing an unfavorable change of $11,946, or 30.4%. The change was primarily attributable to lower gain on currency transactions and increased interest expenses for the three months ended June 30, 2025, partially offset by decreased debt discount amortization.

Current wording

Other expenses for the three months ended September 30, 2025 were$127,135 compared to other expenses of$260,614 for the comparable period in 2024, representing a favorable change of$133,479, or 51.2%. The change was primarily attributable to slower amortization of debt discount, reduced losses on currency transactions, and a decrease of net interest expenses for the three months ended September 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 June 30, 2025 of $2,160,786 compared to $2,111,700 for the comparable period in 2024, representing a favorable change in net loss of $49,086, or 2.3%.

Current wording

As a result of the cumulative effect of the factors described above, we reported a net loss for the three months ended September 30, 2025 of$1,459,762 compared to$2,840,526 for the comparable period in 2024, representing a favorable change in net loss of$1,380,764, or 48.6%.

Previous wording

The following table sets forth our revenues, expenses, and net loss for the six months ended June 30, 2025, and 2024:

Current wording

The following table sets forth our revenues, expenses, and net loss for thenine months ended September 30, 2025, and 2024:

Previous 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.

Current wording

Revenue for thenine months ended September 30, 2025 was$13,382,304 compared to$11,198,627 for the same period in 2024, representing an increase of$2,183,677, or 19.5%. 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 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.

Current wording

Gross profit for thenine months ended September 30, 2025 was$1,357,512 (representing a gross profit margin of 10.1%) compared to a gross profit of$778,780 (representing a gross profit margin of 7.0%) for the same period in 2024, marking a increase of$578,732, or 74.3%. This increase was primarily driven by the higher revenue related to the delivery of a first time full-scale PureFlow™ liquid filtration system to the U.S. Also impacting gross profit was the improved utilization of our membrane manufacturing capacity. This impact was partially offset by lower depreciation expenses. Included in the gross profit was depreciation of$1,176,237 and$1,372,482 for thenine months ended September 30, 2025, and 2024, respectively.

Previous wording

Total operating expenses for the six months ended June 30, 2025 were $4,904,832, representing a decrease of $216,020, or 4.2%, compared to $5,120,852 for the same period in 2024.

Current wording

Total operating expenses for thenine months ended September 30, 2025 were$6,985,712, representing a decrease of$515,580, or 6.9%, compared to$7,501,292 for the same period in 2024.

Previous 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.

Current wording

Selling expenses for thenine months ended September 30, 2025 were$2,071,843 compared to$1,983,414 for the same period in 2024, representing an increase of$88,429, or 4.5%. The increase in selling expenses was mainly related to lower sales commissions in 2024, along with the cost associated with the JV. 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 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.

Current wording

General and administrative expenses for thenine months ended September 30, 2025 were$4,171,764 compared to$4,577,413 for the same period in 2024, representing a decrease of$405,649, or 8.9%. 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 $730,335 and $521,791 for thenine months ended September 30, 2025, and 2024, respectively.

Previous wording

Research and development expenses for the six months ended June 30, 2025 were $472,679 compared to $662,104 for the same period in 2024, representing a decrease of $189,425, or 28.6%. The decrease was primarily attributed to one-time exit costs of a loss-making external development project in the prior-year period and additionally, reduction in the average number of employees engaged in research and development activity as the Company streamlined and centralized the R&D function.

Current wording

Research and development expenses for thenine months ended September 30, 2025 were$742,105 compared to$940,465 for the same period in 2024, representing a decrease of$198,360, or 21.1%. The decrease was primarily attributed to one-time exit costs of a loss-making external development project in the prior-year period and 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

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.

Current wording

Other expenses for thenine months ended September 30, 2025 were$351,764 compared to other expenses of$656,659 for the comparable period in 2024, representing a favorable change of$304,895, or 46.4%. 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 thenine months ended September 30, 2025.

Previous 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%.

Current wording

As a result of the cumulative effect of the factors described above, we reported a net loss for thenine months ended September 30, 2025 of$5,978,890 compared to$7,340,521 for the comparable period in 2024, representing a decrease in net loss of$1,361,631, or 18.5%.

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 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.

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 September 30, 2025, we had cash of $7,354,024 and net working capital of $13,406,883, and on December 31, 2024, we had cash of $10,868,728 and net working capital of $15,736,809. On September 30, 2025, our net working capital had decreased by $2,329,926 compared to December 31, 2024, mainly as a result of a focused effort to improve working capital through improved inventory management.

Previous 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.

Current wording

Cash flows from operating activities for the period ending September 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 thenine months ended September 30, 2025 were $3,977,121 representing a favorable change of $1,551,321 compared to cash flows used in operating activities of $5,528,442 for thenine months ended September 30, 2024. The cash flows used in operating activities for the period consists mainly of the net loss of $5,978,890, adjusted for depreciation and other non-cash-related items of $2,884,217, and an increase in accounts receivables of $1,010,624, partially offset by decrease in contract assets of $863,564 and inventories of $190,640.

Previous 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.

Current wording

Cash flows used in investing activities were $173,139 for thenine months ended September 30, 2025 as compared to cash flows used in investing activities of $28,767 for thenine months ended September 30, 2024, representing an unfavorable change of $144,372. 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 $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.

Current wording

Cash flows provided from financing activities were $787,024 for thenine months ended September 30, 2025 compared to cash flows used by financing activities of $125,718 for thenine months ended September 30, 2024, representing a favorable change of $912,742. 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.

Previous wording

For a description of accounting changes and recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements, see “Note 1: Recently Enacted Accounting Standards” in the accompanying financial statements.

Current wording

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.