STOCK TITAN

LiqTech International (LIQT) deepens H1 2026 loss while raising $18M and retiring $6M debt

(Moderate)
(Neutral)
Form Type
10-Q

Rhea-AI Filing Summary

LiqTech International, Inc. reported lower revenue and wider losses for the three and six months ended June 30, 2026, while significantly strengthening its balance sheet through equity financing and debt repayment. Q2 2026 revenue was $4.36M, down 12.0% from $4.96M a year earlier, mainly due to non-recurring 2025 system sales, while the six-month revenue was $8.50M, down 11.2% from $9.58M.

Q2 gross margin was 8.4%, and the six-month gross margin improved to 8.9% from 6.4% in 2025, but operating expenses rose and other expenses increased sharply from higher interest, debt discount amortization, and FX losses. Net loss grew to $3.05M in Q2 and $5.78M for six months, up 41.2% and 27.8% year over year, respectively.

Liquidity improved markedly: cash increased to $15.66M and working capital to $21.37M, driven by a 20,000,000-share public offering at $1.00 per share and issuance of 3,000,000 shares to cancel $3.0M of senior promissory notes, with the remaining $3.0M repaid in cash. Total liabilities fell to $12.15M, and equity rose to $25.80M. Management expects existing cash and operations to fund the next 12 months but notes macroeconomic uncertainty and continued material weaknesses in internal control over financial reporting.

Positive

  • Cash and working capital strengthened: Cash rose to $15.66M and net working capital to $21.37M at June 30, 2026, driven mainly by the equity offering, providing a larger liquidity buffer.
  • Debt significantly reduced: The company fully settled $6.0M of senior promissory notes (half via shares, half via cash), lowering total liabilities to $12.15M from $16.91M and simplifying the capital structure.
  • Six-month gross margin improved: Gross profit for the first half of 2026 was $0.76M (8.9% margin) versus $0.61M (6.4% margin) a year earlier, reflecting a more favorable mix, better capacity utilization, and cost improvements.

Negative

  • Revenue declined double digits: Q2 2026 revenue fell to $4.36M, down 12.0%, and six-month revenue to $8.50M, down 11.2%, largely from lower system sales versus a strong prior-year project.
  • Losses widened materially: Q2 net loss increased to $3.05M from $2.16M (up 41.2%), and six-month net loss to $5.78M from $4.52M (up 27.8%), driven by weaker revenue and much higher other expenses.
  • Higher cash burn from operations: Net cash used in operating activities was $5.04M for the first half of 2026 versus $2.91M a year earlier, reflecting both the larger net loss and working-capital outflows.
  • Ongoing material weaknesses in controls: Management concluded disclosure controls and procedures were not effective as of June 30, 2026, citing unresolved material weaknesses in internal control over financial reporting.

Filing Explained

The completed financing expanded LiqTech’s common-share base, with additional exercisable instruments that could create further issuance.

LiqTech’s Form 10-Q, an unaudited quarterly report, covers the three and six months ended June 30, 2026. The June financing was completed, leaving $18,106,656 of net common-stock issuance proceeds and $3,000,000 of debt exchanged for shares.

The company had 32,947,841 common shares issued and outstanding against 50,000,000 authorized shares at June 30, 2026. Issuing additional shares increases the total share count and reduces an existing holder’s percentage ownership absent offsetting changes; the completed financing therefore changed the ownership base for existing holders.

Separately, the filing lists 309,527 outstanding RSUs, 5,299,879 prefunded warrants and 6,891,346 warrants, all exercisable for common shares. These instruments are additional potential share issuance capacity, not shares already included in the reported outstanding count.

A subsequent event states that the $1,100,000 promissory notes issued in May were fully repaid on July 22, 2026, leaving no remaining obligations under those notes. The remaining ownership and financing watch items are the exercisable instruments and the company’s 50,000,000-share authorization.

Q2 2026 Revenue $4,363,752 Revenue for the three months ended June 30, 2026; down 12.0% year over year
H1 2026 Revenue $8,500,072 Revenue for the six months ended June 30, 2026; down 11.2% year over year
Q2 2026 Net Loss $3,051,695 Net loss for the three months ended June 30, 2026; up 41.2% versus prior year
H1 2026 Net Loss $5,776,794 Net loss for the six months ended June 30, 2026; up 27.8% year over year
Cash Balance $15,655,731 Cash and restricted cash as of June 30, 2026
Total Liabilities $12,148,278 Total liabilities as of June 30, 2026; down from $16,905,861 at December 31, 2025
Total Equity $25,798,814 Total equity as of June 30, 2026; up from $10,372,236 at December 31, 2025
Shares Outstanding 32,947,841 Common shares issued and outstanding as of June 30, 2026
original issue discount financial
"issued promissory notes in an aggregate principal amount of $1.1 million for cash proceeds of $1.0 million, reflecting an original issue discount"
Original issue discount (OID) is the difference between a debt security’s face value and the lower price at which it is first sold, treated as additional interest that accrues over the life of the instrument. For investors it matters because OID raises the effective yield and changes taxable income and the holding’s cost basis over time — think of buying a $100 voucher for $90 and recognizing the $10 gain as earned interest as the voucher approaches maturity.
noncontrolling interest financial
"the 10% noncontrolling interest is presented separately in the consolidated balance sheet within equity"
The portion of a business owned by investors other than the controlling owner when one company has control of another; it represents outside shareholders’ share of the subsidiary’s assets and profits. For investors, it matters because those outside claims reduce the amount of profit and net assets attributable to the parent owner — similar to saying part of a pizza belongs to someone else — and thus affects earnings, book value and valuation.
right-of-use assets financial
"Operating lease right-of-use assets were $4,157,532 as of June 30, 2026"
Right-of-use assets are the rights a company gains to use a physical space or equipment under a lease agreement. They are recorded as assets on the company's balance sheet, reflecting the value of future benefits from the leased item. For investors, these assets provide a clearer picture of a company's obligations and resources related to leasing arrangements, helping to assess its financial health and operational commitments.
prefunded warrants financial
"As of June 30, 2026, the Company had 309,527 RSUs, 5,299,879 prefunded warrants, and 6,891,346 warrants"
Prefunded warrants are a security that gives the holder the right to convert the warrant into a share after paying a very small remaining amount because almost the full purchase price was paid upfront. They matter to investors because exercising them increases the company’s outstanding shares (dilution) and can provide immediate cash to the issuer while allowing holders to bypass ownership limits or simplify timing, similar to buying a nearly-complete gift card that only needs a tiny top-up to use.
material weakness regulatory
"concluded that our disclosure controls and procedures as of June 30, 2026 were not effective due to material weaknesses"
A material weakness is a significant flaw in the systems and checks a company uses to ensure its financial reports are accurate, meaning errors or fraud could happen and not be caught. For investors it matters because it raises the risk that reported results are unreliable—similar to finding a hole in a ship’s hull—potentially leading to corrected financials, regulatory action, reduced trust, and negative effects on stock value and borrowing costs.
Delegation of Authority regulatory
"introduced an updated Delegation of Authority, with the overall purpose to provide clarity for all employees"
Q2 2026 Revenue $4,363,752 Revenue decreased 12.0% compared to Q2 2025.
H1 2026 Revenue $8,500,072 Revenue decreased 11.2% compared to the first half of 2025.
Q2 2026 Net Loss $3,051,695 Net loss increased 41.2% versus Q2 2025.
H1 2026 Net Loss $5,776,794 Net loss increased 27.8% versus the first half of 2025.
H1 2026 Gross Margin 8.9% Gross margin improved from 6.4% in the first half of 2025.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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FAQ

How did LiqTech (LIQT) perform financially in Q2 2026?

LiqTech reported Q2 2026 revenue of $4.36M, down 12.0% year over year, and a net loss of $3.05M, up 41.2%. Gross margin was 8.4%, and higher interest, debt discount amortization, and FX losses drove a sharp increase in other expenses.

What were LiqTech (LIQT)’s results for the first half of 2026?

For the six months ended June 30, 2026, LiqTech generated $8.50M revenue versus $9.58M in 2025 and recorded a net loss of $5.78M versus $4.52M. Gross margin improved to 8.9% from 6.4% as mix, utilization, and procurement effects offset lower sales.

How did LiqTech (LIQT) improve its liquidity and balance sheet in 2026?

LiqTech completed a 20,000,000-share public offering at $1.00, generating about $18.0M net, and issued 3,000,000 shares to cancel $3.0M of senior notes. Combined with $3.0M cash repayment, this eliminated $6.0M in senior promissory notes and lifted cash to $15.66M.

What is LiqTech (LIQT)’s current debt position and capital structure?

As of June 30, 2026, LiqTech’s senior promissory notes balance was $0 after repayment and debt-for-equity conversion. Total liabilities were $12.15M and total equity $25.80M, with 32,947,841 common shares outstanding and 12,191,225 warrants (including prefunded warrants).

Does LiqTech (LIQT) believe it has enough cash for the next 12 months?

Management stated that cash on hand of $15.66M, plus expected operating cash flows, is believed sufficient to cover capital requirements and committed investments for the next 12 months, while acknowledging significant macroeconomic uncertainties that could affect demand and performance.

What internal control issues did LiqTech (LIQT) report in this 10-Q?

LiqTech’s CEO and CFO concluded that disclosure controls and procedures were not effective as of June 30, 2026 due to material weaknesses in internal control over financial reporting. The company is adding finance staff, upgrading systems, and redesigning processes to remediate these weaknesses.

How concentrated are LiqTech (LIQT)’s customers and where are its operations?

In Q2 2026, one customer represented 19% of revenue, and three customers each represented 10–13% of accounts receivable. As of June 30, 2026, about 87% of assets were in Denmark, 3% in China, and 10% in the U.S., reflecting its production and JV footprint.
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

 

FORM 10-Q

(Mark One) 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2026

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                                                     to                                                       

 

Commission File Number: 001-36210

 

LiqTech International, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

 

20-1431677

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

   

Industriparken 22C, DK 2750 Ballerup, Denmark

  

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code:  +45 3131 5941

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading symbol(s)

 

Name of each exchange on which

registered

Common Stock, $0.001 par value

 

LIQT

 

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

 

Large accelerated filer

Accelerated filer

Non-accelerated filer 

Smaller reporting company

Emerging growth company

  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes No ☒

 

As of August 12, 2026, there were 32,947,841 shares of Common Stock, $0.001 par value per share, outstanding. 

 

 

 

 

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

Quarterly Report on Form 10-Q

For the Period Ended June 30, 2026

 

TABLE OF CONTENTS

 

 

Page

PART I. FINANCIAL INFORMATION

5

   

Item 1. Financial Statements

5

   

Condensed Consolidated Balance Sheets as of June 30, 2026 (unaudited) and December 31, 2025

5

   

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2026 and June 30, 2025 (unaudited)

7

   

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2026 and June 30, 2025 (unaudited)

8

   

Condensed Consolidated Statements of Stockholders Equity for the Three and Six Months ended June 30, 2026 and June 30, 2025 (unaudited)

9

   

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and June 30, 2025 (unaudited)

11

   

Notes to Condensed Consolidated Financial Statements (unaudited)

13

   

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

23

   

Item 3. Quantitative and Qualitative Disclosures About Market Risk

29

   

Item 4. Controls and Procedures

30

   

PART II. OTHER INFORMATION

31

   

Item 1. Legal Proceedings

31

   

Item 1A. Risk Factors

31

   

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

31

   

Item 3. Defaults Upon Senior Securities

31

   

Item 4. Mine Safety Disclosures

31

   

Item 5. Other Information

31

   

Item 6. Exhibits

32

   

SIGNATURES

34

 

 

 

2

 

 

FORWARD-LOOKING STATEMENTS

 

Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” regarding the plans and objectives of management for future operations and market trends and expectations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

 

The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving the continued expansion of our business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future political, legislative, economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. This is especially underlined by the potential impacts from the prevailing macro-economic uncertainty on the Company, including the related effects to our business operations, results of operations, cash flows, and financial position. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Quarterly Report on Form 10-Q will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

 

Forward-looking statements include, but are not limited to, statements concerning:

 

 

The potential adverse effects on our operations and financial performance from armed conflicts or geopolitical tensions;
   

 

 

The potential adverse impact of global trade restrictions, tariffs and geopolitical tensions on our business and supply chain;

   

 

 

The potential negative impact of prolonged energy market volatility and supply disruptions on our business;

   

 

 

The potential adverse impact of health crises, pandemics, and public health emergencies on our business, financial condition, 

and operations;

   

 

 

Our dependence on a few major customers and the ability to maintain future relationships with one or more of these major

customers;

   

 

 

Our ability to operate with financial stability and secure access to external financing and adequate liquidity;

   

 

 

Our ability to secure and source supplies of raw materials and key components in due time and at competitive prices;

   

 

 

Our ability to achieve revenue growth and penetrate new markets;
   

 

 

Our dependence on the expertise and experience of our management team and the retention of key employees;

   

 

 

Our reliance and access to qualified personnel to expand our business;

   

 

 

Our ability to adapt to potentially adverse changes in legislative, regulatory and political frameworks;

   

 

 

Changes in interest rates or tightening of debt capital markets;

   

 

 

Changes in emissions and environmental regulations, and potential further tightening of emission standards;

   

 

 

3

 

 

The exposure to potentially adverse tax consequences;

     
  Our ability to compete under changing governmental standards by which our products are evaluated;
     
 

The financial impact from the fluctuation and volatility of foreign currencies;

     
 

The potential monetary costs of defending our intellectual property rights;

     
 

Our ability to successfully protect our intellectual property rights and manufacturing know-how;

     
 

The possibility of a dispute over intellectual property developed in conjunction with third parties with whom we have contractual relationships;

     
 

The possibility that we could become subject to litigation that could be costly, limit or cancel our intellectual property rights or divert time and efforts away from our business operations;

     
 

The potential negative impact to the sale of our products caused by technological advances of our competitors;

     
 

The potential liability for environmental harm or damages resulting from technical faults or failures of our products;

     
 

The possibility that an investor located within the United States may not be able to, or find it difficult to, enforce any judgments obtained in United States courts because a significant portion of our assets and some of our officers and directors may be located outside of the United States;

     
 

The possibility that we may not be able to develop and maintain an effective system of internal control over financial reporting, leading to inaccurate reports of our financial results;

     
 

The possibility of breaches in the security of our information technology systems;

     
 

The liability risk of our compliance to environmental laws and regulations; and
     
 

The potential negative impact of more stringent environmental laws and regulations as governmental agencies seek to improve minimum standards.
     

 

Any forward-looking statement made by us herein speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

 

4

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

 

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

  

June 30,

  

December 31,

 
  

2026

  

2025

 
         

Assets

        
         

Current Assets:

        

Cash and restricted cash

 $15,655,731  $5,070,385 

Accounts receivable, net

  5,230,837   3,429,992 

Inventories, net

  5,956,679   6,479,321 

Contract assets

  340,260   733,851 

Prepaid expenses and other current assets

  526,348   245,702 
         

Total Current Assets

  27,709,855   15,959,251 
         

Non-Current Assets:

        

Property and equipment, net

  5,284,603   5,845,323 

Operating lease right-of-use assets

  4,157,532   4,643,680 

Deposits and other assets

  529,036   545,573 

Intangible assets, net

  25,759   36,125 

Goodwill

  240,307   248,145 
         

Total Non-Current Assets

  10,237,237   11,318,846 
         

Total Assets

 $37,947,092  $27,278,097 

 

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

 

5

 

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

 

  

June 30,

  

December 31,

 
  

2026

  

2025

 
         

Liabilities and Stockholders’ Equity

        
         

Current Liabilities:

        

Accounts payable

 $1,403,902  $1,552,890 

Accrued expenses

  2,485,634   1,795,382 

Notes payable

  1,050,000   - 
Line of credit  88,428   - 

Current portion of finance lease liabilities

  496,797   517,759 

Current portion of operating lease liabilities

  717,820   714,446 

Contract liabilities

  98,300   140,986 
         

Total Current Liabilities

  6,340,881   4,721,463 
         

Non-Current Liabilities:

        

Deferred tax liability

  60,914   63,654 

Finance lease liabilities, net of current portion

  1,127,729   1,415,908 

Operating lease liabilities, net of current portion

  3,439,712   3,929,234 

Loan from related party

  1,179,042   1,265,057 

Notes payable, net of debt discounts

  -   5,510,545 
         

Total Non-Current Liabilities

  5,807,397   12,184,398 
         

Total Liabilities

  12,148,278   16,905,861 
         
         

Stockholders' Equity:

        

Preferred stock; par value $0.001, 2,500,000 shares authorized, 0 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively

  -   - 

Common stock; par value $0.001, 50,000,000 shares authorized and 32,947,841 and 9,627,064 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively

  32,948   9,627 

Additional paid-in capital

  131,755,874   110,427,993 

Accumulated deficit

  (100,521,598)  (94,795,121)

Accumulated other comprehensive loss

  (5,357,003)  (5,209,173)
         

Total Stockholders' Equity

  25,910,221   10,433,326 
         

Noncontrolling Interest

  (111,407)  (61,090)
         

Total Equity

  25,798,814   10,372,236 
         

Total Liabilities and Equity

 $37,947,092  $27,278,097 

 

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

 

6

 

 

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

  

For The Three Months Ended

  

For the Six Months Ended

 
  

June 30,

  

June 30,

 
  

2026

  

2025

  

2026

  

2025

 

Revenue

 $4,363,752  $4,957,489  $8,500,072  $9,575,030 

Cost of goods sold

  3,998,213   4,472,911   7,740,789   8,965,396 
                 

Gross Profit

  365,539   484,578   759,283   609,634 
                 

Operating Expenses:

                

Selling expenses

  835,836   812,568   1,816,510   1,530,584 

General and administrative expenses

  1,589,775   1,539,323   3,003,920   2,901,569 

Research and development expenses

  271,745   242,556   547,879   472,679 
                 

Total Operating Expenses

  2,697,356   2,594,447   5,368,309   4,904,832 
                 

Loss from Operations

  (2,331,817)  (2,109,869)  (4,609,026)  (4,295,198)
                 

Other Income (Expense):

                

Interest and other income

  22,378   64,605   39,235   133,356 

Interest and other expense

  (231,160)  (63,466)  (440,224)  (111,749)

Amortization of debt discount

  (401,951)  (84,318)  (489,455)  (252,348)

Gain (loss) on foreign currency transactions

  (94,457)  34,060   (263,013)  69,576 

Gain (loss) on disposal of property and equipment

  (15,058)  (2,158)  (15,058)  (63,464)
                 

Total Other Expense

  (720,248)  (51,277)  (1,168,515)  (224,629)
                 

Loss Before Income Taxes

  (3,052,065)  (2,161,146)  (5,777,541)  (4,519,827)
                 

Income tax benefit

  (370)  (360)  (747)  (699)
                 

Net Loss

 $(3,051,695) $(2,160,786) $(5,776,794) $(4,519,128)
                 

Net Loss attributable to noncontrolling interest

  (35,330)  (8,901)  (50,317)  (15,851)

Net Loss attributable to LiqTech International, Inc.

  (3,016,365)  (2,151,885)  (5,726,477)  (4,503,277)
                 

Loss Per Common Share – Basic and Diluted

 $(0.14) $(0.14) $(0.32) $(0.30)
                 

Weighted-Average Common Shares Outstanding – Basic and Diluted

  20,808,160   14,906,781   18,033,180   14,906,781 

 

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

 

7

 

 

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE LOSS (UNAUDITED)

 

  

For the Three Months Ended

  

For the Six Months Ended

 
  

June 30,

  

June 30,

 
  

2026

  

2025

  

2026

  

2025

 
                 

Net Loss

  (3,051,695)  (2,160,786)  (5,776,794)  (4,519,128)
                 

Loss on foreign currency translation adjustments

  (15,203)  794,429   (147,830)  1,142,775 
                 

Total Other Comprehensive Loss

 $(3,066,898) $(1,366,357) $(5,924,624) $(3,376,353)
                 

Net loss attributable to non-controlling interests

  35,330   8,901   50,317   15,851 
                 

Total Other Comprehensive Loss Attributable to LiqTech International, Inc.

 $(3,031,568) $(1,357,456) $(5,874,307) $(3,360,502)

 

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

 

8

 

 

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (UNAUDITED)

 

                  

Accumulated

      

Non-

     
          

Additional

      

Other

  

Total

  

controlled

     
  

Common Stock

  

Paid-in

  

Accumulated

  

Comprehensive

  

Stockholders’

  

Interest in

  

Total

 
  

Shares

  

Amount

  

Capital

  

Deficit

  

Income (Loss)

  

Equity

  

Subsidiaries

  

Equity

 

Balance at December 31, 2025

  9,627,064   9,627   110,427,993   (94,795,121)  (5,209,173)  10,433,326   (61,090)  10,372,236 
                                 

Common stock issued in settlement of RSUs

  394,226   394   (394)  -   -   -   -   - 
                                 

Tax withholdings paid related to stock-based compensation

  (73,449)  (73)  (182,426)  -   -   (182,499)  -   (182,499)
                                 

Stock-based compensation

  -   -   218,325   -   -   218,325   -   218,325 
                                 

Currency translation, net

  -   -   -   -   (132,627)  (132,627)  -   (132,627)
                                 

Net loss

  -   -   -   (2,710,112)  -   (2,710,112)  -   (2,710,112)
                                 

Net loss attributable to noncontrolling interest

  -   -   -   -   -   -   (14,987)  (14,987)
                                 

Balance at March 31, 2026

  9,947,841   9,948   110,463,498   (97,505,233)  (5,341,800)  7,626,413   (76,077)  7,550,336 
                                 
                                 

Common stock issued in settlement of RSUs

  -   -   -   -   -   -   -   - 
                                 

Tax withholdings paid related to stock-based compensation

  -   -   -   -   -   -   -   - 
                                 

Capital raise

  20,000,000   20,000   18,077,051   -   -   18,097,051   -   18,097,051 
                                 

Repayment of note

  3,000,000   3,000   2,997,000   -   -   3,000,000   -   3,000,000 
                                 

Stock-based compensation

  -   -   218,325   -   -   218,325   -   218,325 
                                 

Currency translation, net

  -   -   -   -   (15,203)  (15,203)  -   (15,203)
                                 

Net loss

  -   -   -   (3,016,365)  -   (3,016,365)  -   (3,016,365)
                                 

Net loss attributable to noncontrolling interest

  -   -   -   -   -   -   (35,330)  (35,330)
                                 

Balance at June 30, 2026

  32,947,841   32,948   131,755,874   (100,521,598)  (5,357,003)  25,910,221   (111,407)  25,798,814 
                                 

 

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

 

9

 

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (UNAUDITED)

 

                  

Accumulated

      

Non-

     
          

Additional

      

Other

  

Total

  

controlled

     
  

Common Stock

  

Paid-in

  

Accumulated

  

Comprehensive

  

Stockholders’

  

Interest in

  

Total

 
  

Shares

  

Amount

  

Capital

  

Deficit

  

Income (Loss)

  

Equity

  

Subsidiaries

  

Equity

 

Balance at December 31, 2024

  9,475,443   9,475   109,274,166   (86,267,438)  (6,362,111)  16,654,092   -   16,654,092 
                                 

Common Stock issued in settlement of RSUs

  158,975   159   (159)  -   -   -   -   - 
                                 

Tax withholdings paid related to stock-based compensation

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

Warrants issued in connection with Senior Promissory Notes

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

Stock-based compensation

  -   -   241,245   -   -   241,245   -   241,245 
                                 

Currency translation, net

  -   -   -   -   348,346   348,346   -   348,346 
                                 

Net loss

  -   -   -   (2,351,392)  -   (2,351,392)  -   (2,351,392)
                                 

Capital contribution from noncontrolling interest

  -   -   -   -   -      13,788   13,788 
                                 

Net loss attributable to noncontrolling interest

  -   -   -   -   -   -   (6,950)  (6,950)
                                 

Balance at March 31, 2025

  9,606,024   9,606   109,682,187   (88,618,830)  (6,013,765)  15,059,198   6,838   15,066,036 
                                 

Common stock issued in settlement of RSUs

  8,019   8   (8)  -   -   -   -   - 
                                 

Stock-based compensation

  -   -   230,553   -   -   230,553   -   230,553 
                                 

Currency translation, net

  -   -   -   -   795,338   795,338   (909)  794,429 
                                 

Net loss

  -   -   -   (2,151,885)  -   (2,151,885)  -   (2,151,885)
                                 

Net loss attributable to noncontrolling interest

  -   -   -   -   -   -   (8,901)  (8,901)
                                 

Balance at June 30, 2025

  9,614,043   9,614   109,912,732   (90,770,715)  (5,218,427)  13,933,204   (2,972)  13,930,232 
                                 

 

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

 

10

 

 

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

  

For the Six Months Ended

 
  

June 30,

 
  

2026

  

2025

 

Cash Flows from Operating Activities:

        

Net loss

 $(5,776,794) $(4,519,128)
         

Adjustments to reconcile net loss to net cash used in operations:

        

Depreciation and amortization

  658,434   900,766 

Amortization of debt discount and accrued interest

  489,455   252,348 

Stock-based compensation

  436,650   471,798 

Amortization of right-of-use assets

  347,688   281,639 

Deferred taxes

  (747)  (699)

Loss on disposal of property and equipment

  (15,058)  63,464 
         

Changes in assets and liabilities:

        

Accounts receivable

  (1,955,382)  (1,307,919)

Inventories

  504,990   652,828 

Contract assets

  379,463   678,102 

Prepaid expenses and other current assets

  (291,144)  (227,584)

Accounts payable

  (107,475)  74,808 

Accrued expenses

  679,736   71,919 

Operating lease liabilities

  (347,688)  (281,639)

Contract liabilities

  (39,158)  (18,539)
         

Net Cash used in Operating Activities

  (5,037,030)  (2,907,836)
         

Cash Flows from Investing Activities:

        

Purchase of property and equipment

  (277,646)  (102,342)

Proceeds from the disposal of property and equipment

  20,124   54,457 
         

Net Cash used in Investing Activities

  (257,522)  (47,885)
         

Cash Flows from Financing Activities:

        

Repayments of finance lease liabilities

  (254,067)  (240,849

)

Proceeds from issuance of common stock, net of discounts and commissions

  18,106,656   - 

Proceeds from related party loan

  -   1,084,616 
Proceeds from line of credit  90,568   - 

Payments on notes payable, net

  (3,000,000)  - 
Proceeds from notes payable  1,000,000   - 

Acquisition of common stock for tax withholding obligations

  (182,499)  - 

Capital contribution from noncontrolling interest

  -   

12,729

 
         

Net Cash provided by (used in) Financing Activities

  15,760,658   856,496 
         

Effect of exchange rate changes on cash, cash equivalents and restricted cash

  119,240   (96,054)
         

Net Change in Cash, Cash Equivalents, and Restricted Cash

  10,585,346   (2,195,279)
         

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period

  5,070,385   10,868,728 
         

Cash, Cash Equivalents, and Restricted Cash at End of Period

 $15,655,731  $8,673,449 

 

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

 

11

 

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

  

For the Six Months Ended

 
  

June 30,

 
  

2026

  

2025

 

Supplemental Disclosures of Cash Flow Information:

        

Cash paid for interest

 $310,549  $107,753 
         

Non-Cash Investing and Financing Activities

        

Financed purchases of property and equipment

  -   149,219 
Issued common stock for debt cancellation  $3,000,000  $- 

 

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

 

12

 

LIQTECH INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

 

NOTE 1 BASIS OF PRESENTATION AND OTHER INFORMATION

 

The accompanying unaudited condensed consolidated financial statements of LiqTech International, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. They do not include all the information and footnotes required by GAAP for complete financial statements.

 

The  December 31, 2025 consolidated balance sheet data were derived from audited financial statements but do not include all disclosures required by GAAP. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on February 27, 2026. The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the

Company’s Annual Report on Form 10-K.

 

In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, consisting solely of normal recurring adjustments, have been made. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

 

Recently Adopted Accounting Pronouncements

 

In December 2023, the FASB issued ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures by requiring; (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted. The Company has adopted this standard.

 

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326). This guidance contains amendments that provide decision-useful information to investors and other financial statement users while reducing the time and effort necessary to analyze and estimate credit losses for current accounts receivable and current contract assets. The amendments will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company has adopted this standard.

 

Recently Issued Accounting Pronouncements Not Yet Adopted

 

In November 2024, the FASB issued ASU 2024-03,Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization included in each relevant expense caption presented on the statement of operations. The standard also requires disclosure of qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity’s definition of selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.

 

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

13

   

 

 

NOTE 2 NONCONTROLLING INTEREST AND LOANS FROM RELATED PARTIES

 

In January 2025, the Company established a joint venture Nantong JiTRI LiqTech Green Energy Technology Co., Ltd (the “JV”) in which it holds a 90% ownership interest. The remaining 10% is owned by an unrelated third party. The primary focus of the JV is to develop and commercialize systems for the marine water treatment market in China. The JV is fully consolidated in the Company’s condensed financial statements, and the 10% noncontrolling interest is presented separately in the consolidated balance sheet within equity and in the consolidated statement of operations as a component of net income (loss).

 

As part of the JV agreement, the Company has agreed to make our technology utilization available to the JV and to transfer the utilization rights necessary for operations in the marine water treatment market in China. In February 2025, the JV received R&D funding of RMB 8,000,000 (approximately USD 1.2 million) from the JV partner to support capability development and system construction. The funding is classified as a long-term loan in the financial statements and may be increased to up to RMB 10,000,000 if certain technical and commercial milestones are achieved.

 

The loan bears a fixed annual interest rate of 12% per annum and has no set maturity date. At the sole discretion of LiqTech, the loan may be either converted into equity of the JV in connection with future capital increases or equity injections, or it may be repaid in full with accrued interest. There is no separate default rate beyond the stated contractual interest, and no mandatory repayment terms exist unless elected by the Company.

 

As of June 30, 2026, the noncontrolling interest in the JV amounted to $(111,407) and reflects the third party’s share of the JV’s net assets and net loss for the period.

 

14

 

 

NOTE 3 DISAGGREGATION OF REVENUES AND SEGMENT REPORTING

 

The Company operates through three reportable segments: Systems and Aftermarket, Filters and Membranes, and Components. Each segment comprises multiple sub-segments that leverage a shared production infrastructure and centralized supporting functions. The Company’s Chief Operating Decision-Maker (“CODM”) is Executive Management, consisting of the Chief Executive Officer, and Chief Financial & Operating Officer. Revenue information at both the segment and sub-segment levels is reviewed regularly as part of daily operational management. Profitability and asset information is available and evaluated at the segment level on a monthly basis. Resource allocation decisions are made at the segment level and are assessed on a quarterly basis.

 

The Company sells products throughout the world, and sales by geographical region are as follows for the three and six months ended June 30, 2026 and 2025:

 

  

For the Three Months

  

For the Six Months

 
  

Ended June 30,

  

Ended June 30,

 

Revenues

 

2026

  

2025

  

2026

  

2025

 

Americas

 $452,774  $1,252,870  $703,576  $3,486,771 

Asia-Pacific

  1,012,125   376,413   1,637,678   510,868 

Europe

  2,898,853   3,205,345   6,158,818   5,454,530 

Middle East & Africa

  -   122,861   -   122,861 

Total revenue

 $4,363,752  $4,957,489  $8,500,072  $9,575,030 

 

The Company’s reportable segment information for the three and six months ended June 30, 2026 and 2025 were as follows:

 

  

For the Three Months

  

For the Six Months

 
  

Ended June 30,

  

Ended June 30,

 

Revenues

 

2026

  

2025

  

2026

  

2025

 

Systems and Aftermarket

 $2,408,368  $2,442,696  $4,197,663  $5,136,418 

Filters and Membranes

  1,041,613   1,299,412   2,348,612   2,253,258 

Components

  913,771   1,215,381   1,953,797   2,185,354 

Corporate

  -   -   -   - 

Total revenues

 $4,363,752  $4,957,489  $8,500,072  $9,575,030 

 

  

For the Three Months

  

For the Six Months

 
  

Ended June 30,

  

Ended June 30,

 

Cost of goods sold

 

2026

  

2025

  

2026

  

2025

 

Systems and Aftermarket

 $1,865,188  $1,870,609  $3,154,401  $4,029,736 

Filters and Membranes

  1,219,614   1,637,245   2,741,388   3,138,315 

Components

  913,411   963,905   1,845,000   1,794,290 

Corporate

  -   1,152   -   3,055 

Total cost of goods sold

  3,998,213   4,472,911   7,740,789   8,965,396 

 

  

For the Three Months

  

For the Six Months

 
  

Ended June 30,

  

Ended June 30,

 

Operating expenses

 

2026

  

2025

  

2026

  

2025

 

Systems and Aftermarket

 $855,134  $655,462  $1,638,769  $1,266,949 

Filters and Membranes

  466,279   421,614   914,092   787,974 

Components

  383,872   287,082   756,979   541,239 

Corporate

  992,071   1,230,289   2,058,469   2,308,670 

Total operating expenses

  2,697,356   2,594,447   5,368,309   4,904,832 

 

  

For the Three Months

  

For the Six Months

 
  

Ended June 30,

  

Ended June 30,

 

Other Expenses

 

2026

  

2025

  

2026

  

2025

 

Systems and Aftermarket

 $20,255  $193,595  $43,029  $259,546 

Filters and Membranes

  23,192   31,146   45,554   121,123 

Components

  6,581   2,443   8,893   5,693 

Corporate

  670,220   (175,907)  1,071,039   (161,733)

Total other expenses

  720,248   51,277   1,168,515   224,629 

 

15

 
  

For the Three Months

  

For the Six Months

 
  

Ended June 30,

  

Ended June 30,

 

Net loss

 

2026

  

2025

  

2026

  

2025

 

Systems and Aftermarket

 $(332,209) $(276,970) $(638,536) $(419,813)

Filters and Membranes

  (667,472)  (790,593)  (1,352,422)  (1,794,154)

Components

  (390,093)  (37,689)  (657,075)  (155,169)

Corporate

  (1,661,921)  (1,055,534)  (3,128,761)  (2,149,992)

Total net loss

  (3,051,695)  (2,160,786)  (5,776,794)  (4,519,128)

 

  

As of

 
  

June 30,

  

December 31,

 

Total assets

 

2026

  

2025

 

Systems and Aftermarket

 $10,182,207  $10,210,357 

Filters and Membranes

  9,041,440   10,139,656 

Components

  1,734,710   1,942,818 

Corporate

  16,988,735   4,985,266 

Total assets

 $37,947,092  $27,278,097 

  

 

NOTE 4 ACCOUNTS RECEIVABLE

 

Accounts receivable consisted of the following on June 30, 2026, and December 31, 2025:

 

  

June 30,

  

December 31,

 
  

2026

  

2025

 

Trade accounts receivable

 $5,397,075  $3,567,961 

Allowance for current expected credit losses

  (166,238)  (137,969)

Total accounts receivable, net

 $5,230,837  $3,429,992 

 

The roll-forward of the current expected credit losses for the periods ended June 30, 2026 and December 31, 2025 is as follows: 

 

  

June 30,

  

December 31,

 
  

2026

  

2025

 

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

 $137,969  $637,556 

Bad debt expense

  32,627   29,439 

Receivables written off during the period

  -   (608,331)

Effect of exchange rate changes

  (4,358)  79,305 

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

 $166,238  $137,969 

 

16

 
 

NOTE 5 INVENTORIES

 

Inventories consisted of the following on June 30, 2026, and December 31, 2025:

 

  

June 30,

  

December 31,

 
  

2026

  

2025

 

Raw materials

 $3,277,671  $3,282,184 

Work in process

  1,926,673   2,402,158 

Finished goods and filtration systems

  1,668,618   1,755,674 

Reserve for obsolescence

  (916,283)  (960,695)

Total inventories, net

 $5,956,679  $6,479,321 

 

Inventory valuation adjustments for excess and obsolete inventory are calculated based on current inventory levels, movements, expected useful lives, and estimated future demand for the products.

 

 

NOTE 6 CONTRACT ASSETS AND CONTRACT LIABILITIES

 

Contract assets and Contract liabilities for the periods ended June 30, 2026 and December 31, 2025 is as follows:

 

  

June 30,

  

December 31,

 
  

2026

  

2025

 

Cost incurred

 $1,751,121  $1,750,757 

VAT

  243,777   234,984 

Other receivables

  19,005   10,826 

Prepayments

  (1,771,943)  (1,403,702)
  $241,960  $592,865 
         

Distributed as follows:

        

Contract assets

 $340,260  $733,851 

Contract liabilities

  (98,300)  (140,986)
  $241,960  $592,865 

 

 

NOTE 7 LEASES

 

The Company leases certain vehicles, real property, production equipment and office equipment under lease agreements. The Company evaluates each lease to determine its appropriate classification as an operating lease or finance lease for financial reporting purposes. The majority of our operating leases are non-cancelable leases for production and office space in Hobro and Copenhagen, Denmark. 

 

 

17

 

During the six months ended June 30, 2026, cash paid for amounts included for the measurement of finance lease liabilities was $254,067 and the Company recorded finance lease expenses in other income (expenses) of $58,091.

 

During the six months ended June 30, 2026, cash paid for amounts included for the measurement of operating lease liabilities was $495,963 and the Company recorded operating lease expense of $497,193.

 

Supplemental balance sheet information related to leases as of June 30, 2026 and December 31, 2025 was as follows:

 

  

June 30,

  

December 31,

 
  

2026

  

2025

 

Operating leases:

        

Operating lease right-of-use assets

 $4,157,532  $4,643,680 
         

Operating lease liabilities – current

 $717,820  $714,446 

Operating lease liabilities – long-term

 $3,439,712   3,929,234 

Total operating lease liabilities

 $4,157,532  $4,643,680 
         

Finance leases:

        

Property and equipment, at cost

 $4,445,721  $4,590,723 

Accumulated depreciation

  (1,831,747)  (1,703,252)

Property and equipment, net

 $2,613,974  $2,887,471 
         

Finance lease liabilities – current

 $496,797  $517,759 

Finance lease liabilities – long-term

  1,127,729   1,415,908 

Total finance lease liabilities

 $1,624,526  $1,933,667 
         

Weighted average remaining lease term:

        

Operating leases

  4.7   6.0 

Finance leases

  2.0   2.5 
         

Weighted average discount rate:

        

Operating leases

  6.6%  6.7%

Finance leases

  5.2%  5.3%

 

Maturities of lease liabilities at June 30, 2026 were as follows:

 

  

Operating

  

Finance

 
  

Leases

  

Leases

 

2026

  485,037   299,499 

2027

  971,684   1,138,405 

2028

  822,661   121,500 

2029

  521,330   171,425 

2030

  519,206   27,064 

Thereafter

  1,828,294   16,737 

Total payment under lease agreements

  5,148,212   1,774,630 

Less imputed interest

  (990,680)  (150,104)

Total lease liabilities

 $4,157,532  $1,624,526 

 

 
18

 
 

NOTE 8 – DEBT

 

The components of notes payable are as follows:

 

  

June 30,

  

December 31,

 
  

2026

  

2025

 

Senior promissory notes

 $-  $6,000,000 

Less: unamortized debt discount

  -   (489,455)

Total senior promissory notes payable, net

 $-  $5,510,545 
         

Senior promissory notes payable, less current portion

  -   5,510,545 

Total senior promissory notes payable, net

 $-  $5,510,545 

 

For the six months ended June 30, 2026, and 2025, the Company recognized amortization of debt discount of $489,455 and $252,348, respectively. During the six months ended June 30, 2026  interests of $261,370 was recognized. The note including interest was repaid in June 2026.   

 

On May 22, 2026, the Company entered into a short-term financing arrangement pursuant to which it issued promissory notes in an aggregate principal amount of $1.1 million for cash proceeds of $1.0 million, reflecting an original issue discount of $0.1 million. The notes had an initial term of two months and the proceeds were used for working capital requirements.

 

In May 2026, the Company entered into a $88,428 (RMB 600,000) credit facility with Bank of Jiangsu, available through May 21, 2027. Borrowings under the facility are subject to the bank’s approval, with interest rates and other terms determined at the time of each individual borrowing.

 

On June 8, 2026, the Company fully settled its $6.0 million senior promissory notes. Of the outstanding principal, $3.0 million was settled through the issuance of 3.0 million shares of common stock at $1.00 per share, and the remaining $3.0 million was repaid in cash, together with accrued interest. Following the transaction, no amounts remained outstanding under the senior promissory notes.

 

 

NOTE 9 – AGREEMENTS AND COMMITMENTS

 

Contingencies – From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business.

 

Product Warranties – The Company provides a standard warranty for its systems, generally for a period of one to three years after customer acceptance. The Company estimates the costs that may be incurred under its standard warranty programs and records a liability for such costs at the time product revenue is recognized.

 

In addition, the Company sells an extended warranty for certain systems, which generally provides a warranty for up to four years from the date of commissioning. The specific terms and conditions of the warranties vary depending upon the product sold and the country in which the installation occurred. Revenue received for the sale of extended warranty contracts is deferred and recognized in the same manner as the costs incurred to perform under the warranty contracts.

 

The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Factors that affect the warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and the cost per claim.

 

Changes in the Company’s current and long-term warranty obligations included in accrued expenses on the balance sheet, as of June 30, 2026 and December 31, 2025, were as follows:

 

  

June 30,

  

December 31,

 
  

2026

  

2025

 

Balance at January 1

 $524,828  $621,031 

Warranty costs charged to cost of goods sold

  (90,350)  (87,466)

Utilization charges against reserve

  -   (78,958)

Foreign currency effect

  (14,443)  70,221 

Balance at the end of the period

 $420,035  $524,828 

 

 

NOTE 10 – STOCKHOLDERS EQUITY

 

Common Stock – The Company has 50,000,000 authorized shares of Common Stock, $0.001 par value. As of June 30, 2026 and December 31, 2025, there were 32,947,841 and 9,627,064 shares of Common Stock issued and outstanding, respectively.

 

19

 

Stock Issuances 

 

During the six months ended June 30, 2026, the Company has made the following issuances of Common Stock: 

 

On January 26, 2026, the Company issued 136,998 shares of Common Stock to settle RSUs. The RSUs were valued at $271,256 for services provided by the Company's board of directors (the "Board of Directors") in 2025. The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2025

 

On January 27, 2026, the Company issued 63,149 shares of Common Stock to settle RSUs. The RSUs were valued at $137,549 for services provided by the Company's Senior Leadership Team (the "SLT") in 2025. The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2025.

 

On January 27, 2026, the Company issued 87,374 shares of Common Stock to settle RSUs. The RSUs were valued at $230,741 for services provided by management in 2025. The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2025. In connection with the issuance, 67,840 shares of Common Stock, with a total value of $172,198, were withheld from vesting to settle tax withholdings associated with stock-based compensation.

 

On February 12, 2026, the Company issued 7,389 shares of Common Stock to settle RSUs. The RSUs were valued at $14,630 for services provided by the Company's SLT in 2025. The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2025

 

On February 12, 2026, the Company issued 25,867 shares of Common Stock to settle RSUs. The RSUs were valued at $47,337 for services provided by management in 2025. The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2025. In connection with the issuance, 5,589 shares of Common Stock, with a total value of $10,228, were withheld from vesting to settle tax withholdings associated with stock-based compensation.

 

On June 8, 2026, the Company issued 20,000,000 shares of Common Stock in a public offering. The shares were priced at $1.00 per share, and net proceed before company advisor costs was $18,400,000. Total underwriting discounts and offering costs were $293,344.

 

On June 8, 2026, the Company issued 3,000,000 shares of Common stock at a share price of $1.00 in exchange for the cancellation of $3.0 million of outstanding senior promissory notes in a private placement. The remaining $3.0 million of outstanding senior promissory notes were repaid with cash.

 

Warrants 

 

On June 8, 2026, the Company issued 800,000 underwriter warrants to the underwriter in the public offering. The warrants have an exercise price of $1.25. The warrants were classified as equity instruments and measured at fair value using the Black-Scholes option pricing model. As the warrants were issued as compensation for services directly attributable to the public offering, their fair value of $512,192 was recorded as an increase to additional paid-in capital with an equal reduction to additional paid-in capital as an equity issuance cost. Accordingly, the issuance of the warrants had no impact on net income or total stockholders’ equity.

 

The following is a summary of the periodic changes in warrants outstanding for the six months ended June 30, 2026, and 2025:

 

  

2026

  

2025

  

Outstanding, December 31

  11,391,225   11,391,225  

Warrants issued in connection with public offering and private placement

  800,000   -  

Outstanding, June 30

  12,191,225   11,391,225  

 

 

20

 

Stock-based Compensation 

 

Directors of the Company receive share compensation consisting of annual grants of $36,750 ($73,500 for the Chairman of the Board) in RSUs per annum with one-year vesting.

 

In 2022, the Company’s Board of Directors adopted an Equity Incentive Plan (the “2022 Incentive Plan”). Under the terms and conditions of the 2022 Incentive Plan, the Board of Directors is empowered to grant stock awards, including RSUs, to officers and directors of the Company. At June 30, 2026, 309,527 RSUs were granted and outstanding under the 2022 Incentive Plan.

 

The Company recognizes compensation costs for RSU grants to Directors and management based on the stock price on the date of the grant.

 

The Company recognized stock-based compensation expense related to RSU grants of $218,325 and $230,552 for the three-month periods ended June 30, 2026, and 2025, respectively. On June 30, 2026, the Company had $1,208,819 of unrecognized compensation cost related to non-vested stock grants.

 

A summary of the status of the RSUs as of June 30, 2026 and changes during the period are presented below:

 

  

June 30, 2026

 
      

Weighted

     
      

Average

  

Aggregated

 
  

Number of

  

Grant-Date

  

Intrinsic

 
  

units

  

Fair value

  

Value

 
             

Outstanding, December 31, 2025

  703,753  $2.21  $- 

Vested and settled with share issuance

  

(320,777

)  2.19   - 

Forfeited

  (73,449)  2.48   - 

Outstanding, June 30, 2026

  309,527  $2.17  $- 

 

 

21

 
 

NOTE 11 – LOSS PER SHARE

 

Basic and diluted net income (loss) per common share is determined by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. For the periods where there is a net loss, stock options, warrants, and RSUs have been excluded from the calculation of diluted net loss per common share because their effect would be anti-dilutive. Consequently, the weighted average number of shares of Common Stock used to calculate both basic and diluted net loss per common share is the same for the reported periods.

 

As of June 30, 2026, the Company had 309,527 RSUs, 5,299,879 prefunded warrants, and 6,891,346 warrants, all exercisable for shares of Common Stock.

 

As of June 30, 2025, the Company had 554,571 RSUs, 5,299,879 prefunded warrants, and 6,091,346 warrants, all exercisable for shares of Common Stock.

 

 

NOTE 12 – SIGNIFICANT CUSTOMERS AND CONCENTRATIONS

 

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

 

  

For the Three Months

  

For the Six Months

 
  

Ended June 30,

  

Ended June 30,

 
  

2026

  

2025

  

2026

  

2025

 

Customer A

  19%  *%  10%  *%

Customer B

  *%  11%  *%  *%

Customer C

  *%  *%  *%  20%

 

* Zero or less than 10%

 

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

 

  

June 30,

  

December 31,

 
  

2026

  

2025

 

Customer A

  13%  *%

Customer B

  13%  11%

Customer C

  10%  22%

Customer D

  *%  18%
       
       
       

 

* Zero or less than 10%

 

As of June 30, 2026, approximately 87% of the Company’s assets were located in Denmark, 3% were located in China, and 10% were located in the U.S. As of December 31, 2025, approximately 97% of the Company’s assets were located in Denmark, 3% were located in China, and 0% were located in the U.S.

 

 

NOTE 13 – SUBSEQUENT EVENTS

 

On July 22, 2026, the Company fully repaid the outstanding promissory notes of $1,100,000 including discount. Following the repayment, the Company had no remaining obligations under the notes.

 

22

 
 

ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this quarterly report. In addition, the following discussion should be read in conjunction with our annual report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 27, 2026 and the financial statements and notes thereto. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

Overview

 

LiqTech International, Inc. is a clean technology company that provides state-of-the-art gas and liquid purification products by manufacturing ceramic silicon carbide filters and membranes as well as developing industry-leading and fully automated filtration solutions and systems. We specialize in three business areas: ceramic membranes and membrane incorporated liquid filtration systems, ceramic diesel particulate filters (DPFs) to control soot exhaust particles and black carbon emission from diesel engines, and plastic components for usage across various industries. Using nanotechnology, we develop proprietary products using patented silicon carbide technology. Our products are based on innovative silicon carbide membranes that facilitate new applications and improve existing technologies. We market our products from our offices in Denmark and through local representatives and distributors. The products are shipped directly to customers from our production facilities in Denmark. We assemble our marine water treatment systems in China with silicon carbon membranes delivered from Denmark.

 

The terms “LiqTech”, “we”, “our”, “us”, the “Company” or any derivative thereof, as used herein, refer to LiqTech International, Inc., a Nevada corporation, together with its direct and indirect wholly-owned subsidiaries, which we collectively refer to herein as our “Subsidiaries”.  

 

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

 

Our Strategy

 

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

 

 

Develop and reinforce new products and applications to provide clean water and reduce pollution. We currently provide water filtration systems for commercial pool owners, dual fuel marine vessels, shipowners, and ship operators as well as tailored filtration systems for oil & gas operators, industrial operators and services companies. We are expanding our range of products to better leverage existing customer relationships and develop new relationships within the oil & gas, marine, chemical, and other industries.

   

 

 

Better penetration of existing end markets where our value proposition is strong. We have successfully sold products and installed systems into several end market segments--including automotive/transportation, clean water and pool filtration, marine, industrial wastewater, chemical/petrochemical, and oil & gas applications. We are focused on targeting and developing new customers in these end markets while working with distributors, agents, and partners to access other important geographic markets.

   

 

 

Develop new end markets for our core products and applications. Our existing products and systems are relevant for and valuable to other end markets, and we regularly evaluate opportunities to develop strategic partners to perfect new applications and validate associated value propositions.

     
  Optimization of operation efficiency. We focus on sales & operations planning, supply chain stability and product cost reduction.

 

23

 

Results of Operations

 

The financial information below is derived from our unaudited condensed consolidated financial statements included elsewhere in this report. 

 

Comparison of the Three Months Ended June 30, 2026, and June 30, 2025

 

The following table sets forth our revenues, expenses, and net loss for the three months ended June 30, 2026, and 2025:

 

   

Three Months Ended June 30,

 
                                   

Period to Period Change

 
           

As a %

           

As a %

           

Percent

 
   

2026

   

of Sales

   

2025

   

of Sales

   

Variance

   

%

 

Revenue

  $ 4,363,752       100.0 %   $ 4,957,489       100.0 %   $ (593,737 )     (12.0 )%

Cost of goods sold

    3,998,213       91.6       4,472,911       90.2       (474,698 )     (10.6 )

Gross Profit (Loss)

    365,539       8.4       484,578       9.8       (119,039 )     (24.6 )
                                                 

Operating Expenses

                                               

Selling expenses

    835,836       19.2       812,568       16.4       23,268       2.9  

General and administrative expenses

    1,589,775       36.4       1,539,323       31.1       50,452       3.3  

Research and development expenses

    271,745       6.2       242,556       4.9       29,189       12.0  

Total Operating Expenses

    2,697,356       61.8       2,594,447       52.3       102,909       4.0  
                                                 

Loss from Operation

    (2,331,817 )     (53.4 )     (2,109,869 )     (42.6 )     (221,948 )     10.5  
                                                 

Other Income (Expense)

                                               

Interest and other income

    22,378       0.5       64,605       1.3       (42,227 )     (65.4 )

Interest expense

    (231,160 )     (5.3 )     (63,466 )     (1.3 )     (167,694 )     264.2  

Amortization of debt discount

    (401,951 )     (9.2 )     (84,318 )     (1.7 )     (317,633 )     376.7  

Gain (loss) on foreign currency transactions

    (94,457 )     (2.2 )     34,060       0.7       (128,517 )     (377.3 )

Gain (loss) on disposal of property and equipment

    (15,058 )     (0.3 )     (2,158 )     (0.0 )     (12,900 )     597.8  

Total Other Income (Expense)

    (720,248 )     (16.5 )     (51,277 )     (1.0 )     (668,971 )     1,304.6  
                                                 

Loss Before Income Taxes

    (3,052,065 )     (69.9 )     (2,161,146 )     (43.6 )     (890,919 )     41.2  

Income tax benefit

    (370 )     (0.0 )     (360 )     (0.0 )     (10 )     2.8  
                                                 

Net Loss

  $ (3,051,695 )     (69.9 )%   $ (2,160,786 )     (43.6 )%   $ (890,909 )     41.2 %

Net Loss attributable to Noncontrolling Interest

    (35,330 )     (0.8 )     (8,901 )     (0.2 )     (26,429 )     296.9  

Net Loss attributable to LiqTech International, Inc.

    (3,016,365 )     (69.1 )     (2,151,885 )     (43.4 )     (864,480 )     40.2  

 

Revenues 

 

Revenue for the three months ended June 30, 2026 was $4,363,752 compared to $4,957,489 for the same period in 2025, representing a decrease of $593,737, or 12.0%. The decrease was solely attributable to a reduction in system sales, reflecting a significant Water for Energy delivery in 2025 that did not recur in 2026. Within the Systems segment, sales to both the Pool and Marine segments increased significantly. Furthermore, deliveries of Filters were on par with last year, while Components declined during the period.

 

 

24

 

Gross Profit (Loss)

 

Gross profit for the three months ended June 30, 2026 was $365,539 (representing a gross profit margin of 8.4%) compared to a gross profit of $484,578 (representing a gross profit margin of 9.8%) for the same period in 2025, marking an decline of $119,039, or 24.6%. This decline was driven by the decrease in revenue, mix towards, less high value system sales, lower utilization of our manufacturing capacity to preserve costs partly offset by procurement effects. Included in the gross profit was depreciation of $274,530 and $412,291 for the three months ended June 30, 2026, and 2025, respectively.

 

Expenses

 

Total operating expenses for the three months ended June 30, 2026 were $2,697,356, representing an increase of $102,909, or 4.0%, compared to $2,594,447 for the same period in 2025. Approximately 60% of the increase continue to be related to foreign exchange rate developments, as the average USD/DKK exchange rate for the three months ended June 30, was 6.43 in 2026 and 6.58 in 2025.

 

Selling expenses for the three months ended June 30, 2026 were $835,836 compared to $812,568 for the same period in 2025, representing an increase of $23,268, or 2.9%Excluding the impact of foreign exchange rate developments, costs increased primarily due to the full-year effect of hires within the joint venture in China, Nantong JiTRI LiqTech Green Energy Technology Co., Ltd. (the “JV”), as well as continued investments in the sales organization across the U.S. and Europe, and annualization of the Service Center cost in the U.S.

 

General and administrative expenses for the three months ended June 30, 2026 were $1,589,775 compared to $1,539,323 for the same period in 2025, representing an increase of $50,452, or 3.3%. Adjusting for foreign exchange rate developments, expenses remained stable and below general inflation, as filling of open positions were covered by savings on other overhead expenses. Included in general and administrative expenses were non-cash compensation of $218,252 and $230,552 for the three months ended June 30, 2026, and 2025, respectively.

 

Research and development expenses for the three months ended June 30, 2026 were $271,745 compared to $242,556 for the same period in 2025, representing an increase of $29,189, or 12.0%. The increase was primarily attributed to membrane development costs and cost related to development of Marine systems and Pool systems.

 

Other Income (Expenses)

 

Other expenses for the three months ended June 30, 2026 were $720,248 compared to other expenses of $51,277 for the comparable period in 2025, representing an increase of $668,971, or 1304.6%. The change was primarily attributable to amortization of debt discount, accrued interests on the senior promissory notes and losses on foreign currency transactions for the three months ended June 30, 2026

 

Net Loss

 

As a result of the cumulative effect of the factors described above, we reported a net loss for the three months ended June 30, 2026 of $3,051,695 compared to $2,160,786 for the comparable period in 2025, representing an increase in net loss of $890,909, or 41.2%.

 

25

 

Comparison of the Six Months Ended June 30, 2026, and June 30, 2025

 

The following table sets forth our revenues, expenses, and net loss for the six months ended June 30, 2026, and 2025:

 

   

Six Months Ended June 30,

 
                                   

Period to Period Change

 
           

As a %

           

As a %

           

Percent

 
   

2026

   

of Sales

   

2025

   

of Sales

   

Variance

      %

Revenue

  $ 8,500,072       100.0 %   $ 9,575,030       100.0 %   $ (1,074,958 )     (11.2 )%

Cost of goods sold

    7,740,789       91.1       8,965,396       93.6       (1,224,607 )     (13.7 )

Gross Profit (Loss)

    759,283       8.9       609,634       6.4       149,649       24.5  
                                                 

Operating Expenses

                                               

Selling expenses

    1,816,510       21.4       1,530,584       16.0       285,926       18.7  

General and administrative expenses

    3,003,920       35.3       2,901,569       30.3       102,351       3.5  

Research and development expenses

    547,879       6.4       472,679       4.9       75,200       15.9  

Total Operating Expenses

    5,368,309       63.2       4,904,832       51.2       463,477       9.4  
                                                 

Loss from Operation

    (4,609,026 )     (54.2 )     (4,295,198 )     (44.9 )     (313,828 )     7.3  
                                                 

Other Income (Expense)

                                               

Interest and other income

    39,235       0.5       133,356       1.4       (94,121 )     (70.6 )

Interest and other expense

    (440,224 )     (5.2 )     (111,749 )     (1.2 )     (328,475 )     293.9  

Amortization of debt discount

    (489,455 )     (5.8 )     (252,348 )     (2.6 )     (237,107 )     94.0  

Gain (loss) on foreign currency transactions

    (263,013 )     (3.1 )     69,576       0.7       (332,589 )     (478.0 )

Gain (loss) on disposal of property and equipment

    (15,058 )     (0.2 )     (63,464 )     (0.7 )     48,406       (76.3 )

Total Other Expense

    (1,168,515 )     (13.7 )     (224,629 )     (2.3 )     (943,886 )     420.2  
                                                 

Loss Before Income Taxes

    (5,777,541 )     (68.0 )     (4,519,827 )     (47.2 )     (1,257,714 )     27.8  

Income Tax Benefit

    (747 )     (0.0 )     (699 )     (0.0 )     (48 )     6.9  
                                                 

Net Loss

  $ (5,776,794 )     (68.0 )%   $ (4,519,128 )     (47.2 )%   $ (1,257,666 )     27.8 %

Net Loss attributable to Noncontrolling Interest

    (50,317 )     (0.6 )     (15,851 )     (0.2 )     (34,466 )     217.4  

Net Loss attributable to LiqTech International, Inc.

    (5,726,477 )     (67.4 )     (4,503,277 )     (47.0 )     (1,223,200 )     27.2  

 

Revenues 

 

Revenue for the six months ended June 30, 2026 was $8,500,072 compared to $9,575,030 for the same period in 2025, representing a decrease of $1,074,958, or 11.2%. The decrease was mainly attributable to a reduction in system sales, reflecting a significant Water for Energy delivery in 2025 that did not recur in 2026. Within the Systems segment, sales to both the Pool and Marine segments increased significantly. Furthermore, deliveries of Filters increased while Components declined during the period.

 

 

26

 

Gross Profit (Loss)

 

Gross profit for the six months ended June 30, 2026 was $759,283 (representing a gross profit margin of 8.9%) compared to a gross profit of $609,634 (representing a gross profit margin of 6.4%) for the same period in 2025, marking an increase of $149,649, or 24.5%. This increase was primarily driven by mix towards higher value system sales, better utilization of our manufacturing capacity, procurement effects on prices, and low depreciation expenses. Included in the gross profit was 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.

 

Net Loss

 

As a result of the cumulative effect of the factors described above, we reported a net loss for the six months ended June 30, 2026 of $5,776,794 compared to $4,519,128 for the comparable period in 2025, representing an increase in net loss of $1,257,666, or 27.8%.

 

27

 

Liquidity and Capital Resources 

 

The Company has historically financed operations through offerings of equity or debt instruments, internally generated cash from operations, and our available lines of credit. On June 30, 2026, we had cash of $15,655,731 and net working capital of $21,368,974, and on December 31, 2025, we had cash of $5,070,385 and net working capital of $11,237,788. On June 30, 2026, our net working capital had increased by $10,131,186 compared to December 31, 2025, mainly as a result of the capital raise.

 

Based on current projections, which are subject to significant uncertainties - including the duration and severity of global macroeconomic issues, trade wars and associated tariffs, geopolitical instability, commodity price volatility, and continued global supply chain disruptions-the Company believes that the cash on hand, as well as ongoing cash generated from operations, will be sufficient to cover its capital requirements and committed investments for the next 12 months.

 

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

 

On May 22, 2026, the Company issued and sold 9.09% original issue discount promissory notes in an aggregate principal amount of $1.1 million to affiliates of Bleichroeder L.P. and Laurence W. Lytton for aggregate cash proceeds of $1.0 million. The notes had a two-month term and did not bear interest prior to maturity. If not repaid at maturity, the notes bear interest at 10% per annum, increasing by 1% for each month they remain outstanding, up to a maximum of 16% per annum. The proceeds from the notes were used for working capital and general corporate purposes.

 

On June 4, 2026, the Company entered into an underwriting agreement with Konik Capital Partners, LLC, a division of T.R. Winston & Company, LLC, relating to the issuance and sale of 20,000,000 shares of the Company’s common stock at a public offering price of $1.00 per share. The offering closed on June 8, 2026, resulting in net proceeds to the Company of approximately $18.0 million, after deducting underwriting discounts and commissions and estimated offering expenses. In connection with the offering, the Company issued to the underwriter warrants to purchase up to 800,000 shares of common stock at an exercise price of $1.25 per share. The underwriter warrants are exercisable beginning 180 days following the commencement of sales in the offering and expire five years following such commencement date.

 

In connection with the closing of the offering, the Company also issued 3,000,000 shares of common stock to affiliates of Bleichroeder L.P., 21 April Fund, L.P. and 21 April Fund, Ltd. in exchange for the cancellation of $3.0 million of outstanding senior promissory notes in a concurrent private placement. The remaining $3.0 million principal amount outstanding under the senior promissory notes was repaid in cash from the proceeds of the offering. Accordingly, the full $6.0 million outstanding principal amount under the senior promissory notes was settled in connection with the transaction through a combination of $3.0 million in common stock and $3.0 million in cash.

 

28

 

Cash Flows 

 

Six months ended June 30, 2026 compared to six months ended June 30, 2025

 

Cash flows used in operating activities for the six months ended June 30, 2026 were $5,037,030 representing an increase of $2,129,194 compared to cash flows used in operating activities of $2,907,836 for the six months ended June 30, 2025. The cash flows used in operating activities for the period consist mainly of the net loss of $5,776,794, adjusted for depreciation and other non-cash-related items of $1,916,422, an increase in accounts receivables of $1,955,382, prepaid expenses and current account payables of $398,619, and partially offset by an increase in accrued expenses of $679,736.

 

Cash flows used in investing activities were $257,552 for the six months ended June 30, 2026 as compared to cash flows used in investing activities of $47,885 for the six months ended June 30, 2025, representing a change of $209,637. The investing activities include general purchases of production equipment to continue optimizing production throughput and the internal production of rental assets. For the six months ended June 30, 2026, the main additions were investments in assembly equipment in our JV in China and in the U.S. Service Center.

 

Cash flows provided from financing activities were $15,760,658 for the six months ended June 30, 2026 compared to cash flows used by financing activities of $856,496 for the six months ended June 30, 2025, representing a change of $14,904,162. Financing activities primarily consisted of proceeds from the issuance of common stock, net of discounts and commissions of $18,106,656, and proceeds from a $1,000,000 shareholder loan, being partly offset by the repayment of the $3,000,000 note payable. Additionally, in the prior-year period, the Company received proceeds from a long-term loan as well as a capital contribution from the noncontrolling interest in the joint venture.

 

Off Balance Sheet Arrangements

 

As of June 30, 2026, we had no off-balance sheet arrangements. We are not aware of any material transactions that are not disclosed in our consolidated financial statements. 

 

Significant Accounting Policies and Critical Accounting Estimates

 

The methods, estimates, and judgments that we use in applying our accounting policies have a significant impact on the results that we report in our consolidated financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Our most critical accounting estimates include:

 

The assessment of revenue recognition, which impacts revenue and cost of sales;

the assessment of allowance for product warranties, which impacts gross profit;

the assessment of collectability of accounts receivable, which impacts operating expenses if and when we record bad debt or adjust the allowance for doubtful accounts;

the assessment of recoverability of long-lived assets, which impacts gross profit or operating expenses if and when we record asset impairments or accelerate their depreciation;

the recognition and measurement of current and deferred income taxes (including the measurement of uncertain tax positions), which impact our provision for taxes;

the valuation of inventory, which impacts gross profit; and

the recognition and measurement of loss contingencies, which impact gross profit or operating expenses when we recognize a loss contingency, revise the estimate for a loss contingency, or record an asset impairment.

 

Recently Enacted Accounting Standards

 

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

 

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are not required to provide quantitative and qualitative disclosures about market risk because we are a smaller reporting company. 

 

29

 

ITEM 4.  CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the design and effectiveness of our internal controls over financial reporting and disclosure controls and procedures (pursuant to Rule 13a-15(b) and (c) under the Exchange Act) as of the end of the period covered by this Quarterly Report. A material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a misstatement of the registrant's financial statements will not be prevented or detected on a timely basis.

 

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

 

Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures as of June 30, 2026 were not effective as of the period covered by this Quarterly Report due to material weaknesses in internal controls over financial reporting. For more information on material weaknesses identified by management, please refer to our Form 10-K filed on February 27, 2026 for the year ended December 31, 2025.

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Management's Remediation Initiatives

 

In response to the identified material weaknesses, our management, with oversight from the Company’s Audit Committee, has been and will continue to dedicate necessary resources to enhance the Company’s internal control over financial reporting and remediate the identified material weaknesses. As an example of such remediation, the Company in 2025 hired additional employees into the finance department, and we plan to continue to work on remediating the material weaknesses during 2026 by improving competencies and processes. Further, the Company is evaluating an ERP reimplementation along with other IT programs to help reinforce its controls and processes, and these investments are an important step in the remediation of the material weaknesses. During 2022, the Company introduced an updated Delegation of Authority, with the overall purpose to provide clarity for all employees on the extent to which they can commit the Company and at the same time provide the Company with assurance that decisions about agreements are made by the appropriate functions and employees. Lastly, the Company has started the process of redesigning and ensuring documentation of all processes and procedures related to the financial reporting process to ensure the effective design and operation of process-level controls.

 

While management believes that the steps that we have taken and plan to take will improve the overall system of internal control over financial reporting and will remediate identified material weaknesses, the material weaknesses cannot be considered remediated until the applicable relevant controls operate for a sufficient period of time.

 

Limitations on the Effectiveness of Internal Controls

 

An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

 

30

 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. For a description of contingencies, see “Note 9 – Agreements And Commitments”.

 

ITEM 1A. RISK FACTORS

 

There have been no material changes to the risk factors discussed in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 27, 2026. 

 

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 

 

We did not sell any equity securities during the quarter ended March 31, 2026 in transactions that were not registered under the Securities Act other than as previously disclosed in our other filings with the SEC.

 

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4.   MINE SAFETY DISCLOSURES

 

None.  

 

ITEM 5.   OTHER INFORMATION

 

(c)     Insider Trading Plans

 

During the quarter ended  June 30, 2026no director or Section 16 officer adopted, modified, or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408(a) of Regulation S-K).

 

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ITEM 6.    EXHIBITS

 

3.1

Articles of Incorporation, as amended as of November 13, 2023

 

Incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K as filed with the SEC on March 22, 2024 (File No. 001-36210)

       

3.2

Amended and Restated Bylaws

 

Incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-Q as filed with the SEC on May 14, 2025 (File No. 001-36210)

       
4.1 Form of Underwriter’s Warrant   Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K as filed with the SEC on June 09, 2026 (File No. 001-36210)
       
       
10.1 Note Purchase Agreement, by and among the Company and the Investors, dated May 22, 2026   Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on May 26, 2026 (File No. 001-36210)
       
10.2 Form of Note   Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the SEC on May 26, 2026 (File No. 001-36210)
       
10.3 Debt Cancellation Agreement, by and among the Company and the affiliates of Bleichroeder L.P., 21 April Fund, L.P., and 21 April Fund, Ltd., dated May 26, 2026   Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on June 01, 2026 (File No. 001-36210)
       
10.4 Underwriting agreement, dated June 4, 2026, by and between LiqTech International, Inc. and Konik Capital Partners, LLC, a division of T.R. Winston and Company, LLC   Incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K as filed with the SEC on June 09, 2026 (File No. 001-36210)
       
10.5 Registration Rights Agreement, dated June 8, 2026, by and between LiqTech International, Inc. and affiliates of Bleichroeder L.P., 21 April Fund, L.P., and 21 April Fund, Ltd.   Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on June 09, 2026 (File No. 001-36210)

 

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31.1

Certifications of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

Filed herewith

       

31.2

Certifications of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

Filed herewith

       

32.1

Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002

 

Furnished herewith

       

32.2

Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002

 

Furnished herewith

       

101. INS

Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

 

Provided herewith

       

101. CAL

Inline XBRL Taxonomy Extension Calculation Link base Document

 

Provided herewith

       

101. DEF

Inline XBRL Taxonomy Extension Definition Link base Document

 

Provided herewith

       

101. LAB

Inline XBRL Taxonomy Label Link base Document

 

Provided herewith

       

101. PRE

Inline XBRL Extension Presentation Link base Document

 

Provided herewith

       

101. SCH

Inline XBRL Taxonomy Extension Scheme Document

 

Provided herewith

       

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

Provided herewith

 

 

 

33

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

LiqTech International, Inc.

 
     

Dated: August 12, 2026

/s/ Fei Chen 

 
 

Fei Chen, Chief Executive Officer

 
 

(Principal Executive Officer)

 
     
     

Dated: August 12, 2026

/s/ David Noerby Foss Kowalczyk

 
 

David Noerby Foss Kowalczyk, Chief Financial and Operating Officer

 
 

(Principal Financial, and Accounting)

 

 

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