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What changed in LIQTECH INTERNATIONAL INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of LIQTECH INTERNATIONAL INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+179 added−194 removedSource: 10-K (2025-03-28) vs 10-K (2024-03-22)

Top changes in LIQTECH INTERNATIONAL INC's 2024 10-K

179 paragraphs added · 194 removed · 113 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

49 edited+9 added−8 removed42 unchanged
Biggest changeDue to legislative regulation, system integrators are often required by the end customers to receive approval for their systems, including the components used in such systems, which requires significant time and expense. As a result, we believe that certain system integrators using our products will not replace our filters with competitive products unless there are compelling reasons to do so.
Biggest changeThese system integrators use our filtration products and membranes in larger filtration systems, which eventually are installed in systems used by the end customers. Due to legislative regulation, system integrators are often required by the end customers to receive approval for their systems, including the components used in such systems, which requires significant time and expense.
Our Products We manufacture and sell a broad range of systems and products based on the application of our ceramic filters and membranes for the filtration of liquids and gases within a range of uses, such as industrial wastewater, oil & gas, commercial pool, non-road machinery, marine, chemicals/petrochemicals and other industrial applications.
Our Products We manufacture and sell a broad range of systems and products based on the application of our ceramic filters and membranes for the filtration of liquids and gases within a range of uses, such as industrial wastewater, oil & gas, commercial pool, road & non-road machinery, marine, chemicals/petrochemicals and other industrial applications.
We believe the aftermarket segment benefits from robust growth fundamentals as clients and technology providers are increasingly focused on unlocking value through close collaboration, for which service and maintenance will yield improved customer satisfaction and growth. 6 Table of Contents Silicon Carbide Ceramic Membrane & Diesel Particulate Filter (DPF) Market Our legacy business related to the provision of DPF filters is expected to continue growing across Asia, Europe, and North America as regulators require diesel engines to comply with new and more stringent environmental rules and regulations.
We believe the aftermarket segment benefits from robust growth fundamentals as clients and technology providers are increasingly focused on unlocking value through close collaboration, for which service and maintenance will yield improved customer satisfaction and growth. 6 Table of Contents Silicon Carbide Ceramic Membrane & Diesel Particulate Filter (DPF) Market Our legacy business related to the provision of DPF filters is expected to continue growing across Europe and North America as regulators require diesel engines to comply with new and more stringent environmental rules and regulations.
Reducing diesel emissions will have both health and social benefits along with reduced costs. In response to these health impacts, governments have been implementing legislation to regulate emissions from diesel engines. California implemented the Diesel Risk Reduction Plan, and New York City implemented binding directives for the retrofitting of buses, garbage trucks, and construction machines.
Reducing diesel emissions will have both health and social benefits along with reduced costs. In response to health impacts, governments have been implementing legislation to regulate emissions from diesel engines. California implemented the Diesel Risk Reduction Plan, and New York City implemented binding directives for the retrofitting of buses, garbage trucks, and construction machines.
We intend to leverage the installed base of our filtration systems delivered and commissioned over the last decade by engaging with both new and existing clients to develop a closer and more comprehensive partnership structure and ultimately bundle our filtration system and aftermarket offering.
We intend to leverage the installed base of our filtration systems delivered and commissioned over the last decade by engaging with both new and existing clients to develop a closer and more comprehensive partnership structure and ultimately bundle our filtration systems and aftermarket offering.
In the oil & gas market, we see growing global demand for high-quality re-injection water. In addition, we see tightening water discharge legislation, increasing public awareness of water scarcity, and growing adoption of reuse as key growth drivers in this end market.
In the oil & gas market, we see growing global demand for high-quality re-injection water. In addition, we see tightening water discharge legislation, increasing public awareness of water scarcity, and heightening adoption of reuse as key growth drivers in this end market.
The Aqua Solution® also reduces the number of membrane elements, pressure vessels, and both water and energy consumption as well as CO2 footprint by offering high-flow capabilities at very low pressure with improved filtration characteristics. 2 Table of Contents Diesel Particulate Filters (DPFs) for Gas Purification We offer diesel particulate filters for exhaust emission control solutions to the verified retrofit and original equipment manufacturer (OEM) markets through our direct sales force and distributors specializing in sales to end-users.
The Aqua Solution® also reduces the number of membrane elements, pressure vessels, and both water and energy consumption as well as CO 2 footprint by offering high-flow capabilities at very low pressure with improved filtration characteristics. 2 Table of Contents Diesel Particulate Filters (DPFs) for Gas Purification We offer diesel particulate filters for exhaust emission control solutions to the verified retrofit and original equipment manufacturer (OEM) markets through our direct sales force and distributors specializing in sales to end users.
We believe that supplying our customers with a modular-based solution built upon our silicon carbide membranes is unique in the market, considering our vertical integration with in-house manufacturing of silicon carbide products and engineered plastic components, coupled with the design, engineering, and assembly of the integrated systems. ● Broad Application of LiqTech Membranes: Our membranes can be applied in a variety of applications, including the filtration of industrial wastewater, separation of metals from liquids in industrial processes, marine scrubber wastewater, chemicals and produced water within oil & gas, oil emulsion separation, bacteria removal, commercial swimming pool water treatment, food and beverages, chemicals/petrochemicals, and other applications. 4 Table of Contents ● Marketing and Manufacturing in Key Markets and Expanding to Other Markets: While production is centered in Denmark, we have distribution and sales activities across multiple jurisdictions.
We believe that supplying our customers with a modular-based solution built upon our silicon carbide membranes is unique in the market, considering our vertical integration with in-house manufacturing of silicon carbide products and engineered plastic components, coupled with the design, engineering, and assembly of the integrated systems. ● Broad Application of LiqTech Membranes: Our membranes can be applied in a variety of applications, including the filtration of industrial wastewater, separation of metals from liquids in industrial processes, marine scrubber wastewater, chemicals and produced water within oil & gas, oil emulsion separation, bacteria removal, commercial swimming pool water treatment, food and beverage production, chemicals/petrochemicals processing, and other applications. 4 Table of Contents ● Marketing and Manufacturing in Key Markets and Expanding to Other Markets: While production is centered in Denmark, we have distribution and sales activities across multiple jurisdictions.
We also sell our products through distributors and agents in many other countries and regions such as China, Korea, Spain, UK, France, Middle East, Singapore, Australia and the U.S.
We also sell our products through distributors and agents in many other countries and regions such as China, Korea, Spain, UK, France, Greece, Middle East, Singapore, Australia, and the U.S.
We currently provide water filtration systems for commercial pool owners, scrubber technology providers, shipowners, and ship operators as well as tailored filtration systems for oil & gas operators and services companies.
We currently provide water filtration systems for commercial pool owners, scrubber technology providers, shipowners, and ship operators as well as tailored filtration systems for oil & gas operators, energy companies, and services companies.
We also believe that having distinctive names is an important factor in marketing our products and therefore use trademarks to brand some of our products. As of March 2024, we had three trademark registrations in China and four trademark registrations in Denmark (AQUA SOLUTION, CoMem, CDPX, and FUTURE FILTRATION).
We also believe that having distinctive names is an important factor in marketing our products and therefore use trademarks to brand some of our products. As of March 2025, we had three trademark registrations in China and four trademark registrations in Denmark (AQUA SOLUTION, CoMem, CDPX, and FUTURE FILTRATION).
It utilizes a crossflow structure to handle high concentrations of suspended solids found in produced water from the oil & gas and chemical industries, wastewater from industrial processes and manure filtration, and other applications. It offers consistent removal of oil and suspended solids at high throughput rates regardless of feed conditions.
It utilizes a crossflow structure to handle high concentrations of suspended solids found in produced water from the oil & gas and chemical industries, wastewater from industrial processes, and other applications. It offers consistent removal of oil and suspended solids at high throughput rates regardless of feed conditions.
Our Strategy Our strategy is to leverage our core competencies in material science, advanced filtration, and systems integration, creating differentiated products with compelling value propositions to penetrate attractive end markets with regulatory and ESG tailwinds. Essential imperatives associated with our strategy include the following: ● Develop and reinforce new products and applications to provide clean water and reduce pollution.
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 regulatory tailwinds. Essential imperatives associated with our strategy include the following: ● Develop and reinforce new products and applications to provide clean water and reduce pollution.
In the past two years, we have worked closely with industry partners to validate and accelerate our ultrafiltration technology applications within the global oil & gas industry, in both onshore and offshore environments, evidenced by a commercial installation in the Middle East for produced water and in the Mediterranean Sea for monoethylene glycol (MEG) recovery.
In the past two years, we have worked closely with industry partners to validate and accelerate our ultra-filtration technology applications within the global oil & gas industry, in both onshore and offshore environments, evidenced by a commercial installation in the Middle East for produced water and in the Mediterranean Sea for monoethylene glycol (MEG) recovery.
We seek to leverage our innovative and patented SiC ceramic membrane technology by designing and deploying our filtration systems into complex and demanding industrial applications where our clients can benefit from both operational benefits and value creation. Recent deployments have showcased attractive returns on investment, as our solutions yield improved product characteristics, lower operational costs, and higher output.
We seek to leverage our innovative and patented SiC ceramic membrane technology by designing and deploying our filtration systems into complex and demanding industrial applications where our clients can benefit from cost savings and value creation. Recent deployments have showcased attractive returns on investment, as our solutions yield improved product characteristics, lower operational costs, and higher output.
Our Danish operations are located in the Copenhagen area, Hobro, and Aarhus.
Our Danish operations are located in the Copenhagen area and Hobro.
Furthermore, we have recently intensified focus on aftermarket sales through service & maintenance agreements and general sale of spare parts to our clients and partners.
Furthermore, we have recently intensified our focus on aftermarket sales through service & maintenance agreements and the sale of spare parts to our clients and partners.
LiqTech is differentiated by what we believe is our superior SiC membrane technology and our ability to provide a complete water treatment system for select industries and applications. 5 Table of Contents Our applications within industrial wastewater and more specific applications such as chemicals/petrochemicals purification represent a core part of our strategic plan.
LiqTech is differentiated by what we believe is our superior SiC membrane technology and our ability to provide a complete water treatment system for select industries and applications. 5 Table of Contents Our applications within industrial wastewater and more specific applications such as chemical/petrochemical purification represent a core part of our strategic plan.
Our current focus is to strengthen our position within certain industrial applications such as difficult industrial water streams and hydrocarbon production-derived contaminated water, which we refer to herein as “produced water”. Furthermore, we remain focused on our legacy segments within marine scrubber wastewater, pool, metal & mining, and other energy applications.
Our current focus is to strengthen our position within certain industrial applications such as difficult industrial water streams and hydrocarbon production-derived contaminated water, which we refer to herein as “produced water”. Furthermore, we remain focused on segments within marine scrubber wastewater, pool, metal & mining, microplastics removal, and other applications.
We intend to continue investing in R&D with the aim of developing new technologies and improving our existing products to strengthen our competitive advantages, retaining our existing customers, and acquiring new customers.
We intend to continue investing in R&D with the aim of developing new technologies and improving our existing products to strengthen our competitive advantages, retain our existing customers, and acquire new customers.
We have successfully sold products and installed systems into several end market segments--including automotive/transportation, clean water and pool filtration, marine, industrial wastewater, chemicals/petrochemicals, and oil & gas applications.
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, energy, and oil & gas applications.
We are currently focused on evaluation future market potential in order to more accurately assess the commercial potential within each industrial end-market segment. Based on industry research, the growth within the global industrial water & wastewater treatment market is projected to reach $7.7 billion by 2030.
We are currently focused on evaluating future market potential to more accurately assess the commercial potential within each industrial end-market segment. Based on industry research, the total addressable market within the global industrial water & wastewater treatment market is projected to reach $7.7 billion by 2030.
In the future, we will further develop and reposition our WTU to match the emerging new opportunity for exhaust gas recirculation in dual-fuel engines. This new market development supports the energy transition for the marine industry and will be a major trend in the coming years.
We are actively repositioning our WTU to match the emerging new opportunity for exhaust gas recirculation in dual-fuel engines. This new market development supports the energy transition for the marine industry and will be a major trend in the coming years.
With a pore size of 60 nanometers (nm), it is suitable for ultrafiltration applications. This state-of-the-art membrane technology facilitates new separation processes and new filtration applications; and ● Aqua Solution ®, which integrates an enclosed structural design with cutting-edge membrane technology in a solution specifically designed for applications including pre-treatment, wastewater treatment, and swimming pool and spa water filtration.
This state-of-the-art membrane technology facilitates new separation processes and new filtration applications; and ● Aqua Solution ®, which integrates an enclosed structural design with cutting-edge membrane technology in a solution specifically designed for applications including pre-treatment, wastewater treatment, and swimming pool and spa water filtration.
We intend to continue to devote resources to the development of new technologies and the improvement of our products to retain existing customers and acquire new customers. Employees At December 31, 2023 we had 119 employees, including 83 in production; 15 in administration; 8 in research and development; 11 in sales, marketing and strategy; and 2 in executive management.
We intend to continue to devote resources to the development of new technologies and the improvement of our products to retain existing customers and acquire new customers. Employees At December 31, 2024 we had 105 employees, including 66 in production; 20 in administration; 8 in research and development; 10 in sales, marketing and strategy; and 1 in executive management.
On July 7, 2014, we obtained a new Danish patent application related to our silicon carbide membrane technology. In 2023, we have submitted 3 patent applications to further strengthen our intellectual property for SiC membranes. 8 Table of Contents We also rely on trade secret protection for our confidential and proprietary information. Trade secrets, however, can be difficult to protect.
In 2023, we have submitted 3 patent applications to further strengthen our intellectual property for SiC membranes. 8 Table of Contents We also rely on trade secret protection for our confidential and proprietary information. Trade secrets, however, can be difficult to protect.
Today, 2.2 billion people lack safely managed drinking water, and 3 billion people worldwide lack basic handwashing facilities at home. In addition, more than 700 million people could be displaced due to water scarcity (according to the UN). According to the World Health Organization, approximately 361,000 children die every year due to unsafe water and lack of basic sanitation.
In addition, more than 700 million people could be displaced due to water scarcity (according to the UN). According to the World Health Organization, approximately 395,000 children die every year due to unsafe water and lack of basic sanitation.
The regulation can be reached in one of two ways: 1) use of fuel with low SOx content for a cost that is 150-200 $/MT higher than normal bunker fuel; 2) installation of open-loop, hybrid or closed-loop scrubbers. Only hybrid and closed-loop systems can be use in ”ECA” zones (Emission Control Areas).
In 2020, IMO (International Maritime Organization) issued Marpol VI with clear regulation of SOx emissions for marine ships. The regulation can be reached in one of two ways: 1) use of fuel with low SOx content for a cost that is 150-200 $/MT higher than normal bunker fuel; 2) installation of open-loop, hybrid, or closed-loop scrubbers.
Our Company initially focused on selling DPF filters to the automotive industry to reduce exhaust gas emissions in diesel engines. In 2014, we acquired Provital Solutions, a Danish filtration system manufacturing company that enabled our Company to broaden our offering of products and systems for ceramic filters, SiC membranes, and modular liquid filtration systems.
In 2014, we acquired Provital Solutions, a Danish filtration system manufacturing company that enabled our Company to broaden our offering of products and systems for ceramic filters, SiC membranes, and modular liquid filtration systems. The liquid filtration systems business has become a highly complementary offering to our SiC membrane and DPF business.
Our goal is to leverage our products and core technology and position our Company to take advantage of favorable market trends. Liquid Filtration Systems and Aftermarket Water is essential to life on earth and clean water shortages are affecting billions of people.
Our goal is to leverage our products and core technologies to take advantage of favorable market trends. Liquid Filtration Systems and Aftermarket Water is essential to life on earth and clean water shortages are affecting billions of people. Today, 2.2 billion people lack safe drinking water, and 3 billion people worldwide lack basic handwashing facilities at home.
Our chemically inert, plug-and-play membranes are extremely hard, chemically resistant, and consist of durable ceramics with high flux (flow). SiC membranes are stronger, harder, longer-lasting, more temperature-resistant, and perform more efficiently than conventional ceramic or polymeric membranes; ● Hybrid Technology Membranes (HTM) , a patented asymmetric membrane that combines the desired properties from silicon carbide (SiC) and zirconia (ZrO₂) ceramics.
SiC membranes are stronger, harder, longer-lasting, more temperature-resistant, and perform more efficiently than conventional ceramic or polymeric membranes; and ● Hybrid Technology Membranes (HTM) , a patented asymmetric membrane that combines the desired properties from silicon carbide (SiC) and zirconia (ZrO₂) ceramics. With a pore size of 60 nanometers (nm), it is suitable for ultrafiltration applications.
Recently, we have intensified focus on the direct sale of SiC and HTM membrane products to clients and integrators across jurisdictions to directly access the global market for ceramics membrane solutions in the context of the growing need for clean water and responsible handling of industrial wastewater, while also placing value-enhancing applications across core industrial processes such as chemicals/petrochemicals, enhanced oil recovery, and other applications.
Recently, we have intensified our focus on the direct sale of SiC and HTM membrane products to clients and integrators across jurisdictions to directly access the global market for ceramics membrane solutions in the context of the growing need for clean water and responsible handling of industrial wastewater, while also placing value-enhancing applications across core industrial processes such as chemical/petrochemical, enhanced oil recovery, and other applications. 7 Table of Contents Research and Development We have eight (8) full-time employees who are primarily engaged in R&D activities pertaining to the development of technology and intellectual property rights related to silicon carbide product formulas, applications, and manufacturing processes.
Item 1. Business 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. For more than two decades, we have developed and manufactured products of re-crystallized silicon carbide.
Item 1. Business Overview LiqTech International, Inc. is a clean technology company that manufactures and markets highly specialized filtration products and systems. For more than two decades, we have developed and manufactured products of re-crystallized silicon carbide.
Recently, we are evaluating new opportunities for water treatment units in dual-fuel engine exhaust gas recovery. 3 Table of Contents ● Industrial Applications: We have delivered complete liquid filtration systems for aggressive fluid applications such as heavy metal removal for energy providers and water treatment systems for mining wastewater.
To accelerate our entry into the emerging dual-fuel engine market, we established a joint venture in Nantong, China, in December 2024. 3 Table of Contents ● Industrial Applications: We have delivered complete liquid filtration systems for aggressive fluid applications such as heavy metal removal for energy providers and water treatment systems for mining wastewater.
Most of our competitors are large industrial companies; however, we believe our patented technology allows us to produce high-quality products that provide an advantage over many of our direct and, in many cases, larger competitors.
We believe our patented technology as well as our in-depth application knowledge allow us to offer reliable products that provide an advantage over many of our direct and, in many cases, larger competitors.
Furthermore, our systems have been deployed successfully to reduce OPEX and enhance product quality in chemicals/petrochemicals applications. Highly Flexible & Innovative Plastic Manufacturing LiqTech provides highly flexible and innovative plastics manufacturing, focusing on machining, welding, bending, and solvent cementing. With an intense focus on customer demand, LiqTech serves market leaders in the clean technology, pharmaceuticals, foods, healthcare, and graphics industries.
Furthermore, our systems have been deployed successfully to reduce OPEX and enhance product quality in chemicals/petrochemicals applications. In 2024, we piloted a new application area for microplastics removal for a chemical/petrochemical company. Highly Flexible & Innovative Plastic Manufacturing LiqTech provides highly flexible and innovative plastics manufacturing, focusing on machining, welding, bending, and solvent cementing.
In addition to our industrial, oil & gas, and marine applications, our Company offers industry-leading commercial pool filtration systems globally through distributors and local partners.
According to Clarkson shipping intelligence and other public sources, there are greater than 400 new dual-engine vessels on order for 2024 to 2027. In addition to our industrial, oil & gas, and marine applications, our Company offers industry-leading commercial pool filtration systems globally through distributors and local partners.
As of December 2023, we employed eleven (11) full-time sales, marketing and strategy personnel in addition to partnership and distribution agents. We promote our products through direct sales to potential customers and marketing activities such as participation in tradeshows and exhibitions, with a new focus on digital marketing.
We promote our products through direct sales to potential customers and marketing activities such as participation in tradeshows and exhibitions, with a new focus on digital marketing. In certain instances, our products are delivered to the end customer through system integrators.
For hybrid and closed-loop systems, there is a need to install a water treatment system. Up to now, approximately 6,000 vessels have installed a scrubber of which 1,200 include hybrid or closed-loop systems. Since 2018, LiqTech has sold and installed more than 170 water treatment units (WTU) for marine scrubbers, with an estimated market share of 14%.
Only hybrid and closed-loop systems can be used in “ECA” zones (Emission Control Areas). For hybrid and closed-loop systems, there is a need to install a water treatment system. Up to now, approximately 6,000 vessels have installed a scrubber, of which 1,200 include hybrid or closed-loop systems.
Manufacturing We currently manufacture our ceramic membrane and DPF products in Ballerup, Denmark (Copenhagen area). We assemble our liquid filtration systems in Hobro, Denmark, and we manufacture plastic products at our facility located in Aarhus, Denmark.
Manufacturing We currently manufacture our ceramic membrane and DPF products in Ballerup, Denmark (Copenhagen area). We assemble our liquid filtration systems and manufacture plastic products at our facilities located in Hobro, Denmark. We plan to consolidate, optimize, and expand our production capacity within the existing facilities with further support from partnerships across the U.S. and Asia.
We also believe the high pollution levels will increase the need to retrofit existing vehicles. Historically, our business has predominantly sold our ceramic membranes through integrated filtration system offerings with SiC, HTM, and Aqua Solution® membranes embedded in the filtration systems offered to our partners, distributors, and end clients.
Historically, our business has predominantly sold our integrated filtration systems with embedded SiC, HTM, and Aqua Solution® membranes to our partners, distributors, and end users.
The market for commercial pools in Europe alone was $1.5 billion in 2021 and expected to grow at a CAGR of 6.2% from 2021 to 2028 based on relevant industry research published in June 2022. We remain committed to expand our geographical reach outside Europe through new partnerships and distribution agreements.
According to Frost & Sullivan's report European Swimming Pool Water Treatment Growth Opportunities (June 2022), the European commercial pool market is projected to grow at a CAGR of 6.1% from 2024 to 2028, reaching a total addressable market of $687 million. We remain committed to expand our geographical reach outside of Europe through new partnerships and distribution agreements.
The amount of produced water varies from 0.1 to 10 times the amount of oil produced. We have an installation with a major international oil & gas company operating with stable performance.
The amount of produced water varies from 0.1 to 10 times the amount of oil or gas produced. We have today three installations with international oil & gas companies both in the US and Middle East, all of which are operating with stable performance. Oil & Gas companies require water treatment units with high capacity and efficiency.
Furthermore, LiqTech delivers benefits through vertical integration by manufacturing some key components for the fabrication and assembly of liquid filtration systems for pool and marine scrubber applications. Our Competitive Strengths Our products and systems compete with other filtration technologies that are made of ceramic, aluminum oxide and polymeric materials.
With an intense focus on customer demand, LiqTech serves market leaders in the clean technology, pharmaceuticals, foods, healthcare, and graphics industries. Furthermore, LiqTech delivers benefits through vertical integration by manufacturing some key components for the fabrication and assembly of liquid filtration systems for pool and marine scrubber applications.
We purchase these commodities from various sources generally based upon availability, lead time, quality, and price. Sales, Marketing and Business Intelligence Our products and services are sold both directly and indirectly to end clients across multiple jurisdictions and end-markets through direct sales, systems integrators, distributors, agents, and partners.
Sales, Marketing and Business Intelligence Our products and services are sold both directly and indirectly to end users across multiple jurisdictions and end-markets through direct sales, systems integrators, distributors, agents, and partners. Our Company initially focused on selling DPF filters to the automotive industry to reduce exhaust gas emissions in diesel engines.
We plan to consolidate, optimize, and expand our production capacity within the existing facilities with further support from existing partnerships across Europe, Middle East, and Asia. Raw Materials and Components The main raw materials used in our manufacturing processes are silicon carbide, steel, pumps, electrical components, plastic, platinum, and palladium.
Raw Materials and Components The main raw materials used in our manufacturing processes are silicon carbide, steel, pumps, electrical components, plastic, platinum, and palladium. We purchase these commodities from various sources generally based upon availability, lead time, quality, and price.
Intellectual Property We have one issued patent in the United States that we co-own with a third party, two issued patents in Denmark, three issued foreign patents (Germany, China, and South Korea) that we co-own with a third party, and one pending European patent application that we co-own with a third party.
As a result, we believe that certain system integrators using our products will not replace our filters with competitive products unless there are compelling reasons to do so. Intellectual Property We have two issued patents in Denmark, one issued European patent, and one pending European and US patent application that we co-own with a third party.
Presently, we have initiated activity to penetrate the U.S. onshore oil & gas market. The market for marine water filtration systems is dependent on the development of new regulations for sulfur and ballast water emissions. In 2020, IMO issued Marpol VI with clear regulation of SOx emission for marine ships.
According to Zion Market Research, the market will grow with a CAGR of 8% and reach a market size of $16 billion in 2032 from $8 billion in 2023 The market for marine water filtration systems is dependent on the development of new regulations for sulfur and ballast water emissions.
The liquid filtration systems business has become a highly complementary offering to our SiC membrane and DPF business. We plan to actively market our existing products to new customers as we penetrate new end markets and optimize our manufacturing capacity.
We plan to actively market our existing products to new customers as we penetrate new end markets and optimize our manufacturing capacity. As of December 2024, we employed ten (10) full-time sales, marketing and strategy personnel in addition to partnership and distribution agents.
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Our solution is market-proven and applicable for onshore and offshore operations. ● MEG: Our silicon carbide membrane technology can be deployed in filtration systems related to monoethylene glycol ("MEG") recovery within the oil & gas industry. MEG is widely used by oil & gas producers in wellheads and pipelines to prevent hydrate formation.
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Our chemically inert, plug-and-play membranes are extremely hard, chemically resistant, and consist of durable ceramics with high flux (flow).
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In deep-water, offshore gas production facilities, where the exposure to lower temperatures in subsea pipelines is common, MEG is used for hydrate inhibition.
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In 2024, we developed the PureFlow™ container solution, designed to operate cost-effectively at capacities starting from 10,000 barrels per day. ● Marine Scrubber Wastewater: Sustainability is getting more and more attention in the shipping industry. Most commercial new vessels are built with dual-fuel engines.
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Together with our clients, we have demonstrated the performance of SiC membrane technology and validated significant performance improvements to the MEG regeneration process when compared to other membrane technologies. ● Marine Scrubber Wastewater: We supply water filtration systems for marine scrubber systems that may be deployed on ships to reduce sulfur emissions stemming from heavy fuel oil (HFO) operations, allowing vessels to comply with the International Maritime Organization (IMO) 2020 sulfur cap.
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This type of engine requires efficient and reliable water treatment systems for exhaust gas recirculation, for which it is necessary for engine combustion efficiency. Based on our many commercially operated water treatment systems, we have developed a special water treatment solution for this new application.
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To date, more than 170 water treatment systems have been installed, with orders from European and Asian scrubber technology providers, shipyards, and ship owners.
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We are actively repositioning our WTU to match the emerging new opportunity for exhaust gas recirculation in dual-fuel engines. This new market development supports the energy transition for the marine industry and will be a major trend in the coming years. Today, more than 80% of commercial ships are manufactured in China.
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The Asian markets have shown an improved standard of living due to economic growth, which has led to increased sales of vehicles in the region. At the same time, pollution in major cities has reached high particulate matter levels. As a result, for example, the Chinese government has introduced additional regulations, including new emissions standards, faster than previously anticipated.
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Our Competitive Strengths Our products and systems compete with other filtration technologies made from ceramic, aluminum oxide, and polymeric materials. While most of our competitors are large industrial companies, we hold a unique position by combining proprietary membrane technology with extensive system and application expertise.
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We intend to work on accelerating market penetration and further validate perspectives on market potential and value proposition through detailed market studies and associated estimates of total addressable markets. 7 Table of Contents Research and Development We have eight (8) full-time employees that are primarily engaged in R&D activities pertaining to the development of technology and intellectual property rights related to silicon carbide product formulas, applications, and manufacturing processes.
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In 2024, we have succeeded in two commercial installations in the U.S. onshore market. The projected global market for produced water treatment has large potential for the Company.
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In certain instances, our products are delivered to the end customer through system integrators. These system integrators use our filtration products and membranes in larger filtration systems, which eventually are installed in systems used by the end customers.
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Since 2018, LiqTech has sold and installed more than 170 water treatment units (WTU) for marine scrubbers, with an estimated market share of 14%. Sustainability is gaining increasing attention in the shipping industry. Most commercial new vessels are built with dual-fuel engines.
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The United States patent that we co-own is generally effective for 20 years from the filing date (July 8, 2004) of the earliest U.S. or international application to which it claims priority. The scope and duration of each of our foreign patents vary in keeping with local laws.
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This type of engines requires an efficient and reliable water treatment system for exhaust gas recirculation, for which it is necessary for engine combustion efficiency. Based on our many commercially operated water treatment systems, we have developed a unique for this new application.
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Scope and duration of each of our foreign patents vary in keeping with local laws. On July 7, 2014, we obtained a new Danish patent application related to our silicon carbide membrane technology.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

26 edited+15 added−21 removed140 unchanged
Biggest changeSuch sales may also make it more difficult for us to sell equity securities or equity-related securities in the future at a time and price that we deem appropriate. 19 Table of Contents The Company is considered a “ smaller reporting company ” and is exempt from certain disclosure requirements, which could make our common stock less attractive to potential investors.
Biggest changeSales of substantial amounts of shares in the public market, or the perception that such sales could occur, could depress prevailing market prices for the shares. Such sales may also make it more difficult for us to sell equity securities or equity-related securities in the future at a time and price that we deem appropriate.
In the event that our products fail to meet these evolving standards, some or all of our products may become obsolete, which could have an adverse effect on our business, operating results, financial condition, and long-term prospects. Our international operations are exposed to potential adverse tax consequence. Our international operations create a risk of potential adverse tax consequences.
In the event that our products fail to meet these evolving standards, some or all of our products may become obsolete, which could have an adverse effect on our business, operating results, financial condition, and long-term prospects. Our international operations are exposed to potential adverse tax consequence. Our international operations create a risk of potentially adverse tax consequences.
Additionally, California recently enacted legislation, the California Consumer Privacy Act, which became effective on January 1, 2020. We may also be subject to additional obligations relating to personal data by contract that industry standards apply to our practices.
Additionally, California enacted legislation, the California Consumer Privacy Act, which became effective on January 1, 2020. We may also be subject to additional obligations relating to personal data by contract that industry standards apply to our practices.
As a public company, we expect to continue to incur significant legal, accounting, and other expenses. In addition, the Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC, have imposed various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls as well as mandating certain corporate governance practices.
As a public company, we expect to continue to incur significant legal, accounting, and other expenses. In addition, the Sarbanes-Oxley Act, along with rules subsequently implemented by the SEC, have imposed various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls as well as mandating certain corporate governance practices.
As of December 31, 2023, we have not entered into any derivative contracts to hedge our currency exposure. Our inability to protect our intellectual property rights could negatively affect our business and results of operations.
As of December 31, 2024, we have not entered into any derivative contracts to hedge our currency exposure. Our inability to protect our intellectual property rights could negatively affect our business and results of operations.
These provisions may also limit the ability of stockholders to approve transactions that they may deem to be in their best interests. 18 Table of Contents There is limited trading volume of our common stock, which could make it difficult for you to liquidate an investment in our common stock in a timely manner.
These provisions may also limit the ability of stockholders to approve transactions that they may deem to be in their best interests. There is limited trading volume of our common stock, which could make it difficult for you to liquidate an investment in our common stock in a timely manner.
Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available, we may be required to delay or reduce the scope of our plans to grow our revenues, to pass on one or more strategic acquisitions, or to scale back our business plans.
Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available, we may be required to delay or reduce the scope of our plans to grow our revenues, to pass on one or more opportunities, or to scale back our business plans.
Our ability to achieve financial beak-even is heavily dependent on external macroeconomic and competitive industry dynamics that are outside of our control; therefore, our business may not achieve its financial objectives in a period with increased competition or weakening market fundamentals. Furthermore, future growth and possibly future strategic acquisitions may require public or private equity offerings or debt financings.
Our ability to achieve financial beak-even is heavily dependent on external macroeconomic and competitive industry dynamics that are outside of our control; therefore, our business may not achieve its financial objectives in a period with increased competition or weakening market fundamentals. Furthermore, future growth and operations may require public or private equity offerings or debt financings.
While the Company has procedures to monitor and limit exposure to credit risk on its receivables, there can be no assurance such procedures will effectively limit our credit risk and avoid losses. 11 Table of Contents The impact on our business operations and financial condition if we fail to restore financial stability through improved profitability and access to adequate liquidity.
While the Company has procedures to monitor and limit exposure to credit risk on its receivables, there can be no assurance such procedures will effectively limit our credit risk and avoid losses. 11 Table of Contents If we fail to restore financial stability through improved profitability and access to adequate liquidity, our business options and financial condition would be impacted .
Factors such as the following could cause the market price of our common stock to fluctuate substantially: ● the underlying price of the commodities that affect our key markets of industrial water filtration, marine, and oil & gas; ● announcements of capital budget changes by major customers; ● the introduction of new products by our competitors; ● announcements of technology advances by us or our competitors; ● current events affecting the political and economic environment in the United States, Europe, or Asia; ● conditions or industry trends, including demand for our products, services, and technological advances; ● changes to financial estimates by us or by any securities analysts who might cover our stock; ● additions or departures of our key personnel; ● government regulation of our industry; ● seasonal, economic, or financial conditions; ● our quarterly operating and financial results; ● litigation or public concern about the safety of our products; or ● the effect of macroeconomic uncertainty, COVID-19, or other pandemics.
Factors such as the following could cause the market price of our common stock to fluctuate substantially: ● the underlying price of the commodities that affect our key markets of industrial water filtration, marine, and oil & gas; ● announcements of capital budget changes by major customers; ● the introduction of new products by our competitors; ● announcements of technology advances by us or our competitors; ● current events affecting the political and economic environment in the United States, Europe, or Asia; ● conditions or industry trends, including demand for our products, services, and technological advances; ● changes to financial estimates by us or by any securities analysts who might cover our stock; ● additions or departures of our key personnel; ● government regulation of our industry; ● seasonal, economic, or financial conditions; ● our quarterly operating and financial results; ● litigation or public concern about the safety of our products; or ● the effect of macroeconomic uncertainty, global supply chain disruptions, or public health crises.
Adverse impact on our business due to increased interest rates, tightening debt capital markets, and market volatility. Our business and capital structure are dependent upon our ability to raise financing and optimize our cash management activities through timely access to credit and loan markets at attractive terms.
Our business could face adverse impacts due to increased interest rates, tightening debt capital markets, and market volatility. Our business and capital structure are dependent upon our ability to raise financing and optimize our cash management activities through timely access to credit and loan markets at attractive terms.
The adverse effect to our business operations from armed conflicts (such as Ukraine/Russia and Hamas/Israel) or similar political, social, regulatory, or economic tension may challenge our operational flexibility and financial performance.
Item 1A. Risk Factors RISKS RELATED TO OUR BUSINESS AND OPERATIONS The adverse effect to our business operations from armed conflicts (such as Ukraine/Russia and Hamas/Israel) or similar political, social, regulatory, or economic tension may challenge our operational flexibility and financial performance.
For the year ended December 31, 2023, our four largest customers accounted for approximately 7%, 5%, 4%, and 4% of our net sales (approximately 20% in total). For the year ended December 31, 2022, our four largest customers accounted for approximately 13%, 9%, 6%, and 4% of our net sales (approximately 31% in total).
For the year ended December 31, 2024, our four largest customers accounted for approximately 7%, 7%, 5%, and 5% of our net sales (approximately 24% in total). For the year ended December 31, 2023, our four largest customers accounted for approximately 7%, 5%, 4%, and 4% of our net sales (approximately 20% in total).
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
The price of our common stock is not necessarily indicative of our operating performance or long-term business prospects. In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
Periodic and/or continuous market fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in the value of our common stock. Price volatility may be worse if the trading volume of our common stock is low.
Periodic and/or continuous market fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in the value of our common stock.
If one or more of these analysts ceases coverage altogether, we could lose visibility, which could also lead to a decline in the price of our common stock. The market price of our common stock has been and may continue to be volatile.
If one or more of these analysts ceases coverage altogether, we could lose visibility, which could also lead to a decline in the price of our common stock. Future sales of our common stock, or the perception that future sales may occur, may cause the market price of our common stock to decline.
We are unable to predict the effect, if any, that the sale of shares, or the availability of shares for future sale, will have on the market price of the shares prevailing from time to time.
If any significant number of our outstanding shares are sold, such sales could have a depressive effect on the market price of our stock. We are unable to predict the effect, if any, that the sale of shares, or the availability of shares for future sale, will have on the market price of the shares prevailing from time to time.
Provisions in our articles of incorporation and bylaws could discourage a change in control or an acquisition of us by a third party, even if the acquisition would be favorable to you, thereby adversely affecting existing stockholders.
Sales of substantial numbers of such shares in the public market could adversely affect the market price of our common stock, causing our stock price to decline. 18 Table of Contents Provisions in our articles of incorporation and bylaws could discourage a change in control or an acquisition of us by a third party, even if the acquisition would be favorable to you, thereby adversely affecting existing stockholders.
Each pre-funded warrant is exercisable for $0.008 per share of common stock underlying such pre-funded warrant, which may be paid by way of a cashless exercise--meaning that the holder may not pay a cash purchase price upon exercise, but instead would receive upon such exercise the net number of shares of common stock determined according to the formula set forth in the pre-funded warrant.
These warrants may be exercised through a cashless exercise mechanism, meaning that the holder may not pay a cash purchase price upon exercise, but instead would receive upon such exercise the net number of shares of common stock determined according to the formula set forth in the pre-funded warrant.
As of December 31, 2023, we have issued pre-funded warrants to purchase a total of 3,930,008 shares of our common stock, of which none have been exercised.
As of December 31, 2024, we have issued pre-funded warrants to purchase a total of 5,299,879 shares of our common stock, consisting of 3,930,008 pre-funded warrants issued prior to 2024 and an additional 1,369,871 pre-funded warrants issued in 2024. Of these, none have been exercised.
We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time.
To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. In addition, debt financing, if available, may involve restrictive covenants. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time.
As a result, our customers may modify, delay or cancel plans to purchase our products and services to help mitigate the impact from the prevailing macroeconomic uncertainty. 10 Table of Contents Our business has been right-sized to help protect our profitability and cash flow; however, we remain exposed to near-term market fundamentals as we rely on short lead-time products and orders that may be cancelled if customers are facing weakened end-market demand or increased uncertainty.
While management continues to evaluate energy efficiency measures and alternative supply arrangements, there can be no assurance that future energy market volatility or supply disruptions will not have a material adverse effect on our business, financial condition, and results of operations. 10 Table of Contents Our business has been right-sized to help protect our profitability and cash flow; however, we remain exposed to near-term market fundamentals as we rely on short lead-time products and orders that may be cancelled if customers are facing weakened end-market demand or increased uncertainty.
This resulted in decisive measures implemented by the European Union to help manage security of supply and establish new sources of gas. Our business is heavily exposed to both gas and electricity prices used to power our operating equipment and high-temperature kilns as well as heat the office and manufacturing buildings across Denmark.
Our business is heavily exposed to both gas and electricity prices used to power operating equipment and high-temperature kilns, as well as to heat office and manufacturing facilities.
Consequently, such regulations may deter broker-dealers from recommending or selling our common stock, which may further affect its liquidity. If securities analysts do not publish research or reports about our business or if they downgrade us or our sector, the price of our common stock could decline.
Price volatility may be worse if the trading volume of our common stock is low. 19 Table of Contents If securities analysts do not publish research or reports about our business or if they downgrade us or our sector, the price of our common stock could decline.
The market price of our common stock has been volatile and fluctuates widely in response to various factors that are beyond our control. The price of our common stock is not necessarily indicative of our operating performance or long-term business prospects.
Consequently, such regulations may deter broker-dealers from recommending or selling our common stock, which may further affect its liquidity. The market price of our common stock has been and may continue to be volatile. The market price of our common stock has been volatile and fluctuates widely in response to various factors that are beyond our control.
The resurgence of COVID-19 or similar pandemics could have a material adverse effect on our business, results of operations and financial condition in the future. Our business could be adversely affected by a resurgence of COVID-19 or similar pandemics as evidenced by the global ramifications of the novel coronavirus first identified in Wuhan, Hubei Province, China (COVID-19).
Health crises, pandemics, and other public health emergencies could adversely affect our business, financial condition, and results of operations. Our business could be adversely affected by the emergence or resurgence of health crises, pandemics, or other public health emergencies.
Removed
Item 1A. Risk Factors RISKS RELATED TO OUR BUSINESS AND OPERATIONS There is substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.
Added
Global trade restrictions and geopolitical tensions could adversely impact our business and supply chain Our business operates in a global market and is subject to risks arising from increasing trade restrictions, geopolitical tensions, and shifting regulatory frameworks.
Removed
Our consolidated financial statements as of December 31, 2023, have been prepared under the assumption that we will continue as a going concern for the next twelve months. As of December 31, 2023, we had cash and cash equivalents of $10.4 million and an accumulated deficit of $75.9 million.
Added
In recent years, governments have imposed new tariffs, sanctions, and export controls, particularly in relation to advanced technologies, critical raw materials, and industrial goods. Trade conflicts between major economies, such as the United States and China, as well as evolving sanctions on Russia, have created uncertainty in supply chains and increased the complexity of cross-border trade.
Removed
There is substantial doubt that our cash and cash equivalents will be sufficient for the next twelve months. As a result of our financial condition and other factors described herein, there is substantial doubt about our ability to continue as a going concern.
Added
More recently, the change in administration in the U.S. elevates the potential for trade conflict and tariffs on imports, which could potentially impact our business. New or expanded trade restrictions, including export controls on key materials or technologies used in our products, could disrupt our supply chain, limit our ability to source critical components, and increase costs.
Removed
Our ability to continue as a going concern will depend on our ability to restore profitability and to obtain additional funding, as to which no assurances can be given. We continue to analyze various alternatives, including cost reduction initiatives, cash preservation actions, debt or equity financings, and other arrangements.
Added
Additionally, changes in import/export regulations or retaliatory trade policies from foreign governments could affect our ability to serve certain markets or delay customer orders. Our ability to mitigate these risks depends on the stability of global trade relations, our ability to identify alternative suppliers, and potential shifts in regulatory frameworks that could impact our industry.
Removed
Our future success depends on our ability to restore profitability, raise capital, or a combination of both. We cannot be certain that raising additional capital, whether through selling additional debt or equity securities or obtaining a line of credit or other loan, will be available to us or, if available, will be on terms acceptable to us.
Added
There can be no assurance that future trade restrictions or geopolitical conflicts will not have a material adverse effect on our business, financial condition, and results of operations.
Removed
If we issue additional securities to raise funds, these securities may have rights, preferences, or privileges senior to those of our common stock, and our current stockholders may experience dilution.
Added
Prolonged period of energy market volatility and supply disruptions could negatively impact our business The European energy crisis, which escalated in 2022 amid the Russia-Ukraine war, has largely stabilized; however, our business remains exposed to fluctuations in energy prices and potential supply disruptions caused by geopolitical instability, regulatory changes, or natural disasters.
Removed
If we are unable to obtain funds when needed or on acceptable terms, we may be required to curtail our current development programs, cut operating costs, forgo future development and other opportunities, or even terminate our operations.
Added
While natural gas and electricity prices in Europe have moderated compared to prior peaks, continued uncertainty regarding global energy markets, including potential disruptions from conflicts in the Middle East and instability affecting key shipping routes, could result in renewed price volatility and supply constraints.
Removed
Prolonged period of inflationary pressure including risk of energy shortages and elevated electricity and energy prices in Europe. The European energy crisis escalated in 2022 amid the Russia and Ukraine war with the rising cost of gas and electricity, fueling supply uncertainties and risk of energy shortage across Europe due to the lack of gas from Russia.
Added
Any significant increase in energy costs or supply shortages, whether due to geopolitical conflicts, new regulatory restrictions, or logistical challenges in securing energy inputs, could negatively impact profitability and reduce our competitive position compared to competitors operating in regions with lower energy costs.
Removed
Consequently, this rising energy cost inflation has negatively impacted our profitability and reduced our competitive position compared to competitors operating outside of Europe where the energy crisis has been less pronounced. The inflationary pressure on energy and gas prices may continue to negatively impact our business as prevailing core inflationary indicators remain above policy targets.
Added
Additionally, evolving energy policies, such as carbon taxes, emissions trading schemes, and government-mandated energy transition initiatives, may increase operating costs and impact the cost structure of our production processes.
Removed
Increased macroeconomic uncertainty and its effects on our business operations and financial condition. The uncertain macroeconomic environment caused by the ongoing wars, European energy crisis, and general uncertainty related to the global economy may adversely affect our results and could have a negative impact on timing, delivery and demand for our products and services.
Added
While the global impact of COVID-19 has diminished, recent years have demonstrated the significant disruptions that pandemics or widespread health emergencies can cause to supply chains, labor markets, and overall economic activity.
Removed
Customers, suppliers, and partners may experience business disruptions due to unplanned market volatilities, supply chain restrictions, or lack of funding due to increased cost of capital.
Added
Authorities worldwide continue to implement measures to mitigate potential future outbreaks, including vaccination campaigns, travel restrictions, and quarantine protocols, however, new infectious diseases or resurgences of existing ones could lead to disruptions in our supply chain, temporary facility closures, labor shortages, and delays in customer orders.
Removed
The COVID-19 pandemic resulted in authorities worldwide implementing numerous measures to contain or mitigate the outbreak of the virus, such as travel bans and restrictions, border controls, limitations on business activity, social distancing requirements, quarantines, and shelter-in-place orders. These measures caused business slowdowns or shutdowns in affected areas, both regionally and worldwide.
Added
Additionally, prolonged health crises could negatively impact the financial position of our customers or suppliers, increasing the risk of delayed payments, order cancellations, or defaults on contractual obligations.
Removed
Since 2020, management has initiated several precautionary initiatives across our business in accordance with local regulations and guidelines to mitigate the spread of COVID-19 and to prepare for future pandemics.
Added
Our ability to navigate future public health emergencies will depend on the severity and duration of such events, as well as the effectiveness of mitigation strategies implemented by governments, businesses, and healthcare systems. There can be no assurance that future health crises will not have a material adverse effect on our business, financial condition, and results of operations.
Removed
These precautions have impacted the way we carry out our business, including additional sanitation and cleaning procedures in our production and other facilities, temperature and symptom confirmations, and remote working when required. As evidenced during the COVID-19 pandemic, the effects of a prolonged pandemic could result in an extended negative impact on investment across industries.
Added
Each of the pre-2024 pre-funded warrants is exercisable for $0.008 per share of common stock underlying such pre-funded warrant, while the pre-funded warrants issued in 2024 are exercisable for $0.001 per share of common stock underlying such pre-funded warrant.
Removed
In addition, COVID-19 or similar pandemics could negatively impact the financial position of our customers or those of our collaboration partners, making it difficult to collect receivables or milestone payments. Moreover, our business and results of operations could be exposed to risks associated with uncollectible amounts or defaults on contractual payment obligations.
Added
The Company is considered a “ smaller reporting company ” and is exempt from certain disclosure requirements, which could make our common stock less attractive to potential investors.
Removed
If we are unable to generate sufficient cash from operations due to the impacts of future pandemics, we may need to raise additional funds.
Removed
The duration and severity of any future pandemics remain uncertain as exemplified by the rapid increase in the COVID-19 pandemic in late 2021, thus there can be no assurance that it will not have an adverse effect on our liquidity and capital resources, including our ability to access capital markets in the future on terms that are favorable to us or at all.
Removed
In addition, we could be forced to reduce or forgo attractive business opportunities. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. In addition, debt financing, if available, may involve restrictive covenants.
Removed
Sales of substantial numbers of such shares in the public market could adversely affect the market price of the common stock, causing our stock price to decline.
Removed
Future sales of our common stock, or the perception that future sales may occur, may cause the market price of our common stock to decline. If any significant number of our outstanding shares are sold, such sales could have a depressive effect on the market price of our stock.
Removed
Sales of substantial amounts of shares in the public market, or the perception that such sales could occur, could depress prevailing market prices for the shares.

Item 2. Properties

Properties — owned and leased real estate

0 edited+1 added−1 removed2 unchanged
Removed
Other operations are located at Sindalsvej 38-40, Risskov, Denmark, where we lease approximately 19,500 square feet, of which approximately 2,200 square feet is used for office space and 17,300 square feet is used for production. The lease will expire on August 31, 2024.
Added
In addition, in 2024, we entered into a new lease agreement for additional production and office space at Benshøj Industrivej 1, 9500 Hobro, Denmark. This facility consists of approximately 18,800 square feet, including 13,500 square feet of production space and 5,300 square feet of office space. The lease will expire on April 30, 2034.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. 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. Please reference Note 9 - Agreements, Commitments and Contingencies for details on such litigation.
Biggest changeItem 3. 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. Please reference Note 8 - Agreements, Commitments and Contingencies for details on such litigation.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSince the beginning of our fiscal year ended December 31, 2023, we have not sold any equity securities that were not registered under the Securities Act of 1933 that were not previously reported in a quarterly report on Form 10-Q or in a current report on Form 8-K.
Biggest changeSince the beginning of our fiscal year ended December 31, 2024, we have not sold any equity securities that were not registered under the Securities Act of 1933 and that were not previously reported in a quarterly report on Form 10-Q or in a current report on Form 8-K.
Since the beginning of our fiscal year ended December 31, 2023, we have not repurchased any of our equity securities. 22 Table of Contents
Since the beginning of our fiscal year ended December 31, 2024, we have not repurchased any of our equity securities. 22 Table of Contents
As of December 31, 2023, there were approximately 33 stockholders of record of our common stock as reported by our transfer agent, one of which is Cede & Co., a nominee for Depository Trust Company (“DTC”).
As of December 31, 2024, there were approximately 42 stockholders of record of our common stock as reported by our transfer agent, one of which is Cede & Co., a nominee for Depository Trust Company (“DTC”).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

34 edited+41 added−51 removed25 unchanged
Biggest changeFor the Year Ending December 31, Period to Period Change 2023 As a % of Sales 2022 As a % of Sales $ Percent % Revenue 18,001,652 100.0 % 15,982,438 100.0 % 2,019,214 12.6 % Cost of Goods Sold 15,226,176 84.6 15,415,294 96.5 (189,118 ) (1.2 ) Gross Profit 2,775,476 15.4 567,144 3.5 2,208,332 389.4 Operating Expenses Selling expenses 4,298,905 23.9 3,669,887 23.0 629,018 17.1 General and administrative expenses 4,856,779 27.0 5,701,955 35.7 (845,176 ) (14.8 ) Research and development expenses 1,418,842 7.9 1,835,890 11.5 (417,048 ) (22.7 ) Restructuring costs - - 1,893,166 11.8 (1,893,166 ) (100.0 ) Total Operating Expenses 10,574,526 58.7 13,100,898 82.0 (2,526,372 ) (19.3 ) Loss from Operations (7,799,050 ) (43.3 ) (12,533,754 ) (78.4 ) 4,734,704 (37.8 ) Other Income (Expense) Interest and other income 366,365 2.0 384,058 2.4 (17,693 ) (4.6 ) Interest expense (151,670 ) (0.8 ) (419,942 ) (2.6 ) 268,272 (63.9 ) Amortization discount on Convertible Note (400,903 ) (2.2 ) (2,389,128 ) (14.9 ) 1,988,225 (83.2 ) Gain (Loss) on currency transactions (359,960 ) (2.0 ) 404,162 2.5 (764,121 ) (189.1 ) Gain (Loss) on lease termination - - 147,452 0.9 (147,452 ) (100.0 ) Gain (Loss) on assets held for sale (439,388 ) (2.4 ) - - (439,388 ) - Gain (Loss) on sale of property and equipment 7,254 0.0 635 0.0 6,619 1,042.4 Total Other Income (Expense) (978,302 ) (5.4 ) (1,872,763 ) (11.7 ) 894,462 (47.8 ) Loss Before Income Taxes (8,777,352 ) (48.8 ) (14,406,517 ) (90.1 ) 5,629,166 (39.1 ) Income Taxes Provision (Benefit) (206,207 ) (1.1 ) (237,410 ) (1.5 ) 31,203 (13.1 ) Net Loss (8,571,145 ) (47.6 ) (14,169,107 ) (88.7 ) 5,597,963 (39.5 ) Revenues Revenue for the year ended December 31, 2023 was $18,001,652 compared to $15,982,438 for the same period in 2022, representing an increase of $2,019,214, or 13%.
Biggest changeYear Ended December 31, Period to Period Change As a % As a % Percent 2024 of Sales 2023 of Sales Variance % Revenue $ 14,604,618 100.0 % $ 18,001,652 100.0 % $ (3,397,034 ) (18.9 )% Cost of goods sold 14,353,713 98.3 $ 15,226,176 84.6 (872,463 ) (5.7 ) Gross Profit 250,905 1.7 2,775,476 15.4 (2,524,571 ) (91.0 ) Operating Expenses Selling expenses 2,725,239 18.7 4,298,905 23.9 (1,573,666 ) (36.6 ) General and administrative expenses 5,661,455 38.8 4,856,779 27.0 804,676 16.6 Research and development expenses 1,352,060 9.3 1,418,842 7.9 (66,782 ) (4.7 ) Total Operating Expenses 9,738,754 66.7 10,574,526 58.7 (835,772 ) (7.9 ) Loss from Operation (9,487,849 ) (65.0 ) (7,799,050 ) (43.3 ) (1,688,799 ) 21.7 Other Income (Expense) Interest and other income 178,834 1.2 366,365 2.0 (187,531 ) (51.2 ) Interest expense (167,556 ) (1.1 ) (151,670 ) (0.8 ) (15,886 ) 10.5 Amortization of debt discount (615,552 ) (4.2 ) (400,903 ) (2.2 ) (214,649 ) 53.5 Gain (loss) on foreign currency transactions 164,310 1.1 (359,960 ) (2.0 ) 524,270 (145.6 ) Gain (loss) on disposal of property and equipment (456,282 ) (3.1 ) 7,254 0.0 (463,536 ) (6,390.1 ) Loss on assets held for sale - - (439,388 ) (2.4 ) 439,388 (100.0 ) Total Other Expense (896,246 ) (6.1 ) (978,302 ) (5.4 ) 82,056 (8.4 ) Loss Before Income Taxes (10,384,095 ) (71.1 ) (8,777,352 ) (48.8 ) (1,606,743 ) 18.3 Income Tax Benefit (38,837 ) (0.3 ) (206,207 ) (1.1 ) 167,370 (81.2 ) Net Loss $ (10,345,258 ) (70.8 )% $ (8,571,145 ) (47.6 )% $ (1,774,113 ) 20.7 % Revenues Revenue for the year ended December 31, 2024, was $14,604,618 compared to $18,001,652 for the same period in 2023, representing a decrease of $3,397,034, or 18.9%.
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 cost of sales; ● The assessment of collectability of accounts receivable, which impacts operating expenses when and if we record bad debt or adjust the allowance for doubtful accounts; ● The assessment of recoverability of long-lived assets, which impacts gross margin or operating expenses when and if 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 cost of sales; and ● The recognition and measurement of loss contingencies, which impact cost of sales or operating expenses when we recognize a loss contingency, revise the estimate for a loss contingency, or record an asset impairment.
Our most critical accounting estimates include: 26 Table of Contents ● The assessment of revenue recognition, which impacts revenue and cost of sales; ● The assessment of allowance for product warranties, which impacts cost of sales; ● The assessment of collectability of accounts receivable, which impacts operating expenses when and if we record bad debt or adjust the allowance for doubtful accounts; ● The assessment of recoverability of long-lived assets, which impacts gross margin or operating expenses when and if 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 cost of sales; and ● The recognition and measurement of loss contingencies, which impact cost of sales or operating expenses when we recognize a loss contingency, revise the estimate for a loss contingency, or record an asset impairment.
In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 326, “Financial Instruments – Credit Losses,” the Company estimates expected credit losses based on historical bad debt experience, the aging of accounts receivable, the current creditworthiness of our customers, prevailing economic conditions, and reasonable and supportable forward-looking information.
In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 326, “ Financial Instruments – Credit Losses ,” the Company estimates expected credit losses based on historical bad debt experience, the aging of accounts receivable, the current creditworthiness of customers, prevailing economic conditions, and reasonable and supportable forward-looking information.
Management has analyzed the impact of the current economic climate on its financial statements as of December 31, 2023, and has determined that the changes to its significant judgements and estimates did not have a material impact with respect to goodwill, intangible assets, or long-lived assets.
Management has analyzed the impact of the current economic climate on its financial statements as of December 31, 2024, and has determined that the changes to its significant judgements and estimates did not have a material impact with respect to goodwill, intangible assets, or long-lived assets.
Part of the invoicing to the customer is also attributed to the commissioning, and at transfer of the control of the system (i.e., the first performance obligation), this portion is recognized as Contract Liabilities. 30 Table of Contents Aftermarket sales represent parts, extended warranties, and maintenance services.
Part of the invoicing to the customer is also attributed to the commissioning, and at transfer of the control of the system (i.e., the first performance obligation), this portion is recognized as contract liabilities. 29 Table of Contents Aftermarket sales represent parts, extended warranties, and maintenance services.
In addition, as we make manufacturing process changes and other factory planning decisions, we must make subjective judgments regarding the remaining useful lives of assets, primarily process-specific filter manufacturing tools and building improvements.
In addition, as the Company makes manufacturing process changes and other factory planning decisions, it must make subjective judgments regarding the remaining useful lives of assets, primarily process-specific filter manufacturing tools and building improvements.
We measure the recoverability of assets that will continue to be used in our operations by comparing the carrying value of the asset grouping to our estimate of the related total future undiscounted net cash flows. If an asset grouping’s carrying value is not recoverable through the related undiscounted cash flows, the asset grouping is considered to be impaired.
The Company measures the recoverability of assets that will continue to be used in its operations by comparing the carrying value of the asset grouping to its estimate of the related total future undiscounted net cash flows. If an asset grouping’s carrying value is not recoverable through the related undiscounted cash flows, the asset grouping is considered to be impaired.
Due to our asset usage model and the interchangeable nature of our ceramic filter manufacturing capacity, we must make subjective judgments in determining the independent cash flows that can be related to specific asset groupings.
Due to the Company’s asset usage model and the interchangeable nature of its ceramic filter manufacturing capacity, the Company must make subjective judgments in determining the independent cash flows that can be related to specific asset groupings.
Long-Lived Assets We assess the impairment of long-lived assets when events or changes in circumstances indicate that the carrying value of the assets or the asset grouping may not be recoverable.
Long-Lived Assets The Company assesses the impairment of long-lived assets when events or changes in circumstances indicate that the carrying value of the assets or the asset grouping may not be recoverable.
Factors that we consider in deciding when to perform an impairment review include significant under-performance of a business or product line in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in our use of the assets.
Factors that the Company considers in deciding when to perform an impairment review include significant under-performance of a business or product line in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in its use of the assets.
If we determine that the useful lives of assets are shorter than we had originally estimated, we accelerate the rate of depreciation over the assets’ new, shorter useful lives.
If the Company determines that the useful lives of assets are shorter than it had originally estimated, the Company accelerates the rate of depreciation over the assets’ new, shorter useful lives.
The cash used by operating activities for the year ended December 31, 2023, consists mainly of the net loss for the year of $(8,571,145) adjusted by depreciation and other non-cash items of $4,544,181.
The cash used by operating activities for the year ended December 31, 2024, consists mainly of the net loss for the year of $(10,345,258) adjusted by depreciation and other non-cash items of $4,432,671.
The following is a summary of our non-cash compensation: 2023 2022 Compensation for vesting of restricted stock awards issued to the Board of Directors $ 203,708 $ 167,750 Compensation for vesting of restricted stock awards issued to management 424,196 766,673 Total Non-Cash Compensation $ 627,904 $ 934,423 Research and development expense for the year ended December 31, 2023, was $1,418,842 compared to $1,835,890 for the same period in 2022, representing a decrease of $417,048, or 23%.
The following is a summary of our non-cash compensation: 2024 2023 Compensation for vesting of restricted stock awards issued to the Board of Directors $ 202,125 $ 203,708 Compensation for vesting of restricted stock awards issued to management 462,309 424,196 Total Non-Cash Compensation $ 664,434 $ 627,904 Research and development expense for the year ended December 31, 2024, was $1,352,060 compared to $1,418,842 for the same period in 2023, representing a decrease of $66,782, or 4.7%.
We discuss these policies further below as well as the estimates and judgments involved. 28 Table of Contents Accounts Receivable / Long-Term Receivable / Allowance for Doubtful Accounts / Bad Debt Accounts receivable consist of trade receivables arising from credit sales to customers in the normal course of business.
We discuss these policies further below as well as the estimates and judgments involved. Accounts Receivable and Allowance for Current Expected Credit Losses Accounts receivable consist of trade receivables arising from credit sales to customers in the normal course of business. These receivables are recorded at the time of sale, net of an allowance for current expected credit losses.
Net cash used in investing activities was $2,886,036 for the year ended December 31, 2023, as compared to $1,689,986 for the year ended December 31, 2022, representing an increase of $1,196,050.
Net cash used in investing activities was $424,036 for the year ended December 31, 2024, as compared to $2,886,036 for the year ended December 31, 2023, representing a decrease of $2,462,000.
The Company sells products throughout the world; sales by geographical region are as follows: % Distribution For the Year Ended December 31 2023 2022 2023 2022 Americas 12 % 7 % $ 2,125,460 $ 1,073,433 Asia-Pacific 14 % 21 % 2,506,215 3,406,420 Europe 65 % 59 % 11,820,674 9,379,337 Middle East & Africa 9 % 13 % 1,549,303 2,123,248 100 % 100 % $ 18,001,652 $ 15,982,438 The Company’s sales by product and service are as follows for the years ended December 31, 2023 and 2022: % Distribution For the Year Ended December 31 2023 2022 2023 2022 Water 42 % 33 % $ 7,705,080 $ 5,297,286 Ceramics 35 % 43 % 6,232,628 6,844,861 Plastics 21 % 22 % 3,736,529 3,528,606 Corporate 2 % 2 % 327,415 311,685 100 % 100 % $ 18,001,652 $ 15,982,438 For Water (systems and aftermarket), Ceramics (diesel particulate filters and membranes), and Plastics (components), revenue is recognized when performance obligations specified within the terms of a contract with the customer are satisfied, which occurs when control of the product transfers to the customer or when services are rendered by the Company.
Sales by geographical region for the years ended December 31, 2024, and 2023 were as follows: % Distribution For the Year Ended December 31 2024 2023 2024 2023 Americas 18 % 12 % $ 2,693,002 $ 2,125,460 Asia-Pacific 5 % 14 % 645,044 2,506,215 Europe 71 % 65 % 10,440,040 11,820,674 Middle East & Africa 6 % 9 % 826,532 1,549,303 Totals 100 % 100 % $ 14,604,618 $ 18,001,652 28 Table of Contents The Company’s sales by product line for the years ended December 31, 2024, and 2023 were as follows: % Distribution For the Year Ended December 31 2024 2023 2024 2023 Water 38 % 42 % $ 5,538,741 $ 7,705,080 Ceramics 39 % 35 % 5,634,973 6,232,628 Plastics 23 % 21 % 3,381,408 3,736,529 Corporate 0 % 2 % 49,496 327,415 Totals 100 % 100 % $ 14,604,618 $ 18,001,652 For Water (systems and aftermarket), Ceramics (diesel particulate filters and membranes), and Plastics (components), revenue is recognized when performance obligations specified within the terms of a contract with the customer are satisfied, which occurs when control of the product transfers to the customer or when services are rendered by the Company.
Contract assets are the Company’s rights to consideration in exchange for goods or services and is recognized when a performance obligation has been satisfied but has not yet been billed. Contract assets are transferred to receivables when the right to consideration is unconditional and billed per the terms of the contractual agreement.
Contracts Assets and Liabilities Contract assets are the Company’s rights to consideration in exchange for goods or services and are recognized when a performance obligation has been satisfied but has not yet been billed. When the Company issues invoices to the customer, and the billing is higher than the capitalized Contract assets, the net amount is transferred to Contract liabilities.
General and administrative expenses for the year ended December 31, 2023, were $4,856,779 compared to $5,701,955 for the same period in 2022, representing a decrease of $845,176, or 15%.
General and administrative expenses for the year ended December 31, 2024, were $5,661,455 compared to $4,856,779 for the same period in 2023, representing an increase of $804,676, or 16.6%.
The Company has been operating below capacity, and excess capacity charges have been recognized as cost of sales. Loss Contingencies We are subject to various legal and administrative proceedings along with asserted and potential claims, accruals related to product warranties, and potential asset impairments (loss contingencies) that arise in the ordinary course of business.
Warrant liabilities are recognized at fair value, with changes in fair value recognized in the consolidated statement of operations each period. Loss Contingencies We are subject to various legal and administrative proceedings along with asserted and potential claims, accruals related to product warranties, and potential asset impairments (loss contingencies) that arise in the ordinary course of business.
Cash used by operating activities for the year ended December 31, 2023, was $4,183,918 compared to cash used by operating activities of $12,039,020 for the year ended December 31, 2022, representing a decrease of $7,855,102.
Cash used by operating activities for the year ended December 31, 2024, was $7,534,072 compared to cash used by operating activities of $4,183,918 for the year ended December 31, 2023, representing an increase of $3,350,154.
Other income (expenses) Total Other income (expense) for the year ended December 31, 2023, was $(978,302) compared to $(1,872,763) for the comparable period in 2022, representing a decrease of $894,462, or 48%.
Other income (expense) Total Other expense for the year ended December 31, 2024, was $896,246 compared to $978,302 for the comparable period in 2023, representing decreased expense of $82,056, or 8.4%.
Cash provided by financing activities was $580,645 for the year ended December 31, 2023, as compared to $13,696,551 for the year ended December 31, 2022, representing a decrease of $13,115,906.
Cash provided by financing activities was $8,493,300 for the year ended December 31, 2024, as compared to $580,645 for the year ended December 31, 2023, representing an increase of $7,912,655.
The decrease was mainly driven by the equity raise recorded in May 2022, generating net proceeds of $24,418,612 from the issuance of Common Stock and prefunded warrants, coupled with proceeds of $6,000,000 from the issuance of the new Senior Promissory Notes, and partly offset by the full repayment of the Convertible Note issued in April 2021 of $16,800,000. 2023 2022 Net Cash Used in Operating Activities $ (4,183,918 ) $ (12,039,020 ) Net Cash Used in Investing Activities (2,886,036 ) (1,689,986 ) Net Cash Provided by Financing Activities 580,645 13,696,551 Net Change in Cash and Cash Equivalents (6,175,190 ) (892,009 ) Cash and Cash Equivalents at End of Period $ 10,422,181 $ 16,597,371 Off-Balance Sheet Arrangements As of December 31, 2023, we had no off-balance sheet arrangements.
The increase was mainly driven by the equity raise, generating net proceeds of $9,922,063 from the issuance of common stock and prefunded warrants, partly offset by the repayment of lease agreements in connection with the sales of production equipment in Ballerup as mentioned above. 2024 2023 Net Cash Used in Operating Activities $ (7,534,072 ) $ (4,183,918 ) Net Cash Used in Investing Activities (424,036 ) (2,886,036 ) Net Cash Provided by Financing Activities 8,493,300 580,645 Net Change in Cash and Cash Equivalents 446,547 (6,175,190 ) Cash and Cash Equivalents at End of Period $ 10,868,728 $ 10,422,181 Off-Balance Sheet Arrangements As of December 31, 2024, we had no off-balance sheet arrangements.
By incorporating LiqTech's SiC liquid membrane technology with its long-standing systems design experience and capabilities, the Company offers solutions to the most difficult water pollution problems. 2023 Developments On February 15, 2023, the Company entered into a distribution agreement with Liquinex regarding the supply of silicon carbide ceramic membranes.
By incorporating LiqTech's SiC liquid membrane technology with its long-standing systems design experience and capabilities, the Company offers solutions to the most difficult water pollution problems. 2024 Developments On January 10, 2024, Simon Stadil tendered his resignation as Chief Financial Officer of the Company, effective as of April 10, 2024.
On November 13, 2023, the Company filed an amendment to its Articles of Incorporation to increase the number of authorized shares of the Company’s common stock from 12,500,000 shares to 50,000,000 shares, which was approved by the Company’s stockholders at the Company’s on November 9, 2023. 23 Table of Contents Results of Operations Results of Operations for the Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 The following table sets forth our revenues, expenses, and net income for the years ended December 31, 2023 and 2022 in U.S. dollars, except for percentages.
On November 7, 2024, the Company announced the establishment of a joint venture in China for the marine water treatment market. 23 Table of Contents Results of Operations Results of Operations for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 The following table sets forth our revenues, expenses, and net income for the years ended December 31, 2024, and 2023 in U.S. dollars, except for percentages.
Expenses Total operating expenses for the year ended December 31, 2023, were $10,574,526, representing a decrease of $2,526,372, or approximately 19%, compared to $13,100,898 for the same period in 2022. Adjusting for the reported restructuring costs of $1,893,166 incurred in 2022, total operating expenses decreased by $633,206, or 6%.
Operating Expenses Total operating expenses for the year ended December 31, 2024, were $9,738,754, representing a decrease of $835,772, or 7.9%, compared to $10,574,526 for the same period in 2023. Selling expenses for the year ended December 31, 2024, were $2,725,239, compared to $4,298,905 for the same period in 2023, representing a decrease of $1,573,666, or 36.6%.
Income taxes provision The income tax benefit for the year ended December 31, 2023, was $206,207 compared to a benefit of $237,410 for the comparable period in 2022, representing a decrease of $31,203, or 13%, mainly driven by a decrease in tax credits associated with research and development activities in Denmark.
This decrease in other expenses was partially offset by a non-cash loss related to the disposal of property and equipment, decreased interest income, and higher debt discount amortization costs due to the extension of the maturity date for the senior promissory notes, with additional warrants issued as consideration for the extension. 25 Table of Contents Income taxes provision The income tax benefit for the year ended December 31, 2024, was $38,837 compared to a benefit of $206,207 for the comparable period in 2023, representing a decrease of $167,370, or 81.2%, mainly driven by a decrease in tax credits associated with research and development activities in Denmark.
The roll-forward of Contract assets / liabilities for the periods ended December 31, 2023 and December 31, 2022 is as follows: December 31, 2023 December 31, 2022 Cost incurred $ 3,225,728 $ 3,860,179 Unbilled project deliveries 582,557 950,105 VAT 329,980 229,006 Other receivables 92,619 45,814 Prepayments (1,688,427 ) (3,363,039 ) Deferred Revenue (33,360 ) (118,327 ) $ 2,509,097 $ 1,603,738 Distributed as follows: Contract assets $ 2,891,744 $ 2,253,295 Contract liabilities (382,647 ) (649,557 ) $ 2,509,097 $ 1,603,738 Income Taxes We must make estimates and judgments in determining the provision for income taxes for financial statement purposes.
The roll-forward of contract assets and contract liabilities for the years ended December 31, 2024, and 2023 were as follows: December 31, December 31, 2024 2023 Cost incurred $ 2,512,901 $ 3,225,728 Unbilled project deliveries 51,442 582,557 VAT 93,961 329,980 Other receivables 20,972 92,619 Prepayments (1,121,897 ) (1,688,427 ) Deferred Revenue - (33,360 ) $ 1,557,379 $ 2,509,097 Distributed as follows: Contract assets $ 1,666,698 $ 2,891,744 Contract liabilities (109,319 ) (382,647 ) $ 1,557,379 $ 2,509,097 30 Table of Contents Income Taxes Income taxes are accounted for under the asset and liability method in accordance with ASC 740, “ Income Taxes .” Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
If we do not have sufficient funds to continue operations, we could be required to seek bankruptcy protection or other alternatives that could result in our stockholders losing some or all of their investment. 27 Table of Contents Cash Flows Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Cash used by operating activities is net income (losses) adjusted for certain non-cash items and changes in assets and liabilities.
Cash Flows Year Ended December 31, 2024, Compared to Year Ended December 31, 2023 Cash used by operating activities is net loss adjusted for certain non-cash items and changes in assets and liabilities.
Net Loss Net loss for the year ended December 31, 2023 was $(8,571,145) compared to $(14,169,107) for the comparable period in 2022, representing an improvement of $5,597,963, or approximately 40%.
Net Loss As a result of the cumulative effect of the factors described above, we had a net loss for the year ended December 31, 2024, of $10,345,258 compared to $8,571,145 for the comparable period in 2023, representing an increase in net loss of $1,774,113, or 20.7%.
When a tax position is determined uncertain, we recognize liabilities based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any.
The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not the position will be sustainable upon examination by the taxing authority, including resolution of any related appeals or litigation processes.
Gross Profit Gross profit for the year ended December 31, 2023, was $2,775,476, or 15.4%, compared to $567,144, or 3.5%, for the same period in 2022, representing an increase of $2,208,332, or approximately 389%.
The increase in sales of DPFs was primarily driven by the effective execution of strategies designed to capitalize on the increased demand for DPFs. 24 Table of Contents Gross Profit Gross profit for the year ended December 31, 2024, was $250,905 (or a gross profit margin of 1.7%), compared to $2,775,476 (or a gross profit margin of 15.4%) for the same period in 2023, representing a decrease of $2,524,571, or approximately 91.0%.
Further, changes in assets and liabilities included an increase of Inventory of $1,045,838, an increase of Accounts receivables of $765,956, and an increase in Contract assets/liabilities of $1,108,589, offset by a decrease in Deposits of $1,403,707 and an increase of Accounts payable of $990,538.
Further, changes in assets and liabilities included a decrease in accounts payable of $1,050,406, a decrease in accrued expenses of $908,607, and an increase in inventories of $587,806, partly offset by a decrease in contract assets of $1,102,791 and a decrease in accounts receivable of $620,116.
The roll-forward of the allowance for doubtful accounts for the year ended December 31, 2023 and December 31, 2022 was as follows: 2023 2022 Allowance for doubtful accounts at the beginning of the period $ 59,559 $ 409,076 Bad debt expense 82,066 (24,534 ) Receivables written off during the periods (10,298 ) (295,778 ) Effect of currency translation 3,585 (29,205 ) Allowance for doubtful accounts at the end of the period $ 134,912 $ 59,559 Goodwill and Definite-life intangible assets The Company accounts for Goodwill and definite-life intangible assets in accordance with the provisions of the Statement of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, Intangibles, Goodwill and Other.
The roll-forward of the allowance for current expected credit losses for the year ended December 31, 2024, and December 31, 2023 were as follows: December 31, December 31, 2024 2023 Allowance for current expected credit losses at the beginning of the period $ 134,912 $ 59,559 Bad debt expense 578,423 82,066 Receivables written off during the periods (49,577 ) (10,298 ) Effect of exchange rate changes (26,202 ) 3,585 Allowance for current expected credit losses at the end of the period $ 637,556 $ 134,912 Inventories Inventories directly purchased are carried at the lower of cost or net realizable value, as determined on the first-in, first-out (“FIFO”) method.
Removed
On April 25, 2023, the Company entered into a distribution agreement with Silicon Filter for Phosphoric Acid Purification Applications in China. On May 26, 2023, the Company completed a 1-for-8 reverse split of its issued and outstanding shares of Common Stock. On June 27, 2023, the Company announced that Chairman Mark Vernon would retire from the Board with immediate effect.
Added
On February 14, 2024, the Company entered into a distribution agreement with Razorback Direct for produced water treatment solutions in the U.S. On March 19, 2024, the Board of Directors of the Company appointed Phillip Massie Price as Interim Chief Financial Officer of the Company, effective April 1, 2024.
Removed
Alexander J. Buehler, a member of the Board of Directors, was appointed as the new Chairman of the Board. Further, the Company announced that Martin Kunz was appointed to the Company’s Board of Directors, also with immediate effect.
Added
On May 7, 2024, the Company entered into a distribution agreement with Dan Marine Group for marine water treatment solutions for the Chinese market. On May 14, 2024, the Company entered into a distribution agreement with Franman for marine water treatment solutions for the Greek Market.
Removed
On October 13, 2023, the Company and the Purchasers entered into an amendment to the Note and Warrant Purchase Agreement (the “ Amendment ”) and Allonge No. 1 to each of the Notes (collectively, the “ Allonges ”), each as more fully described in the current report on Form 8-K filed with the SEC on October 19, 2023, effective as of September 30, 2023, pursuant to which the Company and the Purchasers extended the maturity date of the Notes from June 20, 2024, to January 1, 2026 (the “ Extension ”).
Added
On July 25, 2024, the Company entered into a distribution agreement with Danbee Marine Co. for marine water treatment solutions for the South Korean market.
Removed
On October 30, 2023, the Company entered into a distribution agreement with Barr + Wray for Aqua Solution® swimming pool water filtration systems covering the Middle East. On November 2, 2023, the Company entered into a distribution agreement with Waterco for Aqua Solution® swimming pool water filtration systems covering Australia, New Zealand, Papua New Guinea, and the Pacific Islands.
Added
On September 27, 2024, the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company agreed to issue and sell an aggregate of 3,630,129 shares of Common Stock, 1,369,871 pre-funded warrants to purchase shares of Common Stock, and warrants to purchase up to an aggregate of 5,000,000 shares of Common Stock for gross proceeds of approximately $10 million.
Removed
The increase in revenue was underpinned by an uptick in system sales, general spare parts and related services, and plastic component sales, partly offset by a decline in sales of DPFs and ceramic membranes. ● For the years ended December 31, 2023 and 2022, sales of systems, spare parts and related services were $7,705,080 and $5,297,286, respectively, and accounted for 42% and 33% of our total sales. ● For the years ended December 31, 2023 and 2022, sales of DPFs and ceramic membranes were $6,232,628 and $6,844,861, respectively, and accounted for 35% and 43% of our total sales. ● For the years ended December 31, 2023 and 2022, plastics revenues were $3,736,529 and $3,528,606, respectively, and accounted for 21% and 22% of our total sales. 24 Table of Contents The increase in system sales and related services of $2,407,794, reflecting a year-on-year increase of 46%, is a result of the increased focus on aftermarket activities through the establishment of a new dedicated aftermarket organization that generated an uptick in spare parts and membrane housing orders, , coupled with continued traction within our system business related to pool and marine system deliveries as well as oil & gas and industrial system applications.
Added
The combined purchase price of one share of Common Stock and one accompanying warrant to purchase one share of Common Stock is $2.00. The combined purchase price of one pre-funded warrant and one accompanying warrant to purchase one share of Common Stock under the Purchase Agreement is $1.999.
Removed
The sales of DPFs and ceramic membranes experienced a year-on-year decline of 9% to $6,232,628, as the year ended December 31, 2022, benefitted from delivery of a large legacy DPF order. In addition, the Company has applied a deliberate focus to optimize the product mix in favor of higher-margin products, explaining the significant improvement in gross profit for the year.
Added
The Company agreed to issue the Common Stock, warrants, and pre-funded warrants in two tranches: (i) a first tranche comprised of 29,227 shares of Common Stock, 555,302 pre-funded warrants, and warrants to purchase an aggregate of 584,529 shares of Common Stock, which closed on September 27, 2024; and (ii) a second tranche comprised of 3,600,902 shares of Common Stock, 814,569 pre-funded warrants, and warrants to purchase an aggregate of 4,415,471 shares of Common Stock, which closed on November 12, 2024.
Removed
The sale of plastic products benefitted from a year-on-year increase of 6% to $3,736,529, underpinned by increased customer diversification, stable order intake, and the successful execution of a large new order for the construction industry. For the years ended December 31, 2023 and 2022, revenue from R&D projects was $327,415 and $311,685, respectively, reflecting an increase of 5%.
Added
The decline was mainly due to reduced deliveries of liquid filtration systems, plastics products, ceramic membranes, and aftermarket sales, partly offset by increased sales of DPFs. The decrease in deliveries of liquid filtration systems was mainly driven by reduced deliveries of pool filtration systems and marine scrubber systems.
Removed
The increase derives from a reduction in cost of goods sold due to an improved product mix and increased pricing discipline within the legacy ceramic DPF business, coupled with continued delivery of profitable system and aftermarket orders within the pool, oil & gas, and phosphoric acid businesses.
Added
The decline in aftermarket sales was primarily due to remediation work carried out in the same period of 2023, which did not recur in 2024. The reduction in sales of plastic products was largely due to a significant one-time sale recorded in 2023 that did not recur in the current period.
Removed
These efforts resulted in improved profitability, despite remediation costs related to legacy system deliveries and increased depreciation from recent investments in manufacturing equipment and facilities to improve kiln utilization and manufacturing throughput. Included in the gross profit for the year ended December 31, 2023 is depreciation of $2,575,824 compared to $1,822,402 for the same period in 2022.
Added
This decline in gross profit can be attributed to the decrease in revenue, resulting in lower overall activity levels and underutilization of our manufacturing capacity, as well as an unfavorable sales mix, which resulted in a lower proportion of high-margin products such as liquid filtration systems and ceramic membranes.
Removed
Selling expenses for the year ended December 31, 2023, were $4,298,905 compared to $3,669,887 for the same period in 2022, representing an increase of $629,018, or approximately 17%. The increase is explained by the onboarding of new sales and commercial leadership in 2023, partly offset by the ongoing focus on cost reduction and reduced bad debt expenses.
Added
Specifically, the deliveries of containerized oil and gas pilot systems to the Middle East and the U.S. contributed to lower-than-usual margins, reflecting a strategic decision aimed at demonstrating and validating the value proposition associated with our technology and seeding the market for future growth.
Removed
The decrease is attributed to reduced legal expenses, the absence of costs associated with the now-closed production facility in China, the CEO transition, and other transition costs related to management changes executed in 2022. 25 Table of Contents Included in general and administrative expenses is non-cash compensation expense of $627,904 and $934,423 for the years ended December 31, 2023 and December 31, 2022, respectively, representing a decrease of $306,519, or 33%, mainly explained by the stock grants awarded to management amid the 2022 CEO transition.
Added
This approach has proven successful, securing an order for a full-scale system scheduled for delivery in 2025. Additionally, a thorough inventory review led to necessary adjustments for obsolescence and slow-moving items.
Removed
The decrease was attributable to the centralization of R&D efforts to streamline R&D spend and allow for better resource allocation and prioritization of projects. Restructuring costs for the year ended December 31, 2023, were $0 compared to $1,893,166 for the same period in 2022.
Added
The decline in gross profit was partly offset by decreased depreciation as well as continued initiatives aimed at optimizing manufacturing processes, which have improved profitability within DPF and ceramic membrane production. Included in the gross profit was depreciation of $1,830,553 and $2,598,095 for the years ended December 31, 2024, and 2023, respectively.
Removed
Total Other income (expense) in 2023 reflects a loss on assets held for sale along with a reduced gain on currency transactions, with the increased levels in the prior period explained by non-recurring transactions related to the now-closed production facility in China, the receipt of COVID-19 grants, and the early repayment of the Convertible Note.
Added
This decline was primarily driven by a reduction in executive officers, along with reductions in bonus payouts, travel costs, marketing expenses, and expenditures related to external sales consultancy services. The decrease was partially offset by increased bad debt expenses.
Removed
The change was primarily attributable to the improved gross profit combined with the notable non-recurring items recorded in 2022, including restructuring costs, early repayment of the Convertible Note, closure of the production facility in China, and the CEO transition.
Added
The increase was primarily due to newly created positions in supply chain and project management, as well as higher legal expenses, insurance costs, and recruitment costs associated with the resignations of our CFO and VP of Sales. Additionally, one-time expenses were incurred for the relocation of our plastics production facility.
Removed
Liquidity and Capital Resources In relation to the delivery and installation of new machinery and equipment to facilitate revenue growth, the Company has secured approximately $1.4 million of new finance leases from financial institutions to further strengthen its liquidity.
Added
The increase was also partially attributable to the release of bonus provisions in the comparable period of 2023. Included in general and administrative expenses was non-cash compensation of $664,434 and $627,904 for the years ended December 31, 2024, and 2023, respectively.
Removed
On September 30, 2023, the Company proactively addressed the maturity of the $6 million senior promissory notes, extending the original maturity from June 2024 to January 2026 with terms and conditions that are generally aligned with the original agreement dated on June 22, 2022.
Added
The decrease was primarily due to a more focused R&D strategy with fewer ongoing projects and a reduced average number of employees engaged in external research and development activities, as the Company streamlined and centralized its R&D function. This was partially offset by one-time exit costs associated with a loss-making external development project.
Removed
Based on current projections, which are subject to significant uncertainties--including the duration and severity of global macroeconomic issues, 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. 26 Table of Contents Continued market uncertainty and reduced order intake caused by weakening global macroeconomic conditions, recession, or a resurgence of the COVID-19 pandemic, however, could unfavorably impact the Company’s ability to generate positive cash flow and thereby significantly reduce its profitability and liquidity position.
Added
The decrease was primarily attributable to a gain on currency transactions resulting from the EUR/DKK decline against the USD during the period and a loss on assets held for sale in the comparable period in 2023.
Removed
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.
Added
The investing activities include general purchases of production equipment to continue optimizing production throughput and the internal production of rental assets, partly offset by proceeds from the disposition of production equipment in our Ballerup facility.
Removed
In the future, the Company may experience reduced or changed demand for its products and services, especially if there is a global recession, structural shift in regulation, or the continuation of escalating interest rates that adversely impacts the investment decisions of our customers.
Added
Accounts receivable balances are written off when they are determined to be uncollectible.
Removed
The Company has historically satisfied its capital and liquidity requirements through offerings of equity instruments, cash from operations, and our available lines of credit. On December 31, 2023, we had cash of $10,422,181 and net working capital of $14,590,430, and on December 31, 2022, we had cash of $16,597,371 and net working capital of $21,581,287.
Added
For inventories produced, standard costs that approximate actual cost on the FIFO method are used to value inventories. Standard costs are reviewed at least annually by management or more often if circumstances indicate a change in cost has occurred. Work in process and finished goods include material, labor, and production overhead costs.
Removed
On December 31, 2023, our net working capital had decreased by $6,990,857 compared to December 31, 2022, mainly due to a reduction in cash and cash equivalents. In connection with certain orders, we provide the customer a working guarantee, a prepayment guarantee, or a security bond.
Added
The Company adjusts the value of its inventories to the extent management determines that the cost cannot be recovered due to obsolescence or other factors. Inventory valuation adjustments for excess and obsolete inventories are calculated based on current inventories levels, movement, expected useful lives, and estimated future demand for our products.
Removed
For that purpose, we maintain a guaranteed credit line of EUR 850,000 (approximately $940,000), which is secured by a cash deposit.
Added
Goodwill and Intangible assets The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business, with the residual purchase price recorded as goodwill. The determination of the value of the intangible assets acquired involves certain judgments and estimates.
Removed
Going Concern and Management ’ s Plans The financial statements included herein for the period ended December 31, 2023, were prepared under the assumption that we would continue our operations as a going concern, which contemplates the realization of assets and the satisfaction of liabilities during the normal course of business.
Added
These judgments can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital. Acquired intangible assets with determinable useful lives are amortized on a straight-line or accelerated basis over the estimated periods benefited, ranging from one to ten years.

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