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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2025

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

For the transition period from to

Commission File Number: 001-36210

LiqTech International, Inc.

(Exact name of registrant as specified in its charter)

Nevada		20-1431677
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Industriparken 22C, DK 2750 Ballerup, Denmark
(Address of principal executive offices)		(Zip Code)

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

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

Title of each class

Trading symbol(s)

Name of each exchange on which

registered

Common Stock, $0.001 par value

LIQT

The Nasdaq Stock Market LLC

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

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

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

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

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

As of November 14, 2025, there were 9,627,064 shares of Common Stock, $0.001 par value per share, outstanding.

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

Quarterly Report on Form 10-Q

For the Period Ended September 30, 2025

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION	5

Item 1. Financial Statements	5

Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024	5

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and September 30, 2024 (unaudited)	7

Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2025 and September 30, 2024 (unaudited)	8

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months ended September 30, 2025 and September 30, 2024 (unaudited)	9

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and September 30, 2024 (unaudited)	11

Notes to Condensed Consolidated Financial Statements (unaudited)	13

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3. Quantitative and Qualitative Disclosures About Market Risk	28

Item 4. Controls and Procedures	29

PART II. OTHER INFORMATION	30

Item 1. Legal Proceedings	30

Item 1A. Risk Factors	30

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3. Defaults Upon Senior Securities	30

Item 4. Mine Safety Disclosures	30

Item 5. Other Information	30

Item 6. Exhibits	31

SIGNATURES	33

FORWARD-LOOKING STATEMENTS

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

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

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

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

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

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

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

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

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

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

	●	Our ability to achieve revenue growth and penetrate new markets;

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

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

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

	●	Changes in interest rates or tightening of debt capital markets;

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

	●	Exposure to potentially adverse tax consequences;

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

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

	●	The potential monetary costs of defending our intellectual property rights;

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

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

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

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

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

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

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

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

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

	●	The potential negative impact of more stringent environmental laws and regulations as governmental agencies seek to improve minimum (combined or hyphenate) standards.

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

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	*September 30,*		*December 31,*
	*2025*		*2024*
		(Unaudited)
Assets

Current Assets:
Cash and restricted cash	$	7,354,024	$	10,868,728
Accounts receivable, net		3,775,455		2,396,056
Inventories, net		6,425,768		5,541,192
Contract assets		964,171		1,666,698
Prepaid expenses and other current assets		255,649		168,443

Total Current Assets		18,775,067		20,641,117

Non-Current Assets:
Property and equipment, net		6,172,371		6,618,822
Operating lease right-of-use assets		4,543,004		4,450,822
Deposits and other assets		519,360		456,658
Intangible assets, net		38,128		39,367
Goodwill		247,938		220,693

Total Non-Current Assets		11,520,801		11,786,362

Total Assets	$	30,295,868	$	32,427,479

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

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

	*September 30,*			*December 31,*
	*2025*			*2024*
		(Unaudited)
Liabilities and Stockholders’ Equity

Current Liabilities:
Accounts payable	$	1,964,959		$	1,300,966
Accrued expenses		2,185,853			2,491,479
Current portion of finance lease liabilities		513,746			458,347
Current portion of operating lease liabilities		633,385			544,197
Contract liabilities		70,241			109,319

Total Current Liabilities		5,368,184			4,904,308

Non-Current Liabilities:
Deferred tax liability		63,984			57,960
Finance lease liabilities, net of current portion		1,546,110			1,600,931
Operating lease liabilities, net of current portion		3,909,619			3,906,625
Loan from related party		1,208,588			-
Notes payable, net		5,422,525			5,303,563

Total Non-Current Liabilities		12,150,826			10,869,079

Total Liabilities		17,519,010			15,773,387


Stockholders' Equity:
Preferred stock; par value $0.001, 2,500,000 shares authorized, 0 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively		-			-
Common stock; par value $0.001, 50,000,000 shares authorized and 9,627,064 and 9,475,443 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively		9,627			9,475
Additional paid-in capital		110,171,256			109,274,166
Accumulated deficit		(92,202,628	)		(86,267,438	)
Accumulated other comprehensive loss		(5,170,641	)		(6,362,111	)

Total Stockholders' Equity		12,807,614			16,654,092

Noncontrolling Interest		(30,756	)		-

Total Equity		12,776,858			16,654,092

Total Liabilities and Equity	$	30,295,868		$	32,427,479

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

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	*For the Three Months Ended*						*For the Nine Months Ended*
	*September 30,*						*September 30,*
	*2025*			*2024*			*2025*			*2024*
Revenue	$	3,807,274		$	2,478,221		$	13,382,304		$	11,198,627
Cost of goods sold		3,059,396			2,687,754			12,024,792			10,419,847

Gross Profit (Loss)		747,878			(209,533	)		1,357,512			778,780

Operating Expenses:
Selling expenses		541,259			610,713			2,071,843			1,983,414
General and administrative expenses		1,270,195			1,491,366			4,171,764			4,577,413
Research and development expenses		269,426			278,361			742,105			940,465

Total Operating Expenses		2,080,880			2,380,440			6,985,712			7,501,292

Loss from Operations		(1,333,002	)		(2,589,973	)		(5,628,200	)		(6,722,512	)

Other Income (Expense):
Interest and other income		64,354			24,079			197,710			138,909
Interest expense		(63,391	)		(34,523	)		(175,140	)		(135,532	)
Amortization of debt discount		(86,614	)		(156,988	)		(338,962	)		(453,619	)
Gain (loss) on foreign currency transactions		(39,932	)		(89,086	)		29,644			250,912
Gain (loss) on disposal of property and equipment		(1,552	)		(4,096	)		(65,016	)		(457,329	)

Total Other Expense		(127,135	)		(260,614	)		(351,764	)		(656,659	)

Loss Before Income Taxes		(1,460,137	)		(2,850,587	)		(5,979,964	)		(7,379,171	)

Income tax benefit		(375	)		(10,061	)		(1,074	)		(38,650	)

Net Loss	$	(1,459,762	)	$	(2,840,526	)	$	(5,978,890	)	$	(7,340,521	)

Net Loss attributable to noncontrolling interest		(27,849	)		-			(43,700	)		-
Net Loss attributable to LiqTech International, Inc.		(1,431,913	)		(2,840,526	)		(5,935,190	)		(7,340,521	)

Loss Per Common Share – Basic and Diluted	$	(0.15	)	$	(0.49	)	$	(0.62	)	$	(1.26	)

Weighted-Average Common Shares Outstanding – Basic and Diluted		9,616,591			5,820,225			9,610,167			5,811,051

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

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE LOSS (UNAUDITED)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2025			2024			2025			2024

Net Loss		(1,459,762	)		(2,840,526	)		(5,978,890	)		(7,340,521	)

Loss on foreign currency translation adjustments		47,786			718,525			1,191,470			(38,246	)

Total Other Comprehensive Loss	$	(1,411,976	)	$	(2,122,001	)	$	(4,787,420	)	$	(7,378,767	)

Net loss attributable to non-controlling interests		27,849			-			43,700			-

Total Other Comprehensive Loss Attributable to LiqTech International, Inc.	$	(1,384,127	)	$	(2,122,001	)	$	(4,743,720	)	$	(7,378,767	)

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

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

													Accumulated						Non-
							*Additional*						*Other*			*Total*			*controlled*
	*Common Stock*						*Paid-in*			*Accumulated*			*Comprehensive*			*Stockholders’*			*Interest in*			*Total*
	*Shares*			*Amount*			*Capital*			*Deficit*			*Income (Loss)*			*Equity*			*Subsidiaries*			*Equity*
Balance at December 31, 2024		9,475,443			9,475			109,274,166			(86,267,438	)		(6,362,111	)		16,654,092			-			16,654,092

Common stock issued in settlement of RSUs		158,975			159			(159	)		-			-			-			-			-

Tax withholdings paid related to stock-based compensation		(28,394	)		(28	)		(53,065	)		-			-			(53,093	)		-			(53,093	)

Warrants issued in connection with Senior Promissory Notes		-			-			220,000			-			-			220,000			-			220,000

Stock-based compensation		-			-			241,245			-			-			241,245			-			241,245

Currency translation, net		-			-			-			-			348,346			348,346			-			348,346

Net loss		-			-			-			(2,351,392	)		-			(2,351,392	)		-			(2,351,392	)

Capital contribution from noncontrolling interest		-			-			-			-			-			-			13,788			13,788

Net loss attributable to noncontrolling interest		-			-			-			-			-			-			(6,950	)		(6,950	)

Balance at March 31, 2025		9,606,024			9,606			109,682,187			(88,618,830	)		(6,013,765	)		15,059,198			6,838			15,066,036

Common stock issued in settlement of RSUs		8,019			8			(8	)		-			-			-			-			-

Stock-based compensation		-			-			230,553			-			-			230,553			-			230,553

Currency translation, net		-			-			-			-			795,338			795,338			(909	)		794,429

Net loss		-			-			-			(2,151,885	)		-			(2,151,885	)		-			(2,151,885	)

Net loss attributable to noncontrolling interest		-			-			-			-			-			-			(8,901	)		(8,901	)

Balance at June 30, 2025		9,614,043			9,614			109,912,732			(90,770,715	)		(5,218,427	)		13,933,204			(2,972	)		13,930,232

Common stock issued in settlement of RSUs		13,021			13			(13	)		-			-			-						-

Stock-based compensation		-			-			258,537			-			-			258,537						258,537

Currency translation, net		-			-			-			-			47,786			47,786			65			47,851

Net loss		-			-			-			(1,431,913	)		-			(1,431,913	)					(1,431,913	)

Net loss attributable to noncontrolling interest		-			-			-			-			-			-			(27,849	)		(27,849	)

Balance at September 30, 2025		9,627,064			9,627			110,171,256			(92,202,628	)		(5,170,641	)		12,807,614			(30,756	)		12,776,858

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

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

													Accumulated						Non-
							*Additional*						*Other*			*Total*			*controlled*
	*Common Stock*						*Paid-in*			*Accumulated*			*Comprehensive*			*Stockholders’*			*Interest in*		*Total*
	*Shares*			*Amount*			*Capital*			*Deficit*			*Income (Loss)*			*Equity*			*Subsidiaries*		*Equity*
Balance at December 31, 2023		5,727,310			5,727			98,796,357			(75,922,180	)		(5,603,888	)		17,276,016			-		17,276,016

Common Stock issued in settlement of RSUs		110,028			110			(110	)		-			-			-			-		-

Tax withholdings paid related to stock-based compensation		(29,998	)		(30	)		30			-			-			-			-		-

Stock-based compensation		-			-			193,321			-			-			193,321			-		193,321

Currency translation, net		-			-			-			-			(543,580	)		(543,580	)		-		(543,580	)

Net loss		-			-			-			(2,388,295	)		-			(2,388,295	)		-		(2,388,295	)

Balance at March 31, 2024		5,807,340			5,807			98,989,598			(78,310,475	)		(6,147,468	)		14,537,462			-		14,537,462

Common Stock issued in settlement of RSUs		11,932			12			(12	)		-			-			-			-		-

Tax withholdings paid related to stock-based compensation		-			-			(104,940	)		-			-			(104,940	)		-		(104,940	)

Stock-based compensation		-			-			166,617			-			-			166,617			-		166,617

Currency translation, net		-			-			-			-			(213,191	)		(213,191	)		-		(213,191	)

Net loss		-			-			-			(2,111,700	)		-			(2,111,700	)		-		(2,111,700	)

Balance at June 30, 2024		5,819,272			5,819			99,051,263			(80,422,175	)		(6,360,659	)		12,274,248			-		12,274,248

Issuance of common shares, warrants and prefunded warrants in connection with a private offering		29,227			29			1,107,356			-			-			1,107,385			-		1,107,385

Stock-based compensation		-			-			161,853			-			-			161,853			-		161,853

Currency translation, net		-			-			-			-			718,525			718,525			-		718,525

Net loss		-			-			-			(2,840,526	)		-			(2,840,526	)		-		(2,840,526	)

Balance at September 30, 2024		5,848,499			5,848			100,320,472			(83,262,701	)		(5,642,134	)		11,421,485			-		11,421,485

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

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	*For the Nine Months Ended*
	*September 30,*
	*2025*			*2024*
Cash Flows from Operating Activities:
Net loss	$	(5,978,890	)	$	(7,340,521	)

Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization		1,316,217			1,621,898
Amortization of debt discount		338,962			453,619
Stock-based compensation		730,335			521,791
Amortization of right-of-use assets		434,762			439,963
Deferred taxes		(1,075	)		(38,650	)
(Gain) loss on disposal of property and equipment		65,016			457,329

Changes in assets and liabilities:
Accounts receivable		(1,010,624	)		867,035
Inventories		(190,640	)		(901,122	)
Contract assets		863,564			383,835
Prepaid expenses and other current assets		(129,992	)		(87,721	)
Accounts payable		486,819			(736,726	)
Accrued expenses		(416,828	)		(538,387	)
Operating lease liabilities		(434,762	)		(442,519	)
Contract liabilities		(49,985	)		(188,266	)

Net Cash used in Operating Activities		(3,977,121	)		(5,528,442	)

Cash Flows from Investing Activities:
Purchase of property and equipment		(228,928	)		(977,432	)
Proceeds from the disposal of property and equipment		55,789			948,665

Net Cash used in Investing Activities		(173,139	)		(28,767	)

Cash Flows from Financing Activities:
Repayments of finance lease liabilities		(381,755	)		(1,233,103	)
Proceeds from issuance of common stock and prefunded warrants		-			1,107,385
Proceeds from related party loan		1,149,085			-
Capital contribution from noncontrolling interest		19,694			-

Net Cash provided by Financing Activities		787,024			(125,718	)

Effect of exchange rate changes on cash, cash equivalents and restricted cash		(151,468	)		(203,988	)

Net Change in Cash, Cash Equivalents, and Restricted Cash		(3,514,704	)		(5,886,915	)

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period		10,868,728			10,422,181

Cash, Cash Equivalents, and Restricted Cash at End of Period	$	7,354,024		$	4,535,266

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

LIQTECH INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	*For the Nine Months Ended*
	*September 30,*
	*2025*		*2024*
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	132,997	$	131,380
Cash paid for income taxes		-		-

Non-Cash Investing and Financing Activities
Financed purchases of property and equipment	$	149,407	$	83,825

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

LIQTECH INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – BASIS OF PRESENTATION AND OTHER INFORMATION

The accompanying unaudited condensed consolidated financial statements of LiqTech International, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all the information and footnotes required by GAAP for complete financial statements. The December 31, 2024 consolidated balance sheet data were derived from audited financial statements but does not include all disclosures required by GAAP. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 28, 2025. The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, consisting solely of normal recurring adjustments, have been made. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

Recently Adopted Accounting Pronouncements

In August 2023, the FASB issued ASU 2023-05, “Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement,” which requires a newly-formed joint venture to apply a new basis of accounting to its contributed net assets, resulting in the joint venture initially measuring its contributed net assets at fair value on the formation date. ASU 2023-05 is effective for all joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted for joint ventures formed before the effective date. The adoption of ASU 2023-05 did not have a material impact on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

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

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

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

NOTE 2 – NONCONTROLLING INTEREST AND LOANS TO RELATED PARTIES

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

As part of the JV agreement, the Company has agreed to make our technology utilization available to the JV and to transfer the utilization rights necessary for operations in the marine water treatment market in China. In February 2025, the JV received R&D funding of RMB 8,000,000 (approximately USD 1.2 million) from the JV partner to support capability development and system construction. The funding is classified as a long-term loan in the financial statements and may be increased to up to RMB 10,000,000 within 12 months if certain technical and commercial milestones are achieved.

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

As of September 30, 2025, the noncontrolling interest in the JV amounted to $30,756 and reflects the third party’s share of the JV’s net assets and net loss for the period.

NOTE 3 – DISAGGREGATION OF REVENUES AND SEGMENT REPORTING

The Company operates in three reportable segments: Water, Ceramics, and Plastics.

The Company sells products throughout the world, and sales by geographical region are as follows for the three and nine months ended September 30, 2025 and 2024:

	For the Three Months					For the Nine Months
	Ended September 30,					Ended September 30,
	2025			2024		2025		2024
Americas	$	387,208		$	373,364	$	3,873,979	$	1,900,272
Asia-Pacific		478,073			127,030		988,941		562,526
Europe		2,995,961			1,973,219		8,450,491		7,910,059
Middle East & Africa		(53,968	)		4,607		68,893		825,769
Total revenue	$	3,807,274		$	2,478,221	$	13,382,304	$	11,198,627

The Company’s sales by segment are as follows for the three and nine months ended September 30, 2025 and 2024:

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
Revenues	2025		2024		2025		2024
Water	$	1,975,848	$	687,684	$	7,112,266	$	4,106,975
Ceramics		812,246		1,077,630		3,065,504		4,549,104
Plastics		1,019,180		663,198		3,204,534		2,492,839
Corporate		-		49,709		-		49,709
Total revenues	$	3,807,274	$	2,478,221	$	13,382,304	$	11,198,627

The Company’s income and total assets by segment are as follows:

	*For the Three Months*						*For the Nine Months*
	*Ended September 30,*						*Ended September 30,*
Net loss	*2025*			*2024*			*2025*			*2024*
Water	$	(317,045	)	$	(627,456	)	$	(578,351	)	$	(1,316,195	)
Ceramics		(626,604	)		(735,131	)		(2,420,758	)		(2,053,964	)
Plastics		(49,126	)		(510,423	)		(204,295	)		(1,024,605	)
Corporate		(466,988	)		(967,516	)		(2,775,487	)		(2,945,757	)
Total net loss		(1,459,762	)		(2,840,526	)		(5,978,890	)		(7,340,521	)

	*As of*
	*September 30,*		*December 31,*
Total assets	*2025*		*2024*
Water	$	8,839,565	$	8,235,726
Ceramics		10,357,076		10,679,025
Plastics		2,503,101		1,670,644
Corporate		8,596,127		11,842,084
Total assets	$	30,295,868	$	32,427,479

NOTE 4 – ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following on September 30, 2025, and December 31, 2024:

	*September 30,*			*December 31,*
	*2025*			*2024*
Trade accounts receivable	$	3,984,621		$	3,033,612
Allowance for current expected credit losses		(209,166	)		(637,556	)
Total accounts receivable, net	$	3,775,455		$	2,396,056

The roll-forward of the allowance for doubtful accounts for the periods ended September 30, 2025 and December 31, 2024 is as follows:

	*September 30,*			*December 31,*
	*2025*			*2024*
Allowance for current expected credit losses at the beginning of the period	$	637,556		$	134,912
Bad debt expense		(24,627	)		578,423
Receivables written off during the period		(482,470	)		(49,577	)
Effect of exchange rate changes		78,707			(26,202	)
Allowance for current expected credit losses at the end of the period	$	209,166		$	637,556

NOTE 5 – INVENTORIES

Inventories consisted of the following on September 30, 2025, and December 31, 2024:

	*September 30,*			*December 31,*
	*2025*			*2024*
Raw materials	$	3,693,992		$	2,734,781
Work in process		2,039,029			2,435,280
Finished goods and filtration systems		2,071,250			1,580,255
Reserve for obsolescence		(1,378,503	)		(1,209,124	)
Total inventories, net	$	6,425,768		$	5,541,192

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

NOTE 6 – CONTRACT ASSETS AND CONTRACT LIABILITIES

The roll-forward of Contract assets and Contract liabilities for the periods ended September 30, 2025 and December 31, 2024 is as follows:

	*September 30,*			*December 31,*
	*2025*			*2024*
Cost incurred	$	1,909,264		$	2,512,901
Unbilled project deliveries		-			51,442
VAT		305,184			93,961
Other receivables		11,387			20,972
Prepayments		(1,331,905	)		(1,121,897	)
	$	893,930		$	1,557,379

Distributed as follows:
Contract assets	$	964,171		$	1,666,698
Contract liabilities		(70,241	)		(109,319	)
	$	893,930		$	1,557,379

NOTE 7 – LEASES

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

During the nine months ended September 30, 2025, cash paid for amounts included for the measurement of finance lease liabilities was $384,700, and the Company recorded finance lease expenses in other income (expenses) of $96,990.

During the nine months ended September 30, 2025, cash paid for amounts included for the measurement of operating lease liabilities was $666,817, and the Company recorded operating lease expense of $666,817.

Supplemental balance sheet information related to leases as of September 30, 2025 and December 31, 2024 was as follows:

	*September 30,*			*December 31,*
	*2025*			*2024*
Operating leases:
Operating lease right-of-use assets	$	4,543,004		$	4,450,822

Operating lease liabilities – current	$	633,385		$	544,197
Operating lease liabilities – long-term	$	3,909,619			3,906,625
Total operating lease liabilities	$	4,543,004		$	4,450,822

Finance leases:
Property and equipment, at cost	$	4,586,897		$	4,082,864
Accumulated depreciation		(1,607,559	)		(1,157,025	)
Property and equipment, net	$	2,979,338		$	2,925,839

Finance lease liabilities – current	$	513,746		$	458,347
Finance lease liabilities – long-term		1,546,110			1,600,931
Total finance lease liabilities	$	2,059,856		$	2,059,278

Weighted average remaining lease term:
Operating leases		7.5			8.1
Finance leases		2.7			3.1

Weighted average discount rate:
Operating leases		6.8	%		6.8	%
Finance leases		5.3	%		5.5	%

Maturities of lease liabilities at September 30, 2025 were as follows:

	*Operating*			*Finance*
	*Leases*			*Leases*
2025	$	229,976		$	155,833
2026		919,908			615,982
2027		919,908			1,172,522
2028		786,503			124,915
2029		519,695			176,451
Thereafter		2,391,185			45,056
Total payment under lease agreements		5,767,175			2,290,759
Less imputed interest		(1,224,171	)		(230,903	)
Total lease liabilities	$	4,543,004		$	2,059,856

NOTE 8 – LONG-TERM DEBT

The components of notes payable are as follows:

	*September 30,*			*December 31,*
	*2025*			*2024*
Senior promissory notes	$	6,000,000		$	6,000,000
Less: unamortized debt discount		(577,475	)		(696,437	)
Total senior promissory notes payable, net	$	5,422,525		$	5,303,563

Current portion of senior promissory notes payable		-			-
Senior promissory notes payable, less current portion		5,422,525			5,303,563
Total senior promissory notes payable, net	$	5,422,525		$	5,303,563

For the nine months ended September 30, 2025, and 2024, the Company recognized interest expense of $0 and $0, respectively, and $338,962 and $453,619, respectively, on the Senior Promissory Notes related to the amortization of debt issuance costs.

NOTE 9 – AGREEMENTS AND COMMITMENTS

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

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

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

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

Changes in the Company’s current and long-term warranty obligations included in accrued expenses on the balance sheet, as of September 30, 2025 and December 31, 2024, were as follows:

	*September 30,*			*December 31,*
	*2025*			*2024*
Balance at January 1	$	621,031		$	629,100
Warranty costs charged to cost of goods sold		(85,958	)		100,726
Utilization charges against reserve		-			(72,736	)
Foreign currency effect		76,667			(36,059	)
Balance at the end of the period	$	611,740		$	621,031

NOTE 10 – STOCKHOLDERS’ EQUITY

Common Stock – The Company has 50,000,000 authorized shares of Common Stock, $0.001 par value. As of September 30, 2025 and December 31, 2024, there were 9,627,064 and 9,475,443 shares of Common Stock issued and outstanding, respectively.

Stock Issuances

During the nine months ended September 30, 2025, the Company has made the following issuances of Common Stock:

On January 1, 2025, the Company issued 30,703 shares of Common Stock to settle RSUs. The RSUs were valued at $81,886 for services provided by management in 2024. The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2024.

On January 3, 2025, the Company issued 52,350 shares of Common Stock to settle RSUs. The RSUs were valued at $183,750 for services provided by the Company's board of directors (the "Board of Directors") in 2024. The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2024.

On January 3, 2025, the Company issued 75,921 shares of Common Stock to settle RSUs. The RSUs were valued at $245,899 for services provided by management in 2024. The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2024. In connection with the issuance, 28,394 shares of Common Stock, with a total value of $53,097, were withheld from vesting to settle tax withholdings associated with stock-based compensation.

On April 30, 2025, the Company issued 8,019 shares of Common Stock to settle RSUs. The RSUs were valued at $11,868 for services provided by management.

On September 12, 2025, the Company issued 13,021 shares of Common Stock to settle RSUs. The RSUs were valued at $58,333 for services provided by management. In connection with the issuance, 13,021 shares of Common Stock, with a total value of $58,333, were withheld from vesting to settle tax withholdings associated with stock-based compensation

Warrants

On March 26, 2025, the Company entered into a Second Amendment to the Note and Warrant Purchase Agreement (the "Second Amendment") originally dated June 22, 2022, with the holders of the Company’s senior promissory notes. In connection with the Second Amendment, the parties executed Allonge No. 2 (the "Allonges") to each of the existing amended notes, resulting in an extension of the maturity date from January 1, 2026 to May 1, 2027.

Additionally, pursuant to the Allonges, beginning on January 1, 2026, the notes will bear interest at a rate of 10% per annum, payable semiannually. In the event of a default or if the notes are not repaid on or before the new maturity date, the interest rate increases to 13% per annum, with a monthly 1% step-up up to a cap of 16% per annum, payable monthly. Accrued interest (excluding default interest) may be paid in cash or in shares of common stock, at the Company’s election, subject to certain limitations.

As part of the transaction, the Company and the noteholders also agreed to amend and restate the related warrants, reducing the exercise price from $5.20 to $2.00 per share and extending the expiration date to December 31, 2029. The repricing resulted in an incremental change in warrant value of $220,000.

The following is a summary of the periodic changes in warrants outstanding for the nine months ended September 30, 2025, and 2024:

	*2025*		*2024*
Outstanding, December 31		11,391,225		5,021,354
Warrants issued in connection with public offering and private placement		-		1,139,831
Exercises and conversions		-		-
Outstanding, September 30		11,391,225		6,161,185

Stock-based Compensation

In 2013, the Company’s Board of Directors adopted a Share Incentive Plan (as amended, the “2013 Incentive Plan”). Under the terms and conditions of the 2013 Incentive Plan, the Board of Directors is empowered to grant stock awards, including RSUs, to officers, directors, and consultants of the Company. At September 30, 2025, 0 RSUs were granted and outstanding under the 2013 Incentive Plan.

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

In 2022, the Company’s Board of Directors adopted an Equity Incentive Plan (the “2022 Incentive Plan”). Under the terms and conditions of the 2022 Incentive Plan, the Board of Directors is empowered to grant stock awards, including RSUs, to officers and directors of the Company. At September 30, 2025, 609,385 RSUs were granted and outstanding under the 2022 Incentive Plan.

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

The Company recognized stock-based compensation expense related to RSU grants of $730,335 and $521,791 for the nine-month periods ended September 30, 2025, and 2024, respectively. On September 30, 2025, the Company had $895,456 of unrecognized compensation cost related to non-vested stock grants.

A summary of the status of the RSUs as of September 30, 2025 and changes during the period are presented below:

	*September 30, 2025*
				*Weighted*
				*Average*		*Aggregated*
	*Number of*			*Grant-Date*		*Intrinsic*
	*units*			*Fair value*		*Value*

Outstanding, December 31, 2024		357,903		$	3.25	$	-
Granted		478,890			1.97		-
Vested and settled with share issuance		(180,015	)		3.28		-
Forfeited		(47,393	)		2.79		-
Outstanding, September 30, 2025		609,385		$	2.27	$	-

NOTE 11 – LOSS PER SHARE

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

As of September 30, 2025, the Company had 609,385 RSUs, 5,299,879 prefunded warrants, and 6,091,346 warrants, all exercisable for shares of Common Stock.

As of September 30, 2024, the Company had 405,553 RSUs, 4,485,310 prefunded warrants, and 1,675,875 warrants, all exercisable for shares of Common Stock.

NOTE 12 – SIGNIFICANT CUSTOMERS AND CONCENTRATIONS

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

	*For the Three Months*						*For the Nine Months*
	*Ended September 30,*						*Ended September 30,*
	*2025*			*2024*			*2025*			*2024*
Customer A		13	%		*	%		*	%		*	%
Customer B		*	%		12	%		*	%		*	%
Customer C		*	%		*	%		15	%		*	%

* Zero or less than 10%

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

	*September 30,*			*December 31,*
	*2025*			*2024*
Customer C		24	%		*	%
Customer D		13	%		*	%
Customer E		11	%		*	%

* Zero or less than 10%

As of September 30, 2025, approximately 95% of the Company’s assets were located in Denmark, 4% were located in China, and 1% were located in the U.S. As of December 31, 2024, approximately 86% of the Company’s assets were located in Denmark, 0% were located in China, and 14% were located in the U.S.

NOTE 13 – SUBSEQUENT EVENTS

None.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this quarterly report. In addition, the following discussion should be read in conjunction with our annual report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 28, 2025 and the financial statements and notes thereto. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Overview

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

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

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

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 value creation regulatory tailwinds and sustainability implications. Essential imperatives associated with our strategy include the following:

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

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

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

Results of Operations

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

Comparison of the Three Months Ended September 30, 2025, and September 30, 2024

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

	Three Months Ended September 30,
													Period to Period Change
				As a %						As a %						Percent
	2025			of Sales			2024			of Sales			Variance			%
Revenue	$	3,807,274			100.0	%	$	2,478,221			100.0	%	$	1,329,053			53.6	%
Cost of goods sold		3,059,396			80.4			2,687,754			108.5			371,642			13.8
Gross Profit (Loss)		747,878			19.6			(209,533	)		(8.5	)		957,411			(456.9	)

Operating Expenses
Selling expenses		541,259			14.2			610,713			24.6			(69,454	)		(11.4	)
General and administrative expenses		1,270,195			33.4			1,491,366			60.2			(221,171	)		(14.8	)
Research and development expenses		269,426			7.1			278,361			11.2			(8,935	)		(3.2	)
Total Operating Expenses		2,080,880			54.7			2,380,440			96.1			(299,560	)		(12.6	)

Loss from Operation		(1,333,002	)		(35.0	)		(2,589,973	)		(104.5	)		1,256,971			(48.5	)

Other Income (Expense)
Interest and other income		64,354			1.7			24,079			1.0			40,275			167.3
Interest expense		(63,391	)		(1.7	)		(34,523	)		(1.4	)		(28,868	)		83.6
Amortization of debt discount		(86,614	)		(2.3	)		(156,988	)		(6.3	)		70,374			(44.8	)
Gain on currency transactions		(39,932	)		(1.0	)		(89,086	)		(3.6	)		49,154			(55.2	)
Loss on disposal of property and equipment		(1,552	)		(0.0	)		(4,096	)		(0.2	)		2,544			(62.1	)
Total Other Income (Expense)		(127,135	)		(3.3	)		(260,614	)		(10.5	)		133,479			(51.2	)

Loss Before Income Taxes		(1,460,137	)		(38.4	)		(2,850,587	)		(115.0	)		1,390,450			(48.8	)
Income tax benefit		(375	)		(0.0	)		(10,061	)		(0.4	)		9,686			(96.3	)

Net Loss	$	(1,459,762	)		(38.3	)%	$	(2,840,526	)		(114.6	)%	$	1,380,764			(48.6	)%
Net Loss attributable to Noncontrolling Interest		(27,849	)		(0.7	)		-			-			(27,849	)		-
Net Loss attributable to LiqTech International, Inc.		(1,431,913	)		(37.6	)		(2,840,526	)		(114.6	)		1,408,613			(49.6	)

Revenues

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

Gross Profit (Loss)

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

Expenses

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

Selling expenses for the three months ended September 30, 2025 were $541,259 compared to $610,713 for the same period in 2024, representing a decrease of $69,454, or 11.4%. The decrease in selling expenses is related to the release of a bad debt provision due to aging improvements as well as lower depreciatio,n partially offset by costs associated with the newly formed joint venture in China, Nantong JiTRI LiqTech Green Energy Technology Co., Ltd.(the "JV"). The primary focus of the JV is to develop and commercialize systems for the marine water treatment market in China.

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

Research and development expenses for the three months ended September 30, 2025 were $269,426 compared to $278,361 for the same period in 2024, representing a decrease of $8,935, or 3.2%. The decrease was primarily attributed to one-time exit costs of a loss-making external development project in the prior-year period and, a reduction in the average number of employees engaged in research and development activity as the Company streamlined and centralized the R&D function.

Other Income (Expenses)

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

Net Loss

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

Comparison of the Nine Months Ended September 30, 2025, and September 30, 2024

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

	Nine Months Ended September 30,
													Period to Period Change
				As a %						As a %						Percent
	2025			of Sales			2024			of Sales			Variance					%
Revenue	$	13,382,304			100.0	%	$	11,198,627			100.0	%	$	2,183,677			19.5	%
Cost of goods sold		12,024,792			89.9			10,419,847			93.0			1,604,945			15.4
Gross Profit (Loss)		1,357,512			10.1			778,780			7.0			578,732			74.3

Operating Expenses
Selling expenses		2,071,843			15.5			1,983,414			17.7			88,429			4.5
General and administrative expenses		4,171,764			31.2			4,577,413			40.9			(405,649	)		(8.9	)
Research and development expenses		742,105			5.5			940,465			8.4			(198,360	)		(21.1	)
Total Operating Expenses		6,985,712			52.2			7,501,292			67.0			(515,580	)		(6.9	)

Loss from Operation		(5,628,200	)		(42.1	)		(6,722,512	)		(60.0	)		1,094,312			(16.3	)

Other Income (Expense)
Interest and other income		197,710			1.5			138,909			1.2			58,801			42.3
Interest expense		(175,140	)		(1.3	)		(135,532	)		(1.2	)		(39,608	)		29.2
Amortization of debt discount		(338,962	)		(2.5	)		(453,619	)		(4.1	)		114,657			(25.3	)
Gain (loss) on foreign currency transactions		29,644			0.2			250,912			2.2			(221,268	)		(88.2	)
Gain (loss) on disposal of property and equipment		(65,016	)		(0.5	)		(457,329	)		(4.1	)		392,313			(85.8	)
Total Other Expense		(351,764	)		(2.6	)		(656,659	)		(5.9	)		304,895			(46.4	)

Loss Before Income Taxes		(5,979,964	)		(44.7	)		(7,379,171	)		(65.9	)		1,399,207			(19.0	)
Income Tax Benefit		(1,074	)		(0.0	)		(38,650	)		(0.3	)		37,576			(97.2	)

Net Loss	$	(5,978,890	)		(44.7	)%	$	(7,340,521	)		(65.5	)%	$	1,361,631			(18.5	)%
Net Loss attributable to Noncontrolling Interest		(43,700	)		(1.1	)		-			-			(43,700	)		-
Net Loss attributable to LiqTech International, Inc.		(5,935,190	)		(155.9	)		(7,340,521	)		(65.5	)		1,405,331			(19.1	)

Revenues

Revenue for the nine months ended September 30, 2025 was $13,382,304 compared to $11,198,627 for the same period in 2024, representing an increase of $2,183,677, or 19.5%. The favorable change was attributable to an increase in liquid filtration systems, specifically a full-scale PureFlow™ system delivery and pool filtration systems, increased sales of plastics products, and increased sales of ceramic membranes, partially offset by a decrease in deliveries of DPFs.

Gross Profit (Loss)

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

Expenses

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

Selling expenses for the nine months ended September 30, 2025 were $2,071,843 compared to $1,983,414 for the same period in 2024, representing an increase of $88,429, or 4.5%. The increase in selling expenses was mainly related to lower sales commissions in 2024, along with the cost associated with the JV. The primary focus of the JV is to develop and commercialize systems for the marine water treatment market in China. The increase was partially offset by decreased bad debt expense and lower depreciation.

General and administrative expenses for the nine months ended September 30, 2025 were $4,171,764 compared to $4,577,413 for the same period in 2024, representing a decrease of $405,649, or 8.9%. The decrease was mainly attributable to non-recurring costs in the comparable period related to recruitment expenses associated with the CFO transition along with savings on external consulting services during this period. Included in general and administrative expenses were non-cash compensation of $730,335 and $521,791 for the nine months ended September 30, 2025, and 2024, respectively.

Research and development expenses for the nine months ended September 30, 2025 were $742,105 compared to $940,465 for the same period in 2024, representing a decrease of $198,360, or 21.1%. The decrease was primarily attributed to one-time exit costs of a loss-making external development project in the prior-year period and a reduction in the average number of employees engaged in research and development activity as the Company streamlined and centralized the R&D function.

Other Income (Expenses)

Other expenses for the nine months ended September 30, 2025 were $351,764 compared to other expenses of $656,659 for the comparable period in 2024, representing a favorable change of $304,895, or 46.4%. The change was primarily attributable to significant losses on the disposal of property and equipment in the prior-year period, partially offset by a lower gain on currency transactions for the nine months ended September 30, 2025.

Net Loss

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

Liquidity and Capital Resources

The Company has historically financed operations through offerings of equity or debt instruments, internally generated cash from operations, and our available lines of credit. On September 30, 2025, we had cash of $7,354,024 and net working capital of $13,406,883, and on December 31, 2024, we had cash of $10,868,728 and net working capital of $15,736,809. On September 30, 2025, our net working capital had decreased by $2,329,926 compared to December 31, 2024, mainly as a result of a focused effort to improve working capital through improved inventory management.

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

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

Cash Flows

Nine months ended September 30, 2025 compared to nine months ended September 30, 2024

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

Cash flows used in investing activities were $173,139 for the nine months ended September 30, 2025 as compared to cash flows used in investing activities of $28,767 for the nine months ended September 30, 2024, representing an unfavorable change of $144,372. The investing activities include general purchases of production equipment to continue optimizing production throughput and the internal production of rental assets, partly offset by proceeds from the disposal of production equipment in our Ballerup facility.

Cash flows provided from financing activities were $787,024 for the nine months ended September 30, 2025 compared to cash flows used by financing activities of $125,718 for the nine months ended September 30, 2024, representing a favorable change of $912,742. The finance activities include proceeds from a long-term loan and capital contribution from the noncontrolling interest in the JV. Additionally, in the prior-year period, finance activities included the repayment of a lease agreement.

Off Balance Sheet Arrangements

As of September 30, 2025, we had no off-balance sheet arrangements. We are not aware of any material transactions that are not disclosed in our consolidated financial statements.

Significant Accounting Policies and Critical Accounting Estimates

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

●	The assessment of revenue recognition, which impacts revenue and cost of sales;
●	the assessment of allowance for product warranties, which impacts gross profit;
●	the assessment of collectability of accounts receivable, which impacts operating expenses if and when we record bad debt or adjust the allowance for doubtful accounts;
●	the assessment of recoverability of long-lived assets, which impacts gross profit or operating expenses if and when we record asset impairments or accelerate their depreciation;
●	the recognition and measurement of current and deferred income taxes (including the measurement of uncertain tax positions), which impact our provision for taxes;
●	the valuation of inventory, which impacts gross profit; and
●	the recognition and measurement of loss contingencies, which impact gross profit or operating expenses when we recognize a loss contingency, revise the estimate for a loss contingency, or record an asset impairment.

Recently Enacted Accounting Standards

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

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

Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures as of September 30, 2025 were not effective as of the period covered by this Quarterly Report due to material weaknesses in internal controls over financial reporting. For more information on material weaknesses identified by management, please refer to our Form 10-K filed on March 28, 2025 for the year ended December 31, 2024.

Changes in Internal Control over Financial Reporting

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

Management's Remediation Initiatives

In response to the identified material weaknesses, our management, with oversight from the Company’s Audit Committee, has been and will continue to dedicate necessary resources to enhance the Company’s internal control over financial reporting and remediate the identified material weaknesses. As an example of such remediation, in 2023 the Company hired additional employees into the finance department, and the Company implemented a new ERP system along with other IT programs to help reinforce its controls and processes, and these investments are an important step in the remediation of the material weaknesses. During 2022, the Company introduced an updated Delegation of Authority, with the overall purpose to provide clarity for all employees on the extent to which they can commit the Company and at the same time provide the Company with assurance that decisions about agreements are made by the appropriate functions and employees. Lastly, the Company has started the process of redesigning and ensuring documentation of all processes and procedures related to the financial reporting process to ensure the effective design and operation of process-level controls.

While management believes that the actions implemented and planned will improve the overall system of internal control over financial reporting and will remediate the identified material weaknesses, these material weaknesses cannot be considered fully remediated until the applicable relevant controls operate for a sufficient period of time.

Limitations on the Effectiveness of Internal Controls

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

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

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors discussed in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 28, 2025 except the following:

Changes in U.S. policy, including the imposition of or increases in tariffs, changes to existing trade agreements and any resulting changes in international trade relations, such as reciprocal tariffs or trade wars, particularly with regard to China and EU, may have a material adverse impact on our business, results of operations, or financial condition.

In April-May 2025, the global tariff landscape began to quickly change with the U.S. implementing new and/or increased tariffs on various foreign countries, either generally or with respect to certain products. Certain foreign countries, including China and EU, have, and may continue to, change their tariff policies in response to changes in the U.S. tariff policy. These recent tariffs and the subsequent retaliatory tariffs could increase the cost of goods for our products or reduce our ability to sell products globally, particularly in China and US, which may adversely affect our operating results and financial condition. So far, these new tariffs and trade policies have not had a significant impact on our business operations and financial results, primarily due to our prior efforts to accumulate and maintain inventories at favorable cost levels. However, there is no guarantee that we can avoid the impact of tariff and related economic effects in the future, and these trade measures and retaliations may directly impact our business by increasing trade-related costs or affecting the demand for our products globally. Any further unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand for our products and services, impacting the competitive position of our products. If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular, if the U.S. government takes retaliatory trade actions due to the recent trade tension, such changes could have an adverse effect on our business, financial condition and results of operations.

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

We did not sell any equity securities during the quarter ended September 30, 2025 in transactions that were not registered under the Securities Act other than as previously disclosed in our other filings with the SEC.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

During the quarter ended September 30, 2025, no director or Section 16 officer adopted, modified, or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408(a) of Regulation S-K).

ITEM 6. EXHIBITS

3.1	Articles of Incorporation, as amended as of November 13, 2023	Incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K as filed with the SEC on March 22, 2024 (File No. 001-36210)

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

10.1*	Amendment No. 1 to LiqTech International, Inc. 2022 Equity Incentive Plan, as approved by the Company’s stockholders on June 5, 2025	Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K as filed with the SEC on June 6, 2025 (File No. 001-36210)


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

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

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

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

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

101. CAL	Inline XBRL Taxonomy Extension Calculation Link base Document	Provided herewith

101. DEF	Inline XBRL Taxonomy Extension Definition Link base Document	Provided herewith

101. LAB	Inline XBRL Taxonomy Label Link base Document	Provided herewith

101. PRE	Inline XBRL Extension Presentation Link base Document	Provided herewith

101. SCH	Inline XBRL Taxonomy Extension Scheme Document	Provided herewith

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

*Denotes a management contract or compensatory plan or arrangement

SIGNATURES

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

	LiqTech International, Inc.

Dated: November 14, 2025	/s/ Fei Chen
	Fei Chen, Chief Executive Officer
	(Principal Executive Officer)


Dated: November 14, 2025	/s/ David Noerby Foss Kowalczyk
	David Noerby Foss Kowalczyk, Chief Financial and Operating Officer
	(Principal Financial, Accounting and Operating Officer)

LIQTECH INTERNATIONAL INC 10-Q