LiqTech's Q2 Revenue Up, But Losses Persist Amid Rising Costs

TL;DR

**LiqTech's revenue growth is overshadowed by widening losses and declining gross profit, making it a risky bet for short-term gains.**

AI Summary

LiqTech International Inc. reported a net loss of $4,519,128 for the six months ended June 30, 2025, a slight increase from the $4,499,995 net loss in the prior-year period. Revenue increased to $9,575,030 for the six months ended June 30, 2025, up from $8,720,406 in the same period of 2024, representing a 9.8% increase. However, cost of goods sold also rose significantly to $8,965,396 from $7,732,093, leading to a decrease in gross profit from $988,313 to $609,634. Operating expenses decreased slightly by 4.2% to $4,904,832 from $5,120,852, primarily due to reduced research and development expenses, which fell from $662,104 to $472,679. The company's cash and restricted cash balance declined to $8,673,449 as of June 30, 2025, from $10,868,728 at December 31, 2024. A significant change in liabilities was the introduction of a $1,167,215 loan from a related party, net of current portion, in non-current liabilities. The company continues to face challenges with profitability despite revenue growth, as evidenced by the persistent net loss and declining gross profit margin.

Why It Matters

LiqTech's continued net losses and declining gross profit, despite revenue growth, signal persistent operational challenges for investors. The increase in accounts receivable by $1,307,919 suggests potential cash flow issues or extended payment terms, which could impact liquidity. The new $1,167,215 related party loan indicates a reliance on internal or connected financing, potentially raising questions about access to broader capital markets. In a competitive water treatment and filtration market, sustained losses could hinder LiqTech's ability to invest in R&D and maintain its technological edge, affecting its long-term viability and competitive standing against larger, more profitable rivals.

Risk Assessment

Risk Level: high — The company reported a net loss of $4,519,128 for the six months ended June 30, 2025, and a negative cash flow from operating activities of $2,907,836. Gross profit declined by 38.3% from $988,313 in 2024 to $609,634 in 2025, indicating significant pressure on profitability despite revenue growth.

Analyst Insight

Investors should exercise extreme caution and consider LiqTech a speculative investment. Monitor future filings closely for signs of improved gross margins and a clear path to profitability, as current trends suggest ongoing operational challenges and a reliance on external financing.

Financial Highlights

debt To Equity

1.28

revenue

$9,575,030

operating Margin

-51.2%

total Assets

$31,721,406

total Debt

$17,791,174

net Income

-$4,519,128

eps

-$0.47

gross Margin

6.4%

cash Position

$8,673,449

revenue Growth

+9.8%

Key Numbers

• $4,519,128 — Net Loss (Increased from $4,499,995 in prior year period for six months ended June 30, 2025)
• $9,575,030 — Revenue (Increased by 9.8% from $8,720,406 for six months ended June 30, 2025)
• $609,634 — Gross Profit (Decreased by 38.3% from $988,313 for six months ended June 30, 2025)
• $8,673,449 — Cash and Restricted Cash (Decreased from $10,868,728 at December 31, 2024)
• $2,907,836 — Net Cash Used in Operating Activities (Improved from $3,779,679 in prior year period for six months ended June 30, 2025)
• $1,167,215 — Loan from Related Party (New non-current liability as of June 30, 2025)
• $0.47 — Loss Per Common Share (For six months ended June 30, 2025, compared to $0.77 in prior year)
• 9,614,043 — Shares Outstanding (As of August 13, 2025)

Key Players & Entities

• LIQTECH INTERNATIONAL INC (company) — registrant
• $4,519,128 (dollar_amount) — net loss for six months ended June 30, 2025
• $9,575,030 (dollar_amount) — revenue for six months ended June 30, 2025
• $8,673,449 (dollar_amount) — cash and restricted cash as of June 30, 2025
• $1,167,215 (dollar_amount) — loan from related party, net of current portion
• Nasdaq Stock Market LLC (regulator) — exchange where common stock is registered
• SEC (regulator) — Securities and Exchange Commission
• FASB (regulator) — Financial Accounting Standards Board
• ASU 2023-05 (regulation) — Business Combinations — Joint Venture Formations
• ASU 2023-09 (regulation) — Income Taxes (Topic 740): Improvements to Income Tax Disclosures

FAQ

Risk Factors

• Declining Gross Profit Margin [high — financial]: Gross profit decreased by 38.3% to $609,634 for the six months ended June 30, 2025, from $988,313 in the prior year period. This decline, despite a 9.8% increase in revenue to $9,575,030, indicates rising costs of goods sold, which grew to $8,965,396 from $7,732,093, significantly pressuring profitability.
• Persistent Net Loss [high — financial]: The company reported a net loss of $4,519,128 for the six months ended June 30, 2025, a slight increase from the $4,499,995 loss in the same period of 2024. This continued unprofitability, even with revenue growth, highlights ongoing challenges in managing expenses and achieving sustainable earnings.
• Decreasing Cash Position [medium — financial]: Cash and restricted cash decreased to $8,673,449 as of June 30, 2025, from $10,868,728 at December 31, 2024. This reduction in liquidity could impact the company's ability to fund operations and invest in growth opportunities.
• Increased Debt from Related Party [medium — financial]: A new non-current liability of $1,167,215 for a loan from a related party was introduced as of June 30, 2025. While providing some funding, this increases the company's debt obligations and introduces potential complexities in related-party transactions.
• Reduced R&D Spending [medium — operational]: Research and development expenses decreased from $662,104 to $472,679 for the six months ended June 30, 2025. While this contributed to lower operating expenses, a significant reduction in R&D could hinder future innovation and long-term competitiveness.

Industry Context

LiqTech International Inc. operates in the water purification and filtration technology sector. This industry is characterized by increasing global demand for clean water solutions driven by environmental regulations, industrial needs, and population growth. Key trends include the development of advanced membrane technologies and sustainable filtration processes. The competitive landscape includes both large, established players and smaller, specialized firms.

Regulatory Implications

The company must comply with various environmental and safety regulations related to water treatment technologies. Changes in environmental standards or stricter enforcement could impact product development and market access. Financial reporting regulations require accurate disclosure of financial performance and risks, particularly concerning profitability and liquidity.

What Investors Should Do

1. Monitor cost of goods sold and gross margin trends closely.
2. Evaluate the sustainability of operations given the net loss and declining cash.
3. Assess the impact of the related-party loan.
4. Analyze the rationale behind reduced R&D spending.

Key Dates

• 2025-06-30: Six Months Ended Financial Reporting — Reported increased revenue but a decreased gross profit and a net loss, indicating ongoing profitability challenges despite top-line growth.
• 2025-06-30: Balance Sheet Date — Showed a decrease in cash and restricted cash and the introduction of a significant related-party loan.
• 2024-12-31: Prior Year End Balance Sheet — Provides a comparison point for the decrease in cash and the absence of the related-party loan.

Glossary

Accumulated deficit

The cumulative net losses of a company that have not been offset by net income. It represents the total losses incurred since the company's inception. (Indicates the company has historically incurred more losses than profits, standing at ($90,770,715) as of June 30, 2025.)

Contract assets

Represents the company's right to consideration in exchange for goods or services that have been transferred to a customer when that right is conditional on something other than the passage of time. (Decreased from $1,666,698 to $1,140,358, potentially reflecting changes in contract fulfillment or customer payments.)

Contract liabilities

Represents the company's obligation to transfer goods or services to a customer for which the company has received consideration from the customer. (Slightly decreased from $109,319 to $102,710, indicating a minor change in advance payments received from customers.)

Operating lease right-of-use assets

An asset representing the lessee's right to use an underlying asset for the lease term, recognized under ASC 842. (Increased from $4,450,822 to $4,690,909, suggesting the company has taken on more leased assets or the value of existing leases has increased.)

Noncontrolling Interest

The portion of equity in a subsidiary that is not attributable to the parent company. (A new noncontrolling interest of ($2,972) appeared as of June 30, 2025, suggesting a new subsidiary or a change in ownership structure.)

Year-Over-Year Comparison

Compared to the prior year period, LiqTech International Inc. saw revenue increase by 9.8% to $9,575,030 for the six months ended June 30, 2025. However, this growth was overshadowed by a significant decline in gross profit, down 38.3% to $609,634, and a slight increase in net loss to $4,519,128. The company's cash position has also weakened, decreasing from $10,868,728 to $8,673,449, while a new related-party loan of $1,167,215 has been added to non-current liabilities.

Key Financial Figures

• $0.001 — nge on which registered Common Stock, $0.001 par value LIQT The Nasdaq Stock Mar

Filing Documents

• liqt20250630_10q.htm (10-Q) — 1438KB
• ex_829117.htm (EX-31.1) — 9KB
• ex_829118.htm (EX-31.2) — 9KB
• ex_829119.htm (EX-32.1) — 5KB
• ex_829120.htm (EX-32.2) — 5KB
• 0001437749-25-026498.txt ( ) — 5914KB
• liqt-20250630.xsd (EX-101.SCH) — 48KB
• liqt-20250630_cal.xml (EX-101.CAL) — 49KB
• liqt-20250630_def.xml (EX-101.DEF) — 321KB
• liqt-20250630_lab.xml (EX-101.LAB) — 295KB
• liqt-20250630_pre.xml (EX-101.PRE) — 356KB
• liqt20250630_10q_htm.xml (XML) — 868KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 5

Financial Statements

Item 1. Financial Statements 5 Condensed Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024 5 Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and June 30, 2024 (unaudited) 7 Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2025 and June 30, 2024 (unaudited) 8 Condensed Consolidated Statements of Stockholders ' Equity for the Three and Six Months ended June 30, 2025 and June 30, 2024 (unaudited) 9 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and June 30, 2024 (unaudited) 11 Notes to Condensed Consolidated Financial Statements (unaudited) 13

Management's Discussion and Analysis of Financial Condition and Results of Operations

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

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 28

Controls and Procedures

Item 4. Controls and Procedures 29

OTHER INFORMATION

PART II. OTHER INFORMATION 30

Legal Proceedings

Item 1. Legal Proceedings 30

Risk Factors

Item 1A. Risk Factors 30

Unregistered Sales of Equity Securities and Use of Proceeds

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

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 30

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 30

Other Information

Item 5. Other Information 30

Exhibits

Item 6. Exhibits 31

SIGNATURES

SIGNATURES 33 2 Table of Contents

FORWARD-LOOKING STATEMENTS

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

Forward-looking statements include, but are not limited to, statements concerning: The potential adverse effects on our operations and financial performance from armed conflicts or geopolitical tensions; The potential adverse impact of global trade restrictions, tariffs and geopolitical tensions on our business and supply chain; The potential negative impact of prolonged energy market volatility and supply disruptions on our business The potential adverse impact of health crises, pandemics, and public health emergencies on our business, financial condition, and operations Our dependence on a few major customers and the ability to maintain future relationships with one or more of these major customers; Our ability to operate with financial stability and secure access to external financing and adequate liquidity; Our ability to secure and source supplies of raw materials and key components in due time and at competitive prices; Our ability to achieve revenue growth and penetrate new markets; Our dependence on the expertise and experience of our management team and the retention of key employees Our reliance and access to qualified personnel to expand our business; Our ability to adapt to potentially adverse changes in legislative, regulatory and political frameworks; Changes in interest rates or tightening of debt capital markets; Changes in emissions and environmental regulations, and potential further tightening of emission standards; 3 Table of Contents 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

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS LIQTECH INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 2025 2024 (Unaudited) Assets Current Assets: Cash and restricted cash $ 8,673,449 $ 10,868,728 Accounts receivable, net 4,095,991 2,396,056 Inventories, net 5,514,889 5,541,192 Contract assets 1,140,358 1,666,698 Prepaid expenses and other current assets 367,630 168,443 Total Current Assets 19,792,317 20,641,117 Non-Current Assets: Property and equipment, net 6,445,062 6,618,822 Operating lease right-of-use assets 4,690,909 4,450,822 Deposits and other assets 505,382 456,658 Intangible assets, net 40,110 39,367 Goodwill 247,626 220,693 Total Non-Current Assets 11,929,089 11,786,362 Total Assets $ 31,721,406 $ 32,427,479 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents LIQTECH INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) June 30, December 31, 2025 2024 (Unaudited) Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 1,532,813 $ 1,300,966 Accrued expenses 2,698,239 2,491,479 Current portion of finance lease liabilities 522,815 458,347 Current portion of operating lease liabilities 623,766 544,197 Contract liabilities 102,710 109,319 Total Current Liabilities 5,480,343 4,904,308 Non-Current Liabilities: Deferred tax liability 64,281 57,960 Finance lease liabilities, net of current portion 1,676,281 1,600,931 Operating lease liabilities, net of current portion 4,067,143 3,906,625 Loan from related party, net of current portion 1,167,215 - Notes payable, net 5,335,911 5,303,563 Total Non-Current Liabilities 12,310,831 10,869,079 Total Liabilities 17,791,174 15,773,387 Stockholders' Equity: Preferred stock; par value $ 0.001 , 2,500,000 shares authorized, 0 shares issued and outstanding at June 30, 2025 and December

View Full Filing

View this 10-Q filing on SEC EDGAR