Table of Contents

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 six months period ended June 30, 2019

or

 

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

 

For the transition period from _______________________ to _______________________

 

Commission File Number:001-36210

 

LiqTech International, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada 

20-1431677 

(State or other jurisdiction of incorporation or organization)

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

  

  

Industriparken 22C, DK 2750 Ballerup, Denmark

 

  

(Address of principal executive offices)

 

(Zip Code)

 

 

 

Registrant’s telephone number, including area code:  +4544986000

 

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

 

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes ☐   No ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes ☐   No ☒

  

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 ☒

 

The number of shares outstanding of the registrant’s common stock, par value $0.001 per share, at August 14, 2019, was 20,547,668 shares. 

 

 

 

 

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

Quarterly Report on Form 10-Q

For the Period Ended June 30, 2019

 

TABLE OF CONTENTS

 

 

Page

PART I. FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements

4

 

 

Condensed Consolidated Balance Sheets as of June 30, 2019 (unaudited) and December 31, 2018

4

 

 

Condensed Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended June 30, 2019 and June 30, 2018 (unaudited)

6

   

Condensed Consolidated Statement of Stockholder’s Equity for the period Ended June 30, 2019 and June 30, 2018 (unaudited)

8

 

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and June 30, 2018 (unaudited)

9

 

 

Notes to Condensed Consolidated Financial Statements (unaudited)

11

 

 

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

22

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

28

 

 

Item 4. Controls and Procedures

29

 

 

PART II. OTHER INFORMATION

 

 

 

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

32

 

2

 

 

 

FORWARD-LOOKING STATEMENTS

 

Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” regarding the plans and objectives of management for future operations and market trends and expectations.  Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties, including but not limited to the risks described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018. 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 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.  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 report 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.

  

3

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PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

 

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   

As of

   

As of

 
   

June 30,

   

December 31,

 
   

2019

   

2018

 
   

(Unaudited)

         

Current Assets:

               

Cash

  $ 12,572,856     $ 3,776,111  

Cash, restricted

    783,499       -  

Accounts receivable, net

    8,460,159       1,308,122  

Other receivables

    3,303,504       1,098,796  

Deposits

    1,203,216       -  

Contract assets

    506,329       624,275  

Inventories, net

    4,713,656       4,432,055  

Prepaid expenses

    201,880       133,847  
                 

Total Current Assets

    31,745,099       11,373,206  
                 

Property and Equipment, net accumulated depreciation

    1,451,422       1,431,649  

Operating lease right-of-use asset

    1,925,645       -  
Total Property and Equipment and right of use assets     3,377,067       1,431,649  
                 

Other Assets:

               

Investments at cost

    5,680       5,714  

Other intangible assets

    -       748  

Deposits

    445,656       347,932  
                 

Total Other Assets

    451,336       354,394  
                 

Total Assets

  $ 35,573,502     $ 13,159,249  

  

(Continued)

 

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

 

4

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LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

Liabilities and Stockholders’ Equity

 

As of

   

As of

 
   

June 30,

   

December 31,

 
   

2019

   

2018

 
   

(Unaudited)

         

Current Liabilities:

               

Current maturities of finance lease obligations

  $ 5,201     $ 13,789  

Current maturities of operating lease liabilities

    603,152       -  

Accounts payable

    4,717,535       2,122,479  

Accrued expenses

    3,008,933       1,868,229  

Contract liabilities

    1,466,645       516,335  

Deferred revenue / customers deposits

    571,777       98,781  
                 

Total Current Liabilities

    10,373,243       4,619,613  
                 

Operating lease liabilities, net of current maturities

    1,352,749       -  
                 

Total Long-term Liabilities

    1,352,749       -  
                 

Total Liabilities

    11,725,992       4,619,613  
                 

Commitment and Contingencies

    -       -  
                 

Stockholders' Equity:

               

Preferred stock; par value $0.001, 2,500,000 shares authorized; no shares issued or outstanding at June 30, 2019 and December 31, 2018 respectively

    -       -  

Common stock; par value $0,001, 25,000,000 shares authorized, 20,547,668 and 18,228,887 (each after the 4-to-1 reverse stock split) shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively

    20,548       18,229  

Additional paid-in capital

    61,538,883       46,575,986  

Accumulated deficit

    (32,105,194

)

    (32,286,224

)

Deferred compensation

    (29,166

)

    (23,499

)

Accumulated other comprehensive income, net

    (5,577,561

)

    (5,744,856

)

                 

Total Stockholders' Equity

    23,847,510       8,539,636  
                 

Total Liabilities and Stockholders' Equity

  $ 35,573,502     $ 13,159,249  

 

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

 

5

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LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

   

For the Three Months

Ended

   

For the Six Months Ended

 
   

June 30,

   

June 30,

 
   

2019

   

2018

   

2019

   

2018

 
                                 

Net Sales

  $ 9,297,186     $ 3,598,028     $ 16,718,384     $ 5,989,410  

Cost of Goods Sold

    7,222,076       2,938,206       13,168,194       5,389,180  
                                 

Gross Profit

    2,075,110       659,822       3,550,190       600,230  
                                 

Operating Expenses:

                               

Selling expenses

    514,037       463,998       997,623       873,790  

General and administrative expenses

    968,437       582,208       1,739,302       1,344,647  

Research and development expenses

    199,184       176,281       402,356       345,677  
                                 

Total Operating Expense

    1,681,658       1,222,487       3,139,281       2,564,114  
                                 

Income (Loss) from Operations

    393,452       (562,665

)

    410,909       (1,963,884

)

                                 

Other Income (Expense)

                               

Interest and other income

    18,173       7,173       25,450       10,457  

Interest expense

    (36,502

)

    (4,174

)

    (75,150

)

    (60,474

)

Gain (Loss) on currency transactions

    (206,718

)

    296,140       (158,560

)

    217,086  

Gain (Loss) on sale of fixed assets

    (21,619

)

    -       (21,619

)

    -  
                                 

Total Other Income (Expense)

    (246,666

)

    299,139       (229,879

)

    167,069  
                                 

Income (Loss) Before Income Taxes

    146,786       (263,526

)

    181,030       (1,796,815

)

                                 

Income Tax Expense (Income)

    -       -       -       -  
                                 

Net Income (Loss)

  $ 146,786     $ (263,526

)

  $ 181,030     $ (1,796,815

)

                                 
                                 

Basic and Diluted Income (Loss) Per Share

  $ 0.01     $ (0.004

)

  $ 0.01     $ (0.03

)

                                 

Basic Weighted Average Common Shares Outstanding

    19,211,771       16,214,833       18,742,029       13,682,405  
                                 

Diluted Weighted Average Common Shares Outstanding

    19,228,160       16,214,833       18,758,108       13,682,405  

 

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

 

6

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LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (UNAUDITED)

 

 

 

For the Three Months

Ended

 

 

For the Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

 

146,786

 

 

 

(263,526

)

 

 

181,030

 

 

 

(1,796,815

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Comprehensive Income (Loss), Net of Taxes:

                               

Currency Translation

 

 

381,217

 

 

 

(633,427

 

 

167,295

 

 

 

(458,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Comprehensive Income (Loss)

 

$

528,003

 

 

$

(896,953

)

 

$

348,325

 

 

$

(2,255,375

)

 

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

 

7

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LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the period ended June 30, 2018 and June 30, 2019 

 

                                                   

Accumulated

         
                                   

Additional

           

Compre-

   

Deferred

 
   

Preferred Stock

   

Common Stock

   

Paid-in

   

Accumulated

   

hensive

   

Compen-

 
   

Shares

   

Amount

   

Shares

   

Amount

   

Capital

   

Deficit

   

Income/(Loss)

   

sation

 

BALANCE, December 31, 2017

    2,200,837       2,201       11,107,316       11,108       40,491,229       (28,471,696

)

    (5,040,792

)

    (79,933

)

                                                                 

Common shares issued at $4.04 per share for services provided and to be provided by the board of directors

                    14,852       14       59,986                          
                                                                 

Stock based compensation expenses recognized for the period ended March 31, 2018

                                                            18,273  
                                                                 

Currency translation, net

                                                    174,867          
                                                                 

Net Income for the period ended March 31, 2018

                                            (1,533,287

)

               
                                                                 

BALANCE, March 31, 2018

    2,200,837       2,201       11,122,168       11,123       40,551,214       (30,004,983

)

    (4,865,925

)

    (61,660

)

                                                                 

Common shares issued for cash at $1.36 per share, net of offering cost of $747,423, April 2018

                    4,862,132       4,862       5,860,215                          
                                                                 

Conversion of mandatory preferred stock issued in 2017 into 4 common shares per preferred stock

    (2,200,837

)

    (2,201

)

    2,200,837       2,201                                  
                                                                 

Stock based compensation expenses recognized for the period ended June 30, 2018

                                                            9,161  
                                                                 

Currency translation, net

                                                    (633,427 )        
                                                                 

Net Income for the period ended June 30, 2018

                                            (263,526

)

               
                                                                 

BALANCE, June 30, 2018

    -       -       18,185,137       18,185       46,411,430       (30,268,509

)

    (5,499,352

)

    (52,499

)

                                                                 

BALANCE, December 31, 2018

    -       -       18,228,887       18,229       46,575,986       (32,286,224

)

    (5,744,856

)

    (23,499

)

                                                                 

Common shares issued at $4.63 per share for services provided and to be provided by the board of directors

                    28,993       29       134,138                       (21,667

)

                                                                 

Stock based compensation expenses recognized for the period ended March 31, 2019

                                    5,778                       10,166  
                                                                 

Exercise of stock options

                    45,000       45       133,155                          
                                                                 

Currency translation, net

                                                    (213,922

)

       
                                                                 

Net Income for the period ended March 31, 2019

                                            34,244                  
                                                                 

BALANCE, March 31, 2019

    -       -       18,302,880       18,303       46,849,057       (32,251,980

)

    (5,958,778

)

    (35,000

)

                                                                 

Stock based compensation expenses recognized for the period ended June 30, 2019

                                    17,333                       5,834  
                                                                 

Exercise of warrants

                    28,887       29       (29

)

                       
                                                                 

Common shares issued for cash at $7.25 per share, net of offering cost of $1,390,262, May 2019

                    2,215,862       2,216       14,672,522                          
                                                                 

Currency translation, net

                                                    381,217          
                                                                 

Net Income for the period ended June 30, 2019

                                            146,786                  
                                                                 

BALANCE, June 30, 2019

    -       -       20,547,668       20,548       61,538,883       (32,105,194

)

    (5,577,561

)

    (29,166

)

 

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LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Increase (Decrease) in Cash and Cash Equivalents

 

   

For the six months ended

 
   

June 30,

 
   

2019

   

2018

 

Cash Flows from Operating Activities:

               

Net Income (Loss)

  $ 181,030     $ (1,796,815

)

Adjustments to reconcile net profit (loss) to net cash provided (used) by operations:

               

Depreciation and amortization

    554,130       430,081  

Stock-based compensation

    151,611       87,434  

Changes in assets and liabilities:

               

Accounts receivable

    (7,152,037

)

    (319,952

)

Other receivables

    (2,204,708

)

    322,514  

Deposits

    (1,203,216

)

    -  

Inventory

    (281,601

)

    89,754  

Prepaid expenses/deposits

    (157,913

)

    (78,882

)

Accounts payable

    2,595,054       (250,828

)

Accrued expenses

    1,613,701       (1,131,833

)

Operating lease liability

    (234,934

)

    -  

Long-term contracts

    1,068,256       (682,820

)

                 

Total Adjustments

    (5,251,657

)

    (1,534,532

)

                 

Net Cash Used in Operating Activities

    (5,070,627

)

    (3,331,347

)

                 

Cash Flows from Investing Activities:

               

Purchase of property and equipment

    (327,559

)

    (82,992

)

                 

Net Cash Used in Investing Activities

    (327,559

)

    (82,992

)

                 

Cash Flows from Financing Activities:

               

Net payments on financing lease obligation

    (8,588

)

    (14,710

)

Proceeds from exercise of stock options

    133,200       -  

Proceeds from issuance of common stock, net

    14,674,738       5,865,077  
                 

Net Cash Provided by Financing Activities

    14,799,350       5,850,367  
                 

Gain (Loss) on Currency Translation

    179,080       (430,727

)

                 

Net Change in Cash, Cash Equivalents and Restricted Cash

    9,580,244       2,005,301  
                 

Cash, Cash Equivalents and Restricted Cash at Beginning of Period

    3,776,111       2,486,199  
                 

Cash, Cash Equivalents and Restricted Cash at End of Period

  $ 13,356,355     $ 4,491,500  

 

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

 

9

Table of Contents

 

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

   

For the Six Months

Ended June 30,

 
   

2019

   

2018

 

Supplemental Disclosures of Cash Flow Information:

               

Cash paid during the period for:

               

Interest Paid

  $ 50,372     $ 60,474  

Income Taxes

  $ -     $ -  
                 

Supplemental Disclosures of Non-Cash Investing and Financing:

               

Common stocks issued for conversion of mandatory preferred stock

    -       8,803  

Offering costs for common stocks issuance

    1,390,262       747,423  

 

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

 

10

Table of Contents

 

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

   

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Business and Basis of Presentation

 

The consolidated financial statements include the accounts of LiqTech International, Inc., the “Company” and its subsidiaries. The terms "Company", “us", "we" and "our" as used in this report refer to the Company and its subsidiaries, which are set forth below. The Company engages in the development, design, production, marketing and sale of automated filtering systems, ceramic silicon carbide liquid and diesel particulate air filters in United States, Canada, Europe, Asia and South America. Set forth below is a description of the Company and each of its subsidiaries:

 

LiqTech International, Inc., a Nevada corporation organized in July 2004, formerly known as Blue Moose Media, Inc.

 

LiqTech USA, a Delaware corporation and a 100% owned subsidiary of The Company formed in May 2011.

 

LiqTech International AS, a Danish corporation, incorporated on January 15, 2000 (“LiqTech Int. DK”), a 100% owned subsidiary of LiqTech USA, engages in development, design, application, marketing and sales of membranes, ceramic diesel particulate and liquid filters and catalytic converters in Europe, Asia and South America.

 

LiqTech NA, Inc. (“LiqTech NA”), incorporated in Delaware on July 1, 2005, a 100% owned subsidiary of LiqTech USA. LiqTech NA, Inc. engages in the production, marketing and sale of ceramic diesel particulate and liquid filters in the United States and Canada.

 

LiqTech Systems AS, a Danish Corporation ("LiqTech Systems") (Formerly Provital Solutions A/S) was incorporated on September 1, 2009 and engages in the manufacture of fully automated filtering systems for application within marine applications municipal pool and spa applications, and other industrial applications within Denmark and international markets.

 

LiqTech Germany (“LiqTech Germany”), a 100% owned subsidiary of LiqTech Int. DK, incorporated in Germany on December 9, 2011, engaged in marketing and sale of liquid filters in Germany. The Company is in the process of closing operations, which is expected to be completed during 2019.

 

LiqTech PTE Ltd (“LiqTech Sing”), a 95% owned subsidiary of LiqTech Int. DK, incorporated in Singapore on January 19, 2012, engaged in marketing and sale of liquid filters in Singapore and other countries in the area. The Company is in the process of closing operations, which is expected to be completed during 2019.

 

Consolidation -- The consolidated financial statements include the accounts and operations of the Company. All material intercompany transactions and accounts have been eliminated in the consolidation.

 

Functional Currency / Foreign currency translation -- The functional currency of LiqTech International, Inc., LiqTech USA, Inc. and LiqTech NA is the U.S. Dollar. The Functional Currency of LiqTech Int. DK and LiqTech Systems AS is the Danish Krone (“DKK”), the functional currency of LiqTech Germany is the Euro and the functional currency of LiqTech Singapore is the Singapore Dollar. The Company’s reporting currency is U.S. Dollar for the purpose of these consolidated financial statements. The foreign subsidiaries balance sheet accounts are translated into U.S. Dollars at the period-end exchange rates and all revenue and expenses are translated into U.S. Dollars at the average exchange rates prevailing during the three and six months ended June 30, 2019 and 2018. Translation gains and losses are deferred and accumulated as a component of other comprehensive income in stockholders’ equity. Transaction gains and losses that arose from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are included in the statement of operations as incurred.

 

Cash, Cash Equivalents and Restricted Cash -- The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. For the six months ended June 30, 2019 and 2018, the Company has $783,499 and $0, respectively, as restricted cash. The restricted cash is payment guarantees issued to the benefit of customers in connection with prepayments of sales orders. The restricted cash is held in a local financial institution and will be released as order deliveries are made and accepted by the customer. The Company had no balances held in a financial institution in the United States in excess of federally insured amounts at June 30, 2019 and December 31, 2018.

 

11

 

Accounts Receivable -- Accounts Receivables consist of trade receivables arising in the normal course of business. The Company establishes an allowance for doubtful accounts that reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. 

 

The roll forward of the allowance for doubtful accounts for the six months ended June 30, 2019 and the year ended December 31, 2018 is as follows:

 

   

June 30,

2019

   

December 31,

2018

 

Allowance for doubtful accounts at the beginning of the period

  $ 971,772     $ 660,581  

Bad debt expense

    -       353,562  

Receivables written off during the periods

    (3,494

)

    -  

Effect of currency translation

    (5,773

)

    (42,371

)

Allowance for doubtful accounts at the end of the period

  $ 962,505     $ 971,772  

  

Inventory -- Inventory is carried at the lower of cost or market, as determined on the first-in, first-out method.

 

Leases -- The Company leases certain vehicles, real property 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 assets and liabilities under finance leases are recorded at the lower of the present value of future minimum lease payments or the fair market value of the related assets. Assets under finance leases are amortized using the straight-line method over the initial lease term. Amortization of assets under finance leases is included in depreciation expense.

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (“Topic 842”), which requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Subsequent ASUs were issued to provide additional guidance.

 

On January 1, 2019, the Company adopted Topic 842 using the optional transition method of adoption, under which the new standards were applied prospectively rather than restating the prior periods presented. The Company elected the package of practical expedients permitted, which, among other things, allowed the Company to carry forward the historical lease classification. The Company made the accounting policy elections to not recognize lease assets and lease liabilities with an initial term of 12 months or less and to not separate lease and non-lease components. The Company’s accounting for finance leases (formerly called capital lease obligations) remains substantially unchanged. Operating lease right-of-use (“ROU”) assets and liabilities were recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, an incremental borrowing rate based on the information available at the commencement date was used in determining the present value. The Company will use the implicit rate when readily determinable. The operating lease ROU asset also included prepaid lease payments and was reduced by accrued lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. Operating lease cost for lease payments will be recognized on a straight-line basis over the lease term. The impact of adoption on the Company’s consolidated balance sheet was the recognition of a ROU asset of $2.1 million and an operating lease liability of $2.1 million primarily for office space leases. The Company’s adoption of Topic 842 did not materially impact its results of operation.

 

Property and Equipment -- Property and equipment are stated at cost. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized, upon being placed in service. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is computed for financial statement purposes on a straight-line basis over the estimated useful lives of the assets, which range from three to ten years.

 

Long-Term Investments -- Investments in non-consolidated companies are included in long-term investments in the consolidated balance sheet and are accounted for under the cost method and equity method. For these non-quoted investments, we regularly review the assumptions underlying the operating performance and cash flow forecasts based on information requested from these privately held companies. Generally, this information may be more limited, may not be as timely as and may be less accurate than information available from publicly traded companies. Assessing each investment's carrying value requires significant judgment by management. If it is determined that there is an-other-than-temporary decline in the fair value of a non-public equity security, we write down the investment to its fair value and record the related write down as an investment loss in the consolidated statement of operations.

 

12

 

Intangible Assets -- Definite life intangible assets include patents. The Company accounts for definite life intangible assets in accordance with Financial Accounting Standards Board, (“FASB”) Accounting Standards Codification, (“ASC”) Topic 350, “Goodwill and Other Intangible Assets” and amortized the patents on a straight-line basis over the estimated useful life of two to ten years. 

 

Revenue Recognition and Sales Incentives 

 

Accounting policy: On January 1, 2018, the Company adopted Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers,” which includes clarifying ASUs issued in 2015, 2016 and 2017 (“new revenue standard”). The new revenue standard was applied to all open revenue contracts using the modified retrospective method as of January 1, 2018. The new revenue standard did not have a material impact on revenue recognition.

 

For membrane and DPF product sales, revenue is recognized when performance obligations under the terms of a contract with the customer are satisfied, which occurs when control of the membrane, DPF or services are transferred to the customer. The majority of the Company's sales contracts contain performance obligations satisfied at a point in time when title and risks and rewards of ownership have transferred to the customer. This generally occurs when the product is shipped or accepted by the customer.  Revenue for service contracts are recognized as the services are provided. Revenue is measured as the amount of consideration expected to be received in exchange for transferring the goods or providing services. The satisfaction of performance obligations under the terms of a revenue contract generally gives rise for the right to payment from the customer. The Company's standard payment terms vary by the type and location of the customer and the products or services offered. Generally, the time between when revenue is recognized and when payment is due is not significant. Pre-payments received prior to satisfaction of performance obligations are recorded as a customer deposit liability. Given the insignificant days between revenue recognition and receipt of payment, financing components do not exist between the Company and its customers.

 

For contracts with customers that include multiple performance obligations, judgment is required to determine whether performance obligations specified in these contracts are distinct and should be accounted for as separate revenue transactions for recognition purposes. For such arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are generally determined based on the prices charged to customers or using expected cost-plus margin.

 

System sales are recognized when the Company transfers control based upon signed acceptance of the system by the customer upon shipment of the system based on the terms of the contract. For the majority of Systems, the Company transfers control and recognizes revenue when products are shipped to the customer according to the terms of the contract or purchase order. In connection with the system it is normal procedure to issue a FAT (Factory Acceptance Test) stating that the customer has accepted the performance of the system as it is being shipped from the production facility in Hobro. As part of the performance obligation, the customer is normally offered commissioning services (final assembly and configuration at a place designated by the customer) and this commissioning is therefore considered a second delivery performance and is valued at cost, based on the contractual performance given a standard gross margin rate. This second performance delivery is recognized as revenue at the time of delivery of the commissioning together with the cost incurred. Part of the invoicing to the customer is also attributed to the commissioning and at transfer of the control of the system (i.e. the first performance obligation), some of the invoicing will still be awaiting commissioning and is therefore recognized as Other Receivables, while the revenue related to the commissioning is recognized as Deferred Income.

 

Aftermarket sales represent parts, extended warranty and maintenance services. For the sale of aftermarket parts, the Company transfers control and recognizes revenue when parts are shipped to the customer or services are provided. When customers are given the right to return eligible parts and accessories, the Company estimates the expected returns based on an analysis of historical experience. The Company adjusts estimated revenues at the earlier of when the most likely amount of consideration expected to be received changes or when the consideration becomes fixed. The Company recognizes revenue for extended warranty and maintenance agreements based on the standalone selling price over the life of the contract, which reflects the costs to perform under these contracts, which corresponds with, and thereby depicts the transfer of control to the customer. For invoicing to customers where the transfer of control has not occurred (prepayments), the invoiced amount is recognized as Contract Assets / Contract Liabilities.

  

13

 

The Company has received long-term contracts for grants from government entities for the development and use of silicon carbide membranes in various water filtration and treatment applications and historically in the installation of various water filtrations systems. We measure transfer of control of the performance obligation on long-term contracts utilizing the cost-to-cost measure of progress, with cost of revenue including direct costs, such as labor and materials. Under the cost-to-cost approach, the use of estimated costs to complete each performance obligation is a significant variable in the process of determining recognized revenue and a significant factor in the accounting for such performance obligations. The timing of when we bill our customers is generally dependent upon advance billings terms, milestone billings based on completion of certain phases of the work or when services are provided, or products are shipped. Projects with performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of cumulative billings are reported on our Balance Sheets as contract assets. Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimated earnings recognized to date are reported on our Balance Sheets as contract liabilities.

 

In Denmark, Value Added Tax (“VAT”) of 25% of the invoice amount is collected with respect of the sales of goods on behalf of tax authorities. The VAT collected is not revenue of the Company; instead, the amount is recorded as a liability on the balance sheet until such VAT is paid to the authorities. 

 

The Company’s disaggregated revenue is reported in Note 8.

 

Advertising Cost -- Costs incurred in connection with advertising of the Company’s products is expensed as incurred. Such costs amounted to $72,349 and $3,326 for the six months ended June 30, 2019 and 2018, respectively.

 

Research and Development Cost -- The Company expenses research and development costs for the development of new products as incurred. Included in operating expense for the six months ended June 30, 2019 and 2018 were $402,356 and $345,677, respectively, of research and development costs.

 

Income Taxes -- The Company accounts for income taxes in accordance with FASB ASC Topic 740 Accounting for Income Taxes. This statement requires an asset and liability approach for accounting for income taxes.

  

Income (Loss) Per Share -- The Company calculates earnings (loss) per share in accordance with FASB ASC 260, Earnings Per Share. Basic earnings per common share (EPS) are based on the weighted average number of common shares outstanding during each period. Diluted earnings per common share are based on shares outstanding (computed as under basic EPS) and potentially dilutive common shares. Potential common shares included in the diluted earnings per share calculation include in-the-money stock options and warrants that have been granted but have not been exercised.

 

Stock Options and Awards -- The Company has granted stock options to certain key employees during the years presented in the accompanying consolidated financial statements (see note 7). The Company accounts for options in accordance with the provisions of FASB ASC Topic 718, Compensation – Stock Compensation. Non-cash compensation costs of $151,611 and $87,434 have been recognized for the vesting of options and stock awards granted to employees for the six months ended June 30, 2019 and 2018, respectively.

 

Fair Value of Financial Instruments -- The Company accounts for fair value measurements for financial assets and liabilities in accordance with FASB ASC Topic 820. The authoritative guidance that, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 

 

Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities;

   

 

Level 2. Inputs other than the quoted prices in active markets that are observable either directly or indirectly; and

 

 

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

Unless otherwise disclosed, the fair value of the Company’s financial instruments including cash, accounts receivable, prepaid expenses, investments, accounts payable, accrued expenses, capital lease obligations and notes payable approximates their recorded values due to their short-term maturities.

  

14

 

Accounting Estimates -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets including accounts receivable, allowance for doubtful accounts, contract assets, reserve for obsolete inventory, depreciation and impairment of property plant and equipment, and goodwill; liabilities including contract liabilities and contingencies; the disclosures of contingent assets and liabilities at the date of the financial statements; and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimated.

 

Recent Accounting Pronouncements – In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-07, Compensation – Stock Compensation (“Topic 718”): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees except for certain circumstances. Any transition impact will be a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Company adopted this guidance in the first quarter of 2019, and it did not have a material impact on its consolidated financial statements.

 

In August 2018, the Financial Accounting Standards board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15 (“ASU 2018-15”), Intangibles - Goodwill and Other - Internal-Use Software (Topic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.  ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The updated guidance is effective for annual periods beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on the Company’s consolidated financial statements.

 

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurement by removing, modifying and adding certain disclosures. This ASU is effective for the annual period beginning after December 15, 2019, including interim periods within that annual period. The Company is currently evaluating the new guidance to determine the impact it will have on the Company’s consolidated financial statements.

 

In August 2018, the SEC adopted amendments to simplify certain disclosure requirements, as set forth in Securities Act Release No. 33-10532, Disclosure Update and Simplification, which includes a requirement for entities to present the changes in shareholders’ equity in the interim financial statements in quarterly reports on Form 10-Q. This amendment is effective for all filings made on or after November 5, 2018. In light of the timing of effectiveness of the amendment and proximity to the filing date for most filers’ quarterly reports, the SEC has allowed for a filer’s first presentation of the changes in shareholders’ equity to be included in its Form 10-Q for the quarter that begins after the effective date. The Company adopted the SEC’s amendment to interim disclosures in the first quarter of 2019 and has presented the changes in shareholders’ equity on an interim basis.

 

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASC 842"), which requires lessees to recognize right-of-use ("ROU") assets and related lease liabilities on the balance sheet for all leases greater than one year in duration. We adopted ASC 842 on January 1, 2019 using a modified retrospective transition approach for leases existing at, or entered after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach did not require any transition accounting for leases that expired before the earliest comparative period presented. The adoption of this standard resulted in the recording of ROU assets of approximately $2.1 million and lease liabilities of approximately $2.1 million for all of our lease agreements with original terms of greater than one year. The adoption of ASC 842 did not have a significant impact on our consolidated statements of operations. See Note 4 for the required disclosures relating to our lease agreements.

 

In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-18, Restricted Cash which requires companies in the statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Statement of Cash Flows. For the period ended June 30, 2019 the Company has recorded $783,499 as Restricted cash and $12,572,856 as Unrestricted cash and a total of $13,356,355 as Cash, Cash equivalents and Restricted cash. For the period ended December 31, 2018 the amounts were $0 in Restricted cash and $3,776,111 in Unrestricted cash.

 

Other recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Company’s present or future financial statements. 

 

15

 

 

NOTE 2 - INVENTORY

 

Inventory consisted of the following at June 30, 2019 and December 31, 2018:

 

   

2019

   

2018

 

Furnace parts and supplies

  $ 730,370     $ 596,806  

Raw materials

    1,756,414       1,659,826  

Work in process

    1,501,307       1,691,175  

Finished goods and filtration systems

    1,527,554       1,596,042  

Reserve for obsolescence

    (801,990

)

    (1,111,794

)

Net Inventory

  $ 4,713,656     $ 4,432,055  

  

 

 

 

 NOTE 3 - LINES OF CREDIT

 

In connection with certain orders, we have to convey the customer a working guarantee or a prepayment guarantee or security bond. For that purpose, we have a guarantee credit line of DKK 94,620 (approximately $14,427 at June 30, 2019) with a bank, subject to certain base limitations. As of June 30, 2018, we had DKK 94,620 (approximately $14,801) in working guarantee against the line. This line of credit is guaranteed by Vækstfonden (the Danish state's investments fund) and is secured by certain assets of LiqTech Systems such as receivables, inventory and equipment.

 

 

 

 NOTE 4 - LEASES

 

The Company leases certain vehicles, real property 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 operating leases for production and office space in Copenhagen and White Bear Lake, Minnesota.

 

On January 1, 2019, the Company adopted Topic 842 requiring organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The Company elected to use the transition method of adoption, under which the new standards were applied prospectively rather than restating the prior periods presented. As a result of the modified retrospective transition method of adoption, certain accounts lack a comparable value for the same period of 2018, specifically accounts and values associated with operating leases and ROU assets.

 

16

 

Supplemental balance sheet information related to leases as of June 30, 2019 and 2018 was as follows:

 

   

June 30,

2019

   

December

31,

2018

 

Operating leases:

               

Operating lease right-of-use

  $ 1,925,645     $ -  
                 

Operating lease liabilities - current

  $ 603,152     $ -  

Operating lease liabilities – long-term

    1,352,749       -  

Total operating lease liabilities

  $ 1,955,901     $ -  
                 

Finance leases:

               

Property and equipment, at cost

  $ 1,171,295     $ 1,171,295  

Accumulated depreciation

    (1,166,115

)

    (1,162,256

)

Property and equipment, net

  $ 5,180     $ 9,039  
                 

Finance lease liabilities - current

  $ 5,201     $ 13,789  

Finance lease liabilities – long-term

    -       -  

Total finance lease liabilities

  $ 5,201     $ 13,789  
                 

Weighted average remaining lease term:

               

Operating leases

    4.4       -  

Finance lease

    0.1       0.8  
                 

Weighted average discount rate:

               

Operating leases

    7.0

%

    -  

Finance leases

    9.0

%

    7.3

%

 

Maturities of lease liabilities at June 30, 2019 were as follows:

               
   

Operating

lease

   

Finance lease

 

July 2019 – June 2020

  $ 624,358     $ 5,240  

July 2020 – June 2021

    531,629       -  

July 2021 – June 2022

    370,864       -  

July 2022 – June 2023

    342,510       -  

July 2023 – June 2024

    335,706       -  

Thereafter

    27,801       -  

Total payment under lease agreements

    2,232,868       5,240  

Less imputed interest

    (276,967

)

    (39

)

Total lease liability

  $ 1,955,901     $ 5,201  

 

As previously disclosed in our 2018 Form 10-K under the prior guidance of ASC 842, minimum payments under operating lease agreements as of December 31, 2018 were as follows:

 

Year ending December 31,

 

Operating

lease

 

2019

  $ 712,250  

2020

    578,997  

2021

    402,584  

2022

    350,249  

Thereafter

    560,977  

Total

  $ 2,605,057  

 

17

 

 

 

 NOTE 5 - AGREEMENTS AND COMMITMENTS

 

401(K) Profit Sharing Plan -- LiqTech NA has a 401(k)-profit sharing plan and trust covering certain eligible employees. The amount LiqTech NA contributes is discretionary. For the six months ended June 30, 2019 and 2018, matching contributions were expensed and totaled $5,677 and $5,706, respectively.

 

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.

 

On November 20, 2018 a former supplier to Liqtech International A/S contacted the Company with a claim of DKK448,500 ($68,800) alleging that a former Agreement from 2016 had not been respected. The Company has contested the claim due to lack of evidence to support the claim. No provision has been made at June 30, 2019 as the Company does not expect the claim to materialize in any payments to the former supplier.

 

On February 27, 2019, LiqTech Systems A/S was contacted by a former supplier alleging that the Company owed DKK543,905 ($83,400) for services rendered in 2017, the claimant has previously filed a lawsuit to claim payment for the services, which was denied by the Company due to severe errors in the services supplied, and the claim was rejected by a court of law in 2018. Due to the nature of the new claim and the previous ruling from the court of law, no provision has been made at June 30, 2019.

 

In connection with certain orders, we have to convey the customer a working guarantee or a prepayment guarantee or security bond. For that purpose, we have a guarantee line of DKK 94,620 (approximately $14,427 at June 30, 2019) with a bank, subject to certain base limitations. As of June 30, 2018, we had DKK 94,620 (approximately $14,801) in working guarantee against the line. 

  

Product Warranties - The Company provides a standard warranty on its systems, generally for a period of one to three years after customer acceptance. The Company estimates the costs which 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 provide a warranty for up to four years from the date of commissioning. The specific terms and conditions of those warranties vary depending upon the product sold and the country in which the Company does business. 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, including deferred revenue on extended warranty contracts included in accrued expenses on the balance sheet, are as follows:

 

   

2019

 

Balance at December 31, 2018

  $ 432,225  

Current year warranty expense

    903,216  

Change in estimate related to pre-existing warranties

    -  

Payments made

    (275,736

)

Foreign currency effect

    1,901  

Balance at June 30, 2019

  $ 1,061,606  

 

18

 

 

 

 NOTE 6 - EARNINGS PER SHARE

 

The following data shows the amounts used in computing earnings per share and the effect on income and the weighted average number of shares of potential dilutive common stock for the six months ended June 30, 2019 and 2018:

 

 

 

For the Six Months

Ended June 30,

 

 

 

2019

 

 

2018

 

Net Gain (Loss) attributable to LiqTech International, Inc.

 

$

181,030

 

 

$

(1,796,815

)

Weighted average number of common shares used in basic earnings per share

 

 

18,742,029

 

 

 

13,682,405

 

Effect of dilutive securities, stock options and warrants

 

 

16,079

 

 

 

-

 

Weighted average number of common shares and potential dilutive common shares outstanding used in dilutive earnings per share

 

 

18,758,108

 

 

 

13,682,405

 

 

For the six months ended June 30, 2019, the Company had 25,000 options outstanding to purchase common stock at $2.96 per share.

 

For the six months ended June 30, 2018, the Company had 113,750 options outstanding to purchase common stock at $2.96 per share and 100,000 warrants outstanding to purchase common stock at $6.60 per share, which were not included in the loss per share computation because their effect would be anti-dilutive.

 

 

NOTE 7 - STOCKHOLDERS' EQUITY

 

Common Stock -- The Company has 25,000,000 authorized shares of common stock, $0.001 par value. As of June 30, 2019, and December 31, 2018, respectively, there were 20,547,668 (after the 4-to-1 reverse stock split effective on April 8, 2019) and 18,228,887 common shares issued and outstanding.      

 

Voting -- Holders of the common stock are entitled to one vote for each share held of record on each matter submitted to a vote of stockholders, including the election of directors, and do not have any right to cumulate votes in the election of directors. 

 

Dividends -- Subject to the rights and preferences of the holders of any series of preferred stock, if any, which may at the time be outstanding, holders of the common stock are entitled to receive ratably such dividends as our Board of Directors from time to time may declare out of funds legally available.  

 

Liquidation Rights -- In the event of any liquidation, dissolution or winding-up of affairs of the Company, after payment of all of our debts and liabilities and subject to the rights and preferences of the holders of any outstanding shares of any series of our preferred stock, the holders of the common stock will be entitled to share ratably in the distribution of any of our remaining assets.  

 

Other Matters -- Holders of the common stock have no conversion, preemptive or other subscription rights, and there are no redemption rights or sinking fund provisions with respect to our common stock. All of the issued and outstanding shares of common stock on the date of this report are validly issued, fully paid and non-assessable.

 

Preferred Stock -- Our Board of Directors has the authority to issue preferred stock in one or more classes or series and to fix the designations, powers, preferences and rights, the qualifications, limitations or restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any class or series, without further vote or action by the stockholders. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control without further action by the stockholders and may adversely affect the voting and other rights of the holders of common stock.

 

The Company has 2,500,000 authorized shares of preferred stock, $0.001 par value. As of June 30, 2019 and December 31, 2018, respectively, there were 0 mandatory convertible preferred shares issued and outstanding. 

 

19

 

Stock Issuances 

 

Since January 1, 2019, the Company has made the following issuances of common stock (adjusted to account for the 4-to-1 reverse stock-split on April 8, 2019): 

 

On March 5, 2019, the Company issued an additional 24,827 shares of restricted stock valued at $112,500 for services provided by the Board of Directors. The shares vested immediately.

 

On January 24, January 28, February 6 and March 1, 2019, the Company issued a total of 45,000 shares in connection with employees exercising shares in relation to the stock option plan entered in 2015. The shares were issued at a share price of $2.96 and generated net proceeds of $133,200.

 

On May 22, 2019, the Company completed a registered public offering of its common stock. At closing, the Company issued 2,215,862 shares of common stock at a per share price of $7.25 and generated net proceeds of $14,674,738 including cost of $1,390,262 for underwrites fee, lawyer fee, auditor fee and other cost related to the capital raise.

 

On June 6, 2019 the Company issued an additional 28,887 shares in connection with a cashless exercise of warrant’s issued in 2014.

 

For the six months ended June 30, 2019 and 2018, the Company has recorded non-cash compensation expense of $39,111 and $27,434 relating to the awards, respectively.   

 

Common Stock Purchase Warrants 

 

On June 6, 2019 the remaining warrants issued in 2014 were exercised on a cashless basis.

 

At June 30, 2019 and 2018, the Company had no non-vested warrants. We have recorded non-cash compensation expense of $0 for the period’s ended June 30, 2019 and 2018 related to the warrants issued.

 

Stock Options 

 

In August 2011, the Company’s Board of Directors adopted a Stock Option Plan (the “Plan”). Under the terms and conditions of the Plan, the Board of Directors is empowered to grant stock options to employees, officers, and directors of the Company. At June 30, 2019, 25,000 options were granted and outstanding under the Plan. 

 

The Company recognizes compensation costs for stock option awards to employees based on their grant-date fair value. The value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model.

 

The Company recognized stock-based compensation expense related to the options of $0 and $27,434 for six months ended June 30, 2019 and 2018, respectively. At June 30, 2019, the Company had $0 of unrecognized compensation cost related to non-vested options.

 

A summary of the status of the options outstanding under the Company’s stock option plans at June 30, 2019 is presented below: 

 

       

Options Outstanding

   

Options Exercisable

 

Exercise
Prices

   

Number
Outstanding

   

Weighted
Average
Remaining
Contractual Life

(years)

   

Weighted
Average
Exercise
Price

   

Number
Exercisable

   

Weighted
Average
Exercise
Price

 
$ 2.96       25,000       1.12     $ 2.96       25,000     $ 2.96  

Total

      25,000       1.12     $ 2.96       25,000     $ 2.96  

 

20

 

A summary of the status of the options at June 30, 2019, and changes during the period is presented below:

 

   

Shares

   

Weighted
Average
Exercise
Price

   

Average
Remaining
Life

   

Weighted
Average
Intrinsic
Value

 
                                 

Outstanding at beginning of period

    70,000     $ 2.96       1.62     $ -  

Granted

    -       -       -       -  

Exercised

    (45,000

)

    -       -       -  

Forfeited

    -       -       -       -  

Expired

    -       -       -       -  

Outstanding at end of period

    25,000     $ 2.96       1.12     $ -  

Vested and expected to vest

    25,000     $ 2.96       1.12     $ -  

Exercisable end of period

    25,000     $ 2.96       1.12     $ -  

 

 

 NOTE 8 - SIGNIFICANT CUSTOMERS / CONCENTRATION / DISAGGREGATED REVENUE

 

For the six months ended June 30, 2019, our 4 largest customers accounted for approximately 74% of our net sales.

 

For the six months ended June 30, 2018, our largest customer accounted for approximately 12% of our net sales.

 

The Company sells products throughout the world; disaggregated revenue by geographical region is as follows for the three and six months ended June 30, 2019 and 2018: 

 

   

For the Three Months

   

For the Six Months

 
   

Ended June 30,

   

Ended June 30,

 
   

2019

   

2018

   

2019

   

2018

 

United States and Canada

  $ 255,642     $ 260,525     $ 688,229     $ 369,750  

Australia

    153,401       82,490       215,514       282,793  

South America

    -       24,248       -       27,676  

Asia

    933,693       111,015       2,172,807       928,616  

Europe

    7,954,450       3,119,750       13,641,834       4,380,575  
    $ 9,297,186     $ 3,598,028     $ 16,718,384     $ 5,989,410  

 

The Company’s disaggregated revenue by product line is as follows for the three and six months ended June 30, 2019 and 2018: 

 

   

For the Three Months

   

For the Six Months

 
   

Ended June 30,

   

Ended June 30,

 
   

2019

   

2018

   

2019

   

2018

 

Ceramic diesel particulate

  $ 747,234     $ 1,609,057     $ 2,990,502     $ 3,537,162  

Liquid filters and systems

    8,453,136       1,988,971       13,493,469       2,452,248  

Development projects

    96,815       -       234,413       -  
    $ 9,297,186     $ 3,598,028     $ 16,718,384     $ 5,989,410  

 

As of June 30, 2019, approximately 92% and 8% of the Company’s assets were located in Denmark and the United States, respectively. As of June 30, 2018, approximately 90% and 10% of the Company’s assets were located in Denmark and the United States, respectively.

 

 

NOTE 9 - SUBSEQUENT EVENTS

 

The Company’s management reviewed material events through August 14, 2019 and there were no material subsequent events to report.

 

21

 

 

 

 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 April 1, 2019, 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

 

We are a clean technology company that provides state-of-the-art technologies for gas and liquid purification by manufacturing ceramic silicon carbide filters. For more than a decade, we have developed and manufactured products of re-crystallized silicon carbide. We specialize in two business areas: ceramic membranes for liquid filtration and diesel particulate filters (“DPF “ ) for the control of soot exhaust particles from diesel engines. Using nanotechnology, we develop proprietary products using patented silicon carbide technology. Our products are based on unique silicon carbide membranes which facilitate new applications and improve existing technologies. We market our products from our offices in the United States and Denmark, and through local representatives. The products are shipped directly to customers from our production facilities in the United States and 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, including LiqTech USA, Inc., a Delaware corporation (“LiqTech USA”), which owns all of the outstanding equity interest in LiqTech International A/S, a Danish limited company, organized under the Danish Act on Limited Companies of the Kingdom of Denmark (“LiqTech Int. DK”), together with its direct wholly owned subsidiary LiqTech Systems A/S, a Danish limited company, organized under the Danish Act on Limited Companies of the Kingdom of Denmark (formerly known as Provital, “LiqTech Systems”) and LiqTech NA, Inc., a Delaware corporation (“LiqTech Delaware”). Collectively, LiqTech USA, LiqTech Int. DK, LiqTech Systems and LiqTech Delaware are referred to herein as our “Subsidiaries”.  

 

We conduct operations in the Kingdom of Denmark and the United States. Our Danish DPF and membrane manufacturing operations are located in the Copenhagen area; LiqTech Systems’ assembly and testing operations are located in Hobro in Jutland, Denmark. Our U.S. operations are conducted by LiqTech Delaware located in White Bear Lake, Minnesota.

 

Our Strategy

                                                                                                                                                                                     

Our strategy is to create stockholder value by leveraging our competitive strengths in silicon carbide filters and membranes by focusing on discrete applications in key end markets. Essential features of our strategy include:

 

 

Continue to maintain and gain new marine industry customers.  We currently provide water filtration systems for scrubber technology providers, ship owners and ship operators.

 

 

 

 

Enter new geographic markets and expand existing markets. We plan to continue to manufacture and sell our products from our core operations in Denmark and the United States. We work with distributors, agents and partners to access other important geographic markets.

 

 

 

 

Continue to strengthen our position in the DPF market. We believe that we have a strong position in the retrofit market for diesel particulate filter (DPF) systems. We intend to continue our efforts to maintain our market position in this area. Furthermore, we intend to leverage our experience in the OEM market by expanding our presence with new products relating to diesel particulate filter systems.

 

 

 

 

Continue to develop and improve technologies and open new end markets. We intend to continue to develop our ceramic membranes and improve the filtration efficiency for our filtration products. Through continuous research and development, we intend to find new uses for our products and plan to expand into new markets that offer significant opportunity for the Company. One of our key strategies is to develop our membrane applications in partnership with our customers including, for example, the development of the next generation of diesel particulate filters with asymmetric design for the OEM market.

 

 

 

 

Continue our focus on the development and sales of standardized systems. We will continue our focus on selling systems based on our unique SIC Filters. We will also combine the ceramic membranes with other technologies to be able to offer our customers complete filtration solutions. We will continue our focus on developing smaller standard systems, like our ground water treatment system and our residential swimming pool system.

 

22

Table of Contents

 

Developments

 

Results of Operations

 

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

 

The following tables set forth our revenues, expenses and net income for the three and six months ended June 30, 2019 and 2018:

 

   

Three Months Ended June 30,

 
                                   

Period to Period Change

 
   

2019

   

As a %

of Sales

   

2018

   

As a %

of Sales

   

US$

   

Percent

%

 

Net Sales

    9,297,186       100.0

%

    3,598,028       100.0

%

    5,699,158       158.4

%

Cost of Goods Sold

    7,222,076       77.7       2,938,206       81.7       4,283,870       145.8  

Gross Profit

    2,075,110       22.3       659,822       18.3       1,415,288       214.5  
                                                 

Operating Expenses

                                               

Selling expenses

    514,037       5.5       463,998       12.9       50,039       10.8  

General and administrative expenses

    968,437       10.4       582,208       16.2       386,229       66.3  

Research and development expenses

    199,184       2.1       176,281       4.9       22,903       13.0  

Total Operating Expenses

    1,681,658       18.1       1,222,487       34.0       459,171       37.6  
                                                 

Profit (Loss) from Operation

    393,452       4.2       (562,665

)

    (15.6

)

    956,117       169.9  
                                                 

Other Income (Expense)

                                               

Interest and other income

    18,173       0.2       7,173       0.2       11,000       153.4  

Interest (expense)

    (36,502

)

    (0.4

)

    (4,174

)

    (0.1

)

    (32,328

)

    (774.5

)

Gain (loss) on currency transactions

    (206,718

)

    (2.2

)

    296,140       8.2       (502,858

)

    (169.8

)

Gain (loss) on sale of fixed assets

    (21,619

)

    (0.2

)

    -       -       (21,619

)

    -  

Total Other Income (Expense)

    (246,666

)

    (2.7

)

    299,139       8.3       (545,805

)

    (182.5

)

                                                 

Profit (loss) Before Income Taxes

    146,786       1.6       (263,526

)

    (7.3

)

    410,312       155.7  

Income Taxes Expense (Income)

    -       -       -       -       -       -  
                                                 

Net Profit (loss)

    146,786       1.6       (263,526

)

    (7.3

)

    410,312       155.7  

 

23

Table of Contents

 

   

Six Months Ended June 30,

 
                                   

Period to Period Change

 
   

2019

   

As a %

of Sales

   

2018

   

As a %

of Sales

    $    

Percent

%

 

Net Sales

    16,718,384       100.0

%

    5,989,410       100.0

%

    10,728,974       179.1  

Cost of Goods Sold

    13,168,194       78.8       5,389,180       90.0       7,779,014       144.3  

Gross Profit

    3,550,190       21.2       600,230       10.0       2,949,960       491.5  
                                                 

Operating Expenses

                                               

Selling expenses

    997,623       6.0       873,790       14.6       123,833       14.2  

General and administrative expenses

    1,739,302       10.4       1,344,647       22.5       394,655       29.4  

Research and development expenses

    402,356       2.4       345,677       5.8       56,679       16.4  

Total Operating Expenses

    3,139,281       18.8       2,564,114       42.8       575,167       22.4  
                                                 

Profit (loss) from Operation

    410,909       2.5       (1,963,884

)

    (32.8

)

    2,374,793       120.9  
                                                 

Other Income (Expense)

                                               

Interest and other income

    25,450       0.2       10,457       0.2       14,993       143.4  

Interest (expense)

    (75,150

)

    (0.4

)

    (60,474

)

    (1.0

)

    (14,676

)

    (24.3

)

Gain (Loss) on currency transactions

    (158,560

)

    (0.9

)

    217,086       3.6       (375,646

)

    (173.0

)

Gain (Loss) on sale of fixed assets

    (21,619

)

    (0.1

)

    -       -       (21,619

)

    -  

Total Other Income (Expense)

    (229,879

)

    (1.4

)

    167,069       2.8       (396,948

)

    (237.6

)

                                                 

Profit (loss) Before Income Taxes

    181,030       1.1       (1,796,815

)

    (30.0

)

    1,977,845       110.1  

Income Taxes Expense (Income)

    -       -       -       -       -       -  
                                                 

Net Profit (loss)

    181,030       1.1       (1,796,815

)

    (30.0

)

    1,977,845       110.1  

 

24

Table of Contents

 

Comparison of the Three Months Ended June 30, 2019 and June 30, 2018
 

Revenues 

 

Net sales for the three months ended June 30, 2019 were $9,297,186 compared to $3,598,028 for the same period in 2018, representing an increase of $5,699,158 or 158.4%. The increase in sales consisted of an increase in sales of liquid filters and systems of $6,464,165, a decrease in sales of DPF of $726,340 and a decrease in revenue related to development projects of $38,667. The increase in revenue for our liquid filters and water treatment systems is due to completion of projects related to the marine scrubber industry. The realized revenue is a record for the Company. The decrease in demand for our DPF is mainly due to a decrease in market activity compared to the same period last year.

 

Gross Profit

 

Gross profit for the three months ended June 30, 2019 was $2,075,110 compared to a gross profit of $659,822 for same period in 2018, representing an increase of $1,415,288 or 214.5%. The increase in gross profit was due to high sales activity and a better product mix with increased sales of liquid filters and water treatment systems, which have a higher gross margin. Included in gross profit is depreciation of $246,846 and $212,573 for the three months ended June 30, 2019 and 2018, respectively.

 

Expenses

 

Total operating expenses for the three months ended June 30, 2019 were $1,681,658 representing an increase of $459,171 or 37.6%, compared to $1,222,487 for the same period in 2018. This increase in operating expenses is attributable to an increase in general and administrative expenses of $386,229, or 66.3%, and increase in selling expenses of $50,039 or 10.8% and an increase in research and development expenses of $22,903, or 13.0%, compared to the same period in 2018.

 

The main reason for the increase in operating expenses is the large number of new additional employees and related expenses (purchase of IT equipment, office furniture, HR consultants etc.). It is especially new project managers, who have been hired to assist with the large increase in sales and new orders.

 

Non-cash compensation, included in general and administrative expenses, for the three months ended June 30, 2019 were $23,167, compared to $9,161 for the same period in 2018, representing an increase of $14,006, or 152.9%. This increase is attributable to increased non-cash compensation expense for restricted share units granted to directors.

 

The following is a summary of our non-cash compensation: 

 

   

For the Three Months

Ended June 30,

 
   

2019

   

2018

 

Compensation upon vesting of stock options granted to employees

  $ -     $ 3,328  

Compensation for vesting of restricted stock awards issued to the board of directors

    23,167       5,833  

Value of Warrants granted for services

    -       -  

Total Non-Cash Compensation

  $ 23,167     $ 9,161  

 

 Net Income

 

Net profit for the three months ended June 30, 2019 was $146,786 compared to a loss of $263,526 for the comparable period in 2018, representing a change of $410,312, or 155.7%. This improvement was attributable to the substantial increase in revenue and gross profit for the three months ending June 30, 2019, compared to the same period in 2018. Offset in Net Profit is Other Income/Expenses which amounts to ($246,666) for the three months ended June 30, 2019 compared to an income of $299,139 for the same period in 2018. The decrease in Net Other Income/Expense of $545,805 is principally related to losses on currency exchanges.

 

25

Table of Contents

 

Comparison of the Six Months Ended June 30, 2019 and June 30, 2018
 

Revenues 

 

Net sales for the six months ended June 30, 2019 were $16,718,384 compared to $5,989,410 for the same period in 2018, representing an increase of 10,728,974 or 179.1%. The increase in sales consisted of an increase in sales of liquid filters and water treatment systems of $11,041,221, a decrease in sales of DPF of $253,565 and a decrease in sales of development projects of $58,683. The increase in revenue for our liquid filters and water treatment systems is due to completion of projects related to the marine scrubber industry. The realized revenue for the first six months of 2019 is a record for the Company. The decrease in demand for our DPF is mainly due to a decrease in market activity compared to the same period last year.

 

Gross Profit

 

Gross profit for the six months ended June 30, 2019 was $3,550,190 compared to a gross profit of $600,230 for same period in 2018, representing an increase of $2,949,960 or 491.5%. The increase in gross profit was due to the high sales activity for our liquid filters and water treatment systems, which have a higher gross margin. Included in gross profit is depreciation of $554,129 and $430,081 for the six months ended June 30, 2019 and 2018, respectively.

 

Expenses

 

Total operating expenses for the six months ended June 30, 2019 were $3,139,281 representing an increase of $575,167 or 22.4%, compared to $2,564,114 for the same period in 2018. This increase in operating expenses is attributable to an increase in general and administrative expenses of $394,655, or 29.4% an increase in research and development expenses of $56,679, or 16.4%, and an increase in selling expenses of $123,833, or 14.2%, which include expenses related to marketing.

 

The main reason for the increase in operating expenses is the large number of new additional employees and related expenses (purchase of IT equipment, office furniture, HR consultants etc.). It is especially new project managers, who have been hired to assist with the large increase in sales and new orders.

 

Non-cash compensation, included in general and administrative expenses, for the six months ended June 30, 2019 were $151,611, compared to $87,434 for the same period in 2018, representing an increase of $64,177, or 73.4%. This increase is attributable to increased non-cash compensation expense for restricted share units granted to directors.

 

The following is a summary of our non-cash compensation: 

 

   

For the Six Months

Ended June 30

 
   

2019

   

2018

 

Compensation upon vesting of stock options granted to employees

  $ -     $ 15,767  

Compensation for vesting of restricted stock awards issued to the board of directors

    151,611       71,667  

Value of Warrants granted for services

    -       -  

Total Non-Cash Compensation

  $ 151,611     $ 87,434  

   

Net Income

 

Net profit for the six months ended June 30, 2019 was $181,030, compared to a loss of $1,796,815 for the same period in 2018, representing an improvement in Net Income of $1,977,845, or 110.1%. This improvement was attributable to the substantial increase in sales activities and a higher gross profit for the six months ending June 30, 2019, compared to the same period in 2018.

 

26

Table of Contents

 

Liquidity and Capital Resources 

 

We have historically satisfied our capital and liquidity requirements through offerings of equity instruments, internally generated cash from operations and our available lines of credit. At June 30, 2019, we had cash (including restricted cash) of $13,356,355 and working capital of $21,371,856 and at December 31, 2018, we had cash of $3,776,111 and working capital of $6,753,593. At June 30, 2019, our working capital increased by $14,618,263 compared to December 31, 2018 due to a registered public offering of common stock in the second quarter of 2019. Total current assets (excluding cash) were $18,388,744 and $7,597,095 at June 30, 2019 and at December 31, 2018, respectively, and total current liabilities (excluding finance debt and tax) were $9,764,890 and $4,605,254 at June 30, 2019 and at December 31, 2018, respectively. 

 

In connection with certain orders, we have to convey the customer a working guarantee or a prepayment guarantee or security bond. For that purpose, we have a guarantee credit line of DKK 94,620 (approximately $14,427 at March 31, 2019) with a bank, subject to certain base limitations. As of June 30, 2018, we had DKK 94,620 (approximately $14,801) in working guarantee against the line. This line of credit is guaranteed by Vækstfonden (the Danish state's investments fund) and is secured by certain assets of LiqTech Systems such as receivables, inventory and equipment.

 

On May 24, 2019, we issued 2,215,862 shares of common stock in a public offering for gross proceeds of approximately $16.2 million, which has improved our liquidity. We believe that our existing cash and cash equivalents at June 30, 2019, along with cash generated from operations, will be sufficient to allow us to fund our current operating plan over the next 12 months. However, we may need additional funds to sustain and grow our business, and we may raise such funds from time to time through public or private sales of equity or debt securities. Financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could materially and adversely impact our financial condition and results of operations. Additional equity financing may be dilutive to holders of our common stock, and debt financing, if available, may involve significant cash payment obligations and covenants that restrict our ability to operate our business.

 

Cash Flows 

 

Six months ended June 30, 2019 Compared to six months ended June 30, 2018

 

Cash provided (used) by operating activities is net income (losses) adjusted for certain non-cash items and changes in assets and liabilities. Cash used by operating activities for the six months ended June 30, 2019 was $5,070,627, representing an increase of $1,739,280 compared to cash used by operating activities of $3,331,347 for the six months ended June 30, 2018. The increase in cash used by operating activities for the six months ended June 30, 2019 was mainly due to an increase in account receivables of $7,152,037 related to the larger number of shipped orders in the second quarter of 2019. Further other receivables have increased by $2,204,708. The increase in Other Receivables is due to the larger number of shipped orders, as this increase relates to the last payment of most orders, which is normally invoiced when the commissioning has taken place. Deposits have increased by $1,203,216 due to prepayments made for the new furnaces in the production facility in Ballerup. Account payables have increased by $2,595,056; contract assets and liabilities have increased by $1,068,256 and accrued expenses have increased by $1,613,701 due to the large increase in sales activities.

 

Cash used in investing activities was $327,559 for the six months ended June 30, 2019, representing an increase of $244,567, as compared to cash used in investing activities of $82,992 for the six months ended June 30, 2018. The increase in cash used in investing activities was mainly due to $81,421 in the purchase of new IT equipment.

 

Cash provided by financing activities was $14,799,350 for the six months ended June 30, 2019, as compared to cash provided by financing activities of $5,850,367 for the six months ended June 30, 2018. The cash provided by financing activities is mainly related to a public offering that raised $16,065,000 less offering costs of $1,390,262 during the six months ended June 30, 2019.

 

Off Balance Sheet Arrangements

 

As of June 30, 2019, we had no off-balance sheet arrangements. We are not aware of any material transactions, which are not disclosed in our consolidated financial statements. 

 

27

Table of Contents

 

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

 

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

 

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

 

the valuation of inventory, which impacts gross margin; and

 

the recognition and measurement of loss contingencies, which impact gross margin 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: Recently Enacted Accounting Standards” in the accompanying Financial Statements.

 

Subsequent Events

 

The Company’s management reviewed material events through August 14, 2019 and there were no material subsequent events to report.

 

 

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable. 

 

28

Table of Contents

 

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 Annual Report. A 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. Based on this evaluation, Management concluded that due to the limited number of employees in the finance department, our disclosure controls and procedures were not effective as of such date due to material weaknesses that were identified.

 

In 2019 we plan on hiring additional employees to the finance department, and we plan to continue remedy this lack of effectiveness during 2019 in connection with hiring additional employees in the finance department and implementing procedures to minimize the identified weaknesses. Further a planned investment in a new ERP-system to support the controls and processes of the Company should ensure that identified weaknesses will be detected on a timely basis to ensure proper and reliable financial reporting.

.

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 material misstatement of the registrant's annual or interim financial statements will not be prevented or detected on a timely basis. For more information on material weaknesses identified by Management, please see our annual report on Form 10-K for the year ended December 31, 2018.

 

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

 

Management has been actively developing a remediation plan and been implementing new controls and processes to address the aforementioned deficiencies. Upon identifying the material weakness in of our internal controls, we have taken actions to strengthen our internal control structure.

 

Management continues to meet with key managers and control owners to evaluate the effectiveness of internal controls and to ensure implementation of remediation initiatives.

 

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 internal 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.

 

29

Table of Contents

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

Not required for a “smaller reporting company.”  

 

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

 

None.

 

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

 

None.

  

ITEM 4.    MINE SAFETY DISCLOSURES

 

None.  

  

ITEM 5.    OTHER INFORMATION

 

None.  

 

30

Table of Contents

 

ITEM 6.    EXHIBITS

 

10.1 Form of Purchase Agreement with Stephens Inc. as representative of the several underwriters, dated May 22, 2019 Incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K as filed with the SEC on May 24, 2019
     

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

XBRL Instance Document

Filed herewith

 

 

 

101. CAL

XBRL Taxonomy Extension Calculation Link base Document

Filed herewith

  

  

  

101. DEF

XBRL Taxonomy Extension Definition Link base Document

Filed herewith

  

  

  

101. LAB

XBRL Taxonomy Label Link base Document

Filed herewith

  

  

  

101. PRE

XBRL Extension Presentation Link base Document

Filed herewith

  

  

  

101. SCH

XBRL Taxonomy Extension Scheme Document

Filed herewith

  

 

31

Table of Contents

 

SIGNATURES

 

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

 

  

  

LiqTech International, Inc.

  

  

  

  

  

Dated: August 14, 2019 

  

 /s/ Sune Mathiesen 

  

  

  

Sune Mathiesen, Chief Executive Officer

  

  

  

(Principal Executive Officer)

  

  

  

  

  

  

  

  

  

Dated: August 14, 2019 

  

/s/ Claus Toftegaard 

  

  

  

Claus Toftegaard, Chief Financial Officer

  

  

  

(Principal Financial and Accounting Officer)

  

 

32

 

ex_153704.htm

Exhibit 31.1

 

OFFICER’S CERTIFICATE

PURSUANT TO SECTION 302

 

I, Sune Mathiesen, certify that:

 

1,

I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2019 of LiqTech International, Inc.;

 

 

2,

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

3,

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

4,

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5,

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: August 14, 2019

By:       /s/ Sune Mathiesen  

 

Name:  Sune Mathiesen

 

Title:    Chief Executive Officer and Principal Executive Officer

  

 

 

ex_153705.htm

Exhibit 31.2

 

OFFICER’S CERTIFICATE

PURSUANT TO SECTION 302

 

I, Claus Toftegaard, certify that:

 

1,

I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2019 of LiqTech International, Inc.;

 

 

2,

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

3,

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

4,

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5,

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: August 14, 2019

By:       /s/ Claus Toftegaard

 

Name:  Claus Toftegaard

 

Title:    Chief Financial Officer and Principal Financial and Accounting Officer

   

 

 

ex_153707.htm

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U,S,C, SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

In connection with the Quarterly Report of LiqTech International, Inc., (the “Company”) on Form 10-Q for the period ended June 30, 2019 as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

1,     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2,     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: August 14, 2019

By:       /s/ Sune Mathiesen

 

Name:  Sune Mathiesen

 

Title:    Chief Executive Officer and Principal Executive Officer

 

 

A signed original of this written statement required by Section 906, or other document authentications, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the U.S. Securities and Exchange Commission or its staff upon request.

 

 

 

ex_153706.htm

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

18 U,S,C, SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

In connection with the Quarterly Report of LiqTech International, Inc., (the “Company”) on Form 10-Q for the period ended June 30, 2019 as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

1,     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2,     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: August 14, 2019

By:       /s/ Claus Toftegaard 

 

Name:  Claus Toftegaard

 

Title:    Chief Financial Officer and Principal Financial and Accounting Officer

 

 

A signed original of this written statement required by Section 906, or other document authentications, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the U.S. Securities and Exchange Commission or its staff upon request.

 

 

 

v3.19.2
Document And Entity Information - shares
6 Months Ended
Jun. 30, 2019
Aug. 14, 2019
Document Information [Line Items]    
Entity Registrant Name LIQTECH INTERNATIONAL INC  
Entity Central Index Key 0001307579  
Trading Symbol liqt  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Entity Current Reporting Status Yes  
Entity Emerging Growth Company false  
Entity Small Business true  
Entity Common Stock, Shares Outstanding (in shares)   20,547,668
Entity Shell Company false  
Document Type 10-Q  
Document Period End Date Jun. 30, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q2  
Amendment Flag false  
Title of 12(b) Security Common Stock  
v3.19.2
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
Jun. 30, 2019
Dec. 31, 2018
Current Assets:    
Cash $ 12,572,856 $ 3,776,111
Cash, restricted 783,499 0
Accounts receivable, net 8,460,159 1,308,122
Other receivables 3,303,504 1,098,796
Deposits 1,203,216
Contract assets 506,329 624,275
Inventories, net 4,713,656 4,432,055
Prepaid expenses 201,880 133,847
Total Current Assets 31,745,099 11,373,206
Property and Equipment, net accumulated depreciation 1,451,422 1,431,649
Operating lease right-of-use asset 1,925,645
Total Property and Equipment and right of use assets 3,377,067 1,431,649
Other Assets:    
Investments at cost 5,680 5,714
Other intangible assets 748
Deposits 445,656 347,932
Total Other Assets 451,336 354,394
Total Assets 35,573,502 13,159,249
Current Liabilities:    
Current maturities of finance lease obligations 5,201 13,789
Current maturities of operating lease liabilities 603,152
Accounts payable 4,717,535 2,122,479
Accrued expenses 3,008,933 1,868,229
Contract liabilities 1,466,645 516,335
Deferred revenue / customers deposits 571,777 98,781
Total Current Liabilities 10,373,243 4,619,613
Operating lease liabilities, net of current maturities 1,352,749
Total Long-term Liabilities 1,352,749 0
Total Liabilities 11,725,992 4,619,613
Commitment and Contingencies
Stockholders' Equity:    
Preferred stock; par value $0.001, 2,500,000 shares authorized; no shares issued or outstanding at June 30, 2019 and December 31, 2018 respectively
Common stock; par value $0,001, 25,000,000 shares authorized, 20,547,668 and 18,228,887 (each after the 4-to-1 reverse stock split) shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively 20,548 18,229
Additional paid-in capital 61,538,883 46,575,986
Accumulated deficit (32,105,194) (32,286,224)
Deferred compensation (29,166) (23,499)
Accumulated other comprehensive income, net (5,577,561) (5,744,856)
Total Stockholders' Equity 23,847,510 8,539,636
Total Liabilities and Stockholders' Equity $ 35,573,502 $ 13,159,249
v3.19.2
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals)
6 Months Ended 12 Months Ended
Jun. 30, 2019
$ / shares
shares
Dec. 31, 2018
$ / shares
shares
Preferred stock, par value (in dollars per share) | $ / shares $ 0.001 $ 0.001
Preferred stock, shares authorized (in shares) 2,500,000 2,500,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, par value (in dollars per share) | $ / shares $ 0.001 $ 0.001
Common stock, shares authorized (in shares) 25,000,000 25,000,000
Common stock, shares issued (in shares) 20,547,668 18,228,887
Common stock, shares outstanding (in shares) 20,547,668 18,228,887
Common stock, reverse stock split 4-to-1 4 4
v3.19.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Net Sales $ 9,297,186 $ 3,598,028 $ 16,718,384 $ 5,989,410
Cost of Goods Sold 7,222,076 2,938,206 13,168,194 5,389,180
Gross Profit 2,075,110 659,822 3,550,190 600,230
Operating Expenses:        
Selling expenses 514,037 463,998 997,623 873,790
General and administrative expenses 968,437 582,208 1,739,302 1,344,647
Research and development expenses 199,184 176,281 402,356 345,677
Total Operating Expense 1,681,658 1,222,487 3,139,281 2,564,114
Income (Loss) from Operations 393,452 (562,665) 410,909 (1,963,884)
Other Income (Expense)        
Interest and other income 18,173 7,173 25,450 10,457
Interest expense (36,502) (4,174) (75,150) (60,474)
Gain (Loss) on currency transactions (206,718) 296,140 (158,560) 217,086
Gain (Loss) on sale of fixed assets (21,619) (21,619)
Total Other Income (Expense) (246,666) 299,139 (229,879) 167,069
Income (Loss) Before Income Taxes 146,786 (263,526) 181,030 (1,796,815)
Income Tax Expense (Income)
Net Income (Loss) $ 146,786 $ (263,526) $ 181,030 $ (1,796,815)
Basic and Diluted Income (Loss) Per Share (in dollars per share) $ 0.01 $ (0.004) $ 0.01 $ (0.03)
Basic Weighted Average Common Shares Outstanding (in shares) 19,211,771 16,214,833 18,742,029 13,682,405
Diluted Weighted Average Common Shares Outstanding (in shares) 19,228,160 16,214,833 18,758,108 13,682,405
v3.19.2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Net Gain (Loss) attributable to LiqTech International, Inc. $ 146,786 $ (263,526) $ 181,030 $ (1,796,815)
Currency Translation 381,217 (633,427) 167,295 (458,560)
Total Comprehensive Income (Loss) $ 528,003 $ (896,953) $ 348,325 $ (2,255,375)
v3.19.2
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($)
Issuance 1 [Member]
Board of Directors Chairman [Member]
Preferred Stock [Member]
Issuance 1 [Member]
Board of Directors Chairman [Member]
Common Stock [Member]
Issuance 1 [Member]
Board of Directors Chairman [Member]
Additional Paid-in Capital [Member]
Issuance 1 [Member]
Board of Directors Chairman [Member]
Retained Earnings [Member]
Issuance 1 [Member]
Board of Directors Chairman [Member]
AOCI Attributable to Parent [Member]
Issuance 1 [Member]
Board of Directors Chairman [Member]
Deferred Compensation, Share-based Payments [Member]
Issuance 2 [Member]
Board of Directors Chairman [Member]
Preferred Stock [Member]
Issuance 2 [Member]
Board of Directors Chairman [Member]
Common Stock [Member]
Issuance 2 [Member]
Board of Directors Chairman [Member]
Additional Paid-in Capital [Member]
Issuance 2 [Member]
Board of Directors Chairman [Member]
Retained Earnings [Member]
Issuance 2 [Member]
Board of Directors Chairman [Member]
AOCI Attributable to Parent [Member]
Issuance 2 [Member]
Board of Directors Chairman [Member]
Deferred Compensation, Share-based Payments [Member]
Convertible Preferred Stock [Member]
Preferred Stock [Member]
Convertible Preferred Stock [Member]
Common Stock [Member]
Convertible Preferred Stock [Member]
Additional Paid-in Capital [Member]
Convertible Preferred Stock [Member]
Retained Earnings [Member]
Convertible Preferred Stock [Member]
AOCI Attributable to Parent [Member]
Convertible Preferred Stock [Member]
Deferred Compensation, Share-based Payments [Member]
Preferred Stock [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
AOCI Attributable to Parent [Member]
Deferred Compensation, Share-based Payments [Member]
Total
BALANCE (in shares) at Dec. 31, 2017                                     2,200,837 11,107,316          
BALANCE at Dec. 31, 2017                                     $ 2,201 $ 11,108 $ 40,491,229 $ (28,471,696) $ (5,040,792) $ (79,933)  
Common shares issued for services (in shares) 14,852                                              
Common shares issued, for services provided $ 14 $ 59,986                                      
Stock based compensation expenses recognized                                     18,273  
Currency translation, net                                     174,867  
Net Gain (Loss) attributable to LiqTech International, Inc.                                     (1,533,287)  
Currency Translation                                     174,867  
BALANCE (in shares) at Mar. 31, 2018                                     2,200,837 11,122,168          
BALANCE at Mar. 31, 2018                                     $ 2,201 $ 11,123 40,551,214 (30,004,983) (4,865,925) (61,660)  
BALANCE (in shares) at Dec. 31, 2017                                     2,200,837 11,107,316          
BALANCE at Dec. 31, 2017                                     $ 2,201 $ 11,108 40,491,229 (28,471,696) (5,040,792) (79,933)  
Currency translation, net                                                 $ (458,560)
Net Gain (Loss) attributable to LiqTech International, Inc.                                                 (1,796,815)
Currency Translation                                                 (458,560)
BALANCE (in shares) at Jun. 30, 2018                                     18,185,137          
BALANCE at Jun. 30, 2018                                     $ 18,185 46,411,430 (30,268,509) (5,499,352) (52,499)  
BALANCE (in shares) at Mar. 31, 2018                                     2,200,837 11,122,168          
BALANCE at Mar. 31, 2018                                     $ 2,201 $ 11,123 40,551,214 (30,004,983) (4,865,925) (61,660)  
Stock based compensation expenses recognized                                     9,161  
Currency translation, net                                     (633,427) (633,427)
Net Gain (Loss) attributable to LiqTech International, Inc.                                     (263,526) (263,526)
Common shares issued, net offering cost (in shares)                                     4,862,132          
Common shares issued, net offering cost                                     $ 4,862 5,860,215  
Conversion of mandatory preferred stock issued (in shares)                         (2,200,837) 2,200,837                      
Conversion of mandatory preferred stock issued                         $ (2,201) $ 2,201              
Currency Translation                                     (633,427) (633,427)
BALANCE (in shares) at Jun. 30, 2018                                     18,185,137          
BALANCE at Jun. 30, 2018                                     $ 18,185 46,411,430 (30,268,509) (5,499,352) (52,499)  
BALANCE (in shares) at Dec. 31, 2018                                     18,228,887          
BALANCE at Dec. 31, 2018                                     $ 18,229 46,575,986 (32,286,224) (5,744,856) (23,499)  
Common shares issued for services (in shares)             28,993                                  
Common shares issued, for services provided             $ 29 $ 134,138 $ (21,667)                          
Stock based compensation expenses recognized                                     5,778 10,166  
Currency translation, net                                     (213,922)  
Net Gain (Loss) attributable to LiqTech International, Inc.                                     34,244  
Currency Translation                                     (213,922)  
Exercise of stock options (in shares)                                     45,000          
Exercise of stock options                                     $ 45 133,155  
BALANCE (in shares) at Mar. 31, 2019                                     18,302,880          
BALANCE at Mar. 31, 2019                                     $ 18,303 46,849,057 (32,251,980) (5,958,778) (35,000)  
BALANCE (in shares) at Dec. 31, 2018                                     18,228,887          
BALANCE at Dec. 31, 2018                                     $ 18,229 46,575,986 (32,286,224) (5,744,856) (23,499)  
Currency translation, net                                                 167,295
Net Gain (Loss) attributable to LiqTech International, Inc.                                                 181,030
Currency Translation                                                 $ 167,295
Exercise of stock options (in shares)                                                 45,000
BALANCE (in shares) at Jun. 30, 2019                                     20,547,668          
BALANCE at Jun. 30, 2019                                     $ 20,548 61,538,883 (32,105,194) (5,577,561) (29,166)  
BALANCE (in shares) at Mar. 31, 2019                                     18,302,880          
BALANCE at Mar. 31, 2019                                     $ 18,303 46,849,057 (32,251,980) (5,958,778) (35,000)  
Stock based compensation expenses recognized                                     17,333 5,834  
Currency translation, net                                     381,217 $ 381,217
Net Gain (Loss) attributable to LiqTech International, Inc.                                     146,786 146,786
Common shares issued, net offering cost (in shares)                                     2,215,862          
Common shares issued, net offering cost                                     $ 2,216 14,672,522  
Currency Translation                                     381,217 $ 381,217
Exercise of warrants (in shares)                                     28,887          
Exercise of warrants                                     $ 29 29  
Exercise of warrants                                     $ (29) (29)  
BALANCE (in shares) at Jun. 30, 2019                                     20,547,668          
BALANCE at Jun. 30, 2019                                     $ 20,548 $ 61,538,883 $ (32,105,194) $ (5,577,561) $ (29,166)  
v3.19.2
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (Parentheticals) - Common Stock [Member] - USD ($)
3 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Mar. 31, 2019
Mar. 31, 2018
Board of Directors Chairman [Member] | Issuance 1 [Member]        
Shares issued, price per share (in dollars per share)       $ 4.04
Board of Directors Chairman [Member] | Issuance 2 [Member]        
Shares issued, price per share (in dollars per share)     $ 4.63  
Shares issued, price per share (in dollars per share) $ 7.25 $ 1.36    
Shares issued, offering cost $ 1,390,262 $ 747,423    
Convertible Preferred shares, convertible securities (in shares)   4    
v3.19.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Cash Flows from Operating Activities:    
Net Income (Loss) $ 181,030 $ (1,796,815)
Adjustments to reconcile net profit (loss) to net cash provided (used) by operations:    
Depreciation and amortization 554,130 430,081
Stock-based compensation 151,611 87,434
Changes in assets and liabilities:    
Accounts receivable (7,152,037) (319,952)
Other receivables (2,204,708) 322,514
Deposits (1,203,216)
Inventory (281,601) 89,754
Prepaid expenses/deposits (157,913) (78,882)
Accounts payable 2,595,054 (250,828)
Accrued expenses 1,613,701 (1,131,833)
Operating lease liability (234,934)
Long-term contracts 1,068,256 (682,820)
Total Adjustments (5,251,657) (1,534,532)
Net Cash Used in Operating Activities (5,070,627) (3,331,347)
Cash Flows from Investing Activities:    
Purchase of property and equipment (327,559) (82,992)
Net Cash Used in Investing Activities (327,559) (82,992)
Cash Flows from Financing Activities:    
Net payments on financing lease obligation (8,588) (14,710)
Proceeds from exercise of stock options 133,200
Proceeds from issuance of common stock, net 14,674,738 5,865,077
Net Cash Provided by Financing Activities 14,799,350 5,850,367
Gain (Loss) on Currency Translation 179,080 (430,727)
Net Change in Cash, Cash Equivalents and Restricted Cash 9,580,244 2,005,301
Cash, Cash Equivalents and Restricted Cash at Beginning of Period 3,776,111 2,486,199
Cash, Cash Equivalents and Restricted Cash at End of Period 13,356,355 4,491,500
Supplemental Disclosures of Cash Flow Information:    
Interest Paid 50,372 60,474
Income Taxes
Supplemental Disclosures of Non-Cash Investing and Financing:    
Common stocks issued for conversion of mandatory preferred stock 8,803
Offering costs for common stocks issuance $ 1,390,262 $ 747,423
v3.19.2
Note 1 - Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Significant Accounting Policies [Text Block]
NOTE
1
- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Business and Basis of Presentation
 
The consolidated financial statements include the accounts of LiqTech International, Inc., the “Company” and its subsidiaries. The terms "Company", “us", "we" and "our" as used in this report refer to the Company and its subsidiaries, which are set forth below. The Company engages in the development, design, production, marketing and sale of automated filtering systems, ceramic silicon carbide liquid and diesel particulate air filters in United States, Canada, Europe, Asia and South America. Set forth below is a description of the Company and each of its subsidiaries:
 
LiqTech International, Inc., a Nevada corporation organized in
July 2004,
formerly known as Blue Moose Media, Inc.
 
LiqTech USA, a Delaware corporation and a
100%
owned subsidiary of The Company formed in
May 2011.
 
LiqTech International AS, a Danish corporation, incorporated on
January 15, 2000 (
“LiqTech Int. DK”), a
100%
owned subsidiary of LiqTech USA, engages in development, design, application, marketing and sales of membranes, ceramic diesel particulate and liquid filters and catalytic converters in Europe, Asia and South America.
 
LiqTech NA, Inc. (“LiqTech NA”), incorporated in Delaware on
July 1, 2005,
a
100%
owned subsidiary of LiqTech USA. LiqTech NA, Inc. engages in the production, marketing and sale of ceramic diesel particulate and liquid filters in the United States and Canada.
 
LiqTech Systems AS, a Danish Corporation ("LiqTech Systems") (Formerly Provital Solutions A/S) was incorporated on
September 1, 2009
and engages in the manufacture of fully automated filtering systems for application within marine applications municipal pool and spa applications, and other industrial applications within Denmark and international markets.
 
LiqTech Germany (“LiqTech Germany”), a
100%
owned subsidiary of LiqTech Int. DK, incorporated in Germany on
December 9, 2011,
engaged in marketing and sale of liquid filters in Germany. The Company is in the process of closing operations, which is expected to be completed during
2019.
 
LiqTech PTE Ltd (“LiqTech Sing”), a
95%
owned subsidiary of LiqTech Int. DK, incorporated in Singapore on
January 19, 2012,
engaged in marketing and sale of liquid filters in Singapore and other countries in the area. The Company is in the process of closing operations, which is expected to be completed during
2019.
 
Consolidation --
 The consolidated financial statements include the accounts and operations of the Company. All material intercompany transactions and accounts have been eliminated in the consolidation.
 
Functional Currency / Foreign currency translation -- 
The functional currency of LiqTech International, Inc., LiqTech USA, Inc. and LiqTech NA is the U.S. Dollar. The Functional Currency of LiqTech Int. DK and LiqTech Systems AS is the Danish Krone (“DKK”), the functional currency of LiqTech Germany is the Euro and the functional currency of LiqTech Singapore is the Singapore Dollar. The Company’s reporting currency is U.S. Dollar for the purpose of these consolidated financial statements. The foreign subsidiaries balance sheet accounts are translated into U.S. Dollars at the period-end exchange rates and all revenue and expenses are translated into U.S. Dollars at the average exchange rates prevailing during the
three
and
six
months ended
June 30, 2019
and
2018.
Translation gains and losses are deferred and accumulated as a component of other comprehensive income in stockholders’ equity. Transaction gains and losses that arose from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are included in the statement of operations as incurred.
 
Cash, Cash Equivalents and Restricted Cash --
 The Company considers all highly liquid debt instruments purchased with a maturity of
three
months or less to be cash equivalents. For the
six
months ended
June 30, 2019
and
2018,
the Company has
$783,499
and
$0,
respectively, as restricted cash. The restricted cash is payment guarantees issued to the benefit of customers in connection with prepayments of sales orders. The restricted cash is held in a local financial institution and will be released as order deliveries are made and accepted by the customer. The Company had
no
balances held in a financial institution in the United States in excess of federally insured amounts at
June 30, 2019
and
December 31, 2018.
 
Accounts Receivable --
 Accounts Receivables consist of trade receivables arising in the normal course of business. The Company establishes an allowance for doubtful accounts that reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. 
 
The roll forward of the allowance for doubtful accounts for the
six
months ended
June 30, 2019
and the year ended
December 31, 2018
is as follows:
 
   
June 30,
201
9
   
December 31,
201
8
 
Allowance for doubtful accounts at the beginning of the period
  $
971,772
    $
660,581
 
Bad debt expense
   
-
     
353,562
 
Receivables written off during the periods
   
(3,494
)
   
-
 
Effect of currency translation
   
(5,773
)
   
(42,371
)
Allowance for doubtful accounts at the end of the period
  $
962,505
    $
971,772
 
  
Inventory --
 Inventory is carried at the lower of cost or market, as determined on the
first
-in,
first
-out method.
 
Leases --
 The Company leases certain vehicles, real property 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 assets and liabilities under finance leases are recorded at the lower of the present value of future minimum lease payments or the fair market value of the related assets. Assets under finance leases are amortized using the straight-line method over the initial lease term. Amortization of assets under finance leases is included in depreciation expense.
 
In
February 2016,
the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No.
2016
-
02,
Leases (“Topic
842”
), which requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Subsequent ASUs were issued to provide additional guidance.
 
On
January 1, 2019,
the Company adopted Topic
842
using the optional transition method of adoption, under which the new standards were applied prospectively rather than restating the prior periods presented. The Company elected the package of practical expedients permitted, which, among other things, allowed the Company to carry forward the historical lease classification. The Company made the accounting policy elections to
not
recognize lease assets and lease liabilities with an initial term of
12
months or less and to
not
separate lease and non-lease components. The Company’s accounting for finance leases (formerly called capital lease obligations) remains substantially unchanged. Operating lease right-of-use (“ROU”) assets and liabilities were recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do
not
provide an implicit rate, an incremental borrowing rate based on the information available at the commencement date was used in determining the present value. The Company will use the implicit rate when readily determinable. The operating lease ROU asset also included prepaid lease payments and was reduced by accrued lease payments. The Company’s lease terms
may
include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. Operating lease cost for lease payments will be recognized on a straight-line basis over the lease term. The impact of adoption on the Company’s consolidated balance sheet was the recognition of a ROU asset of
$2.1
million and an operating lease liability of
$2.1
million primarily for office space leases. The Company’s adoption of Topic
842
did
not
materially impact its results of operation.
 
Property and Equipment --
 Property and equipment are stated at cost. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized, upon being placed in service. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is computed for financial statement purposes on a straight-line basis over the estimated useful lives of the assets, which range from
three
to
ten
years.
 
Long-Term Investments --
 Investments in non-consolidated companies are included in long-term investments in the consolidated balance sheet and are accounted for under the cost method and equity method. For these non-quoted investments, we regularly review the assumptions underlying the operating performance and cash flow forecasts based on information requested from these privately held companies. Generally, this information
may
be more limited,
may
not
be as timely as and
may
be less accurate than information available from publicly traded companies. Assessing each investment's carrying value requires significant judgment by management. If it is determined that there is an-other-than-temporary decline in the fair value of a non-public equity security, we write down the investment to its fair value and record the related write down as an investment loss in the consolidated statement of operations.
 
Intangible Assets --
 Definite life intangible assets include patents. The Company accounts for definite life intangible assets in accordance with Financial Accounting Standards Board, (“FASB”) Accounting Standards Codification, (“ASC”) Topic
350,
“Goodwill and Other Intangible Assets” and amortized the patents on a straight-line basis over the estimated useful life of
two
to
ten
years. 
 
Revenue Recognition and Sales Incentives
 
 
Accounting policy
: On
January 1, 2018,
the Company adopted Accounting Standards Codification Topic
606,
“Revenue from Contracts with Customers,” which includes clarifying ASUs issued in
2015,
2016
and
2017
(“new revenue standard”). The new revenue standard was applied to all open revenue contracts using the modified retrospective method as of
January 1, 2018.
The new revenue standard did
not
have a material impact on revenue recognition.
 
For membrane and DPF product sales, revenue is recognized when performance obligations under the terms of a contract with the customer are satisfied, which occurs when control of the membrane, DPF or services are transferred to the customer. The majority of the Company's sales contracts contain performance obligations satisfied at a point in time when title and risks and rewards of ownership have transferred to the customer. This generally occurs when the product is shipped or accepted by the customer.  Revenue for service contracts are recognized as the services are provided. Revenue is measured as the amount of consideration expected to be received in exchange for transferring the goods or providing services. The satisfaction of performance obligations under the terms of a revenue contract generally gives rise for the right to payment from the customer. The Company's standard payment terms vary by the type and location of the customer and the products or services offered. Generally, the time between when revenue is recognized and when payment is due is
not
significant. Pre-payments received prior to satisfaction of performance obligations are recorded as a customer deposit liability. Given the insignificant days between revenue recognition and receipt of payment, financing components do
not
exist between the Company and its customers.
 
For contracts with customers that include multiple performance obligations, judgment is required to determine whether performance obligations specified in these contracts are distinct and should be accounted for as separate revenue transactions for recognition purposes. For such arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are generally determined based on the prices charged to customers or using expected cost-plus margin.
 
System sales are recognized when the Company transfers control based upon signed acceptance of the system by the customer upon shipment of the system based on the terms of the contract. For the majority of Systems, the Company transfers control and recognizes revenue when products are shipped to the customer according to the terms of the contract or purchase order. In connection with the system it is normal procedure to issue a FAT (Factory Acceptance Test) stating that the customer has accepted the performance of the system as it is being shipped from the production facility in Hobro. As part of the performance obligation, the customer is normally offered commissioning services (final assembly and configuration at a place designated by the customer) and this commissioning is therefore considered a
second
delivery performance and is valued at cost, based on the contractual performance given a standard gross margin rate. This
second
performance delivery is recognized as revenue at the time of delivery of the commissioning together with the cost incurred. Part of the invoicing to the customer is also attributed to the commissioning and at transfer of the control of the system (i.e. the
first
performance obligation), some of the invoicing will still be awaiting commissioning and is therefore recognized as Other Receivables, while the revenue related to the commissioning is recognized as Deferred Income.
 
Aftermarket sales represent parts, extended warranty and maintenance services. For the sale of aftermarket parts, the Company transfers control and recognizes revenue when parts are shipped to the customer or services are provided. When customers are given the right to return eligible parts and accessories, the Company estimates the expected returns based on an analysis of historical experience. The Company adjusts estimated revenues at the earlier of when the most likely amount of consideration expected to be received changes or when the consideration becomes fixed. The Company recognizes revenue for extended warranty and maintenance agreements based on the standalone selling price over the life of the contract, which reflects the costs to perform under these contracts, which corresponds with, and thereby depicts the transfer of control to the customer. For invoicing to customers where the transfer of control has
not
occurred (prepayments), the invoiced amount is recognized as Contract Assets / Contract Liabilities.
  
The Company has received long-term contracts for grants from government entities for the development and use of silicon carbide membranes in various water filtration and treatment applications and historically in the installation of various water filtrations systems. We measure transfer of control of the performance obligation on long-term contracts utilizing the cost-to-cost measure of progress, with cost of revenue including direct costs, such as labor and materials. Under the cost-to-cost approach, the use of estimated costs to complete each performance obligation is a significant variable in the process of determining recognized revenue and a significant factor in the accounting for such performance obligations. The timing of when we bill our customers is generally dependent upon advance billings terms, milestone billings based on completion of certain phases of the work or when services are provided, or products are shipped. Projects with performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of cumulative billings are reported on our Balance Sheets as contract assets. Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimated earnings recognized to date are reported on our Balance Sheets as contract liabilities.
 
In Denmark, Value Added Tax (“VAT”) of
25%
of the invoice amount is collected with respect of the sales of goods on behalf of tax authorities. The VAT collected is
not
revenue of the Company; instead, the amount is recorded as a liability on the balance sheet until such VAT is paid to the authorities. 
 
The Company’s disaggregated revenue is reported in Note
8.
 
Advertising Cost --
 Costs incurred in connection with advertising of the Company’s products is expensed as incurred. Such costs amounted to
$72,349
and
$3,326
 for the
six
months ended
June 30, 2019
and
2018,
respectively.
 
Research and Development Cost --
 The Company expenses research and development costs for the development of new products as incurred. Included in operating expense for the
six
months ended
June 30, 2019
and
2018
were
$402,356
 and
$345,677,
respectively, of research and development costs.
 
Income Taxes --
 The Company accounts for income taxes in accordance with FASB ASC Topic
740
Accounting for Income Taxes. This statement requires an asset and liability approach for accounting for income taxes.
  
Income (Loss) Per Share --
 The Company calculates earnings (loss) per share in accordance with FASB ASC
260,
Earnings Per Share. Basic earnings per common share (EPS) are based on the weighted average number of common shares outstanding during each period. Diluted earnings per common share are based on shares outstanding (computed as under basic EPS) and potentially dilutive common shares. Potential common shares included in the diluted earnings per share calculation include in-the-money stock options and warrants that have been granted but have
not
been exercised.
 
Stock Options and Awards --
 The Company has granted stock options to certain key employees during the years presented in the accompanying consolidated financial statements (see note
7
). The Company accounts for options in accordance with the provisions of FASB ASC Topic
718,
Compensation – Stock Compensation. Non-cash compensation costs of
$151,611
and
$87,434
have been recognized for the vesting of options and stock awards granted to employees for the
six
months ended
June 30, 2019
and
2018,
respectively.
 
Fair Value of Financial Instruments --
 The Company accounts for fair value measurements for financial assets and liabilities in accordance with FASB ASC Topic
820.
The authoritative guidance that, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a
three
-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
 
 
Level
1.
Observable inputs such as quoted prices in active markets for identical assets or liabilities;
   
 
Level
2.
Inputs other than the quoted prices in active markets that are observable either directly or indirectly; and
 
 
Level
3.
Unobservable inputs in which there is little or
no
market data, which require the reporting entity to develop its own assumptions.
 
Unless otherwise disclosed, the fair value of the Company’s financial instruments including cash, accounts receivable, prepaid expenses, investments, accounts payable, accrued expenses, capital lease obligations and notes payable approximates their recorded values due to their short-term maturities.
  
Accounting Estimates --
 The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets including accounts receivable, allowance for doubtful accounts, contract assets, reserve for obsolete inventory, depreciation and impairment of property plant and equipment, and goodwill; liabilities including contract liabilities and contingencies; the disclosures of contingent assets and liabilities at the date of the financial statements; and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimated.
 
Recent Accounting Pronouncements
 – In
June 2018,
the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No.
2018
-
07,
Compensation – Stock Compensation (“Topic
718”
): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic
718
to include share-based payment transactions for acquiring goods and services from nonemployees except for certain circumstances. Any transition impact will be a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Company adopted this guidance in the
first
quarter of
2019,
and it did
not
have a material impact on its consolidated financial statements.
 
In
August 2018,
the Financial Accounting Standards board (“FASB”) issued Accounting Standards Update (“ASU”)
2018
-
15
(“ASU
2018
-
15”
), 
Intangibles - Goodwill and Other - Internal-Use Software (Topic
350
-
40
): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.
  ASU
2018
-
15
aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The updated guidance is effective for annual periods beginning after
December 15, 2019
and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on the Company’s consolidated financial statements.
 
In
August 2018,
the FASB issued ASU
No.
2018
-
13,
Fair Value Measurement (Topic
820
): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurement by removing, modifying and adding certain disclosures. This ASU is effective for the annual period beginning after
December 15, 2019,
including interim periods within that annual period. The Company is currently evaluating the new guidance to determine the impact it will have on the Company’s consolidated financial statements.
 
In
August 2018,
the SEC adopted amendments to simplify certain disclosure requirements, as set forth in Securities Act Release
No.
33
-
10532,
Disclosure Update and Simplification, which includes a requirement for entities to present the changes in shareholders’ equity in the interim financial statements in quarterly reports on Form
10
-Q. This amendment is effective for all filings made on or after
November 5, 2018.
In light of the timing of effectiveness of the amendment and proximity to the filing date for most filers’ quarterly reports, the SEC has allowed for a filer’s
first
presentation of the changes in shareholders’ equity to be included in its Form
10
-Q for the quarter that begins after the effective date. The Company adopted the SEC’s amendment to interim disclosures in the
first
quarter of
2019
and has presented the changes in shareholders’ equity on an interim basis.
 
In
February 2016,
the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
No.
2016
-
02,
 Leases (Topic
842
) ("ASC
842"
), which requires lessees to recognize right-of-use ("ROU") assets and related lease liabilities on the balance sheet for all leases greater than
one
year in duration. We adopted ASC
842
on
January 1, 2019
using a modified retrospective transition approach for leases existing at, or entered after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach did
not
require any transition accounting for leases that expired before the earliest comparative period presented. The adoption of this standard resulted in the recording of ROU assets of approximately
$2.1
million and lease liabilities of approximately
$2.1
million for all of our lease agreements with original terms of greater than
one
year. The adoption of ASC
842
did
not
have a significant impact on our consolidated statements of operations. See Note
4
for the required disclosures relating to our lease agreements.
 
In
November 2016,
the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No.
2016
-
18,
Restricted Cash which requires companies in the statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Statement of Cash Flows. For the period ended
June 30, 2019
the Company has recorded
$783,499
as Restricted cash and
$12,572,856
as Unrestricted cash and a total of
$13,356,355
as Cash, Cash equivalents and Restricted cash. For the period ended
December 31, 2018
the amounts were
$0
in Restricted cash and
$3,776,111
in Unrestricted cash.
 
Other recent accounting pronouncements issued by the FASB did
not
or are
not
believed by management to have a material impact on the Company’s present or future financial statements. 
 
v3.19.2
Note 2 - Inventory
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Inventory Disclosure [Text Block]
NOTE
2
- INVENTORY
 
Inventory consisted of the following at
June 30, 2019
and
December 31, 2018:
 
   
201
9
   
201
8
 
Furnace parts and supplies
  $
730,370
    $
596,806
 
Raw materials
   
1,756,414
     
1,659,826
 
Work in process
   
1,501,307
     
1,691,175
 
Finished goods and filtration systems
   
1,527,554
     
1,596,042
 
Reserve for obsolescence
   
(801,990
)
   
(1,111,794
)
Net Inventory
  $
4,713,656
    $
4,432,055
 
v3.19.2
Note 3 - Lines of Credit
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Debt Disclosure [Text Block]
 
NOTE
3
 - LINES OF CREDIT
 
In connection with certain orders, we have to convey the customer a working guarantee or a prepayment guarantee or security bond. For that purpose, we have a guarantee credit line of DKK
94,620
(approximately
$14,427
at
June 30, 2019)
with a bank, subject to certain base limitations. As of
June 30, 2018,
we had DKK
94,620
(approximately
$14,801
) in working guarantee against the line. This line of credit is guaranteed by Vækstfonden (the Danish state's investments fund) and is secured by certain assets of LiqTech Systems such as receivables, inventory and equipment.
v3.19.2
Note 4 - Leases
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Lessee, Operating and Finance Leases [Text Block]
 
NOTE
4
 - LEASES
 
The Company leases certain vehicles, real property 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 operating leases for production and office space in Copenhagen and White Bear Lake, Minnesota.
 
On
January 1, 2019,
the Company adopted Topic
842
requiring organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The Company elected to use the transition method of adoption, under which the new standards were applied prospectively rather than restating the prior periods presented. As a result of the modified retrospective transition method of adoption, certain accounts lack a comparable value for the same period of
2018,
specifically accounts and values associated with operating leases and ROU assets.
 
Supplemental balance sheet information related to leases as of
June 30, 2019
and
2018
was as follows:
 
   
June 30,
2019
   
December
31
,
2018
 
Operating leases
:
 
 
 
 
 
 
 
 
Operating lease right-of-use
  $
1,925,645
    $
-
 
                 
Operating lease liabilities - current
  $
603,152
    $
-
 
Operating lease liabilities – long-term
   
1,352,749
     
-
 
Total operating lease liabilities
  $
1,955,901
    $
-
 
                 
Finance leases
:
 
 
 
 
 
 
 
 
Property and equipment, at cost
  $
1,171,295
    $
1,171,295
 
Accumulated depreciation
   
(1,166,115
)
   
(1,162,256
)
Property and equipment, net
  $
5,180
    $
9,039
 
                 
Finance lease liabilities - current
  $
5,201
    $
13,789
 
Finance lease liabilities – long-term
   
-
     
-
 
Total finance lease liabilities
  $
5,201
    $
13,789
 
                 
Weighted average remaining lease term:
               
Operating leases
   
4.4
     
-
 
Finance lease
   
0.1
     
0.8
 
                 
Weighted average discount rate:
               
Operating leases
   
7.0
%
   
-
 
Finance leases
   
9.0
%
   
7.3
%
 
Maturities of lease liabilities at June 30, 2019 were as follows:
               
   
Operating
lease
   
Finance lease
 
July 2019 – June 2020
  $
624,358
    $
5,240
 
July 2020 – June 2021
   
531,629
     
-
 
July 2021 – June 2022
   
370,864
     
-
 
July 2022 – June 2023
   
342,510
     
-
 
July 2023 – June 2024
   
335,706
     
-
 
Thereafter
   
27,801
     
-
 
Total payment under lease agreements
   
2,232,868
     
5,240
 
Less imputed interest
   
(276,967
)
   
(39
)
Total lease liability
  $
1,955,901
    $
5,201
 
 
As previously disclosed in our
2018
Form
10
-K under the prior guidance of ASC
842,
minimum payments under operating lease agreements as of
December 31, 2018
were as follows:
 
Year ending December 31,
 
Operating
lease
 
2019
  $
712,250
 
2020
   
578,997
 
2021
   
402,584
 
2022
   
350,249
 
Thereafter
   
560,977
 
Total
  $
2,605,057
 
 
v3.19.2
Note 5 - Agreements and Commitments
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]
 
NOTE
5
 - AGREEMENTS AND COMMITMENTS
 
401
(K) Profit Sharing Plan
 -- LiqTech NA has a
401
(k)-profit sharing plan and trust covering certain eligible employees. The amount LiqTech NA contributes is discretionary. For the
six
months ended
June 30, 2019
and
2018,
matching contributions were expensed and totaled
$5,677
and
$5,706,
respectively.
 
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.
 
On
November 20, 2018
a former supplier to Liqtech International A/S contacted the Company with a claim of
DKK448,500
(
$68,800
) alleging that a former Agreement from
2016
had
not
been respected. The Company has contested the claim due to lack of evidence to support the claim.
No
provision has been made at
June 30, 2019
as the Company does
not
expect the claim to materialize in any payments to the former supplier.
 
On
February 27, 2019,
LiqTech Systems A/S was contacted by a former supplier alleging that the Company owed
DKK543,905
(
$83,400
) for services rendered in
2017,
the claimant has previously filed a lawsuit to claim payment for the services, which was denied by the Company due to severe errors in the services supplied, and the claim was rejected by a court of law in
2018.
Due to the nature of the new claim and the previous ruling from the court of law,
no
provision has been made at
June 30, 2019.
 
In connection with certain orders, we have to convey the customer a working guarantee or a prepayment guarantee or security bond. For that purpose, we have a guarantee line of DKK
94,620
(approximately
$14,427
at
June 30, 2019)
with a bank, subject to certain base limitations. As of
June 30, 2018,
we had DKK
94,620
(approximately
$14,801
) in working guarantee against the line. 
 
 
Product Warranties
- The Company provides a standard warranty on its systems, generally for a period of
one
to
three
years after customer acceptance. The Company estimates the costs which
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 provide a warranty for up to
four
years from the date of commissioning. The specific terms and conditions of those warranties vary depending upon the product sold and the country in which the Company does business. 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, including deferred revenue on extended warranty contracts included in accrued expenses on the balance sheet, are as follows:
 
   
2019
 
Balance at December 31, 2018
  $
432,225
 
Current year warranty expense
   
903,216
 
Change in estimate related to pre-existing warranties
 
 
-
 
Payments made
   
(275,736
)
Foreign currency effect
   
1,901
 
Balance at
June 30
, 2019
  $
1,061,606
 
 
v3.19.2
Note 6 - Earnings Per Share
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Earnings Per Share [Text Block]
 
NOTE
6
 - EARNINGS PER SHARE
 
The following data shows the amounts used in computing earnings per share and the effect on income and the weighted average number of shares of potential dilutive common stock for the
six
months ended
June 30, 2019
and
2018:
 
 
 
For the Six Months
Ended
June 30
,
 
 
 
2019
 
 
2018
 
Net Gain (Loss) attributable to LiqTech International, Inc.
 
$
181,030
 
 
$
(1,796,815
)
Weighted average number of common shares used in basic earnings per share
 
 
18,742,029
 
 
 
13,682,405
 
Effect of dilutive securities, stock options and warrants
 
 
16,079
 
 
 
-
 
Weighted average number of common shares and potential dilutive common shares outstanding used in dilutive earnings per share
 
 
18,758,108
 
 
 
13,682,405
 
 
For the
six
months ended
June 30, 2019,
the Company had
25,000
options outstanding to purchase common stock at
$2.96
per share.
 
For the
six
months ended
June 30, 2018,
the Company had
113,750
options outstanding to purchase common stock at
$2.96
per share and
100,000
 warrants outstanding to purchase common stock at
$6.60
per share, which were
not
included in the loss per share computation because their effect would be anti-dilutive.
v3.19.2
Note 7 - Stockholders' Equity
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]
NOTE
7
 - STOCKHOLDERS' EQUITY
 
Common Stock
-- The Company has
25,000,000
authorized shares of common stock,
$0.001
par value. As of
June 30, 2019,
and
December 31, 2018,
respectively, there were
20,547,668
(after the
4
-to-
1
reverse stock split effective on
April 8, 2019)
and
18,228,887
common shares issued and outstanding.      
 
Voting
-- Holders of the common stock are entitled to
one
vote for each share held of record on each matter submitted to a vote of stockholders, including the election of directors, and do
not
have any right to cumulate votes in the election of directors. 
 
Dividends
--
Subject to the rights and preferences of the holders of any series of preferred stock, if any, which
may
at the time be outstanding, holders of the common stock are entitled to receive ratably such dividends as our Board of Directors from time to time
may
declare out of funds legally available.  
 
Liquidation Rights
--
In the event of any liquidation, dissolution or winding-up of affairs of the Company, after payment of all of our debts and liabilities and subject to the rights and preferences of the holders of any outstanding shares of any series of our preferred stock, the holders of the common stock will be entitled to share ratably in the distribution of any of our remaining assets.  
 
Other Matters
--
Holders of the common stock have
no
conversion, preemptive or other subscription rights, and there are
no
redemption rights or sinking fund provisions with respect to our common stock. All of the issued and outstanding shares of common stock on the date of this report are validly issued, fully paid and non-assessable.
 
Preferred Stock
 --
Our Board of Directors has the authority to issue preferred stock in
one
or more classes or series and to fix the designations, powers, preferences and rights, the qualifications, limitations or restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any class or series, without further vote or action by the stockholders. The issuance of preferred stock
may
have the effect of delaying, deferring or preventing a change in control without further action by the stockholders and
may
adversely affect the voting and other rights of the holders of common stock.
 
The Company has
2,500,000
authorized shares of preferred stock,
$0.001
par value. As of
June 30, 2019
and
December 31, 2018,
respectively, there were
0
mandatory convertible preferred shares issued and outstanding. 
 
Stock Issuances 
 
Since 
January 1, 2019,
the Company has made the following issuances of common stock (adjusted to account for the
4
-to-
1
reverse stock-split on
April 8, 2019): 
 
On
March 5, 2019,
the Company issued an additional
24,827
shares of restricted stock valued at
$112,500
for services provided by the Board of Directors. The shares vested immediately.
 
On
January 24,
January 28,
February 6
and
March 1, 2019,
the Company issued a total of
45,000
shares in connection with employees exercising shares in relation to the stock option plan entered in
2015.
The shares were issued at a share price of
$2.96
and generated net proceeds of
$133,200.
 
On
May 22, 2019,
the Company completed a registered public offering of its common stock. At closing, the Company issued
2,215,862
shares of common stock at a per share price of
$7.25
and generated net proceeds of
$14,674,738
including cost of
$1,390,262
for underwrites fee, lawyer fee, auditor fee and other cost related to the capital raise.
 
On
June 6, 2019
the Company issued an additional
28,887
shares in connection with a cashless exercise of warrant’s issued in
2014.
 
For the
six
months ended
June 30, 2019
and
2018,
the Company has recorded non-cash compensation expense of
$39,111
 and
$27,434
relating to the awards, respectively.   
 
Common Stock Purchase Warrants 
 
On
June 6, 2019
the remaining warrants issued in
2014
were exercised on a cashless basis.
 
At
June 30, 2019
and
2018,
the Company had
no
non-vested warrants. We have recorded non-cash compensation expense of
$0
for the period’s ended
June 30, 2019
and
2018
related to the warrants issued.
 
Stock Options
 
 
In
August 2011,
the Company’s Board of Directors adopted a Stock Option Plan (the “Plan”). Under the terms and conditions of the Plan, the Board of Directors is empowered to grant stock options to employees, officers, and directors of the Company. At
June 30, 2019,
25,000
options were granted and outstanding under the Plan. 
 
The Company recognizes compensation costs for stock option awards to employees based on their grant-date fair value. The value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model.
 
The Company recognized stock-based compensation expense related to the options of
$0
and
$27,434
for
six
months ended
June 30, 2019
and
2018,
respectively. At
June 30, 2019,
the Company had
$0
of unrecognized compensation cost related to non-vested options.
 
A summary of the status of the options outstanding under the Company’s stock option plans at
June 30, 2019
is presented below: 
 
 
 
 
 
Options Outstanding
   
Options Exercisable
 
Exercise
Prices
   
Number
Outstanding
   
Weighted
Average
Remaining
Contractual Life
(years)
   
Weighted
Average
Exercise
Price
   
Number
Exercisable
   
Weighted
Average
Exercise
Price
 
$
2.96
     
25,000
     
1.12
    $
2.96
     
25,000
    $
2.96
 
Total
     
25,000
     
1.12
    $
2.96
     
25,000
    $
2.96
 
 
A summary of the status of the options at
June 30, 2019,
and changes during the period is presented below:
 
   
Shares
   
Weighted
Average
Exercise
Price
   
Average
Remaining
Life
   
Weighted
Average
Intrinsic
Value
 
                                 
Outstanding at beginning of period
   
70,000
    $
2.96
     
1.62
    $
-
 
Granted
   
-
     
-
     
-
     
-
 
Exercised
   
(45,000
)
   
-
     
-
     
-
 
Forfeited
   
-
     
-
     
-
     
-
 
Expired
   
-
     
-
     
-
     
-
 
Outstanding at end of period
   
25,000
    $
2.96
     
1.12
    $
-
 
Vested and expected to vest
   
25,000
    $
2.96
     
1.12
    $
-
 
Exercisable end of period
   
25,000
    $
2.96
     
1.12
    $
-
 
v3.19.2
Note 8 - Significant Customers / Concentration / Disaggregated Revenue
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
 
NOTE
8
 - SIGNIFICANT CUSTOMERS / CONCENTRATION / DISAGGREGATED REVENUE
 
For the
six
months ended
June 30, 2019, 
our
4
largest customers accounted for approximately
74%
of our net sales.
 
For the
six
months ended
June 30, 2018, 
our largest customer accounted for approximately
12%
of our net sales.
 
The Company sells products throughout the world; disaggregated revenue by geographical region is as follows for the
three
and
six
months ended
June 30, 2019
and
2018:
 
 
   
For the Three Months
   
For the Six Months
 
   
Ended June 30,
   
Ended June 30,
 
   
2019
   
2018
   
2019
   
2018
 
United States and Canada
  $
255,642
    $
260,525
    $
688,229
    $
369,750
 
Australia
   
153,401
     
82,490
     
215,514
     
282,793
 
South America
   
-
     
24,248
     
-
     
27,676
 
Asia
   
933,693
     
111,015
     
2,172,807
     
928,616
 
Europe
   
7,954,450
     
3,119,750
     
13,641,834
     
4,380,575
 
    $
9,297,186
    $
3,598,028
    $
16,718,384
    $
5,989,410
 
 
The Company’s disaggregated revenue by product line is as follows for the
three
and
six
months ended
June 30, 2019
and
2018:
 
 
   
For the Three Months
   
For the Six Months
 
   
Ended June 30,
   
Ended June 30,
 
   
2019
   
2018
   
2019
   
2018
 
Ceramic diesel particulate
  $
747,234
    $
1,609,057
    $
2,990,502
    $
3,537,162
 
Liquid filters and systems
   
8,453,136
     
1,988,971
     
13,493,469
     
2,452,248
 
Development projects
   
96,815
     
-
     
234,413
     
-
 
    $
9,297,186
    $
3,598,028
    $
16,718,384
    $
5,989,410
 
 
As of
June 30, 2019,
approximately
92%
and
8%
of the Company’s assets were located in Denmark and the United States, respectively. As of
June 30, 2018,
approximately
90%
and
10%
of the Company’s assets were located in Denmark and the United States, respectively.
v3.19.2
Note 10 - Subsequent Events
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Subsequent Events [Text Block]
NOTE
9
 - SUBSEQUENT EVENTS
 
The Company’s management reviewed material events through
August 14, 2019
and there were
no
material subsequent events to report.
 
v3.19.2
Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]
Business and Basis of Presentation
 
The consolidated financial statements include the accounts of LiqTech International, Inc. (“The Company”) and its subsidiaries. The terms "Company", “us", "we" and "our" as used in this report refer to The Company and its subsidiaries, which are set forth below. The Company engages in the development, design, production, marketing and sale of automated filtering systems, ceramic silicon carbide liquid and diesel particulate air filters in United States, Canada, Europe, Asia and South America. Set forth below is a description of The Company and each of its subsidiaries:
 
LiqTech International, Inc., a Nevada corporation organized in
July 2004,
formerly known as Blue Moose Media, Inc.
 
LiqTech USA, a Delaware corporation and a
100%
owned subsidiary of The Company formed in
May 2011.
 
LiqTech International AS, a Danish corporation, incorporated on
January 15, 2000 (
“LiqTech Int. DK”), a
100%
owned subsidiary of LiqTech USA, engages in development, design, application, marketing and sales of membranes, ceramic diesel particulate and liquid filters and catalytic converters in Europe, Asia and South America.
 
LiqTech NA, Inc. (“LiqTech NA”), incorporated in Delaware on
July 1, 2005,
a
100%
owned subsidiary of LiqTech USA. LiqTech NA, Inc. engages in the production, marketing and sale of ceramic diesel particulate and liquid filters in the United States and Canada.
 
LiqTech Systems AS, a Danish Corporation ("LiqTech Systems") (Formerly Provital Solutions A/S) was incorporated on
September 1, 2009
and engages in the manufacture of fully automated filtering systems for application within marine applications municipal pool and spa applications, and other industrial applications within Denmark and international markets.
 
LiqTech Germany (“LiqTech Germany”), a
100%
owned subsidiary of LiqTech Int. DK, incorporated in Germany on
December 9, 2011,
engaged in marketing and sale of liquid filters in Germany. The Company is in the process of closing operations, which is expected to be completed during
2019.
 
LiqTech PTE Ltd (“LiqTech Sing”), a
95%
owned subsidiary of LiqTech Int. DK, incorporated in Singapore on
January 19, 2012,
engaged in marketing and sale of liquid filters in Singapore and other countries in the area. The Company is in the process of closing operations, which is expected to be completed during
2019.
Consolidation, Policy [Policy Text Block]
Consolidation --
 The consolidated financial statements include the accounts and operations of the Company. All material intercompany transactions and accounts have been eliminated in the consolidation.
Foreign Currency Transactions and Translations Policy [Policy Text Block]
Functional Currency / Foreign currency translation -- 
The functional currency of LiqTech International, Inc., LiqTech USA, Inc. and LiqTech NA is the U.S. Dollar. The Functional Currency of LiqTech Int. DK and LiqTech Systems AS is the Danish Krone (“DKK”), the functional currency of LiqTech Germany is the Euro and the functional currency of LiqTech Singapore is the Singapore Dollar. The Company’s reporting currency is U.S. Dollar for the purpose of these consolidated financial statements. The foreign subsidiaries balance sheet accounts are translated into U.S. Dollars at the period-end exchange rates and all revenue and expenses are translated into U.S. Dollars at the average exchange rates prevailing during the
three
and
six
months ended
June 30, 2019
and
2018.
Translation gains and losses are deferred and accumulated as a component of other comprehensive income in stockholders’ equity. Transaction gains and losses that arose from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are included in the statement of operations as incurred.
Cash and Cash Equivalents, Policy [Policy Text Block]
Cash, Cash Equivalents and Restricted Cash --
 The Company considers all highly liquid debt instruments purchased with a maturity of
three
months or less to be cash equivalents. For the
six
months ended
June 30, 2019
and
2018,
the Company has
$783,499
and
$0,
respectively, as restricted cash. The restricted cash is payment guarantees issued to the benefit of customers in connection with prepayments of sales orders. The restricted cash is held in a local financial institution and will be released as order deliveries are made and accepted by the customer. The Company had
no
balances held in a financial institution in the United States in excess of federally insured amounts at
June 30, 2019
and
December 31, 2018.
Loans and Leases Receivable, Allowance for Loan Losses Policy [Policy Text Block]
Accounts Receivable --
 Accounts Receivables consist of trade receivables arising in the normal course of business. The Company establishes an allowance for doubtful accounts that reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. 
 
The roll forward of the allowance for doubtful accounts for the
six
months ended
June 30, 2019
and the year ended
December 31, 2018
is as follows:
 
   
June 30,
201
9
   
December 31,
201
8
 
Allowance for doubtful accounts at the beginning of the period
  $
971,772
    $
660,581
 
Bad debt expense
   
-
     
353,562
 
Receivables written off during the periods
   
(3,494
)
   
-
 
Effect of currency translation
   
(5,773
)
   
(42,371
)
Allowance for doubtful accounts at the end of the period
  $
962,505
    $
971,772
 
Inventory, Policy [Policy Text Block]
Inventory --
 Inventory is carried at the lower of cost or market, as determined on the
first
-in,
first
-out method.
Lessee, Leases [Policy Text Block]
Leases --
 The Company leases certain vehicles, real property 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 assets and liabilities under finance leases are recorded at the lower of the present value of future minimum lease payments or the fair market value of the related assets. Assets under finance leases are amortized using the straight-line method over the initial lease term. Amortization of assets under finance leases is included in depreciation expense.
 
In
February 2016,
the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No.
2016
-
02,
Leases (“Topic
842”
), which requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Subsequent ASUs were issued to provide additional guidance.
 
On
January 1, 2019,
the Company adopted Topic
842
using the optional transition method of adoption, under which the new standards were applied prospectively rather than restating the prior periods presented. The Company elected the package of practical expedients permitted, which, among other things, allowed the Company to carry forward the historical lease classification. The Company made the accounting policy elections to
not
recognize lease assets and lease liabilities with an initial term of
12
months or less and to
not
separate lease and non-lease components. The Company’s accounting for finance leases (formerly called capital lease obligations) remains substantially unchanged. Operating lease right-of-use (“ROU”) assets and liabilities were recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do
not
provide an implicit rate, an incremental borrowing rate based on the information available at the commencement date was used in determining the present value. The Company will use the implicit rate when readily determinable. The operating lease ROU asset also included prepaid lease payments and was reduced by accrued lease payments. The Company’s lease terms
may
include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. Operating lease cost for lease payments will be recognized on a straight-line basis over the lease term. The impact of adoption on the Company’s consolidated balance sheet was the recognition of a ROU asset of
$2.1
million and an operating lease liability of
$2.1
million primarily for office space leases. The Company’s adoption of Topic
842
did
not
materially impact its results of operation.
Property, Plant and Equipment, Policy [Policy Text Block]
Property and Equipment --
 Property and equipment are stated at cost. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized, upon being placed in service. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is computed for financial statement purposes on a straight-line basis over the estimated useful lives of the assets, which range from
three
to
ten
years.
Investment, Policy [Policy Text Block]
Long-Term Investments --
 Investments in non-consolidated companies are included in long-term investments in the consolidated balance sheet and are accounted for under the cost method and equity method. For these non-quoted investments, we regularly review the assumptions underlying the operating performance and cash flow forecasts based on information requested from these privately held companies. Generally, this information
may
be more limited,
may
not
be as timely as and
may
be less accurate than information available from publicly traded companies. Assessing each investment's carrying value requires significant judgment by management. If it is determined that there is an-other-than-temporary decline in the fair value of a non-public equity security, we write-down the investment to its fair value and record the related write-down as an investment loss in the consolidated statement of operations.
Goodwill and Intangible Assets, Policy [Policy Text Block]
Intangible Assets --
 Definite life intangible assets include patents. The Company accounts for definite life intangible assets in accordance with Financial Accounting Standards Board, (“FASB”) Accounting Standards Codification, (“ASC”) Topic
350,
“Goodwill and Other Intangible Assets” and amortized the patents on a straight-line basis over the estimated useful life of
two
to
ten
years. 
Revenue from Contract with Customer [Policy Text Block]
Revenue Recognition and Sales Incentives
 
 
Accounting policy
: On
January 1, 2018,
the Company adopted Accounting Standards Codification Topic
606,
“Revenue from Contracts with Customers,” which includes clarifying ASUs issued in
2015,
2016
and
2017
(“new revenue standard”). The new revenue standard was applied to all open revenue contracts using the modified retrospective method as of
January 1, 2018.
The new revenue standard did
not
have a material impact on revenue recognition.
 
For membrane and DPF product sales, revenue is recognized when performance obligations under the terms of a contract with the customer are satisfied, which occurs when control of the membrane, DPF or services are transferred to the customer. The majority of the Company's sales contracts contain performance obligations satisfied at a point in time when title and risks and rewards of ownership have transferred to the customer. This generally occurs when the product is shipped or accepted by the customer.  Revenue for service contracts are recognized as the services are provided. Revenue is measured as the amount of consideration expected to be received in exchange for transferring the goods or providing services. The satisfaction of performance obligations under the terms of a revenue contract generally gives rise for the right to payment from the customer. The Company's standard payment terms vary by the type and location of the customer and the products or services offered. Generally, the time between when revenue is recognized and when payment is due is
not
significant. Pre-payments received prior to satisfaction of performance obligations are recorded as a customer deposit liability. Given the insignificant days between revenue recognition and receipt of payment, financing components do
not
exist between the Company and its customers.
 
For contracts with customers that include multiple performance obligations, judgment is required to determine whether performance obligations specified in these contracts are distinct and should be accounted for as separate revenue transactions for recognition purposes. For such arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are generally determined based on the prices charged to customers or using expected cost-plus margin.
 
System sales are recognized when the Company transfers control based upon signed acceptance of the system by the customer upon shipment of the system based on the terms of the contract. For the majority of Systems, the Company transfers control and recognizes revenue when products are shipped to the customer according to the terms of the contract or purchase order. In connection with the system it is normal procedure to issue a FAT (Factory Acceptance Test) stating that the customer has accepted the performance of the system as it is being shipped from the production facility in Hobro. As part of the performance obligation, the customer is normally offered commissioning services (final assembly and configuration at a place designated by the customer) and this commissioning is therefore considered a
second
delivery performance and is valued at cost, based on the contractual performance given a standard gross margin rate. This
second
performance delivery is recognized as revenue at the time of delivery of the commissioning together with the cost incurred. Part of the invoicing to the customer is also attributed to the commissioning and at transfer of the control of the system (i.e. the
first
performance obligation), some of the invoicing will still be awaiting commissioning and is therefore recognized as Other Receivables, while the revenue related to the commissioning is recognized as Deferred Income.
 
Aftermarket sales represent parts, extended warranty and maintenance services. For the sale of aftermarket parts, the Company transfers control and recognizes revenue when parts are shipped to the customer or services are provided. When customers are given the right to return eligible parts and accessories, the Company estimates the expected returns based on an analysis of historical experience. The Company adjusts estimated revenues at the earlier of when the most likely amount of consideration expected to be received changes or when the consideration becomes fixed. The Company recognizes revenue for extended warranty and maintenance agreements based on the standalone selling price over the life of the contract, which reflects the costs to perform under these contracts, which corresponds with, and thereby depicts the transfer of control to the customer. For invoicing to customers where the transfer of control has
not
occurred (prepayments), the invoiced amount is recognized as Contract Assets / Contract Liabilities.
  
The Company has received long-term contracts for grants from government entities for the development and use of silicon carbide membranes in various water filtration and treatment applications and historically in the installation of various water filtrations systems. We measure transfer of control of the performance obligation on long-term contracts utilizing the cost-to-cost measure of progress, with cost of revenue including direct costs, such as labor and materials. Under the cost-to-cost approach, the use of estimated costs to complete each performance obligation is a significant variable in the process of determining recognized revenue and a significant factor in the accounting for such performance obligations. The timing of when we bill our customers is generally dependent upon advance billings terms, milestone billings based on completion of certain phases of the work or when services are provided, or products are shipped. Projects with performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of cumulative billings are reported on our Balance Sheets as contract assets. Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimated earnings recognized to date are reported on our Balance Sheets as contract liabilities.
 
In Denmark, Value Added Tax (“VAT”) of
25%
of the invoice amount is collected with respect of the sales of goods on behalf of tax authorities. The VAT collected is
not
revenue of the Company; instead, the amount is recorded as a liability on the balance sheet until such VAT is paid to the authorities. 
 
The Company’s disaggregated revenue is reported in Note
8.
Advertising Cost [Policy Text Block]
Advertising Cost --
 Costs incurred in connection with advertising of the Company’s products is expensed as incurred. Such costs amounted to
$72,349
and
$3,326
 for the
six
months ended
June 30, 2019
and
2018,
respectively.
Research, Development, and Computer Software, Policy [Policy Text Block]
Research and Development Cost --
 The Company expenses research and development costs for the development of new products as incurred. Included in operating expense for the
six
months ended
June 30, 2019
and
2018
were
$402,356
 and
$345,677,
respectively, of research and development costs.
Income Tax, Policy [Policy Text Block]
Income Taxes --
 The Company accounts for income taxes in accordance with FASB ASC Topic
740
Accounting for Income Taxes. This statement requires an asset and liability approach for accounting for income taxes.
Earnings Per Share, Policy [Policy Text Block]
Income (Loss) Per Share --
 The Company calculates earnings (loss) per share in accordance with FASB ASC
260,
Earnings Per Share. Basic earnings per common share (EPS) are based on the weighted average number of common shares outstanding during each period. Diluted earnings per common share are based on shares outstanding (computed as under basic EPS) and potentially dilutive common shares. Potential common shares included in the diluted earnings per share calculation include in-the-money stock options and warrants that have been granted but have
not
been exercised.
Fair Value Measurement, Policy [Policy Text Block]
Fair Value of Financial Instruments --
 The Company accounts for fair value measurements for financial assets and liabilities in accordance with FASB ASC Topic
820.
The authoritative guidance that, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a
three
-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
 
 
Level
1.
Observable inputs such as quoted prices in active markets for identical assets or liabilities;
   
 
Level
2.
Inputs other than the quoted prices in active markets that are observable either directly or indirectly; and
 
 
Level
3.
Unobservable inputs in which there is little or
no
market data, which require the reporting entity to develop its own assumptions.
 
Unless otherwise disclosed, the fair value of the Company’s financial instruments including cash, accounts receivable, prepaid expenses, investments, accounts payable, accrued expenses, capital lease obligations and notes payable approximates their recorded values due to their short-term maturities.
  
Use of Estimates, Policy [Policy Text Block]
Accounting Estimates --
 The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets including accounts receivable, allowance for doubtful accounts, contract assets, reserve for obsolete inventory, depreciation and impairment of property plant and equipment, and goodwill; liabilities including contract liabilities and contingencies; the disclosures of contingent assets and liabilities at the date of the financial statements; and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimated.
Share-based Payment Arrangement [Policy Text Block]
Stock Options and Awards --
 The Company has granted stock options to certain key employees during the years presented in the accompanying consolidated financial statements (see note
7
). The Company accounts for options in accordance with the provisions of FASB ASC Topic
718,
Compensation – Stock Compensation. Non-cash compensation costs of
$151,611
and
$87,434
have been recognized for the vesting of options and stock awards granted to employees for the
six
months ended
June 30, 2019
and
2018,
respectively.
New Accounting Pronouncements, Policy [Policy Text Block]
Recent Accounting Pronouncements
 – In
June 2018,
the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No.
2018
-
07,
Compensation – Stock Compensation (“Topic
718”
): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic
718
to include share-based payment transactions for acquiring goods and services from nonemployees except for certain circumstances. Any transition impact will be a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Company adopted this guidance in the
first
quarter of
2019,
and it did
not
have a material impact on its consolidated financial statements.
 
In
August 2018,
the Financial Accounting Standards board (“FASB”) issued Accounting Standards Update (“ASU”)
2018
-
15
(“ASU
2018
-
15”
), 
Intangibles - Goodwill and Other - Internal-Use Software (Topic
350
-
40
): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.
  ASU
2018
-
15
aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The updated guidance is effective for annual periods beginning after
December 15, 2019
and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on the Company’s consolidated financial statements.
 
In
August 2018,
the FASB issued ASU
No.
2018
-
13,
Fair Value Measurement (Topic
820
): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurement by removing, modifying and adding certain disclosures. This ASU is effective for the annual period beginning after
December 15, 2019,
including interim periods within that annual period. The Company is currently evaluating the new guidance to determine the impact it will have on the Company’s consolidated financial statements.
 
In
August 2018,
the SEC adopted amendments to simplify certain disclosure requirements, as set forth in Securities Act Release
No.
33
-
10532,
Disclosure Update and Simplification, which includes a requirement for entities to present the changes in shareholders’ equity in the interim financial statements in quarterly reports on Form
10
-Q. This amendment is effective for all filings made on or after
November 5, 2018.
In light of the timing of effectiveness of the amendment and proximity to the filing date for most filers’ quarterly reports, the SEC has allowed for a filer’s
first
presentation of the changes in shareholders’ equity to be included in its Form
10
-Q for the quarter that begins after the effective date. The Company adopted the SEC’s amendment to interim disclosures in the
first
quarter of
2019
and has presented the changes in shareholders’ equity on an interim basis.
 
In
February 2016,
the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
No.
2016
-
02,
 Leases (Topic
842
) ("ASC
842"
), which requires lessees to recognize right-of-use ("ROU") assets and related lease liabilities on the balance sheet for all leases greater than
one
year in duration. We adopted ASC
842
on
January 1, 2019
using a modified retrospective transition approach for leases existing at, or entered after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach did
not
require any transition accounting for leases that expired before the earliest comparative period presented. The adoption of this standard resulted in the recording of ROU assets of approximately
$2.1
million and lease liabilities of approximately
$2.1
million for all of our lease agreements with original terms of greater than
one
year. The adoption of ASC
842
did
not
have a significant impact on our consolidated statements of operations. See Note
4
for the required disclosures relating to our lease agreements.
 
In
November 2016,
the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No.
2016
-
18,
Restricted Cash which requires companies in the statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Statement of Cash Flows. For the period ended
June 30, 2019
the Company has recorded
$783,499
as Restricted cash and
$12,572,856
as Unrestricted cash and a total of
$13,356,355
as Cash, Cash equivalents and Restricted cash. For the period ended
December 31, 2018
the amounts were
$0
in Restricted cash and
$3,776,111
in Unrestricted cash.
 
Other recent accounting pronouncements issued by the FASB did
not
or are
not
believed by management to have a material impact on the Company’s present or future financial statements. 
v3.19.2
Note 1 - Summary of Significant Accounting Policies (Tables)
6 Months Ended
Jun. 30, 2019
Notes Tables  
Financing Receivable, Allowance for Credit Loss [Table Text Block]
   
June 30,
201
9
   
December 31,
201
8
 
Allowance for doubtful accounts at the beginning of the period
  $
971,772
    $
660,581
 
Bad debt expense
   
-
     
353,562
 
Receivables written off during the periods
   
(3,494
)
   
-
 
Effect of currency translation
   
(5,773
)
   
(42,371
)
Allowance for doubtful accounts at the end of the period
  $
962,505
    $
971,772
 
v3.19.2
Note 2 - Inventory (Tables)
6 Months Ended
Jun. 30, 2019
Notes Tables  
Schedule of Inventory, Current [Table Text Block]
   
201
9
   
201
8
 
Furnace parts and supplies
  $
730,370
    $
596,806
 
Raw materials
   
1,756,414
     
1,659,826
 
Work in process
   
1,501,307
     
1,691,175
 
Finished goods and filtration systems
   
1,527,554
     
1,596,042
 
Reserve for obsolescence
   
(801,990
)
   
(1,111,794
)
Net Inventory
  $
4,713,656
    $
4,432,055
 
v3.19.2
Note 4 - Leases (Tables)
6 Months Ended
Jun. 30, 2019
Notes Tables  
Lessee, Operating and Finance Lease, Assets and Liabilities [Table Text Block]
   
June 30,
2019
   
December
31
,
2018
 
Operating leases
:
 
 
 
 
 
 
 
 
Operating lease right-of-use
  $
1,925,645
    $
-
 
                 
Operating lease liabilities - current
  $
603,152
    $
-
 
Operating lease liabilities – long-term
   
1,352,749
     
-
 
Total operating lease liabilities
  $
1,955,901
    $
-
 
                 
Finance leases
:
 
 
 
 
 
 
 
 
Property and equipment, at cost
  $
1,171,295
    $
1,171,295
 
Accumulated depreciation
   
(1,166,115
)
   
(1,162,256
)
Property and equipment, net
  $
5,180
    $
9,039
 
                 
Finance lease liabilities - current
  $
5,201
    $
13,789
 
Finance lease liabilities – long-term
   
-
     
-
 
Total finance lease liabilities
  $
5,201
    $
13,789
 
                 
Weighted average remaining lease term:
               
Operating leases
   
4.4
     
-
 
Finance lease
   
0.1
     
0.8
 
                 
Weighted average discount rate:
               
Operating leases
   
7.0
%
   
-
 
Finance leases
   
9.0
%
   
7.3
%
Maturity of Operating and Finance Lease Liabilities [Table Text Block]
Maturities of lease liabilities at June 30, 2019 were as follows:
               
   
Operating
lease
   
Finance lease
 
July 2019 – June 2020
  $
624,358
    $
5,240
 
July 2020 – June 2021
   
531,629
     
-
 
July 2021 – June 2022
   
370,864
     
-
 
July 2022 – June 2023
   
342,510
     
-
 
July 2023 – June 2024
   
335,706
     
-
 
Thereafter
   
27,801
     
-
 
Total payment under lease agreements
   
2,232,868
     
5,240
 
Less imputed interest
   
(276,967
)
   
(39
)
Total lease liability
  $
1,955,901
    $
5,201
 
Schedule of Future Minimum Lease Payments for Capital Leases and Operating Leases [Table Text Block]
Year ending December 31,
 
Operating
lease
 
2019
  $
712,250
 
2020
   
578,997
 
2021
   
402,584
 
2022
   
350,249
 
Thereafter
   
560,977
 
Total
  $
2,605,057
 
v3.19.2
Note 5 - Agreements and Commitments (Tables)
6 Months Ended
Jun. 30, 2019
Notes Tables  
Schedule of Product Warranty Liability [Table Text Block]
   
2019
 
Balance at December 31, 2018
  $
432,225
 
Current year warranty expense
   
903,216
 
Change in estimate related to pre-existing warranties
 
 
-
 
Payments made
   
(275,736
)
Foreign currency effect
   
1,901
 
Balance at
June 30
, 2019
  $
1,061,606
 
v3.19.2
Note 6 - Earnings Per Share (Tables)
6 Months Ended
Jun. 30, 2019
Notes Tables  
Schedule of Weighted Average Number of Shares [Table Text Block]
 
 
For the Six Months
Ended
June 30
,
 
 
 
2019
 
 
2018
 
Net Gain (Loss) attributable to LiqTech International, Inc.
 
$
181,030
 
 
$
(1,796,815
)
Weighted average number of common shares used in basic earnings per share
 
 
18,742,029
 
 
 
13,682,405
 
Effect of dilutive securities, stock options and warrants
 
 
16,079
 
 
 
-
 
Weighted average number of common shares and potential dilutive common shares outstanding used in dilutive earnings per share
 
 
18,758,108
 
 
 
13,682,405
 
v3.19.2
Note 7 - Stockholders' Equity (Tables)
6 Months Ended
Jun. 30, 2019
Notes Tables  
Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]
 
 
 
 
Options Outstanding
   
Options Exercisable
 
Exercise
Prices
   
Number
Outstanding
   
Weighted
Average
Remaining
Contractual Life
(years)
   
Weighted
Average
Exercise
Price
   
Number
Exercisable
   
Weighted
Average
Exercise
Price
 
$
2.96
     
25,000
     
1.12
    $
2.96
     
25,000
    $
2.96
 
Total
     
25,000
     
1.12
    $
2.96
     
25,000
    $
2.96
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Table Text Block]
   
Shares
   
Weighted
Average
Exercise
Price
   
Average
Remaining
Life
   
Weighted
Average
Intrinsic
Value
 
                                 
Outstanding at beginning of period
   
70,000
    $
2.96
     
1.62
    $
-
 
Granted
   
-
     
-
     
-
     
-
 
Exercised
   
(45,000
)
   
-
     
-
     
-
 
Forfeited
   
-
     
-
     
-
     
-
 
Expired
   
-
     
-
     
-
     
-
 
Outstanding at end of period
   
25,000
    $
2.96
     
1.12
    $
-
 
Vested and expected to vest
   
25,000
    $
2.96
     
1.12
    $
-
 
Exercisable end of period
   
25,000
    $
2.96
     
1.12
    $
-
 
v3.19.2
Note 8 - Significant Customers / Concentration / Disaggregated Revenue (Tables)
6 Months Ended
Jun. 30, 2019
Notes Tables  
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area [Table Text Block]
   
For the Three Months
   
For the Six Months
 
   
Ended June 30,
   
Ended June 30,
 
   
2019
   
2018
   
2019
   
2018
 
United States and Canada
  $
255,642
    $
260,525
    $
688,229
    $
369,750
 
Australia
   
153,401
     
82,490
     
215,514
     
282,793
 
South America
   
-
     
24,248
     
-
     
27,676
 
Asia
   
933,693
     
111,015
     
2,172,807
     
928,616
 
Europe
   
7,954,450
     
3,119,750
     
13,641,834
     
4,380,575
 
    $
9,297,186
    $
3,598,028
    $
16,718,384
    $
5,989,410
 
Reconciliation of Revenue from Segments to Consolidated [Table Text Block]
   
For the Three Months
   
For the Six Months
 
   
Ended June 30,
   
Ended June 30,
 
   
2019
   
2018
   
2019
   
2018
 
Ceramic diesel particulate
  $
747,234
    $
1,609,057
    $
2,990,502
    $
3,537,162
 
Liquid filters and systems
   
8,453,136
     
1,988,971
     
13,493,469
     
2,452,248
 
Development projects
   
96,815
     
-
     
234,413
     
-
 
    $
9,297,186
    $
3,598,028
    $
16,718,384
    $
5,989,410
 
v3.19.2
Note 1 - Summary of Significant Accounting Policies (Details Textual) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Jan. 01, 2019
Dec. 31, 2018
Restricted Cash and Cash Equivalents, Current, Total $ 783,499 $ 0 $ 783,499 $ 0   $ 0
Cash, Uninsured Amount 0   0     0
Operating Lease, Right-of-Use Asset 1,925,645   1,925,645    
Operating Lease, Liability, Total 1,955,901   $ 1,955,901    
Value Added Tax Of Invoice, Percentage     25.00%      
Advertising Expense     $ 72,349 3,326    
Research and Development Expense, Total 199,184 $ 176,281 402,356 345,677    
Share-based Payment Arrangement, Expenses Including Shares Issued as a Bonus     151,611 $ 87,434    
Cash and Cash Equivalents, at Carrying Value, Ending Balance 12,572,856   12,572,856     $ 3,776,111
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Ending Balance $ 13,356,355   $ 13,356,355      
Minimum [Member]            
Property, Plant and Equipment, Useful Life     3 years      
Finite-Lived Intangible Asset, Useful Life     2 years      
Maximum [Member]            
Property, Plant and Equipment, Useful Life     10 years      
Finite-Lived Intangible Asset, Useful Life     10 years      
Accounting Standards Update 2016-02 [Member]            
Operating Lease, Right-of-Use Asset         $ 2,100,000  
Operating Lease, Liability, Total         $ 2,100,000  
LiqTech USA [Member] | LiqTech International DK [Member]            
Percentage of Subsidiary Owned 100.00%   100.00%      
LiqTech USA [Member] | LiqTech NA [Member]            
Percentage of Subsidiary Owned 100.00%   100.00%      
LiqTech International DK [Member] | LiqTech Germany [Member]            
Percentage of Subsidiary Owned 100.00%   100.00%      
LiqTech International DK [Member] | LiqTech PTE [Member]            
Percentage of Subsidiary Owned 95.00%   95.00%      
LiqTech USA [Member]            
Noncontrolling Interest, Ownership Percentage by Parent 100.00%   100.00%      
v3.19.2
Note 1 - Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($)
6 Months Ended 12 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Allowance for doubtful accounts $ 971,772 $ 660,581
Bad debt expense 353,562
Receivables written off during the periods (3,494)
Effect of currency translation (5,773) (42,371)
Allowance for doubtful accounts $ 962,505 $ 971,772
v3.19.2
Note 2 - Inventory - Summary of Inventory (Details) - USD ($)
Jun. 30, 2019
Dec. 31, 2018
Furnace parts and supplies $ 730,370 $ 596,806
Raw materials 1,756,414 1,659,826
Work in process 1,501,307 1,691,175
Finished goods and filtration systems 1,527,554 1,596,042
Reserve for obsolescence (801,990) (1,111,794)
Net Inventory $ 4,713,656 $ 4,432,055
v3.19.2
Note 3 - Lines of Credit (Details Textual)
Jun. 30, 2019
USD ($)
Jun. 30, 2019
DKK (kr)
Jun. 30, 2018
USD ($)
Jun. 30, 2018
DKK (kr)
Line of Credit Facility, Maximum Borrowing Capacity $ 14,427 kr 94,620    
Guarantor Obligations, Current Carrying Value     $ 14,801 kr 94,620
v3.19.2
Note 4 - Leases - Balance Sheet Information (Details) - USD ($)
Jun. 30, 2019
Dec. 31, 2018
Operating Lease, Right-of-Use Asset $ 1,925,645
Operating lease liabilities - current 603,152
Operating lease liabilities – long-term 1,352,749
Operating Lease, Liability, Total 1,955,901
Property and equipment, at cost 1,171,295 1,171,295
Accumulated depreciation (1,166,115) 1,162,256
Accumulated depreciation 1,166,115 (1,162,256)
Property and equipment, net 5,180 9,039
Finance lease liabilities - current 5,201 13,789
Finance lease liabilities – long-term
Total finance lease liabilities $ 5,201 $ 13,789
Operating leases (Year) 4 years 146 days
Finance lease (Year) 36 days 292 days
Operating leases 7.00%
Finance leases 9.00% 7.30%
v3.19.2
Note 4 - Leases - Maturities of Lease Liabilities (Details) - USD ($)
Jun. 30, 2019
Dec. 31, 2018
July 2019 – June 2020 $ 624,358  
July 2019 – June 2020 5,240  
July 2020 – June 2021 531,629  
July 2020 – June 2021  
July 2021 – June 2022 370,864  
July 2021 – June 2022  
July 2022 – June 2023 342,510  
July 2022 – June 2023  
July 2023 – June 2024 335,706  
July 2023 – June 2024  
Thereafter 27,801  
Thereafter  
Total payment under lease agreements 2,232,868  
Total payment under lease agreements 5,240  
Less imputed interest (276,967)  
Less imputed interest (39)  
Operating Lease, Liability, Total 1,955,901
Total finance lease liabilities $ 5,201 $ 13,789
v3.19.2
Note 4 - Leases - Payments Under Operating and Finance Lease (Details)
Dec. 31, 2018
USD ($)
2019, Operating lease $ 712,250
2020, Operating lease 578,997
2021, Operating lease 402,584
2022, Operating lease 350,249
Thereafter, Operating lease 560,977
Total $ 2,605,057
v3.19.2
Note 5 - Agreements and Commitments (Details Textual)
6 Months Ended
Feb. 27, 2019
USD ($)
Feb. 27, 2019
DKK (kr)
Nov. 20, 2018
USD ($)
Nov. 20, 2018
DKK (kr)
Jun. 30, 2019
USD ($)
Jun. 30, 2018
USD ($)
Jun. 30, 2019
DKK (kr)
Jun. 30, 2018
DKK (kr)
Defined Contribution Plan, Cost         $ 5,677 $ 5,706    
Line of Credit Facility, Maximum Borrowing Capacity         $ 14,427   kr 94,620  
Guarantor Obligations, Current Carrying Value           $ 14,801   kr 94,620
LiqTech International AS [Member] | Claim with Former Supplier for Breach of Agreement [Member]                
Loss Contingency, Damages Sought, Value     $ 68,800 kr 448,500        
LiqTech International AS [Member] | Claim with Former Supplier for Services Rendered [Member]                
Loss Contingency, Damages Sought, Value $ 83,400 kr 543,905            
v3.19.2
Note 5 - Agreements and Commitments - Product Warranties (Details)
6 Months Ended
Jun. 30, 2019
USD ($)
Balance $ 432,225
Current year warranty expense 903,216
Change in estimate related to pre-existing warranties
Payments made (275,736)
Foreign currency effect 1,901
Balance $ 1,061,606
v3.19.2
Note 6 - Earnings Per Share (Details Textual) - $ / shares
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance $ 2.96   $ 2.96
Class of Warrant or Right, Exercise Price of Warrants or Rights   $ 6.60  
Minimum [Member]      
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance $ 2.96 $ 2.96  
Share-based Payment Arrangement, Option [Member]      
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 25,000 113,750  
Warrant [Member]      
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount   100,000  
v3.19.2
Note 6 - Earnings Per Share - Amounts Used in Computing Earnings Per Share (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Net Gain (Loss) attributable to LiqTech International, Inc. $ 146,786 $ (263,526) $ 181,030 $ (1,796,815)
Weighted average number of common shares used in basic earnings per share (in shares) 19,211,771 16,214,833 18,742,029 13,682,405
Effect of dilutive securities, stock options and warrants (in shares)     16,079
Weighted average number of common shares and potential dilutive common shares outstanding used in dilutive earnings per share (in shares) 19,228,160 16,214,833 18,758,108 13,682,405
v3.19.2
Note 7 - Stockholders' Equity (Details Textual)
1 Months Ended 6 Months Ended 12 Months Ended
Jun. 06, 2019
shares
May 22, 2019
USD ($)
$ / shares
shares
Mar. 05, 2019
USD ($)
shares
Mar. 01, 2019
USD ($)
$ / shares
shares
Jun. 30, 2019
USD ($)
$ / shares
shares
Jun. 30, 2018
USD ($)
shares
Dec. 31, 2018
$ / shares
shares
Common Stock, Shares Authorized         25,000,000   25,000,000
Common Stock, Par or Stated Value Per Share | $ / shares         $ 0.001   $ 0.001
Common Stock, Shares, Issued, Total         20,547,668   18,228,887
Stockholders' Equity Note, Stock Split, Conversion Ratio         4   4
Preferred Stock, Shares Authorized         2,500,000   2,500,000
Preferred Stock, Shares Outstanding, Ending Balance         0   0
Proceeds from Stock Options Exercised | $         $ 133,200  
Proceeds from Issuance of Common Stock | $         14,674,738 5,865,077  
Class of Warrant or Right, Exercised During Period 28,887            
Share-based Payment Arrangement, Expense | $         $ 39,111 $ 27,434  
Class of Warrant or Right, Outstanding, Non-vested Warrants         0 0  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance         25,000   70,000
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount | $         $ 0    
Common Stock, Shares, Outstanding, Ending Balance         20,547,668   18,228,887
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross            
The 2011 Stock Options Plan [Member]              
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance         25,000    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross         25,000    
Public Offering [Member]              
Stock Issued During Period, Shares, New Issues   2,215,862          
Share Price | $ / shares   $ 7.25          
Proceeds from Issuance of Common Stock | $   $ 14,674,738          
Payments of Stock Issuance Costs | $   $ 1,390,262          
The 2015 Stock Option Plan [Member]              
Stock Issued During Period, Shares, New Issues       45,000      
Share Price | $ / shares       $ 2.96      
Proceeds from Stock Options Exercised | $       $ 133,200      
Warrants [Member]              
Share-based Payment Arrangement, Expense | $         $ 0 $ 0  
Share-based Payment Arrangement, Option [Member] | The 2011 Stock Options Plan [Member]              
Share-based Payment Arrangement, Expense | $         $ 0 $ 27,434  
Director [Member]              
Stock Issued During Period, Shares, Restricted Stock Award, Gross     24,827        
Stock Issued During Period, Value, Restricted Stock Award, Gross | $     $ 112,500        
Convertible Preferred Stock [Member]              
Preferred Stock, Shares Outstanding, Ending Balance         0   0
Reverse Stock Split [Member]              
Stockholders' Equity Note, Stock Split, Conversion Ratio             4
v3.19.2
Note 7 - Stockholders' Equity - Warrants Outstanding by Exercise Price (Details) - $ / shares
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Exercise prices of warrants (in dollars per share)   $ 6.60
Warrants outstanding (in shares) 25,000  
Warrants outstanding, weighted average remaining contractual life (Year) 1 year 43 days  
Warrants outstanding, weighted average exercise price (in dollars per share) $ 2.96  
Warrants exercisable (in shares) 25,000  
Warrants exercisable, weighted average exercise price (in dollars per share) $ 2.96  
Warrant 1 [Member]    
Exercise prices of warrants (in dollars per share) $ 2.96  
Warrants outstanding (in shares) 25,000  
Warrants outstanding, weighted average remaining contractual life (Year) 1 year 43 days  
Warrants outstanding, weighted average exercise price (in dollars per share) $ 2.96  
Warrants exercisable (in shares) 25,000  
Warrants exercisable, weighted average exercise price (in dollars per share) $ 2.96  
v3.19.2
Note 7 - Stockholders' Equity - Status of Options and Changes During the Year (Details) - USD ($)
6 Months Ended 12 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Outstanding, shares (in shares) 70,000  
Outstanding, weighted average exercise price (in dollars per share) $ 2.96 $ 2.96
Outstanding, average remaining life (Year) 1 year 43 days 1 year 226 days
Outstanding, weighted average intrinsic value  
Granted, shares (in shares)  
Granted, weighted average exercise price (in dollars per share)  
Exercised, shares (in shares) (45,000)  
Exercised, weighted average exercise price (in dollars per share)  
Forfeited, shares (in shares)  
Forfeited, weighted average exercise price (in dollars per share)  
Expired, shares (in shares)  
Expired, weighted average exercise price (in dollars per share)  
Outstanding, shares (in shares) 25,000 70,000
Vested and expected to vest, shares (in shares) 25,000  
Vested and expected to vest, weighted average exercise price (in dollars per share) $ 2.96  
Vested and expected to vest, average remaining life (Year) 1 year 43 days  
Vested and expected to vest, weighted average intrinsic value  
Exercisable end of period, shares (in shares) 25,000  
Exercisable end of period, weighted average exercise price (in dollars per share) $ 2.96  
Exercisable end of period, average remaining life (Year) 1 year 43 days  
Exercisable end of period, weighted average intrinsic value  
v3.19.2
Note 8 - Significant Customers / Concentration / Disaggregated Revenue (Details Textual)
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Customer Concentration Risk [Member] | Revenue Benchmark [Member]    
Number of Major Customers 4 1
Concentration Risk, Percentage 74.00% 12.00%
Geographic Concentration Risk [Member] | Assets, Total [Member] | DENMARK    
Concentration Risk, Percentage 92.00% 90.00%
Geographic Concentration Risk [Member] | Assets, Total [Member] | UNITED STATES    
Concentration Risk, Percentage 8.00% 10.00%
v3.19.2
Note 8 - Significant Customers / Concentration / Disaggregated Revenue - Net Sales by Geographical Region (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Net Sales $ 9,297,186 $ 3,598,028 $ 16,718,384 $ 5,989,410
Reportable Geographical Components [Member] | US And Canada [Member]        
Net Sales 255,642 260,525 688,229 369,750
Reportable Geographical Components [Member] | AUSTRALIA        
Net Sales 153,401 82,490 215,514 282,793
Reportable Geographical Components [Member] | South America [Member]        
Net Sales 24,248 27,676
Reportable Geographical Components [Member] | Asia [Member]        
Net Sales 933,693 111,015 2,172,807 928,616
Reportable Geographical Components [Member] | Europe [Member]        
Net Sales $ 7,954,450 $ 3,119,750 $ 13,641,834 $ 4,380,575
v3.19.2
Note 8 - Significant Customers / Concentration / Disaggregated Revenue - Sales by Product Line (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Net Sales $ 9,297,186 $ 3,598,028 $ 16,718,384 $ 5,989,410
Ceramic Diesel Particulate [Member]        
Net Sales 747,234 1,609,057 2,990,502 3,537,162
Liquid Filters [Member]        
Net Sales 8,453,136 1,988,971 13,493,469 2,452,248
Development Projects [Member]        
Net Sales $ 96,815 $ 234,413