LiqTech(LIQT) - 2024 Q3 - Quarterly Report

Financial Performance - Revenue for Q3 2024 was $2,478,221, a decrease of$2,592,225 or 51.1% compared to $5,070,446 in Q3 2023[86] - Gross loss for Q3 2024 was$209,533, representing a gross loss margin of 8.5%, compared to a gross profit of $948,565 and a margin of 18.7$1,158,098 or 122.1%[90] - Net loss for Q3 2024 was $2,840,526, an increase of$1,426,296 or 100.9% from a net loss of $1,414,230 in Q3 2023[96] - Revenue for the nine months ended September 30, 2024 was$11,198,627, a decrease of $2,873,357, or 20.4$14,071,984 for the same period in 2023[98] - Gross profit for the nine months ended September 30, 2024 was $778,780, representing a gross profit margin of 7$2,502,435 and 17.8% in 2023, a decrease of $1,723,655, or 68.9$7,340,521, an increase of $1,981,496, or 37.0$5,359,025 in 2023[106] Operating Expenses - Total operating expenses for Q3 2024 were $2,380,440, a decrease of$266,978 or 10.1% from $2,647,418 in Q3 2023[91] - Selling expenses in Q3 2024 were$610,713, down $354,326 or 36.7$965,039 in Q3 2023[92] - General and administrative expenses increased by $237,587 or 18.9$1,491,366 in Q3 2024 compared to $1,253,779 in Q3 2023[93] - Research and development expenses decreased by$150,239 or 35.1% to $278,361 in Q3 2024 from$428,600 in Q3 2023[94] - Total operating expenses for the nine months ended September 30, 2024 were $7,501,292, a decrease of$495,621, or 6.2%, compared to $7,996,913 for the same period in 2023[101] - Selling expenses decreased by$1,192,285, or 37.5%, to $1,983,414 for the nine months ended September 30, 2024, compared to$3,175,699 in 2023[102] - General and administrative expenses increased by $887,202, or 24.0$4,577,413 for the nine months ended September 30, 2024, compared to $3,690,211 in 2023[103] - Research and development expenses decreased by$190,538, or 16.8%, to $940,465 for the nine months ended September 30, 2024, compared to$1,131,003 in 2023[104] Cash Flow and Financing - Cash flows used in operating activities for the nine months ended September 30, 2024 were $5,528,442, an unfavorable change of$2,554,778 compared to $2,973,664 for the same period in 2023[118] - Cash flows used in investing activities improved to$28,767 for the nine months ended September 30, 2024, compared to $2,261,131 for the same period in 2023, representing an improvement of$2,232,364[119] - Cash flows used in financing activities were $125,718 for the nine months ended September 30, 2024, a decline of$844,045 compared to cash flows provided of $718,327 for the same period in 2023[120] - The company raised net proceeds of$1,107,385 from the issuance of common stock and prefunded warrants during the financing activities[120] - The company entered into an agreement to issue and sell Common Stock and warrants for gross proceeds of up to $10 million, receiving approximately$1.2 million in the first tranche and 8.8 million in the second tranche[109] Internal Controls and Compliance - Management identified material weaknesses in internal controls over financial reporting, which were not effective as of September 30, 2024[127] - The company has initiated remediation efforts, including hiring additional finance staff and implementing a new ERP system to enhance internal controls[129] - The company is committed to improving its internal control system, although material weaknesses cannot be considered fully remediated until relevant controls operate effectively over time[130] Business Operations and Strategy - The decrease in revenue was attributed to reduced deliveries of ceramic membranes, DPFs, and liquid filtration systems, partly offset by increased sales of plastics products[86] - The company is expanding its product range to leverage existing customer relationships and develop new ones in various industries, including oil & gas and marine[81] - As of September 30, 2024, the company had cash of 4,535,266 and net working capital of $9,963,511, a decrease of$4,626,921 compared to December 31, 2023[107] - Other expenses for Q3 2024 were $260,614, a decrease of$530,757 or 196.5% compared to other income of $270,143 in Q3 2023[95] - Other expenses for the nine months ended September 30, 2024 were$656,659, a decrease of $749,019, or 811.0$92,360 for the same period in 2023[105] - The net loss for the period ending September 30, 2024 was $7,340,521, adjusted for non-cash items including depreciation of$3,455,950[118] - The assessment of critical accounting estimates includes revenue recognition, product warranties, and collectability of accounts receivable, impacting gross profit and operating expenses[122]