Revenue and Sales Performance - For the three months ended March 31, 2023, total revenue was $4,011,519, an increase of 10.3% compared to $3,637,236 for the same period in 2022[53]. - Revenue distribution by region showed Europe at 77%, up from 73% in 2022, while the Americas increased to 9% from 4%[53]. - Water product line revenue significantly increased to $1,434,919, representing 36% of total revenue, compared to $592,990 and 16% in the prior year[54]. - Total consolidated revenue for Q1 2023 was $4,011,519, a 10% increase from $3,637,236 in Q1 2022, driven by higher sales in liquid filtration systems and aftermarket sales[120]. - Gross profit for Q1 2023 was $391,342, representing a 60% increase from $245,541 in Q1 2022, attributed to revenue growth and improved pricing discipline[121]. Expenses and Cost Management - Total operating expenses decreased by 28% to $2,584,003 in Q1 2023 from $3,579,202 in Q1 2022, primarily due to cost reduction efforts[122]. - Research and development costs for the three-month period ended March 31, 2023, were $342,619, a decrease of 43% from $602,737 in the same period of 2022[61]. - Advertising costs for the three-month periods ended March 31, 2023, and 2022 were $32,599 and $55,524 respectively, reflecting a reduction of 41%[60]. - General and administrative expenses decreased by 45% to $1,058,949 in Q1 2023 from $1,916,517 in Q1 2022, resulting from cost reduction and reorganization efforts[124]. - Selling expenses increased by 12% to $1,182,435 in Q1 2023 from $1,059,948 in Q1 2022, due to higher costs associated with sales efforts and marketing activities[123]. - Other expenses improved by 51% to $(211,134) in Q1 2023 from $(427,707) in Q1 2022, reflecting reduced interest expenses and amortization costs[126]. Financial Position and Liquidity - The company held $1,469,325 in restricted cash as of March 31, 2023, compared to $1,440,394 at December 31, 2022[37]. - As of March 31, 2023, the company had cash of $14,309,933 and net working capital of $20,123,957, a decrease of $1,457,330 in net working capital compared to December 31, 2022[133]. - The company completed a $26.5 million public offering in 2022, significantly improving its near-term liquidity position[128]. - The company reported an accumulated deficit of $69,740,538 and total liabilities of $17,256,096 as of March 31, 2023, raising substantial doubt about its ability to continue as a going concern for one year[135]. - The company has initiated substantial cost reductions and profitability improvement measures to develop a sustainable path to profitability[136]. Debt and Financing - The Company recognized no interest expense related to the convertible note for the three months ended March 31, 2023, compared to $187,500 for the same period in 2022[78]. - The Company issued Senior Promissory Notes totaling $6.0 million on June 22, 2022, with a term of 24 months and no interest during this period[79]. - As of March 31, 2023, the Senior Promissory Notes payable amounted to $5,564,842, after accounting for an unamortized debt discount of $435,158[83]. - The company is dependent on additional financing to fund operations, with potential risks of significant dilution to stockholders if equity financing is pursued[136]. - Funding expected during fiscal 2023 is anticipated to be used for existing and future obligations, liabilities, and working capital needs[137]. Inventory and Assets - The net inventory as of March 31, 2023, was $4,421,748, an increase of 8.8% from $4,062,001 as of December 31, 2022[69]. - Total assets as of March 31, 2023, were $38,741,734, a decrease from $40,125,655 as of December 31, 2022[112]. - Approximately 95% of the Company's assets were located in Denmark as of March 31, 2023, compared to 65% as of December 31, 2022[110]. Contractual Obligations and Liabilities - As of March 31, 2023, the Company reported contract assets of $2,447,668 and contract liabilities of $(710,604), compared to $2,253,295 and $(649,557) respectively as of December 31, 2022, indicating an increase in contract assets by 8.6% and contract liabilities by 9.4%[60]. - Contract liabilities are recorded when billing exceeds capitalized contract assets, indicating a strong backlog of orders[43]. - The balance of warranty obligations decreased from $898,072 as of January 1, 2023, to $694,943 by March 31, 2023, reflecting utilization charges and foreign currency effects[89]. Stock and Equity - The weighted average number of common shares used in basic earnings per share increased to 45,228,596 for the three months ended March 31, 2023, up from 21,350,455 in 2022[92]. - The Company had outstanding balances of 35,920,000 warrants as of March 31, 2023, significantly up from 1,015,000 in the same period of 2022[105]. - The Company recognized stock-based compensation expense related to RSU grants of $157,174 for the three-month period ended March 31, 2023, compared to $178,778 in 2022[108]. - As of March 31, 2023, the Company had 2,832,909 RSUs outstanding, an increase from 561,862 RSUs in the same period of 2022[91].
LiqTech(LIQT) - 2023 Q1 - Quarterly Report