10-Q

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 nine months period ended September 30, 2017

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, DK2750 Ballerup, Denmark
(Address of principal executive offices)	(Zip Code)

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

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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 (Do not check if a smaller reporting company)	☐	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 November 14, 2017, was 44,229,264 shares. 

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

Quarterly Report on Form 10-Q

For the Period Ended September 30, 2017

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	4
Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016	4
Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended September 30, 2017 and September 30, 2016 (unaudited)	6
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and September 30, 2016 (unaudited)	8
Notes to Consolidated Financial Statements (unaudited)	10
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 1A. Risk Factors	29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3. Defaults Upon Senior Securities	29
Item 4. Mine Safety Disclosures	29
Item 5. Other Information	29
Item 6. Exhibits	30
SIGNATURES	31

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.  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

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of		As of
	September, 30		December 31,
	2017		2016
	Unaudited
Current Assets:
Cash	$	528,566	$	1,208,650
Accounts receivable, net		1,613,668		1,111,759
Other receivables		342,556		306,177
Cost in excess of billing		753,615		642,700
Inventories		4,810,497		5,174,874
Prepaid expenses		16,383		62,161
Total Current Assets		8,065,285		8,506,321
Property and Equipment, net accumulated depreciation		2,123,429		2,633,558
Other Assets:
Investments at costs		5,909		5,282
Other intangible assets		3,963		5,614
Deposits		297,719		261,553
Total Other Assets		307,591		272,449
Total Assets	$	10,496,305	$	11,412,328

(Continued)

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

4

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of			As of
	September, 30			December 31,
	2017			2016
Current Liabilities:
Current portion of notes payable	$	16,061		$	15,034
Current portion of capital lease obligations		7,808			45,883
Accounts payable		2,290,345			2,262,688
Accrued expenses		2,197,993			2,385,586
Billing in excess of cost		15,224			106,375
Accrued income taxes payable		580			580
Customers deposits		720,561			192,597
Total Current Liabilities		5,248,572			5,008,743
Long-term notes payable, less current portion		32,521			39,895
Long-term capital lease obligations, less current portion		21,054			93,942
Total Long-Term Liabilities		53,575			133,837
Total Liabilities		5,302,147			5,142,580
Commitment and Contingencies See Note 11
Stockholders' Equity:
Common stock; par value $0,001, 100,000,000 shares authorized 44,229,264 and 36,835,514 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		44,230			36,836
Additional paid-in capital		37,961,723			36,084,117
Accumulated deficit		(27,516,432	)		(24,011,343	)
Deferred compensation		(58,548	)		(148,561	)
Other comprehensive income, net		(5,236,815	)		(5,691,301	)
Total Stockholders' Equity		5,194,158			6,269,748
Total Liabilities and Stockholders' Equity	$	10,496,305		$	11,412,328

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

5

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Net Sales	$	2,456,484		$	3,689,511		$	8,350,758		$	11,338,817
Cost of Goods Sold		2,772,451			3,303,042			8,202,634			9,078,036
Gross Profit		(315,967	)		386,469			148,124			2,260,781
Operating Expenses:
Selling expenses		521,627			558,105			1,506,369			1,661,352
General and administrative expenses		433,368			498,358			1,518,935			1,830,260
Non-cash compensation expenses		24,055			104,416			150,013			377,140
Research and development expenses		121,680			124,165			375,026			476,734
Total Operating Expense		1,100,730			1,285,044			3,550,343			4,345,486
Loss from Operations		(1,416,697	)		(898,575	)		(3,402,219	)		(2,084,705	)
Other Income (Expense)
Interest and other income		2,790			-			3,093			-
Interest expense		(3,781	)		(7,347	)		(23,308	)		(23,843	)
Loss on currency transactions		(26,913	)		(14,060	)		(54,600	)		(26,219	)
Loss on sale of fixed assets		(34,824	)		-			(28,056	)		-
Total Other Income (Expense)		(62,728	)		(21,407	)		(102,871	)		(50,062	)
Loss Before (Income) Taxes		(1,479,425	)		(919,982	)		(3,505,090	)		(2,134,767	)
Income Tax Expense (Income)		-			17,646			-			2,885,932
Net Loss		(1,479,425	)		(937,628	)		(3,505,090	)		(5,020,699	)
Basic Loss Per Share	$	(0.03	)	$	(0.02	)	$	(0.09	)	$	(0.13	)
Weighted Average Common Shares Outstanding		44,229,264			39,532,035			40,604,129			39,532,035
Diluted Loss Per Share	$	(0.03	)	$	(0.02	)	$	(0.09	)	$	(0.13	)
Weighted Average Common Shares Outstanding Assuming Dilution		44,229,264			39,532,035			40,604,129			39,532,035

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

6

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

 (UNAUDITED) CONSOLIDATED STATEMENTS OF OTHER

COMPREHENSIVE INCOME

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Net Loss		(1,479,425	)		(937,628	)		(3,505,090	)		(5,020,699	)
Currency Translation, Net of Taxes		142,599			66,547			454,487			401,194
Other Comprehensive Loss	$	(1,336,826	)	$	(871,081	)	$	(3,050,603	)	$	(4,619,505	)

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

7

 LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS

Increase (Decrease) in Cash and Cash Equivalents

	For the Period Ended
	September 30,
	2017			2016
Cash Flows from Operating Activities:
Net Loss	$	(3,505,090	)	$	(5,020,699	)
Adjustments to reconcile net (loss) to net cash provided (used) by operations:
Depreciation and amortization		732,963			995,687
Non-cash compensation		150,013			384,795
Bad debt expense (recovery)		(59,409	)		23,852
Reserve for obsolete inventory		-			132,983
Change in deferred tax asset / liability		-			3,193,214
Loss on sale of equipment		28,056			-
Changes in assets and liabilities:
(Increase) decrease in restricted cash		-			292,826
(Increase) decrease in accounts receivable		(478,879	)		(1,026,055	)
(Increase) decrease in inventory		238,986			(572,709	)
(Increase) decrease in prepaid expenses/deposits		26,817			(79,546	)
Increase (decrease) in accounts payable		27,657			(649,056	)
Increase (decrease) in accrued expenses		340,371			(49,752	)
Increase (decrease) long-term contracts		(202,066	)		1,271,781
Total Adjustments		804,509			3,918,020
Net Cash Used by Operating Activities		(2,700,581	)		(1,102,679	)
Cash Flows from Investing Activities:
Purchase of property and equipment		(94,950	)		(129,411	)
Proceeds from sale of property and equipment		12,827			-
Net Cash Used by Investing Activities		(82,123	)		(129,411	)
Cash Flows from Financing Activities:
Net payments on capital lease obligation		(110,963	)		(112,566	)
Payments on loans payable		(6,347	)		(21,210	)
Proceeds from issuance of common stock and warrants		1,825,000			-
Net Cash Provided by (Used in) Financing Activities		1,707,690			(133,776	)
Gain on Currency Translation		394,930			232,958
Net Increase (Decrease) in Cash and Cash Equivalents		(680,084	)		(1,132,908	)
Cash and Cash Equivalents at Beginning of Period		1,208,650			1,370,591
Cash and Cash Equivalents at End of Period	$	528,566		$	237,683

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

8

 LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS

Increase (Decrease) in Cash and Cash Equivalents

	For the Nine Months Ended September 30,
	2017		2016
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest Paid	$	23,308	$	23,843
Income Taxes	$	-	$	570
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Compensation upon vesting of stock options granted to employees	$	58,038	$	272,665
Compensation for vesting of restricted stock awards issued to the board of directors		78,750		58,250
Value of warrants issued for services		13,225		46,225
Total	$	150,013	$	377,140

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

9

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO 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. (“Parent”) and its subsidiaries. The terms "Company", “us", "we" and "our" as used in this report refer to Parent and its subsidiaries, which are set forth below. The Company engages in the development, design, production, marketing and sale of automated filtering systems, liquid filters, diesel particulate air filters and kiln furniture in United States, Canada, Europe, Asia and South America. Set forth below is a description of Parent and each of its subsidiaries:

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

LiqTech USA, a Delaware corporation and a wholly owned subsidiary of Parent 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 on 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 and kiln furniture in United States and Canada.

LiqTech Germany (“LiqTech Germany”) a 100% owned subsidiary of LiqTech Int. DK, incorporated in Germany on December 9, 2011, engages in marketing and sale of liquid filters in Germany. The Company has no operation and is in the process of closing down, which is expected to be completed during 2017.

LiqTech PTE Ltd. (“LiqTech Sing”) a 95% owned subsidiary of LiqTech Int. DK, incorporated in Singapore on January 19, 2012, engages in marketing and sale of liquid filters in Singapore and other countries in the area. The Company has no operation and is in the process of closing down, which is expected to be completed during 2017.

LiqTech Systems A/S ("LiqTech Systems"), a Danish corporation (formerly Provital Solutions A/S) was incorporated on September 1, 2009 and engages in the manufacture of fully automated filtering systems for application within the pool and spa markets, marine applications, and a number of industrial applications within Denmark and international markets. The financial statements include the accounts of LiqTech Systems from the date of acquisition on July 31, 2014.

Consolidation -- The consolidated financial statements include the accounts and operations of the Company. The non-controlling interests in the net assets of the subsidiaries are recorded in equity. The non-controlling interests of the results of operations of the subsidiaries are included in the results of operations and recorded as the non-controlling interest in subsidiaries. All material inter-company 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 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 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 nine months ended September 30, 2017 and 2016. 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.

10

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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. The Company had no balances held in a financial institution in the United States in excess of federally insured amounts at September 30, 2017 and December 31, 2016.

Accounts Receivable -- Accounts receivables consist of trade receivables arising in the normal course of business. The Company establishes an allowance for doubtful accounts, which 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 nine months ended September 30, 2017 and the year ended December 31, 2016 is as follows:

	2017			2016
Allowance for doubtful accounts at the beginning of the period	$	2,128,452		$	1,087,871
Bad debt expense		(59,409	)		1,437,949
Amount of receivables written off		(31,609	)		(252,792	)
Effect of currency translation		252,482			(144,576	)
Allowance for doubtful accounts at the end of the period	$	2,289,916		$	2,128,452

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

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 (See Note 4).

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 another-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. 

Goodwill -- Goodwill is evaluated for impairment annually, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of goodwill or a significant decrease in expected cash flows.

Revenue Recognition and Sales Incentives -- The Company accounts for revenue recognition in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (SAB 101), FASB ASC 605 Revenue Recognition. The Company recognizes revenue when rights and risk of ownership have passed to the customer, when there is persuasive evidence of an arrangement, product has been shipped or delivered to the customer, the price and terms are finalized, and collections of resulting receivable is reasonably assured. Products are primarily shipped FOB shipping point at which time title passes to the customer. In some instances, the Company uses common carriers for the delivery of products. In these arrangements, sales are recognized upon delivery to the customer. The Company's revenue arrangements with its customers often include early payment discounts and such sales incentives are recorded against sales.

11

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Company has received long-term contracts for the installation of various water filtrations systems and grants from government entities for development and use of silicon carbide membranes in various water filtration and treatment applications. Revenues from long-term contracts and grants are recognized on the percentage-of-completion method, measured by the percentage of project costs incurred to date to estimated total project costs for each long-term contract or grant multiplied by the long-term contract or grant income on a project-by-project basis. This method is used because management considers costs incurred to be the best available measure of progress on contracts in process.

Project costs of the long-term contracts and grants include all direct material and labor costs and those indirect costs related to the project. Project costs are capitalized and accreted into cost of sales based on the percentage of the project completed. Should a loss be estimated on an incomplete project it would be recorded in the period in which such a loss is determined. Changes in estimated profitability of a project are recognized in the period in which the revisions are determined. The aggregate of costs incurred and income recognized on incomplete projects are recorded as costs in excess of billings and are shown as a current asset. 

The aggregate of billings in excess of related costs incurred and income recognized on projects is shown as a current liability.

In Denmark, Value Added Tax (“VAT”) of 25% of the invoice amount is collected in 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.

Advertising Cost -- Cost incurred in connection with advertising of the Company’s products is expensed as incurred. Such costs amounted to $9,270 and $21,307 for the nine months ended September 30, 2017 and 2016, respectively.

Research and Development Cost -- The Company expenses research and development costs for the development of new products and systems as incurred. Included in operating expense for the nine months ended September 30, 2017 and 2016 were $375,026 and $476,734, 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 and awards to certain key employees and directors. See Note 14. The Company accounts for options in accordance with the provisions of FASB ASC Topic 718, Compensation – Stock Compensation. Non-cash compensation costs of $150,013 and $377,140 have been recognized for the vesting of options granted to employees and restricted stock awards issued to the board of directors with an associated recognized tax benefit of $26,775 and $18,445 for the nine months ended September 30, 2017 and 2016, respectively.

Fair Value of Financial Instruments --The Company accounts for fair value measurements for financial assets and financial liabilities in accordance with FASB ASC Topic 820. The authoritative guidance, which, 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.

12

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 allowance for doubtful accounts receivable, cost in excess of billings, reserve for obsolete inventory, depreciation and impairment of property plant and equipment and impairment of goodwill and liabilities billings in excess of cost commitment 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 May 2014, the Financial Accounting Standards Board (FASB) issued a new standard to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. On July 9 2015, the FASB agreed to delay the effective date by one year; accordingly, the new standard is effective for us beginning in the first quarter of 2018 and we expect to adopt it at that time. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. We have not yet selected a transition method, nor have we determined the impact of the new standard on our consolidated financial statements.

In February 2016, the FASB issued changes to the accounting for leases that primarily affect presentation and disclosure requirements. The new standard will require the recognition of a right to use asset and underlying lease liability for operating leases with an initial life in excess of one year. This standard is effective for us beginning in the first quarter of 2019. We have not yet determined the impact of the new standard on our consolidated financial statements.

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. 

NOTE 2 - GOING CONCERN

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has limited cash and incurred significant recent losses. These factors raise substantial doubt about the ability of the Company to continue as a going concern. There is no assurance that the Company will be successful in raising additional cash through the issuance of debt or equity instruments or return to achieving profitable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

NOTE 3 - INVENTORY

Inventory consisted of the following at September 30, 2017 and December 31, 2016:

	2017			2016
Furnace parts and supplies	$	375,529		$	336,799
Raw materials		1,218,256			1,216,098
Work in process		2,592,894			2,499,242
Finished goods and filtration systems		1,934,569			2,544,080
Reserve for obsolescence		(1,310,751	)		(1,421,345	)
Net Inventory	$	4,810,497		$	5,174,874

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at September 30, 2017 and December 31, 2016:

	Useful Life				2017			2016
Production equipment		3	-	10	$	10,031,780		$	10,370,462
Lab equipment		3	-	10		85,766			76,658
Computer equipment		3	-	5		199,184			185,652
Vehicles		3	-	5		74,164			39,090
Furniture and fixture			5			104,431			146,453
Leasehold improvements			10			1,063,722			955,563
						11,559,047			11,773,878
Less Accumulated Depreciation						(9,435,618	)		(9,140,320	)
Net Property and Equipment					$	2,123,429		$	2,633,558

Depreciation expense amounted to $731,312 and $992,418 for the nine months ended September 30, 2017 and 2016, respectively. The property and equipment is held as collateral on lines of credit and guarantees with financial institutions. See Note 9.  

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NOTE 5 - INVESTMENTS AT COSTS

The following tables summarize Level 1, 2 and 3 financial assets and financial (liabilities) by their classification in the Statement of Financial Position:

As of September 30, 2017	Level 1		Level 2		Level 3
Investments		-		-		5,909
Total		-		-		5,909

As of December 31, 2016	Level 1		Level 2		Level 3
Investments		-		-		5,282
Total		-		-		5,282

At September 30, 2017 and 2016, our total investments consisted of an investment of $5,909 and $5,282 in LEA Technology in France to strengthen our sales channels in the French market.

NOTE 6 - DEFINITE-LIFE INTANGIBLE ASSETS

At September 30, 2017 and December 31, 2016, definite-life intangible assets, net of accumulated amortization, consisted of patents on the Company’s products of $3,963 and $5,614, respectively. The patents are recorded at cost and amortized over two to ten years. Amortization expense for the nine months ended September 30, 2017 and 2016 was $1,651 and $3,269, respectively. Expected future amortization expense for the years ended are as follows: 

Year ending December 31,	Amortization Expenses
2017		755
2018		2,540
2019		668
Thereafter		-
	$	3,963

NOTE 7 - GOODWILL

The Company recorded Goodwill in connection with the acquisition of LiqTech Systems. Goodwill is evaluated for impairment annually in the fourth quarter of the Company’s fiscal year, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of goodwill or a significant decrease in expected cash flows. Key variables included in evaluating goodwill for impairment include the pipeline of proposed potential customer sales, budgeted reoccurring sales, risk free interest rate and risk premium rate and future budgeted operating results. The Company recorded an impairment charge of $7,343,208 during the year ended December 31, 2016, as management's estimated fair value of the reporting unit did not exceed the carrying value during 2016 fourth quarter testing. 

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NOTE 8 - NOTES PAYABLE

The Company had a 4.02% note payable used to purchase a vehicle with $48,582 and $54,929 balance outstanding as of September 30, 2017 and December 31, 2016. The note calls for monthly payments of $1,477, matures August 1, 2020 and is secured by the vehicle purchased.

The following represents the future maturities of long-term debt as of September 30, 2017:

Year ending December 31,	Payments
2017	$	3,947
2018		16,234
2019		16,897
2020		11,504
Thereafter		-
	$	48,582
Long-term notes payable, less current portion	$	32,521
Current portion of notes payable	$	16,061

NOTE 9 - LINES OF CREDIT

In connection with certain orders, we have to give 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 $15,000 at September 30, 2017) with a bank, subject to certain base limitations. As of September 30, 2017, we had DKK 94,620 (approximately $15,000) 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 10 - LEASES

Operating Leases -- The Company leases office and production facilities under operating lease agreements expiring in March 2021, August 2018, and May 2018. In some of these lease agreements, the Company has the right to extend.

The future minimum lease payments for non-cancelable operating leases having remaining terms in excess of one year as of September 30, 2017 are as follows:

Year ending December 31,	Lease Payments
2017		162,739
2018		467,758
2019		179,094
2020		182,676
2021		30,546
Thereafter		-
Total Minimum Lease Payments	$	1,022,813

Lease expense charged to operations was $481,001 and $559,755 for the nine months ended September 30, 2017 and 2016, respectively.

Capital Leases -- The Company leases equipment on various variable rate capital leases currently calling for monthly payments of approximately $661 and $595 expiring through July 2018. Included in property and equipment, at September 30, 2017 and December 31, 2016, the Company had recorded equipment on capital lease at $1,267,773 and $1,240,358, respectively, with related accumulated depreciation of $1,230,832 and $1,126,550, respectively. 

During the nine months ended September 30, 2017 and 2016 depreciation expense for equipment on capital leases amounted to $39,445, and $103,219, respectively, and has been included in depreciation expense. During the nine months ended September 30, 2017 and 2016, interest expense on a capital lease obligation amounted to $6,216 and $13,770, respectively. 

The following represents future minimum capital lease payments as of September 30, 2017: 

Year ending December 31,	Lease Payments
2017		3,766
2018		26,538
Thereafter		-
Total minimum lease payments		30,304
Less amount representing interest		(1,442	)
Present value of minimum lease payments		28,862
Less Current Portion		(7,808	)
	$	21,054

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NOTE 11 - 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 nine months ended September 30, 2017 and 2016, matching contributions were expensed and totaled $8,636 and $9,291, 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 September 9, 2014, Mr. Raffaele Bruno Tronchetti Provera (“Plaintiff”), the 60% owner of LiqTech Italy s.r.l. (the “Venture”), sued LiqTech International A/S, the 40% owner of the Venture (“Defendant”), 750,000 Euros before the Court of Como, Italy alleging, among other things, that certain products provided by Defendant to the Venture were defective.  As of August 14, 2017, the case is in the preliminary stages where the court has appointed an expert in order to verify the quality of the products in order to determine whether there is sufficient evidence to proceed.  An evaluation of the outcome will only be possible after the results of the court appointment expert are known. This outcome of the court appointment expert is expected to be reported during 2017. Defendant believes that the claims are without merit and intends to vigorously defend any litigation.

In connection with certain orders, we have to give 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 $15,000 at September 30, 2017) with a bank, subject to certain base limitations. As of September 30, 2017, we had DKK 94,620 (approximately $15,000 at September 30, 2017) in working guarantee against the line. 

NOTE 12 - INCOME TAXES

The Company accounts for income taxes in accordance with FASB ASC Topic 740, Accounting for Income Taxes, which requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carry forwards. The amount of and ultimate realization of the benefits from the deferred tax assets for income tax purposes is dependent, in part, upon the tax laws in effect, the Company’s future earnings, and other future events, the effects of which cannot be determined. In accordance with prevailing accounting guidance, the Company is required to recognize and disclose any income tax uncertainties. The guidance provides a two-step approach to recognizing and measuring tax benefits and liabilities when realization of the tax position is uncertain. The first step is to determine whether the tax position meets the more-likely-than-not condition for recognition and the second step is to determine the amount to be recognized based on the cumulative probability that exceeds 50%. Actual results could differ from these estimates.

As of September 30, 2017, the Company had net operating loss carryovers of approximately $10,857,383 for U.S. federal tax purposes expiring through 2036; approximately $8,645,417 for Danish tax purposes, which do not expire; approximately $491,212 for German tax purposes, which do not expire and approximately $637,307 for Singapore tax purposes which do not expire.

As of September 30, 2017 and December 31, 2016, the Company established a valuation allowance of $3,491,779 and $3,542,000 for the tax components of LiqTech International Inc. and Liqtech NA, respectively, $2,116,505 and $1,095,000 for the tax components of LiqTech International AS and LiqTech Systems, respectively, $137,000 and $122,000 for the tax component of LiqTech Germany and $108,000 and $97,000 for the tax component of LiqTech Singapore as management could not determine that it was more than likely not that sufficient income could be generated by these components to realize the resulting net operating loss carry forwards and other deferred tax assets of these components.

The Company is not relying on the reversal of deferred tax liabilities to realize the deferred tax assets. The same variable used by the Company in evaluating goodwill for impairment was used in assessing the realization of deferred tax assets (See Note 7).

The temporary differences, tax credits and carry forwards gave rise to the following deferred tax asset (liabilities) at September 30, 2017 and December 31, 2016:  

	2017			2016
Vacation accrual	$	5,450		$	5,450
Allowance for doubtful accounts		1,202			1,202
Reserve for obsolete inventory		213,745			200,118
Business tax credit carryover		30,935			30,935
Deferred Compensation		50,512			8,500
Net operating loss carryover		5,838,958			4,906,974
Excess of book over tax depreciation		(287,072	)		(296,227	)
Valuation allowance		(5,853,730	)		(4,856,952	)
Long term deferred tax asset	$	-		$	-

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A reconciliation of income tax expense at the federal statutory rate to income tax expense at the Company’s effective rate is as follows for the nine months ended September 30, 2017 and 2016: 

	2017			2016
Computed tax at expected statutory rate	$	(1,191,730	)	$	(725,821	)
State and local income taxes, net of federal benefit		-			-
Non-US income taxed at different rates		186,512			15,135
Valuation allowance		1,005,218			3,553,605
Other		-			43,013
Income tax expense (benefit)	$	-		$	2,885,932

The components of income tax expense (benefit) from continuing operations for the nine months ended September 30, 2017 and 2016 consisted of the following:

	2017			2016
Current income tax expense:
Danish	$	-		$	(577,892	)
Federal		-			-
State		-			-
Current tax (benefit)	$	-		$	(577,892	)
Book in excess of tax depreciation	$	-		$	-
Deferred rent		-			-
Business tax credit carryover		-			-
Net operating loss carryover		440,787			(88,023	)
Valuation allowance		(440,787	)		3,551,847
Deferred compensation		-			-
Accrued vacation		-			-
Reserve for obsolete inventory		-			-
Deferred tax expense (benefit)	$	-		$	3,463,824
Total tax expense (benefit)	$	-		$	2,885,932

Deferred income tax expense / (benefit) results primarily from the reversal of temporary timing differences between tax and financial statement income.

The Company files Danish, U.S. federal and Minnesota state income tax returns. LiqTech International AS is generally no longer subject to tax examinations for years prior to 2012 for their Danish tax returns. LiqTech NA is generally no longer subject to tax examinations for years prior to 2013 for U.S. federal and U.S. states tax returns. 

NOTE 13 - INCOME (LOSS) 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 nine months ended September 30, 2017 and 2016:

	For the Three Months Ended September 30						For the Nine Months Ended September 30
	2017			2016			2017			2016
Net Loss	$	(1,479,425	)	$	(937,628	)	$	(3,505,090	)	$	(5,020,699	)
Weighted average number of common shares used in basic earnings per share		44,229,264			39,532,035			40,604,129			39,532,035
Effect of dilutive securities, stock options and warrants		-			-			-			-
Weighted average number of common shares and potentially dilutive securities		44,229,264			39,532,035			40,604,129			39,532,035

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For the nine months ended September 30, 2017, Parent had 455,000 options outstanding to purchase shares of common stock of Parent at $0.74 to $1.01 per share and Parent had 700,000 warrants outstanding to purchase shares of common stock of Parent at $0.81 to $1.65 per share, which were not included in the loss per share computation because their effect would be anti-dilutive.

For the nine months ended September 30, 2016, Parent had 1,046,000 options outstanding to purchase shares of common stock of Parent at $0.74 to $1.90 per share and Parent had 7,325,575 warrants outstanding to purchase shares of common stock of Parent at $0.81 to $4.06 per share, which were not included in the loss per share computation because their effect would be anti-dilutive.

NOTE 14 - STOCKHOLDERS' EQUITY

Common Stock -- Parent has 100,000,000 authorized shares of common stock, $0.001 par value. As of September 30, 2017 and December 31, 2016, respectively, there were 44,229,264 and 36,835,514 common shares issued and outstanding.      

Voting -- Holders of Parent 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 which may at the time be outstanding, holders of Parent 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 Parent, 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 Parent common stock will be entitled to share ratably in the distribution of any of our remaining assets.   

Other Matters -- Holders of Parent common stock have no conversion, preemptive or other subscription rights, and there are no redemption rights or sinking fund provisions with respect to the 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 Parent 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 Parent preferred stock may have the effect of delaying, deferring or preventing a change in control of us without further action by the stockholders and may adversely affect the voting and other rights of the holders of common stock.

Common Stock Cancelation

On December 31, 2016, the Company canceled 2,696,521 common shares of the previously issued common shares held in escrow issued in connection with the acquisition of all of the issued and outstanding capital stock of LiqTech Systems (formerly Provital Solutions A/S), as LiqTech Systems failed to meet 2014, 2015 and 2016 catchup gross revenue and EBITDA thresholds.

Common Stock Issuance

On April 13, 2015, Parent issued an additional 100,000 shares of restricted stock valued at $75,000 for services provided and to be provided to a member of the Board of Directors. The Company will recognize the non-cash compensation of the award over the requisite service period, of which 33,333 shares vested on January 1, 2016, 33,333 shares will vest on January 1, 2017 and 33,334 shares will vest on January 1, 2018.

On January 2, 2016, Parent issued an additional 27,253 shares of restricted stock valued at $20,167 for services provided by the Board of Directors. The Company will recognize the non-cash compensation of the award over the requisite service period. The shares vested immediately.

On January 2, 2017, Parent issued an additional 93,750 shares of restricted stock valued at $60,000 for services provided by the Board of Directors. The Company will recognize the non-cash compensation of the award over the requisite service period. The shares vested immediately.

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On May 19, 2017, Parent completed a private placement of its common stock. The Company issued 7,300,000 new shares at a price of $0.25 per share. The private placement was made directly by LiqTech and the Company plans to use the net proceeds of $1,825,000 for acceleration of its business in the marine scrubber industry.

For the nine months ended September 30, 2017 and 2016, the Company has recorded non-cash compensation expense of $78,750 and $58,250, respectively, relating to the vesting of restricted stock awards issued to the board of directors.

Common Stock Purchase Warrants

A summary of the status of the warrants outstanding at September 30, 2017 is presented below:

		Warrants Outstanding						Warrants Exercisable
Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.81		100,000		0.25	$	0.81		100,000	$	0.81
$	1.00		200,000		0.25	$	1.00		200,000	$	1.00
$	1.65		400,000		1.83	$	1.65		400,000	$	1.65
Total			700,000		1.15	$	1.34		700,000	$	1.34

At September 30, 2017, the Company had zero non-vested warrants. We have recorded non-cash compensation expense of $13,225 for the nine months ended September 30, 2017 related to the warrants issued.

The exercise price of the warrants and the number of shares underlying the warrants are subject to adjustment for stock dividends, subdivisions of the outstanding shares of common stock and combinations of the outstanding shares of common stock. For so long as the warrants remain outstanding, we are required to keep reserved from our authorized and unissued shares of common stock a sufficient number of shares to provide for the issuance of the shares of common stock underlying the warrants.

On February 15, 2016, the Company issued to LCL Finance Limited warrants to purchase 100,000 shares of common stock at an exercise price of $0.81 per share. The warrants are exercisable immediately and will remain exercisable until December 31, 2017.

Stock Options

In August 2011, Parent’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 September 30, 2017, 455,000 options were granted and outstanding under the Plan. 

The Company recognizes compensation costs for stock option awards to employees, during 2016, 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 weighted-average assumptions used to estimate the fair values of the stock options granted using the Black-Scholes option-pricing model are as follows:

	LiqTech International, Inc.
Expected term (in years)		10
Volatility		76.87	%
Risk free interest rate		2.24	%
Dividend yield		0	%

The Company recognized stock based compensation expense related to the options of $58,038 and $272,665 for the nine months ended September 30, 2017 and 2016, respectively. At September 30, 2017, the Company had approximately $28,206 of unrecognized compensation cost related to non-vested options expected to be recognized through December 31, 2025. 

A summary of the status of the options outstanding under the Plan at September 30, 2017 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
$	0.74		325,000		2.87	$	0.74		108,333	$	0.74
$	1.01		130,000		8.22	$	1.01		130,000	$	1.01
Total			455,000		4.40	$	0.82		238,333	$	0.89

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A summary of the status of the options at September 30, 2017, and changes during the period are presented below:

	September 30, 2017
	Shares			Weighted Average Exercise Price		Average Remaining Life		Weighted Average Intrinsic Value
Outstanding at beginning of period		868,000		$	1.10		3.41	$	-
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited		(175,000	)		0.75		-		-
Expired		(238,000	)		1.90		-		-
Outstanding at end of period		455,000		$	0.82		4.40	$	-
Vested and expected to vest		455,000		$	0.82		4.40	$	-
Exercisable end of period		238,333		$	0.89		5.79	$	-

At September 30, 2017, Parent had 216,667 non-vested options to purchase shares of Parent common stock with a weighted average exercise price of $0.74 and with a weighted average grant date fair value of $0.46, resulting in unrecognized compensation expense of $18,804, which is expected to be expensed over a weighted-average period of 0.5 years.

The total intrinsic value of options at September 30, 2017 was $0. Intrinsic value is measured using the fair market value at the date of exercise (for shares exercised) or at September 30, 2017 (for outstanding options), less the applicable exercise price.  

NOTE 15 - SIGNIFICANT CUSTOMERS / CONCENTRATION

For the nine months ended September 30, 2017, our four largest customers accounted for approximately 13%, 12%, 9% and 5%, respectively, of our net sales (approximately 39% in total).

For the nine months ended September 30, 2016, the Company had two customers who account for 30% and 19%, respectively, of our net sales (approximately 49% in total).

The Company sells products throughout the world. Sales by geographical region are as follows for the three and nine months ended September 30, 2017 and 2016:

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2017		2016		2017		2016
United States and Canada	$	271,434	$	204,134	$	835,602	$	554,678
Australia		215,713		43,883		502,895		266,625
South America		-		-		-		81,480
Asia		253,460		427,511		1,379,607		649,295
Europe		1,715,877		3,013,983		5,632,654		9,786,739
	$	2,456,484	$	3,689,511	$	8,350,758	$	11,338,817

The Company’s sales by product line are as follows for the three and nine months ended September 30, 2017 and 2016:

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2017		2016		2017		2016
Ceramic diesel particulate	$	1,519,920	$	1,749,925	$	5,677,005	$	4,318,202
Liquid filters and systems		933,182		1,759,285		2,550,144		6,745,397
Kiln furniture		3,382		180,301		123,609		275,218
	$	2,456,484	$	3,689,511	$	8,350,758	$	11,338,817

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NOTE 16 – SUBSEQUENT EVENTS

On November 14, 2017, the Parent effected a private placement of 1,617,503 shares of preferred stock (1 to 4 conversion rate) or 6,470,012 ordinary shares of its common stock at a per share price of $1.20 per preferred share for aggregate proceeds to Parent of $1,941,203.60. Immediately prior to the closing of the private placement, Parent had 44,229,264 of its common stock issued and outstanding, and after the issuance of the 1,617,503 shares of preferred stock in the private placement, or 14.63% equivalent shares of the total shares of common stock issued and outstanding immediately prior to effecting the private placement, Parent has 1,617,503 preferred shares and 44,229,264 common shares issued and outstanding as of the date of this Report. The private placement was completed pursuant to Rule 506 of Regulation D and/or Regulation S of the Securities Act. In connection with the private placement, each investor executed a subscription agreement, which contains customary representations and warranties of Parent and of each investor. The private placement was made directly by Parent and no underwriter or placement agent was engaged by Parent.

Except as set forth above, the Company's management reviewed material events through November 14, 2017 and there were no other subsequent events. 

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

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this quarterly report. In addition, the following discussion should be read in conjunction with our annual report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 30, 2017, 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 (DPFs) for the control of soot exhaust particles from diesel engines. We are phasing out the fabrication of kiln furniture for the refractory industry. 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 (“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 operations are located in the Copenhagen area and in Hobro in Jutland, Denmark, and our U.S. operations are conducted by LiqTech Delaware located in White Bear Lake, Minnesota.

Going Concern

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has limited cash and incurred significant recent losses raising substantial doubt about the ability of the Company to continue as a going concern. 

Our Strategy

Our strategy is to create stockholder value by leveraging our competitive and strengths and focusing on the opportunities in the end-markets we serve. Key features of our strategy include:

● Enter New Geographic Markets and Expand Existing Markets. We plan to continue to manufacture and sell our products out of Denmark and the United States. We intend to continue to develop our organization in Denmark and the United States and we plan to expand our production facilities in the United States to include manufacturing of systems. We have opened sales offices in France and in Italy. In addition to utilizing local representatives, we intend to establish sales outlets with technical support in other European nations, while expanding our presence in Asia. We intend to work with agents and partners to access such markets.

● Continue to Strengthen Position in 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 strength in this area. Furthermore, we intend to leverage our experience in the OEM market and expand our presence in the OEM market with new products relating to DPF systems.

● Continue to Develop and Improve Technologies and Open New End Markets. We intend to continuously develop our ceramic membranes and improve the filtration efficiency for our filtration products. Through continuous development, we intend to find new uses for our products and plan to expand into any new markets that we believe would be appropriate for our Company. One of our key strategies is to develop our membrane applications together with our customers including, for example, the development of the next generation of DPFs with asymmetric design for the OEM market.

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● Continue Our Focus on Selling and on Development New Standard Units. We will continue our focus on selling systems based on our unique SiC membranes. We will also combine the ceramic membranes with other technologies to be able to offer our customers a complete solution. We will continue our focus to develop smaller standard systems, like our ground water treatment unit and our residential swimming pool units. These units will be sold through a network of agents and partnerships.

Developments

Signed Contracts

On January 5, 2017, we announced that we and Grundfos Biobooster A/S (Grundfos) have signed a framework agreement for the delivery of silicon carbide ceramic discs. The agreement has a minimum value of $450,000 and an initial term of 2 years. The ceramic discs will be used in Grundfos´s Ultra Filtration systems for water re-use.

On January 17, 2017, we announced that we had received a $120,000 order for the Company´s water treatment systems for flue gas condensate. The order was received from Tjæreborg Industri A/S, a Danish company who specializes in the development and manufacturing of equipment for power plants. The system has been installed at Uldum Varmeværk, Denmark in 2017.

On March 1, 2017, we announced that due to regulatory issues it has not been feasible for Hunan Yonker Investment Group (Yonker) to complete the agreed investment in LiqTech before the deadline of February 28, 2017. The parties amended the Investment Agreement and the deadline for completion of the US$4,000,000 investment in LiqTech was extended to April 15, 2017, however Yonker subsequently informed the Company that the National Development and Reform Commission (NDRC) was still reviewing and verifying the submitted documents.

On April 17, 2017, we announced that we had received a $480,000 order for the Company´s standardized systems for treatment of waste water from marine scrubbers.

On April 17, 2017, we announced that we had been informed by Hunan Yonker Investment Group (Yonker) that they had completed the mandatory due diligence process related to earlier announced USD 4 million investment in LiqTech.

Yonker further confirmed that the final application has been submitted to the National Development and Reform Commission (NDRC) and now awaits the formal approval.

On May 15, 2017, we announced that we had received a $380,000 order for the Company´s system for treatment of waste water from marine scrubbers. The order is from a new customer and includes an option for further two systems.

On May 19, 2017, we announced that we had received subscription agreements for 7,300,000 new shares at a price of $0.25 per share. The private placement was made directly by LiqTech and the Company plans to use the net proceeds of $1,825,000 million for acceleration of its business in the marine scrubber industry.

On June 8, 2017, we announced that we had been informed by Hunan Yonker Investment Group (Yonker) that its application for a USD 4 million investment in LiqTech has been declined by the National Development and Reform Commission (NDRC).

On June 14, 2017, we announced that we had received a $290,000 order for the Company´s system for treatment of waste water from marine scrubbers.

On August 28, 2017, we announced that we had received two new orders for the Company's systems for treatment of waste water from marine scrubbers.

Results of Operations

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

23

The following table sets forth our revenues, expenses and net income for the three months ended September 30, 2017 and 2016:  

	Three Months Ended September 30,
													Period to Period Change
	2017			As a % of Sales			2016			As a % of Sales			US$			Percent %
Net Sales		2,456,484			100	%		3,689,511			100	%		(1,233,027	)		(33.4	)
Cost of Goods Sold		2,772,451			112.9			3,303,042			89.5			(530,591	)		(16.1	)
Gross Profit		(315,967	)		(12.9	)		386,469			10.5			(702,436	)		(181.8	)
Operating Expenses
Selling expenses		521,627			21.2			558,105			15.1			(36,478	)		(6.5	)
General and administrative expenses		433,368			17.6			498,358			13.5			(64,990	)		(13.0	)
Non-cash compensation expenses		24,055			1.0			104,416			2.8			(80,361	)		(77.0	)
Research and development expenses		121,680			5.0			124,165			3.4			(2,485	)		(2.0	)
Total Operating Expenses		1,100,730			44.8			1,285,044			34.8			(184,314	)		(14.3	)
Loss from Operating		(1,416,697	)		(57.7	)		(898,575	)		(24.4	)		(518,122	)		57.7
Other Income (Expense)
Interest and other income		2,790			0.1			-			-			2,790			-
Interest (expense)		(3,781	)		(0.2	)		(7,347	)		(0.2	)		3,566			(48.5	)
Loss on currency transactions		(26,913	)		(1.1	)		(14,060	)		(0.4	)		(12,853	)		91.4
Loss on sale of fixed assets		(34,824	)		(1.4	)		-			-			(34,824	)		-
Total Other Income (Expense)		(62,728	)		(2.6	)		(21,407	)		(0.6	)		(41,321	)		193.0
Loss Before Income Taxes		(1,479,425	)		(60.2	)		(919,982	)		(24.9	)		(559,443	)		60.8
Income Taxes Expense		-			-			17,646			0.5			(17,646	)		(100.0	)
Net Loss		(1,479,425	)		(60.2	)		(937,628	)		(25.4	)		(541,797	)		57.8

	Nine Months Ended September 30,
													Period to Period Change
	2017			As a % of Sales			2016			As a % of Sales			$			Percent %
Net Sales		8,350,758			100	%		11,338,817			100	%		(2,988,059	)		(26.4	)
Cost of Goods Sold		8,202,634			98.2			9,078,036			80.1			(875,402	)		(9.6	)
Gross Profit		148,124			1.8			2,260,781			19.9			(2,112,657	)		(93.4	)
Operating Expenses
Selling expenses		1,506,369			18.0			1,661,352			14.7			(154,983	)		(9.3	)
General and administrative expenses		1,518,935			18.2			1,830,260			16.1			(311,325	)		(17.0	)
Non-cash compensation expenses		150,013			1.8			377,140			3.3			(227,127	)		(60.2	)
Research and development expenses		375,026			4.5			476,734			4.2			(101,708	)		(21.3	)
Total Operating Expenses		3,550,343			42.5			4,345,486			38.3			(795,143	)		(18.3	)
Loss from Operating		(3,402,219	)		(40.7	)		(2,084,705	)		(18.4	)		(1,317,514	)		63.2
Other Income (Expense)
Interest and other income		3,093			0.0			0			0.0			3,093			-
Interest expense		(23,308	)		(0.3	)		(23,843	)		(0.2	)		535			(2.2	)
Loss on currency transactions		(54,600	)		(0.7	)		(26,219	)		-0.2			(28,381	)		108.2
Gain on sale of fixed assets		(28,056	)		(0.3	)		0			0.0			(28,056	)		-
Total Other Expense		(102,871	)		(1.2	)		(50,062	)		(0.4	)		(52,809	)		105.5
Loss Before Income Taxes		(3,505,090	)		(42.0	)		(2,134,767	)		(18.8	)		(1,370,323	)		64.2
Income Taxes Expense		-			-			2,885,932			25.5			(2,885,932	)		(100.0	)
Net Loss		(3,505,090	)		(42.0	)		(5,020,699	)		(44.3	)		1,515,609			(30.2	)

24

Comparison of the Three Months Ended September 30, 2017 and September 30, 2016
 

Revenues

Net sales for the three months ended September 30, 2017 were $2,456,484 compared to $3,689,511 for the same period in 2016, representing a decrease of $1,233,027 or 33.4%. The decrease in sales consisted of a decrease in sales of liquid filters and systems of $826,103, a decrease in sales of DPFs of $230,005 and a decrease in sales of kiln furniture of $176,919. The decrease in demand for our liquid filters and systems is mainly due to a delay in certain business opportunities compared to the same period last year where various projects were realized. The decrease in demand for our DPFs is mainly due to a decrease in market activity in general compared to the same period last year. The decrease in demand for our kiln furniture is due to the decision that we will not focus on this product line anymore and expect very limited activity going forward.

Gross Profit

Gross loss for the three months ended September 30, 2017 was $315,967 compared to a gross profit of $386,469 for same period in 2016, representing a decrease of $702,436 or 181.8%. The decrease in gross profit was due to low sales activity compared to our fixed cost of goods sold. Included in gross profit is depreciation of $268,872 and $325,990 for the three months ended September 30, 2017 and 2016, respectively.

Expenses

Total operating expenses for the three months ended September 30, 2017 were $1,100,730 representing a decrease of $184,314 or 14.3%, compared to $1,285,044 for the same period in 2016. This decrease in operating expenses is attributable to an decrease in selling and marketing expenses of $36,478, or 6.5%, a decrease in general and administrative expenses of $64,990, or 13.0%, a decrease in non-cash compensation expenses of $80,361, or 77.0% and a decrease in research and development expenses of $2,485, or 2.0%, compared to the same period in 2016.   

Selling expenses for the three months ended September 30, 2017 were $521,627 compared to $558,105 for the same period in 2016, representing a decrease of $36,478, or 6.5%. This decrease is attributable to a cost reduction in selling expenses in general and a centralization of the sales structure for the three months ending September 30, 2017 compared to the same period in 2016.

General and administrative expenses for the three months ended September 30, 2017 were $433,368 compared to $498,358 for the same period in 2016, representing a decrease of $64,990, or 13.0%. This decrease is attributable to a general cost reduction in general and administrative expenses for the three months ending September 30, 2017 compared to the same period in 2016.

Non-cash compensation expenses for the three months ended September 30, 2017 were $24,055 compared to $104,416 for the same period in 2016, representing a decrease of $80,361, or 77.0%. This decrease is attributable to decreased non-cash compensation expense for options, shares and warrants for services performed granted to directors, employees and management compared to the same period in 2016.

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

	For the Three Months Ended
	September 30,		September 30,
	2017		2016
Compensation upon vesting of stock options granted to employees	$	13,397	$	80,591
Compensation for vesting of restricted stock awards issued to the board of directors		6,250		19,417
Value of Warrants granted for services		4,408		4,408
Total Non-Cash Compensation	$	24,055	$	104,416

Research and development expenses for the three months ended September 30, 2017 were $121,680 compared to $124,165 for the same period in 2016, representing a decrease of $2,485, or 2.0%. This decrease is attributable to a cost reduction in research and development expenditures in general for the three months ending September 30, 2017 compared to the same period in 2016.

25

Net Income

Net loss for the three months ended September 30, 2017 was a loss of $1,479,425 compared to a loss of $937,628 for the comparable period in 2016, representing an increase of $541,797, or 57.8%. This increase was primarily attributable to lower gross profit for the three months ending September 30, 2017 compared to the same period in 2016. This was partially offset by a decrease in total operating expenses for the three months ending September 30, 2017 compared to the same period in 2016.

Comparison of the Nine Months Ended September 30, 2017 and September 30, 2016
 

Revenues

Net sales for the nine months ended September 30, 2017 were $8,350,758 compared to $11,338,817 for the same period in 2016, representing a decrease of 2,988,059 or 26.4%. The decrease in sales consisted of a decrease in sales of liquid filters and systems of $4,195,253, a decrease in sales of kiln furniture of $151,609 offset by an increase in sales of DPFs of $1,358,803. The decrease in demand for our liquid filters and systems is mainly due to a delay in certain business opportunities compared to the same period last year where various projects were realized. The increase in demand for our DPFs is mainly due to an increase in market activities compared to the same period last year. The decrease in demand for our kiln furniture is due to the decision that we will not focus on this product line anymore and expect very limited activity going forward.

Gross Profit

Gross profit for the nine months ended September 30, 2017 was $148,124 compared to a gross profit of $2,260,781 for same period in 2016, representing a decrease of $2,112,657 or 93.4%. The decrease in gross profit was due to lower sales activity in general, lower gross margin and due to lower sales activity for our liquid filters and systems, which historically have a higher gross margin, compared to the same period in 2016. Included in gross profit is depreciation of $732,963 and $995,687 for the nine months ended September 30, 2017 and 2016, respectively.

Expenses

Total operating expenses for the nine months ended September 30, 2017 were $3,550,343 representing a decrease of $795,143 or 18.3%, compared to $4,345,486 for the same period in 2016. This decrease in operating expenses is attributable to a decrease in selling and marketing expenses of $154,983, or 9.3%, a decrease in general and administrative expenses of $311.325, or 17.0%, a decrease in non-cash compensation expenses of $227,127, or 60.2% and a decrease in research and development expenses of $101,708, or 21.3%, compared to the same period in 2016.   

Selling expenses for the nine months ended September 30, 2017 were $1,506,369 compared to $1,661,352 for the same period in 2016, representing a decrease of $154,983, or 9.3%. This decrease is attributable to a cost reduction in selling expenses in general and a centralization of the sales structure for the nine months ending September 30, 2017 compared to the same period in 2016.

General and administrative expenses for the nine months ended September 30, 2017 were $1,518,935 compared to $1,830,260 for the same period in 2016, representing a decrease of $311,325, or 17.0%. This decrease is attributable to a general cost reduction in general and administrative expenses for the nine months ending September 30, 2017 compared to the same period in 2016. 

Non-cash compensation expenses for the nine months ended September 30, 2017 were $150,013 compared to $377,140 for the same period in 2016, representing a decrease of $227,127, or 60.2%. This decrease is attributable to decreased non-cash compensation expense for options, shares and warrants for services performed granted to directors, employees and management compared to the same period in 2016.

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

	For the Nine Months Ended
	September 30,		September 30,
	2017		2016
Compensation upon vesting of stock options granted to employees	$	58,038	$	272,665
Compensation for vesting of restricted stock awards issued to the board of directors		78,750		58,250
Value of Warrants granted for services		13,225		46,225
Total Non-Cash Compensation	$	150,013	$	377,140

Research and development expenses for the nine months ended September 30, 2017 were $375,026 compared to $476,734 for the same period in 2016, representing a decrease of $101,708, or 21.3%. This decrease is attributable to a cost reduction in research and development expenditures in general for the nine months ending September 30, 2017 compared to the same period in 2016. 

26

Net Income

Net loss for the nine months ended September 30, 2017 was a loss of $3,505,090 compared to a loss of $5,020,699 for the comparable period in 2016, representing a decrease in net loss of $1,515,609, or 30.2%. This decrease in net loss was primarily attributable to a tax expense of $2,868,286 in 2016 and a decrease in total operating expenses offset by a decrease in gross profit compared to same period in 2016.

Liquidity and Capital Resources

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has limited cash and incurred significant recent losses raising substantial doubt about the ability of the Company to continue as a going concern.   

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 September 30, 2017, the Company did not have any available lines of credit with any lender. At September 30, 2017, we had cash of $528,566 and working capital of $2,816,713 and at December 31, 2016, we had cash of $1,208,650 and working capital of $3,497,578. At September 30, 2017, our working capital decreased by $680,865 compared to December 31, 2016. Total current assets were $8,065,285 and $8,506,321 at September 30, 2017 and at December 31, 2016, respectively, and total current liabilities were $5,248,572 and $5,008,743 at September 30, 2017 and at December 31, 2016, respectively. 

On May 19, 2017, the Parent completed a private placement of 7,300,000 shares of its common stock at a per share price of $0.25 for aggregate proceeds to Parent of $1,825,000. Immediately prior to the closing of the private placement, Parent had 36,929,264 of its common stock issued and outstanding, and after the issuance of the 7,300,000 shares of common stock in the private placement, or 19.8% of the total shares of common stock issued and outstanding immediately prior to the closing of the private placement, Parent has 44,229,264 shares issued and outstanding as of the date of this Report. The private placement was completed pursuant to Section 4(a)(2) of the Securities Act and/or Regulation S promulgated under the Securities Act. In connection with the private placement, each investor executed a subscription agreement, which contains customary representations and warranties of Parent and of each investor. The private placement was made directly by Parent and no underwriter or placement agent was engaged by Parent.

On November 14, 2017, the Parent effected a private placement of 1,617,503 shares of preferred stock (1 to 4 conversion rate) or 6,470,012 ordinary shares of its common stock at a per share price of $1.20 per preferred share for aggregate proceeds to Parent of $1,941,203.60. Immediately prior to the closing of the private placement, Parent had 44,229,264 of its common stock issued and outstanding, and after the issuance of the 1,617,503 shares of preferred stock in the private placement, or 14.63% equivalent shares of the total shares of common stock issued and outstanding immediately prior to effecting the private placement, Parent has 1,617,503 preferred shares and 44,229,264 common shares issued and outstanding as of the date of this Report. The private placement was completed pursuant to Rule 506 of Regulation D and/or Regulation S of the Securities Act. In connection with the private placement, each investor executed a subscription agreement, which contains customary representations and warranties of Parent and of each investor. The private placement was made directly by Parent and no underwriter or placement agent was engaged by Parent.

In connection with certain orders, we have to give 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 $15,000 at September 30, 2017) with a bank, subject to certain base limitations. As of September 30, 2017, we had DKK 94,620 (approximately $15,000) 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.

We will need additional funds to sustain our business. 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 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. In the event that the Company is unable to raise funds, there is substantial doubt about the ability of the Company to continue as a going concern.

Cash Flows

Nine months ended September 30, 2017 Compared to nine months ended September 30, 2016

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 nine months ended September 30, 2017 was $2,700,581, representing an increase of $1,597,902 compared to cash used by operating activities of $1,102,679 for the nine months ended September 30, 2016. The $1,597,902 increase in cash used by operating activities for the nine months ended September 30, 2017 was mainly due to a loss of $3,505,090 adjusted for no cash items, an increase of $478,879 in accounts receivable and a decrease of $202,066 in long-term contracts. This was partially offset by a decrease of $238,986 in inventory, an increase of $27,657 in accounts payable and an increase of $340,371 in accrued expenses.

The increase in in accounts receivable, the increase in accrued expenses, the increase in accounts payable, the decrease in inventory and the decrease in long-term, were all due to normal variations in the ordinary course of business.

27

Cash used in investing activities was $82,123 for the nine months ended September 30, 2017, as compared to cash used in investing activities of $129,411 for the nine months ended September 30, 2016. Cash used in investing activities decreased by $47,288 for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. This decrease was due to a period over period decrease of $34,461 in the purchase of property and proceeds from sale of property and equipment of $12,827.

Cash provided by financing activities was $1,707,690 for the nine months ended September 30, 2017, as compared to cash used by financing activities of $133,776 for the nine months ended September 30, 2016. This change of $1,841,466 in cash provided by financing activities for the nine months ended September 30, 2017, compared to 2016, was mainly due to cash received in connection with the private placement on May 19, 2017 where the Company raised $1,825,000 with no offering costs issuing 7,300,000 shares of common stock.

Off Balance Sheet Arrangements

As of September 30, 2017, we had no off-balance sheet arrangements other than normal operating leases. We are not aware of any material transactions, which are not disclosed in our consolidated financial statements. 

Operating Leases -- The Company leases office and production facilities under operating lease agreements expiring in March 2021, August 2018, May 2018, and September 2017, In some of these lease agreements, the Company has the right to extend.

The future minimum lease payments for non-cancelable operating leases having remaining terms in excess of one year as of September 30, 2017 are as follows:

Year ending December 31,	Lease Payments
2017		162,739
2018		467,758
2019		179,094
2020		182,676
2021		30,546
Thereafter		-
Total Minimum Lease Payments	$	1,022,813

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 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.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

28

ITEM 4.  CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Our management, under supervision and with the participation of both of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 (the “Exchange Act”) Rules 13a-15(e) and 15-d-15(e)) as of the end of the period covered by this report (the “Evaluation Date”). Based upon that evaluation, both of our Chief Executive Officer and Chief Financial Officer concluded that as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on 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.　

(b) Changes in Internal Control over Financial Reporting

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

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

On November 14, 2017, the Parent effected a private placement of 1,617,503 shares of preferred stock (1 to 4 conversion rate) or 6,470,012 ordinary shares of its common stock at a per share price of $1.20 per preferred share for aggregate proceeds to Parent of $1,941,203.60. Immediately prior to the closing of the private placement, Parent had 44,229,264 of its common stock issued and outstanding, and after the issuance of the 1,617,503 shares of preferred stock in the private placement, or 14.63% equivalent shares of the total shares of common stock issued and outstanding immediately prior to effecting the private placement, Parent has 1,617,503 preferred shares and 44,229,264 common shares issued and outstanding as of the date of this Report. The private placement was completed pursuant to Rule 506 of Regulation D and/or Regulation S of the Securities Act. In connection with the private placement, each investor executed a subscription agreement, which contains customary representations and warranties of Parent and of each investor. The private placement was made directly by Parent and no underwriter or placement agent was engaged by Parent.

29

ITEM 6.	EXHIBITS
4.1	Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of LiqTech International, Inc.	Filed herewith
10.1	Form of Subscription Agreement (Regulation S)	Filed herewith
10.2	Form of Subscription Agreement (Section 4(a)(2)/Regulation D)	Filed herewith
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

30

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: November 14, 2017	/s/ Sune Mathiesen
	Sune Mathiesen, Chief Executive Officer
	(Principal Executive Officer)
Dated: November 14, 2017	/s/ Soren Degn
	Soren Degn, Chief Financial Officer
	(Principal Financial and Accounting Officer)

31

EX-4.1

Exhibit 4.1

CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES A CONVERTIBLE PREFERRED STOCK

OF

LIQTECH INTERNATIONAL, INC.

It is hereby certified that:

1. The name of the Company (hereinafter called the "Company") is LiqTech International, Inc. a Nevada corporation.

2. The Articles of Incorporation of the Company authorizes the issuance of Ten Million (10,000,000) shares of preferred stock, $0.001 par value per share, and expressly vests in the Board of Directors of the Company the authority to issue any or all of said shares in one (1) 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.

3. The Board of Directors of the Company, pursuant to the authority expressly vested in it as aforesaid, has adopted the following resolutions creating a Series A issue of Convertible Preferred Stock:

RESOLVED,that Two Million Two Hundred Ten Thousand Three Hundred Fifty-Seven (2,210,357) of the Ten Million (10,000,000) authorized shares of Preferred Stock of the Company shall be designated Series A Convertible Preferred Stock, and shall possess the rights and preferences set forth below:

Section 1.  Definitions. For the purposes hereof, the following terms shall have the following meanings:

"Alternate Consideration" shall have the meaning set forth in Section 6(b).

"Business Day" means any day except Saturday, Sunday, and any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of Nevada are authorized or required by law or other governmental action to close. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

"Common Stock"means the Company's common stock, par value $0.001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed into.

"Common Stock Equivalents" means any securities of the Company or the subsidiaries of the Company, whether or not vested or otherwise convertible or exercisable into shares of Common Stock at the time of such issuance, which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

"Conversion Date" shall have the meaning set forth in Section 5(a).

"Conversion Price" means $0.30, subject to adjustment as set forth in Section 6.

"Conversion Shares" means the shares of Common Stock issuable upon conversion of the shares of Series A Preferred Stock in accordance with the terms hereof.

"Effective Date" means the date that this Certificate of Designation is filed with the Secretary of State of Nevada.

"Fundamental Transaction" shall have the meaning set forth in Section 6(b).

"Holder"shall mean the owner of the Series A Preferred Stock.

"Junior Securities"shall be the Common Stock and any other class or series of capital stock of the Company hereafter created which does not expressly rank pari passu with or senior to the Series A Preferred Stock.

"Liquidation"shall have the meaning set forth in Section 4(a).

"Mandatory Conversion"shall have the meaning set forth in Section 5(b).

"Mandatory Conversion Date"shall have the meaning set forth in Section 5(b).

"Notice of Conversion"shall have the meaning set forth in Section 5(a).

"Person"means an individual, entity, corporation, partnership, association, limited liability company, limited liability partnership, joint-stock company, trust or unincorporated organization.

"Purchase Agreement" means, with respect to each Holder, the securities purchase agreement between the Company and the original Holder.

"Preferred Stock"means the Company's preferred stock, par value $0.001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed into.

"Reverse Split" shall have the meaning set forth in Section 3.

"Series A Preferred Stock"shall have the meaning set forth in Section 2.

"Stated Value" means $1.20 per share.

"Trading Day"means a day on which the NYSE American or any other trading market or exchange on which the Common Stock may then trade is open for business.

Section 2. Designation and Authorized Shares. The series of Preferred Stock designated by this Certificate shall be designated as the Company's Series A Convertible Preferred Stock (the "Series A Preferred Stock") and the number of shares so designated shall be 2,210,357, provided, however, the Company may increase the number of shares of Series A Preferred Stock that has been designated solely by action of the Company's Board of Directors, and no further consent of the Company’s stockholders is required to designate additional shares of Series A Preferred Stock up to 10,000,000 shares, as long as no other series of Preferred Stock has been designated. So long as any of the Series A Preferred Stock are issued and outstanding, the Company shall not issue any shares of Preferred Stock that are senior to the Series A Preferred Stock in Liquidation without the approval of the Holders of a majority of the issued and outstanding shares of Series A Preferred Stock. The Series A Preferred Stock shall not be redeemed for cash and under no circumstances shall the Company be required to net cash settle the Series A Preferred Stock.

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Section 3. Voting Rights. The Holders shall have the right to vote on any matter submitted to a vote of holders of Common Stock, voting together with the Common Stock as one (1) class. The Holders shall be entitled to the same notice of any regular or special meeting of the stockholders as may or shall be given to holders of Common Stock entitled to vote at such meetings. Each share of Series A Preferred Stock will entitle its Holder to vote with the Common Stock on an as-converted basis, and for the avoidance of doubt, each share of Series A Preferred Stock will be initially entitled to four (4) votes. As long as any shares of Series A Preferred Stock are outstanding, the Company may not, without the affirmative vote of the Holders of the majority of the then outstanding shares of the Series A Preferred Stock, alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock, or issue any series of capital ranking senior to the Series A Preferred Stock in Liquidation. Nothing in the foregoing sentence shall impede a change in the Company's Articles of Incorporation, including to effect a reverse split of the Company's issued and outstanding Common Stock (a "Reverse Split"), bylaws or other charter documents which does not have such adverse effect.

Section 4. Liquidation.

(a) The Series A Preferred Stock shall with respect to distributions of assets and rights upon the occurrence of a Liquidation, rank senior to the Junior Securities of the Company. Upon any liquidation, dissolution or winding-up of the Company ("Liquidation"), the Holders of Series A Preferred Stock will be entitled to be paid for each share of Series A Preferred Stock held thereby, out of but only to the extent the assets of the Company are legally available for distribution to its stockholders, an amount equal to the Stated Value per share (as adjusted for stock splits, stock dividends, combinations or other recapitalizations of the Series A Preferred Stock). If the assets of the Company available for distribution to the Holders of Series A Preferred Stock shall be insufficient to permit payment in full to such Holders of the sums which such Holders are entitled to receive in such case, then all of the assets available for distribution to the Holders of the Series A Preferred Stock shall be distributed among and paid to such Holders ratably in proportion to the amounts that would be payable to such Holders if such assets were sufficient to permit payment in full.

(b) After the Holders of all series of Series A Preferred Stock shall have been paid in full the amounts to which they are entitled in Section 4(a), the shares of Series A Preferred Stock shall not be entitled to any further participation in any distribution of assets of the Company.

Section 5. Conversion.

a) Conversions at Option of Holder. Subject to the provisions of this Section 5, each share of Series A Preferred Stock will be convertible, at any time and from time to time from and after the Effective Date, at the option of the Holder thereof, into Common Stock. Holders may effect conversions by providing the Company with a conversion notice (a "Notice of Conversion") which specifies the number of shares of Series A Preferred Stock to be converted, the number of shares of Series A Preferred Stock owned prior to the conversion at issue, the number of shares of Series A Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date may not be prior to the date the applicable Holder delivers by facsimile or e-mail such Notice of Conversion to the Company (such date, the "Conversion Date"). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date will be the date that such Notice of Conversion to the Company is deemed delivered hereunder. The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error. To effect conversions of shares of Series A Preferred Stock, a Holder will not be required to surrender the certificate(s) representing such shares of Series A Preferred Stock to the Company unless all of the shares of Series A Preferred Stock represented thereby are so converted, in which case such Holder shall deliver the certificate representing such shares of Series A Preferred Stock promptly following the Conversion Date at issue subject to the rules of the NYSE American or any other exchange to which the Common Stock may be subject. Shares of Series A Preferred Stock converted into Common Stock in accordance with the terms hereof will be canceled and may not be reissued except as otherwise set forth in this Certificate of Designation.

b) Mandatory Conversion. On the sooner to occur of (i) six (6) months from the Effective Date or (ii) upon the date of effectiveness of any public offering of Common Stock by the Company pursuant to a registration statement filed by the Company with the United States Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the "Mandatory Conversion Date"), all of the outstanding shares of Series A Preferred Stock will automatically convert to Common Stock (a "Mandatory Conversion") in accordance with Section 5(c). Within three Business Days of the Mandatory Conversion Date, the Company shall deliver to each Holder the Conversion Shares issuable upon conversion of such Holder's Series A Preferred Stock, and, within three Business Days after receipt of such Conversion Shares, each Holder shall return the certificates for its Series A Preferred Stock to the Company, provided that, any failure by the Holder to return a certificate for Series A Preferred Stock will have no effect on the Mandatory Conversion pursuant to this Section 5(b), which Mandatory Conversion will be deemed to occur on the Mandatory Conversion Date.

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c) Conversion Shares. The number of Conversion Shares which the Company shall issue upon conversion of the Series A Preferred Stock (whether pursuant to Section 5(a) or 5(b)) will be equal to the number of shares of Series A Preferred Stock to be converted, multiplied by the Stated Value, divided by the Conversion Price in effect at the time of the conversion.

d) Mechanics of Conversion at Option of Holder

i. Delivery of Certificate Upon Conversion. Not later than five Trading Days after each Conversion Date, the Company shall deliver, or cause to be delivered, to the converting Holder a certificate or certificates which will contain appropriate restrictive legends and trading restrictions representing the number of Conversion Shares being acquired upon the conversion of shares of Series A Preferred Stock.

ii. Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Series A Preferred Stock, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holders of the Series A Preferred Stock, not less than such aggregate number of shares of the Common Stock as are issuable upon the conversion of all outstanding shares of Series A Preferred Stock.

iii. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of or as dividends on the Series A Preferred Stock. As to any fraction of a share which a Holder would otherwise be entitled to purchase or be issued upon such conversion, the Company shall round up to the next whole share.

Section 6.  Certain Adjustments.

a) Stock Dividends and Stock Splits. If the Company, at any time while the Series A Preferred Stock is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common Stock Equivalents (which, for avoidance of doubt, will not include any shares of Common Stock issued by the Company upon conversion of this Series A Preferred Stock); (B) subdivides outstanding shares of Common Stock into a larger number of shares; (C) combines (including by way of a Reverse Split) outstanding shares of Common Stock into a smaller number of shares; or (D) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price will be multiplied by a fraction of which the numerator will be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event and of which the denominator will be the number of shares of Common Stock, or in the event that clause (D) of this Section 6(a) will apply shares of reclassified capital stock, outstanding immediately after such event. Any adjustment made pursuant to this Section 6(a) will become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and will become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

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b) Fundamental Transaction. If, at any time while the Series A Preferred Stock is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, or (C) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a "Fundamental Transaction"), then, upon any subsequent conversion of the Series A Preferred Stock, the Holders shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of four shares of Common Stock (the "Alternate Consideration"). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of four shares of Common Stock in such Fundamental Transaction, and the Company shall adjust the Conversion Price in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holders shall be given the same choice as to the Alternate Consideration they receive upon any conversion of the Series A Preferred Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall file a new Certificate of Designation with the same terms and conditions and issue to the Holders new preferred stock consistent with the foregoing provisions and evidencing the Holders' right to convert such preferred stock into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 6(c) and insuring that the Series A Preferred Stock (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

c) Calculations. All calculations under this Section 6 will be made to the nearest 1/10th of a cent or the nearest 1/100th of a share, as the case may be.

d) Notice to the Holders. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 6, the Company shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

Section 7.  Miscellaneous.

a) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth in the Purchase Agreement or address as the Company may specify for such purposes by notice to the Holders delivered in accordance with this Section 7. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally or sent by a nationally recognized overnight courier service, or by facsimile or e-mail, addressed to each Holder at the address of such Holder such forth in the Purchase Agreement or appearing on the books of the Company, or if no such address appears in the Purchase Agreement or on the books of the Company, at the principal place of business of the Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of the Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or upon actual receipt by the party to whom such notice is required to be given.

b) Lost or Mutilated Series A Preferred Stock Certificate. If a Holder's Series A Preferred Stock certificate becomes mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Series A Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership thereof reasonably satisfactory to the Company.

c) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Certificate of Designation will be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflict of laws thereof.

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d) Waiver. Any waiver by the Company or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders. The failure of the Company or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation. Any waiver by the Company or a Holder must be in writing.

f) Status of Converted Series A Preferred Stock. If any shares of Series A Preferred Stock shall be converted or reacquired by the Company, such shares shall resume the status of authorized but unissued Series A Preferred Stock.

[Signature page follows.]

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IN WITNESS WHEREOF, this Certificate of Designation has been executed by a duly authorized officer of the Company as of this 9^th day of November, 2017.

/s/ Soren Degn

Name: Soren Degn

Title: Chief Financial Officer

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EX-10.1

Exhibit 10.1

SUBSCRIPTION AGREEMENT

This SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) is made by and between LiqTech International, Inc. a Nevada corporation (the “Company”), and the undersigned (“Subscriber”) as of the date this Subscription Agreement is accepted by the Company, as set forth on the Company’s signature page hereto.

WHEREAS, subject to the terms and conditions set forth in this Agreement, and pursuant to Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to Subscriber, and Subscriber desires to purchase from the Company, that number of shares of the Company’s Series A Convertible Preferred Stock, $0.001 par value per share (“Preferred Stock”) set forth on the signature page hereto, to persons who are not U.S. persons under Regulation S in a private placement (the “Offering”); and

WHEREAS, Subscriber understands that the Offering is being made without registration of the Preferred Stock under the Securities Act, or any securities law of any state of the United States or of any other jurisdiction, and is being made only non-U.S. persons.

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows:

1.     Subscription for Shares

(a)     Subscription for Shares. Subject to the terms and conditions hereinafter set forth, Subscriber hereby irrevocably subscribes for and agrees to purchase from the Company such amounts of Preferred Stock as is set forth on the signature page hereof (the “Shares”) at a price per Share and for an aggregate purchase price as set forth on the signature page hereof (the “Purchase Price”), and the Company agrees to sell such Shares to Subscriber for the Purchase Price, subject to the Company’s right, in its sole discretion, to reject this subscription, in whole or in part, at any time prior to the Closing (as defined below). Subscriber acknowledges that Subscriber is not entitled to cancel, terminate or revoke this Subscription Agreement. Subscriber further acknowledges that the Shares will be subject to restrictions on transfer as set forth in this Subscription Agreement.

2.     Terms of Subscription.

 (a)     Payment. Subscriber shall make payment for the Shares to an account designated by the Company in an amount equal to the Purchase Price by wire transfer of immediately available funds at or prior to the Closing.

 (b)     Acceptance of Subscription and Issuance of Shares. It is understood and agreed that the Company shall have the sole right, at its complete discretion, to accept or reject this subscription, in whole or in part, for any reason and that the same shall be deemed to be accepted by the Company only when it is signed by a duly authorized officer of the Company and delivered to the undersigned at the Closing (as defined below). Notwithstanding anything in this Subscription Agreement to the contrary, the Company shall have no obligation to issue any of the Shares to any person who is a resident of a jurisdiction in which the issuance of Shares to such person would constitute a violation of the securities, “blue sky” or other similar laws.

 (c)     Closing. The Offering may be consummated at such place (or by electronic transmission) as may be mutually agreed upon by the parties at a closing (the “Closing”) to occur on a date as may be determined by the Company, at a time as may be determined by the Company. Subsequent closings may occur at the discretion of the Company.

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(d)     Closing Deliverables. At the Closing: Subscriber shall deliver the Purchase Price and the Company shall deliver a share certificate representing the Shares to Subscriber that bears an appropriate legend referring to the fact that the Shares are subject to transfer restrictions as set forth in the Securities Act.

3.     Representations and Warranties of Subscriber.

Subscriber represents and warrants to the Company that:

(a)     Reliance on Exemptions. Subscriber understands that the Shares are being offered and sold in reliance upon specific exemptions from registration provided in the Securities Act, and acknowledges that the Offering has not been reviewed by the Securities and Exchange Commission or any state agency because it is intended to be an offering exempt from the registration requirements of the Securities Act pursuant to Regulation S under the Securities Act. Subscriber understands that the Company is relying upon, and intends that the Company rely upon, the truth and accuracy of, and Subscriber’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Subscriber set forth herein in order to determine the availability of such exemptions and the eligibility of Subscriber to acquire the Shares. The Company may only make offers to sell the Shares to persons outside the United States in this Offering and, if applicable, at the time any buy order is originated, the buyer is outside the United States. The undersigned has not received an offer to purchase Shares inside the United States and will not originate a buy order inside the United States.

(b)     Non-U.S. Person. Subscriber is not and is not acquiring the securities for the account or benefit of:

(i)     a natural person resident in the United States;

(ii)     a partnership or corporation organized or incorporated under the laws of the United States;

(iii)     an estate of which any executor or administrator is a U.S. person;

(iv)     a trust of which any trustee is a U.S. person;

(v)     an agency or branch of a foreign entity located in the United States;

(vi)     a non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account any of the foregoing; or

(vii)     a partnership or corporation (A) organized or incorporated under the laws of any foreign jurisdiction, and (B) Formed by a U.S. person principally for the purpose of investing in securities not registered under the Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Regulation D under the Securities Act) who are not natural persons, estates or trusts.

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(c)     Investment Purpose. The Shares and any shares of the common stock of the Company, par value $0.0001 (“Common Stock”) issuable upon conversion thereof (“Conversion Shares”, and together with the Shares, the “Securities”) are being purchased for Subscriber’s own account, for investment purposes only and not with a view to sale or resale, distribution or fractionalization of the Securities under applicable U.S. federal or state securities laws. The undersigned is not acquiring the Securities for the account or benefit of any U.S. person and was not organized for the specific purpose of acquiring such Securities. The undersigned will not (i) resell or offer to resell the Securities, or any portion thereof, or (ii) engage in hedging transactions, in each case, except in accordance with the terms of this Agreement and in accordance with Regulation S under the Securities Act, pursuant to registration under the Securities Act or pursuant to an available exemption from registration under the Securities Act and otherwise in compliance with all applicable securities laws. Furthermore, prior to engaging in any hedging transaction or any resale of the securities, or any portion thereof, by the undersigned, the undersigned shall provide the Company with an opinion of counsel acceptable to the Company in its sole discretion and in a form acceptable to the Company in its sole discretion, that any such proposed sale or hedging transaction is in compliance with the Securities Act or an exemption therefrom. Subscriber has no contract, undertaking, agreement, or arrangement with any person to sell, distribute, transfer, or pledge to such person or anyone else the Securities which Subscriber hereby subscribes to purchase, or any interest therein, and Subscriber has no present plans to enter into any such contract, undertaking, agreement, or arrangement. Subscriber agrees that the Company and its affiliates shall not be required to give effect to any purported transfer of such Shares except upon compliance with the foregoing restrictions.

(d)     Risk of Investment. Subscriber recognizes that the purchase of the Shares involves a high degree of risk in that: an investment in the Company is highly speculative and only investors who can afford the loss of their entire investment should consider investing in the Company and the Shares; transferability of the Securities is limited; and the Company may require substantial additional funds to operate its business and there can be no assurance that the Offering will be completed.

(e)     Use of Proceeds. The Company has made long-term investments into the marine scrubber industry. In November 2016 the International Maritime Organization (IMO) voted to implement a new lower global cap on sulphur emissions from international shipping. Following this, the Company has experienced a strong interest from the marine industry, and in the third quarter 2017 we have seen a strong growth in the sales and delivery of our standardized systems for the treatment of waste water from marine scrubbers. We are working with some of the largest scrubber manufactures in the world, and their forecasts for 2018 give us reason to believe that we will see continued growth from this industry. Subscriber understands that the net proceeds of the Offering will be used to establish the necessary working capital to manage the anticipated growth in orders for our standardized systems for the treatment of waste water from marine scrubbers.

(f)     Prior Investment Experience. Subscriber understands the business in which the Company is engaged and has such knowledge and experience in business and financial matters that Subscriber is capable of evaluating the merits and risks of the investment in the Shares. Subscriber has prior investment experience, and Subscriber recognizes the highly speculative nature of this investment

(g)     Information and Non-Reliance. Subscriber acknowledges that Subscriber has carefully reviewed this Subscription Agreement, which Subscriber acknowledges has been provided to Subscriber. Subscriber has been given the opportunity to ask questions of, and receive answers from, the Company concerning the terms and conditions of this Offering and the Subscription Agreement and to obtain such additional information, to the extent the Company possesses such information or can acquire it without unreasonable effort or expense, necessary to verify the accuracy of same as Subscriber reasonably desires in order to evaluate the investment. Subscriber understands the Subscription Agreement, and Subscriber has had the opportunity to discuss any questions regarding the Subscription Agreement with Subscriber’s counsel or other advisor. Notwithstanding the foregoing, the only information upon which Subscriber has relied is that set forth in the Subscription Agreement and the results of independent investigation by Subscriber. Subscriber has received no representations or warranties from the Company, its employees, agents or attorneys in making this investment decision other than as set forth in the Subscription Agreement. Subscriber does not desire to receive any further information.

(i)     Subscriber represents that it is not relying on (and will not at any time rely on) any communication (written or oral) of the Company, as investment advice or as a recommendation to purchase the Shares, it being understood that information and explanations related to the terms and conditions of the Shares and the Subscription Agreement shall not be considered investment advice or a recommendation to purchase the Shares.

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(ii)     Subscriber confirms that the Company has not (i) given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) an of investment in the Shares or (ii) made any representation to Subscriber regarding the legality of an investment in the Shares under applicable legal investment or similar laws or regulations. In deciding to purchase the Shares, Subscriber is not relying on the advice or recommendations of the Company and Subscriber has made its own independent decision that the investment in the Shares is suitable and appropriate for Subscriber.

(h)     Tax Consequences. Subscriber acknowledges that the Offering may involve tax consequences and that the contents of the Subscription Agreement do not contain tax advice or information. Subscriber acknowledges that Subscriber must retain Subscriber’s own professional advisors to evaluate the tax and other consequences of an investment in the Shares. Subscriber intends to acquire the Shares without regard to tax consequences.

(i)     Transfer or Resale. Subscriber understands that the Securities have not been registered under the Securities Act or the securities laws of any state and, as a result thereof, are subject to substantial restrictions on transfer. Subscriber acknowledges that Subscriber may be precluded from selling or otherwise disposing of the Securities for an indefinite period of time and that in no circumstance may the Securities be transferred to any U.S. Person, as defined by Rule 902(k) of Regulation S under the Securities Act for six (6) months. Subscriber understands and hereby acknowledges that the Company is under no obligation to register the Securities under the Securities Act. Subscriber consents that the Company may, if it desires, permit the transfer of the Securities out of Subscriber’s name only when Subscriber’s request for transfer is accompanied by an opinion of counsel reasonably satisfactory to the Company that neither the sale nor the proposed transfer results in a violation of the Securities Act or any applicable state “blue sky” laws. Notwithstanding any of the foregoing, Subscriber acknowledges that the Company may refuse to register any transfer of the Securities if such transfer is not made in accordance with the provisions of this Regulation S under the Securities Act.

(j)     Due Authorization; Enforcement. Subscriber has all requisite power and authority (and in the case of an individual, capacity) to purchase and hold the Shares, to execute, deliver and perform Subscriber’s obligations under this Subscription Agreement and when executed and delivered by Subscriber, this Subscription Agreement will constitute legal, valid and binding agreements of Subscriber enforceable against Subscriber in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally, and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(k)     Address. The residence address of Subscriber furnished by Subscriber on the signature page hereto is Subscriber’s principal residence if Subscriber is an individual or its principal business address if it is a corporation, partnership, trust or other entity.

(l)     Compliance with Laws. Subscriber will comply with all applicable laws and regulations in effect in any jurisdiction in which Subscriber purchases or sells the Securities and obtain any consent, approval or permission required for such purchases or sales under the laws and regulations of any jurisdiction to which Subscriber is subject or in which Subscriber makes such purchases or sales, and the Company shall have no responsibility therefore.

(m)     Accuracy of Representations and Warranties. The information set forth herein concerning Subscriber is true and correct. Subscriber understands that, unless Subscriber notifies the Company in writing to the contrary at or before the Closing, each of Subscriber’s representations and warranties contained in this Subscription Agreement will be deemed to have been reaffirmed and confirmed as of the Closing, taking into account all information received by Subscriber.

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(n)     Entity Representation. If Subscriber is a corporation, partnership, trust or other entity, such entity further represents and warrants that it was not formed for the purpose of investing in the Company.

4.     Representations and Warranties of the Company.

The Company represents and warrants to Subscriber that:

(a)     Organization. The Company is organized and validly existing in good standing under the laws of the state of Nevada.

(b)     Due Authorization and Enforcement. The Company has all requisite power and authority to execute, deliver and perform its obligations under this Subscription Agreement, and when executed and delivered by the Company, this Subscription Agreement will constitute legal, valid and binding agreements of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally, and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(c)     Valid Issuance. The Shares have been duly authorized and, when issued and paid for in accordance with the terms of this Subscription Agreement, will be duly and validly issued, fully paid and nonassessable, subject to the terms of the Company’s Certificate of Designations of the Relative Rights and Preferences of the Series A Convertible Preferred Stock in the form attached as Exhibit A hereto (the “Certificate of Designation”),and no preemptive rights will exist with respect to any of the Shares or the issuance and sale thereof. In the event that Conversion Shares are issued in accordance with the Certificate of Designation, such Conversion Shares will be duly authorized by all necessary corporate action and validly issued and outstanding, fully paid and nonassessable, and the holders shall be entitled to all rights afforded to a holder of Common Stock. The Company has and will continue to reserve a sufficient amount of Common Stock for the issuance of the Conversion Shares.

(d)     Noncontravention. The execution and delivery of this Subscription Agreement and the consummation of the transactions contemplated hereby will not conflict with or constitute a violation of, or default under any material agreement to which the Company is a party or by which it or any of its properties are bound or the organizational documents of the Company.

5.     Conditions to Obligations of Subscriber and the Company.

The obligations of Subscriber to purchase and pay for the Shares specified on the signature page hereof and of the Company to sell the Shares are subject to the satisfaction at or prior to the Closing of the following conditions precedent:

(a)     Representations and Warranties. The representations and warranties of Subscriber contained in Section 3 hereof and of the Company contained in Section 4 hereof shall be true and correct as of the Closing in all respects with the same effect as though such representations and warranties had been made as of the Closing.

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6.     Legends.

The certificates representing the Shares sold pursuant to this Subscription Agreement will be imprinted with legends in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE WITH REGULATION S PROMULGATED UNDER THE ACT. IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED EXCEPT IN COMPLIANCE WITH THE ACT.”

Certificates may also bear any other legend language that may be determined by the Company and its counsel from time to time.

7.     United States Anti-Money Laundering Program. Subscriber understands that the Company’s Board of Directors is required to comply with applicable anti-money laundering provisions under the United States PATRIOT Act of 2001, as amended (the “USA PATRIOT Act”). As a condition to acceptance of Subscriber’s investment in the Company, Subscriber makes the representations and agreements set forth on Annex A attached hereto, and agrees to provide to the Company true and correct copies of the applicable documentation pursuant to the requirements of Annex B, attached hereto. The Company reserves the right to request such additional information as is necessary to verify the identity of Subscriber and the underlying beneficial owner of Subscriber’s interest in the Company. In the event of delay or failure by Subscriber to produce any information required for verification purposes, the Company may refuse to accept a subscription or may cause the withdrawal of Subscriber from the Company.

8.     Miscellaneous

(a)     Notice. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Subscription Agreement must be in writing and will be deemed to have been delivered: upon receipt, when delivered personally; upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or one (1) business day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:
	LiqTech International, Inc.
	Industriparken 22C
	DK2750 Ballerup, Denmark Phone: + 45 4498 6000
	E-mail: sd@liqtech.com
	Attention: Søren Degn, Chief Financial Officer
with a copy to:	K&L Gates LLP
	200 South Biscayne Boulevard
	Suite 3900
	Miami, FL 33131
	Facsimile:     (305) 359-3306
	E-mail: clayton.parker@klgates.com
	Attention:     Clayton E. Parker, Esq.

If to Subscriber, to its residence address (or mailing address, if different) and facsimile number set forth at the end of this Subscription Agreement, or to such other address and/or facsimile number and/or to the attention of such other person as specified by written notice given to the Company five (5) calendar days prior to the effectiveness of such change.

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(b)     Entire Agreement; Amendment. This Subscription Agreement, which includes the exhibit and annexes referred to herein, supersedes all other prior oral or written agreements between Subscriber, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and constitutes the entire understanding of the parties with respect to the matters covered herein. No provision of this Subscription Agreement may be amended or waived other than by an instrument in writing signed by the Company and Subscriber.

(c)   Severability. If any provision of this Subscription Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Subscription Agreement in that jurisdiction or the validity or enforceability of any provision of this Subscription Agreement in any other jurisdiction.

(d)    Governing Law. This Subscription Agreement shall be governed by and construed in accordance with the laws of the state of Nevada, without giving effect to any choice of law or conflict of law provision or rule.

(e)     Successors and Assigns. This Subscription Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Subscriber shall not assign its rights hereunder without the prior written consent of the Company.

(f)     No Third Party Beneficiaries. This Subscription Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

(g)     Notification of Changes. Subscriber hereby covenants and agrees to notify the Company upon the occurrence of any event prior to the closing of the purchase of the Shares pursuant to this Subscription Agreement which would cause any representation, warranty or covenant of Subscriber contained in this Subscription Agreement to be false or incorrect.

(h)     Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Subscription Agreement and the consummation of the transactions contemplated hereby.

(i)     Legal Representation. Subscriber acknowledges that: Subscriber has read this Subscription Agreement and the exhibit and annexes referred to herein; Subscriber understands that the Company has been represented in the preparation, negotiation and execution of the Subscription Agreement; and Subscriber understands the terms and conditions of the Subscription Agreement and is fully aware of their legal and binding effect.

(j)     Expenses. Each party will bear its own costs and expenses (including legal and accounting fees and expenses) incurred in connection with this Subscription Agreement and the transactions contemplated hereby.

(k)     Counterparts. This Subscription Agreement may be executed in counterparts, all of which shall be considered one and the same agreement. The exchange of signature pages by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document shall constitute effective execution and delivery of this Agreement as to the parties.

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[SIGNATURE PAGES FOLLOW]

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SUBSCRIBER SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

IN WITNESS WHEREOF, and intending to be legally bound hereby, Subscriber has caused this Subscription Agreement to be duly executed and, by executing this signature page, hereby executes, adopts and agrees to all terms, conditions, and representations contained in the foregoing Subscription Agreement and hereby subscribes for the Shares offered by the Company in the amount set forth below.

SUBSCRIBER:

Signature
Print Name
Print Title/Entity Name (if subscriber is not a natural person)
Signature of joint investor, if applicable
Print name of joint investor, if applicable
Check one (if applicable)	[ ] Tenants in Common
	[ ] JTWROS
	[ ] Tenants by Entirety

Date: ____________ ____, 2017

Shares (number of shares of Preferred Stock subscribed for):                  ________

Purchase Price (number of Shares x $[_____]): $                                  ___

Residence Address: Mailing Address, if different from Residence Address:

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COMPANY SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

– PLEASE DO NOT WRITE BELOW THIS LINE –

COMPANY USE ONLY

Accepted and Agreed:

LIQTECH INTERNATIONAL, INC.

By:

Name:

Title:

As of: ____________ ____, 2017

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EXHIBIT A

CERTIFICATE OF DESIGNATIONS

Exhibit A

Annex A

UNITED STATES ANTI-MONEY LAUNDERING

REPRESENTATIONS AND WARRANTIES

In connection with the acquisition of the Company’s Shares, Subscriber hereby represents, warrants and covenants to the Company as follows:

1. Subscriber has reviewed the website of the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), and conducted such other investigation as Subscriber deems necessary or prudent, prior to making these representations and warranties. Subscriber acknowledges that U.S. federal regulations and executive orders administered by OFAC prohibit, among other things, engaging in transactions with, and the provision of services to, certain foreign countries, territories, entities and individuals.

2. All evidence of identity provided in connection with Subscriber’s acquisition of Shares is genuine and all related information furnished is accurate.

3. Subscriber understands and agrees that the investment of funds is prohibited by or restricted with respect to any persons or entities: (i) acting, directly or indirectly, on behalf of terrorists or terrorist organizations, including those persons, entities and organizations that are included on any of the OFAC lists; (ii) residing or having a place of business in a country or territory named on such lists or which is designated as a Non-Cooperative Jurisdiction by the Financial Action Task Force on Money Laundering (“FATF”), or whose subscription funds are transferred from or through such a jurisdiction; (iii) (A) that are a “Foreign Shell Bank” within the meaning of the USA PATRIOT Act or (B) that are a foreign bank other than a “Regulated Affiliate” that is barred, pursuant to its banking license, from conducting banking activities with the citizens of, or with the local currency of, the country that issued the license or (C) whose subscription funds are transferred from or through the entities listed in foregoing clauses (A) and (B); or (iv) residing in, or organized under the laws of, a jurisdiction designated by the Secretary of the Treasury under Sections 311 or 312 of the USA PATRIOT Act as warranting special measures due to money laundering concerns. Such persons or entities in (i) through (iv) are collectively referred to as “Restricted Persons.” Neither Subscriber, nor any person or entity controlling, controlled by, or under common control with, Subscriber, any investors in Subscriber (if Subscriber is a pooled investment vehicle) or any person or entity for whom Subscriber is acting as agent, representative, intermediary, nominee or similar capacity (each such investor in Subscriber and each such person for whom Subscriber acts as agent, representative, intermediary, nominee or in a similar capacity, an “Underlying Beneficial Owner”) in connection with the acquisition of Shares is a Restricted Person.

4. No funds tendered for the acquisition of Shares are directly or indirectly derived from activities that may contravene U.S. federal, state or non-U.S. laws and regulations, including anti-money laundering laws, rules and regulations, and no capital contribution in relation to Shares acquired by Subscriber or, if applicable, any Underlying Beneficial Owner will be derived from any illegal or illegitimate activities.

5. To the extent Subscriber has any Underlying Beneficial Owners, Subscriber: (i) has carried out thorough due diligence as to, and established the identities of, the Underlying Beneficial Owners and any related persons to the extent required by applicable law and regulations (“Related Persons”); (ii) holds the evidence of such identities and will maintain all such evidence for at least five years from the date of the completion of the liquidation of the Company; and (iii) will make such information available to the Company upon the Company’s request.

6. Subscriber acknowledges and understands that the Company, in its sole discretion, may decline to accept any subscription for Shares by a person who is a “Covered Person” within the meaning of the Guidance on Enhanced Scrutiny for Transactions that May Involve the Proceeds of Foreign Official Corruption, issued by the U.S. Department of the Treasury, et al., January, 2001. Accordingly, Subscriber agrees to inform the Company, prior to its acquisition of Shares, if Subscriber or any person controlling, controlled by, or under common control with, Subscriber, or for whom Subscriber is acting as agent or nominee in connection with the acquisition of Shares, is a Covered Person.

Annex A

7. Subscriber agrees to provide any information (including confidential information about Subscriber and, if applicable, any Underlying Beneficial Owner or Related Person) to any person deemed necessary by the Company, in its sole and absolute discretion, to comply with its anti-money laundering responsibilities and policies and any laws, rules and regulations applicable to an investment held or proposed to be held by the Company.

8. Subscriber authorizes and permits the Company, using its own reasonable business judgment, to report information about Subscriber, or any person controlling, controlled by, or under common control with Subscriber, to appropriate authorities, and Subscriber agrees not to hold them liable for any loss or injury that may occur as the result of providing such information.

9. Subscriber agrees that, in the event of a material change with respect to the information provided in connection with the purchase of the Shares, Subscriber will provide the Company promptly with updated information affected by the material change.

10. Subscriber agrees that, notwithstanding any statement to the contrary in any agreement into which it has entered that relates to the Company, or any statement to the contrary in any private placement memorandum of the Company, if the Company determines that Subscriber has appeared on a list of known or suspected terrorists or terrorist organizations compiled by any U.S. or non-U.S. governmental agency, or that any information provided by Subscriber in connection with the acquisition of Shares is no longer true or accurate, the Company, without limiting any other rights available under any agreement between the Company and Subscriber, shall be authorized to take any action it deems necessary or appropriate as a result thereof. The Company may be obligated to “freeze the account” of Subscriber, either by prohibiting additional capital contributions, restricting any distributions and/or declining any requests to transfer Subscriber’s Shares. In addition, in any such event, Subscriber may forfeit its Shares, may be forced to withdraw from the Company or may otherwise be subject to the remedies required by law, and Subscriber shall have no claim against the Company nor its officers, directors, employees, agents, control persons, affiliates and professional advisors and such parties shall be held harmless and indemnified by Subscriber in accordance with the indemnification section of this Agreement for any form of damages as a result of any of the actions described in this paragraph. The Company may also be required to report such action and to disclose Subscriber’s identity or provide other information with respect to Subscriber to OFAC or other governmental entities.

11. Subscriber acknowledges and agrees that any distributions paid to it by the Company will be paid to, and any contributions made by it to the Company will be made from, an account in Subscriber’s name unless the Company, in its sole discretion, agrees otherwise.

12. Subscriber understands, acknowledges and agrees that the acceptance of this Agreement, together with the appropriate remittance, will not breach any applicable money laundering or related rules or regulations (including, without limitation, any statutes, rules or regulations in effect under the laws of the U.S.A. pertaining to prohibitions on money laundering or to transacting business or dealing in property that may be blocked or may belong to Specially Designated Nationals, as such term is used by OFAC).

Annex A

Annex B

ANTI-MONEY LAUNDERING DOCUMENTATION

Subscriber has delivered, or is concurrently delivering herewith, the true, correct and applicable documentation noted below that is applicable to Subscriber:

(i) Individuals (each of the following):

(A) Certified (notarized) copy of passport or other valid government identification document displaying the true name, signature, date of birth and photograph of Subscriber (with certified English translation, if necessary); and

(B) Copy of a recent bank statement or utility bill showing Subscriber’s current home address.

(ii) Corporate (each of the following):

(A) Certificate of Incorporation (or equivalent) with evidence of any name changes;

(B) Certificate of Good Standing;

(C) Director resolution authorizing the investment, if applicable;

(D) Current list or register of Directors;

(E) Specimen signatures of persons authorized to bind Subscriber with regard to its investments with name and office held printed underneath or Powers of Attorney or Letters of Authority (if applicable);

(F) Information on at least two Directors (see (i) above for individuals and (ii) for all other entities);

(G) Evidence of identity for authorized signatories and all beneficial owners of Subscriber >25% OR comfort letter (see (i) above for individuals and (ii) for all other entities); and

(H) Signed copy of Subscriber’s latest available financial statements.

(iii) Limited Partnership (or Limited Liability Company) (each of the following):

(A) Certificate of Limited Partnership (or equivalent) (evidencing registered address) with evidence of any name changes;

(B) Certified copy of the limited partnership agreement (or equivalent);

(C) Limited partnership mandate (or equivalent) for making the investment (if any);

(D) Specimen signatures of persons authorized to bind Subscriber with regard to its investments with name and office held printed underneath or Powers of Attorney or Letters of Authority (if applicable);

(E) Information on the individual(s) that control the general partner (or managing member, if applicable) (see (i) above for individuals and (ii) for all other entities);

(F) Evidence of identity for authorized signatories and all beneficial owners of Subscriber >25% OR comfort letter (see (i) above for individuals and (ii) for all other entities); and

(G) Signed copy of Subscriber’s latest available financial statements.

(iv) Trust (each of the following):

(A) Certified copy of Trust Deed/Agreement (including trust name, nature of trust, trustees, authorizations, date of trust and principal address);

(B) Information about the trustee(s) and settlor(s) (or beneficial owner(s), if different than the settlor(s)) (see (i) above for individuals and (ii) for all other entities); and

(C) Signed copy of Subscriber’s latest available financial statements.

(v) Private Pension Plans or Not For Profit (including Foundations and Charities) (each of the following):

(A) Certified copy of the entity’s formation documents;

(B) An explanation of the nature of the entity’s purpose and operations;

(C) Evidence of identity for authorized signatories, anyone who gives instructions on behalf of the entity and all beneficial owners of Subscriber >25% OR comfort letter (see (i) above for individuals and (ii) for all other entities); and

(D) Confirmation of not for profit designation from the applicable government authority.

(vi) Financial Institutions (additional requirements):

In addition to the applicable requirements above, banks, brokers and other financial institutions must deliver a representation letter in the form determined by the Company indicating that they have established and implemented anti-money laundering procedures reasonably designed to achieve compliance with the USA PATRIOT Act.

Subscriber acknowledges that the Company and its affiliates may require further identification of Subscriber or source of funds before the subscription can be processed, and the Company and its officers, directors, employees, agents, control persons, affiliates and professional advisors shall be held harmless and indemnified in accordance with the indemnification provisions of the Agreement as a result of a failure to process the subscription if such information as has been required by the Company has not been provided by Subscriber. Subscriber agrees to provide any information deemed necessary by the Company in its sole and absolute discretion to comply with its anti-money laundering policies and obligations.

EX-10.2

Exhibit 10.2

SUBSCRIPTION AGREEMENT

This SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) is made by and between LiqTech International, Inc. a Nevada corporation (the “Company”), and the undersigned (“Subscriber”) as of the date this Subscription Agreement is accepted by the Company, as set forth on the Company’s signature page hereto.

WHEREAS, subject to the terms and conditions set forth in this Agreement, and pursuant to under Section 4(a)(2) and/or Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to Subscriber, and Subscriber desires to purchase from the Company, that number of shares of the Company’s Series A Convertible Preferred Stock, $0.001 Preferred Stock par value per share (“Preferred Stock”) set forth on the signature page hereto, to persons who are “accredited investors” (as defined in Rule 501 of Regulation D under the Securities Act), in a private placement (the “Offering”); and

WHEREAS, Subscriber understands that the Offering is being made without registration of the Preferred Stock under the Securities Act, or any securities law of any state of the United States or of any other jurisdiction, and is being made only to “accredited investors”.

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows:

1. Subscription for Shares.

(a)     Subscription for Shares. Subject to the terms and conditions hereinafter set forth, Subscriber hereby irrevocably subscribes for and agrees to purchase from the Company such amounts of Preferred Stock as is set forth on the signature page hereof (the “Shares”) at a price per Share and for an aggregate purchase price as set forth on the signature page hereof (the “Purchase Price”), and the Company agrees to sell such Shares to Subscriber for the Purchase Price, subject to the Company’s right, in its sole discretion, to reject this subscription, in whole or in part, at any time prior to the Closing (as defined below). Subscriber acknowledges that Subscriber is not entitled to cancel, terminate or revoke this Subscription Agreement. Subscriber further acknowledges that the Shares will be subject to restrictions on transfer as set forth in this Subscription Agreement.

2.      Terms of Subscription.

(a)     Payment. Subscriber shall make payment for the Shares to an account designated by the Company in an amount equal to the Purchase Price by wire transfer of immediately available funds at or prior to the Closing.

(b)     Acceptance of Subscription and Issuance of Shares. It is understood and agreed that the Company shall have the sole right, at its complete discretion, to accept or reject this subscription, in whole or in part, for any reason and that the same shall be deemed to be accepted by the Company only when it is signed by a duly authorized officer of the Company and delivered to the undersigned at the Closing (as defined below). Notwithstanding anything in this Subscription Agreement to the contrary, the Company shall have no obligation to issue any of the Shares to any person who is a resident of a jurisdiction in which the issuance of Shares to such person would constitute a violation of the securities, “blue sky” or other similar laws.

(c)     Closing. The Offering may be consummated at such place (or by electronic transmission) as may be mutually agreed upon by the parties at a closing (the “Closing”) to occur on a date as may be determined by the Company, at a time as may be determined by the Company. Subsequent closings may occur at the discretion of the Company.

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(d)     Closing Deliverables. At the Closing: Subscriber shall deliver the Purchase Price and the Company shall deliver a share certificate representing the Shares to Subscriber that bears an appropriate legend referring to the fact that the Shares are subject to transfer restrictions as set forth in the Securities Act.

3.      Representations and Warranties of Subscriber.

Subscriber represents and warrants to the Company that:

(a)     Reliance on Exemptions. Subscriber understands that the Shares are being offered and sold in reliance upon specific exemptions from registration provided in the Securities Act, and upon exemptions from registration under state securities laws, and acknowledges that the Offering has not been reviewed by the Securities and Exchange Commission or any state agency because it is intended to be a nonpublic offering exempt from the registration requirements of the Securities Act and state securities laws. Subscriber understands that the Company is relying upon, and intends that the Company rely upon, the truth and accuracy of, and Subscriber’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Subscriber set forth herein in order to determine the availability of such exemptions and the eligibility of Subscriber to acquire the Shares.

(b)     Investment Purpose. The undersigned is an “accredited investor”, and the Shares and any shares of the common stock of the Company, par value $0.001 (“Common Stock”) issuable upon conversion thereof (“Conversion Shares”, and together with the Shares, the “Securities”) are being purchased for Subscriber’s own account, for investment purposes only and not for distribution or resale to others in contravention of the registration requirements of the Securities Act. Subscriber agrees that it will not sell or otherwise transfer the Securities unless they are registered under the Securities Act or unless an exemption from such registration is available under the Securities Act and permitted by the certificate of incorporation of the Company. Subscriber has no contract, undertaking, agreement, or arrangement with any person to sell, distribute, transfer, or pledge to such person or anyone else the Securities which Subscriber hereby subscribes to purchase, or any interest therein, and Subscriber has no present plans to enter into any such contract, undertaking, agreement, or arrangement. Subscriber agrees that the Company and its affiliates shall not be required to give effect to any purported transfer of such Securities except upon compliance with the foregoing restrictions.

(c)     Accredited Investor. Subscriber shall complete and deliver to the Company prior to Closing, an executed copy of the Accredited Investor Questionnaire attached hereto as Exhibit A. Subscriber is an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act, as amended to date, a summary of which is attached hereto as Exhibit B, and Subscriber is able to bear the economic risk of any investment in the Shares and in the Company.

(d)     Risk of Investment. Subscriber recognizes that the purchase of the Shares involves a high degree of risk in that: an investment in the Company is highly speculative and only investors who can afford the loss of their entire investment should consider investing in the Company and the Shares; transferability of the Securities is limited; and the Company may require substantial additional funds to operate its business and there can be no assurance that the Offering will be completed.

(e)     Use of Proceeds. The Company has made long-term investments into the marine scrubber industry. In November 2016 the International Maritime Organization (IMO) voted to implement a new lower global cap on sulphur emissions from international shipping. Following this, the Company has experienced a strong interest from the marine industry, and in the third quarter 2017 we have seen a strong growth in the sales and delivery of our standardized systems for the treatment of waste water from marine scrubbers. We are working with some of the largest scrubber manufactures in the world, and their forecasts for 2018 give us reason to believe that we will see continued growth from this industry. Subscriber understands that the net proceeds of the Offering will be used to establish the necessary working capital to manage the anticipated growth in orders for our standardized systems for the treatment of waste water from marine scrubbers.

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(f)     Prior Investment Experience. Subscriber understands the business in which the Company is engaged and has such knowledge and experience in business and financial matters that Subscriber is capable of evaluating the merits and risks of the investment in the Shares. Subscriber has prior investment experience, and Subscriber recognizes the highly speculative nature of this investment.

(g)     Information and Non-Reliance.

(i)     Subscriber acknowledges that Subscriber has carefully reviewed this Subscription Agreement, which Subscriber acknowledges has been provided to Subscriber. Subscriber has been given the opportunity to ask questions of, and receive answers from, the Company concerning the terms and conditions of this Offering and the Subscription Agreement and to obtain such additional information, to the extent the Company possesses such information or can acquire it without unreasonable effort or expense, necessary to verify the accuracy of same as Subscriber reasonably desires in order to evaluate the investment. Subscriber understands the Subscription Agreement, and Subscriber has had the opportunity to discuss any questions regarding the Subscription Agreement with Subscriber’s counsel or other advisor. Notwithstanding the foregoing, the only information upon which Subscriber has relied is that set forth in the Subscription Agreement and the results of independent investigation by Subscriber. Subscriber has received no representations or warranties from the Company, its employees, agents or attorneys in making this investment decision other than as set forth in the Subscription Agreement. Subscriber does not desire to receive any further information.

(ii)     Subscriber represents that it is not relying on (and will not at any time rely on) any communication (written or oral) of the Company, as investment advice or as a recommendation to purchase the Shares, it being understood that information and explanations related to the terms and conditions of the Shares and the Subscription Agreement shall not be considered investment advice or a recommendation to purchase the Shares.

(iii)     Subscriber confirms that the Company has not (i) given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) an of investment in the Shares or (ii) made any representation to Subscriber regarding the legality of an investment in the Shares under applicable legal investment or similar laws or regulations. In deciding to purchase the Shares, Subscriber is not relying on the advice or recommendations of the Company and Subscriber has made its own independent decision that the investment in the Shares is suitable and appropriate for Subscriber.

(h)     Tax Consequences. Subscriber acknowledges that the Offering may involve tax consequences and that the contents of the Subscription Agreement do not contain tax advice or information. Subscriber acknowledges that Subscriber must retain Subscriber’s own professional advisors to evaluate the tax and other consequences of an investment in the Shares. Subscriber intends to acquire the Shares without regard to tax consequences.

(i)     Transfer or Resale. Subscriber understands that the Securities have not been registered under the Securities Act or the securities laws of any state and, as a result thereof, are subject to substantial restrictions on transfer. Subscriber acknowledges that Subscriber may be precluded from selling or otherwise disposing of the Shares for an indefinite period of time. Subscriber understands and hereby acknowledges that the Company is under no obligation to register the Securities under the Securities Act. Subscriber consents that the Company may, if it desires, permit the transfer of the Securities out of Subscriber’s name only when Subscriber’s request for transfer is accompanied by an opinion of counsel reasonably satisfactory to the Company that neither the sale nor the proposed transfer results in a violation of the Securities Act or any applicable state “blue sky” laws.

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(j)     No General Solicitation. Subscriber was not induced to invest in the Company or in the Shares by any form of general solicitation or general advertising including, but not limited to, the following: any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over the news or radio; any seminar or meeting whose attendees were invited by any general solicitation or advertising; and any “general solicitation” within the United States, as such term is used in Regulation D promulgated under the Securities Act.

(k)     Due Authorization; Enforcement. Subscriber has all requisite power and authority (and in the case of an individual, capacity) to purchase and hold the Shares, to execute, deliver and perform Subscriber’s obligations under this Subscription Agreement and when executed and delivered by Subscriber, this Subscription Agreement will constitute legal, valid and binding agreements of Subscriber enforceable against Subscriber in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally, and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(l)     Address. The residence address of Subscriber furnished by Subscriber on the signature page hereto is Subscriber’s principal residence if Subscriber is an individual or its principal business address if it is a corporation, partnership, trust or other entity.

(m)     Compliance with Laws. Subscriber will comply with all applicable laws and regulations in effect in any jurisdiction in which Subscriber purchases or sells the Securities and obtain any consent, approval or permission required for such purchases or sales under the laws and regulations of any jurisdiction to which Subscriber is subject or in which Subscriber makes such purchases or sales, and the Company shall have no responsibility therefore.

(n)     Accuracy of Representations and Warranties. The information set forth herein concerning Subscriber is true and correct. Subscriber understands that, unless Subscriber notifies the Company in writing to the contrary at or before the Closing, each of Subscriber’s representations and warranties contained in this Subscription Agreement will be deemed to have been reaffirmed and confirmed as of the Closing, taking into account all information received by Subscriber.

(o)     Entity Representation. If Subscriber is a corporation, partnership, trust or other entity, such entity further represents and warrants that it was not formed for the purpose of investing in the Company.

4.     Representations and Warranties of the Company.

The Company represents and warrants to Subscriber that:

(a)     Organization. The Company is organized and validly existing in good standing under the laws of the state of Nevada.

(b)     Due Authorization and Enforcement. The Company has all requisite power and authority to execute, deliver and perform its obligations under this Subscription Agreement, and when executed and delivered by the Company, this Subscription Agreement will constitute legal, valid and binding agreements of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally, and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(c)     Valid Issuance. The Shares have been duly authorized and, when issued and paid for in accordance with the terms of this Subscription Agreement, will be duly and validly issued, fully paid and nonassessable, subject to the terms of the Company’s Certificate of Designations of the Relative Rights and Preferences of the Series A Convertible Preferred Stock in the form attached as Exhibit C hereto (the “Certificate of Designation”), and no preemptive rights will exist with respect to any of the Shares or the issuance and sale thereof. In the event that Conversion Shares are issued in accordance with the Certificate of Designation, such Conversion Shares will be duly authorized by all necessary corporate action and validly issued and outstanding, fully paid and nonassessable, and the holders shall be entitled to all rights afforded to a holder of Common Stock. The Company has and will continue to reserve a sufficient amount of Common Stock for the issuance of the Conversion Shares.

- 4 -

(d)     Noncontravention. The execution and delivery of this Subscription Agreement and the consummation of the transactions contemplated hereby will not conflict with or constitute a violation of, or default under any material agreement to which the Company is a party or by which it or any of its properties are bound or the organizational documents of the Company.

5.     Conditions to Obligations of Subscriber and the Company.

The obligations of Subscriber to purchase and pay for the Shares specified on the signature page hereof and of the Company to sell the Shares are subject to the satisfaction at or prior to the Closing of the following conditions precedent:

(a)     Representations and Warranties. The representations and warranties of Subscriber contained in Section 3 hereof and of the Company contained in Section 4 hereof shall be true and correct as of the Closing in all respects with the same effect as though such representations and warranties had been made as of the Closing.

6.     Legends.

The certificates representing the Shares sold pursuant to this Subscription Agreement will be imprinted with legends in substantially the following form:

“THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.”

Certificates may also bear any other legend language that may be determined by the Company and its counsel from time to time.

7.     United States Anti-Money Laundering Program. Subscriber understands that the Company’s Board of Directors is required to comply with applicable anti-money laundering provisions under the United States PATRIOT Act of 2001, as amended (the “USA PATRIOT Act”). As a condition to acceptance of Subscriber’s investment in the Company, Subscriber makes the representations and agreements set forth on Annex A attached hereto, and agrees to provide to the Company true and correct copies of the applicable documentation pursuant to the requirements of Annex B, attached hereto. The Company reserves the right to request such additional information as is necessary to verify the identity of Subscriber and the underlying beneficial owner of Subscriber’s interest in the Company. In the event of delay or failure by Subscriber to produce any information required for verification purposes, the Company may refuse to accept a subscription or may cause the withdrawal of Subscriber from the Company.

- 5 -

8.     Miscellaneous

(a)     Notice. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Subscription Agreement must be in writing and will be deemed to have been delivered: upon receipt, when delivered personally; upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or one (1) business day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:
	LiqTech International, Inc.
	Industriparken 22C
	DK2750 Ballerup, Denmark Phone: + 45 4498 6000
	E-mail: sd@liqtech.com
	Attention: Søren Degn, Chief Financial Officer
with a copy to:	K&L Gates LLP
	200 South Biscayne Boulevard
	Suite 3900
	Miami, FL 33131
	Facsimile:     (305) 359-3306
	E-mail: clayton.parker@klgates.com
	Attention:           Clayton E. Parker, Esq.

If to Subscriber, to its residence address (or mailing address, if different) and facsimile number set forth at the end of this Subscription Agreement, or to such other address and/or facsimile number and/or to the attention of such other person as specified by written notice given to the Company five (5) calendar days prior to the effectiveness of such change.

(b)     Entire Agreement; Amendment. This Subscription Agreement, which includes the exhibits and annexes referred to herein, supersedes all other prior oral or written agreements between Subscriber, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and constitutes the entire understanding of the parties with respect to the matters covered herein. No provision of this Subscription Agreement may be amended or waived other than by an instrument in writing signed by the Company and Subscriber.

(c)   Severability. If any provision of this Subscription Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Subscription Agreement in that jurisdiction or the validity or enforceability of any provision of this Subscription Agreement in any other jurisdiction.

(d)    Governing Law. This Subscription Agreement shall be governed by and construed in accordance with the laws of the state of Nevada, without giving effect to any choice of law or conflict of law provision or rule.

(e)     Successors and Assigns. This Subscription Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Subscriber shall not assign its rights hereunder without the prior written consent of the Company.

(f)     No Third Party Beneficiaries. This Subscription Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

- 6 -

(g)     Notification of Changes. Subscriber hereby covenants and agrees to notify the Company upon the occurrence of any event prior to the closing of the purchase of the Shares pursuant to this Subscription Agreement which would cause any representation, warranty or covenant of Subscriber contained in this Subscription Agreement to be false or incorrect.

(h)     Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Subscription Agreement and the consummation of the transactions contemplated hereby.

(i)     Legal Representation. Subscriber acknowledges that: Subscriber has read this Subscription Agreement and the exhibits and annexes referred to herein; Subscriber understands that the Company has been represented in the preparation, negotiation and execution of the Subscription Agreement; and Subscriber understands the terms and conditions of the Subscription Agreement and is fully aware of their legal and binding effect.

(j)     Expenses. Each party will bear its own costs and expenses (including legal and accounting fees and expenses) incurred in connection with this Subscription Agreement and the transactions contemplated hereby.

(k)     Counterparts. This Subscription Agreement may be executed in counterparts, all of which shall be considered one and the same agreement. The exchange of signature pages by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document shall constitute effective execution and delivery of this Agreement as to the parties.

[SIGNATURE PAGES FOLLOW]

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SUBSCRIBER SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

IN WITNESS WHEREOF, and intending to be legally bound hereby, Subscriber has caused this Subscription Agreement to be duly executed and, by executing this signature page, hereby executes, adopts and agrees to all terms, conditions, and representations contained in the foregoing Subscription Agreement and hereby subscribes for the Shares offered by the Company in the amount set forth below.

SUBSCRIBER:

Signature	Social Security Number or
	Tax Identification Number (if any)
Print Name
Print Title/Entity Name (if subscriber is not a natural person)
Signature of joint investor, if applicable	Social Security Number or
	Tax Identification Number (if any)
Print name of joint investor, if applicable
Check one (if applicable)	[ ] Tenants in Common
	[ ] JTWROS
	[ ] Tenants by Entirety

Date: ____________ ____, 2017

Shares (number of shares of Preferred Stock subscribed for):                        ________

Purchase Price (number of Shares x $________): $                                        ___

Residence Address: Mailing Address, if different from Residence Address:

- 8 -

COMPANY SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

– PLEASE DO NOT WRITE BELOW THIS LINE –

COMPANY USE ONLY

Accepted and Agreed:

LIQTECH INTERNATIONAL, INC.

By:

Name:

Title:

As of: ____________ ____, 2017

- 9 -

Exhibit A

Confidential Accredited Investor Questionnaire

To:     Liqtech International,Inc.

LiqTech International, Inc., a Nevada corporation (the “Company”), is offering in a private placement (“Offering”) pursuant to an accompanying subscription agreement, including, without limitation, all exhibits and annexes made a part thereto (collectively, the “Subscription Agreement”) shares of its Preferred Stock, par value $0.001 per share (the “Shares”). The undersigned Subscriber is purchasing Shares pursuant to the Offering and acknowledges that all capitalized terms not otherwise defined herein have the meanings set forth in the Subscription Agreement.

I.     Subscriber represents and warrants that he or it comes within one category marked below, and that for any category marked, he or it has truthfully set forth, where applicable, the factual basis or reason Subscriber comes within that category. ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL EXCEPT AS NECESSARY FOR THE COMPANY TO COMPLY WITH LAW AND/OR ANY RULES PROMULGATED BY ANY REGULATORY AGENCY. The undersigned shall furnish any additional information which the Company deems necessary in order to verify the answers set forth below.

Category A_____ The undersigned is an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with his or her spouse, presently exceeds $1,000,000.

Explanation. In calculating net worth you may include equity in personal property and real estate (other than the value, after deducting mortgage obligations, of Subscriber’s principal residence which may not be included in such net worth calculation), cash, short-term investments, stock and securities. Equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.

Category B_____ The undersigned is an individual (not a partnership, corporation, etc.) who had an individual income in excess of $200,000 in each of the two most recent years, or joint income with his or her spouse in excess of $300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and losses but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year.

Category C_____ The undersigned is a director or executive officer of the Company which is issuing and selling the Shares.

Category D_____ The undersigned is a bank; a savings and loan association; insurance company; registered investment company; registered business development company; licensed small business investment company (“SBIC”); or employee benefit plan within the meaning of Title 1 of ERISA and (a) the investment decision is made by a plan fiduciary which is either a bank, savings and loan association, insurance company or registered investment advisor, or (b) the plan has total assets in excess of $5,000,000 or is a self directed plan with investment decisions made solely by persons that are accredited investors.

(describe entity)

Category E_____ The undersigned is a private business development company as defined in section 202(a)(22) of the Investment Advisors Act of 1940.

Exhibit A

(describe entity)

Category F_____ The undersigned is either a corporation, partnership, Massachusetts business trust, or non-profit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the specific purpose of acquiring the Shares and with total assets in excess of $5,000,000.

(describe entity)

Category G_____ The undersigned is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, where the purchase is directed by a “sophisticated person” as defined in Regulation 506(b)(2)(ii) under the Securities Act of 1933.

Category H_____ The undersigned is an entity (other than a trust) all the equity owners of which are “accredited investors” within one or more of the above categories. If relying upon this Category alone, each equity owner must complete a separate copy of this Agreement.

(describe entity)

Category I_____ The undersigned is not within any of the categories above and is therefore not an accredited investor.

For purposes hereof, “individual income” means adjusted gross income less any income attributable to a spouse or to property owned by a spouse, increased by the following amounts (but not including any amounts attributable to a spouse or to property owned by a spouse): (i) the amount of any interest income received which is tax-exempt under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), (ii) the amount of losses claimed as a limited partner in a limited partnership (as reported on Schedule E of Form 1040), (iii) any deduction claimed for depletion under Section 611 et seq. of the Code, and (iv) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 12.02 of the Code.

The undersigned agrees that the undersigned will notify the Company at any time on or prior to the execution of the Subscription Agreement or this Questionnaire in the event that the representations and warranties in the Subscription Agreement or in this Questionnaire shall cease to be true, accurate and complete.

II.	Disqualification Events.
1.	Certain Criminal Convictions.
	Have you been convicted, within the past ten (10) years (or five (5) years, in the case of the Company, its predecessors and affiliated issuers), of any felony or misdemeanor involving:
	☐	in connection with the purchase or sale of any security;
	☐	involving the making of any false filing with the SEC; or
	☐	arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment advisor or paid solicitor of purchasers of securities?
	☐ Yes.	If yes, please explain:
	_____________________________________________________________________________________________
	_____________________________________________________________________________________________
	_____________________________________________________________________________________________
	☐No.

Exhibit A

2.	Certain Court Injunctions and Restraining Orders.
	Are you subject to any order, judgment or decree of any court of competent jurisdiction that was entered within the past five (5) years and currently restrains or enjoins you from engaging in any conduct or practice:
	☐	in connection with the purchase or sale of any security;
	☐	involving the making of any false filing with the SEC; or
	☐	arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities?
	☐Yes.	If yes, please explain:
	_____________________________________________________________________________________________
	_____________________________________________________________________________________________
	_____________________________________________________________________________________________
	☐No.
3.	Final Orders of Certain State and Federal Regulators.
	Are you subject to a Final Order (as defined below) of state regulators of securities, insurance, banking, savings associations or credit unions; federal banking agencies; the Commodity Futures Trading Commission; or the National Credit Union Administration that:
	☐	bars you from:
	☐	associating with an entity regulated by any of the aforementioned regulators;
	☐	engaging in the business of securities, insurance or banking; or
	☐	engaging in savings association or credit union activities; or
	☐	constitutes a Final Order based on a violation of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct entered within the past ten (10) years?
	☐Yes.	If yes, please explain:
	_____________________________________________________________________________________________
	_____________________________________________________________________________________________
	_____________________________________________________________________________________________
	☐No.

The term “Final Order” means a written directive or declaratory statement issued by a federal or state agency described in Rule 506(d)(1)(iii) under the Securities Act of 1933 under applicable statutory authority that provides for notice and an opportunity for a hearing, which constitutes a final disposition or action by that federal or state agency.

Exhibit A

4.	SEC Disciplinary Orders.
	Are you subject to any order of the Securities and Exchange Commission (“SEC”) that currently:
	☐	suspends or revokes your registration as a broker, dealer, municipal securities dealer or investment adviser;
	☐	places limitations on the activities, functions or operations of, or imposes civil money penalties on, such person; or
	☐	bars you from being associated with any entity or from participating in the offering of any penny stock?1
	☐Yes.	If yes, please explain:
	_____________________________________________________________________________________________
	_____________________________________________________________________________________________
	_____________________________________________________________________________________________
	☐No.

_______________________________

¹ A disqualification based on a suspension or limitation of activities expires when the suspension or limitation expires.

5.	SEC Cease-and-Desist Orders.
	Are you subject to any order of the SEC that was entered within the past five (5) years and currently orders you to cease and desist from committing or causing a future violation of:
	☐	any scienter-based (intent-based) anti-fraud provision of the federal securities laws (including, for example, but not limited to):
	☐	Section 17(a)(1) of the Securities Act of 1933,
	☐	Section 10(b) of the Exchange Act and Rule 10b-5, and
	☐	Section 15 (c) (1) of the Securities Exchange Act); or
	☐	Section 5 of the Securities Act, of 1933, which generally requires that securities be registered and prohibits the sale of unregistered securities.
	☐Yes.	If yes, please explain:
	_____________________________________________________________________________________________
	_____________________________________________________________________________________________
	_____________________________________________________________________________________________
	☐No.
6.	SRO Suspension/Expulsion.
	Have you been suspended or expelled from membership in, or suspended or barred from association with a member of, a securities self-regulatory organization (“SRO”, such as a registered national securities exchange or a registered national or affiliated securities association, including FINRA) for any act or omission to act constituting conduct inconsistent with just and equitable principles of trade?
	☐Yes.	If yes, please explain:
	_____________________________________________________________________________________________
	_____________________________________________________________________________________________
	_____________________________________________________________________________________________
	☐No.

Exhibit A

7.	SEC Stop Orders.
	Have you filed (as a registrant or issuer), or were you named as an underwriter in any registration statement or Regulation A offering statement filed with the SEC that, within the past five (5) years, was the subject of a refusal order, stop order, or order suspending the Regulation A exemption, or is currently the subject of an investigation or proceeding to determine whether a stop order or suspension order should be issued?
	☐Yes.	If yes, please explain:
	________________________________________________________________________________________________
	________________________________________________________________________________________________
	________________________________________________________________________________________________
	________________________________________________________________________________________________
	☐No.
8.	USPS False Representations Order.
	Are you subject to a United States Postal Service (“USPS”) false representation order entered within the past five (5) years, or are you currently subject to a temporary restraining order or preliminary injunction with respect to conduct alleged by the USPS to constitute a scheme or device for obtaining money or property through the mail by means of false representations?
	☐Yes.	If yes, please explain:
	________________________________________________________________________________________________
	________________________________________________________________________________________________
	________________________________________________________________________________________________
	________________________________________________________________________________________________
	☐No.

III.     The undersigned is informed of the significance to the Company of the foregoing representations and answers contained in this Questionnaire contained herein and such answers have been provided under the assumption that the Company will rely on them.

IV.     In furnishing the above information, the undersigned acknowledges that the Company will be relying thereon in determining, among other things, whether there are reasonable grounds to believe that the undersigned qualifies as a Purchaser under Section 4(a)(2) and/or Regulation D of the Securities Act of 1933 and applicable state securities laws for the purposes of the proposed investment.

V.     The undersigned understands and agrees that the Company may request further information of the undersigned in verification or amplification of the undersigned’s knowledge of business affairs, the undersigned’s assets and the undersigned’s ability to bear the economic risk involved in an investment in the securities of the Company.

VI.     The undersigned represents to you that (a) the information contained herein is complete and accurate on the date hereof and may be relied upon by you, (b) the undersigned will notify you immediately of any change in any such information occurring prior to the acceptance of the subscription and will promptly send you written confirmation of such change. The undersigned hereby certifies that he, she or it has read and understands the Subscription Agreement related hereto and (c) the undersigned acknowledges that you may be required to publicly disclose the information provided in this Questionnaire and that he or it consents to such public disclosure.

Exhibit A

VII.     INFORMATION VERIFICATION CONSENT.

BY SIGNING THIS QUESTIONNAIRE, SUBSCRIBER HEREBY GRANTS THE COMPANY PERMISSION TO REVIEW ALL PUBLICLY AVAILABLE INFORMATION REGARDING SUBSCRIBER, INCLUDING, BUT NOT LIMITED TO INFORMATION PROVIDED BY THE OFFICE OF FOREIGN ASSETS CONTROL (“OFAC”) FOR THE PURPOSE OF VERIFYING INFORMATION PROVIDED BY SUBSCRIBER HEREIN.

[SIGNATURE PAGE FOLLOWS]

Exhibit A

INVESTOR QUESTIONNAIRE EXECUTION PAGE

Signature	Signature (if purchasing jointly)
Name Typed or Printed	Name Typed or Printed
Entity Name	Entity Name
Address	Address
City, State and Zip Code	City, State and Zip Code

Exhibit A

EXHIBIT B

Definition of Accredited Investor

“Accredited investor” means any person who comes within any of the following categories, or who the Company reasonably believes comes within any of the following categories, at the time of the sale of the Shares to that person:

1. Any bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; any insurance company as defined in Section 2(13) of the Securities Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

2. Any private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;

3. Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Shares offered, with total assets in excess of $5,000,000;

4. Any director, executive officer, or general partner of the issuer of the Company, or any director or executive officer of the Company;

5. Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase exceeds $1,000,000, provided that for purposes of this item 5, “net worth” means the excess of total assets at fair market value (including personal and real property, but excluding the value of a person’s primary home) over total liabilities (excluding any mortgage on the primary home in an amount of up to the home’s fair market value, but including any mortgage amount in excess of the home’s fair market value);

6. Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year, provided that for purposes of this item 6, “income” means annual adjusted gross income, as reported for federal income tax purposes, plus the amount of any tax-exempt interest income received; the amount of losses claimed as a limited partner in a limited partnership; any deduction claimed for depletion; amounts contributed to an IRA or Keogh retirement plan; alimony paid; and any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 1202 of the Internal Revenue Code of 1986, as amended;

7. Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii); and

8. Any entity in which all of the equity owners are accredited investors.

Exhibit B

EXHIBIT C

CERTIFICATE OF DESIGNATIONS

Exhibit C

Annex A

UNITED STATES ANTI-MONEY LAUNDERING

REPRESENTATIONS AND WARRANTIES

In connection with the acquisition of the Company’s Shares, Subscriber hereby represents, warrants and covenants to the Company as follows:

13. Subscriber has reviewed the website of the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), and conducted such other investigation as Subscriber deems necessary or prudent, prior to making these representations and warranties. Subscriber acknowledges that U.S. federal regulations and executive orders administered by OFAC prohibit, among other things, engaging in transactions with, and the provision of services to, certain foreign countries, territories, entities and individuals.

14. All evidence of identity provided in connection with Subscriber’s acquisition of Shares is genuine and all related information furnished is accurate.

15. Subscriber understands and agrees that the investment of funds is prohibited by or restricted with respect to any persons or entities: (i) acting, directly or indirectly, on behalf of terrorists or terrorist organizations, including those persons, entities and organizations that are included on any of the OFAC lists; (ii) residing or having a place of business in a country or territory named on such lists or which is designated as a Non-Cooperative Jurisdiction by the Financial Action Task Force on Money Laundering (“FATF”), or whose subscription funds are transferred from or through such a jurisdiction; (iii) (A) that are a “Foreign Shell Bank” within the meaning of the USA PATRIOT Act or (B) that are a foreign bank other than a “Regulated Affiliate” that is barred, pursuant to its banking license, from conducting banking activities with the citizens of, or with the local currency of, the country that issued the license or (C) whose subscription funds are transferred from or through the entities listed in foregoing clauses (A) and (B); or (iv) residing in, or organized under the laws of, a jurisdiction designated by the Secretary of the Treasury under Sections 311 or 312 of the USA PATRIOT Act as warranting special measures due to money laundering concerns. Such persons or entities in (i) through (iv) are collectively referred to as “Restricted Persons.” Neither Subscriber, nor any person or entity controlling, controlled by, or under common control with, Subscriber, any investors in Subscriber (if Subscriber is a pooled investment vehicle) or any person or entity for whom Subscriber is acting as agent, representative, intermediary, nominee or similar capacity (each such investor in Subscriber and each such person for whom Subscriber acts as agent, representative, intermediary, nominee or in a similar capacity, an “Underlying Beneficial Owner”) in connection with the acquisition of Shares is a Restricted Person.

16. No funds tendered for the acquisition of Shares are directly or indirectly derived from activities that may contravene U.S. federal, state or non-U.S. laws and regulations, including anti-money laundering laws, rules and regulations, and no capital contribution in relation to Shares acquired by Subscriber or, if applicable, any Underlying Beneficial Owner will be derived from any illegal or illegitimate activities.

17. To the extent Subscriber has any Underlying Beneficial Owners, Subscriber: (i) has carried out thorough due diligence as to, and established the identities of, the Underlying Beneficial Owners and any related persons to the extent required by applicable law and regulations (“Related Persons”); (ii) holds the evidence of such identities and will maintain all such evidence for at least five years from the date of the completion of the liquidation of the Company; and (iii) will make such information available to the Company upon the Company’s request.

18. Subscriber acknowledges and understands that the Company, in its sole discretion, may decline to accept any subscription for Shares by a person who is a “Covered Person” within the meaning of the Guidance on Enhanced Scrutiny for Transactions that May Involve the Proceeds of Foreign Official Corruption, issued by the U.S. Department of the Treasury, et al., January, 2001. Accordingly, Subscriber agrees to inform the Company, prior to its acquisition of Shares, if Subscriber or any person controlling, controlled by, or under common control with, Subscriber, or for whom Subscriber is acting as agent or nominee in connection with the acquisition of Shares, is a Covered Person.

Annex A

19. Subscriber agrees to provide any information (including confidential information about Subscriber and, if applicable, any Underlying Beneficial Owner or Related Person) to any person deemed necessary by the Company, in its sole and absolute discretion, to comply with its anti-money laundering responsibilities and policies and any laws, rules and regulations applicable to an investment held or proposed to be held by the Company.

20. Subscriber authorizes and permits the Company, using its own reasonable business judgment, to report information about Subscriber, or any person controlling, controlled by, or under common control with Subscriber, to appropriate authorities, and Subscriber agrees not to hold them liable for any loss or injury that may occur as the result of providing such information.

21. Subscriber agrees that, in the event of a material change with respect to the information provided in connection with the purchase of the Shares, Subscriber will provide the Company promptly with updated information affected by the material change.

22. Subscriber agrees that, notwithstanding any statement to the contrary in any agreement into which it has entered that relates to the Company, or any statement to the contrary in any private placement memorandum of the Company, if the Company determines that Subscriber has appeared on a list of known or suspected terrorists or terrorist organizations compiled by any U.S. or non-U.S. governmental agency, or that any information provided by Subscriber in connection with the acquisition of Shares is no longer true or accurate, the Company, without limiting any other rights available under any agreement between the Company and Subscriber, shall be authorized to take any action it deems necessary or appropriate as a result thereof. The Company may be obligated to “freeze the account” of Subscriber, either by prohibiting additional capital contributions, restricting any distributions and/or declining any requests to transfer Subscriber’s Shares. In addition, in any such event, Subscriber may forfeit its Shares, may be forced to withdraw from the Company or may otherwise be subject to the remedies required by law, and Subscriber shall have no claim against the Company nor its officers, directors, employees, agents, control persons, affiliates and professional advisors and such parties shall be held harmless and indemnified by Subscriber in accordance with the indemnification section of this Agreement for any form of damages as a result of any of the actions described in this paragraph. The Company may also be required to report such action and to disclose Subscriber’s identity or provide other information with respect to Subscriber to OFAC or other governmental entities.

23. Subscriber acknowledges and agrees that any distributions paid to it by the Company will be paid to, and any contributions made by it to the Company will be made from, an account in Subscriber’s name unless the Company, in its sole discretion, agrees otherwise.

24. Subscriber understands, acknowledges and agrees that the acceptance of this Agreement, together with the appropriate remittance, will not breach any applicable money laundering or related rules or regulations (including, without limitation, any statutes, rules or regulations in effect under the laws of the U.S.A. pertaining to prohibitions on money laundering or to transacting business or dealing in property that may be blocked or may belong to Specially Designated Nationals, as such term is used by OFAC).

Annex A

Annex B

ANTI-MONEY LAUNDERING DOCUMENTATION

Subscriber has delivered, or is concurrently delivering herewith, the true, correct and applicable documentation noted below that is applicable to Subscriber:

(i) Individuals (each of the following):

(A) Certified (notarized) copy of passport or other valid government identification document displaying the true name, signature, date of birth and photograph of Subscriber (with certified English translation, if necessary); and

(B) Copy of a recent bank statement or utility bill showing Subscriber’s current home address.

(ii) Corporate (each of the following):

(A) Certificate of Incorporation (or equivalent) with evidence of any name changes;

(B) Certificate of Good Standing;

(C) Director resolution authorizing the investment, if applicable;

(D) Current list or register of Directors;

(E) Specimen signatures of persons authorized to bind Subscriber with regard to its investments with name and office held printed underneath or Powers of Attorney or Letters of Authority (if applicable);

(F) Information on at least two Directors (see (i) above for individuals and (ii) for all other entities);

(G) Evidence of identity for authorized signatories and all beneficial owners of Subscriber >25% OR comfort letter (see (i) above for individuals and (ii) for all other entities); and

(H) Signed copy of Subscriber’s latest available financial statements.

(iii) Limited Partnership (or Limited Liability Company) (each of the following):

(A) Certificate of Limited Partnership (or equivalent) (evidencing registered address) with evidence of any name changes;

(B) Certified copy of the limited partnership agreement (or equivalent);

(C) Limited partnership mandate (or equivalent) for making the investment (if any);

(D) Specimen signatures of persons authorized to bind Subscriber with regard to its investments with name and office held printed underneath or Powers of Attorney or Letters of Authority (if applicable);

(E) Information on the individual(s) that control the general partner (or managing member, if applicable) (see (i) above for individuals and (ii) for all other entities);

(F) Evidence of identity for authorized signatories and all beneficial owners of Subscriber >25% OR comfort letter (see (i) above for individuals and (ii) for all other entities); and

(G) Signed copy of Subscriber’s latest available financial statements.

(iv) Trust (each of the following):

(A) Certified copy of Trust Deed/Agreement (including trust name, nature of trust, trustees, authorizations, date of trust and principal address);

(B) Information about the trustee(s) and settlor(s) (or beneficial owner(s), if different than the settlor(s)) (see (i) above for individuals and (ii) for all other entities); and

Annex B

(C) Signed copy of Subscriber’s latest available financial statements.

(v) Private Pension Plans or Not For Profit (including Foundations and Charities) (each of the following):

(A) Certified copy of the entity’s formation documents;

(B) An explanation of the nature of the entity’s purpose and operations;

(C) Evidence of identity for authorized signatories, anyone who gives instructions on behalf of the entity and all beneficial owners of Subscriber >25% OR comfort letter (see (i) above for individuals and (ii) for all other entities); and

(D) Confirmation of not for profit designation from the applicable government authority.

(vi) Financial Institutions (additional requirements):

In addition to the applicable requirements above, banks, brokers and other financial institutions must deliver a representation letter in the form determined by the Company indicating that they have established and implemented anti-money laundering procedures reasonably designed to achieve compliance with the USA PATRIOT Act.

Subscriber acknowledges that the Company and its affiliates may require further identification of Subscriber or source of funds before the subscription can be processed, and the Company and its officers, directors, employees, agents, control persons, affiliates and professional advisors shall be held harmless and indemnified in accordance with the indemnification provisions of the Agreement as a result of a failure to process the subscription if such information as has been required by the Company has not been provided by Subscriber. Subscriber agrees to provide any information deemed necessary by the Company in its sole and absolute discretion to comply with its anti-money laundering policies and obligations.

Annex B

EX-31.1

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 September 30, 2017 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,	I am 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: November 14, 2017	By:       /s/ Sune Mathiesen
	Name:  Sune Mathiesen
	Title:    Chief Executive Officer and Principal Executive Officer

EX-31.2

Exhibit 31.2

OFFICER’S CERTIFICATE

PURSUANT TO SECTION 302

I, Soren Degn, certify that:

1,	I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2017 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,	I am 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: November 14, 2017	By:      /s/ Soren Degn
	Name:  Soren Degn
	Title:    Chief Financial Officer and Principal Financial and Accounting Officer

EX-32.1

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 September 30, 2017 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 operation of the Company.

Date: November 14 2017	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-32.2

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 September 30, 2017 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 operation of the Company.

Date: November 14, 2017	By:      /s/ Soren Degn
	Name:  Soren Degn
	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.

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 14, 2017
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	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		44,229,264
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Current Assets:
Cash	$ 528,566	$ 1,208,650
Accounts receivable, net	1,613,668	1,111,759
Other receivables	342,556	306,177
Cost in excess of billing	753,615	642,700
Inventories	4,810,497	5,174,874
Prepaid expenses	16,383	62,161
Total Current Assets	8,065,285	8,506,321
Property and Equipment, net accumulated depreciation	2,123,429	2,633,558
Other Assets:
Investments at costs	5,909	5,282
Other intangible assets	3,963	5,614
Deposits	297,719	261,553
Total Other Assets	307,591	272,449
Total Assets	10,496,305	11,412,328
Current Liabilities:
Current portion of notes payable	16,061	15,034
Current portion of capital lease obligations	7,808	45,883
Accounts payable	2,290,345	2,262,688
Accrued expenses	2,197,993	2,385,586
Billing in excess of cost	15,224	106,375
Accrued income taxes payable	580	580
Customers deposits	720,561	192,597
Total Current Liabilities	5,248,572	5,008,743
Long-term notes payable, less current portion	32,521	39,895
Long-term capital lease obligations, less current portion	21,054	93,942
Total Long-Term Liabilities	53,575	133,837
Total Liabilities	5,302,147	5,142,580
Commitment and Contingencies See Note 11
Stockholders' Equity:
Common stock; par value $0.001, 100,000,000 shares authorized 44,229,264 and 36,835,514 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	44,230	36,836
Additional paid-in capital	37,961,723	36,084,117
Accumulated deficit	(27,516,432)	(24,011,343)
Deferred compensation	(58,548)	(148,561)
Other comprehensive income, net	(5,236,815)	(5,691,301)
Total Stockholders' Equity	5,194,158	6,269,748
Total Liabilities and Stockholders' Equity	$ 10,496,305	$ 11,412,328

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	44,229,264	36,835,514
Common stock, shares outstanding (in shares)	44,229,264	36,835,514

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net Sales	$ 2,456,484	$ 3,689,511	$ 8,350,758	$ 11,338,817
Cost of Goods Sold	2,772,451	3,303,042	8,202,634	9,078,036
Gross Profit	(315,967)	386,469	148,124	2,260,781
Operating Expenses:
Selling expenses	521,627	558,105	1,506,369	1,661,352
General and administrative expenses	433,368	498,358	1,518,935	1,830,260
Non-cash compensation expenses	24,055	104,416	150,013	377,140
Research and development expenses	121,680	124,165	375,026	476,734
Total Operating Expense	1,100,730	1,285,044	3,550,343	4,345,486
Loss from Operations	(1,416,697)	(898,575)	(3,402,219)	(2,084,705)
Other Income (Expense)
Interest and other income	2,790		3,093
Interest expense	(3,781)	(7,347)	(23,308)	(23,843)
Loss on currency transactions	(26,913)	(14,060)	(54,600)	(26,219)
Loss on sale of fixed assets	(34,824)		(28,056)
Total Other Income (Expense)	(62,728)	(21,407)	(102,871)	(50,062)
Loss Before (Income) Taxes	(1,479,425)	(919,982)	(3,505,090)	(2,134,767)
Income Tax Expense (Income)		17,646		2,885,932
Net Loss	$ (1,479,425)	$ (937,628)	$ (3,505,090)	$ (5,020,699)
Basic Loss Per Share (in dollars per share)	$ (0.03)	$ (0.02)	$ (0.09)	$ (0.13)
Weighted Average Common Shares Outstanding (in shares)	44,229,264	39,532,035	40,604,129	39,532,035
Diluted Loss Per Share (in dollars per share)	$ (0.03)	$ (0.02)	$ (0.09)	$ (0.13)
Weighted Average Common Shares Outstanding Assuming Dilution (in shares)	44,229,264	39,532,035	40,604,129	39,532,035

XML

Consolidated Statements of Other Comprehensive Income (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net Loss	$ (1,479,425)	$ (937,628)	$ (3,505,090)	$ (5,020,699)
Currency Translation, Net of Taxes	142,599	66,547	454,487	401,194
Other Comprehensive Loss	$ (1,336,826)	$ (871,081)	$ (3,050,603)	$ (4,619,505)

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash Flows from Operating Activities:
Net Loss	$ (3,505,090)	$ (5,020,699)
Adjustments to reconcile net (loss) to net cash provided (used) by operations:
Depreciation and amortization	732,963	995,687
Non-cash compensation	150,013	384,795
Bad debt expense (recovery)	(59,409)	23,852
Reserve for obsolete inventory		132,983
Change in deferred tax asset / liability		3,193,214
Loss on sale of equipment	28,056
Changes in assets and liabilities:
(Increase) decrease in restricted cash		292,826
(Increase) decrease in accounts receivable	(478,879)	(1,026,055)
(Increase) decrease in inventory	238,986	(572,709)
(Increase) decrease in prepaid expenses/deposits	26,817	(79,546)
Increase (decrease) in accounts payable	27,657	(649,056)
Increase (decrease) in accrued expenses	340,371	(49,752)
Increase (decrease) long-term contracts	(202,066)	1,271,781
Total Adjustments	804,509	3,918,020
Net Cash Used by Operating Activities	(2,700,581)	(1,102,679)
Cash Flows from Investing Activities:
Purchase of property and equipment	(94,950)	(129,411)
Proceeds from sale of property and equipment	12,827
Net Cash Used by Investing Activities	(82,123)	(129,411)
Cash Flows from Financing Activities:
Net payments on capital lease obligation	(110,963)	(112,566)
Payments on loans payable	(6,347)	(21,210)
Proceeds from issuance of common stock and warrants	1,825,000
Net Cash Provided by (Used in) Financing Activities	1,707,690	(133,776)
Gain on Currency Translation	394,930	232,958
Net Increase (Decrease) in Cash and Cash Equivalents	(680,084)	(1,132,908)
Cash and Cash Equivalents at Beginning of Period	1,208,650	1,370,591
Cash and Cash Equivalents at End of Period	528,566	237,683
Supplemental Disclosures of Cash Flow Information:
Interest Paid	23,308	23,843
Income Taxes		570
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Non-cash compensation	150,013	384,795
Total	150,013	377,140
Employee Stock Option [Member]
Adjustments to reconcile net (loss) to net cash provided (used) by operations:
Non-cash compensation	58,038	272,665
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Non-cash compensation	58,038	272,665
Restricted Stock [Member]
Adjustments to reconcile net (loss) to net cash provided (used) by operations:
Non-cash compensation	78,750	58,250
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Non-cash compensation	78,750	58,250
Warrants Issued for Services [Member]
Adjustments to reconcile net (loss) to net cash provided (used) by operations:
Non-cash compensation	13,225	46,225
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Non-cash compensation	$ 13,225	$ 46,225

XML

Note 1 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

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.

(“Parent”) and its subsidiaries. The terms "Company", “us", "we" and "our" as used in this report refer to Parent and its subsidiaries, which are set forth below. The Company engages in the development, design, production, marketing and sale of automated filtering systems, liquid filters, diesel particulate air filters and kiln furniture in United States, Canada, Europe, Asia and South America. Set forth below is a description of Parent and each of its subsidiaries:

LiqTech International, Inc., a Nevada corporation (Parent) organized in

July 2004,

formerly known as Blue Moose Media, Inc.

LiqTech USA, a Delaware corporation and a wholly owned subsidiary of Parent 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 on 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 and kiln furniture in United States and Canada.

LiqTech Germany (“LiqTech Germany”) a

100%

owned subsidiary of LiqTech Int. DK, incorporated in Germany on

December 9, 2011,

engages in marketing and sale of liquid filters in Germany. The Company has

no

operation and is in the process of closing down, which is expected to be completed during

2017.

LiqTech PTE Ltd. (“LiqTech Sing”) a

95%

owned subsidiary of LiqTech Int. DK, incorporated in Singapore on

January 19, 2012,

engages in marketing and sale of liquid filters in Singapore and other countries in the area. The Company has

no

operation and is in the process of closing down, which is expected to be completed during

2017.

LiqTech Systems A/S ("LiqTech Systems"), a Danish corporation (formerly Provital Solutions A/S) was incorporated on

September 1, 2009

and engages in the manufacture of fully automated filtering systems for application within the pool and spa markets, marine applications, and a number of industrial applications within Denmark and international markets. The financial statements include the accounts of LiqTech Systems from the date of acquisition on

July 31, 2014.

Consolidation

 --The consolidated financial statements include the accounts and operations of the Company. The non-controlling interests in the net assets of the subsidiaries are recorded in equity. The non-controlling interests of the results of operations of the subsidiaries are included in the results of operations and recorded as the non-controlling interest in subsidiaries. All material inter-company 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 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 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

nine

months ended

September 30, 2017

and

2016.

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. The Company had

no

balances held in a financial institution in the United States in excess of federally insured amounts at

September 30, 2017

and

December 31, 2016.

Accounts Receivable

 -- Accounts receivables consist of trade receivables arising in the normal course of business. The Company establishes an allowance for doubtful accounts, which 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

nine

months ended

September 30, 2017

and the year ended

December 31, 2016

is as follows:

	2017			2016
Allowance for doubtful accounts at the beginning of the period	$	2,128,452		$	1,087,871
Bad debt expense		(59,409	)		1,437,949
Amount of receivables written off		(31,609	)		(252,792	)
Effect of currency translation		252,482			(144,576	)
Allowance for doubtful accounts at the end of the period	$	2,289,916		$	2,128,452

Inventory

 -- Inventory is carried at the lower of cost or market, as determined on the

first

-in,

first

-out method.

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 (See Note

4

).

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 another-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. 

Goodwill

-- Goodwill is evaluated for impairment annually, and whenever events or changes in circumstances indicate the carrying value of goodwill

may

not

be recoverable. Triggering events that

may

indicate impairment include, but are

not

limited to, a significant adverse change in customer demand or business climate that could affect the value of goodwill or a significant decrease in expected cash flows.

Revenue Recognition and Sales Incentives

 -- The Company accounts for revenue recognition in accordance with the Securities and Exchange Commission Staff Accounting Bulletin

No.

101,

“Revenue Recognition in Financial Statements” (SAB

101

), FASB ASC

605

Revenue Recognition. The Company recognizes revenue when rights and risk of ownership have passed to the customer, when there is persuasive evidence of an arrangement, product has been shipped or delivered to the customer, the price and terms are finalized, and collections of resulting receivable is reasonably assured. Products are primarily shipped FOB shipping point at which time title passes to the customer. In some instances, the Company uses common carriers for the delivery of products. In these arrangements, sales are recognized upon delivery to the customer. The Company's revenue arrangements with its customers often include early payment discounts and such sales incentives are recorded against sales.

The Company has received long-term contracts for the installation of various water filtrations systems and grants from government entities for development and use of silicon carbide membranes in various water filtration and treatment applications. Revenues from long-term contracts and grants are recognized on the percentage-of-completion method, measured by the percentage of project costs incurred to date to estimated total project costs for each long-term contract or grant multiplied by the long-term contract or grant income on a project-by-project basis. This method is used because management considers costs incurred to be the best available measure of progress on contracts in process.

Project costs of the long-term contracts and grants include

 all direct material and labor costs and those indirect costs related to the project. Project costs are capitalized and accreted into cost of sales based on the percentage of the project completed. Should a loss be estimated on an incomplete project it would be recorded in the period in which such a loss is determined. Changes in estimated profitability of a project are recognized in the period in which the revisions are determined. The aggregate of costs incurred and income recognized on incomplete projects are recorded as costs in excess of billings and are shown as a current asset. 

The aggregate of billings in excess of related costs incurred and income recognized on projects is shown as a current liability.

In Denmark, Value Added Tax (“VAT”) of

25%

of the invoice amount is collected in 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.

Advertising Cost

 -- Cost incurred in connection with advertising of the Company’s products is expensed as incurred. Such costs amounted to

$9,270

and

$21,307

for the

nine

months ended

September 30, 2017

and

2016,

respectively.

Research and Development Cost

 -- The Company expenses research and development costs for the development of new products and systems as incurred. Included in operating expense for the

nine

months ended

September 30, 2017

and

2016

were

$375,026

and

$476,734,

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 and awards to certain key employees and directors. See Note

14.

The Company accounts for options in accordance with the provisions of FASB ASC Topic

718,

Compensation – Stock Compensation. Non-cash compensation costs of

$150,013

and

$377,140

have been recognized for the vesting of options granted to employees and restricted stock awards issued to the board of directors with an associated recognized tax benefit of

$26,775

and

$18,445

for the

nine

months ended

September 30, 2017

and

2016,

respectively.

Fair Value of Financial Instruments

 --The Company accounts for fair value measurements for financial assets and financial liabilities in accordance with FASB ASC Topic

820.

The authoritative guidance, which, 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 allowance for doubtful accounts receivable, cost in excess of billings, reserve for obsolete inventory, depreciation and impairment of property plant and equipment and impairment of goodwill and liabilities billings in excess of cost commitment 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

May 2014,

the Financial Accounting Standards Board (FASB) issued a new standard to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. On

July 9 2015,

the FASB agreed to delay the effective date by

one

year; accordingly, the new standard is effective for us beginning in the

first

quarter of

2018

and we expect to adopt it at that time. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. We have

not

yet selected a transition method, nor have we determined the impact of the new standard on our consolidated financial statements.

In

February 2016,

the FASB issued changes to the accounting for leases that primarily affect presentation and disclosure requirements. The new standard will require the recognition of a right to use asset and underlying lease liability for operating leases with an initial life in excess of

one

year. This standard is effective for us beginning in the

first

quarter of

2019.

We have

not

yet determined the impact of the new standard on our consolidated financial statements.

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. 

XML

Note 2 - Going Concern

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Substantial Doubt about Going Concern [Text Block]

NOTE

2

- GOING CONCERN

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has limited cash and incurred significant recent losses. These factors raise substantial doubt about the ability of the Company to continue as a going concern. There is

no

assurance that the Company will be successful in raising additional cash through the issuance of debt or equity instruments or return to achieving profitable operations. The financial statements do

not

include any adjustments that might result from the outcome of these uncertainties.

XML

Note 3 - Inventory

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE

3

- INVENTORY

Inventory consisted of the following at

September 30, 2017

and

December 31, 2016:

	2017			2016
Furnace parts and supplies	$	375,529		$	336,799
Raw materials		1, 218,256			1,216,098
Work in process		2,592,894			2,499,242
Finished goods and filtration systems		1,934,569			2,544,080
Reserve for obsolescence		(1, 310,751	)		(1,421,345	)
Net Inventory	$	4,810,497		$	5,174,874

XML

Note 4 - Property and Equipment

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE

4

 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at

September 30, 2017

and

December 31, 2016:

	Useful Life				2017			2016
Production equipment		3	-	10	$	10,031,780		$	10,370,462
Lab equipment		3	-	10		85,766			76,658
Computer equipment		3	-	5		199,184			185,652
Vehicles		3	-	5		74,164			39,090
Furniture and fixture			5			104,431			146,453
Leasehold improvements			10			1,063,722			955,563
						11,559,047			11,773,878
Less Accumulated Depreciation						(9,435,618	)		(9,140,320	)
Net Property and Equipment					$	2,123,429		$	2,633,558

Depreciation expense amounted to $

731,312

and

$992,418

for the

nine

months ended

September 30, 2017

and

2016,

respectively. The property and equipment is held as collateral on lines of credit and guarantees with financial institutions. See Note

9.

  

XML

Note 5 - Investments at Costs

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE

5

- INVESTMENTS AT COSTS

The following tables summarize Level

1,

2

and

3

financial assets and financial (liabilities) by their classification in the Statement of Financial Position:

As of September 30, 2017	Level 1		Level 2		Level 3
Investments		-		-		5,909
Total		-		-		5,909

As of December 31, 2016	Level 1		Level 2		Level 3
Investments		-		-		5,282
Total		-		-		5,282

At

September 30, 2017

and

2016,

our total investments consisted of an investment of

$5,909

and

$5,282

in LEA Technology in France to strengthen our sales channels in the French market.

XML

Note 6 - Definite-life Intangible Assets

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

NOTE

6

 - DEFINITE-LIFE INTANGIBLE ASSETS

At

September 30, 2017

and

December 31, 2016,

definite-life intangible assets, net of accumulated amortization, consisted of patents on the Company’s products of

$3,963

and

$5,614,

respectively. The patents are recorded at cost and amortized over

two

to

ten

years. Amortization expense for the

nine

months ended

September 30, 2017

and

2016

was

$1,651

and

$3,269,

respectively. Expected future amortization expense for the years ended are as follows: 

Year ending December 31,	Amortization Expenses
2017		755
2018		2,540
2019		668
Thereafter		-
	$	3,963

XML

Note 7 - Goodwill

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Goodwill Disclosure [Text Block]

NOTE

7

- GOODWILL

The Company recorded Goodwill in connection with the acquisition of LiqTech Systems. Goodwill is evaluated for impairment annually in the

fourth

quarter of the Company

’s fiscal year, and whenever events or changes in circumstances indicate the carrying value of goodwill

may

not

be recoverable. Triggering events that

may

indicate impairment include, but are

not

limited to, a significant adverse change in customer demand or business climate that could affect the value of goodwill or a significant decrease in expected cash flows. Key variables included in evaluating goodwill for impairment include the pipeline of proposed potential customer sales, budgeted reoccurring sales, risk free interest rate and risk premium rate and future budgeted operating results. The Company recorded an impairment charge of

$7,343,208

during the year ended

December 31, 2016,

as management's estimated fair value of the reporting unit did

not

exceed the carrying value during

2016

fourth

quarter testing. 

XML

Note 8 - Notes Payable

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Long-term Debt [Text Block]

NOTE

8

 - NOTES PAYABLE

The Company had a

4.02%

note payable used to purchase a vehicle with $

48,582

and

$54,929

balance outstanding as of

September 30, 2017

and

December 31, 2016.

The note calls for monthly payments of

$1,477,

matures

August 1, 2020

and is secured by the vehicle purchased.

The following represents the future maturities of long-term debt as of

September 30, 2017:

Year ending December 31,	Payments
2017	$	3,947
2018		16,234
2019		16,897
2020		11,504
Thereafter		-
	$	48,582
Long-term notes payable, less current portion	$	32,521
Current portion of notes payable	$	16,061

XML

Note 9 - Lines of Credit

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE

9

 - LINES OF CREDIT

In connection with certain orders, we have to give 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

$15,000

at

September 30, 2017)

with a bank, subject to certain base limitations. As of

September 30, 2017,

we had DKK

94,620

(approximately

$15,000

) 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.

XML

Note 10 - Leases

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Leases of Lessee Disclosure [Text Block]

NOTE

10

 - LEASES

Operating Leases

 -- The Company leases office and production facilities under operating lease agreements expiring in

March 2021,

August 2018,

and

May 2018.

In some of these lease agreements, the Company has the right to extend.

The future minimum lease payments for non-cancelable operating leases having remaining terms in excess of

one

year as of

September 30, 2017

are as follows:

Year ending December 31,	Lease Payments
2017		162,739
2018		467,758
2019		179,094
2020		182,676
2021		30,546
Thereafter		-
Total Minimum Lease Payments	$	1,022,813

Lease expense charged to oper

ations was

$481,001

and

$559,755

for the

nine

months ended

September 30, 2017

and

2016,

respectively.

Capital Leases

 --

 The Company leases equipment on various variable rate capital leases currently calling for monthly payments of approximately

$661

and

$595

expiring through

July 2018.

Included in property and equipment, at

September 30, 2017

and

December 31, 2016,

the Company had recorded equipment on capital lease at

$1,267,773

and

$1,240,358,

respectively, with related accumulated depreciation of

$1,230,832

and

$1,126,550,

respectively. 

During the

nine

months ended

September 30, 2017

and

2016

depreciation expense for equipment on capital leases amounted to

$39,445,

and

$103,219,

respectively, and has been included in depreciation expense. During the

nine

months ended

September 30, 2017

and

2016,

interest expense on a capital lease obligation amounted to

$6,216

and

$13,770,

respectively. 

The following represents future minimum capital lease payments as of

September 30, 2017: 

Year ending December 31,	Lease Payments
2017		3,766
2018		26,538
Thereafter		-
Total minimum lease payments		30,304
Less amount representing interest		(1,442	)
Present value of minimum lease payments		28,862
Less Current Portion		(7,808	)
	$	21,054

XML

Note 11 - Agreements and Commitments

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE

11

 - 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

nine

months ended

September 30, 2017

and

2016,

matching contributions were expensed and totaled

$8,636

and

$9,291,

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

September 9, 2014,

Mr. Raffaele Bruno Tronchetti Provera (“Plaintiff”), the

60%

owner of LiqTech Italy s.r.l. (the “Venture”), sued LiqTech International A/S, the

40%

owner of the Venture (“Defendant”),

750,000

Euros before the Court of Como, Italy alleging, among other things, that certain products provided by Defendant to the Venture were defective.

  As of

August 14, 2017,

the case is in the preliminary stages where the court has appointed an expert in order to verify the quality of the products in order to determine whether there is sufficient evidence to proceed.  An evaluation of the outcome will only be possible after the results of the court appointment expert are known. This outcome of the court appointment expert is expected to be reported during

2017.

Defendant believes that the claims are without merit and intends to vigorously defend any litigation.

In connection with certain orders, we have to give 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

$15,000

at

September 30, 2017)

with a bank, subject to certain base limitations. As of

September 30, 2017,

we had DKK

94,620

(approximately

$15,000

at

September 30, 2017) 

in working guarantee against the line. 

XML

Note 12 - Income Taxes

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

12

 - INCOME TAXES

The Company accounts for income taxes in accordance with FASB ASC Topic

740,

Accounting for Income Taxes, which requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carry forwards. The amount of and ultimate realization of the benefits from the deferred tax assets for income tax purposes is dependent, in part, upon the tax laws in effect, the Company

’s future earnings, and other future events, the effects of which cannot be determined. In accordance with prevailing accounting guidance, the Company is required to recognize and disclose any income tax uncertainties. The guidance provides a

two

-step approach to recognizing and measuring tax benefits and liabilities when realization of the tax position is uncertain. The

first

step is to determine whether the tax position meets the more-likely-than-

not

condition for recognition and the

second

step is to determine the amount to be recognized based on the cumulative probability that exceeds

50%.

Actual results could differ from these estimates.

As of

September 30, 2017,

the Company had net operating loss carryovers of approximately

$10,857,383

for U.S. federal tax purposes expiring through

2036;

approximately

$8,645,417

for Danish tax purposes, which do

not

expire; approximately

$491,212

for German tax purposes, which do

not

expire and approximately

$637,307

for Singapore tax purposes which do

not

expire.

As of

September 30, 2017

and

December 31, 2016,

the Company established a valuation allowance of

$3,491,779

and

$3,542,000

for the tax components of LiqTech International Inc. and Liqtech NA, respectively,

$2,116,505

and

$1,095,000

for the tax components of LiqTech International AS and LiqTech Systems, respectively,

$137,000

and

$122,000

for the tax component of LiqTech Germany and

$108,000

and

$97,000

for the tax component of LiqTech Singapore as management could

not

determine that it was more than likely

not

that sufficient income could be generated by these components to realize the resulting net operating loss carry forwards and other deferred tax assets of these components.

The Company is

not

relying on the reversal of deferred tax liabilities to realize the deferred tax assets. The same variable used by the Company in evaluating goodwill for impairment was used in assessing the realization of deferred tax assets (See Note

7

).

The temporary differences, tax credits and carry forwards gave rise to the following deferred tax asset (liabilities) at

September 30, 2017

and

December 31, 2016:

	2017			2016
Vacation accrual	$	5,450		$	5,450
Allowance for doubtful accounts		1,202			1,202
Reserve for obsolete inventory		213,745			200,118
Business tax credit carryover		30,935			30,935
Deferred Compensation		50,512			8,500
Net operating loss carryover		5,838,958			4,906,974
Excess of book over tax depreciation		(287,072	)		(296,227	)
Valuation allowance		(5,853,730	)		(4,856,952	)
Long term deferred tax asset	$	-		$	-

A reconciliation of income tax expense at the federal statutory rate to income tax expense at the Company

’s effective rate is as follows for the

nine

months ended 

September 30, 2017

and

2016:

 

	2017			2016
Computed tax at expected statutory rate	$	(1,191,730	)	$	(725,821	)
State and local income taxes, net of federal benefit		-			-
Non-US income taxed at different rates		186,512			15,135
Valuation allowance		1,005,218			3,553,605
Other		-			43,013
Income tax expense (benefit)	$	-		$	2,885,932

The components of income tax expense (benefit) from continuing operations for the

nine

months ended

September 30, 2017

and

2016

consisted of the following:

	2017			2016
Current income tax expense:
Danish	$	-		$	(577,892	)
Federal		-			-
State		-			-
Current tax (benefit)	$	-		$	(577,892	)
Book in excess of tax depreciation	$	-		$	-
Deferred rent		-			-
Business tax credit carryover		-			-
Net operating loss carryover		440,787			(88,023	)
Valuation allowance		(440,787	)		3,551,847
Deferred compensation		-			-
Accrued vacation		-			-
Reserve for obsolete inventory		-			-
Deferred tax expense (benefit)	$	-		$	3,463,824
Total tax expense (benefit)	$	-		$	2,885,932

Deferred income tax expense / (benefit) results primarily from the reversal of temporary timing differences between tax and financial statement income.

The Company files Danish, U.S. federal and

 Minnesota state income tax returns. LiqTech International AS is generally

no

longer subject to tax examinations for years prior to

2012

for their Danish tax returns. LiqTech NA is generally

no

longer subject to tax examinations for years prior to

2013

for U.S. federal and U.S. states tax returns. 

XML

Note 13 - Income (Loss) Per Share

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE

13

 - INCOME (LOSS) 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

nine

months ended

September 30, 2017

and

2016:

	For the Three Months Ended September 30						For the Nine Months Ended September 30
	2017			2016			2017			2016
Net Loss	$	(1,479,425	)	$	(937,628	)	$	(3,505,090	)	$	(5,020,699	)
Weighted average number of common shares used in basic earnings per share		44,229,264			39,532,035			40,604,129			39,532,035
Effect of dilutive securities, stock options and warrants		-			-			-			-
Weighted average number of common shares and potentially dilutive securities		44,229,264			39,532,035			40,604,129			39,532,035

For the

nine

months ended

September 30, 2017,

Parent had

455,000

options outstanding to purchase shares of common stock of Parent at

$0.74

to

$1.01

per share and Parent had

700,000

 warrants outstanding to purchase shares of common stock of Parent at

$0.81

to

$1.65

per share, which were

not

included in the loss per share computation because their effect would be anti-dilutive.

For the

nine

months ended

September 30, 2016,

Parent had

1,046,000

options outstanding to purchase shares of common stock of Parent at

$0.74

to

$1.90

per share and Parent had

7,325,575

 warrants outstanding to purchase shares of common stock of Parent at

$0.81

to

$4.06

per share, which were

not

included in the loss per share computation because their effect would be anti-dilutive.

XML

Note 14 - Stockholders' Equity

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

14

- STOCKHOLDERS' EQUITY

Common Stock

-- Parent has

100,000,000

authorized shares of common stock,

$0.001

par value. As of

September 30, 2017

and

December 31, 2016,

respectively, there were

44,229,264

 and

36,835,514

common shares issued and outstanding.   

Voting

-- Holders of Parent 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 which

may

at the time be outstanding, holders of Parent 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 Parent, 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 Parent common stock will be entitled to share ratably in the distribution of any of our remaining assets.   

Other Matters

-- Holders of Parent common stock have

no

conversion, preemptive or other subscription rights, and there are

no

redemption rights or sinking fund provisions with respect to the 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 Parent 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 Parent preferred stock

may

have the effect of delaying, deferring or preventing a change in control of us without further action by the stockholders and

may

adversely affect the voting and other rights of the holders of common stock.

Common Stock Cancelation

On

December 31, 2016,

the Company canceled

2,696,521

common shares of the previously issued common shares held in escrow issued in connection with the acquisition of all of the issued and outstanding capital stock of LiqTech Systems (formerly Provital Solutions A/S), as LiqTech Systems failed to meet

2014,

2015

and

2016

catchup gross revenue and EBITDA thresholds.

Common Stock Issuance

On

April 13, 2015,

Parent issued an additional

100,000

shares of restricted stock valued at

$75,000

for services provided and to be provided

 to a member of the Board of Directors. The Company will recognize the non-cash compensation of the award over the requisite service period, of which

33,333

shares vested on

January 

1,

2016,

33,333

shares will vest on

January 1, 2017

and

33,334

shares will vest on

January 1, 2018.

On

January 2, 2016,

Parent issued an additional

27,253

shares of restricted stock valued at

$20,167

for services provided by the Board of Directors. The Company will recognize the non-cash compensation of the award over the requisite service period. The shares vested immediately.

On

January 2, 2017,

Parent issued an additional

93,750

shares of restricted stock valued at

$60,000

for services provided by the Board of Directors. The Company will recognize the non-cash compensation of the award over the requisite service period. The shares vested immediately.

On

May 19, 2017,

Parent completed a private placement of its common stock. The Company issued

7,300,000

new shares at a price of

$0.25

per share. The private placement was made directly by LiqTech and the Company plans to use the net proceeds of

$1,825,000

for acceleration of its business in the marine scrubber industry.

For the

nine

months ended

September 30, 2017

and

2016,

the Company has recorded non-cash compensation expense of

$78,750

and

$58,250,

respectively, relating to the vesting of restricted stock awards issued to the board of directors.

Common Stock Purchase Warrants

A summary of the status of the warrants outstanding at

September 30, 2017

is presented below:

		Warrants Outstanding						Warrants Exercisable
Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.81		100,000		0.25	$	0.81		100,000	$	0.81
$	1.00		200,000		0.25	$	1.00		200,000	$	1.00
$	1.65		400,000		1.83	$	1.65		400,000	$	1.65
Total			700,000		1.15	$	1.34		700,000	$	1.34

At

September 30, 2017,

the Company had

zero

non-vested warrants. We have recorded non-cash compensation expense of

$13,225

for the

nine

months ended

September 30, 2017

related to the warrants issued.

The exercise price of the warrants and the number of shares underlying the warrants are subject to adjustment for stock dividends, subdivisions of the outstanding shares of common stock and combinations of the outstanding shares of common stock. For so long as the warrants remain outstanding, we are required to keep reserved from our authorized and unissued shares of common stock a sufficient number of shares to provide for the issuance of the shares of common stock underlying the warrants.

On

February 15, 2016,

the Company issued to LCL Finance Limited warrants to purchase

100,000

shares of common stock at an exercise price of

$0.81

per share. The warrants are exercisable immediately and will remain exercisable until

December 31, 2017.

Stock Options

In

August 2011,

Parent

’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

September 30, 2017,

455,000

options were granted and outstanding under the Plan. 

The Company recognizes compensation costs for stock option awards to employees

, during

2016,

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 weighted-average assumptions used to estimate the fair values of the stock options granted using the Black-Scholes option-pricing model are as follows:

	LiqTech International, Inc.
Expected term (in years)		10
Volatility		76.87	%
Risk free interest rate		2.24	%
Dividend yield		0	%

The Company recognized stock based compensation expense

 related to the options of

$58,038

and

$272,665

for the

nine

months ended

September 30, 2017

and

2016,

respectively. At

September 30, 2017,

the Company had approximately

$28,206

of unrecognized compensation cost related to non-vested options expected to be recognized through

December 31, 2025. 

A summary of the status of the options outstanding under the Plan at

September 30, 2017

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
$	0.74		325,000		2.87	$	0.74		108,333	$	0.74
$	1.01		130,000		8.22	$	1.01		130,000	$	1.01
Total			455,000		4.40	$	0.82		238,333	$	0.89

A summary of the status of the options at

September 30, 2017,

and changes during the period are presented below:

	September 30, 2017
	Shares			Weighted Average Exercise Price		Average Remaining Life		Weighted Average Intrinsic Value
Outstanding at beginning of period		868,000		$	1.10		3.41	$	-
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited		(175,000	)		0.75		-		-
Expired		(238,000	)		1.90		-		-
Outstanding at end of period		455,000		$	0.82		4.40	$	-
Vested and expected to vest		455,000		$	0.82		4.40	$	-
Exercisable end of period		238,333		$	0.89		5.79	$	-

At

September 30, 2017,

Parent had

216,667

non-vested options to purchase shares of Parent common stock with a weighted average exercise price of

$0.74

and with a weighted average grant date fair value of

$0.46,

resulting in unrecognized compensation expense of

$18,804,

which is expected to be expensed over a weighted-average period of

0.5

years.

The total intrinsic value of options at

September 30, 2017

was

$0.

 Intrinsic value is measured using the fair market value at the date of exercise (for shares exercised) or at

September 30, 2017 (

for outstanding options), less the applicable exercise price.  

XML

Note 15 - Significant Customers / Concentration

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE

15

 - SIGNIFICANT CUSTOMERS / CONCENTRATION

For the

nine

months ended

September 30, 2017,

our

four

largest customers accounted for approximately

13%,

12%,

9%

and

5%,

respectively, of our net sales (approximately

39%

in total).

For the

nine

months ended

September 30, 2016,

the Company had

two

customers who account for

30%

and

19%,

respectively, of our net sales (approximately

49%

in total).

The Company sells products

 throughout the world. Sales by geographical region are as follows for the

three

and

nine

months ended

September 30, 2017

and

2016:

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2017		2016		2017		2016
United States and Canada	$	271,434	$	204,134	$	835,602	$	554,678
Australia		215,713		43,883		502,895		266,625
South America		-		-		-		81,480
Asia		253,460		427,511		1,379,607		649,295
Europe		1,715,877		3,013,983		5,632,654		9,786,739
	$	2,456,484	$	3,689,511	$	8,350,758	$	11,338,817

The Company

’s sales by product line are as follows for the

three

and

nine

months ended

September 30, 2017

and

2016:

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2017		2016		2017		2016
Ceramic diesel particulate	$	1,519,920	$	1,749,925	$	5,677,005	$	4,318,202
Liquid filters and systems		933,182		1,759,285		2,550,144		6,745,397
Kiln furniture		3,382		180,301		123,609		275,218
	$	2,456,484	$	3,689,511	$	8,350,758	$	11,338,817

XML

Note 16 - Subsequent Events

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE

16

– SUBSEQUENT EVENTS

On

November 14, 2017,

the Parent

effected

a private placement of 

1,617,503

shares of preferred stock (

1

to

4

conversion rate) or

6,470,012

ordinary shares of its common stock at a per share price of

$1.20

per preferred share for aggregate proceeds to Parent of

$1,941,203.60

. Immediately prior to the closing of the private placement, Parent had

44,229,264

 of its common stock issued and outstanding, and after the issuance of the 

1,617,503

 shares of preferred stock in the private placement, or

14.63

% equivalent shares of the total shares of common stock issued and outstanding immediately prior to effecting

the private placement, Parent has 

1,617,503

preferred shares and

44,229,264

common shares issued and outstanding as of the date of this Report. The private placement was completed pursuant to Rule

506

of Regulation D and/or Regulation S of the Securities Act. In connection with the private placement, each investor executed a subscription agreement, which contains customary representations and warranties of Parent and of each investor. The private placement was made directly by Parent and

no

underwriter or placement agent was engaged by Parent.

Except as set forth above, the Company's management reviewed material events through

November 14, 2017

and there were

no

other subsequent events. 

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

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.

(“Parent”) and its subsidiaries. The terms "Company", “us", "we" and "our" as used in this report refer to Parent and its subsidiaries, which are set forth below. The Company engages in the development, design, production, marketing and sale of automated filtering systems, liquid filters, diesel particulate air filters and kiln furniture in United States, Canada, Europe, Asia and South America. Set forth below is a description of Parent and each of its subsidiaries:

LiqTech International, Inc., a Nevada corporation (Parent) organized in

July 2004,

formerly known as Blue Moose Media, Inc.

LiqTech USA, a Delaware corporation and a wholly owned subsidiary of Parent 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 on 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 and kiln furniture in United States and Canada.

LiqTech Germany (“LiqTech Germany”) a

100%

owned subsidiary of LiqTech Int. DK, incorporated in Germany on

December 9, 2011,

engages in marketing and sale of liquid filters in Germany. The Company has

no

operation and is in the process of closing down, which is expected to be completed during

2017.

LiqTech PTE Ltd. (“LiqTech Sing”) a

95%

owned subsidiary of LiqTech Int. DK, incorporated in Singapore on

January 19, 2012,

engages in marketing and sale of liquid filters in Singapore and other countries in the area. The Company has

no

operation and is in the process of closing down, which is expected to be completed during

2017.

LiqTech Systems A/S ("LiqTech Systems"), a Danish corporation (formerly Provital Solutions A/S) was incorporated on

September 1, 2009

and engages in the manufacture of fully automated filtering systems for application within the pool and spa markets, marine applications, and a number of industrial applications within Denmark and international markets. The financial statements include the accounts of LiqTech Systems from the date of acquisition on

July 31, 2014.

Consolidation, Policy [Policy Text Block]

Consolidation

 --The consolidated financial statements include the accounts and operations of the Company. The non-controlling interests in the net assets of the subsidiaries are recorded in equity. The non-controlling interests of the results of operations of the subsidiaries are included in the results of operations and recorded as the non-controlling interest in subsidiaries. All material inter-company 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 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 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

nine

months ended

September 30, 2017

and

2016.

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. The Company had

no

balances held in a financial institution in the United States in excess of federally insured amounts at

September 30, 2017

and

December 31, 2016.

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, which 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

nine

months ended

September 30, 2017

and the year ended

December 31, 2016

is as follows:

	2017			2016
Allowance for doubtful accounts at the beginning of the period	$	2,128,452		$	1,087,871
Bad debt expense		(59,409	)		1,437,949
Amount of receivables written off		(31,609	)		(252,792	)
Effect of currency translation		252,482			(144,576	)
Allowance for doubtful accounts at the end of the period	$	2,289,916		$	2,128,452

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.

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 (See Note

4

).

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 another-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. 

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

-- Goodwill is evaluated for impairment annually, and whenever events or changes in circumstances indicate the carrying value of goodwill

may

not

be recoverable. Triggering events that

may

indicate impairment include, but are

not

limited to, a significant adverse change in customer demand or business climate that could affect the value of goodwill or a significant decrease in expected cash flows.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition and Sales Incentives

 -- The Company accounts for revenue recognition in accordance with the Securities and Exchange Commission Staff Accounting Bulletin

No.

101,

“Revenue Recognition in Financial Statements” (SAB

101

), FASB ASC

605

Revenue Recognition. The Company recognizes revenue when rights and risk of ownership have passed to the customer, when there is persuasive evidence of an arrangement, product has been shipped or delivered to the customer, the price and terms are finalized, and collections of resulting receivable is reasonably assured. Products are primarily shipped FOB shipping point at which time title passes to the customer. In some instances, the Company uses common carriers for the delivery of products. In these arrangements, sales are recognized upon delivery to the customer. The Company's revenue arrangements with its customers often include early payment discounts and such sales incentives are recorded against sales.

The Company has received long-term contracts for the installation of various water filtrations systems and grants from government entities for development and use of silicon carbide membranes in various water filtration and treatment applications. Revenues from long-term contracts and grants are recognized on the percentage-of-completion method, measured by the percentage of project costs incurred to date to estimated total project costs for each long-term contract or grant multiplied by the long-term contract or grant income on a project-by-project basis. This method is used because management considers costs incurred to be the best available measure of progress on contracts in process.

Project costs of the long-term contracts and grants include

 all direct material and labor costs and those indirect costs related to the project. Project costs are capitalized and accreted into cost of sales based on the percentage of the project completed. Should a loss be estimated on an incomplete project it would be recorded in the period in which such a loss is determined. Changes in estimated profitability of a project are recognized in the period in which the revisions are determined. The aggregate of costs incurred and income recognized on incomplete projects are recorded as costs in excess of billings and are shown as a current asset. 

The aggregate of billings in excess of related costs incurred and income recognized on projects is shown as a current liability.

In Denmark, Value Added Tax (“VAT”) of

25%

of the invoice amount is collected in 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.

Advertising Costs, Policy [Policy Text Block]

Advertising Cost

 -- Cost incurred in connection with advertising of the Company’s products is expensed as incurred. Such costs amounted to

$9,270

and

$21,307

for the

nine

months ended

September 30, 2017

and

2016,

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 and systems as incurred. Included in operating expense for the

nine

months ended

September 30, 2017

and

2016

were

$375,026

and

$476,734,

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.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock Options and Awards

 -- The Company has granted stock options and awards to certain key employees and directors. See Note

14.

The Company accounts for options in accordance with the provisions of FASB ASC Topic

718,

Compensation – Stock Compensation. Non-cash compensation costs of

$150,013

and

$377,140

have been recognized for the vesting of options granted to employees and restricted stock awards issued to the board of directors with an associated recognized tax benefit of

$26,775

and

$18,445

for the

nine

months ended

September 30, 2017

and

2016,

respectively.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value of Financial Instruments

 --The Company accounts for fair value measurements for financial assets and financial liabilities in accordance with FASB ASC Topic

820.

The authoritative guidance, which, 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 allowance for doubtful accounts receivable, cost in excess of billings, reserve for obsolete inventory, depreciation and impairment of property plant and equipment and impairment of goodwill and liabilities billings in excess of cost commitment 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.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

 -- In

May 2014,

the Financial Accounting Standards Board (FASB) issued a new standard to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. On

July 9 2015,

the FASB agreed to delay the effective date by

one

year; accordingly, the new standard is effective for us beginning in the

first

quarter of

2018

and we expect to adopt it at that time. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. We have

not

yet selected a transition method, nor have we determined the impact of the new standard on our consolidated financial statements.

In

February 2016,

the FASB issued changes to the accounting for leases that primarily affect presentation and disclosure requirements. The new standard will require the recognition of a right to use asset and underlying lease liability for operating leases with an initial life in excess of

one

year. This standard is effective for us beginning in the

first

quarter of

2019.

We have

not

yet determined the impact of the new standard on our consolidated financial statements.

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. 

XML

Note 1 - Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Allowance for Credit Losses on Financing Receivables [Table Text Block]

	2017			2016
Allowance for doubtful accounts at the beginning of the period	$	2,128,452		$	1,087,871
Bad debt expense		(59,409	)		1,437,949
Amount of receivables written off		(31,609	)		(252,792	)
Effect of currency translation		252,482			(144,576	)
Allowance for doubtful accounts at the end of the period	$	2,289,916		$	2,128,452

XML

Note 3 - Inventory (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	2017			2016
Furnace parts and supplies	$	375,529		$	336,799
Raw materials		1, 218,256			1,216,098
Work in process		2,592,894			2,499,242
Finished goods and filtration systems		1,934,569			2,544,080
Reserve for obsolescence		(1, 310,751	)		(1,421,345	)
Net Inventory	$	4,810,497		$	5,174,874

XML

Note 4 - Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Property, Plant and Equipment [Table Text Block]

	Useful Life				2017			2016
Production equipment		3	-	10	$	10,031,780		$	10,370,462
Lab equipment		3	-	10		85,766			76,658
Computer equipment		3	-	5		199,184			185,652
Vehicles		3	-	5		74,164			39,090
Furniture and fixture			5			104,431			146,453
Leasehold improvements			10			1,063,722			955,563
						11,559,047			11,773,878
Less Accumulated Depreciation						(9,435,618	)		(9,140,320	)
Net Property and Equipment					$	2,123,429		$	2,633,558

XML

Note 5 - Investments at Costs (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Fair Value, by Balance Sheet Grouping [Table Text Block]

As of September 30, 2017	Level 1		Level 2		Level 3
Investments		-		-		5,909
Total		-		-		5,909

As of December 31, 2016	Level 1		Level 2		Level 3
Investments		-		-		5,282
Total		-		-		5,282

XML

Note 6 - Definite-life Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Year ending December 31,	Amortization Expenses
2017		755
2018		2,540
2019		668
Thereafter		-
	$	3,963

XML

Note 8 - Notes Payable (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Maturities of Long-term Debt [Table Text Block]

Year ending December 31,	Payments
2017	$	3,947
2018		16,234
2019		16,897
2020		11,504
Thereafter		-
	$	48,582
Long-term notes payable, less current portion	$	32,521
Current portion of notes payable	$	16,061

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Note 10 - Leases (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Year ending December 31,	Lease Payments
2017		162,739
2018		467,758
2019		179,094
2020		182,676
2021		30,546
Thereafter		-
Total Minimum Lease Payments	$	1,022,813

Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block]

Year ending December 31,	Lease Payments
2017		3,766
2018		26,538
Thereafter		-
Total minimum lease payments		30,304
Less amount representing interest		(1,442	)
Present value of minimum lease payments		28,862
Less Current Portion		(7,808	)
	$	21,054

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Note 12 - Income Taxes (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	2017			2016
Vacation accrual	$	5,450		$	5,450
Allowance for doubtful accounts		1,202			1,202
Reserve for obsolete inventory		213,745			200,118
Business tax credit carryover		30,935			30,935
Deferred Compensation		50,512			8,500
Net operating loss carryover		5,838,958			4,906,974
Excess of book over tax depreciation		(287,072	)		(296,227	)
Valuation allowance		(5,853,730	)		(4,856,952	)
Long term deferred tax asset	$	-		$	-

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	2017			2016
Computed tax at expected statutory rate	$	(1,191,730	)	$	(725,821	)
State and local income taxes, net of federal benefit		-			-
Non-US income taxed at different rates		186,512			15,135
Valuation allowance		1,005,218			3,553,605
Other		-			43,013
Income tax expense (benefit)	$	-		$	2,885,932

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	2017			2016
Current income tax expense:
Danish	$	-		$	(577,892	)
Federal		-			-
State		-			-
Current tax (benefit)	$	-		$	(577,892	)
Book in excess of tax depreciation	$	-		$	-
Deferred rent		-			-
Business tax credit carryover		-			-
Net operating loss carryover		440,787			(88,023	)
Valuation allowance		(440,787	)		3,551,847
Deferred compensation		-			-
Accrued vacation		-			-
Reserve for obsolete inventory		-			-
Deferred tax expense (benefit)	$	-		$	3,463,824
Total tax expense (benefit)	$	-		$	2,885,932

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Note 13 - Income (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Weighted Average Number of Shares [Table Text Block]

	For the Three Months Ended September 30						For the Nine Months Ended September 30
	2017			2016			2017			2016
Net Loss	$	(1,479,425	)	$	(937,628	)	$	(3,505,090	)	$	(5,020,699	)
Weighted average number of common shares used in basic earnings per share		44,229,264			39,532,035			40,604,129			39,532,035
Effect of dilutive securities, stock options and warrants		-			-			-			-
Weighted average number of common shares and potentially dilutive securities		44,229,264			39,532,035			40,604,129			39,532,035

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Note 14 - Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

		Warrants Outstanding						Warrants Exercisable
Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.81		100,000		0.25	$	0.81		100,000	$	0.81
$	1.00		200,000		0.25	$	1.00		200,000	$	1.00
$	1.65		400,000		1.83	$	1.65		400,000	$	1.65
Total			700,000		1.15	$	1.34		700,000	$	1.34

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	LiqTech International, Inc.
Expected term (in years)		10
Volatility		76.87	%
Risk free interest rate		2.24	%
Dividend yield		0	%

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [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
$	0.74		325,000		2.87	$	0.74		108,333	$	0.74
$	1.01		130,000		8.22	$	1.01		130,000	$	1.01
Total			455,000		4.40	$	0.82		238,333	$	0.89

Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Table Text Block]

	September 30, 2017
	Shares			Weighted Average Exercise Price		Average Remaining Life		Weighted Average Intrinsic Value
Outstanding at beginning of period		868,000		$	1.10		3.41	$	-
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited		(175,000	)		0.75		-		-
Expired		(238,000	)		1.90		-		-
Outstanding at end of period		455,000		$	0.82		4.40	$	-
Vested and expected to vest		455,000		$	0.82		4.40	$	-
Exercisable end of period		238,333		$	0.89		5.79	$	-

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Note 15 - Significant Customers / Concentration (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area [Table Text Block]

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2017		2016		2017		2016
United States and Canada	$	271,434	$	204,134	$	835,602	$	554,678
Australia		215,713		43,883		502,895		266,625
South America		-		-		-		81,480
Asia		253,460		427,511		1,379,607		649,295
Europe		1,715,877		3,013,983		5,632,654		9,786,739
	$	2,456,484	$	3,689,511	$	8,350,758	$	11,338,817

Reconciliation of Revenue from Segments to Consolidated [Table Text Block]

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2017		2016		2017		2016
Ceramic diesel particulate	$	1,519,920	$	1,749,925	$	5,677,005	$	4,318,202
Liquid filters and systems		933,182		1,759,285		2,550,144		6,745,397
Kiln furniture		3,382		180,301		123,609		275,218
	$	2,456,484	$	3,689,511	$	8,350,758	$	11,338,817

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Note 1 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Cash, Uninsured Amount	$ 0		$ 0		$ 0
Advertising Expense			9,270	$ 21,307
Research and Development Expense	121,680	$ 124,165	375,026	476,734
Allocated Share-based Compensation Expense	$ 24,055	$ 104,416	150,013	377,140
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense			$ 26,775	$ 18,445
DENMARK
Value Added Tax Of Invoice, Percentage			25.00%
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
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%

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Note 1 - Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($)	9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Allowance for doubtful accounts at the beginning of the period	$ 2,128,452	$ 1,087,871	$ 1,087,871
Bad debt expense	(59,409)	$ 23,852	1,437,949
Amount of receivables written off	(31,609)		(252,792)
Effect of currency translation	252,482		(144,576)
Allowance for doubtful accounts at the end of the period	$ 2,289,916		$ 2,128,452

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Note 3 - Inventory - Summary of Inventory (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Furnace parts and supplies	$ 375,529	$ 336,799
Raw materials	1,218,256	1,216,098
Work in process	2,592,894	2,499,242
Finished goods and filtration systems	1,934,569	2,544,080
Reserve for obsolescence	(1,310,751)	(1,421,345)
Net Inventory	$ 4,810,497	$ 5,174,874

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Note 4 - Property and Equipment (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Depreciation	$ 731,312	$ 992,418

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Note 4 - Property and Equipment - Summary of Property and Equipment (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Property and equipment, gross	$ 11,559,047	$ 11,773,878
Less Accumulated Depreciation	(9,435,618)	(9,140,320)
Net Property and Equipment	2,123,429	2,633,558
Production Equipment [Member]
Property and equipment, gross	10,031,780	10,370,462
Lab Equipment [Member]
Property and equipment, gross	85,766	76,658
Computer Equipment [Member]
Property and equipment, gross	199,184	185,652
Vehicles [Member]
Property and equipment, gross	$ 74,164	39,090
Furniture and Fixtures [Member]
Useful Life (Year)	5 years
Property and equipment, gross	$ 104,431	146,453
Leasehold Improvements [Member]
Useful Life (Year)	10 years
Property and equipment, gross	$ 1,063,722	$ 955,563
Minimum [Member]
Useful Life (Year)	3 years
Minimum [Member] | Production Equipment [Member]
Useful Life (Year)	3 years
Minimum [Member] | Lab Equipment [Member]
Useful Life (Year)	3 years
Minimum [Member] | Computer Equipment [Member]
Useful Life (Year)	3 years
Minimum [Member] | Vehicles [Member]
Useful Life (Year)	3 years
Maximum [Member]
Useful Life (Year)	10 years
Maximum [Member] | Production Equipment [Member]
Useful Life (Year)	10 years
Maximum [Member] | Lab Equipment [Member]
Useful Life (Year)	10 years
Maximum [Member] | Computer Equipment [Member]
Useful Life (Year)	5 years
Maximum [Member] | Vehicles [Member]
Useful Life (Year)	5 years

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Note 5 - Investments at Costs (Details Textual) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Other Long-term Investments	$ 5,909	$ 5,282

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Note 5 - Investments at Costs - Financial Assets and Liabilities (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Inputs, Level 1 [Member]
Investments
Total
Fair Value, Inputs, Level 2 [Member]
Investments
Total
Fair Value, Inputs, Level 3 [Member]
Investments	5,909	5,282
Total	$ 5,909	$ 5,282

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Note 6 - Definite-life Intangible Assets (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Intangible Assets, Net (Excluding Goodwill)	$ 3,963		$ 5,614
Minimum [Member]
Finite-Lived Intangible Asset, Useful Life	2 years
Maximum [Member]
Finite-Lived Intangible Asset, Useful Life	10 years
Patents [Member]
Amortization of Intangible Assets	$ 1,651	$ 3,269
Patents [Member] | Minimum [Member]
Finite-Lived Intangible Asset, Useful Life	2 years
Patents [Member] | Maximum [Member]
Finite-Lived Intangible Asset, Useful Life	10 years

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Note 6 - Definite-life Intangible Assets - Expected Future Amortization Expense (Details)	Sep. 30, 2017 USD ($)
2017	$ 755
2018	2,540
2019	668
	$ 3,963

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Note 7 - Goodwill (Details Textual)	12 Months Ended
	Dec. 31, 2016 USD ($)
Goodwill, Impairment Loss	$ 7,343,208

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Note 8 - Notes Payable (Details Textual) - Notes Payable, Other Payables [Member] - USD ($)	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Debt Instrument, Interest Rate, Stated Percentage	4.02%
Long-term Debt	$ 48,582	$ 54,929
Debt Instrument, Periodic Payment	$ 1,477

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Note 8 - Notes Payable - Future Maturities of Long-term Debt (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Long-term notes payable, less current portion	$ 32,521	$ 39,895
Current portion of notes payable	16,061	15,034
Notes Payable, Other Payables [Member]
2017	3,947
2018	16,234
2019	16,897
2020	11,504
Thereafter
	$ 48,582	$ 54,929

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Note 9 - Lines of Credit (Details Textual) - Sep. 30, 2017	USD ($)	DKK
Line of Credit Facility, Maximum Borrowing Capacity	$ 15,000	DKK 94,620
Guarantor Obligations, Current Carrying Value	$ 15,000	DKK 94,620

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Note 10 - Leases (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Operating Leases, Rent Expense	$ 481,001	$ 559,755
Capital Leased Assets, Gross	1,267,773		$ 1,240,358
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Accumulated Depreciation	1,230,832		$ 1,126,550
Depreciation	731,312	992,418
Interest Expense, Lessee, Assets under Capital Lease	6,216	13,770
Assets Held under Capital Leases [Member]
Depreciation	39,445	$ 103,219
Capital Lease Obligations [Member] | Capital Lease 1 [Member]
Debt Instrument, Periodic Payment	661
Capital Lease Obligations [Member] | Capital Lease 2 [Member]
Debt Instrument, Periodic Payment	$ 595

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Note 10 - Leases - Future Minimum Lease Payments for Non-cancelable Operating Leases (Details)	Sep. 30, 2017 USD ($)
2017	$ 162,739
2018	467,758
2019	179,094
2020	182,676
2021	30,546
Thereafter
Total Minimum Lease Payments	$ 1,022,813

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Note 10 - Leases - Future Minimum Capital Lease Payments (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
2017	$ 3,766
2018	26,538
Thereafter	0
Total minimum lease payments	30,304
Less amount representing interest	(1,442)
Present value of minimum lease payments	28,862
Less Current Portion	(7,808)	$ (45,883)
	$ 21,054	$ 93,942

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Note 11 - Agreements and Commitments (Details Textual)		9 Months Ended
	Sep. 09, 2014 EUR (€)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 DKK
Defined Contribution Plan, Cost | $		$ 8,636	$ 9,291
Line of Credit Facility, Maximum Borrowing Capacity		15,000		DKK 94,620
Guarantor Obligations, Current Carrying Value		$ 15,000		DKK 94,620
Chief Executive Officer [Member] | LiqTech Italy [Member]
Equity Method Investment, Ownership Percentage	60.00%
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners	40.00%
Loss Contingency, Damages Sought, Value | €	€ 750,000

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Note 12 - Income Taxes (Details Textual) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Deferred Tax Assets, Operating Loss Carryforwards, Domestic	$ 10,857,383
LiqTech International Inc and LiqTech NA [Member]
Deferred Tax Assets, Valuation Allowance	3,491,779	$ 3,542,000
LiqTech International AS and LiqTech Systems AS [Member]
Deferred Tax Assets, Valuation Allowance	2,116,505	1,095,000
LiqTech Germany [Member]
Deferred Tax Assets, Valuation Allowance	137,000	122,000
LiqTech Singapore [Member]
Deferred Tax Assets, Valuation Allowance	108,000	$ 97,000
Danish Ministry of Taxation [Member]
Deferred Tax Assets, Operating Loss Carryforwards, Foreign	8,645,417
Federal Ministry of Finance, Germany [Member]
Deferred Tax Assets, Operating Loss Carryforwards, Foreign	491,212
Inland Revenue, Singapore (IRAS) [Member]
Deferred Tax Assets, Operating Loss Carryforwards, Foreign	$ 637,307

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Note 12 - Income Taxes - Deferred Tax Assets (Liabilities) (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Vacation accrual	$ 5,450	$ 5,450
Allowance for doubtful accounts	1,202	1,202
Reserve for obsolete inventory	213,745	200,118
Business tax credit carryover	30,935	30,935
Deferred Compensation	50,512	8,500
Net operating loss carryover	5,838,958	4,906,974
Excess of book over tax depreciation	(287,072)	(296,227)
Valuation allowance	(5,853,730)	(4,856,952)
Long term deferred tax asset

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Note 12 - Income Taxes - Reconciliation of Income Tax Expense (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Computed tax at expected statutory rate			$ (1,191,730)	$ (725,821)
State and local income taxes, net of federal benefit
Non-US income taxed at different rates			186,512	15,135
Valuation allowance			1,005,218	3,553,605
Other				43,013
Income tax expense (benefit)		$ 17,646		$ 2,885,932

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Note 12 - Income Taxes - Components of Income Tax Expense (Benefit) from Continuing Operations (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Federal
State
Current tax (benefit)				(577,892)
Book in excess of tax depreciation
Deferred rent
Business tax credit carryover
Net operating loss carryover			440,787	(88,023)
Valuation allowance			(440,787)	3,551,847
Deferred compensation
Accrued vacation
Reserve for obsolete inventory
Deferred tax expense (benefit)				3,463,824
Income tax expense (benefit)		$ 17,646		2,885,932
Danish Ministry of Taxation [Member]
Danish				$ (577,892)

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Note 13 - Income (Loss) Per Share (Details Textual) - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	455,000	1,046,000	868,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 0.82		$ 1.10
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	700,000	7,325,575
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 0.74	$ 0.74
Class of Warrant or Right, Exercise Price of Warrants or Rights	0.81	0.81
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	1.01	1.90
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 1.65	$ 4.06

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Note 13 - Income (Loss) Per Share - Amounts Used in Computing Earnings Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net Loss	$ (1,479,425)	$ (937,628)	$ (3,505,090)	$ (5,020,699)
Weighted average number of common shares used in basic earnings per share (in shares)	44,229,264	39,532,035	40,604,129	39,532,035
Effect of dilutive securities, stock options and warrants (in shares)	0
Weighted average number of common shares and potentially dilutive securities (in shares)	44,229,264	39,532,035	40,604,129	39,532,035

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Note 14 - Stockholders' Equity (Details Textual) - USD ($)					3 Months Ended		9 Months Ended		12 Months Ended
	May 19, 2017	Jan. 02, 2017	Jan. 02, 2016	Apr. 13, 2015	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Feb. 15, 2016
Common Stock, Shares Authorized					100,000,000		100,000,000		100,000,000
Common Stock, Par or Stated Value Per Share					$ 0.001		$ 0.001		$ 0.001
Common Stock, Shares, Issued					44,229,264		44,229,264		36,835,514
Canceled Common Shares Held in Escrow in Connection with an Acquisition, Shares									2,696,521
Proceeds from Issuance of Common Stock	$ 1,825,000						$ 1,825,000
Allocated Share-based Compensation Expense					$ 24,055	$ 104,416	$ 150,013	$ 377,140
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number					455,000	1,046,000	455,000	1,046,000	868,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options					$ 18,804		$ 18,804
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares					216,667		216,667
Share Based Compensation Arrangements by Share Based Payment Award Options, Nonvested Weighted Average Exercise Price							$ 0.74
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value					$ 0.46		$ 0.46
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value					$ 0		$ 0
Common Stock, Shares, Outstanding					44,229,264		44,229,264		36,835,514
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					455,000		455,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options					$ 28,206		$ 28,206
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross							455,000
LCL Finance Limited [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights										100,000
Class of Warrant or Right, Exercise Price of Warrants or Rights										$ 0.81
Warrant [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period							0
Allocated Share-based Compensation Expense							$ 13,225
Private Placement [Member]
Stock Issued During Period, Shares, New Issues	7,300,000
Share Price	$ 0.25
Employee Stock Option [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition							182 days
Employee Stock Option [Member] | The 2011 Stock Options Plan [Member]
Allocated Share-based Compensation Expense							$ 58,038	$ 272,665
Director [Member]
Stock Issued During Period, Shares, Restricted Stock Award, Gross		93,750	27,253	100,000
Stock Issued During Period, Value, Restricted Stock Award, Gross		$ 60,000	$ 20,167	$ 75,000
Director [Member] | Restricted Stock [Member]
Allocated Share-based Compensation Expense							$ 78,750	$ 58,250
Director [Member] | Restricted Stock [Member] | Vesting on January 1, 2016 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period				33,333
Director [Member] | Restricted Stock [Member] | Vesting On January 1, 2017 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period				33,333
Director [Member] | Restricted Stock [Member] | Vesting On January 1, 2018 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period				33,334

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Note 14 - Stockholders' Equity - Warrants Outstanding by Exercise Price (Details)	9 Months Ended
	Sep. 30, 2017 $ / shares shares
Warrants outstanding (in shares) | shares	700,000
Warrants outstanding, weighted average remaining contractual life (Year)	1 year 54 days
Warrants outstanding, weighted average exercise price (in dollars per share)	$ 1.34
Warrants exercisable (in shares) | shares	700,000
Warrants exercisable, weighted average exercise price (in dollars per share)	$ 1.34
Warrant 1 [Member]
Exercise prices of warrants (in dollars per share)	$ 0.81
Warrants outstanding (in shares) | shares	100,000
Warrants outstanding, weighted average remaining contractual life (Year)	91 days
Warrants outstanding, weighted average exercise price (in dollars per share)	$ 0.81
Warrants exercisable (in shares) | shares	100,000
Warrants exercisable, weighted average exercise price (in dollars per share)	$ 0.81
Warrant 2 [Member]
Exercise prices of warrants (in dollars per share)	$ 1
Warrants outstanding (in shares) | shares	200,000
Warrants outstanding, weighted average remaining contractual life (Year)	91 days
Warrants outstanding, weighted average exercise price (in dollars per share)	$ 1
Warrants exercisable (in shares) | shares	200,000
Warrants exercisable, weighted average exercise price (in dollars per share)	$ 1
Warrant 3 [Member]
Exercise prices of warrants (in dollars per share)	$ 1.65
Warrants outstanding (in shares) | shares	400,000
Warrants outstanding, weighted average remaining contractual life (Year)	1 year 302 days
Warrants outstanding, weighted average exercise price (in dollars per share)	$ 1.65
Warrants exercisable (in shares) | shares	400,000
Warrants exercisable, weighted average exercise price (in dollars per share)	$ 1.65

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Note 14 - Stockholders' Equity - Valuation Assumptions for Stock Options (Details) - Employee Stock Option [Member]	9 Months Ended
	Sep. 30, 2017
Expected term (Year)	10 years
Volatility	76.87%
Risk free interest rate	2.24%
Dividend yield	0.00%

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Note 14 - Stockholders' Equity - Options Outstanding by Exercise Price (Details)	9 Months Ended
	Sep. 30, 2017 $ / shares shares
Options outstanding (in shares) | shares	455,000
Options outstanding, weighted average remaining contractual life (Year)	4 years 146 days
Options outstanding, weighted average exercise price (in dollars per share)	$ 0.82
Options exercisable (in shares) | shares	238,333
Options exercisable, weighted average exercise price (in dollars per share)	$ 0.89
Price Range 1 [Member]
Exercise prices of options (in dollars per share)	$ 0.74
Options outstanding (in shares) | shares	325,000
Options outstanding, weighted average remaining contractual life (Year)	2 years 317 days
Options outstanding, weighted average exercise price (in dollars per share)	$ 0.74
Options exercisable (in shares) | shares	108,333
Options exercisable, weighted average exercise price (in dollars per share)	$ 0.74
Price Range 2 [Member]
Exercise prices of options (in dollars per share)	$ 1.01
Options outstanding (in shares) | shares	130,000
Options outstanding, weighted average remaining contractual life (Year)	8 years 80 days
Options outstanding, weighted average exercise price (in dollars per share)	$ 1.01
Options exercisable (in shares) | shares	130,000
Options exercisable, weighted average exercise price (in dollars per share)	$ 1.01

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Note 14 - Stockholders' Equity - Status of Options and Changes During the Year (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Outstanding, shares (in shares)	868,000
Outstanding, weighted average exercise price (in dollars per share)	$ 1.10
Outstanding, average remaining life (Year)	4 years 146 days	3 years 149 days
Granted, shares (in shares)
Granted, weighted average exercise price (in dollars per share)
Exercised, shares (in shares)
Exercised, weighted average exercise price (in dollars per share)
Forfeited, shares (in shares)	(175,000)
Forfeited, weighted average exercise price (in dollars per share)	$ 0.75
Expired, shares (in shares)	(238,000)
Expired, weighted average exercise price (in dollars per share)	$ 1.90
Outstanding, shares (in shares)	455,000	868,000
Outstanding, weighted average exercise price (in dollars per share)	$ 0.82	$ 1.10
Outstanding, weighted average intrinsic value	$ 0
Vested and expected to vest, shares (in shares)	455,000
Vested and expected to vest, weighted average exercise price (in dollars per share)	$ 0.82
Vested and expected to vest, average remaining life (Year)	4 years 146 days
Vested and expected to vest, weighted average intrinsic value
Exercisable end of period, shares (in shares)	238,333
Exercisable end of period, weighted average exercise price (in dollars per share)	$ 0.89
Exercisable end of period, average remaining life (Year)	5 years 288 days
Exercisable end of period, weighted average intrinsic value

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Note 15 - Significant Customers / Concentration (Details Textual) - Customer Concentration Risk [Member] - Sales Revenue, Net [Member]	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Number of Major Customers	4	2
Concentration Risk, Percentage	39.00%	49.00%
Major Customer 1 [Member]
Concentration Risk, Percentage	13.00%	30.00%
Major Customer 2 [Member]
Concentration Risk, Percentage	12.00%	19.00%
Major Customer 3 [Member]
Concentration Risk, Percentage	9.00%
Major Customer 4 [Member]
Concentration Risk, Percentage	5.00%

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Note 15 - Significant Customers / Concentration - Net Sales by Geographical Region (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net Sales	$ 2,456,484	$ 3,689,511	$ 8,350,758	$ 11,338,817
Reportable Geographical Components [Member] | US And Canada [Member]
Net Sales	271,434	204,134	835,602	554,678
Reportable Geographical Components [Member] | AUSTRALIA
Net Sales	215,713	43,883	502,895	266,625
Reportable Geographical Components [Member] | South America [Member]
Net Sales				81,480
Reportable Geographical Components [Member] | Asia [Member]
Net Sales	253,460	427,511	1,379,607	649,295
Reportable Geographical Components [Member] | Europe [Member]
Net Sales	$ 1,715,877	$ 3,013,983	$ 5,632,654	$ 9,786,739

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Note 15 - Significant Customers / Concentration - Sales by Product Line (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net Sales	$ 2,456,484	$ 3,689,511	$ 8,350,758	$ 11,338,817
Ceramic Diesel Particulate [Member]
Net Sales	1,519,920	1,749,925	5,677,005	4,318,202
Liquid Filters [Member]
Net Sales	933,182	1,759,285	2,550,144	6,745,397
Kiln Furniture [Member]
Net Sales	$ 3,382	$ 180,301	$ 123,609	$ 275,218

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Note 16 - Subsequent Events (Details Textual) - USD ($)	Nov. 14, 2017	May 19, 2017	Sep. 30, 2017	Dec. 31, 2016
Common Stock, Shares, Issued			44,229,264	36,835,514
Common Stock, Shares, Outstanding			44,229,264	36,835,514
Percent of Shares Issued and Outstanding Prior to Private Placement			14.63%
Subsequent Event [Member]
Common Stock, Shares, Issued	44,229,264
Common Stock, Shares, Outstanding	44,229,264
Preferred Stock, Shares Issued	1,617,503
Preferred Stock, Shares Outstanding	1,617,503
Convertible Preferred Stock [Member] | Subsequent Event [Member]
Proceeds from Issuance of Private Placement	$ 1,941,203.60
Private Placement [Member]
Stock Issued During Period, Shares, New Issues		7,300,000
Private Placement [Member] | Convertible Preferred Stock [Member] | Subsequent Event [Member]
Stock Issued During Period, Shares, New Issues	1,617,503
Convertible Preferred Stock, Shares Issued upon Conversion	4
Convertible Preferred Stock, Aggregate Shares Issued upon Conversion	6,470,012
Shares Issued, Price Per Share	$ 1.20