Breaking Down LiqTech International, Inc. (LIQT) Financial Health: Key Insights for Investors

You're looking at LiqTech International, Inc. (LIQT) and, honestly, the numbers show a classic growth-versus-stability trade-off that demands a closer look before you commit capital. The third quarter of 2025 (Q3 2025) delivered a massive top-line jump, with revenue hitting $3.8 million-a 54% surge over the prior year-driven by a 187% increase in water system revenue, which is a great sign for their core clean technology business. But still, the company is not yet in the black, reporting a net loss of $(1.5) million for the quarter, even though that's a significant improvement from the $(2.8) million loss a year ago. Management projects full-year 2025 revenue to land between $18.0 million and $19.0 million, a solid 23% to 30% growth trajectory, but you need to understand that their financial health, as flagged by a negative Altman Z-Score, suggests potential financial distress, even with $7.3 million in cash on the balance sheet as of September 30, 2025. We need to dig into how they plan to turn that impressive gross margin of 19.6% into sustainable net income, so let's break down the risks and opportunities for this clean-tech turnaround story.

Revenue Analysis

If you're looking at LiqTech International, Inc. (LIQT), the direct takeaway is that their revenue growth is accelerating, but the underlying business mix is shifting dramatically. The company projects full-year 2025 revenue to land between $18.0 million and $19.0 million, which translates to a projected year-over-year increase of 23% to 30% from 2024. That's a solid rebound, but you need to see where the growth is actually coming from.

The primary revenue streams for LiqTech International, Inc. (LIQT) are centered on their clean technology solutions, which include ceramic silicon carbide filters for gas and liquid purification. The business is essentially split across three main areas, though the focus is clearly moving toward liquid filtration systems (turnkey ceramic membrane systems and complete water treatment plants) and away from their legacy product, Diesel Particulate Filters (DPFs), which control soot from diesel engines.

Here's the quick math on the near-term momentum: Q3 2025 revenue hit $3.8 million, a massive 54% jump compared to the same quarter in 2024. This growth wasn't just a fluke; it was driven by a clear change in their revenue mix, which is defintely a key trend to watch. Water systems are the new core.

The contribution of different business segments to overall revenue shows a clear strategic pivot. The shift is away from the DPF business and toward high-margin liquid filtration. In Q3 2025, for instance, total water system revenue soared by 187% year-over-year, accounting for $2.0 million of the quarter's total revenue. That's a huge chunk of the business now.

• Water Systems: $2.0 million in Q3 2025, a 187% increase.
• Pool Systems: $1.0 million in Q3 2025, fueled by large orders.
• Plastics Products: Increased sales contributed favorably to the quarter.
• DPFs: Deliveries decreased, partially offsetting the growth.

What this estimate hides is the timing risk in their systems business. The company had to adjust its full-year guidance-narrowing the expected range-because two significant purchase orders for their systems business were moved by customers from Q4 2025 to the start of Q1 2026. This shows that while the demand for the larger, more complex systems is strong, the revenue recognition can be lumpy. Still, the underlying demand is there, just pushed out a quarter.

You can see a deeper dive into the valuation and strategic frameworks in the full post: Breaking Down LiqTech International, Inc. (LIQT) Financial Health: Key Insights for Investors. For now, the action is clear: keep tracking the Systems segment for consistent delivery and revenue recognition.

Profitability Metrics

You're looking for a clear-eyed view of LiqTech International, Inc. (LIQT)'s financial engine, and the 2025 numbers show a company in a critical, but improving, transition. The direct takeaway is that while the company remains firmly in a loss-making position on a trailing twelve months (TTM) basis, the operational efficiency improvements in the third quarter of 2025 are a powerful signal of a strategic pivot finally gaining traction.

For the nine months ended September 30, 2025, LiqTech International, Inc. reported a net loss of $5.94 million on revenue of $13.38 million. This reflects the challenge of a small-cap clean-tech firm scaling its specialized silicon carbide filtration technology. Looking at the full year, management expects 2025 revenue to land between $18.0 million and $19.0 million, a strong increase of 23% to 30% over 2024, but the profitability story is where you need to focus.

• Gross Margin: 19.6% (Q3 2025)
• Operating Margin: Approx. -36.8% (Q3 2025, calculated)
• Net Margin: -66.95% (Trailing Twelve Months)

Here's the quick math on the third quarter: Revenue hit $3.8 million, leading to a gross profit of $0.7 million and a gross margin of 19.6%. Total operating expenses for that same quarter were $2.1 million. That leaves an operating loss of approximately $(1.4) million for the quarter, or an operating margin of about -36.8%. The company is defintely still burning cash from operations, but the trend is what matters.

Operational Efficiency and Margin Trends

The operational efficiency analysis shows a clear, positive inflection point. In Q3 2025, the gross profit margin jumped to 19.6% from a negative margin of (8.5)% in the same period a year prior-an improvement of 28.1 percentage points. This dramatic shift is not random; it's driven by better utilization of their membrane manufacturing capacity, especially from strong pool system deliveries and aftermarket sales, which have a favorable product mix.

Also, management is cutting costs: total operating expenses decreased by 12.6% in Q3 2025 compared to Q3 2024. This combination of higher-margin sales and tighter cost control is the roadmap to breakeven. They are executing on the core business model: drive volume through high-value systems to absorb fixed production costs, which is the definition of operational leverage.

Industry Comparison: A Gap to Close

LiqTech International, Inc.'s margins still lag behind the broader water treatment and specialty chemicals industry, but the gap is narrowing. For instance, gross margins in the specialized water treatment sector often average in the 35% range, and can climb as high as 60% for certain proprietary specialty products. LiqTech International, Inc.'s Q3 2025 Gross Margin of 19.6% is significantly below that industry average, indicating they are either pricing aggressively to gain market share or still operating below optimal production scale.

The TTM Operating Margin of -62.42% and Net Margin of -66.95% show the substantial losses accumulated over the last year, which is typical for a small, scaling technology company. However, the Q3 data suggests they are moving toward the positive territory that industry leaders enjoy. The key action for you is to monitor the Q4 2025 results to see if the gross margin can hold above 20% and if the operating expenses remain flat or decline further against the projected higher revenue. You can learn more about the institutional interest in the company by Exploring LiqTech International, Inc. (LIQT) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

You're looking at LiqTech International, Inc. (LIQT) because you see the potential in clean technology, but the balance sheet is what tells you how they are funding that growth. The short answer is that LiqTech is operating with a balanced, though slightly debt-leaning, capital structure compared to its equity base, but the total liabilities are significant relative to equity.

As of September 30, 2025, LiqTech International, Inc.'s total shareholder equity stood at $12,776,858. This is the core ownership stake. Against this, the company reported total liabilities of $17,519,010. This total liabilities figure includes everything from trade payables to long-term debt, and it gives us a total liabilities-to-equity ratio of approximately 1.37.

Overview of Debt Levels and Leverage

When we look specifically at interest-bearing debt, the picture changes, which is why you see different ratios. The core of their long-term financing is a $6,000,000 senior note. This is a concrete, non-bank loan that serves as the primary long-term debt on the books. Short-term debt (or current liabilities) is well-covered, with a current ratio of 3.61 and a cash balance of $7,354,024. That's a solid liquidity position.

Here's the quick math on their leverage:

• Total Liabilities (Q3 2025): $17,519,010
• Total Equity (Q3 2025): $12,776,858
• Debt-to-Equity Ratio (TTM): 0.96

The trailing twelve-month (TTM) Debt-to-Equity ratio of 0.96 means that for every dollar of shareholder equity, the company uses about 96 cents of debt. To be fair, for the broader Industrials sector, the average Debt-to-Equity ratio is around 0.8789. This means LiqTech is operating with slightly more leverage than the average industrial peer, which is common for smaller, high-growth clean technology companies that are still in the capital-intensive phase of scaling their operations.

Recent Financing Activity: Debt and Equity Balance

LiqTech International, Inc. is actively balancing debt and equity to fund its strategic initiatives, which you can read more about in their Mission Statement, Vision, & Core Values of LiqTech International, Inc. (LIQT). The company has been strategic with its debt. For instance, the $6,000,000 senior notes were recently amended to push the maturity date out to May 1, 2027, with a 10% interest rate kicking in on January 1, 2026. This is a clear move to manage near-term cash flow and buy time for their growth initiatives to become profitable.

On the equity side, they've also used creative financing for expansion. The new 90%-owned joint venture (JV) in China secured partner funding of RMB 8,000,000 (approximately $1.1 million USD) at a 12% interest rate. This is a smart way to finance a regional expansion without putting the full debt burden on the parent company's balance sheet. They are defintely prioritizing non-dilutive funding, or debt, for specific projects to preserve shareholder value while they push toward their goal of positive adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

Next Step: Look closely at the upcoming Q4 2025 earnings report to see how the $7.3 million cash on hand is being deployed to cover operating losses and fund capital expenditures, especially as the 10% interest on the senior notes approaches.

Liquidity and Solvency

You're looking at LiqTech International, Inc. (LIQT) to understand if they have the cash to manage their day-to-day business, which is the core of liquidity analysis. The short answer is that the company maintains a strong balance sheet position to cover its near-term obligations, but its operations are still consuming cash.

Current and Quick Ratios: Strong Coverage

LiqTech International, Inc. (LIQT)'s liquidity position as of September 30, 2025, looks defintely healthy on paper. The Current Ratio (Current Assets / Current Liabilities) sits at approximately 3.50, meaning the company has $3.50 in current assets for every dollar of current liabilities. This is a very comfortable margin.

The Quick Ratio (or Acid-Test Ratio), which strips out inventories-often the least liquid current asset-is also robust at about 2.30. This suggests that even without selling any of its inventory, the company could cover its short-term debts more than twice over. That's a clear sign of short-term financial stability.

Working Capital and Cash Flow Trends

The working capital (Current Assets minus Current Liabilities) for LiqTech International, Inc. (LIQT) stood at approximately $13,406,883 as of September 30, 2025. This large surplus is a significant strength, providing a considerable buffer for operations and unexpected needs. However, a deep dive into the cash flow statement (CFS) reveals the underlying challenge.

For the nine months ended September 30, 2025, the company used cash in its core business operations. Specifically, cash flows used in operating activities (CFO) totaled $(3,977,121). Here's the quick math: this negative CFO is primarily a result of a net loss of approximately $(5,978,890) for the same period, partially offset by non-cash adjustments like depreciation. You need to see this number turn positive.

• Operating Cash Flow: Used $3.98 million in the first nine months of 2025.
• Investing Cash Flow: Typically negative for a growing company, reflecting investment in property and equipment.
• Financing Cash Flow: Often used to manage debt or raise capital.

Near-Term Risks and Opportunities

The primary liquidity strength is the current cash on hand, which was $7.3 million as of September 30, 2025. This cash pile is what funds the negative operating cash flow. The near-term risk is simply that the company is still in a cash-burn phase, which means it relies on its balance sheet reserves (and potentially future financing) until it achieves sustained profitability and positive operating cash flow.

The opportunity lies in the positive operational trends. The net loss for Q3 2025 improved significantly to $(1.5) million, compared to a $(2.8) million loss in Q3 2024, driven by revenue growth and improved gross margins. This suggests the cash-burn rate is slowing down, which is a great sign. The company projects full-year 2025 revenue to be between $18.0 million and $19.0 million, a 23% to 30% increase from 2024, which should further improve the cash flow picture. For a deeper look at the company's strategy, check out the Mission Statement, Vision, & Core Values of LiqTech International, Inc. (LIQT).

Valuation Analysis

You're looking at LiqTech International, Inc. (LIQT) because you see the potential of their clean technology in water filtration, but the valuation metrics are telling a mixed story. The direct takeaway is this: LiqTech International, Inc. is a growth-focused company, still operating at a loss, so traditional valuation ratios look distorted, but analyst sentiment points to a significant upside based on future performance.

When a company is in a high-growth, pre-profit stage, you have to look past the negative numbers and focus on the forward-looking metrics and operational improvements. Here's the quick math on why the core ratios are wonky, and what the market is defintely pricing in.

Decoding the Valuation Ratios

The standard valuation metrics for LiqTech International, Inc. (LIQT) are not directly comparable to a mature, profitable company. Since the company reported a net loss of $(1.5) million in Q3 2025, the earnings-based ratios are negative, which is common for companies scaling up in a capital-intensive sector like clean technology.

• Price-to-Earnings (P/E): The latest P/E ratio is -1.71, or 'At Loss,' as of November 2025. This ratio is effectively meaningless because the company has negative earnings per share (EPS).
• Enterprise Value-to-EBITDA (EV/EBITDA): Similarly, the EV/EBITDA is negative, sitting around -1.862. This confirms that the company has negative operating earnings before interest, taxes, depreciation, and amortization (EBITDA), even though they are actively working toward a positive adjusted EBITDA breakeven at a quarterly revenue of approximately $6 million.
• Price-to-Book (P/B): This ratio is more relevant for a capital-intensive business. The P/B ratio is around 1.30, which suggests the stock is trading at a modest premium to its net asset value (book value). To be fair, a P/B of 1.30 is generally a reasonable entry point for a company with high growth expectations.

The market is essentially valuing LiqTech International, Inc. on its assets and future revenue growth, not its current earnings. They expect full-year 2025 revenue to be between $18.0 million and $19.0 million, a 23% to 30% increase over 2024, which is a strong signal.

Stock Price Trend and Analyst Sentiment

The stock has been volatile, which is typical for small-cap growth stocks. Over the last 12 months, the stock has delivered a change of 14.370%, but the price action has been choppy. You need to be prepared for swings.

The stock's 52-week trading range shows a low of $1.34 and a high of $3.35. With the current price around $1.89 (as of mid-November 2025), it sits closer to the low end of that range. This is a classic risk/reward setup: either the company executes its plan and the stock moves toward its high, or it stalls and risks revisiting the low.

The analyst community is bullish, which is a key factor here:

The consensus from the single most recent brokerage firm is 'Buy,' with an average price target of $4.20. This implies a forecast upside of over 122% from the current price, which is a massive signal of confidence in the company's turnaround plan and its focus on liquid filtration systems, especially in the pool sector. Breaking Down LiqTech International, Inc. (LIQT) Financial Health: Key Insights for Investors is a good next step to see how those operational improvements are driving the forecast.

Risk Factors

You're looking at LiqTech International, Inc. (LIQT) and seeing the revenue growth potential, but honestly, the near-term financial risks are significant, and they demand your attention before you commit capital. The company is projecting strong top-line growth for the full year 2025-revenue is expected to be between $18.0 million and $19.0 million, a solid 23% to 30% increase over 2024-but this growth is happening against a backdrop of deep operational losses and financial distress.

Operational and Financial Risks: The Profitability Gap

The core internal risk for LiqTech International, Inc. is its persistent inability to reach profitability. The financial health indicators point to potential distress, with the company carrying a negative Altman Z-Score. Here's the quick math on the challenge: the trailing twelve-month operating margin is a staggering -62.42%, and the net margin is -66.95%. This shows substantial operational inefficiencies and a significant profitability challenge that volume growth alone won't solve immediately.

Also, revenue visibility remains a concern. The recent Q3 2025 earnings report highlighted a slight change to full-year guidance, driven solely by a timing shift where two systems business purchase orders moved from Q4 2025 to Q1 2026. This kind of order timing volatility, while common in capital-intensive industries, can defintely impact investor sentiment and cash flow in a company that is not yet profitable.

• Breakeven Target: The adjusted EBITDA breakeven target is a quarterly revenue of approximately $6 million.
• Liquidity: Cash on hand was $7.3 million as of September 30, 2025, which gives them some runway, but that cash burns quickly with margins this low.

External and Industry Headwinds

The clean technology sector, where LiqTech International, Inc. operates with its ceramic silicon carbide filtration technologies, is inherently exposed to external risks that can shift quickly. These include the constant threat of technological advancements from competitors that could render their proprietary silicon carbide (SiC) membranes less competitive. Plus, the industrial products sector is subject to market volatility.

Regulatory changes are another major external factor. Since LiqTech International, Inc. provides solutions for diesel particulate filters (DPF) and water treatment, stricter or new environmental regulations could be a boon, but changes that favor alternative technologies or create complex, costly compliance hurdles are a real risk. You need to keep a close eye on global environmental policy shifts. Honestly, regulatory risk is a double-edged sword in this space.

Mitigation Strategies and Clear Actions

The good news is the company is actively addressing its cost structure. Management has fully implemented a comprehensive cost reduction strategy, which has successfully lowered the adjusted EBITDA breakeven target from an earlier range of $6.5 million to $7 million down to the current $5.5 million to $6 million in quarterly revenue. This is a significant operational improvement. Furthermore, Q3 2025 showed strong gross profit margin improvement and a 12.6% reduction in total operating expenses, which is a clear step in the right direction.

The company's focus on its Water Systems business, which saw a 187% increase in revenue in Q3 2025, is a strategic mitigation against the volatility in other segments like DPF. Your next step should be to dive deeper into the market dynamics of their key verticals to understand the sustainability of this growth. Exploring LiqTech International, Inc. (LIQT) Investor Profile: Who's Buying and Why?

Growth Opportunities for LiqTech International, Inc. (LIQT)

You're looking at LiqTech International, Inc. (LIQT) and wondering if the recent revenue growth is a trend or just a blip. Honestly, the data points to a clear, near-term growth trajectory, but you need to be a realist about the path to profitability. The company's proprietary silicon carbide filtration technology is the core competitive edge, and it's finally translating into significant commercial wins in key verticals. That's the big takeaway here.

For the full 2025 fiscal year, LiqTech International, Inc. expects revenue to land between $18.0 million and $19.0 million, which is a solid 23% to 30% increase over 2024. Here's the quick math: that growth is driven by system sales, not just components, and that's a better mix. Still, you should note the net loss for the nine months ended September 30, 2025, was $5,978,890, even though that's an 18.5% reduction from the prior year. The goal is a quarterly revenue of approximately $6 million to reach adjusted EBITDA breakeven, so they defintely have a way to go.

Key Growth Drivers and Product Momentum

The company is strategically shifting from a component supplier to a systems provider, and the market is responding. The biggest near-term driver is the water treatment systems business, specifically the swimming pool vertical, which hit its highest quarterly revenue ever in Q3 2025. The QlariFlow filtration system is the product innovation here, offering a high-efficiency alternative to old-school media filtration in commercial pools. Plus, the ceramics and plastics segments are seeing robust growth, with plastics generally outperforming expectations.

The real opportunity lies in expanding applications for their silicon carbide membranes (a type of ceramic membrane used for purification). They've deployed pilot or commercial systems across diverse, high-value industrial applications:

• Oil and gas produced water treatment.
• Lithium brine production and metal processing.
• Advanced oily wastewater treatment for a major U.S. steel producer, North Star BlueScope Steel.
• First commercial orders for marine dual-fuel engine water treatment systems.

Strategic Partnerships and Market Expansion

To capitalize on this technology, LiqTech International, Inc. is executing on clear market expansion and partnership strategies. They are not just waiting for orders; they are building channels and localizing operations. For instance, the May 2025 distribution and partnership agreement with NAF Aquatics for the U.S. commercial swimming pool market is a direct move to scale the QlariFlow system.

In the marine sector, which is subject to rigorous environmental standards, they secured supplier approval for a water treatment system for the WinGD Dual-Fuel Engine in February 2025, which is a big deal for future marine orders. They are also expanding their footprint in China via their joint venture, Jitri LiqTech, which is building a new marine-focused R&D center and localization facility to reduce dependency on European imports. This is a smart move to de-risk the supply chain and capture the Asian marine market.

Here is a snapshot of the 2025 financial outlook based on company guidance and analyst consensus:

What this estimate hides is the timing risk; two system orders were pushed from Q4 2025 to Q1 2026, which is why the guidance was slightly adjusted. That's a common challenge with large system sales, but it means you should watch Q1 2026 results closely for those delayed revenues to hit. For a deeper dive into the company's balance sheet, you can read the full analysis at Breaking Down LiqTech International, Inc. (LIQT) Financial Health: Key Insights for Investors.

Next step: Track the Q4 2025 earnings call for an update on the QlariFlow pipeline and the two delayed system orders.