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 six months period ended June 30, 2014

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: 000-53769

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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting 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	☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐. No ☒ .

The number of shares outstanding of the registrant’s common stock, par value $0.001 per share, at August 11, 2014, was 27,212,500 shares.

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

Quarterly Report on Form 10-Q

For the Period Ended June 30, 2014

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Page
Item 1. Financial Statements	4
Consolidated Balance Sheets as of June 30, 2014 (unaudited) and December 31, 2013	4
Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended June 30, 2014 and June 30, 2013 (unaudited)	6
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and June 30, 2013 (unaudited)	8
Notes to Consolidated Financial Statements (unaudited)	9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation	23
Item 3. Quantitative and Qualitative Disclosures About Market Risk	32
Item 4. Controls and Procedures	32
PART II. OTHER INFORMATION
Item 1A. Risk Factors	33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3. Defaults Upon Senior Securities	33
Item 4. Mine Safety Disclosures	33
Item 5. Other Information	33
Item 6. Exhibits	33
SIGNATURES	38

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.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of June 30,		As of December 31,
	2014		2013
		UNAUDITED
Current Assets:
Cash	$	1,265,367	$	4,884,275
Accounts receivable, net		2,893,254		2,341,070
Other receivables		42,294		231,998
Cost in excess of billing		518,327		406,997
Inventories		4,611,248		4,258,606
Prepaid expenses		103,169		12,021
Current deferred tax asset		41,686		104,143
Total Current Assets		9,475,345		12,239,110
Property and Equipment, net accumulated depreciation		5,201,068		5,829,404
Other Assets:
Other investments		6,824		6,882
Long term deferred tax asset		2,628,557		1,863,349
Other intangible assets		21,623		24,687
Deposits		272,904		271,916
Total Other Assets		2,929,908		2,166,834
Total Assets	$	17,606,321	$	20,235,348

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

4

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of June 30,			As of December 31,
	2014			2013
		UNAUDITED
Current Liabilities:
Current portion of capital lease obligations	$	192,086		$	208,419
Accounts payable		1,508,008			1,586,962
Accrued expenses		1,105,355			1,440,522
Billing in excess of cost		89,961			96,104
Accrued income taxes payable		2,000			2,000
Deferred revenue / customers deposit		267,020			1,212,434
Total Current Liabilities		3,164,430			4,546,441
Long-term capital lease obligations, less current portion		458,177			554,360
Total Long-Term Liabilities		458,177			554,360
Total Liabilities		3,622,607			5,100,801
Stockholders' Equity:
Common stock; par value $0,001, 100,000,000 shares authorized, 27,212,500 and 27,212,500 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively		27,213			27,213
Additional paid-in capital		19,103,303			18,700,574
Accumulated deficit		(3,834,356	)		(2,316,784	)
Deferred compensation		(1,018,554	)		(1,008,450	)
Other comprehensive income, net		(314,866	)		(292,565	)
Non-controlled interest in subsidiaries		20,974			24,559
Total Stockholders' Equity		13,983,714			15,134,547
Total Liabilities and Stockholders' Equity	$	17,606,321		$	20,235,348

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 Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Net Sales	$	3,973,687		$	2,805,921		$	7,171,189		$	6,205,069
Cost of Goods Sold		3,122,473			2,513,400			5,764,847			5,350,525
Gross Profit		851,214			292,521			1,406,342			854,544
Operating Expenses:
Selling expenses		929,277			715,592			1,598,824			1,289,517
General and administrative expenses		763,524			541,824			1,436,181			1,204,129
Non-cash compensation expenses		172,205			743,519			392,623			774,888
Research and development expenses		39,833			111,254			140,419			258,239
Total Operating Expense		1,904,839			2,112,189			3,568,047			3,526,773
Loss from Operations		(1,053,625	)		(1,819,668	)		(2,161,705	)		(2,672,229	)
Other Income (Expense)
Interest and other income		10,550			2,244			13,745			2,400
Interest (expense)		(10,599	)		(12,952	)		(22,120	)		(24,657	)
Gain (loss) on investments		1,278			-			(841	)		-
Gain (loss) on currency transactions		(48,112	)		77,199			(45,325	)		(36,974	)
Loss on sale of fixed assets		-			(2,135	)		-			(2,135	)
Total Other Income (Expense)		(46,883	)		64,356			(54,541	)		(61,366	)
Loss Before Income Taxes		(1,100,508	)		(1,755,312	)		(2,216,246	)		(2,733,595	)
Income Tax Expense (Income)		(337,118	)		(444,659	)		(695,560	)		(741,523	)
Net Loss		(763,390	)		(1,310,653	)		(1,520,686	)		(1,992,072	)
Less Net Loss Attributable To Non-Controlled Interests in Subsidiaries		(1,254	)		(2,551	)		(3,114	)		(14,159	)
Net Loss Attributable To LiqTech	$	(762,136	)	$	(1,308,102	)	$	(1,517,572	)	$	(1,977,913	)
Basic Earnings Per Share	$	(0.03	)	$	(0.05	)	$	(0.06	)	$	(0.08	)
Weighted Average Common Shares Outstanding		27,212,500			24,359,852			27,212,500			24,236,362
Diluted Earnings Per Share	$	(0.03	)	$	(0.05	)	$	(0.06	)	$	(0.08	)
Weighted Average Common Shares Outstanding Assuming Dilution		27,212,500			24,359,852			27,212,500			24,236,362

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						For the Six Months
	Ended June 30,						Ended June 30,
	2014			2013			2014			2013
Net Income (Loss)		(763,390	)		(1,310,653	)		(1,520,686	)		(1,992,072	)
Currency Translation, Net of Taxes		14,003			83,648			(22,200	)		(22,799	)
Other Comprehensive Income (Loss)	$	(749,387	)	$	(1,227,005	)	$	(1,542,886	)	$	(2,014,871	)
Comprehensive Income (Loss) Attributable To Non-controlling Interest in Subsidiaries		174			11,392			(183	)		(216	)
Comprehensive Income (Loss) Attributable To LiqTech International Inc.	$	(749,213	)	$	(1,238,397	)	$	(1,543,069	)	$	(2,014,655	)

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 Six Months Period
	Ended June 30,
	2014			2013
Cash Flows from Operating Activities:
Net Income (Loss)	$	(1,520,686	)	$	(1,992,072	)
Adjustments to reconcile net income (loss) to net cash provided by operations:
Depreciation and amortization		873,216			776,401
Non-cash compensation		392,623			774,888
Bad debt expense		107,111			47,366
Obsolete inventory expense		-			36,354
Change in deferred tax asset / liability		(702,751	)		(739,173	)
(Gain) Loss on sale of equipment		-			2,135
Changes in assets and liabilities:
(Increase) decrease in accounts receivable		(469,591	)		1,106,031
(Increase) decrease in inventory		(352,642	)		(484,523	)
(Increase) decrease in prepaid expenses/deposits		(92,136	)		82,182
Increase (decrease) in accounts payable		(78,954	)		(1,006,210	)
Increase (decrease) in accrued expenses		(1,280,581	)		70,757
Increase (decrease) long term contracts		(117,473	)		(84,484	)
Total Adjustments		(1,721,178	)		581,724
Net Cash Provided (Used) by Operating Activities		(3,241,864	)		(1,410,348	)
Cash Flows from Investing Activities:
Purchase of property and equipment		(183,008	)		(263,433	)
Purchase of Long-term investments		-			(17,369	)
Net Cash Used by Investing Activities		(183,008	)		(280,802	)
Cash Flows from Financing Activities:
Net (payments) proceeds on capital lease obligation		(112,516	)		(106,568	)
Net Cash Provided (Used) by Financing Activities		(112,516	)		(106,568	)
Loss on Currency Translation		(81,520	)		(9,340	)
Net Increase (Decrease) in Cash and Cash Equivalents		(3,618,908	)		(1,807,058	)
Cash and Cash Equivalents at Beginning of Period		4,884,275			3,873,338
Cash and Cash Equivalents at End of Period	$	1,265,367		$	2,066,280

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	22,119	$	24,657
Income Taxes	$	1,000	$	1,000

Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Compensation upon vesting of stock options granted to employees and the board of directors	$	119,892	$	265,266
Compensation for vesting of restricted stock awards issued to the board of directors		213,331		130,222
Value of warrants issued for services		59,400		379,400
Total	$	392,623	$	774,888

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

8

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 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 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 as of December 31, 2013, prior to December 31, 2013 LiqTech NA, Inc. was owned 90% by LiqTech International AS and 10% by 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 Asia (“LiqTech Asia”) a 60% owned subsidiary of LiqTech Int. DK, incorporated in South Korea on July 20, 2006, is currently a dormant subsidiary.

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.

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 accompanying financial statements are unaudited. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2014 and 2013 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2013 audited financial statements. The results of operations for the periods ended June 30, 2014 and 2013 are not necessarily indicative of the operating results for the full year.

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.

9

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 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 functional Currency of LiqTech Asia is South Korean Won. 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 periods ended June 30, 2014 and 2013. 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 -- 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 financial institution in the United States in excess of federally insured amounts at June 30, 2014 and December 31, 2013.

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 six months ended June 30, 2014 and the year ended December 31, 2013 is as follows:

	2014			2013
Allowance for doubtful accounts at the beginning of the period	$	608,356		$	1,243,500
Bad debt expense		107,111			72,548
Amount of receivables written off		-			(770,738	)
Effect of currency translation		(31,101	)		63,046
Allowance for doubtful accounts at the end of the period	$	684,366		$	608,356

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 3).

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

10

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

Revenue Recognition and Sales Incentives -- 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 various grants from government entities for development and use of silicon carbide membranes in various water filtration and treatment applications. Revenues from 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 grant multiplied by the 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 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 $12,486 and $20,739, for the six months ended June 30, 2014 and 2013, respectively.

Research and Development Cost -- The Company expenses research and development costs for the development of new products as incurred. Included in operating expense for the six months ended June 30, 2014 and 2013 were $140,419, and $258,239, 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.

                   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 that have been granted but have not been exercised.

11

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock Options -- The Company have granted stock options to certain key employees. See Note 13. During the years presented in the accompanying consolidated financial statements, the Company has granted options. The Company accounts for options in accordance with the provisions of FASB ASC Topic 718, Compensation – Stock Compensation. Non-cash compensation costs of $392,623 and $774,888 have been recognized for the vesting of options granted to employees with an associated recognized tax benefit of $0 for the six months ended June 30, 2014 and 2013, 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 and liabilities, 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 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. The new standard is effective beginning in the first quarter of 2017; early adoption is prohibited. 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 condensed financial statements.

12

NOTE 2 – INVENTORY

Inventory consisted of the following at June 30, 2014 and December 31, 2013:

	2014			2013
Furnace parts and supplies	$	1,193,192		$	1,025,225
Raw materials		671,271			631,524
Work in process		1,717,590			1,799,888
Finished goods		1,111,233			1,062,865
Reserve for obsolescence		(82,038	)		(260,896	)
Net Inventory	$	4,611,248		$	4,258,606

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at June 30, 2014 and December 31, 2013:

	Useful Life		2014			2013
Production equipment		3 - 10	$	11,552,124		$	11,542,740
Lab equipment		3 - 10		179,896			181,432
Computer equipment		3 - 5		276,513			276,013
Vehicles		3		37,898			38,221
Furniture and fixture		5		72,736			68,169
Leasehold improvements		10		1,113,238			1,059,605
				13,232,405			13,166,180
Less Accumulated Depreciation				(8,031,337	)		(7,336,776	)
Net Property and Equipment			$	5,201,068		$	5,829,404

Depreciation expense amounted to $870,152 and $773,447, for the six months ended June 30, 2014 and 2013, respectively.

NOTE 4 – INVESTMENTS

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 June 30, 2014	Level 1		Level 2		Level 3
Investments		-		-		6,824
Total		-		-		6,824

As of December 31, 2013	Level 1		Level 2		Level 3
Investments		-		-		6,882
Total		-		-		6,882

At June 30, 2014 our total investment of $6,824 consisted of an investment in LEA Technology in France to strengthen our sales channels in the French market.

At December 31, 2013 our total investment of $6,882 consisted of an investment in LEA Technology in France to strengthen our sales channels in the French market.

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NOTE 5 - DEFINITE-LIFE INTANGIBLE ASSETS

At June 30, 2014 and December 31, 2013, definite-life intangible assets, net of accumulated amortization, consisted of patents on the Company’s products of $21,623 and $24,687, respectively. The patents are recorded at cost and amortized over two to ten years. Amortization expense for the six months ended June 30, 2014 and 2013 was $3,064 and $2,954, respectively.

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

Year ending December 31,	Amortization Expenses
2014	$	2,871
2015		5,742
2016		5,742
2017		3,486
2018		2,933
Thereafter		849
Total Amortization Expenses	$	21,623

NOTE 6 – LEASES

Operating Leases -- The Company leases office and production facilities under operating lease agreements expiring in August, 2018, March 2017, February 2017 and December 2016. 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 June 30, 2014 are as follows:

Year ending December	Operating Lease Payments
2014	$	317,256
2015		651,924
2016		668,935
2017		494,207
2018		312,032
Thereafter		-
Total Minimum Lease Payments	$	2,444,354

Lease expense charged to operations was $355,462 and $382,766 for the six months ended June 30, 2014 and 2013, respectively.

Capital Leases -- The Company leases equipment on various variable rate capital leases currently calling for monthly payments of approximately $12,040, $4,666, $3,021 and $2,152 expiring through April 2017. Included in property and equipment, at June 30, 2014 and December 31, 2013, the Company had recorded equipment on capital lease at $1,586,711 and $1,600,254, respectively, with related accumulated depreciation of $1,005,748 and $907,728, respectively.

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During the six months ended June 30, 2014 and 2013, depreciation expense for equipment on capital lease amounted to $105,977, and $107,003, respectively, and has been included in depreciation expense. During the six months ended June 30, 2014 and 2013, interest expense on a capital lease obligation amounted to $20,968 and $26,307, respectively.

Future minimum capital lease payments are as follows for the periods ended December 31:

	Capital Lease Payments
2014	$	130,767
2015		224,837
2016		217,651
2017		139,755
2018		-
Thereafter		-
Total minimum lease payments		713,010
Less amount representing interest		(62,747	)
Present value of minimum lease payments		650,263
Less current portion		(192,086	)
Long-term lease payments	$	458,177

NOTE 7 – AGREEMENTS AND COMMITMENTS

401(K) Profit Sharing Plan -- LiqTech NA has a 401(k) profit sharing plan and trust covering certain eligible employees. The amount LiqTech NA contributes is discretionary. For the six months ended June 30, 2014 and 2013, matching contributions were expensed and totaled $7,425 and $7,463, respectively.

 NOTE 8 – 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.

The temporary differences, tax credits and carry forwards gave rise to the following deferred tax asset (liabilities) at June 30, 2014 and December 31, 2013:

	2014			2013
Vacation accrual	$	4,161		$	4,161
Allowance for doubtful Accounts		13,955			13,955
Reserve for obsolete inventory		23,570			86,027
Net current tax assets	$	41,686		$	104,143
Business tax credit carryover		20,184			20,184
Deferred Compensation		202,309			202,309
Net operating loss carryover		3,132,619			2,367,568
Excess of book over tax depreciation		(726,555	)		(726,712	)
Long term tax asset	$	2,628,557		$	1,863,349

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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%.

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 can difficult to determine and can only be estimated. Management estimates that it is more likely than not that the Company will generate adequate net profits to use the deferred tax assets; management has estimated that all of the deferred tax will be realized and consequently, a valuation allowance was not recorded.

As of June 30, 2014, the Company had net operating loss carryovers of approximately $6,481,000 for U.S. Federal purposes expiring through 2033; $3,020,000 for Danish tax purposes which do not expire; $418,000 for German tax purposes which do not expire and $513,000 for Singapore tax purposes which do not expire.

A reconciliation of income tax expense at the federal statutory rate to income tax expense at the Company’s effective rate is as follows at June 30, 2014 and 2013:

	2014			2013
Computed tax at expected statutory rate	$	(752,797	)	$	(924,608	)
State and local income taxes, net of federal benefits		(24,704	)		(8,533	)
Non-deductible expenses		40,763			111,329
Non-US income taxed at different rates		41,178			80,847
Other items		-			(558	)
Income tax expense (benefit)	$	(695,560	)	$	(741,523	)

The components of income tax expense (benefit) from continuing operations for the six months ended June 30, 2014 and 2013 consisted of the following:

	2014			2013
Current income tax expense:
Danish	$	-		$	-
Korea		-			-
Federal		-			-
State		-			-
Current tax expense	$	-		$	-
Deferred tax expense (benefit) arising from:
Deferred Compensation	$	-		$	-
Net operating loss carryover		(757,272	)		(728,604	)
Allowance for doubtful accounts		-			-
Reserve for obsolete inventory		61,712			(12,919	)
Deferred tax expense	$	(695,560	)	$	(741,523	)
Income tax benefit	$	(695,560	)	$	(741,523	)

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

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 The Company files Danish and U.S. federal and Minnesota state income tax returns. LiqTech International AS is generally no longer subject to tax examinations for years prior to 2009 for their Danish tax returns. LiqTech NA is generally no longer subject to tax examinations for years prior to 2009 for U.S. federal and U.S. states tax returns.

NOTE 9 – 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 six months ended June 30, 2014 and 2013:

	For the Three Months Ended June 30						For the Six Months Ended June 30
	2014			2013			2014			2013
Income (Loss) attributable to LiqTech International Inc.	$	(762,136	)	$	(1,308,102	)	$	(1,517,572	)	$	(1,977,913	)
Weighted average number of common shares used in basic earnings per share		27,212,500			24,359,852			27,212,500			24,236,362
Effect of dilutive securities, stock options and warrants		-			-			-			-
Weighted average number of common shares and potentially dilutive securities	$	27,212,500		$	24,359,852		$	27,212,500		$	24,236,362

For the six months ended June 30, 2014, Parent had 3,064,130 options outstanding to purchase common stock of the Parent at $1.50 to $3.60 per share and Parent had 7,025,575 warrants outstanding to purchase common stock of the Parent at $1.50 to $4.06 per share, which were not included in the loss per share computation because their effect would be anti-dilutive.

For the six months ended June 30, 2013, Parent had 1,964,130 options outstanding to purchase common stock of the Parent at $1.50 to $3.60 per share and Parent had 6,625,575 warrants outstanding to purchase common stock of the Parent at $1.50 to $4.06 per share, which were not included in the loss per share computation because their effect would be anti-dilutive.

NOTE 10 - STOCKHOLDERS' EQUITY

 
Common Stock -- Parent has 100,000,000 authorized shares of common stock, $0.001 par value. As of June 30, 2014 and December 31, 2013, respectively, there were 27,212,500 and 27,212,500 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.

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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 Issuance

During the year 2013, the Company issued 100,000 shares of common stock valued at $320,000 for services rendered.

The Company issued an additional 300,000 shares of restricted stock valued at $960,000 for services provided and to be provided by the board of directors. The Company will recognized the non-cash compensation of the award over the requisite service period, of which 133,333 shares vested on December 31, 2013, 133,333 shares will vest on December 31, 2014 and 33,334 shares will vest on December 31, 2015. As of June 30, 2014, the Company has recorded deferred compensation of $320,001 and non-cash compensation expense of $213,333 relating to the awards for the period ended June 30, 2014.

On October 9, 2013 we announced that the warrant and option exercise raised $4,051,000 with holders exercising 2,701,000 warrants and stock options which included the exercise of 100,000 warrants by Aldo Petersen, Chairman of LiqTech, 25,000 stock options by Lasse Andreassen, founder and former board member of LiqTech and 50,000 stock options by Soren Degn, CFO of LiqTech. The board noted that the additional capital was an orderly solution to improving the Company's capital structure as well as enhancing the ability of LiqTech to list on an exchange. In addition, the new capital gave the Company additional flexibility to generate new orders and to sustain future growth.

On March 2, 2012, Parent completed a registered public offering of its common stock. As part of the closing, Parent issued 2,511,500 shares of common stock at a per share price of $3.25 and generated net proceeds of approximately $7.1 million, net of offering cost of $1,082,668. 

Common Stock Purchase Warrants

A summary of the status of the Warrants outstanding at June 30, 2014 is presented below:

		Warrants Outstanding						Warrants Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	1.50		3,874,000		2.50	$	1.50		3,874,000	$	1.50
$	2.35		400,000		0.75	$	2.35		400,000	$	2.35
$	2.70		2,626,000		2.50	$	2.70		2,626,000	$	2.70
$	4.0625		125,575		2.68	$	4.0625		125,575	$	4.0625
Total			7,025,575		2.40	$	2.04		7,025,575	$	2.04

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At June 30, 2014 the Company had no non-vested warrants. We have recorded non-cash compensation expense of $59,400 for the period ended June 30, 2014 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 underlying the warrants.

On October 9, 2013, the Company issued 2,626,000 new warrants equal to the number of warrants exercised by the warrant holder having the same terms and conditions as the warrants exercised by the warrant holder, respectively, except each warrant issued has a strike price of $2.70 per share, the closing bid price of Parent’s common stock as quoted on the OTCBB on September 23, 2013.  The net proceeds from the offering were allocated to the stock and warrants based on their relative fair values. The Company recorded the relative fair value of the warrants of $1,124,928 as stock offering costs.

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 is empowered to grant stock options to employees, officers, and directors of the Companies. At June 30, 2014, 3,064,130 options were granted and outstanding under the Plan. 

The Company recognizes compensation costs for stock option awards to employees based on their grant-date fair value. The value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model. The 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)		3-4
Volatility		40.74
Risk free interest rate		0.67%
Dividend yield		0%

The Company recognized stock based compensation expense related to the options of $119,891 and $265,266 for the six months ended June 30, 2014 and 2013, respectively. At June 30, 2014 the Company had approximately $698,553 of unrecognized compensation cost related to non-vested options expected to be recognized through March 31, 2017.

A summary of the status of the options outstanding under the Company’s stock option plans at June 30, 2014 is presented below:

		Options Outstanding				Options Exercisable
	Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price	Number Exercisable		Weighted Average Exercise Price
$	1.50	377,500	0.65	$	1.50	377,500	$	1.50
$	1.90	500,000	2.58	$	1.90	166,667	$	1.90
$	2.35	600,000	2.75	$	2.35	150,000	$	2.35
$	2.70	75,000	0.65	$	2.70	75,000	$	2.70
$	3.00 - $3.60	1,511,630	0.66	$	3.06	1,511,630	$	3.04
Total		3,064,130	1.38	$	2.53	2,280,830	$	2.66

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A summary of the status of the options at June 30, 2014, and changes during the period is presented below:

	June 30, 2014
	Shares		Weighted Average Exercise Price		Average Remaining Life		Weighted Average Intrinsic Value
Outstanding at beginning of period		2,564,130	$	2.65		1.64	$	283,125
Granted		500,000		1.90		2.58		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Expired		-		-		-		-
Outstanding at end of period		3,064,130	$	2.53		1.38	$	221,200
Vested and expected to vest		3,064,130	$	2.53		1.38	$	221,200
Exercisable end of period		2,280,830	$	2.66		0.93	$	194,533

At June 30, 2014 the Company had 783,300 non-vested options with a weighted average exercise price of $2.16 and with a weighted average grant date fair value of $0.986, resulting in unrecognized compensation expense of $495,015, which is expected to be expensed over a weighted-average period of 2.65 years.

The total intrinsic value of options at June 30, 2014 was $221,200. Intrinsic value is measured using the fair market value at the date of exercise (for shares exercised) or at June 30, 2014 (for outstanding options), less the applicable exercise price. 

NOTE 11 - SIGNIFICANT CUSTOMERS / CONCENTRATION

The Company had four significant customers that accounted for 20%, 9%, 6% and 6% of total sales at June 30, 2014. The Company had no customers that accounted for more than 10% of total sales at June 30, 2013.

The Company sells products throughout the world; sales by geographical region are as follows for the three and six months ended June 30, 2014 and 2013: 

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2014		2013		2014		2013
United States and Canada	$	769,265	$	876,391	$	1,775,470	$	1,527,410
Australia		28,363		15,644		84,315		168,390
South America		-		4,760		16,845		25,380
Asia		188,312		332,930		494,933		1,151,482
Europe		2,987,747		1,576,196		4,799,626		3,332,407
	$	3,973,687	$	2,805,921	$	7,171,189	$	6,205,069

The Company’s sales by product line are as follows for the three and six months ended June 31, 2014 and 2013:

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2014		2013		2014		2013
Ceramic diesel particulate	$	2,054,689	$	1,539,971	$	3,618,516	$	3,472,276
Liquid filters		1,841,580		1,035,918		3,382,674		2,238,870
Kiln furniture		77,418		230,032		169,999		493,923
	$	3,973,687	$	2,805,921	$	7,171,189	$	6,205,069

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NOTE 12 – SUBSEQUENT EVENTS

The Company’s management reviewed material events through August 12, 2014.

Stock Offering - On July 22, 2014, the Company, entered into a purchase agreement with Craig-Hallum Capital Group LLC as Underwriter, pursuant to which the Company agreed to sell, and the Underwriter agreed to purchase for resale to the public an Offering, subject to the terms and conditions expressed therein, 6,956,522 shares of common stock of the Company, par value $0.001 per share at a price to the public of $1.50 per share. The Offering closed on July 28, 2014. The Company granted the Underwriter a 30-day option to purchase an additional 1,043,478 shares which was exercised by Craig-Hallum Capital Group LLC on July 25, 2014. The Company also issued to the Underwriter, for a price of $50, a warrant to purchase 400,000 shares at an exercise price of $1.65 per share. The warrants are immediately exercisable and will remain exercisable for five years.

Acquisition -On the July 28, 2014, the Company, through its subsidiary, LiqTech Int. DK, completed the acquisition of all of the issued and outstanding capital stock (the “Provital Shares”) of Provital Solutions A/S, a Danish company (“Provital”) from Masu A/S, a Danish company (“MASU”). In consideration for the Provital Shares, MASU received cash consideration in the sum of DKK12,600,000, that is, approximately USD$2,300,000, and 4,044,782 shares of the Company’s common stock (the “Payment Shares”). One-third (1/3) of the Payment Shares shall be subject to a lock-up period of six (6) months. The remaining two-thirds (2/3) of the Payment Shares shall be held in escrow and one-third of the Payment Shares will be released from escrow contingent upon Provital, for the year ending December 31, 2014, achieving (i) gross revenues of not less than DKK65,000,000 and EBITDA of DKK6,500,000, or (ii) EBITDA of not less than DKK10,000,000 and gross revenues of not less than DKK50,000,000. Another one-third (1/3) of the Payment Shares will be released from escrow contingent upon Provital, for the year ending December 31, 2015, achieving (i) gross revenues of not less than DKK120,000,000 and EBITDA of DKK12,000,000, or (ii) EBITDA of not less than DKK16,000,000 and gross revenues of not less than DKK80,000,000.

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The purchase agreement includes “catch up” provisions that provide that the Payment Shares placed in escrow will be released from escrow if Provital (1) for the years ending December 31, 2014 and December 31, 2015, achieves accumulated gross revenues (i) exceeding DKK185,000,000 and EBITDA of DKK18,500,000, or (ii) EBITDA of not less than DKK26,000,000 and gross revenues of not less than DKK130,000,000 or (2) for the year ending December 31, 2016, achieves gross revenues exceeding DKK105,000,000 and EBITDA of not less than DKK21,000,000.

Change in Officers and Appointment of Director - Effective July 29, 2014, the board of directors (the “Board”) of the Company, accepted the amicable resignation of Finn Helmer from his position as Chief Executive Officer of the Company. Effective July 30, 2014, the Board appointed Mr. Sune Mathiesen to serve as CEO and as a Board member of the Company.

CEO Employment Agreement - On July 29, 2014, LiqTech Int. DK and Mr. Mathiesen entered into an Employment Agreement pursuant to which Mr. Mathiesen shall also serve as Director and Chief Executive Officer of the Company. In consideration for Mr. Mathiesen’s services to the Company, Mr. Mathiesen shall receive an annual base salary initially set at DKK 1,500,000. Mr. Mathiesen’s Employment Agreement also provides that he shall receive a yearly bonus of five percent (5%) of the average gross profit for LiqTech Int. DK and Provital Solutions A/S for any sales (revenue) greater than or equal to DKK130,000,000 per year. The calculation in connection with the bonus is described in the Employment Agreement. In addition, Mr. Mathiesen shall be entitled to five weeks’ vacation, a Company mobile phone, broadband connection in his residence, a Company laptop and reimbursement of Company-related travel expenses. The Company may terminate Mr. Mathiesen’s employment upon not less than 12 months’ notice and Mr. Mathiesen may terminate with 12 months’ notice to the end of the month. The contract is non-cancellable from both parties until December 31, 2016.

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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 27, 2014, 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 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 in Singapore, Germany, France, Italy, Korea and Brazil. 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”) and LiqTech NA, Inc., a Delaware corporation (“LiqTech Delaware”). Collectively, LiqTech USA, LiqTech Int. DK and LiqTech Delaware are referred to herein as our “Subsidiaries”. On August 23, 2012, LiqTech A/S, a Danish limited company (“LiqTech AS”) and former subsidiary of the Company was merged with and into LiqTech Int. DK.

We conduct operations in the Kingdom of Denmark and the United States. Our Danish operations are located in the Copenhagen, Denmark area and our U.S. operations are conducted by LiqTech Delaware located in White Bear Lake, Minnesota. In October and December 2011, we opened sales offices in France and Germany and in January 2012, we opened a sales office in Singapore.

Our Strategy

Our strategy is to create stockholder value by leveraging our competitive 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 on continuing to manufacture and sell our products out of Denmark and the United States. In October 2011, the Company opened sales offices in France and Germany and in   January   2012, we opened a sales office in Singapore. We also intend to expand our production capability to Asia when needed, by investing in a new production facility in South Korea, along with opening new marketing offices on the continent. In addition to utilizing local representatives, we intend to also establish sales outlets with technical support in other European nations such as Italy, while expanding to other markets. In certain other locations such as Japan, China and Australia, we intend to work with agents and partners to access such markets.

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● Continue to Strengthen Position in DPF Market. We believe that we have a strong position in the retrofit market for diesel particulate filter 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 diesel particulate filter systems. We intend to leverage our products and experience, as the global DPF market is expected to undergo significant growth.

● Continue to Develop and Improve Technologies and Open New End Markets. We intend to continuously develop our ceramic membrane 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 diesel particulate filters with asymmetric design for the OEM market. We also plan on manufacturing a SiC membrane of 0.01 microns or less, which would position us to enter the ultrafiltration market.

● Continue Our Focus on Developing an Inorganic Reverse Osmosis Membrane. There is no inorganic reverse osmosis membrane in the market today. In 2011, we received a $2 million grant from The Danish National Advanced Technology Foundation to develop a SiC-based membrane that can perform reverse osmosis. We intend to continue our research and development efforts to modify our membrane into one that can perform reverse osmosis over the next several years.

Recent Developments

Recent Contract Wins

On July 16, 2014, we announced a $0.3 million order from a Middle East customer to be delivered this year. The end-user placed the order to confirm the benefits of the LiqTech SiC membrane technology for various upstream produced water applications. We are currently engaged with many Oil & Gas projects primarily in Europe, the Americas and China. The purchase order was for one of our pilot systems installed with LiqTech SiC membrane technology in and effort to test the use of our SiC membranes for various produced water applications. We believe this first order can lead to follow-on sales in 2015. We see a general worldwide trend of increasing demand for higher quality re-injection water. We also see tightening discharge legislations, increasing water cuts (more water produced per barrel oil) and the introduction of Enhanced Oil Recovery (“EOR”) techniques that increase the amount of crude oil extracted from an oil field.

In June 2014, we announced a $0.3 million order from a Middle East Customer for a water membrane system. We view this as a validation point for our technology. This end-user placed the purchase order for one of our pilot systems installed with LiqTech SiC membrane technology in order to test the use of our SiC membranes for various produced water applications. We believe this first order can also lead to follow-on sales in 2015.

In May 2014, we announced a $0.3 million order with Time Solution, a Danish based company selling conventional RO systems, for commercial flat sheet membranes. The first prototypes of Time Solution’s filtration unit were finalized in December 2013 and the finished product has demonstrated positive results outperforming conventional technology for Pre-RO by lowering operating expenditures for customers.

In March 2014, we announced a $0.5 million order for DPFs with Emigreen B.V. Netherland, an expert in the emission control of industrial combustion engines. The integration of Emigreen’s generator engine and our filter resulting in the removal of 99.9% of soot particulates.

Also in March 2014, we announced our first SiC membrane order from an emerging algae market participant for $0.3 million. The algae market has been identified as one of our major emerging market opportunities, and companies in a number of industries including oil, chemical, and pharmaceuticals have identified opportunities in harvesting algae. More efficient harvesting processes are required to reduce production cost and the use of SiC membranes will be a key element in reducing cost thereby improving profitability for the end-users.

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In March 2013, we announced our agreement with FMC Technologies, Inc. (NYSE: FTI), for the use of our silicon carbide membrane technology for oil/gas applications. This exclusive agreement has brought us into the attractive unconventional shale Oil & Gas sector and will allow for the development of new water treatment systems. The agreement includes a multi-year, multi-million dollar commitment towards LiqTech in order for FMC Technologies to maintain exclusivity. The agreement may be terminated at any time by FMC by providing notice to us. We believe our solution will become increasingly common as the market continues to trend toward more stringent water qualities, which cannot be met with conventional technologies.

Stock Offering 

On July 22, 2014, the Company, entered into a purchase agreement with Craig-Hallum Capital Group LLC as Underwriter, pursuant to which the Company agreed to sell, and the Underwriter agreed to purchase for resale to the public an Offering, subject to the terms and conditions expressed therein, 6,956,522 shares of common stock of the Company, par value $0.001 per share at a price to the public of $1.50 per share. The Offering closed on July 28, 2014. The Company granted the Underwriter a 30-day option to purchase an additional 1,043,478 shares which was exercised by Craig-Hallum Capital Group LLC on July 25, 2014. The Company also issued to the Underwriter, for a price of $50, a warrant to purchase 400,000 shares at an exercise price of $1.65 per share. The warrants are immediately exercisable and will remain exercisable for five years.

Provital Acquisition

On the July 28, 2014, the Company, through its subsidiary, LiqTech Int. DK, completed the acquisition of all of the issued and outstanding capital stock (the “Provital Shares”) of Provital Solutions A/S, a Danish company (“Provital”) from Masu A/S, a Danish company (“MASU”). In consideration for the Provital Shares, MASU received cash consideration in the sum of DKK12,600,000, that is, approximately USD$2,300,000, and 4,044,782 shares of the Company’s common stock (the “Payment Shares”). One-third (1/3) of the Payment Shares shall be subject to a lock-up period of six (6) months. The remaining two-thirds (2/3) of the Payment Shares shall be held in escrow and one-third of the Payment Shares will be released from escrow contingent upon Provital, for the year ending December 31, 2014, achieving (i) gross revenues of not less than DKK65,000,000 and EBITDA of DKK6,500,000, or (ii) EBITDA of not less than DKK10,000,000 and gross revenues of not less than DKK50,000,000. Another one-third (1/3) of the Payment Shares will be released from escrow contingent upon Provital, for the year ending December 31, 2015, achieving (i) gross revenues of not less than DKK120,000,000 and EBITDA of DKK12,000,000, or (ii) EBITDA of not less than DKK16,000,000 and gross revenues of not less than DKK80,000,000.

The purchase agreement includes “catch up” provisions that provide that the Payment Shares placed in escrow will be released from escrow if Provital (1) for the years ending December 31, 2014 and December 31, 2015, achieves accumulated gross revenues (i) exceeding DKK185,000,000 and EBITDA of DKK18,500,000, or (ii) EBITDA of not less than DKK26,000,000 and gross revenues of not less than DKK130,000,000 or (2) for the year ending December 31, 2016, achieves gross revenues exceeding DKK105,000,000 and EBITDA of not less than DKK21,000,000.

Change in Officers and Appointment of Director

Effective July 29, 2014, the board of directors (the “Board”) of the Company, accepted the amicable resignation of Finn Helmer from his position as Chief Executive Officer of the Company. Effective July 30, 2014, the Board appointed Mr. Sune Mathiesen to serve as CEO and as a Board member of the Company.

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CEO Employment Agreement 

On July 29, 2014, LiqTech Int. DK and Mr. Mathiesen entered into an Employment Agreement pursuant to which Mr. Mathiesen shall also serve as Director and Chief Executive Officer of the Company. In consideration for Mr. Mathiesen’s services to the Company, Mr. Mathiesen shall receive an annual base salary initially set at DKK 1,500,000. Mr. Mathiesen’s Employment Agreement also provides that he shall receive a yearly bonus of five percent (5%) of the average gross profit for LiqTech Int. DK and Provital Solutions A/S for any sales (revenue) greater than or equal to DKK130,000,000 per year. The calculation in connection with the bonus is described in the Employment Agreement. In addition, Mr. Mathiesen shall be entitled to five weeks’ vacation, a Company mobile phone, broadband connection in his residence, a Company laptop and reimbursement of Company-related travel expenses. The Company may terminate Mr. Mathiesen’s employment upon not less than 12 months’ notice and Mr. Mathiesen may terminate with 12 months’ notice to the end of the month. The contract is irredeemable from both parties until December 31, 2016.

Mr. Mathiesen has served as CEO and as a Director of MASU, a Danish company since February 2013. He has served as CEO and Director of the Board of Provital since March, 2012. Before that he served as Country Manager of Broen Lab Group since August 2010 and before that as Country Manager of GPA Flowsystem since February 2000. Mr. Mathiesen has a solid background in executive management, sales and turn-around. Mr. Mathiesen has been working hands-on with technical products within the valves and fittings industry for the past 16 years. He has a degree in commercial science from Via College in Randers.

Results of Operations

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

 The following table sets forth our revenues, expenses and net income for the three and six months ended June 30, 2014 and 2013:

	Three months ended June 30,
													Period to period change
	2014			As a % of Sales			2013			As a % of Sales			US$			Percent %
Net Sales		3,973,687			100	%		2,805,921			100	%		1,167,766			41.6
Cost of Goods Sold		3,122,473			78.6			2,513,400			89.6			609,073			24.2
Gross Profit		851,214			21.4			292,521			10.4			558,693			191.0
Operating Expenses
Selling and Marketing		929,277			23.4			715,592			25.5			213,685			29.9
General and Administrative		763,524			19.2			541,824			19.3			221,700			40.9
Non-cash compensation		172,205			4.3			743,519			26.5			(571,314	)		(76.8	)
Research and Development		39,833			1.0			111,254			4.0			(71,421	)		(64.2	)
Total Operating Expenses		1,904,839			47.9			2,112,189			75.3			(207,350	)		(9.8	)
Income (loss) from Operating		(1,053,625	)		(26.5	)		(1,819,668	)		(64.9	)		766,043			(42.1	)
Interest and Other Income		10,550			0.3			2,244			0.1			8,306			370.1
Interest (Expense)		(10,599	)		(0.3	)		(12,952	)		(0.5	)		2,354			(18.2	)
(Loss) on Investments		1,278			0.0			-			-			1,278			-
Gain (loss) on Currency Transactions		(48,112	)		(1.2	)		77,199			2.8			(125,311	)		(162.3	)
Gain (Loss) on Sale of Fixed Assets		-			-			(2,135	)		(0.1	)		2,135			(100.0	)
Total Other Income (Expense)		(46,883	)		(1.2	)		64,356			2.3			(111,238	)		(172.8	)
Income Before Income Taxes		(1,100,508	)		(27.7	)		(1,755,312	)		(62.6	)		654,805			(37.3	)
Income Taxes Expense (Income)		(337,118	)		(8.5	)		(444,659	)		(15.8	)		107,541			(24.2	)
Net Income		(763,390	)		(19.2	)		(1,310,653	)		(46.7	)		547,263			(41.8	)
Less net income attributable to the non-controlled interest in subsidiaries		(1,254	)		(0.0	)		(2,551	)		(0.1	)		1,298			(50.9	)
Net Income attributable to LiqTech		(762,136	)		(19.2	)		(1,308,102	)		(46.6	)		545,966			(41.7	)

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	Six months ended June 30,
													Period to period change
	2014			As a % of Sales			2013			As a % of Sales				$		Percent %
Net Sales		7,171,189			100	%		6,205,069			100	%		966,120			15.6
Cost of Goods Sold		5,764,847			80.4			5,350,525			86.2			414,322			7.7
Gross Profit		1,406,342			19.6			854,544			13.8			551,798			64.6
Operating Expenses
Selling and Marketing		1,598,824			22.3			1,289,517			20.8			309,307			24.0
General and Administrative		1,436,181			20.0			1,204,129			19.4			232,052			19.3
Non-cash compensation		392,623			5.5			774,888			12.5			(382,265	)		(49.3	)
Research and Development		140,419			2.0			258,239			4.2			(117,820	)		(45.6	)
Total Operating Expenses		3,568,047			49.8			3,526,773			56.8			41,274			1.2
Income (loss) from Operating		(2,161,705	)		(30.1	)		(2,672,229	)		(43.1	)		510,523			(19.1	)
Interest and Other Income		13,745			0.2			2,400			0.0			11,345			472.7
Interest (Expense)		(22,120	)		(0.3	)		(24,657	)		(0.4	)		2,538			(10.3	)
(Loss) on Investments		(841	)		(0.0	)		-			0.0			(841	)		-
Gain (loss) on Currency Transactions		(45,325	)		(0.6	)		(36,974	)		-0.6			(8,351	)		22.6
Gain (Loss) on Sale of Fixed Assets		-			-			(2,135	)		0.0			2,135			(100.0	)
Total Other Income (Expense)		(54,541	)		(0.8	)		(61,366	)		(1.0	)		6,825			(11.1	)
Income Before Income Taxes		(2,216,246	)		(30.9	)		(2,733,595	)		(44.1	)		517,349			(18.9	)
Income Taxes Expense (Income)		(695,560	)		(9.7	)		(741,523	)		(12.0	)		45,963			(6.2	)
Net Income		(1,520,686	)		(21.2	)		(1,992,072	)		(32.1	)		471,386			(23.7	)
Less net income attributable to the non-controlled interest in subsidiaries		(3,114	)		(0.0	)		(14,159	)		(0.2	)		11,045			(78.0	)
Net Income attributable to LiqTech		(1,517,572	)		(21.2	)		(1,977,913	)		(31.9	)		460,341			(23.3	)

Comparison of the three month periods ended June 30, 2014 and June 30, 2013

Revenues 

Net sales for the three months ended June 30, 2014 were $3,973,687 compared to $2,805,921 for the same period in 2013, representing an increase of $1,167,766 or 41.6%. The increase in sales consist of an increase in sales of DPFs of $514,718 and an increase in sales of liquid filters of $805,662 and a decrease in sales of kiln furniture of $152,614. The increase in demand for our DPFs is mainly due to an increase in activities and mandates. The increase in demand for our liquid filters is due to an increase in worldwide sales of those products. The decrease in demand for our kiln furniture is due to a decision of not focusing on this product line anymore.

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Gross Profit

 Gross profit for the three months ended June 30, 2014 was $851,214 compared to $292,521 for same period in 2013, representing an increase of $558,693 or 191%. The increase in gross profit was due to an increase in our sales and a continuing focus on lowering our production costs. Included in gross profit is depreciation of $409,861 and $373,837 for the three months ended June 30, 2014 and 2013, respectively.

Expenses

 Total operating expenses for the three months ended June 30, 2014 were $1,904,839 representing a decrease of $207,350 or 9.8%, compared to $2,112,189 for the same period in 2013. This decrease in operating expenses is attributable to an increase in selling and marketing expenses of $213,685 or 29.9%, an increase in general and administrative expenses of $221,685 or 40.9%, a decrease in non-cash compensation expenses of $571,314 or 76.8% and a decrease in research and development expenses of $71,421 or 64.2% compared to the same period in 2013.

 Selling expenses for the three months ended June 30, 2014 were $929,277 compared to $715,592 for the same period in 2013, representing an increase of $213,685 or 29.9%. This increase is attributable to an increase in costs in general, the increase in investment in our sales resources and investment in new market opportunities. While we believe that increased investment in sales may produce attractive returns for the Company, profitability from such investments will likely take several fiscal quarters to be realized.

General and administrative expenses for the three months ended June 30, 2014 were $763,524 compared to $541,824 for the same period in 2013, representing an increase of $221,700, or 40.9%. This increase is attributable to increases in general costs, a one-time increase in legal expenses, increase in the provision for bad debt of $107,111 and a general increase in listing expenses.

 Non-cash compensation expenses for the three months ended June 30, 2014 were $172,205 compared to $743,519 for the same period in 2013, representing a decrease of $571,314 or 76.8%. This decrease is attributable to decreased non-cash compensation expense for options, shares and warrants issued for services performed by directors, employees and management.

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

	For the three Months Ended
	June 30,		June 30,
	2014		2013
Compensation upon vesting of stock options granted to employees and the board of directors	$	65,539	$	233,897
Compensation for vesting of restricted stock awards issued to the board of directors		106,666		130,222
Warrants		-		379,400
Total Non-Cash Compensation	$	172,205	$	743,519

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Research and development expenses for the three months ended June 30, 2014 were $39,833 compared to $111,254 for the same period in 2013, representing a decrease of $71,421, or 64.2%. This decrease is attributable to decreased research and development expenditures for the three months ending June 30, 2014 compared to the same period in 2013.

Net Loss Attributable to the Company

Net income attributable to the Company for the three months ended June 30, 2014 was a loss of $762,136 compared to a loss of $1,308,102 for the comparable period in 2013, representing a decrease in loss of $545,966. This decrease was primarily attributable to a decrease of $207,350 in our operating expenses and increase in gross profit of $558,693.

Comparison of the six month periods ended June 30, 2014 and June 30, 2013

Revenues 

Net sales for the six months ended June 30, 2014 were $7,171,189 compared to $6,205,069 for the same period in 2013, representing an increase of $966,120 or 15.6%. The increase in sales consist of an increase in sales of DPFs of $146,240 and an increase in sales of liquid filters of $1,143,804 and a decrease in sales of kiln furniture of $323,924. The increase in demand for our DPFs is mainly due to an increase in activities and mandates. The increase in demand for our liquid filters is due to an increase in worldwide sales of those products. The decrease in demand for our kiln furniture is due to a decision of not focusing on this product line anymore.

Gross Profit

 Gross profit for the six months ended June 30, 2014 was $1,406,342 compared to $854,544 for same period in 2013, representing an increase of $551,798 or 64.6%. The increase in gross profit was due to an increase in our sales and a continuing focus on lowering our production costs. Included in the gross profit is depreciation of $870,152 and $773,447 for the three months ended June 30, 2014 and 2013, respectively.

Expenses

 Total operating expenses for the six months ended June 30, 2014 were $3,568,047 representing an increase of $41,274 or 1.2%, compared to $3,526,773 for the same period in 2013. This increase in operating expenses is attributable to an increase in selling and marketing expenses of $309,307 or 24.0%, an increase in general and administrative expenses of $232,052 or 19.3%, a decrease in non-cash compensation expenses of $382,265 or 49.3% and a decrease in research and development expenses of $117,820 or 45.6% compared to the same period in 2013.

 Selling expenses for the six months ended June 30, 2014 were $1,598,824 compared to $1,289,517 for the same period in 2013, representing an increase of $309,307 or 24.0%. This increase is attributable to an increase in costs in general, the increase in investment in our sales resources and investment in new market opportunities. While we believe that increased investment in sales may produce attractive returns for the Company, profitability from such investments will likely take several fiscal quarters to be realized.

General and administrative expenses for the six months ended June 30, 2014 were $1,436,181 compared to $1,204,129 for the same period in 2013, representing an increase of $232,052, or 19.3%. This increase is attributable to increases in general costs, a one-time increase in legal expenses, increase in the provision for bad debt of $107,111 and a general increase in listing expenses.

 Non-cash compensation expenses for six months ended June 30, 2014 were $392,623 compared to $774,888 for the same period in 2013, representing a decrease of $382,265 or 49.3%. This decrease is attributable to decreased non-cash compensation expense for options, shares and warrants for services performed granted to directors, employees and management.

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

	For the six Months Ended
	June 30,		June 30,
	2014		2013
Compensation upon vesting of stock options granted to employees and the board of directors	$	119,891	$	265,266
Compensation for vesting of restricted stock awards issued to the board of directors		213,332		130,222
Warrants		59,400		379,400
Total Non-Cash Compensation	$	392,623	$	774,888

Research and development expenses for the six months ended June 30, 2014 were $140,419 compared to $258,239 for the same period in 2013, representing a decrease of $117,820, or 45.6%. This decrease is attributable to decreased research and development expenditures for the six months ending June 30, 2014 compared to the same period in 2013.

Net Loss Attributable to the Company

Net income attributable to the Company for the six months ended June 30, 2014 was a loss of $1,517,572 compared to a loss of $1,977,913 for the comparable period in 2013, representing a decrease in loss of $460,341. This decrease was primarily attributable to an increase of $551,798 in gross profit.

Liquidity and Capital Resources

We have historically satisfied our capital and liquidity requirements through offerings of equity instruments, internally generated cash from operations and our available lines of credit. At June 30, 2014, we had cash of $1,265,367 and working capital of $6,310,915 and at December 31, 2013, we had cash of $4,884,275 and working capital of $7,692,669. At June 30, 2014, our working capital decreased by $1,381,754 compared to December 31, 2013. Total current assets were $9,475,345 and $12,239,110 at June 30, 2014 and at December 31, 2013, respectively, and total current liabilities were $3,164,430 and $4,546,441 at June 30, 2014 and at December 31, 2013, respectively.  

On October 9, 2013, we announced that the warrant and option exercise raised $4,051,000 which included the exercise of 100,000 warrants by Aldo Petersen, Chairman of the Board of LiqTech, 25,000 stock options by Lasse Andreassen, founder and former Board member of LiqTech and 50,000 stock options by Soren Degn, CFO of LiqTech, $450,000 was received on September 30, 2013 and $3,601,000 was received during October 2013. The Board noted that the additional capital was an orderly solution to improving the Company's capital structure as well as enhancing the ability of LiqTech to list on an exchange. In addition, the new capital gives the Company additional flexibility to generate new orders and to sustain future growth.

On March 2, 2012, we completed a registered public offering of our common stock. As part of the initial closing, we issued 2,511,500 shares of our common stock in a registered direct placement of our shares at a per share price of $3.25. The net proceeds to us from the initial closing were approximately $7.1 million. We have and intend to continue to use the net proceeds from the offering for the development and marketing of our products, the engineering, development and testing of our membranes, and the opening of local sales offices in certain countries outside of the U.S. and Denmark. Pending application of such proceeds, we have and intend to continue to invest the proceeds in short-term, interest-bearing, investment-grade marketable securities or money market obligations.

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In general, lines of credit in Denmark are due on demand. Our lines of credit with the bank were called in July 2013. Since our public offering in March 2012 we have not drawn any amount on our lines of credit.

On July 28, 2014, we closed a registered firm commitment underwritten public offering of 8,000,000 shares at a price to public of $1.50 per share, which included all 1,043,478 shares subject to the underwriter’s over-allotment option. LiqTech estimates net proceeds received from the offering to be approximately $10.8 million, after deducting underwriting discounts and estimated offering expenses. The Company used approximately $2.3 million of the offering to fund a portion of the purchase price of Provitaland the balance shall be used to pay transaction expenses and for other general corporate purposes.

We believe that our cash flow and other potential sources of funds will be sufficient to fund our anticipated working capital needs and capital spending requirements for the foreseeable future. However, if we were to incur any unanticipated expenditures or the negative trend of our operating cash flow does continue, such circumstances could put a substantial burden on our cash resources.

We may also need additional funds for possible future strategic acquisitions of businesses, products or technologies complementary to our business. If additional funds are required, 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 growth plans and our financial condition and results of operations. Additional equity financing may be dilutive to holders of our common stock, and debt financing, if available, may involve significant cash payment obligations and covenants that restrict our ability to operate our business.

Cash Flows

Six months ended June 30, 2014 Compared to six months ended June 30, 2013

 Cash provided (used) by operating activities is net income (losses) adjusted for certain non-cash items and changes in assets and liabilities. Cash used by operating activities for the six months ended June 30, 2014 was $3,241,864, representing an increase of $1,831,516 compared to cash used by operating activities of $1,410,348 for the six months ended June 30, 2013. The $1,831,516 increase in cash used by operating activities for the six months ended June 30, 2014 was mainly due to the net loss of $1,520,686, the increases of $352,642 in inventory, the increases of $469,591 in accounts receivable, net of bad debt, and a decrease of $1,280,581 in accrued expenses.

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

 Cash used in investing activities was $183,008 for the six months period ended June 30, 2014, as compared to cash used in investing activities of $280,802 for the six months period ended June 30, 2013. Cash used in investing activities decreased for the six months period ended June 30, 2014, compared to the six months period ended June 30, 2013. This decrease was primarily due to a decrease of $80,425 in the purchase of equipment and a decrease of $17,369 in the purchase of long-term investments.

Cash used by financing activities was $112,516 for the six months period ended June 30, 2014, as compared to cash used by financing activities of $106,568 for the six months period ended June 30, 2013. This change of $5,948 in cash used by financing activities for the six months period ended June 30, 2014 compared to 2013, was due to net payments proceeds on capital lease obligation.

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Off Balance Sheet Arrangements

 As of June 30, 2014, 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 August, 2018, March 2017, February 2017 and December 2016.. Some of these lease agreements have a right to extend.

 The future minimum lease payments for non-cancelable operating leases having remaining terms in excess of one year as of June 30, 2014 are as follows:

Year ending December	Operating Lease Payments
2014	$	317,256
2015		651,924
2016		668,935
2017		494,207
2018		312,032
Thereafter		-
Total Minimum Lease Payments	$	2,444,354

Significant Accounting Policies and Critical Accounting Estimates

There have been no significant changes in our significant accounting policies and critical accounting estimates since the filing of our Annual Report on Form 10-K for the period ended December 31, 2013.

Recent 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.

Off Balance Sheet Arrangements

We are not aware of any material transactions which are not disclosed in our consolidated financial statements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

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.

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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 1A. RISK FACTORS.

Not required for a “smaller reporting company.”

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

None

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    MINE SAFETY DISCLOSURES

None.

ITEM 5.    OTHER INFORMATION

None

ITEM 6.    EXHIBITS

1.1	Placement Agency Agreement, dated March 2, 2012, by and between LiqTech International, Inc. and Sunrise Securities Corp.	Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on March 8, 2012
2.1	Agreement and Plan of Merger dated as of August 23, 2011 by and among Blue Moose Media, Inc., LiqTech USA, Inc. and BMD Sub	Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K/A as filed with the SEC on October 11, 2011

3.1 Articles of Incorporation Incorporated by reference to Exhibit 3(i) to the Company’s Registration Statement on Form 10 (SEC Accession No. 0001078782-09-001287) as filed with the SEC on August 19, 2009

33

3.2 Certificate of Amendment to the Articles of Incorporation Incorporated by reference to Exhibit A to the Company’s Information Statement on Schedule 14C as filed with the SEC on September 20, 2011

3.3 Amended and Restated Bylaws, effective January 1, 2012 Incorporated by reference to Exhibit 3.4 to the Company’s Form 10-Q as filed with the SEC on May 15, 2012

4.1	Form of Common Stock Certificate	Incorporated by reference to Exhibit 4.1 to the Company’s Form 10-K as filed with the SEC on March 29, 2012
4.2	Form of Warrant issued to Investors in the Private Placement	Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K as filed with the SEC on August 25, 2011

4.3	Form of Warrant issued to Sunrise Securities Corp.	Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K as filed with the SEC on March 8, 2012
10.1	Form of Securities Purchase Agreement by and between LiqTech USA, Inc. and each of the investors in the Private Placement	Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on August 25, 2011
10.2	Employment Agreement dated July 29, 2011 between LiqTech A/S and Lasse Andreassen	Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K/A as filed with the SEC on October 11, 2011 (translated in English)
10.3	Employment Agreement dated November 16, 2005 between LiqTech NA, Inc. and Donald S. Debelak	Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K/A as filed with the SEC on October 11, 2011

10.4 Addendum to Employment Agreement, dated December 15, 2011, between LiqTech NA, Inc. and Donald S. Debelak Incorporated by reference to Exhibit 10.4 to the Company’s Form 10-K as filed with the SEC on March 29, 2012

34

10.5	Employment Agreement, dated July 29, 2011, between LiqTech International Inc. and Soren Degn (translated in English)	Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-K as filed with the SEC on March 29, 2012
10.6	Lease Agreements for 1800 - 1810 Buerkle Road, White Bear Lake, Minnesota 55110	Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K/A as filed with the SEC on November 15, 2011
10.7	Lease Agreement for 1800 - 1816 Buerkle Road, White Bear Lake, Minnesota 55110	Incorporated by reference to Exhibit 10.7 to the Company’s Form 10-K as filed with the SEC on March 29, 2012
10.8	Lease Agreement for Grusbakken 12, DK-2820 Gentofte Denmark	Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K/A as filed with the SEC on November 15, 2011 (translated in English)
10.9	Lease Agreement for Industriparken 22C, 2750 Ballerup, Denmark	Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K/A as filed with the SEC on November 15, 2011 (translated in English)
10.10	DKK 6,000,000 Line of Credit Agreement, between LiqTech A/S and Sydbank A/S	Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K/A as filed with the SEC on November 15, 2011 (translated in English)

10.11	DKK 3,000,000 Line of Credit Agreement, between LiqTech A/S and Sydbank A/S	Incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K/A as filed with the SEC on November 15, 2011 (translated in English)
10.12	Note Payable Agreement between LiqTech A/S and Sydbank A/S, for the principal amount of $475,000 USD	Incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q as filed with the SEC on November 15, 2011 (translated in English)

10.13 Form of Guarantee in respect of obligations of LiqTech A/S (translated in English) Incorporated by reference to Exhibit 10.13 to the Company’s Form 10-K as filed with the SEC on March 29, 2012

10.14 Form of Guarantee in respect of obligations of LiqTech International A/S (translated in English) Incorporated by reference to Exhibit 10.14 to the Company’s Form 10-K as filed with the SEC on March 29, 2012

35

10.15	Form of Guarantee in respect of obligations of LiqTech NA, Inc. (translated in English)	Incorporated by reference to Exhibit 10.15 to the Company’s Form 10-K as filed with the SEC on March 29, 2012
10.16	Form of Promissory Note payable to certain related parties	Incorporated by reference to Exhibit 10.16 to the Company’s Form 10-K as filed with the SEC on March 29, 2012
10.17	Business Mortgage of LiqTech A/S (translated in English)	Incorporated by reference to Exhibit 10.17 to the Company’s Form 10-K as filed with the SEC on March 29, 2012
10.18	Business Mortgage of LiqTech International A/S (translated in English)	Incorporated by reference to Exhibit 10.18 to the Company’s Form 10-K as filed with the SEC on March 29, 2012
10.19	Bonus and Services Agreement, dated October 31, 2012, by and between the Company and Aldo Petersen	Incorporated by reference to Exhibit 10.19 to the Company’s Quarterly Report on Form 10-Q as filed with the SEC on November 14, 2012
10.20	Agreement, dated March 25, 2013, by and among LiqTech International, Inc., LiqTech Denmark International and Mr. Lasse Andreassen	Incorporated by reference to Exhibit 10.20 to the Company’s Form 10-K as filed with the SEC on March 27, 2013
10.21	Director Contract, dated March 27, 2013, by and between Mr. Finn Helmer and LiqTech Denmark International	Incorporated by reference to the Company's Form 10-Q as filed with the SEC on May 15, 2013
10.22	Securities Purchase Agreement, dated July 15, 2014 by and among LiqTech International A/S, a Danish company, Provital Solutions A/S, a Danish company and Masu A/S, a Danish company	Incorporated by reference to the Company’s Form 8-K as filed with the SEC on July 16, 2014
10.23	Form of Purchase Agreement (Craig-Hallum Capital Group LLC)	Incorporated by reference to the Company’s Form 8-K as filed with the SEC on July 23, 2014
10.24	Form of Underwriter’s Warrant (Craig-Hallum Capital Group LLC)	Incorporated by reference to the Company’s Form 8-K as filed with the SEC on July 23, 2014
10.25	Employment Contract (Sune Mathiesen)	Incorporated by reference to the Company’s Form 8-K as filed with the SEC on August 1, 2014
21	List of Subsidiaries	Incorporated by reference to Exhibit 21 to the Company’s Form 10-K as filed with the SEC on March 29, 2012
31.1	Certifications of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Provided herewith
31.2	Certifications of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Provided 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, not filed 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, not filed herewith

101. INS XBRL Instance Document Provided herewith

36

101. CAL	XBRL Taxonomy Extension Calculation Link base Document	Provided herewith
101. DEF	XBRL Taxonomy Extension Definition Link base Document	Provided herewith
101. LAB	XBRL Taxonomy Label Link base Document	Provided herewith
101. PRE	XBRL Extension Presentation Link base Document	Provided herewith
101. SCH	XBRL Taxonomy Extension Scheme Document	Provided herewith

37

SIGNATURES

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

	LiqTech International, Inc.
Dated: August 12, 2014	/s/ Sune Mathiesen
	Sune Mathiesen, Chief Executive Officer
	(Principal Executive Officer)
Dated: August 12, 2014	/s/ Soren Degn
	Soren Degn, Chief Financial Officer
	(Principal Financial and Accounting Officer)

38

EX-31

EXHIBIT 31.1

OFFICER’S CERTIFICATE
PURSUANT TO SECTION 302

I, Sune Mathiesen, certify that:

1.            I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2014 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:August 12, 2014	By:	/s/ Sune Mathiesen
	Name:	Sune Mathiesen
	Title:	Chief Executive Officer and Principal Executive Officer

EX-31

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 June 30, 2014 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: August 12, 2014	By:	/s/ Soren Degn
	Name:	Soren Degn
	Title:	Chief Financial Officer and Principal Financial and Accounting Officer

EX-32

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Liqtech International, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2014 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: Augsut 12, 2014	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

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Liqtech International, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2014 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: August 12, 2014	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

Note 6 - Leases (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Note 6 - Leases (Details) [Line Items]
Operating Leases, Rent Expense	$ 355,462	$ 382,766
Capital Leased Assets, Gross	1,586,711		1,600,254
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Accumulated Depreciation	1,005,748		907,728
Depreciation	870,152	773,447
Interest Expense, Lessee, Assets under Capital Lease	20,968	26,307
Assets Held under Capital Leases [Member]
Note 6 - Leases (Details) [Line Items]
Depreciation	105,977	107,003
Capital Lease Obligations [Member] | Capital Lease 1 [Member]
Note 6 - Leases (Details) [Line Items]
Debt Instrument, Periodic Payment	12,040
Capital Lease Obligations [Member] | Capital Lease 2 [Member]
Note 6 - Leases (Details) [Line Items]
Debt Instrument, Periodic Payment	4,666
Capital Lease Obligations [Member] | Capital Lease 3 [Member]
Note 6 - Leases (Details) [Line Items]
Debt Instrument, Periodic Payment	3,021
Capital Lease Obligations [Member] | Capital Lease 4 [Member]
Note 6 - Leases (Details) [Line Items]
Debt Instrument, Periodic Payment	$ 2,152

XML

Note 11 - Significant Customers/Concentration (Details) (Sales Revenue, Net [Member], Customer Concentration Risk [Member])	6 Months Ended
	Jun. 30, 2014
Major Customer 1 [Member]
Note 11 - Significant Customers/Concentration (Details) [Line Items]
Concentration Risk, Percentage	20.00%
Major Customer 2 [Member]
Note 11 - Significant Customers/Concentration (Details) [Line Items]
Concentration Risk, Percentage	9.00%
Major Customer 3 [Member]
Note 11 - Significant Customers/Concentration (Details) [Line Items]
Concentration Risk, Percentage	6.00%
Major Customer 4 [Member]
Note 11 - Significant Customers/Concentration (Details) [Line Items]
Concentration Risk, Percentage	6.00%

XML

Note 9 - Loss Per Share (Details) - Amounts Used in Computing Earnings Per Share (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Amounts Used in Computing Earnings Per Share [Abstract]
Income (Loss) attributable to LiqTech International Inc. (in Dollars)	$ (762,136)	$ (1,308,102)	$ (1,517,572)	$ (1,977,913)
Weighted average number of common shares used in basic earnings per share	27,212,500	24,359,852	27,212,500	24,236,362
Effect of dilutive securities, stock options and warrants	0	0
Weighted average number of common shares and potentially dilutive securities	27,212,500	24,359,852	27,212,500	24,236,362

XML

Note 11 - Significant Customers/Concentration (Details) - Net Sales by Geographical Region (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Note 11 - Significant Customers/Concentration (Details) - Net Sales by Geographical Region [Line Items]
Net sales	$ 3,973,687	$ 2,805,921	$ 7,171,189	$ 6,205,069
Reportable Geographical Components [Member] | US and Canada [Member]
Note 11 - Significant Customers/Concentration (Details) - Net Sales by Geographical Region [Line Items]
Net sales	769,265	876,391	1,775,470	1,527,410
Reportable Geographical Components [Member] | AUSTRALIA
Note 11 - Significant Customers/Concentration (Details) - Net Sales by Geographical Region [Line Items]
Net sales	28,363	15,644	84,315	168,390
Reportable Geographical Components [Member] | South America [Member]
Note 11 - Significant Customers/Concentration (Details) - Net Sales by Geographical Region [Line Items]
Net sales		4,760	16,845	25,380
Reportable Geographical Components [Member] | Asia [Member]
Note 11 - Significant Customers/Concentration (Details) - Net Sales by Geographical Region [Line Items]
Net sales	188,312	332,930	494,933	1,151,482
Reportable Geographical Components [Member] | Europe [Member]
Note 11 - Significant Customers/Concentration (Details) - Net Sales by Geographical Region [Line Items]
Net sales	$ 2,987,747	$ 1,576,196	$ 4,799,626	$ 3,332,407

XML

Note 8 - Income Taxes (Details) - Components of Income Tax Expense (Benefit) from Continuing Operations (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Deferred tax expense (benefit) arising from:
Net operating loss carryover			$ (757,272)	$ (728,604)
Reserve for obsolete inventory			61,712	(12,919)
Deferred tax expense			(695,560)	(741,523)
Income tax benefit	$ (337,118)	$ (444,659)	$ (695,560)	$ (741,523)

XML

Note 3 - Property and Equipment (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Property, Plant and Equipment [Abstract]
Depreciation	$ 870,152	$ 773,447

XML

Note 12 - Subsequent Events (Details)	0 Months Ended	12 Months Ended			1 Months Ended										0 Months Ended		1 Months Ended
	Mar. 02, 2012 USD ($)	Dec. 31, 2013 USD ($)	Jun. 30, 2014 USD ($)	Oct. 09, 2013 USD ($)	Jul. 28, 2014 Subsequent Event [Member] Scenario 1 for Year Ending December 31, 2014 [Member] Provital Acquisition [Member] DKK	Jul. 28, 2014 Subsequent Event [Member] Scenario 2 for Year Ending December 31, 2014 [Member] Provital Acquisition [Member] DKK	Jul. 28, 2014 Subsequent Event [Member] Scenario 1 For the Year Ending December 31, 2015 [Member] Provital Acquisition [Member] DKK	Jul. 28, 2014 Subsequent Event [Member] Scenario 2 For the Year Ending December 31, 2015 [Member] Provital Acquisition [Member] DKK	Jul. 28, 2014 Subsequent Event [Member] Scenario 1 for Years Ending December 31, 2014 and December 31, 2015 [Member] Provital Acquisition [Member] DKK	Jul. 28, 2014 Subsequent Event [Member] Scenario 2 for Years Ending December 31, 2014 and December 31, 2015 [Member] Provital Acquisition [Member] DKK	Jul. 28, 2014 Subsequent Event [Member] For Year Ending December 31, 2016 [Member] Provital Acquisition [Member] DKK	Jul. 28, 2014 Subsequent Event [Member] Provital Acquisition [Member] USD ($)	Jul. 28, 2014 Subsequent Event [Member] Provital Acquisition [Member] DKK	Jul. 29, 2014 Subsequent Event [Member] Chief Executive Officer [Member] DKK	Jul. 25, 2014 Subsequent Event [Member] Craig-Hallum Capital Group LLC [Member]	Jul. 22, 2014 Subsequent Event [Member] Craig-Hallum Capital Group LLC [Member] USD ($)	Jul. 22, 2014 Subsequent Event [Member] Craig-Hallum Capital Group LLC [Member] USD ($)	Jul. 28, 2014 Subsequent Event [Member] Craig-Hallum Capital Group LLC [Member] USD ($)
Note 12 - Subsequent Events (Details) [Line Items]
Stock Issued During Period, Shares, New Issues (in Shares)	2,511,500	100,000																6,956,522
Common Stock, Par or Stated Value Per Share (in Dollars per share)		$ 0.001	$ 0.001															$ 0.001
Share Price (in Dollars per share)	$ 3.25																	$ 1.50
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in Shares)															1,043,478
Proceeds from Issuance of Warrants (in Dollars)																$ 50
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)																400,000	400,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)				$ 2.70												$ 1.65	$ 1.65
Warrants, Term																	5 years
Payments to Acquire Businesses, Gross												2,300,000	12,600,000
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares)												4,044,782	4,044,782
Business Acquisition, Requirement for Minimum Revenues					65,000,000	50,000,000	120,000,000	80,000,000
Business Acquisition, Requirement for EBITDA					6,500,000	10,000,000	12,000,000	16,000,000
Business Acquisition, Requirement for Minimum Revenues					65,000,000	50,000,000	120,000,000	80,000,000
Business Acquisition, Requirement for Minimum Revenues					65,000,000	50,000,000	120,000,000	80,000,000
Business Acquisition, Requirement for Minimum Revenues					65,000,000	50,000,000	120,000,000	80,000,000
Business Acquisition, "Catch Up" Provisions, Minimum Revenues									185,000,000	130,000,000	105,000,000
Business Acquisition, “Catch Up” Provisions, Minimum EBITDA									18,500,000	26,000,000	21,000,000
Officers' Compensation														1,500,000
Compensation Arrangement with Individual, Yearly Bonus Percentage														5.00%
Compensation Arrangement with Individual, Yearly Bonus, Revenues Benchmark														130,000,000

XML

Note 6 - Leases (Tables)

6 Months Ended

Jun. 30, 2014

Leases [Abstract]

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

Year ending December	Operating Lease Payments
2014	$	317,256
2015		651,924
2016		668,935
2017		494,207
2018		312,032
Thereafter		-
Total Minimum Lease Payments	$	2,444,354

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

	Capital Lease Payments
2014	$	130,767
2015		224,837
2016		217,651
2017		139,755
2018		-
Thereafter		-
Total minimum lease payments		713,010
Less amount representing interest		(62,747	)
Present value of minimum lease payments		650,263
Less current portion		(192,086	)
Long-term lease payments	$	458,177

XML

Note 10 - Stockholders' Equity (Details) - Warrants Outstanding (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Class of Warrant or Right [Line Items]
Warrants Outstanding (in Shares)	3,064,130	2,564,130
Warrants Weighted-average Remaining Contractual Life	1 year 138 days	1 year 233 days
Warrants Weighted-average Exercise Price	$ 2.53	$ 2.65
Warrants Exercisable (in Shares)	2,280,830
Warrants Exercisable Weighted-average Exercise Price	$ 2.66
Warrant [Member] | Price Range 1 [Member]
Class of Warrant or Right [Line Items]
Warrants Range of Exercise Price	$ 1.50
Warrants Outstanding (in Shares)	3,874,000
Warrants Weighted-average Remaining Contractual Life	2 years 6 months
Warrants Weighted-average Exercise Price	$ 1.50
Warrants Exercisable (in Shares)	3,874,000
Warrants Exercisable Weighted-average Exercise Price	$ 1.50
Warrant [Member] | Price Range 2 [Member]
Class of Warrant or Right [Line Items]
Warrants Range of Exercise Price	$ 2.35
Warrants Outstanding (in Shares)	400,000
Warrants Weighted-average Remaining Contractual Life	9 months
Warrants Weighted-average Exercise Price	$ 2.35
Warrants Exercisable (in Shares)	400,000
Warrants Exercisable Weighted-average Exercise Price	$ 2.35
Warrant [Member] | Price Range 3 [Member]
Class of Warrant or Right [Line Items]
Warrants Range of Exercise Price	$ 2.70
Warrants Outstanding (in Shares)	2,626,000
Warrants Weighted-average Remaining Contractual Life	2 years 6 months
Warrants Weighted-average Exercise Price	$ 2.70
Warrants Exercisable (in Shares)	2,626,000
Warrants Exercisable Weighted-average Exercise Price	$ 2.70
Warrant [Member] | Price Range 4 [Member]
Class of Warrant or Right [Line Items]
Warrants Range of Exercise Price	$ 4.0625
Warrants Outstanding (in Shares)	125,575
Warrants Weighted-average Remaining Contractual Life	2 years 248 days
Warrants Weighted-average Exercise Price	$ 4.0625
Warrants Exercisable (in Shares)	125,575
Warrants Exercisable Weighted-average Exercise Price	$ 4.0625
Warrant [Member]
Class of Warrant or Right [Line Items]
Warrants Outstanding (in Shares)	7,025,575
Warrants Weighted-average Remaining Contractual Life	2 years 146 days
Warrants Weighted-average Exercise Price	$ 2.04
Warrants Exercisable (in Shares)	7,025,575
Warrants Exercisable Weighted-average Exercise Price	$ 2.04
Price Range 1 [Member]
Class of Warrant or Right [Line Items]
Warrants Range of Exercise Price	$ 1.50
Price Range 2 [Member]
Class of Warrant or Right [Line Items]
Warrants Range of Exercise Price	$ 1.90
Price Range 3 [Member]
Class of Warrant or Right [Line Items]
Warrants Range of Exercise Price	$ 2.35
Price Range 4 [Member]
Class of Warrant or Right [Line Items]
Warrants Range of Exercise Price	$ 2.70

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Note 7 - Agreements and Commitments (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Disclosure Text Block Supplement [Abstract]
Defined Contribution Plan, Cost Recognized	$ 7,425	$ 7,463

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Note 5 - Definite-Life Intangible Assets (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Note 5 - Definite-Life Intangible Assets (Details) [Line Items]
Intangible Assets, Net (Excluding Goodwill)	$ 21,623		$ 24,687
Patents [Member]
Note 5 - Definite-Life Intangible Assets (Details) [Line Items]
Intangible Assets, Net (Excluding Goodwill)	21,623		24,687
Amortization of Intangible Assets	$ 3,064	$ 2,954
Patents [Member] | Minimum [Member]
Note 5 - Definite-Life Intangible Assets (Details) [Line Items]
Finite-Lived Intangible Asset, Useful Life	2 years
Patents [Member] | Maximum [Member]
Note 5 - Definite-Life Intangible Assets (Details) [Line Items]
Finite-Lived Intangible Asset, Useful Life	10 years
Minimum [Member]
Note 5 - Definite-Life Intangible Assets (Details) [Line Items]
Finite-Lived Intangible Asset, Useful Life	2 years
Maximum [Member]
Note 5 - Definite-Life Intangible Assets (Details) [Line Items]
Finite-Lived Intangible Asset, Useful Life	10 years

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Note 10 - Stockholders' Equity (Details) - Options Outstanding (USD $)	6 Months Ended
	Jun. 30, 2014
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number outstanding (in Shares)	3,064,130
Weighted average remaing contractual life	1 year 138 days
Weighted average exercise price	$ 2.53
Number exercisable (in Shares)	2,280,830
Weighted average exercise price, exercisable	$ 2.66
Price Range 1 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise price, upper	$ 1.50
Number outstanding (in Shares)	377,500
Weighted average remaing contractual life	237 days
Weighted average exercise price	$ 1.50
Number exercisable (in Shares)	377,500
Weighted average exercise price, exercisable	$ 1.50
Price Range 2 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise price, upper	$ 1.90
Number outstanding (in Shares)	500,000
Weighted average remaing contractual life	2 years 211 days
Weighted average exercise price	$ 1.90
Number exercisable (in Shares)	166,667
Weighted average exercise price, exercisable	$ 1.90
Price Range 3 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise price, upper	$ 2.35
Number outstanding (in Shares)	600,000
Weighted average remaing contractual life	2 years 9 months
Weighted average exercise price	$ 2.35
Number exercisable (in Shares)	150,000
Weighted average exercise price, exercisable	$ 2.35
Price Range 4 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise price, upper	$ 2.70
Number outstanding (in Shares)	75,000
Weighted average remaing contractual life	237 days
Weighted average exercise price	$ 2.70
Number exercisable (in Shares)	75,000
Weighted average exercise price, exercisable	$ 2.70
Price Range 5 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise price, lower	$ 3.00
Range of exercise price, upper	$ 3.60
Number outstanding (in Shares)	1,511,630
Weighted average remaing contractual life	240 days
Weighted average exercise price	$ 3.06
Number exercisable (in Shares)	1,511,630
Weighted average exercise price, exercisable	$ 3.04

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Note 9 - Loss Per Share (Details) (USD $)				6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Oct. 09, 2013	Jun. 30, 2014 Equity Option [Member]	Jun. 30, 2013 Equity Option [Member]	Jun. 30, 2014 Warrant [Member]	Jun. 30, 2013 Warrant [Member]	Jun. 30, 2014 Minimum [Member]	Jun. 30, 2013 Minimum [Member]	Jun. 30, 2014 Maximum [Member]	Jun. 30, 2013 Maximum [Member]
Note 9 - Loss Per Share (Details) [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares)				3,064,130	1,964,130	7,025,575	6,625,575
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 2.53	$ 2.65						$ 1.50	$ 1.50	$ 3.60	$ 3.60
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 2.70					$ 1.50	$ 1.50	$ 4.06	$ 4.06

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Note 3 - Property and Equipment

6 Months Ended

Jun. 30, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at June 30, 2014 and December 31, 2013:

	Useful Life		2014			2013
Production equipment		3 - 10	$	11,552,124		$	11,542,740
Lab equipment		3 - 10		179,896			181,432
Computer equipment		3 - 5		276,513			276,013
Vehicles		3		37,898			38,221
Furniture and fixture		5		72,736			68,169
Leasehold improvements		10		1,113,238			1,059,605
				13,232,405			13,166,180
Less Accumulated Depreciation				(8,031,337	)		(7,336,776	)
Net Property and Equipment			$	5,201,068		$	5,829,404

Depreciation expense amounted to $870,152 and $773,447, for the six months ended June 30, 2014 and 2013, respectively.

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Note 8 - Income Taxes (Details) (USD $)	Jun. 30, 2014
Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member]
Note 8 - Income Taxes (Details) [Line Items]
Operating Loss Carryforwards	$ 6,481,000
Foreign Tax Authority [Member] | Danish Ministry of Taxation [Member]
Note 8 - Income Taxes (Details) [Line Items]
Operating Loss Carryforwards	3,020,000
Foreign Tax Authority [Member] | Federal Ministry of Finance, Germany [Member]
Note 8 - Income Taxes (Details) [Line Items]
Operating Loss Carryforwards	418,000
Foreign Tax Authority [Member] | Inland Revenue, Singapore (IRAS) [Member]
Note 8 - Income Taxes (Details) [Line Items]
Operating Loss Carryforwards	$ 513,000

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Note 11 - Significant Customers/Concentration (Tables)

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

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

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2014		2013		2014		2013
United States and Canada	$	769,265	$	876,391	$	1,775,470	$	1,527,410
Australia		28,363		15,644		84,315		168,390
South America		-		4,760		16,845		25,380
Asia		188,312		332,930		494,933		1,151,482
Europe		2,987,747		1,576,196		4,799,626		3,332,407
	$	3,973,687	$	2,805,921	$	7,171,189	$	6,205,069

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

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2014		2013		2014		2013
Ceramic diesel particulate	$	2,054,689	$	1,539,971	$	3,618,516	$	3,472,276
Liquid filters		1,841,580		1,035,918		3,382,674		2,238,870
Kiln furniture		77,418		230,032		169,999		493,923
	$	3,973,687	$	2,805,921	$	7,171,189	$	6,205,069

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Note 10 - Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2014

Stockholders' Equity Note [Abstract]

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

		Warrants Outstanding						Warrants Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	1.50		3,874,000		2.50	$	1.50		3,874,000	$	1.50
$	2.35		400,000		0.75	$	2.35		400,000	$	2.35
$	2.70		2,626,000		2.50	$	2.70		2,626,000	$	2.70
$	4.0625		125,575		2.68	$	4.0625		125,575	$	4.0625
Total			7,025,575		2.40	$	2.04		7,025,575	$	2.04

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

	LiqTech International, Inc.
Expected term (in years)		3-4
Volatility		40.74
Risk free interest rate		0.67%
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
	Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price	Number Exercisable		Weighted Average Exercise Price
$	1.50	377,500	0.65	$	1.50	377,500	$	1.50
$	1.90	500,000	2.58	$	1.90	166,667	$	1.90
$	2.35	600,000	2.75	$	2.35	150,000	$	2.35
$	2.70	75,000	0.65	$	2.70	75,000	$	2.70
$	3.00 - $3.60	1,511,630	0.66	$	3.06	1,511,630	$	3.04
Total		3,064,130	1.38	$	2.53	2,280,830	$	2.66

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

	June 30, 2014
	Shares		Weighted Average Exercise Price		Average Remaining Life		Weighted Average Intrinsic Value
Outstanding at beginning of period		2,564,130	$	2.65		1.64	$	283,125
Granted		500,000		1.90		2.58		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Expired		-		-		-		-
Outstanding at end of period		3,064,130	$	2.53		1.38	$	221,200
Vested and expected to vest		3,064,130	$	2.53		1.38	$	221,200
Exercisable end of period		2,280,830	$	2.66		0.93	$	194,533

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Note 11 - Significant Customers/Concentration (Details) - Sales by Product Line (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	$ 3,973,687	$ 2,805,921	$ 7,171,189	$ 6,205,069
Ceramic Diesel Particulate [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	2,054,689	1,539,971	3,618,516	3,472,276
Liquid Filters [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	1,841,580	1,035,918	3,382,674	2,238,870
Kiln Furniture [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Net sales	$ 77,418	$ 230,032	$ 169,999	$ 493,923

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Note 8 - Income Taxes (Details) - Deferred Tax Asset (Liabilities) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Deferred Tax Asset (Liabilities) [Abstract]
Vacation accrual	$ 4,161	$ 4,161
Allowance for doubtful Accounts	13,955	13,955
Reserve for obsolete inventory	23,570	86,027
Net current tax assets	41,686	104,143
Business tax credit carryover	20,184	20,184
Deferred Compensation	202,309	202,309
Net operating loss carryover	3,132,619	2,367,568
Excess of book over tax depreciation	(726,555)	(726,712)
Long term tax asset	$ 2,628,557	$ 1,863,349

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Note 1 - Summary of Significant Accounting Policies (Details) (USD $)	3 Months Ended		6 Months Ended			6 Months Ended		12 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 LiqTech International DK [Member]	Jun. 30, 2014 LiqTech NA [Member]	Dec. 30, 2013 LiqTech NA [Member]	Jun. 30, 2014 LiqTech Asia [Member]	Jun. 30, 2014 LiqTech Germany [Member]	Jun. 30, 2014 LiqTech PTE [Member]	Jun. 30, 2014 Employee Stock Option [Member]	Jun. 30, 2013 Employee Stock Option [Member]	Jun. 30, 2014 DENMARK	Jun. 30, 2014 Minimum [Member]	Jun. 30, 2014 Maximum [Member]
Note 1 - Summary of Significant Accounting Policies (Details) [Line Items]
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage						100.00%	100.00%	90.00%	60.00%	100.00%	95.00%
Percentage of Subsidiary Owned by Subsidiary of Parent								10.00%
Cash, Uninsured Amount	$ 0		$ 0		$ 0
Property, Plant and Equipment, Useful Life															3 years	10 years
Finite-Lived Intangible Asset, Useful Life															2 years	10 years
Value Added Tax of Invoice, Percentage														25.00%
Advertising Expense			12,486	20,739
Research and Development Expense	39,833	111,254	140,419	258,239
Allocated Share-based Compensation Expense	172,205	743,519	392,623	774,888								392,623	774,888
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense												$ 0	$ 0

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Note 1 - Summary of Significant Accounting Policies (Details) - Allowance for Doubtful Accounts, Roll Forward (USD $)	6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Allowance for Doubtful Accounts, Roll Forward [Abstract]
Allowance for doubtful accounts at the beginning of the period	$ 608,356	$ 1,243,500	$ 1,243,500
Bad debt expense	107,111	47,366	72,548
Amount of receivables written off			(770,738)
Effect of currency translation	(31,101)		63,046
Allowance for doubtful accounts at the end of the period	$ 684,366		$ 608,356

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Note 2 - Inventory

6 Months Ended

Jun. 30, 2014

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

NOTE 2 – INVENTORY

Inventory consisted of the following at June 30, 2014 and December 31, 2013:

	2014			2013
Furnace parts and supplies	$	1,193,192		$	1,025,225
Raw materials		671,271			631,524
Work in process		1,717,590			1,799,888
Finished goods		1,111,233			1,062,865
Reserve for obsolescence		(82,038	)		(260,896	)
Net Inventory	$	4,611,248		$	4,258,606

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Note 2 - Inventory (Details) - Summary of Inventory (USD $)	Jun. 30, 2014	Dec. 31, 2013
Summary of Inventory [Abstract]
Furnace parts and supplies	$ 1,193,192	$ 1,025,225
Raw materials	671,271	631,524
Work in process	1,717,590	1,799,888
Finished goods	1,111,233	1,062,865
Reserve for obsolescence	(82,038)	(260,896)
Net Inventory	$ 4,611,248	$ 4,258,606

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Note 6 - Leases (Details) - Future Minimum Lease Payments for Non-Cancelable Operating Leases (USD $)	Jun. 30, 2014
Future Minimum Lease Payments for Non-Cancelable Operating Leases [Abstract]
2014	$ 317,256
2015	651,924
2016	668,935
2017	494,207
2018	312,032
Total Minimum Lease Payments	$ 2,444,354

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Note 10 - Stockholders' Equity (Details) - Status of the Options Granted and Changes During the Year (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Status of the Options Granted and Changes During the Year [Abstract]
Shares	3,064,130	2,564,130
Weighted Average Exercise Price	$ 2.53	$ 2.65
Average Remaining Life	1 year 138 days	1 year 233 days
Intrinsic Value	$ 221,200	$ 283,125
Vested and expected to vest	3,064,130
Vested and expected to vest	$ 2.53
Vested and expected to vest	1 year 138 days
Vested and expected to vest	221,200
Exercisable end of period	2,280,830
Exercisable end of period	$ 2.66
Exercisable end of period	339 days
Exercisable end of period	$ 194,533
Granted	500,000
Granted	$ 1.90
Granted	2 years 211 days

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Consolidated Balance Sheets (Current Period Unaudited) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Current Assets:
Cash	$ 1,265,367	$ 4,884,275
Accounts receivable, net	2,893,254	2,341,070
Other receivables	42,294	231,998
Cost in excess of billing	518,327	406,997
Inventories	4,611,248	4,258,606
Prepaid expenses	103,169	12,021
Current deferred tax asset	41,686	104,143
Total Current Assets	9,475,345	12,239,110
Property and Equipment, net accumulated depreciation	5,201,068	5,829,404
Other Assets:
Other investments	6,824	6,882
Long term deferred tax asset	2,628,557	1,863,349
Other intangible assets	21,623	24,687
Deposits	272,904	271,916
Total Other Assets	2,929,908	2,166,834
Total Assets	17,606,321	20,235,348
Current Liabilities:
Current portion of capital lease obligations	192,086	208,419
Accounts payable	1,508,008	1,586,962
Accrued expenses	1,105,355	1,440,522
Billing in excess of cost	89,961	96,104
Accrued income taxes payable	2,000	2,000
Deferred revenue / customers deposit	267,020	1,212,434
Total Current Liabilities	3,164,430	4,546,441
Long-term capital lease obligations, less current portion	458,177	554,360
Total Long-Term Liabilities	458,177	554,360
Total Liabilities	3,622,607	5,100,801
Stockholders' Equity:
Common stock; par value $0,001, 100,000,000 shares authorized, 27,212,500 and 27,212,500 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively	27,213	27,213
Additional paid-in capital	19,103,303	18,700,574
Accumulated deficit	(3,834,356)	(2,316,784)
Deferred compensation	(1,018,554)	(1,008,450)
Other comprehensive income, net	(314,866)	(292,565)
Non-controlled interest in subsidiaries	20,974	24,559
Total Stockholders' Equity	13,983,714	15,134,547
Total Liabilities and Stockholders' Equity	$ 17,606,321	$ 20,235,348

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Note 8 - Income Taxes (Details) - Reconciliation of Income Tax Expense (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Reconciliation of Income Tax Expense [Abstract]
Computed tax at expected statutory rate			$ (752,797)	$ (924,608)
State and local income taxes, net of federal benefits			(24,704)	(8,533)
Non-deductible expenses			40,763	111,329
Non-US income taxed at different rates			41,178	80,847
Other items				(558)
Income tax expense (benefit)	$ (337,118)	$ (444,659)	$ (695,560)	$ (741,523)

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(Unaudited) Consolidated Statements of Cash Flows (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash Flows from Operating Activities:
Net Income (Loss)	$ (1,520,686)	$ (1,992,072)
Adjustments to reconcile net income (loss) to net cash provided by operations:
Depreciation and amortization	873,216	776,401
Non-cash compensation	392,623	774,888
Bad debt expense	107,111	47,366
Obsolete inventory expense		36,354
Change in deferred tax asset / liability	(702,751)	(739,173)
(Gain) Loss on sale of equipment		2,135
Changes in assets and liabilities:
(Increase) decrease in accounts receivable	(469,591)	1,106,031
(Increase) decrease in inventory	(352,642)	(484,523)
(Increase) decrease in prepaid expenses/deposits	(92,136)	82,182
Increase (decrease) in accounts payable	(78,954)	(1,006,210)
Increase (decrease) in accrued expenses	(1,280,581)	70,757
Increase (decrease) long term contracts	(117,473)	(84,484)
Total Adjustments	(1,721,178)	581,724
Net Cash Provided (Used) by Operating Activities	(3,241,864)	(1,410,348)
Cash Flows from Investing Activities:
Purchase of property and equipment	(183,008)	(263,433)
Purchase of Long-term investments		(17,369)
Net Cash Used by Investing Activities	(183,008)	(280,802)
Cash Flows from Financing Activities:
Net (payments) proceeds on capital lease obligation	(112,516)	(106,568)
Net Cash Provided (Used) by Financing Activities	(112,516)	(106,568)
Loss on Currency Translation	(81,520)	(9,340)
Net Increase (Decrease) in Cash and Cash Equivalents	(3,618,908)	(1,807,058)
Cash and Cash Equivalents at Beginning of Period	4,884,275	3,873,338
Cash and Cash Equivalents at End of Period	$ 1,265,367	$ 2,066,280

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Note 4 - Investments (Details) (LEA Technology [Member], USD $)	Jun. 30, 2014	Dec. 31, 2013
LEA Technology [Member]
Note 4 - Investments (Details) [Line Items]
Investments	$ 6,824	$ 6,882

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Note 3 - Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	Useful Life		2014			2013
Production equipment		3 - 10	$	11,552,124		$	11,542,740
Lab equipment		3 - 10		179,896			181,432
Computer equipment		3 - 5		276,513			276,013
Vehicles		3		37,898			38,221
Furniture and fixture		5		72,736			68,169
Leasehold improvements		10		1,113,238			1,059,605
				13,232,405			13,166,180
Less Accumulated Depreciation				(8,031,337	)		(7,336,776	)
Net Property and Equipment			$	5,201,068		$	5,829,404

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Note 4 - Investments (Details) - Summary of Level 1-3 Financial Assets and Liabilities (USD $)	Jun. 30, 2014	Dec. 31, 2013
Fair Value, Inputs, Level 1 [Member]
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments	$ 0	$ 0
Total	0	0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments	0	0
Total	0	0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments	6,824	6,882
Total	$ 6,824	$ 6,882

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Note 5 - Definite-Life Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

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

Year ending December 31,	Amortization Expenses
2014	$	2,871
2015		5,742
2016		5,742
2017		3,486
2018		2,933
Thereafter		849
Total Amortization Expenses	$	21,623

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Note 1 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

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 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 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 as of December 31, 2013, prior to December 31, 2013 LiqTech NA, Inc. was owned 90% by LiqTech International AS and 10% by 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 Asia (“LiqTech Asia”) a 60% owned subsidiary of LiqTech Int. DK, incorporated in South Korea on July 20, 2006, is currently a dormant subsidiary.

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.

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 accompanying financial statements are unaudited. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2014 and 2013 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2013 audited financial statements. The results of operations for the periods ended June 30, 2014 and 2013 are not necessarily indicative of the operating results for the full year.

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 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 functional Currency of LiqTech Asia is South Korean Won. 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 periods ended June 30, 2014 and 2013. 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 -- 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 financial institution in the United States in excess of federally insured amounts at June 30, 2014 and December 31, 2013.

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 six months ended June 30, 2014 and the year ended December 31, 2013 is as follows:

	2014			2013
Allowance for doubtful accounts at the beginning of the period	$	608,356		$	1,243,500
Bad debt expense		107,111			72,548
Amount of receivables written off		-			(770,738	)
Effect of currency translation		(31,101	)		63,046
Allowance for doubtful accounts at the end of the period	$	684,366		$	608,356

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 3).

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

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

Revenue Recognition and Sales Incentives -- 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 various grants from government entities for development and use of silicon carbide membranes in various water filtration and treatment applications. Revenues from 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 grant multiplied by the 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 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 $12,486 and $20,739, for the six months ended June 30, 2014 and 2013, respectively.

Research and Development Cost -- The Company expenses research and development costs for the development of new products as incurred. Included in operating expense for the six months ended June 30, 2014 and 2013 were $140,419, and $258,239, 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.

                   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 that have been granted but have not been exercised.

Stock Options -- The Company have granted stock options to certain key employees. See Note 13. During the years presented in the accompanying consolidated financial statements, the Company has granted options. The Company accounts for options in accordance with the provisions of FASB ASC Topic 718, Compensation – Stock Compensation. Non-cash compensation costs of $392,623 and $774,888 have been recognized for the vesting of options granted to employees with an associated recognized tax benefit of $0 for the six months ended June 30, 2014 and 2013, 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 and liabilities, 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 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. The new standard is effective beginning in the first quarter of 2017; early adoption is prohibited. 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 condensed financial statements.

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Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Common Stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common Stock, shares authorized	100,000,000	100,000,000
Common Stock, shares issued	27,212,500	27,212,500
Common Stock, shares outstanding	27,212,500	27,212,500

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Note 11 - Significant Customers/Concentration

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

NOTE 11 - SIGNIFICANT CUSTOMERS / CONCENTRATION

The Company had four significant customers that accounted for 20%, 9%, 6% and 6% of total sales at June 30, 2014. The Company had no customers that accounted for more than 10% of total sales at June 30, 2013.

The Company sells products throughout the world; sales by geographical region are as follows for the three and six months ended June 30, 2014 and 2013: 

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2014		2013		2014		2013
United States and Canada	$	769,265	$	876,391	$	1,775,470	$	1,527,410
Australia		28,363		15,644		84,315		168,390
South America		-		4,760		16,845		25,380
Asia		188,312		332,930		494,933		1,151,482
Europe		2,987,747		1,576,196		4,799,626		3,332,407
	$	3,973,687	$	2,805,921	$	7,171,189	$	6,205,069

The Company’s sales by product line are as follows for the three and six months ended June 31, 2014 and 2013:

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2014		2013		2014		2013
Ceramic diesel particulate	$	2,054,689	$	1,539,971	$	3,618,516	$	3,472,276
Liquid filters		1,841,580		1,035,918		3,382,674		2,238,870
Kiln furniture		77,418		230,032		169,999		493,923
	$	3,973,687	$	2,805,921	$	7,171,189	$	6,205,069

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Document And Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 11, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	LIQTECH INTERNATIONAL INC
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		27,212,500
Amendment Flag	false
Entity Central Index Key	0001307579
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

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Note 12 - Subsequent Events

6 Months Ended

Jun. 30, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 12 – SUBSEQUENT EVENTS

The Company’s management reviewed material events through August 12, 2014.

Stock Offering - On July 22, 2014, the Company, entered into a purchase agreement with Craig-Hallum Capital Group LLC as Underwriter, pursuant to which the Company agreed to sell, and the Underwriter agreed to purchase for resale to the public an Offering, subject to the terms and conditions expressed therein, 6,956,522 shares of common stock of the Company, par value $0.001 per share at a price to the public of $1.50 per share. The Offering closed on July 28, 2014. The Company granted the Underwriter a 30-day option to purchase an additional 1,043,478 shares which was exercised by Craig-Hallum Capital Group LLC on July 25, 2014. The Company also issued to the Underwriter, for a price of $50, a warrant to purchase 400,000 shares at an exercise price of $1.65 per share. The warrants are immediately exercisable and will remain exercisable for five years.

Acquisition -On the July 28, 2014, the Company, through its subsidiary, LiqTech Int. DK, completed the acquisition of all of the issued and outstanding capital stock (the “Provital Shares”) of Provital Solutions A/S, a Danish company (“Provital”) from Masu A/S, a Danish company (“MASU”). In consideration for the Provital Shares, MASU received cash consideration in the sum of DKK12,600,000, that is, approximately USD$2,300,000, and 4,044,782 shares of the Company’s common stock (the “Payment Shares”). One-third (1/3) of the Payment Shares shall be subject to a lock-up period of six (6) months. The remaining two-thirds (2/3) of the Payment Shares shall be held in escrow and one-third of the Payment Shares will be released from escrow contingent upon Provital, for the year ending December 31, 2014, achieving (i) gross revenues of not less than DKK65,000,000 and EBITDA of DKK6,500,000, or (ii) EBITDA of not less than DKK10,000,000 and gross revenues of not less than DKK50,000,000. Another one-third (1/3) of the Payment Shares will be released from escrow contingent upon Provital, for the year ending December 31, 2015, achieving (i) gross revenues of not less than DKK120,000,000 and EBITDA of DKK12,000,000, or (ii) EBITDA of not less than DKK16,000,000 and gross revenues of not less than DKK80,000,000.

The purchase agreement includes “catch up” provisions that provide that the Payment Shares placed in escrow will be released from escrow if Provital (1) for the years ending December 31, 2014 and December 31, 2015, achieves accumulated gross revenues (i) exceeding DKK185,000,000 and EBITDA of DKK18,500,000, or (ii) EBITDA of not less than DKK26,000,000 and gross revenues of not less than DKK130,000,000 or (2) for the year ending December 31, 2016, achieves gross revenues exceeding DKK105,000,000 and EBITDA of not less than DKK21,000,000.

Change in Officers and Appointment of Director - Effective July 29, 2014, the board of directors (the “Board”) of the Company, accepted the amicable resignation of Finn Helmer from his position as Chief Executive Officer of the Company. Effective July 30, 2014, the Board appointed Mr. Sune Mathiesen to serve as CEO and as a Board member of the Company.

CEO Employment Agreement - On July 29, 2014, LiqTech Int. DK and Mr. Mathiesen entered into an Employment Agreement pursuant to which Mr. Mathiesen shall also serve as Director and Chief Executive Officer of the Company. In consideration for Mr. Mathiesen’s services to the Company, Mr. Mathiesen shall receive an annual base salary initially set at DKK 1,500,000. Mr. Mathiesen’s Employment Agreement also provides that he shall receive a yearly bonus of five percent (5%) of the average gross profit for LiqTech Int. DK and Provital Solutions A/S for any sales (revenue) greater than or equal to DKK130,000,000 per year. The calculation in connection with the bonus is described in the Employment Agreement. In addition, Mr. Mathiesen shall be entitled to five weeks’ vacation, a Company mobile phone, broadband connection in his residence, a Company laptop and reimbursement of Company-related travel expenses. The Company may terminate Mr. Mathiesen’s employment upon not less than 12 months’ notice and Mr. Mathiesen may terminate with 12 months’ notice to the end of the month. The contract is non-cancellable from both parties until December 31, 2016.

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(Unaudited) Consolidated Statements of Operations (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net Sales	$ 3,973,687	$ 2,805,921	$ 7,171,189	$ 6,205,069
Cost of Goods Sold	3,122,473	2,513,400	5,764,847	5,350,525
Gross Profit	851,214	292,521	1,406,342	854,544
Operating Expenses:
Selling expenses	929,277	715,592	1,598,824	1,289,517
General and administrative expenses	763,524	541,824	1,436,181	1,204,129
Non-cash compensation expenses	172,205	743,519	392,623	774,888
Research and development expenses	39,833	111,254	140,419	258,239
Total Operating Expense	1,904,839	2,112,189	3,568,047	3,526,773
Loss from Operations	(1,053,625)	(1,819,668)	(2,161,705)	(2,672,229)
Other Income (Expense)
Interest and other income	10,550	2,244	13,745	2,400
Interest (expense)	(10,599)	(12,952)	(22,120)	(24,657)
Gain (loss) on investments	1,278		(841)
Gain (loss) on currency transactions	(48,112)	77,199	(45,325)	(36,974)
Loss on sale of fixed assets		(2,135)		(2,135)
Total Other Income (Expense)	(46,883)	64,356	(54,541)	(61,366)
Loss Before Income Taxes	(1,100,508)	(1,755,312)	(2,216,246)	(2,733,595)
Income Tax Expense (Income)	(337,118)	(444,659)	(695,560)	(741,523)
Net Loss	(763,390)	(1,310,653)	(1,520,686)	(1,992,072)
Less Net Loss Attributable To Non-Controlled Interests in Subsidiaries	(1,254)	(2,551)	(3,114)	(14,159)
Net Loss Attributable To LiqTech	$ (762,136)	$ (1,308,102)	$ (1,517,572)	$ (1,977,913)
Basic Earnings Per Share (in Dollars per share)	$ (0.03)	$ (0.05)	$ (0.06)	$ (0.08)
Weighted Average Common Shares Outstanding (in Shares)	27,212,500	24,359,852	27,212,500	24,236,362
Diluted Earnings Per Share (in Dollars per share)	$ (0.03)	$ (0.05)	$ (0.06)	$ (0.08)
Weighted Average Common Shares Outstanding Assuming Dilution (in Shares)	27,212,500	24,359,852	27,212,500	24,236,362

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Note 6 - Leases

6 Months Ended

Jun. 30, 2014

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

NOTE 6 – LEASES

Operating Leases -- The Company leases office and production facilities under operating lease agreements expiring in August, 2018, March 2017, February 2017 and December 2016. 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 June 30, 2014 are as follows:

Year ending December	Operating Lease Payments
2014	$	317,256
2015		651,924
2016		668,935
2017		494,207
2018		312,032
Thereafter		-
Total Minimum Lease Payments	$	2,444,354

Lease expense charged to operations was $355,462 and $382,766 for the six months ended June 30, 2014 and 2013, respectively.

Capital Leases -- The Company leases equipment on various variable rate capital leases currently calling for monthly payments of approximately $12,040, $4,666, $3,021 and $2,152 expiring through April 2017. Included in property and equipment, at June 30, 2014 and December 31, 2013, the Company had recorded equipment on capital lease at $1,586,711 and $1,600,254, respectively, with related accumulated depreciation of $1,005,748 and $907,728, respectively.

During the six months ended June 30, 2014 and 2013, depreciation expense for equipment on capital lease amounted to $105,977, and $107,003, respectively, and has been included in depreciation expense. During the six months ended June 30, 2014 and 2013, interest expense on a capital lease obligation amounted to $20,968 and $26,307, respectively.

Future minimum capital lease payments are as follows for the periods ended December 31:

	Capital Lease Payments
2014	$	130,767
2015		224,837
2016		217,651
2017		139,755
2018		-
Thereafter		-
Total minimum lease payments		713,010
Less amount representing interest		(62,747	)
Present value of minimum lease payments		650,263
Less current portion		(192,086	)
Long-term lease payments	$	458,177

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Note 5 - Definite-Life Intangible Assets

6 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

Intangible Assets Disclosure [Text Block]

NOTE 5 - DEFINITE-LIFE INTANGIBLE ASSETS

At June 30, 2014 and December 31, 2013, definite-life intangible assets, net of accumulated amortization, consisted of patents on the Company’s products of $21,623 and $24,687, respectively. The patents are recorded at cost and amortized over two to ten years. Amortization expense for the six months ended June 30, 2014 and 2013 was $3,064 and $2,954, respectively.

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

Year ending December 31,	Amortization Expenses
2014	$	2,871
2015		5,742
2016		5,742
2017		3,486
2018		2,933
Thereafter		849
Total Amortization Expenses	$	21,623

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Note 4 - Investments (Tables)

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

As of June 30, 2014	Level 1		Level 2		Level 3
Investments		-		-		6,824
Total		-		-		6,824

As of December 31, 2013	Level 1		Level 2		Level 3
Investments		-		-		6,882
Total		-		-		6,882

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Accounting Policies, by Policy (Policies)

6 Months Ended

Jun. 30, 2014

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 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 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 as of December 31, 2013, prior to December 31, 2013 LiqTech NA, Inc. was owned 90% by LiqTech International AS and 10% by 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 Asia (“LiqTech Asia”) a 60% owned subsidiary of LiqTech Int. DK, incorporated in South Korea on July 20, 2006, is currently a dormant subsidiary.

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.

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 accompanying financial statements are unaudited. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2014 and 2013 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2013 audited financial statements. The results of operations for the periods ended June 30, 2014 and 2013 are not necessarily indicative of the operating results for the full year.

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.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Functional Currency / Foreign currency translation -- The functional currency of LiqTech International, Inc., LiqTech USA, Inc. and LiqTech NA is the U.S. Dollar. The Functional Currency of LiqTech Int DK 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 functional Currency of LiqTech Asia is South Korean Won. 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 periods ended June 30, 2014 and 2013. 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 and Cash Equivalents -- 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 financial institution in the United States in excess of federally insured amounts at June 30, 2014 and December 31, 2013.

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 six months ended June 30, 2014 and the year ended December 31, 2013 is as follows:

	2014			2013
Allowance for doubtful accounts at the beginning of the period	$	608,356		$	1,243,500
Bad debt expense		107,111			72,548
Amount of receivables written off		-			(770,738	)
Effect of currency translation		(31,101	)		63,046
Allowance for doubtful accounts at the end of the period	$	684,366		$	608,356

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 3).

Investment, Policy [Policy Text Block]

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

Goodwill and Intangible Assets, Policy [Policy Text Block]

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

Revenue 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 various grants from government entities for development and use of silicon carbide membranes in various water filtration and treatment applications. Revenues from 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 grant multiplied by the 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 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 $12,486 and $20,739, for the six months ended June 30, 2014 and 2013, respectively.

Research, Development, and Computer Software, Policy [Policy Text Block]

Research and Development Cost -- The Company expenses research and development costs for the development of new products as incurred. Included in operating expense for the six months ended June 30, 2014 and 2013 were $140,419, and $258,239, 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]

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 that have been granted but have not been exercised.

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

Stock Options -- The Company have granted stock options to certain key employees. See Note 13. During the years presented in the accompanying consolidated financial statements, the Company has granted options. The Company accounts for options in accordance with the provisions of FASB ASC Topic 718, Compensation – Stock Compensation. Non-cash compensation costs of $392,623 and $774,888 have been recognized for the vesting of options granted to employees with an associated recognized tax benefit of $0 for the six months ended June 30, 2014 and 2013, 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 and liabilities, 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 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. The new standard is effective beginning in the first quarter of 2017; early adoption is prohibited. 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 condensed financial statements.

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Note 9 - Loss Per Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

NOTE 9 – 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 six months ended June 30, 2014 and 2013:

	For the Three Months Ended June 30						For the Six Months Ended June 30
	2014			2013			2014			2013
Income (Loss) attributable to LiqTech International Inc.	$	(762,136	)	$	(1,308,102	)	$	(1,517,572	)	$	(1,977,913	)
Weighted average number of common shares used in basic earnings per share		27,212,500			24,359,852			27,212,500			24,236,362
Effect of dilutive securities, stock options and warrants		-			-			-			-
Weighted average number of common shares and potentially dilutive securities	$	27,212,500		$	24,359,852		$	27,212,500		$	24,236,362

For the six months ended June 30, 2014, Parent had 3,064,130 options outstanding to purchase common stock of the Parent at $1.50 to $3.60 per share and Parent had 7,025,575 warrants outstanding to purchase common stock of the Parent at $1.50 to $4.06 per share, which were not included in the loss per share computation because their effect would be anti-dilutive.

For the six months ended June 30, 2013, Parent had 1,964,130 options outstanding to purchase common stock of the Parent at $1.50 to $3.60 per share and Parent had 6,625,575 warrants outstanding to purchase common stock of the Parent at $1.50 to $4.06 per share, which were not included in the loss per share computation because their effect would be anti-dilutive.

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Note 7 - Agreements and Commitments

6 Months Ended

Jun. 30, 2014

Disclosure Text Block Supplement [Abstract]

Commitments Disclosure [Text Block]

NOTE 7 – AGREEMENTS AND COMMITMENTS

401(K) Profit Sharing Plan -- LiqTech NA has a 401(k) profit sharing plan and trust covering certain eligible employees. The amount LiqTech NA contributes is discretionary. For the six months ended June 30, 2014 and 2013, matching contributions were expensed and totaled $7,425 and $7,463, respectively.

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Note 8 - Income Taxes

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

 NOTE 8 – 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.

The temporary differences, tax credits and carry forwards gave rise to the following deferred tax asset (liabilities) at June 30, 2014 and December 31, 2013:

	2014			2013
Vacation accrual	$	4,161		$	4,161
Allowance for doubtful Accounts		13,955			13,955
Reserve for obsolete inventory		23,570			86,027
Net current tax assets	$	41,686		$	104,143
Business tax credit carryover		20,184			20,184
Deferred Compensation		202,309			202,309
Net operating loss carryover		3,132,619			2,367,568
Excess of book over tax depreciation		(726,555	)		(726,712	)
Long term tax asset	$	2,628,557		$	1,863,349

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%.

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 can difficult to determine and can only be estimated. Management estimates that it is more likely than not that the Company will generate adequate net profits to use the deferred tax assets; management has estimated that all of the deferred tax will be realized and consequently, a valuation allowance was not recorded.

As of June 30, 2014, the Company had net operating loss carryovers of approximately $6,481,000 for U.S. Federal purposes expiring through 2033; $3,020,000 for Danish tax purposes which do not expire; $418,000 for German tax purposes which do not expire and $513,000 for Singapore tax purposes which do not expire.

A reconciliation of income tax expense at the federal statutory rate to income tax expense at the Company’s effective rate is as follows at June 30, 2014 and 2013:

	2014			2013
Computed tax at expected statutory rate	$	(752,797	)	$	(924,608	)
State and local income taxes, net of federal benefits		(24,704	)		(8,533	)
Non-deductible expenses		40,763			111,329
Non-US income taxed at different rates		41,178			80,847
Other items		-			(558	)
Income tax expense (benefit)	$	(695,560	)	$	(741,523	)

The components of income tax expense (benefit) from continuing operations for the six months ended June 30, 2014 and 2013 consisted of the following:

	2014			2013
Current income tax expense:
Danish	$	-		$	-
Korea		-			-
Federal		-			-
State		-			-
Current tax expense	$	-		$	-
Deferred tax expense (benefit) arising from:
Deferred Compensation	$	-		$	-
Net operating loss carryover		(757,272	)		(728,604	)
Allowance for doubtful accounts		-			-
Reserve for obsolete inventory		61,712			(12,919	)
Deferred tax expense	$	(695,560	)	$	(741,523	)
Income tax benefit	$	(695,560	)	$	(741,523	)

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

 The Company files Danish and U.S. federal and Minnesota state income tax returns. LiqTech International AS is generally no longer subject to tax examinations for years prior to 2009 for their Danish tax returns. LiqTech NA is generally no longer subject to tax examinations for years prior to 2009 for U.S. federal and U.S. states tax returns.

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Note 10 - Stockholders' Equity

6 Months Ended

Jun. 30, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 10 - STOCKHOLDERS' EQUITY

 
Common Stock -- Parent has 100,000,000 authorized shares of common stock, $0.001 par value. As of June 30, 2014 and December 31, 2013, respectively, there were 27,212,500 and 27,212,500 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 Issuance

During the year 2013, the Company issued 100,000 shares of common stock valued at $320,000 for services rendered.

The Company issued an additional 300,000 shares of restricted stock valued at $960,000 for services provided and to be provided by the board of directors. The Company will recognized the non-cash compensation of the award over the requisite service period, of which 133,333 shares vested on December 31, 2013, 133,333 shares will vest on December 31, 2014 and 33,334 shares will vest on December 31, 2015. As of June 30, 2014, the Company has recorded deferred compensation of $320,001 and non-cash compensation expense of $213,333 relating to the awards for the period ended June 30, 2014.

On October 9, 2013 we announced that the warrant and option exercise raised $4,051,000 with holders exercising 2,701,000 warrants and stock options which included the exercise of 100,000 warrants by Aldo Petersen, Chairman of LiqTech, 25,000 stock options by Lasse Andreassen, founder and former board member of LiqTech and 50,000 stock options by Soren Degn, CFO of LiqTech. The board noted that the additional capital was an orderly solution to improving the Company's capital structure as well as enhancing the ability of LiqTech to list on an exchange. In addition, the new capital gave the Company additional flexibility to generate new orders and to sustain future growth.

On March 2, 2012, Parent completed a registered public offering of its common stock. As part of the closing, Parent issued 2,511,500 shares of common stock at a per share price of $3.25 and generated net proceeds of approximately $7.1 million, net of offering cost of $1,082,668. 

Common Stock Purchase Warrants

A summary of the status of the Warrants outstanding at June 30, 2014 is presented below:

		Warrants Outstanding						Warrants Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	1.50		3,874,000		2.50	$	1.50		3,874,000	$	1.50
$	2.35		400,000		0.75	$	2.35		400,000	$	2.35
$	2.70		2,626,000		2.50	$	2.70		2,626,000	$	2.70
$	4.0625		125,575		2.68	$	4.0625		125,575	$	4.0625
Total			7,025,575		2.40	$	2.04		7,025,575	$	2.04

At June 30, 2014 the Company had no non-vested warrants. We have recorded non-cash compensation expense of $59,400 for the period ended June 30, 2014 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 underlying the warrants.

On October 9, 2013, the Company issued 2,626,000 new warrants equal to the number of warrants exercised by the warrant holder having the same terms and conditions as the warrants exercised by the warrant holder, respectively, except each warrant issued has a strike price of $2.70 per share, the closing bid price of Parent’s common stock as quoted on the OTCBB on September 23, 2013.  The net proceeds from the offering were allocated to the stock and warrants based on their relative fair values. The Company recorded the relative fair value of the warrants of $1,124,928 as stock offering costs.

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 is empowered to grant stock options to employees, officers, and directors of the Companies. At June 30, 2014, 3,064,130 options were granted and outstanding under the Plan. 

The Company recognizes compensation costs for stock option awards to employees based on their grant-date fair value. The value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model. The 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)		3-4
Volatility		40.74
Risk free interest rate		0.67%
Dividend yield		0%

The Company recognized stock based compensation expense related to the options of $119,891 and $265,266 for the six months ended June 30, 2014 and 2013, respectively. At June 30, 2014 the Company had approximately $698,553 of unrecognized compensation cost related to non-vested options expected to be recognized through March 31, 2017.

A summary of the status of the options outstanding under the Company’s stock option plans at June 30, 2014 is presented below:

		Options Outstanding				Options Exercisable
	Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price	Number Exercisable		Weighted Average Exercise Price
$	1.50	377,500	0.65	$	1.50	377,500	$	1.50
$	1.90	500,000	2.58	$	1.90	166,667	$	1.90
$	2.35	600,000	2.75	$	2.35	150,000	$	2.35
$	2.70	75,000	0.65	$	2.70	75,000	$	2.70
$	3.00 - $3.60	1,511,630	0.66	$	3.06	1,511,630	$	3.04
Total		3,064,130	1.38	$	2.53	2,280,830	$	2.66

A summary of the status of the options at June 30, 2014, and changes during the period is presented below:

	June 30, 2014
	Shares		Weighted Average Exercise Price		Average Remaining Life		Weighted Average Intrinsic Value
Outstanding at beginning of period		2,564,130	$	2.65		1.64	$	283,125
Granted		500,000		1.90		2.58		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Expired		-		-		-		-
Outstanding at end of period		3,064,130	$	2.53		1.38	$	221,200
Vested and expected to vest		3,064,130	$	2.53		1.38	$	221,200
Exercisable end of period		2,280,830	$	2.66		0.93	$	194,533

At June 30, 2014 the Company had 783,300 non-vested options with a weighted average exercise price of $2.16 and with a weighted average grant date fair value of $0.986, resulting in unrecognized compensation expense of $495,015, which is expected to be expensed over a weighted-average period of 2.65 years.

The total intrinsic value of options at June 30, 2014 was $221,200. Intrinsic value is measured using the fair market value at the date of exercise (for shares exercised) or at June 30, 2014 (for outstanding options), less the applicable exercise price. 

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Note 3 - Property and Equipment (Details) - Property and Equipment (USD $)	6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Property, Plant and Equipment [Line Items]
Property and equipment	$ 13,232,405	$ 13,166,180
Less Accumulated Depreciation	(8,031,337)	(7,336,776)
Net Property and Equipment	5,201,068	5,829,404
Production Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	11,552,124	11,542,740
Production Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful life	3 years
Production Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful life	10 years
Lab Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	179,896	181,432
Lab Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful life	3 years
Lab Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful life	10 years
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	276,513	276,013
Computer Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful life	3 years
Computer Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful life	5 years
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Useful life	3 years
Property and equipment	37,898	38,221
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Useful life	5 years
Property and equipment	72,736	68,169
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Useful life	10 years
Property and equipment	$ 1,113,238	$ 1,059,605
Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful life	3 years
Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful life	10 years

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Note 10 - Stockholders' Equity (Details) - Assumptions Used to Calculate the Fair Values of Stock Options	6 Months Ended
	Jun. 30, 2014
Note 10 - Stockholders' Equity (Details) - Assumptions Used to Calculate the Fair Values of Stock Options [Line Items]
Volatility	40.74%
Risk free interest rate	0.67%
Dividend yield	0.00%
Minimum [Member]
Note 10 - Stockholders' Equity (Details) - Assumptions Used to Calculate the Fair Values of Stock Options [Line Items]
Expected term (in years)	3 years
Maximum [Member]
Note 10 - Stockholders' Equity (Details) - Assumptions Used to Calculate the Fair Values of Stock Options [Line Items]
Expected term (in years)	4 years

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Note 2 - Inventory (Tables)

6 Months Ended

Jun. 30, 2014

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

	2014			2013
Furnace parts and supplies	$	1,193,192		$	1,025,225
Raw materials		671,271			631,524
Work in process		1,717,590			1,799,888
Finished goods		1,111,233			1,062,865
Reserve for obsolescence		(82,038	)		(260,896	)
Net Inventory	$	4,611,248		$	4,258,606

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Note 8 - Income Taxes (Tables)

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

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

	2014			2013
Vacation accrual	$	4,161		$	4,161
Allowance for doubtful Accounts		13,955			13,955
Reserve for obsolete inventory		23,570			86,027
Net current tax assets	$	41,686		$	104,143
Business tax credit carryover		20,184			20,184
Deferred Compensation		202,309			202,309
Net operating loss carryover		3,132,619			2,367,568
Excess of book over tax depreciation		(726,555	)		(726,712	)
Long term tax asset	$	2,628,557		$	1,863,349

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

	2014			2013
Computed tax at expected statutory rate	$	(752,797	)	$	(924,608	)
State and local income taxes, net of federal benefits		(24,704	)		(8,533	)
Non-deductible expenses		40,763			111,329
Non-US income taxed at different rates		41,178			80,847
Other items		-			(558	)
Income tax expense (benefit)	$	(695,560	)	$	(741,523	)

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

	2014			2013
Current income tax expense:
Danish	$	-		$	-
Korea		-			-
Federal		-			-
State		-			-
Current tax expense	$	-		$	-
Deferred tax expense (benefit) arising from:
Deferred Compensation	$	-		$	-
Net operating loss carryover		(757,272	)		(728,604	)
Allowance for doubtful accounts		-			-
Reserve for obsolete inventory		61,712			(12,919	)
Deferred tax expense	$	(695,560	)	$	(741,523	)
Income tax benefit	$	(695,560	)	$	(741,523	)

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Note 10 - Stockholders' Equity (Details) (USD $)	0 Months Ended		3 Months Ended		6 Months Ended		12 Months Ended	0 Months Ended		6 Months Ended					6 Months Ended				12 Months Ended	0 Months Ended
	Oct. 09, 2013	Mar. 02, 2012	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Oct. 09, 2013 Warrant [Member] Board of Directors Chairman [Member]	Oct. 09, 2013 Warrant [Member]	Jun. 30, 2014 Warrant [Member]	Jun. 30, 2014 Restricted Stock [Member] Director [Member]	Dec. 31, 2015 Restricted Stock [Member]	Dec. 31, 2014 Restricted Stock [Member]	Dec. 31, 2013 Restricted Stock [Member]	Jun. 30, 2014 Employee Stock Option [Member] 2011 Stock Options Plan [Member]	Jun. 30, 2013 Employee Stock Option [Member] 2011 Stock Options Plan [Member]	Jun. 30, 2014 Employee Stock Option [Member]	Jun. 30, 2013 Employee Stock Option [Member]	Dec. 31, 2013 Director [Member]	Oct. 09, 2013 Founder and Board Member [Member]	Oct. 09, 2013 Chief Financial Officer [Member]	Jun. 30, 2014 2011 Stock Options Plan [Member]
Note 10 - Stockholders' Equity (Details) [Line Items]
Common Stock, Shares Authorized			100,000,000		100,000,000		100,000,000
Common Stock, Par or Stated Value Per Share (in Dollars per share)			$ 0.001		$ 0.001		$ 0.001
Common Stock, Shares, Issued			27,212,500		27,212,500		27,212,500
Common Stock, Shares, Outstanding			27,212,500		27,212,500		27,212,500
Stock Issued During Period, Shares, New Issues		2,511,500					100,000
Stock Issued During Period, Value, New Issues (in Dollars)							$ 320,000
Stock Issued During Period, Shares, Restricted Stock Award, Gross																			300,000
Stock Issued During Period, Value, Restricted Stock Award, Gross (in Dollars)																			960,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number												33,334	133,333	133,333
Deferred Compensation Share-based Arrangements, Liability, Current (in Dollars)											320,001
Allocated Share-based Compensation Expense (in Dollars)			172,205	743,519	392,623	774,888				59,400	213,333				119,891	265,266	392,623	774,888
Proceeds from Warrants and Stock Options Exercised (in Dollars)	4,051,000
Share-based Compensation Arrangement by Share-based Payment Award, Warrants and Options, Exercises in Period (in Dollars)	2,701,000
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Exercised								100,000	2,626,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period																				25,000	50,000
Share Price (in Dollars per share)		$ 3.25
Proceeds from Issuance of Common Stock (in Dollars)		7,100,000
Payments of Stock Issuance Costs (in Dollars)		1,082,668
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)	$ 2.70
Warrants Not Settleable in Cash, Fair Value Disclosure (in Dollars)	1,124,928
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number			3,064,130		3,064,130		2,564,130			7,025,575												3,064,130
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options (in Dollars)			495,015		495,015																	698,553
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares			783,300		783,300
Share-based Compensation Arrangements by Share-based Payment Award, Options, Non-vested, Weighted Average Exercise Price (in Dollars per share)					$ 2.16
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value (in Dollars per share)			$ 0.986		$ 0.986
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition					2 years 237 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value (in Dollars)			$ 221,200		$ 221,200		$ 283,125

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Note 6 - Leases (Details) - Future Minimum Capital Lease Payments (USD $)	Jun. 30, 2014	Dec. 31, 2013
Future Minimum Capital Lease Payments [Abstract]
2014	$ 130,767
2015	224,837
2016	217,651
2017	139,755
Total minimum lease payments	713,010
Less amount representing interest	(62,747)
Present value of minimum lease payments	650,263
Less current portion	(192,086)	(208,419)
Long-term lease payments	$ 458,177	$ 554,360

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(Unaudited) Consolidated Statements of Other Comprehensive Income (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net Income (Loss)	$ (763,390)	$ (1,310,653)	$ (1,520,686)	$ (1,992,072)
Currency Translation, Net of Taxes	14,003	83,648	(22,200)	(22,799)
Other Comprehensive Income (Loss)	(749,387)	(1,227,005)	(1,542,886)	(2,014,871)
Comprehensive Income (Loss) Attributable To Non-controlling Interest in Subsidiaries	174	11,392	(183)	(216)
Comprehensive Income (Loss) Attributable To LiqTech International Inc.	$ (749,213)	$ (1,238,397)	$ (1,543,069)	$ (2,014,655)

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Note 4 - Investments

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

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

NOTE 4 – INVESTMENTS

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 June 30, 2014	Level 1		Level 2		Level 3
Investments		-		-		6,824
Total		-		-		6,824

As of December 31, 2013	Level 1		Level 2		Level 3
Investments		-		-		6,882
Total		-		-		6,882

At June 30, 2014 our total investment of $6,824 consisted of an investment in LEA Technology in France to strengthen our sales channels in the French market.

At December 31, 2013 our total investment of $6,882 consisted of an investment in LEA Technology in France to strengthen our sales channels in the French market.

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Note 9 - Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

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

	For the Three Months Ended June 30						For the Six Months Ended June 30
	2014			2013			2014			2013
Income (Loss) attributable to LiqTech International Inc.	$	(762,136	)	$	(1,308,102	)	$	(1,517,572	)	$	(1,977,913	)
Weighted average number of common shares used in basic earnings per share		27,212,500			24,359,852			27,212,500			24,236,362
Effect of dilutive securities, stock options and warrants		-			-			-			-
Weighted average number of common shares and potentially dilutive securities	$	27,212,500		$	24,359,852		$	27,212,500		$	24,236,362

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Note 5 - Definite-Life Intangible Assets (Details) - Expected Future Amortization Expense (USD $)	Jun. 30, 2014
Expected Future Amortization Expense [Abstract]
2014	$ 2,871
2015	5,742
2016	5,742
2017	3,486
2018	2,933
Thereafter	849
Total Amortization Expenses	$ 21,623

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Note 1 - Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

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

	2014			2013
Allowance for doubtful accounts at the beginning of the period	$	608,356		$	1,243,500
Bad debt expense		107,111			72,548
Amount of receivables written off		-			(770,738	)
Effect of currency translation		(31,101	)		63,046
Allowance for doubtful accounts at the end of the period	$	684,366		$	608,356