LiqTech International, Inc. Announces Private Placement Transaction of up to $10 Million With Existing Institutional Investors

Rhea-AI Summary

LiqTech International, Inc. (NASDAQ: LIQT) has announced a private placement transaction of up to $10 million with existing institutional investors. The deal includes:

• 3,630,129 shares of common stock
• 1,369,871 pre-funded warrants
• Warrants to purchase up to 5,000,000 shares

The combined purchase price is $2.00 per share and accompanying warrant. The transaction will close in two tranches, with the first tranche to 19.99% of outstanding shares. LiqTech plans to use the proceeds to fund commercial development in the U.S. oil & gas sector, expand efforts in the European and U.S. swimming pool sector, and develop a new initiative in the marine exhaust gas recirculation water treatment segment.

Positive

• Secured $10 million in funding through private placement
• Support from existing institutional investors indicates confidence in the company
• Funds allocated for strategic growth initiatives in key sectors
• Potential for increased market presence in U.S. oil & gas and swimming pool sectors
• Entry into new marine exhaust gas recirculation water treatment segment

Negative

• Potential dilution of existing shareholders due to new share issuance
• Second tranche of funding dependent on shareholder approval
• Warrants may lead to further dilution if exercised in the future

Insights

Financial Analyst

This private placement is a significant capital raise for LiqTech, bringing in $10 million in gross proceeds. For a company with a market cap of just $17.4 million, this represents a substantial cash injection, nearly 57.5% of its current market value. The structure of the deal, combining common stock, pre-funded warrants and warrants, provides flexibility for investors while potentially diluting existing shareholders.

The pricing at $2.00 per share is noteworthy, as it likely represents a premium or discount to the current trading price, which could impact market perception. The 5-year warrant term at the same price suggests investor confidence in long-term value creation. However, the need for shareholder approval for the second tranche introduces some uncertainty.

The stated use of proceeds focuses on growth initiatives in key sectors: U.S. oil & gas, European and U.S. swimming pools and marine exhaust gas recirculation water treatment. This diversification strategy could potentially reduce risk and open new revenue streams, but execution will be critical given the company's current size and resources.

Market Research Analyst

LiqTech's strategic focus on high-growth sectors is promising. The U.S. oil & gas industry is experiencing a resurgence, with increased demand for advanced filtration technologies to meet environmental regulations. The swimming pool sector in Europe and the U.S. has seen steady growth, driven by residential construction and renovation trends. The marine EGR water treatment segment represents a new opportunity aligned with stricter maritime emissions standards.

However, entering these diverse markets simultaneously may stretch the company's resources thin. The success of this strategy will depend on LiqTech's ability to effectively allocate the new capital and rapidly gain market share against established competitors. The company's emphasis on its "unique capabilities" in high-tech filtration suggests a differentiated product offering, but market penetration and scalability remain key challenges.

Investors should closely monitor LiqTech's progress in these sectors over the next 12-18 months to gauge the effectiveness of this capital deployment and its impact on revenue growth and profitability.

BALLERUP, Denmark, Sept. 30, 2024 /PRNewswire/ -- LiqTech International, Inc. (NASDAQ: LIQT), a high-tech filtration technology company that manufactures and markets highly specialized filtration products and systems, today announced that it has entered into a definitive securities purchase agreement with existing institutional investors (the "Private Placement").

The Private Placement will consist of an aggregate of 3,630,129 shares of common stock, 1,369,871 pre-funded warrants to purchase shares of common stock, and warrants to purchase up to an aggregate of 5,000,000 shares of common stock. The combined purchase price of one share of common stock and one accompanying warrant to purchase one share of common stock is $2.00. The combined purchase price of one pre-funded warrant and one accompanying warrant to purchase one share of common stock is $1.999. The warrants will have an exercise price of $2.00 per share and a term of 5 years.

The Private Placement is expected to close in two tranches. The first tranche will consist of 29,277 shares, 555,302 pre-funded warrants, and 584,529 warrants, an amount in the aggregate equal to 19.99% of shares outstanding immediately prior to the entry into the Private Placement (the "Exchange Cap"). The second tranche will consist of 3,600,902 shares, 814,569 pre-funded warrants, and 4,415,471 warrants, and will close after shareholder approval is obtained on the issuance of the shares. Following the closing of both tranches, the transaction will result in initial aggregate gross proceeds of $10 million to the Company.

LiqTech intends to use the proceeds from the Private Placement to fund the Company's ongoing commercial development in the U.S. oil & gas sector, expansion of its commercial efforts in the European and U.S. swimming pool sector, and development of a new initiative to enter the marine exhaust gas recirculation (EGR) water treatment segment, each of which are critical components to the Company's  growth strategy and path to profitability.

"We would like to thank our existing institutional investors for their consistent support and strong conviction with respect to our company, our management team, and our future opportunities," commented Fei Chen, CEO of LiqTech. "We look forward to the continued execution of our strategic plan aimed at leveraging the unique capabilities of LiqTech's high-tech filtration technology in large, growing end markets in the future."

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, nor may there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

ABOUT LIQTECH INTERNATIONAL, INC.

LiqTech International, Inc., a Nevada corporation, is a high-tech filtration technology company that provides state-of-the-art ceramic silicon carbide filtration technologies for gas and liquid purification. LiqTech's silicon carbide membranes are designed to be used in the most challenging purification applications, and its silicon carbide filters are used to control diesel exhaust soot emissions. Using nanotechnology, LiqTech develops products using its proprietary silicon carbide technology, resulting in a wide range of component membranes, membrane systems, and filters for both microfiltration and ultrafiltration applications. By incorporating LiqTech's SiC liquid membrane technology with the Company´s extensive systems design experience and capabilities, LiqTech offers unique, modular designed filtration solutions for the most difficult water purification applications.

For more information, please visit: www.liqtech.com 

Follow LiqTech on Linkedln: http://www.linkedin.com/company/liqtech-international 

Follow LiqTech on Twitter: https://twitter.com/LiqTech

Forward-Looking Statements
This press release contains "forward-looking statements." Although the forward-looking statements in this release reflect the good faith judgment of management, forward-looking statements are inherently subject to known and unknown risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged to carefully review and consider the various disclosures made by us in the reports filed with the Securities and Exchange Commission, including the risk factors that attempt to advise interested parties of the risks that may affect our business, financial condition, results of operation, and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this release.

LiqTech Company Contact  
Phillip Massie Price, Interim Chief Financial Officer       
LiqTech International, Inc.                             
Phone: +45 31313993 
pmp@liqtech.com

LiqTech Investor Contact      
Robert Blum 
Lytham Partners, LLC  
Phone: 602-889-9700
liqt@lythampartners.com 

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SOURCE LiqTech International, Inc.

FAQ

What is the total value of LiqTech's private placement transaction announced on September 30, 2024?

LiqTech International, Inc. (NASDAQ: LIQT) announced a private placement transaction of up to $10 million with existing institutional investors.

How does LiqTech plan to use the proceeds from the private placement?

LiqTech intends to use the proceeds to fund commercial development in the U.S. oil & gas sector, expand efforts in the European and U.S. swimming pool sector, and develop a new initiative in the marine exhaust gas recirculation water treatment segment.

What is the purchase price for shares and warrants in LiqTech's private placement?

The combined purchase price of one share of common stock and one accompanying warrant to purchase one share of common stock is $2.00.

How many tranches will LiqTech's private placement close in?

The private placement is expected to close in two tranches, with the first tranche to 19.99% of outstanding shares and the second tranche requiring shareholder approval.