WELCOME [] · Spend on water supply, transport, treatment, storage, and disposal has increased 12%...

Tuesday, January 21, 2020

Investor Day

WELCOME

improving our future

Cautionary Statement

Forward-Looking Statements

This presentation contains "forward-looking statements“ within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Although the forward-looking statements in this presentation 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 our 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 presentation.


Agenda

• 2019 Financial Highlights

• Marine Scrubber Market Update

• Capacity Expansion – Hobro (Systems manufacturing)

• Capacity Expansion – Ballerup (Ceramics manufacturing)

• New Products and Markets

• Oil & Gas

• Our Promise for a Sustainable Future

• 2020 IR Calendar


Highlights 2019


2019 Highlights• Preliminary Financial Results

• FY 2019 revenue of $32.4 million, an increase of approximately 265% compared to fiscal year 2018 revenue of $12.3 million

• Fourth quarter 2019 revenue of $6.0 million, in line with previously announced expectations

• FY 2019 income from operations expected to be approximately $0.1 million, compared to a loss of $4.5 million in fiscal year 2018

• Operations• Commercial breakthrough in the marine scrubber industry during 2019• Number of pilot projects completed into adjacent industries to further

expand our technology as we move into 2020 and beyond• Expansion of our Hobro facility• Installation of the first of four planned new furnaces for our Ballerup

facility• Successful completion of the BS Plastics acquisition

• Balance Sheet• Established a $5 million line of credit at attractive interest rates• Solid cash balance of $11.6 million (September 30, 2019)

RECORD REVENUE

PROFITABILITY

MANUFACTURING EXPANSION

STRONG BALANCE SHEET


Revenue Growth

$2.4

$3.6 $3.3 $3.1

$7.4

$9.3$9.7

$6.2

$12.0

$0

$2

$4

$6

$8

$10

$12

$14

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 E

Reflects impact of mechanical issues on two of four legacy furnace

US

$ M

illion

s

FYE December


Gross Margin Improvement

-2.5%

18.3%

8.6%6.1%

19.9%22.3% 23.0%

40.0%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 2021 Goal


Operating Profitability

($4.5)

$0.1

($5)

($4)

($3)

($2)

($1)

$0

$1

2018 2019

US

$ M

illion

s

FYE December

Turned the Company profitable in 2019 with expectation for further growth in 2020


Marine Scrubber Market Update


+90 Global Ports Banning Open Loop Discharge


Scrubber Market Opportunity

• The marine scrubber market is moving from open loop systems to closed loop systems

• 10% closed loop in 2019, expected to be 25-50% closed loop for new retrofits between 2020 and 2025

• Key drivers for vessels moving from open loop to close loop• +90 ports around world banning open loop discharge• Anticipation of a global open loop discharge ban• End user desire for most environmentally favorable products

Through 2019

Total Scrubbers Installed 4,000

Closed Loop Installations 10%, or ~400

Current Addressable Market @ $400,000/system $160 Million

2020 Through 2025

Total Additional Scrubbers Expected to be Installed 4,000 – 8,000

Closed Loop Installations 25-50%, or ~1,000–4,000

Potential Addressable Market @ $400,000/system $400 Million - $1.6 Billion

TOTAL OPEN LOOP BAN WOULD CREATE $3 - $5 BILLION OPPORTUNITY

UP TO $1.6 BILLION

Of additional revenue opportunity for LiqTech between 2020 and 2025

from marine scrubbers


Capacity ExpansionHobro, Denmark


Production Movie- Hobro Facility


Capacity ExpansionBallerup, Denmark


Manufacturing / Ramp UpBallerup, Copenhagen


Silicon Carbide Manufacturing Ramp Up

• Capacity expansion: To meet market demands

• Quality: To achieve uniformity from batch to batch

• Cost optimization: To reach higher margins


Manufacturing Ramp Up

RAMP UP

DECOM-MISSIONING

Nov. 2019

Old Furnace#1

Rev. $10-12 M

Dec. 2019

Furnace#1

Rev. $40-50 M

Old Furnace#2

Rev. $10-12 M

Feb. 2020

Furnace#2

Rev. $40-50 M

Apr. 2020

Furnace#3

Rev. $40-50 M

Old Furnace#3

Rev. $10-12 M

Jun. 2020

Furnace#4

Rev. $40-50 M

Old Furnace#4

R&DRev.

$10-12 M

Q3-Q4 2020

Furnace#5

Rev. $40-50 M

Q3-Q4 2020

Furnace#6

Rev. $40-50 M

Potential


Ramp Up/ Revenue Capacity

Revenue Capacity

Q4 2019: $20 - 25 M

Q1 2020: $60 - 75 M

Q2 2020: $100 - 125 M

Q3 2020: $160 – 200 M


Manufacturing Ramp Up


Ramp Up/ Investments

Investments

Furnaces #1-4: $4 M

Power Plant (3600 AMP): $0.8 M

Cooling Plant (5400 kW): $0.8 M

Others: $0.4 M

Total: $6.0 M

Power Central High Temp Furnace

Transformer Supply Cooling Plant


Ramp Up / AutomationBallerup, Copenhagen


Ramp Up/ Process Transition

• Traditional manufacturing processes:


Automation/ Investments

• Upgrading traditional manufacturing processes by implementing automation

• Identified manual fabrication processes- Cutting - Automation- Coating - Robot technology- Grinding- Marking

• LEAN manufacturing• Internal & external resources

2019

2020

+


Products & Developments


Silicon CarbideMicrotechnology Development

20 µm

3 mm 3 mm

Membrane technology


Membrane Products & Development

CURRENT OFFERING

2020 Q2

2020 Q3

2021-

PRODUCTS

MF, UF, DPF

….+ DISC, FLAT SHEET

….+ NF

….+ OXID PRODUCTS

FOOD & BEVERAGE REFINERIESPHARMACEUTICALS

DRINKING WATERWATER UTILITIES


New Products & Markets


New Products- Marine

• New MK7 Standardized Water Treatment System

• Water Maker – Desalination

• Bilge Water Treatment System

• NOx Reduction System

• Black Carbon Reduction System

• Pool System for Cruise Ships & Yachts

Lower CostMore Efficient

Ceramic / RO

Tightening legislation



Water QualitySmaller Footprint


New Products

• OEM Membranes

• Filter Press – Stand Alone Systems

Estimated Market Size$8 BN

Estimated Market Size$3 BN


Future Addressable Market Opportunities

Industry 2015 2020 2025 2030 2035

Marine

Oil & Gas

Power Plants

Drinking Water

Water Reuse

Food & Beverage

Pharmaceuticals

Product Applications

Marine Scrubber, NOx Reduction, Carbon Black Reduction, Drinking Water, Bilge Water, Pool

Produced Water, Unconventional Oil & Gas, EOR, Refinery Wastewater

Condensate Water, Scrubbers, Makeup Water

Heavy Metal Removal, Pre-RO, RO, Back-Wash Reclamation

Wastewater Reuse, Water Reclamation

Process Water

Process Water


LiqTech Water Treatment Solution

Oil & Gas


Agenda

• Introduction to LiqTech targeted segments within Oil & Gas

• LiqTech Silicon Carbide (SiC) membrane technology characteristics

• LiqTech Oil & Gas experience and exposure to Oil & Gas applications

• Summary


What Is Produced Water?• Natural formation water and/or injection water

• Up to 10 barrels water per 1 barrel of oil!

Produced Water Treatment Scenario Purpose

Discharge• To meet discharge levels for Oil in water concentrations (OiW)• Conventional technology challenged (Walnut shell filters and flotation

units• Recover more oil

Re-injection• Protect formation – maintain reservoir permeability• Recover more oil• Extend well lifetime• Protect high pressure pumps• Bacteria removal (for H2S reduction)

Other purposes • Pre-RO• Irrigation• Cooling systems


Background – Oil & Gas Produced Water

Produced Water (PW) is the highest volume liquid waste stream generated by the petroleum industry. Historically, the treatment of PW has been limited to free oil and suspended solids removal, using physical separation technologies, and injection in disposal wells or surface discharge.

However, because of new regulations combined with geological restrictions and local water scarcity, the drive to have a greater fraction of the PW more extensively treated and ultimately reused is increasing. Moreover, the growth in the application of water intensive processes to extract unconventional oil & gas resources, in particular shale plays and oil sands, has increased the need for cost-effective treatment and reuse of PW to reduce freshwater uptakes.


Background – Oil & Gas Produced Water

New regulations combined with geological restrictions and local water scarcity, the drive to have a greater fraction of the PW more extensively treated and ultimately reused is increasing. Moreover, the growth in the application of water intensive processes to extract unconventional oil & gas resources, in particular shale plays and oil sands, has increased the need for cost-effective treatment and reuse of PW to reduce freshwater uptakes.

By technology, the tertiary produced water treatment systems segment is expected to hold prominent value shares of the global produced water treatment systems market. This has majorly resulted from the increasing technical advances over the years to eliminate more than 95% contaminants from produced water.Source: Future Markets Insights

Market Value in 2019~ US$ 3,659 Mn

CAGR for 2019-2029~ 5.7%

Lucrative SegmentTertiary Systems


Background- Fracking Flow Back

Fracking water management market (Source: Bluefield Research)

Water management for the fracking sector has maintained a steady clip since 2017. Spend on water supply, transport, treatment, storage, and disposal has increased 12% per year from $11.74 billion to a projected $15.49 billion by the close of 2019.

Water management spend for hydraulic fracturing is forecasted to average $17 billion per year from 2019 through 2028. Encouraged by growing demand for scaling water supplies and disposal needs, a host of midstream water companies backed by private equity and wealth funds are positioned to seize the opportunity going forward.

Bluefield’s analysis indicates two fundamental shifts since the last market collapse. The overall resiliency to price swings of upstream oil and gas in the U.S. has increased for water service providers, thereby encouraging increased investment in related infrastructure. Secondly, water management strategies have zeroed-in on water transfers, which make up approximately 49% of total water management spend.


Application Opportunities- Oil & Gas

Application Objective LiqTech Potential

Produced water

Surface dischargeRe-injection

Re-use for other purpose

Meet tightening environmental legislationFacilitate re-injection in low permeable reservoirs – increase well lifetimeWater scarcity – reuse for injection or irrigation

Unconventional/EOR

Flowback from fracking

SAGD

Polymer flooded produced water

Water scarcity – reuse for injection or irrigationWater scarcity – reuse for injection or irrigationFacilitate re-injection

Refinery wastewaterCeramic MBRRemoval of heavy metalsWet gas scrubbing

Limited insightLimited insightLimited insight


Tertiary Treatment Objectives for PW?

• For discharge:• Meet discharge levels for oil content, where conventional technologies (walnut filters and flotation units)

cannot

• Re-injection of treated produced water:• Remove particles and oil to maintain reservoir permeability

• Increase production• Extend well lifetime• Reduce energy consumption

• Removes solids to protect high pressure pumps• Recover more oil• Bacteria removal (for H2S reduction)

• Produced water reuse for other purposes:• Remove oil prior to Reverse Osmosis for desalination or MBR process• Irrigation• Cooling systems


Conventional Technology Limitations• Small droplets are difficult to remove

• Take long time to rise to surface

• Oil-emulsion very difficult to handle

• Chemicals used to increase removal of small droplets (ex. IGF)


SiC Membrane Properties• pH range: 0 to 14

• Abrasion resistant

• Temperature: Up to 800°C in air

• Solvents: Completely stable

• Oxidizers: Any concentration

• Permeability: Highest for any membrane material

i.e. the highest flux and most robust properties for any membrane material

= Fit for Oil & Gas

• SiC membrane surface is very hydrophilic oleophobic, thus repelling oil

• SiC membrane surface charge is negative at most pH-values, oil droplets are typically negative charged, thus repelled from membrane surface

SEM picture of the membraneSubstrate Selective layer


Why Use Membranes For Produced Water Treatment?

SiC strengths towards conventional technologies for tertiary treatment of produced water:

• Solution to oil emulsions• Solution to heavy oil where hydro cyclones are challenged • Solution to polymer flooded produced water

• SiC membranes can handle fluctuations in TSS, oil concentration and temperature in the feed and deliver consistent permeate quality (OiW typically less than 2 ppm OiW and TSS less than 1 ppm)

• SiC membranes potentially offers both secondary and tertiary treatment in one step (lower flow rates)


Why Use SiC Membranes For Produced Water Treatment?

SiC strengths towards other membrane materials:• SiC membranes have shown less fouling tendency at field head

to head comparisons and thus more stable operating conditions than oxide membranes (Al2O3 and TiO2), e.g.

• PW-reinjection in China • PW-discharge - gas condensate in North Sea • PW-reinjection in Europe

Weight, footprint and energy reduction due to higher permeability of SiC membranesChemical resistance in order to ensure efficient cleaning of membranes for worst case scenarios (severe scaling)Process know-how for Produced Water treatment


Full Scale Unit For Off-Shore PWT

Project background• OiW overboard quality - compliance with OSPAR challenging

• High OiW concentrations ( occasionally has been > 3,000mg/liter )• Emulsion cannot be separated by conventional means

• High use of chemicals (Subsea Corrosion inhibitor)

• Mostly condensed water (low salinity)

• Corrosion inhibitor forming tight emulsion with PW

• Compliance being met by use of temporary solutions


Full Scale Unit For Off-Shore PWT

Several technologies were investigated and trialed offshore:

• Absorption• Adsorption• Enhanced Gravity Separation• Filtration• Flocculation• Flotation• Mechanical Coalescence• Advance Oxidation• pH Adjustment

Membrane filtration emerged as most promising technology


Full Scale Unit For Off-Shore PWT• First permanent operational unit in Shell

• 4 trains of 6 membrane elements, capacity 36 m³/h produced water

• Buffer Vessel

• Backwash Vessel

• 2 Feed pumps (duty/standby)

• 4 Recirculation pumps

• 2 Backflush pumps (duty/standby)

OiPW Upstream of Membrane Pkg in mg/l OiPW Downstream of Membrane Pkg in mg/l334 8

147 8

75 5

15 2


Full Scale Unit For Off-Shore PWTOffshore Package for North Sea


PWT for Discharge (Off-Shore)

• Off-shore project in SE-Asia (Shell)

• Low level of TSS

• Very smooth operation

• Two weeks trial – no CIP



• Flux up to 300 LMH

• Recovery 90-95%

• TMP < 0.4 bar

Results - Flux



• Inlet OIW 20-50ppm

• Permeate: • <5ppm OiW, <1ppm TSS

• 90-95% Recovery

• Flux >500 LMH

• TMP: 0.1-0.2 bar

Inlet waterRetentate oil Permeate water


PWT for Re-Injection (On-Shore)

Test was performed for two month at an on-shore produced water treatment facility

• Feed water from 3-phase separator

• Average flux of 300 LMH at TMP = 0.6 bar

• Up to 2,000 ppm in feed

• Permeate below 5 ppm oil

• Cross flow of 2 m/s

PermeateFeed Test setup with automatic pre-filtration (100 µm), CIP unit and membrane filtration unit


PWT for Re-Injection (On-Shore)Middle East (Q3 2019) - short term demand for large installations

Success criteria’s Performance Unit

OiW < 10.0 < 0.5 ppm

TSS < 5.0 < 2.0 ppm

Recovery > 90 > 90 %


PWT for Re-Injection (On-Shore)

• Particle removal from Produced water for Re-injection

• 0.5 micron membrane was used to remove all particles larger than 0.5 micron


PWT for Re-Use (On-Shore)PWT in Shengli, ChinaObjective:

• Pre-treatment for Reverse Osmosis


Unconventional / EOR (Shale Oil/Gas)

Fracking – flowbackSolution available – question of need and price

Polymer flooding EORPass of polymers – rejection of oil and TSS


Tailings - SAGD

3 months field pilot testing

100 LMH – high load of TSS

Satisfying particle removal

No damage on membrane selective layer


Oil & Gas Industry ReferencesOn-shore• Complete SiC membrane system for EOR

project in South America

• 65 m3/h

• Oil/water separation for steam generation

• Membrane supplier for produced water re-injection (Europe)

Off-shore• Membrane supplier for produced water

discharge (Europe)

• Membrane supplier for produced water discharge (Europe)


Turn-key Capabilities

• 2 x 500 m³/h wastewater treatment plant for removal of heavy metals

• Turn-key including precipitation, filtration and dewatering

• Commissioned in Q4 2016

• USD 7M installation


SummaryLiqTech Oil & Gas Application


LiqTech Oil & Gas Application Summary

• Entered in 2009 – too early for membrane technology?

• Exited the industry in 2014 following a large drop in oil prices

• We are currently repositioning ourselves in the industry

• Increasing environmental awareness and tightening legislation

• Launch of unconventional oil & gas exploitation

• Maturing/saturation of oil reservoirs call for higher water treatment capacity and efficiency

• Unique combination of membrane producer and system integrator

• Products and process experts


LiqTech BrandNew Brand & Identity


Brand Promise

”As a pioneer, and the leader on development, manufacturing and supply of revolutionary silicon carbide ceramic technology for purification of liquids and gasses, we at LiqTech have committed ourselves to help solving the environmental challenges caused by the constantly improving global lifestyle.

We are here to clean water for oil, pathogens and heavy metals, and to take an active role in reducing world pollution. We care about the future, and at the same time about growth. We see it as our mission to enable companies to grow stronger while meeting the environmental demands of tomorrow. That means the world to us.”


Brandmark

If you look more carefully you will see that the Q forms an arrow, which symbolizes performance, dynamics, vision and sustainability. The line in the Q shows direction and symbolizes our commitment to being pioneers in purification of liquids and gasses while meeting the environmental challenges of tomorrow.


New LiqTech Brand Video


Sustainable Development Goals- 17 Goals to Transform Our World


2020 IR CalendarPreliminary


2020 Preliminary IR CalendarJanuary 2020

• Investor Day (Denmark)

March 2020• Stephens West Coast 1-on-1

Conference (San Francisco)

• Roth Capital Partners Conference (Newport Beach)

• YE Financial Results Conference Call

May 2020

• Craig-Hallum Conference (Minneapolis)

• Q1 2020 Financial Results Conference Call

• B. Riley Conference (Los Angeles)

July 2020

• Summer Investor Day (New York)

August 2020• Q2 2020 Financial Results

Conference Call

September 2020• Lake Street Conference (New York)

November 2020

• Q3 2020 Financial Results Conference Call

• Craig-Hallum Conference (New York)

• Stephens Investor Conference (Nashville)

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