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Note 12 - Acquisition | 12 Months Ended
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Dec. 31, 2019
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | NOTE 12 - ACQUISITION On September 4, 2019 our wholly-owned subsidiary LiqTech International acquired 100% of the outstanding equity of BS Plastic (“BS Plastic”), a specialized plastic manufacturer based in Denmark. The acquisition allows the Company to in-source certain components of its proprietary ceramic silicon carbide water filtration systems for closed-loop marine scrubber applications. The purchase was accounted for in accordance with the acquisition method of accounting in accordance with ASC 805, Business Combinations. The total purchase was $2,220,150 which consisted of $1,332,090 in cash and contingent consideration of $888,060. The contingent consideration is recorded at its acquisition day fair value and will be paid only if the acquired business achieves certain revenue and gross profit goals over the next three years. The maximum payable under the contingent consideration arrangement is $888,060. Transaction and other costs directly related to the acquisition of BS Plastic, consisting primarily of professional fees, have amounted to approximately $29,500 were expensed as incurred and are included in general and administrative expenses. The purchase price calculation is as follows:
Cash |  | $ | 1,332,090 |
Contingent Consideration |  |  | 888,060 |
Total |  | $ | 2,220,150 |
The table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of purchase:
Cash and bank balances |  | $ | 177,188 |
Account receivables |  |  | 600,440 |
Inventory |  |  | 323,403 |
Other receivables / deferred expenses |  |  | 59,235 |
Deposits |  |  | 53,306 |
Property and Equipment |  |  | 1,397,421 |
Right of Use Assets |  |  | 456,080 |
Customer Relationships |  |  | 488,433 |
Total Identifiable Assets Acquired |  |  | 3,555,506 |
Accounts payables |  |  | (99,490 | )
Other debt and accrued expenses |  |  | (660,989 | )
Right of Use Liabilities |  |  | (456,080 | )
Accrued income tax |  |  | (31,146 | )
Deferred tax liability |  |  | (320,972 | )
Total Liabilities Assumed |  |  | (1,568,677 | )
Total Identifiable Net Assets |  |  | 1,986,829 |
Goodwill |  |  | 233,321 |
Total Consideration Transferred |  | $ | 2,220,150 |
In order to allocate the consideration transferred for BS Plastic, the fair values of all identifiable assets and liabilities were established. For accounting and financial reporting purposes, fair value is defined under FASB ASC Topic 820, “Fair Value Measurements and Disclosures” as the price that would be received upon sale of an asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. Market participants are assumed to be buyers and sellers in the principal (most advantageous) market for the asset or liability. Additionally, fair value measurements for an asset assume the highest and best use of that asset by market participants. We determined the fair value of the property and equipment using a market approach and we determined the fair value of customer relationships acquired primarily by using an income approach. Customer relationships have an estimated useful life of 5 years. Revenue and net income of B/S Plastic since the acquisition dated included in the consolidated income statement was $895,203 and $119,633, respectively. The Company began consolidating the results and cash flows of BS Plastic upon the acquisition date of September 4, 2019. The following unaudited supplemental pro-forma data presents consolidated information as if the acquisition had been completed on January 1, 2017. The pro-forma results were calculated by combining the results of the Company with the stand-alone results of BS Plastic for the pre-acquisition periods:
|  | For the Year Ended December 31 |
|  | 2018 |  |  | 2017 |
Revenue |  | $ | 15,139,607 |  |  | $ | 14,358,283 |
Net income attributable to common shareowners from continuing operations |  |  | (3,754,883 | ) |  |  | (4,370,052 | )
Basic earnings per share of common stock from continuing operations |  |  | (0.24 | ) |  |  | (0.42 | )

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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