XML 24 R13.htm IDEA: XBRL DOCUMENT
v3.20.2

Note 5 - Agreements and Commitments | 6 Months Ended
--- | ---
Jun. 30, 2020
Notes to Financial Statements |
Commitments and Contingencies Disclosure [Text Block] | NOTE 5 - 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, 2020 and 2019, matching contributions were expensed and totaled $6,984 and $5,677, respectively. For the three months period ended June 30, 2020 and 2019, matchng contributions expensed totaled $3,949 and $2,621 respectively. Contingencies -- From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. On November 20, 2018 a former supplier to Liqtech Holding contacted the Company with a claim of DKK 448,500 ($68,800) alleging that an agreement from 2016 had not been respected. The Company has contested the claim due to lack of evidence to support the claim. No provision has been made as of June 30, 2020 as the Company believes that it has valid supporting defenses and does not expect the claim to materialize in any payments to the former supplier. On February 27, 2019, LiqTech Water was contacted by a former supplier alleging that the Company owed DKK 543,905 ($83,400) for services rendered in 2017. The claimant has previously filed a lawsuit to claim payment for the services, which was denied by the Company due to severe errors in the services rendered, and the claim was rejected by a court of law in 2018. Due to the nature of the new claim and the previous ruling from the court of law, no provision has been made as of June 30, 2020. Product Warranties - The Company provides a standard warranty on its systems, generally for a period of one to three years after customer acceptance. The Company estimates the costs that may be incurred under its standard warranty programs and records a liability for such costs at the time product revenue is recognized. In addition, the Company sells an extended warranty for certain systems, which generally provides a warranty for up to four years from the date of commissioning. The specific terms and conditions of the warranties vary depending upon the product sold and the country in which the Company does business. Revenue received for the sale of extended warranty contracts is deferred and recognized in the same manner as the costs incurred to perform under the warranty contracts. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Factors that affect the warranty liability include the number of units sold, historical and anticipated rates of warranty claims and the cost per claim. The Company has assessed the adequacy of the recorded warranty liability at the end of the third quarter of 2019 based on realized warranty expenses for the four years passed since the start-up of producing water treatment systems. Based on the assessment, the Company has reduced the warranty accrual from 7% to 3% of the sales value for delivered products since January 1, 2019. Changes in the Company's current and long-term warranty obligations included in accrued expenses on the balance sheet, as of June 30, 2020 and December 31, 2019 were as follows:
|  | June 30, 2020 |  |  | December 31, 2019 |
Balance at December 31 |  | $ | 813,288 |  |  | $ | 432,225 |
Warranty costs charged to cost of goods sold |  |  | 287,847 |  |  |  | 707,079 |
Utilization charges against reserve |  |  | (76,225 | ) |  |  | (315,556 | )
Release of accrual related to expired warranties |  |  | - |  |  |  | - |
Foreign currency effect |  |  | 6,145 |  |  |  | (10,460 | )
Balance at June 30 |  | $ | 1,031,055 |  |  | $ | 813,288 |
Purchase Obligation - The Company has a purchase obligation to the supplier of the new furnaces to the production facility in Ballerup for which the Company has received two units while the remaining two units will be delivered in the second half of 2020. The total obligation amounts to $3.8 million and the Company has entered into a leasing agreement with the bank to partly finance the purchase. The lease agreement will commence upon the receipt of all furnaces covered by the purchase contract. The Company has no right to cancel the order.

X
- Definition The entire disclosure for commitments and contingencies. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 450 -URI http://asc.fasb.org/topic&trid=2127136 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -URI http://asc.fasb.org/topic&trid=2144648 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -SubTopic 10 -Section 50 -Paragraph 4 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=121559207&loc=d3e25336-109308 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -SubTopic 10 -Section 50 -Paragraph 4 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=121559207&loc=d3e25336-109308 + Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration