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Form 10-Q LIQUIDMETAL TECHNOLOGIES For: Mar 31

May 10, 2016 4:19 PM EDT

UNITED STATES


SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the quarterly period ended March 31, 2016

 

 

 

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 No001-31332


LIQUIDMETAL TECHNOLOGIES, INC.

 (Exact name of Registrant as specified in its charter)

 

Delaware

 

33-0264467

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

30452 Esperanza

Rancho Santa Margarita, CA 92688

(Address of principal executive offices, zip code)

 

Registrant’s telephone number, including area code: (949) 635-2100 


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.

 

Large accelerated filer ☐

 

Accelerated filer 

 

Non-accelerated filer ☐

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 common shares outstanding as of May 6, 2016 was 582,149,485.

 

 
 

 

 

LIQUIDMETAL TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED
March 31, 2016



FORWARD-LOOKING INFORMATION

 

This Quarterly Report on Form 10-Q of Liquidmetal Technologies, Inc. contains “forward-looking statements” that may state our management’s plans, future events, objectives, current expectations, estimates, forecasts, assumptions or projections about the company and its business. Any statement in this report that is not a statement of historical fact is a forward-looking statement, and in some cases, words such as “believes,” “estimates,” “projects,” “expects,” “intends,” “may,” “anticipates,” “plans,” “seeks,” and similar words or expressions identify forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual outcomes and results to differ materially from the anticipated outcomes or results. These statements are not guarantees of future performance, and undue reliance should not be placed on these statements. It is important to note that our actual results could differ materially from what is expressed in our forward-looking statements due to the risk factors described in the section of our Annual Report on Form 10-K for the year ended December 31, 2015 entitled “Risk Factors,” as well as the following risks and uncertainties:

 

 

Our ability to fund our operations in the long-term through financing transactions on terms acceptable to us, or at all;

 

Our history of operating losses and the uncertainty surrounding our ability to achieve or sustain profitability;

 

Our limited history of developing and selling products made from our bulk amorphous alloys;

 

Our limited history of licensing our technology to third parties;

 

Lengthy customer adoption cycles and unpredictable customer adoption practices;

 

Our ability to identify, develop, and commercialize new product applications for our technology;

 

Competition from current suppliers of incumbent materials or producers of competing products;

 

Our ability to identify, consummate, and/or integrate strategic partnerships;

 

The potential for manufacturing problems or delays; and

 

Potential difficulties associated with protecting or expanding our intellectual property position.

 

We undertake no obligation, other than as required by applicable law, to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

 
2

 

 

 

TABLE OF CONTENTS

           

PART I - Financial Information

   
           
 

Item 1 – Financial Statements

   

4

   

Consolidated Balance Sheets

     
   

Consolidated Statements of Operations and Comprehensive Loss

     
   

Consolidated Statement of Shareholders’ (Deficit) Equity

     
   

Consolidated Statements of Cash Flows

     
   

Notes to Consolidated Financial Statements

     
           
 

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

   

19

           
 

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

   

24

         

 

 

Item 4 – Controls and Procedures

   

24

           

PART II – Other Information

   
           
 

Item 1 – Legal Proceedings

   

25

           
 

Item 1A – Risk Factors

   

25

           
 

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

   

25

           
 

Item 3 – Defaults Upon Senior Securities

   

25

           
 

Item 4 – Mine Safety Disclosures

   

25

           
 

Item 5 – Other Information

   

25

           
 

Item 6 – Exhibits

   

26

           

Signatures

   

27

 

 
3

 

 

PART I

FINANCIAL INFORMATION

Item 1 – Financial Statements

 

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

($ in thousands, except par value and share data)

 

 

   

March 31,

   

December 31,

 
   

2016

   

2015

 
   

(Unaudited)

   

(Audited)

 

ASSETS

               
                 

Current assets:

               

Cash

  $ 10,287     $ 2,773  

Restricted cash

    1,005       2,008  

Trade accounts receivable, net of allowance for doubtful accounts

    102       30  

Inventory

    152       83  

Prepaid expenses and other current assets

    224       408  

Total current assets

  $ 11,770     $ 5,302  

Property and equipment, net

    1,263       1,370  

Patents and trademarks, net

    568       570  

Other assets

    36       31  

Total assets

  $ 13,637     $ 7,273  
                 

LIABILITIES, REDEEMABLE COMMON STOCK, AND SHAREHOLDERS' (DEFICIT) EQUITY

               
                 

Current liabilities:

               

Short-term debt

    700       700  

Accounts payable

    209       250  

Accrued liabilities

    1,246       947  

Deferred revenue

    -       77  

Option liabilities

    5,550       -  

Total current liabilities

  $ 7,705     $ 1,974  
                 

Long-term liabilities:

               

Warrant liabilities

    2,388       59  

Other long-term liabilities

    856       856  

Total liabilities

  $ 10,949     $ 2,889  
                 
Redeemable Common Stock:                
Common Stock, $0.001 par value; 105,000,000 and 0 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively (Note 14).     7,129       -  
                 

Shareholders' (deficit) equity:

               

Preferred Stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively

    -       -  

Common stock, $0.001 par value; 700,000,000 shares authorized; 477,149,485 and 477,149,485 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively.

    477       477  

Warrants

    18,179       18,179  

Additional paid-in capital

    204,088       203,735  

Accumulated deficit

    (227,121 )     (217,945 )

Non-controlling interest in subsidiary

    (64 )     (62 )
                 

Total shareholders' (deficit) equity

    (4,441     4,384  
                 

Total liabilities, redeemable common stock, and shareholders' (deficit) equity

  $ 13,637     $ 7,273  

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 
4

 

  

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE LOSS

($ in thousands, except share and per share data)

(unaudited)

 

 

   

For the Three Months

Ended March 31,

 
   

2016

   

2015

 
                 

Revenue

               

Products

  $ 165     $ 23  

Licensing and royalties

    3       3  

Total revenue

    168       26  
                 

Cost of sales

    158       19  
                 

Gross profit

    10       7  
                 

Operating expenses

               

Selling, marketing, general and administrative

    2,017       1,852  

Research and development

    559       482  

Total operating expenses

    2,576       2,334  

Operating loss

    (2,566 )     (2,327 )
                 

Change in value of warrant liabilities, loss

    (1,569 )     (161 )

Change in value of option liabilities, loss

    (5,039 )     -  

Interest expense

    (4 )     -  

Interest income

    -       8  
                 

Net loss and comprehensive loss

    (9,178 )     (2,480 )
                 

Net loss attributable to non-controlling interest

    2       2  

Net loss and comprehensive loss attributable to Liquidmetal Technologies shareholders

  $ (9,176 )   $ (2,478 )
                 
                 

Net loss per common share attributable to Liquidmetal Technologies shareholders, basic and diluted

  $ (0.02 )   $ (0.01 )
                 

Number of weighted average shares - basic and diluted

    512,149,485       464,482,819  

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 
5

 

 

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' (DEFICIT) EQUITY

For the Three Months Ended March 31, 2016

($ in thousands, except share data)

(unaudited)

 

 

   

Preferred Shares

   

Common

Shares

   

Common

Stock

   

Warrants part of Additional Paid-in Capital

   

Additional

Paid-in

Capital

   

Accumulated

Deficit

   

Non- Controlling Interest

   

Total

 

Balance, December 31, 2015

    -       477,149,485     $ 477     $ 18,179     $ 203,735     $ (217,945 )   $ (62 )   $ 4,384  
                                                                 

Stock-based compensation

                                    353                       353  

Net loss

                                            (9,176 )     (2 )     (9,178 )
                                                                 
                                                                 

Balance, March 31, 2016

    -       477,149,485     $ 477     $ 18,179     $ 204,088     $ (227,121 )   $ (64 )   $ (4,441

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 
6

 

 

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in thousands, except per share data)

(unaudited)

 

 

   

Three Months Ended March 31,

 
   

2016

   

2015

 
                 

Operating activities:

               

Net loss

  $ (9,178 )   $ (2,480 )
                 

Adjustments to reconcile net loss to net cash used in operating activities:

               

Depreciation and amortization

    149       115  

Stock-based compensation

    353       337  

Restricted stock compensation issued to officer

    -       78  

Loss from change in value of warrant liabilities

    1,569       161  

Loss from change in value of option liabilities

    5,039       -  
                 

Changes in operating assets and liabilities:

               

Trade accounts receivable

    (72 )     62  

Inventory

    (69 )     -  

Prepaid expenses and other current assets

    184       (7 )

Other assets

    (5 )     -  

Accounts payable and accrued liabilities

    245       46  

Deferred revenue

    (77 )     -  

Net cash used in operating activities

    (1,862 )     (1,688 )
                 

Investing Activities:

               

Purchases of property and equipment

    (9 )     (116 )

Decrease (increase) in restricted cash

    1,003       (2,005 )

Investment in patents and trademarks

    (18 )     -  
                 

Net cash provided by (used in) investing activities

    976       (2,121 )
                 

Financing Activities:

               

Proceeds from stock issuance

    8,400       -  

Net cash provided by financing activities

    8,400       -  
                 

Net increase (decrease) in cash

    7,514       (3,809 )
                 

Cash at beginning of period

    2,773       10,009  

Cash at end of period

  $ 10,287     $ 6,200  
                 

Supplemental Schedule of Non-Cash Investing and Financing Activities:

               

Accrued capital expenditures

    13       -  

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 
7

 

 

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three
Months Ended March 31, 2016 and 2015

(numbers in thousands, except share and per share data)

(unaudited)

 

1. Description of Business

 

Liquidmetal Technologies, Inc. (the “Company”) is a materials technology and manufacturing company that develops and commercializes products made from amorphous alloys. The Company’s family of alloys consists of a variety of bulk alloys and composites that utilizes the advantages offered by amorphous alloys technology. The Company designs, develops, manufactures and sells products and custom components from bulk amorphous alloys to customers in a wide range of industries. The Company also partners with third-party manufacturers and licensees to develop and commercialize Liquidmetal alloy products.

 

Amorphous alloys are, in general, unique materials that are distinguished by their ability to retain a random atomic structure when they solidify, in contrast to the crystalline atomic structure that forms in other metals and alloys when they solidify. Liquidmetal alloys are proprietary amorphous alloys that possess a combination of performance, processing, and potential cost advantages that the Company believes will make them preferable to other materials in a variety of applications. The amorphous atomic structure of bulk alloys enables them to overcome certain performance limitations caused by inherent weaknesses in crystalline atomic structures, thus facilitating performance and processing characteristics superior in many ways to those of their crystalline counterparts. The Company’s alloys and the injection molding technology it employs results in components that exhibit: exceptional dimensional control and repeatability that rivals precision machining, excellent corrosion resistance, brilliant surface finish, high strength, high hardness, high elastic limit, alloys that are non-magnetic, and the ability to form complex shapes common to the injection molding of plastics. Interestingly, all of these characteristics are achievable from the molding process, so design engineers do not have to select specific alloys to achieve one or more of the characteristics as is the case with crystalline materials. The Company believes these advantages could result in Liquidmetal alloys supplanting high-performance alloys, such as titanium and stainless steel, and other incumbent materials in a wide variety of applications. Moreover, the Company believes these advantages could enable the introduction of entirely new products and applications that are not possible or commercially viable with other materials.

 

The Company’s revenues are derived from i) selling bulk Liquidmetal alloy products, which include non-consumer electronic devices, medical products, automotive components, and sports and leisure goods, ii) selling tooling and prototype parts such as demonstration parts and test samples for customers with products in development, iii) product licensing and royalty revenue, and iv) research and development revenue. The Company expects that these sources of revenue will continue to significantly change the character of the Company’s revenue mix.

 

2. Basis of Presentation and Recent Accounting Pronouncements

 

The accompanying unaudited interim consolidated financial statements as of and for the three months ended March 31, 2016 and March 31, 2015 have been prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”) for interim financial information and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. All intercompany balances and transactions have been eliminated in consolidation. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for any future periods or the year ending December 31, 2016. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company's 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 7, 2016.

 

Revenue Recognition

 

The Company’s revenue recognition policy complies with the requirements of ASC 605. Revenue is recognized when i) persuasive evidence of an arrangement exists, ii) delivery has occurred, iii) the sales price is fixed or determinable, iv) collection is probable and v) all obligations have been substantially performed pursuant to the terms of the arrangement. Revenues primarily consist of the sales and prototyping of Liquidmetal molds and bulk alloys, licensing and royalties for the use of the Liquidmetal brand and bulk Liquidmetal alloys. Revenue is deferred and included in liabilities when the Company receives cash in advance for goods not yet delivered or if the licensing term has not begun.

 

License revenue arrangements in general provide for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company. These rights typically include the grant of an exclusive or non-exclusive right to manufacture and/or sell products covered by patented technologies owned or controlled by the Company. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined period of time.

 

Licensing revenues that are one time fees upon the granting of the license are recognized when i) the license term begins in a manner consistent with the nature of the transaction and the earnings process is complete, ii) when collectability is reasonably assured or upon receipt of an upfront fee, and iii) when all other revenue recognition criteria have been met. Pursuant to the terms of these agreements, the Company has no further obligation with respect to the grant of the license. Licensing revenues that are related to royalties are recognized as the royalties are earned over the related period.

 

 
8

 

 

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three
Months Ended March 31, 2016 and 2015

(numbers in thousands, except share and per share data)

(unaudited)

 

Fair Value Measurements

 

The estimated fair values of financial instruments reported in the consolidated financial statements have been determined using available market information and valuation methodologies, as applicable. The fair value of cash, restricted cash, and short-term debt approximate their carrying value due to their short maturities.

 

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Entities are required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value based upon the following fair value hierarchy:

 

Level 1 —

Quoted prices in active markets for identical assets or liabilities;

 

Level 2 —

Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

 

Level 3 —

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The Company has several financial instruments, namely warrant liabilities and written call option liabilities that are recorded at fair value on a periodic basis using Level 2 measurement inputs. These instruments are evaluated under the hierarchy of FASB ASC Subtopic 480-10, FASB ASC Paragraph 815-25-1 and FASB ASC Subparagraph 815-10-15-74 addressing embedded derivatives. The fair value of such instruments is estimated using the Black-Scholes option pricing model. Due to the presence of certain anti-dilution and exercise price reset provisions, as well as other criteria under applicable accounting standards precluding equity treatment, such instruments are required to be classified as liabilities (see Notes 11 and 12).

 

As of March 31, 2016, the following table represents the Company’s fair value hierarchy for items that are required to be measured at fair value on a recurring basis:

  

   

Fair Value

   

Level 1

   

Level 2

   

Level 3

 
                                 

Warrant liabilities

    2,388       -       2,388       -  

Option liabilities

    5,550       -       5,550       -  

 

As of December 31, 2015, the following table represents the Company’s fair value hierarchy for items that are required to be measured at fair value on a recurring basis:

  

   

Fair Value

   

Level 1

   

Level 2

   

Level 3

 
                                 

Warrant liabilities

    59       -       59       -  

 

Recent Accounting Pronouncements

 

Leases

 

In February 2016, the FASB issued an accounting standards update which modifies the accounting for leasing arrangements, particularly those arrangements classified as operating leases. This update will require entities to recognize the assets and liabilities arising from operating leases on the balance sheet. This guidance is effective for fiscal and interim periods beginning after December 15, 2018 and is required to be applied retrospectively to all leasing arrangements. The Company is currently assessing the effects this guidance may have on its consolidated financial statements.

 

Stock-Based Compensation

 

In March 2016, the FASB issued an accounting standards update which simplifies the accounting for share-based payment transactions, inclusive of income tax accounting and disclosure considerations. This guidance is effective for fiscal and interim periods beginning after December 15, 2016 and is required to be applied retrospectively to all impacted share-based payment arrangements. The Company is currently assessing the effects this guidance may have on its consolidated financial statements.

 

 
9

 

 

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three
Months Ended March 31, 2016 and 2015

(numbers in thousands, except share and per share data)

(unaudited)

 

Revenue from Contracts with Customers

 

In May 2014, the FASB issued an accounting standards update which modifies the requirements for identifying, allocating, and recognizing revenue related to the achievement of performance conditions under contracts with customers. This update also requires additional disclosure related to the nature, amount, timing, and uncertainty of revenue that is recognized under contracts with customers. This guidance is effective for fiscal and interim periods beginning after December 15, 2017 and is required to be applied retrospectively to all revenue arrangements. The Company is currently assessing the effects this guidance may have on its consolidated financial statements.

 

Ability to Continue as a Going Concern

 

In August 2014, the FASB issued an accounting standards update which requires an assessment of an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently addressed by U.S. auditing standards. This standard is effective for the fiscal years ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements.

 

Inventory

 

In July 2015, the FASB issued an accounting standards update which modifies the requirements for measuring the value of inventory on a periodic basis. The new requirement will be to measure inventory at the lower of cost or net realizable value. This standard is effective for the fiscal years ending after December 15, 2016, and for annual periods and interim periods thereafter. The adoption of this guidance is not expected to have a significant impact on the Company’s consolidated financial statements.

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA and the SEC did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

 

3. Significant Transactions

 

2016 Purchase Agreement

 

On March 10, 2016, the Company entered into a Securities Purchase Agreement (the “2016 Purchase Agreement”) with Liquidmetal Technology Limited, a Hong Kong company (the “Investor”), providing for the purchase by Investor of up to 405,000,000 shares of the Company’s common stock for an aggregate purchase price of $63.4 million.

 

The 2016 Purchase Agreement provides that the Investor is obligated to purchase up to 405,000,000 shares of the Company’s common stock in multiple closings, with the Investor having purchased 105,000,000 shares at an aggregate purchase price of $8.4 million (or $0.08 per share) at the initial closing on March 10, 2016. The Purchase Agreement provides that the Investor will purchase the remaining 200,000,000 shares at $0.15 per share and 100,000,000 shares at $0.25 per share for an aggregate purchase price of $55.0 million no later than ninety (90) days after the satisfaction of certain conditions, including Company shareholder approval of an amendment to the Company’s Amended and Restated Certificate of Incorporation increasing the Company’s authorized number of shares of common stock from 700,000,000 to 1,100,000,000 (the “Charter Amendment”).

 

In addition to the shares issuable under the 2016 Purchase Agreement, the Company also issued to the Investor a warrant to acquire 10,066,809 shares of common stock of the Company at an exercise price of $0.07 per share. The warrant vests in increments on each closing date under the 2016 Purchase Agreement for a number of warrant shares that is proportionate to the amount of shares purchased under the 2016 Purchase Agreement on such closing date (with 2,609,913 warrant shares having initially vested on March 10, 2016). The warrant will expire on the tenth anniversary of its issuance date; provided, however, that should the subsequent closings under the 2016 Purchase Agreement not occur prior to the ninetieth (90th) day after the filing of the Charter Amendment, the warrant will automatically terminate and the Investor shall have no further right to exercise the remaining unvested 7,456,896 warrant shares under the warrant.

 

The 2016 Purchase Agreement provides that the Investor will have the right to designate one (1) individual to serve on the Company’s Board of Directors. Once the Investor purchases the remaining 300,000,000 shares of common stock under the 2016 Purchase Agreement, the Investor will thereafter have the right to designate an additional two (2) individuals to serve on the Company’s Board of Directors (such that the Investor would have designation rights with respect to three (3) of the seven (7) members of the Company’s Board of Directors, with one such member serving as Chairman). The 2016 Purchase Agreement also provides that, with certain limited exceptions, if the Company issues any shares of common stock at any time through the fifth (5th) anniversary of the Purchase Agreement, the Investor will have a preemptive right to subscribe for and to purchase at the same price per share (or at market price, in the case of issuance of shares pursuant to stock options) the number of shares necessary to maintain its ownership percentage of Company-issued shares of Common Stock.

 

 
10

 

 

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three
Months Ended March 31, 2016 and 2015

(numbers in thousands, except share and per share data)

(unaudited)

 

The 2016 Purchase Agreement requires the Company to use commercially reasonable efforts to obtain, on or before May 31, 2016, shareholder approval of the Charter Amendment, to file the Charter Amendment with the State of Delaware, and to reserve sufficient shares of its common stock for issuance to the Investor under the 2016 Purchase Agreement. If the Company does not obtain shareholder approval of the Charter Amendment in order to file it by May 31, 2016, the Investor will have the right to sell the 105,000,000 shares purchased at the first closing back to the Company for $0.08 per share, with such purchase price to be paid by means of a secured convertible promissory note issued by the Company in the principal amount of $8.4 million (the “Put Note”). Such note, if issued, would accrue interest at the rate of 3% per annum, would be convertible at $0.08 and be due and payable on the eighteen (18) month anniversary of its issuance. If the Put Note is issued, the Company and the Investor would enter into a security agreement which would grant a security interest to the Investor in all of the Company’s assets other than its intellectual property and its equity interests in its subsidiary, Crucible Intellectual Property, LLC.

 

If the Investor fails to purchase the remaining 300,000,000 shares of common stock within 90 days after the filing of the Charter Amendment (assuming all other conditions to such closing have been satisfied), the Investor will forfeit certain rights, including the right to designate additional directors to the Company’s Board of Directors following such failure and the right to exercise the above-described preemptive right. In such event, the Company will also have the right to repurchase all of the shares held by the Investor at a per-share price of $0.08 within 15 months following the approval and filing of the Charter Amendment.

 

Eontec License Agreement

 

In connection with the 2016 Purchase Agreement and also on March 10, 2016, the Company and DongGuan Eontec Co., Ltd., a Hong Kong corporation (“Eontec”), entered into a Parallel License Agreement (the “License Agreement”) pursuant to which the Company and Eontec entered into a cross-license of their respective technologies.

 

The License Agreement provides for the cross-license of certain patents, technical information, and trademarks between the Company and Eontec. In particular, under the License Agreement, the Company granted to Eontec a paid-up, royalty-free, perpetual license (or sublicense, as the case may be) to the Company’s patents and related technical information to make, have made, use, offer to sell, sell, export and import products in certain geographic areas outside of North America and Europe, and Eontec granted to the Company a paid-up, royalty-free, perpetual license (or sublicense, as the case may be) to Eontec’s patents and related technical information to make, have made, use, offer to sell, sell, export and import products in certain geographic areas outside of specified countries in Asia. The license granted by the Company to Eontec is exclusive (including to the exclusion to the Company) in the countries of Brunei, Cambodia, China (P.R.C and R.O.C.), East Timor, Indonesia, Japan, Laos, Malaysia, Myanmar, North Korea, Philippines, Singapore, South Korea, Thailand. and Vietnam. The license granted by Eontec to the Company is exclusive (including to the exclusion of Eontec) in North America and Europe. The cross-licenses are non-exclusive in geographic areas outside of the foregoing exclusive territories.

 

2014 Purchase Agreement

 

On August 20, 2014, the Company entered into a common stock purchase agreement (“2014 Purchase Agreement”) with Aspire Capital Fund LLC (“Aspire Capital”), which provided that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital would be committed to purchase up to an aggregate of $30,000 worth of the Company’s common stock, $0.001 par value, over the 36-month term of the 2014 Purchase Agreement.

 

As of March 31, 2016, the Company had received an aggregate of $1,568 under the 2014 Purchase Agreement through the issuance of 12,500,000 shares of its common stock at a weighted average price of $0.13 per share. On March 9, 2016, the Company terminated the 2014 Purchase Agreement.

 

Line of Credit Facility

 

In February 2015, the Company entered into a $2,000 line of credit facility, with a fixed interest rate of 2.1%, which originally matured on February 13, 2016. The facility has been extended through August 25, 2016, with reductions in available borrowings and associated collateral requirements to $1,000. Amounts available under this facility are secured by cash collateral. Such collateral is included as restricted cash on the Company’s consolidated balance sheet. As of March 31, 2016, there was $700 in outstanding borrowings under this facility. Interest expense applicable to these borrowings was $4 for the three months ended March 31, 2016 and $0 for the three months ended March 31, 2015.

 

Apple License Transaction

 

On August 5, 2010, the Company entered into a license transaction with Apple Inc. (“Apple”) pursuant to which (i) the Company contributed substantially all of its intellectual property assets to a newly organized special-purpose, wholly-owned subsidiary, called Crucible Intellectual Property, LLC (“CIP”), (ii) CIP granted to Apple a perpetual, worldwide, fully-paid, exclusive license to commercialize such intellectual property in the field of consumer electronic products, as defined in the license agreement, in exchange for a license fee, and (iii) CIP granted back to the Company a perpetual, worldwide, fully-paid, exclusive license to commercialize such intellectual property in all other fields of use. Additionally, in connection with the license transaction, Apple required the Company to complete a statement of work related to the exchange of Liquidmetal intellectual property information. The Company recognized a portion of the one-time license fee upon receipt of the initial payment and completion of the foregoing requirements under the license transaction. The remaining portion of the one-time license fee was recognized at the completion of the required statement of work.

 

 
11

 

 

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three
Months Ended March 31, 2016 and 2015

(numbers in thousands, except share and per share data)

(unaudited)

 

Under the agreements relating to the license transaction with Apple, the Company was obligated to contribute, to CIP, all intellectual property that it developed through February 2012. Subsequently, this obligation has been extended to apply to all intellectual property developed through February 2016. The Company is also obligated to maintain certain limited liability company formalities with respect to CIP at all times after the closing of the license transaction.

 

Visser Precision Cast, LLC License Agreement 

 

On June 1, 2012, the Company entered into a Master Transaction Agreement (the “Visser MTA”) with Visser Precision Cast, LLC (“Visser”) relating to a strategic transaction for manufacturing services and financing. Under the manufacturing and service component of the Visser MTA, the Company had agreed to engage Visser as a perpetual, exclusive manufacturer of non-consumer electronic products. Under the financing component of the Visser MTA, the Company issued and sold to Visser in a private placement transaction (i) 30,000,000 shares of common stock at a purchase price of $0.10 per share resulting in proceeds of $3,000 and (ii) two warrants to purchase 15,000,000 shares of common stock at an original exercise price of $0.22 per share which expire on June 1, 2017.

 

On May 20, 2014, the Company and Visser entered into a settlement agreement whereby the parties have amended and restated the sublicense and financing components of the Visser MTA. Additionally, the manufacturing services component and remaining considerations of the Visser MTA were terminated. Under the amended and restated sublicense agreement, the Company has granted to Visser a fully paid-up, royalty-free, irrevocable, perpetual, worldwide, non-transferable, nonexclusive sublicense to all of the Company’s intellectual property developed on or prior to May 20, 2014 (the “Effective Date”), for all fields of use other than certain excluded fields as set forth therein. Visser does not have any rights, now or in the future, to intellectual property of the Company developed after the Effective Date. The license to the Company’s intellectual property developed on or prior to the Effective Date does not include the right to use the “Liquidmetal” trademark or any of the Company’s other trademarks, except in certain defined situations, as set forth in the amended and restated agreement.

 

With the foregoing revised arrangements, the Company is no longer required to use Visser as its exclusive manufacturer and is free to license other manufacturers on a non-exclusive basis in any industry or geographic market as to which the Company has not previously granted an exclusive license to a third party. Any such manufacturers licensed by the Company in the future will be able both to manufacture parts for the Company and the Company’s customers, and to manufacture and sell products for their own account for such industries or markets as the Company may agree, subject to whatever royalty arrangements the Company may negotiate. The Company has not yet licensed any manufacturers other than Visser. Visser will also have the right to manufacture and sell products under the amended and restated sublicense agreement.

 

The settlement amended and restated the two warrants the Company issued to Visser in June 2012 to purchase 15,000,000 shares of the Company’s common stock at an exercise price of $0.22 per share. Those warrants contained anti-dilution mechanisms under which the number of shares issuable upon exercise of those warrants would be increased, and the exercise price for such shares would be reduced if the Company issued shares of its common stock at prices less than the warrants’ exercise price. The amended and restated warrant agreement includes the effect of such anti-dilution adjustments and is exercisable for 18,611,079 shares of common stock (increased further to 21,122,920 shares under the anti-dilution provisions of the warrants, see note 11) at an exercise price of $0.17 per share (further reduced to $0.16 per share under the anti-dilution provisions of the warrants, see note 11). The amended and restated warrant agreement continues to contain comparable anti-dilution adjustment mechanisms. The amended and restated warrant agreement also removes certain lock-up provisions that were included in the original warrants.

 

Other License Transactions

 

On January 31, 2012, the Company entered into a Supply and License Agreement for a five year term with Engel Austria Gmbh (“Engel”) whereby Engel was granted a non-exclusive license to manufacture and sell injection molding machines to the Company’s licensees. Since that time, the Company and Engel have agreed on an injection molding machine configuration that can be commercially supplied and supported by Engel.  On December 6, 2013, the companies entered into an Exclusivity Agreement for a 10 year term whereby the Company agreed, with certain exceptions and limitations, that the Company and its licensees would purchase amorphous alloy injection molding machines exclusively from Engel, and this exclusivity right was granted in exchange for certain royalties to be paid by Engel to the Company based on a percentage of the net sales price of such injection molding machines.

 

The Company’s Liquidmetal Golf subsidiary has the exclusive right and license to utilize the Company’s Liquidmetal alloy technology for purposes of golf equipment applications. This right and license is set forth in an intercompany license agreement between Liquidmetal Technologies and Liquidmetal Golf. This license agreement provides that Liquidmetal Golf has a perpetual and exclusive license to use Liquidmetal alloy technology for the purpose of manufacturing, marketing, and selling golf club components and other products used in the sport of golf. The Company owns 79% of the outstanding common stock of Liquidmetal Golf.

 

In June 2003, the Company entered into an exclusive license agreement with LLPG, Inc. (“LLPG”).  Under the terms of the agreement, LLPG has the exclusive right to commercialize Liquidmetal alloys, particularly precious-metal based compositions, in jewelry and high-end luxury product markets.  The Company, in turn, will receive royalty payments over the life of the contract on all Liquidmetal products produced and sold by LLPG. The exclusive license agreement with LLPG expires on December 31, 2021.

 

 
12

 

 

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three
Months Ended March 31, 2016 and 2015

(numbers in thousands, except share and per share data)

(unaudited)

 

In March 2009, the Company entered into a license agreement with Swatch Group, Ltd. (“Swatch”) under which Swatch was granted a non-exclusive license to the Company’s technology to produce and market watches and certain other luxury products. In March 2011, this license agreement was amended to grant Swatch exclusive rights as to watches and all third parties (including the Company), but non-exclusive as to Apple, and the Company’s license agreement with LLPG was simultaneously amended to exclude watches from LLPG’s rights. The Company will receive royalty payments over the life of the contract on all Liquidmetal products produced and sold by Swatch. The license agreement with Swatch will expire on the expiration date of the last licensed patent.

 

4. Liquidity and Capital Resources

 

For the three months ended March 31, 2016, the Company’s cash used in operations was $1,862, cash flows from investing activities were $976, primarily due to reductions in restricted cash as a result of collateral requirement reductions, and cash provided by financing activities was $8,400 due to cash received from equity sales under the 2016 Purchase Agreement. As of March 31, 2016, the Company’s cash and restricted cash balance was $11,292, which consisted of $10,287 of cash and $1,005 of short-term restricted cash.

 

On March 10, 2016, the Company entered into the 2016 Purchase Agreement with Liquidmetal Technology Limited providing for the purchase by the Investor of up to 405,000,000 shares of the Company’s common stock for an aggregate purchase price of $63.4 million.

 

The 2016 Purchase Agreement provides that the Investor is obligated to purchase up to 405,000,000 shares of the Company’s common stock in multiple closings, with the Investor having purchased 105,000,000 shares at an aggregate purchase price of $8.4 million (or $0.08 per share) at the initial closing on March 10, 2016. The 2016 Purchase Agreement provides that the Investor will purchase the remaining 200,000,000 shares at $0.15 per share and 100,000,000 shares at $0.25 per share for an aggregate purchase price of $55.0 million no later than ninety days after the satisfaction of certain conditions, including Company shareholder approval of an amendment to the Company’s Amended and Restated Certificate of Incorporation increasing the Company’s authorized number of shares of common stock from 700,000,000 to 1,100,000,000 (see note 3).

 

The Company anticipates that its current capital resources, when considering expected losses from operations, will be sufficient to fund the Company’s operations through the middle of 2017. The Company has a relatively limited history of producing bulk amorphous alloy components and products on a mass-production scale. Furthermore, the ability of future contract manufacturers to produce the Company’s products in desired quantities and at commercially reasonable prices is uncertain and is dependent on a variety of factors that are outside of the Company’s control, including the nature and design of the component, the customer’s specifications, and required delivery timelines. These factors will likely require that the Company make further equity sales under the 2016 Purchase Agreement, raise additional funds by other means, or pursue other strategic initiatives to support its operations beyond the middle of 2017. There is no assurance that the Company will be able to make equity sales under the 2016 Purchase Agreement or raise additional funds by other means on acceptable terms, if at all. If the Company were to make equity sales under the 2016 Purchase Agreement or to raise additional funds through other means by issuing securities, existing shareholders will be diluted. If funding is insufficient at any time in the future, the Company may be required to alter or reduce the scope of its operations or to cease operations entirely. Uncertainty as to the outcome of these factors raises substantial doubt about the Company’s ability to continue as a going concern.

 

5. Inventory

 

Inventory totaled $152 and $83 as of March 31, 2016 and December 31, 2015, respectively, and primarily consisted of raw alloy and finished goods inventory to satisfy future customer orders. Inventory is stated at the lower of weighted-average cost or market.

 

6. Prepaid Expenses and Other Current Assets

 

Prepaid expenses and other current assets totaled $224 and $408 as of March 31, 2016 and December 31, 2015, respectively, and primarily consisted of prepaid invoices and insurance premiums that will be recognized as expenses as shipments are made to customers or services are provided.

 

7. Patents and Trademarks, net

 

Net patents and trademarks totaled $568 and $570 as of March 31, 2016 and December 31, 2015, respectively, and primarily consisted of purchased patent rights and internally developed patents.

 

Purchased patent rights represent the exclusive right to commercialize the bulk amorphous alloy and other amorphous alloy technology acquired from California Institute of Technology (“Caltech”), through a license agreement with Caltech and other institutions. All fees and other amounts payable by the Company for these rights and licenses have been paid or accrued in full, and no further royalties, license fees or other amounts will be payable in the future under the license agreement.

 

 
13

 

 

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three
Months Ended March 31, 2016 and 2015

(numbers in thousands, except share and per share data)

(unaudited)

 

In addition to the purchased and licensed patents, the Company has internally developed patents. Internally developed patents include legal and registration costs incurred to obtain the respective patents. The Company currently holds various patents and numerous pending patent applications in the United States, as well as numerous foreign counterparts to these patents outside of the United States.

 

The Company amortizes capitalized patents and trademarks over an average of 10 to 17 year periods. Amortization expense for patents and trademarks was $25 and $25 for the three month periods ended March 31, 2016 and 2015, respectively.

 

8. Other Assets

 

Other assets totaled $36 and $31 as of March 31, 2016 and December 31, 2015, respectively, and consisted of deposits under long-term lease agreements.

 

9. Accrued Liabilities

 

Accrued liabilities totaled $1,246 and $947 as of March 31, 2016 and December 31, 2015, respectively. Included within these totals are employee related accruals for normal wages, bonuses, and vacation liabilities of $1,139 and $766, as well as accrued audit fees of $34 and $109 as of March 31, 2016 and December 31, 2015, respectively. In addition, as of March 31, 2016 and December 31, 2015, respectively, $73 and $72 of deferred straight-line rent liabilities existed related to the Company’s warehouse and office facility lease.

 

10. Short-Term Debt

 

Short-term debt totaled $700 and $700 as of March 31, 2016 and December 31, 2015, respectively, and consisted of borrowings under a line of credit facility, with a fixed interest rate of 2.1%. Interest expense related to outstanding borrowings was $4 and $0 for the three months ended March 31, 2016 and 2015, respectively.

 

This credit facility requires the Company to maintain collateral for the full amount of the facility. A failure to meet this requirement could trigger a prepayment of all outstanding borrowings.

 

Given the proximity to maturity, the carrying amount of short-term debt approximates fair value.

 

11. Warrant Liabilities

 

Pursuant to FASB ASC 815, the Company is required to report the value of certain warrants as a liability at fair value and record the changes in the fair value of the warrant liabilities as a gain or loss in its consolidated statement of operations and comprehensive loss due to the price-based anti-dilution rights of the warrants.

 

During June 2012, the Company issued warrants to purchase a total of 15,000,000 shares of common stock to Visser under the Visser MTA Agreement (see Note 3). These warrants had an original exercise price of $0.22 per share, expire on June 1, 2017 and were originally valued at $4,260. These warrants have certain anti-dilution and exercise price reset provisions which qualify the warrants to be classified as a liability under FASB ASC 815. As a result of subsequent issuances of the Company’s common stock, which resulted in anti-dilutive price resets, the exercise price of these warrants was reduced to $0.16 and $0.17 as of March 31, 2016 and December 31, 2015, respectively. In addition, the number of shares to be issued under the warrants as a result of the anti-dilution provision increased to 21,122,920 and 18,937,931 as of March 31, 2016 and December 31, 2015, respectively. As of March 31, 2016, these warrants were valued at $636 under the Black-Scholes valuation model utilizing the following assumptions: (i) expected life of 1.17 years, (ii) volatility of 69%, (iii) risk-free interest rate of 0.7%, and (iv) dividend rate of 0. The change in fair value for these warrants was a loss of $602 for the three months ended March 31, 2016.

 

On July 2, 2012, the Company issued warrants to purchase a total of 18,750,000 shares of common stock in a private placement (the “July 2012 Private Placement”). These warrants have an exercise price of $0.384 per share, expire on July 2, 2017, and were originally valued at $5,053. These warrants have certain anti-dilution and exercise price reset provisions which qualify the warrants to be classified as a liability under FASB ASC 815. As a result of executed draw-downs under the 2013 and 2014 Purchase Agreements, contractually defined price resets, and issuances under the 2016 Purchase Agreement, which resulted in an anti-dilution impact, the exercise price of these warrants was reduced to $0.17 and $0.19 as of March 31, 2016 and December 31, 2015, respectively. As of March 31, 2016 there were warrants to purchase a total of 17,572,000 shares of common stock outstanding, which were valued at $499 under the Black-Scholes valuation model utilizing the following assumptions: (i) expected life of 1.25 years, (ii) volatility of 70%, (iii) risk-free interest rate of 0.7%, and (iv) dividend rate of 0. The change in fair value for these warrants was a loss of $474 for the three months ended March 31, 2016.

 

 
14

 

 

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three
Months Ended March 31, 2016 and 2015

(numbers in thousands, except share and per share data)

(unaudited)

 

On March 10, 2016, the Company issued warrants to purchase a total of 10,066,809 shares of common stock as part of the 2016 Purchase Agreement. These warrants have an exercise price of $0.07 per share, expire on March 10, 2026, and were originally valued at $760. These warrants have certain anti-dilution and exercise price reset provisions which qualify the warrants to be classified as a liability under FASB ASC 815. As of March 31, 2016, these warrants were valued at $1,253 under the Black-Scholes valuation model utilizing the following assumptions: (i) expected life of 9.94 years, (ii) volatility of 117%, (iii) risk-free interest rate of 1.78%, and (iv) dividend rate of 0. The change in fair value for these warrants was a loss of $493 for the three months ended March 31, 2016.

 

The following table summarizes the change in the Company’s warrant liabilities as of March 31, 2016:

 

           

July 2, 2012

                 
    Visser MTA     Private     2016 Purchase          
   

Agreement

   

Placement

   

Agreement

   

Total

 
                                 

Beginning Balance - December 31, 2015

  $ 34     $ 25     $ -       59  

Original valuation- new issuances

    -       -       760       760  

Change in value of warrant liability, loss

    602       474       493       1,569  

Ending Balance - March 31, 2016

  $ 636     $ 499     $ 1,253     $ 2,388  

 

The Company had warrants to purchase 48,761,729 and 36,509,931 shares of common stock outstanding as of March 31, 2016 and December 31, 2015, respectively, which were valued and classified as a liability under FASB ASC 815.

 

12. Option Liabilities

 

As part of the 2016 Purchase Agreement, executed on March 10, 2016, the Company granted to the Investor the rights for future purchases of shares of Company’s common stock at predetermined prices. These options allow the investor to purchase 200,000,000 shares of the Company’s common stock at a price of $0.15 per share and 100,000,000 shares of the Company’s common stock at a price of $0.25 per share. Given that the volume of shares to be issued upon exercise of these instruments is in excess of that currently authorized for issuance, these options are required to be classified as liabilities under FASB ASC 815. The 200 million share option and the 100 million share option were initially valued at $489 and $22, respectively. As of March 31, 2016, these written call options were valued at $4,808 and $742, respectively, under the Black-Scholes valuation model utilizing the following assumptions: (i) expected life of 0.38 years, (ii) volatility of 97%, (iii) risk-free interest rate of 0.39%, and (iv) dividend rate of 0. The change in fair value for these options was a loss of $4,319 and $720, respectively, for the three months ended March 31, 2016.

 

The following table summarizes the change in the Company’s option liabilities as of March 31, 2016:

 

   

200M Share

   

100M Share

         
   

Call Option

   

Call Option

   

Total

 
                         

Beginning Balance - December 31, 2015

  $ -     $ -       -  

Original valuation

    489       22       511  

Change in value of option liability, loss (gain)

    4,319       720       5,039  

Ending Balance - March 31, 2016

    4,808       742       5,550  

 

13. Other Long-term Liabilities  

 

Other long-term liabilities were $856 as of March 31, 2016 and December 31, 2015, and consisted of long-term, aged payables to vendors, individuals, and other third parties that have been outstanding for more than 5 years. The Company is in the process of researching and resolving the balances for settlement and/or escheatment in accordance with applicable state law.

 

 
15

 

 

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three
Months Ended March 31, 2016 and 2015

(numbers in thousands, except share and per share data)

(unaudited)

 

14. Redeemable Common Stock

 

Redeemable common stock is comprised on 105,000,000 shares of the Company’s common stock (par value $0.001), issued and outstanding, that is contingently puttable to the Company upon the satisfaction of certain events. As part of the 2016 Purchase Agreement, the Company granted to the Investor the option to put the 105,000,000 shares delivered upon closing of the 2016 Purchase Agreement in exchange for a secure convertible note priced at $0.08 per share. This instrument will be exercisable in the event the Company is not able to effect an increase in authorized shares on or before May 31, 2016. In the event the Company is not able to effect such an increase, the Investor will have until October 31, 2016 to exercise its right under this instrument. Given the presence of conditional redemption features that are outside of the Company’s control, this instrument is required to be classified as temporary equity under ASC 480-10-S99. The instrument was originally valued at $7,129 after giving recognition to liability classified warrants and call options granted as part of the transaction (see Notes 11 and 12). This amount has not been subsequently adjusted as of March 31, 2016 due to the instrument not currently being redeemable and the nature of the contingencies impacting future redemption.

 

15. Stock Compensation Plans

 

Under the Company’s 2002 Equity Incentive Plan (the “2002 Plan”), which provided for the grant of stock options to officers, employees, consultants and directors of the Company and its subsidiaries, the Company granted options to purchase the Company’s common stock. A total of 10,000,000 shares of the Company’s common stock were available for issuance under the 2002 Plan. The 2002 Plan expired by its terms in April 2012, but remains in effect only with respect to the equity awards that had been granted prior to its expiration. The Company had outstanding grants of options to purchase 822,000 and 822,000 shares of the Company’s common stock as of March 31, 2016 and December 31, 2015, respectively.

 

On June 28, 2012, the Company adopted its 2012 Equity Incentive Plan, with the approval of the Company’s shareholders, which provided for the grant of stock options to officers, employees, consultants and directors of the Company and its subsidiaries. All options granted under this plan had exercise prices that were equal to the fair market value on the dates of grant. During the three months ended March 31, 2016, the Company granted options to purchase 2,000,000 shares of common stock. Under this plan, the Company had outstanding grants of options to purchase 27,724,242 and 25,988,734 shares of the Company’s common stock as of March 31, 2016 and December 31, 2015, respectively.

 

On January 27, 2015, the Company adopted its 2015 Equity Incentive Plan, which provided for the grant of stock options to officers, employees, consultants and directors of the Company and its subsidiaries. A total of 40,000,000 shares of the Company’s common stock are available for issuance under this plan. All options granted under this plan had exercise prices that were equal to the fair market value on the dates of grant. During the three months ended March 31, 2016, the Company granted options to purchase 13,700,000 shares of common stock. Under this plan, the Company had outstanding grants of options to purchase 28,086,667 and 15,100,000 shares of the Company’s common stock as of March 31, 2016 and December 31, 2015, respectively.

 

Stock based compensation expense attributable to these plans was $353 for the three months ended March 31, 2016. This compares to $337 for the three months ended March 31, 2015. The increase was due to additional options issued under 2016 stock option grants.

 

16. Shareholders’ (Deficit) Equity

 

Common stock

 

In June 2012, the Company issued 30,000,000 shares of common stock to Visser in connection with the Visser MTA Agreement (see Note 3).

 

Pursuant to the terms of the Company’s Senior Convertible Notes due September 1, 2013, which were also issued in the July 2012 Private Placement, the Company opted to pay the twelve monthly installment payments prior to the September 1, 2013 maturity date with shares of the Company’s common stock. Upon final settlement, the Company had issued 163,641,547 shares of common stock at a weighted average conversion price of $0.0774, for the twelve installment payments due under the notes, consisting of $12,000 principal and $680 of interest.

 

During the year ended December 31, 2013, the holders of the Company’s Series A Preferred Stock converted all of the outstanding 506,936 shares of Series A Preferred Stock into 16,896,070 shares of the Company’s common stock. After giving effect to such conversion, the Company has no shares of preferred stock outstanding.

 

On February 28, 2013, the Company’s shareholders approved an amendment to the Certificate of Incorporation of the Company increasing the number of authorized shares of common stock from 400 million shares to 500 million shares.

 

On October 24, 2013, the Company’s shareholders approved an amendment to the Company’s Certificate of Incorporation increasing the number of authorized shares of common stock from 500 million shares to 700 million shares.

 

In connection with the execution of the 2013 Purchase Agreement, the Company issued to each of the 2013 Investors a pro rata portion of 2,666,667 shares of the Company’s common stock. As of December 31, 2014, the Company had received an aggregate of $16,000 under the 2013 Purchase Agreement through the issuance of 85,355,615 shares of its common stock at a weighted average price of $0.19 per share. On August 22, 2014, the Company voluntarily terminated the 2013 Purchase Agreement, effective August 25, 2014 (see Note 3).

 

On September 9, 2014, an initial registration statement covering 75,000,000 shares issued and issuable pursuant to the 2014 Purchase Agreement was declared effective by the SEC. As of September 30, 2015, the Company had received an aggregate of $1,568 under the 2014 Purchase Agreement through the issuance of 12,500,000 shares of its common stock at a weighted average price of $0.13 per share. On March 8, 2016, the Company voluntarily terminated the 2014 Purchase Agreement, effective March 9, 2016 (see Note 3).

 

 
16

 

 

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three
Months Ended March 31, 2016 and 2015

(numbers in thousands, except share and per share data)

(unaudited)

 

Warrants

 

In connection with the Series A Preferred Stock issuances in 2009, warrants to purchase 29,779,557 shares of the Company’s common stock, valued at $18,179, were outstanding through July 15, 2015. Due to extension of the expiration date of these warrants during 2010, they no longer contained anti-dilution provisions and were reflected as equity as they did not meet the criteria under FASB ASC 815 for liability treatment. Such warrants had exercise prices ranging between $0.48 and $0.49 and expired on July 15, 2015.

 

Non-Controlling Interest

 

The Company’s Liquidmetal Golf subsidiary has the exclusive right and license to utilize the Company’s Liquidmetal alloy technology for purposes of golf equipment applications. Liquidmetal Technologies owns 79% of the outstanding common stock of Liquidmetal Golf. As of March 31, 2016, non-controlling interest was a deficit of $64. The December 31, 2015 non-controlling interest was a deficit of $62.

 

17. Loss Per Common Share

 

Basic earnings per share (“EPS”) is computed by dividing earnings (loss) attributable to common shareholders by the weighted average number of common shares outstanding for the periods. Diluted EPS reflects the potential dilution of securities that could share in the earnings.

 

Options to purchase 56,632,909 shares of common stock, at prices ranging from $0.07 to $1.44 per share, were outstanding at March 31, 2016, but were not included in the computation of diluted EPS for the same period as the inclusion would have been antidilutive, given the Company’s net loss. Warrants to purchase 48,761,729 shares of common stock, with prices ranging from $0.07 to $0.17 per share, outstanding at March 31, 2016 were not included in the computation of diluted EPS for the same period as the inclusion would have been antidilutive, given the Company’s net loss.

 

Options to purchase 44,445,400 shares of common stock, at prices ranging from $0.08 to $1.44 per share, were outstanding at March 31, 2015, but were not included in the computation of diluted EPS for the same period as the inclusion would have been antidilutive, given the Company’s net loss. Warrants to purchase 66,057,792 shares of common stock, with prices ranging from $0.18 to $0.49 per share, outstanding at March 31, 2015 were not included in the computation of diluted EPS for the same period as the inclusion would have been antidilutive, given the Company’s net loss.

 

18. Commitments and Contingencies

 

Operating Lease Commitments

 

The Company leases its offices and warehouse facilities under various lease agreements, certain of which are subject to escalations based upon increases in specified operating expenses or increases in the Consumer Price Index. As of March 31, 2016 and December 31, 2015, the Company had recorded $73 and $72, respectively, of deferred rent expenses.

 

Rent expense was $56 and $56 for the three months ended March 31, 2016 and 2015, respectively.

 

19. Related Party Transactions

 

The Company entered into a license agreement (the “IMG License Agreement”) with Innovative Materials Group, LLC (“IMG”), a California limited liability company which is majority owned by Mr. Kang, a former Chief Executive Officer and former Chairman of the Company, to license certain patents and technical information for the limited purpose of manufacturing certain licensed products with the Company’s first generation die cast machines. The IMG License Agreement granted a non-exclusive license to certain product categories, as well as an exclusive license to specific types of consumer eyewear products and obligated IMG to pay the Company a running royalty based on its sales of licensed products through August 5, 2021. The Company recognized $0 in royalty revenues from IMG during the three months ended March 31, 2016 and 2015. The IMG License Agreement was terminated on March 8, 2016.

 

In March 2016, the Company executed an Amended and Restated Employment Agreement with Mr. Steipp. The Restated Employment Agreement provides for an employment term from its effective date through August 3, 2017, after which the employment term is renewed annually for successive one year terms, unless terminated by the Company or Mr. Steipp. Under the Restated Employment Agreement, Mr. Steipp is entitled to certain benefits if his employment is terminated involuntarily. These benefits include payment of a lump sum amount equal to one year of his annual base salary, continued insurance benefits at the Company’s expense for one year and accelerated vesting of equity awards. If the Company undergoes a “change of control”, and Mr. Steipp (i) is subsequently terminated without “cause”, or (ii) the Company subsequently takes certain actions that constitute “good reason”, and thereafter Mr. Steipp resigns, he will be entitled to a payment equal to one year of base salary, plus continued insurance benefits for two years, plus acceleration of vesting on equity awards and an extended time during which to exercise any equity awards that are stock options.

 

 
17

 

 

LIQUIDMETAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three
Months Ended March 31, 2016 and 2015

(numbers in thousands, except share and per share data)

(unaudited)

 

In March 2016, the Company entered into amended Change of Control Agreements with certain of its executive officers. The Change of Control Agreements provide that if the executive officer’s employment with the Company is terminated without cause during the one-year period after a change of control of the Company, then the terminated officer will receive lump sum severance compensation in an amount equal to twelve months of his then-current base salary. Under the agreements, each of the executive officers will also be entitled to the above-described severance compensation in the event he terminates his own employment within one year after a change of control because of a salary decrease, assignment to a lower-level position, or a required move of more than twenty-five miles. In addition, upon termination, all unvested stock options related to these officers will automatically and immediately vest and shall thereafter be exercisable in accordance with the terms and provisions of the applicable award agreements.

 

On March 10, 2016, the Company entered into the 2016 Purchase Agreement with Liquidmetal Technology Limited, providing for the purchase of up to 405,000,000 shares of the Company’s common stock for an aggregate purchase price of $63.4 million. Liquidmetal Technology Limited is a newly formed company owned by Mr. Yeung Tak Lugee Li (“Mr. Li”). In connection with the 2016 Purchase Agreement and also on March 10, 2016, the Company and DongGuan Eontec Co., Ltd., entered into a a license agreement pursuant to which the Company and Eontec entered into a cross-license of their respective technologies. Eontec is a publicly held Hong Kong corporation in which Mr. Li is the Chairman and majority shareholder. As of March 31, 2016, Mr Li is a greater-than-5% beneficial owner of the Company.

 

 
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Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

This management’s discussion and analysis should be read in conjunction with the consolidated financial statements and notes included elsewhere in this Quarterly Report on Form 10-Q. All amounts described in this section are in thousands, except percentages, periods of time, and share and per share data.

 

This management’s discussion and analysis, as well as other sections of this Quarterly Report on Form 10-Q, may contain “forward-looking statements” that involve risks and uncertainties, including statements regarding our plans, future events, objectives, expectations, estimates, forecasts, assumptions, or projections. Any statement that is not a statement of historical fact is a forward-looking statement, and in some cases, words such as “believe,” “estimate,” “project,” “expect,” “intend,” “may,” “anticipate,” “plan,” “seek,” and similar words or expressions identify forward-looking statements. These statements involve risks and uncertainties that could cause actual outcomes and results to differ materially from the anticipated outcomes or results, and undue reliance should not be placed on these statements. These risks and uncertainties include, but are not limited to, the matters discussed under the heading “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and other risks and uncertainties discussed in other filings made with the Securities and Exchange Commission (including risks described in subsequent reports on Form 10-Q and Form 8-K and other filings). We disclaim any intention or obligation, other than as required by applicable law, to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

 

Overview

 

We are a materials technology company that develops and commercializes products made from amorphous alloys. Our Liquidmetal® family of alloys consists of a variety of proprietary bulk alloys and composites that utilize the advantages offered by amorphous alloy technology. We design, develop and sell products and components from bulk amorphous alloys to customers in various industries. We also partner with third-party manufacturers and licensees to develop and commercialize Liquidmetal alloy products.

 

Amorphous alloys are, in general, unique materials that are distinguished by their ability to retain a random atomic structure when they solidify, in contrast to the crystalline atomic structure that forms in other metals and alloys when they solidify. Liquidmetal alloys are proprietary amorphous alloys that possess a combination of performance, processing, and potential cost advantages that we believe will make them preferable to other materials in a variety of applications. The amorphous atomic structure of bulk alloys enables them to overcome certain performance limitations caused by inherent weaknesses in crystalline atomic structures, thus facilitating performance and processing characteristics superior in many ways to those of their crystalline counterparts. Our alloys and the injection molding technology we employ results in components that exhibit: exceptional dimensional control and repeatability that rivals precision machining, excellent corrosion resistance, brilliant surface finish, high strength, high hardness, high elastic limit, alloys that are non-magnetic, and the ability to form complex shapes common to the injection molding of plastics. Interestingly, all of these characteristics are achievable from the molding process, so design engineers do not have to select specific alloys to achieve one or more of the characteristics as is the case with crystalline materials. We believe these advantages could result in Liquidmetal alloys supplanting high-performance alloys, such as titanium and stainless steel, and other incumbent materials in a wide variety of applications. Moreover, we believe these advantages could enable the introduction of entirely new products and applications that are not possible or commercially viable with other materials.

 

Our revenues are derived from i) selling our bulk Liquidmetal alloy products, which include non-consumer electronic devices, medical products, automotive components, and sports and leisure goods; ii) selling tooling and prototype parts such as demonstration parts and test samples for customers with products in development; iii) product licensing and royalty revenue, and iv) research and development revenue. We expect that these sources of revenue will continue to significantly change the character of our revenue mix.

 

Our cost of sales consists primarily of the costs of manufacturing, which include raw alloy and internal labor required to operate our on-site production cell. Selling, general, and administrative expenses currently consist primarily of salaries and related benefits, travel, consulting and professional fees, depreciation and amortization, insurance, office and administrative expenses, and other expenses related to our operations.

 

Research and development expenses represent salaries, related benefits expenses, depreciation of research equipment, consulting and contract services, expenses incurred for the design and testing of new processing methods, expenses for the development of sample and prototype products, and other expenses related to the research and development of Liquidmetal bulk alloys. Costs associated with research and development activities are expensed as incurred. We plan to enhance our competitive position by improving our existing technologies and developing advances in amorphous alloy technologies. We believe that our research and development efforts will focus on the discovery of new alloy compositions, the development of improved processing technology, and the identification of new applications for our alloys.

 

 
19

 

 

Licensing Transactions

 

Eontech License Agreement

 

In connection with the 2016 Purchase Agreement (as further described below), on March 10, 2016, the Company and DongGuan Eontec Co., Ltd., a Hong Kong corporation (“Eontec”), entered into a Parallel License Agreement (the “License Agreement”) pursuant to which the Company and Eontec entered into a cross-license of their respective technologies.

 

The License Agreement provides for the cross-license of certain patents, technical information, and trademarks between the Company and Eontec. In particular, under the License Agreement, the Company granted to Eontec a paid-up, royalty-free, perpetual license (or sublicense, as the case may be) to the Company’s patents and related technical information to make, have made, use, offer to sell, sell, export and import products in certain geographic areas outside of North America and Europe, and Eontec granted to the Company a paid-up, royalty-free, perpetual license (or sublicense, as the case may be) to Eontec’s patents and related technical information to make, have made, use, offer to sell, sell, export and import products in certain geographic areas outside of specified countries in Asia. The license granted by the Company to Eontec is exclusive (including to the exclusion to the Company) in the countries of Brunei, Cambodia, China (P.R.C and R.O.C.), East Timor, Indonesia, Japan, Laos, Malaysia, Myanmar, North Korea, Philippines, Singapore, South Korea, Thailand. and Vietnam. The license granted by Eontec to the Company is exclusive (including to the exclusion of Eontec) in North America and Europe. The cross-licenses are non-exclusive in geographic areas outside of the foregoing exclusive territories.

 

Apple License Transaction

 

On August 5, 2010, the Company entered into a license transaction with Apple Inc. (“Apple”) pursuant to which (i) the Company contributed substantially all of its intellectual property assets to a newly organized special-purpose, wholly-owned subsidiary, called Crucible Intellectual Property, LLC (“CIP”), (ii) CIP granted to Apple a perpetual, worldwide, fully-paid, exclusive license to commercialize such intellectual property in the field of consumer electronic products, as defined in the license agreement, in exchange for a license fee, and (iii) CIP granted back to the Company a perpetual, worldwide, fully-paid, exclusive license to commercialize such intellectual property in all other fields of use.

 

Under the agreements relating to the license transaction with Apple, the Company was obligated to contribute, to CIP, all intellectual property that it developed through February 2012. Subsequently, this obligation has been extended to apply to all intellectual property developed through February 2016. The Company is also obligated to maintain certain limited liability company formalities with respect to CIP at all times after the closing of the license transaction.

 

Visser Precision Cast, LLC License Transaction

 

On June 1, 2012, the Company entered into a Master Transaction Agreement (the “Visser MTA”) with Visser Precision Cast, LLC (“Visser”) relating to a strategic transaction for manufacturing services and financing. Under the manufacturing and service component of the Visser MTA, the Company agreed to engage Visser as a perpetual, exclusive manufacturer of non-consumer electronic products. Under the financing component of the Visser MTA, the Company issued and sold to Visser in a private placement transaction (i) 30,000,000 shares of common stock at a purchase price of $0.10 per share resulting in proceeds of $3,000,000 and (ii) two warrants to purchase 15,000,000 shares of common stock at an original exercise price of $0.22 per share which expire on June 1, 2017.

 

On May 20, 2014, the Company and Visser entered into a settlement agreement whereby the parties have amended and restated the sublicense and financing components of the Visser MTA. Additionally, the manufacturing services component and remaining considerations of the Visser MTA were terminated. Under the amended and restated sublicense agreement, the Company granted to Visser a fully paid-up, royalty-free, irrevocable, perpetual, worldwide, non-transferable, nonexclusive sublicense to all of the Company’s intellectual property developed on or prior to May 20, 2014 (the “Effective Date”), for all fields of use other than certain excluded fields as set forth therein. Visser does not have any rights, now or in the future, to the Company’s intellectual property developed after the Effective Date. The license to the Company’s intellectual property developed on or prior to the Effective Date does not include the right to use the “Liquidmetal” trademark or any of the Company’s other trademarks, except in certain defined situations, as set forth in the amended and restated agreement.

 

With the foregoing revised arrangements, the Company is no longer required to use Visser as its exclusive manufacturer and is free to license other manufacturers on a non-exclusive basis in any industry or geographic market as to which the Company has not previously granted an exclusive license to a third party. Any such manufacturers licensed by the Company in the future will be able both to manufacture parts for the Company and its customers, and to manufacture and sell products for their own account for such industries or markets as the Company may agree, subject to whatever royalty arrangements the Company may negotiate. The Company has not yet licensed any manufacturers other than Visser. Visser will also have the right to manufacture and sell products under the amended and restated sublicense agreement.

 

The settlement amended and restated the two warrants the Company issued to Visser in June 2012 to purchase 15,000,000 shares of its common stock at an exercise price of $0.22 per share. Those warrants contained anti-dilution mechanisms under which the number of shares issuable upon exercise of those warrants would be increased, and the exercise price for such shares would be reduced if we issued shares of our common stock at prices less than the warrants’ exercise price. The amended and restated warrant agreement includes the effect of such anti-dilution adjustments and is exercisable for 18,611,079 shares of common stock (increased further to 21,122,920 shares under the anti-dilution provisions of the warrants, see footnote 11) at an exercise price of $0.16 per share. The amended and restated warrant agreement continues to contain comparable anti-dilution adjustment mechanisms. The amended and restated warrant agreement also removes certain lock-up provisions that were included in the original warrants. These warrants expire on June 1, 2017.

 

 
20

 

 

Other License Transactions

 

On January 31, 2012, the Company entered into a Supply and License Agreement for a five year term with Engel Austria Gmbh (“Engel”) whereby Engel was granted a non-exclusive license to manufacture and sell injection molding machines to the Company’s licensees. Since that time, the Company and Engel have agreed on an injection molding machine configuration that can be commercially supplied and supported by Engel. On December 6, 2013, the companies entered into an Exclusivity Agreement for a 10 year term whereby the Company agreed, with certain exceptions and limitations, that the Company and its licensees would purchase amorphous alloy injection molding machines exclusively from Engel, and this exclusivity right was granted in exchange for certain royalties to be paid by Engel to the Company based on a percentage of the net sales price of such injection molding machines.

 

The Company’s Liquidmetal Golf subsidiary has the exclusive right and license to utilize the Company’s Liquidmetal alloy technology for purposes of golf equipment applications. This right and license is set forth in an intercompany license agreement between Liquidmetal Technologies and Liquidmetal Golf. This license agreement provides that Liquidmetal Golf has a perpetual and exclusive license to use Liquidmetal alloy technology for the purpose of manufacturing, marketing, and selling golf club components and other products used in the sport of golf. Liquidmetal Technologies owns 79% of the outstanding common stock in Liquidmetal Golf.

 

In June 2003, the Company entered into an exclusive license agreement with LLPG, Inc. (“LLPG”). Under the terms of the agreement, LLPG has the exclusive right to commercialize Liquidmetal alloys, particularly precious-metal based compositions, in jewelry and high-end luxury product markets. The Company, in turn, will receive royalty payments over the life of the contract on all Liquidmetal products produced and sold by LLPG. The exclusive license agreement with LLPG expires on December 31, 2021.

 

In March 2009, the Company entered into a license agreement with Swatch Group, Ltd. (“Swatch”) under which Swatch was granted a non-exclusive license to the Company’s technology to produce and market watches and certain other luxury products. In March 2011, this license agreement was amended to grant Swatch exclusive rights as to watches and all third parties (including the Company), but non-exclusive as to Apple, and the Company’s license agreement with LLPG was simultaneously amended to exclude watches from LLPG’s rights. The Company will receive royalty payments over the life of the contract on all Liquidmetal products produced and sold by Swatch. The license agreement with Swatch will expire on the expiration date of the last licensed patent.

 

Critical Accounting Policies and Estimates

 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions.

 

We believe that the following accounting policies are the most critical to our consolidated financial statements since these policies require significant judgment or involve complex estimates that are important to the portrayal of our financial condition and operating results:

 

Revenue recognition

Impairment of long-lived assets and definite-lived intangibles

Deferred tax assets

Valuation of liability classified warrants and options

Share based compensation

 

Our Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Annual Report”) contains further discussions on our critical accounting policies and estimates.

 

 
21

 

 

Results of Operations  

 

Comparison of the three months ended March 31, 2016 and 2015

  

   

For the three months ended March 31,

 
   

2016

           

2015

         
    (unaudited)             (unaudited)          
   

in 000's

   

% of Products Revenue

   

in 000's

   

% of Products Revenue

 
                                 

Revenue:

                               

Products

  $ 165             $ 23          

Licensing and royalties

    3               3          

Total revenue

    168               26          
                                 

Cost of sales

  $ 158       96%       19       83%  
                                 

Gross profit

    10       6%       7       30%  
                                 

Selling, marketing, general and administrative

    2,017       1222%       1,852       8052%  

Research and development

    559       339%       482       2096%  
                                 

Operating loss

    (2,566 )             (2,327 )        
                                 

Change in value of warrant liabilities, loss

    (1,569 )             (161 )        

Change in value of option liabilities, loss

    (5,039 )             -          

Interest expense

    (4 )             -          

Interest income

    -               8          

Net loss

    (9,178 )             (2,480 )        

 

In discussing our results of our operations, we have categorized the specific items of our consolidated statements of operations into various categories to facilitate the understanding of our core business operations. Explanations of each category as well as analyses of specific items contained in that category are discussed below:

 

Operating revenue and expenses

 

The “Operating revenue and expenses” category of statements of operations items represent those items that pertain to our core operations in the bulk alloy manufacturing and licensing business as follows:

 

Revenue. Total revenue increased to $168 for the three months ended March 31, 2016 from $26 for the three months ended March 31, 2015. The increase was attributable to completion of small scale pre-production orders during 2016 as a result of our continued build out of our on-site manufacturing capabilities.

 

Cost of sales. Cost of sales was $158, or 96% of products revenue, for the three months ended March 31, 2016, an increase from $19, or 83% of products revenue, for the three months ended March 31, 2015. The increase in our cost of sales as a percentage of product revenue for the three months ended March 31, 2016 was primarily attributable to the high tooling costs associated with smaller pre-production orders in relation to the piece price yielded from manufacturing. The cost to manufacture parts from our bulk alloys manufacturing business is variable and differs based on the unique design of each product. Given the continued development and refinement of our manufacturing efforts during the three months ended March 31, 2016, our cost of sales as a percentage of products revenue is not necessarily representative of our future cost percentages and is expected to improve over time with increases in volume and continued improvements to our internal processes. When we begin increasing our products revenues with shipments of routine, commercial parts through our manufacturing facility and/or third party contract manufacturers, we expect our cost of sales percentages to decrease, stabilize and be more predictable.

 

 
22

 

 

Gross profit. Our gross profit increased to $10 from $7 for the three month periods ended March 31, 2016 and 2015, respectively. Our gross profit, as a percentage of products revenue, decreased to 6% from 30% for the three month periods ended March 31, 2016 and 2015, respectively. As discussed above under “Cost of sales”, early pre-production orders are resulting in a higher cost mix, relative to revenue, than would otherwise be incurred in an on-site production environment, with higher volumes and more established operating processes, or through contract manufacturers. As such, our gross profit percentages have fluctuated and may continue to fluctuate based on volume and quoted production prices per unit and may not be representative of our future business. When we begin increasing our products revenues with shipments of routine, commercial parts through future orders to our manufacturing facility and/or third party contract manufacturers, we expect our gross profit percentages to stabilize, increase and be more predictable.

 

Selling, marketing, general and administrative. Selling, marketing, general and administrative expenses were $2,017 and $1,852 for the three months ended March 31, 2016 and 2015, respectively. The increase in expense is due to additional legal costs incurred during 2016 with respect to the 2016 Purchase Agreement.

 

Research and development. Research and development expenses increased to $559 for the three months ended March 31, 2016, from $482 for the three months ended March 31, 2015. The increase in expense was mainly due to additional research projects and additional personnel hired to support our manufacturing and process development efforts. We continue to (i) perform research and development of new Liquidmetal alloys and related processing capabilities, (ii) develop new manufacturing techniques, and (iii) contract with consultants to advance the development of Liquidmetal alloys and related production processes.  

 

Operating loss. Operating loss was $2,566 and $2,327 for the three months ended March 31, 2016 and 2015, respectively. The increase in our operating loss is primarily attributable to increase in operating expenses, as discussed above.

 

We continue to invest in our technology infrastructure to expedite the adoption of our technology, but we have experienced long sales lead times for customer adoption of our technology. Until that time where we can either (i) increase our revenues with shipments of routine, commercial parts through a combination of our manufacturing center or third party contract manufacturers or (ii) obtain significant licensing revenues, we expect to continue to have operating losses for the foreseeable future.

 

Non-operational expenses

 

Our statement of operations contains various, significant items that are non-operational in nature. These categories of expenses may have significant gains and losses based on the volatility of our stock price as follows:

 

Change in value of warrant liabilities. The change in value of warrant liabilities was a non-cash loss of $1,569 and $161 for the three months ended March 31, 2016 and 2015, respectively. These adjustments result from periodic valuation adjustments related to fluctuations in our stock price, and other inputs, for warrants issued in connection with the Visser MTA Agreement, the July 2012 Private Placement, and the 2016 Purchase Agreement. Changes in the value of our warrants are non-cash and do not affect the core operations of our business or liquidity.

 

Change in value of option liabilities. The change in value of option liabilities was a non-cash loss of $5,039 and $0 for the three months ended March 31, 2016 and 2015, respectively. These adjustments result from periodic valuation adjustments related to fluctuations in our stock price, and other inputs, for written call options issued in connection with the 2016 Purchase Agreement. Changes in the value of option liabilities are non-cash and do not affect the core operations of our business or liquidity.

 

Interest expense. Interest expense relates to interest incurred under our line of credit agreement. Such amounts were $4 and $0 for the three months ended March 31, 2016 and 2015, respectively.

 

Interest income. Interest income relates to interest earned from our cash deposits for the respective periods. Such amounts were $0 and $8 for the three months ended March 31, 2016 and 2015, respectively.

 

Liquidity and Capital Resources

 

Cash used in operating activities

 

Cash used in operating activities totaled $1.9 million and $1.7 million for the three months ended March 31, 2016 and 2015, respectively. The cash was primarily used to fund operating expenses related to our business and product development efforts.

 

Cash provided by (used in) investing activities

 

Cash provided by (used in) investing activities totaled $1.0 million and $(2.1) million for the three months ended March 31, 2016 and 2015, respectively. Investing outflows primarily consist of capital expenditures to support our manufacturing efforts. Also included in investing cash flows are changes in restricted cash to support line of credit collateral requirements of which $1.0 million was recorded as an in-flow during the three months ended March 31, 2016 and $2 million was recorded as an outflow during the three months ended March 31, 2015.

 

Cash provided by financing activities

 

Cash provided by financing activities totaled $8.4 million and $0 for the three months ended March 31, 2016 and 2015, respectively. Cash provided in 2016 was the cash received for the issuance of shares under the 2016 Purchase Agreement.

 

 
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Financing arrangements and outlook

 

On March 10, 2016, we entered into a Securities Purchase Agreement (the “2016 Purchase Agreement”) with Liquidmetal Technology Limited, a Hong Kong company (the “Investor”), providing for the purchase by Investor of up to 405,000,000 shares of our common stock for an aggregate purchase price of $63.4 million.

 

The 2016 Purchase Agreement provides that the Investor is obligated to purchase up to 405,000,000 shares of our common stock in multiple closings, with the Investor having purchased 105,000,000 shares at an aggregate purchase price of $8.4 million (or $0.08 per share) at the initial closing on March 10, 2016. The 2016 Purchase Agreement provides that the Investor will purchase the remaining 200,000,000 shares at $0.15 per share and 100,000,000 shares at $0.25 per share for an aggregate purchase price of $55.0 million no later than ninety days after the satisfaction of certain conditions, including shareholder approval of an amendment to our Amended and Restated Certificate of Incorporation increasing our authorized number of shares of common stock from 700,000,000 to 1,100,000,000.

 

We anticipate that our current capital resources, when considering expected losses from operations, will be sufficient to fund our operations through the middle of 2017. We have a relatively limited history of producing bulk amorphous alloy components and products on a mass-production scale. Furthermore, the ability of future contract manufacturers to produce our products in desired quantities and at commercially reasonable prices is uncertain and is dependent on a variety of factors that are outside of our control, including the nature and design of the component, the customer’s specifications, and required delivery timelines. These factors will likely require that we make further equity sales under the 2016 Purchase Agreement, raise additional funds by other means, or pursue other strategic initiatives to support our operations beyond the middle of 2017. There is no assurance that we will be able to make equity sales under the 2016 Purchase Agreement or raise additional funds by other means on acceptable terms, if at all. If we were to make equity sales under the 2016 Purchase Agreement or to raise additional funds through other means by issuing securities, existing shareholders will be diluted. If funding is insufficient at any time in the future, we may be required to alter or reduce the scope of our operations or to cease operations entirely. Uncertainty as to the outcome of these factors raises substantial doubt about our ability to continue as a going concern.

 

 

Off Balance Sheet Arrangements 

 

As of March 31, 2016, we did not have any off-balance sheet arrangements.

 

 

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

 

Interest Rate Risk

 

Our line of credit facility provides for a fixed interest rate of 2.1% per annum on all outstanding borrowings. A change in interest rates impacts the fair value of our outstanding debt under the line of credit facility but has no impact on interest incurred or cash flows.  As of March 31, 2016, there was $700 in outstanding borrowings under this facility. Given the proximity to maturity, the carrying amount of short-term debt approximates fair value as of March 31, 2016.

 

 

Item 4 – Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2016. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2016.

 

Changes in Internal Control over Financial Reporting.

 

There were no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
24

 

 

PART II

OTHER INFORMATION

Item 1 – Legal Proceedings

 

There have been no significant developments with respect to legal proceedings specifically affecting Liquidmetal Technologies Inc. or its subsidiaries since the filing of the 2015 Annual Report.

 

Item 1A – Risk Factors

 

For a detailed discussion of the risk factors that should be understood by any investor contemplating an investment in our stock, please refer to Part I, Item 1A “Risk Factors” in the 2015 Annual Report. There have been no material changes from the risk factors previously disclosed in Part I, “Item 1A Risk Factors” in the 2015 Annual Report.

 

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

 

During the period covered by this Quarterly Report on Form 10-Q, we did not issue or sell any unregistered equity securities, other than as reported in the Company’s Current Report on Form 8-K filed with the SEC on March 14, 2016 with respect to the 2016 Purchase Agreement.

 

Item 3 – Defaults Upon Senior Securities

 

None.

 

Item 4 – Mine Safety Disclosures

 

None.

 

Item 5 – Other Information

 

None.

 

 
25

 

 

 

Item 6 – Exhibits

 

The following documents are filed as exhibits to this Report:

 

 

 

Exhibit

Number

 

Description of Document

     
     
     

4.1

 

Stock Purchase Warrant, dated March 10, 2016, issued to Liquidmetal Technology Limited by Liquidmetal Technologies, Inc. (incorporated by reference from Exhibit 4.1 to the Form 8-K filed on March 14, 2016).

     

10.1

 

Securities Purchase Agreement, dated March 10, 2016, between Liquidmetal Technologies, Inc. and Liquidmetal Technology Limited (incorporated by reference from Exhibit 10.1 to the Form 8-K filed on March 14, 2016).

     

10.2

 

Parallel License Agreement, dated March 10, 2016, between Liquidmetal Technologies, Inc. and DongGuan Eontec Co., Ltd. (incorporated by reference from Exhibit 10.2 to the Form 8-K filed on March 14, 2016).

     

10.3

 

Amended and Restated Employment Agreement, dated March 10, 2016, between the Company and Thomas Steipp (incorporated by reference from Exhibit 10.3 to the Form 8-K filed on March 14, 2016).

     

10.4

 

Form of Amendment of Change of Control Agreement (incorporated by reference from Exhibit 10.4 to the Form 8-K filed on March 14, 2016).

     

31.1

 

Certification of Principal Executive Officer, Thomas Steipp, as required by Section 302 of the Sarbanes-Oxley Act of 2002

     

31.2

 

Certification of Principal Financial Officer, Tony Chung, as required by Section 302 of the Sarbanes-Oxley Act of 2002

     

32.1

 

Certification of Chief Executive Officer, Thomas Steipp, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     

32.2

 

Certification of Chief Financial Officer, Tony Chung, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     

101.1

 

The following financial statements from Liquidmetal Technologies, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (unaudited), formatted in XBRL: (i) Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015, (ii) Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2016 and 2015, (iii) Consolidated Statement of Shareholders’ (Deficit) Equity for the three months ended March 31, 2016, (iv) Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015, and (v) Notes to Consolidated Financial Statements.

 

 
26

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

LIQUIDMETAL TECHNOLOGIES, INC.

 

 

(Registrant)

 

 

 

 

Date: May 10, 2016

/s/ Thomas Steipp

 

 

Thomas Steipp

 

 

President and Chief Executive Officer

 

 

(Principal Executive Officer)

 

 

 

 

 

 

 

Date: May 10, 2016

/s/ Tony Chung

 

 

Tony Chung

 

 

Chief Financial Officer

 

 

(Principal Financial and Accounting Officer)

 

 

 

 

 

27

 

 

Exhibit 31.1

certificationS

 

 

I, Thomas Steipp, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Liquidmetal Technologies, 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. The registrant's other certifying officer and I are 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 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: May 10, 2016    

/s/ Thomas Steipp                                                

  Thomas Steipp
  President and Chief Executive Officer
  (Principal Executive Officer)

 

 

 

Exhibit 31.2

 

CERTIFICATIONS

I, Tony Chung, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Liquidmetal Technologies, 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. The registrant's other certifying officer and I are 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 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: May 10, 2016     

/s/ Tony Chung                                                          

  Tony Chung
  Chief Financial Officer
  (Principal Financial and Accounting Officer)

 

 

 

Exhibit 32.1

 

WRITTEN STATEMENT OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. 1350

 

Solely for the purposes of complying with 18 U.S.C. 1350, I, the undersigned Chief Executive Officer of Liquidmetal Technologies, Inc. (the “Company”), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2016 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

/s/ Thomas Steipp                                             

Thomas Steipp, President and Chief Executive Officer

May 10, 2016

 

Exhibit 32.2

 

WRITTEN STATEMENT OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. 1350

 

 

Solely for the purposes of complying with 18 U.S.C. 1350, I, the undersigned Chief Financial Officer of Liquidmetal Technologies, Inc. (the “Company”), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2016 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

/s/ Tony Chung                                                                  

Tony Chung, Chief Financial Officer

May 10, 2016

 

 

 

v3.4.0.3
Document And Entity Information - shares
3 Months Ended
Mar. 31, 2016
May. 06, 2016
Entity Registrant Name LIQUIDMETAL TECHNOLOGIES INC  
Entity Central Index Key 0001141240  
Trading Symbol lqmt  
Current Fiscal Year End Date --12-31  
Entity Filer Category Accelerated Filer  
Entity Current Reporting Status Yes  
Entity Voluntary Filers No  
Entity Well-known Seasoned Issuer No  
Entity Common Stock, Shares Outstanding (in shares)   582,149,485
Document Type 10-Q  
Document Period End Date Mar. 31, 2016  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q1  
Amendment Flag false  
v3.4.0.3
Consolidated Balance Sheets ( Current Period Unaudited) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Redeemable Common Stock [Member]    
Redeemable Common Stock:    
Common Stock, $0.001 par value; 105,000,000 and 0 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively (Note 14). $ 7,129,000
Cash 10,287,000 $ 2,773,000
Restricted cash 1,005,000 2,008,000
Trade accounts receivable, net of allowance for doubtful accounts 102,000 30,000
Inventory 152,000 83,000
Prepaid expenses and other current assets 224,000 408,000
Total current assets 11,770,000 5,302,000
Property and equipment, net 1,263,000 1,370,000
Patents and trademarks, net 568,000 570,000
Other assets 36,000 31,000
Total assets 13,637,000 7,273,000
Short-term debt 700,000 700,000
Accounts payable 209,000 250,000
Accrued liabilities $ 1,246,000 947,000
Deferred revenue $ 77,000
Option liabilities $ 5,550,000
Total current liabilities 7,705,000 $ 1,974,000
Warrant liabilities 2,388,000 59,000
Other long-term liabilities 856,000 856,000
Total liabilities $ 10,949,000 $ 2,889,000
Shareholders' (deficit) equity:    
Preferred Stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively
Common stock, $0.001 par value; 700,000,000 shares authorized; 477,149,485 and 477,149,485 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively. $ 477,000 $ 477,000
Warrants 18,179,000 18,179,000
Additional paid-in capital 204,088,000 203,735,000
Accumulated deficit (227,121,000) (217,945,000)
Non-controlling interest in subsidiary (64,000) (62,000)
Total shareholders' (deficit) equity (4,441,000) 4,384,000
Total liabilities, redeemable common stock, and shareholders' (deficit) equity $ 13,637,000 $ 7,273,000
v3.4.0.3
Consolidated Balance Sheets ( Current Period Unaudited) (Parentheticals) - $ / shares
Mar. 31, 2016
Dec. 31, 2015
Redeemable Common Stock [Member]    
Redeemable Common stock, par value (in dollars per share) $ 0.001
Redeemable Common stock, shares issued (in shares) 105,000,000
Redeemable Common stock, shares outstanding (in shares) 105,000,000
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Preferred stock, shares authorized (in shares) 10,000,000 10,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized (in shares) 700,000,000 700,000,000
Common stock, shares issued (in shares) 477,149,485 477,149,485
Common stock, shares outstanding (in shares) 477,149,485 477,149,485
v3.4.0.3
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Revenue    
Products $ 165,000 $ 23,000
Licensing and royalties 3,000 3,000
Total revenue 168,000 26,000
Cost of sales 158,000 19,000
Gross profit 10,000 7,000
Operating expenses    
Selling, marketing, general and administrative 2,017,000 1,852,000
Research and development 559,000 482,000
Total operating expenses 2,576,000 2,334,000
Operating loss (2,566,000) (2,327,000)
Change in value of warrant liabilities, loss (1,569,000) $ (161,000)
Change in value of option liabilities, loss (5,039,000)
Interest expense (4,000) $ 0
Interest income 0 8,000
Net loss and comprehensive loss (9,178,000) (2,480,000)
Net loss attributable to non-controlling interest 2,000 2,000
Net loss and comprehensive loss attributable to Liquidmetal Technologies shareholders $ (9,176,000) $ (2,478,000)
Net loss per common share attributable to Liquidmetal Technologies shareholders, basic and diluted (in dollars per share) $ (0.02) $ (0.01)
Number of weighted average shares - basic and diluted (in shares) 512,149,485 464,482,819
v3.4.0.3
Consolidated Statement of Shareholders' Equity (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($)
Preferred Stock [Member]
Common Stock [Member]
Warrant [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Noncontrolling Interest [Member]
Total
Balance (in shares) at Dec. 31, 2015 477,149,485          
Balance at Dec. 31, 2015 $ 477,000 $ 18,179,000 $ 203,735,000 $ (217,945,000) $ (62,000) $ 4,384,000 $ 4,384,000
Stock-based compensation 0 0 353,000 0 353,000  
Net loss $ 0 $ 0 0 $ (9,176,000) (2,000) (9,178,000) (9,178,000)
Balance (in shares) at Mar. 31, 2016 477,149,485          
Balance at Mar. 31, 2016 $ 477,000 $ 18,179,000 $ 204,088,000 $ (227,121,000) $ (64,000) $ (4,441,000) $ (4,441,000)
v3.4.0.3
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Operating activities:    
Net loss $ (9,178,000) $ (2,480,000)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 149,000 115,000
Share-based Compensation $ 353,000 337,000
Restricted stock compensation issued to officer 78,000
Fair Value Adjustment of Warrants $ 1,569,000 $ 161,000
Fair Value Adjustment of Options 5,039,000
Changes in operating assets and liabilities:    
Trade accounts receivable (72,000) $ 62,000
Inventory (69,000) 0
Prepaid expenses and other current assets 184,000 $ (7,000)
Other assets (5,000)
Accounts payable and accrued liabilities 245,000 $ 46,000
Deferred revenue (77,000)
Net cash used in operating activities (1,862,000) $ (1,688,000)
Investing Activities:    
Purchases of property and equipment (9,000) (116,000)
Decrease (increase) in restricted cash 1,003,000 $ (2,005,000)
Investment in patents and trademarks (18,000)
Net cash provided by (used in) investing activities 976,000 $ (2,121,000)
Financing Activities:    
Proceeds from stock issuance 8,400,000
Net cash provided by financing activities 8,400,000
Net increase (decrease) in cash 7,514,000 $ (3,809,000)
Cash at beginning of period 2,773,000 10,009,000
Cash at end of period 10,287,000 $ 6,200,000
Supplemental Schedule of Non-Cash Investing and Financing Activities:    
Accrued capital expenditures $ 13,000
v3.4.0.3
Note 1 - Description of Business
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Business Description and Basis of Presentation [Text Block]
1. Description of Business
 
Liquidmetal Technologies, Inc. (the “Company”) is a materials technology and manufacturing company that develops and commercializes products made from amorphous alloys. The Company’s family of alloys consists of a variety of bulk alloys and composites that utilizes the advantages offered by amorphous alloys technology. The Company designs, develops, manufactures and sells products and custom components from bulk amorphous alloys to customers in a wide range of industries. The Company also partners with third-party manufacturers and licensees to develop and commercialize Liquidmetal alloy products.
 
Amorphous alloys are, in general, unique materials that are distinguished by their ability to retain a random atomic structure when they solidify, in contrast to the crystalline atomic structure that forms in other metals and alloys when they solidify. Liquidmetal alloys are proprietary amorphous alloys that possess a combination of performance, processing, and potential cost advantages that the Company believes will make them preferable to other materials in a variety of applications. The amorphous atomic structure of bulk alloys enables them to overcome certain performance limitations caused by inherent weaknesses in crystalline atomic structures, thus facilitating performance and processing characteristics superior in many ways to those of their crystalline counterparts. The Company’s alloys and the injection molding technology it employs results in components that exhibit: exceptional dimensional control and repeatability that rivals precision machining, excellent corrosion resistance, brilliant surface finish, high strength, high hardness, high elastic limit, alloys that are non-magnetic, and the ability to form complex shapes common to the injection molding of plastics. Interestingly, all of these characteristics are achievable from the molding process, so design engineers do not have to select specific alloys to achieve one or more of the characteristics as is the case with crystalline materials. The Company believes these advantages could result in Liquidmetal alloys supplanting high-performance alloys, such as titanium and stainless steel, and other incumbent materials in a wide variety of applications. Moreover, the Company believes these advantages could enable the introduction of entirely new products and applications that are not possible or commercially viable with other materials.
 
The Company’s revenues are derived from i) selling bulk Liquidmetal alloy products, which include non-consumer electronic devices, medical products, automotive components, and sports and leisure goods, ii) selling tooling and prototype parts such as demonstration parts and test samples for customers with products in development, iii) product licensing and royalty revenue, and iv) research and development revenue. The Company expects that these sources of revenue will continue to significantly change the character of the Company’s revenue mix.
v3.4.0.3
Note 2 - Basis of Presentation and Recent Accounting Pronouncements
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Basis of Presentation and Significant Accounting Policies [Text Block]
2
.
Basis of Presentation and Recent Accounting Pronouncements
 
The accompanying unaudited interim consolidated financial statements as of and for the three months ended March 31, 2016 and March 31, 2015 have been prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”) for interim financial information and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. All intercompany balances and transactions have been eliminated in consolidation. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for any future periods or the year ending December 31, 2016. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company's 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 7, 2016.
 
Revenue Recognition
 
The Company’s revenue recognition policy complies with the requirements of ASC 605. Revenue is recognized when i) persuasive evidence of an arrangement exists, ii) delivery has occurred, iii) the sales price is fixed or determinable, iv) collection is probable and v) all obligations have been substantially performed pursuant to the terms of the arrangement. Revenues primarily consist of the sales and prototyping of Liquidmetal molds and bulk alloys, licensing and royalties for the use of the Liquidmetal brand and bulk Liquidmetal alloys. Revenue is deferred and included in liabilities when the Company receives cash in advance for goods not yet delivered or if the licensing term has not begun.
 
License revenue arrangements in general provide for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company. These rights typically include the grant of an exclusive or non-exclusive right to manufacture and/or sell products covered by patented technologies owned or controlled by the Company. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined period of time.
 
Licensing revenues that are one time fees upon the granting of the license are recognized when i) the license term begins in a manner consistent with the nature of the transaction and the earnings process is complete, ii) when collectability is reasonably assured or upon receipt of an upfront fee, and iii) when all other revenue recognition criteria have been met. Pursuant to the terms of these agreements, the Company has no further obligation with respect to the grant of the license. Licensing revenues that are related to royalties are recognized as the royalties are earned over the related period.
 
Fair Value
Measurements
 
The estimated fair values of financial instruments reported in the consolidated financial statements have been determined using available market information and valuation methodologies, as applicable. The fair value of cash, restricted cash, and short-term debt approximate their carrying value due to their short maturities.
 
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Entities are required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value based upon the following fair value hierarchy:
 
Level 1 —
Quoted prices in active markets for identical assets or liabilities;
 
Level 2 —
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
 
Level 3 —
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
 
The Company has several financial instruments, namely warrant liabilities and written call option liabilities that are recorded at fair value on a periodic basis using Level 2 measurement inputs. These instruments are evaluated under the hierarchy of FASB ASC Subtopic 480-10, FASB ASC Paragraph 815-25-1 and FASB ASC Subparagraph 815-10-15-74 addressing embedded derivatives. The fair value of such instruments is estimated using the Black-Scholes option pricing model. Due to the presence of certain anti-dilution and exercise price reset provisions, as well as other criteria under applicable accounting standards precluding equity treatment, such instruments are required to be classified as liabilities (see Notes 11 and 12).
 
As of March 31, 2016, the following table represents the Company’s fair value hierarchy for items that are required to be measured at fair value on a recurring basis:
 
 
 
 
Fair Value
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
                                 
Warrant liabilities
    2,388       -       2,388       -  
Option liabilities
    5,550       -       5,550       -  
 
As of December 31, 2015, the following table represents the Company’s fair value hierarchy for items that are required to be measured at fair value on a recurring basis:
 
 
 
 
Fair Value
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
                                 
Warrant liabilities
    59       -       59       -  
 
Recent Accounting Pronouncements
 
Leases
 
In February 2016, the FASB issued an accounting standards update which modifies the accounting for leasing arrangements, particularly those arrangements classified as operating leases. This update will require entities to recognize the assets and liabilities arising from operating leases on the balance sheet. This guidance is effective for fiscal and interim periods beginning after December 15, 2018 and is required to be applied retrospectively to all leasing arrangements. The Company is currently assessing the effects this guidance may have on its consolidated financial statements.
 
Stock-Based Compensation
 
In March 2016, the FASB issued an accounting standards update which simplifies the accounting for share-based payment transactions, inclusive of income tax accounting and disclosure considerations. This guidance is effective for fiscal and interim periods beginning after December 15, 2016 and is required to be applied retrospectively to all impacted share-based payment arrangements. The Company is currently assessing the effects this guidance may have on its consolidated financial statements.
 
Revenue from Contracts with Customers
 
In May 2014, the FASB issued an accounting standards update which modifies the requirements for identifying, allocating, and recognizing revenue related to the achievement of performance conditions under contracts with customers. This update also requires additional disclosure related to the nature, amount, timing, and uncertainty of revenue that is recognized under contracts with customers. This guidance is effective for fiscal and interim periods beginning after December 15, 2017 and is required to be applied retrospectively to all revenue arrangements. The Company is currently assessing the effects this guidance may have on its consolidated financial statements.
 
Ability to Continue as a Going Concern
 
In August 2014, the FASB issued an accounting standards update which requires an assessment of an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently addressed by U.S. auditing standards. This standard is effective for the fiscal years ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements.
 
Inventory
 
In July 2015, the FASB issued an accounting standards update which modifies the requirements for measuring the value of inventory on a periodic basis. The new requirement will be to measure inventory at the lower of cost or net realizable value. This standard is effective for the fiscal years ending after December 15, 2016, and for annual periods and interim periods thereafter. The adoption of this guidance is not expected to have a significant impact on the Company’s consolidated financial statements.
 
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA and the SEC did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
v3.4.0.3
Note 3 - Significant Transactions
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Significant Transactions [Text Block]
3
.
Significant Transactions
 
2016 Purchase Agreement
 
On March 10, 2016, the Company entered into a Securities Purchase Agreement (the “2016 Purchase Agreement”) with Liquidmetal Technology Limited, a Hong Kong company (the “Investor”), providing for the purchase by Investor of up to 405,000,000 shares of the Company’s common stock for an aggregate purchase price of $63.4 million.
 
The 2016 Purchase Agreement provides that the Investor is obligated to purchase up to 405,000,000 shares of the Company’s common stock in multiple closings, with the Investor having purchased 105,000,000 shares at an aggregate purchase price of $8.4 million (or $0.08 per share) at the initial closing on March 10, 2016. The Purchase Agreement provides that the Investor will purchase the remaining 200,000,000 shares at $0.15 per share and 100,000,000 shares at $0.25 per share for an aggregate purchase price of $55.0 million no later than ninety (90) days after the satisfaction of certain conditions, including Company shareholder approval of an amendment to the Company’s Amended and Restated Certificate of Incorporation increasing the Company’s authorized number of shares of common stock from 700,000,000 to 1,100,000,000 (the “Charter Amendment”).
 
In addition to the shares issuable under the 2016 Purchase Agreement, the Company also issued to the Investor a warrant to acquire 10,066,809 shares of common stock of the Company at an exercise price of $0.07 per share. The warrant vests in increments on each closing date under the 2016 Purchase Agreement for a number of warrant shares that is proportionate to the amount of shares purchased under the 2016 Purchase Agreement on such closing date (with 2,609,913 warrant shares having initially vested on March 10, 2016). The warrant will expire on the tenth anniversary of its issuance date; provided, however, that should the subsequent closings under the 2016 Purchase Agreement not occur prior to the ninetieth (90th) day after the filing of the Charter Amendment, the warrant will automatically terminate and the Investor shall have no further right to exercise the remaining unvested 7,456,896 warrant shares under the warrant.
 
The 2016 Purchase Agreement provides that the Investor will have the right to designate one (1) individual to serve on the Company’s Board of Directors. Once the Investor purchases the remaining 300,000,000 shares of common stock under the 2016 Purchase Agreement, the Investor will thereafter have the right to designate an additional two (2) individuals to serve on the Company’s Board of Directors (such that the Investor would have designation rights with respect to three (3) of the seven (7) members of the Company’s Board of Directors, with one such member serving as Chairman). The 2016 Purchase Agreement also provides that, with certain limited exceptions, if the Company issues any shares of common stock at any time through the fifth (5th) anniversary of the Purchase Agreement, the Investor will have a preemptive right to subscribe for and to purchase at the same price per share (or at market price, in the case of issuance of shares pursuant to stock options) the number of shares necessary to maintain its ownership percentage of Company-issued shares of Common Stock.
 
The 2016 Purchase Agreement requires the Company to use commercially reasonable efforts to obtain, on or before May 31, 2016, shareholder approval of the Charter Amendment, to file the Charter Amendment with the State of Delaware, and to reserve sufficient shares of its common stock for issuance to the Investor under the 2016 Purchase Agreement. If the Company does not obtain shareholder approval of the Charter Amendment in order to file it by May 31, 2016, the Investor will have the right to sell the 105,000,000 shares purchased at the first closing back to the Company for $0.08 per share, with such purchase price to be paid by means of a secured convertible promissory note issued by the Company in the principal amount of $8.4 million (the “
Put Note
”). Such note, if issued, would accrue interest at the rate of 3% per annum, would be convertible at $0.08 and be due and payable on the eighteen (18) month anniversary of its issuance. If the Put Note is issued, the Company and the Investor would enter into a security agreement which would grant a security interest to the Investor in all of the Company’s assets other than its intellectual property and its equity interests in its subsidiary, Crucible Intellectual Property, LLC.
 
If the Investor fails to purchase the remaining 300,000,000 shares of common stock within 90 days after the filing of the Charter Amendment (assuming all other conditions to such closing have been satisfied), the Investor will forfeit certain rights, including the right to designate additional directors to the Company’s Board of Directors following such failure and the right to exercise the above-described preemptive right. In such event, the Company will also have the right to repurchase all of the shares held by the Investor at a per-share price of $0.08 within 15 months following the approval and filing of the Charter Amendment.
 
Eontec License Agreement
 
In connection with the 2016 Purchase Agreement and also on March 10, 2016, the Company and DongGuan Eontec Co., Ltd., a Hong Kong corporation (“Eontec”), entered into a Parallel License Agreement (the “License Agreement”) pursuant to which the Company and Eontec entered into a cross-license of their respective technologies.
 
The License Agreement provides for the cross-license of certain patents, technical information, and trademarks between the Company and Eontec. In particular, under the License Agreement, the Company granted to Eontec a paid-up, royalty-free, perpetual license (or sublicense, as the case may be) to the Company’s patents and related technical information to make, have made, use, offer to sell, sell, export and import products in certain geographic areas outside of North America and Europe, and Eontec granted to the Company a paid-up, royalty-free, perpetual license (or sublicense, as the case may be) to Eontec’s patents and related technical information to make, have made, use, offer to sell, sell, export and import products in certain geographic areas outside of specified countries in Asia. The license granted by the Company to Eontec is exclusive (including to the exclusion to the Company) in the countries of Brunei, Cambodia, China (P.R.C and R.O.C.), East Timor, Indonesia, Japan, Laos, Malaysia, Myanmar, North Korea, Philippines, Singapore, South Korea, Thailand. and Vietnam. The license granted by Eontec to the Company is exclusive (including to the exclusion of Eontec) in North America and Europe. The cross-licenses are non-exclusive in geographic areas outside of the foregoing exclusive territories.
 
2014
Purchase Agreement
 
On August 20, 2014, the Company entered into a common stock purchase agreement (“2014 Purchase Agreement”) with Aspire Capital Fund LLC (“Aspire Capital”), which provided that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital would be committed to purchase up to an aggregate of $30,000 worth of the Company’s common stock, $0.001 par value, over the 36
-month term of the 2014 Purchase Agreement.
 
As of March 31, 2016, the Company had received an aggregate of $1,568 under the 2014 Purchase Agreement through the issuance of 12,500,000 shares of its common stock at a weighted average price of $0.13 per share. On March 9, 2016, the Company terminated the 2014 Purchase Agreement.
 
Line of Credit Facility
 
In February 2015, the Company entered into a $2,000 line of credit facility, with a fixed interest rate of 2.1%, which originally matured on February 13, 2016. The facility has been extended through August 25, 2016, with reductions in available borrowings and associated collateral requirements to $1,000. Amounts available under this facility are secured by cash collateral. Such collateral is included as restricted cash on the Company’s consolidated balance sheet. As of March 31, 2016, there was $700 in outstanding borrowings under this facility. Interest expense applicable to these borrowings was $4 for the three months ended March 31, 2016 and $0 for the three months ended March 31, 2015.
 
Apple License Transaction
 
On August 5, 2010, the Company entered into a license transaction with Apple Inc. (“Apple”) pursuant to which (i) the Company contributed substantially all of its intellectual property assets to a newly organized special-purpose, wholly-owned subsidiary, called Crucible Intellectual Property, LLC (“CIP”), (ii) CIP granted to Apple a perpetual, worldwide, fully-paid, exclusive license to commercialize such intellectual property in the field of consumer electronic products, as defined in the license agreement, in exchange for a license fee, and (iii) CIP granted back to the Company a perpetual, worldwide, fully-paid, exclusive license to commercialize such intellectual property in all other fields of use. Additionally, in connection with the license transaction, Apple required the Company to complete a statement of work related to the exchange of Liquidmetal intellectual property information. The Company recognized a portion of the one-time license fee upon receipt of the initial payment and completion of the foregoing requirements under the license transaction. The remaining portion of the one-time license fee was recognized at the completion of the required statement of work.
 
Under the agreements relating to the license transaction with Apple, the Company was obligated to contribute, to CIP, all intellectual property that it developed through February 2012. Subsequently, this obligation has been extended to apply to all intellectual property developed through February 2016. The Company is also obligated to maintain certain limited liability company formalities with respect to CIP at all times after the closing of the license transaction.
 
Visser Precision Cast, LLC License Agreement
 
 
On June 1, 2012, the Company entered into a Master Transaction Agreement (the “Visser MTA”) with Visser Precision Cast, LLC (“Visser”) relating to a strategic transaction for manufacturing services and financing. Under the manufacturing and service component of the Visser MTA, the Company had agreed to engage Visser as a perpetual, exclusive manufacturer of non-consumer electronic products. Under the financing component of the Visser MTA, the Company issued and sold to Visser in a private placement transaction (i) 30,000,000 shares of common stock at a purchase price of $0.10 per share resulting in proceeds of $3,000 and (ii) two warrants to purchase 15,000,000 shares of common stock at an original exercise price of $0.22 per share which expire on June 1, 2017.
 
On May 20, 2014, the Company and Visser entered into a settlement agreement whereby the parties have amended and restated the sublicense and financing components of the Visser MTA. Additionally, the manufacturing services component and remaining considerations of the Visser MTA were terminated. Under the amended and restated sublicense agreement, the Company has granted to Visser a fully paid-up, royalty-free, irrevocable, perpetual, worldwide, non-transferable, nonexclusive sublicense to all of the Company’s intellectual property developed on or prior to May 20, 2014 (the “Effective Date”), for all fields of use other than certain excluded fields as set forth therein. Visser does not have any rights, now or in the future, to intellectual property of the Company developed after the Effective Date. The license to the Company’s intellectual property developed on or prior to the Effective Date does not include the right to use the “Liquidmetal” trademark or any of the Company’s other trademarks, except in certain defined situations, as set forth in the amended and restated agreement.
 
With the foregoing revised arrangements, the Company is no longer required to use Visser as its exclusive manufacturer and is free to license other manufacturers on a non-exclusive basis in any industry or geographic market as to which the Company has not previously granted an exclusive license to a third party. Any such manufacturers licensed by the Company in the future will be able both to manufacture parts for the Company and the Company’s customers
, and to manufacture and sell products for their own account for such industries or markets as the Company may agree, subject to whatever royalty arrangements the Company may negotiate. The Company has not yet licensed any manufacturers other than Visser. Visser will also have the right to manufacture and sell products under the amended and restated sublicense agreement.
 
The settlement amended and restated the two warrants the Company issued to Visser in June 2012 to purchase 15,000,000 shares of the Company’s common stock at an exercise price of $0.22 per share. Those warrants contained anti-dilution mechanisms under which the number of shares issuable upon exercise of those warrants would be increased, and the exercise price for such shares would be reduced if the Company issued shares of its common stock at prices less than the warrants’ exercise price. The amended and restated warrant agreement includes the effect of such anti-dilution adjustments and is exercisable for 18,611,079 shares of common stock (increased further to 21,122,920 shares under the anti-dilution provisions of the warrants, see note 11) at an exercise price of $0.17 per share (further reduced to $0.16 per share under the anti-dilution provisions of the warrants, see note 11). The amended and restated warrant agreement continues to contain comparable anti-dilution adjustment mechanisms. The amended and restated warrant agreement also removes certain lock-up provisions that were included in the original warrants.
 
Other License Transactions
 
On January 31, 2012, the Company entered into a Supply and License Agreement for a five year term with Engel Austria Gmbh (“Engel”) whereby Engel was granted a non-exclusive license to manufacture and sell injection molding machines to the Company’s licensees. Since that time, the Company and Engel have agreed on an injection molding machine configuration that can be commercially supplied and supported by Engel.  On December 6, 2013, the companies entered into an Exclusivity Agreement for a 10 year term whereby the Company agreed, with certain exceptions and limitations, that the Company and its licensees would purchase amorphous alloy injection molding machines exclusively from Engel, and this exclusivity right was granted in exchange for certain royalties to be paid by Engel to the Company based on a percentage of the net sales price of such injection molding machines.
 
The Company’s Liquidmetal Golf subsidiary has the exclusive right and license to utilize the Company’s Liquidmetal alloy technology for purposes of golf equipment applications. This right and license is set forth in an intercompany license agreement between Liquidmetal Technologies and Liquidmetal Golf. This license agreement provides that Liquidmetal Golf has a perpetual and exclusive license to use Liquidmetal alloy technology for the purpose of manufacturing, marketing, and selling golf club components and other products used in the sport of golf. The Company owns 79% of the outstanding common stock of Liquidmetal Golf.
 
In June 2003, the Company entered into an exclusive license agreement with LLPG, Inc. (“LLPG”).  Under the terms of the agreement, LLPG has the exclusive right to commercialize Liquidmetal alloys, particularly precious-metal based compositions, in jewelry and high-end luxury product markets.  The Company, in turn, will receive royalty payments over the life of the contract on all Liquidmetal products produced and sold by LLPG. The exclusive license agreement with LLPG expires on December 31, 2021.
 
In March 2009, the Company entered into a license agreement with Swatch Group, Ltd. (“Swatch”) under which Swatch was granted a non-exclusive license to the Company’s technology to produce and market watches and certain other luxury products. In March 2011, this license agreement was amended to grant Swatch exclusive rights as to watches and all third parties (including the Company), but non-exclusive as to Apple, and the Company’s license agreement with LLPG was simultaneously amended to exclude watches from LLPG’s rights. The Company will receive royalty payments over the life of the contract on all Liquidmetal products produced and sold by Swatch. The license agreement with Swatch will expire on the expiration date of the last licensed patent.
v3.4.0.3
Note 4 - Liquidity and Capital Resources
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Liquidity and Capital Resources [Text Block]
4
. Liquidity
and
Capital Resources
 
For the three months ended March 31, 2016, the Company’s cash used in operations was $1,862, cash flows from investing activities were $976, primarily due to reductions in restricted cash as a result of collateral requirement reductions, and cash provided by financing activities was $8,400 due to cash received from equity sales under the 2016 Purchase Agreement. As of March 31, 2016, the Company’s cash and restricted cash balance was $11,292, which consisted of $10,287 of cash and $1,005 of short-term restricted cash.
 
On March 10, 2016, the Company entered into the 2016 Purchase Agreement with Liquidmetal Technology Limited providing for the purchase by the Investor of up to 405,000,000 shares of the Company’s common stock for an aggregate purchase price of $63.4 million.
 
The 2016 Purchase Agreement provides that the Investor is obligated to purchase up to 405,000,000 shares of the Company’s common stock in multiple closings, with the Investor having purchased 105,000,000 shares at an aggregate purchase price of $8.4 million (or $0.08 per share) at the initial closing on March 10, 2016. The 2016 Purchase Agreement provides that the Investor will purchase the remaining 200,000,000 shares at $0.15 per share and 100,000,000 shares at $0.25 per share for an aggregate purchase price of $55.0 million no later than ninety days after the satisfaction of certain conditions, including Company shareholder approval of an amendment to the Company’s Amended and Restated Certificate of Incorporation increasing the Company’s authorized number of shares of common stock from 700,000,000 to 1,100,000,000 (see note 3).
 
The Company anticipates that its current capital resources, when considering expected losses from operations, will be sufficient to fund the Company’s operations through the middle of 2017. The Company has a relatively limited history of producing bulk amorphous alloy components and products on a mass-production scale. Furthermore, the ability of future contract manufacturers to produce the Company’s products in desired quantities and at commercially reasonable prices is uncertain and is dependent on a variety of factors that are outside of the Company’s control, including the nature and design of the component, the customer’s specifications, and required delivery timelines. These factors will likely require that the Company make further equity sales under the 2016 Purchase Agreement, raise additional funds by other means, or pursue other strategic initiatives to support its operations beyond the middle of 2017. There is no assurance that the Company will be able to make equity sales under the 2016 Purchase Agreement or raise additional funds by other means on acceptable terms, if at all. If the Company were to make equity sales under the 2016 Purchase Agreement or to raise additional funds through other means by issuing securities, existing shareholders will be diluted. If funding is insufficient at any time in the future, the Company may be required to alter or reduce the scope of its operations or to cease operations entirely. Uncertainty as to the outcome of these factors raises substantial doubt about the Company’s ability to continue as a going concern.
v3.4.0.3
Note 5 - Inventory
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Inventory Disclosure [Text Block]
5
.
Inventory
 
Inventory totaled $152 and $83 as of March 31, 2016 and December 31, 2015, respectively, and primarily consisted of raw alloy and finished goods inventory to satisfy future customer orders. Inventory is stated at the lower of weighted-average cost or market.
v3.4.0.3
Note 6 - Prepaid Expenses and Other Current Assets
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Prepaid Expenses and Other Current Assets [Text Block]
6
.
P
repaid Expenses and Other Current Assets
 
Prepaid expenses and other current assets totaled $224 and $408 as of March 31, 2016 and December 31, 2015, respectively, and primarily consisted of prepaid invoices and insurance premiums that will be recognized as expenses as shipments are made to customers or services are provided.
v3.4.0.3
Note 7 - Patents and Trademarks, Net
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Intangible Assets Disclosure [Text Block]
7
.
Patents and T
rademarks, net
 
Net patents and trademarks totaled $568 and $570 as of March 31, 2016 and December 31, 2015, respectively, and primarily consisted of purchased patent rights and internally developed patents.
 
Purchased patent rights represent the exclusive right to commercialize the bulk amorphous alloy and other amorphous alloy technology acquired from California Institute of Technology (“Caltech”), through a license agreement with Caltech and other institutions. All fees and other amounts payable by the Company for these rights and licenses have been paid or accrued in full, and no further royalties, license fees or other amounts will be payable in the future under the license agreement.
 
In addition to the purchased and licensed patents, the Company has internally developed patents. Internally developed patents include legal and registration costs incurred to obtain the respective patents. The Company currently holds various patents and numerous pending patent applications in the United States, as well as numerous foreign counterparts to these patents outside of the United States.
 
The Company amortizes capitalized patents and trademarks over an average of 10 to 17 year periods. Amortization expense for patents and trademarks was $25 and $25 for the three month periods ended March 31, 2016 and 2015
, respectively.
v3.4.0.3
Note 8 - Other Assets
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Other Assets Disclosure [Text Block]
8. Other Assets
 
Other assets totaled $36 and $31 as of March 31, 2016 and December 31, 2015, respectively, and consisted of deposits under long-term lease agreements.
v3.4.0.3
Note 9 - Accrued Liabilities
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Accounts Payable and Accrued Liabilities Disclosure [Text Block]
9
.
Accrued Liabilities
 
Accrued liabilities totaled $1,246 and $947 as of March 31, 2016 and December 31, 2015, respectively. Included within these totals are employee related accruals for normal wages, bonuses, and vacation liabilities of $1,139 and $766, as well as accrued audit fees of $34 and $109 as of March 31, 2016 and December 31, 2015, respectively. In addition, as of March 31, 2016 and December 31, 2015, respectively, $73 and $72 of deferred straight-line rent liabilities existed related to the Company’s warehouse and office facility lease.
v3.4.0.3
Note 10 - Short-term Debt
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Short-term Debt [Text Block]
10
.
Short-Term Debt
 
Short-term debt totaled $700 and $700 as of March 31, 2016 and December 31, 2015, respectively, and consisted of borrowings under a line of credit facility, with a fixed interest rate of 2.1%. Interest expense related to outstanding borrowings was $4 and $0 for the three months ended March 31, 2016 and 2015, respectively.
 
This credit facility requires the Company to maintain collateral for the full amount of the facility. A failure to meet this requirement could trigger a prepayment of all outstanding borrowings.
 
Given the proximity to maturity, the carrying amount of short-term debt approximates fair value.
v3.4.0.3
Note 11 - Warrant Liabilities
3 Months Ended
Mar. 31, 2016
Warrant [Member]  
Notes to Financial Statements  
Derivatives and Fair Value [Text Block]
11
. Warrant
Liabilities
 
Pursuant to FASB ASC 815, the Company is required to report the value of certain warrants as a liability at fair value and record the changes in the fair value of the warrant liabilities as a gain or loss in its consolidated statement of operations and comprehensive loss due to the price-based anti-dilution rights of the warrants.
 
During June 2012, the Company issued warrants to purchase a total of 15,000,000 shares of common stock to Visser under the Visser MTA Agreement (see Note 3). These warrants had an original exercise price of $0.22 per share, expire on June 1, 2017 and were originally valued at $4,260. These warrants have certain anti-dilution and exercise price reset provisions which qualify the warrants to be classified as a liability under FASB ASC 815. As a result of subsequent issuances of the Company’s common stock, which resulted in anti-dilutive price resets, the exercise price of these warrants was reduced to $0.16 and $0.17 as of March 31, 2016 and December 31, 2015, respectively. In addition, the number of shares to be issued under the warrants as a result of the anti-dilution provision increased to 21,122,920 and 18,937,931 as of March 31, 2016 and December 31, 2015, respectively. As of March 31, 2016, these warrants were valued at $636 under the Black-Scholes valuation model utilizing the following assumptions: (i) expected life of 1.17 years, (ii) volatility of 69%, (iii) risk-free interest rate of 0.7%, and (iv) dividend rate of 0. The change in fair value for these warrants was a loss of $602 for the three months ended March 31, 2016.
 
On July 2, 2012, the Company issued warrants to purchase a total of 18,750,000 shares of common stock in a private placement (the “July 2012 Private Placement”). These warrants have an exercise price of $0.384 per share, expire on July 2, 2017, and were originally valued at $5,053. These warrants have certain anti-dilution and exercise price reset provisions which qualify the warrants to be classified as a liability under FASB ASC 815. As a result of executed draw-downs under the 2013 and 2014 Purchase Agreements, contractually defined price resets, and issuances under the 2016 Purchase Agreement, which resulted in an anti-dilution impact, the exercise price of these warrants was reduced to $0.17 and $0.19 as of March 31, 2016 and December 31, 2015, respectively. As of March 31, 2016 there were warrants to purchase a total of 17,572,000 shares of common stock outstanding, which were valued at $499 under the Black-Scholes valuation model utilizing the following assumptions: (i) expected life of 1.25 years, (ii) volatility of 70%, (iii) risk-free interest rate of 0.7%, and (iv) dividend rate of 0. The change in fair value for these warrants was a loss of $474 for the three months ended March 31, 2016.
 
On March 10, 2016, the Company issued warrants to purchase a total of 10,066,809 shares of common stock as part of the 2016 Purchase Agreement. These warrants have an exercise price of $0.07 per share, expire on March 10, 2026, and were originally valued at $760. These warrants have certain anti-dilution and exercise price reset provisions which qualify the warrants to be classified as a liability under FASB ASC 815. As of March 31, 2016, these warrants were valued at $1,253 under the Black-Scholes valuation model utilizing the following assumptions: (i) expected life of 9.94 years, (ii) volatility of 117%, (iii) risk-free interest rate of 1.78%, and (iv) dividend rate of 0. The change in fair value for these warrants was a loss of $493 for the three months ended March 31, 2016.
 
The following table summarizes the change in the Company’s warrant liabilities as of March 31, 2016:
 
 
 
 
 
 
 
July 2, 2012
 
 
 
 
 
 
 
 
 
 
 
Visser MTA
 
 
Private
 
 
2016 Purchase
 
 
 
 
 
 
 
Agreement
 
 
Placement
 
 
Agreement
 
 
Total
 
                                 
Beginning Balance - December 31, 2015
  $ 34     $ 25     $ -       59  
Original valuation- new issuances
    -       -       760       760  
Change in value of warrant liability, loss
    602       474       493       1,569  
Ending Balance - March 31, 2016
  $ 636     $ 499     $ 1,253     $ 2,388  
 
The Company had warrants to purchase 48,761,729 and 36,509,931 shares of common stock outstanding as of March 31, 2016 and December 31, 2015, respectively, which were valued and classified as a liability under FASB ASC 815.
v3.4.0.3
Note 12 - Option Liabilities
3 Months Ended
Mar. 31, 2016
Options [Member]  
Notes to Financial Statements  
Derivatives and Fair Value [Text Block]
12
.
Option Liabilities
 
As part of the 2016 Purchase Agreement, executed on March 10, 2016, the Company granted to the Investor the rights for future purchases of shares of Company’s common stock at predetermined prices. These options allow the investor to purchase 200,000,000 shares of the Company’s common stock at a price of $0.15 per share and 100,000,000 shares of the Company’s common stock at a price of $0.25 per share. Given that the volume of shares to be issued upon exercise of these instruments is in excess of that currently authorized for issuance, these options are required to be classified as liabilities under FASB ASC 815. The 200 million share option and the 100 million share option were initially valued at $489 and $22, respectively. As of March 31, 2016, these written call options were valued at $4,808 and $742, respectively, under the Black-Scholes valuation model utilizing the following assumptions: (i) expected life of 0.38 years, (ii) volatility of 97%, (iii) risk-free interest rate of 0.39%, and (iv) dividend rate of 0. The change in fair value for these options was a loss of $4,319 and $720, respectively, for the three months ended March 31, 2016.
 
The following table summarizes the change in the Company’s option liabilities as of March 31, 2016:
 
 
 
200M Share
 
 
100M Share
 
 
 
 
 
 
 
Call Option
 
 
Call Option
 
 
Total
 
                         
Beginning Balance - December 31, 2015
  $ -     $ -       -  
Original valuation
    489       22       511  
Change in value of option liability, loss (gain)
    4,319       720       5,039  
Ending Balance - March 31, 2016
    4,808       742       5,550  
v3.4.0.3
Note 13 - Other Long-term Liabilities
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Other Liabilities Disclosure [Text Block]
13.
Other Long-term Liabilities
  
 
Other long-term liabilities were $856 as of March 31, 2016 and December 31, 2015, and consisted of long
-term, aged payables to vendors, individuals, and other third parties that have been outstanding for more than 5 years. The Company is in the process of researching and resolving the balances for settlement and/or escheatment in accordance with applicable state law
.
v3.4.0.3
Note 14 - Redeemable Common Stock
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Redeemable Common Stock [Text Block]
14. Redeemable Common Stock
 
Redeemable common stock is comprised on 105,000,000 shares of the Company’s common stock (par value $0.001), issued and outstanding, that is contingently puttable to the Company upon the satisfaction of certain events. As part of the 2016 Purchase Agreement
, the Company granted to the Investor the option to put the 105,000,000 shares delivered upon closing of the 2016 Purchase Agreement in exchange for a secure convertible note priced at $0.08 per share. This instrument will be exercisable in the event the Company is not able to effect an increase in authorized shares on or before May 31, 2016. In the event the Company is not able to effect such an increase, the Investor will have until October 31, 2016 to exercise its right under this instrument. Given the presence of conditional redemption features that are outside of the Company’s control, this instrument is required to be classified as temporary equity under ASC 480-10-S99. The instrument was originally valued at $7
,129 after giving recognition to liability classified warrants and call options granted as part of the transaction (see Notes 11 and 12). This amount has not been subsequently adjusted as of March 31, 2016 due to the instrument not currently being redeemable and the nature of the contingencies impacting future redemption
.
v3.4.0.3
Note 15 - Stock Compensation Plans
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
1
5
.
Stock Compensation Plan
s
 
Under the Company’s 2002 Equity Incentive Plan (the “2002 Plan”), which provided for the grant of stock options to officers, employees, consultants and directors of the Company and its subsidiaries, the Company granted options to purchase the Company’s common stock.
A total of 10,000,000 shares of the Company’s common stock were available for issuance under the 2002 Plan. The 2002 Plan expired by its terms in April 2012, but remains in effect only with respect to the equity awards that had been granted prior to its expiration. The Company had outstanding grants of options to purchase 822,000 and 822,000 shares of the Company’s common stock as of March 31, 2016 and December 31, 2015, respectively.
 
On June 28, 2012, the Company adopted its 2012 Equity Incentive Plan, with the approval of the Company’s shareholders, which provided for the grant of stock options to officers, employees, consultants and directors of the Company and its subsidiaries. All options granted under this plan had exercise prices that were equal to the fair market value on the dates of grant. During the three months ended March 31, 2016, the Company granted options to purchase 2,000,000 shares of common stock. Under this plan, the Company had outstanding grants of options to purchase 27,724,242 and 25,988,734 shares of the Company’s common stock as of March 31, 2016 and December 31, 2015, respectively.
 
On January 27, 2015, the Company adopted its 2015 Equity Incentive Plan, which provided for the grant of stock options to officers, employees, consultants and directors of the Company and its subsidiaries. A total of 40,000,000 shares of the Company’s common stock are available for issuance under this plan. All options granted under this plan had exercise prices that were equal to the fair market value on the dates of grant. During the three months ended March 31, 2016, the Company granted options to purchase 13,700,000 shares of common stock. Under this plan, the Company had outstanding grants of options to purchase 28,086,667 and 15,100,000 shares of the Company’s common stock as of March 31, 2016 and December 31, 2015, respectively.
 
Stock based compensation expense attributable to these plans was $353 for the three months ended March 31, 2016. This compares to $337 for the three months ended March 31, 2015. The increase was due to additional options issued under 2016 stock option grants.
v3.4.0.3
Note 16 - Shareholders' (Deficit) Equity
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]
16
.
Shareholders
’ (Deficit)
Equity
 
Common stock
 
In June 2012, the Company issued 30,000,000 shares of common stock to Visser in connection with the Visser MTA Agreement (see Note 3).
 
Pursuant to the terms of the Company’s Senior Convertible Notes due September 1, 2013, which were also issued in the July 2012 Private Placement, the Company opted to pay the twelve monthly installment payments prior to the September 1, 2013 maturity date with shares of the Company’s common stock. Upon final settlement, the Company had issued 163,641,547 shares of common stock at a weighted average conversion price of $0.0774, for the twelve installment payments due under the notes, consisting of $12,000 principal and $680 of interest.
 
During the year ended December 31, 2013, the holders of the Company’s Series A Preferred Stock converted all of the outstanding 506,936 shares of Series A Preferred Stock into 16,896,070 shares of the Company’s common stock. After giving effect to such conversion, the Company has no shares of preferred stock outstanding.
 
On February 28, 2013, the Company’s shareholders approved an amendment to the Certificate of Incorporation of the Company increasing the number of authorized shares of common stock from 400 million shares to 500 million shares.
 
On October 24, 2013, the Company’s shareholders approved an amendment to the Company’s Certificate of Incorporation increasing the number of authorized shares of common stock from 500 million shares to 700 million shares.
 
In connection with the execution of the 2013 Purchase Agreement, the Company issued to each of the 2013 Investors a pro rata portion of 2,666,667 shares of the Company’s common stock. As of December 31, 2014, the Company had received an aggregate of $16,000 under the 2013 Purchase Agreement through the issuance of 85,355,615 shares of its common stock at a weighted average price of $0.19 per share. On August 22, 2014, the Company voluntarily terminated the 2013 Purchase Agreement, effective August 25, 2014 (see Note 3).
 
On September 9, 2014, an initial registration statement covering 75,000,000 shares issued and issuable pursuant to the 2014 Purchase Agreement was declared effective by the SEC. As of September 30, 2015, the Company had received an aggregate of $1,568 under the 2014 Purchase Agreement through the issuance of 12,500,000 shares of its common stock at a weighted average price of $0.13 per share. On March 8, 2016, the Company voluntarily terminated the 2014 Purchase Agreement, effective March 9, 2016 (see Note 3).
 
Warrants
 
In connection with the Series A Preferred Stock issuances in 2009, warrants to purchase 29,779,557 shares of the Company’s common stock, valued at $18,179, were outstanding through July 15, 2015. Due to extension of the expiration date of these warrants during 2010, they no longer contained anti-dilution provisions and were reflected as equity as they did not meet the criteria under FASB ASC 815 for liability treatment. Such warrants had exercise prices ranging between $0.48 and $0.49 and expired on July 15, 2015.
 
Non-Controlling
Interest
 
The Company’s Liquidmetal Golf subsidiary has the exclusive right and license to utilize the Company’s Liquidmetal alloy technology for purposes of golf equipment applications. Liquidmetal Technologies owns 79% of the outstanding common stock of Liquidmetal Golf. As of March 31, 2016, non-controlling interest was a deficit of $64. The December 31, 2015 non-controlling interest was a deficit of $62.
v3.4.0.3
Note 17 - Loss Per Common Share
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Earnings Per Share [Text Block]
17
.
Loss
Per Common Share
 
Basic earnings per share (“EPS”) is computed by dividing earnings (loss) attributable to common shareholders by the weighted average number of common shares outstanding for the periods. Diluted EPS reflects the potential dilution of securities that could share in the earnings.
 
Options to purchase 56,632,909 shares of common stock
, at prices ranging from $0.07 to $1.44 per share
, were outstanding at March 31, 2016, but were not included in the computation of diluted EPS for the same period as the inclusion would have been antidilutive, given the Company’s net loss. Warrants to purchase 48,761,729 shares of common stock
, with prices ranging from $
0.07 to $0.17 per share
, outstanding at March 31, 2016 were not included in the computation of diluted EPS for the same period as the inclusion would have been antidilutive, given the Company’s net loss.
 
Options to purchase 44,445,400 shares of common stock
, at prices ranging from $0.08 to $1.44 per share
, were outstanding at March 31, 2015, but were not included in the computation of diluted EPS for the same period as the inclusion would have been antidilutive, given the Company’s net loss. Warrants to purchase 66,057,792 shares of common stock
, with prices ranging from $0.18 to $0.49 per share
, outstanding at March 31, 2015 were not included in the computation of diluted EPS for the same period as the inclusion would have been antidilutive, given the Company’s net loss
.
v3.4.0.3
Note 18 - Commitments and Contingencies
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]
18
. Commitments and Contingencies
 
Operating Lease Commitments
 
The Company leases its offices and warehouse facilities under various lease agreements, certain of which are subject to escalations based upon increases in specified operating expenses or increases in the Consumer Price Index. As of March 31, 2016 and December 31, 2015, the Company had recorded $73 and $72, respectively, of deferred rent expenses.
 
Rent expense was $56 and $56 for the three months ended March 31, 2016 and 2015, respectively.
v3.4.0.3
Note 19 - Related Party Transactions
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Related Party Transactions Disclosure [Text Block]
19
. Related Party Transactions
 
The Company entered into a license agreement (the “IMG License Agreement”) with Innovative Materials Group, LLC (“IMG”), a California limited liability company which is majority owned by Mr. Kang, a former Chief Executive Officer and former Chairman of the Company
, to license certain patents and technical information for the limited purpose of manufacturing certain licensed products with the Company’s first generation die cast machines. The IMG License Agreement granted a non-exclusive license to certain product categories, as well as an exclusive license to specific types of consumer eyewear products and obligated IMG to pay the Company a running royalty based on its sales of licensed products through August 5, 2021. The Company recognized $
0 in royalty revenues from IMG during the three months ended March 31, 2016 and 2015. The IMG License Agreement was terminated on March 8, 2016.
 
In March 2016, the Company executed an Amended and Restated Employment Agreement with Mr. Steipp. The Restated Employment Agreement provides for an employment term from its effective date through August 3, 2017, after which the employment term is renewed annually for successive one year terms, unless terminated by the Company or Mr. Steipp. Under the Restated Employment Agreement, Mr. Steipp is entitled to certain benefits if his employment is terminated involuntarily. These benefits include payment of a lump sum amount equal to one year of his annual base salary, continued insurance benefits at the Company’s expense for one year and accelerated vesting of equity awards. If the Company undergoes a “change of control”, and Mr. Steipp (i) is subsequently terminated without “cause”, or (ii) the Company subsequently takes certain actions that constitute “good reason”, and thereafter Mr. Steipp resigns, he will be entitled to a payment equal to one year of base salary, plus continued insurance benefits for two years, plus acceleration of vesting on equity awards and an extended time during which to exercise any equity awards that are stock options.
 
In March 2016, the Company entered into amended Change of Control Agreements with certain of its executive officers. The Change of Control Agreements provide that if the executive officer’s employment with the Company is terminated without cause during the one-year period after a change of control of the Company, then the terminated officer will receive lump sum severance compensation in an amount equal to twelve months of his then-current base salary. Under the agreements, each of the executive officers will also be entitled to the above-described severance compensation in the event he terminates his own employment within one year after a change of control because of a salary decrease, assignment to a lower-level position, or a required move of more than twenty-five miles. In addition, upon termination, all unvested stock options related to these officers will automatically and immediately vest and shall thereafter be exercisable in accordance with the terms and provisions of the applicable award agreements.
 
On March 10, 2016, the Company entered into the 2016 Purchase Agreement with Liquidmetal Technology Limited, providing for the purchase of up to 405,000,000 shares of the Company’s common stock for an aggregate purchase price of $63.4 million. Liquidmetal Technology Limited is a newly formed company owned by Mr. Yeung Tak Lugee Li (“Mr. Li”)
. In connection with the 2016 Purchase Agreement and also on March 10, 2016, the Company and DongGuan Eontec Co., Ltd., entered into a a license agreement pursuant to which the Company and Eontec entered into a cross-license of their respective technologies. Eontec is a publicly held Hong Kong corporation in which Mr. Li is the Chairman and majority shareholder. As of March 31, 2016, Mr Li is a greater-than-5% beneficial owner of the Company.
v3.4.0.3
Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2016
Accounting Policies [Abstract]  
Revenue Recognition, Policy [Policy Text Block]
Revenue Recognition
 
The Company’s revenue recognition policy complies with the requirements of ASC 605. Revenue is recognized when i) persuasive evidence of an arrangement exists, ii) delivery has occurred, iii) the sales price is fixed or determinable, iv) collection is probable and v) all obligations have been substantially performed pursuant to the terms of the arrangement. Revenues primarily consist of the sales and prototyping of Liquidmetal molds and bulk alloys, licensing and royalties for the use of the Liquidmetal brand and bulk Liquidmetal alloys. Revenue is deferred and included in liabilities when the Company receives cash in advance for goods not yet delivered or if the licensing term has not begun.
 
License revenue arrangements in general provide for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company. These rights typically include the grant of an exclusive or non-exclusive right to manufacture and/or sell products covered by patented technologies owned or controlled by the Company. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined period of time.
 
Licensing revenues that are one time fees upon the granting of the license are recognized when i) the license term begins in a manner consistent with the nature of the transaction and the earnings process is complete, ii) when collectability is reasonably assured or upon receipt of an upfront fee, and iii) when all other revenue recognition criteria have been met. Pursuant to the terms of these agreements, the Company has no further obligation with respect to the grant of the license. Licensing revenues that are related to royalties are recognized as the royalties are earned over the related period.
Fair Value Measurement, Policy [Policy Text Block]
Fair Value
Measurements
 
The estimated fair values of financial instruments reported in the consolidated financial statements have been determined using available market information and valuation methodologies, as applicable. The fair value of cash, restricted cash, and short-term debt approximate their carrying value due to their short maturities.
 
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Entities are required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value based upon the following fair value hierarchy:
 
Level 1 —
Quoted prices in active markets for identical assets or liabilities;
 
Level 2 —
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
 
Level 3 —
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
 
The Company has several financial instruments, namely warrant liabilities and written call option liabilities that are recorded at fair value on a periodic basis using Level 2 measurement inputs. These instruments are evaluated under the hierarchy of FASB ASC Subtopic 480-10, FASB ASC Paragraph 815-25-1 and FASB ASC Subparagraph 815-10-15-74 addressing embedded derivatives. The fair value of such instruments is estimated using the Black-Scholes option pricing model. Due to the presence of certain anti-dilution and exercise price reset provisions, as well as other criteria under applicable accounting standards precluding equity treatment, such instruments are required to be classified as liabilities (see Notes 11 and 12).
 
As of March 31, 2016, the following table represents the Company’s fair value hierarchy for items that are required to be measured at fair value on a recurring basis:
 
 
 
 
Fair Value
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
                                 
Warrant liabilities
    2,388       -       2,388       -  
Option liabilities
    5,550       -       5,550       -  
 
As of December 31, 2015, the following table represents the Company’s fair value hierarchy for items that are required to be measured at fair value on a recurring basis:
 
 
 
 
Fair Value
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
                                 
Warrant liabilities
    59       -       59       -  
New Accounting Pronouncements, Policy [Policy Text Block]
Recent Accounting Pronouncements
 
Leases
 
In February 2016, the FASB issued an accounting standards update which modifies the accounting for leasing arrangements, particularly those arrangements classified as operating leases. This update will require entities to recognize the assets and liabilities arising from operating leases on the balance sheet. This guidance is effective for fiscal and interim periods beginning after December 15, 2018 and is required to be applied retrospectively to all leasing arrangements. The Company is currently assessing the effects this guidance may have on its consolidated financial statements.
 
Stock-Based Compensation
 
In March 2016, the FASB issued an accounting standards update which simplifies the accounting for share-based payment transactions, inclusive of income tax accounting and disclosure considerations. This guidance is effective for fiscal and interim periods beginning after December 15, 2016 and is required to be applied retrospectively to all impacted share-based payment arrangements. The Company is currently assessing the effects this guidance may have on its consolidated financial statements.
 
Revenue from Contracts with Customers
 
In May 2014, the FASB issued an accounting standards update which modifies the requirements for identifying, allocating, and recognizing revenue related to the achievement of performance conditions under contracts with customers. This update also requires additional disclosure related to the nature, amount, timing, and uncertainty of revenue that is recognized under contracts with customers. This guidance is effective for fiscal and interim periods beginning after December 15, 2017 and is required to be applied retrospectively to all revenue arrangements. The Company is currently assessing the effects this guidance may have on its consolidated financial statements.
 
Ability to Continue as a Going Concern
 
In August 2014, the FASB issued an accounting standards update which requires an assessment of an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently addressed by U.S. auditing standards. This standard is effective for the fiscal years ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements.
Inventory, Policy [Policy Text Block]
Inventory
 
In July 2015, the FASB issued an accounting standards update which modifies the requirements for measuring the value of inventory on a periodic basis. The new requirement will be to measure inventory at the lower of cost or net realizable value. This standard is effective for the fiscal years ending after December 15, 2016, and for annual periods and interim periods thereafter. The adoption of this guidance is not expected to have a significant impact on the Company’s consolidated financial statements.
 
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA and the SEC did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
v3.4.0.3
Note 2 - Basis of Presentation and Recent Accounting Pronouncements (Tables)
3 Months Ended
Mar. 31, 2016
Notes Tables  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]
 
 
Fair Value
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
                                 
Warrant liabilities
    2,388       -       2,388       -  
Option liabilities
    5,550       -       5,550       -  
 
 
Fair Value
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
                                 
Warrant liabilities
    59       -       59       -  
v3.4.0.3
Note 11 - Warrant Liabilities (Tables)
3 Months Ended
Mar. 31, 2016
Warrant [Member]  
Notes Tables  
Schedule of Derivative Liabilities at Fair Value [Table Text Block]
 
 
 
 
 
 
July 2, 2012
 
 
 
 
 
 
 
 
 
 
 
Visser MTA
 
 
Private
 
 
2016 Purchase
 
 
 
 
 
 
 
Agreement
 
 
Placement
 
 
Agreement
 
 
Total
 
                                 
Beginning Balance - December 31, 2015
  $ 34     $ 25     $ -       59  
Original valuation- new issuances
    -       -       760       760  
Change in value of warrant liability, loss
    602       474       493       1,569  
Ending Balance - March 31, 2016
  $ 636     $ 499     $ 1,253     $ 2,388  
v3.4.0.3
Note 12 - Option Liabilities (Tables)
3 Months Ended
Mar. 31, 2016
Options [Member]  
Notes Tables  
Schedule of Derivative Liabilities at Fair Value [Table Text Block]
 
 
200M Share
 
 
100M Share
 
 
 
 
 
 
 
Call Option
 
 
Call Option
 
 
Total
 
                         
Beginning Balance - December 31, 2015
  $ -     $ -       -  
Original valuation
    489       22       511  
Change in value of option liability, loss (gain)
    4,319       720       5,039  
Ending Balance - March 31, 2016
    4,808       742       5,550  
v3.4.0.3
Note 2 - Fair Value of Items Measured on a Recurring Basis (Details) - Fair Value, Measurements, Recurring [Member] - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Fair Value, Inputs, Level 1 [Member]    
Warrant liabilities
Option liabilities  
Fair Value, Inputs, Level 2 [Member]    
Warrant liabilities $ 2,388 $ 59
Option liabilities $ 5,550  
Fair Value, Inputs, Level 3 [Member]    
Warrant liabilities
Option liabilities  
Warrant liabilities $ 2,388 $ 59
Option liabilities $ 5,550  
v3.4.0.3
Note 3 - Significant Transactions (Details Textual) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended 15 Months Ended 19 Months Ended
Mar. 10, 2016
Dec. 06, 2013
Jun. 02, 2012
Jan. 31, 2012
Feb. 28, 2015
Aug. 20, 2014
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Mar. 31, 2016
Mar. 31, 2016
Jul. 15, 2015
Dec. 31, 2014
Oct. 24, 2013
Feb. 28, 2013
Feb. 27, 2013
Jul. 02, 2012
Engel [Member]                                  
Supply and License Agreement, Term       5 years                          
Exclusive License Agreement, Term   10 years                              
Line of Credit [Member]                                  
Interest Expense             $ 4,000 $ 0                  
Line of Credit Facility, Maximum Borrowing Capacity         $ 2,000,000                        
Line of Credit Facility, Interest Rate During Period         2.10%         2.10%              
Short-term Debt             $ 700,000   $ 700,000 $ 700,000 $ 700,000            
The 2016 Purchase Plan [Member] | Purchase Price per Share of $0.15 [Member]                                  
Common Stock Purchase Agreement, Remaining Number of Shares to be Purchased No Later than 90 Days after the Satisfaction of Certain Conditions             200,000,000     200,000,000 200,000,000            
The 2016 Purchase Plan [Member] | Purchase Price per Share of $0.25 [ Member]                                  
Common Stock Purchase Agreement, Remaining Number of Shares to be Purchased No Later than 90 Days after the Satisfaction of Certain Conditions             100,000,000     100,000,000 100,000,000            
The 2016 Purchase Plan [Member] | Shares of Common Stock Vested [Member]                                  
Class of Warrant or Right, Number of Securities Called by Warrants or Rights 2,609,913                                
The 2016 Purchase Plan [Member]                                  
Exclusive License Agreement, Term 10 years                                
Common Stock Purchase Agreement, Number of Shares Authorized to Issue and Sell to Investors 405,000,000                                
Common Stock Purchase Agreement, Value of Shares Authorized to Issue and Sell to Investors $ 63,400,000                                
Stock Issued During Period, Shares, New Issues 105,000,000                                
Stock Issued During Period, Value, New Issues $ 8,400,000                                
Sale of Stock, Price Per Share $ 0.08                                
Common Stock Purchase Agreement, Purchase Price per Share, No Later than 90 Days after Satisfaction of Certain Conditions             $ 0.15     $ 0.15 $ 0.15            
Common Stock Purchase Agreement, the Other Purchase Price per Share, No Later than 90 Days after Satisfaction of Certain Conditions             $ 0.25     $ 0.25 $ 0.25            
Common Stock Purchase Agreement, Value of Shares Authorized to Be Purchased No Later than 90 Days after Satisfaction of Certain Conditions             $ 55,000,000     $ 55,000,000 $ 55,000,000            
Class of Warrant or Right, Number of Securities Called by Warrants or Rights 10,066,809           10,066,809     10,066,809 10,066,809            
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 0.07                                
Class of Warrant or Right, Remaining Number of Shares Unvested 7,456,896                                
Common Stock Purchase Agreement, Number of Shares, Put Option 105,000,000                                
Convertible Note, Price per Share $ 0.08                                
Common Stock Purchase Agreement, Value of Shares, Put Option $ 8,400,000                                
Debt Instrument, Interest Rate, Stated Percentage 3.00%                                
Debt Instrument, Convertible, Conversion Price $ 0.08                                
Debt Instrument, Term 1 year 180 days                                
The 2014 Purchase Agreement [Member] | Common Stock [Member]                                  
Stock Issued During Period, Weighted Average Price Per Share                 $ 0.13   $ 0.13            
The 2014 Purchase Agreement [Member]                                  
Common Stock Purchase Agreement, Value of Shares Authorized to Issue and Sell to Investors           $ 30,000,000                      
Stock Issued During Period, Shares, New Issues                 12,500,000                
Stock Issued During Period, Value, New Issues                     $ 12,500,000,000            
Common Stock, Par or Stated Value Per Share           $ 0.001                      
Common Stock Subscriptions, Term           3 years                      
Proceeds from Issuance of Common Stock                 $ 1,568,000   $ 1,568,000            
Private Placement [Member] | Visser MTA Agreement [Member] | Additional Warrants for Anti-dilution Impact [Member]                                  
Class of Warrant or Right, Number of Securities Called by Warrants or Rights             21,122,920     21,122,920 21,122,920            
Private Placement [Member] | Visser MTA Agreement [Member]                                  
Stock Issued During Period, Shares, New Issues     30,000,000                            
Sale of Stock, Price Per Share     $ 0.10                            
Class of Warrant or Right, Number of Securities Called by Warrants or Rights     15,000,000       18,611,079     18,611,079 18,611,079            
Class of Warrant or Right, Exercise Price of Warrants or Rights     $ 0.22                            
Proceeds from Issuance of Common Stock     $ 3,000,000                            
Class of Warrant or Right, Adjusted Exercise Price of Warrants or Rights             $ 0.16     $ 0.16 $ 0.16   $ 0.17        
Private Placement [Member]                                  
Class of Warrant or Right, Number of Securities Called by Warrants or Rights             17,572,000     17,572,000 17,572,000           18,750,000
Class of Warrant or Right, Exercise Price of Warrants or Rights             $ 0.17   $ 0.19 $ 0.17 $ 0.17           $ 0.384
Minimum [Member]                                  
Common Stock, Shares Authorized             700,000,000     700,000,000 700,000,000            
Class of Warrant or Right, Exercise Price of Warrants or Rights                       $ 0.48          
Maximum [Member]                                  
Common Stock, Shares Authorized             1,100,000,000     1,100,000,000 1,100,000,000            
Class of Warrant or Right, Exercise Price of Warrants or Rights                       $ 0.49          
Liquidmetal Golf [Member]                                  
Noncontrolling Interest, Ownership Percentage by Parent             79.00%   79.00% 79.00% 79.00%            
Interest Expense             $ 4,000 $ 0                  
Common Stock, Shares Authorized             700,000,000   700,000,000 700,000,000 700,000,000     700,000,000 500,000,000 400,000,000  
Common Stock Purchase Agreement, Repurchase Price per Share $ 0.08                                
Repurchase Deadline after Filing Date of Charter Amendmnet 1 year 90 days                                
Common Stock, Par or Stated Value Per Share             $ 0.001   $ 0.001 $ 0.001 $ 0.001            
Proceeds from Issuance of Common Stock             $ 8,400,000                  
Short-term Debt             $ 700,000   $ 700,000 $ 700,000 $ 700,000            
v3.4.0.3
Note 4 - Liquidity and Capital Resources (Details Textual) - USD ($)
3 Months Ended
Mar. 10, 2016
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Dec. 31, 2014
Oct. 24, 2013
Feb. 28, 2013
Feb. 27, 2013
The 2016 Purchase Plan [Member] | Purchase Price per Share of $0.15 [Member]                
Common Stock Purchase Agreement, Remaining Number of Shares to be Purchased No Later than 90 Days after the Satisfaction of Certain Conditions   200,000,000            
The 2016 Purchase Plan [Member] | Purchase Price per Share of $0.25 [ Member]                
Common Stock Purchase Agreement, Remaining Number of Shares to be Purchased No Later than 90 Days after the Satisfaction of Certain Conditions   100,000,000            
The 2016 Purchase Plan [Member]                
Common Stock Purchase Agreement, Number of Shares Authorized to Issue and Sell to Investors 405,000,000              
Common Stock Purchase Agreement, Value of Shares Authorized to Issue and Sell to Investors $ 63,400,000              
Common Stock Purchase Agreement, Number of Shares Obligated to Purchase 405,000,000              
Stock Issued During Period, Shares, New Issues 105,000,000              
Stock Issued During Period, Value, New Issues $ 8,400,000              
Sale of Stock, Price Per Share $ 0.08              
Common Stock Purchase Agreement, Purchase Price per Share, No Later than 90 Days after Satisfaction of Certain Conditions   $ 0.15            
Common Stock Purchase Agreement, the Other Purchase Price per Share, No Later than 90 Days after Satisfaction of Certain Conditions   $ 0.25            
Common Stock Purchase Agreement, Value of Shares Authorized to Be Purchased No Later than 90 Days after Satisfaction of Certain Conditions   $ 55,000,000            
Minimum [Member]                
Common Stock, Shares Authorized   700,000,000            
Maximum [Member]                
Common Stock, Shares Authorized   1,100,000,000            
Net Cash Provided by (Used in) Operating Activities   $ (1,862,000) $ (1,688,000)          
Net Cash Provided by (Used in) Investing Activities   976,000 $ (2,121,000)          
Net Cash Provided by (Used in) Financing Activities   8,400,000          
Restricted Cash and Cash Equivalents, and Cash and Cash Equivalents, Carrying Value   11,292,000            
Cash and Cash Equivalents, at Carrying Value   10,287,000 $ 6,200,000 $ 2,773,000 $ 10,009,000      
Restricted Cash and Cash Equivalents, Current   $ 1,005,000   $ 2,008,000        
Common Stock, Shares Authorized   700,000,000   700,000,000   700,000,000 500,000,000 400,000,000
v3.4.0.3
Note 5 - Inventory (Details Textual) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Inventory, Net $ 152 $ 83
v3.4.0.3
Note 6 - Prepaid Expenses and Other Current Assets (Details Textual) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Prepaid Expense and Other Assets, Current $ 224 $ 408
v3.4.0.3
Note 7 - Patents and Trademarks, Net (Details Textual) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Patents and Trademarks [Member] | Minimum [Member]      
Finite-Lived Intangible Asset, Useful Life 10 years    
Patents and Trademarks [Member] | Maximum [Member]      
Finite-Lived Intangible Asset, Useful Life 17 years    
Patents and Trademarks [Member]      
Intangible Assets, Net (Excluding Goodwill) $ 568,000   $ 570
Amortization of Intangible Assets 25,000 $ 25,000  
Intangible Assets, Net (Excluding Goodwill) $ 568,000   $ 570,000
v3.4.0.3
Note 8 - Other Assets (Details Textual) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Other Assets $ 36 $ 31
v3.4.0.3
Note 9 - Accrued Liabilities (Details Textual) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Accrued Liabilities, Current $ 1,246 $ 947
Employee-related Liabilities, Current 1,139 766
Accrued Professional Fees, Current 34 109
Accrued Rent, Current $ 73 $ 72
v3.4.0.3
Note 10 - Short-term Debt (Details Textual) - USD ($)
1 Months Ended 3 Months Ended 15 Months Ended
Feb. 28, 2015
Mar. 31, 2016
Mar. 31, 2015
Mar. 31, 2016
Dec. 31, 2015
Line of Credit [Member]          
Short-term Debt   $ 700,000   $ 700,000 $ 700,000
Line of Credit Facility, Interest Rate During Period 2.10%     2.10%  
Interest Expense   4,000 $ 0    
Short-term Debt   700,000   $ 700,000 $ 700,000
Interest Expense   $ 4,000 $ 0    
v3.4.0.3
Note 11 - Warrant Liabilities (Details Textual) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Mar. 10, 2016
Dec. 31, 2015
Jul. 02, 2012
Jun. 30, 2012
Visser MTA Agreement [Member]            
Class of Warrant or Right, Number of Securities Called by Warrants or Rights 21,122,920     18,937,931   15,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 0.16     $ 0.17   $ 0.22
Derivative Liability, Noncurrent $ 636,000     $ 34,000   $ 4,260,000
Fair Value Assumptions, Expected Term 1 year 62 days          
Fair Value Assumptions, Expected Volatility Rate 69.00%          
Fair Value Assumptions, Risk Free Interest Rate 0.70%          
Fair Value Assumptions, Expected Dividend Rate 0.00%          
Fair Value Adjustment of Warrants $ 602,000          
Private Placement [Member]            
Class of Warrant or Right, Number of Securities Called by Warrants or Rights 17,572,000       18,750,000  
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 0.17     $ 0.19 $ 0.384  
Derivative Liability, Noncurrent $ 499,000     $ 25,000 $ 5,053,000  
Fair Value Assumptions, Expected Term 1 year 91 days          
Fair Value Assumptions, Expected Volatility Rate 70.00%          
Fair Value Assumptions, Risk Free Interest Rate 0.70%          
Fair Value Assumptions, Expected Dividend Rate 0.00%          
Fair Value Adjustment of Warrants $ 474,000          
The 2016 Purchase Plan [Member] | Warrants Valued as Liability [Member]            
Derivative Liability, Noncurrent $ 1,253,000   $ 760,000      
The 2016 Purchase Plan [Member] | Warrant [Member]            
Fair Value Assumptions, Expected Term 9 years 343 days          
Fair Value Assumptions, Expected Volatility Rate 117.00%          
Fair Value Assumptions, Risk Free Interest Rate 1.78%          
Fair Value Assumptions, Expected Dividend Rate 0.00%          
The 2016 Purchase Plan [Member]            
Class of Warrant or Right, Number of Securities Called by Warrants or Rights 10,066,809   10,066,809      
Class of Warrant or Right, Exercise Price of Warrants or Rights     $ 0.07      
Derivative Liability, Noncurrent $ 1,253,000        
Fair Value Adjustment of Warrants 493,000          
Derivative Liability, Noncurrent 2,388,000     $ 59,000    
Fair Value Adjustment of Warrants $ 1,569,000 $ 161,000        
Class of Warrant or Right, Outstanding 48,761,729     36,509,931    
v3.4.0.3
Note 11 - Warrant Liability (Details) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Visser MTA Agreement [Member]    
Balance $ 34,000  
Original valuation- new issuances  
Change in value of warrant liability, loss $ 602,000  
Balance 636,000  
Private Placement [Member]    
Balance $ 25,000  
Original valuation- new issuances  
Change in value of warrant liability, loss $ 474,000  
Balance $ 499,000  
The 2016 Purchase Plan [Member]    
Balance  
Original valuation- new issuances $ 760,000  
Change in value of warrant liability, loss 493,000  
Balance 1,253,000  
Balance 59,000  
Original valuation- new issuances 760,000  
Change in value of warrant liability, loss 1,569,000 $ 161,000
Balance $ 2,388,000  
v3.4.0.3
Note 12 - Option Liabilities (Details Textual) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
The 2016 Purchase Plan [Member] | Purchase Price per Share of $0.15 [Member]      
Common Stock Purchase Agreement, Remaining Number of Shares to be Purchased No Later than 90 Days after the Satisfaction of Certain Conditions 200,000,000    
The 2016 Purchase Plan [Member] | Purchase Price per Share of $0.25 [ Member]      
Common Stock Purchase Agreement, Remaining Number of Shares to be Purchased No Later than 90 Days after the Satisfaction of Certain Conditions 100,000,000    
The 2016 Purchase Plan [Member] | The 200 Million Share, Call Option [Member]      
Original Valuation, Options $ 489,000    
Derivative Liability, Current 4,808,000    
Fair Value Adjustment of Options 4,319,000    
The 2016 Purchase Plan [Member] | The 100 Million Share, Call Option [Member]      
Original Valuation, Options 22,000    
Derivative Liability, Current 742,000    
Fair Value Adjustment of Options $ 720,000    
The 2016 Purchase Plan [Member] | Options [Member]      
Fair Value Assumptions, Expected Term 138 days    
Fair Value Assumptions, Expected Volatility Rate 97.00%    
Fair Value Assumptions, Risk Free Interest Rate 0.39%    
Fair Value Assumptions, Expected Dividend Rate 0.00%    
The 2016 Purchase Plan [Member]      
Common Stock Purchase Agreement, Purchase Price per Share, No Later than 90 Days after Satisfaction of Certain Conditions $ 0.15    
Common Stock Purchase Agreement, the Other Purchase Price per Share, No Later than 90 Days after Satisfaction of Certain Conditions $ 0.25    
The 200 Million Share, Call Option [Member]      
Original Valuation, Options $ 489,000    
Derivative Liability, Current 4,808,000  
Fair Value Adjustment of Options 4,319,000    
The 100 Million Share, Call Option [Member]      
Original Valuation, Options 22,000    
Derivative Liability, Current 742,000  
Fair Value Adjustment of Options 720,000    
Derivative Liability, Current 5,550,000  
Fair Value Adjustment of Options $ 5,039,000  
v3.4.0.3
Note 12 - Option Liability (Details) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
The 200 Million Share, Call Option [Member]    
Balance  
Original Valuation, Options $ 489,000  
Fair Value Adjustment of Options 4,319,000  
Balance $ 4,808,000  
The 100 Million Share, Call Option [Member]    
Balance  
Original Valuation, Options $ 22,000  
Fair Value Adjustment of Options 720,000  
Balance $ 742,000  
The 105 Million Share, Put Option [Member]    
Balance  
Original Valuation, Options $ 511,000  
Fair Value Adjustment of Options 5,039,000  
Balance $ 5,550,000  
Balance  
Fair Value Adjustment of Options $ 5,039,000
Balance $ 5,550,000  
v3.4.0.3
Note 13 - Other Long-term Liabilities (Details Textual) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Other Liabilities, Noncurrent $ 856 $ 856
Period for Outstanding Liability 5 years  
v3.4.0.3
Note 14 - Redeemable Common Stock (Details Textual) - USD ($)
$ / shares in Units, $ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Redeemable Common Stock [Member] | The 2016 Purchase Agreement [Member]    
Temporary Equity, Shares Issued 105,000,000  
Temporary Equity, Shares Outstanding 105,000,000  
Temporary Equity, Par or Stated Value Per Share $ 0.001  
Redeemable Common Stock [Member]    
Temporary Equity, Shares Issued 105,000,000
Temporary Equity, Shares Outstanding 105,000,000
Temporary Equity, Par or Stated Value Per Share $ 0.001
Temporary Equity, Carrying Amount, Attributable to Parent $ 7,129
The 2016 Purchase Agreement [Member]    
Debt Instrument, Convertible, Conversion Price $ 0.08  
Temporary Equity, Carrying Amount, Attributable to Parent $ 7,129  
v3.4.0.3
Note 15 - Stock Compensation Plans (Details Textual) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Jan. 27, 2015
Apr. 04, 2002
Equity Incentive Plan [Member]          
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant         10,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number 822,000   822,000    
Equity Incentive Plan 2012 [Member]          
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number 27,724,242   25,988,734    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross 2,000,000        
Equity Incentive Plan 2015 [Member]          
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant       40,000,000  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number 28,086,667   15,100,000    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross 13,700,000        
Share-based Compensation $ 353 $ 337      
v3.4.0.3
Note 16 - Shareholders' (Deficit) Equity (Details Textual) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended 19 Months Ended
Nov. 08, 2013
Jul. 17, 2013
Jun. 30, 2012
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Mar. 31, 2016
Jul. 15, 2015
Sep. 09, 2014
Oct. 24, 2013
Feb. 28, 2013
Feb. 27, 2013
Jul. 02, 2012
Private Placement [Member] | Visser MTA Agreement [Member]                              
Stock Issued During Period, Shares, New Issues     30,000,000                        
Private Placement [Member] | Senior Convertible Notes [Member] | Weighted Average [Member]                              
Debt Instrument, Convertible, Conversion Price   $ 0.0774                          
Private Placement [Member] | Senior Convertible Notes [Member]                              
Debt Conversion, Converted Instrument, Shares Issued   163,641,547                          
Debt Instrument, Periodic Payment, Principal   $ 12,000,000                          
Debt Instrument, Periodic Payment, Interest   $ 680,000                          
Private Placement [Member]                              
Class of Warrant or Right, Number of Securities Called by Warrants or Rights       17,572,000         17,572,000           18,750,000
Class of Warrant or Right, Exercise Price of Warrants or Rights       $ 0.17   $ 0.19     $ 0.17           $ 0.384
Common Stock Purchase Agreement [Member] | Weighted Average [Member]                              
Share Price             $ 0.19                
Common Stock Purchase Agreement [Member]                              
Stock Issued During Period, Shares, New Issues             85,355,615                
Stock Issued During Period, Shares, Other 2,666,667                            
Stock Issued During Period, Value, New Issues             $ 16,000,000                
The 2014 Purchase Agreement [Member] | Common Stock [Member]                              
Stock Issued During Period, Weighted Average Price Per Share           $ 0.13     $ 0.13            
The 2014 Purchase Agreement [Member]                              
Stock Issued During Period, Shares, New Issues           12,500,000                  
Stock Issued During Period, Value, New Issues                 $ 12,500,000,000            
Common Stock, Shares Covered by Registration Statement                     75,000,000        
Proceeds from Issuance of Common Stock           $ 1,568,000     $ 1,568,000            
Liquidmetal Golf [Member]                              
Noncontrolling Interest, Ownership Percentage by Parent       79.00%   79.00%     79.00%            
Minimum [Member]                              
Common Stock, Shares Authorized       700,000,000         700,000,000            
Class of Warrant or Right, Exercise Price of Warrants or Rights                   $ 0.48          
Maximum [Member]                              
Common Stock, Shares Authorized       1,100,000,000         1,100,000,000            
Class of Warrant or Right, Exercise Price of Warrants or Rights                   $ 0.49          
Series A Preferred Stock [Member]                              
Conversion of Stock, Shares Converted               506,936              
Class of Warrant or Right, Number of Securities Called by Warrants or Rights                   29,779,557          
Common Stock [Member]                              
Conversion of Stock, Shares Issued               16,896,070              
Preferred Stock, Shares Outstanding       0   0   0 0            
Common Stock, Shares Authorized       700,000,000   700,000,000     700,000,000     700,000,000 500,000,000 400,000,000  
Proceeds from Issuance of Common Stock       $ 8,400,000                    
Warrants and Rights Outstanding       18,179,000   $ 18,179,000     $ 18,179,000 $ 18,179,000          
Stockholders' Equity Attributable to Noncontrolling Interest       $ (64,000)   $ (62,000)     $ (64,000)            
v3.4.0.3
Note 17 - Loss Per Common Share (Details Textual) - $ / shares
3 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2014
Jul. 15, 2015
Employee Stock Option [Member] | Minimum [Member]        
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price $ 0.07 $ 0.08    
Employee Stock Option [Member] | Maximum [Member]        
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price $ 1.44 $ 1.44    
Employee Stock Option [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 56,632,909 44,445,400    
Warrant [Member] | Minimum [Member]        
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 0.07   $ 0.18  
Warrant [Member] | Maximum [Member]        
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 0.17   $ 0.49  
Warrant [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 48,761,729   66,057,792  
Minimum [Member]        
Class of Warrant or Right, Exercise Price of Warrants or Rights       $ 0.48
Maximum [Member]        
Class of Warrant or Right, Exercise Price of Warrants or Rights       $ 0.49
v3.4.0.3
Note 18 - Commitments and Contingencies (Details Textual) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Deferred Costs, Leasing, Net, Current $ 73   $ 72
Operating Leases, Rent Expense, Net $ 56 $ 56  
v3.4.0.3
Note 19 - Related Party Transactions (Details Textual) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Mar. 10, 2016
Innovative Materials Group [Member]      
Royalty Revenue $ 0 $ 0  
The 2016 Purchase Plan [Member]      
Common Stock Purchase Agreement, Number of Shares Authorized to Issue and Sell to Investors     405,000,000
Common Stock Purchase Agreement, Value of Shares Authorized to Issue and Sell to Investors     $ 63,400,000
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