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LT

LIQUIDMETAL TECHNOLOGIES INC (LQMT)·Q4 2015 Earnings Summary

Executive Summary

  • Q4 2015 revenue was $0.018M, down sharply year over year as the company shifted from licensee R&D projects to prototyping and onsite manufacturing; gross loss was $0.019M and operating loss was $2.1M, with year-end cash of $4.8M .
  • The company announced a cross-licensing and strategic relationship with EONTEC alongside a $63.4M equity financing led by Lugee Li; $8.4M was funded on March 10, 2016, with $55M targeted for Q3 2016 pending shareholder approval to increase authorized shares .
  • Commercial funnel accelerated: RFQs jumped to 308 in 2015 (from 20 in 2014), nine orders received (two in production), and the customer opportunity list expanded from ~$0.5M to ~$27M projected annualized revenue by year-end .
  • Management expects 10–15 new customer orders in 2016 but does not expect profitability in 2016, citing long sales cycles and early-stage production cost profile .
  • Potential stock reaction catalysts: EONTEC financing and broader manufacturing capabilities (larger parts, lower-cost alloys in Asia) to accelerate revenue, subject to share authorization and closing conditions .

What Went Well and What Went Wrong

What Went Well

  • Strategic EONTEC alliance and $63.4M financing to accelerate global adoption; initial $8.4M received, remaining $55M targeted for Q3 2016 upon increasing authorized shares .
  • Demand indicators surged: 308 RFQs, nine orders (two production), and opportunity list grew to $27M, reflecting engagement with global leaders in medical, automotive, and industrial sectors .
  • Internal capability buildout: ISO 9001 certification achieved and full in-house production capability demonstrated; MSRs expanded from 14 to 25 across North America .

What Went Wrong

  • Revenue remained minimal and margins negative: Q4 revenue $0.018M with gross loss $0.019M; FY 2015 revenue $0.125M and gross loss $0.224M as early production costs outweighed low-volume revenues .
  • Operating losses persisted: Q4 operating loss $2.1M and FY operating loss $9.3M; management indicated profitability unlikely in 2016 given long adoption cycles .
  • Investor concerns around dilution and compensation surfaced in Q&A; management emphasized long-term strategic investor alignment and use of proceeds for operations .

Financial Results

MetricQ2 2015Q3 2015Q4 2015
Revenue ($USD Millions)$0.039 $0.042 $0.018
Gross Profit (Loss) ($USD Millions)$(0.094) $(0.118) $(0.019)
Selling, Marketing, G&A ($USD Millions)$1.9 $1.8 —
R&D Expense ($USD Millions)$0.455 $0.491 —
Operating Expense ($USD Millions)——$2.1
Operating Loss ($USD Millions)——$2.1
Cash Balance ($USD Millions)$7.3 $6.4 (incl. $2.0 restricted) $4.8

Notes: “—” indicates not disclosed explicitly for the period in the call/filing.

Segment breakdown: Not applicable; the company does not provide segment reporting for quarterly results .

KPIs

KPIQ2 2015Q3 2015Q4 2015
RFQs received (quarter/year-to-date context)>100 in Q2 >100 in Q3; fifth straight sequential increase 308 for FY 2015
Orders received (FY)——9 orders (2 in production)
Opportunity list (annualized projected revenue)~$0.5M at end of 2014 —~$27M at end of 2015
MSR network size (North America)——Expanded to 25 (from 14 in 2014)
ISO 9001 certification statusProcess advancing; expectation Q4 issuance Completed audit; formal certificate expected Q4 Achieved in 2015

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
New customer ordersFY 2016Not previously quantifiedAnticipate 10–15 new customer orders Introduced
ProfitabilityFY 2016Not previously quantifiedUnlikely to reach profitability in 2016 Clarified (lower)
Funding/liquidity2016Equity line/LOC disclosures$63.4M equity financing; $8.4M received; $55M targeted Q3 2016 subject to share authorization Raised
Geographic production strategyOngoingFocus US/EU with ENGEL/MaterionComplement with EONTEC capabilities in Asia (larger parts, lower-cost alloys) Expanded footprint

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2015)Trend
Demand funnel (RFQs)>100 RFQs in Q2; continued surge in Q3 with fifth straight sequential increase 308 RFQs in FY 2015; improved quality; significant customer engagement Strongly positive momentum
Orders/productionInitial prototype orders in Q3; knives project learnings 9 orders, 2 in production; expect 10–15 new orders in 2016 Building toward production
ISO 9001 certificationProcess expected to culminate in Q4 Achieved in 2015 Completed milestone
Manufacturing strategyEngage contract manufacturers; ENGEL machines validated Complement with EONTEC (die-cast-like machines, larger parts, lower-cost alloys) and geographic focus (US/EU vs Asia) Broader capabilities
Funding/liquidityQ2/Q3: equity lines and LOC; cash $7.3M/$6.4M $63.4M financing; $8.4M funded; $55M pending approval Liquidity inflection
Profitability outlookN/A previouslyUnlikely to achieve profitability in 2016 Realistic timing
IP/patentsPortfolio growth noted in prior years 126 patent applications filed; cross-license with EONTEC enhances protection, especially in China Strengthened protection

Management Commentary

  • CEO: “Strategically, the EONTEC agreement is an excellent move… technologies and organizational capabilities are very complementary… establish a global footprint with sufficient resource and focus to enable success.”
  • CFO: “For the fourth quarter, we generated $18,000 of revenue… gross loss for the fourth quarter was $19,000… operating expense for the fourth quarter… $2.1 million… operating loss of $2.1 million… We ended 2015 with $4.8 million of cash in the bank.”
  • VP Sales: “RFQs increased from 20 in 2014 to 308 in 2015… nine orders of which two were for production parts… opportunities list grew to $27 million by the end of 2015.”
  • CEO on profitability timing: “It’s unlikely… we’ll get to profitability in 2016 but we certainly should be moving in that direction… with EONTEC capabilities we’ll be able to address more parts more quickly.”
  • CEO on IP: “We’re up to 126 [patent] applications… cross-licensing… protect the consolidated patent much more effectively [in China] than we would be able to do by ourselves.”

Q&A Highlights

  • Production footprint: US/EU production with ENGEL/Materion; certain applications may be produced in China via EONTEC to address lower price points and larger parts; alloys tested across machines .
  • Investor concerns on dilution/compensation: Management acknowledged dilution with share issuance but emphasized long-term, strategic investor alignment with EONTEC/Lugee Li; compensation governed by board processes .
  • Profitability timeline: Management does not expect profitability in 2016; expects revenue growth from 10–15 parts moving into production .
  • Apple relationship: Existing agreements unchanged by EONTEC deal; certain patents usable outside consumer electronics/watches .
  • Larger parts capability and alloy cost: EONTEC machines and alloys enable larger, lower-cost parts for suitable applications, complementing Liquidmetal’s high-performance focus .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2015 EPS and revenue was unavailable at time of analysis; coverage appears limited and data was not retrievable (no estimates to compare).

Key Takeaways for Investors

  • Liquidity and strategic support improved materially via $63.4M financing and EONTEC alliance, enabling faster scaling and broader part/application coverage (including larger parts and lower-cost alloys) .
  • Demand metrics (RFQs, orders, opportunity pipeline) point to heightened customer engagement, especially in medical and automotive, suggesting potential revenue inflection as prototypes convert to production through 2016–2017 .
  • Near-term P&L will remain pressured: low revenue base and early production learning curve keep margins negative; management guides no profitability in 2016 .
  • Execution hinges on converting the $27M pipeline and securing 10–15 new orders this year, while maintaining quality and scaling manufacturing across US/EU and Asia partners .
  • Authorization of additional shares is a gating factor for the remaining $55M financing tranche; shareholder approval is critical for funding and governance changes (board nominees) .
  • IP position strengthened (126 patent applications) and cross-licensing should help protect technology and reduce IP risk in Asia, supporting broader market penetration .
  • With estimates unavailable, near-term trading may center on execution milestones: additional orders, production shipments, and formal closing of the remaining financing tranches .
Sources:
- Q4 2015 results and funding: **[1141240_0001437749-16-027991_ex99-1.htm:2]**
- Strategic alliance details and financing terms: **[1141240_0001437749-16-027548_ex10-1.htm:0]** **[1141240_0001437749-16-027548_ex10-1.htm:20]** **[1141240_0001437749-16-027548_ex10-1.htm:23]**
- Demand funnel, orders, and opportunities list: **[1141240_0001437749-16-027991_ex99-1.htm:1]** **[1141240_0001437749-16-027991_ex99-1.htm:3]** **[1141240_0001437749-16-027991_ex99-1.htm:8]** **[1141240_LQMT_98332_0]** **[1141240_LQMT_98332_3]**
- ISO certification and internal capabilities: **[1141240_LQMT_98332_0]** **[1141240_LQMT_93376_1]**
- Profitability outlook: **[1141240_0001437749-16-027991_ex99-1.htm:10]** **[1141240_LQMT_98332_16]**
- Cash balances Q2/Q3/Q4: **[1141240_LQMT_88561_2]** **[1141240_LQMT_93376_5]** **[1141240_0001437749-16-027991_ex99-1.htm:2]**
- Manufacturing footprint and EONTEC capabilities: **[1141240_0001437749-16-027991_ex99-1.htm:5]** **[1141240_0001437749-16-027991_ex99-1.htm:11]**
- Investor concerns/dilution context: **[1141240_LQMT_98332_14]**
- Apple relationship unchanged: **[1141240_LQMT_98332_17]**
- Patent/IP commentary: **[1141240_LQMT_98332_9]**