Liquidmetal Technologies Inc (LQMT)

[Jimmy777]

Page 7 is a real doozie... Yikes!


http://ipo.nasdaq.com/ViewFiling_frames.asp?filename=0000950144-02-004412.txt&filepath=%5C2002%5C04%5C29%5C


Our historical results of operations may not be indicative of our future results.

Although our discontinued retail golf business will not contribute to our revenues in 2002 or in the future, this business contributed approximately 46.2%, 61.5%, and 74.7% of our revenues for the years ended December 31, 2001, 2000, and 1999, respectively. As a result of our limited history of selling bulk amorphous alloy components and products that are incorporated into the finished goods of our customers, and because the revenues, costs and expenses, assets and liabilities, and cash flows in connection with our discontinued retail golf business have been segregated in our consolidated financial statements, our historical results of operations may not be indicative of our future results. In addition, we have estimated in our consolidated financial statements the losses that we will incur while we continue to operate our discontinued retail golf business prior to its sale or discontinuation. If the losses we actually incur increase materially from these estimates, our financial results could be harmed.

If we cannot establish and maintain relationships with customers that incorporate our components and products into their finished goods, we will not be able to increase our revenues and commercialize our products.

To increase our revenues, we must establish and maintain relationships with customers that incorporate our components and products into their finished goods. We expect to rely on the marketing, distribution, and, in some cases, the research and development abilities of our customers to assist us in developing, commercializing, and marketing our products in different markets. To date, we have formalized only a few of these relationships. Our future growth will depend in large part on our ability to enter into these relationships and the subsequent success of these relationships. If our products are chosen to be incorporated into a customer’s products, we may still not realize significant revenues from that customer if that customer’s products are not commercially successful.

It may take significant time and cost for us to develop new customer relationships, which may delay our ability to generate additional revenue or achieve profitability.

Our ability to generate revenue from new customers will be affected by the amount of time it takes for:


• us to identify a potential customer;

• our customers to test Liquidmetal alloys;

• prototypes to be designed;

• manufacturing facilities to be prepared for full-scale production upon the transition from prototype to final product; and

• with respect to some types of products, such as medical devices, obtaining regulatory approval.


We currently do not have a sufficient history of selling products made from our bulk amorphous alloys to predict accurately the length of our average sales cycle. We believe that our average sales cycle from the time we deliver an active proposal to a customer until the time our customer fully integrates our bulk amorphous alloys into its product could be a significant period of time. The sales cycle could extend longer than we anticipate. The time it takes to transition a customer from limited production to full-scale production runs will depend upon the nature of the products into which our alloys are integrated. Our inexperience in this area could delay our ability to generate additional revenue.

After we develop a customer relationship, it may take a significant amount of time for that customer to develop, manufacture, and sell finished goods that incorporate our components and products.

We believe that many of our customers will perform numerous tests and extensively evaluate our components and products before incorporating them into their finished products.

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