its more profitable to play the penny player

Liquidmetal Technologies' (LQMT) CEO Lugee Li on Q4 2016 Results - Earnings Call Transcript
Mar.10.17 | About: Liquidmetal Technologies, (LQMT)
Liquidmetal Technologies, Inc. (OTCQB:LQMT) Q4 2016 Earnings Conference Call March 10, 2017 4:30 PM ET
Executives
Lugee Li - CEO
Tony Chung - CFO
Bruce Bromage - EVP Business Development & Operations

Analysts
Operator
Good day and welcome to the Liquidmetal Technologies’ Fourth Quarter and Fiscal 2016 Conference call. My name is Chris, and I will be your conference operator this afternoon. Joining us on today's call are Liquidmetal's President and CEO, Professor Lugee Li; CFO, Tony Chung; and Executive Vice President of Business Development and Operations, Bruce Bromage.

Before we proceed, I would like to provide the company's Safe Harbor statement ...........
....... Now, I would like to turn the call over to the company’s President and CEO, Professsor Lugee Li. Please go ahead sir.

Lugee Li
Thanks, Chris. Hello everyone. Since coming on Board as CEO of Liquidmetal I have seen great potential. It is not only the technology, it is the people. We've a very strong team, it is supreme. Everyone knows Liquidmetal. I know what Liquidmetal needs to thrive, so I give it. From my experience with Eon's business assess I know there are many opportunity for Liquidmetal. I'm focusing on those most promising and the fastest opportunity. And I'm now making some change. First, we can make progress very quickly by using the manufacturing capabilities that work so well in China. We are making parts for many customer using amorphous die cast machine and metal injection molding machine. I'm adding this system to Liquidmetal. Bruce will give an update. Second, I'm looking closely at Liquidmetal's cost structure, to become profitable as soon as possible. I'm changing the business, I also changed the spending. Tony will provide the details later. It will take a lot of hard work and a little bit more patience but in time Liquidmetal will thrive. Now, I will let Bruce and Tony give you their details and updates.

Bruce Bromage
Thank you, Lugee. I'm pleased to update our operational progress. We remain focused on accelerating adoption of our technology and scaling the business. To accelerate adoption, we continue to work closely with strategic customers to prototype parts in automotive, medical and consumer markets. These parts demonstrate and refine our full production capabilities including molding, finishing and quality management. In addition, new products are underway power the use of lower cost alloys, lower cost molds, and China based production. These new capabilities provide broader and more competitive solutions to meet challenging customer requirements. To scale the business we are readying our building, a 41,000 square foot facility in nearby Lake Forest, California for volume production. We expect it to be operational in early third quarter. Our Lake Forest facility will support volume production of three distinct technologies.

First, our flagship cold crucible injection molding systems are in active use. These systems provide exceptional control over oxygen and other impurities that affect the performance of amorphous metal parts. Parts are produced in high volumes with remarkable dimensional precision within microns, with high strength in corrosion resistance that is unique to bulk metallic glasses. We have extensively characterized the properties of our primary alloy LM105 which is produced to meet strict material chemistry specification. Our simplified production process and rigorous quality controls make our cold crucible system attractive for the most demanding customers including medical device manufacturers.
During our last quarter, we completed additional biocompatibility studies that demonstrates the promise of Liquidmetal technology from [indiscernible] including designs that exploit the exceptional ware resistance of our materials.

Second, we are about to receive our first two hot crucible die cast machine, leveraging technology developed by Eon. These systems produced high quality Liquimetal parts using low cost alloys. And the machines can make parts that are up to three times larger than our cold crucible systems. We are finding immediate interest in the many new applications that are enabled by this technology and have customer prototypes in China on identical machines.Today we offer customers [technical difficulty] volumes die cast production and we expect to offer U.S. based production within the third quarter of this year. Our injection molding and die cast systems are complementary addressing distinct market opportunities.

Finally, we planned to add metal injection molding or MIM production to our manufacturing capabilities. MIM is a mature technology that is similar in some ways to Liquidmetal. Metal part or injection molding is a multi-step process, it is more difficult to control than that of metal but with significantly lower material cost.
In general, a MIM part is not a candidate for Liquidmetal and vice versa. Customer seeking precision metal parts will be well served by our unique ability to guide them through the cost performance tradeoffs addressed by each of our three production technologies. Members of our staff have deep MIM experience and expertise and have already found customer interest. We expect our initial MIM cell to be operational by the third and fourth quarter and will begin quoting China based MIM production shortly. These efforts allow us to present customer with industry leading capabilities to address applications, from low cost to very high performance in China, United States and Europe. With that I'll hand the call over to Tony to provide our financial update.

Tony Chung
Thanks Bruce and good morning everyone. First let me provide a brief overview of our 2016 financial results. For the fourth quarter we generated $124,000 of revenues to close out the year with $480,000 of revenues. Our operating loss for the fourth quarter was $2.7 million to close out the year with $9.9 million of operating loss. As Prof. Lee alluded to previously our primary goal as a company is to become profitable as soon as possible. Bruce has discussed our strategy to generating and increasing our revenue, but to become profitable we must also reduce our cost-of-sales and operating expenses. To reduce our cost-of-sales we are currently focusing our attention on collaborating with Eon Tech to lower alloy cost and increase efficiencies associated with the new die cast machine.

To reduce our operating expense, we have focused on reducing our general and administrative expenses and as you are aware we've recently had changes in our execute management structure which in turn will reduce our G&A expense for the future. In addition, the company has significantly reduced its cash bonus structure for executives for 2017 and beyond. All in an effort to focus our spending on revenue generating activity. Professor Li’s dedication to reducing costs cannot be understated considering that he continues to receive no compensation for his role as CEO of the company. And we as Executive Management are following his lead by reducing our incentive pay to decrease operating expenses for the long run.

Now focusing our attention on cash, we ended 2016 with close to $60 million of cash in the bank resulting from Professor Li’s investments in the fourth quarter of 2016. As you are aware, we have and we’ll spend on cash on investing in our infrastructure, as evidenced by the recent purchase of our new corporate headquarters and manufacturing facility, and on the purchase of die cast machine. Look for us to further invest in our capital infrastructure in 2017 to build out our new facility, to advance or manufacturing in the U.S.

Lastly, I would like to point out an important company milestone as disclosed in our 10-K and that is a fact that our financial auditor SingerLewak has signed off on our financial statements without a go-in concern opinion. This is the first time in the history of our company since I've been here, we have not had to go-in concern opinion. This is largely due to the investments by Professor Li, but it’s sheds light on an important factor on the operation of this company.

Fund raising in general can be incredibly time consuming expenses and distracting. It’s a significant moment for this company to be able to completely focus on manufacturing, operations and profitability without the need to raise short-term capital and I for one am glad that the company can operate making sound long- term decisions without this burden and distraction.
For a more through discussion of our 2016 financial results, please refer to the management discussion in Analysis Section of our 2016 Form 10-K.

Now related to some administrative matters, as part of our efforts to focused on operations and reduce operating expenses, we will not hold a first quarter earnings call. Look for our press releases and SEC filings for update on the company until our second quarter earnings call. In addition, after we settle into our new headquarters in Lake Forest, we will have an open house to showcase our new building sometimes this summer. Shareholders, customers, partners are all welcomed to join, so please look out for future announcements on our Web site.
This concludes our 2016 year-end earnings call. Thank you very much and we will see you at our open house. Operator?

Operator
Yes, sir.
Tony Chung
We are done here.
Operator
Very good. Thank you. This concludes today’s call. Thank you for your participation. You may now disconnect.

“We are very excited about the purchase of our new corporate office and manufacturing facility. The new facility will allow us to expand our manufacturing capabilities in line with our overall strategy to prepare the Company to be the global leader in amorphous alloy production,” said Professor Lugee Li, Chairman and CEO at LQMT.

Dongguan Eontec to buy new materials firm for 220 mln yuan
?4:35am EST
Dongguan Eontec Co Ltd <300328.SZ> :Says it plans to buy new materials firm for 220 million yuan ($31.81 million).

The technical barrier of liquid metal (amorphous alloy)is very high, especially the problem of mature equipment becomes the bottleneck of restricting its application.

Inside and outside the decorative parts, more than 400 grams of auto parts and so on are part of the bulk forming, which means that in order to promote a large area of liquid metal, must master the core technology of bulk molding. Secondly, the production of bulk amorphous alloys are still in development or improvement in equipment, a few years ago, although there are a few domestic enterprises began to develop the production of bulk amorphous equipment, but did not form a large-scale market, estimated to be improved and still continued to improve. Fortunately, the eastern region of China, an important equipment companies began to organize the relevant units of collaborative research and development of liquid metal forming equipment, the first half of this year is expected to face global supply. From the analysis of the trial production, both the design of the components, the forming of the products, the yield and the consistency of the products meet the design requirements, and have their own intellectual property rights.

Electronic Devices With Retractable Displays

Abstract
An electronic device may have a pair of elongated housings. A flexible display may be placed in a first position in which the display is retracted within one of the housings and a second position in which the flexible display is deployed and extends between the housings in a planar shape for viewing by a user. Support structures such as rigid slats that run parallel to the housings and bistable slats that run perpendicular to the rigid slats may be used to support the flexible display. Speakers, microphones, cameras, and other components can be mounted in the housings. The housings may be held together using magnets and may contain electrical components such as integrated circuits, batteries, and other devices. The components may be mounted on printed circuit boards that rotate within a rotating roller around which the display is wrapped when retracted.

[0065] FIG. 20 is a perspective view of an illustrative bistable structure that may be used in implementing elongated support members such as support slats 142. As shown in FIG. 20, support slats 142 may have elongated rectangular strip shapes or other shapes. Each slat 142 may extend along a longitudinal axis 154 parallel to axis X in the example of FIG. 15. Slats 142 may have a curved shape (i.e., a curved profile) that provides slats 142 with bistability. Slats 142 may be formed from plastic, metal (e.g., spring metal, etc.), or other suitable materials…….

When Prof Li was asked about worldwide strategy on Amorphous alloy, He assured that he would turn Eontec to be the Amorphous alloy/Liquidmetal platform, looking to select competent factory as the raw material supplier, equipment supplier, thus forming cooperation to support the licensing for third part companies to carry out their production, Eontec will provide technical support when needed, that is the idea of franchising the Amorphous Alloy manufacturing to third party company. This is a known working business model to follow. Prof. Li has this vision 3 years ago, he is very clear on the target and its path to get to it in terms of the commercialization of the alloy. With the recent alliance of Eontec and Liquidmetal, we can expect to see a very fast adaptation of this new alloy and that is going to happen any minute from now.

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I keep checking for the posts with new news and information.

Liquidmetal Technologies targets larger parts up to 300 g

Liquidmetal® Technologies, Inc. has announced that it has ordered its first amorphous metal moulding machine from its licensee, Eontec Co., Ltd. The machine design is based on a die casting platform and, it is stated, is complementary to the injection moulding machine developed with Engel. Delivery of the machine is expected in March 2017. Paul Hauck, Executive Vice President of Sales and Marketing, stated, “The machine technology that we are purchasing from Eontec will allow the manufacture of larger parts, up to 300 g, and will allow us to offer lower cost parts made possible with larger higher-cavitation moulds. The machine capabilities from both Eontec and Engel are expected to significantly broaden the number of possible applications across multiple markets. In parallel to this order, our sales team is reviewing past customer opportunities for candidate parts that could be served with the larger capacity machine.” On January 24th, 2017 Liquidmetal® Technologies, Inc. announced that it had entered into an agreement for the purchase of an 41,000 ft2 building to be used as a new manufacturing facility. The building is located in Lake Forest, California, and the purchase price was given as approximately $7.8 million. The company expected to close the property purchase on February 17th, 2017. Commenting on the purchase, Prof Lugee Li, Chairman and CEO at Liquidmetal Technologies, Inc., stated, “We are very excited about the purchase of our new corporate office and manufacturing facility. The new facility will allow us to expand our manufacturing capabilities in line with our overall strategy to prepare the Company to be the global leader in amorphous alloy production.” Prof Lugee Li is also the Chairman and majority stockholder of DongGuan EONTEC Co., Ltd., a publicly traded company on the Shenzhen Stock Exchange specialising in new materials developments including bulk metallic glasses and medical grade magnesium for implants.