Liquidmetal Technologies Inc (LQMT)

[Watts Watt]

The complete context of the below (i.e. shifting from a 5 year non-exclusive agreement to a ten year exlusive agreement may be found at this link:

http://biz.yahoo.com/e/140305/lqmt10-k.html

Form 10-K for LIQUIDMETAL TECHNOLOGIES INC

5-Mar-2014

Annual Report

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Other License Transactions

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On January 31, 2012, we 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 our licensees. Since that time, we 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 Exclusive License Agreement for a 10 year term whereby Engel was granted an exclusive license to manufacture and sell injection molding machines to our licensees in exchange for certain royalties to be paid by Engel to us based on a percentage of the net sales price of injection molding machines.......

Keep in mind that these certain royalties are one time payments. It is likely that also included would be any replacement parts, as well. The important Note Bene is that there is no recurring revenue stream, which is normative for the industry. Generally, these machines are a capital investment and are expected to have, in my opinion, anywheres from a 20 to 40 year life. while certainly a positive revenue flow, it is nothing to get terribly excited about.

The significant revenues would come from a recurring royalty based upon a percentage of the selling price of parts made by the injection molding process, whether a result of a contract manufacturer's operation or an end users in-house turn key operation....

This is the key to LQMT's survival.

This is also the basis for the current dispute between LQMT and VPC.....who get's what of the net profit split between LQMT and VPC.....

This may be less of a problem with a turn-key operation, but the chemistry leading up to a similar dispute certainly has its potential.

Hopefully, LQMT will hire new lawyers (instead of relying upon Chung and his Tampa Florida side-kick) to draw up royalty contracts with turn key machine recipients.