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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 10, 2004
LIQUIDMETAL TECHNOLOGIES, INC.
(Exact name of Registrant as Specified in its Charter)
Delaware 000-31332 20-0121262
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
25800 Commercentre Dr., Suite 100
Lake Forest, CA 92630
(Address of Principal Executive Offices; Zip Code)
Registrant's telephone number, including area code: (949) 206-8000
100 North Tampa St., Suite 3150
Tampa, Florida 33602
(Registrant's Former Address)
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LIQUIDMETAL TECHNOLOGIES, INC.
FORM 8-K
Item 9. Regulation FD Disclosure.
The following information is being furnished under Item 9 of Form 8-K:
Effective January 10, 2004, Liquidmetal Technologies, Inc. (the "Company") has
entered into an agreement with Growell Metal Co., Ltd. ("Growell Metal") that
satisfies and settles certain outstanding accounts receivable and potential
claims between Growell Metal and the Company (the "Settlement Agreement"). A
description of the material terms and conditions of the Settlement Agreement is
set forth below.
The Company previously reported in its Form 10-Q for the third quarter 2003
(filed on November 14, 2003) that it had received from Growell Metal updated
information regarding the status of Growell Metal's ingot supply operations. At
the time, Growell Metal had been engaged in the manufacture and supply of
Liquidmetal alloy ingots that were sold to the Company for use in the Company's
casting operations. As further reported in the third quarter Form 10-Q, the
updated information provided by Growell Metal suggested that, due to financial
challenges associated with its ingot supply operations, Growell Metal may desire
to modify its relationship with the Company.
Subsequent to such disclosure, the Company has been engaged in continuing
discussions with Growell Metal regarding the nature and structure of the
relationship between the two parties. As a result of these discussions, Growell
Metal has indicated that it will discontinue its ingot supply operations and has
recently threatened to pursue legal claims against the Company's South Korean
subsidiary ("Liquidmetal Korea"). These claims were based on an alleged breach
by Liquidmetal Korea of a Product Supply Agreement entered into between Growell
Metal and Liquidmetal Korea in June 2002. Although Liquidmetal Korea has denied
liability on these claims, because the claims involve complex issues of fact and
contractual interpretation, the Company has been unable to predict with any
certainty whether a court of law in South Korea would have imposed any liability
on Liquidmetal Korea in the event that a legal proceeding would have been
commenced, nor could the Company predict the extent of damages that may have
been awarded.
In addition to the foregoing, in March 2003, Liquidmetal Korea sold Growell
Metal five proprietary Liquidmetal alloy casting machines and granted to Growell
Metal a license to use such casting machines to manufacture auto parts for South
Korean automobile manufacturers (the "Diecasting Agreement"). Immediately prior
to the Settlement Agreement, Liquidmetal Korea had an unpaid account receivable
from Growell Metal in the amount of approximately $2.1 million (US) for the
purchase of these casting machines. In addition to discontinuing its ingot
supply operations, Growell Metal has also recently indicated to the Company that
it may discontinue this Liquidmetal casting business. Although Growell Metal had
never denied its obligation to pay this outstanding receivable and had not
alleged a breach of the Diecasting Agreement, the Company had recently come to
believe that, based on the pendency of the dispute under the Product Supply
Agreement, the discontinuation of Growell Metal's ingot supply business, and the
potential discontinuation of Growell Metal's casting business, there is
substantial doubt as to whether the Company would have been able to collect such
account receivable.
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As a result of the foregoing, the Company determined that it would be in the
best interest of the Company's shareholders to settle the foregoing claims and
obligations upon the terms and conditions of the Settlement Agreement. The
material terms of the Settlement Agreement are as follows:
* Pursuant to and upon the execution of the Settlement
Agreement, Growell Metal has satisfied in full the $2.1
million account receivable to Liquidmetal Korea for the
casting machines bought by Growell Metal in connection with
the Diecasting Agreement.
* Pursuant to the Settlement Agreement, Liquidmetal Korea has
purchased from Growell Metal approximately $4.9 million in
equipment and materials inventory that was used in Growell
Metal's ingot supply operations. Approximately $2.1 million
of the purchase price for this equipment has been paid through
the offsetting of the $2.1 million casting machine receivable
from Growell Metal as described above, while the remaining
balance of approximately $2.8 million must be paid by December
31, 2004 in cash or by Company common stock (as decided by the
Company). If the amount is paid in Company stock, the stock
will be valued for such purpose on the basis of the average
closing price of the Company's common stock during the five
trading days immediately preceding the date on which the
payment is made. The Company intends to use this equipment in
its manufacturing operations or its licensing/equipment sales
business.
* The Company and Growell Metal have granted to each other
comprehensive mutual releases whereunder all current, prior,
and future claims under the Product Supply Agreement and
Diecasting Agreement are waived and released, and all other
potential prior or current claims between the parties from any
other source (whether known or unknown) are also released.
* The Diecasting Agreement will continue to remain in effect,
although all potential claims (including future claims)
against the Company are released thereunder. Additionally,
in the event that Growell Metal desires to assign its rights
under the Diecasting Agreement and sell its casting machines
to a third party, the Company will cooperate with Growell
Metal in facilitating such assignment. If Growell Metal
desires to sell its Liquidmetal casting machines, then the
Company must encourage third parties to purchase Liquidmetal
casting machines from Growell Metal before the Company tries
to sell any of its own casting machines to the third party,
provided that the casting machines owned by Growell Metal meet
the third-party's specifications.
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Signature
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 thereunder duly authorized.
LIQUIDMETAL TECHNOLOGIES, INC.
By: /s/ John Kang
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John Kang
Chairman, President, and Chief
Executive Officer
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Date: January 15, 2004