LQMT 10-K & 10-Q changes, risk factors and insider trading

The United States has imposed tariffs on certain items imported from various countries where we currently sell or in the past sold our products. Since January 2025, the Trump Administration has significantly expanded and modified these tariff policies, creating an evolving landscape of trade restrictions and uncertainty. As a result of changes to U.S. and foreign government administrative policy, there may be changes to existing trade agreements, greater restrictions on free trade generally, the imposition of or significant increases in tariffs on goods imported into the U.S., including tariffs on products manufactured in China, and adverse responses by foreign governments to U.S. trade policies, among other possible changes. The U.S. administration has announced it intends to implement or increase tariffs and it remains unclear what the U.S. administration or foreign governments will or will not do with respect to tariffs or trade agreements and policies. A trade war, other governmental action related to tariffs or trade agreements, changes in U.S. social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where we currently purchase, manufacture and sell products, and any resulting negative sentiments towards the U.S. as a result of such changes, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

On January 12, 2022, Liquidmetal Technologies entered into a manufacturing agreement (“Manufacturing Agreement”) with Dongguan Yihao Metal Materials Technology Co. Ltd. (“Yihao”) to become the primaryan outsourced manufacturer of the Company’s products. Under the Manufacturing Agreement, which has a term of five years, Yihao has agreed to serve as a non-exclusive contract manufacturer for amorphous alloy parts offered and sold by the Company at prices determined on a “cost-plus” basis. Yihao is an affiliate of Dongguan Eontec Co. Ltd. and Professor Lugee Li, our Chairman and largest beneficial owner of the Company’s capital stock.

On January 23, 2020, 20321 Valencia, LLC, a Delaware limited liability company and our wholly owned subsidiary, entered into a lease agreement (the “Facility Lease”) pursuant to which we leased to MatterHackers, Inc., a Delaware corporation (“Tenant”), an approximately 32,534 square foot portion of the Facility. The lease term iswas for 5 years and 2 months and is scheduled to expireexpired on April 30, 2025. The base rent payable under the Facilitylease Leasewas is $32,534$33 per month initially and iswas subject to periodic increases up to a maximum of approximately $54,000$54 per month. Tenant will paypaid approximately 79% of common operating expresses. The Facility Lease has other customary provisions, including provisions relating to default and usage restrictions. The Facility Lease grants to Tenant a right to extend the lease for one additional 60-month period at market rental value.expenses.

In addition to the shares issuable under the 2016 Purchase Agreement, we issued to the Investor a warrant to acquire 10,066,809 shares of common stockstock. (of which the right to exercise 2,609,913 of theThe warrant shares vestedexpired on March 10, 2016 and the right to exercise the remaining 7,456,896 warrant shares vested on October 26, 2016, all at an exercise price of $0.07 per share). The warrant will expire on the tenth anniversary of its issuance date.2026.

Revenue. Total revenue increaseddecreased by $350$76 to $784 for the year ended December 31, 2025 from $860 for the year ended December 31, 2024 from $510 for the year ended December 31, 2023.2024. The increasedecrease was attributable to ana increasedecrease in product shipments primarily related to the launch ofour health monitoring rings and medical devices utilizing our technology.devices.

Gross profit. Our gross profit increased by $68$13 from $149 for the year ended December 31, 2023 to $217 for the year ended December 31, 2024.2024 Ourto gross margin percentage decreased from 29.2%$230 for the year ended December 31, 20232025. toOur gross margin percentage increased from 25.2% for the year ended December 31, 2024.2024 to 29.3% for the year ended December 31, 2025. Our gross profit percentages have fluctuated and may continue to fluctuate based on production volumes and quoted production prices per unit and may not be representative of our future business. Once we are able to sustain and increase shipments of routine, commercial products and parts through future orders to third party contract manufacturers, we expect our gross profit percentages to stabilize, increase, and be more predictable.

Selling, marketing, general, and administrative expenses. Selling, marketing, general, and administrative expenses increased by $297$447 to $3,958, or 504.8% of revenue, for the year ended December 31, 2025 from $3,511, or 408.3% of revenue, for the year ended December 31, 2024 from $3,214, or 630.2% of revenue, for the year ended December 31, 2023.2024. The increase in expenses was primarily attributable to increase in audittravel, legal expenses, and tradeshowjoint expensesventure startup costs in 20242025 compared to 2023.2024.

Investment income. Investment income relates to realized gains earned from our investments in debt securities for the respective periods. Investment income was $266$102 and $330$266 for the years ended December 31, 20242025 and 2023,2024, respectively. The decrease during 20242025 is primarily due to higherlower overall yieldstrading on debt securities as a result of anwithdrawals increase in overall interest rate increases by the government and holding ontofrom debt securities untilto maturity.fund our new joint venture.

Interest income. Interest income relates to interest earned from our cash deposits and investments in debt securities for the respective periods. Interest income was $870$649 and $286$870 for the years ended December 31, 20242025 and 2023,2024, respectively. The increasedecrease during 20242025 is primarily due to higherlower overall yields on debt securities as a result of anwithdrawals increasefrom indebt overallsecurities interestto ratefund increasesour bynew thejoint government in 2024 and 2023.venture.

Cash used in operating activities totaled $2,752 for the year ended December 31, 2025 and $1,157 for the year ended December 31, 2024 and $1,313 for the year ended December 31, 2023.2024. The cash was primarily used to fund operating and capital expenses related to our new joint venture manufacturing operations as well as business and product development efforts.

Cash provided by investing activities totaled $3,905 for the year ended December 31, 2025 and cash used in investing activities totaled $1,674 for the year ended December 31, 2024 and cash provided by investing activities totaled $7,881 for the year ended December 31, 2023.2024. Cash used in investing activities primarily consists of purchases and sales of debt securities in line with our investment strategy.

However, as of December 31, 2024,2025, the Company had $6,011$7,164 in cash and restricted cash, as well as $16,330$12,523 in investments in debt securities. The Company views this total of $22,341$19,760 as readily available sources of liquidity in the event needed to advance the Company’s existing strategy, and/or pursue an alternative strategy. As such, the Company anticipates that its current capital resources, when considering expected losses from operations, will be sufficient to fund the Company’s operations for the foreseeable future.

Our revenues are derived from i) selling our bulk amorphous alloy custom products and parts for applications which include, but are not limited to, non-consumer electronic devices, robotic components, medical products, automotive components, and sports and leisure goods; ii) selling tooling and prototype parts such as demonstration parts and test samples for customers with products in development; and iii) product licensing and royalty revenue.

On March 10, 2016, we entered into a Securities Purchase Agreement (the “2016 Purchase Agreement”) with Liquidmetal Technology Limited, a Hong Kong company (the “Investor”), which is controlled by our Chairman, Professor Lugee Li (“Professor Li”). The 2016 Purchase Agreement provided for the purchase by the Investor of a total of 405,000,000 shares of our common stock for an aggregate purchase price of $63,400. The transaction occurred in multiple closings, with the Investor having purchased 105,000,000 shares at a purchase price of $8,400 (or $0.08 per share) at the initial closing on March 10, 2016, and the remaining 200,000,000 shares at $0.15 per share and 100,000,000 shares at $0.25 per share for an aggregate purchase price of $55,000 on October 26, 2016. On October 10, 2024, the Investor sold 179,787,888 to various buyers leaving 226,572,262 shares of our common stock owned by the Investor as of MarchJune 31,30, 2026.

Comparison of the three months ended MarchJune 31,30, 2026 and 2025

Revenue. Total revenue decreased by $26$93 to $256$196 for the three months ended MarchJune 31,30, 2026 from $282$289 for the three months ended MarchJune 31,30, 2025. The decrease was attributable to decrease in product shipments primarily related to recurring customer orders and medical device orders.

Cost of Sales. Cost of sales was $179,$107, or 69.9%54.6% of total revenue, for the three months ended MarchJune 31,30, 2026, as compared to $204,$212, or 72.3%73.4% of total revenue, for the three months ended MarchJune 31,30, 2025. The decrease in our cost of sales was primarily driven by lower productcosts revenuesof tariffs during Q1Q2 2026 compared to Q1Q2 2025. Once we are able to sustain and increase shipments of routine, commercial products and parts through our contract manufacturers, we expect our cost of sales percentages to decrease, stabilize, and be more predictable.

Gross Profit. Our gross profit decreasedincreased by $1$12 from $78 for the three months ended March 31, 2025 to $77 for the three months ended MarchJune 31,30, 2025 to $89 for the three months ended June 30, 2026. Our gross margin percentage increased slightly from Q1Q2 2025 to Q1Q2 2026. Our gross profit percentages have fluctuated and may continue to fluctuate based on production volumes and quoted production prices per unit and may not be representative of our future business. If we are able to sustain and increase shipments of routine, commercial products and parts through future orders to third party contract manufacturers, we expect our gross profit percentages to stabilize, increase, and be more predictable.

Selling, marketing, general, and administrative expenses. Selling, marketing, general, and administrative expenses increased by $237$344 to $1,212,$1,270, or 473.4%648.0% of revenue, for the three months ended MarchJune 31,30, 2026 from $975,$926, or 345.7%320.4% of revenue, for the three months ended MarchJune 31,30, 2025. The increase in expenses was primarily attributable to increase in payroll expenses and expenses related to our factory build out in China in Q1Q2 2026 compared to Q1Q2 2025. Stock Based compensation decreasedwas by $16 to $38$33 for the three months ended MarchJune 31,30, 2026 fromand $54$33 for the three months ended MarchJune 31,30, 2025. The decrease was attributable to no new stock option issuances in the current quarter.

Research and development expenses. Research and development expenses decreasedincreased to $3,$4, or 1.2%2.0% of revenue, for the three months ended MarchJune 31,30, 2026, and $4,$3, or 1.4%1.0% of revenue, for the three months ended MarchJune 31,30, 2025. This was primarily due to continuing efforts to perform research and development on new Liquidmetal alloys and related processing capabilities, albeit on a reduced basis.

Investment income. Investment income relates to realized gains earned from our investments in debt securities for the respective periods. Investment income was $10$35 and $63$5 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The decreaseincrease during the three months ended MarchJune 31,30, 2026 is primarily due to withdrawalsincreased income from debtinvesting securities.activities.

Interest income. Interest income relates to interest earned from our cash deposits and investments in debt securities for the respective periods. Interest income was $137$114 and $179$163 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The decrease during the three months ended MarchJune 31,30, 2026 is primarily due to withdrawals from debt securities to fund our new joint venture.venture and operations.

Lease income. Lease income relates to straight-line rental income received under the Facility Lease. Such amounts were $196 and $89$160 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase during the three months ended MarchJune 31,30, 2026 was primarily due to amendment of the Facility Lease on May 1, 2025 and the related increase in leased square footage.

Net loss. Our annual net losses of $765$841 for the three months ended MarchJune 31,30, 2026 and $568$525 for the three months ended MarchJune 31,30, 2025 are primarily reflective of operating expenses associated with our on-going business as well as non-operational income, discussed above. Inventory was $0 as of March 31, 2026, as all inventory had been shipped before period end.

Cash used in operating activities totaled $226$419 and $299$579 for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The cash was primarily used to fund operating expenses related to our business and product development efforts.

Cash provided by (used in) investing activities

Cash provided by investing activities totaled $466$1,521 and cash used in $812$186 for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Investing inflows primarily consist of proceeds from the sale of debt securities. Investing outflows primarily consist of purchases of debt securities and purchases of fixed assets for our factory in China

However, as of MarchJune 31,30, 2026, we had $7,404$8,266 in cash and restricted cash, as well as $11,757$10,581 in investments in debt securities. We view this total of $19,161$18,847 as readily available sources of liquidity in the event needed to advance our existing strategy, and/or pursue an alternative strategy. As such, we anticipate that our current capital resources, when considering expected losses from operations, will be sufficient to fund our operations for the foreseeable future. Accordingly, we have concluded that there is no substantial doubt about the Company’s ability to continue as a going concern.