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spk04: The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 1 1.
spk01: Good afternoon. Welcome to Liquid Metal Technologies Fiscal Year 2022 Conference Call. My name is Amy, and I will be your conference operator this afternoon. Joining us on today's call is Mr. Tony Chung, Liquid Metal's Chief Executive Officer. Before we proceed, I would like to provide the company's safe harbor statement with important questions regarding forward-looking statements made during this call as follows. All statements made by management during this call that are not based on historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933 as amended on Section 21E of the Securities Exchange Act of 1934 as amended. Such forward-looking statements include but are not limited to those made by Mr. Chung regarding the company's cash, revenue outlook, and technology development. While management has based any forward-looking statements made during the call on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on the number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside the company's control that could cause actual results to materially differ for such statements. Such risks, uncertainties, and other factors include but are not necessarily limited to these set forth under risk factors in the company's annual report on the Form 10-K for the year ended December 31, 2022. Accordingly, you should not place any reliance on forward-looking statements as a prediction of actual results. The company disclaims any intention and undertakes no obligation to update or revise any forward-looking statements. You are also urged to carefully review and consider the various disclosure in the company's annual report on the Form 10-K for the year ended December 31, 2022, as well as other public filings with the SEC since such date. I would also like to remind everyone that this call will be available for replay starting later this evening via a link available in the Investor Relations section of the company's website at www.liquidmetal.com. Now, I would now like to turn the call over to the company's Chief Executive Officer, Mr. Tony Chung.
spk00: Thank you, Amy, and thank you to our investors for participating in today's call. I'm going to do something a little different this time around in that I want to keep our investors generally informed on the state of the company by answering some frequently asked questions that have been presented to me from investors whom I've met recently. Please note that on top of the discussions I have for you today, you should also review our 2022 10-K filed early in the day to get a full overview of our company operations. But before we go into the FAQs, let's go over the formal part of our session by briefly going over our financial results for 2022. We closed out the year with approximately $380,000 in revenues and a net loss of $2.4 million. Our modified EBITDA, which excludes non-cash items for 2022, came in at about negative $1.8 million. On the balance sheet, we ended the year with approximately $24 million of readily available liquid cash and investments. Our corporate building, purchased in 2017, which is our other major asset, has a net book value of approximately $8 million. We have not done a formal appraisal but we have market analysis indicating that the current market value of the building is significantly higher, considering the recent increases in real estate valuations. We have no debt, and as confirmed by our auditors, have no going concern issues. So with that out of the way, let me dive into FAQ number one. What is the current state of the technology, and why have there been delays in revenue growth? I'm sure this is on everyone's mind, and to answer this question, I need to provide some perspective by summarizing our company history based on my 15 combined years of work experience at Liquid Metal. Liquid Metal went public in 2002 when we were operating out of our first corporate office located in Tampa, Florida. With a successful fundraise, we invested in a manufacturing plant located in South Korea. to make cell phone parts for the major cell phone manufacturers during the flip phone era. It was very early in our evolution and our manufacturing technology was in its infancy. In hindsight, the first generation of our die-cast machines was not ready for volume production and due to increasing costs and ongoing losses, we shut down operations in Korea around 2009. After this attempt at manufacturing and commercialization, our focus turned to developing new operations in the U.S. and monetizing our intellectual property. In so doing, we signed a license agreement with Apple in 2010 and co-developed new machines based on Ingalls injection molding platform. While we were able to obtain the attention of such world-renowned companies, The fact remained that for years, we operated with tight cash constraints and struggled to get our operations off the ground to advance the technology. However, at the end of 2016, the company was revived by Mr. Lu Ji Li, who invested $63 million into the company and became our chairman and major stakeholder. In addition, we began our partnership with EonTech, also chaired by Mr. Li, through a parallel license agreement to share intellectual property between the two companies. EONtech is a public company in China which specializes in manufacturing aluminum and magnesium die-cast parts for automotive and industrial components. By partnering with Mr. Li and EONtech, we not only gained the capital required to focus on our business, but we also gained a partner with the technical know-how and global experience that we lacked as a company. Thereafter, we purchased our new corporate building in 2017 and started a small manufacturing operation with the EONTECH die-cast machines for manufacturing liquid metal parts. This was a pivotal moment for the company because the EONTECH platform represented the latest development in machine technology for amorphous alloys that allowed the company to manufacture on a global scale. But during this transition period, it was quickly evident that to attract major customers, we would require a much larger scale manufacturing operation. To address this issue, we restructured the company in 2019 to reduce our overhead costs. But more importantly, we outsourced all our manufacturing needs to Yeehaw, Eontech's affiliate company focused primarily on manufacturing amorphous alloys. Now, around this time, when we were implementing the shift in our technology, the world was struck by COVID-19, and the economy essentially came to a halt. I arrived as CEO in late 2021, and the company reemerged from COVID lockdowns to be able to again execute on its core strategy. So in summary, the company managed to survive through many challenges throughout its history. But despite everything that we have gone through, I believe that our amazing technology is just as relevant today as it was when we went public. With the current evolution of our business model of having sales, engineering, quality, and admin support in the United States, paired with world-class manufacturing capabilities in China, we have emerged to position ourselves to execute on the original vision of the company, to be the premier supplier of amorphous alloy applications to the mass market. So this leads us to question number two. Where are you with sales? So coming out of the pandemic, we relaunched our sales and business development efforts. We began by heavily targeting large-scale customers, including established medical device and instrument suppliers who were themselves beginning to reopen. These large companies have a tendency to heavily scrutinize new technology prior to accepting them as a readily available resource. As such, capturing their business requires a long-term strategy of proving out the benefits of the technology and navigating regulatory oversight. These larger scale customers also have very extensive vendor qualification processes with physical onsite inspections and quality controls. The foregoing processes may take years and we are working diligently and going through the necessary steps to ultimately bring about our technology into their product lines. While large-scale customers tend to move slowly, we have other opportunities with small to medium-sized customers who move more quickly, especially the ones that are in startup mode. These smaller, more nimble companies, however, have production volume quantities that are not at the levels that would make a significant impact on our revenue growth. So bottom line, it is essential for us to focus on our energy, on high volume, large scale customers, despite the fact that these companies tend to have longer sales cycles, which we are currently experiencing. We are putting in the time and diligently working with such companies to create long term regular revenue streams. In addition, we are working with small to medium sized companies for quick opportunities, even though they may have a more modest impact on our bottom line. More on the subject of sales cycles, it is important to point out the fact that we are not in the business of selling widgets. By that, I mean that our sales cycles can be complex, requiring collaboration with designers, engineers, product managers, and so forth to come up with suitable designs for prototyping and general production that accentuate the benefits of our amorphous alloys. This process can be as short as six months but more typically can take years. Again, especially when working with large-scale customers. With that said, I can state that we are fully immersed in our sales effort and are now seeing results with new prototype orders that were recently received in the health monitoring, surgical robots, and eyewear industries. We hope to see more prototype orders from customers in other industries that are currently in the pipeline, and are hopeful of getting these prototypes into general production as soon as possible. So next, frequently asked question number three, what's going on with the recent golf license agreement? As before, let me provide a little history related to our experience with golf. Our first generation of liquid metal golf clubs were made during the late 90s, and they were known for having remarkable distance capabilities. However, prior to going public, we discontinued the golf business due to the limited size of this market, and we made a conscious decision to devote our cash and resources on commercializing our technology for the mass market, including consumer electronics and medical industries. Fast forward to 2022, with the culmination of our current business structure, we felt that it was the right time to revisit the golf space and signed a non-exclusive license agreement with ATJ Technologies. a company that has broad experience in the sporting goods industry, to have them develop amorphous alloy technology specifically related to golf applications. ATJ has done design work on driver faceplates and is currently working with Asian golf companies to produce new golf applications. Liquid Metal 2 is in preliminary discussions with a major golf company in the United States. to explore possibilities of developing new amorphous alloys specifically formulated for golf applications. In short, we have begun the process of partnering with established golf companies and are looking forward to working with them to utilize the elasticity and hardness benefits of our alloys and to eventually produce and market the second generation of liquid metal branded golf clubs. Okay, frequently asked question number four, will you have manufacturing in the U.S. or anywhere else? The short answer is not in the foreseeable future. Manufacturing is a costly, all-encompassing endeavor. With the current state of our operations, we don't have the need for additional manufacturing capacity and will not devote resources to such an undertaking. I believe we currently have everything we need to be successful with a full-service US team and a global Chinese manufacturing partner. Ultimately, having a second source manufacturing will be a key component of our growth and risk mitigation. And we will certainly address this at the stage of the company's evolution when high volume production capacity becomes our focus. But again, for now, we have all that we need to execute our strategy. Frequently asked question number five, why don't you have more company announcements? This is a very common question and the answer is quite simple. When we enter into material transactions as defined by the Securities and Exchange Commission, we inform the public through the required public forums. Also, we have postings on our liquid metal website blog with announcements on trade shows where liquid metal is featured. In essence, I would like the investor community to know that I work very closely with our 20-plus sales reps who are veterans in the industry as well as our team of internal sales and engineering staff. and we are fully devoted and working diligently to garner sales and business development opportunities. With that said, I would caution everyone to be aware of fake news and misinformation about the company. Our quarterly 10Q and annual 10K filings are major undertakings with CPA audits and reviews, and they have the clearest and most up-to-date information on our company for investors to review. And for the last FAQ, when is the next shareholder meeting? We are in the planning stages for a 2023 shareholder meeting and we will have announcements through official filing and press releases once we have a firm date. I'm looking forward to meeting everyone there and answer some more questions at that time. In conclusion, as with any new technology, it takes time and patience to position the technology to succeed. I believe we are in the best position that we've ever been in as a company. And while our challenges still remain, we are heavily focused on bringing about mass production of liquid metal parts and seeking out new opportunities towards building shareholder value. That's it for today. I hope to share more news in the near future and will continue to implement strategies to increase our revenues and accelerate the adoption of our technology. Thank you for your attention and I'll see you at the shareholder meeting. Operator, thank you.
spk01: Thank you, Mr. Chung. At this time, this concludes today's call. You may now disconnect.
spk04: Thank you. The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 1 1.
spk03: Thank you. you Thank you. Bye. Thank you. Thank you.
spk01: Good afternoon. Welcome to Liquid Metal Technologies Fiscal Year 2022 Conference Call. My name is Amy, and I will be your conference operator this afternoon. Joining us on today's call is Mr. Tony Chung, Liquid Metal's Chief Executive Officer. Before we proceed, I would like to provide the company's safe harbor statement with important questions regarding forward-looking statements made during this call as follows. All statements made by management during this call that are not based on historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933 as amended on Section 21E of the Securities Exchange Act of 1934 as amended. Such forward-looking statements include but are not limited to those made by Mr. Chung regarding the company's cash, revenue outlook, and technology development. While management has based any forward-looking statements made during the call on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on the number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside the company's control that could cause actual results to materially differ for such statements. Such risks, uncertainties, and other factors include but are not necessarily limited to these set forth under risk factors in the company's annual report on the Form 10-K for the year ended December 31, 2022. Accordingly, you should not place any reliance on forward-looking statements as a prediction of actual results. The company disclaims any intention and undertakes no obligation to update or revise any forward-looking statements. You are also urged to carefully review and consider the various disclosure in the company's annual report on the Form 10-K for the year ended December 31, 2022, as well as other public filings with the SEC since such date. I would also like to remind everyone that this call will be available for replay starting later this evening via a link available in the Investor Relations section of the company's website at www.liquidmetal.com. Now, I would now like to turn the call over to the company's Chief Executive Officer, Mr. Tony Chung.
spk00: Thank you, Amy, and thank you to our investors for participating in today's call. I'm going to do something a little different this time around in that I want to keep our investors generally informed on the state of the company by answering some frequently asked questions that have been presented to me from investors whom I've met recently. Please note that on top of the discussions I have for you today, you should also review our 2022 10-K by the early end of the day to get a full overview of our company operations. But before we go into the FAQs, let's go over the formal part of our session by briefly going over our financial results for 2022. We closed out the year with approximately $380,000 in revenues and a net loss of $2.4 million. Our modified EBITDA, which excludes non-cash items for 2022, came in at about negative $1.8 million. On the balance sheet, we ended the year with approximately $24 million of readily available liquid cash and investments. Our corporate building, purchased in 2017, which is our other major asset, has a net book value of approximately $8 million. We have not done a formal appraisal but we have market analysis indicating that the current market value of the building is significantly higher, considering the recent increases in real estate valuations. We have no debt, and as confirmed by our auditors, have no going concern issues. So with that out of the way, let me dive into FAQ number one. What is the current state of the technology, and why have there been delays in revenue growth? I'm sure this is on everyone's mind and to answer this question, I need to provide some perspectives by summarizing our company history based on my 15 combined years of work experience at Liquid Metal. Liquid Metal went public in 2002 when we were operating out of our first corporate office located in Tampa, Florida. With a successful fundraise, we invested in a manufacturing plant located in South Korea to make cell phone parts for the major cell phone manufacturers during the flip phone era. It was very early in our evolution and our manufacturing technology was in its infancy. In hindsight, the first generation of our die-cast machines was not ready for volume production and due to increasing costs and ongoing losses, we shut down operations in Korea around 2009. After this attempt at manufacturing and commercialization, our focus turned to developing new operations in the U.S. and monetizing our intellectual property. In so doing, we signed a license agreement with Apple in 2010 and co-developed new machines based on Engel's injection molding platform. While we were able to obtain the attention of such world-renowned companies, The fact remained that for years, we operated with tight cash constraints and struggled to get our operations off the ground to advance the technology. However, at the end of 2016, the company was revived by Mr. Lu Ji Li, who invested $63 million into the company and became our chairman and major stakeholder. In addition, we began our partnership with EonTech, also chaired by Mr. Li, through a parallel license agreement to share intellectual property between the two companies. EonTech is a public company in China which specializes in manufacturing aluminum and magnesium die-cast parts for automotive and industrial components. By partnering with Mr. Li and EonTech, we not only gained the capital required to focus on our business, but we also gained a partner with the technical know-how and global experience that we lacked as a company. Thereafter, we purchased our new corporate building in 2017 and started a small manufacturing operation with the EONTECH die-cast machines for manufacturing liquid metal parts. This was a pivotal moment for the company because the EONTECH platform represented the latest development in machine technology for amorphous alloys that allowed the company to manufacture on a global scale. But during this transition period, it was quickly evident that to attract major customers, we would require a much larger scale manufacturing operation. To address this issue, we restructured the company in 2019 to reduce our overhead costs. But more importantly, we outsourced all our manufacturing needs to Yihao, Eontech's affiliate company focused primarily on manufacturing amorphous alloys. Now, around this time, when we were implementing the shift in our technology, the world was struck by COVID-19 and the economy essentially came to a halt. I arrived as CEO in late 2021, and the company reemerged from COVID lockdowns to be able to again execute on its core strategy. So in summary, the company managed to survive through many challenges throughout its history. But despite everything that we have gone through, I believe that our amazing technology is just as relevant today as it was when we went public. With the current evolution of our business model of having sales, engineering, quality, and admin support in the United States, paired with world-class manufacturing capabilities in China, we have emerged to position ourselves to execute on the original vision of the company, to be the premier supplier of amorphous alloy applications to the mass market. So this leads us to question number two. Where are you with sales? So coming out of the pandemic, we relaunched our sales and business development efforts. We began by heavily targeting large-scale customers, including established medical device and instrument suppliers who were themselves beginning to reopen. These large companies have a tendency to heavily scrutinize new technology prior to accepting them as a readily available resource. As such, capturing their business requires a long-term strategy of proving out the benefits of the technology and navigating regulatory oversight. These larger scale customers also have very extensive vendor qualification processes with physical onsite inspections and quality controls. The foregoing processes may take years, and we are working diligently and going through the necessary steps to ultimately bring about our technology into their product lines. While large-scale customers tend to move slowly, we have other opportunities with small to medium-sized customers who move more quickly, especially the ones that are in startup mode. These smaller, more nimble companies, however, have production volume quantities that are not at the levels that would make a significant impact on our revenue growth. So bottom line, it is essential for us to focus on our energy, on high volume, large scale customers, despite the fact that these companies tend to have longer sales cycles, which we are currently experiencing. We are putting in the time and diligently working with such companies to create long term regular revenue streams. In addition, we are working with small to medium sized companies for quick opportunities, even though they may have a more modest impact on our bottom line. More on the subject of sales cycles, it is important to point out the fact that we are not in the business of selling widgets. By that, I mean that our sales cycles can be complex, requiring collaboration with designers, engineers, product managers, and so forth to come up with suitable designs for prototyping and general production that accentuate the benefits of our amorphous alloys. This process can be as short as six months but more typically can take years. Again, especially when working with large-scale customers. With that said, I can state that we are fully immersed in our sales effort and are now seeing results with new prototype orders that were recently received in the health monitoring, surgical robots, and eyewear industries. We hope to see more prototype orders from customers in other industries that are currently in the pipeline, and are hopeful of getting these prototypes into general production as soon as possible. So next, frequently asked question number three, what's going on with the recent golf license agreement? As before, let me provide a little history related to our experience with golf. Our first generation of liquid metal golf clubs were made during the late 90s, and they were known for having remarkable distance capabilities. However, prior to going public, we discontinued the golf business due to the limited size of this market, and we made a conscious decision to devote our cash and resources on commercializing our technology for the mass market, including consumer electronics and medical industries. Fast forward to 2022. With the culmination of our current business structure, we felt that it was the right time to revisit the golf space and signed a non-exclusive license agreement with ATJ Technologies. a company that has broad experience in the sporting goods industry, to have them develop amorphous alloy technology specifically related to golf applications. ATJ has done design work on driver faceplates and is currently working with Asian golf companies to produce new golf applications. Liquid Metal 2 is in preliminary discussions with a major golf company in the United States. to explore possibilities of developing new amorphous alloys specifically formulated for golf applications. In short, we have begun the process of partnering with established golf companies and are looking forward to working with them to utilize the elasticity and hardness benefits of our alloys and to eventually produce and market the second generation of liquid metal branded golf clubs. Okay, frequently asked question number four, will you have manufacturing in the U.S. or anywhere else? The short answer is not in the foreseeable future. Manufacturing is a costly, all-encompassing endeavor. With the current state of our operations, we don't have the need for additional manufacturing capacity and will not devote resources to such an undertaking. I believe we currently have everything we need to be successful with a full-service US team and a global Chinese manufacturing partner. Ultimately, having a second source manufacturing will be a key component of our growth and risk mitigation. And we will certainly address this at the stage of the company's evolution when high volume production capacity becomes our focus. But again, for now, we have all that we need to execute our strategy. Frequently asked question number five, why don't you have more company announcements? This is a very common question and the answer is quite simple. When we enter into material transactions as defined by the Securities and Exchange Commission, we inform the public through the required public forums. Also, we have postings on our Liquid Metal website blog with announcements on trade shows where Liquid Metal is featured. In essence, I would like the investor community to know that I work very closely with our 20-plus sales reps who are veterans in the industry as well as our team of internal sales and engineering staff. and we are fully devoted and working diligently to garner sales and business development opportunities. With that said, I would caution everyone to be aware of fake news and misinformation about the company. Our quarterly 10Q and annual 10K filings are major undertakings with CPA audits and reviews, and they have the clearest and most up-to-date information on our company for investors to review. And for the last FAQ, when is the next shareholder meeting? We are in the planning stages for a 2023 shareholder meeting and we will have announcements through official filing and press releases once we have a firm date. I'm looking forward to meeting everyone there and answer some more questions at that time. In conclusion, as with any new technology, it takes time and patience to position the technology to succeed. I believe we are in the best position that we've ever been in as a company. And while our challenges still remain, we are heavily focused on bringing about mass production of liquid metal parts and seeking out new opportunities towards building shareholder value. That's it for today. I hope to share more news in the near future and will continue to implement strategies to increase our revenues and accelerate the adoption of our technology. Thank you for your attention and I'll see you at the shareholder meeting. Operator, thank you.
spk01: Thank you, Mr. Chung. At this time, this concludes today's call. You may now disconnect.
Disclaimer