LIQUIDMETAL TECHNOLOGIES INC

LIQUIDMETAL TECHNOLOGIES, INC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Liquidmetal Technologies, Inc. (the “Company”) is a materials technology company that works with manufacturing and commercial partners to develop and commercialize products made from proprietary amorphous alloys. The Company’s family of alloys consists of a variety of bulk alloys and composites that utilize the advantages offered by amorphous alloys technology. The Company designs, develops, and sells products and custom parts from bulk amorphous alloys to customers in a wide range of industries. The Company also partners withthird-party manufacturers and licensees to develop and commercialize Liquidmetal alloy products.

Amorphous alloys are, in general, unique materials that are distinguished by their ability to retain a random atomic structure when they solidify, in contrast to the crystalline atomic structure that forms in other metals and alloys when they solidify. Liquidmetal alloys are proprietary amorphous alloys that possess a combination of performance, processing, and potential cost advantages that the Company believes will make them preferable to other materials in a variety of applications. The amorphous atomic structure of bulk alloys enables them to overcome certain performance limitations caused by inherent weaknesses in crystalline atomic structures, thus facilitating performance and processing characteristics superior in many ways to those of their crystalline counterparts. The Company believes that the alloys and the molding technologies it employs* mayresult in components, for many applications, that exhibit: exceptional dimensional control and repeatability that rivals precision machining, excellent corrosion resistance, brilliant surface finish, high strength, high hardness, high elastic limit, alloys that are non-magnetic, and the ability to form complex shapes common to the injection molding of plastics. Interestingly, all of these characteristics are achievable from the molding process, so design engineers often donot* have to select specific alloys to achieveone or more of the characteristics as is the case with crystalline materials. The Company believes these advantages could result in Liquidmetal alloys supplanting high-performance alloys, such as titanium and stainless steel, and other incumbent materials in a wide variety of applications. Moreover, the Company believes these advantages could enable the introduction of entirely new products and applications that arenot possible or commercially viable with other materials.

The Company’s revenues are derived from i) selling bulk Liquidmetal alloy products to customers who produce medical devices, automotive assemblies, sports and leisure goods, and non-consumer electronic devices, ii) selling tooling and prototype parts such as demonstration parts and test samples for customers with products in development, iii) product licensing and royalty revenue, and iv) research and development revenue. The Company expects that these sources of revenue will continue to significantly change the character of the Company’s revenue mix.

*Principles of Consolidation.*The consolidated financial statements include the accounts of Liquidmetal Technologies, Inc., its special-purpose wholly-owned subsidiary, Crucible Intellectual Property LLC,20321 Valencia LLC, and Liquidmetal Golf. All intercompany balances and transactions have been eliminated.

*Non-Controlling Interest.*The results of operations attributable to the non-controlling interest of Liquidmetal Golf are presented within equity and are shown separately from the Company’s equity.

Revenue Recognition. Revenue is recognized pursuant to applicable accounting standards including FASB ASC Topic606 (“ASC605”), Revenue from Contracts with Customers. ASC606 summarizes certain points in applying generally accepted accounting principles to revenue recognition in financial statements and provides guidance on revenue recognition issues in the absence of authoritative literature addressing a specific arrangement or a specific industry.

The Company’s revenue recognition policy complies with the requirements of ASC606. As a majority of the Company’s sales revenue continues to be recognized when products are shipped, and there wasno change in the recognition model historically applied to active license and royalty contracts under the new revenue standard, there wasno adjustment to the opening balance of retained earnings. The impact to the Company’s results of operations isnot material, on an on-going basis, because the analysis of the Company’s contracts under the new revenue standard supports a recognition model consistent with the Company’s previous revenue recognition model. Revenue on the majority of the Company’s contracts will continue to be recognized over time because of the continuous transfer of control to the customer.

Products. Product revenues are primarily generated from the sale and prototyping of molds and bulk alloy products. Revenue is recognized when i) persuasive evidence of an arrangement exists, ii) delivery has occurred, iii) the sales price is fixed or determinable, iv) collection is probable and v) all obligations have been substantially performed pursuant to the terms of the arrangement. When the Company receives consideration, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a sales contract, it records deferred revenue, which represents a contract liability. The Company will recognize deferred revenue as products revenue after it has transferred control of the goods or services to the customer and all revenue recognition criteria are met. Such amounts arenot expected to be material on an ongoing basis.

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Licensing and royalties. License revenue arrangements in general provide for the grant of an exclusive or non-exclusive right to manufacture and/or sell products covered by patented technologies owned or controlled by the Company. The intellectual property rights granted* maybe perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined period of time. Licensing revenues that areone*-time fees upon the granting of the license are recognized when i) the license term begins in a manner consistent with the nature of the transaction and the earnings process is complete, ii) when collectability is reasonably assured or upon receipt of an upfront fee, and iii) when all other revenue recognition criteria have been met. Pursuant to the terms of these agreements, the Company hasno further obligation with respect to the grant of the license. Licensing revenues that are related to royalties are recognized as the royalties are earned over the related period.

Practical Expedients and Exemptions. The Company generally expenses sales commissions when incurred because the amortization period would have beenone year or less. These costs are recorded within selling, marketing, general and administrative expenses. The Company doesnot disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length ofone year or less and (ii) contracts for which the Company recognizes revenue at the amount for which it has the right to invoice for services performed.

Cash and cash equivalents.The Company considers all highly-liquid investments with maturity dates ofthree months or less when purchased to be cash equivalents. The Company limits the amount of credit exposure to each individual financial institution and places its temporary cash into investments of high credit quality with a financial institution that exceeds federally insured limits. The Company hasnot experienced any losses related to these balances and believes its credit risk to be minimal. As of* December 31, 2023and2022,* the Company held deposits of $8,647 and $1,958, respectively, in such highly-liquid investments.

Investments in debt securities. The Company will invest excess funds to maximize investment yield, while maintaining liquidity and minimizing credit risk. Debt securities are carried at fair value and consist primarily of investments in obligations of the United States Treasury, various U.S. and foreign corporations, and certificates of deposits. The Company classifies its investments in debt securities as available-for-sale with all unrealized gains or losses included as part of other comprehensive income. The Company evaluates its debt securities with unrealized losses on a quarterly basis for potential other-than-temporary impairments in value. As a result of this assessment, the Company didnot recognize any other-than-temporary impairment losses considered to be credit related for the years ended* December 31, 2023and2022.*

Trade Accounts Receivable.The Company grants credit to its customers generally in the form of short-term trade accounts receivable. The creditworthiness of customers is evaluated prior to signing a contract with the customer. As of December 31, 2023,two customers represented 96%, or $178, of the total outstanding trade accounts receivable. As of December 31, 2022,one customer represented 100%, or $24, of the total outstanding trade accounts receivable. During2023, there were three major customers, who together accounted for 86% of our revenue. During2022, there were three major customers, who together accounted for 74% of our revenue. In the future, the Company expects that a significant portion of the revenue* may*continue to be concentrated in a limited number of customers, even if the bulk alloys business grows.

The allowance for doubtful accounts reflects management's best estimate of probable losses inherent in the trade accounts receivable. Management primarily determines the allowance based on the aging of accounts receivable balances, historical write-off experience, customer concentrations, customer creditworthiness and current industry and economic trends. The Company's provisions for uncollectible receivables are included in selling, marketing, general and administrative expense in the consolidated statements of operations. At* December 31, 2023and2022,* the Company had recorded an allowance for doubtful accounts of $0 and $0, respectively.

*Inventory.*Inventory is stated at the lower of weighted-average cost or net realizable value. Inventory is recorded at actual cost when purchased and then expensed at weighted-average cost as used in production and/or shipped to satisfy customer orders. We perform an analysis of our inventory balances at least quarterly to determine if the carrying amount of inventories exceeds their net realizable value. The analysis of estimated net realizable value is based on customer orders, market trends and historical pricing. If the carrying amount exceeds the estimated net realizable value, the carrying amount is reduced to the estimated net realizable value.

*Property and Equipment.*Property and equipment are stated at cost less accumulated depreciation and amortization. Additions and major renewals are capitalized. Repairs and maintenance are charged to expense as incurred. Upon disposal, the related cost and accumulated depreciation are removed from the accounts, with the resulting gain or loss included in operating income. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which range fromone tofive years.

*Intangible Assets.*Intangible assets consist of the costs incurred to purchase patent rights and costs incurred to register and maintain patents and trademarks. Intangible assets are reported at cost, net of accumulated amortization. Patents and trademarks are amortized using the straight-line method over a period based on their contractual lives ranging fromten toseventeen years.

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Impairment of Long-lived Assets. The Company reviews long-lived assets to be held and used in operations for impairment whenever events or changes in circumstances indicate that the carrying value of an asset* maybe impaired. These evaluations mayresult from significant decreases in the overall market outlook for the Company’s technology or the market price of an asset, a significant adverse change in the extent or manner in which an asset is being used in its physical condition, a significant adverse change in legal factors or in the business climate that could affect the value of an asset, as well as economic or operational analyses. If the Company concludes that the carrying value of certain assets willnot* be recovered based on expected undiscounted future cash flows, an impairment write-down is recorded to reduce the assets to their estimated fair value. Fair value is determined via market, cost and income based valuation techniques, as appropriate. The fair value is measured on a nonrecurring basis using a combination of quoted prices for similar assets in active markets and other unobservable adjustments to historical cost (Level3) inputs.No such charges were recorded for the years ended* December 31, 2023and December 31, 2022.*

Fair Value Measurements. The estimated fair values of financial instruments reported in the consolidated financial statements have been determined using available market information and valuation methodologies, as applicable. The fair value of cash and restricted cash approximate their carrying value due to their short maturities and are classified as Level1 instruments within the fair value hierarchy.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Entities are required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value based upon the following fair value hierarchy:

As of* December 31, 2023,*the following table represents the Company’s fair value hierarchy for items that are required to be measured at fair value on a recurring basis:

As of* December 31, 2022,*the following table represents the Company’s fair value hierarchy for items that are required to be measured at fair value on a recurring basis:

Non-recurring fair value measurements.Certain assets and liabilities are measured at fair value on a nonrecurring basis. In other words, the instruments arenot measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). No such losses were recorded during the year ended* December 31, 2023and2022.*

*Research and Development Expenses.*Research and development expenses represent salaries, related benefits expense, expenses incurred for the design and testing of new processing methods and other expenses related to the research and development of Liquidmetal alloys. Development costs incurred in research and development activities are expensed as incurred.

Advertising and Promotion Expenses.Advertising and promotion expenses are expensed when incurred. Advertising and promotion expenses were $69 and $73, for the years ended December 31, 2023and2022, respectively.

*Legal Costs.*Legal costs are expensed as incurred.

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Stock-Based Compensation. The Company accounts for share-based compensation in accordance with the fair value recognition provisions of FASB ASC Topic718, Share-based Payment, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the consolidated financial statements based on their fair values. The fair value of stock options is calculated by using the Black-Scholes option pricing formula that requires estimates for expected volatility, expected dividends, the risk-free interest rate and the term of the option. If any of the assumptions used in the Black-Scholes model change significantly, share-based compensation expense* may*differ materially in the future from that recorded in the current period.

Income Taxes.Income taxes are provided under the asset and liability method as required by FASB ASC Topic740, Accounting for Income Taxes. Under this method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. The effect of a tax rate change on deferred taxes is recognized in operations in the period that the change in the rate is enacted. Valuation allowances are established when necessary to reduce net deferred tax assets to the amount expected to be realized. Under the provisions of FASB ASC Topic740, the Company hadno material unrecognized tax positions andno adjustments to liabilities or operations were required. The Company, when applicable, will recognize interest and penalties related to uncertain tax positions in income tax expense. There wasno expense related to interest and penalties for the years ended* December 31, 2023and2022,* respectively.

*Earnings Per Share.*Basic earnings per share (“EPS”) is computed by dividing earnings (losses) attributable to common shareholders by the weighted average number of common shares outstanding for the periods. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

*Use of Estimates.*The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. Actual results could differ from those estimates. These management estimates are primarily related to impairment of long-lived assets, allowance for bad debt, warrant valuations, and inventory valuation.

Subsequent Events. The Company evaluated subsequent events through the filing of its Annual Report on Form10-K with the SEC.

Supplemental Cash Flow Information.Cash payments for interest were $0 for each of the years ended December 31, 2023and2022, respectively.

Recent Accounting Pronouncements.

Financial Instruments- Credit Losses

In* June 2016,the FASB issued an accounting standards update which changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. This update replaces the existing incurred loss impairment model with an expected loss model (referred to as the Current Expected Credit Loss model, or "CECL"). The standard update, and its related amendments, will become effective for the fiscal year beginning on January 1, 2023.This didnot* have a material impact on its consolidated financial statements as of and for the year ended* December 31, 2023.*

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA and the SEC didnot or arenot believed by management to have a material impact on the Company's present or future consolidated financial statements.

Yihao Manufacturing Agreement

On* January 12, 2022,*the Company entered into a manufacturing agreement (“Manufacturing Agreement”) with Dongguan Yihao Metal Materials Technology Co. Ltd. (“Yihao”) to become the primary contract manufacturer of the Company’s products. Under the Manufacturing Agreement, which has a term offive 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.

Corporate Facility Purchase and Lease

On* February 16, 2017,the Company purchased a 41,000 square foot facility (the “Facility”) located in Lake Forest, CA, where operations commenced during July 2017.*The purchase price for the Facility was $7,818.

On* January 23, 2020,20321 Valencia, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, entered into a lease agreement (the “Facility Lease”) pursuant to which the Company leased to MatterHackers, Inc., a Delaware corporation (“Tenant”), an approximately 32,534 square foot portion of the Facility. The lease term is for 5 years and2 months and is scheduled to expire on April 30, 2025.The base rent payable under the Facility Lease is $32,534 per month initially and is subject to periodic increases up to a maximum of approximately $54,000 per month. Tenant will pay 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 forone* additional 60-month period at market rental value.

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2016 Purchase Agreement

On* March 10, 2016,the Company entered into a Securities Purchase Agreement (the“2016* Purchase Agreement”) with Liquidmetal Technology Limited, a Hong Kong company (the “Investor”), which is controlled by the Company’s Chairman, Professor Li. The2016 Purchase Agreement provided for the purchase by the Investor of a total of 405,000,000 shares of the Company’s 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, 2016and 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.*

In addition to the shares issuable under the2016 Purchase Agreement, the Company issued to the Investor a warrant to acquire 10,066,809 shares of common stock (of which the right to exercise 2,609,913 of the warrant shares vested on* March 10, 2016and the right to exercise the remaining 7,456,896 warrant shares vested on October 26, 2016*at an exercise price of $0.07 per share). The warrant will expire on thetenth anniversary of its issuance date.

The2016 Purchase Agreement also provided that, with certain limited exceptions, if the Company issues any shares of common stock at any time through thefifth anniversary of the2016 Purchase Agreement, the Investor will have a preemptive right to subscribe for and to purchase at the same price per share (or at market price, in the case of issuance of shares pursuant to stock options) the number of shares necessary to maintain its ownership percentage of Company-issued shares of common stock.

Eontec License Agreement

On* March 10, 2016,in connection with the2016* Purchase Agreement, the Company and DongGuan Eontec Co., Ltd., a Hong Kong corporation (“Eontec”), entered into a Parallel License Agreement (the “License Agreement”) pursuant to which the Company and Eontec agreed to cross-license their respective technologies. The Company’s Chairman, Professor Li, is also the Chairman of Eontec.

The License Agreement provides for the cross-license of certain patents, technical information, and trademarks between the Company and Eontec. In particular, the Company granted to Eontec a paid-up, royalty-free, perpetual license to the Company’s patents and related technical information to make, have made, use, offer to sell, sell, export, and import products in certain geographic areas outside of North America and Europe. In turn, Eontec granted to the Company a paid-up, royalty-free, perpetual license to Eontec’s patents and related technical information to make, have made, use, offer to sell, sell, export, and import products in certain geographic areas outside of specified countries in Asia. The license granted by the Company to Eontec is exclusive (including to the exclusion of the Company) in the countries of Brunei, Cambodia, China (P.R.C and R.O.C.), East Timor, Indonesia, Japan, Laos, Malaysia, Myanmar, Philippines, Singapore, South Korea, Thailand, and Vietnam. The license granted by Eontec to the Company is exclusive (including to the exclusion of Eontec) in North America and Europe. The cross-licenses are non-exclusive in geographic areas outside of the foregoing exclusive territories.

Eutectix Business Development Agreement

On* January 31, 2020,the Company entered into a Business Development Agreement (the “Agreement”) with Eutectix, LLC, a Delaware limited liability company (“Eutectix”), which provides for collaboration, joint development efforts, and the manufacturing of products based on the Company’s proprietary amorphous metal alloys. Under the Agreement, the Company licensed to Eutectix specified equipment owned by the Company, includingtwo* injection molding machines,two diecasting machines, and other machines and equipment, all of which will be used to make product for Company customers and Eutectix customers. The licensed machines and equipment represented substantially all of the machinery and equipment then held by the Company. The Company has also licensed to Eutectix various patents and technical information related to the Company’s proprietary technology. Under the Agreement, Eutectix agreed to pay the Company a royalty ofsix percent (6%) of the net sales price of licensed products sold by Eutectix, and Eutectix will also manufacture for the Company product ordered by the Company. The Agreement has a term offive years, subject to renewal provisions and the ability of either party to terminate earlier upon specified circumstances.

Apple License Transaction

On* August 5, 2010,the Company entered into a license transaction with Apple Inc. (“Apple”) pursuant to which (i) the Company contributed substantially all of its intellectual property assets to a newly organized special-purpose, wholly-owned subsidiary, called Crucible Intellectual Property, LLC (“CIP”), (ii) CIP granted to Apple a perpetual, worldwide, exclusive license to commercialize such intellectual property in the field of consumer electronic products, as defined in the license agreement, in exchange for aone*-time, upfront license fee, and (iii) CIP granted back to the Company a perpetual, worldwide, fully-paid, exclusive license to commercialize such intellectual property in all other fields of use.

Under the agreements relating to the license transaction with Apple, the Company was obligated to contribute, to CIP, all intellectual property developed through* February 2016.*The Company is also obligated to maintain certain limited liability company formalities with respect to CIP at all times after the closing of the license transaction.

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Liquidmetal Golf Sublicense Agreement

Liquidmetal Golf Inc. (“Liquidmetal Golf” or “LMG”) is a majority-owned subsidiary which has the exclusive right and license to utilize our Liquidmetal alloy technology for purposes of golf equipment applications. This right and license is set forth in an intercompany license agreement dated* January 1, 2002*between Liquidmetal Technologies and Liquidmetal Golf. This license agreement provides that Liquidmetal Golf has a perpetual and exclusive license to use Liquidmetal alloy technology for the purpose of manufacturing, marketing, and selling golf club components and other products used in the sport of golf. The Company owns 79% of the outstanding common stock in Liquidmetal Golf.

On* January 13, 2022,*Liquidmetal Golf entered into a sublicense agreement (“LMG Sublicense Agreement”) with Amorphous Technologies Japan, Inc. (“ATJ”), a newly formed Japanese entity that was established by Twins Corporation, a sporting goods company operating in Japan. Under the agreement, LMG granted to ATJ a nonexclusive worldwide sublicense to the Company’s amorphous alloy technology and related trademarks to manufacture and sell golf clubs and golf related products. The LMG Sublicense Agreement has a term ofthree years and provides for the payment of a running royalty to LMG of 3% of the net sales price of licensed products.

Swatch Group License

In* March 2009,the Company entered into a license agreement with Swatch Group, Ltd. (“Swatch”) under which Swatch was granted a non-exclusive license to the Company’s technology to produce and market watches and certain other luxury products. In March 2011,this license agreement was amended to grant Swatch exclusive rights as to watches as against allthird* parties (including the Company), but non-exclusive as to Apple. The Company will receive royalty payments over the life of the contract on all Liquidmetal products produced and sold by Swatch. The license agreement with Swatch will expire on the expiration date of the last licensed patent.

The following table sets forth amortized cost and fair value of investments in debt securities (short-term and long-term):

Income from these investments totaled $616 and $128 during the years ended* December 31, 2023and2022,* respectively, and was included as a portion of interest and investment income on the Company’s consolidated statements of operations.

Based on the Company’s review of its debt securities in an unrealized loss position at* December 31, 2023,it determined that the losses were primarily the result of current economic factors, impacting all global debt and equity markets, that are the result of the global COVID-19 pandemic. The impact to the Company’s investment portfolio is considered to be temporary, rather than a deterioration of overall credit quality. The Company doesnot* intend to sell and it isnot more likely thannot that the Company will be required to sell these securities prior to recovering their amortized cost. As such, the Company doesnot consider these securities to be other-than-temporarily impaired at* December 31, 2023.*

Trade accounts receivable were comprised of the following:

During the year ended* December 31, 2023and2022,* there wasno allowance for doubtful accounts.

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Prepaid expenses and other current assets consisted of the following:

Inventories consisted of the following:

Property and equipment consisted of the following:

Depreciation expense for the years ended* December 31, 2023and2022* was $335 and $315, respectively, and is included in selling, marketing, general and administrative expenses.

Patents and trademarks consist of the following:

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Amortization expense was $21 and $29 for the years ended* December 31, 2023and2022,* respectively, and is included in research and development expense in the consolidated statements of operations and comprehensive loss. The estimated aggregate amortization expense for each of thefive succeeding years is as follows:

The weighted average amortization are as follows:

Purchased patent rights represent the exclusive right to commercialize the bulk amorphous alloy and other amorphous alloy technology acquired from California Institute of Technology (“Caltech”), through a license agreement with Caltech and other institutions. All fees and other amounts payable by the Company for these rights and licenses have been paid or accrued in full, andno further royalties, license fees or other amounts will be payable in the future under the license agreements.

In addition to the purchased and licensed patents, the Company has capitalized legal and registration costs incurred to obtain and maintain the respective patents. The Company currently holds various patents and numerous pending patent applications in the United States, as well as numerous foreign counterparts to these patents outside of the United States.

Other assets consisted of the following:

Accrued liabilities consisted of the following:

Other long-term liabilities was $902 as of* December 31, 2023and2022,* and consisted of $859 of long-term, aged payables to vendors, individuals, and otherthird parties that have been outstanding for more than 5 years. Also included in the balance as of* December 31, 2023and2022* is $43 in tenant deposits under the Facility Lease.

The Company is in the process of researching and resolving the balances for settlement and/or escheatment in accordance with applicable state law.

On* June 28, 2012,the Company adopted the2012* Equity Incentive Plan (“2012 Plan”), with the approval of the shareholders, which provided for the grant of stock options to officers, employees, consultants and directors of the Company and its subsidiaries. The2012 Plan provides for the granting to employees of incentive stock options within the meaning of Section422 of the Internal Revenue Code of1986, as amended, and for the granting to employees and consultants of non-statutory stock options. In addition, the Plan permits the granting of stock appreciation rights, or SARs, with or independently of options, as well as stock bonuses and rights to purchase restricted stock. A total of 30,000,000 shares of the Company’s common stock* maybe granted under the2012* Equity Incentive Plan, and all options granted under this plan had exercise prices that were equal to the fair market value on the date of grant. On* December 16, 2021,the Company granted option grants under the Company’s2012* Equity Incentive Plan, as approved to by the Board, for employees up to 1,400,000 shares of the Company’s common stock in total. Under this plan, the Company had outstanding grants of options to purchase 2,993,000 and 5,674,000 shares of the Company’s common stock as of* December 31, 2023and December 31, 2022,*respectively.

On* January 27, 2015,the Company adopted its2015* Equity Incentive Plan (“2015 Plan”), which provided for the grant of stock options to officers, employees, consultants and directors of the Company and its subsidiaries. A total of 40,000,000 shares of the Company’s common stock are available for issuance under the2015 Plan. All options granted under the2015 Plan had exercise prices that were equal to the fair market value on the dates of grant. On* July 7, 2021,the Company granted Mr. Chung an option grant under the Company’s2015* Equity Incentive Plan, as approved by the Board, to purchase up to 7,500,000 shares of Company stock. On* December 16, 2021,the Company granted option grants under the Company’s2015* Equity Incentive Plan, as approved to by the Board, for directors up to 600,000 shares of the Company’s common stock in total. Under this plan, the Company had outstanding grants of options to purchase 14,261,667 and 20,941,667 as of* December 31, 2023and December 31, 2022,*respectively.

FASB ASC718, Compensation–* Stock Compensation*, requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. Under ASC718, the Company is required to measure the cost of employee services received in exchange for stock options and similar awards based on the grant-date fair value of the award and recognize this cost in the income statement over the period during which an employee is required to provide service in exchange for the award. The Company recorded $113 and $163 for the years ended* December 31, 2023and2022,* respectively, of non-cash charges for stock compensation related to amortization of the fair value of restricted stock and unvested stock options. The total compensation costs related to non-vested awardsnot yet recognized were $61 and $115 for the years ended* December 31, 2023and2022,* respectively.

Expected volatilities are based on historical volatility expected over the expected life of the options. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted represents the period of time that options granted are expected to be outstanding. Expected forfeiture rates are determined based on historical forfeitures over afive-year period. The risk-free rate used for the period within the expected life of the options is based on U.S. Treasury rates in effect at the time of grant.

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The following table summarizes the Company’s stock option transactions:

The following table provides supplemental data on stock options:

The following table summarizes the Company’s stock options outstanding and exercisable by ranges of option prices as of* December 31, 2023and2022:*

*** December 31, 2023***

*** December 31, 2022***

The Company’s non-vested options at the beginning and ending of fiscal year2023 had weighted-average grant-date fair values of $0.05 and $0.05 per option, respectively.

Amounts collected under the Facility Lease are comprised of base rents and reimbursements for direct facility expenses (property taxes and insurance), common area maintenance, and utilities. Amounts recorded to lease income are comprised of base rents and direct facility expenses, recorded on a straight-line basis over the lease term. Reimbursements for common area maintenance and utility expense are recorded as reductions to like expenses within sales, general, and administrative costs.

The future minimum rents due to the Company under the Facility Lease are as follows:

Significant components of deferred tax assets are as follows:

The valuation allowance decreased $11,409 and increased $14,376 in2023 and2022, respectively. Changes in the valuation allowance are impacted by the expiration of net operating loss (“NOL”) carryforwards, current year net operating losses, and changes to future tax deductions resulting from the terms of stock compensation plans and accrued liabilities.

The following table accounts for the differences between the expected federal tax benefit (based on the statutory2023 and2022 U.S. federal income tax rate of21%) and the actual tax provision:

As of* December 31, 2023,the Company had approximately $149,677 of NOL carryforwards for U.S. federal income tax purposes expiring in2023* through2043. As of* December 31, 2023,the Company had approximately $110,970 of NOL carryforwards for California income tax purposes expiring in2024* through2044. The Company and Liquidmetal Golf, Inc. file on a separate company basis for federal income tax purposes. Accordingly, the federal NOL carryforwards ofone legal entity arenot available to offset federal taxable income of the other. Liquidmetal Golf, Inc. had approximately $979 in federal NOL carryforwards, expiring in2023 through2041.

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We recognize excess tax benefits associated with the exercise of stock options directly to shareholders’ equity only when realized. Accordingly, deferred tax assets arenot recognized for NOL carryforwards resulting from excess tax benefits. As of* December 31, 2023,deferred tax assets donot* include approximately $75 of these tax effected excess tax benefits from employee stock option exercise that are a component of our NOL carryforwards. Accordingly, additional paid-in capital will increase up to an additional $75 if and when such excess tax benefits are realized.

As of* December 31, 2023,the Company had approximately $138 of Research & Development (“R&D”) credit carryforwards for U.S. federal income tax purposes expiring in2024* through2033. In addition, the Company has California R&D credit carryforwards of approximately $243, which donot expire under current California law. Section382 of the Internal Revenue Code (“IRC”) imposes limitations on the use of NOL’s and credits following changes in ownership as defined in the IRC. The limitation could reduce the amount of benefits that would be available to offset future taxable income each year, starting with the year of an ownership change. As a result of the completion of the complex analysis required by the IRC to determine if an ownership change has occurred, the Company has determined that its annual NOL carryforward limitation under Section382 of the IRC is $764 per year.

The ability to realize the tax benefits associated with deferred tax assets, which includes benefits related to NOL’s, is principally dependent upon the Company’s ability to generate future taxable income from operations. The Company has provided a full valuation allowance for its net deferred tax assets due to the Company’s net operating losses.

The Company adopted the provisions of FASB ASC Topic470 – Income Taxes. At the adoption date and as of* December 31, 2020,the Company hadno* material unrecognized tax benefits andno adjustments to liabilities or operations were required. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense which were $0 for the years ended* December 31, 2023and2022.*

As of* December 31, 2023,the tax years 2016 through2023,* and2015 through2023 are subject to examination by the federal and California taxing authorities, respectively.

The following table presents a summary of the changes in each component of AOCI for the years ended* December 31, 2023and2022:*

Basic earnings per share (“EPS”) is computed by dividing earnings (loss) attributable to common shareholders by the weighted average number of common shares outstanding for the periods. Diluted EPS reflects the potential dilution of securities that could share in the earnings.

Options to purchase 17,254,667 shares of common stock at prices ranging from $0.07 to $0.38 per share were outstanding at* December 31, 2023,but werenot* included in the computation of diluted EPS for the same period as the inclusion would have been antidilutive, given the Company’s net loss. Options to purchase 26,615,667 shares of common stock at prices ranging from $0.07 to $0.38 per share were outstanding at* December 31, 2022,but werenot* included in the computation of diluted EPS for the same period as the inclusion would have been antidilutive, given the Company’s net loss.

Warrants to purchase 10,066,809 shares of common stock, priced at $0.07 per share, outstanding at each of* December 31, 2023and2022* werenot included in the computation of diluted EPS for the same period as the inclusion would have been antidilutive, given the Company’s net loss.

On* March 10, 2016,the Company entered into the2016* Purchase Agreement with Liquidmetal Technology Limited, providing for the purchase of 405,000,000 shares of the Company’s common stock for an aggregate purchase price of $63,400. Liquidmetal Technology Limited was a newly formed company owned by Professor Li. In connection with the2016 Purchase Agreement and also on* March 10, 2016,the Company and Eontec, entered into a license agreement pursuant to which the Company and Eontec entered into a cross-license of their respective technologies. Eontec is a publicly held Hong Kong corporation of which Professor Li is the Chairman. Eontec is also an affiliate of Yihao. Yihao is currently the Company’s primary contract manufacturer. As of December 31, 2023,Professor Li is a greater-than 5% beneficial owner of the Company and serves as the Company’s Chairman. Equipment and services procured from Eontec, and their affiliates, were $301 and $215 during the years ended December 31, 2023and2022,* respectively. As of* December 31, 2023and2022,* the Company has outstanding payables to Eontec, and their affiliates of $30 and $15, respectively.

On* May 10, 2022,Mr. Abdi Mahamedi resigned as a director of the Company. In connection with Mr. Mahamedi’s resignation, the Board of Directors of the Company approved an amendment to Mr. Mahamedi’s previously granted options to purchase an aggregate of 1,870,000 shares of Company common stock to provide for the extension of the exercise period of the options through May 10, 2025.Upon Mr. Mahamedi’s resignation as a director, the Company entered into a Consulting Agreement, dated May 10, 2022,with Rosewood LLC pursuant to which Mr. Mahamedi as the owner of Rosewood LLC will assess and present business opportunities for the licensing and sublicensing of the Company’s technology. Mr. Mahamedi will also provide business development services and perform other special projects as requested by the Company. The Consulting Agreement has a term of5* years, subject to the right of the Company or Mr. Mahamedi to terminate the agreement at any time after* December 1, 2022and subject to certain other early-termination rights. As sole consideration for the Consulting Agreement, the Company granted to Mr. Mahamedi an option to purchase up to 2.0 million shares of Company common stock at an exercise price of the closing market price of the Company’s common stock on May 10, 2022that will vest 33% on thefirst* anniversary of the grant date and the remainder vesting monthly over the ensuingtwo years, provided that Mr. Mahamedi continues to be engaged as a consultant on each such vesting date. The options have a term of5 years.

The Company follows the guidance in FASB ASC Topic855, Subsequent Events (“ASC855”), which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before the consolidated financial statements are issued or are available to be issued. ASC855 sets forth (i) the period after the balance sheet date during which management of a reporting entity evaluates events or transactions that* mayoccur for potential recognition or disclosure in the consolidated financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its consolidated financial statements, and (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. Accordingly, the Company didnot* have any subsequent events that require disclosure.