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Friday, March 30, 2012, 09:15 pm PT (12:15 am ET)

Liquidmetal Technologies filing outlines its $20 million agreement with Apple

In its 10-K filing with the US Securities and Exchange Commission, Liquid Metal outlined the details of its $20 million licensing program with Apple, which began in 2010.

Toward the end of 2010, Apple entered into an exclusive agreement to license the use of Liquid Metal's amorphous metal alloys with unique atomic structures, used to create products that are stronger, lighter, and resistant to wear and corrosion.

The metal alloys owned by Liquidmetal Technologies were developed by a research team at the California Institute of Technology, and their amorphous, non-crystalline structure makes them harder than alloys of titanium or aluminum.



In its latest 10-K filed today, the company noted that its "Total Revenue decreased by $19.6 million to $972 thousand for the year ended December 31, 2011 from $20.6 million for the year ended December 31, 2010.

"The decrease is primarily in the licensing and royalties revenue category due to a one-time licensing fee that occurred during 2010," the filing stated. In 2011 the $972,000 in revenue came from a combination of $572,000 in product sales and $400,000 in other licensing and royalty payments, a steep drop from the previous year's $20.6 million that largely came from Apple.

Describing that transaction, Liquidmetal stated, "On August 5, 2010, we entered into a license transaction with Apple Inc. ("Apple") pursuant to which (i) we contributed substantially all of our 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, fully-paid, exclusive license to commercialize such intellectual property in the field of consumer electronic products, as defined in the license agreement, in exchange for a license fee, and (iii) CIP granted back to us a perpetual, worldwide, fully-paid, exclusive license to commercialize such intellectual property in all other fields of use.

"Additionally, in connection with the license transaction, Apple required us to complete a statement of work related to the exchange of Liquidmetal intellectual property information. The Company recognized a portion of the one-time license fee upon receipt of the initial payment and completion of the foregoing requirements under the license transaction. The remaining portion of the one-time license fee was recognized at the completion of the required statement of work.

"Under the agreements relating to the license transaction, we are obligated to contribute all intellectual property that we develop through February 2012 to CIP. In addition, we are obligated to refrain from encumbering any assets subject to the Apple security interest through August 2012 and are obligated to refrain from granting any security in our interest in CIP at any time. We are also obligated to maintain certain limited liability company formalities with respect to CIP at all times after the closing of the license transaction. If we are unable to comply with these obligations, Apple may be entitled to foreclose on our assets."

AppleInsider was first to discover that Apple was looking to hire a number of experts on amorphous metal alloys to build products using Liquidmetal's technology. The first product Apple created using Liquidmetal was an iPhone SIM card ejector tool.