Liquidmetal Technologies, Inc. ("Liquidmetal," "LQMT" or the Company) (OTCBB:LQMT) manufactures amorphous metal alloy components.

The original Complaint charges that LQMT and certain individuals violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between June 11, 2001 through March 23, 2004, about its financial results. Specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to the Defendants or recklessly disregarded by them; (1) that LQMT failed to make its product commercially feasible due to its high manufacturing cost; (2) that LQMT, struggling with the lack of market acceptance for the product, attempted to boost revenues through fraudulent means via a deal with a South Korean metals processing company; (3) that LQMT’s improving financial results were only made possible through improper revenue recognition practices in violation of Generally Accepted Accounting Principles (“GAAP”).

Further, on February 20, 2004, the Company disclosed that it would have to restate revenues for the third and fourth quarters of 2002 and the first quarter of 2003 due to improper revenue recognition. On March 30, 2004, Defendants revealed that he Company’s 10-K has been indefinitely delayed due to its inability to complete the audit of prior years’ financial results. On April 29, 2004, LMQT announced that it received a Nasdaq Staff Determination indicating that because the Company has not timely filed a Form 10-K with the SEC for the period ended December 31, 2003, LQMT faces delisting from NASDAQ. In response to the news, the price of LQMT stock declined during the class period to close at slightly over $3 per share on March 30, 2004, a drop of over 80% from the stock’s Class Period high.

As summarized by the Company’s FORM 10-K/A for the fiscal year ended December 31, 2005, the Company and certain of its present and former officers and directors were named as Defendants in nine purported class action Complaints filed in the United States District Court for the Middle District of Florida, Tampa Division, and the Central District of California, Southern Division, alleging violations of Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. In August 2004, four Complaints were consolidated in the Middle District of Florida under the caption Primavera Investors v. Liquidmetal Technologies, Inc., et al., Case No. 8:04-CV-919-T-23EAJ. John Lee, Chris Cowley, Dwight Mamanteo, Scott Purcell and Mark Rabold were appointed co-lead Plaintiffs, but Mr. Mamanteo later withdrew. In September 2004, the five Complaints filed in the Central District of California were transferred to the Middle District of Florida for consolidation with the Primavera Investors action. The lead Plaintiffs served their Consolidated Amended Class Action Complaint on January 12, 2005. The Amended Complaint alleges that the Prospectus issued in connection with the Company’s initial public offering in May 2002 contained material misrepresentations and omissions regarding its historical financial condition and regarding a personal stock transaction by the Company’s former chief executive officer. The lead Plaintiffs further generally allege that during the proposed Class Period of May 21, 2002, through May 13, 2004, the Defendants engaged in improper revenue recognition with respect to certain of the Company’s business transactions, failed to maintain adequate internal controls, and knowingly disclosed unrealistic but favorable information about market demand for and commercial viability of Company’s products to artificially inflate the value of Company’s stock. The Amended Complaint seeks unspecified compensatory damages and other relief. The Company, along with other Defendants, filed a Motion to Dismiss Plaintiffs’ Consolidated Amended Class Action Complaint in March 2005. The Motion to Dismiss was denied in December 2005, and the Defendants served their Answer and Affirmative Defenses to the Consolidated Amended Class Action Complaint on December 16, 2005.

According to a press release dated October 20, 2006, Liquidmetal announced that the federal judge presiding over the consolidated class action entitled Primavera Investors v. Liquidmetal Technologies, Inc., et al., which was pending in the United States District Court for the Middle District of Florida, has approved the previously disclosed settlement of the class action. In connection with the settlement, Liquidmetal's directors' and officers' liability insurers contributed $7,025,000 to a settlement fund, from which claims of eligible class members will be paid in accordance with a Court-approved plan of allocation. The consolidated class action arose from a number of lawsuits filed in 2004 under the federal securities laws against Liquidmetal and certain of its former and current directors and officers. The class action settlement is part of a previously disclosed agreement to settle the class action and two pending derivative actions, which were also filed in 2004 based upon the same facts and circumstances underlying the class action, for a total of $7.5 million: $7,025,000 for the consolidated class action, and $475,000 for the two derivative actions. In addition, Liquidmetal will commit to maintain or implement various corporate governance measures in connection with the settlement of the derivative actions. Final documentation and approval of the settlement of the derivative actions remains outstanding.