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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q

|                                                                                              
|----------------------------------------------------------------------------------------------
|x
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

OR

|                                                                                              
|----------------------------------------------------------------------------------------------
|o     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ____________ to ___________

Commission File No. 000-31332

LIQUIDMETAL TECHNOLOGIES

(Exact name of Registrant as specified in its charter)

|                                                                         |  |                                               
|------------------------------------------------------------------------ |  | ----------------------------------------------
|California(State or other jurisdiction of
incorporation or organization) |  | 33-0264467(I.R.S. Employer
Identification No.)

100 North Tampa St., Suite 3150
Tampa, Florida 33602(address of principal executive office, zip code)

Registrants telephone number, including area code: (813) 314-0280

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for at least the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of May 14, 2003, there were 41,588,652 shares of the registrants common
stock, no par value, outstanding.

1



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TABLE OF CONTENTS



|                                                  |                                                                                                   |                                                                                                   |  |  |  |  |  | 
|------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I                                           
|                                                  | Item 1  Financial Statements and Independent Accountants Report                                
|                                                  |                                                                                                   | CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)                                                
|                                                  |                                                                                                   | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited)               
|                                                  |                                                                                                   | CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (unaudited)                            
|                                                  |                                                                                                   | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except per share data) (unaudited)
|                                                  |                                                                                                   | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)                                 
|                                                  | Item 2.     Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                  | Item 3  Quantitative and Qualitative Disclosures about Market Risk                              
|                                                  | Item 4  Controls and Procedures                                                                 
|PART II OTHER INFORMATION                        
|                                                  | Item 2  Change in Securities and Use of Proceeds.                                               
|                                                  | Item 6  Exhibits and Reports on Form 8-K.                                                       
|SIGNATURES                                       
|CERTIFICATION                                    
|EXHIBIT INDEX                                    
|Ex-15- Awareness Letter from Independent Auditors
|Ex-99.1 CEO Certification                        
|Ex-99.2 CFO Certification                        



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##### Table of Contents



TABLE OF CONTENTS

|                            |                                                                                                |                                                                                   
|--------------------------- | ---------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------
|PART I                     
|                            | Item 1  Financial Statements and Independent Accountants Report                             
|                            |                                                                                                | Condensed Consolidated Balance Sheets (unaudited)                                 
|                            |                                                                                                | Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)
|                            |                                                                                                | Condensed Consolidated Statements of Shareholders Equity (unaudited)             
|                            |                                                                                                | Condensed Consolidated Statements of Cash Flows (unaudited)                       
|                            |                                                                                                | Notes to Condensed Consolidated Financial Statements (unaudited)                  
|                            |                                                                                                | Independent Accountants Report                                                   
|                            | Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
|                            | Item 3  Quantitative and Qualitative Disclosures about Market Risk                           
|                            | Item 4  Controls and Procedures                                                              
|PART II  Other Information
|                            | Item 2  Changes in Securities and Use of Proceeds                                            
|                            | Item 6  Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                 
|CERTIFICATIONS             
|EXHIBIT INDEX              

2



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##### Table of Contents






PART I

FINANCIAL INFORMATION




Item 1  Financial Statements and Independent Accountants Report




LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)

|                                                    |                                                                                                                                                                              |                            |                                            |         |           |        |              |         |        |        | 
|--------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | ------- | --------- | ------ | ------------ | ------- | ------ | ------ | 
|                                                    |                                                                                                                                                                              |                            |                                            |         | March 31, |        | December 31,
|                                                    |                                                                                                                                                                              |                            |                                            |         | 2003      |        | 2002        
|                                                    |                                                                                                                                                                              |                            |                                            |         |           |        |             
|ASSETS                                             
|CURRENT ASSETS:                                     |                                                                                                                                                                              |                            |                                            |         |           |        |              |        
|                                                    | Cash and cash equivalents                                                                                                                                                    |                            | $                                          | 18,472  |           |        | $            | 26,003  |       
|                                                    | Marketable securities held-for-sale                                                                                                                                          |                            |                                            | 1,927   |           |        |              | 3,068   |       
|                                                    | Trade receivables, net                                                                                                                                                       |                            |                                            | 8,134   |           |        |              | 6,404   |       
|                                                    | Inventories                                                                                                                                                                  |                            |                                            | 3,556   |           |        |              | 2,506   |       
|                                                    | Prepaid expenses and other current assets                                                                                                                                    |                            |                                            | 1,101   |           |        |              | 2,142   |       
|                                                    |                                                                                                                                                                              |                            |                                            |         |           |        |              |        
|                                                    |                                                                                                                                                                              | Total current assets       |                                            |         | 33,190    |        |              |         | 40,123 |       
|PROPERTY, PLANT AND EQUIPMENT, NET                  |                                                                                                                                                                              |                            | 22,374                                     |         |           |        | 23,505       |        
|GOODWILL                                            |                                                                                                                                                                              |                            | 184                                        |         |           |        | 184          |        
|OTHER
INTANGIBLE ASSETS, NET                        |                                                                                                                                                                              |                            | 855                                        |         |           |        | 785          |        
|OTHER ASSETS                                        |                                                                                                                                                                              |                            | 469                                        |         |           |        | 408          |        
|                                                    |                                                                                                                                                                              |                            |                                            |         |           |        |              |        
|                                                    |                                                                                                                                                                              | Total assets               |                                            | $       | 57,072    |        |              | $       | 65,005 |       
|                                                    |                                                                                                                                                                              |                            |                                            |         |           |        |              |        
|LIABILITIES AND SHAREHOLDERS EQUITY               
|CURRENT LIABILITIES:                                |                                                                                                                                                                              |                            |                                            |         |           |        |              |        
|                                                    | Accounts payable and accrued expenses                                                                                                                                        |                            | $                                          | 6,932   |           |        | $            | 11,174  |       
|                                                    | Net liabilities of discontinued operations                                                                                                                                   |                            |                                            | 138     |           |        |              | 1,148   |       
|                                                    | Deferred revenue                                                                                                                                                             |                            |                                            | 984     |           |        |              | 1,397   |       
|                                                    | Other liabilities, current portion                                                                                                                                           |                            |                                            | 20      |           |        |              | 19      |       
|                                                    |                                                                                                                                                                              |                            |                                            |         |           |        |              |        
|                                                    |                                                                                                                                                                              | Total current liabilities  |                                            |         | 8,074     |        |              |         | 13,738 |       
|LONG-TERM NOTE PAYABLE                              |                                                                                                                                                                              |                            | 5,175                                      |         |           |        | 74           |        
|OTHER LONG-TERM LIABILITIES, NET OF CURRENT PORTION |                                                                                                                                                                              |                            | 69                                         |         |           |        |             |        
|                                                    |                                                                                                                                                                              |                            |                                            |         |           |        |              |        
|                                                    |                                                                                                                                                                              | Total liabilities          |                                            |         | 13,318    |        |              |         | 13,812 |       
|                                                    |                                                                                                                                                                              |                            |                                            |         |           |        |              |        
|COMMITMENTS AND CONTINGENCIES                       |                                                                                                                                                                              |                            |                                            |         |           |        |              |        
|MINORITY INTEREST                                   |                                                                                                                                                                              |                            | 28                                         |         |           |        | 21           |        
|                                                    |                                                                                                                                                                              |                            |                                            |         |           |        |              |        
|SHAREHOLDERS EQUITY:                               |                                                                                                                                                                              |                            |                                            |         |           |        |              |        
|                                                    | Common stock, no par value; 200,000,000 shares authorized and 41,572,523 issued
and outstanding at March 31, 2003 and 41,009,245 issued and outstanding
at December 31, 2002 |                            |                                            | 106,954 |           |        |              | 106,554 |       
|                                                    | Paid in capital                                                                                                                                                              |                            |                                            | 20,326  |           |        |              | 20,326  |       
|                                                    | Unamortized stock-based compensation                                                                                                                                         |                            |                                            | (437    | )         |        |              | (480    | )     
|                                                    | Accumulated deficit                                                                                                                                                          |                            |                                            | (82,748 | )         |        |              | (76,940 | )     
|                                                    | Accumulated comprehensive (loss) income                                                                                                                                      |                            |                                            | (369    | )         |        |              | 1,712   |       
|                                                    |                                                                                                                                                                              |                            |                                            |         |           |        |              |        
|                                                    |                                                                                                                                                                              | Total shareholders equity |                                            |         | 43,726    |        |              |         | 51,172 |       
|                                                    |                                                                                                                                                                              |                            |                                            |         |           |        |              |        
|                                                    |                                                                                                                                                                              |                            | Total liabilities and shareholders equity |         | $         | 57,072 |              |         | $      | 65,005 | 
|                                                    |                                                                                                                                                                              |                            |                                            |         |           |        |              |        

See notes to condensed consolidated financial statements.

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LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
(unaudited)

|                                                       |                                                        |                                                                    |        |                      |       |      |        |        |       |  
|------------------------------------------------------ | ------------------------------------------------------ | ------------------------------------------------------------------ | ------ | -------------------- | ----- | ---- | ------ | ------ | ----- | -
|                                                       |                                                        |                                                                    |        | For the Three Months
|                                                       |                                                        |                                                                    |        | Ended March 31,     
|                                                       |                                                        |                                                                    |        |                     
|                                                       |                                                        |                                                                    |        | 2003                 |       | 2002
|                                                       |                                                        |                                                                    |        |                      |       |     
|REVENUE                                                |                                                        | $                                                                  | 6,559  |                      |       | $    | 1,463  |       
|COST OF SALES                                          |                                                        |                                                                    | 3,883  |                      |       |      | 682    |       
|                                                       |                                                        |                                                                    |        |                      |       |      |        |       
|Gross Profit                                           |                                                        |                                                                    | 2,676  |                      |       |      | 781    |       
|                                                       |                                                        |                                                                    |        |                      |       |      |        |       
|OPERATING EXPENSES:                                    |                                                        |                                                                    |        |                      |       |      |        |       
|                                                       | Selling, general, and administrative                   |                                                                    |        | 4,507                |       |      |        | 2,269  |      
|                                                       | Research and development                               |                                                                    |        | 4,038                |       |      |        | 2,696  |      
|                                                       |                                                        |                                                                    |        |                      |       |      |        |       
|                                                       |                                                        | Total expenses                                                     |        |                      | 8,545 |      |        |        | 4,965 |  
|                                                       |                                                        |                                                                    |        |                      |       |      |        |       
|LOSS BEFORE INTEREST EXPENSE AND INCOME,               |                                                        |                                                                    |        |                      |       |      |        |       
|                                                       | MINORITY INTEREST AND DISCONTINUED                     |                                                                    |        |                      |       |      |        |        |      
|                                                       | OPERATIONS                                             |                                                                    |        | (5,869               | )     |      |        | (4,184 | )    
|                                                       | Interest expense                                       |                                                                    |        | (63                  | )     |      |        | (312   | )    
|                                                       | Interest income                                        |                                                                    |        | 131                  |       |      |        |       |      
|                                                       |                                                        |                                                                    |        |                      |       |      |        |       
|LOSS BEFORE MINORITY INTEREST AND                      |                                                        |                                                                    |        |                      |       |      |        |       
|DISCONTINUED OPERATIONS                                |                                                        |                                                                    | (5,801 | )                    |       |      | (4,496 | )     
|Minority interest in income of consolidated subsidiary |                                                        |                                                                    | (7     | )                    |       |      |       |       
|                                                       |                                                        |                                                                    |        |                      |       |      |        |       
|LOSS FROM CONTINUING OPERATIONS                        |                                                        |                                                                    | (5,808 | )                    |       |      | (4,496 | )     
|DISCONTINUED OPERATIONS:                               |                                                        |                                                                    |        |                      |       |      |        |       
|                                                       |                                                        | Gain (loss) from disposal of discontinued retail golf segment, net |        |                      |      |      |        |        | (530  | )
|                                                       |                                                        |                                                                    |        |                      |       |      |        |       
|NET LOSS                                               |                                                        |                                                                    | (5,808 | )                    |       |      | (5,026 | )     
|OTHER COMPREHENSIVE LOSS:                              |                                                        |                                                                    |        |                      |       |      |        |       
|                                                       | Foreign exchange translation loss                      |                                                                    |        | (940                 | )     |      |        | (124   | )    
|                                                       | Unrealized loss on marketable securities held-for-sale |                                                                    |        | (1,141               | )     |      |        |       |      
|                                                       |                                                        |                                                                    |        |                      |       |      |        |       
|COMPREHENSIVE LOSS                                     |                                                        | $                                                                  | (7,889 | )                    |       | $    | (5,150 | )     
|                                                       |                                                        |                                                                    |        |                      |       |      |        |       
|PER COMMON SHARE BASIC AND DILUTED:                    |                                                        |                                                                    |        |                      |       |      |        |       
|                                                       | Loss from continuing operations                        |                                                                    | $      | (0.14                | )     |      | $      | (0.13  | )    
|                                                       |                                                        |                                                                    |        |                      |       |      |        |       
|                                                       | Income (loss) from discontinued operations             |                                                                    | $      | 0.00                 |       |      | $      | (0.02  | )    
|                                                       |                                                        |                                                                    |        |                      |       |      |        |       
|                                                       | Net loss                                               |                                                                    | $      | (0.14                | )     |      | $      | (0.14  | )    
|                                                       |                                                        |                                                                    |        |                      |       |      |        |       

See notes to condensed consolidated financial statements.

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LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
For the Three Months Ended March 31, 2003
(in thousands, except per share data)
(unaudited)

|                           |                                              |  |            |         |        |   |         |       |         |   |         |   |               |   |              |    |         |   |         |        |         |   |       |        |   |   |        |        |  
|-------------------------- | -------------------------------------------- |  | ---------- | ------- | ------ | - | ------- | ----- | ------- | - | ------- | - | ------------- | - | ------------ | -- | ------- | - | ------- | ------ | ------- | - | ----- | ------ | - | - | ------ | ------ | -
|                           |                                              |  |            |         |        |   |         |       |         |   |         |   |               |   | Unamortized  |    |         |   |         |        | Accumu- |   |       |        |  
|                           |                                              |  |            |         |        |   |         |       |         |   |         |   |               |   | Stock-option |    |         |   |         |        | lated   |   |       |        |  
|                           |                                              |  |            |         |        |   |         |       |         |   |         |   |               |   | Based        |    | Accumu- |   | Compre- |        |         |   |      
|                           |                                              |  | Common     |         | Common |   | Paid in |       | Compen- |   | lated   |   | hensive       |   |              |    |        
|                           |                                              |  | Shares     |         | Stock  |   | Capital |       | sation  |   | Deficit |   | Income (Loss) |   | Total       
|                           |                                              |  |            |         |        |   |         |       |         |   |         |   |               |   |             
|Balance, December 31, 2002 |                                              |  | 41,009,245 |         |        | $ | 106,554 |       |         | $ | 20,326  |   |               | $ | (480         | )  |         | $ | (76,940 | )      |         | $ | 1,712 |        |   | $ | 51,172 |       
|                           | Stock options exercised                      |  |            | 657,036 |        |   |         | 1,053 |         |   |         |  |               |   |              |   |         |   |         |       |         |   |       |       |   |   |        | 1,053  |  
|                           | Repurchase of shares                         |  |            | (93,758 | )      |   |         | (653  | )       |   |         |  |               |   |              |   |         |   |         |       |         |   |       |       |   |   |        | (653   | )
|                           | Stock option-based
compensation amortization |  |            |        |        |   |         |      |         |   |         |  |               |   |              | 43 |         |   |         |       |         |   |       |       |   |   |        | 43     |  
|                           | Foreign exchange translation
loss            |  |            |        |        |   |         |      |         |   |         |  |               |   |              |   |         |   |         |       |         |   |       | (940   | ) |   |        | (940   | )
|                           | Unrealized loss on marketable
securities     |  |            |        |        |   |         |      |         |   |         |  |               |   |              |   |         |   |         |       |         |   |       | (1,141 | ) |   |        | (1,141 | )
|                           | Net loss                                     |  |            |        |        |   |         |      |         |   |         |  |               |   |              |   |         |   |         | (5,808 | )       |   |       |       |   |   |        | (5,808 | )
|                           |                                              |  |            |         |        |   |         |       |         |   |         |   |               |   |              |    |         |   |         |        |         |   |       |        |   |   |        |       
|Balance, March 31, 2003    |                                              |  | 41,572,523 |         |        | $ | 106,954 |       |         | $ | 20,326  |   |               | $ | (437         | )  |         | $ | (82,748 | )      |         | $ | (369  | )      |   | $ | 43,726 |       
|                           |                                              |  |            |         |        |   |         |       |         |   |         |   |               |   |              |    |         |   |         |        |         |   |       |        |   |   |        |       

See notes to condensed consolidated financial statements.

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LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except per share data)
(unaudited)

|                                                 |                                                                                                    |                                                        |         |                      |        |      |        |        |       |  
|------------------------------------------------ | -------------------------------------------------------------------------------------------------- | ------------------------------------------------------ | ------- | -------------------- | ------ | ---- | ------ | ------ | ----- | -
|                                                 |                                                                                                    |                                                        |         | For the Three Months
|                                                 |                                                                                                    |                                                        |         | Ended March 31,     
|                                                 |                                                                                                    |                                                        |         |                     
|                                                 |                                                                                                    |                                                        |         | 2003                 |        | 2002
|                                                 |                                                                                                    |                                                        |         |                      |        |     
|OPERATING ACTIVITIES:                            |                                                                                                    |                                                        |         |                      |        |      |        |       
|                                                 | Net loss                                                                                           |                                                        | $       | (5,808               | )      |      | $      | (5,026 | )    
|                                                 | Gain from operations and (gain) loss on disposition of discontinued operations                     |                                                        |         |                     |        |      |        | 530    |      
|                                                 |                                                                                                    |                                                        |         |                      |        |      |        |       
|                                                 | Loss from continuing operations                                                                    |                                                        |         | (5,808               | )      |      |        | (4,496 | )    
|                                                 | Adjustments to reconcile loss from continuing operations to net cash used
by operating activities: |                                                        |         |                      |        |      |        |        |      
|                                                 |                                                                                                    | Minority interest in income of consolidated subsidiary |         |                      | 7      |      |        |        |      |  
|                                                 |                                                                                                    | Depreciation and amortization                          |         |                      | 990    |      |        |        | 323   |  
|                                                 |                                                                                                    | Amortization of debt discount                          |         |                      |       |      |        |        | 228   |  
|                                                 |                                                                                                    | Stock-based compensation                               |         |                      | 43     |      |        |        | 1,507 |  
|                                                 |                                                                                                    | Bad debt expense                                       |         |                      | 94     |      |        |        | 30    |  
|                                                 |                                                                                                    | Warranty expense                                       |         |                      | 367    |      |        |        |      |  
|                                                 | Changes in operating assets and liabilities:                                                       |                                                        |         |                      |        |      |        |        |      
|                                                 |                                                                                                    | Accounts receivable                                    |         |                      | (1,824 | )    |        |        | (217  | )
|                                                 |                                                                                                    | Inventories                                            |         |                      | (117   | )    |        |        | 156   |  
|                                                 |                                                                                                    | Prepaid expenses and other current assets              |         |                      | 1,041  |      |        |        | (175  | )
|                                                 |                                                                                                    | Other assets                                           |         |                      | (61    | )    |        |        |      |  
|                                                 |                                                                                                    | Accounts payable and accrued expenses                  |         |                      | (5,012 | )    |        |        | 572   |  
|                                                 |                                                                                                    | Unearned revenue                                       |         |                      | (413   | )    |        |        |      |  
|                                                 |                                                                                                    | Other liabilities                                      |         |                      | (2     | )    |        |        | (54   | )
|                                                 |                                                                                                    |                                                        |         |                      |        |      |        |       
|Net cash used by continuing operations           |                                                                                                    |                                                        | (10,695 | )                    |        |      | (2,126 | )     
|Net cash used by discontinued operations         |                                                                                                    |                                                        | (1,010  | )                    |        |      | (1,242 | )     
|                                                 |                                                                                                    |                                                        |         |                      |        |      |        |       
|Net cash used by operating activities            |                                                                                                    |                                                        | (11,705 | )                    |        |      | (3,368 | )     
|                                                 |                                                                                                    |                                                        |         |                      |        |      |        |       
|INVESTING ACTIVITIES:                            |                                                                                                    |                                                        |         |                      |        |      |        |       
|                                                 | Purchases of property and equipment                                                                |                                                        |         | (1,684               | )      |      |        | (385   | )    
|                                                 | Investment in patents and trademarks                                                               |                                                        |         | (90                  | )      |      |        | (14    | )    
|                                                 |                                                                                                    |                                                        |         |                      |        |      |        |       
|Net cash used by investing activities            |                                                                                                    |                                                        | (1,774  | )                    |        |      | (399   | )     
|                                                 |                                                                                                    |                                                        |         |                      |        |      |        |       
|FINANCING ACTIVITIES:                            |                                                                                                    |                                                        |         |                      |        |      |        |       
|                                                 | Proceeds from borrowings                                                                           |                                                        |         | 5,488                |        |      |        | 2,000  |      
|                                                 | Repayment of other liabilities                                                                     |                                                        |         | (2                   | )      |      |        |       |      
|                                                 | Stock options exercised                                                                            |                                                        |         | 803                  |        |      |        | 435    |      
|                                                 |                                                                                                    |                                                        |         |                      |        |      |        |       
|Net cash provided by financing activities        |                                                                                                    |                                                        | 6,289   |                      |        |      | 2,435  |       
|                                                 |                                                                                                    |                                                        |         |                      |        |      |        |       
|EFFECT OF FOREIGN EXCHANGE TRANSLATION           |                                                                                                    |                                                        | (341    | )                    |        |      | (26    | )     
|                                                 |                                                                                                    |                                                        |         |                      |        |      |        |       
|NET DECREASE IN CASH AND CASH EQUIVALENTS        |                                                                                                    |                                                        | (7,531  | )                    |        |      | (1,358 | )     
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |                                                                                                    |                                                        | 26,003  |                      |        |      | 2,230  |       
|                                                 |                                                                                                    |                                                        |         |                      |        |      |        |       
|CASH AND CASH EQUIVALENTS AT END OF PERIOD       |                                                                                                    | $                                                      | 18,472  |                      |        | $    | 872    |       
|                                                 |                                                                                                    |                                                        |         |                      |        |      |        |       
|SUPPLEMENTAL CASH FLOW INFORMATION               |                                                                                                    |                                                        |         |                      |        |      |        |       
|                                                 | Interest paid                                                                                      |                                                        | $       | 34                   |        |      | $      |       |      
|                                                 |                                                                                                    |                                                        |         |                      |        |      |        |       
|                                                 | Taxes paid                                                                                         |                                                        | $       | 57                   |        |      | $      |       |      
|                                                 |                                                                                                    |                                                        |         |                      |        |      |        |       

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##### Table of Contents



LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  continued
(in thousands, except per share data)
(unaudited)

During the three months ended March 31, 2003, the Company reclassified
$933 of machines from property, plant and equipment to inventory because the
machines were sold in 2003.

During the three months ended March 31, 2003, the change in the foreign
exchange between the U.S. Dollar and the South Korean Won resulted in a $313
gain related to the note payable and $912 loss related to property, plant and
equipment, including $39 related to accumulated depreciation.

During the three months ended March 31, 2003, an option holder surrendered
93,758 share of the Companys common stock in-lieu of cash payment for the
option exercise price of $250 and income taxes payable by the option holder of
$403. The common shares received in lieu of cash payment were immediately
canceled upon receipt of the shares by the Company.

During the three months ended March 31, 2002, the Company incurred $207 of
costs related to its initial public offering that had not been paid as of March
31, 2002.

During the three months ended March 31, 2002, the Company recorded a net
addition to shareholders equity of $1,156 comprised of stock-based
compensation in the discontinued retail golf operations. Additionally, there
was a $98 foreign exchange loss effect in the discontinued retail golf
operations.

See notes to condensed consolidated financial statements.

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LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2003 and 2002
(in thousands, except per share data)
(unaudited)

1.     Description of Business

Liquidmetal Technologies and its subsidiaries (collectively the Company)
are in the business of developing, manufacturing, and marketing products made
from amorphous alloys. Liquidmetal Technologies markets and sells Liquidmetal®
alloy industrial coatings and also manufactures, markets and sells products and
components from bulk Liquidmetal alloys that can be incorporated into the
finished goods of its customers across a variety of industries.

The
Company classifies operations into two reportable segments:
Liquidmetal alloy industrial coatings and bulk Liquidmetal alloys. Liquidmetal
alloy industrial coatings are used primarily as a protective coating for
industrial machinery and equipment, such as drill pipe used by the oil drilling
industry and boiler tubes used by coal-burning power plants. Bulk Liquidmetal
alloys include market opportunities to manufacture and sell components
for electronic devices, medical devices, sporting goods, tooling and prototype
sampling, and metals processing equipment. In addition, such alloys are
used to generate research and development services revenue for developing uses
related primarily to defense and medical applications.

2.      Basis of Presentation and Recent Accounting Pronouncements

The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States of America (generally accepted accounting principles)
for interim financial information and with the instructions to Form 10-Q.
Accordingly, they do not include all of the information and notes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting only of normal recurring
accruals) considered necessary for a fair presentation have been included. In
addition, certain reclassifications have been made for consistent
presentation. Operating results for the three months ended March 31, 2003 are not
necessarily indicative of the results that may be expected for any future
periods or the year ending December 31, 2003. The accompanying unaudited
condensed consolidated financial statements should be read in conjunction with
the Companys Form 10-K filed with the Securities and Exchange Commission on
March 31, 2003.

Stock-based
compensation.The Company applies Accounting Principles Board
(APB) Opinion No. 25 for
options when the exercise price of options granted to employees is less then
the fair value of the underlying stock on the date of grant. The Company
applies Statement of Financial Accounting Standards (SFAS) No. 123 for options granted to nonemployees who perform services
for the Company.

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LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2003 and 2002
(in thousands, except per share data)
(unaudited)

Had the Company determined compensation cost based on the fair value at
the grant date for stock options consistent with the method of SFAS No. 123,
the Companys loss from continuing operations and basic and diluted loss per
share from continuing operations would have been as follows:

|                                                             |                                          |                                                                                                                                                 |   |                      |      |      |   |        |        |  
|------------------------------------------------------------ | ---------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- | - | -------------------- | ---- | ---- | - | ------ | ------ | -
|                                                             |                                          |                                                                                                                                                 |   | For the Three Months
|                                                             |                                          |                                                                                                                                                 |   | Ended March 31,     
|                                                             |                                          |                                                                                                                                                 |   |                     
|                                                             |                                          |                                                                                                                                                 |   | 2003                 |      | 2002
|                                                             |                                          |                                                                                                                                                 |   |                      |      |     
|Loss from continuing operations:                             |                                          |                                                                                                                                                 |   |                      |      |      |   |       
|                                                             | As reported                              |                                                                                                                                                 | $ | (5,808               | )    |      | $ | (4,496 | )     
|                                                             |                                          | Add: stock-based employee compensation expense included
in reported net income, net of related tax effects                                      |   |                      | 27   |      |   |        | 103    |  
|                                                             |                                          | Deduct: total stock-based employee compensation expense
determined under the fair value based method for all
awards, net of related tax effects |   |                      | (596 | )    |   |        | (1,613 | )
|                                                             |                                          |                                                                                                                                                 |   |                      |      |      |   |       
|                                                             | Proforma loss from continuing operations |                                                                                                                                                 | $ | (6,377               | )    |      | $ | (6,006 | )     
|                                                             |                                          |                                                                                                                                                 |   |                      |      |      |   |       
|Basic and diluted loss per share from continuing operations: |                                          |                                                                                                                                                 |   |                      |      |      |   |       
|                                                             | As reported                              |                                                                                                                                                 | $ | (0.14                | )    |      | $ | (0.13  | )     
|                                                             | Pro forma                                |                                                                                                                                                 |   | (0.15                | )    |      |   | (0.17  | )     

New Accounting Pronouncements.In June 2001, the Financial Accounting
Standards Board (FASB) issued SFAS No. 143, Accounting for Asset Retirement Obligations.SFAS No. 143
requires that the fair value of a liability for an asset retirement obligation
be recognized in the period in which such liabilities are incurred if a
reasonable estimate of fair value can be made. The associated asset retirement
costs should be capitalized as part of the carrying amount of the long-lived
asset. SFAS No. 143 is effective for financial statements issued for fiscal
years beginning after June 15, 2002. Adoption of SFAS No. 143 did not have a
material impact on the Companys financial statements.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated With Exit or Disposal Activities. Statement 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring). SFAS No.
146 requires costs associated with exit or disposal activities to be recognized
when the costs are incurred, rather than at a date of commitment to an exit or
disposal plan. SFAS No. 146 is effective for exit or disposal activities that
are initiated after December 31, 2002. The adoption of SFAS No. 146 did not
have a material impact on the Companys financial statements.

In December 2002, SFAS No. 148, Accounting for Stock-Based Compensation
-Transition and Disclosurewas issued by the FASB. This standard amends SFAS
No. 123 to provide alternative methods of transition for a voluntary change to
the fair value method of accounting for stock-based employee compensation. In
addition, this standard amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the
method of accounting for stock-based employee compensation and the effect of
the method used on reported results. SFAS No. 148 is effective for financial
statements for fiscal years ending after December 15, 2002. The Company
implemented SFAS No. 148 effective January 1, 2003 regarding disclosure
requirements for condensed financial statements for interim
periods. The Company has not yet determined whether it will voluntarily change
to the fair value based method of accounting for stock-based employee
compensation.

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LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2003 and 2002
(in thousands, except per share data)
(unaudited)

In November 2002, the FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others(Interpretation 45). Interpretation 45
changes the accounting for and the disclosure of guarantees. Interpretation 45
requires that guarantees meeting the characteristics described in the
Interpretation be initially recorded as fair value in contrast to FASB No. 5,
which requires recording a liability when a loss is probable and reasonably
estimable. The disclosure requirements of Interpretation 45 are effective for
financial statements and annual periods ending after December 31, 2002. The
initial recognition and initial measurement provisions of Interpretation 45 are
effective on a prospective basis to guarantees issued or modified after
December 30, 2002. The adoption of Interpretation 45 did not have a material
impact on the Companys financial statements.

3.     Trade receivables



| |                                                                              
| | -----------------------------------------------------------------------------
| | Trade receivables from continuing operations were comprised of the
following:

|                                      |                         |   |           |       |              |   |       |       | 
|------------------------------------- | ----------------------- | - | --------- | ----- | ------------ | - | ----- | ----- | 
|                                      |                         |   | March 31, |       | December 31,
|                                      |                         |   | 2003      |       | 2002        
|                                      |                         |   |           |       |             
|Accounts receivable                   |                         | $ | 8,514     |       |              | $ | 6,681 |      
|Less: Allowance for doubtful accounts |                         |   | (380      | )     |              |   | (277  | )    
|                                      |                         |   |           |       |              |   |       |      
|                                      | Account receivable, net |   | $         | 8,134 |              |   | $     | 6,404 | 
|                                      |                         |   |           |       |              |   |       |      

4.     Inventories

Inventories from continuing operations were comprised of the following:

|                |                   |   |           |       |              |   |       |       | 
|--------------- | ----------------- | - | --------- | ----- | ------------ | - | ----- | ----- | 
|                |                   |   | March 31, |       | December 31,
|                |                   |   | 2003      |       | 2002        
|                |                   |   |           |       |             
|Raw materials   |                   | $ | 1,635     |       |              | $ | 1,585 |      
|Work in process |                   |   | 1,382     |       |              |   | 592   |      
|Finished goods  |                   |   | 539       |       |              |   | 329   |      
|                |                   |   |           |       |              |   |       |      
|                | Total inventories |   | $         | 3,556 |              |   | $     | 2,506 | 
|                |                   |   |           |       |              |   |       |      

5.     Property, Plant and Equipment

Property, plant and equipment consisted of the following:

|                                                                       |                                          |   |           |        |              |   |        |        | 
|---------------------------------------------------------------------- | ---------------------------------------- | - | --------- | ------ | ------------ | - | ------ | ------ | 
|                                                                       |                                          |   | March 31, |        | December 31,
|                                                                       |                                          |   | 2003      |        | 2002        
|                                                                       |                                          |   |           |        |             
|Machinery and equipment                                                |                                          | $ | 11,368    |        |              | $ | 11,002 |       
|Office and computer equipment, software, furnishings, and improvements |                                          |   | 2,746     |        |              |   | 2,465  |       
|Buildings                                                              |                                          |   | 10,587    |        |              |   | 11,084 |       
|Construction in process of machinery and equipment and plant           |                                          |   | 53        |        |              |   | 403    |       
|                                                                       |                                          |   |           |        |              |   |        |       
|                                                                       | Total                                    |   |           | 24,754 |              |   |        | 24,954 | 
|Accumulated depreciation                                               |                                          |   | (2,380    | )      |              |   | (1,449 | )     
|                                                                       |                                          |   |           |        |              |   |        |       
|                                                                       | Total property, plant and equipment, net |   | $         | 22,374 |              |   | $      | 23,505 | 
|                                                                       |                                          |   |           |        |              |   |        |       

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LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2003 and 2002
(in thousands, except per share data)
(unaudited)

Depreciation expense was approximately $970 and $304 for the three months
ended March 31, 2003 and 2002.

6.     Intangible Assets

Intangible assets consisted of the following:

|                                     |  |           |       |              |  |   |       |  
|------------------------------------ |  | --------- | ----- | ------------ |  | - | ----- | -
|                                     |  | March 31, |       | December 31,
|                                     |  | 2003      |       | 2002        
|                                     |  |           |       |             
|Purchased and licensed patent rights |  | $         | 481   |              |  | $ | 458   |  
|Internally developed patents         |  |           | 679   |              |  |   | 622   |  
|Trademarks                           |  |           | 66    |              |  |   | 56    |  
|                                     |  |           |       |              |  |   |       |  
|Total                                |  |           | 1,226 |              |  |   | 1,136 |  
|Accumulated amortization             |  |           | (371  | )            |  |   | (351  | )
|                                     |  |           |       |              |  |   |       |  
|Total intangible assets, net         |  | $         | 855   |              |  | $ | 785   |  
|                                     |  |           |       |              |  |   |       |  

Amortization expense was approximately $20 and $19 for the three months
ended March 31, 2003 and 2002. The estimated aggregate amortization expense
for each of the five succeeding years is as follows:

| |  |              |      |                                |  |   |    | 
| |  | ------------ | ---- | ------------------------------ |  | - | -- | 
| |  | December 31, |      | Aggregate Amortization Expense
| |  |              |      |                               
| |  |              | 2004 |                                |  | $ | 78 | 
| |  |              | 2005 |                                |  |   | 75 | 
| |  |              | 2006 |                                |  |   | 74 | 
| |  |              | 2007 |                                |  |   | 74 | 
| |  |              | 2008 |                                |  |   | 74 | 

7.     Product Warranty

Due to the lack of historical information for warranty expense related to
bulk alloy products, management estimates product warranties as a percentage of
bulk alloy product sales earned during the period. During the three months
ended March 31, 2003, the Company recorded $367 of warranty expense. The
product warranty accrual balance was included in accounts payable and accrued
expenses at December 31, 2002.

8.     Note Payable

On February 4, 2003, Liquidmetal Korea received 6,500,000 in South Korean
Won, or approximately $5,488, under a loan from Kookmin Bank of South Korea, as
evidenced by a note payable to Kookmin Bank. The principal and interest under
this note is payable in equal monthly installments beginning eighteen months
from the origination date until the maturity date on December 20, 2007. During
the first eighteen months from the origination date, interest is payable on a
monthly basis. The note payable bears interest at an annual rate of 7.1%. In
the event of delayed repayment, the interest increases to a maximum of 21%,
depending on the length of time the repayment is delayed. Since this note
payable is denominated in South Korea Won, the balance will fluctuate with the
exchange rate between the U.S. Dollar and the South Korean Won, resulting in
the recognition of foreign exchange gains or losses which are included in other
comprehensive loss. At March 31, 2003, the balance was $5,175
resulting in the recognition of a foreign exchange gain of $313 which is
included in the net foreign exchange loss of $940 in other
comprehensive loss during the three months ended March 31, 2003.

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LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2003 and 2002
(in thousands, except per share data)
(unaudited)

9.     Discontinued Operations

On April 30, 2002, management terminated the operations of the retail golf
segment by means of completing the liquidation of substantially all of the
retail golf assets and liabilities. The disposition of the retail golf
operations represented the disposal of a business segment. Accordingly, the
accompanying condensed consolidated financial statements reflect the retail
golf segment as a discontinued operation for all periods presented.

During the three months ended March 31, 2003, there was no change in the
estimate of expenses associated with the disposal of the discontinued retail
golf operations. During the three months ended March 31, 2002, the Company
recorded a net increase in the loss on disposal of $530, which was comprised of
$628 due to changes in the estimated operating losses offset by $98 from the
reversal of the accumulated foreign exchange gains after the liquidation of
Liquidmetal Golf (Europe) Limited. The $628 of operating losses was comprised
of $40 net reduction to accrued expenses, $368 related to inventory adjustments
and $300 due to a change in accrued warranty expenses.

At March 31, 2003, the net liabilities of the discontinued operations
consisted entirely of current liabilities. There were no assets associated
with discontinued retail golf operations at March 31, 2003.

10.     Stock Compensation Plan

On April 4, 2002, the Companys shareholders and board of directors
adopted the 2002 Incentive Equity Plan (2002 Equity Plan). The 2002 Equity
Plan authorizes for the grant of stock options to officers, employees,
consultants and directors of the Company and its subsidiaries. In addition, the
plan permits the granting of stock appreciation rights, with, or independently
of, options, as well as stock bonuses and rights to purchase restricted stock.
A total of 10,000,000 shares of our common stock may be granted under the 2002
Equity Plan. As of March 31, 2003, there are 357,420 options outstanding under
the 2002 Equity Plan. The stock options are exercisable over a period
determined by the Board of Directors or the Compensation Committee, but no
longer than 10 years.

Prior to the approval of the 2002 Equity Plan, options were primarily
granted under the Companys 1996 Stock Option Plan (1996 Company Plan). On
April 4, 2002, the Companys board of directors terminated the 1996 Company
Plan. The termination will not affect any outstanding options under the 1996
Company Plan and all such options will continue to remain outstanding and be
governed by the plan. No additional options may be granted under the 1996
Company Plan. As of March 31, 2003, there were 4,075,894 options outstanding
under the 1996 Company Plan.

On April 4, 2002, the Companys shareholders and board of directors
adopted the 2002 Non-employee Director Stock Option Plan (2002 Director
Plan). Only non-employee directors are eligible for grants under the 2002
Director Plan. A total of 1,000,000 shares of the Companys Common Stock may be
granted under the 2002 Director Plan. There are 270,000 options outstanding
under the 2002 Equity Plan as of March 31, 2003.

Additionally, the Company has 2,221,508 options outstanding at March 31,
2003 which were granted outside the 1996 Company Plan, 2002 Equity Plan and
2002 Director Plan.

The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants for the three months ended March
31, 2003 and 2002, respectively: expected volatility of 100% for all periods;
dividend yield of 0.0% for all periods; expected option life of approximately 5
years; and a risk-free interest rate ranging from 2.9% to 3.8%.

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LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2003 and 2002
(in thousands, except per share data)
(unaudited)

The following table summarizes the Companys stock option transactions for
the three months ended March 31, 2003:

|                                         |           |  |           |          |         |   |          |      | 
|---------------------------------------- | --------- |  | --------- | -------- | ------- | - | -------- | ---- | 
|                                         |           |  |           |          |         |   | Weighted
|                                         |           |  | Number of |          | Average
|                                         |           |  | Shares    |          | Price  
|                                         |           |  |           |          |        
|Options outstanding at December 31, 2002 |           |  | 8,182,348 |          |         | $ | 5.37     |     
|                                         | Granted   |  |           | 133,065  |         |   |          | 9.89 | 
|                                         | Exercised |  |           | (657,036 | )       |   |          | 1.60 | 
|                                         | Forfeited |  |           | (733,555 | )       |   |          | 2.15 | 
|                                         |           |  |           |          |         |   |          |     
|Options outstanding at March 31, 2003    |           |  | 6,924,822 |          |         | $ | 6.16     |     
|                                         |           |  |           |          |         |   |          |     

The following table summarizes the Companys stock option transactions for
the three months ended March 31, 2002:

|                                         |           |  |           |          |         |   |          |       | 
|---------------------------------------- | --------- |  | --------- | -------- | ------- | - | -------- | ----- | 
|                                         |           |  |           |          |         |   | Weighted
|                                         |           |  | Number of |          | Average
|                                         |           |  | Shares    |          | Price  
|                                         |           |  |           |          |        
|Options outstanding at December 31, 2001 |           |  | 8,166,703 |          |         | $ | 4.53     |      
|                                         | Granted   |  |           | 120,974  |         |   |          | 15.87 | 
|                                         | Exercised |  |           | (251,614 | )       |   |          | 1.73  | 
|                                         | Forfeited |  |           |         |         |   |          |      | 
|                                         |           |  |           |          |         |   |          |      
|Options outstanding at March 31, 2002    |           |  | 8,036,063 |          |         | $ | 4.78     |      
|                                         |           |  |           |          |         |   |          |      

The weighted average fair value of options granted during the three months
ended March 31, 2003 and 2002, was $7.63 and $12.25, respectively. There were
3,908,940 options with a weighted average exercise price of $4.69 exercisable
at March 31, 2003 and 3,792,078 options with a weighted average exercise price
of $3.79 exercisable at March 31, 2002.

Included in the above tables are certain options granted where their
exercise prices were below the fair market value of the common stock at the
measurement date (in-the-money). In-the-money options of 569,249 with a
weighted average fair value of $4.67 were outstanding at March 31, 2003 and
1,246,670 options with a weighted average fair value of $4.56 were outstanding
at March 31, 2002.

The following table summarizes the Companys stock options outstanding and
exercisable by ranges of option prices as of March 31, 2003:

|                    |  |                     |           |                    |  |                  |     |             |  |              |       |          |  |  |           |  |  |   |       | 
|------------------- |  | ------------------- | --------- | ------------------ |  | ---------------- | --- | ----------- |  | ------------ | ----- | -------- |  |  | --------- |  |  | - | ----- | 
|Options Outstanding |  | Options Exercisable
|                    |  |                    
|                    |  |                     |           |                    |  | Weighted Average |     | Weighted    |  | Number of    |       | Weighted
|Range of            |  | Number of options   |           | Remaining Contract |  | Average          |     | Options     |  | Average     
|Option Price        |  | Outstanding         |           | Life (Years)       |  | Option Price     |     | Exercisable |  | Option Price
|                    |  |                     |           |                    |  |                  |     |             |  |             
|$0.00 - $1.55       |  |                     | 376,345   |                    |  |                  | 7.8 |             |  | $            | 1.16  |          |  |  | 376,345   |  |  | $ | 1.16  | 
|$1.56 - $3.10       |  |                     | 543,098   |                    |  |                  | 6.0 |             |  |              | 2.54  |          |  |  | 526,968   |  |  |   | 2.54  | 
|$3.11 - $4.65       |  |                     | 2,261,299 |                    |  |                  | 7.8 |             |  |              | 4.65  |          |  |  | 1,956,131 |  |  |   | 4.65  | 
|$4.66 - $6.20       |  |                     | 2,691,294 |                    |  |                  | 8.1 |             |  |              | 6.20  |          |  |  | 899,250   |  |  |   | 6.20  | 
|$6.21 - $7.75       |  |                     | 7,540     |                    |  |                  | 9.5 |             |  |              | 7.44  |          |  |  |          |  |  |   |      | 
|$7.76 - $9.30       |  |                     | 28,541    |                    |  |                  | 8.9 |             |  |              | 9.06  |          |  |  | 3,226     |  |  |   | 9.30  | 
|$9.31 - $10.85      |  |                     | 233,065   |                    |  |                  | 9.7 |             |  |              | 10.35 |          |  |  |          |  |  |   |      | 
|$10.86 - $12.40     |  |                     | 339,877   |                    |  |                  | 8.4 |             |  |              | 12.40 |          |  |  | 133,151   |  |  |   | 12.40 | 
|$12.41 - $15.50     |  |                     | 443,763   |                    |  |                  | 9.0 |             |  |              | 15.04 |          |  |  | 13,869    |  |  |   | 15.00 | 
|                    |  |                     |           |                    |  |                  |     |             |  |              |       |          |  |  |           |  |  |   |       | 
|                    |  |                     | 6,924,822 |                    |  |                  | 8.0 |             |  | $            | 6.16  |          |  |  | 3,908,940 |  |  | $ | 4.69  | 
|                    |  |                     |           |                    |  |                  |     |             |  |              |       |          |  |  |           |  |  |   |       | 

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LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2003 and 2002
(in thousands, except per share data)
(unaudited)

11.     Segment Reporting and Major Customers

SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information,requires companies to provide certain information about their
operating segments. In April 2002, the Company began classifying operations
into two reportable segments: Liquidmetal alloy industrial coatings and bulk
Liquidmetal alloys. The Liquidmetal alloy industrial coatings are used
primarily as a protective coating for industrial machinery and equipment, such
as drill pipe used by the oil drilling industry and boiler tubes used by coal
burning power plants. Bulk Liquidmetal alloys include market opportunities to
manufacture and sell casing components for electronic devices, medical devices,
sporting goods, tooling, prototype sampling, defense applications and metal processing equipment. Primarily, the expenses incurred by the bulk
Liquidmetal alloy segment are research and development costs and selling
expenses associated with identifying and developing market opportunities.
Bulk Liquidmetal alloys products can be distinguished from Liquidmetal alloy
coatings in that the bulk Liquidmetal alloy can have significant thickness, up
to approximately one inch, which allows for their use in a wider variety of
applications other than a thin protective coating applied to machinery and
equipment. Revenue and expenses associated with research and development
services are included in the bulk Liquidmetal alloy segment. The accounting
policies of the reportable segments are the same as those described in Note 2
to the consolidated financial statements included in the Companys Form 10-K
filed with the Securities and Exchange Commission on March 31, 2003.

Summarized financial information concerning the Companys reportable
segments is shown in the following tables:

|                                   |                                                                                      |  |   |          |   |            |   |        |   |  |   |         |   | 
|---------------------------------- | ------------------------------------------------------------------------------------ |  | - | -------- | - | ---------- | - | ------ | - |  | - | ------- | - | 
|                                   |                                                                                      |  |   |          |   |            |   |        |   |  |   | Segment
|                                   |                                                                                      |  |   | Coatings |   | Bulk Alloy |   | Totals
|                                   |                                                                                      |  |   |          |   |            |   |       
|Three months ended March 31, 2003: |                                                                                      |  |   |          |   |            |   |        |   |  |   |        
|                                   | Revenue to external customers                                                        |  | $ | 772      |   |            | $ | 5,787  |   |  | $ | 6,559   |  
|                                   | Gross profit (loss)                                                                  |  |   | 379      |   |            |   | 2,297  |   |  |   | 2,676   |  
|                                   | Income (loss) before minority interest,
interest expense and discontinued
operations |  |   | (126     | ) |            |   | (2,443 | ) |  |   | (2,569  | )
|                                   | Total identifiable assets at end of period                                           |  |   | 1,621    |   |            |   | 33,478 |   |  |   | 35,099  |  
|Three months ended March 31, 2002: |                                                                                      |  |   |          |   |            |   |        |   |  |   |        
|                                   | Revenue to external customers                                                        |  | $ | 1,292    |   |            | $ | 171    |   |  | $ | 1,463   |  
|                                   | Gross profit (loss)                                                                  |  |   | 612      |   |            |   | 169    |   |  |   | 781     |  
|                                   | Income (loss) before minority interest,
interest expense and discontinued
operations |  |   | 463      |   |            |   | (2,955 | ) |  |   | (2,492  | )

Reconciling information between reportable segments and the Companys
consolidated totals is shown in the following table:

|                                                                                          |                                                             |   |                      |        |      |   |        |        |  
|----------------------------------------------------------------------------------------- | ----------------------------------------------------------- | - | -------------------- | ------ | ---- | - | ------ | ------ | -
|                                                                                          |                                                             |   | For the Three Months
|                                                                                          |                                                             |   | Ended March 31,     
|                                                                                          |                                                             |   |                     
|                                                                                          |                                                             |   | 2003                 |        | 2002
|                                                                                          |                                                             |   |                      |        |     
|Total segment loss before minority interest, interest expense
and discontinued operations |                                                             | $ | (2,569               | )      |      | $ | (2,492 | )     
|                                                                                          | General and administrative expenses                         |   |                      | (3,300 | )    |   |        | (1,692 | )
|                                                                                          |                                                             |   |                      |        |      |   |        |       
|Consolidated loss before interest expense, minority interest and
discontinued operations  |                                                             |   | (5,869               | )      |      |   | (4,184 | )     
|                                                                                          | Interest expense                                            |   |                      | (63    | )    |   |        | (312   | )
|                                                                                          | Interest income                                             |   |                      | 131    |      |   |        |       |  
|                                                                                          | Minority interest in income of consolidated subsidiary      |   |                      | (7     | )    |   |        |       |  
|                                                                                          | Gain from disposal of discontinued retail golf segment, net |   |                      |       |      |   |        | 530    |  
|                                                                                          |                                                             |   |                      |        |      |   |        |       
|CONSOLIDATED NET LOSS                                                                     |                                                             | $ | (5,808               | )      |      | $ | (5,026 | )     
|                                                                                          |                                                             |   |                      |        |      |   |        |       

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LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2003 and 2002
(in thousands, except per share data)
(unaudited)

Excluded general and administrative expenses are attributable to the
Companys corporate headquarters. These expenses primarily include corporate
salaries, consulting, professional fees and facility costs. Research and
development expenses are included in the operating costs of the segment that
performed the research and development.

Reconciling information between reportable segments and the Companys
consolidated totals is shown in the following table:

|                          |                                           |   |           |        | 
|------------------------- | ----------------------------------------- | - | --------- | ------ | 
|                          |                                           |   | March 31,
|                          |                                           |   | 2003     
|                          |                                           |   |          
|Total segment assets      |                                           | $ | 35,099    |       
|                          | Cash and cash equivalents                 |   |           | 16,760 | 
|                          | Marketable securities held-for-sale       |   |           | 1,927  | 
|                          | Prepaid expenses and other current assets |   |           | 592    | 
|                          | Other property, plant and equipment       |   |           | 1,781  | 
|                          | Intangibles, net                          |   |           | 855    | 
|                          | Other assets                              |   |           | 58     | 
|                          |                                           |   |           |       
|Total consolidated assets |                                           | $ | 57,072    |       
|                          |                                           |   |           |       

Assets excluded from segment assets include assets attributable to the
Companys corporate headquarters. The largest asset represents the Companys
cash balances, primarily generated from the Companys stock offering and
proceeds from the Kookmin loan (See note 8).

12.     Income Taxes

The provision for income tax benefit (expense) for the three months ended
March 31, 2002 and 2002, respectively, is calculated, when applicable, through
the use of an estimated annual income tax rate based on projected annualized
income (loss). The Company estimated an effective tax rate of 0% during the
three months ended March 31, 2003 and 2002, respectively, based on the
Companys reported losses.

13.     Income (Loss) Per Common Share

Basic 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.

|                               |               |  |                 |   |      |  |            |   | 
|------------------------------ | ------------- |  | --------------- | - | ---- |  | ---------- | - | 
|                               |               |  | Three Months   
|                               |               |  | Ended March 31,
|                               |               |  |                
|                               |               |  | 2003            |   | 2002
|                               |               |  |                 |   |     
|Weighted average basic shares  |               |  | 41,229,476      |   |      |  | 35,079,644 |  
|Effect of dilutive securities: |               |  |                 |   |      |  |            |  
|                               | Stock options |  |                 |  |      |  |            |  | 
|                               | Warrants      |  |                 |  |      |  |            |  | 
|                               |               |  |                 |   |      |  |            |  
|Diluted shares                 |               |  | 41,229,476      |   |      |  | 35,079,644 |  
|                               |               |  |                 |   |      |  |            |  

The effect of outstanding options and warrants to purchase common stock
was excluded in the periods presented because the inclusion would have been
antidilutive.

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LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2003 and 2002
(in thousands, except per share data)
(unaudited)

14.     Commitments

The Company is a party to a distribution agreement whereby it granted to a
third party exclusive rights to market and sell golf products incorporating
Liquidmetal technology to certain Japanese sporting equipment companies. The
third party paid the Company a $1.0 million distribution fee as part of this
agreement, of which a portion was refundable according to a formula based on
the gross profit earned by the third party. The remaining unearned
distribution fee of $830 has not been refunded as of March 31, 2003. On March
28, 2003, the distribution agreement was terminated and the Company entered
into a new agreement to pay to the same third party a commission on the net
sales price of all Liquidmetal golf equipment that is shipped by the Company or
its affiliates to Japanese golf companies for sale into the Japanese
end-market. This commission will apply to golf equipment shipped by the
Company or its affiliates during the period beginning on March 28, 2003 and
ending on March 28, 2006. If by March 28, 2006, the Company has not paid $350
in commission payments, the balance between commissions paid and $350 will be
paid by April 30, 2006 thereby guaranteeing the third party a $350 minimum
payment during the term of the agreement. The Company will recognize the
unearned distribution fee of $830 as revenue proportionately with the payment
of commissions under the new agreement.

On December 20, 2002, the Company entered into an agreement with a
third-party supplier to purchase raw materials for a total of $3,488 during
2003.

The Company is from time to time a party to certain legal proceedings
arising in the ordinary course of business. Although outcomes cannot be
predicted with certainty, the Company does not believe that any legal
proceedings to which it is a party will have a material adverse effect on the
Companys financial position, results of operations, and cash flows.

15.     Related Party Transactions

On July 29, 2002, the Company invested $2,000 in Growell Metal, Inc.
(Growell Metal), a metals processing company located in South Korea and
publicly traded on South Koreas KOSDAQ stock market. The Company acquired
891,100 shares (or approximately 5%) of Growell Metals outstanding common
stock in this transaction. During the fourth quarter of 2002, Growell Metals
spin-off of its electronics division resulted in the creation of a new company
named Growell Electronics Inc (Growell Electronics). As a result of the
spin-off, 30% of the Companys 891,100 common shares of Growell Metal were
exchanged for an equal number of shares in the common stock of Growell
Electronics. During the year ended December 31, 2002, the Company sold its
shares in Growell Electronics for approximately $1,432, resulting in a realized
gain of $832. For the three months ended March 31, 2003, the change in fair
value of the remaining investment in Growell Metal resulted in an unrealized
loss of $1,141, which is reported as other comprehensive loss in the
accompanying condensed consolidated statement of operations. At March 31,
2003, the cumulative unrealized gain in the fair value of the remaining
investment was $527, which is included in the accumulated
comprehensive (loss) income
in the accompanying condensed consolidated balance sheet. Subsequent to
March 31, 2003, the Company sold its remaining shares in Growell Metal for approximately
$2,578, resulting in a realized gain of approximately $1,178. Currently,
Growell Metal holds 92,167 shares (or approximately 0.2%) of the Companys
outstanding common stock.

Under the terms of a supply agreement, the Company has engaged Growell
Metal to produce Liquidmetal alloy ingots (ingots) for the Company to
purchase and use as a raw material in the manufacturing of products and
components made of Liquidmetal alloys. The agreement is for a five-year period
beginning in June 2002. Under the terms of this cost-plus arrangement,
Growell Metal is paid a processing fee plus the cost of the raw materials used
to produce the ingots. During the three months ended March 31, 2003, Growell
Metal purchased $1,402 of raw materials from the Companys own raw material
stock to use in the production of the ingots. The Company purchased $1,534 of
ingots from Growell Metal during the three months ended
March 31, 2003. The
net profit on the sale of the raw materials sold to Growell Metal is netted

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LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2003 and 2002
(in thousands, except per share data)
(unaudited)

against the cost of the ingots purchased from Growell Metal. At March 31,
2003, the Company had a net payable to Growell Metal of $215 related to these
transactions.

During the first
quarter of 2003, the Company sold $2,544 of casting equipment to Growell Metal
for use in the processing of bulk Liquidmetal alloy products. As part of a
five-year strategic agreement finalized in March 2003. Growell Metal has the
right to manufacture and market an exclusive line of automotive parts made from
Liquidmetal alloys for customers in South Korea. The Company will receive
royalty payments from the sale of Liquidmetal alloy parts produced and sold by
Growell. At March 31, 2003, the Company had a receivable from Growell Metal of
$2,500 related to the sale of this equipment.

During the year ended December 31, 2002, the Company sold $1,569 of furnace
equipment to Growell Metal to produce ingots for the Company. The accumulated
profit on these sales, $80, was deferred and will be amortized against cost of
sales over the remaining term of the technology transfer agreement between Growell Metal and
the Company. The agreement is for a two-year period beginning in
February 2002. At March 31, 2003, the remaining deferred profit was $44. During
the three months ended March 31, 2003, the Company sold $3 of products and
services to Growell Metal related to the maintenance of this furnace equipment.
At March 31, 2003, the Company had a receivable from Growell Metal of $148
related to the sale of this equipment to Growell Metal.

A company managed and partially owned by one of the Companys directors
provides technical support services and computer equipment to the Company.
During the three months ended March 31, 2003 and 2002, the Company incurred $12
and $53, respectively, of expenses and equipment purchases related to this
arrangement. At March 31, 2003 and December 31, 2002, the Company had a
payable related to these transactions of $12 and $7, respectively.

The Company is a party to a license agreement with California Institute of
Technology (Caltech) under which the Company exclusively licenses from Caltech
certain inventions and technology relating to amorphous alloys. Professor
William Johnson, the Vice Chairman of the Companys board of directors, is a
professor at Caltech, and substantially all of the amorphous alloy technology
licensed to the Company under the Caltech license agreement was developed in
Professor Johnsons Caltech laboratory. During each of the three months ended
March 31, 2003 and 2002, the Company paid $50 to Caltech representing the
second and final installments on the $150 aggregate fees related to this
agreement. Additionally, the Company reimburses Caltech for laboratory
expenses incurred by Professor Johnsons Caltech laboratory, which during the
three months ended March 31, 2003, amounted to $22 in reimbursements.

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INDEPENDENT ACCOUNTANTS REPORT

To the Board of Directors and Shareholders of
Liquidmetal Technologies:

We have reviewed the accompanying condensed consolidated balance sheet of
Liquidmetal Technologies and subsidiaries (the Company) as of March 31, 2003,
the related condensed consolidated statements of operations and comprehensive
loss for the three-month periods ended March 31, 2003 and 2002, of
shareholders equity for the three months ended March 31, 2003, and of cash
flows for the three months ended March 31, 2003 and 2002. These financial
statements are the responsibility of the Companys management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with auditing standards generally accepted in the United States
of America, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express such
an opinion.

Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States
of America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of
Liquidmetal Technologies and subsidiaries as of December 31, 2002, and the
related consolidated statements of operations and comprehensive loss,
shareholders equity, and cash flows for the year then ended (not presented
herein) and in our report dated February 4, 2003, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 2002 is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.

DELOITTE & TOUCHE LLP
Certified Public Accountants

Tampa, Florida
April 16, 2003

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Item 2.     Managements Discussion and Analysis of Financial Condition and Results of Operations

Liquidmetal Technologies and Subsidiaries
Managements Discussion and Analysis of Financial Condition
And Results of Operations

This managements discussion and analysis should be read in conjunction
with the condensed consolidated financial statements and notes included
elsewhere in this report on Form 10-Q.

This managements discussion and analysis, as well as other sections of
this report on Form 10-Q, may contain forward-looking statements that involve
risks and uncertainties, including statements regarding our plans, future
events, objectives, expectations, forecasts, or assumptions. Any statement that
is not a statement of historical fact is a forward-looking statement, and in
some cases, words such as believe, estimate,  project, expect,
intend, may, anticipate, plans, seeks, and similar expressions
identify forward-looking statements. These statements involve risks and
uncertainties that could cause actual outcomes and results to differ materially
from the anticipated outcomes or results, and undue reliance should not be
placed on these statements. These risks and uncertainties include, but are not
limited to, the matters discussed under the caption Factors Affecting Future
Results in our Annual Report on Form 10-K for the fiscal year ended December
31, 2003 and other risks and uncertainties discussed in filings made with the
Securities and Exchange Commission (including risks described in subsequent
reports on Form 10-Q, Form 10-K, Form 8-K, and other filings). Liquidmetal
Technologies disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise.

OVERVIEW

We are a materials technology company that develops, manufactures, and
markets products made from amorphous alloys. Our Liquidmetal® family of alloys
consists of a variety of coatings, powders, bulk alloys, and composites that
utilize the advantages offered by amorphous alloy technology. We develop,
manufacture, and sell products and components from bulk amorphous alloys that
are incorporated into the finished goods of our customers, and we also market
and sell amorphous alloy industrial coatings. We have the exclusive right to
develop, manufacture, and sell what we believe are the only commercially viable
bulk amorphous alloys.

Amorphous alloys are 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 ordinary metals and alloys when
they solidify. Liquidmetal alloys possess a combination of performance,
processing, and cost advantages that we believe makes them preferable to other
materials in a variety of applications. The amorphous atomic structure of our
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. For example, our zirconium-titanium Liquidmetal
alloys are approximately 250% stronger than commonly used titanium alloys, such
as Ti-6Al-4V, but they have processing characteristics similar in many respects
to plastics. We believe these advantages will result in Liquidmetal alloys
supplanting plastics, high-performance alloys, and other incumbent materials in
a wide variety of applications. Moreover, we believe these advantages will
enable the introduction of entirely new products and applications that are not
possible or commercially viable with other materials.

Our revenues are derived from two principal operating segments:
Liquidmetal alloy coatings and bulk Liquidmetal alloy products. Liquidmetal
alloy coatings are used primarily as a protective coating for industrial
machinery and equipment, such as drill pipe used by the oil drilling industry
and boiler tubes used in coal-burning power plants. The historical operating
information for the three months ended March 31, 2002 contained in this section
is based substantially on sales of Liquidmetal alloy coatings; however, this is
a diminishing percentage of our business. In the second half of 2002, we began
producing bulk Liquidmetal alloy components and products for incorporation into
our customers finished goods. Bulk Liquidmetal alloy revenue includes sales
of: parts or components of electronic devices, medical products, sports and
leisure goods; tooling and prototype parts for customers with products in
development; metals processing equipment; and research and development
revenue relating primarily to defense and medical applications. We have been
focusing our initial commercialization efforts for bulk Liquidmetal alloys
primarily on applications for products with high unit volumes that are

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sold in major industries. We expect that these new sources of revenue will
continue to significantly change the size and character of our revenue mix.

The cost of sales for our Liquidmetal coatings consists primarily of the
costs of outsourcing our manufacturing to third parties. We expect that our
cost of sales should increase from historical results as we further
build our bulk Liquidmetal alloy business. Although we plan to continue
outsourcing the manufacturing of our coatings, we will internally manufacture
many products derived from our bulk Liquidmetal alloys and could
require continued capital expenses as we expand our manufacturing capabilities.

Selling, general, and administrative expenses currently consist primarily
of marketing and advertising, salaries and related benefits, stock-based
compensation, professional fees, administrative expenses, and other expenses
related to our operations.

Research and development expenses represent salaries, related benefits
expense, stock-based compensation, expenses incurred for the design and testing
of new processing methods, and other expenses related to the research and
development of Liquidmetal alloys. Costs associated with research and
development activities are expensed as incurred. We plan to enhance our
competitive position by improving our existing technologies and developing
advances in amorphous alloy technologies. We believe that our research and
development efforts will focus on the discovery of new alloy compositions, the
development of improved processing technology, and the identification of new
applications for our alloys.

Our historical operations, prior to 2002, included
our coatings business and our retail golf operation conducted through our
majority owned Liquidmetal Golf subsidiary. On September 29, 2001, our board of
directors and the board of directors of Liquidmetal Golf voted to discontinue
the retail golf operations of Liquidmetal Golf in order to conform our
operations to our business strategy. Pursuant to Accounting Principles Board
Opinion No. 30, Reporting the Results of Operations  Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions, we reclassified our
consolidated financial statements to reflect the discontinuation of Liquidmetal
Golfs retail golf operations. The revenue, costs and expenses, assets and
liabilities, and cash flows of the retail golf business were segregated in our
Consolidated Balance Sheets, Consolidated Statements of Operations and
Comprehensive Loss, and Consolidated Statements of Cash Flows. The net
operating results, net assets, and net cash flows of the retail golf business
were reported as discontinued operations in our annual consolidated financial
statements and in the condensed consolidated financial statements included in this report
on Form 10-Q. On April 30, 2002, management terminated the operations of the
retail golf segment by means of completing the liquidation of the retail golf
assets and liabilities.

The following discussion and analysis of our financial condition and
results of operations focuses on the historical results of our continuing
operations.

Results of Operations

Comparison of the three months ended March 31, 2003 and 2002

Revenue. Revenue increased $5.1 million to $6.6 million in the three
months ended March 31, 2003 from $1.5 million in the three months ended March
31, 2002. The increase was due to the $5.6 million increase in revenue earned
by our bulk Liquidmetal alloys segment in the three months ended March 31,
2003. This increase in our bulk Liquidmetal alloys business revenue consisted
of a revenue increase of $2.9 million from the sale of metal
processing equipment primarily for use in the processing of bulk Liquidmetal alloy products, an
increase of $1.3 million from research and development services related
primarily to defense and medical applications, and an increase of $1.4 million
from the sales and prototyping of parts manufactured from bulk Liquidmetal
alloys. The increase in revenue earned by our bulk Liquidmetal alloy segment
revenue was offset slightly by a decrease of $0.5 million in the revenue earned
by our coatings business as compared to the three months ended March 31, 2002.

Cost of Sales. Cost of sales increased to $3.9 million, or 59% of revenue,
in the three months ended March 31, 2003 from $0.7 million, or 47% of revenue,
in the three months ended March 31, 2002. This increase was primarily a result
of the bulk Liquidmetal alloy business contributing a larger percentage of our
revenue than the coating business in the three months ended March 31, 2002. As
expected, cost of sales as a percentage of revenue has continued to increase as
our

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revenue mix as shifted more toward the bulk alloy business, although we believe that
anticipated higher manufacturing volumes and an expected greater mix of
higher-margin products in the future will cause the gross profit to improve
over time. The cost to manufacture parts from our bulk Liquidmetal alloys is
variable and differs based on the unique design of each product. The effect of
the sale of lower-margin products during the three months ended March 31, 2003
was partially offset by higher margins from equipment sales and research and
development revenues included in the bulk Liquidmetal alloy business. However,
the cost of sales for the products sold by the coatings business segment is
generally consistent because the Liquidmetal coatings products are produced by
third parties and sold wholesale to various industries.

Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased to $4.5 million, or 69% of revenue, in the
three months ended March 31, 2003 from $2.3 million, or 155% of revenue, in the
three months ended March 31, 2002. This increase was primarily a result of
increased wages of $0.6 million; increased professional fees, consultant fees,
and contract services of $0.6 million; increased insurance expense of $0.2
million; increased travel expenses of $0.2 million; increased property rent of
$0.2 million; increased product warranty expense of $0.2 million; increased bad
debt expense of $0.1 million; and increased depreciation expense of $0.1 in the
three months ended March 31, 2003. These and other increases in selling,
general and administrative expenses represent the continued additions to our
corporate infrastructure required to prepare for and support the anticipated
growth of our bulk Liquidmetal alloy business.

Research and Development Expenses. Research and development expenses
increased to $4.0 million, or 62% of revenue, in the three months ended March
31, 2003 from $2.7 million, or 184% of revenue, in the three months ended March
31, 2002. This increase was partially a result of expenses related to the
continued research and development of new Liquidmetal alloys and related
processing capabilities, including the hiring of additional research employees,
developing new manufacturing techniques, and contracting with consultants and
providing research grants to various institutions to advance the development of
Liquidmetal alloys. Salaries and wages increased $1.5 million, professional
fees, consultant fees, and contract services increased $0.3 million, research
grants to institutions increased $0.2 million, laboratory and prototyping
expenses increased $0.3 million, and depreciation expense increased $0.4
million. These increased expenses were partially offset by a decrease in
stock-based compensation expense of $1.4 million.

Interest Expense. Interest expense was $0.1 million, or 1% of revenue, in
the three months ended March 31, 2003 and was $0.3 million, or 21% of revenue,
in the three months ended March 31, 2002. During the three months ended March
31, 2003, the interest expense was primarily due to the interest accrued on the
Kookmin Bank loan funded on February 4, 2003. During the three months ended
March 31, 2002, the interest expense was primarily due to the amortization of
the fair value of warrants granted in connection with subordinated promissory
notes we issued in February 2001.

Interest Income.Interest income was $0.1 million, or 2% of revenue, in
the three months ended March 31, 2003 due to interest earned on short-term,
investment grade, interest-bearing securities. During the three months ended
March 31, 2002, we did not own interest-earning investments.

LIQUIDITY AND CAPITAL RESOURCES

Our operating activities, including our discontinued retail golf
operations, used cash of $11.7 million for the three months ended March 31,
2003 and $3.4 million for the three months ended March 31, 2002. Cash used in
operating activities for the three months ended March 31, 2003 resulted from
net cash used by discontinued operations of $1.0 million and net cash used by
continuing operations of $10.7 million. Cash used in operating activities for
the three months ended March 31, 2002 resulted from net cash used by
discontinued operations of $1.2 million and net cash used by continuing
operations of $2.1 million. We had working capital of $25.1 million as of March
31, 2003. Cash used by continuing operations in the three months ended March
31, 2003 resulted primarily from operating losses from continuing operations of
$5.8 million and a decrease in accounts payable and accrued liabilities of $5.0
million.

Our investing activities used cash of $1.8 million for the three months
ended March 31, 2003 for the acquisition of property and equipment of $1.7
million and investment in patents and trademarks of $0.1 million.

Our financing activities provided $6.3 million in cash for the three
months ended March 31, 2003, which consists $5.5 million in proceeds from
borrowings from Kookmin bank and $0.8 million in proceeds from stock options
exercised.

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We currently anticipate substantially lower capital expenditures for at
least the next 12 months, given the completion of construction and purchase of
manufacturing equipment for our plant in Pyongtaek, South Korea. We anticipate
that our capital expenditures will be approximately $3.0 to $5.0 million in
2003 for any additional equipment requirements and for the acquisition of
furniture, fixtures, and other business equipment. This amount is subject to
change, however, depending upon the nature and the amount of the orders that we
actually receive from customers.

Our capital requirements during the next 12 months will depend on numerous
factors, including the success of our existing products, the development of new
applications for Liquidmetal alloys, and the resources we devote to develop and
support our Liquidmetal alloy products. During the next 12 months, we expect to
continue to devote capital to our research and development activities, to
further develop and strengthen our manufacturing capabilities, and for working
capital and other general corporate purposes. These expenses and capital
expenditures will consume a material amount of our cash resources, including a
portion of the net proceeds of our initial public offering. Our liquidity is
not dependent upon the use of off-balance sheet financing arrangements, such as
securitization of receivables or obtaining access to assets through special
purpose entities.

We intend to continue to develop our manufacturing resources and
capabilities. Additionally, we anticipate growth in our working capital
requirements from our expanding bulk Liquidmetal alloy business. However, the
amount of these requirements will depend on the nature and amount of orders we
receive for the purchase of our bulk Liquidmetal alloy products.

We believe that our current cash and cash equivalents, together with
anticipated cash flow from our operations, will be sufficient to fund our
working capital and capital expenditure requirements for at least the next 12
months. However, our future capital needs will be dependent to a significant
extent on our ability to generate cash flow from operations. Our projections of
cash flows from operations and, consequently, future cash needs are subject to
uncertainty. If our available funds and cash generated from operations are
insufficient to satisfy our liquidity requirements, we may need to raise
additional capital to fund our working capital or capital expenditure
requirements. We cannot be certain that additional capital, whether through
selling additional debt or equity securities or obtaining a line of credit or
other loan, will be available to us or, if available, will be on terms
acceptable to us. If we issue additional securities to raise funds, these
securities may have rights, preferences, or privileges senior to those of the
rights of our common stock and our stockholders may experience additional
dilution.

We are a party to a distribution agreement whereby we granted to a third
party exclusive rights to market and sell golf products incorporating
Liquidmetal technology to certain Japanese sporting equipment companies. The
third party paid us a $1.0 million distribution fee as part of this agreement,
of which a portion was refundable according to a formula based on the gross
profit earned by the third party. The remaining unearned distribution fee of
$0.8 million has not been refunded as of March 31, 2003, and we do not believe
the third party is entitled to a refund. On March 28, 2003, the distribution
agreement was terminated and we entered into a new agreement to pay to the same
third party a commission on the net sales price of all Liquidmetal golf
equipment that is shipped by our company or its affiliates to Japanese golf
companies for sale into the Japanese end-market. This commission will apply to
golf equipment shipped by our company or its affiliates during the period
beginning on March 28, 2003 and ending on March 28,2006. If by March 28, 2006,
we have not paid $0.4 million in commission payments, the balance between
commissions paid and $0.4 million will be paid by April 30, 2006, thereby
guaranteeing the third party a $0.4 million minimum payment during the term of
the agreement. We will recognize the unearned distribution fee of $0.8
million as revenue proportionately with the payment of commissions under the
letter agreement.

USE OF PROCEEDS

Pursuant to our Registration Statement on Form S-1 (Registration No.
333-73716), as amended, initially filed with the Securities and Exchange
Commission on November 20, 2001 and declared effective May 21, 2002, we closed
an initial public offering of 5,000,000 shares of common stock on May 28, 2002,
plus an additional 229,000 shares on June 10, 2002 pursuant to an overallotment
option, at a price of $15.00 per share (which sale is referred to herein as the
Offering). The Offering generated aggregate cash proceeds during the second
quarter 2002 of $78.4 million. The net proceeds were $70.7 million after
deducting underwriting commissions of $5.5 million and other transaction fees
of $2.2 million. The

22



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managing underwriters for the Offering were Merrill Lynch
& Co., UBS Warburg, and Robert W. Baird & Co.

As of March 31,
2003, we had used approximately $60.7 million of net
proceeds from the Offering. We used approximately $7.8 million of the net
proceeds from the Offering to repay all outstanding promissory notes and
accrued interest, $11.1 million to fund the construction of our manufacturing
facility in South Korea, $13.0 million to purchase equipment used to
manufacture Liquidmetal parts, $0.4 million to purchase assets related to
production and sale of equipment used in the production process of liquidmetal
alloy products, and $0.3 million to purchase the 51% interest in our majority
owned Dongyang subsidiary. During the third quarter of 2002, we used $2.0
million to invest in the common stock of Growell Metal, which will supply a
portion of the Liquidmetal alloy ingots used in our manufacturing operations in
Korea. As of December 31, 2002, we used approximately $24.0 million of the net
proceeds for working capital, excluding $2.1 million paid to Paul Azinger for
amounts due under the terms of his endorsement agreement. We have invested the
remaining net proceeds of this offering in short-term, investment grade,
interest-bearing securities. We intend to use the remaining net proceeds of the
offering for working capital purposes. Additionally, management may determine
to fund all or a portion of the costs of any acquisitions of complementary
businesses we determine to pursue in the future with proceeds from the
Offering, although there are no assurances that we will be able to successfully
identify or consummate any such acquisitions.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires us to
make estimates and assumptions that affect reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. These estimates and assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances. Actual results could differ materially from
these estimates under different assumptions or conditions.

We believe that the following accounting policies are the most critical to
our consolidated financial statements since these policies require significant
judgment or involve complex estimates that are important to the portrayal of
our financial condition and operating results:



| |  |  | Our earnings and cash flows are subject to fluctuations due to changes
in non-U.S. currency exchange rates. We are exposed to non-U.S.
exchange rate fluctuations as the financial results of non-U.S.
subsidiaries are translated into U.S. dollars. As exchange rates vary,
those results, when translated, may vary from expectations and
adversely impact overall expected profitability. The cumulative
translation effects for subsidiaries using functional currencies other
than the U.S. dollar are included in accumulated foreign exchange
translation in shareholders equity. Movements in non-U.S. currency
exchange rates may affect our competitive position, as exchange rate
changes may affect business practices and/or pricing strategies of
non-U.S. based competitors.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | We record an accrual for potential product warranty costs. Due to the
lack of historical information for warranty expense related to bulk
alloy products, management estimates product warranties as a
percentage of bulk alloy product sales earned during the period. In
the event in future periods the actual product warranty costs
consistently exceed the estimate for product warranty costs, an
adjustment would be made and income would decrease in the period of
such determination. Likewise, in the event we determine that actual
product warranty costs would be consistently lower than the estimate
for product warranty costs, an adjustment would be made and income
would increase in the period of such determination.                                                 
|
| |  |  | We record an allowance for doubtful accounts as a contra-asset to our
trade receivables for potential uncollectible accounts. Management
estimates the amount of potentially uncollectible accounts by
reviewing significantly past due customer balances relative to
historical information available for those customers. In the event, in
future periods, actual uncollectible accounts exceed the estimate for
uncollectible accounts, an adjustment would be made and income would
decrease in the period of such determination. Likewise, in the event,
in future periods, actual uncollectible accounts are lower than the
estimate for uncollectible accounts, an adjustment would be made and
income would increase in the period of such determination.                            

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| |  |  | We value inventory at lower of cost or net realizable value.
Management has determined net realizable value to be equal to the
selling price of the products to be produced and sold. In the event,
in future periods, the actual selling prices exceed the estimate for
selling prices, an adjustment would be made and income would increase
in the period of such determination. Likewise, in the event, in future
periods, actual selling prices are lower than the estimate for selling
prices, an adjustment would be made and income would decrease in the
period of such determination.                                       
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | We record valuation allowances to reduce the deferred tax assets to
the amounts estimated to be recognized. While we consider taxable
income in assessing the need for a valuation allowance, in the event
we determine we would be able to realize our deferred tax assets in
the future in excess of the net recorded amount, an adjustment would
be made and income increased in the period of such determination.
Likewise, in the event we determine we would not be able to realize
all or part of our deferred tax assets in the future, an adjustment
would be made and charged to income in the period of such
determination.

NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for
Asset Retirement Obligations.SFAS No. 143 requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which such liabilities are incurred if a reasonable estimate of fair value can
be made. The associated asset retirement costs should be capitalized as part of
the carrying amount of the long-lived asset. SFAS No. 143 is effective for
financial statements issued for fiscal years beginning after June 15, 2002.
Adoption of SFAS No. 143 did not have a material impact on our financial
statements.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated With Exit or Disposal Activities. Statement 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring). SFAS No. 146
requires costs associated with exit or disposal activities to be recognized
when the costs are incurred, rather than at a date of commitment to an exit or
disposal plan. SFAS No. 146 is effective for exit or disposal activities that
are initiated after December 31, 2002. The adoption of SFAS No. 146 did not
have a material impact on our financial statements.

In December 2002, SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosurewas issued by the FASB. This standard
amends SFAS No. 123 to provide alternative methods of transition for a
voluntary change to the fair value method of accounting for stock-based
employee compensation. In addition, this standard amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual
and interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results.
SFAS No. 148 is effective for financial statements for fiscal years ending
after December 15, 2002. We will implement SFAS No. 148 effective January 1,
2003 regarding disclosure requirements for condensed financial statements for
interim periods. We have not yet determined whether we will voluntarily change
to the fair value based method of accounting for stock-based employee
compensation.

In November 2002, the FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others(Interpretation 45). Interpretation 45
changes the accounting for and the disclosure of guarantees. Interpretation 45
requires that guarantees meeting the characteristics described in the
Interpretation be initially recorded as fair value in contrast to FASB No. 5,
which requires recording a liability when a loss is probable and reasonably
estimable. The disclosure requirements of Interpretation 45 are effective for
financial statements and annual periods ending after December 31, 2002. The
initial recognition and initial measurement provisions of Interpretation 45 are
effective on a prospective basis to guarantees issued or modified after
December 30, 2002. The adoption of Interpretation 45 did not have a material
impact on our financial statements.

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Item 3  Quantitative and Qualitative Disclosures about Market Risk

We are exposed to various markets risks as a part of our operations, and
we anticipate that this exposure will increase as a result of our planned
growth. In an effort to mitigate losses associated with these risks, we may at
times enter into derivative financial instruments, although we have not
historically done so. These may take the form of forward sales contracts,
option contracts, foreign currency exchange contracts, and interest rate swaps.
We have not, and do not intend to, engage in the practice of trading
derivative securities for profit.

Interest Rates.We are exposed to market risks relating to changes in
interest rates. Some of the proceeds of our initial public offering are
invested in short-term, interest-bearing, investment grade securities. The
value of these securities will be subject to interest rate risk and could fall
in value if interest rates rise.

Commodity Prices.We are exposed to price risk related to anticipated
purchases of certain commodities used as raw materials by our businesses,
including titanium and zirconium. Although we do not currently enter into
commodity future, forward, and option contracts to manage the fluctuations in
prices of anticipated purchases, we may enter into such contacts in the future
as our business grows and as our purchases of these raw materials increase.

Foreign Exchange Rates.As a result of our operation of a manufacturing
facility in South Korea, a substantial portion of our costs will be denominated
in the South Korean won. Consequently, fluctuations in the exchange rates of
the South Korean won to the U.S. dollar will affect our costs of goods sold and
operating margins and could result in exchange losses. Although we do not
currently enter into foreign exchange hedge transactions, we may do so in the
future as our business grows.




Item 4  Controls and Procedures

Within the 90 days prior to the date of this quarterly report, Liquidmetal
Technologies (the Company) carried out an evaluation, under the supervision
and with the participation of the Companys management, including the Companys
Chief Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of the Companys disclosure controls and procedures
pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended.
Based on that evaluation, the Chief Executive Officer and the Chief Financial
Officer have concluded that these disclosure controls and procedures are
effective in timely alerting them to material information relating to the
Company, including its consolidated subsidiaries, required to be included in
this quarterly report on Form 10-Q. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of our evaluation.

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PART II
OTHER INFORMATION




Item 2  Change in Securities and Use of Proceeds.

Pursuant to the our Registration Statement on Form S-1, as amended,
initially filed with the Securities and Exchange Commission on November 20,
2001 and declared effective May 21, 2002 (Registration No. 333-73716), the We
closed an initial public offering of 5,000,000 shares of common stock on May
28, 2002, plus an additional 229,000 shares on June 10, 2002 pursuant to an
overallotment option, at a price of $15.00 per share (which sale is referred to
herein as the Offering). The Offering generated aggregate cash proceeds
during the second quarter 2002 of $78.4 million. The net proceeds were $70.7
million after deducting underwriting commissions of $5.5 million and other
transaction fees of $2.2 million. The managing underwriters for the Offering
were Merrill Lynch & Co., UBS Warburg and Robert W. Baird & Co.

As of March 31,
2003, we had used approximately $60.7 million of net
proceeds from the Offering. We used $7.8 million of its net proceeds from the
Offering to repay all of its outstanding promissory notes and accrued interest,
$11.1 million to fund the construction of our manufacturing facilities in
South Korea $13.0 million to purchase equipment used to manufacture Liquidmetal
parts, $0.4 million to purchase assets related to the production and sale of
equipment used in the production process of liquidmetal alloy products, and
and $0.3 million was used to purchase the 51% interest in Dongyang. During the
third quarter of 2002, we used $2.0 million to invest in the common stock of
Growell Metal, who will supply a portion of the Liquidmetal alloy ingots used
in our manufacturing process in Korea. As of March 31, 2003, we used
approximately $24.0 million of the net proceeds for working capital, excluding
$2.1 million paid to Paul Azinger for amounts due under the terms of his
endorsement agreement. We have invested the remaining net proceeds of this
offering in short-term, investment grade, interest-bearing securities. We
intend to use the remaining net proceeds of the offering for working capital
purposes. Additionally, management may determine to fund all or a portion of
the costs of any acquisitions of complementary businesses we determine to
pursue in the future with proceeds from the Offering, although there are no
assurances that we will be able to successfully identify or consummate any such
acquisitions.




Item 6  Exhibits and Reports on Form 8-K.



|(a) |  | Exhibits
|--- |  | --------

The following documents are filed as an exhibit to this Report:

|        |  |                                                                  
|------- |  | -----------------------------------------------------------------
|Exhibit |  |                                                                  
|Number  |  | Description of Document                                          
|        |  |                                                                  
|15.0    |  | Awareness Letter from Independent Auditors                       
|99.1    |  | Certificate of Chief Executive Officer pursuant to 18 U.S.C. 1350
|99.2    |  | Certificate of Chief Financial Officer pursuant to 18 U.S.C. 1350



|(b) |  | Reports on Form 8-K
|--- |  | -------------------

We filed no reports on Form 8-K during the quarter ended March 31, 2003.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                   |  |                                                                                                                      
|------------------ |  | ---------------------------------------------------------------------------------------------------------------------
|                   |  | LIQUIDMETAL TECHNOLOGIES
(Registrant)                                                                                
|Date: May 14, 2003 |  | /s/ John Kang

John Kang
President & Chief Executive Officer
(Principal Executive Officer)                           
|                   |  |                                                                                                                      
|Date: May 14, 2002 |  | /s/ Brian McDougall

Brian McDougall
Executive Vice President & Chief Financial Officer
(Principal Financial Officer)

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CERTIFICATION

I, John Kang, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Liquidmetal
Technologies;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a)     designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
|
| | b)     evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                  
|
| | c)     presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;                                                                                                                        

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
|
| | b)     any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                    

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                   |  |                                                                                           
|------------------ |  | ------------------------------------------------------------------------------------------
|Date: May 14, 2003 |  | /s/ John Kang

John Kang
President & Chief Executive Officer
(Principal Executive Officer)

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CERTIFICATION

I, Brian McDougall, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Liquidmetal
Technologies;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
|
| | b)     evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                              
|
| | c)     presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;                                                                                                                    

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a)     all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
|
| | b)     any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                        

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                   |  |                                                                                                                      
|------------------ |  | ---------------------------------------------------------------------------------------------------------------------
|Date: May 14, 2003 |  | /s/ Brian McDougall

Brian McDougall
Executive Vice President & Chief Financial Officer
(Principal Financial Officer)

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EXHIBIT INDEX

|        |  |                                                                      |  |  |  | 
|------- |  | -------------------------------------------------------------------- |  |  |  | 
|Exhibit |  |                                                                      |  |  |  | 
|Number  |  | Description of Document                                              |  |  |  | 
|        |  |                                                                      |  |  |  | 
|15.0    |  | Awareness Letter from Independent Auditors                          
|99.1    |  | Certificate of Chief Executive Officer pursuant to 18 U. S. C. 1350.
|99.2    |  | Certificate of Chief Financial Officer pursuant to 18 U. S. C. 1350.

30