Twindog,
Wow! what a piece of crap! First let me say if you will send me your address I'll send you a new knife. Feel free to test it too. ( I would prefer you not cut a nail, that seems a little extreme and I don't really intend this model to cut steel. If you need to cut steel I make a Rescue axe designed to cut sheet metal that would probably hold up.)
About the time that knife was made was when I implemented some new inspection and testing procedures. As with that knife, we had a few come through with similar problems. This came from some issues with heat treating. That knife was most likely made from 52-100. I found out that this particular batch needed to soak in the high temp salt for no less than 1 full hour. We had only been going for about 15 min at heat and a full run of about 10 knives came out soft. I thought we had gotten them all but I guess not. Basically you tested a knife that had an improper heat treat.
We make more knives that I can possibly do all myself. It also has taken a while to get the guy's to a point that they can recognize the possible problems that can arise that are not visual. Each blade is now checked after heat treating and before the handle goes on to assure it is up to standards. There may be one that slips through now and then but it is rare. Humans make mistakes but we are trying to eliminate all the problems we can. However when one does come up we will take care of the problem.
Daniel