What Do You Know About Liquidmetal Technologies Inc (OTCBB:LQMT)

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Liquidmetal Technologies Inc (OTCBB:LQMT) is an exciting story in small caps that long ago captured legions of shareholders who support the stock and believes it goes higher. LQMT has been highly volatile in recent weeks and currently sits just over $0.12.

Liquidmetal is a materials technology Company that has one of the most exciting and potentially disruptive technologies to come out in years. Their patented Liquidmetal family of alloys consists of a variety of proprietary bulk alloys and composites that utilize the advantages offered by amorphous alloy technology.

Liquidmetal Technologies Inc (OTCBB:LQMT) used to be a $20 big board stock with a billion dollar market valuation. Unfortunately the product was not yet ready for market and after a string of bad management decisions the stock ended up on the bb’s. LQMT started as a Caltech research project in the early 90’s that was eventually IPO’d on the NASDAQ in 2002.

Liquidmetal alloys contain atoms of significantly different sizes that form a dense mix. It behaves more like glass in the sense that its viscosity drops gradually with increased temperature and retains its form and amorphous properties even after being heat-formed.

Liquidmetal alloys combine a number of desirable material features, including high tensile strength, excellent corrosion resistance, very high coefficient of restitution and excellent anti-wearing characteristics. These unique properties means liquidmetal can be injection-molded into extraordinary precise shapes similar to a plastic, while overcoming the crystalline weakness and necessary machining inherent in other metals.

Liquidmetal has significant potential in a number of industries including aerospace, military, auto, watches, and cutlery to name a few. LQMT controls the intellectual property rights with more than 63 U.S. patents.

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In 2010 LQMT entered into a license transaction with Apple Inc. pursuant to which, for a one-time licensing fee of $20 million, they granted to Apple a perpetual, worldwide, fully-paid, exclusive license to commercialize all of the company’s intellectual property in the field of consumer electronic products.

The Apple transaction obviously marked a huge milestone for LQMT which used the proceeds to pay off some of their outstanding debt. It was this news that was the catalyst for the run to $1.75.

Unfortunately (thanks to WATTS on the following) Liquidmetal did not obtain enough monies from Apple to pay off all of their debts. Indeed, they had adverse debt outstanding from a lawsuit from SAGA LSI, a joint venture in Italy between LQMT and Saga Plastics. Further, new inexperienced management failed to anticipate the number of years and expenses to shift from the technology of die casting liquidmetal to the injection molding of liquidmetal. They were forced to borrow money from Norden, Barney Visser and Furniture Row and negotiated very poorly contracts with Visser Precision Cast, giving them exclusivity of manufacture, when they had no injection molding experience of bulk amorphous metals AT ALL. Further, they lost all of the scientific and technical staff who saw thru total management inexperience to negotiate through the manufacturing and financial difficulties which lay ahead.

As far as the price going to $1.75 per share, that was due to the new Liquidmetal management not addressing shareholders with clarity to state that there would be no future revenues from this exclusive contract made with the new LQMT management. In fact, it was only three months later that the details of the transaction became public. This duplicity was an egregious spurning of long time shareholders to receive timely and accurate information at such a time.

Now, five years into injection molding, there remain no revenue from sales of commercial parts. Even under die casting, revenues were in the multi million dollars, even with an inferior technology. Yet management has doubled salaries in some cases and is asking for a special early Annual shareholders meeting begging shareholders to pass new executive stock options, though they have yet to manufacture and sell a single product in the market place.

According to the 10Q LQMT filed on November 12 they maintain an enviable looking balance sheet for the bb’s showing a really strong cash position of $11.9 million in the treasury and minimal short term debt except for the $4.9 million in long term warrant liabilities. LQMT reported $97,000 in revenues for the quarter ended September 30 compared to $456,000 for the same period last year.

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Currently trading at a $58 million market valuation LQMT does have $6.2 million in the treasury and little debt. The stock does command strong interest from Investors who site the fact that Apple is still very much vested in the Company and evidence suggests they will be using the technology in the near future; if this happens, LQMT could see worldwide exposure and send the stock into another stratosphere. We will be updating on LQMT when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with LQMT.

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Disclosure: we hold no position in LQMT either long or short and we have not been compensated for this article.

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10 Comments

  1. watts???...really???...come one on

    “Unfortunately (thanks to WATTS on the following)”:

    What??? Is this a joke???

    If you’re going to cite “watts” as your source of authority on ANYTHING related to investments, let alone Liquidmetal, you might as well be speaking to his alter ego because “watts” is the same one who fervently applauded the Visser Precision Cast deal at its inception along with his original investment with people who were convicted of securities fraud, only to have their convictions overturned on a technicality. I don’t condone current mgmt, but LQMT had their backs against the wall and were, for all intents and purposes – DONE! But their feet were put to the fire on the Apple deal. They had NOTHING to offer Apple at that point. They could have signed a deal with Schmucko enterprises for 20 mill. Would that have been a better deal? And if “watts” had a clue on due diligence, he would have investigated the facts of that deal instead of thinking Apple finally meant nirvana. Interestingly enough, that deal was initiated and also signed off on by the old management who committed fraud and who “watts” thought was more credible.

    Management “failed to anticpate the number of years?” Is that a joke? It’s a disruptive tech. The old method was a MISERABLE FAILURE. The company burned through a hundred mill – minimum – of initial shareholder money on the IPO and much of it on their own self-interests to the extend they could not keep an auditor in place! They have actually accomplished more – and validated and cultured alliances – with companies that they had merely – at most – initiated prior. Does “watts” really think Materion and Engel would have continued their relationship with old management? “Watts” needs to give it a break.

    As for “losing” old scientists – they have cultivated MORE through CIP, which is a joint venture IP entity owned 100% by Liquidmetal. But I’m sure “watts” thinks the Apple scientists like Steve Zadesky are a joke. Yeah, tell that to Tim Cook as Cook made Zadesky (a former Ford engineer and the principal engineer on the iphone project from inception) in charge of Apple’s auto initiative.

    When I think of watts, I don’t think.

  2. watts???...really???...come on! on

    “Unfortunately (thanks to WATTS on the following)”:

    What??? Is this a joke???

    If you’re going to cite “watts” as your source of authority on ANYTHING related to investments, let alone Liquidmetal, you might as well be speaking to his alter ego because “watts” is the same one who fervently applauded the Visser Precision Cast deal at its inception, along with his original investment with people who were convicted of securities fraud, only to have their convictions overturned on a technicality. I don’t condone current mgmt, but LQMT had their backs against the wall and were, for all intents and purposes – DONE! But their feet were put to the fire on the Apple deal. They had NOTHING to offer Apple at that point. They could have signed a deal with Schmucko Enterprises for 30 mill. Would that have been a better deal? And if “watts” had a clue on due diligence, he would have investigated the facts of that deal instead of thinking Apple finally meant nirvana. Interestingly enough, that deal was initiated and also signed off on by the old management who committed fraud and who “watts” thought was more credible.

    Management “failed to anticpate the number of years?” Is that a joke? It’s a disruptive tech. The old method was a MISERABLE FAILURE – even higher costs, product failures, etc. etc. etc. The company burned through a hundred mill – minimum – of initial shareholder money on the IPO and much of it on their own self-interests to the extent they could not keep an auditor in place! They have actually accomplished more – and validated and cultured alliances – with companies that they had merely – at most – initiated prior. Does “watts” really think Materion and Engel would have continued their relationship with old management? “Watts” needs to give it a break.

    As for “losing” old scientists – they have cultivated MORE through CIP (Crucible Intellectual Property), which is a joint venture IP entity owned 100% by Liquidmetal with the large majority of the R&D and legal fees paid by – yes, you guessed it – APPLE! But I’m sure “watts” thinks the Apple scientists like Steve Zadesky are a joke. Yeah, tell that to Tim Cook as Cook made Zadesky (a former Ford engineer and the principal engineer on the iphone project from inception) in charge of Apple’s auto initiative.

    When I think of watts, I don’t bother to take the time to think. This company could end up being a failure, but certainly no worse than what it was and watts actually approved of all those deals on first blush, only to realize he didn’t read enough and was dead WRONG! Shocking.

  3. LQMT Unknown on

    Paul, your “source” is off-base and has as much knowledge of what is going on in this company as someone who extols all of the benefits and none of the negatives. Your source cheered the benefits of that Visser Precision deal before ripping it, and management, when it crashed. As anyone knows, a disruptive tech is a very hard sell, but previous management were about as untrustworthy as you can get, but many (not all) only saw dollar signs instead of investigating their negative history and greed prevailed. And add on top of all that, attacks on a management team exercising heavy control of ownership and all an “investor” is doing is crushing their own investment. There is so much off-base with that source, it’s sad.

  4. So the 1 million dollar raise that old Tommy gave himself would probably be enough to prototype 10 parts for GM or Ford, call up a VP and invite them to the RSM to see them being produced.

    But, seems like the insiders are fat and happy living the high life off of shareholders. They’re getting rich anyway so why be in a hurry to get serious production going? Then they just might have to earn their huge compensation.

  5. Non-disclosed on

    That’s EXACTLY what they said about GTAT! Problem is … That’s FAR from all they needed! They also needed:

    o integrity
    o intelligence
    o LOTS of hard work and sweat
    o aggressive, cost conscious mgmt
    o heavily vested operational team
    o yada, yada, yada …

    Thus the complete and utter failure to perform. Thus the impossibility of AAPL repeating the mistake with LQMT.

    This WILL NOT happen (ok, 99.95% unlikely). If AAPL needs LQMT to step up (for some as yet undefined reason or purpose), they will buy them or, much more likely, shepherd a sale to one of their preferred operation and manufacturing partners. You know, someone who can EXECUTE.

  6. Got the idea that LQMT technology is good for Apple in the sense that is difficult to copy, as soon as Apple is using liquid metal in their products I’m long for the stock. Got the impression that 20M for Apple should be peanuts. As an investor it’s frustrating that no one talks more in detail about the possibilities of those alloys and some foundation to argument its disruptiviness , best regards

  7. If anyone wants to know what Watts feels about LQMT check out i-hub mssg # 5485 & #5435.

    We’ve all been positive and negative about lqmt. Why would he be any different?

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