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.