Liquidmetal Technologies is the leading developer of bulk alloys that utilize the performance advantages offered by amorphous alloy technology. Amorphous alloys are unique materials that are distinguished by their ability to retain a random structure when they solidify, in contrast to the crystalline atomic structure that forms in ordinary metals and alloys. Liquidmetal Technologies is the first company to produce amorphous alloys in commercially viable bulk form, enabling significant improvements in products across a wide array of industries
Discovered by researchers at the California Institute of Technology, Liquidmetal alloys’ unique atomic structure enables applications to achieve performance and accuracy levels that have not been possible before. The revolutionary class of patented materials technology redefine performance and design paradigms institutionalized by traditional materials. Liquidmetal Technologies controls the intellectual property rights with more than 70 U.S. patents.
The rational:
The play is based on the fact that more and more speculation will happen on the potential usage of the material liquidmetal in the new iphone 7. Details of the iphone design and its release date is expected to be announced as of September.
In 2010, LQMT entered into a license transaction with Apple Inc. for a one-time licensing fee of $20 million. They granted to Apple a perpetual, worldwide, fully-paid, exclusive license to commercialize all of the company’s intellectual property in the field of consumer electronic products. Once rumors started that Apple might use Liquidmetal in the iPhone 5 the stock went parabolic. Unfortunately, the only application of liquidmetal until now was a sim ejector and the share price retraced. Reasons for the limited usage were that Liquidmetal is state-of-the-art and there weren’t two sources of Liquidmetal parts. LQMT didn’t even have two production lines hence Apple decided to source a non-essential part: a SIM card ejector pin. The pin was also a good test of Liquidmetal’s unique properties ie it must be strong and inflexible (source http://bit.ly/2bdBYxR)
Since then, some new elements shown up that it could be used more in the new iPhone 7
1/ at the beginning of this year, LQMT proudly announced they received the ISO 9001:2008 certification which implies a standard production quality. Some customers require this certification from their suppliers to ensure minimal standards are met. Ofcourse you only invest in getting this certification if your are sure it will attract more customers.
2/ In May they announced a partnership with EONTEC a global manufacturing company headquartered in Hong Kong with manufacturing plants in China. They entered in a cross licensing agreement for an investment of 63.4M$ in LQMT by the major shareholder of EONTEC namely Mr Li. This investment is done via a share purchase agreement of 405M shares. The purchasing by Mr Li is done in two parts, an initial buying of 105M shares and the remaining 300M shares. This means Mr Li is evaluation the share price of LQMT to .1565. To accommodate this financing they had to increase the Company’s authorized shares from 700,000,000 to 1,100,000,000 (dilution). More details can be found on http://bit.ly/2aYRQS9
This partnership positively impacts the production capabilities and delivery assurance.
3/ Since 2010, Apple has repeatedly extended its agreement with Liquidmetal Technologies. The last extension was until February 5, 2016. Multiple patents have been filed by Apple in the past and recently, indicating they still doing research using the material http://bit.ly/2bkDD2Q .
4/ Some rumors already started to spread mentioning liquid metal as its primary material which is sometimes referred to as metallic glass http://bit.ly/2aVcmrw. Some decent UK newspaper tend to spread leaks of it being waterproof due to the usage of liquidmetal http://bit.ly/2bhDSiV. More of that I would say …
5/ The recent earnings call on August 17th contained some interesting news. First of all there was the disappointing revenue of Q2 of only 34K$. Later in the call the CEO clearly states that there is always a great time elapse between the orders and the shipments and he noted that orders for Q1 and Q2 were substantial higher at 144K$ and 221K$. Secondly and more important was that the CEO mentioned that 2016 is a pivot year and stating that “We now have some exciting examples of customer value being created in places like Connexions and a host of other customers that we cannot mention by name”
http://yhoo.it/2bFYn5I
The strategy:
Mr Li failed to buy the 300M shares before the initial deadline of August 17th hence they mutual agreed to extend this deadline until the end of the year http://bit.ly/2bGpzV5. His statement on the recent collaboration is however interesting to read: “I have worked closely with the Liquidmetal management team to shape a vision and a tactical plan for the future that would not have been possible for either company on its own. I look forward to furthering our relationship and am excited about the possibilities for 2017 and beyond.”
As positive news on the funding and positive rumors on liquidmetal usage in the iphone increases into the second part of the year, we will be looking for price spike to unload the position.
The entry strategy is to buy the shares at a dip for a max of .1565, the price Mr Li, is paying and manage stop loss around .07 according to your position size.
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