After an early morning dip, the highest risk/reward penny stock on the OTC, Liquidmetal Technologies Inc. (LQMT) stabilized quickly to trade flat since the dip. Rumors have surrounded the Company for months as to whether or not their proprietary technology will once again see a large cash deal from iPhone5 maker Apple Inc. (AAPL). In 2010, LQMT shot from 0.08 to 0.40, pulling back before running to $1.76, a 2,100% gain.
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LQMT Stock Chart
Last: 0.27, down -0.0298 (-9.94%)
Dollar Volume: $1,169,617
Average Trade Size: 9,190
Issued and Outstanding: 191,902,906
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Dilution has been the major issue facing long shareholders of Liquidmetal Technologies. Today, the Company’s prospectus filing with the SEC triggered an early morning sell off. However, subsequent to the 424B3 filing, LQMT posted their acceptance from the SEC requesting confidential treatment for information it excluded from an exhibit to a Form S-1 filed on July 18, 2012.
The prospectus is just another addition to the long standing tradition the Company has been forced to live with of issuing shares for cash, services, or indirectly for cash by converting debt into shares. Even with an increase in revenues compared to the same three month period last year, $204,000 versus $110,000, without a deal from Apple, the company will be lucky to break a million dollars in revenues for the calendar year. A million dollars wouldn’t even cover the selling, marketing, general and administrative expenses incurred for the three months ended June 30, 2012: $1,007,000
About LQMT Stock
Liquidmetal Technologies, Inc. is a materials technology company that develops and commercializes products made from amorphous alloys. The Company’s family of alloys consists of a variety of bulk alloys and composites that utilizes the advantages offered by amorphous alloys technology.
On August 5, 2010, Liquidmetal Technologies entered into a license transaction with Apple Inc. pursuant to which
(i) Liquidmetal Technologies contributed substantially all of its intellectual property assets to a newly organized special-purpose, wholly-owned subsidiary, called Crucible Intellectual Property, LLC, CIP,
(ii) CIP granted to Apple a perpetual, worldwide, fully-paid, exclusive license to commercialize such intellectual property in the field of consumer electronic products, as defined in the license agreement, in exchange for a license fee, and
(iii) CIP granted back to the Company a perpetual, worldwide, fully-paid, exclusive license to commercialize such intellectual property in all other fields of use.
Additionally, in connection with the license transaction, Apple required Liquidmetal Technologies to complete a statement of work related to the exchange of Liquidmetal intellectual property information. The Company recognized a portion of the one-time license fee upon receipt of the initial payment and completion of the foregoing requirements under the license transaction. The remaining portion of the one-time license fee was recognized at the completion of the required statement of work.
Under the agreements relating to the license transaction with Apple, Liquidmetal Technologies was obligated to contribute all intellectual property that it developed through February 2012 and subsequently amended to extend through February 2014 to CIP.
In addition, Liquidmetal Technologies is obligated to refrain from encumbering any assets subject to the Apple security interest through August 2012 and is obligated to refrain from granting any security in its interest in CIP at any time. The Company is also obligated to maintain certain limited liability company formalities with respect to CIP at all times after the closing of the license transaction. If the Company is unable to comply with these obligations, Apple may be entitled to foreclose on such assets.
Liquidmetal Technologies was in compliance with these obligations as of June 30, 2012.
Bottom Line: At 0.27, this is not a significant drop in LQMT and it should remain on the list of penny stocks to watch. Throughout the summer, LQMT has a 50 day moving average of 0.3014. Most times these average numbers are meaningless, but its indicative of the optimism behind LiquidMetal and the chance of a deal with Apple.
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