Penny Stock Alert: Li-Ion Motors Corp. (LIMO) Speeding Up

When penny stock picks go from 0 to 6 cents in 3.4 hours, everyone wants to start investing in penny stocks to achieve those gains. When a car can get you 47 MPG, car buyers aren’t thinking about speed, they are thinking about saving which is why those types tend not to buy penny stocks (No Offense). But when Li-Ion Motors Corp. (LIMO.OB) setup shop in NASCAR country and presented the Inizio, the first ever all American built electric supercar that went from 0-60 in 3.4 seconds, it drew people to invest in penny stocks and made LIMO one of best penny stocks to buy if you can risk your money in it for the next say 20 years.

Makers of the Inizio and Wave II, LIMO won the $2.5 million Progressive Automotive X-Prize a couple of years ago. Car enthusiast or not, LIMO is a penny stock to watch with the push to seek alternative fuels and tax-incentives to purchase electric powered automobiles. But let’s face it, you invest in penny stocks like LIMO because you are looking to make a head-spinning profit on the stock; the same reason why you would buy the $140 thousand Inizio, to go 170 MPH.

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Headquartered in Mooresville, NC, LIMO has a strong future if it can sustain the times ahead. Similar to when Motorola spent over a decade researching and designing the brief-case docked first mobile phones that led to the shoe-sized portable mobile phone to the car-mounted spiraled antenna car phones to lead to what today is touch screen iPhones, LIMO is cutting edge with their risky venture into an auto industry that was on the outs during an economic recession. Will the more than 10 years of experience and expertise in the conversion of internal combustion cars to all electric, LIMO also licenses its proprietary battery management system (BMS) and new age technology to car makers looking to further advance their electric vehicle (EV) offerings.

LIMO Stock Snap Shot:

Yesterday Close: 0.30
Intraday High: 0.33
Market Cap: 1.93M
Shares Outstanding: 6.42M
Float: 1.42M
Reporting Status: SEC Filer
Financials: Audited
Short Interest: 2,568 (Feb 29, 2012)

LIMO Stock Chart Highlights:

RSI: appears flat
Volume: surge tapering off
MACD: still bullish but fading slightly
Stochastics: %K & %D indicate bullish

LIMO first entered into a agreement with Canadian Lithium Electric Vehicle Corp (LEVC) in 2010 for for an annual fee of $500,000 for ten years and an additional $1,750,000 based on a valuation report prepared by an independent third party.  LEVC is required to pay $1 million of the license fee during year one for the initial two years and $500,000 each additional year.  LIMO had received $732,666 from LEVC with a balance due of $267,334 as of October 31, 2011.

LIMO announced a couple weeks ago that the company had expanded its licensing agreement with LEVC,  under which LEVC will have a three year, non-exclusive right to market the Inizio and the Wave II globally. LEVC must first obtain highway certification for both vehicles before it can start production. The licensing agreement opens the doors for LIMO to potentially benefit from the government incentives of our northern neighbors, especially the incentives offered in Quebec’s provinces. In Quebec the program is structured to reimburse up to 90% of R&D completed in Canada.

The Current Market for LIMO:

Automobile manufacturers are “elbows and assholes” to get the most stylish, fuel efficient, low cost vehicles to market with the going concern over high fuel prices and new fuel mandates which must be met over the next decade. With catchy “green” names like Volt and Leaf, hybrid/EV sales have been crap thus far for all car makers except Toyota with their Prius. It could be because “greenies” want more space so they can’t go for the micro-sized hybrid/EV market except the new Prius V station wagon which now makes Toyota’s Prius family 60% of the hybrid/EVmarket as of February. But with the bad-ass, Italian design look alike, NASCAR experienced engineering, Does LIMO make its money on the technology and licensing rights or the green luxury super-sports cars market?

One analyst’s comments recently regarding the hybrid/EV market was that they simply don’t make any sense right now for the “normal” car buyer which is why sales on hybrid/EV cars have been so low. Lexus makes a sweet car, period. They’re luxury hybrid/EV CT 200h gets 42 MPG and sold the same number, 1,600, in February as the Volt and Leaf combined. 35 other hybrid/EV are available for purchase in the U.S. but mostly sell less than 100 of each model per month. The low sales in these hybrid/EV models is simple to explain; even at $40 thousand, less a tax credit of $7,500, you would have to pay $4 a gallon for gas for 12 years before you would have saved any money rather than buying a fuel efficient gas guzzler for $20,000.

LIMO shouldn’t have to worry about this for their market since none of the hybrid/EV makers are looking to make a car that seat two comfortably, has gull-wing type doors, uses no gas at all (due to lack of government lobbyists fighting to have a battery/electric operated car) and goes nearly 200 MPH. When people think hybrid/EV they think Tesla Motors that just about went under before they a few things go their way. Nissan, Ford, Chevrolet, Toyota, Mitsubishi, Mazda, Kia, etc. all want to get their thumbprint on the “status quo” of building a greener world of vehicles. The Inizio from LIMO says “to hell with that, get the #@!* out of my way”.

The Growing Concern:

LIMO makes cars, good cars, with a “permanent” battery. Hybrid/EV Lithium Ion batteries don’t last forever. The typical lifespan of a Lithium Ion battery is affected by usage and calendar life. Typically Li-Ion batteries lose about 1% of their capacity each year without any use. The typical everyday driver of a vehicle will further degrade a Li-Ion battery’s capacity. Trips to the mall, grocery store, back and forth from the office, baseball games, football practice, all take their toll and each associated recharge as well. When typically, a driver will travel around 15,000 miles a year, it all adds up over the course a couple years.

So, when you look at it from this point of view and the fact that the battery is 50% of the cost of the hybrid/EV, how much of an impact will it have on LIMO to license its BMS technology or to unveil the Inizio for sale to hot-shot hybrid/EV owners? Most likely the impact will be minimal at best on the side of selling LIMO made hybrid/EV Inizio and Wave II to willing buyers since if you can spend $140 thousand for a car, you most likely don’t worry much about the cost of maintenance or replacement parts.

Have you ever seen someone walk into a Porsche dealer and ask for a discount of $8,000 because they are going to need to replace the ceramic brakes, clutch and P-Zero tires in less than 18 months?

Bottom Line: LIMO is an interesting penny stock worth watching closely. Look for spikes in the volume and any indication of production or sales to commence with LEVC licensing agreement. Agreements are rarely worth their weight in ink so, with the speckled past LIMO has in the investor community, look for changes in their 10-Q filings which you can check here, especially changes in Assets which would be an early indication that growth is occurring.

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