Rumors Push Liquidmetal Technologies Inc (OTCBB:LQMT) Up the Chart
Liquidmetal Technologies Inc (OTCBB:LQMT)’s stock performance over the last couple of years hasn’t been the definition of “consistent”. In fact, we’ve seen way too many surges towards the higher end of the chart which provided a lot of day traders with an opportunity for a quick and easy profit, but they were all followed by some rather painful drops which means that a lot of the investors have been left disappointed. You’re probably wondering what could be causing the erratic performance.
Well, as some of you might know, back in 2010 LQMT signed a licensing agreement with none other than Apple Inc. (NASDAQ:AAPL). The deal secured a one-time licensing fee for the small cap alloy manufacturer, but, perhaps more importantly, it served as a true testament to LQMT‘s technology.
It is uncommon for a penny stock to have any sort of relationship with huge NASDAQ-listed enterprises and that’s why virtually all the spikes seen on LQMT‘s three-year chart have been caused by rumors that AAPL are, in some way or another, going to use liquidmetal alloys in their products.
Last week, the ticker registered three green sessions in a row and, not surprisingly, the surge was once again caused by speculations that the new iPhone 6 will incorporate LQMT‘s amazing material. The only problem is, such rumors have been flying around for years, but so far, the only AAPL product that seems to be made out of liquidmetal is the SIM-card ejecting pin. What’s more, even if the alloys are more extensively used in the next incarnation of the world’s best-selling smartphone, we still don’t know what the benefits for LQMT will be. All this means that another painful correction in the near future is anything but impossible.
Outside of AAPL‘s excitement, LQMT seem to be trying hard to make progress. The latest 10-Q, for example, shows that they have managed to improve some of the financials but despite this, there are still some problems. Here’s a round-up of the most important figures as of September 30:
- cash: $3 million
- current assets: $4 million
- current liabilities: $947 thousand
- revenue: $456 thousand
- net loss: $6.7 million
When you compare the figures above with the ones found in the Q2 report, you’ll see that they have burned through quite a lot of cash during the reported period and that, because of change in the fair value of warrants, the net loss is absolutely huge. On the positive side, the revenues have increased immensely and (perhaps the highlight of the financial statement) the current liabilities have dropped by almost 50%.
The reduction of the liabilities is actually just a part of the continuing effort to cut down on the debt and you can see that it’s working. Unfortunately, a large portion of it was converted into common stock which means that more than 112 million new shares saw the light of day between February 20 and October 31.
What’s more, it would appear that the $3 million in working capital that they had back at the end of September simply isn’t enough and that’s why they signed a stock purchase agreement two weeks ago. Over the next 36 months, some institutional investors will buy a total of $20 million worth of common shares valued at 90% of the market price. The discount is not huge and the deal means that LQMT shouldn’t have any financial difficulties in the future, but, unless they can turn a profit soon, the shareholders might be in for some severe dilution.
Time will tell if LQMT will finally experience some more significant growth and it will really be a shame if the stock fails to deliver since the company is showing much more potential when compared to other small cap enterprises like Nutranomics, Inc. f/k/a Buka Ventures, Inc. (OTCBB:NNRX) and Fresh Healthy Vending International, Inc. (OTCBB:VEND) that rely on nothing more than paid pumps and artificial hype. Even so, keeping all the risks in mind could save you quite a lot of sleepless nights in the future.
