There was a time when Liquidmetal Technologies (PINKSHEETS: LQMT) was on the brink of something massive, or at least that’s what was being reported by a number of touters, but the materials technology company that develops and commercializes products made from amorphous alloys has yet to deliver on the promises of others and the question is, will they ever?
At one time LQMT was putting together days in which trading volume topped the 14 million mark and their share price was consistently moving above the 0.60 level. Those days appear to be a distant memory even though they were just a few short months ago. Now LQMT is trading around the 0.27 level with volume a fraction of what its former self.
Unfortunately for LQMT reality set in for investors, understanding that the hype surrounding an Apple, Inc. (NASDAQ: AAPL) agreement was not going to be the tipping point for financial riches. While promoters tried to use that hype once more in June, pointing to an amendment to the Master Transaction Agreement previously entered into on August 5, 2010, investors have taken to the axiom “fool me once….”
Other than noting that the MTA had been amended to extend the end date from February 5, 2012 to February 5, 2014 there were no details regarding the financial benefit for LQMT. As is well known now, the previously entered agreement with AAPL was essentially a cash grab for LQMT, providing no means to establish a long-term revenue stream through royalties, sales, etc.
For those who don’t remember, LQMT licensed their technology to AAPL on a pre-paid basis, giving AAPL the exclusive rights to use Liquidmetal technology in consumer electronics; the idea being that AAPL would implement the technology in their popular iPhone. Of course even if AAPL did use the technology in their iPhone it would have meant nothing financially for LQMT due to the nature of the MTA.
To say it would have meant nothing financially for LQMT may be a bit unfair as the company may have been able to leverage the buzz surrounding their technology inclusion into other ventures but to date that hasn’t happened. The fact that AAPL holds the exclusive rights to use the technology in consumer electronics certainly doesn’t help LQMT’s prospects any.
The obvious question is what is LQMT going to do next? It goes without saying their series of amorphous metal alloys have some impressive credentials, they were originally developed at California Institute of Technology, but it appears as if the company needs to shift their focus. It’s not as if consumer electronics are the only products that can be improved by these alloys, made up of a mix of titanium, copper, zirconium, and others.
In fact these amorphous metal alloys could be applicable in many industries due to their high tensile strength, excellent resistance to corrosion, and strong resistance to scratches. Among the items that this technology could find its way into are components for aerospace, commercial imaging devices, medical devices as well as sporting goods & leisure products. That being said, LQMT has fallen short of tackling these potential markets, seemingly blinded by an Apple deal that really has no upside for the company or its shareholders.
Perhaps seeing LQMT technology in the iPhone would make it easier to attract other industries but sitting around waiting for that day has been costly. Looking at LQMT most recent quarterly earnings report the company saw a sharp decline in revenue, reporting earnings of $196,000 for the three months ended March 31, 2012 compared to $504,000 for the three months ended March 31, 2011. As noted by the company, “The decrease was primarily attributable to a one time license fee of $381 thousand from a Liquidmetal alloy license agreement recognized in 2011.”
Even more head-scratching is the fact that selling, marketing, general, and administrative expenses for the most recent period were $959,000, or 524% of revenue, compared to $1.0 million, or 834% of revenue, for the three months ended March 31, 2011. There is something wrong with that picture.
On top of all this LQMT is essentially reliant on the sale of securities to keep their operations running, a scenario that doesn’t bode well for shareholders who are opposed to dilution. Unless LQMT can find their way into new industries and prove they aren’t simply an Apple project the company will continue to struggle.