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John L. Cameron
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I'm an individual investor who primarily swing trades microcap stocks. I will take a longer term position in companies that I feel are in the midst of a turnaround.
  • Options Show That The Company Values It's Stock At $.29 With No Revenue Streams 7 comments
    Apr 4, 2014 9:20 AM | about stocks: LQMT

    I'm very surprised that there is not more discussion about the SEC filing came out on Wednesday showing that options awarded to executives as part of their compensation package have a $.29 strike price. IRS rule 409a requires that companies are required to set the strike price of employee stock options at the fair market value of the company at the time the option is granted. I view this as a very positive indicator that something big is around the corner. The millions of options granted to the CEO and other officers have a strike price 17% above where the stock is currently trading. The company wants the strike price to be as low as possible so the holders can exercise the options for a profit at a future date. Former strike prices for previous options were at $.08.

    If you look at the Williams %R indicator the stock is very oversold at this point and the stock previously found support at this level. Not only that, shares are trading 17% below what the company says is fair market value for their stock. If they are valuing the company at $.29 with no revenue, what will the company be worth when a contract is announced?

    Thomas Steipp 4,063,500 shares to be executed at $.29
    Bruce Bromage 1,704,500 shares to be executed at $.29
    Ricardo Salas 1,000,000 shares to be executed at $.29
    Tony Chung 976,500 shares to be executed at $.29

    http://www.quotemedia.com/finance/quote/?qm_page=66115&qm_symbol=LQMT

    Disclosure: I am long LQMT.

    Stocks: LQMT
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Comments (7)
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  • jedyfun
    , contributor
    Comments (6) | Send Message
     
    That was a good news but what's the big sell off today John?
    7 Apr 2014, 05:01 PM Reply Like
  • JRS5
    , contributor
    Comments (348) | Send Message
     
    It appears to be an industry wide sell off - all tech stocks got hit hard.
    7 Apr 2014, 09:46 PM Reply Like
  • John L. Cameron
    , contributor
    Comments (106) | Send Message
     
    Author’s reply » I think we'll begin to find support here
    8 Apr 2014, 10:31 AM Reply Like
  • jp186
    , contributor
    Comments (392) | Send Message
     
    support at .29?
    9 Apr 2014, 12:13 PM Reply Like
  • John L. Cameron
    , contributor
    Comments (106) | Send Message
     
    Author’s reply » At $.20. Should move upward from here.
    9 Apr 2014, 12:35 PM Reply Like
  • JRS5
    , contributor
    Comments (348) | Send Message
     
    I posted the info below for John's other article, but would like to post here as well in attempt to provide readers with a summary of what I have learned in my research.
    LQMT Summary of Observations:
    Positives:
    •LQMT has a revolutionary product that has great potential (more product/use info can easily be found at their website). The company holds numerous patents (alone and with apple) which should protect it from replication by others for the immediate future.
    •It has recently taken this technology to the point where they have a turnkey product that is ready for sale currently. This is a clear sign the company is moving from the R&D stage to the production/sales stage.
    •LQMT has Apple in support of their technology (this should not be under estimated).
    •It is becoming more clear that Apple will be using their product in near future products.
    •Use in Apple products would provide worldwide positive exposure and make the company’s product a household name.
    •LQMT now has a Beryllium free product which is under FDA review and expected approval. This product will open many new revenue opportunities in the non CE field for the company (most notably medical fields). This could potentially be the biggest future revenue driver.
    •LQMT recently partnered with Materion Brush to make their Beryllium free product (LM 105) commercially available. Apple has been under pressure from environmental groups to not use toxic substances in their product, so this new LM105 would meet their needs.
    •There was substantial insider buying in 2013 up to .22.
    •Despite an initial failed attempt, LQMT has potential in the golf industry with their new approach of selling their product to existing major brands to use in their clubs (as opposed to making their own clubs in competition with major brands). Their new approach may be able to land a contract(s) with the major players as their product is definitely superior to the products currently used be the club manufacturers.
    •LQMT has potential in other industries such as aerospace, military, auto, watches, and cutlery to name a few. The potential is definitely quite impressive.
    •Last November LQMT signed a sales agreement with the firm Charles J. Librizzi to market their product. This appears to be a qualified firm.
    •Last November LQMT lined up a $20M line of credit (not in use but available).
    •In March 2014 LQMT hired Paul Hauck as VP of Worldwide Sales. Mr. Hauck has an extremely impressive background and track record in the industry and appears to be a very big step in the right direction for a company looking to start selling their product on a large scale.
    •Company management has stated publicly that they have already won contracts but has not stated details due to ongoing mediation with their partner Visser Precision Cast (VPC). Details could be released as soon as mediation is resolved.
    •LQMT has already sent out 18 prototype machines to companies in the auto, defense, medical device, and golf industries. However no contracts have been announced due to ongoing mediation with VPC.
    •LQMT should definitely earn revenues from all non consumer electronic uses of its product.
    •There exists a potential for buyout from either Apple (first refusal) or another company.
    •The company is relatively debt free.
    •Despite lack of current revenue, stock price may still be considered undervalued due to the great potential growth in the near future.

     

    Negatives:
    •It is unclear if LQMT will receive revenues from use in Apple products. The question of royalties appears in question. It would appear if Apple purchases machines from LQMT’s partner, they would receive some revenues.
    •The MTA with Visser (VPC) has been the issue of dispute between the two companies and why they have been in arbitration proceedings since November. The fact that it is not resolved is not a good sign and likely holding down the share price at present. LQMT may have to pay Visser to get out of this MTA. The decision to use Visser (which had little/no experience in metal molding when the MTA was signed) appears to be a very bad decision by LQMT management. LQMT shareholders will need a neutral/favorable outcome of this arbitration process. A negative outcome may be detrimental to shareholders (and could include stock dilution). The two parties have until June 16th to resolve their differences. If not then a third party arbitrator will be brought in and a binding decision made within 10 days. It is in LQMT’s best interest to resolve this sooner as many potential investors are likely waiting on the sidelines for this to be resolved.
    •LQMT’s leadership appears to be questionable. The company has used stock dilution in the past to provide funds (including substantial salaries). The Visser MTA appears to be a poor decision. Some argue the Apple Agreement was giving away too much for too little. Many investors do not have confidence in management, although recent actions by management appear to show movement in the right direction (noted above).
    •Stock dilution is always a threat as the company has very little current revenues.

     

    This is the list I have put together. It appears that there are some near term issues that need to be addressed ASAP as share price declines. Resolution of the Visser MTA and contract announcements would make all of the negatives quickly forgotten. The positives still seem to far outweigh the negatives and would indicate that share price will indeed rise by year end. To what extend remains to be seen, but the potential rise in share price is tremendous versus the share price decline from current. I hope this information is helpful to you all. I am currently long LQMT.
    26 Apr 2014, 08:39 PM Reply Like
  • John L. Cameron
    , contributor
    Comments (106) | Send Message
     
    Author’s reply » Looks like we got a positive resolution with Visser.
    20 May 2014, 05:06 PM Reply Like
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