Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
I think it's fairly obvious that Eontech can only sell products into NA/EU if LQMT receives revenue from them, either as a distributor or through further licensing.
What's a little fuzzy to me, is whether Eontech is free to sell components to another Chinese manufacturer (Foxconn, for example) whose final, assembled products are destined for NA/EU markets, without involving LQMT. It seems like this sort of thing could be fairly cumbersome to track and regulate.
1. Apple arms Liam with 30kW electron beam to crack open fully sealed Liquidmetal iPhone 8 casing
2. .....
3. Skynet
Perhaps Li has been working with Apple's blessing all along—the Chinese branch of LQMT, so to speak. Perhaps Apple never purchased LQMT outright because the plan the whole time was to partner us up with a Chinese manufacturer for R&D—and Apple rarely takes a direct stake in their overseas suppliers. By leaving LQMT independent, they can completely control the course of development without getting their hands dirty from the wrong side of Chinese corporate politics.
Just another theory.
Maybe Apple caught wind of the Turing Phone and—instead of suing Li into oblivion for patent infringement—saw a potential partner in a company claiming to be able to mass produce BMG casings.
A little research, yadda yadda, a little negotiation, bada-bing bada-boom... EONTEC partners with AAPL and LQMT to advance the production of iPhone/iPad/MacBook case manufacture.
Kind of makes sense now.
Did I solve the mystery? What do I win?
The actual market price won't matter. If we vote to authorize 1.1B shares, Li will buy 200M @ $0.15 and 100M @ $0.25. By that point it could either be a premium or a bargain.
It's all fantastic if Li really wants to pilot LQMT to success. It could ultimately be disastrous for any of us common shareholders who hold for too long if he plans to gain control (the setup is there with the 1.1B authorization) and absorb LQMT into EONTEC. Since this whole deal is looking likely to have Apple's blessing, it's interesting to consider how Apple might feel about giving CIP to the Chinese.
I think it would be more likely that Apple actually wants to use some of EONTEC's IP to build more capable machines. The e-motion 110 is not suitable for Apple's production volumes.
Either way, this deal is much nicer if Apple is directly involved—which they really kind of have to be. If Apple contracts EONTEC to manufacture for them, there may be potential for LQMT to catch some Apple revenue on the NA/EU import license. I'm not sure exactly how Apple's own unlimited license would interact with EONTEC's explicit prohibition from shipping parts into those markets described in the new contract. Apple may need to contract LQMT to subcontract EONTEC for such a job. Though I'm also not sure if the prohibition applies to parts, or only to finished goods.
While we can't necessarily assume that EONTEC is untrustworthy simply because they are a Chinese company (a little bonus credibility coming out of Hong Kong), it's not exactly comparable to Apple's experience with Foxconn. Chinese authorities will bend over backwards and bury as many bodies as they need to in order to keep Apple happy. LQMT doesn't enjoy such clout, though it is intriguing to know whether Apple is somehow behind or involved in this whole arrangement.
Has anyone managed to look into whether EONTEC actually has significant experience working with BMG, as they state? They do not mention injection molding at all, and I was under the impression that die casting of BMG led to inferior parts prone to failure. Though perhaps previous failures were more a product of flawed alloy formulation (pre-Materion) or some other factor not endemic to the process? I'm sure the subject of "why die cast parts sucked" is something Watts could shed light on.
Per the agreement, Eontec is banned from selling into the (obviously extremely lucrative) North American and European markets. This will force the two entities to cooperate as LQMT imports or sells import licenses for Eontec-produced goods for resale in the US/EU/etc.
Seems they were smart enough to cut themselves into the deal this time. Of course, all of this goes away if/when Li hits 51%, and Eontec starts selling all non-CE whenever they want, wherever they want. Good thing they were also smart enough to pack parachutes.
A lot of documents to sort through, but this appears to be the initial amendment to the MTA that granted AAPL right of first refusal (S-1/A dated 8/3/2012). I don't know if this is still in force, as written, or has been subsequently amended:
I've been wondering that myself, since this has the makings of a "creeping takeover" rather than a negotiated buyout. I'm going to take a quick look through the MTA for the exact language regarding AAPL's right of first refusal.
He must purchase those shares at $0.15/$0.25, regardless of the market price. It's a condition of LQMT printing the new shares for him.
If you're wondering why he didn't simply hit the market and buy up all the outstanding common shares for much less, I suspect that such a frenzy would ultimately end up costing him a lot more than the $0.01576 cost basis of this package.
The open market share price does not necessarily need to be $0.25. Li himself is obligated to purchase at that price, so if the deal goes through and the market scoffs between now and then, he will be forced to pay a premium. One of many ways in which this is some sort of "soft takeover".
The license explicitly forbids Eontec from using LQMT tech in the production of weapons and armor.
So here's something interesting. Including all options and warrants, there are 584.5M non-Li shares outstanding. While this deal will give Li about 41% of the company, If we vote to increase the authorization to 1.1B, it will be possible for him to subsequently purchase up to 56.6% of the company without ever touching the open market.
Even without the extra authorization, upon the completion of this deal common shareholders will own less than 50% of the company. This feels like a calculated move on his part, leaving the door wide open to a full takeover.
So double the float. That's a pill I'm willing to swallow if the agreement so confidently predicts PPS holding over $0.25 after 90 days (following whatever future event).
I expect we'll see some action today.
That would be a great deal. I hope it's the case.
I'm wary, though, of massive dilution here.
Whatever's going on, it's better than bankruptcy. A little Chinese influence (ambition, discipline, greed) seems to be exactly what the listless Team Steipp needs more of.
Also possible that this is a part for the "5SE" or whatever lesser model Apple is about to announce this week.
The f-- is this?
Well, there is one more major Apple product announcement before we run out of cash. Still the reason we all remain invested.
If nothing from AAPL before the fall, we may need a decent contract announcement to get us over $0.10 and unlock the Aspire line.
Though really, if the BOD wants to get this stock over $0.10, they can make a few phone calls and manipulate the price up in 5 minutes. What would it take, $30k worth of buy volume?
A couple of years ago, I realized that overmolding the ceramic discs with LM105 should tremendously increase the performance per pound of Dragon Skin armor, and that this is something that can be done immediately with the e-motion 110 (with an exceptionally high yield rate, since cosmetic flaws would be inconsequential). I had even considered approaching Dragon Skin, starting a company and licensing a machine from LQMT to produce the discs for them.
I'm glad that LQMT appears to be doing something with this idea.
I've also thought about LM as the perfect warship hull material (http://investorshub.advfn.com/boards/read_msg.aspx?message_id=112093567) but I had no idea that it costs upwards of $200,000,000 to paint an aircraft carrier. If we assume that the exterior hull is 10% of the Ford's 100,000 tons, then the raw material cost (before processing) of an LM105-like formulation to build that hull is about ($19,000/t * 10,000t) $190,000,000. Less than the paint. That is, of course, after they spend billions figuring out how to make and join gigantic sheets of it.
That's what happens when Lobots are pressed for accountable estimates.
I'll look forward to watching this when I have the time.
There can also be value in denying technology to your competitors, even if you never plan to use it. Apple itself has some history of buying up promising outside projects just to kill them off.
Of course the actual value of these patents (most patents?) is entirely nebulous and difficult to quantify.
The question was: How much has Apple spent developing them? Given that many of the patents are so far unproven, the development costs are the easiest number with which we may reasonably assign them a value.
I'd say anywhere between $100M and $5,000M.
That's the thing about Silicon Valley: companies will pay billions for absolutely nothing of value simply because they're intrigued by it and they can, or they feel that it fits into some broader strategy.
When we look at LQMT as a manufacturer (as they've recently styled themselves), they are—so far—completely worthless and doomed to failure.
When we look at the company as a repository of intellectual property with the potential to dramatically impact manufacturing paradigms for hundreds of billions of dollars worth of products worldwide, it looks like we might be holding a hundred-bagger.
Could go either way. I haven't invested a single dollar that I'm not prepared to lose, and I'd suggest that others do the same.
Well let's look at it from the other direction.
If Apple has spent $27,000,000,000.00 on R&D since they began their business relationship (centered upon R&D) with Liquidmetal Technologies, what percentage of Apple's total R&D work has involved the advancement of amorphous alloy technology?
I suspect that it is far more than the 0.11% ($30M) suggested by another poster.
Perhaps we can take a clue from the number of BMG-related patents that Apple has submitted as a percentage of their total patent awards over the time period.
Apple Patent Awards
2010: 563
2011: 676
2012: 1136
2013: 1775
2014: 2003
2015: 1938
Total: 8091
CIP Patents: 63
Percentage of Apple's patents assigned to CIP: 0.78%
If we assume (conservatively) that BMG patents cost an "average" amount for Apple to develop and weight them neutrally, we can guesstimate that Apple has so far spent $210.2 million dollars on IP assigned to Crucible.
In reality, advanced materials development is probably more expensive than the majority of R&D (software development, etc.) performed by Apple, and I wouldn't be surprised if the actual number is closer to the $500M figure (1.8% of AAPL R&D budget).
Why would you guess that such a minuscule fraction of the $27 billion that Apple has spent on R&D during the course of our Technology Transfer Agreement has gone toward producing the dozens of amorphous alloy patents in CIP?
Two mysterious ways to define the minimum value of LQMT:
At least half of the amount that Apple has spent developing the amorphous alloy patents that we co-own.
At least $1 more than Apple is willing to spend in order to keep LQMT out of the hands of another buyer.
I guarantee that both of these numbers are higher than the current market cap.
Ridiculous. LQMT has an extensive and exceptional IP portfolio. The current market cap is already well below the reasonable sale/liquidation value of the company. Absent future dilution well beyond the currently authorized 700M shares, or Tommy Boy selling off perpetual rights to additional product categories, the price of LQMT is about as low as it can go.
Good post. Let's hope.
Milling marks are obvious. It's possible that the piece is machined from amorphous billet (Apple's magic "steel"), but there is also at least one rather pedestrian looking spot weld in this photo that I don't believe would work well with BMG.
If I can find a friendly scrap metal processor nearby with an XRF analyzer, I'll try to get a definitive answer. Don't hold your breath.