I'm less interested in the share price today. I would love to see more discourse on the potential, specific sources of revenue over the next 5 years. I'll start with my thoughts and theories as formed by reading this board, especially joshuaeyu.
We focus on two sources primarily: 1. Lake Forest and the likelihood of medical and 2. Apple. What is Li's plan for us, and how does he hope it develops?
The document provided by Josh (again) is basically a defense to the Chinese government why Li should be allowed to acquire such a large interest in LQMT. Much of the first part of the document is a side-by-side comparison of the two entities, with an emphasis why LQMT will not steal market share from Eontec. This is a similar question as raised recently about Li's conflict of interest.
The answer given in the document (in 2016), was that LQMT is a R&D facility with no real manufacturing capability. LQMT's primary clients are medical. Also, the cross-licensing agreement keeps LQMT out of Eontec's primary market. They are stating here that LQMT has a different market, a different product, a separate R&D operation, separate suppliers and is of a completely different (smaller) scale than Eontec.
Why is that relevant? There was/is some speculation that Eontec might eventually take some of its existing customers in the LQMT territories and transfer those accounts to us. That could be the plan, but this document doesn't make that sound too feasible without an acquisition.
That leaves us with three possible sources of income...
1. Our own sales and production in Lake Forest. The only way for me to estimate this would be based upon the near-term production capacity of Lake Forest. Someone has estimated this in the past in the several hundred thousand dollar range annually per machine. It is better than what we have now, but the build up to NASDAQ proportions would take years.
2. Our own sales and Eontec production. The sky is the limit here, assuming we can sell. This seems contingent upon consumer electronic adoption to drive recognition and lower price, as well as a sales team that produces.
a. ROFR comes into play here, as February will determine whether
Apple wants to keep that brand exclusivity and first-mover bragging
rights, or if they are going to go it alone with LM105, risking all
of the other makers beating them to the punch with the much cheaper
DC105.
3. Royalties. Let Li's other companies use the brand name worldwide, regardless of who sells the contract or produces the goods. This also relies heavily on CE, as we need lots and lots of volume to make money here. However, we do not need production capacity.
What is Li's plan then?
1. Secure the Liquidmetal brand via controlling interest
2. Simultaneously build an unrivaled capacity and lowest cost for BMG in China, just as 5g, electric cars, aerospace, etc. begin to require something light, strong, and RF transparent.
3. Invest in Lake Forest as a prototyping facility for North America, (primarily for Apple initially), and for the medical contracts that were in motion prior to his arrival.
4. Attach the brand name LiquidMetal to everything and anything he is allowed to attach it to.
5. Combine companies under one company. Doing this first resolves the major conflict of interest problems Li will have if LQMT and Eontec begin sharing major automotive manufacturing duties
6. Expand production capacity in North America and Europe to capitalize on automotive applications.
Nothing happens without the scale of CE, and CE is controlled by Apple until February. DC105 is the only option in the near term for CE due to cost. The question is whether or not it will be labeled LiquidMetal.
Josh did the math a few days ago. $5 a share for 20% of the cell phone frame market. If not Apple, then everyone else. If Apple, then everyone else can't use the name, even if they use the formula.
I see the $5 - $20 a share possibility over the next 5 years. Lake Forest is a strategic piece to the puzzle because it is a US company, not because the medical contracts. I do not believe that the medical suppliers would have faith in our production capacity or staying power without the rest of this story. Medical will play a bigger part in the revenue eventually once it is adopted in more applications. That could take some time.
How likely is all of this to happen vs. slow slide into eventual bankruptcy? The only way to answer that is by looking at the investment being made by Li. Either he is a massive gambler, or he knows CE is inevitable in one form or another...
1. $64 million by Li into LQMT
2. Lake Forest > $10 million and growing
3. $1 million in raw materials in LF.
4. Almost 1 billion yuan in Eontec investment in manufacturing capacity
5. Joint ventures with Cloud Metal for magnesium (automotive), with LK to produce hundreds of machines per order
Why the silence then? No CE, means no medical, no economies of scale, no North America. To scale up in time to capitalize on CE, Li had to start building capacity 2 - 3 years ago. That is a huge risk if you are simply relying on Apple to be sympathetic to your dreams. The silence tells me that either Apple has agreed to a scenario where they use DC105 as "Liquidmetal" to meet the Chinese requirement for 5G prototypes by 2018, or the negotiations lasted until very recently before they failed. If we are hitching our wagon to Apple, the silence will likely continue past February, as they will have their usual supplier gag order in place. If not, this will become a race between the phone makers to publicize the brand first. We should see some indication of that after the ROFR expires.
Li knew he would be successful before investing in LQMT. We were the last major piece to the puzzle, not one of the first. The only choice Apple has in the near term is whether we enter into a new relationship with them, or we enter it with the rest of the cell phone makers. Near-term medical contracts are just the gravy that will pay for the US-based LiquidMetal showcase.
This is basically what I believe other posters, particularly Josh, have been saying for some time. Rather than believe it wholesale, I needed to piece that information into my own narrative.
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