“Men who can both be right and sit tight are uncommon.” ~ Jesse Livermore

I) Introduction

II) Professor Li Strikes Again in China

III) Link to Professor Li’s Operation and Liquidmetal Found

IV) Critical Event For Professor Li Reveals ‘Elephant in the Room’

V) Curious Timeline of Events

VI) Conclusion

VII) Disclosure

Introduction

As more intelligence-gathering efforts pertaining to Professor Li’s activities yield results worthy of disclosure, an update is in order.  This time, in addition to sleuthing Chinese websites in search of information and additional arguable evidence of Liquidmetal Technologies (“LM”) business conducted at Professor Li’s China-based operations, I’ve spent a lot of consultation time with a contact I have in SE Asia (“source”) who was able to answer questions raised about the evidence I’ve found so far of Li’s activities at his newly-formed syndicate CYYT and Li’s likely moves planned for LQMT shareholders.

The last discussion among many I had with my source regarding breadcrumbs Professor Li had left behind to his whereabouts of his manufacturing facilities abruptly stopped and took a radical U-turn into a discussion about the stark differences between the methods of Chinese businessmen and their American counterparts.  

After I digested what was told to me by my source about these differences, the light switched on in my brain!  I realized that a lot of what I thought I knew about Professor Li is wrong.

My new understanding of the role LQMT plays in the tsunami of changes taking place in China solved the mystery about Professor Li; what’s he’s doing; and how LQMT investors are expected to be impacted.  And after you review my presentation, no one should have much doubt about their decision to hold LQMT, or dump the stock.

The information offered within this report is by far the most important to LQMT stockholders than information I’ve shared with you in previous reports. This report identifies signed agreements with a China behemoth and with the Chinese government (“the State”) for the purpose of producing auto parts, in an operation beyond size and scope of the CYYT syndicate, the project I’ve discussed in two previous reports.

Moreover, in this report I present evidence of contract signed between Dongguan Yi’an Techology (“DYT”) and the State involving LM, directly, which is something we’ve all been waiting for beyond evidence of production.   

Up until now, no one has ever really put together what’s really going on behind the scenes at LQMT, because the barriers of language, opacity of information endemic to privately-held companies in China, and cultural differences between the Anglo and Sino worlds are much greater than most uninitiated to the Sino world likely imagine.

And the biggest stumbling block of investors in their desire to weigh whether to own LQMT, or not, becomes so evident and ‘in your face’ after I’m done with this presentation, the term: “not seeing the elephant in the room” probably applies to almost every stockholder of LQMT to this point.

And the answer to questions about Professor Li’s neglectful behavior towards LQMT investors is consistent with “how the Chinese have operated and conducted business for more than 1,000 years,” said my source.  “But, after you ‘get it’, the idea behind the Chinese methods and traditions of doing business are quite sound and advantageous to global trade from the standpoint of reaching domestic harmony.

With a backdrop of the trade war between the U.S. and China running at full-speed, the financial news media have served a wonderful service—for a change.  From the analysis reported of the main drivers of the trade war, the puzzle about LM, Professor Li and his plans for the LQMT stock price are more than clear!  Given the context and the agreement I found, I expose the proverbial elephant in the room.

Honestly, after discovering the CYYT and the incredible amount of deal making, commitments and, now, significant production and revenue recorded for the CYYT, I began to wonder about the motive about Professor Li’s level of scruples regarding disclosures.  Maybe the CYYT had no business with LM, translating to no revenue to shareholders of the LQMT. There is no concrete evidence of LQMT slated to gain revenue from the CYYT, but the project involves amorphous metals.

After discussing the CYYT and Professor Li’s involvement with my source, I felt like a complete chump, akin to feeling like a child questioning a loving parent about why it’s important to finish my dinner before eating dessert.  And what I’m about to layout within this report is the ‘real deal’. It’s real life in China, with moves being made by Professor Li playing out in real time among the country’s heaviest of hitters in a game of global trade.

And for those who think Professor Li is some quixotic Hong Kong businessman who might have made a mistake by his generously-priced purchase of a defunct company are obviously blind.  Surely, something is going on. Well, there is.

In fact, it appears to me the infrastructure of Professor Li’s big push is running concurrently with contracts already in force between Chinese manufacturers of medical equipment and auto parts.  Who the customers of these Chinese manufacturers are still a mystery, but their identity at the moment is less important to the new information I have.

I’ll start by offering some high-octane fuel to the report by reporting Professor Li’s most recent deal.  And the contract signed between Professor Li’s vast holdings under the DYT umbrella provides the framework for revenue scheduled to be generated for LM in 2019.  

Thanks to my source, who told me to “keep digging,” I found enough of Professor Li’s whole enchilada to satisfy myself about my source’s credibility and knowledge of the situation in China.  In short, the CYYT is not the flagship of Professor Li’s naval assault; it’s akin to a mere single destroyer of his naval armada.

And for those who had expected LM’s D-day to take place in 2018, you were unfortunately led astray by the in-and-out traders of LQMT.  Not one serious manufacturer or supplier of significant import operating within any of these three markets, listed above, has not rolled out new technologies en mass… just yet.  

So far, all we’ve been treated to are promotional ‘sneak peaks’ of small new-product runs of consumer and commercial products sporting liquid metal alloys.  So, chill. You’ll get your dessert when these captains of these industries give it to you, which will come by late-2019, the precious few months leading up to the D-day launch of so many new products and technologies in the 2020.

Professor Li Strikes Again in China

I link to an important document, dated August 13, 2018, that answers a lot of my questions concerning for whom Professor Li’s launch of small liquid metal components and BMG parts will be made.  

Admittedly, I missed this document during my deep research in preparation of my last report about the CYYT syndicate, but later found it during my latest round of research and surveillance of LM’s beloved CEO.

Contained in this document are the two parties involved in an agreement: DYT and privately-held China Auto Parts Industry Co., Ltd., a subsidiary of State-owned China National Machinery Industry Corporation (website sinomach.com.cn/).  

Both companies entered into a framework agreement, a most-important ceremonial agreement and custom signed between two Chinese firms in a tradition steeped in the spirit of “Guanxiwang,” according to my source.

In 2017, Fortune Magazine ranks China National Machinery Industry (known to Fortune as Sinomach) as the 256th largest global company, with 150,967 employees, revenue of US$42.6 billion, and a recent change of revenue of 32.3% compared with revenue generated in 2016.   Since 2013, Sinomach had jumped ahead of 70 companies to its present ranking.  Impressive.

Oh, and by the way, Sinomach inched out Goldman Sachs in the 2017 global ranking by three spots.  Sinomach is a big company. Although the CYYT syndicate is quite large, it is small when compared to Sinomach.

Let’s move on to another document, dated June 28, 2018, where you can find the connection between Sinomach and DYT.  The above, linked document describes a meeting held on June 26, where 31 Chinese broker-dealers and an individual, presumably a ‘whale investor’ (no. 32), met to discuss financing of a deal involving a “Zhongyue’s amorphous cooperation” group of companies.

The whale investor, it turns out, is not a whale investor.  Xue Jiping is his name, and he’s the Chairman of Jiangsu Zhongtian Technology Co Ltd (ticker: 600522:CH).  

Zhongtian Technology Co. Ltd. trades at $US3.84 billion of market capitalization, and specializes in technology hardware, such as “optic cables, optic fibers, electric cable materials and accessories, related components, and related controlling systems,” according to Bloomberg.  

Jiangsu Zhongtian Technology operates in the same market as Corning’s market of optic cable production.  Hmm. 5G market? Well, let’s leave that juicy rabbit hole unexplored until I issue another update with any and all facts involving Jiangsu Zhongtian Technology and a deal made with Professor Li.

Therefore, back to the facts.

And how do I know the connection between Sinomach and DYT is the foundation of the June 26 meeting of broker-dealers and investment banking people?  Carefully read the second paragraph from the bottom of the document linked above, and here.  You’ll see the term “Zhongyue’s amorphous cooperation,” as I have previously mentioned.  

Now traverse back to a previous link leading to the Sinomach/DYT contract, and look for “Yi’an Technology and Zhongyue Amorphous Strategy” near the top of the document (after “Special Notes” section).

In other words, the June 26 meeting was convened to introduce funding requirements of the Sinomach/DYT deal.  But Sinomach was not disclosed as the other party within the published document at that time.

I speculate the reason for this omission is: Sinomach wanted to pop out from the shadows of its interests only after a commitment had been reached by the financiers of the project, although, of course, the participants in the meeting had already had known the identity of the kingpin of the proposed partnership with DYT.  But, as you will see, the overwhelming reason behind the secrecy of Simomach’s interest in a project with DYT is consistent with Chinese tradition and methods.

Link to Professor Li’s Operation and Liquidmetal Found

Now, if you’re still with me in this research nightmare, link to the August 22, 2018 announcement, issued by DYT here, that notifies the pubic of the formation of Zhuzhou Yi’an New Materials Research and Development Co., Ltd. (“ZYNM”), a joint venture forged between DYT and Zhuzhou City State-owned Assets Investment Holding Group Co., Ltd. (“the State”), of which the each party holds 60% and 40% ownership, respectively.  

But before I tell you about Professor Li’s relationship with the “muscle” of the State, the punchline to the mystery of ‘how LQMT will get the money’ in this intricate maze of legal entities and deals is contained in the document that announces the formation of ZYNM.  It’s all there, but for the details.

And if you didn’t link and read the document of the DYT deal with the State, the important excerpt regarding the scope of the ZYNM is provided, below:

VII. Business scope: R&D, production and sales of nano-materials, liquid metal (amorphous alloy materials), magnesium-aluminum alloy new materials and their products, molds; design, manufacture and sales of liquid metal forming equipment; liquid metal technical services, technical consultation, technology transfer; technology import and export, import and export of goods. (Projects subject to approval according to law may be operated after approval by relevant departments)

Bombshell!  Do you ‘get it’, yet?

The provision of the agreement between DYT and the State means LM is now legally tied into all of Professor Li’s recent joint ventures, principally the Son-of-Kong syndicate, the CYYT ( discussed in previous reports) and the newly formed King-Kong project with Sinomach.   

And who the heck knows who else will be tied in to the ZYNM?  I state this because I have more leads, but won’t discuss here.  Later.

And how do I know this pearl of information regarding the purpose of ZYNM is to trade with foreign entities?  

The line contained in the August 22 document references the August 17 meeting held by the board of directors of DYT, whereby the board approved contracts involving the trade with foreign entities.  

Sounds strange?  Doesn’t it? Why would a vote take place to discuss whether Professor Li’s business sprawl needs approval of the board of DYT directors?  Read on, because the reason for Sinomach’s deal with DYT ties in with the approval of the DYT board of directors regarding permission for doing business with LM.  So, hold onto that thought.

Therefore, we know which foreign entity holds liquid metal technologies, molds, casting, equipment and technical prowess.  That foreign entity cannot be Leader Biomedical IP Limited, Leader Biomedical Limited, Leader Biomedical Europe BV, all of whom fall within Professor Li’s legion of foreign-based manufacturing babies, who hold no patents for bulk metal glass (“BMG”) production.  

And another foreign entity, Yi’an Hong Kong Co. Ltd, is merely a holding company of Professor Li’s from where he funnels and deploys capital.

The only foreign entity with all of the abilities, as stated in section VII of the announcement about the formation of ZYNM is our company: LM.

Hello?!  Professor Li had to gain approval of the board of directors of DYT to trade with LM for the purpose of supplying Sinomach’s amorphous metals technology needs.  We didn’t see all of this legal activity behind the scenes in China with the CYYT syndicate. But we see it now with Sinomach.

And thanks to my source, who told me the smoking gun regarding the connection between LM and Professor Li’s business sprawl must be somewhere, or will be somewhere at some point, because China’s securities laws mandate publicly-traded companies to disclose detailed material information to investors and other interested parties, much in the same way as the SEC mandates U.S. publicly-traded companies.  “Same. Same,” as they say in China.

Now, I swear I can hear the question from my readers: Why is the announcement of the formation of ZYNM any different from SEC documents already filed with the SEC regarding clauses about free reciprocation of technologies between DYT and LM?  Don’t we already know about Professor Li’s desire to swap technologies between the two companies? Good question from those paying attention to the LM trade.

The answer to the above-question will become clear, along with the answer to the question of why Sinomach’s was not publicly identified during the big meeting of broker-dealers in June 2018.  And the answer to these two question are answered when I unveil the aforementioned ‘elephant in the room’ to the Professor Li mystery.

The CYYT syndicate information I presented in my last report was a mere ‘smoking gun’ of Professor Li’s activities regarding anything related to the production of goods involving special materials, medical equipment, auto parts and consumer electronics.  We all needed that information at that time.

With Eontec and Nanjing Yunhai in control of the CYYT syndicate with 60% and 40% stakes held, respectively, we now know from where the CYYT syndicate gets materials for Professor Li’s upcoming production blitz in 2019.  If you had read my previous reports, you know that material supplier is Nanjing Yunhai, the largest producer of magnesium alloys of the world, and Professor Li’s minority partner in the CYYT syndicate.

As I presented in my last report, the CYYT syndicate is already generating revenue, with a larger expansion of the CYYT, stage II, already in progress.   

With this report, we now know Professor Li has signed-on with State-owned Sinomach, through its subsidiary China Auto Parts Industry Co., Ltd.  Can we assume products made by China Auto Parts Industry Co. are auto parts? I think so.

Critical Event For Professor Li Reveals ‘Elephant in the Room’

The second-half of the report doesn’t contain more ‘smoking guns’, but offers instead a foundation by which an interpretation of the tea leaves of Professor Li’s operation and overall plan is likely to play out.  So, let’s get into why I know the odds of Professor Li cashing out big-time via his vast LQMT holdings is his ultimate goal of his mission.

Here’s what I mean.  And the following discussion truly fascinates me, but also serves as vital intelligence for every shareholder of LQMT, or for shareholders any Chinese-owned company, especially right now.  

My source introduced to me Chinese culture, business mores among Chinese businessmen, and the function of the State in China’s economy.  I begin with a quick anecdote to my presentation before revealing the elephant in the room of the LQMT trade.

I remember once reading several years ago about some hotshot American entrepreneur who decided to take his America-based manufacturing operation to China.  Sounded like a good idea at the time. Everyone was doing it. Right?

After two years, this so-called hotshot retreated back to the United States with his tail firmly between his legs, and told reporters about his decision to abort his China-based plant.  The hotshot said, and I paraphrase, “I had no idea of the roadblocks I had to overcome in order to get one widget out the door.”

At the time of that report, the hotshot’s comment to reporters made an impact on me.  What in the world was he talking about? Did he have problems with regulations? Unions?  Infrastructure problems? What? I don’t remember reading about the reason for the failure of his company in China.

In my discussions with my source, the mystery of why this American businessman had a bad experience in China was solved.  My source said, “The American had no Guanxiwang. Without Guanxiwang, you die in China.”

My source went on to say the Chinese will show up to work for an American, for example, because they are paid to show up to work.  But without the approval and support of a Guanxiwang, Chinese workers won’t violate the group’s Guanxiwang when unwittingly asked by an American (in this case) to do so.  And that conflict between business practices in the U.S. and China happens very fast, even with a seemingly small decision such as the choice of trucking companies to deliver the factory’s goods becomes an issue.

In China, the trucking company hired for the contract must be a member of the right Guanxiwang to deliver those goods.  But the American businessman won’t be told why a Chinese manager has dragged his feet after a decision has been made to work outside the Guanxiwang.

Earlier in this article, I included an announcement of a framework deal made between DYT and State-owned titan Sinomach.

I wrote:

Both companies entered into a framework agreement, a most-important ceremonial agreement and custom signed between two Chinese firms in a tradition steeped in the spirit of “Guanxiwang,” according to my source.

The concept behind Guanxiwang is, generally-speaking, a taboo subject, and is on par in China with discussing deeply-held religious concepts with strangers, especially when discussed with a foreigner, who, in this case, is also the boss.

The practice of Guanxiwang stems from Confucius, Buddhist and Taoism teachings and philosophies of the East.  For shareholders of LQMT, a fuller explanation of Guanxiwang, or more generally, Guanxi, is required reading.

I found the following excellent resources on the subject:

1. Chinese Business Culture and Guanxi (good Powerpoint-style presentation)
2. The Influence of Confucianism and Buddhism on Chinese Business: the Case of Aveiro, Portugal
3. Guanxi: What is it and Why is it a Chinese Business Essential?
4. The Most Misunderstood Business Concept In China

After you get up to speed about the subject of Guanxi and Guanziwang, the outline of the elephant comes into the picture.

Professor Li’s Guanxiwang

So who/what is Li’s Guanxiwang?  

It goes like this.  When the announcement in April 2018, notifying the public of People’s Republic of China’s Zhuzhou City State-owned Assets Investment Holding Group Co., Ltd. had taken a 28.2% majority-stake in DYT, of course the banter that followed in the U.S. focused upon how this event affected LM.

Fair enough, so far.

The response by LM included a brief statement, assuring LQMT investors of no material change to the company.  The statement issued by LM Investor Relations is factual, therefore, no foul was committed. And the issue of Professor Li’s new and controlling State partner left the discussions as fast as it entered.  

But the majority stake of DYT transferred to the State came with became profound implications to those aware of Guanxiwang in China.  Instead of discussions about threats of Professor Li’s operation coming ‘out of left field’ with the power of the Chinese government taking control of DYT, the news of the State taking a controlling stake in DYT should have, instead, compounded the bullish case for LMQT.  

Let’s first read how a Taiwanese news source Snowflake News reported on the matter on April 19, 2018 (translated to English):

On the evening of April 17, Yi’an Technology announced that the company had received the notice from the controlling shareholder Yi’an Industrial Co., Ltd. (“Yi’an Industry”), Yi’an Industrial and Zhuzhou City State-owned Assets Investment Holding Group Co., Ltd. (“Zhuzhou” SDIC” (100% wholly-owned holding company of Zhuzhou City SASAC ) is planning an equity transfer and voting entrustment, which may involve changes in the company’s control and has a significant impact on the company.

After this share transfer and voting rights entrusted, Yi’an Industrial [Li’s parent company of Eontec] expects to hold 21.73% of Yi’an Technology’s [Eontec] voting rights. Zhuzhou Guotou is expected to hold Yi’an Technology’s voting rights ratio of 28.24%. The actual controller of Yi’an Technology will be changed from Mr. Li Yangde to the State-owned Assets Supervision and Administration Commission of Zhuzhou Municipal People’s Government, the sole shareholder of Zhuzhou Guotou.

After retrieving this document for comment from my source, he said, “Li has been elevated to a powerful Guanxi,” the State.

Snowflake News continued:

What’s important is that we [Snowflake News] have written about the investment research report of Yi’an Technology – “Yi’an Technology 430 million will increase the introduction of Zhuzhou State Enterprise, liquid metal unicorn is about to be born!”  The article mentions the importance of the introduction of Zhuan Guotou to the strategic development of Yi’an Technology, and also mentions the dual advantages of the company’s secondary market share price with both the issue price and the fixed price increase.  

After showing my source the Snowflake News article again, he told me Professor Li has reached the power level of the regional State (under control of Beijing), all of which means:

1. Cooperation at the State level among other enterprises that have reached this distinction.
2. More power for Professor Li to affect his dream.
3. More leverage to raise needed funds (akin to achieving an Aaa rating with Moody’s)
4. Gobs of other resources and access to other State-level enterprises with needed ‘muscle’ to capture market share and competitiveness.  

In the parlance of an European State, one can say Professor Li has been knighted.  And all businessmen at Professor Li’s former level of personal and business achievement “know this day might come for them, too, whether they like it, or not,” my source said.  

As Snowflake News puts it, a “unicorn” is about to be born, referring to Professor Li’s new ventures into the amorphous metal business at DYT.

I asked my source whether, or not, Professor Li knew he was slated be taken into the fold of the State.  He said, “Of course, and many others in his circle knew, too. But that big State-owned company in China you told me about, Jay, couldn’t sign a contract with the professor until the State took control of the professor’s company.  It’s all arranged.”

Therefore, my original assessment issued in my previous report about the takeover of DYT by the State was completely wrong.  I had stated I thought Professor Li might use LQMT as his financial escape hatch out of Beijing’s bureaucratic death grip. Wrong!  Instead, Professor Li most likely enjoys the power of the State on his side.

Anglo-centric investors equate State-controlled enterprises with dead entities and inferior growth prospects.  In China, however, a knock on the door by the State with a bag of money and a desire of a controlling interest in your company is akin to Ed McMahon informing you that you’ve won the Publishers Clearing House Sweepstakes… the next unicorn.

With Professor Li as the driver of LQMT, our savior, folks, is the power behind the Chinese government!  The Chinese government is the proverbial elephant in the room of the LQMT trade. And it’s the lost analysis of LQMT from an event that took place nearly six months ago.  “Trust me, J, the guy’s already counting the money,” my source laughed.

The move by the State to take a controlling stake in DYT comes with a mandate of cooperation by other State-owned or State-controlled companies operating within the guanxiwang projects of State interest, with plenty of access to cheap and available capital (while companies outside the guanxiwang have been mandated to deleverage), and approved access to the Chinese markets for the guanxiwang’s products.  All of this intense fanfare is a result of China’s Made In China 2025 initiative, the One Belt, One Road initiative, and, now, the trade war between the U.S. and China.

Therefore, it should come as no surprise, four months after the State purchased a controlling interest in DYT, Professor Li was able to cinch an eye-to-eye deal with Sinomach’s massive muscle of 150,000 employees-strong.  And the mystery behind the formation of ZYNM, formalized as the entity whereby technologies, equipment and know-how between DYT and LM will flow through the newly-minted partnership of ZYNM must have been pushed hard by the State for its project with Sinomach.

Guanxi and Guanxiwang are pretty cool stuff.  But I must stress that, mores of Chinese cultural are deeply-rooted, and Guanxi is also extremely serious stuff, akin to the responsibilities and concepts associated with ‘Noblesse Oblige” among peers of European aristocracy.  

After only 20 minutes of researching about the benefits of become part of a Guanxiwang at the level of the State, I found these excerpts from a recently-published article about Guanxiwang (not by name) as a contentious trade issue expressed by President Trump during the ongoing foray of communications with the American voter about the U.S. trade war with China.

Listed below, are excerpts from an article published by The Epoch Times, entitled, What Is the ‘Made in China 2025’ Program That Is the Target of US Tariffs?  This sole article touches upon all points pertinent to a final point I will make at the end of the article that allows even the bind to see my proverbial elephant.

An official from the U.S. trade representative’s (USTR) office told Reuters the U.S. tariff list targeted Chinese tech products that benefit from the Chinese regime’s industrial policies, including the “Made in China 2025” program.

…

What is the Made in China 2025 program exactly?

The initiative was unveiled in 2015 as the Chinese regime’s signature 10-year economic plan. It outlines goals to develop 10 domestic tech manufacturing industries: “(1) advanced information technology; (2) robotics and automated machine tools; (3) aircraft and aircraft components; (4) maritime vessels and marine engineering equipment; (5) advanced rail equipment; (6) new energy vehicles; (7) electrical generation and transmission equipment; (8) agricultural machinery and equipment; (9) new materials; and (10) pharmaceuticals and advanced medical devices.

…

China pursues an outbound industrial policy with government capital and highly opaque investor networks to facilitate high-tech acquisitions abroad. This undermines the principles of fair competition: China’s state-led economic system is exploiting the openness of market economies in Europe and the United States.

…

Such financial support is evidence that private Chinese firms are directed by the state on where to engage in foreign acquisitions, the USTR report found.

…

Another method the Chinese regime uses to acquire foreign technology is to force American and other Western firms operating in China to transfer their tech knowledge to their Chinese joint-ventures, in exchange for market access.

…

According to the US-China Business Council’s 2017 member survey, 19 percent of responding companies said that in the past year they had been directly asked to transfer technology. Of these, 33 percent said that the request came from a central government entity and 25 percent that it came from the local government.

…

The USTR report found that for U.S. companies that are the focus of China’s industrial policies, the pressure to transfer technology was “particularly intense.” A 2017 government survey of the U.S. integrated circuit industry found that 25 companies had to form joint ventures with Chinese entities and transfer technology in exchange for market access.

Any trader who’ve been involved with the LQMT trade for some time know that the emphasized text within the excerpts of the article apply to Professor Li and LM…in spades!  Are there really any doubts?

Curious Timeline of Events

Let’s take a look at the timeline of important recent events surrounding LM since the State knighted Professor Li on April 17.  Now, my readers might understand the formidable force of the State behind Professor Li’s entire enchilada, including a heavily influenced calendar of events Professor Li had to adhere to of the past six-month time period.  

April 17:  The State takes control of DYT.  The State takes ultimate control of most of Professor Li’s business empire, including the following companies, of which DYT has legal control:

Hunan Salt Industry Co. Ltd. (600929)

Dongguan Meian Magnesium Science & Technology Co. Ltd.

Dongguan Zhong An Enterprise Management Consulting Center LP

Jiamusi

Hainan Wenchang Dowell Industrial Co. Ltd.

Ashura (BVI) Ltd.

Dowell Electric Works Co. Ltd.

Guangdong Materials Research Society

Aap Joints International Ltd.

Dowell Holdings Co. Ltd.

German Aap Biotec Co. Ltd.

Precision Products (BVI) Ltd.

Aap Implantate International Ltd.

Yi’an Industrial Co. Ltd. (mother company of Dongguan Yi’an Technology)

Aap Orthopedics Ltd.

South China University of Technology

Dowell Resort Ltd.

Dongguan Dewei Casting Product Co. Ltd.

Gang An Holdings Co. Ltd.

….and more

June 15: Headline-Trump ignites trade war with China, officially announces tariffs on $50 billion worth of Chinese goods

“Ignites” is the important word in this headline.  Kudos goes out to the editor of Business Insider (Malaysia), because Trump did ignite, and officially start a trade war with China.  This is Trump’s rendition of the Japanese version of bombing Pearl Harbor, in reverse, and against another “enemy.”

My source tells me the Sino-centric media (all Chinese-speaking publishers of the world) were collectively shocked after Trump actually escalated rhetoric to a level of concrete action, resulting to a complete about-face of good sentiment among traders of Chinese stocks.

But don’t be fooled into thinking Beijing was shocked, my source said.  Just as it appears, today, that Washington had pre knowledge of an impending attacked of Hawaii in 1941, it appears Beijing, too, had pre knowledge of Trump’s tariff attacks upon China.

June 22: Paul Hauck ”resigned” as the Executive Vice President of Sales.   LQMT investors were stunned.  

The LQMT SEC Form 8-K read:

On June 22, 2018, Paul Hauck resigned as the Executive Vice President of Sales and Marketing of Liquidmetal Technologies, Inc. (the “Company”). Mr. Hauck did not resign because of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

Hmm.  Maybe Hauck could shed some light on what I’m telling you now.  

June 26:  A DYT meeting was held, with 31 Chinese broker-dealers and Xue Jiping, Chairman of Jiangsu Zhongtian Technology Co Ltd, in attendance.  Discussion were directed to the financiers’ participation in Beijing’s project with DYT and Sinomach.

August 17: DYT board of directors approve trade with foreign entities possessing needed liquid metal technologies, materials, equipment, production and expertise involved with the items listed within the signed agreement of the formation of ZYNM on August 17 between DYT and the State (same day as DYT board meeting).

August 17: DYT and the State sign an agreement to establish Zhuzhou Yi’an New Materials Research and Development Co., Ltd. (ZYNM), a joint venture between DYT and the State, held in a 60% and 40% ownership, respectively.  This is the “bombshell” document.

Let’s get into more detail about this agreement.  The document issued by DYT, notifying stockholders of the newly-formed ZYNM included the following clause:

The foreign investment and related party transactions need not be submitted to the shareholders’ meeting for deliberation, and do not constitute a major asset restructuring as stipulated in the Measures for the Administration of Major Asset Restructuring of Listed Companies.

With a registered capital of $7.3 million reported as held by the ZYNM, the transactions between LM and ZYNM might not constitute enough money to be considered a “major asset restructuring” for DYT, but that’s a lot of potential revenue for LM and fuel for a stock rally of LQMT shares.  I like this already.

And an independent director of DYT issued a document to the board of directors on August 17, as well,, entitled, [Yi’an] Technology: Opinions on prior approval of the independent directors of foreign investment Connected Transaction, wherein there’s a clause about an “urgent need.”

We believe that this foreign investment and related party transactions will be beneficial to the clustering advantages of Zhuzhou’s “China Power Valley” aviation, electric locomotives, new energy vehicles and its supporting industries, focusing on the urgent need for new materials and new industries.

There sure was a lot of activity going on at DYT on August 17.  Someone has ants in his pants.

The China Power Valley is located in Hunan Province, where China Auto Parts Industry Co., Ltd., Sinomach’s subsidiary, is located, and where Professor Li’s newly-formed joint venture with the State, ZYNM, is located.  What a coincidence. No?

After noticing all the deals made by Professor Li are with companies located mostly in South China (across from Hong Kong) and Jiangsu Province, the China Power Valley, located in Hunan Province, north of Guangdong Province, is clearly out of the path of Professor Li’s sprawl of companies and recent deals located along the East and South China Seas.  Interesting.

Apparently, when the State tells Professor Li to hop to Hunan, the professor starts hopping to Hunan, where LM revenue is located. 

Conclusion

Gleaned from all the research I’ve done to this point, the entire planet is gearing up for mass production runs in 2019 for deliveries of new products, materials and technologies.  LM technologies will be riddled throughout some of the roll out of these new materials, products and technologies.

In addition to Professor Li’s deal-making with new companies involved with his amorphous metals production projects in China, within the past six months State-owned behemoth Sinomach has come into the picture along with subsequent documents filed indicating a joint venture with the State and DYT had become an urgent priority to approve and fund for deployment of LM “assets” in China Power Valley, the home of the Chinese Electric Vehicle (“EV”) makers.  

Apparently, the State is more concerned with Chinese EV makers getting its hands on LM technologies, leaving foreign makers of EV’s to fend for themselves.  I looked up the location of all Volkswagen plants, for instance, and I saw no plant located in Hunan Province.

In fact, Volkswagen, was initially my speculative odds-on favorite as a likely automaker Professor Li would likely snag as a customer.  Well, I would have lost that bet.

The purpose of the joint venture between Professor Li and the State is to transfer technology via an import/export arrangement that independent directors of DYT feel is not necessary to report to sitting board of directors of DYT because of the inconsequential size of the transactions.  Really?

I’ve read documents filed by the board of directors of DYT that have less gravity than weight of US$7.3 million of capital initially deployed for the ZYNM company.  In fact, I know of three separate notification to investors involving stock swap arrangements by DYT and the company’s trustee totaling approximately US$3.0 million.  

Sure, one side is an equity side of the ledger, and the other side pertains to assets, but US$7.3 million is not ‘chump change’ to DYT.  Is it a big deal? I’m know sure, yet. But apparently, trading with a foreign entity is a big deal to DYT. I’m watching this, along with further notification of stock swaps, because stock swaps are famously known as pledges of capital for the purpose of offsetting cash flowing between two entities, such as DYT and LM, for instance.       

In any event, $7.3 million, an amount that is material to LM and potential catalyst for a rally share price of LQMT.  That’s the point I want to convey.

Given the facts about the power of State-owned enterprises in China, the amount of documents concerning material events has jump considerably, beginning in June.  Professor Li’s lack of communications at LM appears to be for sound reasons, including reasons concerning China’s sensitivities surrounding complaints by the Trump Administration during the ongoing U.S./China trade war, in addition to sanctions possibly levied against China at the World Trade Organization.  Scary stuff.

I don’t expect a ‘heads up’ to any sudden influx of revenue derived from ZYNM.  Instead, revenue might come in from ZYNM with no fanfare attached to the bumps to revenue at LM.  

But, one day in year 2020, the year I expect a LQMT stock price above $1.50, Professor Li might announce a stock swap and merger between DYT and LM. Professor Li has already told investors of his intention to merge the two companies as soon as LM become cash flow positive.

Under this scenario, LQMT stockholders will become DYT stockholders, which has been the model Chinese State-owned companies have use to gain technology, jobs and added economic growth, since 2015.  Because Professor Li seized control of LM before President-elect Trump entered the White House, I don’t expect this model to change for Professor Li. But I will be updating my subscribers about any changes to the model I sense might come.  But for now, evidence of progress at LM in China appears strong, stronger than I had thought earlier.

Disclosure

As of this report date in October 23, 2018 I own 1,175,000 shares in LQMT $.231 or $271,588, plan to add shares, have a goal of selling above $.40 for profit, or taking a loss.