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This is the state-owned company that Eontec sought and obtained 430 million yuan in investment in a non-public offering. That had been in the works for years.
I don't know if the transfer of control was planned, but the investment was. That makes me believe that this is a part of the plan, not some hostile takeover. If it is part of the plan, it means that Li felt the investment and relinquishing of majority ownership was worth the price paid. I also suspect that he retains effective control when his share is paired with that held by other investors.
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From Josh's post on the 2017 Eontec Board of Directors commentary:
"In October 2017, the company received the “Approval of Approval of Non-Public Issuance of Shares of Eontec issued by the China Securities Regulatory Commission (CSRC [2017] No. 1872). Up to now, the company has successfully completed the non-public issuance of 50 million shares (Zhuzhou State-owned Assets Investment Holding Group Co., Ltd. full-time placing company, this non-public issuance of 50 million shares) and the listing of new shares.
The company's non-public offering of shares to be introduced by the purchaser Zhuzhou State-owned Assets Investment Holding Group Co., Ltd. is a state-owned investment enterprise group in Zhuzhou City and a 100% wholly-owned enterprise in Zhuzhou SASAC. Its main scope of business is: State-owned assets investment. And operations; financial investment and services; and other supporting industry operations and management related to the main business. The companies that it invests in include industries, agriculture, finance, real estate, tourism, and parks. The manufacturing-related companies include Zhuzhou Smelter Group Co., Ltd., Weichai Power ( 000338 ) Co., Ltd., and Zhuzhou Tianqiao Crane ( 002523 ) Machinery Co., Ltd. Co., Ltd., and some of them have a certain correlation with the company's business, which is conducive to the company's in-depth cooperation with Zhuzhou City State-owned Assets Investment Holding Group Co., Ltd. subordinated investment companies.
The issuance of funds raised in the issuance will be directed to the construction project of Yi'an Yunhai Light Alloy Precision Die Casting Production Base, the expansion of amorphous alloy (liquid metal) precision structural parts and the construction of an amorphous alloy (liquid metal) research and development center. After the implementation of the above projects, It will help the company to consolidate its existing competitive advantages and further enhance its position in the industry."
4. Corporate Governance
Company will strictly follow the requirements of laws, regulations, and regulatory documents such as the “Company Law,” “Securities Law,” and “Code of Corporate Governance for Listed Companies,” and continue to improve the corporate governance structure to ensure that shareholders can fully exercise their rights and ensure the board of directors. Ability to exercise its powers in accordance with laws, regulations, and articles of association, and make scientific, prompt, and prudent decisions to ensure that independent directors can perform their duties conscientiously, safeguard the company's overall interests, especially the legal rights of small and medium shareholders, and ensure that the board of supervisors can independently and effectively exercise The right to supervise and inspect the directors, senior management personnel, and company finances provides institutional guarantees for the development of the company.
I wonder why it ultimately went to Houston.
"Lastly, had any of us had to report that kind of thing on a Blog I trust we would have been so humiliated that we would have resigned rather than post more such nonsense. Not so by our LQMT trough feeders ... as long as investors keep providing the nourishment they will continue to eat rather than produce."
You have all of the metrics that should matter. You know the dates at which the global adoption of a new material should have happened. You know how fast it should take to turn around a company and integrate it into the Li empire. You know exactly the decisions being made by each entity with regard to replacing steel or titanium in their products. You understand FDA approval, the CE market, automotive, and the nuances of royalty payments, electrical upgrades, throughput speeds, scrap rates, zirconium prices, trade wars, market competition for technical resources, R&D costs, and supplier non-disclosure agreements. You have absorbed it all. Thankfully, you don't cloud the heads of us simpletons with these difficult concepts. Instead, you draw the simple lines for us. "It should have happened by now. If you don't believe that, you are being taken and misled by the LQMT trough feeders."
If it weren't for your 7 years of experience with LQMT, Eagle, I would personally be lost with my head in the clouds. When I try to make things too complex, you always draw the simple lines for me to show me how stupidly optimistic I am being. Hopefully, I'll be as rich and well informed as you on my 7th anniversary as an investor with LQMT. I can then simply shut out the noise, and curse LQMT for not being what I personally expect it to be for me. Then I will post my pessimism 20 times a day for any new investors to read.
You are either short, you are a troll, or you are an idiot for staying with a company that believe in so little. Who is the one here believing in the lottery?
Completely understandable that you are fed up after 12 years. I agree that it the pieces are now in place, and the performance can be accurately measured.
I disagree with the notion that a 90 day sales and marketing push must result in a contract within 2 months. It just isn't reasonable. I believe his 90 day push started when the pieces were finally in place. He was given a marketing budget to make the push. The blog was his explanation of the steps he would take.
I don't read that it is a statement that something will happen. I read it as "Finally, I have something to sell, and this is how I am starting."
The 100s of RFQs were legitimate leads, with no feasible product with which to win business.
If I were a Cleveland Browns fan, I'd be fed up. That doesn't mean I would blame the first round pick from 2015 for the last 0-16 season. It's more complex than that.
I think your 3rd Quarter deadline is reasonable. I will consider the same if our revenue is still that low in November.
Yes. This.
I am always suspicious of simple answers that discount reality. Fire Hauck using iHop, "it's simple, just sell something" reasoning, and you will simply waste a year trying to find someone else who can effectively grasp and sell this alloy.
I would take away all of the reasons that are out of Hauck's control first, rather than demanding he pull an expensive rabbit from a gullible hat. Then give the guy a year. I believe the 90 day period is the start of that evaluation period. I support this as a shareholder, because I do not want to lose months transitioning to another sales "guru" who is handcuffed with the same constraints.
Who is "everyone" holding him to a 90 day "promise" he never actually made?
How do we know this is his absolute last chance? Is "everyone" selling if we can't directly attribute contracts to Paul Hauck on the morning of the 91st day after the blog post?
Despite being a shareholder for 4 years and counting, I don't know if the lack of a competitively priced metal, an expandable and compliant manufacturing facility, etc. should have been something he could have overcome. Maybe he should have been able to sell contracts with overpriced LM105 and one Engel machine in the old space.
I think that he finally has the things he needs to be effective. I think once he had them, he started a concerted, 90-day push. I think that he expects that this push will net some production contracts in a 6 - 18 month time frame.
Turning his blog post into something it isn't on a public board is misinformation. Having a personal opinion about his performance to-date is fair.
I'm no Hauck apologist, but I fail to see this "promise" you keep talking about.
"Liquidmetal is on the move. I’m pleased to report that our new, larger facility is up-and-running, positioning us to facilitate more manufacturing activity than ever before. In response, this week we are rolling out an aggressive 90-day sales and marketing plan designed to leverage our increased capacity in 2018."
Did I miss a sentence in his blog where he guarantees new production orders at the end of the 90-day period?
Another less precise way to estimate would be on the projected Model 3s sold...
https://www.google.com/amp/s/seekingalpha.com/amp/news/3331575-model-3-production-estimated-1k-per-week
1500 or so in Q4. 12500 or so in Q1. If Tesla is paying us, our revenue should ramp up quickly to match Tesla’s.
I agree. When I say $100 a vehicle, I mean from Eontec, as they have the Tesla contract in our territory.
The cross licensing agreement with Eontec applies to all materials and technology, not just Liquidmetal.
Tesla produced 1550 Model 3s in the 4th quarter. At a $100 fee per car, LQMT would have made $155,000.
We had $321,000 in revenue for the year, with $157,000 in accounts receivable. $66K in licensing/royalties.
Tesla is scheduled to ramp up to 5000 per week by the end of second quarter. That would be half a million in revenue per week. Don't hold your breath for those numbers, but they should be better than they were in the 4th quarter.
Tesla was supposed to hit those numbers at least 6 months earlier than what is now predicted. Li says we are 6 months behind.
I think this is partially the reason for our Q4 "spike" in revenue. If this is true, we should see a ramp up in revenue that mimics the Model 3 production numbers.
Qualcomm?
“In March 2009, we entered into a license agreement with Swatch Group, Ltd.
("Swatch") under which Swatch was granted a non-exclusive license to our
technology to produce and market watches and certain other luxury products. In
March 2011, this license agreement was amended to grant Swatch exclusive rights
as to watches, but non-exclusive as to Apple, and our license agreement with
LLPG was simultaneously amended to exclude watches from LLPG's rights. We will
receive royalty payments over the life of the contract on all Liquidmetal
products produced and sold by Swatch. The license agreement with Swatch will
expire on the expiration date of the last licensed patent.”
I'm not disagreeing with you. I'm saying that by looking at the actions of any of the current executives you cannot reasonably determine we are all doomed. Their fortunes continue to be aligned with those of the investors.
Hauck, Chung, Bromage have enough shares to make themselves rich, and want to keep their finances balanced...
or
The ship is sinking and they are jumping off.
Both are possibilities. If the first is a "fairytale", then the "simpler version" that the ship must be going down must be true. With that sort of information, I'm surprised you are still invested.
"With that said, if I see Li license Eontec CE IP to Liquidmetal I think things will get interesting, and I will hold much longer than end of March."
But how can that be true if Chung and Hauck bailed out? Why would they bail out if Li were going to do this? It is a fairytale to think that they sold for any reason other than impending bankruptcy.
I'm not disputing your skepticism, only your absolutism on the meaning of each shred of information, good or bad.
Here is a counterargument...
Paul Hauck and Tony Chung, for example, are likely somewhere in the middle of their careers; 40 - 55 years old. Maybe they have high school or college aged kids. Hauck likely lives in Orange County, giving him a significant mortgage. By all accounts he is doing well for himself.
At this point in his career, he has probably managed to put away $2 million to $3 million into his retirement. He has probably also been college educations for his kids.
He undoubtedly makes more than he spends, so he has been putting money into post tax investments for a while. After the dust settles from his other obligations, maybe $50K - $80K annually.
He still owns has north of 2 million options.
What would I do if I were Paul Hauck, and this scenario is relatively accurate?
To retire comfortably in So Cal is $5 Million+ I'm on track for that, with or without my options.
Income covers all costs, including school for the kids, and milk bones for the dogs.
I have $500K - $1 million in post tax investments, wisely invested in broader market equities. I keep $100K in cash or money market.
I have great faith in the new direction of the company. I honestly believe that we will see $20 a share within 10 years. At that point, between my non-LQMT holdings and my options, I will be worth $30 -$40 million.
Would I use any of that roughly $1 million I have in cash or the broader market to buy LQMT? No way. Things look pretty good the way they are.
As an investor, Eicheljaeger wants the following:
1. Please use all $1 million to buy LQMT on the open market.
2. Please mortgage your house and buy LQMT in the open market.
3. Please hold every share until I am out.
4. Please ask your kids to foot their own college education so that you have more money to publicly support LQMT.
5. Ration the milk bones so that you have more money for LQMT.
When an investor doesn't get what the investor wants, but the employee is still on track to make tens of millions of dollars before retirement, the issue is not the company's prospects. Our interests are still aligned. The issue is that the investor wants it all, and wants it now. The employee is living his or her life, and making good decisions.
You cannot use Chung, Bromage or Hauck as barometers for the health of the company, when they stand to become very rich men with their current holdings.
In a very tight job market, if Hauck left by his own volition, (thereby leaving his unvested options behind), I would see that as a sign he did not think he would become rich where he is.
It was. The new 10K should be out in March. I haven't seen any large sales by Bruce Bromage in the last year.
I assume your list shows pure stock ownership, and the LQMT site includes options.
Not according to the the company website...
LQMT 2017 10K List of Beneficial Owners
It’s almost as if someone thought this through before spending $63 million.
I bet the auto industry is very aware of how trade wars can affect their margins and hedge accordingly.
Also, tariffs are being discussed around steel and aluminum, making magnesium and BMG more cost competitive.
Knowns:
1. Li owns 400+ million shares of LQMT
2. LQMT BOD, shareholders and Chinese government and perhaps Apple allowed him to acquire these shares
3. Eontec has built out capacity with massive funding by the Chines government
4. Eontec has recently solicited non public funds for further expansion to further expand capacity
5. Li has established many JVs in order to ramp up expansion
6. Li has introduced LQMT to the players in China with who, he interacts (e.g. Foxconn)
7. 5g
8. Automotive and magnesium
9. 100billion yuan in CE market
10. Large sums of money is hard to get out of China
11. ROFR
If you are Li...
1. How do you make sure that your money is spendable worldwide?
2. How do you sell your biggest Eontec shareholders on the merits of giving royalties for Eontec sales to LQMT?
3. How do the rich Chinese nationals that participated in the NP funding make sure that their money, once earned,;is spendable worldwide?
4. When I eventually merge all of the pieces and parts around the world into one entity,;how do I make sure that the liquidity exists so that me and my friends can cash out. If only I had an entity big enough to be on an American exchange where funds were forced to contribute/rebalance all of that 401k and IRA money.
5.My NP offering was only completed recently. Therefore, my buddies, who are in this to get rich, need time to enter positions to get rich on both sides of the Pacific. What happens if LQMT announces a contract before they get a chance to buy in?
6. Should I assuage iHop shareholders and kiss Tim Cook’s ring on every contract opportunity, or should I wait until after mid February?
7. Should I lannounce every little Martin guitar-like contract only to watch the share price retreat by 50%, or should I coordinate my media blitz to release a barrage of news that continually punishes the shorts?
8. If an Apple prognosticator indicates that the cheapest iPhone will be made with an aluminum mid frame, will account for 100 million units: and will amount to 50% of all iPhones sold, what will the other 50% be made from in the enhanced 4g and 5g worlds? What would Apple advise me to pontificate to the world on a quarterly conference call?
If you think Li is in this for our patents and a little hobby shop in Lake Forest, you are worrying yourself unnecessarily. What you should legitimately concern yourself with is whether or not he can pull this off before some unknown political, personal or economic event derails him. There are real risks here. The ones that this board focuses on are yesterday’s risks, not today’s.
Li and his investors need to get paid on both sides of the Pacific. If only Li gets paid, Chinese investors won’t let him give LQMT their piece. He has to make them rich in both countries as well so that they too can get their money out of China. Without NASDAQ liquidity, everyone is trapped. The biggest Eontec investors, including Li, want LQMT to soar, to soar at a sustained rate, and to do so quickly to start the Nasdaq clock.
He still has to sell to be successful. Let’s hope he has that wrapped up as well.
Given the many recorded shipments from Eontec to Tesla and Tesla suppliers, I wonder if the language in the cross licensing agreement could result in a royalty/commission to LQMT:
2.3. Territories. Eontec shall take such action and measures as shall be necessary to ensure that Eontec Licensed Products are not sold or resold in or into the LMT Exclusive Territory by Eontec or any other party in the chain of distribution (whether as a part of a finished product assembled or produced by a third party or otherwise) without first obtaining the prior written consent of LMT. LMT shall take such action and measures as shall be necessary to ensure that LMT Licensed Products are not sold or resold in or into the Eontec Exclusive Territory by LMT or any other party in the chain of distribution (whether as a part of a finished product assembled or produced by a third party or otherwise) without first obtaining the prior written consent of Eontec.
I think he probably was. I also think that once recruited, the bar he had to meet was still high. Whether he meets or has met that bar, or whether Apple went in a different direction is a mystery.
Apple is good at keeping secrets. In fact, if we weren’t at least talking to Apple, why wouldn’t they simply deny it and move on? The secrecy, including the absence of quarterly calls, makes me think the infamous Apple $50 million penalty for supplier leaks is in effect.
If there is no there there with Apple, I doubt we are pursuing CE on our own without some loophole that Li found via Eontec. That scenario also leaves Apple to forgo BMG until they can produce it as inexpensively as their competitors using Eontec’s formula.
The only thing I can come up with is that they have still many many shares in their possession.
These are the questions that need asking. I’ll take a shot by giving my opinion.
Put the MTA and ROFR aside for a minute, as they can be changed if both parties feel the need.
The Chinese government has adopted a five year plan and a long range plan based upon the principles in Jeremy Rifkin’s book “The Third Industrial Revolution” which among other things, has put China on a path of new industrialization via internet technologies and domestic consumption. Their long term initiative is entitled “Made in China 2025”. They are linking up their industrial infrastructure via the Internet of things.
Some of the big Chinese companies like Huawei and ZTE have been big beneficiaries of this push, which includes the initiative to be the first major adopter of 5G. As mentioned by WATTS in a previous post, this local favoritism has put Apple at a significant disadvantage that even their war chest can not overcome.
The Chinese handset market is the largest in the world, followed by India, then by the U.S. 5G is absolutely integral to Made in China 2025. A phone with steel or aluminum is not RF transparent. A steel frame or aluminum frame glass sandwich like the iPhone X does not allow for small components to be screwed to the glass. The future of the market, in the near term at least, is BMG.
Eontec, as we all know, is the only manufacturer that has the capability to produce 1000g of BMG in one shot. This is important for large volume orders such as a cell phone mid frame. Eontec, therefore has created a joint venture with LK to produce as many of its machines as possible, with money loaned by the Chinese government, in the name of a Chinese-led 3rd industrial revolution.
If Eicheljager can piece this much together in 2017, Tim Cook had this dynamic figured out in 2014 or 2015. What do you do if you run the largest company in the world, and your only avenue to grow significantly is to penetrate the Chinese market, dominated by heavily subsidized locals? You cut a deal with Eontec. You are now supporting Chinese industry, Chinese ambitions, and Chinese technology. But what about the formula to which you own perpetual CE rights? Abandon it? If I were Apple, I would look for a way to combine my need for cheap, scalable BMG with my years of research. “Lugee Li, you have our blessing (which was likely necessary) to acquire a controlling interest in LQMT.”
Apple needs Eontec. They also could use a California-based entity to manufacture their own prototypes, keeping in line with their tight-lipped nature. They also could use the good press of using a U.S. supplier, perhaps to the point of investing in some U.S. based manufacturing capacity for LQMT to make something like an Apple Watch.
The focus is always on why Apple doesn’t need LQMT, and how we contractually cannot stop them. But what if Apple WANTS to place its orders through LQMT? They will pay what they pay for a phone case. If LQMT gets the royalty as a condition of letting Li in the door, with Apple getting to mix and match BMG formulas within one device, all produced by Foxconn, using Eontec branded machines for DC105 and Engel machines for LM105, then everyone wins.
If Apple turns down that scenario, or one similar to that, what happens? Eontec sells to everyone else. LQMT probably would not benefit to the extent it would with Apple.
Tim Cook realized 2 years ago that Apple makes the most money by partnering with Li. This is Apple’s plan as much as it is Li’s. Li, of course, has to prove he can scale up. He also needs to build the local manufacturing to the point where he can satisfy medical and Apple prototyping.
LQMT makes money, because it is a package deal that was a precondition to allowing Li in the door, in exchange for the ability to mix and match formulas based upon cost/ need.
This scenario can’t be picked from the MTA nor the ROFR, because those are protective documents, not opportunistic documents.
We are a penny stock for a reason. That scenario cannot be proven until it does or doesn’t happen.
Just my opinion. Find the holes, and propose a new narrative. I am confident that there is a plan in place, and that it is largely proceeding as intended. The silence is telling.
My only agenda is to make money. I don’t want to be fleeced any more than the rest of the board does.
Fair enough.
There is a chart within the document, the purpose of which is to show that the company’s customers do not overlap in a way that would constitute a threat to local (Chinese) industry. It shows Tesla royalties as one of the top 1 or 2 revenue sources for LQMT.
I’d love for some more people to read that document and provide input. They are citing roughly a 10% royalty from TESLA equal to approximately $72K paid to LQMT in 2016 based upon an Eontec order.
If the same arrangement existed in 2017, and we made a few hundred thousand from TESLA, it wouldn’t be easy to separate from the other small hits of revenue we have received.
If the model 3 ramps up, we could see more. If the deal that produced these royalties is finished, we might not see a thing.
Its a document that has floated around since Josh posted in April. Why no one wants to talk about a 100+ page document with so many potential clues is beyond me.
There have been many bills of lading from Eontec to SAPA posted. Whether or not we have or will derive royalties from those parts is unknown to me. The previous royalties were for the door lock . I assume they will continue producing them for the Model 3 and we will receive some more small royalties. The big tonnage we have been seeing? No idea. I hope so, but i can’t definitively state that we would be entitled to anything unless It is LQMT’s deal subcontracted to Eontec. I don’t see the revenue that makes me think that is the case.
I tend to think it is real. It appears that the revenue from Tesla goes to Eontec, with some sort of royalty going to LQMT. However, that royalty doesn’t seem to add up to much. If the deal gets publicized, we might get a nice bump. If not, I’m not sure the few hundred thousand dollars a year will do much for us.
I do not read Chinese either. My investment was important enough to me to find google translate. If it isn’t that important to you, please do go back to blaming whomever you were blaming before I posted the information you were purportedly looking for.
Your choice not to take another 15 minutes to translate it and read where the Tesla connection to LQMT came from.
I’m answering the question posed.
http://www.cninfo.com.cn/finalpage/2017-04-06/1203257912.PDF
Posted numerous times in the past.
Thank you for putting this out there. We need more real discussion on this board, rather than the doom and gloom vs. cheerleader struggle.
I believe what you say to be true. It looks as if we cannot license in the area of CE in perpetuity, as that is owned by Apple. I think that changes the calculus to favor Apple more, but Li knew this when buying his shares. It isn't a new development.
I still think we are at the crossroads. I also think that there are some Eontec shareholders that followed Li to LQMT with a significant investment.
Li had a plan. I'm trying to figure out where that plan has gone right, and where it may have gone wrong. Failing to get sufficient power for a sintering oven for MIM is not likely something that is keeping him up at night, as I doubt it holds the key to world BMG domination.
We will see about February. I don't expect some big unveiling. I do expect to begin seeing evidence in the financials that is hard to hide.
Well, therein lies the hole in my theory. Thank you for the correction.
So the pressure on Apple to give us a deal is reduced to:
1. Apple needs DC105 for cost reasons
2. Apple will want exclusivity. Li doesn't have to give it to Apple without a good deal. He can still choose to go the direction of the other makers.
I don't know that Apple controls the brand name, except in China, in any way after the ROFR. They have perpetual rights via CIP to the patented methods of production.
I don't see why LQMT couldn't sell rights to Eontec, and what Apple would do about it if they did.
I think he would license DC105 to everyone. I also agree that Liquidmetal as a name today isn't worth much. That scenario doesn't help LQMT much either. In this scenario, Eontec is just another BMG manufacturer, and DC105 is just another formulation.
Look at it from Apple's perspective. Years contributing to CIP, and all of your competitors beat you to the punch by using Li's formulation.
If you were Li, and you wanted to really put the pressure on Apple, wouldn't you also try to find a way to let the other makers use the name Liquidmetal?
I'm not proposing that LQMT license DC105 to Samsung. I am saying that we allow naming rights to Eontec for a royalty. For example, Samsung makes OLED screens for Apple. OLED makes a nice royalty on every iPhone, presumably paid to them by Samsung.
All conjecture. I find it more productive than worrying about the daily ups and downs of a penny or two.
Ha! No. I haven't bought or sold any since last March. I'm not interested trading anything. I'm just trying to consolidate a few years worth of opinions into a few posts.
I don't have any special insight into that. Logically speaking, you wouldn't merge the companies until you extracted the exponential value out of LQMT. That comes after a big board listing. Without NASDAQ, you would not have the stock price stability to cash in on that explosive growth.
I think that Li has tried to put himself in the best negotiating position possible. If Apple offers the best deal (which must include the worldwide recognition of the brand) then he chooses Apple. If the other piece of the market proves more lucrative, he will choose that.
To tie himself to Apple exclusively is going to cost Apple. I imagine that it would need to include the heavy promotion of Liquidmetal as a brand, as that is the key to the next level.
Just my opinion.