Nanalyze

Quantum Materials Corp and Rice University

In an article this past week we discussed a company called Quantum Materials Corp (OTCMKTS:QTMM) using the most recent available information from the SEC filings for the Company available, a March 31 2013 10-Q. Three days after this article was published, QTMM filed an 8-K with the SEC to define amendments for their two agreements with Rice University; one agreement with QTMM and one with QTMM subsidiary, Solterra. Given that the SEC requires a company to file an 8-K within 4 business days of a significant material event occurring, we can only assume that this amendment was agreed upon in the past four business days. Both agreements refer to the below intellectual property:

QTMM_IP

Source: QTMM September 19, 2013 8-K Filing

Solterra Amendments

The Solterra agreement has two amendments; the effective dates of the royalty structure for the sale of photovoltaic cells by Solterra and the annual minimum royalties for the same. The first amendment of the royalty structure can be seen below:

Source: QTMM September 19, 2013 8-K Filing

Source: QTMM September 19, 2013 8-K Filing

The second amendment regarding annual minimum royalties states that the first amount due is $100,000 on January 1 2016 with amounts each year increasing thereafter. From January 1 2019 and every year thereafter the annual minimum royalty amount is fixed at $53,153,600.

QTMM Amendment

Similar to the amendment in the Solterra agreement, the QTMM agreement has an amendment that also defines a new structure for minimum annual royalty payments as seen below:

Source: QTMM September 19, 2013 8-K Filing

Source: QTMM September 19, 2013 8-K Filing

Solterra and QTMM Milestones

According to the agreements, both Solterra and QTMM have very clearly stated obligations to fulfill which are referred to as “company diligence milestones”. The most near term obligation is to establish quantum dot production pilot plant capable of producing 1000 g/week and to offer for sale a Rice Licensed Product for use in medical applications on or before August 15, 2014. The Companies are expected to offer for sale solar cells incorporating a Rice Licensed Product on or before January 30, 2015 and to start up a full scale quantum dot production plant by February 15, 2015. Further objectives include bringing a 10 MW capacity solar cell pilot production line on-stream by April 28,2015 and offering for sale a Rice Licensed Product for use in electronic applications on or before August 15, 2015.

Rice University is a pioneer in the area of nanotechnology research having established the first nanotechnology center in the US. Their research accomplishments in the area of quantum dots are cited in many academic papers and news articles. With the Rice agreements now amended, QTMM can focus on achieving the very clear set of objectives stated for the coming years.

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  • J Dallon

    I just came across this company and they seem to be making headway and they are getting some good media coverage with the recent press release. The intelellectual property mentioned in this article refers to a single international patent. If that patent allows them to CHEAPLY produce quantum dots in a way in which others can’t then the patent is worth something. They have under a year to get to mass production of 2.2 pounds of dots a week. They also need to be selling these. Does anyone know the buyers that are lined up if they get there?

    • J Dallon

      Also should consider the price. Let’s say they sell at $10,000 a pound. That’s $20,000 dollars. What price can these sell at? The article says they need to get to full scale production but at what price and what volume? That would be good ot know.

      • Jason P

        When you divide the “Annual Minimum Royalty” by your proposed $10K/lb price you get:
        2.9 lbs prior to 2015, 11.7 the next year, 29.3, and 58.5 for perpetuity. Rice doesn’t have a say on the price so if the company sells their dots at higher value, less volume is needed; if the price is lower then more.

        • J Dallon

          Good point but that’s if they pay Rice all the proceeds from the sale of their dots. They have to make a profit so they will need to produce more that the minimum royalty requires which also has to consider costs. If they can produce cheaply with there method, this will be easier to accomplish. Agreeing to pay and being able to pay are two different things. If you look at the Solterra agreement it is remarkable. If they can actually pay Rice 53 million by 2019 and beyond what sort of profits would they be making on the sale of solar cells!?!?!? Remember a big boy could also swoop in and take them out at such a low price before then.

          • Ken

            The company is very tightly held and has not been funded by venture capitalists or government grants to get to commercialization.Their patent pending flow process is what differentiates them from other companies who are trying to scale up.One microreactor will be able to produce 100kg per day.At that rate they will be the only company able to supply the demands for large scale solar or lighting projects.They also own a key patent from ASU for roll to roll which is key for mass production of flexible displays or solar panels.If you do some research on Tetrapod quantum dots you will find out why they are superior in every way to spherical quantum dots and another reason why I believe this company will be the market leader in the near future.These are my opinions only and based on hundreds of hours of research on nanotechnology and quantum dots in particular.

          • I think the scenario would be more that a big boy will swoop in and take them over! Big boys like companies with big potential. That equates to big profits. This company Quantum Materials Corp. fits that bill, selling the next generation semiconductor that fills a demand gap for quality, performance and efficiency that they hold the rights to market world wide, while being able to mass produce them cheaper than any other manufacturer. The stuff that big boys want to be part of, a product that is used in a diversity of markets such as the display market, medical and upcoming solar market. I say upcoming because panels aren’t cheap enough yet for the individual home owner to go off the grid, when they are the market will explode. Solterra is positioning for that market. I’ll leave you with the thought that you should consider investing in this little company while it’s still unknown because the markets that the Tetrapod Quantum Dots will be used in is best summed up by the companies Marketing Director from an earlier PR: Art Lamstein, Director of Marketing for QMC and SRT added, “The timeline is moved forward to present day and market forecasts will need be rewritten for quantum dot based renewable energy, photovoltaics, biotech diagnostic assays, drug delivery platforms, theranostic cancer and other biomedicine treatments, QD-LED and opto-electronic devices, photonics, low power SSL lighting, batteries, fuel cells, thermo-QD applications, quantum computing, memory, and conductive inks (to name a few).”

  • John A

    Potential Investors should check out Investors Hub QTMM..
    http://investorshub.advfn.com/boards/board.aspx?board_id=15185

    • Mr Right

      Just don’t say anything negative about the company.

  • Mr Right

    BTW, this is a company that is down 23% year-to-date with a long history of unmet promises:

    http://www.sec.gov/Archives/edgar/data/1403570/000101376213000713/form10q.htm
    Coupled within cell cost per watt decreasing below $.75/Watt, we intend to pursue initial product sales in early 2013 with significant increases later in 2013.

    http://www.sec.gov/Archives/edgar/data/1403570/000101376212000333/form10k.htm
    Coupled within cell cost per watt decreasing below $.75/Watt, we intend to pursue initial product sales in late 2012 with significant increases in 2013.

    http://www.sec.gov/Archives/edgar/data/1403570/000101376211002070/form10q.htm
    Coupled within cell cost per watt decreasing below $.75/Watt, we intend to pursue initial product sales in late 2011 with significant increases in 2012.

    http://www.sec.gov/Archives/edgar/data/1403570/000101376209002046/form10k.htm
    Coupled within cell cost per watt decreasing below $1.00/Watt, we intend to pursue initial product sales in late 2010 with significant increases in 2011.

    Above statements VERBATIM from filings. You guys see the trend here?

    • Ken

      Mr.Wrong,

      Nanosys and Nanoco are both off the mark as well with their scale up timelines.QdVision has not disclosed how or how much qd they can supply.Its about meeting the market and that is where QMC is at this moment.Let’s see who scales up first.

    • ken

      Mr.Wrong,

      I forgot to add that your post was on QMCs subsidiary company Solterra Renewable Technologies. At the time Solterra was very engaged with the Saudis for a large scale solar project and because they did not fully commit the company went back to focusing on their core business of tetrapod quantum dots which they are now close to commercializing. The fact that the Saudis have spent basically none of the 107 billion they said have slated for solar projects since then is part of the reason why there has been no action for Solterra to date or other solar companies as well in SA. I will help you with your due diligence if you need it, just ask so that the whole picture is portrayed rather than just one aspect. Sometimes its just being lazy sometimes its just ignorance, and sometimes its just bashing for bashings sake.Where do you fit in and what is your interest in this market ?

      Good day !
      Ken

  • Mr Right

    Bill Leigh, when you said that Art Lamstein, Director of Marketing for QMC and SRT added, “The timeline is moved forward to present day and market forecasts will need be rewritten” you were completely right. They need to be rewritten every filing 🙂

    • Latest filing is being written/reviewed right now. Stand by for the next couple filings. MR. Right, you have no idea how you’re really Mr. Wrong. It’s guys like you that I love. Once you realize you’re watching the train pull away from the station and get that deep sinking feeling in the pit of your stomach that you missed the opportunity that was within your grasp, you, Mr. Right will be scrambling to catch the next train available. Unfortunately by that point you will be chasing the price of the only publicly traded company that offers this unique product that will be used in so many diverse markets. I love you guys because it’s my option then to sell you a share or two at a significantly higher price. Foresight is so much better than hindsight!

    • Sam Bass

      Seems like all of these quantum dot companies fail to miss their forecast.

      Nanoco>>expects production to rise to 43kg in 2012 and 125kg in 2013. It expects a selling price of $500/g with gross margins of 55%. That suggests revenues of $21.5m and a gross margin of $11.8m in 2012.

      (Nanalyze Editor needed to remove links that were broken in this comment)

  • Mr Right

    Ken, you are right. I posted QTMM’s subsidiary Solterra’s unmet promises. I meant to post QTMM’s unmet promises as seen below:

    http://www.sec.gov/Archives/edgar/data/1403570/000101376208002376/form10q.htm
    The Company expects to commence sales of its manufactured quantum dots by the summer of 2009.

    http://www.sec.gov/Archives/edgar/data/1403570/000101376209000880/form10q.htm
    The Company expects to commence limited sales of its manufactured quantum dots by the fall of 2009.

    http://www.sec.gov/Archives/edgar/data/1403570/000101376210001292/form10q.htm
    The design of the pilot line is intended such that the initial target output of the line, at approximately one kilogram per day, can be further scaled at least by an order of magnitude to 100 Kilograms per day in late 2010.

    http://www.sec.gov/Archives/edgar/data/1403570/000101376211002070/form10q.htm
    The design of the pilot line is intended such that the initial target output of the line, at approximately one kilogram per day, can be further scaled at least by an order of magnitude to 100 Kilograms per day in 2011.

    http://www.sec.gov/Archives/edgar/data/1403570/000101376212002172/for10q.htm
    The design of the pilot line is intended such that the initial target output of the line, at approximately one kilogram per day, can be further scaled at least by an order of magnitude to 100 Kilograms per day in 2012.

    In 2013 filings it seems they forgot to update the date and it still gives the unmet 2012 promise. Bill Leigh, you are right. The train is leaving the station except it going backwards.

    • Bill

      You never answered Ken’s question what is your interest here? You are not lazy, you spent the time to look up all the filings, I don’t think you’re ignorant, from what I’ve seen so far, so that leaves a basher. Let me ask you a question, how many new technologies and processes have you brought into the commercial market? How many were on time for those startup companies in a developmental stage? If you read the latest 8k you would see some of those milestones are followed by the word COMPLETE. They may not have been on time but it’s far more important they were accomplished. GL2U

      • Mr Right

        When I do research on a company I like to do it thoroughly so as not to make poor investments and to be absolutely sure of my conclusions as I am sure you do. When I spend a great deal of time and energy looking into a a company and find out that it makes forward looking statements to investors and changes them constantly by simply cutting and pasting and changing dates these are huge red flags. I’m sharing these findings with others so they aware of what not may be completely obvious in this article. I can now move on to looking at more companies safely assured that if any of the new Rice milestones are met, I’ll be back to have a second look. Best of luck 2 you as well.

        • Ken

          Its to bad your research isn’t up to date and it doesn’t cover QMC moving into a new facility ..hiring staff…shipping samples..etc.Complete the story not just the parts that suite you for your purposes.

        • Ken

          Maybe you should do all the research not just the negatives you can find…like …QMC moving into new facility …hiring staff…sending “Requested” samples out to clients.Its easy to see your purpose here…

  • Nanalyze author, your follow up article is NOT UNBAISED, here’s why:

    UNBAISED REALLY? Why would you imply something other than the truth?
    “Given that the SEC requires a company to file an 8-K within 4 business days of a significant material event occurring, we can only assume that this amendment was agreed upon in the past four business days”.
    Remove that sentence and it would be unbiased reporting. Not ASSUMING, the facts are as you know them:

    CURRENT REPORT
    Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

    Date of Report (Date of earliest event reported): September 19, 2013 (August 21, 2013)

    Let me run through a possible scenario:
    Rice sends the papers to QMC on or after 8-21-13. They are received and reviewed by the CEO, he then has to send them to the lawyer to review, I’m sure they talked and I’m sure the lawyer didn’t drop everything he was doing just to look at the amended letter. You know for a fact there were no discussions with Rice or any typo’s that had to be corrected? 4 weeks in the business world to get a response for something that was not mission critical sounds reasonable to me. So why do you bring up in your article that they have to report to the SEC within 4 days of the event? UNBAISED I don’t think. You need to reread your mission statement and reread it again. You’re not doing yourself any favors nor anyone looking for WISE investment advice from you.

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