Quantum Materials Corp Needs Cash Badly

An article was published last week on Aznano titled “Quantum Dot LED Display Development Kicked Off by Quantum Materials Corp” in which it was stated that a company called Quantum Materials Corp is “now supplying tetrapod quantum dots to an Asian manufacturer of LCD displays“. The article goes on to state that “it will be fascinating to see the first prototypes of these game-changing QD-LED displays when they emerge“. Given that Quantum Materials Corp is an over-the-counter (OTC) stock, and that many OTC stocks have lost investors money over the years, this merits a much closer look at who the company is.

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In November 2008, Quantum Materials Corp (OTCMKTS:QTMM) changed its business plans from pursuing the mining of mineral rights located in Nevada to pursuing the business plans of its subsidiary, Solterra, a start-up solar technology and quantum dot manufacturing firm. QTMM’s shares jumped 40% last Friday, presumably on the back of their recent press release giving the company a market cap of just over $10 million. As of March 31, 2013, the company had $1,625 in cash on hand and licenses worth $55,000 bringing total assets of the company to $56,625. Total shareholders’ deficit sits around $13 million currently. The company has no revenues.

Technology

The company currently has licensing agreements with Rice University, the University of Arizona, and Arizona State University (ASU). Regarding Rice University, the company states in their latest 10-Q  that they were unable to meet the August 2012 minimum royalty payments agreed upon with Rice as well as production milestones and that they are in discussions with Rice regarding the status of their license agreement. Regarding ASU, QTMM agreed to pay ASU $835,000 for printed solar cell development work. As of June 30, 2010, $630,000 of these costs had been incurred. QTMM has paid ASU $175,000 under their contract with ASU and is attempting to negotiate a substantially reduced fee payable for the remainder. Regarding the University of Arizona, the company has licensed one patent titled “Screen Printing Techniques for the Fabrication of Organic Light – Emitting Diodes” and has agreed to yearly royalty payments increasing each year to 2015 with the next payment of $25,000 due on Dec 31 2013.

Progress

The press release referenced by Aznano states that Quantum Materials Corp has “shipped Tetrapod Quantum Dots in sample quantities to a diversified leading Asian-based electronics manufacturer”. Assuming that these were solicited shipments, it still hardly means they are “supplying” to this leading manufacturer.

In the latest 10-Q (Q1 2013) the below statement is made regarding the company’s goals for the production of quantum dots :

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.

With 2012 having come and gone and the agreement with Rice in discussion as a result of missing production targets it seems unlikely the company met this goal.

In regards to current financial standing, the latest 10-Q makes the following statement:

As of March 31, 2013, the Company lacks sufficient cash continues to incur losses in its development stage operations.  In the past, the Company has been relying on loans from its Chief Executive Officer resulting from private sale transactions of our common stock that is owned by him. The Company is in arrears in payments related to these business agreements.  The company also owes $1,784,122 in back wages and salaries; employees and consultants have agreed to defer payment of the wages and fees owed to them.

While the recent announcement seems meaningful on the surface, the company is in need of funding. Investors should ask themselves just what potential the company has to begin mass-producing quantum dots even if they are able to get funding through a severely discounted secondary offering. For exposure to quantum dots, investors should also look at a company we profiled earlier called Nanoco which is currently partnered with Dow Chemical and is in the process of mass-producing quantum dots.

Update September 17, 2013:  We received an email from Art Lamstein, Director of Marketing at QTMM,  asking us to retract this article. Since all the facts in the article are taken from the latest available 10-Q of the company (March 31, 2013) we have nothing to retract. We look forward to any newly filed 10-Qs or 8-Ks which may provide an update as to how the Company has progressed since.

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