“The delay in processing of the upfront license fee was largely an unintended consequence of expanding the project scope from the initial $20M to the now proposed $70M.”
I think Steve was being diplomatic when he said that.
There are at least two parts to this venture. There is the JV agreement between Amtronics and AMTRON, which covers the construction and operation of the facility, equipment purchases, production, sales, etc.
Then there is the licensing agreement between QMC and Amtronics/AMTRON, which allows the use of QMC’s IP by the JV for an upfront $1M fee and defines the costs for equipment to be purchased from QMC and the costs for QMC’s technical support.
When the licensing agreement was signed in November, the parties were supposed to be ready to move forward with the 12,000 ft2 facility under the terms of that agreement. AMTRON should have been prepared to pay QMC the initial $500K within 30 days.
However, as we later found out, the parties had started to reevaluate the scope of the project in December and had prepared a new proposal based on the larger 120,000 ft2 facility by mid-January.
To me, the majority of the impact of this scope change was on the JV agreement and not on the license agreement. I can understand that uncertainty due to the re-negotiations could have postponed the initial payment to QMC beyond the 12/19/18 due date. But then AMTRON promised in writing that the total $1M payment would be made to QMC by 1/31/19. With the new expanded scope JV proposal in hand in mid-January, it should have been obvious that the basic terms of the licensing agreement would remain unchanged and AMTRON could have made the then over due $1M upfront payment in good faith on 1/31/19. But they didn’t.
Then in mid-February “The Company has recently been provided additional validation that the governmental transfer approval was complete and that funds should be received by the Company on or before February 20, 2019”.
Again, AMTRON failed to deliver in February and a month later, on March 15, AMTRON finally delivered only the first half of the over due $1M payment, 3 months late, with another promise that the remain $500K is in process.
I’m sure Steve was very happy to finally announce the $500K partial payment to his shareholders and that progress was being made (pilings installed), but I would not consider this business relationship to be off to a great start. Starting is good, but I have reservations about AMTRONs performance.
I will wait and see.
The timeline:
The initial License and Development Agreement between Amtronics and QMC was signed and announced on 11/19/18. This Agreement was based on building a 12,000 facility with a budget of $24,000.
QMC was to be paid $500K by 12/19/18 and another $500K by 1/19/19.
Per the mid January Update, both QMC principles and those of our licensees worked through the (December) holidays in order to complete a proposal for the expansion of the Assam Tech City quantum dot operation that would increase the investment from the Indian government from $4M to a total of $12M and increase the investment from the licensees from $20M to $70M.
On 12/19/18 QMC was not paid the first $500K.
On 12/23/18, AMTRON paid the first investment of $1M USD into the overall project fund.
Amtronics then transferred a $500K USD commitment fee to the group that has secured the $20M investment funding.
On 12/29/18, QMC received a letter from the managing director of the AMTRON, confirming that the requisite $1M USD upfront license fee would be paid to QMC on or before January 31, 2019.
On 1/16/19, QMC attended the Foundation Stone Laying Ceremony of the QUANTUM DOTS NANO COMPLEX at Tech City, Guwahati. QMC also issued the Update Report to Shareholders which stated that the total $1M was to be paid by AMTRON on or before 1/31/19.
On 1/31/19 QMC was not paid the combined $1M as promised by AMTRON.
On 2/14/19 QMC issued the 2Q 10-Q. The 10-Q stated that the “Company has recently been provided additional validation that the governmental transfer approval was complete and that funds should be received by the Company on or before February 20, 2019”.
On 2/20/19 QMC was again not paid the $1M.
On 3/15/19 QMC announced in a PR that it had finally received the initial $500K along with confirmation that the $500K balance payment was in process.
