Quantum Materials Corp. (fka QTMM)

[ih8aloss]

FYI One of todays Seeking Alpha posts:
https://seekingalpha.com/article/4286691-quantum-materials-corp-looks-set-turnaround

PS. He only has 15,000 followers

Pictures, graphs and charts not included in the below post.
Quantum Materials Corp. Looks Set For A Turnaround
Aug. 19, 2019 5:04 PM ET |
About: Quantum Materials Corp. (QTMM)
Matt Bohlsen
Investment advisor, portfolio strategy, growth at reasonable price
Marketplace
Trend Investing
(15,088 followers)
Summary

What are quantum dots [QDs] and their applications? Quantum dots fluoresce (generate light) when energy is applied to them or generate energy when light is applied.

The global quantum dots market accounted for $734 million in 2016 and is expected to reach $22 billion by 2023, growing at a CAGR of 62.6%.

Quantum Materials Corp.'s business and licensing plans.

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This article first appeared on Trend Investing on July 11 therefore all data is as of this date.

Quantum Materials Corp. (OTCQB:QTMM) - Price = CAD 0.028

Quantum Materials Corp. ("QMC") is a US company headquartered in San Marcos, Texas, USA, that designs and develops quantum dots and other nano-materials using a patented process capable of producing commercial quantities of these materials with high performance characteristics at low cost and rapid scale up. Target markets are major end-use markets such as displays, lighting applications (e.g.: LEDs), solar, security & surveillance, batteries, sensors, and biotechnology/medical applications.

Quantum Materials Corp. state they are a "leading American nanomaterial & cadmium free quantum dot manufacturer."

Solterra Renewable Technologies Inc. is the wholly-owned subsidiary of Quantum Materials. Solterra is developing next-gen quantum dot solar cells printing by roll-to-roll processes. The "goal" is that by using quantum dots the efficiency of solar cells can be significantly improved above conventional solar cells. You can read more here.

As shown on the chart below, the stock price has suffered for a decade. I would be the first to agree this is a warning sign for investors to have added caution; however, it can also be explained in part as the company has undergone a long journey to develop and then market their products, etc. Given production and revenues are just around the corner, the timing appears right for a small entry.

Quantum Materials Corp. price graph

Source: Google Finance
What are quantum dots [QDs] and their applications?

Quantum dots [QDs] are super tiny semiconductor particles a few nanometres in size, having optical and electronic properties that differ from larger LED particles. Quantum dots are artificial atoms ranging in size from <1.5 to > 40 nanometers made up of 1 to 50 atoms. One nanometer is 10 to the power -9 meter or "a millionth of a millimeter". Approximately 10,000 QDs would fit across the diameter of a human hair.

When the quantum dots are illuminated by UV light, some of the electrons receive enough energy to break free from the atoms creating a conductance band in which electrons are free to move through a material and conduct electricity.

In simple terms:

Quantum Dots fluoresce (generate light) when energy is applied to them or generate energy when light is applied.

You can read more on quantum dots here.
Quantum dots applications

Quantum Materials Corp. develops and manufactures several types of quantum dots. The company has patented chemistry that enables production of highly uniform tetrapod quantum dots with excellent yields. The structure of a tetrapod quantum dot consists of a central core with 4 rods protruding from the center, significantly different from the spherical quantum dots sold on the market today. It is important to note that the tetrapods are superior in energy absorption and emission than related spherical or rod-like structures.

Displays

For all types of displays (TVs, etc.), quantum dots have the potential to be the next big thing, by bringing better image quality to displays. Tetrapod quantum dots are an advanced nanoscale material that improves the performance and energy efficiency of very high-resolution computer, TV and smartphone displays. Quantum Materials' patent-pending automated production technology produces uniform, narrow bandwidth quantum dots with bright emission, less aggregation, purer colors (including high-luminous red) and precise color rendition. Their higher brightness means fewer quantum dots are required to achieve the same level of performance needed, for more cost savings.

Note: Quantum Materials does not use the tetrapods in displays, but instead a 100% cadmium free RoHS compliant spherical quantum dot is used for displays.

Solar

Quantum dot solar cells can absorb solar energy from the visible spectrum to the invisible infrared and ultraviolet bands even at night, thus allowing for 24 hour per day energy production.

According to NREL & QMC, quantum dot solar, at ~66%-70%, has a 'theoretical' potential conversion efficiency nearly twice as great as all non-quantum dot solar cell technologies. This, coupled with the ability to print quantum dot solar cells with conventional printing equipment, will result in the lowest cost solar technology bar none. Quantum Materials has equipment which is capable of producing 100 kg per day at very competitive costs.

Quantum Materials subsidiary Solterra Renewable Technologies, Inc. is in the development and mass-production of quantum dot solar cells by roll-to-roll printing on flexible films. The company say that their roll to roll printing and low cost of continuous flow quantum dot production process is expected to produce the lowest cost thin film solar solution once at scale.

Other applications

There are numerous other applications such as solid state lighting (improves LEDs performance and hence lowers cost), security and surveillance (nano dots can be secretly embedded in clothing, etc.), anti-counterfeiting, water purification, medical (cancer and disease detection and possibly treatment using fluorescence of quantum dot markers), conductive inks, and many others. An area I find most interesting is that quantum dots in batteries can increase power performance and rapid charging abilities.

Quantum Materials is focused on the following applications:

a) Thin film electronics which includes, solar, display, lighting and energy storage (super capacitors); using thin film roll to roll printing for these applications.

b) Anti-counterfeiting, track and trace. This technology combines their materials technology and its ability to emit a non-clonable mark with a robust software based ledger.
Global Quantum dots market outlook

Research and Markets quote from the Quantum Dot - Global Market Outlook (2017-2023) report:

"The Global Quantum Dots Market accounted for $734 million in 2016 and is expected to reach $22 billion by 2023 growing at a CAGR of 62.6%. Factors such as rising demand for optimized devices with better performance and resolution quality and ability to emit brighter light increases energy efficiency are fueling the market growth. However, huge price of the technology, small price of competing technologies and use of heavy metals as raw material are hampering the market growth."

Quantum dots market size forecasts

Source: Private company chart (no link)
Quantum Materials business plan

Quantum Materials is the developer of the quantum dots technology. The company's plan is to sell licenses and equipment, charge royalties, and/or sub-contract out manufacturing of their products.

Quantum Materials Corp.'s licensing plans

Quantum Materials has signed a licensing agreement for large scale volume production of quantum dots in Assam, India. The agreement is with Amtronics India, which formed Qamronics India Pvt. (JV between Amtronics India and Assam Electronics Development Corporation Ltd. (AMTRON) which is state-owned) for the purpose of building the Assam, India, production facility.
Management

Stephen Squires - Founder, Chairman & CEO of Quantum Materials Corp., CEO of Quantum Materials Asia Co., Ltd., and Managing Director and Founder of Solterra Renewable Technologies, Inc.

Mr. Squires has over 30 years experience in advanced materials, nanotechnology and other emerging technologies. From 1983 to 2001, Mr. Squires was Founder and CEO of Aviation Composite Technologies Inc., which he grew to have over 200 employees and $20 million in revenue. ACT was merged with USDR Aerospace in 2001. In the late 1970s, at McDonnell Douglas, he developed and adapted advanced materials for combat aircraft applications.

David Doderer - Director

David Doderer has over 20 years of research & development experience in the emerging technologies of biotech and nanotech with an emphasis on exploring the properties of nanomaterials and quantum dots, and integrating them within projects.

Dr. Ghassan Jabbour - Board Member

Professor Jabbour is Canada Research Chair Tier 1 in the Electrical Engineering department at the University of Ottawa, Canada. He was the Founding Director of the Solar and Photovolatic Engineering Center, Named Professor of Materials Engineering and Professor of Electrical Engineering at KAUST. Dr. Jabbour was one of the founding PIs for the Flexible Display Center [FDC] at Arizona State University [ASU], the Director of Flexible and Organic Electronics Development at FDC, Director of Advanced Photovoltaics Center [ASU], and a Professor of the School of Materials [ASU]. Prof. Jabbour has had many distinguished honors and awards.

Source: Company website
Largest Shareholders and insiders

Insiders hold ~6.5% which is not bad.

Source: 4-traders
Valuation

Quantum Materials has a market cap of USD 16.5m with 581m shares outstanding (as of May 10, 2019), and is not yet earnings positive.

Cash levels shown as of end March 2019 were low at USD 135,292; however, the company is expecting USD 500,400 as shown in their account receivables.

It is a bit early for me to have a price target. I was not able to find any analyst's price targets.

Quantum Materials current financials

Note the net income has an error and should read negative USD 9.401 million, not billion.

Note the latest Quarterly Report shows total liabilities at USD 7,192,413.

Source: Bloomberg
Catalysts

2019 - Possible off-take announcements. The company stated in January 2019 that they were "in discussions with a number of the industry’s leading electronics OEMs in an effort to identify the optimum industry partner that will be capable of delivering this solution to a very broad market."
2019 - Possible further license agreements and/or quantum dot off-take agreements.
Late 2019/early 2020 - Commencement of quantum dot production in Assam, India.

Latest News and achievements

July 2018 - Advanced remote phosphor QD-LED development – surpassed 10,000 hours continuous on-time.

October 2018 - (For displays) Achieved industry leading 91% Rec. 2020 coverage on chip with cadmium-free QD remote phosphor.

December 2018 - Completed licensing agreement with Amtronics India to establish large scale QD production in Assam, India, for 3rd generation solar, displays and SSL.

Note: Qamronics India Pvt. has been established to manufacture quantum dot semiconductors and quantum dot thin film solar cells using patented technologies licensed from Quantum Materials Corp. USA.

Note: Amtronics has decades of experience throughout the Middle East and Asia in developing and managing infrastructure and commercial construction projects, scaling technologies and has developed exceptional operational expertise.

On April 29, 2019, Quantum Materials announced:

"Quantum Materials Corp. unveils industry’s first 100% cadmium-free 55 inch Quantum Dot LCD Display with 95% Rec. 2020 Performance. Quantum Materials Corp. CEO Stephen B. Squires stated that “We are extremely excited to announce this level of QD performance in a totally cadmium-free display product. We have received very encouraging indications of interest from OEM electronics manufacturers that are looking to increase the color rendering capabilities of their displays without adding cadmium and upon reaching this milestone, we believe we are now in a position to partner to commercialize this technology in order to get our QD materials into consumer displays. With the advent of this low cost, high performance offering, we believe we can materially disrupt the industry and create a market condition wherein QD enhanced technology can become a de-facto standard in consumer displays."

On June 13, 2019, Quantum Materials announced:

"Quantum Materials Corp. announces $1 million order for two high volume quantum dot production systems. The $1M order has been placed by Amtronics LLC and has been secured with a letter of credit issued by Assam Electronic Development Corporation Limited. The two systems are scheduled to be delivered to Amtronics LLC on or before June 30, 2019 and will be deployed at the Quantum Materials Corp’s licensee’ new Tech City site in Assam, India, currently under construction with a target completion date of November 2019... Quantum Material's is the leader in high volume, low cost, quantum dot production using its patented continuous flow process technologies. Their QDX dots have been engineered to provide long-term reliability making them ideally suited for solar, energy storage, lighting and display applications... Commenting on the news, M.K. Yadava, CEO of Assam Electronics Development Corp., stated: "We are excited to see our vision taking shape in this exciting new venture to build next generation technology utilizing quantum dot materials. We are making excellent progress in constructing the new quantum dot facilities here at Tech City and with weather permitting, we believe the new facility will be completed according to schedule with an opening date on or about Nov 2019.""

Risks

The company is burning cash (loss making) and currently funded by shareholders. Funding risk remains in the short term.
Technology change.
The usual risks of new development and production companies - technical issues, licensing/production problems, competition.
Management and currency risks.
Sovereign risk is low to medium (headquarters in USA, Qamronics is in India).
Stock market risks - dilution, lack of liquidity, market sentiment.

Investors can view the company presentation here, the latest quarterly report here, and an older CEO interview here.
Competitors

Quantum dot producers

Advano, American Dye Source Inc., Antibodies Incorporated, Attonuclei, Avantama AG, CAN GmbH, China Beijing Beida Jubang Science & Technology Co., Ltd., Creative Diagnostics, CrystalPlex Corporation, Cytodiagnostics, Dow Chemical Company, Dotz Nano Ltd., DuPont, Emfutur Technologies, Evident Thermoelectrics, Fuji Pigment Co., Ltd., Green Science Alliance Co. Ltd., Hansol Chemical Co. Ltd., IQDEMY Quantum Technology SA, KRI, Inc., Merck KGaA/EMD Performance Materials, Mesolight, Lab21 Limited, Najing Tech, Nano Elements Source LLC, Nano Chem Tech Inc., Nanoco Group Plc, Nanooptical Materials Inc., NanoPhotonica, Inc., Nanosquare Inc., Nanosys Inc., Navillum Nanotechnologies LLC, Nexdot SAS, Nippon Chemical Industrial Co., Ltd., NN-Labs, LLC, Ocean Nanotech LLC, Particle Works, PhosphorTech Corporation, Quantum Solutions, Shanghai Simbatt Energy Technology Co., Ltd., Shoei Chemical Inc., Sigma-Aldrich, Sinon Therapeutics, Solvay SA, StoreDot Ltd., Thermo Fisher Scientific, Tianjin Zhonghuan Electronic Lighting Technology Co., UbiQD, LLC, Unique Materials, Wah Hong Industrial Corporation, Wuhan Jiayuan Quantum Dots Co., Ltd., XF Nano, Zhonghuan Quantum.

Quantum dot product developers

Acer Inc, AUO Optronics, BOE Technology Group Co., Ltd., Efun Technology Co., Ltd., HiSense, Innolux Corporation, LG Display Co. Ltd., LMS Co. Ltd., Lumileds, Luminit, ML System S.A Zaczernie, Nano-Lit Technologies, Natcore Technology, Inc., NS Materials Inc., Osram Opto Semiconductors, QD Laser Inc., QD Solar QMAT Inc., Quantag, Ranovus, Raytheon Company, Revolution Lighting Technologies, Samsung, TCL Corporation, Tianma Microelectronics Co. Ltd., TPV-Vision.
Conclusion

Quantum Materials shareholders have had a rough past decade and certainly the financials look typical of an R&D company burning cash; however, it looks increasingly likely the company is about to turn the corner.

The quantum dot sector is expected to surge at a CAGR of 62.6%. Competition is fierce; however, Quantum Materials has a competitive edge with their better performing quantum dots (with no cadmium) and a low cost flow production process which is soon to be put into large scale production in India.

Connecting the "dots" - The late 2018 news of a licensing agreement to establish large scale quantum dot production in Assam, India, the June 2019 $1 million order for two high volume quantum dot production systems, the Assam site development by Qamronics, all lead me to believe quantum dot related revenues (license fees and royalties, etc.) are not far away (~2020). This is confirmed by the company saying the India factory has a "completion date of November 2019". The CapEx of the India land and factory is to be shouldered by Qamronics India.

It is too early to give an accurate valuation for the company; however, given the enormous potential upside in the sector, buying now on a market cap of USD 16m appears to leave plenty of upside and minimal downside. Given the poor share price and financial performance to date, investors would be wise to invest cautiously on this high risk/high reward nanotech company.

I intend to follow up very soon with a CEO interview exclusive for Trend Investing members.

As usual, all comments are welcome.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The information in this article is general in nature and should not be relied upon as personal financial advice.