QRSciences makes US push

Perth technology company QRSciences has continued its push into the US market, with chief executive Kevin Russeth relocating to San Diego and its stock now trading in the US over-the-counter market.

This followed a presentation last month at the annual DEMO conference in the US, an invitation-only event that has served as the launch pad for companies such as Palm and E*Trade.

QR has also moved to compulsory acquisition of its namesake subsidiary, after lifting its shareholding to 92.09 per cent early this month.

The acquisition was a final step in tidying up QR’s corporate structure, and comes seven years after the development of its quadrupole resonance technology commenced.

The company has invested more than $30 million in its technology and is currently focused on developing an explosive detection system, designed to supplement existing x-ray security systems installed in airports.

Mr Russeth said he was moving to the US to be closer to his main potential market.

As well as being the biggest market for airport security systems, he said the US was the standard setter for the rest of the world.

In addition, Mr Russeth said QR was hoping to obtain equity finding in the US and research funding from the private sector and government agencies.

The company earned its first income in 2004 and has subsequently signed two major research and development contracts.

Its contract with the Transport Safety Administration, an agency of the US Department of Homeland Security, will bring in about $400,000 of revenue.

QR said it was unable to disclose the details of the contract, but initial work would be carried out in Perth.

This followed a contract with the China Institute of Atomic Energy to work on the development of a new multi-technology screening system.

As well as R&D contract funding, QR aims to generate revenue from outsourced consulting and equipment sales.

However the big opportunity will come from royalty and licence income, if and when manufacturers incorporate its technology in their products.

Mr Russeth said pilot testing currently under way would be critical to the company’s future.

“This is a really important year for us,” he said.

If the pilot tests are successful, Mr Russeth said commercial orders could start to flow.

Unlike other technology companies, which need to build their own manufacturing plant or appoint a contract manufacturer, QR’s main customers, such as Rapiscan and L-3 Communications, which dominate the US airport security market, have their own manufacturing facilities.

The main direct competition for QR comes from Quantum Magnetics, a company owned by giant multinational GE.

Mr Russeth said he was confident of QR’s ability to compete and cited the recruitment last year of Quantum Magnetics head of engineering, Simon Bedford, to demonstrate its market lead.

He said QR’s appearance at the invitation-only DEMO conference generated a flurry of publicity in the US, including in The Wall Street Journal.

“We were written up all over the US,” he said. “It just boomed, it was amazing.”

Mr Russeth credited the WA Government with helping QR present to the ANZA TechNet conference in San Francisco in late 2004, at which QR won an award for the brightest technology prospect from Australia and New Zealand.

That award led, in turn, to the invitation to the DEMO conference.

Mr Russeth noted that QR is not a ‘single product’ company.

While its current focus is detection of plastic explosives, its technology could be used in narcotic detection, pharmaceutical quality control and mineral assay testing.

He said the company planned to retain its research and development activities in Perth, where it employs about 40 staff.

QRSCIENCES

• QRSciences has moved its corporate office to the US.
• Its stock has started trading in the US ‘OTC’ market.
• The company has moved to compulsory acquisition of its namesake subsidiary.
• Pilot testing of its quadrupole resonance technology is under way.