INVESTOR PRESENTATION APRIL-2016 -...

INVESTOR PRESENTATION APRIL-2016

©2016 QuantumSphere, Inc. (QSI) All Rights Reserved. ©2016 QuantumSphere, Inc. (QSI) All Rights Reserved.

OTCQB: QSIM

Kevin MaloneyyChairman & [email protected]

DISCLAIMER:

This presentation is provided for information purposes only and should not be construed as an offer, and shall not form part of an offer, or solicitation to buy or sell any securities or derivatives. It should not be considered as an invitation to subscribe for or purchase any securities in QuantumSphere Inc or as an inducement to make an offer or invitation with respect to those securities Noany securities in QuantumSphere, Inc. or as an inducement to make an offer or invitation with respect to those securities. Noagreement to subscribe for securities in QuantumSphere, Inc. will be entered into on the basis of this presentation.

To the maximum extent permitted by applicable laws, QuantumSphere and its affiliates make no representation and can give no assurance, guarantee or warranty, express or implied, as to, and take no responsibility for the authenticity, validity, accuracy, suitability or completeness of, or any errors in or omission, from any information, statement or opinion contained in this presentation.

FORWARD LOOKING STATEMENTS:

Any information provided with this presentation related to timing, price, volume, and projected revenue are forward-looking statements and represent management’s best estimates as to its future performance. As such, these statements are not guarantees of future performance and are s bject to high risks ncertainties and ass mptions that are diffic lt to predict Therefore o r act al res lts performance and are subject to high risks, uncertainties, and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any verbal or written forward-looking statements as a result of various factors beyond our control.

PAGE 1Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM

QSI is Transforming the Chemicals Industry

• QSI products address key chemical production inefficiencies• QSI products address key chemical production inefficiencies

• Lead chemical: $100B market, critical to global food supply

100’ f l t l b ll b fit f QSI l iti• 100’s of plants globally can benefit from QSI value proposition

• Lead ammonia product, FeNIX™, commercially validated QuantumSphere OTCQB: QSIM

• JDA & sales agreement in place with industry leader, CASALE

• ~$50M/year revenue potential for lead product, FeNIX™

• Volume production capacity in place – backed by extensive IP

• QSI is poised for long-term profitable growth


15% Energy savingsQSI Technology can add Billions in Annual Revenue to the World’s Most Critical Chemical Process…

…With a 10% Increasein Production Output.

Focus on Ammonia for Global Food Supply

• ~$100B Global Market; ~200M Tons/year

• World’s Most Critical Chemical ~82% Used for Agricultural Fertilizer Enables Global Food Supply and Population

R ibl f • Responsible for: ~50% of All Protein~2% of Global CO2 Emissions~5% of World’s Natural Gas Consumption~2% of World’s Energy Consumption

P d ti • Production: ~600 Ammonia Plants WorldwideHighly Inefficient Production Process

QSI Technology Increases Chemical Plant ProfitsPAGE 4Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM

FeNIX™ Increases Catalyst Surface Area and Performance

Standard Ammonia Catalyst

FeNIX™ Nano-Coated Catalyst

FeNIX™ Nano Catalyst Accelerator


Catalytic reactions happen on the surface of the catalyst. Higher surface area = improved catalytic performance. Leveraging QSI’s patented process, a handful or ~15 grams of QSI’s FeNIX™ Nano Iron catalyst accelerator has the surface

area of about the size of a basketball court, or ~5000 square feet compared to the size of about one sheet of paper.

“Turbo-Charging” Ammonia Production

High S f A F NIX High Surface Area FeNIX Nano-Coated Catalyst

FeNIX™

AmmoniaConverter

10-15% Increase in Ammonia Plant Efficiency

FeNIX™High Performance Catalyst Accelerator

U.S. Patent No: 9,272,920


High Surface Area = Increased Efficiency = Greater Profits

Partnership Executed with Industry Leader

• Joint Development Agreement, May 2015

• Global Ammonia Technology Leader

• ~40% of Global Production

• CASALE’s Exclusive Nano CASALE s Exclusive Nano Catalyst Provider

• Commercial Sales

Casale converter technology critical to global ammonia production Hundreds of ammonia plants worldwide can

benefit from increased production efficiency

PAGE 7

Commercial Sales Agreement, March 2016

Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM

2 Key Channels for Market Penetration

1. Converter Technology

2. Catalyst TechnologyTechnology Technology

2 technologies required for ammonia productiong q p2 ways QSI penetrates the ammonia market

Additional market access, less risk


dd t o a a et access, ess sFeNIX™ is a competitive advantage to converter & catalyst providers

QSI in the Value ChainFeNIX™ Nano Catalyst Accelerator Technology JDA & commercial sales

agreement with Casale

Leading Converter Providers

Leading Catalyst Providers

Dominant Producers


No QSI sales force required – leverage existing partner networks

CASALE is Driving QSI Commercialization

• Conservative industry: multi-year/multi-step process

• Many driving forces; Economics Regulatory Social • Many driving forces; Economics, Regulatory, Social

• QSI commercialization in final stages, led by CASALE

Initial Commercialization – (2H-2016)

Commercial Sales Agreement – Casale (2016)Commercial Sales Agreement Casale (2016)

Commercial Plant Validation – China (2015)

Completed Manufacturing Facility QSI (2014) Completed Manufacturing Facility – QSI (2014)

External Lab Validation – China (2014)

I t l L b V lid ti QSI (2009 2013)

PAGE 10

Internal Lab Validation – QSI (2009 – 2013)


QSI Offers a Compelling Value Proposition

100’s of ammonia plants globally could benefit •10-15% Increase in Catalyst Activity10 15% Increase in Catalyst Activity

Based on 2015 commercial plant validation

•Strong ROI & IRR for Ammonia Producersg~2 year payback; typical catalyst life ~10 years

•Two Ways Ammonia Plant Operators Win:

1. Production Increase

2. Energy Savingsgy g

A 5% increase in production output can translate to millions in revenue annually for a typical large-scale ammonia plant


y yp g p

Delivering Shareholder Value

QSI Profit EconomicsStrong Gross Margins• Strong Gross Margins

QSI Production Capacity• Current Manufacturing Facility: 2–3 Plants per Year

$ Up to $15M in Annual Revenue Potential

• Economically Scalable Manufacturing Facility: ~$10M CapEx Investment Can Deliver up to $75M in Annual Revenue to QSI


Patented High-Volume Production

Economically Scalable | Highly Automated | Extensive IP

Inputs Vaporize Passivate Package

STEP STEP STEP STEP

PAGE 13

STEP1

STEP2

STEP3

STEP4


U.S. Patent No: 7,282,167

FeNIX™ Increases Catalyst Surface Area and Performance

Standard Ammonia Catalyst

FeNIX™ Nano-Coated Catalyst

FeNIX™ Nano Catalyst Accelerator

• 10 Issued Patents

• 12 Years of “Know How”• 12 Years of Know-How

• High Surface Area Effect 12kgs of FeNIX™ Nano Iron Accelerator


gWill Coat Nearly One Ton of Existing Commercial Ammonia Catalysts

Large Pipeline of Chemical Opportunities

QSI may ultimately improve many chemical processes

AmmoniaHydro-processing

Fischer-TropschMethanation

---------------------------

Olefins

Methanol

Ammonia FilterFilterMethanol

Olefins

Ethylene Oxide

Bio-RenewablesPoly-olefins

Hydrogen

Polyurethanes Syngas

~$450B

Fluid Cat Cracking

Sulfur Recovery

More… Parafins

--------------------------

~$1.5 Trillion in Basic Chemicals Produced Annually

PAGE 15

Up to 90% of all Industrial Processes Utilize Catalysts


~$2B Total Available Market

C2-C4NH3 CH4O

T t l M k t $100B $300B $50B

2 43 4

Ammonia MethanolOlefins

Total Market: ~$100B ~$300B ~$50B

Total Available Market (TAM):

~$250M ~$1.5B ~$250M

QSI Addressable Market*:

~$50M ~$300M+ ~$50M+

Agricultural Paint, Adhesives, End Products:

Agricultural Fertilizer

Polymers, PlasticsPaint, Adhesives,

Fuels

Product Status:Anticipated

2H-2016Lab Validations

in ProgressLab Validations

Pending

PAGE 16

2H 2016 in Progress Pending


*QSI Addressable Market is based on a blend of increased production and energy savings in plants directly accessible through Casale partnership.

Target Objectives and Next Steps

OPERATIONAL

• Execute commercial agreements with • Execute commercial agreements with additional industry-leading partners

• Complete follow-on commercial reactor

d

QuantumSphere OTCQB: QSIM

Complete follow on commercial reactor validation utilizing Casale technology

• Secure purchase orders via existing CASALE p gchannels for FeNIX™ ammonia catalyst sales

• Further validate follow-on nano catalyst accelerator products for Methanol and Olefins

• Continue to expand production capabilities to t d d d t t IP

PAGE 17

meet demand and protect IP


Public Company Background

• Founded in 2002 as an R&D companyFocused on industrial chemicals sectorFocused on industrial chemicals sector

• Became publicly traded in 2014 | Symbol: QSIM

$32M i it fi i g d t d t• ~$32M in equity financing secured to date~$7M in cash from board and management

• Recent Stock Price: $1 00 | Market Cap: $22 6M

QuantumSphere OTCQB: QSIM

• Recent Stock Price: $1.00 | Market Cap: $22.6M

• ~22.6M Shares Outstanding |~6.2M Public Float

• ~39.6M Shares Fully Diluted~11.6M Warrants | ~5.5M Options |~$25M Cash Value

NASDAQ U li ti g A ti i t d i 2016

PAGE 18

• NASDAQ Uplisting Anticipated in 2016


Experienced Management Team

Substantial business and technical qualifications to execute QSI strategy

~$7M in capital invested by Management, Board, and Advisors

Kevin Maloney, MBACo-Founder &Chief Executive Officer

• 21 years of experience in sales, marketing, and finance

• Formerly at PIMCO and First American Corporation

• Experienced entrepreneur with previous start-up experience

22 f i i i i M&A d h l Gregory Hrncir, Esq.Chief Strategy Officer &General Counsel

• 22 years of experience in corporate, securities, M&A and technology start-ups

Steve Gillings, MBAChi f Fi i l Offi

• 30 years of accounting experience at multiple public companiesChief Financial Officer

Matthew Griffith, MBAVice President, Operations

• 10 years of experience in commercialization and development of advanced materials and clean energy systems

Vito Canuso Esq • 20 years of IP litigation/portfolio experience with top IP law firm Knobbe Martens Olson and Vito Canuso, Esq.Vice President, Intellectual Property

• 20 years of IP litigation/portfolio experience with top IP law firm Knobbe, Martens, Olson, and Bear LLC

• Held senior position at Medtronics


Seasoned Board of Directors

Marc Goroff, Ph.D. • Chief Technology Officer and co-founder, Quorum Technologies. • Serial hardware and software technology entrepreneur • Earned Ph D in Theoretical Physics from Caltech at age 23Earned Ph.D. in Theoretical Physics from Caltech at age 23

Steven MyersGovernance and Nominating Committee Chair

• Chairman of Dolphin Capital Holdings, Inc., a private equity investment company • Chairman of Governance & Nominating Committee of Neostem, Inc., a biosciences company • Former Founder & CEO of SMA, an aerospace & defense mgmt consulting services business

Jeff Palmer, MBAStrategic Planning & Operations Committee Chair

• Founder & CEO of Rimports, $150M+ manufacturer of consumer products in major retailers• Finalist in the Utah regional competition for 2012 Ernst & Young Entrepreneur of the Year• Former Far East Area Director for ICON Health & Fitness in Hong Kong, fluent in Mandarin

and Cantonese

Francis Poli, Esq.Lead Director andCompensation Committee Chair

• General Counsel and Executive Vice President, Cohen and Steers, Inc. (NYSE: CNS)• Former Chief Legal Officer and Compliance Committee Chair with PIMCO and Allianz• Former JP Morgan counsel

Robert Venable MBA/CFA • Managing Director and Chief Financial Officer SW Asset Management LLC Robert Venable, MBA/CFA Audit Committee Chair

• Managing Director and Chief Financial Officer, SW Asset Management, LLC. • Former Chief Investment Officer at First American Corp, Capital Mgmt Division (NYSE: FAF)• Vice President in Charge of Global Asset Allocation at PIMCO


Notable Technology Advisory Board

Jared Cohen • Director of Google Ideas

• Co-Author with Google’s Chairman, Eric Schmidt; The New Digital Age – Reshaping the Future of People Nations and BusinessPeople, Nations, and Business

• Named one of the 100 Most Influential People in the World by Time Magazine – May 2013

• Stanford / Oxford / Rhodes Scholar

Bill Collins • Managing Director of Global Resource Management Consultancy (GRMC)

Key executive at International Rectifier ramping the company from $60M to over $700M in Revs• Key executive at International Rectifier, ramping the company from $60M to over $700M in Revs

• Frequent industry panelist and guest lecturer at CalTech, USC and LARTA

• Past President, Tech Coast Angels, Los Angeles

Jon Faiz Kayyem, Ph.D. • Member, Caltech Board of Trustees

• Founder, CMS (Acquired by Motorola)

• Chief Technology Officer, GenMark (NASDAQ: GMRK)

Prof. George Olah, Ph.D.Nobel Prize Winner

• Nobel Laureate (Chemistry, 1994) for research involving the generation and reactivity of carbocations via superacids

• Priestley Medal (American Chemical Society)

• Distinguished Professor of Chemistry and Chemical Engineering and Materials Science

• Director of the Loker Hydrocarbon Research Institute

• Dr. Olah served on the QSI Board of Advisors from Dec. 2005 through his retirement in Dec. 2014


Transforming the Chemicals Industry

• QSI technology increases chemical production efficiency• QSI technology increases chemical production efficiency

• Compelling value prop for 100’s of chemical plants globally

• Lead ammonia product, FeNIX™, commercially validated

• JDA & sales agreement in place with industry leader, CASALEQuantumSphere OTCQB: QSIM

• ~$50M/year revenue potential through lead product, FeNIX™

• QSI R&D complete – initial commercialization in final stages

• Volume production capacity in place – backed by extensive IP

• QSI is poised for long-term profitable growth


QSIM - 3 Key Takeaways

Addressing Significant Market PainsUnique technology addresses key inefficiencies in large chemicals industryUnique technology addresses key inefficiencies in large chemicals industry

With Compelling & Profitable SolutionsValue proposition worth billions to 100’s of chemical plants worldwideValue proposition worth billions to 100 s of chemical plants worldwide

Driven by World-Class PartnersCommercialization led by global technology leader CASALECommercialization led by global technology leader, CASALE

Thank You!


Contact Information

Kevin Maloney, MBA Gregory Hrncir, Esq.Chairman & CEO General Counsel & CSO949 378 9851 818 400 5930

Contact Info:QSI-Nano Catalyst Production Facility; ~4 Metric Tons per Year Capacity

949-378-9851 [email protected] [email protected]


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