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INVESTOR PRESENTATION MAY-2016
©2016 QuantumSphere, Inc. (QSI) All Rights Reserved.
OTCQB: QSIM
Kevin MaloneyChairman & CEO
949-378-9851
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. No
agreement 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 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
Public Company Background
PAGE 2
• Founded in 2002 as an R&D company
Focused on industrial chemicals sector
• Became publicly traded in 2014 | Symbol: QSIM
• ~$32M in equity financing secured to date
~$7M in cash from board and management
• Recent Stock Price: $.55 | Market Cap: $12.4M
• ~22.6M Shares Outstanding |~6.2M Public Float
• ~39.6M Shares Fully Diluted
~11.6M Warrants | ~5.5M Options |~$25M Cash Value
• NASDAQ Uplisting Anticipated in 2016
QuantumSphere
OTCQB: QSIM
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
QSI is Transforming the Chemicals Industry
PAGE 3
• QSI products address key chemical production inefficiencies
• Lead chemical: $100B market, critical to global food supply
• 100’s of plants globally can benefit from QSI value proposition
• Lead ammonia product, FeNIX™, commercially validated
• JDA & sales agreement in place with industry leader, CASALE
• ~$50-100M/year revenue potential for lead product, FeNIX™
• Volume production capacity in place – backed by extensive IP
• QSI is poised for long-term profitable growth
QuantumSphere
OTCQB: QSIM
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
Highlights
15% Energy savings
QSI Technology can add Billions in Annual Revenue to the World’s Most Critical Chemical Process…
…With a 10% Increasein Production Output.
• ~$100B Global Market; ~200M Tons/year
• World’s Most Critical Chemical
~82% Used for Agricultural Fertilizer
Enables Global Food Supply and Population
• Responsible for:
~50% of All Protein
~2% of Global CO2 Emissions
~5% of World’s Natural Gas Consumption
~2% of World’s Energy Consumption
• Production:
~600 Ammonia Plants Worldwide
Highly Inefficient Production Process
QSI Technology Increases Chemical Plant Profits
PAGE 5
Focus on Ammonia for Global Food Supply
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
PAGE 6Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
Standard Ammonia Catalyst
FeNIX™ Nano-Coated Catalyst
FeNIX™ Nano Catalyst Accelerator
FeNIX™ Increases Catalyst Surface Area and Performance
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
PAGE 7
High Surface Area FeNIX
Nano-Coated Catalyst
Ammonia
Converter
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
10-15% Increase in
Ammonia Plant Efficiency
FeNIX™High Performance
Catalyst Accelerator
High Surface Area = Increased Efficiency = Greater Profits
U.S. Patent No: 9,272,920
Partnership Executed with Industry Leader
PAGE 8
• Joint Development
Agreement, May 2015
• Global Ammonia
Technology Leader
• ~40% of Global Production
• CASALE’s Exclusive Nano
Catalyst Provider
• Commercial Sales
Agreement, March 2016
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
Casale converter technology critical
to global ammonia production Hundreds of ammonia plants worldwide can
benefit from increased production efficiency
PAGE 9
2 Key Channels for Market Penetration
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
1. Converter
Technology
2. Catalyst
Technology
2 technologies required for ammonia production
2 ways QSI penetrates the ammonia market
Additional market access, less risk
FeNIX™ is a competitive advantage to converter & catalyst providers
PAGE 10
FeNIX™ Nano Catalyst
Accelerator Technology
Leading Converter
Providers
Leading Catalyst
Providers
Dominant
Producers
QSI in the Value Chain
JDA & commercial sales
agreement with Casale
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
No QSI sales force required – leverage existing partner networks
CASALE is Driving QSI Commercialization
PAGE 11
• Conservative industry: multi-year/multi-step process
• Many driving forces; Economics, Regulatory, Social
• QSI commercialization in final stages, led by CASALE
Initial Commercialization – (2H-2016)
Commercial Sales Agreement – Casale (2016)
Commercial Plant Validation – China (2015)
Completed Manufacturing Facility – QSI (2014)
External Lab Validation – China (2014)
Internal Lab Validation – QSI (2009 – 2013)
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
QSI Offers a Compelling Value Proposition
PAGE 12
100’s of ammonia plants globally could benefit
•10-15% Increase in Catalyst ActivityBased on 2015 commercial plant validation
•Strong ROI & IRR for Ammonia Producers~2 year payback; typical catalyst life ~10 years
•Two Ways Ammonia Plant Operators Win:
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
1. Production Increase
2. Energy Savings
A 5% increase in production output can translate to millions in revenue annually for a typical large-scale ammonia plant
Delivering Shareholder Value
QSI Profit Economics
• 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
PAGE 13Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
Patented High-Volume Production
PAGE 14
Economically Scalable | Highly Automated | Extensive IP
Inputs Vaporize Passivate Package
STEP
1STEP
2STEP
3STEP
4
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
U.S. Patent No: 7,282,167
FeNIX™ Increases Catalytic Performance
PAGE 15Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
Standard Ammonia Catalyst
FeNIX™ Nano-Coated Catalyst
FeNIX™ Nano Catalyst Accelerator
• 10 Issued Patents
• 12 Years of “Know-How”
• High Surface Area Effect 12kgs of FeNIX™ Nano Iron Accelerator
Will Coat Nearly One Ton of Existing
Commercial Ammonia Catalysts
Large Pipeline of Chemical Opportunities
PAGE 16
QSI may ultimately improve many chemical processes
Olefins
Methanol
Ammonia FilterMethanol
Olefins
Ammonia
Ethylene Oxide
Fluid Cat Cracking
Hydro-processing
Bio-RenewablesPoly-olefins
Fischer-Tropsch
Hydrogen
Polyurethanes Syngas
Sulfur Recovery
Methanation
More… Parafins
~$1.5 Trillion in Basic Chemicals Produced Annually
Up to 90% of all Industrial Processes Utilize Catalysts
---------------------------
~$450B
--------------------------
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
~$2B Total Available Market
PAGE 17
Total Market: ~$100B ~$300B ~$50B
Total Available
Market (TAM):~$250M ~$1.5B ~$250M
QSI Addressable
Market*:~$50-100M ~$300M+ ~$50M+
End Products:Agricultural
FertilizerPolymers, Plastics
Paint, Adhesives,
Fuels
Product Status:Anticipated
2H-2016
Lab Validations
in Progress
Lab Validations
Pending
C2-C4NH3CH4O
Ammonia MethanolOlefins
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
*QSI Addressable Market is based on a blend of increased production and energy savings in plants directly accessible through Casale partnership.
d
Target Objectives and Next Steps
PAGE 18
QuantumSphere
OTCQB: QSIM
OPERATIONAL
• Execute commercial agreements with
additional industry-leading partners
• Complete follow-on commercial reactor
validation utilizing Casale technology
• Secure purchase orders via existing CASALE
channels for FeNIX™ ammonia catalyst sales
• Further validate follow-on nano catalyst
accelerator products for Methanol and Olefins
• Continue to expand production capabilities to
meet demand and protect IP
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
Experienced Management Team
PAGE 19
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
Gregory Hrncir, Esq.Chief Strategy Officer &
General Counsel
• 22 years of experience in corporate, securities, M&A and technology start-ups
Steve Gillings, MBAChief Financial Officer
• 30 years of accounting experience at multiple public companies
Matthew Griffith, MBAVice President, Operations
• 10 years of experience in commercialization and development of advanced materials and
clean energy systems
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
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
Seasoned Board & Management Advisors
PAGE 20
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 23
Steven Myers • 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, MBA • 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 and
Compensation 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.
• Former Chief Investment Officer at First American Corp, Capital Mgmt Division (NYSE: FAF)
• Vice President in Charge of Global Asset Allocation at PIMCO
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
Notable Technology Advisory Board
PAGE 21
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 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
• 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
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
Transforming the Chemicals Industry
PAGE 22
• 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, CASALE
• ~$50-100M/year revenue potential for 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
QuantumSphere
OTCQB: QSIM
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
Summary
QSIM - 3 Key Takeaways
Addressing Significant Market PainsUnique technology addresses key inefficiencies in large chemicals industry
With Compelling & Profitable SolutionsValue proposition worth billions to 100’s of chemical plants worldwide
Driven by World-Class PartnersCommercialization led by global technology leader, CASALE
PAGE 23
Thank You!
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM
Contact Information
Kevin Maloney, MBA Gregory Hrncir, Esq.Chairman & CEO General Counsel & CSO
949-378-9851 818-400-5930
[email protected] [email protected]
PAGE 24
Contact Info:QSI-Nano Catalyst Production Facility; ~4 Metric Tons per Year Capacity
Improving Chemical Production Efficiencies With Advanced Technologies OTCQB: QSIM