Investment Type
Preferred Equity
Industry
Nanotechnology
Stage
Growth
Offering Type
Equity
Offering Size
$4,000,000
Min. Purchase
$50,000
USCIM Fund XVIII QuantumSphere, LLC
Investor Contact
Alfred Ritter
aritter@uscgs.com
Company Contact
Kevin Maloney, CEO
kmaloney@qsinano.com
Investor Contact
Alfred Ritter
aritter@uscgs.com
Company Contact
Kevin Maloney, CEO
kmaloney@qsinano.com
US Capital Investment Management

QuantumSphere Investor presentation



COMPANY BACKGROUND

QuantumSphere OTCQB: QSIM

  • Founded in 2002 as an R&D company focused on the industrial chemicals sector
  • Became publicly traded in 2014 | Symbol: QSIM
  • ~$35M in financing secured to date; includes ~$7M cash from management, board, advisors
  • Recent Stock Price: $0.25 | Market Cap: ~$5.7M
  • ~22.7M Shares Outstanding |~6.5M Public Float
  • NASDAQ Uplisting Anticipated in next 12 months

QSI is Transforming the Chemicals Industry


QSI's nano catalyst technology can add billions of dollars in revenue and energy savings to the world's most critical chemical process.

QSI's lead catalyst product, FeNIX™ offers a proven enhancement to the $100B ammonia production market.


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Highlights

  • QSI products address key energy and production challenges
  • FeNIX™, commercially validated for ammonia production
  • Ammonia: ~$100B market1,2,3, critical to global food supply
  • 100's of chemical plants can benefit from QSI value prop
  • Commercialization agreement with industry leader, CASALE
  • Volume production capacity in place – backed by extensive IP
  • Key ammonia process patent issued in March 2016
  • QSI is poised for long-term profitable growth

1. Research and Markets: Global Ammonia Outlook to 2018
2. USGS; Mineral Resource Program Report: Nitrogen – Ammonia
3. Potash Corp; Market Report - Price

FeNIX™ Increases Catalyst Surface Area and Activity


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Chemical reactions take place on the surface of catalysts. Therefore, catalytic surface area is hugely important.


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A handful of standard catalyst has about the same surface area as an 8 ½" x 11" sheet of paper: ~0.65 square feet

A handful of FeNIX nanocatalyst has about the same surface area as basketball court: ~5,000 square feet


"Turbo-Charging" Ammonia Production


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1. Casale Internal Report: Nano-Coated Ammonia Catalyst Validation, April 2015

Commercial Partnership Industry Leader


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  • 95 Year-Old Swiss-Based Global Ammonia Technology Leader
  • ~40% of Global Production1
  • Joint Development Agreement, May 2015
  • Commercial Sales Agreement, March 2016

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1. Per Casale, S.A.


CASALE is Driving QSI Commercialization

Partners Provide Clear Path to Commercialization

  • Conservative industry: multi-year/multi-step process
  • Many driving forces: Economics, Regulatory, Social
  • QSI commercialization in final stages, led by CASALE

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Focus on Ammonia for Global Food Supply

World's Most Critical Chemical

~$100B Global Market1,2; ~200M Tons/ year1


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Enables Global Food Supply and Population

~82% Used for Agricultural Fertilizer3

Responsible for:

~2% of Global CO2 Emissions4
~2% of World’s Energy Consumption4

Production:

~600 Ammonia Plants Worldwide5
Highly Inefficient Production Process
QSI Technology Increases Chemical Plant Profits

QSI Technology Increases Chemical Plant Profits

1. Research and Markets: Global Ammonia Outlook to 2018
2. USGS; Mineral Resource Program Report: Nitrogen – Ammonia
3. Potash Corp: Nitrogen Overview
4. International Energy Agency: Tracking Industrial Energy Efficiency and CO2 Emissions
5. Data provided by Casale, S.A.

QSI in the Value Chain


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Converter Providers and Catalyst Suppliers offer 2 revenue / sales channels to QSI.

Partnership with industry leader means no QSI sales force required.


QSI Offers a Compelling Value Proposition

100's of ammonia plants globally could benefit

10-15% Increase in Catalyst Activity

  • Based on 2015 commercial plant validation
  • A 5% increase in catalytic activity is considered significant1

Strong ROI & IRR for Ammonia Producers

  • Based on industry-standard of up to a 3-year payback period
  • Typical catalyst life is ~10 years

Two Ways Ammonia Plant Operators Win:

1. Increased Production Output* Example: A typical ammonia plant (1500 Mt/day) might invest ~$3M USD in FeNIX™ nanocatalyst accelerator technology to earn up to $100M USD in additional revenue and up to $15M USD in additional gross profit over the 10-year life of the catalyst.

2. Energy Savings** Example: A typical ammonia plant (1500 Mt/day) might invest $750k USD in FeNIX™ nanocatalyst accelerator technology to save ~$2.5M USD in energy costs over the 10-year life of the catalyst.


*assuming plant has additional upstream/downstream excess capacity
**assuming a 10% increase in catalytic activity and typical ammonia plant operating costs

1. Chemical Engineering Magazine: Boosting Catalyst Productivity, January 2010


Delivering Shareholder Value

Revenue Model – Three Paths

Current: Plant Refurbishments

  • Up to 15 Plants per Year through Casale
  • Revenue: Up to $45M per year and up to $3M per Plant
  • Gross Margins: 50%

Future: New Build Plants

  • Up to 8 new-build plants permitted worldwide

Future: Nanocatalysts for production of other chemicals

  • ~$1.0 trillion of basic chemicals produced annually

QSI Production Capacity

Current Manufacturing Facility:

  • Able to service up to 4 Plants per Year
  • QSI is cash flow positive at 2 plants per year

Economically Scalable Manufacturing Facility:

  • ~$7M CapEx Can Deliver up to $45M in Annual Revenue to QSI
  • Minimal increase to corporate overhead expenses

Technology Backed by 10 Issued Patents

QSI’s Key Patents

Iron Nanocatalyst for Ammonia Production

  • Iron Nanocatalyst Coating
  • Commercial Ammonia Catalyst Substrate
  • Issued March 2016

High Volume Nanocatalyst Production

  • Gas Phase Condensation Process
  • Yields High-Quality, Narrow-Distribution
  • Several Nanocatalyst Materials Including Iron for Ammonia Production
  • Issued October 2007

Broad Range of Nano-Scale Catalysts

Economically Scalable | Highly Automated | Extensive IP

QSI’s proprietary nanocatalyst production process is capable of producing a broad range of nanocatalyst with applications across the ~$1.0 trillion basic chemicals market


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Multi $100M Annual Revenue Potential


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*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 / Financial

  • 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 intellectual property
  • $4M Equity PIPE Financing w/ Warrant Coverage
  • NASDAQ uplisting 6-12 months after PIPE Close

EXPERIENCED MANAGEMENT TEAM

Substantial business and technical qualifications to execute QSI strategy ~$7M in capital invested by Management, Board, and Advisors


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Seasoned Board & Advisors


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QSIM Summary – 3 Key Takeaways

Addressing Significant Market Pains

Unique technology addresses key inefficiencies in large chemicals industry

With Compelling & Profitable Solutions

Value proposition worth billions to 100’s of chemical plants worldwide
FeNIX™ seamlessly integrated into ammonia plants – with no capex required

Driven by World-Class Partners Now

Commercialization led by global technology leader, CASALE


Appendix: FeNIX™ Nano-Fe Coated Catalysts


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FeNIX coating applied to standard commercial ammonia catalyst increases surface area 6000x.


FeNIX Delivers up to 15% Increased Performance


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Data from Internal Reports:
1. Casale Internal Report: Nano-Coated Ammonia Catalyst Validation, April 2015
2. JHG Internal Report: 1m Reactor Operating Data – Zhumadian, October 2015
3. JHG Internal Report: 1m Reactor Operating Data – Shangcai, November 2015





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.

TTo 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.





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