QuantumSphere and Vivakor Execute MOU for Asset Deal; Recent Debt Conversions Improve Company Balance Sheet

QuantumSphere, Inc.

Companies Mentioned:

Primary Exchange: OTC PINK
Under the Symbol: QSIM

QuantumSphere and Vivakor Execute MOU for Asset Deal; Recent Debt Conversions Improve Company Balance Sheet

Wednesday, June 14, 2017 8:00 AM

MOU creates opportunity for royalty payments upon successful technology commercialization

SANTA ANA, CA / ACCESSWIRE / June 14, 2017 / QuantumSphere, Inc. (OTC PINK: QSIM), a developer and manufacturer of advanced catalyst materials designed to increase process efficiencies and production output in commercial-scale chemical plants, today issued a business and corporate update to its shareholders.

In June 2017, the Series A preferred shareholders (who have common stock voting rights) approved a corporate resolution for QuantumSphere (the "Company") to sell up to ten nano production reactors, peripheral production and testing equipment, and certain patents to Vivakor, Inc. (VIVK) in exchange for preferred stock and royalty payments to QuantumSphere - the latter upon reaching certain revenue milestones. The asset sale is in relation to the production of the Company's QSI-Nano iron catalysts for ammonia synthesis.

2016 was a milestone year for QuantumSphere, as it was issued a key ammonia patent in March 2016 and executed a 10-year commercialization agreement with Casale also in March 2016. The issued patent (U.S. Patent Number 9,272,920) is related to its advanced FeNIX nanocatalyst accelerator technology and claims around the application of iron nanocatalysts, applied as a coating onto existing commercial ammonia catalysts, for increased catalytic activity and production efficiency in ammonia synthesis. As of today, QuantumSphere has 10 issued patents and plans to explore the sale of other assets and intellectual property rights in exchange for a combination of cash, stock, and/or royalty payments.

The Company remains actively engaged with its Swiss partner, Casale, S.A., in pursuing an ammonia plant operator as a first customer and is in sales discussions with industry leading prospects in India at this time. The Company is optimistic that its patented FeNIX™ catalyst technology can add significant production value and energy savings to ammonia plant owners and operators. As stated previously, after 14 years of research and development, more than $35 million of invested capital, having worked closely with Casale for the past six years, and with potential sales prospects in India, QuantumSphere believes all of the combined efforts may possibly result in commercialization of this important technology in 2017 or 2018.

The Company entered into a multi-year Commercialization Partnership Agreement with Swiss-based Casale S.A. (Casale), pursuant to which the parties agreed to the terms of commercialization of the Company's QSI-Nano iron catalysts for ammonia synthesis. Casale is restricted from entering into any agreement with any third party for any purpose relating to the use of nano-sized particle based catalysts in ammonia synthesis. Further, during the term, Casale has exclusive rights to commercially market, co-brand and sell the FeNIX product into the ammonia market globally, with the exception of China. The Company is now in the initial commercialization phase with its partner Casale in addressing the market opportunity within the $100 billion annual ammonia market. Per its commercialization agreement, Casale is responsible for the sales and marketing efforts of FeNIX to its existing and prospective customers.

On May 23, 2017 the Company also improved its balance sheet when it converted $1,127,408 in Series O-2 convertible notes principal and related accrued interest (67% of the total of Series O-2 notes) into 1,127,410 shares of QuantumSphere Series A preferred stock. Each share of preferred stock has the voting rights of 254 common shares. The preferred shares in total represent approximately 58% of all voting common shares.

The Series A preferred shareholders also approved a second corporate resolution to approve the increase in authorized common shares from 500 million to 5 billion. The purpose of this resolution was to allow the conversion of notes payable to equity and thus improve the balance sheet for the actions outlined in the following resolution.

The Series A preferred shareholders also approved a third corporate resolution to grant authority to QuantumSphere's board to pursue a merger with, sale to, or acquisition of another operating company or technologies.

The Company is likely to experience further conversions of debt to equity in the near future. All debt on the balance sheet must be converted in order for the Vivakor asset sale to become effective. The Company will work with its senior secured lender and Vivakor as well as other trade vendors to convert, transfer, or service any remaining outstanding debt. Investors are encouraged to carefully review QuantumSphere's latest 10-Q filing for details and risk disclosures. In this regard, the Company is exploring opportunities related to additional financings, licensing of other technologies, and a possible sale of additional assets to cover short-term cash needs. The Company has had preliminary discussions with multiple parties that have expressed an interest in additional financing, acquiring the Company's assets, and/or merging into the existing operating Company. Management believes that the above options give the best opportunity for QuantumSphere to realize some return on its assets given the Company's limited cash position.

About QuantumSphere, Inc.

QuantumSphere, Inc. (OTC PINK: QSIM), is a developer and manufacturer of advanced catalyst materials used in the production of industrial chemicals. The Company's lead product, FeNIX™, is a nanocatalyst used in the production of ammonia that integrates with existing commercial catalysts. It improves process efficiencies and production output, with real-world applications documented at up to 15% improvement. These efficiencies reduce energy consumption and deliver greater profits to chemical plant owners and operators. QuantumSphere's value proposition is applicable to hundreds of chemical plants globally, representing billions of dollars in annual output. The Company is presently focused on the $100 billion per year ammonia market, (82% of which is used to make fertilizer for food production) and has partnered with Swiss-based Casale, a 95-year-old engineering firm whose technology is utilized in nearly 40% of the world's production of ammonia. QuantumSphere is also leveraging its intellectual property to develop catalysts for other key chemical markets, such as methanol and light olefins. The Company is based in Santa Ana, California and its common stock is quoted on the OTC Markets under the ticker symbol QSIM. For more information, visit www.qsinano.com.

Contact Information

Stephen Hart, Hayden IR
[email protected]

Safe Harbor Statement

All statements included or incorporated by reference in this News Release, other than statements or characterizations of historical fact, are "forward-looking statements." Examples of forward-looking statements include, but are not limited to, statements concerning projected sales, costs, expenses and gross margins; our accounting estimates, assumptions and judgments; the prospective demand for our products; the projected growth in our industry; the competitive nature of and anticipated growth in our industry; and our prospective needs for, and the availability of, additional capital. These forward-looking statements are based on our current expectations, estimates, approximations and projections about our industry and business, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by such words as “anticipates,” "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions and variations or negatives of these words. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors, some of which are set forth in the "Risk Factors" section of our Report on Form 10-K for the year ended June 30, 2016 filed on October 13, 2016 and updated on our Quarterly Reports on Form 10-Q for the quarterly periods ended September 30, 2016, December 31, 2016, and March 31, 2017, which could cause our financial results, including our net income or loss or growth in net income or loss to differ materially from prior results, which in turn could, among other things, cause the price of our common stock to fluctuate substantially. These forward-looking statements speak only as of the date of this News Release. We undertake no obligation to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law.