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COSTA MESA, CA, U.S.A. – August 29, 2005 – QuantumSphere, Inc., the leading manufacturer of metallic nanopowders for applications in aerospace, defense, energy and other markets demanding advanced material applications, announced (“QSI- nano™ Ni/Co alloy”) as a clear replacement solution for the platinum electrode market. QuantumSphere is the only supplier of the world’s highest quality metallic nanomaterials including QSI- nano™ Ni/Co and other proprietary alloys. Independent validation, provided by DoppStein Enterprises, Inc. (DSE) regarding this development, poses a serious issue for platinum suppliers in the platinum group metal catalyst market, as QSI- nano™ Ni/Co alloy will alleviate dependency on platinum as the main catalytic material in a variety of battery and fuel cell applications– while presenting tremendous business and cost savings advantages for companies.

A shift from finely divided platinum to QSI- nano™ Ni/Co alloy results in a reduction in the cost of fuel cell and battery catalysts by approximately 50%, while achieving up to 90% of pure platinum performance, based on current prices. Conversely, a 90% cost savings will result in a remarkable 73% performance relative to pure platinum. To view independent scientific data from DSE that supports and validates QuantumSphere’s achievement in the catalyst marketplace, visit http://www.qsinano.com/products.html and click on “DSE nano-Nickel/Cobalt Validation Data.”

“By adopting our product, QuantumSphere enables companies to provide new product offerings in the marketplace and increase their revenue,” said Kevin Maloney, CEO, QuantumSphere, Inc. “For example, we have spoken with many firms that are frustrated by the fact that products using small fuel cells or batteries face a problem– up to 40% of the total product cost is derived from the expense of the catalyst. By using our QSI-Nano™ Ni/Co alloy product, QuantumSphere can reduce the total device cost significantly. This opens up an exciting range of new business opportunities for companies that want to offer new products to customers but were previously hindered by the cost that platinum imposed on the OEM and final product price. Additionally, the method of making these materials is highly scalable and fully automated. QSI-Nano™ Ni/Co alloy will liberate companies from their dependence on platinum, lower the cost of production and increase profit margins, enabling firms to offer new products at a price point that will be accepted in the market,” Maloney added.

DoppStein Enterprises, Inc., conducted experiments and provided independent scientific data to validate QuantumSphere’s achievement. “After months of working to evaluate and validate QuantumSphere’s product and manufacturing capabilities, I can finally state with full confidence that oxygen reduction catalysis on cathode electrodes using QuantumSphere’s nano-sized nickel/cobalt alloy material has been unambiguously demonstrated,” said Robert Dopp, President, DSE. “This catalyst can be used in a variety of practical batteries and fuel cells, including Li-ion, Zn/air, PEMFC and DMFC. One fundamental issue of fuel cells is the reliance on platinum as catalyst. For a cost comparison, finely divided platinum (currently $75.00/gram in bulk) costs approximately 5 times as much as QuantumSphere’s nano-Ni/Co alloy catalyst (currently $15.00/gram). This translates into a large reduction in total device cost. Implementation of this new technology incorporating QSI-Nano™ Ni/Co alloy in the alternative energy sector has the potential to dramatically accelerate commercialization of these micro devices,” Dopp added.

Confirmation of catalysis was accomplished through a series of experiments where nanocatalysts were used alone and in conjunction with varying amounts of platinum. “Not only are QuantumSphere’s catalysts active alone, they also enhance the activity of platinum when combined with various QSI-Nano™ materials. Compared with a pure platinum catalyzed cathode, QuantumSphere’s metallic nanoparticles show up to 90% of the catalytic activity,” Dopp commented. “The activity was demonstrated using electrochemical techniques and impedance spectroscopy. This was the first clear verification and will be followed by a series of optimization experiments that are targeted at meeting or exceeding the activity of high surface area platinum catalyzed cathodes. The impact of these findings is enormous, as it reveals that nanocatalysts prepared by QuantumSphere’s proprietary methods have the potential to partially or fully replace platinum (a $10-$12 billion market, annually), one of the most expensive and scarce electrode components,” Dopp concluded. White papers will be released in Q1, 2006.

About QuantumSphere, Inc

QuantumSphere is a manufacturer of nanoscale metals and alloys for applications in portable power, renewable energy, electronics, aerospace, defense and other markets demanding advanced materials. QuantumSphere’s proprietary technology enables the production of ultra-pure, highly uniform nanometals and alloys under 50 nanometers in high volume at commercial prices with the potential to be utilized in a large number of new applications. QuantumSphere has also created an extensive intellectual property portfolio around its process capabilities and end-use commercial applications. QuantumSphere seeks to leverage its market position to manufacture and ship high-performance catalyst materials and electrode devices for clean-energy applications such as batteries and micro fuel cells for portable power and hydrogen generation through electrolysis, among others.

QuantumSphere also works closely with leading universities by funding research to validate QuantumSphere-Nano materials and generate licensing rights to intellectual property for disruptive high-value commercial applications. For more information, please visit www.qsinano.com.

The company is leveraging its leading market position in metallic powders to manufacture and ship product for applications in fuel cells, magnetic medical products, bio-sensors, filtration devices and other applications including additives for plastics and electromagnetic frequency shielding. For more information, visit www.qsinano.com or contact Joe Romano, Partner, HighGround, Inc. at 781-279-1320 x 208 or [email protected].

About DSE

Robert Dopp is a consultant to the fuel cell, battery and related industries.Ê During his three decades of battery R&D;, resulting in 36 related patents bearing his name, he has designed several production air cathode machines, making the highest rate air cathode in the world. He has helped to develop a consumer battery with over four times the energy density of Alkaline cylindrical cells, and many tens of times higher energy than many rechargeable batteries. For more information contact Joe Romano, Partner, HighGround, Inc. at 781-279-1320 x 208 or [email protected].