Press Contact: Michele Kinman 408-218-8815 Email

FOR IMMEDIATE RELEASE

Santa Ana, CA, U.S.A. -June 8, 2006 – QuantumSphere, a leading manufacturer of nanoscale metals and alloys for applications in energy and other markets demanding advanced materials, announced it has launched a major research initiative to provide breakthrough capabilities for the generation of hydrogen that could deeply impact OEMs and consumers on a global scale. There is a significant pent-up demand in the marketplace for a solution that enables the cheap, clean and efficient production of hydrogen fuel. However, current methods of hydrogen generation have not adequately addressed these needs, as conventional methods of production ultimately require the use of fossil fuels to generate hydrogen– thus hampering the full realization of a hydrogen economy.

“The traditional method of producing hydrogen has been known for decades, and little has changed in this industry. Major oil companies have spent billions on their infrastructure and are thus slow to adopt new innovations in the hydrogen production process,” said Kevin Maloney, CEO, QuantumSphere, Inc. “As a result, hydrogen is still typically produced from steam reformation of hydrocarbons or gasified coal. Generally considered the most efficient process, steam reformation produces four pounds of carbon dioxide (greenhouse gasses) for every one pound of hydrogen produced. This presents a significant problem, since billions of pounds of hydrogen will be used as the market migrates toward the use of hydrogen and other renewable sources of energy, and away from conventional resources,” Maloney added.

QuantumSphere to Leverage Research, Set New Standard for Hydrogen Generation
The ever-increasing cost of gasoline has significantly contributed to a burgeoning interest in the hydrogen economy as an alternative to an oil-based economy. However, the shift from oil necessitates a need for new technologies to be developed before a hydrogen economy can be realized. One alternative that eliminates the need to produce hydrogen from fossil fuels is to generate hydrogen from water, leveraging water electrolysis. To date, only 5% of hydrogen is made by water electrolysis since the process relies on the use of platinum, which is cost-prohibitive.

“Several companies are struggling to efficiently generate hydrogen by water electrolysis with poor results thus far as today’s processes use expensive platinum electrodes. The high cost of platinum leads to the use of electrodes that have a small surface area,” said Dr. Douglas Carpenter, Chief Scientific Officer, QuantumSphere, Inc. “Our water electrolysis research will ultimately enable us to leverage the Company’s nanomaterials to produce cheap hydrogen using water and electricity. QuantumSphere’s electrodes use QSI-Nano® metals and alloys that are ten times less expensive when compared to platinum, offering an orders-of-magnitude increase in surface area (due to nano-scale size) to provide low cost, energy-efficient processes and materials to generate hydrogen,” Dr. Carpenter added.

QuantumSphere’s water electrolysis processes alleviate the dependence on platinum, deliver 80% cheaper electrodes with increased surface area and activity while reducing the electrical potential that resists the water splitting process. “Our process only uses water and electricity– no green house gasses are produced, and when hydrogen and oxygen are recombined in a fuel cell, the end-product generates pure water and electricity,” said Dr. Kim McGrath, Director of Fuel Cell Research, QuantumSphere, Inc. “The electricity needed for this process can be from wind, solar or hydroelectric sources to make it a totally renewable energy cycle,” said Dr. McGrath. QuantumSphere will announce the results of its research in Q4 2006 that will reveal performance data when compared to baseline experiments with platinum electrodes.

Federal Government Realizes Need, Initiates Funding for Hydrogen Research
President Bush’s previous photo opportunity at one of the first U.S. hydrogen filling stations signaled that the hydrogen economy is becoming a reality. As a result of the White House’s hydrogen ambitions, President Bush’s energy bill increased funding for hydrogen research and development by nearly $2 billion over the next five years and it authorized significant additional funding for demonstration projects and tax incentives for consumers who buy hydrogen fuel cells. The federal government also established the FreedomCar project, a partnership that includes the Department of Energy, automobile manufacturers and others working to develop commercially-sustainable hydrogen-powered automobiles. Additionally, the President’s Hydrogen Fuel Initiative seeks to reverse America’s growing dependence on foreign oil by developing the technology needed for commercially viable hydrogen-powered fuel cells.

In a State of the Union Address, President Bush discussed the importance of “…a simple chemical reaction between hydrogen and oxygen generates energy, which can be used to power a car producing only water, not exhaust fumes. With a new national commitment, our scientists and engineers will overcome obstacles to taking these cars from laboratory to showroom,” said Bush. Bush also commented on how the hydrogen economy will require “…important innovation to make our air significantly cleaner, and our country much less dependent on foreign sources of energy.”

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.