Hello,

Halloween is upon us, and here at QuantumSphere we have some frighteningly good news. We’ve just announced the filing of two benchmark patents responsible for achieving a 320% increase in power and efficiency for zinc-air battery cathodes. This has also been a busy month for the rest of the nanotechnology industry. The media have been reporting on everything from nanotech stock progress to advancements in alternative energy. And Governor Schwarzenegger is taking an aggressive stance in positioning California at the forefront of crucial issues in environmental protection and energy efficiency including renewable sources such as hydrogen and solar power, for which QuantumSphere continues to develop very innovative and powerful enabling nano catalyst materials. We are happy to share our big news as well as the latest industry headlines with you, and will continue to bring you the most up-to-date announcements as we move forward. Have a happy and safe Halloween, and we look forward to catching up with you again in November.

Kindest Regards,

Kevin D. Maloney, CEO

IN THIS ISSUE…

QSI Happenings & Headlines
BREAKING NEWS:

• QuantumSphere Announces Two Key Patent Applications Leveraging QSI-Nano® Catalysts for Large Primary Battery Market: Third-Party Validation Confirms 320% Increase in Power for Zinc-Air Battery Cathodes

Industry News
• Nanotech Speculator Stocks: Class Of 2006, Forbes, Oct. 19, 2006
• Alternative Energy Suppliers Look to Nano-Manufacturing, Semiconductor International, Oct. 17, 2006
• U.S. Government Gets Mixed Feedback On Nanotechnology, CBC.CA/The Associated Press, Oct. 11, 2006
• Silicon vs. CIGS: With Solar Energy, The Issue Is Material, CNET News.com, Oct. 2, 2006
• Department of Energy Releases Strategic Plan to Address Energy Challenges