[QuantumSphere - Energetics and Power for Advanced Applications]

Santa Ana nanotech company QuantumSphere Inc. is alive only because it’s flexible.

Launched three years ago by entrepreneur Kevin D. Maloney and chemist Doug Carpenter, Ph.D., the company was built to exploit the commercial possibilities of a versatile machine that Carpenter had invented. The device can convert a metal wire or metal powder into the finest of particles – each one about 30 atoms wide, only 10 billionths of a meter across, or 10 nanometers.

Carpenter holds up a vial of black powdered cobalt from his machine. In that container, about the size of his pinky, are 10,000,000,000,000,000,000,000,000,000 particles. That number is 10 to the 28th power – roughly the same as all the bits of sand in the world.

Nano-sized metals tend to be completely different from ordinary metals. For starters, one gram of nanometal powder has as much surface area as a soccer field. That huge surface can react strongly with oxygen, which is the quality Carpenter had in mind when he designed his nanomanufacturing process. He was looking for a way to improve rocket fuel by adding nano aluminum.

He succeeded, but has since set that work aside, because the market isn’t ready and because it’s so hazardous.

“People who work with aluminum usually end up with a big hole in the ground,” he says.

When QuantumSphere got under way in late 2002, it planned to make and sell a much safer product – nano-sized zinc oxide for use in glass and cosmetics to protect users from ultraviolet light. That’s a $200 million market but, it turned out, not a safe one commercially, because competition was so intense. Other companies were making nano zinc oxide “by the trainload,” Maloney learned.

QuantumSphere had to shift gears, and it’s still figuring out exactly which direction it will head. Potential clients keep knocking on the door as they hear about what the company makes.

How about blending nano silver into military clothing, because silver kills germs, and in nano form it can be mixed into the fabric?

Or relatively inexpensive nano cobalt as a replacement for costly platinum as a fuel-cell catalyst?

Or using nano nickel-cobalt alloy to improve hearing-aid batteries?

Or mixing nano copper into ink so you could simply print out a circuit?

QuantumSphere has great prospects, but where it ends up will depend on what it learns about the new nanometals it makes and customers’ willingness to pay for them.

“We’re not married to one product,” says Kimberly McGrath, the company’s director of fuel-cell research. “We’re going to find the key material.”

“It’s an exciting company,” says Derrell Brookstein, managing director of Nanotechnology.com, an online publication that evaluates firms in the rapidly expanding field of nano-scale products. QuantumSphere has a good team in place, has attracted major companies as research partners, and knows that “it’s all about business at the end of the day.”

“But there are no guarantees. It’s a very competitive field,” Brookstein says.

Maloney and Carpenter are confident that several of their commercial prospects will pan out. Their fuel-cell expert, McGrath, is also comfortable with the risks and potential rewards of startup company. She’s a Ph.D. who’s in her first job as a professional chemist after putting herself through school on money she made gambling.

At this point, QuantumSphere’s most promising products are nano cobalt in fuel cells and nano nickel-cobalt in batteries. In each of those cases, QuantumSphere is working with major-brand international companies, but still is short of a formal product announcement.

So far, nano nickel in magnetic coatings and nano copper in conductive inks have produced the most revenue. Boosted by those sales, Maloney projects revenues of $500,000 this year, with a few million dollars in 2007, depending on the timing of commercialization.

Having a versatile manufacturing process allows [QuantumSphere] to be flexible, but doesn’t help it to focus. The broad range of potential uses for all its potential products can be a distraction, and potential customers often suggest applications that [QuantumSphere] hadn’t yet considered.

To meet the challenge of remaining focused, the company tries to test possibilities fast so it can discard the losers quickly.

For Maloney, those disappointments are a necessary stage on [QuantumSphere’s] road to success, so he tells employees not be discouraged by them. In fact, he instructs them:

“Fail quickly and often.”

Eventually, your laptop, cell phone will need only refueling

In a few years, it’s likely you’ll no longer need to plug in your cell phone or laptop for hours to recharge it.

Instead of being powered by a battery, the gadget would have a built-in fuel cell. When that runs low, you’d rummage through your pocketbook or briefcase, pull out a disposable cartridge filled with methanol, pop it into the device’s fuel socket, and you’d be good to go.

Expect to see them on the market next year as electronics makers work the kinks out of this new Direct Methanol Fuel Cell technology.

But cross your fingers, because they’ve been promised “next year” for several years now. The reason companies from Toshiba and Panasonic to Samsung are developing fuel cells isn’t because recharging is such a bother. It’s because the companies need more power to run their ever-more-powerful electronics.

A fuel cell can run a laptop for 20 hours between refills, but a typical modern laptop’s lithium-ion battery is likely to fail in two to four hours – long before a cross-country plane flight is over.

Even the International Civil Aviation Organization is on board. Its rules committee agreed last year to allow air travelers to carry methanol starting in 2007, if national regulators approve. Each passenger would be limited to two methanol cartridges (about the size of a wine cork) in carry-on luggage.

Here’s a look at the innovation process for one of QuantumSphere’s most promising products:

What: Nano cobalt for fuel cells.

When: Last month, laboratory tests showed that replacing 50 percent of the platinum in a direct methanol fuel cell’s electrode with nano cobalt increased power 30 percent while cutting costs 30 percent.

Who: Kimberly McGrath, Ph.D.

How it could affect the company: QuantumSphere is negotiating to supply nano cobalt and other nanometals to two large Japanese electronics makers, which are planning to power new devices with methanol fuel cells starting as early as 2007.

How it could affect consumers: Small methanol fuel cells have the potential to power a laptop or cell phone for 20 hours or more. Instead of needing to be recharged, the devices would be refueled with small disposable cartridges containing methanol.

Where the first ideas came from: Company co-founder Kevin Maloney saw fuel cells as a large potential market for [QuantumSphere], so he hired McGrath last June to explore how nanometals perform as fuel-cell components. Based on her previous studies and increasing demand for new power sources for portable electronics, she decided in July to focus on direct methanol fuel cells.

The go-ahead: In August, McGrath conducted limited experiments on nanometals in fuel cells. The results were encouraging enough that Maloney approved the purchase of $100,000 worth of lab equipment, which arrived in January.

Where the next idea came from: Tests began with a catalyst consisting of 40 percent nano cobalt because McGrath knew from her scientific background that it should work and because Maloney knew that a 40 percent reduction in platinum would be enough to attract interest from fuel-cell manufacturers. What’s the competition? Other companies make nano-scale materials, but [QuantumSphere] says only its process makes nanometal particles as small, as uniform and in quantities of kilograms rather than grams per day.

Other potential problems: Feasibility of methanol fuel cells has not been proven in the marketplace. Nanometals could become low-cost commodities, if QuantumSphere’s patent applications don’t protect it.

Protection against matching innovations: Among [QuantumSphere’s] eight patent applications for nano-sized compounds, three are for nanometals in fuel cells.

What’s next: Tests to determine whether nano cobalt can efficiently replace more than 50 percent of the fuel cell’s platinum and whether other nanometals can do any better.