Replies to post #40730 on QS Energy Inc (QSEP)

[zerosnoop]

NOT TRUE according to the EVIDENCE below from the RECENT shareholders update about the PROVEN AOT. NEXT

http://ir.qsenergy.com/press-releases/detail/2034


QS Energy CEO Jason Lane Issues Shareholder Update

HOUSTON, TX -- (Marketwired) -- 05/25/17 -- QS Energy, Inc. (the "Company") (OTCQB: QSEP) is a developer of integrated technology solutions for the energy industry. The following is a shareholder update from Jason Lane, Chief Executive Officer and Chairman of the Board, QS Energy, Inc.

Dear Shareholders,

It is a great opportunity and honor for me to join QS Energy as its new CEO and Chairman of the Board, and the first few weeks on the job have been an amazing ride. I have taken a deep dive into the Company's technologies and strategies; I have also had the chance to better know the entire QS Energy team, our business partners and our emerging customer base. I am energized by the ongoing developments under our current strategic plan -- one that I believe will efficiently stabilize the Company's capitalization, accelerate our sales cycle, push our Applied Oil Technology (AOT) to commercial operations, and create positive cash flow and long-term profitability for the Company.

All shareholders should know that I approach this new challenge with a clear sense of QS Energy's unique potential and the industry it serves. As a Texas oil veteran with more than 20 years of industry experience, I've managed large Landman operations; overseen acquisition and divestiture of more than 650,000 acres of oil and gas properties; bought and sold multiple royalty packages; and operated and drilled throughout the United States. Through all of those experiences, I've developed deep, high-level relationships throughout the oil industry and a clear understanding of the midstream transportation challenges this industry faces. I also understand, after many conversations about QS Energy with industry contacts, the great value that our AOT viscosity reduction technology brings to the crude oil transportation market.

Our strategic plan breaks down into three parts, all working toward common goals. In this letter, I would like to share the core essentials of that plan, as well as a bit more about our governing philosophy.

I. Adding Strategic Depth to Our Board

Our first order of business has been to fill the Company's open Board seats and complete a strong and highly engaged Board of Directors that can help execute on our vision. I joined the Board as its Chairman on April 1st. Concurrent to my appointment, and thereafter in May, the Board appointed three additional new Directors and nominated a fourth for election to the Board by shareholder vote. I am thrilled to introduce our sitting and nominated Board members who are slated to run for election at the Company's shareholder meeting on July 14th. I encourage you to read and learn more about our Board members in the Proxy Statement filed with the SEC on May 24th, 2017.

Current Board Members:

Jason Lane: Chairman and CEO of QS Energy. You've already read enough about me.

Gary Buchler: As COO of the Natural Gas Pipelines business unit at Kinder Morgan, Inc. (NYSE: KMI), Gary manages 3,900 employees, a $1.3 billion budget, and was instrumental in the acquisition and integration of more than $45 billion in pipeline assets at Kinder Morgan. Gary was appointed to the Board in May 2017 and serves on the Audit Committee.

Richard Munn: Richard is one of the top players in the royalty and mineral arena, with a track record of closing more than 50 transactions and $450 million in acquisitions over the course of his career. Richard has already begun leveraging his reputation and extensive network to make introductions regarding the AOT technology on behalf of QS Energy in the public and private energy sectors. Richard was appointed to the Board in May 2017.

Dr. Eric Bunting: As a physician, executive, and entrepreneur, Eric brings a unique perspective to the Board. As a significant investor in the Company, Eric also brings a true shareholder's perspective to all of the Board's responsibilities. Eric was appointed to the Board in April 2017.

Don Dickson: A long-time senior executive with Kinder Morgan and former CEO of Advanced Pipeline Services, Don has been a member of QS Energy's Board since 2013 and currently serves on the Company's Audit Committee.

Tom Bundros: CEO of Dalton Utilities and former CFO of Colonial Pipeline Company, Tom joined the Board in 2015 and was recently appointed Chairman of the Company's Audit Committee.

Nominated:

William Green: I look forward to Bill joining the Board in July after his retirement from Devon Energy Corporation. His 30-plus years of executive-level industry sales experience will be invaluable to our Company.

II. Expanding Market Adoption of AOT

The core mission of the new strategic plan is to accelerate market adoption of our AOT technology. From my first day on the job, I began talking with industry experts within and outside of QS Energy's partner and customer base. In these talks, I confirmed what I had already learned from my team at QS Energy -- that the potential operational and financial benefits of AOT are significant.

We face an unusual challenge, however, in expanding adoption. The majority of our customer base operates at a high level of confidentiality, frequently operating under NDAs and closely protecting all facets of their operations. We, too, must protect our intellectual property, operations and proprietary information. At the same time, potential customers need to "kick the tires" to see our equipment operating in the field under commercial operating conditions, watch real-time viscosity reduction in action, and have access to summary SCADA and in-field test data. NDA requirements have so far prohibited this type of access.

The key to overcoming this hurdle -- which I am taking on as a personal mission -- is to find a partner/customer and a location where QS Energy can jointly develop operations under relaxed conditions of non-disclosure, allow prospects to tour an operating facility, and provide them with summary operating data for review and detailed analysis.

As Gary Buchler explains, "AOT has the potential to solve a number of difficult operating issues common in the midstream transport market. To drive adoption in an industry that has traditionally been slow to adopt new technologies, we must increase market visibility of QS Energy and the financial and operating benefits of AOT."

We are moving quickly in our efforts to select a development partner and site location, and initiate a joint development agreement. Richard Munn and I have identified and approached a number of small to mid-sized target companies, and we are now working with a select group of targets who have expressed interest in providing transparent joint operations on an initial AOT installation, with an eye towards rolling out AOT throughout their pipeline operations.

III. Implementing New Equity Structure to Fund Critical Growth Capital

Delivering on this vision, of course, requires us to stabilize short-term funding needs and develop a strategic equity structure to drive long-term execution. Over the past two months, investors have shown interest in our convertible note private placement offering as described in our Form 10-Q filed with the SEC May 15th, 2017. Funds raised through this convertible note offering should be sufficient to cover operations for the next several months while providing funds necessary to retrofit our standing AOT inventory and implement improvements based on two years of in-field testing and operations.

That said, once we achieve true market adoption, we will need growth capital to fund expansion of our AOT inventory and manage corporate growth. To this end, we will be asking shareholders at our July 14th Annual Meeting of Shareholders to approve authorization of additional common and new preferred shares as described in our Proxy Statement filed with the SEC on May 24th, 2017.

The strategic goal of authorizing additional common and preferred Company stock is to provide an equity base we can use to fund growth in operating revenues and cash flows. The Board's challenge in accomplishing this goal is to minimize dilution in the best interest of our shareholder base.

"As a longtime investor and large shareholder, I am keenly aware of the Company's history and shareholder concerns," Dr. Bunting explained recently to the Board. "I could not be more excited by our upcoming opportunities, nor more supportive of the steps management has taken to appropriately capitalize QS Energy and optimally position the Company for growth. Our team has put in place a strategy designed to achieve commercialization of the Company's AOT technology while maximizing shareholder value."

To this end, in addition to using our common stock, we plan to use preferred stock to provide initiative-based offerings, which could command a higher price and be less dilutive than common stock offerings due to credit-enhancement, dividends and other preference features.

IV. Our Commitment to Open Communications and Transparency

Since taking over as CEO of QS Energy, I have met and visited with a number of shareholders. Through these meetings, I have learned how important full and complete transparency is to all of you. It is an issue of great importance to me as well. Our shareholders play an integral part in our Company and must know where we stand at all times. My management team has agreed to continue and expand a philosophy of openness and transparency into all of our practices and activities.

While I realize that information flow does have limits as required under SEC compliance and selective disclosure rules -- and to protect the intellectual property of our Company and those we work with -- we will work diligently within these bounds to keep our shareholders well informed. We continue to work with current and potential customers under strict nondisclosure and hope to have material updates for our shareholders in the near future. In the meantime, I appreciate your patience and understanding in these matters.

In closing, I would personally like to thank each and every shareholder who has been part of the journey to this point, and I look forward to bringing our AOT technology to full and complete adoption in the midstream and upstream crude oil transportation sector across the globe. It is with great pleasure that I invite our shareholders to QS Energy's 2017 Annual Meeting of Shareholders on July 14th, 2017, at the La Torretta Lake Resort in Montgomery, Texas, located approximately an hour north of Houston. For those of you who are unable to join us in person, we will be broadcasting the meeting's audio and computer screen presentations via live webcast that will be available on our company website at www.qsenergy.com/webcast.

Hope to see you all there.

Best regards,

Jason Lane
CEO and Chairman of the Board
QS Energy, Inc.
Tomball, Texas

For further information about QS Energy, Inc., visit www.QSEnergy.com, read our SEC filings at http://ir.stockpr.com/qsenergy/all-sec-filings and subscribe to Email Alerts at http://ir.stockpr.com/qsenergy/email-alerts to receive Company news and shareholder updates.

Safe Harbor Statement:

Some of the statements in this release may constitute forward-looking statements under federal securities laws. Please visit the following link for our complete cautionary forward-looking statement: http://www.qsenergy.com/site-info/disclaimer

About AOT (Applied Oil Technology)

Developed in partnership with scientists at Temple University in Philadelphia, AOT (Applied Oil Technology) is the energy industry's first crude oil pipeline flow improvement solution using an electrical charge to coalesce microscopic particles native to unrefined oil, thereby reducing viscosity. Over the past four years AOT has been rigorously prepared for commercial use with the collaboration of over 30 engineering teams at 19 independent oil production and transportation entities interested in harnessing its demonstrated efficacy to increase pipeline performance and flow, drive up committed and uncommitted toll rates for pipeline operators, and reduce pipeline operating costs. Although AOT originally attracted the attention of pipeline operators motivated to improving their takeaway capacity during an historic surge in upstream output resulting from enhanced oil recovery techniques, the technology now represents what we believe to be the premiere solution for improving the profit margins of producers and transporters during today's economically challenging period of low spot prices and supply surplus.

About QS Energy, Inc.

QS Energy, Inc. (OTCQB: QSEP), provides the global energy industry with patent-protected industrial equipment designed to deliver measurable performance improvements to crude oil pipelines. Developed in partnership with leading crude oil production and transportation entities, QS Energy's high-value solutions address the enormous capacity inadequacies of domestic and overseas pipeline infrastructures that were designed and constructed prior to the current worldwide surge in oil production. In support of our clients' commitment to the responsible sourcing of energy and environmental stewardship, QS Energy combines scientific research with inventive problem solving to provide energy efficiency 'clean tech' solutions to bring new efficiencies and lower operational costs to the upstream, midstream and gathering sectors. More information is available at: www.QSEnergy.com

Company Contact:
QS Energy, Inc.
Tel: [phone]
E-mail: [e-mail]
Sales: [e-mail]

Investor Relations:
QS Energy, Inc.
Tel: [phone]
E-mail: [e-mail]

Source: QS Energy, Inc.

Released May 25, 2017

[zerosnoop]

INCORRECT. The PROVEN AOT, AOT XL, JOULE HEAT & ELEKTRA technologies are all here to stay as per the RECENT PR below. NEXT

http://ir.qsenergy.com/press-releases/detail/2026


SANTA BARBARA, CA -- (Marketwired) -- 10/17/16 -- QS Energy, Inc. (OTCQB: QSEP) The following is a shareholder update from Greggory M. Bigger, Chief Executive Officer, QS Energy, Inc.

As we enter the final quarter of what has been a year of re-alignment for the global energy sector, I'd like to provide an update on how our business strategies have evolved to capitalize on this unique period of transformation and opportunity.

It gives me great pleasure to confirm that we are engaged in AOT provisioning discussions under Non-Disclosure Agreements with multiple crude oil producers and pipeline operators here in the U.S., Canada, and the Middle East. Thanks to the tireless efforts of our project manager John Valenti, QS Energy has expanded our engineering capabilities in response to requests for detailed technical AOT deployment proposals and to meet the growing scope of potential applications for our technology.

From the onset of the value engineering of AOT and continuing today in our ongoing design process to further optimize its performance, along with myself and our engineering team, John is currently managing our collaboration with Temple University, our supply chain system fabricators, and current industry partners in North America and the Middle East. I can state without hesitation that there is no one else as exceptionally qualified as John to manage these complex and intensely detail-oriented projects and for that reason he continues to have the fullest confidence of the Board and myself.

Although the AOT technology is now nearly fully engineered and it has become less important to staff engineering support internally, we continue to benefit greatly from these in-house resources and industry partnerships. Based on what we are currently working on with industry partners, both domestic and international, I've never been more optimistic about our technology, our industry, and our relationship with Temple University and the interrelated role they are playing in the commercialization of the AOT system.

We're especially appreciative of the outstanding laboratory testing and R&D capabilities of Temple University's Department of Physics and Dr. Tao's team. Since my tenure as Chief Executive Officer began, our focus on intensely managing expenses while maximizing the fiscal and human capital resources available to us has been integral to positioning our solutions for today's new energy industry landscape and will continue to be central to QS Energy's path forward in developing and commercializing the AOT system. The present supply chain can handle 20 unit orders at a time, however additional facilities are available for larger orders.

As you are aware, in the first quarter of this year the Company embarked on an acquisitions strategy targeting undervalued assets. Over the past six months we have issued four Letters of Intent to a select group of crude oil and natural gas producers that met our stringent criteria. One of these letters was issued to the U.S. Federal Bankruptcy Court in Houston. While QS Energy is not abandoning this strategy, we are paying very close attention to crude oil pricing to gauge the most opportune time when conditions are optimally favorable to exercise a buy-side acquisition of cash flow positive entities.

It goes without saying that few industries are as prone to the "boom and bust" cycle of expansion and contraction as the oil and gas industry. Not unexpectedly, following the steep drop in oil spot prices in Q4 of 2014 the industry has been forced to recalibrate. Currently domestic and foreign markets appear to be slowly emerging from the price trough which triggered a widespread retrenchment and consolidation. While the U.S. rig count is gradually recovering, the tens of thousands of jobs lost will only return when spot prices recover more fully.

However, as we've documented previously, our experience has been that interest in AOT continues to grow as a result of this down cycle as producers and transporters adjust their operations to trim costs, remain solvent and survive until prices inevitably recover. By offering laboratory viscosity reduction tests of crude oil samples supplied by prospective customers, we've uniformly been able to predict efficiencies that can be gained in their pipeline infrastructures. In performing hydraulic analysis based on the specific crude oil being transported and the physical properties and operational metrics of the targeted pipeline, we are providing highly specific economic models of the bottom line benefits AOT can be expected to deliver.

We believe these factors explain why oil producers in many of the world's highest production regions are requesting proposals documenting how AOT can assist in their plans to increase crude oil flow volume and improve their ability to move hydrocarbons to market. Furthermore, as we have now definitively confirmed through commercial pipeline installations and the SCADA (Supervisory Control and Data Acquisition) records we have collected as well as crude oil samples we have analyzed in the Temple laboratory, the value engineered AOT has documented efficacy across the full spectrum of grades of crude oil, from super heavy bitumen to super lightweight and ultralight condensates.

Our ongoing deployment of a customized AOT system on a condensate line and the well-documented efficiencies it is bringing to the movement of ultralight feedstock, a category of crude oil that is currently just under 18% of all U.S. output, is evidence of the versatility of our technology.

From our perspective, two overarching market influencers explain this heightened awareness of AOT and the measurable benefits it can potentially provide. Both of these trends are responsible for redrawing the map of oil and gas markets over the past two years and a third, the increasing focus on reducing emissions in the production and transport of hydrocarbons, holds the promise to deeply affect the oil sector in the coming years.

First, and perhaps most significantly, U.S. and foreign producers have now endured nearly nine quarters of depressed oil prices. Last week's uptick to just over $50, the first time that barrier has been eclipsed since July 2015, may portend a slow return to previous highs which could improve margins and re-ignite E&P activity. However, even a surge to the $60s or $70s would not alter some of the new realities facing the industry. The shakeout and re-alignment that began last year has resulted in a leaner and more efficient industry, a mindset that will persist for the foreseeable future. As a result, we continue to see an increased focus among pipeline operators on lowering Opex and squeezing out higher flow volume and stronger tariff income, all of which make a case for AOT deployment.

Secondly, the bright side of the continuation of OPEC's intransigent production policies has been an intense focus on infrastructure by virtually all members of the consortium. Many of these nations are almost entirely dependent on oil revenue and have been driven to near insolvency due to the global supply glut and downward pressure on prices. In response, member nations Saudi Arabia, Iraq, Iran, and Venezuela, and petro-states such as Colombia, Brazil, and Ecuador have embarked on ambitious and capital-intensive modernization programs, much of this aimed at harnessing efficiency-centric technologies which provide innumerable of opportunities for AOT and Joule Heat.

Throughout the year we have documented how these efforts to expand existing infrastructure and improve delivery to markets may offer a broad range of potential applications for AOT technology. For example, in an Update on AOT Opportunities in the Middle East and South America and an August 15 2016 news release we discussed that we have issued a Letter of Intent to a national oil company in Western Asia and have produced an AOT Case Study for a sole and separate operator in the Middle East based on hydraulic analysis using crude oil samples and pipeline data provided by this prospective customer.

Thirdly, as international markets gear up to develop economically viable alternative and renewable energy sources to supplement fossil fuel, political leadership here and overseas seems poised to resurrect the idea of incentives to reduce CO2 emissions and other forms of greenhouse gas. What's changed in the equation is that some of the talk about carbon tax credits and the ability to buy and sell them on an open market is now coming from within the energy industry. For example, ExxonMobil has been lobbying Washington to develop carbon tax credit legislation and foreign energy giants which include BP Plc, Royal Dutch Shell Plc, Total SA, Statoil ASA, and others, are calling for incentive programs they believe will remove uncertainty from the investment markets and bring order and transparency to the global push to reduce emissions.

Although we have long considered the "clean tech" aspects of our patent-protected industrial hardware worth noting as seen in this August 15 2014 news release, it has yet to prove prudent as a business development strategy in the absence of sufficient and tangible customer benefit. However, should a carbon tax credit incentive pass into law we believe it may offer significant opportunities for QS Energy's technologies. During my tenure as Chief Executive Officer I have had countless discussions about the role our solutions could play in achieving the twin goals of reducing CO2 output and our customers securing financial advantages through research funding and tax credits.

More often than not the topic of carbon credits has been brought up as an ancillary benefit of AOT or Joule Heat by our prospective customers. Even though such incentives were at the time purely speculative, executives at midstream companies, technologists at engineering firms, and elected officials in regulatory and economic development agencies in Utah and Louisiana made clear their interest in investigating this intently. To fully explore carbon tax credit offset benefits AOT and Joule Heat could potentially offer to producers, transporters, and operators of offloading facilities and refineries, QS Energy commissioned a Carbon Markets research paper by Loyola Marymount University. Completed in December 2014, the study documents the emerging markets for the buying and selling of carbon emission allowances or permits ("carbon trading") and the fiscal benefits that may be gained by our customers through U.S. and international tax credits.

It is also worth noting that we have just wrapped up a reengineering of our patented Joule Heat System. As a result of the testing of a new prototype, we are in the process of further refining the performance of this innovative direct heat technology. While our patents remain in force with our intellectual property attorneys Jones Walker LLP, the Company is amending and resubmitting designs and additional patentable engineering characteristics for this energy-efficient upstream heating product.

Now that the value engineering of AOT and Joule Heat are nearing completion, we are reviewing Company-owned technology, patents, and other assets related to ELEKTRA, a clean tech hardware system designed to increase fuel efficiency and improve performance of diesel engines. According to multiple industry and government studies there is potentially a strong and growing demand for technology able to mitigate CO2 and other pollutants produced by the millions of diesel engines in use today in electric plants, marine vessels, and Class I locomotives in the U.S. We will be developing additional ELEKTRA design drawings and engineering schematics for the second quarter of 2017.

As our extensive protocols of controlled loop and commercial pipeline testing has borne out, AOT can be effectively customized for virtually any crude oil viscosity reduction and flow volume improvement application producers or transporters anywhere in the world can envision. An excellent example of this can be seen in a recent request for a modified system required for a high volume offloading facility. In response to this need we are currently developing the AOT XL, a vertically mounted, multi-vessel, modular unit designed for offshore applications.

We thank our shareholders for their loyalty and support, and our industry partners and supply chain suppliers for their collaboration. As noted throughout the year in our previous Shareholder Updates, news releases and SEC filings, we remain steadfast in our belief that AOT and Joule Heat have the potential to optimize the world's massive pipeline infrastructure at a time when operational efficiency, bottom line performance, and competitive advantages are paramount objectives of the industry.

Best regards,

Greggory M. Bigger
Chief Executive Officer
QS Energy, Inc.
Toll-Free: [phone]
Main: [phone]

Safe Harbor Statement:
Some of the statements in this letter may constitute forward-looking statements under federal securities laws. Please visit the following link for our complete cautionary forward-looking statement: http://www.qsenergy.com/site-info/disclaimer

Image Available: http://www.marketwire.com/library/MwGo/2016/10/15/11G118183/Images/greggory_m_bigger-f43f31771636b019a81b3340c6b426d6.jpg

Investor Relations & Media Contact:
QS Energy, Inc.
Tel: [phone]
E-mail: [e-mail]

Source: QS Energy, Inc.

Released October 17, 2016

[Tpsully]

Wow ...........


Why do some have to go back 10-15
Years . Ignoring what is currently going on with QSEP ?? My guess and only a guess is they continue to be shown that what is some write lately is incorrect and twisted ...

QSEP has a new leader with industry experience who has shown he believes in the product . He has taken a lower salary and will make more when the AOT sells . Maybe he
Believes Mr S 's statement that QSEP will soar when the AOT sells ....

The board is full of knowledgeable industry members. IMO I can only
Believe they would not have taken the position if they did not also believe in the product...

Some have stated that Mr L took the job so now he can receive rent in Texas from QSEP ... LOL ..... another
Reason IMO some are not finding much to

[zerosnoop]

ABSOLUTELY FALSE. The sec has VERIFIED & APPROVED the INDEPENDENT reports provided by ATS RheoSystems, RMOTC & PETROCHINA. The INDEPEDENT results are published in the 10k about the PROVEN AOT. This is why the DRA & DILUENT companies & their AGENTS, LAWYERS & PARASITES are very concerned about the PROVEN AOT & the damage it will do to their industry & profits. The DRA & DILUENT companies have FAILED to stop the progress of the PROVEN AOT.

https://journals.aps.org/pre/abstract/10.1103/PhysRevE.91.012304

Laboratory and Scientific Testing

From 2010 through 2013, the Company worked with the U.S. Department of Energy (“US DOE”) to test its technology at the Department of Energy’s Rocky Mountain Oilfield Testing Center (“RMOTC”), near Casper, Wyoming. This third-party testing independently verified the efficacy of the Company’s technology operating in a controlled facility, using commercial-scale prototype of our AOT equipment. These tests were summarized in the US DOE Rocky Mountain Oilfield Test Center report dated April 4, 2012 (“ROMRC Report”), which reported AOT measured pressure loss reduction of 40% (RMOTC Report, Fig. 1, page 4) and viscosity reduction of 40% (RMOTC Report, Fig. 2, page 4); and reported observed reductions in line-loss and gains in pump operation efficiency across the entire length of the 4.4-mile test pipeline. A copy of the RMOTC April 4, 2012 Report is available on the Company website at: https://qsenergy.box.com/DOE-STWA-RMOTC-Report. A subsequent long-duration (24-hour) test at the RMOTC facility tested the effectiveness of AOT in treating oil overnight, as pipeline oil temperatures and viscosities drop. In its report dated May 3, 2012 to May 4, 2012, US DOE engineers recorded 56% reduction in viscosity of the AOT-treated oil versus untreated oil, with AOT effectively stabilizing oil viscosity throughout the overnight run despite dropping temperatures. A copy of the RMOTC May 3, 2012 to May 4, 2012 report is available on the Company website at: https://qsenergy.box.com/DOE-STWA-RMOTC-Overnight.

Laboratory testing of our AOT technology has been conducted by Dr. Rongjia Tao. Testing of the technology as applied to crude oil extraction and transmission has been conducted at Temple University in their Physics Department, in addition to the US DOE, at their Rocky Mountain Oilfield Testing Center, located on the Naval Petroleum Reserve #3 Teapot Dome Oilfield, north of Casper, Wyoming. In addition, a group led by Dr. Rongjia Tao, Chairman, Department of Physics of Temple University conducted experiments, using the laboratory-scale Applied Oil Technology apparatus at the National Institute of Standards and Technology (NIST) Center for Neutron Research (CNR). NIST is an agency of the U.S. Department of Commerce, founded in 1901 in Gaithersburg, Maryland.

Independent laboratory testing was also conducted as a collaborative effort by Temple University and PetroChina Pipeline R&D Center (“PetroChina”) in 2012. In its report dated June 26, 2012 (“PetroChina Report”), PetroChina concluded, “The above series of tests show that it is very effective to use AOT to reduce the viscosity of crude oil. We can see that AOT has significantly reduced the viscosity of Daqing crude oil, Changqing crude oil, and Venezuela crude oil, and greatly improved its flow rate.” (PetroChina Report, page 15). A copy of the PetroChina Report is available online at: https://qsenergy.box.com/PetroChina-STWA-Report

As previously reported in 2014, QS Energy installed and tested its commercial AOT equipment, leased and operated by TransCanada on TransCanada’s high-volume Keystone pipeline operation. The first full test of the AOT equipment on the Keystone pipeline was performed in July 2014, with preliminary data analyzed and reported by Dr. Rongjia Tao of Temple University. Upon review of the July 2014 test results and preliminary report by Dr. Tao, QS Energy and TransCanada mutually agreed that this initial test was flawed due to, among other factors, the short term nature of the test, the inability to isolate certain independent pipeline operating factors such as fluctuations in upstream pump station pressures, and limitations of the AOT device to produce a sufficient electric field to optimize viscosity reduction. Although Dr. Tao’s preliminary report indicated promising results, QS Energy and TransCanada mutually agreed that no conclusions could be reliably reached from the July 2014 test or from Dr. Tao’s preliminary report. As a result of this test, the Company modified its testing protocols and contracted with an independent laboratory, ATS RheoSystems, a division of CANNON (“ATS”), to perform follow-up tests at the TransCanada facility. This independent laboratory performed viscosity measurements at the TransCanada facility during subsequent testing in September 2014. As detailed in its field test report dated October 6, 2014, ATS measured AOT viscosity reductions of 8% to 23% depending on flow rates and crude oil types in transit. Over the duration of a 24-hour test intended to measure the recovery of the AOT treated oil from its reduced-viscosity treated state to its original pre-treated viscosity, ATS measured viscosity reductions of 23% three hours after treatment and 11% thirteen hours after treatment, with the crude oil returning to its untreated state approximately twenty-two hours after treatment. In its summary report dated February 5, 2015, ATS concluded that i) data indicated a decrease in viscosity of crude oil flowing through the TransCanada pipeline due to AOT treatment of the crude oil; and ii) the power supply installed on our equipment would need to be increased to maximize reduction in viscosity and take full advantage of the AOT technology. A copy of the ATS summary report dated February 5, 2015 is available on the Company website at: https://qsenergy.box.com/ATS-AOT-SummaryRpt. A copy of the ATS field test report dated October 6, 2014, with certain confidential information redacted, is available on the Company website at: https://qsenergy.box.com/ATS-AOT-Detailed-Report.

Although, as reported by ATS, the efficacy of the AOT technology operated in the TransCanada field test was constrained due to limitations of the electric field applied by that unit’s power supply, subsequent analysis by QS Energy personnel of ATS test results compared against laboratory tests performed at Temple University on oil samples provided by TransCanada revealed a single test run in which the electric field generated by the AOT was sufficient to fully treat the oil given operating conditions at the time of the test. In this test run, ATS measured a 23% reduction in viscosity three hours after AOT treatment. Laboratory tests at Temple University performed on a sample of crude oil provided by TransCanada of the same type treated in that specific field test measured a 27% reduction in viscosity in the laboratory immediately following treatment. Allowing for the actual three-hour of recovery time of the field test measurement, the resulting field test viscosity reduction of 23% correlates very well to the 27% viscosity reduction achieved in the laboratory setting.