Replies to post #2384 on QS Energy Inc (QSEP)

[J.T. The DD King]

One of the main reasons for China is, China as well as Russia, India and a good many other countries do not trust an American device that's only been tested in America. STWA's goal was to have a Communist Country test the AOT because the results are unarguably accurate.

Other reasons for China being first is the Chinese mandate requiring all industries to reduce greenhouse gas emissions by 16% by 2015. China is not like the USA. When China puts out a mandate it's comply or else.

For that simple reason China is motivated to fast track implementation whereas other pipelines might need to "Think" about it, so the China decision was multifaceted including but not limited to the reasons I just stated.

Please read about STWA. All of these answers and more are in the filings as well as the fact STWA has not stopped Domestic testing. In fact STWA leased the RMOTC testing center for 5 full years. In addition offshore studies as well as trunk line & refinery uses are posted on STWA in the investors section on their website. The AOT has been under constant testing and improvement since early 2011 and still continues today.

As a side note, I sincerely doubt the US Government leases large, expensive blocks of land with improvements without a background check to ensure the lessee has the means to pay the term of the lease.

[mentalFLOSS]

Right, you actually agree with the management that they have low hours of testing. That why STWA is currently negotiating for a commercial test-pilot installation program.

You pointed out that the company is low on cash: now you understand why they chose not to spend "1000's of hours of data logging."

And obviously you realized that it cheaper to ship the prototype AOT to a testing facility (like China) rather than to build out the testing site just to accommodate one type of test. The would mean building many more battery tanks (big dollars that STWA doesn't have). Shipping in huge amounts of crude oil from China (or other international areas) for a few test, and then ship back to China, because they can't resell it to US refineries that are not equipped to process that type of oil. How could they afford all that? You yourself said they have financial issues. If they did any of the things you suggested, then ZERO would have diluted their shares 2 years ago to pay for such wasteful spending.

You ask, "Why would they go offshore when the biggest pie is right here?" My wise friend, I'm sure you know this, but I'll mention it anyways. Last year PetroChina surpassed Exxon as the biggest publicly traded producer of oil worldwide. But I'm sure you already knew that! It's common knowledge. Be puzzled no more. (Source: http://www.pipelineandgasjournal.com/petrochina-surpasses-exxon-oil-production)

Since you already looked at the testing reports I just wanted to point something out to you. Did you notice that the AOT device did even better on China's waxy crude oil compared to US oil?

You ask, "Why wouldn't the Chinese rely on the the US test results?" For the exact same reason why you won't rely on JT's due diligence.

Finally you said, "Lastly if this is so plain to see by majors the deal would have been done on day 2 of the published report. All this talk of 6 months to get this or that done is nonsense." Here's a question for you: why don't you ever close on a commercial property on day 2 after it's listed? Surely you are wiser than this - o wise one. Btw I'm also a fellow commercial real estate investor. I love it and IMO it's the best investment vehicle.

An M&A is pure speculation by some here. It might happen, it might not. I'm leaning towards the not side. Let it go! Move on!

So what should this cash strapped, financially depleted company do next? Here's just my idea. Wait that's not my idea, it's what management is doing. How about STWA finds a company that will cover the expenses for a pilot test? Not just gathering data on a tiny little protype AOT 1.2 but a giant, full sized, commercially-ready AOT Midstream. Wow! Such a grand idea. That way STWA doesn't need to dilute shares because the testing is payed for by the pilot program. And the actual, non-prototype, soon-to-be commercially available AOT will have tons of data logged.

This actually presents 2 big problem (or prompts 2 big questions).

1. How will STWA pay for setting up manufacturing?
2. Who will be willing to participate as part of the pilot program?

1. Manufacturing companies in Caper WY are putting in their own capital to build and set up manufacturing facilities. Now we both are thinking - these must be some stupid people running those companies. Shouldn't STWA have to fork out the money for that? But then I realized these companies are smart, because they have projected out into the future more than you and I can because of the information they have. Today they put up their capital, and tomorrow a large order comes in returning their money to them 100X over. If you do you DD you will uncover unbiased facts that what I just wrote here is true.

2. You might be thinking, "So what! Manufacturing is solved, but if they don't have sales it means squat! In the US, who's is going to be willing to test-pilot the AOT?" It's a well documented fact that midstream transporters are slower-moving and more conservative, especially because they are one of the highest-regulated industry segments in the world! See that's a big problem! At this rate sales of the first AOT is 5 years away. It does prove your point, and it seems that sales are not even appearing on the horizon. But this management is fully aware of this problem. Therefore they are targeting upstream producer because they adopt new technology faster. Yes, it the same guys that have adopted fracking technology. Before STWA began manufacturing even the 1st AOT unit, they knew who the specific company is that will be installing it as part of the pilot testing program. (If you do your DD you will know that what I have said here is a fact. No it's not in an 8-K.) But I guarantee you that the none of the "majors" (TransCanada, Enbridge ect.) will be the first to order and pilot the AOT.

By the way, ask you CEO/Engineer friend about certification process of new technology. This is what STWA is currently in the middle of doing. What does it take to meet requirements, documentations, and approvals required by the domestic and international pipeline regulators?