Qnetic Corporation

Dear Martin, thanks for your questions. We are very careful about vibrations and noise, for the environment and for our mechanical system. Vibration means fatigue and wear, it is our worst enemy. The system is mounted on silent blocks that filters the big majority of the vibration between the system and the ground. The system maximum speed is 8000RPM, so the main potential excitation is at low frequency (below 135Hz). These, combined with the low stiffness of the bearing and the fact the rotor is in a vacuum, make Qnetic extremely silent. We plan to measure vibrations and noise on a broad spectrum and optimize the system. All in all, we believe the risk to subterranean animals is small but we’ll consider this risk factor during development and thanks for raising it!

Thanks, Tom, for your appreciation! As a ‘Unicorn Hunter,’ you may have noticed our recognition by ‘Unicorner’ as one of the Top 5 Startups of 2024. We’ve strategically filed a select number of high-impact patents, each with broad scope and containing more than 100 claims, ensuring robust protection while efficiently managing our IP investment. These applications cover inventions related to the radial bearing system, various machine features, and rotor design and manufacturing. Additional patents are currently in preparation, drawing on insights and findings from our ongoing tests and simulations. From the outset, we prioritized PCT applications to secure global coverage, focusing on full patents rather than utility models. The ongoing funding round will enable us to accelerate the filing of additional patents and further expand our IP portfolio. With decades of IP experience within our team and the support of the renowned patent attorney firm Rouse, we are confident in executing a smart, growth-oriented patent strategy.

Hi Nick, it’s certainly a hot topic! Thanks for raising it. Coincidentally, I was in a webinar last week with an expert panel discussing exactly this topic. Let me share my takeaways from those panelists (let’s focus on economic arguments, not politics): 1. There are actually some very positive things to start with, all of which should favour Qnetic: — Expectation that Trump will increase tariffs on China-imports, including/especially Li-ion cells. — Expected greater focus on energy sovereignty, security and resilience. — Stronger emphasis on onshore manufacturing. — The Elon Musk factor! Musk may cause a shift in attitude. 2. Although threats to funding are real, there is probably more rhetoric and posturing about fossil fuels than will be reflected in actual policy change. Most likely there will be a broadening of funding scope to include legacy fossil-fuel options, which will then have to compete—and probably lose—on competitive grounds (including environmental considerations). 3. Trump has executive powers to make scalpel-like changes but the IRA has very broad bipartisan support across government, making sweeping changes unlikely. 4. The funding is already committed and allocated at state level, much of it to red states, and much of it supporting domestic manufacturing and infrastructure jobs, which would make no sense to rescind. The states decide their own climate policy and plans and the W. Boylston project would be based on state-level funding.

Dear David, Thank you for your questions. Several factors result in unavoidable idling losses: aerodynamic losses (vacuum conditions can’t be perfect); eddy current losses, present in both permanent and active magnetic bearings, although minimized; vibrations (imbalance is reduced to G2.5 standards but not eliminated); and misalignment, leading to uneven magnetic loading and other inefficiencies. Our current iteration Vega prototype has an energy loss of 2.8% per hour at max speed. We're improving these results by pulling a deeper vacuum of 0.1 Pa (vs. 4 Pa currently) and better alignment, with a goal of 1% energy loss per hour with Vega. Our serial product target is 0.5% energy loss per hour at max speed—so we are making great progress! Our product is designed exclusively for stationary applications—mobile is complicated (gyroscopic forces), and not core to our mission. Best regards, Loïc.

Hi Karl, Thank you for the questions. (1) We have two stages of prototypes that we are working on, and the Imperial College Consultants' report is talking about both of them. The first prototype is a lab-scale prototype (1:4) that we have planned for 2023, and is the primary use of the Wefunder funding campaign. The second prototype will be the MVP, which is expected to be completed in 2024. (2) The $560,000 anticipated price is based on a selling price of $280 per kWh x 2000 kWh (one Qnetic unit). The cost of each unit is estimated to be about $140 per kWh x 2000 kWh, and thus derives the 50% margin. The cost of the product was calculated based on the Bill of Materials using latest commercial information from wind-turbine supply chain sources, and manufacturing costs. The selling price was based on what we believe is competitive market pricing versus competing technologies. (3) As indicated on the slide, the growth of the Storage Market is based on publicly available reports from Bloomberg Finance and other sources, although Elon Musk recently claimed a market that would be three times the size. Yes, the market is doubling every 3 years. Thank you for pointing out the inconsistency. We have corrected it. (4) Four hours is the shortest charge or discharge time based on the power rating of the system. Twelve hours is the longest reasonable discharge duration that users might need. Naturally a twelve-hour discharge can only be done once a day. A more typical regime will be, for example, 6 hours to charge and discharge twice a day. Charging eight hours at night from wind power then discharging 4 hours at dawn is also likely, for example. Is is indeed possible to cycle three times a day but everywhere you look, the grid generally has two power demand peaks at dawn and dusk, so two cycles is more logical. We have uploaded NREL’s 'The Four Phases of Storage Deployment' report for context. (5) At the time of the beginning of the Wefunder campaign (prior to Dec 31st), we only had non-audited (but CPA reviewed) financial statements as of September 30th available. The process of consolidating the three companies is ongoing and is estimated to be complete by end of May at the latest. (6) The balance of the shares are owned by part of the team who are also early investors, as well as the team of advisors. A portion of the shares are also set aside for an employee stock ownership plan for early employees.

Dear Rae, thanks for the opportunity to talk about supply chain strategy! Our specific supply chain (beyond the prototypes) will be matter of a later stage of development. Already in an early design stage, we are focus on environmental responsibility. From our business background, we are used to manage (and control) a high standard “code of conduct” related to the supply chain. This includes social & environmental responsibility and business ethics like the prohibition of child labor, HSE requirements, carbon footprint and recycling rate. Qnetic targets “local content”, sourcing the material locally, fulfilling local regulation and ensure added value in the regions where the solution is deployed. We intend to have factories in US, EU and China. Materials are basically: • Steel and other commercial metals • Composite fibers • Electrical and electronic parts • High performance magnets, nowadays NeFeB magents — uses rare earth metals, manufactured almost only in China. We will source the magnets as responsibly as possible, expect recycled neodymium available soon and we are observing the development of potential rare earth free alternatives. Apart from NeFeB magnets, Qnetic's supply chain does not rely on specific supply chain bottlenecks such as Congolese cobalt, Chilean lithium, or Chinese anode/cathode materials. Qnetic can be manufactured anywhere in the world.

Thank you Iain for your question and for your investment, really appreciated. As you said, multiple technologies will be needed, hydrogen, compressed air, pumped hydro, flywheels etc. If we take the challenge of storage and we sort out the best technology for different application (different discharge duration), we can see that hydrogen will be the cheapest for seasonal, compressed air energy storage may best serve weekly and pumped hydro is the cheapest for daily storage. But pumped hydro is not scalable and limited to specific geography. Qnetic Flywheel Energy Storage will be the best scalable solution for 4 to 12h discharge duration. This suits the need for daily energy shifting, which is more than 60% of future market for energy storage. Qnetic is safe, no chemicals, no fire hazard and it can be produced locally (very critical for energy security). There is an excellent study about different technologies for different application from Dr. O. Schmidt and Dr. I. Staffell, leading experts on energy storage (storage-lab.com/levelized-cost-of-storage). We worked with Oliver as a third party to compare Qnetic with other technologies. We just got the report and we hope to publish it on our updates in the coming weeks. Stay tuned!

Hi Jonathan. I am typing this in Sacramento, CA, where we have spent the day looking for a factory space. The US-market product will be made here in the US: not just final assembly but the core rotor technology. The Shanghai location is where Qnetic was born in 2021, founded by me and Loïc, British and French engineers respectively, who were living there doing other jobs. The Vega lab scale product you see in the videos, was made in Shanghai as it allowed as to speed up development at low cost to enable us to get to the market faster. The Shanghai technical team that enabled us to build it will remain, as we ramp-up US engineering, production, sales, maintenance and other operations. Our IP is owned by our US topco.

Thanks for your support George.

Hi Benjamin, Thank you for your interest and question. The valuation is going to be based on the size of the investment of the Series A round (and that is going to depend on our success in the SEED round, which is still underway). As you can see, our current round on Wefunder is based on a SAFE with a $20M valuation cap, and obviously, we are targeting both our SEED round as well as our subsequent Series A Round to be well north of that and to provide a significant benefit to our Wefunder investors who have really helped us in our early stages. Hoping for your support as well, and please feel free to ask additional questions.