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Business Overview
Recently Quantum Materials has consumated an alliance agreement with Nanoaxis LLC. Nanoaxis specializes in developing leading edge bioimaging, biological diagnostic tools and drug therapies that rely on the unique properties of nanomaterials and more specifically TQD's. Compared with the conventional organic dyes, quantum dots have several some attractive advantages: long-term photostability, higher fluorescent outcome, narrower fluorescence emission, sensitivity to the electric and magnetic field. These advantages give a broad prospect for quantum dots to be applied in the biophysics field.QMC is working with Nanoaxis for the joint development of these exciting new diagnostic tools and drug therapies. The immediate aim of the alliance is to develop Tetrapod Quantum Dot based Cancer diagnostic kits and theranostic applications including Alzheimer's, Type 1 and Type 2 Diabetes, Breast Cancer and Major Depression. Quantum Materials is developing specialized quantum dots for NanoAxis to functionalize with their proprietary biomedical nanomaterials for a multiplexing drug delivery platform for drug/gene therapy and diagnostic medical devices technologies. The technology alliance allows these technologies to be developed rapidly due to Quantum Materials' ability to create the highest quality quantum dots in quantities necessary to support multiple projects with timely deliveries. The immediate goal is to develop a QD microarray device for detection, diagnosis and quantification of early cancers. The QD-MI device will be designed for rapid detection and grading of various multiple cancers using blood assays; easily, with higher accuracy and at less cost than current single ELISA assays. All diagnostic and pharmaceutical products will include QMC quantum dots functionalized by NanoAxis biomedical IP nanotechnology. We anticipate we can achieve production and initiate sales in 2012 and based on our limited test marketing, we believe this product has the potential to be well received by the nanobio markets. However, no assurances can be given the the aforementioned plans will occur or lead to profitable operations. According to a recent report published by BCC Research the total market for nanobiotechnology products is $19.3 billion in 2010 and is growing at a compound annual growth rate of 9% to reach a forecast market size of $29.7 billion by 2015.According to a New Report by Global Industry Analysts, Inc. the Global BioImaging Technologies Market is forecast to Reach US$37.4 Billion by 2017. Another recently published report by Bharatbook.com entitled "Quantum Dots : Technologies and Global Markets" indicates that the global market for quantum dots (QDs) in 2010 was worth an estimated $67 million in revenues. This market is projected to grow over the next 5 years, reaching almost $670 million by 2015, representing a tenfold increase. Optoelectronics, which includes quantum dot photovoltaics, represents one of the greatest market sectors. This area was launched in 2010 and is expected to increase at a 128.4% compound annual growth rate to reach a value of $310 million in 2015. The more established biomedical sector was valued at $48 million in 2010. This sector is expected to increase at a 30% compound annual growth rate to reach a value of $179 million in 2015. Solterra is a development stage quantum dot solar cell technology and manufacturing company. We perceive an opportunity for Solterra to acquire a significant amount of solar photovoltaic market share by commercializing a low cost quantum dot based third/fourth generation photovoltaic technology/solar cell, pursuant to an exclusive license agreement with William Marsh Rice University ("Rice University" or "Rice"). Our objective is to become the first tetrapod quantum dot solar cell manufacturer and the first solar cell manufacture to be able to offer a solar electricity solution that competes on a non-subsidized basis with the price of retail electricity in key markets in North America, South America, Europe, the Middle East and Asia. Competitors are pursuing different nanotechnological approaches to developing solar cells, but the general idea is the same for all. When light hits an atom in a semiconductor, those photons of light with lots of energy can push an electron out of its nice stable orbital around the atom. The electron is then free to move from atom to atom, like the electrons in a piece of metal when it conducts electricity. Using nano-size bits of semiconductor embedded in a conductive plastic maximizes the chance that an electron can escape the nanoparticle and reach the conductive plastic before it is "trapped" by another atom that has also been stripped of an electron. Once in the plastic, the electron can travel through wires connecting the solar cell to an electronic device. It can then wander back to the nanocrystal to join an atom that has a positive charge, which scientifically is called electron hole recombination. A quantum dot solar cell typically uses a thin layer of quantum dot semiconductor material, rather than silicon wafers, to convert sunlight into electricity. Quantum Dots, also known as nanocrystals, measure near one billionth of an inch and are a non-traditional type of semiconductor. Management believes that they can and will be used as an enabling material across many industries and that quantum dots are unparalleled in versatility and flexible in form. Solterra intends to design and manufacture solar cells using a proprietary thin film semiconductor technology that we believe will allow us to reduce our average solar cell manufacturing costs and be extremely competitive in this market. Solterra will be one of the first companies to integrate non-silicon quantum dot thin film technology into high volume low cost production using proprietary technologies. Our objective is to become one of the first solar module manufacturers to offer a solar electricity solution that competes on a non-subsidized basis with the price of retail electricity in key markets in North America, South America, Europe, the Middle East and Asia. Management believes that the manufacture of our thin film quantum dot solar cells can introduce a cost effective disruptive technology that can help accelerate the conversion from a fossil fuel dependent energy infrastructure to one based on renewable, carbon-neutral energy sources. We believe that our proposed products also can be a part of the solution to greenhouse gases and global warming.

Scale Up Quantum Dot Production
QMC will scale up Quantum Dot Production by  applying proprietary technology licensed from Rice University for our quantum dot synthesis process and accomplishing large scale production using proprietary Micro-Reactor technology jointly developed through an agreement with Access2Flow an advanced flow chemistry consortium based in the Netherlands. These proprietary technologies enables QMC/Solterra to produce the highly desirable tetrapod quantum dots at a cost savings of greater than 75% compared to competing suppliers, and will organically supply QMC/Solterra's requirements for quantum dots for its solar cells and other quantum dot enabled products. Additionally, QMC intends to market these TQD's through various existing supply channels into various markets, including but not limited to lighting, security and electronics. The initial pilot scale up will take place at the Access2Flow facilities in the Netherlands and once optimized, equipment will be relocated as required to the nanobiotechnology or solar cell production facility.

Fabricate solar cells
Solterra will fabricate solar cells and optimize the performance of solar cells based on a proprietary blend of TQD's. The aim is to invest our best efforts to demonstrate and scale up production of low cost quantum dot solar cells having peak efficiency of greater than 10%. The efficiency of solar cells is the electrical power it puts out as percentage of the power in incident sunlight. Within the photovoltaic market, cell pricing and peak efficiency are key benchmarks for consumers in the decision for system selection and installation. The design and manufacture of Solterra's quantum dot based solar cells is projected to allow for the conversion of sunlight into usable electricity at a combination of efficiencies and cell cost at a very low "cents per kilowatt-hour" rate. The initial work was accomplished on site at the Arizona State University labs but such work was relocated to better accommodate the logistic requirements of our Chief Science Officer, Professor Ghassan Jabbour, who is now located at Kaust University in Saudi Arabia.

Additional Applications
Identify, license and or develop additional quantum dot enabled applications in the lighting, memory and medical fields

Objectives
The Current Objectives of the Company upon receipt of additional financing are as follows:


 * Become the first bulk manufacture of high quality tetrapod quantum dots and have Solterra become the first solar cell manufacturer to be able to offer a solar electricity solution that competes on a non-subsidized basis with the price of retail electricity in key markets in the Middle East ,Asia, North America, South America, and Europe.


 * Build a robust intellectual property portfolio in Nanomaterials, Nanobio technologies, nanomaterials processes, third & fourth generation photovoltaics, quantum dot process technologies and numerous other quantum dot enabled technologies. Success criteria include completion of preparation and filing of numerous patent applications in the area of Nanomaterials, tetrapod quantum dots, continuous flow chemistry and Quantum Dot Solar Cell technology, although no assurances can be given that these goals will be achieved.


 * Initiate scaled manufacturing of tetrapod quantum dots, based in part on technology licensed from William H. Marsh Rice University, and building on continued research. Planning includes the implementation of one or more TQD pilot lines The design of the pilot line is intended such that the initial target output of the line, at approximately one kilogram per day, can be further scaled at least by an order of magnitude to 100 Kilograms per day in 2012. The output of the tetrapod quantum dots manufacturing will be used for QMC/Nnaoaxis Nanobio products and Solterra's quantum dot solar cells as well as stand-alone sales to third party developers of quantum dot products such as lighting, battery's, displays, memory and computer and consumer electronics.


 * Continue to develop and characterize the Quantum Dot Solar Cell product; moving towards pilot proof line for solar cells and leading to high throughput print line ultimately capable of yearly solar cell output near gigawatt range. Target cell efficiencies are 15% within 1 year and greater than 25% within five years. Coupled within cell cost per watt decreasing below $.75/Watt, we intend to pursue initial product sales in late 2012 with significant increases in 2013.

Business Accomplishments
The following is an outline of the business accomplishments of the Company since July 2010.


 * Completed proof of concept for producing Tetrapod Quantum Dots ("TQD") using the micro reactor process.
 * Completed 30 grams per week pilot scale production of TQD's using continuous flow micro reactor process and next step is now large scale production.
 * Negotiated Memorandum of Understanding ("MOU") with Saudi business group to establish TQD & solar cell production in the Kingdom of Saudi Arabia.
 * Negotiated and consummated alliance agreement with Nanoaxis for the joint development of nanobio products with initial focus on invitro diagnostic kits and drug delivery technologies using TQD's.
 * Established focused R&D effort to develop production process and shelling techniques to produce extremely high quantum yield TQD's.
 * Developed and implemented plan to establish nanobio R&D and production lab in Texas.
 * Negotiated rights to sub-license technologies with Rice University. This was necessary to complete the joint venture agreements that we have been negotiating in the middle east and will be necessary as we pursue similar JV's in other regions.
 * Re-negotiated the Rice University license to split the single license agreement into two separate license agreements one with Quantum Materials Corp. for all medical applications and all electronics applications with the exception of solar, and one with Solterra Renewable Technologies Inc. just for solar. This is a significant step in structuring the parent company to be able to focus on developing new platform applications where quantum dots can be the enabling material and then forming wholly owned subsidiaries, like Solterra, to scale up and commercialize those technologies. The license agreements provide for the right to grant sublicenses subject to certain conditions.
 * Developed numerous proprietary processes, and have made significant discoveries that we believe will result in additional intellectual properties for the company.
 * Identified and began negotiations to license additional process and application oriented intellectual properties with recognized Universities for a broad range of nanotechnology related fields.

Competitive Strengths
We believe that Solterra's licensed and proprietary technologies provide us with a number of competitive strengths that position us to become a leader in the solar energy industry and compete in the broader electric power industry: QMC's Cost-per-Gram advantage. Our proprietary and patent pending chemistry, process technology and metering technologies enable us to produce high purity, highly uniform tetra-pod quantum dots in high volumes at a very competitive price point. Our intellectual property provides for a number of base elements from which we can produce these unique, highly desirable materials, including non-toxic materials that are well suited for medical and consumer electronics applications. Solterra's Cost-per-Watt advantage. Our proprietary thin film technology should allow us to achieve an average manufacturing cost per watt less than $.75 and position Solterra's cells as one of the lowest priced in the world and significantly less than the per watt manufacturing cost of crystalline silicon solar modules. Continuous and scalable production process. We intend to manufacture our solar cells on high-throughput production lines that complete all manufacturing steps, from semiconductor printing to final assembly and testing, in an automated, proprietary, continuous process. Replicable production facilities. We anticipate using a systematic replication process to build new production lines with operating metrics that are comparable to the performance of best of bread production lines. By expanding production, we believe we can take advantage of economies of scale, accelerate development cycles and leverage our operations, enabling further reductions in the manufacturing cost per watt of our solar cells. Stable supply of raw materials. We will not be constrained by shortages of semiconductor material, as we will be positioned to produce our own quantum dot materials. Pre-sold capacity through Long Term Supply Contracts. We expect to pursue long term supply contracts which, if successfully entered into, would provide us with predictable net sales and enable us to realize economies of scale from capacity expansions quickly. By pre-selling the solar cells to be produced on future production lines, we intend to minimize the customer demand risk of our expansion plans. Favorable system performance. Under real-world conditions, including variation in ambient temperature and intensity of sunlight, we believe systems incorporating our solar cells will generate more kilowatt hours of electricity per watt of rated power than systems incorporating crystalline silicon solar modules, increasing our end-users' return on investment. Solterra solar cells successfully blend the needs for efficiency, low cost, and time to recoup investment. Furthermore, the solar panels will be easy to install due to their flexibility and low weight.

Target Market Segment Strategy
Our goal is to create a sustainable market for our solar modules by utilizing our proprietary thin film semiconductor technology to develop a solar electricity solution that competes on a non-subsidized basis with the price of retail electricity in key markets in North America, Europe, the Middle East and Asia. We intend to pursue the following strategies to attain this goal: Penetrate key markets rapidly. We expect to be a fully-integrated solar cell manufacturer. To the extent that our finances will permit in the future, we intend to place production lines in strategic locations over the course of many years across the globe which will enable us to diversify our customer base, gain market share in key solar cell markets and reduce our dependence on any individual country's subsidy programs. Further reduce manufacturing cost. We anticipate deploying continuous improvement systems and tools to increase the throughput of all of our production lines and the efficiency of our workforce and to reduce our capital intensity and raw material requirements. In addition, as we expand production, we believe we can absorb fixed costs over higher production volumes, reduce fixed costs by manufacturing in low-cost regions such as Malaysia, negotiate volume-based discounts on certain raw material and equipment purchases and gain production and operational experience that translate into improved process and product performance. Increase sellable Watts per module. We will constantly be driving several programs designed to increase the number of sellable watts per solar module, which is driven primarily by conversion efficiency. Enter the mainstream market for electricity. We believe that our ability to enter the non-subsidized, mainstream market for electricity will require system development and optimization, new system financing options and the development of new market channels. As part of these activities, we anticipate developing other quantum dot renewable energy solutions beyond the solar cell that we plan to offer in select market segments. The grid-tied Photovoltaic market is of importance because it is the fastest growing segment for Photovoltaics. Many of the early niche markets for solar were off-grid solutions such as emergency phone boxes, sail boats, and, of course, outer space. However, now that the price for Photovoltaic solar has dropped and can compete effectively with additional electric power sources (especially when energy rebates are considered), the grid-tied Photovoltaic systems has become the largest growing segment. An appealing aspect of the potential large projects is that a large project can represent the sales volume in one transaction that might require hundreds of individual transactions for residential Photovoltaic solar applications and successfully obtaining these contracts can help us obtain other customer contracts. In addition, the lifetime requirements for some custom large projects may not be as stringent as for the regulated residential electricity market. The most direct means for establishing the competitive value of Solterra's quantum dot and high-volume printing approach is to note that, while classic PV installed cost is approximately $0.50/kWh, and today's least expensive residential PV systems still cost approximately $0.38/kWh, the cells produced by Solterra are expected to provide electricity in the $0.08 - $0.14/kWh range. This translates into a cost saving of 66% under the cost of the current least expensive residential PV systems.

Quantum Dots: Man-Made Molecule
Quantum dots refer to one of several promising materials niche sectors that recently have emerged from the burgeoning growth area of nanotechnology. Quantum dots fall into the category of nanocrystals, which also includes quantum rods and nanowires. As a materials subset, quantum dots are characterized by particles fabricated to the smallest of dimensions from only a few atoms and upwards. At these tiny dimensions, they behave according to the rules of quantum physics, which describe the behavior of atoms and sub atomic particles, in contrast to classical physics that describes the behavior of bulk materials, or in other words, objects consisting of many atoms.

Quantum Dots measure near one billionth of an inch and are a non-traditional type of semiconductor. They can be used as an enabling material across many industries and are unparalleled in versatility and flexible in form.

These highly efficient tetrapod QD are available across the entire light wavelength from UV to IR spectra and very narrow bandwidth is common. Selectivity of arm width and length is very high allowing different characteristics to be emphasized. Capping with shells and dyes adds desired properties. A custom mixture of quantum dots tuned to optimal wavelengths is easy to create, and projects will have the advantage of unprecedented flexibility and quantities for determining the optimal quantum dot without the time, expense and poor quality of batch synthesis methods.

Rice University Quantum Dot Synthesis
Dr. Michael S. Wong's lab at William Marsh Rice University invented a simplified synthesis using greener fluids in a moderate temperature process producing same-sized QD particles, in which more than 95 percent are tetrapods; where previously even in the best recipe less than 50 percent of the prepared particles were all same size and tetrapods. These highly efficient tetrapod QD are available across the entire light wavelength from UV to IR spectra and very narrow bandwidth is common. Selectivity of arm width and length is very high allowing different characteristics to be emphasized. Capping with shells and dyes adds desired properties. A custom mixture of quantum dots tuned to optimal wavelengths is easy to create, and projects will have the advantage of unprecedented flexibility and quantities for determining the optimal quantum dot without the time, expense and poor quality of batch synthesis methods.

Furthermore, the Rice process uses much cheaper raw materials and fewer purification steps. A positively charged molecule called cetyltrimethylammonium bromide provides this dramatic improvement in tetrapod manufacture. This compound, found in some shampoos, also is 100 times cheaper than alkylphosphonic acids currently used and is far safer, further simplifying the manufacturing process.

Access2Flow QD Mass-Production
Access2Flow continuous flow micro-reactor processing will enable us to scale up the manufacture to our goal of 100kg/day production without loss of quality. Through QMC research and development in conjunction with A2F, we have made improvements on the process which are an integral part of our intellectual property contributed to our Joint Venture and other partnerships. We will be the first to mass produce the highest quality quantum dots at the lowest cost on the market using readily available, non-REE materials.

The Access2Flow continuous flow micro-reactor maintains the synthesis process precise and narrow wavelength uniformity. The quality and quantity of our tetrapod quantum dots have exceeded our requirements and far exceed what is available on the market today. Due to the simplicity of our scale-up to mass production, we believe we could provide last year's display industry's total consumption of QD in one month's production.

Both full-scale quantum dot manufacturing and quantum dot based thin-film photovoltaic solar panel facilities can be developed today with available technologies.

QD Nanotech Applications
Current and future applications of quantum dots impact a broad range of industrial markets. These include, for example, biology and biomedicine; computing and memory; electronics and displays; optoelectronic devices such as LEDs, lighting, and lasers; optical components used in telecommunications; and security applications such as covert identification tagging or biowarfare detection sensors. All of these markets can move from laboratory discovery to commercialization as QMC scales production of quantum dots to robust levels. IN VITRO analysis for cells and biological systems:

Quantum dots make improvements in the quality of marking in both brightness and time to study (hours instead of minutes). IN VIVO selective tissue marking:

Quantum dots have been used for lymph node mapping and vascular and deep tissue imaging. This use has the potential to be much more significant for disease control and cure than any other current pharmacological technology.

QD Printing Applications
Quantum Materials Corporation has the exclusive worldwide license to proprietary quantum dot printing technologies developed by Dr. Ghassan Jabbour. This pioneering technology makes significant improvements over prior art!

Displays
Quantum Dot LED as well as nanoparticle LED / OLED based displays now have the potential to be manufactured using very high volume, low cost roll-to-roll print processing on inexpensive substrates. In addition to the potential to deliver a significantly lower price point, this technology can also provide, higher definition, increased viewing angles, lower power consumption and reduced response time for an enhanced picture, all in a very thin, light weight, format. These characteristics enable display technologies to flourish in environments that have previously been uneconomical or simply not viable.

Lighting
Tetrapod quantum dots and printing technologies can be printed and applied to certain lighting applications delivering high brightness, true color balance, long life and low energy consumption for highest efficiency. As global consumption of electricity in the world is increasing dramatically, energy efficiency through better electronics and lighting is a key to reducing the overall burden on power production and the expected increases in greenhouse gas emissions.

Thermoelectrics
Thermoelectric devices are not more ubiquitous because, simply stated, they are not efficient. The best materials in nature's arsenal are small bandgap semiconductors and semimetals, but they still do not enable the efficiencies required for a widespread technology adoption. Many researchers are working diligently on nanocomposite materials, such as quantum dots that artificially induce phonon scattering, thereby inhibiting heat transfer due to lattice vibrations while facilitating electron and hole conduction. Results to date have been promising, with improvements by up to 100% of the Zt coefficient (the basic thermoelectric figure of merit) being reported.

Photonics & Telecommunications
Quantum dots make an attractive opportunity to develop optical switches, modulators, and other devices that rely upon nonlinear optics. Quantum dot colloids can have strong transitions at the important 1310nm and 1550nm telecommunication bands that have been incorporated into or onto optical polymers, semiconductor polymers, microcavities, photonics crystals, and even semiconductor devices. Quantum dot nanocomposite materials and associated devices continue to be investigated by numerous researchers with the aim of creating faster, cheaper, and more powerful optical telecommunication components.

Security Inks
Inks and paints incorporating quantum dots, nanoscale semiconductor particles, can be tuned to emit light at specific wavelengths in the visible and infrared portion of the spectra. Ink and paint formulations can be created by combining multiple quantum dots and other pigments to create unique fluorescent spectral barcodes that identify any object or document when illuminated. The quantum dot based inks may be applied via conventional screen, flexography, offset, gravure, and ink jet printing processes while the paints are designed to be sprayed onto any surface.

Introductory Pricing for Academic Research
Stephen B. Squires, Founder and CEO of Quantum Materials Corporation said: "We believe that our tetrapod quantum dots are truly an enabling technological breakthrough. As such we have an obligation to make sure these materials are accessible to researchers across the globe so discovery in the advanced electronics and life sciences fields, among others, can be realized and accelerated. Offering QMC tetrapod quantum dots at a substantial cost savings will increase access to experimentation as the range of quantum dot research also widens. There are a number of potential applications for quantum dots that have not been well described and we really believe this is going to be the kind of platform technology that spurs innovation and creativity throughout the scientific community."

Due to lowered component cost and manufacturing advantages, QMC has initiated sales operations by marketing its high purity, uniform tetrapod quantum dot production at low introductory pricing to the life sciences, academic, and other industrial research and development (R&D) communities. "Research" pricing to the academic community and potential partners will spur development of new market opportunities. The unique properties and quantum effects of quantum dots will cause advances in diverse fields including biology and biomedicine; computing and memory; electronics and displays; optoelectronic devices such as solar cells, LEDs, lighting, and lasers; optical components used in telecommunications; and security applications such as covert identification tagging or biowarfare detection sensors.

We expect to see a strong demand for this product from Universities and R&D arms of nanotech manufacturers of electric light bulbs, electronic equipment, particularly screens for computers, TV, advertising displays as well as a variety of medical uses. Using quantum dots, screens for computers, televisions, advertising displays, cell phones and other electronic devices can produce clearer, sharper pictures at less cost. In addition, there are medical uses, such as biomarkers, which have tremendous potential in deepening the understanding of diseases including cancer and innovating new and dramatically better treatments.

Global QD Market Projections
According to a report by BCC Research, the global market for QDs, which in 2008 was estimated to generate $28.6 million in revenues, is projected to grow over the next 5 years at a compound annual growth rate (CAGR) of 90.7%, reaching over $700 million by 2013. Following the initially modest revenues generated by standalone colloidal QDs - primarily serving the life sciences, academic, and other industrial research and development (R&D) communities - within the next 2 years several product launches with colloidal or in situ QD underpinning will bolster market revenue considerably.