QS Energy's Losses Mount, Cash Dwindles Amid AOT Development Push

Ticker: QSEP · Form: 10-Q · Filed: Nov 14, 2025 · CIK: 1103795

Sentiment: bearish

Topics: Going Concern, Net Loss, Cash Burn, Penny Stock, Energy Technology, R&D Expenses, Dilution

TL;DR

**QSEP is a cash-burning machine with no revenue, avoid this stock unless you like throwing money into a black hole.**

AI Summary

QS Energy, Inc. (QSEP) reported a significant deterioration in its financial position for the nine months ended September 30, 2025. The company incurred a net loss of $13,777,000, a substantial increase from the $1,147,000 net loss in the prior year period. Operating expenses surged to $12,050,000 from $758,000, and research and development expenses dramatically increased to $1,395,000 from $143,000. Cash on hand plummeted to $49,000 as of September 30, 2025, down from $150,000 at December 31, 2024, with management estimating these funds will only last through October 2025. The company also faces a stockholders' deficit of $5,446,000 and has $1,070,000 in past-due convertible notes payable, along with other overdue obligations. Despite these challenges, QS Energy continues to develop its Applied Oil Technology (AOT) for crude oil pipeline transportation, aiming to transition from testing to initial production and market adoption. The company is actively seeking additional financing through debt and equity to sustain operations and fund its technology commercialization efforts.

Why It Matters

This filing reveals QS Energy is in a precarious financial state, raising significant going concern doubts for investors. The massive increase in net loss and operating expenses, coupled with critically low cash reserves, indicates severe operational challenges and a high burn rate. For employees, this signals potential job insecurity, while customers and the broader market should note the company's struggle to commercialize its AOT technology, potentially impacting future energy efficiency solutions. Competitively, QSEP's financial distress could allow rivals in the energy efficiency sector to gain market share without significant challenge from AOT.

Risk Assessment

Risk Level: high — The company reported a net loss of $13,777,000 for the nine months ended September 30, 2025, and had only $49,000 in cash on hand, which management estimates will only last through October 2025. Furthermore, QS Energy has $1,070,000 in past-due convertible notes payable and a total stockholders' deficit of $5,446,000, indicating severe liquidity and solvency issues.

Analyst Insight

Investors should exercise extreme caution and likely avoid QSEP given the substantial doubt about its ability to continue as a going concern, the lack of revenue, and the rapidly depleting cash reserves. The company's reliance on future financing, which is not assured, makes it a highly speculative investment.

Financial Highlights

debt To Equity
N/A
revenue
$0
operating Margin
N/A
total Assets
$104,000
total Debt
$5,550,000
net Income
$ -13,777,000
eps
$ -0.03
gross Margin
N/A
cash Position
$49,000
revenue Growth
0.0%

Key Numbers

Key Players & Entities

FAQ

What is QS Energy, Inc.'s primary technology?

QS Energy, Inc.'s primary technology is Applied Oil Technology (AOT), a commercial-grade crude oil pipeline transportation flow-assurance product designed to reduce pipeline pressure loss, increase flow rate, and reduce reliance on diluents.

Did QS Energy, Inc. generate any revenue in the last quarter?

No, QS Energy, Inc. reported $0 in revenues for both the three and nine months ended September 30, 2025, and the corresponding periods in 2024.

What was QS Energy, Inc.'s net loss for the nine months ended September 30, 2025?

QS Energy, Inc. reported a net loss of $13,777,000 for the nine months ended September 30, 2025, a significant increase from the $1,147,000 net loss in the same period of 2024.

What is the current cash position of QS Energy, Inc.?

As of September 30, 2025, QS Energy, Inc. had cash on hand of $49,000. Management estimates these funds will only be sufficient to continue operations through October 2025.

Does QS Energy, Inc. have any past-due obligations?

Yes, as of September 30, 2025, QS Energy, Inc. had 42 notes payable with an aggregate balance of $1,070,000 in default, along with certain past-due obligations to a former officer.

What is the status of QS Energy, Inc.'s 'going concern' assessment?

Management has concluded there is substantial doubt about QS Energy, Inc.'s ability to continue as a going concern within one year due to significant net losses, cash used in operations, a stockholders' deficit, and past-due obligations.

How much did QS Energy, Inc. spend on research and development?

For the nine months ended September 30, 2025, QS Energy, Inc. spent $1,395,000 on research and development, a substantial increase from $143,000 in the same period of 2024.

How many shares of common stock are outstanding for QS Energy, Inc.?

As of November 7, 2025, the number of shares of QS Energy, Inc.'s Common Stock outstanding was 537,448,950.

What are the main risks for QS Energy, Inc. investors?

Key risks for QS Energy, Inc. investors include the substantial doubt about its ability to continue as a going concern, lack of revenue, rapidly depleting cash, significant accumulated deficit, and reliance on uncertain future financing.

What is QS Energy, Inc.'s strategy to address its financial challenges?

QS Energy, Inc. is actively seeking additional funds, primarily through the issuance of debt and equity securities for cash, to operate its business, fund license agreements, product development, commercialization of AOT technologies, and public company costs.

Risk Factors

Industry Context

The crude oil pipeline transportation sector is capital-intensive and subject to stringent regulatory oversight. Companies in this space often face challenges related to infrastructure development, environmental compliance, and fluctuating commodity prices. QS Energy's Applied Oil Technology (AOT) aims to improve efficiency and reduce costs in pipeline operations, positioning it within a segment focused on technological innovation to address industry challenges.

Regulatory Implications

As a company involved in oil pipeline transportation technology, QS Energy may be subject to various environmental, safety, and transportation regulations. Failure to comply with these regulations could result in fines, operational disruptions, and reputational damage. The company's financial distress could also impact its ability to meet ongoing compliance requirements.

What Investors Should Do

  1. Monitor financing efforts closely.
  2. Assess the viability of AOT commercialization.
  3. Evaluate the risk of further dilution.
  4. Consider the going concern risk.

Key Dates

Glossary

Stockholders' Deficit
A negative equity position where a company's liabilities exceed its assets. It means the company owes more than it owns. (QS Energy has a stockholders' deficit of $5,446,000, indicating the company is insolvent on a book value basis.)
Convertible Notes Payable
Debt instruments that can be converted into a predetermined amount of the issuer's equity at certain times. (QS Energy has $1,070,000 in convertible notes payable in default, adding to its financial distress and potential for equity dilution.)
Applied Oil Technology (AOT)
QS Energy's proprietary technology for crude oil pipeline transportation. (This is the company's core product, and its successful commercialization is critical for future revenue and viability.)
Cash Burn Rate
The rate at which a company spends its cash reserves, particularly when it is not generating positive cash flow. (QS Energy's cash used in operating activities of $3.38M for nine months highlights a high burn rate, depleting its limited cash reserves rapidly.)
Going Concern
An accounting assumption that a business will continue to operate for the foreseeable future. If there are doubts, it must be disclosed. (With cash only expected to last through October 2025, there are substantial doubts about QS Energy's ability to continue as a going concern.)

Year-Over-Year Comparison

QS Energy has experienced a dramatic financial deterioration compared to the prior year. Revenue remains non-existent, but net losses have surged from $1.15 million to $13.78 million for the nine-month periods. Operating expenses have increased by over 15 times, from $758,000 to $12.05 million, and R&D expenses have also seen a tenfold increase. Cash on hand has fallen to a critical $49,000 from $150,000, and the company now faces significant debt defaults and a growing stockholders' deficit, indicating a substantially higher financial risk profile.

Filing Stats: 4,381 words · 18 min read · ~15 pages · Grade level 17 · Accepted 2025-11-14 16:01:43

Key Financial Figures

Filing Documents

Forward-Looking Statements

Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements. These forward-looking statements include predictions and statements regarding our future: revenues and profits; customers; research and development expenses and efforts; scientific and other third-party test results; sales and marketing expenses and efforts; liquidity and sufficiency of existing cash; technology and products; and the effect of recent accounting pronouncements on our financial condition and results of operations. You can identify these and other

forward-looking statements by the use of words such as "may," "will," "expects," "anticipates,"

forward-looking statements by the use of words such as "may," "will," "expects," "anticipates," "believes," "estimates," "intends," "project," "potential," "forecast" "continues," "strategies," or the negative of such terms, or other comparable terminology, and also include statements concerning plans, objectives, goals, strategies and future events or performance. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth below under the heading "Risk Factors." We cannot assure you that we will achieve or accomplish our expectations, beliefs or projections. All forward-looking statements included in this document are based on information available to us on the date hereof. We assume no obligation to update any forward-looking statements. 2 QS ENERGY, INC. FORM 10-Q INDEX

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 4

Unaudited Condensed Consolidated Financial Statements

Item 1. Unaudited Condensed Consolidated Financial Statements 4 Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statements of Operations, Unaudited 5 Condensed Consolidated Statement of Stockholders' Deficit, Unaudited 6 Condensed Consolidated Statements of Cash Flows, Unaudited 8 Notes to Condensed Consolidated Financial Statements, Unaudited 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 21

Quantitative and Qualitative Disclosure about Market Risk

Item 3. Quantitative and Qualitative Disclosure about Market Risk 35

Controls and Procedures

Item 4. Controls and Procedures 35

– OTHER INFORMATION

PART II – OTHER INFORMATION 36

Legal Proceedings

Item 1. Legal Proceedings 36

Risk Factors

Item 1A. Risk Factors 36

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 36

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 36

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 36

Other Information

Item 5. Other Information 36

Exhibits

Item 6. Exhibits 37

SIGNATURES

SIGNATURES 38 3 PART I – FINANCIAL INFORMATION

Unaudited Condensed Consolidated Financial

Item 1. Unaudited Condensed Consolidated Financial QS ENERGY, INC. Condensed Consolidated Balance Sheets September 30, 2025 (unaudited) December 31, 2024 ASSETS Current assets: Cash $ 49,000 $ 150,000 Prepaid expenses 54,000 11,000 Total current assets 103,000 161,000 Property and equipment, net 1,000 3,000 Total assets $ 104,000 $ 164,000 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable-license agreements - past due $ 3,167,000 $ 2,433,000 Accounts payable and accrued expenses 1,089,000 881,000 Convertible notes payable, net of discounts of $ 45,000 and $ 133,000 , respectively; includes $ 1,070,000 and $ 2,339,000 , respectively, in default 1,294,000 2,524,000 PPP loan payable – 24,000 Total current liabilities 5,550,000 5,862,000 Total liabilities 5,550,000 5,862,000 Commitments and contingencies – – Stockholders' deficit Common stock, $ 0.001 par value: 750,000,000 shares authorized, 529,194,266 and 428,424,880 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively 529,195 428,425 Additional paid-in capital 135,101,805 121,173,575 Accumulated deficit ( 141,077,000 ) ( 127,300,000 ) Total stockholders' deficit ( 5,446,000 ) ( 5,698,000 ) Total liabilities and stockholders' deficit $ 104,000 $ 164,000 See notes to condensed consolidated financial statements. 4 QS ENERGY, INC. Condensed Consolidated Statements of Operations, Unaudited Three months ended Nine months ended September 30, September 30, 2025 2024 2025 2024 Revenues $ – $ – $ – $ – Costs and Expenses Operating expenses 646,000 231,000 12,050,000 758,000 Research and development expenses 1,244,000 48,000 1,395,000 143,000 Loss from operations ( 1,890,000 ) ( 279,000 ) ( 13,445,000 ) ( 901,000 ) Other income (expense) Interest expense ( 74,000 ) ( 86,000 ) ( 332,000 ) ( 246,000 ) Net Loss $ (

financial statements

financial statements. The Company's management has evaluated all other the recently issued, but not yet effective, accounting standards and guidance that have been issued or proposed by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission through the filing date of these financial statements and does not believe the future adoption of any such pronouncements will have a material effect on the Company's financial position and results of operations. 3. Accounts Payable and Accrued Expenses As of September 30, 2025 and December 31, 2024, the Company owed $ 197,000 and $ 197,000 , respectively, pursuant to a separation agreement with a former executive officer effective April 1, 2017 as amended by letter agreements dated effective August 16, 2018 and March 31, 2019, (the "Letter Agreements") which have been included as part of accounts payable and accrued expenses on the accompanying condensed consolidated balance sheet. The payments are to be made at $10,000 per month. During the

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