Executive Summary / Key Takeaways

• FlooidCX Corp, soon to be Quantum Energy Corporation (FLCX), is undergoing a significant transformation, pivoting from prior business activities to focus on distributed direct electrical energy systems utilizing exclusively licensed and patent-pending technologies.
• The company's business model combines one-time license fees to distributors with long-term installation fees and recurring revenue from customer energy system agreements, with installation projects funded by customers or dedicated investors.
• Recent financial performance shows a shift to profitability, with $1.0 million in revenue from license sales in Q1 2024 resulting in $794,000 in net income, a notable improvement from a net loss in the prior year period.
• FLCX possesses a substantial potential growth pipeline, with management projecting over $150 million in potential installation fees and over $100 million in potential recurring revenue contracts for fiscal year 2025, supported by recent contract wins and surveyed facilities.
• Key risks include dependence on external funding for installation projects, limited current liquidity, and identified material weaknesses in internal financial controls, which the company is planning to address.

A New Dawn in Distributed Energy

FlooidCX Corp, in the process of rebranding as Quantum Energy Corporation, stands at the precipice of a new era, having fundamentally reshaped its business focus. Incorporated in 2014 and known previously as Gripevine, Inc. and Baixo Relocation Services, Inc., the company underwent a pivotal split-off in June 2022, divesting prior interests and entering a period without operating activities. This strategic reset paved the way for its current mission: to revolutionize distributed direct electrical energy systems through a suite of exclusively licensed and patent-pending technologies.

The company positions itself at the vanguard of this market, aiming to provide end-to-end energy solutions that conserve energy, produce new available electrical capacity, and offer sustainable alternatives. This ambition is underpinned by a diverse technological portfolio and a strategic business model designed to capitalize on both upfront market entry and long-term service provision.

The Technological Core: Innovation and Quantifiable Advantages

At the heart of Quantum Energy's strategy lies its differentiated technology, which forms the basis of its Direct Energy Systems. The company holds worldwide exclusive licenses for critical components including Harvested and Thermal Electrical Energy Collection and Transmission (EET), Photon Lighting Systems, photovoltaic and thermal energy harvesting, Photon Engines, and energy conditioning and storage systems.

A cornerstone technology is EET, described as the patent-pending ability to transmit harvested electrical energy through standard USB or ethernet cables. This technology is capable of transmitting from as low as 80 Watts to over several hundred Watts per channel. A key benefit highlighted is its adherence to low-voltage protocols in many installations, which can eliminate the need for conduit and standardized electrical cable, potentially dramatically lowering new and remodeling construction costs. The company states that in many installations, EET can completely replace 110-120V outlets and associated infrastructure. Beyond cost savings, it also offers superior remote control and monitoring capabilities.

Derived from EET, the SAFEwatt ethernet power adapter exemplifies the practical application of this technology. The company notes that typical laptop/desktop adapters consume 140-200 Watts from AC wall plugs. The SAFEwatt adapter, by contrast, uses 15-20 volts DC and an average of 60 Watts, representing about one third the power consumption of a typical computer adapter. The company anticipates developing over 200 custom EET adapter devices for various low-voltage applications, highlighting the potential breadth of this technology's impact on energy consumption in common devices.

Other key technologies include:

• Photon Lighting Systems: Exclusive technology that turns lighting fixtures into energy harvesting generators across various light sources and conditions.
• Photovoltaic Systems: Unique systems noted for being significantly lighter than conventional solar, with some offering self-cleaning and protective features.
• Thermal Energy Harvesting: Focuses on converting waste heat and cold into usable energy.
• Photon Engines: These engines convert minimal DC input (typically less than 12 volts) into conditioned electrical energy (typically 48 volts DC) using "Danzik's Magnetic Propulsion discoveries." This technology allows a low-speed flywheel to multiply the speed of subsequent flywheels and alternators to high speeds (500 to over 5000 rpm) using zero-contact, permanent magnet drives, eliminating traditional mechanical linkages.
• Batteries: The company offers Iron-Air batteries and other third-party solutions as a sustainable, cost-effective, and safer alternative to lithium batteries, integrated with comprehensive storage systems.

The "so what" for investors is that these technologies, particularly EET and the Photon Engine's Magnetic Propulsion, represent potential differentiators in the energy market. If successfully deployed and scaled, they could offer tangible benefits like lower installation costs, reduced energy consumption, and potentially more efficient or sustainable energy generation compared to conventional methods. This technological edge forms a potential competitive moat, although the company does not provide specific, quantified performance metrics comparing its systems directly against named competitors in terms of overall system efficiency, cost per watt installed, or long-term energy yield.

Competitive Landscape and Positioning

The distributed energy and energy efficiency market is dynamic, with competition arising from various angles. While the information does not name specific direct competitors in its core energy system installation business, the company's description of its technology and market focus implies competition with providers of traditional electrical infrastructure, solar installation companies, energy storage providers, and potentially other developers of novel energy generation or efficiency technologies.

Based on broader industry knowledge, companies like Tesla (TSLA) in energy storage, various solar installers (e.g., SunPower (SPWR), Enphase Energy (ENPH) for components), and traditional electrical contractors operate in adjacent or overlapping spaces. However, FLCX's unique combination of technologies, particularly EET and Magnetic Propulsion-based Photon Engines, suggests a focus on a potentially distinct approach to distributed energy generation and transmission.

A competitive analysis framework, while seemingly misaligned with the company's energy business (discussing CRM/CX competitors like Salesforce (CRM), Zendesk (ZEN), Freshworks (FRSH), ServiceNow (NOW)), provides a framework for evaluating competitive positioning. Applying this framework conceptually to FLCX's energy business, its strengths likely lie in its proprietary technology and potentially a niche focus on specific applications or customer segments where its technology offers unique advantages (e.g., low-voltage transmission benefits in certain building types, or the specific efficiency claims of its Photon Engines). The competitive analysis framework also highlights potential disadvantages for smaller players, such as smaller scale leading to potentially higher operating costs per unit (though FLCX's stated funding model aims to mitigate this for installations) and potential technological gaps or slower integration compared to larger, more diversified tech companies.

FLCX's strategy appears to leverage its technological differentiators to build market share, initially through licensing agreements that establish a distribution network and then through direct installation projects. The company's involvement in rare earth recycling and magnet manufacturing could also provide a degree of vertical integration, potentially offering cost advantages or supply chain security compared to competitors reliant solely on external suppliers for critical magnetic components. However, without direct comparative data on technology performance, cost structures, or market share within its specific niche, a precise quantitative competitive positioning is challenging to fully ascertain.

Financial Performance and Liquidity

The first quarter of 2024 marked a significant turning point in FLCX's reported financial performance, reflecting the initial impact of its new business model. For the three months ended March 31, 2024, the company generated $1.0 million in revenue, a substantial increase from $0 in the corresponding period of 2023. This revenue was derived solely from the sale of two Licensed Distributorships at $500,000 each.

This revenue generation contributed to a net income of approximately $794,000 for Q1 2024, a stark contrast to the net loss of approximately $88,000 in Q1 2023. Operating expenses increased significantly, primarily driven by $300,000 in advertising and marketing fees in Q1 2024, compared to minimal operating expenses (primarily audit fees) in Q1 2023. Other income also saw a notable increase to approximately $94,000, mainly due to foreign currency re-measurements on Canadian Dollar denominated notes payable.

Looking at the balance sheet as of March 31, 2024, the company reported cash and cash equivalents of $125,200. Total current assets stood at $8.99 million, including significant accounts receivable ($4.60 million) and other receivables ($4.22 million), the latter including amounts due from third-party collections and cash collected for future stock issuances. Total current liabilities were $4.01 million, primarily consisting of notes payable ($3.67 million) and accounts payable/accrued liabilities ($340,596). This resulted in a net working capital surplus of approximately $4.99 million, an increase from $2.40 million at December 31, 2023.

Cash flow from operations for Q1 2024 was positive at approximately $125,000, driven by the net income and favorable changes in operating assets and liabilities, partially offset by the foreign currency gain. This is an improvement from $0 cash flow from operations in Q1 2023.

The company acknowledges that its current liquidity is limited and that its continuation as a going concern is dependent on continued financial support and the ability to obtain necessary equity financing and achieve profitable operations. However, management has implemented a capital resource plan with two distinct pathways: covering general operating overhead through license sales and fees (currently generating approximately $2.0 million per month on average) and funding customer installations separately through customer payments or independent investor capital. This model is designed to regulate capital demands by only proceeding with installations when funding is secured, thereby limiting the strain on company cash resources.

Outlook and Growth Pipeline

The most compelling aspect of Quantum Energy's current narrative lies in the significant growth pipeline detailed in subsequent events after March 31, 2024, up to the May 8, 2025 filing date. These developments provide concrete indicators of the potential scale of the Direct Energy Systems business.

Key highlights from the subsequent events include:

• Sale of an exclusive license in the Philippines for $3.0 million, coupled with a $20.0 million minimum manufacturing commitment.
• A letter of intent for licensing and manufacturing in the Philippines for the electrification of over 80,000 housing units starting construction in late 2025.
• Numerous additional non-exclusive license sales at $500,000 each across multiple US states, with negotiations ongoing for eight more.
• Commencement of the first large-scale installation contract on March 10, 2025, for Karmali Holdings in Houston, Texas. This contract is valued between $17.5 million and $23.2 million for installation fees, with an estimated additional $14.0 million in recurring revenue over the twenty-year contract term.
• Identification of a substantial pipeline from October 2024 through Letters of Intent and Energy Surveys on nearly 3.0 million square feet of commercial/industrial facilities. This pipeline represents approximately $52.1 million in potential installation fees and approximately $25.2 million in additional contractual recurring revenue over twenty-year contracts.
• Expectation of executed customer contracts for the estimated $52.1 million in installation fees no later than April 30, 2025 (prior to the filing date).
• Engineering work has commenced on several installation projects across multiple states.
• Active survey and installation work is ongoing for 109 facility locations.
• Anticipation of the first installation permitting being issued in late April to end of May 2025.

Management projects that potential installation fees for fiscal year 2025 could exceed $150.0 million, with potential recurring revenue contracts exceeding $100.0 million. Achieving these projections would require approximately $35.0 million in funding during 2025 for manufacturing and product placement, which the company plans to secure through customer or investor capital. The current average monthly license sales of $2.0 million also provide a steady stream of revenue to cover operating overhead.

These figures paint a picture of a company rapidly moving from the licensing phase to the installation and recurring revenue phase of its business model. The successful execution of these contracts and conversion of the pipeline into booked revenue will be critical milestones for the company's growth trajectory and its ability to demonstrate the scalability of its Direct Energy Systems business.

Risks and Challenges

Despite the promising outlook and recent operational progress, Quantum Energy faces significant risks and challenges that warrant careful consideration. The most prominent is the company's dependence on external funding for its installation projects. While the stated strategy is to limit capital expenditure to fully funded projects, the ability to secure this customer or investor capital is crucial for realizing the projected installation fees and recurring revenue. Failure to obtain sufficient funding could severely constrain the company's growth and ability to execute its pipeline.

Furthermore, the company's continuation as a going concern is explicitly stated as dependent on continued financial support from shareholders, creditors, and related parties, as well as obtaining necessary equity financing. This highlights the inherent financial risk associated with a company in the early stages of scaling a capital-intensive business.

Operational risks are also present. The company is undertaking complex installation projects across multiple locations, requiring manufacturing capabilities, labor, permitting, and project management expertise. Delays, cost overruns, or technical issues in these early installations could impact profitability and future contract acquisition.

Finally, management has identified material weaknesses in internal control over financial reporting as of March 31, 2024. These include the lack of an Audit Committee with an independent financial expert and insufficient internal accounting personnel with U.S. GAAP knowledge. While management states these did not affect the accuracy of the current financials and plans are in place to address them (hiring staff/consultants, implementing controls), these weaknesses pose a risk to the reliability of future financial reporting and overall corporate governance.

Conclusion

Quantum Energy Corporation is embarking on a transformative journey, leveraging its unique portfolio of licensed and patent-pending technologies to enter the distributed direct electrical energy market. The shift is evident in its recent financial results, moving from a period of inactivity and losses to generating revenue and net income from license sales in Q1 2024.

The company's strategic focus on a two-tiered revenue model – initial license fees followed by long-term installation and recurring service revenue – is designed to manage capital while scaling operations. The detailed pipeline of potential installation projects and recurring revenue contracts, particularly the significant figures projected for fiscal year 2025, underscores the potential for substantial growth. However, realizing this potential is heavily contingent on the company's ability to secure the necessary funding for each installation project, highlighting the critical importance of its capital strategy and external financial support.

While the technological differentiators, such as EET and Magnetic Propulsion, offer a potential competitive edge, the company operates in a market with large, well-established players and faces challenges related to scale, liquidity, and internal controls. Investors considering FLCX should weigh the significant growth opportunities presented by its technology and pipeline against the inherent risks of a company in this stage of development, particularly its reliance on external funding and the need to strengthen its financial reporting infrastructure. The successful execution of the growing installation pipeline and effective management of its capital resources will be key determinants of Quantum Energy's ability to fulfill its ambitious vision.