Welcome to the Ensurge Q3 2022 preliminary report. My name is Kevin Barber, and I'm the CEO. I'm very excited with the progress that we've made in the last several months, as we'll talk through in the coming slides, both technically as well as commercially, as we've introduced a second pillar in our go-to-market strategy, pursuing strategic partners in addition to our commercial customers. First, our strategy. Our focus continues to be to transform the microbattery industry by delivering the first milliamp-hour capacity solid-state microbattery. Our Ensurge microbattery provides unique benefits, including higher energy density, twice that of lithium-ion, which allows more energy capacity in the same space or a smaller battery for the same amount of energy capacity, as well as the ability to customize the form factor, both in length and width and height, so it can be optimized for the various wearable and hearable customer device requirements. The benefits of our solid-state architecture versus lithium-ion is that it charges faster. Our data has already demonstrated that we can charge 90% of rated capacity in 30 minutes. High pulse discharges, that's critically important for wireless communication using Bluetooth communication protocols and larger and longer charge cycles, extending the life cycle of the battery. All of this is addressing a huge existing market opportunity of 1 billion+ units across both hearables and a wide variety of wearable applications, as well as the connected IoT, Internet of Things, sensor markets, providing lots and lots of opportunity for us in a growing market to serve unique high-performance applications of batteries. We've had really great momentum these last three months. We shipped our first packaged battery samples to one of our customers, which is a leading hearing aid company. This is then the final culmination of the technical work necessary to package our battery cell into a packaged unit and being able to deliver that to a customer for their evaluation. We've already had our first technical meetings with this customer. They're very excited with the progress we've made and the ability for them to now begin to test and look and give us feedback on these initial packaged battery samples. In addition, we've shipped packaged battery samples to an innovative digital health device company who has forecasted demand in Q1 2023, and we expect to be our first production shipping customer for our stacked production batteries. We shipped high-performing unit cells in coin cell format to three strategic partners, including one world-leading consumer electronics and communications company and two world-leading battery manufacturers. We're in discussion with more than 20 new companies wanting our battery offering, each representing over $200 million of product revenue potential. We've also had a strong increase in our production rate of battery cells during this past quarter, which continues to accelerate our learning, our technology optimization, and we expect it to further increase during Q4 this year and during 2023. We are also engaged in contract negotiations with a global leader in the information technology market. This would be a funded technology development that would deliver technology capabilities and attributes that are beyond our current roadmap. These are technical objectives that are defined by them that meet their demands of aggressive wearable device roadmap that will achieve dramatic improvements in both usability and ease of use. We're very excited with these conversations that we're having with them to define how we work together using our cell technology to deliver the performance and capabilities they look for in high-performance microbatteries. Finally, we anticipate these series of conversations we're having with the three strategic partners we've shipped samples to, this fourth strategic partner that we're in contract negotiations with, to begin to start funding our co-development efforts during Q1 of this coming year. We expect to engage in those conversations with the three that have received our samples in the coming days, and we anticipate that that will yield a funding agreement during Q1. Looking backwards into our Q3 financials, we had total of operating expenses and cash adjustments just under $6.9 million, up from last quarter of $5.9 million. That was driven by 50% increase in our operating expenses, mostly from R&D activity in the summertime here in California, where electricity costs are higher. We anticipate this to return back to our nominal $6 million a quarter in the coming quarter. A reminder of our go-to-market strategy. As we've been discussing since this past summer, not only are we focused on commercial customers, but we have also introduced this concept of strategic partners. We are deeply engaged with four of them today, with others interested in discussions. As I mentioned, two of them are consumer device companies. We're focused on signing funded development agreements with them, delivering unique wearable and hearable batteries for their proprietary technology development requirements. Their focus is to leverage our high energy density core cells and then work together to find unique ways to package them or to modify them to deliver to their requirements. The product revenue potential from this category of customers is greater than $500 million a year. Huge opportunities for us going forward, both for funding us in our near term as well as the product revenue potential over time. The second category of strategic partners we're discussing with are battery manufacturers, and we've been engaged with two of them. Also focus on agreements, but in this case, licensing agreements, primarily with the possibility of funded development agreements. They're focused on the same market, wearables, hearables and IoT, and we see them as a potential channel for our technology as well as licensees to build our technology. Given the size of the market, their product revenue potential is also greater than $500 million per year. In summary, this commercialization of technology came from their interest that what we were doing was so exciting and so unique, they wanted to look at our core cell technology to work together on unique batteries. They will either involve upfront or ongoing NRE and equity investments. It may involve licensing, or it may involve both NRE and licensing. Certainly by the time we come to the manufacturing of these new technologies, we would be in discussions to provide manufacturing rights through either a royalty and/or investment financial model. We're very excited with this new strategy and the progress we've made in just a short period of time, and we'll continue to make progress here. The commercial customers continues to focus on wearables, hearables and the industrial IoT markets, delivering innovative solutions. We continue to focus on our five signed agreements. As I just mentioned, we've shipped stacked batteries to two of them this past couple of months, with more than two dozen more that's engaged across both wearables and IoT companies. All together, the product revenue potential for them is greater than $200 million per year, which is in excess of what the San Jose facility, when fully equipped, would be able to produce, building full production batteries. We have a very full pipeline with very interested customers. The business model in this case is to deliver customized complete batteries where customers need performance or form factors that are simply not available today using lithium-ion. We see dramatic interest in fast charging, higher energy density, and the ability of form factor customization to be the three things that we get common high interest in from these customers we're engaged with. The business model is the shipment and sales of manufactured batteries in a classic sales process with some modest NRE for development of those unique customized batteries. Just a reminder of our architecture that remains very innovative, where we do not see others pursuing this combination of fundamental technologies that starts with the use of ultrathin stainless-steel substrates that deliver high energy density, high mechanical strength, and is a great advance over alternatives such as ceramic and silicon. We bring our innovative cell stacking and packaging technology, which continues to maximize and deliver high energy densities. It continues to provide an ability to customize the height of the package and the capacity of the battery package and the battery. Finally, the ease of use to mount the battery onto the device using a direct printed circuit board connection because of the way our battery is architected. Our chemistry is anode-less, which provides low cost with a proven chemistry that has been around since the 1990s and demonstrated to deliver greater than 1,000 cycles. Finally, we have our existing roll-to-roll manufacturing facility, which provides for high throughput and low cost within a conventional manufacturing environment. It's this combination of these four items that delivers our unique architecture, our unique ability to provide performance with small-form-factor flexibility into this really large market, which we are able to deliver scale. Expanding on that, our value propositions of the benefits of our battery drive both the strategic and our customer engagements. It's a safe chemistry, solid-state, compared to lithium-ion. Our ultrathin stainless-steel provides form factor flexibility. The solid-state chemistry provides temperature tolerance, which is very exciting for customers wanting to embed our battery into molded plastic devices. You can imagine eyewear needing to have batteries in the glasses, wanting to have the ability to put the battery inside of that. That's not available with lithium-ion, and solid-state allows that form factor to be delivered. High energy density with our ultrathin stainless-steel differentiates us for watt-hours per liter, and high discharge rates, which is really important for the wearable markets wanting to have the minimum amount of time off of the human body, and then fast charging for rapid charging of the battery. Just in summary, twice the energy density compared to lithium-ion button cells, two to three times the charge cycle life, twice the speed of charging with a safe chemistry, and the ability to enable unique end products as you see on the bottom right. In summary, we continue to focus on delivering the first solid-state milliamp-hour and tens of milliamp-hour microbatteries. Our roadmap fits a very large billion-dollar market. When our San Jose facility is full of equipment, it can deliver $100 million in annual EBITDA with our experienced leadership and management team. We're targeting the hearables, wearables, and IoT markets. That is an existing billion-unit market, multi-billion-dollar market, which improves the existing applications, and we can enable new ones that are not possible without our batteries. We bring a novel architecture that is unique, and we're getting really ready to deploy with the amazing and significant progress we've made in this short two and a half years since we've started down this journey in mid-2020. We anticipate to do early production at the very end of Q4. As I mentioned, our first customer forecasting demand is demand in Q1 of 2023, and so we would need to begin initial production at the very end of this quarter. That brings me to the end. I wanna thank you for that, and I'm gonna open it up to questions. Thanks, Kevin. I have some questions that I got from the audience. The first question is that Ensurge did an issuance a week ago, Kevin, and what are the plans to fund the operation and the CapEx need of the company going forward? Yeah, it's a very important question. There's two paths that we're running in parallel. First, we're currently working with our strategic partners and discussing them to fund our ongoing operation, either through upfront fees or monthly payments. As I've mentioned, we anticipate having one in place during Q1 2023. That we see as an important part of the equation to be part of our funding. In addition, we're aiming to raise equity in the U.S. into the U.S. subsidiary to fund the expansion of the facility. As we move increasingly from technology development into early production and scaling manufacturing, and then as we look to expand capacity, we'll need to plan how to expand and fund that expansion. We look to raise money in the U.S. to do that. We're working hard today to get a U.S. banker in place to help us with that. When we're talking about CapEx to expand the manufacturing capabilities, what is the timeline for getting this new equipment ordered and finally installed for manufacturing within your facility in San Jose? Yeah, I would anticipate we would be able to order equipment, the long lead equipment in early 2023, then our ability to expand our capacity in San Jose would then be in place in 2024. That is what we'd expect in terms of the capacity for much of the critical equipment that takes time to order, it takes time to install that equipment and then certify it and qualify it, that it matches the performance we've developed with our existing equipment. That is about a one-year timeline from initial placement of the orders. in 2023, we will or Ensurge will use the current equipment in place to grow this manufacturing and sales, and then move into the additional equipment in 2024. That's correct. Yeah. That's exactly right. The pilot line we have today has meaningful capacity. We have a full pilot line of roll-to-roll equipment, and we have our initial set of packaging equipment. You know, we would expect our initial revenue of product to come from that existing equipment. Yes, 2023 will be initial revenue, largely with our existing equipment. Okay. Could you say some more in detail? I know it's kind of difficult here, but sort of in detail regarding the business plan of Ensurge. Sort of will you going forward license out technology? Will you outsource production? Will for sure also produce batteries in-house or battery cells in-house? How do you see that develop? I'm not asking for a specific mix, but sort of more of your views on how to deal with the different demands from the market. Yeah, it's a great question. It's one that's quite complex, but let me attempt to answer that. First, we will start with sending batteries fully produced in San Jose as a way to demonstrate the technology as commercial, with our pilot line. Largely with our existing capacity, we would expect to do that in-house. As volumes increase, as we just discussed, as we leave 2023 and go into 2024, and we have more demand, we have more agreements and more customers who want our batteries, that is when we have choices that we can make. I would expect the two go-to-market strategies to be important here. One is the commercial customers, and the second is the strategic partners. I think we can expect that on the commercial customer side, they would not be in the position early days to want to license. They're gonna want us to deliver or have be delivered finished batteries. We would then either need to be able to increase the capacity to meet their needs in San Jose, or we would need to license and/or outsource that final manufacturing of the batteries to expand our ability to deliver to the capacity or to the demand that our customers are providing. I think those are the two choices we'll have in 2023 as we get beyond our initial volume. For the strategic partners, it's a different model because in each of their cases, we're talking about working with them on unique technologies and with their requirements. Most likely, it will involve us providing the core cells at the beginning and working with them to finish the cells with either their own ability to do that, in some cases, like the battery companies, or when it's consumer device companies licensing, and they may have other partners that would manufacture for them the back end of the battery. I believe it'll be, in the case of the strategic partners, increasingly a licensing model, a outsource manufacturing model of the battery that we produce the cells using our roll-to-roll equipment. That, I think, is the two paths for that as type of customer. I think we'll need to let more time unfold to allow clarity on which of those paths we follow. It's very likely we'll end up following more than one path. We may end up doing more packaging for customers and more licensing for some strategic partners. I do anticipate we'll end up with a blend of those choices. That's how I'm thinking about the business models and how they relate to how we'll do manufacturing, both internally and externally. A follow-up question there. If you were to license the technology, how would you be able to protect your IP in that sense? Well, it's a very good question, Ståle. It is actually the key challenge with the licensing model, and one that will take time to ensure that we protect. I think that's a big part of the nature of the discussions we're having for the agreements, is how to protect and ensure our intellectual property is protected. You know, we have been filing patents, but the more important is actually the know-how that you don't put in a patent. It's how you actually do the details that, as we've talked about in prior calls, are very important details to make the integration of the battery of how we use steel and how we deposit the LiCoO2 and the LIPON materials and how we package that and make the package function properly. The know-how is what's critical. Being able to transfer and outsource a packaged device and teach them, how do you protect that? I think it is a very critical element to the discussions. It has been done before in the technology market. It can be done, but it is the critical element of how we need to work through how to protect that. Who we work with will matter a lot. Where they're located and their manufacturing facilities will probably influence us. It is a very good point, Ståle. The intellectual property protection is a key part of enabling the licensing or outsourcing business models. Thanks. Just a question from one of our shareholders. The facility in San José, and I know we're jumping around a little bit here, but that's the way it is. The facility in San José, how many battery cells is the potential to manufacture in that specific facility? Yes, it's a very good and very important question. It is difficult to give a specific number, because the number of cells depends on the capacity of the cell. The bigger the capacity of the cell, the fewer we can do. But to give you a sense of it, I would give one billion cells as a nominal target for the San Jose facility when fully equipped with the front-end process equipment. That footprint, we know that the maximum of that can fit into the building. It could be less than that if the capacity of the batteries on average is higher than we're forecasting, or it can be much more than that if the capacity of the batteries is less than we're forecasting. I think one billion cells per year is a reasonable kinda midpoint of what we can produce in San Jose. Just to follow up on that sort of specific question. If we should compare it to packaged batteries, you have said you have given some numbers on the gross margins or the contribution margins there. You think that that's sort of the contribution/gross margin will be the same or different from the packaged battery of the unit cells manufactured in the facility? Yeah, I think the answer is yes. I do expect them to be similar. The nature of them are similar, the front-end and the back-end material. The contribution of material cost in the front-end, it's the steel, it's the targets for the deposition. In the back-end, it's the packaging materials. When you look at the cost contributors, they're similar. You have the yield element you have to take into account, and then you have the capital equipment per unit. In our modeling, I would expect, while the pricing will be lower for just doing the cells only, the percent gross margins on contribution margin and gross margin will be similar to the numbers I've talked about before on product gross margins, which are gross margin in the 60% range, contribution margins approaching 80% range, given the high capital-intensive nature of the business model, and the variable cost nature of the business model. I would predict, a cell-only business model would have similar gross margins. There's another interesting question here. Sort of, the person is asking about the competitive landscape. We had discussed this before, but maybe sort of use some comments on it. The competitive landscape as well as the market characteristics in the battery cell market, has it changed? That's number one. I think that the second question, which is more is also a good question. Sort of moreover, why didn't the market hear about this unit cell market, which we started to announce contracts with this summer and fall? In general, sort of why have the company given so little information about this market before end July, August this year? Yeah. I think the starting point is to recognize the market we're focused on. We're focused on the microbattery market, serving the applications that use milliamp-hour capacity batteries, which we've identified as the wearable and hearable markets. That's very different than the electric vehicle market. In the electric vehicle or the large battery markets, the concept of building cells and having a company build a cell and then selling it to a different company that does the pack, that puts the cells together and builds the packs, that's a very well-known business model in the large battery market. That model does not exist in the microbattery market. That idea, there is no one doing cells for a microbattery. It's by the technical nature of the way the battery is built for a liquid electrolyte, either lithium-ion button cell or whether it's a lithium polymer pouch, which are the two types of batteries we compete with for these wearables and hearable markets. There is no business model. There is no market that sells the cell as a separate element to finishing a battery. That has not been, up till recently, our focus because that is not an existing market. That is not the nature of the business model in the, in the marketplace today. Technically, the way we build the battery is innovative. We're just now developing how to package. It's early days. It's early days to separate cell manufacturing from package manufacturing. Came along some strategic companies in discussions we were having, and they brought this concept based on their interest that they have their own technology, and they would be interested in this idea of separating the cell from the way the cells are packaged. Given that is what they were interested in discussing, that was what they were interested in evaluating what the core potential of our steel and our LiCoO2 LIPON anode-less architecture can deliver on roll-to-roll equipment. That is where the demand, where the interest came from our customers. I think that's really important because we have been listening to our customers, engaged in the market throughout these last two years and adapting and adopting where we need to meet those market requirements. First, the market doesn't exist. The market doesn't separate these concepts today. That market concept needs to be created, and we've been focused on delivering to existing markets. It is a large opportunity, however, because these strategic partners represent sizable opportunities in their own right. The business model is one that with the right partner can be, over time, made to work. That is why we're excited about it, but that is also why it's a recent conversation and now very much part of our strategy. Okay. A last question here, Kevin. You have been working with Ensurge for some years, coming from sort of, what should I say? For building a battery and battery cells from scratch. And sort of, the question here is, how do you see your current competitive position, that's number one, after sort of this has been ongoing for 2.5 years? Number two, I think you have said a little bit about this, but still we could sum it up here in this question, the overall interest demand for the Ensurge solutions, that means packaged batteries and battery cells. And sort of overall, what do you expect as a CEO for Ensurge from 2023? Yeah, that's a great final question. Yeah, just a little history. I think it is worth noting that it's been just two and a half years. That may in some worlds sound like a long time. In the technology market, it's not a long time. We have made amazing progress. The technical team has made amazing progress. Our commercial engagements made a lot of great progress in this short period of time. We've innovated on elements that just simply didn't exist. The idea of a battery on steel, the idea of stacking batteries and making them work together, the idea of delivering the performance benefits that the market really wants. I'm really excited with what we've started since essentially an announcement in February of 2020 and our first private placement in the summer of 2020, and we come now to the end of 2022, having made amazing progress. I wanna start with the context. You know, I think then on the competitive position. You know, each quarter we give an update on the number of customers we're talking to, and it's only been growing of customers who see needs for better batteries, that see their energy density needs. They see the need for faster charging. They need shapes that simply aren't available, that they can't build the product that they want to build. We're now talking about more than 24 commercial customers. We're talking about four strategic partners. We have a lot of competitors in the lithium-ion space, clearly very capable and very strong and very successful. They will continue to be. We want to offer an alternative that is better for those customers who need a better solution. Our competitive position is clear, and I think it's very strong. There are no other solid-state solutions that are able to deliver milliamp-hour capacities, and I think it's a very exciting position. The interest is high, the demand is high, that is to come to your final element of your question, what do I expect as we now are getting ready to enter into 2023? Having made the technical progress we've made, you know, we're not done technically. I don't want to imply that we're done. We have a lot more work to do technically to improve yields, to improve consistency, to further optimize, particularly the details of the processing, to make it more and more manufacturable. I think in the big picture, the theme for 2023 is that evolution. The evolution from the core technology to increasingly more and more the manufacturability of the technology, enabling higher throughputs, enabling higher yields, enabling to scale the production as we're able to deliver more and more volume. That then finally enables into increased customer demand and increased revenue within the capacity of our existing facility and equipment, until we're able to add more capacity or find external sources to increase our capacity. 2023 is in kind of a summary, two big themes. I would add, sorry, three big themes. One, to continue along with the strategic partner engagement, to continue with our manufacturability improvements, and finally to expand and deepen our customer pipeline. Those would be the three areas that we'll continue to focus on. Thank you, Kevin. That was all the questions from me for today. Well, thank you, Ståle, for the questions, and thank you all for listening. I'm very excited with the progress, and I look forward to continuing to give you updates as we continue to make progress on our strategic partner initiative with our commercial customers and with our technology and manufacturing progress. Thank you and have a great rest of your day.