ESS Tech, Inc. Micro-Cap Virtual Conference

Yeah, absolutely. First of all, thanks for hosting me, and thanks to everyone who is on the call or watching for your interest in ESS. I think it is an exciting time, and really glad to be here to share our story with you. I am going to share my slides, Alex. Let me know if this does not work out right. Hopefully you can see that.

Okay, great. Perfect. We'll start here with the company timeline for all those who are new to ESS.

We really have three phases I would start by talking about. The first one, as you can see at the bottom, is 2011 to 2021. Founder-led business. Really intelligent, great founders that we had, a husband and wife. Their thesis, to put it in my own words, was they wanted to take a concept around an iron flow battery and turn it into a product that could be capable commercially. They started there in 2011, and then the next 10 years they spent trying to make an iron flow battery work. At that point, 2021, many of the investors will remember that there was a big SPAC craze, a lot of money coming in for new energy technologies.

ESS came public in 2021 via SPAC, and it was a great time for the company because they were able to capitalize themselves quite well. Big valuation, so very exciting. They put out some very high forecasts about what the types of revenues they could do over the next few years on iron flow. That's probably phase two is the IPO via SPAC time, where the company was really focused on fulfilling those projections that they had given during the SPAC and selling a lot of iron flow batteries. What we came to find, or what the company came to find at that time, is that perhaps 2021 wasn't the right time to go public. Hard to decline such a great opportunity to raise capital, and get an opportunity to be a publicly listed company and everything like that.

No harm on the reasonings to go public at the time. But because they had put out such high expectations into the market, they really focused on getting sales out there and selling through the pipeline of iron flow. What was behind that, though, is that the product wasn't totally commercially ready. What I would say is the iron flow battery functioned quite well in an R&D setting when you had the people who understood the technology quite well working on it and running it every day. Then from there, when you put it out into the field, it's a totally different problem. You have people who may know the system, may not, running it and doing the maintenance on it. What we found is that the iron flow battery wasn't really commercially scaled yet.

During that time, it was really ESS was trying to build the airplane as they were flying it. All of that kind of came to a head at the end of 2024, when a lot of that money, most of the money that had been raised, had been spent over that 4 years trying to build that airplane up as they were trying to sell. They came to a point where we didn't really have a very commercial viable product, but we were running low on money. That's when the interim CEO, Kelly Goodman, who's still with the company today, she's our Chief Strategy Officer. You can see that third bullet right there, Project New Horizon.

What we did in the Project New Horizon timeframe and what we've been on a journey for over the last, call it 12 to 15 months, is reassessing where our products fit in the market and what the market needs are. If we take the two things we have, the legacy iron flow business, we really have done a study as to where the best fit for that battery would be in terms of commercial, how much money it's going to take to be able to have commercial scale, and then how much time are we going to need in order to build that product up correctly. What we've seen in those, as we looked at that flux capacitor, if you will, for lack of a better term, is the iron flow battery really needs more time.

If we wanted to bring this product to market in a 6 to 12-month view, the amount of capital you'd have to spend is exponentially higher than if you give it the time. You can make a more quality product if we step back for a second and we say, "Okay, the energy market has changed so much over the last decade that where is this technology best fit in the market? How do we make sure that it's commercially scaled for that market and leans on the competitive advantages that the technology has?" Everything that comes out of it that says, "Look, we need more time to be able to develop the iron flow battery." We're on that journey there. Some people will ask, "Are we abandoning this? Are we doing something else?" The answer is no. We believe in that technology.

It's just there's a different application timeline for it and a different amount of time that it's going to take to build it. In that time, and I'll flip to a different slide now, as I'm sure people have had a chance to look over this one. Here's the way that we think about our platform now is I've talked about on the right side, you've got iron flow for a long duration. Near term is sodium ion. When we decided that iron flow was going to take a lot longer to develop, and that was the best way for us to be able to bring that product to market in the right way, we thought, there's got to be another near-term opportunity for us to take advantage of.

One of the things that I wanted to do, since I've joined, as I took over as CEO in January this year, is to think about that. What is the best positioning for our company and our technologies? What we found is that we've got a great opportunity here in sodium ion. Just to give you a very quick idea of sodium ion, sodium ion looks very much like the 3,000-pound gorilla in the room, which is lithium ion. The box, the battery, looks very much the same. The way you package it up, the way that you deliver it to customers is very similar. The difference here is twofold. Or actually, I would say threefold. One is that sodium ion actually has a, the chemistry is different in that it lets you use a wider operating temperature range.