Q1 2024 FREYR Battery Earnings Call

Okay.

Good morning, Bonnie.

Yes.

Dennis: Good morning, my name is Dennis, and I'm with the U.S. Marine Corps. Hello, and welcome to Frayer Battery's first quarter 2024 earnings conference call. With me today on the call are Tom Oner Jensen, our executive chairperson, Berger Steen, our chief executive officer, Oscar Brown, our chief financial officer, Jeremy Bezek, executive vice president of corporate development, and president of Frayer Battery US. During today's call, management may make forward-looking statements about our business.

Bonnie: Hello, and welcome to for a battery is first quarter 2024 earnings conference call.

Bonnie: With me today on the call our time honored guests in our executive Chairperson Berger, our Chief Executive Officer.

Oscar Brown, our Chief Financial Officer, Jeremy beds, ex executive price President of corporate development and President prior battery U S.

Bonnie: During today's call management may make forward looking statements about our business.

Bonnie: These forward looking statements involve significant risks and uncertainties that could cause actual results.

Bonnie: Differ materially from expectations.

Bonnie: Most of these factors are outside <unk> control.

Bonnie: Difficult to predict.

Bonnie: Additional information about risk factors that could materially affect our business are available in fragrance Epsilon and annual report on Form 10-K filed with the Securities and Exchange Commission.

Bonnie: They are available on the Investor Relations section of our website with that I will turn the call over to Tom.

Dennis: These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expectations. Most of these factors are outside Frayer's control and are difficult to predict. Additional information about risk factors that could materially affect our business is available in FRAERS S1, an annual report on Form 10-K filed with the Securities and Exchange Commission, which is available on the Investor Relations section of our website. With that, I'll turn the call over to Tom.

Tom Oner Jensen: Thank you, Jeff, and welcome, everyone, to this first quarter 2024 earnings call, Friar's 12th earnings call since we went public on the New York Stock Exchange back in July 2020. When we launched our mission to become a global champion in clean battery solutions, we advocated that deep electrification would happen across the board, and we particularly emphasized the massive growth expected in the ESS segment with LFP batteries. It is interesting to look back on our market predictions from back then, which were notably higher than most other estimates at the time, and see that the development in battery deployment is well in line with our predictions.

Tom: Thank you, Jeff and welcome everyone. Today's first quarter 2024 earnings call prior to <unk> earnings call. Since we've been public on the New York Stock Exchange back in July 2021.

Tom: When we launched our mission to become a global champion and clean battery solutions, we advocated that deep electrification would happen across the board and we particularly emphasized the massive growth expected in the segments with LNP batteries.

Tom: It is interesting to look back on our market predictions from back then which were notably higher than most other estimates at the time and see that the development and battery deployment is well in line with our predictions.

Tom Oner Jensen: As per the recent International Energy Agency report, the storage market continues to grow exponentially and is exhibiting the benefits and added momentum from established and emerging structural growth drivers, such as renewables proliferation, electrification of everything, but also now with AI and crypto on the horizon.

Tom: As per the recent international Energy Agency report the storage market continues to grow exponentially and it's exhibiting the benefits and added momentum from established.

Tom: And emerging structural growth drivers such as renewables proliferation electrification of everything but also now with AI and crypto on the horizon.

Tom Oner Jensen: We believe this market will continue to surprise on the upside, and we are very well positioned to play a significant role in it. Against this backdrop, we have made significant progress behind the scenes this quarter on enhancing our technology strategy, evaluating, maturing, rejecting, and pursuing value-creative deals, refining further our end-market focus on ESS and commercial mobility, and preparing to fund a build-out of our presence in the U.S. battery value chain through our GigaAmerica effort.

Tom: We believe that this market will continue to surprise on the upside and we are very well positioned to play a significant role in it.

Tom: Against this backdrop, we have made significant progress behind the scenes this quarter on augmenting our technology strategy evaluating maturing rejecting and pursuing value accretive deals refining further our end market focus on E. S. S in commercial mobility and preparing to fund the build out of our presence in the U S battery value chain.

Tom: Through our Giga America efforts.

Tom Oner Jensen: As a listed company with no debt, a strong balance sheet, and valuable assets, we are increasingly being recognized as an industrialization partner of choice, and our optionality is strong and increasing. Our dual strategic approach to technology has been to develop next generation technology development through the 24M platform and complement this through securing rights to build, own, and operate conventional top tier technology currently penetrating the accelerating market.

Tom: As a listed company with no debt a strong balance sheet and valuable assets, we are increasingly being recognized as an industrialization partner of choice and our Optionality is strong and increasing.

Tom: Our dual strategic approach on technology has been to develop next generation technology development through the 24 interim platform and complement this through securing rights to build own and operate conventional top tier technology currently penetrating the accelerating markets Burger on the team.

Tom Oner Jensen: Berger and the team will take you through the details of where we are on this journey, but I'm very excited about the significant progress we have made with our highly professional and dedicated people on both sides of the Atlantic. During the quarter we are in, we expect to move from an aspiring battery company to a battery producing company with strong optionality and top-tier technology partnerships in the making. Despite the enormous complexity of bringing a novel cell production technology to scale, I am very proud that our teams and partners have solved a majority of the remaining challenges in this world's first production platform at gigawatt-hour scale.

Tom: We will take you through the details of where we are on this journey, but I'm very excited about the significant progress we have made through our highly professional and dedicated people on both sides of the Atlantic.

Tom: During the quarter, we are in we expect to move from an aspiring battery company to a battery producing company with strong optionality and top tier technology partnerships in the making.

Tom: Despite the enormous complexity of bringing a novel cell production technology to scale I am very proud that our teams and partners have sold a majority of the remaining challenges and its world's first production platform at gigawatt power scale.

Tom Oner Jensen: We are now in the home stretch of fine-tuning and aligning the highly complicated machinery to enable production with the full automation of the next generation casting and unit cell assembly later this quarter. When this happens, we will be in a unique position with one of the very few US IP-based battery technologies at a scale not yet seen in operation. As with every battery producer, we will face multiple new challenges as we ramp towards test production, but we will deal with them and communicate accordingly. Turning now to slide four.

Tom: We are now in the home stretch of fine tuning and aligning the highly complicated machinery to enable production with the full automation of the next generation casting and unit cell Assembly later this quarter. When this happens we will be in a unique position with one of the very few U S. IP based battery technologies.

Tom: Scale, not yet seen an operation.

Tom: As for every battery producer, we will face multiple new challenges as we ramp towards test production, but we will deal with them and communicate accordingly.

Tom: Turning now to slide four.

Tom: We have Furthermore, strengthened our board of directors to maximize shareholder alignment and value creation through the appointments of Todd canter towards E bikes, let them all and David Manners, we are deeply grateful and honored to have our largest shareholder our original founder and a distinguished U S Intelligence officer with unique GOP.

Tom: Colin Public affairs expertise joins failures board. These gentlemen, each bring decades of experience across the global capital markets and energy sectors and they are aligned with you as fellow shareholders in our business. Furthermore, their dedication to our journey is already supporting accelerated development for the <unk>.

Tom: Company wide, we safeguard our financial position and strengthen our optionality for a highly dynamic and exciting future.

Tom: On behalf of drivers board of directors I would like to extend our appreciation and gratitude to our investors who despite the challenges have continued to believe in US. We relentlessly continue our pursuit of becoming a clean battery manufacturing company in the Western Hemisphere. This is a tremendous challenge and not.

Tom: Without heartache, but we are very close to material breakthroughs and I promise you that we will not dressed until we have become a forced to be reckoned with in this industry, but that they'd get it I hand, it over to you.

Tom Oner Jensen: We have furthermore strengthened our Board of Directors to maximize shareholder alignment and value creation through the appointments of Todd Cantor, Tori Ivar-Sletimun, and David Manner. We are deeply grateful and honored to have our largest shareholder, our original founder, and a distinguished U.S. intelligence officer with unique geopolitical and public affairs expertise join FREYR's board. These gentlemen bring decades of experience across the global capital markets and energy sectors, and they are aligned with you as fellow shareholders in our business.

Speaker Change: Thanks, Tom and welcome to everyone joining today's call.

Speaker Change: Turning to slide five.

Tom Oner Jensen: Furthermore, their dedication to our journey is already supporting accelerated development for the company while we safeguard our financial position and strengthen our optionality for a highly dynamic and exciting future. On behalf of FRIAR's Board of Directors, I would like to extend our appreciation and gratitude to our investors who, despite the challenges, have continued to believe in FRIAR. We relentlessly continue our pursuit of becoming a clean battery manufacturing company in the Western Hemisphere.

Speaker Change: Let's begin with our key messages from today's release.

Speaker Change: Although we had a quiet first quarter of 'twenty 'twenty four in terms of formal news releases. Our teams have been diligently working several exciting opportunities behind the scenes. While we continue to approach our most significant milestone to date at the CGP.

Tom Oner Jensen: This is a tremendous challenge and not without heartache. But we are very close to material breakthroughs, and I promise you that we will not rest until we have become a force to be reckoned with in this. With that, Birgit, I hand it over to you.

Speaker Change: Let's start with our progress on the CPP.

Tom Oner Jensen: My name is Tom, and welcome to everyone joining today's call. Turning to slide five.

Speaker Change: Thanks to the efforts of Micros this team and our valued partners at the asset level. We continue to expect that the first units held production trial with a full automation of the sika piece next generation semi solid casting and unit cell Assembly will take place in Q2 2020.

Tom Oner Jensen: Let's begin with our key messages from today's release. Although we had a quiet first quarter of 2024 in terms of formal news releases, our teams have been diligently working on several exciting opportunities behind the scenes while we continue to approach our most significant milestone to date at the CQP. Let's start with our progress on the CQP. Thanks to the efforts of Mike Brose, his team, and our valued partners at AssetMall, we continue to expect that the first unit cell production trial, with full automation of the CPP's next generation semi-solid casting and unit cell assembly, will take place in Q2 2024. Bernie Parr Board of Directors. As Tom just mentioned, we were delighted to welcome three seasoned professionals to our board in recent weeks: Paul Counter, Tony Varshalatamoum, and David Monard.

Speaker Change: Turning to our board of directors as Tom Just mentioned, we were delighted to welcome three seasoned professionals to our board in recent weeks outcome.

Speaker Change: Help counter to what are you actually at the moment and David matters.

Tom Oner Jensen: Third, as I mentioned earlier, our business development and commercial teams have been busy evaluating and pursuing opportunities across the globe. As Jeremy will detail shortly with an update on our Frame 2.0 growth initiative, we've streamlined our project and new pipelines to focus on the initiatives that align with our objective to accelerate our path to market and with a view to generating positive operating cash flow as quickly as possible. And finally, in the prevailing interest rate capital markets and industry environments, cash is king.

Speaker Change: Third as I mentioned earlier, our business development and commercial teams have been busy evaluating and pursuing opportunities across the globe.

Speaker Change: As Jeremy will detail shortly with an update of our <unk> 2.0 growth initiative, we've streamlined our project in new pipelines to focus on the initiatives that align with our objective to accelerate our path to market and with a view to generating positive operating cash flow as quickly as possible.

Speaker Change: And finally in the prevailing interest rate capital markets and industry environments cash is king.

Tom Oner Jensen: And we remain focused on preserving and deploying your precious capital to generate shareholder value. We'll hear from Oscar shortly about our commitment to maintaining strict capital and cost discipline while we build our business and advance our capital formation process. We'll be in just five seconds.

Speaker Change: We remain focused on preserving and deploying your precious capital to generate shareholder value well hear from Oscar shortly about our commitment to maintaining strict capital and cost discipline, while we build our business and advance our capital formation process.

Speaker Change: Moving to slide six.

Tom Oner Jensen: Let's dive into our continued progress at the CQP. There's no change to our prior expectation to commence automated unit cell production with the full functionality of the casting and unit cell assembly in the second quarter. In preparation for this key milestone, the teams have been focused on the complex and delicate process of integrating the cathode, anode, and merge units with the casting and unit cell assembly machine on what we believe is the world's largest multi-carrier system, or MCS for short.

Speaker Change: Let's dive into our continued progress at the CGP.

Speaker Change: There is no change to our prior expectation to commence automated units of production with the full functionality of the casting and unit cell Assembly in the second quarter.

Speaker Change: Operation for this key milestone the teams have been focused on the complex and delicate process of integrating the cathode anode and merch units the casting and unit cell Assembly machine on what we believe is the world's largest multi carrier system or Mcs for short.

Tom Oner Jensen: Let me provide some additional context about the unique characteristics of the semiconductor process and our next steps at the CQP. Unlike conventional lithium-ion battery manufacturing, which involves producing electrodes from separate equipment before assembling them into cells, the semisolid technology employs a continuous and integrated process. The semisolid process starts with electrode coating and proceeds to electrode stacking. The next generation semisolid casting in the unit cell assembly unit, which is the heart of the production system, then creates independent unit cells, each containing a cathode, anode, and separator.

Speaker Change: Let me provide some additional context about the unique characteristics of the sensitive process and next steps at the CGP.

Speaker Change: Unlike conventional lithium ion battery manufacturing, which involves producing electrodes on separate equipment before assembling them into cells. The sudden solid technology employers the continuous and integrated process.

Speaker Change: And assorted process starts with electric coding.

Speaker Change: And proceeds to electrodes stuck in the next generation Central casting and unit cell Assembly unit, which is the heart of the production system, then creates independent unit cells, each containing a castle anodes and separated.

Tom Oner Jensen: The subsequent steps are required to produce a complete cell in a pouch, which is a stack of multiple unit cells, have already been developed and validated on the Semicellular Platform. As such, when we begin producing these unit cells continuously, and with the full automation of the next generation casting unit cell assembly, it will be a meaningful achievement for Freyberg. As you can see from the photos on this slide, we've continued to make and test cells at the CQP while we approach the final stages of automating the casting and unit cell assembly.

Speaker Change: The subsequent steps required to produce the complete sell an approach which is a stock of multiple unit cells.

Speaker Change: Already been developed and validated on the Sem solar platform as such when we began producing these unit cells continuously under the full automation of next generation casting Unitil Assembly it will be a meaningful achievement for fragrance.

Speaker Change: And as you can see from the photos on this slide we've continued to make in T cells at the <unk>, while we approach the final stages of automating the casting annual telephone.

Tom Oner Jensen: This next milestone is a step change on our journey to becoming a battery production company. Demonstrating our ability to produce cells on a novel technology platform is not only a key precursor to validating the semisolid manufacturing process, but it's also an important step to prove our technical and operational credentials as an emerging partner of choice for our customers, alliance members, and global network of vendors. They appreciate the acumen required to hit this next milestone, and we're grateful for their continued support on our scaling journey. I'll turn the call over to Jeremy to discuss our ongoing business development opportunities.

Speaker Change: This next milestone is a step change on our journey to becoming a battery production company.

Speaker Change: Demonstrating our ability to produce cells on a novel technology platform slowly creep in key precursor to validating the Senate solid manufacturing process. It's also an important step to prove our technical and operational credentials as an emerging partner of choice for our customers' alliance members and global network of vendors.

Speaker Change: They appreciate the acumen required to hit this next milestone and we're grateful for their continued support from our scaling journey.

Speaker Change: Now I'll turn the call over to Jeremy to discuss our ongoing business development opportunities.

Berger Steen: Berger. I'll begin on slide seven during our fourth quarter update in February. Frayer announced its 2.0 growth initiative. The strength of our balance sheet and the strong capability we have across the company are strengths that others across the value chain see as attractive attributes for a conversation. We continue to pursue opportunities related to this strategy and have focused a significant amount of time in the last couple of months narrowing in on projects and priorities that both provide near-term revenue and cash flow, as well as avoid a negative impact on our current liquidity position.

Jeremy Beds: Gregor I'll begin on slide seven.

Jeremy Beds: During our fourth quarter update in February.

Jeremy Beds: <unk> announced its two point out growth initiatives.

Jeremy Beds: The strength of our balance sheet and a strong capability, we have across the company our strengths that others across the value chain see as attractive attributes for a conversation.

Jeremy Beds: We continue to pursue opportunities related to this strategy and are focused a significant amount of time in the last couple of months narrowing in on projects and priorities that both provide near term revenue and cash flow as well as avoiding a negative impact on our current liquidity position.

Berger Steen: We are now focusing on four distinct commercial and project-related opportunities. We have added one e-mobility development and commercial opportunity this past quarter while eliminating two of the previously contemplated projects related to the EV market in Europe.

Jeremy Beds: We are now focusing on four distinct commercial and project related opportunities.

Jeremy Beds: We have added one E mobility development and commercial opportunity this past quarter, while eliminating two of the previously contemplated projects related to the EV market in Europe.

Berger Steen: The current project list represents opportunities at multiple points in the value chain, multiple end-use markets, and project types ranging from a variety of greenfield projects to one potential inorganic growth opportunity. As these projects mature and become something that we can discuss publicly, we will look forward to sharing more information. All told, these growth opportunities create a real opportunity for FRER to accelerate its journey toward fortifying itself as a Western leader in the lithium-ion battery sector. Now, turning to slide 8.

Jeremy Beds: The current project list represents opportunities at multiple spots in the value chain multiple end use markets and project types ranging from a variety of greenfield projects to one potential inorganic growth opportunity.

Jeremy Beds: As these projects mature and become something that we can discuss publicly we will look forward to sharing more information.

Jeremy Beds: All told these growth opportunities create a real opportunity for <unk> to accelerate our journey towards fortifying ourselves as a western leader in the lithium ion battery sector.

Jeremy Beds: Now turning to slide eight.

Berger Steen: I also wanted to include a brief update about the GigaAmerica site in Coweta County, Georgia. We continue to advance the conventional technology track, and we believe, as I mentioned last quarter, that this project will be the earliest path to market for scaled production. Simply put, the technological maturity and established supply chains with conventional technology create an acceleration that allows us to realize a start-up production date faster than we would otherwise have been able to achieve.

Jeremy Beds: I also wanted to include a brief update about the Giga America site and Coweda County, Georgia.

Jeremy Beds: We continue to advance the conventional technology track and we believe as I mentioned last quarter that this project will be the earliest path to market for scaled production.

Jeremy Beds: Simply put.

Jeremy Beds: The technological maturity and established supply chains with conventional technology create an acceleration that allows us to realize a startup production date faster than we would otherwise have been able to achieve.

Berger Steen: With the IRA production tax credits providing such a significant opportunity and benefit to the project, it behooves us to move as quickly as possible to realize those benefits. Over the next couple of months, our plan is to finalize terms with the technology provider, deliver previously discussed conditional and binding offtake agreements, and refresh and relaunch the project-level equity process along with the debt side of the funding. We will provide full transparency into the project plan and the value opportunity over the succeeding weeks as those details get finalized.

Jeremy Beds: With the IRA production tax credits, providing such a significant opportunity and benefit to the project. It behooves us to move as quickly as possible to realize those benefits.

Berger Steen: Over the next couple of months our plan is to finalize terms with the technology provider deliver previously discussed conditional and binding offtake agreements and refreshing and re launching the project level equity process, along with the debt side of the fundraising.

Jeremy Beds: We will provide full transparency into the project plan and the value opportunity over the succeeding weeks as those details get finalized.

Berger Steen: Related to Project Patriot, the 24M production track at Gigamerica, we continue to engage with the DOE and keep them updated on our progress. While we await results from the CQP, we are actively managing the appropriate level of project spend. I will now send this message over to Oscar to chat about the financial performance from the last quarter. Thank you.

Berger Steen: Related to project Patriot the 24 in production track at Giga America, we continue to engage with the daily and keep them updated on our progress while we await results from the CQ. Pete we are actively managing the appropriate level of project spend.

Berger Steen: I will now send it over to Oscar to chat about the financial performance from the last quarter. Thank you Oscar.

Oscar: Thank you Jeremy.

Oscar Brown: Moving now to slide 9, Optimizing Our Spending, I will review our recent financial results. In addition to the usual year-over-year comparison, we've added the previous quarter to the slide for ease of sequential quarterly comparison as well. For the first quarter of 2024, FRAE reported a net loss of $29 million, or $0.20 per share, compared with a net loss of $25 million in the fourth quarter of 2023, which is the sequential period, and a loss of $13 million in the first quarter of 2023, which was the year-over-year period.

Oscar: Moving now to slide nine optimizing our spending I will review our recent financial results.

Oscar Brown: In addition to the usual year over year comparison, we've added the previous quarter to the slides, where he's a sequential quarterly comparison as well.

Oscar Brown: For the first quarter of 2024, <unk> reported a net loss of $29 million or <unk> 20 per share compared with a net loss of $25 million in the fourth quarter of 2023, which is the sequential period and a loss of $13 million in the first quarter of 2023, which was the year over year period.

Oscar Brown: The net loss in the fourth quarter of 2023 was impacted by a number of unusual items, including a $9 million benefit from the Warrant Liability Fair Value Adjustment due to a decline in our stock price during the quarter, and the reversal of annual bonus accruals as the company chose not to pay cash STIP for 2023 in light of our restructuring, which lowered operating expenses. Partially offset by the restructuring accrual, reflecting the downsizing of our workforce to better reflect the prioritization of our projects and the development versus operating stage of our company.

Oscar Brown: The net loss in the fourth quarter of 2023 was impacted by a number of unusual items, including a $9 million benefit from the warrant liability fair value adjustment due to a decline in our stock price during the quarter.

Oscar Brown: The reversal of annual bonus accruals as a company chose not to pay cash estimate for 2023 in light of our restructuring, which lowered operating expenses.

Oscar Brown: Partially offset by the restructuring accrual, reflecting the downsizing of our workforce to better reflect the prioritization of our projects and the development versus operating stage of our company.

Oscar Brown: In Q1 2024, we recognized higher depreciation expense than in 2023 and resumed quarterly accruals for the potential STIP awards that would be based on 2024 performance. These items can make sequential comparisons of our total operating expenses and G&A less intuitive. In any case, our cash G&A run rate has indeed come down with the reduction in force and refocus of our activities in 2024, although as of the end of Q1 2024. We have reduced full-time employees by 20% and contractors and project support by 50% compared with November 2023. Also, as a reminder, the Warrant Liability Fair Value Adjustment reflects a non-cash gain when our stock price declines during any reporting period and a loss when our stock price increases.

Oscar Brown: In Q1, 2024, we recognized higher depreciation expense in 2023 and resumed quarterly accruals for the potential as chip awards that would be based on 2020 for performance.

Oscar Brown: These items can make sequential comparisons of our total operating expenses and G&A less intuitive.

Oscar Brown: In any case, our cash G&A run rate run rate has indeed come down with the reduction in force and refocus of our activities in 2024.

Oscar Brown: As of the end of 'twenty as of the end of Q1 2024.

Oscar Brown: We have reduced full time employees by 20% and contractors and projects support by 50% compared with November 2023.

Oscar Brown: Also as a reminder, the warrant liability fair value adjustment reflects the noncash gain when our stock price declines during in any doing any reporting period and a loss in our stock price increases.

Oscar Brown: This item was nominal in the first quarter of 2024, but can vary widely depending on periodic movements in our stock price. The company reported increasing research and development costs in each of the periods highlighted as commissioning activities for the CQP Intensified, and we work towards this upcoming production milestone. We expect R&D spending to be lower in the second half of 2024 as we achieve the aforementioned goals in the first half.

Oscar Brown: This item was nominal in the first quarter of 2024, but can vary widely depending on periodic movements in our stock price.

Oscar Brown: The company reported increasing research and development cost in each of the periods highlighted as commissioning activities for the <unk> intensified.

Oscar Brown: And we work towards this upcoming production milestone.

Oscar Brown: We expect R&D spending will be lower in the second half of 'twenty 'twenty four as we achieve the aforementioned goals in the first half.

Oscar Brown: While we have significantly reduced our annual cash burn rate compared with last year when all spending, including capital expenditures, is considered, we continue to seek opportunities to reduce unnecessary costs and activities to extend our liquidity runway beyond the two-year target we discussed in previous calls before we raise additional financing to support our project activities. We exited the first quarter of 2024 with cash in equivalence of $253 million, with no debt, reflecting total cash uses in the first quarter of $23 million compared with cash uses of $52 million in the fourth quarter of 2023 and $88 million in the first quarter of 2023, year over year.

Oscar Brown: We have significantly reduced our annual cash burn rate compared with last year, when all spending including capital expenditures are considered we.

Oscar Brown: We continue to seek opportunities to reduce unnecessary costs and activities to extend our liquidity runway beyond the two year target. We have discussed in previous calls before we raise additional financing to support our project activity.

Oscar Brown: We exited the first quarter of 2024 with cash and equivalents of $253 million and no debt.

Oscar Brown: Reflecting total cash uses in the first quarter of $23 million compared with cash uses of $52 million in the fourth quarter of 2023 and $88 million in the first quarter of 2023 year over year.

Oscar Brown: Net cash used for investing activities, which is primarily capital expenditures and any related reimbursements, was $2 million in the first quarter of 2024, $19 million in the fourth quarter of last year, and $67 million in the first quarter of last year. Moving now to slide 10, Optimizing Our Balance Sheet. And focusing in on the cash waterfall for the first quarter, you can see that gross capital expenditures in the first quarter of 2024, which were $21 million, were mostly offset by other items, which included a $19 million reimbursement of deposits from our general contractor at Giga Arctic, reflecting the completion of the East and North buildings and, therefore, the contract.

Oscar Brown: Net cash used for investing activities, which was primarily capital expenditures at <unk> and any related reimbursements was $2 million in the first quarter of 2024.

Oscar Brown: $19 million in the fourth quarter last year and $67 million in the first quarter of last year.

Oscar Brown: Okay.

Oscar Brown: Moving now to slide 10, optimizing our balance sheet and focusing in on the cash waterfall for the first quarter you can see the gross capital expenditures in the first quarter of 2024, which were $21 million were mostly offset by other items, which included a $19 million reimbursement of deposits from our general contractor of Giga Arctic.

Oscar Brown: Reflecting the completion of the eastern North buildings, and therefore the contract.

Oscar Brown: No further significant net capital expenditures for Giga-Arctic are budgeted for the remainder of the year, and costs for utilities and maintenance to preserve the buildings are expected to be around $2 million per year. Prior to any project-related funding this year, capital expenditures for the remainder of the year will be primarily related to the CQP and Test Center and will be much lower than last year's. We continue to evaluate use cases for the GigArctic buildings and site, which could include its original intent as a gigafactory, Battery Component Manufacturing, or other industrial activities. In addition, we have received unsolicited inquiries regarding a potential sale of the buildings to third parties.

Oscar Brown: No further significant net capital expenditures for Giga Arctic are budgeted for the remainder of the year and cost for utilities and maintenance to preserve the buildings are expected to be around $2 million per year.

Oscar Brown: Prior to any project related funding this year capital expenditures for the remainder of the year will be primarily related to the <unk> test center and will be much lower than last year as previously discussed.

Oscar Brown: We continue to evaluate use cases for the gig Arctic buildings and site, which could include its an original its original incentives the Giga factory.

Oscar Brown: Battery component manufacturing for.

Oscar Brown: Or other industrial activities.

Oscar Brown: In addition, we have received unsolicited inquiries regarding a potential sale of the buildings to third parties.

Oscar Brown: The book value of this 75,000 square meter asset is approximately $225 million. We will continue to actively evaluate the future of this asset with maximizing risk-adjusted shareholder value as our guidepost. So our 2024 spending has been focused on getting to battery cell production at the CQP using 24M technology and the production activity necessary to deliver testable cells from the CQP to NEDx, the continued development of Giga America, and pursuing a conventional license and project to accelerate our path to first revenue.

Oscar Brown: The book value of the 75000 square meter asset is approximately $225 million.

Oscar Brown: We will continue to actively evaluate the future of this asset with maximizing rich risk adjusted shareholder value as our guidepost.

Oscar Brown: So our 2024 spending has been focused on getting to battery cell production of the <unk> using 24, <unk> technology and the production.

Oscar Brown: Activity necessary to deliver testable cells from the <unk> the.

Oscar Brown: The continued development of Giga America and.

Oscar Brown: In pursuing a conventional licensed some project to accelerate our path to first revenues.

Oscar Brown: Indeed, we are actively evaluating significant opportunities that might merit short-term investment but lead to longer-term capital formation on attractive terms in the near term. How the CQP, Giga America, and these other important opportunities develop might impact our spending for the year, and we will keep investors updated. We've exited the first quarter with the company well positioned for the current environment. We protected our balance sheet and extended our runway. We continue to pursue non-dilutive growth capital and are maximizing our project development opportunities while remaining vigilant on overall spending. We have a great team, a pristine balance sheet, and a long list of opportunities across the battery value chain. With that, I'll turn it back over to Berger for additional comments.

Oscar Brown: Indeed, we are actively evaluating significant opportunities, which might merit short term investment to lead to longer term capital formation on attractive terms in the near term.

Berger Steen: How the CQ P. Giga America and these other important opportunities develop might impact our spending for the year and we will keep investors updated.

Oscar Brown: We've exited the first quarter with the company well positioned for the current environment, we protected our balance sheet and extended our runway. We continue to pursue pursue non dilutive growth capital and are maximizing our project development opportunities while remaining vigilant on overall spending.

Oscar Brown: Have a great team, a pristine balance sheet and a long list of opportunities across the battery value chain.

Berger Steen: With that I'll turn it back over to Burger for additional comments.

Berger Steen: Thanks Oscar.

Berger Steen: I'll conclude our prepared remarks on slide 11 before we go to Q&A. We started 2024 with clear priorities to deliver on automated trial cell production, evolve a conventional technology track for the company, several promising opportunities to pursue and evolve, and an imperative to conserve cash and generate capital formation alternatives. The result of these efforts is the updated 2024 roadmap you see on slide 11. At CQP, we're focused on commencing production of unit cells with full automation of the casting and unit cell assembler.

Berger Steen: Conclude our prepared remarks on slide 11, before we go to Q&A.

Berger Steen: We started 2024 clear priorities to deliver on automated trial cell production evolving a conventional technology to track for the company.

Berger Steen: Several promising opportunities to pursue and evolve on an imperative to conserve cash and generate capital formation alternatives.

Berger Steen: The result of these efforts is the updated 2024 roadmap you'll see on slide 11.

Berger Steen: But the CPP refocus on commencing production of unit cells with a full automation of the calcium silicon blue.

Berger Steen: As I noted earlier, Mike, his teams, and our partners have been working tirelessly to prepare for this next milestone, and we're looking forward to sharing more news with you from the CQP during the second quarter. In parallel with the important progress at AssetMall, Jeremy and his team have been working on several promising deals behind the scenes, highlighted by the conventional technology opportunity. During the coming months, we intend to formalize the agreement, secure offtake agreements, and relaunch the project equity and debt funding processes.

Berger Steen: As I noted earlier, Mike his teams and our partners have been working tirelessly prepared for this next milestone and were looking forward to sharing more news with you from the sea compete during the second quarter.

Berger Steen: In parallel with the important progress as the asset more Jeremy and his team have been working several promising deals behind the scenes highlighted by the conventional technology opportunity.

Berger Steen: During the coming months, we intend to formalize the agreements secure offtake agreements and relaunched our project equity and debt funding processes.

Berger Steen: As allocators in your capital, we believe that the conventional track for Giga America offers the greatest potential to accelerate the capture of the Section 45X production tax credits, so this project is a top priority. In addition to coordinating with Jeremy's folks on the conventional opportunity, also on his team, I've been working on several other capital formation initiatives tied to projects in the Frey 2.0 growth pipeline. As we execute our strategy to accelerate our path to commercialization and first revenues, the capital raises associated with the highest value creation projects will take priority. Turning to the second half of 2024, we expect to be in execution mode on live projects. For the Conventional Agreement, our focus will be on commercial development and capital formation to facilitate the potential GigaAmerica FID.

Berger Steen: As allocators and your capital we believe that the conventional track fatigue America offers the greatest potential to accelerate the capture the section 45 X production tax credits. So this project is a top priority.

Berger Steen: In addition to coordinating with Jeremy as folks on the conventional opportunity also and his team are emerging on several other capital formation initiatives tied to project in the Fray 2.0 growth pipeline.

Berger Steen: As we execute our strategy to accelerate our path to commercialization in the first revenues the capital raises associated with the highest value creation projects will take priority.

Berger Steen: Turning to the second half of 'twenty 'twenty four we expect to be in execution mode on my projects.

Berger Steen: Conventional agreement, our focus will be on commercial development and capital formation to facilitate the potential <unk> of America.

Berger Steen: And finally, with the progress we expect to demonstrate later this year on our highest priority projects, capital formation and commercial momentum should accelerate in tandem. We're looking at some transformational opportunities, and we're excited to share news of our progress as 2024 continues. Before I turn it over to Jeff for the start of the Q&A, I'll once again thank our employees at Frayer for their commitment to our cause. What we're aspiring to do is far from easy.

Berger Steen: And finally with the progress we expect to demonstrate later this year on our highest priority projects capital formation and commercial momentum should accelerate in tandem.

Berger Steen: We're looking at on some transformational opportunities and were excited to share news of our progress as 24024 continues.

Berger Steen: Before I turn it over to Jeff for start a Q&A I'll once again, thank our employees at <unk> for their commitment to our costs.

Berger Steen: Oprah aspiring to do is far from easy and.

Berger Steen: And you've navigated our scaling journey, the dynamic policy environment, and the higher for longer interest rate backdrop with unwavering professionalism. On behalf of the Frey Board of Directors and management team, thank you for all that you do. And with that, I'll hand it back over to Jeff so we can take your questions. Thanks, Berger.

Jeff: And you've navigated our scaling journey, the dynamic policy environment, and a higher for longer interest rate backdrop with unwavering professionalism.

Berger Steen: On behalf of the freight board of directors and management team. Thank you for all that you do.

Berger Steen: And with that I'll hand, it back over to Jeff. So we can take your questions. Thanks operator.

Dennis: Dennis, we're ready to open up the lines.

Jeff: Dennis we are ready to open up the lines.

Operator: If you would like to ask a question, simply press star and then the number one on your telephone keypad. Again, press star one to ask a question. Your first question is from the line of Tyler DiMatteo with BTIG. Please go ahead.

Jeff: If you would like to ask a question simply press Star then the number one on your telephone keypad again press star one to ask a question.

Tyler DiMatteo: Your first question is from the line of Tyler <unk> with BTG. Please go ahead.

Tyler DiMatteo: Hi, everyone, and good morning. Thanks for your time today. I really appreciate it.

Tyler DiMatteo: Hi, everyone. Good morning, Thanks for the time that I really appreciate it so all of those <unk>.

Tyler DiMatteo: So on the CQP, I'm just curious here, as we get to the final stages and we move towards automated cell production, what are those key stages that are left that we kind of need to work through? Is it just simply testing, kind of making sure that the multi-carrier system and the process are working? I'm just curious if you can kind of help us understand what those final steps are before we can really start producing batteries here.

Tyler DiMatteo: Just curious here as we get to the final stages, and we move towards automated cell production.

Tyler DiMatteo: Are those key stages that are less that we kind of need to work through is it just simply testing kind of making sure that the.

Tyler DiMatteo: On the multi carrier system and the process is working and I'm. Just curious if you can kind of help us understand what those final steps are before we can really start producing batteries yet.

Tyler DiMatteo: Yes.

Berger Steen: Thanks. As we discussed, the casting and unit cell assembly machine is a highly complex version one piece of machinery. The thing we've accomplished so far this quarter is we've made it through the first and potentially most novel process embedded in this machine, and that's the casting of anodes and cathodes. And we've been able to hand-assemble batteries made from those automated production batches of cathodes and anodes and come up with initial test results that are quite encouraging relative to our original spec.

Tyler DiMatteo: Thanks.

Tyler DiMatteo: As we discussed.

Berger Steen: Crossing engineered cell Assembly machine is the highly complex.

Berger Steen: Version, one piece of machinery.

Berger Steen: The thing we've accomplished so far this quarter.

Berger Steen: As we've made it through the first on the pension the most novel process.

Berger Steen: And embedded in this machine, that's the casting of anodes and capsules.

Berger Steen: <unk>.

Berger Steen: And we've been able to Hans merge batteries made from those automated.

Berger Steen: Automated production batches of caseloads in anodes.

Berger Steen: Come out words or initial test results that are quite encouraging relative to our original spec.

Berger Steen: The bit that's remaining now, as you indicate, is the tuning of the multi-carrier system that ensures that the anodes from the top, the cathodes from the bottom, and the separator meet in exactly the right place and with the right pressure and with the right vertical, sorry, horizontal movement. So that we end up with the appropriate tolerances for the final unit cell assembled and then divided and turned into something that can be stacked into a full battery cell with 23 of these unit cells.

Berger Steen: That that's remaining now as you indicate.

Berger Steen: As the tuning of the multi carrier system.

Berger Steen: Insurers that the the unloads from the top the caseloads from the bottom and the separator meat and exactly the right place and we'll write pressure.

Berger Steen: I'm going to rise vertical horizontal movement.

Berger Steen: So that we end up with.

Berger Steen: The appropriate tolerances for the final unit sell assembled and then.

Berger Steen: And then.

Berger Steen: Divided and turned into something that can be stuck into a full battery cell with 23 of these of these unit cells and that's that's sort of piece of precision machinery again, what we understand from compressed on Siemens to be the largest multi carrier system installed anywhere.

Berger Steen: And that sort of precision machinery, again, what we understand from Festo and Siemens to be the largest multi-carrier system installed anywhere, tuning that machine is what we're working on now. So we think, and we're expecting that we could be a few hours, a few days away from the first successful, fully automated, casted, and merged cells. And so I think it's not too much to say that we have 205 people here at Freyr who are holding their breath a little every morning as we get our updates from Mark and his team.

Berger Steen: Tuning that machine is what we're working on now.

Berger Steen: So were rethinking and we were expecting.

Berger Steen: It could be it could be a few hours to a few days away from from first successful fully automated.

Berger Steen: And merge cells.

Berger Steen: And so I think it's not too much to say that.

Berger Steen: We have 205 people here at <unk>, who are holding their breath, a little every morning, as we get our updates from from occupancy.

Berger Steen: Okay, great. Thank you. Really helpful on that front. And then on the battery component comments, you know, realizing it's early days here, I guess just at the highest level, I mean, what would an ideal opportunity look like in that side of the value chain? Or just how are you thinking about that? And kind of what would you look for? And just any color there.

Speaker Change: Okay, great. Thank you really helpful on that front and then on the <unk>.

Berger Steen: Battery components comments, you know realizing it's early days here I guess just at the highest level I mean, what would an ideal opportunity look like in that side of the value chain or just how are you thinking about that and kind of what would you look for.

Berger Steen: Just any color there.

Berger Steen: As you know, we started out based on the unique advantages and characteristics of the 24M semi-solid process as applied to LFP, with a focus on the ESS space. That's also where we developed return capability and partnerships, such as a partnership with NEDEC, which is called NEDEC Energy AS, which is there to make modules and packs. We also have advanced plans for further downstream product development. So I'd say somebody who's developing, say, grid storage or something that sits adjacent to a PV project, probably in the U.S., who likes the fact that our current cells are produced, or cells to be produced, are produced on U.S. soil and would like to see that supply chain resilience and certainty for the next 10 years that you can get from a stateside producer, that Okay.

Berger Steen: As you know we started out based on the unique advantages and characteristics of the 24, <unk> and a solid process as applied to our team with a focus on the ESF space, That's also where redeveloped turn capability and partnerships such as our partnership with <unk>.

Berger Steen: Which is called <unk> and Gis.

Berger Steen: It's just there to make modules and packs.

Berger Steen: Also have advanced plans for further downstream product development, So I would say somebody who's.

Berger Steen: Developing say grid storage or.

Berger Steen: Something that sits adjacent to a PV projects.

Berger Steen: Probably in the U S.

Berger Steen: We like the fact that our current cells are produced for our self to be produced are produced on U S soil.

Berger Steen: And we'd like to see that supply chain resilience and uncertainty for the next 10 years that you can get from our from the state side producer.

Berger Steen: That would be our ideal our deal.

Berger Steen: Downstream expansion and customer for that extension.

Tyler DiMatteo: Okay, and if I could just squeeze one more in here. On the 2.0, the growth initiatives here, you kind of spoke about the four distinct projects. I guess without getting into the details of those, you know, how did they come about? I mean, how did you define them, and what was kind of the sourcing process there? If you could add any comments on that front.

Speaker Change: Okay, and if I could just squeeze one more in here.

Tyler DiMatteo: The two point out of the growth initiatives.

Tyler DiMatteo: You kind of spoke to the four distinct projects I guess without getting into the details of those how did they come about I mean, how do you do.

Tyler DiMatteo: Find them and what was kind of the sourcing process there.

Tyler DiMatteo: Any comments on that front.

Tyler DiMatteo: Okay.

Tyler DiMatteo: <unk>.

Tyler DiMatteo: And I will have our conversation about this performance this quarter later on.

Tyler DiMatteo: Guests discuss how we describe that the Jeremy perhaps you could you could talk a little bit about how we probably went about the level of developing in triaging and improving this portfolio.

Berger Steen: Jeremy and I will have our conversation about this performance this quarter later on, but we'll discuss how we describe that. But Jeremy, perhaps you could talk a little bit about how we went about developing, triaging, and improving this portfolio.

Jeremy Bezek: Happy to do that, Berger. Thanks.

Jeremy: Happy to do that Burger. Thanks, Tyler Thanks for the question.

Jeremy Bezek: It's actually a varied process.

Jeremy Bezek: Tyler, thanks for the question. It's actually a varied process. You know, we're always listening. We're always taking calls. We have a funnel approach, as most do, to evaluating alternatives, doing initial screening, and then advancing those projects into real actionable opportunities. I would say that the current portfolio that we have and maybe the portfolio that we've actually screened out came in slightly different ways. Some relationships that some of us have throughout the battery value chain are, of course, always important opportunities because you feel like you understand the opportunities to a greater degree by having access to both people and companies through a variety of means.

Jeremy Bezek: We are always listening, we're always taking calls.

Jeremy Bezek: We have a funnel approach is most due to evaluating alternatives doing initial screening and then advancing those projects into.

Jeremy Bezek: Real actionable opportunities I would say that the current portfolio that we have and may be the portfolio that we actually screened out all came in slightly.

Jeremy Bezek: Different ways, some relationships that some of us have throughout the battery value chain of courser.

Jeremy Bezek: Always important opportunities because you can you feel like you understand the opportunities to a greater degree by having access to both people and <unk>.

Jeremy Bezek: Companies.

Jeremy Bezek: Through a variety of means so I think that's it's using our relationships, but it's also been inbounds from.

Jeremy Bezek: So I think that's using our relationships. But it's also been inbound from, you know, off the shelf right from people that we don't know that see what we're doing, see our public position, see our balance sheet and the fact that we have no debt and are interested in talking to us about how we might work together. So I'd say some of it was kind of proactive outreach from us, but most of it was inbound.

Jeremy Bezek: Off the shelf right from people that we don't know that see what we're doing.

Jeremy Bezek: Our public position.

Jeremy Bezek: See our balance sheet and the fact that we have no debt.

Jeremy Bezek: Our interested in talking to us about how we might work together so.

Jeremy Bezek: So I'd say some of it was kind of proactively outreach from us, but most of it was in downs.

Jeremy Bezek: And that's exciting because I think what it means is our messaging is getting out there, that we want to be a partner of choice for folks, and that they see us as a credible player that they want to work with.

Jeremy Bezek: And thats exciting because I think what it means is our messaging is getting out there that we want to be a partner of choice for folks.

Jeremy Bezek: And that they see us as a credible player that they want to work with.

Jeremy Bezek: Yes.

Tyler DiMatteo: Okay, great. Yeah, no, but very good to hear. Thank you guys. I really appreciate the time today, and I'll turn it back to the queue.

Speaker Change: Okay, Great Yeah, no very good. Thank you guys I really appreciate the time today and I'll turn it back to the queue.

Speaker Change: Thanks Tyler.

Operator: Once again, if you would like to ask a question, simply press star then the number one on your telephone keypad. And at this time, there are no further questions. I'll turn the call back to the manager. Thanks, Dennis. Well, thank you everyone for your time today and your attention and your interest in prayer. I look forward to seeing everybody.

Speaker Change: Once again, if you would like to ask a question simply press Star then the number one on your telephone keypad.

Speaker Change: And at this time there are no further questions I will turn the call back to management.

Dennis: Thanks, Dennis. Well, thank you, everyone, for the time today and your attention and your interest in prayer. I look forward to seeing everybody out on the road as we get into the quarter, and we will talk to you all very soon. This will conclude the call.

Speaker Change: Thanks status well. Thank you everyone for the time today and your attention and your interest in <unk> look forward to seeing everybody out on the road.

Dennis: We get into the quarter and we will talk to you all very soon.

Dennis: This will conclude the call.

Dennis: [music].

Operator: Thank you for watching!