True CCU companies, BCS continues to offer an attractive value proposition based on local development of sustainable carbon. I would like to emphasize in this context the two most important words, they are local and sustainable. Following our successful establishment of a consistent process baseline last year, we are now fully focused on product development towards different battery applications. The product in this context is what we generally call carbon powders, or more specifically, BCS CNT. This carbon powder, which is a key component to enhance the battery quality into all batteries, is today produced mostly in China with a massive CO2 footprint. However, our core CO2-consuming technology leverages electrolyzers to convert captured CO2 emissions into conductive carbon powders for advanced battery applications. Production of conventional and fossil CNT is all about size, it is about form, and it is about cost. It is made, as I said, in China.
As small particles as possible with as much surface as possible to as low cost as possible. BCS CNT is different. Produced from a fundamental new technology, sustainable, produced locally, different in size and different in form, resulting in highly unique characteristics, which I will come back to. However, BCS CNT acts as any conventional multi-wall carbon nanotube in terms of being an additive to increase the conductivity of the active material for different battery applications. That is important. We have shown this graph before, but this is still our industrial vision of the core of our pure play CCU equity story. The value proposition in terms of local and sustainable circular value chain towards critical battery raw material. Energy storage through batteries is indeed a growing mega trend, and to an increasingly extent, really strategically on a regional level.
Local BCS carbon production from a nearby large CO2 point emitter by using the direct or the indirect flue gas as feeding stock for our CO2-consuming technology. With production based on green hydropower, this is a net CO2-consuming technology which could form the basis for a new industry which we need in this country, based on local competence and experience we already have, namely within process and material technology. I would like to emphasize that in a scaled-up mode, our BCS production methodology is modular and is on-demand scalable, establishing a good fundamental for our industrial unit cost analysis going forward. China completely dominates the battery industry, also towards the supply of components and critical raw materials. Non-Chinese battery supply chains are therefore critical to develop to meet the geopolitical situation. It is fair to assume European drones will not be operated based on Chinese battery technology going forward.
CNT is a highly critical conductive raw material for enabling a competitive battery performance for all battery chemistries, and is in a wider context defined as very strategic, a very strategic material into most batteries. Today, BCS is one of very few CNT suppliers in Europe, as the production of critical carbon powders for the European battery industry can be described as an emerging market. This is why there are a number of global initiatives to establish regional and self-sufficient battery supply chains, both in the U.S. as well as in Europe. The Americans have recently established a national strategy for leadership in batteries with a mine-to-market plan for full domestic value chain by 2030.
The Europeans have implemented a number of initiatives to strengthen their battery value chain with EIC Accelerator and the IPCEI batteries are probably the two most relevant initiatives to strengthen development of advanced battery materials for energy storage, as well as general R&D activities through the entire battery value chain. Finally, which we have talked about previously, there is a local program. It is ongoing to strengthen the Nordic battery value chain initiated by IFE and FFI. Then over to the numbers. Our financial numbers still confirms that we continue to have a realistic plan for execution on our strategy. Adjusted for timing of SkatteFUNN grants, cash burn is stable and constant also from end of last year. The positive effect of reduced operating expenses from the Innovation Norway funding is clear. The effect was not in force last year.
Our manning, as well as our level of equipment and hardware, is at an adequate level compared with our activities and our deliverables, which again means a limited CapEx. We will hence maintain a similar constant cash burn going forward. All in all, still a healthy cash position, now at NOK 110 million, which continues to put us in an attractive financial position. Finally, a little piece of good news. Yesterday, we received notification that we have received additional funding from SkatteFUNN. We have shown this graph previously, documenting a consistent process platform from late last year and improvements into early this year. As for all well-known industrial companies involved with production of carbon powders, BCS continues to mature our fundamental process know-how, as well as we continue on our improvement programs.
This will strengthen the robustness of the process with less variations as we move towards the center of the process window, as well as we are improving our quality. Increased robustness means increased yield, means less sensitivity to variations in raw material supply, as well as to the process itself. As we have strengthened our focus from process towards product, we have initiated an accelerated program towards product development with what we say is relevant partners. Relevant partners for us are both technical knowledgeable as well as technical curious. They have a deep understanding of battery cell electrode design as well as advanced battery functions. We seek the R&D environments within these partner organizations, enabling us and assisting us on the innovation side on new chemistries and new materials.
Main reason for this is that for any existing technology baseline, all new materials need an extensive and a revised version of a test procedure, which in most cases is a real-time and resource-consuming exercise. Many companies basically do not change material composition in an existing and running technology. This is principally different in an R&D context, where next-generation battery chemistries, as well as the composition of revised bill of materials, is being established. This suits us well, as we are not offering a drop-in replacement product. As you can see from this slide, our current product development and application testing is running in several phases, from the electrolyzer process into powder treatments to internal or external coin or pouch cell testing. We thrive for an iterative process where dynamic feedback loops takes place from product testing and then fed back to powder treatment.
As a documentation of our technical progress and know-how, I am quite proud to show you the following slides. We are now showing microscopic pictures and not the drawings of the unique and the novel BCS CNT. We can see here from the left with increasing enlargement, first a scaled CNT cluster, basically formed like a ball of steel wool. Secondly, an enlarged CNT bonding with internal blue lines showing a core of iron carbide. Then an enlargement of one CNT surface with a multitude of up to 40 walls. Our unique CNT structure is strongly chemically bonded and placed in open network clusters. Contrary to conventional CNT, the BCS CNT clusters are elastic and acts like a spring when compressed. We are now in the position actually to quantify the spring-back force effect relative to conventional CNT.
This is very important for us to have in place when we are talking to potential partners which thinks this could be an important characteristic. A 10% iron carbide content confined by CNT walls, basically making the BCS CNT magnetic. That could also have several interesting advantages. In order to summarize our unique BCS CNT, the following five key characteristics: very low bulk density, magnetic due to iron carbide confined by CNT walls. It has a moderate surface area. Elastic properties and chemically bonded in an open network, which we call clusters. All in all, a combination of properties that is rarely achieved together. This is a potential advantage, as it changes the properties compared to conventional CNT. As we know, for the first time actually, is able to exactly define the characteristics of BCS CNT.
We attract proactive interest from relevant partners who have assumptions of what this combination of characteristics means in certain battery applications. We obviously cannot disclose our partner names if we haven't agreed otherwise. However, here is one very concrete testing feedback from one particularly non-Chinese, but Asian battery manufacturer, comparing BCS CNT quality performance results evolving from 2023 until today's powder, as well as we are comparing it to other carbon powder references in gray here. These results from more industrial scale coin or pouch cells is very interesting, and we see a very interesting and substantial improvement, both in initial discharge capacity as well as in direct current resistance. We do continue the testing campaign with this partner together with many other, actually for several different applications.
I would also say that we have done material progress on the patent side, and we have currently four active patent families going with three granted patents in place. The first patent family is granted both national and international, while for the second patent family, international grants are still pending. Patent family number three and four, which were submitted first half of this year, and based on what we have experienced from the patent timeline in one and two, it will typically take up to two years before first grant is received. In order to summarize, deeper understanding of BCS CNT, confirming a unique 3D clustered structure not produced by conventional CVD process. Basically, we are making something complete new. Partner testing progressing well with industrial partners now in up to several rounds of testing, and the feedback is encouraging.
BCS CNT is on par with reference powders on several parameters. The geopolitical developments increasingly favor local and secure supply of battery materials outside China. I would say that's strengthening the relevance of what we do. Finally, we are continuously expanding our patent portfolio. We are maintaining a strong financial position with a constant and adequate cost burn rate. That concludes my presentation. Thanks for listening, and now we are opening up for Q&A.
This Q&A session is moderated by Fredrik Øksnes, CCO in Bergen Carbon Solutions. With us today, we also have Petter Slyngstadli from Norne Securities. First question, Odd. One year ago, in the Q3 2025 update, BCS announced a breakthrough. The company has reported ongoing internal and external testing, but until now have provided limited information about the results. What validated test results can you share? I think you have probably already.
Yeah, I mean, this is the first time we have shared back-to-back partner feedback, but we have to do it anonymously, and I think these results spoke for itself. Of course, we would strive to share more of these results going forward.
Question number two. Since the breakthrough reported in Q3 2025, BCS and its partner and institutes have conducted testing. This has not yet resulted in any announced collaboration agreements or contracts. Can you provide information about potential agreements with external parties and indicative timelines?
I cannot, but I mean, we are working with a number of partners in Asia and in Europe, and we are doing different partner testing for different application and different purposes with many of these companies. They are all working towards a certain purpose. I mean, we cannot disclose what we are doing with who we are working with at this point in time. What I can say is that the list of companies we are working with is increasing on a weekly basis.
On the 7th of September, BCS announced that the Norwegian Industrial Property Office had granted the patent titled "Method and Apparatus for Purification and Separation of Solid-State Carbon-Containing Material. Does this patent cover the entire process associated with BCS CNTs, or if not, will BCS seek patent protection for the remaining element?
I mean, as we have shown, our process is in many stages, and that particular patent covers only the separation and the purification section of our production method.
Which battery applications is BCS primarily targeting, and in which battery type do you expect the first commercial breakthrough?
Yeah. I mean, first of all, we are a material technology company. We are developing a conductive additive for making all batteries more effective, and that goes for LFP, it goes for sulfur, it goes for NMC, and also other battery chemistries. I would say that we are involved in the whole range of different battery chemistries going forward.
A new one with regards to partners here. We know that you cannot disclose partners currently testing your CNTs. Can you say if some of these are large battery producers?
Some are large and some are small. Some are not even battery producers, they are chemical companies.
Yeah.
Yeah.
Yeah, right. Have you noticed a difference in partner approach?
Yeah.
You are chasing them or if you see the companies reaching out to you?
What I can say is that, as I emphasized that in the presentation, I mean, we need a technically curious and knowledgeable partner who has interest of looking into new material compositions. That is not always the big supply chain or procurement parts of the different organizations. That is the technical development parts. So we are very dependent on speaking to the right companies and the right people. When we have done that, it is crucial that we are open of what we make, that we are knowledgeable of what we make. That is why this spring-back force determination is so important, because, I mean, these environments are highly technically qualified, and we need to show that we know.
I mean, we need to be as good as is possibly we can in order to describe what we do and what we make, and when we do that, we get the respect and the attention we deserve.
Okay, the next one is with regards to patents. Very promising what you said about your patent portfolio. Is the current progress contributing to the patent applications?
I would definitely say what we are working on now would definitely have implications of our patent strategy going forward. I would say this is continuous work.
Yeah. Okay. I think the last question before we give Petter the opportunity, has the consortium for the IFE defense project application been established, and is BCS still in the scope?
This is in the application phase. We are taking part of this application, and what we know is that there will be some kind of decision taken first quarter next year of the way forward on this.
BCS is still-
We are definitely taking part of this, yeah.
Yeah.
Okay, thank you. Then I am leaving the microphone to Petter.
Thank you. Can you elaborate a bit about the SkatteFUNN news from yesterday?
The SkatteFUNN news. First of all, Petter, thanks for coming here
Yeah, thanks for inviting me.
This morning, early in the morning.
Thanks for inviting me.
We think that is very nice. The SkatteFUNN came in last night, actually, and this is an extended funding part which will not have an effect before a couple of years. But it is definitely a confirmation from SkatteFUNN that we are, I would say, sort of an accelerator of what we have got, and the fact that we are able to publicize part of what we do, then that triggers sort of a new funding element. I am not in a position to say the amount right now because we are a bit uncertain of the range of it.
Okay. This EU Battery Passport, can you say something about that and how that will change sort of the need of the local supply chain?
What we know is that the EU Battery Passport element is something which will be implemented during February, 1st next year, actually. I think it's just one element of the big direction of making the batteries more sustainable, having, you know, where it's produced, what is the CO2 footprint of it. I think that is, as I said, one element of a number of other ones which points in the right direction, that more and more of the material input to the battery design needs to come from the local area.
Yeah.
That's the mega trend.
Cool. I guess, one of the main news on your call today is probably the direct feedback you received from one of your testing partners.
Yeah.
You show that you have had significant progress from the 2023 batch. You are on par with relevant competitors, I would say. You have shown that you have taken down the volatility and you have heightened the quality of your product. Do you think that the sort of quality improvement is done?
No.
Do you think that you can progress further and outpace the competitors?
I mean, the biggest room in the world is the room for improvement.
I hear.
As we know, yes. We still definitely think there are improvement areas. We are very satisfied by, at this stage in time, having a new product, being able to document on par results with the conventional established players. I think that is a very good start, actually. For some areas, even better results. I think that there are absolutely room for improvement here, and that's what we're working on.
Could you say anything about the cost side?
No.
For your product compared to the others?
I mean, as I said before, we haven't really spent too much time on that. We know this is a modular process. And we, you know, it's scalable in all kind of forms, which is two very important parameters for getting the cost down. And we have, I mean, our analysis, I think I'm repeating what I've said previously, is, you know, we have a reasonably good feeling of our cost base.
Yeah. All right.
Okay. Before we sum up, we have one more question.
Okay.
That just came in. With regards to this spring-back force
Yeah.
That you described.
Yeah. The question is, the spring-back force is not a typical thing that you are measuring in a powder. In which applications are this elasticity particularly interesting?
That is something I will not be too concrete on here. But I have at least two different applications in mind where this could be very interesting. You know, it is very Presenting BCS status has to be very technical. It is almost impossible not to do that. I would say that whatever characteristics and uniqueness we are able now to identify, I would say all of these elements which I have listed have some potential real positive effects. That is what I can say for the time being. We need to document that.
Okay, that sums up the Q&A. Thank you, Odd.
Thank you, and thanks for attending this early morning call.