Good morning. It's great to be back here in Oslo. Thank you for the warm welcome. You know, I come from a shipbuilding family in the west of Scotland. I've lived for many years in continental Europe before moving back to the U.S. I have to say how much I appreciate coming to Norway so frequently. Any place I can take a subway to the ski slopes is my kind of place. There's a drive, a determination, and a real discipline that is part of your culture here that I very much appreciate. I have to say, it's probably what led to your outstanding results in the Winter Olympics. It's with that drive and determination, as well as a discipline, that I bring with me to Ensurge, and which then underscores, underpins the type of update I'm gonna share with you today.
Before doing so, I think it might be worth spending a minute to provide you a bit of context. I've spent my 30-year career bringing hardware technology to market, from innovation to mass production. I inherited a basket of products without a plan many years ago in my career, established the strategy, built the team, executed on that strategy, and resulted in a billion-dollar business. Later, at Google, I was part of the early team to launch the consumer electronics business, pulling many alumni from Apple as we built the culture. It was that data-driven, determined, results-oriented company that now has allowed the Pixel phone to be in its ninth generation and over 50 million units sold.
Another company that provides that level of discipline is Tesla, in their scaling of electric vehicles in the U.S. and abroad and around the world. Elon Musk and the team at Tesla have always been very disciplined about where they are with their product, they learned the hard way early on that scaling too quickly was expensive. It's one of those for what that reason, and many others, I'm grateful for our new COO, Matt Catterson, who's joined our team, who scaled Tesla's battery production, working very closely with Elon Musk and building the Panasonic battery production from from one line to 14 as they scaled. It's a disciplined process that is required in the physical world as we, as we launch new products. With that context, I'll walk you through what our Q4 was about.
Q4, I would say it was a transition quarter. It was my first full quarter as CEO, and as I've done numerous times in new roles, I took an assessment of the team, of the company, of the market, and where we stood. That sets the foundation for what we're doing right now in Q1 and the results we've had to date, which I'll walk you through. Our Q1 objective is very simple: it's to set the foundation for reliable delivery, sustained long-term partner engagement, and positioning the company for scale. The rest of 2026 is pretty simple. It's about commercialization. That I'm excited to walk you through. What did I do in my first 100 days as CEO? As I said, I looked at the market, I looked at the product, I looked at the team. I did a full-scale assessment of the company.
We signed the Corning JDA and the investment agreement. We swapped out and moved people with battery experience into customer-facing roles, and that immediately strengthened those relationships, as well as we developed our partnerships with a number of companies throughout the industry. The product we focused from a legacy process and manufacturing emphasis to battery product emphasis, really focusing on what the product is, what the product needs to be, and how we get there. We also fundamentally implemented the standard, industry-standard phase-gate approach to product development. This is the backbone for every successful company launching a new hardware product, and it is now the backbone of Ensurge. The manufacturing as well, we implemented industry-standard manufacturing practices to make sure we document our processes.
This may sound very elementary, but it is critical to enable scale, to have that documentation, have the standard, to have the rubric for our manufacturing process. We also modernized the company's data infrastructure at also cost-effective ways and while reducing costs. We also, from a manufacturing perspective, we enforced the culture of accountability. We drove engagement with our team across functions. This immediately led to better equipment uptime. It's amazing when you tap in to what people want to accomplish and involve them in the mission of the company, how they rise to that occasion. The financials, the financials in Q4 2025 were substantially higher than 2024. There were some personnel, facilities, equipment, and materials. However, there was also a shift to R&D capitalization.
In a stage of company where we are, the R&D does not need to be capitalized. In fact, it has no impact to cash flow. As an early-stage company, what matters is cash flow, and that is what I judge every day by and review every week is our cash flow. The R&D capitalization change has no impact to cash flow. Quite, quite easily, though, we initiated over $2 million of annual cost reductions in areas that are absolutely non-strategic and will not add value to the final product. As I mentioned, we discontinued the R&D capitalization. I saved the team for last because I think it's actually the most important. The single biggest lever that any company has is the quality of its talent, and Ensurge is very fortunate to have excellent, excellent talent.
We were able to up the game and bring in new talent, tapping into some of the best leaders the solid-state battery industry has and the battery industry, more broadly speaking. We're at an opportunity right now where the rest of the industry is relatively depressed, with electric vehicles now on the decline in the U.S. at least. So we have an opportunity to tap into some excellent, excellent talent. Most importantly, though, we looked at where value is created, and the value is created in the product, and it's critically important that we have the right talent on board to then develop that product. Process engineering is important, but it serves in... it serves product. It is a secondary to the product team. What have we done? This shift that we announced in the very beginning of February is fundamental to the company.
It allows us to unlock the core value of the product, which is our fundamental underlying solid-state platform. Our fundamental physics are sound. Our customer pipeline is incredibly robust. That underpins the opportunity that we have ahead of us to focus on the platform and focus on validating that. There in turn, enables a much broader roadmap of specific products and variants and form factors for specific use cases. As I mentioned, we shifted out the talent, we upgraded some talent. We have a leadership team now that it has deep industry experience in battery and specifically solid-state development and manufacturing. We also right-sized the organization, unfortunately, letting go some excellent people. Whose skills are just not right for Ensurge at this point in time.
As I looked at the organization chart, I knew that we needed to shift it when I saw that we had 80% of the team focused on process and not product. Now we've shifted to a product-led organization under a CTO with a PhD in solid-state battery expertise and former solid-state battery experience, and that team is wholly focused on validating our core platform. The other thing we're doing is shifting the talent to bring in more battery expertise, more, more battery experience, because battery development is a non-trivial matter. These are phenomenal, fascinating products, but the engineering discipline, the engineering experience really makes a difference in speed and, and capability. So we're excited for that.
Then lastly, certainly, is about the discipline and this commercial readiness that we have right on our fingertips, and we have to execute that in a disciplined manner. We can do it in a lean operating model. We don't need to spend money on expensive overtime for 24/7 manufacturing because we're not there yet, and we shouldn't be. That's the whole point, is that we can enjoy being in this earlier stage where we're engaging customers at the outset and working with them to tailor our product to their needs without spending the cost of 24/7 manufacturing with so much overtime. This industry standard product development process I speak about is truly our backbone, and I'll walk you through more details about that.
The technical engagement we're able to have with our customers by now having technical battery experience is game-changing because they need solutions to their products and their energy needs, and we're there with the right people at the right time with the right product. Right now, fundamentally, what we're doing is we have this wonderful capability at Ensurge, and now we're converting that to confidence and executing with the confidence that it takes to do this well. What is that backbone? This is our product development process. We are so fortunate as a company to have this wonderful legacy, wonderful heritage of innovation. If I look around the industry, there are companies that are not nearly as far along as we are, and they've been doing this for more than 10 years longer than we've been doing it, and I say that honestly.
The innovation that's happened in this company with a discovery under a relatively short period of time is truly phenomenal and should be, should be celebrated. The fundamental physics, I will say this again and again, that I believe they're sound. That is why I was compelled to the opportunity, that's why Dr. Sharafi, our CTO, was compelled to the opportunity, and that's why Matt Catterson was compelled to the opportunity as our COO, because the fundamental physics are really compelling. The process technologies as well, these core processes, like roll-to-roll, have been defined, and we've done some wonderful first, first run performance, and we've, and we've shipped samples to customers. We've, we've done a lot of great things in a relatively short period of time, and I applaud the team, and I applaud the, the broader folks involved who've gotten us to where we are now.
Now is a shift. Now we go from divergent idea generation and divergent thinking to convergent engineering discipline and engineering problem solving. I have a master's in engineering. I've been doing this since I can remember, this is the part that I enjoy and, and, and have experience doing. And the team as well that we're attracting is very steeped in this engineering convergent problem-solving thinking. It's around the design of experiments. It's around the test data. It's around isolating where there might be issues to drive repeatability, to drive performance, to drive cycle life. These are all critical things that we have been able to demonstrate in pieces, and now we're bringing them together under a disciplined process. That validation of the core platform, that is what the feedback has been given to us that is so critical in the market. Validate the platform.
That we can do. That I'm excited to be doing. From there, we define the product, so the number of layers, the substrate. We can define the form factor. We can define that once we have the broader platform validated. It gives us those degrees of freedom by having the platform validated, then we go into product definition. As well as the manufacturing processes, right? Having those robust and capable of across different products and form factors, and that confidence we can go in to say, "Yes, we can do this particular product," this opens up, again, degrees of freedom, opportunities for us to be able to be successful in lots of different product formats. The pilot lines, this is where right now, in proof of concept stage, we're starting that planning, that disciplined planning of all the future stages, engineering, validation, design, et cetera.
We're designing that in now, so we know what we do now gives us that foresight of what we need to do as a pilot facility, in our pilot facility down the road. What is required, such as the processes, the equipment, all that planning, that disciplined planning needs to start now. We have a great evaluation agreements that have been set up, and I, again, I applaud the previous team for that. What I'm doing now is actually engaging customers in a more deep way, in a longer-term way, in a partnerships way. This is what I've done across numerous companies with success in the past. By enlisting the commitment and the interest by some large companies in the world who are in desperate need of our product, we engage them now.
We work with them on their product development timeline, and we intersect with that product development timeline at the right stage, and we develop our product in parallel with their product for a final use product, and that starts now. They also follow the same process, and so we speak the same language. This is a common platform for all of us. Today, we are in what we might call the proof of concept stage or initial prototype testing. Next step will be the engineering validation, which means technical feasibility. It's just another stage. It's another emphasis of testing, and shows that, yes, we can do this in a more robust form under a lot more conditions. Design validation is actually when you have design freeze, and that's a big step.
That is when you're testing the actual end product in market and actually getting real usage, out of it. Then pilot production or production validation, you have to validate the processes before you go mass production, so you have to do it in pilot form. Then, of course, there's mass production. What this allows us to do now, by focusing on unlocking value now, it opens up partnerships for us down the road. We don't have to do it all ourselves. We know what we're really good at, and let's focus on that, and let's enlist partners to help us along the way. Regarding our partnerships, the partnerships remain very strong. Our relationship with Corning under our joint development agreement is proceeding as planned. We are integrating their Ribbon Ceramic cathode with our Ensurge platform.
We've been doing some initial testing, and we're very excited about what we have with them, as well as they're deploying resources on encapsulation materials and processes, so that's to enwrap the battery and ensure that it's airtight. We're working very well in concert with each other, deploying resources across the board. We stay in touch, stay in contact with each other through a rigorous, repeatable process for ensuring that we maintain a shared understanding. We're also in the process of engaging other partners, of course, we are making great progress, I would say, with some companies in the medical fields.
The inbound is truly interesting as well, and I think this is a very interesting moment in time where AI is driving the demand of battery power in some of these devices that are space-constrained. It's a very good place for us to be playing, and the tides of this market, the trends of this market, are truly compelling. You'll see here on the right, we're starting to standardize how we go to market, so we can go and reach additional customers. We're not locked by our people. We have documents that we can share more readily, and we can engage customers so they can get to know our products and our capabilities while they're evaluating our technology, and we can broaden our reach as a result. The market outlook.
You know, this is where we are in a very interesting point in time. The competitive landscape is very interesting. I believe that we are the company the furthest ahead, and if I was a betting person, I would say that we would be the first to market in the solid-state format because our markets move fast. There is great demand for our product. We are in a very interesting niche in the market or segment, I should say, of the market that is truly underserved. There are tiny microamp-hour batteries serving very niche applications, and then there's a lithium-ion that is calling from the industrial base. It is clearly limited in its performance capabilities for these high-tech markets. These high-tech markets are seeing that the battery is part of the tech stack.
It's no longer a commodity that can be dropped in. This is enabling great products, and we are there. We are where those great products are gonna be developed and are being developed already. Look at the diversity of what we're facing. This platform is so remarkable across so many different sectors, from the medical and hearables, wearable space, and the industrial and defense. You think drones, you think luxury, you think smart labels and sporting equipment, gaming. It's truly interesting to see the inbound that we're getting, and it's no question that's, that this quote on the upper right is real, that we are being told that the, that we are considered the mother of all inventions and that our customers are eager for us to get to market.
We're very excited to be working with some of the most impressive companies in the world. As I said in the very beginning, 2026, it's the year of commercialization. It's very straightforward. I've got the team focused on this. We're focused on validating the platform to make sure that we unlock the true value of Ensurge. We do this against defined product requirements in a very data-driven fashion. We are also defining the initial products. What do the specifications need to be for that first-to-market product? The commercial validation is equally important, and this is the customer demand, transferring customer demand to engaged, committed customer contracts and working with us to then enable their products to market. Those evaluations that are certainly have been, have been engaged, have been the, the mechanism of engaging customers in the past, those are fine and well.
What we're looking to do is upping that game to have real embedded customer partnerships, long-term development partnerships over all of those phases that I just walked you through in the product development process. Lastly, super important, and that is the scalability, that we do that now. We document our processes so that we can engage outside partners to help us scale this product. We are also, allowing, certainly the platform to understand, okay, when we have the platform validated, now the breadth of, of product applications we can go after, both in terms of architecture and form factor. Lastly, the infrastructure, the, the, the, the space, the equipment, the building, the, the setup, all of these things need to be done now because battery manufacturing and any hardware manufacturing, for that matter, it's a, it's a long process. It's an involved process.
It, it can be capital-expensive, in, certainly other industries, more so than ours. Regardless, capital is precious, and so we're doing this in a lean fashion so that we plan now so that our path to execution is as lean, as efficient, and as efficient as possible. I'll wrap up here. I would invite anybody with questions to send an email to ir@ensurge. I'll say that again, ir@ensurge. Stands for Investor Relations at Ensurge. I am wholly focused on driving this company to deliver, to scale, and to unlock the true value that exists in Ensurge. We are in the very beginning, I think, of very exciting times. We've only just begun, and we have the team, the talent, the commitment, the market, the technology right here at this fabulous intersection.
I'm so excited to be here, and I look forward to engaging with the investors and making this next chapter of Ensurge the absolute best, and to have a wonderful rest of the year. Thank you so much!