Ideal Power Inc.

Welcome to the Ideal Power fourth quarter 2020 results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Caroline Capaccia from LHA. Please go ahead.

Thank you, Kevin, and good afternoon, everyone. Thank you for joining Ideal Power's fourth quarter 2020 conference call. With me on the line are Dan Vardar, President and Chief Executive Officer, and Tim Byrne, Chief Financial Officer. Ideal Power's fourth quarter and full year 2020 financial results press release is available on the company's website at idealpower.com. Before we begin, I'd like to remind everyone that statements made on the call and webcast, including those regarding future financial results and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's SEC filings for a list of associated risks. And we would also refer you to the company's website for more supporting industry information. Now I will turn the call over to Ideal Power's president and CEO, Dan Burdar. Dan?

Thank you, Carolyn. Good afternoon, everyone, and welcome to our fourth quarter and full year 2020 financial results conference call. I'll begin by giving you an update on our progress and achievements toward our strategy to commercialize our B-TRAN semiconductor architecture technology. I'll also describe our objectives for 2021 which are to work toward completion of the NASD program for final device demonstration in mid-2022 and to complete the steps in our BTRAN strategy to enable commercialization. Then Tim Burns, our CFO, will take you through the numbers. Throughout 2020, we sustained momentum toward our commercialization goals and are moving into 2021 with continued excitement about our prospects for BTRAN as a differentiated technology addressing a large and growing market and with a balance sheet strengthened by our recent equity offerings to help make those prospects a reality. Let's start our discussion with our work with United States Navy. Our work for the Naval Sea Systems Command, or NAVSEA, in collaboration with Diversified Technologies, or DTI, remains on schedule. As background, in the second quarter of 2020, we signed a $1.2 million subcontract with DTI on the development and demonstration of a BTRAN-enabled direct current medium voltage circuit breaker as part of the U.S. Navy's strategic focus on ship electrification. The contract is funded under the Department of Defense's Rapid Innovation Fund, the purpose of which is to accelerate the commercialization of high-value, high-impact technologies. Our project with DTI for NAVSEA is intended to develop and demonstrate a B-train-enabled, high-efficiency, 12 kilovolt medium voltage direct current circuit breaker for the U.S. Navy with a subsequent objective of introducing a family of medium-voltage DC circuit breaker products, incorporating B-TRAN for sale to the military, industrial, and utility markets. As we discussed with you on our last call, during the fourth quarter, we completed the first major milestone in the program, the first wafer fabrication run conducted by Teledyne, and we tested and selected wafers for dicing and packaging into B-TRAN devices using our lab-based packaging design. The results from this testing were incorporated into the device and packaging design and manufacturing process improvements for subsequent runs. Recently, we completed the second major milestone in the program and are in receipt of the wafers from Teledyne's second fabrication run incorporating those design and manufacturing process improvements, and we're now testing and selecting these wafers for dicing and packaging into BTRAN devices. The packaging for this run We utilize the new design developed by the University of Texas at Austin under the NAVSEA program. Over the two-year program, we plan a total of five runs over six quarters, aiming for optimized device delivery in late 2021, with the final demonstration of a 12 kilovolt MVDC breaker in mid-2022. The development process is iterative. We're performing multiple wafer fabrication runs, to assess the trade-offs between maximum theoretical device performance and its manufacturability. The purpose of these successive fabrication runs is to optimize the device design for performance and manufacturability. The third fabrication run with Teledyne, which is the next major milestone in the NAVSEED program, has begun and is expected to be completed in the second quarter of 2021. We've been through multiple project reviews with NAVSEED and continue to receive positive feedback on our progress to date. Under the NAFC program, during the fourth quarter, the University of Texas at Austin's Semiconductor Power Electronics Center completed its initial design of a new BTRAN device packaging. In collaboration with a commercial packaging firm, the UT Austin design was modified to enhance its ability to be manufactured in high volume. The new packaging design improves upon the lab-based packaging we've used previously. It's intended to provide the electrical connections, form factor, and thermal management required to incorporate a semiconductor device into an end-user product design. The new packaging will encapsulate the BTRAN dye into a package similar to those commonly available for commercial IGBTs, and this packaging design will be utilized for future BTRAN dyes under the NAVSEED program and our customer engineering prototype sampling program. As a reminder, Ship electrification is a high-priority initiative in the Navy as it can significantly enhance the energy efficiency of ship operations, improve their operational flexibility, and lower cost. Distributed power on ships makes them less vulnerable to attack by lowering their noise signature and enhancing their stealth capabilities. And BTRAN technology offers substantial size, heat, and loss reduction over continuously conducting semiconductor devices, such as ITBTs, without using complex, large, and heavy liquid cooling systems. We're very excited about the progress being made under the NAMC program, and this progress continues to benefit our overall validation and commercialization efforts. During the fourth quarter, the Semiconnective Power Electronics Center at the University of Texas at Austin also designed and fabricated an initial laboratory version of a B-Tran driver. Subsequently, as we announced earlier this month, the talented postdoc who designed the lab prototype of the device also completed a first-generation commercial version of a B-Tran driver. incorporating feedback from our testing. The new driver design removed some of the features that were included in the laboratory version, truly for debugging purposes, and also reduced the footprint of the driver by over 50%. The new driver design also adds additional operating capabilities to the programming of the driver, including an improvement to the switching performance through faster turn-off, resulting in significantly lower switching losses. The postdoc's work has been closely supervised by Dr. Alex Wine, the leader of the semiconductor power electronics center, and a world-renowned expert in power semiconductor devices and power electronics. The new driver has been fabricated and tested, and additional units are being fabricated for use in our engineering prototype sampling program. Our development of a B-TRAN dedicated driver is a crucial step in the commercialization of B-TRAN devices. B-TRAN is a double-sided device with unique architecture, and our developing, designing, and fabricating this driver removes the need for potential customers to do so, facilitating their technical evaluation of the device by presenting them with test-ready engineering prototype samples. The sampling program will provide engineering samples to potential end users and gather their feedback on the device, the packaging design, the driver, as well as general feature sets and priorities. This feedback will allow us to determine common requirements across applications that can then be incorporated into intelligent power module design that we plan to bring to market in 2022 as part of our B-TRAN commercialization. Offering an intelligent power module rather than a discrete device should accelerate B-TRAN's commercial adoption. With our new packaging design and driver design complete, we're now ready to engage with customers for our engineering prototype sampling program. To this end, we recently announced the hiring of a vice president of business development who joined our team in late February. Jeff Knapp brings an impressive and successful background in sales and business development for both silicon and silicon carbide devices, as well as established customer relationships in the electric vehicle and renewable energy markets, two markets which we're targeting for our customer sampling program. Bringing on a dedicated senior business development leader is an exciting step forward for Ideal Power as we begin collaborating with customers for the engineering sampling program and subsequent commercialization. Thanks to his strong semiconductor background and customer relationships, Jeff's been able to hit the ground running. He's prioritized the inbound requests we've received from potential customers, added numerous high-profile targets to the list, and is actively engaged with several of our highest priority target customers to drive customer sampling agreement disclosure. We're looking forward to being able to talk more about the high-quality companies and institutions we're engaging with for the program as we formalize our relationships. Looking at the B-TRAN patent estate, we currently have 58 issued B-TRAN patents, one more than last quarter, with 21 of those issued outside of the United States and 26 pending patents. Our geographic coverage includes North America, China, Japan, and Europe, with potential to expand coverage into South Korea and India. As part of the driver development process, we identified improvements in performance and device protection that enhanced the capability of B-TRAN, Patent protection for these inventions was filed with the U.S. Patent Office. Our focus for 2021 remains twofold, to achieve our objectives under the NAVSEA program with a target of delivering an optimized device in late 2021 for incorporation into the demonstration of a 12 kilovolt NVDC breaker in mid-2022, and to complete the steps in our BTRAN strategy, staging BTRAN technology for commercialization in 2022. With respect to NAVSEA, As we progress toward delivery, we continue to view our collaboration with VTI as a significant, potentially catalytic opportunity. VTRAN's performance characteristics over conventional power switches, including higher efficiency and lower cooling requirements, and thus smaller OEM product designs, enable the solid-state circuit breaker application. Its potential is high as a game-changer for distributed DC networks across a wide variety of military, industrial, and utility applications. including medium to high voltage DC transmission and distribution systems, microgrids, and electrical generation related to renewable solar and wind energy and energy storage. With respect to BTRAN commercialization, the engineering sampling program is now underway as we've begun to engage with prospective program participants targeting putting multiple sample agreements in place in order to gather feedback from customers that can be used to prepare an intelligent power module for initial commercial sales in 2022. Our commercialization efforts will focus on establishing strategic development and commercial partnerships, building commercial momentum, and laying the foundation for future BTRAN revenue streams. The IGBT market is already a $6 billion market estimated to grow to $9.4 billion by 2025. The key high growth segments within the IGBT market that we plan to target for initial commercial sales include electric vehicles and electric vehicle charging, solar and wind energy and energy storage, and data center uninterruptible power supplies. Since the transition from sampling to commercial sales will vary by market segment and individual customers, we expect to continue to add potential customers and applications to the engineering sampling program over time, while simultaneously commercializing B-TRAN for markets and applications already in the sampling program. The timeline for these phases will also vary as prospective customers, even those with similar applications, have different technology evaluation cycles and design periods for incorporating new technologies into their products. Overall, we recently achieved our second milestone with NASC, completed a dedicated B-Tran driver, created a manufacturing-ready packaging design, We expect to start announcing sampling agreements in the coming months that we expect to lead to initial commercial agreements targeting first commercial revenue in 2022. Our strong balance sheet will support our efforts and positions us to be an attractive partner to the corporations of size that we're targeting for our customer sampling programs. In all, testing results of B-Tran WaveFirst and Dye underscore our belief in IdeaPower's B-Tran technology that's potentially transformational with its unique bidirectional switching capability lower switching and conduction losses, lower user costs, and improved and more compact thermal management. With these advantages, BTRAN has the ability to solve the immediate needs of power electronics applications in both high growth, high demand markets, while enabling new market segments. We continue to progress well on our plans and are now entering a key step in our commercialization strategy, engaging prospective customers in our engineering prototype sampling program. As we enter 2021, we are very excited about our future as we have a differentiated, patented technology that can address a large and rapidly growing market while armed with a strong balance sheet to make our vision a reality. Now I'd like to hand the call over to our Chief Financial Officer, Tim Burns, for a review of our fourth quarter and full year 2020 financial results.