Ideal Power Inc.

Good day and welcome to the Ideal Power first quarter 2021 results conference call. Today's conference is being recorded. Following today's presentation, there will be a question and answer session. To ask a question on the call, please connect through a landline or if using wireless, please use a broadband connection if possible and speak directly into your cellular phone. Please press star one to ask a question. Also, if you are using a speakerphone, please make sure your mute button is turned off to allow your signal to reach our equipment. At this time, I would like to turn the conference over to Carolyn Capaccio. Please go ahead.

Thank you, Operator. Thank you and good afternoon, everyone, and thank you for joining Ideal Power's first quarter 2021 conference call. With me on the call are Dan Berdar, President and Chief Executive Officer, and Tim Burns, Chief Financial Officer. Ideal Power's first quarter 2021 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 on the call. Please refer to the company's SEC filings for a list of associated risks. We would also refer 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 Berdar. Dan?

Thank you, Carolyn. Good afternoon, everyone, and welcome to our first quarter 2021 financial results conference call. I'll begin by giving you an update on our progress and achievements on our strategy to commercialize our B-Tran semiconductor power switch technology. I'll also update you on our objectives for 2021, which are to complete multiple fabrication runs for the NASI program leading to a final device demonstration in mid-2022, and to complete the steps in our B-TRAN strategy to enable commercialization. Then Tim Burns, our CFO, will take you through the numbers. During the first quarter, we made continued progress toward our 2021 B-TRAN commercialization objectives, and we're on track to make our prospects for B-TRAN as a differentiated technology addressing a large and growing market a reality. Let's begin with our work with the U.S. Navy. For those of you who may be new to Ideal Power, we're working with the Naval Sea Systems Command, or NAVSEA, in collaboration with Diversified Technologies, or 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. In the second quarter of 2020, we signed a $1.2 million subcontract with DTI and 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 BTRAN-enabled, high-efficiency, 12 kilovolt medium-voltage direct current circuit breaker for the U.S. Navy, with the subsequent objective of introducing a family of medium-voltage DC circuit breaker products incorporating B-TRAN for sale to military, industrial, and utility markets. The first two major milestones under the program are complete and involve successful wafer fabrication runs conducted by Teledyne, our fabrication partner. We tested and selected wafers from those runs for dicing and packaging into B-TRAN devices and incorporated the results from the runs into device and manufacturing process improvements for subsequent runs. For dye from the most recent run, we packaged the dye utilizing a new packaging design developed by the University of Texas at Austin's Semiconductor Power Electronics Center, which I'll discuss in more detail later on the call. We began the next fabrication run with Teledyne in April, and we expect this run to finish later this quarter. The completion of this fabrication run is the next major milestone under the program. As you can see, the development process is iterative, performing multiple wafer fabrication runs to assess trade-offs, between maximum theoretical device performance and manufacturability, and incorporating our findings and adjustments into the next run. The objective of these successive fabrication runs is to optimize the device design for performance and manufacturability, and we plan a total of five runs over the two-year program, aiming to deliver an optimized device near the end of the year with a final demonstration of a 12 kilovolt medium voltage DC breaker in mid-2022. The project is regularly reviewed by the Navy, and we continue to make solid progress toward the program objectives. As I mentioned, under the NAVSEED program, the University of Texas at Austin's Semiconductor Power Electronics Center designed the new BTRAN device packaging, and in collaboration with a commercial packaging firm, the UT Austin design was recently modified to enhance its ability to be manufactured in high volume and to incorporate the size, electrical connections, form factor, and thermal management required to integrate a semiconductor device into an end-user product design. The packaging firm fabricated the packaging materials and assembled trial packages to ensure a good mechanical fit and ease of assembly. Those trial assemblies went well, and as I previously mentioned, they subsequently packaged dye from the second fabrication run under the NAVSEA program. These packaged devices are now undergoing testing and characterization and using the new device driver, also designed by UT's Semiconductor Power Electronics Center. This packaging design will be utilized for future VTREN dyes under both the NAVSEA program and our customer engineering prototype sampling program, and resembles those commonly available for commercial IGBTs, which we believe can speed customer adoption. The Navy has made ship electrification a high priority initiative, as it can significantly enhance the energy efficiency of ship operations, improve their operational flexibility, and lower operating costs. Distributed power on ships makes them less vulnerable to attack by lowering their noise signature and enhancing their stealth capabilities, and B-TRAN technology offers substantial size, heat, and loss reduction over continuously conducting semiconductor devices, such as IGBTs, without using complex, large, and heavy liquid cooling systems. We're very excited about the progress being made under the NAVSEED program, and this progress continues to benefit our overall validation and commercialization efforts. In addition to this program with the U.S. Navy, we're pursuing other opportunities for government funding. The Department of Energy recently issued a new round of solicitations, and in collaboration with both existing and new partners, we've submitted multiple proposals for government funding this quarter. Our efforts in this area were aided by our February hiring of a new Vice President of Business Development with an extensive network in the electric vehicle and renewables markets that enable us to attract the attention and collaboration of several potential partners for these opportunities, representing diverse applications, including electric vehicles, UPS systems, and power converters for renewable energy applications. Partnering for government funding opportunities may lead to the development of additional BTRAN-enabled products and further commercial opportunities. We recently released a BTRAN information sheet, which is available on our website, that provides the technical community with detailed information on B-TRAN operating characteristics as well as information regarding the packaging and driver design and operation. This serves as the fundamental technical information for Audio Power's customer sampling program and is being used to facilitate potential customers' technical evaluation of the device. We're currently engaged with a wide variety of companies in our business development efforts. We hope to be able to name some of the companies in the future We do want to give you a flavor of who some of these companies are or what they do. Our discussions include two of the world's largest automobile manufacturers who are interested in the potential of B-Tran for use in EV traction drives. Our engagement with them and their technical teams is very promising for the long-term benefit B-Tran can bring to the EV market. While automotive companies move slowly in the adoption of new technology, the feedback we've received from their technical teams has been very positive. and we're impressed by the size of the teams and resources they're bringing to these evaluations. We're also in discussion with one of the world's largest providers of power converters for solar energy. Our low loss and bidirectionality are of particular interest as solar is increasingly being coupled with energy storage. Our business development team is also engaged with several companies that supply electronic traction and propulsion systems, variable frequency motor drives, and battery chargers to the EV and locomotive markets. Another company is a global Fortune 500 company that provides a wide range of power products and is looking at VTRAN for their EV charging systems. We're also engaged with multiple companies that provide DC to DC and AC to DC power supplies for industrial, military, medical, and EV applications. While each of these will progress at their own pace, we're seeing significant resources being brought to the evaluation from both large and small companies. We will continue to add more companies to this pipeline in the coming months, as we raise the visibility of B-TRAN within the potential power equipment manufacturers. Not all these engagements will result in a formal agreement. Some may want a different type of commercial arrangement, while others may ultimately want a product configuration different to what we're currently providing in the sampling program. As the program gathers momentum and we gather more device feedback, we'll determine a set of common requirements across applications that can then be incorporated into an intelligent power module. Offering an intelligent power module rather than the discrete device should accelerate B-Tran's commercial adoption, and we're on track to bring this module to market in 2022 as part of our B-Tran commercialization. Crucial to the next phase of device development and optimization is bringing additional talent and leadership in-house. After hiring Jeff Knapp as our VP of Business Development in February, we announced last week that we made another key hire, naming Dr. John Kang-Boo our Vice President of Engineering. John Kang is an accomplished engineer and power semiconductor device design leader with 20 years of experience in leading every aspect of power semiconductor development, including power semiconductors for electric vehicles and hybrid electric vehicle applications, as well as significant experience with conventional power semiconductor devices such as IGBTs and MOSFETs. He also has significant experience working with semiconductor foundries and wafer processing. He's authored and co-authored numerous publications and has over 30 patents to his name. Jun Kang will further expand our in-house expertise and direct the continued advancement of our B-TRAN technology and products, including the design of the intelligent power module we will offer for commercial sale. To ensure sufficient supply capacity for the large potential customers and to mitigate supply chain risk, we began the process of qualifying a second domestic semiconductor fabrication partner. We completed our technical screening of wafer fabrication companies and selected a fabrication partner for a qualification run scheduled to start later this month. We expect this run to be completed next quarter. In addition to mitigating supply chain risk, having a second fabrication partner also gives us more flexibility to provide both devices and data that are not subject to the restrictions of our ITAR and confidentiality requirements of the NAVSEA program. The wafer fabricator we are qualifying has strong experience making bipolar devices, and we look forward to reporting our progress with them in addition to our continued work with Teledi. We've made significant progress in assembling all the essential elements needed to support V-TRAN through customer engineering sampling and into commercialization. This year, we've strengthened our balance sheet, added highly qualified power semiconductor business development and engineering leaders to the team, developed new packaging and driver designs, completed a major milestone under the NAVSEA program, signed sampling agreements with new partners, and build a strong pipeline of new customer engagements that include large automobile companies, renewable energy equipment providers, and power supply manufacturers for a wide range of applications. Looking at the B-TRAN patent estate, we currently have 62 issued B-TRAN patents, with 25 of those issued outside of the United States and 22 pending B-TRAN patents. During the first quarter, we had our first patent issuance in South Korea. Our current geographic coverage now includes North America, China, Japan, South Korea, and Europe, with the potential to expand coverage into India. Our focus for 2021 remains twofold, to achieve our milestones under the NAVSEED program with the target of delivering an optimized device near year-end for incorporation into the demonstration of a 12 kilovolt MVDC breaker in mid-2022, and to complete the steps in our B-TRAN strategy to enable commercializations in 2022. Our recent submissions to the DOE and other government entities underscore our collaboration with DTI and the NAVSEA project as potentially catalytic, broadening our access to a wide range of opportunities to demonstrate B-TRAN's power semiconductor performance characteristics over conventional power switches, including bidirectionality, higher efficiency, and lower cooling requirements, and thus smaller OEM product designs, as a potential high impact technology for a variety of applications. We look forward to being able to discuss the customer sampling program participants in more detail as we put additional sampling agreements in place in the coming months in order to gather feedback from customers that will be used to prepare the Intelligent Power Module for initial commercial sales in 2022. We're excited about the number and caliber of companies engaging with us on our business development efforts. We're focused on high-growth addressable segments within the overall $6 billion IGBT market that we plan to target for initial commercial sales, including electric vehicles, electric vehicle charging, solar and wind energy, energy storage, and data center uninterruptible power supplies. We're looking to establish strategic developmental commercial partnerships, building commercial momentum, and laying the foundation for future VTRAN revenue streams. We'd like to remind everyone that the transition from sampling to commercial sales will vary by market segment and individual customers, and 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. Going forward, we'll announce sampling agreements as we're able, provide additional color on the types of companies in our commercial discussions, and utilize our strong balance sheet in our efforts to establish relationships as an attractive partner to major players in growing segments. Our R&D program will move in last step with customer sampling, incorporating feedback and refining our product offering in pursuit of initial commercial agreements, targeted to provide our first commercial revenue in the second half of 2022. We continue to progress well in our plans as we focus on bringing a differentiated patented technology that can significantly improve the efficiency and economics of electric vehicles EV charging, solar and wind power, energy storage, and data center UPS systems. We're particularly excited to be commercializing such an impactful technology at a time when our target markets of electric vehicles, EV charging, renewable energy, and data centers have such a robust long-term growth ahead of them. Now I'd like to hand the call over to our Chief Financial Officer, Tim Burns, for a review of our first quarter 2021 financial results.