Ideal Power Inc.

and welcome to the Ideal Power Fourth Quarter 2021 Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Carolyn Capaccio of LHA. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Thank you for joining Ideal Power's Fourth 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 fourth quarter and full year 2021 financial results press release is available on the company's recently designed 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. We would also refer you to the company's website for more supporting industry information. Now, I will turn the call over to Ideal Powers President and CEO, Dan Bredar. Dan?

Thank you, Carolyn. Good afternoon, everyone, and welcome to our fourth 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 technology. including our test and evaluation program and the work we're doing under projects with the U.S. Navy and the Department of Energy. Then I'll walk you through our plans and key priorities for 2022 for BTRAN commercialization. And Tim Burns, our CFO, will take you through the numbers, after which we'll take your questions. Let's get started. Fourth quarter of 2021 capped off a year of strong progress on our BTRAN commercialization roadmap. During the year, we achieved the goals we set for ourselves a year ago. significantly advance our B-Tran test and evaluation program, adding leading companies in each of our target markets, electric vehicles, EV charging, renewable energy, UPS systems for data centers, and solid-state circuit breakers, as well as smaller, innovative companies and research universities. We completed several wafer fabrication runs under our program funded by the U.S. Navy to optimize our B-TRAN for incorporation into the demonstration of a 12 kilovolt medium voltage direct current solid state circuit breaker in 2022. And in collaboration with Diversified Technologies, or DTI, secured additional government funding with a Phase I SBIR grant to deliver a low-loss B-TRAN multi-die module concept suitable for subsequent incorporation into a 13.8 kilovolt alternating current solid state circuit breaker if we're awarded phase two of the program. These 2021 objectives help catalyze our commercial development of VTRAN as a differentiated technology addressing a large and growing market. Our collaboration with DTI and our work on direct current circuit breakers for NAVSEA for use in ship electrification contribute to our further collaboration in the award of a phase one small business innovation research grant funded by the Department of Energy to develop an alternating current solid-state circuit breaker for use in power distribution, renewable energy, and microgrid applications connected to the utility power grid. This work for U.S. government entities led in turn to a commercial opportunity with a Forbes Global 500 leader in diverse power management markets that will be testing and evaluating D-TRAN for use in bidirectional DC solid-state circuit breaker applications for solar and wind systems. These efforts were further supported by the publication of our Solid State Circuit Breaker white paper, B-TRAN Devices and Solid State Circuit Breaker Applications, during the fourth quarter. This is just one example of how opportunities in the public and private sectors can synergize technology development, and we plan to seek additional opportunities to collaborate on government programs in 2022. Let's talk more about our test and evaluation program. During the fourth quarter, we added participants to our B-TRAN program including the Forbes Global 500 leader in diverse power management I just mentioned, as well as additional commercial businesses and universities. Participants by universities is important as their evaluation of BTRAN may lead to additional opportunities funded by the Department of Energy and or Department of Defense, which, as I mentioned, can in turn lead to additional commercial opportunities. Subsequent to quarter end, we announced an additional participant, a leading manufacturer of commercial electric vehicles, EV powertrain components and EV charging infrastructure, our third test and evaluation announcement in the EV space. This manufacturer will evaluate V-Trans devices for use in power conversion applications in its commercial EVs, initially for the DC-to-DC converter, with other EV and EV charging applications potentially to follow. We're very excited to work with this commercial EV leader. What is common among these commercial entities is that they are all leading-edge technology adopters that have demonstrated a desire to evaluate and adopt new approaches to their product offerings and have the technical resources in-house to commit to evaluating a new innovative technology and the new capabilities it can create for them in their product designs. We now have one or more test and evaluation agreements in place in each of our target markets. In addition, we've built a broad funnel and are collaborating with additional potential test and evaluation participants in our target applications of electric vehicles, EV charging, power converters for renewable energy, and then uninterruptible power supplies for data centers and solid-state circuit breakers who have expressed interest in assessing B-TRAN. These companies are in various stages of evaluation, from initial exploration of the suitability and benefits of B-TRAN in their applications to deep dives with their technical and procurement teams prior to potentially signing test and evaluation agreements. We know it is frustrating to some of our investors when we cannot name the OEM companies that we're working with in a press release. But for these companies' competitive reasons, we have non-disclosure agreements with them and are therefore contractually obligated to not disclose their names, and we'll honor those agreements. As part of the evaluation of new semiconductor devices, there is a collaboration between the OEM and our technical teams to understand the device operation, the application, and its suitability for the OEM's future products. To do so, the OEM technical teams need to share their intended use cases and information about their product and technology roadmaps with us. As you can imagine, most companies consider their product and technology roadmaps and the evaluation and adoption of new technologies to be very sensitive, competitive information. We hope that as these relationships progress, we'll be able to begin naming at least some of these companies as they lead to more collaborative and potentially strategic commercial arrangements. All of these test and evaluation agreements involve companies committing the resources they need to complete their evaluation of the device and driver with our support for their application or applications. They'll provide valuable feedback on the device, feature set, and priorities, while allowing us to determine the common requirements across applications. We'll then incorporate this feedback into our product roadmap for commercialization. Even after the release of our initial commercial products, the test and evaluation program will continue as we expect to add collaborations both in the near and long term to broaden the awareness of our technology's potential to OEMs and their product offerings. These ongoing engagements will likely result in a variety of BTRAN-based modules over time, tailored towards specific applications and use cases, as is common in the traditional power semiconductor market. Let's move now to our work with the United States Navy. Ideal Power continues to collaborate with DTI on a project for the Naval Sea Systems Command, or NAVSEA, on the development and demonstration of a V-train-enabled direct current medium voltage solid-state circuit breaker. This program 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 as part of the Navy's strategic focus on chip electrification. Our project with DTI for NAVSEED is intended to develop and demonstrate a DTRAN-enabled high-efficiency 12 kilovolt medium voltage direct current circuit breaker for the U.S. Navy with subsequent objectives to introduce a family of medium voltage DC circuit breaker products incorporating DTRANs for sale to the military, industrial, and utility markets. The fifth fabrication run was recently completed by one of our domestic semiconductor fabrication partners, The wafers from this run will be diced and packaged using our new packaging into devices for testing and delivery to DTI. We'll continue to provide program and technical support through the demonstration of the BTRAN-enabled DC solid-state circuit breaker later this year. Let's move now to our work with the Department of Energy. Our second collaboration with DTI is under a Phase I Small Business Innovation Research Grant funded by the Department of Energy. This grant is to develop a VTRAN-based low-loss 13.8 kilovolt alternating current solid-state circuit breaker intended to be used in medium voltage power distribution and renewable energy and microgrid applications connected to the utility power grid. The VTRAN-based solid-state circuit breaker is expected to limit fault energy by orders of magnitude faster compared to conventional mechanical breakers. We recently announced that we have delivered our Phase 1 project commitments and provided our final report under this program last month. Phase 1 focused on the simulation, device design, and module packaging concepts, leveraging our current guide design to allow B-TRANs to be assembled in a series or parallel configuration for high voltage rating capability. Under Phase 1, we conducted a comprehensive semiconductor device optimization, optimized the B-Tran device design and wafer layout for potential fabrication in Phase 2, accommodated a multi-die packaging design, and with the assistance of a world-class packaging firm, completed the conceptual multi-die packaging design with double-sided cooling, assessing both the thermal performance and inductance. Our designs demonstrate the ability of B-Tran multi-die modules to interrupt AC power and confirm the efficiency and speed of B-Tran devices in AC operations. Over the next few weeks, DTI and Ideal Power will collaborate to submit a grant application to the DOE for phase two of the project. If we're awarded a phase two grant, DTI will build and test a 50 megawatt, 13.8 kilovolt AC solid state circuit breaker using BTRAN devices. This voltage level is commonly found in utility distribution networks, so the resulting breaker design can be applied directly to existing utility transmission and distribution systems and microgrids. Following that demonstration, DTI would have the ability to sell the breaker design to utility, industrial, and military customers and license the design to others for sale. We would also expect to partner with other circuit breaker companies so they can design and bring their own VTRAN-based products to market. The lower conduction losses of VTRAN could become a key enabler for the solid-state circuit breaker market. This market is projected to grow at over 6% compound annual rate to $26 billion by 2027. There's a tremendous opportunity for solid-state circuit breakers to displace mechanical breakers and gain incremental share across numerous medium voltage applications in the utility, distributed generation, and transmission distribution markets. eTRAN enabled solid-state circuit breakers to potentially displace mechanical circuit breakers, which are roughly 100 to 1,000 times slower than solid-state circuit breakers. It could also solve the problems posed by solid-state circuit breakers using conventional semiconductor devices, such as IGBTs, that suffer high conduction losses, resulting in significant wasted energy that must be dissipated in the form of heat. As a result, DTRAN has the potential to be an enabler for the solid-state circuit breaker market in both direct and alternating current applications. The DOE project gave us valuable information on combining multiple devices in parallel and in series configurations can be applied to other commercial applications such as electric vehicles. We'll update you on our progress with our Phase 2 application to the Department of Energy under the Phase 2 project. In preparation for our future growth, we've taken several steps to broaden our production relationships and capabilities. We have a strong partnership with Teledyne and plan to continue working with them to support our future government-funded development projects. In addition, We completed the wafer fabrication qualification run of a second domestic semiconductor fabrication partner. Those wafers are now being evaluated to assess their performance and identify any fabricator-specific changes that we should incorporate into future runs. This partner has strong experience making bipolar devices and is a good partner for ongoing development activities. In particular, they have expertise and equipment for fabricating silicon carbide devices as well as silicon, and could be a good partner for our long-term technology roadmap to develop a silicon carbide B-train. In addition to this second domestic fabrication partner, we've selected and begun qualification of a world-class non-domestic fabrication partner for high-volume production in preparation for 2023 and beyond. Adding another fab will help us ensure sufficient supply capacity for future potential large customers and further mitigate supply chain risks. Also, adding a truly production-level FAB allows us to run larger wafer lots in shorter time with much less manual handling and inspection as these facilities tend to be highly automated. Additionally, we've selected and engaged a world-class packaging firm to transition to our new packaging design for volume production. Trial builds of a packaging approach suitable for high-volume production are in progress now. Lastly, we've evaluated and identified third-party firms that we'll use for device testing, enabling us to conduct some of the tests we're not equipped to perform in our lab and provide an independent source of data that's not constrained by the confidentiality requirements of our DOD-funded activities. We expect to begin that testing after we've completed deliveries to DTI of the Navy program. Let's discuss our roadmap for 2022. Our primary objective for the year remains to introduce our first commercial product for sale. As we build on our 2021 accomplishments, we expect 2020-22 to be an exciting year as we move closer to realizing the potential of B-TRAN's unique advantages of bidirectional switching capability, lower switching and conduction losses, lower user costs, and improved and more compact thermal management requirements for OEM products in our target markets. Here are our key steps to achieve this objective, many of which will run concurrently. First, support and complete the steps in our B-Trend test and evaluation program with current program participants, incorporating ongoing feedback into our first commercial product offerings. We'll be providing packaged B-Trend devices paired with a driver to these participants to facilitate and accelerate their evaluation. And as I mentioned, we'll continue to add additional potential customers to our test and evaluation program as it will remain an ongoing aspect of our sales and marketing process. Second, we've already started developing the specifications for our initial commercial product and will engage a third party in the coming months to support our design efforts. This effort will run in parallel with the test and evaluation program, and the design will iterate and evolve through the incorporation of program feedback from current and future program participants. Offering an intelligent power module rather than a discrete device is intended to accelerate DTRAN commercialization and adoption by mitigating in advance the hurdles we know customers will face specifically a driver and packaging optimized for bidirectional operation, saving customers from having to design these themselves. We may also design custom modules for certain of our potential customers, particularly for electric vehicles and solid-state circuit breaker applications, where multiple BTRAN dies may need to be combined into a single package, either in a series or in parallel configuration to accommodate higher voltages and currents. Also, we expect our multi-die design from the Department of Energy SBIR program to become a commercial product for the solid-state circuit breaker market if we're awarded phase two of the program. Third, we'll continue to collaborate with BTI on our BTRAN-enabled solid-state circuit breaker projects. Under NASI, we remain focused on the delivery of optimized package devices for incorporation into the demonstration of a 12-kilovolt MVDC breaker later this year. We'll provide program support through the completion of the demonstration. As I previously mentioned, and subsequent to the demonstration, an objective of this program is for DTI to introduce a family of medium-voltage DC circuit breaker products, incorporating VTRAN for sale to military, industrial, and utility markets. Under the SBIR grant, we'll work with DTI to submit a joint proposal for a Phase II grant, which, if awarded, would entail the build-out and testing of a full 50-megawatt 13.8 kV AC solid-state circuit breaker, incorporating VTRAN devices. Fourth, we're targeting completing the qualification run of a high volume wafer fabricator. We'll collectively go through the necessary wafer fabrication process and equipment reviews, engineering short loops, and trial builds to assess their potential to be our high volume fabricator to support our plans for commercial sales. While this process will take several months, our intent is to have a high volume wafer fab ready to support our volume requirements for 2023 and beyond. Lastly, we're working on submitting additional proposals for government funding. We have the potential to be the prime or subprime on these proposals, and we expect to collaborate with various OEMs and universities on submitting proposals as funding opportunities become available. Looking at the B-TRAN patent estate, we currently have 65 issued B-TRAN patents, with 27 of those issued outside of the United States, and 26 pending B-TRAN patents. Our current geographic coverage includes North America, China, Japan, South Korea, and Europe, with the potential to expand coverage into India. In 2021, eight D-CRAN patents were issued, and six of these were issued outside of the United States, including Ideal Power's first patent issuance in South Korea. We recently announced the appointment of two new independent directors to our board of directors, Drew Freeman and Greg Knight. These appointments were the result of a rigorous process in conjunction with BoardSPAN, a third-party firm specializing in board searches, to identify candidates that brought both deep expertise in semiconductors and significant experience and relationships in our initial target markets for B-TRAN, including electric vehicles, renewable energy, energy storage, and power electronics. Drew Freeman has spent his entire career of over 30 years in the semiconductor industry, 16 of which focused on sales and marketing of semiconductors to the automotive industry. As Senior Vice President of Global Automotive Sales and Marketing for NXP Semiconductors, he built significant automotive market share by developing long-term relationships and locking in design wins at Tier 1 automotive customers. He brings commercial and strategic expertise in both semiconductor and automotive experience and relationships to our board, will be a great asset to our business development team as they seek senior-level access to our target customers in the EV market. Greg Knight brings operational and leadership experience to our board, having served as president and or chief executive officer at GT Advanced Technologies, Exawatt, and PV Tech Group, as well as experience bringing new technologies to market and relationships in the silicon carbide, electric vehicle, renewable energy, energy storage, and power electronics markets. He brings great relationships with target customers in the renewable energy markets and semiconductor companies that we may wish to collaborate with for market access, potential licensing partners, and key suppliers. The search culminated in the appointment to our board of two individuals with skill sets, experience, and relationships that directly align with our strategies to commercialize and grow BTRAN in our target markets. I'd like to take this opportunity to welcome Drew and Greg on behalf of Ideal Power, and we look forward to their contributions over the coming months and years as we commercialize and grow the business. In the coming weeks, the board of directors will meet, and new committee assignments will be finalized and subsequently disclosed in an 8K. We executed consistently to our plan in 2021. We are very excited about our prospects for BTRAN as a disruptive technology in our target markets and for what we plan to accomplish in 2022. Again, our objective is to exit 2022 with the introduction of our first commercial product available for sale. We have a talented team, leading companies in our target markets participating in our test and evaluation program, innovative engineering design collaborators, fabrication capacity in place with more to come, a packaging partner ready for high-volume production, testing capabilities on deck, and a strong balance sheet to support our commercialization strategy and our ability to collaborate with large customers. We remain focused on continued strong execution toward commercializing DTRAN. We'll continue to praise you of our progress, including additions of the companies to our test and evaluation program as we are able, and update you on feedback we receive from the program participants and inform you as we achieve milestones throughout the year. Now I'd like to hand the call over to our Chief Financial Officer, Tim Burns, for review of the fourth quarter 2021 financial results.