Ideal Power Inc.

Good day and welcome to the Ideal Power first quarter 2022 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, ma'am.

Thank you, operator, and good afternoon, everyone. Thank you for joining Ideal Power's first quarter 2022 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 2022 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'll 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 2022 financial results conference call. I'll begin by giving you an update on our progress and achievements on our strategy to commercialize our BTRAN semiconductor technology. Then I'll review our plans and key priorities for 2022 for BTRAN commercialization. Then Tim Burns, our CFO, will take you through the numbers, after which we'll take your questions. Let's get started. It's only been two months since our last call. The first quarter was successful and productive as we made significant advancements along our 2022 roadmap to commercialize B-TRAN as a disruptive, highly efficient, bi-directional energy control semiconductor technology. It solves immediate needs in our target electric vehicle, EV charging, renewable energy, energy storage, UPS for data centers, and solid-state circuit breaker end markets. This is a very busy and exciting time at Ideal Power, and we're happy to update you on our progress as we remain on track to achieve our goals for 2022. Let's begin with our test and evaluation program. Since the year began, we expanded our roster of participants in the V-TRAN test and evaluation program. These new participants include a Fortune 1000 global semiconductor manufacturer that serves a variety of commercial and military sectors, This OEM will evaluate BTRAN for its low losses and bidirectional capability initially for test and measurement equipment applications. We also added an established aerospace and defense systems contractor interested in evaluating BTRAN for solid-state circuit breakers, with whom we're jointly pursuing additional government grants. Also, as we mentioned on our last call, a leading manufacturer of commercial electric vehicles, EV powertrain components, and EV charging infrastructure. They'll test and evaluate VTRAN for use in power conversion applications and their commercial EVs, initially for the DC-to-DC converter, with other EV and EV charging applications potentially to follow. This is our third announcement in the EV space. We also added a space applications system developer that will evaluate VTRAN for solid-state circuit breaker applications. The lower thermal management requirements and fewer devices needed with B-TRAN are advantageous given the size and efficiency constraints of their target applications. And finally, universities that hold connections to large commercial businesses where they officially function in the role of testing and evaluation of new technologies such as B-TRAN for large commercial OEM organizations. These program participants are all looking to incorporate innovative, advanced technologies and new approaches into their product offerings to improve performance, increase efficiency, and lower cost. And they all have the technical resources to commit to evaluating a cutting-edge technology and the improvements and capabilities it can create for them in their product designs. This interest in new technologies was clearly demonstrated in March when we exhibited B-TRAN at the Applied Power Electronics Conference in Houston. The prevailing focus during the conference in recent years has been wide-gap materials, but this year the significant theme of the conference was focused on bidirectional applications such as electric vehicles, vehicle-to-grid, microgrids, and renewables paired with energy storage. This is the result of the two macro trends driving growth in the industry, the adoption of both EVs and renewable energy. Our exhibition and presentation at the conference resulted in us adding several medium and large companies to our target markets in our pipeline, two of which recently joined our test and evaluation program in the weeks following the conference. Our technology was well received, and our presentation, entitled Operation and Characterization of Low-Loss Bidirectional Junction Transistor, BTRAN, won an APEC 2022 Outstanding Presentation Award. It's great to see our team and technology receive such recognition from the technical community. Further, we exhibited V-TRAN at the Power Conversion and Intelligent Motion Conference in Nuremberg, Germany last week. V-TRAN was again well received for its compelling benefits of bidirectional capability and low losses. Our team engaged with potential customers from e-mobility, energy storage, industrial motor drive, and solid-state circuit breaker applications, as well as potential collaborators in the power device, module packaging, driver, intelligent power module, and semiconductor manufacturing spaces. With at least one test and evaluation agreement in place in each of our target markets and a large pipeline of potential additional collaborations, we're well positioned to evaluate VTRAN's capabilities across our target end markets. These collaborations will provide the ongoing information to drive the features and performance of our commercial product offerings. Over time, our ongoing engagements will likely result in a variety of VTRAN-based modules customized towards specific applications, as is common in the traditional power semiconductor market. Now let's move on to our work with the United States Navy. As we've discussed previously, Ideal Power is collaborating with Diversified Technologies, or DTI, on a project for the Naval Sea Systems Command, or NAVSEA, on the development and demonstration of a BTRAN-enabled direct current solid-state circuit breaker. This program is supported by the Department of Defense's Rapid Innovation Fund, which invests to accelerate the commercialization of high-value, high-impact technologies and is part of the U.S. Navy's strategic focus on chip electrification. Our project with DTI for NAVSEA is intended to develop and demonstrate a DTRAN-enabled high-efficiency 12 kilovolt medium voltage direct current solid state circuit breaker for the U.S. Navy, with subsequent objective of introducing a family of medium voltage DC circuit breaker products, incorporating DTRAN for sale to military, industrial, and utility markets. Initial wafers from the latest fabrication run completed by one of our domestic fabrication partners are ready for dicing and packaging into devices, which will then be tested for delivery to DTI. We'll continue to provide program and technical support through the demonstration of the BTRAN-enabled DC solid-state breaker later this year and keep you apprised of our progress within the limitations of our NAVSEA confidentiality restrictions. Let's move now to our work with the Department of Energy and our submissions for other government funding opportunities. In the first quarter, we announced that we delivered on our project commitments and provided our final report under a Phase 1 Small Business Innovation Research, or SBIR, grant funded by the Department of Energy. This project is our second collaboration with VTI, and the SBIR grant will potentially fund the development of a VTRAN-based, low-loss, 13.8 kilovolt alternating current solid state breaker intended to be used in medium voltage power distribution in 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 compared to conventional mechanical circuit breakers due to its much faster speed of operation. Phase 1 of the project focused on the simulation, device design, and the design of a multi-die module packaging concept, leveraging our current die design to allow VTRANs to be assembled in series or parallel configurations for a higher voltage or current rating capability. We conducted a comprehensive semiconductor device optimization, optimized the B-TRAN device design and wafer layout for potential fabrication in phase two, accommodating a multi-die packaging design, and with the assistance of a world-class packaging firm, completed a conceptual multi-die packaging design with double-sided cooling, assessing both the thermal performance and inductance. Our simulations and design analysis confirms the ability of B-TRAN multi-die modules to interrupt AC power efficiently and quickly. Last month, we collaborated with DTI on the submission of an SBIR Phase II grant proposal to move ahead with the development and demonstration of a 13.8 kV alternating current solid-state circuit breaker. If we receive the Phase II grant, DTI would build and test a full 50 megawatt 13.8 kV alternating current solid-state circuit breaker using multi-die BTRAN packages. As the 13.8 kV level is commonly found in utility distribution networks, the resulting breaker design can be applied directly to existing utility transmission and distribution systems as well as micro-brits. Following that demonstration, DTI would have the ability to sell the breaker to utility, industrial, military customers and license the breaker design to others for sale to end users. We would also expect to partner with other circuit breaker companies so they can design and bring their own VTRAN-based products to market. We look forward to hearing back from the Department of Energy on our Phase 2 application, and we'll keep you updated. We expect to leverage the valuable knowledge we now have in designing and packaging multiple devices in parallel and in series configurations for applications such as electric vehicles, as well as for other commercial applications going forward. Our solid-state circuit breaker projects with the U.S. Navy and Department of Energy have raised the visibility of B-TRAN as enabling technology for low-loss, fast-acting circuit breakers. Two of the most recent additions to our test and evaluation program are customers specifically looking for better semiconductor solutions for circuit breaker applications. While the addressable IGBT market is large and growing rapidly, we expect there will continue to be new market segments not currently served by conventional semiconductors, such as solid-state circuit breakers, that are enabled due to the low-loss bidirectional capability of our technology. We continue to seek opportunities to participate in government-funded programs that support technology development, particularly for future commercial applications. In the first quarter, we submitted several proposals and content papers for government funding opportunities, including proposals with three new partners. These new partners include a system integrator, a firm with packaging and driver expertise, and a university contracted to act as a technology evaluator for large commercial products OEM. Depending on the proposal, we could either be the prime or subcontractor if awarded funding under one or more of these submissions. These proposals cover several applications, including solid-state circuit breakers, current source inverters, and modules for electric vehicles. Our development activities also made significant progress during the quarter. Teldenine has been a valuable fabrication partner and will continue to work with them as part of our government-funded development projects. Since the year began, we further built out our roster of production partners to ensure we have sufficient capability to support our ongoing development activities and prepare for anticipated higher volume fabrication demand in 2023. We completed the qualification process of a second domestic semiconductor fabrication partner. This partner brings bipolar fabrication experience, supporting our ongoing development activities, as well as silicon carbide fabrication experience, potentially making them a good partner for pursuing government funding opportunities while supporting our longer-term technology roadmap to develop the silicon carbide B-tran. Additionally, as we discussed on our last call, we recently began the qualification of a non-domestic production-level fabrication partner. This fabricator will initially be conducting engineering short loops, an evaluation program involving a subset of process production steps to enable us to assess their process capability limitations and key fabrication steps that are crucial to making a high-performing double-sided device. If the short loops are successful, the next step will be a full process flow engineering run later this year. A fabrication partner capable of high-volume production will drive improved quality, faster runs, and higher wafer output per run compared to our current development fabricators, while helping to ensure sufficient supply capacity for large customers and mitigating supply chain risk. On the packaging side, our world-class packaging partner completed design work and trial mechanical builds and is now packaging its first B-Tran devices to support device testing, followed by the packaging of devices for our test and evaluation program. We also completed a pilot run with a domestic packaging firm to support the NAVSEA program. This firm will support not only the NAVSEA program, but also other potential future government-funded development projects and programs. Now let's review our roadmap for 2022. Our objective for this year remains to introduce our first commercial products by year-end, realizing the potential of V-TRAN's unique advantages of bidirectional switching capability, lower switching and conduction losses, improved and more compact thermal management requirements, and lower user costs for OEM products in our target markets. We've made strong progress to date, and to recap, our key steps for this year are, first, we're working closely with the growing number of participants in our V-TRAN test and evaluation program, will be providing package devices paired with a driver to facilitate and accelerate their evaluation process. These customers will share their testing results with us and provide application-specific feedback on the design and operation of the package devices and driver, the feature set they require, and their priorities for individual applications. We'll incorporate their feedback into our commercial product offerings. This will allow us to determine common requirements across applications for our initial commercial products. And as our test and evaluation program will remain an ongoing aspect of our sales and marketing process, we'll continue to work to add additional potential customers to it. Second, as our test and evaluation program progresses, we're preparing to engage a third party to support our design efforts for our initial commercial product. This effort is intended to run in parallel with the test and evaluation program, with the device design iterating and evolving through the incorporation of feedback from program participants. Our intention is to offer a module rather than a discrete device as our first commercial product. This should accelerate B-TRAN commercialization and adoption by solving the hurdles we know customers will face with respect to bidirectional driver and packaging optimization, saving customers from having to design these themselves. We'll be ready to design custom modules for potential customers, such as those looking to apply B-TRAN in electric vehicles and solid-state circuit breaker use cases where multiple BTRAN die may be needed to be combined into a single package, either in series or in parallel, to accommodate higher voltages and currents. Again, 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, specifically for NAVSEA, delivery of optimized package devices for incorporation into the demonstration of a 12 kilovolt MVDC breaker later this year. Subsequent to the demonstration, an objective of this program is for DTI to introduce a family of medium voltage DC circuit breaker products, incorporating DTRAN for sale to military, industrial, and utility markets. And under the DOE SBIR grant, if in collaboration with DTI, we're awarded a phase two grant the completion of the build-out and testing of a 50-megawatt 13.8 kV alternating current solid-state circuit breaker incorporating B-trans. Fourth, we'll work toward completing the qualification run of a high-volume production wafer fabricator to assess their potential to support our plans for commercial sales. Our intent is to have a high-volume wafer fab ready to support our volume requirements for 2023 and beyond. Lastly, we continue to work on submitting additional proposals for government funding. As I mentioned with respect to the proposals already submitted, we have the potential to be the prime or subcontractor on these proposals. 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 67 issued patents with 29 of those issued outside of the United States and 25 pending B-TRAN patents. In April, we added to the geographic breadth of our patent portfolio with the issuance of our first patent in India. Our current geographic coverage includes North America, China, Japan, South Korea, India, and Europe, and these, along with the United States, represent all of our high priority geographies for patent coverage. In all, the first quarter was very productive, and our momentum continued into the second quarter. We're making strong progress toward commercialization and are very excited about our prospects for B-TRAN as a disruptive technology over the coming years. Despite the global uncertainties that businesses must deal with today, such as supply chain disruptions, COVID pandemic, high inflation, and rising interest rates, we remain on track to introduce our first commercial product by the end of the year. We're increasingly excited by new customer and collaboration opportunities that were being created as a result of our government-funded solid-state circuit breaker projects. With multiple years of cash on the balance sheet, a talented and highly motivated team, a strong IP portfolio, and world-class fabrication and packaging partners, we're fortunate to be able to remain focused on executing our commercialization strategy, delivering on our 2022 objectives, and realizing the potential of our technology. We'll keep you updated on our progress as we hit each milestone on our roadmap. Now, I'd like to hand the call over to Chief Financial Officer Tim Burns. for review of our first quarter 2022 financial results.