Ideal Power Inc.

Good afternoon, ladies and gentlemen, and welcome to the Ideal Power first quarter 2023 results call. At this time, all participants are in listening mode. At the end of management remarks, there will be a question and answer session. Investors can submit questions anytime within the meeting webcast by typing them into the Q&A button on the right side of the viewing screen. Sell side analysts may ask questions on the phone. For anyone else to ask a question on the phone line, please press star then one on your touchtone phone. To withdraw questions, please press star then two. As a reminder, this event is being recorded. I would now like to turn the conference over to Jeff Christensen. Please go ahead.

Thank you, operator. And good afternoon, everyone. Thank you for joining Ideal Power's first quarter 2023 conference call. With me on the call are Dan Berdar, President and Chief Executive Officer, Ben Burns, Chief Financial Officer. Ideal Power's first quarter 2023 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 It may be subject to a number of risks and uncertainties that could cause action results to differ materially from those described in the call. Please refer to the company's SEC filings for the 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 iBuild Power's president and CEO, Dan Bernard. Dan?

Thank you, Jeff. Good afternoon, everyone, and welcome to our first quarter 2023 financial results conference call. I'll update you on our progress since the start of the first quarter and priorities for 2023 to commercialize our D-Trans semiconductor technology. And then Tim Burns, our CFO, will take you through the numbers, after which we'll take your questions. This is an exciting year for us. We are really getting engaged with customers as we look to commercialize our technology. Our 2023 milestones are in our press release today and in the online webcast portal for this conference call. For those not familiar with them, our objectives for this year are, first, to launch our first commercial product, the SimCool Power Module, which is a multi-dive D-Tran module. Next, complete phase one of the multi-year development program with a top 10 global automaker in the second quarter of this year. Complete the first engineering run with a production fab in the second quarter of this year. deliver packaged B-Trans to DTI under the NAVSEA program in the first half of this year, introduce our second commercial product, an intelligent power module, in Q3, and deliver B-Trans samples for test and evaluation for our potential customers in the second half of the year. We're on track and remain confident we'll deliver on these milestones as we continue to execute our B-Trans commercialization roadmap. I'll discuss each of the expected milestones and our progress on them along with other developments. We're excited to have announced the introduction of our first commercial product, the Simcool Power Module. Our Simcool is a multi-die BTRAN module well-suited for the large, growing solid-state circuit breaker market. This market is projected to grow at a compound annual growth rate of over 6% to approximately 26 billion by 2027. With the clear advantages over electromechanical breakers and IGBT-based solid-state circuit breakers, BTRAN-enabled solid-state circuit breakers are ideal for a range of utility, industrial power control, and military high-power applications from 600 volts to many thousands of volts. We've targeted our initial product for the solid-state circuit breaker market because BTRAN can be an enabling technology for the application due to its very low conduction losses, and we continue to see significant customer interest as a result of our program with the U.S. Navy. Also, Similar to other industrial and renewable energy applications, the solid-state circuit breaker application has a design cycle that's closer to a year, much faster than the multi-year automotive design cycle. We expect initial low-volume sales of Simcool to begin later this year and revenue starting to ramp up in 2024 as customers complete their solid-state circuit breaker product designs. Moving on to the second upcoming milestone, Late last year, we entered into a development agreement with a global top 10 automotive OEM. We're partnering with this automaker's advanced technology development team to develop a custom D-Tran power module in collaboration with an innovative packaging company also selected by the automaker. This custom D-Tran module is targeted for use in electric vehicle drivetrains in the automaker's next generation electric vehicle platforms. This represents our second engagement with the world's leading auto manufacturers as another top 10 global automaker is in our test and evaluation program. This program is on an accelerated timeline to get the custom module production ready by 2025. That's the stated goal of the program. We're making excellent progress having completed almost all the phase one deliverables and expect to complete phase one of this multi-year development program later this quarter. Working closely with the automaker, we've already agreed on the scope of work and objectives for Phase 2 of the program with their engineering team and await final approval of the Phase 2 purchase order. In Phase 2, we'll work closely with the automaker's innovative packaging company to integrate B-Tran dyes into the power module design. Phase 3 will be an extensive testing of the custom module incorporating B-Tran devices to meet automotive certification standards, which are pretty substantial. So it's really us and the packaging company working independently in Phase 1, and then Ideal Power providing devices to the packaging company from incorporation into the module in Phase 2. And then Phase 3 is all about the testing and certification of the module itself, so it can be the core of the powertrain inverter for their next-generation electric vehicles. We went through a considerable technology competition to be chosen for the program, and we'll need to continue to meet the program milestones and performance expectations as the program progresses. What we've learned during the technology selection process and phase one to date reinforces the competitive advantage we knew we could bring to electric vehicles as automakers innovate to find ways to reduce electric vehicle cost while simultaneously improving vehicle range. Let's turn to the supply chain necessary to support our sales as we start to ramp volumes in 2024 as customers complete their product design cycles. We're nearing the completion of a full process flow engineering run at a wafer fabricator with high volume production capability. Testing results for in-process wafers have proceeded very well and we're pleased with both the performance and overall quality of the wafer fabrication and the technical capability of the wafer foundry's manufacturing team. This run is expected to be completed later this month and they are ready to immediately begin a run to support our SimCool first builds in the next phase of our automotive custom module program. This wafer fabricator is also already certified to automotive standards, which makes them a qualified supplier for our automotive program and reflects the high standards, capabilities, and quality of their wafer fabrication. Also, we've engaged a second high-volume wafer fabrication partner to complete a similar full process flow run. The second wafer fab is very experienced in manufacturing bipolar devices, such as IGBTs, and the detailed review of our process flow went very well. We're now ready to begin an actual wafer run at their production facility. These two sources are in very different parts of the world with world-class experience and capabilities, and they're eager to be engaged in the new technology, such as DTRAN. Dual sourcing for wafer fabrication with no exposure to China will provide us with sufficient supply capacity for the large customers we're engaging. Our dual-sourcing strategy will allow us to proactively secure the necessary production capacity, components, and services for partners in disparate geographies, mitigating supply chain risk. Let's turn to our DOD-funded NAVSEA program with the U.S. Navy for a BTRAN-enabled solid-state circuit breaker. We're excited to have completed our first volume shipment of packaged and tested BTRAN devices to our partner on the project, Diversified Technologies, or DTI. We also provided DTI one of our customer evaluation kits that includes our driver to assist them in the completion of their driver design for the medium voltage direct current circuit breaker demonstration. We expect our second volume shipment to DTI in the next couple of days. And as we finish the current wafer runs, pricing, packaging, and testing will provide the remaining deliveries in the next couple of weeks. We'll continue to support the program throughout the demonstration of the V-Tran enabled circuit breaker. In the meantime, DTI has identified another circuit breaker opportunity that they want to pursue with us, building on the work we're doing together for the Navy. On the technology development front, the testing we've been doing in our lab on the devices we ship to the Navy enabled our team to identify and implement what we believe is a patentable innovation in how we drive and control BTRAN that's enabled us to realize an additional 20% improvement in conduction losses. This change does not require any changes to our B-Tran die design or packaging. It is being implemented in the driver that we're using in our customer evaluation program and subsequent intelligent power module products. This latest improvement means B-Tran conduction losses can be more than five times better than bidirectional circuits using IGBTs with diodes. We're in the process of now incorporating this improvement in our driver and capturing the innovation in a patent application. Our BTRAN is moving into commercialization at a great time when renewables, energy storage, and electric vehicles are in the early stages of their adoption. They still have the largest part of their growth curve ahead of them. Automotive manufacturers are finding that with BTRAN, there's a path to reduce power semiconductor costs, the second largest production cost in electric vehicles, and improve vehicle range to mitigate driver range anxieties. The inherent bidirectionality and lower losses of DETRAN are also well-suited to renewables coupled with energy storage, making renewable energy a dispatchable resource in improving the usable kilowatt hours from these systems. Moving on, we're on track to launch our second commercial product in the third quarter, which will build on the multi-die packaging design of SimCool and add a bidirectional intelligent driver. This product will target renewables, particularly renewables such as solar and wind coupled with energy storage, standalone energy storage, EV charging, and other industrial end markets. This product revenue will start in 2024 and ramp up in late 2024 and into 2025 as it gets through customers' OEM product designs. Moving on to our test and evaluation program, since the announcement of our custom module development program with a top 10 global automaker and achievement of several of our milestones under the Navy program, we've had an increasing number of companies engaging with us to learn more about our technology and to participate in our B-Trend test and evaluation program. The participants in the program include another top 10 global automaker, an EV charging company, a commercial electric vehicle company, a leading provider to the solar industry, a Forbes Global 500 power management company, and several others covering each of our target market segments. This quarter, we added a global Tier 1 automotive supplier as part of this program. This Tier 1 supplier is evaluating V-TRAN for use in its electric vehicle inverter, bidirectional charging, and circuit protection applications. Their interest resulted from the announcement of our custom module development agreement with a global top 10 automaker. We also added a second Forbes Global 500 liter in diverse power management markets to the program roster. This company will evaluate V-TRAN initially for use in solid-state circuit breakers in its smart infrastructure division. We plan to deliver VTRAN customer kits for evaluation to the test and evaluation program participants in the second half of this year following the completion of our deliveries to the Navy. These customer kits will include the improvements to our VTRAN driver I discussed earlier and will consist of a package VTRAN device driver, test board, and safety enclosure to facilitate and accelerate the evaluation process. As you know, our test and evaluation program will remain an embedded process in our sales and marketing efforts, and a source of input for our next generation of products. We'll continue to add additional potential customers to the program. Through the test and evaluation program, we'll gather valuable feedback on their application-specific product requirements and potentially secure product development or other commercial agreements. This engagement will allow us to get a good handle on customers' technology evaluation processes, their product design cycles, and their commercial plans. Since the start of the year, we've submitted several proposals for government funding opportunities with the Department of Energy, Air Force, NASA, and other government entities in collaboration with commercial entities and universities, including other companies in the semiconductor ecosystem. Proposal topics include solid-state circuit breakers, grid applications, renewables, and next-generation BTRAN technology. We've also established collaborations with universities and commercial entities to pursue funding under the CHIPS Act as the funding programs are implemented. In addition, we're involved in multiple regional hubs that are being established under the Act. Our competition for these programs is high. They provide us an opportunity to collaborate with current fabrication partners and prospective customers, both to advance the state of our technology and pursue additional application-specific demonstrations of B-TRAN. Looking at our expanded B-TRAN patent estate, we currently have 74 issued B-TRAN patents, with 32 of those issued outside the United States. 22 pending BTRAN patents. Our current geographic coverage for our patents includes North America, China, Japan, South Korea, India, and Europe, all representing our high-priority patent coverage geographies. As part of our product development and introductions, we're expanding our patent efforts to include what we believe to be high-value patents on our packaging designs and driver, including the innovative approach to driving and controlling BTRAN that I discussed earlier in as both are unique to the bidirectional nature of our technology. Moving on, we recently issued a new VTRAN white paper. This white paper includes recent testing results using our driver and devices with our double-sided packaging. It shows switching characteristics and waveforms using bidirectional double-pulse testing, which is important for customer technical teams. A link to the new white paper is on our website. We attended this year's Applied Power Electronics Conference in March. Our technical white paper, DTRAN Optimization and Performance Characterization, was selected for presentation at the conference. Our booth was very well attended, and it generated significant new interest from large industrial companies in our test and evaluation program. In summary, we're thrilled that we introduced our first commercial product, made our first volume shipment to DTI under the NAVSEA program, with clear line of sight to completing the remaining volume shipments. made improvements to further reduce B-TRAN conduction losses and are adding new, potentially high-volume companies to our test and evaluation program. We're also very much on track to meet the key milestones and objectives I outlined for this year. B-TRAN's unique architecture offers advantages of inherent bidirectional switching capability, reduced switching and conduction losses, and more compact thermal management requirements, potentially leading to lower cost and improved performance for OEM products. eTRAN has the potential to displace conventional power semiconductor solutions in many applications, including electric vehicles, renewable energy, energy storage, solid-state circuit breakers, and motor drives. Now I'd like to hand the call over to our Chief Financial Officer, Tim Burns, to review the first quarter financial results.