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spk00: Good day, ladies and gentlemen, and welcome to the Odyssey Semiconductor first quarter 2022 earnings call. At this time, all participants are in a listen-only mode. At the end of today's presentation, there will be an opportunity to ask questions via a chat line. Investors can submit their questions within the meeting webcast by typing them into the Q&A button on the right side of your viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask a question on the phone line, please press star then one on your telephone keypad. To withdraw your question, 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 of Investor Relations. Please go ahead.
spk03: Thank you, Operator. Joining me today are John Edmonds, Chairman of the Board, Mark Davidson, CEO, and Rick Brown, Co-Founder, CTO, and Board Member. Earlier today, we issued a press release announcing our results for the first quarter. We'll start today's calls with prepared remarks from John, Mark, and Rick before moving into Q&A. Some statements made today are forward-looking. Forward-looking statements are subject to risk, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by these statements. Additional information regarding these factors can be found in our annual, quarterly, and other reports filed with the SEC. I will now turn the call over to John Edmonds, Chairman of the Board.
spk04: John Edmonds Thanks, Jeff. Now to provide a thumbnail sketch of Odyssey for those of you who are new to us, let me point out that we're a small development stage semiconductor company in Ithaca, New York, focused on developing vertical GAN high voltage conducting transistors for the electric vehicle, solar panel array, and high voltage motor markets. Even though we're small, we do have our own foundry right in Ithaca itself. We were fortunate to acquire the former bin optics foundry that eventually became available when they were acquired by Macom. In a way, we were also spawned out of Cornell, the university foundry and the School of Engineering. One of the founders, Dick Shealy, is a professor at Cornell, and Rick Brown, who's on the call with us today, was one of his grad students. and then went out into industry and came back and started working with Dick again. We pride ourselves on being one of the few GaN foundries offering foundry services in the country right now. For our own products, we're focused on GaN for higher power switching technology. So today, we're not trying to compete with companies like Navitas or Transform or GaN Systems. We're actually complementary to them. They're mostly focused on low power chargers and switching, and we're focused on 1200 volts and above voltage categories. Our technology will be important to the next generation battery packs for electric cars, as well as solar power inverters and high voltage industrial motors. You can see that we became public through a reverse IPO a couple of years ago. So far, we have been financed by two rounds of private placements, one in August of 2019 for 2.9 million, and one in March of 2021 for 5 million. In that regard, we believe we're undercapitalized at this point. Last quarter, we filed an S-1 to prepare to raise additional money and couple that offering with an uplisting application on NASDAQ. We will update the S-1 with our March 31st financials next week, and we continue to clear questions from NASDAQ. We may also raise money on a bridge loan while we buy time for more news of our progress on the product in a relatively calmer market in which to price and close an offering. that will make sense. Now I'll turn it over to Mark Davidson, our new CEO, as he would like to make a few comments today. Mark?
spk02: Thank you, John, and good afternoon, everyone. Well, I'm almost four weeks into my time as CEO of Odyssey Semiconductor, and I could not be more excited to be here. To start off, I'd like to briefly introduce myself to you all and then share why I decided to join Odyssey. Then I'll conclude with my perspective on the market and our opportunity. I'm a power guy. I started in automotive power supply design and transitioned to power semiconductors shortly after. While I started in engineering, I quickly realized my skills and interests aligned better on the revenue growth side of business. This experience, combined with my more recent experience in non-semiconductor startups, positioned me well to join Odyssey as CEO. Odyssey's approach to power conversion with our novel vertical GAN devices will have a significant impact on the market. The team at Odyssey is technically brilliant, and my marketing and sales experience complements very nicely. I'm excited to report that I've already spoken with a few customers that we're lining up suppliers to be ready to package devices for our internal testing and then for customer evaluations. The need for high performance, high power conversion in key applications like electric vehicles, renewable energy, and industrial motors is accelerating the need for non-Silicon-based solutions. We continue to receive requests for our 1,200-volt vertical GAN FETs from U.S. and European automotive OEMs and Tier 1 suppliers, and a large high-voltage industrial motor manufacturing company. Sustainability, size, and costs are the main drivers for this fast-growing, multibillion-dollar market. Silicon carbide and lateral GAN companies are generating wins and revenue in this market. which has always been and always will be highly fragmented. There is no dominant market share company in power, which means the best solution for a given opportunity will always win. Odyssey remains focused on working with our customers to deliver the best solutions to scale at high volumes, combining the best of both silicon carbide and lateral gain. The drivers are higher voltages, for example, 800-volt battery packs in electric vehicles, and high conversion efficiency at lower price points than silicon carbide or lateral gain can deliver. Thank you for your interest in and support of Odyssey Semiconductor. I've started to speak with investors, and I look forward to connecting with each of you in the very near future. I would now like to turn the call over to Rick.
spk01: Thank you, Mark. For recent device development news, as announced in our previous press release, Odyssey has validated its approach to a 700-volt breakdown transistor with low-on resistance. Devices based on this process flow are currently being used to validate Odyssey's packaging and reliability development. In parallel, a process for 1,200-volt breakdown transistors continues in our fab. Odyssey is zeroing in on processing parameters to achieve this goal and is confident in its ability to demonstrate, qualify, and distribute samples to customers in 2022 with this rating. Also, a new U.S. patent has been issued for Odyssey's vertical GAN transistor technology, which widens the moat around Odyssey's intellectual property. I'll now turn the call back over to John.
spk04: Thanks, Rick. And on the financials, we did generate revenues of $30,000 in Q1 of 22. These are generated from foundry service businesses that we do with other companies. In the past, and we'd like to build this back up to something in the neighborhood of $300,000 a quarter or better, but these are foundry services we'd be performing, and they can help us get to break even as a company But this is different than the product development we've been doing in the GAN product line. We're continuing to finish the development of that GAN product, and we plan to be shipping samples later this year. We also have new opportunities in the services area, and we hope that Mark, as the new CEO, will be able to focus and lend his experience in sales and marketing to these efforts. We're diligently managing cash. Cash balance is $1.6 million as of March 31st. Cash used in ongoing operations was averaging $175,000 per month in the first quarter. This is below the average of $208,000 per month last year in 2021. In addition, in the first quarter, we spent approximately $275,000 on legal and accounting fees and preparing for the S-1 and NASDAQ uplisting. We also spent about $70,000 toward the recruiting fees for the new CEO in the first quarter. As you can see, the CEO has been hired. This will add to the Q2 and ongoing cash usage, and we do plan to add additional resources in a measured fashion over time. And finally, I'd just like to summarize that we hope that you'll agree that we are continuing to develop new disruptive technology products with strong intellectual property. We have a strong GAN team with its own 3-5 semiconductor fab, and we have strong interest in our technology from customers, which Mark is now following up on. We have near-term product growth strategies. We're planning to introduce product samples as soon as possible in 2022. We also have longer-term product roadmap and a growth runway. Finally, we're working on emerging from being a development-stage company by uplisting and raising more capital later this year. And with that, I'll turn it over to Jeff, and we'll see if there's any questions today.
spk03: Operator, please provide instructions on how to ask questions.
spk00: Thank you. At this time, we are conducting a question and answer session. Investors can submit their questions within the meeting webcast by typing them into the Q&A button on the right side of your viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please press star then 1 on your telephone keypad. And to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble the roster. There are no questions on the phone line, so I will now turn the call back over to Jeff Christensen to read questions submitted through the webcast. Thank you.
spk03: Okay, thanks a lot. And, yeah, I'll jump right into the questions that are on the webcast. The first one's for Rick. You mentioned the company's approach was validated with the 700-volt milestone. Can you provide some more color on that?
spk01: Yes. It means that the overall structure that we're using to achieve the 700-volt breakdown has been validated, meaning that we have – repeated that result and we're going to use that we're going to use devices using that particular layout and fabrication flow to kind of debug and validate our packaging and reliability development so we're going to give we're going to get die from those process runs and put them through our intended packaging and reliability development The technology used to demonstrate 700-volt breakdown is not too different from what we are developing for 1200 volts, and the packaging that we are intending to put it in is nearly identical to the packaging that we would be putting the 1200-volt device in. So it's kind of a leader for the intended 1200-volt breakdown devices. But it has been validated in that we have run it several times, and we're happy to begin putting it through its paces as far as a packaged device.
spk04: These are all vertical structures. Is that correct, Rick?
spk01: Yes. These are vertical conduction and transistors.
spk03: Okay, Rick. Thanks a lot. Our next question is for Mark. There was a – Wolfspeed talked about an 8-inch platform recently, and does Odyssey have any comments about that?
spk02: Yeah, thanks for the question. For sure, Wolfspeed's done a really nice job putting a lot of news out about opening this new 8-inch foundry, silicon carbide foundry. And, of course, with the voltage levels we're going after, we see silicon carbide as the competitive offerings. If we look at the technical, so 8-inch does nothing to close the performance gap that we'll have over silicon carbide. And while it does close the economics gap, instead of being about four times as many die per wafer, we're now down to about two times die per wafer, which is still a significant commercial advantage. So we're excited to see Wolfspeed make that move and continue to advance the non-silicon movement. But, you know, from a performance and economics point of view, we're still very confident in our place in the marketplace.
spk03: Okay, thanks, Mark. Our next question is for John. How should we think about the capital raise, and will the company consider a bridge loan?
spk04: Yes, we're in the process. We have some money committed already to a bridge loan. and we're talking to a few other people. We're kind of looking for friends and family type of rates, so we're not shopping this widely, but we're trying to raise a relatively small amount of money, you know, on the range of $1 million to $3 million or so. And so, you know, we do have some money committed, and we'll use that money if that's all we can raise at the moment to you know, extend and buy ourselves some more time and allow the volatility in the markets to calm. At the same time, we give Mark as a new CEO a chance to succeed with what he's trying to do with the company and the company to make more progress in, you know, advertising and getting the word out about the new technology that we're bringing to market. So we think all of those things will be helpful to a raise and we'd like to have a little more time to get that out into the market and then raise the money, you know, maybe in the fall if that's possible. We could raise it sooner if the market conditions permit, and we'll have the S-1 ready to go and be in a position to do that. So, you know, we'll raise the money whenever it makes sense to do so. But we'd like the flexibility, and that's what the bridge loan is all about, of, you know, being able to – wait for the market a little bit more if that's possible in the grand scheme of things.
spk03: Helpful. Thanks, John. It looks like we have no other questions. Operator, you can end the call.
spk00: Thank you. This concludes today's conference. All parties may disconnect and have a great day.
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