Odyssey Semcondctr Tech

Earlier today, we issued a press release announcing our results for the second quarter. We'll start today's call with prepared remarks by Mark, followed by those prepared remarks. John and Rick Brown will join us for Q&A session. 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 may be found in our annual, quarterly, and other reports filed with the SEC. During our prepared remarks, we will be referring to slides that are available for viewing in the webcast and posted in the investor relations section of our website at odysseysemi.com. I will now turn the call over to Mark Davidson, Chief Executive Officer.

Thank you, Jeff, and welcome everyone. Having just completed my first quarter as CEO of Odyssey Semiconductor, I'm proud to present this quarterly update. Before I turn to my first slide, I'd like to share some observations and conclusions after my first three months on the job. First and foremost, I accepted this job because I believe in the market opportunity and the position Odyssey Semiconductor holds to deliver value, both to customers and to our shareholders. Three months in, and I know we will deliver on that value. Second, having our own foundry is a strategic advantage for a few reasons. It enables us to innovate fast, and the fact that we will be producing in the same factory as we develop the technology will pay off in product qualification. We're generating revenue through foundry services while we develop our products. And last, the CHIPS Act presents an opportunity to expand even faster and and larger. My final conclusion is that we truly do have a strong team of innovators, innovators who are not only working on technology, but technology that will be practical and economical. This team, combined with my marketing and sales experience, is strong. So now turning to slide three in the slide deck, let's start with a refresher. So Odyssey is a semiconductor company, and we're located in Ithaca, New York. We're laser focused on bringing disruptive technology to the large and fast growing high voltage power semiconductor space. Our approach is to build a vertical gallium nitride power transistor that offers the power efficiency of gallium nitride with the voltage capability of silicon carbide. One of the first new directions I've provided to the company since starting is advancing Odyssey from just materials and process R&D to becoming a product company. As you can see on slide four, we accomplished a great deal recently. Most notably on the technology front, we are now fabricating a high-power, 1,000-volt vertical GAN transistor. We will be packaging these transistors later this year, and we'll be shipping a few to teacher customers who have already committed to evaluating. Of course, we will continue to innovate on higher breakdown voltages while expanding the product offering at this voltage node. Moving to the business front, we were able to secure $1.25 million in bridge loan financing, thanks to John Edmonds, our chairman. We've remained very disciplined on spend, offset by generating revenue from our foundry services for other companies, which, as I mentioned before, is an asset while we develop our own product line. Let's move to slide five, talk about our outlook for the second half of 2022. Our outlook remains very simple. We're going to continue to mature our first-generation product by packaging it, having it evaluated internally, and then by those teacher customers that I mentioned earlier. We're also going to target increasing our foundry services revenue to help offset our cash burns. We currently have about a $2 million pipeline of opportunity that we're focused on winning. The goal is to build this foundry revenue back up to something in the neighborhood of $300,000 per quarter or better. While I'm talking about manufacturing, let me talk about our excitement by the passing of the CHIPS Act that President Biden signed today. The CHIPS Act will position our company to receive funds which will help us expand our factory to not only strengthen our business, but also to help America regain our leadership in semiconductors. Power semiconductor market represents a very important segment in that endeavor. All right, at this stage, I'd like to switch gears a little bit and talk a little bit more about the Odyssey strategy. So let's move to slide six. We have an enormous opportunity driven by the megatrends happening in the world. As a company, we are uniquely positioned to enable and deliver on all fronts shown here. Vertical GAN is the answer, and we have the know-how and protected IP to deliver. I will once again state my confidence in our lean and talented team. They are technically brilliant, and my marketing and sales experience complements very well. As you can see on slide seven, the market we're pursuing is large and growing fast. Silicon carbide has gained traction in high voltage because today's lateral GAN solutions can't deliver the performance and voltage range needed. Our approach to vertical GAN will solve that. We will be building high power samples this year for the 600 to 900 volt product line while strengthening our technology for the 1200 volt node. According to Yole, a French company that gathers market statistics, the 600 to 900 volt is the larger market today, is growing at a 20% compound annual growth rate. The 1,200 volt product or market segment is growing faster at 63% CAGR and will become the larger market in the second half of this decade. Together, the collective markets are expected to increase from about 800 million per year in 2021 to about $3 billion in 2025, approximate combined CAGR of 40%. And again, this is all according to Yule. All right, let's turn to slide eight. We'll talk about, so while there are a number of markets that will benefit from high voltage vertical GAN, we are going to start by focusing on three markets, industrial motors, electric vehicles, and renewable energy. And as we build out our marketing team, we'll enable additional markets who are looking for the performance delivered by our vertical GAN power FET product line. So why are we so focused on high voltage? As you can see on slide nine, the higher the voltage, the more energy can be conserved. That's why the megatrend of moving to high voltage is happening as electrification happens. Because, again, higher voltage, the more energy can be conserved. To date, there really have been limited solutions to efficiently deliver and convert power at these levels. There's limited competition, but a large market opportunity exists for high margin solutions. Slide 10 illustrates the opportunity very clearly. According to the latest report from YOL, while silicon carbide delivers better performance than traditional silicon in the power-fet space, the economics just aren't there. While we see silicon carbide companies making moves here, they're still an order of magnitude away from meeting the economics required. So how can we, Odyssey with our vertical GAN, meet what the market demands? And slide 11 illustrates that. First, let's remember that GaN offers extremely high efficiency while allowing the smallest solution size. It's all about power density, and GaN allows the highest power density, both better than silicon or silicon carbide. But since lateral GaN can't practically offer the voltage range needed, customers haven't considered GaN as an alternative. But now that we're going to deliver on both, the economics matter. Now, in this space, die size is driven by on-resistance. So for the same on-resistance, we can fit almost 10 vertical GAN transistors in the same area as a single silicon carbide transistor. When comparing their 6-inch wafer to our 4-inch wafer, we're building four times as many devices per wafer than the silicon carbide companies. That offers significant economic advantage. So why Odyssey Semiconductor? As slide 12 illustrates, we are uniquely positioned. We have the expertise and the IP portfolio to protect it. And because we have our own foundry, we can innovate quickly, and when we're ready for production revenue, we will control our ability to supply products to customers. And customers agree. Slide 13 offers a glimpse into the customer conversations we've had thus far. and I'm having more conversations. We're not just building novel technology. We're building products that customers need. I was recently talking to a customer. Specifically, I gave them the update that we're assembling engineering samples this year for internal and then for their evaluation. They restated their commitment to want to get samples to test as soon as they're ready. Of course, I reminded them that we'll be evaluating them first, and as soon as we finish our evaluation, they'll be next on the list in order to be able to a sample and work with the technology. They're very excited. That represents not only the market opportunity, but again, the position that we, Odyssey, have in bringing vertical GAN to the market. So slide 14, really the main message I'm going to leave you with. The time is now. Odyssey is emerging from purely process R&D to now also starting to develop our first products. We validated our approach. We're pursuing a large and growing market. And as I've said a number of times, we are assembling our first engineering samples later this year. It's an exciting time for Odyssey. We are a product company. So I'll wrap up with slide 15, which is here for your reference. It just really summarizes our strategy in previous rounds of financing. So let me tie it all together with a summary. We're emerging from process and materials R&D to delivering on our thesis as a product company. We'll do it at voltages that lateral GAN can't practically reach and at performance and cost levels unattainable by silicon carbide. We'll use recent financing to assemble our first-gen product samples while also continuing to pursue higher voltages. Our vertical GAN products will deliver high power conversion efficiency and a small solution size for a large and fast-growing market. Thank you for your participation, and I'll now turn it back over to the operator. Thank you.

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