Odyssey Semcondctr Tech

Good afternoon, ladies and gentlemen, and welcome to the Odyssey Semiconductor fourth quarter and full year 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. Investors can submit their questions within the meeting webcast by typing them into the QA 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 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. As a reminder, this event is being recorded. I would now like to turn the conference over to Jeff Christensen, Investor Relations. Please go ahead.

Thank you, Operator. Joining me today are Mark Davidson, CEO, and John Edmonds, Chairman of the Board. Earlier today, we issued a press release announcing our results for the fourth quarter and full year of 2022. We'll start today's call with prepared remarks from Mark, followed by those prepared remarks, Mark and John will respond to your questions. Some statements made today are forward-looking. Forward-looking statements are subject to risks, 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. During our prepared remarks, we will be referring to slides available for viewing in the webcast and posted to the investor relations section of odysseysemi.com. I will now turn the call over to Mark Davidson, Chief Executive Officer.

Thank you, Jeff, and thank you to everyone who's listening live or reviewing this earnings call on demand. Before I move into my prepared slides, I want to start with some perspective on the year ended and the upcoming year. As a refresher, I joined Odyssey in April of 2022, and as I reflect on our company's progress since then, I'm proud of each and every employee here at Odyssey Semiconductor. We are a small team of highly capable and committed people who are delivering impressive accomplishments in a very constrained environment. There are two areas where the company is delivering meaningful results. First, it's pushing the new technology out of the lab and into our customers' hands. As our team pivoted to focus on designing and fabricating large devices that could be used in customer circuits versus small test chips, we had the breakthrough on 1200 volt performance. That was the stated goal. We uncovered and solved a few other technical challenges that became exposed when building larger devices. We were also able to validate what could only be tested when larger device dimensions are fabricated. To say it more succinctly, A great deal of new IP was generated as we fabricated devices to be used for customer samples. The other benefit of this approach, combined with all of our public announcements, is the quantity and quality of customers who have reached out looking to evaluate samples. We're in regular communication with a number of these customers who are committed to evaluating the technology to identify projects where they could purchase our products in high volumes. The second area where we're creating value is in our external foundry business. This business is where we use our manufacturing capacity to build product and technology for other companies. In this area, we have amazing talent and a strong track record of delivering challenging projects for customers. I know we can be doing significantly more here to deliver additional cash to our operations. While we haven't yet turned that corner, we have put a great deal of focus to win more projects. I expect 2023 to be the year where we can deliver even more significant results from our Foundry business. More on that later. As we wrap up 2022, I can say with conviction that we accomplished a great deal to get Odyssey Semi on the right path to delivering high-value products to a large and growing market. We remain diligent on spend, focused on creating valuable products, and we have a path to grow the Foundry business significantly, which leads me to my outlook on 2023. Very simply, the objective for 23 is to convert our potential into results to make sure we're prepared for high volume adoption of our new products and to deliver cash from our foundry operations. We don't see the headwinds of the economy improving greatly, so while we will have to raise additional capital by the middle of 2023, we will remain efficient in our operations as we deliver samples to customers and use this milestone to secure commitments from these customers. We'll be preparing these new products for qualification to prove to the market the vertical gain delivers on the promises of improved performance, high reliability, and commercial viability. Our suppliers are working very closely with us on these efforts as well, so the supply chain will be ready. We're also going to turn the potential of our foundry business into more significant results. Our pipeline is strong, and we've made a few new business development investments, which we'll further add to it. We know exactly where we fit in the semiconductor manufacturing landscape. Succinctly, we help innovators turn their new idea into reality by providing the expertise and manufacturing capacity to help them move from a little quote that we made up, from the lab to the fab. We provide expertise and flexibility. There is a significant market for this, especially as the US government has put so much focus on new semiconductor innovation. And speaking on the US government, we have made progress in our pursuit of CHIPS funding. More on that later. Okay, at this point, let's move to the presentation, and we'll start on slide three. Slide three is a reminder of why Odyssey Semiconductor exists and why we're a great investment. In short, we validated that we can build 1,200-volt vertical GAN power FETs with performance better than anything else in the market. We have order of magnitude advantage versus the competition, and we're pursuing a very large and fast-growing market. Odyssey is uniquely positioned to win as we remain focused on the milestones needed to scale our business. When we look at slide four, it represents the press release, the latest press release we put out in early January. And this is the press release announced that we had completed fabrication of customer samples at the end of Q4, which was our plan. We've been working with our packaging supplier to have these devices assembled so they can be mounted on circuit boards and tested in real life applications. Once we get these parts back, we'll be doing our internal testing and characterization with the plan to ship samples to customers in March. Slide five is a slide I like to present and spend some time on because it really represents where we are on our journey. It's a very simple visual to help us show that we have taken a step from research into product development partnered with our teacher customers. For example, earlier today we had a discussion with a multi-billion dollar company where they've provided detailed specs for a product that they need for a project with a major automotive OEM. And they're coming to Odyssey Semiconductor to deliver on this. everything that they ask for in these technical specs is well within our product capabilities and this is one of the many opportunities we have with leaders in the market so again we've made this step from research into product development working closely with these teacher customers slide six slide six summarizes a lot of what we've discussed so far with some specific numbers. On the technology front, again, we've completed fabrication in our facility and are currently having products assembled. As I mentioned, we'll do our internal testing and we'll get samples to customers in March. And these customers are customers that are committed to us and we've committed to them. Out of a relatively large backlog of interested parties, we are focused on customers that represent what we believe to be large market opportunity. as well as customers that are willing to work closely with us, collaborate with us to make sure that we have good engineer-to-engineer collaboration. You'll hear me refer to them often as teacher customers. Our objective in these customer engagements is to use this step to secure product development agreements from these customers. And what I mean by that specifically, these will be commitments from customers that when we design and deliver products to their specs, they'll purchase these products in volume. This will be an important milestone in validating that our products fill a very important solution gap that our customers can only fill with Odyssey. On the business front, we were able to secure funding that will get us through the middle of the year. That's the additional $2.35 million. And as I stated earlier, we will have to secure more funding around the middle of the year. Foundry pipeline remains strong. $62,000 of revenue in the quarter bringing the total for the calendar year to $321,000. Our target is to grow this business by at least 50% in 2023 relative to that 2022 number as a step towards more significant revenue from Foundry operations. And lastly, $269,000 per month in cash use and operations remaining very efficient on the money that we spend. And at this point, I'm not going to present any additional slides. They are there for your reference. And as you go through them, What you'll see is the megatrends that have hit the electronics and specifically the semiconductor industry over the last few years are accelerating the new need for solutions in this 1,200-volt range. Silicon carbide is starting to take some market. However, really vertical gain is poised to meet the multi-billion-dollar market opportunity, and no company is positioned better than Odyssey. We have order of magnitude improvement over silicon carbide. We're going to deliver the performance with the economics and supply chain needed. Now is the time. So again, the rest of the slides are available. If you want to review them at your leisure, feel free to contact Jeff or myself if you'd like to dig into any details. So at this point, I'd like to thank you for your time and interest in Odyssey Semiconductor. And I'm going to turn it back over to the moderator for Q&A.