Good day. And welcome to the Ideal Power Fourth Quarter 2020 Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Carolyn Capaccio from LHA. Please go ahead.

Thank you, Kevin, and good afternoon, everyone. Thank you for joining Ideal Power’s fourth quarter 2020 conference call. With me on the line are Dan Brdar, President and Chief Executive Officer; and Tim Burns, Chief Financial Officer. Ideal Power’s fourth quarter and full-year 2020 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 will turn the call over to Ideal Power’s President and CEO, Dan Brdar. Dan?

Thank you, Carolyn. Good afternoon, everyone. And welcome to our fourth quarter and full-year 2020 financial results conference call. I’ll begin by giving you an update on our progress and achievements toward our strategy to commercialize our B-TRAN semiconductor architecture technology. I'll also describe our objectives for 2021, which are to work toward completion of the NAVSEA program for final device demonstration in mid-2022 and to complete the steps in our B-TRAN strategy to enable commercialization. Throughout 2020, we sustained our momentum toward our commercialization goals and are moving into 2021 with continued excitement about our prospects for B-TRAN as a differentiated technology addressing a large and growing market and with a balance sheet strengthened by our recent equity offering to help make those prospects a reality. Let’s start our discussion with our work with the United States Navy. Our collaboration with the Naval Sea Systems Command, or NAVSEA, in collaboration with Diversified Technologies or DTI, remains on schedule. As a background, in the second quarter of 2020, we signed a $1.2 million subcontract with DTI on the development and demonstration of a B-TRAN enabled direct charge medium voltage circuit breaker as part of the U.S. Navy's strategic focus on ship electrification. The contract is funded through the Department of Defense’s Rapid Innovation Fund, which aims to accelerate the commercialization of high-value, high-impact technologies. Our project with DTI from NAVSEA is intended to develop and demonstrate a B-TRAN enabled high-efficiency 12-kilovolt medium voltage direct current circuit breaker for the U.S. Navy, with a subsequent objective of introducing a family of medium voltage DC circuit breaker products incorporating B-TRAN for sale to the military, industrial and utility markets. As we discussed with you on our last call, during the fourth quarter, we completed the first major milestone in the program, the first wafer fabrication run conducted by Teledyne, and we tested and selected wafers for dicing and packaging into B-TRAN devices using our lab-based packaging design. The results from this testing were incorporated into the device and packaging design and manufacturing process improvements for subsequent runs. We recently completed the second major milestone in the program and are in receipt of the wafers from Teledyne’s second fabrication run incorporating those design and manufacturing process improvements, and we're now testing and selecting these wafers for dicing and packaging into B-TRAN devices. The packaging for this run will utilize the new design developed by the University of Texas at Austin under the NAVSEA program. Over the two-year program, we planned a total of five runs over six quarters aiming for optimized device delivery in late 2021, with the final demonstration of a 12 kilovolt MVDC breaker in mid-2022. The development process is iterative. We are performing multiple wafer fabrication runs to set the trade-offs between maximum theoretical device performance and its manufacturability. The purpose of these successive fabrication runs is to optimize the device design for performance and manufacturability. The third fabrication run by Teledyne, which is the next major milestone in the NAVSEA program, has begun and is expected to be completed in the second quarter of 2021. We've been through multiple projects for these with NAVSEA and continue to receive positive feedback on our progress to date. Under the NAVSEA program, during the fourth quarter, the University of Texas at Austin's Semiconductor Power Electronics Center completed its initial design of a new B-TRAN device packaging. In collaboration with a commercial packaging firm, the UT Austin design was modified to enhance its ability to be manufactured in high volume. The new packaging design improves upon the lab-based packaging we’ve used previously and is intended to provide the electrical connections, form factor, and thermal management required to incorporate a semiconductor device into an end-user product design. The new packaging will encapsulate the B-TRAN die into a package similar to those commonly available for commercial IGBTs. This packaging design will be utilized for future B-TRAN dies under the NAVSEA program and our customer engineering prototype sampling program. As a reminder, ship electrification is a high-priority initiative in the Navy as it can significantly enhance the energy efficiency of ship operations, improve their operational flexibility, and lower costs. Distributed power on ships makes them less vulnerable to attacks by lowering their noise signature and enhancing their stealth capabilities. B-TRAN technology offers substantial size, heat and loss reduction over continuously conducting semiconductor devices such as IGBTs without using complex, large and heavy liquid cooling systems. We're very excited about the progress being made under the NAVSEA program. This progress continues to benefit our overall validation and commercialization efforts. During the fourth quarter, the Semiconductor Power Electronics Center at the University of Texas at Austin also designed and fabricated an initial laboratory version of a B-TRAN driver. Subsequently, as we announced earlier this month, the talented post-doc who designed the lab prototype of the device also completed a first-generation commercial version of the B-TRAN driver, incorporating feedback from our testing. The new driver design removes some of the features that were included in the laboratory version purely for debugging purposes and also reduces the footprint of the driver by over 50%. The new driver design also adds additional operating capabilities to the programming of the driver, including an improvement to the switching performance through faster turn-off, resulting in significantly lower switching losses. The post-doc's work has been closely supervised by Dr. Alex Huang, the leader of the Semiconductor Power Electronics Center and a world-renowned expert in power semiconductor devices and power electronics. The new driver has been fabricated and tested, and additional batches are being fabricated for use in our engineering prototype sampling program. Our development of a B-TRAN dedicated driver is a crucial step in the commercialization of B-TRAN devices. B-TRAN is a double-sided device with unique architecture, and our developing, designing, and fabricating this driver removes the need for potential customers to do so, facilitating the technical evaluation of the device by presenting them with test-ready engineering prototype samples. The sampling program will provide engineering samples to potential end-users and gather their feedback on the device, packaging design, the driver, as well as general feature sets and priorities. This feedback will allow us to determine customer requirements across applications that can then be incorporated into an intelligent power module design that we plan to bring to market in 2022 as part of our B-TRAN commercialization. Offering an intelligent power module rather than a discrete device should accelerate B-TRAN's commercial adoption. With our new packaging design and driver design completed, we're now ready to engage with customers for our engineering prototype sampling program. We also recently announced the hiring of a Vice President of Business Development, who joined our team in late February. Jeff Knapp brings an impressive and successful background in sales and business development for both silicon and silicon carbide devices, as well as established customer relationships in the electric vehicle and renewable energy markets, two markets that we're targeting for our customer sampling program. Bringing on a dedicated senior business development leader is an exciting step forward for Ideal Power as we begin collaborating with customers for the engineering sampling program and subsequent commercialization. Thanks to his strong semiconductor background and customer relationships, he has been able to hit the ground running. He’s prioritized the inbound requests we received from potential customers, added numerous high-profile targets to the list, and actively engaged with several of our highest-priority target customers to drive customer sampling agreements closure. We're looking forward to being able to talk more about the high-quality companies and institutions we're engaging with for the program as we formalize our relationships. Looking at the B-TRAN patent state, we currently have 58 issued B-TRAN patents, one more than last quarter, with 21 of those issued outside of the United States and 26 pending patents. Our geographic coverage includes North America, China, Japan, and Europe, with potential to expand coverage into South Korea and India. As part of the driver development process, we identified improvements in performance and device protection that enhance the capability of B-TRAN; patent protection for these enhancements was filed with the U.S. Patent Office. Our focus for 2021 remains twofold: to achieve our objectives under the NAVSEA program with a targeted delivery of an optimized device in late 2021, and to continue staging B-TRAN technology for commercialization in 2022. With respect to NAVSEA, as we progress toward delivery, we continue to view our collaboration with DTI as a significant potential catalytic opportunity. B-TRAN’s performance characteristics over conventional power switches, including higher efficiency and lower cooling requirements, and our smaller OEM product designs enable the solid-state circuit breaker application. Its potential is high as a game changer for distributed DC networks across a wide variety of military, industrial, and utility applications, including needs for higher voltage DC transmission and distribution systems, microgrids, and electrical generation related to renewable solar and wind energy and energy storage. With respect to B-TRAN commercialization, the engineering sampling program is now underway as we’ve begun to engage with prospective program participants, targeting putting multiple sample agreements in place in order to gather feedback from customers that can use and prepare an intelligent power module for initial commercial sales in 2022. Our commercialization efforts will focus on establishing strategic, development, and commercial partnerships, and build commercial momentum while laying the foundation for our future B-TRAN revenue streams. The IGBT market is already a $6 billion market estimated to grow to $9.4 billion by 2025. The key high-growth segments within the IGBT market that we plan to target for initial commercial sales include electric vehicles and electric vehicle charging, solar and wind energy, energy storage, and data center uninterruptible power supplies. Since the transition from sampling to commercial sales will vary by market segments and individual customers, we expect to continue adding potential customers and applications to the engineering sampling program over time while simultaneously commercializing B-TRAN for markets and applications already in the sampling program. The timeline for these spaces will also vary as prospective customers, even though they are similar, have different technology evaluation cycles and design periods for incorporating new technologies into their products. Overall, we recently achieved our second milestone with NAVSEA, completed a dedicated B-TRAN driver, and created a manufacturing-ready packaging design. We expect to start announcing sampling agreements in the coming months that we anticipate will lead to initial commercial agreements targeting the first commercial revenue in 2022. Our strong balance sheet will support our efforts and position us to be an attractive partner to the corporations of size we're targeting for our customer sampling program. Testing results of B-TRAN wafers and die underscore our belief in Ideal Power’s B-TRAN technology, which is potentially transformational with its unique bidirectional switching capability, lower switching and conduction losses, lower user costs, and improved thermal management. With these advantages, B-TRAN has the ability to solve the immediate needs of power electronic applications in both high growth, high demand markets while enabling new market segments. We continue to progress well on our plans and are now entering a key step in our commercialization strategy, engaging prospective customers in our engineering prototype sampling program. As we enter 2021, we're very excited about our future. We have a differentiated patented technology that can address a large and rapidly growing market, with a strong balance sheet to make our vision a reality. Now, I'd like to hand the call over to our Chief Financial Officer, Tim Burns, for a review of our fourth quarter and full-year 2020 financial results. Tim?

Thank you, Dan. I will review fourth quarter and full-year 2020 financial results. In the fourth quarter, we recorded approximately $274,000 of grant revenue totaling $428,000 of grant revenue for the year with offsetting costs of grant revenue as we continued our work on the Navy-funded NAVSEA demonstration project under the DTI contract, which began in late June. Fourth quarter 2020 operating expenses were $1.1 million, compared to $0.8 million in the fourth quarter of 2019. The increase in operating expenses was due to higher research and development spending. Full-year 2020 operating expenses were $4.1 million, compared to $3.1 million in full-year 2019. The full-year increase in operating expense was related to B-TRAN wafer fabrication and driver development spending, as well as higher non-cash stock compensation expense. The fourth quarter 2020 net loss was $1.1 million, compared to $0.8 million in the fourth quarter of 2019 as a result of higher research and development expenses. The net loss for the full year 2020 was $7.8 million, inclusive of non-cash warrant inducement expense of $3.7 million, compared to $3.9 million in full-year 2019. The full-year 2019 net loss included a $0.8 million loss from discontinued operations relating to the PPSA operations, which we sold in September 2019. Fourth quarter 2020 cash used in operating activities was $0.7 million, flat compared to cash used in operating activities in the fourth quarter of 2019, and down from $0.8 million in the third quarter of 2020. For the full year 2020, cash used in operating activities was $3 million, consistent with the approximately $750,000 per quarter burn rate that we forecasted for 2020. During 2020, we raised $2.5 million in net proceeds from the early warrant exercise transaction that we completed in August, as well as an additional $0.6 million from other warrant exercises. We received the Paycheck Protection Program loan to temporarily subsidize payroll facilities costs in the business landscape impacted by the COVID-19 pandemic. We recently applied for forgiveness of our PPP loan. While our expectation is that this will be forgiven, we cannot provide assurance there will be granted forgiveness for the loan in whole or in part. Subsequent to year end and through the end of February 2021, we raised an additional $3.2 million from the exercise of warrants. Also in February 2021, we completed an underwritten public offering for 1.4 million shares of our common stock at $17 per share, for net proceeds of $21.2 million. We expect to use a portion of the proceeds from these underwritten public offerings and warrant exercises in 2021 to: One, modestly build out our commercial team, which started with bringing Jeff Knapp on board as our Vice President of Business Development. We plan on hiring additional talent to focus on the front-end customer-facing part of the business, including additional resources to support our customer sampling program, and B-TRAN commercialization. Two, to build on our technical team, expanding our capabilities and bringing on a few additional internal resources to provide expertise where we previously relied on third parties. Three, now that we’re engaging with large companies in our customer sampling program, we aim to qualify additional domestic semiconductor fabrication partners. And four, for general corporate and working capital purposes. As a result of these activities designed to enable the commercialization of our B-TRAN technology in 2022, we expect an overall moderately upward trend in our quarterly cash burn in 2021. For the first quarter of 2021, we expect cash used in operating activities to be approximately $850,000 to $875,000 compared to approximately $750,000 per quarter cash burn in 2020. For the full year 2021, we currently expect cash used in operating activities of approximately $4 million; however, our cash burn may be modestly higher depending on the pace of the commercialization activities I just mentioned. As a result of the underwritten public offering and warrant exercises, and as of February 28, 2021, we have 5.9 million shares of common stock outstanding. We also have $1 million in-the-money warrants outstanding, along with 0.4 million stock options outstanding for fully diluted shares of 7.3 million shares. At February 28, 2021, our unaudited cash balance was $27.2 million. With our strengthened balance sheet, we have ample liquidity, particularly given our March cash burn, to fund multiple years of operations. We are now a well-capitalized partner for the larger companies that we expect to participate in our customer sampling program. At this time, I’d like to open up the call for questions. Operator?

Thank you. Our first question today comes from Ruben Roy with The Benchmark Company.

Thank you. Thanks for taking my questions and congrats again for the continued progress through your end and so far in '21. Dan, I wanted to drill in a bit on the upcoming sampling programs. It's great to hear about the driver progress over at UT. And you did talk about some additional runs that are going to be happening at Teledyne over the next few quarters, several quarters, as you're working with NAVSEA. What needs to happen to get sort of the sampling out to your other customers going—do you need to get several more runs going, do you need a data sheet that you have the driver? Maybe you could just help us understand the timing and puts and takes of getting your actual samples to the customers?

Sure. There’s a whole party of things that are happening. For those that are kind of already in the queue and engaged with, we already shared information with them in terms of device performance and some features about the driver, but there will be more information coming off the driver. For those that are likely to be candidates, we're going to be putting together a bigger product information sheet that will go on the website that will give people a lot of information about the device, its operation, visual elements, the technical parameters we are looking at in terms of operating parameters, but also information about the physical package, its size, dimensions, and the driver itself. As it relates to actually getting the physical samples in people's hands, we are already having multiple copies of the driver that has now been designed and tested. That was done by a third-party PCB firm. Those are actually in and we will make more of those as we go along. For the devices themselves, it will either be we’ll take some from NAVSEA with their cooperation, or we'll do an additional run to get some just for the customer sampling program. We'll have some flexibility, and it's really going to be up to the discussions we have to have with NAVSEA regarding how many they will let us use for the sampling program because it's not going to be a big portion of a run versus what needs to be used to satisfy the NAVSEA program.

So you also mentioned sort of the new packaging design, which has improved on your lab-based packaging designs that you're already using. And it sounds like the encapsulation of that B-TRAN commercial package at some point is going to be similar to an IGBT. Maybe you could just walk me through how to think about that from a footprint perspective. How does it work with the driver in some of these end markets? Is the PCB going to be encapsulated in the package itself? And is it going to be a consistent package across some of these end market applications that you're targeting?

For the package itself, for those that are familiar with wide IGBTs, the package discrete devices, it will look just like an IGBT with a fourth lead instead of three leads. So if you're familiar with what a TO-247 looks like for IGBTs, it's very much like that, the same dimensions—the only difference is just a fourth connection. For the sampling program, the driver and the packaged B-TRAN will be physically separate. The B-TRAN package is basically soldered to the driver. If you want to test multiple devices, you can solder/desolder the packaged B-TRAN, and it’ll give you one driver you can use for all of those. Our expectation, based on what we're seeing for performance of devices and also the early feedback we are getting from people that we're engaging with on a sampling program, is that the B-TRAN itself is going to likely be identical for all applications. There's no need for the typical trade-offs that IGBT manufacturers do regarding conduction loss versus current tails, and the nature of B-TRAN eliminates a lot of those IGBT-specific operating issues. For the foreseeable future, the B-TRAN value will be the same regardless of the application. The packaging will likely be the same. For most applications, we may end up going to some larger packages that have multiple die in one package to comply with IGBTs. Changes that are application-specific are more likely to end up being reflected in the driver versus the actual wafers that we have to fabricate.

I guess the last question for you. And then I just had a quick one for Kim. Just on sort of the timing of how to think about '22 and as we get into the later stages of commercialization and revenues. You guys have been talking about potentially working with DTI on additional circuit breaker products as you flow through this NAVSEA objectives, et cetera, and potentially have circuit breakers for sale to other customers industrial and otherwise. What's your thinking there in terms of timing of revenue? Do you think we'll be seeing kind of circuit breaker packaged products out in the market, and then beyond that, will we start to see some sales of actual B-TRAN devices into other markets, or do you think it's going to just depend and maybe we'll see a little bit of both as we kind of go through '22?

I think we'll actually see B-TRAN device sales probably before we see circuit breaker sales. It really comes from two reasons. One, while we want to bring out a variety of B-TRAN products, we're obligated to come out with several for the Navy and for the military broadly. That process has the longest sales cycle due to the way military procurement works. There is also an opportunity to sell them to industrial and utility markets, but that's not DTI's strong suit. Fortunately, we are not constrained in our relationship with DTI for the program. Once the demonstration itself is successful, we will engage with other companies that are more targeted at the utility and industrial segment. This will give them a unique and differentiated product compared to what they already offer. I expect to ultimately end up with multiple players bringing a B-TRAN to market. However, based on what we are seeing, there will likely be earlier opportunities to sell B-TRAN devices, particularly in electric vehicles, charging, and renewables, especially those that have yet to be integrated into power modules.

Okay, excellent. Great. And just a quick follow-up for Tim. Tim, you mentioned a couple of the areas that you're targeting for use of funds. One thing you did note, which I found interesting was the qualification potentially for an additional domestic wafer fabrication partner? What's driving that at this point? Is it just kind of making sure you have multiple sources as you get closer to commercialization? Or is there something going on at Teledyne or otherwise that's influencing how you're thinking about an additional partner there?

Yes, Ruben, let me take the first half and then Dan can add his thoughts. There are a couple of things that are driving it. We're engaged with some customers who will potentially be adopting our technology and whose volume demand is going to be very high, if we're successful with them. We know from previous experiences that some will require a second source for risk mitigation, as losing supplies is not an option for them. We view it also as part of our own risk mitigation; while Teledyne has great expertise, we want to ensure that if, for example, the fab we work with in California were to experience setbacks, we would still maintain the ability to run wafers. So, getting ahead of these customer pushes is part of our strategy.

Our next question comes from Don Slowinski of Winslow Asset Group.

Dan, as you collaborate with these new high-profile targets as you put it, could you provide maybe real-world examples where B-TRAN is displacing existing IGBTs? Additionally, are there greenfield opportunities we haven't discussed?

Yes. When you think about sort of the greenfield opportunities, the DC circuit breaker is one of those where there isn't a market without better semiconductor selection, which we can provide. Regarding more mature markets, there's a significant push across the board in electric vehicles to improve efficiency because semiconductor losses are a major contributor to the inefficiencies that currently exist for electric vehicles and their charging systems. Significant improvements in power switches mean either more range for batteries, or they result in cutting costs by reducing high-cost components. Secondly, regarding solar energy and energy storage, solar efficiency peaking means we need a new technology to improve performance. Alternatives like silicon carbide have been costly and challenging. B-TRAN, particularly when coupled with storage, can significantly impact the available energy from systems, whether in terms of usability or sales.

So are there existing electric vehicle manufacturers that you would be displacing IGBT technology within that electric vehicle segment that’s manufactured now, or is there another competitive technology?

Yes. It's predominantly IGBT that we're competing against in that segment. Now, electric vehicles also use MOSFETs for high switching frequency applications, but generally, IGBTs do not play well in this market space. It's really about going after the IGBT market, particularly as manufacturers aim to improve onboard storage efficiency.

Our next question comes from Richard King, an individual investor.

Dan, I want to get a better understanding of how you function with your technological advancements. Do you, in fact, have your own technical team or are you relying on external people, or is most of the technological advancement coming from the partners you're working with at the University, Teledyne, DTI, and so on?

The core B-TRAN technology is in-house. We have a highly qualified PhD leading our semiconductor physics work, who drives the actual device design and provides the technical direction to Teledyne. We had previously outsourced the driver development through the University of Texas at Austin, but now that we have a driver in place, we consider bringing additional tech expertise in-house as we expand our team. Our strategy includes a balanced blend of maintaining core technology internally, protected and patented, while leveraging third parties for commercially available solutions like packaging designs and wafer fabrication.

And how are those people at the University of Texas, for example, compensated? Do they have some form of ownership or do they have participation through the sales revenues?

Yes, well, certainly you touched on what was probably the biggest challenge of getting our agreement in place with the University of Texas. We were not willing to share any technology rights for any work that they would do. We wanted to use them for their technical expertise, their facilities, and to conduct design work. It took quite a few rounds of negotiations to get this agreement finalized. Ultimately, they serve as a high-technology engineering service for us, although they prefer not to view it that way. However, we retain all rights coming from their work.

Our next question comes from Bruce Palmer.

A little more on timing is kind of my question. I know some of that might be hypothetical, but just understand maybe timing on the sampling program. You said people will look at things over various times. For example, if you're working with one of your five targets now and let's say you sign an agreement for them to sample, by the end of the second quarter, how long do you envision people going through the sampling process, giving you feedback? How long will it take to incorporate their suggestions for the driver to reach agreements? What might be some expectations we could look at?

It's going to vary based on the individual company, and as we get further into this, we’ll have a better sense. The way we expect this to go based on our current discussions is that, once engaged, we'll be getting technical feedback from them very quickly while they'll still be conducting their testing. Our technical team will work closely to ensure they have a clear understanding of the device and driver operation, along with relevant design margins. Some will want to validate design margins, while others may want to replicate our provided information. Receiving their feedback about package designs will likely take more time, but the specifics will become clearer as we engage with a few of these players.

If you add a second fabricator, and you're into 2022, what kind of volume could you realistically produce? For example, could you guys break out 2 million devices, 3 million devices? What kind of production volume would you be able to manage?

With Teledyne, we can meet all the device production we anticipate over the next couple of years. Teledyne already has another facility identified where they could expand the process if needed. Thus, it's really about securing our position in case something were to happen at that fab, but also ensuring that if we collaborate with automobile makers, they typically think in millions of units. We want to ensure they're comfortable that we'll be able to meet their production needs, especially if they ramp things up.

As there are no further questions, I'd like to turn the call back to Mr. Brdar for any additional or closing remarks.

Well, thanks everyone for joining our call today. We'll be presenting at the Investor Summit Virtual Conference next week, which we invite you to tune in to the webcast. In the meantime, everyone keep safe, and we look forward to speaking with you again when we report our first quarter results. Thank you.

Ladies and gentlemen, that concludes today's conference call. Thank you for your presentation. You may now disconnect.