Good afternoon, ladies and gentlemen, and welcome to the Ideal Power First Quarter 2023 Results Call. At this time, all participants are in listen-only mode. At the end of management remarks, there will be a question-and-answer session. As a reminder, this conference 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 Brdar, President and Chief Executive Officer; Tim Burns, Chief Financial Officer. Ideal Power's first quarter 2023 financial results press release is available on the company's website. 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 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 Ideal Power's President and CEO, Dan Brdar. 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 B-TRAN semiconductor technology. 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 SymCool power module, which is a multi-die B-TRAN module. Next, complete Phase 1 of the multi-year development program with a top 10 global automaker in the second quarter of this year. Complete first engineering run with a production fab in the second quarter of this year, deliver package B-TRAN 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-TRAN 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-TRAN 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 SymCool Power Module. Our SymCool is a multi-die B-TRAN 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 of our electromechanical breakers and IGBT-based solid-state circuit breakers, B-TRAN 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 market because B-TRAN can be an enabling technology for the application into 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 SymCool 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 B-TRAN power module in collaboration with an innovative packaging company also selected by the automaker. This custom B-TRAN module is targeted for use in electric vehicle drivetrains in the automaker's next-generation electric vehicle platform. 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 I deliverables and expect to complete Phase I of this multi-year development program later this quarter. Working closely with the automaker, we've already agreed on the scope of work and adapters for Phase I of the program with their engineering team and await final approval of the Phase II purchase order. In Phase II, we'll work closely with the automaker's innovative packaging company to integrate B-TRAN devices into the power module design. Phase III will involve extensive testing of the custom module incorporating B-TRAN devices to meet automotive certification standards, which are pretty substantial. So it's really us in the packaging company working independently in Phase I, and then Ideal Power providing devices to the packaging company for incorporation into the module in Phase II, and then Phase III 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 I to date reinforces the competitive advantage we knew we could bring to electric vehicles as automakers innovate to find ways to reduce electric vehicle costs 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 foundries' manufacturing team. This run is expected to be completed later this month, and they are ready to immediately begin a run to support our SymCool first builds and the next phase of our automotive custom module program. This wafer fabricator is also already certified through 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 a 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 new technologies such as B-TRAN. Full 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 NAVSEA program funded by the U.S. Navy for the B-TRAN enabled solid state circuit breaker. We're excited to have completed our first volume shipments of packaged and tested B-TRAN devices to our partner on the project, Diversified Technologies, or DTI. We also provided DTI with 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. 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 B-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 conducting in our lab on the devices we shipped to the Navy enabled our team to identify and implement what we believe is a patentable innovation in how we drive and control B-TRAN, allowing us to realize an additional 20% improvement in connection losses. This change does not require any adjustments to our B-TRAN 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 B-TRAN is moving towards 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 B-TRAN, there's a pathway to reduce power semiconductor costs, the second largest production cost in electric vehicles, and improve vehicle range to mitigate driver range anxiety. The inherent bidirectionality and lower losses of B-TRAN are also well-suited to renewables, coupled with energy storage, making renewable energy a dispatchable resource and 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 SymCool and add a bidirectional intelligent driver. This product will target renewables, particularly renewables such as solar and wind, coupled with energy storage, stand-alone energy storage, EV charging, and other industrial end markets. This product's 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 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-TRAN test and evaluation program. The participants in the program include another top 10 global automaker, an EV charging company, a commercial electric vehicle company, the leading provider to the solar industry, a 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 B-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 leader in diverse power management markets to the program roster. This company will evaluate B-TRAN initially for use in solid-state circuit breakers in its smart infrastructure division. We plan to deliver B-TRAN customer kits for evaluation to the testing 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 B-TRAN driver as I discussed earlier and will consist of a packaged B-TRAN 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 for 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 B-TRAN 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 being established under the Act. The 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 with 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 and 22 pending B-TRAN 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 approaches to driving and controlling B-TRAN that I've discussed earlier, as both are unique to the bidirectional nature of our technology. Moving on, we recently issued a new B-TRAN 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, B-TRAN optimization and performance characterization, was selected for presentation at the conference. Our booth was very well attended and 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 shipments to DTI under the NAVSEA program with a 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. B-TRAN 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'll hand the call over to our Chief Financial Officer, Tim Burns, to review the first quarter financial results.

Thank you, Dan. I will review first quarter 2023 financial results. We recorded minimal current revenue for the first quarter. At March 31, current revenue of $36,724 remains to be recognized under the Navy-funded NAVSEA program. In the second quarter of 2023, we expect to recognize revenue related to the NAVSEA program as well as revenue from Phase 1 of the custom module development program with the top 10 global automaker. Operating expenses were $2.6 million in the first quarter of 2023 compared to $1.9 million in the first quarter of 2022, driven primarily by higher research and development expenses due to additional semiconductor fab runs and related wafer costs. Operating expenses were also impacted by higher personnel costs and reflect higher stock-based compensation expense. Although we expect higher research and development spending in the balance of 2023, at or above that seen in the first quarter, we continue to expect some quarter-to-quarter variability in operating expenses, particularly our research and development spending due to the timing of semiconductor fabrication runs and other development activities and hiring, as well as the potential impacts of additional government funding. We expect to keep general and administrative expenses in 2023 close to 2022 levels, excluding the impact of stock-based compensation expense, despite the impact of inflation on the costs of services. Sales and marketing spending is expected to increase modestly in 2023 from 2022 levels due to hiring and costs associated with commercialization efforts, including new product launches. The net loss in the first quarter of 2023 was $2.5 million compared to $1.9 million in the first quarter of 2022. First quarter 2023 cash burn was $1.8 million on the lower end of our guidance of $1.8 million to $2 million and down from $2.1 million in the fourth quarter of 2022. We expect second quarter 2023 cash burn of approximately $1.8 million to $2 million and a full year 2023 cash burn of approximately $8 million to $8.5 million. Cash and cash equivalents totaled $14.5 million at March 31, 2023. Given our planned cash burn, which remains modest, we have ample liquidity on our balance sheet to fund operations through 2024 to commercialize our technology and also to be a well-capitalized partner for the broad spectrum of companies that are either already participating or that we expect to participate in the testing and evaluation of our B-TRAN technology as well as a global Top 10 automaker that has engaged us in our development program. We have an asset-light business model and licensing part of our strategies we've discussed on prior calls. At March 31, we had 5,931,569 shares outstanding, up slightly from December 31 and unchanged from year-end. Including 844,375 stock options, restricted stock units, and performance stock gains outstanding, we had 7,816,092 diluted shares outstanding at March 31. At this time, I'd like to open up the call for questions. Operator?

This time, we are conducting a Q&A session. I will then call back over to Jeff Christensen to take questions submitted.

Thank you. Gentlemen, the first question that was submitted is, what differences have you seen in working with the production fab compared to your work with development fabs?

Good question. Quite a bit. There are a few things that are really substantial in terms of the development fabs versus the production fabs. First is that in production fabs, we can go to larger wafers than we were running at the development fab. So we can literally produce twice as many devices out of a wafer because of the larger wafer size. Probably one of the biggest differences is that production fabs have a lot of automation, whereas in development fabs, there's a lot of things that we've done manually, and that drives two things. It drives very long cycle times to complete a run, and it also drives a lot of scratches as the wafers are handled manually. What we have seen with this first run in the production fab was already better than anything we've done in the development fab in terms of device performance and just the yield per wafer, even though we're working on a larger wafer than the development fab. So there's a pretty substantial improvement across the board in terms of volume, cycle time, and quality.

Thank you. Our next question submitted is, you mentioned Forbes Global 500 power management market leaders. What kind of products do those companies make and what are some examples of those types of companies?

The global management companies are companies that make things like protective relays for utilities, circuit breakers, and power converters for renewable energy, a whole variety of power electronics equipment for high power applications. The companies that you typically think of that are in that group are companies like Siemens, Eaton, ABB, and Schneider, which are very large, well-recognized companies in the power space.

Thank you. Our next question submitted is, you referenced you will have two high volume fab partners. Can you quantify their volume capacity?

Let me answer that just a little bit differently. Let's talk about their available volume capacity because they're all running other products as well. The one that we have just finished, they are a very deliberate kind of firm. Right now, they have available capacity that we could tap into to make about 250,000 units a year. The other one that we are starting has the capacity to do well over one million units a year of actual available capacity that we can tap into. So between the two of them, we think we've got plenty of capacity for the near term and hopefully have the opportunity to get them to sort of compete against each other a little bit for our business, both in terms of cost and quality.

Okay. Thank you. Yeah. Investors, we appreciate your questions, and you could submit your questions by clicking on a button in the webcast portal. Our next question that was submitted is, you mentioned that you realized an additional 20% improvement in conduction losses. Are there specific applications or target markets that will benefit most from this improvement?

Yes. One of the markets where you're continuously conducting things like circuit breakers in particular will benefit. But even applications where you're doing a lot of switching, like energy storage coupled with solar, will benefit from it as well. And just to give people some context, improvements in losses in semiconductors are usually pretty hard to come by. So when we discovered that we could do something that really didn't affect the need to change what we were making in the fabs at all and get a 20% improvement, it was a pretty exciting day around here for sure.

Okay. Thank you. Next question, EVs and renewables are two markets that garner most of the attention, but your SymCool is targeting solid-state circuit breakers, where B-TRAN is enabling technology. Could you provide additional color on this specific market opportunity, why you chose the SymCool as your first product and why it should excite investors?

Yes. One of the reasons is, when you look at industrial products like circuit breakers, the design cycle is a lot shorter. Typically, an industrial company can design a new product in a year or sometimes even less, versus the automobile cycle, which is a long design cycle to get through that whole process. It's three to five years depending on the company. So we chose it partly because it's a faster path to revenue, it will be our early revenue while we go through these automotive qualification programs. But it's also one where we are truly an enabling technology. Solid-state circuit breakers have been made before with traditional semiconductors like IGBTs, but if you can bring something that has dramatically lower losses, it results in a solution that really becomes viable for the marketplace versus something that's more of a technical curiosity, which is what's been done to date with conventional semiconductors.

Thank you. There are no other questions at this time. Dan, do you have any closing remarks?

Excellent. Thank you, everybody, for joining our call today. We've made great progress over the first few months of the year on our path to commercialize our technology. Our talented team is on track for a successful 2023, hitting the milestones that we've laid out for people to monitor our progress. So we appreciate the opportunity to share our progress and we look forward to speaking with you again on the next call.