Q4 2023 Ideal Power Inc Earnings Call

Unknown Attendee: Unknown Attendee Good morning, ladies and gentlemen, and welcome to the Ideal Power fourth quarter and full year 2023 results call. At this time, all participants are in a listen-only mode.

Good morning, ladies and gentlemen, and welcome to the ideal power fourth quarter and full year 2023 results call.

At this time all participants are in a listen only mode at the end of managements remarks, there will be a question and answer session.

Unknown Attendee: At the end of management's remarks, there will be a question and answer session. However, investors can submit their questions at any time during the meeting webcast by typing them into the Q&A button on the left of your viewing screen. Analysts who publish research may ask questions on the phone line. To ask questions on the phone line, please press star 1 on your phone to enter the question queue at any time, and we'll open the floor for questions and comments after the presentation. As a reminder, this event is being recorded. I would now like to turn the conference over to Jeff Christensen. Please go ahead.

Investors can submit their questions anytime at the meeting webcast by typing them into the Q&A button on the left of your viewing screen.

Analysts to publish research you may ask questions on the phone lines for.

For analysts to ask questions on the phone line. Please press star one on your phone went into the question queue at any time and we'll open the floor for questions and comments after the presentation.

As a reminder, this event is being recorded.

I would now like to turn the conference over to Jeff Christensen. Please go ahead.

Jeff Christensen: Thank you, Matt. And good morning, everyone. Thank you for joining Ideal Power's fourth quarter and full year 2023 conference call; with me on the call are Dan Bernard, President and Chief Executive Officer, and Tim Burns, Chief Financial Officer. Ideal Power's fourth quarter and full year 2023 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.

Thank you, Matt and good morning, everyone. Thank you for joining ideal powers fourth quarter and full year 2023 conference call.

With me on the call are Dan Bernard President and Chief Executive Officer, and Tim Burns Chief Financial Officer.

Idaho Power's fourth quarter and full year 2023 financial results press release is available on the Companys website at Idaho power Dot 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 maybe 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.

Jeff Christensen: And we would also refer you to the company's website for more supporting company information. Now, I'd like to turn the call over to Ideal Power's President and CEO, Dan Bernard. Dan?

And we would also refer you to the company's website for more supporting company information.

Now I would like to turn the call over to ideal powers, President and CEO, Dan bird or.

Dan.

Dan Bernard: Thank you, Jeff. Good morning, everyone. And welcome to our fourth quarter and full year 2023 financial results conference call. I'll first update you on our progress since the start of the fourth quarter and then review our priorities for 2024 to commercialize our B-Tran semiconductor technology, and then Tim Burns, our CFO, will take you through the numbers, after which we'll take your questions. We made great progress delivering against our B-Tran commercial roadmap in 2023, and that progress has continued into 2024 as our customer engagements are expanding. While we're certainly excited about our progress and recent news, we're even more excited about how 2024 is shaping up for the company.

Thank you, Jeff Good morning, everyone and welcome to our fourth quarter and full year 2023 financial results Conference call.

I will first update you on our progress since the start of the fourth quarter and then review our priorities for 2024 to commercialize our B Tran semiconductor technology, and then Tim Burns our CFO will take you through the numbers after which we'll take your questions.

We made great progress delivering against our B Tran commercial roadmap in 2023 and that progress has continued into 2024 is our customer engagements are expanding.

While we're certainly excited about our progress and recent news, we're even more excited about how 2024 is shaping up for the company.

Dan Bernard: Since the start of the fourth quarter, we successfully completed several additional milestones and had some very positive customer recognition that collectively confirms our continued progress on our B-Train commercialization roadmap. We're thrilled about our momentum, recent successes, customer feedback, and recent announcements in these major areas. First, we commence SIMCOOL PowerModule shipments to fulfill customer orders. The SIMCOOL PowerModule targets industrial markets, particularly the solid state circuit breaker market, and is expected to be the earliest source of our product revenue and sales ramp. Second, we successfully completed phase two of our development program with Stellantis, a top ten global automaker. Notably, the name Stellantis was disclosed by Ideal Power for the first time in Q4 of 2023.

Since the start of the fourth quarter, we successfully completed several additional milestones and had some very positive customer recognition that collectively confirms our continued progress on our B Tran commercialization roadmap.

We're thrilled about our momentum recent successes customer feedback and recent announcements and these major areas.

First we commenced Sim cool power module shipments to fulfill customer orders the simco power module targets industrial markets, particularly the solid state circuit breaker market and is expected to be the earliest source of our product revenue and sales ramp.

Second we successfully completed phase two of our development program was the Lantus a top 10 global automaker, notably the names to Lantus was disclosed by them ideal power for the first time in Q4 of 2023.

Dan Bernard: Third, Stellantis recognized Ideal Power as a finalist in their 2023 Stellantis Venture Award. Fourth, we released demonstration videos and application notes related to our B-Train and Simcoe products to assist the technical teams at our target customers to better understand our products and their use. These videos and application notes have already produced new opportunities in our sales funnel and are generating a high number of views with our target technical audience, demonstrating a growing interest in and awareness of our technology. Finally, we are nearing completion of a qualification run with our second high volume wafer fabrication partner. We'll take a deeper look at these activities.

Third the Atlantis recognized ideal power as a finalist in their 2023 is the length of this venture awards.

We released demonstration videos and application notes related to our B Tran in Simcoe products to assist the technical teams at our target customers to better understand our products and their use.

These videos and application notes have already produced new opportunities in our sales funnel and are producing a high number of views with our targets technical audience, demonstrating a growing interest in and awareness of our technology.

Fifth we are nearing completion of qualification run with our second high volume wafer fabrication partner.

We will take a deeper look at these activities, but first I want to take a step back and highlight what is driving the interest in and the need for the technology, we're bringing to market.

Dan Bernard: But first, I want to take a step back and highlight what is driving the interest in and the need for the technology we're bringing to market. The commercialization of our technology comes at a time when there are significant macro trends in the industrial, renewable energy, energy storage, and hybrid and electric vehicle markets that will act as drivers of our revenue growth for many years. It's not only the long-term growth of solar energy, energy storage, and the adoption of hybrid and electric vehicles. These growing markets are part of the broader global electrification of society that is occurring. The current electric utility system was designed decades ago and will require enormous investment to accommodate the fundamental changes electrification requires.

The commercialization of our technology comes at a time when there are significant macro trends in the industrial renewable energy energy storage and hybrid and electric vehicle markets that will act as drivers of our revenue growth for many years.

It's not only the long term growth of solar energy energy storage and the adoption of hybrid and electric vehicles.

These growing markets are part of the broader global electrification of society that is that is occurring.

The current electric utility system was designed decades ago and will require enormous investment to accommodate the fundamental changes electrification requires.

Dan Bernard: Our utility transmission and distribution system was not designed to accommodate the large amounts of distributed solar power for homes and businesses, the build out of a nationwide electric vehicle charging infrastructure, and the broad use of localized energy storage by businesses for backup power and electricity cost control. At the core of all these applications, renewable energy, energy storage, hybrid and electric vehicles, EV charging, and utility grid modernization is the need for improved power semiconductors as they are essential to reducing the cost and improving efficiency across all applications.

Our utility transmission and distribution system was not designed to accommodate the large amounts of distributed solar power for homes and businesses. The build out of a nationwide electric vehicle charging infrastructure in the broad use of localized energy storage by businesses for backup power and electricity cost control at.

At the core of all of these applications renewable energy energy storage hybrid and electric vehicles, EV charging and utility grid modernization is the need for improved power semiconductors as they are essential to reducing the cost and improving the efficiency across all applications.

Dan Bernard: Better power semiconductors mean more useful energy for a solar or energy storage installation, longer range and faster charging for an electric vehicle, and lower cost and more efficient use of electricity. That's why we're so excited about the timing of our commercialization and what B-Trend brings to the market. Our technology has the potential to improve the performance and cost of a wide variety of applications that are part of this fundamental change in how we make, distribute, and use electricity. Looking at the size of the opportunity this creates, based on a recent study by Mordor Intelligence in their Global Power Electronics Market Report, the vTrans serviceable addressable market, or SAM, is predicted to more than double over the next five years. With a projected 16% compound annual growth rate, the total market for B-Tran is forecasted to grow from 3.6 billion in 2023 to 7.6 billion in 2028, driven by these macro trends. Looking forward, we'll continue to execute on our B-Tran commercialization roadmap. Our priorities for 2024 are to convert large OEMs and our test and evaluation program to design wins and or custom development agreements. CellSim pool power modules to additional target industrial customers, at distributors for simple products, and continue the strong execution on our development program with Stellantis.

Better power semiconductors mean, more useful energy for our solar or energy storage installation longer range and faster charging for an electric vehicle and lower cost and more efficient use of electricity as.

That's why we're so excited about the timing of our commercialization and what <unk> brings to the market. Our technology has the potential to improve the performance and cost of a wide variety of applications that are part of this fundamental change in how we make distribute and use electricity.

Looking at the size of the opportunity. This creates based on the recent study by Mordor intelligence in their global power Electronics market report the Retrans serviceable addressable market for Sam is predicted to more than double over the next five years with a projected 16% compound annual growth rate. The total Sam for B Tran is.

Forecasted to grow from $3 6 billion in 2023 to $7 6 billion in 2028, driven by these macro trends.

Looking forward, we will continue to execute on our B Tran commercialization roadmap.

Our priorities for 2024 are to convert large Oems and our test and evaluation program to design wins and to our customer development agreements.

<unk> cool power modules to additional target industrial customers.

Ed distributors for simple products.

Continued the strong execution on our development program was to Lantus.

Dan Bernard: Begin third-party automotive qualification testing, complete the qualification of a second high-volume production fab, and capture initial sales of our SimCool IQ Intelligent Power Module, and I'll discuss the highlights of some of these priorities, along with other opportunities and developments. There's a growing list of customers working with our team in each of our key target markets, and I'm pleased and excited about our progress and the feedback we're receiving from our growing customer engagement. We expect industrial markets, and in particular, the solid state circuit breaker market served by our simple power module, to be the earliest source of our product revenue and drive our initial sales ramp. The interest in our Simcoe product is driven by the need for better circuit protection within the utility distribution system, industrial facilities, the need to be able to quickly isolate solar farms and energy storage facilities, and even circuit protection within hybrid and electric vehicles. Later this year, we're expecting initial sales of our Simcool IQ Intelligent Power Module. The SimCool IQ takes our SimCool power module and adds an intelligent driver to allow localized control and operation.

Began third party automotive qualification testing.

To complete the qualification of a second high volume production.

And capture initial sales of our <unk> IQ intelligent power module.

And I'll discuss the highlights of some of these priorities along with other opportunities in development.

There is a growing list of customers working with our team and each of our key target markets and I am pleased and excited about our progress and the feedback we're receiving from our growing customer engagements.

We expect the industrial markets and in particular, the solid state circuit breaker market served by our simple power module you would be the earliest source of our product revenue and drive our initial sales ramp the.

The interest in our simple product is driven by the need for better circuit protection within the utility distribution system industrial facilities.

Need to be able to quickly isolate solar farms in energy storage facilities, and even circuit protection within hybrid and electric vehicles.

Later this year, we're expecting initial sales of our Sim cool IQ intelligent power module.

The Simco IQ takes our Simcoe power module and adds an intelligent intelligent driver to allow localized control and operation.

Dan Bernard: The SimCool IQ product applies to the renewables market, particularly renewables coupled with energy storage, standalone storage, and microgrids, EV charging, and other industrial markets. Like the solid-state circuit breaker market, these applications have a shorter design cycle compared to the automotive industry. Targeting the industrial, power, and renewables markets first gives us the ability to ramp up our supply chain and revenue so we are ready to serve the high volume we expect to be driven from auto manufacturers for their hybrid and electric vehicle platforms. With the visibility of our technology and products growing, we're now receiving numerous inbound inquiries from companies in our early target markets looking to learn more about our product. To better serve these customers and provide the ability to purchase products in smaller volumes, we're adding distributors for customers wanting parts for evaluation, some of which will later turn into volume supply agreements with us. We're finalizing our first agreement with a distributor for our product. We've also selected a second distributor with particular strength in Asia and have begun crafting an agreement with them as well.

The simple IQ product applies to the renewables market, particularly renewables, coupled with energy storage standalone storage and micro grids, EV charging and other industrial markets.

I'd like to solid state circuit breaker market. These applications have a shorter design cycle compared to the automotive industry.

Targeting the industrial power and renewables markets first gives us the ability to ramp up our supply chain and revenue. So we are ready to serve the high volume, we expect to be driven from auto manufacturers for their hybrid electric vehicle platforms.

With the visibility of our technology and products growing we're now receiving numerous inbound inquiries from comforting companies and our early target markets looking to learn more about our products.

To better serve these customers and provide the ability to purchase products in smaller volumes, we're adding distributors for customers wanting parts for evaluation some of which will later turn into volume supply agreements with us.

We're finalizing our first agreement with the distributor for our products. We have also selected a second distributor with particular strength in Asia and have begun crafting an agreement with them as well.

Dan Bernard: Our current focus is engaging distributors with strong technical sales teams, expertise in securing sales for new technologies, and global reach. We'll add more sales reps and distributors over time to have comprehensive channel coverage. As we said previously, given the evaluation and OEM product design cycles of most industrial companies, volume and revenue will be modest in 2024, and we expect to see the start of a ramp-up in sales in the second half of 2024 as customers work to release products that incorporate B-Cramp. Turning to Stellantis, we're thrilled with our progress in their program to use B-Train in their future EV drivetrain. Due to the strong performance of our team and our technology, we're continuing to earn our place in the program and recently announced that we successfully completed phase two of the program several months ahead of schedule.

Our current focus is engaging distributors with strong technical sales teams expertise and securing sales for new technologies and global reach we will add more sales reps and distributors over time to have comprehensive channel coverage.

As we said previously given the evaluation and OEM product design cycles of most industrial companies volume and revenue will be modest in 2024, we expect to see the start of a ramp up in sales in the second half of 2024 as customers work to release products that incorporate <unk>.

Turning to the Lantus, we're thrilled with our progress in their program to use <unk> in their future EV drivetrain.

Due to the strong performance of our team and our technology, we're continuing to earn our place in the program and recently announced that we successfully completed phase two of the program several months ahead of schedule.

Dan Bernard: Phase two deliverables included a multi-wafer run, delivery of tested B-Train devices and drivers to both the program's packaging company and the organization building the initial drivetrain inverter, and delivery of a comprehensive test plan for auto qualifications that was subsequently approved by Stellantis. We collaborated closely with Stellantis and the program partners to supply B-TRAN devices for integration into the custom power module and inverter designs. The device testing results by the Stellantis program team validated the expected efficiency improvements anticipated from the use of B-TRAN in the drive train.

Phase II deliverables included a multi wafer run.

Delivery of tested B Tran devices and drivers to both the program's packaging company and the organization building. The initial drivetrain inverter and delivery of a comprehensive test plan for auto qualification that was subsequently approved our scientists.

We collaborated closely with Lantus and the program partners to supply <unk> devices for integration into the custom power module in inverted designs.

The device testing results by this to Lantus program team validated the expected efficiency improvements anticipated from the use of <unk> in the drivetrain.

Dan Bernard: As part of Phase 2, Stellantis also conducted a data-driven, comprehensive assessment of the technology readiness for implementation into their electric vehicle platform, and we're pleased to say the outcome of the assessment was very positive. Additionally, successful completion of phase two was also customer validation of B-Tran and its potential impact on improving EV range and cost. Additional validation was provided by Stellantis in December when they named us a finalist in the 2023 Stellantis Venture Awards.

As part of Phase III still Lantus also conducted a data driven comprehensive assessment of the technology readiness for implementation into the electric vehicle platform and we're pleased to say the outcome of the assessment was very positive success.

Successful completion of Phase II was also customer validation of <unk> and its potential impact on improving EV range and cost.

Additional validation was provided by the Lantus in December when they named US a finalist in the 2023 Atlantis Debenture rewards our selection was based on our successful collaboration and performance in the program.

Dan Bernard: Our selection was based on our successful collaboration and performance in the program, the potential impact on customer experience, novelty of the technology, and its potential scale within Stellantis. We're leveraging our success with Stellantis to attract and engage additional companies interested in our technology for their applications, including other industrial and automotive OEMs and Tier 1 automotive suppliers. We're currently finalizing the scope of work for phase three of the program with Stellantis, which now includes the production side of their team. This phase is expected to include extensive testing of the custom B-TRAN module to meet automotive certification standards, enabling B-TRAN to be the core of the powertrain inverter for the automaker's next generation EV platform. Their stated goal for the program is to have a custom module production ready by 2025. Stellantis is funding the program.

<unk> impact on customer experience novelty of the technology and its potential scale within the Lantus.

We're leveraging our success with Atlantis to attract and engage additional companies interested in our technology for their applications, including other industrial and automotive Oems and tier one automotive suppliers.

We're currently finalizing the scope of work for phase III of the program was to Lantus, which now includes the production side of their team.

This phase is expected to include the extensive testing of the custom <unk> module to meet automotive certification standards, enabling <unk> to be the core of the powertrain inverter for the automakers next generation EV platform there.

Our stated goal for the program is to have a custom module production ready by 2025.

The Lantus is funding the program, we had modest revenue from them in 2023 and expect modest revenue from Lantus again in 2024.

Dan Bernard: We had modest revenue from them in 2023, and we expect modest revenue from Stellantis again in 2024. Due to its compelling advantages, V-Tran is also being evaluated for Stellantis' vehicle power management, circuit protection, and EV charging ecosystem. As a reminder, this program represents our second engagement with the world's leading automotive manufacturers, as another top 10 global automaker is already in our test and evaluation program. Substantial progress continues with our test and evaluation program participants, particularly for solid state circuit breakers and hybrid and electric vehicle applications. This year, we expect to convert large OEMs in our test and evaluation program into design wins and or additional custom development agreements. Our test and evaluation program includes several large global companies that present multiple opportunities for ideal power. Taken as a whole, they address all of our target markets.

Due to its compelling advantages B Tran is also being evaluated forced atlantis's vehicle power management circuit protection and EV charging ecosystem.

As a reminder, this program represents our second engagement with the world's leading automotive manufacturers is another top 10 global automaker is already in our test and evaluation programs.

Substantial progress continues with our test and evaluation program participants, particularly for solid state circuit breaker and hybrid and electric vehicle applications.

This year, we expect to convert large Oems and our test and evaluation program into design wins into additional customer development agreements.

Our test and evaluation program includes several large global companies that present multiple opportunities for ideal power.

Taken as a whole they address all of our target markets. While initially interested in a specific application. These program participants have in many cases expanded their interest to several applications in their product portfolios that could take advantage of the benefits of <unk>.

Dan Bernard: While initially interested in a specific application, these program participants have, in many cases, expanded their interest to several applications in their product portfolios that could take advantage of the benefits of B-TRAM. Customer shipments to the Test and Evaluation Program participants included multiple packaged B-Train devices, the device driver, and a power test board housed in a safety enclosure to facilitate and accelerate the evaluation process.

Customer shipments to the test and evaluation program participants included multiple package B Tran devices, the device driver and a power test board housed in our safety enclosure to facilitate and accelerate the evaluation process.

Dan Bernard: To date, V-Tran shipments to test and evaluation program participants include a top 10 global automaker, a global Tier 1 automotive supplier, a leading provider in the solar industry, two Forbes Global 500 power management companies, a global provider of backup power and energy management solutions, and several others, with additional kits to follow for new participants. While these large companies move slowly, several of these customers have advanced beyond the evaluation stage and are requesting multi-year product volume quotes or custom product development proposals, and in many cases, are providing us with specific feedback for our long-term product planning roadmap to closely align with their requirements. The conversion of a single opportunity could potentially significantly impact the trajectory of our pending revenue rate.

Debate nutrient shipments to test and evaluation program participants include the top 10 global automaker, a global tier one automotive supplier, a leading provider in the solar industry.

Forbes Global 500 power management companies global provider of backup power and energy management solutions and several others with additional kits to follow for new participants.

While these large companies move slowly several of these customers have advanced beyond the evaluation stage and are requesting multiyear product volume quotes or custom product development proposals and in many cases are providing us specific feedback for our long term product planning roadmap to closely align with their requirements the conversion of a single opportunity.

<unk> significantly impact the trajectory of our pending revenue ramp.

Dan Bernard: 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 will continue to add additional potential customers to the program for those customers that represent an opportunity for us to collaborate with a market leader for a specific market segment. The program allows us to get a good handle on customers' technology evaluation processes, their product design cycles, and their commercial plans. Beyond the high-profile companies in our test and evaluation program, we're already seeing customers, particularly in the circuit breaker and circuit protection markets, ready to be served by our distributors as we bring them on board. Let's turn to the supply chain that insurers will be prepared to support our sales and production ramp.

As you know our test and evaluation program will remain an embedded process and our sales and marketing effort and a source of input to our next generation of products will continue to add additional potential customers to the program for those customers that represent an opportunity for us to collaborate with a market leader for a specific market segment.

The program allows us to get a good handle on customers' technology evaluation processes their product design cycles and their commercial plans.

Beyond the high profile companies in our test and evaluation program, we're already seeing customers, particularly in the circuit breaker and circuit protection markets ready to be served by our distributors as we bring them on board.

Let's turn to the supply chain that insurers will be prepared to support our sales and production ramps.

Dan Bernard: Our second high volume wafer fabrication partner is nearing completion of a qualification run. This wafer fab in Europe will support future revenue growth and add bull sourcing for wafer fabrication. We're very pleased with its progress with no major issues to date and look forward to receiving the wafers from this lot and assessing their performance of the completed wafers and result in V-Tran dies. We expect to complete the qualifications of this FAB as early as the second quarter of 2024.

Our second high volume wafer fabrication partner is nearing completion of a qualification runs.

This wafer fab in Europe will support future revenue growth and add dual sourcing for wafer fabrication. We're very pleased with its progress with no major issues to date and look forward to receiving the wafers from this lot and assessing their performance with a completed wafers and result in <unk> we.

We expect to complete the qualification of this fab as early as the second quarter of 2024.

Dan Bernard: Last year, we qualified an Asian wafer fabrication supplier with high volume capabilities. With these two wafer foundry partners on board, we'll have bullsourcing for wafer fabrication in different parts of the world with no exposure to China. Our dual sourcing strategy will allow us to proactively secure not only the necessary production capacity but also the ability to source components and services from partners in disparate geographies as part of our strategy to mitigate supply chain risk. This dual sourcing will provide us with sufficient supply capacity for the large customers we're engaging with. We're confident each of these wafer fabs has ample capacity to meet our expected demand over at least the next two to three years. Automotive qualification testing will begin later this year.

Last year, we quantified and Asian wafer fabrication supplier with high volume capability.

With these two wafer foundry partners on board, we'll have dual sourcing for wafer fabrication and different parts of the world with no exposure to China.

Our dual sourcing strategy will allow us to proactively secure not only the necessary production capacity, but also the ability to source components and services from partners and disparate geographies as part of our strategy to mitigate supply chain risks.

This dual sourcing will provide us with sufficient supply capacity for the large customers we're engaging we're.

We're confident each of these wafer fabs as ample capacity to meet our expected demand over at least the next two to three years.

Automotive qualification testing will begin later this year.

Dan Bernard: Being automotive qualified helps us to cross the board in both automotive and industrial applications. It says a lot about the robustness of your design and its ability to withstand the extremes of the environment for shock, vibration, and power cycling. It helps industrial customers get a comfort level with the readiness of a new technology. With our certification test plan now approved as part of Phase 2, the certification testing firm we intend to use has been selected, and once Phase 3 with Philanthus is underway, we'll begin the wafer runs that we plan to use for auto certification. While it may change at some point in the future, one advantage we have for the foreseeable future is that for any application, like hydroelectric vehicles or solid-state circuit breakers or solar and energy storage, the wafers and resulting dies are all exactly the same. We can wrap up production robustly because we don't have to forecast wafer demand and the guide design mix based on the application.

Automotive qualified helps us across the board in both automotive and industrial applications. It says a lot about the robustness of your design and its ability to handle the extremes of the environment for shock vibration and power cycling.

It helps industrial customers get a comfort level for the readiness of our new technology.

With our certification test plant now approved as part of Phase III certification testing firm, we intend to use has been selected and once phase III with Atlantis is underway. We will begin the wafer runs we plan to use for auto certification.

While it may change at some point in the future one advantage we have for the foreseeable future is that for any application like hybrid electric vehicles, where solid state circuit breakers for solar and energy storage, the wafers and resulting dies are all exactly the same we.

We can ramp up production robustly, because we don't have to forecast wafer demand and the diode design mix based on the application.

Dan Bernard: Another advantage to our approach is our ability to leverage the huge investment that's already been made in silicon wafer fabrication and packaging for power devices. Our asset-light business model gives us the ability to continue focusing on technology improvement while being able to quickly incorporate customer feedback for our product roadmap. Although the interest in bi-directional power semiconductors continues to grow, we're not aware of any competing inherently bi-directional technology.

Another advantage to our approach is our ability to leverage the huge investment that's already been made and silicon wafer fabrication and packaging for power devices, our asset light business model gives us the ability to continue focusing on technology improvement, while being able to quickly incorporate customer feedback for our product roadmap.

Although the interest in bi directional power semiconductors continues to grow we're not aware of any competing inherently bi directional technologies looked.

Dan Bernard: Looking at our expanded V-Tran patent estate, we currently have 82 issued V-Tran patents, with 36 of those issued outside of the United States. Our current geographic coverage for our patents includes North America, China, Japan, South Korea, India, and Europe, with pending coverage in Taiwan, all representing our high priority patent coverage geography. As part of our product development and introductions, we're expanding our patent efforts in what we believe to be high-value patents on our driver design and controls and packaging design, as both are unique to the bi-directional nature of our technology. As a result of our continued innovation, our list of pending V-Tramp patents is now at 39. In addition, we treat our double-sided wafer fabrication process as a trade secret. So even after studying our patents, somebody wouldn't have the know-how to be able to fabricate the device.

Looking at our expanded <unk> patent estate. We currently have 82 issued B Tran patents with 36 of those issued outside of the United States.

Our current geographic coverage for our patents includes North America.

China, Japan, South Korea, India, and Europe with pending coverage in Taiwan, all representing our high priority patent coverage geographies.

As part of our product development and introductions, we're expanding our patent efforts and what we believe to be high value patents on our driver design and controls and packaging designs.

As both our unique to the bidirectional nature of our technology.

As a result of our continued innovation our list of pending B Tran patents is now at 39.

In addition, we treat our double sided wafer fabrication process as a trade secret.

So you've been studying our patents somebody wouldn't have the knowhow to be able to fabricate. The device. There is an enormous amount of learning that's gone into the fabrication process flow to make high quality high performing double sided devices for commercial sale.

Dan Bernard: There's an enormous amount of learning that's gone into the fabrication process flow to make high-quality, high-performing double-sided devices for commercial sale. In summary, we're off to a great start already this year, and we're on track to achieve our 2024 milestone. We look forward to several announcements in the coming months as we complete the key objectives we plan to accomplish for the year. And when we look out over the next 12 months, we're confident we can continue to drive considerable commercial progress in our target markets. We'll maintain our relentless focus to commercialize our technology and facilitate its adoption in our target markets. We expect D-Tran to displace conventional power semiconductor solutions in many applications, such as solid-state circuit breakers, renewable energy, energy storage, hybrid and electric vehicle, and other industrial markets.

In summary, we're off to a great start already this year and we're on track to achieve our 2024 milestones. We look forward to several announcements in the coming months as we complete the key objectives, we plan to accomplish for the year.

When we look out over the next 12 months. We're confident we can continue to drive considerable commercial progress in our target markets. We will maintain our relentless focus to commercialize our technology and facilitates adoption in our target markets.

We expect <unk> to displace conventional power semiconductor solutions and many applications with the solid state circuit breaker renewable energy energy storage hybrid and electric vehicles and other industrial markets.

Timothy W. Burns: I'd like to hand the call over to our Chief Financial Officer, Tim Burns, to review our fourth quarter financial results. Thank you, Dan. I will review the fourth quarter and the full year 2023 financial results. We recorded $61,000 in commercial revenue for the fourth quarter and $161,000 for the full year.

Now I'd like to hand, the call over to our Chief Financial Officer, Tim Burns.

To review, our fourth quarter financial results.

Thank you Dan I'll review, the fourth quarter and the full year 2023 financial results.

We recorded $61000 in commercial revenue for the fourth quarter and $161000 for the full year.

Our grant revenue was $37000 for the full year 2023.

Timothy W. Burns: Our grant revenue was $37,000 for the full year 2023, booking to 2024. We expect commercial revenue from both product sales and development agreements. Although we are continuing to pursue government funding opportunities, we do not have any such programs at this time. Operating expenses were $2.5 million in the fourth quarter of 2023, compared to $2 million in the fourth quarter of 2022, driven primarily by higher research and development expenses. We completed several wafer runs with our qualified high volume production foundry. We also are in the midst of a qualification run with a second high volume production foundry. Operating expenses reflected higher stock-based compensation expense on performance stock units and new higher grants. 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, product development, other research and development activities, and hiring. We expect to keep general and administrative expenses relatively flat in the first quarter of 2024, excluding the impact of stock-based compensation.

Looking to 2024, we expect commercial revenue from both product sales and development agreements.

Although we are continuing to pursue government funding opportunities, we do not have any such programs at this time.

Operating expenses were $2 5 million in the fourth quarter of 2023 compared to $2 million in the fourth quarter of 2022.

Driven primarily by higher research and development expenses.

We completed several wafer runs with our qualified high volume production foundry.

We also are in the midst of a qualification run with a second high volume production foundry.

Operating expenses reflected higher stock based compensation expense and performance stock units and new hire grants.

We continue to expect some quarter to quarter variability in operating expenses, particularly on research and development spending due to the timing of semiconductor fabrication runs product development.

Other research and development activities and hiring.

We expect to keep general and administrative expenses relatively flat in the first quarter of 2024, excluding the impact of stock based compensation expense.

Sales and marketing spending is expected to continue to increase modestly in coming quarters due to hiring in costs associated with our commercialization efforts.

Net loss in the fourth quarter of 2023 was $2 4 million compared to $1 9 million in the fourth quarter of 2022.

Full year 2023, net loss was $10 million compared to $7 $2 million in full year 2022.

Timothy W. Burns: Sales and marketing spending is expected to continue to increase modestly in coming quarters due to hiring and costs associated with our commercialization efforts. Net loss in the fourth quarter of 2023 was $2.4 million compared to $1.9 million in the fourth quarter of 2022; full year 2023 net loss was $10 million compared to $7.2 million in full year 2022. Fourth quarter 2023 cash burn was $2.3 million at the midpoint of our guidance of 2.2 to $2.4 million, as we continue to manage expenses prudently and aggressively. Cash burn in the full year 2023 was $7.9 million, at the midpoint of our guidance of $7.8 million, and compared to $6.8 million in the full year 2020. We expect first quarter 2024 cash burn of approximately $2.3 to $2.4 million, and full year 2024 cash burn of $8 to $8.5 million. Net of an expected $1 million benefit from proceeds from the expiring heavily in the money warrant. Cash and cash equivalents totaled $8.5 million on December 31, 2023.

Fourth quarter 2023, cash burn was $2 $3 million at the midpoint of our guidance of $2 two to $2 4 million.

As we continue to manage expenses prudently it aggressively.

Cash burn in the full year 2023 was $7 $9 million at the midpoint of our guidance of $7 $88 million.

And compared to $6 $8 million in the full year 2022.

We expect first quarter 2020 for cash burn of approximately two three to $2 $4 million.

And full year 2020 for cash burn of eight to $8 $5 million.

Net of an expected $1 million benefit from proceeds from expiring heavily in the money warrants.

Cash and cash equivalents totaled $8 5 million at December 31, 2023.

We have no debt and a clean capital structure.

Given our planned cash burn, which remains modest we have ample liquidity on our balance sheet to fund operations through 2024.

We will potentially see several potential sources of funds, including product sales development agreements.

Other commercial agreements with upfront payments and government funded programs, where we see opportunities to collaborate with some of our partners.

Timothy W. Burns: We have no debt in a clean capital structure. Given our planned cash burn, which remains modest, we have ample equity on our balance sheet to fund operations through 2024, and will potentially see several potential sources of funds, including product sales and development agreements. Other commercial agreements with Upfront Payments and government-funded programs where we see opportunities to collaborate with some of our partners. We're also exploring potential strategic relationships with our well-capitalized partners. For example, Stellantis has a venture fund, and we were named a finalist in the 2023 Stellantis Venture Awards.

We're also exploring potential strategic relationships with our well capitalized partners.

For example, the Lantus has a venture fund and we were named a finalist in the 2023 still anticipates Your awards.

Don't know if theres a potential opportunity for us was to answers venture funds, but it is something we could choose to explore if we are convinced it wouldnt adversely impact other EV customer opportunities.

As a public company, we also have access to the capital markets if necessary.

At December 31, we had $5 million 996697 shares outstanding.

Timothy W. Burns: You do not know if there is a potential opportunity for us with Stellantis Venture Fund, but it is something we could choose to explore if we are convinced it wouldn't adversely impact other EV customer opportunities. As a public company, we also have access to the capital markets if necessary. At December 31, we had 5,996,697 shares outstanding, up slightly from the end of September, and 1,040,248 warrants outstanding, unchanged from the end of September. 444,180 of the warrants outstanding are heavily in the money and set to expire in November 2024, if not exercised beforehand, including 811,478 stock options, restricted stock units, and performance stock units outstanding. We had 7,848,423 diluted shares outstanding as of December 31st.

Up slightly from the end of September and a $1 4200, 48 warrants outstanding unchanged from the end of September.

444180 of the warrants outstanding are heavily in the money and set to expire in November 2024.

Not exercised beforehand.

Including 811478 stock options restricted stock units and performance stock units outstanding.

Had $7 million 848423 diluted shares outstanding at December 31.

At this time I would like to open up the call for questions.

Operator.

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 left side of your viewing screen.

Analysts, who publish research you may ask questions on the phone line for analysts to ask questions on the phone line. Please press star one on your phone.

Unknown Attendee: At this time, I'd like to open up the call for questions. Operator. Thank you. Investors can submit their questions within the meeting webcast by typing them into the Q&A button on the left side of their viewing screen.

Your first question is coming from David Williams from Benchmark. Your line is live.

Hey, good morning, gentlemen, and thanks for taking my questions.

Morning, David.

Yes, so congrats on all the progress you are clearly, making a lot of headway here and I've always been impressed with your go to market strategy is how quickly that's developed.

Unknown Attendee: Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please press star 1 on your phone. Your first question is coming from David Williams from Benchmark. Your line is live. Hey, good morning, gentlemen, and thanks for taking my call.

In that vein could you talk a little bit about the shipments you had this quarter.

And maybe just any color around that maybe who that was or what our intent or what the feedback has been since they've received those things.

David Neil Williams: Yeah, so congrats on all the progress. You're clearly making a lot of headway here, and I've, Unknown Speaker, with your go-to-market strategy. Developed

Yes, so obviously, it's Sim cool product sales are there.

Initial shipments of that product that product is targeting the solid state circuit breaker market.

Dan Bernard: I guess in that vein, can you talk a little bit about the shipments you had this quarter and maybe just any color around maybe who that was or what their intent or what the feedback is? Yeah, so they're obviously Simcool product sales. So their initial shipments of that product, that product is targeting the solid state circuit breaker market. We have a couple of companies in our testing evaluation program that are Forbes global 500 power management leaders. There's also, I would say, a couple more that are similar in size to those companies that we're interacting with on a regular basis. So, we're not going to name the specific companies, but there are some very large, well-known names in the. Great

We have a couple of <unk>.

And our test and evaluation program that were Forbes Global 500 power management leaders.

There is also I would say a couple of more that are similar in size to those companies that were interacting with on a regular basis. So we're not going to name the specific companies, but there are some very large well known names in the space.

Okay great.

And you talked about having the capacity capacity in place for the next several years.

I guess what is the opportunity for maybe revenue to inflect a little more quickly than you anticipate if you started receiving orders or design wins for production. Later this year, how quickly could you ramp and do you feel that you have opportunity. If you needed more capacity that you could you could maybe augment what you have currently with.

Dan Bernard: And you talked about having the capacity in place for the next several years. I guess, what is the opportunity for maybe revenue to increase a little more quickly than you anticipate? started receiving orders or design wins for production. Unknown Attendee, Jeffrey Grampp, Jeff Christensen, David Williams, Timothy Burns, Unknown Attendee, Yeah, as far as our ability to produce products at the wafer fabs and the packaging firms, we can ramp them relatively quickly. Even from a material standpoint, you know, the wafers that we use are not special. I mean, they're out there available in the silicon commodity wafer market. And there's plenty of capacity to actually just, you know, do more runs than we have been doing with them. So that ability is pretty fast.

With other opportunities.

Yes, as far as our ability to produce product that the wafer fabs and our packaging firms, we can ramp down relatively quickly even from a material standpoint. The wafers that we use are not special I mean, there are out there available in the silicon commodity wafer market.

And there is plenty of capacity to actually just do more runs and we have been doing with them. So that ability as quickly as pretty quick and so it's really a function of how quickly do we see the customer adoption technology adoption with.

Dan Bernard: So it's really a function of how quickly we see customer adoption, you know, technology adoption, with customers, especially the big customers that we're working with. It always seems to take longer than anybody would like, but if they decide they want to start doing something meaningful, we could respond, you know, literally within the quarter, I think by ramping up additional products. And maybe just one last one here, but maybe you could talk a little bit about the ASP or even the bill of material potential on the solid state circuit. What does that look like, and maybe even on a per unit basis, but what kind of revenue could we expect as that begins to ramp up? Yeah, so for the simple, it's a multi-die module. If you look at the IGBT module market out there, those modules typically range anywhere from, let's say, 100 to 300.

With customers, especially the big customers that we're working with always seems to take longer than anybody would like but if they decided they want to start doing something meaningful we can respond.

Literally within the quarter by ramping up additional product.

Yes.

And maybe just one last one here, but maybe if you could talk a little bit about the the ESP or even the bill of material potential on the solid state circuit Breakers, what does that look like and maybe even a per unit basis, but what kind of revenues that we expect as that begins to ramp as you think about volumes.

Yes, so for the simple it's a multi die module if you look at the <unk>.

<unk> module market out there those modules typically range anywhere from let's say 100 to $300.

Dan Bernard: We're going to make sure we're price competitive in that market. One of the things that we've done in the design of the Simcoe power module is, you know, when we think about high-power circuit breakers for industrial utility applications, they have a huge range in size; they could go from, you know, a couple of kV up to dozens of kV, and the product is designed so you can parallel as many units as you want to get to whatever rating you want. So we don't have to make any special modules depending on the size of the breaker. And that's one of the things that we're getting for feedback is that customers that are focusing on circuit breaker applications really like the fact that it gives them unlimited flexibility in how they size the breaker. Thanks so much for the time, gentlemen; I appreciate it, man.

We're going to be make sure we're priced competitive in that market.

One of the things that we've done and the design of the <unk> power module is.

Four we think about high power circuit breakers for industrial utility applications. They have a huge range in size they could go from.

No.

A couple of JV up to thousands of JV and when the product is designed so you can parallel as many units as you want to get to whatever rating you want. So we don't have to make any special modules, depending on the size of the breaker and Thats one of the things that we're getting for feedback is.

The customers that are focusing on circuit breaker applications really like the fact that it gives them unlimited flexibility in how they size the breaker.

Great. Thanks, so much for the time gentlemen, appreciate it and I'll jump back in the queue.

David Neil Williams: Thanks, David. Thank you. Your next question is coming from Donovan Schaefer from Northland Capital Market. Your line is live.

Thanks, David.

Thank you. Your next question is coming from Donovan Schafer from Northland Capital markets. Your line is live.

Donovan Schaefer: Hey, good morning, guys. Thanks for taking the questions. So the first one I want to ask about is, you know, following covering the clean energy kind of like utility scale solar space, there's an acute pain that the project developers are feeling right now, and it's flowing through and impacting a lot of the utility scale equipment providers that that I cover. And, you know, one of them is a high-voltage circuit breaker. And I know this stuff can be pretty, you know, a lot of nuance, pretty technical, like, there may be differences, for instance, the beach hand may not be applicable for like a high-voltage type grid tie application or where, you know, or there could be a long validation process where you need a utility to sign off and say, yes, we But, um, So, you know, the pain point right now is kind of more high voltage, but you go through the whole spectrum or the whole gamut going down to the panel level and building up to where you tie into the grid.

Hey, good morning, guys. Thanks for taking the questions. So the first one I want to ask about is.

Following covering the clean energy kind of like utility scale solar.

Space. There is there is an acute pain.

The project developers are feeling right now and it's flowing through and impacting a lot of the utilities go equipment providers.

Did I cover.

And.

One of them is a high voltage circuit breakers and I know this stuff can be pretty.

A lot of nuance pretty technical lag there may be differences for instance.

The B Tran may not be applicable for like a high voltage type grid grid tie application or where.

Or there could be a long validation process, where you need a utility.

<unk> off and say, yes, we're going to allow such and such a piece of equipment to connect into our our wires or protect our system and so forth.

Yeah.

So the painful right now is kind of more high voltage, but you go through the whole spectrum or the whole gamut.

Going down to the panel level and building up to where you tie into the grid. So I'm curious if you're seeing any.

Dan Bernard: So I'm curious if you're seeing any incremental interest or, you know, folks taking a greater interest in this kind of approach if it is portable or transferable to those applications. And if the current kind of problems the industry is having there, if that's something you'd be able to benefit from, or if it takes too long, and so maybe not necessarily this cycle, but you know, the next time a bottleneck like this emerges in the space, you could you could execute them. I'm curious if you have any cover songs on that.

Incremental interest or.

Folks taking a greater interest in this kind of approach if it is portable are transferable to those.

Conditions.

And if with current kind of problems. The industry is having there if that's something you'd be able to benefit from or if it takes too long and so maybe not necessarily this cycle, but the next time a bottleneck like this emerges in this space you could you could execute on it.

Curious if you had any color around that.

Dan Bernard: Yeah, I mean, the nice thing about the way we have done SIMCOOL is you can literally do something that is at 1200 volts, or you can do something that is at 12,000 volts. And that's a big part of why these Forbes Global 500 companies are really interested in understanding our technology, because they'll figure out what's the right size, whether it's really high voltage, or whether it's going to be something that is a much more localized level at the panel level, and figure out what's the right solution there. And our technology gives them the ability to have the same semiconductor, you know, in this huge range. So they can craft solutions that give them a really unique offering compared to the rest of the marketplace.

Yes, I mean, the nice thing about the way we have done. Some coal is you can literally do something that is it.

1200 volts or you can do some things at 12000 volts and Thats a big part of why these Forbes global 500 companies are really interested in understanding our technology because they will figure out what's the right size, whether its really high voltage or whether it's going to be something that is a much more localized level at the panel level and figure out what's the right solution there and our.

Technology gives them the ability to have the same semiconductor.

In this huge range.

So they can craft the solutions that give them really unique offering compared to the rest of the marketplace. So we expect to participate in both ends of that spectrum.

Dan Bernard: So we expect to participate in both ends of that spectrum. Okay, so there's not some, something where, say, a certain number of b-tran dies would need to be connected in like series or in parallel, or, you know, because I know there's this modularity to it, where you can kind of mix and match and hit whatever specifications you need from a voltage and a current standpoint. But, you know, you could get like an incremental amount of losses or something, because, of course, that's one of the benefits is you have fewer losses versus other, you know, other circuit breakers, types of circuit breakers. But does it get prohibitive at any point? No, in fact, what actually happens is you parallel losses, and losses go down. Unknown Speaker.

Okay. So there is not some.

Something worse.

A certain number of.

B Tran dies would need to be connected and like series are in parallel or because I know, there's this modularity to it where you can kind of mix and match them and whatever.

Suffocation, you need from a voltage and current standpoint, but you could get like an incremental amount of losses or something because I know and of course, that's one of the benefits as you have.

Fewer losses versus others.

Other circuit breaker types of certain theaters, but does it get prohibitive at any point.

No in fact, what that gap is.

Parallel losses losses, but now.

Dan Bernard: Yeah, okay. Okay. Unknown Speaker.

Okay.

Yes.

You actually can be really impactful as you get to bigger and bigger breakers, where you just get to a level of losses that if youre doing igt's you can't even begin to touch it.

Dan Bernard: It actually can be really impactful as you get to bigger and bigger breakers where you just get to a level of losses that if you're doing IGBTs, you know, you can't even begin to touch. Okay, okay. Well, that's great. Um, and then, in kind of a similar vein, talking about EVs, you know, in phase two with the process of Stellantis, I know, I think in the release, you say, and in the prepared remarks, one of the objectives was for the customer to validate potential improvements for range and cost in the EV. And I know that it's kind of interchangeable because, you know, if you improve the range, you can then reduce the batteries required. And so that lowers the cost. And you can kind of pick and choose between the two. But is there anything, you know? I guess first, were they successful in that part of things where they're able to kind of come up with their own number, some kind of quantification? And then Is that something you can share?

Okay, Okay, well that's great.

And then with the.

With kind of similar in the similar vein talking about Evs on phase two with the process is still answers.

I know I think in the release you say in the prepared remarks, one of the objectives was to for the customer to validate.

Potential improvements for range and cost and the EV and I know thats kind of interchangeable because if you improve the range. You can you can then reduce the batteries required and so that lowers the cost and you can kind of pick and choose between the two.

<unk>.

Is there anything.

I guess first did.

They are successful in that part of things, where they are able to kind of come up with their own number some kind of a quantification.

And then is that something you can share and if not can you just maybe give more of a.

Dan Bernard: And if not, can you just maybe give more of a rough materiality, or if it's an attribute that would move the needle for them? Yeah, the large automobile companies have incredibly sophisticated modeling capability to assess the impact of a whole variety of things on the performance of the vehicle, just on your one comment. We haven't had any discussions with any automaker where they're talking about reducing the size of the batteries.

Russ materiality or if that's an attribute that would move the needle for them.

Yes.

The large automobile companies have.

Incredibly sophisticated modeling capability to assess the impact of whole variety of things on the performance of the vehicle.

Yes.

On your one comment we haven't had any discussions with any automaker, where they're talking about reducing the size of the batteries.

Dan Bernard: What they're looking for are solutions that help them lower cost and extend range at the same time, because they're fighting both of those issues. So to take batteries out, that doesn't give them a gain in range with improved semiconductors so far is just kind of a non starter for them. They want, they want something that tackles both of those issues. That's what BTN really does.

What they're looking for solutions that help them lower cost and extend range at the same time, because they are fighting both of those issues. So.

To take batteries out it doesn't give them a gain in range with improved semiconductors. So far is just kind of a nonstarter for them. They want they want something that tackles, both of those issues and thats, what <unk> really does help.

Dan Bernard: Because we're working under a nondisclosure agreement with them, they won't let us say, you know, what the model improvement was from using B-Tran. But, you know, what we do know is that they were really happy that it met their expectations. We did some work ourselves, leveraging some analysis that Toyota did looking at the improvement of power semiconductors, and our conclusion back then was our technology would improve the range of the electric vehicle by seven to ten percent by using B-Tran instead of IGBTs. So I think the answer they got must have been somewhere in that neighborhood, but I doubt they would let us disclose it.

Because we are working under a non disclosure agreement with them. They won't let us say what the improvement was from using <unk>, but what we do know as they were really happy that it met their expectations. We did some work ourselves leveraging some analysis that Toyota did looking at improvement in power semiconductors and our conclusion.

Back then was our technology would improve the range of electric vehicle by 7% to 10% by using <unk> instead of <unk>. So I think the answer they got must've been somewhere in that neighborhood.

I doubt they would let us disclose it.

Dan Bernard: Wow, okay, that's quite impressive. And then, for, we're talking about developing, you know, a module, a custom module for these types of applications. Yeah, I know, the needs can vary quite widely. So with the SimCool module, you've got four, four vTran dies in there. When it comes to doing, let's focus specifically, and just as kind of a point reference for the Stellantis, the idea of making a, And it does need to be, I mean, I guess you could talk about it just for this particular application to have a module where it's the power module that is in the drivetrain application for, you know, tying to the inverter, how many dyes would be involved in something like that It'll be bigger than Sim Cool. It depends a lot on the car, the size, the size of the motor that's in there, the electric motor they want to drive, but it could be from maybe as low as eight to 10 to maybe 20.

Wow, Okay, that's quite impressive.

And then.

Four.

Talking about developing.

Our module customer module for these types of applications.

Yeah, I know the needs can can vary quite widely so with the Sim cool module, you've got $4 four b Tran dies in there when it comes to doing let's focus specifically and just as kind of a point of reference for the Lantus.

You are making a.

And it doesn't need to be selling because I mean, I guess you could talk about.

Just for this particular application.

So have a module where its the power module that is in the drivetrain application four.

For tie into the inverter.

Many of dies would be involved in something like that I mean, if <unk> four.

Is this something where you talking tons.

Hundreds or really more like four same order kind of a magnitude of of some cool.

It'll be bigger than the simple it depends a lot on the car the size the size of motive its in there the electric motors, they want to drive, but it will it could be from.

Maybe as low as 8% to 10 to maybe 20.

Dan Bernard: It also depends on how many modules they want to use to get redundancy for the modules themselves. So they may break it up into a couple of groups just from a reliability standpoint. Thank you. Your next question is coming from Brian Dobson from Chardon Capital Markets. Your line is live. Hey, good morning.

And it also depends on how many modules they want to use to get redundancy for the modules themselves. So they may break it up into a couple of groups just from a reliability standpoint.

Thank you. Your next question is coming from Brian Dobson from Chardan capital markets. Your line is live.

Yes.

Hey, good morning, So you gave some great cover.

Brian H. Dobson: So you made some great covers on Stellantis, and you mentioned conversations with leading global companies. Do you believe that the growing network contributed to starting those conversations? And have you noticed that that relationship has opened up new opportunities for you? So yes, I think both initially with the Navy program for solid state circuit breakers and then with Atlantis, particularly after we were able to name them when we were named a finalist in the Atlantis Venture Awards. It both really resulted in a significant increase in our sales funnel, significant inbound inquiries, particularly around the solid state circuit breaker application in the hybrid and electric vehicle application as well. So that's something that we think will just expand our opportunities, including companies that aren't necessarily in our test and evaluation program that are now looking to purchase STEM cools rather than participate in a test and evaluation program to pin the customer kits that have individually packaged B-Tran So we think that'll drive revenue early on, it'll be very modest, but it'll drive revenue early on because companies are actually looking to buy several to tens of devices for their evaluation that, you know, we haven't even discussed as part of the Test and Evaluation Program.

On Atlantis and you mentioned also conversations with leading global companies.

Do you believe that the growing there.

This contributed to starting those conversations and have you noticed that that relationship has opened up new opportunities for you.

So, yes, I think Bose I initially with the Navy program for solid State Circuit Breakers, and then was the Lantus, particularly after we were able to name them when we.

We were named a finalist in the Lantus venture Awards and both really resulted in a significant increase in our sales funnel significant inbound inquiries.

Particularly around the solid state circuit breaker application in the hybrid and electric vehicle application.

Application as well so that's something that we think so.

We'll just expand your opportunities, including companies that aren't necessarily in our test and evaluation program that are now looking to purchase Sim cools rather than.

In the test and evaluation program to obtain the customer kits that have individually packaged <unk>. So we think that will drive and it will be very modest but it will drive revenue early on is companies are actually looking to buy.

Several two turns of devices for their evaluation that we havent, even discussed as part of the test and evaluation program. The other thing that we saw was as soon as we announced the lantus the other.

Dan Bernard: Another thing that we saw was that as soon as we announced Atlantis, the other top-down automaker that's already in our Test and Evaluation Program clearly reacted to that in terms of the level of activity, engagement, and things that they're looking to do with us. So I think they all realize they've got to figure out what their EV platform is going forward, how they are going to tackle the range and cost issues, and how they are going to do something that is innovative so it doesn't look like they're just copying what somebody else has already done. Yeah, it was very good. Thanks very much.

Top down automaker, that's already in our test and evaluation program.

Clearly reacted to that in terms of the level of activity engagement and things that they're looking to do with us. So I think they all realize they've got to figure out what is their EV platform going forward, how are they going to tackle the range in cost issues and how are they going to do something that is innovative it doesn't look like you're just copying what somebody else is already done.

Done.

Yeah very good thanks very much.

Jeffrey Scott Grampp: Yeah. Thank you. Your next question is coming from Jeff Grampp from Alliance Global Partners. Your line is live. Good morning, guys.

Sure.

Thank you. Your next question is coming from Jeff Gramm from Alliance Global Partners. Your line is live.

Good morning, guys.

Jeffrey Scott Grampp: I'm curious, with respect to the Stellantis process, is there a way to kind of compare and contrast the difficulty or risk profile, if you will, between the various phases? In other words, just trying to assess it as an outsider? Is it? Is it harder or more challenging to pass through a given phase?

Curious.

With with respect to the.

Atlanta's process is there a way to kind of compare contrast, the difficulty or risk profile. If you will between the various phases.

In other words, just trying to assess is an outside or is it is it harder or more challenging to pass through a given phase or is it just different and maybe a little bit apples and oranges thoroughly characterized in such a way.

Dan Bernard: Or is it just different than maybe a little bit of apples and oranges to really characterize them in such a way? I don't think they're substantially different from one phase to the next. They have different levels of focus, but they make their criteria pretty clear upfront about what we've got to do at each phase. There's a common view of what the deliverables are, and what the criteria are. For example, the technology readiness assessment that they went through, they shared with us, "Here's all the data we're going to need for you guys to meet the criteria that we need for production." They've been really good to work with, and their team is really, really sharp technically.

I don't think there is substantially different from one phase to the next they have different different levels of focus.

But they make their criteria are pretty clear upfront in each phase what we've got to do Theres a common view of what the deliverables are what the criteria are for.

For example, just this the technology readiness assessments that they went through.

They share with us here's all the data we're going to need for you guys too.

Meet the criteria that we need for production so.

They've been really good to work with and our team is really really sharp technically I mean, we've been really impressed by the caliber of their in house team Thats working on electric vehicles. So.

Dan Bernard: We've been really impressed by the caliber of their in-house team that's working on electric vehicles. It's one of those things where the focus is a little different at each phase, but there are no surprises. You've got to do the work and produce the data and do the testing and satisfy their requirements to put something into production. Okay, great. I understand. And then for my follow-up, I'm curious on the distribution front. You mentioned being pretty close, I think, with at least one distributor. Can you just talk at a high level? You know, how important you guys are that sales channel? As far as the overall opportunity set for you guys, if we kind of, I guess, exclude the still antithesis of the world, which sounds like, you know, those can be kind of game changers, but with respect to Sim cool and some of these other commercial developments, how important of a sales channel is that for you guys?

Just as it is.

One of the things, we're focused a little different in each phase, but no surprises in that.

You got to do the work and produce the data and do the testing and satisfy their requirements to put something into production.

Okay, great understood.

Then for my follow up I'm curious on the distribution front, you mentioned being pretty close I think with with at least one distributor can you just talk high level.

How important do you guys view that sales channel.

As far as the overall opportunity set for you guys. If if we kind of I guess exclude the still anticipate the world, which sound like those can be kind of a game changer, but with respect to some color on some of these other commercial development how important of a sales channel is that for you guys.

Jeffrey Scott Grampp: It's actually very important because, you know, we're a small team. And for a new technology, you spend almost as much time working with small customers as you do with big ones, especially early on in that process. So having a distributor that can serve the smaller customers, those that are not likely to go into a strategic supply agreement, is actually a great way for us to start getting revenue into the pipeline without having to build a huge front end of the team to be out there doing all the work that we need to do. Just chasing, you know, just individual sales. Okay, that makes a lot of sense. Thank you for your time, guys. Thank you, Jeff.

Hi, it's actually very important because we're a small team.

And for our new technology, you spend is almost as much time working with our small customers you do a big one, especially early on in that process. So having a distributor that can serve the smaller customers. Those that are not likely to go into a strategic supply agreement actually is a great way for us to start getting <unk>.

Revenue into the pipeline.

Without having to build a huge front end of the team.

To be out there chasing just individual sales.

Okay that makes a lot of sense. Thank you for the time guys.

Thank you Jeff.

Thank you. Your next question is coming from David Williams from Benchmark. Your line is live.

Jeffrey Scott Grampp: Thank you. Your next question is coming from David Williams from Benchmark. Your line is live.

David Neil Williams: Hey everyone, thanks for letting me ask a follow-up question. I wanted to ask, just to kind of follow up on Jeff's question about distribution. We talked in the past about one of the biggest hurdles is educating your customers or potential customers. How big of a hurdle do you think that is?

Hey, gentlemen, thanks for let me ask a follow up I wanted to ask just kind of following up on Jeff's question. There about the distribution you've talked in the past about one of the biggest hurdles as educating your customers or potential customers how big of a hurdle do you think that is that something that you can do with the distributors and I'm, assuming you're going to use them for.

Dan Bernard: Is that something that you, with the distributors, and I'm assuming you're going to use them for demand creation as well as logistics and order fulfillment, but are there any challenges you see in terms of education? Not so much challenges, you know. What happened is we worked with customers like Stellantis and some of the other big companies that are in our test and evaluation program. It's forced us to put together material that actually helps the technical audience come up to speed. So we're not having to do it from the start every time.

Our demand creation as well as logistics and order fulfillment, but are there any challenges you see in terms of educating that depth into salesforce.

Not so much a challenge is what's happened as we have worked with customers likes to Lantus and some of the other big companies that in our test and evaluation program, it's forced us to put together material that actually helps the technical audience come up to speed. So we're not having to do it from start every time. So we're getting a lot of reuse out of <unk>.

Dan Bernard: So we're getting a lot of reuse out of both the data, the presentation material, and the discussion material that we've put together for other customers. So we've already taken this first distributor through that. And because they're a technical sales team, they got it. They understood it right away.

The data the presentation material and the discussion material that we've put together for other customers. So we've already taken the first distributor through that.

Because they because there are technical sales team may got it I understood it right away.

Dan Bernard: So what we've told them is, look, you know, if you get stuck at any point in time, we've got field application engineering here. You can pull in if the questions get beyond your level, but they come up the learning curve pretty quickly. Yeah, And we actually issued some videos and application notes here just recently for the technical audience. And we'll continue to expand the amount of information we have on the website to support, for instance, sales through distribution. And one, just last one, if I may, on the test evaluation program: is there a way to think about the magnitude of customers that are coming to you outside of that T&E program and just kind of trying to get a sense of what that interest is outside of that capital? Yeah, so I would say the interest outside of the program is probably roughly equivalent to the interest in the program.

What we've told them is look.

If you get stuck at any point in time, we've got field application engineering here you can pull in if the questions get beyond your level, but they came up the learning curve pretty quickly.

And we actually issued.

Some videos and application notes here just recently from the technical audience and we will continue to expand the amount of information we have on our website to support for instance sales through distribution.

Okay and one just last one if I may on the testing evaluation program is there a way to think about the magnitude of customers that are coming to you outside of that <unk> program and just kind of trying to get a sense of what that interest is outside of that capital to you in the audience.

Yes, so I would say the interest outside of the programs probably roughly equivalent to the interest in the program.

Dan Bernard: So there are various reasons why someone might not want to sign a test evaluation agreement or prefer to receive some cool power modules rather than our B-Train test kit, right? Particularly if they're looking at solid state circuit breaker applications, for example. So we haven't specified who those customers are or even provided the necessarily kind of similar detail that we do with the test and evaluation program. But that's just our approach. If we don't have a signed agreement, we generally try to avoid talking about those opportunities with any form of specificity.

So there's various reasons why someone might not want to sign a test evaluation agreement or prefer to receive Sim cool power modules, rather than a retreat test kit, particularly because they will consolidate circuit breaker applications as and again as an example, so we.

We haven't specified who those customers are even providing necessarily kind of similar detail than we do with the test and evaluation program.

That's just our approach if we don't have a signed agreement.

Generally try to avoid talking about those opportunities with any form of specifics.

David Neil Williams: [inaudible] Thanks, David. Thank you. I will now turn this call back to Jeff Christensen to read questions submitted to the webcast. Thank you. Thank you, Matt.

Fantastic well keep up the good work gentlemen, and looking forward to the continued success.

Thanks, David.

Thank you I will now turn this call back to Jeff Christianson to read questions submitted through the webcast. Thank you.

Thank you Matt.

Jeff Christensen: And gentlemen, our first question is, Can you please explain how BTRAN fits into the application? Is it different for each application? And how do you think about that for the production of beach? Actually, for us, it's one of the advantages of our technology in that it's the same dive regardless of the application. Whether it's packaged a little bit differently, what we're actually going to make in the wafer fab is the same, whether it's going into an electric vehicle, a circuit breaker, or an energy storage or solar installation. As I mentioned in my pair of remarks, that might change over time, we'll see, you know, as we continue to make improvements in the BTRAN technology, but for now, it gives us a lot They're all the same for us.

And gentlemen, our first question is can you. Please explain how <unk> fits into applications is it different for each application and how do you think about that for production of B Tran.

Actually for US, it's what are the advantages of our technology and that it's the same now regardless of the application.

Whether it's packaged a little bit differently, what we're actually going to make in the wafer fab is the same whether it's going into an electric vehicle a circuit breaker or.

Energy storage or solar installation as I mentioned in my prepared remarks that might change over time, we'll see as we continue to make improvements in the B Tran technology, but for now it gives us.

A lot simpler approach to ramping production because we don't have to be to focus on is the are the wafers being made going to go to electric vehicle application or a solid state circuit breaker, they're all the same for us.

Dan Bernard: Thank you. And as the operator mentioned, you can click on that ask a question button and submit your questions. And please submit each of your questions as you think of them using that ask a question button rather than all your questions at one time. We have several questions here. The next question, gentlemen, is considering the vast interest in silicon carbide and GAN, how does BTRAN performance compare with these materials, and do you see BTRAN topology being applied to these materials in the future? Yeah, you know, they were each really targeting different things.

Thank you.

As the operator mentioned.

You can click you can click on that ask a question button and submit your questions and please submit your each of your questions. As you think of them in that ask a question button rather than all of your questions. At one time, we have several questions in here.

Next question gentlemen is considering the vast interest in silicon carbide and Gan, how does <unk> performance compare with these materials and do you see B Tran topology being applied to these materials in the future.

Yes.

They were each really targeting different things.

Dan Bernard: GAN really started where you needed very, very fast switching. So it was in things like radio frequency; it's been moving into power applications. You think about your computers, your laptop chargers, those are probably GAN-based devices; they've been trying to get to higher and higher voltages. There are some limitations in terms of what you can do with GAN that come from the nature of the material and the technology.

Dan really started where you need a very very fast switching so it was in things like radio frequency, it's been moving into power applications.

Think about your your computers your laptop Chargers those are probably Gan based devices. They have been trying to get to higher and higher voltage.

There are a there is some limitations in terms of what you can do with Gan that come from the nature of the material and the technology.

Dan Bernard: And you know, both GAN and silicon carbide are expensive. We actually have the ability to take our technology to silicon carbide, for example, but we haven't really been too focused on that yet, simply because of the fact that silicon carbide needs to come down significantly in cost, and it needs to improve in quality. And it's not, it's not trivial.

And both.

Both Gan on Silicon carbide are expensive.

We are actually have the ability to take our technology to silicon carbide for example, but we haven't really been too focused on that yet simply because of the fact that silicon carbide needs to come down significantly in cost it needs to improve and quality.

And it's not.

Dan Bernard: For example, if I go buy a silicon wafer, it costs me $60. If I go buy a silicon carbide wafer, it's $800. And that's part of what's driving some of the things you've seen, like Tesla announcing they want to reduce the amount of silicon carbide by 75%. It's all about how do you get the cost down to still improve performance.

Not trivial for example, if I go by a silicon wafer cost me $60. If I go by a silicon carbide wafer is $800.

And that's part of what's driving some of the things <unk> seen like Tesla announcing they want to reduce the amount of silicon carbide by 75%. It's all about how do you get the cost down still improved performance and Thats, what really creates the opportunity for retrans now as silicon carbide materials wide bandgap materials improve you will see us.

Dan Bernard: And that's what really creates the opportunity for BTRAN. Now, as silicon carbide and materials, wideband gap materials, improve, you'll see us make a silicon carbide device in BTRAN, but we think that's still a few years away, just because there's such a big gap in terms of what silicon carbide and wideband gap materials bring to the performance level. So it's, you know, there's a lot of excitement around it, but it really needs to be used in places where you need the ability to go to much faster switching speeds, or much higher temperatures, or much higher voltages than what you can do with a silicon device like BTRAN. Thank you.

Silicon carbide device and <unk>, but we think that's still a few years away just because there is such a big gap in terms of what is what silicon carbide, a wide bandgap materials bring for the performance level. So.

Theres a lot of excitement around that but it really needs to be use of places where you need the ability to go too much faster switching speeds are much higher temperature or much higher voltages than what you can do with a silicon device like <unk> vitriol.

Thank you.

Dan Bernard: Another question regarding silicon carbide is for future EVs that will utilize the silicon carbide platform. Are the enhancements to range with BTRAN similar in the silicon carbide platform versus non-silicon? Yeah, it's a very similar kind of improvement because it's really the nature of the architecture itself. One of the other things that can be done that, you know, we see an opportunity. If you look, for example, what Tesla is doing, rather than going to all silicon carbide MOSFETs, they're going to a hybrid module that includes a silicon IGBT with low-voltage silicon carbide MOSFETs to handle the switching. You can do the same thing with BTRAN.

Another question regarding Silicon carbide is for the future Evs that will utilize silicon carbide platforms are the enhancements to range with B Tran similar to in the silicon carbide platform versus non silicon.

Yes, it's a very similar kind of improvement because it's really the nature of the architecture itself.

Things that can be done that.

We see an opportunity if you look for example, what Tesla is doing rather than going to all silicon carbide MOSFET.

We're going to a hybrid module that includes a silicon at GBT with low voltage silicon carbide MOSFET is to handle the switching you can do the same thing with B Tran you could make a silicon <unk> with low voltage silicon carbide MOSFET is to give you the really fast switching so theres a lot of steps along the way that I think youre going to see it.

Dan Bernard: You could make a silicon BTRAN with low-voltage silicon carbide MOSFETs to handle the switching, and MOSFETs to give you really fast switching. So there are a lot of steps along the way that I think you're going to see in terms of how new semiconductor devices get adopted while everybody's working on bringing down the cost of silicon carbide and improving its quality. Thank you.

In terms of how new semiconductor devices get adopted while everybody is working on bringing down the cost of silicon carbide and improving its quality.

Thank you.

Dan Bernard: Our next question submitted using that X ask a question button is, can you talk about the interest level or make additional comments about the interest level among tier one auto suppliers? Yeah, we actually were engaged with one of the world's largest auto suppliers. And we started with a discussion about the transfer of the drivetrain, but they're one of the companies that I was referring to that have come back and said, Hey, there's a whole bunch of other products that we make that could use vtrans. So it's become a much broader discussion, and what we're finding is the tier one suppliers are now starting to engage with us because they're trying to figure out with the automobile makers having built these EV teams in-house, they want to be part of that. They want to be embedded into these designs, and they have a lot of ability to innovate themselves. So, B-Train gives them the ability to innovate designs for circuit protection, for quick disconnects on the batteries, for the drivetrain itself that they actually want to come up with so they can propose them to the automakers and give them a day.

Our next question submitted into the ask a question button is can you talk about the interest level.

Additional comments about the interest level among tier one auto suppliers.

Yes, we actually engage with literally one of the world's largest auto suppliers.

And we started with a discussion about Vietnam for the drive train, but theyre one of the companies that I was referring to that have come back and said hey, there's a whole bunch of other products that we make that could use b tran. So it's become a much broader discussion.

And what we're finding is the tier one suppliers are now starting to engage with us because they are trying to figure out with the automobile makers, having built these EV teams in house.

They want to be part of that they want to be embedded into these designs and they have a lot of ability to innovate themselves. So <unk> gives them the ability to innovate designs or circuit protection for quick disconnects on the batteries for the drivetrain itself that they actually want to come up with so they can proposal three automakers and give them a differentiated solution.

Thank you.

And we still have questions. Please submit them.

Look forward to answering your questions you can submit them into that ask a question button. Our next question is can you talk about other companies developing <unk> Beach, just bi directional power switch and who are your competitors.

Yes, we really don't see anybody else, that's developing an inherently bi directional device all the bidirectional switches that we see people putting together our combination of conventional technologies. They are putting <unk> back to back which doubles the losses or they are putting modified.

MOSFET is back to back.

And we keep a pretty close eye on what's going on both in the technical literature things that happened in the patent office and for example, our team is that applied power Electronics conference. This week, where there are specifically going to be looking at whats going on with others and bidirectional switching.

We really are competing against the IGT makers of the world. So it is the infineon.

On semis the fuji's.

The advantage with US really is as we ramp up in volume and as we have customers like the automakers, who are going to want a second source of supply, we actually would license our technology to them. So they can leverage their own investment and their fabrication facilities their sales and support organizations. So while they are competitors we.

At some point in time Theres going to be a couple of them that are actually really interested in collaborating with us.

We had one of them reach out to US here just last week wanted to explore collaborations so.

No we're definitely on the radar screen and we're trying to make sure that we're creating a pathway for partnerships rather than just pure competition.

Thank you it looks like there are no other questions at this time, Dan do you have any closing remarks.

I just want to thank everybody for joining our call. We made great progress here on our path to commercialize our technology and our talented team is on track for a very successful 2024. So we look forward to commercial announcements in advance of our next call and.

Thank you everybody for joining us.

Thank you. This concludes today's conference all parties may disconnect and have a great day.