Ideal Power Inc. Stock

Good day, and welcome to the IAxis Alpha Virtual Best Ideas Fall Investment Conference 2026. Our next presenting company is Ideal Power. [Operator Instructions]

I'd now like to turn the floor over to today's host, David Somo, Chief Executive Officer of Ideal Power. Please go ahead.

Okay. Thank you, and thank you for all of those who are joining us today. This is David Somo, President and CEO of Ideal Power. To start off with, I'd like to quickly introduce who's on the call with you today. In addition to myself, we have Tim Burns, our Chief Financial Officer; and to round out the executive staff here at Onsemi, 2 members that are not -- excuse me, at Ideal Power, 2 members that are not here with us on the call today would be Clay Beltran, our Chief Operating Officer, who joined us early this year and Mark Russell, our Chief Commercial Officer, who has been with us since the end of 2025.

And then from a shares outstanding basis, we have just over 16 million shares outstanding. There are about 3.4 million prefunded warrants. And then we also have about 1.2 million employee options and stock units. So altogether, about 21 million fully diluted shares. Our cash balance, and this is as of last reporting, which was June 30 is just over $41 million, which provides us with several years of cash, and we have a clean balance sheet with no debt.

So now I'd like to talk about how I view the investment thesis in Ideal Power. This is something that I used as a formula for evaluating companies and previous roles where I was responsible for M&A and how I evaluated my decision to join Ideal Power in November of last year.

So when looking at technology companies, the first thing I tend to do is look at technology and products, do they have a product in their technology that has a strong fit to secular megatrends in the market that is well protected from competition and differentiated. The second area is looking at markets as the company and the technology and products they develop addressing large and growing markets. Do they have access to key customers that can help validate their products in market and scale revenue with the company? And do they have an operating model that as they scale revenues that drops a strong operating profit and overall profitability for the company.

Evaluating here at Ideal Power, I think we check each one of those boxes from a technology and products perspective, we have a unique and differentiated product that is highly patented specifically for the applications we're targeting in solid-state circuit protection and related applications. We are addressing a multibillion-dollar market opportunity that is growing over the next several years as part of the secular mega trend in high-voltage DC power applications. We have access to global customers and have a growing sales funnel of more than $400 million in opportunities today and an operating model that is CapEx, low CapEx requirements that can scale as we grow revenue with the company.

So what is B-TRAN, for those of you who may not be familiar with it, it's a monolithic bidirectional power switch that was developed here at Ideal Power. Its uniqueness is really in that we develop a symmetrical device on both the top and the bottom side of the wafer, which allows us to conduct and block current flow in voltages in both directions natively with a single device. The same device can be deployed across multiple applications and the compelling advantages for B-TRAN for the applications that we're targeting, which are generally conducting applications in areas like solid-state circuit protection, EV contactors and battery disconnect units is its native bidirectional conduction and blocking capability.

The lower conduction losses that it was designed to deliver in always on or conducting applications and that by doing so with fewer components needed to conduct and block in both directions, you can actually achieve higher power density and lower system costs with fewer components.

Now quickly looking at the competitive landscape for B-TRAN in the applications that we're targeting around bidirectional power switching. If you look at more traditional devices, they typically have anywhere between 2 and 4 devices that are required for bidirectional conduction and blocking, in the case of silicon carbide requires a minimum of 2 devices and a back-to-back configuration to be able to conduct and block in both directions, whereas B-TRAN is able to do that with a single device older IGBT technology does that typically with 4 devices or more.

B-TRAN was specifically optimized to deliver low conduction losses, and in the bottom left graph here, you can see that when compared to IGBT or silicon carbide MOSFETs, it can deliver substantial reduction in losses, which improves power efficiency. It make simpler the thermal solution for the device and result in energy savings where it's deployed.

Now looking at the portfolio of products that we've developed. The first is a B-TRAN discrete device that's in an industry standard package. It's rated to 1,200 volts and 75 amps. Again, this one device is able to conduct in block in both directions in the applications it's used in. The second device we are developing for release is SymCool which incorporates 4 B-TRAN die in the first version, thereby increasing the current rating of what the device can conduct and providing a convenient, small form factor where customers may be developing applications that require higher current ratings than a single device is capable of achieving. This has also rated to 1,200 volts and 200 ounces currently. And then the final product that we will offer is B-TRAN die, which is for those customers who are developing their own modules or their own packaging solutions want to buy known good die that has been tested to prove functionality and to be able to integrate that in their specific packaging depending on their system requirements.

B-TRAN from patent perspective is now at 105 patents. And as you can see here on the slide, those are across multiple regions and geographies with 54 patents issued in the United States and 51 foreign patents to protect our inventions.

If the moderator is still on, is it possible for them to push the slide forward, we're stuck on pushing, Slide 8, please wait. They're seeing the slides. We're not seeing the slides apparently.

All right. So I can see it in the background here, I'll try to walk us through the slides to keep us moving for the limited time that we have today. Here, we're taking a look at the market opportunity for B-TRAN, which we break into 2 areas primarily. One is static or conducting applications that we can participate in with the current generation of B-TRAN we've developed and the second is switching applications where they're typically switching at 10-plus kilohertz where we are developing either optimized drivers for B-TRAN that can work best in switching environments or with a derivative device that we're developing for B-TRAN that we can later deliver to the market as part of our product road map.

If you look at these markets, the opportunity across data center, industrial and automotive for static applications. Again, those that are primarily conducting applications is about $3.7 billion today, scope growing to about $6.5 million by 2030 is our forecast. And then switching applications can add additional market opportunity that's about the same size between now and 2030 as we deliver solutions that are able to address those specific applications for TAM expansion.

What I would also point out is, as we look at the opportunity today, it's relatively equally split between automotive and industrial data center, and we expect the data center industrial to grow faster over the next 4 to 5-year horizon as EVs in the U.S., in particular have slowed in adoption while they're still being adopted outside of the U.S., primarily in China and Europe.

Next slide, please. So looking at where B-TRAN goes in the different applications environments that we've targeted with the product, First, in the data center, B-TRAN today, which are static conducting applications, we can use primarily in circuit protection in multiple spots basically from the wall of the data center down to the rack level. And these typically require different current levels and different number of protection devices depending on where it's placed in the data center.

The second area of opportunity is in electric vehicles, EV where B-TRAN is being evaluated for solid-state contactors and battery disconnect units with the products that we're now developing a release to market and then the final areas in EV charging also from a protection standpoint. Future opportunities for the products here as we develop switching solutions would be TAM expansion across data center into areas like traction inverter in electric vehicles and then around charging in the EV charging solutions.

Next slide, please. So looking at solid state protection in the transition, the high-voltage DC power distribution systems in the data center. There's been a lot of discussion throughout the industry, led by NVIDIA, the open compute project and others that as they continue to increase the compute capability and power required at the rack level, AC systems no longer can deliver the power that's required to operate those racks. And therefore, the transition that's upcoming to 800-volt DC distribution systems in the data center. This was also through alternative energy sources like battery systems that are scaling up to 800 volts and above. When you go to 800-volt or high-voltage DC power systems, solid-state circuit protection really becomes an essential part of the solution when compared to what has been the standard in AC operated data centers and environments, which have been more mechanical circuit breakers.

First and foremost, fault energy builds very quickly at 800 volts. You need much faster interruption capabilities as fault arise to be able to protect the sensitive equipment throughout the data center, whereas mechanical breakers operate in about millisecond time the solid-state breakers can operate in microseconds. It needs to have controlled term off, deterministic protection, some other capabilities. So in general, solid-state circuit protection goes together with the transition to 800-volt or high-voltage DC power systems.

Next slide, please. So during the recent quarterly results call in August, we talked about releasing and SSCB Reference Design Kit, rated 800 volts for customer evaluation. This is now stocked in our global distributor, Richardson Electronics for customers to purchase, and we've also delivered additional RDKs to customers for their evaluation and their labs to test our products and be able to help accelerate their own solid-state circuit maker protection. The capability of this device is rated 800-volt 63 amps. It uses 2 B-TRANs with a power efficiency that's achieved of about 99.9%, where customers are using this is to evaluate the performance of B-TRAN from a conduction standpoint, power losses, the ability to detect an interrupt alts as they occur and test the energy efficiency of the device. It can also then be used by customers to accelerate their own product development as its complete circuit breaker in the small format.

Next slide please, then offering an update on two of the strategic partnerships that we have with customers. One is around Stellantis. We continue to work with them on deliverables as part of their evaluation for solid-state contactor and BDU opportunity in future electric vehicles from the company, and we are making good progress in those areas with them. The other is working with a lead customer in Asia for their evaluation of our SSCB solution for HBBC, or 800-volt DC data center and industrial energy infrastructure applications. During the quarterly results call in August, I mentioned that we were close to delivering the first prototypes for customer evaluation. We've actually since delivered those prototypes to the Elite customer. We've demonstrated the functionality of the prototypes, and they're now conducting their own internal evaluation and testing of the devices for next steps.

Next slide, please. Looking at our sales funnel, I mentioned during the recent quarterly results call that the funnel has now increased to over $400 million. This is roughly split equally between industrial data center and automotive applications. So we have a healthy mix of products across different application areas, all generally aligned to solid-state circuit protection and battery disconnect unit applications. We've released the 800-volt RDK that I showed on the previous slide, that really does help customers not evaluate our products, but to accelerate their own internal development. And then we have a number of other engagements broadly with customers where we have moved things from the top of the funnel where you've identified and qualified opportunities into more of the middle of the funnel, where there's more active evaluations taking place for our products.

From a manufacturing perspective, we've talked about having multiple fabs or foundries that we work with to fabricate our B-TRAN devices so that we have the source of supply that we need to be able to scale the business as we win business at customers and ramp production. We also use multiple outsourced assembly and test houses or assembly and packaging houses to build the final product for us, where it's going to be used in a packaged form.

And then finally, we have a global logistics footprint established so that we can support customers in each of the regions where we do business with them. One new point that I mentioned recently was we entered into a long-term supply agreement with the high-volume wafer foundry in Asia that really gives us a strong capability to scale our production as volumes increase over time and do so at the targeted gross margins we have for the business to drive profitability as we ramp revenue.

Next slide, please. From a strategic priorities perspective, first and foremost, we want to continue to add new opportunities to the sales funnel. We've seen it grow from earlier this year, was around just over $200 million or just under $200 million, excuse me, to over $400 million today. We want to continue to add new opportunities. The second area is going to be driving those opportunities in the funnel to design ins and purchase orders so that we start the production ramp for our products with customers and get customers products out into the field to start the business growth. Then we have continuing to work with customers across the board, whether they're in data center, industrial or automotive applications, specifically around the Stellantis opportunity to continue to progress this. We've met the deliverables we needed to provide for the next milestone in the project. We're working forwards with them in Q4.

We'll support that activity and then the subsequent deliverables as they're required and then continue to explore strategic investment opportunities because that can be beneficial in a couple of regards. One, a validation of our product and solutions in the market; and two, have a potential customer at the end who has a vested interest in the company and its success and works together with us to commercialize B-TRAN technology. So it's something we'll continue to work towards with the discussions that I'm having with potential strategic investors to date.

Next slide please. And I think that's the end of the slide presentation.

So I'll turn it over to Tim for the Q&A.

All right. The first question, how does Ideal Power's brand-based solid-state circuit breaker comparing performance and total system cost to competing devices for an 800-volt AI data center application.

Yes, so there are several advantages that our product was optimized to deliver for the applications we're targeting around conducting applications like solid-state circuit protection. One of those is lower conduction losses in these always-on typically conducting applications while also being able to rapidly detect alts as they emerge and mitigate those faults.

The second is our native bidirectional conducting and blocking capability. Essentially, what that means is we need 1 device to conduct and block in both directions where competitor solutions require at least 2 devices. And then the third is really fewer components that are required because of the native bidirectional capability of our device and the applications we address which can lead to better power density or improved power density and lower system cost.

All right. The next question, what are the important targets for catalysts that investors should watch out for in 2026 and 2027 as B-TRAN moves toward commercialization.

Yes. So there are probably 3 areas here that I would highlight. The first is something we are executing on today, which is the delivery of RDKs with B-TRAN for targeted applications that help customers complete their evaluation and accelerate their product development. As part of that been also prototype deliveries to customers. I think on the last financial results call in August, I mentioned that we were close to shipping the first prototype SSCB units for evaluation to a lead customer in Asia. We've since completed at Action. We've demonstrated product capability in their specific application, and they're now actively testing our prototypes in their labs.

The second area is around customer prototype builds and deliveries to end customers where they take the next step after validating our B-TRAN capabilities to develop their own products that they then shift end customers as prototype systems or field testing by the customers downstream. And then the final area is really looking for NRE agreements and purchase orders that we generate for sales with B-TRAN.

Okay. The next question, can you provide an update on your project with an industry partner to deliver an intelligent SSCB prototype for planned evaluation by U.S. hyperscaler and its NVIDIA Ruben Ultra 800-volt DC data center development environment.

Sure. So the hyperscaler is interested in evaluating the intelligent SSCB solution, as we call it, as part of its planned 800-volt DC infrastructure. As a first step, it wants to complete an engineering study and develop a simulation platform for its planned 800-volt DC power distribution architecture. This will include things like load, flow, short circuit, transient and protection coordination analyses. We are developing a proposal with our industry partner, to perform this study and create the associated HBDC models and simulation platform that they can use for the evaluation, which is expected to include NRE funding. The results will help establish the system architecture and protection requirements and, in turn, determine the timing and scope of subsequent hardware prototype evaluation.

The next question, what role do distributors ultimately play in the commercialization strategy?

Yes. So distributors are -- can be an effective way to increase our virtual resources. So essentially, they have existing relationships with many customers that with our small sales force, we cannot always be present at on a daily basis or a weekly basis to identify opportunities and work directly with customers on their product development. The distributors are an extension of our sales force to be able to identify those opportunities promote our products with those customers, help them through their product development and where it becomes an important opportunity or a priority for us, we can apply our internal resources alongside them.

In addition to the distributors, we are bringing on rep firms, which typically are more technically oriented, they're not stocking distributors, and they're exclusively focused on demand creation with technically capable sales organization. And so recently, for example, we just brought on a rep in the Southeast, who has identified multiple customer opportunities across their installed base where they represent other manufacturers' product lines, and we are working with them to met those opportunities now. So it's an important way to basically expand our feet on the street to promote and sell our products.

All right. The next question, and I'll answer this. Are you only used on lithium solid-state batteries or also lithium phosphate and other chemistries nonsolid state.

So our technology is battery agnostic, so it can be used with multitude and battery technologies.

All right. The next question, how defensible is B-TRAN's intellectual property position as larger semiconductor companies enter bidirectional power applications.

So we have a very large patent portfolio. As David had mentioned, it's not just here in the U.S., but it's in several countries, places like China, Japan, South Korea, India, Europe, et cetera. And it also covers not just the architecture itself, but also how you control a double-sided device and some application-specific patents. So we have a very strong patent portfolio around B-TRAN and the B-TRAN technology.

Next question, how much is your quarterly cash burn?

So our quarterly cash burn is roughly $2.5 million. I think our guidance for Q3 is a little bit higher than that, $2.7 million to $2.9 million. Our guidance for the full year is not more than roughly $10.5 million cash burn for the full year, which is up from about $9.6 million last year. And looking forward, we expect pretty modest increases in our operating expenses. So we would not expect significant increases in R&D, G&A. The place where we may see the most growth is in the sales and marketing line, which is the smaller of the 3 at the present time.

All right. The next question, which end markets are moving fastest today, AI data centers, energy storage, other industrial applications or EVs?

Yes. So our earliest opportunities for revenue are going to come in the data center and potentially industrial sectors. There's a lot of momentum, particularly around data center and with the halo effect, energy infrastructure, supporting the migration from AC to high-voltage DC data center power distribution environment and that is moving customers and prompting them to go much faster around product development, getting their products qualified and getting them into customers' hands for field testing and then into volume production.

So the most exciting and near-term opportunities for us are definitely data center in the accompanying energy infrastructure. Automotive and EV is still an important market because of potential volume that it drives, and we'll continue to work with customers there that we are engaged with today towards solid-state contractor and BDU solutions, but those typically take longer time.

All right. And then while we do have a few more questions at this point, I think we're approaching time, so I'd like to turn it back over to the moderator.

Thank you. That does conclude Ideal Power's presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.

Good morning, ladies and gentlemen, and welcome to the Ideal Power Second Quarter 2026 Results Conference Call.

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

[Operator Instructions]

As a reminder, this event is being recorded. I would now like to turn the conference over to Jeff Christensen. Please go ahead.

Thank you, Jenny, and good morning, everyone. Thank you for joining Ideal Power's Second Quarter 2026 Results Conference Call. On the call with me are David Somo, President and Chief Executive Officer; and Tim Burns, Chief Financial Officer. Ideal Power's second quarter 2026 financial results press release is available on the company's website at idealpower.com.

Before we begin, I'd like to remind everyone that a number of statements on this call are forward-looking statements. All statements on this call that are based on historical fact -- that are not based on historical fact are forward-looking statements. While management has based any forward-looking statements on its current expectations, the information which such expectations were based on may change.

These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties and other factors, many of which are outside the company's control that could cause actual results to materially differ from such statements. Please refer to the company's SEC filings for some of the associated risks, uncertainties and other factors. We would also refer you to Ideal Power's website for more supporting company information.

Now I'd like to turn the call over to Ideal Power's President and Chief Executive Officer. David?

Thank you, Jeff, and thank you to everyone joining us today. I'll begin with an update on our commercial progress from the start of the second quarter. Then Tim will review our financial results. And after our remarks, we look forward to your questions.

Let me start with our lead Asia customer. We're finalizing our low current solid-state circuit breaker or SSCB prototype development for shipment to the customer later this month for their internal testing. B-TRAN-enabled SSCB prototypes are expected to be available from this customer for their 800-volt AI data center and energy grid customers in the fourth quarter of 2026. With initial low-volume orders to support the prototype builds also expected in the fourth quarter. Beyond that initial project in an order of priority, we are engaged with this customer on 2 additional projects, one for a medium current SSCB designed for 800-volt DC data centers, energy storage applications, EV charging and industrial microgrids and the second for a low current SSCB for smart industrial buildings. Technical discussions on the medium current SSCB are already underway.

Second, under the letter of intent we signed in the second quarter, we advanced our co-development with an industry partner on a B-TRAN-enabled intelligent SSCB prototype for a planned evaluation by U.S. hyperscaler in its development for the NVIDIA Rubin Ultra 800-volt DC data center power system. We're targeting prototype delivery by the end of the fourth quarter of 2026. This prototype is also planned to be offered to additional hyperscalers and other AI data center operators adopting the NVIDIA Rubin Ultra Power architecture or comparable 800-volt DC AI data center power distribution systems for evaluation.

The Ideal Power team will be attending the Open Compute Project Global Summit in October, together with our industry partner to introduce this intelligent SSCB prototype concept to AI data center and infrastructure providers for their consideration.

Third, we delivered a second set of Gen 2 B-TRAN custom packaging samples and development kits to Stellantis for their evaluation. We are working closely with the customer on a detailed analysis of our solid-state contactor system-level specification to optimize the solution and align the remaining deliverables under the purchase order. While this has impacted the timing of our expected completions of deliverables under the PO, it is not delayed or otherwise impacted our expectations regarding the EV contactor opportunity with Stellantis.

The deliverables we've completed support the next project milestone scheduled for the fourth quarter of 2026. We will work to promptly complete future deliverables as they are agreed with the customer to support subsequent project milestones.

Fourth, we achieved an important operational milestone. We entered into a long-term supply agreement with a high-volume wafer foundry in Asia, not China, and achieved functional first silicon after initiating discussions with them in the first quarter of this year. This is an automotive-qualified fab that has built more than 1 billion power semiconductors. This foundry has the capacity to support high-volume industrial and automotive customers at a cost structure, we believe, supports our targeted gross margins at scale.

Fifth, we're seeing accelerating demand to support 800-volt DC architectures from a growing number of potential customers, including leading global electromechanical breaker manufacturers now seeking SSCB solutions. I've been asked how we are helping customers speed up adoption. And I would like to take a moment to explain the progress we're making.

We introduced a new SSCB reference design kit or RDK, to assist customers with evaluating our technology and accelerate the development of their own SSCB products. This is critical to adoption as companies that have traditionally supplied electromechanical breakers may not have internal expertise with solid-state solutions or may not have started developing SSCB products. With the rollout of 800-volt AI data center power architectures expected to start in the second half of next year, these companies need a close to market-ready solution to enable timely product introductions.

We are already seeing traction as one of our distribution partners has placed its first stocking order for these SSCB RDKs for delivery in the coming weeks and multiple customers have requested access to our new RDKs.

Sixth, after recently adding a Europe-based sales director, our team met with more than 20 potential customers at PCIM in Germany. Our European sales efforts have already led to early engagements with the European-based global automaker and Tier 1 automotive suppliers. We recently met with one of these global Tier 1s preproduction and production teams as we are finding significant interest in solid-state EV contactor and battery disconnect unit solutions.

We also have a new engagement with the European-based circuit protection company interested in a broad set of applications, including solid-state breakers for data centers and energy storage as well as battery disconnect units for EVs. They're targeting both U.S. and European markets on an aggressive time line.

Seventh, our newly formed Advisory Board now includes its first member, Dr. Sanjay Parthasarathi, Chief Marketing Officer of Coherent Corporation, a key supplier for AI data center infrastructure. Sanjay brings more than 35 years of leadership across data centers, optical networking and related technology markets, aligning with our near-term revenue opportunities. His deep market expertise and industry network directly support our plans to accelerate the commercialization of our high-value, high-impact solutions.

Let me spend a moment on the data center market. When people picture the AI boom, they think graphics chips, processors and servers. But the bottleneck is increasingly power, getting it to the data center in distributing and managing it once there. The forthcoming migration to the 800-volt DC power architectures in AI data centers and the supporting energy infrastructure is a catalyst that is accelerating the demand for high-voltage power semiconductors.

This is reflected in the industry's growing backlog for power semiconductors and is expected to drive rapid growth over the next several years. SSCBs are essential in high-voltage DC systems as they enable ultrafast fault handling for reliability. B-TRAN provides an ideal solution for solid-state circuit protection with its inherent bidirectional operation, low conduction losses, microsecond fault handling and 1200-volt rated operation provided ample safety margin for 800-volt power delivery systems.

The industry is in the early stages of a secular megatrend in power semiconductors that presents an exciting growth opportunity. I'll briefly discuss our product reliability testing and qualification plans. A simple way to think about it is that industrial and automotive qualification typically reflect the requirements of each end market. JEDEC industrial qualification supports our near-term opportunities in AI data centers, energy storage and grid infrastructure markets while AECQ or automotive qualification is designed for automotive applications.

Given the accelerating demand for power semiconductors to support AI data centers and energy infrastructure, which represent our nearest-term revenue opportunities, we are prioritizing work on industrial reliability testing and qualification. We plan to begin the industrial qualification process during the current quarter and completed in the fourth quarter.

Automotive reliability testing and qualification will be planned to align with customer time lines. Importantly, automotive qualification is typically required for use in vehicle production but is not a gating item to advance product development for automotive opportunities, including our EV contactor opportunity with Stellantis. As such, adjusting the timing of automotive qualification is not expected to affect our sales opportunities.

Our commercial progress is showing up in the size and quality of our sales funnel, which has grown to over $400 million in total revenue opportunity, up from about $300 million at our mid-May call. It's split roughly 50-50 between automotive and the combination of AI data centers and other industrial applications, and it is global.

Applications are primarily SSCBs and solid-state EV contactors with growing interest in solid-state transformers, all of which broadly fit into the category of circuit protection. While growing funnel is encouraging, converting it into design wins, production orders and revenue remains our top priority. We are focused on execution and working closely with customers to complete their evaluations, product development and testing to advance projects through the funnel and into volume production orders and revenue growth.

In closing, commercial momentum continued to build this quarter with prototype SSCB units being finalized for internal testing by our lead Asia customer, progress toward the planned evaluation of a co-developed intelligent SSCB prototype for U.S. hyperscaler, a growing pipeline of engagements with regional and multinational customers across multiple markets, and the rollout and first stocking order for our new SSCB reference design kit designed to accelerate customer adoption.

We also achieved an important operational milestone by entering into a long-term supply agreement with a high-volume automotive qualified foundry that we expect to be a cost-effective partner for us for years to come.

Overall, the industry's transition to high-voltage DC power architectures in AI data centers and energy infrastructure is serving as a catalyst for power semiconductors and solid-state circuit protection solutions, and B-TRAN enables a differentiated solution to fill that need. Our focus remains on advancing customer opportunities in the volume production orders, revenue growth and long-term shareholder value creation.

Now I'd like to hand the call over to Tim Burns to review our financials. Tim?

Thank you, David, and good morning, everyone. I'll begin by summarizing our recent capital raise. We raised $27.7 million in net proceeds from a registered direct offering of common stock and prefunded warrants that closed on May 18. We are excited that the financing was led by the company's largest institutional shareholders. The offering significantly strengthened our balance sheet. At June 30, 2026, cash and cash equivalents totaled $41.3 million. Post offering, we still have a clean capital structure and no debt.

Our second quarter 2026 cash burn was $2.5 million, flat compared to $2.5 million in the second quarter of 2025 and up from $2.3 million in the first quarter of 2026. Our Q2 cash burn was at the lower end of our guidance of $2.5 million to $2.7 million. Even with the flexibility provided by our recent capital raise, we will continue to manage expenses prudently and aggressively. We expect third quarter 2026 cash burn to be approximately $2.7 million to $2.9 million with a full year 2026 cash burn of approximately $10.3 million to $10.5 million. This compares to a 2025 cash burn of $9.6 million. The higher forecasted cash burn in 2026 compared to 2025 is due primarily to the hiring of additional sales and engineering personnel.

We recorded modest revenue in the second quarter of 2026. Initial orders from the companies evaluating our products for potential inclusion in their OEM products are expected to be small with order sizes increasing as customers progress through their design cycles, perform product qualification and build inventory for the commercialization of their B-TRAN-based products.

Operating expenses were $3.6 million in the second quarter of 2026 compared to $3.1 million in the second quarter of 2025. The increase was driven primarily by higher stock-based compensation expense, personnel costs and noncash patent impairments as we proactively rationalized our pending patent portfolio. Our 105 issued patents were unaffected by this rationalization and the streamlining of the portfolio lowers our future patent spend.

We expect operating expenses to increase modestly in the coming quarters due to growth in our sales and engineering teams to support our commercialization efforts as well as our growing number of customer engagements. We continue to expect some quarter-to-quarter variability in operating expenses, particularly research and development spending due to the timing of semiconductor fabrication runs, product development and other research and development activities as well as hiring.

The timing of equity award grants and performance stock unit vestings and related noncash stock-based compensation expense recognition will also cause variability in our quarterly operating expenses as it has in the last 2 quarters. Net loss in the second quarter of 2026 was $3.4 million compared to $3 million in the second quarter of 2025.

At the end of June, we had 16,421,520 shares outstanding, 1,238,553 options and stock units outstanding and 3,410,086 prefunded warrants outstanding. At June 30, 2026, our fully diluted share count was 21,070,159 shares.

At this time, I'd like to open up the call for questions. Operator?

[Operator Instructions]

Our first question is coming from Casey Ryan of AmerX.

I wanted to ask about the hyperscaler opportunity. Are you partnered with other component makers? And I'm just wondering if they're really sourcing their own solutions at this point, looking for better products and better pieces. And if one hyperscaler is doing it, do we think all of them will start to do it? Or is it sort of a personality of the hyperscaler in terms of how much they want to control versus turning that over to external parties like us.

Casey, I'll take that one. So I'll use your terminology. It's more of the personality of the hyperscalers. They're each involved at different levels depending on how they work with their partners that are supplying different components and systems that are deployed in the data center, either those who are all the way down to kind of the component levels that could integrate in bigger systems that then get deployed, there are those who stay at a higher level. So the opportunity here and working with our industry partners to deliver something that's more at a circuit protection level but bring some intelligence that's intended to help with managing how power is utilized and optimized across the power distribution system inside hyperscalers, which is why we believe it has relevance to them likely be less relevant for us to show up with a B-TRAN for them to evaluate.

But when it's at a more of a system level that they can potentially integrate in their environment that becomes potentially more interest and that's what we're working towards.

What do you think sort of the evaluation period, I mean does it feel fair to think that maybe it's a 1-year type of evaluation period shorter or longer, I guess.

Yes, difficult to call. And what I would refer to is for those who are looking to be on the front end of the 800-volt DC data center power evolution that's anticipated or projected to happen starting from the second half of next year and see some aggressive adoption as we go into the end of the year and into 2028. So the evaluation time line if it's going to be used early in that environment would have to line up with that schedule.

Yes. Okay. I mean that's actually consistent with what we've heard from a few other companies who are in your base necessarily, but are exposed to data center as well.

Are you guys -- do you -- are there conversations with other data center component companies that you sell with or partner with? And I'm not trying to draw a straight line to Coherent, but I did see that you added someone there to your advisory board and I think that's a positive, but obviously, Coherent is a big player in data center as well. But are you sort of with a partner or a group of companies partnering to sort of sell solutions? Or are each of you still pursuing your own direct access to say a certain hyperscaler or a certain customer opportunity in a data center?

So let me describe it this way, and I'll use the automotive market analogy. If you think about the way automotive works now, it was historically component suppliers, semiconductor suppliers like us would sell to Tier 1s who then would sell to the automotive OEMs and about 8 to 10 years ago, that began to shift where the OEMs wanted direct relationships with some of the semiconductor suppliers to know what's coming down the pipe and evaluate newer technology sooner and then have some influence over what their Tier 1 suppliers are providing them at a systems level.

I think there's opportunity here. Our traditional model would be us selling our semiconductor components, B-TRAN to somebody who's going to build a solid-state circuit breaker or a solid-state contactor for automotive that then gets integrated by the next level customer and goes eventually into a data center environment or industrial grid or something along those lines. I think the opportunity here is with the rapid pace of innovation to be able to take something that's more like a circuit breaker circuit protection level and introduce new concepts directly to -- those who are doing higher-level system integration or even in some cases, the hyperscalers themselves.

We're looking at new technology and how to prepare for this HVDC transition. And so we want to work at each level, direct with our more traditional customers that are building circuit protection devices or contactors for EVs, then their customers who may be doing the integration level and ultimately, to the hyperscaler, if possible, where there could be interest and they want to work at that level.

That's actually very, very helpful for me to hear that and sort of get a better understanding of that. On the capacity agreements, getting those feel positive, but it also maybe feels encouraging because perhaps customers were asking you about capacity and wanted you to sort of demonstrate a plan, which would sort of suggest some interest on their side. So I'm curious how much getting this sort of penciled out and contracted was sort of part of maybe satisfying some of the sales conversations that you're having with certain potential end customers.

Yes. So with the existing fabs that we have, I mean, we had capacity for 2-plus years with the existing relationships. But for us, particularly as you look longer term, you look at things like the automotive market, our new long-term supply agreement really supports the long-term scaling of our business and probably even more importantly, it's at a cost structure that we believe support our targeted gross margins, right? So we've publicly say we're looking for gross margins of 40% plus, and we have a long-term relationship now that we believe will support that.

Yes, 40% plus. Okay. All right. Terrific. And then last question, I guess, with Stellantis, we always are encouraged by any progress there. But I guess what do you think is Stellantis sort of unpredictable for you and there's no way to sort of say, when will they start to integrate some of these products or make a decision in a definitive way. How do we think about that? And has the opportunity narrowed or widened since maybe we first started talking about them 18 months ago, 24 months ago?

Yes. So I'll take that one, Casey. We are now -- the level of depth in the discussions with Stellantis towards working for the solid-state contactor program has definitely increased. Over the past couple of months, we are working with them very closely on the definition of their system solution level to understand how B-TRAN can be used in their environment to be able to optimize the performance and the capabilities of their system, looking and evaluating different alternatives that extend beyond our contribution to the system. It includes things like packaging and so forth that need to be considered as the total system solution.

And so I'm encouraged with the improved depth of the conversations that we have as we continue to work closely with them for the contactor program. And so that's -- for me helps to understand as the discussions deepen, you get into more details that's typically a positive sign of where things are progressing.

Well, we appear to have reached the end of our question-and-answer session on the phone lines. I will now turn the call back to Jeff Christensen to read questions submitted through the webcast. Thank you.

Thanks, Jenny. The first question submitted is, why are the foundry agreement and functional first silicon so important for Ideal Power?

Yes. And I kind of addressed this in responding to one of Casey's questions, but One, it's a long-term supply agreement, right? So this will allow us not just to get through the initial ramp, which we had already planned for with our existing fabs, but really gets us in a place where several years out when things like automotive volumes are potentially much more significant. We have an existing relationship now that will support that.

The other thing, obviously, is in a larger fab, more established fab, there's a cost structure, right? So I had mentioned in answering Casey, that we believe that we can get to our targeted gross margins at scale with this new foundry relationship. And we have. And it does provide confidence to the customers because they'll recognize the fab if we disclose it to them under NDA, and they'll know that we'll be able to supply them even if their volumes grow very rapidly.

[Operator Instructions]

Our next submitted question was what gives management confidence that Ideal Power was successfully commercialized?

Yes, I'll take that one, Jeff. And I think you laid that out during the prepared remarks, but essentially, there are 3 I would say. One is that B-TRAN possesses benefits and advantages for the applications that we're targeting, primarily around solid-state circuit protection that span data centers, energy infrastructure and EV applications. We think we have some unique and differentiated capabilities that I described during the call that serve us well and make us very competitive in those applications.

The second is the continued expansion of customer engagements and our sales opportunity funnel. I'm seeing continued progress with adding new opportunities to the funnel and deepening engagements with customers. That helps move us along that development time line in working towards production systems.

And then the final is that we're actually going to be in the right place at the right time from a market perspective, with respect to the growth outlook and secular megatrend that's taking place around high-voltage DC for data centers and energy infrastructure, and that fits well with where we've targeted B-TRAN from an applications perspective and from a growth opportunity.

Thank you. Are there a couple of milestones that Ideal Power will achieve with the recent capital raise?

Yes. So for us, I mean, our strategy doesn't change on how we're attacking the market. We don't expect enormous increases in our spend just because we have more capital on the balance sheet. We'll continue to be aggressive in managing our cash spend. So what it does do is we have over $40 million -- over $41 million actually on the balance sheet at June 30. So we have a strong balance sheet. That will be viewed very favorably by both vendors and customers as we move forward. So it puts us in a better position to commercialize our technologies and give our partners the confidence that we have adequate capital for several years.

The company issued a shelf registration on July 10. And any additional commentary on that?

Yes. So from my perspective, it's good housekeeping. So our prior shelf was expiring or it expired and we wanted to put up a shelf. We have no intention on raising capital right now. We will have it available to issue registered shares if there is a strategic investment that comes along. We're in discussions with companies on that possibility. Obviously, that would be great for validation of the technology and for revenue generation as well. But again, it's -- does not indicate that we have any intent to raise capital. It is just good housekeeping. It's a 3-year instrument. So 2, 3 years from now, there is a reason for us to raise capital or if there's a strategic investment opportunity that comes along, and just gives us the flexibility to these registered shares.

Thank you. The next question is, the company includes in its strategic priorities in the press release and in the presentation to continue to explore strategic opportunities with global market leaders. Is that -- the question about that was, does that mean corporate investors taking equity stakes or -- and/or is that the investment community?

So it would be customers, right? So this would be a customer that is going to potentially adopt our technology. It gives them an incentive for us to succeed. We could potentially have a very positive relationship in terms of driving revenue growth. And we had a lot of the large companies that we're talking to in terms of prospective customers have equity branches that actually do invest in key suppliers and key technologies for their OEM products. So that's what we're potentially looking at there.

[Operator Instructions]

The next submitted question was what third-party validations exist around B-TRAN? Any comment on that?

So we're in the process of -- and David talked about this extensively in his comments, but going through JEDEC qualification for the industrial markets, which is key for our near-term revenue opportunities. We also will align our time line for automotive qualification with the automotive opportunities in our pipeline, including Stellantis. We've worked with multiple actual third-party testing houses to generate a lot of data on B-TRAN. A lot of that is included in the data sheets that we have published on our website.

And all of our customers just don't take for granted what's in the data sheet. They evaluate the technology. They bring it into their lab. They test it themselves to understand the operating conditions and how it operates under different conditions. So from that perspective, I think we're in really good shape.

The next submitted question is, can you help investors understand the types of current customer paid engagements?

Yes. So for us right now, there's a couple really. So one is product sampling and development kits. And these are generally will be small volume orders where they want to get the technology in their lab and evaluate it for use in their applications. The other thing is potentially NRE fees for custom development projects. So if prospective customer wants, for instance, a custom package for their application, that's something that we would potentially do and earn NRE dollars for doing that. So those are the main types of revenue near term. And then longer term, obviously, we'll be looking at much higher volume orders in some of these companies actually adopt our technology for their end products.

Thank you. That concludes our question-and-answer session. I would now like to turn the call over to -- back over to David Somo for closing remarks.

Thanks, Jeff. I want to thank our employees. Their innovation and hard work are what's driving our progress. And thank you to everyone who joined us today and your support. I look forward to our next quarterly results call in November as we execute on our plan to commercialize B-TRAN.

Operator, you may end the call.

Thank you very much. This concludes today's conference call. All parties may disconnect and have a great day.

Good morning, ladies and gentlemen, and welcome to the Ideal Power First Quarter 2026 Results Conference Call. [Operator Instructions] As a reminder, this event is being recorded.

And I would now like to turn the conference over to Mr. Jeff Christensen. Please go ahead, sir.

Thank you, and good morning, everyone. Thank you for joining Ideal Power's First Quarter 2026 Results Conference Call. On the call with me are David Somo, President and Chief Executive Officer; and Tim Burns, Chief Financial Officer. Ideal Power's first quarter 2026 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 the company's 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 the associated risks. We would also refer you to the company's website for supporting company information.

Now I'll turn the call over to Ideal Power's President and Chief Executive Officer. David?

Thank you, Jeff. I appreciate everyone joining us today. I'll provide an update on our commercial progress since the start of the first quarter. Afterwards, I'll turn things over to Tim to discuss our financial results. We look forward to your questions after our remarks.

First, our lead Asia customer project for low current solid-state circuit breakers, or SSCBs, continues to advance through product development and remains on track for prototype units for 800-volt AI data center and energy grid customer evaluations. The prototype units are expected to be available in the fourth quarter of 2026, with initial low-volume sales orders to support the prototype build. Beyond that initial project, we started 2 new projects with this customer, one for a medium current SSCB designed for 800-volt DC data centers, energy storage applications, EV charging and industrial microgrids. And the second for a low current SSCB for smart industrial buildings.

Second, we signed a letter of intent with an industry partner to co-develop a B-TRAN-enabled intelligent SSCB prototype for evaluation by a U.S. hyperscaler in its development environment for the NVIDIA Rubin Ultra 800-volt DC AI data center power distribution system. Prototype delivery is targeted for the end of Q4 2026, with an expected purchase order for the delivery of the prototype units. This prototype is also planned to be offered to additional U.S. hyperscalers and other AI data center operators adopting the NVIDIA Rubin Ultra rack architecture, or comparable 800-volt DC AI data center power distribution systems for evaluation.

Third, we delivered initial next-generation B-TRAN custom package samples and development kits for evaluation to Stellantis for EV applications. We are on track to complete the remaining deliverables under our existing purchase order with Stellantis by mid-2026.

Fourth, we engaged new Asia-based global suppliers of power solutions for the potential development of B-TRAN-enabled SSCBs for use in solid-state transformers, or SSPs, targeting 800-volt DC AI data centers, energy storage systems, EV charging and the energy grid. SSPs represent a meaningful opportunity for B-TRAN, and these are our first SSP-specific customer engagements.

Fifth, we engaged several multinational customers for the potential development of B-TRAN-based SSCBs across AI data centers, smart industrial building applications, energy storage systems and the renewable energy grid.

Sixth, strategic investment discussions with global market-leading customers continue to be part of our commercial strategy. I have ongoing discussions with potential strategic investors and plan to continue to see those through.

Reflecting this progress, our sales opportunity funnel increased to over $300 million revenue opportunity to date, up from approximately $200 million at the time of our investor business update call at the end of February. These opportunities continue to diversify across AI data centers, industrial and automotive applications as well as across multiple geographies. While growing funnel is encouraging, converting it into design wins, production orders and revenue is the top priority. We are focused on execution and working closely with customers to complete their product development and testing to advance projects through the funnel and into volume production orders and revenue.

At the Advanced Power Electronics Conference in March, we met with approximately 30 companies that expressed interest in B-TRAN during and following the conference. And some of those discussions have since progressed into qualified sales funnel opportunities. In addition, during my recent 2-week business trip in Asia, my second such trip to Asia this year, I highlighted that we initiated 2 new projects with our lead Asia customer, our first opportunities with SSP customers, and we saw strong interest in B-TRAN-enabled solid-state circuit protection applications, expanding AI data centers, energy storage systems, grid infrastructure and the industrial sector.

Now I'd like to briefly touch on the upcoming market inflection in the industry's transition of power architectures. We continue to see growing industry momentum in the adoption of next-generation high-voltage DC power architectures for AI data centers and grid infrastructure. Importantly, the AI data center build-out has driven extraordinary growth in GPUs, CPUs and training chips. But the power systems delivering electricity to operate the next generation of those chips are now the limiting factor, and the industry is mobilizing to address it.

Legacy 400-volt AC-based data centers were designed for rack power levels of 10 to 50 kilowatts. Next-generation AI workloads are pushing those requirements to 100 to 150 kilowatts in the near term and eventually beyond 500 kilowatts with some industry planning scenarios targeting 1 megawatt per rack by 2030. To support that scale, the industry is transitioning to higher voltage DC or 800-volt DC power architectures, a shift NVIDIA has been actively driving through its GPU platform road map. We believe this transition is in its earliest stages and will expand demand for solid-state circuit protection, capable of handling bidirectional current flow, microsecond fault detection and intelligent control that traditional mechanical breakers were simply not designed to support.

At the recent Advanced Power Electronics Conference, we presented a paper highlighting why solid-state circuit breakers are essential for emerging 800-volt AI data center power distribution architectures and how B-TRAN effectively addresses the key design challenges customers face, including power efficiency, controllability, fast fault response, power density and system costs, challenges that have made silicon carbide solutions a difficult fit for this application. Building on this emerging market opportunity, we also added our first potential solid-state transformer projects to the sales funnel with prospective customers in Asia. Our addressable market opportunity is large and is expanding as the industry's power archer (sic) [ architecture ] transition unfolds across multiple markets.

Shifting topics, our patent coverage spans North America, China, Taiwan, Japan, South Korea, India and Europe, all representing our priority patent coverage geographies. As a result of our continued innovation, our list of issued B-TRAN patents is now at 103 with 50 of those issued outside of the United States. To safeguard our intellectual property further, we treat the double-sided wafer process flow we developed to make our devices as a trade secret and do not disclose the identity of and work under strict confidentiality with our wafer fabrication partners. So even if a competitor studied our patents, they wouldn't have the know-how to fabricate the device. In addition to minimize the potential for infringement, we exclusively work with foundries and packaging houses in countries that have a history of respecting intellectual property rights.

In closing, commercial momentum continues to build with prototype programs progressing with our lead Asia customer, co-development of prototype units with an industry partner for evaluation by U.S. hyperscaler, Stellantis deliverables progressing on schedule, our first opportunities for B-TRAN enabled SSPs and engagement expanding with several new SSCB opportunities with multinational customers.

The industry's transition towards high-voltage DC power architectures and AI data centers and energy infrastructure is expanding the opportunity for advanced solid-state circuit protection that traditional mechanical breakers do not address and B-TRAN is uniquely positioned to meet that need. Our focus remains on converting our expanding sales funnel and customer engagements into production orders, revenue and long-term shareholder value creation. The strategic priorities we have set are designed to achieve these goals.

Now I'd like to hand the call over to Tim Burns to review our financials. Tim?

Thank you, David, and good morning, everyone. Our first quarter 2026 cash burn from operating and investing activities was $2.3 million compared to $2.1 million in the first quarter of 2025 and $2.2 million in the fourth quarter of last year.

Our Q1 cash burn was below our guidance of $2.6 million to $2.8 million. We continue to manage expenses prudently and aggressively. We expect second quarter 2026 cash burn to be approximately $2.5 million to $2.7 million with a full year 2026 cash burn of approximately $10 million to $10.5 million. This compares to a 2025 cash burn of $9.6 million. The higher forecasted cash burn in 2026 compared to 2025 is due primarily to the hiring of additional sales and engineering personnel.

Cash and cash equivalents totaled $16.4 million at March 31, 2026. We have no debt and a clean capital structure.

We did not record revenue in the first quarter of 2026. Initial orders from the companies evaluating our products for potential inclusion in their OEM products are expected to be small with order sizes increasing as customers progress through their design cycles, perform product qualification and build inventory for the commercialization of their B-TRAN-based products.

Operating expenses were $3.7 million in the first quarter of 2026 compared to $2.8 million in the first quarter of 2025, driven primarily by higher stock-based compensation expense and personnel costs. Stock-based compensation expense increased in the first quarter of 2026 due to equity award modifications under the transition services agreement with our former CEO and inducement grants to our incoming CEO in the fourth quarter of 2025. We expect operating expenses to increase modestly in the coming quarters due to growth in our sales and engineering teams to support our commercialization efforts as well as our growing number of customer engagements. We continue to expect some quarter-to-quarter variability in operating expenses, particularly research and development spending due to the timing of semiconductor fabrication runs, product development and other research and development activities as well as hiring.

The timing of equity award grants, vesting and related noncash stock-based compensation expense recognition will also cause variability in our quarterly operating expenses as it has in the last 2 quarters.

Net loss in the first quarter of 2026 was $3.6 million compared to $2.7 million in the first quarter of 2025. At the end of March, we had 12,112,118 shares outstanding, 1,464,226 options and stock units outstanding and 2,238,040 prefunded warrants outstanding. At March 31, 2026, our fully diluted share count was 15,814,384 shares.

At this time, I'd like to open up the call for questions. Operator?

[Operator Instructions] Okay. While we wait, I will turn this call back over to Mr. Jeff Christensen to read questions submitted through the webcast.

Our first submitted question is, if you could leave investors with one message today about why Ideal Power is a compelling investment opportunity at this stage of the company's development, what would it be?

Yes. So I'll take that one, Jeff. We're at the cusp of high-voltage DC secular megatrend where the energy infrastructure across data centers, grid, energy storage and industrial applications are at the early stages of transitioning from AC to high-voltage DC systems. This aligns very strongly to the capabilities we have and benefits of our B-TRAN product, specifically in areas like solid-state circuit breakers.

As I mentioned at the beginning of my comments, it's not just a 1-year phenomenon. We think this is a multiyear secular megatrend that will continue. It's just starting and will continue through 2030 and beyond. So we expect that to expand the market opportunity for B-TRAN and the applications that we're targeting over that period of time.

Jeff, could you...

The next submitted question was any sense that electric vehicle recovery, mainly in Europe, is igniting interest in B-TRAN?

So in the -- our sales opportunities, we have multiple customers that are evaluating B-TRAN, both across automotive OEMs like Stellantis and Tier 1s. Listening to some of the commentary from our peers and what I've seen in the market is that the current oil situation is driving renewed interest in EVs, and that renewed interest could lead to increased sales volumes, which increases the opportunity for B-TRAN on those programs that we have with our customers.

The next submitted question is, please comment on how B-TRAN compares with Infineon's CoolSiC JFET product.

Yes. So Infineon's CoolSiC JFET, that's a new form of silicon carbide FET device. Initially, there were silicon carbide MOSFETs. The comparison between B-TRAN here is, first and foremost, in the bidirectional -- inherent bidirectional conducting and blocking capability of B-TRAN. JFETs, like silicon carbide MOSFETs, require back-to-back configuration, so at least 2 devices to be able to conduct and block in both directions compared to a single device for B-TRAN. In addition, like I've heard during my recent tour with customers, where they are evaluating silicon carbide MOSFETs, it becomes very difficult in medium and high current applications to share current and control the turn on and turn off of the devices and SSCB applications, which is an area -- areas they cite as a strength for B-TRAN. And obviously, if we can reduce the component count, we can reduce the system size and improve the power density and reduce the cost of the overall system.

Yes. We've gotten questions submitted. So please continue to click that button and ask a question, and we look forward to answering your questions. The next submitted question is, please discuss where the company stands today in terms of manufacturing readiness.

Yes. So we're ready. We have relationships with multiple foundries and packaging firms. They'll be able to handle our sales ramp here over the next couple of years. We also have a road map to support business over the long term, supporting our forecasted capacity requirements while also providing significant cost reduction. So from a manufacturing perspective, we're in good shape.

Any additional color on the incremental improvements in the quality and quantity of the sales funnel? Additionally, what initiatives is Ideal Power undertaking to expand its sales funnel?

Yes. So I'll take that one. As I mentioned during my prepared remarks, the sales funnel has increased by more than 50% since the end of February and the March call that we did for the full year '25 earnings. The rigor around it has really increased as we -- and I personally sit in biweekly funnel reviews with the sales team, not only to look at the opportunities that are in there, but also understand what is being added to the funnel, where are we in customer development projects, how are things progressing, what can we do to speed up those projects by -- between our sales team and our applications engineering organization. If there are any issues that come up, how do we resolve those quickly with customers to work towards keeping projects on track.

And so I'd say the funnel rigor has certainly improved from the beginning of the year until now as we get a stronger handle on the opportunities going into the funnel, and we progress those opportunities through the funnel, both through our sales team and our applications engineering team and regular engagements with customers.

Does Ideal Power still expect to complete the automotive qualification and reliability testing this summer?

Yes, we continue to make progress towards completing automotive reliability testing this summer.

And the other -- next question on the same, what is the importance of the automotive qualification to Ideal Power?

Yes. So it's a requirement by automotive customers to deploy B-TRAN in their vehicles. So customers can proceed with product development while the qualification is taking place. But to put the products into vehicles to begin their field testing on the road and then to release in series models, they need to have the components automotive qualified.

You mentioned the automotive qualification completion this summer. What -- the other submitted question was, what other near-term catalysts that the market should be looking out for in the next 3 to 6 months?

Yes. From that perspective, it's really what we've communicated earlier. So it's announcing additional agreements with customers, whether they're custom development agreements or new programs that potentially for custom development. It's also -- we're expecting to start getting purchase orders. So we'll start to talk about those and announce those as they come in. But it's really all around commercial activity. We'll continue to make progress with Stellantis. We're targeting, again, those deliverables here to be completed by midyear. So we're expecting commercial announcements here over the course of the next 3 to 6 months that will be meaningful for us.

Who is the main competition for B-TRAN?

So if we look at for the applications we're targeting, it would primarily be silicon carbide MOSFETs. IGBTs really aren't considered in the space because of the losses associated with them. And when you're conducting the vast majority of the time, you want to minimize those losses.

And then any other -- so let me look here. The time line for revenue, any other comments about the time line for meaningful revenue?

So we're still on track with what we said in the business update call. Obviously, the projects we discussed on the call today, we're expecting to contribute to that, but there's no change in our expectation.

Okay. Are there any key hires planned in sales and engineering in the coming quarters?

So we've already actually added to the team this year. We added a sales director in Europe, applications engineering support in Asia. We've actually added someone in the quality team that's assisting with our automotive qualification. But the team is largely intact. We'll probably add just maybe a couple more positions over the balance of the year, but we have the core team in place to commercialize the technology.

Did -- how are things going with -- you mentioned Stellantis. Any other comment about other automakers?

As part of the funnel, if I look at over $300 million in opportunities that we have, it's roughly split about 50-50 on a percentage basis between automotive and then general data center, general industrial applications. So we do have other projects that are under consideration or evaluation by either automotive Tier 1s or OEMs, specifically around EV contactors, battery disconnect units.

Any other -- can you provide any other color on strategic partner investment possibilities?

Not much more depth that I can go into at this time other than I have ongoing discussions, as I mentioned in my prepared remarks, from potential strategic investors. I have continued those discussions at a high level in some of the companies and working to expand that to other areas to consider what may be the best fit for our company and a strong validation of B-TRAN in the market based on investment of somebody who has interest in adopting our products.

That concludes our question-and-answer session. David, do you have any closing remarks?

Yes. I just want to thank everyone who joined the call today. Along with our sales team, I will be attending PCIM in Europe next month, and I look forward to sharing updates with you in August regarding our progress as we execute on our plan to commercialize B-TRAN. In closing, I want to recognize the company's employees for their innovation and continued hard work and thank them for their efforts. Operator, you may end the call.

Thank you. Ladies and gentlemen, this concludes today's conference. All parties may disconnect, and have a great day.

Good morning, ladies and gentlemen, and welcome to the Ideal Power Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions] As a reminder, this event is being recorded.

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

Thank you, Holly, and good morning, everyone. Thank you for joining Ideal Power's Fourth Quarter and Full Year 2025 Results Conference Call. On the call with me are David Somo, President and Chief Executive Officer; and Tim Burns, Chief Financial Officer. Ideal Power's Fourth Quarter and Full year 2025 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 company 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. We would also refer you to the company's website for more supporting company information.

Now I'll turn the call over to Ideal Power's President and Chief Executive Officer, David?

Thank you, Jeff. I appreciate everyone joining us today. As you know, we laid out our strategy, commercial opportunities, priorities and expectations on our recent business update webcast call. It's a plan designed to accelerate commercialization and deliver increased value to our shareholders and our customers. Now that we have set out a clear path, our focus is on disciplined execution. I won't repeat what I shared on our business update webcast call. Instead, I'll discuss our progress since the start of the fourth quarter. Afterwards, I'll turn things over to Tim to discuss our financial results. We look forward to your questions after our remarks.

First, we announced a multiyear strategic cooperation agreement with Lazzen for the design, development and worldwide sales of a portfolio of B-TRAN-enabled circuit protection products. [ Think ] solid-state circuit breakers, battery disconnect units and EV contactors. Their first B-TRAN-enabled solid-state circuit breaker is expected to target AI data center customers. Other potential products include SSCBs for the intelligent grid, renewable energy and energy storage systems and EV charging infrastructure, along with contactors and battery disconnect units for EVs. For those of you not familiar with Lazzen, they are a publicly traded leading circuit protection solutions provider and systems integrator in Asia that is becoming increasingly focused on expanding into the North American and European markets.

Second, we signed a letter of intent with a leading power module manufacturer in Asia to develop and offer a family of B-TRAN-based power modules for sale to their customers. This customer already provides a portfolio of IGBT and silicon carbide modules. They see compelling value in B-TRAN and are interested in developing differentiated and customized B-TRAN-enabled solutions due to its inherent competitive advantages in a variety of end-use applications.

Third, we continue to advance our relationship with Stellantis, including executing on our existing purchase order for custom development and packaged B-TRAN devices for EV applications. We completed the first of 5 deliverables under this PO in the second half of 2025. We expect to complete the remaining 4 deliverables by mid-2026. That includes the delivery of custom packaged B-TRAN devices and reference design kits for the testing and evaluation in EV applications. We also remain engaged with Stellantis on a potential development program for EV contactors. Our B-TRAN patent estate continues to grow.

Currently, we have 100 issued B-TRAN patents with 48 of those issued outside of the United States. Our patent coverage spans North America, China, Taiwan, Japan, South Korea, India and Europe, all representing our high-priority patent coverage geographies. As a result of our continued innovation, our list of pending B-TRAN patents is now at 78. To safeguard our intellectual property further, we treat the proven double-sided wafer process flow we develop to make our devices as a trade secret and do not disclose the identity of and work under strict confidentiality with our wafer fabrication partners. So even if a competitor studied our patents, they wouldn't have the know-how to fabricate the device.

In addition, to minimize the potential for infringement, we exclusively work with foundries and packaging houses in countries that have a history of respecting intellectual property rights. I want to close by detailing the strategic priorities for the company. First, continuing to add new opportunities to the sales funnel. We have a good start today with nearly $200 million of potential sales opportunities identified, but need to continuously expand the sales funnel with new engagements and opportunities. Our opportunities are global, and we added a sales leader in Asia late last year and expect to add a sales leader in Europe and a field applications manager in Asia in the near term to support the global commercialization of B-TRAN.

Drive initial revenue ramp by converting sales opportunities in the funnel to design-ins and custom development agreements on the earliest possible schedule. It is not just about expanding our sales funnel, it is even more important that we execute and advance qualified opportunities through the funnel to production orders and revenue. Secure production orders with Lazzen for their first B-TRAN-enabled solid-state circuit breaker product and expand our strategic cooperation with Lazzen to include solutions to address additional markets and applications. complete the remaining deliverables under the Stellantis purchase order and continue to advance opportunities for EV contactors and battery disconnect units with Stellantis and other global automakers and Tier 1 suppliers. Continue exploring strategic investment opportunities with global market leaders.

We are engaged with a small number of global market leaders on potential strategic investments. Strategic investors are typically motivated by 2 factors: first, new and innovative technologies that best solve customer solutions challenges related to market shifts. For example, the transition from AC to 800-volt DC data center power distribution systems; second, providing additional resources and development support to guide and accelerate the commercialization of new technologies that are of significant interest to their business. While these investments take time, they offer significant validation and alignment of interest with customers.

Now I'd like to hand the call over to Tim Burns to review our financials. Tim?

Thank you, David, and good morning, everyone. I'll begin by summarizing our recent capital raise. We raised $12.6 million in estimated net proceeds from a public offering and concurrent private placement that closed on February 25. The offering included common stock and prefunded warrants.

Prefunded warrants are common stock equivalents included in the company's weighted average shares outstanding for EPS calculations, but not included in shares outstanding as they do not have voting rights until exercised. For those of you unfamiliar with prefunded warrants, they are not what you think of when you have to add warrant coverage to a deal. The prefunded warrants were effectively paid for except for the par value of a fraction of a cent at closing rather than a sweetener added on top of common stock for little or no additional consideration. We are excited that the financing was led by the company's largest existing institutional shareholders with participation from Ideal Power insiders, including our CEO.

The offering strengthened our balance sheet. Post offering, we still have a clean capital structure and no debt. Our fourth quarter 2025 cash burn was $2.2 million compared to $2.6 million in the fourth quarter of 2025 and $2.7 million in the third quarter of 2025. Our Q4 cash burn was well below our guidance of $2.5 million to $2.7 million. Our full year 2025 cash burn was $9.6 million compared to $9.2 million in the full year 2024. Our full year 2025 cash burn was below our guidance of approximately $10 million. We continue to manage expenses prudently and aggressively. We expect first quarter 2026 cash burn to increase to approximately $2.6 million to $2.8 million with a full year 2026 cash burn of approximately $10.5 million, with the year-over-year increase primarily due to planned 2026 hiring, including expanding the direct sales team, as David had mentioned. This compares to a 2025 cash burn of $9.6 million.

Cash and cash equivalents totaled $6.1 million at December 31, 2025, which does not include the $12.6 million of estimated net proceeds from our recent capital raise. We did not record revenue in the fourth quarter of 2025. Initial orders from the companies valuing our products for potential inclusion in their OEM products are expected to be small with order sizes increasing as customers progress through their design cycles, perform product qualification and build inventory for the commercialization of their B-TRAN-based products. Operating expenses were $1.9 million in the fourth quarter of 2025 compared to $2.8 million in the fourth quarter of 2024, driven primarily by lower stock-based compensation expense and personnel costs. The lower stock-based compensation included the forfeiture and modification of certain equity awards in connection with retirement and transition services agreement the company entered into with our prior CEO.

Due to the accounting rules around equity award modifications, the company expects significantly higher stock-based compensation in the first quarter, tapering off in the second quarter. We continue to expect some quarter-to-quarter variability in operating expenses, particularly our research and development spending due to the timing of semiconductor fabrication runs, product development, other research and development activities as well as hiring. The timing of equity grants and related noncash stock-based compensation expense recognition will also cause variability in our quarterly operating expenses.

Net loss in the fourth quarter of 2025 was $1.9 million compared to $2.6 million in the fourth quarter of 2024. Net loss in the full year 2025 was $10.6 million compared to $10.4 million in the full year 2024. At the end of December 2025, we had 8,537,387 shares outstanding and our fully diluted share count was 10,565,023 shares. Upon the closing of our recent capital raise and is detailed in the final prospectus supplement we filed with the SEC on February 25, we had 12,089,289 shares outstanding, 2,238,040 prefunded warrants outstanding and 1,486,955 stock option and stock units outstanding for a fully diluted share count of 15,814,384 shares.

At this time, I'd like to open up the call for questions. Operator?

[Operator Instructions]

Your first question for today is from Casey Ryan with WestPark Capital.

This is a good segue as we exit '25 and look forward to 2026. Tim, thanks for the breakdown on the operating expense line. I think that was going to be my first question. You talked about R&D being tied to the production sort of delivering samples to customers. What's the view on SG&A? And I'm just sort of thinking up from 4Q, but maybe looking back, typically, it's been $300,000 kind of has been the number. Is that sort of a good range to think about for '26? Or will that also vary quite a bit?

Yes. On a cash basis, it will not vary, right? So the only thing that could cause variation really is stock-based compensation expense. But we're expecting actually to keep G&A relatively flat. It may be up low single digits in terms of percent, but our goal is to keep G&A flat year-over-year.

Okay. Terrific. That's very helpful. And then I feel like the opportunities with Lazzen sound exciting and encouraging for sure. Can you tell us a little bit about if -- where they use your product, will that typically be new builds and new products? Or is there actually sort of a retrofit and maybe like upgrade and repair kind of opportunity given that it's a better solution than what might already be in the field in some locations?

Yes. So I'll take that one, Casey. Lazzen has a portfolio of what are the older style mechanical breakers and those are deployed in a variety of different applications. They're developing their solid-state circuit breaker portfolio now and building that out, and that's where we have the opportunity to participate in a portfolio of products from them, starting with areas like solid-state circuit breakers and static transfer switches that can go into first target for them in data centers and then also renewable energy, battery energy storage systems and grid applications.

So that's likely to be the first end markets for their portfolio of the solid-state circuit breakers they're developing where we have an opportunity to participate with them with B-TRAN.

Okay. And then just to the extent that you know the process, do you think data centers when we talk about the transition to the power systems, are those also like greenfield, meaning it's a whole new building? Or is it possible that an existing data center could be fully retrofitted? And so it would be new from the standpoint of how it operates inside its 4 walls, but maybe its location might not be new.

Yes. Interesting question because primarily, we're focused on new greenfield build-outs, but I also think there are some opportunities for brownfield, particularly as you have data centers stood up that are 400-volt single-phase AC, 3-phase AC and if they're going to adopt the new NVIDIA platforms, which could drive the power distribution systems to 800 volt, then there is a need to replace the infrastructure across the data center. So I think they're possible, certainly greenfield as all new opportunity, and there will likely also be some brownfield.

Okay. Terrific. Terrific. And then I was trying to drop this down, but you mentioned in 2026, you guys have, I think, 4 or 5 milestones with Stellantis that you're planning on achieving, which is terrific. I'm just curious if you could qualify the nature of those? Like are those tasks and accomplishments that the ideal power team can drive? Or in some cases, are you gated because they're dependent on some process over at Stellantis? I'm just wondering how much is in your control sort of just in terms of we need to execute ABCD.

Yes. So overall, there were 5 deliverables. One of them we completed late last year. So there's 4 remaining deliverables. Under that PO, it's custom development work. So it's custom packaging for the device. So there's 2 variants of packaging that they want us to deliver as well as just some reference design kits so that they can evaluate the technology further in the applications that they're looking at. So those are the 4 deliverables. They are completely within our control, and we expect to complete those by mid-'26.

Yes. That's terrific, Tim. Listen, I think between today and the update last week, I think we have a good sense of what's possible for '26. So thanks for the terrific update, and we look forward to the rest of the year making progress.

I will now turn the call back to Jeff Christensen to read questions submitted through the webcast.

Thank you, Holly. And I wanted to mention that the business update webcast call is available -- the link to it is available on our Investor Relations web page. I encourage you to watch it. Our first question, gentlemen, is what product development work is still required by Ideal Power to match the product line with customer needs?

Yes. So our current B-TRAN product, the first-gen product that we have today and have been widely sampling to customers meets the target applications that we have prioritized for accelerating our commercialization. So that includes areas like the solid-state circuit breakers, static transfer switches, EV contactors. Really no further modifications required at a device level. Where we're spending our time with customers now is really on their specific product development, where we're working with them to incorporate B-TRAN from optimizing drivers in the power supply circuitry to thermal solutions to fit into their enclosures and so forth, working with our device. So really, the products are set for initial applications that we've targeted, and it's more working with the customer through their product development now.

Thank you. The next submitted question is, what are the main hurdles to cross the sizable orders?

Yes. First and foremost, we need to work with the customers to complete their product development and qualifications. Once they have that design complete and they've got their qualification package for things like solid-state circuit breakers that they can deliver to their customers, then it's really on our customers to go win the business at their end customers.

So getting to those sizable orders requires getting through the product development and qualification with our customers, them going to their customers, introducing the products as part of their sales process and then having the customers adopt those systems and start to scale out builds.

Thank you. The next question, on the possible strategic partners, what do these partners need to see in order to make a decision?

Yes. Part of this is they'll need to evaluate and confirm that B-TRAN advantages kind of best solve the design challenges that they're seeing in systems requirements. So as they consider how to best meet some of the needs of end customers with the systems they're developing, they want to confirm that B-TRAN best provides the advantages to solve some of the challenges that they have. That then can move them forward with the strategic partner engagements.

Thank you. We've had several submitted questions, and we encourage you to click that Ask a Question button. Our next question is, are there opportunities for NRE revenue in 2026?

Short answer is yes on that one. As we work across many different customers and have discussions with them, where there are opportunities for some custom development, similar to what we've done with Stellantis or other customers who may want something either a bit different or want additional engineering support on the development of their products, that would present NRE revenue opportunities for us.

What ideal power solutions will drive the earliest revenue?

Yes. Here again, if I look at it from a product perspective, it will be things like solid-state circuit breakers and static transfer switches that are used in markets that adopt new technologies faster. So it would be data center, battery energy storage systems and grid applications is where we see the first opportunities and earliest revenue potential for B-TRAN-based products.

Thanks. Please comment on your plans to expand the sales funnel.

Well, 2 approaches here. The first, as you heard during the prepared remarks, we're expanding and investing in our own sales resources here. So late last year, we added a sales leader in Asia. We now are adding an applications engineering manager there that is able to sit in the lab with customers to help them accelerate their product development and new customers evaluate B-TRAN for their potential products.

The second area is really leaning into our distributor network, where we're putting new tools in place that can help them sell B-TRAN and actually some programs that will incentivize them to go out and get design ins and design wins and customer evaluations with our products. So that will help us fill the top of the funnel. And in fact, not in our funnel today is more than 100 different opportunities that we're vetting. And once qualified, I would expect many of those to move into the funnel.

What are the company's plans to shorten the prospect sales cycle?

Yes. Really because B-TRAN is a new technology and different from conventional solutions that customers understand well like IGBTs and silicon carbide FETs. We need to help the customers both evaluate our products for their systems and then accelerate product development where we have a different power supplier driving structure for the devices. So the first is reference design kits. We continue to work on optimized reference design kits that serve as a very good point for customers to start their design and accelerate their product development by doing a good part of the work for them specific to the B-TRAN subsystem of their products.

The second is use our applications engineering resources here within the company as customers get into their product development and have questions, we're providing direct support to them through our engineering team with applications notes as well as supporting them on calls or as needed, sitting in the lab with them. And then the final area is leverage our distributors. We work with distributors like Richardson Electronics that has significant experience in the power industry. They actually build power systems as well as cell components. And so they have a technical sales organization and field apps engineers that can help customers understand how to develop with our B-TRAN products.

We've, again, continue to get questions submitted. We encourage you to click that Ask a Question button. The next submitted question is, will Lazzen manufacture the product? What's the thinking on that? And relative to the company has talked about licensing the technology.

Yes. So I would expect Lazzen and other similar customers to really be on a purchase order relationship, potentially over time, maybe a longer-term supply agreement. But that would be buying products manufactured by Ideal Power. Where it may come up from a licensing perspective is as we deal with large multinational customers that typically want to ensure they're multisource or reduce the risk in their supply chain. And that's where we would be open to consider a licensing agreement with either if we should be unable to supply for whatever reason, gives the customer confidence that they can have the product manufactured for them, either by themselves or somebody else. But certainly, in those -- in that scenario, were it to come about, while we're open to licensing, I want to maintain a favorable position there and kind of first right of supply.

Any update on the automotive qualification testing?

What we've said is that we expect to complete the automotive reliability testing by this summer, and I believe we're on track to do that.

Why is B-TRAN bidirectional such an important advantage?

Yes, 2 different scenarios I'll describe here. One is you think about in the context of battery entered storage systems or EVs where you have a battery system that's both discharging and then charging again, you have to conduct current in both directions. So that's an obvious advantage where the system has to be bidirectional. Then if you look at particularly the new 800-volt distribution systems and data centers, here, you get into a situation where you never -- the current doesn't cross 0 like it does in AC-based systems. And without trying to make this too technical, what it means is when you have constant current and voltage, when fault conditions arise, current can actually be caused to flow backwards in both directions.

And so you want to be able to ensure that you can identify where that's happening, be able to contain it and be able to control how that ripples through the system. So from that perspective, it's something referred to as selectivity inside the 800-volt power distribution system, you need to have bidirectional capabilities in the circuit protection systems.

What are your thoughts on the recent announcement of Stellantis sharing more electric vehicle technology with Leapmotor of China? And will that have any effect on your relationship, either positive or negative?

No, I think it could be a positive for Ideal Power. We've, for some time now, worked closely with Stellantis. As Tim mentioned in his comments, we're preparing a custom package devices for their evaluation in EV platforms as well as working with them towards an EV contactor program. So to the extent that they would be sharing some of that technology would open up a bigger market opportunity for us out of the same investment in the design and development of the products.

And in the Stellantis program or any other vehicle EV program, how do you think about -- will it be one model, multiple models of vehicles? What -- how do you think about -- how should investors think about that?

Yes. The automotive companies rarely invest in a technology to build for one model. They typically want to take it across multiple models to get the economies of their investment, economies of scale there. And so our expectation would be with any of the automotive OEMs or Tier 1s considering our product that are they -- if we're successful in them adopting B-TRAN that it would play across more of their EV fleet, multiple models as opposed to just a single model.

Are there a couple of milestones that Ideal Power will achieve with the recent capital raise?

Yes. I think primarily, it's to expand and accelerate the commercialization of B-TRAN and our sales initiatives in support of it. So I mentioned the new hires that we're bringing on board, sales leader in Europe, and applications manager in Asia and then to engage and ensure we're getting our unfair share of mind at our distributors as a smaller company with design evaluation, design-in, design win registration programs that we can fund to really have the distributors excited about selling our products. So it's focusing both our internal resources and our distributor network on accelerating B-TRAN commercialization.

Thank you. That concludes our question-and-answer session. I'd like now to turn the call over to David for closing remarks.

I just want to thank everyone who joined the call with us today and appreciate the questions. We are committed to executing on our plan and sharing our progress as we move forward. Operator, you may end the call.

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

Hello, ladies and gentlemen, and welcome to the Ideal Power Business Update Conference Call. [Operator Instructions]

As a reminder, this event is being recorded.

Before we begin, I'd like to remind everyone that statements made on the call and webcast, including those regarding future financial results and company 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. We would also refer you to the company's website for more supporting company information.

With me on the call today is David Somo, President and Chief Executive Officer; and Tim Burns, Chief Financial Officer. Now I'll turn the call over to David and Tim.

Thank you, Jeff, and thank you, everyone, for joining us today. I appreciate the opportunity to be able to present a company update on Ideal Power to you. My name is David Somo, President and CEO of Ideal Power. As many of you know, I joined the company in November of last year, following my predecessor's retirement. Next to me is Tim Burns, our Chief Financial Officer.

My background is about 35 years in the semiconductor industry, including 12 years each at On Semiconductor and AMD in executive roles. During that time, while early in my career, having been an engineer working on product development and applications, I spent the last 25 years specifically focused on driving worldwide sales, marketing, business development. And that was a key factor in the Board electing to bring me in, in November of last year to help accelerate the commercialization of our B-TRAN products into the market.

Tim has been with us for 13 years now, and I'd like to introduce the rest of the leadership team here at IPWR. First, Mark Russell, who I brought in as Chief Commercial Officer in December of last year. Mark is a 25-year semiconductor industry veteran with stops at Infineon, Microsemi and Semtech, leading worldwide sales, marketing and business development. Together, he will help me drive the commercialization of B-TRAN in the market.

In January of this year, I brought in Clay Beltran as our Chief Operating Officer. Clay is a 30-year industry veteran in semiconductors, having run global manufacturing operations, supply chain and quality for companies like Diodes and [ Semtech and Intersil. ] With Clay, he will be focused on ensuring that our products are ready to support our customers' commercialization.

From a capital perspective, and these numbers are as of year-end, we had 8.5 million shares outstanding for options and warrants, and these are prefunded warrants. There's no actual warrants outstanding. There were about 2 million. So that means about 10.5 million shares on a fully diluted basis. Our cash balance at year-end was $6.1 million. And here, actually, just yesterday, we completed an offering where we raised net proceeds of $12.6 million, and that's an estimate after fees and expenses.

From a balance sheet perspective, we have a clean balance sheet with no debt.as well as the clean capital structure.

Since joining Ideal Power, I've often been asked what were my reasons for electing to come in and join the team. I thought it'd be helpful to share during my 12 years at ON Semiconductor running corporate strategy and M&A., I developed a playbook with specific criteria around how I evaluate semiconductor companies for their potential success in the industry.

The first criteria is around technology and products. Does the company have unique and differentiated products that helps to solve customer system challenges? And is it widely protected so others cannot quickly follow with products competing with them? Second, do they have access to large and growing markets to be able to sell their products? Third, from a customer perspective, do they have access to market maker customers who can adopt their products and help validate them in the market? And then finally, in an operating model, do they have an asset-light model that as revenue scales, they have strong fall-through leverage to the bottom line?

Ideal Power checks each one of these boxes. Our B-TRAN solutions are based on a proprietary technology that has compelling advantages relative to conventional solutions. From a market perspective, we're addressing large, high-growth secular markets that include data centers, energy storage and renewable systems as well as other industrial power systems.

We have broadening engagements that are also deepening with a number of customers worldwide and currently have a qualified sales opportunity funnel of just under $200 million. In addition, I'm in discussions with a small number of strategic customers who have expressed interest in potential strategic investment in Ideal Power to deepen the relationship between the companies.

And finally, from an operating model perspective, we're a fabless business using outside manufacturing for our products, and we have strong operating leverage as we grow revenue with the company to fall through to the bottom line. As some of you who have been with us for some time know, Ideal Power has been through 3 stages of development. Initially, the company started actually doing power converter systems design, and it was during that stage that they realized they were missing a critical ingredient for their solutions in a highly efficient bidirectional semiconductor switch. That started Phase II IPWR 2.0 for the company, which was the design, development and customer sampling and validation of the B-TRAN products.

And now we're entering the IPWR 3.0 development phase, which is focused on commercializing our B-TRAN solutions. For those who are not familiar with us, I'll spend a moment talking about what is B-TRAN. It's a proprietary bidirectional semiconductor power switch that leverages the economies of scale inherent in the silicon and semiconductor industry established over the past several decades. The uniqueness to our product and what makes it bidirectional in nature is that we actually build the device on both sides of the wafer, making it inherently bidirectional in its ability to conduct and block current and voltages.

There are 3 fundamental advantages to the B-TRAN technology. The first is in its bidirectional capability, whereas competitors require multiple devices to be able to conduct in both directions, we can do this with a single device. Second, it has very low conduction losses for applications that are typically on and continuously conducting. That translates to lower power consumption, lower energy use and ultimately for end users such as data centers, lower energy costs. And third, by using fewer components to enable these capabilities, we enable smaller, lower-cost system solutions for our customers.

So taking a look at the advantages of our B-TRAN technology compared to conventional solutions like IGBTs that have been around for a long time now and silicon carbide FETs. I wanted to pare those. First, at the top right, you can see in the diagram, the uniqueness for bidirectional applications is that with a single B-TRAN, we can enable current conduction in both directions where the other conventional solutions both require about 4 devices to be able to enable bidirectional capabilities.

Among several other advantages, we also have ultra-low conduction losses. And as compared to even newer technologies like silicon carbide FETs, as you can see on the bottom left, we're able to reduce the conduction losses and power consumption by more than 50% in applications that use B-TRAN. There are a number of other advantages that I discussed on the prior page and alluded to, specifically fewer components leading to smaller systems with lower overall system cost.

From a commercialization perspective, there are 3 different forms of B-TRAN that we are engaged in with customers today. The first is at the top, the B-TRAN discrete device, which is rated 1,200 volts, 75 amps. Our lead customers today are using this device to develop their first systems with B-TRAN. The second, for customers who want to go to higher current rating, they can either elect to use multiple discrete B-TRAN devices or they can select a SymCool module, which has 4 B-TRANs inside of it and increases the current rating to 200 amps today, and we anticipate going higher in the future.

And finally, for power module makers as well as large customers who may want to develop their custom packaging to fit in their specific systems designs, we also will be making available B-TRAN in a known good die format, which means that we electrically test it and guarantee its operation in die form for customers to be able to integrate in their own packaging.

Now I'd like to talk about the markets for B-TRAN and the opportunity we see in front of us. First, I'll help with the decoding of this slide, so you understand what we're referring to. In green, you'll see what we refer to as static applications, which are always on typically conducting applications. That is a SAM that we are able to access with today's products. So it includes applications like solid-state circuit breakers, EV contactors and battery disconnect units, EV charging stations and static transfer switches. Today, with our current products, that represents a SAM or serviceable available market of just over $3.5 billion, growing to $6.6 billion in 2030.

In addition, we're working on new methodologies for operating and driving our B-TRAN devices. Those provide for what is called soft switching and reduces switching losses in the device. This opens up what we refer to as future or switching applications that include systems like inverters and motor drives. Together, as we open up those new applications, it effectively doubles the SAM that we can address with B-TRAN from about $6.6 billion, growing to more than $14 billion in 2030.

I'd briefly like to touch on what the lower power losses mean from an end market perspective. If you take today's data centers and as they continue to scale up in power from 10 megawatt to 100 megawatt, even gigawatt data centers now, they consume an enormous amount of power, which is placing a tremendous strain on the antiquated power grids that are there to supply these data centers. They also are hugely expensive to operate. Even a tiny reduction in power of 1% to 2% in the data center can generate substantial savings on a single data center of hundreds of thousands of dollars annually to cumulatively up to $1 billion across data centers.

Our B-TRAN device with its ultra-low conduction losses improves power efficiency in applications where it's used like circuit breakers, transfer switches and battery disconnect units that contributes to reducing the power consumption in these data centers.

Now I'd like to talk about the applications that we are first addressing with our B-TRAN solutions and lead customers. These are the static applications that I referred to previously represented here. In the data center, that includes the battery disconnect unit, solid-state circuit breakers and static transfer switches. On average, B-TRAN has approximately $180 of content per each system that it's used in. And across the number of racks that are used in data centers worldwide, that represents about a $600 million -- or $800 million SAM, sorry, small slide, difficult to read.

For electric vehicles, we, on average, in static always on conducting applications have an opportunity in EV contactors, which are part typically of the battery disconnect unit. That -- over 20 million vehicles that are sold this year, that represents about a $1.8 billion SAM for our B-TRAN devices in the market. By 2030, we expect that to grow to about $2.4 billion. And then in EV charging, we are able to address circuit protection and the battery disconnect unit inside these systems, which represent on average per B-TRAN system, about $60 of content -- $50, excuse me, over 12 million chargers, that's about $600 million of opportunity growing to about $2.4 billion in 2030.

These represent numbers only pertaining to the static applications that I referenced earlier and do not yet include the B-TRAN future element, which are the switching applications, which could enable us to play in other areas like traction inverters, onboard chargers and higher voltage DC/DC conversion.

Now I'd like to share a case study with a lead customer in solid-state circuit breakers. The customer's prototype system on the right side of the slide was built with the silicon carbide MOSFET rated for 400 volts, 20 amps and conducted in only one direction. As we engaged with the customer, they asked us to use our B-TRAN technology to first make it bidirectional and then secondly, be able to increase the current rating of the product within that same enclosure. In retrofitting on the bottom left, our reference design for their enclosure, we were able to make the product bidirectional as well as quadruple the current capability from 20 amps to 80 amps while also increasing the voltage rating of the system from 400 volts up to a potential of 800 volts.

Now I'd like to talk about customers, in particular, 2 areas. One, Stellantis, where we have received a PO from them in the second half of last year with specific deliverables, of which we've completed one and the remainder are expected to be completed by this summer. This includes things like automotive reliability testing for our device to demonstrate its capability to survive in a harsh environment like automotive.

In addition, as we complete these deliverables, we're working with Stellantis towards an EV contactor program for their electric vehicle fleet. Then recently during my visit to Asia in the second half of January, I signed 2 new agreements with customers for the development of B-TRAN-enabled solutions. Lazzen is the first customer in circuit breaking and it is that system that I was referring to on the prior slide. They are a leading circuit protection solutions provider and systems integrator in Asia that also sells into the North America and European markets.

Their products go into data centers, renewable energy and energy storage systems, EVs and other industrial markets. The agreement reached with Lazzen is for them to develop a portfolio of B-TRAN-enabled solutions in circuit protection in areas like BDU or EV contactors for their customers worldwide.

Now I'd like to talk about our sales funnel and prospects for customers getting systems to market with B-TRAN. Today, as I mentioned at the outset, we have just under $200 million of qualified sales opportunities in our funnel at different stages. This is typical progression where new opportunities once qualified, where you know the specific project, you know the application, you understand the specifications and how B-TRAN fits into it as well as their development schedule and time line and forecast. That goes into the top of funnel. As we go through more of the technical interactions, it continues down to where they're actually testing our products in their systems to qualify them. And then once complete, they can begin to deliver solutions to market.

The customers in here include Lazzen as well as another Asia power module maker that I signed an LOI with for the development of a family of power modules with B-TRAN in it. This is a firm that already does IGBT and silicon carbide modules today. They saw compelling value in B-TRAN and are interested in developing solutions based on it. Stellantis is in there as well as other automotive OEM in Tier 1s as well as Fortune 500 power management market leaders.

In addition to those opportunities in the funnel, we're in discussions with tens of customers that once we further understand the details of their projects and how B-TRAN fits to their specifications, I would expect many of those to migrate into the funnel and work their way through.

In summary, I want to close with detailing the strategic priorities for the company. One is we need to continue to add new opportunities to the sales funnel. We have a good start today, but we need to continuously expand new funnels or new opportunities into the funnel. In addition, those opportunities that are in the funnel, we want to aggressively work with our customers to convert to design-ins and revenue on the earliest possible schedule.

This includes things like signing additional customer development agreements with our customers as part of those programs. I expect that we'll see initial sales orders for our products from lead customers later this year and then ramping into 2027, and we need to continue to execute with the customers to make that happen.

In addition, we'll focus on completing the remaining deliverables under the Stellantis purchase order and continue to advance opportunities with other automotive OEMs and Tier 1s for automotive products.

And finally, for the very small number of large multinational customers, where I've started discussions with the strategic investment considerations, I want to continue to see those through with customers as we would welcome one or more of our leading worldwide customers to deepen the engagement with B-TRAN and Ideal Power.

With that, I'll wrap it up. Thank you for your time and for listening to us today and turn it back over to Jeff.

All right. Thanks, David. And we had several questions that have been submitted, and we encourage you to continue to submit your questions. I'll go ahead and start with the first submitted question is which markets are closest to adopting and what are the main drivers to revenue?

Yes. So the initial markets, I expect to be data centers and then energy storage and renewable energy installations. They typically have the shortest product development cycle that can be 18 to 24 months, remembering that we already have been sampling B-TRAN for more than 18 months to date. So the lead customers that we've been working with are far along in that process, which is why I expect we would see initial sales orders this year.

We'll continue to work automotive. We have not given up on that, but it takes time for those to convert through development to revenue. And so our focus is both getting revenue as early as possible in those markets where they adopt new technology faster like data center and then continue to work more broad industrial and automotive applications that can substantially increase future revenues for the company.

Okay. Thank you. And also, I wanted to now turn it over to Casey Ryan with WestPark Capital. Casey?

David and Tim, great to see you. Thank you for this update actually. It's very interesting. So I wanted to ask one thing about automotive. I know that broadly, the industry has had sort of a slowdown and sort of a reevaluation in the EV space. But one of the things we've been hearing is that bill of materials and costs continue to be an issue. Can B-TRAN solutions maybe replace silicon carbide or other parts and actually help solve some of the bill of material cost issues for future EVs?

Yes. Thanks for the question, Casey. And absolutely, as I indicated earlier, if you think about applications like EV contact or battery disconnect unit in the EVs, there's typically multiple EV contactors in each vehicle. And today, there are multiple components in each one of those contactors. By inherently being able to conduct bidirectionally, B-TRAN significantly can reduce the number of components used and reduce the size of the systems as well as reduce the overall systems cost. So I think both from reducing the power consumption, which can contribute towards extended range and reducing the cost through the use of fewer components, we can help the EV manufacturers in both ways.

Okay. Terrific. That's very helpful. The other thing that was really illuminating was your sharing of the sales funnel and pipeline. And I'm interested in that top, which I realize is the sort of identified opportunities. If we look out into '27, say, 12 months from today, could that number be sort of in the billions, even if it's $1 billion? I mean, substantially larger than what that $55 million is today?

I won't go into specific numbers, Casey, but I'll tell you, I expect and the reason I'm here at the company to leverage my commercial background together with Mark and the team we have is to continue to grow that top of funnel. I expect to continuously grow it. Certainly, $1 billion is a great goal to have. We'll work on getting it there as early as we possibly can as we continue the customer engagements. But we want to be certain we're putting only qualified opportunities into the funnel and do have some rigor around it before they go in, so we can focus our resources and also helping those customers get their products to market.

Understood. Okay. Terrific. [Technical Difficulty]

Not sure. Maybe we lost Casey.

Casey, if you could repeat that question?

Sure. David, I was really interested in the idea of a partner who might make an investment in the company, which is fine. But I'm curious just sort of what the shape of that looks like, like with that partner sort of persisted in one vertical like data center or electric or auto or if it's a sort of industry agnostic...

Yes. I think it certainly would be in 2 potential areas from the discussions I'm in today. And I'll quality those are early discussions, but actually, they've approached us about a potential investment here in Ideal Power. On one hand, it's more industrial type products. So it would be more related to industrial power systems, data center, energy storage and grid applications. The other side is from automotive. And there's some interest from both. And I would think it could be beneficial for the company in deepening a very small number of customers who could invest so that we also don't have any limitations or restrictions on who we can engage with going forward in time.

Okay. Understood. These are really helpful. Just one small question. I was pretty interested in the example product you showed, the solid-state circuit breaker for that kind of product because I feel like that product is actually fairly close to maybe being out in the market. What's the dollar content for Ideal Power? I mean, is it in tens of dollars or hundreds of dollars? Or I'm just looking for sort of some general idea.

Yes. If you go back to the slide I showed earlier around circuit breakers, kind of data center, it's tens of dollars of content. Typically, there are different ratings on those. The higher the current rating, the more devices you need in it. So it's a range, but it's tens of dollars, typically.

Okay. I'll sort of clear the floor, but this has been a very detailed and very helpful update. So we're looking forward to the progress throughout the year.

All right. Thank you, Casey. Our next submitted question is, can you tell us more about the road map to commercial revenue and when?

Yes. And I think I addressed that earlier in the presentation. So really, if I look at our lead customers, which are in circuit braking and power modules specifically, those that are furthest ahead, customers furthest ahead in their development and commercialization process are expecting to complete their development and qualification kind of around the end of summer time frame, I would say, end of Q3, and then they'll begin selling those solutions to their customers, which would be from Q4 onwards. And that's where I commented that I would expect our sales orders to begin later this year and then ramping into 2027.

Okay. Thank you. Are there opportunities for NRE revenue in 2026?

Yes, actually, a great question. And I think those customers that are earlier in process, not already committed to develop products, as they gain that -- as we achieve that commitment, they absolutely could be NRE programs, and we are focused on working to deliver additional NRE engagements and development programs with customers.

How do you see the markets evolving? And what are the most exciting -- what's most exciting about the Ideal Power opportunities?

Yes. The one I'm most excited about today is really -- there's a combination there. It's data center because of the substantial capital investment going into the data centers worldwide. They are having a hard time keeping up with the demand as the hyperscalers continue to stand those up as well as co-located data centers, enterprise edge and so forth. So with that, it's also transitioning architectures and the move from 400-volt AC single-phase to 3-phase AC to 800-volt DC data centers really is fundamentally changing the architecture and driving the adoption of solid-state circuit breakers, which is ideal fit for B-TRAN product.

Tied together to these are energy storage and battery backup systems and kind of grid applications. So those have the most exciting potential. They have shorter product development and commercialization schedules than automotive does, and they're growing rapidly.

Thanks. In solid-state circuit breaker, which companies are competitors? And what is Ideal Power's value differentiator?

Yes. And so if you think about the market, we are selling to the companies that develop the circuit breakers. So all of them are potential customers to us. Our competition is really coming from silicon carbide devices, and those will be companies like my former one ON Semi and Infineon. And they have silicon carbide in portfolios. The disadvantage they have is they cannot conduct bidirectional and they have higher conduction losses inherent in those devices.

It's also built on newer materials, wide band gap materials that have not yet been through a decades-long learning curve on driving costs down and achieving economies of scale. So the fact that we can manufacture our products on the silicon substrates that have been part of the industry for multiple decades is another advantage to us from a cost perspective, together with the low conduction losses, bidirectional capability and having fewer devices, which leads to smaller, lower-cost system solutions for customers.

Thank you. How does Ideal Power show proof of the B-TRAN value in your markets?

Yes. Good question. So customers are always of the mindset of show me. The example that I showed on one of the earlier slides of how we retrofitted our reference design into the customer's case is one way in which we do that. So we give -- we sell to customers reference designs that they can use to be able to validate the performance of the device. That's the power consumption, the ability to conduct in both directions. And then without getting into too many technical details, they want to look at short circuit protection for circuit breakers, how do you control the slope, how do you manage the turn on and turn off, they're able to do this with the reference design tools that we provide to them.

Thank you. Our next question is, are there any other companies developing a bidirectional power switch in your markets?

So if you go back, there's no one in a similar device that can address the power range that we're able to do with B-TRAN. And the reason they cannot is we have 100 patents granted and another 78 patents in flight on the bidirectional nature of our device and operation of a bidirectional device. So it's very difficult for others to be able to follow us. There is gallium nitride, which is used typically in 650-volt and below applications. So it's more at a kind of CPU board level, and that's an area we don't go down to with our device. We're focused on higher power applications, typically at 800 volts and above.

Thank you. What are your thoughts on the company's capital raise completed yesterday?

Yes. I'll take this one, Jeff. We're actually very happy with the raise. It was a clean deal. So it was common stock only. There were prefunded warrants, but those are common stock equivalents. They're not what you think of when you have to add warrant coverage to a deal. These were effectively paid for except for the par value, a fraction of a cent at closing. We're excited that it was led by some of our largest investors. Also, insiders did participate.

David himself participated in the transaction. You can see the details of that on the Form 4 we filed earlier this morning. And it's great to be in a position where we have a strong balance sheet because you never want to be in a situation where you're explaining to customers where your future funding is coming from. If you can show a healthy balance sheet, it takes that off the table and is am impediment to sales. So overall, we think this is great for the business, and we can really now focus on commercialization.

Thank you. Any other comments about the opportunities with Stellantis?

No, probably nothing further to say at this time. I want to see us execute against the deliverables of the PO here, and that's what we're focused in on. And then as we get through that process, I think I would say everything is looking very good. We obviously are working with them towards an EV contactor program that can be important to the company and really help us commercialize and scale B-TRAN solutions in the market in EV contactors. And so we're going to stay focused on executing and meeting the deliverables to move this along.

Thank you. Do you have any concerns that your Chinese business partner might try to steal your IP or any other companies?

Yes, that's actually a really good question. Having done business in China for probably 30 of the 35 years I've been in the industry, I kind of understand the landscape well. A couple of things. One, the patent landscape in China has become much stronger. Companies like Huawei today actually are highly inventive. They want to be able to protect their patents and legal jurisdiction around patents has become much better even for international companies. But more importantly, we don't share all the details of our product.

The key ingredients are really around how we manufacture uniquely a bidirectional device on both sides of the wafer. And that would be -- we don't patent that because we don't want to disclose any of the details around how we make that happen. And so it would be extremely difficult for somebody to follow us in doing a device that has inherent bidirectional capability like B-TRAN in silicon.

Yes. And I would just add to that, none of our fabrication or packaging occurs in China. So we're selling into China. But in terms of the important IP that goes around the technology, that's all happening outside of China.

Okay. Another question about Stellantis. Any comments about the deliverables timing under the Stellantis PO?

I'll give a bit more clarity there. I don't want to go into specific details, but we're doing a custom package product for them that the next deliverable is kind of out in the end of March and after that in the May time frame or the next couple of deliverables together, which gives them product they can use to test in their systems. And then we also need to complete the automotive reliability testing that's in process.

Please provide any color on where we stand with manufacturing.

Okay. I'll start that and Tim can add to it. But on the manufacturing side, we have 2 foundries that we use, one in Europe, one in Asia. We then have -- that's for the fabrication of our devices. And then we used an OSAT or outsourced assembly and test partner for the packaging of our devices where we're not selling die-level product. They are in good shape with their products. They are ready to support the commercialization of B-TRAN. And we are then working looking out in time, 2 years down the road or so to ensure that we have competitive cost structure in the manufacturing footprint, foundry and packaging partners. Naming that...

What is the current rating of power switching switch used for EV inverters? And how -- thinking about other companies, when they announce like a single die module, the rating they're announcing, how does -- how should the investors think about that?

Yes. So I actually have significant experience with that area, and it varies by customer depending on the battery pack, it's 400 volt battery pack, 800 volt, how many kilowatt hours. But typically, what you see is where they're using power modules or in some cases, doing this discretely and packaging into the inverter with die, they use multiple die. And so there isn't a device that can go off and necessarily conducted 1,000 amps, but you can put multiple die together to be able to do that in parallel. In modules in general, that's what they do. They can be anywhere from 4 to as many as 16 die in a single module in a power integrated module that could be used in an inverter application and there could be multiple inverters used in that application.

Okay. What -- any information about your pursuit on data center?

Sorry, can you repeat that?

Yes. Any information on your pursuit for data center -- business in data centers?

Yes, really leading with the customers who service data center. So a company like Lazzen, who has data center customers as they adopt our products, and that is the initial target market for them. And they have the relationships with those data centers to be able to sell in the products. And so we're -- they're kind of the OEM to the data center for B-TRAN to make its way to market.

Okay. How many total shares are outstanding after the raise?

Yes. So the exact numbers are in the final prospectus supplement that we filed yesterday. But overall, on a common stock basis, it's roughly 12 million shares outstanding. What that does not include is there's just over now 2 million prefunded warrants that are outstanding. Those are common stock equivalents. So those are actually included in the company's EPS calculation. And then if you want to get the fully diluted shares, you also need to add in what I believe is about $1.5 million -- excuse me, 1.5 million shares for employee equity awards that have not vested.

Can you quantify the extended range for EVs and the cost savings for EVs?

Yes, difficult to do because there are many factors that are determining the range. B-TRAN being in contactors can be one of the range contributing in power reduction for extending the range. But it really depends on the system architecture, how many are in each EV and so forth. So it certainly contributes, difficult to quantify it, though, just down to B-TRAN. From a cost and density perspective, sorry, I refer to power density here, which just means smaller size. By using fewer components, they get to smaller size and they get to lower cost because they're buying fewer components. So overall, it helps certainly in the -- reducing the size and the power as well as the cost where B-TRAN is used compared to conventional solutions.

Thank you. So we have several questions that have been submitted and continue to be submitted. So again, click on that Ask a Question button, and we look forward to answering your question. Regarding the -- you talked about the sales funnel. And what investors are asking about the word backlog. Can you give some comment on that? And also, what's the thinking on the direct sales force and plans to add?

Okay. So first, I'll take the sales funnel and backlog. So the sales funnel shows the multiple stages you go through in a typical design win process for our products. They start early discussions, then it gets into detailed technical specifications review, then it gets into actual customer product development test and qualification, then it goes to design-in where the customer has confirmed use of your products and then they give you a PO, which becomes backlog when you receive the purchase order. So that's where I indicated earlier that my expectation is we'll see additional sales orders later this year for applications like data center and energy systems from our lead customers that would become backlog for us later this year.

From a sales perspective, we actually have scaled some, but we're going to leverage manufacturer rep network. So what that looks like today is we have direct sales in Asia. We have direct sales in the U.S. And I'm in the process of adding direct sales in Europe to be able to support customers. For example, Stellantis, who has operations across Detroit, Italy, France, and you need to support them in each of the regions as well as there are many large industrial power companies throughout Europe.

In addition to that, we are using a rep or distributor network that can sell our products and becomes a multiplier to our sales organization. And they actually are managed together with our sales organization. For example, as we work with them, the opportunities they identify and we agree are qualified opportunities, then we'll make their way into the sales funnel. And we manage the distributors' reps, just like we do our own direct sales people, which is to have some rigor around continuous reviews of the opportunities to ensure we're progressing them if there are any issues that we address them quickly and timely and keep these moving so we can work to convert them towards systems that are released to market and revenue for the company. So it will be our sales plus expanded or multiplied by a third-party rep distributor network.

Thank you. What is the update on the auto qualification testing and...

Yes. I mentioned that earlier. We're in the midst of testing now, and we will expect to complete that this summer. That is the plan, which is aligned to the Stellantis program schedule.

Okay. Thank you. Well, we're out of time, and we appreciate your questions. And thank you for joining us on the call today, and have a great day.

Thank you.

Good morning, ladies and gentlemen, and welcome to the Ideal Power Third Quarter 2025 Results Conference Call. [Operator Instructions] As a reminder, this event is being recorded.

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

Thank you, Jenny, and good morning, everyone. Thank you for joining Ideal Power's Third Quarter 2025 Results Conference Call. With me on the call are David Somo, President and Chief Executive Officer; and Tim Burns, Chief Financial Officer. Ideal Power's third quarter 2025 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 company 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 on the call. Please refer to the company's SEC filings for a list of associated risks. We would also refer you to the company's website on supporting company information.

Now I'll turn the call over to Ideal Power's President and CEO, David Somo. David?

Thank you, Jeff. I appreciate everyone joining us today. I couldn't be more excited to join you today for my first Ideal Power results conference call. As many of you know, my new role was announced last week. That said, I want to touch on a few things before handing the call over to Tim Burns. We look forward to your questions after our prepared remarks.

I'd like to briefly discuss why I took the role at Ideal Power, and then I'll discuss my approach and near-term plans. First, why did I take the CEO role here? Ideal Power has created a compelling and customer-validated solution addressing secular high-growth power applications emerging in the data center, industrial and automotive markets where power efficiency, power density and cost are key requirements. There is a multibillion-dollar addressable market for our B-TRAN technology. With the ongoing electrification of our society, we are commercializing our technology in an opportune time by delivering innovative and enabling power semiconductor solutions for a broad array of growing and B-TRAN-enabled applications. Obviously, I have high confidence in Ideal Power or I wouldn't have joined. I want to commend and thank my predecessor, Dan Brdar, for his leadership and strong contributions in guiding the company to where it is today.

Second, I see Ideal Power as a technology innovator with its B-TRAN technology that enables inherent advantages in delivering ultra-low conduction losses, improved power efficiency and power density and bidirectionality, all on widely deployed low-cost silicon. These are competitive differentiators as we begin to commercialize our B-TRAN solutions with customers.

Third, I believe I can help Ideal Power to accelerate its commercial opportunities. I know Ideal Power's markets from my more than 30 years of experience in the semiconductor industry, spanning a variety of end-use markets, including data centers, industrial and automotive. I plan on leveraging my extensive commercial experience and relationships to drive revenue growth in our target markets. Revenue is a priority. I'm sure you are wondering what I plan on doing or what you should expect from me.

Having joined Ideal Power just last week, I'm spending time getting my hands on the details of the business. During the next several weeks, I will be listening closely to feedback from our customers, distributors, suppliers and the outstanding team here at Ideal Power. Because I'd like to be highly visible with customers, both existing and prospective, I'll be meeting with them to understand their priorities, opportunities and requirements and listen to their feedback about our technology and their applications. I'll review our opportunities, progress, road map and strategic initiatives. Those discussions will deepen my understanding of our business and enable me to fine-tune our vision and strategy going forward, building on the strong foundation that is in place today.

Upon completion of that process, I anticipate scheduling a call and webcast to share more detailed information and discuss certain topics in greater depth, including my perspective for product commercialization. Before setting expectations, I want to take the necessary time to thoroughly understand the current state of our business. As an organization, we will strive to execute in all aspects of the business with rigor, discipline and a strong sense of urgency. We will endeavor to execute on what we communicate and not put ourselves in a position to have to reset expectations. It goes without saying that this is important to establishing and maintaining credibility. One thing is abundantly clear, with a strong foundation in place from which to drive our future growth, I'm not going back to the drawing board. We're well positioned to drive long-term value creation for our customers, suppliers, employees and stockholders.

In closing, I look forward to partnering with Tim Burns, our CFO. I'd like to recognize the entire team for their third quarter progress and results. I'd also like to thank my predecessor, Dan Brdar, for assisting with the transition and providing a strong foundation for our growth. I'm thrilled to be joining Ideal Power at a time when the company has such exciting opportunities ahead.

Now, I'd like to turn the call over to Tim Burns to discuss our recent progress. Tim?

Thank you, David, and good morning, everyone. Since David just started last week, I'll share an update on our progress since the start of the third quarter. First, we secured a purchase order from Stellantis in late August for custom development and packaged B-TRAN devices targeting multiple electric vehicle applications. We successfully completed our first of 5 deliverables under the purchase order in late September. The remaining deliverables are expected to be completed next year.

Second, we expect Stellantis to award us with a multiyear EV contactor program. As part of the program scope, Stellantis has told us they want to install B-TRAN-based contactors in Stellantis test vehicles potentially as early as late 2026. We'll know more about the scope and timing specifics as we work through the program details with Stellantis in the coming months. This program has broad and substantial potential as Stellantis recently shared with us that they are evaluating the deployment of B-TRAN-based contactors across all of their EV models and platforms.

Third, we are engaged in early discussions with a sixth global automaker. This automaker is evaluating B-TRAN for next-generation high-voltage EV power switching and protection applications where bidirectionality and low conduction losses enable more compact, reliable and efficient vehicle and charging architectures. We will share further updates on this opportunity as the engagement progresses.

Fourth, our first design win customer has successfully completed testing of the updated solid-state circuit breakers that we provided them during the third quarter. We're currently working with them on the finalization of their product design as they prepare for end customer sampling and production.

Fifth, we shipped additional solid-state circuit breaker reference designs to large potential customers including a global power management market leader in Asia. Reference designs are an important part of our commercialization strategy as B-TRAN is a new technology and customers are eager to get hardware in their hands that demonstrates the advantages of B-TRAN in their target applications.

Sixth, we increased the power rating of our discrete B-TRAN product by 50% and commenced shipment of these devices with a higher power rating and power density. This development has sparked greater interest from both existing customers and new prospects in our sales pipeline as it aligns well with the market moving to higher power architectures for many applications.

Seventh, we continue to expand our global reach, adding our first direct salesperson in Asia. He's already conducting face-to-face meetings with current and prospective customers. Interest in B-TRAN is growing across Asia, which is the world's largest market for power electronics. We're excited about the opportunity for B-TRAN in this region as Asian companies typically adopt new technologies faster than their European and American counterparts.

Eighth, third-party automotive qualification and reliability testing of B-TRAN devices is well underway with more than 1,000 packaged B-TRAN devices from multiple wafer runs. Early test results are positive with zero failures to date. As a new semiconductor device without a long operating history, third-party reliability testing and the data it generates is key for both industrial and automotive customers as they evaluate and adopt B-TRAN for their applications.

Moving on to the initial market for B-TRAN, the industrial markets, and in particular, solid-state circuit protection for data centers, microgrids, industrial facilities and grid infrastructure. Our first design win customer is one of the largest circuit protection equipment manufacturers in Asia, serving data centers, industrial and utility markets and renewable energy applications.

As we have previously mentioned and based on the first design win customers' projections, the initial product from this customer could translate to several hundred thousands of dollars of revenue for Ideal Power in its first year of sales with the opportunity to exceed $1 million in revenue for us in the second year of sales. Importantly, this marks only the beginning. The initial product is anticipated to be the first of multiple products from this customer that will incorporate B-TRAN into solid-state circuit breakers.

This customer provides a variety of circuit breaker products across various power ratings and is expected that they could expand their portfolio to add a full family of solid-state circuit breakers at ratings similar to their current family of electromechanical breakers. Discussions of other B-TRAN-enabled solid-state circuit breaker products has already started, and our team recently built the solid-state circuit breaker prototype with a higher rating to share with this customer.

Looking briefly at innovation, we increased the power rating of our discrete B-TRAN product by 50% and commenced shipment of these devices with a higher power rating and power density. This development has sparked greater interest from both existing customers and new prospects in our sales pipeline. Our approach to power ratings of our products is deliberately cautious, an approach that has been well received by our customers as we bring new solutions to their markets and applications.

As we accumulate more testing hours and go through additional reliability testing, including the ongoing third-party automotive qualification testing, we're finding that we have more than ample margin in our design to increase the power rating of our products. Elevated product ratings will expand our SAM to include additional applications. It will also strengthen our product competitiveness in the marketplace as it translates to smaller, lower-cost OEM products for customers that choose B-TRAN as their power semiconductor solution.

We previously mentioned that orders near term are not dependent upon the successful completion of automotive qualification. However, achieving third-party automotive qualification would provide additional confidence among industrial customers regarding B-TRAN's long-term reliability. It would also provide evidence of the device's reliability under extreme conditions such as high humidity and temperature, which exceeds typical industrial application requirements.

Additionally, given that engineers tend to be cautious when adopting new technologies, achieving automotive qualification could help accelerate the adoption of B-TRAN-based products by early adopters in our initial target industrial markets.

Our B-TRAN patent state continues to grow. Currently, we have 97 issued B-TRAN patents with 47 of those issued outside the United States. Our patent coverage spans North America, China, Taiwan, Japan, South Korea, India and Europe, all representing our high-priority patent coverage geographies. As a result of our continued innovation, our list of pending B-TRAN patents is now at 73.

To safeguard our intellectual property further, we treat the proven double-sided wafer process flow we develop to make our devices as a trade secret and do not disclose the identity of and work under strict confidentiality with our wafer fabrication partners. So even if a competitor studied our patents, they wouldn't have the know-how to fabricate the device.

Next, I'll discuss our financial results. Our third quarter 2025 cash burn from operating and investing activities was $2.7 million, up from $2.4 million in the third quarter of 2024 and up from $2.5 million in the second quarter of this year. Our Q3 cash burn was at the lower end of our guidance of $2.7 million to $2.9 million. Our cash burn from operating and investing activities for the first 9 months of 2025 was $7.4 million, up from $6.6 million in the first 9 months of 2024.

We continue to manage expenses prudently and aggressively. We expect fourth quarter 2025 cash burn to be approximately $2.5 million to $2.7 million with a full year 2025 cash burn of approximately $10 million. This compares to a 2024 cash burn of $9.2 million, excluding the benefit of warrant proceeds. The higher forecasted cash burn in 2025 compared to 2024 is due to increased semiconductor fabrication spending and hiring.

Cash and cash equivalents totaled $8.4 million at September 30, 2025. We have no debt and a clean capital structure. We recorded modest revenue for the third quarter of 2025 as customers continue to evaluate our technology.

Initial orders from the large companies evaluating our products for potential inclusion in their OEM products will be small with order sizes increasing as customers start to prototype their OEM products, progress through their design cycles and build inventory for the rollout of their B-TRAN-based products.

Operating expenses were $3 million in the third quarter of 2025 compared to $2.9 million in the third quarter of 2024, with the increase due to higher wafer fabrication costs at our second foundry. We expect operating expenses to increase modestly in the coming quarters due to recent and future hiring and costs associated with our development and commercialization efforts.

We also 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. The timing of equity grants and related stock-based compensation expense recognition will also cause variability in our quarterly operating results.

Net loss in the third quarter of 2025 was $2.9 million compared to $2.7 million in the third quarter of 2024. Considering our asset-light business model, no debt and modest planned cash burn, we have sufficient liquidity on our balance sheet to fund operations through at least mid-2026. We'll potentially see several sources of funds over the next year, such as product sales, development agreements and other commercial agreements with upfront payments.

Additionally, we are exploring strategic relationships with our well-capitalized and large global partners with these opportunities strengthening as we further advance these customer relationships. As a publicly traded company, we also have access to the capital markets as necessary, providing us with additional financial flexibility.

At the end of September, we had 8,511,403 shares outstanding, 824,760 options and stock units outstanding and 653,827 prefunded warrants outstanding. At September 30, 2025, our fully diluted share count was 9,989,990 shares.

In summary, we are thrilled to share that our first design win customer has successfully completed testing of the updated solid-state circuit breakers and are now finalizing their product design as they prepare for end customer sampling and production. We're also delighted to announce that not only securing the purchase order from Stellantis for custom development and packaged B-TRAN devices targeting multiple EV applications, but also completing our first of 5 deliverables under this purchase order.

Overall, it is an exciting time at Ideal Power, and I look forward to working with David to capture the significant market potential for B-TRAN as an ultra-low loss and bidirectional power semiconductor.

At this time, I'd like to open up the call for questions. Operator?

[Operator Instructions] Our first question is coming from Casey Ryan of WestPark Capital.

David, welcome. It's great to have you on board. Tim, thank you for this good update. So I just wanted to start with generally automotive. It feels like the opportunities are with EV platforms and the growth of those platforms generally. And so I just want to sort of confirm that for myself before we go a little further.

Yes. Thanks, Casey. Glad to be on the call, and I appreciate the question. So automotive is one of multiple markets that we're able to sell our products into where it's a strong fit to the applications requirements. As you understand, automotive is also one of the longer development cycles and projects are typically multiyear programs. So we continue to work to, I would say, move from the initial engagement through continued evaluation where we've made progress now in delivering enhanced products to our customers. We've continued multiple stages of the development programs. And each of those is a necessary step in moving towards completing R&D evaluation of the products and qualification and moving into series engineering and eventually landing into vehicles on the EV side.

Okay. Terrific. And then sort of on that EV track, what's driving the automakers to look for better solutions than, say, what they have currently or what they've had previously because generally, they must be facing some limitations with sort of existing solutions. Is it battery density or the power of the amount of electronics per vehicle? And I'm sort of happy for it for Ideal Power, but I'm curious what's sort of driving it and what sort of barriers they're running into with sort of their current solutions. And of course, you guys are bringing a better solution to market.

Sure. Well, one of the fundamental trends in power electronics is a move to higher power architectures. And one of the fundamental ones in EV architectures is the adoption of 800-volt main battery systems, which is driving a redesign of the overall architecture and traction inverter, charging systems, contactors, battery disconnect units and so forth. So that's what's the reason for continuing to evaluate technologies that provide higher power efficiency, improved power density and minutes to cost.

Okay. Terrific. And then sort of quickly on like charging stations, which I think is also a potential market for Ideal Power. I think charging stations are also moving to 800-volt systems, right? Which might cause the same sort of trend where people would be interested in your solution?

Yes. Fast DC charging stations actually continue to increase the power to multiple kilovolts, gets partitioned out across multiple terminals. So it does present an opportunity for us. Also, in some instances, particularly home charging, there is bidirectionality involved where you can feed into the battery pack and then off-hours feed out from the battery pack back in that distributed power. So that's unique to the design of our B-TRAN technology.

Okay. Terrific. That's really helpful. And then I wanted to ask about the Asian, I think, power management company is what we're talking about them as a customer. So it sounds like -- and Tim, you said sort of a couple of hundred thousand dollars might be kind of a target range for potential revenues in year one. But what I wanted to ask was, is the product currently available for sale hypothetically today? Or will it start to go on sale to the commercial market sometime in '26?

Yes. So it's not currently for sale. So they're finalizing their product design. We're working with them to do that right now. I don't know the specific timing, whether it will be here later this year or whether it will be next year. That's something we can cover here when we have the update call, in terms of timing. But they have the updated prototypes. They've completed testing. It was successful. So those prototypes look good. And we're just waiting for them to share a little bit more on their timing specifics as it relates to their rollout plan.

Yes. Well, I mean, from my perspective, what's significant, right, is going from concept to testing to sort of turning into a commercial product, having completed that cycle, I think, is really impressive. So that's it for me right now.

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

Thank you, Jenny. Gentlemen, the first submitted question is, any additional context around the CEO transition? Is this something that was planned for?

So yes, Dan's retirement was planned. There was an extensive search that was conducted and led by our Board that Dan was involved with to identify our next CEO. And that resulted in us bringing David on board. And I'm actually really excited, particularly because of his past experience in semiconductors and commercial expertise that it's a great time to bring him on because I think it will really help with obviously is our priority and what's on investors' mind in terms of revenue generation.

Thank you. Our next submitted question is, how do you see the markets evolving? And this is a question for David. How do you see the markets evolving, including data centers, industrial and automotive? And what are you most excited about with Ideal Power opportunities?

Okay. So Casey alluded to part of this question, but I'll give a more thorough answer here. Our B-TRAN-enabled solutions, from my perspective, it's excel and high-power applications, delivering lower conduction losses for improved power efficiency, smaller system size for improved power density, bidirectionality and enabling lower systems cost. Power levels have continued to trend up, as I mentioned a moment ago, across these applications, including the AI data center, which is now planning to move to 800-volt rack architectures commencing sometime in 2027. Automotive EV with the adoption of 800-volt battery systems and fast DC charging terminals as well as other industrial infrastructure applications as the power grid is enhanced to support these growing applications.

In addition, grid-to-system and system-to-grid power transfer requires bidirectionality, where there is also a growing trend to migrate from electromechanical to solid-state semiconductor-enabled systems. Each of these major technology trends involve applications such as circuit breaking and protection, UPS and battery disconnect system, among others, that B-TRAN solutions excel at enabling.

So in summary, we see a continued trend towards higher power levels across these multiple applications, looking for improved power efficiency, improved power density and managing costs that are all a strong fit for our B-TRAN technology.

Thank you. Our next submitted question is, do you expect the initial sales ramp and milestones to be achieved within 2025?

So having been in the seat here a total of 8 days, I'm currently spending my time deepening my understanding of the details of our business. Once I've been through that process, including the opportunity for face-to-face meetings with key customers to understand thoroughly the details of the engagements that we have with them, I anticipate scheduling a call and webcast to share more detailed information and discuss certain topics in greater depth, including my outlook for product commercialization. Revenue is a priority, and I plan on leveraging my go-to-market experience achieved in my 30-plus years in semiconductors across many end sectors and customers to drive revenue growth in our target markets.

Thank you. We have several investors that have submitted questions, and please submit your questions using the "Ask a Question" button. And as you think a question, submit them, you don't need to accumulate all your questions and submit at one time.

Our next submitted question is, what is Ideal Power doing to expand the sales pipeline?

Yes. So as discussed in our prepared remarks and shared by Tim, we have added direct sales in Asia and are already conducting meetings with current and prospective customers. And we're excited about the opportunity for B-TRAN in the region as Asian companies generally adopt new technologies faster than their North American and European counterparts. While we continue to expand the sales funnel, we have a strong focus on closing the many opportunities available to us from current customer engagements. So having the additional sales capability on the ground in Asia is important to us, and we view it as a market that can actually move faster in adoption of new technology than some of the others.

Thank you. How would you compare B-TRAN to competitors, including silicon and silicon carbide solutions?

Yes. So I think about it in this way. B-TRAN has 2 significant advantages. First, it has ultra-low conduction losses, leading to higher power efficiency and improved power density. And second, it's bidirectional. These advantages translate to more power-efficient and compact customer products at lower cost compared to alternative silicon and silicon carbide power solutions that are in the market today.

Okay. Thanks. Can you provide us with any additional information on Tier 1s and OEMs besides Stellantis in the automotive?

Yes. So we're engaged with several automotive OEMs and Tier 1 suppliers as we've previously said. These prospective customers are considering a range of applications and include power switching, EV contactors and battery disconnect units, charging systems and inverters. With the automakers increasingly moving to the 800-volt architectures, as I talked about earlier in my comments, the opportunity for us in this market is expanding. At this point, it also seems likely there will be a replacement of electromechanical contactors with solid-state solutions in EVs.

Okay. Thanks. Our next submitted question is, when mentioning EVs with Stellantis, is either the drivetrain or contactor program likely to be included in hybrids?

Yes. The Stellantis program is really focused on electric vehicles, but our technology would bring the same benefits to hybrid electric vehicles. So we're obviously engaged with several global automakers, several Tier 1 automotive suppliers. I assume once we start getting adopted EVs, the hybrid is also a natural extension of that. So there's definitely an opportunity there for B-TRAN.

Thank you. Our next submitted question is a long one, is just to understand, you upgraded the power rating to 75 amps. You stated in the release that this maintains a significant design margin to a tested long-term continuous basis of 150 amps. What does that mean? How would you -- would you, at some point in time, increase 150 amps? Or would you have to test it at above that at a safe design margin? Is there a standard margin that the industry uses? And how does the 75 amps, 150 amps margin fit within the standard?

Sure. So I'll take that one. You can think about it in the following manner. Increasing our power rating enables customers to evaluate our B-TRAN solutions for a wider range of applications as well as increase the power rating while lowering conduction loss of existing applications in their current designs. There isn't a specific industry guideline for safe design margin. However, we remain very conservative in rating the device at 75 amps, and we've tested it up to 150 amps. We want to ensure that we're providing the proper safety margin to our customers, and that varies by customer and by applications. But I would say that we have sufficient headroom to continue to scale the device up for higher power solutions as the trend continues in that direction.

Thank you. Our next submitted question is, please provide any color on where we stand with manufacturing?

Yes. So we have 2 foundries. As we mentioned, one of them is in Europe, one of them is in Asia. We've been working with the Asian foundry for a little bit longer than we had the European foundry. So I'd say they probably are still ahead of the European foundry in terms of things like yield. But we're comfortable that we could utilize devices from either one for end product sales to customers. And we also have a great relationship with 2 packaging houses, one that we're using -- we use primarily for production, and that's actually in Asia and one here in the U.S. that we also continue to do some development work with that we could use for production, if necessary, for instance, if we received a government program that required U.S. manufacturing. So overall, I'd say we're in really good shape. Right now, it's just about commercializing the technology.

Thank you. Our next minute question is, what are the main barriers to closing sales?

Introducing B-TRAN with it being a new semiconductor technology and device structure begins with educating the customers. Engineers are generally familiar with IGBTs and MOSFETs, but B-TRAN features innovative and distinct architecture that functions differently from traditional semiconductor devices. So to help our prospective customers evaluate our products for their applications, we provide evaluation kits and reference designs to simplify this undertaking.

Additionally, engineers often adopt a cautious approach, which can extend the evaluation period. Achieving automotive qualification, as we mentioned during our prepared remarks, will help to speed up adoption by demonstrating the technology's proven long-term reliability for their applications.

Thank you. Our next question is, how should investors think about tariffs and trade policies on Ideal Power?

Yes. We continue to see that the tariff situation is very fluid, but we anticipate minimal impact on our operations from tariffs in place today. And notably, power semiconductors are often exempt for many of these tariffs, which really limits the potential effect on us. While the situation continues to evolve, we're confident that we're well positioned to manage and mitigate the impact of future tariff changes, trade policy shifts and also supply chain disruptions.

Thank you. That concludes our question-and-answer session. I'd like to turn the call back over to David Somo for closing remarks.

Thank you, Jeff. I want to thank everybody for participating in today's call and for the good questions. As I mentioned earlier, we anticipate scheduling a call and webcast in advance of our year-end results call to share more detailed information and discuss some of the topics we explore today in greater depth. Operator, you may end the call.

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