Good day, and welcome to the Ideal Power Third Quarter 2021 Results Conference Call. Today’s conference is being recorded. At this time, I would now like to turn the conference over to Carolyn Capaccio of LHA. Please go ahead, ma'am.

Thank you, Sara. Thank you and good afternoon everyone and thank you for joining Ideal Power's third quarter 2021 conference call. With me on the call are Dan Brdar, President and Chief Executive Officer; and Tim Burns, Chief Financial Officer. Ideal Power’s third quarter 2021 financial results press release is available on the Company’s website at idealpower.com. Before we begin, I would like to remind everyone that statements made on the call and webcast, including those regarding future financial results and industry prospects are forward-looking, and maybe subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the Company’s SEC filings for a list of associated risks. We would also refer you to the Company’s website for more supporting industry information. Now, I will turn the call over to Ideal Power’s President and CEO, Dan Brdar. Dan?

Thank you, Carolyn. Good afternoon, everyone and welcome to our third quarter 2021 financial results conference call. I will begin by giving you an update on our progress and achievements on our strategy to commercialize our B-TRAN semiconductor technology as well as the work we’re doing with the U.S Navy and the Department of Energy. And Tim Burns, our CFO, will take you through the numbers and then we will get -- take your questions. So let's get started. We made significant progress on our B-TRAN commercialization roadmap during the third quarter moving toward objective of commercially launching B-TRAN in the second half of 2022 as a differentiated technology addressing a large and growing market. During the past several weeks, we made several announcements regarding large global companies that will be participating in our test and evaluation program. We have deliberately targeted leading companies in each of our target market segments that are adopters of new technology, have demonstrated a desire to take a new approach to their product offerings, and have the technical resources in-house to commit to evaluating a new innovative technology and the new approaches it can offer them in their product designs. Our announcements included a top 10 global automaker, a top 10 solar power conversion provider, an EV charging company, each of which will test and evaluate B-TRAN for use in their applications. We've signed additional test and evaluation agreements we've not announced that represent collaboration partners, or relationships with additional commercial businesses in our target markets, and with universities that present opportunities to pursue additional funding from the Department of Energy or the Department of Defense. Subsequent to the third quarter, we announced an additional participate -- a discipline in our sampling and evaluation program with a Forbes Global 500 leader in diverse power…

Thank you, Dan. I will review third quarter 2021 financial results. In the third quarter, we recorded $121,000 in grant revenue, as offsetting cost of grant revenue as we continued our work on the Navy funded NAVSEA demonstration under the DTI subcontract, which began in mid 2020. As we've noted on previous calls, the amount of grant revenue recognized each quarter will vary, as this is a function of the timing of spending in scheduled milestones under the program. We continue to expect almost all of the grant revenue for this program and our SBIR Phase 1 project to be recognized by early next year. Operating expenses were $1.2 million in the third quarter of 2021, flat compared to $1.2 million in the third quarter of 2020. While we invested over $200,000 more in research and development and sales and marketing in the third quarter, compared to the third quarter of 2020. This increase was largely offset by lower general and administrative expenses. We continue to expect research and development and sales and marketing spending to trend higher in the fourth quarter and throughout 2022 As we accelerate development and commercialization of our B-TRAN technology, including conducting additional wafer fabrication runs, third-party testing of the B-TRAN, adding more engineering and front end talent supporting our Test and Evaluation program, designing an intelligent power module and other B-TRAN commercialization activities with potential new customers and partners. We do expect some quarter-to-quarter variability in operating expenses, particularly our research and development spending due to the timing of semiconductor fabrication runs and other development activities. Net was in the third quarter of 2021 was $1.2 million, compared to $4.9 million in the third quarter of 2020. The year-ago period included a one-time non cash warrant inducement expense of $3.7 million. Third quarter 2021 cash used in operating and investing activities was $1.2 million, up from $0.8 million in the third quarter of 2020 and $1.1 million in the second quarter of this year. Our third quarter cash burn was consistent with the guidance we provided in our second quarter call. We continue to invest in both sales and marketing and research and development, expect fourth quarter cash burn of approximately $1.3 million in a full year cash burn of approximately $4.5 million. Cash and cash equivalents totaled $24.5 million in September 30, 2021. Our balance sheet gives us ample liquidity, particularly given our plan continued modest cash burn to fund multiple years of operations. And we are a well capitalized partner for the larger companies that are engaged and we expect to engage in the testing and evaluation of our B-TRAN technology. As of September 30, we had 5,872,046 shares outstanding and 1,040,248 warrants outstanding, including 455,937 stock options outstanding, our diluted shares outstanding and September 30 was 7.4 million shares unchanged from our diluted shares outstanding at June 30. At this time, I'd like to open up the call for questions. Operator?

Thank you. We'll take our first question from Don Slowinski with Winslow Asset Group.

Good afternoon, gentlemen. Thanks for taking my questions. Can you hear me, okay? Dan, could you please clarify a couple of issues around total addressable markets? Because there were some presentations by Ideal Power that talked about the IGBT market growing to $11 billion. And then you talk about the circuit breaker market at growing to $26 billion. So I assume that's the overall circuit breaker market? Do you have a breakdown of what the solid state circuit breaker market looks like? And what that component in the IGBT segment is? Can you just give us a little more color on that, total addressable market?

Yes, you're correct. That $26 billion is the total circuit breaker market. About 40% of that market is really where B-TRAN is sort of in the sweet spot. If you think about circuit breakers, there's a lot of really small, small circuit breakers that are low voltage for things like your home and so forth. And some that are very, very high voltage that would use a different technology altogether. So about 40% of that market, let's call it 10 million. 10 billion is the section that applies to B-TRAN. What portion of that 10 billion will be the cost of the B-TRANs is too early to tell. I think, as we get through, certainly through this demonstration that we're doing with DTI for the Navy, we'll have a pretty good feel of what the percentage of the circuit breaker cost is related to B-TRAN. And we'll be able to give a little bit more information at that point in time.

Okay. So it looks like 10 billion addressable market for B-TRAN within solid state circuit breakers, and then outside of that segment, there are additional use cases for -- are there additional use cases for B-TRAN outside of that? Where's that? Yes. And when you talk about components in electric vehicles or electric vehicle charging stations are those solid state circuit breakers within those applications or as others completely different than that's another additional addressable market.

The studies that I have looked at so far for circuit breakers really don't do a very good job of accounting for the circuit protection, like protection relays and the circuit breakers that are part of the EV space. They tend to do more straight line productions of what the market has been for the past year. So I think in terms of the actual size of the circuit breaker market, I think it's probably being underestimated. And the fact that they only show it expected to grow at 6% a year when the EV portion of power switches is growing at 15% a year. Seems a little, I think modest in terms of their projections. So I think it will actually be bigger than what the expert study share.

Yes, that makes sense. Just one for other one. When you talk about bringing in a third-party Lab, which I think is a great idea. Can you give us some idea on timing on that? When you think you'll identify someone and then how long it'll take them to actually take B-TRAN devices and come back with performance and validation results.

We're going through that selection process, as we speak. There are actually were calls on it earlier today, just evaluating the various companies that our team is familiar with, the sensor capability to make sure that there's nothing that they can't do in terms of some of the things that we want to have done for our data sheets and data information. We're going to make that selection this quarter, like to try and do by the end of the month if we can. And then we'll have a better feel on how long it will take them once we see their formal quotes and they lay out what's their timeframe, because what we're finding is that, depending on who you talk to you, they have a different backlog of work of when they can actually get started. But I would expect that we're going to have the information sometime in Q1 that will be able to go into our public data sheet.

That's fantastic. Okay. I appreciate you taking the questions.

Sure. Thanks.

Take care.

Thank you. [Operator Instructions] The next we will take Kelly Thurman.

Hey, Dan. Thanks for taking my question.

Sure.

Once the sampling program is over, and the next stage takes in where you guys will be developing the product for and moving it along. Will you guys be earning any type of revenue once you're past that sampling program?

Yes, in fact, some of the folks that we're talking to the reason I brought up, for example, custom modules that some of the customers have talking to us about, they would actually be paying us for that. So there would be paid work for that. We will have, we hope we'll have some additional R&D funds from the grants. But for also for customers that want more than a handful of devices to sample. And for example, the automobile companies are typically like that, we would actually charge them for those parts, because we're not going to make hundreds and hundreds of parts of them evaluate on our nickel, and they're willing to pay for those things.

Okay, And then next question and final question, Who do you guys feel you're farthest along with taking a company sampling right now from a prospect to a customer? And are you having success cross selling B-TRAN into multiple product lines, even though they're only sampling one product? Are you having any success cross selling B-TRAN into multiple product lines?

Yes. Part of why we have targeted some of the bigger companies that we have, like the power management company that we announce; the solar power converter company, we announced this because they do multiple things. And we've had multiple discussions with those folks where they say, here's the application we want to start with. But we would also see using it for applications B and C as well. So I think now that getting the leverage out of those larger companies, I think it's going to be pretty helpful in terms of being able to proliferate B-TRAN into other products other than just the initial one that we might be using as the basis for our discussions with them. We actually have multiple companies now that are literally ready, they have budgets approved, they're basically just waiting for us to hand them devices. So we have there's three companies that are definitely in that mode right now, and a couple others that are going through their budget approval process.

When do you think we'll hear some company names? Will that not be till next year? Well, I'm hoping it'll be next year, I think it's going to be a function of what happens with a couple where there's opportunities for code development. If they end up being substantial programs, I think we're going to have to have a discussion with the companies about our obligations to disclose things that will be considered material to our investment community. I'm hoping that even before we get too far into the sampling program itself, we've got a couple other activities that we'll be able to start naming some people.

All right. Thank you for taking my question.

The main thing [indiscernible] confirmed about the -- just one of the thought ad is just what we find is that most people just don't want their competitors to know what they're doing. But at some point, I think the sensitivity of that goes down as we start to work with more and more companies that are out there.

All right. Thanks for taking my question.

Thank you. And this will conclude today's question-and-answer session. I would now like to turn the conference back over to Dan Brdar, [indiscernible] for closing remarks?

Well, thanks everyone for joining our call today. For the remainder of the year, we'll be presenting at the Benchmark Companies technology one on one conference. The Benchmark company discovery one on one investor conference and also with the Sidoti December Microcap conference. Wish everybody a happy and safe rest of 2021 Look forward to giving you another update on our fourth quarter call. Have a great day.

Thank you. And that does conclude today’s teleconference. We do appreciate your participation. You may now disconnect.