Good morning, ladies and gentlemen, and welcome to the Ideal Power First Quarter 2024 Results 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, operator, and good morning, everyone. Thank you for joining Ideal Power's First Quarter 2024 Conference Call. With me on the call are Dan Brdar, President and Chief Executive Officer; and Tim Burns, Chief Financial Officer. Ideal Power's First Quarter 2024 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 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 the associated risks, and we would also refer you to the company's website for supporting company information. Now I'd like to turn the call over to Ideal Power's President and CEO, Dan Brdar. Dan?

Thank you, Jeff, and everyone, for joining us on the first quarter 2024 conference call this morning. I'm eager to share some recent updates on the business since the start of the first year and review our priorities for 2024. Then I'll turn things over to Tim Burns to review our financials. We'll be pleased to answer your questions after our remarks. This was an exciting quarter for us as we made significant progress in our customer engagements and commercialization efforts as evidenced by the conversion of customers in our test and evaluation program moving to commercial orders, shipping our first commercial products, the addition of our first distributor and their subsequent customer orders, successfully completing the current program phase with Stellantis and the addition of new large companies to our test and evaluation program. We'll take a look at each of these activities and some additional progress against our objectives for the year. But for those new to Ideal Power, I want to briefly address the markets we serve and the opportunity for our technology. Our technology B-TRAN is a low-loss bidirectional power semiconductor device that has wide applicability in high-power applications such as solid-state circuit breakers and circuit protection, renewable energy, energy storage, electric vehicles and EV charging, industrial motor drives, UPS systems for data centers and power converters for a variety of industrial utility and military applications. Based on a recent study by Mordor Intelligence, in their global power electronics market report and company estimates, the trans Serviceable Addressable Market, or SAM, is predicted to more than double over the next 5 years. With a projected 16% compound annual growth rate, the total SAM or VTRM is forecasted to grow from $3.6 billion in 2023 to $7.6 billion in 2028. Today, this market is currently served largely…

Thank you, Dan. I will review the first quarter 2024 financial results. We recorded $79,000 in commercial revenue for the first quarter. Looking at the balance of 2024, we expect modest commercial revenue from both product sales and development agreements. Operating expenses were $2.5 million in the first quarter of 2024, down from $2.6 million in the first quarter of 2023. We continue to expect some quarter-to-quarter variability in operating expenses, particularly our research and development spending due to the timing of semiconductor fabrication runs, product development, other research and development activities and hiring. The timing of equity grants and rated stock-based compensation expense may also cause variability in our quarterly operating expenses. We expect general and administrative expenses to be up modestly in the second quarter of 2024 due partly to the timing of our annual shareholder meeting and associated costs. Sales and marketing spending is expected to continue to increase modestly in coming quarters due to hiring and costs associated with our commercialization efforts. Net loss in the first quarter of 2024 was $2.5 million, flat compared to the first quarter of 2023. The First quarter 2024 cash burn, which excludes the net proceeds from our public offering was $1.9 million, below our guidance of $2.3 million to $2.4 million due to the timing of spending and related payments. We continue to manage expenses prudently and aggressively. We expect second quarter 2024 cash burn of approximately $2.2 million to $2.4 million, partly due to timing reversals from the first quarter and the full year 2024 cash burn of $8 million to $8.5 million, net of an expected $1 million benefit from proceeds from expiring heavily in the money warrants. Cash and cash equivalents totaled $20.2 million at March 31, 2024. We have no debt and a clean capital…

[Operator Instructions] Your first question is coming from Brian Dobson of Chardan.

So I guess first on Stellantis, had some exciting news about Phase 2 being completed. I guess as you've given us some really good color on that already, how do you think progressing through this process with a, call it, Tier 1 OEM like Stellantis has helped you in your approach to perhaps other OEMs? Do you find that there's a lot of synergy there in terms of improving your product?

One of the things that we are happy about is that we're not really constrained in what we're doing under the Stellantis program. So we are literally taking test results that we've generated for Stellantis and going to other Tier 1s and other automotive OEMs. So the things that they're focused on, the kind of data they want, how they want testing done, we basically get a lot of repeatability out of it. And the fact that when we go to these other OEMs and other Tier 1s, when it's clear that we understand how the testing needs to be done for the automobile sector, it gives them confidence that we actually really got our arms around what the requirements are. So it's been really beneficial that we don't have limitations as a result of what we're doing with Stellantis.

And so the order activity around SymCool is interesting. When do you think you might have more color in terms of feedback from those modules? Have you received any early feedback from those 2 S&P 500 companies?

So we're actively engaged with both of them. Obviously, one has already ordered CIMCO product from us. I would say it's a little bit early to get detailed feedback. I mean we're in discussions with one of them in particular, for potentially a development program for a product line that they're looking to potentially roll out for solid-state circuit breakers. So I think it's something where we're just saying actively engaged with these companies. And once they kind of graduate, so to speak, from the test and evaluation program, there's still going to be initially low volume orders that follow-on orders will increase in size over time. But it's not a process where you graduate from the test and evaluation program and the next day is a design win, right? It's an ongoing process. And we think the process really it's about a 12-month process. So we would expect to convert some of these companies here potentially later this year and design wins for products that would be ready to roll out either regulate this year or into early next year?

You mentioned a lot of areas for growth on the call, but if you had to narrow down to, say, 1 or 2 that you're most excited about for 2025, '26, what would those be? Where are you looking to devote the lion's share of, call it, management's time and efforts? I think it's really things that are around circuit protection for one because that is -- it's a shorter cycle -- but in the time frame you're talking about, we're also going to be pretty well into the programs with certainly Stellantis and hopefully, others. So we've got sort of a short-term opportunity, a longer-term opportunity that's even bigger. So we're kind of trying to leverage what we're doing for both of those and be responsive to both because they both are just driven by really fundamental changes going on in the automobile industry and the need to upgrade our electric infrastructure.

[Operator Instructions] I will now turn this call back to Jeff Christensen to read any questions that have been submitted through the webcast. Thank you.

Thanks, operator. And our first question is, have all the companies involved in the company in our test and evaluation program been announced? Or are there some that you just have not announced?

So yes, there are some that we haven't announced. I mean we focus our announcements really on what we think are the largest opportunities. So there's companies that are not been announced in that program. I would say also, there's companies that may be very large companies that just won't participate in the test and evaluation program that go straight to buying our SymCool product because they really want to get a head start in evaluating that product from their solid-state circuit breaker and circuit protection products. So it will be a mix. But yes, we'll continue to announce the very large companies that have joined the program. But in general, no, we will not announce every entrant into that test and evaluation program.

Is the arrangement with Richardson exclusive in any way? And why was Richardson selected?

Yes. It is not exclusive. There was a little bit of confusion when Richardson had their earnings call. They're so excited about what we're doing together. I think the speaker kind of got a little carried away. But our -- and we had to go back to them and let them know that the individual unfortunately misspoke. Our relationship with them is not exclusive. We really selected them because while they're not the biggest distributor out there, they really have unique expertise in technical sales as it relates to new technology and new products. They don't really focus on the commodity parts that you find with some of the other really, really large distributors where it's just turning parts out at the lowest cost. They really have the technical expertise to actually support their customers as new technology comes to market. And I think they're just kind of a great fit for what we need. But as I mentioned in my prepared comments, we're going to be adding some others because we do realize that Bobby has got a great customer base, there are customers they don't reach. So we want to make sure that we've got really good channel coverage globally in terms of the opportunities that VTM presents for us.

We've got several questions in the queue here on the webcast from the ask a question button. So we look forward to your questions there, you can submit it into that ask a question button. Our next question is what is the product that Ideal Power is circuit breaker. What certain brick or product do we replace with our product?

Well, it's a circuit breaker that will be designed by others, companies that make industrial equipment and utility equipment companies like Siemens, Eaton, ABB, what it's replacing is the traditional electromechanical breaker. If you look at any utility infrastructure, you go to a substation, they all use these electromechanical breakers that while they have low conduction losses, they act very slowly. A semiconductor-based device can literally act more than 100x faster, which means you don't have arcing. Arcing poses fires, arcing where is the contacts in the breaker. So the need to actually have faster-arcing breakers as we have more and more distributed energy put into the system. And as we have more distributed loads like EV charging requires better faster-arcing breakers. And that's really the opportunity that it's presenting for us. So say circuit breakers have actually been around for a while, but the problem has been those that are IGBT-based have just had too high conduction loss to make them a practical solution. So we actually function as an enabling technology for the circuit breaker replacements.

Can you provide any updates on any of the other companies in the test and evaluation program beyond what you mentioned?

So we're actively engaged with all of it. I mean the one that's probably most notable is the other top 10 automakers that's in that program. They became, I would say, particularly actively engaged after we were able to name Stellantis back in December. We continue discussions with them on a regular basis. We're talking about actually multiple different ideas right now for potential custom development program with them. So I would say that's probably the biggest update. I mean, Dan, in his prepared remarks went through us converting some of the companies, including a Forbes Global 500 power management market leader into actually starting to buy product and place orders with us. So I think that's kind of the expectation is that as companies get through their initial valuation, they'll start to actually place orders for relatively small quantities so that they can continue their evaluation, particularly if they're looking at the CIMCO for the solicitor application, the actual test and evaluation program is designed around the discrete B-TRAN device. So a single buy, not this multi-die CIMCO module that we released as our first commercial product. So we think that's going to kind of be the evolution really is test and evaluation programs will transition to ordering and obviously follow-on orders and ultimately, design wins or custom development agreements.

Thank you. And for the audience, if you have a question, go ahead and just submit one at a time. I want to make sure we get your questions in. You don't feel like you're going to need to group them all together to ask. Our next question is, can you provide us with any other information on Tier 1s and OEMs besides Stellantis in automotive?

We can't name any of them. There are a couple that we actually meet with on a regular basis. And now I guess it's actually starting today, those that were in the solicitation from Stellantis we're now engaging with a broader group of them. So the Tier 1s ultimately know that they're going to be one provided in these systems. So those that are the big players that you would expect to be providing the space are already engaged with us to understand the technology, to understand the benefits that it can bring and to understand how the automakers that we're working with are thinking about using the technology. My hope is that, particularly as we get through this next phase with Stellantis, we'll be able to start naming some of these Tier 1s because if you know the automotive industry, you'll recognize their names.

And that's all the time we have questions for. And Dan, do you have any closing remarks?

I just want to thank everybody for joining our call. We made great progress on our path to commercialize our technology, and our talent and team is on track for a very successful 2024. We look forward to continuing commercial announcements before our next update call. So operator, you may end the call.

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