IPWR - NASDAQ

Good morning, ladies and gentlemen, and welcome to the Ideal Power Third Quarter 2024 Results Call. [Operator Instructions] As a reminder, this event is being recorded. I would now like to turn the conference over to Mr. Jeff Christensen, Investor Relations. Sir, please go ahead.

Thank you, Alan, and good morning everyone. Thank you for joining Ideal Power's third 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 third 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 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, and we would also refer to you the company's website for more supporting company information. Now I'd like to turn the call over to Ideal Power's, President and CEO, Dan Brdar. Dan?

Thank you, Jeff. I appreciate everybody joining us today. I'm excited to update you on our progress since the start of the third quarter, including several significant developments. I'll cover the key highlights briefly, then discuss them in a little more depth and provide context for their importance. And Tim Burns will discuss our financial results. We'll be pleased to answer your questions after our prepared remarks. First, a global Tier 1 automotive supplier recently ordered numerous discrete B-TRAN devices, a simple power module, solid-state circuit breaker, evaluation board and driver. This customer is interested in using B-TRAN for solid-state EV contactor applications. Second, we continue to meet regularly with Stellantis technical and production teams. Phase 3 is expected to begin shortly after Stellantis selects a Tier 1 supplier to design and build the drivetrain inverter for its new EV platform. In a parallel initiative, Stellantis and Ideal Power continue to work with a large semiconductor company with expertise in driver control circuitry for the B-TRAN inverter driver. Third, we're collaborating with our third global automaker, along with our previously announced engagements with Stellantis and a second Top 10 global automaker. This auto OEM is evaluating B-TRAN enabled contactors in its electric vehicles. We recently delivered a solid-state circuit breaker evaluation board to this customer. Fourth, Richardson Electronics, a global distributor of our products is engaged with a global leader in the design and manufacturer of power conversion equipment, electric motors and motor drives for the potential use of B-TRAN in a matrix converter application. Fifth, this quarter, we added RYOSHO as our second distributor. RYOSHO has already placed orders with Ideal Power from a large global customer interested in the company's products for solid-state circuit protection applications. In addition, RYOSHO recently introduced B-TRAN to Global Automakers based in Japan. Sixth, this quarter, we also added Sekorm as our third distributor in response to customer requests, Sekorm is quoting our products to large companies for solid-state circuit breaker applications. Sekorm is strong in Asia, particularly China. Seventh, we commenced third-party automotive qualification testing of B-TRAN devices. This testing requires over 1000 packaged B-TRAN devices from multiple wafer runs. Initial test results are positive with no failures to date. Eighth, based on the results of testing, we increase the current rating of our SymCool power module by 25% to 200 amps. In conjunction with the power module size reduction of approximately 50%, this significantly increases the power density for the SymCool power module while reducing cost. Looking first at the automotive market. Since we're not constrained under our arrangement with Stellantis, we continue to lever our success with them to attract and engage other auto OEMs and Tier 1 automotive suppliers to evaluate B-TRAN for their next-generation electric and hybrid electric vehicle platforms. This quarter, we added our third global automaker and a global Tier 1 automotive supplier to our list of customer engagements. The third global automaker is evaluating B-TRAN-enabled contactors for its electric vehicles. We recently delivered a solid-state circuit breaker evaluation board to this customer, while the new global Tier 1 automotive supplier ordered numerous discrete B-TRAN devices, the SymCool power module, solid-state circuit breaker evaluation board and a driver. Like the third global automaker, this Tier 1 supplier is also interested in using B-TRAN for solid-state EV contactor applications, a new application where B-TRAN is an enabling technology. The EV contactor application is generating a lot of interest from global automakers and their Tier 1 suppliers. Solid-state contactors provide several benefits over electromechanical contactors. They act much faster, thereby eliminating arcing and improving safety and are more reliable as they do not include physical contacts subject to wear. In addition, they provide programmable settings for trip and current limits as well as built-in safety diagnostics. Solid-state contactors are also expected to cost less than electromechanical contactors in EV applications. While conventional power semiconductors have conduction losses that are too high to make solid-state EV contactors practical, B-TRAN is enabling as it provides ultra-low conduction losses with the added benefit of inherent bidirectionality. B-TRAN-based EV contactors provide an efficient fast-acting solution for high-voltage applications in EVs where they can play a critical role in isolating the battery, inverter and onboard charger to ensure safety when the vehicle is off or being serviced. The need for very low losses and the ability of a contact to act very quickly is becoming increasingly important as automotive OEMs increase the operating voltage of their systems to enable shorter charging times for the batteries. Moving on to different EV applications for B-TRAN. Our program with Stellantis is for a custom B-TRAN power module for use in their EV drivetrain platform across their brands. Stellantis is furthest along of the three global electric vehicle automakers we're working with. The development program with Stellantis is structured in three phases. As many of you know, we successfully completed Phase 2 of our program with them earlier this year and are eagerly waiting to begin the next phase. While Stellantis upper management has been focused on resolving their well-documented inventory and labor challenges this year, we're now seeing a return to focusing on future models and platforms. The selection of a Tier 1 for the program's drivetrain inverter is now under internal review, and we're confident we'll secure the next phase of the program in the coming months. Since completing Phase 2, we continue to meet with their technical and production teams weekly to keep the program progressing. Meanwhile, Stellantis developed and sent out a drivetrain inverter solicitation to roughly a half dozen Tier 1 suppliers. The Tier 1 suppliers were asked to provide their proposals to supply B-TRAN-based drivetrain inverters. Stellantis introduced our team to the Tier 1 suppliers we were not already working with, so we could bring them up to speed on the technology, our products, the unique configuration we developed for the application and the corresponding test data that demonstrated we provide better performance compared to other silicon and silicon carbide solutions. The Tier 1 inverter proposals have been submitted to Stellantis. They are reviewing the proposals and would down select to 1 or 2 Tier 1 suppliers to design and build the drivetrain inverter for their new EV platform. After the Tier 1 inverter supplier is selected by Stellantis, we expect to start the next phase, working with the Tier 1 suppliers and the Stellantis teams with the objective of developing a production-ready B-TRAN power module for use in their EV drivetrain. Completion of the B-TRAN module is targeted for 2025. Stellantis is also interested in B-TRAN for battery circuit protection applications as well. In a parallel initiative, Stellantis is working with us and a large semiconductor company with expertise in driver control circuitry for a B-TRAN inverter driver. In addition, Stellantis recently introduced us to another large semiconductor company to explore potential collaboration on a novel concept utilizing B-TRAN for the inverter module. While waiting on the next phase to be formalized, we recently commenced third-party automotive qualification testing of our B-TRAN die. We prioritize shipment of packaged B-TRAN devices for multiple wafer runs for this third-party testing as it will allow us to share third-party test data with industrial customers during the automotive qualification and design-in process and prior to these industrial customers ramping their potential new product offerings incorporating B-TRAN. Industrial qualification includes a subset of the testing required for automotive qualification with less stringent requirements for certain tests. Formal third-party automotive qualification is only required prior to customers including our B-TRAN semiconductor technology in automotive products, systems and subsystems offered for sale. Automotive qualification testing includes a broad array of testing required by automotive codes and standards utilizing specified parameters, in some cases, much more stringent than industrial standards and a wide range of test conditions. The testing to achieve automotive qualification requires over 1,000 packaged B-TRAN devices from multiple wafer runs. The process itself includes tens of thousands of power cycles at various current levels, thermal cycling at extreme temperature and humidity levels, blocking voltage and shock and vibration testing and visual inspection. These tests are designed to expose the semiconductor to conditions that are intended to accelerate failure mechanisms and demonstrate the long-term reliability of the devices. Since testing began last month, it has gone well with no failures to date. We expect auto qualification to be successfully completed in the first half of 2025. As I mentioned, industrial orders in the near term are not dependent on the successful completion of automotive qualification. However, third-party automotive qualification will provide further assurance to industrial customers of the long-term reliability of B-TRAN and conditions beyond what is required for industrial applications. It's also expected to potentially accelerate sales to industrial customers that are often conservative in adopting new technologies. Now let's take a look at the industrial markets as these are expected to be the early source of our product sales and revenue ramp, initially for solid-state circuit breakers and other circuit protection applications served by our SymCool power module. B-TRAN is enabling technology for solid-state circuit protection applications as it reduces conduction losses and operating costs in power switching and control circuitry. Solid-state devices can act literally orders of magnitude faster than the electromechanical circuit breakers widely used today and B-TRAN-enabled circuit protection devices provide the additional benefits of ultra-low conduction losses, critical in continuously conducting applications and inherent bidirectionality. We've got a roster of large companies that we've been working with for several months, and we've got several more in the queue in early-stage discussions. For customers that have already conducted an initial valuation of our products, we're now in the process of responding to their request for proposals for custom packages and/or development agreements if their applications require any unique packaging or customization. For customers that will use our standard products, we expect increasing order sizes as they transition from initial evaluation and prototyping to building inventory for OEM product launches. To facilitate this process, we created a solid-state circuit breaker reference design for these customers that includes an evaluation board along with B-TRAN devices. This reference design is expected to accelerate customers' evaluation of B-TRAN for use in their solid-state circuit breaker products. Our revenue will be modest with small orders in the near term as customers evaluate B-TRAN and build initial product prototypes incorporating our products. Once these customers are deep into their design cycle, we expect order size to significantly increase, resulting in a ramp in revenue. While the timing of customer adoption is not within our direct control, we're targeting to ramp revenue in the second half of next year based on the multitude of global customers evaluating our technology, several of whom have already placed initial orders. We added our second and third distributors, RYOSHO and Sekorm in the third quarter, a significant development in our commercialization roadmap for B-TRAN. RYOSHO and Sekorm are similar to our previously announced distributor, Richardson Electronics, as they have expertise in demand creation, not just catalog order taking, with strong technical sales teams, global reach and a proven track record of securing sales for new technologies. RYOSHO is the U.S. subsidiary of RYODEN, a publicly listed company on the Tokyo Stock Exchange with almost $2 billion in annual sales in over 20 international locations. RYOSHO is focused on the sale of semiconductors and other electronic components with particular strength throughout Asia. Right out of the gate, they placed orders with us from a large global customer interested in our technology for solid-state circuit protection applications and recently introduced B-TRAN to global automakers based in Japan. Sekorm Advanced technology is quoting our products to large companies for solid-state circuit breaker applications. Our products fit very well with their customer base, they have customers throughout Asia with China as their primary focus. China is the largest market in the world for power semiconductors today. Sekorm is focused on industrial applications requiring circuit protection and DC infrastructure and electric vehicle charging and is a leader in sales to the utility infrastructure market. Addition of these two distributors is another example of our asset-light business model that leverages the large investment already made in silicon processing, distribution, demand creation and support infrastructure. Utilizing data from a recent study by Mordor Intelligence in their global power electronics market report, we expect the B-TRAN serviceable addressable market, or SAM, to more than double over the next five years to almost $8 billion, growing at a compound annual growth rate of 16% -- within the overall market is the $1 billion SAM for solid-state switchgear we're attacking with our SymCool power module and the $1.4 billion SAM for renewable energy, energy storage, microgrids and EV charging targeted by our SymCool IQ product. Our SAM also includes $1.6 million for industrial applications such as motor drives and UPS systems for data centers and $3.6 billion for automotive. As it relates to the recent election, there is some investor concern regarding the impact of the new administration on certain of our target markets, such as electric vehicles and renewable energy. This could be seen recently as companies in these sectors experienced sharp declines in their stock price immediately following the election. While we understand the concern, the adoption of electric vehicles and renewable energy is a global market and will continue despite any near-term changes in government policy in the United States. We see the global nature of these markets as our customer base is largely made up of large global companies, many of them headquartered in Europe or Asia. There is a broad and global support for the clean energy transition at all levels of government globally. Private investment in clean energy continues to increase. Renewable energy is now the lowest cost source of electricity in many areas, and industry experts continue to forecast significant growth for electric vehicles and renewables. Regardless of the administration in Washington, D.C., we're well positioned for growth due to the increased and inevitable further electrification of society that will drive growing demand for power semiconductors, particularly those with compelling value propositions like B-TRAN. We see no change in the level of engagement of our customers as they are uniformly focused on improving the performance and cost of their next-generation products. B-TRAN not only improves the economics of electric vehicles and renewable energy solutions, but also other applications like solid-state circuit protection, motor drives and UPS systems for data centers. Turning to our high-volume wafer fabrication suppliers in Europe. In Asia, we're dual sourced for wafer fabrication in different parts of the world with ample capacity to support anticipated customer demand over the next few years. Our dual sourcing for wafer fabrication in disparate geographies has no exposure to China or Taiwan to mitigate supply chain risk. Our fab partner in Asia was able to produce functional bidirectional devices from an engineering run last year that demonstrated high wafer yield without the need for special equipment or capital investment. There's always room to improve yields. And over the course of last year, we focused on further increasing yields to reach our commercial yield target. By leveraging our proprietary improvement process flow, we successfully qualified a second wafer fabrication partner located in Europe last quarter. The engineering run at this fab, similar to the engineering run in our Asian fab, provided functional bidirectional devices. Due to process improvements, device performance from the most recent runs at this fab match, or in some cases exceeds that of the devices from our fab partner in Asia. We're working closely with this partner to increase yields, leveraging our lessons learned from our other wafer fabrication runs. We expect to achieve our commercial yield target at this fab in advance of our sales ramp expected to start in the second half of next year. Moving on to innovation, we expect to complete the first engineering run of our next-generation B-TRAN die design later this year. This die will be roughly half the size of the current die, translating to more than twice as many dies per wafer while providing the same voltage and current rating capability of our current device. This next-generation B-TRAN die design is part of our long-term cost reduction roadmap. We've already completed the packaging design for this next-generation die. We expect the packaging itself to be about 30% smaller than our current packaged design with a corresponding decrease in cost. Turning to parallel device characterization, we've demonstrated that the current sharing of B-TRAN is better than that of conventional devices such as IGBTs when devices are run in parallel for high current capability. This is of critical importance for solid-state circuit breaker applications where OEM will combine multiple SymCool power modules in parallel to achieve their desired breaker rating. Unlike IGBTs, B-TRAN is able to balance current sharing between devices in parallel at specified levels of temperature mismatch between the devices. This feature improves reliability compared to running IGBTs in parallel for multi-die power modules, providing us with another competitive advantage compared to conventional technologies. Another advantage to our approach for the foreseeable future is that the wafers and resulting dives are all the same for any application, whether going into a circuit breaker, electric vehicle, energy storage system, data center or solar installation. We can ramp up production costs effectively because we don't have to forecast wafer demand and die design mix based on the application. For automakers, it will ultimately be them buying our dies. All they need from us are our wafers or dies themselves. For example, under the Stellantis program, they're working with an innovative packaging company to develop a unique packaging design that fits the needs of their B-TRAN enabled drivetrain inverter. This allows us to continue to focus on improving our core technologies. We're unaware of any competing inherently bidirectional high-power technologies using anything similar to our technology. High-growth, high-power applications such as solid-state circuit breakers, power converters for energy storage, solar and wind power, electric vehicle inverters and contactors, electric vehicle charging stations, UPS systems for data centers and other applications are all focused on bringing down cost while improving efficiency for their next-generation products. While silicon carbide has been targeting many of these same applications, the high cost and inherent materials challenges of silicon carbide remain a long-term challenge to meet the needs of many of these customers. This is evidenced by the recent decision by companies such as Qorvo, who announced they are exiting the silicon carbide market. We believe B-TRAN, particularly in bidirectional applications, offers a new low loss, lower-cost approach. Looking at our expanding B-TRAN patent estate, we currently have 90 issued B-TRAN patents with 42 of those issued outside of the United States. Our current geographic coverage for our patents includes North America, China, Japan, South Korea, India, Europe and now Taiwan, all representing our high-priority geographic coverages. Just last month, we had our first B-TRAN patent issued in Taiwan, providing coverage in a country known for its power semiconductor manufacturing. As a result of our continued innovation, our list of pending B-TRAN patents is now at 50. In addition, we treat the proven process flow we used to make our devices as a trade secret and work under strict confidentiality with our wafer fabrication partners. So even if a competitor studied our patents, they would not have the know-how on how to actually fabricate the device. Overall, this quarter, we added our third global automaker to our list of customer engagements. We secured initial orders from a global Tier 1 automotive supplier. We added our second and third distributors with expertise in demand creation, and they're placing customer orders and providing quotes for our products to large global companies. And we're continuing to innovate and advance our B-TRAN technology and products while preparing our supply chain to handle the pending sales ramp. The momentum we're building is working to advance companies to orders, followed by potential custom development agreements and/or design wins and revenue growth. I would like to hand the call over to Tim Burns to review our financials. Tim?

Thank you, Dan, and good morning, everyone. Our third quarter 2024 cash burn was $2.4 million, up from $1.9 million in the third quarter of 2023 and up from $2.2 million in the second quarter of 2024. Our Q3 cash burn was at the low end of our guidance of $2.4 million to $2.6 million due to the timing of spending and related payments. We continue to manage expenses prudently and aggressively. We expect fourth quarter 2024 cash burn of approximately $2.6 million to $2.8 million. We previously provided guidance of a cash burn for full year 2024 of $8.5 million, net of an expected $1 million in proceeds from warrant exercises. We now expect to be slightly below that estimate for the full year 2024. Specifically, we expect full year 2024 cash burn of approximately $8.2 million to $8.4 million, net of the $1 million in proceeds from warrant exercises. These warrants were scheduled to expire this month. However, the warrant holder exercised the warrants in the third quarter, resulting in $1 million in proceeds to the company. Cash and cash equivalents totaled $18.7 million at September 30, 2024. We have no debt and a clean capital structure. We recorded very modest revenue for the third quarter, driven by our prioritization of devices for automotive qualification testing. While initial orders from the large companies evaluating our products for potential inclusion in their OEM products will be small, we expect order sizes to increase as customers start to prototype their OEM products and progress through their design cycles. Looking at the fourth quarter of 2024, we expect to see modest volume in commercial revenue from product sales. Operating expenses were $2.9 million in the third quarter of 2024 compared to $2.8 million in the third quarter of 2023. We expect both research and development and sales and marketing spending 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. Our net loss was flat at $2.7 million in both the third quarter of 2024 and the third quarter of 2023. At the end of September, we had 8,142,776 shares outstanding, 975,579 options and stock units outstanding, 887,160 prefunded warrants outstanding and 347,240 warrants outstanding. The remaining warrants have an exercise price of $8.90 and are set to expire in August of next year. At September 30, 2024, our fully diluted share count was 10,352,755 shares. At this time, I'd like to open up the call for questions. Operator.

[Operator Instructions] Our first question is coming from Brian Dobson with Clear Street. Your line is live.

Good morning. Thanks very much for taking my question. Just to bring it up to 30,000 feet, if you could, for a moment, opine on the outcome of the U.S. election, in particular, if you think that some of the recent negativity surrounding green energy has been overblown and how you think this impacts the operating environment over the next four years?

Yes. I think there certainly was an immediate reaction to it. But if you look at the prior administration where Trump was our President, solar actually did very well. So I think part of this is really just concern that some of the incentives that are out there are going to be a headwind for things, particularly like solar, and the high cost of electric vehicles is already a challenge even before the election. But the customers we're working with, they are not disengaging in any way, they're really focusing on what they need to do to keep their products competitive, which is really focused on how do they drive down the cost and improve the performance, whether it's more kilowatt hours out of an energy storage system or more range out of the battery. So I think it's really just more a short-term reaction. And based on what we've seen when this administration was in office previously, it really didn't have any deleterious impact on solar in the U.S. And then, as I mentioned in my comments, I mean, it is a global market. So the growth that we're seeing in electric vehicles globally and renewable energy, that momentum continues to be pretty strong.

You mentioned that in the quarter, you added new distributors as well, and it's encouraging to hear but they've already placed orders. How do you see that relationship developing over the course of '25 and '26? Is there any kind of additional color you can give us on your long-term plans of working with those two partners?

Yes. So these -- the distributors that we've signed up, so now Richardson and the two most recent to get us to the three distributors are all involved in demand creation. So they're introducing us to large customers. While they are handling order fulfillment for us, which is great from the perspective that many of these customers are international, the real value is really in the introductions. And we have arrangements with the distributors that they will temporarily get a small single-digit fee from customers where they introduce us to, but we handle them direct. So if you're talking like an automotive company, a very large industrial company, those will not be actually fulfilled ultimately through distribution, although the introduction may be made through these distributors. So for us, it's really an extension of the sales team.

Yes, excellent. And regarding your work with Stellantis in entering Phase 3, can you offer any kind of additional color on that project and how you see it perhaps progressing from a time line point of view next year?

Yes. We actually saw the Stellantis team at the senior level is really focused on the fact that I think they were relatively slow to react to what was going on in the car market with the volume of vehicles they were building and where they were pricing vehicles. So it created, I think, a distraction for them with coming to terms with the fact that they had an excess of inventory and they didn't have incentives to move vehicles. That seemed to take away some of the priority internally for them to get approvals for a lot of the technology programs they're working on. We're seeing that swing back now because they seem to have the roadmap laid out. I think they are -- the technical teams have continued to work and the production teams have continued to work despite that, and we've been collaborating with them as well. So I think that they are still very much focused on getting this new version of their power module for the inverter ready for next year, so they can start to actually get into actual testing of the builds. That seems to really be a driver, because part of the strategy that they've got are to bring out more electric vehicles that can provide longer range and reduce the cost of those vehicles, and we fit very well into that formula because that's really part of what our technology brings to the table.

Great, and just for some investors that might be new to the story, could you just quickly highlight what you're most excited about for '25 and '26?

Yes, I'm really excited of the fact that the companies that we're working with, they're very large global customers that have the ability to actually really bring out some innovative products, and we're learning a lot from them as well about where they're going with their products. It's bringing new semiconductor technology always takes a long time. You've got to get the customers educated about your technology, they've got to get devices and get familiar with them, they've got to start working on their designs. So it's a long process. And it's really exciting for us, the number of companies that we see spending time, energy and resources on an ongoing basis with us because any one of them can drive a significant amount of volume for us as they get to the point where they start to roll out product.

Great. Look forward to catching up with you after the call. Thank you.

Thank you.

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

Thanks, operator. Gentlemen, the first submitted question is, does B-TRAN have uses in data centers? And if yes, is Ideal Power taking -- talking to anyone about it?

Yes, it does. One of the things that data centers really have to focus on is circuit protection, whether it's through the UPS systems or circuit protection of the servers themselves. And those are continuously conducting devices that have to act extremely fast. So we actually are already talking to customers that are looking at B-TRAN as part of protecting the data centers from disruptions in the power quality and how they can be incorporated into the new designs for things like the UPSs and fast disconnects that allow the data centers to keep operating.

Our next submitted question is how much annual revenue does Ideal Power need to be profitable and cash flow positive? What would the margin be for that revenue?

Yes. So there's obviously a lot of variables to take into account there. But I would say roughly $30 million to $50 million is probably the range in terms of annual revenue where we would get to cash flow breakeven. And that assumes that at that point, you're above 30% gross margins with our long-term target being obviously 50% gross margins. But until we get further scale, we'll probably be in the 30s at that kind of revenue range.

In October, it was announced the company received orders. How accretive are those revenues? And are they -- will they be recognized in the fourth quarter?

Yes. So in general, right now, most of the orders we're talking about are small, and it's just because of the timing of where people are in their design cycles. So while initial orders here in the near term will be small, we expect to really start to see larger orders as these customers get to actually building prototypes of their products that they intend to launch and then actually starting to build inventory for those products. So generally, those orders will be fulfilled within -- depending, I would say, anywhere between -- if we have the inventory on hand, immediate to 12 weeks. So if we announce an order in October, very likely the revenue will be recognized here in the fourth quarter.

Thank you. We have several questions submitted. If you have a question, please click on the webcast portal, click on Ask a Question button. Our next submitted question is, since there are many industries that could benefit from B-TRAN, why is it taking so long to achieve even one large order? Where is their urgency?

Yes. I would say it gets back to some of what I said for the -- in answering the last question. These companies have, if you're looking in the industrial sector, 12-month design cycles. So if you're still in the first half of that design cycle, it's going to be very low quantity orders, right? If you're looking later into that design cycle, which just, again, will be six to 12 months into the design cycle, we'd expect increasing order sizes. But it's really just a factor of when they began their evaluation and where they are in that design cycle.

Thank you. Our next submitted question is, at what point is an Ideal Power news event material enough to disclose the name or names of your global development partners?

So, I would say there's not a hard and fast rule. I mean, technically, I think the stance has been made in the -- by the SEC and NASDAQ and others that the name of the company is -- can be kept confidential in most cases. So what you really need to look at is the relationship and how far you are along with that customer, whether they're ready to introduce a product. So there are certain checkpoints kind of that we look at where we go back to those customers and ask for permission to name them. And we'll continue to do that. But it's really -- when you sign a formal agreement prior to launch of a product --those are times that there's much more likelihood, particularly when you near product launch because the products will be out there, right? It's not just an R&D effort. Companies don't want people to know what they're doing just solely from an R&D perspective. But when something is getting productized, that kind of changes the narrative.

Thank you. Our next submitted question is, what do you see as the most likely application for a first design win and what type of company? And what do you think the timing of the design win will be?

Yes. I think the most likely application is going to be something related to solid-state circuit breakers or circuit protection. We've got several companies now that is their focus on how they want to use B-TRAN. While there's a lot of companies that are focusing on things like EV contactors and so forth, that design cycle and that win cycle, I think, on the industrial side will certainly be shorter, and there's enough players in that space that we're working with that are making good progress. That would be my expectation for first sample. I think the companies themselves, when I think about those that are sort of in the lead with the companies we're working with, they are going to be companies that are significant suppliers to the utility space and to large industrial customers. Where they provide other types of power control equipment and other circuit protection devices where this actually brings something unique to their portfolio of products, that gives them a competitive advantage versus others that we are not working with.

Thank you. It looks like there are no other submitted questions. Dan, do you have any closing remarks?

I just want to thank everybody for joining us today on today's call and for your questions, and we look forward to continuing commercial announcements on our B-TRAN before our next update call. Operator, you may end the call.