IPWR - NASDAQ

Good morning, ladies and gentlemen, and welcome to the Ideal Power Fourth Quarter and Full Year 2024 results 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. Investors can submit their questions anytime within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen. Analysts who publish research may ask questions on the phone lines. For analysts to ask questions on the phone line, please press. 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 fourth quarter and full year 2024 results conference call. With me on the call are Dan Brdar, President and Chief Executive Officer, and Tim Burns, Chief Financial Officer. Ideal Power's fourth quarter and full year 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. We would also refer you to the company's website for more supporting company information. I'll turn the call over to Ideal Power's President and CEO, Dan Brdar. Dan?

Thank you, Jeff. I appreciate everyone joining us today. I'm looking forward to updating you on the progress since the start of the fourth quarter. We accomplished several key 2024 milestones and made significant progress with a number of key customers, including Stellantis. Based on our recent successes, positive customer feedback, and the heightened level of customer engagement, we're excited about how 2025 is shaping up for the company. Since the announcement of our first design win in September, our pipeline has expanded, and the pace of evaluation of our technology and meetings has accelerated. It's just one of the reasons why we're so excited about 2025. We have a roster of large global companies we've been working with for several months and several more in the queue in early-stage discussions. Given the size of these companies, any one of them could represent annual revenue to us of millions of dollars or more over time. A few key design wins would be enough to get us to profitability. I'll briefly cover the key highlights since the start of the fourth quarter and discuss them in a little bit more depth to provide context for their importance. Then I'll turn things over to Tim to discuss our financial results. We'll be pleased to answer your questions after our prepared remarks. First, we secured our first design win for solid-state circuit breakers with one of Asia's largest circuit protection equipment manufacturers serving industrial and utility markets. Our B-TRAN-based solution easily fits in the customer's existing design for a circuit breaker product. This will reduce the time to market for their initial B-TRAN-enabled breaker product. The joint development program in connection with this design win targeted B-TRAN-based circuit breaker prototypes late in the second quarter of 2025 to be followed by commercial sales to their customers later in the year. We're pleased to announce that this program is well ahead of schedule, with circuit breaker prototypes now expected to be completed, tested, and shipped to the customer in late March or early April. This will allow the OEM to test and begin marketing the new low-loss breaker to their customers sooner than planned. Second, we secured an order for SimCool IQ intelligent power modules from a customer that specializes in the development and manufacture of circuit protection and power conversion solutions. This customer is interested in SimCool IQ modules for several end markets, including renewable energy, energy storage, electric vehicle charging, and data centers. This product opened an estimated $1.4 billion serviceable addressable market for energy and power applications. This will be the second market to contribute to our sales ramp behind the solid-state switchgear market served by our SimCool power module. Third, we secured orders from a third global tier-one automotive supplier for numerous discrete B-TRAN devices, SimCool power module, solid-state circuit breaker evaluation board, and driver. The customer is interested in using B-TRAN for solid-state electric vehicle contactor applications, a new application where B-TRAN is an enabling technology. The B-TRAN value proposition for EV contactors is similar to that of solid-state circuit breakers: very fast acting, safer, more reliable, programmability, and diagnostic capability. Turning to Stellantis, as many of you know, they had a challenging year in 2024 with high vehicle pricing, high inventory levels, and production outpacing demand. During this period, next-generation vehicle programs like ours slowed down as their senior management and production teams focused on resetting their traditional combustion engine vehicle business to align with the changes in the marketplace. Fortunately, they have largely addressed those challenges and are now refocusing on their next-generation platforms. Earlier this month, we completed a comprehensive program review in Detroit with Stellantis' US, French, and Italian production and engineering teams, along with the other major suppliers contributing to Stellantis' new EV platform. At the program review, we reviewed the design, device operation, and test data completed in the first two phases of the program. We also reviewed the work done with their engineering team that provided a direct comparison of IGBTs, silicon carbide MOSFETs, and B-TRAN-based switching options, which clearly showed B-TRAN provided the lowest loss solution. In addition, we reviewed the automotive qualification testing results to date and provided a live device switching demonstration for their drivetrain inverter in the lab. We also introduced them to the concept of a B-TRAN-based EV contactor, leveraging work we're doing with other automakers and tier-one suppliers. Feedback from the Stellantis teams was overwhelmingly positive. As a result of the successful program review, we met with Stellantis earlier this week to discuss their priorities and next steps. At that meeting, Stellantis informed us that they intend to award us an additional program for B-TRAN-enabled EV contactors. Stellantis identified an immediate need for a low-loss solid-state EV contactor but had not identified a solution. Semiconductor-based solutions they evaluated for the contactor did not meet their conduction loss and cost requirements. At the program review, when we shared the work we're doing on contactors with other OEMs and tier-one suppliers, they realized that our technology is likely the solution they need for an ultra-low-loss EV contactor. We're extremely excited about this potential new program. The implementation of EV contactors in an EV is not nearly as complex as undertaking and implementing a new EV drivetrain platform. This program would meaningfully accelerate our timeline to sustained revenue from our relationship with Stellantis. We expect to finalize the scope and cost of this incremental opportunity with Stellantis in March, followed by their formal internal program review and approval and purchase order. While this program is exciting, it's equally important to note that Stellantis is still fully engaged with us on the existing inverter program. The program review highlighted to Stellantis that B-TRAN is a lower-loss solution for a drivetrain inverter module. Their plan is to continue to advance the current program with us while also proceeding with a new high-priority program for B-TRAN-enabled EV contactors. In a parallel initiative to the inverter program, Stellantis continues working with us and a large semiconductor company with expertise in driver control circuitry for the B-TRAN inverter drivers. Fifth, we commenced third-party automotive qualification and reliability testing with several hundred devices being tested. The results are positive, with zero die failures to date. Our automotive qualification testing is a long process, involving many thermal and power cycles in well over a thousand devices. We remain highly confident that we'll successfully complete auto qualification later this year. Let's move on to the 2025 milestones we recently published. Those milestones are the highest priorities in our commercial roadmap to ramp sales and our path toward positive cash flow and profitability. Our first milestone is to secure the next stage of our development program with Stellantis. As I mentioned, we not only expect to continue advancing the current program with Stellantis, but we're expecting to secure an additional program with Stellantis for B-TRAN-enabled EV contactors. Our second milestone is to complete the deliverables related to our first design win that we announced in December. As I mentioned, we're well ahead of schedule to complete those deliverables, enabling the customer to roll out their first B-TRAN-enabled product sooner than planned. Our third milestone is to capture additional design wins and custom development agreements. These design wins and agreements are the precursor to our revenue ramp. We're engaged with several large companies that could turn into design wins for us, particularly for solid-state circuit breaker applications. Our fourth milestone is to start our initial sales ramp in the second half of the year. We expect our first design win to contribute to the start of the sales ramp later this year, along with additional design wins in the coming months. Our first design win represents a significant validation of B-TRAN as an enabling technology for solid-state circuit breakers, and we expect it to act as a catalyst for our anticipated revenue ramp. Based on the customer's projections, the opportunity for this customer's first B-TRAN-based product alone can translate into revenue of several hundred thousand dollars in its first year of sales, with the opportunity to exceed a million dollars in revenue in the second year of sales. On the successful rollout of this first product, we expect this OEM to expand its offerings to include a suite of B-TRAN-enabled solid-state circuit breakers with a wide range of ratings. Each product would incorporate one or more of our devices or modules to achieve the desired current rating, presenting a substantial opportunity for revenue growth beyond what's expected from their initial product. Our fifth milestone is to increase the current rating of our products. From the customer's perspective, this is relatively invisible as there will be no change in the manufacturing cost or form factor of our products. We expect the increased current ratings to positively impact customer adoption of our technology as it further improves its value proposition. A higher current rating allows our products to handle more power, or customers to use fewer devices to achieve a specified current rating for its OEM products. It should also positively impact margins, with that benefit being shared with the customer as higher current-rated devices are typically priced higher, and in this case, there's no incremental cost from increasing the rating. It's a win-win for both us and our customers. Sixth, our last milestone is to complete the third-party automotive qualification testing. This testing requires well over a thousand packages of B-TRAN devices for multiple wafer runs. As I mentioned, test results to date are positive with no die failures, and we expect to complete automotive qualification testing later this year. Automotive qualification will get us well-positioned for the automotive segment. As due to their longer design cycles, initial automotive OEMs and tier-one automotive suppliers won't need automotive-certified products from us until next year. It will, however, provide them comfort knowing that we've already taken the devices through the testing, including things like shock and vibration, which are unique to the automotive standards. It will also generate lots of great third-party reliability data to share with prospective industrial customers. Industrial qualification includes a subset of the testing required to meet automotive codes and standards, with less stringent requirements for certain tasks. Industrial orders are not dependent on successful completion of automotive qualification. However, third-party automotive qualification will further assure industrial customers of the long-term reliability of B-TRAN under conditions beyond what is required for their industrial applications. It's also expected to potentially accelerate sales to industrial customers who are often conservative in adopting new technologies. Looking at our target industrial markets, these markets 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. Our first product, the SimCool Power Module, was explicitly designed for the solid-state switchgear market with an estimated serviceable addressable market for us of $1 billion. Growth in electrification and DC power systems in renewable energy, energy storage, EV charging, and data centers require solid-state or semiconductor-based circuit breakers to handle DC fault currents that can rise much more quickly than AC fault currents. Solid-state circuit breakers also provide several other benefits compared to electromechanical breakers widely used today. These benefits include more than a hundred times faster operation, enhanced safety and reliability, and programmability and diagnostic capabilities. We are well-positioned with our SimCool power module to take advantage of the pending upgrades that need to be made in the grid infrastructure and industrial facilities globally. The market has had a desire to move to solid-state circuit protection due to its benefits relative to slower-acting electromechanical devices. While solid-state circuit breakers have been around for a while, the problem has been that IGBT-based breakers suffer from conduction losses that are too high to make them a broadly adopted practical solution. This is not true of B-TRAN-enabled breakers. As B-TRAN has clear advantages in this application, including dramatically lower conduction losses compared to IGBT and silicon carbide MOSFET-based breakers. Conduction losses are critical in continually conducting applications like solid-state breakers. They're also inherently bidirectional, reducing the number of devices for any breaker rating. This results in lower system cost compared to IGBT and silicon carbide MOSFET-based breakers. And last, they reduce thermal management requirements for a B-TRAN-based breaker as there is less heat generated from our technology because of the ultra-low conduction losses. A smaller surface area and less complex thermal management systems are needed to dissipate the heat, resulting in smaller, lighter, and lower-cost solid-state circuit breaker solutions. As we stated previously, we're unaware of any competing and inherently bidirectional high-power technologies similar to B-TRAN or any potentially enabling technologies for solid-state circuit breakers other than our B-TRAN technology. Turning to the automotive market, we're now engaged with three tier-one auto suppliers in addition to three global automakers. While we were previously focused on the drivetrain inverter and onboard charging applications for electric vehicles, the EV contactor application is now generating a lot of interest from global automakers, including Stellantis and their tier-one suppliers. In fact, the last two additions to our automotive engagements are both focused on EV contactor applications. For those unfamiliar with contactors, a conventional electric vehicle contactor is an electromechanical device that disconnects the electric vehicle subsystems from the vehicle's battery in the event of a crash or fault or when the vehicle or subsystem is not operational. Contactors are a vital safety feature to control high current and high voltage loads to and from the battery. Several contactors, typically five to eight, are used in an electric vehicle to disconnect the battery from loads such as the motor drive, heating and cooling systems, and charging systems. The benefits of solid-state electric vehicle contactors are similar to the benefits of solid-state circuit breakers: fast acting, safer, more reliable, with programmability and diagnostic capability. Some have expressed concern related to certain of our target markets due to the change in administration here in the US. 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 do not see a slowdown in engagement from automakers, tier-one auto suppliers, or industrial customers. These companies are uniformly focused on improving performance, whether it be driving range for EVs or efficiency for solar installations, and the cost of their next-generation products. B-TRAN not only improves the performance and economics of electric vehicles and renewable energy solutions but also other applications like solid-state circuit protection, UPS systems for data centers, and industrial motor drives. With subsidies and tax credits for EVs being eliminated in some places, adopting new technologies to reduce cost and improve performance is even more important to electric vehicle automakers. Technological advancements and the adoption of new technologies are critical to the mass adoption of EVs. B-TRAN improves the range of EVs, the cost of silicon, and enables solid-state EV contactors, hence the strong and growing interest in B-TRAN from global automakers and tier-one auto suppliers. Turning to our distributors, we have agreements with three distributors with demand generation expertise and comprehensive customer networks that expand our global reach. Richardson Electronics for the global distribution of IQ Power products, Ryosho for global product distribution with particular strength in Japan, and SequoM for product distribution throughout China. Distributors' introductions to large global companies are expanding our sales pipeline with customers we would not normally be able to reach. Ryosho is now engaged in discussions with a Forbes Global 500 power market leader regarding B-TRAN for solid-state circuit breaker applications. This could turn into our third engagement with a Forbes Global 500 power management leader. SequoM recently secured an order for discrete B-TRAN devices, SimCool power modules, and evaluation boards from a new customer interested in B-TRAN for solid-state circuit breaker applications. We're also excited to be in discussions with a shortlist of additional distributors focused on the European market. Moving on to innovation, with our smaller die later this year, we'll be getting twice as many die out of the same wafer. Our plan is not to change the size of the packaging dimensions to the reduction in the size of the die to avoid any disruption to customer adoption and to conform to industry-standard packaging dimensions. This is one of several cost reduction activities we've planned over the coming quarters as we lay the groundwork for our targeted product gross margins at 50% at scale. Looking at our expanding B-TRAN patent estate, we currently have 94 issued patents, with 45 of those issued outside the United States. Our current geographic coverage for our patents includes North America, China, Taiwan, Japan, South Korea, India, and Europe, all representing our high-priority patent-covered geographies. In the fourth quarter, 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 B-TRAN patents that is pending is now 53. To further protect our intellectual property, we treat the proven double-sided wafer process flow we developed to make our devices as a trade secret. We work under strict confidentiality with our fabrication partners. So even if a competitor studied our patents, they wouldn't have the know-how to fabricate the device. In summary, we're very excited about the recent progress and positive program review with Stellantis, the opportunity to add a second program with Stellantis for EV contactors, and our first design win. Our first design win represents both significant validation of B-TRAN as an enabling technology for solid-state circuit breakers and a catalyst for our anticipated revenue ramp in the second half of 2025. It's exciting to witness the heightened level of customer engagement for solid-state circuit breakers and EV contactors and the overall expansion of our pipeline and, in cases like our first design win, an accelerated timeline for the rollout of B-TRAN-based products. We have a roster of large global companies evaluating our technology for potential inclusion in their OEM products and several more in the queue in early-stage discussions. Given the size of these companies, any one of them could represent annual revenue to us of millions of dollars or more over time. And a few key design wins could get us to profitability. 2025 is shaping up to be an exciting year for Ideal Power. I would like to hand the call over to Tim Burns to review our financials.

Thank you, Dan, and good morning, everyone. Our fourth quarter 2024 cash burn was $2.6 million, up from $2.1 million in the fourth quarter of 2023 and up from $2.4 million in the third quarter of 2024. Our Q4 cash burn was at the low end of our guidance of $2.6 million to $2.8 million due to the timing of spending and related payments. Our full-year 2024 cash burn was $8.2 million, net of $1 million in proceeds to the company from warrants exercised in the third quarter. Our full-year 2024 cash burn was at the low end of our guidance of $8.2 million to $8.4 million, net of the $1 million in proceeds from warrant exercises. We continue to manage expenses prudently and aggressively. We expect first-quarter 2025 cash burn to decrease to approximately $2.2 million to $2.4 million, with a full-year 2025 cash burn of over $10 million, with the increase primarily due to 2024 and planned 2025 hiring. This compares to a 2024 cash burn of $9.2 million, excluding the benefit of warrant proceeds. Cash and cash equivalents totaled $15.8 million at December 31, 2024. We have no debt and a clean capital structure. We recorded modest revenue for the fourth quarter of 2024, driven by our prioritization of devices for automotive qualification testing. While initial orders from large companies evaluating our technology 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 and roll out B-TRAN-based products. Looking at the first quarter of 2025, we expect to see modest volume in commercial revenue from product sales, with our revenue ramp starting in the second half of 2025. Operating expenses were $2.8 million in the fourth quarter of 2024, compared to $2.5 million in the fourth quarter of 2023. We expect both research and development and sales and marketing spending to increase modestly 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 in research and development spending, due to the timing of semiconductor fabrication runs, packaging activities, product development, and 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. The net loss in the fourth quarter of 2024 was $2.6 million, compared to $2.4 million in the fourth quarter of 2023. The net loss for the full year 2024 was $10.4 million, compared to $10 million in the full year 2023. At the end of December 2024, we had 8,335,491 shares outstanding, 955,129 stock options and stock units outstanding, 763,827 pre-funded warrants outstanding, and 342,240 warrants outstanding. The remaining warrants have an exercise price of $8.90 and are set to expire in August of this year. If exercised in full, the exercise of these warrants will result in $3 million in proceeds to the company. At December 31, 2024, our full diluted share count was 10,396,687 shares. At this time, I'd like to open up the call for questions.

Operator?

Thank you. At this time, we are conducting a question and answer session. Investors can submit their questions within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen. Analysts who publish research may also ask questions on the phone line. Handset before you press the keys. Thank you. Your first question is coming from Jesse Sabolson of DeBoral.

Thanks for taking the questions here. Yeah. It's an exciting time. So, you know, good to hear everything is developing well. I'm curious. You mentioned several hundred thousand in revenue in the first year of sales with this one SSCB customer. Is that implying that the second half should see that number of revenue, or is it a twelve-month from sales beginning in late Q2 2025?

It's the second. So it is from when they start their initial sales for the first twelve months of the product launch. That's their expectation.

Okay. Great. Cool. Understood. Yeah. You know, so beyond this initial design win, can you disclose or give an idea of just how many additional SSTB customers are in active evaluation phases? Maybe, additionally, you know, could you clarify what the typical sales cycle length is for this market segment?

Yeah. So there's over a half dozen very large companies that are evaluating our technology right now for solid-state circuit breaker applications. The design cycles, I mean, each customer is a little bit different. We saw with the first design win we announced, it was just a few months to get from initial discussions to actually having prototype products in their hands. So it can be pretty quick. The industrial design cycles are typically closer to a year. Obviously, it's much faster than, like, the automotive design cycle.

Is it possible that we might be able to hear about some more design wins in the space and some more potential revenue generation opportunities in fiscal 2025, or is that more of a fiscal 2026?

We're targeting getting more into the queue here for 2025.

Awesome. Awesome. It's good to hear. Okay. I'll take one more just on the EV side, and I'll then let the others run in. But I'm just, you know, there's some really exciting news here when it comes to the expansion of the partnership with Stellantis. I'm just kind of curious with regards to the EV contactors. You mentioned the scope and cost will be discussed in March. Could design wins for this opportunity be in 2025 as well?

Well, the automotive program will take longer. It would be a funded program. But we would expect to see funding from the program in 2025 for sure.

Okay. Great. Yeah. I understand that these can be a little bit more lengthy in their evaluation phase, but it's good news that you guys are expanding the partnership there and have so much interest in the products.

Yeah. They are happy with the progress we made to date, and it turns out we're in a good position to solve some other problems that they've got.

Great. Well, thanks for taking the questions, guys.

Thanks, Jesse.

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

Thank you, Jenny. Our first question is any additional color on the program review and the new EV contactors program with Stellantis?

Yeah. You know, working with Stellantis has been interesting. They're such a big company, and what we're finding is the decision-making process there, part of what drives it to be so long is the fact that you've got groups in the US that have to weigh in on things, groups in France that have to weigh in on things, and groups in Italy that have to weigh in on things on both the engineering and production side. So we were pretty excited to actually have the opportunity to have them all together in a room, get them, you know, kind of all on the same page, but also to have the key people there. Because we came in prepared to pitch them on the EV contactor work. And when we did, the response we got was pretty impressive because, clearly, they had been exploring another silicon carbide-based solution that wasn't getting them there, and that work had apparently been underway for quite a while. So while they're happy with the work we've been doing on the original program, they pretty quickly jumped to, you know, having everybody in the room saying, hey, this is what we need for our contactor issue here. So it was a really interesting and dynamic meeting with lots of good questions. We got a lot of insight into some other things they were doing where we can play a role. So it was a very, very good meeting for us.

Thank you. The next question is, can you talk about how complementary your technology is with the DesignWin customer's products? What other technology did the customer consider?

The customer actually had a silicon carbide solution that wasn't hitting the performance metrics that they needed. So, you know, it was a case to really bring them an alternative when they understood a little bit about what B-TRAN is capable of. So we're finding this happening in a couple of places, both on circuit breakers and contactors, where the current path that many of them are on is really creating an opportunity for us to bring a better solution.

Thank you. What size circuit breaker is the first design win for, and what market is it targeting?

It's an industrial-sized circuit breaker that can handle several dozen amps. So it's a pretty good size in terms of its power rating. But what's interesting is because of the fact that we have such low losses, there's very little thermal management that needs to be done. So this breaker that can handle, you know, dozens and dozens of amps can literally fit in your hand, which is part of what has them excited. That you've got something that high performance and small with low thermal management means to them means a lower-cost product. And they have several other products in the industrial size and the utility scale. So we're really focusing on making sure the first one goes well so that we can start to bring out other products that would utilize our technology.

Thank you. Our next submitted question is, will the solid-state circuit breaker design win be sold to other companies, or is this a specific design win for the current design win customer only? Will it fit into existing breaker panels as well as new ones?

Yeah. I mean, this is an industrial breaker, so we're not going to be constrained in any way. We can take the work that we're doing here and go elsewhere. What's interesting is, because of the capability of our die, we could actually have breakers at different ratings using the exact same design that we've got now. It's going to be a function of conduction losses versus how high a current rating you want. So we're actually going to leverage this work with other companies that we're already engaged with. And because we're already through that design cycle, it really helps us with the solutions that we can bring to other companies that we're working with on circuit breakers.

Thank you. Are additional design wins expected in the short term by large OEMs in your T&E roster, or are they coming from your three distributors?

Yeah. So it'll be a mix. For the distributors, they do introduce us to large companies that then our business development team engages with directly. So they're really contributing to the funnel of those large customers that we're working with for potential design wins. So it will be a multiple-pronged approach where we have our team going out there through their networks, leveraging our board members to get to certain customers. And then for customers that we don't have contacts with or are just geographically in areas where our team doesn't have the same level of connections, we have those distributors to really assist with that effort.

Thank you. Our next question submitted is, well, Stellantis, are they close to deciding on the tier-one supplier or any thoughts on that?

Yeah. What we discovered in the meeting is, you know, Europe had a different view of this than the US teams. So it looks like they're actually going to use a couple of tier ones. They want them kind of competing against each other. So we're going to be, fortunately, the ones that they are interested in, we're already working with for other things. So it's going to be a couple of tier ones that will be in the inverter program that we will be supporting as they do their inverter design.

Thank you. What are you doing to expand the industrial and automotive pipeline?

Yeah. For that, I think it's kind of been answered a little bit with our really multi-pronged approach to it. So again, we have, for instance, Drew Freeman on our board, who ran automotive sales at NXP for semiconductors. So he has connections. We have our existing team with connections. Actually, our Stellantis relationship resulted from a connection that our VP of business development had based on prior roles that he's been in. And then we're specifically targeting distributors that have really creation capabilities in terms of demand. So these are companies that have relationships with very large companies that can make those introductions and open those doors for us. We've obviously mentioned we have Richardson Electronics here in the US. We have two different distributors now in the Asian markets. And we're working to add a European distributor here in the near term.

Thank you. Regarding the contactors in automotive, how many devices would that translate into revenue per vehicle?

Yeah. So in terms of the number of contactors, we've mentioned it's typically about five to eight per electric vehicle. In terms of content, it's probably two to three hundred dollars of content. Our opportunity specifically for that. So if you look at the opportunity with any specific automaker, it really just depends on how many models they put it in. I mean, anybody can model out for a specific automaker what their vehicle count is. That's generally public information on vehicle sales and to really see what the potential opportunity is with any of these large automakers, and you can do the same thing for Stellantis, obviously, as well.

Thank you. What is your headcount now, and how many are in sales? And what is the expected headcount growth in 2025?

Yeah. We have a very light SLA business model. So we're highly outsourced, obviously, for things like wafer fabrication, for packaging. Right now, our headcount is at sixteen. It'll probably be closer to twenty by the end of the year. We have four people currently on the sales side. We'll probably, going from sixteen to twenty, add one or two more on the sales side specifically. Just the number of engagements is increasing, and we really need additional support from the sales side. There are still opportunities at places that are companies that we haven't gotten hardware in their hands yet, and we want to get the doors open and get that hardware in their hands because there's such a broad market for this technology, we'll have to beef it up a little bit.

On the third-party automotive qualification and reliability test, is it common or rare to have no failures going through testing? Is there a certain number of failures allowed to still pass? And does the automotive certification require no failures during testing?

No. That's a good question. The automotive standards actually allow a certain number of failures. They also specify the amount of change in performance that a device can have. So, you know, we still have a lot of testing to go yet, so we may see some failures as we go along, but that won't, you know, prevent us from being auto-qualified. The failures, if they do happen, you want them to be on the packaging side, not the die side. Because packaging-related failures usually have to do with things like solder voids, or, like, in IGBTs, the most common failure mechanism was the wire bonds to die to the package. We don't use wire bonding, but it's more package-related things through all the thermal cycles where connections fatigue. So there is room to actually have some failures and to make sure that we're within the parameters of how much performance can be lost at the end of all that testing.

Thank you. What are your thoughts on potential design wins for hybrid autos?

Yeah. You know, hybrids have the same issues. I mean, they need better EV contactors. They need better inverters, you know, for their performance. The OEMs we're working with right now, though, seem more focused on the full electric vehicles. So I think it will be a function of as we continue to work with these folks, we'll get pulled into other opportunities. The approach that we're seeing kind of uniformly here is there seems to be a desire to get a common platform across multiple models and brands for these big automakers, and that seems to be their highest priority. I think as we get a little further along, like we give it a contact, there'll be an ability to open the door on what's happening on the hybrid side as well because we should be able to leverage everything we've been doing here so far.

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

I just want to thank everybody who joined the call today and for the good questions. We look forward to updating you with B-TRAN commercial announcements before our next update call. And operator, you can end the call.