Dan Brdar - President, Chief Executive Officer Tim Burns - Chief Financial Officer Carolyn Capaccio - LHA.

Good day! And welcome to the Ideal Power, Fourth Quarter 2021 Results Conference Call. Today’s conference is being recorded. At this time, I’d now like to turn the conference over to Carolyn Capaccio of LHA. Please go ahead..

Thank you, operator, and good afternoon everyone. Thank you for joining Ideal Power's fourth 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 fourth quarter and full year 2021 financial results and press release is available on the company’s recently designed 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 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 fourth quarter 2021 financial results conference call. I'll begin by giving you an update on our progress and achievements on our strategy to commercialize our B-TRAN semiconductor technology, including our test and evaluation program, and the work we're doing under projects with the U.S.

Navy and the Department of Energy. Then I'll walk you through our plans and key priorities for 2022 for B-TRAN commercialization, and Tim Burns our CFO will take you through the numbers after which we’ll take your questions. Let's get started. Fourth quarter 2021 capped off the year of strong progress on our B-TRAN commercialization roadmap.

During the year we achieved the goals we set for ourselves a year ago, significantly advanced our B-TRAN commercialization test and evaluation program, adding leading companies in each of our target markets, electric vehicles, EV charging, renewable energy, UPS Systems for Data Centers, solid state circuit breakers, as well as smaller innovative companies and research universities.

We completed several wafer fabrication runs under our program funded by the U.S.

Navy to optimize our B-TRAN for incorporation into the demonstration of a 12 kilovolt, medium voltage, direct current, solid state circuit breaker in 2022 and in collaboration with diversified technologies or DTI, secured additional government funding with a Phase I SBIR grant to deliver a low loss, B-TRAN multi di-module conceptual suitable for subsequent incorporation into a 13.8 kilovolt alternating current, solid state circuit breaker before awarded Phase 2 of the program.

These 2021 objectives help catalyze our commercial development at B-TRAN as a differentiated technology addressing a large and growing market.

Our collaboration with DTI and our work on direct current circuit breakers for NAVSEA were used in ship electrification contribute to our further collaboration in the award of a Phase 1, small business innovation research grant funded by the Department of Energy to develop an alternating current solid state circuit breaker for use of power distribution, renewable energy and micro grid applications connected to the utility power grid.

This worked for U.S. government entities that in turn to a commercial opportunity with the Forbes Global 500 leader and diverse power management markets that will be testing and evaluating B-TRAN for use in bidirectional DC solid state circuit breaker applications for solar and wind systems.

These efforts were further supported by the publication of our solid state circuit breaker white paper, B-TRAN devices and solid state circuit breaker applications during the fourth quarter.

This is just one example of how opportunities in the public and private sectors could synergize technology development and we plan to see conditional opportunities to collaborate on government programs in 2022. Let’s talk more about our test and evaluation program.

During the fourth quarter we added participants to our B-TRAN program, including the Forbes Global 500 leader in Diverse Power Management I just mentioned, as well as additional commercial businesses and universities.

Participants by universities is important as their evaluation of B-TRAN may lead to additional opportunities funded by the Department of Energy and/or Department Of Defense, which as I mentioned can in turn lead to additional commercial opportunities.

Subsequent to quarter end, we announced an additional participant, a leading manufacturer of commercial electric vehicles; EV Power train components and EV charging infrastructure, our third test and evaluation announcement in the EV space.

This manufacturer will evaluate B-TRAN devices for use in power conversion applications and as commercial EVs initially for the DC to DC converter without our EV and EV charging applications potentially to follow. We're very excited to work with this commercial EV leader.

What is common among these commercial entities is that they are all leading edge technology adopters, that have demonstrated a desire to evaluate and adopt new approaches in their product offerings.

They have the technical resources in house to commit to evaluating a new innovative technology and the new capabilities it can create for them and their product designs. We now have one or more test and evaluation agreements in place in each of our target markets.

In addition, we built a broad funnel and are collaborating with additional potential test and evaluation participants in our target applications of electric vehicles, EV charging, power converters for renewable energy, uninterruptible power supplies for datacenters and solid state circuit breaker and they express interest in assessing B-TRAN.

These companies are in various stages of evaluation, from initial exploration of the suitability and benefits of B-TRAN in their applications, to deep dives with their technical and procurement teams prior to potentially signing, test and evaluation agreements.

We know it is frustrating for some of our investors when we cannot name the OEM companies that we're working with in a press release, but for these companies competitive reasons, we have non-disclosure agreements with them and are therefore contractually obligated to not disclose their names and will honor those agreements.

As part of the evaluation of new semiconductor devices, there is a collaboration between the OEM and our technical teams to understand the device operation, the application and its suitability for the OEM suite of products.

To do so, the OEM technical teams need to share their intended use cases and information about their product and technology roadmaps with us. As you can imagine, most companies consider their product and technology roadmaps, and the evaluation and adoption of new technologies to be very sensitive competitive information.

We hope that as these relationships progress, we’ll be able to begin naming at least some of these companies as they lead to more collaborative and potentially strategic commercial arrangements.

All of these tests and evaluation agreements involve companies committing to resources they need to complete their evaluation of the device and driver with our support for their application or applications.

They’ll provide valuable feedback on the device feature set and priorities, while allowing us to determine the common requirements across application. We’ll then incorporate this feedback into our product roadmap for commercialization.

Even after the release of our initial commercial products, the test and evaluation program will continue as we expect to add collaborations, both in the near and long term, to broaden the awareness of our technology’s potential to OEMs and their product offerings.

These ongoing engagements will likely result in a variety of B-TRAN based models over time, tailored towards specific applications and use cases as is common in the traditional power semiconductor market. Let’s move now to our work with the United States Navy.

Ideal Power continues to collaborate with DTI on a project for the Naval Sea Systems Command or NAVSEA, on the development and demonstration of the B-TRAN enabled direct current, medium voltage solid state circuit breaker.

This program is funded under the Department of Defense's Rapid Innovation Fund, the purpose of which is to accelerate the commercialization of high value, high impact technologies, as part of the Navy's strategic focus on ship electrification.

Our project with DTI for NAVSEA is intended to develop and demonstrate B-TRAN enabled high efficiency 12 kilowatt medium voltage direct current circuit breaker for the U.S. Navy, with subsequent objectives to introduce a family of medium voltage DC circuit breaker products incorporating B-TRAN for sale of military, industrial and utility markets.

The fifth fabrication run was recently completed by one of our domestic semiconductor fabrication partners, and the wafers from this run will be diced and packaged using our new packaging, into devices for testing and delivery to DTI.

We’ll continue to provide program and technical support through the demonstration of the B-TRAN enabled DC solid state circuit breaker later this year. Let’s move now to our work with the Department Of Energy. Our second collaboration with DTI is under a Phase 1 small business innovation research grant funded by the department of energy.

This grant is to develop a B-TRAN based, low loss 13.8 kilovolt, alternating current solid state circuit breaker, intended to be used in medium voltage power distribution in renewable energy and micro-grid applications connected to the utility power grid.

The B-TRAN based solid state circuit breaker is expected to limit watt [ph] energy by orders of magnitude faster compared to conventional mechanical breakers. We recently announced that we have delivered our Phase I project commitments and provided our final report under this program last month.

Phase I focused on the simulation, device design and modular packaging concepts, leveraging our current value design to allow B-TRAN to be assembled in the series or parallel configuration for high voltage rating capability.

Under Phase I we conducted a comprehensive semiconductor device optimization, optimized the B-TRAN device design and wafer layout for potential fabrication in Phase II; accommodated a multi-die packaging design and with the assistance of a world class packaging firm completed the conceptual multi-die packaging design with double sided cooling, assessing both the thermal performance and inductance.

Our designs demonstrate the ability of B-TRAN multi-die module, they interrupt AC power, confirm the efficiency and speed of B-TRAN devices in AC operations. Over the next few weeks, DTI and Ideal Power will collaborate to submit a grant application to the DOE for Phase 2 of the project.

If we’re awarded a Phase 2 grant DTI will build and test a 50 megawatt, 13.8 kilovolt, AC solid state circuit breaker using B-TRAN devices. This voltage level is commonly found in utility distribution networks, so the resulting breaker design can be applied directly to existing utility transmission and distribution systems and micro grids.

Following that demonstration, DTI would have the ability to sell the breaker design to Utility, Industrial and Military Customers and license the design to others for sale. We would also expect to partner with other circuit breaker companies, so they can design and bring their own B-TRAN based products to market.

The lower convention losses of B-TRAN could become a key enabler for the solid state circuit breaker market. This market is projected to grow at over 6% compound annual rate to $26 billion by 2027.

There's a tremendous opportunity for solitude circuit breakers to displace mechanical breakers and gain incremental share across numerous medium voltage applications in the utility, distributed generation and transmission and distribution markets.

B-TRAN enabled solid state circuit breakers could potentially displace mechanical circuit breakers, which are roughly 100x to 1000x slower than solid state circuit breakers.

They could also solve the problems posed by solid state circuit breakers using conventional semiconductor devices such as IGBTs and suffer high conduction losses, resulting in significant wasted energy that must be dissipated in the form of heat.

As a result, B-TRAN has the potential to be an enabler for the solid state circuit breaker market, both direct and alternating current applications. The new lead project gave us valuable information on combining multiple devices in parallel and in serious configurations that can be applied to other commercial applications such as electric vehicles.

We’ll update you on our progress with our Phase II application to the Department of Energy under the Phase II project. In preparation for our future growth, we've taken several steps to broaden our production relationships and capabilities.

We have a strong partnership with Teledyne and plan to continue working with them to support our future government funded development projects. In addition, we completed the wafer fabrication qualification run of a second domestic semiconductor fabrication partner.

Those wafers are now being evaluated to assess their performance and identify any fabricator specific changes that we should incorporate into future runs. This partner has strong experience making bipolar devices, and is a good partner for ongoing development activities.

In particular, they have expertise and equipment for fabricating silicon carbide devices, as well as silicon, and could be a good partner for a long term technology roadmap to develop a silicon carbide B-TRAN.

In addition to this second domestic fabrication partner, we’ve selected and begun qualification of a world class, non-domestic fabrication partner for high volume production in preparation for 2023 and beyond.

Adding another fab will help us ensure sufficient supply capacity for future potential large customers, and further mitigate supply chain risks. Also, adding a truly production level fab, allows us to run larger wafer lots in shorter time, with much less manual handling and inspection as these facilities tend to be highly automated.

Additionally, we’ve selected and engaged the world class packaging firm to transition to our new packaging design for volume production. Trial builds of a packaging approach suitable for high volume production are in progress now.

Lastly, we've evaluated and identified third party firms that we’ll use for device testing, enabling us to conduct some of the tests we are not equipped to perform in our lab and provide an independent source of data that’s not constrained by the confidentiality requirements of our DOD funded activities.

We expect to begin that testing after we've completed deliveries to DTI of this navy program. Let's discuss our roadmap for 2022. Our primary objective for the year remains to introduce our first commercial product for sale.

As we build on our 2021 accomplishment, we expect 2022 to be an exciting year as we move closer to realizing the potential of B-TRAN’s unique advantages of high directional switching capability, lower switching and conduction losses, lower user costs and improved and more compact thermal management requirements for OEM products in our target markets.

Here are key steps to achieve this objective, many of which will run concurrently. First, support and complete the steps in our B-TRAN test and evaluation program, with current program participants, incorporating ongoing feedback into our first commercial product offerings.

We will be providing packaged B-TRAN devices paired with a driver to these participants to facilitate and accelerator their valuation. And as I mentioned, we’ll continue to add additional potential customers for our test and evaluation program as it will remain an ongoing aspect of our sales and marketing process.

Second, we've already started developing the specifications for our initial commercial product and will engage a third party in the coming months to support our design efforts.

This effort will run in parallel with the test and evaluation program and design will iterate and evolve through the incorporation of program feedback from current and future program participants.

Offering an intelligent power module rather than a discrete device is intended to accelerate B-TRAN commercialization and adoption by mitigating in advance the hurdles we know customers will face, specifically the driver and packaging optimized for bi-directional operation, saving customers from having to design these themselves.

We may also design custom models for certain of our potential customers, particularly for electric vehicles and solid state circuit breaker applications, where multiple B-TRAN dyes may need to be combined into a single package, either in a series or in parallel configuration to accommodate higher voltages and currents.

Also, we expect our multi di-design from the Department of Energy SBIR program to become a commercial product for the solid state circuit breaker market if we are awarded Phase II of the program. Third, we’ll continue to collaborate with DTI on our B-TRAN enabled solid state circuit breaker projects.

Under NAVSEA we remain focused on the delivery of optimized packaged devices from corporation into the demonstration with 12 kilowatt MVDC breaker later this year. We’ll provide program support through the completion of demonstration.

As I previously mentioned and subsequent to the demonstration, an objective of this program is for DTI to introduce a family of medium voltage DC circuit breaker products incorporating B-TRAN for sale to military, industrial and utility markets.

Under the SBIR grant, we’ll work with DTI to submit a joint proposal or a Phase II grant which is awarded, would entail the build out and testing of a full 50 megawatt 13.8 kV AC solid state circuit breaker incorporating B-TRAN devices. Fourth, we are targeting completing the qualification run of a high volume wafer fabricator.

We’ll collectively go through the necessary wafer fabrication process and equipment reviews, engineering short loops and trial build to assess their potential to be our high volume fabricator to support our plans for commercial sales.

While this process will take several months, our intent is to have a high volume wafer fab ready to support our volume requirements in 2023 and beyond. Lastly, we are working on submitting additional proposals for government funding.

We have the potential to be the prime or subprime on these proposals, and we expect to collaborate with various OEMs and universities on submitting proposals as funding opportunities become available.

Looking at the B-TRAN patent state, we currently have 65 issued B-TRAN patents with 27 of those issued outside of the United States and 26 pending B-TRAN patents. The current geographic coverage includes North America, China, Japan, South Korea and Europe with the potential to expand coverage into India.

In 2021 eight B-TRAN patents were issued and six of these were issued outside of the United States, including Ideal Power's first patent issuance in South Korea. We recently announced the appointment of two new independent directors to our Board of Directors, Drue Freeman and Greg Knight.

These appointments were the result of a rigorous process in conjunction with Boardspan, a third party firm specializing in board searches to identify candidates that brought both deep expertise in semiconductors and significant experience and relationships in our initial target markets for B-TRAN, including electric vehicles, renewable energy, energy storage and power electronics.

Drue Freeman has spent his entire career of over 30 years in the semiconductor industry, 16 of which focused on sales and marketing of semiconductors to the automotive industry.

As Senior Vice President of Global Automotive Sales and Marketing for NXP Semiconductors, he built significant automotive market share by developing long term relationships and locking in design wins as Tier I automotive customers.

He brings commercial and strategic expertise and both semiconductor and automotive experience and relationships to our Board. He will be a great asset to our business development team as they seek senior level access to our target customers in EV market.

Greg Knight brings operational and leadership experience to our Board, having served as President and Chief Executive Officer at GT Advanced Technologies, Exawatt and PV Tech Group, as well as experience bringing new technologies to market and relationships in the silicon carbide, electric vehicle, renewable energy, energy storage and power electronics markets.

He brings great relationships with target customers and their renewable energy markets and semiconductor companies that we may wish to collaborate with market access, potential licensing partners and key suppliers.

The search culminating the appointment to our Board of two individuals with skillsets, experience and relationships that directly align with our strategy to commercialize and grow B-TRAN in our target markets.

I’d like to take like to take this opportunity to welcome Drue and Greg on behalf of Ideal Power and we look forward to their contributions over the coming months and years as we commercialize and grow the business.

In the coming weeks the Board of Directors will meet and new committee assignments will be finalized and subsequently disclosed in an 8-K. We executed consistently to our plan in 2021. We are very excited about our prospects for B-TRAN as a disruptive technology in our target markets and for what we plan to accomplish in 2022.

Again, our objective is to exit 2022 with the introduction of our first commercial product available for sale.

We have a talented team, leading companies in our target markets participating in our test and evaluation program, innovative engineering design collaborators, fabrication capacity in place with more to come, a packaging partner ready for high volume production, testing capabilities on deck and a strong balance sheet to support our commercialization strategy and our ability to collaborate with large customers.

We remain focused on continued strong execution toward commercializing B-TRAN. We’ll continue to apprise you of our progress, including additions of the company's to our customer evaluation program as we are able, and update you on feedback we receive from program participants and inform you as we achieve milestones throughout the year.

Now, I’d like to hand the call over to our Chief Financial Officer, Tim Burns for a view of the fourth quarter 2021 financial results. Tim. .

Thank you, Dan. I will review fourth quarter and full year 2021 financial results.

In the fourth quarter we recorded $129,000 in grant revenue, totaling $576,000 of grant revenue for the year, 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 and commenced work under the DOE funded SBIR Phase I grant in late 2021.

As we’ve noted on previous calls, the amount of grant revenue recognized each quarter will vary, as it is a function of the timing of spending and scheduled milestones under the program. We continue to expect almost all the remaining grant revenue for these programs to be recognized in the first half of this year.

Operating expenses were $1.4 million in the fourth quarter of 2021, compared to $1.1 million in the fourth quarter of 2020. As expected, sales and marketing expenses trended higher as we added business development talent to the team, including personnel to support our test and evaluation program.

General and administrative expenses were also higher in the quarter on higher Investor Relations spending. Full year 2021 operating expenses were $4.8 million compared to $4.1 million in full year 2020.

The full year increase in operating expenses related primarily to higher sales and marketing in research and development spending as we added personnel and invested in B-TRAN driver development and the expansion of internal test capabilities.

We continue to expect research and development and sales and marketing spending to trend higher throughout 2022 as we accelerate development and commercialization of our B-TRAN Technology, including additional wafer fabrication runs, including a qualifying run with a high volume production wafer fabricator, third party testing of the B-TRAN, adding more engineering and front end talent, supporting our test and evaluation program, designing our initial product for commercial sale, and other B-TRAN commercialization activities with potential new customers and partners.

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 and other development activities.

We expect a relatively modest increase in general and administrative expense due primarily to the impact of inflation on the cost of services. Net loss in the fourth quarter of 2021 was $1.4 million compared to $1.1 million in the fourth quarter of 2020. Full year 2021 net loss was $4.8 million compared to $7.8 million in full year 2020.

2021 included a $91,000 gain on forgiveness of long term debt owing to the paycheck protection program loan, while 2020 included a one-time non-cash of warrant inducement expense of $3.7 million.

Fourth quarter 2021 cash used in operating and investing activities, which is net of the cost reimbursement under the NAVSEA program was $1.3 million, up from $0.7 million in the fourth quarter of 2020 and $1.2 million in the third quarter of 2021.

Our full year 2021 cash burn of $4.5 million was consistent with the expectation we provided on our third quarter call.

We continue to invest in both sales and marketing and research and development, and expect the cash burn for full year 2022 of approximately $6.5 million to $7 million, with the first quarter 2022 cash burn of $1.4 million to $1.5 million. Cash and cash equivalents totaled $23.2 million at December 31, 2021.

Given our planned modest cash burn, which were higher in 2021 remains modest.

Our balance sheet gives us ample liquidity to fund multiple years of operations and to be a well-capitalized partner for the broad spectrum of companies that are either already participating or that we expect to participate in the testing and evaluation of our B-TRAN technology.

At December 31 we had 5,892,446 shares outstanding and 1,040,248 warrants outstanding. Including 492,886 stock options and restricted stock units outstanding, diluted shares outstanding at December 31 totaled 7.5 million shares. At this time I would like to open up the call for questions.

Operator?.

Thank you. [Operator Instructions] And our first question will come from David Williams with Benchmark..

Hey! Good afternoon! Thanks for letting me ask the question and congrats on the progress. .

Thank you. .

I just wanted to see if maybe you could give a little color. You talked about the test and evaluation partners and really gaining some momentum there.

But just kind of curious if you could maybe walk us through that life cycle; when you expect some of the feedback and maybe just how that cycle will complete?.

Yeah, we actually are getting feedback already.

As part of the discussions, when our teams get together and we take them through the device design and the physics and how it operates and they share with us their applications and how they are thinking about using it, there's already an interchange that happens between the teams, because part of it, we want to understand what are their requirements in terms of the device designed how it's laid out, how it's packaged, things they are looking for in terms of the driver.

If they are interested in going with their own driver, which some of them are, we want to make sure that they understand enough to be able to really think through that process, and then as a result of this we've been really putting together that early feedback to identify what's the first commercial product going to look like.

So I think we've got a pretty good handle on that at this point in time. And then as we actually shipped the devices and the drivers out to these teams, their cycle to physically do the evaluation varies a lot by company.

Some of them that are really in the morning industrial products, you know its a few months to take them in the lab, go through a test program, get some feedback from us on some of the results and others like specifically some of the automobile companies are actually looking at some longer multi-year programs.

It would take a lot of devices and may have some custom packaging that we would be involved with or they would introduce us to packaging firms they like to work with, to come up with a custom configuration for their application. So they vary a lot, that's why we view this as sort of an ongoing program.

As we bring others in, we will get their feedback and what may be a new iteration of a module design, it may be a new version of an intelligent power module, so it will be an ongoing cycle that will drive the product offerings that we’ll have over the next couple of years. .

Okay, thanks. And then may be just, what are the boxes that need to be checked before being awarded the Phase II. I know you said you're applying for that.

What do you think the odds of you getting to Phase II will look like or are? And then, when do you think that would begin?.

I think our odds are reasonably good. It's just a function of how many proposals are in, because it's always a limitation of what's the budget that's available and how many awards can they afford to make based on the size of the proposal. So you really don't know how good your odds are, typically you know in government funded programs.

You win maybe one out of 10 proposals. When you get to a Phase II of a program I think those odds get certainly significantly better, but we don't really have visibility to it and no one does when you're submitting these things, because it’s so much a function of what’s the actual budget that's available.

The plan is to submit the proposals in April and the selections and ultimate award would be targeted for the November – I'm sorry, the September-October time frame. .

And then if by chance, if you are not selected there, how do you proceed? Does this work continue maybe at a slower pace or is there additional funding may be needed.

Just how do you think about the program continuing forward if you didn't win the Phase II?.

Well, we actually see other opportunities. In fact we've actually already, we are submitting another proposal for solid state circuit breaker to a different government agency with different partners.

So we think there's – because there's so much interest in moving to solid state circuit breakers, even if we don't do it through Phase II of this program, we think there are going to be other opportunities.

Plus one of the large industrial players that is in our test and evaluation program is specifically interested in coming up with their own version of a solid state circuit breaker based on B-TRAN. So we think there is multiple shots on goals to get a B-TRAN base solid state circuit breaker out in the marketplace. .

Fantastic! Exactly what we wanted to hear. And then maybe lastly form me, is maybe if you could talk a little bit about the importance of moving from the government sector to now having some of the private sector companies working with.

How is – maybe just speak to the importance there and what do you think that means for the company overall?.

Well, you know the government I think plays a really important role in really early stage technology before things are really commercial. They play a role in bridging that gap in terms of providing funding, providing opportunity to do demonstrations of the technology. It’s typically received as higher risk and maybe what industry is willing to bear.

Once you get engaged with the commercial entities, I think it says a lot about how much further along the technology is in terms of its readiness for commercialization, plus larger companies, the auto companies excluded, but most larger companies have the ability to work a lot faster than the government when it comes time to actually decide something and build it.

So I think it really helps accelerate the pace of what we can do once we start to really engage here with the commercial sector. .

Fantastic! Well, thanks again for the time and best luck on the quarter and Tim, we’ll ask some questions to you next time, [inaudible]. .

No problem. .

Thanks Dave. .

Thank you guys. .

And our next question will come from Kelly Thurman [ph] a Private Investor. .

Hey guys! Thanks for taking my question. On the last call you had said that three companies had budgeted and there were two more in the process. So I wonder if all five companies have budgeted now, and if that is for actually the final design of a product or it's just for further development at this point. .

Typically it's for further development, because for these companies to do their evaluation they actually have to sign some fairly significant resources.

They have to put an engineering team together; they have to potentially put some equipment into their lab and they typically create a program where they’ve laid out what's the testing that's going to be done? Who's going to be in that program? And then what that feedback looks like in terms of its reporting and collaboration with us. .

Okay.

When do you see the initial spend of those budgets, at what point this year?.

We think that's going to happen with the commercial entities right after we complete our deliveries here to DTI. We've kept all of them warm, so that they understand that we've got to meet the obligations under the Navy Program first, since the Navy wants a pretty high volume of devices.

So I would expect the middle this year we’ll start to see that spent. .

Now, once that spent comes in, since its material, will you have to talk about the names of the companies at that point?.

It will depend on the program. If it's just them spending their own dollars for their own resources, no. If they are funding us to do some work; for example some of automobile guys want to fund some development work, the argument we would make is that’s material and we have to disclose it. .

Okay, and then finally would you say that B-TRAN has met or exceeded the expectations of your samplers so far?.

I think it's too early to say. Based on the discussions we’ve had so far, they are all positive. Nobody has decided to go a different direction.

So I think it's really more a case of the early exchanges that we're having are consistent with how people are thinking about using it, and the performance that they are seeing so far is attracted to them to continue. .

Is this going to move fast enough to wear on day one of manufacturing? You think one of these samplers will be a customer at that point. .

Well, I think particularly for some of the automobile guys, they are talking about a large volume of devices.

So I think they are going to want to see hundreds if not thousands of devices for their own programs and evaluations that we want to come from a production level fab, because of all the benefits it brings to work at the production level versus the development level fab. .

Okay. Thanks a lot guys. .

Okay, thank you. .

Thank you. [Operator Instructions]. And our next question will come from Taylor Fredericks with Arrowhead Securities Group. Please go ahead. .

Yes, it’s great to speak with everybody. Dan and Tim, just a real quick question. You said your objective for 2022 remains to introduce our first project for commercial sale.

How soon will that take place; Q2, Q3, Q4? And at the same time if you wouldn't mind answering, what is the cost of production in your eyes, and what can you sell this for?.

Our expectation is it's going to be in the – probably in Q4 based on the things that we want to incorporate into that first product. The cost of production, you know we really don't want to be disclosing, because of the fact we were engaging with these customers, we don't want them to know what our cost basis looks like.

Our expectation is that a B-TRAN module would have about 25% premium to an IGBT module when it has some volume, because it's really replacing what would be done with multiple modules to use the conventional IGBTs.

So it should actually have a cost savings for the end user in terms of the up-front cost, plus the efficiency savings, plus the reduced thermal management.

So it should be a compelling, cost equation, so that even though we're making them in relatively small volume compared to IGBTs, it should be attractive for them, and still allow us to move into some attractive margins..

Dan I appreciate that. If you will, you know obviously time over nature speaks on itself where you guys are showing these demonstrated models to Department of Energy, to top 10 tier EV companies. What is your stance on potential, you know competitive companies coming in or either buying you out, either way.

But most importantly, demonstrating your model to top 10 tier companies on the EV market, at some point and I know you addressed this in your speech. There is lot of investors that understand, over the last year nobody has been able to say who these people are, because you know IPWR is engaged with these companies.

At some point with this absolute amazing technology, somebody else is going to be able to figure this out.

So what is IPWR doing to protect itself from say the long game of getting cut out?.

Sure, if you look at our technology, there's a couple of things to keep in mind. One is, when we are engaging with these customers they are under non-disclosures. So not only can we not share their information, but we're not going to sign that if it’s not mutual.

So we don't want our technology finding its way to other potential suppliers they might want to work with. And they are all deep pocket targets, so they tend to be pretty respectful of non-disclosure obligations of the suppliers they work with.

What we are doing as a technology company is we've got a pretty broad patent portfolio that covers even the basic architecture of the device, but on top of that what we have done is, the - a lot of the warning that has gone on over the last two to three years has been learning how to make a double sided device.

Because double sided wafer fabrication is not common in the semiconductor industry and that whole process of how do you make the double sided device, you won't find in our patents, we treat it as a trade secret.

So even if somebody were to try and do some reverse engineering, the would have a long development process to go through, to figure out all the things that we have learned under our confidential collaboration with folks like Paladin and others that we use as our wafer fabricator.

It would take a lot of effort to try and back engineer that, because it’s just not documented in a form that anybody in the customer base or in the public literature or in our patents would be able to find. .

Well, thank you so much for your answer. I am firm believer in the technology this firm holds. Thank you. Wish you the best. .

Thanks Taylor. .

Thank you. And that does conclude the question-and-answer session. Mr. Brdar, I will now turn the conference back over to you. .

I just want to thank everybody for joining our call today. We wish everybody a happy and safe 2022 and we look forward to giving you another update on our first quarter call. Thanks everyone. .

Thank you. And that does conclude today’s conference. We do thank you for your participation.

Have an excellent day!.