Best Energy Inc. (IPWR) This fall 2023 Earnings Name Transcript

Best Energy Inc. (NASDAQ:IPWR) This fall 2023 Earnings Convention Name February 29, 2024 10:00 AM ET

Firm Contributors

Jeff Christensen – IR

Dan Brdar – President and CEO

Tim Burns – CFO

Convention Name Contributors

David Williams – Benchmark

Donovan Schafer – Northland Capital Markets

Brian Dobson – Chardan Capital Markets

Jeff Grampp – Alliance International Companions

Operator

Good morning, girls and gents, and welcome to the Best Energy Fourth Quarter and Full 12 months 2023 Outcomes Name. [Operator Instructions] As a reminder, this occasion is being recorded.

I might now like to show the convention over to Jeff Christensen. Please go forward.

Jeff Christensen

Thanks, Matt, and good morning, everybody. Thanks for becoming a member of Best Energy’s fourth quarter and full 12 months 2023 convention name. With me on the decision are Dan Brdar, President and Chief Government Officer; and Tim Burns, Chief Monetary Officer.

Best Energy’s fourth quarter and full 12 months 2023 monetary outcomes press launch is out there on the corporate’s web site at idealpower.com. Earlier than we start, I might prefer to remind everybody that statements made on the decision and webcast, together with these relating to future monetary outcomes and business prospects are forward-looking and possibly topic to quite a few dangers and uncertainties that would trigger precise outcomes to vary materially from these described within the name. Please consult with the corporate’s SEC filings for a listing of related dangers and we’d additionally refer you to the corporate’s web site for extra supporting firm info.

Now I wish to flip the decision over to Best Energy’s President and CEO, Dan Brdar. Dan?

Dan Brdar

Thanks, Jeff. Good morning, everybody, and welcome to our fourth quarter and full 12 months 2023 monetary outcomes convention name.

I will first replace you on our progress for the reason that begin of the fourth quarter after which overview our priorities for 2024 to commercialize our B-TRAN semiconductor know-how. After which Tim Burns, our CFO, will take you thru the numbers, after which we’ll take your questions. We made nice progress delivering towards our B-TRAN industrial roadmap in 2023, and that progress has continued into 2024 as our buyer engagements are increasing.

Whereas we’re definitely enthusiastic about our progress and up to date information, we’re much more enthusiastic about how 2024 is shaping up for the corporate. Because the begin of the fourth quarter, we efficiently accomplished a number of extra milestones and had some very constructive buyer recognition that collectively confirms our continued progress on our B-TRAN commercialization roadmap. We’re thrilled about our momentum, current successes buyer suggestions and up to date announcement in these main areas.

First, we commenced SymCool energy module shipments to satisfy buyer orders. The SymCool energy module targets industrial markets, significantly the solid-state circuit breaker market, and is predicted to be the earliest supply of our product income and gross sales ramp.

Second, we efficiently accomplished Part 2 of our growth program with Stellantis, a prime 10 international automaker. Notably, the identify Stellantis was disclosed by Best Energy for the primary time in This fall of 2023. Third, Stellantis acknowledged Best Energy as a finalist of their 2023 Stellantis Enterprise Awards.

Fourth, we launched demonstration movies and software notes associated to our B-TRAN and SymCool merchandise to help the technical groups that our goal prospects to higher perceive our merchandise and their use. These movies and software notes have already produced new alternatives in our gross sales funnel and are producing a excessive variety of views with our goal technical viewers, demonstrating a rising curiosity in and consciousness of our know-how.

Fifth, we’re nearing completion of a qualification run with our second high-volume wafer fabrication associate. We’ll take a deeper take a look at these actions however first, I need to take a step again and spotlight what’s driving the curiosity in and the necessity for the know-how we’re bringing to market.

The commercialization of our know-how comes at a time when there are important macro tendencies within the industrial, renewable power, power storage and hybrid and electrical automobile markets that may act as drivers of our income progress for a few years. It isn’t solely the long-term progress of photo voltaic power, power storage and the adoption of hybrid and electrical automobiles. These rising markets are a part of the broader international electrification of society that’s occurring.

The present electrical utility system was designed many years in the past and would require huge funding to accommodate the elemental adjustments electrification requires. Our utility transmission and distribution system was not designed to accommodate the massive quantities of distributed solar energy for houses and companies, the build-out of a nationwide electrical automobile charging infrastructure and the broad use of localized power storage by companies for backup energy and electrical energy price management.

On the core of all these purposes, renewable power, power storage, hybrid and electrical automobiles, EV charging and utility grid modernization is the necessity for improved energy semiconductors as they’re important to lowering the fee and enhancing the effectivity throughout all purposes.

Higher energy semiconductors imply extra helpful power for a photo voltaic or MG storage set up, longer vary and sooner charging for an electrical automobile and decrease price and extra environment friendly use of electrical energy. That is why we’re so excited in regards to the timing of our commercialization and what B-TRAN brings to the market.

Our know-how has the potential to enhance the efficiency and value of all kinds of purposes which can be a part of this basic change in how we make, distribute and use electrical energy. Trying on the measurement of the chance this creates, based mostly on the current examine by Mordor Intelligence, of their international energy electronics market report, the B-TRAN serviceable addressable market or SAM, is predicted to greater than double over the following 5 years with a projected 16% compound annual progress fee, the entire SAM for B-TRAN is forecasted to develop from $3.6 billion in 2023 to $7.6 billion in 2028, pushed by these macro tendencies.

Trying ahead, we’ll proceed to execute on our B-TRAN commercialization roadmap. Our priorities for 2024 are to transform giant OEMs and our take a look at and analysis program to design wins and/or customized growth agreements, promote easy energy modules to extra goal industrial prospects, add distributors for SymCool merchandise, proceed the robust execution on our growth program with Stellantis, start third-party automotive qualification testing, full the qualification of a second high-volume manufacturing fab and seize preliminary gross sales of our SymCool IQ clever energy module. And I will focus on the highlights of a few of these priorities, together with different alternatives and developments.

There is a rising checklist of consumers working with our crew in every of our key goal markets and I am happy and enthusiastic about our progress and the suggestions we’re receiving from our rising buyer engagements. We anticipate industrial markets and particularly, the solid-state circuit breaker market served by our SymCool energy module to be the earliest supply of our product income and drive our preliminary gross sales ramp.

The curiosity in our SymCool product is pushed by the necessity for higher circuit safety inside the utility distribution system, industrial amenities, the necessity to have the ability to rapidly isolate photo voltaic farms and power storage amenities and even circuit safety inside hybrid and electrical automobiles. Later this 12 months, we’re anticipating preliminary gross sales of our SymCool IQ clever energy module. The SymCool IQ takes our SymCool energy module and provides an clever driver to permit localized management in operation.

The SymCool IQ product applies to the renewables market, significantly renewables coupled with power storage, standalone storage and microgrids, EV charging and different industrial markets. Just like the solid-state circuit breaker market, these purposes have a shorter design cycle in comparison with the automotive business.

Focusing on the economic, energy and renewables markets first provides us the flexibility to ramp up our provide chain and income, so we’re able to serve the excessive quantity we anticipate to be pushed from auto producers for his or her hybrid and electrical automobile platforms.

With the visibility of our know-how and merchandise rising, we’re now receiving quite a few inbound inquiries from firms in our early goal markets seeking to study extra about our merchandise. To raised serve these prospects and supply the flexibility to buy merchandise in smaller volumes, we’re including distributors for purchasers wanting elements for analysis, a few of which is able to later flip into quantity provide agreements with us.

We’re finalizing our first settlement with a distributor for our merchandise. We have additionally chosen a second distributor with specific power in Asia and have begun crafting an settlement with them as properly. Our present focus is participating distributors with robust technical gross sales groups, experience in securing gross sales for brand spanking new applied sciences and international attain.

We’ll add extra gross sales reps and distributors over time which have complete channel protection. As we stated beforehand, given the analysis and OEM product design cycles of most industrial firms, quantity and income can be modest in 2024, and we anticipate to see the beginning of a ramp-up in gross sales within the second half of 2024 as prospects work to launch merchandise that incorporate B-TRAN.

Turning to Stellantis. We’re thrilled with our progress of their program to make use of B-TRAN of their future EV drivetrain. Because of the robust efficiency of our crew and our know-how, we’re persevering with to earn our place in this system and not too long ago introduced that we efficiently accomplished Part 2 of this system a number of months forward of schedule. Part 2 deliverables included a multi-wafer run, supply of examined B-TRAN gadgets and drivers to each this system’s packaging firm and the group, constructing the preliminary drivetrain inverter, and supply of a complete take a look at plan for auto qualification that was subsequently accepted by Stellantis. We collaborated intently with Stellantis and this system companions to produce B-TRAN gadgets for integration into the customized energy module and inverter designs.

The machine testing outcomes by the Stellantis program crew validated the anticipated effectivity enhancements anticipated from the usage of B-TRAN within the drivetrain. As a part of part 2, Stellantis additionally performed a data-driven complete evaluation of the know-how readiness for implementation into their electrical automobile platform.

And we’re happy to say the result of the evaluation was very constructive. Profitable completion of Part 2 was additionally buyer validation of B-TRAN and its potential impression on enhancing EV vary and value. Further validation was supplied by Stellantis in December, after they named us a finalist within the 2023 Stellantis Enterprise Awards.

Our choice was based mostly on our profitable collaboration and efficiency in this system, the potential impression on buyer expertise, novelty of the know-how and its potential scale inside Stellantis. We’re leveraging our success with Stellantis to draw and have interaction extra firms keen on our know-how for his or her purposes, together with different industrial and automotive OEMs and Tier 1 automotive suppliers.

We’re at present finalizing the scope of labor for Part 3 of this system with Stellantis, which now contains the manufacturing aspect of their crew. This part is predicted to incorporate the in depth testing of the customized B-TRAN module to fulfill automotive certification requirements, enabling B-TRAN to be the core of the powertrain inverter for the automakers’ next-generation EV platform. Their said purpose for this system is to have a customized module manufacturing prepared by 2025.

Stellantis is funding this system. We had modest income from them in 2023 and anticipate modest income from Stellantis once more in 2024. Because of its compelling benefits, B-TRAN can be being evaluated for Stellantis’ automobile energy administration, circuit safety and EV charging ecosystem.

As a reminder, this program represents our second engagement with the world’s main automotive producers as one other prime 10 international automaker is already in our take a look at and analysis program. Substantial progress continues with our take a look at and analysis program members, significantly for solid-state circuit breaker and hybrid and electrical automobile purposes.

This 12 months, we anticipate to transform giant OEMs in our take a look at and analysis program into design wins and/or extra customized growth agreements. Our take a look at and analysis program contains a number of giant international firms that current a number of alternatives for Best Energy. Taken as a complete, they tackle all of our goal markets.

Whereas initially keen on a particular software, these program members have, in lots of circumstances, expanded their curiosity to a number of purposes of their product portfolios to reap the benefits of the advantages of B-TRAN. Buyer shipments to the take a look at and analysis program members included a number of bundle B-TRAN gadgets, the machine driver and an influence take a look at board housed in a security enclosure to facilitate and speed up the analysis course of.

So far, B-TRAN shipments to check and analysis program members embody a prime 10 international automaker, a world Tier 1 automotive provider, a number one supplier within the photo voltaic business, two Forbes International 500 energy administration firms, a world supplier of backup energy and power administration options and several other others with extra kits to observe for brand spanking new members.

Whereas these giant firms transfer slowly, a number of of those prospects have superior past the analysis stage and are requesting multiyear product quantity quotes or customized product growth proposals and in lots of circumstances, are offering us particular suggestions for our long-term product planning roadmap to intently align with their necessities.

The conversion of a single alternative may probably considerably impression the trajectory of our pending income rail. As you already know, our take a look at and analysis program will stay an embedded course of in our gross sales and advertising and marketing effort and a supply of enter to our subsequent technology of merchandise. We’ll proceed so as to add extra potential prospects to this system for these prospects that characterize a possibility for us to collaborate with a market chief for a particular market section.

This system permits us to get a very good deal with on prospects’ know-how analysis processes, their product design cycles and their industrial plans. Past the high-profile firms in our take a look at and analysis program, we’re already seeing prospects, significantly within the circuit breaker and circuit safety markets able to be served by our distributors as we carry them on board. Let’s flip to the provision chain that ensures we’ll be ready to assist our gross sales and manufacturing ramps.

Our second high-volume wafer fabrication associate is nearing completion of a qualification run. This wafer fab in Europe will assist future income progress and add twin sourcing for wafer fabrication.

We’re very happy with its progress with no main points so far and stay up for receiving the wafers from this lot and assessing their efficiency with the finished wafers and end in B-TRAN dies. We anticipate to finish the qualification of this fab as early because the second quarter of 2024. Final 12 months, we certified an Asian wafer fabrication provider with high-volume functionality.

With these two wafer foundry companions on board, we’ll have twin sourcing for wafer fabrication in several elements of the world with no publicity to China. Our twin sourcing technique will enable us to proactively safe not solely the mandatory manufacturing capability, but additionally the flexibility to supply elements and companies from companions in disparate geographies as a part of our technique to mitigate provide chain danger.

This twin sourcing will present us with adequate provide capability for the massive prospects we’re participating. We’re assured every of those wafer fabs has ample capability to fulfill our anticipated demand over at the very least the following two to a few years.

Automotive qualification testing will start later this 12 months. Being automotive certified helps us throughout the board in each automotive and industrial purposes. It says so much in regards to the robustness of your design and its capability to deal with extremes of the surroundings for shock, vibration and energy biking. It helps industrial prospects get a consolation degree for the readiness of a brand new know-how. With our certification take a look at plant now accepted as a part of Part 2, the certification testing agency we intend to make use of has been chosen.

And as soon as Part 3 with Stellantis is underway, we’ll start the wafer runs that we plan to make use of for auto certification. Whereas it might change in some unspecified time in the future sooner or later, one benefit we have now for the foreseeable future is that for any software, like hydroelectric automobiles or solid-state circuit breakers or photo voltaic and power storage, the wafers and ensuing dies are all precisely the identical. We are able to ramp up manufacturing robustly as a result of we do not have to forecast wafer demand and the die design combine based mostly on the appliance.

One other benefit to our strategy is our capability to leverage the large funding that is already been made in silicon wafer fabrication and packaging for energy gadgets. Our asset-light enterprise mannequin provides us the flexibility to proceed specializing in know-how enchancment whereas with the ability to rapidly incorporate buyer suggestions for our product roadmap.

Though the curiosity in bidirectional energy semiconductors continues to develop, we’re not conscious of any competing inherently bidirectional applied sciences. Taking a look at our expanded B-TRAN patent property, we at present have 82 issued B-TRAN patents with 36 of these issued outdoors of the USA. Our present geographic protection for our patents contains North America, China, Japan, South Korea, India and Europe, with pending protection in Taiwan, all representing our high-priority patent protection geographies.

As a part of our product growth and introductions, we’re increasing our patent efforts in what we consider to be high-value patents on our driver design and controls and packaging designs as each are distinctive to the bidirectional nature of our know-how. Because of our continued innovation, our checklist of pending B-TRAN patents is now at 39.

As well as, we deal with our double-sided wafer fabrication course of as a commerce secret. So even finding out our patents, someone would not have the know-how to have the ability to fabricate the machine. There’s an infinite quantity of studying that is gone into the fabrication course of move to make high-quality, high-performing double-sided gadgets for industrial sale.

In abstract, we’re off to an awesome begin already this 12 months, and we’re on observe to attain our 2024 milestones. We stay up for a number of bulletins within the coming months as we full the important thing goals we plan to perform for the 12 months.

After we look out over the following 12 months, we’re assured we are able to proceed to drive appreciable industrial progress in our goal markets. We’ll keep our relentless focus to commercialize our know-how and facilitate its adoption in our goal markets. We anticipate B-TRAN to displace standard energy semiconductor options in lots of purposes with a solid-state circuit breaker, renewable power, power storage, hybrid and electrical automobiles and different industrial markets.

Now I might like handy the decision over to our Chief Monetary Officer, Tim Burns, to overview our fourth quarter monetary outcomes. Tim?

Tim Burns

Thanks, Dan.

I’ll overview the fourth quarter and full 12 months 2023 monetary outcomes. We recorded $61,000 in industrial income for the fourth quarter and $161,000 for the complete 12 months. Our grant income was $37,000 for the complete 12 months 2023.

Seeking to 2024, we anticipate industrial income from each product gross sales and growth agreements. Though we’re persevering with to pursue authorities funding alternatives, we don’t have any such packages at the moment.

Working bills have been $2.5 million within the fourth quarter of 2023 in comparison with $2 million within the fourth quarter of 2022, pushed primarily by greater analysis and growth bills.

We accomplished a number of wafer runs with our certified high-volume manufacturing foundry. We additionally earned the midst of a qualification run with a second high-volume manufacturing foundry. Working bills mirrored greater stock-based compensation expense on efficiency inventory models and new greater grants.

We proceed to anticipate some quarter-to-quarter variability in working bills, significantly our analysis and growth spending as a result of timing of semiconductor fabrication runs, product growth, different analysis and growth actions and hiring.

We anticipate the important thing normal and administrative bills comparatively flat within the first quarter of 2024, excluding the impression of stock-based compensation expense. Gross sales and advertising and marketing spending is predicted to proceed to extend modestly within the coming quarters because of hiring and prices related to our commercialization efforts.

Internet loss within the fourth quarter of 2023 was $2.4 million in comparison with $1.9 million within the fourth quarter of 2022. Full 12 months 2023 internet loss was $10 million in comparison with $7.2 million in full 12 months 2022. Fourth quarter 2023 money burn was $2.3 million on the midpoint of our steering of $2.2 million to $2.4 million as we proceed to handle bills prudently and aggressively. Money burn within the full 12 months 2023 was $7.9 million on the midpoint of our steering of $7.8 million to $8 million and in comparison with $6.8 million within the full 12 months 2022.

We anticipate first quarter 2024 money burn of roughly $2.3 million to $2.4 million and full 12 months 2024 money burn of $8 million to $8.5 million, internet of an anticipated $1 million profit from proceeds from expiring closely within the cash warrants.

Money and money equivalents totaled $8.5 million at December 31, 2023. Now we have no debt and a clear capital construction. Given our deliberate money burn, which stays modest, we have now ample liquidity on our stability sheet to fund operations by means of 2024.

We’ll probably a number of potential sources of funds, together with product gross sales, growth agreements, different industrial agreements with upfront funds and government-funded packages the place we see alternatives to collaborate with a few of our companions. We’re additionally exploring potential strategic relationships with our well-capitalized companions.

For instance, Stellantis has a enterprise fund, and we have been named a finalist within the 2023 Stellantis Enterprise Awards. You have no idea if there is a potential alternative for us with Stellantis enterprise fund, it’s one thing we may select to discover if we’re satisfied it would not adversely impression different EV buyer alternatives. As a public firm, we even have entry to the capital markets if vital.

At December 31, we had 5,996,697 shares excellent, up barely from the top of September of, and a 1,040,248 warrants excellent, unchanged from the top of September. 444,180 of the warrants excellent are closely within the cash and set to run out in November 2024 if not exercised beforehand. Together with 811,478 inventory choices, restricted inventory models and efficiency inventory models excellent, we had 7,848,423 diluted shares excellent at December 31.

Right now, I might prefer to open up the decision for questions. Operator?

Query-and-Reply Session

Operator

[Operator Instructions] Your first query is coming from David Williams from Benchmark. Your line is stay.

David Williams

Hello, good morning, gents, and thanks for taking my questions.

Tim Burns

Good morning, David.

David Williams

So congrats on all of the progress. You are clearly making lots of headway right here, and I’ve at all times been impressed along with your go-to-market technique is how rapidly that is developed. I assume in that vein, are you able to discuss somewhat bit in regards to the shipments you had this quarter? And possibly simply any coloration round possibly who that was or what their intent or what the suggestions has been since they’ve acquired these issues?

Tim Burns

Sure. So that they’re clearly SymCool product gross sales. So there are preliminary shipments of that product. That product is focusing on the solid-state circuit breaker market. Now we have a few firms in our take a look at and analysis program that have been Forbes International 500 energy administration leaders. There’s additionally, I might say, a pair extra which can be comparable in measurement to these firms that we’re interacting with regularly. So we’re not going to call the particular firms, however there are some very giant well-known names within the area.

David Williams

Okay. Nice. And also you talked about having the capability in place for the following a number of years. I assume what’s the alternative for possibly income to inflect somewhat extra rapidly than you anticipate? Should you began receiving orders or design wins for manufacturing later this 12 months, how rapidly may you ramp? And do you are feeling that you’ve got alternative if you happen to wanted extra capability that you can possibly increase what you’ve gotten at present with different alternatives?

Dan Brdar

Sure, so far as our capability to provide product on the wafer fabs and the packaging companies, we are able to ramp down comparatively rapidly. Even from a cloth standpoint, the wafers that we use usually are not particular. I imply they’re on the market obtainable within the silicon commodity wafer market. And there is loads of capability to truly simply do extra runs than we have now been doing with them. In order that capability is fairly fast.

So it is actually a operate of how rapidly will we see the client adoption. Expertise adoption with prospects, particularly the large prospects that we’re working with at all times appears to take longer than anyone would love. But when they determine they need to begin doing one thing significant, we may reply actually inside the quarter, I feel by ramping up extra product.

David Williams

Very good. Nice. And possibly only one final one right here. However possibly if you happen to may discuss somewhat bit in regards to the ASP and even the invoice of fabric potential on the solid-state circuit breakers. What does that appear to be and possibly even on a per unit foundation, however what sort of income may we anticipate as that begins to ramp as you consider volumes?

Tim Burns

Sure. So for the SymCool, it is a multi-die module. Should you take a look at the IGBT module market on the market, these modules usually vary anyplace from, as an instance, $100 to $300. We’re going to verify we’re value aggressive in that market.

Dan Brdar

One of many issues that we have carried out within the design of the SymCool energy module is for — when you consider high-power circuit breakers for industrial utility purposes, they’ve an enormous vary in measurement. They might go from a few KV as much as dozens of KV. And the product is designed, so you may parallel as many models as you need to get to no matter ranking you need.

So we do not have to make any particular modules relying on the dimensions of the breaker. And that is one of many issues that we’re getting for suggestions is the purchasers which can be specializing in circuit breaker purposes actually like the truth that it provides them limitless flexibility in how they measurement the breaker.

David Williams

Thanks a lot for the time, gents. Recognize it, and I will soar again within the queue.

Dan Brdar

Thanks David.

Operator

Thanks. Your subsequent query is coming from Donovan Schafer from Northland Capital Markets. Your line is stay.

Donovan Schafer

Hello, good morning, guys. Thanks for taking the questions. So the primary one I need to ask about is following and masking the clear power type of like utility scale photo voltaic area, there’s an acute ache that the undertaking builders are feeling proper now and it is flowing by means of and impacting lots of the utility scale gear suppliers that I cowl. And one among them is high-voltage circuit breakers. And I do know these items will be fairly — lots of nuance, fairly technical, like there could also be variations.

For example, the B-TRAN might not be relevant for like a high-voltage sort grid — grid-high software or the place — or there could possibly be a protracted validation course of the place you want a utility log off and say, sure, we will enable such and such a chunk of apparatus to attach into our wires or defend our system and so forth. However — so the ache level proper now’s type of extra excessive voltage, however you undergo the entire spectrum or the entire gamut happening to the panel degree and constructing as much as the place you tie into the grid.

So I am curious if you happen to’re seeing any incremental curiosity or people taking a larger curiosity in this sort of strategy? Whether it is transportable or transferable to these purposes? And if with present type of issues the business is having there, if that is one thing you’d be capable to profit from? Or if it takes too lengthy and so possibly not essentially this cycle however the subsequent time a bottleneck like this emerges within the area, you can execute on it? Simply curious when you’ve got any coloration on that.

Dan Brdar

Sure. I imply the good factor about the best way we have now carried out SymCool is you may, — let it do one thing that’s at 1,200 volts or you are able to do one thing at 12,000 volts. And that is a giant a part of why these Forbes International 500 firms are actually keen on understanding our know-how as a result of they’re going to work out what’s the precise measurement, whether or not it is actually excessive voltage or whether or not it’ll be one thing that may be a far more localized degree on the panel degree and work out what’s the precise answer there.

And our know-how provides them the flexibility to have the identical semiconductor on this big vary to allow them to craft the options to offer them actually a singular providing in comparison with the remainder of {the marketplace}. So we anticipate to take part in each ends of that spectrum.

Donovan Schafer

Okay. So there’s not one thing the place a sure variety of B-TRAN dies would must be linked in like sequence or in parallel or — as a result of I do know there’s this modularity to it the place you may type of combine and match and hit no matter classifications you want from a voltage in a present standpoint. However you can get like an incremental quantity of losses or some — as a result of I do know, in fact, that is one of many advantages is you’ve gotten fewer losses versus different circuit breaker or sorts of circuit breakers, however does it get prohibitive at any level?

Dan Brdar

No. Actually, what truly occurs is you parallel losses, losses go down. I imply — you truly, will be actually impactful as you get to larger and larger breakers, the place you get to a degree of losses that if you happen to’re doing IGBTs, you may’t even start to the touch it.

Donovan Schafer

Okay. Okay. Nicely, that is nice. After which with the — with type of on an analogous — in an analogous vein, speaking about EVs in Part 2 with the method of Stellantis, I do know I feel within the launch you say and within the ready remarks, one of many goals was to — for the client to validate potential enhancements for vary and value within the EV. And I do know that is type of interchangeable as a result of if you happen to enhance the vary, you may then scale back the batteries required, and in order that lowers the fee and you’ll type of choose and select between the 2.

However is there something, I assume, first, did — have been they profitable in that a part of issues the place they’re capable of type of give you their very own numbers, some type of a quantification? After which is that one thing you may share? And if not, are you able to simply possibly give extra of a tough materiality or if it is that is an attribute that might transfer the needle for them?

Dan Brdar

Sure. The massive vehicle firms have simply extremely refined modeling functionality to evaluate the impression of an entire number of issues on the efficiency of the automobile. Simply in your one remark, we have not had any discussions with any automaker the place they’re speaking about lowering the dimensions of the batteries. What they’re on the lookout for are options that assist them decrease price and prolong vary on the identical time as a result of they’re preventing each of these points. So to take batteries out, it would not give them a acquire in vary.

With improved semiconductors, to this point it is simply type of a nonstarter for them. They need one thing that tackles each of these points. And that is what B-TRAN actually does. Now as a result of we’re working underneath a nondisclosure settlement with them, they will not allow us to say what the mannequin enchancment was from utilizing B-TRAN however what we do know is that they have been actually glad that it met their expectations. We did some work ourselves leveraging some evaluation that Toyota did taking a look at enchancment in energy semiconductors.

And our conclusion again then was our know-how would enhance the vary of electrical automobile by 7% to 10% by utilizing B-TRAN as an alternative of IGBTs. So I feel the reply they received should have been someplace in that neighborhood, however I doubt they might allow us to disclose it.

Donovan Schafer

Wow. Okay. That is fairly spectacular. After which for — in speaking about growing a module — a customized module for these units of purposes, I do know the wants can differ, I feel, fairly extensively. So with the SymCool module, you have received 4 B-TRAN dies in there. In the case of doing — let’s focus particularly and simply as type of a degree of reference, for the Stellantis, the concept of constructing a — and it would not must be Stellantis. I imply, I assume you can discuss it only for this specific software, to have a module the place it is the facility module that’s within the drivetrain software for tying to the inverter. What number of dies could be concerned in one thing like that? I imply if SymCool’s 4, is that this one thing the place you are speaking 10s, 100s or actually extra like 4 – identical order type of a magnitude of SymCool?

Dan Brdar

It is going to be larger than SymCool. It relies upon so much on the automobile, the dimensions, the dimensions of the motor that is in there, the metric motor they need to drive, however it could possibly be from possibly as little as eight to 10 to possibly 20. And it additionally relies upon what number of modules they need to use to get redundancy for the modules themselves. So they could break it into a few teams simply from a reliability standpoint.

Operator

Thanks. Your subsequent query is coming from Brian Dobson from Chardan Capital Markets. Your line is stay.

Brian Dobson

Hello, good morning. So that you guys did some cowl on Stellantis. And also you talked about additionally conversations with main international firms. Do you consider they’re rising community has contributed to beginning these conversations? And have you ever observed that, that relationship has opened up new alternatives for you?

Tim Burns

So sure. I feel each — initially with the Navy program for solid-state circuit breakers after which with Stellantis, significantly after we have been capable of named, we have been named finalists within the Stellantis Enterprise Awards, have each actually resulted in a big enhance in our gross sales funnel, important inbound inquiries, significantly across the strong state circuit breaker software within the hybrid and electrical automobile software as properly.

In order that’s one thing that we predict will simply develop our alternatives, together with firms that are not essentially in our take a look at and analysis program that at the moment are seeking to buy SymCools slightly than within the take a look at and analysis program to acquire the client kits which have individually packaged B-TRAN die. So we predict that may drive — it will likely be very modest, however it is going to drive income early on as firms are literally seeking to purchase a number of to tens of gadgets for his or her analysis that we have not even mentioned as a part of the take a look at and analysis program.

Dan Brdar

The opposite factor that we noticed was, as quickly as we introduced Stellantis, the opposite top-down automaker that is already in our take a look at and analysis program, clearly reacted to that by way of the extent of exercise, engagement and issues that they are seeking to do with us. So I feel all of them notice they have to determine what’s their EV platform going ahead? How are they going to sort out the vary and value points? And the way are they going to do one thing that’s progressive? It would not appear to be they’re simply copying what someone else has already carried out.

Brian Dobson

Sure, superb. Thanks very a lot.

Operator

Thanks. Your subsequent query is coming from Jeff Grampp from Alliance International Companions. Your line is stay.

Jeff Grampp

Good morning, guys. I am curious, with respect to the Stellantis course of. Is there a solution to type of evaluate, distinction the issue or danger profile, if you’ll, between the varied areas? In different phrases, simply making an attempt to evaluate as an outsider, is it tougher or tougher to go by means of a given part? Or is it simply completely different and possibly somewhat bit apples and oranges to essentially characterize in such a approach?

Dan Brdar

I do not assume they’re considerably completely different from one part to the following. They’ve completely different ranges of focus. However they make their standards fairly clear upfront in every part, what we have to do. There is a widespread view of what the deliverables are, what the standards are. For instance, this — the know-how readiness evaluation that they went by means of, they share with us, here is all the info we will want for you guys to fulfill the standards that we’d like for manufacturing.

So they have been actually good to work with and their crew is basically, actually sharp technically. I imply we have been actually impressed by the caliber of their in-house crew that is engaged on electrical automobiles. So it is one of many issues the place the main focus is somewhat completely different in every part, however no surprises, and also you simply — you bought to do the work and produce the info and do the testing and fulfill their necessities to place one thing into manufacturing.

Jeff Grampp

Okay. Nice. Understood. After which for my follow-up, I am curious on the distribution entrance. You talked about being fairly shut, I feel, with at the very least one distributor. Are you able to simply discuss excessive degree, how vital you guys view that gross sales channel so far as the general alternative set for guys? If we type of, I assume, exclude the Stellantis of the world, which sound like these will be type of sport changers. However with respect to SymCool and a few of these different industrial developments, how vital of a gross sales channel is that for you guys?

Dan Brdar

It is truly crucial as a result of we’re a small crew. And for a brand new know-how, you spend as nearly as a lot time working with small prospects, you do a giant one, particularly early on in that course of. So having a distributor that may serve the smaller prospects, these that aren’t seemingly to enter a strategic provide settlement truly is a good way for us to begin getting income into the pipeline with out having to construct an enormous entrance finish of the crew to be on the market simply chasing particular person gross sales.

Jeff Grampp

Okay. That makes lots of sense. Thanks for the time, guys.

Dan Brdar

Thanks, Jeff.

Operator

Thanks. Your subsequent query is coming from David Williams from Benchmark. Your line is stay.

David Williams

Hello, everybody. Thanks for letting me ask a follow-up. I needed to ask simply type of following up on Jeff’s query there in regards to the distribution. You talked up to now about one of many largest hurdles is educating your prospects or potential prospects. How large of a hurdle do you assume that’s? Is that one thing that you are able to do with the distributors? And I am assuming you are going to use them for demand creation in addition to logistics and order success. However are there any challenges you see by way of educating that potential gross sales pressure?

Dan Brdar

Not a lot as challenges. What’s occurred is we have now labored with prospects like Stellantis and a few of the different large firms that in our take a look at and analysis program, it is pressured us to place collectively a cloth that truly helps the technical viewers come up to the mark. So we’re not having to do it from begin each time. So we’re getting lots of reuse out of each the info, the presentation materials and the dialogue materials that we have put collectively for different prospects. So we have already taken the primary distributor by means of that.

As a result of they seem to be a technical gross sales crew, they received it. They understood it instantly. So what we have advised them is, look, if you happen to get caught at any cut-off date, we have subject software engineering right here. You’ll be able to pool in if the questions get past your degree, however they got here up with studying curve fairly rapidly.

Tim Burns

Sure. And we truly issued some movies and software notes right here only in the near past for the technical viewers, and we’ll proceed to develop the quantity of data we have now on the web site to assist, for example, gross sales by means of distribution. .

David Williams

Okay. And one simply final one, if I could. On the take a look at and analysis program, is there a approach to consider the magnitude of consumers which can be coming to you outdoors of that T&E program? And simply type of making an attempt to get a way of what that curiosity is outdoors of that captive T&E viewers.

Tim Burns

Sure. So I might say the curiosity outdoors of this system might be roughly equal to the curiosity in this system. So there’s varied explanation why somebody may not need to signal a take a look at and analysis settlement or desire to obtain SymCool energy modules slightly than our B-TRAN take a look at package, proper, significantly if you happen to take a look at solid-state circuit breaker purposes for example.

So we have not specified who these prospects are and even offering essentially type of comparable element that we do with the take a look at and analysis program, however that is simply our strategy. If we do not have a signed settlement, we typically attempt to keep away from speaking about these alternatives with any type of specifics.

David Williams

Unbelievable. Nicely, sustain with good work gents, and looking out ahead to the continued success.

Dan Brdar

Thanks, David.

Operator

Thanks. I’ll now flip this name again to Jeff Christensen to learn questions submitted by means of the webcast. Thanks.

Jeff Christensen

Thanks, Matt. And gents, our first query is, are you able to please clarify how B-TRAN matches into purposes? Is it completely different for every software? And the way do you consider that for manufacturing of B-TRAN?

Dan Brdar

Really, for us, it is one of many benefits of our know-how is that it is the identical node whatever the software. Whether or not it is packaged somewhat bit otherwise, what we’re truly going to make within the wafer fab is identical, whether or not it is going into an electrical automobile, a circuit breaker or an power storage or photo voltaic set up.

As I discussed in my ready remarks, that may change over time. We’ll see as we proceed to make enhancements within the B-TRAN know-how. However for now, it provides us so much less complicated strategy to ramping manufacturing as a result of we do not have to be too centered on — is the — are the wafers being made going to go to electrical automobile software or a solid-state circuit breaker? They’re all the identical for us.

Jeff Christensen

[Operator Instructions] Now we have a number of questions in right here. Subsequent query, gents, is contemplating the huge curiosity in silicon carbide and GaN, how does B-TRAN efficiency evaluate with these supplies? And do you see B-TRAN topology being utilized to those supplies sooner or later?

Dan Brdar

Sure. They have been every actually focusing on various things. GaN actually began the place you want very, very quick switching. So some issues like radio frequency. It has been transferring into energy purposes.

And if you consider your computer systems, your laptop computer chargers, these are most likely GaN-based gadgets. They have been making an attempt to get to greater and better voltage. There are — a, there are some limitations by way of what you are able to do with GaN that come from the character of the fabric and the know-how. And each GaN and silicon carbide are costly. We even have the flexibility to take our know-how to silicon carbide, for instance.

However we have not actually been too centered on that but, merely due to the truth that silicon carbide wants to return down considerably in price, it wants to enhance in high quality and it is not trivial. For instance, if I’m going purchase a silicon wafer, it prices me $60. If I’m going purchase a silicon carbide wafer, it is $800. And a part of what’s driving a few of the belongings you’ve seen like Tesla saying they need to scale back the quantity of silicon carbide by 75%. It is all about how do you get the fee down however nonetheless enhance efficiency.

And that is what actually creates the chance for B-TRAN. Now as silicon carbide and supplies — wide-band-gap supplies enhance, you will see us make a silicon carbide machine in B-TRAN, however we predict that is nonetheless just a few years away simply because there’s such a giant hole by way of what silicon carbide and wide-band-gap supplies carry for the efficiency degree.

So it is — there’s lots of pleasure round it, however it actually must be utilized in locations the place you want the flexibility to go to a lot sooner switching speeds, or a lot greater temperature or a lot greater voltages than what you are able to do with a silicon machine like B-TRAN.

Jeff Christensen

Thanks. One other query relating to silicon carbide is, for the longer term EVs that may make the most of silicon carbide platforms, are the enhancements to vary with B-TRAN just like — within the silicon carbide platform versus non-silicon?

Dan Brdar

Sure, it is a very comparable type of enchancment as a result of it is actually the character of the structure itself. One of many different issues that may be carried out that we see a possibility. Should you look, for instance, what Tesla is doing, slightly than going to all silicon carbide MOSFETs, they’ll a hybrid module that features a silicon IGBT with low-voltage silicon carbide MOSFETs to deal with the switching. You are able to do the identical factor with B-TRAN. You can also make a silicon B-TRAN with low-voltage silicon carbide MOSFETs to provide the actually quick switching.

So there’s lots of steps alongside the best way that I feel you are going to see by way of how new semiconductor gadgets get adopted whereas all people’s engaged on bringing down the price of silicon carbide and enhancing its high quality.

Jeff Christensen

Thanks. Our subsequent query submitted into the ask-a-question button is, are you able to discuss in regards to the curiosity degree or make extra feedback in regards to the curiosity degree amongst Tier 1 auto suppliers?

Dan Brdar

Sure. We truly — we’re engaged with actually one of many world’s largest auto suppliers. And we began with a dialogue about B-TRAN for the drivetrain, however they’re one of many firms that I used to be referring to which have come again and stated, there’s a complete bunch of different merchandise that we make that would use B-TRAN. So it is turn into a wider dialogue. And what we’re discovering is the Tier 1 suppliers at the moment are beginning to have interaction with us as a result of they’re making an attempt to determine with the automotive makers having constructed these EV groups in-house, they need to be a part of that.

They need to be embedded into these designs, they usually have lots of capability to innovate themselves. So B-TRAN provides them the flexibility to innovate designs for circuit safety, for fast disconnects on the batteries, for the drivetrain itself that they really need to give you to allow them to suggest them to the automakers and provides them a differentiated answer.

Jeff Christensen

[Operator Instructions] Our subsequent query is, are you able to discuss different firms growing this bidirectional energy swap? And who’re your rivals?

Dan Brdar

Sure. We actually do not see anyone else that is growing an inherently bidirectional machine. All of the bidirectional switches that we see individuals placing collectively are mixture of standard applied sciences. They’re placing IGBTs back-to-back, which doubles the losses or they’re placing MOSFETs back-to-back. And we maintain a fairly shut eye on what is going on on each within the technical literature, issues which have occurred within the patent workplace.

And for instance, our crew is on the Utilized Energy Electronics Convention this week the place they’re particularly going to be taking a look at what is going on on with others in bidirectional switching. We actually are competing towards the IGBT makers of the world. So it’s the Infineons, the Onsemis, Fuji’s.

The benefit with us actually is as we ramp up in quantity and as we have now prospects, just like the automakers who’re going to need a second supply of provide, we truly would license our know-how to them to allow them to leverage their very own funding of their fabrication amenities, their gross sales and assist organizations.

So whereas they’re rivals, we predict in some unspecified time in the future in time, there’s going to be a few them which can be truly actually keen on collaborating with us. Actually, we had one among them attain out to us right here simply final week, needed to discover collaboration. So we all know we’re undoubtedly on the radar display screen, and we’re making an attempt to guarantee that we’re making a pathway for partnerships slightly than simply pure competitors.

Jeff Christensen

Thanks. It seems to be like there are not any different questions at the moment. Dan, do you’ve gotten any closing remarks?

Dan Brdar

I simply need to thank all people for becoming a member of our name. We made nice progress right here on our path to commercialize our know-how. And our gifted crew is on observe for a really profitable 2024. So we stay up for industrial bulletins prematurely of our subsequent name. Thanks all people for becoming a member of us.

Operator

Thanks. This concludes immediately’s convention. All events might disconnect, and have an awesome day.

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