IPWR earnings call analysis

NASDAQ:IPWR Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Holly | Conference Operator: Good morning, ladies and gentlemen, and welcome to the Ideal Power fourth quarter and full year 2025 results conference call. At this time, all participants are in a listen-only mode. At the end of management's remarks, there will be a question and answer session. Investors can submit their questions anytime within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please press star one on your telephone keypad. As a reminder, this event is being recorded. I would now like to turn the conference over to Jeff Christensen.

Please go ahead. Jeff Christensen | Head of Investor Relations

Thank you, Holly, and good morning, everyone. Thank you for joining Ideal Power's fourth quarter and full year 2025 results conference call. On the call with me are David Somo, President and Chief Executive Officer, and Tim Burns, Chief Financial Officer. Ideal Power's fourth quarter and full year 2025 results press release is available on the company's website at idealpower.com. Before we begin, I'd like to remind everyone that statements made on the call and webcast, including those regarding future financial results and company prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's FCC filings for a list of associated risks. We would also refer you to the company's website for more supporting company information. Now I'll turn the call over to Ideal Power's President and Chief Executive Officer, David.

David Somo | President and Chief Executive Officer

Thank you, Jeff. I appreciate everyone joining us today. As you know, we laid out our strategy, commercial opportunities, priorities, and expectations on our recent business update webcast call. It's a plan designed to accelerate commercialization and deliver increased value to our shareholders and our customers. Now that we have set out a clear path, our focus is on disciplined execution. I won't repeat what I shared on our business update webcast call. Instead, I'll discuss our progress since the start of the fourth quarter. Afterwards, I'll turn things over to Tim to discuss our financial results. We look forward to your questions after our remarks. First, we announced a multi-year strategic cooperation agreement with Lazen for the design, development, and worldwide sales of a portfolio of VTRAN-enabled circuit protection products. Think solid-state circuit breakers, battery disconnect units, and EV contactors. Their first VTRAN-enabled solid-state circuit breaker is expected to target AI data center customers. Other potential products include SSCBs for the intelligent grid, renewable energy and energy storage systems, and EV charging infrastructure, along with contactors and battery disconnect units for EVs. For those of you not familiar with Lazen, they are a publicly traded, leading circuit protection solutions provider and systems integrator in Asia that is becoming increasingly focused on expanding into the North American and European markets. Second, we signed a letter of intent with a leading power module manufacturer in Asia to develop and offer a family of DETRAN-based power modules for sale to their customers. This customer already provides a portfolio of IGBT and silicon carbide modules. They see compelling value in BTRAN and are interested in developing differentiated and customized BTRAN-enabled solutions due to its inherent competitive advantages in a variety of end-use applications. Third, we continue to advance our relationship with Stellantis, including executing on our existing purchase order for custom development and packaged DTRAN devices for EV applications. We completed the first of five deliverables under this PO in the second half of 2025. We expect to complete the remaining four deliverables by mid-2026. That includes the delivery of custom packaged DTRAN devices and reference design kits for the testing and evaluation in EV applications. We also remain engaged with Stellantis on a potential development program for EV contactors. Our BTRAN patent estate continues to grow. Currently, we have 100 issued BTRAN patents with 48 of those issued outside of the United States. Our patent coverage spans North America, China, Taiwan, Japan, South Korea, India, and Europe, all representing our high priority patent coverage geographies. As a result of our continued innovation, our list of pending BTRAN patents is now at 78. To safeguard our intellectual property further, we treat the proven double-sided wafer process flow we developed to make our devices as a trade secret and do not disclose the identity of and work under strict confidentiality with our wafer fabrication partners. So even if a competitor studied our patents, they wouldn't have the know-how to fabricate the device. In addition, to minimize the potential for infringement, we exclusively work with foundries and packaging houses in countries that have a history of respecting intellectual property rights. I want to close by detailing the strategic priorities for the company. First, continuing to add new opportunities to the sales funnel. We have a good start today with nearly 200 million of potential sales opportunities identified. but need to continuously expand the sales funnel with new engagements and opportunities. Our opportunities are global, and we added a sales leader in Asia late last year and expect to add a sales leader in Europe and a field applications manager in Asia in the near term to support the global commercialization of VTRAN. Drive initial revenue ramp by converting sales opportunities in the funnel to design-ins and custom development agreements on the earliest possible schedule. It is not just about expanding our sales funnel. It is even more important that we execute and advance qualified opportunities through the funnel to production orders and revenue. Secure production orders with LASN for their first BTRAN-enabled solid-state circuit breaker product and expand our strategic cooperation with LASN to include solutions to address additional markets and applications. Complete the remaining deliverables under the Stellantis purchase order and continue to advance opportunities for EV contactors and battery disconnect units with Stellantis and other global automakers and Tier 1 suppliers. Continue exploring strategic investment opportunities with global market leaders. We are engaged with a small number of global market leaders on potential strategic investments. Strategic investors are typically motivated by two factors. First, new and innovative technologies that best solve customer solutions challenges related to market shifts. For example, the transition from AC to 800-volt DC data center power distribution systems. Second, providing additional resources and development support to guide and accelerate the commercialization of new technologies that are of significant interest to their business. While these investments take time, They offer significant validation and alignment of interest with customers. Now, I'd like to hand the call over to Tim Burns to review our financials. Tim?

Tim Burns | Chief Financial Officer

Thank you, David, and good morning, everyone. I'll begin by summarizing our recent capital raise. We raised $12.6 million in estimated net proceeds from a public offering and concurrent private placement that closed on February 25th. The offering included common stock and pre-funded warrants. Pre-funded warrants are common stock equivalents included in a company's weighted average shares outstanding for EPS calculations, but not included in shares outstanding if they do not have voting rights until exercised. For those of you unfamiliar with pre-funded warrants, they are not what you think of when you have to add warrant coverage to a deal. The pre-funded warrants were effectively paid for except for the par value of a fraction of a Senate closing rather than a sweetener added on top of common stock for little or no additional consideration. We are excited that the financing was led by the company's largest existing institutional shareholders, with participation from ideal power insiders, including our CEO. The offering strengthened our balance sheet. Post-offering, we still have a clean capital structure and no debt. Our fourth quarter 2025 cash burn was $2.2 million compared to $2.6 million in the fourth quarter of 2025 and $2.7 million in the third quarter of 2025. Our Q4 cash burn was well below our guidance of $2.5 to $2.7 million. Our full year 2025 cash burn was $9.6 million compared to $9.2 million in the full year 2024. our full year 2025 cash burn was below our guidance of approximately $10 million. We continue to manage expenses prudently and aggressively. We expect first quarter 2026 cash burn to increase to approximately $2.6 to $2.8 million, with a full year 2026 cash burn of approximately $10.5 million, with the year-over-year increase primarily due to planned 2026 hiring, including expanding the direct sales team, as David had mentioned. This compares to a 2025 cash burn of 9.6 million. Cash and cash equivalents totaled $6.1 million at December 31st, 2025, which does not include the $12.6 million of estimated net proceeds from our recent capital raise. We did not record revenue in the fourth quarter of 2025. Initial orders from the companies valuing our products for potential inclusion in their OEM products are expected to be small, with order sizes increasing as customers progress through their design cycles, perform product qualification, and build inventory for the commercialization of their BTRAN-based products. Operating expenses were $1.9 million in the fourth quarter of 2025 compared to $2.8 million in the fourth quarter of 2024 driven primarily by lower stock-based compensation expense and personnel costs. The lower stock-based compensation included the forfeiture and modification of certain equity awards in connection with the retirement and transition services agreement the company entered into with our prior CEO. Due to the accounting rules around equity award modifications, the company expects significantly higher stock-based compensation in the first quarter, tapering off in the second quarter. We continue to expect some quarter-to-quarter variability in operating expenses, particularly our research and development spending, due to the timing of semiconductor fabrication runs, product development, other research and development activities, as well as hiring. The timing of equity grants and related non-cash stock-based compensation expense recognition will also cause variability in our quarterly operating expenses. Net loss in the fourth quarter of 2025 was $1.9 million compared to $2.6 million in the fourth quarter of 2024. Net loss in the full year 2025 was $10.6 million compared to $10.4 million in the full year 2024. At the end of December 2025, we had 8,537,387 shares outstanding, and our fully diluted share count was 10,565,023 shares. Upon closing of our recent capital raise, it is detailed in the final prospective supplement we filed with the SEC on February 25th, we had 12,089,289 shares outstanding, 2,238,040 pre-funded warrants outstanding, and 1,486,955 stock option and stock units outstanding for a fully diluted share count of 15,814,384 shares. At this time, I'd like to open up the call for questions. Operator?

Holly | Conference Operator

Thank you. At this time, we are conducting a question and answer session. Investors can submit their questions within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please press star 1 on your telephone keypad. Please hold while we poll for questions.

Holly | Conference Operator

Your first question for today is from Casey Ryan with West Park Capital.

Casey Ryan | Analyst, West Park Capital

Hey, good morning, gentlemen. This is a good segue as we exit 25 and look forward to 2026. Tim, thanks for the breakdown on the operating expense line. I think that was going to be my first question. You talked about R&D being tied to production, you know, sort of delivering samples to customers. What's the view on SG&A? And I'm just sort of, you know, thinking up from 4Q, but maybe, you know, looking back, typically it's been, you know, 300,000 kind of has been the number. Is that sort of a good range to think about for 26, or will that also vary quite a bit?

Tim Burns | Chief Financial Officer

Yeah. On a cash basis, it will not vary, right? So the only thing that could cause variation really is stock-based compensation expense. Okay. but we're expecting actually to keep G&A relatively flat. It may be up low single digits in terms of percent, but our goal is to keep G&A flat through the year.

Casey Ryan | Analyst, West Park Capital

Okay. Terrific. That's very helpful. And then, you know, I feel like the opportunities with Lazen sound exciting and encouraging for sure. Can you tell us a little bit about where they use your product? Will that typically be new builds and new products or is there actually sort of a retrofit and maybe like upgrade and repair kind of opportunity given that it's a better solution than what might already be in the field in some locations yeah so i'll take that one casey lazin has a portfolio of what are the older style mechanical breakers and those are deployed in a variety of different applications David Somo | President and Chief Executive Officer: They're developing their solid-state circuit breaker portfolio now and building that out, and that's where we have the opportunity to participate in a portfolio of products from them, starting with areas like solid-state circuit breakers and static transfer switches that can go into the first target for them in data centers, and then also renewable energy, battery energy storage systems, and grid applications. So that's likely to be the first in markets for their portfolio of the solid state circuit breakers they're developing where we have an opportunity to participate with them with P-TRAN.

Casey Ryan | Analyst, West Park Capital

Okay. And then just to the extent that you know the process, do you think data centers, when we talk about the transition to the power systems, are those also like greenfield, meaning it's a whole new building, or is it possible that an existing data center could be fully retrofitted, and so it would be new from the standpoint of how it operates inside its four walls, but maybe its location might not be new.

David Somo | President and Chief Executive Officer

Yeah, interesting question, because primarily we're focused on new greenfield build-outs, but I also think there are some opportunities for brownfield, particularly as you have data centers stood up that are 400-volt, single-phase AC, three-phase AC, and if they're going to adopt the new NVIDIA platforms with the drive power distribution systems to 800 volt, then there is a need to replace the infrastructure across the data center. So I think both are possible. Certainly Greenfield is all new opportunity, and there will likely also be some brownfield.

Casey Ryan | Analyst, West Park Capital

Okay. Terrific. Terrific. And then I was trying to jot this down, but you mentioned in 2026 you guys have, I think, four or five milestones with Stellantis that you're you know, planning on achieving, which is terrific. I'm just curious if you could qualify the nature of those. Like, are those, you know, tasks and accomplishments that the ideal power team can drive? Or in some cases, are you, you know, gated because they're dependent on some process over at Stellantis? I'm just wondering how much is in your control, sort of just in terms of we need to execute A, B, C, D.

Tim Burns | Chief Financial Officer

Yeah, so overall there were five deliverables. One of them we completed late last year. So there's four remaining deliverables. Under that PO is custom development work. So it's custom packaging for the device. So there's two variants of packaging that they want us to deliver as well as just some reference design kits so that they can evaluate the technology further in the applications that they're looking at. So those are the four deliverables. They are completely within our control. And we expect to complete those by mid-26.

Casey Ryan | Analyst, West Park Capital

Yeah, that's terrific, Tim. Thank you. Listen, I think between, you know, today and the update last week, I think we have a good sense of what's possible for 26. So thanks for the terrific update. And we'll look forward to the rest of the year making progress.

Thank you. Tim Burns | Chief Financial Officer

Thanks. Appreciate it, Casey.

Casey Ryan | Analyst, West Park Capital

Thank you.

Holly | Conference Operator

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

Jeff Christensen | Head of Investor Relations

Thank you, Holly. And I wanted to mention that the business update webcast call is available. The link to it is available on our investor relations web page. I encourage you to watch it. Our first question, gentlemen, is what product development work is still required by investors ideal power to match the product line with customer needs?

David Somo | President and Chief Executive Officer

Yeah, so our current B-Tran product, the first-gen product that we have today and have been widely sampling the customers, meets the target applications that we have prioritized for accelerating our commercialization. So that includes areas like the solid-state circuit breakers, static transfer switches, EV contactors. Certainly no further modifications required at a device level. Where we're spending our time with customers now is really on their specific product development, where we're working with them to incorporate VTRAN from optimizing drivers in the power supply circuitry to thermal solutions to fit into their enclosures and so forth, working with our device. So really, the products are set for initial applications that we've targeted, and it's more working with the customer through their product development now.

Jeff Christensen | Head of Investor Relations

Thank you. The next submitted question is what are the main hurdles to cross the sizable orders?

David Somo | President and Chief Executive Officer

Yeah, first and foremost, we need to work with the customers to complete their product development and qualifications. Once they have that design complete and they've got their qualification package for things like solid state circuit breakers that they can deliver to their customers. And then it's really on our customers to go win the business at their end customers. So getting to those sizable orders requires getting through the product development qualification with our customers, them going to their customers, introducing the products as part of their sales process, and then having the customers adopt those systems and start to scale out and build.

Jeff Christensen | Head of Investor Relations

Thank you. The next question, on the possible strategic partners, what do these partners need to see in order to make a decision?

David Somo | President and Chief Executive Officer

Yeah, part of this is they'll need to evaluate and confirm that BTRAN advantages can best solve the design challenges that they're seeing in systems requirements. So as they consider how to best meet some of the needs of end customers with the systems they're developing, they'll want to confirm that BTRAN best provides the advantages to solve some of the challenges that they have. That then can... move them forward with the strategic partner engagement.

Jeff Christensen | Head of Investor Relations

Thank you. We've had several submitted questions, and we encourage you to click that Ask a Question button. Our next question is, are there opportunities for NRE revenue in 2026?

David Somo | President and Chief Executive Officer

The short answer is yes on that one. As we work across many different customers and have discussions with them, Where there are opportunities for some custom developments, similar to what we've done with Stellantis or other customers who may want something either a bit different or want additional engineering support on the development of their products, that would present NRE revenue opportunities for us.

Jeff Christensen | Head of Investor Relations

Thanks. What ideal power solutions will drive the earliest revenue?

David Somo | President and Chief Executive Officer

Yeah, here again, if I look at it from a product perspective, it'll be things like solid-state circuit breakers and static transfer switches that are used in markets that adopt new technologies faster. So it'd be data center, battery energy storage systems, and grid applications is where we see the first opportunities and earliest revenue potential for BTRAN-based products.

Jeff Christensen | Head of Investor Relations

Thanks. Please comment on your plans to expand the sales funnel.

David Somo | President and Chief Executive Officer

Well, two approaches here. The first is you heard during the prepared remarks, we're expanding and investing in our own sales resources here. So late last year, we added a sales leader in Asia. We now are adding an applications engineering manager there. So that is able to sit in the lab with customers to help them accelerate their product development. and new customers evaluate VTRAN for their potential products. The second area is really leaning into our distributor network, where we're putting new tools in place that can help them sell VTRAN and actually some programs that will incentivize them to go out and get design ins and design wins and customer evaluations with our products. So that'll help us fill the top of the funnel, and in fact, Not in our funnel today is more than 100 different opportunities that we're vetting. And once qualified, I would expect many of those to move into the funnel.

Jeff Christensen | Head of Investor Relations

What are the company's plans to shorten the prospect sales cycle?

David Somo | President and Chief Executive Officer

Really, because B-Tran is a new technology and different from conventional solutions that customers understand well, like IGBTs and silicon carbide FETs, We need to help the customers both evaluate our products for their systems and then accelerate product development where we have a different power supplier driving structure for the devices. So the first is reference design kits. We continue to work on optimized reference design kits that serve as a very good point for customers to start their design and accelerate their product development by doing a good part of the work for them specific to the B-TRAN system. subsystem of their products. The second is use our applications engineering resources here within the company as customers get into their product development and have questions, we're providing direct support to them through our engineering team with applications notes as well as supporting them on calls or as needed sitting in the lab with them. And then the final area is leverage our distributors. We work with distributors like Richardson Electronics that has significant experience in the power industry. They actually build power systems as well as self components. And so they have a technical sales organization and field apps engineers that can help customers understand how to develop with our BTRAN products.

Jeff Christensen | Head of Investor Relations

Thank you. We've had, again, continue to get questions submitted. We encourage you to click that ask a question button. The next submitted question is, will Lazen manufacture the product? What's the thinking on that and relative to the company has talked about licensing the technology?

David Somo | President and Chief Executive Officer

Yeah, so I would expect Lazen and other similar customers to really be on a purchase order relationship, potentially over time, maybe a longer-term supply agreement. But that would be buying products manufactured by Ideal Power. where it may come up from a licensing perspective is as we deal with large multinational customers that typically want to ensure there's multi-source or reduce the risk in their supply chain. And that's where we would be open to consider a licensing agreement with either if we should be unable to supply for whatever reason gives the customer confidence that they can have the product manufactured for them, either by themselves or somebody else. But certainly in those in that scenario, where it's come about. While we're open to licensing, I would want to maintain a favorable position there and kind of have first right of supply.

Jeff Christensen | Head of Investor Relations

Thank you. Any update on the automotive qualification testing?

David Somo | President and Chief Executive Officer

What we've said is that we expect to complete the automotive reliability testing by this summer, and I believe we're on track to do that.

Jeff Christensen | Head of Investor Relations

Thank you. Why is B-TRAN bidirectional such an important advantage?

David Somo | President and Chief Executive Officer

Yeah, two different scenarios I'll describe here. One is you think about in the context of battery-entered storage systems or EVs where you have a battery system that's both discharging and then charging again. You have to conduct current in both directions. So that's an obvious advantage where the system has to be bidirectional. Then if you look at particularly the new 800 volt distribution systems and data centers, here you get into a situation where the current doesn't cross zero like it does in AC-based systems. And without trying to make this too technical, what it means is when you have constant current and voltage, when fault conditions arise, current can actually be caused to flow backwards in both directions. And so you want to be able to ensure that you can identify where that's happening, be able to contain it, and be able to control how that ripples through the system. So from that perspective, it's something referred to as selectivity. Inside the 800-volt power distribution system, you need to have bidirectional capabilities in the circuit protection system.

Jeff Christensen | Head of Investor Relations

Thank you. What are your thoughts on the recent announcement of Stellantis sharing more electric vehicle technology with Leap Motor of China, and will that have any effect on your relationship, either positive or negative?

David Somo | President and Chief Executive Officer

No, I think it could be positive for ideal power. We've, for some time now, worked closely with Stellantis. As Tim mentioned in his comments, we're preparing a custom package devices for their evaluation and EV platforms as well as working with them towards an EV contactor program. So to the extent that they would be sharing some of that technology would open up a bigger market opportunity for us out of the same investment in the design and development of the products.

Jeff Christensen | Head of Investor Relations

Thanks. And in the Stellantis program, or any other EV program, how do you think about, will it be one model, multiple models of vehicles? How do you think about it? How should investors think about that?

David Somo | President and Chief Executive Officer

Yeah, the automotive companies rarely invest in a technology to build for one model. They typically want to take it across multiple models to get the economies of their investment, economies of scale there. And so, Our expectation would be with any of the automotive OEMs or Tier 1s, considering our product, that are they, if we're successful in them adopting V-TRAN, that it would play across more of their EV fleet, multiple models as opposed to just a single model.

Jeff Christensen | Head of Investor Relations

Thank you. Are there a couple of milestones that Ideal Power will achieve with the recent capital raise?

David Somo | President and Chief Executive Officer

Yeah, I think primarily it's to expand and accelerate the commercialization of B-Tran and our sales initiatives in support of it. So I mentioned the new hires that we're bringing on board, sales leader in Europe, an applications manager in Asia, and then to engage and ensure we're getting our unfair share of mind at our distributors as a smaller company with a design evaluation, design in, design when registration programs that we can fund to really have the distributors excited about selling our products. So it's focusing both our internal resources and our distributor network on accelerating BTRAN commercialization.

Jeff Christensen | Head of Investor Relations

Thank you. That concludes our question and answer session. I'd like now to turn the call over to David for closing remarks.

David Somo | President and Chief Executive Officer

Okay. I just want to thank everyone who joined the call with us today and appreciate the questions. We are committed to executing on our plan and sharing our progress as we move forward. Operator, you may end the call.

Holly | Conference Operator

Thank you. This concludes today's conference. All parties may disconnect and have a great day. jsPDF 3.0.3 D:20260606090204-00'00'

NASDAQ:IPWR Q3 2025 Earnings Call Transcript Generated on 6/6/2026 David Somo | President & CEO: automotive I plan on leveraging my extensive commercial experience and relationships to drive revenue growth in our target markets revenue is a priority I'm sure you are wondering what I plan on doing or what you should expect from me having joined ideal power just last week I'm spending time getting my hands on the details of the business during the next several weeks I will be listening closely to feedback from our customers distributors and suppliers, and the outstanding team here at Ideal Power. Because I'd like to be highly visible with customers, both existing and prospective, I'll be meeting with them to understand their priorities, opportunities, and requirements, and listen to their feedback about our technology and their applications. I'll review our opportunities, progress, roadmap, and strategic initiatives. Those discussions will deepen my understanding of our business and enable me to fine tune our vision and strategy going forward, building on the strong foundation that is in place today. Upon completion of that process, I anticipate scheduling a call and webcast to share more detailed information and discuss certain topics in greater depth, including my perspective for product commercialization. Before setting expectations, I want to take the necessary time to thoroughly understand the current state of our business. As an organization, we will strive to execute in all aspects of the business with rigor, discipline, and a strong sense of urgency. We will endeavor to execute on what we communicate and not put ourselves in a position to have to reset expectations. It goes without saying that this is important to establishing and maintaining credibility. One thing is abundantly clear. With a strong foundation in place from which to drive our future growth, I'm not going back to the drawing board. We're well-positioned to drive long-term value creation for our customers, suppliers, employees, and stockholders. In closing, I look forward to partnering with Tim Burns, our CFO. I'd like to recognize the entire team for the third quarter progress and results. I'd also like to thank my predecessor, Dan Bergar, for assisting with the transition and providing a strong foundation for our growth. I'm thrilled to be joining Ideal Power at a time when the company has such exciting opportunities ahead. Now, I'd like to turn the call over to Tim Burns to discuss our recent progress.

Tim Burns | Chief Financial Officer

Tim? Thank you, David, and good morning, everyone. Since David just started last week, I'll share an update on our progress since the start of the third quarter. First, we secured a purchase order from Stellantis in late August for custom development in packaged B-Tran devices targeting multiple electric vehicle applications. We successfully completed our first of five deliverables under the purchase order in late September. The remaining deliverables are expected to be completed next year. Second, we expect Stellantis to award us with a multi-year EV contactor program. As part of the program scope, Stellantis has told us they want to install BTRAN-based contactors in Stellantis test vehicles potentially as early as late 2026. We'll know more about the scope and timing specifics as we work through the program details with Stellantis in the coming months. This program has broad and substantial potential as Stellantis recently shared with us that they are evaluating the deployment of V-TRAN based contactors across all of their EV models and platforms. Third, we are engaged in early discussions with the sixth global automaker. This automaker is evaluating V-TRAN for next generation high voltage EV power switching and protection applications where bidirectionality and low conduction losses enable more compact, reliable, and efficient vehicle and charging architectures. We will share further updates on this opportunity as the engagement progresses. Fourth, our first DesignWin customer has successfully completed testing of the updated solid-state circuit breakers that we provided them during the third quarter. We're currently working with them on the finalization of their product design as they prepare for and the customer sampling and production. Fifth, we shipped additional solid state circuit breaker reference designs to large potential customers, including a global power management market leader in Asia. Reference designs are an important part of our commercialization strategy, as vTRAN is a new technology, and customers are eager to get hardware in their hands that demonstrates the advantages of vTRAN in their target applications. Sixth, we increased the power rating of our discrete V-TRAN product by 50% and commenced shipment of these devices with a higher power rating and power density. This development has sparked greater interest from both existing customers and new prospects in our sales pipeline as it aligns well with the market moving to higher power architectures for many applications. Seventh, we continue to expand our global reach, adding our first direct salesperson in Asia. He's already conducting face-to-face meetings with current and prospective customers. Interest in B-Tran is growing across Asia, which is the world's largest market for power electronics. We're excited about the opportunity for B-Tran in this region as Asian companies typically adopt new technologies faster than their European and American counterparts. Eighth, third-party automotive qualification and reliability testing of B-TRAN devices is well underway with more than 1,000 packaged B-TRAN devices from multiple wafer runs. Early test results are positive with zero failures to date. As a new semiconductor device without a long operating history, third-party reliability testing and the data it generates is key for both industrial and automotive customers as they evaluate and adopt B-TRAN for their applications. Moving on to the initial market for B-TRAIN, the industrial markets, and in particular, solid-state circuit protection for data centers, microgrids, industrial facilities, and grid infrastructure. Our first design wind customer is one of the largest circuit protection equipment manufacturers in Asia, serving data centers, industrial and utility markets, and renewable energy applications. As we have previously mentioned, and based on the first DesignWin customer's projections, the initial product from this customer could translate to several hundred thousands of dollars of revenue for ideal power in its first year of sales, with the opportunity to exceed a million dollars in revenue for us in the second year of sales. Importantly, this marks only the beginning. The initial product is anticipated to be the first of multiple products from this customer that will incorporate B-TRAN into solid-state circuit breakers. This customer provides a variety of circuit breaker products across various power ratings and is expected that they could expand their portfolio to add a full family of solid-state circuit breakers at ratings similar to their current family of electromechanical breakers. Discussions of other BTRAN-enabled solid-state circuit breaker products has already started, and our team recently built the solid-state circuit breaker prototype with a higher rating to share with this customer. Looking briefly at innovation, we increased the power rating of our discrete B-TRAN product by 50% in commencement shipment of these devices with a higher power rating and power density. This development has sparked greater interest from both existing customers and new prospects in our sales pipeline. Our approach to power ratings of our products is deliberately cautious, an approach that has been well received by our customers as we bring new solutions to their markets and applications. As we accumulate more testing hours and go through additional reliability testing, including the ongoing third-party automotive qualification testing, we're finding that we have more than ample margin in our design to increase the power rating of our products. Elevated product ratings will expand our SAM to include additional applications. It will also strengthen our product's competitiveness in the marketplace as it translates to smaller, lower-cost OEM products for customers to choose B-TRAN as their power semiconductor solution. We previously mentioned that orders near-term are not dependent upon the successful completion of automotive qualification. However, achieving third-party automotive qualification would provide additional confidence among industrial customers regarding V-TRAN's long-term reliability. It would also provide evidence of the device's reliability under extreme conditions, such as high humidity and temperature, which exceeds typical industrial application requirements. Additionally, given that engineers tend to be cautious when adopting new technologies, Achieving automotive qualification could help accelerate the adoption of BTRAN-based products by early adopters in our initial target industrial markets. Our BTRAN patent estate continues to grow. Currently, we have 97 issued BTRAN patents with 47 of those issued outside the United States. Our patent coverage spans North America, China, Taiwan, Japan, South Korea, India, and Europe, all representing our high-priority patent coverage geographies. As a result of our continued innovation, our list of pending B-Tran patents is now at 73. To safeguard our intellectual property further, we treat the proven double-sided wafer process flow we developed to make our devices as a trade secret and do not disclose the identity of and work under strict confidentiality with our wafer fabrication partners. So even if a competitor studied our patents, they wouldn't have the know-how to fabricate the device. Next, I'll discuss our financial results. Our third quarter 2025 cash burn from operating and investing activities was $2.7 million, up from $2.4 million in the third quarter of 2024, and up from $2.5 million in the second quarter of this year. Our Q3 cash burn was at the lower end of our guidance of $2.7 to $2.9 million. Our cash burn from operating and investing activities for the first nine months of 2025 with $7.4 million, up from $6.6 million in the first nine months of 2024. We continue to manage expenses prudently and aggressively. We expect fourth quarter 2025 cash burn to be approximately $2.5 to $2.7 million, with a full year 2025 cash burn of approximately $10 million. This compares to a 2024 cash burn of $9.2 million, excluding the benefit of warrant proceeds. The higher forecasted cash burn in 2025 compared to 2024 is due to increased semiconductor fabrication spending and hiring. Cash and cash equivalents totaled $8.4 million on September 30, 2025. We have no debt and a clean capital structure. We recorded modest revenue for the third quarter of 2025 as customers continue to evaluate our technology. Initial orders from the large companies evaluating our products for potential inclusion in their OEM products will be small with order sizes increasing as customers start to prototype their OEM products, progress through their design cycles, and build inventory for the rollout of their B-Tran-based products. Operating expenses were $3 million in the third quarter of 2025 compared to $2.9 million in the third quarter of 2024 with the increase due to higher wafer fabrication costs at our second foundry. We expect operating expenses to increase modestly in the coming quarters due to recent and future hiring and costs associated with our development and commercialization efforts. We also continue to expect some quarter-to-quarter variability in operating expenses, particularly our research and development spending, due to the timing of semiconductor fabrication runs, product development, other research and development activities, and hiring. The timing of equity grants and related stock-based compensation expense recognition will also cause variability in our quarterly operating results. Net loss in the third quarter of 2025 was $2.9 million compared to $2.7 million in the third quarter of 2024. Considering our asset-wide business model, no debt, and modest planned cash burn, we have sufficient liquidity on our balance sheet to fund operations through at least mid-2026. We'll potentially see several sources of funds over the next year, such as product sales, development agreements, and other commercial agreements with upfront payments. Additionally, we are exploring strategic relationships with our well-capitalized and large global partners with these opportunities strengthening as we further advance these customer relationships. As a publicly traded company, we also have access to the capital markets as necessary, providing us with additional financial flexibility. At the end of September, we had 8,511,403 shares outstanding, 824,760 options and stock units outstanding, and 653,827 pre-funded warrants outstanding. At September 30th, 2025, our fully diluted share count was 9,989,990 shares. In summary, we are thrilled to share that our first DesignWin customer has successfully completed testing of the updated solid-state circuit breakers and are now finalizing their product design as they prepare for end customer sampling and production. We're also delighted to announce that not only securing the purchase order from Stellantis for custom development and packaged B-Tran devices targeting multiple EV applications, but also completing our first of five deliverables under this purchase order. Overall, it is an exciting time at Ideal Power, and I look forward to working with David to capture the significant market potential for B-Tran as an ultra-well loss and bidirectional power semiconductor. At this time, I'd like to open up the call for questions. Operator?

Operator | Conference Call Operator

Thank you. At this time, we are conducting a question and answer session. Investors can submit their questions within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please press star 1 on your phone keypad. For anyone using speakerphone, we ask that you please pick up your handset before you press the keys. Please wait a moment whilst we poll for questions.

Casey Ryan | Analyst, West Park Capital

thank you our first question is coming from casey ryan of west park capital casey your line is live uh thank you good morning gentlemen david welcome it's great to have you on board tim thank you for this good update um so i just wanted to start with um generally automotive it feels like the opportunities are with ev platforms and the growth of of those platforms um generally. And so I just want to sort of confirm that for myself before we go a little further.

David Somo | President & CEO

Yeah, thanks, Casey. Glad to be on the call and appreciate the question. So automotive is one of multiple markets that we're able to sell our products into where it has a strong fit to the applications requirements. As you understand, automotive is also one of the longer development cycles and projects are typically multi-year programs. So we continue to work to, I would say, move from the initial engagement through continued evaluation, where we've made progress now in delivering enhanced products to our customers. We've continued multiple stages of the development programs, and each of those is a necessary step in moving towards completing R&D evaluation of the products and qualification and moving into series engineering and eventually landing into vehicles on the EV side.

Casey Ryan | Analyst, West Park Capital

Okay, terrific. And then sort of on that EV track, what's driving the automakers to look for better solutions than say what they have currently or what they've had previously because generally they must be facing some limitations with sort of existing solutions. Is it battery density or the power of the amount of electronics per vehicle? And I'm sort of happy for it for ideal power, but I'm curious what sort of driving it and what sort of barriers they're running into with sort of their current solutions. And of course, you guys are bringing a better solution to market.

David Somo | President & CEO

Sure. Well, one of the fundamental trends in power electronics is a move to higher power architectures. And one of the fundamental ones in EV architectures is the adoption of 800-volt main battery systems, which is driving redesign of the overall architecture and fraction inverter, charging systems, contactors, battery disconnect units, and so forth. So that's what's the reason for continuing to evaluate technologies that provide higher power efficiency, improved power density, and manage the cost.

Casey Ryan | Analyst, West Park Capital

Okay, terrific. And then sort of quickly on like charging stations, which I think is also a potential market for ideal power, I think charging stations are also moving to 800-volt systems, right, which might cause the same sort of trend where people would be interested in your solution.

David Somo | President & CEO

Yeah, fast DC charging stations actually continue to increase the power to multiple kilovolts, get partitioned out across multiple terminals. So it does present an opportunity for us. Also, in some instances, particularly home charging, there's bidirectionality involved where you can feed into the battery pack and then off-hours feed out from the battery pack back in to district power. So that's unique to the design of our B-Train technology.

Casey Ryan | Analyst, West Park Capital

Okay, terrific. That's really helpful. And then I wanted to ask about the Asian – I think power management company is what we're talking about them as a customer. So it sounds like, and Tim, you said sort of a couple hundred thousand dollars might be kind of a target range for potential revenues in year one. But what I wanted to ask was, is the product currently available for sale, you know, hypothetically today, or will it start to go on sale to the commercial market sometime in 26th?

Tim Burns | Chief Financial Officer

Yeah, so it's not currently for sale. So they're finalizing their product design. We're working with them to do that right now. I don't know the specific timing, whether it will be here later this year or whether it will be next year. That's something we can cover here when we have the update call. in terms of timing, but they have the updated prototypes. They've completed testing. It was successful, so those prototypes look good, and we're just waiting for them to share a little bit more on their timing specifics as it relates to their rollout plan.

Casey Ryan | Analyst, West Park Capital

Yeah, well, I mean, from my perspective, what's significant, right, is going from concept to testing to sort of turning into a commercial product. Having completed that cycle, I think, is really impressive, so... That's it for me right now. Thank you for the terrific update.

Tim Burns | Chief Financial Officer

Thanks, Casey.

Appreciate it. Operator | Conference Call Operator

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

Thank you. Jeff Christensen | Vice President, Investor Relations

Thank you, Jenny. Gentlemen, the first submitted question is, any additional context around the CEO transition? Is this something that was planned for?

Tim Burns | Chief Financial Officer

So, yes, Dan's retirement was planned. There was an extensive search that was conducted and led by our board that Dan was involved with to identify our next CEO. And that resulted in us bringing David on board. And I'm actually really excited, particularly because of his vast experience in semiconductors and commercial expertise, that it's a great time to bring him on because I think it will really help with what obviously is our priority and what's on investors' mind in terms of revenue generation.

Jeff Christensen | Vice President, Investor Relations

Thank you. Our next submitted question is, how do you see the markets evolving? And this is a question for David. How do you see the markets evolving, including data centers, industrial, and automotive? And what are you most excited about with ideal power opportunities?

David Somo | President & CEO

Okay, so Casey alluded to part of this question, but I'll give a more thorough answer here. Our BTRAN-enabled solutions, from my perspective, it's Excel and high-power applications delivering lower conduction losses for improved power efficiency, smaller system size for improved power density, bidirectionality, and enabling lower systems cost. Power levels have continued to trend up, as I mentioned a moment ago, across these applications, including the AI data center, which is now planning a move to 800-volt rack architectures, commencing sometime in 2027. Automotive EV with the adoption of 800-volt battery systems and fast DC charging terminals, as well as other industrial infrastructure applications as the power grid is enhanced to support these growing applications. In addition, grid-to-system and system-to-grid power transfer requires bidirectionality, where there is also a growing trend to migrate from electromechanical to solid-state semiconductor-enabled systems. Each of these major technology trends involve applications such as circuit breaking and protection, UPS, and battery disconnect system, among others, that VTRAN solutions excel at enabling. So in summary, we could see a continued trend towards higher power levels across these multiple applications, looking for improved power efficiency, improved power density, and managing costs that are all strong fit for our BTRAN technology.

Jeff Christensen | Vice President, Investor Relations

Thank you. Our next submitted question is, do you expect the initial sales ramp and milestones to be achieved within 2025?

David Somo | President & CEO

So having been in the seed here a total of eight days, I'm currently spending my time deepening my understanding of the details of our business. Once I've been through that process, including the opportunity for face-to-face meetings with key customers to understand thoroughly the details of the engagements that we have with them. I anticipate scheduling a call and webcast to share more detailed information and discuss certain topics in greater depth, including my outlook for product commercialization. Revenue is a priority, and I plan on leveraging my go-to-market experience achieved in my 30-plus years in semiconductors across many end sectors and customers to drive revenue growth in our target markets.

Jenny | Webcast Moderator

Thank you.

Jeff Christensen | Vice President, Investor Relations

We have several investors that have submitted questions, and please submit your questions using the Ask a Question button. And as you think of questions, submit them. You don't need to accumulate all your questions and submit it at one time. Our next submitted question is, what is Ideal Power doing to expand the sales pipeline?

David Somo | President & CEO

Yeah, so as discussed in our prepared remarks and shared by Tim, we have added direct sales in Asia and are already conducting meetings with current and prospective customers. We're excited about the opportunity for B-Tran in the region as Asian companies generally adopt new technologies faster than their North American and European counterparts. While we continue to expand the sales funnel, we have a strong focus on closing many opportunities available to us from current customer engagements. So having the additional sales capability on the ground in Asia is important to us, and we view it as a market that can actually move faster in adoption of new technology than some of the others.

Jenny | Webcast Moderator

Thank you.

Jeff Christensen | Vice President, Investor Relations

How would you compare B-TRAN to competitors, including silicon and silicon carbide solutions?

David Somo | President & CEO

Yes, I think about it in this way. B-TRAN has two significant advantages. First, it has ultra-low conduction losses, leading to higher power efficiency and improved power density. And second, it's bidirectional. These advantages translate to more power efficient and compact customer products at lower cost compared to alternative silicon and silicon carbide power solutions that are in the market today.

Jeff Christensen | Vice President, Investor Relations

Okay, thanks. Can you provide us with any additional information on Tier 1s and OEMs besides Stellantis and the automotive?

David Somo | President & CEO

Yeah, so we're engaged with several automotive OEMs and Tier 1 suppliers, as we've previously said. Prospective customers are considering a range of applications that include power switching, EV contactors and battery disconnect units, charging systems, and inverters. With automakers increasingly moving to the 800-volt architectures, as I talked about earlier in my comments, the opportunity for us in this market is expanding. At this point, it also seems likely there'll be a replacement of electromechanical contactors with solid-state solutions in EVs.

Jenny | Webcast Moderator

Okay, thanks.

Jeff Christensen | Vice President, Investor Relations

Our next submitted question is, when mentioning EVs with Stellantis, is either the drivetrain or contactor program likely to be included in hybrids?

Tim Burns | Chief Financial Officer

Yeah, the way that this program is really focused on electric vehicles, but our technology would bring the same benefits to hybrid electric vehicles. So we're obviously engaged with several global automakers, several tier one automotive suppliers. I assume once we start getting adopted in EVs, hybrid is also a natural extension of that. So there's definitely an opportunity there for B-Trend.

Jeff Christensen | Vice President, Investor Relations

Thank you. Our next submitted question is a long one. is uh just just understand you upgraded the power rating to 75 amps you stated in the release that this maintains a significant design margin to a tested long-term continuous basis of 150 amps what does that mean how would you would you at some point time increase to 150 amps or would you have to test it at above that at a safe design margin is there a standard margin that the industry uses and how does the 75-150 margin fit within the standard?

David Somo | President & CEO

Sure, so I'll take that one. You can think about it in the following manner. Increasing our power rating enables customers to evaluate our B-TRAN solutions for a wider range of applications, as well as increase the power rating while lowering conduction losses of existing applications in their current designs. There isn't a specific industry guideline for safe design margin. However, we remain very conservative in rating the device at 75 amps, and we've tested it up to 150 amps. We want to ensure that we're providing the proper safety margin to our customers, and that varies by customer and by applications. But I would say that we have sufficient headroom to continue to scale the device up for higher power solutions as the trend continues in that direction.

Jenny | Webcast Moderator

Thank you.

Jeff Christensen | Vice President, Investor Relations

Our next submitted question is, please provide any color on where we stand with manufacturing.

Tim Burns | Chief Financial Officer

Yeah, so we have two foundries. As we've mentioned, one of them is in Europe, one of them is in Asia. We've been working with the Asian foundry for a little bit longer than we had the European foundry, so I'd say they probably are still ahead of the European foundry in terms of things like yield. But we're comfortable that we could utilize devices from either one for end product sales to customers. And we also have a great relationship with two packaging houses, one that we're using, please, primarily for production. That's actually in Asia and one here in the U.S. that we also continue to do some development work with that we could use for production if necessary, for instance, if we received a government program that required U.S. manufacturing. So, overall, I think we're in really good shape. Right now, it's just about commercializing the technology.

Jeff Christensen | Vice President, Investor Relations

Thank you. Our next minute question is, what are the main barriers to closing sales?

David Somo | President & CEO

Introducing D-Tran, with it being a new semiconductor technology and device structure, begins with educating the customers. Engineers are generally familiar with IGBTs and MOSFETs, but D-Tran features innovative and distinct architecture that functions differently from traditional semiconductor devices. So to help our prospective customers evaluate our products for their applications, we provide evaluation kits and reference designs to simplify this undertaking. Additionally, engineers often adopt a cautious approach, which can extend the evaluation period. Achieving automotive qualification, as we mentioned during our prepared remarks, will help to speed up adoption by demonstrating the technology's proven long-term reliability for their applications.

Jeff Christensen | Vice President, Investor Relations

Thank you. Our next question is, how should investors think about tariffs and trade policies on ideal power?

Tim Burns | Chief Financial Officer

Yeah, we continue to see that the tariff situation is very fluid, but we anticipate minimal impact on our operations from tariffs in place today. And notably, power semiconductors are often exempt from any of these tariffs, which really limits the potential effect on us. While the situation continues to evolve, we're confident that we're well positioned to manage and mitigate the impact of future tariff changes, trade policy shifts, and also supply chain disruptions.

Jenny | Webcast Moderator

Thank you.

Jeff Christensen | Vice President, Investor Relations

That concludes our question and answer session. I'd like to turn the call back over to David Somo for closing remarks.

David Somo | President & CEO

Thank you, Jeff. I want to thank everybody for participating in today's calls and for the good questions. As I mentioned earlier, we anticipate scheduling a call and webcast in advance of our year-end results call to share more detailed information and discuss some of the topics explored today in greater depth. Operator, you may end the call.

Operator | Conference Call Operator

Thank you. This concludes today's conference. All parties may disconnect and have a great day. jsPDF 3.0.3 D:20260606090206-00'00'