Jeff Christensen; Investor Relations; Ideal Power Inc
R. Daniel Brdar; President, Chief Executive Officer, Director; Ideal Power Inc
Timothy Burns; Chief Financial Officer, Treasurer, Secretary; Ideal Power Inc
Brian Dobson; Analyst; Chardan Capital Markets LLC
Kris Tuttle; Analyst; Blue Caterpillar LLC
Presentation
Operator
Good morning, ladies and gentlemen, and welcome to the Ideal Power second-quarter 2024 results call. (Operator Instructions) 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
Thank you, operator, and good morning, everyone. Thank you for joining Ideal Power's second-quarter 2024 conference call. With me on the call today are Dan Brdar, our President and Chief Executive Officer; and Tim Burns, Chief Financial Officer. Ideal Power's second-quarter 2024 financial results press release is available on the company's website at idealpower.com. Before we begin, I'd like to remind everyone that statements made on the call and webcast, including those regarding future financial results and company's prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's SEC filings for a list of associated risks, and we would also refer you to the company's website for more supporting company information. And now I'd like to turn the call over to Ideal Power's President and CEO, Dan Brdar. Dan?
R. Daniel Brdar
Thank you, Jeff, and thanks, everyone, for joining us today on our second quarter conference call. I'm excited to update you today on our progress since the start of the second quarter. As we've accomplished a couple of our key milestones for the year and made significant progress with several key customers that I'll turn things over to Tim Burns to discuss our financial results. We'll be pleased to answer your questions after our remarks, I'm delighted to report that on a number of new developments at Ideal Power, I'll cover the key highlights briefly then discuss them in a little bit more depth and provide context for their importance. First, we are collaborating with our third global automaker, along with our previously announced engagements with Stellantis and a second top 10 global automaker. Second, we announced a global distribution agreement with a second distributor that is particularly strong in Asia. This distributor is already placing orders with us, adding distributors and channels to market as one of our key 2024 milestones. Third, we qualified a second wafer fabrication supplier with high-volume production capability, this is also one of our 2024 milestones. Fourth, we secured orders for B-TRAN devices and circuit breaker evaluation boards from a global leader in power semiconductor and power electronics solutions. Fifth, we secured an order for B-TRAN devices for evaluation in solar inverter applications from a top 10 global provider of power conversion solutions to the solar industry. This company was a participant in the B-TRAN test and evaluation program. Sixth, we secured an order for simple power modules and drivers from a Forbes Global 500 power management market leader that also participated in our B-TRAN test and evaluation program. Seventh, we added a global leader in circuit protection, industrial fuses and power conversion technology with over $1 billion in annual sales to the roster of our test and evaluation program and eight based on the results of testing, we increased the current rating of our simple power module by 2025 by 25% when combined with an approximate 50% size reduction we recently implemented. We dramatically increased the simple modules, power density. Looking first at the automotive market, we continue to leverage the work we're doing with Stellantis to attract other auto OEMs and to evaluate B-TRAN for their next-generation electric and hybrid vehicle platforms. This quarter, we added a third global automaker to our list of customer engagements after learning more about our technology and products 13 realize the potential benefit of B-TRAN in several locations in the EV drivetrain. Our initial focus is on EV contactors. This global automakers engineering team is working closely and meeting regularly with our engineers on the use of B-TRAN enabled contactors to potentially replace electromechanical contactors and it's across its EV platform. Contactor service cutoff switches for high-power applications in EVs. They play a critical role in isolating the battery inverter and high-speed charging system to ensure safety when the vehicle is off or being serviced. Contactors are bidirectional and there are typically four to six high-power contactors in every EV and the assessment of the automotive OEM, the bidirectional nature ability to accommodate higher voltage DC platforms, fast speed and low conduction losses at B-TRAN because solid-state contactor a good first use case for their EVs. Solid-state contactors and EVs are an emerging market and our technology is potentially enabling for this application due to its very low conduction losses and inherent directionality. High-power EV contactor market is forecasted to grow to over $3.7 billion in 2025. We believe that over time, solid-state contactors will potentially displace electro-mechanical contactors in half or more of this market. This market is additive to the serviceable addressable market for B-TRAN that we've shared with you previously. We're excited to add another global automotive OEM and look forward to expanding our collaboration with them. Turning to Stellantis, as many of you know, we successfully completed Phase II of our program with them a few months ago and are eagerly waiting to begin Phase III. What's been happening in the meantime, as we continued to meet with their team weekly, while they developed and sent out the drivetrain inverter solicitation to roughly a half a dozen Tier 1 suppliers. The Tier 1 suppliers were asked to provide their proposals to supply the B-TRAN based drivetrain inverter latest introduced our team to Tier 1 suppliers. We were not already working with, so we can bring them up to speed on the technology, our products, the unique configuration that we developed for the application and the corresponding test data that demonstrated we provide better performance compared to other silicon and silicon carbide solution. The Tier 1 inverter proposals have been submitted and Stellantis is in the process of reviewing the proposals and will down-select to one or two Tier 1 suppliers to design and build the drivetrain inverter for their even their new EV platform. In a parallel effort, Stellantis is working with us and a large semiconductor company with expertise in driver control circuitry for the B-TRAN inverter drivers after the Tier 1 inverter supplier is selected by Stellantis. We expect to start Phase three, working with the Tier 1 suppliers and Stellantis his team with the objective of developing a production-ready B-TRAN power module for use in their EV drivetrain completion. The B-TRAN module is still targeted for 2025. Our focus continues to be on a custom B-TRAN Power Module for use in the EV drivetrain platform. They also continue to express interest and B-TRAN from battery circuit protection as well. Turning to the previously announced top 10 global automaker in our test & evaluation Program, we've been able to share the unique Vetria and configuration we developed for EV drivetrain inverters with them as well as the test data we generated under this Stellantis program. It's we're not constrained under our arrangement with Stellantis for using the design work and test data to attract other automotive OEMs and Tier 1s to explore and adopt B-TRAN for their next-generation vehicles. As a result of the test data, we provided the top 10 automakers moving forward and expected to order hardware for testing by their design team. We're also introducing them to the concept of B-TRAN enabled EV contactors. This gives us two opportunities with this automaker that could evolve into formal program. Now let's discuss industrial markets as they are expected to be the early source of our product sales and revenue. We secured orders for B-TRAN devices and circuit breaker evaluation boards from a global leader in power semiconductor and power electronics solutions in connection with its launch of a multiyear DC power distribution system program. This opportunity was introduced to us through our new distributor relationship with Rio. The company presents multiple opportunities for us as it addresses several of our target industrial markets, solid state circuit breakers for industrial facilities and electric utility grid infrastructure and renewable energy for solid-state circuit breaker applications. Our B-TRAN technology has clear advantages providing dramatically lower conduction losses, lower costs and by directionality compared to electromechanical breakers and IGBT and silicon carbide mass spec based solid-state circuit breakers. Also during the quarter, we secured an order for B-TRAN products for evaluation and solar inverter applications from a top 10 global provider of our conversion solutions to the solar industry. This customer is previously -- was a previously announced participant in our B-TRAN test and evaluation program and is one of several who are advancing from that program to beginning to order products from us as part of their application specific development work. By moving through the test and evaluation program, with these large companies takes time, we're excited to see many of them taking that next step with us and begin ordering commercial products in small quantities. We're also pleased that we've not had any companies drop out of the test and evaluation program. We also secured an order for simple power modules and drivers from a Forbes Global 500 power management market leader that was also a participant in our Test & Evaluation Program. This global power management market leader is evaluating Simcoe against IGBT modules for use in solid-state circuit breaker applications. This customer's order for simple power modules, all those their testing of discrete trend devices. In response to this customer's request Ideal Power provided high volume quotes for Simcoe power modules. The customer may also evaluate our technology for other power conversion applications. Also, we're very pleased that multiple customers in our Test & Evaluation Program are advancing to initial orders with us. We also added a global leader in circuit protection and industrial markets with over $1 billion in annual sales to the roster of the B-TRAN test and evaluation program. This global supplier presents multiple opportunities for us as they address several of our targeted industrial markets, including industrial fuses, renewable energy and energy storage power conversion, rail, transportation and EV power management. As part of our effort to expand our geographic and application diversification, we added a second global distributor real show, a subsidiary of RYOSHO corporation RYOSHO is listed on the Tokyo Stock Exchange and has almost $2 billion in annual sales at '21. International sites, including Rio USA. We actually was focused on the sale of semiconductors and other electronic components. This distributor already placed orders with us on a large global customer in Asia, interested in the company's products for solid-state circuit protection applications. This is a significant development in the commercialization of our B-TRAN technology. As a small company, we cannot efficiently reach the large global customer base for our products on our own by leveraging the large investment in semiconductor sales and distribution networks, we can reach many customers. It would be difficult to us, engage or educate about our products and technology like Richardson Electronics. We also has a strong technical sales team with expertise in generating demand and securing orders for new products and technologies has a global customer base. Their sales focus is particularly strong in Asia, which complements Richardson's geographic strength. We look forward to collaborating with RYOSHO to secure additional orders, particularly in the Asian markets where they have an extensive customer base and distributors for our products is one of our key milestones for this year, and we'll likely add others in the coming quarters to adjust to address geographies or customer segments not covered well by our existing distributors. Another key milestone we completed in the quarter was the qualification of a second wafer fabrication supplier with high-volume production capability. This facility in Europe, along with our previously qualified wafer fabricator in Asia as dual sourcing for wafer fabrication, geographic diversity to our supply chain and will support future revenue growth, providing ample capacity to support anticipated customer demand over the next several years, this fab successfully completed a multi wafer full process flow engineering run of double-sided B-TRAN wafers. By leveraging our proprietary proven process flow. This foundry was able to produce functional bidirectional devices on their initial run without the need for special equipment for capital investment. Initial devices from this run have already been packaged by our packaging partners and successfully tested in our lab. This fab has demonstrated expertise in commercial manufacturing of high power, high power devices such as IGBTs. It's a qualified manufacturer of semiconductor wafers to multiple Tier 1 automotive suppliers. This will help Ideal Power to attract and engage prospective automotive OEMs and Tier 1 suppliers as customers since the fab is ISO 9,001 and ISO 14,001 certified, the globally recognized standards for quality and environmental management systems. Our dual sourcing for wafer fabrication in disparate geographies has no exposure to China or Taiwan to mitigate supply chain risks. Turning to product development. Based on the results of testing, we confirmed that our initial product ratings are quite conservative in our device design is very capable of providing high performance and handling the current and voltage ratings required for our target applications. For example, our discrete device is currently rated at 50 amps. It has been tested on a long duration basis at 150 amps without failure or any loss of performance. As a result of our test data, we are modestly increasing the current rating of our simple power module at 25% from 160 amps to 200 amps. While we feel this is still a conservative rating, the customer feedback we've received from our test data reflects our comfort level in making this change, along with the rating increase. We also implemented a reduction in the physical size of our power module of approximately 50%. This combination dramatically increases the power density of the simple power module, which allows customers to use less space in their OEM products to accommodate the semiconductor devices, which helps them lower cost while improving efficiency and overall performance as part of our cost reduction initiatives, we're also planning on reducing the cell size of our B-TRAN die. This will allow us to double the number of dies per wafer, which effectively doubles the number of dies per year that our wafer fabrication partners can produce significantly expanding our available capacity for our large volume target customers such as automakers. Also since wafer processing cost is on a per wafer basis, antibodies a significant cost reduction for our products as we scale up production. We recently began our first engineering run of the second-generation B-TRAN design. While it will take us a few runs to incorporate and finalize any learning from this effort. No significant process changes are expected also in the third quarter, we expect to begin the wafer runs will use for third party reliability testing and automotive qualification. This tends to be a lengthy process due to the time it takes to complete thousands of power cycles and all the other testing required to meet automotive standards. Completing this process will also help us with industrial customers since automotive standards are the most stringent testing requirements. The acceptance of a new technology with a large industrial customers as well as automotive OEMs and Tier 1 suppliers definitely benefits from being able to share the third party reliability and qualification data with prospective customers. We're not aware of any competing inherently bidirectional high-powered technologies that are using anything similar to our technology. Looking at our expanding B-TRAN patent estate. We currently have 87 issued patents with 40 of those issued outside the United States. Our current geographic coverage for our patents includes North America, China, Japan, South Korea, India and Europe with pending coverage in Taiwan, all representing our high-priority patent coverage geographies. As part of our product development and introductions, we've expanded our patent efforts to include what we believe to be high-value patents for our driver design and controls and double-sided packaging designs as both are unique due to the bidirectional nature of our technology. As a result of our continued innovations. Our list of pending B-TRAN patents is now 45. In addition, we treat the proven process flow we used to make our devices as a trade secret and work under strict confidentiality with our wafer fabrication partners. But even if a competitor studied our patents, they wouldn't have the know-how to be able to fabricate the device. The bottom line is we continue to execute on our B-TRAN commercialization roadmap and prepare for the significant sales ramp we're expecting initially in industrial markets, then followed by opportunities in hybrid and electric vehicles. We remain on track to achieve our 2024 milestones and look forward to continuous progress with existing relationships, new collaborations and several commercial announcements in the coming months. Now I'd like to turn the call over to Tim Burns to review our financials. Tim?
Timothy Burns
Thank you, Dan, and good morning, everyone. Second quarter 2024 cash burn was $2.2 million, up from 1.9 million in the second quarter of 2024 and up from $1.8 million in the second-quarter 2023. Our Q2 cash burn was at the low end of our guidance of $2.2 million to $2.4 million due to timing of spending and related payments. We also added $2.1 million to our cash balance in the second quarter due to the exercise of the over-allotment option by the underwriters from our late March public offering. In total, we raised net proceeds of $15.7 million from the public offering. We continue to manage expenses prudently and aggressively. We expect third quarter 2024 cash burn of approximately $2.4 million to $2.6 million and a full year 2020 for cash burn of approximately $8.5 million, net of an expected $1 million benefit from proceeds from expiring heavily in the money warrants. Cash and cash equivalents totaled $20.1 million at June 30, 2024. We have no debt and a clean capital structure. We recorded minimal revenue for the second quarter on low volume orders from the large companies evaluating our products for potential inclusion in their OEM products. Looking at the balance of 2024, we expect modest volume in commercial revenue from product sales and potentially development agreements depending on the timing of revenue recognition under any such programs. Operating expenses were $2.9 million in the second quarter of 2024 compared to $2.4 million in the second quarter of 2023, driven primarily by higher research and development spending as we were engaged with key fabs and added engineering personnel. We expect both research and development and sales and marketing spending to increase modestly in coming quarters due to 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 or the research and development activities and hiring the timing of equity grants and related stock based compensation expense will also cause variability in our quarterly operating expenses net loss in the second quarter of 2024 was $2.7 million compared to $2.3 million in the second quarter of 2023. At the end of June, we had 7,693,917 shares outstanding, 887,160 prefunded warrants outstanding, 977,313 options in stock units outstanding and 786,420 warrants outstanding. 444,180 of these warrants outstanding are set to expire in November, if not exercised beforehand. At June 30, 2024, our fully diluted share count was 10,344,810 shares. At this time, I'd like to open up the call for questions. Operator?
Question and Answer Session
Operator
Thank you. At this time we are conducting a question-and-answer session. (Operator Instructions) Brian Dobson, Chardan.
Brian Dobson
Thanks very much for taking my questions this morning on. So just to just to kick it off now, as you're looking out over the next 12 months, how do you feel about the macro-economic environment given call it recent market fluctuations, how confident are you in continued growth and what is your broader product demand landscape look like over the next 12 months?
R. Daniel Brdar
It's interesting. When we're working with our folks at the automakers who are working on models in the out years. It has a lot of noise around what's going on in the auto industry with plant closures and high cost of cars and cost of financing. But the group that we're working with are pretty focused because they're not working on the products are going to come out this year, the working on the products for the future. So we see really no short, no shortage of funding or focus in those areas. And the macro trend in the long term that really benefiting from is the adoption of electric vehicles, the need for EV charging, the adoption of renewable energy and energy storage. Those macro trends are there. They're going to go through their own growing pains. And obviously, some of those are really susceptible to project financing costs and interest rates. But in general, we haven't seen any impact or even get a sense from the teams that we're working with that they're being told to slow down what they're doing. So we're excited about that.
Brian Dobson
Yeah, very good. Thanks. So two, you're working with a third OEM now, how do you believe your work with tenants to OEMs has prepared you for this trial? And is there something unique about these three OEMs that are moving them to an early adoption versus others?
R. Daniel Brdar
Yeah, good question going through the process was the Stellantis has really helped us a lot with engaging the other automakers because we understand how they look at technology, we're understanding the kind of data they want, what kind of testing they want, how they want it packaged and presented. So I think it's really helped us come across as on a very professional company with these other automakers because we work so closely with the Stellantis team. So that's been really beneficial for us.
Brian Dobson
Thanks. And a follow-up to that, would you describe the margin opportunity in industrials compared with automotive? And what would be reasonable lead times from testing to implementation for both industrial clients and automotive volumes?
Timothy Burns
So in terms of time lines, I mean, from the industrial side, design cycles are roughly a year. So it's as we look at somebody converting some of these customers to design wins that's kind of the rough timeframe you need to look at. Now with the automotive companies, I would say it's not significantly different. It's at three-plus years, even with everything they've done to tried to speed up that design cycle for EVs. I still think that's probably what we're looking at in terms of the EV cycle, obviously have a head start on that cycle with Stellantis since we've been engaged with them now for an extended period, but it never will remain true in terms of gross margins, our overall target gross margin. So including mix is about 50% gross margins at scale. If we look at that, we actually think that the industrial opportunity is probably a little bit higher, higher margin for us, particularly in places where we're enabling technology like solid-state circuit breakers. We believe we're the best alternative in there probably isn't another very good alternative. So that's definitely opportunity for us. We would expect automotive to be less than 50% just because they're obviously extremely focused on cost. And that's really going to help drive EV adoption if they can bring them cost of their vehicles down.
Brian Dobson
Excellent. Thank you very much.
Operator
Thank you. (Operator Instructions) Kris Tuttle, Blue Capital -- apologies, Blue Caterpillar.
Kris Tuttle
Hi, thanks. Thanks for taking my question and then congratulations on the steady progress, and I wanted to understand a little bit more about the solid-state semiconductor application arm. And specifically, you've got Richardson and now RYOCHO show ties distributors. Are they in order for them to be effective today need to provide a set like field engineering services around packaging, the big trend into a fully functioning replace that on. So that's kind of my first question, sort of understanding what other pieces are involved in that that go to that part of the go to market?
R. Daniel Brdar
Yeah, what we provide them is the simple power module, which is already packaged up for electrical connection. We teach them about the application. We teach them about device so they can sell it and they're selling to customers that will ultimately make the circuit breakers. So we provide them the data that shows, for example, you can parallel devices to reach whatever rating you want. We provide them the information so they can teach the customers how to control it. So what they're really providing is a technical sales function. They don't actually have to do any kind of product modification or provide any kind of hardware software. It's really education about the application and how to use our device.
Kris Tuttle
Okay. Yeah, that's helpful. And then in terms of the I'm kind of looking at what's your device versus existing solutions. I understand, you know, about parallel, thermal efficiency, et cetera. But I'm with you, is there a cost differential here? And can you quantify kind of what it might look like in some of the applications that you started working on your device fully integrated versus the existing circuit breaker technology that's out there?
R. Daniel Brdar
Yeah, the existing circuit breakers that are out there. Unfortunately, there really isn't much in the way of solid-state circuit breakers at the industrial and utility level. And it is because of the fact that existing semiconductors like IGBTs, their conduction losses are too high so there's too much loss power. There's too much heat that has to be generated. So the conventional circuit breakers are electromechanical devices. And there's a couple of issues with those on the electromechanical devices, our basically contactors that open and when you open the contacts, you get an arc and that creates where so they need to have maintenance associated with them. But the bigger challenge that we're hearing from the customer base. The folks that want to design the solid-state circuit breakers is our utility system is changing. It wasn't originally designed for all this energy storage that's going in and distributed locations, all the solar, all the EV charging that's going to be put in. So there needs to be better circuit breakers that can act faster in the event that there is a fault that occurs at one of these installations and a solid-state circuit breaker can add literally orders of magnitude faster than a conventional electromechanical breakers. That's a big part of what's driving that adoption.
Operator
Thank you. I will now turn the call back to Jeff Christensen to read questions submitted through the webcast.
Jeff Christensen
Thanks, gentlemen, and thanks, operator. The first question is the largest ram charger Extended Range EV. with an advertised 690 mile driving range is slated to be debuted next year. Sales of extended-range EVs in China have more than doubled in the last year and extended range. EVs sales are projected to grow rapidly in the US in coming years. Do you view this as new potential trend as a threat or a benefit, Ideal Power?
R. Daniel Brdar
Actually to benefit because what they're doing with the chart, the RAM charger and across the industry is they want to address a couple of their key issues. One of those is, of course, the range of the vehicles. The other one is the time it takes to charge vehicles so what they're doing on the RAM charger on it already exists, I think in Porsche's vehicle and we know several other auto manufacturers are making this move themselves. They want to move from a 400 volt system for the batteries to an 800 volt system because that enables them to do a couple of things. One is they can actually drive the motors with higher voltage and lower current, which means there's less heat produced because it's really a function of current if there's less heat that's produced electronics last longer wiring harnesses get lower cost significantly cheaper. And most importantly, managing the heat during charging is one of the things that cases how long it takes to charge the car. So if you can target at higher voltage and lower current, you can charge it faster and they move to an 800 volt bus that really fits really well with hydropower because our we have a 400 volt ready device. So we're actually happy to see them going in that direction because addressing some of the market concerns with charging time and range. And this creates more opportunity for us where we can leverage the full voltage capability of our devices.
Jeff Christensen
Thank you. Our next submitted question is can some cool power modules be configured for the high voltage and current needed for high-power EV contract -- contactors?
R. Daniel Brdar
Yes, the nice thing about our devices is they can be paralleled and they exhibit a behavior from different than things like phosphates. If they have what's called a positive temperature coefficient versus a negative temperature coefficient. So that means if one device is feeling for some reason with a positive temperature coefficient, more power is sent to the devices that are lower temperature, in other words, not getting so hot in things like mask sets that are negative temperature coefficient. It actually ultimately ends up in a failure because the heart of the device gets the more current to conduct. So having devices, you can parallel with a positive temperature coefficient really allows you to string them together to whatever size rating you want to target for voltage and current, which is what gives you a lot of flexibility when you start looking at a line of solid-state circuit breakers, you can use the same core device and configure the products or whatever your market applications are that you're targeting.
Jeff Christensen
Thanks, Dan. We have several questions that have been submitted. If you have a question you can if you click on the Ask a Question button in the webcast portal. Our next submitted question is, does silicon carbide devices have much higher heat tolerance? How does the trend compete against the high tolerance of silicon carbide?
R. Daniel Brdar
Silicon carbide has a material or has a higher heat tolerance, but the package devices are typically limited to about 175 degrees C, our silicon devices are typically 125 to 150 degree C. The problem isn't the silicon carbide material. It's the packaging where you have a limitation has high temperature packaging has a lot of challenges. So we see people using silicon carbide. It's less for the higher temperature capability and more because their application requires faster switching than what you can do with any silicon device because it's faster switching is inherent to the silicon carbide material. The challenge with it, though, is know you've got to have higher heat tolerance if you generate more heat and silicon carbide devices have higher conduction losses. So they're going to have more heat to generate. And you've got to deal with the cost of that material. It's three to five times higher for a silicon carbide device versus a silicon device. So know that in the semiconductor world, there's always trade-offs in terms of what you get for performance versus cost.
Jeff Christensen
Thank you. Our next question is we'll be trying to be cost effective compared to 500 day mechanical high-voltage contactors that can be as low as $120 for a single unit?
R. Daniel Brdar
Yeah, high-power side, what we're hearing from the automobile OEM there, they're actually higher cost. I ahead today I guess just because of some of the changes that it require for high voltage or high-speed charging, our product will be competitive. We've gotten really good feedback from the automobile OEM in terms of what they're looking for in terms of the cost target and the performance level, we can obviously Parallel die to reach whatever the average rating is that they want to design for the contactor plus what the OEMs are telling us is they also like the fact that. The contactor can now at orders of magnitude faster than the than the traditional mechanical contactor and you have the added benefit of it being programmable and no context-aware or fuse. And that combination of reliability, programmability and speed is pretty attractive in terms of what they need to address some of the demands, particularly as they go to are voltage buses and faster and faster charging on the vehicles.
Jeff Christensen
Thank you. Our next question is our Richardson (inaudible) show have similar agreements with Ideal Power?
R. Daniel Brdar
Yeah, they're very similar from what we like is that they're very complementary companies. They both have great technical sales teams they're very good at demand creation are very good at bringing new semiconductor technology to their customer base, but have really complementary geographies in terms of where they focused and they're under our agreements with them, they are compensated the same way. So, we think we do it and we're going to really be a nice complement to our own business development team to reach those customers, that would be hard for us to reach on our own.
Jeff Christensen
Thank you. Our next submitted question is in general, what would be the argument for not purchasing Ideal Power Products. They need to be proven to meet quality standards. Are they more expensive than status quo?
R. Daniel Brdar
But we'll actually, as I mentioned in the prepared comments, we're going to actually start a third party testing for automotive qualification. The reason for not purchasing that I would expect to see is engineers are by nature, conservative and the adoption of new technology doesn't happen quickly. We need to understand the technology. They didn't learn about the trend in school like they probably learned about it. What it must fit is these you don't have years and years of devices operating out in the field. So it's the conservative nature of engineers that I think will probably be the issue that any new technology faces of GAN devices have seen that silicon carbide when they first are coming to market, they saw that also. So it's really just part of that new technology adoption issue that would be a reason to not purchase it. Our costs will certainly be competitive on and we'll certainly have the same codes and standard certifications that other traditional devices will have. So it's just that education they have to go through. But any new technology you bring to market you the module size reduction is great news, but will that impact customer testing timelines it won and it actually came from some of the customer feedback is they got to know the device we shared with them. What the layout internal to it is they may want to know can we make it smaller since we're pretty conservative in the design that we did for it on. So really reflects what they were looking for to actually have it physically match the size of an Infineon package that's out there. So that helps them be a little bit more plug and play in terms of and their own products to be able to keep the size as small as possible and just get the benefits of the trend. So I don't think is going to affect that at all. I think it's actually going to help with the acceptance of it since it really reflects the feedback we've got from multiple customers that we're already testing are the first version of our Simcoe module.
Jeff Christensen
In 1P train be used for the positive and negative sides of any EV contactor feed due to B-TRAN inherent by directionality?
R. Daniel Brdar
We don't know exactly how the OEMs are going to want to configure the contactor itself. We're in the early stages of getting them up to speed on it. They're looking at what their options are in terms of how they want to use the device. So as we get further along with the OEM that we announced here recently, we'll have a better feel in terms of how they want to configure it.
Jeff Christensen
Thank you. you can submit additional call, we have other questions and you can submit questions by clicking on the Q&A button. How would your strategy, how would your strategy change in the face of a potential global glut silicon carbide in much lower silicon carbide, much better prices?
R. Daniel Brdar
What we know that's going to happen over time. There's a lot of silicon carbide capacity that's being built out there. Silicon carbide still though have some core issues in terms of materials challenges that need to be dealt with. We will be lower cost. I mean, silicon is a lower cost materials already in huge volume in terms of availability. Our wafers are not anything special. It's easier to process. Silicon carbide is a very hard material physically in terms of polishing it and processing wafers. But as silicon carbide gets lower cost and as the quality of the material gets better, we'll make a silicon carbide B-TRAN. There's nothing that stops us from starting to do work in those advanced materials other than the fact that we just see high cost materials challenges still haven't been solved yet.
Jeff Christensen
Thank you. Looks like again, it looks like there's no other questions. Do you have any closing remarks?
R. Daniel Brdar
I just want to thank everybody for joining today's call in an exciting quarter as we added another global automotive OEM, added a second high-quality distributor for our products qualified, a second high-volume wafer fabricator saw multiple customers from our Test & Evaluation Program transitioned to placing orders and increasing the power rating of our products. So we look forward to continuing commercial announcements before our next update call. And with that, operator, you can end the call.
Operator
Thank you. This concludes today's conference. All parties may disconnect. Have a great day.