Ideal Power Inc. (IPWR) Q4 2022 Earnings Call Transcript

Call Start: 16:30 January 1, 0000 5:10 PM ET

Ideal Power Inc. (NASDAQ:IPWR)

Q4 2022 Earnings Conference Call

March 2, 2023 16:30 ET

Company Participants

Jeff Christensen – Investor Relations

Dan Brdar – President & Chief Executive Officer

Tim Burns – Chief Financial Officer

Conference Call Participants

David Williams – The Benchmark Company

Operator

Good day ladies and gentlemen and welcome to the Ideal Power Fourth Quarter and Full Year 2022 Results Call. At this time, all participants are in listen-only mode. At the end of management’s remarks, there will be a question-and-answer session. [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, Sarah and good afternoon, everyone. Thank you for joining Ideal Power’s fourth quarter and full year 2022 conference call. With me on the call today are Dan Brdar, President and Chief Executive Officer; and Tim Burns, Chief Financial Officer. Ideal Power’s fourth quarter and full year 2022 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 industry 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 industry information.

Now I’ll turn the call over to Ideal Power’s President and CEO, Dan Brdar. Dan?

Dan Brdar

Thank you, Jeff. Good afternoon, everyone and welcome to our fourth quarter and full year 2022 financial results conference call. I’ll first give you an update on our progress since the start of the fourth quarter and priorities for 2023 to commercialize our B-TRAN semiconductor technology. And then Tim Burns, our CFO, will take you through the numbers, after which we’ll take your questions. So let’s begin. We’re excited to have announced the introduction of our first commercial product, The SymCool power module. The SymCool is a multi-die B-TRAN module targeted primarily for the solid-state circuit breaker market. Since the announcement of our DoD funded project with the U.S. Navy and NAVC for a B-TRAN-enabled solid-state circuit breaker, we’ve had an increasing number of companies looking to learn more about our technology. Offering the initial shipment of working devices to our partner on the project, DTI, we’ve been approached by multiple industrial companies looking to participate in our technology evaluation program, we are focused on bringing low-loss circuit breakers to the utility and industrial markets.

This strong market pull for our technology, where we can be an enabling technology for solid-state circuit breakers drove our decision to make this our first commercial product. Speaking of solid-state circuit breakers, let’s turn to our work with the U.S. Navy and our partner diversified technologies. In the fourth quarter, we shipped additional B-TRAN devices to DTI in preparation for a full-scale medium voltage direct current or MVDC circuit breaker demonstration. Additional wafers are now being fabricated at both of our development wafer fabrication partners. The first of these runs is nearing completion and these wafers will be diced and packaged into devices and then tested prior to further deliveries to DTI. We expect to deliver packaged B-TRAN to DTI for inclusion in the MVDC circuit breaker in the first half of 2023 and will continue to support the program throughout the demonstration of the B-TRAN-enabled circuit breaker.

The objective of this program post demonstration is for DTI to introduce a family of circuit breakers, incorporating B-TRAN for sales to military, industrial and utility markets. As we mentioned on our last call, during the fourth quarter, we entered into a development agreement with a global top 10 automotive OEM. This is the second global top 10 automaker working with us as we previously announced a different top-down automaker participating in our customer technology evaluation program. We’re partnering with this automaker’s advanced technology development team to develop a custom B-TRAN power module for use in electric vehicle drivetrain inverters in the automakers next-generation electric vehicle platform. We expect to complete Phase 1 of that development program in the second quarter. Progress to date has been very good. And as a result, we’re already in discussions with the automaker on the scope for Phase 2 of the program.

Phase 2 will focus on the integration of B-TRAN dies into the power module as we collaborate with an innovative packaging company also selected by this automaker. We went through a considerable technology competition to be selected for the program and we’ll need to continue to meet program milestones and performance expectations as the program progresses. What we’ve learned during the technology competition and our ongoing discussions with the automaker to date reinforce the competitive advantages we knew we could bring to electric vehicles. The 2 primary issues automakers are facing are high electric vehicle costs and continued range anxiety from customers due to the early stage of our charging infrastructure build-out. The EV cost challenge has been compounded a rising battery costs due to fivefold increase in lithium since mid-2020.

Semiconductor technology that can improve vehicle drivetrain efficiency can play a significant role in improving EV range. Unfortunately, improving traditional semiconductor performance has focused on moving to wide bandgap materials such as silicon carbide which only exacerbates the cost problem. The silicon carbide devices are much more expensive than silicon devices. With B-TRAN moving into commercialization, automakers are finding there’s a lower-cost path to improved vehicle range. In addition, since Brad is an architecture, it too can move to silicon carbide as wafer cost, processing and quality improve over time. As we look forward for 2023, there are several key objectives we’re focused on that will enable you to track our product development and commercialization progress.

This year, we expect to: one, complete the full process flow run at a high-volume wafer fabricator to prepare for ramping our commercial product sales; two, ship packaged devices under the NAPS program for incorporation into a medium voltage DC circuit breaker for the demonstration. Three, complete Phase I and win Phase 2 of the custom module development program with a global top 10 automaker; four, complete fabrication and begin sales of our first commercial product, the The SymCool Power module. Five, complete the design and introduce our second commercial product, an intelligent power module. Six, add additional potential high-volume customers to our B-TRAN test and evaluation program and seven, deliver the customer kits inclusive of a packaged B-TRAM device, driver, test board and safety enclosure to participants in our B-TRAM test and evaluation program.

While we’ve already discussed the Navy program and the global automaker custom module, let’s look at the additional 2023 objectives in more detail. Moving from development wafer fabs to production fabs is a critical next step. As part of our commercialization strategy, we need to have fabrication capacity in place to support our customers’ needs. We also need to make sure that our customers are protected to the extent we can from supply chain shocks and disruptions as well as exposure to regions of the world that do not operate under the same guidelines we do with respect to intellectual property. The prepared for commercial product shipments earlier this year, we started a full process flow engineering run at a wafer fabrication partner with high-volume production capability. This run is proceeding very well and we expect to complete the engineering run in the second quarter.

Upon successful qualification, this fabrication partner will be able to support our sales as we ramp to higher volumes in 2024. Also, we’re about to engage a second high-volume wafer fabrication partner to complete a similar full process flow run. The second wafer fab is very experienced in manufacturing bipolar devices such as IGBTs. These 2 sources are in very different parts of the world with world-class experience and capabilities and are eager to be engaged in a new technology such as B-TRAM. Dual sourcing for wafer fabrication with no exposure to China will provide us with sufficient supply capacity from the large customers we’re engaging. Our dual sourcing strategy will allow us to proactively secure necessary production capacity, components and services from partners in disparate geographies, mitigating supply chain risk.

Looking to commercial products. We plan to introduce our second commercial product this year which will build on the multi-die packaging design of SymCool and the bidirectional driver we designed for our customer technology evaluation program. This product will be an intelligent power module that will add a multi-die driver to the The SymCool power module design. This product will target renewables, particularly renewables such as solar and wind, coupled with energy storage, stand-alone energy storage and other industrial end markets. The driver and packaging for this product are already in design and we’re on track to launch our second commercial product in the third quarter.

Moving on to our evaluation program. We are now collaborating with a global Tier 1 automotive supplier as part of our technology evaluation program. This Tier 1 supplier will evaluate B-TRAN for use in its electric vehicle inverter, bidirectional charging and circuit protection applications. Their interest was sparked by the announcement of our custom module development agreement with a global top 10 automaker. Our technical and business development teams are meeting on a regular basis as we plan to deliver B-TRAN samples for evaluation to the Tier 1 automotive supplier in the second half of 2023. We’re fabricating additional customer kits inclusive of a packaged B-TRAN, device driver, test board and safety enclosure to facilitate and accelerate the evaluation process. After delivery of the kits and completion of testing and evaluation by prospective customers, we’ll gather valuable feedback on their product requirements and potentially secure product development or other commercial agreements. We’ll then use this feedback to determine the requirements for the various customers’ applications and to drive our development road map for future B-TRAN products.

As you know, our test and evaluation program will remain an embedded process in our sales and marketing effort and a source of input to our next generation of products. We’ll continue to add additional potential customers to the program. Since the start of the fourth quarter, we submitted proposals and concept papers for government funding opportunities with the Army, the Department of Defense, DoD’s Defense Innovation Unit and established collaborations with universities and commercial activities to pursue additional government funding solicitations as they’re released. We’re also preparing submissions through the Department of Energy, Department of Defense, Air Force and NASA and collaborating with wafer fabrication partners and commercial entities to explore funding opportunities under the CHIPS Act as the programs are defined and open for the solicitation.

With the completion — the competition for these programs is high, they provide us an opportunity to collaborate with current fabrication partners and prospective customers, both to advance the state of our technology and pursue additional application-specific demonstrations of B-TRAN. Looking at our expanded B-TRAN patent estate, we currently have 72 issued B-TRAN patents, with 31 of those issued outside of the United States and 24 pending B-TRAN patents. Our current geographic coverage on our patents includes North America, China, Japan, South Korea, India and Europe, all of which represent our high-priority geographies for patent coverage. As part of our product development and introductions, we’re expanding our patterning efforts to include what we believe to be high-value patents on our driver and packaging designs as both are unique due to the bidirectional nature of our technology.

Moving on, we recently issued a new B-TRAN white paper. This white paper includes recent testing results using our newly designed driver and devices using our double-sided packaging. It shows switching characteristics and wave forms using bidirectional double pulse testing which is important for pet and customer technical teams. A link to the new white paper is available in the press release we issued early this week. We will attend this year’s Applied Power Electronics Conference, or APAC, in Orlando, Florida from March 19 through 23rd. Our technical paper, B-TRAN optimization and performance characterization was selected for presentation at the conference. As you may recall, last year, our paper was selected by the Pentacle community for an award as one of the best technical presentations. So we expect considerable interest in this year’s paper and our progress.

In summary, we’re thrilled that we introduced our first commercial product. We’re selected for a custom module development program with a top 10 global automaker and are now collaborating with a Tier 1 automotive supplier. We’re also very much on track to meet the key milestones and objectives for this year that I outlined earlier. B-TRAN’S unique architecture offers the advantages of inherent bidirectional switching capability, reduced switching and conduction losses and improved the more compact thermal management requirements, potentially leading to lower user costs for OEM products, incorporating B-TRAN and high-growth and B-TRAN-enabled applications. B-TRAN has the potential to displace conventional power semiconductor solutions in many applications, including electric vehicles, renewable energy, energy storage, solid-state circuit breakers and motor drives.

Now, I’d like to hand the call over to Chief Financial Officer, Tim Burns, to review our fourth quarter financial results. Tim?

Tim Burns

Thank you, Dan. I will review the fourth quarter and full year 2022 financial results. We recorded $17,000 in grant revenue for the fourth quarter and $203,000 in grant revenue for the full year with offsetting cost of brand revenue as we continued our work on the Navy funded NAVC program. On December 31, grant revenue of $37,000 remain to be recognized under this program. Operating expenses were $2 million in the fourth quarter of 2022 compared to $1.4 million in the fourth quarter of 2021, driven primarily by higher research and development expenses due to additional semiconductor fab runs and costs related to the development of our driver, packaging and recently launched The SymCool power module. Operating expenses also reflect higher stock-based compensation expense.

Although we expect higher research and development spending in 2023, we continue to expect some quarter-to-quarter variability in operating expenses, particularly our research and development spending due to the timing of semiconductor fabrication runs and other development activities and hiring as well as the potential impact of additional government funding. We expect to keep general and administrative expenses in 2023, close to 2022 levels, excluding the impact of stock-based compensation expense, despite the impact of inflation on the cost of services. Sales and marketing spending is expected to increase modestly in 2023 due to hiring and costs associated with commercialization efforts, including new product launches. Net loss in the fourth quarter of 2022 was $1.9 million compared to $1.4 million in the fourth quarter of 2021. Full year 2022 net loss was $7.2 million compared to $4.8 million in full year 2021.

Fourth quarter 2022 cash burn was $2.1 million, consistent with our guidance of approximately $2 million to $2.1 million. Full year 2022 cash burn was $6.8 million, again consistent with our guidance of approximately $6.7 million to $6.8 million. We expect first quarter 2023 cash burn of approximately $1.8 million to $2 million and full year 2023 cash burn of $8 million to $8.5 million. Cash and cash equivalents totaled $16.3 million at December 31, 2022. Given our planned cash burn which remains modest, we have ample liquidity on our balance sheet to fund operations through 2024 as we commercialize our technology and also to be a well-capitalized partner for the broad spectrum of companies that are either already participating or that we expect to participate in the testing and evaluation of our B-TRAN technology as well as the global top 10 automaker that has engaged us for a development program. At December 31, we had 5,924,680 shares outstanding, up slightly from the end of September and 1,04,248 warrants outstanding, unchanged from the end of September. Including 811,614 stock options, restricted stock units and performance stock units outstanding, we had 7,776,542 diluted shares outstanding at December 31.

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. Investors conclude with their questions within the meeting webcast by taking them into the Q&A button on the right side of your viewing screen. Our first question comes from David Williams with Benchmark.

David Williams

Congrats on the progress you guys are definitely making a lot of headway and it’s fantastic to see so congrats there. I guess then, maybe one of my first question is just kind of around some of the comments that were made this week from Tesla and just discussing the silicon carbide cost and the reduction that we’re able to make there. Do you think as you kind of look out across your product and your capabilities and kind of what you’re seeing, do you think that you’re silicon alternative in the silicon carbide is part of that discussion? Or just kind of thinking about your content there, your capabilities? Any color would be very helpful.

Dan Brdar

Yes. Sure. Great question, David. For those of us that don’t know, Tesla had come out earlier and said they wanted to reduce the silicon carbide in their next generation of vehicles by 75%. And it’s all about cost. It goes to the comments I made earlier, EVs have a significant cost problem. The semiconductors and electric vehicles are the second highest cost component after the battery. So when you’re dealing with things like silicon carbide which are in order of magnitude more expensive, you get improved performance at a very high cost. So you get some improvement in range but you pay for it in cost. We think that presents a great opportunity for us because we can bring a really high level of performance beyond what you can get with a traditional silicon device without incurring the cost of silicon carbide.

When we went through the technology evaluation with the Patton automaker that we’re doing a custom module for there were silicon carbide devices that we were competing against. And because they — this automaker is not focused on bringing out 100,000 vehicles, we want. I think the automakers is they really want to get broad adoption are becoming more and more focused on cost and it creates an opportunity for high-performance technologies like ours that can be done in silicon. And then as silicon carbide matures as the quality and cost of wafers come down and processing costs come down, the transit architecture. So we can move to silicon carbide as well. But for now, I think we present an alternative that the automakers are looking for just because silicon carbide is a big cost burden on products that are still made in relatively small volumes when you look at electric vehicles.

David Williams

That’s very, very helpful. And then maybe just on the – since you released the first product, just can you discuss a little bit of the traction that you’ve seen? And anything that maybe surprised you or new customers or any applications that you’ve seen that have come in?

Dan Brdar

Well, it’s really targeting the solid-state circuit breaker market and it was really driven by the discussions that we were having with the large industrial players that wanted to also focus on for consolidated circuit breakers. The project we’re doing with the Navy are all discrete devices that are packaged individually and they’re putting a series parallel configuration to make the 12-kilowatt rating for the breaker. And the feedback we got was that the industrial companies were looking for something that had a higher rating, a multi-die approach where we parallel multiple die and gave them a building block, so they can make whatever size they want without needing to make so many connections if they were individual devices. So it was really driven by the feedback that we were already getting from the players that want to make solid-state circuit breakers.

David Williams

Great. And maybe just from a geographical standpoint, it sounds like you made a lot of progress in terms of the sampling and new customers. Can you talk maybe from a geographical perspective where you’re seeing the greatest interest in demand? Is this Asia-based or European or maybe even North American-based?

Dan Brdar

Most of the companies that we are working with are global. So they have a presence in the U.S., Europe and Asia. So we’re really looking — because our team is small and we are concerned about bandwidth as more and more people learn about the technology, we’re really not spending much time on small companies because it takes almost as much time to support a small company on the technology it does someone new. So we are really focusing our partnering on players that are names that people would recognize in terms of the companies and that are global in the products that they bring to market.

David Williams

Okay. And one last one for me, if you don’t mind. Just kind of thinking about the time line to revenue on some of the automotive stuff that you discussed and some of the other programs that are in place. When do you think we should start beginning to see some real revenue ramp? Is that this year? Or should we expect that maybe later into next year?

Dan Brdar

You’ll see revenue on the industrial segments, things like renewables and motor drives, those sort of things in 2024. You’ll see some modest revenue later in 2023. But when you think about it and customers have to go through a design cycle to incorporate any new semiconductor device. So once they’re through that process, it will – the revenue will start to ramp in ’024. On the automobile side, the stated objective of the program with the global automaker is a production-ready product by mid-2025. So I would expect that real revenue from them would follow shortly after that. And they actually consume a lot of parts just to go through all their certification and testing and qualification. So we’ll actually even see some preproduction revenue on the automobile side starting probably in the second half of 2025.

Operator

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

Jeff Christensen

Thank you, Sarah. First question that’s been posted to the Q&A button is, could you describe the development agreement with a top 10 global automaker in more detail, including the phases of the program?

Dan Brdar

Sure. We were selected from several competing technologies. And so folks that know us know that we were getting pretty frustrated because it was just a very long evaluation process took over a year. As you can imagine, the automakers are looking at all the technologies that are out there as they think about how are they going to bring out products that are differentiated from what’s already in the market, how are they going to manage costs, how are they going to improve range. So we were competing against a whole variety of technologies, including some self-care technologies. We were selected for that program. They also selected an innovative packaging company that was – packaging was also going through its own selection of technologies and innovation. And then we’re going to be married together. The way the program itself works, Phase 1 is really up doing our part and the packaging firm doing their part independently, where we provide them test data, we provide them devices and we provide them a bunch of technical documentation as it relates to the technology itself.

Then Phase 2 which we expect to move into here in the not-too-distant future, will be us providing devices to the innovative packaging company who will incorporate those into the packaging design that they have come up with. And then Phase 3 will be that module with B-TRAN devices being extensively tested to meet the auto certification standards which are pretty substantial. The program is really on a pretty fast time line to try and get this thing to the point where it is production ready by 2025. That is the stated goal of this program. So it’s really us and the packaging company working independently in Phase 1 and us providing devices to them for incorporation into the module in Phase 2 and then Phase 3 is really all about the testing and certification of the module itself.

Jeff Christensen

Our next question is about the target markets and more information about it. When do you expect each of your target markets to generate revenue? And how do you foresee the revenue opportunity and ramp for each market?

Tim Burns

I’ll just to expand a little bit on what Dan shared for David’s question earlier, the longest path to revenue is the EV segment but it’s also the largest opportunity. As Dan had mentioned in that development program with the top 10 global automaker, the target is a production-ready module in 2025. So it’s still a couple of years out. If you look at our SymCool power module, that’s targeted at solid-state circuit breaker market. So we expect initial sales of that product here in the second half of the year and we expect that revenue to start ramping in 2024. When you look at other target markets, renewables, renewables with storage, EV charging, we think those would be a logical fit for our second commercial product, the intelligent power module that we expect to launch here in the third quarter of this year. So that revenue would start to ramp and likely in 2024 as well as it gets through that design cycle.

So we’ll provide some more specific revenue expectations and we get a little bit further along with these prospective customers. But I assume through the test and evaluation program, we’ll really get a good handle on their technology evaluation processes, their product design cycles as well as their commercial plans and we’ll look to be able to provide more specific guidance here in the future.

Jeff Christensen

Thank you. Now that you’ve introduced your first product, do you still foresee government funding to be part of your go-forward commercialization strategy? And how is the company impacted by the chip act?

Dan Brdar

I’ll do this one. Yes, we actually think that government programs are a good opportunity for us. It helps cover some costs that we would spend on development in our own. It gives us the ability to partner with other technology companies and customers, particularly for things that are application-specific opportunities so that we can turn those into some longer-term relationships and really helps us stay connected with where some of the major players are going, whether it be on the application side or on the technology development side and we see the government continuing to want to spend quite a bit of money on energy technologies and now semiconductors with the Chips Act. We think the Cytec is going to be favorable for us. It’s still taking shape.

What is going to happen first from our understanding of discussions we had as recently as this week is the government is going to form regional hubs that are really sort of anchored by wafer fabricators. And then people will be associated with those hubs, whether they’re universities, technology providers or semiconductor companies like ourselves. And then we expect to submit proposals related to target applications as well as some longer-term silicon carbide development under the Chip Act as the funding programs get put in place and they start to roll out some other solicitations connected to the chips Act through DoD and DOE.

Jeff Christensen

Thank you. We received some really good questions. We have more coming. And in the meantime, if investors, you can submit your questions anytime within the meeting webcast by typing them into the Q&A button on the right side of reviewing screen. The next question is, how has semiconductor – how is the semiconductor supply chain disruptions impacted the company to date?

Dan Brdar

And what will be the impact as you commercialize the technology and start to ramp volume.

Tim Burns

Yes. So on the supply chain side, I mean, the disruptions have had little impact actually on us to date. So we’ve intentionally made sure that we’re dual sourced, not tied to a specific geography. And we also have things like wafers. We ordered wafers well in advance, so there wouldn’t be any disruption to our wafer fabrication runs. I would say the bigger impact in the semiconductor supply chain disruption is really consumer electronics. So that’s where you probably saw the greatest impact. But for a company like us, it’s in power and we’re still operating in relatively low volumes in terms of number of wafers we’re processing, there really wasn’t a significant impact. I guess looking forward as we start to ramp volumes in 2024, we don’t expect our commercialization efforts to really be impacted by the semiconductor supply chain disruption that’s really working itself out as we speak. And we’ll continue to make sure we have a dual-source strategy, continue to make sure that we have suppliers in different geographies, just for geopolitical risk. And we’ll just keep dual sourcing as a key part of our overall strategy.

Jeff Christensen

This comment and question was posted to the portal. In my discussions with Ideal Power shareholders, the investing public is fixated on automotive only, even though your technology will span multiple economic sectors and industries. What can you tell us that will help appreciate the broad economic potential of B-TRAN?

Dan Brdar

So yes, electric vehicles are obviously getting a lot of buzz just because it’s one of probably the 2 macro trends that are really driving growth in power semiconductors. But right now, renewables is already over $1 billion IGBT market. It’s already enormous market. Energy storage is becoming more and more prevalent and that will be paired with renewables. So that’s a very large opportunity. The circuit breaker market itself is enormous. Now solid-state circuit breakers were really the enabling technology. So we’ll have to see what we can displace in that market. The filler circuit breaker markets over $25 billion in total. There’s the EV charging infrastructure that’s going to be put in place. So there’s a lot of significant opportunities for the technology. It’s really any application that requires power semiconductor devices and we expect to generate significant revenue from areas other than electric vehicles and earlier than we will for electric vehicles, even though EVs is obviously a great long-term opportunity.

Jeff Christensen

Thank you. Will the phases essentially be the same for all automotive OEMs, please provide additional information on the definition of Phase 1. And would milestone payments be triggered after Phase 1 or Phase 2?

Dan Brdar

Yes. The automakers are each approaching things a little bit differently. Some are doing the packaging design for modules, for example, in-house. Some are relying on third parties. So they each are going to preach us a little bit differently but what we’re seeing pretty consistently is rather than relying solely on the Tier 1 suppliers. They’ve all seemed to have created some very substantial technical themes internally to assess technology and to do design work, particularly as it relates to high power sections of the EV like the drivetrain, all really focused on how to shorten the design cycle because they really don’t want to get into the 5-year traditional design cycles. They’re really looking to take a couple of years out of that. So it gives us some opportunities to, I think, really collaborate with some pretty innovative companies and approaches.

Tim Burns

And then on the milestone payment side, so there’s relatively modest revenue associated with the first couple of phases of the program but it is based on one or more milestone payments for each phase. That’s still a negotiation for Phase 2 but likely for Phase 1, it will be a single milestone payment.

Jeff Christensen

What do you estimate your tax loss carryforward will be at the end of fiscal 2023?

Dan Brdar

So we’re still doing our taxes here for this year that just ended. But I think we had a carryforward of in excess of $40 million in growing. So it’s pretty substantial. We have not done any kind of analysis to see under the tax code, whether we’ve ever triggered as a company a change of control with capital raises which is an analysis we would have to do to really confirm that full carryforward but it is pretty sizable.

Jeff Christensen

How do you define top 10 automaker? Unit sold market cap revenue?

Dan Brdar

Units sold because that’s what really matters to us is, how many vehicles are they selling because that really drives the size of the opportunity for us as a supplier to them?

Jeff Christensen

Thank you. Any update on the circuit breaker project for DOE you were mentioning a while ago with DTI.

Dan Brdar

The circuit breaker that we were doing with BTI for the Department of Energy, we won the Phase 1 award, successfully completed that. DTI submitted the proposal for Phase 2 but Phase 2 actually didn’t get selected. And the only negative feedback that they got was there was concern on DTI’s ability to be a significant supplier to the utility sector because they’re not traditionally a big supplier to them. They’re really more successful in terms of the government marketplace. And since there’s so much competition for these, just that one negative was enough to result in us not getting selected for Phase 2. Now for us, what we’re providing and what we’re doing, whether it is a DC circuit page for the military or whether it’s an AC circuit breaker for the Department of Energy for us, the work is exactly the same.

Jeff Christensen

Thank you. My understanding is Enphase researchers have started using gallium nitrate to improve power electronics. Is this conceivable that this material could be used for Ideal Power’s Power Switch in addition to silicon and silicon carbide? Has any test been done in that regard?

Dan Brdar

Yes, gallium nitride will take quite a while for a couple of reasons. One is gallium nitride is — does it really well in terms of very fast switching for lower voltage, lower power applications, things like power supplies for consumer electronics and low-power applications like microinverters, like what Enphase is doing. It’s going to be a while before that, that technology has advanced enough that it can really be used in high-power applications. And there’s also a challenge in making vertical structures in GaN, the ability to figure that out from a fabrication standpoint is something that people haven’t been successfully doing that yet. So I think for us, GaN, for us or for any high-power application is quite a ways off in the future and it has its own set of cost issues also as a wideband gap material.

Jeff Christensen

Thank you. We do not have any other questions. Dan, do you have any closing remarks?

Dan Brdar

I just want to thank everybody for joining us on the call today. We made great progress last year in our path to commercializing our technology. And our talented team is on track for a very successful 2023. We’ll continue to actively share our story with the investment community as we move forward in executing our milestones for this year. We’ll be participating in 4 investor conferences in March. Information about each of those conferences available in our press release today and we hope to speak further with those of you within the conferences. So at that point, I’d like to thank people for joining us and we will talk to you again next quarter.

Operator

Thank you. This concludes today’s conference. All parties may disconnect and have a great day.