Good day, everyone and welcome to the Ideal Power Second Quarter 2020 Results Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Carolyn Capaccio of LHA. Please go ahead, ma’am.

Thank you, and good afternoon. Thank you for joining Ideal Power's second quarter 2020 conference call. With me on the call are Dan Brdar, President and Chief Executive Officer; and Tim Burns, Chief Financial Officer. Ideal Power’s second quarter 2020 press is available on the company's website at idealpower.com. Before we begin, I'd like to remind everyone that the statements made on the call and on the 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 will turn the call over to Ideal Power's President and CEO, Dan Brdar. Dan?

Thank you, Carolyn. Good afternoon, everyone, and welcome to our second quarter 2020 conference call. I’ll begin by giving you an update on Phase two of our commercialization program, and our recently announced U.S. Navy sponsored contract and outline our priorities for the rest of the year and Tim Burns, our CFO will take you through the numbers. Before we get started, a quick note on COVID-19. At early May, our staff returned to the office upon expiration of the Texas stay-at-home order and we are observing safety protocols and best practices including wearing masks, practicing social distancing, and following all applicable guidelines to keep our teams safe. Additionally, our fabrication and device packaging partners and key suppliers continue to operate and are producing parts for our testing and evaluation, and to support our partnering and demonstration efforts, we are performing and enhancing our internal device packaging capabilities and continue to leverage our partners external equipment in facilities as necessary to supplement our capabilities. Overall, the impact of the pandemic has been manageable without significant disruptions. Our supply chain remains intact and our development and commercialization timeline remains on track. During the second quarter of 2020, we significantly advanced Phase Two of our B-TRAN commercialization plan, which is entails the fabrication of parts through delivery of samples to potential partners for evaluation with respective development. As we previewed to you on prior calls and announced earlier this week, in June, we issued our first U.S. government funded demonstration project. We signed a $1.2 million contract to partner with diversified technologies or DTI of the development and demonstration of a B-TRAN-enabled direct current circuit breaker as part of the U.S. Navy’s strategic focus on ship electrification. .: It also allows for distributed power on ships making them less vulnerable and reduces…

Thank you, Dan. I will read second quarter 2020 financial results. In the second quarter, we recorded a small amount of grant revenue with offsetting cost of grant revenue as we signed and began work on the DTI contract in late June. Second quarter 2020 operating expenses were $0.8 million, compared to $0.9 million in the second quarter of 2019. The decrease in operating expenses was due to lower general and administrative expenses, including lower legal fees, and lower facilities costs, due to the sublease we entered in during the third quarter of last year. Second quarter 2020 net loss was $0.8 million, compared to $1.3 million in the second quarter of 2019. The decrease in net loss is primarily due to a $0.3 million loss from discontinued operations in the second quarter of 2019 associated with the PPSA business that we divested in September of 2019. We also had a lower loss from continuing operations due to reduction in our operating expenses. Second quarter 2020 cash used in operating activities was $0.7 million, slightly lower than cash used in operating activities in the second quarter of 2019. Cash and cash equivalents totaled $1.8 million as of June 30, 2020. During the second quarter, we receive a $0.1 million Paycheck Protection Program loan to temporarily subsidize payroll and facilities costs in a business landscape impacted by the COVID-19 pandemic. We expect the loan will be forgiven, but do not provide assurance that will be granted forgiveness of the loan in total or in parts. And as a note, long-term debt outstanding at June 30, 2020 was $0.1 million. As a reminder, as we are singularly focused on development and commercialization of our B-TRAN technology, we are well-positioned with the strengthened balance sheet and an asset light operating model. Our burn rate remains approximately $0.7 million to $0.7 million in cash per quarter, subject to both the timing of and variability in expenditures and refinement to the B-TRAN development and commercialization plan. As Dan mentioned, on August 5, we completed an early warrant exercise transaction with certain of the company’s Series A warrant holders. The transaction raised approximately $2.5 million of net proceeds strengthening our cash position by enabling the orderly exercise of the warrants. We intend to use the net proceeds to fund B-TRAN commercialization and development and for working capital and other corporate purposes. In the transaction, Series A warrant holders were issued new Series C warrants to purchase up to an aggregate of 705,688 shares of the Company’s common stock at an exercise price of $8.90 per share, through a private placement, as an incentive for them to exercise their Series A warrants early. At this time, I would like to open up the call for questions. Operator?

[Operator Instructions] We’ll take our first question from Don Slowinski with Winslow Asset Group.

Good afternoon. Thanks for taking my questions. Dan, in your June presentation, you had a 5x proven conduction loss improvement and I assume that since this NAVSEA contract is a 12KV system that you can’t get that type of improvement. Can you talk about the different types of improvements that B-TRAN offers in the different markets that you are addressing? And then, just looking to your pipeline and talk about what you think the low hanging fruit is and how you could plug that in?

Sure. The 5x is looking at a true bidirectional switch. What we are doing and you think about the military and what their needs are in terms of applications and robustness, we have been conservative in partnership with DTI in terms of how we want to rate these devices. We want to make sure that we have a good demonstration. So, we are actually going to be rating them pretty conservatively. We had a review with the navy as recently as yesterday and it’s pretty close to them that the potential for the technology is much more than the 50% that we are saying here. But we don’t want to set expectations that we can’t meet. The driver for them and for anybody who is going to use DC systems or these conduction loss issues, so, for the navy it’s a little bit unique and that they actually want a bidirectional system. Because they want to be able to have zones on the ship where they can redirect power and they may not necessarily where – know where the load is coming from if the ship is damaged for some reason or have to take part of the infrastructure out to repair. So bidirectionality actually is what their unique requirements. But it’s even for a one directional device for DC breakers, there is a lot of opportunity because they are showing that DC distribution and transmission systems are actually cheaper. And there is besides the infrastructure that is DC based there is a real market that is they are looking for a solution. We look at companies like ABB and others. We made some very big complicated IGBT based solid state breakers which have hadn’t been commercially successful largely because of all the heat that they generate and the efficiency impact that comes from that. So, we think that this market in general is good early target market. We think the UPS market is another good one, simply because of the fact that, if you look at datacenters all power has to flow through the UPS system. So the semiconductor switches are continuously conducting generating heat and a low loss switch like the B-TRAN can actually significant impact of that performance, particularly if we look at datacenter where the electricity cost is the biggest operating component for most of these facilities.

Great. And just one follow-up. Are you aware if NAVSEA or diversified is testing other solutions and when do you feel timeframe-wise the validation of B-TRAN will occur through your current effort with them?

Well, I think we’ll see validation next year. This is going to be something we are going to do several ones. They are going deliberately break the devices to make sure they understand what the margin is in the design. Then maybe the next is look at and funded IGBT versions of this kind of breaker previously. In fact, DTI was one of the largest – on the network but unfortunately as I mentioned earlier, it resulted in too much heat which meant a little cooling system which the navy just wasn’t a part of.

Fair enough. Thanks for taking my questions.

Sure.

[Operator Instructions] We’ll next go to Orin Hirschman with AFS and Partners.

Hi. AIGH. Thanks very much. On – let me just go with the timeframe and when you actually are hoping to have sampling done in the next Q1 of 2021 and are the customers already expecting something and you won’t buffer – for customers and those customers primarily in one area for sample in power back up systems for example?

We start to start sampling earlier this year. The sampling progress have been an ongoing thing, simply because we want to have the opportunity to start discussions with a variety of segments. Our focus is going to be on the UPS sector, because of the impact that the technology it has. We’ve identified the customers that we want to target. We’ve already had some discussion with some of them. But we’ll also be putting some other samples now with some of the market segments that just typically take a long time. The example I’ll give you is electric cables. We’ve been approached by one of the major auto manufacturers when they heard about our technology, we don’t expect to see business from the automotive sector for quite some time. Because it’s very slow to adopt new technology. They have long design cycles. But you have to start those discussions and you can get close to the technology at some point in time. So we are going to be focused on things that are really benefit from the low reduction loss for UPS systems and we’ll also be sampling some of the – from a low loss switch things like motor drives where you can use a matrix type converter or some of the renewable energy applications where the ones bidirectionality for things like energy storage coupled with solar.

So, two parallel questions, one is, on the energy storage side, I think where utilities are beginning to move to net energy storage and this is something that could be helpful in handling a specific bidirectional aspect but also a loss aspect – is it a loss aspect or important and not peer or is just a – what this is more an up to date with the existing IGBT is there other solutions integrated type of solutions where the loss reduction is such an issue and is this important for the large lithium ion battery farms or flow battery farms?

The losses are important for - pretty much for any of these applications. The challenge is, at the end of the day, electricity is the commodity and the two things that drive it are, the first cost of your source of generation, the reliability of it and the efficiency of it. And efficiency can have a pretty big impact. So if there is an opportunity to significantly impact the efficiency, particularly something on energy storage where – charging and discharging, so you are getting hit with an impact in both directions. They could actually make a meaningful difference in terms of what the economics look like for those projects. Plus, the ability to actually have power control with things like batteries and micro grids, you need bidirectional switching and control for those kinds of applications as well. So, we think there is going be plenty of opportunities to incorporate the B-TRAN technology and into some of these energy storage applications both.

Okay. And just going back for a minute to the – and do you think those amongst the first customer – potential customers to sample? Or is there any one customer in that area that’s already thinking about this?

We actually already have an agreement with one that we’ve already signed that will be one of our earlier sample customers that are in that space.

That’s great. And just going back to the – what you call, stability fear, I would say, if I may humbly say, that the key here is that proving out what the efficiencies can make a difference in an actual electric car in an actual real car on the road. And I have heard of one – not – competing technology - going to complementary technology whether that actually been able to prove out a small percentage savings which you continue be hung on in a driver chip, a modulation chip. I guess, my question is, now that you’ve been approached which is obviously means everybody you are going to approach by one car manufacturer if the car manufacturer – I guess, the question is, there are lot of small guys and there is lot of big guys. Can you say that the big guy or a small guy, because obviously the big guy can afford to do a lot more than a small guy or the small guy could be more nimble. But do you think you could progress this to an actual road test at some point over the coming year or so? And if so, can you do it with a original release of the product in terms of the voltage? Or do you need to have a much higher voltage?

Over the coming years, no, I don’t think so. Simply because the automotive manufacturers just don’t move that quickly. I think for them it’s really understanding what the potential for the technology is, start to do some evaluation themselves. They typically actually play an interesting role in that they actually can be a strategic partner where they fund development activities, particularly things that maybe suited for their needs. So you can actually have strategic partners with these folks that make don’t – so they get much further along in their technology valuation and adoption process. But they can still play an important role in helping advance if they do the technology.

Okay. Well they will be taking chip probably within the lab from you do you think?

I think so. Yes.

And again, a big guy or a small guy, both have advantages and disadvantages?

Well, we’ve been approached by one bigger guy. This should go out – but I think it’s going to be some of the smaller guys that are actually going to be probably more innovative, simply because they can be more nimble and will be more aggressive. The challenge in the automotive sector for the big guys is, when they make products they are in the millions. And any kind of a technology issue that results in potentially recall for them can cause enormous amounts of money. So, they – if you look at their adoption of the silicon carbide MOSFETs it’s been a very slow process. But it’s been important in terms of the development initiatives that that’s been put in the power semiconductor industry through and some of the money that have gone into the development of the technology.

Okay, great. Thanks so much.

Sure.

Alright. And it looks like at this time, we have no further questions. I would like to turn it back over to Mr. Brdar for any additional or closing remarks.

Okay. Well, thank you, everyone for joining our call today. We will be presenting at LD Micro’s the LD 500 Online Conference on September 2nd. So we invite you to tune into the webcast. And we had - have a great some summer. Stay safe and we will speak to you again while we report on the third quarter. Thank you.

And that does conclude today’s conference. We thank everyone again for their participation.