Good morning, ladies and gentlemen, welcome to the Ideal Power Q1 2026 Results Conference Call. At this time, all participants are in a listen-only mode, and at the end of management's remarks, there will be a question and answer session. Investors can submit their questions anytime within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please press star one on your telephone keypad. We do ask that while posing your question, you please pick up your handset if on speakerphone. As a reminder, this event is being recorded. I would now like to turn the conference over to Mr. Jeff Christensen. Please go ahead, sir.
Thank you. Good morning, everyone. Thank you for joining Ideal Power's Q1 2026 Results Conference Call. On the call with me are David Somo, President and Chief Executive Officer, and Tim Burns, Chief Financial Officer. Ideal Power's Q1 2026 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 the 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 the associated risk. We would also refer you to the company's website for supporting company information. Now I'll turn the call over to Ideal Power's President and Chief Executive Officer. David?
Thank you, Jeff. I appreciate everyone joining us today. I'll provide an update on our commercial progress since the start of the Q1. Afterward, I'll turn things over to Tim to discuss our financial results. We look forward to your questions after our remarks. First, our lead Asia customer project for low current solid-state circuit breakers, or SSCBs, continues to advance through product development and remains on track for prototype units for 800 volt AI data center and energy grid customer evaluations. The prototype units are expected to be available in the fourth quarter of 2026, with initial low volume sales orders to support the prototype builds. Beyond that initial project, we started two new projects with this customer.
One for a medium current SSCB designed for 800 volt DC data centers, energy storage applications, EV charging and industrial microgrids, and the second for a low current SSCB for smart industrial buildings. Second, we signed a letter of intent with an industry partner to co-develop a B-TRAN enabled intelligent SSCB prototype for evaluation by a US hyperscaler in its development environment for the NVIDIA Rubin Ultra 800 volt DC AI data center power distribution system. Prototype delivery is targeted for the end of Q4 2026, with an expected purchase order for the delivery of the prototype units. This prototype is also planned to be offered to additional US hyperscalers and other AI data center operators adopting the NVIDIA Rubin Ultra rack architecture or comparable 800 volt DC AI data center power distribution systems for evaluation.
Third, we delivered initial next generation B-TRAN custom package samples and development kits for evaluation to Stellantis for EV applications. We are on track to complete the remaining deliverables under our existing purchase order with Stellantis by mid 2026. Fourth, we engaged new Asia-based global suppliers of power solutions for the potential development of B-TRAN enabled SSCBs for use in solid-state transformers, or SSTs, targeting 800 volt DC AI data centers, energy storage systems, EV charging, and the energy grid. SSTs represent a meaningful opportunity for B-TRAN, and these are our first SST specific customer engagements. Fifth, we engaged several multinational customers for the potential development of B-TRAN based SSCBs across AI data centers, smart industrial building applications, energy storage systems, and the renewable energy grid. Six, strategic investment discussions with global market leading customers continue to be part of our commercial strategy.
I have ongoing discussions with potential strategic investors and plan to continue to see those through. Reflecting this progress, our sales opportunity funnel increased to over $300 million revenue opportunity today, up from approximately $200 million at the time of our investor business update call at the end of February. These opportunities continue to diversify across AI data centers, industrial and automotive applications, as well as across multiple geographies. While a growing funnel is encouraging, converting it into design wins, production orders, and revenue is the top priority. We are focused on execution and working closely with customers to complete their product development and testing to advance projects through the funnel and into volume production orders and revenue.
At the Applied Power Electronics Conference in March, we met with approximately 30 companies that expressed interest in B-TRAN during and following the conference, and some of those discussions have since progressed into qualified sales funnel opportunities. In addition, during my recent two-week business trip in Asia, my second such trip to Asia this year, I highlighted that we initiated two new projects with our lead Asia customer, our first opportunities with SST customers, and we saw strong interest in B-TRAN enabled solid-state circuit protection applications spanning AI data centers, energy storage systems, grid infrastructure, and the industrial sector. Now I'd like to briefly touch on the upcoming market inflection in the industry's transition of power architectures. We continue to see growing industry momentum in the adoption of next-generation high voltage DC power architectures for AI data centers and grid infrastructure.
Importantly, the AI data center build-out has driven extraordinary growth in GPUs, CPUs, and training chips. The power systems delivering electricity to operate the next generation of those chips are now the limiting factor, and the industry is mobilizing to address it. Legacy 400 to 400 volt AC-based data centers were designed for rack power levels of 10 to 50 kilowatts. Next-generation AI workloads are pushing those requirements to 100 to 150 kilowatts in the near term, and eventually beyond 500 kilowatts, with some industry planning scenarios targeting 1 MW per rack by 2030. To support that scale, the industry is transitioning to higher voltage DC or 800 volt DC power architectures, a shift NVIDIA has been actively driving through its GPU platform roadmap.
We believe this transition is in its earliest stages and will expand demand for solid-state circuit protection capable of handling bidirectional current flow, microsecond fault detection, and intelligent control that the traditional mechanical breakers were simply not designed to support. At the recent Applied Power Electronics Conference, we presented a paper highlighting why solid-state circuit breakers are essential for emerging 800 volt AI data center power distribution architectures. How B-TRAN effectively addresses the key design challenges customers face, including power efficiency, controllability, fast fault response, power density, and system cost. Challenges that have made silicon carbide solutions a difficult fit for this application. Building on this emerging market opportunity, we also added our first potential solid-state transformer projects to the sales funnel with prospective customers in Asia. Our addressable market opportunity is large and is expanding as the industry's power transition unfolds across multiple markets.
Shifting topics, our patent coverage spans North America, China, Taiwan, Japan, South Korea, India, and Europe, all representing our priority patent coverage geographies. As a result of our continued innovation, our list of issued B-TRAN patents is now at 103, with 50 of those issued outside of the United States. To safeguard our intellectual property further, we treat the double-sided wafer process flow we developed to make our devices as a trade secret, and do not disclose the identity of, and work under strict confidentiality with, our wafer fabrication partners. Even if a competitor studied our patents, they wouldn't have the know-how to fabricate the device. In addition, to minimize the potential for infringement, we exclusively work with foundries and packaging houses in countries that have a history of respecting intellectual property rights.
In closing, commercial momentum continues to build with prototype programs progressing with our lead Asia customer, co-development of prototype units with an industry partner for evaluation by U.S. hyperscaler, Stellantis deliverables progressing on schedule, our first opportunities for B-TRAN enabled SSTs. Engagement expanding with several new SSCB opportunities with multinational customers. The industry's transition toward high voltage DC power architectures in AI data centers and energy infrastructure is expanding the opportunity for advanced solid-state circuit protection that traditional mechanical breakers do not address. B-TRAN is uniquely positioned to meet that need. Our focus remains on converting our expanding sales funnel and customer engagements into production orders, revenue, and long-term shareholder value creation. The strategic priorities we have set are designed to achieve these goals. Now I'd like to hand the call over to Tim Burns to review our financials. Tim?
Thank you, David, and good morning, everyone. Our Q1 2026 cash burn from operating investing activities was $2.3 million, compared to $2.1 million in the Q1 of 2025, and $2.2 million in the fourth quarter of last year. Our Q1 cash burn was below our guidance of $2.6 million-$2.8 million. We continue to manage expenses prudently and aggressively. We expect second quarter 2026 cash burn to be approximately $2.5 million-$2.7 million, with a full year 2026 cash burn of approximately $10 million-$10.5 million. This compares to a 2025 cash burn of $9.6 million.
The higher forecasted cash burn in 2026 compared to 2025 is due primarily to the hiring of additional sales and engineering personnel. Cash and cash equivalents totaled $16.4 million of March 31st, 2026. We have no debt and a clean capital structure. We did not record revenue in the Q1 of 2026. Initial orders from the companies evaluating our products for potential inclusion in their OEM products are expected to be small, with order sizes increasing as customers progress through their design cycles, perform product qualification, and build inventory for the commercialization of their B-TRAN based products. Operating expenses were $3.7 million in the Q1 of 2026, compared to $2.8 million in the Q1 of 2025, driven primarily by higher stock-based compensation expense and personnel costs.
Stock-based compensation expense increased in the Q1 of 2026 due to equity award modifications under the transition services agreement with our former CEO and inducement grants to our incoming CEO in the fourth quarter of 2025. We expect operating expenses to increase modestly in the coming quarters due to growth in our sales and engineering teams to support our commercialization efforts as well as our growing number of customer engagements. We continue to expect some quarter-to-quarter variability in operating expenses, particularly research and development spending, due to the timing of semiconductor fabrication runs, product development and other research and development activities, as well as hiring. The timing of equity award grants, vestings, and related non-cash stock-based compensation expense recognition will also cause variability in our quarterly operating expenses, as it has in the last two quarters.
Net loss in the Q1 of 2026 was $3.6 million, compared to $2.7 million in the Q1 of 2025. At the end of March, we had 12,112,118 shares outstanding, 1,464,226 options and stock units outstanding, and 2,238,040 pre-funded warrants outstanding. At March 31st, 2026, our fully diluted share count was 15,814,384 shares. At this time, I'd like to open up the call for questions. Operator?
Thank you. At this time, we'll be conducting our question and answer session. Investors can submit their questions within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you wish to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Okay, while we wait, I will turn this call back over to Mr. Jeff Christensen to read questions submitted through the webcast. Thank you.
Thank you. Our first submitted question is, if you could leave investors with 1 message today about why Ideal Power is a compelling investment opportunity at this stage of the company's development, what would it be?
Yeah. I'll take that one, Jeff. We're at the cusp of a high voltage DC secular megatrend, where the energy infrastructure across data centers, grid, energy storage, and industrial applications are at the early stages of transitioning from AC to high voltage DC systems. This aligns very strongly to the capabilities we have and benefits of our B-TRAN product, specifically in areas like solid-state circuit breakers. As I mentioned at the beginning of my comments, it's not just a one-year phenomenon. We think this is a multi-year secular megatrend that'll continue, is just starting and will continue through 2030 and beyond. We expect that to expand the market opportunity for B-TRAN and the applications that we're targeting over that period of time.
Thank you. Jeff, do we have-
Oh, I'm sorry.
Apologies.
Yeah. The next submitted question was, any sense that electric vehicle recovery, mainly in Europe, is igniting interest in B-TRAN?
In our sales opportunities, we have multiple customers that are evaluating B-TRAN, both across automotive OEMs like Stellantis and Tier 1s. Listening to some of the commentary from our peers and what I've seen in the market is that the current oil situation is driving renewed interest in EVs, and that renewed interest could lead to increased sales volumes, which increases the opportunity for B-TRAN on those programs that we have with our customers.
Thank you. The next submitted question is, please comment on how B-TRAN compares with Infineon's CoolSiC JFET product.
Yeah. Infineon's CoolSiC JFET, that's a new form of a silicon carbide
FET device. Initially, they were silicon carbide MOSFETs. The comparison between B-TRAN here is first and foremost in the inherent bidirectional conducting and blocking capability of B-TRAN. JFETs, like silicon carbide MOSFETs, require back-to-back configuration, so at least two devices to be able to conduct and block in both directions compared to a single device for B-TRAN. In addition, like I've heard during my recent tour with customers where they are evaluating silicon carbide MOSFETs, it becomes very difficult in medium and high current applications to share current and control the turn on and turn off of the devices in SSCB applications, which is an area they areas they cite as a strength for B-TRAN.
Obviously, if we can reduce the component count, we can reduce the system size and improve the power density and reduce the cost of the overall system.
Thank you. We've gotten questions submitted. Please continue to click that button to ask a question. We look forward to answering your questions. The next submitted question is, please discuss where the company stands today in terms of manufacturing readiness.
Yeah. We're ready. We have relationships with multiple foundries and packaging firms. They'll be able to handle our sales ramp here over the next two years. We also have a roadmap to support business over the long term, supporting our forecasted capacity requirements while also providing significant cost reductions. From a manufacturing perspective, we're in good shape.
Thank you. Any additional color on the incremental improvements in the quality and quantity of the sales funnel? What initiatives is Ideal Power undertaking to expand its sales funnel?
Yeah. I'll take that one. As I mentioned during my prepared remarks, the sales funnel has increased by more than 50% since the end of February and the March call that we did for the full year 2025 earnings. The rigor around it has really increased as we, and I personally, sit in biweekly funnel reviews with the sales team, not only to look at the opportunities that are in there, but to also understand what is being added to the funnel, where are we in customer development projects, how are things progressing, what can we do to speed up those projects by between our sales team and our applications engineering organization. If there are any issues that come up, how do we resolve those quickly with customers to work towards keeping projects on track.
I would say the funnel rigor has certainly improved from the beginning of the year till now as we get a stronger handle on the opportunities going into the funnel and we progress those opportunities through the funnel, both through our sales team and our applications engineering team and regular engagements with customers.
Thank you. Does Ideal Power still expect to complete the automotive qualification and reliability testing this summer?
Yes, we continue to make progress towards completing automotive reliability testing, this summer.
Thank you. Next question on this thing, what is the importance of the automotive qualification to Ideal Power?
Yeah. It's a requirement by automotive customers to deploy B-TRAN in their vehicles. Customers can proceed with product development while the qualification is taking place. To put the products into vehicles to begin their field testing on the road and then to release in series models, they need to have the components automotive qualified.
Thank you. You mentioned the automotive qualification completion this summer. The other submitted question was, what other near-term catalyst that the market should be looking out for in the next three to six months?
Yeah. From that perspective, it's really well you communicated earlier. It's announcing additional agreements with customers, whether they're custom development agreements or new programs that potentially for custom development. It's also what we're expecting to start getting purchase orders, so we'll start to talk about those and announce those as they come in. It's really all around commercial activity. We'll continue to make progress with Stellantis. We're targeting, again, those deliverables here to be completed by mid-year. We're expecting commercial announcements here over the course of the next 3-6 months that will be meaningful for us.
Thank you. Who is the main competition for B-TRAN?
If we look at for the applications we're targeting, it would primarily be silicon carbide MOSFETs. IGBTs really aren't considered in this space because of the losses associated with them, and when you're conducting the vast majority of the time, you want to minimize those losses.
Thank you. Let me look here. The timeline for revenue. Any other comments about the timeline for meaningful revenue?
We're still on track with what we said in the business update call. Obviously, the projects we discussed on the call today we're expecting to contribute to that, but there's no change in our expectation.
Okay. Thank you. Are there any key hires planned in sales and engineering in the coming quarters?
We've already actually added to the team this year. We added a sales director in Europe, applications engineering support in Asia. We've actually added someone in the quality team that's assisting with our automotive qualification. The team's largely intact. We'll probably add just two more positions over the balance of the year, we have the core team in place to commercialize the technology.
Thank you. How are things going with You mentioned Stellantis. Any other comment about other automakers?
No, as part of the funnel, if I look at the over $300 billion in opportunities that we have, it's roughly split about 50/50 on a percentage basis between automotive and then general data center, general industrial applications. We do have other projects that are under consideration or evaluation by either automotive tier 1s or OEMs, specifically around EV contactors battery disconnect units.
Thank you. Can you elaborate or can you provide any other color on the strategic partner investment possibilities?
Not much more depth that I can go into at this time other than I have ongoing discussions, as I mentioned in my prepared remarks, from potential strategic investors. I have continued those discussions at a high level in some of the companies, and working to expand that to other areas, to consider what may be the best fit for our company and a strong validation of B-TRAN in the market based on investment of somebody who has interest in adopting our products.
Thank you. That concludes our question and answer session. David, do you have any closing remarks?
I just wanna thank everyone who joined the call today. Along with our sales team, I'll be attending PCIM in Europe next month, and I look forward to sharing updates with you in August regarding our progress as we execute on our plan to commercialize B-TRAN. In closing, I wanna recognize the company's employees for their innovation and continued hard work and thank them for their efforts. Operator, you may end the call.
Thank you. Ladies and gentlemen, this concludes today's conference. All parties may disconnect, and have a great day.