Ideal Power reports $2.7 million cash burn, highlights strong foundation for growth and upcoming product commercializations in electric vehicle market

Anticipate scheduling a call and webcast to share more detailed information and discuss certain topics in greater depth, including my perspective for product commercialization. Before setting expectations, I want to take the necessary time to thoroughly understand the current state of our business. As an organization, we will strive to execute in all aspects of the business with rigor, discipline and a strong sense of urgency. We will endeavor to execute on what we communicate and not put ourselves in a position have to reset expectations. It goes without saying that this is important to establishing and maintaining credibility. One thing is abundantly clear. With a strong foundation in place from which to drive our future growth, I'm not going back to the drawing board. We're well positioned to drive long term value creation for our customers, suppliers, employees and stockholders. In closing, I look forward to partnering with Tim Burns, our cfo. I'd like to recognize the entire team for their third quarter progress and results. I'd also like to thank my predecessor, Dan Berdar, for assisting with the transition and providing a strong foundation for our growth. I'm thrilled to be joining Ideal Power at a time when the company has such exciting opportunities ahead. Now I'd like to turn the call over to Tim Burns to discuss our recent progress.

Tim thank you David and good morning everyone. Since David just started last week, I'll share an update on our progress since the start of the third quarter. First, we secured a purchase order from Stellantis in late August for custom development and packaged BTRAN devices targeting multiple electric vehicle applications. We successfully completed our first of five deliverables under the purchase order in late September. The remaining deliverables are expected to be completed next year. Second, we expect Stellantis to award us with a multi year EV contactor program. As part of the program scope, Stellantis has told us they want to install BTRAN based contactors in Stellantis test vehicles potentially as early as late 2026. We'll know more about the scope and timing specifics as we work through the program details with Stellantis in the coming months. This program has broad and substantial potential as Stellantis recently shared with us that they are evaluating the deployment of BTRAN based contactors across all of their EV models and platforms. Third, we are engaged in early discussions with the sixth global automaker. This automaker is evaluating BTRAN for next generation high voltage EV power switching and protection where bidirectionality and low conduction losses enable more compact, reliable and efficient vehicle and charging architectures. We will share further updates on this opportunity as the engagement progresses. Fourth, our first Design Win Customer has successfully completed testing of the updated solid state circuit breakers that we provided them during the third quarter. We're currently working with them on the finalization of their product design as they prepare for end customer sampling and production. Fifth, we shipped additional solid state circuit breaker reference designs to large potential customers, including a global power management market leader in Asia. Reference designs are an important part of our commercialization strategy as BTRAN is a new technology and customers are eager to get hardware in their hands that demonstrates the advantages of BTRAN in their target applications. Sixth, we increased the power rating of our discrete BTRAN product by 50% and commenced shipment of these devices with a higher power rating and power density. This development has sparked greater interest from both existing customers and new prospects in our sales pipeline as it aligns well with the market moving to higher power architectures for many applications. Seventh, we continue to expand our global reach, adding our first direct salesperson in Asia. He's already conducting face to face meetings with current and prospective customers. Interest in BTRAN is growing across Asia, which is the world's largest market for power electronics. We're excited about the opportunity for BTRAN in this region as Asian companies typically adopt new technologies faster than their European and American counterparts. 8th, 3rd party automotive qualification and reliability testing of BTRAN devices is well underway with more than 1000 packaged BTRAN devices from multiple wafer runs. Early test results are positive with zero failures to date. As a new semiconductor device without a long operating history, third party reliability testing and the data it generates is key for both industrial and automotive customers as they evaluate and adopt BTRAN for their applications. Moving on to the initial market for BTRAN, the industrial markets and in particular solid state circuit protection for data centers, micro-grids, industrial facilities and grid infrastructure. Our First Design Win customer is one of the largest circuit protection equipment manufacturers in Asia, serving data centers, industrial and utility markets and renewable energy applications. As we have previously mentioned and based on the First Design Win customer's projections, the initial product from this customer could translate to several hundred thousands of dollars of revenue for Ideal Power in its first year sales, with the opportunity to exceed a million dollars in revenue for us in the second year of sales. Importantly, this marks only the beginning. The initial product is anticipated to be the first of multiple products from this customer that will incorporate BTRAN into solid state circuit breakers. This customer provides a variety of circuit breaker products across various power ratings and it is expected that they could expand their portfolio to add a full family of solid state circuit breakers at ratings similar to their current family of electromechanical breakers. Discussions of other BTRAN enabled solid state circuit breaker products has already started and our team recently built the solid state circuit breaker prototype with a higher rating to share with this customer. Looking briefly at innovation, we increased the power rating of our discrete BTRAN product by 50% and commenced shipment of these devices with a higher power rating and power density. This development has sparked greater interest for both existing customers and new prospects in our sales pipeline. Our approach to power ratings of our products is deliberately cautious, an approach that has been well received by our customers as we bring new solutions to their markets and applications. As we accumulate more testing hours and go through additional reliability testing, including the ongoing third party automotive qualification testing, we're finding that we have more than ample margin in our design to increase the power rating of our products. Elevated product ratings will expand our SAM to include additional applications. It will also strengthen our product's competitiveness in the marketplace as it translates to smaller, lower cost OEM products for customers to choose BTRAN as their power semiconductor solution. We previously mentioned that orders near term are not dependent upon the successful completion of automotive qualification. However, achieving third party automotive qualification would provide additional confidence among industrial customers regarding BTRANs long term reliability. It would also provide evidence of the device's reliability under extreme conditions such as high humidity and temperature, which exceeds typical industrial application requirements. Additionally, given that engineers tend to be cautious when adopting new technologies, achieving automotive qualification could help accelerate the adoption of BTRAN based products by early adopters in our initial target industrial markets. Our BTRAN patent stake continues to grow. Currently we have 97 issued BTRAN patents with 47 of those issued outside the United States. Our patent coverage spans North America, China, Taiwan, Japan, South Korea, India and Europe, all representing our high priority patent coverage geographies. As a result of our continued innovation, our list of pending BTRAN patents is now at 73. To safeguard our intellectual property further, we treat the proven double sided wafer process flow we developed to make our devices as a trade secret and do not disclose the identity of and work under strict confidentiality with our wafer fabrication partners. So even if a competitor studied our patents, they wouldn't have to know how to fabricate the device. Next, I'll discuss our financial results. Our third quarter 2025 cash burn from operating and investing activities was $2.7 million, up from $2.4 million in the third quarter of 2024 and up from $2.5 million in the second quarter this year. Our Q3 cash burn was at the lower end of our guidance of 2.7 to $2.9 million. Our cash burn from operating investing activities for the first nine months of 2025 was $7.4 million, up from $6.6 million in the first nine months of 2024. We continue to manage expenses prudently and aggressively. We expect fourth quarter 2025 cash burn to be approximately 2.5 to $2.7 million with a full year 2025 cash burn of approximately $10 million. This compares to a 2024 cash burn of $9.2 million excluding the benefit of warrant proceeds. The higher forecasted cash burn in 2025 compared to 2024 is due to increased semiconductor fabrication spending and hiring. Cash and cash equivalents totaled $8.4 million of 9-30-2025. We have no debt and a clean capital structure. We recorded modest revenue for the third quarter of 2025 as customers continue to evaluate our technology. Initial orders from the large companies evaluating our products for potential inclusion in their OEM products will be small with order sizes increasing as customers start to prototype their OEM products, progressed through their design cycles and built inventory for the rollout of their BTRAN based products.