Ideal Power Inc. (IPWR) CEO Daniel Brdar on Q2 2021 Results - Earnings Call Transcript

Aug. 12, 2021 7:19 PM ETIdeal Power Inc. (IPWR)
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Ideal Power Inc. (NASDAQ:IPWR) Q2 2021 Results Conference Call August 12, 2021 4:30 PM ET

Company Participants

Carolyn Capaccio - Investor Relations

Daniel Brdar - President and Chief Executive Officer

Timothy Burns - Chief Financial Officer

Conference Call Participants

Shawn Severson - Water Tower Research

David Williams - The Benchmark Company

Don Slowinski - Winslow Asset Group

Operator

Good day, ladies and gentlemen and welcome to the Ideal Power Second Quarter 2021 Results Conference Call. Today’s conference is being recorded.

At this time, I would like to turn the conference over to Carolyn Capaccio of LHA. Please go ahead.

Carolyn Capaccio

Thank you, Keith. And Good afternoon everyone. Thank you for joining Ideal Power's second quarter 2021 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 2021 financial results press release is available on the Company’s website at idealpower.com.

Before we begin, I would 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 maybe 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. 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.

Daniel Brdar

Thank you, Carolyn. Good afternoon, everyone. And welcome to our second quarter 2021 financial results conference call. I will begin by giving you an update on our progress and achievements on our strategy to commercialize our B-TRAN semiconductor architectures technology, including progress our objectives for 2021, which includes the engagement of potential customers, to test and evaluate B-TRAN and the completion of multiple fabrication runs for the NAVSEA program, leading to a full scale circuit breaker demonstration in mid 2022. Then Tim burns our CFO, we will take you through the numbers, and then we will take your questions.

We are on-track with our roadmap to commercialize B-TRAN as a differentiated technology addressing a large and growing market. And since the start of the second quarter, we achieved key milestones on this roadmap. Let's begin with the specifics of our progress towards commercialization, specifically, our engagement with potential customers to test and evaluate B-TRAN in their applications.

Early in the quarter, we released a B-TRAN information sheet which you can find on the technology page of our website that provides detailed information on B-TRAN operating characteristics, as well as information regarding the packaging and driver design and operation. But the technical community needs to begin evaluating our technology.

Over the last few months, our team has done a great job of leveraging this information to engage with potential customers in our target and markets, vehicle electrification and EV charging, renewable energy, UPS systems for data centers and solid state circuit breakers. And these conversations have progressed and yielded solid real results.

We are now engaged with several potential customers who are committing significant resources and technical expertise to thoroughly evaluate B-TRAN for use in their applications. A significant commitment is required on the part of our potential customers to fully evaluate a new power switch architecture as potential use within their target applications.

But we are already finding is that the talent engineering teams that these early collaborating companies are identifying new design approaches, and rethinking their applications and power management for both DC and AC implementations, to the enabling low loss and bi directional capabilities of B-TRAN. This is very exciting.

Let's look at some of the applications for which B-TRAN is being evaluated. In the automotive sector, we are working with a top 10 Global automaker, whose advanced technology engineering team will test and evaluate B-TRAN and its driver for easy applications including the EV drive train, DC-to-DC power conversion, circuit protection, and other uses within the EV ecosystem.

Specifically with this potential customer, B-TRAN is enabling new architectures and solutions to improve EV efficiency, range and performance by lowering total system size, cost and component count.

B-TRAN target applications include the EV traction inverter and charging circuits, which are inherently bi-directional, supporting vehicle to grid applications and emerging EV architectures and applications such as the matrix converter, and solid state circuit breaker. The EV space is already the largest segment in the $6 billion power switch market with overall is expected to nearly double by 2026.

In EV charging, we are working with a provider of electric vehicles chargers, we will test and evaluate B-TRAN for their innovative, portable and modular EV charging system, that is currently under development. This solution combines a DC fast charger with a swappable battery system. And a modular designed to allow for scaling, targeting both on-demand fast charging and roadside assistance to eliminate charging anxiety.

The advantages that B-TRAN can offer over conventional IGBTs switches to EV charging, greater efficiency, high directionality, smaller size and reduced thermal management are critically important to mobile EV charging systems with battery storage.

This is the type of innovation and disruptive business model that can contribute to EV adoption, and the build out of the charging infrastructure with this need for smaller, lower operating cost solutions.

EV charging companies could potentially be an early adopter of B-TRAN with the 2.1 million unit global EV charging station market expect this to grow to an estimated 30.8 million units by the end of 2027.

In power management for the data center market, we are working with a top 10 global provider of power conversion solutions to the solar industry. That is expanding this portfolio to include a broad array of power conversion application solutions serving multiple sectors.

This provider will test and evaluate B-TRAN for its compelling advantages in bi- directional circuits for various applications. Starting with an interoperable power supplies or UPS systems or data centers. And expanding to include renewable energy, electric vehicles and other applications.

There is intense pressure for data centers, given the secretary trend toward cloud computing and data storage to reduce electricity costs and power losses. Electricity consumption is the largest operating cost for a data center and all the electricity entering the data center passes through a UPS system. Currently, UPS systems and their protection account for approximately 6% of data center total energy losses.

Replacing conventional power semiconductors in these systems would B-TRAN is expected to resolve and the substantial annual cost savings for data centers through reduce energy consumption and the ability to migrate to lower costs, less complex cooling systems.

This will be a significant advancement for power switches and UPS systems. A market, which was approximately $0.5 billion in 2020 is a forecast to grow at an estimated 6% compound annual growth rates through 2026.

We are in discussions for possible collaborations with additional companies in our target end market applications. We have expressed interest in assessing B-TRAN and we will announce future collaborations as we are able.

In the cases I just mentioned, as well as other potential engagements, the customers will share their testing results and provide applications specific feedback on the design and operation of the package devices and driver. The feature set and priorities for individual applications, and also enable us to determine common requirements across applications.

We will then this feature set into an intelligent power module for commercialization and potentially engage with certain these customers for custom modules. Primarily for EV and solid-state circuit breaker applications where multiple devices may need to be combined into a single package.

The next step to be completed in parallel with further discussions with potential participants is to complete the fabrication runs for dicing and packaging. And to pair these package dies with the driver for delivery to these initial participants in our customer testing and evaluation program.

While each participant in the evaluation program will be working to their own schedule. We anticipate feedback from these initial companies will provide meaningful input into the design of our intelligent power module. But we essentially introduced for commercial sales in the second half of 2022.

One our target end markets for B-TRAN, it is all at circuit breakers. An important advancement in a very global arts global circuit breaker market, which is which in total is projected to grow at a compound growth rate about 6% to almost $26 billion by 2027. And as we have discussed with you over the last couple of quarters, we have and we will continue to pursue opportunities for government funding.

In the second quarter, Diversified Technologies Incorporated was awarded second project submitted in collaboration with us, a Phase I small business innovation research grants, funded by the U.S. Department of Energy.

This grant is to develop a B-TRAN based low loss, 13.8 kilovolt alternating current solid state circuit breaker, intended to be used in medium voltage, power distribution and renewable energy and micro grid applications, connected to the utility power grid.

We see this application as a significant opportunity to capitalize on the benefits of solid state circuit breakers, which prevent damage to downstream equipment, upstream power generators, generators and the grid itself are utilizing microsecond current interruption capability.

We expect B-TRAN will make a solid state circuit breaker significantly more efficient, smaller and less expensive. Under Phase I of the SPIR project we will design fabricate and pass a module that can allow for multiple devices to be assembled in a parallel configuration for a high voltage rating capability.

The project will utilize our current by design, so we view this initial phase of the project as primarily a packaging and module development activity that enables B-TRAN to be used in applications like AC circuit breakers that require more than 1200 volt capability.

The B-TRAN based solid state circuit breaker is expected to limit all the energy I orders of magnitude faster compared to conventional mechanical circuit breakers. Since this project does not have the strict confidentiality restrictions of our U.S. Navy program, we will be able to provide more insight into the project, as we complete the various milestones under the program. We will also be able to leverage the knowledge we gain on combining multiple devices in a parallel program for other applications, such as electric vehicles.

We expect that B-TRAN will simplify the cooling systems, enabling smaller, lower cost air cooling instead of complex liquid cooling systems, due to its 50% lower conduction losses, compared to conventional power semiconductor switches and reduced the component count due to B-TRAN's unique bi-directional capability requiring a smaller footprint.

If Phase I is successful and we are awarded Phase II, the objectively will be to build and demonstrate a 50 megawatt, 13.8 kilovolt AC solid state circuit breaker in collaboration with DTI. 13.8 kilovolt is a voltage level commonly found in utility distribution networks. So, the resulting breaker design can be applied directly to the existing utility transmission and distribution systems, as well as micro grids.

Following in the demonstration DTI would have the ability to sell the breaker to utility, industrial and military customers and licensed the design to others for sale to end users. We would also expect to partner with other circuit breaker companies so they can design and bring their own B-TRAN based products to market.

For additional context, while direct current with DC based systems are expected to grow rapidly due to the long-term growth of solar, wind and energy storage, the market today for circuit breakers is predominantly for alternating current or AC circuit breakers, which make up the majority of the expected $25 billion circuit breaker market.

Also, of this large circuit breaker market about 45% is for medium voltage breakers, which is B-TRAN's sweet spot. Medium voltage circuit breakers are used in the aging utility distribution system that brings power from high voltage transmission lines to the end user.

This is also the segment that is in the most need of updating due to the age of the existing utility distribution system and the limitations in its capacity and its vulnerability to disruption. Also, as more distributed resources like solar are added to the grid, and to accommodate EV charging and vehicle to grid applications, the distribution system is going to require substantial investment.

In smarter bi-directional subsystems like solid state circuit breakers will be needed. This is why we believe the medium voltage class of AC circuit breakers will be the fastest growing segment in the circuit breaker market and it is where B-TRAN can bring the most value because low conduction losses and fast switching times.

The SBIR collaboration with DTI is a significant strategic opportunity one that is incremental to our efforts with the US Navy and also critical to electric grid development. So, we are very excited about this project and look forward to generating promising results.

Let's move now to our work with the US Navy. As most of you are aware Ideal Power is working with the Naval Sea Systems Command or NAVSEA in collaboration with DTI on the development and demonstration of a B-TRAN enabled direct current medium voltage circuit breaker, as part of the U.S. Navy's strategic focus on ship electrification.

This $1.2 million subcontract with DTI is funded under the Department of Defense's rapid innovation fund, the purpose of which is to accelerate the commercialization of high value high impact technologies.

A project with DTI for NAVSEA is intended to develop and demonstrate a B-TRAN enabled high efficiency 12 kilovolt medium voltage direct current circuit breaker for the US Navy. The subsequent objective of introducing a family of medium voltage DC circuit breaker products incorporating B-TRANs for sale to military, industrial and utility markets.

The major milestones under the program for us are the wafer fabrication runs conducted by Teledyne our fabrication partner. This development process is iterative. So, we are performing multiple wafer fabrication runs under the program, the yield wafers and results die the test and assess the trade-offs between maximum theoretical device performance and manufacturability incorporating our findings and adjustments into subsequent runs.

During the second quarter, we had a commercial packaging vendor adapt the packaging design initially developed by the University of Texas at Austin's semiconductor power electronics center for high volume production.

And the materials were fabricated and assembled in the drop packages to ensure a good mechanical fit and ease of assembly. Those trial assemblies weren't well, and excessively packaged dye were tested and characterized internally at Ideal Power using our driver, also designed by UT Austin, and they generated switching and other data consistent with our expectations and simulations.

We recently began our next wafer fabrication run under the NAVSEA program, the completion of which is the next major milestone in the NAVSEA program. In total, we plan five runs over a three year program, aiming to deliver an optimized power switch for using the full scale demonstration of a 12 kilovolt MVDC breakers in mid 2022. We are very excited about this progress, which continues to benefit our overall validation and commercialization efforts.

To support our next phase of development and optimization. we are utilizing our strong cash position to modestly invest in our team capabilities. As you know, this year we brought on Board Jeff Knapp as Vice President of Business Development, and Dr. Jiankang Bu, as Vice President of Engineering, both highly qualified and accomplished leaders in their respective disciplines. And both are already making a significant positive impact on our development and commercialization efforts.

In the coming months, we will make a few other additions to our teams to bring more capabilities in house, particularly in applications driver design, and testing to support our commercialization efforts.

We are also in the process of qualifying second domestic semiconductor fabrication partner that has strong experience making bipolar devices to ensure sufficient supply capacity for future potential large customers and to mitigate supply chain risk. We currently have a qualifying semiconductor fabrication run in progress with this new partner.

The second fabrication partner will also give us more flexibility to provide both packages devices and data that are separated from and not subject to the restrictions and confidentiality requirements of our NAVSEA program.

Looking at the B-TRAN patents stake. We currently have 65 issued B-TRAN patents with 27 of those issues outside of the United States and another 23 pending patents. Our current geographic coverage includes North America, China, Japan, South Korea and Europe. But the potential to expand coverage into India. In the last 12-months, nine B-TRAN patents have been issued with seven of the nine issued outside of the United States, including Ideal Power first patent issuance in South Korea.

In all, we continued our record of progress in the past three-months from a development perspective. More notably our recent announcements of test and evaluation collaborations with leaders in the electric vehicle, uninterruptible power supplies for data centers and renewable energy markets at the beginning of our commercialization of B-TRAN.

These customer engagements represent a crucial step forward in establishing B-TRAN as a differentiated semiconductor technology addressing a large and growing market. Backed by our strong balance sheet or the recent additions of highly qualified business development and engineering leaders, we are well positioned to support our B-TRAN commercialization plan.

Our focus for 2021 is threefold. We continue to engage with prospective customers and to support existing customers in our test and evaluation program to achieve our milestones under the NAVSEA program with a target of delivering an optimized package device for incorporation into the demonstration of a 12 kilovolt MVDC breaker in mid 2022.

And to achieve our initial objectives under the Phase 1 SDIR grant, which is to deliver a low loss B-TRAN module suitable for subsequent incorporation into a 13.8 kilovolt alternating current solid-state circuit breaker, if we are awarded Phase 2 of the program. After we are able, we will apprise you of the companies we add to our customer test and evaluation program in the coming months.

We will also update you as permitted on the feedback that we receive from the program. And how this data feeds into our common requirements across applications that can then be incorporated into an LGM hour module that we will introduced to the marketplace in the second half of 2022.

Ideal Power on the cusp of realizing the potential of B-TRAN unique advantages bi-directional switching capability, lower switching and conduction losses, lower user costs and improved and more compact thermal management.

B-TRAN has the ability to solve the immediate needs of many power electronics applications in both high growth and high demand market segments or enabling new applications and market segments.

We are making system progress on our strategy. Moving along our intended trajectory to differentiated patent technology that can substantially improve existing and enable new solutions for many of today's power needs.

Now, I would like to hand the call over to our Chief Financial Officer, Tim Burns for review of our second quarter of 2021 financial results. Tim?

Timothy Burns

Thank you, Dan. I will review second quarter 2021 financial results. In the second quarter, we recorded approximately $85,000 in grant revenue with offsetting cost of grant revenue. As we continued our work on the Navy funded NAVSEA demonstration under the DTI sub contract, which began in mid 2020.

The amount of grant revenue recognized each quarter will vary, as it is a function of the timing spending in scheduled milestones under the program. We expect almost all of the grant revenue for this program to be recognized by early 2022.

Operating expenses were $1.3 million in the second quarter of 2021 compared to $0.8 million in the second quarter of 2020. As we invested in research and development, sales and market and other general corporate expenses.

We expect research and development and sales and marketing spending to trend higher in the balance of 2021, as we accelerate development of the B-TRAN technology, including qualifying a second domestic semiconductor fabrication partner.

And now that we have begun to commercialize B-TRAN as evidenced by recent announcements. We do expect some quarter-to-quarter variability in our research and development spending due to the timing of semiconductor fabrication runs and other development activities.

Net loss for the second quarter of 2021 was $1.2 million, compared to $0.8 million in the second quarter of 2020. Second quarter of 2021 net loss includes the gain on forgiveness of long-term debt of $91,000 awaiting for a payroll protection program loan received in the second quarter of 2020 forgiven by the SBA in May, 2021. As a result of the loan forgiveness, we had no long-term debt outstanding at June 30, 2021.

Second quarter 2021 cash used in operating and investing activities was $1.1 million, compared to $0.7 million in the second quarter of 2020. Our second quarter cash burn was consistent with the expectation we provided in our first quarter call.

We continue to expect our cash burn to increase in the second half of the year, as we invest in both sales and marketing and research and development. We expect the cash burn of approximately $1.2 million to $1.3 million in the third quarter of 2021 and we expect a full-year cash burn of approximately $4.5 million.

Cash and cash equivalents totaled $25.7 million at June 30th, 2021. Our strong balance sheet since our February public offering is enabled and will continue to enable us to support and be more attractive partner to the larger corporations that are participating and that we expect to participate in our customer test and evaluation program, modestly build out our internal research and development capability and our product design team bring in driver design expertise in area we are narrowing on third parties in-house.

We modestly build our commercial team in front end talent, including applications, engineering expertise to support our customer testing evaluation program and B-TRAN commercialization and complete the qualification of the second domestic semiconductor fabrication partner, now that we are engaging with large companies and our customer test and evaluation program and the support our working capital needs.

As of June 30th, we had 5,872,046 shares outstanding, and 1,040,248 warrants outstanding. Including 455,937 stock options outstanding our diluted shares outstanding at June 30th was 7.4 million. Our balance sheet gives us ample liquidity, particularly given our planned continued modest cash burn to fund multiple years of operations, and we are well-capitalized partner for the larger companies that are participating and we expect to participate in the testing and evaluation of our B-TRAN technology.

At this time, I would like to open up the call for questions. Operator.

Question-And-Answer Session

Operator

Thank you. [Operator Instructions]. We will take our first question from Shawn Severson with WTR. Please go ahead.

Shawn Severson

Hey guys. Thanks for taking my question. Just trying to figure out, do you have any more automotive EV companies in the pipeline and those in are going through pilot programs are going to pilot?

Daniel Brdar

We do. We view things that are going on in the EV, space, renewable, EV charging all the target applications, we want to continue to bring companies into that pipeline, because we would like to have, two or three, at least in each of those targeted segments, because they are each going to have different ideas and different approaches.

So, we have some that we hope we get over the finish line, but they are their names that people will recognize if we are able to get them actually in the program with so far, we think we have got a pretty, pretty robust pipeline based on the relationships that Jeff Knapp and his experience working in the EV space is bringing the company.

Shawn Severson

And when you look at all of those, those applications in various markets that are coming in, that are coming to the pipeline, which ones do you think would go to commercialization the fastest? I assume there is some difference depending on the application and what it is, but which one priority do you think gets the fastest?

Daniel Brdar

I think we will see the circuit breaker and EV charging probably go first. Circuit breaker will certainly be helped by the fact that we will be doing full scale demonstrations of design that incorporates technology, EV charging, because there is such a for us to build out that infrastructure and are looking for innovative solutions so, we are seeing shorter design cycles there.

After that, I think will come some things in the renewable space, particularly renewables coupled with energy storage, and the automobile folks will probably last, but we think based on what we are seeing, they will be significantly faster than what you would typically see in the EV sector, simply because most of the large OEMs that are the traditional car companies, we are already seeing, we have a lot of pressure to catch up. So, things that have been driven by some of the new companies like Tesla that has come along.

Shawn Severson

And my last question is, when you get into an automotive, or an ABB platform, is there a lot of redesign that has to take place between different models in that platform, or like you get into an OEM and you are, you are in one vehicle, the it is very easy to get into the set of one model into 10. Let's say for example, if you understand what I mean?

Daniel Brdar

Yes, I do. What we are finding is that what the automobile companies are really trying to do is get to a common platform as much commonality as parts as possible, because they don't want to have all these different designs and parts and supply chain challenges that come with it. So, part of what we are seeing is some innovation of just taking clean sheets of paper and say, okay.

This is the drive train that we are going to use for the entire classes vehicle. So, we think if we can get to the point where there is a module that incorporates what they are looking for, from a packaging standpoint, we will see it used across a whole variety of models for a given manufacturer.

Shawn Severson

Great, thanks guys.

Timothy Burns

Thank you.

Daniel Brdar

Thanks Shawn.

Operator

We will take our next question from David Williams with The Benchmark Company. Please go ahead.

David Williams

Thanks, hey Dan and Tim. Good afternoon. appreciate you taking time to let me ask a question here. First, I want to ask maybe if you kind of think about your customers you have in the evaluation and testing phase now. Have you receive feedback yet in terms of maybe how they are thinking about using the product, and maybe their design cycles, just anything, any color around just any of the testing an evaluation that you have ongoing today?

Daniel Brdar

Well we don't have parts in their hands yet. But what we have been learning about is they have learned about the technology, we are our technical teams have had a whole series of meetings with most of these customers.

We are learning about how they are thinking about using the technology and how they are thinking about changing their approach to the drive trains and how they are changing the approach or some of the other technologies that go into the car because of the fact that B-TRAN is enabling them to do different approaches.

And the example that I use is, a matrix converter. Matrix converters are technologies they've been around for a long time. But the challenge has always been there is not a good bi-directional AC switch out there so you don't see them very often. Well, that is a different story now. So we see automobile manufacturers looking at matrix converters, as an approach where previously they haven’t.

So part of why we ended up being under NDAs is we learn a lot about their application and what they are thinking about, as well as them learning about our device. So I think we are going to see some pretty innovative approaches come to market as some of the more established automobile manufacturers take the work that is already been done in this space and look at new ways to do it.

David Williams

Okay. Great. And then maybe from the automotive side, if we think about kind of the qualification cycle there and the certification for those parts. That is a fairly elongated cycle, and it is a thing that we hear a lot from other semi especially the power space. How do you think about your certification and qualification as you get into producing these products that typically have two to three year design cycles? Do you think you can accelerate that, just kind of given your discussions with customers today? Or do you think that we are still some time away from that as you had mentioned, maybe being the last really take off?

Daniel Brdar

Well, may be the last segment. But we think it is going to be accelerated for two reasons. One is typically the OEMs rely on their Tier 1 suppliers to do a lot of new work on new sub systems and bring new technology to the OEM. That has changed.

What we are seeing is most of the major OEMs have actually created their own internal teams to look at new technology and to look at how to bring it to their products, because they are trying to shorten that cycle. So they are taking the lead and saying, here is what we are going to use from a technology perspective. Here is our platform and you are a Tier 1 supplier. This is how you'll do it.

So they are actually changing their process to accelerate the ability to get models into the marketplace. The other thing that we are seeing that is really, it was a bit of a surprise to us. As we talked to them about, for example, how they want devices packaged. What they said is we will introduce you.

We will take the lead and introduce you to the packaging firms that know our requirements, what we want, and you can work directly with them knowing that you are on a mandate from us. So we don't necessarily have to learn a lot this with a packaging company ourselves. They are going to leverage the relationships and expertise and the qualified suppliers they already have and connect us to them. So we think that will also certainly accelerate that cycle.

David Williams

Great. And then maybe, if you can just talk about any hurdles that you see between now and commercialization. What are the biggest challenges, I guess between here and there? Is it really just the adoption and the sampling getting it into the hands of the customers or are there other hurdles maybe in terms of the technology or the capability that has to be overcome?

Daniel Brdar

We know this technology certainly works. We know it performs as we have simulated. So I think for us, the challenge is really raising the visibility, raising the awareness, getting those potential end-users through that learning curve, that adoption cycle.

Particularly as a small company, now we are fortunate that we have got folks like Jeff that have established relationships. But without that, it would be tough to get to some of the right people in these organizations to really start that process. So I think for us it is going to be really more that educational process that will be the pacing item for our really large scale adoption.

David Williams

And maybe Tim, as you think about the balance sheet, obviously in a very good position there. But how do you think about your cash needs maybe as you ramp into commercialization and those associated costs, particularly as you run through some of these engineering or these sampling lock.

Timothy Burns

Yes. So we will always have a relatively small team. It is really just some are very strong technical expertise in the front end of the business, really interacting with the customer. So we will never be a company with hundreds of employees.

So for us, it is actually pretty manageable. I mean, we went from $3 million last year cash burn, we are forecasting about $4.5 million here for this year. I'm sure we will probably be, we will wait-and-see. It is a little bit early, but maybe we are another $1.5 million next year of growth.

It really just depends on how many participants we get in the program, how many participants in that program that we need to support, and we will have much better visibility as we get into that in early next year, as well as the commercialization of the technology in the second half of 2022.

But from our perspective, we knew when we went and did the raise here back in February, that we are going to have multiple years of cash and we would have a really strong balance sheet coming out of it. So, capital is not something that is a high concern for us at this point.

David Williams

Great. Well, congrats on the progress guys. Looking forward to seeing the rest of the progress next quarter.

Daniel Brdar

Thanks David.

Operator

We will take our next question from [Kelly Thurman] (Ph), Private Investor. Please go ahead.

Unidentified Analyst

Hey, Dan. Thanks for taking my call. I was curious to see when we will maybe hear some company names and why they haven't wanted to reveal their names on some of the sampling that you guys are doing? And the second question is, do you guys have anything in place to prevent a larger company from coming in and acquiring you guys when you are significantly undervalued?

Daniel Brdar

Let me address the first one and I will let Tim speak to the second part of your question. We actually so far have been prohibited from announcing the names and we have told these companies that we are working with.

Our investors are to want to know, and the response that we routinely get is that, look, we don't want our competitors knowing what we are doing, which I understand and appreciate. But it is a little frustrating because rather than announcing, it is one of the Top 10 global automakers, we would like to say who it is.

As we move into what, as these relationships advance, and they might turn into something that might be co-development agreements or a more strategic relationship. I think we are probably going to have some ability to say something at that point in time, but so far it is really, it is always been driven by their lack of desire to let their competitors know what kind of technologies they are looking at, and exploring for their products, basically that simple.

Timothy Burns

Yes. And is it relates to the second question that you had? So I would say that is something that is a concern of ours as well as whether getting taken out too early, potentially. For us, we are trying to establish as many of your way she says we can across multiple applications, and in doing so we try to hold off a specific application acquisition or a specific company from an application acquiring company.

I would say that is probably one of the higher areas of concern. When we look at it. We would really like to get through into the commercialization process and we have a much higher evaluation than we are now, before we have to deal with some of those conversations potentially. But, I would say that that is either risk.

Operator

[Operator Instructions]. We will take our next question from Don Slowinski with Winslow Asset Group. Please go ahead.

Don Slowinski

Thanks for taking my question today. Hey, guys. Congratulations on your progress. It seems like you are on the latter portion of a Phase II of your Phase III a plan towards B-TRAN commercialization. Is there anything in between this testing and evaluation and the next step, which would be the strategic development and commercial partnerships? Is there prototyping or is there anything else we can consider? And can you give us some timing on these expected strategic development and commercial partnerships?

Daniel Brdar

Well, let's talk about what will happen is one of the things that we were going to do is because we believe that B-TRAN is a new technology, we are better off bringing the intelligent power modules the a package guide coupled with a driver to market, we are going to take the feedback from the early participants in this program and bring out that intelligent power monitor. That is what we actually are going to be looking for commercialization.

But the other thing that that we see the potential for as our relationships with some of these companies start to progress, I think there is certainly opportunities to form a little bit more strategic relationships where we may be doing co-development for them, for example, for the EV space, because their requirements are unique in terms of what they are looking for, for devices and packaging, I think there is an opportunity for us to get some funded co-development work that we would do.

That would be certainly getting us deeper in bed with some of these folks, but also generating some, some revenue on the development side to just get ready for that market entry that we could then leverage with, with other people in that same market segment.

Don Slowinski

Okay, so that wouldn't be commercial revenue, but development revenue?

Daniel Brdar

Correct.

Don Slowinski

And then, what is your anticipated revenue model when you get to commercialization?

Daniel Brdar

I think it is a little bit too early to say Don what the revenue numbers roll look like at this point. And I think we have a pretty good sense of what the gross margin numbers would be like. And we are thinking from that perspective, 50% to 60%, gross margins.

But in terms of the adoption rate, we are just too early in conversations with these companies to really have visibility into that, but it is next year as we start getting some of that information. We will try to start providing some guidance as soon as we can.

Don Slowinski

Okay. Well that is a good margin profile. Thanks for taking questions and congrats again on all the progress.

Daniel Brdar

Thank you.

Operator

Thank you. Ladies and gentlemen, this concludes today's question-and-answer session. At this time, I would like to turn the conference back to Dan Brdar for any additional closing remarks.

Daniel Brdar

Thanks, everyone, for joining us our call today. Next week, we will be presenting at the Sidotti August Micro Cap Conference, and also the Q3 Virtual Investor Summit. So, there is an opportunity to talk to us again there if anybody's going to be participating in those conferences. So, we hope everybody has a good day and we will speak to you again when we report the third quarter results. Thank you.

Operator

Ladies and gentlemen, this concludes today's conference. We appreciate your participation. You may now disconnect.

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