UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission File Number 001-36216

IDEAL POWER INC.

(Exact name of registrant as specified in its charter)


Delaware	14-1999058
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

5508 Highway 290 West, Suite 120

Austin, Texas 78735

(Address of principal executive offices)

(Zip Code)

(512) 264-1542

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		IPWR		The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐	Accelerated filer ☐

Non-accelerated filer ☒	Smaller reporting company ☒

	Emerging growth company ☐

If an emerging growth company, indicate by check mark whether the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 10, 2023, the issuer had 5,938,458 shares of common stock, par value $0.001, outstanding.


PART I	FINANCIAL INFORMATION	3

Item 1.	Unaudited Condensed Financial Statements	3

	Balance Sheets at June 30, 2023 and December 31, 2022	3
	Statements of Operations for the three and six months ended June 30, 2023 and 2022	4
	Statements of Cash Flows for the six months ended June 30, 2023 and 2022	5
	Statements of Stockholders’ Equity for the three-month periods during the six months ended June 30, 2023 and 2022	6
	Notes to Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4.	Controls and Procedures	17

PART II	OTHER INFORMATION	18

Item 1.	Legal Proceedings	18

Item 1A.	Risk Factors	18

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 3.	Defaults Upon Senior Securities	18

Item 4.	Mine Safety Disclosures	18

Item 5.	Other Information	18

Item 6.	Exhibits	19

SIGNATURES		20


	June 30,		December 31,
	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	12,683,268	$	16,345,623
Accounts receivable, net		203,324		65,936
Prepayments and other current assets		540,430		491,365
Total current assets		13,427,022		16,902,924

Property and equipment, net		281,109		200,103
Intangible assets, net		2,539,422		2,036,431
Right of use asset		218,130		248,720
Other assets		11,189		11,189
Total assets	$	16,476,872	$	19,399,367

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	112,010	$	130,503
Accrued expenses		614,642		254,218
Current portion of lease liability		67,595		64,597
Total current liabilities		794,247		449,318

Long-term lease liability		168,600		202,987
Other long-term liabilities		1,180,005		838,458
Total liabilities		2,142,852		1,490,763

Commitments and contingencies (Note 5)

Stockholders’ equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 5,939,779 shares issued and 5,938,458 shares outstanding at June 30, 2023 and 5,926,001 shares issued and 5,924,680 shares outstanding at December 31, 2022		5,940		5,926
Additional paid-in capital		106,244,511		105,011,318
Treasury stock, at cost, 1,321 shares at June 30, 2023 and December 31, 2022		(13,210)		(13,210)
Accumulated deficit		(91,903,221)		(87,095,430)
Total stockholders’ equity		14,334,020		17,908,604
Total liabilities and stockholders’ equity	$	16,476,872	$	19,399,367


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Development revenue	$	98,443	$	—	$	98,443	$	—
Grant revenue		36,724		50,978		37,388		175,986
Total revenue		135,167		50,978		135,831		175,986

Cost of development revenue		74,013		—		74,013		—
Cost of grant revenue		36,724		50,978		37,388		175,986
Total cost of revenue		110,737		50,978		111,401		175,986

Gross profit		24,430		—		24,430		—

Operating expenses:
Research and development		1,206,688		728,383		2,646,716		1,556,930
General and administrative		933,993		734,637		1,828,926		1,587,586
Sales and marketing		271,900		233,152		576,226		452,581
Total operating expenses		2,412,581		1,696,172		5,051,868		3,597,097

Loss from operations		(2,388,151)		(1,696,172)		(5,027,438)		(3,597,097)

Interest income, net		108,345		6,178		219,647		2,462

Net loss	$	(2,279,806)	$	(1,689,994)	$	(4,807,791)	$	(3,594,635)

Net loss per share – basic and diluted	$	(0.37)	$	(0.27)	$	(0.78)	$	(0.58)

Weighted average number of shares outstanding – basic and diluted		6,185,397		6,157,625		6,181,972		6,156,495


				Additional							Total
	Common Stock			Paid-In		Treasury Stock			Accumulated		Stockholders’
	Shares	Amount		Capital		Shares	Amount		Deficit		Equity
Balances at December 31, 2021	5,893,767	$	5,894	$	104,063,321	1,321	$	(13,210)	$	(79,906,080)	$	24,149,925
Exercise of options	1,351		1		(1)	—		—		—		—
Stock issued for services	10,000		10		100,090	—		—		—		100,100
Stock-based compensation	—		—		231,765	—		—		—		231,765
Net loss for the three months ended March 31, 2022	—		—		—	—		—		(1,904,641)		(1,904,641)
Balances at March 31, 2022	5,905,118		5,905		104,395,175	1,321		(13,210)		(81,810,721)		22,577,149
Stock-based compensation	—		—		230,473	—		—		—		230,473
Net loss for the three months ended June 30, 2022	—		—		—	—		—		(1,689,994)		(1,689,994)
Balances at June 30, 2022	5,905,118	$	5,905	$	104,625,648	1,321	$	(13,210)	$	(83,500,715)	$	21,117,628

Balances at December 31, 2022	5,926,001	$	5,926	$	105,011,318	1,321	$	(13,210)	$	(87,095,430)	$	17,908,604
Vesting of restricted stock units	6,889		7		(7)	—		—		—		—
Stock-based compensation	—		—		609,926	—		—		—		609,926
Net loss for the three months ended March 31, 2023	—		—		—	—		—		(2,527,985)		(2,527,985)
Balances at March 31, 2023	5,932,890		5,933		105,621,237	1,321		(13,210)		(89,623,415)		15,990,545
Vesting of restricted stock units	6,889		7		(7)	—		—		—		—
Stock-based compensation	—		—		623,281	—		—		—		623,281
Net loss for the three months ended June 30, 2023	—		—		—	—		—		(2,279,806)		(2,279,806)
Balances at June 30, 2023	5,939,779	$	5,940	$	106,244,511	1,321	$	(13,210)	$	(91,903,221)	$	14,334,020


For the Year Ended December 31,
2023 (remaining)	$	39,683
2024		80,552
2025		82,587
2026		56,132
Total lease payments		258,954
Less: imputed interest		(22,759)
Total lease liability		236,195
Less: current portion of lease liability		(67,595)
Long-term lease liability	$	168,600


				Weighted
		Weighted		Average
		Average		Remaining
	Stock	Exercise		Life
	Options	Price		(in years)
Outstanding at December 31, 2022	513,948	$	7.59	6.6
Granted	12,000	$	11.96
Outstanding at June 30, 2023	525,948	$	7.69	6.2
Exercisable at June 30, 2023	459,950	$	7.04	5.8


	RSUs	PSUs
Outstanding at December 31, 2022	183,666	114,000
Granted	39,750	—
Vested	(13,778)	—
Outstanding at June 30, 2023	209,638	114,000


Exhibit Number		Document

10.1+		Amended and Restated Ideal Power Inc. 2013 Equity Incentive Plan (incorporated by reference to our Current Report on Form 8-K, filed on June 16, 2023)

31.1*		Certification of Principal Executive Officer pursuant to Exchange Act Rule, 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Principal Financial Officer pursuant to Exchange Act Rule, 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		Certification pursuant to 18 U.S.C. 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

10.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)


Dated August 11, 2023	IDEAL POWER INC.

	By:	/s/ R. Daniel Brdar
		R. Daniel Brdar
		Chief Executive Officer

	By:	/s/ Timothy W. Burns
		Timothy W. Burns
		Chief Financial Officer


	June 30,		December 31,
	2023		2022
	(unaudited)
Patents	$	1,393,141	$	1,263,930
Trademarks		10,627		—
Other intangible assets		1,843,036		1,391,479
		3,246,804		2,655,409
Accumulated amortization - patents		(240,608)		(211,078)
Accumulated amortization - other intangible assets		(466,774)		(407,900)
	$	2,539,422	$	2,036,431

SEC Form 10-Q filed by Ideal Power Inc.