Ideal Power Inc. (NASDAQ:IPWR) Q4 2020 Results Conference Call March 17, 2021 4:30 PM ET Company Participants Carolyn Capaccio - LHA Investor Relations Dan Brdar - President and CEO Tim Burns - Chief Financial Officer Conference Call Participants Ruben Roy - Benchmark Company Don Slowinski - Winslow Asset Group Operator Good day. And welcome to the Ideal Power Fourth Quarter 2020 Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Caroly ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ¨ 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) (State or other ...

Ideal Power Inc. (NASDAQ:IPWR) Q3 2020 Results Earnings Conference Call November 12, 2020 4:30 PM ET Company Participants Carolyn Capaccio - LHA Investor Relations Dan Brdar - President and CEO Tim Burns - Chief Financial Officer Conference Call Participants Jim McIlree - Bradley Woods Orin Hirschman - AIGH Operator Please standby. We are about to begin. Good day. And welcome to the Ideal Power Third Quarter 2020 Results Conference Call. Today’s conference is being recorded. At this time, I would like to tu ...

Ideal Power Inc. (NASDAQ:IPWR) Q2 2020 Earnings Conference Call August 13, 2020 4:30 PM ET Company Participants Carolyn Capaccio - LHA Investor Relations Daniel Brdar - President and Chief Executive Officer Timothy Burns - Chief Financial Officer Conference Call Participants Slowinski - Winslow Asset Group Orin Hirschman - AIGH Operator 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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ¨ 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) (State or other juri ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to _______________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Delaware 14-1999058 4120 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________________________________________________________ FORM 10-K ________________________________________________________________ (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR ¨ 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 001-362 ...

Financial Data and Key Metrics Changes - The company reported no revenues from continuing operations for both the fourth quarter and full year of 2019 [34] - Fourth quarter 2019 operating expenses decreased to $0.8 million from $1 million in the fourth quarter of 2018, while full year 2019 operating expenses were $3.1 million compared to $4.3 million in 2018 [35] - The net loss for the fourth quarter of 2019 was $0.8 million, down from $1.9 million in the same quarter of 2018, and the full year net loss was $3.9 million compared to $7.9 million in 2018 [36] - Cash and cash equivalents totaled $3.1 million as of December 31, 2019, with no long-term debt outstanding [40] - The current cash burn rate is approximately $0.7 million per quarter, which is about 60% less than the average quarterly cash burn in 2018 [41] Business Line Data and Key Metrics Changes - The company has shifted focus from its legacy Power Conversion Systems business to the development and commercialization of B-TRAN technology, resulting in reduced cash burn [8] - The B-TRAN technology is in Phase two of its commercialization plan, which involves fabricating parts and delivering samples to potential customers [19] Market Data and Key Metrics Changes - The electric power switch market is expected to grow to $7.4 billion by 2022, indicating significant market potential for B-TRAN technology [9] - U.S. data centers currently consume 73 billion kilowatt hours per year, with a greater than 13% power loss, highlighting the efficiency benefits of B-TRAN technology [16] Company Strategy and Development Direction - The company aims to establish strategic partnerships in targeted market sectors for initial commercial sales of B-TRAN power switches [19] - The B-TRAN technology is positioned to address inefficiencies in conventional power switches, which could lead to broader adoption in various applications [14][42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2020 being an inflection point for B-TRAN, citing increased engagement with potential customers and partners [44] - The company is actively monitoring the impact of COVID-19 on operations and has implemented risk mitigation strategies [20][22] Other Important Information - The company has 51 issued B-TRAN patents, with 15 issued outside North America, and 34 pending patent filings to enhance geographic coverage [33] - The company is currently not in production, which minimizes logistics and supply chain issues related to COVID-19 [23] Q&A Session Summary Question: Has the focus on the UPS market changed? - Management acknowledged that while the UPS market remains a focus, other opportunities have emerged that are being evaluated [46] Question: How will strategic partnerships affect B-TRAN manufacturing? - Management clarified that the company is fabless and will rely on contractual relationships with fab houses for manufacturing, while selling parts to strategic partners [48][50] Question: What is the timeline for entering the automotive market? - Management indicated that while the automotive market is a significant opportunity, initial revenue will come from partnerships that are executable in a shorter timeframe, with automotive partnerships likely involving licensing arrangements [52][53]

IDEAL @ POWER Investor Presentation December 2019 Safe Harbor All statements in this presentation that are not based on historical fact are "forward looking statements." While management has based any forward looking statements included in this presentation on its current expectations, the information on which such expectations were based may change. These forward looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties and other factors ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Condensed Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Financial%20Statements) Presents unaudited condensed financial statements, including balance sheets, operations, cash flows, and equity, with detailed accounting notes [Balance Sheets](index=4&type=section&id=Balance%20Sheets%20at%20September%2030%2C%202019%20(Unaudited)%20and%20December%2031%2C%202018) Balance Sheet Highlights (September 30, 2019 vs. December 31, 2018) | Item | Sep 30, 2019 | Dec 31, 2018 | Change | % Change | | :----------------------------------- | :----------- | :----------- | :----- | :------- | | Total Assets | $2,918,780 | $6,165,820 | $(3,247,040) | -52.66% | | Cash and cash equivalents | $769,833 | $3,258,077 | $(2,488,244) | -76.38% | | Current assets of discontinued operations held for sale | $0 | $1,096,323 | $(1,096,323) | -100.00% | | Intangible assets, net | $1,645,555 | $1,396,409 | $249,146 | 17.84% | | Total Stockholders' Equity | $1,585,373 | $4,597,944 | $(3,012,571) | -65.52% | | Accumulated deficit | $(66,519,544) | $(63,414,252) | $(3,105,292) | 4.90% | [Statements of Operations](index=5&type=section&id=Statements%20of%20Operations%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202019%20and%202018%20(Unaudited)) Statements of Operations Highlights (Unaudited) | Item | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Product revenue | $0 | $0 | $0 | $0 | | Total operating expenses | $722,045 | $1,238,496 | $2,325,066 | $3,340,669 | | Loss from continuing operations | $(724,808) | $(1,238,608) | $(2,328,138) | $(3,303,852) | | Loss from discontinued operations | $(78,796) | $(1,011,315) | $(768,047) | $(2,724,679) | | Loss on sale of discontinued operations | $(9,107) | $0 | $(9,107) | $0 | | Net loss | $(812,711) | $(2,249,923) | $(3,105,292) | $(6,028,531) | | Net loss per share – basic and fully diluted | $(0.55) | $(1.61) | $(2.13) | $(4.30) | [Statements of Cash Flows](index=6&type=section&id=Statements%20of%20Cash%20Flows%20for%20the%20nine%20months%20ended%20September%2030%2C%202019%20and%202018%20(Unaudited)) Statements of Cash Flows Highlights (Unaudited, Nine Months Ended September 30) | Item | 2019 | 2018 | | :------------------------------------------------ | :----------- | :----------- | | Loss from continuing operations | $(2,328,138) | $(3,303,852) | | Net cash used in operating activities (continuing) | $(1,876,140) | $(2,267,158) | | Net cash used in operating activities – discontinued operations | $(557,096) | $(2,076,842) | | Net cash used in investing activities | $(78,595) | $(87,001) | | Net cash provided by (used in) investing activities – discontinued operations | $23,587 | $(49,865) | | Net cash used in financing activities | $0 | $(2,616) | | Cash and cash equivalents at end of period | $769,833 | $5,538,765 | [Statements of Stockholders' Equity](index=7&type=section&id=Statements%20of%20Stockholders'%20Equity%20for%20the%20three-month%20periods%20ended%20during%20the%20nine%20months%20ended%20September%2030%2C%202019%20and%202018%20(Unaudited)) Stockholders' Equity Highlights (Unaudited) | Item | Dec 31, 2018 | Sep 30, 2019 | | :----------------------------------- | :----------- | :----------- | | Total Stockholders' Equity | $4,597,944 | $1,585,373 | | Accumulated Deficit | $(63,414,252) | $(66,519,544) | | Preferred stock shares outstanding | 1,518,430 | 810,000 | | Common stock shares outstanding | 1,403,158 | 1,474,001 | | Additional paid-in capital | $68,022,484 | $68,115,842 | | Net loss for the nine months ended Sep 30, 2019 | N/A | $(3,105,292) | | Conversion of preferred stock to common stock (2019) | N/A | 70,843 common shares from 708,430 preferred shares | | Stock-based compensation (9 months ended Sep 30, 2019) | N/A | $118,521 | | Stock-based compensation (9 months ended Sep 30, 2018) | N/A | $837,810 | [Notes to Unaudited Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Financial%20Statements) Explains business, accounting policies, strategic shift, division sale, equity changes, legal proceedings, and subsequent events [Note 1 – Organization and Description of Business](index=8&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Description%20of%20Business) Ideal Power Inc. shifted focus to B-TRAN™ technology after selling its power conversion division, operations dependent on securing funding - **Strategic Shift**: The company approved a strategic shift on January 2, 2019, to focus solely on the development and commercialization of its B-TRAN™ technology, suspending further power converter system development and sales[20](index=20&type=chunk) - **Discontinued Operations**: The power conversion systems division was sold on September 19, 2019[20](index=20&type=chunk) - **Funding Dependence**: The company's operations are dependent on obtaining adequate funding through future revenues, equity/debt financing, co-development agreements, government grants, or intellectual property sales/licensing[21](index=21&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=8&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) Outlines financial statement presentation, reverse stock split adjustment, liquidity status, and ASC 842 lease adoption - **Reverse Stock Split**: A one-for-ten reverse stock split was effected on August 15, 2019, with all share and per-share data retroactively adjusted[24](index=24&type=chunk) - **Liquidity and Going Concern**: The company had a net loss of **$3.1 million** and used **$2.4 million cash** in operating activities for the nine months ended September 30, 2019, leading to substantial doubt about its ability to continue as a going concern[25](index=25&type=chunk) - **Going Concern Alleviated**: A private placement completed on November 13, 2019, generated **$3.5 million** in gross proceeds (**$3.1 million net**), alleviating the substantial doubt about the company's ability to continue as a going concern for at least the next twelve months[25](index=25&type=chunk) - **Lease Accounting Standard Adoption**: The company adopted ASC 842 (Leases) effective January 1, 2019, recognizing a right-of-use asset of **$422,819** and a lease liability of **$427,131**[27](index=27&type=chunk) [Note 3 – Sale of Power Conversion Systems Division](index=10&type=section&id=Note%203%20%E2%80%93%20Sale%20of%20Power%20Conversion%20Systems%20Division) The company sold its power conversion systems division to CE+T Energy Solutions for cash and equity, reporting its financial results as discontinued operations - **Strategic Exit**: The Board approved the sale of the power conversion systems division on January 2, 2019, due to the division's inability to achieve positive cash flows and scale sufficiently[29](index=29&type=chunk)[30](index=30&type=chunk) - **Sale Completion**: The sale to CE+T Energy Solutions, Inc. closed on September 19, 2019, for **$200,000** in cash and **50 shares** of CE+T Energy's common stock (**5% ownership**), with net cash proceeds of **$23,587**[32](index=32&type=chunk) Loss from Discontinued Operations (Unaudited) | Item | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $0 | $342,661 | $115,000 | $1,144,103 | | Cost of revenue | $1,337 | $552,127 | $141,647 | $1,471,890 | | Research and development | $12,613 | $527,631 | $197,663 | $1,774,193 | | General and administrative | $40,332 | $9,513 | $79,306 | $33,762 | | Sales and marketing | $24,514 | $264,705 | $59,431 | $588,937 | | Impairment | $0 | $0 | $405,000 | $0 | | **Loss from discontinued operations** | **$(78,796)** | **$(1,011,315)** | **$(768,047)** | **$(2,724,679)** | [Note 4 – Intangible Assets](index=12&type=section&id=Note%204%20%E2%80%93%20Intangible%20Assets) Intangible assets, mainly patents, increased from December 2018 to September 2019, reflecting IP investment and higher amortization Intangible Assets, Net (Unaudited) | Item | Sep 30, 2019 | Dec 31, 2018 | | :-------------------- | :----------- | :----------- | | Patents | $898,346 | $824,004 | | Other intangible assets | $964,542 | $732,175 | | Total | $1,862,888 | $1,556,179 | | Accumulated amortization | $(217,333) | $(159,770) | | **Intangible assets, net** | **$1,645,555** | **$1,396,409** | Amortization Expense (Unaudited) | Period | 2019 | 2018 | | :-------------------------- | :------- | :------- | | Three months ended Sep 30 | $21,554 | $16,323 | | Nine months ended Sep 30 | $57,563 | $48,534 | - **Capitalized costs** for unawarded patents amounted to **$339,020** at September 30, 2019[37](index=37&type=chunk) [Note 5 – Lease](index=12&type=section&id=Note%205%20%E2%80%93%20Lease) Adopted ASC 842, recognizing a right-of-use asset and lease liability, and subleased 75% of its facility, reducing net lease payments - **ASC 842 Adoption**: On January 1, 2019, the company recognized a right-of-use asset of **$422,819** and a lease liability of **$427,131**[39](index=39&type=chunk) - **Sublease Agreement**: On September 19, 2019, the company subleased approximately **75%** of its Austin facility to CE+T Energy, with CE+T Energy obligated to pay **75%** of master lease sums and **100%** of maintenance costs[41](index=41&type=chunk) Future Undiscounted Minimum Lease Payments (Net, as of Sep 30, 2019) | For the Year Ended December 31, | Net | | :------------------------------ | :---- | | 2019 | $12,010 | | 2020 | $49,120 | | 2021 | $20,787 | | **Total future undiscounted minimum lease payments** | **$81,917** | | Less: imputed interest | $(20,003) | | **Total lease liability** | **$307,664** | [Note 6 – Commitments and Contingencies](index=13&type=section&id=Note%206%20%E2%80%93%20Commitments%20and%20Contingencies) Has variable payments under a licensing agreement for semiconductor power switches and mutual indemnification obligations from a division sale - **Licensing Agreement**: The company holds an exclusive royalty-free license for semiconductor power switches, with variable annual payments up to **$100,000** based on patent filings and issuances[42](index=42&type=chunk) - **New Patent**: A patent issued in April 2019 resulted in the recording of an asset and corresponding liability of **$232,367** for estimated present value of future payments[42](index=42&type=chunk) - **Indemnification Obligations**: The company has mutual indemnification obligations with CE+T Energy related to the Asset Purchase Agreement for the sale of its power conversion systems division[43](index=43&type=chunk) [Note 7 – Common and Preferred Stock](index=13&type=section&id=Note%207%20%E2%80%93%20Common%20and%20Preferred%20Stock) Executed a reverse stock split for Nasdaq compliance, converted preferred stock, and received an extension for minimum stockholders' equity compliance - **Preferred Stock Conversion**: On February 21, 2019, a shareholder converted **708,430 shares** of preferred stock to **70,843 shares** of common stock[44](index=44&type=chunk) - **Reverse Stock Split**: A **one-for-ten reverse stock split** was effected on August 15, 2019, reducing outstanding common stock from **14,722,840** to **1,474,001 shares**[46](index=46&type=chunk)[48](index=48&type=chunk) - **Nasdaq Compliance (Bid Price)**: The company regained compliance with Nasdaq's minimum bid price requirement on September 4, 2019[50](index=50&type=chunk) - **Nasdaq Compliance (Stockholders' Equity)**: On August 21, 2019, the company was notified of non-compliance with the minimum stockholders' equity requirement (**$2.5 million**), with a compliance plan submitted and approved, granting an extension until November 30, 2019[51](index=51&type=chunk) [Note 8 – Equity Incentive Plan](index=15&type=section&id=Note%208%20%E2%80%93%20Equity%20Incentive%20Plan) The 2013 Equity Incentive Plan governs stock options and RSUs, with executive forfeitures leading to accelerated compensation expense recognition - **Award Forfeitures**: In April 2019, executives and Board members voluntarily forfeited **49,584 stock options** and **11,900 performance stock units**, leading to an accelerated recognition of **$80,492** in stock compensation expense[53](index=53&type=chunk) Stock Option Activity (Unaudited, Nine Months Ended Sep 30, 2019) | Item | Stock Options | Weighted Average Exercise Price | | :-------------------------- | :------------ | :------------------------------ | | Outstanding at Dec 31, 2018 | 147,054 | $50.79 | | Granted | 24,400 | $4.25 | | Forfeited/Expired/Exchanged | (95,474) | $67.64 | | **Outstanding at Sep 30, 2019** | **75,980** | **$14.67** | | Exercisable at Sep 30, 2019 | 69,130 | $15.70 | - **Unrecognized Compensation Cost**: At September 30, 2019, **$19,033** of unrecognized compensation cost related to non-vested equity awards remained, expected to be recognized over a weighted average period of **0.4 years**[58](index=58&type=chunk) [Note 9 – Warrants](index=17&type=section&id=Note%209%20%E2%80%93%20Warrants) Had 684,095 warrants outstanding at September 30, 2019, with a weighted average exercise price of $25.37, subject to exercise limitations Warrants Outstanding (Unaudited) | Date | Warrants Outstanding | Weighted Average Exercise Price | | :-------------------- | :------------------- | :------------------------------ | | September 30, 2019 | 684,095 | $25.37 | | December 31, 2018 | 713,652 | $26.19 | Warrants Expired (Unaudited, Nine Months Ended Sep 30, 2019) | Period | Warrants Expired | | :-------------------------- | :--------------- | | Three months ended Sep 30 | 19,355 | | Nine months ended Sep 30 | 29,557 | - **Exercise Limitations**: Warrants held by the two largest beneficial owners may only be exercised to the extent that their total beneficial ownership does not exceed **9.99%** of outstanding common stock[59](index=59&type=chunk) [Note 10 – Legal Proceedings](index=17&type=section&id=Note%2010%20%E2%80%93%20Legal%20Proceedings) Involved in a legal dispute with Pathion Holdings, Inc. regarding a failed asset purchase agreement, with partial summary judgment in its favor and trial set for August 2020 - **Lawsuit Filed**: On June 13, 2019, the company filed a petition against Pathion Holdings, Inc. and Pathion, Inc. for breach of an asset purchase agreement and fraudulent inducement related to the sale of its PPSA™ Assets[61](index=61&type=chunk) - **Summary Judgment Granted**: On August 23, 2019, the Court granted the company's motion for partial summary judgment, declaring Pathion has no rights to the PPSA™ Assets and awarding the company **$24,800** in legal fees[63](index=63&type=chunk) - **Trial Date**: A trial for the remaining claims is scheduled to begin on August 31, 2020[64](index=64&type=chunk) [Note 11 – Subsequent Events](index=17&type=section&id=Note%2011%20%E2%80%93%20Subsequent%20Events) Granted stock options and completed a private placement in November 2019, raising $3.5 million gross proceeds for working capital - **Stock Options Granted**: On October 28, 2019, **94,000 stock options** were granted to executives with a fair value of **$184,689**[66](index=66&type=chunk) - **Private Placement**: A private placement closed on November 13, 2019, generating aggregate gross proceeds of **$3.5 million** and estimated net proceeds of **$3.1 million**[67](index=67&type=chunk) - **Securities Issued**: The offering included **544,950 shares** of common stock, **868,443 pre-funded warrants**, and **1,766,751 investor warrants**, with an exercise price of **$2.4763** per share (or pre-funded warrant) and **$2.32** per share for investor warrants, respectively[67](index=67&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on financial condition and operational results, highlighting B-TRAN strategic shift, division sale, financing, Nasdaq compliance, and performance comparisons [Overview](index=20&type=section&id=Overview) Ideal Power shifted focus to B-TRAN™ technology after selling its PPSA™ division, generating limited revenue and relying on stock sales for funding - **Strategic Shift**: The company has shifted its focus from PPSA™ power conversion products to the development and commercialization of its B-TRAN™ solid state switch technology[75](index=75&type=chunk) - **Discontinued Operations**: The power conversion systems division was sold on September 19, 2019[75](index=75&type=chunk) - **Revenue Generation**: The company has generated limited revenues since inception, primarily from discontinued operations and grant revenue, with no revenue from continuing operations reported for the nine months ended September 30, 2019 and 2018[76](index=76&type=chunk) [Sale of Power Conversion Systems Division](index=20&type=section&id=Sale%20of%20Power%20Conversion%20Systems%20Division%20(MD%26A)) Sold its power conversion systems division to CE+T Energy Solutions for cash and equity, including a sublease agreement for its Austin facility - **Sale Completion**: The power conversion systems division was sold to CE+T Energy Solutions, Inc. on September 19, 2019[77](index=77&type=chunk) - **Consideration**: The sale consideration included **$200,000** in cash and **50 shares** of CE+T Energy's common stock, representing a **5% ownership interest**[77](index=77&type=chunk) - **Sublease Agreement**: A sublease was entered into with CE+T Energy for approximately **75%** of the Austin, Texas facility, with CE+T Energy covering **75%** of master lease payments and **100%** of maintenance costs[78](index=78&type=chunk) [Private Placement of Common Stock and Warrants](index=20&type=section&id=Private%20Placement%20of%20Common%20Stock%20and%20Warrants) Completed a private placement in November 2019, raising $3.5 million gross proceeds by issuing common stock and warrants for working capital - **Offering Details**: A private placement closed on November 13, 2019, generating aggregate gross proceeds of **$3.5 million** and estimated net proceeds of **$3.1 million**[80](index=80&type=chunk) - **Securities Issued**: The offering included **544,950 shares** of common stock, **868,443 pre-funded warrants**, and **1,766,751 investor warrants**[80](index=80&type=chunk) - **Use of Proceeds**: Net proceeds from the offering are intended for working capital and general corporate purposes[80](index=80&type=chunk) [Reverse Stock Split](index=22&type=section&id=Reverse%20Stock%20Split%20(MD%26A)) Effected a one-for-ten reverse stock split on August 15, 2019, to adjust its common stock trading price on the Nasdaq Capital Market - **Split Ratio**: A **one-for-ten reverse stock split** of outstanding common stock was effected on August 15, 2019[82](index=82&type=chunk) - **Trading Adjustment**: Common stock began trading on the Nasdaq Capital Market on a split-adjusted basis on August 20, 2019[82](index=82&type=chunk) [Nasdaq Listing Compliance](index=22&type=section&id=Nasdaq%20Listing%20Compliance%20(MD%26A)) Addressed Nasdaq non-compliance for minimum stockholders' equity, submitting an approved plan, with a private placement expected to restore compliance - **Non-Compliance**: On August 21, 2019, the company was notified of non-compliance with Nasdaq Listing Rule 5550(b)(1) due to stockholders' equity being below the required minimum of **$2.5 million**[83](index=83&type=chunk) - **Compliance Plan**: A plan of compliance was submitted on October 3, 2019, and approved by Nasdaq on October 31, 2019, granting an extension until November 30, 2019[83](index=83&type=chunk) - **Expected Compliance**: The company believes the recent private placement will enable it to satisfy the minimum **$2.5 million** stockholders' equity requirement[83](index=83&type=chunk) [Critical Accounting Policies](index=22&type=section&id=Critical%20Accounting%20Policies%20(MD%26A)) Adopted ASC 842 for leases on January 1, 2019, recognizing a right-of-use asset and lease liability, with no other significant policy changes - **ASC 842 Adoption**: Effective January 1, 2019, the company recognized a right-of-use asset of **$422,819** and a lease liability of **$427,131**[84](index=84&type=chunk) - **No Other Significant Changes**: There have been no other significant changes to critical accounting policies disclosed in the 2018 Annual Report on Form 10-K[85](index=85&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations%20(MD%26A)) Significantly reduced net loss for three and nine months ended September 30, 2019, driven by lower discontinued operations losses and reduced G&A expenses Comparison of Three Months Ended September 30, 2019 vs. 2018 | Item | 2019 | 2018 | Change | % Change | | :----------------------------------- | :----------- | :----------- | :----- | :------- | | Research and development | $250,773 | $326,733 | $(75,960) | -23% | | General and administrative | $471,272 | $911,763 | $(440,491) | -48% | | Loss from continuing operations | $(724,808) | $(1,238,608) | $513,800 | -41% | | Loss from discontinued operations | $(78,796) | $(1,011,315) | $932,519 | -92% | | Net loss | $(812,711) | $(2,249,923) | $1,437,212 | -64% | Comparison of Nine Months Ended September 30, 2019 vs. 2018 | Item | 2019 | 2018 | Change | % Change | | :----------------------------------- | :----------- | :----------- | :----- | :------- | | Research and development | $804,741 | $743,495 | $61,246 | 8% | | General and administrative | $1,520,325 | $2,597,174 | $(1,076,849) | -41% | | Loss from continuing operations | $(2,328,138) | $(3,303,852) | $975,714 | -30% | | Loss from discontinued operations | $(768,047) | $(2,724,679) | $1,956,632 | -72% | | Net loss | $(3,105,292) | $(6,028,531) | $2,923,239 | -48% | [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources%20(MD%26A)) Currently without revenue, relies on stock sales for funding; cash and equivalents decreased, but a $3.5 million private placement is expected to provide capital - **Revenue Generation**: The company currently does not generate revenue and has funded operations primarily through the sale of common stock[99](index=99&type=chunk) Liquidity Highlights (Unaudited) | Item | Sep 30, 2019 | | :-------------------------- | :----------- | | Cash and cash equivalents | $769,833 | | Net working capital | $347,251 | | Long-term debt | $0 | | Cash used in operating activities (9 months) | $(2,433,236) | - **Subsequent Financing**: A private placement closed on November 13, 2019, raising **$3.5 million** in gross proceeds (**$3.1 million net**) to fund operations[103](index=103&type=chunk) - **Future Funding Needs**: The company may require additional financing to continue operations and execute its business plan, with no assurance of obtaining such financing on favorable terms or at all[104](index=104&type=chunk) [Off-Balance Sheet Arrangements](index=25&type=section&id=Off-Balance%20Sheet%20Arrangements%20(MD%26A)) As of September 30, 2019, the company did not have any material off-balance sheet arrangements - No material off-balance sheet arrangements as of September 30, 2019[105](index=105&type=chunk) [Trends, Events and Uncertainties](index=25&type=section&id=Trends%2C%20Events%20and%20Uncertainties%20(MD%26A)) There are no material changes from trends, events, or uncertainties disclosed in the company's 2018 Annual Report on Form 10-K - No material changes from trends, events, or uncertainties disclosed in the 2018 Annual Report on Form 10-K[106](index=106&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Ideal Power Inc. is not required to provide quantitative and qualitative disclosures about market risk - **Exempt from Disclosure**: As a smaller reporting company, Ideal Power Inc. is not required to provide quantitative and qualitative disclosures about market risk[107](index=107&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2019, with no material changes in internal control over financial reporting - **Effectiveness of Disclosure Controls**: The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2019[110](index=110&type=chunk) - **Changes in Internal Control**: There were no material changes in internal controls over financial reporting during the quarter ended September 30, 2019[111](index=111&type=chunk) - **Limitations**: The company acknowledges that control systems provide only reasonable, not absolute, assurance due to inherent limitations such as human error, collusion, or management override[112](index=112&type=chunk) [PART II - OTHER INFORMATION](index=28&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) Involved in a legal dispute with Pathion Holdings, Inc. regarding a failed asset purchase agreement, with partial summary judgment in its favor and trial set for August 2020 - **Lawsuit Filed**: The company filed a petition against Pathion Holdings, Inc. and Pathion, Inc. for breach of an asset purchase agreement and fraudulent inducement related to the sale of its PPSA™ / Power Conversion Systems business[116](index=116&type=chunk) - **Summary Judgment**: The court granted the company's motion for partial summary judgment, declaring Pathion has no rights to the PPSA Assets and awarding the company **$24,800** in legal fees[118](index=118&type=chunk) - **Trial Date**: A trial for the remaining claims is scheduled to begin on August 31, 2020[119](index=119&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) The company refers readers to the risk factors discussed in its 2018 Annual Report on Form 10-K, noting no material changes in these factors - **Referral to 10-K**: Readers should carefully consider the risk factors discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2018[121](index=121&type=chunk) - **No Material Changes**: There have been no material changes in the risk factors included in the Annual Report on Form 10-K for the year ended December 31, 2018[121](index=121&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds for the period - No unregistered sales of equity securities or use of proceeds were reported[122](index=122&type=chunk) [Item 3. Defaults Upon Senior Securities](index=28&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company - This item is not applicable[123](index=123&type=chunk) [Item 4. Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable[124](index=124&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - No other information was reported[125](index=125&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including Certificate of Incorporation amendments, asset purchase and sublease agreements, and required certifications - **Exhibits** include Certificate of Amendment to the Certificate of Incorporation, Asset Purchase Agreement, Sublease Agreement, and certifications from principal executive and financial officers[126](index=126&type=chunk) [SIGNATURES](index=30&type=section&id=SIGNATURES) [Signatures](index=30&type=section&id=SIGNATURES_DETAIL) The report is duly signed by Ideal Power Inc.'s CEO and CFO, affirming compliance with the Securities Exchange Act of 1934 - The report is signed by Lon E. Bell, Chief Executive Officer, and Timothy W. Burns, Chief Financial Officer, on November 14, 2019[130](index=130&type=chunk)[131](index=131&type=chunk)