Ideal Power(IPWR) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Presents the company's unaudited financial statements for interim periods ended June 30, 2025, and December 31, 2024 Item 1. Unaudited Condensed Financial Statements Presents the company's unaudited financial position, operational performance, cash flows, and equity for interim periods Balance Sheets Total assets decreased from $19.83 million to $14.95 million, driven by reduced cash, with equity significantly declining Balance Sheet Summary | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $11,105,553 | $15,842,850 | | Total current assets | $11,424,643 | $16,296,606 | | Total assets | $14,948,016 | $19,826,684 | | Total current liabilities | $904,272 | $560,810 | | Total liabilities | $2,209,675 | $1,971,520 | | Total stockholders' equity | $12,738,341 | $17,855,164 | Statements of Operations Net loss significantly increased for both three and six months ended June 30, 2025, due to decreased revenue and higher R&D Statements of Operations Summary | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,275 | $1,331 | $13,278 | $80,070 | | Gross loss | $(2,202) | $(16,143) | $(21,061) | $(5,902) | | Research and development | $1,900,019 | $1,562,747 | $3,468,011 | $2,929,640 | | Total operating expenses | $3,138,291 | $2,869,870 | $5,944,264 | $5,407,062 | | Loss from operations | $(3,140,493) | $(2,886,013) | $(5,965,325) | $(5,412,964) | | Net loss | $(3,036,765) | $(2,662,065) | $(5,739,789) | $(5,131,691) | | Net loss per share – basic and diluted | $(0.33) | $(0.31) | $(0.63) | $(0.69) | Statements of Cash Flows Operating cash outflows increased due to higher net loss, with financing activities shifting from inflow to outflow Statements of Cash Flows Summary | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,425,301) | $(3,970,930) | | Net cash used in investing activities | $(220,337) | $(239,004) | | Net cash provided by (used in) financing activities | $(91,659) | $15,799,996 | | Net increase (decrease) in cash and cash equivalents | $(4,737,297) | $11,590,062 | | Cash and cash equivalents at end of period | $11,105,553 | $20,064,897 | Statements of Stockholders' Equity Stockholders' equity significantly decreased from $17.86 million to $12.74 million due to net loss Stockholders' Equity Summary | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Stockholders' Equity | $12,738,341 | $17,855,164 | | Common Stock Shares Outstanding | 8,499,335 | 8,336,812 | | Additional Paid-In Capital | $125,950,104 | $125,327,300 | | Accumulated Deficit | $(113,207,052) | $(107,467,263) | - Net loss for the six months ended June 30, 2025, was $5,739,789, contributing to the accumulated deficit[17] - Stock-based compensation for the six months ended June 30, 2025, totaled $714,625[17] Notes to Unaudited Financial Statements Provides detailed context for financial statements, covering organization, accounting policies, asset/liability, and equity Note 1 – Organization and Description of Business Ideal Power Inc. develops B-TRAN® solid-state switch technology, with continued operations dependent on future funding - Ideal Power Inc. is focused on the development and commercialization of its B-TRAN® solid-state switch technology[20] - The company's continued operations rely on obtaining adequate funding through future revenues, stock offerings, debt financing, co-development agreements, government grants, or intellectual property sales/licensing[21] Note 2 – Summary of Significant Accounting Policies Outlines financial statement presentation, segment information, and net loss per share policies, confirming SEC Form 10-Q adherence - Financial statements are prepared in accordance with SEC Form 10-Q rules, with certain information condensed or omitted[22] - The company operates as one operating segment, with the CEO as the Chief Operating Decision Maker, reviewing financial information on a company-wide basis[24] - Pre-funded warrants are included in the computation of basic net loss per share, but no common share equivalents are included in diluted net loss per share due to their anti-dilutive effect in periods of net loss[26][27] Note 3 – Intangible Assets Intangible assets increased from $2.61 million to $2.68 million, with capitalized unawarded patent costs Intangible Assets, Net | Intangible Asset | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Patents | $1,949,489 | $1,770,374 | | Trademarks | $22,861 | $22,767 | | Other intangible assets | $1,843,036 | $1,843,036 | | Total intangible assets, net | $2,681,808 | $2,611,998 | - Costs related to patents not yet awarded ($707,305 at June 30, 2025) are capitalized but not amortized until patent issuance[30] - Amortization expense for intangible assets was $109,399 for the six months ended June 30, 2025, up from $106,602 in the prior year[32] Note 4 – Lease Amended Lease in April 2024 for larger space resulted in a gain on termination and new right-of-use asset/liability - In April 2024, the company entered an Amended Lease for a larger 5,775 sq ft office and laboratory space, replacing a 4,070 sq ft suite[34] - The Amended Lease term expires 62 months from July 1, 2024, with annual base rent starting at $118,388 and increasing by approximately 2.75% annually[34] - A gain of $15,319 was recorded on the termination of the original lease[35] Lease Liability Components | Lease Liability Component | Amount | | :--- | :--- | | Total lease liability | $446,361 | | Current portion of lease liability | $(87,915) | | Long-term lease liability | $358,446 | Note 5 – Commitments and Contingencies Holds two exclusive royalty-free license agreements with $1.1 million estimated future payments, no current legal proceedings - The company holds exclusive royalty-free licenses for semiconductor power switches (expires 2033, $100,000 annually) and semiconductor drive circuitry (expires 2034, $50,000 annually)[39][40] - The estimated present value of future payments under licensing agreements was $1,096,957 at June 30, 2025, with $150,000 due in the next twelve months[41] - The company is not currently party to any legal proceedings[42] Note 6 – Equity Incentive Plan Equity Incentive Plan had 213,555 shares available, with decreased outstanding options and increased RSU/PSU awards - At June 30, 2025, 213,555 shares of common stock were available for issuance under the 2013 Equity Incentive Plan[44] Stock Options Summary | Stock Options | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Outstanding | 416,414 | 509,414 | | Weighted Average Exercise Price | $7.85 | $7.56 | | Exercisable | 412,414 | N/A | Equity Awards Summary | Equity Awards | Outstanding at June 30, 2025 | Outstanding at December 31, 2024 | | :--- | :--- | :--- | | RSUs | 334,904 | 331,715 | | PSUs | 194,000 | 114,000 | - Unrecognized compensation cost related to non-vested equity awards was $2,236,333 at June 30, 2025, expected to be recognized over a weighted average period of 0.9 years[48] Note 7 – Warrants Outstanding warrants totaled 342,240 and pre-funded warrants 653,827, with 110,000 pre-funded warrants exercised Warrant Summary | Warrant Type | Outstanding at June 30, 2025 | Outstanding at December 31, 2024 | Weighted Average Exercise Price | | :--- | :--- | :--- | :--- | | Warrants | 342,240 | 342,240 | $8.90 | | Pre-funded warrants | 653,827 | 763,827 | $0.001 | - During the six months ended June 30, 2025, 110,000 pre-funded warrants were exercised for $110 in proceeds[49] - All warrants were exercisable at June 30, 2025, subject to beneficial ownership limitations for certain holders[50] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes Ideal Power's business, product commercialization, customer engagements, and financial performance, highlighting increased losses Overview Ideal Power focuses on B-TRAN® solid-state switch technology, launching SymCool® products and generating $13,278 revenue in H1 2025 - Ideal Power Inc. is solely focused on the development and commercialization of its B-TRAN® solid-state switch technology[55] - The company launched its first two commercial products, the SymCool® Power Module and SymCool® IQ Intelligent Power Module, in early and late 2023, respectively[57][58] - Revenue for the six months ended June 30, 2025, was $13,278[56] Product Launches Launched SymCool® Power Module for SSCBs and SymCool® IQ for renewable energy, with higher volume sales expected post-design wins - SymCool® Power Module (launched early 2023) targets the solid-state circuit breaker (SSCB) market[57] - SymCool® IQ Intelligent Power Module (launched late 2023) targets renewable energy, energy storage, EV charging, and other industrial applications[58] - Significant revenue growth is expected from higher volume orders following design wins, with a typical one-year lead time for OEM product launches[59] Development Agreement Completed second phase of Stellantis development agreement for EV drivetrain inverters, next phase focuses on automotive certification - Completed the second phase of a product development agreement with Stellantis for a custom B-TRAN® power module for EV drivetrain inverters[60] - The next phase will involve extensive testing to meet automotive certification standards for B-TRAN® in Stellantis' next-generation EVs[60] Customer Engagements Engaged with global automakers, power conversion providers, and automotive suppliers for B-TRAN® testing, leading to design wins - Engagements include multiple top global automakers, a top 10 global power conversion solutions provider, three global power management market leaders, and five tier 1 automotive suppliers[61] - These engagements involve testing and evaluating B-TRAN® technology for various applications, potentially leading to future design wins or custom development agreements[61] First Design Win Secured first design win for SSCBs with a major Asian manufacturer, completing development in Q1 2025, sales expected later in 2025 - First design win secured in late 2024 for SSCBs with a top Asian circuit protection equipment manufacturer[62] - Joint development agreement for an SSCB product incorporating B-TRAN® devices was completed in Q1 2025, three months ahead of schedule[62] - Commercial sales for this design win are expected later in 2025, with additional design wins anticipated in the second half of 2025[62] Results of Operations Operating and net losses increased for both three and six months ended June 30, 2025, due to decreased revenue and higher R&D Comparison of the three months ended June 30, 2025 to the three months ended June 30, 2024 Revenue slightly decreased, gross loss improved, but increased R&D expenses led to higher operating and net losses for Q2 2025 Three Months Ended June 30 Comparison | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $1,275 | $1,331 | -4.2% | | Cost of revenue | $3,477 | $17,474 | -80.1% | | Gross loss | $(2,202) | $(16,143) | -86.4% | | Research and development | $1,900,019 | $1,562,747 | +21.6% | | General and administrative | $897,239 | $947,384 | -5.3% | | Sales and marketing | $341,033 | $359,739 | -5.2% | | Loss from operations | $(3,140,493) | $(2,886,013) | +8.8% | | Net interest income | $103,728 | $223,948 | -53.7% | | Net loss | $(3,036,765) | $(2,662,065) | +14.1% | Comparison of the six months ended June 30, 2025 to the six months ended June 30, 2024 Revenue significantly decreased, resulting in higher gross loss, increased R&D, and higher operating and net losses for H1 2025 Six Months Ended June 30 Comparison | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $13,278 | $80,070 | -83.4% | | Cost of revenue | $34,339 | $85,972 | -60.1% | | Gross loss | $(21,061) | $(5,902) | +256.8% | | Research and development | $3,468,011 | $2,929,640 | +18.4% | | General and administrative | $1,797,060 | $1,801,072 | -0.2% | | Sales and marketing | $679,193 | $676,350 | +0.4% | | Loss from operations | $(5,965,325) | $(5,412,964) | +10.2% | | Net interest income | $225,536 | $281,273 | -19.9% | | Net loss | $(5,739,789) | $(5,131,691) | +11.8% | - Revenue for the six months ended June 30, 2025, included product sales and development revenue related to the first design win, while 2024 revenue was primarily from the Stellantis development agreement[70] - Expects negative gross margin from product revenue at low volumes, with significant improvement as higher volume production commences[71] - Research and development expenses are expected to be higher in the second half of 2025 due to continued B-TRAN® technology development[72] Liquidity and Capital Resources Incurred losses since inception, with $11.1 million cash and $10.5 million working capital, requiring potential future funding - The company has incurred losses since inception and relies on common stock and pre-funded warrant sales for funding[77] Liquidity Metrics | Metric | June 30, 2025 | | :--- | :--- | | Cash and cash equivalents | $11.1 million | | Net working capital | $10.5 million | | Outstanding debt | $0 | - Net cash used in operating activities was $4,425,301 for the six months ended June 30, 2025, an increase from $3,970,930 in the prior year[79][80] - Management believes current cash and cash equivalents are sufficient to meet ongoing liquidity needs for at least the next twelve months, but additional future funding may be required[78] Critical Accounting Estimates No significant changes to critical accounting estimates since the December 31, 2024, Annual Report on Form 10-K - No significant changes to critical accounting estimates since the December 31, 2024, Annual Report on Form 10-K[83] Trends, Events and Uncertainties No material changes from trends, events, or uncertainties disclosed in the December 31, 2024, Annual Report on Form 10-K - No material changes from trends, events, or uncertainties disclosed in the December 31, 2024, Annual Report on Form 10-K[84] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Ideal Power Inc. is exempt from market risk disclosures - The company is not required to provide market risk disclosures as a smaller reporting company[85] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control - Disclosure controls and procedures were deemed effective as of June 30, 2025, following an evaluation by the CEO and CFO[86] - No material changes in internal controls over financial reporting occurred during the quarter ended June 30, 2025[87] PART II OTHER INFORMATION Presents other information including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings The company is not currently involved in any legal proceedings, though ordinary course litigation may occur - The company is not currently involved in any legal proceedings[90] Item 1A. Risk Factors No material changes from the risk factors disclosed in the December 31, 2024, Annual Report on Form 10-K - No material changes from the risk factors disclosed in the December 31, 2024, Annual Report on Form 10-K[91] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - No unregistered sales of equity securities or use of proceeds to report[92] Item 3. Defaults Upon Senior Securities This item is not applicable to the company - Not applicable[93] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[94] Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q2 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[95] Item 6. Exhibits Lists exhibits filed with Form 10-Q, including certifications and XBRL documents, providing supporting report documentation - Includes certifications of Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1)[97] - Contains Inline XBRL documents for financial data (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 10.LAB, 101.PRE, 104)[97] SIGNATURES Affirms the accuracy and completeness of the filing, duly signed by the CEO and CFO on August 14, 2025 Signatures Report duly signed by CEO R. Daniel Brdar and CFO Timothy W. Burns on August 14, 2025, affirming filing accuracy - Report signed by R. Daniel Brdar (CEO) and Timothy W. Burns (CFO) on August 14, 2025[100][101]