Ideal Power(IPWR) - 2022 Q4 - Annual Report

PART I Business Ideal Power develops and commercializes B-TRAN™ solid-state switch technology, targeting electric vehicles, renewable energy, and data centers, funded by stock sales and grants - The company is solely focused on the development and commercialization of its B-TRAN™ solid-state switch technology[16] - In January 2023, the company launched its first commercial product, the SymCool™ Power Module, targeting the solid-state circuit breaker (SSCB) market[18] - A product development agreement was initiated in Q4 2022 with a top-10 global automaker for a custom B-TRAN™ power module for next-generation EV platforms[19] - The B-TRAN™ technology is expected to reduce power losses by 50% or more compared to conventional power switches, enabling higher efficiency[34] - As of December 31, 2022, the company holds a significant intellectual property portfolio with 41 U.S. and 31 foreign issued patents related to its B-TRAN™ technology[40] Grant Revenue (2021-2022) | Year | Grant Revenue ($) | | :--- | :--- | | 2022 | $203,269 | | 2021 | $576,399 | Risk Factors The company faces significant risks from historical losses, reliance on external financing, new product development uncertainties, supply chain dependencies, and market competition - The company has sustained approximately $87.1 million in net losses since inception, with a net loss of $7.2 million in 2022, and may not achieve profitability[51] - Product development is inherently uncertain, with no guarantee that B-TRAN™ products will meet prototype results or customer expectations[53] - Dependence on semiconductor fabrication partners poses risks related to two-sided wafer processing, cost-effectiveness at scale, and securing capacity[55][56] - Achieving 'design wins' is critical but challenging as a new market entrant, with potentially long sales cycles, especially in automotive[57][61] - Additional financing may be required, which might not be available on acceptable terms and could result in dilution for existing stockholders[77][96] - Supply chain disruptions, including COVID-19 impacts, logistics, and component shortages, could interrupt manufacturing, delay development, and increase costs[70][73] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None[102] Properties Ideal Power leases 4,070 square feet of office and laboratory space in Austin, Texas, with a remaining lease term of 44 months as of December 31, 2022 - The company leases 4,070 square feet of office and laboratory space in Austin, Texas[103] - The lease commenced on June 1, 2021, with a remaining term of 44 months as of December 31, 2022[103] Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse impact on its business or financial results - The company is not currently a party to any legal proceedings expected to have a material adverse impact on its business[104] Mine Safety Disclosures This item is not applicable to the company - Not applicable[105] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on Nasdaq under "IPWR", with no cash dividends paid or anticipated, as earnings are reinvested for business expansion - The company's common stock is listed on the Nasdaq Capital Market under the symbol "IPWR"[106] - No cash dividends have been paid since inception, with plans to retain earnings for business expansion rather than future payouts[107] Management's Discussion and Analysis of Financial Condition and Results of Operations Grant revenue decreased in 2022, while operating expenses significantly increased, leading to a 51% higher net loss of $7.2 million, with $16.3 million in cash deemed sufficient for the next 12 months Comparison of Operations (2022 vs. 2021) | Metric | 2022 ($) | 2021 ($) | Change (%) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Grant Revenue | $203,269 | $576,399 | -64.7% | Timing of milestones under NAVSEA program | | R&D Expenses | $3,366,776 | $1,927,743 | +75% | Higher self-funded wafer fabrication runs and personnel costs | | G&A Expenses | $3,123,852 | $2,408,425 | +30% | Higher stock-based compensation and professional fees | | Sales & Marketing | $852,331 | $512,807 | +66% | Higher personnel costs and activities to support commercialization | | Loss from Operations | ($7,342,959) | ($4,848,975) | +51% | Driven by lower revenue and higher operating expenses | | Net Loss | ($7,189,350) | ($4,770,269) | +51% | Driven by higher operating loss | - The company expects to generate initial commercial revenue in late 2023 following product launch and a new development agreement[126] - As of December 31, 2022, cash and cash equivalents totaled $16.3 million, deemed sufficient for liquidity needs for at least the next 12 months[135][136] - Net cash used in operating activities increased to $6.4 million in 2022 from $4.3 million in 2021, reflecting higher net loss and working capital changes[137][138] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Ideal Power is not required to provide quantitative and qualitative disclosures about market risk - Not required for a smaller reporting company[149] Financial Statements and Supplementary Data This section presents audited financial statements for 2022 and 2021, showing a net loss of $7.2 million in 2022, with total assets of $19.4 million and net cash usage of $6.8 million Balance Sheet Summary (as of Dec 31, 2022) | Category | Amount ($) | | :--- | :--- | | Assets | | | Cash and cash equivalents | $16,345,623 | | Total current assets | $16,902,924 | | Total assets | $19,399,367 | | Liabilities & Equity | | | Total current liabilities | $449,318 | | Total liabilities | $1,490,763 | | Total stockholders' equity | $17,908,604 | Statement of Operations Summary (Year ended Dec 31, 2022) | Metric | Amount ($) | | :--- | :--- | | Grant revenue | $203,269 | | Total operating expenses | $7,342,959 | | Loss from operations | $(7,342,959) | | Net loss | $(7,189,350) | | Net loss per share | $(1.17) | Statement of Cash Flows Summary (Year ended Dec 31, 2022) | Category | Amount ($) | | :--- | :--- | | Net cash used in operating activities | $(6,383,914) | | Net cash used in investing activities | $(312,740) | | Net cash used in financing activities | $(127,872) | | Net decrease in cash | $(6,824,526) | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure This item is not applicable to the company - Not applicable[237] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes during Q4 2022 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of December 31, 2022[239] - Internal control over financial reporting was concluded to be effective as of December 31, 2022, based on the COSO framework[240] - No material changes in internal control over financial reporting occurred during the fourth quarter of 2022[242] Other Information This item is not applicable to the company - Not applicable[244] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections The company reports no information under this item - None[245] PART III Directors, Executive Officers and Corporate Governance Information for this item is incorporated by reference from the company's definitive proxy statement for the 2023 annual meeting of stockholders - Information is incorporated by reference from the registrant's definitive proxy statement for the 2023 annual meeting of stockholders[246] Executive Compensation Information for this item is incorporated by reference from the company's definitive proxy statement for the 2023 annual meeting of stockholders - Information is incorporated by reference from the registrant's definitive proxy statement for the 2023 annual meeting of stockholders[247] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information for this item is incorporated by reference from the company's definitive proxy statement for the 2023 annual meeting of stockholders - Information is incorporated by reference from the registrant's definitive proxy statement for the 2023 annual meeting of stockholders[248] Certain Relationships and Related Transactions, and Director Independence Information for this item is incorporated by reference from the company's definitive proxy statement for the 2023 annual meeting of stockholders - Information is incorporated by reference from the registrant's definitive proxy statement for the 2023 annual meeting of stockholders[249] Principal Accountant Fees and Services Information for this item is incorporated by reference from the company's definitive proxy statement for the 2023 annual meeting of stockholders - Information is incorporated by reference from the registrant's definitive proxy statement for the 2023 annual meeting of stockholders[250] PART IV Exhibits, Financial Statement Schedules This section lists financial statements, schedules, and exhibits filed with the Annual Report on Form 10-K, with schedules omitted if not required or applicable - This section lists the financial statements and exhibits filed with the report[251][254] - All financial statement schedules were omitted as not required, not applicable, or already included in financial statements or notes[253] Form 10-K Summary The company did not provide a summary for its Form 10-K - None[259]