Ideal Power Inc

Previous wording

To date, operations have been funded primarily through the sale of common stock and pre-funded warrants and we have generated $3.7 million in grant revenue for bidirectional power switch development. We did not generate grant revenue in the six months ended June 30, 2024. We may pursue additional research and development grants, if and when available, to further develop and/or improve our technology.

Current wording

To date, operations have been funded primarily through the sale of common stock and pre-funded warrants and we have generated $3.7 million in grant revenue for bidirectional power switch development. We did not generate grant revenue in the nine months ended September 30, 2024. We may pursue additional research and development grants, if and when available, to further develop and/or improve our technology.

Previous wording

We are in the process of commercializing our B-TRAN™ technology and launched our first two commercial products, the SymCool® Power Module and SymCool® IQ Intelligent Power Module, in 2023. We generated $80,070 in commercial revenue in the six months ended June 30, 2024.

Current wording

We are in the process of commercializing our B-TRAN™ technology and launched our first two commercial products, the SymCool® Power Module and SymCool® IQ Intelligent Power Module, in 2023. We generated $80,624 in commercial revenue in the nine months ended September 30, 2024.

Previous wording

During the fourth quarter of 2022, we announced, and began Phase 1 of, a product development agreement with Stellantis, a top 10 global automaker, for a custom B-TRAN™ power module for use in the automaker’s EV drivetrain inverters in its next generation EV platform. In Phase 1 of the program, we provided packaged B-TRAN™ devices, test kits and technical data to Stellantis for their evaluation. During the third quarter of 2023, we secured, and began Phase 2 of, this program. In Phase 2 of the program, we collaborated with Stellantis and the program partners, including both the program’s packaging company and the organization building the initial drivetrain inverter, to supply B-TRAN™ devices for integration into the custom power module and inverter designs. Also, as part of Phase 2, we provided Stellantis a comprehensive test plan for the testing required to achieve certification to automotive standards for B-TRAN™. The test plan was subsequently approved as submitted. In the first quarter of 2024, we successfully completed Phase 2 of the program. We recorded the remaining revenue under Phase 2 of this program in the first quarter of 2024. We are currently finalizing the scope of work for the next phase of the program with Stellantis.

Current wording

During the fourth quarter of 2022, we announced, and began Phase 1 of, a product development agreement with Stellantis, a top 10 global automaker, for a custom B-TRAN™ power module for use in the automaker’s EV drivetrain inverters in its next generation EV platform. In Phase 1 of the program, we provided packaged B-TRAN™ devices, test kits and technical data to Stellantis for their evaluation. During the third quarter of 2023, we secured, and began Phase 2 of, this program. In Phase 2 of the program, we collaborated with Stellantis and the program partners, including both the program’s packaging company and the organization building the initial drivetrain inverter, to supply B-TRAN™ devices for integration into the custom power module and inverter designs. Also, as part of Phase 2, we provided Stellantis a comprehensive test plan for the testing required to achieve certification to automotive standards for B-TRAN™. The test plan was subsequently approved as submitted. In the first quarter of 2024, we successfully completed Phase 2 of the program. We recorded the remaining revenue under Phase 2 of this program in the first quarter of 2024. We are currently finalizing the scope of work for the next phase of the program with Stellantis. The next phase of the program is expected to be finalized and started after Stellantis selects a Tier 1 auto supplier to manufacture the EV drivetrain inverter utilizing the custom B-TRAN™ power module.

Previous wording

In March 2024, we announced a global distribution agreement with Richardson Electronics, Ltd. (RELL). RELL is the first distributor for our products. We commenced shipments of our products to RELL to fulfill initial end customer orders late in the first quarter of 2024.

Current wording

In March 2024, we announced a global distribution agreement with Richardson Electronics, Ltd. (RELL) and, in August 2024, we announced a global distribution agreement with RYOSHO U.S.A., INC. (RYOSHO), a subsidiary of RYODEN CORPORATION (TSE: 8084). We have commenced shipments of our products to both RELL and RYOSHO to fulfill initial end customer orders. In September 2024, we announced a distribution agreement with Sekorm Advanced Technology (Shenzhen) Co., Ltd. for the distribution of our products throughout China.

Previous wording

Test and Evaluation Agreements

Current wording

Test and Evaluation Agreements and Other Collaborations

Previous wording

Since the middle of 2021, we announced several test and evaluation agreements with prospective customers, including, but not limited to, a second top 10 global automaker, a top 10 global provider of power conversion solutions to the solar industry, two global diverse power management market leaders, a tier 1 automotive supplier and a global power conversion supplier. These companies, along with other current and future participants in our test and evaluation program, intend to test and evaluate the B-TRAN™ for use in their applications. We expect to incorporate the feedback from these customers into our future commercial products. We began B-TRAN™ customer shipments to program participants in mid-2023.

Current wording

We have announced several test and evaluation agreements with prospective customers, including, but not limited to, a second top 10 global automaker, a top 10 global provider of power conversion solutions to the solar industry, two global diverse power management market leaders, a tier 1 automotive supplier and a global power conversion supplier. These companies, along with other current and future participants in our test and evaluation program, intend to test and evaluate, or have already begun testing and evaluating, the B-TRAN™ for use in their applications. We expect to incorporate the feedback from these customers into our future commercial products. We began B-TRAN™ customer shipments to initial program participants in mid-2023.

Previous wording

In March 2024, we issued and sold 1,366,668 shares of our common stock at a price of $7.50 per share and 633,332 pre-funded warrants to purchase shares of our common stock at a price of $7.499 per pre-funded warrant in an underwritten public offering. The pre-funded warrants have an exercise price of $0.001 per share. The underwriter had a 30-day option to purchase up to an additional 300,000 shares of our common stock at the offering price, less the underwriting discounts and commissions. In April 2024, the underwriter exercised this option in full. The net proceeds to us from the public offering were $15.7 million, inclusive of the underwriter’s exercise of its option to purchase additional shares in full. We intend to use the net proceeds from the public offering to fund further commercialization and development of our B-TRAN™ technology and general corporate and working capital purposes.

Current wording

In March 2024, we issued and sold 1,366,668 shares of our common stock at a price of $7.50 per share and 633,332 pre-funded warrants to purchase shares of our common stock at a price of $7.499 per pre-funded warrant in an underwritten public offering. The pre-funded warrants have an exercise price of $0.001 per share. The underwriter had a 30-day option to purchase up to an additional 300,000 shares of our common stock at the offering price, less the underwriting discounts and commissions. In April 2024, the underwriter exercised this option in full. The net proceeds to us from the public offering were $15.7 million, inclusive of the underwriter’s exercise of its option to purchase additional shares in full. We intend to use the net proceeds from the public offering to fund further commercialization and development of our B-TRAN™ technology and for general corporate and working capital purposes.

Previous wording

*Commercial Revenue.*Commercial revenue was $1,331 for the three months ended June 30, 2024, compared to $98,443 in the three months ended June 30, 2023. Commercial revenue in the three months ended June 30, 2024 related to initial orders from customers evaluating our technology. Commercial revenue in the three months ended June 30, 2023 related to Phase 1 of our development agreement with Stellantis. We expect product revenue to increase modestly over the remainder of 2024 and development revenue to resume once Phase 3 of our development agreement with Stellantis is underway. We may also generate development revenue from other customers.

Current wording

*Commercial Revenue.*Commercial revenue was $554 for the three months ended September 30, 2024, compared to $1,557 in the three months ended September 30, 2023. Commercial revenue in the three months ended September 30, 2024 related to initial orders from customers evaluating our technology. Larger orders and corresponding revenue growth are expected as customers advance in their evaluation, prototyping and overall design cycles. Commercial revenue in the three months ended September 30, 2023 related to Phase 1 of our development agreement with Stellantis. We expect product revenue to increase modestly in the fourth quarter of 2024 and development revenue to resume once Phase 3 of our development agreement with Stellantis is underway. We may also generate development revenue from other customers.

Previous wording

*Cost of Commercial Revenue.*Cost of commercial revenue was $17,474 for the three months ended June 30, 2024, compared to $74,013 in the three months ended June 30, 2023. Cost of commercial revenue in the three months ended June 30, 2024 related to initial low volume shipments of our products. Cost of commercial revenue in the three months ended June 30, 2023 related to Phase 1 or our development agreement with Stellantis. We expect significant improvement in gross margins as we commence higher volume production and shipments in the future.

Current wording

*Cost of Commercial Revenue.*Cost of commercial revenue was $1,511 for the three months ended September 30, 2024, compared to $2,787 in the three months ended September 30, 2023. Cost of commercial revenue in the three months ended September 30, 2024 related to initial low volume shipments of our products. Cost of commercial revenue in the three months ended September 30, 2023 related to Phase 1 or our development agreement with Stellantis. While we expect gross margins to be negative in the near term due to low production volumes, we expect significant improvement in gross margins as we commence higher volume production and shipments in the future.

Previous wording

Research and Development Expenses. Research and development expenses increased by $356,059, or 30%, to $1,562,747 in the three months ended June 30, 2024 from $1,206,688 in the three months ended June 30, 2023. The increase was due to higher semiconductor fabrication costs of $331,660, personnel costs of $130,893 and placement fees and expenses of $85,478, partly offset by lower stock-based compensation expense of $181,827 and other B-TRAN™ development spending of $10,145. We expect higher research and development expenses in the remainder of 2024 as compared to 2023, partly due to the addition of engineering personnel, as we continue development of our B-TRAN™ technology.

Current wording

Research and Development Expenses. Research and development expenses decreased slightly by $6,475, or less than 1%, to $1,684,063 in the three months ended September 30, 2024 from $1,690,538 in the three months ended September 30, 2023. We expect higher research and development expenses in the fourth quarter of 2024 as compared to the fourth quarter of 2023, primarily due to the addition of engineering personnel this year and higher semiconductor fabrication and/or packaging costs.

Previous wording

General and Administrative Expenses. General and administrative expenses increased by $13,391, or 1%, to $947,384 in the three months ended June 30, 2024 from $933,993 in the three months ended June 30, 2023. We expect slightly to moderately higher general and administrative expenses, exclusive of stock-based compensation, in the remainder of 2024 as compared to 2023.

Current wording

General and Administrative Expenses. General and administrative expenses increased by $39,944, or 5%, to $893,969 in the three months ended September 30, 2024 from $854,025 in the three months ended September 30, 2023. The increase was due to higher professional fees of $58,613, personnel costs of $14,558 and other costs of $4,989, partly offset by lower stock-based compensation expense of $38,216. We expect slightly to moderately higher general and administrative expenses, exclusive of stock-based compensation, in the fourth quarter of 2024 as compared to the fourth quarter of 2023.

Previous wording

Sales and Marketing Expenses. Sales and marketing expenses increased by $87,839, or 32%, to $359,739 in the three months ended June 30, 2024 from $271,900 in the three months ended June 30, 2023. The increase was due to higher personnel costs of $73,855 and search and placement fees of $32,243, partly offset by lower other spending of $18,259. We expect higher sales and marketing expenses in the remainder of 2024 as compared to 2023, partly due to the addition of sales personnel, as we further commercialize our B-TRAN™ technology.

Current wording

Sales and Marketing Expenses. Sales and marketing expenses increased by $26,679, or 9%, to $320,642 in the three months ended September 30, 2024 from $293,963 in the three months ended September 30, 2023. The increase was due to higher personnel costs of $74,728 and other spending of $6,566, partly offset by lower stock-based compensation expense of $34,805 and professional fees of $19,810. We expect higher sales and marketing expenses in the fourth quarter of 2024 as compared to the fourth quarter of 2023, partly due to hiring as we further commercialize our B-TRAN™ technology.

Previous wording

Loss from Operations. Our loss from operations for the three months ended June 30, 2024 was $2,886,013, or 21% higher, as compared to the $2,388,151 loss from operations for the three months ended June 30, 2023, for the reasons discussed above.

Current wording

Loss from Operations. Our loss from operations for the three months ended September 30, 2024 was $2,899,631, or 2% higher, as compared to the $2,839,756 loss from operations for the three months ended September 30, 2023, for the reasons discussed above.

Previous wording

Interest Income, Net. Net interest income was $223,948 for the three months ended June 30, 2024 compared to $108,345 for the three months ended June 30, 2023 due to the impact of a higher cash balance post-public offering on interest earned from our money market account.

Current wording

Interest Income, Net. Net interest income was $209,283 for the three months ended September 30, 2024 compared to $99,275 for the three months ended September 30, 2023 due to the impact of a higher cash balance post-public offering on interest earned from our money market account.

Previous wording

Net Loss. Our net loss for the three months ended June 30, 2024 was $2,662,065, or 17% higher, as compared to a net loss of $2,279,806 for the three months ended June 30, 2023, for the reasons discussed above.

Current wording

Net Loss. Our net loss for the three months ended September 30, 2024 was $2,690,348, or 2% lower, as compared to a net loss of $2,740,481 for the three months ended September 30, 2023, for the reasons discussed above.

Previous wording

*Commercial Revenue.*Commercial revenue was $80,070 for the six months ended June 30, 2024, compared to $98,443 in the six months ended June 30, 2023. Commercial revenue related primarily to our development agreement with Stellantis.

Current wording

*Commercial Revenue.*Commercial revenue was $80,624 for the nine months ended September 30, 2024, compared to $100,000 in the nine months ended September 30, 2023. Commercial revenue related to our development agreement with Stellantis and initial orders from customers evaluating our technology.

Previous wording

Grant Revenue. We did not generate grant revenue in the six months ended June 30, 2024. We generated $37,388 in grant revenue in the six months ended June 30, 2023.

Current wording

Grant Revenue. We did not generate grant revenue in the nine months ended September 30, 2024. We generated $37,388 in grant revenue in the nine months ended September 30, 2023.

Previous wording

*Cost of Commercial Revenue.*Cost of commercial revenue was $85,972 for the six months ended June 30, 2024, compared to $74,013 in the six months ended June 30, 2023. Cost of commercial revenue related primarily to our development agreement with Stellantis.

Current wording

*Cost of Commercial Revenue.*Cost of commercial revenue was $87,483 for the nine months ended September 30, 2024, compared to $76,800 in the nine months ended September 30, 2023. Cost of commercial revenue related to our development agreement with Stellantis and initial orders from customers evaluating our technology.

Previous wording

Cost of Grant Revenue. Cost of grant revenue was $0 for the six months ended June 30, 2024 as we did not have any active grant programs. Cost of grant revenue was $37,388 in the six months ended June 30, 2023. Cost of grant revenue for the six months ended June 30, 2023 was equal to the associated grant revenue resulting in no gross profit.

Current wording

Cost of Grant Revenue. Cost of grant revenue was $0 for the nine months ended September 30, 2024 as we did not have any active grant programs. Cost of grant revenue was $37,388 in the nine months ended September 30, 2023. Cost of grant revenue for the nine months ended September 30, 2023 was equal to the associated grant revenue resulting in no gross profit.

Previous wording

Research and Development Expenses. Research and development expenses increased by $282,924, or 11%, to $2,929,640 in the six months ended June 30, 2024 from $2,646,716 in the six months ended June 30, 2023. The increase was due to higher semiconductor fabrication costs of $291,933, personnel costs of $209,757, placement fees and expenses of $86,941 and other B-TRAN™ development spending of $44,732, partly offset by lower stock-based compensation expense of $350,439.

Current wording

Research and Development Expenses. Research and development expenses increased by $276,449, or 6%, to $4,613,703 in the nine months ended September 30, 2024 from $4,337,254 in the nine months ended September 30, 2023. The increase was due to higher personnel costs of $402,490, placement fees and expenses of $111,933, semiconductor fabrication costs of $89,584, packaging costs of $83,674 and other B-TRAN™ development spending of $73,981, partly offset by lower stock-based compensation expense of $485,213.

Previous wording

General and Administrative Expenses. General and administrative expenses decreased by $27,854, or 2%, to $1,801,072 in the six months ended June 30, 2024 from $1,828,926 in the six months ended June 30, 2023.

Current wording

General and Administrative Expenses. General and administrative expenses increased slightly by $12,090, or less than 1%, to $2,695,041 in the nine months ended September 30, 2024 from $2,682,951 in the nine months ended September 30, 2023.

Previous wording

Sales and Marketing Expenses. Sales and marketing expenses increased by $100,124, or 17%, to $676,350 in the six months ended June 30, 2024 from $576,226 in the six months ended June 30, 2023. The increase was due to higher personnel costs of $129,129, partly offset by lower consulting fees of $23,720 and other spending of $5,285.

Current wording

Sales and Marketing Expenses. Sales and marketing expenses increased by $126,803, or 15%, to $996,992 in the nine months ended September 30, 2024 from $870,189 in the nine months ended September 30, 2023. The increase was due to higher personnel costs of $203,858 and other spending of $14,054, partly offset by lower professional fees of $47,305 and stock-based compensation expense of $43,804.

Previous wording

Loss from Operations. Our loss from operations for the six months ended June 30, 2024 was $5,412,964, or 8% higher, as compared to the $5,027,438 loss from operations for the six months ended June 30, 2023, for the reasons discussed above.

Current wording

Loss from Operations. Our loss from operations for the nine months ended September 30, 2024 was $8,312,595, or 6% higher, as compared to the $7,867,194 loss from operations for the nine months ended September 30, 2023, for the reasons discussed above.

Previous wording

Interest Income, Net. Net interest income was $281,273 for the six months ended June 30, 2024 compared to $219,647 for the six months ended June 30, 2023 due to the impact of a higher cash balance post-public offering on interest earned from our money market account.

Current wording

Interest Income, Net. Net interest income was $490,556 for the nine months ended September 30, 2024 compared to $318,922 for the nine months ended September 30, 2023 due to the impact of a higher cash balance post-public offering on interest earned from our money market account.

Previous wording

Net Loss. Our net loss for the six months ended June 30, 2024 was $5,131,691, or 7% higher, as compared to a net loss of $4,807,791 for the six months ended June 30, 2023, for the reasons discussed above.

Current wording

Net Loss. Our net loss for the nine months ended September 30, 2024 was $7,822,039, or 4% higher, as compared to a net loss of $7,548,272 for the nine months ended September 30, 2023, for the reasons discussed above.

Previous wording

At June 30, 2024, we had cash and cash equivalents of $20.1 million. Our net working capital at June 30, 2024 was also $19.6 million. We had no outstanding debt at June 30, 2024.

Current wording

At September 30, 2024, we had cash and cash equivalents of $18.7 million. Our net working capital at September 30, 2024 was $18.1 million. We had no outstanding debt at September 30, 2024.

Previous wording

Operating activities in the six months ended June 30, 2024 resulted in cash outflows of $3,970,930 which were due to the net loss for the period of $5,131,691, partly offset by stock-based compensation of $745,600, depreciation and amortization of $163,871, favorable balance sheet timing of $155,129 and other non-cash items of $96,161.

Current wording

Operating activities in the nine months ended September 30, 2024 resulted in cash outflows of $6,192,707 which were due to the net loss for the period of $7,822,039, partly offset by stock-based compensation of $1,163,808, depreciation and amortization of $250,936, other non-cash items of $117,136 and favorable balance sheet timing of $97,452.

Previous wording

Operating activities in the six months ended June 30, 2023 resulted in cash outflows of $3,408,492, which were due to the net loss for the period of $4,807,791, partly offset by stock-based compensation of $1,233,207, depreciation and amortization of $121,423 and favorable balance sheet timing and other non-cash items of $44,669.

Current wording

Operating activities in the nine months ended September 30, 2023 resulted in cash outflows of $5,178,734, which were due to the net loss for the period of $7,548,272, partly offset by stock-based compensation of $1,859,209, depreciation and amortization of $193,900 and favorable balance sheet timing of $316,429.

Previous wording

We expect an increase in cash outflows from operating activities in the remainder of 2024 as we further develop and commercialize our B-TRAN™ technology.

Current wording

We expect an increase in cash outflows from operating activities in the fourth quarter of 2024 as we further develop and commercialize our B-TRAN™ technology.

Previous wording

Investing activities in the six months ended June 30, 2024 and 2023 resulted in cash outflows of $239,004 and $253,863, respectively, for the acquisition of intangible assets and fixed assets.

Current wording

Investing activities in the nine months ended September 30, 2024 and 2023 resulted in cash outflows of $445,100 and $406,035, respectively, for the acquisition of intangible assets and property and equipment.

Previous wording

Financing activities in the six months ended June 30, 2024 resulted in cash inflows of $15,724,818 in net proceeds from the public offering of our common stock and pre-funded warrants and $86,757 from the exercise of stock options, slightly offset by $11,579 in tax payments related to the vesting of restricted stock units.

Current wording

Financing activities in the nine months ended September 30, 2024 resulted in cash inflows of $15,724,818 in net proceeds from the public offering of our common stock and pre-funded warrants, $1,018,898 from the exercise of warrants, and $86,757 from the exercise of stock options, slightly offset by $11,579 in tax payments related to the vesting of restricted stock units.

Previous wording

There have been no significant changes during the six months ended June 30, 2024 to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Current wording

There have been no significant changes during the nine months ended September 30, 2024 to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.