Ideal Power Inc.

Previous wording

To date, operations have been funded primarily through the sale of common stock and we have generated $3.7 million in grant revenue for bidirectional power switch development. Grant revenue was $37,388 and $203,269, respectively, in the years ended December 31, 2023 and 2022, respectively. We may pursue additional research and development grants, if and when available, to further develop and/or improve our technology.

Current wording

From inception, we have generated $3.7 million in grant revenue for bidirectional power switch development. Grant revenue was $0 and $37,388, respectively, in the years ended December 31, 2024 and 2023. 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 $161,483 in commercial revenue in the year ended December 31, 2023.

Current wording

We are in the process of commercializing our B-TRAN® technology and have launched our first two commercial products, the SymCool® Power Module and SymCool® IQ Intelligent Power Module. We generated $86,032 and $161,483, respectively, in commercial revenue in the years ended December 31, 2024 and 2023.

Previous wording

In late 2023, we launched our second commercial product, the SymCool™ IQ Intelligent Power Module. The SymCool™ IQ IPM builds on the bidirectional B-TRAN™ multi-die packaging design of our SymCool™ Power Module and adds an integrated intelligent driver optimized for bidirectional operation. This product targets several markets including renewable energy, energy storage, EV charging and other industrial applications. We expect initial sales of this product in late 2024.

Current wording

In late 2023, we launched our second commercial product, the SymCool® IQ Intelligent Power Module. The SymCool® IQ IPM builds on the bidirectional B-TRAN® multi-die packaging design of our SymCool® Power Module and adds an integrated intelligent driver optimized for bidirectional operation. This product targets several markets including renewable energy, energy storage, EV charging and other industrial applications. We announced our first order for this product in late 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 early 2024, we successfully completed Phase 2 of the program. Phase 3 builds on the completion of all Phase 1 and 2 deliverables and therefore transitions to Stellantis’ production team. We are currently finalizing the scope of work for the next phase of the program with Stellantis. This phase is expected to include the extensive testing of the custom B-TRAN™ module to meet automotive certification standards enabling B-TRAN™ to be the core of the powertrain inverter for the automaker’s next-generation EVs. The objective of this phase is the completion and certification of a production-ready B-TRAN™-based module and is targeted for 2025. We recorded all of the revenue under Phase 1 and $61,483 of the revenue under Phase 2 in year ended December 31, 2023. We will record the remaining Phase 2 revenue in the first quarter of 2024.

Current wording

In late 2022, we announced, and began the first phase 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 the first phase of the program, we provided packaged B-TRAN® devices, test kits and technical data to Stellantis for their evaluation. In 2023, we secured, and began the second phase of, this program. In the second phase 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 the second phase of the program, 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 2024, we successfully completed the second phase of the program. The next phase of the program is expected to build on the prior phases and transition to Stellantis’ production team. We are currently finalizing the scope of work for the next phase of the program with Stellantis. This phase is expected to include the extensive testing of the custom B-TRAN® module to meet automotive certification standards enabling B-TRAN® to be the core of the powertrain inverter for the automaker’s next-generation EVs.

Previous wording

Since the middle of 2021, we announced several test and evaluation agreements with prospective customers, including 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 announced several engagements and/or initial orders with large companies, including a second top 10 global automaker, a third global automaker, a top 10 global provider of power conversion solutions to the solar industry, two global diverse power management market leaders, three tier 1 automotive suppliers, a global power conversion supplier and others. These companies intend to test and evaluate the B-TRAN® for use in their applications and these engagements could lead to future design wins or custom development agreements. We also announced agreements with three distribution partners. We may add other distribution partners in the future.

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 has 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. The estimated net proceeds to us from the March 2024 Offering are $13.6 million or $15.7 million if the underwriter exercises its option to purchase additional shares in full. We intend to use the net proceeds from the March 2024 Offering to fund further commercialization and development of our B-TRAN™ technology and general corporate and working capital purposes.

Current wording

In March and April 2024, we issued and sold 1,666,668 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 net proceeds to us from the public offering were $15.7 million. 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.

Previous wording

Impairment of Long-Lived Assets. The long-lived assets, consisting of property and equipment and intangible assets, held and used by us are reviewed for impairment no less frequently than annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability is performed. We determined that there was no impairment in the value of long-lived assets during the year ended December 31, 2023 and immaterial impairments in the value of long-lived assets during the year ended December 31, 2022.

Current wording

Impairment of Long-Lived Assets. The long-lived assets, consisting of property and equipment and intangible assets, held and used by us are reviewed for impairment no less frequently than annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability is performed. We determined that there was a $77,444 impairment in the value of long-lived assets during the year ended December 31, 2024, and no impairment in the value of long-lived assets during the year ended December 31, 2023.

Previous wording

*Commercial Revenue.*We began to commercialize our B-TRAN™ technology in 2023. For the year ended December 31, 2023, we recognized commercial revenue of $161,483. Our commercial revenue consisted of development revenue (see Development Agreement above) including the sale of packaged B-TRAN™ devices. In the year ended December 31, 2022, we did not recognize any commercial revenue as we were still focused on the development of our B-TRAN™ technology. We expect to recognize modest commercial revenue from both product sales and development agreements in 2024.

Current wording

*Commercial Revenue.*Commercial revenue was $86,032 in the year ended December 31, 2024 compared to $161,483 in the year ended December 31, 2023. In the year ended December 31, 2024, our commercial revenue related to development agreements and product sales. In the year ended December 31, 2023, our commercial revenue consisted of development revenue including the sale of packaged B-TRAN® devices. We expect to recognize modest commercial revenue from both product sales and development agreements in 2025 with product sales increasing in the second half of the year.

Previous wording

*Grant Revenue.*Grant revenue decreased by $165,881 to $37,388 in the year ended December 31, 2023 from $203,269 in the year ended December 31, 2022 due to the completion of our $1.2 million subcontract with Diversified Technologies, Inc. (“DTI”) to supply B-TRAN™ devices as part of a contract awarded to DTI by the United States Naval Sea Systems Command for the development and demonstration of a B-TRAN™ enabled high efficiency direct current solid-state circuit breaker. We do not have any active government programs although we are pursuing additional government funding opportunities that may result in additional grant revenue in the future.

Current wording

*Grant Revenue.*We did not recognize any grant revenue in the year ended December 31, 2024. Grant revenue was $37,388 in the year ended December 31, 2023 as we completed our $1.2 million subcontract with Diversified Technologies, Inc. (“DTI”) to supply B-TRAN® devices as part of a contract awarded to DTI by the United States Naval Sea Systems Command for the development and demonstration of a B-TRAN® enabled high efficiency direct current solid-state circuit breaker. Although our primary focus is the commercialization of our B-TRAN® technology and initial products, we are pursuing additional government funding opportunities that may result in additional grant revenue in the future.

Previous wording

Cost of Commercial Revenue. Cost of commercial revenue was $123,225 for the year ended December 31, 2023. In the year ended December 31, 2022, we did not recognize any cost of commercial revenue as we were still focused on the development of our B-TRAN™ technology.

Current wording

Cost of Commercial Revenue. Cost of commercial revenue was $93,409 and $123,225 for the years ended December 31, 2024 and 2023, respectively.

Previous wording

Cost of Grant Revenue. Cost of grant revenue decreased by $165,881 to $37,288 for the year ended December 31, 2023 from $203,269 for the year ended December 31, 2022 due to the completion of our subcontract with DTI. The cost of grant revenue is equal to the associated grant revenue resulting in no gross profit. We expect no gross profit from other grants that we are pursuing, or may pursue, in 2024.

Current wording

Cost of Grant Revenue. We did not recognize any cost of grant revenue in the year ended December 31, 2024. Cost of grant revenue was $37,388 for the year ended December 31, 2023. The cost of grant revenue in 2023 was equal to the associated grant revenue resulting in no gross profit. We expect no gross profit from other grants that we are pursuing, or may pursue, in 2025.

Previous wording

Gross Profit. Gross profit was $38,258 in the year ended December 31, 2023 compared to $0 in the year ended December 31, 2022. While we may recognize a gross profit in 2024 from development agreements, we do not expect to recognize a positive gross profit from product sales in 2024 due to the higher costs associated with initial low volume production.

Current wording

Gross Profit (Loss). Our gross loss was $7,377 for the year ended December 31, 2024 due to the higher costs associated with initial low volume production. Gross profit was $38,258 in the year ended December 31, 2023 as commercial revenue from our development agreement with Stellantis exceeded the associated program costs. We do not expect to recognize a gross profit from commercial revenue in 2025 due to the higher costs associated with initial low volume production.

Previous wording

Research and Development Expenses. Research and development expenses increased by $2,376,435, or 71%, to $5,743,211 in the year ended December 31, 2023 from $3,366,776 in the year ended December 31, 2022. The increase was due to higher stock-based compensation expense of $959,561, wafer fabrication runs of $902,810, engineering services, primarily packaging costs, of $324,455 and personnel costs of $275,420, partly offset by lower other B-TRAN™ spending of $85,811. We expect higher research and development expenses in 2024 as we further develop our B-TRAN™ technology and related drive circuitry.

Current wording

Research and Development Expenses. Research and development expenses increased by $464,007, or 8%, to $6,207,218 in the year ended December 31, 2024 from $5,743,211 in the year ended December 31, 2023. The increase was due to higher personnel costs of $623,688, engineering services, primarily packaging costs, of $123,760, search and placement fees and expenses of $110,754 and other B-TRAN® spending of $105,497, partly offset by lower stock-based compensation expense of $499,692. We expect higher research and development expenses in 2025 as we further develop our B-TRAN® technology and related drive circuitry.

Previous wording

General and Administrative Expenses. General and administrative expenses increased by $409,531, or 13%, to $3,533,383 in the year ended December 31, 2023 from $3,123,852 in the year ended December 31, 2022. The increase was due primarily to higher stock-based compensation expense of $309,530, personnel costs of $147,063 and other costs of $3,594, partly offset by lower Board fees and expenses of $50,656. We expect relatively flat to slightly higher general and administrative expenses, exclusive of stock-based compensation, in 2024.

Current wording

General and Administrative Expenses. General and administrative expenses increased by $75,153, or 2%, to $3,608,536 in the year ended December 31, 2024 from $3,533,383 in the year ended December 31, 2023. We expect slightly higher general and administrative expenses, exclusive of stock-based compensation, in 2025.

Previous wording

Sales and Marketing Expenses. Sales and marketing expenses increased by $261,421, or 31%, to $1,113,752 in the year ended December 31, 2023 from $852,331 in the year ended December 31, 2022. The increase was due primarily to higher personnel costs of $191,480 and stock-based compensation expense of $76,486, slightly offset by lower other costs of $6,545. We expect higher sales and marketing expenses in 2024 as we expand our engagement with prospective customers and support the roll-out of our SymCool™ and SymCool™ IQ products.

Current wording

Sales and Marketing Expenses. Sales and marketing expenses increased by $134,292, or 12%, to $1,248,044 in the year ended December 31, 2024 from $1,113,752 in the year ended December 31, 2023. The increase was due primarily to higher personnel costs of $220,998 and other costs of $23,287, partly offset by lower stock-based compensation expense of $63,557 and professional fees of $46,436. We expect higher sales and marketing expenses in 2025 as we expand our engagement with prospective customers, continue to build our sales pipeline and further commercialize our B-TRAN® technology and related products.

Previous wording

Loss from Operations. Our loss from operations for the year ended December 31, 2023 was $10,352,088 or 41% higher than the $7,342,959 loss from operations for the year ended December 31, 2022, driven by the factors discussed above.

Current wording

Loss from Operations. Our loss from operations for the year ended December 31, 2024 was $11,071,175 or 7% higher than the $10,352,088 loss from operations for the year ended December 31, 2023, driven by the factors discussed above.

Previous wording

Interest Income, Net. Interest income, net increased by $244,459 to $398,068 for the year ended December 31, 2023 from $153,609 for the year ended December 31, 2022 due to the impact of higher interest rates on our money market account in 2023.

Current wording

Interest Income, Net. Interest income, net increased by $255,294 to $653,362 for the year ended December 31, 2024 from $398,068 for the year ended December 31, 2023 due primarily to a higher average balance on our money market account in 2024 as a result of our public offering.

Previous wording

*Net Loss.*Our net loss increased by $2,764,670 or 38%, to $9,954,020 for the year ended December 31, 2023 from a net loss of $7,189,350 for the year ended December 31, 2022 for the reasons discussed above.

Current wording

*Net Loss.*Our net loss increased by $463,793 or 5%, to $10,417,813 for the year ended December 31, 2024 from a net loss of $9,954,020 for the year ended December 31, 2023 for the reasons discussed above.

Previous wording

In 2023, we generated commercial revenue of $161,483 and grant revenue of $37,388. In 2024, we expect modest commercial revenue from product sales and product development agreements. While we do not have any active government programs, we are pursuing government funding opportunities that may result in additional grant revenue in the future. We have incurred losses since our inception. We have funded our operations to date primarily through the sale of common stock.

Current wording

In 2024, we generated commercial revenue of $86,032. In 2025, we expect growth in commercial revenue from product sales and product development agreements. While we do not have any active government programs, we are pursuing government funding opportunities that may result in additional grant revenue in the future. We have incurred losses since our inception. We have funded our operations to date primarily through the sale of common stock and common stock equivalents.

Previous wording

As of December 31, 2023 and 2022, we had cash and cash equivalents of $8,474,835 and $16,345,623, respectively. Our net working capital and long-term debt at December 31, 2023 were $8,178,282 and $0, respectively.

Current wording

As of December 31, 2024 and 2023, we had cash and cash equivalents of $15,842,850 and $8,474,835, respectively. Our net working capital and long-term debt at December 31, 2024 were $15,735,796 and $0, respectively.

Previous wording

Operating activities in the year ended December 31, 2022 resulted in cash outflows of $6,383,914, which were due to the net loss for the period of $7,189,350 and unfavorable balance sheet timing of $516,931, partly offset by non-cash items including stock-based compensation of $975,801, depreciation and amortization of $187,077, stock issued for services of $100,100, amortization of right of use asset of $58,452 and the write-off of long-lived assets of $937.

Current wording

Operating activities in the year ended December 31, 2024 resulted in cash outflows of $8,742,580, which were due to the net loss for the period of $10,417,813, unfavorable balance sheet timing of $399,667 and a non-cash gain on lease termination of $15,319, partly offset by other non-cash items including stock-based compensation of $1,596,254, depreciation and amortization of $341,045, the write-off of long-lived assets of $77,444 and amortization of right of use asset of $75,476.

Previous wording

Operating activities in the year ended December 31, 2023 resulted in cash outflows of $7,131,578, which were due to the net loss for the period of $9,954,020, partly offset by other non-cash items including stock-based compensation of $2,321,380, depreciation and amortization of $271,746 and amortization of right of use asset of $62,150 and favorable balance sheet timing of $167,116.

Current wording

Operating activities in the year ended December 31, 2023 resulted in cash outflows of $7,131,578, which were due to the net loss for the period of $9,954,020, partly offset by other non-cash items including stock-based compensation of $2,321,380, depreciation and amortization of $271,746, amortization of right of use asset of $62,150 and favorable balance sheet timing of $167,116.

Previous wording

Investing activities in the years ended December 31, 2023 and 2022 resulted in cash outflows of $522,946 and $312,740, respectively. For the year ended December 31, 2023, cash outflows for the acquisition of intangible assets were $282,121 and capital expenditures were $240,825. For the year ended December 31, 2022, cash outflows for the acquisition of intangible assets were $130,089 and capital expenditures were $182,651. Our capital expenditures in both years were primarily for lab testing equipment.

Current wording

Investing activities in the years ended December 31, 2024 and 2023 resulted in cash outflows of $506,428 and $522,946, respectively. For the year ended December 31, 2024, cash outflows for the acquisition of intangible assets were $309,162 and capital expenditures were $197,266. For the year ended December 31, 2023, cash outflows for the acquisition of intangible assets were $282,121 and capital expenditures were $240,825. Our capital expenditures in both years were primarily for lab testing equipment.

Previous wording

Financing activities in the years ended December 31, 2023 and 2022 resulted in cash outflows of $216,264 and $127,872, respectively, for the payment of withholding taxes on the vesting of restricted stock units.

Current wording

Financing activities in the year ended December 31, 2024 resulted in a net cash inflow of $16,617,023 due to net proceeds from our public offering of $15,724,818 and proceeds from warrant and stock option exercises of $1,120,513, slightly offset by $228,308 for the payment of withholding taxes on the vesting of restricted stock units. Financing activities in the year ended December 31, 2023 resulted in a cash outflow of $216,264 for the payment of withholding taxes on the vesting of restricted stock units.

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 has 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. The estimated net proceeds to us from the March 2024 Offering are $13.6 million or $15.7 million if the underwriter exercises its option to purchase additional shares in full. We intend to use the net proceeds from the March 2024 Offering to fund further commercialization and development of our B-TRAN™ technology and general corporate and working capital purposes.

Current wording

In March and April 2024, we issued and sold 1,666,668 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 net proceeds to us from the public offering were $15.7 million. 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.

Previous wording

In March 2021, we entered into a lease agreement for 4,070 square feet of office and laboratory space located in Austin, Texas. The commencement of the lease occurred on June 1, 2021 and the initial term of the lease was 63 months. The actual base rent in the first year of the lease was $56,471 and was net of $18,824 in abated rent over the first three months of the lease term. The annual base rent in the second year of the lease is $77,330 and increases by $2,035 in each succeeding year of the lease. In addition, we are required to pay our proportionate share of operating costs for the building under this triple net lease. The lease contains a 5-year fair market renewal option. It does not contain a termination option. We recognized a right of use asset of $339,882 and a corresponding lease liability for this lease upon lease commencement.

Current wording

In March 2021, we entered into a lease agreement (the “Original Lease”) for 4,070 square feet of office and laboratory space located in Austin, Texas (the “Original Suite”). The commencement of the lease occurred on June 1, 2021 and the initial term of the lease was 63 months. The actual base rent in the first year of the lease was $56,471 and was net of $18,824 in abated rent over the first three months of the lease term. The annual base rent in the second year of the lease was $77,330 and increased by $2,035 in each succeeding year of the lease. In addition, we were required to pay our proportionate share of operating costs for the building under this triple net lease.

Previous wording

Future minimum payments under the lease are as follows:

Current wording

Future minimum payments under the Amended Lease are as follows:

Previous wording

In 2023, we amended a 2021 license agreement which expires in February 2034. Per the agreement, we have an exclusive royalty-free license associated with semiconductor drive circuitry which enhances our intellectual property portfolio. We pay $50,000 annually under this agreement. At inception, we recorded an intangible asset and other long-term liability of $451,557 for the estimated present value of future payments under this licensing agreement.

Current wording

In 2023, we amended a 2021 license agreement which expires in February 2034. Per the agreement, we have an exclusive royalty-free license associated with semiconductor drive circuitry which enhances our intellectual property portfolio. We pay $50,000 annually under this agreement.

Previous wording

At December 31, 2023, the corresponding long-term liability for the estimated present value of future payments under these licensing agreements was $1,125,173. We are accruing interest for future payments related to these agreements.

Current wording

At December 31, 2024, the estimated present value of future payments under these licensing agreements was $1,157,375 with $150,000 due and payable in 2025. We are accruing interest for future payments related to these agreements.