The accompanying notes
are an integral part of these condensed financial statements.
The accompanying notes
are an integral part of these condensed financial statements.
The accompanying notes
are an integral part of these condensed financial statements.
Notes to Financial Statements
(unaudited)
Note 1 – Organization and Description
of Business
Ideal Power Inc. (the “Company”)
was incorporated in Texas on May 17, 2007 under the name Ideal Power Converters, Inc. The Company changed its name to Ideal Power
Inc. on July 8, 2013 and re-incorporated in Delaware on July 15, 2013. With headquarters in Austin, Texas, it developed power
conversion solutions with a focus on solar + storage, microgrid and stand-alone energy storage applications. The principal products
of the Company were 30-kilowatt power conversion systems, including 2-port and multi-port products.
On April 16, 2018, the Company realigned
into two operating divisions: Power Conversion Systems, to continue the commercialization of its PPSA™ technology, and B-TRAN,
to develop its Bi-directional bi-polar junction TRANsistor (B-TRAN™) solid state switch technology. On January 2, 2019, the
Board of Directors of the Company (the “Board”) approved a strategic shift to focus on the commercialization of its
B-TRAN™ technology and a plan to suspend further power converter system development and sales while the Company located a
buyer for its power conversion systems division and PPSA™ technology. On September 19, 2019, the Company closed on the sale
of the power conversion systems division and the Company is now solely focused on the further development and commercialization
of its B-TRAN™ technology. Prior to the sale of the Company’s PPSA™ business and technology on September 19,
2019, the Company classified the power conversion system division as held for sale. The Company shows this division as a discontinued
operation in these financial statements.
Since its inception, the Company has generated
limited revenues from the sale of products and has financed its research and development efforts and operations primarily through
the sale of common stock and warrants. The Company’s continued operations are dependent upon, among other things, its ability
to obtain adequate sources of funding through future revenues, follow-on stock offerings, issuances of warrants, debt financing,
co-development agreements, government grants, sale or licensing of developed intellectual property or other alternatives.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited financial
statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for Form
10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and
regulations. The Balance Sheet at December 31, 2019 has been derived from the Company’s audited financial
statements included in its Annual Report on Form 10-K filed with the SEC on March 31, 2020.
In the opinion of management, these financial
statements reflect all normal recurring, and other adjustments, necessary for a fair presentation. These financial statements should
be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2019. Operating results for interim periods are not necessarily indicative of operating results for
an entire fiscal year or any other future periods.
Reverse Stock Split
On August 15, 2019, the Company effected
a reverse stock split of the outstanding shares of its common stock by a ratio of one-for-ten, and its common stock began trading
on the Nasdaq Capital Market on a split-adjusted basis on August 20, 2019. The par value of the Company’s common stock remained
unchanged at $0.001 per share after the reverse stock split. All share amounts, per share data, share prices, exercise prices and
conversion rates set forth in these notes and the accompanying financial statements have, where applicable, been adjusted retroactively
to reflect the reverse stock split.
Liquidity and Going Concern
As reflected in the accompanying
condensed financial statements, the Company had a net loss of $0.9 million and used $0.8 million of cash in operating
activities for the three months ended March 31, 2020. At March 31, 2020, the Company had net working capital of $1.8 million
and the Company’s principal source of liquidity consisted of $2.2 million of cash and cash equivalents.
In order to meet the Company’s operating
requirements through at least the next twelve months from the date of issuance of these financial statements, it will need to raise
additional capital from third parties. There can be no assurance that the Company will be successful in obtaining third party financing.
Additionally, the outbreak of the novel coronavirus (COVID-19) has caused significant disruptions to the global financial markets
which could impact the Company’s ability to raise additional capital, on acceptable terms or at all. If external financing
sources are not available or are inadequate to fund operations, or the technology under development is not capable of generating
sustainable revenues in the future, the Company will be required to reduce operating costs, which could jeopardize future strategic
initiatives and business plans. Accordingly, these factors, among others raise substantial doubt about the Company’s ability
to continue as a going concern. The Company’s independent registered public accounting firm, in its report on the Company’s
2019 financial statements, raised substantial doubt about the Company’s ability to continue as a going concern.
The accompanying condensed financial statements
have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. The ability of the Company to continue as a going concern is dependent on its ability
to raise additional capital and to develop profitable operations through implementation of its current business initiatives, however,
there can be no assurances that the Company will be able to do so. The accompanying condensed financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as a going concern.
Earnings Per Share
In accordance with ASC 260, shares issuable
for little or no cash consideration are considered outstanding common shares and included in the computation of basic earnings
per share. As such, for the three months ended March 31, 2020, the Company has included pre-funded warrants to purchase 868,443
shares of common stock, which were issued in November 2019 with an exercise price of $0.001, in its computation of earnings per
share. See Note 7 for additional information.
Recent Accounting Pronouncements
Management does not believe that any recently
issued, but not yet effective, accounting standard, if adopted, would have a material impact on the Company’s financial statements.
Note 3 – Discontinued Operations
On January 2, 2019, the Board approved
a strategic shift to focus on the commercialization of the Company’s B-TRAN™ technology and a plan to suspend further
power converter system development and sales while the Company located a buyer for its power conversion systems division. On January
4, 2019, the Company implemented a reduction-in-force in connection with this exit activity and recognized an expense of $92,600
in involuntary termination benefits.
The Company’s power conversion system
division, a component supplier to energy storage system integrators, had not achieved the necessary scale to generate positive
cash flows. As the division was dependent on the ability of its customers to scale in the small commercial and industrial segment
of the storage market and based on the sales forecasts and commitments provided by these customers, the Company did not expect
its power conversion systems division to scale sufficiently in the short term, requiring an inflow of additional capital for the
business. As such, the decision was made to exit the power conversion systems business and sell the division and the Company’s
PPSA™ technology and focus on the Company’s B-TRAN™ technology.
As a result, the assets held for sale and
discontinued operations criteria were met and the Company’s financial statements are presented in accordance with ASC 205.
Under ASC 205-20-45-10, during the period in which a component meets the assets held for sale and discontinued operations criteria,
an entity must present the assets and liabilities of the discontinued operation separately in the asset and liability sections
of the balance sheet for the comparative reporting periods. The prior period balance sheet should be reclassified for the held
for sale items. For income statements, the current and prior periods should report the results of operations of the component in
discontinued operations when comparative income statements are presented.
On September 19, 2019, the Company closed
on the sale of its power conversion systems division to CE+T Energy Solutions, Inc. (“CE+T Energy”). The consideration
consisted of $200,000 in cash and 50 shares of CE+T Energy’s common stock, issued on December 11, 2019, which represented
a 5% ownership interest in CE+T Energy as of the closing date. The Company did not record any value of the equity consideration
obtained in the sale as there is not currently a market for such shares and the Company does not have access to current financial
information and future financial projections of CE+T Energy. CE+T Energy also assumed certain liabilities of the power conversion
systems division in connection with the sale. The net cash proceeds from the sale were $23,587.
As a result of the sale, the Balance Sheets
at March 31, 2020 and December 31, 2019 do not include assets held for sale.
The following is a reconciliation of the
major classes of line items constituting loss on discontinued operations to loss on discontinued operations shown in the Statement
of Operations:
|
|
March 31,
|
|
|
|
2019
|
|
Product revenue
|
|
$
|
113,500
|
|
Cost of product revenue
|
|
|
98,768
|
|
Research and development
|
|
|
160,284
|
|
General and administrative
|
|
|
25,506
|
|
Sales and marketing
|
|
|
36,117
|
|
Impairment (1)
|
|
|
140,000
|
|
Loss on discontinued operations
|
|
$
|
(347,175
|
)
|
|
(1)
|
Represents an impairment charge of
$140,000, calculated as the net book value of assets held for sale prior to the impairment less the expected proceeds from
the planned sale. The expected proceeds were based on the estimated fair value of the net assets held for sale less the
estimated cost to sell the net assets held for sale.
|
Note 4 – Intangible Assets
Intangible assets, net consisted of the
following:
|
|
March 31,
2020
|
|
|
December 31,
2019
|
|
|
|
(unaudited)
|
|
|
|
|
Patents
|
|
$
|
905,183
|
|
|
$
|
909,142
|
|
Other intangible assets
|
|
|
964,542
|
|
|
|
964,542
|
|
|
|
|
1,869,725
|
|
|
|
1,873,684
|
|
Accumulated amortization
|
|
|
(261,604
|
)
|
|
|
(239,306
|
)
|
|
|
$
|
1,608,121
|
|
|
$
|
1,634,378
|
|
Amortization expense amounted to $22,298
and $16,469 for the three months ended March 31, 2020 and 2019, respectively. Amortization expense for the succeeding five
years and thereafter is $68,967 (2020), $91,955 (2021-2024) and $922,676 (thereafter).
At March 31, 2020 and December 31,
2019, the Company had capitalized $248,658 and $335,224, respectively, for costs related to patents that have not been awarded.
Note 5 – Lease
The Company leases 14,782 square feet of
office and laboratory space located in Austin, Texas. On April 20, 2018, the Company entered into an amendment to its existing
operating lease which extended the lease term from May 31, 2018 to May 31, 2021. The annual base rent in the first year of the
lease extension was $184,775 and increases by $7,391 in each succeeding year of the lease extension. In addition, the Company is
required to pay its proportionate share of operating costs for the building under this triple net lease. The lease does not
contain renewal or termination options.
On January 1, 2019, the Company adopted
ASC 842 utilizing a modified retrospective approach with a date of initial application at the beginning of the period of adoption.
At adoption, the Company recognized a right of use asset of $422,819 and lease liability of $427,131. As the discount rate implicit
in the lease was not readily determinable and the Company did not have any outstanding indebtedness, the Company utilized market
data, giving consideration to remaining term of the lease, to estimate its incremental borrowing rate at 8% per annum for purposes
of calculating the right of use asset and lease liability.
On September 19, 2019, the Company
entered into a sublease with CE+T Energy pursuant to which the Company subleases approximately seventy-five (75%) percent of its
Austin, Texas facility to CE+T Energy. Under the sublease, CE+T Energy is obligated to make monthly payments equal to 75% of all
sums due under the master lease and 100% of any maintenance and repair costs related to the subleased premises. The sublease replaced
a temporary agreement between the Company and CE+T Energy, effective July 22, 2019, that contained similar payment obligations
by CE+T Energy for utilization of the subleased premises. Consistent with the master lease, the sublease terminates on May 31,
2021. During the three months ended March 31, 2020, CE+T Energy made payments of $51,231 to the Company related to the subleased
premises. The payments included CE+T Energy’s share of rent as well as its proportionate share of operating costs for the
building under the master lease. The Company recognized these payments as a reduction in general and administrative expenses.
Future minimum payments under the lease,
as amended, are as follows:
For the Year Ended December 31,
|
|
Master Lease
|
|
|
Sublease Income
|
|
|
Net
|
|
2020
|
|
|
148,436
|
|
|
|
(111,327
|
)
|
|
|
37,109
|
|
2021
|
|
|
83,149
|
|
|
|
(62,362
|
)
|
|
|
20,787
|
|
Total future undiscounted minimum lease payments
|
|
$
|
231,585
|
|
|
$
|
(173,689
|
)
|
|
$
|
57,896
|
|
Less: imputed interest
|
|
|
(9,758
|
)
|
|
|
|
|
|
|
|
|
Total lease liability
|
|
$
|
221,827
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2020
and 2019, operating cash flows for lease payments totaled $48,041 and $46,194, respectively. For both the three months ended March
31, 2020 and 2019, operating lease cost, recognized on a straight-line basis, totaled $48,488. At March 31, 2020, the remaining
lease term was 14 months.
Note 6 – Commitments and Contingencies
License Agreement
In 2015, the Company entered into licensing
agreements which expire in February 2033. Per the agreements, the Company has an exclusive royalty-free license associated with
semiconductor power switches which enhances its intellectual property portfolio. The agreements include both fixed payments, all
of which were paid prior to 2017, and ongoing variable payments. The variable payments are a function of the number of associated
patent filings pending and patents issued under the agreements. The Company will pay $10,000 for each patent filing pending and
$20,000 for each patent issued within 20 days of December 21st of each year of the agreements, up to a maximum of $100,000
per year (i.e. five issued patents).
In April 2019, a patent associated with
these agreements was issued and the Company recorded, as a non-cash activity, an intangible asset and a corresponding other long-term
liability of $232,367, representing the estimated present value of future payments under the licensing agreements for this issued
patent. Through March 31, 2020, three patents associated with the agreements were issued. At March 31, 2020 and December 31,
2019, the other long-term liability for the estimated present value of future payments under the licensing agreements was $599,860
and $595,802, respectively. The Company is accruing interest for future payments related to the issued patents associated with
these agreements.
Legal Proceedings
On April 11, 2019, the Company entered
into an asset purchase agreement (the “APA”) with Pathion Holdings, Inc., a Delaware corporation, and Pathion, Inc.,
a Delaware corporation, (together, “Pathion”) to sell certain assets (the “PPSA Assets”) related to the
Company’s PPSA™ / Power Conversion Systems business (“PPSA Business”). The purchase price consisted of
$500,000 in cash and 150,000 shares of the common stock of Pathion Holdings, Inc. Pursuant to the APA, Pathion would also assume
certain liabilities relating to the PPSA Business.
On June 13, 2019, the Company filed a petition
in the district court of the 250th Judicial District in Travis County (the “Court”), naming Pathion and
certain Pathion officers as defendants. The petition asserts breach of the APA and the related sublease agreement for failure by
Pathion to pay any cash amounts due thereunder, and fraudulent inducement by Pathion and the individual defendants for misrepresenting
Pathion’s financial position and its stock value. The petition also requested a declaratory judgment that Pathion has no
rights to the PPSA Assets.
On July 15, 2019, Pathion filed a general
denial to the Company’s petition.
On July 22, 2019, the Company filed a motion
for partial summary judgment on its declaratory judgment action and for severance. Pathion responded to the motion for summary
judgment on August 6, 2019. That same day, Pathion filed a counterclaim, and requested injunctive relief and a declaratory judgment.
On August 13, 2019, the Court conducted
a hearing on the Company’s motion for summary judgment. On August 23, 2019, the Court issued an order granting the Company’s
motion for summary judgment and fees and severing judgment from remaining claims. Under this order, the Court declared and decreed
that Pathion has no rights to the PPSA Assets and awarded the Company $24,800 in legal fees. On October 15, 2019, the Court issued
a writ of garnishment against Pathion’s bank to enable collection of these legal fees.
On October 14, 2019, the Court granted
Pathion’s counsel’s motion to withdraw. Ten days later, a new lawyer appeared for Pathion, and the next day, October
25, 2019, the Court issued a scheduling order requiring Pathion to produce documents and appear for deposition in December 2019
and set trial to begin on August 31, 2020. On December 12, 2019, after Pathion filed an emergency order to delay depositions, the
Court set a new deposition date of January 7, 2020. The deposition occurred on January 7, 2020. On February 20, 2020, Pathion filed
a request for the Company to produce documents within 30 days. The Company responded to this request on March 23, 2020.
At March 31, 2020, the Company, even though
it did not expect an unfavorable outcome related to this proceeding, was unable to estimate the possible gain or loss, if any,
related to this proceeding.
On April 17, 2020, the Company and Pathion,
including the individual Pathion defendants, entered into an Agreement and General Release and, on April 22, 2020 jointly filed
a Mutual Notice of Nonsuit with the Court. As a result, the parties have been released from any agreements previously signed by
the parties and the legal proceeding has been dismissed. In connection with this settlement for no cash consideration, the parties
signed a Rule 11 Agreement whereby the Company would still receive the $25,442 of legal fees plus interest that it was awarded
by the Court in August 2019 and garnished in October 2019. These funds were received by the Company on April 23, 2020.
The Company may be subject to other
litigation from time to time in the ordinary course of business. The Company is not currently party to any legal proceedings
that it believes would reasonably have a material adverse impact on its business, financial results and cash flows.
Indemnification Obligations
In connection with the sale of its power
conversion systems division in September 2019, the Company entered into an Asset Purchase Agreement with CE+T Energy that contains
mutual indemnification obligations for breaches of representations, warranties and covenants and for certain other matters, including
indemnification by the Company for assets and liabilities excluded from the sale and by CE+T Energy for liabilities assumed in
the sale.
COVID-19 Pandemic
In March 2020, the World Health Organization
declared the outbreak of COVID-19 as a pandemic, which continues to spread throughout the United States and the rest of the world.
The ultimate extent of the impact of COVID-19 on the financial performance of the Company will depend
on future developments, including, among other things, the duration and spread of COVID-19, and the overall economy, all of which
are highly uncertain and cannot be predicted. The outbreak of COVID-19 has already caused significant disruptions to
the global financial markets which may impact the Company’s ability to raise additional capital, on acceptable terms or at
all. If the financial markets and/or the overall economy are impacted for an extended period, the
Company's operating results may be materially and adversely affected.
Note 7 — Common and Preferred Stock
Private Placement
On November 7, 2019, the Company entered
into a securities purchase agreement with certain institutional and accredited investors, including Dr. Lon E. Bell, Chairman of
the Board and former Chief Executive Officer, for a private placement of the Company’s common stock and warrants to purchase
common stock for aggregate gross proceeds of $3.5 million and net proceeds of $3.1 million (the “Offering”). The Offering
closed on November 13, 2019. In the Offering, the Company issued an aggregate of (i) 544,950 shares of common stock at $2.4763
per share and (ii) pre-funded warrants to purchase 868,443 shares of common stock that are immediately exercisable and have no
expiration date, at a price of $2.4763 less a nominal exercise price of $0.001 per pre-funded warrant. The Company also issued
to the investors warrants to purchase up to an aggregate of 1,766,751 shares of common stock at an exercise price of $2.32 per
share that are immediately exercisable and will expire five years from the issuance date. As compensation to the placement agent
in the Offering, in addition to a cash fee for its services, the Company also issued to the placement agent a warrant to purchase
up to 70,670 shares of common stock, with an exercise price of $2.9716 per share. The other terms of the placement agent warrant
are substantially the same as the investor warrants. For his investment of $500,000, Dr. Bell received 201,914 shares of common
stock and 252,393 warrants in the Offering. Pursuant to a registration rights agreement, the Company filed a registration statement
with the SEC (which was declared effective on December 20, 2019) to register the resale of the shares of common stock and the shares
of common stock issuable upon exercise of the warrants issued in the Offering.
Reverse Stock Split
On August 15, 2019, after receipt of stockholder
and Board approval, the Company filed a Certificate of Amendment to the Certificate of Incorporation of Ideal Power Inc. to effect
a one-for-ten (1:10) reverse stock split of all issued and outstanding shares of the Company’s common stock. The Company’s
common stock began trading on the Nasdaq Capital Market on a split-adjusted basis when the market opened on August 20, 2019. The
par value of the Company’s common stock remained unchanged at $0.001 per share after the reverse stock split.
The reverse stock split reduced the number
of shares of the Company’s common stock outstanding from 14,722,840 to 1,474,001, inclusive of full shares received for fractional
interests. The number of shares of the Company’s common stock issuable upon conversion of the outstanding shares of the Company’s
preferred stock was reduced from 810,000 shares to 81,000 shares. The number of authorized shares of the Company’s common
stock was not changed by the reverse stock split.
The reverse stock split proportionately
affected the number of shares of the Company’s common stock available for issuance under the Company’s equity incentive
plans. The number of shares of the Company’s common stock subject to all options, warrants and stock awards of the Company
outstanding immediately prior to the reverse stock split were proportionately adjusted in accordance with their terms.
Preferred Stock
The Company is authorized to issue
10,000,000 shares of preferred stock.
On February 21, 2019, a shareholder converted
708,430 shares of preferred stock to 70,843 shares of common stock. On December 12, 2019, a shareholder converted 810,000 shares
of preferred stock to 81,000 shares of common stock. At March 31, 2020 and December 31, 2019, there was no preferred stock outstanding.
Note 8 — Equity Incentive Plan
On May 17, 2013, the Company adopted the
2013 Equity Incentive Plan (the “Plan”) and reserved shares of common stock for issuance under the Plan. The Plan is
administered by the Compensation Committee of the Company’s Board of Directors.
At March 31, 2020, 19,663 shares of
common stock were available for issuance under the Plan.
A summary of the Company’s stock
option activity and related information is as follows:
|
|
Stock
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Life
(in years)
|
|
Outstanding at December 31, 2019
|
|
|
169,980
|
|
|
$
|
8.13
|
|
|
|
9.1
|
|
Granted
|
|
|
112,791
|
|
|
$
|
2.18
|
|
|
|
|
|
Outstanding at March 31, 2020
|
|
|
282,771
|
|
|
$
|
5.76
|
|
|
|
9.3
|
|
Exercisable at March 31, 2020
|
|
|
74,980
|
|
|
$
|
14.81
|
|
|
|
7.9
|
|
During the three months ended March
31, 2020, the Company granted 52,791 stock options to Board members and 57,000 stock options to executives that are subject
to cancellation for no consideration in the event the Company does not obtain shareholder approval of an increase in the
shares reserved for issuance under the Plan at the Company’s 2020 Annual Meeting of Stockholders. During the three
months ended March 31, 2020, the Company granted 3,000 stock options to employees under the Plan. The estimated fair value of
these stock options, calculated using the Black-Scholes option valuation model, was $173,184, $100,919 of which was
recognized during the three months ended March 31, 2020.
At March 31, 2020, there was $232,952
of unrecognized compensation cost related to non-vested equity awards granted under the Plan. That cost is expected to be recognized
over a weighted average period of 1.1 years.
Note 9 — Warrants
The Company had 2,714,858 warrants outstanding
at March 31, 2020 with a weighted average exercise price of $1.70 per share, down from 3,331,506 warrants outstanding at December
31, 2019. During the three months ended March 31, 2020, warrants to purchase 616,648 shares of common stock expired.
At March 31, 2020, all warrants are exercisable,
although the warrants held by each of the Company’s four largest beneficial owners may be exercised only to the extent that
the total number of shares of common stock then beneficially owned by such shareholder does not exceed 9.99% of the outstanding
shares of the Company’s common stock.
Note 10 — Subsequent Events
On April 29, 2020, the Company issued 26,316
unregistered shares of common stock, valued at $50,000 at the time of issuance, to a third-party vendor as compensation for services
performed. At March 31, 2020, the $50,000 was included in accrued expenses.
On May 4, 2020, the Company entered
into a Loan Agreement and Promissory Note (collectively the “PPP Loan”) with BBVA USA pursuant to the Paycheck
Protection Program (the “PPP”) under the recently enacted Coronavirus Aid, Relief, and Economic Security Act
(“CARES Act”) administered by the U.S. Small Business Administration. The Company received total proceeds of
$91,407 from the unsecured PPP Loan. The PPP Loan is scheduled to mature on May 4, 2022 and has an interest rate of 1.00% per
annum and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration
under the CARES Act. The PPP Loan may be prepaid by the Company at any time prior to its maturity with no prepayment
penalties.
The PPP Loan contains customary
events of default relating to, among other things, payment defaults and breaches of representations and warranties. Subject
to certain conditions, the PPP Loan may be forgiven in whole or in part by applying for forgiveness pursuant to the CARES Act
and the PPP. The amount of loan proceeds eligible for forgiveness is based on a formula based on a number of factors,
including the amount of loan proceeds used by the Company during the eight-week period after the loan origination for certain
purposes, including payroll costs, rent payments on certain leases and certain qualified utility payments, provided that,
among other things, at least 75% of the loan amount is used for eligible payroll costs, the employer maintaining or rehiring
employees and maintaining salaries at certain level. In accordance with the requirements of the CARES Act and the PPP, the
Company intends to use the proceeds from the PPP Loan primarily for payroll costs. There can be no assurance that the Company will be granted forgiveness of
the PPP Loan in whole or in part. Assuming the principal amount is not forgiven, the payment schedule would consist of 18
monthly consecutive payments of $5,145 each, beginning December 4, 2020 with a final payment due on May 4, 2022 for all
principal and accrued interest not yet paid.
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS AND OTHER INFORMATION CONTAINED IN THIS REPORT
This report contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities
Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange
Act. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements
by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements
by looking for words such as "approximates," "believes," "hopes," "expects," "anticipates,"
"estimates," "projects," "intends," "plans," "would," "should," "could,"
"may" or other similar expressions in this report. In particular, these include statements relating to future actions,
prospective products, applications, customers, technologies, future performance or results of anticipated products, expenses, and
financial results. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results
to differ materially from our historical experience and our present expectations or projections. Factors that could cause actual
results to differ from those discussed in the forward-looking statements include, but are not limited to:
|
•
|
our ability to generate revenue;
|
|
•
|
our limited operating history;
|
|
•
|
the size and growth of markets for our technology;
|
|
•
|
regulatory developments that may affect our business;
|
|
•
|
our ability to successfully develop new technologies, particularly our bi-directional bipolar junction transistor, or B-TRAN™;
|
|
•
|
our expectations regarding the timing of prototype and commercial fabrication of B-TRAN™ devices;
|
|
•
|
our expectations regarding the performance of our B-TRAN™ and the consistency of that performance with both internal and third-party simulations;
|
|
•
|
the expected performance of future products incorporating our B-TRAN™;
|
|
•
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the performance of third-party consultants and service providers whom we have and will continue to rely on to assist us in development of our B-TRAN™ and related drive circuitry;
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the rate and degree of market acceptance for our B-TRAN™;
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The time required for third parties to redesign, test and certify their products incorporating our B-TRAN™;
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our ability to successfully commercialize our B-TRAN™ technology;
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our ability to secure strategic partnerships with semiconductor fabricators and others related to our B-TRAN™ technology;
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our ability to obtain, maintain, defend and enforce intellectual property rights protecting our technology;
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the success of our efforts to manage cash spending, particularly prior to the commercialization of our B-TRAN™ technology;
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general economic conditions and events and the impact they may have on us and our potential partners and licensees;
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our ability to obtain adequate financing in the future, as and when we need it;
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our ability to maintain listing of our common stock on the Nasdaq Capital Market;
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the impact of the novel coronavirus (COVID-19) on our business, financial condition and results of operations;
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our success at managing the risks involved in the foregoing items; and
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other factors discussed in this report.
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The forward-looking statements are based
upon management’s beliefs and assumptions and are made as of the date of this report. We undertake no obligation to publicly
update or revise any forward-looking statements included in this report. You should not place undue reliance on these forward-looking
statements.
REVERSE STOCK SPLIT
On August 15, 2019, we effected a reverse
stock split of the outstanding shares of our common stock by a ratio of one-for-ten, and our common stock began trading on the
Nasdaq Capital Market on a split-adjusted basis on August 20, 2019. The par value of our common stock remained unchanged at $0.001
per share after the reverse stock split. All share amounts, per share data, share prices, exercise prices and conversion rates
have, where applicable, been adjusted retroactively to reflect the reverse stock split.
Unless otherwise stated or the context
otherwise requires, the terms “Ideal Power,” “we,” “us,” “our” and the “Company”
refer to Ideal Power Inc.