Table of Contents

​

​

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

FORM 10-Q

(Mark One)

​

For the quarterly period ended March 31, 20212022

OR

OR

​

For the transition period from ______________ to _______________

Commission File Number 001-36216

IDEAL POWER INC.

(Exact name of registrant as specified in its charter)

​

4120 Freidrich Lane,5508 Highway 290 West, Suite 100120

Austin, Texas 7874478735

(Address of principal executive offices)

(Zip Code)

(512) (512) 264-1542

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

​

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No ¨

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period than the registrant was required to submit such files).

Yes x☒ No ¨

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

​

If an emerging growth company, indicate by check mark whether the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x

☒

As of May 12, 2021,11, 2022, the issuer had 5,872,0465,903,797 shares of common stock, par value $.001,$0.001, outstanding.

​

​

​

​

​

​

Table of Contents

PART I-FINANCIAL INFORMATION

ITEM 1. CONDENSED FINANCIAL STATEMENTS

IDEAL POWER INC.

Balance Sheets

The accompanying notes are an integral part of these condensed financial statements.

IDEAL POWER INC.

Statements of Operations(unaudited)

​

(unaudited)

​

The accompanying notes are an integral part of these condensed financial statements.

​

Table of Contents

IDEAL POWER INC.

Statements of Cash FlowsOperations

(unaudited)

(unaudited)​

​

The accompanying notes are an integral part of these condensed financial statements.

​

Table of Contents

IDEAL POWER INC.

Statements of Cash Flows

Statement of Stockholders’ Equity(unaudited)

​

For the Three Months Ended March 31, 2021 and 2020

(unaudited)

​

The accompanying notes are an integral part of these condensed financial statements.

​

​

Table of Contents

IDEAL POWER INC.

Statements of Stockholders’ Equity

For the Three Months Ended March 31, 2022 and 2021

(unaudited)

​

​

The accompanying notes are an integral part of these condensed financial statements.

​

​

Table of Contents

IDEAL POWER INC.

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, the Company is solely focused on the further development and commercialization of its Bi-directional bi-polarBidirectional bipolar junction TRANsistor (B-TRAN™) solid statesolid-state switch technology.

Since its inception, the Company 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 (the “SEC”) 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 Sheetbalance sheet at December 31, 20202021 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 26, 2021.25, 2022.

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, 2020.2021. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.

EarningsNet Loss Per Share

In accordance with ASCAccounting Standards Codification 260, shares issuable for little or no cash consideration are considered outstanding common shares and included in the computation of basic earningsnet loss per share. As such, for the three months ended March 31, 20212022 and 2020,2021, the Company has included pre-funded warrants to purchase 253,828 and 868,443 shares of common stock respectively, whichin its computation of net loss per share. The pre-funded warrants were issued in November 2019 with an exercise price of $0.001,$0.001.

In periods with a net loss, no common share equivalents are included in itsthe computation of earningsdiluted net loss per share.share because their effect would be anti-dilutive. At March 31, 2022, potentially dilutive shares outstanding amounted to 1,382,402 shares and exclude prefunded warrants to purchase shares of common stock.

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.

​

​

Table of Contents

Note 3 – Intangible Assets

Intangible assets, net consisted of the following:

​

​

Amortization expense amounted to $23,698$36,812 and $22,298$23,698 for the three months ended March 31, 20212022 and 2020,2021, respectively. Amortization expense for the succeeding five years and thereafter is $100,732 (2021)$110,732 (2022), $134,310 (2022-2025)$147,642 (2023-2026) and $1,118,267$1,016,200 (thereafter).

At March 31, 20212022 and December 31, 2020,2021, the Company had capitalized $245,178$317,923 and $270,000,$306,640, respectively, for costs related to patents that have not been awarded.

​

Note 4 – Loans

In May 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 Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (“SBA”). The Company received total proceeds of $91,407 from the unsecured PPP Loan. The PPP Loan is scheduled to mature in May 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 first payment due date was originally in December 2020 but BBVA USA extended the first due date to August 2021 as the PPP Flexibility Act of 2020 extended the deferral period for payment of principal and interest for all PPP borrowers.

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 8-week or 24-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 60% 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 used the proceeds from the PPP Loan primarily for payroll costs. The Company applied for forgiveness of the PPP Loan during the first quarter of 2021. See Note 10.

In April 2020, the Company also received a $5,000 advance related to a U.S. Small Business Administration Economic Injury Disaster Loan. The Company expects to repay this advance and has included it within accrued expenses.

Note 5 – Lease

The Company leasespreviously leased 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 $184,775Texas 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.

For purposes of calculating the right of use asset and lease liability included in the Company’s financial statements, the Company estimated its incremental borrowing rate at 8% per annum.

In September 2019, the Company entered into a sublease with CE+T Energy pursuant to which the Company subleasessubleased approximately seventy-five percent (75%) percent of its Austin, Texas facilitythis space 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 mastera third party. This 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 in July 2019, that contained similar payment obligations by CE+T Energy for utilization of the subleased premises. Consistent with the master lease, the sublease terminatesexpired concurrently on May 31, 2021. During the three months ended March 31, 2021, CE+T Energy made payments of $53,293 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 three months ended March 31, 2021 and 2020, operating cash flows for lease payments totaled $49,889 and $48,041, respectively. For both the three months ended March 31, 2021 and 2020, operating lease cost, recognized on a straight-line basis, totaled $48,488. At March 31, 2021, the remaining lease term was 2 months.

In March 2021, the Company entered into a lease agreement for 4,070 square feet of office and laboratory space located in Austin, Texas. The commencement of the lease is expected to occuroccurred on June 1, 2021 and the initial term of the lease is 63 months. The actual base rent in the first year of the lease iswas $56,471 and iswas 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, the Company is required to pay its 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. The Company will recognizerecognized a right of use asset of $339,882 and a corresponding lease liability for this lease upon lease commencement.

​

For purposes of calculating the right of use asset and lease liability included in the Company’s financial statements, the Company estimated its incremental borrowing rate at 6% per annum.

​

Future minimum payments under the lease are as follows:

​

​

At March 31, 2022, the remaining lease term was 53 months.

​

For the three months ended March 31, 2022 and 2021, operating cash flows for this lease uponpayments totaled $18,824 and $49,889 respectively. For the three months ended March 31, 2022 and 2021, operating lease commencement.cost, recognized on a straight-line basis, totaled $19,018 and $48,488, respectively.

Table of Contents

Note 65 – 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 annually with one-half the annual payment due within 20 days of December 21^st of each year and one-half annual the payment due within 20 days of June 21^st of each year of the agreements, up to a maximum of $100,000 per year (i.e. five issued patents).

In March 2021, two patents associated with these agreements were issued and the Company recorded, as a non-cash activity, an intangible asset and a corresponding other long-term liability of $426,937, representing the estimated present value of future payments under the licensing agreements for these two issued patents. Through March 31, 2021, all All five patents associated with the agreements wereare issued.

At March 31, 20212022 and December 31, 2020,2021, the other long-term liability for the estimated present value of future payments under the licensing agreements was $944,026$922,439 and $552,031,$917,100, respectively. The Company is accruing interest for future payments related to the issued patents associated with these agreements.

Legal Proceedings

The Company may be subject to litigation from time to time in the ordinary course of business. The Company is not currently party to any legal proceedings.

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.

The employment agreements of Company executives include an indemnification provision whereby the Company shall indemnify and defend, at the Company’s expense, its executives so long as an executive’s actions were taken in good faith and in furtherance of Company’s business and within the scope of executive’s duties and authority.

COVID-19 Pandemic

As of the date of these financial statements, the COVID-19 pandemic 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 its related variants, the timing, scope and efficacy of vaccination efforts, additional governmental restrictions in response to the COVID-19 pandemic and the overall economy, all of which are highly uncertain and cannot be predicted. TheIf the COVID-19 pandemic has already causedcontributes to additional significant volatility in the global financial markets which may impactin the future, the Company’s ability to raise additional capital, if necessary, on acceptable terms or at all, may be impacted, though such risk has not materialized to date. If the financial markets and/or the overall economy are negatively impacted for an extended period, the Company'sCompany’s operating results may be materially and adversely affected.

​

Note 76 — Common Stock

February 2021 Public Offering

In February 2021, the Company issued and sold 1,352,975 shares of its common stock, including 176,475 additional shares of common stock pursuant to the exercise of the underwriter’s option to purchase additional shares in full, in an underwritten public offering at a price of $17.00 per share (the “February 2021“Public Offering”). The net proceeds to the Company from the February 2021Public Offering were $21.2 million. The Company intends to use the net proceeds from the February 2021Public Offering to fund commercialization and development of its B-TRAN™ technology and general corporate and working capital purposes.

Stock IssuanceIssuances

In January 2022, the Company issued 10,000 unregistered shares of common stock, valued at $100,100 at the time of issuance, to a third-party vendor as compensation for services performed. In February 2021, the Company issued 4,000 unregistered shares of common stock, valued at $68,680 at the time of issuance, to a third-party vendor as compensation for services performed.

​

Table of Contents

Note 87 — Equity Incentive Plan

OnIn May 17, 2013, the Company adopted the 2013 Equity Incentive Plan (as amended and restated, the “Plan”) and reserved shares of common stock for issuance under the Plan.Plan, which was last amended in June 2021. The Plan is administered by the Compensation Committee of the Company’s Board of Directors.

AtDirectors.At March 31, 2021, 92,1402022, 412,945 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:

​

​

During the three months ended March 31, 2021,2022, the Company granted 31,82113,096 stock options to Board members and 25,00010,000 stock options to employees under the Plan. The estimated fair value of these stock options, calculated using the Black-Scholes option valuation model, was $497,461, $55,708$185,889, $29,998 of which was recognized during the three months ended March 31, 2021.2022.

In January 2022, the Compensation of the Company’s Board of Directors (the “Board”) approved a modification of stock option grants to David Eisenhaure, the Company’s former Chairman of the Board, whom passed away in Octobor 2021. The modification extended the post-termination exercise period of his vested stock option grants from 12 months to 5 years. During the three months ended March 31, 2022, the Company recognized $49,327 of expense related to this modification.

At December 31, 2021 and March 31, 2022, there were 100,000 unvested restricted stock units (“RSUs”) outstanding. NaN RSUs were granted, vested or forfeited during the three months ended March 31, 2022.

At March 31, 2021,2022, there was $482,900$1,650,209 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 1.11.3 years.

​

Note 98 — Warrants

TheAt March 31, 2022 and December 31, 2021, the Company had 1,040,248786,420 warrants outstanding at March 31, 2021 with a weighted average exercise price of $3.92$5.19 per share down from 2,273,369and 253,828 pre-funded warrants outstanding at December 31, 2020.

with an exercise price of $0.001 per share. The weighted average remaining life, excluding the 253,828 pre-funded warrants with no expiration date, of the outstanding warrants is 3.0 years.

At March 31, 2021,2022, all warrants arewere exercisable, although the warrants held by eachcertain of the Company’s four largest beneficial ownerswarrant holders may be exercised only to the extent that the total number of shares of common stock then beneficially owned by such shareholderwarrant holder does not exceed 4.99% (or, at the investor’s election, 9.99%) of the outstanding shares of the Company’s common stock.

​

In May 2021, the SBA approved forgivenessTable of the Company’s PPP Loan in the principal amount $91,407, including accrued interest.Contents

Table of our efforts to manage cash spending, particularly prior to the commercialization of our B-TRAN™ technology;Contents

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q as well as our audited 20202021 financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2020.2021. In addition to historical information, the discussion and analysis here and throughout this Form 10-Q contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited, to those set forth under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020.2021.

Overview

Ideal Power Inc. is located in Austin, Texas. With headquarters in Austin, Texas, theThe Company is solely focused on the further development and commercialization of its Bi-directional bi-polarBidirectional bipolar junction TRANsistor (B-TRAN™) solid state switch technology.

To date, operations have been funded primarily through the sale of common stock and warrants. Total revenue generated from inception to date as of March 31, 20212022 amounted to $15.6$16.0 million with approximately $12.4 million of that revenue from discontinued operations and the remainder from grant revenue for bi-directionalbidirectional power switch development. Revenue was $242,061$125,008 and $0$242,061 in the three months ended March 31, 2022 and 2021, and 2020, respectively, and the revenuerespectively. Revenue for both the three months ended March 31, 2022 and 2021 was related to a government grant.grants. We may pursue additional research and development grants, if and when available, to further develop and/or improve our technology.

COVID-19 Impact

As of the date of this report, the COVID-19 pandemic continues to spread throughout the United States and the rest of the world. The ultimate extent of the impact of COVID-19 on theour financial performance of the Company will depend on future developments, including, among other things, the duration and spread of COVID-19 and its related variants, the timing, scope and efficacy of vaccination efforts, additional governmental restrictions in response to the COVID-19 pandemic, and the overall economy, all of which are highly uncertain and cannot be predicted. TheIf the COVID-19 pandemic has causedcontributes to significant additional volatility in the global financial markets which may impactin the Company’sfuture, our ability to raise additional capital, if necessary, on acceptable terms or at all, may be impacted, though such risk has not materialized to date. If the financial markets and/or the overall economy are negatively impacted for an extended period, the Company'sour operating results may be materially and adversely affected.

While the outbreak of COVID-19 initiallypandemic has caused some disruption to our business, in the first and second quarters of 2020, the COVID-19 pandemicit has not had a material adverse impact on our operations to date. However, the COVID-19 pandemic may disrupt our business in the future and cause electrical component shortages and unavailability, difficulties in securing fabrication capacity, delays in critical development and commercialization activities and/or result in potential incremental costs associated with mitigating the effects of the COVID-19 pandemic. There has been a significant disruption in the supply chain for semiconductors due both to the COVID-19 pandemic and increased demand for semiconductors. While this disruption has not materially impacted us to date, it may materially and adversely impact us in the future. The COVID-19 pandemic is ongoing, and its dynamic nature, including uncertainties relating to the ultimate spread of the virus the severity of the disease,and its related variants, the duration of the outbreak,pandemic, the timing, scope and efficacy of vaccination efforts and additional actions that may be taken by governmental authorities in response to contain the outbreak or to treat its impact,pandemic, makes it difficult to forecast the effects on our business and results of operations for the remainder of 20212022 and thereafter.

February 2021 Offering

In February 2021, we issued and sold 1,352,975 sharesTable of our common stock, including 176,475 additional shares of common stock pursuant to the exercise of the underwriter’s option to purchase additional shares in full, in an underwritten public offering at a price of $17.00 per share (the “February 2021 Offering”). The net proceeds to us from the February 2021 Offering were $21.2 million. We intend to use the net proceeds from the February 2021 Offering to fund commercialization and development of our B-TRAN™ technology and general corporate and working capital purposes.Contents

Table of Contents

Liquidity and Capital Resources

We currently generate grant revenue only andonly. We expect to generate grant revenue to likely beand potentially commercial revenue in 2022, depending on the ultimate date that our only source of revenueinitial product is introduced for 2021.commercial sale. We have incurred losses since inception. We have funded our operations to date through the sale of common stock and warrants.

At March 31, 2021,2022, we had cash and cash equivalents of $26,789,017.$21.7 million. Our net working capital and long-termat March 31, 2022 was $21.4 million. We had no outstanding debt at March 31, 20212022. Accordingly, management expects that our cash and cash equivalents will be sufficient to fund our activities for at least the next twelve months from the date of filing this Quarterly Report on Form 10-Q; however, we may require additional funds to fully implement our plan of operation.

Operating activities in the three months ended March 31, 2022 resulted in cash outflows of $1,417,123, which were $26,499,349due to the net loss for the period of $1,904,641, partly offset by stock-based compensation of $231,765, favorable balance sheet timing of $111,463, stock issued for services of $100,100 and $91,407, respectively.

depreciation and amortization of $44,190. Operating activities in the three months ended March 31, 2021 resulted in cash outflows of $843,337, which were due to the net loss for the period of $924,150 and unfavorable balance sheet timing $79,315, partly offset by stock issued for services of $68,680, stock-based compensation of $61,933 and depreciation and amortization of $29,515. Operating activities in the three months ended March 31, 2020 resulted in cash outflows of $813,627, which were due to the loss from continuing operations for the period of $930,501 and unfavorable balance sheet timing of $45,080 partly offset by stock-based compensation of $116,497, depreciation and amortization of $28,113 and patent impairment charges of $17,344.

We expect a modest ramp upan increase in cash outflows from operating activities for the remainder of 2021throughout 2022 as we continue to accelerate development and commercialization of our B-TRAN™ technology. We expect cash outflows from operating activities to trend upward in 2021.

Investing activities in the three months ended March 31, 20212022 and 20202021 resulted in cash outflows of $30,737$27,616 and $24,063,$30,737, respectively, for the acquisition of intangible assets and fixed assets.

Financing activities in the three months ended March 31, 2022 did not result in any cash inflows or outflows. Financing activities in the three months ended March 31, 2021 resulted in cash inflows of $21,204,609 from the net proceeds from our Public Offering (as defined below) in February 2021 Offering and $3,301,226 from the exercise of warrants and stock options. Financing activities in the three months ended March 31, 2020 resulted in no cash inflows or outflows.

PPP Loan

In May 2020, we 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 Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (“SBA”). We received total proceeds of $91,407 from the unsecured PPP Loan. The PPP Loan is scheduled to mature in May 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 us at any time prior to its maturity with no prepayment penalties. The first payment due date was originally in December 2020 but BBVA USA extended the first due date to August 2021 as the PPP Flexibility Act of 2020 extended the deferral period for payment of principal and interest for all PPP borrowers.

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 us during the 8-week or 24-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 60% 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, we used the proceeds from the PPP Loan primarily for payroll costs. We applied for forgiveness of the PPP Loan during the first quarter of 2021. In May 2021, the SBA approved forgiveness of our PPP Loan.

February 2021Public Offering

In February 2021, we issued and sold 1,352,975 shares of our common stock, including 176,475 additional shares of common stock pursuant to the exercise of the underwriter’s option to purchase additional shares in full, in an underwritten public offering at a price of $17.00 per share.share (the “Public Offering”). The net proceeds to us from the February 2021Public Offering were $21.2 million. We intend to use the net proceeds from the February 2021Public Offering to fund commercialization and development of our B-TRAN™ technology and general corporate and working capital purposes.

Critical Accounting Policies

Estimates

There have been no significant changes during the three months ended March 31, 20212022 to the critical accounting policiesestimates 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, 2020.

Off-Balance Sheet Transactions

As of March 31, 2021, we did not have any off-balance sheet transactions.

2021.

Trends, Events and Uncertainties

There are no material changes from trends, events or uncertainties disclosed in our 2020 Annual Report on Form 10-K.10-K for the fiscal year ended December 31, 2021.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide this information.

Table of Contents

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the Company’s reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The Company’s disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that this information is accumulated and communicated to management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company conducted an evaluation (pursuant to Rule 13a-15(b) of the Exchange Act), under the supervision and with the participation of its Chief Executive Officer (principal executive officer) and its Chief Financial Officer (principal financial and accounting officer) of the effectiveness of the Company’s disclosure controls and procedures as of March 31, 20212022 and has concluded that, as of March 31, 2021,2022, the Company’s disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There have been no material changes in our internal controls over financial reporting that occurred during the quarter ended March 31, 20212022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Limitations on the Effectiveness of Controls

Control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control systems’ objectives are being met. Further, the design of any system of controls must reflect the fact that there are resource constraints, and the benefits of all controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of error or mistake. Control systems can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

​

Table of Contents

PART II-OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We may be subject to litigation from time to time in the ordinary course of business. We are not currently party to any legal proceedings.

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors disclosed in our 2020 Annual Report on Form 10-K.10-K for the year ended December 31, 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 26, 2021,In January 2022, we issued 4,00010,000 unregistered shares of common stock, valued at $68,680$100,100 at the time of issuance, to a third-party vendor as compensation for services performed. The shares of common stock were issued in a private placement pursuant to Section 4(a)(2) of the Securities Act.

​

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

​

Table of Contents

ITEM 6. EXHIBITS

​

​

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant, has duly, caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

​

​

​

​

​