Ideal Power (IPWR) 10-Q 14 May 20 2020 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 12, 2020
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Entity Registrant Name	Ideal Power Inc.
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Central Index Key	0001507957
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Trading Symbol	IPWR
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		2,126,267
Entity Emerging Growth Company	false
Entity Small Business	true

Balance Sheets

Balance Sheets - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 2,219,992	$ 3,057,682
Prepayments and other current assets	253,902	248,148
Total current assets	2,473,894	3,305,830
Property and equipment, net	52,165	47,302
Intangible assets, net	1,608,121	1,634,378
Right of use asset	216,518	260,310
Other assets	17,920	17,920
Total assets	4,368,618	5,265,740
Current liabilities:
Accounts payable	138,920	182,956
Accrued expenses	319,342	319,135
Current portion of lease liability	188,678	183,119
Total current liabilities	646,940	685,210
Long-term lease liability	33,149	82,055
Other long-term liabilities	613,300	609,242
Total liabilities	1,293,389	1,376,507
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 2,101,272 shares issued and 2,099,951 shares outstanding at March 31, 2020 and December 31, 2019	2,101	2,101
Additional paid-in capital	71,358,753	71,242,256
Treasury stock, at cost, 1,321 shares at March 31, 2020 and December 31, 2019	(13,210)	(13,210)
Accumulated deficit	(68,272,415)	(67,341,914)
Total stockholders' equity	3,075,229	3,889,233
Total liabilities and stockholders' equity	$ 4,368,618	$ 5,265,740

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Balance Sheets
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares, issued	2,101,272	2,101,272
Common stock, shares, outstanding	2,099,951	2,099,951
Treasury stock, shares	1,321	1,321

Statements of Operations

Statements of Operations - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Statements of Operations
Product revenue	$ 0	$ 0
Cost of product revenue	0	0
Gross profit	0	0
Operating expenses:
Research and development	350,664	218,216
General and administrative	579,770	468,390
Total operating expenses	930,434	686,606
Loss from continuing operations before interest	(930,434)	(686,606)
Interest expense, net	67	7,118
Loss from continuing operations	(930,501)	(693,724)
Loss from discontinued operations	0	(347,175)
Net loss	$ (930,501)	$ (1,040,899)
Loss from continuing operations per share - basic and fully diluted (in dollars per share)	$ (0.31)	$ (0.49)
Loss from discontinued operations per share - basic and fully diluted (in dollars per share)	0	(0.24)
Net loss per share - basic and fully diluted	$ (0.31)	$ (0.73)
Weighted average number of shares outstanding - basic and fully diluted (in dollars)	2,968,394	1,433,069

Statements of Cash Flows

Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Loss from continuing operations	$ (930,501)	$ (693,724)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	28,113	27,595
Write-off of capitalized patents	17,344	0
Stock-based compensation	116,497	26,621
Decrease in operating assets:
Prepayments and other current assets	(5,754)	1,044
Increase (decrease) in operating liabilities:
Accounts payable	(44,036)	36,253
Accrued expenses	4,710	15,182
Net cash used in operating activities	(813,627)	(587,029)
Net cash used in operating activities - discontinued operations	0	(409,867)
Cash flows from investing activities:
Purchase of property and equipment	(10,678)	(1,194)
Acquisition of intangible assets	(13,385)	(31,323)
Net cash used in investing activities	(24,063)	(32,517)
Net decrease in cash and cash equivalents - continuing operations	(837,690)	(619,546)
Net decrease in cash and cash equivalents - discontinued operations	0	(409,867)
Cash and cash equivalents at beginning of period	3,057,682	3,258,077
Cash and cash equivalents at end of period	$ 2,219,992	$ 2,228,664

Statement of Stockholders' Equi

Statement of Stockholders' Equity - USD ($)	Common Stock [Member]	Preferred Stock [Member]	Additional Paid-In Capital [Member]	Treasury Stock [Member]	Accumulated Deficit [Member]	Total
Beginning balance at Dec. 31, 2018	$ 1,404	$ 1,518	$ 68,022,484	$ (13,210)	$ (63,414,252)	$ 4,597,944
Beginning balance (in shares) at Dec. 31, 2018	1,404,479	1,518,430		1,321
Conversion of preferred stock to common stock	$ 71	$ (708)	637	$ 0	0	0
Conversion of preferred stock to common stock (in shares)	70,843	(708,430)
Stock-based compensation	$ 0	$ 0	(25,814)	0	0	(25,814)
Net loss for the period	0	0	0	0	(1,040,899)	(1,040,899)
Ending balance at Mar. 31, 2019	$ 1,475	$ 810	67,997,307	$ (13,210)	(64,455,151)	3,531,231
Ending balance (in shares) at Mar. 31, 2019	1,475,322	810,000		1,321
Beginning balance at Dec. 31, 2019	$ 2,101	$ 0	71,242,256	$ (13,210)	(67,341,914)	3,889,233
Beginning balance (in shares) at Dec. 31, 2019	2,101,272			1,321
Stock-based compensation	$ 0	0	116,497	$ 0	0	116,497
Net loss for the period	0	0	0	0	(930,501)	(930,501)
Ending balance at Mar. 31, 2020	$ 2,101	$ 0	$ 71,358,753	$ (13,210)	$ (68,272,415)	$ 3,075,229
Ending balance (in shares) at Mar. 31, 2020	2,101,272	0		1,321

Organization and Description of

Organization and Description of Business	3 Months Ended
	Mar. 31, 2020
Organization and Description of Business
Organization and Description of Business	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.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2020
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	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 SECon 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 and used $0.8 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.

Discontinued Operations

Discontinued Operations	3 Months Ended
	Mar. 31, 2020
Discontinued Operations
Discontinued Operations	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.

Intangible Assets

Intangible Assets	3 Months Ended
	Mar. 31, 2020
Intangible Assets
Intangible Assets	Note 4 – Intangible Assets Intangible assets, net consisted of the following: March 31, December 31, 2020 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.

Lease

Lease	3 Months Ended
	Mar. 31, 2020
Lease
Lease	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) 2021 83,149 (62,362) Total future undiscounted minimum lease payments $ 231,585 $ (173,689) $ 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.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2020
Commitments and Contingencies
Commitments and Contingencies	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 21 st 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 250 th 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.

Common and Preferred Stock

Common and Preferred Stock	3 Months Ended
	Mar. 31, 2020
Common and Preferred Stock
Common and Preferred Stock	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.

Equity Incentive Plan

Equity Incentive Plan	3 Months Ended
	Mar. 31, 2020
Equity Incentive Plan
Equity Incentive Plan	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: Weighted Weighted Average Average Remaining Stock Exercise Life Options Price (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.

Warrants

Warrants	3 Months Ended
	Mar. 31, 2020
Warrants
Warrants	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.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2020
Subsequent Events
Subsequent Events	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.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2020
Summary of Significant Accounting Policies
Basis of Presentation	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 SECon 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	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	Liquidity and Going Concern As reflected in the accompanying condensed financial statements, the Company had a net loss of $0.9 and used $0.8 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	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	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.

Discontinued Operations (Tables

Discontinued Operations (Tables)	3 Months Ended
	Mar. 31, 2020
Discontinued Operations
Schedule of Discontinued Operations and 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.

Intangible Assets (Tables)

Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2020
Intangible Assets
Schedule of intangible assets, net	March 31, December 31, 2020 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

Lease (Tables)

Lease (Tables)	3 Months Ended
	Mar. 31, 2020
Lease
Schedule of future minimum rental payments for operating leases	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) 2021 83,149 (62,362) Total future undiscounted minimum lease payments $ 231,585 $ (173,689) $ Less: imputed interest (9,758) Total lease liability $ 221,827

Equity Incentive Plan (Tables)

Equity Incentive Plan (Tables)	3 Months Ended
	Mar. 31, 2020
Equity Incentive Plan
Summary of company's stock options activity and related information	Weighted Weighted Average Average Remaining Stock Exercise Life Options Price (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

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Details)	Aug. 15, 2019$ / shares	Mar. 31, 2020USD ($)$ / sharesshares	Mar. 31, 2019USD ($)	Dec. 31, 2019USD ($)$ / shares	Dec. 31, 2018USD ($)
Reverse stock split, Ratio	0.10
Common stock, par value | $ / shares	$ 0.001	$ 0.001		$ 0.001
Net loss		$ (930,501)	$ (1,040,899)
Net Cash Provided by (Used in) Operating Activities		800,000
Working Capital		1,800,000
Cash and cash equivalents		$ 2,219,992	$ 2,228,664	$ 3,057,682	$ 3,258,077
Pre Funded Warrant
Common stock, par value | $ / shares		$ 0.001
Warrants issued to purchase shares of common stock | shares		868,443

Discontinued Operations - Addit

Discontinued Operations - Additional Information (Details) - USD ($)	Sep. 19, 2019	Jan. 04, 2019	Mar. 31, 2019
Discontinued Operations
Net cash proceeds from sale of discontinued operations	$ 23,587
Asset Impairment Charges, Total			$ 140,000
Employee Involuntary Termination [Member]
Discontinued Operations
Restructuring costs		$ 92,600
Power Conversion Systems Division [Member] | Discontinued Operations, Disposed of by Sale [Member] | C E Plus T Energy Solutions, Inc [Member]
Discontinued Operations
Cash consideration	$ 200,000
Consideration in shares, number	50
Consideration in shares, ownership percentage	5.00%

Discontinued Operations - Sched

Discontinued Operations - Schedule of disposal group including discontinued operations to loss (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Discontinued Operations
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		140,000
Loss on discontinued operations	$ 0	$ (347,175)

Intangible Assets - Intangible

Intangible Assets - Intangible assets, net (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Intangible Assets
Gross intangible assets	$ 1,869,725	$ 1,873,684
Accumulated amortization	(261,604)	(239,306)
Intangible assets, net	1,608,121	1,634,378
Patents
Intangible Assets
Gross intangible assets	905,183	909,142
Other intangible assets
Intangible Assets
Gross intangible assets	$ 964,542	$ 964,542

Intangible Assets - Additional

Intangible Assets - Additional Information (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Intangible Assets
Amortization expense	$ 22,298	$ 16,469
Amortization expense for 2020	68,967
Amortization expense for 2021	91,955
Amortization expense for 2022	91,955
Amortization expense for 2023	91,955
Amortization expense for 2024	91,955
Amortization expense for thereafter	922,676
Capitalized costs for costs related to patents that have not been awarded	$ 248,658		$ 335,224

Lease - Additional Information

Lease - Additional Information (Details)	Sep. 19, 2019	Mar. 31, 2020USD ($)	Mar. 31, 2019USD ($)	Dec. 31, 2019USD ($)	Jan. 01, 2019USD ($)	Apr. 20, 2018USD ($)ft²
Operating Lease, Right-of-Use Asset		$ 216,518		$ 260,310
Operating Lease, Liability		221,827
Operating Lease, Payments		48,041	$ 46,194
Operating Lease, Cost		$ 48,488	$ 48,488
Operating Lease, Weighted Average Remaining Lease Term		14 months
Percentage of Texas facility subleased	75.00%
Sublease income receivable per month, as a percentage of aggregate master lease payments due	75.00%
Maintenance and repair costs receivable, percentage	100.00%
Sublease Income		$ 51,231
Office And Laboratory Space [Member]
Square feet of office and laboratory space leased (in sq ft) | ft²						14,782
Annual base rent in first year						$ 184,775
Increase in base rent each succeeding year						$ 7,391
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset					$ 422,819
Operating Lease, Liability					$ 427,131
Lessee, Operating Lease, Discount Rate					8.00%

Lease - Future minimum payments

Lease - Future minimum payments (Details)	Mar. 31, 2020USD ($)
Master Lease
2020	$ 148,436
2021	83,149
Total future undiscounted minimum lease payments	231,585
Less: imputed interest	(9,758)
Total lease liability	221,827
Sublease Income
2020	(111,327)
2021	(62,362)
Total future undiscounted minimum lease payments, sublease income	(173,689)
Net
2020	37,109
2021	20,787
Total future undiscounted minimum lease payments, net of sublease income	$ 57,896

Commitments and Contingencies (

Commitments and Contingencies (Details) - USD ($)	Apr. 11, 2019	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2015	Apr. 22, 2020	Dec. 31, 2019	Aug. 23, 2019	Apr. 30, 2019
Other Commitments [Line Items]
Payment for each patent issued		$ 13,385	$ 31,323
Licensing agreements
Other Commitments [Line Items]
Payable for each patent filing pending				$ 10,000
Payment for each patent issued				$ 20,000
Payment for each patent issue days				20 days
Contractual Obligation								$ 232,367
Long-term liability for estimated present value of future payments under licensing agreement		599,860				$ 595,802
Licensing agreements | Maximum
Other Commitments [Line Items]
Contractual Obligation		$ 100,000
Pathion Holdings, Inc.
Other Commitments [Line Items]
Legal fees reimbursement receivable					$ 25,442		$ 24,800
Pathion Holdings, Inc. | the APA
Other Commitments [Line Items]
Consideration transferred by cash	$ 500,000
Consideration transferred by shares	150,000

Common and Preferred Stock - Pr

Common and Preferred Stock - Private Placement (Details) - USD ($)	Nov. 13, 2019	Nov. 07, 2019	Mar. 31, 2020	Dec. 31, 2019	Aug. 15, 2019
Common stock, par value			$ 0.001	$ 0.001	$ 0.001
Warrants, exercise price			1.70
Pre Funded Warrant
Common stock, par value			$ 0.001
Number of warrants issued			868,443
Offering
Common stock, par value	$ 2.4763
Gross proceeds		$ 3,500,000
Estimated net proceeds		$ 3,100,000
Number of common stock, shares issued	544,950
Investment made	$ 500,000
Offering | Pre Funded Warrant
Pre-funded Warrant Price	$ 2.4763
Number of warrants issued	868,443
Warrants, exercise price	$ 0.001
Offering | Other Warrants [Member]
Number of warrants issued	1,766,751
Warrants, exercise price	$ 2.32
Warrants, term	5 years
Offering | Placement Agent Warrant [Member]
Number of warrants issued	70,670
Warrants, exercise price	$ 2.9716
Dr. Lon E. Bell, Chief Executive Officer and Chairman of the Board [Member] | Offering
Number of common stock, shares issued	201,914
Number of warrants issued	252,393

Common and Preferred Stock - Re

Common and Preferred Stock - Reverse Stock Split (Details)	Aug. 15, 2019$ / sharesshares	Mar. 31, 2020$ / sharesshares	Dec. 31, 2019$ / sharesshares	Aug. 14, 2019shares	Feb. 21, 2019shares
Common and Preferred Stock
Stockholders' Equity Note, Stock Split, Conversion Ratio	0.10
Common Stock, Par or Stated Value Per Share | $ / shares	$ 0.001	$ 0.001	$ 0.001
Common Stock, Shares, Outstanding	1,474,001	2,099,951	2,099,951	14,722,840
Convertible Preferred Stock, Shares Issuable upon Conversion			81,000	810,000	708,430

Common and Preferred Stock - _2

Common and Preferred Stock - Preferred Stock (Details) - shares	Dec. 12, 2019	Feb. 21, 2019	Mar. 31, 2020	Dec. 31, 2019	Aug. 14, 2019
Common and Preferred Stock
Preferred Stock, Shares Authorized			10,000,000
Convertible Preferred Stock, Shares Issuable upon Conversion		708,430		81,000	810,000
Conversion of Stock, Shares Converted	81,000	70,843
Preferred Stock, Shares Outstanding			0	0

Equity Incentive Plan - Additio

Equity Incentive Plan - Additional Information (Details)	3 Months Ended
	Mar. 31, 2020USD ($)shares
Equity Incentive Plan
Estimated fair value of stock options | $	$ 173,184
Estimated Fair Value of Stock Options Recognized | $	100,919
2013 Equity Incentive Plan [Member]
Equity Incentive Plan
Unrecognized compensation cost related to non-vested share-based compensation arrangements | $	$ 232,952
Weighted average period for recognition	1 year 1 month 6 days
2013 Equity Incentive Plan [Member] | Employees
Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	3,000
Equity Incentive Plan [Member]
Equity Incentive Plan
Shares of common stock available for issuance under the Plan (in shares)	19,663
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	112,791
2020 Annual Shareholder Meeting | Board members
Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	52,791
2020 Annual Shareholder Meeting | Executives
Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	57,000

Equity Incentive Plan - Summary

Equity Incentive Plan - Summary of Stock Option Activity and Related Information (Details) - Equity Incentive Plan [Member] - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Stock Options
Outstanding at December 31, 2019 (in shares)	169,980
Granted (in shares)	112,791
Outstanding at March 31, 2020 (in shares)	282,771	169,980
Exercisable at March 31, 2020 (in shares)	74,980
Weighted Average Exercise Price
Outstanding at December 31, 2019 (in dollars per share)	$ 8.13
Granted (In dollars per share)	2.18
Outstanding at March 31, 2020 (in dollars per share)	5.76	$ 8.13
Exercisable at March 31, 2020 (in dollars per share)	$ 14.81
Weighted Average Remaining Life (in years)
Outstanding (in years)	9 years 3 months 18 days	9 years 1 month 6 days
Exercisable at March 31, 2020	7 years 10 months 24 days

Warrants - Additional Informati

Warrants - Additional Information (Details) - $ / shares	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding	2,714,858	3,331,506
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 1.70
Convertible Preferred Stock Maximum Beneficial Ownership Percentage	9.99%
Warrant [Member]
Class of Warrant or Right [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations	616,648

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent event	May 04, 2020USD ($)item	Apr. 29, 2020USD ($)shares
Subsequent Event [Line Items]
Shares issued for services (in shares) | shares		26,316
Shares issued for services, value		$ 50,000
Accrued expenses for services received		$ 50,000
PPP Loan
Subsequent Event [Line Items]
Proceeds from loan	$ 91,407
Interest rate (as a percent)	1.00%
Prepayment penalties	$ 0
Number of monthly consecutive payments | item	18
Monthly consecutive payment amount	$ 5,145