10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission File Number 001-36216

IDEAL POWER INC.

(Exact name of registrant as specified in its charter)

Delaware	14-1999058
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

4120 Freidrich Lane, Suite 100

Austin, Texas 78744

(Address of principal executive offices)

(Zip Code)

(512) 264-1542

(Registrant’s telephone number, including area code)

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

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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer,” and “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(Do not check if a smaller reporting company)

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

As of August 10, 2015, the issuer had 9,352,263 shares of common stock, par value $.001, issued and outstanding.

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION	3
Item 1.	Condensed Financial Statements	3
	Balance Sheets at June 30, 2015 (Unaudited) and December 31, 2014	3
	Statements of Operations for the three months and six months ended June 30, 2015 and 2014 (Unaudited)	4
	Statements of Cash Flows for the six months ended June 30, 2015 and 2014 (Unaudited)	5
	Notes to Unaudited Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II	OTHER INFORMATION	24
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
SIGNATURES		26

2

PART I-FINANCIAL INFORMATION

ITEM 1. CONDENSED FINANCIAL STATEMENTS

IDEAL POWER INC.

Balance Sheets

	June 30,			December 31,
	2015			2014
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	19,965,791		$	7,912,011
Accounts receivable, net		757,464			446,521
Inventories, net		665,481			251,338
Prepayments and other current assets		286,368			263,605
Total current assets		21,675,104			8,873,475
Property and equipment, net		616,993			374,376
Patents, net		1,095,090			1,012,964
Other non-current assets		17,920			17,920
Total assets	$	23,405,107		$	10,278,735
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,154,813		$	441,636
Accrued expenses		881,031			773,119
Total current liabilities		2,035,844			1,214,755
Commitments
Stockholders’ equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 9,345,263 and 7,048,235 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively		9,345			7,048
Additional paid-in capital		49,500,394			32,712,020
Treasury stock		(2,657	)		(2,657	)
Accumulated deficit		(28,137,819	)		(23,652,431	)
Total stockholders’ equity		21,369,263			9,063,980
Total liabilities and stockholders’ equity	$	23,405,107		$	10,278,735

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

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IDEAL POWER INC.

Statements of Operations

(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Revenues:
Products	$	1,199,037		$	444,100		$	2,397,028		$	552,600
Grants		-			116,426			-			299,021
Total revenue		1,199,037			560,526			2,397,028			851,621
Cost of revenues:
Products		1,056,138			440,972			2,075,639			635,313
Grant research and development costs		-			129,362			-			332,245
Total cost of revenue		1,056,138			570,334			2,075,639			967,558
Gross profit (loss)		142,899			(9,808	)		321,389			(115,937	)
Operating expenses:
Research and development		1,100,348			645,335			2,092,580			954,898
General and administrative		968,364			718,287			1,879,141			1,463,255
Sales and marketing		371,228			261,528			844,180			529,747
Total operating expenses		2,439,940			1,625,150			4,815,901			2,947,900
Loss from operations		(2,297,041	)		(1,634,958	)		(4,494,512	)		(3,063,837	)
Interest income		4,651			7,394			9,124			15,531
Net loss	$	(2,292,390	)	$	(1,627,564	)	$	(4,485,388	)	$	(3,048,306	)
Net loss per share – basic and fully diluted	$	(0.28	)	$	(0.23	)	$	(0.59	)	$	(0.44	)
Weighted average number of shares outstanding – basic and fully diluted		8,103,475			7,011,465			7,582,362			7,005,319

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

4

IDEAL POWER INC.

Statements of Cash Flows

(unaudited)

	Six Months Ended
	June 30,
	2015			2014
Cash flows from operating activities:
Net loss	$	(4,485,388	)	$	(3,048,306	)
Adjustments to reconcile net loss to net cash used in operating activities:
Allowance for doubtful accounts		54,791			-
Write-down of inventory		(6,430	)		-
Depreciation and amortization		80,940			19,711
Write-off of capitalized software		45,641			-
Write-off of capitalized patents		103,289			-
Stock-based compensation		666,434			379,282
Fair value of warrants issued for services		50,940			67,920
Decrease (increase) in operating assets:
Accounts receivable		(365,734	)		(152,602	)
Inventories		(423,740	)		272,724
Prepaid expenses		(22,763	)		22,734
Increase (decrease) in operating liabilities:
Accounts payable		713,177			(195,648	)
Accrued expenses		107,912			130,198
Net cash used in operating activities		(3,480,931	)		(2,503,987	)
Cash flows from investing activities:
Purchase of property and equipment		(343,208	)		(233,971	)
Acquisition of patents		(195,378	)		(254,809	)
Net cash used in investing activities		(538,586	)		(488,780	)
Cash flows from financing activities:
Net proceeds from issuance of common stock		15,924,405			-
Exercise of options and warrants		148,892			4,990
Net cash provided by financing activities		16,073,297			4,990
Net increase (decrease) in cash and cash equivalents		12,053,780			(2,987,777	)
Cash and cash equivalents at beginning of period		7,912,011			14,137,097
Cash and cash equivalents at end of period	$	19,965,791		$	11,149,320

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

5

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, it develops power conversion solutions with an initial focus on stand-alone commercial and industrial grid storage, combined solar and storage, and microgrid applications. The principal products of the Company are power conversion systems, including dual-port and multi-port battery converters.

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, US Department of Energy grants and, prior to its initial public offering, issuance of convertible debt.

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, 2014 has been derived from the Company’s audited financial statements. Certain prior period amounts have been reclassified to conform to the current period presentation. These changes had no impact on total revenue, loss from operations or net loss.

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, 2014. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Accounts Receivable

Trade accounts receivable are stated net of an allowance for doubtful accounts. The Company performs ongoing credit evaluations of its customers’ financial condition. In limited instances, the Company may require an upfront deposit and, in most cases, the Company does charge interest on past due amounts. Management estimates the allowance for doubtful accounts based on review and analysis of specific customer balances that may not be collectible and how recently payments have been received. Accounts are considered for write-off when they become past due and when it is determined that the probability of collection is remote.

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Inventories

Inventories are stated at the lower of cost (first in, first out method) or market value. Inventory quantities on hand are reviewed regularly and a write-down for excess and obsolete inventory is recorded based primarily on an estimated forecast of product demand, market conditions and planned design changes.

Property and Equipment

Property and equipment are stated at historical cost less accumulated depreciation and amortization. Major additions and improvements are capitalized while maintenance and repairs that do not improve or extend the useful life of the respective asset are expensed. Depreciation and amortization of property and equipment is computed using the straight-line method over the estimated useful lives. Leasehold improvements are amortized over the shorter of the life of the asset or the related leases. Estimated useful lives of the principal classes of assets are as follows:

Leasehold improvements	Up to 4 years
Machinery and equipment	5 years
Furniture, fixtures, software and computers	3-5 years

Patents

Patents are recorded at cost. The Company capitalizes third party legal costs and filing fees associated with obtaining patents on its new discoveries. Once the patents have been issued, the Company amortizes these costs over the shorter of the legal life of the patent or its estimated economic life, generally 20 years, using the straight-line method.

Impairment of Long-Lived Assets

The long-lived assets held and used by the Company are reviewed for impairment no less frequently than annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability is performed.

Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable and accounts payable. As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheets. This is primarily attributed to the short maturities of these instruments. The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value.

7

Revenue Recognition

Revenue from product sales is recognized when the risks of loss and title pass to the customer, as specified in (1) the respective sales agreements and (2) other revenue recognition criteria as prescribed by Staff Accounting Bulletin (“SAB”) No. 101 (SAB 101), “Revenue Recognition in Financial Statements,” as amended by SAB No. 104, “Revenue Recognition”. The Company generally sells its products FOB shipping and recognizes revenue when products are shipped.

Historically, the Company received payments from government entities in the form of government grants. Government grants are agreements that generally provide the Company with cost reimbursement for certain types of research and development activities over a contractually defined period. Revenues from government grants are recognized in the period during which the Company incurs the related costs, provided that the Company has incurred the cost in accordance with the specifications and work plans determined between the Company and the government entity. Costs incurred related to the grants are recorded as grant research and development costs. At December 31, 2014, we had recognized all grant revenues related to the ARPA-E grant and no grant revenue was recognized in the three and six months ended June 30, 2015. Grant receivables were $132,227 at December 31, 2014 and were included in accounts receivable. At June 30, 2015, all outstanding grant receivables had been collected.

Product Warranties

The Company generally provides a ten year manufacturer’s warranty covering product defects. Accruals for product warranties are estimated based upon limited historical warranty experience, engineering experience and judgment, and an assessment of the reliability of the Company’s products. Accruals for product warranties are recorded in cost of revenues at the time revenue is recognized in order to match revenues with related expenses. The Company assesses the adequacy of its estimated warranty liability quarterly and adjusts the reserve, included in accrued expenses, as necessary.

Research and Development

Grant research and development are costs incurred solely related to grant revenues, and are classified as a line item under cost of revenues. Other research and development costs are presented as a line item under operating expenses and are expensed as incurred. Total research and development costs incurred during the three and six months ended June 30, 2015 amounted to $1,100,348 and $2,092,580. Total research and development costs incurred during the three and six months ended June 30, 2014 amounted to $774,697 and $1,287,143, inclusive of $129,362 and $332,245 related to grant research which was included in cost of revenues.

Income Taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. At June 30, 2015 and December 31, 2014, the Company has established a full reserve against all deferred tax assets.

Tax benefits from an uncertain tax position are recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate resolution.

8

Net Loss Per Share

The Company applies FASB ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method. In periods with a net loss, no common share equivalents are included because their effect would be anti-dilutive. At June 30, 2015 and 2014, potentially dilutive shares outstanding amounted to 2,883,205 and 2,405,545, respectively.

Stock Based Compensation

The Company applies FASB ASC 718, “Stock Compensation,” when recording stock based compensation. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option valuation model. The assumptions used in the Black-Scholes valuation model are as follows:

Grant Price - The grant price of the issuances are determined based on the closing share price on the date of grant.

Risk-free interest rate - The risk free interest rate is based on the implied yield available on US Treasury securities at the time of grant with an equivalent term of the expected life of the award.

Expected lives - As permitted by SAB 107, due to the Company's insufficient history of option activity, the Company utilizes the simplified approach to estimate the options’ expected term, calculated as the midpoint between the vesting period and the contractual life of the award.

Expected volatility – Volatility is determined based on management's estimate or historical volatilities of comparable companies.

Expected dividend yield – Dividend yield is based on current yield at the grant date or the average dividend yield over the historical period. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future.

The Company accounts for stock issued to non-employees in accordance with the provisions of FASB ASC 505-50 “Equity Based Payments to Non-Employees.” FASB ASC 505-50 states that equity instruments that are issued in exchange for the receipt of goods or services should be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date occurs as of the earlier of (a) the date at which a performance commitment is reached or (b) absent a performance commitment, the date at which the performance necessary to earn the equity instruments is complete (that is, the vesting date).

Presentation of Sales Taxes

Certain states impose a sales tax on the Company’s sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the states. The Company’s accounting policy is to exclude the tax collected and remitted to the states from revenues and cost of revenues.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, accounts receivable and accounts payable. The Company maintains its cash with a major financial institution located in the United States. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company maintains balances in excess of federally insured limits. The Company has not experienced losses in such accounts and believes it is not exposed to significant credit risk regarding its cash and cash equivalents.

9

The Company encounters a certain amount of risk as a result of a concentration of revenue from a few significant customers. Credit is extended to customers based on an evaluation of their financial condition. In limited instances, the Company may require an upfront deposit and, in most cases, the Company does charge interest on past due amounts. The Company performs ongoing credit evaluations of its customers and records an allowance for potential bad debts based on available information. 

The Company had revenue from three customers which accounted for 28%, 21% and 20% of net revenue for the three months ended June 30, 2015 and revenue from three customers which accounted for 36%, 21% and 17% of net revenue for the six months ended June 30, 2015. The Company had receivable balances from three customers that accounted for 78% of trade receivables at June 30, 2015.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in US GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for annual and interim periods beginning after December 15, 2017. The adoption of the updated standard is not expected to have a significant effect on the Company’s financial statements.

Management does not believe that any other recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on the financial statements.

Note 3 – Accounts Receivable

Accounts receivable, net consisted of the following:

	June 30,		December 31,
	2015		2014
	(unaudited)
Trade receivables	$	717,382	$	231,412
Grant receivables		-		132,227
Other receivables		40,082		107,657
		757,464		471,296
Allowance for doubtful accounts		-		(24,775	)
	$	757,464	$	446,521

For the six months ended June 30, 2015, $79,566 of trade receivables from customers were written-off as it was determined that the probability of collection was remote, of which $24,775 had been reserved at December 31, 2014.

10

Note 4 – Inventories

Inventories, net consisted of the following:

	June 30,		December 31,
	2015		2014
	(unaudited)
Raw materials	$	123,103	$	143,289
Finished goods		542,378		148,752
		665,481		292,041
Reserve for obsolescence		-		(40,703	)
	$	665,481	$	251,338

For the six months ended June 30, 2015, the Company recorded a $34,273 write-off of inventory, of which $14,079 had been reserved at December 31, 2014, and a favorable adjustment of $26,624 to eliminate the remaining reserve as it was determined that planned design changes that originally necessitated the establishment of the reserve would be delayed. There was no reserve for obsolescence at June 30, 2015.

Note 5 – Property and Equipment

Property and equipment, net consisted of the following:

	June 30,			December 31,
	2015			2014
	(unaudited)
Machinery and equipment	$	440,807		$	263,142
Building leasehold improvements		212,243			48,280
Furniture, fixtures, software and computers		147,811			183,237
		800,861			494,659
Accumulated depreciation and amortization		(183,868	)		(120,283	)
	$	616,993		$	374,376

Note 6 – Patents

Patents, net consisted of the following:

	June 30,			December 31,
	2015			2014
	(unaudited)
Patents	$	1,132,307		$	1,040,219
Accumulated amortization		(37,217	)		(27,255	)
	$	1,095,090		$	1,012,964

For the six months ended June 30, 2015, capitalized patent costs of $103,289 were written off as the Company chose to discontinue pursuit of the associated patents. The expense associated with the write-offs is included in general and administrative expenses.

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Note 7 – Accrued Expenses

Accrued expenses consisted of the following:

	June 30,		December 31,
	2015		2014
	(unaudited)
Accrued compensation	$	499,150	$	548,953
Warranty reserve		268,488		143,364
Other		113,393		80,802
	$	881,031	$	773,119

Note 8 – Commitments

The Company has entered into a lease for 14,782 square feet of office and laboratory space located in Austin, Texas. The triple net lease has a term of 48 months and commenced on June 1, 2014. The annual base rent in the first year of the lease was $154,324 and increases by $3,548 in each succeeding year of the lease. In addition, the Company is required to pay its proportionate share of operating costs for the building. The Company has a one-time option to terminate the lease on May 31, 2017 with a termination payment of approximately $99,000 if it elects to exercise this option. Upon entering the lease agreement, the Company paid the landlord a security deposit of $35,840 that is to be repaid, provided the Company is not in default on any of its obligations under the lease, one-half after eighteen months and the remainder at the end of the lease term.

At June 30, 2015, the remaining annual base rent commitments under the lease, assuming no early termination, are as follows:

Year Ended December 31,	Amount
2015	$	78,936
2016		159,941
2017		163,489
2018		68,736
Total	$	471,102

The Company incurred rent expense of $53,166 and $26,886 for the three months ended June 30, 2015 and 2014, respectively. For the six months ended June 30, 2015 and 2014, the Company incurred rent expense of $107,377 and $36,773, respectively.

Note 9 – Common Stock

On May 20, 2015, the Company completed an underwritten follow-on offering of 2,225,825 shares, inclusive of the underwriter’s overallotment of 290,325 shares, of its common stock. Gross proceeds were $17.25 million before underwriting discounts and commissions. Net cash proceeds were approximately $15.9 million after offering fees and expenses, including the underwriting discount of approximately $1.0 million. The Company expects to utilize net proceeds from the offering for working capital and general corporate purposes.

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Note 10 — 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, including stock options, stock awards and stock bonuses, not to exceed a maximum of 839,983 shares. The Plan is administered by the Compensation Committee of the Company’s Board of Directors. The persons eligible to participate in the Plan are employees (including officers), members of the Board of Directors, consultants and other independent advisors and contractors who provide services to the Company. Options issued under the Plan may have a term of up to ten years and may have variable vesting. The typical vesting schedule for stock options awarded under the Plan is a four year annual vesting schedule for employees and a one year quarterly vesting schedule for Board members.

On May 26, 2015, the shareholders approved an amendment to the Plan which increased shares available for issuance under the Plan by 1,250,000 shares. At June 30, 2015, there were 1,061,665 shares of common stock available for issuance under the Plan.

During the six months ended June 30, 2015, the Company granted 38,502 stock options to Board members and 48,200 stock options to employees. The estimated fair value of stock options granted under the Plan in the six months ended June 30, 2015, calculated using the Black-Scholes option valuation model, was $392,097, of which $88,956 was recognized during the six months ended June 30, 2015.

During the six months ended June 30, 2015, 58,203 options to purchase shares of the Company’s common stock were exercised. The Company issued 49,536 shares of common stock and 8,667 options were cancelled to satisfy the exercise price of options exercised on a cashless basis. Net proceeds received from option exercises were $148,892 during the six months ended June 30, 2015.

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, 2014		1,368,047		$	6.41		8.7
Granted		86,702		$	8.15
Exercised		(58,203	)	$	4.01
Forfeited/Expired/Exchanged		(45,087	)	$	5.94
Outstanding at June 30, 2015		1,351,459		$	6.64		7.9
Exercisable at June 30, 2015		441,252		$	4.89		5.4

At June 30, 2015, there was $3,223,451 of unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average period of 2.9 years.

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Note 11 — Warrants

During the six months ended June 30, 2015, warrant holders exercised 32,362 warrants on a cashless basis and received 21,667 shares of common stock and 10,695 shares were used to cover the exercise price.

	Warrants			Weighted Average Exercise Price
Outstanding at December 31, 2014		1,564,108		$	4.48
Granted		-			-
Exercised		(32,362	)	$	3.48
Forfeited/Expired/Exchanged		-			-
Outstanding at June 30, 2015		1,531,746		$	4.50

The shares underlying the warrants have not been registered. Warrants to purchase 12,000 shares of the Company’s common stock were unvested at June 30, 2015.

Note 12 — Resignation Agreement

On January 9, 2015, the Company entered into a Resignation and Release Agreement (the “Resignation Agreement”) with Paul Bundschuh, the Company’s former Chief Marketing Officer. Under the terms of the Resignation Agreement, Mr. Bundschuh is to receive the full severance benefits to which he would have been entitled under his employment agreement if he had been terminated without cause. In addition, 10,000 stock options previously issued to Mr. Bundschuh and scheduled to vest on December 31, 2015 were immediately vested upon execution of the Resignation Agreement and the Company recorded an expense of $26,067 related to the vesting of the options. The Company also recorded an accrual of $140,000 related to the Resignation Agreement. At June 30, 2015, the remaining balance was $33,181 and is included in accrued expenses.

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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, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 history of losses;

● our ability to achieve profitability;

● our limited operating history;

● emerging competition and rapidly advancing technology in our industry that may outpace our technology;

● customer demand for the products and services we develop;

● the impact of competitive or alternative products, technologies and pricing;

● our ability to meet development milestones and anticipated performance metrics for our bi-directional switch technologies;

● our ability to manufacture any products we develop;

● general economic conditions and events and the impact they may have on us and our potential customers;

● the adequacy of protections afforded to us by the patents that we own and the cost to us of maintaining, enforcing and defending those patents;

● our ability to obtain, expand and maintain patent protection in the future, and to protect our non-patented intellectual property;

● our exposure to and ability to defend third-party claims and challenges to our patents and other intellectual property rights;

● our ability to obtain adequate financing in the future, as and when we need it;

● our success at managing the risks involved in the foregoing items; and

● other factors discussed in this report.

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.

Unless otherwise stated or the context otherwise requires, the terms “Ideal Power,” “we,” “us,” “our” and the “Company” refer to Ideal Power Inc.

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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 2014 financial statements and related notes included in our Annual Report on Form 10-K. 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 II, Item 1A of this report.

OVERVIEW

Ideal Power is located in Austin, Texas. We design, market and sell electrical power conversion products using our proprietary technology called Power Packet Switching Architecture, or PPSA. Our PPSA technology enables high efficiency power conversion by eliminating many of the heavy, passive components used in conventional power conversion products and replacing them with a unique software-enabled topology. Our products are designed to be used in both on-grid and off-grid applications. We believe our products are the only transformer-less power converters with electrical isolation approved for use in on-grid applications. Our technology is protected by a patent portfolio of 26 US and four foreign issued patents. We own all of the rights to our PPSA technology.

We sell our products primarily to systems integrators for installation as part of a larger turn-key system providing the end user with a complete solution for managing their energy consumption. These customers sell systems that enable end users to manage their electricity consumption by reducing demand charges and integrating renewable energy sources. We also sell systems to commercial end users that enable them to reduce fossil fuel consumption and/or form their own microgrid. Our products are made by contract manufacturers to our specifications, enabling us to scale production to meet demand on a cost-effective basis without requiring significant expenditures on manufacturing facilities and equipment. Our existing products that connect to the power grid are UL 1741 certified, and we are in the process of getting new products UL 1741 certified.

The Company was founded on May 17, 2007. To date, operations have been funded primarily through the sale of common stock, US Department of Energy grants and, prior to its initial public offering, issuance of convertible debt. Total revenue generated from inception to date as of June 30, 2015 amounted to $8,474,224 with approximately a third of that revenue coming from government grants. The Company has applied these revenues to research and product development, thereby reducing its capital requirements. The Company may continue to pursue research and development grants, if and when available, for the purpose of developing new products and improving current products.

Our PPSA Technology

Our PPSA-based products provide the same electrical isolation as traditional, transformer-based power conversion systems. We believe our products are the only commercial transformer-less power conversion systems that provide the electrical isolation required to connect alternative energy sources and battery storage systems to the grid. Because our products use software-enabled technologies to replace the traditional transformer and other bulky, passive components used in traditional power conversion systems, our power conversion systems (“PCS”) are lighter, smaller and more efficient.

Our PPSA technology uses indirect power flow in which power flows through input switches and is temporarily stored in our proprietary AC link inductor. Our proprietary fast switching algorithms enable the transfer of quantum packets of power between ports in our system. As the AC link becomes charged, it disconnects from its input switches, resonates without being connected to either the input or output switches, and then reconnects to its output switches when it reaches the correct voltage and frequency for the application, providing true electrical isolation without the need for a transformer.

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Existing Products

We have six products based on our PPSA technology. Each of these products is briefly described below:

· 30kW photovoltaic, or PV, Inverter, which has a UL 1741 certification and is intended to be used for commercial and industrial solar power installations. This is our first product and shares the same hardware as the Company’s 30kW battery converter described below but uses embedded software specific to a PV application.

· 30kW Battery Converter, which has a UL 1741 certification and is intended to be used for the commercial and industrial grid-tied distributed energy storage market. This battery converter is bi-directional, which means power can flow to or from batteries. This product uses the same hardware design as the 30kW PV Inverter, but has embedded software that enables bi-directional power conversion and control. This product is more efficient and approximately only 1/4^th to 1/8^th the size and weight of similar transformer-based products. The 30kW Battery Converter also has a significantly lower acoustic noise profile and can be installed in buildings without the need for acoustic isolation or insulation.

· 30kW grid-resilient AC-DC PCS, for which we received UL 1741 certification for grid-tied applications in June 2015. This product is able to convert to both 50Hz and 60Hz AC current and has the ability to form and manage a microgrid. This product is intended for customers who need a 30kW battery converter for use overseas or who need the additional capability to form a microgrid. This product is not a replacement for our 30kW battery converter but complements the existing product with additional features.

· 30kW grid-resilient AC-DC-DC multi-port PCS with two DC ports enabling two DC inputs, such as a PV and a battery storage system, to be installed with one power converter. We received UL 1741 certification for grid-tied applications of this product in the June 2015. This product is capable of managing the conversion to both 50Hz and 60Hz AC current, enabling the ability to operate in grids outside of North America. This product also has the ability to form and manage a microgrid, effectively using energy storage with distributed generation resources to support critical loads or allow a building to disconnect from the utility power grid. This product received the “Electrical Energy Storage Award” for product innovation in 2014 at InterSolar, Germany, the world’s largest solar exhibition.

· 125kW grid-resilient AC-DC PCS, for higher power applications. This 125kW system has over four times the power of the 30kW product and is also able to convert to both 50Hz and 60Hz AC current. This product is primarily for use in grid-tied applications, and we expect to receive its UL 1741 certification in the second half of 2015. It also has the ability to form and manage a microgrid.

· 125kW grid-resilient AC-DC-DC multi-port PCS for higher power applications with multi-port capabilities. This 125kW system has over four times the power of the 30kW multi-port product and is also able to convert to both 50Hz and 60Hz AC current. This product has the ability to form and manage a microgrid. Because this product is intended primarily for off-grid and microgrid management applications, we do not intend to seek a UL 1741 certification for this product at this time. This product is currently in prototype production only with the first customer shipment in June 2015.

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The figure below illustrates this product family:

Strategy

Our strategy is to promote and expand the use of our PPSA technology through product development and product sales, including the licensing of our product designs to systems integrators and other original equipment manufacturers, or OEMs. We intend to target OEMs in the power conversion industry that serve markets and geographies that would be difficult or costly for us to pursue directly and which make complementary products that do not compete with us in our core markets or core product offerings.

Future Innovations

BD-IGBT

Our existing products incorporate multiple IGBTs, which are power switches used in the process to convert power from one current form to another. IGBTs switch power in only one direction (DC to AC or AC to DC) and require the use of a diode to prevent power from flowing back into the system. To enable our existing products to perform bi-directional power conversion, for each IGBT and diode used in our products, we must include a second IGBT and diode. These components result in a slight voltage drop that affects the electrical efficiency of our products and generate excess heat that must be dissipated. We are developing a bi-directional IGBT, or BD-IGBT, that we believe will allow us to substitute one BD-IGBT for two pairs of IGBTs and diodes used in our current products. Based on our software simulations, we believe that the BD-IGBTs can improve electrical efficiency from approximately 96.5% to greater than 98%, which would reduce the heat generated by the operation of our products. As a result, products incorporating BD-IGBTs will require less space for heat dissipation which would allow us to reduce our material costs. We believe that these development efforts, if successful, will enhance the competitive position of our products.

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B-TRAN

During the course of our BD-IGBT development, we have come up with an alternative bi-directional switch concept to the BD-IGBT which we are calling the B-TRAN. This new bi-directional switch concept has the potential to meet or exceed the projected performance of the B-TRAN as validated by third party simulations. While our primary technology path for bi-directional switching remains the BD-IGBT, the B-TRAN device provides us an option with potentially higher performance. During the second quarter, the U.S. Patent Office awarded us five new patents covering the operation, control and manufacturing of the B-TRAN device. We intent to engage an additional semiconductor fabricator to produce a proof of concept of the B-TRAN device which will result in a significant increase in our research & development spending for the balance of 2015 and first quarter of 2016.

We expect that our intellectual property rights will continue to be a significant asset to us and our strategy is to actively pursue patent protection for our innovative technologies in the US and other commercially important global markets. We have 26 US and four foreign issued patents. We have filed numerous additional pending US, foreign and international patent applications.

Target Markets

We have focused our sales and marketing efforts on markets where we believe our technology has the most value. We focus on sales to commercial and industrial customers in which there is a need for power conversion systems to:

· manage consumption to reduce peak power demands;

· integrate new sources of generation such as distributed PV; and

· form microgrids.

We believe our products provide compelling advantages to commercial or industrial customers who have these needs due to the reduced weight, compact size, quiet operation, high efficiency and reliability, and advanced programmability of our products compared to traditional power conversion systems.

According to Yole Development, or Yole, a global research firm specializing in the scientific and power electronics markets, the global power conversion market was approximately $50 billion in 2014 and is forecast to grow to over $70 billion by 2020.

Battery and Microgrid Power Conversion Market

Battery Energy Storage Systems, or BESS, are blocks of batteries coupled with a power conversion system to enable electric power to be captured and stored for future use. These grid-tied systems can be large, megawatt-scale systems operated by utilities to better manage their system resources, or small, kilowatt-scale systems in homes and businesses designed to enable consumers to manage their power use and mitigate utility imposed demand charges. In certain US markets, such as California, New York, and Massachusetts, there are economic incentives available to commercial and industrial consumers in the form of reduced demand charges for installing a BESS and reducing peak consumption. There is also emerging regulatory policy that is driving the adoption of energy storage. For example, California has issued a mandate for over 1,000 megawatts of new energy storage to be installed by 2020, and currently offers attractive rebates to end users who install a BESS through its Self-Generation Incentive Program.

Typically, PV systems are connected to the utility power grid so customers can continue to receive power from the utility to augment their PV systems and, in some cases, to sell power back to the utility. As a as result, when the utility power grid becomes unavailable or experiences a blackout, the PV system is prevented by design from generating power to avoid damaging grid equipment or creating a safety hazard. Our grid-resilient multi-port power conversion systems are designed to address this problem by enabling a solar PV system with a BESS to operate and be managed as a local microgrid even when the utility grid is down. In addition, our grid-resilient multi-port power conversion systems work with other energy sources, such as a diesel generator coupled with a BESS.

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We sell a number of our products to BESS integrators, such as Gexpro Energy Solutions, Sharp Electronics, CODA Energy, Green Charge Networks and EOS Energy Storage.

Commercial and industrial BESS are used for more than peak demand reduction. IHS, a global research firm, forecasts that global installations of grid-tied commercial BESS coupled with PV, a subset of the battery and microgrid market, will grow 111% annually to over 600 MW of BESS by 2018. 

Other Microgrid Applications

We believe, based on our analysis of market characteristics including existing grid infrastructure, high diesel fuel costs, good solar irradiance, and projected population growth, regions such as Southeast Asia, Africa, the Middle East, and Central and South America will have increasing demand for new power generation capacity. Remote communities with limited infrastructure in these regions depend more on expensive diesel fuel to generate electricity and may not have a utility power grid for access to high quality, reliable power. As a result, we believe that these less developed countries represent a significant opportunity for our grid-resilient products. IHS has predicted that the market for off-grid and microgrid BESS installations with PV will reach 400MW by 2018 with the majority of this growth coming from regions with less developed electricity infrastructure.

Other Markets

In addition to the markets discussed above, we believe there are other potential market opportunities for our power conversion systems. As an example, we have provided power conversion systems to NRG Energy, Inc. for a California Public Utility Commission-approved technology demonstration program to reduce the installation and operational costs of DC charging infrastructure for electric vehicles and, in September 2014, NRG purchased two of our 30kW battery converters for installation at a demonstration site at the University of California San Diego. Additionally, we shipped our first order for the commercial wind turbine market in September 2014. We believe our PPSA technology can also be used in other verticals within the global power conversion market.

Critical Accounting Policies

There have been no significant changes during the three and six months ended June 30, 2015 to the critical accounting policies 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, 2014.

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Results of Operations

Comparison of the three months ended June 30, 2015 to the three months ended June 30, 2014

Revenues.   Revenues for the three months ended June 30, 2015 of $1,199,037 were $638,511, or 114%, higher than the $560,526 we earned in revenues for the three months ended June 30, 2014. The increase was due to a $754,937 increase in product revenues, primarily associated with sales of our 30kW Battery Converter but also including sales of our grid-resilient 30kW PCS and 125kW products.

There were no grant revenues for the three months ended June 30, 2015, as compared to grant revenues for the three months ended June 30, 2014 of $116,426. At December 31, 2014, we had recognized all grant revenues related to the ARPA-E grant.

Cost of Revenues.   Cost of revenues increased for the three months ended June 30, 2015 to $1,056,138 compared to $570,334 for the three months ended June 30, 2014 due to $615,166 increase in product cost of revenue partially offset by a $129,362 decrease in grant research and development costs. The increase was primarily due to higher unit sales volumes compared to the three months ended June 30, 2014, as well as costs associated with the production of new products in low volume and higher personnel costs. The decrease in grant research and development costs is due to the ARPA-E grant being fully funded at December 31, 2014.

Gross Profit (Loss).   Gross profit for the three months ended June 30, 2015 was $142,899 compared to a gross loss for the three months ended June 30, 2014 of $9,808. Our gross profit improvement was due to the impact of $754,937 of higher product sales compared to the three months June 30, 2014 and was partly offset by costs associated with the production of new products in low volume and increased personnel costs.

Research and Development Expenses.   Research and development expenses increased by $455,013, or 71%, to $1,100,348 in the three months ended June 30, 2015 from $645,335 in the three months ended June 30, 2014. The increase was due to incremental costs associated with advanced power switch development of $195,212, higher personnel costs of $176,033, higher development costs for new products, including our grid-resilient 30kW 2 port and multi-port PCS and 125kW 2 port and multi-port PCS, of $87,696, higher product certification costs of $34,833, and higher stock-based compensation of $32,239, partly offset by lower contract labor of $106,183. The costs related to advanced power switch development increased as we are self-funding these efforts going forward after fully utilizing the ARPA-E grant program funding in December 2014.

General and Administrative Expenses.   General and administrative expenses increased by $250,077, or 35%, to $968,364 in the three months ended June 30, 2015 from $718,287 in the three months ended June 30, 2014. The increase was due primarily to higher stock-based compensation of $101,607, higher personnel costs of $60,171 and higher legal and patent fees of $55,214 compared to the three months ended June 30, 2014. In addition, we also wrote off $45,641 of capitalized software costs in the three months ended June 30, 2015.

Sales and Marketing Expenses.   Sales and marketing expenses increased by $109,700, or 42%, to $371,228 in the three months ended June 30, 2015 from $261,528 in the three months ended June 30, 2014. The increase was due primarily to bad debt expense of $54,333 and higher contract labor costs of $30,739.

Loss from Operations.   Due to the increase in our operating expense, which was partially offset by our gross profit, our loss from operations for the three months ended June 30, 2015 was $2,297,041 or 40% higher than the $1,634,958 loss from operations for the three months ended June 30, 2014.

Interest Income.    Interest income decreased to $4,651 for the three months ended June 30, 2015 compared to $7,394 for the three months ended June 30, 2014.

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Net Loss.   As a result of a higher loss from operations, our net loss for the three months ended June 30, 2015, was $2,292,390 as compared to a net loss of $1,627,564 for the three months ended June 30, 2014.

Comparison of the six months ended June 30, 2015 to the six months ended June 30, 2014

Revenues.   Revenues for the six months ended June 30, 2015 of $2,397,028 were $1,545,407, or 181%, higher than the $851,621 we earned in revenues for the six months ended June 30, 2014. The increase in revenue was driven by a $1,844,428 increase in product revenues, primarily associated with sales of our 30kW Battery Converter.

There were no grant revenues for the six months ended June 30, 2015, as compared to grant revenues for the six months ended June 30, 2014 of $299,021. At December 31, 2014, we had recognized all grant revenues related to the ARPA-E grant.

Cost of Revenues.   Cost of revenues increased for the six months ended June 30, 2015, to $2,075,639 compared to $967,558 for the six months ended June 30, 2014 due to $1,440,326 increase in product cost of revenue partially offset by a $332,245 decrease in grant research and development costs. The increase was primarily due to higher unit sales volumes compared to the six months ended June 30, 2014, as well as higher personnel costs of $117,062. The decrease in grant research and development costs is due to the ARPA-E grant being fully funded at December 31, 2014.

Gross Profit (Loss).   Gross profit for the six months ended June 30, 2015 was $321,389 compared to a gross loss for the six months ended June 30, 2014 of $115,937. Our gross profit was due to the impact of $1,844,428 of higher product sales compared to the six months June 30, 2014. Gross profit was negatively impacted by increased supply chain and engineering personnel costs, as we added resources to support our existing products, and incremental costs associated with the initial roll-out of new products at low volume.

 Research and Development Expenses.   Research and development expenses increased by $1,137,682, or 119%, to $2,092,580 in the six months ended June 30, 2015 from $954,898 in the six months ended June 30, 2014. The increase was due to incremental costs associated with advanced power switch development of $378,765, higher personnel costs of $375,705, higher development costs for new products, including our grid-resilient 30kW 2 port and multi-port PCS and 125kW 2 port and multi-port PCS, of $254,910, higher product certification costs of $84,327, and higher stock-based compensation of $73,934, partly offset by lower contract labor of $89,741. The costs related to advanced power switch development increased as we are self-funding these efforts going forward after fully utilizing the ARPA-E grant program funding in December 2014.

General and Administrative Expenses.   General and administrative expenses increased by $415,886, or 28%, to $1,879,141 in the six months ended June 30, 2015 from $1,463,255 in the six months ended June 30, 2014. The increase was due primarily to higher stock-based compensation of $197,304, higher legal and patent fees of $113,308, and higher personnel costs of $112,955 compared to the six months ended June 30, 2014. In addition, we wrote off $45,641 of capitalized software costs in the six months ended June 30, 2015.

 Sales and Marketing Expenses.   Sales and marketing expenses increased by $314,433, or 59%, to $844,180 in the six months ended June 30, 2015 from $529,747 in the six months ended June 30, 2014. The increase was due primarily to severance costs of $139,955, higher contract labor costs of $67,399, bad debt expense of $54,791 and personnel costs of $27,404 compared to the six months ended June 30, 2014.

Loss from Operations.   Due to the increase in our operating expense which is partially offset by our gross profit, our loss from operations for the six months ended June 30, 2015 was $4,494,512 or 47% higher than the $3,063,837 loss from operations for the six months ended June 30, 2014.

Interest Income.   Interest income decreased to $9,124 for the six months ended June 30, 2015 compared to $15,531 for the six months ended June 30, 2014.

Net Loss.   As a result of a higher loss from operations, our net loss for the six months ended June 30, 2015, was $4,485,388 as compared to a net loss of $3,048,306 for the six months ended June 30, 2014.

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Liquidity and Capital Resources

Although our revenues have increased every full calendar year from the date of our inception, we do not generate enough revenue to sustain our operations. Currently, our revenues are derived from the sales of our products. We have primarily funded our operations through the sale of common stock, government grants and, prior to our initial public offering, issuance of convertible debt.

At June 30, 2015, we had cash and cash equivalents of $19,965,791. Our net working capital and long-term debt at June 30, 2015 were $19,639,260 and $0, respectively.

Operating activities in the six months ended June 30, 2015 resulted in cash outflows of $3,480,931, which were due primarily to the net loss for the period of $4,485,388, partly offset by non-cash items of $995,605, related primarily to stock-based compensation of $666,434, write-off of capitalized software and patent costs of $148,930 and depreciation and amortization of $80,940, and positive working capital changes of $8,852. Operating activities in the six months ended June 30, 2014 resulted in cash outflows of $2,503,987, which were due to the net loss for the period of $3,048,306 partially offset by non-cash items of $466,913, related primarily to stock-based compensation of $379,282, and positive working capital changes of $77,406. 

Investing activities in the six months ended June 30, 2015 and 2014 resulted in cash outflows of $538,586 and $488,780, respectively, for development of patents and acquisition of fixed assets.

Financing activities in the six months ended June 30, 2015 resulted in cash inflows of $16,073,297, related primarily to the issuance of 2,225,825 shares of common stock shares at a public offering price of $7.75. Net cash proceeds after offering-related expenses were $15,924,405. In addition, we received $148,892 in net proceeds from the exercise of stock options. Financing activities in six months ended June 30, 2014 resulted in cash inflow of $4,990.

Off-Balance Sheet Transactions

We do not have any off-balance sheet transactions.

Trends, Events and Uncertainties

Research and development of new technologies is, by its nature, unpredictable. Although we will undertake development efforts with commercially reasonable diligence, there can be no assurance that the net proceeds from the recent public offerings of our common stock will be sufficient to enable us to develop our technology to the extent needed to create future sales to sustain operations as contemplated herein. If the net proceeds from the recent public offerings of our common stock are insufficient for this purpose, we will consider other options to continue our path to commercialization, including, but not limited to, additional financing through follow-on stock offerings, debt financing, co-development agreements, curtailment of operations, suspension of operations, sale or licensing of developed intellectual or other property, or other alternatives.

We cannot assure you that our technology will be adopted, that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable. Furthermore, since we have no committed source of financing, we cannot assure you that we will be able to raise money as and when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to severely curtail, or even to cease, our operations.

Other than as discussed above and elsewhere in this report, we are not aware of any trends, events or uncertainties that are likely to have a material effect on our financial condition.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial and accounting officer), has concluded that, as of June 30, 2015, our disclosure controls and procedures are effective.

There have been no other material changes in our internal controls over financial reporting that occurred during the quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II-OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not applicable.

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors disclosed in our 2014 Annual Report on Form 10-K.

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

Our initial public offering of our common stock on registration statement number 333-190414, declared effective on November 21, 2013, raised approximately $15 million in net cash proceeds after expenses.

On May 20, 2015, we closed an underwritten follow-on offering of 2,225,825 shares, inclusive of the underwriter’s overallotment of 290,325 shares, of our common stock at a price of $7.75, before underwriting discounts and commissions. The offer and sale of all shares in the follow-on offering were registered under the Securities Act of 1933, as amended pursuant to a registration statement on Form S-3 (registration number 333-200661), which was declared effective on April 27, 2015, and raised approximately $15.9 million in net cash proceeds after expenses.

Through June 30, 2015, we used approximately $11 million of the net cash proceeds from our equity offerings. These funds were used as follows: $712,000 for protection of our intellectual property, $694,000 for purchase of equipment and software and the remainder for our operations, including research and development and general and working capital purposes. None of the proceeds were used for construction of plant, building and facilities, the purchase of real estate or the acquisition of any business.

On May 5, 2015, the Company issued 9,710 shares of common stock to a warrant holder in connection with the exercise of a warrant. The per share exercise price was $3.47626 and the warrant was exercised on a cashless basis. The Company relied on the exemption provided by Section 3(a)(9) of the Securities Act of 1933 to issue the common stock.

On May 6, 2015, the Company issued 11,957 shares of common stock to a warrant holder in connection with the exercise of a warrant. The per share exercise price was $3.47626 and the warrant was exercised on a cashless basis. The Company relied on the exemption provided by Section 3(a)(9) of the Securities Act of 1933 to issue the common stock.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

Exhibit Number	Document
10.1†	Restated 2013 Equity Incentive Plan*
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer*
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer*
32.1	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer*
101.INS	XBRL Instant Document *
101.SCH	XBRL Taxonomy Extension Schema Document *
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document *
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document *
10.LAB	XBRL Taxonomy Extension Label Linkbase Document *
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document *

† Restated, but not amended. Published as an Exhibit for convenience

*Filed herewith

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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.

Dated August 13, 2015	IDEAL POWER INC.
	By:	/s/ R. Daniel Brdar
		R. Daniel Brdar
		Chief Executive Officer
	By:	/s/ Timothy W. Burns
		Timothy W. Burns
		Chief Financial Officer

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EX-10.1

Exhibit 10.1

IDEAL POWER INC.

(Formerly known as Ideal Power Converters, Inc.)

RESTATED 2013 EQUITY INCENTIVE PLAN

As Adopted May 17, 2013 and Restated May 26, 2015

1.           PURPOSE.

The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, and its Parent and Subsidiaries (if any), by offering them an opportunity to participate in the Company’s future performance through awards of Options, the right to purchase Common Stock and Stock Bonuses. Capitalized terms not defined in the text are defined in Section 2.

2.           DEFINITIONS.

As used in this Plan, the following terms will have the following meanings:

“AWARD” means any award under this Plan, including any Option, Stock Award or Stock Bonus.

“AWARD AGREEMENT” means, with respect to each Award, the signed written agreement between the Company and the Participant setting forth the terms and conditions of the Award.

“BOARD” means the Board of Directors of the Company.

“CAUSE” means (i) an intentional act of fraud, financial embezzlement, theft or any other material violation of law that occurs during or in the course of the Participant’s employment with the Company; (ii) intentional damage to the Company’s assets; (iii) intentional disclosure of the Company’s confidential and/or proprietary secrets and information contrary to the Company’s policies; (iv) intentional engagement in any competitive activity which would constitute a breach of the Participant’s duty of loyalty or obligations to the Company; (v) an intentional breach of any of the Company’s policies; (vi) the willful and continued failure to substantially perform the Participant’s duties for the Company (other than as a result of Disability); or (vii) willful conduct by the Participant that is materially injurious to the Company, monetarily or otherwise.

“CODE” means the Internal Revenue Code of 1986, as amended.

“COMMON STOCK” means the common stock, $0.001 par value, of the Company or any successor corporation.

“COMPANY” means Ideal Power Inc., a Delaware corporation, formerly known as Ideal Power Converters, Inc., a Texas corporation, or any successor corporation.

“COMMITTEE” means the Compensation Committee of the Board of Directors which shall administer and interpret the Plan as more particularly described in Section 5 of the Plan; provided, however, that the term Committee will refer to the Board of Directors during such times as the Board of Directors has no Compensation Committee.

“DISABILITY” means a disability, whether temporary or permanent, partial or total, as determined by the Committee, provided that with respect to any individual who is an employee or other “service provider”, disability shall be determined in accordance with Section 409A of the Code and related regulations.

“EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended.

“EXERCISE PRICE” means the price at which a holder of an Option may purchase the Shares issuable upon exercise of the Option.

“FAIR MARKET VALUE” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:

(a)           if such Common Stock is publicly traded and is then listed on a national securities exchange or on Nasdaq, its official closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading or on Nasdaq;

(b)           if such Common Stock is quoted on the Over-the-Counter Bulletin Board, its last sale price on the Over-the-Counter Bulletin Board on the date of determination, provided, however, if no sale takes place on the date of determination then the Fair Market Value will be the last sale price on the Over-the-Counter Bulletin Board on the last trading day prior to the determination date on which a sale was recorded; or

(c)           if neither of the foregoing is applicable, by the Committee in good faith and in accordance with requirements under Section 409A of the Code and related regulations.

“INSIDER” means an officer or director of the Company or a Ten Percent Shareholder, as defined in Section 6.3.

“OPTION” means an award of an option to purchase Shares pursuant to Section 6.

“PARENT” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

“PARTICIPANT” means a person who receives an Award under this Plan.

“PERFORMANCE FACTORS” means the factors selected by the Committee, in its sole and absolute discretion, which may be from among, but are not limited to, the following measures to determine whether the performance goals applicable to Awards have been satisfied:

(a)           Net revenue and/or net revenue growth;

(b)           Earnings before income taxes and amortization and/or earnings before income taxes and amortization growth;

(c)           Operating income and/or operating income growth;

(d)           Net income and/or net income growth;

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(e)           Earnings per share and/or earnings per share growth;

(f)           Total shareholder return and/or total shareholder return growth;

(g)           Return on equity;

(h)           Operating cash flow return on income;

(i)           Adjusted operating cash flow return on income;

(j)           Economic value added; and

(k)           Individual business objectives.

“PERFORMANCE PERIOD” means the period of service determined by the Committee, not to exceed five years, during which years of service or performance is to be measured for Stock Awards or Stock Bonuses, if such Awards are restricted.

“PLAN” means this Restated Ideal Power Inc. 2013 Equity Incentive Plan, as amended from time to time.

“PURCHASE PRICE” means the price at which the Participant of a Stock Award may purchase the Shares.

“SHARES” means shares of the Company’s Common Stock reserved for issuance under this Plan, as adjusted pursuant to Sections 3 and 18, and any successor security.

“STOCK AWARD” means an award of Shares pursuant to Section 7.

“STOCK BONUS” means an award of Shares pursuant to Section 8.

“SUBSIDIARY” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

“TERMINATION” or “TERMINATED” means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director, consultant, independent contractor or advisor to the Company or a Parent or Subsidiary of the Company. An employee will not be deemed to have ceased to provide services in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Company, provided that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute or unless provided otherwise pursuant to a formal policy adopted from time to time by the Company and issued and promulgated to employees in writing. In the case of any employee on an approved leave of absence, the Committee may make such provisions respecting suspension of vesting of the Award while on leave from the employ of the Company or a Subsidiary as it may deem appropriate, except that in no event may an Option be exercised after the expiration of the term set forth in the Option agreement. The Committee will have sole discretion to determine whether a Participant has ceased to provide services and the effective date on which the Participant ceased to provide services (the “Termination Date”).

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3.           SHARES SUBJECT TO THE PLAN.

3.1            Number of Shares Available. Subject to Sections 3.2, 3.3 and 18, the total aggregate number of Shares reserved and available for grant and issuance pursuant to this Plan, shall be 2,089,983 Shares and will include Shares that are subject to: (a) issuance upon exercise of an Option but cease to be subject to such Option for any reason other than exercise of such Option; (b) an Award granted hereunder but forfeited or repurchased by the Company at the original issue price; and (c) an Award that otherwise terminates without Shares being issued. At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Options granted under this Plan and all other outstanding but unvested Awards granted under this Plan.

3.2            [RESERVED]

3.3            Adjustment of Shares. In the event that the number of outstanding shares of Common Stock is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company without consideration, then (a) the number of Shares reserved for issuance under this Plan, (b) the Exercise Prices of and number of Shares subject to outstanding Options, and (c) the number of Shares subject to other outstanding Awards will be proportionately adjusted, subject to any required action by the Board or the shareholders of the Company and compliance with applicable securities laws; provided, however, that fractions of a Share will not be issued but will either be replaced by a cash payment equal to the Fair Market Value of such fraction of a Share or will be rounded up to the nearest whole Share, as determined by the Committee.

4.           ELIGIBILITY.

ISOs (as defined in Section 6 below) may be granted only to employees (including officers and directors who are also employees) of the Company or of a Parent or Subsidiary of the Company. All other Awards may be granted to employees, officers, directors, consultants, independent contractors and advisors of the Company or any Parent or Subsidiary of the Company, provided such consultants, independent contractors and advisors are natural persons who render bona-fide services not in connection with the offer and sale of securities in a capital-raising transaction or promotion of the Company’s securities. A person may be granted more than one Award under this Plan.

5.           ADMINISTRATION.

5.1          Committee.

(a)           The Plan shall be administered and interpreted by a Committee consisting of two or more members of the Board. So long as the Company has a class of its equity securities registered under Section 12 of the Exchange Act, any Committee administering the Plan will consist solely of two or more members of the Board who are “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act and, if the Board so determines in its sole discretion, who are “outside directors” within the meaning of Section 162(m) of the Code. To the extent consistent with corporate law, the Committee may delegate to any officers of the Company the duties, power and authority of the Committee under the Plan pursuant to such conditions or limitations as the Committee may establish; provided, however, that only the Committee may exercise such duties, power and authority with respect to Participants who are subject to Section 16 of the Exchange Act.

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(b)           Members of the Committee may resign at any time by delivering written notice to the Board. The Board shall fill vacancies in the Committee. The Committee shall act by a majority of its members in office. The Committee may act either by vote at a meeting or by a memorandum or other written instrument signed by a majority of the Committee.

(c)           If the Board, in its discretion, does not appoint a Committee, the Board itself will administer and interpret the Plan and take such other actions as the Committee is authorized to take hereunder; provided that the Board may take such actions hereunder in the same manner as the Board may take other actions under the Certificate of Formation and bylaws of the Company generally.

5.2          Committee Authority. Without limitation, the Committee will have the authority to:

(a)           construe and interpret this Plan, any Award Agreement and any other agreement or document

(b)           executed pursuant to this Plan;

(c)           prescribe, amend and rescind rules and regulations relating to this Plan or any Award;

(d)           select persons to receive Awards;

(e)           determine the form and terms of Awards;

(f)           determine the number of Shares or other consideration subject to Awards;

(g)           determine whether Awards will be granted singly, in combination with, in tandem with, in

(h)           replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the

(i)           Company or any Parent or Subsidiary of the Company;

(j)           grant waivers of Plan or Award conditions;

(k)           determine the vesting, exercisability and payment of Awards;

(l)           correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or

(m)           any Award Agreement;

(n)           determine whether an Award has been earned; and

(o)           make all other determinations necessary or advisable for the administration of this Plan.

5.3           Committee Discretion. Any determination made by the Committee with respect to any Award will be made at the time of grant of the Award or, unless in contravention of any express term of this Plan or Award, at any later time, and such determination will be final and binding on the Company and on all persons having an interest in any Award under this Plan. The Committee may delegate to one or more officers of the Company the authority to grant an Award under this Plan to Participants who are not Insiders of the Company. No member of the Committee shall be personally liable for any action taken or decision made in good faith relating to this Plan, and all members of the Committee shall be fully protected and indemnified to the fullest extent permitted under applicable law by the Company in respect to any such action, determination, or interpretation.

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6.           OPTIONS.

The Committee may grant Options to eligible persons and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISO”) or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following:

6.1            Form of Option Grant. Each Option granted under this Plan will be evidenced by an Award Agreement which will expressly identify the Option as an ISO or an NQSO (hereinafter referred to as the “Stock Option Agreement”), and will be in such form and contain such provisions (which need not be the same for each Participant) as the Committee may from time to time approve, and which will comply with and be subject to the terms and conditions of this Plan.

6.2            Date of Grant. The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, unless otherwise specified by the Committee. The Stock Option Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.

6.3            Exercise Period. Options may be exercisable within the times or upon the events determined by the Committee as set forth in the Stock Option Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of 10 years from the date the Option is granted; and provided further that no ISO granted to a person who directly or by attribution owns more than 10% of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“Ten Percent Shareholder”) will be exercisable after the expiration of five years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines, provided, however, that in all events a Participant will be entitled to exercise an Option at the rate of at least 20% of the full number of shares of the grant per year over five years from the date of grant, subject to reasonable conditions such as continued employment; and further provided that an Option granted to a Participant who is an officer or director may become fully exercisable, subject to reasonable conditions such as continued employment, at any time or during any period established by the Company.

6.4            Exercise Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted and may be not less than 100% of the Fair Market Value of the Shares on the date of grant; provided that the Exercise Price of an ISO granted to a Ten Percent Shareholder will not be less than 110% of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased may be made in accordance with Section 9 of this Plan.

6.5            Method of Exercise. Options may be exercised only by delivery to the Company of a written stock option exercise notice (the “Exercise Notice”) in a form approved by the Committee, (which need not be the same for each Participant), stating the number of Shares being purchased, the restrictions imposed on the Shares purchased under such Exercise Notice, if any, and such representations and agreements regarding the Participant’s investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply with applicable securities laws, together with payment in full of the Exercise Price for the number of Shares being purchased.

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6.6          Termination. Notwithstanding the exercise periods set forth in the Stock Option Agreement, exercise of an Option will always be subject to the following:

(a)           If the Participant’s service is Terminated for any reason except death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable upon the Termination Date no later than 3 months after the Termination Date (or such longer time period not exceeding five years as may be determined by the Committee, with any exercise beyond three months after the Termination Date deemed to be an NQSO). Notwithstanding the foregoing, Participants who are members of the Board, but not employees of the Company may exercise any of such Participant’s Options after such Participant’s Termination Date, provided that such Options have not otherwise expired pursuant to the Stock Option Agreement governing such Option.

(b)           If the Participant’s service is Terminated because of the Participant’s death or Disability (or the Participant dies within three months after a Termination other than for Cause or because of Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the Termination Date and must be exercised by the Participant (or the Participant’s legal representative) no later than 12 months after the Termination Date (or such longer time period not exceeding five years as may be determined by the Committee, with any such exercise beyond (i) three months after the Termination Date when the Termination is for any reason other than the Participant’s death or Disability, or (ii) 12 months after the Termination Date when the Termination is for Participant’s death or Disability, deemed to be an NQSO).

(c)           Notwithstanding the provisions in Section 6.6(a) above, if the Participant’s service is Terminated for Cause, neither the Participant, the Participant’s estate nor such other person who may then hold the Option shall be entitled to exercise any Option with respect to any Shares whatsoever, after Termination, whether or not after Termination the Participant may receive payment from the Company or a Subsidiary for vacation pay, for services rendered prior to Termination, for services rendered for the day on which Termination occurs, for salary in lieu of notice, or for any other benefits. For the purpose of this paragraph, Termination shall be deemed to occur on the date when the Company dispatches notice or advice to the Participant that his service is Terminated for Cause.

6.7            Limitations on Exercise. The Committee may specify a reasonable minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent the Participant from exercising the Option for the full number of Shares for which it is then exercisable.

6.8            Limitations on ISO. The aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which ISO are exercisable for the first time by a Participant during any calendar year (under this Plan or under any other incentive stock option plan of the Company, Parent or Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value of Shares on the date of grant with respect to which ISO are exercisable for the first time by a Participant during any calendar year exceeds $100,000, then the Options for the first $100,000 worth of Shares to become exercisable in such calendar year will be ISO and the Options for the amount in excess of $100,000 that become exercisable in that calendar year will be NQSOs. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date of this Plan to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISO, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.

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6.9            Modification, Extension or Renewal. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefore, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. The Committee may reduce the Exercise Price of outstanding Options without the consent of Participants affected by a written notice to them; provided, however, that the Exercise Price may not be reduced below the minimum Exercise Price that would be permitted under Section 6.4 of this Plan for Options granted on the date the action is taken to reduce the Exercise Price.

6.10             No Disqualification. Notwithstanding any other provision in this Plan, no term of this Plan relating to ISO will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.

7.           STOCK AWARD.

A Stock Award is an offer by the Company to sell to an eligible person Shares that may or may not be subject to restrictions. The Committee will determine to whom an offer will be made, the number of Shares the person may purchase, the price to be paid (the “Purchase Price”), the restrictions to which the Shares will be subject, if any, and all other terms and conditions of the Stock Award, subject to the following:

7.1            Form of Stock Award. All purchases under a Stock Award made pursuant to this Plan will be evidenced by an Award Agreement (the “Stock Purchase Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan. The offer of a Stock Award will be accepted by the Participant’s execution and delivery of the Stock Purchase Agreement and payment for the Shares to the Company in accordance with the Stock Purchase Agreement.

7.2            Purchase Price. The Purchase Price of Shares sold pursuant to a Stock Award will be determined by the Committee on the date the Stock Award is granted and may not be less than 100% of the Fair Market Value of the Shares on the grant date, except in the case of a sale to a Ten Percent Shareholder, in which case the Purchase Price will be 110% of the Fair Market Value. Payment of the Purchase Price must be made in accordance with Section 9 of this Plan.

7.3            Terms of Stock Awards. Stock Awards may, but need not be, subject to such restrictions as the Committee may impose. These restrictions may be based upon completion of a specified number of years of service with the Company or upon completion of Performance Factors set out in advance in the Participant’s individual Stock Purchase Agreement. Stock Awards may vary from Participant to Participant and between groups of Participants. Prior to the grant of a Stock Award subject to restrictions, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Award; (b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant. Prior to the transfer of any Stock Award, the Committee shall determine the extent to which such Stock Award has been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Stock Awards that are subject to different Performance Periods and have different performance goals and other criteria.

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7.4            Termination During Performance Period. If a Participant is Terminated during a Performance Period for any reason, then any Stock Awards then held by the Participant that have not vested will be terminated and forfeited.

8.           STOCK BONUSES.

8.1            Awards of Stock Bonuses. A Stock Bonus is an award of Shares for services rendered to the Company or any Parent or Subsidiary of the Company. A Stock Bonus will be awarded pursuant to an Award Agreement (the “Stock Bonus Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan. A Stock Bonus may be awarded for general excellence of service or upon satisfaction of such Performance Factors as are set out in advance in the Participant’s individual Award Agreement (the “Performance Stock Bonus Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan. Stock Bonuses may vary from Participant to Participant and between groups of Participants, and may be based upon the achievement of the Company, Parent or Subsidiary and/or individual Performance Factors or upon such other criteria as the Committee may determine.

8.2            Terms of Stock Bonuses. The Committee will determine the number of Shares to be awarded to the Participant. If the Stock Bonus is being earned upon the satisfaction of performance goals pursuant to a Performance Stock Bonus Agreement, then the Committee will: (a) determine the nature, length and starting date of any Performance Period for each Stock Bonus; (b) select from among the Performance Factors to be used to measure the performance, if any; and (c) determine the number of Shares that may be awarded to the Participant. Prior to the payment of any Stock Bonus, the Committee shall determine the extent to which such Stock Bonuses have been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Stock Bonuses that are subject to different Performance Periods and different performance goals and other criteria. The number of Shares may be fixed or may vary in accordance with such performance goals and criteria as may be determined by the Committee. The Committee may adjust the performance goals applicable to the Stock Bonuses to take into account changes in law and accounting or tax rules and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships.

8.3            Form of Payment. The earned portion of a Stock Bonus may be paid to the Participant by the Company either currently or on a deferred basis, with such interest or dividend equivalent, if any, as the Committee may determine. Payment of an interest or dividend equivalent (if any) may be made in the form of cash or whole Shares or a combination thereof, either in a lump sum payment or in installments, all as the Committee will determine.

9.           PAYMENT FOR SHARE PURCHASES.

Payment for Shares purchased pursuant to this Plan (including Shares issued from the exercise of an Option) may be made in cash (by check or wire transfer) or, where expressly approved for the Participant by the Committee and where permitted by law:

(a)           by cancellation of indebtedness of the Company to the Participant;

(b)           by surrender of shares that either: (1) have been owned by the Participant for more than six months and have been paid for within the meaning of Securities and Exchange Commission Rule 144; or (2) were obtained by the Participant in the public market;

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(c)          by waiver of compensation due or accrued to the Participant for services rendered;

(d)          with respect only to purchases upon exercise of an Option, and provided that a public market for the Company’s stock exists:

(1)             through a “same day sale” commitment from the Participant and a broker-dealer that is a member of the Financial Industry Regulatory Authority (a “FINRA Dealer”) whereby the Participant irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased to pay for the Exercise Price, and whereby the FINRA Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly to the Company; or

(2)             through a “margin” commitment from the Participant and a FINRA Dealer whereby the Participant irrevocably elects to exercise the Option and to pledge the Shares so purchased to the FINRA Dealer in a margin account as security for a loan from the FINRA Dealer in the amount of the Exercise Price, and whereby the FINRA Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly to the Company; or

(e)           by any combination of the foregoing.

10.         WITHHOLDING TAXES.

10.1             Withholding Generally. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company an amount sufficient to satisfy federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such Shares. Whenever, under this Plan, payments in satisfaction of Awards are to be made in cash, such payment will be net of an amount sufficient to satisfy federal, state, and local withholding tax requirements.

10.2             Stock Withholding. When, under applicable tax laws, a participant incurs tax liability in connection with the exercise or vesting of any Award that is subject to tax withholding and the Participant is obligated to pay the Company the amount required to be withheld, the Committee may allow the Participant to satisfy the minimum withholding tax obligation by electing to have the Company withhold from the Shares to be issued that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld, determined on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares withheld for this purpose will be made in accordance with the requirements established by the Committee and will be in writing in a form acceptable to the Committee.

11.         PRIVILEGES OF STOCK OWNERSHIP.

No Participant will have any of the rights of a shareholder with respect to any Shares until the Shares are issued to the Participant. After Shares are issued to the Participant, the Participant will be a shareholder and will have all the rights of a shareholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are issued pursuant to a Stock Award with restrictions, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Stock Award.

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12.          NON-TRANSFERABILITY.

Awards of Shares granted under this Plan, and any interest therein, will not be transferable or assignable by the Participant, and may not be made subject to execution, attachment or similar process, other than by will or by the laws of descent and distribution. Awards of Options granted under this Plan, and any interest therein, will not be transferable or assignable by the Participant, and may not be made subject to execution, attachment or similar process, other than by will or by the laws of descent and distribution. During the lifetime of the Participant an Award will be exercisable only by the Participant. During the lifetime of the Participant, any elections with respect to an Award may be made only by the Participant unless otherwise determined by the Committee and set forth in the Award Agreement with respect to Awards that are not ISOs.

13.          CERTIFICATES.

All certificates for Shares or other securities delivered under this Plan will be subject to such stop transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable federal, state or foreign securities law, or any rules, regulations and other requirements of the Securities and Exchange Commission or any stock exchange or automated quotation system upon which the Shares may be listed or quoted.

14.          ESCROW; PLEDGE OF SHARES.

To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates.

15.          EXCHANGE AND BUYOUT OF AWARDS.

The Committee may, at any time or from time to time, authorize the Company, with the consent of the respective Participants, to issue new Awards in exchange for the surrender and cancellation of any or all outstanding Awards. The Committee may at any time buy from a Participant an Award previously granted with payment in cash, Shares or other consideration, based on such terms and conditions as the Committee and the Participant may agree.

16.          SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.

16.1             Compliance with Securities Laws in Conjunction with Grants of Awards. An Award will not be effective unless such Award is in compliance with all applicable federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the Securities and Exchange Commission or to effect compliance with the registration, qualification or listing requirements of any state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.

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16.2             Compliance with Securities Laws in Conjunction with Exercise, Sale or Disposition of Award Securities. Participants understand that the sale or disposition (including through exercise) of Options, the Shares acquired by exercise of the Options and the Shares granted as Stock Awards and Stock Bonuses (collectively, the “Award Securities”) are subject to federal and state securities laws. As such, the sale or disposition (including through the exercise of Options) of Award Securities may be restricted during certain periods (“Blackout Period”). Participants agree that they will promptly notify the Company’s Chief Financial Officer or the Chairperson of the Committee of an intent to exercise an Option or to sell or otherwise dispose of Award Securities and will not engage in the exercise, sale or other disposition of Award Securities unless such exercise, sale or other disposition is approved in writing by the Company. If the Company is unable to approve the exercise of an Option, and the Participant’s right to exercise the Option will expire or terminate during the Blackout Period, the Committee will, in good faith, review the circumstances relating to the Option exercise and, in its discretion, may extend the exercise period.

17.        NO OBLIGATION TO EMPLOY.

Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Participant’s employment or other relationship at any time, with or without cause.

18.         CORPORATE TRANSACTIONS.

18.1             Assumption or Replacement of Awards by Successor. Unless an Award Agreement provides otherwise, in the event of (a) a dissolution or liquidation of the Company, (b) a merger or consolidation in which the Company is not the surviving corporation (other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction, or other transaction in which there is no substantial change in the shareholders of the Company or their relative stock holdings and the Awards granted under this Plan are assumed, converted or replaced by the successor corporation, which assumption will be binding on all Participants), (c) a merger in which the Company is the surviving corporation but after which the shareholders of the Company immediately prior to such merger (other than any shareholder that merges, or which owns or controls another corporation that merges, with the Company in such merger) cease to own their shares or other equity interest in the Company, (d) the sale of substantially all of the assets of the Company, or (e) the acquisition, sale, or transfer of more than 50% of the outstanding shares of the Company by tender offer or similar transaction, any or all outstanding Awards may be assumed, converted or replaced by the successor corporation (if any), which assumption, conversion or replacement will be binding on all Participants. In the alternative, the successor corporation may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to shareholders (after taking into account the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the Participant. In the event such successor corporation (if any) refuses to assume or substitute Awards, as provided above, pursuant to a transaction described in this Subsection 18.1, (i) the vesting of any or all Awards granted pursuant to this Plan will accelerate upon a transaction described in this Section 18 and (ii) any or all Options granted pursuant to this Plan will become exercisable in full prior to the consummation of such event at such time and on such conditions as the Committee determines. If such Options are not exercised prior to the consummation of the corporate transaction, they shall terminate at such time as determined by the Committee. Notwithstanding anything to the contrary herein or in any Award Agreement, in any assumptions or replacements of Stock Options, Stock Awards or Stock Bonuses that are subject to Section 409A of the Code, the determination of equal or equivalent value shall be made in accordance with the provisions of Section 409A and related regulations. Similarly, in any assumptions or replacements of ISOs, the determination of equal or equivalent value shall be made in accordance with Section 424 of the Code and related regulations.

Page 12 of 14

18.2             Other Treatment of Awards. Subject to any greater rights granted to Participants under the foregoing provisions of this Section 18, in the event of the occurrence of any transaction described in Section 18.1, any outstanding Awards will be treated as provided in the applicable agreement or plan of merger, consolidation, dissolution, liquidation, or sale of assets.

18.3             Assumption of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the exercise price and the number and nature of Shares issuable upon exercise of any such option will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price.

19.         ADOPTION AND SHAREHOLDER APPROVAL.

This Plan became effective on the date on which it was adopted by the Board, which was May 17, 2013 (the “Effective Date”). Upon the Effective Date, the Committee may grant Awards pursuant to this Plan. The Company sought and obtained shareholder approval of the Plan within 12 months after the date this Plan was adopted by the Board; provided, however, if the Company had failed to obtain shareholder approval of the Plan during such 12-month period, pursuant to Section 422 of the Code, any Option granted as an ISO at any time under the Plan would not qualify as an ISO within the meaning of the Code and would be deemed to be an NQSO.

20.         TERM OF PLAN/GOVERNING LAW.

Unless earlier terminated as provided herein, this Plan will terminate 10 years from the date this Plan is adopted by the Board or, if earlier, the date of shareholder approval. This Plan and all agreements thereunder shall be governed by and construed in accordance with the laws of the State of Texas.

21.         AMENDMENT OR TERMINATION OF PLAN.

The Board may at any time terminate or amend this Plan in any respect, including without limitation amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that no amendments to the Plan will be effective without approval of the shareholders of the Company if shareholder approval of the amendment is then required pursuant to Section 422 of the Code or the rules of any stock exchange or quotation system on which the Common Stock is listed.

Page 13 of 14

22.         NONEXCLUSIVITY OF THE PLAN.

Neither the adoption of this Plan by the Board, the submission of this Plan to the shareholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock options and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

23.          ACTION BY COMMITTEE.

Any action permitted or required to be taken by the Committee or any decision or determination permitted or required to be made by the Committee pursuant to this Plan shall be taken or made in the Committee’s sole and absolute discretion.

WHEREFORE, this Restated Ideal Power Inc. 2013 Equity Incentive Plan has been adopted by the Board on the 26th day of May 2015.

IDEAL POWER INC.
By:	/s/ R. Daniel Brdar
	R. Daniel Brdar, Chief Executive Officer

Page 14 of 14

EX-31.1

Exhibit 31.1

CERTIFICATION

I, R. Daniel Brdar, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Ideal Power Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15-d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2015

/s/ R. Daniel Brdar

R. Daniel Brdar

Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Timothy W. Burns, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Ideal Power Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15-d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2015

/s/ Timothy W. Burns

Timothy W. Burns

Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

In connection with the periodic report of Ideal Power Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2015 as filed with the Securities and Exchange Commission (the “Report”), we, R. Daniel Brdar, Chief Executive Officer (Principal Executive Officer) and Timothy W. Burns, Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of our knowledge:

(1)         The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2)         The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Date: August 13, 2015

/s/ R. Daniel Brdar

R. Daniel Brdar

Chief Executive Officer (Principal Executive Officer)

/s/ Timothy W. Burns

Timothy W. Burns

Chief Financial Officer (Principal Financial and Accounting Officer)

XML

Commitments (Details)	Jun. 30, 2015 USD ($)
Other Commitments [Line Items]
2015	$ 78,936
2016	159,941
2017	163,489
2018	68,736
Total	$ 471,102

XML

Resignation Agreement (Details Textual) - Jun. 30, 2015 - Resignation Agreement [Member] - USD ($)	Total
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares	10,000
Stock or Unit Option Plan Expense	$ 26,067
Deferred Compensation Arrangement with Individual, Recorded Liability	33,181
Severance Costs	$ 140,000

XML

Inventories (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Inventory [Line Items]
Raw materials	$ 123,103	$ 143,289
Finished goods	542,378	148,752
Inventory, Gross	665,481	292,041
Reserve for obsolescence	0	(40,703)
Inventory, Net, Total	$ 665,481	$ 251,338

XML

Commitments (Tables)

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Other Commitments [Table Text Block]

At June 30, 2015, the remaining annual base rent commitments under the lease, assuming no early termination, are as follows:

Year Ended December 31,	Amount
2015	$	78,936
2016		159,941
2017		163,489
2018		68,736
Total	$	471,102

XML

Equity Incentive Plan (Details) - Employee Stock Option [Member] - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Warrants, Outstanding	1,368,047
Warrants, Granted	86,702
Warrants, Exercised	(58,203)
Warrants, Forfeited/Expired/Exchanged	(45,087)
Warrants, Outstanding	1,351,459	1,368,047
Stock Options, Exercisable at June 30, 2015	441,252
Outstanding at December 31, 2014	$ 6.41
Weighted Average Exercise Price, Granted (in dollars per share)	8.15
Weighted Average Exercise Price, Exercised (in dollars per share)	4.01
Weighted Average Exercise Price, Forfeited/Expired/Exchanged (in dollars per share)	5.94
Outstanding at June 30, 2015	6.64	$ 6.41
Weighted Average Exercise Price, Exercisable at June 30, 2015 (in dollars per share)	$ 4.89
Weighted Average Remaining Life, Outstanding (in years)	7 years 10 months 24 days	8 years 8 months 12 days
Weighted Average Remaining Life, Exercisable at June 30, 2015 (in years)	5 years 4 months 24 days

XML

Patents (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Finite-Lived Intangible Assets [Line Items]
Impairment of Intangible Assets, Finite-lived	$ 103,289	$ 0
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Impairment of Intangible Assets, Finite-lived	$ 103,289

XML

Inventories

6 Months Ended

Jun. 30, 2015

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

Note 4 – Inventories

Inventories, net consisted of the following:

	June 30,		December 31,
	2015		2014
	(unaudited)
Raw materials	$	123,103	$	143,289
Finished goods		542,378		148,752
		665,481		292,041
Reserve for obsolescence		-		(40,703)
	$	665,481	$	251,338

For the six months ended June 30, 2015, the Company recorded a $34,273 write-off of inventory, of which $14,079 had been reserved at December 31, 2014, and a favorable adjustment of $26,624 to eliminate the remaining reserve as it was determined that planned design changes that originally necessitated the establishment of the reserve would be delayed. There was no reserve for obsolescence at June 30, 2015.

XML

Equity Incentive Plan (Details Textual) - USD ($)	1 Months Ended	6 Months Ended
	May. 26, 2015	Jun. 30, 2015	Jun. 30, 2014	May. 17, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options		$ 3,223,451
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition		2 years 10 months 24 days
Proceeds from Issuance of Common Stock		$ 15,924,405	$ 0
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock Granted, Value, Share-based Compensation, Gross		$ 392,097
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		86,702
Allocated Share-based Compensation Expense		$ 88,956
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		58,203
Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		48,200
Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		38,502
Equity Incentive 2013 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement By Share-based Payment Award Plan Modification Number Of Shares Authorised				839,983
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant		1,061,665
Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		58,203
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		49,536
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized	1,250,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period		8,667
Proceeds from Issuance of Common Stock		$ 148,892

XML

Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2015
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	Up to 4 years
Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	5 years
Furniture, fixtures, software and computers [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	3 years
Furniture, fixtures, software and computers [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	5 years

XML

Organization and Description of Business (Details Textual)	6 Months Ended
	Jun. 30, 2015
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Entity Incorporation, State Country Name	Delaware
Entity Incorporation, Date of Incorporation	Jul. 15, 2013

XML

Warrants (Details) - 6 months ended Jun. 30, 2015 - Warrant [Member] - $ / shares	Total
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Warrants, Outstanding	1,564,108
Warrants, Granted	0
Warrants, Exercised	(32,362)
Warrants, Forfeited/Expired/Exchanged	0
Warrants, Outstanding	1,531,746
Outstanding at December 31, 2014	$ 4.48
Weighted Average Exercise Price, Granted (in dollars per share)	0
Weighted Average Exercise Price, Exercised (in dollars per share)	3.48
Weighted Average Exercise Price, Forfeited/Expired/Exchanged (in dollars per share)	0
Outstanding at June 30, 2015	$ 4.50

XML

Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Summary Of Significant Accounting Policies [Line Items]
Property, Plant and Equipment, Depreciation Methods			straight-line method
Grants Receivable, Current	$ 0		$ 0		$ 132,227
Research And Development Expense Including Grants		$ 129,362		$ 332,245
Cash, FDIC Insured Amount	250,000		$ 250,000
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			2,883,205	2,405,545
Research and Development Expense, Total	$ 1,100,348	$ 645,335	$ 2,092,580	$ 954,898
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Customer Three [Member]
Summary Of Significant Accounting Policies [Line Items]
Concentration Risk, Percentage	20.00%		17.00%
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Customer One [Member]
Summary Of Significant Accounting Policies [Line Items]
Concentration Risk, Percentage	28.00%		36.00%
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Customer Two [Member]
Summary Of Significant Accounting Policies [Line Items]
Concentration Risk, Percentage	21.00%		21.00%
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Government Entity [Member]
Summary Of Significant Accounting Policies [Line Items]
Concentration Risk, Percentage			78.00%
Patents [Member]
Summary Of Significant Accounting Policies [Line Items]
Finite-Lived Intangible Assets, Amortization Method			straight-line method
Finite-Lived Intangible Asset, Useful Life			20 years

XML

Accounts Receivable (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Trade receivables	$ 717,382	$ 231,412
Grant receivables	0	132,227
Other receivables	40,082	107,657
Accounts Receivable, Gross, Current	757,464	471,296
Allowance for doubtful accounts	0	(24,775)
Accounts Receivable, Net, Current	$ 757,464	$ 446,521

XML

Accounts Receivable

6 Months Ended

Jun. 30, 2015

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 3 – Accounts Receivable

Accounts receivable, net consisted of the following:

	June 30,		December 31,
	2015		2014
	(unaudited)
Trade receivables	$	717,382	$	231,412
Grant receivables		-		132,227
Other receivables		40,082		107,657
		757,464		471,296
Allowance for doubtful accounts		-		(24,775)
	$	757,464	$	446,521

For the six months ended June 30, 2015, $79,566 of trade receivables from customers were written-off as it was determined that the probability of collection was remote, of which $24,775 had been reserved at December 31, 2014.

XML

Accounts Receivable (Details Textual) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for Doubtful Accounts Receivable, Write-offs	$ 79,566	$ 24,775

XML

Commitments (Details Textual)	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($) ft²	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) ft²	Jun. 30, 2014 USD ($)
Other Commitments [Line Items]
Operating Leases, Rent Expense	$ 53,166	$ 26,886	$ 107,377	$ 36,773
Lease Expiration Date			May 31, 2017
Office And Laboratory Space [Member]
Other Commitments [Line Items]
Operating Leases, Lease Space | ft²	14,782		14,782
Lessee Leasing Arrangements, Operating Leases, Term of Contract			48 months
Operating Leases, Future Minimum Payments Due, Next Twelve Months	$ 154,324		$ 154,324
Operating Leases, Increases In Base Rent, Amount	3,548		3,548
Operating Leases, Termination Payment	99,000		99,000
Security Deposit	$ 35,840		$ 35,840

XML

Balance Sheets - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 19,965,791	$ 7,912,011
Accounts receivable, net	757,464	446,521
Inventories, net	665,481	251,338
Prepayments and other current assets	286,368	263,605
Total current assets	21,675,104	8,873,475
Property and equipment, net	616,993	374,376
Patents, net	1,095,090	1,012,964
Other non-current assets	17,920	17,920
Total assets	23,405,107	10,278,735
Current liabilities:
Accounts payable	1,154,813	441,636
Accrued expenses	881,031	773,119
Total current liabilities	$ 2,035,844	$ 1,214,755
Commitments
Stockholders' equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 9,345,263 and 7,048,235 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively	$ 9,345	$ 7,048
Additional paid-in capital	49,500,394	32,712,020
Treasury stock	(2,657)	(2,657)
Accumulated deficit	(28,137,819)	(23,652,431)
Total stockholders' equity	21,369,263	9,063,980
Total Liabilities and Stockholders' Equity	$ 23,405,107	$ 10,278,735

XML

Warrants (Details Textual) - Jun. 30, 2015 - shares	Total
Class of Warrant or Right [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares	12,000
Warrant [Member]
Class of Warrant or Right [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	32,362
Warrants Issued For Promissory Note Holders [Member] | Warrant [Member]
Class of Warrant or Right [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	32,362
Warrants Issued For Promissory Note Holders [Member] | Used to Cover Exercise Price [Member]
Class of Warrant or Right [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	10,695
Warrants Issued For Promissory Note Holders [Member] | Cashless Basis Exercise [Member] | Common Stock [Member]
Class of Warrant or Right [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	21,667

XML

Organization and Description of Business

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business Description and Basis of Presentation [Text Block]

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 develops power conversion solutions with an initial focus on stand-alone commercial and industrial grid storage, combined solar and storage, and microgrid applications. The principal products of the Company are power conversion systems, including dual-port and multi-port battery converters.

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, US Department of Energy grants and, prior to its initial public offering, issuance of convertible debt.

XML

Property and Equipment (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Machinery and equipment	$ 440,807	$ 263,142
Building leasehold improvements	212,243	48,280
Furniture, fixtures, software and computers	147,811	183,237
Property and equipment, gross	800,861	494,659
Accumulated depreciation and amortization	(183,868)	(120,283)
Property and equipment, net	$ 616,993	$ 374,376

XML

Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2015

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

Property and equipment, net consisted of the following:

	June 30,		December 31,
	2015		2014
	(unaudited)
Machinery and equipment	$	440,807	$	263,142
Building leasehold improvements		212,243		48,280
Furniture, fixtures, software and computers		147,811		183,237
		800,861		494,659
Accumulated depreciation and amortization		(183,868)		(120,283)
	$	616,993	$	374,376

XML

Patents (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Patents	$ 1,132,307	$ 1,040,219
Accumulated amortization	(37,217)	(27,255)
Patents, net	$ 1,095,090	$ 1,012,964

XML

Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2015

Accounts Payable and Accrued Liabilities, Current [Abstract]

Schedule of Accrued Liabilities [Table Text Block]

Accrued expenses consisted of the following:

	June 30,		December 31,
	2015		2014
	(unaudited)
Accrued compensation	$	499,150	$	548,953
Warranty reserve		268,488		143,364
Other		113,393		80,802
	$	881,031	$	773,119

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

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, 2014 has been derived from the Company’s audited financial statements. Certain prior period amounts have been reclassified to conform to the current period presentation. These changes had no impact on total revenue, loss from operations or net loss.

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, 2014. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Accounts Receivable

Trade accounts receivable are stated net of an allowance for doubtful accounts. The Company performs ongoing credit evaluations of its customers’ financial condition. In limited instances, the Company may require an upfront deposit and, in most cases, the Company does charge interest on past due amounts. Management estimates the allowance for doubtful accounts based on review and analysis of specific customer balances that may not be collectible and how recently payments have been received. Accounts are considered for write-off when they become past due and when it is determined that the probability of collection is remote.

Inventories

Inventories are stated at the lower of cost (first in, first out method) or market value. Inventory quantities on hand are reviewed regularly and a write-down for excess and obsolete inventory is recorded based primarily on an estimated forecast of product demand, market conditions and planned design changes.

Property and Equipment

Property and equipment are stated at historical cost less accumulated depreciation and amortization. Major additions and improvements are capitalized while maintenance and repairs that do not improve or extend the useful life of the respective asset are expensed. Depreciation and amortization of property and equipment is computed using the straight-line method over the estimated useful lives. Leasehold improvements are amortized over the shorter of the life of the asset or the related leases. Estimated useful lives of the principal classes of assets are as follows:

Leasehold improvements	Up to 4 years
Machinery and equipment	5 years
Furniture, fixtures, software and computers	3-5 years

Patents

Patents are recorded at cost. The Company capitalizes third party legal costs and filing fees associated with obtaining patents on its new discoveries. Once the patents have been issued, the Company amortizes these costs over the shorter of the legal life of the patent or its estimated economic life, generally 20 years, using the straight-line method.

Impairment of Long-Lived Assets

The long-lived assets held and used by the Company are reviewed for impairment no less frequently than annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability is performed.

Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable and accounts payable. As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheets. This is primarily attributed to the short maturities of these instruments. The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value.

Revenue Recognition

Revenue from product sales is recognized when the risks of loss and title pass to the customer, as specified in (1) the respective sales agreements and (2) other revenue recognition criteria as prescribed by Staff Accounting Bulletin (“SAB”) No. 101 (SAB 101), “Revenue Recognition in Financial Statements,” as amended by SAB No. 104, “Revenue Recognition”. The Company generally sells its products FOB shipping and recognizes revenue when products are shipped.

Historically, the Company received payments from government entities in the form of government grants. Government grants are agreements that generally provide the Company with cost reimbursement for certain types of research and development activities over a contractually defined period. Revenues from government grants are recognized in the period during which the Company incurs the related costs, provided that the Company has incurred the cost in accordance with the specifications and work plans determined between the Company and the government entity. Costs incurred related to the grants are recorded as grant research and development costs. At December 31, 2014, we had recognized all grant revenues related to the ARPA-E grant and no grant revenue was recognized in the three and six months ended June 30, 2015. Grant receivables were $132,227 at December 31, 2014 and were included in accounts receivable. At June 30, 2015, all outstanding grant receivables had been collected.

Product Warranties

The Company generally provides a ten year manufacturer’s warranty covering product defects. Accruals for product warranties are estimated based upon limited historical warranty experience, engineering experience and judgment, and an assessment of the reliability of the Company’s products. Accruals for product warranties are recorded in cost of revenues at the time revenue is recognized in order to match revenues with related expenses. The Company assesses the adequacy of its estimated warranty liability quarterly and adjusts the reserve, included in accrued expenses, as necessary.

Research and Development

Grant research and development are costs incurred solely related to grant revenues, and are classified as a line item under cost of revenues. Other research and development costs are presented as a line item under operating expenses and are expensed as incurred. Total research and development costs incurred during the three and six months ended June 30, 2015 amounted to $1,100,348 and $2,092,580. Total research and development costs incurred during the three and six months ended June 30, 2014 amounted to $774,697 and $1,287,143, inclusive of $129,362 and $332,245 related to grant research which was included in cost of revenues.

Income Taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. At June 30, 2015 and December 31, 2014, the Company has established a full reserve against all deferred tax assets.

Tax benefits from an uncertain tax position are recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate resolution.

Net Loss Per Share

The Company applies FASB ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method. In periods with a net loss, no common share equivalents are included because their effect would be anti-dilutive. At June 30, 2015 and 2014, potentially dilutive shares outstanding amounted to 2,883,205 and 2,405,545, respectively.

Stock Based Compensation

The Company applies FASB ASC 718, “Stock Compensation,” when recording stock based compensation. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option valuation model. The assumptions used in the Black-Scholes valuation model are as follows:

Grant Price - The grant price of the issuances are determined based on the closing share price on the date of grant.

Risk-free interest rate - The risk free interest rate is based on the implied yield available on US Treasury securities at the time of grant with an equivalent term of the expected life of the award.

Expected lives - As permitted by SAB 107, due to the Company's insufficient history of option activity, the Company utilizes the simplified approach to estimate the options’ expected term, calculated as the midpoint between the vesting period and the contractual life of the award.

Expected volatility – Volatility is determined based on management's estimate or historical volatilities of comparable companies.

Expected dividend yield – Dividend yield is based on current yield at the grant date or the average dividend yield over the historical period. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future.

The Company accounts for stock issued to non-employees in accordance with the provisions of FASB ASC 505-50 “Equity Based Payments to Non-Employees.” FASB ASC 505-50 states that equity instruments that are issued in exchange for the receipt of goods or services should be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date occurs as of the earlier of (a) the date at which a performance commitment is reached or (b) absent a performance commitment, the date at which the performance necessary to earn the equity instruments is complete (that is, the vesting date).

Presentation of Sales Taxes

Certain states impose a sales tax on the Company’s sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the states. The Company’s accounting policy is to exclude the tax collected and remitted to the states from revenues and cost of revenues.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, accounts receivable and accounts payable. The Company maintains its cash with a major financial institution located in the United States. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company maintains balances in excess of federally insured limits. The Company has not experienced losses in such accounts and believes it is not exposed to significant credit risk regarding its cash and cash equivalents.

The Company encounters a certain amount of risk as a result of a concentration of revenue from a few significant customers. Credit is extended to customers based on an evaluation of their financial condition. In limited instances, the Company may require an upfront deposit and, in most cases, the Company does charge interest on past due amounts. The Company performs ongoing credit evaluations of its customers and records an allowance for potential bad debts based on available information.

The Company had revenue from three customers which accounted for 28%, 21% and 20% of net revenue for the three months ended June 30, 2015 and revenue from three customers which accounted for 36%, 21% and 17% of net revenue for the six months ended June 30, 2015. The Company had receivable balances from three customers that accounted for 78% of trade receivables at June 30, 2015.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in US GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for annual and interim periods beginning after December 15, 2017. The adoption of the updated standard is not expected to have a significant effect on the Company’s financial statements.

Management does not believe that any other recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on the financial statements.

XML

Balance Sheets [Parenthetical] - $ / shares	Jun. 30, 2015	Dec. 31, 2014
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	9,345,263	7,048,235
Common Stock, Shares, Outstanding	9,345,263	7,048,235

XML

Resignation Agreement

6 Months Ended

Jun. 30, 2015

Resignation Agreement [Abstract]

Compensation Related Costs, General Disclosure [Text Block]

Note 12 — Resignation Agreement

On January 9, 2015, the Company entered into a Resignation and Release Agreement (the “Resignation Agreement”) with Paul Bundschuh, the Company’s former Chief Marketing Officer. Under the terms of the Resignation Agreement, Mr. Bundschuh is to receive the full severance benefits to which he would have been entitled under his employment agreement if he had been terminated without cause. In addition, 10,000 stock options previously issued to Mr. Bundschuh and scheduled to vest on December 31, 2015 were immediately vested upon execution of the Resignation Agreement and the Company recorded an expense of $26,067 related to the vesting of the options. The Company also recorded an accrual of $140,000 related to the Resignation Agreement. At June 30, 2015, the remaining balance was $33,181 and is included in accrued expenses.

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 10, 2015
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Entity Registrant Name	Ideal Power Inc.
Entity Central Index Key	0001507957
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	IPWR
Entity Common Stock, Shares Outstanding		9,352,263

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

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, 2014 has been derived from the Company’s audited financial statements. Certain prior period amounts have been reclassified to conform to the current period presentation. These changes had no impact on total revenue, loss from operations or net loss.

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, 2014. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Trade and Other Accounts Receivable, Policy [Policy Text Block]

Accounts Receivable

Trade accounts receivable are stated net of an allowance for doubtful accounts. The Company performs ongoing credit evaluations of its customers’ financial condition. In limited instances, the Company may require an upfront deposit and, in most cases, the Company does charge interest on past due amounts. Management estimates the allowance for doubtful accounts based on review and analysis of specific customer balances that may not be collectible and how recently payments have been received. Accounts are considered for write-off when they become past due and when it is determined that the probability of collection is remote.

Inventory, Policy [Policy Text Block]

Inventories

Inventories are stated at the lower of cost (first in, first out method) or market value. Inventory quantities on hand are reviewed regularly and a write-down for excess and obsolete inventory is recorded based primarily on an estimated forecast of product demand, market conditions and planned design changes.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment are stated at historical cost less accumulated depreciation and amortization. Major additions and improvements are capitalized while maintenance and repairs that do not improve or extend the useful life of the respective asset are expensed. Depreciation and amortization of property and equipment is computed using the straight-line method over the estimated useful lives. Leasehold improvements are amortized over the shorter of the life of the asset or the related leases. Estimated useful lives of the principal classes of assets are as follows:

Leasehold improvements	Up to 4 years
Machinery and equipment	5 years
Furniture, fixtures, software and computers	3-5 years

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Patents

Patents are recorded at cost. The Company capitalizes third party legal costs and filing fees associated with obtaining patents on its new discoveries. Once the patents have been issued, the Company amortizes these costs over the shorter of the legal life of the patent or its estimated economic life, generally 20 years, using the straight-line method.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of Long-Lived Assets

The long-lived assets held and used by the Company are reviewed for impairment no less frequently than annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability is performed.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable and accounts payable. As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheets. This is primarily attributed to the short maturities of these instruments. The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

Revenue from product sales is recognized when the risks of loss and title pass to the customer, as specified in (1) the respective sales agreements and (2) other revenue recognition criteria as prescribed by Staff Accounting Bulletin (“SAB”) No. 101 (SAB 101), “Revenue Recognition in Financial Statements,” as amended by SAB No. 104, “Revenue Recognition”. The Company generally sells its products FOB shipping and recognizes revenue when products are shipped.

Historically, the Company received payments from government entities in the form of government grants. Government grants are agreements that generally provide the Company with cost reimbursement for certain types of research and development activities over a contractually defined period. Revenues from government grants are recognized in the period during which the Company incurs the related costs, provided that the Company has incurred the cost in accordance with the specifications and work plans determined between the Company and the government entity. Costs incurred related to the grants are recorded as grant research and development costs. At December 31, 2014, we had recognized all grant revenues related to the ARPA-E grant and no grant revenue was recognized in the three and six months ended June 30, 2015. Grant receivables were $132,227 at December 31, 2014 and were included in accounts receivable. At June 30, 2015, all outstanding grant receivables had been collected.

Standard Product Warranty, Policy [Policy Text Block]

Product Warranties

The Company generally provides a ten year manufacturer’s warranty covering product defects. Accruals for product warranties are estimated based upon limited historical warranty experience, engineering experience and judgment, and an assessment of the reliability of the Company’s products. Accruals for product warranties are recorded in cost of revenues at the time revenue is recognized in order to match revenues with related expenses. The Company assesses the adequacy of its estimated warranty liability quarterly and adjusts the reserve, included in accrued expenses, as necessary.

Research and Development Expense, Policy [Policy Text Block]

Research and Development

Grant research and development are costs incurred solely related to grant revenues, and are classified as a line item under cost of revenues. Other research and development costs are presented as a line item under operating expenses and are expensed as incurred. Total research and development costs incurred during the three and six months ended June 30, 2015 amounted to $1,100,348 and $2,092,580. Total research and development costs incurred during the three and six months ended June 30, 2014 amounted to $774,697 and $1,287,143, inclusive of $129,362 and $332,245 related to grant research which was included in cost of revenues.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. At June 30, 2015 and December 31, 2014, the Company has established a full reserve against all deferred tax assets.

Tax benefits from an uncertain tax position are recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate resolution.

Earnings Per Share, Policy [Policy Text Block]

Net Loss Per Share

The Company applies FASB ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method. In periods with a net loss, no common share equivalents are included because their effect would be anti-dilutive. At June 30, 2015 and 2014, potentially dilutive shares outstanding amounted to 2,883,205 and 2,405,545, respectively.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock Based Compensation

The Company applies FASB ASC 718, “Stock Compensation,” when recording stock based compensation. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option valuation model. The assumptions used in the Black-Scholes valuation model are as follows:

Grant Price - The grant price of the issuances are determined based on the closing share price on the date of grant.

Risk-free interest rate - The risk free interest rate is based on the implied yield available on US Treasury securities at the time of grant with an equivalent term of the expected life of the award.

Expected lives - As permitted by SAB 107, due to the Company's insufficient history of option activity, the Company utilizes the simplified approach to estimate the options’ expected term, calculated as the midpoint between the vesting period and the contractual life of the award.

Expected volatility – Volatility is determined based on management's estimate or historical volatilities of comparable companies.

Expected dividend yield – Dividend yield is based on current yield at the grant date or the average dividend yield over the historical period. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future.

The Company accounts for stock issued to non-employees in accordance with the provisions of FASB ASC 505-50 “Equity Based Payments to Non-Employees.” FASB ASC 505-50 states that equity instruments that are issued in exchange for the receipt of goods or services should be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date occurs as of the earlier of (a) the date at which a performance commitment is reached or (b) absent a performance commitment, the date at which the performance necessary to earn the equity instruments is complete (that is, the vesting date).

Presentation of Sales Taxes Policy [Policy Text Block]

Presentation of Sales Taxes

Certain states impose a sales tax on the Company’s sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the states. The Company’s accounting policy is to exclude the tax collected and remitted to the states from revenues and cost of revenues.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, accounts receivable and accounts payable. The Company maintains its cash with a major financial institution located in the United States. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company maintains balances in excess of federally insured limits. The Company has not experienced losses in such accounts and believes it is not exposed to significant credit risk regarding its cash and cash equivalents.

The Company encounters a certain amount of risk as a result of a concentration of revenue from a few significant customers. Credit is extended to customers based on an evaluation of their financial condition. In limited instances, the Company may require an upfront deposit and, in most cases, the Company does charge interest on past due amounts. The Company performs ongoing credit evaluations of its customers and records an allowance for potential bad debts based on available information.

The Company had revenue from three customers which accounted for 28%, 21% and 20% of net revenue for the three months ended June 30, 2015 and revenue from three customers which accounted for 36%, 21% and 17% of net revenue for the six months ended June 30, 2015. The Company had receivable balances from three customers that accounted for 78% of trade receivables at June 30, 2015.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in US GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for annual and interim periods beginning after December 15, 2017. The adoption of the updated standard is not expected to have a significant effect on the Company’s financial statements.

Management does not believe that any other recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on the financial statements.

XML

Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues:
Products	$ 1,199,037	$ 444,100	$ 2,397,028	$ 552,600
Grants	0	116,426	0	299,021
Total revenue	1,199,037	560,526	2,397,028	851,621
Cost of revenues:
Products	1,056,138	440,972	2,075,639	635,313
Grant research and development costs	0	129,362	0	332,245
Total cost of revenue	1,056,138	570,334	2,075,639	967,558
Gross profit (loss)	142,899	(9,808)	321,389	(115,937)
Operating expenses:
Research and development	1,100,348	645,335	2,092,580	954,898
General and administrative	968,364	718,287	1,879,141	1,463,255
Sales and marketing	371,228	261,528	844,180	529,747
Total operating expenses	2,439,940	1,625,150	4,815,901	2,947,900
Loss from operations	(2,297,041)	(1,634,958)	(4,494,512)	(3,063,837)
Interest income	4,651	7,394	9,124	15,531
Net loss	$ (2,292,390)	$ (1,627,564)	$ (4,485,388)	$ (3,048,306)
Net loss per share - basic and fully diluted (in dollars per share)	$ (0.28)	$ (0.23)	$ (0.59)	$ (0.44)
Weighted average number of shares outstanding - basic and fully diluted (in shares)	8,103,475	7,011,465	7,582,362	7,005,319

XML

Accrued Expenses

6 Months Ended

Jun. 30, 2015

Accounts Payable and Accrued Liabilities, Current [Abstract]

Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block]

Note 7 – Accrued Expenses

Accrued expenses consisted of the following:

	June 30,		December 31,
	2015		2014
	(unaudited)
Accrued compensation	$	499,150	$	548,953
Warranty reserve		268,488		143,364
Other		113,393		80,802
	$	881,031	$	773,119

XML

Patents

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure [Text Block]

Note 6 – Patents

Patents, net consisted of the following:

	June 30,		December 31,
	2015		2014
	(unaudited)
Patents	$	1,132,307	$	1,040,219
Accumulated amortization		(37,217)		(27,255)
	$	1,095,090	$	1,012,964

For the six months ended June 30, 2015, capitalized patent costs of $103,289 were written off as the Company chose to discontinue pursuit of the associated patents. The expense associated with the write-offs is included in general and administrative expenses.

XML

Patents (Tables)

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

Patents, net consisted of the following:

	June 30,		December 31,
	2015		2014
	(unaudited)
Patents	$	1,132,307	$	1,040,219
Accumulated amortization		(37,217)		(27,255)
	$	1,095,090	$	1,012,964

XML

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Property, Plant and Equipment, Estimated Useful Lives [Table Text Block]

Estimated useful lives of the principal classes of assets are as follows:

Leasehold improvements	Up to 4 years
Machinery and equipment	5 years
Furniture, fixtures, software and computers	3-5 years

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Equity Incentive Plan

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 10 — 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, including stock options, stock awards and stock bonuses, not to exceed a maximum of 839,983 shares. The Plan is administered by the Compensation Committee of the Company’s Board of Directors. The persons eligible to participate in the Plan are employees (including officers), members of the Board of Directors, consultants and other independent advisors and contractors who provide services to the Company. Options issued under the Plan may have a term of up to ten years and may have variable vesting. The typical vesting schedule for stock options awarded under the Plan is a four year annual vesting schedule for employees and a one year quarterly vesting schedule for Board members.

On May 26, 2015, the shareholders approved an amendment to the Plan which increased shares available for issuance under the Plan by 1,250,000 shares. At June 30, 2015, there were 1,061,665 shares of common stock available for issuance under the Plan.

During the six months ended June 30, 2015, the Company granted 38,502 stock options to Board members and 48,200 stock options to employees. The estimated fair value of stock options granted under the Plan in the six months ended June 30, 2015, calculated using the Black-Scholes option valuation model, was $392,097, of which $88,956 was recognized during the six months ended June 30, 2015.

During the six months ended June 30, 2015, 58,203 options to purchase shares of the Company’s common stock were exercised. The Company issued 49,536 shares of common stock and 8,667 options were cancelled to satisfy the exercise price of options exercised on a cashless basis. Net proceeds received from option exercises were $148,892 during the six months ended June 30, 2015.

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, 2014		1,368,047	$	6.41		8.7
Granted		86,702	$	8.15
Exercised		(58,203)	$	4.01
Forfeited/Expired/Exchanged		(45,087)	$	5.94
Outstanding at June 30, 2015		1,351,459	$	6.64		7.9
Exercisable at June 30, 2015		441,252	$	4.89		5.4

At June 30, 2015, there was $3,223,451 of unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average period of 2.9 years.

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Commitments

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 8 – Commitments

The Company has entered into a lease for 14,782 square feet of office and laboratory space located in Austin, Texas. The triple net lease has a term of 48 months and commenced on June 1, 2014. The annual base rent in the first year of the lease was $154,324 and increases by $3,548 in each succeeding year of the lease. In addition, the Company is required to pay its proportionate share of operating costs for the building. The Company has a one-time option to terminate the lease on May 31, 2017 with a termination payment of approximately $99,000 if it elects to exercise this option. Upon entering the lease agreement, the Company paid the landlord a security deposit of $35,840 that is to be repaid, provided the Company is not in default on any of its obligations under the lease, one-half after eighteen months and the remainder at the end of the lease term.

At June 30, 2015, the remaining annual base rent commitments under the lease, assuming no early termination, are as follows:

Year Ended December 31,	Amount
2015	$	78,936
2016		159,941
2017		163,489
2018		68,736
Total	$	471,102

The Company incurred rent expense of $53,166 and $26,886 for the three months ended June 30, 2015 and 2014, respectively. For the six months ended June 30, 2015 and 2014, the Company incurred rent expense of $107,377 and $36,773, respectively.

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Common Stock

6 Months Ended

Jun. 30, 2015

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Note 9 – Common Stock

On May 20, 2015, the Company completed an underwritten follow-on offering of 2,225,825 shares, inclusive of the underwriter’s overallotment of 290,325 shares, of its common stock. Gross proceeds were $17.25 million before underwriting discounts and commissions. Net cash proceeds were approximately $15.9 million after offering fees and expenses, including the underwriting discount of approximately $1.0 million. The Company expects to utilize net proceeds from the offering for working capital and general corporate purposes.

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Warrants

6 Months Ended

Jun. 30, 2015

Warrants and Rights Note Disclosure [Abstract]

Warrants Disclosure [Text Block]

Note 11 — Warrants

During the six months ended June 30, 2015, warrant holders exercised 32,362 warrants on a cashless basis and received 21,667 shares of common stock and 10,695 shares were used to cover the exercise price.

			Weighted
			Average Exercise
	Warrants		Price
Outstanding at December 31, 2014		1,564,108	$	4.48
Granted		-		-
Exercised		(32,362)	$	3.48
Forfeited/Expired/Exchanged		-		-
Outstanding at June 30, 2015		1,531,746	$	4.50

The shares underlying the warrants have not been registered. Warrants to purchase 12,000 shares of the Company’s common stock were unvested at June 30, 2015.

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Inventories (Details Textual) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Inventory [Line Items]
Inventory Write-down	$ (6,430)	$ 0	$ 14,079
Inventory Valuation Reserves	0		$ 40,703
Inventory Adjustments	$ 26,624

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Inventories (Tables)

6 Months Ended

Jun. 30, 2015

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventories, net consisted of the following:

	June 30,		December 31,
	2015		2014
	(unaudited)
Raw materials	$	123,103	$	143,289
Finished goods		542,378		148,752
		665,481		292,041
Reserve for obsolescence		-		(40,703)
	$	665,481	$	251,338

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Equity Incentive Plan (Tables)

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

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, 2014		1,368,047	$	6.41		8.7
Granted		86,702	$	8.15
Exercised		(58,203)	$	4.01
Forfeited/Expired/Exchanged		(45,087)	$	5.94
Outstanding at June 30, 2015		1,351,459	$	6.64		7.9
Exercisable at June 30, 2015		441,252	$	4.89		5.4

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Common Stock (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Payments of Stock Issuance Costs	$ 1,000,000
Gross Proceeds From Issuance Of Common Stock	17,250,000
Proceeds from Issuance of Common Stock	$ 15,924,405	$ 0
IPO [Member]
Stock Issued During Period, Shares, New Issues	2,225,825
Underwriters [Member]
Stock Issued During Period, Shares, New Issues	290,325

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Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net loss	$ (4,485,388)	$ (3,048,306)
Adjustments to reconcile net loss to net cash used in operating activities:
Allowance for doubtful accounts	54,791	0
Write-down of inventory	(6,430)	0
Depreciation and amortization	80,940	19,711
Write-off of capitalized software	45,641	0
Write-off of capitalized patents	103,289	0
Stock-based compensation	666,434	379,282
Fair value of warrants issued for services	50,940	67,920
Decrease (increase) in operating assets:
Accounts receivable	(365,734)	(152,602)
Inventories	(423,740)	272,724
Prepaid expenses	(22,763)	22,734
Increase (decrease) in operating liabilities:
Accounts payable	713,177	(195,648)
Accrued expenses	107,912	130,198
Net cash used in operating activities	(3,480,931)	(2,503,987)
Cash flows from investing activities:
Purchase of property and equipment	(343,208)	(233,971)
Acquisition of patents	(195,378)	(254,809)
Net cash used in investing activities	(538,586)	(488,780)
Cash flows from financing activities:
Net proceeds from issuance of common stock	15,924,405	0
Exercise of options and warrants	148,892	4,990
Net cash provided by financing activities	16,073,297	4,990
Net increase (decrease) in cash and cash equivalents	12,053,780	(2,987,777)
Cash and cash equivalents at beginning of period	7,912,011	14,137,097
Cash and cash equivalents at end of period	$ 19,965,791	$ 11,149,320

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Property and Equipment

6 Months Ended

Jun. 30, 2015

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

Note 5 – Property and Equipment

Property and equipment, net consisted of the following:

	June 30,		December 31,
	2015		2014
	(unaudited)
Machinery and equipment	$	440,807	$	263,142
Building leasehold improvements		212,243		48,280
Furniture, fixtures, software and computers		147,811		183,237
		800,861		494,659
Accumulated depreciation and amortization		(183,868)		(120,283)
	$	616,993	$	374,376

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Warrants (Tables)

6 Months Ended

Jun. 30, 2015

Warrants and Rights Note Disclosure [Abstract]

Schedule Of Share Based Payment Award Warrants Valuation Assumptions [Table Text Block]

			Weighted
			Average Exercise
	Warrants		Price
Outstanding at December 31, 2014		1,564,108	$	4.48
Granted		-		-
Exercised		(32,362)	$	3.48
Forfeited/Expired/Exchanged		-		-
Outstanding at June 30, 2015		1,531,746	$	4.50

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Accrued Expenses (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Schedule of Accrued Expenses [Line Items]
Accrued compensation	$ 499,150	$ 548,953
Warranty reserve	268,488	143,364
Other	113,393	80,802
Accrued Liabilities, Current	$ 881,031	$ 773,119

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Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2015

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Accounts receivable, net consisted of the following:

	June 30,		December 31,
	2015		2014
	(unaudited)
Trade receivables	$	717,382	$	231,412
Grant receivables		-		132,227
Other receivables		40,082		107,657
		757,464		471,296
Allowance for doubtful accounts		-		(24,775)
	$	757,464	$	446,521