Ideal Power Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Ideal Power is developing and commercializing its B-TRAN solid-state switch technology; current revenue is from government grants.
Financial performance
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Grant revenue | $50,978 | $84,705 | $175,986 | $326,766 |
| Gross profit | $0 | $0 | $0 | $0 |
| Operating expenses | $1,696,172 | $1,276,244 | $3,597,097 | $2,200,388 |
| Net loss | $1,689,994 | $1,186,693 | $3,594,635 | $2,110,843 |
| Net loss per share | $0.27 | $0.19 | $0.58 | $0.37 |
| Operating cash used | Not provided for quarter | Not provided for quarter | $3,081,517 | $1,801,095 |
Grant costs equaled grant revenue, leaving no gross profit. At June 30, cash and cash equivalents were $20.0 million, working capital was $19.9 million, and total liabilities were $1.69 million. The company reported no outstanding debt. Cash declined from $23.17 million at year-end 2021; first-half investing cash outflow was $67,920 and there were no financing cash flows.
Changes versus prior period
- Q2 revenue decreased 40%; first-half revenue decreased 46%, reflecting lower grant revenue.
- Operating expenses rose 33% in Q2 and 63% for the first half. First-half R&D increased 90%, G&A 32%, and sales and marketing 159%.
- First-half net loss increased 70%. The 2021 comparison included a $91,407 gain from PPP loan forgiveness; there was no comparable gain in 2022.
- First-half operating cash use increased by approximately $1.28 million year over year.
Outlook, risks, and other notable items
- Management said cash was expected to fund activities for at least 12 months from the filing date, while noting additional funding could be needed to fully execute its plans.
- The company expected to introduce its initial commercial product as early as late 2022. It anticipated higher R&D and sales and marketing spending in the rest of 2022, and higher investing outflows for testing equipment.
- A NAVSEA-related DTI subcontract was extended six months and was expected to finish by year-end. Management expected to recognize the remaining $64,671 of related grant revenue in Q3 and Q4 2022. The company expected no gross profit from this or other grant work.
- Management identified commercialization, product development and performance, customer adoption, fabrication capacity, semiconductor supply-chain disruption, and future financing as significant uncertainties. COVID-19 had not materially adversely affected operations to date, but could cause future delays, shortages, costs, or financing challenges.
- License-related future payments were recorded as an $877,778 long-term liability. The company reported no current legal proceedings and no material changes to the risk factors in its 2021 Form 10-K.
Important facts for investors to verify
- Whether the initial B-TRAN product launch and commercial revenue occur on the anticipated timetable.
- Progress and remaining costs under the DTI/NAVSEA program, including recognition of the stated $64,671 remaining grant revenue.
- Cash burn, planned fabrication and equipment spending, and whether the stated cash runway remains adequate.
- Availability of future grants, commercial partnerships, and financing if commercialization is delayed or requires more capital.