~~Registration~~Table ~~No.~~of ~~333-_________~~Contents

~~UNITED~~As ~~STATES~~filed ~~SECURITIES~~with ~~AND~~the ~~EXCHANGE~~Securities ~~COMMISSION~~and Exchange Commission on March 27, 2026

~~Washington,~~Registration DNo.C. ~~20549~~333-

~~FORM~~UNITED ~~S-1~~STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

IDEAL POWER INC. (Exact name of registrant as specified in its charter)

(Exact name of registrant as specified in its charter)

Delaware				14-1999058
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Delaware		14-1999058
(State or other jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
incorporation or organization)	Classification Code Number)	Identification No.)

5508 Highway 290 West, Suite 120

~~5004~~Austin, ~~Bee Creek Road~~Texas, ~~Suite 600~~78735

Spicewood, Texas 78669

(512) 264-1542

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

~~Paul~~David ~~Bundschuh~~Somo

President and Chief Executive Officer

Ideal Power Inc.

~~5004~~5508 ~~Bee~~Highway ~~Creek~~290 ~~Road~~West, Suite ~~600~~120

~~Spicewood~~Austin, Texas, ~~78669~~78735

(512) 264-1542

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With Copies to:

~~Kevin~~Ned ~~Friedmann, Esq~~A. Richardson & Patel LLP The Chrysler Building, 49th Floor 405 Lexington Avenue New York, New York 10174 Telephone: (212) 561-5559 Fax: (917) 591-6898 Scott Bartel, Esq. Eric Stiff, Esq. Locke Lord LLP 500 Capitol Mall, Suite 1800 Sacramento, California 95814 Telephone: (916) 930-2500 Fax: (916) 930-2501Prusse

AsPerkins ~~soon~~Coie ~~as practicable after the effective date of this Registration Statement.~~LLP

~~(Approximate~~1900 ~~date~~Sixteenth ofStreet, ~~commencement~~Suite ~~of proposed sale to the public)~~1400

IfDenver, ~~any~~Colorado ~~of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. [ ]~~80202

~~If this Form is filed to register additional securities for an offering pursuant to Rule 462~~(b303) ~~under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]~~291-2300

IfApproximate ~~this~~date ~~Form~~of iscommencement aof ~~post-effective~~proposed ~~amendment~~sale ~~filed pursuant~~ to ~~Rule~~the ~~462(c)~~public: ~~under~~From ~~the~~time ~~Securities~~to ~~Act~~time, ~~check~~after the ~~following~~effective ~~box~~date ~~and list the Securities Act registration statement number~~ of ~~the~~this ~~earlier effective~~ registration statement ~~for the same offering~~. ~~[ ]~~

If ~~this~~any ~~Form~~of isthe asecurities ~~post-effective~~being ~~amendment~~registered ~~filed~~on ~~pursuant~~this Form are to ~~Rule~~be ~~462(d)~~offered ~~under~~on ~~the~~a ~~Securities~~delayed ~~Act,~~or ~~check~~continuous ~~the~~basis ~~following~~pursuant ~~box~~to ~~and~~Rule 415 ~~list~~under the Securities Act ~~registration statement number~~ of 1933 ~~the~~check ~~earlier effective registration statement for~~ the ~~same~~following ~~offering. [ ]~~box: ☒

~~Indicate~~If bythis ~~check~~Form ~~mark~~is ~~whether~~filed ~~the~~to ~~registrant~~register isadditional asecurities ~~large~~for ~~accelerated~~an ~~filer,~~offering anpursuant ~~accelerated~~to ~~filer,~~Rule 462(b) under athe ~~non-accelerated~~Securities ~~filer~~Act, orplease acheck ~~smaller~~the ~~reporting~~following ~~company.~~box ~~See~~and list the ~~definitions~~Securities ofAct ~~“large~~registration ~~accelerated~~statement ~~filer,”~~number ~~“accelerated~~of ~~filer”~~the ~~and~~earlier ~~“smaller~~effective ~~reporting~~registration ~~company”~~statement infor ~~Rule 12b-2 of~~ the ~~Exchange~~same ~~Act (check one):~~offering. ☐

~~Large~~If ~~accelerated~~this ~~filer~~Form [is ]a ~~Accelerated~~post-effective ~~filer~~amendment [filed ]pursuant ~~Non-accelerated~~to ~~filer~~Rule 462(c) under [the ]Securities ~~Smaller~~Act, ~~reporting~~check ~~company~~the ~~[X]~~following ~~(Do~~box ~~not~~and ~~check~~list ifthe aSecurities ~~smaller~~Act ~~reporting~~registration ~~company)~~statement number of the earlier effective registration statement for the same offering. ☐

~~CALCULATION~~If OFthis ~~REGISTRATION~~Form ~~FEE~~is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

	Amount to be Registered (1)		Proposed Maximum Offering Price Per Share		Proposed Maximum Aggregate Offering Price		Amount of Registration Fee
Title of Each Class of Securities to be Registered
Common Stock, $0.001 par value per share(2)		2,875,000	$	5.00	$	14,375,000	$	1,960.75
Underwriter Warrant (3)(4)			$		$	1,000	$	0.14
Common Stock underlying Underwriter's Warrant		287,500	$	6.25	$	1,796,875	$	245.09
Total					$	16,172,875	$	2,205.98

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

(1)	Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended, for the public offering and Rule 457(a) for the offering by the security holder.
(2)	Includes 375,000 shares of common stock representing 15% of the shares offered to the public that the underwriter has the option to purchase to cover over-allotments, if any.
(3)	No registration fee required pursuant to Rule 457(g) under the Securities Act of 1933.
(4)	Represents a warrant granted to the underwriter to purchase shares of common stock in an amount up to 10% of the number of shares sold to the public in this offering.

~~The~~If ~~registrant~~an ~~hereby~~emerging ~~amends~~growth ~~this~~company, ~~Registration~~indicate ~~Statement~~by oncheck ~~such~~mark ~~date~~if orthe ~~dates~~registrant ashas ~~may~~elected benot ~~necessary~~ to ~~delay~~use ~~its effective date until~~ the ~~registrant~~extended ~~shall~~transition ~~file~~period afor ~~further~~complying ~~amendment,~~with ~~which~~any ~~specifically~~new ~~states~~or ~~that~~revised ~~this~~financial ~~Registration~~accounting ~~Statement~~standards ~~shall~~provided ~~thereafter~~pursuant ~~become~~to ~~effective in accordance with~~ Section 8 7(a) (2)(B) of the Securities Act ~~of 1933, as amended, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine~~. ☐

~~THE~~The ~~INFORMATION~~Registrant INhereby ~~THIS~~amends ~~PROSPECTUS~~this ISRegistration ~~NOT~~Statement ~~COMPLETE~~on ~~AND~~such ~~MAY~~date BEor ~~CHANGED.~~dates ~~THESE~~as ~~SECURITIES~~may ~~MAY~~be ~~NOT~~necessary BEto ~~SOLD~~delay ~~UNTIL~~its ~~THE~~effective ~~REGISTRATION~~date ~~STATEMENT~~until ~~FILED~~the ~~WITH~~Registrant ~~THE~~shall ~~SECURITIES~~file ~~AND~~a ~~EXCHANGE~~further ~~COMMISSION~~amendment ISwhich ~~EFFECTIVE.~~specifically ~~THIS~~states ~~PROSPECTUS~~that ISthis ~~NOT~~Registration ANStatement ~~OFFER~~shall TOthereafter ~~SELL~~become ~~THESE~~effective ~~SECURITIES~~in ~~AND~~accordance WEwith ~~ARE~~Section 8(a) of ~~NOT~~the ~~SOLICITING~~Securities ANAct of 1933 ~~OFFER~~or TOuntil ~~BUY~~the ~~THESE~~Registration ~~SECURITIES~~Statement INshall ~~ANY~~become ~~STATE~~effective ~~WHERE~~on ~~THE~~such ~~OFFER~~date ORas ~~SALE~~the ISCommission, ~~NOT~~acting ~~PERMITTED~~pursuant to said Section 8(a), may determine.

~~SUBJECT~~Table TOof ~~COMPLETION, DATED AUGUST 6, 2013~~Contents

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION DATED MARCH 27, 2026

PRELIMINARY PROSPECTUS

2Up to 631,~~500,000~~332 Shares of Common Stock Issuable Upon Exercise of Pre-Funded Warrants

WeThis ~~are~~prospectus ~~offering~~covers ~~2,500,000~~potential ~~shares~~resale ofby ~~our~~certain ~~common~~selling ~~stock,~~securityholder ~~$0.001~~(the ~~par~~“Selling ~~value,~~Securityholder”) inidentified aherein ~~firm~~of ~~commitment offering~~631,332 ~~which~~shares ~~share~~of ~~number reflects~~ our ~~proposed~~Common ~~one~~Stock, ~~for~~par 2value $0.~~381~~001 ~~reverse~~per ~~stock~~share ~~split~~ (~~the~~ “~~reverse~~Common ~~stock split~~Stock”) ~~described~~issuable inupon ~~this prospectus. After~~ the ~~effectiveness~~exercise of ~~the~~pre-funded ~~registration~~warrants ~~statement,~~at ofan ~~which~~exercise ~~this~~price ~~prospectus is a part, and concurrently with the pricing~~ of ~~the~~approximately ~~offering,~~$0.001 weper ~~will~~share ~~effect~~(“Pre-Funded ~~the reverse stock split~~Warrants”).

~~This~~We isare anregistering ~~initial~~the ~~public~~shares ~~offering~~on behalf of ~~our~~the ~~common~~Selling ~~stock~~Securityholder to be offered and sold by it from time to time. We ~~expect~~are ~~the~~not ~~public~~selling ~~offering~~any ~~price~~securities tounder bethis ~~$5.00~~prospectus ~~per~~and ~~share~~will ~~(assuming~~not ~~the~~receive ~~reverse~~any ~~stock~~proceeds ~~split). There~~from isthe ~~presently~~sale noof ~~public~~Common ~~market~~Stock ~~for~~by ~~our~~the ~~common~~Selling ~~stock. We~~Securityholder ~~intend~~pursuant to ~~apply~~this ~~for~~prospectus. ~~listing~~The ofSelling ~~our~~Securityholder ~~common~~may ~~stock~~offer onand ~~the~~sell ~~Nasdaq~~such ~~Capital~~shares ~~Market~~to ~~under~~or ~~the~~through ~~symbol~~one ~~“IPWR~~or more underwriters,” ~~which~~dealers ~~listing~~and weagents, ~~expect~~or directly to ~~occur~~purchasers, ~~upon~~or ~~consummation~~through ofa ~~this~~combination ~~offering. No~~of ~~assurance~~these ~~can~~methods beor ~~given~~any ~~that~~other ~~our~~method ~~application~~permitted ~~will~~by ~~be approved~~law. If ~~our~~See ~~application~~“Plan toof ~~the~~Distribution” ~~Nasdaq~~for ~~Capital~~more ~~Market~~information isabout ~~not~~how ~~approved,~~the orSelling ifSecurityholder wemay dosell ~~not~~or ~~raise~~otherwise atdispose ~~least~~of ~~$10~~such ~~million~~shares. inOur ~~this~~registration ~~offering,~~of wethese ~~will~~shares does not ~~complete~~mean that the ~~offering~~Selling Securityholder will offer or ~~effect~~sell ~~the~~any ~~reverse~~shares ~~stock~~of ~~split~~our Common Stock.

WeOur ~~are~~Common anStock ~~“emerging~~is ~~growth~~currently ~~company”~~listed on The Nasdaq Capital Market under the ~~federal~~symbol ~~securities~~“IPWR”. ~~laws~~On ~~and~~March ~~will~~26, ~~have~~2026, the ~~option~~last toreported ~~use~~sale ~~reduced~~price ~~public~~of ~~company~~our ~~reporting~~Common ~~requirements~~Stock was $3. ~~Investing~~11. inThe ~~our~~applicable ~~common~~prospectus ~~stock~~supplement, ~~involves~~if aany, ~~high~~will ~~degree~~contain ofinformation, ~~risk.~~where ~~See~~applicable, ~~“Risk~~as ~~Factors”~~to ~~beginning~~any other listing, if any, on ~~page~~The 9Nasdaq ~~for~~Capital aMarket ~~discussion~~or any securities market or other securities exchange of ~~information~~the ~~that~~securities ~~should~~covered beby ~~considered~~the inprospectus ~~connection~~supplement. ~~with~~Prospective anpurchasers ~~investment~~of inour securities are urged to obtain current information as to the market prices of our securities, where applicable.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or ~~determined~~passed ifupon ~~this~~the ~~prospectus~~accuracy isor ~~truthful~~adequacy orof ~~complete~~this prospectus. Any representation to the contrary is a criminal offense.

~~MDB~~We ~~Capital~~may ~~Group,~~amend ~~LLC~~or issupplement ~~the~~this ~~underwriter~~prospectus ~~for~~from ~~our~~time ~~initial public offering. If we sell all of the common stock we are offering, we will pay~~ to ~~MDB~~time ~~Capital~~by ~~Group,~~filing ~~LLC~~amendments ~~$1,250,000,~~ or ~~10%,~~supplements ofas ~~the gross proceeds of this offering and non-accountable expenses equal to $187,500~~required. ~~For~~ aWe ~~more~~urge ~~complete~~you ~~discussion of the compensation we will pay~~ to ~~the~~read ~~underwriter, please see~~ the ~~section~~entire ~~of this~~ prospectus ~~titled “Underwriting”. In connection with this offering~~, weany ~~have~~amendments ~~also~~or ~~agreed to issue to MDB Capital Group~~supplements, ~~LLC~~any afree ~~warrant~~writing ~~to purchase shares of our common stock in an amount up to 10% of the shares of common stock sold in the public offering~~prospectuses, ~~with~~and anany ~~exercise~~documents ~~price~~incorporated ~~equal~~by toreference ~~125%~~carefully ofbefore ~~the~~you ~~per-share~~make ~~public~~your ~~offering~~investment ~~price~~decision.

	Per Share		Total
Public offering price	$	5.00	$	12,500,000.00
Underwriting discounts and commissions	$	0.50	$	1,250,000.00
Proceeds to us (before expenses) (1)	$	4.50	$	11,250,000.00

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 8 of this prospectus for a discussion of certain risks that you should consider in connection with an investment in our securities.

~~(1)~~The ~~Does~~date ~~not~~of ~~include~~this aprospectus ~~non-accountable expense allowance equal to $187~~is ,~~500~~ ~~payable to MDB Capital Group, LLC, the underwriter~~2026. ~~See “Underwriting” for a description of compensation payable to the underwriter.~~

~~The~~Table ~~underwriter may also purchase an additional 375,000 shares~~ of our common stock (assuming the reverse stock split) amounting to 15% of the number of shares offered to the public, within 45 days of the date of this prospectus, to cover over-allotments, if any, on the same terms set forth above.Contents

The underwriter expects to deliver the shares on or about _____________________, 2013.

MDB Capital Group, LLC

The date of this prospectus is _______________, 2013.

TABLE OF CONTENTS

		Page
PROSPECTUS SUMMARY		1
ABOUT THIS PROSPECTUS		1
SUMMARY SELECTED FINANCIAL INFORMATION		8
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA		2
RISK FACTORS		9
PROSPECTUS SUMMARY		3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION CONTAINED IN THIS PROSPECTUS		20
THE OFFERING		5
BUSINESS		21
RISK FACTORS		6
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		31
USE OF PROCEEDS		9
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		37
SELLING SECURITYHOLDER		10
EXECUTIVE COMPENSATION		40
DIVIDEND POLICY		11
DESCRIPTION OF CAPITAL STOCK		42
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		12
MARKET FOR OUR COMMON STOCK, DIVIDEND POLICY AND OTHER STOCKHOLDER MATTERS		46
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		46
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS		15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE		49
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		19
CHANGES IN ACCOUNTANTS		53
DESCRIPTION OF CAPITAL STOCK		21
UNDERWRITING		53
PLAN OF DISTRIBUTION		24
USE OF PROCEEDS		57
LEGAL MATTERS		25
CAPITALIZATION		57
EXPERTS		25
DILUTION		59
WHERE YOU CAN FIND MORE INFORMATION		25
LEGAL MATTERS		60
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE		25
EXPERTS		60
WHERE YOU CAN FIND MORE INFORMATION		60
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES		60

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

~~You~~ABOUT ~~should~~THIS rely only on the information contained in this prospectus. We have not authorized anyone to provide you with additional or different information. The information contained in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.PROSPECTUS

NoYou ~~dealer,~~should ~~salesperson~~rely only on the information contained in this prospectus or in any ~~other~~applicable ~~person~~prospectus issupplement ~~authorized~~prepared inby ~~connection~~us ~~with~~or ~~this~~on ~~offering~~our behalf. Neither we nor the Selling Securityholder has authorized anyone to ~~give~~provide any information or to make any representations ~~about~~other usthan those contained in this prospectus, ~~the~~any ~~securities~~accompanying ~~offered~~prospectus ~~hereby~~supplement or any ~~matter~~free ~~discussed~~writing inprospectus ~~this~~we ~~prospectus~~have prepared. We and the Selling Securityholder take no responsibility for, and can provide no assurance as to the reliability of, any other ~~than~~information ~~those~~that ~~contained~~others inmay ~~this~~give you. This prospectus is an offer to sell only the securities offered hereby and, ifonly ~~given~~under orcircumstances ~~made~~and in jurisdictions where it is lawful to do so. No dealer, ~~the~~salesperson or other person is authorized to give any information or ~~representations~~to ~~must~~represent anything not becontained ~~relied~~in ~~upon~~this asprospectus, ~~having~~any ~~been~~applicable ~~authorized~~prospectus bysupplement usor any related free writing prospectus. This prospectus ~~does~~is not ~~constitute~~ an offer to sell orsecurities, aand ~~solicitation~~it ofis not soliciting an offer to buy securities, in any ~~security~~jurisdiction ~~other~~where ~~than~~the offer or sale is not permitted. You should assume that the ~~securities~~information ~~offered~~appearing byin this prospectus, or anany ~~offer~~prospectus tosupplement ~~sell~~is oraccurate aonly ~~solicitation~~as of anthe ~~offer~~date toon ~~buy~~the ~~any~~front ~~securities~~of bythose ~~anyone~~documents inonly, ~~any~~regardless ~~circumstance~~of inthe ~~which~~time ~~the~~of ~~offer~~delivery of this prospectus or ~~solicitation~~any isapplicable ~~not~~prospectus ~~authorized~~supplement, or isany ~~unlawful~~sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates.

~~Prospectus~~This ~~Summary~~prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described in the section entitled under “Where You Can Find More Information.”

This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information that you need to consider in making your investment decision. You should carefully read this entire prospectus, as well as the information to which we refer you, before deciding whether to invest in our common stock. You should pay special attention to the “Risk Factors” section of this prospectus to determine whether an investment in our common stock is appropriate for you.1

~~This~~Table registration statement, including the exhibits and schedules thereto, contains additional relevant information about us and our securities. With respect to the statements contained in this prospectus regarding the contents of any agreement or any other document, in each instance, the statement is qualified in all respects by the complete text of the agreement or document, a copy of which has been filed or incorporated by reference as an exhibit to the registration statement.Contents

~~About~~CAUTIONARY ~~Ideal~~NOTE ~~Power~~REGARDING ~~Inc.~~FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

WeThis ~~design~~prospectus and ~~develop~~the ~~technologies~~documents ~~that~~incorporated ~~aim~~by toreference ~~improve~~herein ~~key~~and ~~performance~~therein ~~characteristics~~contain forward-looking statements within the meaning of ~~electronic~~the ~~power~~Private ~~converters~~Securities Litigation Reform Act of 1995 and ~~inverters,~~the ~~including~~provisions ~~manufacturing~~of ~~cost,~~Section ~~installation~~27A ~~cost,~~of ~~weight,~~the ~~efficiency~~Securities Act, ~~reliability~~ and ~~flexibility. Our~~Section ~~Power~~21E ~~Packet~~of ~~Switching~~the ~~Architecture™~~Securities Exchange Act of 1934, as amended (~~PPSA~~the “Exchange Act”). isForward-looking anstatements ~~entirely~~give ~~new~~our ~~power~~current ~~conversion~~expectations ~~topology~~or forecasts of future events. You can identify these statements by the fact that ~~uses~~they ~~software~~do ~~switching~~not ~~and~~relate ~~100%~~strictly ~~indirect~~to ~~power~~historical ~~transfer~~or current facts. ~~With~~ ~~PPSA,~~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 prospectus and the ~~power~~documents ~~flows~~incorporated ~~into~~by reference herein and istherein. ~~temporarily~~In ~~stored~~particular, inthese aninclude ACstatements ~~link~~relating ~~magnetic~~to ~~storage~~future ~~component~~actions, prospective products, applications, customers, technologies, future performance or results of anticipated products, expenses, and financial results. ~~This~~ ~~allows~~These ~~PPSA~~forward-~~enabled~~looking ~~products~~statements are subject to ~~provide~~certain ~~isolation~~risks ~~(which~~and ~~enables~~uncertainties ~~grounding)~~that ~~and~~could ~~still~~cause beactual ~~significantly~~results ~~smaller~~to ~~than~~differ ~~both~~materially ~~transformer-based~~from ~~inverters~~our historical experience and ~~transformer-less~~our ~~inverters~~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:

We● ~~believe that~~ our ~~technology~~history ~~can allow owners and operators~~ of systems with a wide variety of power conversion needs to benefit from reduced costs and increased efficiency, reliability and flexibility. In addition, PPSA can reduce the compliance burden faced by users of transformer-less power converters. (Transformer-less converters are smaller than transformer-based converters, but they do not provide isolation, so they need significant additional protections to meet United States safety regulations.)losses;

~~Our~~● ~~initial~~our ~~target~~ability ~~markets~~to ~~will~~generate ~~be the PV inverter, electrified vehicle DC charging, and distributed storage markets.~~revenue;

We were incorporated in Texas on May 17, 2007. We converted to a Delaware corporation on July 15, 2013. The address of our corporate headquarters is 5004 Bee Creek Road, Suite 600, Spicewood, Texas 78669 and our telephone number is (512) 264-1542. Our website can be accessed at www.idealpower.com. The information contained on, or that may be obtained from, our website is not, and shall not be deemed to be, a part of this prospectus.

The Industry

Recent trends in the sources and uses of energy are driving demand for electronic power converters. These trends include the migration toward intermittent renewable resources, an increased consumer demand for electrified vehicles, and a growing need to improve grid reliability and enable low cost off-grid renewable power systems in remote locations. However, the power electronics systems used in these markets have limitations in size, weight, cost, safety, efficiency, flexibility and reliability. We believe PPSA can improve upon existing technology on all of these parameters.

Currently, isolated power conversion requires several bulky, inflexible devices. These include bulk capacitors, power switches, line reactors and isolation transformers. These components are heavy and expensive. In addition, they are often custom-built for fixed functions, making them inflexible and not scalable. This process also imposes high electrical and thermal stresses, which can create safety and reliability issues.

-1-

Our Proprietary Technology

With PPSA, power flows through, and is temporarily stored in, an AC link magnetic storage component. The power therefore moves like a packet, and the switching of that packet through the stages of the PPSA process is what gives Power Packet Switching Architecture its name. Critically, this means that the entire process of isolated power conversion can take place in a single PPSA enabled device. A brief outline of the process is as follows:

Stage One: The AC Link is charged from the input

Stage Two: The AC Link stores electrical energy and switches (rotates) the input voltage/current to match the output voltage/current requirements

Stage Three: The AC Link releases power to the output

This process has several benefits. Many of these stem from the fact that PPSA requires fewer hardware components than conventional designs:

· Improved power-to-weight ratio. This is another way of saying that PPSA can deliver the same power as a traditional inverter in a much smaller form factor and lower weight. Lower weight using standard materials can lower material and manufacturing costs, as well as logistic costs of shipping, installation and maintenance. For example, Power One (one of the leaders in the power conversion space) currently offers a 27.6 kW transformer-less inverter that weighs 168 lbs., for a power-to-weight ratio of approximately 6.09 lbs./kW. (Please note that transformer-less inverters do not provide isolation; one of the key benefits they provide over traditional inverters is that they are smaller.) Our 30 kW inverter weighs only 97 lbs., for a power-to-weight ratio of approximately 3.23 lbs./kW.

· Best-of-class safety without significant additional safeguards. Stage Two of the PPSA process above provides electrical isolation between the input and the output without a transformer. This isolation means that PPSA systems can be grounded, so they achieve the same safety profile as transformer-based inverters. Transformer-less inverters, which cannot be grounded can only achieve that level of safety by integrating other safeguards, increasing system expense.

· Greater efficiency. PPSA delivers efficiencies above 96%. The efficiency of competing systems varies significantly depending on the application, but in some of our target applications, our PPSA solution has half the power losses of conventional solutions.

-2-

· Greater scalability/flexibility. The electronic power converter market is fragmented. PPSA can use a common hardware design with different embedded software to address different markets. PPSA’s flexibility enables uses below 10 kW to over 1 MW.

· Greater reliability. Because PPSA uses no electrolytic capacitors, it eliminates many points of failure of conventional systems. We believe this and other design features will lead to increased reliability.

We are continuing to develop and extend the PPSA platform. This includes development work focused on bi-directional insulated gate bipolar transistors (BD-IGBTs). Using BD-IGBTs in our PPSA solution should yield further improvements in power density, manufacturing cost, and efficiency. The Department of Energy awarded us a $2.5 million ARPA-e grant to develop and commercialize BD-IGBT power switches to improve the performance of our solutions.

Our Business Model

Our business model is to license PPSA to original equipment manufacturers (OEMs). Our goal is to have OEMs sell our product to end users and share in the overall economic benefit; we expect this approach will allow us to save on staffing and working capital requirements. To serve the goal of licensing PPSA, we are building reference products that demonstrate the capabilities of PPSA to OEMs. We have already designed and built our first two reference products: a 30 kW photovoltaic (PV) inverter and a 30kW battery converter. These products have met rigorous industry standards and have been purchased by leading commercial and government customers, including Johnson Controls, Sharp Labs of America, the U.S. Navy, the National Renewable Energy Laboratory (NREL) and National Aeronautics and Space Administration (NASA). We are in the process of developing two more reference products: a 30kW 3-port hybrid converter and a 30kW micro-grid converter. Based on our research and testing, we believe our technology can scale down to 10 kW and up to 1 MW.

Our Target Markets

We believe there are dozens of markets that could benefit from PPSA’s unique method of isolated transformer-less power conversion. Our initial focus will be on three strategic markets: solar photovoltaic (PV), distributed storage and electrified vehicle DC charging. We have chosen these initial markets based on their size and growth, the strength of the PPSA value proposition for those markets, and our time-to-market.

· PV inverter market: The PV inverter market is already large and still growing; industry analysts estimate it at $7.1 billion in 2013, with growth in the installed base from 30 GW in 2012 to over 58 GW in 2017 (a CAGR of 13.8%). Much of this growth is due to a rapid decline in the cost of solar cells. Operators who are trying to remove more cost from these systems have therefore now begun to turn to “balance of system” costs, as these now represent a larger percentage of total installation expense.

Our 30kW PV inverter weighs 97 pounds compared to 1200 pounds from a typical transformer-based PV inverter. It also weighs about half as much as typical transformer-less PV inverters, which do not provide isolation and therefore need additional safeguards to meet US regulatory guidelines. This reduced weight means that our 30kW PV inverter can be cheaper to manufacture than the competition; it also means that it is cheaper to ship and install.

Our reference product for this market is our 30kW PV inverter. As of March 31, 2013, this product had already been sold to 11 different PV inverter installation companies.

· Distributed storage market: This market is also growing extremely fast; industry analysts estimate that the U.S. market will grow from 1.4 MW of PV systems with integrated storage in 2012 to 900 MW in 2017, a CAGR of 264%.

Our 30kW battery converter is our first reference product for this market. It is suitable for several emerging storage applications, including peak demand reduction. Our early customers for this application include Johnson Controls, Sharp and Powin Energy. We have also made commercial off the shelf (COTS) sales to NREL, the U.S. Navy and NASA.

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Our next reference product for this market will be our 3-port hybrid converter, which will integrate PV with grid storage. We also plan to develop a 3-port micro-grid converter (expected Q4 2014) that will provide new embedded firmware capabilities supporting micro-grids. We expect this product will allow our customers to use our systems to lower the cost of combined PV and batteries for emergency backup power or to operate them in remote off-grid installations.

· Electrified vehicle DC charging market: The DC charging market is sometimes called the fast-charging market, as it can reduce charge time for a standard electric vehicle from 8 hours to 30 minutes. This market is growing extremely fast, spurred on by EV manufacturers such as Tesla and Nissan; industry analysts estimate that it will grow from $713 million in 2013 to $3.8 billion in 2020 (a CAGR of 27.1%), as the number of DC chargers grows from about 9,000 to about 98,000 over the same time period.

Our 30 kW battery converter is our first reference product for this market, and is already installed at NREL in Colorado. We believe the efficiency, flexibility and cost benefits of PPSA will contribute to the spread of DC charging stations. Our partners in establishing early market leadership include the U.S. Department of Defense and NRG Energy.

Our next reference product for this market (expected Q1 2014) will be a 30 kW hybrid converter that will exploit the multi-port capabilities of PPSA; it will have the ability to integrate DC charging with PV or stationary battery storage.

· Other markets: We plan to continue to evaluate new markets for PPSA based on their size and growth, the strength of the PPSA value proposition for those markets, and our time-to-market. We are studying PPSA’s applicability to markets such as variable frequency drives (VFDs) for AC motors, uninterruptible power supply (UPS), utility dispatchable PV, and solid state transformers.

Reverse Stock Split and Offering Requirements

We will close this offering only if our listing application is approved by the Nasdaq Capital Market and only if we raise a minimum of $10 million in gross proceeds. If we are unable to meet either of these requirements, we will terminate the offering.

On June 13, 2013, our Board of Directors, and on July 5, 2013, stockholders holding a majority of our outstanding voting power, approved resolutions authorizing our Board of Directors to effect a reverse split of our common stock at an exchange ratio of between one-for-two and one-for-ten, with our Board of Directors retaining the discretion as to whether to implement the reverse split and which exchange ratio to implement. The reverse stock split is intended to allow us to meet the minimum share price requirement of The Nasdaq Capital Market. During August 2013, our Board of Directors determined that following the effectiveness of the registration statement, of which this prospectus is a part, and prior to the closing of this offering, the Board of Directors will effect the reverse stock split at a ratio of 1 share for each 2.381 shares.

Except as otherwise indicated and except in our financial statements, all information regarding share amounts of common stock and prices per share of common stock contained in this prospectus assume the consummation of the reverse stock split to be effected following effectiveness of the registration statement, of which this prospectus forms a part, and prior to the closing of this offering.

Status as an Emerging Growth Company

We are an “emerging growth company” as that term is defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act) are required to comply with the new or revised financial accounting standard. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have irrevocably elected to opt out of the transition period, and we have not utilized any provisions of the JOBS Act to date.

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Ability to Continue our Operations

We experienced net losses of $4,647,219 and $1,750,939 for the years ended December 31, 2012 and 2011, respectively. At December 31, 2012, our net loss from inception was $7,200,514. Net loss for the quarter ended March 31, 2013 was $1,824,503, which increased the accumulated net losses to $9,025,017 as of March 31, 2013.

We will need financing to continue our operations, particularly for the support of our research and development efforts. We have no committed sources of capital and do not know whether additional financing will be available when needed on terms that are acceptable, if at all. The failure to satisfy our capital requirements will adversely affect our business, financial condition, results of operations and prospects.

Unless we raise funds in this offering, we will not have sufficient capital to continue our operations for the next 12 months. Even if we raise funds in this offering, they may be insufficient to sustain our operations for the next 12 months if our costs are higher than projected or unforeseen expenses arise.

Convertible Promissory Notes

We have issued $750,000 in senior secured convertible promissory notes that must be paid or converted into shares of our common stock on or before July 29, 2014, $4 million in senior secured convertible promissory notes that must be paid or converted into shares of our common stock on or before November 21, 2013, $1.142 million in convertible promissory notes that must be paid or converted into shares of our common stock on or before December 31, 2013, and we expect to issue an additional $213,394 in convertible notes to our legal counsel for services rendered in connection with this offering. Collectively, we refer to these promissory notes as the “Convertible Notes” in this prospectus. If we raise at least $10 million in this offering, all of the Convertible Notes will be converted into shares of our common stock. We do not plan to consummate this offering unless we raise at least $10 million, so our disclosures in this prospectus assume full conversion of the Convertible Notes into 1,682,606 shares of our common stock.

Risks Related to Our Business

Our business is subject to a number of risks. You should understand these risks before making an investment decision. If any of these risks actually occurs, our business, financial condition or results of operations would likely be materially adversely affected. In such case, the trading price of our common stock would likely decline, and you may lose all or part of your investment. Below is a summary of some of the principal risks we face. The risks are discussed more fully in the section of this prospectus below titled “Risk Factors.”

· We have a limited operating history and it is uncertain whether we will ever be profitable. We anticipate future losses and negative cash flow, which may limit or delay our ability to become profitable.

· We may raise additional financing by issuing new securities that may have terms or rights superior to those of our shares of common stock, which could adversely affect the market price of our shares of common stock and our business.

· If we do not receive additional financing when and as needed in the future, we may not be able to continue our research and development efforts or accelerate the commercialization of our technology and materials.

· If we are unable to keep up with rapid technological changes, our technology may become obsolete.

· We may be unable to protect our intellectual property.

· We may not be able to reach production scales that are required to maintain manufacturing costs low enough to become profitable.

· We may not be able to convince customers to buy or to license our products due to our limited history.

· We may have significant reliability problems with our products, requiring extensive recalls and repair costs.

· We will face extensive competition from better-established power converter manufacturers.

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THE OFFERING

The following summary contains basic information about our initial public offering and our common stock and is not intended to be complete. It does not contain all of the information that may be important to you. For a more complete understanding of our common stock, please refer to the section of this prospectus titled “Description of Capital Stock.”

Issuer		Ideal Power Inc., a Delaware corporation.
Common Stock Offered By Us		2,500,000 shares of common stock, par value $0.001 per share.
Over-allotment Option		We have granted an option to our underwriter to purchase up to an additional 375,000 shares of common stock within 45 days of the date of this prospectus in order to cover over-allotments, if any.
Common Stock Outstanding Prior To This Offering		1,480,262 shares of common stock (1)
Common Stock Outstanding After This Offering		5,688,038 shares of common stock (1)(2)(3)
Use of Proceeds		We intend to use the net proceeds from our sale of common stock in this offering as follows: approximately $1.5 million will be used for new product research and development, approximately $5 million will be used for existing product development and commercialization, approximately $1 million will be used for the protection of our intellectual property, approximately $1 million will be used for the purchase of equipment and software, and the balance of the funds will be used for general corporate purposes. See “Use of Proceeds” and “Plan of Operation” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information.
Market And Trading Symbol For The Common Stock		There is currently no market for our common stock. We intend to apply for listing of our common stock on the Nasdaq Capital Market under the symbol “IPWR”.
Underwriter Common Stock Purchase Warrant		In connection with this offering, we have also agreed to sell to MDB Capital Group, LLC and its designees a warrant to purchase up to 10% of the shares of common stock sold in this offering. If this warrant is exercised, each share may be purchased by MDB Capital Group, LLC at $6.25 per share (125% of the price of the shares sold in this offering.)

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Lock-Up Agreements			Our officers, directors and employees, and 5% or greater holders of our equity securities as determined pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended, will have the securities they own locked up until the first anniversary of the Underwriting Agreement we will enter into with MDB Capital Group, LLC in conjunction with this offering (the “One Year Lock-Up”). The purchasers of our senior secured convertible promissory notes, including MDB Capital Group, LLC, are subject to lock-up requirements for periods that may last no more than 180 days following the date of this prospectus (the “Six Month Lock-Up”). The number of currently outstanding shares of common stock subject to the One Year Lock-Up totals 1,262,792 shares and the number of shares underlying options, warrants, and convertible promissory notes subject to the One Year Lock-Up totals 453,441 shares. The number of shares of common stock to be issued to, or that may be acquired by, the holders of our senior secured convertible promissory notes and MDB Capital Group, LLC that will be subject to the Six Month Lock-Up totals 2,455,231 shares. For more information about the lock-up agreements and requirements, see the section titled “Underwriting - Lock-Up Agreements” in this prospectus.
Offering Termination			If we fail to obtain approval from The Nasdaq Stock Market to list our common stock on the Nasdaq Capital Market or if we fail to raise at least $10 million of gross proceeds in this offering, we will not complete the offering.
(1)	The number of shares of our common stock to be outstanding both before and after this offering is based on the number of shares outstanding as of June 30, 2013 and excludes:
	●	158,108 shares of our common stock reserved for issuance under outstanding option agreements and 352,270 shares of our common stock reserved for issuance under option agreements that have been approved by the Compensation Committee of the Board of Directors but have not yet been issued;
	● ●	487,713 shares of our common stock reserved for future issuance under our 2013 Equity Incentive Plan; 1,519,095 shares of our common stock reserved for issuance under outstanding warrant agreements; and
	●	250,000 shares of our common stock issuable upon exercise of the warrant issued to MDB Capital Group, LLC.

	Unless otherwise specifically stated, information throughout this prospectus assumes that none of our outstanding options or warrants to purchase shares of our common stock are exercised.
(2)	Unless otherwise indicated, the number of shares of common stock presented in this prospectus excludes shares issuable pursuant to the exercise of the underwriter’s over-allotment option.
(3)	This number includes 2,500,000 shares of common stock that will be issued in this offering, 1,682,606 shares of common stock that will be issued to the holders of the Convertible Notes upon the completion of this offering, and 25,170 shares of common stock to be issued to our independent directors as compensation for their services.

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SUMMARY SELECTED FINANCIAL INFORMATION

The table below includes historical selected financial data for each of the years ended December 31, 2012 and 2011, derived from our audited financial statements included elsewhere in this prospectus. The table below also includes historical financial data for the three-month periods ended March 31, 2013 and 2012, derived from our unaudited financial statements included elsewhere in this prospectus.

You should read the historical selected financial information presented below in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and our financial statements and the notes to those financial statements included elsewhere in this prospectus. Historical results are not necessarily indicative of the results that may be expected for any future period.

	For the Years Ended December 31,						For the Quarters Ended March 31, (unaudited)
	2012			2011			2013			2012
STATEMENT OF OPERATIONS:
Revenue	$	1,126,907		$	860,771		$	380,135		$	132,182
Costs of goods sold		957,641			757,393			366,989			87,577
Gross Profit		169,266			103,378			13,146			44,605
Operating expenses		3,207,573			1,616,060			754,220			652,331
Loss from operations		(3,038,307	)		(1,512,682	)		(741,074	)		(607,726	)
Interest expense, net		(1,608,912	)		(238,257	)		(1,083,429	)		(103,549	)
Net loss	$	(4,647,219	)	$	(1,750,939	)	$	(1,824,503	)	$	(711,275	)
Basic and diluted net loss per share		(1.33	)		(0.53	)		(0.52	)		(0.20	)
Weighted average number of basic and diluted common shares outstanding		3,489,963			3,282,520			3,524,505			3,477,050
	December 31, 2012			December 31, 2011			March 31, 2013 (unaudited)
BALANCE SHEET DATA:
Cash and cash equivalents	$	1,972,301		$	100,675		$	1,215,986
Working capital (deficit)		528,603			(61,437	)		(1,274,681	)
Total assets		3,207,003			579,853			2,325,766
Total liabilities		3,308,397			1,750,750			4,196,841
Total stockholders’ deficit		(101,394	)		(1,170,897	)		(1,871,075	)

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RISK FACTORS

We are subject to various risks that may materially harm our business, prospects, financial condition and results of operations. An investment in our common stock is speculative and involves a high degree of risk. In evaluating an investment in shares of our common stock, you should carefully consider the risks described below, together with the other information included in this prospectus.

If any of the events described in the following risk factors actually occurs, or if additional risks and uncertainties that are not presently known to us or that we currently deem immaterial later materialize, then our business, prospects, results of operations and financial condition could be materially adversely affected. In that event, the trading price of our common stock could decline, and you may lose all or part of your investment in our shares. The risks discussed below include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements.

Risks Related to Our Business

We lack an established operating history on which to evaluate our business and determine if we will be able to execute our business plan, and we can give no assurance that our operations will result in profits.

We were formed in Texas on May 17, 2007 and converted to a Delaware corporation on July 15, 2013; therefore we have a limited operating history that makes it difficult to evaluate our business. We have been granted patents by the United States of America and we have currently pending patent applications with the United States Patent and Trademark Office and equivalent offices in the European Union, India, Malaysia, Singapore, the Philippines, South Korea, China, Brazil and Canada for a power converter topology and our methods of operating said topology, as well as various improvements on and applications of our basic power converter design. We have also had our designs validated by UL certifications from Intertek (a Nationally Recognized Test Laboratory), the California Energy Commission, and several PV inverter installations. However, we have only recently begun sales of our products, and we cannot say with certainty when we will begin to achieve profitability. No assurance can be made that we will ever become profitable.

We have incurred losses in prior periods and expect to incur losses in the future. We may never be profitable.

Our independent registered public accounting firm has issued an unqualified opinion with an explanatory paragraph to the effect that there is substantial doubt about our ability to continue as a going concern. This unqualified opinion with an explanatory paragraph could have a material adverse effect on our business, financial condition, results of operations and cash flows. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” and Note 2 to our financial statements included elsewhere in this prospectus.

Since our inception on May 17, 2007 through December 31, 2012, we sustained $7,200,514 in net losses and we had net losses at December 31, 2012 and 2011 of $4,647,219 and $1,750,939, respectively. We expect to continue to sustain losses for the foreseeable future. Net loss for the three months ended March 31, 2013 was $1,824,503, which increased the accumulated net losses to $9,025,017 as of March 31, 2013.

We began product sales in 2011 and shipped 14 units for $165,000. In 2012 we shipped 25 units for $266,000. In the first quarter of 2013, we shipped 15 units for $122,000. We also sold $10,000 in ancillary equipment, PV combiners made by SolarBOS. As sales of our products have generated minimal operating revenues, we have relied on sales of our debt securities to continue our operations. If we are unable to raise funds through sales of our securities, there can be no assurance that we will be able to implement our business plan, generate sustainable revenue or ever achieve profitable operations. We expect to have operating losses until such time as we develop a substantial and stable revenue base. We cannot assure you that we can achieve or sustain profitability on a quarterly or annual basis in the future.

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To date we have had a limited number of customers. We cannot assure you that our customer base will increase.

Two customers, the Department of Energy (ARPAE) and Lockheed Martin, accounted for 75% of net revenue for the year ended December 31, 2012. Two customers, Lockheed Martin and Meridian Solar, accounted for 85% of net revenues for the year ended December 31, 2011. The loss of one of these customers could cause an adverse effect on our operations. 72% of the Company’s accounts receivable balance at December 31, 2012 was from the Department of Energy and 100% of accounts receivable at December 31, 2011 was from Lockheed Martin. Separate from the work for the Department of Energy and Lockheed Martin, the Company sold its product to eleven customers in 2012.

We may not be able to meet our product development and commercialization milestones.

Product development and testing are subject to unanticipated and significant delays, expenses and technical or other problems. We cannot guarantee that we will successfully achieve our milestones within our planned timeframe or ever. Our plans and ability to achieve profitability depend on acceptance of our technology and our products by key market participants, such as vendors and marketing partners, and potential end-users of our products. We continue to educate designers and manufacturers about our solar PV inverters, grid-battery converters, and electric vehicle charging infrastructure. More generally, the commercialization of our products may also be adversely affected by many factors not within our control, including:

· the willingness of market participants to try a new product and the perceptions of these market participants of the safety, reliability, functionality and cost effectiveness of our products;

· the emergence of newer, possibly more effective technologies;

· the future cost and availability of the raw materials and components needed to manufacture and use our products; and

· the adoption of new regulatory or industry standards that may adversely affect the use or cost of our products.

Accordingly, we cannot predict that our products will be accepted on a scale sufficient to support development of mass markets for them.

We must achieve design wins to retain our existing customers and to obtain new customers, although design wins achieved do not necessarily result in substantial sales.

The constantly changing nature of technology in the markets we serve causes equipment manufacturers to continually design new systems. We must work with these manufacturers early in their design cycles to modify our equipment or design new equipment to meet the requirements of their new systems. Manufacturers typically choose one or two vendors to provide the components for use with the early system shipments. Selection as one of these vendors is called a design win. It is critical that we achieve these design wins in order to retain existing customers and to obtain new customers.

We believe that equipment manufacturers often select their suppliers based on factors including long-term relationships and end user demand. Accordingly, we may have difficulty achieving design wins from equipment manufacturers who are not currently our customers. In addition, we must compete for design wins for new systems and products of our existing customers, including those with whom we have had long-term relationships. Our efforts to achieve design wins are time consuming, expensive, and may not be successful. If we are not successful in achieving design wins, or if we do achieve design wins but our customers’ systems that utilize our products are not successful, our business, financial condition, and results of operations could be materially and adversely impacted.

Once a manufacturer chooses a component for use in a particular product, it is likely to retain that component for the life of that product. Our sales and growth could experience material and prolonged adverse effects if we fail to achieve design wins. However, design wins do not always result in substantial sales, as sales of our products are dependent upon our customers’ sales of their products.

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The prototype of our new 3-port hybrid converter may not provide the results we expect, may prove to be too expensive to produce and market, or may uncover problems of which we are currently not aware, any of which could harm our business and prospects.

We are currently building a prototype of a 3-port hybrid converter, which is an integrated solar PV inverter and battery charger/inverter, based on improvements to our current PV inverter products. We do not yet know if the prototype will produce positive results consistent with our expectations. The prototype may also cost significantly more than expected, and the prototype design and construction process may uncover problems of which we are currently not aware. These and other prototypes of emerging products are a material part of our business plan, and if they are not proven to be successful, our business and prospects could be harmed.

We expect to license our technology in the future; however the terms of these agreements may not prove to be advantageous to us. If the license agreements we enter into do not prove to be advantageous to us, our business and results of operations will be adversely affected.

Ultimately, our goal is to license our technology to our customers. However, we may not be able to secure license agreements with customers on terms that are advantageous to us. Furthermore, the timing and volume of revenue earned from license agreements will be outside of our control. If the license agreements we enter into do not prove to be advantageous to us, our business and results of operations will be adversely affected.

We have not devoted significant resources towards the marketing and sale of our products and we continue to rely on the marketing and sales efforts of third parties whom we do not control.

To date, we have sold only our solar PV inverter and battery converter products and, even after adding industry veterans to our staff, we continue to experience a learning curve in the marketing and sale of products on a commercial basis. We expect that the marketing and sale of these products will continue to be conducted by a combination of independent manufacturers’ representatives, third-party strategic partners, distributors, or OEMs. Consequently, commercial success of our products will depend to a great extent on the efforts of others. We have entered and intend to continue entering into strategic marketing and distribution agreements or other collaborative relationships to market and sell our solar PV inverter, battery converter and other value added products. However, we may not be able to identify or establish appropriate relationships in the near term or in the future. We can give no assurance that these distributors or OEMs will focus adequate resources on selling our products or will be successful in selling them. In addition, third-party distributors or OEMs have or may require us to provide volume price discounts and other allowances, customize our products or provide other concessions that could reduce the potential profitability of these relationships. Failure to develop sufficient distribution and marketing relationships in our target markets will adversely affect our commercialization schedule and to the extent we have entered or enter into such relationships, the failure of our distributors and other third parties to assist us with the marketing and distribution of our products, or to meet their monetary obligations to us, may adversely affect our financial condition and results of operations.

A material part of our success depends on our ability to manage our suppliers and manufacturers. Our failure to manage our suppliers and manufacturers could materially and adversely affect our results of operations and relations with our customers.

We rely upon suppliers to provide the components necessary to build our products and on contract manufacturers to produce our products. There can be no assurance that key suppliers and manufacturers will provide components or products in a timely and cost efficient manner or otherwise meet our needs and expectations. Our ability to manage such relationships and timely replace suppliers and manufacturers, if necessary, is critical to our success. Our failure to timely replace our contract manufacturers and suppliers, should that become necessary, could materially and adversely affect our results of operations and relations with our customers.

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We may in the future add production capabilities that would subject us to numerous additional risks and could adversely affect our business, financial condition, results of operations and prospects.

We currently rely on third parties to produce our products, but we may in the future add production capabilities and produce products ourselves. Adding production to our operations would subject us to numerous additional risks, including:

· the need to use significant capital resources for equipment purchases;

· increases to our operating expenses to add personnel and expertise to effectively and efficiently manufacture products;

· inaccurate estimates of customer demand for our products and the resources needed to meet customer demand; and

· diversion of management’s attention from other aspects of our business.

If we expand our business to produce our own products, we cannot assure you that we will be able to produce our products in a profitable manner or at all. If we add production capabilities and any of the risks above are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected.

Our business is dependent upon our ability to obtain financing. If we do not obtain such financing, we may have to cease our activities and investors could lose their entire investment.

There is no assurance that we will operate profitably or generate positive cash flows in the future. We will require additional financing in order to sell our current products and to continue the research and development required to produce our next generation of products. We anticipate that we will need approximately $5 million during the next 12 months to sustain our business operations, including our research and development activities. We may not be able to obtain financing on commercially reasonable terms or at all. If we do not obtain such financing, our business could fail and investors could lose their entire investment.

In conjunction with an award we received through the State of Texas, we have granted the Office of the Governor, Economic Development and Tourism (“OOGEDT”), a security interest in all of our assets. If we breach the award agreement and do not repay the award funds, the OOGEDT will be entitled to exercise its right to foreclose on our assets. If that were to happen, your investment would become worthless.

On October 1, 2010, we received a Texas Emerging Technology Fund Award in the amount of $1 million through the Office of the Governor, Economic Development and Tourism (“OOGEDT”). If we are in breach of the terms of the award because, for example, we move our operations to a jurisdiction other than Texas, we fail to continue our business, or because the Office of the Governor finds that we made false or misleading statements to the OOGEDT to induce that office to make the award, the OOGEDT may demand repayment of the award funds that have been disbursed, which currently total $1,152,690 as of March 31, 2013. The OOGEDT has taken a security interest in our assets to secure the repayment of the funds in the event that we breach the terms of the award. If we breach the terms of the award and fail to repay the award funds, the OOGEDT would be entitled to exercise its right to foreclose on our assets. If that were to happen, your investment would become worthless.

The economic downturn in the United States has adversely affected, and is likely to continue affecting, our ability to raise capital, which may potentially impact our ability to continue our operations.

As a company that is still in the process of developing its technology, we must rely on raising funds from investors to support our research and development activities and our operations. The economic downturn in the United States has resulted in a tightening of the credit markets, which has made it more difficult to raise capital. If we are unable to raise funds as and when we need them, we may be forced to curtail our operations or even cease operating altogether.

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We are subject to credit risks.

Some of our customers may experience financial difficulties and/or may fail to meet their financial obligations to us. As a result, we may incur charges for bad debt provisions related to some trade receivables. In certain cases where our end customers utilize contract manufacturers or distributors, our accounts receivable risk may lie with the contract manufacturer or distributor and may not be guaranteed by the end customer. In addition, in connection with the growth of the renewable energy market, we are gaining a substantial number of new customers, some of which have relatively short histories of operations or are newly formed companies. As a result, it is difficult to ascertain financial information in order to appropriately extend credit to these customers. Further, the volatility in the renewable energy market may put additional pressure on our customers’ financial positions, as they may be required to respond to large swings in revenue. The renewable energy industry has also seen an increasing amount of bankruptcies and reorganizations as the availability of financing has diminished.

If customers fail to meet their financial obligations to us, or if the assumptions underlying our recorded bad debt provisions with respect to receivables obligations do not accurately reflect our customers’ financial conditions and payment levels, we could incur write-offs of receivables in excess of our provisions, which could have a material adverse effect on our cash flow and operating results.

We may not be able to control our warranty exposure, which could increase our expenses.

We currently offer and expect to continue to offer a warranty with respect to our power converters and we expect to offer a warranty with each of our future product applications. If the cost of warranty claims exceeds any reserves we may establish for such claims, our results of operations and financial condition could be adversely affected.

We may be exposed to lawsuits and other claims if our products malfunction, which could increase our expenses, harm our reputation and prevent us from growing our business.

Any liability for damages resulting from malfunctions of our products could be substantial, increase our expenses and prevent us from growing or continuing our business. Potential customers may rely on our products for critical needs, such as backup power. A malfunction of our products could result in warranty claims or other product liability. In addition, a well-publicized actual or perceived problem could adversely affect the market’s perception of our products. This could result in a decline in demand for our products, which would reduce revenue and harm our business. Further, since our products are used in devices that are made by other manufacturers, we may be subject to product liability claims even if our products do not malfunction.

We are highly dependent on certain key members of our executive management team. Our inability to retain these individuals could impede our business plan and growth strategies, which could have a negative impact on our business and the value of your investment.

Our ability to implement our business plan depends, to a critical extent, on the continued efforts and services of Paul Bundschuh (Chief Executive Officer) and William Alexander (Chief Technology Officer). If we lose the services of either of these persons, we would likely be forced to expend significant time and money in the pursuit of replacements, which may result in a delay in the implementation of our business plan and plan of operations. We can give no assurance that we could find satisfactory replacements for these individuals on terms that would not be unduly expensive or burdensome to us. We do not currently carry a key-man life insurance policy that would assist us in recouping our costs in the event of the death or disability of either of these executives.

Any failure by management to properly manage our expected rapid growth could have a material adverse effect on our business, operating results and financial condition.

If our business develops as expected, we anticipate that we will grow rapidly in the near future. Our failure to properly manage our expected rapid growth could have a material adverse effect on our ability to retain key personnel. Our expansion could also place significant demands on our management, operations, systems, accounting, internal controls and financial resources. If we experience difficulties in any of these areas, we may not be able to expand our business successfully or effectively manage our growth. Any failure by management to manage growth and to respond to changes in our business could have a material adverse effect on our business, financial condition and results of operations.

-13-

Risks Relating to the Industry

Our industry is intensely competitive. We cannot guarantee you that we can compete successfully.

Our business is highly competitive. We will be competing against providers of power converter systems that are highly established and have substantially greater manufacturing, marketing, management and financial resources including very substantial market position and name recognition. The competitors for our PV inverter products include ABB, Advanced Energy, Satcon, SMA and Chint Solar. All aspects of our business, including pricing, financing and servicing, as well as the general quality, efficiency and reliability of our products, are significant competitive factors. Our ability to successfully compete with respect to each of these factors is material to the acceptance of our products and our future profitability. In addition, the solar power industry may tend to be resistant to change and to new products from suppliers that are not major names in the field. Our competitors will use their established position to their competitive advantage. If our innovations are successful, our competitors may seek to adopt and copy our ideas, designs and features. Our competitors may develop or offer technologies and products that may be more effective or popular than our products and they may be more successful in marketing their products than we are in marketing ours. Pricing competition could result in lower margins for our products.

We expect to compete on the basis of our products’ significantly lower cost, smaller footprint, and higher efficiency. Technological advances in alternative energy products or other power converter technologies may negatively affect the development of our products or make our products non-competitive or obsolete prior to commercialization or afterwards.

We cannot assure you that we will be able to compete successfully in our markets, or compete effectively against current and new competitors as our industry continues to evolve.

The reduction or elimination of government subsidies and economic incentives for energy-related technologies could harm our business.

We believe that near-term growth of energy-related technologies, including power converter technology, relies on the availability and size of government and economic incentives and grants (including, but not limited to, the U.S. federal Investment Tax Credit and various state and local incentive programs). These incentive programs could be challenged by utility companies, or for other reasons found to be unconstitutional, and/or could be reduced or discontinued for other reasons. The reduction, elimination, or expiration of government subsidies and economic incentives could delay the development of our technology and harm our business.

Changes to the National Electrical Codes could adversely affect our technology and products.

Our products are installed by system integrators that must meet National Electrical Codes, including using equipment that meets industry standards such as UL1741. The NEC standards address the safety of these systems. The NEC standards, as well as the UL1741 and IEEE1547 requirements continue to evolve and are subject to change. If we respond to these changing standards and requirements more slowly than our competitors or if we are unable to meet new standards and requirements, our products will be less competitive.

New technologies in the alternative energy industry may supplant solar PV inverter devices, including our current products for which we have patents and pending patent applications, which would harm our business and operations.

The alternative energy industry is subject to rapid technological change. Our future success will depend on the cutting edge relevance of our technology, and thereafter on our ability to appropriately respond to changing technologies and changes in function of products and quality. If new technologies supplant our power converter technology, our business would be adversely affected and we will have to revise our plan of operation.

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Businesses, consumers, and utilities might not adopt alternative energy solutions as a means for providing or obtaining their electricity and power needs.

On-site distributed power generation solutions that utilize our inverter products (such as photovoltaic systems), provide an alternative means for obtaining electricity and are relatively new methods of obtaining electrical power. There is a risk that businesses, consumers, and utilities may not adopt these new methods at levels sufficient to grow our business. Traditional electricity distribution is based on the regulated industry model whereby businesses and consumers obtain their electricity from a government regulated utility. For alternative methods of distributed power to succeed, businesses, consumers and utilities must adopt new purchasing practices and must be willing to rely upon less traditional means of providing and purchasing electricity. As larger solar projects come online, utilities are becoming increasingly concerned with grid stability, power management and the predictable loading of such power onto the grid.

We cannot be certain that businesses, consumers, and utilities will choose to utilize on-site distributed power at levels sufficient to sustain our business. The development of a mass market for our products may be impacted by many factors which are out of our control, including:

· market acceptance of photovoltaic systems that incorporate our products;

· the cost competitiveness of these systems;

· regulatory requirements; and

· the emergence of newer, more competitive technologies and products.

If a mass market fails to develop or develops more slowly than we anticipate, we may be unable to recover the costs we will have incurred to develop these products.

The industries in which we compete are subject to volatile and unpredictable cycles.

As a supplier to the solar, grid storage, electrified vehicle charging infrastructure, wind, electric motor and related industries, we are subject to business cycles, the timing, length, and volatility of which can be difficult to predict. These industries historically have been cyclical due to sudden changes in customers’ manufacturing capacity requirements and spending, which depend in part on capacity utilization, demand for customers’ products, inventory levels relative to demand, and access to affordable capital. These changes have affected the timing and amounts of customers’ purchases and investments in technology, and affect our orders, net sales, operating expenses, and net income. In addition, we may not be able to respond adequately or quickly to the declines in demand by reducing our costs. We may be required to record significant reserves for excess and obsolete inventory as demand for our products changes.

To meet rapidly changing demand in each of the industries we serve, we must effectively manage our resources and production capacity. During periods of decreasing demand for our products, we must be able to appropriately align our cost structure with prevailing market conditions, effectively manage our supply chain, and motivate and retain key employees. During periods of increasing demand, we must have sufficient manufacturing capacity and inventory to fulfill customer orders, effectively manage our supply chain, and attract, retain, and motivate a sufficient number of qualified individuals. If we are not able to timely and appropriately adapt to changes in our business environment or to accurately assess where we are positioned within a business cycle, our business, financial condition, or results of operations may be materially and adversely affected.

Risks Related to this Offering and Owning Our Common Stock

Prior to the completion of our initial public offering, there was no public trading market for our common stock.

The offering under this prospectus is an initial public offering of our securities. Prior to the closing of the offering, there will have been no public market for our common stock. While we plan to list our common stock on the Nasdaq Capital Market, we cannot assure you that our listing application will be approved, and that a public market for our common stock will develop. If our Nasdaq listing application is not approved, we will not complete the offering.

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We are an "emerging growth company" under the JOBS Act of 2012 and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. At present, we do not intend to take advantage of these exemptions, other than as they apply to all other “smaller reporting companies,” though we may do so at some point in the future. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

We will remain an “emerging growth company” for up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30.

Our status as an “emerging growth company” under the JOBS Act of 2012 may make it more difficult to raise capital as and when we need it.

Because of the exemptions from various reporting requirements provided to us as an “emerging growth company,” we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our reporting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.

If a public market for our common stock develops, it may be volatile. This may affect the ability of our investors to sell their shares as well as the price at which they sell their shares.

If a market for our common stock develops, the market price for the shares may be significantly affected by factors such as variations in quarterly and yearly operating results, general trends in the alternative energy industry, and changes in state or federal regulations affecting us and our industry. Furthermore, in recent years the stock market has experienced extreme price and volume fluctuations that are unrelated or disproportionate to the operating performance of the affected companies. Such broad market fluctuations may adversely affect the market price of our common stock, if a market for it develops.

Conversion of the Convertible Notes together with the exercise of outstanding warrants will result in substantial dilution to the investors in this offering.

Prior to the completion of this offering, we will have outstanding approximately $6.1 million in Convertible Notes with interest accrued, for the purpose of this discussion, through March 31, 2013. The Convertible Notes will be paid with 1,682,606 shares of our common stock. An additional 1,519,095 shares of our common stock may be purchased through the exercise of warrants and a right to purchase issued to the Office of the Governor, Economic Development and Tourism, in conjunction with the award we received from the Texas Emerging Technology Fund. Conversion of the notes and, if it occurs, exercise of all of the warrants, will result in substantial dilution to the investors in this offering.

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We are required to register the shares of common stock underlying our senior secured convertible promissory notes and the warrants that were issued with them. The sale of these shares could cause the market price of our common stock to decline.

We have granted registration rights to the holders of our senior secured convertible promissory notes. Registration of the 1,370,267 shares of common stock underlying our senior secured convertible promissory notes and the 791,080 shares of common stock underlying the warrants issued with them could have the effect of driving down the price of our common stock in the market.

We have the right to issue shares of preferred stock. If we were to issue preferred stock, it is likely to have rights, preferences and privileges that may adversely affect the common stock.

We are authorized to issue 10,000,000 shares of “blank check” preferred stock, with such rights, preferences and privileges as may be determined from time-to-time by our board of directors. Our board of directors is empowered, without stockholder approval, to issue preferred stock in one or more series, and to fix for any series the dividend rights, dissolution or liquidation preferences, redemption prices, conversion rights, voting rights, and other rights, preferences and privileges for the preferred stock. No shares of preferred stock are presently issued and outstanding and we have no immediate plans to issue shares of preferred stock. The issuance of shares of preferred stock, depending on the rights, preferences and privileges attributable to the preferred stock, could adversely reduce the voting rights and powers of the common stock and the portion of the Company’s assets allocated for distribution to common stockholders in a liquidation event, and could also result in dilution in the book value per share of the common stock we are offering. The preferred stock could also be utilized, under certain circumstances, as a method for raising additional capital or discouraging, delaying or preventing a change in control of the Company, to the detriment of the investors in the common stock offered hereby. We cannot assure you that we will not, under certain circumstances, issue shares of our preferred stock.

We have not paid dividends in the past and have no immediate plans to pay dividends.

We plan to reinvest all of our earnings, to the extent we have earnings, in order to market our products and to cover operating costs and to otherwise become and remain competitive. We do not plan to pay any cash dividends with respect to our securities in the foreseeable future. We cannot assure you that we would, at any time, generate sufficient surplus cash that would be available for distribution to the holders of our common stock as a dividend. Therefore, you should not expect to receive cash dividends on the common stock we are offering.

Management of our Company is within the control of the board of directors and the officers. You should not purchase our common stock unless you are willing to entrust management of our Company to these individuals.

All decisions with respect to the management of the Company will be made by our board of directors and our officers, who, before this offering, beneficially own 56.8% of our common stock, as calculated in accordance with Rule 13d-3 promulgated under the Securities Exchange Act of 1934. After the issuance of our common stock in this offering and the conversion of the Convertible Notes, management will beneficially own 17.7% of our common stock, as calculated in accordance with Rule 13d-3. Holders of the common stock who purchase in this offering will not obtain majority control of the Company. Therefore, management will retain significant influence in electing a majority of the board of directors who shall, in turn, have the power to appoint the officers of the Company and to determine, in accordance with their fiduciary duties and the business judgment rule, the direction, objectives and policies of the Company including, without limitation, the purchase of businesses or assets; the sale of all or a substantial portion of the assets of the Company; the merger or consolidation of the Company with another corporation; raising additional capital through financing and/or equity sources; the retention of cash reserves for future product development, expansion of our business and/or acquisitions; the filing of registration statements with the Securities and Exchange Commission for offerings of our capital stock; and transactions that may cause or prevent a change in control of the Company or its winding up and dissolution. Accordingly, no investor should purchase the common stock we are offering unless such investor is willing to entrust all aspects of the management of the Company to such individuals.

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We have options for the purchase of 510,378 shares of our common stock outstanding and we may issue additional options in the future to employees, officers, directors, independent contractors and agents. Sales of the underlying shares of common stock could adversely affect the market price of our common stock.

We currently have outstanding options for the purchase of 510,378 shares of common stock. Of this amount, options for the purchase of 207,604 shares are held by non-affiliates. Once our common stock is publicly traded, non-affiliate holders may sell these shares in the public markets from time to time, without limitations on the timing, amount or method of sale. If our stock price rises, the holders may exercise their options and sell a large number of shares. This could cause the market price of our common stock to decline.

We will incur significant increased costs as a result of becoming a public company that reports to the Securities and Exchange Commission and our management will be required to devote substantial time to meet compliance obligations.

As a public company reporting to the Securities and Exchange Commission, we will incur significant legal, accounting and other expenses that we did not incur as a private company. We will be subject to reporting requirements of the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the Securities and Exchange Commission that impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. In addition, on July 21, 2010, the Dodd-Frank Wall Street Reform and Protection Act was enacted. There are significant corporate governance and executive compensation-related provisions in the Dodd-Frank Act that are expected to increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and may also place undue strain on our personnel, systems and resources. Our management and other personnel will need to devote a substantial amount of time to these new compliance initiatives. In addition, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified people to serve on our board of directors, our board committees or as executive officers.

Failure to build our finance infrastructure and improve our accounting systems and controls could impair our ability to comply with the financial reporting and internal controls requirements for publicly traded companies.

As a public company, we will operate in an increasingly demanding regulatory environment, which requires us to comply with applicable provisions of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act, and the related rules and regulations of the Securities and Exchange Commission, expanded disclosure requirements, accelerated reporting requirements and more complex accounting rules. Company responsibilities required by the Sarbanes-Oxley Act include establishing corporate oversight and adequate internal control over financial reporting and disclosure controls and procedures. Effective internal controls are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. We will need to hire or outsource additional finance personnel and build our financial infrastructure as we transition to operating as a public company, including complying with the applicable requirements of Section 404 of the Sarbanes-Oxley Act. We may be unable to do so on a timely basis. Until we are able to expand our finance and administrative capabilities and establish necessary financial reporting infrastructure, we may not be able to prepare and disclose, in a timely manner, our financial statements and other required disclosures or comply with the applicable provisions of the Sarbanes-Oxley Act or existing or new reporting requirements. If we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed and investors could lose confidence in our reported financial information.

Assuming a market for our common stock develops, shares eligible for future sale may adversely affect the market for our common stock.

To date we have issued approximately $5.9 million in principal amount of convertible promissory notes and we expect to issue an additional $213,394 in convertible notes to our legal counsel for services. If we raise gross proceeds of at least $10 million in this offering, the convertible promissory notes and those expected additional convertible notes will be converted into shares of our common stock either at the price per share in this offering or at a discount to the price per share in this offering. We do not plan to consummate this offering unless we raise at least $10 million. Therefore, assuming an offering price of $5.00 per share, the principal and interest accrued through March 31, 2013 under the promissory notes will be converted into 1,621,249 shares of our common stock and the expected additional convertible notes will convert into an additional 61,357 shares of common stock upon the consummation of this offering. We have also issued warrants for the purchase of 1,519,095 shares of our common stock. We have agreed to register for resale 1,370,267 shares of common stock together with 791,080 shares of common stock underlying the warrants issued in conjunction with our senior secured convertible promissory notes.

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Furthermore, from time to time after we become subject to the reporting requirements of section 13 or section 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) for at least 90 days, certain of our stockholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject to certain limitations. In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information requirement (which disappears after one year). Of the 1,480,262 shares of our common stock outstanding as of June 30, 2013, approximately 509,094 shares are held by “non-affiliates” and will be freely tradable without restriction pursuant to Rule 144, although 217,471 shares of common stock held by non-affiliates will be subject to a one year lock-up that will end on the first anniversary of the execution of the underwriting agreement entered into in connection with this offering.

Any substantial sale of our common stock pursuant to Rule 144 or pursuant to any resale prospectus (including sales by investors of securities acquired in connection with this offering) may have a material adverse effect on the market price of our common stock.

We may allocate the net proceeds from this offering in ways that differ from the estimates discussed in the section titled "Use of Proceeds" and with which you may not agree.

The allocation of net proceeds of the offering set forth in the “Use of Proceeds” section below represents our estimates based upon our current plans and assumptions regarding industry and general economic conditions, and our future revenues and expenditures. The amounts and timing of our actual expenditures will depend on numerous factors, including market conditions, cash generated by our operations, business developments and related rate of growth. We may find it necessary or advisable to use portions of the proceeds from this offering for other purposes. Circumstances that may give rise to a change in the use of proceeds and the alternate purposes for which the proceeds may be used are discussed in the section entitled “Use of Proceeds” below. You may not have an opportunity to evaluate the economic, financial or other information on which we base our decisions on how to use our proceeds. As a result, you and other stockholders may not agree with our decisions. See “Use of Proceeds” for additional information.

You will experience immediate dilution in the book value per share of the common stock you purchase.

Because the price per share of our common stock being offered is substantially higher than the book value per share of our common stock, you will experience substantial dilution in the net tangible book value of the common stock you purchase in this offering. Based on an assumed offering price of $5.00 per share, if you purchase shares of common stock in this offering, you will experience immediate and substantial dilution of $2.92 per share in the net tangible book value of the common stock at March 31, 2013. See the section titled “Dilution” below for a more detailed discussion of the dilution you will incur if you purchase common stock in this offering.

Our charter documents and Delaware law may inhibit a takeover that stockholders consider favorable.

Upon the closing of this offering, provisions of our Certificate of Incorporation (“Certificate”) and bylaws and applicable provisions of Delaware law may delay or discourage transactions involving an actual or potential change in control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. The provisions in our Certificate and bylaws:

· authorize our board of directors to issue preferred stock without stockholder approval and to designate the rights, preferences and privileges of each class; if issued, such preferred stock would increase the number of outstanding shares of our capital stock and could include terms that may deter an acquisition of us;

· limit who may call stockholder meetings;

· do not permit stockholders to act by written consent;

· do not provide for cumulative voting rights; and

· provide that all vacancies may be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum.

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In addition, once we become a publicly traded corporation, Section 203 of the Delaware General Corporation Law may limit our ability to engage in any business combination with a person who beneficially owns 15% or more of our outstanding voting stock unless certain conditions are satisfied. This restriction lasts for a period of three years following the share acquisition. These provisions may have the effect of entrenching our management team and may deprive you of the opportunity to sell your shares to potential acquirers at a premium over prevailing prices. This potential inability to obtain a control premium could reduce the price of our common stock. See “Anti-Takeover Effects of Certain Provisions of Delaware Law and Our Charter Documents” for additional information.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION

CONTAINED IN THIS PROSPECTUS

This prospectus contains forward-looking statements. 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 prospectus. These statements may be found under the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” included in this prospectus, as well as in this prospectus generally. 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 limited cash and a history of losses;

● our ability to achieve profitability;

●

our limited operating history;

● ~~emerging~~the ~~competition~~size and ~~rapidly~~growth ~~advancing~~of markets for our technology;

● customer demand for the products and services we develop;

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

● 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;

●

our ability to continue as a going concern;

●

regulatory developments that may affect our business;

●

our ability to successfully develop new products and the expected performance of those products;

●

the performance of third-party consultants and service providers whom we have and will continue to rely on to assist us in development and commercialization of our B-TRAN® and related packaging and drive circuitry;

●

the rate and degree of market acceptance for our B-TRAN® and current and future B-TRAN® products;

●

the time required for third parties to redesign, test and certify their products incorporating our B-TRAN®;

●

our ability to successfully commercialize our B-TRAN® technology;

●

our ability to secure strategic partnerships with semiconductor fabricators and others related to our B-TRAN® technology;

●

our ability to obtain, maintain, defend and enforce intellectual property rights protecting our technology;

●

the success of our efforts to manage cash spending, particularly prior to the commercialization of our B-TRAN® technology at scale;

●

trade protectionism, tariffs, and other barriers to trade that impact the availability or cost of the raw materials and components used in our products;

●

general economic conditions and events, including inflation, and the impact they may have on us and our potential partners and licensees;

●

our dependence on the global supply chain and impacts of supply chain disruptions;

●

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

●

changes in management and the board of directors, and our reliance on key personnel;

●

the impact of global health pandemics on our business, financial condition and results of operations;

●

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

● other factors discussed in this prospectus, our Annual Report for the ~~“Risk~~year ~~Factors”~~ended ~~section~~December of31, ~~this~~2025, ~~prospectus~~filed with the SEC on March 27, 2026, which is incorporated by reference herein, and our other filings with the SEC.

The forward-looking statements are based upon management’s beliefs and assumptions and are made as of the date ~~of this prospectus~~made. We undertake no obligation to publicly update or revise any forward-looking statements included ~~in this prospectus~~ or toincorporated ~~update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise, except to the extent required~~ by ~~federal~~reference securities laws. Actual future results may vary materially as a result of various factors, including, without limitation, the risks outlined under the section entitled “Risk Factors” and matters described in this prospectus, ~~generally. In~~any ~~light~~applicable ofprospectus ~~these~~supplement ~~risks~~ and ~~uncertainties, we cannot assure you that~~ the ~~forward-looking~~documents ~~statements~~incorporated ~~contained~~by inreference ~~this~~herein ~~prospectus~~and ~~will in fact occur~~therein. You should not place undue reliance on these forward-looking statements.

~~-20-~~2

~~BUSINESS~~Table of Contents

~~Our~~PROSPECTUS ~~Company~~SUMMARY

WeThe ~~are~~following ~~leaders~~summary highlights information contained elsewhere in ~~the~~this ~~development~~prospectus ofand andoes ~~innovative~~not ~~electronic~~contain ~~power~~all ~~conversion~~of ~~technology~~the ~~called~~information ~~Power~~that ~~Packet~~you ~~Switching~~should ~~Architecture~~consider ~~(PPSA)~~in making your investment decision. ~~PPSA~~ isBefore ainvesting ~~radically~~in ~~new~~our ~~universal~~securities, ~~power~~you ~~conversion~~should ~~topology~~read ~~intended~~this toentire ~~improve~~prospectus ~~upon~~carefully, ~~current~~including ~~power~~the ~~conversion~~documents ~~technology~~incorporated inby ~~key~~reference ~~product~~herein ~~metrics~~and therein, ~~such~~including asthe ~~weight~~section entitled “Risk Factors” included elsewhere in this prospectus, ~~size~~the sections entitled “Risk Factors” Cautionary Note Regarding Forward-Looking Statements and Industry Data,” ~~cost~~and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes thereto, ~~efficiency~~which are incorporated by reference herein and ~~flexibility~~therein. ~~PPSA~~ ~~utilizes~~Some ~~standardized~~of ~~hardware~~the ~~with~~statements ~~customizable~~in ~~software~~this prospectus and in the documents incorporated by reference herein and therein constitute forward-looking statements. We ~~have~~See ~~already~~“Cautionary ~~placed~~Statement ~~significant~~Regarding ~~patent~~Forward-Looking ~~protections~~Statements.” onUnless ~~PPSA~~the context requires otherwise, the words “we,” “us,” “our,” and ~~are~~“Company” ~~continuing~~refer collectively to ~~build~~Ideal anPower ~~intellectual~~Inc., ~~property~~a ~~portfolio~~Delaware ~~around it~~corporation.

~~Electronic~~Company power converters change the form of electrical energy to optimize generation, distribution, consumption or storage. This conversion may include changing between direct circuit (DC) and alternative current (AC) forms of electricity or changing the voltage and current.Overview

~~The~~Ideal ~~change~~Power ~~in sources and uses of energy~~ is ~~driving~~located ~~a need for new energy infrastructure and technology. Renewables~~ in ~~particular are driving the need for significant change~~Austin, ~~for example, they create a need for power storage near the source of generation~~Texas. ~~Distributed~~ ~~power~~We conversion plays a central role in this new infrastructure. Renewables require distributed power conversion to allow battery charging and voltage conversion to match grid characteristics. Inverters are ~~used~~solely tofocused ~~convert~~on DCthe ~~power~~further ~~from~~development ~~renewable solar~~ and ~~wind~~commercialization ~~generators~~of toour ACBidirectional ~~power. Bi-directional~~bipolar ~~inverters/chargers~~junction ~~are~~TRANsistor ~~needed for large~~(“B-~~scale~~TRAN®”) ~~battery storage and fast electrified vehicle charging. Distributed power conversion can also improve grid reliability and create remote micro~~solid-~~grids~~state toswitch ~~bring distributed power systems to remote communities without power grids~~technology. In short, power converters play a crucial role in ensuring the most efficient form of power is available across the electricity spectrum from generation through distribution to storage and ultimately consumption.

InWe ~~the marketplace, there~~ are ~~currently~~in ~~two~~the ~~main~~process ~~varieties~~ of ~~large-scale~~commercializing ~~inverters: traditional~~our ~~inverters and transformer~~B-~~less~~TRAN® ~~inverters. Traditional~~technology ~~inverters~~and ~~rely~~have onlaunched ~~transformers,~~our ~~which~~first ~~are~~two ~~big~~commercial ~~and heavy. Thus~~products, ~~inverters~~the ~~with~~discrete ~~transformers~~B-TRAN® ~~are~~and ~~costly~~the toSymCool® ~~ship,~~Power ~~install and manufacture~~Module.

~~Alternatively,~~Recent transformer-less inverters are lighter, smaller and more efficient than transformer-based inverters. The main problem with transformer-less inverters is that they do not provide electrical isolation. This means the system cannot be grounded, which creates additional safety concerns compared with non-grounded systems such as typical PV arrays. The US National Electrical Code prohibited the use of non-grounded systems until 2005, and still imposes stringent regulation for systems with transformer-less inverters. These regulations may require installers to use double jacketed PV wire, overcurrent protection, and disconnect devices on both the positive and negative conductors. These additional requirements raise the system cost.Developments

~~PPSA~~Product enables a size and weight profile even smaller than a transformer-less inverter while simultaneously providing isolation. Consequently, PPSA has the potential to impact several fast-growing markets.Launches

~~Though~~Our wefirst ~~intend~~commercial toproduct ~~ultimately~~launch ~~generate~~was ~~revenues primarily by licensing our technology to partners, we have begun by developing and selling our reference products to demonstrate~~ the ~~capabilities~~discrete ~~of our technology to these future partners~~B-TRAN®. ~~Our~~ ~~primary~~This ~~business~~single ~~strategy~~B-TRAN® isdie ~~(1)~~packaged ~~to search~~ for ~~and~~electrical ~~evaluate~~connection ~~licensing~~is ~~and~~designed ~~partnership agreements with key players in the verticals for which we have developed PPSA reference products; (2)~~ to ~~develop~~meet ~~new PPSA reference products that extend our capabilities and address additional market sectors; and (3) to further develop~~ the ~~PPSA~~very ~~technology~~low ~~platform. Our~~conduction ~~first~~loss ~~efforts~~needs ~~are~~of ~~focused on~~ the ~~photovoltaic~~solid-state ~~(PV)~~circuit ~~inverter,~~protection ~~distributed storage~~ and ~~electrified~~electric vehicle DC(“EV”) ~~charging~~contactor markets. ~~We have completed reference products for the PV inverter and distributed storage markets, and are working to develop one for the electrified vehicle DC charging market.~~

WeOur ~~believe~~second ~~our~~commercial ~~reference~~ product ~~for~~launch ~~the~~was ~~PV inverter market is~~ the ~~only~~SymCool® ~~technology~~Power ~~capable~~Module. ofThis ~~offering~~multi-die ~~a transformer~~B-~~less~~TRAN® ~~inverter~~module ~~with~~is ~~isolation.~~also Wedesigned ~~have~~to ~~also~~meet ~~developed~~the avery ~~bi-directional~~low ~~battery~~conduction ~~converter~~loss ~~reference~~needs ~~product~~of ~~ideal~~the ~~for~~solid-state ~~several~~circuit ~~emerging~~protection ~~grid~~and ~~storage~~EV ~~solutions~~contactor markets.

WeUpon ~~are~~product ~~also~~launch, ~~evaluating~~we ~~related~~design ~~market~~and ~~applications~~build initial prototypes for ~~PPSA~~testing and to solicit customer feedback. We ~~believe~~Based on the ~~combination~~results of ~~our~~testing ~~technological~~and ~~leadership~~customer ~~and~~feedback, ~~intellectual~~we ~~property~~incorporate ~~position~~any ~~enables~~necessary uschanges into the product design, build final prototypes and complete additional testing prior to ~~partner~~full ~~with~~commercial ~~key~~release. ~~players~~To indate, our ~~target~~customers ~~markets~~have ~~and~~purchased ~~share~~prototypes in ~~the~~small ~~economic~~quantities ~~benefits~~for evaluation and provided us feedback that has been incorporated into our ~~technology~~final ~~can~~product ~~unlock~~designs. We ~~also~~expect ~~believe~~significantly ~~that~~higher ~~our~~volume ~~unique~~orders ~~technology~~from ~~will~~customers ~~allow~~once uswe secure a design win from them, and they start to ~~deliver~~build ~~high~~inventory ~~value~~in ~~solutions~~advance of launching their OEM products. For the products described above, we would expect the time from announcing a design win to ~~new~~the ~~high-growth~~sale ~~emerging~~of ~~markets~~the ~~before~~related ~~competitors~~OEM product to be roughly twelve to eighteen months, ~~enabling~~although it may vary considerably depending on the customer and application. We would expect a significantly longer design cycle for automotive applications. Design wins are expected to result in significant revenue growth for us over time as product life cycles tend to ~~capture~~be ~~early~~relatively ~~market~~long ~~leadership~~for inpower ~~these~~electronics ~~markets~~products as changing to another technology would require an OEM to redesign their product.

~~-21-~~Development Agreement

~~Our~~In ~~Technology~~2022, we announced, and began the first phase of, a product development agreement with Stellantis, a top 10 global automaker, for a custom B-TRAN® power module for use in the automaker’s EV drivetrain inverters in its next generation EV platform. In the first phase of the program, we provided packaged B-TRAN® devices, test kits and technical data to Stellantis for their evaluation. In 2023, we secured, and began the second phase of, this program. In the second phase of the program, we collaborated with Stellantis and the program partners, including both the program’s packaging company and the organization building the initial drivetrain inverter, to supply B-TRAN® devices for integration into the custom power module and inverter designs. Also, as part of the second phase of the program, we provided Stellantis a comprehensive test plan for the testing required to achieve certification to automotive standards for B-TRAN®. The test plan was subsequently approved as submitted. In 2024, we successfully completed the second phase of the program. In August 2025, we secured an order from Stellantis for custom development and packaged devices targeting multiple EV applications. We completed the first of five deliverables under this purchase order in 2025. Also in 2025, Stellantis informed us that they are prioritizing the EV contactor application over the drivetrain inverter application. We are currently working to complete the remaining deliverables under the 2025 purchase order and are engaged with Stellantis on a potential EV contactor program.

In our PPSA topology, power flows through and is temporarily stored in an AC link magnetic storage component. This power packet switching is the heart of our technology. After the AC link is charged, it is disconnected from both input and output, providing isolation without a transformer.3

~~Figure~~Table ~~1: Schematic~~ of ~~PPSA Process~~Contents

~~Traditional~~Customer inverter technology uses several magnetic components and capacitors that are heavy and expensive, have custom hardware for fixed functions that are inflexible and costly, and have high electrical and thermal stresses that significantly increase failure rates and reduce efficiency. Our technology eliminates the majority of the passive components of traditional power converters, including transformers, inductors and capacitors. PPSA technology can provide isolated power conversion in a single device, which provides clear advantages over traditional topologies. Among them are:Engagements

~~· Weight:~~We ~~PPSA~~have ~~architecture~~announced ~~reduces~~several ~~weight~~engagements byand/or ~~eliminating~~initial ~~passive~~orders ~~components~~with ~~such~~large ~~as transformers~~companies, ~~inductors~~including Stellantis and ~~bulk~~other ~~capacitors.~~global ~~Our~~automakers, ~~30kW~~Forbes PVGlobal 500 diverse power management market leaders, global tier 1 automotive suppliers, circuit protection market leaders, inverter ~~weighs~~/ 97energy ~~pounds~~storage market leaders and others. By ~~contrast~~These companies intend to test and evaluate, ~~competing~~or ~~30kW~~are PValready ~~inverters~~in ~~with~~the ~~transformers~~process ~~weigh~~of ~~approximately~~testing 1and evaluating,~~200~~ ~~pounds~~our technology for use in their applications. These engagements could lead to future design wins or custom development agreements. We also announced agreements with multiple distribution partners. We may add other distribution partners in the future. Recently, we signed a letter of intent with a power module maker in Asia to manufacture and ~~transformer~~offer B-~~less~~TRAN®-based ~~inverters~~power ~~(which~~modules dofor ~~not~~sales ~~provide~~to ~~isolation)~~their ~~weigh~~customers. ~~around~~We ~~170~~may ~~pounds~~engage with other power module manufacturers or others in the power semiconductor ecosystem in the future to further expand the channels to market for products incorporating our technology.

~~Figure~~First ~~2: PPSA~~Design ~~Weight Comparison~~Win

~~· Cost:~~In ~~Reduced~~late ~~weight~~2024, ~~results~~we announced our first design win for solid-state circuit breakers (“SSCBs”) with one of the largest circuit protection equipment manufacturers in ~~lower~~Asia ~~manufacturing~~serving ~~costs~~the data center, renewable energy, energy storage, EV and other industrial markets. ~~PPSA~~ ~~technology~~In ~~uses~~connection ~~off~~with this design win, we entered into a joint development agreement for a SSCB product incorporating multiple B-TRAN® devices. The agreement included the~~-shelf~~ ~~components~~product design, prototype builds and ~~standard~~testing ~~materials~~of the SSCB. We completed our deliverables, including SSCB prototypes, under this agreement in the first quarter of 2025. In ~~addition~~the third quarter of 2025, ~~lighter~~the ~~weight~~customer ~~components~~successfully ~~save~~completed their testing of updated SSCB prototypes that included enhancements requested by the customer. The customer plans on gathering feedback on this new product from their end customers onahead ~~transportation~~of product launch. In February 2026, we entered into a multi-year strategic cooperation agreement with this customer for the design, development and ~~installation~~worldwide ~~costs~~sales of circuit protection solutions including SSCBs, battery disconnect units and EV contactors featuring B-TRAN®. We expect to announce additional design wins and/or custom development agreements with this customer and/or other customers in 2026.

~~· Safety:~~Intellectual Since PPSA provides isolation, it allows the systems in which it is used to be grounded. Non-grounded systems require additional safeguards to pass U.S. safety regulations, which increase system cost and reduce efficiency. Property

We rely on a combination of patents, trade secrets, laws that protect intellectual property, confidentiality procedures and contractual restrictions with our employees and others to establish and protect our intellectual property rights. Our first B-22TRAN® patent was issued in 2015 and our patents generally have a 20-year life from the date of initial filing prior to expiration. We expect to continue to build our patent estate for our B-TRAN® technology and other technological developments that broaden the scope of our technology platform. In addition, we treat the proprietary dual-sided wafer fabrication process we developed to produce B-TRAN® wafers as a trade secret. As of February 28, 2026, we had 52 U.S. and 48 foreign issued patents as well as 82 additional pending U.S. and international patent applications on our B-TRAN® technology.

~~· Efficiency:~~Public InOffering ~~the~~and ~~California~~Concurrent ~~Energy~~Private Commission (CEC) weighted efficiency test, our 30kW PV inverter efficiency is 96.5% as measured by Intertek, a leading Nationally Recognized Testing Laboratory (NRTL). This is one of the highest PV inverter efficiencies shown on the CEC website for approved PV inverters. In addition, our battery converter has achieved efficiencies of over 96%, which is superior to industry-standard.Placement

~~Figure~~On February 23, 2026, we entered into an underwriting agreement (the “Underwriting Agreement”) with Titan Partners Group LLC, a division of American Capital Partners, LLC, as representative of the underwriters named therein (the “Underwriter”), relating to the underwritten public offering of 3~~: PPSA~~,505,855 ~~Efficiency~~shares ~~Comparison~~of the Common Stock, and Pre-Funded Warrants to purchase up to 952,881 shares of Common Stock (the “Public Offering”). The Pre-Funded Warrants have an exercise price of $0.001 per share and expire when they are exercised in full. The gross proceeds to the Company from the Public Offering were approximately $12.3 million.

~~· Scalability/Flexibility:~~On ~~PPSA~~February ~~technology~~23, ~~uses~~2026, ~~standardized~~we ~~hardware~~entered into a securities purchase agreement (the “Securities Purchase Agreement”) with ~~application~~the ~~specific~~Selling ~~software~~Securityholder, ~~thus~~pursuant ~~providing~~to ~~more~~which ~~scalability~~the ~~that~~Company weagreed ~~believe~~to ~~will~~issue ~~allow~~and ussell to the Selling Securityholder Pre-Funded Warrants to purchase 631,332 ~~and~~shares ~~our~~of ~~licensees~~Common Stock at an exercise price of $0.001 per share in a concurrent private placement (the “Concurrent Placement”). The Pre-Funded Warrants offered in the Concurrent Placement have substantially the same terms as the Pre-Funded Warrants offered in the Offering, except that the Pre-Funded Warrants in the Concurrent Placement and the shares of Common Stock issuable upon exercise of the Pre-Funded Warrants in the Concurrent Placement are not registered under the Securities Act and are offered pursuant to ~~rapidly~~an ~~develop~~exemption ~~products~~from ~~for~~the ~~new~~registration ~~applications. PPSA’s~~requirements ~~flexibility~~of ~~enables~~the ~~uses~~Securities ~~below~~Act 10provided kWin Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. The gross proceeds to ~~over~~the Company from the Concurrent Placement were approximately $1.7 MWmillion.

~~· Reliability:~~ The ~~end~~Offering ~~result~~and ofthe ~~our~~Concurrent ~~technology~~Placement isclosed aon ~~simplified~~February ~~product that eliminates several common of failure modes. Our products use no electrolytic capacitors. We believe that this design feature~~25, ~~together with our other design improvements, increases overall reliability~~2026.

WeCorporate are currently working on a next generation Bidirectional Insulated Gate Bipolar Transistor (BD-IGBT) with funds from a U.S. Department of Energy’s $2.5 million ARPA-E (Advanced Research Projects Agency-Energy) grant. If successful, we believe these new BD-IGBTs will further improve our key technology metrics. We have two leading research universities and commercial vendors working on this project under our direction.Information

~~Business~~We ~~Strategy~~were formed in Texas on May 17, 2007 and converted to a Delaware corporation on July 15, 2013. Our principal executive offices are located at 5508 Highway 290 West, Suite 120, Austin, Texas 78735 and our telephone number is (512) 264-1542. Our website address is www.idealpower.com. The foregoing website address is provided as an inactive textual reference only. The information provided on our website (or any other website referred to in this prospectus supplement or the accompanying prospectus) is not part of this this prospectus supplement or the accompanying prospectus and is not incorporated by reference as part of this prospectus supplement or the accompanying prospectus.

~~Our~~Implications ~~business strategy is to promote and expand the uses~~ of ~~our~~Being ~~PPSA~~a ~~platform~~Smaller ~~technology~~Reporting ~~through licensing and partnership agreements and to further develop our technology and its applications.~~Company

~~Licensing Approach:~~ We are ~~focused~~also ona ~~licensing~~“smaller ~~our~~reporting ~~proprietary~~company” ~~power~~as ~~conversion~~defined ~~PPSA~~in ~~technology~~Item ~~to Original Equipment Manufacturers~~ 10(~~OEMs~~f)~~. We~~(1) ~~will~~of ~~seek~~Regulation ~~license~~S-K, ~~fees~~ and ~~royalties~~have ~~from~~elected ~~OEMs~~to ~~based~~take onadvantage ~~the~~of ~~sales~~certain of ~~their~~the ~~products~~scaled ~~integrating~~disclosure ~~PPSA~~available ~~technology~~for smaller reporting companies. We ~~believe~~will ~~that~~remain ~~OEMs~~a ~~could~~smaller ~~achieve~~reporting ~~higher~~company ~~margins~~until bythe ~~providing~~end ~~unique~~of ~~products~~the ~~(based~~fiscal onyear ~~PPSA)~~in towhich ~~system~~(1) ~~integrators.~~we Wehave ~~are~~a ~~targeting~~public ~~leading~~common ~~OEMs~~equity infloat ~~the~~of PVmore ~~inverter~~than $250 million, ~~distributed~~or ~~storage~~(2) ~~converter,~~we ~~and~~have ~~electrified~~annual ~~vehicle~~revenues DCfor ~~charging~~the ~~markets~~most asrecently ~~potential~~completed ~~commercial~~fiscal ~~licensees~~year of ~~our~~more ~~PPSA~~than ~~technology. We~~$100 million ~~believe~~and ~~partnerships~~a ~~with~~public ~~key~~common ~~licensees~~equity ~~will~~float ~~enable~~or uspublic tofloat ~~reap the benefits~~ of ~~our~~more ~~technology much faster~~ than ~~by manufacturing, distributing or installing products ourselves~~$700 million. ~~This~~ ~~business~~We ~~model will~~ also ~~allow~~would usnot tobe ~~concentrate~~eligible ~~our~~for ~~efforts~~status ~~and~~as ~~resources~~a onsmaller ~~projects~~reporting ~~more~~company inif ~~line~~we ~~with~~become ~~our~~an ~~expertise.~~investment Ascompany, wean ~~develop~~asset-backed issuer ~~new~~or ~~applications~~a ~~for~~majority-owned subsidiary ~~our~~of ~~technology,~~a weparent ~~expect~~company tothat ~~target~~is ~~new~~not ~~partnerships~~a insmaller ~~different~~reporting ~~market sectors~~company.

~~Reference~~We ~~Products: Our~~have ~~reference~~elected ~~products~~to ~~demonstrate~~take ~~the~~advantage ~~advantages~~ of ~~our~~certain ~~technology~~of ~~for~~the ~~potential~~reduced ~~OEM~~disclosure ~~partners. As~~obligations ~~noted~~in ~~above,~~the weregistration ~~have~~statement ~~completed development~~ of ~~our~~which ~~first~~this ~~two~~prospectus ~~reference~~is ~~products,~~ a ~~30kW~~part ~~photovoltaic~~and ~~inverter~~may ~~(for~~elect ~~the~~to PVtake ~~market)~~advantage ~~and~~of aother ~~30kW~~reduced ~~battery~~reporting ~~converter~~requirements ~~(for~~in ~~the~~future ~~distributed~~filings. ~~storage~~As ~~market). At~~a ~~Intertek~~result, ~~these~~the ~~products~~information ~~have~~that ~~passed~~we ~~UL1741,~~provide ato ~~rigorous~~our ~~set~~stockholders ofmay ~~performance~~be ~~and~~different ~~safety~~from ~~tests~~what ~~required~~you ~~for~~might ~~connection~~receive tofrom ~~the~~other ~~power~~public ~~grid~~reporting companies in ~~the~~which ~~U.S.~~you ~~and~~hold ~~several~~equity ~~other countries~~interests.

~~-23-~~4

~~Our~~Table ~~next~~of planned reference product is a 30kW 3-port hybrid converter, intended for integrating PV, grid storage, and DC charging systems with greater energy and cost-efficiency than conventional solutions. After that, we intend to develop a 30kW micro-grid converter that will add new capabilities to support off grid and emergency back-up power applications.Contents

~~Figure~~The ~~4: Planned Product Pipeline~~Offering

We are focusing our future development efforts on our next-generation Bidirectional Insulated Gate Bipolar Transistor (BD-IGBT). Uni-directional IGBTs are widely used in power converters. Conventional power converters and IGBT power switches conduct and block current in a single direction. Currently, we successfully use these standard uni-directional IGBTs in our PPSA systems. Once we move to bi-directional switches that conduct and block current in both directions, however, we will be able reduce the number of components in our system, which will reduce material costs and improve efficiency even further. Our BD-IGBT development effort is being funded partially with funds from the U.S. Department of Energy’s $2.5 million ARPA-E (Advanced Research Projects Agency-Energy) grant. If successful, this project would enhance several key metrics of the PPSA platform.

Common Stock outstanding as of March 25, 2026:		12,089,389 shares.

Common Stock offered by the Selling Securityholder:		Consists of 631,332 shares issuable upon exercise of the Pre-Funded Warrants held by the Selling Securityholder.

Common Stock to be outstanding after giving effect to the issuance of the Common Shares this offering:		12,089,389 shares, assuming no exercise of the Pre-Funded Warrants.

Use of proceeds:		The Selling Securityholder will receive all of the proceeds of the sale of shares issuable upon exercise of the Pre-Funded Warrants offered from time to time pursuant to this prospectus. Accordingly, we will not receive any proceeds from the sale of shares issuable upon exercise of the Pre-Funded Warrants. See the section herein titled “Use of Proceeds.”

Plan of Distribution		The Selling Securityholder may sell all or a portion of the shares of Common Stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. Registration of the Common Stock covered by this prospectus does not mean, however, that such shares necessarily will be offered or sold. See “Plan of Distribution.

Risk factors:		See the section titled “Risk Factors” and other information included in this prospectus, and incorporated by reference herein, for a discussion of factors you should consider carefully before deciding to invest in our Common Stock.

Trading market and symbol:		Our Common Stock is currently listed on The Nasdaq Capital Market under the symbol “IPWR”.

Transfer agent:		The transfer agent and registrar for our Common Stock is EQ Shareowner Services.

~~Figure~~ 5~~: Incremental Benefits of BD-IGBT Implementation~~

*ExpectedTable ~~date~~of ~~for BG-IGBT to be developed.~~Contents

WeRISK ~~intend to pursue upgrades to the PPSA platform to continuously improve the value proposition of our technology.~~FACTORS

~~Intellectual~~An ~~Property: As~~investment ain ~~company~~our ~~primarily~~securities ~~focused~~involves onrisks. ~~licensing,~~You weshould ~~expect~~carefully ~~that~~consider ~~our~~the ~~most~~risks ~~valuable~~described ~~asset~~in ~~will~~the besections ~~our~~entitled ~~intellectual~~“Risk ~~property.~~Factors” ~~This~~in ~~includes~~any ~~U.S.~~prospectus supplement and ~~foreign~~those ~~patents~~set forth in documents incorporated by reference in this prospectus and any applicable prospectus supplement, ~~patent~~as ~~applications~~well as other information in this prospectus and ~~know-how.~~any Weapplicable ~~are~~prospectus ~~pursuing~~supplement, anbefore ~~aggressive~~purchasing ~~intellectual~~any ~~property~~of ~~strategy~~our securities. ~~Thus~~ ~~far~~Each weof ~~have~~the ~~identified~~risks ~~more~~described ~~than~~in 50these ~~specific~~sections ~~inventions~~and wedocuments ~~believe~~could tomaterially beand ~~novel~~adversely affect our business, financial condition, results of operations and ~~patentable. We~~prospects, ~~are~~and ~~pursuing~~could result in a ~~proven~~loss ~~ideation~~of ~~process~~your toinvestment. ~~enhance~~Additional risks and ~~continue~~uncertainties ~~these~~not ~~discoveries~~known to us or that we deem immaterial may also impair our business, financial condition, results of operations and prospects.

WeRisks ~~have~~Related ~~17 issued U.S. patents and 41 additional pending U.S. patents and provisional patent applications. We have 12 pending foreign patent applications which, barring unforeseen problems, are expected~~ to ~~provide~~this ~~patent~~Offering ~~protection in 45 additional countries including the European Union, China, India, Korea, Malaysia, the Philippines, Singapore~~ and ~~Brazil. We~~Ownership ~~expect to file a significant number~~ of ~~additional~~Our ~~patent~~Common ~~applications as our technology matures.~~ Stock

~~-24-~~We have broad discretion in the use of our existing cash and may not use it effectively.

Our ~~background~~management ~~research~~will ~~has~~have ~~not~~broad ~~identified~~discretion ~~any~~in ~~public~~the ~~information~~application of our existing cash, and you will be relying on the judgment of our management regarding such asapplication. ~~patents~~You orwill ~~published~~not ~~articles~~have the opportunity, ~~relating~~as part of your investment decision, to assess whether our ~~technology~~existing cash is being used appropriately. Our management might not apply our existing cash in ways that ~~would~~ultimately ~~affect~~increase the value of your investment. If we do not invest or apply our ~~freedom~~existing cash in ways that enhance stockholder value, we may fail to ~~operate~~achieve expected results, which could cause our stock price to decline.

WeInvestors ~~rely~~who onbuy ashares ~~combination~~at ofdifferent ~~patent~~times ~~filings,~~will ~~laws~~likely ~~that~~pay ~~protect~~different ~~intellectual property, confidentiality procedures, and contractual restrictions with our employees and others, to establish and protect our intellectual property rights~~prices. ~~In addition, the software that is shipped with our products is encrypted, which makes it very difficult for potential patent infringers to reverse-engineer our products.~~

~~Target~~Investors ~~Markets~~who purchase shares in this offering at different times will likely pay different prices, and so may experience different levels of dilution and different outcomes in their investment results. Similarly, the Selling Securityholder may sell such shares at different times and at different prices. Investors may experience a decline in the value of the shares they purchase from the Selling Securityholder in this offering as a result of sales made by us in future transactions to the Selling Securityholder at prices lower than the prices they paid. The Selling Securityholder will have discretion to vary the timing, prices, and number of shares sold in this offering. Investors may experience a decline in the value of their shares of our Common Stock. The trading price of our Common Stock has been volatile and subject to wide fluctuations.

WeThe ~~believe~~issuance ~~that~~of ~~our~~Common ~~PPSA~~Stock ~~technology~~to ~~has~~ the ~~potential~~Selling toSecurityholder ~~transform~~may ~~large~~cause ~~global~~substantial ~~markets~~dilution ~~that~~to ~~currently~~our ~~rely~~existing ~~upon~~stockholders ~~high-power~~and ~~electronic~~the ~~power~~sale ~~converters,~~of ~~including~~such ~~photovoltaic~~shares ~~inverters,~~acquired ~~electrified~~by ~~vehicle~~the ~~charging~~Selling ~~infrastructure,~~Securityholder ~~grid-storage~~could ~~battery~~cause ~~converters~~the ~~and~~price ~~micro-grids. Several~~ of ~~these~~our ~~are~~Common ~~already~~Stock ~~multi-billion dollar global markets and others are projected~~ to ~~grow at more than one hundred percent annually for the next several years~~decline. We ~~are~~In ~~carefully selecting which market segments to participate in based on time-to-market for our PPSA platform~~addition, ~~market size/growth rate, and~~ the ~~size~~future issuance of ~~the~~additional ~~customer~~equity ~~benefit~~securities ~~that~~may wecause ~~expect~~further ~~to deliver~~dilution. We ~~are currently targeting the following three market segments.~~

PVWe ~~Inverter~~are ~~Market~~registering for resale by the Selling Securityholder up to 631,332 shares of Common Stock issuable upon the exercise of Pre-Funded Warrants. The number of shares of our Common Stock ultimately offered for resale by the Selling Securityholder under this prospectus is dependent on the number of exercised Pre-Funded Warrants. Depending on a variety of factors, including market liquidity of our Common Stock, the issuance of shares to the Selling Securityholder may cause the trading price of our Common Stock to decline.

~~The~~In Uaddition, we have a significant number of stock options, restricted stock units and performance stock units outstanding.S. ~~Energy~~To ~~Information~~the ~~Administration~~extent ~~forecasts~~that ~~solar~~outstanding ~~capacity~~stock toawards ~~grow~~may bybe ~~more~~exercised, ~~than~~settled ~~1000%~~or ~~from~~converted ~~2011~~or toother ~~2040~~shares issued, ~~representing~~investors anpurchasing ~~increase~~our Common Stock in ~~power~~this ~~production~~offering ofmay ~~46GW~~experience further dilution. ~~Industry~~ ~~analysts~~See ~~estimated~~“-Shares ~~the~~eligible ~~global~~for PVfuture ~~inverter~~sale, including warrants and options exercisable into shares of our Common Stock, may cause dilution to our existing stockholders and may adversely affect the market atfor ~~approximately~~our $7Common Stock.1” ~~billion~~In inaddition, ~~2013. Analysts~~we ~~also~~may ~~forecast~~choose ~~significant~~to ~~growth~~raise inadditional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the ~~installed~~extent ~~base~~that additional capital is raised through the sale of PVequity ~~inverters~~or convertible debt securities, ~~from~~the 30issuance GWof these securities could result in ~~2012~~further dilution to ~~over~~our 58stockholders GWor result in ~~2017,~~downward ~~representing~~pressure aon ~~CAGR~~the price of 13our Common Stock.8% See “-Raising additional capital may cause dilution to you or our existing stockholders, restrict our operations or require us to relinquish rights to our technologies.” Furthermore, if the pre-funded warrants issued in the Concurrent Placement are exercised, you will also incur additional dilution.

The rapid growth in solar installations is due to a mix of declining system prices, subsidies and increasing environmental initiatives. Since 2008, module prices have fallen by 80%. Balance of system costs — which include PV inverters, installation cost, shipping cost, regulatory costs, and cabling and wiring systems — are becoming more important as their proportional share of total overall cost has risen over the years.6

~~Our~~Table ~~reference product for the PV market is a 30kW PV inverter. We believe that it is the only technology capable~~ of offering a transformer-less inverter with isolation at reasonable economics. We believe our PV inverter product validates our unique technology in one of its simplest implementations. We believe PPSA-based converters provide the following advantages:Contents

~~· Lighter~~Shares ~~weight~~eligible for future sale, including warrants and ~~smaller~~options ~~size~~exercisable into shares of our Common Stock, ~~reducing~~may ~~logistics~~cause dilution to our existing stockholders and ~~installation~~may ~~cost~~adversely asaffect ~~well~~the asmarket ~~footprint~~for our Common Stock.

~~· Higher~~Sales ~~efficiencies~~of substantial amounts of our Common Stock in the public market, ~~thereby~~or ~~increasing~~the ~~energy~~perception ~~production~~that these sales could occur, could cause the market price of our Common Stock to decline. These sales could also make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

~~· Flexibility~~At March 25, 2026, we had 12,089,389 shares of ~~installation~~Common Stock outstanding and 2,238,040 pre-funded warrants with an exercise price of $0.001 that are included in our computation of basic earnings per share. Shares beneficially owned by our affiliates, if any, and employees are subject to volume and other restrictions under Rules 144 and 701 under the Securities Act, various vesting agreements, our insider trading policy and/or any applicable 10b5-1 trading plan. Shares that are not beneficially owned by our affiliates and employees generally can be freely sold in the public market, subject in some cases to restrictions under Rule 144.

~~· Electrical~~At ~~isolation~~March 25, 2026, we had 1,486,955 potentially dilutive shares outstanding, exclusive of pre-funded warrants to purchase shares of Common Stock that are considered outstanding common shares (including pre-funded warrants to purchase 631,332 shares of Common Stock issued in the Concurrent Placement) and included in our computation of basic earnings per share, and we may grant additional options, restricted stock units, performance stock units, other stock-based awards and/or warrants in the future. The settlement of vested restricted stock units and performance stock units, and the exercise of vested options and/or warrants, including pre-funded warrants, could result in the issuance of a large number of shares, which may be sold into the markets. Any sale of a substantial number of shares of our Common Stock may have a material adverse effect on the market price of our Common Stock.

~~Our~~We, ~~current~~our ~~30kW~~executive PVofficers ~~inverter~~and ~~with~~directors ~~electrical~~have ~~isolation~~agreed, ~~weighs~~subject 97to ~~pounds~~specified ~~compared~~exceptions, not to ~~about~~offer, 1sell,~~200~~ ~~pounds~~contract ~~for~~to ~~typical~~sell, PVhypothecate, ~~inverters~~pledge ~~that~~or ~~provide~~otherwise ~~comparable~~dispose ~~electrical~~of, ~~isolation. The~~directly ~~product~~or ~~supports~~indirectly, ~~standard~~or ~~grounded~~establish PVor ~~arrays~~increase (a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act with ~~both~~respect ~~unipolar~~to, ~~and~~any ~~bipolar~~shares ~~configurations)~~of ~~without~~Common ~~requiring~~Stock anbeneficially ~~internal~~owned or(as ~~external~~such ~~transformer. Its~~term ~~small~~is used in Rule 13d-3 of the Exchange Act), ~~lightweight~~or ~~design~~any ~~allows~~other ~~simple~~securities ~~installation~~so ~~indoors~~owned convertible into or ~~outdoors. The~~exercisable PVor ~~inverter~~exchangeable ~~completed~~for ~~industry~~the ~~certifications~~shares inof ~~May~~Common ~~2012. This~~Stock ~~product~~or ~~has~~publicly ~~industry~~announce ~~standard~~the ~~features~~intention ~~and~~to asdo any of ~~March~~the 31foregoing, ~~2013,~~whether ~~initial~~any ~~production~~such ~~units~~transaction ~~have~~is ~~been~~to ~~sold~~be tosettled 11by ~~different~~delivery PVof ~~inverter~~the ~~installation~~shares ~~companies~~of ~~with~~Common ~~installations~~Stock inor ~~Texas,~~such ~~California~~other of our securities, ~~Oregon~~in ~~and~~cash ~~Colorado~~or otherwise.

~~-25-~~This restriction terminates after the close of trading of the Common Stock on May 27, 2026.

~~Figure~~These ~~6: Seven~~lock-up agreements affect approximately 242,909 shares of our ~~30kW~~Common PVStock ~~Inverter~~currently inoutstanding ~~use~~as atof the ~~University~~date of ~~Texas-~~this ~~Austin~~prospectus supplement. Sales of stock by any of our executive officers or directors could have a material adverse effect on the trading price of our Common Stock.

~~Distributed~~We ~~Storage~~have ~~Market~~not paid dividends in the past and have no immediate plans to pay dividends.

~~One~~We ~~key~~plan ~~reason~~to ~~some~~reinvest ~~customers~~all of our earnings, to the extent we have ~~been~~earnings, ~~slow~~in order to ~~adopt~~market ~~renewable~~our ~~sources~~products isand ~~that~~to ~~power~~cover isoperating ~~not~~costs ~~necessarily~~and ~~produced~~to ~~when~~otherwise ~~customers~~become ~~need~~and itremain competitive. PV ~~only~~We ~~produces~~do ~~energy~~not ~~when~~plan ~~the~~to ~~sun~~pay isany ~~shining,~~cash ~~and~~dividends ~~wind~~with ~~turbines~~respect to our securities in the foreseeable future. As a result, only ~~when~~appreciation in the ~~wind~~price isof ~~blowing. Consequently~~our Common Stock, ~~customers~~which ~~who~~may never occur, will provide a return to stockholders. We cannot ~~use~~assure ~~the~~you ~~power~~that ~~produced~~we would, at ~~those~~any ~~times~~time, ~~may~~generate ~~waste~~sufficient surplus cash that would be available for distribution to the ~~excess~~holders ~~power~~of our Common Stock as a dividend. ~~This~~ ~~hurts~~Therefore, ~~the~~you ~~value~~should ~~proposition~~not ofexpect ~~using~~to ~~renewables~~receive cash dividends on our Common Stock.

Some utility jurisdictions have a “net metering” policy, which allows customers to sell their excess electric power to the utility and then purchase it back when needed at the same price. In effect, the local utility and power grid act as a remote battery system for energy consumers in these jurisdictions. As the penetration of renewables increases, utilities will be under financial pressure to reduce or discontinue net metering policies, as they receive no compensation for this service. Thus, we believe that utilities will seek to reduce or discontinue net-metering policies, and by doing so, create market demand for local energy storage systems.In the United States, a key driver for the use of energy storage is to reduce utility demand charges. Peak demand charges can account for a significant portion of the electricity bill for commercial and industrial customers. Therefore, it may be financially attractive for commercial buildings, for example, to reduce peak loads in order to limit peak demand charges.7

InTable ~~the United States, avoiding peak demand charges can make installation~~ of commercial energy storage systems financially attractive with 2013 utility rate schedules. In many cases the payback time for the end user can be quicker than with grid-connected residential or utility-scale systems. Therefore, there is great potential for suppliers to target combined commercial-scale PV and grid storage systems in the US.Contents

~~The~~Raising ~~Americas~~additional ~~are~~capital, ~~predicted~~if tonecessary, ~~remain~~may ~~the~~cause ~~largest~~dilution ~~market~~to ~~for~~you ~~energy~~or ~~storage~~our inexisting ~~grid-connected commercial PV systems over the next five years~~stockholders, ~~increasing~~restrict ~~from~~our anoperations ~~estimated~~or ~~1.4MW~~require ofus PVto ~~systems~~relinquish ~~with~~rights ~~installed storage in 2012~~ to ~~900MW~~our ~~in 2017, a CAGR of 264%~~technologies.

~~This~~We ismay ~~one~~seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships and licensing arrangements. To the ~~high~~extent ~~value~~that we raise additional capital through the sale or issuance of equity, ~~high~~warrants ~~growth~~or ~~markets~~convertible debt securities, your ownership interest and the ownership interest of our existing stockholders will be diluted, and the terms of such securities may include liquidation or other preferences that adversely affect your rights as a stockholder. If we ~~are~~raise ~~targeting~~capital ~~with~~through debt financing, it may involve agreements that include covenants limiting or restricting our ~~PPSA~~ability ~~reference~~to ~~products~~take certain actions, such as incurring additional debt, making capital expenditures or declaring dividends. We ~~have~~If ~~achieved~~we ~~early~~raise ~~design~~additional ~~wins~~funds ~~from~~through ~~leading~~strategic ~~customers~~partnerships or licensing agreements with third parties, we may have to relinquish valuable rights to our ~~2-port~~technologies, ~~battery~~or ~~converter~~grant licenses on terms that are not favorable to us. If we are unable to raise additional funds if and when needed, we may be required to delay, limit, reduce or terminate our development and commercialization efforts.

~~Our~~The ~~reference~~public ~~product~~market for ~~this~~our ~~market~~Common isStock amay 30be ~~kW battery converter~~volatile. It isThis ~~suitable~~may ~~for~~affect ~~several~~the ~~emerging~~ability ~~grid~~of ~~storage~~our ~~applications~~investors ~~including~~to ~~commercial~~sell ~~peak~~their ~~demand~~shares ~~reduction,~~as ~~utility~~well ~~load~~as ~~shifting~~the ~~buffering~~price ~~high~~at ~~power~~which ~~electrified~~they ~~vehicle~~sell DCtheir ~~chargers and bidirectional DC chargers~~shares.

The ~~battery~~market ~~converter~~price for ~~this~~our ~~usage~~shares ~~completed industry certification in January 2013. As of March 31, 2013, this product~~ has ~~been~~experienced ~~sold~~significant toprice 8and ~~different~~volume ~~customers~~fluctuations. inWe ~~California,~~cannot ~~Colorado,~~predict ~~Washington,~~whether ~~Wisconsin,~~the ~~Ohio,~~price ~~and~~of ~~Oregon. Commercial~~our ~~sales~~Common ~~have~~Stock ~~been~~will ~~made~~rise toor ~~Johnson Controls, Sharp, Powin Energy and others~~fall. ~~Commercial~~ ~~Off~~Our ~~The~~stock ~~Shelf~~price ~~(COTS)~~may ~~government~~be ~~sales~~significantly ~~have~~affected ~~been~~by ~~made~~factors tosuch ~~the National Renewable Energy Laboratory~~as, ~~the~~among ~~U.S. Navy, and NASA.~~ others:

~~-26-~~● variations in the volume of trading activity;

We● ~~plan~~actual toor ~~migrate~~anticipated ~~early~~fluctuations ~~customer~~in ~~designs from~~ our ~~2-port battery converter to our 3-port hybrid converter when it becomes available. This will allow a lower cost~~liquidity, ~~more~~financial ~~efficient~~condition ~~integrated solution for supporting both commercial-scale grid storage~~ and PVoperating inverter functions. We plan to further develop a 3-port microgrid converter that will use similar hardware to the hybrid converter but will also provide new embedded firmware microgrid capabilities. This will allow our customers to add emergency backup power capabilities to these systems or operate them in remote off-grid installations.results;

~~Figure~~● ~~7: Our~~quarterly ~~30kW~~and ~~battery~~yearly ~~converter~~operating ~~used~~results ~~for~~compared ~~containerized~~to ~~grid~~market ~~storage undergoing testing at the Bonneville Power Authority, Washington~~expectations;

DC● ~~Charging~~quarterly ~~Market~~and yearly operating results of other companies in our industry compared to market expectations;

~~Alternatives~~● togeneral ~~gas-powered~~trends cars have historically comprised a small portion of the overall automotive market. We believe this is changing rapidly. Based on industry reports, consumers will soon have a greater selection of both plug-in ~~hybrid~~markets ~~electric~~we ~~vehicles~~expect ~~(PHEV)~~to ~~and fully electric vehicles (EV) from car manufacturers.~~serve;

A● ~~major~~competition ~~limitation~~from ofexisting ~~electrified~~products ~~vehicles~~or isnew ~~their~~products ~~limited driving range on batteries and the recharging time to extend this range. EVs and PHEVs have an on-board charger~~ that ~~converts~~may the low voltage AC power in a home to the DC power needed for charging EV batteries. The on-board charger is typically small and light, to enable it to fit inside the car. Because of these limitations, the charger takes about 8 hours for a full charge (which provides a driving range of about 100 miles).emerge;

A● DCfuture ~~charger~~announcements orconcerning ~~fast~~our ~~charger~~business ~~contains~~or aour ~~high-powered~~competitors’ charger located outside the car. This off-board charger has the potential to fully charge a car in about 30 minutes. EV fast chargers are used to extend the driving range without the long charging time of low power on-board chargers and can also improve charging efficiency. Navigant Research (2013) forecasts the market for EVSE (electric vehicle supply equipment) to be $713 million in 2013 and to reach $3.8 billion by 2020, a CAGR of 27.1%, with shipments of DC Chargers increasing from 9,000 in 2013 to 98,000 in 2020.businesses;

DC● ~~chargers~~additions ~~create~~or ~~high~~departures ~~peak~~of ~~loads~~key ~~when~~management ~~charging~~or aother ~~vehicle~~technical and no loads when not charging. This duty cycle can create high demand charges, creating high operating costs for DC charging stations. A typical 50kW DC charger in Southern California can fully charge a Nissan Leaf for less than $4 per vehicle, but the utility peak demand charges on the installation can be more than $1000/month.personnel;

We● ~~have a 30KW battery charger for this market that exhibits~~ the ~~characteristics~~public’s ofreaction to our ~~PPSA~~press ~~technology. Our PPSA-based battery charger is 95% efficient. Competing chargers have 90% efficiency~~releases, ~~which~~other ~~means~~public ~~that~~announcements ~~they~~and ~~waste~~filings ~~twice~~with asthe ~~much energy as our products do.~~ SEC;

~~-27-~~● issuances or sales, or expected issuances or sales of our capital stock, including in connection with this offering;

~~Our~~● ~~hybrid~~disputes ~~converter~~or ~~product~~other ~~will~~developments berelated ~~a disruptive technology that we believe could have a major impact on the DC charging market by integrating efficient buffer battery storage~~ to ~~reduce~~proprietary ~~demand charges~~rights, ~~and~~including ~~PV to allow efficient charging directly from distributed resources. We expect the efficiency~~patents, ~~flexibility,~~litigation matters and ~~cost benefits of~~ our ~~technologies~~ability to ~~contribute~~obtain topatent ~~the~~protection ~~spread~~for ~~of DC charging stations; as such, we are seeking to establish early leadership in the DC fast charging infrastructure market with~~ our early partners including NRG and the U.S. Department of Defense. We are also working with NREL to demonstrate next generation DC charger features, including vehicle-to-grid (V2G) solutions that allow EVs to provide power back to the utility grid.technologies;

We● ~~are~~litigation ~~currently~~involving ~~developing a 30kW 3-port hybrid converter~~us, ~~which is~~ our ~~reference~~general ~~product~~industry ~~for~~or ~~this~~both; ~~market. This will be our first product to exploit the single-stage multi-port capabilities of our technology. This product will include two DC ports~~ and one AC grid port that will combine the capabilities of our existing PV inverter and battery converter and, if the product performs as planned, should perform at lower cost and higher efficiency than other hybrid converters.

~~Figure~~● ~~8: Our~~changes ~~30kW~~in ~~battery~~state ~~converter~~or ~~used~~federal ~~for~~regulations ~~bi-directional~~affecting DCus ~~charging~~and atour ~~the National Renewable Energy Laboratory, Colorado~~industry.

~~Other~~Furthermore, ~~Markets~~in recent years the stock market has experienced extreme price and volume fluctuations that are unrelated or disproportionate to the operating performance of the affected companies. Such broad market fluctuations may adversely affect the market price of our Common Stock. In addition, price volatility may be greater if the public float and trading volume of our Common Stock is low. As a result, you may suffer a loss on your investment.

As mentioned above, our technology may be applicable to a wide variety of power conversion needs. This may include, among others, the VFD motor drive market, uninterruptible power supply (UPS) market, or the solid-state transformer market. We will continue to evaluate new markets on their fit with the criteria we outlined above: time-to-market for our PPSA platform, market size/growth rate, and the size of the customer benefit that we expect to deliver.8

~~Early~~Table ~~Development~~of ~~Partnerships~~Contents

~~PPSA~~USE ~~has~~OF ~~gained early validation from licensing and development arrangements with leading partners in both the private and public sectors.~~PROCEEDS

~~Lockheed Martin:~~ We ~~received~~will ~~approximately~~not ~~$1.3~~receive ~~million~~any inproceeds ~~early revenues~~ from ~~Lockheed~~the ~~Martin~~sale ~~Corporation~~of ~~(LMC)~~the ~~from~~shares ~~a License Agreement and a Subcontractor Development Agreement, both~~ of ~~which~~Common ~~were~~Stock ~~entered~~by into in December 2009. We received approximately $1.1 million from a subcontract project to develop hardware and provide technical support for LMC’s Hybrid Intelligent Power development contract from the ~~U.S.~~Selling ~~Army Communications-Electronics Research, Development and Engineering Center~~Securityholder. ~~We completed this work in early 2012 and do not expect additional revenues for subcontract development.~~

~~-28-~~9

~~Pursuant~~Table to the License Agreement, LMC has the exclusive right to use our initial patents for government applications and the non-exclusive right to use our initial patents for mobile applications. Mobile applications are defined in the License Agreement as “products contained in an air, ground, water or space vehicle or that are intended to be transported from time to time from one location to another.” We retain the right to sell COTS products to any customer, including the U.S. Department of ~~Defense.~~Contents

~~LMC~~SELLING is required to pay us a royalty of 3% on sales of any products that leverage our technology. Additionally, LMC is required to pay us minimum annual royalties in order to retain its exclusive rights for government applications. The minimum annual royalty for exclusive government applications increases to $200,000 in 2014, and thereafter by an additional $100,000 each year, until it reaches $500,000 per year. LMC may choose not to pay the minimum annual royalty, in which case it would lose the exclusive rights to our technology for government applications. We have earned $0.16 million in annual licensing revenues from LMC through March 2013.SECURITYHOLDER

~~Department~~References ofto ~~Energy:~~the We“Selling ~~have~~Securityholder” ~~been~~in ~~awarded~~this ~~two~~prospectus ~~significant~~mean ~~grants from~~ the ~~U.S.~~entity ~~Department~~listed ofin ~~Energy~~the ~~(DOE). We~~table ~~have~~below, ~~received~~and ~~approximately~~the ~~$1.0~~donees, ~~million~~transferees, inassignees, ~~revenue~~successors, ~~from~~heirs, ~~these~~executors, ~~grants. These~~administrators, ~~grants~~legal ~~provided~~representatives, ~~funding~~pledgees ~~for long-term research~~ and ~~next~~others ~~generation~~who ~~product~~may ~~development.~~later Wecome ~~expect~~ to ~~receive~~hold ~~additional~~any ~~revenue~~of ~~from~~the ~~these~~Common ~~grants~~Stock ~~until~~described ~~they~~in ~~are~~this ~~completed. We~~prospectus ~~plan~~as toa ~~apply~~result ~~for~~of ~~additional~~a ~~government~~transfer ~~grants~~not ininvolving ~~the~~a ~~future~~public sale.

WeThis ~~have~~prospectus ~~received~~relates anto ~~award~~the ofpossible ~~$2.5~~resale ~~million~~by ~~from~~the ~~ARPA-E~~Selling ~~(Advanced~~Securityholder ~~Research~~of ~~Projects~~up ~~Agency~~to –631,332 ~~Energy). This~~shares ~~award~~of ~~will~~Common beStock ~~used~~that toare ~~reimburse~~issuable ~~costs~~under wethe ~~incur~~Pre-Funded onWarrants. aFor ~~three-year~~additional ~~project~~information ~~that~~regarding ~~began~~the inissuance ~~January~~of ~~2012. This~~the ~~award~~Pre-Funded isWarrants, ~~being~~see ~~used~~“Prospectus toSummary ~~develop~~— ~~and~~Recent ~~commercialize~~Developments a— ~~new~~Public ~~type~~Offering ofand ~~semiconductor~~Concurrent ~~power~~Private ~~switch~~Placement”. ~~called~~The aSelling ~~silicon~~Securityholder ~~bi-directional~~may ~~integrated~~offer ~~gate~~the ~~bipolar~~shares ~~transistor~~of ~~(BD-IGBT). While~~Common weStock ~~currently~~for ~~successfully~~resale ~~use~~from ~~commodity~~time ~~silicon~~to ~~IGBT~~time ~~and~~pursuant ~~diode~~to ~~components~~this inprospectus. ~~our~~The ~~products,~~Selling weSecurityholder ~~are~~may ~~developing~~also ~~BD-IGBT~~sell, ~~components~~transfer ~~that~~or weotherwise ~~believe~~dispose ~~could~~of ~~significantly~~all ~~improve~~or ~~the~~a ~~efficiency,~~portion ~~weight,~~of ~~and~~its ~~manufacturing~~shares ~~costs~~ of ~~our~~Common ~~products. Two~~Stock ~~leading~~in ~~research~~transactions ~~universities,~~exempt ~~Rensselaer~~from ~~Polytechnic~~the ~~Institute~~registration ~~and~~requirements ~~Virginia~~of ~~Tech,~~the inSecurities ~~addition~~Act toor ~~several~~pursuant ~~commercial~~to ~~vendors~~another ~~are~~effective ~~working~~registration ~~under~~statement ~~our~~covering ~~direction~~those ~~and~~shares. ~~are~~Information ~~receiving~~about the ~~majority~~Selling ofSecurityholder ~~the~~may ~~ARPA-E~~change ~~program~~over ~~funding~~time.

~~Our~~We ~~second~~do ~~DOE~~not ~~award~~know ~~was~~when aor ~~$150~~in what amounts the Selling Securityholder may offer the shares of Common Stock for sale,~~000~~ ~~Phase~~and, Iother ~~SBIR~~than ~~(Small~~as ~~Business~~set ~~Innovation~~forth ~~Research)~~herein, ~~grant. This~~we ~~grant~~currently ~~has~~have ~~been~~no ~~used~~agreements, toarrangements ~~develop~~or ~~early~~understandings ~~prototypes~~with ofthe aSelling ~~3-port~~Securityholder ~~hybrid~~regarding ~~converter. We~~the ~~completed~~sale ~~this~~or ~~project~~other indisposition ~~May~~of ~~2013~~any of the shares of Common Stock. We ~~are~~Because ~~applying~~the ~~for~~Selling aSecurityholder $1may ~~million~~offer ~~Phase~~all, IIsome ~~grant~~or none of the shares pursuant to ~~fund~~the ~~further~~offering, ~~development~~no definitive estimate as to the number of ~~this~~shares ~~concept. We~~that ~~hope~~will tobe ~~include~~held ~~advanced~~by ~~converter~~the ~~capabilities~~Selling Securityholder after the offering can be provided. Except for ~~micro~~the ownership of Pre-~~grids~~Funded ~~into~~Warrants, athe ~~Phase~~Selling IISecurityholder ~~program,~~has ifnot ~~awarded~~had any material relationship with us within the past three years.

~~National~~Beneficial ~~Renewable~~ownership ~~Energy~~is ~~Laboratory: On~~determined ~~May~~in ~~13,~~accordance ~~2013~~with wethe ~~announced~~rules aof ~~Cooperative~~the ~~Research~~SEC and ~~Development~~includes ~~Agreement~~voting ~~(CRADA)~~or toinvestment ~~use~~power ~~our~~with ~~topology~~respect to ~~develop~~shares of Common Stock and ~~test~~the ~~next~~right ~~generation~~to ~~electric~~acquire ~~vehicle~~such DCvoting ~~charging~~or ~~infrastructure~~investment ~~solutions~~power within 60 days through the exercise of any option, warrant or other right. The ~~goal~~following table sets forth, as of the ~~partnership~~date isof tothis ~~create~~prospectus, ~~standard~~the ~~reference~~name ~~designs~~of ~~using~~the ~~our~~Selling ~~patented~~Securityholder, ~~topology~~the innumber ~~the~~of ~~3-port~~shares ~~hybrid~~of ~~converter~~Common Stock that ~~can~~the ~~readily~~Selling beSecurityholder ~~adopted~~may byoffer ~~commercial~~pursuant to this prospectus and ~~municipal~~the EVnumber ~~fleets,~~of ~~military~~shares ~~installations,~~of Common Stock owned by the Selling Securityholder before and ~~public~~after ~~infrastructure~~the offering. ~~These~~ ~~reference~~Solely ~~designs~~for ~~seek~~purposes toof ~~improve~~ the ~~cost~~table below, ~~efficiency~~we ~~and~~have ~~reliability~~assumed that the Selling Securityholder will sell all of ~~power~~the ~~conversion~~shares ~~between~~of ~~electrified~~Common ~~vehicles,~~Stock ~~solar~~that ~~panels,~~the ~~storage~~Selling ~~batteries~~Securityholder currently holds and ~~electric~~will ~~grid,~~make asno ~~well~~other aspurchases ~~provide~~or ~~grid~~sales ~~storage~~of ~~and~~Common ~~emergency~~Stock. ~~backup~~The ~~power~~percentages ~~capabilities~~below also assume the full conversion of the Pre-Funded Warrants.

Competition

Shares of Common Stock
Beneficially
Owned Prior to the
Offering of the Selling
Securityholder’s

Shares(1)

Maximum
Number of
Shares
To Be Sold in
the Offering
of the Selling
Securityholder’s

Shares(2)

Shares of Common Stock
Beneficially
Owned After the
Offering of the Selling
Securityholder’s Shares(2)

Name of Selling Securityholder

Number

Percentage

Shares

Number

Percentage

Lytton-Kambara Foundation⁽³⁾

1,210,047

9.9

631,332

1,186,849

9.3

We(1) ~~compete~~Assumes ~~against~~exercise ~~well-established~~in ~~incumbent~~full ~~power~~of ~~conversion technologies. We believe that, for~~ the ~~markets~~Pre-Funded ~~we have identified, our technology provides significant competitive advantages, however, we do not currently have a significant competitive presence in our industry~~Warrants.

~~Transformer~~(2) ~~Based~~The ~~Topologies: They~~Company ~~are~~does not have the ~~conservative~~ability ~~choice~~to ascontrol ~~they~~how ~~have~~many, ~~been~~if inany, of the ~~market~~shares ~~longer~~of ~~than~~Common ~~any~~Stock ~~other~~will ~~system. They~~be ~~provide~~sold ~~isolation~~by ~~but~~the ~~are~~Selling ~~big~~Securityholder ~~and~~listed ~~heavy~~above. ~~There~~ ~~have~~The ~~been~~table ~~significant~~above ~~improvements~~assumes inthat ~~efficiencies~~the ~~over~~Selling Securityholder will sell all of the ~~years~~shares ~~but~~of weCommon ~~believe~~Stock ~~further~~offered ~~improvements~~herein ~~are~~for ~~limited~~purposes ~~because~~of determining how many shares of Common Stock the ~~transformer~~Selling ~~requirements. The~~Securityholder ~~major~~will ~~suppliers~~own inafter ~~this~~the ~~market~~offering ~~include:~~of ~~SMA,~~the ~~Advanced~~shares ~~Energy,~~of Common Stock and ~~Schneider~~their ~~Electric~~applicable beneficial ownership percentage following the offering of the shares of Common Stock.

~~Transformer-Less~~(3) ~~Topologies:~~Includes ~~Transformer-less~~631,332 ~~inverters~~shares ~~are~~of ~~the~~Common ~~norm~~Stock inissuable upon the ~~European~~exercise ~~market~~of ~~for~~Pre-Funded ~~photovoltaic~~Warrants. ~~applications;~~Laurence ~~they are lighter and more efficient than transformer based inverters~~W. ~~They~~ ~~have~~Lytton ~~been~~is ~~obtaining~~the ~~market~~President ~~share~~and ina ~~the~~key ~~U.S.~~director ~~market because~~ of ~~these~~the ~~characteristics~~Selling Securityholder. The ~~drawback~~address of ~~transformer-less~~record ~~inverters~~ is ~~that~~467 ~~they~~Central ~~provide~~Park ~~no electrical isolation. SMA~~West, ~~Power~~17A ~~One~~New ~~(acquired by ABB)~~York, ~~REFUsol~~NY ~~(acquired by Advanced Energy), Kaco, and Fronius compete in this market~~10025.

~~-29-~~10

~~Inverter~~Table ~~with High Frequency Transformers: These inverters provide isolation without the weight~~ of a transformer-based inverter. However, high frequency (HF) inverters lose competiveness as they scale-up in power. This is because in contrast to traditional inverters, HF inverters do not become more efficient or less costly per amount of power they convert. Power One and SMA are the key suppliers in this market.Contents

~~Micro~~DIVIDEND Inverters: In a string of PV modules connected to a string inverter, if one of the modules is in the shade, that one low-performing module constrains the output of the whole string. The problem is resolved by using micro inverters connected to each module. However, large arrays of microinverters are expensive to produce and install, which mainly relegates their use to the residential market. The leader in micro inverters is Enphase.POLICY

~~Research~~We have never declared or paid any cash dividends on our capital stock. We intend to retain future earnings, if any, to finance the operation of our business and ~~Development~~do ~~Costs~~not anticipate paying any cash dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our Board after considering our financial condition, results of operations, capital requirements, business prospects and other factors our Board deems relevant, and subject to the restrictions contained in any future financing instruments.

During the years ended December 31, 2012 and December 31, 2011, we incurred $1,127,192 and $914,851 in research and development expense. During the quarters ended March 31, 2013 and March 31, 2012, we incurred $256,348 and $352,841 in research and development expense.11

~~Manufacturing~~Table of Contents

WeDIRECTORS ~~currently~~AND ~~use~~EXECUTIVE ~~a subcontractor to assemble and test our product from our designs using commodity materials and components.~~OFFICERS

~~Employees~~The following table sets forth certain information with respect to our executive officers and directors as of the date hereof.

As of August 5, 2013, we had 10 full-time employees, two full-time contract employees and two part-time contract employees. None of these employees are covered by a collective bargaining agreement, and we believe our relationship with our employees is good. We also employ consultants, including technical advisors, on an as-needed basis to supplement existing staff. Consultants and technical advisors provide us with expertise in mechanical engineering, electrical engineering, and other specialized areas of engineering and science.

Name	Age	Position
David Somo	59	President, Chief Executive Officer (“CEO”) and Director
Timothy W. Burns	51	Chief Financial Officer (“CFO”) , Secretary and Treasurer
Drue Freeman	63	Director
Gregory Knight	51	Director
Ted Lesster	87	Director
Michael C. Turmelle	67	Chairman of the Board

~~Industry~~Executive ~~Certifications~~Officers

~~Industry~~David ~~certifications~~Somo ~~are~~has ~~generally~~served ~~required~~as ~~for~~our President and Chief Executive Officer and on our ~~products~~Board since November 2025. ~~The~~ ~~main~~Prior ~~certification~~to ~~requirement~~joining isIdeal ~~UL1741~~Power, ~~which~~he ~~tests~~served as an operating partner with private equity firm Strenuus Capital Partners from January 2025 to October 2025. In addition, Mr. Somo served as President and ~~guarantees~~CEO ~~grid~~of ~~safety~~Preciseley Microtechnology Corporation from June 2021 to September 2024 and ~~product~~held ~~safety~~the ~~for~~position ~~distributed~~of ~~generation~~Senior ~~sources~~Vice ~~including~~President, PVCorporate ~~inverters~~Strategy, ~~battery~~Marketing ~~converters~~and Systems Engineering at onsemi (Nasdaq: ON) from 2009 to June 2021. Mr. Somo has over 30 years of experience in the semiconductor industry spanning the industrial, automotive, consumer, computing, data center and bicommunications end-~~directional~~markets. ~~electrified~~He ~~vehicle~~has ~~chargers~~held leadership roles in several other prominent companies, including Celerity, Incorporated, Ubicom, Incorporated, MEMC Electronic Materials, Incorporated, and Advanced Micro Devices, Incorporated. A ~~National~~Mr. ~~Recognized~~Somo ~~Testing~~has ~~Laboratory~~extensive ~~(NRTL)~~experience ~~must~~in ~~complete~~worldwide sales, marketing, business development, corporate strategy, mergers and acquisitions and product development with full business P&L responsibility. He holds a Bachelor of Science in Electrical Engineering from Arizona State University and completed the ~~certification~~INSEAD ~~before~~International Directors Programme in Corporate Governance. Mr. Somo brings to our ~~customers~~Board ~~may~~experience ~~install~~as a Chief Executive Officer, knowledge of the power semiconductor industry and ~~use~~the commercialization of power semiconductors into a variety of markets, and experience and familiarity with our ~~products~~business inas ~~the~~our ~~United~~Chief ~~States~~Executive Officer.

WeTimothy ~~have~~W. ~~worked~~Burns ~~with~~has ~~Intertek~~served as our Chief Financial Officer and Treasurer since October 2013 and Secretary since November 2013. Prior to joining the Company, Mr. Burns was employed by Rainmaker Systems, Inc. (Nasdaq: RMKR), then a ~~leading~~publicly ~~NRTL~~traded company, ~~for~~from ~~these~~November ~~certifications~~2010 ~~and~~until ~~have~~February ~~successfully~~2013, ~~completed~~first ~~testing~~as the company’s Controller and, ~~received~~beginning ~~authorization~~in toApril ~~use~~2011, ~~their~~as ~~ETL~~its ~~mark~~Chief onFinancial ~~our~~Officer. ~~30kW~~Mr. PVBurns ~~inverter~~also served as Interim President and ~~30kW~~Chief ~~battery~~Executive ~~converter~~Officer of Rainmaker Systems, Inc. ~~While~~ wefrom ~~have~~October ~~been~~2012 ~~able~~to December 2012. Prior to ~~rapidly~~his ~~and~~employment ~~timely~~with ~~complete~~Rainmaker ~~these~~Systems, ~~certifications~~Inc., ~~which~~Mr. weBurns ~~believe~~was isemployed ~~indicative~~by Dean Foods Company (NYSE: DF), then a publicly traded company, from 2001 until November 2010 where he held various positions in finance and accounting including Director of ~~our~~Corporate ~~commitment~~Accounting from 2008 to ~~the~~November ~~development~~2010. ofFrom ~~our~~1998 ~~technology~~to 2001, weMr. ~~may~~Burns ~~not~~was beemployed by Deloitte & Touche, LLP as ~~successful~~an inauditor. ~~completing~~Mr. ~~certification~~Burns inhas a ~~timely~~master’s ~~manner~~degree onin ~~future~~professional ~~products,~~accounting ~~such~~from asthe ~~our~~University ~~3-port~~of ~~hybrid~~Texas ~~converter,~~and ~~which~~a ~~could~~bachelor’s ~~limit~~degree ~~our~~in ~~ability~~accounting tofrom ~~bring~~the ~~such~~University ~~products~~of toSouthern ~~market~~California. He is a public accountant certified in Texas.

Europe and Japan have different certification test procedures, but generally test for similar capabilities. We do not have familiarity with these other grid safety certifications; however, such certifications are likely to be required to sell our products in these regions. Geographic regions outside of North America, Europe and Japan generally do not have specific certification requirements, but may require one or more of the other regional certifications before products are approved for sale.12

~~Government~~Table ~~Regulation~~of Contents

Government approval is not required for us to sell our products. However government support for renewable energy, improved grid efficiency, and EVs will impact growing markets that we service. Utility regulations and support for these markets may also impact these end markets. Government and utility support for these markets is generally required near term for these markets to grow and changes in policy by governments or utilities may limit the market opportunities for our products.Directors

-Drue Freeman has served on our Board since April 2022. He has over 30 years of semiconductor industry experience, sixteen of which focused on sales and marketing of semiconductors to the automotive industry. Mr. Freeman spent most of his career at NXP Semiconductors (“NXP”), a Dutch multinational manufacturer serving the automotive industry. In 1990, he joined VLSI Technology, an American company that designed and manufactured custom and semi-custom integrated circuits, which was bought by Philips Semiconductors, a division of Philips Electronics. Philips Semiconductors was subsequently spun-out from Philips to become NXP. At NXP, he served in various leadership positions in Japan, Germany, China and Silicon Valley. He launched and served on the Board of Directors for Datang-NXP Semiconductors, the first Chinese automotive semiconductor company, and ended his tenure at NXP as Senior Vice President of Global Automotive Sales & Marketing. While at NXP, Mr. Freeman built significant automotive semiconductor market share by developing long-term relationships with OEMs and locking in design wins at Tier-1 automotive customers. Since November 2016, he has served as an Advisor at Silicon Catalyst, an incubator focused exclusively on solutions in silicon, and, from March 2018 to April 2020, he served as Chief Executive Officer of the Association for Corporate Growth Silicon Valley, the premier organization for decision makers in Silicon Valley, providing business professionals with direct and referral access to key business leaders, transformational thought leadership and practical experience for professional growth and business development. Mr. Freeman provides strategic and advisory services, with recent clients including Blue River Technology (a subsidiary of Deere & Co.), Savari (acquired by Harman) and DeepScale.ai (acquired by Tesla), and served on the Board of Directors of Sand Hill Angels, a group of Silicon Valley angel investors between January 2018 and December 2024. In September 2024, Mr. Freeman joined the Board of Directors of Boardwalktech Software Corp. (BWLK.V), an enterprise software company. He has a B.S. in Electrical Engineering from San Diego State University and an MBA in Business from Pepperdine Graziadio Business School. Mr. Freeman brings to our Board experience as a semiconductor executive and strategic advisor and investor and knowledge of, and relationships in, the semiconductor and automotive / electric vehicle (“EV”) industries.

~~Properties~~Gregory Knight has served on our Board since April 2022. He has 25 years of experience in industrial manufacturing across a wide range of industries including photovoltaic (“PV”), silicon carbide, EV, power electronics and industrial equipment in both leadership positions and as a strategic consultant. Since August 2025, Mr. Knight has served as President and Chief Executive Officer of Enbi Global, a manufacturer of specialty rollers and insulation materials with primary market demands from commercial print, automation, automotive and HVAC industries. Prior to his current role, Mr. Knight served as President and Chief Executive Officer of Kellenberger (formerly Hardinge), a leading international provider of advanced, super-precision grinding and turning CNC machine solutions, from September 2024 to April 2025. Prior to serving as President and Chief Executive Officer of Kellenberger, Mr. Knight served as President and Chief Executive Officer of Hardinge from July 2023 to September 2024 and served as Vice President and Chief Operating Officer from January 2023 to July 2023. Previously, Mr. Knight served as President and Chief Executive Officer of GT Advanced Technologies, a producer of silicon carbide and sapphire crystal materials for expanding markets such as EVs and power electronics, from September 2016 to October 2021. His other leadership positions include: Co-Founder and Co-Chief Executive Officer of Exawatt, which provides strategic consulting for the solar PV, EV, power electronics, high-purity quartz and lithium-ion battery markets, from May 2015 to September 2016; President of PV Tech Group, a provider of a range of operations and strategic planning services to the PV industry, from July 2010 to September 2016; and Chief Technology Officer for Equity Solar, a provider of silicon surface chemistries intended to increase PV cell efficiency, from April 2010 to June 2015. Mr. Knight began his PV career as Manufacturing Director, Solar Cell Fabrication, at Schott Solar, a manufacturer of components for solar power systems. He currently serves on the Board of Directors of Enbi Global and Allied Graphite and held prior board positions with Kellenberger, Hardinge, GT Advanced Technologies and Cerahelix. Mr. Knight served five years in the U.S. Navy as Chemistry / Radiological Controls Officer and holds a B.A. in Chemistry from Cornell University and a formal nuclear engineering education from the Naval Nuclear Power School. Mr. Knight brings to our Board experience as an executive and knowledge of silicon carbide and PV, EV, energy storage and power electronics markets.

~~Our~~Ted ~~principal~~Lesster ~~office~~has isserved ~~located~~on our Board since April 2018. Prior to 1985, Mr. Lesster worked first in the power conversion group at ~~5004~~the ~~Bee~~Westinghouse ~~Creek~~R&D ~~Road~~Center and subsequently at the Westinghouse ESSD Oceanic Division (“ESSD”). As an Advisory Engineer he was instrumental in developing power electronics for power conversion, ~~Suite~~active ~~600~~sonar and propulsion systems for deep submergence vehicle and surface ship applications. In 1985, ~~Spicewood~~he became manager of Electrical Engineering and, ~~Texas~~in ~~78669~~1992, he was appointed to assemble and lead the technical team that worked in conjunction with Chrysler to develop and take to initial production advanced power trains for the Chrysler EPIC minivan. We ~~currently~~Following ~~lease~~the ~~approximately~~Northrop ~~4,000~~Grumman ~~square~~acquisition ~~feet~~of ESSD he returned to the Oceanic Division as Engineering Director of ~~office~~the engineering department and ~~laboratory~~then ~~space~~as ~~under~~Chief Scientist. In 1999, he joined SatCon as Engineering Director and later as General Manager. He resigned from his management position at SatCon in 2002 to lead the design and development of a ~~triple~~novel ~~net~~2-megawatt ~~lease~~flywheel/doubly fed induction machine and diesel-based uninterruptible AC power source. With the transfer of that isand ~~due~~similar power electronics-based technology to ~~expire~~RCT Systems (“RCT”) in ~~May~~2003, Mr. Lesster joined RTC in an advisory role and was active in hardware development of vehicle and shipboard pulse power and power management applications as well as both wave energy and tide power energy conversion projects until his retirement in 2014. ~~The~~Mr. ~~rent~~Lesster ishas ~~approximately~~BA $3and MA degrees in Engineering from Oxford University and,~~200~~ ~~per~~in ~~month~~1971, he received the Westinghouse B.G. Lamme Award for a year’s study scholarship. He used this to study at Imperial College of Science and Technology in London where his thesis for the Diploma of Imperial College certificate was on control techniques for reluctance machines. Mr. Lesster holds six patents and several pending in the field of power conversion. Mr. Lesster brings to our Board an extensive knowledge of power electronics and power conversion systems.

~~Legal~~Michael ~~Proceedings~~C. Turmelle has served on our Board since December 2017 and as Chairman of the Board since December 2021. From January 2018 to January 2024, Mr. Turmelle served as the Managing Director of Hayward Tyler, which he joined in February 2015. Hayward Tyler designs, manufactures and services performance-critical electric motors and pumps to meet the most demanding of applications for the global energy industry, as both an original equipment manufacturer supplier and trusted partner. Previously, Mr. Turmelle ran his own consulting company working with start-ups and turn-arounds in the areas of renewable energy, medical and other advanced technologies. He has served on the Board of Directors of Quantum Computing Inc. (Nasdaq: QUBT) since January 2022. Mr. Turmelle has previously served on other Boards of Directors including the Board of Directors of Implant Sciences Corp., an explosive and narcotic trace detection company, where he served as Chairman of the Board from 2015 to 2017. He was Chief Financial Officer and Chief Operating Officer and a member of the Board of Directors of SatCon. Mr. Turmelle was also on the Board of Directors of Beacon Power, a SatCon spin-off company dealing in flywheel energy storage. He has a B.A. in Economics from Amherst College and is a graduate of General Electric’s Financial Management Program. Mr. Turmelle brings to our Board years of public company executive experience as well as extensive experience in finance and operations and in the field of electrical technology.

WeDavid ~~are~~Somo — please ~~not~~see ~~a party to any pending legal proceedings~~above.

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~13

~~AND~~Table ~~RESULTS~~of ~~OF OPERATIONS~~Contents

~~The~~CERTAIN ~~following~~RELATIONSHIPS ~~discussion~~AND ~~and~~RELATED ~~analysis~~PARTY of our financial condition and results of operations should be read in conjunction with the section of this prospectus titled “Summary Selected Financial Information” and our financial statements and related notes appearing elsewhere in this prospectus. In addition to historical information, this discussion and analysis here and throughout this prospectus 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” and elsewhere in this prospectus.TRANSACTIONS

~~OVERVIEW~~Policies and Procedures for Approving Related Party Transactions

WeUnder ~~are~~our ~~located~~Code ~~near~~of ~~Austin~~Conduct, ~~Texas. We~~our ~~were~~employees ~~formed~~and toofficers ~~develop~~are ~~and~~discouraged ~~commercialize~~from ~~our~~entering ~~Power~~into ~~Packet~~any ~~Switching~~transaction ~~Architecture~~that ~~(PPSA)~~may ~~technology~~cause ~~that~~a ~~improves~~conflict ~~the~~of ~~performance,~~interest. ~~size~~In addition, ~~weight~~they ~~and~~must ~~manufacturing~~report ~~cost~~any potential conflict of ~~electronic~~interest, ~~power~~including ~~converters~~related ~~for~~party ~~several~~transactions, ~~large~~to ~~vertical~~their ~~markets~~supervisors or our Chief Executive Officer.

WeOur ~~were~~Related ~~founded~~Party onTransaction ~~May~~Policy ~~17,~~(the ~~2007. To~~“Policy”) ~~date~~provides, ~~our~~among ~~operations~~other ~~have~~items, ~~been~~that ~~funded~~pre-approval ~~through the sale~~ of ~~our~~related ~~common~~party ~~stock~~transactions ~~and~~(as ~~convertible~~defined ~~debt,~~in ~~through~~the ~~technology~~Policy) ~~licensing~~requires ~~revenue,~~a ~~and~~majority ~~through~~vote ~~U.S. Department~~ of ~~Energy~~the ~~grants. Our~~disinterested ~~total~~members ~~revenue~~of ~~generated~~the ~~from~~Audit ~~inception~~Committee towith ~~date~~a asde ofminimis ~~March~~exception ~~31,~~for ~~2013~~transactions isless than $2,~~770,813,~~500. ~~with~~De ~~the~~minimis ~~majority~~transactions ofmay ~~that~~be ~~revenue~~approved ~~coming~~by ~~from~~either ~~non-recurring~~our ~~events~~Chief ~~such~~Executive asOfficer ~~engineering~~or ~~fees~~Chief ~~and~~Financial ~~government~~Officer, ~~grants~~if disinterested. ~~This~~ ~~non-recurring~~Further, ~~revenue~~the ~~has~~Policy ~~been~~requires ~~successfully~~timely ~~applied~~disclosure ~~for~~to ~~research~~the ~~and~~Board ~~product~~of ~~development,~~all ~~reducing~~related ~~our~~party ~~capital~~transactions ~~requirements~~requiring disclosure under SEC regulations.

WeRelated ~~have~~Party completed development and industry certification of our first two products, a 30kW PV inverter and a 30kW battery converter, both using the same Universal Power Converter hardware design with different embedded firmware. We are currently developing our third product, which is a 30kW 3-port hybrid converter.Transactions

~~These~~No ~~are~~related ~~reference~~party ~~design~~transactions ~~products~~have ~~that~~been weentered ~~plan~~into, toor ~~use~~in ~~to promote long term licensing opportunities for the Company. As a result~~effect, wesince ~~believe~~January the revenue from our early product sales is not the most important metric of our growing success. We believe the quality and the level of interest from prospective strategic customers and potential licensees is the most important metric1, ~~although we cannot provide any assurance that such prospective customers and potential licensees will materialize for us~~2024.

We are currently focused on three vertical markets – PV inverters, distributed energy storage, and electrified vehicle DC charging. The PV inverter market is the largest and most mature, but it is also in a hypercompetitive state with slow growth and an increasing number of suppliers. Our initial PV inverter product is highly innovative and was developed as the first implementation of PPSA in order to validate our technology. We continue to leverage the PV inverter market for valuable product refinement feedback, including feature and performance requirements as well as improving the quality and robustness of our product reference designs. We plan to integrate our proven PV inverter functionality with grid storage and/or DC charging functionality to create high value hybrid and micro-grid systems.14

~~The~~Table ~~distributed energy storage market is a new evolving market. We believe that this market will grow quickly, but is currently limited by the lack~~ of commercially available, certified solutions. We believe our battery converter is highly competitive in this market. We have won several design wins with strategic customers that we believe can generate product sales and may be converted to licensing agreements longer term. Most of our initial battery converter sales have been to potential licensees as they evaluate our converters for possible integration into their commercial grid storage market offering. We are currently negotiating a strategic supplier agreement with an industry leader in this market, although we cannot provide any assurance that this potential agreement will be consummated. We believe our ability to negotiate attractive licensing terms would improve if high market demand is established for our reference design products. Contents

~~-31-~~COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

We believe the electrified vehicle DC charging market may be our fastest growing market opportunity. Our approach to this market offers features to reduce installation costs, operational costs, and create new value-added capabilities. Similar to the distributed energy storage market, we are working with several strategic customers to achieve design wins and help them integrate our product into their solution. Our initial focus is on the California DC charging market and we believe we can achieve design wins and ecosystem partners in this space.

We also continue to develop next generation products including our 3-port hybrid converter and new power switch components that we believe will further extend the differentiation and value of our reference design products. We believe that we are offering a long term solutions roadmap for our selected customers and markets that can establish our PPSA technology as the market leading solution.

We have released and are selling our first two commercial products, which have generated limited revenue to date. We expect these products to generate additional revenues; however, in the near term, these revenues may not be adequate to cover the costs of our operations.

Our financial statements contemplate the continuation of our business as a going concern. We are subject to the risks and uncertainties associated with a new business, including lack of operating capital, lack of personnel and lack of demand for our products. We have no established source of capital, we have limited commercial product revenue and we have incurred significant debt and significant losses from operations since inception. These matters raise substantial doubt about our ability to continue as a going concern.

Plan of Operation

Our strategy is to continue to commercialize our technology though the development of a variety of products and licensing. We have completed development of our first two products, we are developing additional products and we will continue making improvements to all of our products based on customer feedback from system installations. Our goal is to have these products validate our technology and lay the foundation for licensing our technology platform into applications across the global power converter marketplace.

We expect to use the net proceeds received from this offering to continue our product research and development, protect our intellectual property, and explore market opportunities, as well as for working capital and other general corporate purposes. The net proceeds from this offering are anticipated to be approximately $10.5 million, which is expected to be sufficient to fund our activities for the next two years following the offering. Our anticipated costs include employee salaries and benefits, compensation paid to consultants, capital costs for research and other equipment, costs associated with development activities including travel and administration, legal expenses, sales and marketing costs, general and administrative expenses, and other costs associated with an early stage, publicly-traded technology company. We anticipate increasing the number of employees by up to approximately 15-25 employees; however, this is highly dependent on the nature of our development efforts. We anticipate adding employees in the areas of research and development, sales and marketing, and general and administrative functions required to support our efforts. We expect to incur consulting expenses related to technology development and other efforts as well as legal and related expenses to protect our intellectual property. We expect capital expenditures to be approximately $1.0 million during the two years following this offering, but these are highly dependent on the nature of the operations where co-development activities are ongoing. We also have issued $4 million in senior secured convertible promissory notes that must be paid on November 21, 2013, $750,000 in senior secured convertible promissory notes that must be paid on July 29, 2014, and $1.142 in convertible promissory notes that must be paid on December 31, 2013, if the notes are not converted to shares of our common stock prior to their maturity dates.

The amounts that we actually spend for any specific purpose may vary significantly and will depend on a number of factors including, but not limited to, the pace of progress of our commercialization and development efforts, actual needs with respect to product testing, development and research, market conditions, and changes in or revisions to our marketing strategies. In addition, we may use a portion of any net proceeds to acquire complementary products, technologies or businesses; however, we do not have plans for any acquisitions at this time. We will have significant discretion in the use of any net proceeds. Investors will be relying on the judgment of our management regarding the application of the proceeds of any sale of our common stock.

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CRITICAL ACCOUNTING POLICIES

The following discussion and analysis of financial condition and results of operations is based upon our financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America. Certain accounting policies and estimates are particularly important to the understanding of our financial position and results of operations and require the application of significant judgment by our management or can be materially affected by changes from period to period in economic factors or conditions that are outside of our control. As a result, they are subject to an inherent degree of uncertainty. In applying these policies, our management uses their judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on our historical operations, our future business plans and projected financial results, the terms of existing contracts, our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate. Please see Note 2 to our financial statements for a more complete description of our significant accounting policies.

Basis of Presentation. Our financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplate continuation of the Company as a going concern. However, we are subject to the risks and uncertainties associated with a new business, we have limited sources of revenue, and we have incurred significant losses from operations since inception. Our operations are dependent upon it raising additional capital. These matters raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty.

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”. We generally sell our products freight-on-board (FOB) shipping and recognize revenue when products are shipped. Revenue from service contracts is recognized using the completed-performance or proportional-performance method depending on the terms of the service agreement. When there are acceptance provisions based on customer-specified subjective criteria, the completed-performance method is used. For contracts where the services performed in the last series of acts is very significant, in relation to the entire contract, performance is not deemed to have occurred until the final act is completed. Once customer acceptance has been received, or the last significant act is performed, revenue is recognized. We use the proportional-performance method when a service contract specifies a number of acts to be performed and we have the ability to determine the pattern and value in which service is provided to the customer.

Royalty income is recognized as earned based on the terms of the contractual agreements.

Research and Development. The cost of research and development is expensed as incurred.

Income Taxes. We account for income taxes using an asset and liability approach that 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 we are able to realize their benefits, or that future deductibility is uncertain. 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.

Stock-Based Compensation. The costs of all employee stock options, as well as other equity-based compensation arrangements, are reflected in the financial statements based on the estimated fair value of the awards on the grant date. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. Stock compensation for stock granted to non-employees is determined as the fair value of the consideration received or the fair value of equity instruments issued, whichever is more reliably measured.

-33-

Convertible Promissory Notes and Warrants. The warrants and embedded conversion feature of convertible promissory notes are classified as equity under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815-40 “Derivatives and Hedging – Contracts in Entity’s Own Equity.” The Company allocates the proceeds of the convertible promissory notes between convertible promissory notes and the financial instruments related to warrants associated with convertible promissory notes based on their relative fair values at the commitment date. The fair value of the financial instruments related to warrants associated with convertible promissory notes is determined using the Black-Scholes option pricing model and the respective allocated proceeds to the warrants is recorded in additional paid-in capital. The embedded beneficial conversion feature associated with convertible promissory notes is recognized and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital in accordance with ASC Topic 470-20 “Debt – Debt with Conversion and Other Options”. The portion of debt discount resulting from the allocation of proceeds to the financial instruments related to warrants associated with convertible promissory notes is being amortized over the life of the convertible promissory notes. For the portion of debt discount resulting from the allocation of proceeds to the beneficial conversion feature, it is amortized over the term of the notes from the respective dates of issuance.

RESULTS OF OPERATIONS

Comparison of the three months ended March 31, 2013 to the three months ended March 31, 2012

Revenues. Revenues for the first quarter of 2013 of $380,135 were $247,953 higher than the $132,182 we earned in revenues for the first quarter of 2012. The increase in revenue was due to a $160,956 increase in grant revenues, the majority of which came from our Department of Energy grant. In the first quarter of 2012, revenue from the sale of products and services was $45,900 and was attributed to work performed for Lockheed Martin. In the first quarter of 2013, revenue from the sale of products, which consisted of 5 battery units, 10 inverters and 16 combiners, was $132,897.

Cost of Revenues. As a result of the increase in sales of our products, cost of revenues increased for the three months ended March 31, 2013, to $366,989 from $87,577 for the quarter ended March 31, 2012, an increase of $279,412 or approximately 319%.

Gross profit. Gross profit for the first quarter of 2013 and 2012 was $13,146 and $44,605, respectively. The first quarter of 2012 benefited from higher margins received on contract services for Lockheed Martin. The margin in the first quarter of 2013 was low because grant expense was in excess of grant revenue.

Operating Expenses. Operating expenses consist of general and administrative activities, research and development, and sales and marketing, which increased by $101,889 during the three months ended March 31, 2013, to $754,220 as compared to operating expenses of $652,331 for the three months ended March 31, 2012. While general and administrative costs increased by $181,472, research and development expense of $256,348 for the first quarter of 2013 was $96,493 lower than the $352,841 incurred in the first quarter of 2012. The research and development costs in the first quarter of 2012 were higher due to increased expenses from certification testing that was performed during that quarter on our inverter product.

Loss from Operations. Due to the increase in our operating expenses, our loss from operations for the first quarter of 2013 of $741,074 was $133,348 or 21.9% higher than the $607,726 loss from operations for the quarter ended March 31, 2012.

Interest Expense. Interest expense increased from $103,549 in the first quarter of 2012 to $1,083,429 in the first quarter of 2013, an increase of $979,880, of which $959,956 was due to an increase in amortization of debt discount.

Net Loss. Primarily as a result of the increase in our operating expenses and interest expense, our net loss for the quarter ended March 31, 2013, was $1,824,503 as compared to a net loss of $711,275 for the quarter ended March 31, 2012, an increase of $1,113,228.

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Comparison of Years Ending December 31, 2012 and 2011

Revenues. During 2012 and 2011, our revenues totaled $1,126,907 and $860,771, respectively, an increase of $266,136 or approximately 31%. Revenues from grants totaled $707,357 and $26,581 in 2012 and 2011, respectively. Of the $707,357 of grant revenue received in 2012, $693,938 was from the Department of Energy. Revenues from royalty income totaled $100,000 and $20,000 in 2012 and 2011, respectively, pursuant to the minimum licensing fees required by our licensing agreement with Lockheed Martin. Revenues from the sale of product and services totaled $319,550 and $814,190 in 2012 and 2011 respectively. The sale of product and services included contract revenues from Lockheed Martin of $53,900 and $649,440 in 2012 and 2011, respectively. The contract revenue from Lockheed Martin declined in 2012, since the project required lower levels of our services. Sales of converter products totaled $265,650 for 25 units in 2012 and $164,750 for 14 units in 2011.

Cost of Revenues. As a result of the increase in sales of our products, cost of revenues increased for the year ended December 31, 2012, to $957,641 from $757,393 for the year ended December 31, 2011, an increase of $200,248 or approximately 26%. Gross margin increased from 12% to 15% in 2012, largely due to an additional $80,000 in royalty income received in 2012.

Operating Expenses. Operating expenses, consisting of general and administrative expenses, research and development, and sales and marketing, increased by $1,591,513 during the year ended December 31, 2012, to $3,207,573 as compared to operating expenses of $1,616,060 for the year ended December 31, 2011. The most significant increase was related to the increase in professional services, which totaled $1,139,886 for the year ended December 31, 2012, as compared to $147,356 for the year ended December 31, 2011. This increase resulted primarily from the payment for business consulting and legal services. Both research and development and general and administrative expense also increased as a result of an increase in full time equivalent employees from 6.5 during the year ended December 31, 2011, to 9 during the year ended December 31, 2012. If our operations grow as expected, we anticipate that the number of our employees will continue to increase.

Loss from Operations. Due to the increase in our operating expenses, our loss from operations increased during 2012 by $1,525,625 or approximately 100%, to $3,038,307 for the year ended December 31, 2012, as compared to $1,512,682 for the year ended December 31, 2011.

Interest Expense. Interest expense increased from $238,257 in 2011 to $1,608,912 in 2012 due to an increase of $1,295,920 in amortization of the debt discount.

Net Loss. Primarily as a result of the increase in our operating expenses and interest expense, our net loss for the year ended December 31, 2012, was $4,647,219 as compared to a net loss of $1,750,939 for the year ended December 31, 2011, an increase of $2,896,280.

Liquidity and Capital Resources

Although our revenues have increased every year from the date of our inception, we do not generate enough revenue to sustain our operations. Our revenues are derived from sales of our products and from grants we have received for the development of our technology. We have funded our operations through the sale of our common stock, preferred stock (later converted to common) and debt securities.

As of March 31, 2013, and December 31, 2012, we had cash and cash equivalents of $1,215,986 and $1,972,301, respectively.

Our net working capital decreased from a positive $528,603 as of December 31, 2012, to a negative $1,274,681 as of March 31, 2013, mainly due to the increase in our current portion of long term debt from $1,313,146 to $2,350,532, due to the amortization of the debt discount, as well as due to the cash expended for operating activities.

Operating activities in the first quarter of 2013 resulted in cash outflows of $717,133, which were due primarily to the net loss for the quarter of $1,824,503 offset by amortization of total debt discount in the amount of $1,037,386.

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Investing activities during quarters ended March 31, 2013 and 2012 resulted in cash outflows of $59,182 and $63,614, respectively, for development of patents and acquisition of fixed assets.

During the quarter ended March 31, 2013, we did not raise any additional funds. In the quarter ended March 31, 2012, we raised $202,704 in gross proceeds from the sale of convertible promissory notes and $52,000 from the sale of stock.

During the year ended December 31, 2012, we raised $4 million in gross proceeds from the sale of our senior secured convertible promissory notes, $695,000 in other convertible promissory notes, and $52,000 from the sale of stock. We have no committed sources of financing and, in the near term, we do not expect to earn enough revenues from the sale of our products to support our operations. The report from our independent registered public accounting firm states that there is a substantial doubt about the Company’s ability to continue as a going concern.

At December 31, 2012 and 2011, we had $1,972,301 and $100,675 in cash and cash equivalents, respectively. Our net working capital increased $590,040 in 2012 from a negative $61,437 as of December 31, 2011, to a positive $528,603 in December 31, 2012, due to debt financing.

Operating activities in 2012 resulted in cash outflows of $2,251,489, which were due primarily to the loss for the year of $4,647,219 offset by amortization of debt discount in the amount of $1,472,904 and the fair value of warrants issued for consulting services in the amount of $670,947.

Investing activities during 2012 and 2011 resulted in cash outflows of $309,035 and $150,811, respectively, for the development of patents and acquisition of fixed assets.

Financing activities during 2012 and 2011 generated $4,432,150 and $1,363,376, respectively, in net cash from the issuance of debt and common stock.

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 this offering 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 this offering 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 prospectus, 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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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table sets forth the names and ages of all of our directors and executive officers. The Company's board of directors plans to fill a vacancy on the board of directors by appointing an additional independent director prior to our listing on the Nasdaq Capital Market. Our officers are appointed by, and serve at the pleasure of, the board of directors.

Name	Age	Position
Paul Bundschuh	51	Chief Executive Officer and Chairman of the board of directors
William C. Alexander	57	Chief Technology Officer
Christopher P. Cobb	43	President, Chief Operating Officer and Director
Barry Loder	56	Chief Financial Officer
Charles De Tarr	56	Vice President, Finance and Secretary
Mark L. Baum	40	Director
Lon E. Bell, Ph.D.	72	Director

Biographical information with respect to our executive officers and directors is provided below. There are no family relationships between any of our executive officers or directors.

Paul Bundschuh, Chief Executive Officer and Chairman of the Board

Mr. Bundschuh joined Ideal Power in May 2009. Since September 2012, he has been Chief Executive Officer and Chairman of our board of directors. In this role, he has guided our business strategy and overseen our fundraising and sales/marketing efforts. From May 2009 through September 2012, Mr. Bundschuh was Vice President of Business Development, where he focused on financing activities, including obtaining various grants and industry awards and securing customers. Prior to joining our company, Mr. Bundschuh was a renewable energy technology and marketing consultant from September 2008 through May 2009, during which time he consulted with various renewable energy firms on their marketing and business development efforts. From January 2008 through July 2008, Mr. Bundschuh was Vice President of Marketing and Technology for Electromagnetic Power Solutions, an inverter company start-up leveraging IP licensed from Virginia Tech University. Mr. Bundschuh developed the business and marketing plans for the company and identified potential investors. From October 2000 through March 2007, Mr. Bundschuh was Vice President of Sales and Marketing of the Semi & Licensing division of Waves Audio, where he began a new division for audio IP licensing and custom semiconductor solutions to the consumer audio OEM market. Prior to Waves Audio, Mr. Bundschuh held various roles with Motorola Semiconductor and Advanced Micro Devices. Mr. Bundschuh has a Master of Business Administration from the University of Texas at Austin, a Masters of Engineering in Computer and Systems Engineering as well as a Bachelor of Science in Electrical Engineering from Rensselaer Polytechnic Institute. Mr. Bundschuh’s extensive knowledge of renewable energy technology and his experience in marketing and business development, particularly for start-up companies, led us to believe that he should serve as a director.

Christopher Cobb – President, Chief Operating Officer and Director

Mr. Cobb joined Ideal Power in May 2012 as Chief Executive Officer and a director. In this capacity, he focused on business strategy and obtaining funding for our operations. In September 2012, Mr. Cobb transitioned to President and Chief Operating Officer, where he focuses on our operations, strategy for development of our business and the implementation of that strategy. From December 2011 through May 2012, Mr. Cobb was an independent consultant to businesses of varying sizes, providing guidance on business strategy and organizational development. Mr. Cobb served as President, Director and Chief Financial Officer of HEIT, Inc. from September 2010 through November 2011, where he focused on finance, mergers and acquisitions and the integration of HEIT with Simpler-Webb, Inc. Mr. Cobb left HEIT after the firm was sold to Computer Services Inc. (OTCQX: CSVI). From February 2009 through September 2010, Mr. Cobb was CEO and Director of Simpler-Webb Inc., and was responsible for overall company strategy and management. He led the effort to merge with HEIT and subsequently led the integration effort of those two firms. Mr. Cobb was CFO and director of Simpler-Webb from April 2002 through February 2009. Prior to April 2002, Mr. Cobb held various positions at United Airlines, McKinsey and Company and Andersen Consulting. Mr. Cobb holds a Master of Business Administration from the Kellogg Graduate School of Management and a Bachelor of Science in Mechanical Engineering from the University of Texas at Austin. Mr. Cobb’s experience as a consultant providing guidance on business strategy and organizational development and as a member of the board of directors of Simpler-Webb led us to conclude that he should serve as a director.

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William C. Alexander, P.E. – Chief Technology Officer and Founder

Mr. Alexander founded Ideal Power in 2007 and joined us full time in January 2010 as the Chief Technology Officer. Mr. Alexander oversees the technology development of all of our products and inventions. Mr. Alexander is also the lead engineer working with clients to collaboratively develop solutions based on our technology. Mr. Alexander was a director of Ideal Power from 2007 through 2012. Prior to joining the company, Mr. Alexander was a Principal Engineer II for BAE Systems in Austin, Texas from June 1999 through January 2010. Mr. Alexander was the lead engineer developing various weapons systems including LIDAR seekers for air-to-air and air-to-ground applications. Before BAE, Mr. Alexander held various technology and engineering roles with Symtx, Inc., Tracor Aerospace, Inc. and Croft and Company. Mr. Alexander has 27 patents granted with over 50 patents pending. He has a Master of Science in Mechanical Engineering and a Bachelor of Science in Mechanical Engineering from the University of Texas at Austin.

Barry Loder – Chief Financial Officer

Barry Loder was appointed as our Chief Financial Officer, on a part-time basis, in July 2013. Mr. Loder will begin full-time duties with us following the completion of this offering. Until he joins Ideal Power Inc., Mr. Loder is, and has been since March 2012, the Executive Vice President/Chief Operating and Financial Officer of Shield Air Solutions, Inc., a specialty manufacturer of industrial environmental control systems located in Houston, Texas. At Shield Air Solutions, Mr. Loder is responsible for all manufacturing, sales, marketing, operational, procurement and financial matters for the company. From April 2010 to March 2012, Mr. Loder was a principal at BCL Partners, a financial consulting company, that assisted small and mid-size companies in the areas of corporate growth strategies, initial public offerings, financings and merger and acquisition activities. From October 2008 to April 2010, Mr. Loder was the Chief Executive Officer/Chief Financial Officer of Cyberwize, Inc., a Florida based direct marketing company. Mr. Loder was Chief Financial Officer and founder of Republic Waste Industries, Inc. where he was responsible for all financial matters including merger and acquisition activities. Mr. Loder has extensive experience in merger and acquisition transactions, corporate financings and initial public offerings. Mr. Loder is a certified public accountant in Texas. Mr. Loder received a Bachelor of Arts in Accounting/Finance from Walsh University and received a Master of Business Administration from Houston Baptist University.

Charles De Tarr – Vice President, Finance and Secretary

Charles De Tarr joined Ideal Power Inc. in May 2008 as our part-time Chief Financial Officer and Secretary and began providing services on a full-time basis in February 2013. On July 10, 2013, Mr. De Tarr was appointed as Vice President, Finance. Mr. De Tarr also served as a director on our Board of Directors from May 2008 through November 2012. Prior to joining the Company on a full-time basis, Mr. De Tarr was Chief Financial Officer of Intevras Technologies, LLC from July 2009 through July 2010 when it was acquired by Layne Christensen Company. Mr. De Tarr continued as the Financial Manager for the Intevras Division in a part-time capacity from July 2010 through January 2013. Before joining Intevras, Mr. De Tarr was the founder, owner and Chief Executive Officer of BNC Communications, LLC, a telecommunications service provider, in Austin, Texas. Mr. De Tarr managed that company’s operations from January 2004 through 2008. Prior to BNC Communications, Mr. De Tarr held various management positions with a variety of firms, including C3 Communications, Inc., DataPult, LP, Chubb Security Systems, Inc. and Supreme Cable Company, Inc. Mr. De Tarr holds a Bachelor of Science in Business Administration from Ithaca College, Ithaca, New York and a Master of Business Administration from the University of Texas at Austin. In addition, Mr. De Tarr holds both a CPA and CVA designation from the Texas State Board of Public Accountancy and the National Association of Certified Valuation Analysis, respectively.

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Mark L. Baum, J.D., Director

Mark L. Baum joined our board of directors in November 2012. Mr. Baum is also director, since December 2011, of Imprimis Pharmaceuticals, Inc., a publicly traded company, where he also serves as Chief Executive Officer effective April 1, 2012. Mr. Baum has served as the principal of The Baum Law Firm, P.C. (now TBLF, LLC) since 1998, and has more than 15 years of experience in financing, operating and advising small capitalization publicly traded enterprises, with a particular focus on restructured or reorganized businesses. As a manager of capital, he has completed more than 125 rounds of financing for more than 40 publicly traded companies. As a securities attorney, Mr. Baum has focused his practice on U.S. securities laws, reporting requirements and public company finance-related issues that affect small capitalization public companies. Mr. Baum has actively participated in numerous public company spin-offs, restructurings/recapitalizations, venture financings, private-to-public mergers, asset acquisitions and divestitures. In addition to his fund management and legal experience, Mr. Baum has operational experience in the following industries: life science and diagnostics, closed door pharmacies, cleaner and renewable energy and retail home furnishings. Mr. Baum has served on numerous boards of directors of publicly traded companies, including Chembio Diagnostic Systems, Inc., Applied Natural Gas Fuels, Inc. (formerly AGAS), Shrink Nanotechnologies, Inc., You on Demand, Inc. and CoConnect, Inc., as well as boards of advisors for domestic and international private and public companies. Mr. Baum founded and capitalized the Mark L. Baum Scholarship, which has funded tuition grants to college students in Texas. Mr. Baum is a published inventor and a licensed attorney in California and Texas. Mr. Baum’s years of public company executive experience, including knowledge of securities laws, reporting requirements and public company finance-related issues, led us to believe that he should serve as a director.

Lon E. Bell, Ph.D., Director

Dr. Bell joined our Board of Directors in November 2012. He founded Amerigon Inc. (now Gentherm) in 1991. Dr. Bell has served many roles in Amerigon, Inc., including Chief Technology Officer until December 2010, Director of Technology until 2000, Chairman and Chief Executive Officer until 1999, and President until 1997. Dr. Bell served as the Chief Executive Officer and President of BSST LLC, a subsidiary of Amerigon from September 2000 to December 2010. He served as a Director of Amerigon from 1991 to 2012. Previously, Dr. Bell co-founded Technar Incorporated, which developed and manufactured automotive components, and served as Technar’s Chairman and President until selling majority ownership to TRW Inc. in 1986. Dr. Bell continued managing Technar, then known as TRW Technar, as its President until 1991. He co-founded Mahindra REVA Electric Vehicle Co Ltd. in 1994 and serves on its Board of Directors and Chairman of its Intellectual Property Committee. He currently serves on the Board of Directors of ClearSign Combustion Corporation. He is a member of advisory boards at California Institute of Technology Mechanical Engineering Department since 2008, Michigan State University and University of Santa Barbra Energy Frontiers Research Centers since 2010 and Alphabet Energy since 2011. Dr. Bell is a leading expert in the design and mass production of thermoelectric products. He has authored more than 30 publications in the areas of thermodynamics of thermoelectric systems, automotive crash sensors, and other electronic and electromechanical devices. Five of his inventions have gone into mass production and dominated their target markets. Dr. Bell received a BSc. in Mathematics, an MSc. in Rocket Propulsion, and a Ph.D. in Mechanical Engineering from the California Institute of Technology. Dr. Bell’s demonstrated ability to commercialize inventions led us to conclude that he should serve as a director.

Director Independence

Our board of directors has determined that Mark S. Baum and Lon E. Bell, Ph.D. are “independent directors” as such term is defined by Nasdaq Marketplace Rule 5605(a)(2). We have established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Mr. Baum and Dr. Bell serve on all three committees. The Company's board of directors plans to fill a vacancy on the board of directors by appointing an additional independent director prior to our listing on the Nasdaq Capital Market.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has, during the past ten years, been involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K.

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EXECUTIVE COMPENSATION

The following summary compensation table covers all compensation awarded to, earned by or paid to our principal executive officer and each of the other two highest paid executive officers, if any, whose total compensation exceeded $100,000 during the years ended December 31, 2012 and 2011. These individuals are sometimes referred to in this prospectus as the “Named Executive Officers”.

Summary Compensation Table

Name and Principal		Salary		Bonus		Stock		Option			All Other		Total
Position						Awards (1)			Awards (2)		Compensation
Paul Bundschuh	2012	$	139,999	$	0	$	0		$	0	$	0	$	139,999
Chief Executive Officer	2011		103,924		0		35,000			0		0	$	138,924
Christopher Cobb	2012	$	13,462	$	41,250	$	48,993		$	85,049	$	0	$	188,754
President and Chief Operating Officer (Former Chief Executive Officer)	2011		0		0		0			0		-	$	0
William Alexander	2012	$	238,253	$	0	$	0		$	0	$	0	$	238,253
Chief Technology Officer, founder	2011		160,294		8,000		0			0		0		168,294
Charles De Tarr	2012	$	115,895	$	35,000	$	0		$	0	$	0	$	150,895
Former Chief Financial Officer	2011		84,455		0		0			0		0		84,455

The following table summarizes compensation earned during the years ended December 31, 2025 and 2024 by our named executive officers (“NEOs”).

(1) The amounts included in this column are the aggregate grant date fair value of stock awards computed by us in accordance with Accounting Standards Codification 718, Compensation-Stock Compensation, and includes amounts from stock awards granted in 2011 and 2012. For information on the valuation assumptions used in calculating these dollar amounts, see Notes 1 and 7 to our audited financial statements included elsewhere in this prospectus.

Name and Principal Position	Year	Salary ($)		Bonus ($)⁽¹⁾		Stock Awards ($)⁽²⁾		All Other Compensation ($)⁽³⁾		Total ($)
David Somo^(4),(5)	2025		57,212		—		2,083,739		19,816		2,160,767
President and Chief Executive Officer

Timothy Burns	2025		282,576		11,774		174,570		25,868		494,788
Chief Financial Officer and Secretary	2024		282,576		79,475		282,000		25,242		669,293

R. Daniel Brdar⁽⁶⁾	2025		306,519		—		337,709		33,988		678,216
Former President and Chief Executive Officer	2024		354,200		199,238		599,250		27,451		1,180,139

(2) This amount reflects the aggregate grant date fair value for this award and does not correspond to the actual value that may be recognized by the individual upon option exercise. T he assumptions used to determine the grant date fair value of the stock option is included in Note 11 to our audited financial statements included elsewhere in this prospectus.

(1)	Bonus represents performance bonus earned during the year. See “Employment Agreements” below for further discussion of NEO target bonuses.
(2)	The amounts included in this column are the aggregate grant date fair value of restricted stock units and performance stock units determined in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures.
(3)	Other compensation includes Company-paid healthcare and relocation benefits.
(4)	Mr. Somo was appointed Chief Executive Officer effective November 3, 2025
(5)	The stock awards reported for Mr. Somo represent a new hire inducement grant.
(6)	Mr. Brdar served as President and Chief Executive Officer until November 2, 2025.

Narrative to Summary Compensation Table

Current and Future Compensation Practices

~~Currently,~~Compensation ~~compensation~~ for our ~~employees~~NEOs consists of base salary, a cash ~~bonuses~~bonus and equity awards. ofThe ~~stock~~current ~~options~~practice oris ~~restricted~~for ~~stock through~~ the ~~Ideal~~Company ~~Power~~to ~~Converters,~~provide ~~Inc.~~annual ~~2013~~equity ~~Equity~~awards ~~Incentive~~in ~~Plan. We believe that a combination of cash, options for~~ the ~~purchase~~form of ~~common~~restricted stock, orunits ~~grants~~and ofperformance ~~restricted~~ stock ~~will~~units ~~allow us~~ to ~~attract~~NEOs. ~~and~~The ~~retain~~Company ~~the~~has ~~services~~not ofestablished ~~individuals~~a ~~who~~policy ~~will~~or ~~help~~practice usfor ~~achieve~~determining ~~our~~the ~~business~~number ~~objectives,~~of ~~thereby~~NEOs’ ~~increasing~~equity ~~value~~awards ~~for~~and, ~~our~~as ~~stockholders. We~~such, ~~believe~~the ~~that~~number ~~share~~of ~~ownership~~awards bygranted ~~our employees is an effective method~~ to ~~deliver~~NEOs ~~superior~~are ~~stockholder~~at ~~returns by increasing~~ the ~~alignment~~discretion ~~between~~of the ~~interests~~Compensation Committee of our ~~employees and our stockholders~~Board. No ~~employee~~We ismay ~~required~~establish tosuch ~~own~~a ~~common~~policy ~~stock~~or practice in ~~our~~the ~~Company~~future.

In setting the compensation for our NEOs, we look primarily at the person’s responsibilities and level of performance, at the person’s experience and education, at our ability to replace the individual and competitive benchmarking data. In 2022, the Compensation Committee engaged a firm that specializes in executive and Board compensation to conduct a compensation benchmarking study. This firm obtained market benchmarking data for public companies with similar characteristics to us and compared this data to actual executive compensation at the Company. The firm’s analyses determined that base salary for the former CEO was well positioned to the 25th percentile of the peer group while the base salary for the CFO was below the 25th percentile of the peer group. As a result, the Compensation Committee determined that it was appropriate to maintain the same base salary for the former CEO and approved an increase in the annual base salary of the CFO for 2023 to align with the 25th percentile of the peer group. The Compensation Committee also considered this compensation benchmarking study in setting 2025 compensation for NEOs. The compensation of current CEO was determined based on market-~~40-~~based guidance provided by an executive search firm engaged by the Company for the CEO search.

In setting the compensation for our officers, we look primarily at the person’s responsibilities, at the person’s experience and education and at our ability to replace the individual. We expect the base salaries of our executive officers to remain relatively constant unless the person’s responsibilities are materially changed. We also expect that we may pay bonuses in the future to reward exceptional performance or the achievement by the Company or an individual of targets to be agreed upon. During 2011 and 2012, because we had limited cash resources, we periodically accrued salaries for our executive officers. It is possible that we will again be unable to pay these salaries in a timely manner until we begin to generate cash from sales of our products or we arrange additional financing in the form of equity sales or debt instruments. 15

~~Employment~~Table ~~Agreements~~of ~~and Offer Letters~~Contents

OnWe ~~May~~expect 7the ~~and~~base ~~May~~salaries 8,of ~~2013,~~ our ~~executives,~~NEOs ~~Paul~~to ~~Bundschuh,~~remain ~~Christopher~~relatively ~~Cobb~~constant ~~and~~but ~~William~~may ~~Alexander,~~adjust ~~entered~~a ~~into~~NEO’s ~~employment~~base ~~agreements~~salary ~~with~~if usthe person’s responsibilities are materially changed or due to other economic or market considerations. ~~With~~ ~~the~~We ~~exception~~also ofmay ~~the~~pay ~~annual~~bonuses ~~compensation~~to ~~and~~reward exceptional performance or the ~~length~~achievement ofby the ~~term~~Company or an individual of targets to be agreed upon. The performance bonus target for each NEO who is currently an employee of the Company is established by his employment ~~agreements~~agreement, subject to adjustment by the ~~material~~Compensation ~~terms~~Committee, which is discussed in detail below. In 2025 and 2024, the actual bonuses paid to NEOs were equal to 8.33% and 56.25%, respectively, of the ~~employment~~performance ~~agreements~~bonus ~~are~~target ~~substantially~~for each NEO and were based on the ~~same~~level of achievement by the Company of targets approved by the Board.

The ~~employment~~Company’s ~~agreements~~current ~~entered~~practice ~~into~~is byto ~~Messrs.~~not ~~Bundschuh~~provide ~~and~~NEOs ~~Alexander~~with ~~have initial terms~~ cost-of-living ~~two~~adjustments ~~years,~~to ~~but~~their ~~will~~base besalary ~~renewed~~ on an annual basis ~~following the expiration of the initial term, unless otherwise terminated~~. ~~Mr.~~ ~~Cobb’s~~The ~~employment~~Compensation ~~agreement~~Committee ~~includes~~elected anto ~~initial~~maintain ~~term of one year, and will be renewed for periods of six months following~~ the ~~expiration~~same ofbase ~~the initial term~~salary, ~~unless~~without ~~otherwise~~a ~~terminated. Mr. Bundschuh is compensated at an annual rate~~ cost-of-living ~~$200~~adjustment,~~000,~~ ~~Mr.~~for ~~Cobb~~the isformer ~~compensated~~CEO atfor anthe ~~annual~~years ~~rate~~2022 ofthrough ~~$175,000~~2025 and ~~Mr.~~for ~~Alexander~~the isCFO ~~compensated~~for atthe anyears ~~annual~~2023 ~~rate~~through ~~of $223,267~~2025.

~~Each~~Outstanding ~~executive~~Equity ~~will~~Awards beAt ~~entitled~~2025 toFiscal receive a cost of living adjustment on January 1st of each year and will be entitled to participate in any employee benefit plans we offer. Each executive is entitled to four weeks of paid time off each year. Following the initial public offering of our common stock, each executive will become eligible for an annual bonus, in an amount to be determined by the Compensation Committee, based upon standards and goals agreed to by the Compensation Committee and the executive, and each executive may receive awards of stock grants or stock options at the discretion of the Compensation Committee.Year-End

Our board of directors may terminate the services of the executive for “cause,” as defined in the employment agreement or upon 30 days written notice to the executive. The employment agreements may also be terminated by the executive’s death or disability, by the election of the executive or due to a change in control, as defined in the employment agreements.

	Option awards								Stock awards
Name	Number of securities underlying unexercised options (#) exercisable		Number of securities underlying unexercised options (#) unexercisable		Option exercise price ($)		Option expiration date		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) ⁽¹⁾
David Somo		—		—	$	—		—		247,438	(2)	$	764,583
		—		—	$	—		—		247,438	(3)	$	764,583
Timothy Burns		—		—	$	—		—		20,000	(4)	$	61,800
		—		—	$	—		—		20,000	(5)	$	61,800
		—		—	$	—		—		26,666	(6)	$	82,398
		25,000		—	$	7.59	12/10/2030			—		$	—
		5,700		—	$	7.19	08/06/2030			—		$	—
		9,500		—	$	1.99	03/25/2030			—		$	—
		9,721		—	$	2.85	10/28/2029			—		$	—
R. Daniel Brdar		—		—	$	—		—		60,000	(7)	$	185,400
		—		—	$	—		—		20,000	(8)	$	61,800
		—		—	$	—		—		56,666	(9)	$	175,098
		—		—	$	—		—		10,000	(10)	$	30,900
		50,000		—	$	7.59	01/30/2027			—		$	—
		25,000		—	$	7.19	01/30/2027			—		$	—
		38,000		—	$	1.99	01/30/2027			—		$	—
		21,000		—	$	2.85	01/30/2027			—		$	—

If(1) anValue ~~executive~~calculated ~~is terminated~~ as ~~a result of death, disability or~~ the ~~executive’s~~number ~~election, he will receive his accrued but unpaid salary and the value~~ of ~~unused~~unearned ~~paid~~units ~~time~~multiplied ~~off~~by ~~through~~ the ~~effective~~closing ~~date~~price of ~~his termination, his accrued but unpaid annual bonus, if any, and his business expenses incurred prior to~~ the effective date of his termination (the “Termination Payment”). The executive will be entitled to continue to participate in any employee benefit plan to the extent provided for in the plan or as may be required by law. If we terminate the executiveCompany’s ~~employment~~Common ~~other~~Stock ~~than~~on ~~for cause,~~ the ~~executive~~Nasdaq ~~will~~Capital ~~receive~~Market ~~the~~at ~~Termination~~December Payment and severance consisting of the greater of (i) the salary that would be due to the executive if his employment had not been terminated or (ii) six months annual salary. The executive will also be entitled to continue to participate in any employee benefit plan for a period of six months following the termination of his employment. If an executive is terminated as a result of a change in control31, he2025 ~~will receive the Termination Payment and severance in an amount equal to the annual salary due to the executive for the balance~~ of ~~the term~~$3. In09 noper ~~event will this severance payment be less than the amount of the executive’s annual salary~~share.

By(2) ~~letter~~Performance ~~dated~~stock ~~June 20~~units, ~~2013,~~with wea ~~made~~grant andate ~~offer~~ of ~~employment~~December ~~to Barry Loder for the position of Chief Financial Officer. Mr. Loder agreed to initially provide services on a part-time basis until the offering closes~~11, ~~at which time he will become a full-time employee. During his part-time service~~2025, wevest ~~agreed~~in tofour ~~pay~~equal ~~Mr.~~tranches ~~Loder~~at ~~$200~~such ~~per hour. Upon his transition to a full~~ time ~~employee,~~or wetimes ~~agreed~~prior to ~~pay~~December ~~Mr. Loder an annual salary of $175~~31,~~000~~ ~~through~~2028 ~~the~~that ~~consummation~~certain ofperformance ~~this~~goals ~~offering~~are ~~and an annual salary of $200~~achieved,~~000~~ ~~thereafter. Mr.~~provided ~~Loder~~that ~~will~~the beNEO ~~entitled~~remains ~~to participate~~ in ~~any~~continuous ~~bonus~~service ~~plan~~with ~~that~~us ~~may~~through beeach ~~adopted~~vesting ~~by our board of directors and he may be entitled to receive grants of restricted stock, bonus stock or stock options, as determined by our board of directors~~date. ~~Upon~~ ~~becoming~~Represent a ~~full~~new ~~time~~hire ~~employee,~~inducement Mrgrant. ~~Loder became eligible to participate in our employee benefit plans.~~

~~-41-~~16

~~Outstanding~~Table ~~Equity~~of ~~Awards at December 31, 2012~~ Contents

~~The~~(3) ~~following~~Restricted ~~table~~stock ~~sets~~units, ~~forth~~with ~~certain~~a ~~information~~grant ~~concerning~~date ~~outstanding~~of ~~equity~~November ~~awards~~3, ~~for~~2025, ~~our~~vest ~~Named~~one-third ~~Executive~~annually ~~Officers~~over ata ~~December~~three-year 31vesting period, ~~2012.~~provided Nothat ~~options~~the ~~were~~NEO ~~exercised~~remains byin ~~our~~continuous ~~Named~~service ~~Executive~~with ~~Officers~~us ~~during~~through ~~the~~each ~~last~~vesting ~~two~~date. ~~fiscal~~Represent ~~years~~a new hire inducement grant.

Name	Option Number of securities underlying unexercised options (#) Exercisable		Awards Number of securities underlying unexercised options (#) Unexercisable		Option exercise price ($)		Option expiration date
Paul Bundschuh		1,228		--	$	0.8133	5/12/2022
Paul Bundschuh		1,281		--	$	0.7953	8/25/2022
Paul Bundschuh		9,817		1,963	$	2.9715	6/30/2020
Paul Bundschuh		5,890		--	$	2.9715	9/30/2020
Paul Bundschuh		5,890		--	$	2.9715	12/31/2022
Christopher Cobb		2,766		16,199	$	6.3276	5/21/2020
Charles De Tarr		26,743		--	$	0.4155	1/31/2022

(4)	Performance stock units, with a grant date of June 12, 2025, vest in three equal tranches at such time or times prior to June 12, 2028 that certain common stock price appreciation metrics are achieved, provided that the NEO remains in continuous service with us through each vesting date.

~~Director~~(5) ~~Compensation~~Restricted stock units, with a grant date of June 12, 2025, vest one-third annually over a three-year vesting period, provided that the NEO remains in continuous service with us through each vesting date.

~~Members~~(6) ofRestricted ~~our~~stock ~~board~~units, ofwith ~~directors~~a ~~did~~grant ~~not~~date ~~receive~~of ~~compensation for their service as directors for the year ended December 31, 2012. On~~ June 3020, ~~2013~~2024, ~~our~~vest ~~board~~one-third ofannually ~~directors~~over ~~approved~~a ~~compensation to be paid to the independent directors as follows: each of the independent directors will receive each calendar~~ three-year ~~$50,000~~vesting ~~in cash and $50~~period,~~000~~ inprovided ~~value~~that ~~of shares of common stock. The cash component of~~ the ~~compensation~~NEO ~~will~~remains not begin to accrue until the registration statement, of which this prospectus is a part, is declared effective by the Securities and Exchange Commission. All directors are reimbursed ordinary and reasonable expenses incurred in ~~exercising~~continuous ~~their~~service ~~responsibilities. At~~with ~~March~~us ~~31,~~through ~~2013,~~each wevesting ~~reserved 12,465 shares of our common stock for the payment of compensation to our independent directors~~date.

~~Insider~~(7) ~~Participation~~Performance stock units, with a grant date of June 12, 2025, vest in ~~Executive~~three ~~Compensation~~equal ~~Decisions~~tranches at such time or times prior to November 1, 2026 that certain common stock price appreciation metrics are achieved, provided that the former NEO remains in continuous service with us through each vesting date.

~~Until~~(8) ~~November~~Restricted ~~28,~~stock ~~2012~~units, ~~our~~with ~~directors~~a ~~were~~grant ~~also~~date ~~executive~~of ~~officers. These~~June ~~individuals included William Alexander~~12, ~~Christopher Cobb and Paul Bundschuh. Our board of directors currently consists of four members~~2025, ~~two~~vest ofone-half ~~whom~~on ~~are also executive officers. The two remaining members of our board are independent within the meaning of the rules of the Nasdaq Capital Market. On~~ January 223, ~~2013,~~2026 ~~our~~and ~~board~~one-half ofon ~~directors~~April ~~established three committees~~3, ~~namely an Audit Committee~~2026, aprovided ~~Nomination~~that ~~and~~the ~~Governance~~NEO ~~Committee~~remains ~~and~~in acontinuous ~~Compensation~~service ~~Committee. Our~~with ~~independent~~us ~~directors~~through ~~are the sole members of~~ each ofvesting ~~these committees~~date.

(9)	Restricted stock units, with a grant date of June 20, 2024, vest one-half on January 3, 2026 and one-half on April 3, 2026, provided that the NEO remains in continuous service with us through each vesting date.

(10)	Restricted stock units, with a grant date of December 15, 2022, vest one-half on January 3, 2026 and one-half on April 3, 2026, provided that the NEO remains in continuous service with us through each vesting date.

Executive Officer Employment Agreements

Mr. Somo

In connection with his appointment as President and Chief Executive Officer, the Company and Mr. Somo entered into an employment agreement, pursuant to which Mr. Somo will (a) receive an annual base salary of $425,000, subject to periodic review by the Board, and (b) be eligible to participate in the Company’s discretionary bonus program with a target award equal to 100% of Mr. Somo’s base salary. Mr. Somo will also be able to participate in the Company’s employee benefit plans from time to time in effect for executive officers or employees. In addition, as an inducement to enter into the employment agreement, Mr. Somo received an initial grant of (1) restricted stock units equal to 2.5% of all issued and outstanding shares of the Company’s Common Stock, plus all shares of Common Stock issuable upon the exercise, conversion, or exchange of any options, warrants, or other rights to acquire Common Stock and upon the conversion or exchange of any securities convertible into or exchangeable for Common Stock (the “Fully Diluted Common Stock”) of the Company, vesting in three equal annual installments beginning on November 3, 2026, and (2) performance restricted stock units equal to equal to 2.5% of the Fully Diluted Common Stock for the Company, vesting upon achievement of certain performance milestones, in each case subject to the terms of his employment agreement and the applicable award agreements, including continue vesting during a 12-month severance period (as set forth in his employment agreement) (collectively, the “Inducement Awards”). His employment agreement also provides for the reimbursement of expenses incurred by Mr. Somo in connection with his relocation to Austin, Texas in an amount not to exceed $50,000 (subject to gross-up in order to offset applicable taxes).

If Mr. Somo is terminated without cause at the election of the Company or terminates his employment for “good reason” (as defined in his employment agreement), he will be entitled to, in addition to the continued vesting set forth above, (A) earned and accrued base salary, bonus, vacation time and other benefits, and (B)(i) a severance payment equal to 12 months of base salary, (ii) payment of annual bonus amounts he would have otherwise received, subject to the terms of his employment agreement, and (iii) continued COBRA health coverage for 12 months following termination of employment with the Company, in each case in Section (B), subject to execution of a customary release set forth in his employment agreement (collectively, the “Severance Benefits”). If Mr. Somo is terminated upon a change in control, Mr. Somo would be entitled to the Severance Benefits and immediate vesting of all outstanding equity awards.

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Under the terms of his employment agreement, Mr. Somo is entitled to participate in any of our employee benefit plans that may now be, or in the future will be, in effect on a general basis for our executive officers or employees. Additionally, we provide, at the Company’s sole expense, healthcare benefits for Mr. Somo and his spouse.

Mr. Burns

On September 16, 2014, Timothy Burns entered into an employment agreement with us. The agreement provided for an initial annual salary, subject to a cost-of-living adjustment and adjustment annually at the discretion of the Board or Compensation Committee. Mr. Burns is also eligible for an annual bonus with a target performance bonus equal to 50% of his annual salary. The actual performance bonus percentage for a given year is based on actual performance relative to performance goals, which are to be mutually agreed upon by the Compensation Committee, the Chief Executive Officer and Mr. Burns.

The employment agreement will be terminated if Mr. Burns is disabled or voluntarily resigns from his employment. The Company may terminate Mr. Burns’ employment for cause or without cause on 30 days’ written notice. If his employment is terminated by the Company without cause, Mr. Burns will receive his accrued but unpaid salary and the value of unused paid time off through the effective date of the termination, any accrued but unpaid bonus, business expenses incurred prior to the effective date of the termination, and severance (the “Burns Severance Payment”) consisting of six months’ salary. The Company may elect, in its sole discretion, whether to pay the Burns Severance Payment in one lump sum or on regular pay days for the six months following termination of Mr. Burns’ employment. Mr. Burns will also be entitled to continue to participate in employee benefit plans, at the Company’s sole expense, for six months following the termination of his employment. In addition, if Mr. Burns’ employment is terminated as a result of a change in control, any of his equity awards that were scheduled to vest following the termination of his employment will vest immediately.

Under the terms of his employment agreement, Mr. Burns is entitled to participate in any of our employee benefit plans that may now be, or in the future will be, in effect on a general basis for our executive officers or employees. Additionally, we provide, at the Company’s sole expense, healthcare benefits for Mr. Burns and his children.

DIRECTOR COMPENSATION

Non-Employee Director Compensation Policy

Our Board compensation policy provides for the following compensation to our non-employee directors:

•	*Annual Cash Retainer.* Each non-employee director, other than the Chairman of the Board, receives an annual cash retainer of $60,000. The Chairman of the Board receives an annual cash retainer of $70,000.

•

Annual Equity Grant. Each non-employee director, other than the Chairman of the Board, receives an annual equity grant of restricted stock units having a grant date fair value of $60,000. The Chairman of the Board receives an annual equity grant of restricted stock units having a grant date fair value of $120,000. Annual equity grants vest in equal quarterly installments over the fiscal year.

All non-employee directors are also reimbursed for ordinary and reasonable expenses incurred in exercising their responsibilities. We do not compensate Mr. Somo, our President and Chief Executive Officer, for his service on the Board.

The following table describes the compensation earned by non-employee members of our Board during the year ended December 31, 2025:

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)⁽¹⁾		Total ($)
Drue Freeman	$	60,000	$	60,000	$	120,000
Gregory Knight	$	60,000	$	60,000	$	120,000
Ted Lesster	$	60,000	$	60,000	$	120,000
Michael C. Turmelle	$	70,000	$	120,000	$	190,000

(1)

The amounts included in this column are the aggregate grant date fair value of restricted stock unit awards, determined in accordance with Financial Standards Accounting Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. These amounts do not necessarily reflect the actual value that may be recognized by the individual upon restricted stock unit vesting.

The aggregate number of stock option awards outstanding for each of our non-employee directors as of December 31, 2025, was as follows:

Name	Number of Vested Stock Options
Drue Freeman		8,983
Gregory Knight		8,983
Ted Lesster		34,821
Michael C. Turmelle		45,731

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial ownership of our common stock as of March 25, 2026 by (i) each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our common stock, (ii) each of our directors and named executive officers and (iii) all executive officers and directors as a group.

Beneficial ownership is determined in accordance with SEC rules. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and include shares of common stock issuable upon exercise of stock options and warrants that, in each case, are immediately exercisable or exercisable within 60 days of March 25, 2026 and shares of common stock issuable upon the vesting of restricted stock units that are scheduled to vest within 60 days of March 25, 2026. Except as otherwise indicated, all of the shares reflected in the table are shares of common stock and all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. The information is not necessarily indicative of beneficial ownership for any other purpose.

Ownership information is based on 12,089,389 shares of common stock outstanding at the close of business on March 25, 2026. The address of each officer and director is 5508 Highway 290 West, Suite 120, Austin, Texas 78735. Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act and is generally determined by voting powers and/or investment powers with respect to securities. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed shares of common stock subject to stock options, warrants and/or restricted stock units held by that person that are currently exercisable or exercisable or subject to vesting, in each case, within 60 days of March 25, 2026 to be outstanding. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.

Name and Address of Beneficial Owner	Number of Shares Beneficially Owned		Percentage of Shares Beneficially Owned
5% Stockholders:
AWM Investment Company, Inc. (1)		1,208,938		9.9	%
AIGH (2)		1,210,620		9.9	%
Laurence W. Lytton (3)		1,210,047		9.9	%
Named Executive Officers, Directors and Director Nominees:
David Somo (4)		90,909		*
Timothy Burns (5)		94,001		*
Drue Freeman (6)		34,513		*
Gregory Knight (6)		34,513		*
Ted Lesster (7)		63,351		*
Michael C. Turmelle (8)		96,790		*
All Directors and Executive Officers as a Group (6 persons)		414,077		3.4	%

*	Represents beneficial ownership of less than 1%.

(1)

Based on shares held on December 31, 2025 as reported on Nasdaq and actual shares and prefunded warrants purchased in a confidentially marketed public offering that closed on February 25, 2026. Represents shares beneficially owned by AWM Investment Company, Inc., a Delaware corporation (“AWM”), as the investment adviser to Special Situations Cayman Fund, L.P., a Cayman Islands Limited Partnership (“Cayman”), Special Situations Fund III QP, L.P., a Delaware limited partnership (“SSFQP”), Special Situations Technology Fund, L.P., a Delaware limited partnership (“Tech”) and Special Situations Technology Fund II, L.P., a Delaware limited partnership (“Tech II” and, together with Cayman, SSFQP and Tech, the “AWM Funds”). David M. Greenhouse and Adam C. Stettner are the principal owners of AWM. Through their control of AWM, Messrs. Greenhouse and Stettner share voting and investment control over the portfolio securities of each of the AWM Funds. Includes (i) 1,196,849 shares of Common Stock and (ii) 12,089 shares of Common Stock issuable upon exercise of prefunded warrants exercisable within 60 days of March 25, 2026. Excludes an aggregate of 1,461,286 shares of Common Stock issuable upon exercise of prefunded warrants exercisable within 60 days of March 25, 2026 due to beneficial ownership limitations. The prefunded warrants held by AWM may only be exercised to the extent that the total number of shares of Common Stock then beneficially owned by AWM does not exceed 9.99% of the outstanding shares of our Common Stock. The amounts set forth in the table above give effect to such beneficial ownership limitation. The address for AWM is c/o Special Situations Funds, 527 Madison Avenue, Suite 2600, New York, New York, 10022.

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(2)

Based on shares held immediately prior to, and actual shares purchased in, a confidentially marketed public offering that closed on February 25, 2026. Represents shares beneficially owned by AIGH Capital Management, LLC, AIGH Investment Partners, LLC and Mr. Orin Hirschman (collectively, “AIGH”). Includes (i) 1,181,696 shares of Common Stock and (ii) 28,924 shares of Common Stock issuable upon exercise of prefunded warrants exercisable within 60 days of March 25, 2026. Excludes 104,409 shares of Common Stock issuable upon exercise of prefunded warrants exercisable within 60 days of March 25, 2026 due to beneficial ownership limitations. The prefunded warrants held by AIGH may only be exercised to the extent that the total number of shares of Common Stock then beneficially owned by AIGH does not exceed 9.99% of the outstanding shares of our Common Stock. The amounts set forth in the table above give effect to such beneficial ownership limitation. The address for AIGH is 6006 Berkely Avenue, Baltimore, Maryland, 21209.

(3)

Based on a Schedule 13G filed with the SEC on March 2, 2026 reporting on beneficial ownership as of February 24, 2026. Includes (i) 1,186,849 shares of Common Stock and (ii) 631,332 shares of Common Stock issuable upon exercise of prefunded warrants. The prefunded warrants held by Laurence W. Lytton may only be exercised to the extent that the total number of shares of Common Stock then beneficially owned by Laurence W. Lytton does not exceed 9.99% of the outstanding shares of our Common Stock. The amounts set forth in the table above give effect to such beneficial ownership limitation. The address for Laurence W. Lytton is 467 Central Park West, New York, NY 10025.

(4)	Represents shares of Common Stock.

(5)	Includes (i) 44,080 shares of Common Stock and (ii) 49,921 shares of Common Stock issuable upon exercise of stock options exercisable within 60 days of March 25, 2026.

(6)	Includes (i) 20,984 shares of Common Stock, (ii) 8,983 shares of Common Stock issuable upon exercise of stock options exercisable within 60 days of March 25, 2026 and (iii) 4,546 shares of Common Stock issuable upon the vesting of restricted stock units within 60 days of March 25, 2026.

(7)	Includes (i) 23,984 shares of Common Stock, (ii) 34,821 shares of Common Stock issuable upon exercise of stock options exercisable within 60 days of March 25, 2026 and 4,546 shares of Common Stock issuable upon the vesting of restricted stock units within 60 days of March 25, 2026.

(8)	Includes (i) 41,968 shares of Common Stock, (ii) 45,731 shares of Common Stock issuable upon exercise of stock options exercisable within 60 days of March 25, 2026 and (iii) 9,091 shares of Common Stock issuable upon the vesting of restricted stock units within 60 days of March 25, 2026.

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DESCRIPTION OF CAPITAL STOCK

The following ~~is a brief~~ description of our capital stock is intended as a summary only. This ~~summary~~description ~~does~~is ~~not~~based ~~purport~~upon, and is qualified by reference to, beour ~~complete~~certificate inof ~~all~~incorporation, ~~respects.~~as ~~This~~amended ~~description~~to isdate ~~subject~~(our “certificate of incorporation”), our certificate of designation of preferences, rights and limitations of Series A convertible preferred stock (our “certificate of designation”), our bylaws, as amended to date (our “bylaws”), and ~~qualified~~applicable ~~entirely~~provisions byof the ~~terms~~General Corporation Law of ~~our~~the ~~Certificate~~State of ~~Incorporation~~Delaware (the “~~Certificate~~DGCL”). This summary is not complete. You should read our certificate of ~~Incorporation”~~incorporation (including the certificate of amendment thereto), our certificate of designation and our bylaws, ~~copies~~which ofare ~~which~~incorporated ~~have~~by ~~been~~reference ~~filed~~as ~~with~~exhibits to the ~~SEC~~registration ~~and~~statement ~~are~~of ~~also~~which ~~available~~this ~~upon~~prospectus ~~request~~forms ~~from~~a uspart, for the provisions that are important to you.

Authorized ~~Capitalization~~and Outstanding Capital Stock

WeOur ~~have~~certificate ~~60,000,000 shares~~ of ~~capital~~incorporation ~~stock~~provides ~~authorized~~that ~~under~~we ~~our~~may ~~Certificate~~issue ofup ~~Incorporation,~~to ~~consisting of~~ 50,000,000 shares of ~~common~~Common ~~stock~~Stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, ~~all with a~~ par value of $0.001 per share. ~~As of June 30~~3, ~~2013~~000,000 ~~we had 1,480,262~~ shares of ~~common~~our ~~stock~~authorized ~~outstanding~~preferred ~~(not including an additional 25,170 shares of common~~ stock ~~reserved~~have ~~for~~been ~~issuance~~designated as ~~compensation~~Series ~~through~~A ~~June~~Convertible ~~30,~~Preferred ~~2013~~Stock, topar ~~our~~value ~~independent~~$0.001 ~~directors)~~per ~~and~~share no(the ~~shares~~“Series ofA ~~preferred~~Preferred ~~stock outstanding~~Stock”). ~~Our~~ ~~authorized~~As ~~but unissued shares~~ of ~~common~~March ~~stock~~25, ~~and~~2026, ~~preferred~~we ~~stock~~had ~~are~~outstanding ~~available for issuance without further action by our stockholders~~12,089,389 ~~unless~~shares ~~such~~of ~~action~~Common isStock ~~required~~and byno ~~applicable~~shares ~~law or the rules~~ of ~~any~~preferred stock ~~exchange or automated quotation system on which our securities may be listed or traded~~.

-42-

Common Stock

~~Holders~~Each holder of our ~~common~~Common ~~stock~~Stock ~~are~~is entitled to ~~such~~one ~~dividends~~vote asfor ~~may~~each besuch ~~declared~~share byoutstanding ~~our~~in ~~board~~the ofholder’s ~~directors~~name. ~~out~~No holder of ~~funds~~Common ~~legally~~Stock ~~available~~is ~~for~~entitled ~~such purpose, subject~~ to ~~any~~cumulate ~~preferential~~votes ~~dividend~~in ~~rights~~voting offor ~~any~~directors, ~~then~~which ~~outstanding~~means ~~preferred~~that ~~stock. The~~the ~~shares~~holders of ~~common~~a ~~stock~~majority ~~are~~of ~~neither~~the ~~redeemable~~outstanding ~~nor~~shares ~~convertible. Holders~~ of ~~common~~our ~~stock~~Common ~~have~~Stock nowill ~~preemptive~~be orentitled ~~subscription rights~~ to ~~purchase~~elect ~~any~~all of ~~our~~the ~~securities~~directors standing for election.

~~Each~~Holders ~~holder~~ of our ~~common~~Common ~~stock~~Stock isare entitled to ~~one~~such ~~vote~~dividends ~~for~~as ~~each~~may ~~such~~be ~~share~~declared ~~outstanding~~by inour ~~the~~board ~~holder’s~~of ~~name. No~~directors ~~holder~~(our “Board”) out of ~~common~~funds ~~stock~~legally isavailable ~~entitled~~for such purpose, subject to ~~cumulate~~any ~~votes~~preferential individend ~~voting~~rights ~~for~~of ~~directors~~any then outstanding preferred stock.

In the event of our liquidation, dissolution or winding up, the holders of our ~~common~~Common ~~stock~~Stock are entitled to receive pro rata our assets, which are legally available for distribution, after payments of all debts and other liabilities and subject to the prior rights of any holders of preferred stock then outstanding. ~~All of the outstanding shares of our common stock are fully paid and non-assessable. The shares of common stock offered by this prospectus will also be fully paid and non-assessable.~~

~~There~~The isshares noof ~~public~~Common ~~market~~Stock ~~for~~are ~~our~~neither ~~common~~redeemable ~~stock~~nor convertible. We ~~intend~~Holders toof ~~apply~~Common ~~for~~Stock ~~listing~~have no preemptive or subscription rights to purchase any of our ~~common~~securities. ~~stock~~The onshares ~~the~~of ~~Nasdaq~~Common ~~Capital~~Stock ~~Market,~~are ~~and~~not ~~listing~~subject onto ~~this~~further ~~exchange~~calls isor aassessment ~~condition~~by us. There are no redemption or sinking fund provisions applicable to the ~~consummation~~Common Stock. All of ~~this~~the ~~offering~~outstanding shares of our Common Stock are fully paid and non-assessable.

Preferred Stock

Our Certificate of Incorporation permits us to issue up to 10,000,000 shares of preferred stock in one or more series and with rights and preferences that may be fixed or designated by our board of directors without any further action by our stockholders. We currently have no shares of preferred stock outstanding.General

~~Subject~~Our tocertificate ~~the limitations prescribed in our Certificate~~ of ~~Incorporation~~incorporation ~~and~~provides ~~under~~that ~~Delaware law,~~ our ~~Certificate~~Board ofhas ~~Incorporation authorizes~~ the ~~board of directors~~authority, ~~from~~without ~~time~~any tofurther ~~time~~action by ~~resolution~~our ~~and without further stockholder action~~stockholders, to ~~provide~~designate ~~for~~and ~~the~~issue ~~issuance~~up ofto 10,000,000 shares of preferred stock, in one or more classes or series, and to fix the ~~designation~~powers, ~~powers~~rights, preferences, and ~~other~~privileges ~~rights~~ of ~~the~~each ~~shares~~class ~~and~~or toseries ~~fix the qualifications, limitations and restrictions thereof. The issuance~~ of preferred stock, ~~with~~including ~~certain~~dividend ~~voting~~rights, conversion ~~and/or redemption~~ rights, ~~could~~voting ~~adversely affect the~~ rights, ofterms ~~holders~~ of ~~our common stock~~redemption, ~~including~~liquidation ~~with~~preferences ~~respect to voting, dividends~~ and ~~liquidation. Preferred~~the ~~stock~~number ~~could~~of ~~also~~shares beconstituting ~~issued~~any ~~quickly~~class ~~with~~or ~~terms calculated to delay~~series, ~~defer~~which ormay ~~prevent~~be agreater ~~change~~than inthe ~~control~~rights of ~~our Company or to make removal of management more difficult. Additionally,~~ the ~~issuance~~holders of ~~preferred stock may decrease~~ the ~~market~~Common ~~price of our common stock~~Stock.

~~Stock~~Series ~~Options~~A ~~and~~Preferred ~~Warrants~~Stock

AsOn ofFebruary ~~June 30~~23, ~~2013~~2017, we ~~have~~filed ~~reserved~~a certificate of designation with the ~~following~~Secretary ~~shares~~of State of ~~common~~the ~~stock~~State ~~for~~of ~~issuance~~Delaware ~~pursuant~~creating our Series A Preferred Stock and establishing the designations, preferences, and other rights of the Series A Preferred Stock, which became effective upon filing. Our Series A Preferred Stock ranks senior to ~~stock~~our ~~option~~Common Stock with respect to dividend rights and ~~warrant~~rights ~~agreements:~~on liquidation, winding-up and dissolution. Our Series A Preferred Stock has a stated value of $2.535. Holders of Series A Preferred Stock are entitled to receive dividends declared or paid on our Common Stock. The holders of the Series A Preferred Stock do not have the right to vote on any matter except to the extent required by Delaware law. There are no shares of Series A Preferred Stock outstanding.

● ● 158,108 shares of our common stock are reserved for issuance under various outstanding option agreements, at a weighted average exercise price of $2.71631 per share; 1,519,095 shares of our common stock, at a weighted average exercise price of $2.99 per share (assuming the sale of our common stock in this offering at a price of $5.00 per share), are reserved for issuance under various outstanding warrant agreements; and21

●Table ~~487,713 shares~~ of ~~our common stock have been reserved for the issuance of awards under our 2013 Equity Incentive Plan.~~Contents

On July 19, 2013, the Compensation Committee approved the grant of stock option awards from our 2013 Equity Incentive Plan covering 352,270 shares of our common stock. The exercise price will equal the price at which shares of common stock are sold in this offering.

-43-

Convertible Promissory Notes

We have defined “Convertible Notes” in this prospectus to mean, collectively, $750,000 in senior secured convertible promissory notes that must be paid or converted into shares of our common stock on or before July 29, 2014, $4 million in senior secured convertible promissory notes that must be paid or converted into shares of our common stock on or before November 21, 2013, $1.142 million in convertible promissory notes that must be paid or converted into shares of our common stock on or before December 31, 2013, and an additional $213,394 in convertible notes that we expect to issue to our counsel for legal services. If we raise at least $10 million in this offering, all of the Convertible Notes will be converted into 1,682,606 shares of our common stock. We do not plan to consummate this offering unless we raise at least $10 million.

Anti-Takeover Effects of Certain Provisions of Delaware Law and Our Charter Documents

~~The~~Provisions ~~following~~of isDelaware alaw ~~summary~~and ofour ~~certain~~charter ~~provisions~~documents could have the effect of ~~Delaware~~delaying ~~law~~or preventing a third party from acquiring us, ~~our~~even ~~Certificate~~if ofthe ~~Incorporation~~acquisition ~~and~~would benefit our ~~bylaws~~stockholders. ~~This~~These ~~summary~~provisions ~~does~~may ~~not~~delay, ~~purport~~defer toor beprevent ~~complete~~a ~~and~~tender isoffer ~~qualified~~or takeover attempt of the Company that a stockholder might consider in his, her or its ~~entirety~~best interest, including those attempts that might result in a premium over the market price for the shares held by ~~reference~~our stockholders. These provisions are intended to enhance the ~~corporate~~likelihood ~~law~~of continuity and stability in the composition of ~~Delaware~~our Board and in the policies formulated by the Board and to discourage types of transactions that may involve our ~~Certificate~~actual or threatened change of ~~Incorporation~~control. ~~and~~These ~~bylaws~~provisions are designed to reduce our vulnerability to an unsolicited proposal for a takeover that does not contemplate the acquisition of all of our outstanding shares, or an unsolicited proposal for the restructuring or sale of all or part of us.

Effect of Delaware Anti-Takeover Statute. We ~~will~~are be subject to Section 203 of the ~~Delaware General Corporation Law~~DGCL, an anti-takeover law. In general, Section 203 prohibits a Delaware corporation from engaging in any business combination (as defined below) with any interested stockholder (as defined below) for a period of three years following the date that the stockholder became an interested stockholder, unless:

·● prior to that date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

·● upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares of voting stock outstanding (but not the voting stock owned by the interested stockholder) those shares owned by persons who are directors and officers and by excluding employee stock plans in which employee participants do not have the right to determine whether shares held subject to the plan will be tendered in a tender or exchange offer; or

·● on or subsequent to that date, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.

Section 203 defines “business combination” to include the following:

·● any merger or consolidation involving the corporation and the interested stockholder;

·● any sale, lease, exchange, mortgage, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;

·● subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

·● subject to limited exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or

·● the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

In general, Section 203 defines an “interested stockholder” as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation, or who beneficially owns 15% or more of the outstanding voting stock of the corporation at any time within a three-~~44-~~year period immediately prior to the date of determining whether such person is an interested stockholder, and any entity or person affiliated with or controlling or controlled by any of these entities or persons.

In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation, or who beneficially owns 15% or more of the outstanding voting stock of the corporation at anytime within a three-year period immediately prior to the date of determining whether such person is an interested stockholder, and any entity or person affiliated with or controlling or controlled by any of these entities or persons.22

~~Our~~Table ~~Charter Documents. Our charter documents include provisions that may have the effect~~ of discouraging, delaying or preventing a change in control or an unsolicited acquisition proposal that a stockholder might consider favorable, including a proposal that might result in the payment of a premium over the market price for the shares held by our stockholders. Certain of these provisions are summarized in the following paragraphs.Contents

~~Effects~~Our ofCharter ~~authorized but unissued common stock and blank check preferred stock~~Documents. One of the effects of the existence of authorized but unissued common stock and undesignated preferred stock may be to enable our board of directors to make more difficult or to discourage an attempt to obtain control of our Company by means of a merger, tender offer, proxy contest or otherwise, and thereby to protect the continuity of management. If, in the due exercise of its fiduciary obligations, the board of directors were to determine that a takeover proposal was not in our best interest, such shares could be issued by the board of directors without stockholder approval in one or more transactions that might prevent or render more difficult or costly the completion of the takeover transaction by diluting the voting or other rights of the proposed acquirer or insurgent stockholder group, by putting a substantial voting block in institutional or other hands that might undertake to support the position of the incumbent board of directors, by effecting an acquisition that might complicate or preclude the takeover, or otherwise.

InEffects ~~addition,~~of ~~our~~authorized ~~Certificate~~but ofunissued ~~Incorporation~~Common ~~grants~~Stock ~~our~~and ~~board~~blank ofcheck ~~directors~~preferred ~~broad~~stock. ~~power~~One toof ~~establish~~ the ~~rights~~effects ~~and~~of ~~preferences~~the existence of authorized ~~and~~but unissued ~~shares~~Common ofStock and undesignated preferred stock~~. The~~ ~~issuance~~may ofbe ~~shares~~to ofenable ~~preferred~~our ~~stock~~Board ~~could~~to ~~decrease~~make more difficult or to discourage an attempt to obtain control of the ~~amount~~Company by means of ~~earnings~~a ~~and~~merger, ~~assets~~tender ~~available~~offer, ~~for~~proxy ~~distribution~~contest or otherwise, and thereby to ~~holders~~protect ofthe ~~shares~~continuity of ~~common stock~~management. ~~The~~ ~~issuance~~If, ~~also~~in ~~may~~the ~~adversely~~due ~~affect~~exercise ~~the~~of ~~rights~~its ~~and~~fiduciary ~~powers~~obligations, ~~including~~the ~~voting~~Board ~~rights~~were to determine that a takeover proposal was not in our best interest, such shares could be issued by the Board without stockholder approval in one or more transactions that might prevent or render more difficult or costly the completion of ~~those~~the ~~holders~~takeover ~~and~~transaction ~~may~~by ~~have~~diluting the ~~effect~~voting or other rights of ~~delaying,~~the ~~deterring~~proposed acquirer or ~~preventing~~insurgent stockholder group, by putting a ~~change~~substantial voting block in ~~control~~institutional or other hands that might undertake to support the position of ~~our~~the ~~Company~~incumbent Board, by effecting an acquisition that might complicate or preclude the takeover, or otherwise.

~~Cumulative~~In ~~Voting. Our~~addition, ~~Certificate~~our certificate of ~~Incorporation~~incorporation ~~does~~grants ~~not~~our ~~provide~~Board ~~for~~broad ~~cumulative~~power ~~voting~~to inestablish the ~~election~~rights and preferences of ~~directors,~~authorized ~~which~~and ~~would~~unissued ~~allow~~shares of preferred stock. The issuance of additional shares of preferred stock could decrease the amount of earnings and assets available for distribution to holders of ~~less~~shares ~~than~~of aCommon ~~majority~~Stock. The issuance also may adversely affect the rights and powers, including voting rights, of those holders and may have the ~~stock~~effect toof ~~elect~~delaying, ~~some~~deterring ~~directors~~or preventing a change in control of the Company.

NoCumulative ~~Stockholder~~Voting. ~~Action~~Our bycertificate ~~Written~~of ~~Consent. Our~~incorporation ~~Certificate~~does ofnot ~~Incorporation~~provide ~~expressly~~for ~~prohibits~~cumulative ~~stockholders~~voting ~~from~~in ~~acting~~the byelection ~~written~~of ~~consent. This~~directors, ~~means~~which ~~that~~would ~~stockholders~~allow ~~may~~holders ~~only~~of ~~act~~less atthan ~~annual~~a ormajority ~~special~~of ~~meetings~~the stock to elect some directors.

~~Vacancies~~Blank Check Preferred Stock. ~~Our~~ ~~Certificate~~As noted above, our certificate of ~~Incorporation~~incorporation ~~provides~~allows ~~that~~our ~~all~~Board ~~vacancies~~to ~~may~~fix bethe ~~filled~~designation, bypowers, preferences and rights of the ~~affirmative~~shares ~~vote~~of each series of apreferred ~~majority~~stock and any of ~~directors~~their ~~then~~qualifications, inlimitations ~~office~~or restrictions, ~~even~~in ifeach ~~less~~case ~~than~~without afurther ~~quorum~~vote or action by our stockholders.

~~Special~~No ~~Meeting~~Stockholder ofAction ~~Stockholders. A special meeting of stockholders may only be called~~ by ~~the~~Written ~~Chairman~~Consent. ofOur ~~the~~certificate ~~board~~ of ~~directors,~~incorporation ~~the~~expressly ~~Chief~~prohibits ~~Executive~~stockholders ~~Officer,~~from oracting ~~the board of directors at any time and for any purpose or purposes as shall be stated in the notice of the meeting, and shall be called~~ by ~~the Secretary upon the~~ written ~~request of the holders of record of at least 25% of the outstanding shares of common stock~~consent. This ~~provision~~means ~~could~~that ~~prevent~~ stockholders from calling a special meeting because, unless certain significant stockholders were to join with them, they might not obtain the percentage necessary to request the meeting. Therefore, stockholders holding less than 25% of the issued and outstanding common stock, without the assistance of management, may beonly ~~unable~~act toat ~~propose~~annual ~~a vote on any transaction that would delay, defer~~ or ~~prevent~~special ~~a change of control, even if the transaction were in the best interests of our stockholders~~meetings.

~~Requirements for Advance Notification of Stockholder Nominations and Proposals~~Vacancies. Our ~~Certificate~~certificate of ~~Incorporation~~incorporation and bylaws ~~have~~provide ~~advance~~that ~~notice~~all ~~procedures~~vacancies ~~with~~may ~~respect~~be tofilled ~~stockholder proposals and nominations of candidates for election as directors, other than nominations made~~ by ~~or at~~ the ~~direction~~affirmative ofvote ~~our board~~ of ~~directors or~~ a ~~committee~~majority of ~~our~~directors ~~board. The~~then ~~business~~in ~~to be conducted at a meeting will be limited to business properly brought before the meeting~~office, ineven ~~accordance~~if ~~with~~less ~~our~~than ~~Certificate~~a ~~of Incorporation and bylaws~~quorum. Failure to follow the procedures set forth in our Certificate of Incorporation and bylaws will result in the chairman of the meeting disregarding the nomination or declaring that the proposed business will not be transacted.

~~-45-~~Special Meeting of Stockholders. A special meeting of stockholders may only be called by the chairman of the Board, the chief executive officer, or the Board at any time and for any purpose or purposes as shall be stated in the notice of the meeting, and shall be called by the secretary upon the written request of the holders of record of at least 25% of the outstanding shares of Common Stock. This provision could prevent stockholders from calling a special meeting because, unless certain significant stockholders were to join with them, they might not obtain the percentage necessary to request the meeting. Therefore, stockholders holding less than 25% of the issued and outstanding Common Stock, without the assistance of management, may be unable to propose a vote on any transaction that would delay, defer or prevent a change of control, even if the transaction were in the best interests of our stockholders.

~~MARKET~~Requirements ~~FOR~~for ~~OUR~~Advance ~~COMMON~~Notification ~~STOCK~~of Stockholder Nominations and Proposals. Our certificate of incorporation and bylaws have advance notice procedures with respect to stockholder proposals and nominations of candidates for election as directors, ~~DIVIDEND~~other ~~POLICY~~than ~~AND~~nominations ~~OTHER~~made ~~STOCKHOLDER~~by ~~MATTERS~~or at the direction of our Board or a committee of our Board. The business to be conducted at a meeting will be limited to business properly brought before the meeting, in accordance with our certificate of incorporation and bylaws. Failure to follow the procedures set forth in our certificate of incorporation and bylaws will result in the chairman of the meeting disregarding the nomination or declaring that the proposed business will not be transacted.

~~There~~Under isour nobylaws, ~~established~~unless ~~public~~we ~~trading~~consent ~~market~~in ~~for~~writing ~~our~~to ~~common stock. Of~~ the ~~1,480,262~~selection ~~shares~~ of ~~our~~an ~~common~~alternative ~~stock~~forum, ~~outstanding~~the asCourt of ~~August~~Chancery 5,of ~~2013,~~the ~~approximately 509,094~~State ~~shares are held by “non-affiliates” and,~~ of ~~that~~Delaware ~~amount~~(or, ~~217,471~~ ~~shares~~if ~~will be freely tradable without restriction pursuant to Rule 144 once we have been subject to~~ the ~~reporting~~Court ~~requirements~~ of ~~Section~~Chancery ~~13 or Section 15(d)~~ of the ~~Securities~~State ~~Exchange Act~~ of ~~1934~~Delaware ~~for~~does anot ~~period~~have ofjurisdiction, atthe ~~least~~federal 90district ~~days~~court ~~and~~for ~~assuming we comply with~~ the ~~remaining~~District ~~requirements~~ of ~~Rule~~Delaware) ~~144. We~~shall, ~~also~~to ~~have outstanding options for~~ the ~~purchase~~fullest ofextent ~~158,108~~permitted ~~shares~~by ~~of common stock~~law, ~~352,270~~be ~~shares~~the ofsole ~~common~~and ~~stock~~exclusive ~~reserved~~forum for: ~~option~~(i) ~~grants~~any ~~that~~derivative ~~were~~action ~~approved~~or byproceeding ~~the~~brought ~~Compensation Committee~~ on ~~July~~behalf ~~19,~~of ~~2013,~~the ~~but~~Company; ~~have~~(ii) ~~not~~any ~~yet~~action ~~been~~asserting ~~issued,~~a ~~warrants~~claim ~~for the purchase~~ of ~~1,519,095~~breach ~~shares~~ of ~~common~~a ~~stock~~fiduciary ~~and~~duty ~~convertible~~owed ~~promissory~~by ~~notes~~any ~~with interest accrued through March 31~~director, ~~2013 that would require us to issue an additional 1~~officer,~~621,249~~ ~~shares~~or ofother ~~common~~employee ~~stock,~~or ~~and~~stockholder ~~an additional 61,357 shares~~ of ~~common~~the ~~stock~~Company ~~underlying convertible promissory notes that we expect~~ to ~~issue~~the toCompany ~~our~~or ~~counsel~~the ~~for~~Company’s ~~legal~~stockholders; ~~services. We~~(iii) ~~have~~any ~~also~~action ~~reserved~~asserting a ~~total~~claim ofarising ~~25,170~~pursuant ~~shares of common stock that we intend~~ to ~~issue~~any toprovision ~~our independent directors as part~~ of ~~their compensation for services provided through June 30 2013. In addition, upon~~ the ~~closing~~DGCL ofor ~~this~~as ~~offering, we will issue~~ to which the ~~underwriter~~DGCL aconfers ~~warrant~~jurisdiction ~~for~~on the ~~purchase~~Court of ~~250,000~~Chancery ~~shares~~ of ~~our~~the ~~common~~State ~~stock. Any substantial sale~~ of ~~our~~Delaware; ~~common~~or ~~stock~~(iv) ~~pursuant~~any toaction ~~Rule~~asserting ~~144~~a orclaim arising pursuant to any ~~resale~~provision ~~prospectus~~of ~~(including~~our ~~sales~~certificate ~~by investors~~ of ~~securities~~incorporation ~~acquired~~or inour ~~connection~~bylaws ~~with~~or ~~this~~governed ~~offering)~~by ~~may have a material adverse effect on~~ the ~~market~~internal ~~price~~affairs ~~of our common stock~~doctrine.

WeIn ~~have~~addition, ~~never~~our ~~paid~~bylaws ~~cash~~provide ~~dividends~~that onunless ~~our securities and~~ we doconsent ~~not~~in ~~anticipate~~writing ~~paying~~to ~~any~~the ~~cash~~selection ~~dividends on our shares~~ of ~~common~~an ~~stock~~alternative inforum, the ~~foreseeable~~federal ~~future. We~~district ~~intend~~court tofor ~~retain~~the ~~any~~District ~~future~~of ~~earnings~~Delaware ~~for~~(or ~~reinvestment~~if insuch ~~our~~court ~~business. Any~~does ~~future~~not ~~determination~~have tojurisdiction ~~pay~~over ~~cash~~such ~~dividends~~action, ~~will~~any beother atfederal ~~the~~district ~~discretion~~court of ~~our~~the ~~board~~United ~~of directors~~States), ~~and~~to ~~will~~the befullest ~~dependent~~extent ~~upon~~permitted ~~our~~by ~~financial condition~~law, ~~results~~shall ofbe ~~operations,~~the ~~capital~~sole ~~requirements~~ and ~~such~~exclusive ~~other~~forum ~~factors~~for asthe ~~our~~resolution ~~board~~ of ~~directors~~any ~~deems~~claims ~~relevant~~arising under the Securities Act.

WeTransfer ~~intend~~Agent toand apply for the listing of our common stock on the Nasdaq Capital Market but we cannot assure you that our application will be approved. If our application is not approved, we may not complete the offering. Registrar

AsOur oftransfer ~~August~~agent 5,and ~~2013,~~registrar wefor ~~had~~our ~~1,480,262~~Common ~~shares~~Stock ofis ~~common~~EQ ~~stock~~Shareowner ~~outstanding, held of record by 22 stockholders~~Services.

~~SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT~~Listing

WeOur ~~have~~Common ~~set~~Stock forth in the following table certain information regarding our common stock beneficially owned by (i) each stockholder we know to be the beneficial owner of 5% or more of our outstanding common stock, (ii) each of our directors and named executive officers, and (iii) all executive officers and directors as a group. Generally, a person is ~~deemed~~listed to be a “beneficial owner” of a security if that person has or shares the power to dispose or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which the person has the right to acquire beneficial ownership within 60 days pursuant to options, warrants, conversion privileges or similar rights. Unless otherwise indicated, ownership information is as of August 5, 2013, and is based on ~~1,480,262 shares of common stock outstanding on that date.~~ The ~~percentage~~Nasdaq ~~ownership~~Capital ~~after~~Market under the ~~offering~~symbol ~~is based on 5,688,038 shares of common stock outstanding~~“IPWR. ”

~~-46-~~23

Names and Address of Beneficial Owner	Number of Shares Beneficially Owned			% of Shares Owned Prior to the Offering			% of Shares Owned After the Offering
Directors and Officers:
Paul Bundschuh, Chief Executive Officer and Director		75,703	(3)		5.0	%		1.3	%
Christopher Cobb, President, Chief Operating Officer and Director		94,012	(4)		6.0	%		1.6	%
William C. Alexander, Chief Technology Officer		487,295			32.9	%		8.6	%
Charles De Tarr, Vice President, Finance and Secretary		210,135	(5)		13.4	%		3.6	%
Mark Baum, Director		81,423	(6)		5.4	%		1.7	%(7)
Lon E. Bell, Director		66,346	(8)		4.3	%		1.9	%(9)
All Directors and Officers as a Group		1,014,916			56.8	%		17.7	%
5% Owners
Hamo Hacopian(10)		262,495			17.7	%		4.6	%
Peter Appel		506,435	(11)		25.5	%		12.4	%(12)
MDB Capital Group, LLC		114,290	(13)		7.2	%		2.9	%(14)
Cindy Breed		131,247			8.9	%		2.3	%
David Breed		142,996	(15)		9.6	%		2.5	%

Table of Contents

~~(1)~~PLAN ~~The~~OF ~~address of each officer and director is 5004 Bee Creek Rd., Suite 600, Spicewood, Texas 78669~~DISTRIBUTION

~~(2)~~The ~~Beneficial~~Selling ~~ownership~~Securityholder isof ~~determined in accordance with Rule 13d-3 under~~ the ~~Securities~~securities ~~Exchange~~and ~~Act~~any of ~~1934,~~its ~~as amended~~pledgees, ~~and~~assignees ~~is generally determined by voting powers~~ and~~/or~~ ~~investment~~successors-in-interest ~~powers~~may, ~~with~~from ~~respect~~time to ~~securities.~~time, ~~Unless~~sell ~~otherwise~~any ~~noted,~~or ~~the~~all ~~shares~~ of ~~common~~their ~~stock~~securities ~~listed~~covered ~~above~~hereby ~~are~~on ~~owned~~Nasdaq asor ofany ~~July~~other ~~20,~~stock ~~2013~~exchange, ~~and~~market ~~are~~or ~~owned~~trading offacility ~~record~~on bywhich ~~each~~the ~~individual~~securities ~~named~~are astraded ~~beneficial~~or ~~owner~~in ~~and~~private ~~such~~transactions. ~~individual~~These ~~has~~sales ~~sole~~may ~~voting~~be ~~and~~at ~~dispositive~~fixed ~~power~~or ~~with~~negotiated ~~respect to the shares of common stock owned by each of them~~prices. InThe ~~determining~~Selling ~~the~~Securityholder ~~number of shares that~~ may beuse ~~issued~~any ~~for~~one ~~the~~or ~~conversion~~more of ~~promissory~~the ~~notes,~~following wemethods ~~have~~when ~~accrued~~selling ~~interest through July 20, 2013.~~securities:

~~(3)~~● ~~Includes~~ordinary ~~44,780~~brokerage ~~shares~~transactions ~~of common stock, warrants for the purchase of 2,054 shares of common stock, 26,071 shares subject to an option to purchase common stock~~ and, ~~assuming~~transactions ~~a price of $5.00 per share~~ in ~~this~~which ~~offering, 2,799 shares of common stock that may be issued upon~~ the ~~conversion~~broker-dealer ofsolicits ~~a promissory note in the principal amount of $13,000.~~purchasers;

~~(4)~~● ~~Includes~~block ~~14,094~~trades ~~shares~~in ofwhich ~~common stock, warrants for~~ the ~~purchase~~broker-dealer ofwill ~~31,608~~attempt ~~shares of common stock, 5,517 shares subject~~ to ansell ~~option~~the tosecurities ~~purchase~~as ~~common~~agent ~~stock~~but ~~exercisable~~may ~~within~~position ~~60 days of July 20, 2013,~~ and ~~42,794~~resell ~~shares~~a portion of ~~common stock that may be issued upon~~ the ~~conversion~~block ofas aprincipal ~~promissory~~to ~~note~~facilitate in the ~~principal amount of $200,000.~~transaction;

~~(5)~~● ~~Includes~~purchases ~~118,406~~by ~~shares~~a ofbroker-dealer ~~common~~as ~~stock,~~principal ~~warrants for the purchase of 23,706 shares of common stock, 26,743 shares subject to an option to purchase common stock exercisable within 60 days of July 20, 2013,~~ and ~~41,280~~resale ~~shares~~by ~~of common stock that may be issued upon~~ the ~~conversion~~broker-dealer offor aits ~~promissory notes in the principal amount of $150,000 and $40,000.~~account;

~~(6)~~● ~~This~~an ~~amount~~exchange ~~includes~~distribution ~~44,099 shares held~~ in ~~Mr.~~accordance ~~Baum’s~~with ~~name and 28,935 shares of common stock that may be acquired through~~ the ~~conversion~~rules of ~~a senior secured convertible promissory note in~~ the ~~principal~~applicable amount of $100,000 held by Series E-1 of Larren Smitty, LLC, of which Mr. Baum is the beneficial owner, and 8,390 shares of common stock which have been authorized but have not yet been issued for services Mr. Baum has provided as a director. Not included in this amount are 14,383 shares of common stock issuable upon the exercise of warrants held by Series E-1 of Larren Smitty, LLC.exchange;

~~-47-~~● privately negotiated transactions;

(7)	Mr. Baum’s percentage ownership following the offering is based on 95,807 shares of common stock, which includes 81,423 shares from the conversion of senior secured convertible promissory notes issued to Series E-1 of Larren Smitty, LLC as well as 14,383 shares underlying warrants held by Series E-1 of Larren Smitty, LLC that will become exercisable upon the completion of this offering.
(8)	Lon E. Bell, Ph.D., a director, is a trustee of the Bell Family Trust that owns two senior secured convertible promissory notes, each in the principal amount of $100,000 which may be converted into 57,956 shares of our common stock. This amount also includes 8,390 shares of common stock which have been authorized but have not yet been issued for services Dr. Bell has provided as a director. Dr. Bell has sole voting and investment control with respect to the shares of common stock owned by the Bell Family Trust. Not included in this amount are warrants for the purchase of 43,150 shares of common stock that will not be exercisable until this offering is complete.
(9)	Mr. Bell’s percentage ownership following the offering is based on 109,496 shares of common stock, which includes 66,346 shares from the conversion of senior secured convertible promissory notes and shares for services as well as 43,150 shares underlying the warrants that will become exercisable upon the completion of this offering.
(10)	Mr. Hacopian has sole voting and dispositive power with respect to his shares of common stock.
(11)	This amount includes 506,435 shares of common stock that may be acquired through the conversion of senior secured convertible promissory notes in the principal amounts of $100,000, $1,625,000 and $275,000. Not included in this amount are warrants for the purchase of 302,049 shares of common stock that will not be exercisable until this offering is completed. Mr. Appel has sole voting and dispositive power with respect to his shares of common stock.
(12)	Mr. Appel’s percentage ownership following the offering is based on 808,484 shares of common stock, which includes 506,435 shares from the conversion of senior secured convertible promissory notes as well as 302,049 shares underlying the warrants that will become exercisable upon the completion of this offering.
(13)	The address for MDB Capital Group, LLC is 401 Wilshire Boulevard, Suite 1020, Santa Monica, California 90401. This amount includes 114,290 shares of common stock which may be acquired through the conversion of senior secured convertible promissory notes in the principal amount of $195,000 and $200,000. Not included in this amount are warrants for the purchase of 350,698 shares of common stock that are not currently exercisable. Warrants for the purchase of 56,814 shares of common stock will be exercisable after this offering is completed and warrants for the purchase of 293,884 shares of common stock will be exercisable 180 days following the completion of this offering. Christopher A. Marlett has sole voting and dispositive power with respect to these shares of common stock.

●

settlement of short sales;

(14)	The percentage ownership of MDB Capital Group, LLC following the offering is based on 171,104 shares of common stock, which includes 114,290 shares from the conversion of senior secured convertible promissory notes as well as 56,814 shares underlying warrants that will become exercisable upon the completion of this offering.
(15)	This amount includes 131,247 shares of common stock, 7,798 shares of common stock which may be acquired through the conversion of a convertible promissory note in the principal amount of $25,000, and warrants for the purchase of 3,951 shares of common stock exercisable within 60 days of July 20, 2013.

●

in transactions through broker-dealers that agree with the Selling Securityholder to sell a specified number of such securities at a stipulated price per security;

~~-48-~~● through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

~~CERTAIN~~● ~~RELATIONSHIPS~~a ~~AND~~combination ~~RELATED~~of ~~TRANSACTIONS,~~any ~~AND~~such ~~DIRECTOR~~methods ~~INDEPENDENCE~~of sale; or

We● ~~intend~~any toother ~~apply~~method ~~for~~permitted ~~the~~pursuant ~~listing~~to ofapplicable our common stock on the Nasdaq Capital Market, therefore, our determination of the independence of directors is made using the definition of “independent” contained in the listing standards of the Nasdaq Stock Marketlaw. On the basis of information solicited from each director, the board has determined that each of Mr. Baum and Dr. Bell has no material relationship with the Company and is independent within the meaning of such rules.

~~SEC~~The ~~regulations~~Selling ~~define~~Securityholder ~~the~~may ~~related~~also ~~person~~sell ~~transactions~~securities ~~that~~under ~~require~~Rule ~~disclosure~~144 toor ~~include~~ any ~~transaction,~~other ~~arrangement~~exemption orfrom ~~relationship~~registration inunder ~~which~~ the ~~amount~~Securities ~~involved exceeds the lesser of $120~~Act,~~000~~ orif one percent of the average of the Company’s total assets at year end for the last two completed fiscal years in which we were or are to be a participant and in which a related person had or will have a direct or indirect material interest. A related person is: (i) an executive officeravailable, ~~director~~rather ~~or director nominee of the Company, (ii) a beneficial owner of more~~ than 5%under ofthis our common stock, (iii) an immediate family member of an executive officer, director or director nominee or beneficial owner of more than 5% of our common stock, or (iv) any entity that is owned or controlled by any of the foregoing persons or in which any of the foregoing persons has a substantial ownership interest or controlprospectus.

~~For~~Broker-dealers engaged by the ~~period~~Selling Securityholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from ~~January~~the 1,Selling ~~2011~~Securityholder (or, ~~through~~if any broker-dealer acts as agent for the ~~date~~purchaser of ~~this~~securities, ~~prospectus~~from (the ~~“Reporting Period”~~purchaser) in amounts to be negotiated, ~~described~~but, ~~below~~except ~~are~~as ~~certain~~set ~~transactions~~forth orin ~~series~~a supplement to this prospectus, in the case of ~~transactions~~an ~~between~~agency ustransaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2121; and ~~certain~~in ~~related~~the ~~persons~~case of a principal transaction a markup or markdown in compliance with FINRA Rule 2121.

OnIn ~~October~~connection ~~16,~~with ~~2011,~~the ~~Paul~~sale ~~Bundschuh,~~of ~~our~~the ~~Chief~~securities ~~Executive~~or ~~Officer~~interests therein, ~~purchased~~the 4Selling Securityholder may enter into hedging transactions with broker-dealers or other financial institutions,~~109~~ ~~shares~~which may in turn engage in short sales of ~~stock~~the securities in ~~exchange~~the ~~for~~course ~~$26~~of hedging the positions they assume. The Selling Securityholder may also sell securities short and deliver these securities to close out their short positions,~~000~~ or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Securityholder may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

OnThe ~~March~~Selling ~~24,~~Securityholder ~~2011,~~and weany ~~issued~~broker-dealers aor ~~$10,000~~agents ~~promissory~~that ~~note~~are toinvolved ~~William~~in ~~Alexander,~~selling ~~our~~the ~~Chief~~securities ~~Technology~~may ~~Officer~~be ~~and~~deemed ato ~~beneficial~~be ~~owner~~“underwriters” within the meaning of ~~more~~the ~~than~~Securities 5%Act ofin ~~our~~connection ~~common~~with ~~stock~~such sales. ~~The~~ ~~note~~In ~~accrued~~such ~~simple~~event, ~~interest~~any atcommissions received by such broker-dealers or agents and any profit on the ~~rate~~resale of 6%the ~~per~~securities ~~year~~purchased ~~and~~by ~~all~~them ~~principal~~may ~~and~~be ~~interest~~deemed ~~were~~to ~~due~~be ~~and~~underwriting ~~payable~~commissions onor discounts under the ~~maturity~~Securities ~~date,~~Act. ~~December~~Each ~~31,~~Selling ~~2011. On~~Securityholder ~~September~~has 5,informed ~~2011~~us wethat ~~repaid~~it ~~the~~does ~~loan~~not ~~along~~have any written or oral agreement or understanding, directly or indirectly, with ~~$271.23~~any inperson ~~accrued~~to ~~interest~~distribute the securities.

OnWe ~~March~~are ~~25,~~required ~~2011,~~to wepay ~~issued~~certain afees ~~promissory~~and ~~note~~expenses inincurred ~~the~~by ~~principal~~us ~~amount~~incident ~~of $20,000~~ to ~~Dr. David Breed. At~~ the ~~time~~registration ~~the loan was made, Dr. Breed was a director and he is a beneficial owner~~ of ~~more~~the ~~than 5% of our common stock~~securities. ~~The~~ ~~note~~We ~~accrued~~have ~~simple~~agreed ~~interest~~to atindemnify the ~~rate~~Selling ofSecurityholder 6%against ~~per~~certain ~~year. On September 30~~losses, ~~2011~~claims, wedamages ~~repaid~~and ~~$10~~liabilities,~~000~~ ofincluding ~~the~~liabilities ~~principal~~under ~~amount together with $310.68 in interest. On October 15, 2011 we paid~~ the ~~remaining~~Securities ~~$10,000 of the principal amount together with $335~~Act.~~34 in interest.~~

~~Between~~We ~~March~~agreed ~~17,~~to ~~2011~~keep ~~and~~this ~~March~~prospectus ~~25,~~effective ~~2011,~~until ~~we received three loans from Charles De Tarr totaling $60,000, which was~~ the ~~highest~~Selling ~~principal~~Securityholder ~~amount~~does ~~owed~~not ~~during~~own ~~the~~any ~~Reporting~~Pre-Funded ~~Period. At~~Warrants ~~the~~or ~~time~~Common ~~the~~Stock ~~loans~~issuable ~~were~~upon ~~made,~~exercise ~~Mr. De Tarr was a director and our Chief Financial Officer and he is a beneficial owner~~ of ~~more than 5% of our common stock. The loans accrued simple interest at~~ the ~~rate~~Pre-Funded ~~of 6% per year. On April 30~~Warrants, ~~2011,~~as ~~we repaid $20,000 of the principal amount~~applicable. On July 8, 2011, Mr. De Tarr advanced an additional $10,000 to us. On October 9, 2011, we repaid $10,000 in principal amount in cash, paid interest in the amount of $1,623.45 and repaid the remaining $40,000 in principal amount with the convertible promissory note described below.

OnPursuant ~~October 9, 2011, we issued a $40,000 convertible promissory note~~ to ~~Mr.~~applicable Derules ~~Tarr. The~~and ~~convertible~~regulations ~~note~~under ~~accrues simple interest at~~ the ~~rate~~Exchange ofAct, 6%any ~~per~~person ~~year~~engaged ~~and~~in ~~all principal and interest are due and payable on~~ the ~~earlier~~distribution of ~~(i) December 31, 2013, (ii)~~ the ~~closing~~resale ofsecurities amay ~~firm~~not ~~commitment~~simultaneously ~~underwritten~~engage ~~initial~~in ~~public~~market ~~offering~~making ~~that~~activities ~~raises~~with atrespect ~~least~~to ~~$10~~the ~~million~~Common ~~(an~~Stock ~~IPO),~~for ~~(iii)~~ the ~~closing~~applicable ofrestricted ~~a Qualified Financing~~period, as defined in ~~the~~Regulation ~~convertible promissory note~~M, ~~and~~prior ~~(iv)~~to anthe ~~event~~commencement of ~~default~~the distribution. ~~The~~ ~~promissory~~In ~~note~~addition, ~~will~~the ~~automatically~~Selling ~~convert~~Securityholder onwill anbe ~~IPO~~subject atto ~~the~~applicable ~~price~~provisions ~~per~~of ~~share at which~~ the ~~common~~Exchange ~~stock~~Act isand ~~offered to~~ the ~~public. At~~rules ~~Mr.~~and Deregulations ~~Tarr’s option~~thereunder, ~~the~~including ~~promissory~~Regulation ~~note~~M, which may ~~also~~limit bethe ~~converted~~timing ~~(A)~~of ~~upon~~purchases aand ~~Non-Qualified~~sales ~~Financing~~of ~~(as defined in~~ the ~~promissory~~Common ~~note)~~Stock atby the ~~lower~~Selling ofSecurityholder ~~(i) the lowest per share~~ or ~~unit~~any ~~purchase~~other ~~price~~person. ~~paid~~We ~~for~~will ~~Next~~make ~~Round~~copies ~~Securities~~of ~~(as~~this ~~defined~~prospectus inavailable to the ~~promissory~~Selling ~~note)~~Securityholder orand ~~(ii)~~have ~~$2.65754~~informed orthem ~~(B)~~of atthe ~~any~~need ~~time prior~~ to deliver a ~~Non-Qualified~~copy ~~Financing~~of orthis ~~Qualified~~prospectus ~~Financing~~to ateach ~~$6.3276. During~~purchaser ~~the~~at ~~Reporting~~or ~~Period,~~prior ~~the highest principal amount owed pursuant~~ to the ~~promissory~~time ~~note was $40,000. As~~ of ~~July 20, 2013, interest in~~ the ~~amount~~sale of(including ~~$4,277.26~~by ~~had~~compliance ~~accrued. To~~with ~~date,~~Rule no172 ~~payments~~under ~~have been made toward~~ the ~~principal~~Securities ~~amount or accrued interest~~Act).

~~-49-~~24

OnTable ~~February 24, 2012, we issued a $25,000 convertible promissory note and a common stock purchase warrant to Dr. David Breed. The convertible note accrues simple interest at the rate~~ of 6% per year and all principal and interest are due and payable on its maturity date, December 31, 2013, unless earlier paid by the Company. The promissory note may be converted at the lower of (i) the lowest per share purchase price paid in cash for Next Financing Securities (as defined in the convertible note) or (ii) $6.3276. The promissory note will automatically convert upon an initial public offering of our common stock at the price per share at which the common stock is offered to the public. At Dr. Breed’s option, he may convert the promissory note at any time at the rate of $6.3276. During the Reporting Period, the highest principal amount owed pursuant to the promissory note was $25,000. As of July 20, 2013, interest in the amount of $2,107 had accrued. To date, no payments have been made toward the principal amount or accrued interest. In conjunction with this promissory note, we issued a warrant to Dr. Breed. The warrant has a term of seven years. The number of shares subject to the warrant is determined by dividing the principal amount of the promissory note by the exercise price. The exercise price is determined as follows: if the convertible promissory note is converted in the Next Financing, the per share exercise price will be the price at which the note was converted, otherwise the per share exercise price will be $6.3276.Contents

On April 12, 2012, we issued a $13,000 convertible promissory note and a common stock purchase warrant to Paul Bundschuh, our Chief Executive Officer. The convertible note accrues simple interest at the rate of 6% per year and all principal and interest are due and payable on its maturity date, December 31, 2013, unless earlier paid by the Company. The promissory note will automatically convert upon an initial public offering of our common stock at the price per share at which the common stock is offered to the public. The promissory note may be converted (A) at the lower of (i) the lowest per share purchase price paid in cash for Next Financing Securities (as defined in the convertible note) or (ii) $6.3276 or (B) prior to the Next Qualified Financing (as defined in the convertible note) at $6.3276. During the Reporting Period, the highest principal amount owed pursuant to the promissory note was $13,000. As of July 20, 2013, interest in the amount of $993.23 had accrued. To date, no payments have been made toward the principal amount or accrued interest. In conjunction with this promissory note, we issued a warrant to Mr. Bundschuh. The warrant has a term of seven years. The number of shares subject to the warrant is determined by dividing the principal amount of the promissory note by the exercise price. The exercise price is determined as follows: if the convertible promissory note is converted in the Next Financing, the per-share exercise price will be the price at which the note was converted, otherwise the per share exercise price will be $6.3276.

On May 22, 2012, we issued convertible promissory notes together with common stock purchase warrants to Charles De Tarr and Christopher Cobb, respectively. Mr. Cobb is our President and Chief Operating Officer, a member of our board of directors and a beneficial owner of more than 5% of our common stock. The note issued to Mr. De Tarr was in the principal amount of $150,000 and included a series of advances made to us by Mr. De Tarr from February 28, 2012 through May 22, 2012. The note issued to Mr. Cobb was in the principal amount of $200,000. The convertible notes accrue interest at the rate of 6% per year and all principal and interest are due and payable on the maturity date, December 31, 2014, unless earlier paid by the Company. The promissory notes will automatically convert upon an initial public offering of our common stock at the price per share at which the common stock is offered to the public. The promissory notes may be converted (A) at the lower of (i) the lowest per share purchase price paid in cash for Next Financing Securities (as defined in the convertible notes) or (ii) $6.3276 or (B) prior to the Next Qualified Financing (as defined in the convertible notes) at $6.3276. As of July 20, 2013, interest in the amount of $12,125.75 had accrued on the $150,000 note and interest in the amount of $13,969.01 had accrued on the $200,000 note. To date, no payments have been made toward the principal amount or accrued interest of either note, therefore, during the Reporting Period, the highest principal amounts owed pursuant to the promissory notes were $150,000 and $200,000, respectively. In conjunction with these promissory notes, we issued a warrant to each of Mr. De Tarr and Mr. Cobb. The warrants have terms of seven years. The number of shares subject to each warrant is determined by dividing the principal amount of the promissory note by the exercise price. The exercise price is determined as follows: if the convertible promissory note is converted in the Next Financing, the per share exercise price will be the price at which the note was converted, otherwise the per share exercise price will be $6.3276.

-50-

On August 31, 2012, we closed an offering of $750,000 in principal amount of senior secured convertible promissory notes (the “August Notes”) together with warrants to purchase shares of our common stock. On November 21, 2012, we closed an offering of $3.25 million in principal amount of senior secured convertible promissory notes (the “November Notes”) together with warrants to purchase shares of our common stock. On July 29, 2013, we closed an offering of $750,000 in aggregate principal amount of senior secured convertible promissory notes (the “July Notes”) together with warrants for the purchase of our common stock. The August Notes, the November Notes and the July Notes are collectively referred to in this discussion as the “Notes.” The Notes accrue interest at the higher of (i) 1% per annum or (ii) or the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code. The principal amount of the August Notes and the November Notes, together with accrued interest, are due and payable on the earlier to occur of (i) November 21, 2013, (ii) an Event of Default (as defined in the Notes) or (iii) the closing of an IPO Financing (as defined in the Notes). The principal amount of the July Notes, together with accrued interest, are due and payable on the earlier to occur of (i) July 29, 2014, (ii) an Event of Default (as defined in the Notes) or (iii) the closing of an IPO Financing (as defined in the Notes). To date, we have made no payments toward the principal or accrued interest. The warrants issued in conjunction with the Notes have a term of seven years (provided that if we consummate an initial public offering of our common stock after the fifth anniversary date of the issue date but prior to the expiration date, then the expiration date will be extended for an additional five years following the initial public offering) and an exercise price that will be determined as follows: (i) in the event of an IPO that occurs prior to the maturity dates of the Notes, the per-share exercise price will be equal to the lower of 0.70 times the IPO price or $3.47626; or (ii) in the event of a Private Equity Financing (as defined in the warrant agreement) that occurs prior to the maturity date of the Notes, the per-share exercise price will be equal to the lower of 0.70 times the Private Equity Financing Price or $3.47626; provided, however, that (A) if we undertake first, a Private Equity Financing and secondly, an IPO prior to the maturity date of the Notes and (B) the Private Equity Financing price is higher than the IPO price, then the per share exercise price will be adjusted to equal the number of shares of common stock and the exercise price calculated in accordance with subsection (i) above; or (iii) if we do not undertake either a Private Equity Financing or an IPO prior to the maturity date of the Notes, then the exercise price will be $3.47626 per share. The number of shares of common stock that will be issued under the terms of the warrants issued in conjunction with the August Notes will be determined as follows: (i) in the event of an IPO that occurs prior to November 21, 2013, the principal amount of the August Note divided by the lower of 0.70 of the IPO Price or $3.47626 will determine the number of shares of common stock covered by the warrant while the per-share exercise price will be equal to the lower of 0.70 times the IPO Price or $3.47626; or (ii) in the event of a Private Equity Financing that occurs prior to November 21, 2013, the principal amount of the August Note divided by the lower of 0.70 of the Private Equity Financing Price or $3.47626 will determine the number of shares of common stock covered by the warrant, with a per-share exercise price equal to the lower of 0.70 times the Private Equity Financing Price or $3.47626; provided, however, that (A) if we undertake first, a Private Equity Financing and secondly, an IPO prior to November 21, 2013 and (B) the Private Equity Financing Price is higher than the IPO Price, then the number of shares of common stock covered by the warrant and the per share exercise price shall be adjusted to equal the number of shares of common stock and the exercise price calculated in accordance with subsection (i) above; or (iii) if we do not undertake either a Private Equity Financing or an IPO prior to November 21, 2013, then the number of shares of common stock covered by the warrant will equal the original principal amount of the August Note divided by $3.47626, and the exercise price will be $3.47626 per share. The number of shares of common stock that may be purchased pursuant to the terms of the warrants issued in conjunction with the November Notes and the July Notes will be computed identically to the August Notes, except on one-half the principal amount. The following officers, directors and beneficial owners of 5% of our common stock invested in these offerings:

August 31, 2012
Name and Title	Investment Amount
Lon Bell, director (Investment made through the Bell Family Trust dated 2/2/95)	$	100,000
Peter Appel, beneficial owner of more than 5% of our common stock	$	100,000

November 21, 2012
Lon Bell, director (Investment made through the Bell Family Trust dated 2/2/95)	$	100,000
Mark Baum, director (Investment made through Series E-1 of the Larren Smitty, LLC)	$	100,000
Peter Appel, beneficial owner of more than 5% of our common stock	$	1,625,000
MDB Capital Group, LLC, beneficial owner of more than 5% of our common stock	$	395,000
July 29, 2013
Peter Appel, beneficial owner of more than 5% of our common stock	$	275,000

-51-

On July 24, 2012, we entered into engagement agreements with MDB Capital Group, LLC (“MDB”) (the “Engagement Agreements”). In exchange for services that were provided and pursuant to the terms of our Engagement Agreements, on November 21, 2012, we issued to MDB a warrant to purchase 200,393 shares of common stock and a warrant to purchase 93,491 shares of common stock. The warrant to purchase 200,393 shares of common stock expires seven years from the date of issuance. The warrant for the purchase of 93,491 shares of common stock expires seven years after the issue date, provided, however, if the Company closes an IPO after the fifth anniversary date of the issue date but prior to the expiration date, then the expiration date will be extended for an additional five years following the close of the IPO. The exercise price of the warrant to purchase 200,393 shares of common stock will be determined as follows: (i) in the event of an IPO that occurs prior to the November 21, 2013, the per-share exercise price will be equal to the lower of 0.70 times the IPO price or $3.47626; or (ii) in the event of a Private Equity Financing (as defined in the warrant agreement) that occurs prior to November 21, 2013, the per-share exercise price will be equal to the lower of 0.70 times the Private Equity Financing Price or $3.47626; provided, however, that (A) if we undertake first, a Private Equity Financing and secondly, an IPO prior to November 21, 2013, and (B) the Private Equity Financing price is higher than the IPO price, then the per share exercise price will be adjusted to equal the number of shares of common stock and the exercise price calculated in accordance with subsection (i) above; or (iii) if we do not undertake either a Private Equity Financing or an IPO prior to November 21, 2013, then the exercise price will be $3.47626 per share. The exercise price of the warrant to purchase 93,491 shares of common stock will be determined as follows: (i) in the event of an IPO that occurs prior to November 21, 2013, the per-share exercise price will be equal to 125% of the lower of 0.70 times the IPO price or $4.345325; or (ii) in the event of a Private Equity Financing (as defined in the warrant agreement) that occurs prior to November 21, 2013, the per-share exercise price will be equal to 125% of the lower 0.70 times the Private Equity Financing Price or $4.345325; provided, however, that (A) if we undertake first, a Private Equity Financing and secondly, an IPO prior to November 21, 2013, and (B) the Private Equity Financing price is higher than the IPO price, then the per share exercise price will be adjusted to equal the number of shares of common stock and the exercise price calculated in accordance with subsection (i) above; or (iii) if we do not undertake either a Private Equity Financing or an IPO prior to November 21, 2013, then the exercise price will be $4.345325 per share. The warrants will become exercisable, in whole or in part, 180 days after the completion of this offering.

During the years ended December 31, 2012 and 2011 and the quarter ended March 31, 2013, we incurred $50,069, $75,823 and $18,024, respectively, for IT services and equipment provided by DataCorp, a company that is owned by Hamo Hacopian, a former director.

Certain of our current officers have executed employment agreements with us or have received shares of common stock or options to purchase common stock as compensation. Our independent directors also receive compensation for their services to us. See the section of this prospectus titled “Executive Compensation” for a discussion of these transactions.

-52-

CHANGES IN ACCOUNTANTS

In January 2013, we dismissed Maxwell, Locke & Ritter (MLR) as our independent public accounting firm, because MLR is not registered with the Public Company Accounting Oversight Board. On January 26, 2013, we engaged Gumbiner Savett Inc. (“Gumbiner”) as our new independent registered public accounting firm. The decision to dismiss MLR and to retain Gumbiner was approved by our board of directors.

For the fiscal years ended December 31, 2010 and December 31, 2011, MLR’s reports on our financial statements did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles. During the fiscal years ended December 31, 2010 and December 31, 2011 and through the date of MLR’s dismissal, there were no disagreements with MLR on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure that would have caused MLR to make reference to the subject matter of the disagreement in its reports. During the fiscal years ended December 31, 2010 and December 31, 2011 and through the date of MLR’s dismissal, we did not experience any of the events set forth in paragraphs (A) through (D) of Item 304(a)(1)(v) of Regulation S-K.

During the fiscal years ended December 31, 2010 and December 31, 2011 and through the date that we retained Gumbiner, we did not consult Gumbiner regarding any of the matters set forth in paragraphs (i) and (ii) of Item 304(a)(2) of Regulation S-K.

UNDERWRITING

We are offering the shares of common stock described in this prospectus through the underwriter, MDB Capital Group, LLC, which is acting as lead managing underwriter of the offering.

We have agreed to enter into an underwriting agreement with the underwriter prior to the closing of this offering. Subject to the terms and conditions of the underwriting agreement, we will agree to sell to the underwriter, and the underwriter will agree to purchase, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus, as it may be supplemented, shares of common stock.

The underwriter is committed to purchase all of the common shares offered by us, other than those covered by the option to purchase additional shares described below, if they purchase any shares. The underwriting agreement provides that the underwriter’s obligations to purchase shares of our common stock are subject to conditions contained in the underwriting agreement. A copy of the underwriting agreement has been filed as an exhibit to the registration statement of which this prospectus forms a part.

We have been advised by the underwriter that the underwriter proposes to offer shares of our common stock directly to the public at the public offering price set forth on the cover page of this prospectus and to certain dealers that are members of the Financial Industry Regulatory Authority (FINRA). Any securities sold by the underwriter to such securities dealers will be sold at the public offering price less a selling concession not in excess of $[___] per share. After the public offering of the shares, the offering price and other selling terms may be changed by the underwriter.

None of our securities included in this offering may be offered or sold, directly or indirectly, nor may this prospectus and any other offering material or advertisements in connection with the offer and sales of any of our common stock, be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons who receive this prospectus are advised to inform themselves about and to observe any restrictions relating to this offering of our common stock and the distribution of this prospectus. This prospectus is neither an offer to sell nor a solicitation of any offer to buy any of our common stock included in this offering in any jurisdiction where that would not be permitted or legal.

The underwriter has advised us that it does not intend to confirm sales to any accounts over which they exercise discretionary authority.

-53-

Underwriting Discount and Expenses

The following table summarizes the underwriting discount and commission to be paid to the underwriter by us.

	Without Over- Allotment		With Over- Allotment
Public offering price	$	12,500,000	$	14,375,000
Underwriting discount to be paid to the underwriter		1,250,000		1,437,500
Non-accountable expense allowance		187,500		187,500
Net proceeds, before other expenses	$	11,062,500	$	12,750,000

We estimate the total expenses payable by us for this offering to be approximately $2.03 million, which amount includes (i) the underwriting discount of $1,250,000 ($1,437,500 if the underwriter’s over-allotment option is exercised in full), (ii) reimbursement of the non-accountable expenses of the underwriter equal to $187,500 (none of which has been paid in advance), including the legal fees of the underwriter being paid by us, and (iii) other estimated expenses of approximately $595,500, which includes legal, accounting, printing costs and various fees associated with the registration and listing of our shares. In no event will the aggregated expenses reimbursed to MDB Capital Group, LLC exceed $187,500.

Over-allotment Option

We have granted to the underwriter an option, exercisable not later than 45 days after the date of this prospectus, to purchase up to an additional 375,000 shares of our common stock (up to 15% of the shares firmly committed in this offering) at the public offering price, less the underwriting discount, set forth on the cover page of this prospectus. The underwriter may exercise the option solely to cover over-allotments, if any, made in connection with this offering. If any additional shares of our common stock are purchased pursuant to the over-allotment option, the underwriter will offer these additional shares of our common stock on the same terms as those on which the other shares of common stock are being offered hereby.

Determination of Offering Price

There is no current market for our common stock. Our underwriter, MDB Capital Group, LLC, is not obligated to make a market in our securities, and even if it chooses to make a market, can discontinue at any time without notice. Neither we nor the underwriter can provide any assurance that an active and liquid trading market in our securities will develop or, if developed, that the market will continue.

The public offering price of the shares offered by this prospectus has been determined by negotiation between us and the underwriter. Among the factors considered in determining the public offering price of the shares were:

· our history and our prospects;

· the industry in which we operate;

· our past and present operating results;

· the previous experience of our executive officers; and

· the general condition of the securities markets at the time of this offering.

The offering price stated on the cover page of this prospectus should not be considered an indication of the actual value of the shares. That price is subject to change as a result of market conditions and other factors, and we cannot assure you that the shares can be resold at or above the public offering price.

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Underwriter Warrant

We have agreed to issue to MDB Capital Group, LLC and its designees a warrant to purchase shares of our common stock (up to 10% of the shares of common stock sold in this offering). This warrant is exercisable at $6.25 per share (125% of the price of the common stock sold in this offering), commencing on the effective date of this offering and expiring seven years from the effective date of this offering. The warrant and the shares of common stock underlying the warrant have been deemed compensation by FINRA and are therefore subject to a one year lock up pursuant to Rule 5110(g)(1) of FINRA. MDB Capital Group, LLC (or permitted assignees under the Rule) will not sell, transfer, assign, pledge, or hypothecate this warrant or the securities underlying this warrant, nor will it engage in any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of this warrant or the underlying securities for a period of one year from the effective date of the offering.

Pursuant to engagement agreements entered into on July 24,2012, with MDB Capital Group, LLC, we issued warrants to purchase an aggregate of 293,884 shares of our common stock on November 21, 2012. The term for these warrants is 7 years and the warrants do not become exercisable until 180 days after the completion of this offering. Upon the completion of this offering with aggregate gross proceeds in excess of $10 million, the exercise price for 200,393 shares of our common stock covered by these warrants will be the lower of 0.70 times the IPO price set forth on the cover page of this Prospectus or $3.47626, and the exercise price of the remaining warrant to purchase 93,491 shares of our common stock will be 125% of the lower of 0.70 times the IPO price set forth on the cover page of this Prospectus or $4.345325. We issued these warrants to MDB Capital Group, LLC for advisory services and private placement agency services rendered on November 21, 2012.

In the private placement of our senior secured convertible promissory notes in November of 2012, MDB Capital Group purchased an aggregate of $395,000 in principal amount of our notes and received warrants to purchase shares of our common stock. The term of this warrant is 7 years. The calculation of the number of shares of our common stock covered by this warrant and the exercise price is determined by a formula. The number of shares of our common stock covered by the warrant is determined by dividing 50% of the principal amount of the senior secured convertible notes purchased by the lower of 0.70 times the IPO price set forth on the cover page of this Prospectus or $3.47626 with an exercise price of the lower of 0.70 times the IPO price set forth on the cover page of this Prospectus or $3.47626. Assuming that the offering covered by this prospectus closes with the IPO price set forth on the cover page of this prospectus and that we receive aggregate gross proceeds in excess of $10 million, the warrant would cover 56,814 shares of our common stock. These warrants are not currently exercisable and will not become exercisable unless and until this offering closes or certain future events occur. If this offering does not close or is abandoned, then this warrant will cover 56,814 shares of our common stock at an exercise price of $3.37626 per share and become exercisable on November 21, 2013, unless a private equity financing occurs prior to that date in which case the number of shares covered by this warrant and the exercise price will be determined by the price our shares are sold in the private equity financing.

Lock-Up Agreements

All of our officers, directors, employees, and stockholders beneficially owning 5% or more of our common stock have agreed that, until the later of the one year anniversary of the date of the Underwriting Agreement we will enter into in conjunction with this offering, they will not sell, contract to sell, grant any option for the sale or otherwise dispose of any of our equity securities, or any securities convertible into or exercisable or exchangeable for our equity securities, without the consent of MDB Capital Group, LLC, except for exercise or conversion of currently outstanding warrants, options and convertible debentures, as applicable; and exercise of options under an acceptable stock incentive plan. This lock-up covers a total of 1,716,233 shares of common stock which includes 1,262,792 shares of our currently outstanding common stock and 453,441 shares of common stock underlying stock options, warrants and convertible promissory notes. The underwriter may consent to an early release from the lock-up period if, in its opinion, the market for the common stock would not be adversely impacted by sales and in cases of a financial emergency of an officer, director or other stockholder. We are unaware of any officer, director or stockholder who intends to ask for consent to dispose of any of our equity securities during the relevant lock-up periods.

Holders of our senior secured convertible promissory notes, including MDB Capital Group, LLC, have agreed that, until 180 days following the date of this prospectus, they will not sell, contract to sell, grant any option for the sale or otherwise dispose of any of our equity securities, or any securities convertible into or exercisable or exchangeable for our equity securities, without the consent of MDB Capital Group, LLC. This lock-up covers a total of 2,455,231 shares of our common stock which includes 1,370,267 shares of common stock that will be issued upon the conversion of our senior secured convertible promissory notes, 791,080 shares of common stock underlying the warrants issued therewith, and 293,884 shares of common stock underlying warrants issued to MDB Capital Group, LLC.

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Indemnification

We will agree to indemnify the underwriter against certain liabilities, including certain liabilities arising under the Securities Act, and to contribute to payments that the underwriter may be required to make for these liabilities.

Short Positions and Penalty Bids

The underwriter may engage in over-allotment, syndicate covering transactions, and penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of the common stock, in accordance with Regulation M under the Exchange Act.

● Over-allotment involves sales by the underwriter of shares in excess of the number of shares the underwriter is obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by an underwriter is not greater than the number of shares that it may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriter may close out any short position by either exercising its over-allotment option and/or purchasing shares in the open market.

● Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriter will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which it may purchase shares through the over-allotment option. If an underwriter sells more shares than could be covered by the over-allotment option, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if an underwriter is concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

● Penalty bids permit an underwriter to reclaim a selling concession from a syndicate member when the shares originally sold by the syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of the common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the NASDAQ Capital Market, and if commenced, they may be discontinued at any time.

Neither we nor the underwriter make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common stock. In addition, neither we nor the underwriter make any representation that the underwriter will engage in these transactions or that any transaction, once commenced, will not be discontinued without notice.

Electronic Distribution

A prospectus in electronic format may be made available on the Internet sites or through other online services maintained by the underwriter, or by its affiliates. In those cases, prospective investors may view offering terms online and, depending upon the underwriter, prospective investors may be allowed to place orders online. The underwriter may agree with us to allocate a specific number of shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the underwriter on the same basis as other allocations.

Other than the prospectus in electronic format, the information on the underwriter’s website and any information contained in any other website maintained by the underwriter is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the underwriter in its capacity as underwriter and should not be relied upon by investors.

The underwriter’s compensation in connection with this offering is limited to the fees and expenses described above under “Underwriting Discount and Expenses.”

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USE OF PROCEEDS

Based on an assumed offering price of $5.00 per share, we estimate the gross proceeds from the sale of 2,500,000 shares of common stock, prior to deducting underwriting discounts and commissions and the estimated offering expenses payable by us, will be approximately $12.5 million (approximately $14.375 million if the over-allotment option granted to the underwriter is exercised in full).

We estimate that we will receive net proceeds of approximately $10.5 million, after deducting underwriting discounts and commissions and our underwriter’s expense allowance, and other estimated expenses of approximately $2.03 million, which includes legal, accounting, printing costs and various fees associated with the registration and listing of our shares. If the underwriter exercises its right to purchase an additional 375,000 shares of common stock to cover over-allotments, we will receive an additional approximately $1,687,500, after deducting approximately $187,500 for underwriting discounts and commissions.

We currently intend to use the net proceeds of this offering as follows: approximately $1 million for patent filings and the protection of intellectual property, $1.5 million for new product research and development, $5 million for the development of existing products, including product and equipment purchases, $1 million for equipment and software, and $2 million for working capital and general corporate expenses.

The amounts and timing of our actual expenditures will depend on numerous factors, including market conditions, results from our research and development efforts, business developments and opportunities and related rate of growth, sales and marketing activities and competition. Accordingly, our management will have broad discretion in the application of the net proceeds, and investors will be relying on the judgment of our management regarding the application of the proceeds from this offering. We may find it necessary or advisable to use portions of the proceeds from this offering for other purposes. Circumstances that may give rise to a change in the use of proceeds and the alternate purposes for which the proceeds may be used include:

● the existence of unforeseen or other opportunities or the need to take advantage of changes in timing of our existing activities;

● the need or desire on our part to accelerate, increase, reduce or eliminate one or more existing initiatives due to, among other things, changing market conditions and competitive developments or interim results of research and development efforts;

● results from our business development and marketing efforts, including co-development and pilot site installation opportunities that may materialize;

● the effect of federal, state, and local regulation of potential customers in our identified industries;

● our ability to attract development funding or to license or sell our technology to industry sponsors or other interested organizations; and/or

● the presentation of strategic opportunities of which we are not currently aware (including acquisitions, joint ventures, licensing and other similar transactions).

From time to time, we evaluate these and other factors and we anticipate continuing to make such evaluations to determine if the existing allocation of resources, including the proceeds of this offering, is being optimized.

CAPITALIZATION

The following table sets forth our actual cash and cash equivalents and capitalization, each as of March 31, 2013:

● on an actual basis; and ● on a pro forma as adjusted basis to give effect to the issuance of the common stock offered hereby and the use of proceeds, as described in the section entitled “Use of Proceeds.”

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You should consider this table in conjunction with our financial statements and the notes to those financial statements included in this prospectus.

	As of March 31, 2013
	Actual			Actual with effect of reverse split			As adjusted for the effect of the reverse split, debt conversion and issuance of shares to directors			As adjusted for this offering (1)
Total debt at face value, net of debt discount
Convertible debt less debt discount plus Texas Emerging Technology Fund	$	3,350,532		$	3,350,532		$	1,000,000		$	1,000,000
Stockholders’ equity
Common stock, par value $0.001 per share – 50,000,000 shares of common stock authorized; 1,480,262 shares issued and outstanding as of March 31 giving effect to the reverse split; 5,688,308 shares issued and outstanding as adjusted (2)	$	3,525		$	1,480		$	3,188		$	5,688
Additional paid-in-capital		7,109,741			7,111,786			10,601,465			21,101,465
Additional paid-in-capital; stock to be issued to directors and for legal services (3)		43,333			43,333			--			--
Treasury stock		(2,657	)		(2,657	)		(2,657	)		(2,657	)
Accumulated deficit		(9,025,017	)		(9,025,017	)		(9,282,464	)		(9,282,464	)
Total stockholders’ equity (deficit)		(1,871,075	)		(1,871,075	)		1,319,532			11,822,032
Total capitalization		1,479,457			1,479,457			2,319,532			12,822,032
Stockholders’ equity (deficit) per share		(0.53	)		(1.33	)		0.43			2.18

(1) (2) (3) Assumes that approximately $12.5 million of our common stock is sold in this offering at an offering price of $5.00 per share and that the net proceeds thereof are approximately $10.5 million after deducting underwriting discounts and commissions and our estimated expenses. If the underwriter’s over-allotment option is exercised in full, net proceeds will increase to approximately $12,187,500. Convertible notes and interest of $5,980,214, including $750,000 raised after the second quarter of 2013, convert into 1,621,249 shares of common stock at the time of the offering. Of the $5,980,214 in debt $2,791,325 is already accounted for in paid in capital as debt discount. Management anticipates issuing 12,465 shares of common stock to our independent directors as compensation to March 31, 2013 with paid in capital of $43,333. Management anticipates that the number of shares to be issued to the independent directors will increase to 25,710 shares by June 30, 2013; these shares are reflected in the last two columns. Management anticipates that it will issue an additional convertible promissory note to Richardson & Patel LLP that will be converted into 61,357 unregistered shares of common stock at $3.47626 per share in payment of an anticipated $213,294 in additional legal expenses incurred during 2013 to complete this offering; these shares are reflected in the last two columns.

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DILUTION

Our net tangible book value as of March 31, 2013, was approximately $(1,871,075), or $(1.33) per share of our common stock. Our net tangible book value per share represents our total tangible assets less total liabilities divided by the number of shares of our common stock outstanding on March 31, 2013. If we had converted all the convertible debt as of March 31, 2013, our net tangible assets would have been $1,319,532 or $0.41 per share. Assuming that we issue all of the shares of our common stock offered by us at the public offering price of $5.00 per share, after deducting the commissions and estimated offering expenses payable by us and converting the Convertible Notes net of debt discount already on the books, our net tangible book value as of March 31 2013, would have been approximately $11.8 million, or $2.08 per share of our common stock. This amount represents an immediate increase in net tangible book value of $1.67 per share to our existing stockholders and an immediate dilution in net tangible book value of $2.92 per share to new investors purchasing shares of our common stock in this offering.

We determine dilution by subtracting the adjusted net tangible book value per share after this offering from the public offering price per share of our common stock. The following table illustrates the dilution in net tangible book value per share to new investors:

Public offering price per share			$	5.00
Net tangible book value per share as of March 31, 2013 with conversion of debt	$	0.41
Increase per share attributable to new investors	$	1.67
Adjusted net tangible book value per share after this offering			$	2.08
Dilution in net tangible book value per share to new investors			$	2.92

The following shares were not included in the above calculation:

● 158,108 shares of our common stock reserved for issuance under stock option agreements at a weighted average exercise price of $2.7163 per share and 352,270 shares of our common stock reserved for issuance under option agreements that have been approved by the Compensation Committee of the Board of Directors but have not yet been issued at an exercise price of $5.00;

● 1,519,095 shares of common stock reserved for issuance under various outstanding warrant agreements at a weighted average exercise price of $2.99 per share;

● 487,713 shares of our common stock reserved for future issuance under our 2013 Equity Incentive Plan; and

● up to 250,000 shares of our common stock issuable upon exercise of the warrant issued to MDB Capital Group, LLC.

Unless otherwise specifically stated, information throughout this prospectus assumes that none of our outstanding warrants to purchase shares of our common stock are exercised.

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LEGAL MATTERS

~~Richardson~~The ~~& Patel LLP, with an office at 405 Lexington Avenue, 49th Floor, New York, New York 10174, will pass upon the~~ validity of the ~~shares~~issuance of ~~common~~the ~~stock~~securities offered byhereby this prospectus. Richardson & Patel LLP has agreed to accept $300,000 in aggregate principal amount of convertible promissory notes as partial payment for legal services in connection with the initial public offering of our common stock, the registration statement of which this prospectus is a part, and the listing of our common stock on the Nasdaq Capital Market, which convertible promissory notes will ~~convert~~be ~~into~~passed ~~an aggregate of 82,192 shares of common stock~~ upon completion of this offering. The promissory notes will convert to common stock upon the consummation of this offering at the rate of $3.47626 per share. Although Richardson & Patel LLP is not under any obligation to accept additional securities in payment for ~~services,~~us itby ~~may~~Perkins doCoie so in the future. Robert Groover, Esq., an attorney with Glast, Phillips & Murray, P.C., holds a warrant for the purchase of 6,300 shares of our common stock. Glast, Phillips & Murray, P.C., with an office at 14801 Quorum Drive, Suite 500, Dallas, Texas 75254, has provided a legal opinion to the underwriter relating to the discussion included in this prospectus of our patents and patent applications. Locke Lord LLP, ~~with an office at 500 Capitol Mall~~Denver, ~~Suite 1800, Sacramento, California 95814, is legal counsel to MDB Capital Group, LLC~~Colorado.

EXPERTS

The financial statements of Ideal Power Inc. as of December 31, ~~2012~~2025 and ~~2011,~~2024 and for ~~the~~each ~~years~~of ~~ended~~the ~~December~~two ~~31,~~years ~~2012 and 2011, included~~ in ~~this prospectus and elsewhere in~~ the ~~registration~~period ~~statement~~ended ~~have~~December ~~been~~31, ~~audited by Gumbiner Savett Inc.~~2025, ~~independent~~incorporated ~~registered~~by ~~public~~reference ~~accounting firm (which contain an explanatory paragraph related~~ to ~~our~~the ~~ability~~Annual toReport ~~continue~~on asForm a10-K ~~going~~for ~~concern~~the asyear ~~described~~ended inDecember ~~Note~~31, 22025, ~~to our financial statements) as set forth in their report. We~~ have ~~included~~been ~~these~~so ~~financial~~incorporated ~~statements~~ in ~~the prospectus and elsewhere in the registration statement in~~ reliance ~~upon~~on the report of BPM LLP, ~~Gumbiner~~an ~~Savett~~independent ~~Inc.~~registered public accounting firm, given on ~~their~~the authority of said firm as experts in ~~accounting~~auditing and ~~auditing~~accounting.

WHERE YOU CAN FIND ~~MORE~~ADDITIONAL INFORMATION

WeThis ~~have~~prospectus ~~filed~~is ~~with~~part of the ~~SEC a~~ registration statement on Form S-1 that we filed with the SEC under the Securities Act ~~that~~and ~~registers~~does not contain all of the ~~shares~~information set forth in the registration statement. Whenever a reference is made in this prospectus to any of our ~~common~~contracts, ~~stock~~agreements toor other documents, the reference may not be ~~sold~~complete, inand you should refer to the exhibits that are part of the registration statement or the exhibits to the reports or other document incorporated into this ~~offering~~prospectus for a copy of such contract agreement or other document. ~~Our~~Because we are subject to the information and reporting requirements under the Exchange Act, we file annual, quarterly and current reports, proxy statements and other information with the SEC. Our filings ~~are~~with ~~and~~the ~~will~~SEC ~~become~~are available to the public over the ~~Internet at the~~ SEC’s website at www.sec.gov. ~~You~~ ~~may~~Our ~~also~~Annual ~~read~~Report on Form 10-K, Quarterly Reports on Form 10-Q and ~~copy~~Current Reports on Form 8-K, including any ~~document~~amendments to those reports, and other information that we file with or furnish to the SEC atpursuant ~~its~~to ~~public~~Section 13(a) or ~~reference~~15(d) of ~~facilities~~the atExchange Act ~~100~~can Falso ~~Street~~be Naccessed free of charge on our website.~~E.,~~ ~~Washington,~~at Dhttps://idealpower.Ccom. ~~20549.~~Information ~~You~~contained ~~can~~on ~~also~~or ~~obtain~~accessible ~~copies~~through ofour ~~the~~website ~~documents~~is ~~upon~~not ~~the~~a ~~payment~~part of athis ~~duplicating~~prospectus ~~fee~~and tois ~~the~~not ~~SEC.~~incorporated ~~Please~~by ~~call~~reference herein, and the ~~SEC~~inclusion atof ~~1-800-SEC-0330~~our ~~for~~website ~~further~~address ~~information~~in onthis ~~the~~prospectus ~~operation~~is ofan ~~the~~inactive ~~public~~textual reference ~~facilities~~only.

~~This~~INCORPORATION ~~prospectus~~OF ~~does~~CERTAIN ~~not~~INFORMATION ~~contain~~BY all of the information set forth in the registration statement and the exhibits and schedules thereto. Some items are omitted in accordance with the rules and regulations of the SEC. You should review the information and exhibits included in the registration statement for further information about us and the securities we are offering. Statements in this prospectus concerning any document we filed as an exhibit to the registration statement or that we otherwise filed with the SEC are not intended to be comprehensive and are qualified by reference to these filings. You should review the complete document to evaluate these statements.REFERENCE

~~DISCLOSURE~~The OFSEC ~~COMMISSION~~allows ~~POSITION~~us ONto ~~INDEMNIFICATION~~“incorporate by reference” information that we file with it into this prospectus, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus. The information incorporated by reference into this prospectus is deemed to be part of this prospectus, and any information filed with the SEC after the date of this prospectus will automatically be deemed to update and supersede information contained in this prospectus and any accompanying prospectus supplement.

~~FOR~~The ~~SECURITIES~~following ~~ACT~~documents ~~LIABILITIES~~previously filed with the SEC are incorporated by reference in this prospectus:

~~Insofar~~• asOur ~~indemnification~~Annual ~~for~~Report ~~liabilities~~on ~~arising~~Form ~~under~~10-K for the ~~Securities~~fiscal ~~Act~~year ~~may~~ended beDecember ~~permitted to directors~~31, ~~officers or persons controlling the Company~~2025, wefiled ~~have~~with ~~been informed that in~~ the ~~opinion~~SEC ofon ~~the~~March ~~Securities and Exchange Commission~~27, ~~such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.~~2026;

• Our Current Report on Form 8-~~60-~~K filed with the SEC on February 23, 2026; and

2• The description of our common stock contained in our Registration Statement on Form 8-A filed with the SEC on November 21,~~500~~ 2013 under Section 12(b) of the Exchange Act,~~000~~ ~~Shares~~including any amendments or reports filed for the purpose of ~~Common~~updating ~~Stock~~such description (including Exhibit 4.5 to our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 27, 2026).

Table of Contents

All filings filed by us pursuant to the Exchange Act after the date of the initial filing of the registration statement of which this prospectus is a part and prior to effectiveness of the registration statement shall be deemed to be incorporated by reference into this prospectus.

We also incorporate by reference all additional documents that we file with the SEC under the terms of Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act that are made after the date of the initial registration statement but prior to effectiveness of the registration statement and after the date of this prospectus but prior to the termination of the offering of the securities covered by this prospectus. We are not, however, incorporating, in each case, any documents or information that we are deemed to furnish and not file in accordance with SEC rules.

You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. You should assume that the information appearing in this prospectus is accurate only as of the date of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

Any statement contained in a document incorporated or deemed to be incorporated by reference into this prospectus will be deemed to be modified or superseded for the purposes of this prospectus to the extent that a statement contained herein, or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein, modifies or supersedes that statement. The modifying or superseding statement need not state it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement is not an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus.

You may request, and we will provide you with, a copy of these filings, at no cost, by calling us at (561) 559-4111 or by writing to us at the following address:

Ideal Power Inc.

~~PROSPECTUS~~5508 Highway 290 West, Suite 120

~~MDB~~Austin, ~~Capital Group~~Texas, ~~LLC~~78735

~~Until ,~~(512) 2013, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.264-1542

~~-61-~~Attention: Chief Financial Officer

Table of Contents

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

~~ITEM~~ Item 13. ~~OTHER~~ ~~EXPENSES~~Other OFExpenses ~~ISSUANCE~~of ~~AND~~Issuance ~~DISTRIBUTION~~and Distribution.

The following table sets forth ~~the~~an ~~various~~estimate ~~expenses~~of tothe befees ~~incurred~~and inexpenses ~~connection~~relating ~~with~~to the ~~sale~~issuance and distribution of ~~our~~the ~~common~~securities ~~stock~~ being registered hereby, all of which ~~will~~shall be borne by ~~us (except any underwriting discounts and commissions and expenses incurred for brokerage, accounting, tax or legal services or any other expenses incurred in disposing of~~ the ~~shares). All amounts shown are estimates except the SEC registration fee.~~registrant:

SEC Filing Fee	$	2001.38
SEC registration fee	$	276
FINRA Fee*	$	1,967.29
Legal fees and expenses	$	40,000
Underwriter’s Legal Fees and Expenses.	$	187,500.00
Printing fees and expenses	$	1,500
Nasdaq Fee*	$	50,000.00
Accounting fees and expenses	$	8,000
Printing Expenses*	$	35,000.00
Miscellaneous fees and expenses	$	2,500
Accounting Fees and Expenses*	$	40,000.00
Total	$	52,276
Legal Fees and Expenses*	$	450,000.00
Transfer Agent and Registrar Expenses*	$	15,000.00
Miscellaneous*	$	1,500.00
Total	$	782,968.67

*Item 14. ~~Estimated~~Indemnification of Directors and Officers.

~~ITEM~~Section 14145 of the Delaware General Corporation Law (the “DGCL”) provides, in general, that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to the corporation. ~~INDEMNIFICATION~~ OFIn ~~DIRECTORS~~the ~~AND~~case ~~OFFICERS~~of a derivative action, a Delaware corporation may indemnify any such person against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter as to which such person will have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses. The DGCL provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

The ~~following~~registrant’s ~~summary~~certificate isof ~~qualified~~incorporation, inas amended, provide that it will indemnify its ~~entirety~~directors, byofficers, ~~reference~~employees and agents to the ~~complete~~extent ~~text~~and in the manner permitted by the provisions of ~~any~~the ~~statutes~~DGCL, ~~referred~~as amended from time to ~~below~~time, subject to any permissible expansion or limitation of such indemnification, as may be set forth in any stockholders’ or directors’ resolution or by contract. Any repeal or modification of these provisions approved by the registrant’s stockholders will be prospective only and will not adversely affect any limitation on the ~~certificate~~liability of ~~incorporation~~any of ~~Ideal~~the ~~Power~~registrant’s ~~Inc.,~~directors aor ~~Delaware~~officers ~~corporation~~existing as of the time of such repeal or modification.

~~Section~~The ~~145~~registrant’s ofcertificate ~~the General Corporation Law~~ of ~~the~~incorporation, ~~State~~as ofamended, ~~Delaware~~provides ~~(the~~that ~~“DGCL”)~~no ~~permits~~director ais ~~Delaware~~liable ~~corporation~~ to ~~indemnify~~the ~~any~~registrant ~~person~~or ~~who~~its ~~was~~stockholders orfor ismonetary adamages ~~party~~for orbreach isof ~~threatened~~fiduciary toduty beas ~~made~~ a ~~party~~director to ~~any~~the ~~threatened,~~fullest ~~pending~~extent orpermitted ~~completed~~by ~~action,~~the ~~suit or proceeding~~DGCL, ~~whether~~except ~~civil,~~for ~~criminal,~~liability ~~administrative or investigative~~ (~~other~~i) ~~than~~for anany ~~action~~breach ~~by or in the right~~ of the ~~corporation)~~director’s byduty ~~reason~~ of ~~the~~loyalty ~~fact~~to ~~that~~ the ~~person~~registrant is or ~~was~~its ~~a director~~stockholders, ~~officer,~~(ii) ~~employee~~for acts or ~~agent~~omissions ofnot ~~the~~in ~~corporation,~~good orfaith is or ~~was~~which ~~serving~~involve atintentional ~~the~~misconduct ~~request~~or ofa ~~the~~knowing ~~corporation~~violation asof ~~a director~~law, ~~officer,~~(iii) ~~employee~~under orSection ~~agent~~174 of ~~another~~the ~~corporation~~DGCL, ~~partnership, joint venture, trust~~ or ~~other~~(iv) ~~enterprise,~~for ~~against~~any ~~expenses~~transaction ~~(including~~from ~~attorneys’~~which ~~fees),~~the ~~judgments,~~director ~~fines~~derived ~~and~~an ~~amounts~~improper ~~paid~~personal inbenefit. ~~settlement~~If ~~actually~~the ~~and~~DGCL ~~reasonably~~is ~~incurred~~amended byafter the ~~person~~date inhereof ~~connection~~to ~~with~~authorize ~~such~~corporate action, ~~suit~~further eliminating or ~~proceeding~~limiting if the ~~person~~personal ~~acted~~liability inof ~~good~~directors, ~~faith~~then ~~and~~the inliability of a ~~manner~~director of the ~~person~~Corporation ~~reasonably~~shall ~~believed to~~ be ineliminated or ~~not~~limited ~~opposed~~ to the ~~best~~fullest ~~interests~~extent ofpermitted by the ~~corporation,~~Delaware ~~and,~~General ~~with~~Corporation ~~respect to any criminal action or proceeding~~Law, ~~had~~as noso ~~reasonable cause to believe the person’s conduct was unlawful~~amended.

In the case of an action by or in the right of the corporation, Section 145 of the DGCL permits a Delaware corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses that the Court of Chancery or such other court shall deem proper.II-1

~~-62-~~Table of Contents

~~Section~~The ~~145~~registrant ofhas ~~the DGCL~~ also ~~permits~~obtained ainsurance ~~Delaware~~covering ~~corporation~~its todirectors ~~purchase~~ and ~~maintain~~officers ~~insurance~~for on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability ~~asserted against such person and incurred by such person in any such capacity, or~~ arising out of ~~such~~their ~~person’s~~respective ~~status as such, whether or not the corporation would have the power to indemnify such person against such liability under Section 145 of the DGCL~~actions.

Article 13 of our Certificate of Incorporation states that our directors shall not be personally liable to us or to our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to us or to our stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefitItem 15. If ~~the~~Recent ~~Delaware~~Sales ~~General Corporation Law is amended after the date hereof to authorize corporate action further eliminating or limiting the personal liability~~ of ~~directors,~~Unregistered ~~then the liability of our directors shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended~~Securities.

~~Article~~On 14February ~~of our Certificate of Incorporation states that each person who was or is made a party or is threatened to be made a party to or is involved in any action~~23, ~~suit or proceeding~~2026, ~~whether~~the ~~civil,~~Company ~~criminal,~~entered ~~administrative~~into ~~or investigative (hereinafter a “proceeding”), by reason of~~ the ~~fact~~Securities ~~that~~Purchase heAgreement orwith ~~she, or a person of whom he or she is~~ the ~~legal~~Selling ~~representative~~Securityholder, ispursuant orto ~~was~~which ~~a director or officer of~~ the Company oragreed is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to ~~employee~~issue ~~benefit plans (hereinafter an “indemnitee”) shall be indemnified~~ and ~~held~~sell ~~harmless by us~~ to the ~~fullest~~Selling ~~extent~~Securityholder ~~permitted~~Pre-Funded byWarrants ~~the~~to ~~Delaware~~purchase ~~General Corporation Law against all expense~~631,332 ~~liability~~shares ~~and~~of ~~loss~~Common ~~(including~~Stock ~~attorneys’~~at ~~fees,~~an ~~judgments,~~exercise ~~fines,~~price ~~ERISA~~of ~~excise~~$0.001 ~~taxes~~per orshare ~~penalties and amounts paid or to be paid~~ in ~~settlement)~~the ~~reasonably~~Concurrent ~~incurred~~Placement. orThe ~~suffered~~Pre-Funded byWarrants ~~such~~offered ~~indemnitee~~ in ~~connection~~the ~~therewith. Such~~Concurrent ~~indemnification~~Placement ~~shall~~have ~~continue as to~~ an ~~indemnitee~~exercise ~~who~~price has ceased to be a director, officer, employee or agent, except as provided in subparagraph (b) hereof, we shall indemnify any such indemnitee seeking indemnification in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by our board of ~~directors~~$0. ~~The~~001 ~~right~~per toshare ~~indemnification conferred by Article 14 is a contract right~~ and ~~includes~~expire ~~the~~when ~~right~~they toare beexercised ~~paid by us the expenses incurred~~ in ~~defending any such proceeding in advance of its final disposition (an “expense advancement”); provided~~full, ~~however, that, if~~ the ~~Delaware~~gross ~~General~~proceeds ~~Corporation~~to ~~Law so requires,~~ the ~~payment~~Company offrom ~~such expenses incurred by an indemnitee in advance of~~ the ~~final~~Concurrent ~~disposition~~Placement ofwere aapproximately ~~proceeding,~~$1.7 ~~shall~~million. beThe ~~made~~Concurrent ~~upon~~Placement ~~delivery~~closed ~~to us of an undertaking, by or~~ on ~~behalf~~February ~~of such indemnitee~~25, ~~to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified~~2026. We ~~may,~~For byadditional ~~action~~information ofregarding ~~our~~the ~~Board~~Securities ofPurchase ~~Directors~~Agreement, ~~provide~~refer ~~indemnification~~ to ~~our employees and agents with~~ the ~~same~~summary ~~scope~~included ~~and~~under ~~effect~~Item ~~as the foregoing indemnification of directors and officers~~1. ~~The~~01 ~~right to indemnification~~ and ~~the~~Item ~~payment~~3.02 of expenses incurred in defending a proceeding in advance of its final disposition conferred in Article 14 is not exclusive of any other right that any person may have or hereafter acquire under any statute, provision of our ~~Certificate~~Current ofReport ~~Incorporation,~~on ~~bylaw,~~Form ~~agreement,~~8-K ~~vote~~filed ofwith ~~stockholders or disinterested directors or otherwise. We may maintain insurance, at our expense, to protect~~ the ~~Company~~SEC ~~and~~on ~~any~~February ~~of our directors~~25, ~~officers~~2025, ~~employees~~which oris ~~agents~~incorporated ~~against~~by ~~any~~reference ~~such expense, liability or loss, whether or not we have the power to indemnify such person~~herein.

~~ITEM 15~~Item 16. ~~RECENT~~ ~~SALES~~Exhibits OFand ~~UNREGISTERED~~Financial ~~SECURITIES~~Statement Schedules.

~~During the past three years, we issued the following securities without registration under the Securities Act of 1933, as amended~~ (~~the “Securities Act”~~a) Exhibits.

On January 15, 2010, we entered into a Services Agreement with Dynamic Manufacturing Solutions LLC (“DMS”). Pursuant to the Services Agreement, we agreed to pay $120,000 in invoices issued by DMS to us for manufacturing services with shares of our common stock. DMS currently owns 40,382 shares of our common stock. We relied on the exemption provided by Section 4(a)(2) of the Securities Act of 1933 to make the offering inasmuch as the investor was accredited and there was no form of general solicitation or general advertising relating to the offer.

Exhibit Number		Description
3.1		Delaware Certificate of Conversion including Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1, filed on August 6, 2013 (File No. 333-190414)).
3.2		Certificate of Amendment to the Certificate of Incorporation of Ideal Power Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on August 20, 2019 (File No. 001-36216)).
3.3		Second Amended and Restated Bylaws of Ideal Power Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on June 17, 2022 (File No. 001-36216)).
3.4		Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of Ideal Power Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on February 27, 2017 (File No. 001-36216)).
4.1		Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 14, 2021)
4.2		Form of Series B Pre-Funded Common Stock Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 13, 2019)
4.3		Form of Pre-Funded Warrant issued in March 2024 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 28, 2024)
4.4		Form of Pre-Funded Warrant issued to Selling Securityholder in February 2026 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 25, 2026)
5.1#		Opinion of Perkins Coie LLP
10.1		Ideal Power Inc. Amended and Restated 2013 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 16, 2023) +
10.2		Employment Agreement, effective November 3, 2025, between Ideal Power Inc. and David Somo (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 3, 2025) +
10.3		Employment Agreement between the registrant and Timothy W. Burns dated September 16, 2014 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 19, 2014) +
10.4		Second Revised and Restated Employment Agreement between the Company and R. Daniel Brdar dated April 8, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 14, 2020) +
10.5		Retirement and Transition Services Agreement, dated November 2, 2025, between Ideal Power Inc. and R. Daniel Brdar (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 3, 2025) +
10.6		Form of Restricted Stock Units Agreement (incorporated by reference to Exhibit 99.1 of the Company’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on November 3, 2025) +
10.7		Form of Performance Stock Units Agreement (incorporated by reference to Exhibit 99.2 of the Company’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on November 3, 2025) +
10.8		Securities Purchase Agreement, dated February 23, 2026 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on February 25, 2026)
23.1#		Consent of BPM LLP, Independent Registered Public Accounting Firm
23.2#		Consent of Perkins Coie LLP (included in Exhibit 5.1).
24.1#		Power of Attorney (included on the signature page hereto).
107#		Filing Fee Table.

~~-63-~~# Filed herewith. + Indicates a management contract or compensatory agreement.

~~In September and October 2010, we sold a total of 27,299 shares of our common stock to two investors for proceeds of $81,120~~Item 17. We relied on the exemption provided by Section 4(a)(2) of the Securities Act of 1933 to make the offering inasmuch as the investors were accredited and there was no form of general solicitation or general advertising relating to the offerUndertakings.

~~On October 1, 2010, in conjunction with an award from the State of Texas Office of the Governor, Economic Development and Tourism~~ (~~“OOGEDT”~~a), ~~we granted to the OOGEDT a right to purchase shares of our capital stock.~~ The ~~purchase~~undersigned ~~price~~registrant ~~per~~hereby share is $0.002381 per share. The number of shares that may be purchased shall be equal to the quotient obtained by dividing the total amount of the award together with accrued interest at the rate of 8% per annum disbursed to the date of exercise by either (i) the purchase price in the First Qualifying Financing Transaction (as defined in the award agreement) if such financing is closed before December 30, 2010; (ii) eight-tenths of the purchase price in the First Qualifying Financing Transaction if such financing is closed after December 30, 2010; or (iii) if no First Qualifying Transaction is closed 42 months after October 1, 2010 or the OOGEDT exercises the right to purchase before any such financing transaction, then $0.295072. We expect that the OOGEDT to exercise this option to purchase our common stock. As of March 31, 2013, the number of shares of common stock the OOGEDT has the right to purchase is 288,173. We relied on the exemption provided by Section 4(a)(2) of the Securities Act of 1933 to make the offering inasmuch as the investor was a government entity and there was no form of general solicitation or general advertising relating to the offer.undertakes:

On December 10, 2010, we completed an offering of 122,175 shares of our Series Seed Convertible Preferred Stock to Battery Ventures VIII, L.P. (“Battery”) for a price of $240,000.57. We relied on the exemption provided by Rule 506 of Regulation D of the Securities Act of 1933 to make the offering inasmuch as the investor was accredited and there was no form of general solicitation or general advertising relating to the offer. As a result of our achieving certain milestones, on or about August 4, 2011 the Series Seed Convertible Preferred Stock was converted into 51,312 shares of our common stock. We relied on Section 3(a)(9) of the Securities Act of 1933 to issue the common stock.

Between April 26, 2011 and October 9, 2011, we undertook an offering of $360,000 in principal amount of convertible promissory notes to five investors. The convertible notes have an annual interest rate of 6% and all principal and interest are due and payable on its maturity date, December 31, 2013, unless earlier paid by the Company. The notes may be converted into shares of common stock at the lower of (i) the lowest per share purchase price paid in cash for Qualified Financing Securities (as defined in the convertible notes) or (ii) $6.3276. In an amendment to the promissory notes, the holders agreed to a mandatory conversion in the event of an initial public offering at the per share price of the securities sold in the offering. We relied on the exemption provided by Rule 506 of Regulation D of the Securities Act of 1933 to make the offering inasmuch as all of the investors were accredited and there was no form of general solicitation or general advertising relating to the offer.

Between October 12, 2011 and May 4, 2012, we sold a total of 42,670 shares of our common stock to a total of five accredited investors and one of our executive officers for proceeds totaling approximately $270,000. We relied on the exemption provided by Section 4(a)(2) of the Securities Act of 1933 to make the offering inasmuch as the investors were accredited and there was no form of general solicitation or general advertising relating to the offer.

On November 5, 2011, our Board of Directors adopted the Ideal Power Converters, Inc. 2011 Stock Option/Stock Issuance Plan (the “2011 Plan”). Pursuant to the 2011 Plan, we are able to issue awards of stock options and common stock to employees, directors and consultants and independent advisors who render services to us. We reserved 371,000 shares of our common stock for issuance under the Plan. We relied on Rule 701 promulgated under the Securities Act of 1933, as amended, to issue awards from the Plan. On November 5, 2012, the awards we made from the Plan terminated.

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Between February 24, 2012 and July 17, 2012, we undertook an offering of $695,150.80 in principal amount of convertible promissory notes together with warrants. The convertible notes have an annual interest rate of 6% and all principal and interest are due and payable on the maturity date, December 31, 2013, unless earlier paid by the Company. The notes may be converted into shares of common stock at the lower of (i) the lowest per share purchase price paid in cash for Qualified Financing Securities (as defined in the convertible notes) or $6. 3276. If the note is converted into shares issued in a Next Financing (as defined in the note), the exercise price of the warrant is equal to the lower of (i) the per share purchase price paid in the Next Financing or (ii) $6. 3276. If the note is converted into shares of common stock or reaches its maturity date, then then exercise price of the warrant is equal to $6. 3276. In an amendment to the promissory notes, the holders agreed to a mandatory conversion in the event of an initial public offering at the per share price of the securities sold in the offering. The warrants have a term of seven years. The number of shares subject to each warrant is determined by dividing the principal amount of the promissory note by the exercise price. The exercise price is determined as follows: if the convertible promissory note is converted in the Next Financing, the per share exercise price will be the price at which the note was converted, otherwise the per share exercise price will be $6. 3276. We relied on the exemption provided by Rule 506 of Regulation D of the Securities Act of 1933 to make the offering inasmuch as all of the investors were accredited and there was no form of general solicitation or general advertising relating to the offer.

On August 31, 2012, we completed an offering of $750,000 in principal amount of our senior secured convertible promissory notes together with warrants. If we proceed with an initial public offering of our securities, as defined in the Securities Purchase Agreement, then there will be a mandatory conversion of the notes at a 30% discount to the per share initial public offering price. If we do not proceed with an initial public offering of our securities, the notes shall be paid in full on the maturity date. If the notes are voluntarily converted into shares of common stock, including in connection with a Private Equity Financing or in the event of a Change of Control (as defined in the notes), each note shall be converted into that number of shares of common stock equal to the principal amount and accrued interest of the investor’s note divided by the lower of (i) 0.70 times the Private Equity Financing Price or share consideration paid in the event of a Change of Control or (ii) $7.643. If we proceed with an initial public offering of our securities or a Private Equity Financing, the number of shares of common stock covered by the warrant shall be equal to the principal amount of the investor’s note divided by 0.70 times the initial public offering price or Private Equity Financing Price, as applicable, and the per share exercise price of the warrants will equal 0.70 times the initial public offering price or Private Equity Financing Price, as applicable. If we do not undertake either an initial public offering or a Private Equity Financing, then the number of shares of common stock covered by the warrant shall be equal to the original principal amount of the investor’s note divided by $7.643 and the exercise price shall be $7.643 per share. We relied on the exemption provided by Rule 506 of Regulation D of the Securities Act of 1933 to make the offering inasmuch as all of the investors were accredited and there was no form of general solicitation or general advertising relating to the offer. In April 2013, we exchanged the outstanding senior secured convertible promissory notes and warrants with senior secured convertible promissory notes and warrants that mirrored the terms of the senior secured convertible promissory notes and warrants issued on November 21, 2012, as described below, except the calculation of the number of shares of common stock covered by these warrants is based on the full principal amount of the investor’s note. We relied on the exemption provided by Section 4(a)(2) of the Securities Act of 1933 to make the offering inasmuch as all of the investors were accredited and there was no form of general solicitation or general advertising relating to the offer.

On November 21, 2012, we completed an offering of $3.25 million in principal amount of our senior secured convertible promissory notes together with warrants. If we proceed with an initial public offering of our securities, as defined in the Securities Purchase Agreement, then there will be a mandatory conversion of the notes at a conversion price equal to the lower of a 30% discount to the per share initial public offering price or $3.47626. In the event of a conversion for any reason other than the closing of an initial public offering of our securities or a Change of Control, as defined in the notes, each note shall be converted into a number of shares of common stock equal to the principal amount and accrued interest of the investor’s note divided by the lower of (i) $3.47626 or (ii) 0.70 of the per share consideration paid in the most recent Private Equity Financing. If the notes are converted into shares of common stock in connection with an initial public offering of our securities or a Private Equity Financing, the number of shares covered by each warrant will be equal to one-half the principal amount of the investor’s note divided by the lower of (i) 0.70 times the initial public offering price or the Private Equity Financing Price, as applicable, or (ii) $3.47626, while the per-share exercise price will be equal to the lower of (i) 0.70 times the initial public offering price or the Private Equity Financing Price, as applicable, or (ii) $3.47626. If the notes are not converted into shares of common stock in connection with an initial public offering of our securities or a Private Equity Financing, the number of shares covered by each warrant will be equal to one-half of the original principal amount of the investor’s note divided by $3.47626, and the per share exercise price of the warrants will equal $3.47626. We relied on the exemption provided by Rule 506 of Regulation D of the Securities Act of 1933 to make the offerings inasmuch as all of the investors were accredited and there was no form of general solicitation or general advertising relating to the offers.

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In March 2013, we issued an unsecured convertible promissory note in the principal amount of $86,707 to Richardson & Patel LLP, our legal counsel, as payment for services rendered through December 31, 2012. Interest accrues from the date of the note at the higher of: (i) the rate of 1% per annum, simple interest; or (ii) at the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code. Principal and interest is payable on the earlier to occur of (i) December 31, 2013 (the “Calendar Due Date”), (ii) the occurrence of an Event of Default (as defined in the promissory note) or (iii) the closing of an IPO Financing (as defined in the promissory note). If, prior to the Calendar Due Date, we complete a firm commitment underwritten initial public offering of our common stock that raises at least $10 million (the “IPO Financing”), the promissory note must be repaid with shares of our common stock. The conversion price will be equal to the lower of 0.70 times the IPO price or $3.47626. We relied on the exemption provided by Section 4(a)(2) of the Securities Act of 1933 to make the offering inasmuch as the investor was an accredited investor and there was no form of general solicitation or general advertising relating to the offer.

On May 17, 2013, our Board of Directors adopted the Ideal Power Converters, Inc. 2013 Equity Incentive Plan (the “2013 Plan”). Pursuant to the 2013 Plan, we are able to issue awards of stock options and common stock to employees, directors and consultants and independent advisors who render services to us. We reserved 839,983 shares of our common stock for issuance under the Plan. The Compensation Committee of our Board of Directors has approved the issuance of stock option grants covering a total of 352,270.

On July 29, 2013, we completed an offering of $750,000 in principal amount of our senior secured convertible promissory notes together with warrants. If we proceed with an initial public offering of our securities, as defined in the Securities Purchase Agreement, then there will be a mandatory conversion of the notes at a conversion price equal to the lower of a 30% discount to the per share initial public offering price or $3.47626. In the event of a conversion for any reason other than the closing of an initial public offering of our securities or a Change of Control, as defined in the notes, each note shall be converted into a number of shares of common stock equal to the principal amount and accrued interest of the investor’s note divided by the lower of (i) $3.47626 or (ii) 0.70 of the per share consideration paid in the most recent Private Equity Financing. If the notes are converted into shares of common stock in connection with an initial public offering of our securities or a Private Equity Financing, the number of shares covered by each warrant will be equal to one-half the principal amount of the investor’s note divided by the lower of (i) 0.70 times the initial public offering price or the Private Equity Financing Price, as applicable, or (ii) $3.47626, while the per-share exercise price will be equal to the lower of (i) 0.70 times the initial public offering price or the Private Equity Financing Price, as applicable, or (ii) $3.47626. If the notes are not converted into shares of common stock in connection with an initial public offering of our securities or a Private Equity Financing, the number of shares covered by each warrant will be equal to one-half of the original principal amount of the investor’s note divided by $3.47626, and the per share exercise price of the warrants will equal $3.47626. We relied on the exemption provided by Rule 506 of Regulation D of the Securities Act of 1933 to make the offerings inasmuch as all of the investors were accredited and there was no form of general solicitation or general advertising relating to the offers.

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ITEM 16. EXHIBITS

Exhibit No.		Description of Document
1.1		Form of Underwriting Agreement**
3.1		Delaware Certificate of Conversion including Certificate of Incorporation.*
3.2		Bylaws of Ideal Power Inc.*
4.1		Underwriter’s Warrant**
5.1		Opinion of Richardson & Patel LLP regarding the validity of the common stock being registered**
10.1		Consulting Agreement dated July 24, 2012 between the registrant and MDB Capital Group, LLC*
10.2		Consulting Agreement dated August 8, 2012 between the registrant and MDB Capital Group, LLC*
10.3		Form of Lock-Up Agreement*
10.4		Form of Lock-Up Agreement executed by MDB Capital Group, LLC**
10.5		Form of Subscription and Stock Purchase Agreement by and between the registrant and investors for an offering completed in October 2010**
10.6		Form of Subscription Agreement and Stock Purchase Agreement by and between the registrant and investors for an offering completed on May 4, 2012**
10.7		Form of Convertible Promissory Note issued by the registrant to investors in the offering completed on October 9, 2011**
10.8		Form of Convertible Promissory Note issued by the registrant to investors in the offering completed on July 17, 2012**
10.9		Form of Warrant issued by the registrant to investors in the offering completed on July 17, 2012**
10.10		Form of Securities Purchase Agreement between the registrant and investors for an offering completed on August 31, 2012*
10.11		Form of Registration Rights Agreement between the registrant and investors for an offering completed on August 31, 2012*
10.12		Form of Senior Secured Convertible Promissory Note issued by the registrant to investors in the offering completed on August 31, 2012*
10.13		Form of Security Agreement between the registrant and investors for an offering completed on August 31, 2012*
10.14		Form of Warrant issued by the registrant to investors in the offering completed on August 31, 2012*
10.15		Form of Replacement Senior Secured Convertible Promissory Note issued by the registrant to investors in the offering completed on August 31, 2012*
10.16		Form of Replacement Warrant issued by the registrant to investors in the offering completed on August 31, 2012*
10.17		Form of Securities Purchase Agreement between the registrant and investors for an offering completed on November 21, 2012*
10.18		Form of Registration Rights Agreement between the registrant and investors for an offering completed on November 21, 2012*
10.19		Form of Senior Secured Convertible Promissory Note issued by the registrant to investors in the offering completed on November 21, 2012*
10.20		Form of Security Agreement between the registrant and investors for the offering completed on November 21, 2012*
10.21		Form of Warrant issued by the registrant to investors in the offering completed on November 21, 2012*
10.22		Texas Emerging Technology Fund Award and Security Agreement dated October 1, 2010*
10.23		Investment Unit issued on October 1, 2010 by the registrant to Office of the Governor Economic Development and Tourism of the State of Texas**
10.24		Subordination Agreement dated August 30, 2012 between the registrant and Office of the Governor Economic Development and Tourism of the State of Texas*
10.25	Lease Agreement between the Company and Texas Public Employees Association dated May 7, 2013**
10.26	Employment Agreement between the Company and William Alexander dated May 7, 2013*
10.27	Employment Agreement between the Company and Paul Bundschuh dated May 7, 2013*
10.28	Employment Agreement between the Company and Christopher Cobb dated May 8, 2013*
10.29	Form of Indemnification Agreement entered into in December 2010 between the Company and William Alexander, Charles De Tarr, David Breed and Hamo Hacopian**
10.30	Form of Securities Purchase Agreement between the registrant and investors for an offering completed on July 29, 2013*
10,31	Form of Registration Rights Agreement between the registrant and investors for an offering completed on July 29, 2013*
10.32	Form of Senior Secured Convertible Promissory Note issued by the registrant to investors in the offering completed on July 29, 2013*
10.33	Form of Security Agreement between the registrant and investors for the offering completed on July 29, 2013*
10.34	Form of Warrant issued by the registrant to investors in the offering completed on July 29, 2013*
10.35	Ideal Power Converters, Inc. 2013 Equity Incentive Plan*
10.36	Warrant issued to MDB Capital Group, LLC (MDB-1) dated November 21, 2012*
10.37	Addendum to Warrant issued to MDB Capital Group, LLC (MDB-1) dated July 10, 2013*
10.38	Warrant issued to MDB Capital Group, LLC (MDB-2) dated November 21, 2012*
10.39	Addendum to Warrant issued to MDB Capital Group, LLC (MDB-2) dated July 10, 2013*
10.40	Amendment No. 1 dated May 20, 2011 to the Investment Unit issued on October 1, 2010 by the registrant to Office of the Governor Economic Development and Tourism of the State of Texas**
10.41	Amendment No. 2 dated April 16, 2013 to the Investment Unit issued on October 1, 2010 by the registrant to Office of the Governor Economic Development and Tourism of the State of Texas**
14.1	Code of Business Conduct and Ethics*
23.1	Consent of Gumbiner Savett Inc., Independent Registered Public Accounting Firm*
23.2	Consent of Richardson & Patel LLP (included in Exhibit 5.1)**
24.1	Power of Attorney (included on the signature page)

*Filed herewith.

**To be filed by amendment.

-67-

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes:

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by ~~section~~Section 10(a)(3) of the Securities Act of 1933;

~~(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post~~II-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;2

~~(iii) To~~Table ~~include any material information with respect to the plan~~ of ~~distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.~~Contents

(2ii) ~~That,~~ ~~for~~To ~~the~~reflect ~~purpose~~in ofthe ~~determining~~prospectus any ~~liability~~facts ~~under~~or events arising after the ~~Securities~~effective ~~Act~~date of ~~1933,~~the ~~each~~registration ~~such~~statement (or the most recent post-effective amendment ~~shall~~thereof) bewhich, ~~deemed~~individually toor bein the aggregate, represent a ~~new~~fundamental change in the information set forth in this registration statement. ~~relating~~Notwithstanding tothe foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered ~~therein,~~would not exceed that which was registered) and any deviation from the ~~offering~~low or high end of ~~such~~the ~~securities~~estimated atmaximum ~~that~~offering ~~time~~range ~~shall~~may be ~~deemed~~reflected in the form of prospectus filed with the Commission pursuant to beRule 424(b) if, in the ~~initial~~aggregate, ~~bona~~the ~~fide~~changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering ~~thereof.~~price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(3iii) To ~~remove~~include ~~from~~any ~~registration~~material byinformation ~~means~~with respect to the plan of adistribution ~~post-effective~~not ~~amendment~~previously ~~any~~disclosed ofin the ~~securities~~registration ~~being~~statement ~~registered~~or ~~that~~any ~~remain~~material ~~unsold~~change atto ~~the~~such ~~termination~~information ofin ~~the~~this ~~offering.~~registration statement;

~~(4) That~~Provided, ~~for~~however, ~~the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes~~ that inparagraphs (a)(1)(i), ~~primary~~(a)(1)(ii) and ~~offering~~ (a)(1)(iii) of ~~securities~~this ofsection ~~the~~do ~~undersigned~~not ~~registrant~~apply ~~pursuant~~if tothe ~~this~~ registration statement, ~~regardless~~is ofon ~~the~~Form S-3 ~~underwriting method used to sell the securities to the purchaser, if the securities are offered~~ or ~~sold~~Form F-3 toand ~~such purchaser by means of any of~~ the ~~following~~information ~~communications,~~required ~~the undersigned registrant will be a seller~~ to ~~the purchaser and will~~ be ~~considered~~included toin ~~offer~~a orpost-effective ~~sell~~amendment ~~such~~by ~~securities~~those toparagraphs ~~such~~is ~~purchaser:~~contained ~~(i)~~in ~~any~~reports ~~preliminary~~filed ~~prospectus~~with or ~~prospectus~~furnished ~~of the undersigned registrant relating~~ to the ~~offering~~Commission ~~required to be filed pursuant to Rule 424; (ii) any free writing prospectus relating to the offering prepared~~ by ~~or on behalf of~~ the ~~undersigned~~ registrant orpursuant ~~used or referred~~ to bysection ~~the~~13 ~~undersigned~~or ~~registrant;~~section 15(~~iii~~d) of the ~~portion~~Securities Exchange Act of 1934 ~~any~~that ~~other~~are ~~free~~incorporated ~~writing~~by ~~prospectus~~reference ~~relating~~in to the ~~offering~~registration ~~containing~~statement, ~~material information about the undersigned registrant~~ or ~~its~~is ~~securities~~contained ~~provided~~in bya orform ~~on behalf~~ of ~~the~~prospectus ~~undersigned~~filed ~~registrant;~~pursuant ~~and~~to Rule 424(ivb) ~~any other communication~~ that is anpart ~~offer~~of in the ~~offering~~registration ~~made by the undersigned registrant to the purchaser~~statement.

(52) To ~~provide~~That, tofor the ~~underwriter~~purpose atof ~~the~~determining ~~closing~~any ~~specified~~liability inunder the ~~underwriting~~Securities ~~agreements,~~Act ~~certificates~~of in1933, each such ~~denominations~~post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and ~~registered~~the inoffering of such ~~names~~securities asat ~~required~~that bytime ~~the~~shall ~~underwriters~~be deemed to ~~permit~~be ~~prompt~~the ~~delivery~~initial tobona ~~each~~fide ~~purchaser~~offering thereof.

(63) ~~For~~ ~~purposes~~To ofremove ~~determining any liability under the Securities Act, the information omitted~~ from ~~the~~registration ~~form~~by ofmeans ~~prospectus as filed as part~~ of ~~this~~a ~~registration~~post-effective ~~statement~~amendment inany ~~reliance upon Rule 430A and contained in a form~~ of ~~prospectus filed by~~ the ~~registrant~~securities ~~pursuant~~being toregistered ~~Rule~~which ~~424(b)(1)~~remain orunsold ~~(4)~~at ~~or 497(h) under~~ the ~~Securities~~termination ~~Act shall be deemed to be part~~ of ~~this registration statement as of~~ the ~~time it was declared effective~~offering.

(75) ~~For~~ That, for the purpose of determining ~~any~~ liability under the Securities Act to any purchaser, each ~~post-effective~~prospectus ~~amendment~~filed ~~that~~pursuant ~~contains~~to aRule ~~form~~424(b) as part of ~~prospectus~~a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be apart ~~new~~of and included in the registration statement ~~relating~~as toof the ~~securities~~date ~~offered~~it ~~therein~~is first used after effectiveness. Provided, ~~and~~however, ~~the~~that ~~offering~~no statement made in a registration statement or prospectus that is part of ~~such~~the ~~securities~~registration atstatement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time ~~shall~~of becontract ~~deemed~~of sale prior to besuch first use, supersede or modify any statement that was made in the ~~initial~~registration ~~bona~~statement ~~fide~~or ~~offering~~prospectus ~~thereof~~that was part of the registration statement or made in any such document immediately prior to such date of first use.

(8b) ~~Insofar~~ asThe ~~indemnification~~undersigned ~~for~~registrant ~~liabilities~~hereby ~~arising~~further ~~under~~undertakes ~~the~~that, ~~Securities~~for ~~Act~~the purposes of ~~1933~~determining ~~may~~any beliability ~~permitted~~under tothe ~~directors,~~Securities ~~officers~~Act ~~and~~of ~~controlling~~1933, ~~persons~~each filing of the registrant’s annual report pursuant to ~~the~~section ~~foregoing~~13(a) ~~provisions,~~ or ~~otherwise,~~section ~~the~~15(d) ~~registrant has been advised that in the opinion~~ of the Securities ~~and~~ Exchange ~~Commission~~Act ~~such~~of ~~indemnification~~1934 ~~is against public policy as expressed in the Securities Act~~ (and is, ~~therefore~~where applicable, ~~unenforceable.~~each Infiling ~~the~~of ~~event~~an ~~that~~employee abenefit ~~claim~~plan’s ~~for~~annual ~~indemnification~~report ~~against~~pursuant ~~such~~to ~~liabilities~~section 15(~~other~~d) ~~than~~of the ~~payment~~Securities byExchange ~~the~~Act ~~registrant~~ of ~~expenses~~1934) ~~incurred~~that oris ~~paid~~incorporated by areference ~~director, officer or controlling person of the registrant~~ in the ~~successful~~registration ~~defense~~statement ofshall ~~any~~be ~~action,~~deemed ~~suit~~to orbe ~~proceeding)~~a isnew ~~asserted~~registration bystatement ~~such~~relating ~~director,~~to ~~officer or controlling person in connection with~~ the securities ~~being~~offered ~~registered~~herein, ~~the~~and ~~registrant will, unless in~~ the ~~opinion~~offering of ~~its~~such ~~counsel~~securities ~~the~~at ~~matter~~that ~~has~~time ~~been~~shall ~~settled~~be bydeemed ~~controlling precedent, submit~~ to ~~a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will~~ be ~~governed by~~ the ~~final~~initial ~~adjudication~~bona offide ~~such~~offering ~~issue~~thereof.

~~-68-~~(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933, and will be governed by the final adjudication of such issue.

II-3

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of ~~Spicewood~~Austin, State of Texas, on ~~this~~March ~~6th day of August~~27, ~~2013~~2026.

IDEAL POWER INC. By: /s/ ~~Paul~~David A.Somo ~~Bundschuh~~Name: ~~Paul~~David A.Somo ~~Bundschuh~~Title: President and Chief Executive Officer

~~Each~~POWER ~~person~~OF whose signature appears below constitutes and appoints Paul Bundschuh as his or her true and lawful attorneys-in-fact and agents, each acting alone, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to the Registration Statement, and to sign any registration statement for the same offering covered by this Registration Statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and all post-effective amendments thereto, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.ATTORNEY

~~Pursuant~~Each toperson ~~the~~whose ~~requirements~~signature appears below hereby constitutes and appoints David Somo and Timothy Burns, and each of ~~the~~them ~~Securities~~acting ~~Act~~individually, as his true and lawful attorneys-in-fact and agents, each with full power of ~~1933~~substitution, for him in any and all capacities, to execute any and all amendments to this Registration Statement (including any post-effective amendments, and any new registration statement ~~has~~with ~~been~~respect ~~signed~~to bythe offering contemplated thereby filed pursuant to Rule 462(b) of the ~~following~~Securities ~~persons~~Act), inand to file the ~~capacities~~same, with exhibits thereto and onother documents in connection therewith, with the ~~dates~~Securities ~~indicated~~and Exchange Commission, granting unto such attorneys-in-fact and agents, with full power of each to act alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents, or his, her or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Dated: August 6, 2013		/s/ Paul A. Bundschuh
		Paul A. Bundschuh
		Chief Executive Officer and Director
		(Principal Executive Officer)
Dated: August 6, 2013		/s/ Barry Loder
		Barry Loder
		Chief Financial Officer
		(Principal Financial and Accounting
		Officer)
Dated: August 6, 2013		/s/ Christopher P. Cobb
		Christopher P. Cobb
		President and Director
Dated: August 6, 2013		/s/ Lon E. Bell
		Lon E. Bell, Ph.D., Director

Pursuant to the requirements of the Securities Act of 1933, this registration statement and power of attorney have been signed by the following persons in the capacities and on the dates indicated.

Dated: August 6, 2013 /s/ Mark S. Baum Mark S. Baum., Director

Signature	Title	Date

/s/ David Somo	President, Chief Executive Officer and Director	March 27, 2026
David Somo	(Principal Executive Officer)

/s/ Timothy W. Burns	Chief Financial Officer, Secretary and Treasurer	March 27, 2026
Timothy W. Burns	(Principal Financial and Accounting Officer)

/s/ Michael C. Turmelle	Chairman of the Board	March 27, 2026
Michael C. Turmelle

/s/ Drue Freeman	Director	March 27, 2026
Drue Freeman

/s/ Gregory Knight	Director	March 27, 2026
Gregory Knight

/s/ Ted Lesster	Director	March 27, 2026
Ted Lesster

II-~~69-~~4

Ideal Power Inc.

INDEX TO CONDENSED FINANCIAL STATEMENTS

		Page No.
CONDENSED FINANCIAL STATEMENTS
Condensed Balance Sheets at March 31, 2013 (Unaudited) and December 31, 2012		F-1
Condensed Statements of Operations for the three months ended March 31, 2013 and 2012 (Unaudited)		F-2
Condensed Statement of Stockholders’ Deficit for the three months ended March 31, 2013 (Unaudited)		F-3
Condensed Statements of Cash Flows for the three months ended March 31, 2013 and 2012 (Unaudited)		F-4
Notes to Condensed Financial Statements		F-5

ANNUAL FINANCIAL INFORMATION
Report of Independent Registered Public Accounting Firm		F-17
Balance Sheets at December 31, 2012 and 2011		F-18
Statements of Operations for the years ended December 31, 2012 and 2011		F-19
Statement of Stockholders’ Deficit for the years ended December 31, 2012 and 2011		F-20
Statements of Cash Flows for the years ended December 31, 2012 and 2011		F-21
Notes to Financial Statements		F-23

IDEAL POWER INC.

Condensed Balance Sheets

	March 31,			December 31,				Pro Forma Stockholders' Deficit as of March 31, 2013 (unaudited)
	2013			2012				(Note 15)
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,215,986		$	1,972,301		$
Accounts receivable, net		303,890			485,674
Inventories, net		209,942			217,867
Prepayments and other current assets		27,254			28,468
Prepaid offering costs		12,398			-
Total current assets		1,769,470			2,704,310
Property and equipment, net		27,659			27,903
Patents, net		528,637			474,790
Total Assets	$	2,325,766		$	3,207,003		$
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current portion of long-term debt, net of debt discount of
$2,791,325 at March 31, 2013 and $3,828,711 at
December 31, 2012.	$	2,350,532		$	1,313,146		$
Accounts payable		404,357			684,558
Accrued expenses		214,262			178,003
Deferred revenue		75,000			-
Total current liabilities		3,044,151			2,175,707
Long-term debt		1,152,690			1,132,690
Commitments
Stockholders’ deficit:
Common stock, $0.001 par value; 50,000,000 shares
authorized; 3,524,505 issued and outstanding at March 31,
2013 and December 31, 2012.		3,525			3,525			1,480
Common stock to be issued		43,333			-			43,333
Additional paid-in capital		7,109,741			7,098,252			7,111,786
Treasury stock		(2,657	)		(2,657	)		(2,657	)
Accumulated deficit		(9,025,017	)		(7,200,514	)		(9,025,017	)
Total stockholders’ deficit		(1,871,075	)		(101,394	)		(1,871,075	)
Total Liabilities and Stockholders’ Deficit	$	2,325,766		$	3,207,003		$

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

F-1

IDEAL POWER INC.

Condensed Statements of Operations

(Unaudited)

	Three Months Ended
	March 31,			March 31,
	2013			2012
Revenues:
Products and services	$	132,897		$	45,900
Royalties		25,000			25,000
Grants		222,238			61,282
Total revenue		380,135			132,182
Cost of revenues		366,989			87,577
Gross profit		13,146			44,605
Operating expenses:
General and administrative		437,312			255,840
Research and development		256,348			352,841
Sales and marketing		60,560			43,650
Total operating expenses		754,220			652,331
Loss from operations		(741,074	)		(607,726	)
Interest expense, net (including amortization of debt discount of
$1,037,386 and $77,430 for the three months ended March 31, 2013
and 2012, respectively)		1,083,429			103,549
Net loss	$	(1,824,503	)	$	(711,275	)
Net loss per share – basic and fully diluted	$	(0.52	)	$	(0.20	)
Weighted average number of shares outstanding – basic and fully diluted		3,524,505			3,477,050

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

F-2

IDEAL POWER INC.

Condensed Statement of Stockholders' Deficit (Unaudited)

For the three months ended March 31, 2013

	Common Stock				Common Stock Issuable				Additional Paid-In		Treasury			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Stock			Deficit			Deficit
Balances at January 1, 2013		3,524,505	$	3,525		-	$	-	$	7,098,252	$	(2,657	)	$	(7,200,514	)	$	(101,394	)
Common stock issuable for services		-		-		29,680		43,333		-		-			-			43,333
Stock-based compensation		-		-		-		-		11,489		-			-			11,489
Net loss for the three months ended March 31, 2013		-		-		-		-		-		-			(1,824,503	)		(1,824,503	)
Balances at March 31, 2013		3,524,505	$	3,525		29,680	$	43,333	$	7,109,741	$	(2,657	)	$	(9,025,017	)	$	(1,871,075	)

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

F-3

IDEAL POWER INC.

Condensed Statements of Cash Flows

(Unaudited)

	Three Months Ended March 31,
	2013			2012
Cash flows from operating activities:
Net loss	$	(1,824,503	)	$	(711,275	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		5,578			13,674
Common stock to be issued for services		43,333			-
Stock-based compensation		11,489			13,048
Amortization of debt discount		1,037,386			77,430
Decrease (increase) in operating assets:
Accounts receivable		181,785			55,497
Inventories		7,925			-
Prepaid expenses and offering costs		(11,180	)		-
Increase (decrease) in operating liabilities:
Accounts payable		(280,201	)		193,954
Accrued expenses		36,255			17,207
Deferred Revenue		75,000			75,000
Net cash used in operating activities		(717,133	)		(265,465	)
Cash flows from investing activities:
Purchase of property and equipment and patents		(59,182	)		(63,614	)
Cash flows from financing activities:
Borrowings on notes payable		20,000			202,704
Proceeds from issuance of common stock		-			52,000
Net cash provided by financing activities		20,000			254,704
Net decrease in cash and cash equivalents		(756,315	)		(74,375	)
Cash and cash equivalents at beginning of period		1,972,301			100,675
Cash and cash equivalents at end of the period	$	1,215,986		$	26,300
Supplemental disclosure of cash flow information:
Cash paid during the three months:
Interest	$	0		$	212

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

F-4

Ideal Power Inc.

Notes to Condensed Financial Statements

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 converter solutions for photovoltaic generation, grid-storage and electric vehicle charging. The principal products of the Company are photovoltaic inverters and battery converters. The Company is developing technology to build electric vehicle chargers, wind converters and variable frequency drives. The Company also renders services to customers for developing a technological platform similar to that of the Company.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation and Going Concern

The accompanying unaudited interim condensed financial statements and information 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 condensed balance sheet at December 31, 2012 has been derived from the Company’s audited financial statements.

In the opinion of management, these condensed financial statements reflect all normal recurring and other adjustments necessary for a fair presentation. These financials statements should be read in conjunction with the audited financial statements for the year ended December 31, 2012 included elsewhere in this document. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.

The accompanying unaudited interim condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP) which contemplate continuation of the Company as a going concern. However, the Company is subject to the risks and uncertainties associated with a new business and has incurred significant losses from operations since inception. The Company’s operations are dependent upon it raising additional funds through a private offering of its stock or debt financing. The Company is obligated to pay or convert $5,142,000 in promissory notes due in 2013. The Company has no committed sources of capital and is not certain whether additional financing will be available when needed on terms that are acceptable, if at all. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty. The report from the Company’s independent registered public accounting firm relating to the year ended December 31, 2012 states that there is substantial doubt about the Company’s ability to continue as a going concern.

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.

F-5

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 and generally requires no collateral from its customers or 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. There was no allowance for doubtful accounts at March 31, 2013 and December 31, 2012.

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 anticipated production requirements in the near future. There was no reserve for excess and obsolete inventory at March 31, 2013 and December 31, 2012.

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	2 years
Machinery and equipment	5 years
Furniture, fixtures and computers	3-5 years

Patents

Patents are recorded at cost. Once the patents are awarded the amortization is computed using the straight-line method over the estimated useful lives of the patents of 20 years commencing from the date of filing of patents.

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. Management has determined that there was no impairment in the value of long-lived assets during the three months ended March 31, 2013.

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, notes payable, line of credit 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.

F-6

Convertible Promissory Notes and Warrants

The warrants and embedded conversion feature of convertible promissory notes are classified as equity under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815-40 “Derivatives and Hedging – Contracts in Entity’s Own Equity”. The Company allocates the proceeds of the convertible promissory notes between convertible promissory notes and the financial instruments related to warrants associated with convertible promissory notes based on their relative fair values at the commitment date. The fair value of the financial instruments related to warrants associated with convertible promissory notes is determined utilizing the Black-Scholes option pricing model and the respective allocated proceeds to the warrants is recorded in additional paid-in capital. The embedded beneficial conversion feature associated with convertible promissory notes is recognized and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital in accordance with ASC Topic 470-20 “Debt – Debt with Conversion and Other Options”.

The portion of debt discount resulting from the allocation of proceeds to the financial instruments related to warrants associated with convertible promissory notes is being amortized over the life of the convertible promissory notes. For the portion of debt discount resulting from the allocation of proceeds to the beneficial conversion feature, it is amortized over the term of the notes from the respective dates of issuance.

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. Revenue from service contracts is recognized using the completed-performance or proportional-performance method depending on the terms of the service agreement. When there are acceptance provisions based on customer-specified subjective criteria, the completed-performance method is used. For contracts where the services performed in the last series of acts is very significant, in relation to the entire contract, performance is not deemed to have occurred until the final act is completed. Once customer acceptance has been received, or the last significant act is performed, revenue is recognized. The Company uses the proportional-performance method when a service contract specifies a number of acts to be performed and the Company has the ability to determine the pattern and related value in which service is provided to the customer.

The Company receives payments from government entities in the form of government grants. Government grants are agreements that generally provide the Company with cost reimbursement for certain type of research and development activities over a contractually defined period. Revenues from government grants are recognized in the period during which the related costs are incurred, provided that the conditions under which the government grants were provided have been met. Government grants amounted to $222,238 and $61,282 for the three months ended March 31, 2013 and 2012, respectively.

At March 31, 2013 and December 31, 2012, grants receivable amounted to $223,223 and $348,647, respectively, and were included in accounts receivable.

Royalty income is recognized as earned based on the terms of the contractual agreements.

Product Warranties

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

F-7

Research and Development

Research and development costs are expensed as incurred. Research and development costs incurred during the three months ended March 31, 2013 and 2012 amounted to $256,348 and $352,841, respectively.

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 March 31, 2013 and December 31, 2012 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, except for periods for which no common share equivalents are included because their effect would be anti-dilutive.

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 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 of 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.

F-8

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, accounts receivable, accounts payable and short term debt. The Company maintains its cash with a major financial institution located in the United States of America. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000. Periodically throughout the year, the Company maintains balances in excess of federally insured limits. The Company encounters 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. The Company does not require collateral or other security to support accounts receivable. The Company performs ongoing credit evaluations of its customers and records an allowance for potential bad debts based on available information. The Company had two and three customers that accounted for 80% and 100% of net revenue for the three months ended March 31, 2013 and 2012, respectively. The loss of one of these customers could cause an adverse effect on the Company’s operations. The Company had an accounts receivable balance from two customers and one customer that accounted for 85% and 72% of total accounts receivable at March 31, 2013 and December 31, 2012, respectively.

Recent Accounting Pronouncements

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

Note 3 - Inventories

Inventories consisted of the following:

	March 31,		December 31,
	2013		2012
	(unaudited)
Raw Materials	$	128,246	$	144,842
Finished goods		81,696		73,025
	$	209,942	$	217,867

Note 4 – Prepayment and Other Current Assets

Prepayment and other current assets consisted of the following:

	March 31,		December 31,
	2013		2012
	(unaudited)
Prepaid insurance	$	20,254	$	22,186
Prepaid subscription		5,000		4,282
Others		2,000		2,000
	$	27,254	$	28,468

F-9

Property and equipment consisted of the following:

	March 31,			December 31,
	2013			2012
	(unaudited)
Machinery and Equipment	$	19,670		$	19,670
Building leasehold improvements		46,850			46,850
Furniture, fixtures and computers		62,684			58,379
		129,204			124,899
Accumulated depreciation and amortization		(101,545	)		(96,996	)
	$	27,659		$	27,903

Note 6 – Patents

Patents consisted of the following:

	March 31,			December 31,
	2013			2012
	(unaudited)
Patents	$	534,134		$	479,256
Accumulated amortization		(5,497	)		(4,466	)
	$	528,637		$	474,790

Amortization expense related to patents amounted to $1,031 and $404 for the three months ended March 31, 2013 and 2012, respectively. Estimated amortization expense for the succeeding five years and thereafter is $5,900 (2014); $5,900 (2015); $5,900 (2016); $5,900 (2017); $5,900 (2018); and $85,000 (thereafter).

At March 31, 2013 and December 31, 2012, the Company had capitalized approximately $414,000 and $426,000, respectively, for costs related to patents that have not been awarded.

F-10

Note 7 – Long-term Debt

	March 31, 2013 (unaudited)		December 31 2012
1) The Company entered into the Texas Emerging Technology Fund (the “ETF”) Award and Security Agreement (the “Agreement”) with the State of Texas (the “State”) on October 1, 2010 subsequently amended on May 20, 2011 and April 16, 2013. Under the Agreement, the Company received an initial award totaling $250,000 during the year ended December 31, 2010 and received an additional award totaling $750,000 during the year ended December 31, 2011 (collectively, the “Promissory Note”). The proceeds from the award must be used to expedite commercialization intended to increase high-quality jobs in Texas through expenditures on working capital or development or acquisition of capital assets used to produce income and in meeting the Company’s goal of introducing a 30KW solar inverter to the market. The Company is also required to meet certain milestones by specific dates, use Texas-based suppliers and establish a substantial percentage of its commercialization and manufacturing activities in Texas. The awards are collateralized by all owned or acquired assets of the Company. The ETF in a subordination agreement dated August 30, 2012, agreed to subordinate the Promissory note to secured convertible promissory notes to be issued by the Company of up to $5,000,000. At March 2013, and December 31, 2012, the Company had secured convertible promissory notes aggregating $4,000,000. See 4) and 5) below. The Promissory Note accrues interest at an annual rate of 8% and could be repaid at the option of the Company after April 1, 2012. The Promissory Note will be cancelled and the debt, including accrued interest, will be forgiven upon the earlier of: 1) October 1, 2020 or 2) the date the ETF receives a return of cash or public securities equal to the proceeds from the Promissory Note plus accrued interest in connection with a qualifying liquidation event, as defined in the agreement. Upon note repayment or forgiveness, the agreement will terminate and the Company will be released from all obligations under the Agreement. In connection with the Promissory Note, in October 2010 and July 2011, the Company issued warrants to purchase 33,875 and 101,626 shares of the Company’s common stock, respectively. The fair value of the warrants was determined to be $66,372 and $199,104, respectively, and was recorded as debt discount. During the three months ended March 31, 2013 and 2012 the Company incurred interest expense amounting to $0 and $77,430 related to the accretion of the debt discount. Interest on the Promissory Note, including accretion of debt discount, amounted to $20,000 and $97,430 for the three months ended March 31, 2013 and 2012, respectively. Effective interest rate on this Promissory Note was 8% and 16% per annum for the three months ended March 31, 2013 and 2012, respectively. Accrued interest amounted to $152,690 and $132,690 at March 31, 2013 and 2012, respectively, and is included in the outstanding amount of promissory note.	$	1,152,690	$	1,132,690
2) Unsecured convertible promissory notes with principal and interest due at maturity at 6% per annum, maturing on the earlier of: 1) December 31, 2013, or 2) closing of initial public offering of the Company’s common stock in which the Company raises at least $10million, or 3) closing of qualified financing, as defined in the promissory notes, or 4) occurrence of event of default, as defined in the promissory notes. The promissory notes are convertible into 172,249 shares of the Company’s common stock at the option of the note holder upon occurrence of certain events, as defined in the promissory notes. The embedded beneficial conversion feature associated with these convertible promissory notes had no intrinsic value. Of the total amount outstanding, $40,000 was due to an officer of the Company at March 31, 2013 and December 31, 2012, respectively. Interest expense on these notes amounted to $5,400 and $5,370 for the three months ended March 31, 2013 and 2012, respectively.		360,000		360,000

F-11

3) Unsecured convertible promissory notes aggregating $695,150 with principal and interest due at maturity at 6% per annum and maturing on the earlier of : 1) December 31, 2013 , or 2) closing of initial public offering of the Company’s common stock in which the Company raises at least $10million, or 3) closing of qualified financing, as defined in the promissory notes, or 4) occurrence of event of default, as defined in the promissory notes .Of the total amount outstanding, $389,575 was due to an officer, employee, and director of the Company. The promissory notes are convertible into 332,608 shares of the Company’s common stock at the option of the note holder upon occurrence of certain events, as defined in the promissory notes. The embedded beneficial conversion feature associated with these convertible promissory notes had no intrinsic value. In connection with these promissory notes, the Company issued warrants to purchase 261,581 shares of the Company’s common stock. The fair value of the warrants was determined to be $419,840 and was recorded as debt discount. During the three months ending March 31, 2013 and 2012 the Company incurred interest expense amounting to $65,532and $0, respectively, related to the accretion of the debt discount. Interest on these promissory notes, including accretion of debt discount, amounted to $75,960 and $536 for the three months ended March 31, 2013 and 2012, respectively. Unamortized debt discount amounted to $196,597 at March 31, 2013 and $262,129 at December 31, 2012. Effective interest rate on these notes was 44% per annum for the three months ended March 31, 2013.			498,553				433,021
4) Convertible promissory notes aggregating $750,000 secured by substantially all assets of the Company with principal and interest due at maturity at the higher of: a) 1% per annum or b) at the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code, and maturing on the earlier of : 1) November 21, 2013, 2) event of default, as defined in the agreement, or 3) the closing of an initial public offering of the Company’s common stock. Of the total amount outstanding, $100,000 was due to one of the directors of the Company. The promissory notes are convertible into 512,645 shares of the Company’s common stock at the option of the note holder upon occurrence of certain events, as defined in the promissory notes. The intrinsic value of embedded beneficial conversion feature associated with these convertible promissory notes was determined to be $321,429 and was recorded as debt discount. In connection with these promissory notes, the Company issued warrants to purchase 513,699 shares of the Company’s common stock. The fair value of the warrants was determined to be $749,846 and was recorded as debt discount. During the three months ended March 31, 2013 and 2012, the Company incurred interest expense amounting to $150,000 and $0, respectively, related to the accretion of debt discount. Interest expense including accretion of debt discount, amounted to $151,875 and $0 for the three months ended March 31, 2013 and 2012, respectively. Unamortized debt discount amounted to $400,000 as of March 31, 2013 and $550,000 at December 31, 2012. Effective interest rate on these notes was 81% per annum for the three months ended March 31, 2013.			350,000				200,000

F-12

5) Convertible promissory notes aggregating $3,250,000 secured by substantially all assets of the Company with principal and interest due at maturity at the higher of: a) 1% per annum or b) at the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code, and maturing on the earlier of : 1) November 21, 2013, 2) event of default, as defined in the agreement, or 3) the closing of an initial public offering of the Company’s common stock. Of the total amount outstanding, $200,000 was due to two directors of the Company. The promissory notes are convertible into 2,226,027 shares of the Company’s common stock at the option of the note holder upon occurrence of certain events, as defined in the promissory notes. The intrinsic value of the embedded beneficial conversion feature associated with these convertible promissory notes was determined to be $1,402,397 and was recorded as debt discount. In connection with these promissory notes, the Company issued warrants to purchase 1,113,014 shares of the Company’s common stock. The fair value of the warrants was determined to be $1,625,890 and was recorded as debt discount. In connection with these promissory notes the Company issued underwriter warrants to purchase 222,603 shares of the Company’s common stock. The fair value of the warrants was determined to be $292,368 and was recorded as debt discount. The Company also incurred debt raising cost of $375,000 in connection with these promissory notes which has been recorded as debt discount. During the three months ended March 31, 2013 and 2012, the Company incurred interest expense amounting to $812,500 and $0, respectively, related to the accretion of the debt discount. Interest expense, including accretion of debt discount, amounted to $820,624 and $0 for the three months ended March 31, 2013 and 2012 respectively. Unamortized debt discount amounted to $2,166,667 at March 31, 2013 and $2,979,167 at December 31, 2012. The effective interest rate on these notes was 101% per annum for the three months ended March 31, 2013. 1,083,333 270,833

6) Unsecured convertible promissory note amounting to $86,707 with principal and interest due at maturity at the higher of: a) 1% per annum or b) at the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code, and maturing on the earlier of: 1) December 31, 2013, 2) event of default, as defined in the agreement, or 3) the closing of an initial public offering of the Company’s common stock. The promissory note is convertible into 59,388 shares of the Company’s common stock at the option of the note holder upon occurrence of certain events, as defined in the promissory note. The intrinsic value of embedded beneficial conversion feature associated with these convertible promissory notes was determined to be $37,415 and was recorded as debt discount. During the three months ending March 31, 2013 and 2012, the Company incurred interest expense amounting to $9,354 and $0, respectively, related to the accretion of the debt discount. Interest expense, including accretion of debt discount, amounted to $9,570 and $0 for the three months ended March 31, 2013 and 2012, respectively. Unamortized debt discount amounted to $28,061 and $37,415 at March 31, 2013 and December 31, 2012, respectively. Effective interest rate was 44% per annum for the three months ended March 31, 2013.		58,646		49,292
		3,503,222		2,445,836
Less current portion of long-term debt, net of debt discount of $2,791,325 at March 31, 2013 and $3,828,711 at December 31, 2012		2,350,532		1,313,146
Long-term debt	$	1,152,690	$	1,132,690

The unamortized debt discount of $2,791,325 at March 31, 2013 will be amortized during the year ended December 31, 2013. Maturities of the long-term debt over the succeeding year and thereafter is approximately $5,142,000 (2013); and $1,153,000 (thereafter).

F-13

Note 8 – Warranty Reserve

The changes in warranty reserve, included in accrued expenses, were as follows:

	March 31,
	2013 (unaudited)
Balance, January 1, 2013	$	103,129
Provisions for warranty and beta replacements		11,812
Warranty payments or beta replacements		-
Balance, end of the period	$	114,941

Note 9 – Common and Preferred Stock

All shares of common and preferred stock have a par value of $0.001. Each holder of common stock is entitled to one vote per share outstanding. Each holder of preferred stock is entitled to the number of votes equal to the number of shares of common stock into which the shares of preferred stock could be converted on the record date. As of March 31, 2013 and December 31, 2012 there were no outstanding shares of preferred stock.

Common Stock

During the three months ended March 31, 2013, the Company recognized an award of 29,680 shares of its common stock for services performed by directors. The shares have not been issued and are excluded from the weighted average total shares outstanding. The fair value of common stock to be issued in connection with services rendered was determined to be $43,333.

Note 10 – Stock Option Plan

During the three months ended March 31, 2013, the Company did not grant any stock options. The following presents a summary of activity under the Company’s stock option plan for the three months ended March 31, 2013 (unaudited):

	Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Life (in years)
Outstanding at January 1, 2013		376,455	$	1.141		7.8
Granted		-		-		-
Exercised		-		-		-
Forfeited/Expired/Exchanged		-		-		-
Outstanding at March 31, 2013		376,455	$	1.141		7.6
Exercisable at March 31, 2013		338,270	$	0.980		7.7

F-14

The following table sets forth additional information about stock options outstanding at March 31, 2013 (unaudited):

Range of Exercise Prices		Options Outstanding		Weighted Average Remaining Life (in years)		Weighted Average Exercise Price		Options Exercisable
$	0.04 - $0.99		94,650		8.4	$	0.1493		94,650
$	1.00 - $1.99		236,650		7.4		1.2480		234,213
$	2.00- $2.66		45,155		7.0	$	2.6575		9,407
			376,455						338,270

The estimated aggregate pretax intrinsic value (the difference between the Company’s estimated stock price on the last day of the three months ended March 31, 2013 and the exercises price, multiplied by the number of in-the-money options) is approximately $381,000. This amount changes based on the fair value of the Company’s stock.

As of March 31, 2013, there was approximately $67,000 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 3.7 years.

Note 11 – Warrants

During the three months ended March 31, 2013 the Company did not issue any warrants. A summary of the Company’s warrant activity and related information for the three months ended March 31, 2013 is as follows:

	Warrants		Weighted Average Exercise Price
Outstanding at January 1, 2013		2,809,483	$	1.52
Granted		-		-
Exercised		-		-
Forfeited/Expired		-		-
Outstanding at March 31, 2013		2,809,483	$	1.52

Note 12 – Commitments

Lease

The Company leases its facility in Spicewood, Texas under a non-cancelable operating lease expiring on May 31, 2014. Rent expense incurred for the three months ended March 31, 2013 and 2012 amounted to $9,200 and $8,614, respectively.

Future estimated lease payments are as follows:

Year ending March 31
2014	$	38,000
2015		6,000
	$	44,000

F-15

Employment Agreement

The Company has entered into an employment agreement, subsequently amended on May 8, 2013, with executive management personnel that provides for severance payments upon termination without cause. Consequently, if the Company had released executive management personnel without cause or due to a change in control, as defined in the employment agreement, the severance expense due would be a minimum six month salary of approximately $88,000, plus any pro-rated bonuses and vacation days earned.

Note 13 – Consulting Services

During the three months ended March 31, 2013 and 2012, the Company incurred $18,024 and $4,821, respectively, on consulting services rendered by and fixed asset purchases from a company which is owned by one of the major shareholders of the Company, who from May 2007 to November 2012 was also a director of the Company.

Note 14 – Retirement Plan

The Company has adopted a defined contribution plan covering all of its employees. Under the plan, the Company contributions are discretionary. The Company did not make any discretionary contributions during the three months ended March 31, 2013 and 2012.

Note 15 - Unaudited Pro Forma Stockholders' Deficit

The Company is in the process of filing a registration statement on Form S-1 with the U.S. Securities and Exchange Commission in connection with a proposed offering of its securities. If the offering contemplated by the registration statement is consummated and the Company raises sufficient equity to meet the listing requirements of the NASDAQ Capital Market, the board of directors has been authorized by the Company's stockholders to effect a reverse stock split of its common stock after the effectiveness of the registration statement and prior to the closing of the offering. The unaudited proforma stockholders' deficit as of March 31, 2013 gives effect to the assumed 1-for-2.381 reverse stock split (see Note 16).

Since the 1-for-2.381 reverse stock split is to be effected after the effectiveness of the registration statement, the historical share information included in the accompanying interim condensed financial statements and notes hereto does not assume the 1-for-2.381 reverse stock split, and accordingly has not been adjusted.

Note 16 – Subsequent Events

Consulting Agreement

On April 19, 2013, the Company entered into an agreement effective May 1, 2013 with an unrelated party to provide public relations services for a monthly fee of $7,500 for a period of 12 months.

Employment Agreements

On May 8, 2013, the Company entered into employment agreements with the Chief Technology Officer and Chief Executive Officer of the Company that provide for severance payments upon termination without cause. Consequently, if the Company had released executive management personnel without cause or due to a change in control, as defined in the employment agreements, the severance expense due would be a minimum six month salary of approximately $212,000, plus any pro-rated bonuses and vacation days earned.

Reverse Stock Split

On June 13, 2013, the Company’s Board of Directors, and on July 5, 2013, stockholders holding a majority of the Company’s outstanding voting power, approved resolutions authorizing the Board of Directors to effect a reverse split of the Company’s common stock at an exchange ratio of between one-for-two and one-for-ten, with the Board of Directors retaining the discretion as to whether to implement the reverse split and which exchange ratio to implement. The reverse stock split is intended to allow the Company to meet the minimum share price requirement of The Nasdaq Capital Market. During August 2013, the Board of Directors determined that, following the effectiveness of the registration statement and prior to the closing of the offering, the Board of Directors will effect the reverse stock split at a ratio of one share for each 2.381 shares.

F-16

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

of Ideal Power Inc.

We have audited the accompanying balance sheets of Ideal Power Inc. (the “Company”) as of December 31, 2012 and 2011, and the related statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2012. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012 and 2011, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully discussed in Note 2 to the financial statements, the Company is subject to the risks and uncertainties associated with a new business and has incurred significant losses from operations since inception. The Company’s operations are dependent upon it raising additional funds through an equity offering or debt financing. The Company is also obligated to pay or convert $5,142,000 in promissory notes due in November and December 2013. The Company has no committed sources of capital and is not certain whether additional financing will be available when needed on terms that are acceptable, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Gumbiner Savett Inc.

July 16, 2013 except for Notes 17 and 18 as to which the date is August 2, 2013

Santa Monica, California

F-17

IDEAL POWER INC.
Balance Sheets
	December 31,							Pro Forma Stockholders' Deficit as of December 31, 2012 (unaudited)
	2012			2011				(Note 17)
ASSETS
Current assets:
Cash and cash equivalents	$	1,972,301		$	100,675		$
Certificate of deposit		-			20,000
Accounts receivable, net		485,674			103,360
Inventories, net		217,867			130,018
Prepayments and other current assets		28,468			-
Total current assets		2,704,310			354,053
Property and equipment, net		27,903			72,425
Patents, net		474,790			153,375
Total Assets	$	3,207,003		$	579,853		$
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Revolving line of credit	$	-		$	20,000		$
Current portion of long-term debt, net of debt discount of $3,828,711 at December 31, 2012		1,313,146			-
Accounts payable		684,558			248,666
Accrued expenses		178,003			146,824
Total current liabilities		2,175,707			415,490
Long-term debt, net of debt discount of $0 and $77,430 at December 31, 2012 and 2011, respectively		1,132,690			1,335,260
Commitments
Stockholders’ deficit:
Common stock, $0.001 par value; 50,000,000 shares authorized; 3,524,505 and 3,460,091 shares issued and outstanding at December 31, 2012 and 2011, respectively		3,525			3,460			1,480
Additional paid-in capital		7,098,252			1,381,595			7,100,297
Treasury stock		(2,657	)		(2,657	)		(2,657	)
Accumulated deficit		(7,200,514	)		(2,553,295	)		(7,200,514	)
Total stockholders’ deficit		(101,394	)		(1,170,897	)		(101,394	)
Total Liabilities and Stockholders’ Deficit	$	3,207,003		$	579,853		$

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

F-18

IDEAL POWER INC.
Statements of Operations
	For the Year Ended December 31,
	2012			2011
Revenues:
Products and services	$	319,550		$	814,190
Royalties		100,000			20,000
Grants		707,357			26,581
Total revenue		1,126,907			860,771
Cost of revenues		957,641			757,393
Gross profit		169,266			103,378
Operating expenses:
General and administrative		1,916,911			633,348
Research and development		1,127,192			914,851
Sales and marketing		163,470			67,861
Total operating expenses		3,207,573			1,616,060
Loss from operations		(3,038,307	)		(1,512,682	)
Interest expense, net (including amortization of debt discount of $1,472,904 and $176,984 for the years ended December 31, 2012 and 2011, respectively)		1,608,912			238,257
Net loss	$	(4,647,219	)	$	(1,750,939	)
Net loss per share – basic and fully diluted	$	(1.33	)	$	(0.53	)
Weighted average number of shares outstanding – basic and fully diluted		3,489,963			3,282,520

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

F-19

IDEAL POWER INC.
Statement of Stockholders’ Deficit
For the Years Ended December 31, 2012 and 2011
																					Total
	Common Stock						Preferred Stock						Additional								Stockholders’
	Shares			Amount			Shares			Amount			Paid-In Capital		Treasury Stock			Accumulated Deficit			Equity (Deficit)
Balances at December 31, 2010		3,223,457		$	3,223			122,175		$	122		$	821,126	$	-		$	(802,356	)	$	22,115
Issuance of common stock		70,741			71			-			-			187,931		-			-			188,002
Issuance of common stock for services		44,718			45			-			-			118,795		-			-			118,840
Conversion of Series Seed Preferred stock to common stock		122,175			122			(122,175	)		(122	)		-		-			-			-
Issuance of warrants in connection with debt		-			-			-			-			199,104		-			-			199,104
Stock-based compensation		-			-			-			-			54,639		-			-			54,639
Repurchase of common stock		(1,000	)		(1	)		-			-			-		(2,657	)		-			(2,658	)
Net loss for the year ended December 31, 2011		-			-			-			-			-		-			(1,750,939	)		(1,750,939	)
Balances at December 31, 2011		3,460,091			3,460			-			-			1,381,595		(2,657	)		(2,553,295	)		(1,170,897	)
Issuance of common stock		19,568			20			-			-			51,980		-			-			52,000
Issuance of common stock for services		44,846			45			-			-			78,949		-			-			78,994
Fair value of warrants issued in connection with promissory notes		-			-			-			-			3,088,944		-			-			3,088,944
Beneficial conversion feature – convertible promissory notes		-			-			-			-			1,761,241		-			-			1,761,241
Fair value of warrants issued in connection with consulting services		-			-			-			-			670,947		-			-			670,947
Stock-based compensation in		-			-			-			-			64,596		-			-			64,596
Net loss for the year ended December 31, 2012		-			-			-			-			-		-			(4,647,219	)		(4,647,219	)
Balances at December 31, 2012		3,524,505		$	3,525			-		$	-		$	7,098,252	$	(2,657	)	$	(7,200,514	)	$	(101,394	)

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

F-20

IDEAL POWER INC.
Statements of Cash Flows
	For the Year Ended December 31,
	2012			2011
Cash flows from operating activities:
Net loss	$	(4,647,219	)	$	(1,750,939	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		52,139			40,859
Stock-based compensation		64,596			54,639
Issuance of common stock for services		78,994			118,840
Amortization of debt discount		1,472,904			176,984
Issuance of note payable in connection with services		86,707			-
Fair value of warrants issued for consulting services		670,947			-
Increase in operating assets:
Accounts receivable		(382,314	)		(103,360	)
Inventories		(87,849	)		(130,018	)
Prepaid expenses		(27,468	)		-
Increase in operating liabilities:
Accounts payable		435,892			101,077
Accrued expenses		31,182			136,275
Net cash used in operating activities		(2,251,489	)		(1,355,643	)
Cash flows from investing activities:
Purchase of property and equipment		(5,961	)		(74,381	)
Acquisition of patents		(323,074	)		(56,430	)
Certificate of deposit		20,000			(20,000	)
Net cash used in investing activities		(309,035	)		(150,811	)
Cash flows from financing activities:
(Repayment) borrowings on line of credit		(20,000	)		20,000
Borrowings on notes payable, net of debt raising costs		4,400,150			1,158,032
Proceeds from issuance of common stock		52,000			188,002
Repurchase of common stock		-			(2,658	)
Net cash provided by financing activities		4,432,150			1,363,376
Net increase (decrease) in cash and cash equivalents		1,871,626			(143,078	)
Cash and cash equivalents at beginning of year		100,675			243,753
Cash and cash equivalents at end of year	$	1,972,301		$	100,675
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest	$	212		$	4,152
				(Continued)

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

F-21

IDEAL POWER INC.

Statements of Cash Flows (Continued)

Non cash activities for the year ended December 31, 2012:

The Company issued 2,110,897 warrants valued at $3,088,944 in connection with notes payable.

The Company recorded $1,761,241 as additional paid-in capital in connection with the beneficial conversion feature of convertible promissory notes.

Non cash activities for the year ended December 31, 2011:

The Company issued 101,626 warrants valued at $199,104 in connection with a note payable.

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

F-22

Ideal Power Inc.

Notes to Financial Statements

Note 1 – Organization and Description of Business

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation and Going Concern

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States (US GAAP) which contemplate continuation of the Company as a going concern. However, the Company is subject to the risks and uncertainties associated with a new business and has incurred significant losses from operations since inception. The Company’s operations are dependent upon it raising additional funds through private offering of its stock or debt financing. The Company is obligated to pay or convert $5,142,000 in promissory notes due in 2013. The Company has no committed sources of capital and is not certain whether additional financing will be available when needed on terms that are acceptable, if at all. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty. The report from the Company’s independent registered public accounting firm states that there is substantial doubt about the Company’s ability to continue as a going concern.

Use of 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

Inventories

F-23

Property and Equipment

Leasehold improvements	2 years
Machinery and equipment	5 years
Furniture, fixtures and computers	3-5 years

Patents

Impairment of Long-Lived Assets

Fair Value of Financial Instruments

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, certificate of deposit, notes payable, line of credit 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.

Convertible Promissory Notes and Warrants

F-24

Revenue Recognition

The Company receives payments from government entities in the form of government grants. Government grants are agreements that generally provide the Company with cost reimbursement for certain type of research and development activities over a contractually defined period. Revenues from government grants are recognized in the period during which the related costs are incurred, provided that the conditions under which the government grants were provided have been met. Government grants amounted to $707,357 and $26,581 for the years ended December 31, 2012 and 2011, respectively. At December 31, 2012, grants receivable amounted to $348,647 and were included in accounts receivable. At December 31, 2011, there were no grants receivable.

Royalty income is recognized as earned based on the terms of the contractual agreements.

Product Warranties

Research and Development

Research and development costs are expensed as incurred. Research and development costs incurred during the years ended December 31, 2012 and 2011 amounted to $1,127,192 and $914,851, respectively.

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 December 31, 2012 and 2011, the Company has established a full reserve against all deferred tax assets.

F-25

Net Loss Per Share

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 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

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, accounts receivable, accounts payable and short term debt. 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. Periodically throughout the year, the Company maintains balances in excess of federally insured limits. 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. The Company generally does not require collateral or other security to support accounts receivable. The Company performs ongoing credit evaluations of its customers and records an allowance for potential bad debts based on available information. The Company had two customers that accounted for 75% and 85% of net revenue for the years ended December 31, 2012 and 2011, respectively. The loss of one of these customers could cause an adverse effect on the Company’s operations. The Company had an accounts receivable balance from one customer that accounted for 72% and 100% of total accounts receivable at December 31, 2012 and 2011, respectively.

Recent Accounting Pronouncements

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

Note 3 - Inventories

Inventories consisted of the following:

	December 31,
	2012		2011
Raw materials	$	144,842	$	130,018
Finished goods		73,025		-
	$	217,867	$	130,018

F-26

Note 4 – Prepayment and Other Current Assets

At December 31, 2012, prepayment and other current assets consisted of the following:

Prepaid insurance	$	22,186
Prepaid subscription		4,282
Others		2,000
	$	28,468

Note 5 – Property and Equipment

Property and equipment consisted of the following:

	December 31,
	2012			2011
Machinery and Equipment	$	19,670		$	19,670
Building leasehold improvements		46,850			46,850
Furniture, fixtures and computers		58,379			52,422
		124,899			118,942
Accumulated depreciation and amortization		(96,996	)		(46,517	)
	$	27,903		$	72,425

Note 6 – Patents

Patents consisted of the following:

	December 31,
	2012			2011
Patents	$	479,256		$	156,182
Accumulated amortization		(4,466	)		(2,807	)
	$	474,790		$	153,375

Amortization expense related to patents amounted to $1,659 and $1,443 for the years ended December 31, 2012 and 2011, respectively. Estimated amortization expense for the succeeding five years and thereafter is $ 2,700(2013); $2,700 (2014); $2,700 (2015); $2,700 (2016); $2,700 (2017); and $35,000 (thereafter).

At December 31, 2012 and 2011, the Company had capitalized approximately $426,000 and $127,000, respectively, for costs related to patents that have not been awarded.

Note 7 – Line of Credit

The Company had a credit agreement with a bank under which it could borrow up to $20,000 through March 16, 2012. Borrowings under the credit agreement were collateralized by a certificate of deposit of equal amount and guaranteed by officers of the Company. Interest was payable at a rate of 2.75% per annum. Amount outstanding under this credit agreement amounted to $20,000 at December 31, 2011, and was repaid in April 2012.

F-27

Note 8 – Long-term Debt

	December 31,
	2012		2011
1) The Company entered into the Texas Emerging Technology Fund (the “ETF”) Award and Security Agreement (the “Agreement”) with the State of Texas (the “State”) on October 1, 2010 subsequently amended on May 20, 2011 and April 16, 2013. Under the Agreement, the Company received an initial award totaling $250,000 during the year ended December 31, 2010 and received an additional award totaling $750,000 during the year ended December 31, 2011 (collectively, the “Promissory Note”). The proceeds from the award must be used to expedite commercialization intended to increase high-quality jobs in Texas through expenditures on working capital or development or acquisition of capital assets used to produce income and in meeting the Company’s goal of introducing a 30KW solar inverter to the market. The Company is also required to meet certain milestones by specific dates, use Texas-based suppliers and establish a substantial percentage of its commercialization and manufacturing activities in Texas. The awards are collateralized by all owned or acquired assets of the Company. The ETF in a subordination agreement dated August 30, 2012, agreed to subordinate the Promissory Note to secured convertible promissory notes to be issued by the Company of up to $5,000,000. At December 31, 2012 the Company had secured convertible promissory notes aggregating $4,000,000. See 4) and 5) below. The Promissory Note accrues interest at an annual rate of 8% and could be repaid at the option of the Company after April 1, 2012. The Promissory Note will be cancelled and the debt, including accrued interest, will be forgiven upon the earlier of: 1) October 1, 2020 or 2) the date the ETF receives a return of cash or public securities equal to the proceeds from the Promissory Note plus accrued interest in connection with a qualifying liquidation event, as defined in the agreement. Upon note repayment or forgiveness, the agreement will terminate and the Company will be released from all obligations under the Agreement. In connection with the Promissory Note, in October 2010 and July 2011, the Company issued warrants to purchase 33,875 and 101,626 shares of the Company’s common stock, respectively. The fair value of the warrants was determined to be $66,372 and $199,104, respectively, and was recorded as debt discount. During the years ended December 31, 2012 and 2011, the Company incurred interest expense amounting to $77,430 and $176,984 related to the accretion of the debt discount. Interest on the Promissory Note, including accretion of debt discount, amounted to $157,430 and $225,017 for the years ended December 31, 2012 and 2011, respectively. Unamortized debt discount amounted to $0 and $77,430 at December 31, 2012 and 2011, respectively. Effective interest rate on this Promissory Note was 16% and 36% per annum for the years ended December 31, 2012 and 2011, respectively. Accrued interest amounted to $132,690 and $52,690 at December 31, 2012 and 2011, respectively, and is included in the outstanding amount of Promissory note.	$	1,132,690	$	975,260

F-28

2) Unsecured convertible promissory notes with principal and interest due at maturity at 6% per annum, subordinate to the line of credit, and maturing on the earlier of: 1) December 31, 2013, or 2) closing of initial public offering of the Company’s common stock in which the Company raises at least $10million, or 3) closing of qualified financing, as defined in the promissory notes, or 4) occurrence of event of default, as defined in the promissory notes . The promissory notes are convertible into 172,249 shares of the Company’s common stock at the option of the note holder upon occurrence of certain events, as defined in the promissory notes. The embedded beneficial conversion feature associated with these convertible promissory notes had no intrinsic value. Of the total amount outstanding, $40,000 was due to an officer of the Company at December 31, 2012 and 2011, respectively. Interest on these notes amounted to $21,600 and $9,146 for the years ended December 31, 2012 and 2011, respectively.	360,000	360,000
3) Unsecured convertible promissory notes aggregating $695,150 with principal and interest due at maturity at 6% per annum and maturing on the earlier of : 1) December 31, 2013 , or 2) closing of initial public offering of the Company’s common stock in which the Company raises at least $10 million, or 3) closing of qualified financing, as defined in the promissory notes, or 4) occurrence of event of default, as defined in the promissory notes .Of the total amount outstanding, $389,575 was due to an officer, employee and directors of the Company. The promissory notes are convertible into 332,608 shares of the Company’s common stock at the option of the note holder upon occurrence of certain events, as defined in the promissory notes. The embedded beneficial conversion feature associated with these convertible promissory notes had no intrinsic value. In connection with these promissory notes, the Company issued warrants to purchase 261,581 shares of the Company’s common stock. The fair value of the warrants was determined to be $419,840 and was recorded as debt discount. During the year ended December 31, 2012, the Company incurred interest expense amounting to $157,711 related to the accretion of the debt discount. Interest on these promissory notes, including accretion of debt discount, amounted to $185,874 for the year ended December 31, 2012. Unamortized debt discount amounted to $262,129 at December 31, 2012. Effective interest rate on these notes was 35% per annum for the year ended December 31, 2012.	433,021	-
4) Convertible promissory notes aggregating $750,000 secured by substantially all assets of the Company with principal and interest due at maturity at the higher of: a) 1% per annum or b) at the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code, and maturing on the earlier of : 1) November 21, 2013, 2) event of default, as defined in the agreement, or 3) the closing of an initial public offering of the Company’s common stock. Of the total amount outstanding, $100,000 was due to one of the directors of the Company. The promissory notes are convertible into 512,645 shares of the Company’s common stock at the option of the note holder upon occurrence of certain events, as defined in the promissory notes. The intrinsic value of embedded beneficial conversion feature associated with these convertible promissory notes was determined to be $321,429 and was recorded as debt discount. In connection with these promissory notes, the Company issued warrants to purchase 513,699 shares of the Company’s common stock. The fair value of the warrants was determined to be $749,846 and was recorded as debt discount. During the year ended December 31, 2012, the Company incurred interest expense amounting to $521,275 related to the accretion of the debt discount. Interest on these promissory notes, including accretion of debt discount, amounted to $523,796 for the year ended December 31, 2012. Unamortized debt discount amounted to $550,000 at December 31, 2012. Effective interest rate on these notes was 210% per annum for the year ended December 31, 2012.	200,000	-

F-29

5) Convertible promissory notes aggregating $3,250,000 secured by substantially all assets of the Company with principal and interest due at maturity at the higher of: a) 1% per annum or b) at the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code, and maturing on the earlier of : 1) November 21, 2013, 2) event of default, as defined in the agreement, or 3) the closing of an initial public offering of the Company’s common stock. Of the total amount outstanding, $200,000 was due to two directors of the Company. The promissory notes are convertible into 2,226,027 shares of the Company’s common stock at the option of the note holder upon occurrence of certain events, as defined in the promissory notes. The intrinsic value of the embedded beneficial conversion feature associated with these convertible promissory notes was determined to be $1,402,397 and was recorded as debt discount. In connection with these promissory notes, the Company issued warrants to purchase 1,113,014 shares of the Company’s common stock. The fair value of the warrants was determined to be $1,625,890 and was recorded as debt discount. In connection with these promissory notes the Company issued underwriter warrants to purchase 222,603 shares of the Company’s common stock. The fair value of the warrants was determined to be $292,368 and was recorded as debt discount. The Company also incurred debt raising cost of $375,000 in connection with these promissory notes which has been recorded as debt discount. During the year ended December 31, 2012, the Company incurred interest expense amounting to $716,488 related to the accretion of the debt discount. Interest expense on these promissory notes, including accretion of debt discount, amounted to $720,099 for the year ended December 31, 2012. Unamortized debt discount amounted to $2,979,167 at December 31, 2012. The effective interest rate on these notes was 133% per annum for the year ended December 31, 2012		270,833		-
6) Unsecured convertible promissory note amounting to $86,707 with principal and interest due at maturity at the higher of: a) 1% per annum or b) at the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code, and maturing on the earlier of: 1) December 31, 2013, 2) event of default, as defined in the agreement, or 3) the closing of an initial public offering of the Company’s common stock. The promissory note is convertible into 59,388 shares of the Company’s common stock at the option of the note holder upon occurrence of certain events, as defined in the promissory note. The intrinsic value of embedded beneficial conversion feature associated with these convertible promissory notes was determined to be $37,415 and was recorded as debt discount. Unamortized debt discount amounted to $37,415 at December 31, 2012.		49,292		-
		2,445,836		1,335,260
Less current portion of long-term debt, net of debt discount of $3,828,711 at December 31, 2012		1,313,146		-
Long-term debt, net of debt discount of $0 and $77,430 at December 31, 2012 and 2011, respectively	$	1,132,690	$	1,335,260

F-30

Maturities of the long-term debt over the succeeding year and thereafter is approximately $5,142,000 (2013); and $1,133,000 (thereafter). The unamortized debt discount of $3,828,711 at December 31, 2012 will be amortized during the year ended December 31, 2013.

Note 9 – Warranty Reserve

The changes in warranty reserve, included in accrued expenses, were as follows:

	2012			2011
Balance, beginning of the year	$	123,979		$	-
Provisions for warranty and beta replacements		18,900			123,979
Warranty payments or beta replacements		(39,750	)		-
Balance, end of the year	$	103,129		$	123,979

Note 10 – Common and Preferred Stock

All shares of common and preferred stock have a par value of $0.001. Each holder of common stock is entitled to one vote per share outstanding. Each holder of preferred stock is entitled to the number of votes equal to the number of shares of common stock into which the shares of preferred stock could be converted on the record date. As of December 31, 2012 and 2011, there were no outstanding shares of preferred stock.

Common Stock

During the year ended December 31, 2012, stockholders’ equity activity consisted of the following common stock transactions: (1) the issuance to investors in a private placement, in consideration of $52,000, of an aggregate of 19,568 shares of the Company’s common stock, (2) the issuance of an aggregate 44,846 shares of the Company’s common stock with a fair value of $78,994 for services, (3) the issuance of 2,110,897 warrants with a value of $3,088,944 in connection with debt, (4) the issuance of 477,135 warrants with a fair value of $670,947 in connection with consulting services.

During the year ended December 31, 2011, stockholders’ equity activity consisted of the following common stock transactions: (1) the issuance to investors in private placement, in consideration of $188,002, of an aggregate 70,741 shares, including 9,783 shares to an executive employee, of the Company’s common stock (2) the issuance of an aggregate 44,718 shares, including 13,170 shares to an executive employee, of the Company’s common stock with a fair value of $118,840 for services, (3) the issuance of 101,626 warrants with a fair value of $199,104 in connection with debt, (4) repurchase of 1,000 shares of the Company’s common stock for $2,658.

Preferred Stock

During the year ended December 31, 2011, the Company converted 122,175 shares of Series Seed Preferred stock into an equal number of shares of the Company’s common stock.

Note 11 – Stock Option Plan

In 2011, the Company adopted the 2011 Stock Option/Stock Issuance Plan (the “Plan”) and reserved 371,000 shares of common stock for issuance under the Plan. The Plan is administered by the Company’s board of directors and is divided into two separate equity programs: 1) the Option Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of common stock, and (ii) the Stock Issuance Program, under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of common stock directly, either through the immediate purchase of such shares or as a bonus for services rendered to the Company. The persons eligible to participate in the Plan are employees, non-employee members of the board of directors, consultants and other independent advisors 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.

F-31

During the year ended December 31, 2012, the Company did not grant any awards of common stock or options to purchase common stock from the Plan.

During the year ended December 31, 2011, the Company granted option awards to various employees for the purchase of 38,756 shares of common stock from the Plan at an exercise price of $2.658. The options were to vest over a period of 4 years commencing from the date of grant. The options were valued at approximately $83,000 using the Black-Scholes option pricing model. Pursuant to the terms of the Plan, if stockholder approval was not obtained within 12 months after the date of the board’s adoption of the Plan, then all options previously granted under the Plan would terminate and cease to be outstanding, and no further options could be granted and no shares could be issued under the Plan. The Plan was not approved by the Company’s stockholders on or before November 5, 2012 and the option grants terminated on that date.

Awards Granted Outside the Plan

During the year ended December 31, 2012, the Company granted 45,155 stock options to purchase shares of common stock at an exercise price of $2.658 to an executive employee. The options vest over a period of 4 years commencing from the date of grant. As permitted by SAB 107, due to the Company’s insufficient history of option activity, management utilized the simplified approach to estimate the options expected term, which represents the period of time that options granted are expected to be outstanding. The risk free interest rate for periods within the contractual life of the option is based on the U.S. treasury yield in effect at the time of grant. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future. The options were valued at approximately $85,000 using the Black-Scholes option pricing model. Amount of approximately $12,400 relating to these options was charged to expense during the year ended December 31, 2012.

The assumptions used in the Black-Scholes model are as follows:

	For the year ended December 31,
	2012			2011
Risk-free interest rate		1.41	%		1.41	%
Expected dividend yield		0	%		0	%
Expected lives	5.25 years			9 years
Expected volatility		90	%		90	%

A summary of the Company’s stock option activity and related information is as follows:

	2012							2011
	Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Life (in years)		Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Life (in years)
Outstanding at January 1		370,056		$	1.115		8.9		331,300	$	0.934		9.9
Granted		45,155			2.658				38,756		2.658
Exercised		-			-				-		-
Forfeited/Expired/Exchanged		(38,756	)		2.658				-		-
Outstanding at December 31		376,455		$	1.141		7.8		370,056	$	1.115		8.9
Exercisable at December 31		326,570		$	0.958		8.0		279,095	$	0.884		9.0

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The following table sets forth additional information about stock options outstanding at December 31, 2012:

Range of Exercise Prices		Options Outstanding		Weighted Average Remaining Life (in years)		Weighted Average Exercise Price		Options Exercisable
$	0.04 - $0.99		94,650		8.7	$	0.1493		94,650
$	1.00 - $1.99		236,650		7.6	$	1.2480		225,335
$	2.00- $2.66		45,155		7.4	$	2.6575		6,585
			376,455						326,570

The estimated aggregate pretax intrinsic value (the difference between the Company’s estimated stock price on the last day of the year ended December 31, 2012 and the exercises price, multiplied by the number of in-the-money options) is approximately $373,000. This amount changes based on the fair value of the Company’s stock.

As of December 31, 2012, there was $79,371 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 3.4 years.

Note 12 – Warrants

During the year ended December 31, 2012, the Company issued 2,110,897 warrants to purchase shares of the Company’s common stock to various promissory note holders with exercise prices ranging from $0.001 to $2.658. The warrants vest through November 2013. The warrants were valued at approximately $3,089,000 using the Black-Scholes option pricing model. See Note 8.

During the year ended December 31, 2012, the Company issued 477,135 warrants to purchase shares of the Company’s common stock to a consultant in connection with consulting services. The warrants have an exercise price of $1.46. The warrants vested immediately. The warrants were valued at approximately $671,000 using the Black-Scholes option pricing model which was charged to expense during 2012.

During the year ended December 31, 2011, the Company issued 101,626 warrants to purchase shares of the Company’s common stock in connection with Promissory Note with an exercise price of $0.001. The warrants vested over a period of 9 months from the date of issuance. The warrants were valued at approximately $199,000 using the Black-Scholes option pricing model. See Note 8.

The assumptions used in the Black-Scholes model are as follows:

	For the year ended December 31,
	2012			2011
Risk-free interest rate		0.46% -0.69	%		1.41	%
Expected dividend yield		0	%		0	%
Expected lives	3.5 – 4 years			10 years
Expected volatility		90	%		90	%

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A summary of the Company’s warrant activity and related information is as follows:

	2012				2011
	Warrants		Weighted Average Exercise Price		Warrants		Weighted Average Exercise Price
Outstanding at January 1		221,451	$	0.00072		119,825	$	0.00043
Granted		2,588,032		1.87		101,626		0.0010
Exercised		-		-		-		-
Forfeited/Expired		-		-		-		-
Outstanding at December 31		2,809,483	$	1.52		221,451	$	0.00072

Note 13 – Income Taxes

Income taxes are disproportionate to income due to net operating loss carryforwards, which are fully reserved. As of December 31, 2012, the Company has federal net operating loss carryforwards of approximately $5,313,000 which will begin to expire in 2031. Management has concluded that it is more likely than not that the Company will not have sufficient taxable income within the carryforward period permitted by current law to allow for the utilization of certain of the deductible amounts generating the deferred tax assets; therefore, a full valuation allowance has been established to reduce the net deferred tax assets to zero at December 31, 2012 and 2011.

The following is a summary of the significant components of the Company’s net deferred income tax assets and liabilities as of December 31, 2012 and 2011:

	Year ended December 31,
	2012			2011
Current deferred income tax assets:
Inventory – uniform capitalization	$	18,000		$	10,000
Less valuation allowance		(18,000	)		(10,000	)
	$	-		$	-
Non-current deferred income tax assets and (liabilities):
Net operating loss	$	1,806,000		$	675,000
Research and development credit		18,000			18,000
Warrant reserve		35,000			42,000
Depreciation and amortization		7,000			1,000
Other		(139,000	)		(29,000	)
Less valuation allowance		(1,727,000	)		(707,000	)
Net non-current deferred tax assets	$	-		$	-

The Company has applied the provisions of FASB ASC 740, “Income Tax” which clarifies the accounting for uncertainty in tax positions. FASB ASC 740 requires the recognition of the impact of a tax position in the financial statements if that position is more likely than not of being sustained on a tax return upon examination by the relevant taxing authority, based on the technical merits of the position. At December 31, 2012 and 2011, the Company had no unrecognized tax benefits.

F-34

The Company recognizes interest and penalties related to income tax matters in interest expense and operating expenses, respectively. As of December 31, 2012 and 2011, the Company has no accrued interest and penalties related to uncertain tax positions.

The Company is subject to tax in the United States (“U.S.”) and files tax returns in the U.S. Federal jurisdiction. The Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2008. The Company currently is not under examination by any tax authority.

The reconciliation between the statutory income tax rate and the effective tax rate is as follows:

	For the year ended December 31,
	2012			2011
Statutory federal income tax rate		(34	) %		(34	) %
Debt discount		12			4
Other		-			1
Valuation allowance		22			29
		-	%		-	%

Note 14 – Commitments

Lease

The Company leases its facility in Spicewood, Texas under a non-cancelable operating lease expiring on May 31, 2014. Rent expense incurred for the years ended December 31, 2012 and 2011 amounted to $34,932 and $31,833, respectively.

Future estimated lease payments are as follows:

Year ending December 31,
2013	$	38,000
2014		16,000
	$	54,000

Employment Agreement

Note 15 – Consulting Services

During the years ended December 31, 2112 and 2011, the Company incurred $50,069, and $75,823 respectively, on account of consulting services and fixed asset purchases from a company which is owned by one of the major shareholders of the company who from May 2007 to November 2012 was also a director of the Company.

Note 16 – Retirement Plan

The Company has adopted a defined contribution retirement plan covering all of its employees. Under the plan, the Company contributions are discretionary. The Company’s discretionary contributions amounted to $4,198 and $1,939 for the years ended December 31, 2012 and 2011, respectively.

F-35

Note 17 - Unaudited Pro Forma Stockholders' Deficit

The Company is in the process of filing a registration statement on Form S-1 with the U.S. Securities and Exchange Commission in connection with a proposed offering of its securities. If the offering contemplated by the registration statement is consummated and the Company raises sufficient equity to meet the listing requirements of the NASDAQ Capital Market, the board of directors has been authorized by the Company's stockholders to effect a reverse stock split of its common stock after the effectiveness of the registration statement and prior to the closing of the offering. The unaudited proforma stockholders' deficit as of December 31, 2012 gives effect to the assumed 1-for-2.381 reverse stock split (see Note 18).

Since the 1-for-2.381 reverse stock split is to be effected after the effectiveness of the registration statement, the historical share information included in the accompanying financial statements and notes hereto does not assume the 1-for-2.381 reverse stock split, and accordingly has not been adjusted.

Note 18– Subsequent Events

Consulting Agreement

On April 19, 2013, the Company entered into an agreement effective May 1, 2013 with an unrelated party to provide public relations services for a monthly fee of $7,500 for a period of 12 months.

Employment Agreements

Reverse Stock Split

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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