Ideal Power Inc. — Director's Dealing 2013

Nov 22, 2013

SEC Form 3 — Initial Statement of Beneficial Ownership

Issuer: Ideal Power Inc. (IPWR)
CIK: 0001507957
Period of Report: 2013-11-21

Reporting Person: BAUM MARK L (N/A)

Holdings (Non-Derivative)

Security	Shares	Ownership
Common Stock	52432	Direct

Holdings (Derivative)

Security	Exercise Price	Expiration	Underlying	Shares	Ownership
Senior Secured Convertible Promissory Note	$		Common Stock (28935)		Indirect
Warrant	$		Common Stock (14383)		Indirect

Footnotes

F1: The senior secured convertible promissory note (the "Note") must be converted in conjunction with the Company's initial public offering. The Note may be converted prior to the Company's initial public offering on a change of control or at the election of the holder.

F2: The Note must be paid in full at the earlier of (i) January 6, 2014, (ii) the occurrence of an Event of Default as defined in the Note or (iii) the closing of an initial public offering raising at least $10 million in gross proceeds ("IPO").

F3: If the Note is converted in conjunction with an IPO, the conversion price will be equal to the lower of 0.70 times the IPO price or $1.46. If the holder elects to convert the Note prior to the IPO or the maturity date, the conversion price will be equal to the lower of 0.70 times the price per share paid by investors in the most recent Private Equity Financing (as defined in the Note) to occur prior to the Calendar Due Date or $1.46. For purposes of this report, we have accrued shares for the payment of interest through the date of filing.

F4: The Note and the warrant are issued to Series E-1 of Larren Smitty, LLC, which is owned by the reporting person.

F5: The warrant may be exercised prior to January 6, 2014 in conjunction with an IPO or a Private Equity Financing. Otherwise, the warrant may not be exercised prior to January 6, 2014.

F6: The warrant will expire on November 21, 2020 provided, however, if the Company completes an IPO after November 21, 2018 but prior to November 21, 2020, then the expiration date will be extended for an additional five years following the completion of the IPO.

F7: In the event an IPO is completed prior to January 6, 2014, the per-share exercise price will be equal to the lower of 0.70 times the IPO Price or $1.46. In the event of a Private Equity Financing that occurs prior to January 6, 2014, the per-share exercise price will equal the lower of 0.70 times the Private Equity Financing price or $1.46; provided, however, that (A) if the Company undertakes first, a Private Equity Financing and secondly, an IPO prior to January 6, 2014 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 exercise price calculated based on the IPO price. If the Company does not undertake a Private Equity Financing or an IPO prior to January 6, 2014, then the exercise price will be $1.46 per share.