SecProbe.io

August 30, 2013

Via E -mail
Paul Bundschuh
Chief Executive Officer
Ideal Power Inc.
5004 Bee Creek Road, Suite 600
Spicewood, Texas  78669

Re: Ideal Power Inc.
Registration Statement on Form S -1
Filed August 6, 2013
 File No. 333 -190414

Dear Mr. Bundschuh:

We have reviewed your registration statement  and have the following comments.  In
some of our comments, we may ask you to provide us with information so we  may better
understand your disclosure.

Please respond to this letter by amending your registration statement and providing the
requested information.  If you do not believe our comments apply to your facts and
circumstances or do not believe an amendment  is appropriate, please tell us why in your
response.

 After reviewing any amendment to your registration statement and t he information you
provide in response to these  comment s, we may have  additional comments .

Prospectus Cover

1. Please revise the cove r page to disclose your relationship with MDB Capital  Group .

2. We note your disclosure that this is a firm commitment offering.  Certain of disclosure
throughout suggests  a different arrangement, however.  For example, we note disclosure
on page 4 that you will terminate the offering if you fail to raise $10 million, which
seems inconsistent with a firm commitment to take or pay for a certain number of shares.
Please revi se to clarify the underwriting arrangement.

Paul Bundschuh
Ideal Power Inc.
August 30, 2013
Page 2

 Prospectus Summary, page 1

3. Please define or remove technical terms and other jargon so that your document can be
understood by an investor not in your industry.  Examples include “topology,” “utility
dispatchable PV,” “reference product,” “PV inverter,” and “distributed storage.”  It may
also be useful to include a brief introductory explanation of where your product fits into
the electric power market.  For example, is it a consumer or industrial prod uct?  Which
types of OEMs might be interested in using your product?

4. Please provide us support for the market and industry data that you cite in the sections
entitled “Our Proprietary Technology” on page  2 and “Our Target Markets” on pages  3
and 4 .  Clear ly mark the material you provide to identify the data you cite in your
document, and tell us whether you commissioned any of the data disclosed in your
prospectus.

5. Please provide us support for your statements regarding your leadership throughout the
prospectus, such as your statements about leadership in the first and last paragraphs on
page 21 of the prospectus.

Our Proprietary Technology, page 2

6. Please provide us with support for your claims in the bullet points in this section about
best-of-class safety, greater efficiency and greater reliability.  In addition, where you
provide statistics, please explain what they mean.  For example, what does 96%
efficiency mean?

7. Please expand the disclosure in the first bullet point on page 3 about “uses below 10kW
to over 1MW” to briefly provide examples of the types of uses at the low and high end of
the range so that the uses at either end of the range can be understood by an investor not
in your industry.

8. We note the disclosure in the last sentence of this section about a government grant.
Please expand the appropriate section to disclose, if applicable, any rights that the
government has to your technology and patents.

9. We note the disclosure in the last sentence of this section about developing and
commer cializing power switches and the disclosure in the second paragraph on page 3
that you are in the process of developing two more reference products.  Please expand the
sections entitled “Plan of Operation” and “Business” to clearly discuss each step you
must take to reach commercialization of your proposed products and your estimated
capital needed to achieve each product.  For example, you disclose on page s 3 and 24 that
the bi -directional insulated gate bipolar transistor is being funded partially by a $2 .5
million grant.  However, you do not mention the total capital needed to achieve that
product or the two other products mentioned on page 24.

Paul Bundschuh
Ideal Power Inc.
August 30, 2013
Page 3

 Our Business Model, page 3

10. Please expand the disclosure in the fifth sentence of this section to disclose the number of
companies that have purchased your products.  In addition, explain to us why you chose
the customer names you included here.  In this respect, please note that we do not
consider name recognition to be a sufficient basis for identifying a customer in your
disclosure.

Our Tar get Markets, page 3

11. Refer to the first bullet point under this heading.  It is not clear why the rapid decline in
the cost of solar cells causes growth in the PV inverter market or helps your business.
Please revise to clarify.

12. Please eliminate disclosure that appears to be marketing. For example, we note the
disclosure in this section about “dozens of markets that could benefit” and the “strengt h
of the PPSA value proposition for those markets.”

13. Please expand the disclosure in the appropriate section of your filing to clarify your
relationship with the U.S. Department of Defense and NRG Energy.  In this regard, we
note t hat you mention in the third bullet point of this section that the U.S. Department of
Defense and NRG Energy are your “ partners. ”

Status as an Emerging Growth Company, page 4

14. Please supplementally provide us with copies of all written communications, as defined
in Rule 405 unde r the Securities Act, that you, or anyone authorized to do so on your
behalf, present to potential investors in reliance on Section 5(d) of the Securities Act,
whether or not they retain copies of the communications. Similarly, please
supplementally provid e us with any research reports about you that are       published or
distributed in reliance upon Section 2(a)(3) of the Securities Act of
1933 added by  Section 105(a) of the Jumpstart Our Business Startups Act by any broker
or dealer that is  participatin g or will participate in your offering.

Please clarify that despite opting out of Section 102(b)(1) of the JOB S Act, you may still
take advantage of all of the other provision of that Act.

The Offering, page 6

15. We note that you disclose that you intend to use some proceeds for “existing product
development and commercialization,” “protection of [y]our intellectual property” and
“general corporate  purposes .”  However, on page 57 you state that you intend to use
some procee ds for the “development of existing products, including product and

Paul Bundschuh
Ideal Power Inc.
August 30, 2013
Page 4

 equipment purchases,” “patent filings and the protection of intellectual property” and
“working capital and general corporate purposes.”  Please reconcile .

To date we have had a limited n umber of customers, page 10

16. Please expand the disclosure in this risk factor to quantify the percentage of your net
revenues in the fiscal year ended December 31, 2012 from the Department of Energy and
Lockheed Martin, respectively.  Also, expand the dis closure to quantify the percentage of
your net revenues in the fiscal year ended December 31, 2011 from Lockheed Martin and
Meridian Solar, respectively.

17. If your revenues in the last two years from Lockheed Martin were received in connection
with your agr eements entered into in 2009 and you do not expect any additional revenues
from these agreements, expand the disclosure in this risk factor and in your section
entitled “Plan of Operation” to discuss the lack of future revenues  from agreements with
Lockhe ed Martin.  In this regard, we note the disclosure in the last paragraph on page 28
about your agreements with Lockheed Martin.

18. If your grant revenues from the Department of Energy in the fiscal year ended December
31, 2012 and in the quarter ended March 31, 2013 represent substantially all of your
revenues that you expect to receive from the grants from that agency mentioned in the
third paragraph on page 29, expand the disclosure in this risk factor and in your section
entitled “Plan of Operation” to dis cuss the lack of future revenues from those two grants
from that agency.

We have not devoted significant resources toward the marketing and sale, page 11

19. Please expand the disclosure in the appropriate section of your filing to discuss the
material terms  of your strategic marketing and distribution agreements mentioned in this
risk factor.

Business Strategy, page 23

20. Since you do not appear to have sold any 30kW hybrid converters , 30kW micro -grid
converters  and bidirectional insulated gate transistors, please revise throughout to remove
claims about the characteristics of these product or their benefits, or revise to indicate that
they represent management's belief. Examples include the disclosure on page 24 about
“charging systems with greater energy and  cost efficiency,” the disclosure in Figure 5 o n
page 24 of the incremental benefits of BD -IGBT implementation, the disclosure on page
27 about a “lower cost, more efficient integrated solution” and the disclosure on page 28
about the product “should perfo rm at lower cost and higher efficiency.”

Paul Bundschuh
Ideal Power Inc.
August 30, 2013
Page 5

 Intellectual Property, page 24

21. We note the reference in this section to a “proven ideation process.”  Please provide us
support for your statement about a “proven” process.  Also, p lease briefly explain the
phrase  “ideation process.”

22. Please disclose the duration of your material patents.

Revenue Recognition, page 33

23. We note that you have been awarded two significant grants from the U.S. Department of
Energy and have received approximately $1.0 million in revenue  to fund long -term
research and next generation product development. Please revise to describe how you
recognize revenue from grants.  Describe how the revenue is earned and how you
determine the timing for revenue recognition.

24. As a related matter, please clarify if the grants are for the reimbursement of costs and
how you determined that grants are appropriately classified as revenue rather than netted
against related expenses incurred.   Please also clarify where you record expenses related
to gran t revenue in the statement of operations.  We reference your disclosure on page F -
7 that government grants are agreements that generally provide the company with cost
reimbursement for certain type of research and development activities over a
contractuall y defined period.

Stock -Based Compensation, page 33

25. Please revise to disclose how you determined each of the assumptions required in valuing
stock options.  In discussing how you determined the fair value of your common stock,
disclose the following:

 The aggregate intrinsic value of all outstanding options based on the midpoint of
the estimated IPO price range.  Please make sure to use the pre -reverse stock split
IPO price.
 Discuss the significant factors, assumptions and methodologies used in
determ ining fair value for those options granted during the twelve months prior to
the date of the most recent balance sheet.
 Discuss each significant factor contributing to the difference between the fair
value as of the date of grant and the estimated IPO pric e for options granted
during the twelve months prior to the date of the most recent balance sheet.
 Disclose the valuation method used and the reasons why you choose that method.

26. Please also revise to include disclosure about how you value common stock iss ued for
services and common stock warrants issued for consulting services.

Paul Bundschuh
Ideal Power Inc.
August 30, 2013
Page 6

 Convertible Promissory Notes and Warrants, page 34

27. Please revise to disclose the significant assumptions used to value warrants issued in
connection with debt arrangements, incl uding how you determined the estimated fair
value of your common stock used in the valuation.

Results of Operations, page 34

28. Please revise to discuss the reasons for the significant increase in grant revenue in fiscal
2012. Please also further discuss the significant decline in contract revenues from
Lochhead Martin in fiscal 2012.

29. Please revise to discuss why general and administrative expense increased from the three
months ended March 31, 2012 to March 31, 2013. Please also further discuss the reas on
for the significant increase in general and administrative expenses for fiscal 2012
compared to 2011 and clarify the nature of the significant increase in business consulting
and legal services.

Capitalization, page 57

30. Please provide us the adjustments used to determine the “as adjusted for the effect of the
reverse split, debt conversion and issuance of shares to directors” in the Capitalization
table on page 58. In addition, provide a reconciliation of the “as adjusted ” amounts in the
table to the amounts in the balance sheets on page F -1.

Dilution, page 59

31. Please revise to disclose how the data in the table on page 59 would change assuming the
exercise of all warrants and options.

Financial Statements

32. Please u pdate the financial statements when required by Rule 8 -08 of Regulation S -X.

Condensed Financial Statements for the three months ended March 30, 2013

Condensed Balance Sheets, page F -1

33. Please revise to separately identify outstanding debt that is conv ertible .

Paul Bundschuh
Ideal Power Inc.
August 30, 2013
Page 7

 Condensed Statement of Operations, page F -2

34. Please revise to disclose the pro forma net loss per share assuming the reverse stock split
that you will effect after the effectiveness of the registration statement.

Note 6.  Patents, page F -10

35. We reference the disclosure that you have capitalized $426,000 for costs related to
patents that have not been awarded.  Please tell us the nature of the costs capitalized as
patent assets.  In addition, please tell us the basis in U.S. GAAP for capitaliz ing costs to
obtain patents.   We reference FASB ASC 350 -30 which states that the costs of internally
developing other intangible assets, such as those that are specifically identifiable, are
expensed as incurred, unless other specific guidance calls for c apitalization of those costs.

Note 9. Common and Preferred Stock, page F -14

36. Please explain to us the basis in U.S. GAAP for your accounting for the 29,680 shares of
common stock for services that have not been issued.  If the services have been
performed, explain to us why the related expense is not recorded within net loss on the
statement of operations.

37. As a related matter, revise to disclose how you determined the fair value of common
stock to be issued in connection with services rendered of $43,333.

Exhibit 23.1. Consent of Independent Registered Public Accounting Firm

38. To the extent there is a delay in requesting effectiveness of your registration statement, or
there is any change, other than typographical, made to the financial statements, or there
have been intervening events since the prior filing that are material to t he company,
please provide a currently dated and signed consent from your independent accountant
with your next amendment.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing include s the information the Securities Act of 1933 and
all applicable Securities Act rules require.  Since the company and its management are in
possession of all facts relating to a company’s  disclosure, they are responsible for the accuracy
and adequacy  of the disclosures they have made.

Paul Bundschuh
Ideal Power Inc.
August 30, 2013
Page 8

 Notwithstanding our comments, in the event you request acceleration of the effective date
of the pending registration statement  please provide a written statement from the company
acknowledging that:

 should the Commission or the staff, acting pursuant to delegate