UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
COMMISSION FILE NUMBER
ENERGOUS CORPORATION
(Exact name of registrant as specified in its charter)
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(State of incorporation) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive office) (Zip code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 4, 2020, there were
ENERGOUS CORPORATION
FORM 10-Q
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Energous Corporation
BALANCE SHEETS
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As of |
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September 30, 2020 |
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December 31, 2019 |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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At-the-market ("ATM") funds receivable |
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– |
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Accounts receivable |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Operating lease liabilities, current portion |
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Deferred revenue |
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Total current liabilities |
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Operating lease liabilities, long-term portion |
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Total liabilities |
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Commitments and contingencies |
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Stockholders’ equity: |
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Preferred Stock, $ at September 30, 2020 and December 31, 2019; outstanding |
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Common Stock, $ shares authorized at September 30, 2020 and December 31, 2019, respectively; outstanding at September 30, 2020 and December 31, 2019, respectively. |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed financial statements.
3
Energous Corporation
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
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For the Three Months Ended September 30, |
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For the Nine Months Ended September 30, |
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2020 |
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2019 |
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2020 |
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2019 |
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Revenue |
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$ |
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$ |
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$ |
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$ |
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Operating expenses: |
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Research and development |
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Sales and marketing |
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General and administrative |
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Cost of services revenue |
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– |
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– |
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– |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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Other income: |
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Interest income |
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Total other income |
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Net loss |
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$ |
( |
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$ |
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$ |
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$ |
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Basic and diluted loss per common share |
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$ |
( |
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$ |
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$ |
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$ |
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Weighted average shares outstanding, basic and diluted |
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The accompanying notes are an integral part of these condensed financial statements.
4
Energous Corporation
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
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Common Stock |
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Additional Paid-in |
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Accumulated |
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Total Stockholders' |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balance at January 1, 2020 |
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$ |
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$ |
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$ |
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$ |
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Stock-based compensation - restricted stock units ("RSUs") |
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– |
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– |
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– |
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Stock-based compensation - performance share units ("PSUs") |
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– |
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– |
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– |
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Stock-based compensation - employee stock purchase plan ("ESPP") |
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– |
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– |
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– |
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Issuance of shares for RSUs |
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( |
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– |
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– |
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Proceeds from contributions to the ESPP |
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– |
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– |
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– |
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Issuance of shares in an at-the-market ("ATM") offering, net of $ |
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– |
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Net loss |
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– |
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– |
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– |
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( |
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Balance March 31, 2020 (unaudited) |
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( |
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Stock-based compensation - restricted stock units ("RSUs") |
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– |
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– |
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– |
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Stock-based compensation - employee stock purchase plan ("ESPP") |
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– |
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– |
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– |
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Issuance of shares for RSUs |
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( |
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– |
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– |
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Proceeds from contributions to the ESPP |
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– |
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Issuance of shares in an at-the-market ("ATM") offering, net of $ |
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– |
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Net loss |
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– |
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– |
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– |
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( |
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Balance, June 30, 2020 (unaudited) |
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$ |
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$ |
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$ |
( |
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$ |
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Stock-based compensation - restricted stock units ("RSUs") |
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– |
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– |
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– |
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Stock-based compensation - employee stock purchase plan ("ESPP") |
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– |
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– |
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– |
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Issuance of shares for RSUs |
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( |
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– |
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– |
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Proceeds from contributions to the ESPP |
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– |
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– |
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– |
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Issuance of shares in an at-the-market ("ATM") offering, net of $ |
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– |
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Net loss |
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– |
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– |
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– |
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( |
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( |
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Balance, September 30, 2020 (unaudited) |
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$ |
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$ |
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$ |
( |
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$ |
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5
Energous Corporation
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)
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Common Stock |
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Additional Paid-in |
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Accumulated |
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Total Stockholders' |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balance at January 1, 2019 |
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$ |
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$ |
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$ |
( |
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$ |
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Stock-based compensation - restricted stock units ("RSUs") |
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– |
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– |
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– |
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Stock-based compensation - employee stock purchase plan ("ESPP") |
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– |
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– |
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– |
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Issuance of shares for RSUs |
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( |
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– |
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– |
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Shares withheld for payroll tax on RSUs |
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( |
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– |
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( |
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– |
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( |
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Shares withheld for payroll tax on performance share units ("PSUs") |
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( |
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– |
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( |
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– |
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( |
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Exercise of stock options |
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– |
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Proceeds from contributions to the ESPP |
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– |
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– |
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– |
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Issuance of shares and warrant in a private placement, net of $ |
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– |
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Net loss |
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– |
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– |
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– |
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( |
) |
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( |
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Balance, March 31, 2019 (unaudited) |
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$ |
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$ |
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$ |
( |
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$ |
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Stock-based compensation - restricted stock units ("RSUs") |
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– |
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– |
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– |
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Stock-based compensation - employee stock purchase plan ("ESPP") |
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– |
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– |
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– |
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Issuance of shares for RSUs |
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( |
) |
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– |
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– |
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Proceeds from contributions to the ESPP |
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– |
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Net loss |
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– |
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– |
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– |
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( |
) |
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( |
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Balance, June 30, 2019 (unaudited) |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Stock-based compensation - restricted stock units ("RSUs") |
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– |
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– |
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– |
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Stock-based compensation - employee stock purchase plan ("ESPP") |
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– |
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– |
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– |
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Issuance of shares for RSUs |
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( |
) |
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– |
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– |
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Shares returned |
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( |
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– |
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– |
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– |
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- |
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Proceeds from contributions to the ESPP |
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– |
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– |
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– |
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Net loss |
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– |
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– |
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– |
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( |
) |
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( |
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Balance, September 30, 2019 (unaudited) |
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$ |
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$ |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these condensed financial statements.
6
Energous Corporation
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
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For the Nine Months Ended September 30, |
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2020 |
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2019 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
) |
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$ |
( |
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Adjustments to reconcile net loss to: |
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Net cash used in operating activities: |
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Depreciation and amortization |
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Stock based compensation |
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Changes in operating lease right-of-use assets |
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Bad debt expense |
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– |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
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Prepaid expenses and other current assets |
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( |
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( |
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Accounts payable |
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( |
) |
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( |
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Accrued expenses |
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( |
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( |
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Operating lease liabilities |
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( |
) |
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( |
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Net cash used in operating activities |
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( |
) |
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( |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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( |
) |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities: |
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Net proceeds from the sales of common stock |
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Proceeds from the exercise of stock options |
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– |
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Proceeds from contributions to employee stock purchase plan |
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Shares repurchased for tax withholdings on vesting of RSUs |
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– |
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( |
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Shares repurchased for tax withholdings on vesting of PSUs |
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– |
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( |
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Net cash provided by financing activities |
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Net (decrease) increase in cash and cash equivalents |
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( |
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Cash and cash equivalents - beginning |
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Cash and cash equivalents - ending |
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$ |
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$ |
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Supplemental disclosure of non-cash financing activities: |
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At-the-market ("ATM") funds receivable |
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$ |
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$ |
– |
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Common stock issued for RSUs |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed financial statements.
7
Note 1 - Business Organization, Nature of Operations
Energous Corporation (the “Company”) was incorporated in Delaware on October 30, 2012. The Company has developed its WattUp® technology, consisting of proprietary semiconductor chipsets, software, hardware designs and antennas, that enables radio frequency (“RF”) based charging for electronic devices, providing wire-free contact and non-contact charging solutions, with the potential to enable charging with mobility. The Company believes its proprietary WattUp technology can be utilized in consumer electronics such as wearables, hearing aids, earbuds, Bluetooth headsets, Internet of Things (“IoT”) devices, smartphones, tablets, e-book readers, keyboards, mice, remote controls, rechargeable lights, cylindrical batteries, medical devices and other devices with charging requirements that would otherwise require battery replacement or wired power connection.
Note 2 – Liquidity and Management Plans
During the three and nine months ended September 30, 2020, the Company recorded revenue of $
As of September 30, 2020, the Company had cash on hand of $
Research and development of new technologies is by its nature unpredictable. Although the Company intends to continue its research and development activities, there can be no assurance that its available resources and revenue generated from its business operations will be sufficient to sustain its operations. Accordingly, the Company expects to pursue additional financing, which could include offerings of equity or debt securities, bank financings, commercial agreements with customers or strategic partners, and other alternatives, depending upon market conditions. There is no assurance that such financing would be available on terms that the Company would find acceptable, or at all.
The market for products using the Company’s technology is broad and evolving, but remains nascent and unproven, so the Company’s success is dependent upon many factors, including customer acceptance of its existing products, technical feasibility of future products, regulatory approvals, competition and global market fluctuations.
In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic. The pandemic continues to affect the United States and the world. The Company is monitoring the ongoing effects of COVID-19 (including continued outbreaks) and the related business and travel restrictions and changes to behavior intended to reduce its spread, and COVID-19’s impact on the Company’s operations, financial position, cash flows, inventory, supply chains, global regulatory approvals, purchasing trends, customer payments, and the industry in general, in addition to the impact on its employees. Due to the continuing developments and fluidity of this situation, the magnitude and duration of the pandemic and its impact on the Company's operations and liquidity are still uncertain as of the date of this report.
Note 3 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
These unaudited condensed interim financial statements should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended December 31, 2019 included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on March 13, 2020. The accounting policies used in preparing these unaudited condensed interim financial statements are consistent with those described in the Company’s December 31, 2019 audited financial statements.
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Note 3 – Summary of Significant Accounting Policies, continued
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements as well as the reported expenses during the reporting periods.
The Company’s significant estimates and assumptions include the valuation of stock-based compensation instruments, recognition of revenue, the useful lives of long-lived assets, and income tax expense. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. Although the Company believes that its estimates and assumptions are reasonable, they are based upon information available at the time the estimates and assumptions were made. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all short-term, highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. The Company maintains cash balances that may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation limits. The Company maintains its cash deposits with major financial institutions.
Revenue Recognition
On January 1, 2018, the Company adopted Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers" (Topic 606).
In accordance with Topic 606, the Company recognizes revenue using the following five-step approach:
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1. |
Identify the contract with a customer. |
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2. |
Identify the performance obligations in the contract. |
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3. |
Determine the transaction price of the contract. |
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4. |
Allocate the transaction price to the performance obligations in the contract. |
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Recognize revenue when the performance obligations are met or delivered. |
The Company’s revenue primarily consists of product development projects revenue and royalty revenue from Dialog. The Company also provides contract services for Dialog.
The Company records revenue associated with product development projects that it enters into with certain customers. In general, these product development projects are complex, and the Company does not have certainty about its ability to achieve the project milestones. The achievement of a milestone is dependent on the Company’s performance obligation and requires acceptance by the customer. The Company recognizes this revenue at a point in time based on when the performance obligation is met. The payment associated with achieving the performance obligation is generally commensurate with the Company’s effort or the value of the deliverable and is nonrefundable. The Company records the expenses related to these product development projects in research and development expense, in the periods such expenses were incurred.
The Company records royalty revenue from its manufacturing partner, Dialog, and such royalty revenue is recognized at a point in time based on shipments from Dialog to its customers.
The Company recognizes contract services revenue from Dialog over the period of time that the services are performed. The costs associated with this revenue are recognized as the services are performed and are included in cost of services revenue.
Research and Development
Research and development expenses are charged to operations as incurred. For internally developed patents, all patent application costs are expensed as incurred as research and development expense. Patent application costs, which are generally legal costs, are expensed as research and development costs until such time as the future economic benefits of such patents become more certain. The Company incurred research and development costs of $
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Note 3 – Summary of Significant Accounting Policies, continued
Stock-Based Compensation
The Company accounts for equity instruments issued to employees, board members and contractors in accordance with accounting guidance that requires awards to be recorded at their fair value on the date of grant and are amortized over the vesting period of the award. The Company recognizes compensation costs on a straight-line basis over the requisite service period of the award, which is typically the vesting term of the equity instrument issued.
Under the Company’s Employee Stock Purchase Plan (“ESPP”), employees may purchase a limited number of shares of the Company’s common stock at a
Income Taxes
Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of September 30, 2020,
Net Loss Per Common Share
Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and warrants (using the treasury stock method), the vesting of restricted stock units (“RSUs”) and performance stock units (“PSUs”) and the enrollment of employees in the ESPP. The computation of diluted loss per share excludes potentially dilutive securities of