watt-10q_20220930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 001-36379

ENERGOUS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		46-1318953
(State of incorporation)		(I.R.S. Employer Identification No.)

3590 North First Street, Suite 210, San Jose, CA 95134

(Address of principal executive office) (Zip code)

(408) 963-0200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $0.00001 par value

WATT

The Nasdaq Stock Market

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. Yes ☑ No ☐

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). Yes ☑ No ☐

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	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
Emerging growth company	☐

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 ☐ No ☑

As of November 7, 2022, there were 78,083,343 shares of our Common Stock, par value $0.00001 per share, outstanding.

ENERGOUS CORPORATION

FORM 10-Q

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

INDEX

PART I - FINANCIAL INFORMATION		3

Item 1. Financial Statements		3

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20

Item 3. Quantitative and Qualitative Disclosure About Market Risk		24

Item 4. Controls and Procedures		24

PART II – OTHER INFORMATION		25

Item 1. Legal Proceedings		25

Item 1A. Risk Factors		25

Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities		37

Item 3. Defaults Upon Senior Securities		37

Item 4. Mine Safety Disclosures		37

Item 5. Other Information		37

Item 6. Exhibits		37

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Energous Corporation

CONDENSED BALANCE SHEETS

	As of
	September 30, 2022			December 31, 2021
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	30,355,468		$	49,071,414
Accounts receivable, net		243,320			283,602
Inventory		164,426			–
Prepaid expenses and other current assets		1,105,254			874,886
Total current assets		31,868,468			50,229,902

Property and equipment, net		436,400			510,197
Operating lease right-of-use assets		2,139,949			618,985
Other assets		11,991			11,991
Total assets	$	34,456,808		$	51,371,075
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	893,783		$	1,205,957
Accrued expenses		1,524,241			1,523,317
Accrued severance expense		580,034			975,439
Operating lease liabilities, current portion		709,014			628,307
Deferred revenue		55,841			13,364
Total current liabilities		3,762,913			4,346,384

Operating lease liabilities, long-term portion		1,436,339			40,413
Total liabilities		5,199,252			4,386,797

Commitments and contingencies
Stockholders’ equity:
Preferred Stock, $0.00001 par value, 10,000,000 shares authorized at September 30, 2022 and December 31, 2021; no shares issued or outstanding at September 30, 2022 and December 31, 2021.		–			–
Common Stock, $0.00001 par value, 200,000,000 shares authorized at September 30, 2022 and December 31, 2021; 77,722,402 and 76,667,205 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively.		778			767
Additional paid-in capital		385,792,159			383,383,550
Accumulated deficit		(356,535,381	)		(336,400,039	)
Total stockholders’ equity		29,257,556			46,984,278
Total liabilities and stockholders’ equity	$	34,456,808		$	51,371,075

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

Energous Corporation

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021
Revenue	$	223,201		$	201,364		$	672,133		$	531,389
Costs and expenses:
Cost of revenue		420,060			–			894,693			–
Research and development		2,885,830			4,737,159			9,622,886			15,432,097
Sales and marketing		1,093,640			1,922,128			3,865,322			6,157,697
General and administrative		1,931,386			1,990,266			5,983,845			6,934,410
Severance expense		–			4,017,172			633,444			4,017,172
Total costs and expenses		6,330,916			12,666,725			21,000,190			32,541,376
Loss from operations		(6,107,715	)		(12,465,361	)		(20,328,057	)		(32,009,987	)
Other income:
Interest income		142,840			835			192,715			3,869
Total other income		142,840			835			192,715			3,869
Net loss	$	(5,964,875	)	$	(12,464,526	)	$	(20,135,342	)	$	(32,006,118	)
Basic and diluted loss per common share	$	(0.08	)	$	(0.20	)	$	(0.26	)	$	(0.51	)
Weighted average shares outstanding, basic and diluted		77,595,878			63,014,246			77,219,737			62,225,801

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

Energous Corporation

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

	Common Stock				Additional Paid-in			Accumulated			Total Stockholders'
	Shares		Amount		Capital			Deficit			Equity
Balance at January 1, 2022		76,667,205	$	767	$	383,383,550		$	(336,400,039	)	$	46,984,278
Stock-based compensation - options		–		–		10,313			–			10,313
Stock-based compensation - restricted stock units ("RSUs")		–		–		745,620			–			745,620
Stock-based compensation - employee stock purchase plan ("ESPP")		–		–		40,973			–			40,973
Issuance of shares for RSUs		387,823		4		(4	)		–			–
Proceeds from contributions to the ESPP		–		–		104,217			–			104,217
Net loss		–		–		–			(7,152,718	)		(7,152,718	)
Balance at March 31, 2022 (unaudited)		77,055,028	$	771	$	384,284,669		$	(343,552,757	)	$	40,732,683
Stock-based compensation - options		–		–		21,330			–			21,330
Stock-based compensation - RSUs		–		–		601,029			–			601,029
Stock-based compensation - ESPP		–		–		41,428			–			41,428
Issuance of shares for RSUs		215,746		2		(2	)		–			–
Proceeds from contributions to the ESPP		193,797		2		60,509			–			60,511
Net loss		–		–		–			(7,017,749	)		(7,017,749	)
Balance at June 30, 2022 (unaudited)		77,464,571	$	775	$	385,008,963		$	(350,570,506	)	$	34,439,232
Stock-based compensation - options		–		–		21,564			–			21,564
Stock-based compensation - RSUs		–		–		586,652			–			586,652
Stock-based compensation - performance share units ("PSUs")		–		–		67,922			–			67,922
Stock-based compensation - ESPP		–		–		22,084			–			22,084
Issuance of shares for RSUs		257,831		3		(3	)		–			–
Proceeds from contributions to the ESPP		–		–		84,977			–			84,977
Net loss		–		–		–			(5,964,875	)		(5,964,875	)
Balance at September 30, 2022 (unaudited)		77,722,402	$	778	$	385,792,159		$	(356,535,381	)	$	29,257,556

	Common Stock				Additional Paid-in			Accumulated			Total Stockholders'
	Shares		Amount		Capital			Deficit			Equity
Balance at January 1, 2021		61,292,412	$	614	$	344,024,638		$	(294,972,746	)	$	49,052,506
Stock-based compensation - RSUs		–		–		2,088,910			–			2,088,910
Stock-based compensation - ESPP		–		–		57,316			–			57,316
Issuance of shares for RSUs		627,412		6		(6	)		–			–
Proceeds from contributions to the ESPP		–		–		117,013			–			117,013
Net loss		–		–		–			(8,525,763	)		(8,525,763	)
Balance at March 31, 2021 (unaudited)		61,919,824	$	620	$	346,287,871		$	(303,498,509	)	$	42,789,982
Stock-based compensation - RSUs		–		–		1,471,826			–			1,471,826
Stock-based compensation - PSUs		–		–		2,695,847			–			2,695,847
Stock-based compensation - ESPP		–		–		60,651			–			60,651
Issuance of shares for RSUs		298,641		3		(3	)		–			–
Issuance of shares for PSUs		494,608		5		(5	)		–			–
Proceeds from contributions to the ESPP		155,064		2		120,232			–			120,234
Net loss		–		–		–			(11,015,829	)		(11,015,829	)
Balance at June 30, 2021 (unaudited)		62,868,137	$	630	$	350,636,419		$	(314,514,338	)	$	36,122,711
Stock-based compensation - options		–		–		284,994			–			284,994
Stock-based compensation - RSUs		–		–		1,010,990			–			1,010,990
Stock-based compensation - PSUs		–		–		843,741			–			843,741
Stock-based compensation - ESPP		–		–		76,814			–			76,814
Issuance of shares for RSUs		287,135		3		(3	)		–			–
Proceeds from contributions to the ESPP		–		–		124,801			–			124,801
Net loss		–		–		–			(12,464,526	)		(12,464,526	)
Balance at September 30, 2021 (unaudited)		63,155,272	$	633	$	352,977,756		$	(326,978,864	)	$	25,999,525

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

Energous Corporation

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended September 30,
	2022			2021
Cash flows from operating activities:
Net loss	$	(20,135,342	)	$	(32,006,118	)
Adjustments to reconcile net loss to:
Net cash used in operating activities:
Depreciation and amortization		200,995			195,361
Stock based compensation		2,158,915			8,591,089
Changes in operating lease right-of-use assets		550,372			594,089
Bad debt expense		30,000			10,850
Changes in operating assets and liabilities:
Accounts receivable		10,282			(111,683	)
Inventory		(164,426	)		–
Prepaid expenses and other current assets		(230,368	)		(72,074	)
Other assets		–			(10,381	)
Accounts payable		(312,174	)		(174,606	)
Accrued expenses		924			18,822
Accrued severance expense		(395,405	)		1,102,832
Operating lease liabilities		(594,703	)		(636,984	)
Deferred revenue		42,477			–
Net cash used in operating activities		(18,838,453	)		(22,498,803	)
Cash flows from investing activities:
Purchases of property and equipment		(127,198	)		(310,718	)
Net cash used in investing activities		(127,198	)		(310,718	)
Cash flows from financing activities:
Proceeds from contributions to employee stock purchase plan		249,705			362,048
Net cash provided by financing activities		249,705			362,048
Net decrease in cash and cash equivalents		(18,715,946	)		(22,447,473	)
Cash and cash equivalents - beginning		49,071,414			50,729,661
Cash and cash equivalents - ending	$	30,355,468		$	28,282,188
Supplemental disclosure of non-cash investing and financing activities:
Increase in operating lease right-of-use assets and operating lease liabilities	$	2,071,336		$	–
Common stock issued for RSUs	$	9		$	12
Common stock issued for PSUs	$	–		$	5

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

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® wireless power technology, consisting of proprietary semiconductor chipsets, software controls, hardware designs and antennas, that enables radio frequency (“RF”) based charging for electronic devices. The WattUp technology has a broad spectrum of capabilities, including near-field wireless charging and at-a-distance wireless charging at various distances. The Company believes its proprietary WattUp technologies are well suited for many applications, including building and home automation, electronic shelf labels, industrial IoT sensors, surface and implanted medical devices, tracking devices, hearables, wearables, consumer electronics and public safety applications. Potential future applications include smartphones, commercial and industrial robotics, as well as automotive solutions and other devices with charging requirements that would otherwise require battery replacement or a wired power connection.

Note 2 – Liquidity and Management Plans

During the three and nine months ended September 30, 2022, the Company recorded revenue of $223,201 and $672,133, respectively. During the three and nine months ended September 30, 2021, the Company recorded revenue of $201,364 and $531,389, respectively. During the three and nine months ended September 30, 2022, the Company recorded net losses of $5,964,875 and $20,135,342, respectively. During the three and nine months ended September 30, 2021, the Company recorded net losses of $12,464,526 and $32,006,118, respectively. Net cash used in operating activities was $18,838,453 and $22,498,803 for the nine months ended September 30, 2022 and 2021, respectively. The Company is currently meeting its liquidity requirements through the proceeds of securities offerings that raised net proceeds of $53,556,202 during 2020 and $27,043,751 during the fourth quarter of 2021, proceeds from contributions to the Company’s employee stock purchase plan (the “ESPP”), along with payments received from customers.

As of September 30, 2022, the Company had cash and cash equivalents of $30,355,468. The Company expects that cash and cash equivalents as of September 30, 2022, together with anticipated revenues, will be sufficient to fund the Company’s operations through November 2023.

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 will 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, the development of complementary technologies, competition and global market fluctuations.

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 (the “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, 2021 included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on March 23, 2022. The accounting policies used in preparing these unaudited condensed interim financial statements are consistent with those described in the Company’s December 31, 2021 audited financial statements.

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.

Note 3 – Summary of Significant Accounting Policies, continued

The Company’s significant estimates and assumptions include the valuation of stock-based compensation instruments, recognition of revenue, inventory valuation, the useful lives of long-lived assets, and the valuation allowance on deferred tax assets. 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 mai