Energous Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Note 8 – Fair Value Measurements

The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value:


	Balance as of September 30, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	16,578,659	$	–	$	–	$	16,578,659
Liabilities:
Warrant liability	$	–	$	–	$	450,000	$	450,000


	Balance as of December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	26,287,293	$	–	$	–	$	26,287,293
Liabilities:
Warrant liability	$	–	$	–	$	–	$	–

Note 8 – Fair Value Measurements, continued

There were no transfers among Level 1, Level 2, or Level 3 categories during the periods presented.

2023 Warrants

The Company utilizes a Monte Carlo simulation model for the 2023 Warrants at each reporting period, with changes in fair value recognized in the statements of operations. The estimated fair value of the 2023 Warrant liability is determined using Level 3 inputs. Inherent in a Monte Carlo simulation model are assumptions related to expected share-price volatility, expected life, risk-free interest rate, and dividend yield.

The key inputs into the Monte Carlo simulation model for the 2023 Warrants are as follows:


	At March 31, 2023			At June 30, 2023			At September 30, 2023
Share price	$	10.80		$	4.80		$	1.60
Exercise price	$	8.00		$	8.00		$	1.66
Term (in years)		6.0			5.7			5.5
Volatility		65	%		65	%		75	%
Risk-free rate		3.6	%		4.1	%		4.6	%
Dividend yield		0	%		0	%		0	%

The decrease in the fair value of the 2023 Warrant liability was determined to be $788,000 and $2,685,000 during the three and nine months ended September 30, 2023, respectively (see Note 7 – Warrant Liability).

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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