WATT 10-Q
Energous Corp (WATT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
COMMISSION FILE NUMBER
(Exact name of registrant as specified in its charter)
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(State of incorporation) | (I.R.S. Employer Identification No.) |
(Address of principal executive office) (Zip code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading |
| Name of each exchange on which registered |
The |
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 | ☐ | 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
As of May 9, 2025, there were
ENERGOUS CORPORATION
FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 2025
INDEX
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Energous Corporation
BALANCE SHEETS
(in thousands, except share and per share amounts)
As of | ||||||
| March 31, 2025 |
| December 31, 2024 | |||
| (unaudited) |
| (1) | |||
ASSETS |
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Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Accounts receivable, net |
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Inventory |
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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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Total assets | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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Current liabilities: |
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Accounts payable | $ | | $ | | ||
Accrued expenses |
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Accrued severance expense |
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Warrant liability |
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Operating lease liabilities, current portion |
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Short-term loan payable, net | | | ||||
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 (Note 8) |
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Stockholders’ equity (deficit): |
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Preferred Stock, $ |
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Common Stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
| ( |
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Total stockholders’ equity (deficit) |
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| ( | ||
Total liabilities and stockholders’ equity (deficit) | $ | | $ | | ||
| (1) |
The accompanying notes are an integral part of these condensed financial statements.
3
Energous Corporation
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share and per share amounts)
| For the Three Months Ended March 31, | |||||
2025 |
| 2024 | ||||
Revenue | $ | | $ | | ||
Cost of revenue |
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Gross profit (loss) | | ( | ||||
Operating expenses: | ||||||
Research and development |
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Sales and marketing |
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General and administrative |
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Severance expense |
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Expenses from abandoned financing transaction | | — | ||||
Total operating expenses |
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Loss from operations |
| ( |
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Other income (expense), net: |
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Change in fair value of warrant liability |
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Interest income (expense), net |
| ( |
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Total other income (expense), net |
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Net loss | $ | ( | $ | ( | ||
Basic and diluted loss per common share | $ | ( | $ | ( | ||
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 (DEFICIT)
(Unaudited)
(in thousands, except for share amounts)
Additional | Total | |||||||||||||
| Common Stock |
| Paid-in |
| Accumulated |
| Stockholders’ | |||||||
Shares |
| Amount | Capital | Deficit | Equity (Deficit) | |||||||||
Balance as of January 1, 2025 | | $ | | $ | | $ | ( | $ | ( | |||||
Stock-based compensation - restricted stock units (“RSUs”) | — | — | | — | | |||||||||
Issuance of shares for RSUs | | — | — | — | — | |||||||||
Shares issued to vendor for services | | — | | — | | |||||||||
Issuance of shares in an at-the-market (“ATM”) placement, net of $ | | — | | — | | |||||||||
Net loss | — | — | — | ( | ( | |||||||||
Balance as of March 31, 2025 |
| | $ | | $ | | $ | ( | $ | | ||||
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| Additional |
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| Total | ||||||||
Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||
Shares |
| Amount | Capital | Deficit | Equity (Deficit) | |||||||||
Balance as of January 1, 2024 | | $ | | $ | | $ | ( | $ | | |||||
Stock-based compensation - options |
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Stock-based compensation - RSUs |
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Stock-based compensation - employee stock purchase plan (“ESPP”) |
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Issuance of shares for RSUs |
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| — | ||||
Proceeds from contributions to the ESPP |
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Issuance of shares in an ATM placement, net of $ |
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Issuance of shares in a sale of common stock, pre-funded warrants and warrants, net of $ |
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Net loss |
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| — |
| — |
| ( |
| ( | ||||
Balance as of March 31, 2024 | | $ | | $ | | $ | ( | $ | | |||||
The accompanying notes are an integral part of these condensed financial statements.
5
Energous Corporation
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
| For the three months ended March 31, | |||||
2025 |
| 2024 | ||||
Cash flows from operating activities: |
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Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Stock-based compensation |
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Accrued interest | | — | ||||
Amortization of short-term loan fees | | — | ||||
Change in fair value of warrant liability |
| ( |
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Changes in operating assets and liabilities: |
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Accounts receivable |
| ( |
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Inventory |
| ( |
| ( | ||
Prepaid expenses and other current assets |
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Operating lease right-of-use (“ROU”) assets | | | ||||
Accounts payable |
| ( |
| ( | ||
Accrued expenses |
| ( |
| ( | ||
Accrued severance expense |
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Operating lease liabilities |
| ( |
| ( | ||
Deferred revenue |
| ( |
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Net cash used in operating activities |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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Net cash used in investing activities |
| ( |
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Cash flows from financing activities: |
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Repayments of short-term loan | ( | — | ||||
Payments from financed insurance premiums | ( | — | ||||
Net proceeds from an ATM offering |
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Net proceeds from a sale of common stock and warrant issuance |
| — |
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Proceeds from contributions to the ESPP |
| — |
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Net cash provided by financing activities |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
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| ( | ||
Cash, cash equivalents and restricted cash - beginning |
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Cash, cash equivalents and restricted cash - ending | $ | | $ | | ||
Supplemental disclosure of cash flow information: | ||||||
Interest paid | $ | | $ | — | ||
Supplemental disclosure of non-cash investing and financing activities: |
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Decrease in operating lease ROU assets and operating lease liabilities from lease amendment | $ | — | $ | | ||
Increase in operating lease ROU assets and operating lease liabilities from lease modification | $ | | $ | — | ||
Increase in ROU assets from shares issued to landlord | $ | | $ | — | ||
Accrued interest included in short-term loan payable | $ | | $ | — | ||
The accompanying notes are an integral part of these condensed financial statements.
6
ENERGOUS CORPORATION
Notes to the Financial Statements
Note 1 - Business Organization, Nature of Operations
Description of Business
Energous Corporation d/b/a Energous Wireless Power Solutions (the “Company”) has developed a scalable, over-the-air Wireless Power Network (“WPN”) technology that integrates advanced semiconductor chipsets, software controls, hardware designs, and antenna systems to enable radio frequency (“RF”)-based charging for Internet of Things (“IoT”) devices. The Company’s WPN technology provides a comprehensive suite of capabilities designed to power the next generation of wireless energy networks, seamlessly delivering power and data across diverse, battery-free device ecosystems. This innovation enhances operational visibility, control, and intelligent business automation.
With a patent portfolio exceeding
The Company believes its technology represents a breakthrough in wireless power delivery, offering a differentiated approach to charging IoT devices via RF technology. To date, the Company has developed and released multiple transmitter and receiver solutions. The Company’s transmitters vary in form factor, power specifications, and operating frequencies, while the Company’s receivers are engineered to support a wide range of wireless charging applications across multiple device categories. including:
Device Type | Application |
RF Tags | Cold Chain, Asset Tracking, Medical IoT |
IoT Sensors | Cold Chain, Logistics, Asset Tracking |
Electronic Shelf Labels | Retail and Industrial IoT |
The first WPN-enabled end product featuring the Company’s technology entered the market in 2019. In the fourth quarter of 2021, the Company commenced shipments of its first at-a-distance wireless PowerBridge transmitter systems for commercial IoT applications and proof-of-concept deployments. As the Company continues to innovate its technology applications, the Company anticipates the release of additional wireless power-enabled products.
Note 2 – Liquidity and Management Plans
During the three months ended March 31, 2025 and 2024, the Company recorded revenue of $
As of March 31, 2025, the Company had cash and cash equivalents of $
As the Company gains traction in the market with its new technology and continues to invest capital in transitioning and scaling the business from research and development of new technologies to commercial production, 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 financing, 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. If the Company is unsuccessful in implementing this plan, the Company will be required to make further cost and expense reductions or modifications to its on-going and strategic plans.
7
Note 2 – Liquidity and Management Plans, continued
The market for products using the Company’s technology is broad and evolving, 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 unaudited condensed financial statements 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”). Certain information and note disclosures have been condensed or omitted pursuant to such rules and regulations. The unaudited condensed financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair presentation of the period presented. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for other future periods.
These interim unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 27, 2025 (“the 2024 Annual Report”). The accounting policies used in preparing these interim unaudited condensed financial statements are consistent with those described in the 2024 Annual Report.
Reclassifications
Certain reclassifications have been made to the fiscal year 2024 financial statements to conform to the 2025 presentation. The Company reclassified certain expenses between research and development and general and administrative expenses. The amounts were not considered material to the condensed financial statements. The reclassifications had no impact on total assets, total liabilities, or stockholders’ equity (deficit).
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, inventory valuation, fair value of warrant liabilities 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, Cash Equivalents and Restricted Cash
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.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
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Note 3 – Summary of Significant Accounting Policies, continued
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as a liability at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the warrants is estimated using an appropriate valuation model. Such warrant classification is also subject to re-evaluation at each reporting period.
Offering costs associated with warrants classified as liabilities are expensed as incurred and are presented as offering cost related to warrant liability in the statement of operations. Offering costs associated with the sale of warrants classified as equity are charged against the proceeds received.
Fair Value
The Company follows ASC 820, “Fair Value Measurements” (“ASC 820”), which establishes a common definition of fair value to be applied when US GAAP requires the use of fair value, establishes a framework for measuring fair value, and requires certain disclosure about such fair value measurements.
ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:
| ● | Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities to which the Company has access at a measurement date. |
| ● | Level 2: Observable inputs other than Level 1 quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in an active market, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
| ● | Level 3: Unobservable inputs for which little or no market data exists and for which the Company must develop its own assumptions regarding the assumptions that market participants would use in pricing the asset or liability, including assumptions regarding risk. |
Because of the uncertainties inherent in the valuation of assets or liabilities for which there are no observable inputs, those estimated fair values may differ significantly from the values that may have been used had a ready market for the assets or liabilities existed.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, cash equivalents, prepaid expenses and other current assets, and accounts payable and accrued expenses, are an approximate of their fair values because of the short maturity of these instruments. The carrying amounts of the Company’s short-term debt and lease liabilities approximate fair value due to the market interest rates that these obligations bear and interest rates currently available to the Company. The Company’s warrant liability recognized at fair value on a recurring basis is a level 3 measurement (see Note 13 – Fair Value Measurements).
Revenue Recognition
The Company follows ASC 606, “Revenue from Contracts with Customers” (“Topic 606”).
In accordance with Topic 606, the Company recognizes revenue using the following five-step approach:
| 1. | Identify the contract with a customer. |
| 2. | Identify the performance obligations in the contract. |
9
Note 3 – Summary of Significant Accounting Policies, continued
| 3. | Determine the transaction price of the contract. |
| 4. | Allocate the transaction price to the performance obligations in the contract. |
| 5. | Recognize revenue when or as the performance obligations are satisfied. |
The Company’s revenue consists of its single segment of wireless charging system solutions. The wireless charging system revenue consists of revenue from product development projects and production-level systems. During the three months ended March 31, 2025 and 2024, the Company recognized $
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 the point in time at which 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. Any deferred revenue is recognized upon achievement of the performance obligation or expiration of a support agreement.
Accounts Receivable
The Company reviews its receivables for collectibility based on historical loss patterns, aging of the receivables, and assessments of specific identifiable client accounts considered at risk or uncollectible and provides allowances for potential credit losses, as needed. The Company also considers any changes to the financial condition of its clients and any other external market factors that could impact the collectibility of the receivables in the determination of the allowance for credit losses. Based on these assessments, the Company did
The Company follows ASC Topic 310, Receivables (“Topic 310”) to account for transactions related to factoring accounts receivable. The Company did not have a factoring agreement during the three months ended March 31, 2025 and 2024.
Inventory
Inventory is stated at the lower of cost or net realizable value. Net realizable value is calculated at the end of each reporting period and adjustment, if needed, is made. At the point of loss recognition, a new lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in the new cost basis.
Research and Development
Research and development expenses are charged to operations as incurred. The Company incurred research and development costs of $
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 amortized over the vesting period of the award. The Company amortizes 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 ESPP, employees purchased a limited number of shares of the Company’s common stock at a
10
Note 3 – Summary of Significant Accounting Policies, continued
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC Topic 740, Income Taxes (“ASC 740”). Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between financial statement carrying amounts and the tax basis of existing assets and liabilities and net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply in the years in which those tax assets and liabilities are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company continues to assess the need for a valuation allowance on the deferred tax assets by evaluating both positive and negative evidence that may exist. Any adjustment to the valuation allowance on deferred tax assets would be recorded in the statements of income for the period that the adjustment is determined to be required.
The Company accounts for uncertain tax position in accordance with ASC 740. 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. The guidance from ASC 740, “Income Taxes” also discusses the classification of related interest and penalties on income taxes. The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense.
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) and the vesting of RSUs and PSUs. The computation of diluted loss per share excludes potentially dilutive securities of
For the three months ended March 31, | ||||
| 2025 |
| 2024 | |
Warrants issued to investors 1 | | | ||
Options to purchase common stock | — | | ||
RSUs | | | ||
Total potentially dilutive securities | | | ||
For the three months ended March 31, 2025, the table above includes
1 The weighted average number of common shares outstanding as of March 31, 2024 included the weighted average effect of the
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Note 3 – Summary of Significant Accounting Policies, continued
Property and Equipment
The Company currently uses the following expected life terms for depreciating property and equipment: computer software –
Leases
The Company determines if an arrangement is a lease at the inception of the arrangement. The Company applies the short-term lease recognition exemption and recognizes lease payments in profit or loss at lease commencement for facility or equipment leases that have a lease term of 12 months or less and do not include a purchase option whose exercise is reasonably certain. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities.
ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are measured and recorded at the later of the adoption date, January 1, 2019, or the service commencement date based on the present value of lease payments over the lease term. The Company uses the implicit interest rate when readily determinable; however, most leases do not establish an implicit rate, so the Company uses an estimate of the incremental borrowing rate based on the information available at the time of measurement. Lease expense for lease payments is recognized on a straight-line basis over the lease term. See Note 8 – Commitments and Contingencies, Operating Leases for further discussion of the Company’s operating leases.
Segments
The Company has
Recent Accounting Pronouncements, Not Yet Adopted
In December 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-09, “Income Taxes” (“Topic 740”), Improvements to Income Tax Disclosures. This standard is intended to enhance the transparency and usefulness of income tax disclosures to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. This standard is effective for the Company’s annual fiscal period beginning January 1, 2025. The Company does not believe that the adoption of this standard will have a material impact on the Company’s financial statements and related disclosures.
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU requires the disaggregation of certain expenses in the notes to the financial statements, to provide enhanced transparency into the expense captions presented on the face of the income statement. This ASU is effective on a prospective basis for fiscal years beginning after December 15, 2026 and for interim periods beginning after December 15, 2027, with early adoption permitted. This ASU may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of the new standard on the financial statements and related disclosures.
Management has reviewed other recently issued accounting pronouncements issued or proposed by the FASB and does not believe any of these accounting pronouncements has or will have a material impact on the condensed financial statements.
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Note 4 – Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
Balance as of | ||||||
March 31, 2025 | December 31, 2024 | |||||
Deposit with contract manufacturer |
| $ | |
| $ | |
Prepaid and deferred financing costs |
| — |
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Interest receivable |
| |
| — | ||
Prepaid subscriptions |
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Prepaid insurance |
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Prepaid software and support |
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Tradeshow deposits |
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Other deposits |
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Total | $ | | $ | | ||
Note 5 – Inventory
Below is a summary of the Company’s inventory as of March 31, 2025 and December 31, 2024 (in thousands):
| Balance as of | |||||
| March 31, 2025 |
| December 31, 2024 | |||
Raw materials | $ | | $ | | ||
Work-in-process |
| — |
| — | ||
Finished goods | | — | ||||
Total | $ | | $ | | ||
Note 6 – Property and Equipment
Property and equipment are as follows (in thousands):
Balance as of | ||||||
March 31, 2025 | December 31, 2024 | |||||
Computer software |
| $ | |
| $ | |
Computer hardware |
| |
| | ||
Furniture and fixtures |
| |
| | ||
Leasehold improvements |
| |
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| |
| | |||
Less – accumulated depreciation |
| ( |
| ( | ||
Total property and equipment, net | $ | | $ | | ||
The Company did
13
Note 7 – Accrued Expenses
Accrued expenses consist of the following (in thousands):
| Balance as of | |||||
| March 31, 2025 |
| December 31, 2024 | |||
Accrued compensation | $ | | $ | | ||
Accrued legal expenses |
| |
| | ||
Accrued interest | | | ||||
Other accrued expenses |
| |
| | ||
Total | $ | | $ | | ||
Note 8 – Commitments and Contingencies
Operating Leases
San Jose Lease
On May 20, 2022, the Company signed a lease amendment to the existing lease for its office space at its corporate headquarters in San Jose, California, extending the term of the lease for an additional
On March 19, 2025, the Company signed an amendment to the existing lease for its office space at its corporate headquarters in San Jose, California, relocating to a smaller suite within the same building and extending the lease through December 31, 2027. The Company agreed to issue
Operating Lease Commitments
The Company follows ASC 842, “Leases” (“Topic 842”) and recognizes the required ROU assets and operating lease liabilities on its balance sheet. The Company anticipates having future total lease payments of $
A reconciliation of undiscounted cash flows to lease liabilities recognized as of March 31, 2025 is as follows (in thousands):
For the year ending December 31, |
| Amount | |
2025 (Remaining nine months) |
| $ | |
2026 |
| | |
2027 | | ||
Total future lease payments |
| | |
Present value discount (8.0% weighted average) |
| ( | |
Total operating lease liabilities | $ | | |
14
Note 8 – Commitments and Contingencies, continued
Hosted Design Software Agreement
In June 2021, the Company entered into an electronic design automation software in a hosted environment license agreement with a term of
Litigations, Claims, and Assessments
The Company is from time to time involved in various disputes, claims, liens and litigation matters arising in the normal course of business. While the outcome of these disputes, claims, liens and litigation matters cannot be predicted with certainty, after consulting with legal counsel, management does not believe that the outcome of these matters will have a material adverse effect on the Company’s combined financial position, results of operations or cash flows.
MBO Bonus Plan and 2024 Bonus Plan
On May 30, 2024, the Board of Directors (“Board”), on the recommendation of the Compensation Committee, approved the 2024 Corporate Bonus Plan (the “2024 Bonus Plan”), whereby employees’ bonuses will be based upon achievement of performance objectives set by the Compensation Committee and paid annually. Employees must be continuously employed throughout the applicable performance period and payment date and achieve the performance objectives.
Under the 2024 Bonus Plan, the Compensation Committee is responsible for selecting the amounts of potential bonuses for executive officers and vice presidents, the performance metrics used to determine whether any such bonuses will be paid and determining whether those performance metrics have been achieved. The Company did
On February 21, 2025, the Board, on the recommendation of the Compensation Committee, approved the 2025 Corporate Bonus Plan (the “2025 Bonus Plan”), whereby employees’ bonuses will be based upon achievement of performance objectives set by the Compensation Committee and paid annually. Employees must be continuously employed throughout the applicable performance period and payment date and achieve the performance objectives.
Under the 2025 Bonus Plan, the Compensation Committee is responsible for selecting the amounts of potential bonuses for executive officers and vice presidents and defining the annual performance metrics against which the bonus compensation will be measured. The level of achievement against pre-defined performance metrics is used to determine whether any such bonuses will be paid and whether those performance metrics have been satisfactorily achieved. The Company did
Severance and Change in Control Agreement
On May 30, 2024, the Compensation Committee approved a new form of Severance Agreement and Change in Control Agreement (“Severance Agreement”) that the Company may enter into with executive officers and vice presidents (each, an “Executive”). Under the Severance Agreement, if an Executive party thereto is terminated without cause or in a qualifying change in control termination, the Company agrees to pay the Executive to
15
Note 8 – Commitments and Contingencies, continued
Executive Transition – Cesar Johnston
On March 26, 2024, the Company announced that Cesar Johnston was no longer serving as President and Chief Executive Officer of the Company effective March 24, 2024. In connection with his cessation as an officer of the Company, Mr. Johnston was entitled to receive the benefits and payments set forth in the Amended and Restated Severance and Change in Control Agreement, dated December 6, 2021 (“Johnston Severance Agreement”), between the Company and Mr. Johnston. Accordingly, Mr. Johnston received (a)
As of March 31, 2025, the Company had accrued unpaid severance expense related to COBRA reimbursements of approximately $
Note 9 – Short-term Debt
Financing for Insurance Premiums
On April 5, 2024, the Company financed $
Agile Subordinated Loan Agreement
Effective October 1, 2024, the Company entered into a subordinated business loan agreement (the “Original Loan Agreement”) with Agile Capital Funding, LLC and Agile Lending, LLC (collectively, the “Lender”), which provided for an initial term loan of $
Effective November 5, 2024, the Company entered into an amended subordinated business loan agreement with the Lender (the “Amended Loan Agreement”) to refinance the Original Term Loan. The Amended Loan Agreement provides for a new term loan of $
As of March 31, 2025, the Company had a short-term loan payable balance of approximately $
16
Note 10 – Capital Stock and Warrants
Authorized Capital
The holders of the Company’s common stock are entitled to
Financing
On November 15, 2021, the Company filed a shelf registration statement on Form S-3 with the SEC, which became effective on December 16, 2021. This shelf registration statement allowed the Company to sell, from time to time, any combination of debt or equity securities described in the registration statement up to aggregate proceeds of $
The Company allocated the proceeds received first to the 2023 Warrants based on the fair value of the 2023 Warrants as determined at initial measurement, with the remaining proceeds allocated to the shares of common stock (see Note 12 – Warrant Liability and Note 13 – Fair Value Measurements). Pursuant to the terms of the 2023 Warrants, the exercise price was adjusted to $
On February 15, 2024, the Company entered into a securities purchase agreement with an institutional investor, providing for the issuance and sale by the Company in a registered direct offering (the “2024 Offering ”) pursuant to a prospectus supplement dated February 15, 2024, of (i)
On June 21, 2024, the Company filed a prospectus supplement covering the offering, issuance and sale of up to $
On December 30, 2024, the Company filed a prospectus supplement (“December 2024 Prospectus Supplement”) to cover the issuance and sale of an additional $
On January 6, 2025, the Company filed a prospectus supplement (“January 2025 Prospectus Supplement”) to cover the issuance and sale of an additional $
17
Note 10 – Capital Stock and Warrants, continued
On February 13, 2025, the Company filed a prospectus supplement (“February 2025 Prospectus Supplement”) to cover the issuance and sale of an additional $
Regulation A Offering
On October 11, 2024, the Company filed a Regulation A Offering Statement on Form 1-A with an offering of a maximum of
On March 11, 2025, the Company withdrew the Regulation A Offering.
Common Stock Outstanding
Common Stock Reserved for Future Issuance
The Company has reserved the following shares of common stock for future issuance:
| March 31, 2025 |
| March 31, 2024 | |||
Stock options outstanding |
| — |
| | ||
RSUs outstanding |
| |
| | ||
Warrants outstanding |
| |
| | ||
Shares available for issuance under the 2013 Equity Incentive Plan |
| — |
| | ||
Shares available for issuance under the 2014 Non-employee Equity Compensation Plan |
| — |
| | ||
Shares available for issuance under the 2015 Performance Share Unit Plan |
| — |
| | ||
Shares available for issuance under the 2017 Equity Inducement Plan |
| — |
| | ||
Shares available for issuance under the 2024 Equity Incentive Plan | | — | ||||
Shares available for issuance under the Employee Stock Purchase Plan |
| — |
| | ||
Total |
| |
| | ||
18
Note 11 – Stock-Based Compensation
Equity Incentive Plans
2017 Equity Inducement Plan
On December 28, 2017, the Board approved the 2017 Equity Inducement Plan. Under the 2017 Equity Inducement Plan, the Board reserved
On July 20, 2022, the Board increased the number of shares of common stock reserved and available for issuance under the 2017 Equity Inducement Plan by
2024 Equity Incentive Plan
On June 12, 2024, the Energous Corporation 2024 Equity Incentive Plan (the “2024 Equity Incentive Plan”) was approved by stockholders for the issuance of equity incentive awards to eligible participants, which replaced the following equity plans of the Company: (i) the 2013 Equity Incentive Plan, (ii) 2014 Non-Employee Equity Compensation Plan, (iii) the Performance Share Unit Plan and (iv) the 2017 Equity Inducement Plan (collectively, the “Prior Equity Plans”). All existing outstanding awards remain outstanding under the Prior Equity Plans, and an additional
As of March 31, 2025, there are
Employee Stock Purchase Plan
The Company terminated the ESPP on January 21, 2025. The final shares purchased under the ESPP were deemed delivered on December 31, 2024.
Stock Option Activity
In February 2022, the Board granted the Company’s former Chief Executive Officer
19
Note 11 – Stock-Based Compensation, continued
Restricted Stock Units (“RSUs”)
During the three months ended March 31, 2025, the Compensation Committee granted directors an aggregate of
During the three months ended March 31, 2025, the Board granted employees an aggregate of
As of March 31, 2025, the unamortized fair value of the RSUs was $
|
| Weighted | |||
Average | |||||
Grant | |||||
Date Fair | |||||
| Total |
| Value | ||
Outstanding at January 1, 2025 | | $ | | ||
RSUs granted | | | |||
RSUs vested | ( | | |||
RSUs forfeited | ( | | |||
Outstanding at March 31, 2025 |
| | $ | | |
Employee Stock Purchase Plan
On January 21, 2025, the Company terminated its ESPP. No transactions were recorded under the ESPP during 2025. During the year ended December 31, 2024, there were two offering periods. The first offering period began on January 1, 2024 and concluded on June 30, 2024. The second offering period began on July 1, 2024 and concluded on December 31, 2024.
The weighted average grant-date fair value of the purchase option for each designated share purchased under the ESPP was approximately $
The Company estimated the fair value of ESPP purchase options granted during the three months ended March 31, 2024 using the Black-Scholes option pricing model. The fair values of ESPP purchase options granted were estimated using the following assumptions:
| For the three months ended March 31, |
| ||||
| 2025 |
| 2024 |
| ||
Stock price | — | $ | | |||
Dividend yield | — |
| | % | ||
Expected volatility | — |
| | % | ||
Risk-free interest rate | — |
| | % | ||
Expected life | — |
| ||||
20
Note 11 – Stock-Based Compensation, continued
Stock-Based Compensation Expense
The total amount of stock-based compensation was reflected within the statements of operations as (in thousands):
| Three Months Ended March 31, | |||||
| 2025 |
| 2024 | |||
Research and development | $ | | $ | | ||
Sales and marketing |
| |
| | ||
General and administrative |
| |
| | ||
Severance expense |
| |
| | ||
Cost of revenue | | — | ||||
Total | $ | | $ | | ||
Note 12 – Warrant Liability
2023 Warrants
In March 2023, the Company issued
In the event of certain transactions such as a merger, consolidation, tender offer, reorganization, or other change in control, if holders of common stock are given any choice as to the consideration to be received, the holder of each 2023 Warrant shall be given the same choice of alternate consideration. In the event of certain transactions that are not within the Company’s control, such as a merger, consolidation, tender offer, reorganization, or other change in control of the Company, each holder of a 2023 Warrant shall be entitled to receive the same form of consideration at the Black Scholes value of the unexercised portion of the 2023 Warrant that is being offered and paid to holders of common stock, including the option to exercise the 2023 Warrants on a “cashless basis”.
If the Company issues additional shares of common stock or equity-linked securities for a consideration per share less than the Exercise Price, then such Exercise Price will be reduced to a new lower price pursuant to the terms of the 2023 Warrants. Additionally, if the Exercise Price of any outstanding derivative securities is modified by the Company such that such security’s modified exercise price is below the Exercise Price, the Exercise Price will adjust downward pursuant to the terms of the 2023 Warrant. This provision would not apply for stock or stock equivalents which fall under shares that qualify for exempt issuance, such as if the Company adjusted the option exercise price for an option granted to an employee, officer, or director.
The Company accounted for the 2023 Warrants in accordance with the derivative guidance contained in ASC 815-40, as the warrants did not meet the criteria for equity treatment. The Company believes that the adjustments to the Exercise Price is based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under ASC 815-40, and thus the 2023 Warrants are not eligible for an exception from derivative accounting. As such, the 2023 Warrants were initially measured at fair value and recorded as a liability in the amount of $
21
Note 13 – 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 March 31, 2025 and December 31, 2024 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):
| Balance as of March 31, 2025 | |||||||||||
| Level 1 |
| Level 2 |
| Level 3 |
| Total | |||||
Assets: |
|
|
|
|
|
|
|
| ||||
Cash equivalents | $ | | $ | — | $ | — | $ | | ||||
Liabilities: |
|
|
|
|
|
| ||||||
Warrant liability | $ | — | $ | — | $ | | $ | | ||||
| Balance as of December 31, 2024 | |||||||||||
| Level 1 |
| Level 2 |
| Level 3 |
| Total | |||||
Assets: |
|
|
|
|
|
|
|
| ||||
Cash equivalents | $ | | $ | — | $ | — | $ | | ||||
Liabilities: |
|
|
|
|
|
|
|
| ||||
Warrant liability | $ | — | $ | — | $ | | $ | | ||||
There were
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:
| As of March 31, |
| As of March 31, | ||||
2025 | 2024 | ||||||
Share price | $ | | $ | | |||
Exercise price | $ | | $ | | |||
Term (in years) | |||||||
Volatility |
| | % | | % | ||
Risk-free rate | | % | | % | |||
Dividend yield | | % | | % | |||
The change in the fair value of the 2023 Warrant liability was a decrease of $
| For the three months ended March 31, | |||||
(in thousands) |
| 2025 |
| 2024 | ||
Beginning value | $ | | $ | | ||
Change in value of warrant liability |
| ( |
| | ||
Ending value | $ | | $ | | ||
Note 14 – Customer Concentrations
22
Note 15 – Subsequent Events
From April 1, 2025 to May 9, 2025, the Company settled sales of
On April 16, 2025, the Company’s Board approved an amendment and restatement of the 2024 Equity Incentive Plan, which is subject to stockholder approval at the 2025 annual meeting of stockholders, to, among other things, increase the number of shares reserved for issuance for an additional
On April 16, 2025, the Company’s Board approved an amendment to the Company's second amended and restated certificate of incorporation, which is subject to stockholder approval at the 2025 annual meeting of stockholders, to effect a reverse stock split of the common stock at a ratio ranging from any whole number between1-for- and 1-for-, as determined by the Board in its discretion.
23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
As used in this Quarterly Report on Form 10-Q (this “Report”), unless the context otherwise requires the terms “we,” “us,” “our,” and “Energous” refer to Energous Corporation d/b/a Energous Wireless Power Solutions, a Delaware corporation. This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are intended to be covered by the “safe harbor” created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “would,” “should,” “could,” “seek,” “intend,” “plan,” “continue,” “estimate,” “anticipate” or other comparable terms. All statements other than statements of historical facts included in this report regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expectations with respect to future financings; expectations for revenues, liquidity, cash flows and financial performance; and expectations regarding the release of additional wireless power-enabled products. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Forward-looking statements relate to the future and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and generally outside of our control, so actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others: our ability to develop commercially feasible technology; timing of customer implementations of our technology in consumer products; timing and receipt of regulatory approvals in the United States and internationally; our ability to find and maintain contract manufacturing partners; market acceptance of our technology; competition in our industry; our ability to protect our intellectual property; our ability to maintain or improve our financial position, cash flows, and liquidity and our expected financial needs; and other risks and uncertainties described in the Risk Factors and in Management’s Discussion and Analysis sections of our most recently filed Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q, including this Report. We undertake no obligation to publicly update any of our forward-looking statements, whether as a result of new information, future developments or otherwise.
Overview
We have developed a scalable, over-the-air Wireless Power Network (“WPN”) technology that integrates advanced semiconductor chipsets, software controls, hardware designs, and antenna systems to enable radio frequency (“RF”)-based charging for Internet of Things (“IoT”) devices. Our WPN technology provides a comprehensive suite of capabilities designed to power the next generation of wireless energy networks, seamlessly delivering power and data across diverse, battery-free device ecosystems. This innovation enhances operational visibility, control, and intelligent business automation.
With a patent portfolio exceeding 250 patents, our solutions support both near-field and at-a-distance wireless charging, supplying power at multiple levels across varying distances, as well as expertise in advanced receiver technology. By enabling continuous wireless power transmission, our transmitter and receiver technologies facilitate the use of battery-free IoT devices, transforming asset and inventory tracking across multiple industries. Key applications include retail sensors, electronic shelf labels, asset trackers, air quality monitors, motion detectors, and other smart monitoring solutions.
We believe our technology represents a breakthrough in wireless power delivery, offering a differentiated approach to charging IoT devices via RF technology. To date, we have developed and released multiple transmitter and receiver solutions. Our transmitters vary in form factor, power specifications, and operating frequencies, while our receivers are engineered to support a wide range of wireless charging applications across multiple device categories. including:
Device Type | Application |
RF Tags | Cold Chain, Asset Tracking, Medical IoT |
IoT Sensors | Cold Chain, Logistics, Asset Tracking |
Electronic Shelf Labels | Retail and Industrial IoT |
24
The first WPN-enabled end product featuring our technology entered the market in 2019. In the fourth quarter of 2021, we commenced shipments of its first at-a-distance wireless PowerBridge transmitter systems for commercial IoT applications and proof-of-concept deployments. As we continue to innovate our technology applications, we anticipate the release of additional wireless power-enabled products.
Critical Accounting Policies and Estimates
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“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.
Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. Although we believe 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.
Going Concern. Accounting Standards Codification (“ASC”) 205-40 Presentation of Financial Statements - Going Concern, requires management to assess our ability to continue as a going concern. In accordance with this guidance, we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued. We have determined that there was substantial doubt about our ability to continue as a going concern, but it was alleviated based on financing received in 2025, as well as current operating levels and further cost reductions implemented in the first quarter of 2025. We anticipate cash flows generated from operations and our cash and cash equivalents will be sufficient to meet our liquidity needs for at least the next 12 months.
Determining the extent to which conditions or events raise substantial doubt about our ability to continue as a going concern requires significant judgment and estimation by us. Our significant estimates related to this analysis may include identifying business factors used in the forecasted financial results and liquidity. We believe that the estimated values used in our going concern analysis are based on reasonable assumptions. However, such assumptions are inherently uncertain and actual results could differ materially from those estimates.
Warrants. We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”), and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as a liability at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the warrants is estimated using an appropriate valuation model. Such warrant classification is also subject to re-evaluation at each reporting period.
Offering costs associated with warrants classified as liabilities are expensed as incurred and are presented as offering cost related to warrant liability in the statement of operations. Offering costs associated with the sale of warrants classified as equity are charged against proceeds.
Revenue Recognition. We follow ASC 606, “Revenue from Contracts with Customers” (“Topic 606”). In accordance with Topic 606, we recognize revenue using the following five-step approach:
| 1. | Identify the contract with the customer. |
| 2. | Identify the performance obligations in the contract. |
25
| 3. | Determine the transaction price of the contract. |
| 4. | Allocate the transaction price to the performance obligations of the contract. |
| 5. | Recognize revenue when or as the performance obligations are satisfied. |
Our revenue consists of its single segment of wireless charging system solutions. The wireless charging system revenue consists of revenue from product development projects and production-level systems.
We record revenue associated with product development projects that we enter into with certain customers. In general, these product development projects are complex, and we do not have certainty about our ability to achieve the project milestones. The achievement of a milestone is dependent on our performance obligation and requires acceptance by the customer. We recognize this revenue at the point in time at which the performance obligation is met. The payment associated with achieving the performance obligation is generally commensurate with our effort or the value of the deliverable and is nonrefundable. Any deferred revenue is recognized upon achievement of the performance obligation or expiration of a support agreement.
During the three months ended March 31, 2025, management believes there have been no significant changes to the items that we disclosed within our critical accounting policies and estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024.
Results of Operations
Costs and Expenses
Cost of revenue consists of direct materials, direct labor and overhead for our production-level wireless charging systems. Research and development expenses include costs associated with our efforts to develop our technology, including personnel compensation, consulting, engineering supplies and components, regulatory expense and general office expenses specifically related to the research and development department. Sales and marketing expenses include costs associated with selling and marketing our technology to our customers, including personnel compensation, public relations, graphic design, tradeshow, engineering supplies utilized by the sales team and general office expenses specifically related to the sale and marketing department. General and administrative expenses include costs for general and corporate functions, including personnel compensation, facility fees, travel, telecommunications, insurance, professional fees, consulting fees, general office expenses, and other overhead.
Comparison of Three Months Ended March 31, 2025 and 2024
The following table sets forth selected Condensed Statements of Operations data (in thousands):
For the three months ended March 31, | ||||||||||||
| 2025 |
| 2024 |
| $ Change |
| % Change |
| ||||
Revenue | $ | 343 | $ | 64 | $ | 279 | 436 | % | ||||
Cost of revenue |
| 250 |
| 109 | 141 | 129 | % | |||||
Gross profit (loss) |
| 93 |
| (45) | 138 | 307 | % | |||||
Operating expenses: |
|
| ||||||||||
Research and development |
| 1,192 |
| 2,189 | (997) | (46) | % | |||||
Sales and marketing |
| 589 |
| 873 | (284) | (33) | % | |||||
General and administrative |
| 895 |
| 1,995 | (1,100) | (55) | % | |||||
Severance expense |
| 372 |
| 1,563 | (1,191) | (76) | % | |||||
Expenses from abandoned financing transaction | 656 | — | 656 | 100 | % | |||||||
Total operating expenses |
| 3,704 |
| 6,620 | (2,916) | (44) | % | |||||
Loss from operations |
| (3,611) |
| (6,665) | (3,054) | (46) | % | |||||
Other income (expense), net: |
|
| ||||||||||
Change in fair value of warrant liability |
| 267 |
| (82) | 349 | 426 | % | |||||
Interest income (expense), net |
| (22) |
| 148 | (170) | (115) | % | |||||
Total other income, net | 245 | 66 | 179 | 271 | % | |||||||
Net loss | $ | (3,366) | $ | (6,599) | $ | (3,233) | (49) | % | ||||
26
Revenue. During the three months ended March 31, 2025 and 2024, we recorded revenue of $0.3 million and $0.1 million, respectively. The 436% year over year increase is primarily due to the expansion of commercial sales of PowerBridge Pro transmitters to multinational retailers deploying our WPN technology in connection with their infrastructure modernization initiatives.
Costs and Expenses and Loss from Operations. Costs and expenses are made up of cost of revenue, research and development, sales and marketing, general and administrative, severance expense and expenses from the abandoned financing transaction. Loss from operations for the three months ended March 31, 2025 and 2024 were $3.6 million and $6.7 million, respectively.
Cost of Revenue:
For the three months ended March 31, |
| ||||||||||||
| 2025 |
| 2024 |
| $ Change |
| % Change | ||||||
Cost of revenue | $ | 250 | $ | 109 | $ | 141 |
| 129 | % | ||||
Percent of total revenue |
| 73 | % |
| 170 | % |
|
|
| ||||
Cost of revenue was $0.2 million and $0.1 million, respectively, for the three months ended March 31, 2025 and 2024. The increase is primarily due to higher sales volume of PowerBridge Pro transmitters that were shipped during the first quarter of 2025. With the ramp up of our volume manufacturing during the first quarter of 2025, product margins improved significantly, transitioning from a gross loss in 2024 of $45,000 to a gross profit in 2025 of approximately $0.1 million, representing a 307% year over year improvement in gross profit.
Research and Development Costs:
For the three months ended March 31, |
| ||||||||||||
| 2025 |
| 2024 |
| $ Change |
| % Change | ||||||
Research and development | $ | 1,192 | $ | 2,189 | $ | (997) |
| (46) | % | ||||
Percent of total revenue |
| 348 | % |
| 3,420 | % |
|
|
|
| |||
Research and development costs were $1.2 million and $2.2 million, respectively, for the three months ended March 31, 2025 and 2024. The decrease of $1.0 million is primarily due to a $0.8 million decrease in personnel-related expenses, consisting of a $0.7 million decrease in payroll costs and a $0.1 million decrease in stock-based compensation and a $0.2 million decrease in third-party software costs.
Sales and Marketing Costs:
For the three months ended March 31, |
| |||||||||||
| 2025 |
| 2024 |
| $ Change |
| % Change |
| ||||
Sales and marketing | $ | 589 | $ | 873 | $ | (284) |
| (33) | % | |||
Percent of total revenue |
| 172 | % |
| 1,364 | % |
|
|
|
| ||
Sales and marketing costs for the three months ended March 31, 2025 and 2024 were $0.6 million and $0.9 million, respectively. The decrease of $0.3 million is primarily due to a $0.1 million decrease in personnel related costs due to reduced headcount, a $0.1 million decrease in tradeshow, promotional expenses and engineering components used for customer demonstrations and a $0.1 million decrease in public relations and consulting fees.
General and Administrative Expenses:
For the three months ended March 31, |
| |||||||||||
| 2025 |
| 2024 |
| $ Change |
| % Change |
| ||||
General and administrative | $ | 895 | $ | 1,995 | $ | (1,100) |
| (55) | % | |||
Percent of total revenue |
| 261 | % |
| 3,117 | % |
|
|
|
| ||
General and administrative costs for the three months ended March 31, 2025 and 2024 were $0.9 million and $2.0 million, respectively. The decrease of $1.1 million is primarily due to a $0.5 million decrease in legal fees, a $0.2 million decrease in consulting, recruiting and third-party fees, a $0.2 million decrease in annual meeting-related expenses, a $0.1 million decrease in stock-based compensation and a $0.1 million decrease in insurance premiums.
27
Severance Expense:
For the three months ended March 31, |
| |||||||||||
| 2025 |
| 2024 |
| $ Change |
| % Change |
| ||||
Severance expense | $ | 372 |
| $ | 1,563 | $ | (1,191) |
| (76) | % | ||
Percent of total revenue |
| 108 | % | 2,442 | % |
|
|
|
| |||
Severance expense for the three months ended March 31, 2025 and 2024 was $0.4 million and $1.6 million, respectively. The severance expense for the three months ended March 31, 2025 was related to non-executive employees. The severance expense for the three months ended March 31, 2024 was related to the settlement of the departure by the former Chief Executive Officer.
Expenses from Abandoned Financing Transaction:
For the three months ended March 31, |
| |||||||||||
| 2025 |
| 2024 |
| $ Change |
| % Change | |||||
Expenses from abandoned financing transaction | $ | 656 | $ | — | $ | 656 |
| 100 | % | |||
Percent of total revenue |
| 191 | % |
| 0 | % |
|
|
|
| ||
Expenses related to our abandoned financing transaction were $0.7 million for the three months ended March 31, 2025, primarily attributable to our decision not to pursue the convertible preferred equity offering under Regulation A. This decision was made because the Company was able to secure less dilutive financing through its ATM Program at a lower cost of capital. There was no such expense during the three months ended March 31, 2024.
Other income (expense):
For the three months ended March 31, |
| |||||||||||
| 2025 |
| 2024 |
| $ Change |
| % Change |
| ||||
Change in fair value of warrant liability |
| $ | 267 |
| $ | (82) | $ | 349 |
| 426 | % | |
Interest income (expense), net |
| (22) |
| 148 | (170) |
| (115) | % | ||||
Total other income (expense), net |
| $ | 245 |
| $ | 66 | $ | 179 |
| (271) | % | |
Other income resulting from the change in fair value of the warrant liability was $0.3 million for the three months ended March 31, 2025, compared to $0.1 million in expense for the three months ended March 31, 2024. The change is due to a lower market value of our common stock.
Net interest expense for the three months ended March 31, 2025 was $22,000, as we incurred $187,000 in interest expense from a short-term loan, partially offset by $165,000 in interest earned from our money market account. Interest income for the three months ended March 31, 2024 was $148,000 from interest earned on our money market account.
Net Loss. As a result of the above, net loss for the three months ended March 31, 2025 was $3.4 million as compared to $6.6 million for the three months ended March 31, 2024.
Liquidity and Capital Resources
During the three months ended March 31, 2025 and 2024, we recorded revenue of $0.3 million and $0.1 million, respectively. We incurred net losses of $3.4 million and $6.6 million for the three months ended March 31, 2025 and 2024, respectively. Net cash used in operating activities was $4.7 million and $5.1 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, the Company had cash and cash equivalents of $10.1 million. We are currently meeting our liquidity requirements through the proceeds of securities offerings that raised net proceeds of $13.8 million during the first quarter of 2025.
As we gain traction in the market with our new technology and continue to invest capital in transitioning and scaling the business from research and development of new technologies to commercial production, there can be no assurance that our available resources and revenue generated from our business operations will be sufficient to sustain our operations.
Accordingly, we expect 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 we would find acceptable, or at all. If we are unsuccessful in
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implementing this plan, we will be required to make further cost and expense reductions or modifications to our on-going and strategic plans.
ATM Offering Program
On June 21, 2024, we entered into the At the Market Offering Agreement with H.C. Wainwright & Co., LLC, as sales agent, pursuant to which we could issue and sell of up to $3.45 million in shares of our common stock (as amended to date, the “ATM Program”). During the year ended December 31, 2024, we sold 6,851,753 shares of our common stock under the ATM Program for net proceeds of approximately $3.1 million (net of commissions and other related offering expenses of approximately $0.3 million).
During the three months ended March 31, 2025, we sold 18,703,305 shares of our common stock under the ATM Program for net proceeds of approximately $13.8 million (net of commissions and other related offering expenses of approximately $0.9 million). As of March 31, 2025, approximately $79.3 million in shares of common stock remained available for issuance under the ATM Program, subject to availability of authorized shares.
Agile Subordinated Loan Agreement
Effective October 1, 2024, we entered into a subordinated business loan agreement (the “Original Loan Agreement”) with Agile Capital Funding, LLC and Agile Lending, LLC (collectively, the “Lender”), which provided for an initial term loan of $525,000, with the ability to receive additional term loans of up to $1.6 million, subject to certain conditions (such loans, the “Original Term Loan”). Principal and interest on the Original Term Loan in the aggregate amount of $756,000 was to be repaid in weekly payments of $27,000 commencing on October 14, 2024 and fully repaid on or before the maturity date of April 21, 2025.
Effective November 5, 2024, we entered into an amended subordinated business loan agreement with the Lender (the “Amended Loan Agreement”) to refinance the Original Term Loan. The Amended Loan Agreement provides for a new term loan of $997,000, with the ability to receive additional term loans of up to $1.6 million, subject to certain conditions (such new loans, the “New Term Loan”). Principal and interest on the New Term Loan in the aggregate amount of $1,415,740 will be repaid in weekly payments of approximately $39,000 and fully repaid on or before the maturity date of July 17, 2025. The proceeds of the New Term Loan were used to repay in full the Original Term Loan, which had a settlement value of $648,000 on November 5, 2024. The New Term Loan is expressly subordinated to our obligations on certain senior indebtedness of the Company as provided in the Amended Loan Agreement.
Cash Flows
Operating Activities - During the three months ended March 31, 2025, cash flows used in operating activities were $4.7 million, consisting of a net loss of $3.4 million, plus adjustments to reconcile net loss to net cash used in operating activities aggregating $0.1 million (principally change in fair value of warrant liability of $0.3 million, partially offset by stock-based compensation of $0.1 million and depreciation and amortization and amortization of short-term loan fees totaling approximately $0.1 million), a $0.6 million decrease in accounts payable, a $0.5 million decrease in accrued expenses, a $0.2 million increase in accounts receivable, a $0.2 million decrease in operating lease liabilities and a $0.1 million increase in inventory, partially offset by a $0.3 million decrease in operating lease right-of-use assets, a $0.1 million decrease in prepaid expenses and other current assets and a $0.1 million increase in accrued severance.
During the three months ended March 31, 2024, cash flows used in operating activities were $5.1 million, consisting of a net loss of $6.6 million, less adjustments to reconcile net loss to net cash used in operating activities aggregating $0.5 million (principally stock-based compensation of $0.4 million and change in fair value of warrant liability of $0.1 million), a $0.3 million decrease in accounts payable, a $0.2 million increase in inventory and a $0.1 million decrease in accrued expenses, partially offset by a $1.3 million increase in accrued severance expense, a $0.2 decrease in prepaid expenses and other current assets and a $0.1 decrease in accounts receivable.
Investing Activities - During the three months ended March 31, 2025 and 2024, cash flows used in investing activities were not material. A small amount of hardware and equipment was purchased during each period.
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Financing Activities - During the three months ended March 31, 2025, cash flows provided by financing activities were $13.4 million, which primarily consisted of $13.8 million in net proceeds from the sale of shares of our common stock under the ATM Program, partially offset by $0.3 million in repayments of a short-term loan and $0.1 million in repayments of financed insurance. During the three months ended March 31, 2024, cash flows provided by financing activities were $1.9 million, which primarily consisted of $1.8 million in net proceeds from a registered direct offering that included the sale of common stock, pre-funded warrants and warrants.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
As a smaller reporting company, we are not required to provide this information.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures to ensure that material information relating to us is made known to the officers who certify our financial reports and the Board. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) and 15d-15(e) under the Exchange Act.
Based on the evaluation, our principal executive officer and principal financial officer concluded that these disclosure controls and procedures were effective as of March 31, 2025 to provide reasonable assurance that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms and that information required to be disclosed by us in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our interim principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
For the three months ended March 31, 2025, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently a party to any pending legal proceedings that we believe will have a material adverse effect on our business, financial condition or cash flows. We may, however, be subject to various claims and legal actions arising in the ordinary course of business from time to time.
Item 1A. Risk Factors
Our future performance is subject to a variety of risks and uncertainties that could materially and adversely affect our business, financial condition, results of operations, and the trading price of our common stock. These risks and uncertainties are described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to these risks and uncertainties described in our Annual Report on Form 10-K for the year ended December 31, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On March 19, 2025, the Company signed an amendment to the existing lease for its office space at its corporate headquarters in San Jose, California, relocating to a smaller suite within the same building, and extending the lease through December 31, 2027. The Company issued 75,000 shares of its common stock (the “Landlord Shares”) to the landlord upon signing the amendment as partial consideration for the amended lease. The Landlord Shares were issued in reliance upon the exemptions from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act in a privately negotiated transaction not involving any public offering or solicitation.
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Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended March 31, 2025, no director or officer of the Company
Item 6. Exhibits
The following are filed, furnished or incorporated by reference as a part of this Quarterly Report on Form 10-Q:
Exhibit |
| Description |
|
3.1 | |||
3.2 | |||
3.3 | |||
31.1† | Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934. | ||
32.1+ | |||
101.INS† | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||
101.SCH† | Inline XBRL Taxonomy Extension Schema Document. | ||
101.CAL† | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | ||
101.DEF† | Inline XBRL Taxonomy Extension Definition Linkbase Document. | ||
101.LAB† | Inline XBRL Taxonomy Extension Label Linkbase Document. | ||
101.PRE† | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | ||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101). |
† | Filed herewith. |
+ | Furnished herewith. |
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ENERGOUS CORPORATION | |||
| (Registrant) | |||
| ||||
Date: May 13, 2025 | By: | /s/ Mallorie Burak | ||
Name: | Mallorie Burak | |||
Title: | Chief Executive Officer and Chief Financial Officer | |||
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) | ||||
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