What changed in this filing

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Item 1. Financial Statements

2024-08-12 compared with 2024-05-14 · 187 added, 145 removed, 421 unchanged (44% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

March 31, 2024

June 30, 2024

December 31, 2023

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Stockholders’ equity:

Preferred Stock, $ 0.00001 par value, 10,000,000 shares authorized as of March 31, 2024 and December 31, 2023;

no shares issued or outstanding as of March 31, 2024 and December 31, 2023.

Common Stock, $ 0.00001 par value, 200,000,000 shares authorized as of March 31, 2024 and December 31, 2023;

6,085,766 and 5,471,121 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.

Preferred Stock, $ 0.00001 par value, 10,000,000 shares authorized as of June 30, 2024 and December 31, 2023;

no shares issued or outstanding as of June 30, 2024 and December 31, 2023.

Common Stock, $ 0.00001 par value, 200,000,000 shares authorized as of June 30, 2024 and December 31, 2023;

6,554,296 and 5,471,121 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively.

Additional paid-in capital

8 unchanged sentences

(in thousands, except share and per share amounts)

For the Three Months Ended March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Costs and expenses:

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Loss from operations

Other income (expense):

Other income (expense), net:

Offering costs related to warrant liability

1 unchanged sentence

Interest income

Total other income (expense)

Total other income (expense), net

Basic and diluted loss per common share

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Balance as of March 31, 2024

Stock-based compensation - RSUs

Stock-based compensation - ESPP

Issuance of shares for RSUs

Proceeds (refunds) from contributions to the ESPP

Pre-funded warrants exercised

Balance at June 30, 2024 (unaudited)

Stockholders’

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Balance as of March 31, 2023

Stock-based compensation - options

Stock-based compensation - RSUs

Stock-based compensation - PSUs

Stock-based compensation - ESPP

Issuance of shares for RSUs

Proceeds from contributions to the ESPP

Balance at June 30, 2023 (unaudited)

Share and per share amounts have been retroactively adjusted to reflect the impact of a 1-for- 20 reverse stock split effected in August 2023, as discussed in Note 1.

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(in thousands)

For the Three Months Ended

For the Six Months Ended

Cash flows from operating activities:

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Change in fair value of warrant liability

Offering costs allocated to warrants

Offering costs allocated to warrant liability

Changes in operating assets and liabilities:

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Net proceeds from a sale of common stock and warrant issuance

Proceeds from contributions to the ESPP

Proceeds from contributions to the ESPP, net

Net cash provided by financing activities

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Cash, cash equivalents and restricted cash - beginning

Cash, cash equivalents and restricted cash - ending

Cash and cash equivalents - ending

Supplemental disclosure of non-cash investing and financing activities:

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Description of Business

Energous Corporation (the “Company”) has developed a wireless power networks technology (“WPNT”), consisting of semiconductor chipsets, software controls, hardware designs and antennas, that enable radio frequency (“RF”) based charging for Internet of Things (“IoT”) devices.

The WPNT has a broad spectrum of capabilities to enable the next generation of wireless power networks, delivering power and data in a seamless device portfolio.

Energous Corporation d/b/a Energous Wireless Power Solutions (the “Company”) has developed scalable, over-the-air wireless power networks (“WPN”) technology, consisting of semiconductor chipsets, software controls, hardware designs and antennas, that enable radio frequency (“RF”) based charging for Internet of Things (“IoT”) devices.

The WPN technology has a broad spectrum of capabilities to enable the next generation of wireless power networks, delivering power and data in a seamless device portfolio, enabling unprecedented levels of visibility, control, and intelligent business automation.

This includes near field and at-a-distance wireless charging with multiple power levels at various distances.

The Company’s wireless power transmitter and receiver technologies deliver continuous access to wireless power, helping drive a new generation of battery-free devices for asset and inventory tracking and management – from retail sensors, electronic shelf labels, and asset trackers, to air quality monitors, motion detectors, and more.

The Company believes its technology is innovative in its approach, in that the Company is developing solutions that charge IoT devices using RF technology.

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Retail and Industrial IoT

The first end product featuring the Company’s technology entered the market in 2019.

The Company started shipping its first at-a-distance wireless PowerBridges for commercial IoT applications in the fourth quarter of 2021 and expects additional wireless power enabled products to be released as the Company’s business moves forward.

The first WPN end product featuring the Company’s technology entered the market in 2019.

The Company started shipping its first at-a-distance wireless PowerBridges for commercial IoT applications and proofs of concept in the fourth quarter of 2021 and expects additional wireless power enabled products to be released as the Company’s business moves forward.

Reverse Stock Split

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Note 2 – Liquidity and Management Plans

During the three months ended March 31, 2024 and 2023, the Company recorded revenue of $ 0.1 million and $ 0.1 million, respectively.

During the three months ended March 31, 2024 and 2023, the Company recorded net losses of $ 6.6 million and $ 6.7 million, respectively.

Net cash used in operating activities was $ 5.1 million and $ 5.4 million for the three months ended March 31, 2024 and 2023, respectively.

However, the Company is currently meeting its liquidity requirements through the proceeds of securities offerings that raised net proceeds of $ 27.0 million during 2021, $ 0.7 million during 2022, $ 6.9 million during 2023 and $ 1.8 million during the first quarter of 2024.

As of March 31, 2024, the Company had cash and cash equivalents of $ 10.7 million.

The Company expects that cash and cash equivalents as of March 31, 2024, together with additional anticipated proceeds from the ATM sales agreement during 2024, continued cost and expense reductions and collections generated by anticipated revenues, will be sufficient to fund the Company’s operations through May 2025.

Research and development of new technologies is by its nature unpredictable.

Although the Company intends to continue its research and development activities and transition 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.

During the three and six months ended June 30, 2024, the Company recorded revenue of $ 46,000 and $ 110,000 , respectively.

During the three and six months ended June 30, 2023, the Company recorded revenue of $ 0.1 million and $ 0.2 million, respectively.

During the three and six months ended June 30, 2024, the Company recorded net losses of $ 4.3 million and $ 10.9 million, respectively.

During the three and six months ended June 30, 2023, the Company recorded net losses of $ 4.0 million and $ 10.6 million, respectively.

Net cash used in operating activities was $ 10.8 million and $ 11.7 million for the six months ended June 30, 2024 and 2023, respectively.

However, the Company is currently meeting its liquidity requirements through the proceeds of securities offerings, including the ATM Program (as defined in Note 7 below), which securities offerings generated aggregate net proceeds of $ 6.9 million during 2023 and $ 1.8 million during the six months ended June 30, 2024.

As of June 30, 2024, the Company had cash and cash equivalents of $ 4.9 million.

The Company expects that cash and cash equivalents as of June 30, 2024, together with additional anticipated proceeds from the ATM Program and other financing transactions during 2024, continued cost and expense reductions and collections generated by anticipated revenues, will be sufficient to fund the Company’s operations through August 2025.

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 financings, commercial agreements with customers or strategic partners, and other alternatives, depending upon market conditions.

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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, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for other future periods.

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, 2023 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 28, 2024.

The accounting policies used in preparing these unaudited condensed interim financial statements are consistent with those described in the Company’s December 31, 2023 audited financial statements .

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 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, 2023 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 28, 2024.

The accounting policies used in preparing these interim unaudited condensed financial statements are consistent with those described in the Company’s December 31, 2023 audited financial statements .

Reclassifications

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The Company reports restricted cash on its balance sheet to disclose the amount reserved for a specific purpose aside from ordinary business operations.

The Company has restricted cash as collateral for the Company’s corporate credit card program.

As of March 31, 2024 and December 31, 2023, the carrying value of restricted cash was $ 0.1 million and $ 0.1 million, respectively.

The Company had restricted cash as collateral for the Company’s corporate credit card program which was discontinued during the second quarter of 2024.

As of June 30, 2024 and December 31, 2023, the carrying value of restricted cash was $ 0 and $ 0.1 million, respectively.

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”).

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Revenue Recognition

The Company follows Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” (“Topic 606”).

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:

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Recognize revenue when or as the performance obligations are satisfied.

Note 3 – Summary of Significant Accounting Policies, continued

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, 2024 and 2023, the Company recognized $ 0.1 million and $ 0.1 million, respectively, in revenue.

Note 3 – Summary of Significant Accounting Policies, continued

During the three and six months ended June 30, 2024, the Company recognized $ 46,000 and $ 110,000 , respectively.

During the three and six months ended June 30, 2023, the Company recognized $ 0.1 million and $ 0.2 million, respectively, in revenue.

The Company records revenue associated with product development projects that it enters into with certain customers.

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Patent application costs, which are generally legal costs, are expensed as research and development costs until such time as the future economic benefits of such patents become more certain.

The Company incurred research and development costs of $ 2.3 million and $ 3.1 million for the three months ended March 31, 2024 and 2023, respectively.

The Company incurred research and development costs of $ 2.4 million and $ 4.8 million for the three and six months ended June 30, 2024, respectively.

The Company incurred research and development costs of $ 2.9 million and $ 6.0 million for the three and six months ended June 30, 2023, respectively.

Stock-Based Compensation

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A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards.

As of March 31, 2024, no liability for unrecognized tax benefits was required to be reported.

As of June 30, 2024, no liability for unrecognized tax benefits was required to be reported.

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.

No interest or penalties were recorded during the three months ended March 31, 2024 and 2023.

No interest or penalties were recorded during the three or six months ended June 30, 2024 and 2023.

The Company files income tax returns with the United States, California, Texas and Arizona governments.

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Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and warrants (using the treasury stock method), the vesting of restricted stock units (“RSUs”) and performance stock units (“PSUs”) and the enrollment of employees in the ESPP.

The computation of diluted loss per share excludes potentially dilutive securities of 1,546,213 and 644,530 , as outlined in the table below, for the three months ended March 31, 2024 and 2023, respectively, because their inclusion would be anti-dilutive.

For the Three Months Ended

The computation of diluted loss per share excludes potentially dilutive securities of 2,010,538 and 613,018 , as outlined in the table below, for the three and six months ended June 30, 2024 and 2023, respectively, because their inclusion would be anti-dilutive.

For the three

and six months ended

Warrants issued to investors

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Total potentially dilutive securities

For the three months ended March 31, 2024, the table above includes 1,020,409 warrants expiring on February 20, 2029, which have an exercise price of $ 1.84 and 412,500 warrants expiring on March 28, 2029, which have an exercise price of $ 1.66 .

For the three months ended March 31, 2023, the table above includes 83,333 warrants that expired on March 1, 2024, which had an exercise price of $ 200 , and 412,500 warrants expiring on March 28, 2029, which have an exercise price of $ 1.66 .

1 The weighted average number of common shares outstanding as of March 31, 2024 includes the weighted average effect of the 450,409 pre-funded warrants issued in connection with a registered direct offering the Company entered into on February 15, 2024 (see Note 7 – Capital Stock and Warrants) because the exercise of such warrants requires nominal consideration ($ 0.001 per share exercise price for each pre-funded warrant).

As of March 31, 2024, none of the pre-funded warrants have been exercised;

therefore, all 450,409 outstanding pre-funded warrants as of that date are not included in the table above.

For the three and six months ended June 30, 2024, the table above includes 1,020,409 warrants expiring on February 20, 2029, which have an exercise price of $ 1.84 per share and 412,500 warrants expiring on March 28, 2029, which have an exercise price of $ 1.66 per share.

For the three and six months ended June 30, 2023, the table above includes 83,333 warrants that expired on March 1, 2024, which had an exercise price of $ 200 per share, and 412,500 warrants expiring on March 28, 2029, which have an exercise price of $ 1.66 per share.

The Company determines if an arrangement is a lease at the inception of the arrangement.

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See Note 6 – Commitments and Contingencies, Operating Leases for further discussion of the Company’s operating leases.

The Company has one operating segment and one reportable segment as its chief operating decision maker, who is its Interim Principal Executive Officer and Chief Financial Officer, reviews financial information on a regular basis for purposes of allocating resources and evaluating financial performance.

All long-lived assets are located in the United States and substantially all revenue is attributed to customers based in the United States.

Note 3 – Summary of Significant Accounting Policies, continued

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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 asses 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 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.

Adoption of this standard will not likely have a material impact on the Company’s financial statements.

Management has reviewed other recently issued accounting pronouncements issued or proposed by the FASB and does not believe any of these accounting pronouncements has had or will have a material impact on the condensed consolidated financial statements.

Note 4 – Inventory

Below is a summary of the Company’s inventory as of March 31, 2024 and December 31, 2023 (in thousands):

Below is a summary of the Company’s inventory as of June 30, 2024 and December 31, 2023 (in thousands):

Balance as of

March 31, 2024

June 30, 2024

December 31, 2023

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Balance as of

March 31, 2024

June 30, 2024

December 31, 2023

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Upon expiration of the original lease on September 30, 2022, the new monthly lease payment starting October 1, 2022 is approximately $ 59,000 , subject to annual escalations up to a maximum monthly lease payment of approximately $ 62,000 .

The Company recorded lease expense of $ 0.2 million for both the three months ended March 31, 2024 and 2023.

The Company recorded

lease expense of $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2024, respectively.

The Company recorded lease expense of $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2023, respectively.

Note 6 – Commitments and Contingencies, continued

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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 $ 1.1 million during the period from the second quarter of 2024 to the third quarter of 2025.

As of March 31, 2024, the Company has total operating lease ROU assets of $ 1.0 million, current portion of operating lease liabilities of $ 0.7 million and long-term portion of operating lease liabilities of $ 0.4 million.

The weighted average remaining lease term is 1.5 years as of March 31, 2024.

A reconciliation of undiscounted cash flows to lease liabilities recognized as of March 31, 2024 is as follows (in thousands):

The Company anticipates having future total lease payments of $ 0.9 million during the period from the third quarter of 2024 to the third quarter of 2025.

As of June 30, 2024, the Company has total operating lease ROU assets of $ 0.9 million, current portion of operating lease liabilities of $ 0.7 million and long-term portion of operating lease liabilities of $ 0.2 million.

The weighted average remaining lease term is 1.3 years as of June 30, 2024.

A reconciliation of undiscounted cash flows to lease liabilities recognized as of June 30, 2024 is as follows (in thousands):

For the year ending December 31,

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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 three-years under which the Company is required to remit quarterly payments of approximately $ 0.2 million through the second quarter of 2024.

In June 2024, the Company renewed an electronic design automation software in a hosted environment license agreement through the end of 2025 under which the Company is required to remit quarterly payments of approximately $ 52,000 through the fourth quarter of 2025.

Litigations, Claims, and Assessments

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To be eligible to receive a bonus under the Bonus Plan, an executive officer must be continuously employed throughout the applicable performance period, and in good standing, and achieve the performance objectives selected by the Compensation Committee.

Under the Bonus Plan, the Compensation Committee is responsible for selecting the amounts of potential bonuses for executive officers, 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 not record any expense under the Bonus Plan during the three months ended March 31, 2024.

During the three months ended March 31, 2023, the Company recorded $ 0.1 million in expense under the Bonus Plan.

Under the Bonus Plan, the Compensation Committee was responsible for selecting the amounts of potential bonuses for executive officers, the performance metrics used to determine whether any such bonuses would be paid and determining whether those performance metrics had been achieved.

The Company did not record any expense under the Bonus Plan during the three or six months ended June 30, 2024.

During the three and six months ended June 30, 2023, the Company recorded $ 0.2 million and $ 0.3 million, respectively, in expense under the Bonus Plan.

As of December 31, 2023, the Company had $ 0.5 million in bonuses earned during 2023 that had not yet been paid and was included in accrued expenses.

As of March 31, 2024, the Company had $ 0.2 million in MBO bonus expense earned and accrued during 2023 that had not yet been paid and was subsequently paid during the second quarter of 2024.

Severance and Change in Control Agreement

On March 15, 2018, the Compensation Committee approved a form of Severance and Change in Control Agreement (“Severance Agreement”) that the Company may enter into with executive officers (each, an “Executive”).

As of June 30, 2024, the Company had paid all amounts accrued under the Bonus Plan.

On May 30, 2024, the Board, on the recommendation of the Compensation Committee, approved the 2024 Corporate Bonus Plan (“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 achieve the performance objectives.

Note 6 – Commitments and Contingencies, continued

Under the Severance Agreement, if an Executive is terminated in a qualifying change in control termination, the Company agrees to pay the Executive six to twelve months of that Executive’s monthly base salary.

If an Executive elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) the Company will pay the full amount of the Executive’s premiums under the Company’s health, dental and vision plans, including coverage for the Executive’s eligible dependents, for the six-to-twelve-month period, as applicable, following the Executive’s termination.

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.

As of June 30, 2024, the Company did not record any expense under the 2024 Bonus Plan.

Severance and Change in Control Agreement

On March 15, 2018, the Compensation Committee approved a form of Severance and Change in Control Agreement that the Company may enter into with executive officers.

On May 30, 2024, the Compensation Committee approved a new form of 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 three to twelve months of that Executive’s monthly base salary and 25 % to 100 % of the Executive’s target bonus, and to accelerate the vesting of 25 % to 100 % of the Executive’s unvested equity awards.

If an Executive elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) the Company will pay the full amount of the Executive’s premiums under the Company’s health, dental and vision plans, including coverage for the Executive’s eligible dependents, for the three -to- twelve-month period, as applicable, following the Executive’s termination.

Executive Transition – Cesar Johnston

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In connection with his cessation as an officer of the Company, Mr.

Johnston is entitled to receive the benefits and payments set forth in the Amended and Restated Severance and Change in Control Agreement, dated December 6, 2021 (“Severance Agreement”), between the Company and 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.

Accordingly, Mr.

Johnston will receive (a) 18 months of his monthly salary plus the amount equal to 100 % of his target bonus, (b) any outstanding unvested equity awards held by Mr.

Johnston that were scheduled to vest during the next 18 months following the termination date, (c) reimbursement for continued COBRA payments, if elected by Mr.

Johnston received (a) 18 months of his monthly salary plus the amount equal to 100 % of his target bonus, (b) any outstanding unvested equity awards held by Mr.

Johnston that were scheduled to vest during the next 18 months following the termination date, and (c) reimbursement for continued COBRA payments, if elected by Mr.

Johnston, during the 18 months following the termination date.

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Johnston’s departure during the three months ended March 31, 2024, including $ 0.1 million in stock-based compensation as a result of accelerated vesting of RSUs and options (see Note 8 – Stock-Based Compensation for additional details).

As of March 31, 2024, the Company had accrued unpaid severance expense of $ 1.4 million pertaining to Mr.

Johnston’s Severance Agreement, which is due to be paid approximately 60 days following of Mr.

Johnston’s date of separation.

The Company reversed $ 0.3 million in accrued severance during the three months ended June 30, 2024, as a result of the finalization of the negotiated settlement and payroll taxes.

The Company, therefore, recorded expense of $ 1.2 million in total severance expense pertaining to Mr.

Johnston’s departure during the six months ended June 30, 2024.

As of June 30, 2024, the Company had accrued unpaid severance expense related to COBRA reimbursements of approximately $ 46,000 pertaining to the Johnston Severance Agreement, which is due to be paid through September 2025.

Executive Transition – William Mannina

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Mannina and the Company, Mr.

Mannina will receive payments and benefits including cash severance payments equivalent to nine months of his then-current salary of $ 265,825 and premium payments for continued healthcare coverage for nine months following his resignation effective date.

Mannina received payments and benefits including cash severance payments equivalent to nine months of his then-current salary of $ 265,825 and premium payments for continued healthcare coverage for nine months following his resignation effective date.

Mannina’s restricted stock units continued to vest through August 16, 2023.

As of March 31, 2024, the Company had accrued unpaid severance expense of approximately $ 0.1 million pertaining to Mr.

As of June 30, 2024, the Company had no accrued unpaid severance expense pertaining to Mr.

Mannina’s agreement.

Note 6 – Commitments and Contingencies, continued

Strategic Alliance Agreement

In November 2016, the Company and Dialog Semiconductor plc (“Dialog”), a related party (see Note 11—Related Party Transactions), entered into a Strategic Alliance Agreement (“Alliance Agreement”) for the manufacture, distribution and commercialization of products incorporating the Company’s wire-free charging technology (“Licensed Products”).

In November 2016, the Company and Dialog Semiconductor plc (“Dialog”), a related party, entered into a Strategic Alliance Agreement (“Alliance Agreement”) for the manufacture, distribution and commercialization of products incorporating the Company’s wire-free charging technology (“Licensed Products”).

Pursuant to the terms of the Alliance Agreement, the Company agreed to engage Dialog as the exclusive supplier of the Licensed Products for specified fields of use, subject to certain exceptions (the “Company Exclusivity Requirement”).

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The Company Exclusivity Requirement renewed automatically on an annual basis unless the Company and Dialog agreed to terminate the requirement.

Note 6 – Commitments and Contingencies, continued

On September 20, 2021, the Company was notified by Dialog, which had been recently acquired by Renesas Electronics Corporation (“Renesas”), that it was terminating the Alliance Agreement between the Company and Dialog.

There is a wind down period included in the Alliance Agreement which will conclude in September 2024.

During the wind down period, the Alliance Agreement’s terms will continue to apply to the Company’s products that are covered by certain existing customer relationships, except that the parties’ respective exclusivity rights have terminated (see Note 11 – Related Party Transactions for expenses incurred by the Company from Renesas).

Note 7 – Capital Stock and Warrants

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Riley Securities, Inc.

(the “ATM Program”).

The $ 40 million of common stock to be offered, issued and sold under the ATM Program is included in the $ 75 million of securities that may be offered, issued and sold by the Company under the base prospectus.

Pursuant to this shelf registration statement, the Company sold shares which raised net proceeds of $ 38.8 million (net of $ 1.2 million in issuance costs) during the third and fourth quarters of 2020 under the ATM Program.

On October 4, 2021, the Company filed a prospectus supplement covering the offering, issuance and sale of up to an additional $ 35 million of shares of the Company’s common stock pursuant to the ATM Program.

The Company raised net proceeds of $ 27.0 million (net of $ 0.9 million in issuance costs), during 2021 under the ATM Program.

During 2022, the Company raised an additional $ 0.7 million (net of $ 0.1 million in issuance costs) under the ATM Program.

During the first quarter of 2023, the Company raised $ 3.6 million (net of $ 0.2 million in issuance costs).

As of March 31, 2024, there is no amount remaining in the Prior Shelf due to its expiration on September 24, 2023.

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 (the “Current Shelf”).

(the “Prior ATM Program”).

The $ 40 million of common stock to be offered, issued and sold under the Prior ATM Program was included in the $ 75 million of securities that may be offered, issued and sold by the Company under the base prospectus.

Note 7 – Capital Stock and Warrants, continued

The Company raised net proceeds of $ 27.0 million (net of $ 0.9 million in issuance costs), during 2021 under the Prior ATM Program.

During 2022, the Company raised an additional $ 0.7 million (net of $ 0.1 million in issuance costs) under the Prior ATM Program.

During the first quarter of 2023, the Company raised $ 3.6 million (net of $ 0.2 million in issuance costs) under the Prior ATM Program.

As of June 30, 2024, there is no amount remaining in the Prior Shelf due to its expiration on September 24, 2023.

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 allows 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 $ 100 million.

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Pursuant to the terms of the 2023 Warrants, the exercise price was adjusted to $ 1.66 during 2023.

Note 7 – Capital Stock and Warrants, continued

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 “Offering”), of (i) 570,000 shares of the Company’s common stock, (ii) pre-funded warrants to purchase up to 450,409 shares of common stock (referred to individually as a “Pre-Funded Warrant” and collectively as the “Pre-Funded Warrants”), and (iii) warrants to purchase an aggregate of 1,020,409 shares of common stock (referred to individually as a “Warrant” and collectively as the “Warrants”).

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Each Pre-Funded Warrant and Warrant is exercisable at any time on or after the date of issuance to purchase one share of common stock at a price of either $ 0.001 per share, in the case of Pre-Funded Warrants, or $ 1.84 per share, in the case of Warrants.

The Pre-Funded Warrants expire when they are exercised in full, and the Warrants expire five years from the date of issuance.

The Pre-Funded Warrants expired upon full exercise in April 2024, and the Warrants expire five years from the date of issuance.

The Offering closed on February 20, 2024.

The Company received net proceeds of approximately $ 1.8 million (net of $ 0.2 million in issuance costs).

On June 21, 2024, the Company filed a prospectus supplement covering the offering, issuance and sale of up to $ 3.5 million in shares of the Company’s common stock pursuant to the At the Market Offering Agreement, dated June 21, 2024, between the Company and H.C.

Wainwright & Co., LLC (the “Current ATM Program”, and together with the Prior ATM program, the “ATM Program”).

As of June 30, 2024, no transactions under this prospective supplement have been made.

In addition, on June 20, 2024, the Company provided notice of termination of the Prior ATM Program that the Company had entered into with Roth Capital Partners, LLC, as sales agent.

The Company entered into the Current ATM Program discussed above to replace the Prior ATM Program.

Note 7 – Capital Stock and Warrants, continued

Common Stock Outstanding

Our outstanding shares of common stock typically include shares that are deemed delivered under US GAAP.

The Company’s outstanding shares of common stock typically include shares that are deemed delivered under US GAAP.

Shares that are deemed delivered currently include shares that have vested, but have not yet been delivered, under tax-deferred equity awards, as well as shares purchased under the ESPP where actual transfer of shares normally occurs a few days after the completion of the purchase periods.

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The Company has reserved the following shares of common stock for future issuance:

March 31, 2024

June 30, 2024

December 31, 2023

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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

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Equity Incentive Plans

2013 Equity Incentive Plan

Effective on June 14, 2023, the Company’s stockholders approved the amendment and restatement of the 2013 Equity Incentive Plan to increase the number of shares reserved for issuance thereunder by 50,000 shares, bringing the total number of shares approved for issuance under that plan to 489,298 .

As of March 31, 2024, 120,949 shares of common stock remain eligible to be issued through equity-based instruments under the 2013 Equity Incentive Plan.

2014 Non-Employee Equity Compensation Plan

Effective on May 26, 2020, the Company’s stockholders approved the amendment and restatement of the 2014 Non-Employee Equity Compensation Plan to increase the number of shares reserved for issuance through equity-based instruments thereunder by 40,000 shares, bringing the total number of shares approved for issuance under that plan to 82,500 .

As of March 31, 2024, 23,262 shares of common stock remain eligible to be issued through equity-based instruments under the 2014 Non-Employee Equity Compensation Plan.

2015 Performance Share Unit Plan

Effective on June 16, 2021, the Company’s stockholders approved the amendment and restatement of the 2015 Performance Share Unit Plan to increase the number of shares reserved for issuance through equity-based instruments thereunder by 85,000 shares, bringing the total number of shares approved for issuance under that plan to 255,505 .

As of March 31, 2024, 112,647 shares of common stock remain eligible to be issued through equity-based instruments under the 2015 Performance Share Unit Plan.

2017 Equity Inducement Plan

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On March 28, 2024, the Board increased the number of shares of common stock reserved and available for issuance under the 2017 Equity Inducement Plan by 121,510 shares.

As of March 31, 2024, 132,927 shares of common stock remain available to be issued through equity-based instruments under the 2017 Equity Inducement Plan.

As of June 30, 2024, 133,612 shares of common stock remain available to be issued through equity-based instruments under the 2017 Equity Inducement Plan.

2024 Equity Incentive Plan

On June 12, 2024, the Energous Corporation 2024 Equity Incentive Plan (the “2024 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 456,000 shares of common stock were approved for issuance under the 2024 Plan.

As of June 30, 2024, 233,570 shares of common stock remain available for issuance under the 2024 Plan.

Note 8 – Stock-Based Compensation, continued

Employee Stock Purchase Plan

In April 2015, the Company’s Board approved the ESPP, under which 30,000 shares of common stock were reserved for purchase by the Company’s employees, subject to the approval by the Company’s stockholders.

In April 2015, the Board approved the Energous Corporation Employee Stock Purchase Plan (“ESPP”), under which 30,000 shares of common stock were reserved for purchase by the Company’s employees, subject to the approval by the Company’s stockholders.

On May 21, 2015, the Company’s stockholders approved the ESPP.

Effective on June 14, 2023, the Company’s stockholders approved the amendment and restatement of the ESPP to increase the number of shares reserved for issuance through equity-based instruments thereunder by 25,000 shares, bringing the total number of shares approved for issuance under that plan to 102,500 .

On June 12, 2024, the Company’s stockholders approved the amendment and restatement of the ESPP to increase the number of shares reserved for issuance under the ESPP by 6,200 shares.

Under the ESPP, employees may designate an amount not less than 1 % but not more than 10 % of their annual compensation for the purchase of Company shares.

No more than 375 shares may be purchased by an employee under the ESPP during an offering period.

Excess contributions during an offering period are refunded to the employees.

An offering period is six months in duration commencing on or about January 1 and July 1 of each year.

The exercise price of options purchased under the ESPP is the lesser of 85 % of the fair market of the common stock on the first business day of the offering period and 85 % of the fair market value of the common stock on the applicable exercise date.

As of March 31, 2024, 14,716 shares of common stock remain eligible to be issued under the ESPP.

Employees contributed approximately $ 36,000 through payroll withholdings to the ESPP as of March 31, 2024 for the current offering period which will end on June 30, 2024 with shares deemed delivered on that date.

As of June 30, 2024, 17,166 shares of common stock remain eligible to be issued under the ESPP.

Employees contributed approximately $ 55,000 through payroll withholdings to the ESPP as of June 30, 2024 for the current offering period which ended on June 30, 2024.

Approximately $ 52,000 was due to be refunded to employees due to share purchase limits for an offering period.

The remaining $ 3,000 was used to purchase 3,750 shares with shares deemed delivered on June 30, 2024.

Stock Option Activity

In February 2022, the Board granted the Company’s former Chief Executive Officer 15,000 stock options under the 2013 Equity Incentive Plan at an exercise price of $ 25.40 per share with half of the options vesting on the second anniversary of the vesting start date and a quarter of the options vesting on each of the two following anniversaries .

In February 2022, the Board granted the Company’s former Chief Executive Officer 15,000 stock options at an exercise price of $ 25.40 per share with half of the options vesting on the second anniversary of the vesting start date and a quarter of the options vesting on each of the two following anniversaries .

Under the former Chief Executive Officer’s Severance Agreement, unvested awards vesting within 18 months of termination were accelerated and became vested on March 26, 2024.

Consequently, 3,750 options became vested and another 3,750 options were forfeited.

This resulted in stock-based compensation expense of approximately $ 53,000 during the three months ended March 31, 2024.

No stock options were granted during the three months ended March 31, 2023 and 2024.

The following is a summary of the Company’s stock option activity during the three months ended March 31, 2024:

This resulted in stock-based compensation expense of approximately $ 0 and $ 53,000 during the three and six months ended June 30, 2024, respectively.

As of June 30, 2024, all stock options granted to the former Chief Executive Officer were forfeited.

No stock options were granted during the three and six months ended June 30, 2023 and 2024.

The following is a summary of the Company’s stock option activity during the six months ended June 30, 2024:

Outstanding as of January 1, 2024

Outstanding as of March 31, 2024

Outstanding as of June 30, 2024

Exercisable as of January 1, 2024

Exercisable as of March 31, 2024

As of March 31, 2024, the unamortized fair value of options was $ 0 .

Exercisable as of June 30, 2024

As of June 30, 2024, the unamortized fair value of stock options was $ 0 .

Note 8 – Stock-Based Compensation, continued

During the three months ended March 31, 2024, the Board granted its interim principal executive officer and Chief Financial Officer RSUs covering 50,000 shares of common stock under the 2017 Equity Inducement Plan and RSUs covering 2,000 shares of common stock under the 2013 Equity Incentive Plan.

The awards vest over four years .

During the three months ended March 31, 2024, the Compensation Committee granted various non-employees RSUs covering 6,000 shares of common stock under the 2014 Non-Employee Equity Compensation Plan.

The awards vest on the one-year anniversary of the grant date.

Under the former Chief Executive Officer’s Severance Agreement, unvested RSUs vesting within 18 months of termination were accelerated and became vested on March 26, 2024.

Consequently, 3,017 RSUs became vested resulting in stock-based compensation expense of approximately $ 77,000 during the three months ended March 31, 2024.

As of March 31, 2024, the unamortized fair value of the RSUs was $ 0.8 million.

Restricted Stock Units (“RSUs”)

During the six months ended June 30, 2024, the Board granted its Interim Principal Executive officer and Chief Financial Officer 77,000 RSUs.

Each RSU represents the contingent right to one share of common stock of the Company.

The RSU awards vest over four years .

During the six months ended June 30, 2024, the Compensation Committee granted directors an aggregate of 6,000 RSUs for service on the board of directors.

These RSU awards vest on the one-year anniversary of the grant date.

During the six months ended June 30, 2024, the Board granted employees an aggregate of 468,000 RSUs, which vest over four years .

Under the former Chief Executive Officer’s Severance Agreement, unvested RSUs vesting within 18 months of termination were accelerated and vested on March 26, 2024.

Consequently, 3,017 RSUs vested resulting in stock-based compensation expense of approximately $ 0 and $ 77,000 during the three and six months ended June 30, 2024, respectively.

As of June 30, 2024, the unamortized fair value of the RSUs was $ 1.1 million.

The unamortized amount will be expensed over a weighted average period of 2.9 years.

A summary of the activity related to RSUs for the three months ended March 31, 2024 is presented below:

A summary of the activity related to RSUs for the six months ended June 30, 2024 is presented below:

Outstanding at January 1, 2024

RSUs forfeited

Outstanding at March 31, 2024

Outstanding at June 30, 2024

Performance Stock Units (“PSUs”)

PSUs are grants that vest upon the achievement of certain performance goals.

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Johnston of certain performance metrics to be recommended by the Compensation Committee and approved by the Board at a subsequent date.

There was no PSU activity for the three months ended March 31, 2024 and 2023.

There was no PSU activity for the three or six months ended June 30, 2024 and 2023.

The 2,500 PSU shares that were reserved for grant during 2024 per Mr.

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Employee Stock Purchase Plan

The current offering period under the ESPP started on January 1, 2024 and will conclude on June 30, 2024.

The recently completely offering period under the ESPP started on January 1, 2024 and concluded on June 30, 2024.

During the year ended December 31, 2023, there were two offering periods.

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The second offering period began on July 1, 2023 and concluded on December 31, 2023.

The weighted average grant-date fair value of the purchase option for each designated share purchased under the ESPP was approximately $ 0.85 and $ 8.00 for the three months ended March 31, 2024 and 2023, respectively, which represents the fair value of the option, consisting of three main components:

The weighted average grant-date fair value of the purchase option for each designated share purchased under the ESPP was approximately $ 0.85 per share and $ 8.00 per share for the six months ended June 30, 2024 and 2023, respectively, which represents the fair value of the option, consisting of three main components:

(i) the value of the discount on the enrollment date, (ii) the proportionate value of the call option for 85 % of the stock and (iii) the proportionate value of the put option for 15 % of the stock.

The Company recognized compensation expense for the ESPP of approximately $ 19,000 and $ 25,000 for the three months ended March 31, 2024 and 2023, respectively.

The Company estimated the fair value of ESPP purchase options granted during the three months ended March 31, 2024 and 2023 using the Black-Scholes option pricing model.

The Company recognized compensation expense for the ESPP of approximately $( 16,000 ) and $ 3,000 for the three and six months ended June 30, 2024.

The credit balance during the three months ended June 30, 2024 is primarily due to share purchase limitations recognized during the quarter resulting in the reversal of part of the previous quarter’s compensation expense.

The Company recognized compensation expense for the ESPP of approximately $ 16,000 and $ 41,000 for the three and six months ended June 30, 2023, respectively.

The Company estimated the fair value of ESPP purchase options granted during the six months ended June 30, 2024 and 2023 using the Black-Scholes option pricing model.

The fair values of ESPP purchase options granted were estimated using the following assumptions:

Three Months Ended March 31,

Six Months Ended June 30,

Dividend yield

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The total amount of stock-based compensation was reflected within the statements of operations as (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

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Each 2023 Warrant was initially exercisable for one share of the Company’s common stock at a price of $ 8.00 per share.

As of March 31, 2024, the exercise price was adjusted to $ 1.66 per share (subject to further adjustment in certain circumstances, including in the event of stock dividends and splits;

As of June 30, 2024, the exercise price was adjusted to $ 1.66 per share (subject to further adjustment in certain circumstances, including in the event of stock dividends and splits;

recapitalizations;

change of control transactions;

and issuances or sales of, or agreements to issue or sell, shares of common stock or common stock equivalents at a price per share less than the then-applicable exercise price for the 2023 Warrants, including sales under the ATM, the “Exercise Price”).

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.

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As such, the 2023 Warrants were initially measured at fair value and recorded as a liability in the amount of $ 3.1 million.

As of March 31, 2024, all 2023 Warrants were outstanding.

As of March 31, 2024, the fair value of the warrant liability was $ 0.7 million.

The Company recorded a change in fair value of the warrant liability of $ 0.1 million for the three months ended March 31, 2024.

The Company did no t record a change in fair value of the warrant liability for the three months ended March 31, 2023.

For the three months ended March 31,

Beginning value

Initial valuation of new warrants

Change in value of warrant liability

As of June 30, 2024, all 2023 Warrants were outstanding.

As of June 30, 2024, the fair value of the warrant liability was $ 0.4 million.

The Company recorded a change in fair value of the warrant liability of $ 0.3 million for both the three and six months ended June 30, 2024.

The Company recorded a change in fair value of the warrant liability of $ 1.9 million for both the three and six months ended June 30, 2023.

Note 10 – 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, 2024 and December 31, 2023 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value:

Balance as of March 31, 2024

The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):

Balance as of June 30, 2024

Cash equivalents

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

As of June 30, 2024

As of March 31, 2024

As of June 30, 2023

As of March 31, 2023

Exercise price

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Dividend yield

The change in the fair value of the 2023 Warrant liability was determined to be $ 0.1 million during the three months ended March 31, 2024.

There was no change in fair value of the 2023 Warrant liability for the three months ended March 31, 2023 (see Note 9 – Warrant Liability).

Note 11 – Related Party Transactions

In November 2016, the Company and Dialog entered into the Alliance Agreement for the manufacture, distribution and commercialization of products incorporating the Company’s wire-free charging technology (See Note 6 – Commitments and Contingencies, Strategic Alliance Agreement ).

On November 7, 2016 and June 28, 2017, the Company and Dialog entered into securities purchase agreements under which Dialog acquired a total of 86,985 shares of common stock and received warrants to purchase up to 70,878 shares of common stock.

As of March 31, 2024, none of the warrants remain outstanding.

As of March 31, 2024, Renesas owns approximately 1.4 % of the Company’s outstanding common stock.

The Company did no t record any revenue during the three months ended March 31, 2024 and 2023 under the Alliance Agreement.

The Company incurred $ 0 and $ 0.1 million in chip test development expense from Renesas, which acquired Dialog in August 2021, during the three months ended March 31, 2024 and 2023, respectively.

On September 20, 2021, the Company was notified by Dialog that it was terminating the Alliance Agreement between the Company and Dialog.

The change in the fair value of the 2023 Warrant liability was determined to be $ 0.3 million during the six months ended June 30, 2024.

The change in fair value of the 2023 Warrant liability was determined to be $ 1.9 million during the six months ended June 30, 2023 (see Note 9 – Warrant Liability).

For the six months ended June 30,

(in thousands):

Beginning value

Initial valuation of new warrants

Change in value of warrant liability

Note 11 – Customer Concentrations

Four customers accounted for approximately 87 % of the Company’s revenue for the three months ended March 31, 2024, and two customers accounted for approximately 84 % of the Company’s revenue for the three months ended March 31, 2023.

Two customers accounted for approximately 92 % of the Company’s accounts receivable balance as of March 31, 2024, and two customers accounted for approximately 88 % of the Company’s accounts receivable balance as of December 31, 2023.

Two customers accounted for approximately 87 % of the Company’s revenue for the three months ended June 30, 2024, and three customers accounted for approximately 78 % of the Company’s revenue for the six months ended June 30, 2024.

Two customers accounted for approximately 68 % of the Company’s revenue for the three months ended June 30, 2023, and three customers accounted for approximately 75 % of the Company’s revenue for the six months ended June 30, 2023.

Two customers accounted for approximately 91 % of the Company’s accounts receivable balance as of June 30, 2024, and two customers accounted for approximately 88 % of the Company’s accounts receivable balance as of December 31, 2023.

Note 12 – Subsequent Event

Pursuant to the prospectus supplement filed on June 21, 2024 (See Note 7 – Capital Stock and Warrants, Financing ), the Company raised $ 0.2 million from total sales of 240,112 shares of the Company’s common stock under the ATM Program during the period from July 1, 2024 through August 9, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements