UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM10-K

(Mark One)

For the Fiscal Year EndedDecember 31, 20142017

For the transition period from __________________ to __________________

Commission file number:001-36379

ENERGOUS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

(408)963-0200

(Registrant’s telephone number, including area code)

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

Securities registered pursuant to Section 12 (g) of the Act: Common Stock, par value $0.001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes¨   ☐    Nox

  ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes¨  ☐    Nox

  ☒

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.    Yesx  ☒    No¨

  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yesx  ☒    No¨

  ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of RegulationS-K is not contained herein, and will not be contained, to the best of registrant'sregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form10-K.¨  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See definitions of "large“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act. (Check one):

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 Rule12b-2 of the Act):    Yes¨  ☐    Nox

  ☒

The aggregate market value of the voting andnon-voting common equity held bynon-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter ($15.12) was $99,383,907.$288,974,313. Solely for the purposes of this calculation, shares held by directors, executive officers and 10% owners of the registrant have been excluded. Such exclusion should not be deemed a determination or an admission by the registrant that such individuals are, in fact, affiliates of the registrant.

As of March 30, 2015,2, 2018, there were 12,796,50225,155,547 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The registrant intends to file a definitive proxy statement pursuant to Regulation 14A within 120 days after the end of the fiscal year ended December 31, 2014.2017. Portions of such proxy statement are incorporated by reference into Part III of this Annual Report on Form 10-10-K.K.

ENERGOUS CORPORATION

TABLE OF CONTENTS

technology to seamlessly mesh (like a network ofWi-Fi routers) to form a wire-free charging network that will allow users to charge their devices as they move fromroom-to-roomor integrated into electronic devices, withthroughout a range of fifteen (15) feet in radius or in a circular charging envelope of thirty (30) feet. Welarge space. To date, we have developed multiple prototype systemstransmitter prototypes in various form factors and power capabilities. We have also developed multiple receiver prototypes, including smartphone battery cases, toys, fitness trackers, Bluetooth headsets and tracking devices, as well as stand-alone receivers. We are also in the pre-production stage leading to mass production with early adopters of the WattUp technology to bring the first contact-based transmitters and compatible receivers to market.

When the company was founded, we recognized the need to build and design an enterprise-class network management and control software (“NMS”) system that was integral to the architecture and development of our wire-free charging technology. Our NMS system can be scaled up to control an enterprise consisting of singlethousands of devices or scaled down to work in a home or IoT environment.

The power, distance and multiple transmittersmobility capabilities of the WattUp technology were validated by an internationally recognized independent testing lab in various forms and sizes, multiple smart phone receiver cases, various other forms of receiving devices and management software. We have validated the technology in our laboratories, however our technology is not yet optimized and may be too large or too expensive to be incorporated into commercially marketed products.October 2015.

Our technology solution consists principally of transmitter and receiver application specific integrated circuits (“ASICs”)ICs and novel antenna designs driven through innovative algorithms and software applications. We aresubmitted our first IC design for wafer fabrication in November 2013 and have since been developing multiple generations of transmitter and receiver ASICs,ICs, multiple antenna designs, as well as algorithms and software designs that we believe, in the aggregate, will optimize our technology by reducing size and cost, while increasing performance to a level that we believe will allow forenable our technology to be integrated into low-power devices (thata broad spectrum of devices. We have developed a “building block” approach which allows us to scale our product implementations by combining multiple transmitter building blocks and/or multiple receiver building blocks to provide the power, distance, size and cost performance necessary to meet application requirements. While the technology is very scalable, in order to provide the necessary strategic focus to grow the company effectively, we have defined our market as devices requiringthat require 10 watts or less than 10 watts), thereby eliminating the need for a charging cord or padof power to maintain a charge. We submitted our first ASIC design for wafer fabrication in November 2013. Since then, we have continued to improve on our ASIC developments and we expectintend to continue investingto invest in this area. We are also developing what we believe will be an enterprise class management and control system for our WattUp solution that will incorporate cloud based network managementIC development as well as in the necessary local interfaceother components of the WattUp system to improve product performance, efficiency, cost-performance and control forminiaturization as required to grow the transmitterbusiness and receiver.

expand the ecosystem, while also distancing us from any potential competitors.

We believe that if our development, regulatory and commercialization efforts are successful, our transmitter and receiver technology will support a broad spectrum of charging solutions will initially be ableranging from contact-based charging or charging at distances of a few millimeters (“near field”) to simultaneously chargecharging at distances of up to 12 mobile15 feet (“far field”).

In February 2015, we signed a Development and License Agreement with one of the top consumer electronic companies in the world based on total worldwide revenues. The agreement is milestone-based and while there are no guarantees that the WattUp^® technology will ever be integrated into our strategic partner’s consumer devices, at varying charging levels, dependingwe continue to progress the relationship as evidenced by our 2017 revenues from engineering services resulting from the achievement of certain milestones under the agreement. We anticipate continued progress with the relationship, which we expect will result in additional engineering services revenue and ultimately, if our technology is incorporated into one or more products by our strategic partner, potentially significant revenues based on the number of devices, with a range of fifteen (15) feetWattUp^® technology being integrated into products shipped to consumers.

In February 2016, we began delivering evaluation kits to potential licensees to allow their respective engineering and product management departments to test and evaluate our technology. We expect that the testing and evaluations currently taking place will lead to products beginning to be shipped to consumers in radius or in a circular charging envelope of thirty (30) feet. Subsequent development efforts will focus on increasing the power delivery capability, increasing distance, enhancing the management and control solution and lowering overall system cost.2018.

As part of our commercialization efforts, in May 2014 we executed our first of 16 joint development agreements with strategic partners which provide for the exchange of technology and which serve to describe the integration of our technology into the strategic partners’ products. At the 2015 Consumer Electronics Show in January, we met with over 100 existing or new potential joint development partners and investors and demonstrated whole house charging coverage through the use of WattUp technology through multiple transmitters packaged in a variety of consumer friendly form factors, including televisions, bed-side units, sound bars, wall units and speakers. It is our objective during the first and second quarter of 2015 to narrow our research and development efforts to strategic partners whose goals, capabilities and commercialization potential most closely aligns with ours. Accordingly, in January 2015,In November 2016, we entered into a funded product developmentStrategic Alliance Agreement with Dialog, pursuant to which Dialog manufactures and licensing agreement with a tier-one consumer electronics company.distributes IC products incorporating our wire-free charging technology. Dialog is our exclusive supplier of these products for the general market. Our WattUp technology will often use Dialog’s SmartBond^® Bluetooth low energy solution as theout-of-band communications channel between the wireless transmitter and receiver. In most cases, Dialog’s power management technology will then be used to distribute

power from the WattUp receiver IC to the rest of the device while Dialog’s AC/DC Rapid Charge™ power conversion technology delivers power to the wireless transmitter.

We have pursued an aggressiveOur intellectual property strategy and are developingincludes pursuing patent protection for new patents.innovations. As of December 31, 2014,March 2, 2018, we had in excess of 125more than 170 pending U.S. patent and provisional patent applications. As of that date, the U.S. Patent and Trademark Office and international patent offices had issued 77 patents and had notified us of the allowance of 50 additional patents. In addition to the inventions covered by these patents and patent applications, we have also identified a significant number of additional specific inventions that we believe may beare novel and patentable. We intend to file for patent protection for the most valuable of these, as well asand for other new inventions that we expect to develop. Our strategy is to continually monitor the costs and benefits of each patent application and pursue those that we expect will best protect our business.

business and expand the core value of the Company.

We have recruited and hired a seasoned management team with both private and public company experience and relevant industry experience to develop and execute our operating plan. In addition, we have identified and hired additionalkey engineering resources in the areas of IC development, antenna development, hardware, software and firmware engineering as well as integration and testing which we expect will build upallow us to continue to expand our technology and intellectual property as well as meet the engineering capabilitysupport requirements of our internal team.

licensees.

Our common stock is quoted on the NASDAQ CapitalThe Nasdaq Stock Market under the symbol “WATT”. As of December 31, 2014,March 2, 2018, we had 3668 full-time employees.employees, 60 of which were engineers. We were incorporated in Delaware in October 2012. Our corporate headquarters is located at 3590 North First Street, Suite 210, San Jose, CA 95134. Our website can be accessed atwww.energous.com. www.energous.com. The information contained on, or that may be obtained from our website, is not, and shall not be deemed to be, part of this Annual Report on Form10-K.

Our Technology

The wire-free charging solution we are developing employs 3D “pocketforming” via a transmitter technology that creates a targeted RF energy pocket in a room around a receiving device (which may be mobile(mobile or fixed).

Figure 1 below shows a simplebasic diagram of our solution. Today this solution is able to send wattageRF energy from the transmitter to individual receiver devices in our laboratory.single or multiple devices.

Figure 1: Our Wire-freeWire-Free Charging Solution Diagram

First, our proprietary transmitter locates the client receiver(s) in a 3-dimensional space via technology we have developed using standard Bluetooth technology.^® communications. Next, the transmitter, through software control, generates a proprietary RF waveformcontrolled and focusedRF-waveform to create an RF energy pocket around the client receiver(s). We expect that client company receivers,Receiver(s) equipped with our antennas and ASICs,ICs, and drivencontrolled by our software, will beare able to gatherharvest power from this focused RF energy pocket. We believe that these client receivers will be incorporated into rechargeable-batteryvarious devices such as smart phones cases with embedded batteries, smart phones,smartphones, wearables, fitness trackers, keyboards and mice, cameras, tablets, e-book readers, keyboards, mice,toys, IoT devices, sensors, remote controls, rechargeable lights or anymedical devices and other device with similar charging requirements that would otherwise need a battery or a connection to a power outlet.

small electronics which contain embedded batteries.

Our transmitter uses proprietary software algorithms to dynamically direct, focus and control our proprietary RF waveform in three dimensions as it transmits energy to a moving object (such as a user holding their mobile phone indevice as they walk around a user’s pocket)room).

Figure 2 below depicts the front and back of a smart phone case that integrates our receiver technology and will, if used with our transmitter within the appropriate range, wirelessly charge a smart phone.

Figure 2: Front and Back of our Prototype Smart Phone Case with Embedded Energous Receiver Technology

Our initial demonstration system was able to output wattagetransmit energy to multiple devices withwithin a rangeradius of fifteen (15) feet in radius or in a circular charging envelope of thirty (30) feet and in real-time was able to refocus the RF pocket.15 feet. We believe our ASICscurrent generation ICs and those in development will also allow us to significantly reduce the size and cost of both our transmitter costs, while achieving highertransmitters and our receivers, and to increase delivered power and efficiency and faster synchronizing speeds.synchronization.

We submittedIn January 2016, we announced a new Miniature WattUp Near Field Transmitter (now called WattUp Near Field Transmitter Technology) and a small form factor receiver, both of which were developed as a direct result of our first ASIC designefforts to reduce cost and size. The WattUp Near Field Transmitter Technology offers contact-based charging, for wafer fabrication in November 2013. Since then,which we have submitted additionalreceived FCC approval, that allows for low power charging at up to five millimeter distances. Due to its low cost and small size, the miniature transmitter is anticipated to be bundledin-box with WattUp receiver enabled devices, replacing alternative charging solutions like power adapters and charging cables. The ability to provide a low cost, portable charging solution for receiver ASIC designsdevices established portability for the WattUp solution, and we expect it to accelerate the adoption of our wafer fabricator for production. Twotechnology. In 2017, we announced the High-Power version of these ASICs were usedthe WattUp nearfield transmitter that will have the ability to demonstrate our WattUp technology in prototypical consumer products in conjunction with our strategic partnerschange on contact at the Consumer Electronics Show in January 2015. Additional ASICs are under development and twolevels of these ASICs have entered the fabrication stage.

up to 10 watts.

Our Competition

There are numerousmany existing widelyand commercially available methods to provide power to rechargeable low-power fixed and mobilefor charging battery-powered devices, including wallplug-in recharging, charging, inductive recharging, power-mat recharging, battery rechargingcharging, magnetic resonance charging, charging stations and more. To our knowledge, almost all mobile consumer electronic devices equipped with a rechargeable battery come bundled with a method to rechargecharge the device (for example, a power cord). We are depending onStudies indicate that the development of aconsumer has grown tired and frustrated with tethered charging solutions and that the market thatis poised and will sufficiently value the convenience ofbe receptive to untethered wire-free recharging to pay the additional cost to purchasepower solutions like our wire-free charging solutions.

WattUp technology. We believe that the main advantagepositive market response and interest in the WattUp technology we have seen suggests that consumer electronic companies that develop products incorporating our technology will generate incremental sales and realize highly differentiated competitive advantages.

We believe our WattUp technology has a number of our wire-free charging technology, asadvantages compared to traditional charging technologies will be the ability to charge multiple devices anywhere within the charging area (expected to be a spanin terms of up to 30 feet) without the use of a charging pad. We believeproduct spectrum, distance, size, cost, mobility, foreign object detection and portability. Further, our technology is unique and flexible allowingallows us to target a fixed or mobile device and track that device if it moves, or is moving, and focus and transmit pockets offocused energy to the targeted device to charge the device without having to remove the battery or plug in the device. However, there are a

A variety of other wireless charging technologies are on the market or under development today. These competitive technologies fall into the following categories:

Magnetic Induction. Magnetic induction uses a magnetic coil to create resonance, which can transmit energy over very short distances. Power is delivered as a function of coil size (the larger the coil, the more power), and coils must be directly paired (one receiver coil to one transmitter coil = directly coupled pair) within a typical distance of less than one inch. Products utilizing magnetic induction have been available for 10+ years in products such as rechargeable electronic toothbrushes.

Magnetic Resonance. Magnetic resonance is similar to magnetic induction, as it uses magnetic coils to transmit energy. This technology uses coils that range in size depending on the power levels being transmitted. It has the ability to transmit power at distances up to ~11 inches (30cm) which can be increased with the use of resonance repeaters.

Conductive. Conductive charging uses conductive power transfer to eliminate wires between the charger (often a charging mat) and the charging device. It requires the use of a charging board as the power transmitter to deliver the power, and a charging device, with abuilt-in receiver, to receive the power. This technology requires direct metal contact between the charging board and the receiver. Once the charging board recognizes the receiver, the charging begins.

RF Harvesting. Harvesting RF energy is at the core of Energous’our WattUp technology. RF harvesting approaches typically utilizeutilizes directional antennas to target and deliver energy. To our knowledge, there are two other companies attempting to utilize a directional pocket of energy similar to that being developed by Energous.us.

Laser. Laser charging technology uses very short wavelengths of light to create a collimated beam that maintains its size over distance, using what is described as distributed resonance to deliver power to an optical receiver.

Ultrasound. Ultrasound charging technology converts electric energy into acoustic energy in the form of ultrasound waves. It then reconverts those waves through an “energy-harvesting” receiver.

Our Business Strategy

We intendPursuant to license our solution to consumer product companies who design, manufacture or cause to manufactureStrategic Alliance Agreement with Dialog, Dialog manufactures and market devices todistributes IC products incorporating our wire-free charging technology. Dialog is our exclusive supplier of these products for the consumer and who would benefit from wire-free charging.general market. We intend to pursue this licensing path because we believe there are several market verticals to whichvertical markets with large volumes of potential annual sales that would benefit from our technology, can apply, and as a result, we believe that thismay purchase our proprietary components through the Strategic Alliance Agreement. Our strategy is to support the most capital-efficient manner in which we can address manydevelopment and proliferation of them at once.our WattUp^® technology to form a ubiquitous wire-free charging ecosystem.

In addition, weWe believe that our greatest market opportunity is to create a ubiquitous protocol forlies in wire-free charging at a distance, which we anticipate may develop in much the same way that as theWi-Fi is the standard for wire-free data. ecosystem has developed. The goal is to ensure interoperability between base stationstransmitters and receivers that are based on our technology, regardless of who made them, installed them into finished goods, or marketed them. The implementation of previous standardsubiquitous solutions, such asWi-Fi and Bluetooth, should help to illustrateillustrates our goal; goal. For example,Wi-Fi routers, regardless of their designer or manufacturer, work withWi-Fi receivers installed in various consumer electronic devices, regardless of the manufacturer. Accordingly, we are following the same rollout strategy asWi-Fi in that we endeavor to:

In order for our technology to make ourbecome a ubiquitous solution the standard for charging at a distance, we intend to pursue an ecosystem strategy for our solution,technology, engaging not only potential licensees for our transmitter and receiver technologies, but also their upstream and downstream value chain partners. We also intend to capitalize on our first-to-market advantage and prioritize protectingprotection of our intellectual property portfolio, as we believe that keeping a firm grasp on this portfoliostrategy will make it less likely that a competing platform will be able to gain a solid foothold in theRF-based wirelesscharging-at-a-distance market and compete with our technology in a “standards battle.”meaningful way.

We believe our strategic relationshipsrelationship with key licenseesDialog will enable us to reap the benefits of our technology much faster and with greater penetration than by manufacturing and distributing or installing products ourselves. We believe this business model will also allowstrategic relationship allows us to solve the supply chain problem for major consumer electronic and IoT companies as well as leverage their highly regarded and experienced sales force while we concentrate our efforts and resources on engineering, development and commercialization projects more in line with our expertise as a research-and-development oriented company focused on generating licensable intellectual property. As we develop new applications for our technology, we expect to target new strategic relationships in different market sectors.

accelerate the introduction and adoption of the WattUp solution.

In order to demonstrateengage with potential licensees of the capabilityWattUp technology, we have developed evaluation kits consisting of oura transmitter and a receiver along with the enabling software to allow potential strategic partners to test the technology in their labs. The kits form a base “building block” component that is scalable to meet the needs of specific applications. We are developing processes and support capabilities to assist potential partners,customers as they evaluate the technology and develop specific designs to incorporate it.

In selecting initial customers, we are currently developing complete products, whichemploying a three-pronged strategy. First, we will convert into reference designs, whichare engaging with smaller, more nimble early adopters who have short product cycles to ship fully integrated WattUp enabled devices to the consumer as quickly as possible. These customers are important from a technology validation standpoint. Simultaneously, we intendare engaging with larger, top tier customers who have the ability to provideship WattUp enabled consumer and IoT devices in mass quantities beginning in the end of 2018. Finally, we continue to expand our licensees who will then modify and remanufacturecustomer based while we focus large opportunities with longer product cycles that should come to fit their own needs. These reference designs will be licensedfruition in 2019 where we expect to key partners, which we believe will allow themsee a significant increase in our revenues on the path to speed up incorporation of our technology into their product lines, create awareness and demand, and bring our power solution to market faster. We believe that our proprietary technology can potentially be utilized in a variety of devices, including smart phones, smart phone accessories, e-book readers, tablets, keyboards, mice, remote controls, rechargeable lights, cylindrical batteries, and any other device with similar charging requirements that would otherwise need a battery or a connection to a power outlet.

profitability.

Since we are developing a development stage company,new electronic device charging paradigm for consumers, we have not yet finalized some aspectsexpect the operational details of our strategy. For example,strategy to continue to evolve as our technology matures and our engagements with strategic partners solidify. As a result, we may decideexpect to sellmake operational course corrections as we steer the company towards our ASICs ourselves, rather than license the designgoal of those ASICs. That decision would depend on whether we believe selling ASICs ourselves would help meet the market demand of potential customers who would require our ASICs in order to provide their solution to the marketplace. However, we do not intend to manufacture our own ASICs. If we decide to sell our ASICs rather than license their designs, we will utilize a contract manufacturer to manufacture the ASICs. In any event, we do not intend to produce finished goods consumer products.

ubiquitous wire-free charging solution.

Our Initial Target Markets

We believe that our technology will be compelling to many endvertical markets, each of which may have several potential customers. In an effort toTo focus our activities and deliver a WattUp enable product tosee WattUp-enabled products in the consumerhands of consumers as quickly as possible, we may select certainhave selected initial target markets and strategic partners because of their time-to-market capabilities and theircustomers based on market potential.potential andtime-to-market capabilities. As we continue to develop our technology, we intend to add additionalmore markets and partners expanding our market presence.

partners.

We viewidentify our initialearly target markets in these two hardware categories.categories, transmitter target markets and receiver target markets.

Transmitter Target Markets

Wi-Fi Routers

We believeTransmitters are devices that consumers willbroadcast RF energy pockets that can be best able to understand our technologyaccessed byWatt-Up enabled receivers in the context of the wire-free data industry, since our technology allows devices to receive power while uncoupled in much the same way that the Wi-Fi router allowed devices to receive data while uncoupled. In addition, weconsumer electronic devices. We believe our transmitter technology can integrate well into form factorswill be developed and released in three basic categories:

Stand-Alone Transmitters:

We currently plan to release stand-alone transmitters in three categories:

Near Field WattUp Transmitters:

Because of the distinct advantages compared to other existing forms of contact-based wireless data routers. During the coursecharging including ease of our continuing system development,manufacturing and relative ease of regulatory approval, we expect that products using our Near Field transmitter technology will be the first WattUp enabled products on the market. Our Near Field transmitters are ideally suited for a broad spectrum of devices such as wearables, IoT devices and other small electronics that require a small form factor receiver and alow-cost charging solution as well as larger, more power-hungry devices like smartphones, smart watches and tablets. These solutions will initially beone-to-one (one transmitter to one receiver) withfollow-on versions being one transmitter to multiple receivers.

Mid Field WattUp Transmitters:

We expect that our Mid Field WattUp transmitters will be ablegeared to integratedesktop and automotive markets and will likely have a range of a few centimeters to one meter. We also intend for the Mid Field transmitters to have tracking ability to support mobile applications and multiple receiving devices. Midsized WattUp transmitters may include small desktop and nightstand transmitters designed to send power at distances for consumer electronic and IoT devices. The same technology may also be integrated into third party devices such as computer monitors, nightstand consumer electronics, accessories such as low voltage portable battery chargers and integrated automotive applications.

Far Field WattUp Transmitters:

Far Field WattUp transmitters are full featured transmitters with the power to charge multiple devices within a radius of up to 15 feet. We also expect that Far Field WattUp transmitters will have the ability to “pair” with other Far Field WattUp transmitters, allowing the user to create a large charging envelope encompassing many different rooms or large spaces while seamlessly providing charging to mobile devices that are moving through the coverage space. Far Field WattUp transmitters may also play a significant role in the powering of IoT devices that are fixed – such as security cameras and sensors. These may also be charged from a WattUp-enabledWi-Fi router, which addsRF-basedcharging-at-a-distance functionality.

Transmitters Integrated into Third Party Devices:

The “building block” core architecture developed for the WattUp technology is ideally suited to a broad spectrum of third party devices like televisions and refrigerator doors. The flexibility of the architecture in terms of size, power, distance, and cost affords Energous licensees the opportunity to match our technology with specific requirements and limitations typically found with complex integrations. For example, the WattUp technology could be integrated into form factors demanded by brandedthe door of a small refrigerator typically found in college dorm rooms providing charging capabilities to mobile devices anywhere in the room. Further, the “pairing” capabilities of the transmitter technology could enable licensees to develop venue-specific consumer electronics products like integrated televisions that are paired with integrated picture frames to provide mobile charging across a large room such as an airport lounge.

Wi-Fi Routers

We see the combination of the wire-free power router marketers.and theWi-Fi router as a natural integration point and a synergistic application of both technologies. The WattUp wire-free power router shares a number of technical characteristics withWi-Fi routers in that both devices operate in the airwaves in the unlicensed industrial, scientific and medical bands, both devices owe their success to the utility and convenience they bring to the

consumer, both devices rely on antenna structures to send power and data, and both devices “pair” or provide hand off capabilities which allow for large “enabled” sites similar to a mesh network. We also believe that our 3D pocketforming technology may be able to enhance the data signal of aWi-Fi router, which we believe will provide an even stronger value proposition to wireless data router manufacturers. In addition, we plan to collaborate with our tier-one consumer electronics company, development partner to engage with third party transmitter suppliers. Our belief is that through this joint approach we will be able to enhance the marketing of transmitters and manufacturing of transmitters which in turn would help drive the demand for receiving devices.

According to Infonetics Research, the wireless local area network (“WLAN”) market was approximately $4 billion in 2012. This includes enterprise access points, WLAN controllers and TheWi-Fi phone access points. The Wi-Fi router market has two segments: commercial and residential. The key differentiator between these segments is that commercial routers tend to have much more robust security features, including virtual private networks and advanced content filtering. We believe that our technology is applicable to both the commercial and residentialWi-Fi router markets. Consequently, we have begunmarkets based on the building block capabilities mentioned earlier that will enable the WattUp technology to engage with some of these leading firms ineffectively serve and support both of these segments.

markets.

In addition, theWi-Fi router market has other key players. These include consumer electronics supply chain firms, including original equipment manufacturers (“OEMs”), original design manufacturers (“ODMs”), component manufacturers and branded consumer electronics firms. We believe that each of these categories of players can help to integrate our technology into a commercially availableWi-Fi router.

An ODM designs products either collaboratively with their customers or on their own and manufactures them for sale to companies under the end customer’s brand. Additionally, an ODM may engage multiple companies with similar designs that are then marketed under several different end customers’ brands. An OEM manufactures products for sale under another firm’s brand. We believe that engaging with both types of organizations will be necessary to speed our entry into the market and extend our market reach.

Component suppliers are also a key part of our go-to-market strategy, as most ODMs and OEMs do not design their own components. We expect to be actively engaged with component companies that supply antennas, as well as mixed-signal, power and RF components to the major ODM and OEMs in the Wi-Fi router market.

As part of ourgo-to-market strategy under the Strategic Alliance Agreement with Dialog, we intend to market to major infrastructure developers, both forare currently working with customers offering consumer and commercial applications. Within these consumer markets, engagements will primarily be with consumer product companies who manufacture and market products to major residential home builders. For commercial installations, we will engage with the wireless network operators and private Wi-Fi system operators. We will also engage with concentrated consumer destinations (for example, coffee shop and restaurant chains, airport lounges and airports). We intend to educate concentrated consumer destinations on the benefitsapplications of our solutions to drive them to seek out and demand our solution from their vendors and suppliers.technology.

Receiver Target Markets

In January 2015, we signed a development and licensing agreement with a tier-one consumer electronics company to embed WattUp wire-free charging receiver technology in various products including, but not limited to mobile consumer electronics and related accessories. During the development phase and through our customer’s first customer shipment of product with our technology embedded in each licensed product category, we will afford this customer an exclusive time to market advantage in such licensed product categories.

This development and licensing agreement contains both invention and development milestones that we will need to achieve during the next two years. If we achieve such milestones, we are entitled to receive milestone-based development payments under the agreement.

This agreement, and the close collaboration with our partner it entails, will enable us to accelerate commercial development on a number of fronts. If successful, we believe this agreement also paves a very clear path to attaining critical mass in the market for WattUp wire-free power. We believe that this critical mass is driven by both wide adoption of our receiver technology, but just as importantly, having this wide adoption on the receiver side creates pull and demand for broad adoption of our transmitter technology. With the goal of promoting the establishment of a wire-free charging ecosystem based on the WattUp technology, we, and this partner, plan to collaborate to introduce WattUp technology to potential partner companies including router and accessory manufacturers.

Mobile Devices (Phones and Tablets)

We believe that the value proposition of our technology would be strengthened significantly if it were directly integrated into OEM subassemblies for mobile devices or the devices themselves, or alternatively, if our technology was integrated into third party silicon components already present in the mobile device. Both of these entry points would eliminate the need for accessory-based solutions. This presents an attractive market for us as the set of potential partners with whom to engage is readily identifiable and the opportunity with each is large given the concentrated market share of the major players. In January 2013, Gartner estimated that the size of the smart phone industry was approximately $117.5 billion in 2012, and would grow to approximately $175.4 billion in 2016. Gartner also estimated that the size of the combined media tablet and premium tablet industry was approximately $32 billion in 2012, and would grow to approximately $62.8 billion in 2016.

In order to develop relationships with the large mobile device OEMs, we believe it is important to build an ecosystem of key players across the value chain.

We have identified the key players in this value chain. We categorize these players as upstream providers (which produce components for OEMs and ODMs, such as baseband integrated circuits, application processors, Bluetooth modules, memory and batteries), midstream providers (which assemble devices for branded firms and test components for OEMs and ODMs) and downstream providers (which provide end-use services for consumers of devices sold by branded consumer electronics firms and include telecom operators and channel distributors).

Cases for Mobile Devices (Phones and Tablets)

We believe that cases for mobile devices (which include both phones and tablets) are an attractive initial market for our receiver. According to ABI Research, the mobile phone accessory market (which includes headphones and chargers as well as cases) was $20 billion in 2012. According to the NPD Group, the mobile phone case industry was approximately 36% of the overall mobile phone accessory market for the first half of 2012. If both of these figures are correct, the smartphone case market was approximately $7 billion in 2012.

In addition, this is a fiercely competitive market, with dozens of players looking for a way to differentiate themselves. There are hundreds of different types of mobile phone cases that range in price from under $10 to over $100, and are made of varying materials from simple polymers to full-grain leather. Some of these cases are differentiated by being thin and light, while others are differentiated by offering additional features such as external battery packs, waterproofing or credit card slots. We believe that this competition makes it more likely that we will be able to find a partner that chooses to differentiate its products by licensing our technology.

We further believe that this is an attractive market because the design cycles for these cases tend to be much shorter than those for the devices themselves. Though our longer-term goal remains integrating our receiver technology into the mobile devices themselves (through the branded consumer electronics firms that market them or the OEM or ODM that manufactures them), we believe that initially designing our receivers into cases will provide industry validation and “pull” our technology into the original mobile device manufacturer.

Other Markets

We believe there are many morea wide variety of potential marketsuses for our receiver technology, in the longer term. We are pursuing a licensing strategy so that we can bring our technology to multiple markets simultaneously.

Some potential long-term markets for our technology include:including:

This list is meant for illustrative purposes only; we cannot guarantee that we will address any of these markets, and we may decide to address a market that is not on the above list. We intend to continuously evaluate our target markets and choose new markets based on factors including (but not limited to)time-to-market, market size and growth, and the strength of our value proposition for a specific application.

Key Strategic Partnership

In January 2015, we signed a Development and License Agreement with atier-one consumer electronics company to embed WattUp wire-free charging receiver technology in various products, including mobile consumer electronics and related accessories.

This Development and License Agreement, as amended, contains invention and development milestones requirements that we will need to achieve through fiscal 2018 and potentially beyond. We are entitled to receive development payments under the agreement, based on achievement of specified milestones.

During the development phase until one year after the first customer shipment of any WattUp enabled product within the partners portfolio of products, we will afford this customer a time to market advantage in the licensed product categories.

This agreement was last amended in December 2017 to allow us to market certain products that were previously restricted by the exclusivity terms of the agreement.

WattUp uses small form factor antennas that are formed using the existing device’s printed circuit board, removing the need for larger, more expensive coils. This enables broader adoption of wireless charging in a larger range of battery-powered devices, such as smartphones, tablets, IoT devices, small form factor wearables, gaming and Virtual Reality (VR)/Augmented Reality (AR) devices.

We believe this agreement, or one like it with another top tier consumer electronics company, presents an opportunity to accelerate critical mass adoption for WattUp^® wire-free power. We also believe that partners are the key to adoption and critical mass by the broad distribution of embedded or stand-alone transmitters into other consumer electronics devices. Finally, having this wide adoption on both the transmitter and the receiver side should create demand for broad adoption of our technology from circles outside of our key strategic partners.

In November 2016, we entered into a Strategic Alliance Agreement with Dialog for the manufacture and distribution of IC products incorporating our wire-free charging technology. Dialog is our exclusive supplier of these products for specified fields of use. Our WattUp chipsets are ordered through and manufactured by Dialog, carry the Dialog brand and are shipped and supported by Dialog. Dialog agreed to not distribute, sell or work with any third party to develop any competing products without our approval. Energous and Dialog agreed on a revenue sharing arrangement and will collaborate on the commercialization of licensed products based on a mutually-agreed upon plan.

Our WattUp technology uses Dialog’s SmartBond^®Bluetooth low energy solution as theout-of-band communications channel between the wireless transmitter and receiver. Dialog’s power management technology is used to distribute power from the WattUp receiver IC to the rest of the device while Dialog’s AC/DC Rapid Charge™ power conversion technology delivers power to the wireless transmitter.

Research and Development

Research and development costs accountaccounted for a substantial portionapproximately 66%, 69% and 63% of our total operating expenses.expenses for 2017, 2016 and 2015, respectively. Our total research and development expenses were $12.5$33.2 million, $32.8 million, and $2.1$18.8 million for the years ended December 31, 2014,2017, 2016, and 2013,2015, respectively. Research and development expenses are expected to increase in the future as we concentrate our efforts and resources on the commercialization of our technology.

Our Intellectual Property

As a company primarily focused on licensing, we expect that our most valuable asset will be our intellectual property. This includes U.S. and foreign patents, patent applications andknow-how. We are pursuinghave implemented an aggressive intellectual property strategy and are developingcontinuing to pursue patent protection for new patents.

innovations. As of December 31, 2014,March 2, 2018, we had more than 170 pending patent applications in excess of 125 pendingthe U.S. and abroad. Additionally, the U.S. Patent and Trademark Office and international patent offices have issued 77 patents and provisional patentnotified us of the allowance of 50 additional patents applications. In addition to the inventions covered by these patents and patent applications, we have identified a significant number of additional specific inventions we believe may beare novel and patentable. We intend to file for patent protection for the most valuable of these, as well as for other new inventions that we expect to develop.

Our strategy is to continually monitor the costs and benefits of each patent application and pursue those that will best protect our business and expand the core value of the Company.

Government Regulation

Our wire-free charging technology involves the transmission of power using RF energy waves, which areis subject to regulation by the FCC,Federal Communications Commission (“FCC”), and may be subject to regulation by other federal, state, local and localinternational agencies. To our knowledge, the transmission of power in this manner by a consumer product at the ranges we are proposing is novel. We believe our technology is safe, and we are in the process of seeking FCC approval.

We believe our technology is safe because our proprietary waveform operates in the 2.4/5.8 GHz radio frequency range, which is the same range as Wi-Fi routers and several other wireless consumer electronics. For those types of products,continue to consult with the FCC grants what is known as Part 15and other regulatory bodies to establish a process by which devices incorporating WattUp^® technology can secure required approvals.

As part of the regulatory approval if, among other things,process, devices incorporating the specific absorption rate (“SAR”) is below certain thresholds. In addition, because ourWattUp^® technology involves the transmission of power greater than the power threshold limits of Part 15, we also expect towill need to obtain approvals under both FCC Part 15 and FCC Part 18, approval. To our knowledge, the transmission of power in this manner by a consumer product at the ranges we are proposingdepending on specific application. Energous has not yet been approvedreceived Part 15 and there can be no assurance that we will be able to obtain this approval or that other governmentalPart 18 FCC grants for WattUp enabled products and anticipates future domestic and international approvals will not be required.for new and updated designs.

Employees

As of March 16, 2015,2, 2018, we had 3868 full-time employees. None of these employees are covered by a collective bargaining agreement, and we believe our relationship with our employees is good. We also employ consultants, including technical advisors, on anas-needed basis to supplement existing staff. Consultants and technical advisors provide us with expertise in electrical engineering, software development and other specialized areas of engineering and science.

Item 1A. Risk Factors

We are subject to variousmany risks that may materially harm our business, prospects, financial condition and results of operations. An investment in our common stock is speculative and involves a high degree of risk. In evaluating an investment in shares of our common stock, you should carefully consider the risks described below, together with the other information included in this prospectus.

If any of the events described in the following risk factors actually occurs, or if additional risks and uncertainties that are not presently known to us or that we currently deem immaterial later materialize, then our business, prospects, results of operations and financial condition couldcondition. This discussion highlights some of the risks that might adversely affect our future operating results in material ways. We believe these are the risks and uncertainties that are the most important ones we face. We

cannot be materially adversely affected. Incertain that event, the tradingwe will successfully address these risks, and if we are unable to address them, our business may not grow, our stock price of our common stock could decline,may suffer and you maycould lose all or partthe value of your investment in our shares.company. Other risks and uncertainties that we do not currently recognize as material risks, or that are similar to risks faced by other companies in our industry, may also impair our business, prospects, results of operations and financial condition. The risks discussed below include forward-looking statements, and our actual results may differ substantially from those discussedwhat is in these forward-looking statements.

Risks Related to Our Business

We have no history of generating sales or licensemeaningful product revenue, have a history of operating losses, and we may never achieve or maintain profitability.

We have a limited operating history upon which investors may evaluaterely in evaluating our business and its prospects. We have never generated sales or licenseonly very limited revenues to date and we have a history of losses from operations. As of December 31, 2014,2017, we had an accumulated deficit of $51,145,478, that included accumulated expense of $26,442,177 from changes in value of derivative liabilities and, accumulated stock based compensation expense of $2,564,126.approximately $174 million. Our ability to achieve material revenue-generating operations,generate revenues on a more reliable and ultimately,larger scale, and to achieve profitability, will depend on whether we can obtain additional capital when we need it,our ability to execute our business plan, complete the development of our technology, and incorporate it into products that technology into the products sold by our customers wish to buy, and then find customers who will purchase our future products and services. There can be no assurance thatto do so rapidly with appropriate financing if necessary. If we will everare unable to generate revenues orof significant scale to cover our costs of doing business, our losses will continue and we may not achieve profitability.

profitability, which could negatively impact the value of your investment in our securities.

Terms of our developmentDevelopment and licensing agreementLicense Agreement with atier-one consumer electronics company could inhibit potential licensees from working with us in specific markets.

We have entered into a Development and License Agreement with atier-one consumer electronics company to embed our WattUp wire-free charging receiver and transmitter technology in various products, including mobile consumer electronics and related accessories. This agreement provides our strategic partner atime-to-market advantage during the development and licensing agreement with a tier-one consumer products company that provides that company a time-to-market advantageuntil one year after the first customer shipment for certainspecified WattUp-enabled consumer products. The time-to-market advantage mightThis may inhibit anotherother potential licenseelicensees of our technology from engaging with us or theyon competing consumer products, and may be pressuredcause them to seek solutions offered by other solutionscompanies, which could have a negative impact on our future revenue opportunities.opportunities and financial results.

Our effortsWe may neverbe unable to demonstrate the feasibility of our technology.

We have developed a working prototypeprototypes of products using our technology, but significant additional research and development activity willis required to commercialize our technology for mid field and far field applications so that it can be required before we achieve asuccessfully integrated into commercial product.products. Our research and development efforts remain subject to all of the risks associated with the development of new products that are based on emerging technologies, including without limitationsuch as unanticipated technical or other problems, the inability to develop a productidentify products utilizing our technology that maywill be sold at anin demand with customers, getting our technology designed in to those products, designing new products for manufacturability, and achieving acceptable price pointpoints for final products. Our technology must also satisfy customer expectations and be suitable for them to use in consumer applications. Any delays in developing our technology that arise from factors of this sort would aggravate our exposure to the possible insufficiencyrisk of fundshaving inadequate capital to fund the research and development needed in order to complete development of these products and enable us to render services.products. Technical problems may result incausing delays andwould cause us to incur additional expenses that would increase our operating losses. If we cannot complete, or if we experience significant delays in developing our technology and products and services based on such technology,it for use in potential commercial applications, particularly after incurring significant expenditures, our business may fail. In particular, tofail and you could lose the value of your investment in our company. To our knowledge, the technological concepts we are applying to develop commercial applications of wire-free power for fixed and mobile low-power rechargeable devices have notnever previously been previously successfully applied by anyone else, ifapplied. If we fail to develop a practical efficient orand economical commercial productproducts based on those technological concepts,our technology, our business may fail.fail and you could lose the value of your investment in our stock.

WeThe FCC may not obtain FCCdeny approval for our technology, and existing laws or regulations or future legislative or regulatory changes may affectimpair our business.

Our wire-free charging technology involves the transmission of power using RFradio frequency (RF) energy, waves, which areis subject to regulation by the FCC, andFederal Communications Commission, or FCC. It may also be subject to regulation by other federal, state and local agencies. We intend to design our technology so that it willto operate in the 2.4/5.8 GHz radio frequency range, whicha RF band that is the same range as also used forWi-Fi routers and several other wireless consumer electronics. For those types of products, theSome customer applications may require us to develop our technology to work at different frequencies. The FCC grants what is known as Part 15product approval if, among other things, the specific absorption ratehuman exposure to radio frequency emissions is below certainspecified thresholds. In addition, because our technology involves the transmission ofFor products that transmit more power, greater than the power threshold limits of Part 15, we also expect to need to obtainadditional FCC Part 18 approval. To our knowledge, the transmission of power using RF energy waves by a consumer product at the ranges weapprovals are proposing has not yet been approved and thererequired. There can be no assurance that wedevices incorporating our technology will be able to obtain thisreceive FCC approval or that other governmental approvals will not be required. Our efforts to achieve required governmental approvals could beobtain FCC approval for devices using our technology is costly and time consuming and if weconsuming. If approvals are unable to receive any such required approvalsnot obtained in a timely and cost-efficient manner, our business and operating results maywould be materially adversely affected. The cost of compliance withharmed. In addition, new laws or regulations governing our technology or future products could adversely affect our financial results. New laws or regulations may impose restrictions or obligations on us that could forcerequire us to redesign our technology under development or other future products, and may impose restrictionsor that are not possibledifficult or practicableimpracticable to comply with, all of which could causewould adversely affect our business to fail. We cannot predict the impact on our business of any legislation or regulations related to our technology or future products that may be enacted or adopted in the future.

revenues and financial results.

We anticipate future lossesdepend upon our strategic relationship with Dialog Semiconductor, a provider of electronics products, and negative cash flow, and it is uncertain if or whenthere can be no assurance that we will become profitable.achieve the expected benefits of this relationship.

We have entered into a strategic cooperation agreement with Dialog Semiconductor, a provider of electronics products, pursuant to which we licensed our WattUp technology to Dialog and Dialog became the exclusive provider of our technology. We intend to leverage Dialog’s sales and distribution channels and its operational capabilities to accelerate market adoption of our technology, while we focus our resources on research and development of our technology. There can be no assurance that Dialog will promote our technology successfully, or that it will be successful in producing and distributing related products to our customers’ specifications. Dialog may have other priorities or may encounter difficulties in its own business that interfere with the success of our relationship. If this strategic relationship does not yet demonstrated an ability to generate license revenue, andwork as we intend, then we may never be ablerequired to produce material revenuesseek an arrangement with another strategic partner, or operate onto develop internal capabilities, which will require a profitable basis.commitment of management time and our financial resources to identify a replacement strategic partner, or to develop our own production and distribution capabilities. As a result, we have incurred losses sincemay be unable without undue expense to replace this agreement with one or more new strategic relationships to promote and provide our inception and expect to experience operating losses and negative cash flow for the foreseeable future.

We expect to expend significant resources on hiring of personnel and startup costs, including payroll and benefits, product and ASIC testing and development, intellectual property development and prosecution, marketing and promotion, capital expenditures, working capital and general and administrative expenses. We expect to incur costs and expenses related to prototype development, consulting costs, laboratory development costs, obtaining regulatory approvals required for our technology and reference product designs, marketing and other promotional activities, hiring of personnel, and the continued development of relationships with strategic business partners. We may not be able to obtain financing in a sufficient amount or at all. We anticipate our losses will continue to increase from current levels during our development stage.technology.

We expect tomay require additional financing in order to achieve our business plans.

We believe our technologyplans, and there is novel in offering the potential to make wire-free charging an affordable, ubiquitous and convenient service for end users. However, the consumer and commercial electronics industry in general and the power, recharging and alternative recharging segments ofno guarantee that industry in particular are subject to intense and increasing competition and rapidly evolving technologies. Accordingly, for our business plans to succeed we believe it will be important for us to move quickly to develop our technology, obtain required regulatory approvals and engage with strategic partners. As a small company, weavailable on acceptable terms, or at all.

We may be unable to successfully implement our ambitions of targeting very large markets in an intensely competitive industry segment without significantly increasing our resources. We do not have sufficient funds to fully implement our business plan, the ultimate goal of which is to license our technology to device manufacturers, wireless service providers and other commercial partners to make wire-free charging an affordable, ubiquitous and convenient service for end users.plans. We expect that unless we are able to obtain non-dilutive financing through licensing revenues or other strategic partner transactions, we will need to raise additional capital through new financings.financings, even if we begin to generate meaningful commercial revenue. Such financings could include equity financing, which may be dilutive to stockholders, or debt financing, which would likelycould restrict our ability to borrow from other sources. In addition, such securities may contain rights, preferences or privileges senior to those of the rights of our current stockholders. There can be no assurance thatAs a result of economic conditions, general global economic uncertainty, political change, and other factors, we do not know whether additional fundscapital will be available when needed, or that, if available, we will be able to obtain additional capital on terms attractivereasonable terms. If we are unable to us,raise additional capital due to the volatile global financial markets, general economic uncertainty or at all. If adequate funds are not available,other factors, we may be required to curtail the development of our technology or materially curtailreduce operations as a result, or reduce our operations. We could be forced to sell or dispose of our rights or assets. Any inability to raise adequate funds on commercially reasonable terms could have a material adverse effect on our business, results of operationoperations and financial condition, including the possibility that a lack of funds could cause our business to fail and liquidate with little or no return to investors.

We may have difficulty managing growth inExpanding our business.

Asbusiness operations as we expand our activities, thereintend will be additionalimpose new demands on our financial, technical, operational and management resources. The failure

To date we have operated primarily in the research and development phase of our business. If we are successful, we will need to continue toexpand our business operations, which will impose new demands on our financial, technical, operational and management resources. If we do not upgrade our technical, administrative, operating and financial control systems, or the occurrence of unexpected expansion difficulties arise, including issues relating to our research and development activities and retention of experienced scientists, managers and engineers, could have a material adverse effect on our business, financial condition andour results of operations and financial condition, and our ability to timely execute our business plan. If we are unable to implement these actions in a timely manner, our results may be adversely affected.

If we successfullyproducts incorporating our technology are launched commercially launch a product, and our product doesbut do not achieve widespread market acceptance, we will not be able to generate the revenue necessary to support our business.

AchievingMarket acceptance of a wire-free rechargingcharging system as a preferred method to rechargelow-power fixed and mobile electronic devices will be crucial to our continued success. Consumers and commercial customers will not begin to use or increase the use of our product unless they agree that the convenience of our solution would be worth the additional expense of purchasing our system. We have no history of marketing any product and we and our commercialization partners may fail to generate significant interest in the initial commercial products or any other product we or our partners may develop. These and otherThe following factors, including the following factors,among others, may affect the rate and level of the market acceptance:acceptance of products in our industry:

If we are unable to achieve or maintain market acceptance of our technology, and if related products do not win widespread market acceptance, our business wouldwill be significantly harmed.

If we successfullyproducts incorporating our technology are commercially launch a product,launched, we may experience seasonality or other unevenness in our financial results in consumer markets or a long and variable sales cycle in enterprise markets.

While we do not now have license revenue or a commercial product, ourOur strategy depends on developing athe development of successful commercial productproducts and effectively licensing our technology into the consumer, enterprise and commercial markets. We will need to understand procurement and buying cycles to be successful in licensing our technology into those markets. If we eventually generate a substantial portion of our revenues from licensing arrangements, wetechnology. We anticipate it is possible that demand for our technology could vary similarly with the market for products with which our technology may be used, for example, the market for new purchases of laptops, tablet, mobile phones, gaming systems, toys, wearables and the like. Such consumer markets are often seasonal, with peaks in and around the December holiday season and the August-Septemberback-to-school season. Enterprises and commercial markets may have annual or other budgeting and buying cycles that could affect us, and, particularly if we are designated as a capital improvement project, we may have a long or unpredictable sales cycle.

We may not be able to achieve all the product features we seek to include in our product.technology.

We have developed a prototypeworking prototypes of commercial products that utilize our product concept that displays limited functionality in a laboratory setting. There are a variety oftechnology. Additional features and performance specifications we seek to include in our product that wetechnology have not yet achieved. While we believe recharging multiple devices on one transmitterbeen developed. For example, some customer applications may require specific combinations of cost, footprint, efficiencies and

capabilities at a commercially acceptable level may be possible theoretically, we have not yet achieved these results, even in the laboratory.various charging power levels and distances as part of an overall system. We believe our research and development efforts will yield additional functionality and capabilities over time. However, there can be no assurance that we will be successful in achieving all the features we are targeting and our inability to do so may limit the appeal of our producttechnology to consumers.

Use ofFuture products based on our technology under development or other future products may require the user to purchase additional products to use with existing devices. To the extent these additional purchases are inconvenient, the adoption of our technology under development or other future products could be slowed, which would harm our business.

For rechargeable devices that will utilize our receiver technology, the technology may be embedded in a sleeve, case or other enclosure. For example, certain products such as remote controls or toys equipped with replaceable AA size or other sized batteries would need to be outfitted with enhanced batteries and other hardware that would enableenabling the devices to be rechargeable by our system. In each case, to use a device with our system, an end user willwould be required to retrofit the device with a receiver and may be required to upgrade the battery technology used with the device (unless, for example, a consumer electronics supply chain firm has built compatible battery technology and a receiver are built into the device). These additional steps and expenses may offset the convenience for some users and discourage some users from purchasing our technology under development or other future products. Such factors may inhibit adoption of our technology, which wouldcould harm our business. We have not developed thean enhanced battery to be usedfor use in devices with our technology, and our ability to enable use of our technology with devices that will require an enhanced battery will depend on our ability to develop a commercial version of such an enhanceda battery that could be manufactured at a reasonable cost. If we fail to develop or enable a commercially practicable enhanced battery, we expect our business wouldcould be harmed, and we may need to change our strategy and target markets.

Laboratory conditions differ from field conditions, which could affect the effectiveness of our technology under development or other future products. Failures to effectively move from laboratory to the field effectively would harm our business.

Our technology, whenWhen used in the field, our technology may not be able to match the observations, developments,perform as expected based on test results and performance thatof our technology may be able to achieve (and we may be able to document) under controlled laboratory circumstances. As oneFor example, of the difference between ideal laboratory conditions and field use, consider that in the laboratory we can arrange for the transmitter to have line-of-sighta configuration of obstructions of transmission to a receiver. If we intend to test the performance through obstructions, we can control the configurations of the obstructions and the materials from which such obstructions are made. In the field, however, the receiver maywill be obscured or obstructed, or placed around a corner. Also,arranged in some fashion, but in the field receivers may be obstructed in many different and unpredictable ways over which we will have no control over the configuration of the obstructions or the materials that comprise each obstruction.control. These conditions may significantly decrease or eliminatediminish the power received at the receiver or the effective range of the transmitter, because the RF energy from the transmitter may be absorbed by obscuring or blocking material or may need to be reflected off of a surface to reach the receiver, making the transmission distance longer than straight-line distances. The failure of products using our technology under development or other future products to be able to meet the demands of users in the field wouldcould harm our business.

Safety concerns and legal action by private parties may affect our business.

We believe that our technology is safe. However, it is possible that we could discover safety issues with our technology or keep that some people may be concerned with wire-free transmission of power in a manner that has occurred with some other wireless technologies as they were put into residential and commercial use, such as the safety concerns that were raised by some regarding the use of cellular telephones and other devices to transmit data wirelessly in close proximity to the human body. While we plan to at least partially address this potential concern by developing our management software to be configurable by users to selectively recharge devices in ways that would be intended to avoid recharging in close proximity to a human body, such as recharging only during predetermined time periods or recharging only when the device is not moving, we do not plan to conduct any tests to determine whether RF waves produce harmful effects on humans or other animals. We may be unable to effectively prevent recharging in close proximity to a user’s body, which could affect the marketability of our technology or could result in requests for law or regulation governing our technology under development or a class of products in which our technology under development would be included. In addition, while we believe our technology is safe, users of our technology under development or other future products who suffer medical ailments may blame the use of products incorporating our products,technology, as occurred with a small number of users of cellular telephones. A discovery of safety issues relating to our technology wouldcould have a material adverse effect on our business and any legal action against us claiming our productstechnology caused harm could be expensive, divert management and adversely affect us or cause our business to fail, whether or not such legal actions were ultimately successful.

Our industry is subject to intense competition and rapid technological change, which may result in products or new solutionstechnology that areis superior to our technology under development or other future products we may bring to market from time to time.ours. If we are unable to anticipate or keep pace with changes in the marketplace and the direction of technological innovation and customer demands, our technology and products may become less useful or obsolete and our operating results will suffer.

The consumer and commercial electronics industry in general, and the power, recharging and alternative recharging segments of that industry in particular, are subject to intense and increasing competition and rapidly evolving technologies. Because products incorporating our productstechnology are expected to have long development cycles, we must anticipate changes in the marketplace and the direction of technological innovation and customer demands. To compete successfully, we will need to demonstrate the advantages of our products and technologies over well-established alternative solutions, productsestablished alternatives, and technologies, as well asover newer methods of power delivery and convince consumers and enterprises of the advantages of our products and technologies.delivery. Traditional wallplug-in recharging remains an inexpensive alternative to our technology under development. Also, directlytechnology. Directly competing technologies such as inductive charging, magnetic resonance charging, conductive charging, ultrasound and other yet unidentified solutions may have greater consumer acceptance than the technologies we have developed. Furthermore, certain competitors may have greater resources than uswe have and may be better established in the market than we are. We cannot be certain which other companies may have already decided to or may in the future choose to enter our markets. For example, consumer electronics products companies may invest substantial resources in wireless power or other recharging technologies and may decide to enter our target markets. Successful developments of competitors that result in new approaches for recharging could reduce the attractiveness of our products and technologies or render them obsolete.

Our future success will depend in large part on our ability to establish and maintain a competitive position in current and future technologies. Rapid technological development may render our technology under development or future products based on our technology obsolete. Many of our competitors have or may have greater corporate, financial, operational, sales and marketing resources andthan we have, as well as more experience in research and development than we have.development. We cannot assure you that our competitors will not succeed in developingdevelop or marketingmarket technologies or products that are more effective or commercially attractive than our products or that would render our technologies and products obsolete. We may not have or be able to raise or develop the financial resources, technical expertise, marketing, distribution or support capabilities to compete successfully in the future. Our success will depend in large part on our ability to maintain a competitive position with our technologies.

Our competitive position also depends on our ability to:

If our technology under development isdoes not or our future products are not competitivecompete well based on these or other factors, our business wouldcould be harmed.

It is difficult and costly to protect our intellectual property and our proprietary technologies, and we may not be able to ensure their protection.

Our success depends significantly on our ability to obtain, maintain and protect our proprietary rights to the technologies used in products incorporating our products.technologies. Patents and other proprietary rights provide uncertain protections, and we may be unable to protect our intellectual property. For example, we may be unsuccessful in defending our patents and other proprietary rights against third party challenges.

As of December 31, 2014, If we had in excess of 125 pending U.S. patents and provisional patent applications on file, but do not have any issued patentsthe resources to defend our intellectual property, the value of our intellectual property and our licensed technology will decline, threatening our potential revenue and results of operations.

We depend upon a combination of patent, trade secrets, copyright and trademark laws to protect our intellectual property and technology.

In addition to patents, we expect toWe rely on a combination of patents, trade secrets, copyright and trademark laws, nondisclosure agreements and other contractual provisions and technical security measures to protect our intellectual property rights. These measures may not be adequate to safeguard the technology underlying our products.technology. If they do not protect our rights adequately, third parties could use our technology, and our ability to compete in the market would be reduced. Although we are attempting to obtain patent coverage for our technology where available and where we believe appropriate, there are aspects of the technology for which patent coverage may never be sought or received. We may not possess the resources to or may not choose to pursue patent protection outside the United States or any or every country other than the United States where we may eventually decide to sell our future products. Our ability to prevent others from making or selling duplicate or similar technologies will be impaired in those countries in which we have no patent protection. Although we have in excessa number of 125 pending U.S. patents and provisional patent applications on file in the United States, protecting aspects of our technology under development, ourthe patents may not issue, as a result of those applications drawing priority or otherwise based on those patent applications, may issue only with limited coverage or may issue and be subsequently successfully challenged by others and held invalid or unenforceable.

Similarly, even if patents do issueare issued based on our applications or future applications, any issued patents may not provide us with any competitive advantages. Competitors may be able to design around our patents or develop products that provide outcomes comparable or superior to ours. Our patents may be held invalid or unenforceable as a result of legal challenges by third parties, and others may challenge the inventorship or ownership of our patents and pending patent applications. In addition, if we choose to and are able to secure protection in countries outside the United States, the laws of some foreign countries may not protect our intellectual property rights to the same extent as do the laws of the United States. In the event a competitor infringes upon our patent or other intellectual property rights, enforcing those rights may be difficult and time consuming. Even if successful, litigation to enforce our intellectual property rights or to defend our patents against challenge could be expensive and time consuming and could divert our management’s attention. We may not have sufficient resources to enforce our intellectual property rights or to defend our patents against a challenge.

We may also in the future as one of our strategiesOur strategy is to deploy our technology into the market licenseby licensing patent and other proprietary rights to aspects of our technology to third parties and customers. Disputes with our licensors may arise regarding the scope and content of these licenses. Further, our ability to expand into additional fields with our technologies may be restricted by our existing licenses or licenses we may grant to third parties in the future.

The policies we use to protect our trade secrets may not be effective in preventing misappropriation of our trade secrets by others. In addition, confidentiality agreements executed by our employees, consultants and advisors may not be enforceable or may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure. Litigating a trade secret claim is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge methods andknow-how. If we are unable to protect our intellectual property rights, we may be unable to prevent competitors from using our own inventions and intellectual property to compete against us, and our business may be harmed.

We may be subject to patent infringement or other intellectual property lawsuits which maythat could be costly to defend.

Because our industry is characterized by competing intellectual property, we may be sued for violatingbecome involved in litigation based on claims that we have violated the intellectual property rights of others. Determining whether a product infringes a patent involves complex legal and factual issues, and the outcome of patent litigation actions is often uncertain. We have not conducted any significant search of patents issued to third parties, and noNo assurance can be given that third party patents containing claims covering our products, parts of our products, technology or methods do not exist, have not been filed, or could not be filed or issued. Because of the number of patents issued and patent applications filed in our technical areas or fields (including some pertaining specifically to wireless charging technologies), our competitors or other third parties may assert that our products and technology and the methods we employ in the use of our products and technology are covered by United States or foreign patents held by them. In addition, because patent applications can take many years to issue and because publication schedules for pending applications vary by jurisdiction, there may be applications now pending of which we are unaware, and which may result in issued patents that our technology under development or other future products would infringe. Also, because the claims of published patent applications can change between publication and patent grant, there may be published patent applications that may ultimately issue with claims that we infringe. There could also be existing patents that one or more of our technologies, products or parts may infringe and of which we are unaware. As the number of competitors in the market for wire-free power and alternative recharging solutions increases, and as the number of patents issued in this area grows, the possibility of patent infringement claims against us increases. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.

In the event that we become subject to a patent infringement or other intellectual property lawsuit and if the relevant patents or other intellectual property were upheld as valid and enforceable and we were found to infringe or violate the terms of a license to which we are a party, we could be prevented from selling any infringing products of ours unless we could obtain a license or were able to redesign the product to avoid infringement. If we were unable to obtain a license or successfully redesign, we might be prevented from selling our technology under development or other future products. If there is an allegation ora determination that we have infringed the intellectual property rights of a competitor or other person, we may be required to pay damages, orpay a settlement, or pay ongoing royalties.royalties, or be enjoined. In these circumstances, we may be unable to sell our products or license our technology at competitive prices or at all, and our business and operating results could be harmed.

We could become subject to product liability claims, product recalls, and warranty claims that could be expensive, divert management’s attention and harm our business.

Our business exposes us to potential liability risks that are inherent in the marketing and sale of products used by consumers. We may be held liable if our technology under development now or in the future causes injury or death or are found otherwise unsuitable during usage. Our technology under development incorporates sophisticated components and computer software. Complex software can contain errors, particularly when first introduced. In addition, new products or enhancements may contain undetected errors or performance problems that, despite testing, are discovered only after installation. While we believe our technology is safe, users could allege or possibly prove defects (some of which could be alleged or proved to cause harm to users or others) because we design our productstechnology to perform complex functions involving RF energy, possibly in close proximity to users. A product liability claim, regardless of its merit or eventual outcome, could result in significant legal defense costs. The coverage limits of our insurance policies we may choose to purchase to cover related risks may not be adequate to cover future claims. If sales of products incorporating our productstechnology increase or we suffer future product liability claims, we may be unable to maintain product liability insurance in the future at satisfactory rates or with adequate amounts. A product liability claim, any product recalls or excessive warranty claims, whether arising from defects in design or manufacture or otherwise, could negatively affect our sales or require a change in the design or manufacturing process, any of which could harm our reputation and business, harm our relationship with licensors of our products, result in a decline in revenue and harm our business.

In addition, if a product that we designedor a strategic partner design is defective, whether due to design or manufacturing defects, improper use of the product or other reasons, we or our strategic partners may be required to notify regulatory authorities and/or to recall the product. A required notification to a regulatory authority or recall could result in an investigation by regulatory authorities of products incorporating our products,technology, which could in turn result in required recalls, restrictions on the sale of thesuch products or other penalties. The adverse publicity resulting from any of these actions could adversely affect the perception of our customers and potential customers. These investigations or recalls, especially if accompanied by unfavorable publicity, could result in our incurring substantial costs, losing revenues and damaging our reputation, each of which would harm our business.

We are subject to risks associated with our utilization of consultants.

To improve productivity and accelerate our development efforts while we build out our own engineering team, we may use experienced consultants to assist in selected business functions, including the development of our ASICs.projects. We take steps to monitor and regulate the performance of these independent third parties. However, arrangements with third party service providers may make our operations vulnerable if these consultants fail to satisfy their obligations to us as a result of their performance, changes in their own operations, financial condition, or other matters outside of our control. Effective management of our consultants is important to our business and strategy. The failure of our consultants to perform as anticipated could result in substantial costs, divert management’s attention from other strategic activities, or create other operational or financial problems for us. Terminating or transitioning arrangements with key consultants could result in additional costs and a risk of operational delays, potential errors and possible control issues as a result of the termination or during the transition.

We expect to depend on consumer electronics supply chain firms to manufacture, market and distribute our technology under development. If these strategic partners fail to successfully manufacture, market and distribute our technology under development, our business will be materially harmed.

We currently intend to license our system architecture, proprietary waveform, antenna design and ASIC designs to consumer electronics supply chain firms rather than manufacture our technology under development ourselves. We will not be able to control the efforts and resources these consumer electronics supply chain firms would devote to marketing our technology under development or other future products. Those third parties may not be able to successfully market and sell the products they develop based on our technology, may not devote sufficient time and resources to support the marketing and selling efforts and may not market those products at prices that will permit the products to develop, achieve or sustain market acceptance. Finding new licensors could be an expensive and time-consuming process and we may not be able to find suitable consumer electronics supply chain firms and other distribution strategic partners on acceptable terms or at all. If we cannot find suitable third party partners or our third party partners experience difficulties, do not actively market our technology under development or future products or do not otherwise perform under our license agreements, our potential for revenue may be dramatically reduced, and our business could be harmed.

We intend to pursue licensing of our technology as a primary means of commercialization but we may not be able to secure advantageous license agreements. If we are not able to secure advantageous license agreements for our technology, our business and results of operations will be adversely affected.

We are pursuingpursue the licensing of our technology as a primary means of commercialization.revenue generation. We believe there are many companies that would be interested in implementing our technology into their devices. Many of these companies are well-known, world-wide companies. We have entered into one product development and license agreement with atier-one consumer electronics company that has the potential to yield license revenue. In addition, weWe have also entered into a totalnumber of 16evaluation and joint development agreements providing for our development of reference designs which serve to describe the integration of our technology into thewith potential strategic partner’s products.partners. However, the joint developmentthese agreements do not commit either party to a long-term relationship and any of these parties may disengage with us at any time. Creating a license or otherlicensing business relationship with these classes of companies will takeoften takes a substantial effort, as we expect to have to convince themthe counterparty of the efficacy of our technology, meet their design and manufacturing requirements, satisfy their marketing and product needs, and comply with their selection, review and contracting requirements. There can be no assurance that we will be able to gain entryaccess to these companies,potential licensing partners, or that they will ultimately decide to integrate our technology with their products. We may not be able to secure license agreements with customers on advantageous terms, that are advantageous to us. Furthermore,and the timing and volume of revenue earned from license agreements will be outside of our control. If the license agreements we enter into do not prove to be advantageous to us, our business and results of operations will be adversely affected.

Our business is subject to data security risks, including security breaches.

We, or our third-party vendors on our behalf, collect, process, store and transmit substantial amounts of information, including information about our customers. We take steps to protect the security and integrity of the information we collect, process, store or transmit, but there is no guarantee that inadvertent or unauthorized use or disclosure will not occur or that third parties will not gain unauthorized access to this information despite such efforts. Security breaches, computer malware, computer hacking attacks and other compromises of information security measures have become more prevalent in the business world and may occur on our systems or those of our vendors in the future. Large Internet companies and websites have from time to time disclosed sophisticated

and targeted attacks on portions of their websites, and an increasing number have reported such attacks resulting in breaches of their information security. We and our third-party vendors are at risk of suffering from similar

attacks and breaches. Although we take steps to maintain confidential and proprietary information on our information systems, these measures and technology may not adequately prevent security breaches and we rely on our third-party vendors to take appropriate measures to protect the security and integrity of the information on those information systems. Because techniques used to obtain unauthorized access to or to sabotage information systems change frequently and may not be known until launched against us, we may be unable to anticipate or prevent these attacks. In addition, a party who is able to developillicitly obtain a technology that meetscustomer’s identification and password credentials may be able to access the customer’s account and certain account data.

Any actual or suspected security breach or other compromise of our development partner's specifications. Even if we succeedsecurity measures or those of our third-party vendors, whether as a result of hacking efforts,denial-of-service attacks, viruses, malicious software,break-ins, phishing attacks, social engineering or otherwise, could harm our reputation and business, damage our brand and make it harder to retain existing customers or acquire new ones, require us to expend significant capital and other resources to address the breach, and result in developing a technology that meets allviolation of applicable laws, regulations or other legal obligations. Our insurance policies may not be adequate to reimburse us for direct losses caused by any such security breach or indirect losses due to resulting customer attrition.

We rely on email and other messaging services to connect with our existing and potential customers. Our customers may be targeted by parties using fraudulent spoofing and phishing emails to misappropriate passwords, payment information or other personal information or to introduce viruses through Trojan horse programs or otherwise through our customers’ computers, smartphones, tablets or other devices. Despite our efforts to mitigate the specifications ineffectiveness of such malicious email campaigns through product improvements, spoofing and phishing may damage our developmentbrand and licensing agreement,increase our development partner could decline to use our technology in its products.costs. Any of these events would have a material adverse effect on our business.

The terms of our only development and licensing agreement with a tier-one consumer products company require us to meet stringent performance specifications and aggressive technical milestones. While we are devoting substantial corporate time and resources to the development of our technology for this company’s products, there can be no assurance that we can meet the performance specifications and technical milestones in the timeframe required by the development and licensing agreement or at all. Further, the decision to embed our technology within its products is completely in our development partner’s discretion and itcircumstances could decline to use our technology in its products even if we meet all the performance specifications and technical milestones set forth in the agreement. Additionally, the development and licensing agreement prohibits us from the development of our technology for certain product categories until our development partner has introduced products with our technology embedded in those categories to consumers. If we are unable to meet the stringent performance specifications and aggressive technical milestones required by the development and licensing agreement or our development partner declines to embed our technology in its products,materially adversely affect our business, would be significantly harmed. The harm to our business resulting from either of these scenarios will exacerbated by the fact that we have agreed to limited exclusivity in certain product categories with our development partner.

financial condition and operating results.

We are highly dependent on certain key members of our executive management team. Our inability to retain these individuals could impede our business plan and growth strategies, which could have a negative impact on our business and the value of your investment.

Our ability to implement our business plan depends, to a critical extent, on the continued efforts and services of Stephen Rizzone (Chief Executive Officer), Michael Leabman (Chief Technology Officer), George Holmes (Senior Vice Presidenta very small number of Sales and Marketing) and Cesar Johnston (Senior Vice President of Engineering).key executives. If we lose the services of any of these persons, we would likelycould be forcedrequired to expend significant time and money in the pursuit of replacements, which may result in a delay in the implementation of our business plan and plan of operations. WeIf necessary, we can give no assurance that we could find satisfactory replacements for these individuals on terms that would not be unduly expensive or burdensome to us. We do not currently carry akey-man life insurance policy that would assist us in recouping our costs in the event of the death or disability of eitherany of these executives.

Our long-term success and growth strategy depend on our ability to attract, integrate and retain high-level engineering talent.

Because of the highly specialized and complex nature of our business, our success and future growth also depends on management’sour ability to attract, hire, train, integrate and retain high-level engineering talent. Competition for such personnel is intense asbecause we compete for talent as a pre-revenue company against many large profitable companies and our inability to adequately staff our operations with highly qualified and well-trained engineers could render us less efficient and impede our ability to develop and deliver a commercial product. Such a competitive market could put upward pressure on labor costs for engineering talent. In addition, risingWe may incur significant costs associated with certain employee benefits,to attract and retain highly qualified talent, and we may lose new employees to our competitors or other technology companies before we realize the benefit of our investment in particular employee health coverage, could limitrecruiting and training them. Volatility or lack of performance in our stock price may also affect our ability to provide certain employee benefits in the future. If we are unableattract and retain qualified personnel.

Risks Related to OwningOwnership of Our Common Stock

As an investor, youYou may lose all of your investment.

Investing in our common stock involves a high degree of risk. As an investor, you may never recoup all, or even part of, your investment and you may never realize any return on your investment. You must be prepared to lose all of your investment.

Our stock price couldis likely to continue to be volatile and investors may have difficulty selling their shares.volatile.

Our common stock is currently listed on the NASDAQ Capital Market under the symbol “WATT.” For the period from March 28, 2014 when trading began on the NASDAQ Capital Market through December 31, 2014, the daily trading volume for shares of our common stock ranged from 6,200 to 2,403,900 shares traded per day, and the average daily trading volume during such period was 162,713 shares.

The market price of the common stock has fluctuated significantly since it was first listed on the NASDAQ CapitalThe Nasdaq Stock Market on March 28,in 2014. Since this date, through December 31, 2014, theOur common stock has experienced an intra-day trading price has fluctuated fromhigh of $33.50 per share and a low of $7.11 to a high of $16.44.$6.91 per share over the last 52 weeks. The price of our common stock mayis likely to continue to fluctuate significantly in response to many factors some of whichthat are beyond our control, includingincluding:

We are an “emerging growth company” under the JOBS Actcompany,” and are able to take advantage of 2012 and we cannot be certain if the reduced disclosure requirements, excluding applicable to emerging growth companies, maywhich could make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, (“JOBS Act”), and, for as long as we maycontinue to be an emerging growth company, we intend to take advantage of certain exemptions from various reporting requirements, that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with theprovide auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,our internal controls, reduced disclosure obligations regardingabout executive compensation, in our periodic reports and proxy statements, and exemptionsexemption from the requirements of holdingrequirement to hold a nonbinding advisory vote on executive compensation and stockholder approvalcompensation. However, we chose not to delay compliance with new or revised financial accounting standards. We could be an emerging growth company until 2019 or, if earlier, the year when the market value of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.held by non-affiliates exceeds $700.0 million as of the last business day of our most recent second quarter end. If some investors find our common stock less attractive as a result of reduced disclosure of this sort, there may be a less active trading market for our common stock and our stock price may be more volatile.

We will remain an “emerging growth company” for up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30.

decline.

Our status as an “emerging growth company” under the JOBS Act of 2012 may make it more difficult to raise capital as and when we need it.

Because of the exemptions from various reporting requirements provided to us as an “emerging growth company,” we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our reporting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it,maintain effective internal control over financial reporting, investors may lose confidence in the accuracy of our financial conditionreports.

As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal controls. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting. Although our management has

determined that our internal control over financial reporting was effective as of December 31, 2017, we cannot assure you that we not identify a material weakness in our internal control in the future.

If we have a material weakness in our internal control over financial reporting in the future, we may not detect errors on a timely basis. If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if we identify a material weakness in our internal control over financial reporting in the future, it could harm our operating results, cause us to fail to meet our SEC reporting obligations or Nasdaq listing requirements, adversely affect our reputation, cause our stock price to decline or result in inaccurate financial reporting or material misstatements in our annual or interim financial statements. Further, if there are material weaknesses or failures in our ability to meet any of operationsthe requirements related to the maintenance and reporting of our internal controls such as Section 404 of the Sarbanes-Oxley Act, investors may lose confidence in the accuracy and completeness of our financial reports and that could cause the price of our common stock to decline. We could become subject to investigations by Nasdaq, the SEC or other regulatory authorities, which could require additional management attention and which could adversely affect our business.

In addition, our internal control over financial reporting will not prevent or detect all errors and fraud. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be materially and adversely affected.

detected.

We have not paid dividends in the past and have no immediate plans to pay dividends.

We plan to reinvest all of our earnings, to the extent we have earnings, in order to market our products and technology and to cover operating costs and to otherwise become and remain competitive. We do not plan to pay any cash dividends with respect to our securities in the foreseeable future. We cannot assure you that we would, at any time, generate sufficient surplus cash that would be available for distribution to the holders of our common stock as a dividend.

Concentration of ownership among our existing executive officers, directors and significant stockholders may prevent new investors from influencing significant corporate decisions.

All decisions with respect to the management of the Company will beour company are made by our board of directors and our officers, who collectively, beneficially own approximately 4.4%7.6% of our common stock as calculated in accordance with Rule 13d-3 promulgated under the Securities Exchange Act of 1934.collectively. In addition, otherour greater than 5% stockholders such as Dialog, Emily and Malcolm Fairbairn, Hood River Capital Management, DvineWave, Holdings LLC whichand BlackRock Inc. beneficially ownsowned approximately 15% of our common stock, AWM Investment Company Inc. which beneficially owns approximately 7% of our common stock17.6%, 7.0%, 6.7%, 6.7%, and Absolute Ventures, which owns approximately 5%5.4%, respectively, of our common stock as calculated in accordance with Rule 13d-3 promulgated under the Securities Exchange Act of 1934.February 15, 2018. As a result, these stockholders will be able to exercise a significant level of control over all matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation and approval of significant corporate transactions. This control could have the effect of delaying or preventing a change of control of our Companycompany or changes in management and will make the approval of certain transactions difficult or impossible without the support of these stockholders.

We expect to continue to incur significant costs as a result of being a public reporting company that reports to the Securities and Exchange Commission and our management will be required to devote substantial time to meet our compliance obligations.

As a public company reporting to the Securities and Exchange Commission (“SEC”),company, we incur significant legal, accounting and other expenses. We are subject to reporting requirements of the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SECSecurities and Exchange Commission (“SEC”) that impose significant requirements on public companies, including requiring establishmentrequire us to establish and maintenance ofmaintain effective disclosure controls and financial controls, and changes inas well as some specific corporate governance practices. In addition, on July 21, 2010, the Dodd-Frank Wall Street Reform and Protection Act was enacted. There are significant corporate governance and executive compensation-related provisions in the Dodd-Frank Act that are expected to increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and may also place undue strain on our personnel, systems and resources. Our management and other personnel are expected to devote a substantial amount of time to these new compliance initiatives.initiatives associated with our public reporting company status.

We may be subject to securities litigation, which is expensive and could divert management attention.

Our stock price has fluctuated in the past, most recently following our announcement of Federal Communications Commission approval of ourmid-field transmitter technology, and it may be volatile in the future. In addition, we expect these rules and regulationsthe past, companies that have experienced volatility in the market price of their securities have been subject to make it more difficult and more expensive for us to obtain director and officer liability insurance,securities class action litigation, and we may be requiredthe target of litigation of this sort in the future. Securities litigation is costly and can divert management attention from other business concerns, which could seriously harm our business and the value of your investment in our company.

An active trading market for our common stock may not be maintained.

Our stock is currently traded on The Nasdaq Stock Market, but we can provide no assurance that we will be able to accept reduced policy limits and coveragemaintain an active trading market on this or incur substantially higher costs to obtainany other exchange in the same or similar coverage. As a result,future. If an active market for our common stock is not maintained, it may be more difficult for our stockholders to sell or purchase shares. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and impair our ability to acquire other companies or technologies using our shares as consideration.

If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. There can be no assurance that analysts will continue to attract and retain qualified peoplecover us or provide favorable coverage. If one or more of the analysts who cover us downgrade our stock or change their opinion of our stock, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to serveregularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.

Our ability to use net operating loss carry forwards to reduce future tax payments may be limited if our taxable income does not reach sufficient levels.

As of December 31, 2017, we had a Federal net operating loss (“NOL”) carryforward of $84,418,000. Under the U.S. Tax Code, NOL can generally be carried forward to offset future taxable income for a period of 20 years. Our ability to use our NOL during this period will be dependent on our boardability to generate taxable income, and the NOL could expire before we generate sufficient taxable income. As of directors,December 31, 2017, based on our board committees or as executive officers.

history of operating losses it is possible that a portion of our NOL is not fully realizable.

Our charter documents and Delaware law may inhibit a takeover that stockholders consider favorable.

Provisions of our Certificatecertificate of Incorporation (“Certificate”)incorporation and bylaws, and applicable provisions of Delaware law, may delay or discourage transactions involving an actual or potential change in control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. The provisions in our Certificatecertificate of incorporation and bylaws:

In addition, Section 203 of the Delaware General Corporation Law may limit our ability to engage in any business combination with a person who beneficially owns 15% or more of our outstanding voting stock unless certain conditions are satisfied. This restriction lasts for a period of three years following the share acquisition. These provisions may have the effect of entrenching our management team and may deprive you of the opportunity to sell your shares to potential acquirers at a premium over prevailing prices. This potential inability to obtain a control premium could reduce the price of our common stock.

Item 1B. Unresolved Staff Comment

Comments

Not applicable.

Item 2. Properties

Our principal office isIn 2014, we entered into a lease agreement for our corporate headquarters located at Northpointe Business Center, 3590 North First Street Suite 210,in San Jose, California. The lease will expire in August 2019. This space is used for our headquarters and for research and development efforts. In 2015, we entered into two sub-lease agreements for additional laboratory space in San Jose, CA, 95134. Asboth of December 31, 2014,which expire in June 2019. In May 2017, we are leasing approximately 15,000 square feet of office and laboratory space underentered into a lease thatagreement for office space in Costa Mesa, CA which is due toutilized by our engineers residing in Southern California, which will expire in September 2019. The initial monthly base rent was $36,720 per month. In addition, pursuant to the lease we issued to the landlord 41,563 shares of restricted stock valued at $500,000, of which $400,000 will be applied to reduce the Company’s base rent by $6,732 per month and of which $100,000 was used for certain tenant improvements.

On February 26, 2015, we agreed to rent an additional 3,491 square feet of classroom space from an existing tenant in the same building in which we currently lease space through a sub-lease agreement which expires on June 30, 2019 (3 months prior to the expiration of our existing facility lease). The additional space is required to accommodate the build out of additional laboratory and testing space. Per the agreement, we anticipate additional monthly office rent expense of $6,109.

Item 3. 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 or financial conditions. We may, however, be subject to various claims and legal actions arising in the ordinary course of business from time to time.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our shares of common stock are listed on the NASDAQ CapitalThe Nasdaq Stock Market under the symbol “WATT.” The table below provides, for the fiscal quarters indicated, the reported high and low closing sales prices for our common stock on the NASDAQ CapitalThe Nasdaq Stock Market since March 28, 2014.January 1, 2016.

Item 7. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are developinghave developed a technology to enablecalled WattUp^® that consists of proprietary semiconductor chipsets, software, hardware designs and antennas that enables radio frequency (“RF”) based charging for electronic devices, providing wire-free charging of electronic devices at a distancesolutions for contact-based charging and at-a-distance charging, ultimately enabling charging with complete mobility under full software control. Our ultimate goal isPursuant to license our WattUp^TMtechnology to consumer product companies, device manufacturers, wireless data router manufacturersStrategic Alliance Agreement with Dialog Semiconductor plc (“Dialog”), Dialog manufactures and other commercial partners to makedistributes integrated circuit (“IC”) products incorporating our RF-based wire-free charging an affordable, ubiquitous and convenient service offeringtechnology. Dialog is our exclusive supplier of these ICs for end users.the general market. We believe our proprietary technology can potentially be usedutilized in a variety of devices, including smart phones,wearables, hearing aids, earbuds, Bluetooth headsets, Internet of Things (“IoT”) devices, smartphones, tablets, e-book readers, wearables, keyboards, mice, remote controls, rechargeable lights, cylindrical batteries, medical devices and any other devicesdevice with similar charging requirements that would otherwise need a battery or a connection to a power outlet.

We believe our technology is novel in its approach, in that itwe are developing a solution that charges electronic devices by surrounding them with a three dimensional (“3D”)focused, radio frequency (“RF”)energy pocket (“RF energy pocket”). We are developingengineering solutions that we expect to enable the wire-free transmission of energy from one or multiple transmitter(s) to multiple receivers connected to or integrated into electronic devices, at distancesfor contact-based applications as well as far field applications of up to fifteen (15)15 feet. We have developed multiple prototype systems consisting of either a single or multiple transmitter(s) in various forms and sizes, multiple smart phone receiver cases, various other forms of receiving devices and management software.

We are also developing what we believe will be an enterprise class management and control system for our WattUp solutionFar Field transmitter technology to seamlessly mesh (like a network of Wi-Fi routers) to form a wire-free charging network that will incorporate cloud based networkallow users to charge their devices as they move from room-to-room or throughout a large space. To date, we have developed multiple transmitter prototypes in various form factors and power capabilities. We have also developed multiple receiver prototypes, including smartphone battery cases, toys, fitness trackers, Bluetooth headsets and tracking devices, as well as stand-alone receivers. We are also in the pre-production stage leading to mass production with early adopters of the WattUp technology to bring the first contact-based transmitters and compatible receivers to market.

In November 2016, we entered into a Strategic Alliance Agreement with Dialog, pursuant to which Dialog will manufacture and distribute IC products incorporating our wire-free charging technology. Dialog is our exclusive supplier of these products for the general market. Our WattUp technology will use Dialog’s SmartBond^® Bluetooth low energy solution as theout-of-band communications channel between the wireless transmitter and receiver. In most cases, Dialog’s power management technology will then be used to distribute power from the WattUp receiver integrated circuit to the rest of the device while Dialog’s AC/DC Rapid Charge™ power conversion technology delivers power to the wireless transmitter.

On December 26, 2017, we announced Federal Communications Commission (FCC) certification of our first-generation WattUp Mid Field transmitter, which sends focused,RF-based power to devices at a distance of up to three feet, while also charging multiple devices at once. Our WattUp Mid Field transmitter underwent rigorous, multi-month testing to verify it met consumer safety and regulatory requirements. We believe this achievement represents the first certification of a Part 18 FCC approvedpower-at-a-distance wireless charging transmitter, and also establishes a precedent that will streamline both our future FCC and international regulatory approvals, as well as the necessary local interface and control for the transmitter and receiver.

We believe that if our development, regulatory and commercialization efforts are successful, our transmitter and receiver solutions will initially be able to simultaneously charge up to 24 devices, ranging from ¼ watt up to sixteen (16) watts, depending on the number of devices, with a range of fifteen (15) feet in radius or in a charging envelop bounded by thirty (30) feet. Subsequent development efforts will focus on increasing the power delivery capability, increasing distance, enhancing the management and control solution and lowering overall system cost.

As partapprovals of our commercialization efforts, in May 2014 we executed our first of 16 joint development agreements with strategic partners which providecustomers for the exchange of technology and which serve to describe the integration of our technology into the strategic partners’ products. At the Consumer Electronics Show, January 5-9, 2015, we met with over 100 existing or new potential joint development partners, demonstrated various electronic devices employing the WattUp technology and demonstrated an end-to-end wire-free power solution in a typical home environment. It is our objective during the first and second quarter of 2015 to narrow our research and development efforts to those strategic partners whose goals, capabilities and commercialization potential we believe most closely aligns with ours.

In January 2015, we signed a development and licensing agreement with a tier-one consumer electronics company to embed WattUp wire-free charging receiver technology in various products including, but not limited to mobile consumer electronics and related accessories. During the development phase and through customer shipment of the first licensed product, we will afford this customer an exclusive time to market advantage in the licensed product categories.

This development and licensing agreement contains both invention and development milestones that we will need to achieve during the next two years. Pursuant to the Agreement, we will receive development payments based upon its achievement of milestones, as provided for in the Agreement, including the receipt of an initial payment of $500,000 earned upon the signing of the Agreement. There can be no assurance that we will meet all required milestones under this agreement or that this strategic partner will include our technology in any products.

We have pursued an aggressive intellectual property strategy and are developing new patents. As of December 31, 2014, we had in excess of 125 pending U.S. patents and provisional patent applications. In addition to the inventions covered by these patent applications, we have identified a significant number of additional specific inventions we believe may be novel and patentable. We intend to file for patent protection for the most valuable of these, as well as for other new inventions that we expect to develop. Our strategy is to continually monitor the costs and benefits of each patent application and, when appropriate, pursue those that will best protect our business.

their respectiveend-products.

We have recruited and hired a seasoned management team with both private and public company experience and relevant industry experience to develop and execute our operating plan. In addition, we have identified and hired additionalkey engineering resources in the areas of IC development, antenna development, hardware, software and firmware engineering as well as integration and testing which we expect will build up the engineering capability of our internal team. We were incorporated in Delaware on October 30, 2012 under the name DvineWave Inc. and in January 2014 we changed our name to Energous Corporation. We are located in San Jose, CA. To date, our operations have been funded through the sale of our common stock and convertible debt (which has since been converted into shares of our common stock).

We have not generated any revenue to date, and have incurred significant losses from operations since inception. We expectallow us to continue to incur operating lossesexpand our technology and intellectual property as well as meet the support requirements of our licensees.

The market for products using our technology is nascent and unproven, so the foreseeable future as we develop our technology.Company’s success is sensitive to many factors, including technological feasibility, regulatory approval, customer acceptance, competition and global market fluctuations.

For the years ended December 31, 20142017, 2016 and 2013,2015, the Company had $12,511,647$23,601,688, $31,848,990 and $2,095,367,$15,464,406, respectively, of research and development expenses capitalized for federal income tax purposes, with amortization commencing upon the Company receiving an economic benefit from the related research. As of December 31, 2014,2017, the Company had $5,814,569approximately $84,418,000 gross federal and state net operating loss carryovers (“NOLs”) and a federal tax credit carryover of $877,597. For the years endedapproximately $2,686,000. As of December 31, 20142017 and 2013,2016, deferred tax assets consisted principally of net operating loss and tax credit carryovers, the research and development costs and stock-based compensation, and such deferred tax assets were fully reserved. Accordingly, the Company’s effective tax rate for the years ended December 31, 20142017, 2016 and 20132015 was 0%.

Internal Revenue Code Section 382 imposes limitations on the use of net operating loss carryovers when the stock ownership of one or more 5% shareholders (shareholders owning 5% or more of the Company’s outstanding capital stock) has increased on a cumulative basis by more than 50 percentage points. Management cannot control the ownership changes occurring as a result of public trading of the Company’s Common Stock. Accordingly, there is a risk of an ownership change beyond the control of the Company that could trigger a limitation of the use of the loss carryover. AsThe Company completed a Section 382 analysis as of December 31, 2014, the Company has not completed an analysis whether an ownership change occurred under Section 382, which, if it did occur, could substantially limit its ability in the future to utilize2017 and determined that none of its NOLs and other tax carryforwards.

or R&D credits would be limited.

In assessing the realization 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 future generation of taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and taxing strategies in making this assessment. Based on this assessment, management has established a full valuation allowance against all of the net deferred tax assets for each period, since it is more likely than not that all of the deferred tax assets will not be realized.

Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of December 31, 2014,2017 and 2013,2016, no liability for unrecognized tax benefits was required to be reported. The guidance 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 for the years ended December 31, 2014,2017, 2016 and 2013.

Convertible Instruments. The Company accounts for hybrid contracts that feature conversion options in accordance with ASC 815 “Derivatives and Hedging Activities,” (“ASC 815”) and ASC 480 “Distinguishing Liabilities from Equity” (“ASC 480”), which require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (i) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (ii) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (iii) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments that have been determined to be free standing derivative financial instruments (when the Company has determined that the embedded conversion options should be bifurcated from their host instruments) in accordance with ASC 815. Under ASC 815, a portion of the proceeds received upon the issuance of the hybrid contract is allocated to the fair value of the derivative. The derivative was subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in results of operations.

Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument.

The Company accounted for convertible debt instruments, when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, in accordance with ASC 470-20 “Debt with Conversion and Other Options”. The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized under the effective interest method over the term of the related debt.

On April 2, 2014, all convertible debt instruments and the related derivative liabilities were extinguished and converted into 1,930,128 shares of common stock.

2015.

Common Stock Purchase Warrants and Other Derivative Financial Instruments. The Company classifies as equity any contracts that (i) require physical settlement ornet-share settlement or (ii) provides a choice ofnet-cash settlement or settlement in the Company’s own shares (physical settlement ornet-share settlement) providing that such contracts are indexed to the Company’s own stock as defined in ASC815-40 “Contracts in Entity’s Own Equity” (“ASC815-40”). The Company classifies as assets or liabilities any contracts that (i) requirenet-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the Company’s control) or (ii) givesgive the counterparty a choice ofnet-cash settlement or settlement in shares (physical settlement ornet-share settlement). The Company assesses classification of common stock purchase warrants and other free standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities or equity is required.

Results of Operations

For the Years Ended December 31, 20142017 and 20132016

Revenues.

Revenues.  Through During the years ended December 31, 2014,2017 and 2016, we have not generated revenues.recorded revenue of $1,154,009 and $1,451,941, respectively, upon the achievement of milestones under a development and licensing agreement. The

decrease in revenue of $297,932 is due to the rescoping of project milestones, affecting the amount and timing of the achievement of these milestones.

Operating Expenses and Loss from OperationsExpenses.. Operating expenses are made upconsist of derivative instrument issuance, research and development, sales and marketing, and general and administrative and marketing expenses. Loss from operationsOperating expenses for the years ended December 31, 20142017 and 2013 was $20,374,7092016 were $50,541,837 and $4,435,470, respectively. Derivative instrument issuance expense was $0 and $887,062 for the years ended December 31, 2014 and 2013,$47,282,661, respectively.

Research and Development Expenses.Research and development expenses include costs for developing our technology, such as IC design costs, salaries, software and facility costs. Research and development costs for the years ended December 31, 20142017 and 20132016 were $12,511,647$33,230,668 and $2,109,890,$32,832,677, respectively. The $397,991 increase in research and development expenses is primarily due to a $3,287,398$5,939,073 increase in compensation, including a $4,296,494 increase in stock-based compensation of $924,702,and a $1,642,579 increase in payroll and related compensation expense, from a largergreater average headcount withinand the department,issuance of additional restricted stock unit (RSU) awards, and a $3,575,586$390,072 increase in spending on components, designdepreciation due to a higher asset base in lab equipment and perpetual engineering software licenses, partially offset by a $3,966,298 decrease in chip development, manufacturing and engineering suppliescomponent costs due to more transmitter and receiver chip development work being done in house, a $973,467 decrease in term-based engineering software licenses and $931,834 decrease in consulting costs.

Sales and Marketing Expenses. Sales and marketing expenses for the demonstration units at the Consumer Electronics Show (“CES”), a $1,051,158years ended December 31, 2017 and 2016 were $5,207,746 and $3,201,549, respectively. The $2,006,197 increase in legal costssales and marketing expenses is primarily due to an increase of $1,753,758 in compensation, including a $969,398 increase in payroll and related to patent application filingsexpense and a $2,193,539$784,360 increase in hardwarestock-based compensation, due to a higher average headcount and software consulting expenses related to preparation for the demonstration unit presented at CES.issuance of additional RSU grants and a $235,506 increase in tradeshow expenses.

General and Administrative Expenses.General and administrative expenses include costs for general and corporate functions, including facility fees, travel, telecommunications, insurance, professional fees, consulting fees and other overhead. General and administrative costs for the years ended December 31, 20142017 and 20132016 were $5,059,703$12,103,423 and $1,204,896,$11,248,435, respectively. The $854,988 increase in general and administrative expense is primarily due to a $1,546,656$1,180,146 increase in compensation, including a $1,213,790 increase in stock-based compensation of $1,023,890,and a $33,644 decrease in payroll costs, a $136,122 decrease in general office expenses, and a $117,692 decrease in consulting and third party service costs.

Loss from adding two new employees within the department and the retention of a full-time Chief Executive OfficerOperations. Loss from operations for the entireyears ended December 31, 2017 and 2016 was $49,387,828 and $45,830,720, respectively.

Interest Income. Interest income for the year in 2014, a $749,581 increase in investor relations and consulting costs, a $159,144 increase in insurance costs, primarily asended December 31, 2017 was $11,679, compared to $13,326 for the year ended December 31, 2016.

Net Loss. As a result of larger D&O premiums,the above, net loss for the year ended December 31, 2017 was $49,376,875, compared to $45,817,394 for the year ended December 31, 2016.

For the Years Ended December 31, 2016 and 2015

Revenues. During the years ended December 31, 2016 and 2015, we recorded revenue of $1,451,941 and $2,500,000, respectively, upon the achievement of milestones under a $188,021 increasedevelopment and licensing agreement. The decrease in facilities costs, primarily from increased office rent after relocationrevenue of $1,048,059 is due to the San Joserescoping of project milestones, affecting the amount and timing of the achievement of these milestones.

Operating Expenses. During 2016 and 2015, operating expenses are made up of research and development, sales and marketing, and general and administrative expenses. Operating expenses for the years ended December 31, 2016 and 2015 were $47,282,661 and $30,077,339, respectively.

Research and Development Expenses.Research and development expenses include costs for developing our technology, such as IC design costs, salaries, software and facility a $444,762 increase in recruiting costs related to our efforts to recruitcosts. Research and retain certain key employees and an increase of $368,088 in depreciation expense as a result of our acceleration in capital purchases during the second half of 2014.

Marketingdevelopment costs for the years ended December 31, 20142016 and 20132015 were $2,803,359$32,832,677 and $233,622,$18,825,041, respectively. The increase in research and development costs of $14,007,636 is primarily due to increaseda $4,640,880 increase in compensation of $1,346,077, including(including an increase in stock-based compensation of $583,238,$1,409,597) from hiring five additional employeesa larger headcount within the department, a $4,483,417 increase in chip design, development and manufacturing costs for our receiver and transmitter chips, a $1,564,187 increase in patent legal costs related to the department during 2014,management of our patent portfolio, an $883,272 increase in software expense due to incurring a full year of $662,448 in public relations and consulting expensesthe hosted design solution package and an increase of $256,368 in travel costs associated with the preparation of CESvarious engineering software licenses needed to support a larger staff and meetings with potential customersan $819,503 increase in consulting fees to assist in our quality assurance, design and strategic partners.regulatory efforts.

Sales and Marketing Expenses.

Change in Fair Value of Derivative Liabilities.  Change in fair value of derivative liabilities Sales and marketing expenses for the years ended December 31, 2014,2016 and 2013 was $26,265,177,2015 were $3,201,549 and $177,000,$3,221,303, respectively. The decrease in sales and marketing costs of $19,754 is primarily due to minor decreases in consulting and travel, partially offset by minor increases in compensation, recruiting and tradeshow expenses.

General and Administrative Expenses.

Interest Expense.  Interest expense General and administrative expenses include costs for general and corporate functions, including facility fees, travel, telecommunications, insurance, professional fees, consulting fees and other overhead. General and administrative costs for the years ended December 31, 20142016 and 2013 was $1,024,7742015 were $11,248,435 and $908,611, respectively,$8,030,995, respectively. The increase in general and included amortizationadministrative expense of debt discount$3,217,440 is primarily due to a $2,966,474 increase in compensation, including stock-based compensation increase of $2,547,733, from increased headcount within the department and newly executed executive stock award agreements, a $305,390 increase in telecommunications and miscellaneous office expenses to support a larger company headcount, a $232,667 increase in legal, accounting and insurance fees, partially offset by a $163,341 decrease in consulting and outside service fees.

Loss from Operations. Loss from operations for the years ended December 31, 20142016 and 2013 of $964,8512015 was $45,830,720 and $705,289,$27,577,339, respectively.

Interest Income. Interest income for the year ended December 31, 2016 was $13,326 as compared to $15,637 for the year ended December 31, 2015.

Gain on Debt ExtinguishmentNet Loss..  Gain on debt extinguishment As a result of the above, net loss for the year ended December 31, 2016 was $45,817,394 as compared to $27,561,702 for the year ended December 31, 2015.

Liquidity and Capital Resources

During years ended December 31, 2017 and 2016, we recorded revenue of $1,154,009 and $1,451,941, respectively. We incurred a net loss of $49,376,875 and $45,817,394 for the years ended December 31, 20142017 and 2016, respectively. Net cash used in operating activities was $2,084,368 as compared to $0 for the year ended December 31, 2013. The gain on debt extinguishment resulted from the conversion of the convertible notes$34,430,298 and the related extinguishment of the notes, accrued interest payable and the derivative liability.

Net Loss.  Net loss$33,062,247 for the years ended December 31, 20142017 and 2013 was $45,603,110 and $5,521,081, respectively.

Liquidity and Capital Resources

We have not generated revenues and have net losses of $45,603,110 and $5,521,081 for the years ended December 31, 2014 and 2013,2016, respectively. Since inception, we have met our liquidity requirements principally through the private placement of convertible notes, the sale of our common stock in a registered initial public offerings,offering, the sale of our common stock to a strategic investor, the issuance of our common stock to ourthe Company’s landlord to reduce ourits monthly base rent obligation and pay for certain tenant improvements, and the sale of common stock in a December 2014 secondary offering.

twofollow-on public offerings, sales of stock to investors in private placements, and revenue received under product development projects entered into with customers.

As of December 31, 2014,2017, we had cash on handand cash equivalents of $31,494,592. In April 2014$12,795,254. Also, as noted in the subsequent event section of our 2017 audited financial statements, during January 2018, we completed our IPOraised $38,999,989 (net of 4,600,000 sharesunderwriters’ discount of common$1,000,000) from the sale of stock at a price to the public of $6.00 per share through which we raised net proceeds of approximately $24.8 million. In connection with the completion of the IPO, our outstanding convertible notes and interest accrued thereon were converted into 1,833,336 and 96,792 shares, respectively, of common stock, thus extinguishing the debt associated with the notes. On April 4, 2014, we issued 210,527 shares of common stock to a strategic investor upon the receipt of net proceeds of $900,000 ($300,000 received on March 27, 2014, $700,000 received on April 4, 2014, net of commissions paid of $100,000).

On December 15, 2014, we completedin an underwritten public“at-the-market” equity offering of our common stock at a pricestock.

We believe our current cash on hand, together with anticipated payments under product development projects entered into with customers, will be sufficient to fund our operations into the second quarter of 2016.2019. However, depending on how soon we expectare able to achieve meaningful commercial revenues, we may require additional financing to fully implement our business plan, the ultimate goal of which is to license our technology to device manufacturers, wireless service providers and other commercial partners to make wire-free charging an affordable, ubiquitous and convenient service for end users. Potential financing sources could includefollow-on equity offerings, debt financing,co-development agreements or other alternatives. Depending upon market conditions, we may choose to pursue additional financing to, among other reasons, accelerate our product development efforts, regulatory activities and business development and support functions with a view to capitalizing on the market opportunity we see for our wire-free charging technology.

On April 24, 2015, we filed a “shelf” registration statement on FormS-3, which became effective on April 30, 2015. The “shelf” registration statement allows the Company from time to time to sell any combination of debt or equity securities described in the registration statement up to aggregate proceeds of $75,000,000, of which approximately $60,700,000 has already been sold.

During the year ended December 31, 2014,2017, cash flows used in operating activities were $15,606,422,$34,430,298, consisting of a net loss of $45,603,110,$49,376,875, lessnon-cash expenses aggregating $28,107,842$17,194,309 (representing principally the amortization of debt discount of $964,851, stock basedstock-based compensation of $2,547,978$15,802,819 and the change in fair valuedepreciation expense of derivative liabilities of $26,265,177 offset by the gain on the conversion of notes of $2,084,368)$1,309,980), an increasea $2,683,073 decrease in accounts payable, of $1,354,973, primarily due to increased component purchasing, use of consultantspartially offset by a $348,275 decrease in prepaid expenses and patent filing legal fees incurredother current assets and invoiceda $149,500 decrease in December 2014 and paid in early 2015 and an increase in accrued expenses of $838,945, primarily due to increases in accrued employee compensation and an accrued stock warrant payable to a vendor.accounts receivable. During the year ended December 31, 2013,2016, cash flows used in operating activities were $3,430,978,$33,062,247, consisting of a net loss of $5,521,081,$45,817,394, lessnon-cash expenses aggregating $10,546,795 (representing principally stock-based compensation of $9,508,175 and depreciation expense of $957,836), a $2,382,790 increase in accounts payable, a $492,616 increase in accrued expenses, partially offset by non-casha $652,336 increase in prepaid expenses and other current assets.

During the years ended December 31, 2017 and 2016, cash flows used in investing activities were $814,648 and $1,137,446, respectively. The cash used for year ended December 31, 2017 consisted of $1,631,879purchases of laboratory equipment and net changes in operating assetssoftware to help with chip development and liabilitiestesting. The cash used for the year ended December 31, 2016 consisted of $458,224.

purchases of laboratory and software to accommodate a larger engineering staff and to help with chip development and testing.

During the year ended December 31, 2014 and 2013, cash flows used in investing activities were $1,619,695 and $199,054, respectively. The increase for the year December 31, 2014 consisted principally of the purchase of laboratory and computer equipment and software while developing an initial prototype for demonstration at CES, as well as furniture, fixtures and tenant improvements for the new office in San Jose, CA.

During the year ended December 31, 2014,2017, cash flows provided by financing activities were $46,766,929 and$16,781,563, which consisted principally of the net proceeds from our IPO of $24,872,170, net proceeds from our secondary offering of $20,993,759 and net proceeds of $900,000$14,932,547 from the saleissuance of our common stock.shares to private investors, proceeds from the exercise of stock options of $979,950 and proceeds from contributions to the employee stock purchase program (“ESPP”) of $869,066. During the year ended December 31, 2013,2016, cash flows provided by financing activities were $5,582,818 and$35,585,766, which primarily consisted principally of $5,500,009 innet proceeds of $34,788,311 from the issuance of shares to private investors, proceeds from contributions to the employee stock purchase program (“ESPP”) of $727,784, proceeds from the saleexercise of convertible debtstock options of $382,351, offset by a total of $312,680 in shares repurchased for tax withholdings on vesting of RSUs and $200,681 in proceeds from the sale of the Company’s common stock.

PSUs.

Research and development of new technologies is, by its nature, unpredictable. Although we intend to undertake development efforts with commercially reasonable diligence, there can be no assurance that our available resources including the net proceeds from our public offerings will be sufficient to enable us to develop our technology to the extent needed to create future revenues to sustain our operations.

We cannot assure that our technology will be adopted, that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable. Furthermore, since we have no committed source of financing, we cannot assure youthere can be no assurance that we will be able to raise capital as and when we need it to continue our operations.

Contractual Obligations

In the ordinary course of business, we routinely enter into purchase commitments for various aspects of our operations, such as purchases of engineering supplies, lab equipment, chip design engineering, engineering

consulting services and software licenses. We do not believe these commitments will have a material effect on our financial condition, results of operations or cash flows.

The following table summarizes our contractual obligations at December 31, 2017 and the effect such obligations are expected to have on our liquidity and cash flows in future periods:

Item 8. Financial Statements and Supplementary Data.

Energous Corporation

(f/k/a DvineWave Inc.)

INDEX TO FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors and Stockholders

of Energous Corporation (f/k/a DvineWave Inc.)

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Energous Corporation (f/k/a DvineWave Inc.) (the “Company”) as of December 31, 20142017 and 2013 and2016, the related statements of operations, changes in stockholders’ equity (deficit), and cash flows for each of the three years then ended.  in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements based on our audits.

audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our auditsaudits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the financial statements are free of material misstatement.misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included considerationAs part of our audits we are required to obtain an understanding of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audit providesaudits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2013.

In our opinion, the financial statements referred/S/ Marcum LLP

MarcumLLP

Melville, NY

March 16, 2018

Energous Corporation

(f/k/a DvineWave Inc.)

BALANCE SHEETS