UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM10-K

(Mark One)

For the Fiscal Year EndedDecember 31, 20172019

For the transition period fromto

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   ☐    No ☒

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 ☐    No  ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    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’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 or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company” and “emerging growth 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  ☐    No  ☒

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 was $288,974,313.$126,048,551. 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 2, 2018,3, 2020, there were 25,155,54734,632,217 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, 2017.2019. Portions of such proxy statement are incorporated by reference into Part III of this Annual Report on Form10-K.

ENERGOUS CORPORATION

TABLE OF CONTENTS

PART I

As used in this Annual Report on Form10-K, unless the context otherwise requires the terms “we,” “us,” “our,” and “Energous” refer to Energous Corporation, a Delaware corporation.

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (“Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the “safe harbor” created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “could,” “seek,” “intend,” “plan,” “estimate,” “anticipate” or other comparable terms. All statements other than statements of historical facts included in this Report regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding proposed business strategy; market opportunities; regulatory approval; expectations for current and potential business relationships; expectations for revenues, cash flows and financial performance; and anticipated results of research and development efforts. These forward-looking statements are based on our current information and beliefs. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are unpredictable and many of which are outside of our control. Actual results may differ materially from what is anticipated, so you should not rely on these forward-looking statements. Important factors that could cause actual outcomes to differ materially from those indicated in the forward-looking statements include, among others, the following: our ability to develop a commercially feasible technology; receipt of necessary regulatory approval; our ability to find and maintain development partners, market acceptance of our technology; competition in our industry; protection of our intellectual property; and other risks and uncertainties described in the Risk Factors and in Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of this Report and our subsequently filed Quarterly Reports on Form 10-Q. We undertake no obligation to update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Item 1. Business

Overview

We have developed aour WattUp® wireless power technology, called WattUp^® that consistsconsisting of proprietary semiconductor chipsets, software controls, hardware designs and antennas, that enables radio frequency (“RF”) based charging for electronic devices, providingdevices. The WattUp technology has a broad spectrum of capabilities, including contact-based wireless charging and wireless charging at various distances. We have demonstrated that, for non-contact applications, our transmitter technology is able to mesh into a wire-free charging solutions for contact-based charging andat-a-distance charging, ultimately enabling charging with network that is expected to allow users to charge their devices even as the devices are moved about in three-dimensional space (“mobility under software control. Pursuant to ourcharging”). In November 2016 we entered into a Strategic Alliance Agreement with Dialog Semiconductor plc (“Dialog”), an industry leader in Bluetooth low energy semiconductors and power management semiconductors. In conjunction with the Strategic Alliance Agreement, Dialog manufactures and distributesis the exclusive distributor of integrated circuit (“IC”) products incorporatingthat incorporate ourRF-based wire-free charging technology. Dialog is our exclusive supplier of these ICs for the general market. designs and provides sales and logistic support to customers on a global basis. We believe our proprietary WattUp technology can be utilized in a variety of devices, includingconsumer electronics such as wearables, hearing aids, earbuds, Bluetooth headsets, Internet of Things (“IoT”) devices, smartphones, tablets,e-book readers, smartwatches, fitness bands, keyboards, mice, remote controls, rechargeable lights, cylindrical batteries, medical devices, and any other devicedevices with similar charging requirements that would otherwise need arequire battery replacement or a connection to awired power outlet.connection.

We believe our technology is novelinnovative in its approach, in that we are developing a solutionsolutions that chargescharge electronic devices by surrounding them with a focused radio frequency energy pocket (“RF energy pocket”).pocket. We are engineering solutions that we expect to enable thedeliver wire-free transmission of energy for contact-based charging applications and are also developing non-contact charging at distances up to approximately three feet, as well as far field applications oflow-power charging for distances up to 15 feet. We are also developing our Far Field transmitter

technology to seamlessly mesh (like a network offeet and in some use cases mobility charging. Wi-Fi routers) to form a wire-free charging network that will allow users to charge their devices as they move fromroom-to-room or throughout a large space. To date,To-date, we have developed multiple transmittertransmitters and receivers, including 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.partner production designs. The transmitters vary based on form factor, power specifications and frequencies, while the receivers are designed for applications including hearing aids, fitness bands, smartwatches, smartphones,

smartglasses, sensors, industrial applications, keyboards, mice, headsets, earbuds, headphones, Bluetooth tracking tags and more. We have engagements with several consumer electronics (CE) and medical device companies that are in the evaluation and pre-production stage of WattUp-based product development. In 2019, our first end customer product entered the market and we expect additional partner products to be announced and launched in 2020. We are also in discussion with potential customers in the pre-production stage leadingconsumer and industrial spaces that are considering our solutions to mass production with early adopters ofsupply low power distance charging for products that could enter the WattUp technology to bring the first contact-based transmitters and compatible receivers to market.market in 2021.

When the company was founded in 2012, we recognized the need to builddesign and designbuild an enterprise-class network management and control software (“NMS”) system that waswould be integral to the architecturesupporting our customers’ rapid and developmentcost-effective deployment of our wire-free charging technology. Our NMS system can be scaledis robust and flexible enough to scale up to control an enterprise consisting of thousands of devices across an enterprise, or scaledscale down to work inmeet the needs of a home or IoT environment.

The power,In December 2017, we announced Federal Communications Commission (“FCC”) certification of our first-generation WattUp Mid Field transmitter, which simultaneously powers multiple devices at a distance of up to three feet. This transmitter underwent rigorous, multi-month testing to verify that it met consumer safety and mobility capabilitiesregulatory requirements. We believe this was the first certification of the WattUpa Part 18 FCC-approved non-contact wireless charging transmitter, and that it establishes engineering design precedents that can streamline future regulatory approvals for our technology were validated by an internationally recognized independent testing lab in October 2015.and for our customers’ end-products that employ our technology.

Our technology solution consists principally of transmitter controller ICs, power amplifier ICs and receiver ICs, andas well as novel antenna designs, driven through innovative algorithmsapplication prototypes and proprietary software applications.algorithms. We submitted our first IC design for wafer fabrication in November 2013 and have since been developing multipledeveloped many generations of transmitter and receiver ICs, multiple antenna designs, as well as algorithms and software designs that we believe, in the aggregate, willalgorithms.  We have endeavored to optimize our technology by reducing size and cost, while at the same time increasing performance to a level that will enablewhich enables our technologydesigns to be integrated into a broad spectrumrange of devices. We have developed a “building block” approach whichthat allows us to scale our product implementations by combining multiple transmitter building blocks and/or multiple receiver building blocks to providemeet the power, distance, size and cost performance necessary to meet applicationrequirements of customer applications requirements. While theOur technology is veryreadily scalable in order to providebecause the necessary strategic focus to grow the company effectively, wesame ICs that are used for contact-based charging can be used for distance-based charging solutions. We have defined our market as devices that require 10 watts or lessdeveloped two classes of chip solutions, a CMOS-based technology focused on low cost, small footprint and low power to charge.(less than 5 watts) and a GaAs/GAn-based technology capable of delivering higher power with greater efficiency. We intend to continue to invest in ICresearch and development as well aswith high power capabilities of 20 watts and beyond at high levels of efficiency. We also intend to continue to invest in the other components of the WattUp system to improveimproving product performance, efficiency, cost-performance and miniaturization as required to grow the businessreach multiple markets and expand the power-at-a-distance ecosystem, while also distancing us from anymaintaining a technology lead on 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 ranging from contact-based charging or charging at distances of a few millimeters (“near field”) to charging at distances of up to 15 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, we 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 WattUp^® technology being integrated into products shipped to consumers.

In February 2016, we began deliveringdeliver evaluation kits to potential licensees of our technology, to allow their respective engineering and product management departments to test and evaluate the technology. Our customers’ product development, technology integration and product introduction cycles occur over multiple quarters and generally more than a year can elapse before first evaluation and final shipment of the customer’s product. Once our customers begin to sell products to end customers that incorporate our technology, we would expect the commercialization cycle to shorten over time as the technology matures and market acceptance grows.

We generally maintain exclusive rights to all intellectual property in our technology. We expect that the testing and evaluations currently taking place will lead to products beginning to be shipped to consumers in 2018.

In November 2016, we entered into a Strategic Alliance Agreement with Dialog, pursuant to which Dialog manufactures and 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.

Ourhave implemented an aggressive intellectual property strategy includes pursuingand are continuing to pursue patent protection for new innovations. As of March 2, 2018,February 13, 2020, we had more than 170110 pending patent applications in the U.S. and provisional patent applications. As of that date,abroad. Additionally, the U.S. Patent and Trademark Office and international patent offices hadhave issued 77220 patents to us. In addition to the inventions covered by these patents, we have also identified specific inventions that we believe are novel and had notified us of the allowance of 50 additional patents.patentable. In addition to the inventions covered by these patents and patent applications, we have also identified specific inventions that we believe are novel and patentable. We intend to file for patent protection for the most valuable of these, and for other inventions that we expect to develop. Our strategyThis is toa significant annual expense and we continually monitor the costs and benefits of each patent application and pursue those that we expect will best protectbelieve are most protective for our business and expand the core value of the Company.

We have recruited and hired aOur seasoned management team withhas both private and public company experience, andas well as relevant industry experience to develop and execute our operating plan.experience. In addition, we have identified and hired key engineering resources in the areas of IC development, antenna development, hardware, software and firmware engineering as well as integration and testing, which will

allow us to continue to expand our technology and intellectual property as well asand to meet theour customers’ support requirements of our licensees.requirements.

Our common stock is quoted on The Nasdaq Stock Market under the symbol “WATT”. As of March 2, 2018,February 29, 2020, we had 6851 full-time employees, 6041 of whichwhom 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 at 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 solutiontechnology we are developing employs transmitter technology that creates a targeted RF energy pocket around a fixed or mobile receiving device (mobile or fixed).device.

Figure 1 below shows a basic diagramconceptual design of a mid field wireless charging solution based on our solution.technology. Today this solutiontechnology is able to send RF energy from the transmitter to single receiving device, or to multiple receiving devices.

Figure 1: OurConcept of a Mid Field Wire-Free Charging Solution

First, our proprietary transmitter technology locates the receiver(s) in space via technology we have developedtarget receivers using standard Bluetooth^® communications. Next, communications and our proprietary technology. Our software controls then cause the transmitter through software control, generatesto generate a controlled and focusedRF-waveform to create an that creates a RF energy pocket around the receiver(s). Receiver(s)receivers. Receivers equipped with our antennas and ICs, and controlled by our software, are able to harvest power from thisthe focused RF energy pocket. We believe that these receivers will be incorporated into variousfuture devices such as smartphones, wearables, fitness trackers, keyboards and mice, cameras, tablets, toys, IoT devices, sensors, remote controls, medical devices and other small electronics whichthat contain embedded batteries.

Our The transmitter uses proprietary software algorithms to dynamically direct, focus and control our RF waveform as it transmits energy to a moving object, (suchsuch as a user holding theira mobile device as they walkwhile walking around a room).room. Our small form factor antennas use the existing device’s

printed circuit board, eliminating 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.

Our initial demonstration system was able to transmitcapable of transmitting energy to multiple devices within a radius of 15 feet. We believe ourOur current generation ICs and those in development will also allow us tohas significantly reducereduced the size and cost of both our transmitters and our receivers, and products under development are designed to increase delivered powerfurther reduce size and cost.  In addition, our ICs are designed for lower-power and higher-power applications, efficiency and faster synchronization.

In January 2016, we announced a new Miniatureintroduced our WattUp Near Field Transmitter (now called WattUp Near Field Transmitter Technology)Technology and a small form factor receiver, both of which were developed as a direct result of our efforts to reduce cost and size. The WattUp Near Field Transmitter Technology offersThis contact-based charging solution, for which we have received FCC approval, that allowsallowed for low power charging at up to five millimeter distances.millimeters. In 2017, we announced a higher-power version of our WattUp Near Field Transmitter technology, with the ability to charge on contact at levels of up to 10 watts. In February 2019, we announced that our latest WattUp Near Field High Power transmitter technology supports up to 20 watts of charging power. Due to its low cost and small size, the miniature transmitter is anticipated tocan be bundledin-box with WattUpWattUp-enabled receiver enabled devices, replacing alternative charging solutions like power adapters and charging cables. The ability to provide aWe expect accelerating adoption of our low cost, portable charging solution for receiver devices established portability for the WattUp solution, and we expect it to accelerate the adoption of our technology. In 2017, we announced the High-Power version of the WattUp nearfield transmitter that will have the ability to change on contact at levels of up to 10 watts.accelerate.

Our Competition

There are many existing and commercially availableCompeting methods for charging battery-powered devices includinginclude wallplug-in charging, inductive charging, magnetic resonance charging, charging stations and more. To our knowledge, almost all consumer electronic deviceselectronics equipped with a rechargeable battery come bundled with a charging method, to charge the device (for example,such as a power cord).cord. Studies indicate that the consumer has grown tired and frustrated with tetheredconsumers prefer wire-free, or untethered, charging solutions and that the market is poised and will be receptive to untethered wire-free power solutions likesuch as our WattUp technology. We believe that the positive 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 believeadvantages of our WattUp technology has a number of advantages compared to traditional charging technologies in terms of product spectrum, distance,include size, cost, mobility, foreign object detection and portability. Further, our technology allows us to target, track and charge a device and track that device ifas it moves, and it enables devices to be designed without removable batteries or is moving, and transmit focused energythe need to the targeted device to charge the device without having to remove the battery or plug in the device.to charge. Over time, charging at greater distances could become a further competitive advantage.  

A variety of 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 our WattUp technology. RF harvesting typically utilizes 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 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

Pursuant to our Strategic Alliance Agreement, with Dialog, Dialog manufactures and distributes IC products incorporating our wire-free charging technology. Dialog is ourthe exclusive supplier of these products, for the general market. Wewhich we believe there aremay be useful in several vertical markets with large volumes of potential annual sales that would benefit from our technology, and as a result, we may purchase our proprietary components through the Strategic Alliance Agreement.sales. Our strategy is to support the development and proliferation of our WattUp^® technology to form a ubiquitous wire-free charging ecosystem.

We believe that our greatesta large market opportunity lies in wire-free low-power charging at a distance, which we anticipate maymight develop in muchas the same way as theWi-Fi ecosystem has developed. The goal is to ensure interoperability between transmitters 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 ubiquitous solutions, such asWi-Fi and Bluetooth, illustrates our goal. For example,Wi-Fi routers, regardless of their designer or manufacturer, work withWi-Fi receivers installed in consumer electronic devices,electronics, regardless of the manufacturer. Accordingly, we are following the same rollout strategy asWi-Fiin thatpartnership with Dialog, we endeavor to:

We believe our strategic relationship with Dialog will enable us to reap the benefits of our technology much faster and with greater penetration than by manufacturing and distributing products ourselves. We believe this strategic relationship allows us to solve theresolve supply chain problemproblems for major consumer electronicelectronics and IoT companies as well as leverage their highly regarded and experiencedDialog’s sales force while we concentrate our efforts and resources on engineering, development and commercialization projects to accelerate the introduction and adoption of the WattUp solution.solutions.

In order toTo engage with potential licensees of the WattUp technology, we have developed evaluation kits consisting of a 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 customers as they evaluate the technology and develop specific designs to incorporate it.

In selecting initialTo validate our technology, we originally sought out customers we are employing a three-pronged strategy. First, we are engaging withthat were smaller, more nimble early adopters who havewith relatively short product cycles and the ability to ship fully integrated WattUp enabled devices to the consumer as quickly as possible. These customers are important from a technology validation standpoint. Simultaneously,At the same time, we are engagingbegan to engage with larger, top tier customers who havewith the ability to ship WattUp enabled consumer and IoT devices in mass quantities beginning in the end of 2018. Finally, we continue to expand our customer based while we focus large opportunitiesquantities. We are also engaged with companies that have much longer product cycles, that should come to fruitionsuch as medical and mobile device companies. As our partnership with Dialog enters its fourth year, the majority of new customer introductions are made through Dialog, comprised of companies diverse in 2019 where we expect to see a significant increase in our revenues on the path to profitability.size and end markets.

Since we are developing a new electronic deviceelectronics charging paradigm for consumers, we expect themany operational details of our strategy to continue to evolve as our technology matures, engineering breakthroughs occur and our engagements with our strategic partners solidify. As a result, we expect to make operational course corrections as we steer the company towardspartner Dialog and our goal of a ubiquitous wire-free charging solution.top tier customers advance and mature.

Our Target Markets

We believe thatcategorize our technology will be compelling to many vertical markets, each of which may have several potential customers. To focus our activities and see WattUp-enabled products in the hands of consumers as quickly as possible, we have selected initial target markets and customers based on market potential andtime-to-market capabilities. As we continue to develop our technology, we intend to add more markets and partners.

We identify our early target markets in two categories,as transmitter target markets and receiver target markets.

Transmitter Target Markets

Transmitters are devices that broadcast RF energy pockets that can be accessed byWatt-Up enabled WattUp-enabled receivers in consumer electronic devices.electronics. We believe our transmitter technology will be developed and released in three basic categories:

Stand-Alone Transmitters:

We currently plan to release stand-alone transmittersand integrated transmitter technology in three categories:

WattUp Near Field WattUp Transmitters:

Because of the distinctits advantages compared toover other existing forms of contact-based wireless charging, including ease of manufacturing and relative ease of regulatory approval, we expect that productstransmitters using our WattUp Near Field transmitter technology willto be the first WattUp enabled transmitter products on the market. Our Near Field transmittersThese contact-based charging solutions are ideally suited for a broad spectrum ofmany electronic devices, such as wearables, IoT devices and other small electronics that require a small form factor receiver and alow-cost charging solution as well assolution. They are also suitable for larger, more power-hungry devices likesuch as smartphones, smart watches and tablets. These solutionsInitially these transmitters will initially beone-to-one (one transmitter to one receiver), withfollow-on future versions being one transmitter tosingle transmitters for multiple receivers.

WattUp Mid Field WattUp Transmitters:

We expect that transmitters using our WattUp Mid Field WattUp transmitterstechnology will be geared to desktop and automotive markets and will likely havefor charging at 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 Mid Field transmitters may include small desktop and nightstand transmitters designed to send power at distances for consumer electronicelectronics 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.

WattUp Far Field Transmitters:

Transmitters based on WattUp Transmitters:

Far Field WattUp transmitterstechnology are full featured transmitters with theexpected to provide low power to chargecharging for 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 createcreaging a largemesh of charging envelope encompassing manythat could be used for different rooms or large spaces while seamlessly providing charging to mobile devices that are movingmove through the coverage space. Far Field WattUp transmitters may also play a significant role in the powering ofcharging low power IoT devices that arein fixed locations – 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 smartspeakers, 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 transmit technology could be integrated into the door of a small refrigerator typically found in college dorm rooms, providingto provide 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 and theWi-Fi router as a natural integration point and a synergistic application of both technologies. The WattUp wire-free power routerAWattUp transmitter 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,antennas, and both devices “pair” or provide hand off capabilities which allow for mesh networks to provision large “enabled” sites similar to a mesh network. We also believe that our technology may enhance the data signal of aWi-Fi router, which we believe will provide an even stronger value proposition to wireless data router manufacturers.

TheWi-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.sites. We believe that our technology is applicable to both the commercial and residentialWi-Fi router markets based on the building block capabilities mentioned earlier that will enable the WattUp technology to effectively serve and support both 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.

As part of ourgo-to-market strategy under the Strategic Alliance Agreement, with Dialog, we are currently working with Dialog to identify potential customers offeringto offer consumer and commercial applications of our transmitter technology.

Receiver Target Markets

We believe there are a wide variety ofmany potential uses for our receiver technology, including:

This list is meant forto be 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 continuouslycontinue to 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.

As part of our go-to-market strategy under the Strategic Alliance Agreement, we are currently working with Dialog to enhance solutions for our current customers and to identify new customers for our technology.

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.Relationship

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 Bluetooth solutions, including 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 accounted for approximately 66%, 69%60% and 63%64% of our total operating expenses for 2017, 20162019 and 2015,2018, respectively. Our total research and development expenses were $33.2 million, $32.8$23.2 million and $18.8$32.9 million for the 2017, 2016,2019 and 2015,2018, 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 have implemented an aggressive intellectual property strategy and are continuing to pursue patent protection for new innovations. As of March 2, 2018,February 13, 2020, we had more than 170110 pending patent applications in the U.S. and abroad. Additionally, the U.S. Patent and Trademark Office and international patent offices have issued 77220 patents and notified us of the allowance of 50 additional patents applications.to us. In addition to the inventions covered by these patents and patent applications, we have identified a significant number of additional specific inventions we believe are 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 is subject to regulation by the Federal Communications Commission (“FCC”), international regulators and may be subject to regulation by other federal, state, local and international agencies. We believeOur technology has been tested against U.S. and international safety requirements which has consistently demonstrated that our technology is safe, and wesafe. We continue to consultwork with the FCC and other regulatory bodies to establish a process by whichprocesses, standards and spectrum allocation to ensure devices incorporating WattUp^®WattUp® technology can secure required domestic and international approvals.

As part of the regulatory approval process, devices incorporating the WattUp^®WattUp® technology will need tomust obtain approvals under both FCC Part 15 andand/or FCC Part 18 in the U.S., depending on the specific application. Energous has received Part 15 and Part 18 FCC grantsapprovals for WattUp enabled products and anticipates future domestic andhas received regulatory approvals from many international approvals for new and updated designs.agencies.

In February 2020, we announced regulatory approval for our WattUp near-field wireless charging technology in Japan, a critical market in the Asia Pacific region for our customers and partners. As of February 26, 2020, products integrating WattUp® technology had received international regulatory approvals and were approved to ship into 112 countries.  

Employees

As of March 2, 2018,February 29, 2020, we had 6851 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. RiskRisk Factors

We are subject to many risks that may harm our business, prospects, results of operations and financial condition. 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 certain that we will successfully address these risks, and if we are unable to address them, our business may not grow, our stock price may suffer and you could lose the value of your investment in our 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 what is in these forward-looking statements.

Risks Related to Our Business

We have no history of generating meaningful product revenue, and we may never achieve or maintain profitability.

We have a limited operating history upon which investors may rely in evaluating our business and its prospects. We have generated only very limited revenues to date, and we have a history of losses from operations. Asas of December 31, 2017,2019, we had an accumulated deficit of approximately $174$263 million. Our ability to generate revenues on a more reliable and larger scale, and to achieve profitability will depend on our ability to execute our business plan, complete the development and approval of our technology, and incorporate itthe technology into products that customers wish to buy, and if necessary, secure additional financing. There can be no assurance that our technology will be adopted widely, that we will ever earn revenues sufficient to do so rapidly with appropriate financing if necessary.support our operations, or that we will ever be profitable. Furthermore, there can be no assurance that we will be able to raise capital as and when we need it to continue our operations. If we are unable to raise sufficient additional capital, we may be required to delay, reduce or severely curtail our research and development or other operations, which could have a material adverse effect on our business, operating results, financial condition, long-term prospects and ability to continue as a viable business. If we are unable to generate revenues of significant scale to cover our costs of doing business, our losses will continue and we may not achieve profitability, which could negatively impact the value of your investment in our securities.

TermsWe will need additional financing to achieve our long-term business plans, and there is no guarantee that it will be available on acceptable terms, or at all.

We do not have sufficient funds to fully implement our long-term business plans. It is likely that we will need to raise additional capital through new financings, even if we begin to generate meaningful commercial revenue. For example, new product development for business partners may require considerable expense in advance of substantial revenue for such products. Such financings could include equity financing, which may be dilutive to stockholders, or debt financing, which could restrict our ability to borrow from other sources. In addition, such securities may contain rights, preferences or privileges senior to those of current stockholders. As a result of economic conditions, general global economic uncertainty (including as a result of actual or perceived disruption caused by the recent coronavirus, or COVID-19, or other infectious diseases), political change, and other factors, we do not know whether additional capital will be available when needed, or that, if available, we will be able to obtain additional capital on reasonable terms. If we are unable to raise additional capital due to the volatile global financial markets, general economic uncertainty or other factors, we may be required to curtail development of our Developmenttechnology or reduce operations as a result, or to sell or dispose of assets. Any inability to raise adequate funds on commercially reasonable terms could have a material adverse effect on our business, results of operations and License Agreementfinancial condition, including the possibility that a lack of funds could cause our business to fail and liquidate with atier-one consumer electronics company could inhibit potential licensees from working with uslittle or no return to investors.

We may not be able to develop all the features we seek to include in specific markets.our technology.

We have entered into a Developmentdeveloped commercial products, as well as working prototypes, that utilize our technology. Additional features and License Agreement with atier-one consumer electronics companyperformance specifications we seek to embedinclude in our WattUp wire-freetechnology have not yet been developed. For example, some customer applications may require specific combinations of cost, footprint, efficiencies and capabilities at various frequencies, charging receiverpower levels and transmitter technologydistances. 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 various products, including mobile consumer electronicsachieving all the features we are targeting and related accessories. This agreement provides our strategic partner atime-to-market advantage duringinability to do so may limit the development and until one year after the first customer shipment for specified WattUp-enabled consumer products. This may inhibit other potential licenseesappeal of our technology from engaging with us on competing consumer products, and may cause them to seek solutions offered by other companies, which could have a negative impact on our revenue opportunities and financial results.consumers.

We may be unable to demonstrate the commercial feasibility of the full capability of our technology.

We have developed both commercial products, as well as working prototypes, of products usingthat use our technology at differing power levels and charging distances, but additional research and development is required to commercializerealize the potential of our technology for mid fieldapplications at increasing power levels and far field applications sodistances that it can be successfully integrated into commercial products. Our researchResearch and development efforts remain subject to the risks associated with the development of new products that are based on emerging technologies such asis, by its nature, unpredictable.  We could encounter unanticipated technical problems, the inability to identify products utilizing our technology that will be in demand with customers, getting our technology designed in tointo those products, designing new products for manufacturability, regulatory hurdles and achieving acceptable price points for final products. Although we intend to undertake development efforts with commercially reasonable diligence, there can be no assurance that our available resources will be sufficient to enable us to develop our technology to the extent needed to create future revenues to sustain our operations.

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 risk of having inadequate capital to fund the research and development needed to complete development of these products. Technical problems causingleading to delays would cause us to incur additional expenses that would increase our operating losses. If we experience significant delays in developing our technology and products based on it for use in potential commercial applications, particularly after incurring significant expenditures, our business may fail, and you could lose the value of your investment in our company. To our knowledge, the technological concepts we are applying have never previously been successfully applied. If we fail to develop practical and economical commercial products based on our technology, our business may fail and you could lose the value of your investment in our stock.

control the spread of the virus, including quarantines, travel restrictions, manufacturing restrictions, declarations of states of emergency, business shutdown and restrictions on the movement of employees in many regions of China and certain other countries, including the United States. Further, a majority of our early adopters have a significant dependence on the Chinese manufacturing and supply chain infrastructure. We believe the outbreak of COVID-19 has delayed adoption of our technology by multiple customers who temporarily shut down their workforce and supply chain based in China. In one case, this outbreak delayed the launch of a new product that incorporates our technology. COVID-19, or similar or related diseases, may result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect our suppliers’ supply to us and demand for our customers’ products. Any of these events could materially and adversely affect our business, results of operations and financial condition. The FCCextent of the impact will depend on future developments, which are highly uncertain and cannot be predicted.

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 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. If we do not have the resources to defend our intellectual property, the value of our intellectual property and our licensed technology will decline. In addition, some companies that integrate our technology into their products may acquire rights in the technology that limit our business or increase our costs.  If we are not successful in protecting our intellectual property effectively, our financial results may be adversely affected and the price of our common stock could decline.

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

We 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 our 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 would have no patent protection. Although we have patent applications on file in the United States and elsewhere, the patents might not issue, might issue only with limited coverage, or might issue and be subsequently successfully challenged by others and held invalid or unenforceable.  

Similarly, even if patents are 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 or claims of prior art by third parties, and others may challenge the inventorship or ownership of our patents and pending patent applications. In addition, if we 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.

Our strategy is to deploy our technology into the market by licensing patent and other proprietary rights to third parties and customers. Disputes with our licensees 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 existing licenses or licenses we may grant to third parties in the future.

The policies we use to protect our trade secrets might not be effective in preventing misappropriation of our trade secrets by others. In addition, confidentiality agreements executed by our customers, employees, consultants and advisors might not be enforceable or might 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. Moreover, our competitors may independently develop equivalent knowledge methods and know-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.   

Domestic and international regulators may deny approval for our technology, and future legislative or regulatory changes may impair our business.

Our wire-free charging technology involves power transmission of power using radio frequency (RF) energy, which is subject to regulation by the Federal Communications Commission or FCC.in the United States and by comparable regulatory agencies worldwide. It may also be subject to regulation by other federal, state and local agencies. WeRegulatory concerns include whether human exposure to radio frequency emissions are below specified thresholds. Higher levels of exposure require separate approval.  For example, transmitting more power over a certain distance or transmitting power over a greater distance may require separate regulatory approvals. In addition, we design our technology to operate in a RF band that is also used forWi-Fi routers and other wireless consumer electronics. Someelectronics, and we also design it to operate at different frequencies as demanded for some customer applicationsapplications. Applications at different frequencies may require us to develop our technology to work at different frequencies. The FCC grants product approval if, among other things, the human exposure to radio frequency emissions is below specified thresholds. For products that transmit more power, additional FCC approvals are required. There can be no assurance that devices incorporating our technology will receive FCC approval or that other governmental approvals will not be required. Our effortsseparate regulatory approvals.  Efforts to obtain FCCregulatory approval for devices using our technology is costly and time consuming.consuming, and there can be no assurance that requisite regulatory approvals will be forthcoming. If approvals are not obtained in a timely and cost-efficient manner, our business and operating results wouldcould be materially harmed.adversely affected. In addition, new lawslegal or regulations governing our technologyregulatory developments could impose additional restrictions or costs on us that could require us to redesign our technology or future products, or that are difficult or impracticable to comply with, all of which would adversely affect our revenues and financial results.

We depend upon our strategic relationship with Dialog Semiconductor, a provider of electronics products, and there can be no assurance that we will achieve the expected benefits of this relationship.

We have entered into a strategic cooperationalliance agreement with Dialog Semiconductor, a provider of electronics products, pursuant to which we licensed our WattUp technology to Dialog and Dialogit 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 work as we intend, then we may be required to seek an arrangement with another strategic partner, or to develop internal capabilities, which will require a 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 may be unable without undue expense to replace this agreement with one or more new strategic relationships to promote and provide our technology.

We may require additional financing in order to achieve our business plans, and there is no guarantee that it will be available on acceptable terms, or at all.

We may not have sufficient funds to fully implement our business plans. We expect that we will need to raise additional capital through new 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,technology which could restrictincrease our costs and delay revenues.

Terms of our existing or new development and license agreements could limit our ability to borrow from other sources. In addition, such securities may contain rights, preferences or privileges senior to those of current stockholders. As a result of economic conditions, general global economic uncertainty, political change, and other factors, we do not know whether additional capital will be available when needed, or that, if available, we will be able to obtain additional capital on reasonable terms. If we are unable to raise additional capital due to the volatile global financial markets, general economic uncertainty or other factors, we may be required to curtail developmentlicense our technology in specific markets.

The terms of our current development and license agreement with a tier-one consumer electronics company could limit our ability to do business in some industry verticals through December 2020, which could cause some potential customers not to choose, or delay using, our technology or reduce operations as a result, or to sell or dispose of assets. Any inability to raise adequate funds on commercially reasonable termsin their products, which could have a material adverse effectnegative impact on our business, results of operationsrevenue opportunities 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.

Expanding our business operations as we intend will impose new demands on our financial, technical, operational and management resources.

To date we have operated primarily in the research and development phase of our business. If we are successful, we will need to expand 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 theif unexpected expansion difficulties arise, including issues relating to our research and development activities, andthen retention of experienced scientists, managers and engineers could become more challenging and have a material adverse effect on our business, our 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.condition.  

If products incorporating our technology are launched commercially but do not achieve widespread market acceptance, we will not be able to generate the revenue necessary to support our business.

Market acceptance of a wire-freeRF-based charging system as a preferred method to rechargelow-power fixed and mobilefor charging electronic devices will be crucial to our continued success. The following factors, among others, may affect the rate and level of market acceptance of products in our industry:

capabilities at 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 technology to consumers.

Future products based on our technology 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 utilize our receiver technology, the technology may be embedded in a sleeve, case or other enclosure. For example, products such as remote controls or toys equipped with replaceable AA size or other batteries would need to be outfitted with enhanced batteries and other hardware enabling the devices to be rechargeable by our system. In each case, an end user would 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, 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 userscustomers from purchasinglicensing our technology under development or other future products.technology. Such factors may inhibit adoption of our technology, which could harm our business. We have not developed an enhanced battery for use in devices with our technology, and our ability to enable use of our technology with devices that require an enhanced battery will depend on our ability to develop a commercial version of such a battery that could be manufactured at a reasonable cost. If we fail to develop or enable a commercially practicable enhanced battery of this nature is not developed, our business could be harmed, and we may need to change our strategy and target markets.

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

When used in the field, our technology may not perform as expected based on test results and performance of our technology under controlled laboratory circumstances.conditions. For example, in the case of distance charging, a laboratory a configuration of transmission obstructions of transmission will be arranged in some fashion,for testing, but in the field receivers may be obstructed in many different and unpredictable ways over which we have no control.ways. These conditions may significantly diminish 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 a surface to reach the receiver, making the transmission distance longer than straight-line distances.transmitter. The failure of products using our technology or other future products to be able to meet the demandsexpectations of users in the field could 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 that some people may be concerned with wire-free transmission of powerRF-based charging 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. 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 technology, as occurred with a small number of users of cellular telephones. A discovery of safety issues relating to our technology could have a material adverse effect on our business and any legal action against us claiming our technology 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.

As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal controls. Although our management has determined that our internal control over financial reporting was effective as of December 31, 2019, we cannot assure you that we will not identify any material weakness in our internal control in the future.

We are no longer an emerging growth company and are now required to include an attestation report on the effectiveness of our internal control over financial reporting annually of our independent registered public accounting firm. Even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may conclude that there are material weaknesses with respect to our internal controls or the level at which our internal controls are documented, designed, implemented or reviewed.

If we experience a material weakness in our internal controls, we may fail to detect errors in our financial accounting, which may require a financial statement restatement or otherwise 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 the requirements related to the maintenance and reporting of our internal controls over financial reporting, or if our auditors were to express an adverse opinion on the effectiveness of our internal control over our financial reporting because we had one or more material weaknesses, 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 detected.

Our industry is subject to intense competition and rapid technological change, which may result in technology that is superior to ours. If we are unable todo not 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 electronics industry in general, and the power, recharging and alternative rechargingcharging segments in particular, are subject to intense and increasing competition and rapidly evolving technologies. Because products incorporating our technology 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 established alternatives, and over newerother emerging methods of power delivery. Traditional wallplug-in recharging remains an inexpensive alternative to our technology. 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 technologiestechnology we have developed. Furthermore, certainsome competitors may have greater resources than we 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 or future products based on our technology obsolete. Many of our competitors have greatermore corporate, financial, operational, sales and marketing resources than we have, as well as more experience in research and development. We cannot assure you that our competitors will not develop or market technologies that are more effective or commercially attractive than our products or that would render our technologies and products obsolete. We may not have or 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:

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 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. If we do not have the 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.

We 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 our 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 a number of patent applications on file in the United States, the patents may not issue, 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 are 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 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.

Our strategy is to deploy our technology into the market by licensing patent and other proprietary rights 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 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. 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 that could be costly to defend.

Because our industry is characterized by competing intellectual property, we may become 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. No 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 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 thatIf 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 a determination that we have infringed the intellectual property rights of a competitor or other person, we may be required to pay damages, pay a settlement, or pay ongoing 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 areis 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.unsuitable. 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 technology 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 technology 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 or 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 partnerspartner 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 technology, which could in turn result in required recalls, restrictions on the sale of such 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 engineering 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 development 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.

If we are not able to secure advantageous license agreements for our technology, our business and results of operations will be adversely affected.

We pursue the licensing of our technology as a primary means of revenue generation. We believe there are many companies that would be interested in implementing our technology into their devices. We have entered into one product development and license agreement with atier-one consumer electronics company that has the potential to yield license revenue. We have also entered into a number of evaluation and joint development agreements with potential strategic partners. However, these 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 licensing business relationship often takes a substantial effort, as we expect to have to convince the counterparty of the efficacy of our technology, meet design and manufacturing requirements, satisfy marketing and product needs, and comply with selection, review and contracting requirements. There can be no assurance that we will be able to gain access to 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, 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 illicitly obtain a customer’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 security 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 a violation 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 effectiveness of such malicious email campaigns through product improvements, spoofing and phishing may damage our brand and increase our costs. Any of these events or circumstances could materially adversely affect our business, financial condition and operating results.

We are highly dependent on 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 a very small number of key executives. If we lose the services of any of these persons, we could be required 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. If 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-manany key-person life insurance policy that would assisthelp us in recoupingrecoup our costs in the event of the death or disability of any of these executives.

Our success and growth 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 depends on our ability to attract, hire, train, integrate and retain high-level engineering talent. Competition for such personnel is intense because we compete for talent 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. We may incur significant costs 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 recruiting and training them. Volatility or lack of performance in our stock price may also affect our ability to attract and retain qualified personnel.

Risks Related to Ownership of Our Common Stock

You maymight lose all of your investment.

Investing in our common stock involves a high degree of risk. As an investor, you maymight 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 is likely to continue to be volatile.

The market price of theour common stock has fluctuated significantly since it was first listed on The Nasdaq Stock Marketour initial public offering in 2014. Our common stock has experienced an intra-day trading high of $33.50$6.79 per share and a low of $6.91$0.90 per share on The Nasdaq Stock Market over the last 52 weeks.weeks, as of March 12, 2020. The price of our common stock is likely to continue to fluctuate significantly in response to many factors that are beyond our control, including:

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 the 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 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 our company are made by our board of directors and our officers, who beneficially own approximately 7.6%5.9% of our common stock collectively.collectively as of February 20, 2020. In addition, our greater than 5% stockholders such as Dialog Semiconductor plc, Black Rock Inc. and Emily and Malcolm Fairbairn Hood River Capital Management, DvineWave, and BlackRock Inc. beneficially owned approximately 17.6%6.9%, 7.0%, 6.7%, 6.7%5.6%, and 5.4%5.2%, respectively, of our common stock as of February 15, 2018.20, 2020. 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 company 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 and our management will be required to devote substantial time to meet our compliance obligations.

As a public reporting company, we incur significant legal, accounting and other expenses. We are subject to reporting requirements of the Securities Exchange Act of 1934 and rules subsequently implemented by the Securities and Exchange Commission (“SEC”) that require us to establish and maintain effective disclosure controls and internal controls over financial controls,reporting, as well as some specific corporate governance practices. Our management and other personnel are expected to devote a substantial amount of time to compliance 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 followingreacting to news such as our announcementpast announcements of Federal Communications Commission approval of ourmid-field transmitter technology,FCC approvals and it may be volatile in the future. In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation, and we may be the 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 maintain an active trading market on thisThe Nasdaq Stock Market or any other exchange in the future.future, including if we no longer meet the applicable listing standards of Nasdaq. If an active market for our common stock is not maintained, or if we no longer qualify to be listed on Nasdaq, it may be difficult for our stockholders to sell or purchase shares.shares on such a national securities exchange, or otherwise. 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 by 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 cover 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 regularly 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 Federal 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, 2017,2019, we had a Federal net operating loss (“NOL”) carryforward of $84,418,000.approximately $169,405,000. Under the U.S. Tax Code, NOLNOLs arising in tax years ending on or before December 31, 2017 can generally be carried forward to offset future taxable income for a period of 20 years.years, and NOLs arising in tax years ending after December 31, 2017 can generally be carried forward indefinitely. Our ability to use our NOL during this periodNOLs will be dependent on our ability to generate taxable income, and the NOLNOLs that arose in tax years ending on or before December 31, 2017 could expire before we generate sufficient taxable income.income to take advantage of the NOLs. As of December 31, 2017,2019, based on our history of operating losses it is possible that a portion of our NOL isNOLs will not be fully realizable.

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

Provisions of our certificate of incorporation and bylaws, and applicable 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 certificate of incorporation and bylaws:

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 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 Stock Market since January 1, 2016.

As of December 31, 2017,2019, there were 13 holders11 stockholders of record of our common stock, and we believe we have significantly more beneficial holders of our common stock. Our common stock is listed on The Nasdaq Stock Market under the symbol “WATT.”

We have never paid cash dividends on our securities and we do not anticipate paying any cash dividends on our shares of common stock in the foreseeable future. We intend to retain any future earnings for reinvestment in our business. Any future determination to pay cash dividends will be at the discretion of our board of directors, and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as our board of directors deems relevant.

The information regarding the Securities Authorized for issuance under our equity compensation plans will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from our Proxy Statement to be filed with the SEC for our 2020 Annual Meeting of Stockholders.

Item 6. Selected Financial Data

The data set forth below should be read in conjunction with Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Company’s financial statements and notes thereto.Not applicable.

The Company has had no long-term liabilities, preferred stock or dividends declared.

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

Overview

We have developed aour WattUp® wireless power technology, called WattUp^® that consistsconsisting of proprietary semiconductor chipsets, software controls, hardware designs and antennas, that enables radio frequency (“RF”) based charging for electronic devices, providingdevices. The WattUp technology has a broad spectrum of capabilities, including contact-based wireless charging and wireless charging at various distances. We have demonstrated that, for non-contact applications, our transmitter technology is able to mesh into a wire-free charging solutions for contact-based charging and at-a-distance charging, ultimately enabling charging with network that is expected to allow users to charge their devices even as the devices are moved about in three-dimensional space (“mobility under software control. Pursuant to ourcharging”). In November 2016 we entered into a Strategic Alliance Agreement with Dialog Semiconductor plc (“Dialog”), an industry leader in Bluetooth low energy semiconductors and power management semiconductors. In conjunction with the Strategic Alliance Agreement, Dialog manufactures and distributesis the exclusive distributor of integrated circuit (“IC”) products incorporatingthat incorporate our RF-based wire-free charging technology. Dialog is our exclusive supplier of these ICs for the general market.designs and provides sales and logistic support to customers on a global basis. We believe our proprietary WattUp technology can be utilized in a variety of devices, includingconsumer electronics such as wearables, hearing aids, earbuds, Bluetooth headsets, Internet of Things (“IoT”) devices, smartphones, tablets, e-book readers,smartwatches, fitness bands, keyboards, mice, remote controls, rechargeable lights, cylindrical batteries, medical devices, and any other devicedevices with similar charging requirements that would otherwise need arequire battery replacement or a connection to awired power outlet.connection.

We believe our technology is novelinnovative in its approach, in that we are developing a solutionsolutions that chargescharge electronic devices by surrounding them with a focused radio frequency energy pocket (“RF energy pocket”).pocket. We are engineering solutions that we expect to enable thedeliver wire-free transmission of energy for contact-based charging applications and are also developing non-contact charging at distances up to approximately three feet, as well as far field applications oflow-power charging for distances up to 15 feet. We are also developing our Far Field transmitter technology to seamlessly mesh (like a network of Wi-Fi routers) to form a wire-free charging network that will allow users to charge their devices as they move from room-to-room or throughout a large space. To date,feet and in some use cases mobility charging. To-date, we have developed multiple transmittertransmitters and receivers, including 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.partner production designs. The transmitters vary based on form factor, power specifications and frequencies, while the receivers are designed for applications including hearing aids, fitness bands, smartwatches, smartphones, smartglasses, sensors, industrial applications, keyboards, mice, headsets, earbuds, headphones, Bluetooth tracking tags and more. We are engaged with several consumer electronics (CE) and medical device companies that are in the pre-production stage of WattUp-based product development. In 2019, our first end customer product entered the market and we expect additional partner products to be announced and launched in 2020. We are also in discussion with potential customers in the pre-production stage leadingconsumer and industrial spaces that are considering our solutions to mass production with early adopterssupply low power distance charging for products that could enter the market in 2021.

When the company was founded in 2012, we recognized the need to design and build an enterprise-class network management and control software (“NMS”) system that would be integral to supporting our customers’ rapid and cost-effective deployment 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. DialogOur NMS system is our exclusive supplierrobust and flexible enough to both scale up to control thousands of these products fordevices across an enterprise, or scale down to meet 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. needs of a home or IoT environment.

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)(“FCC”) certification of our first-generation WattUp Mid Field transmitter, which sends focused,RF-based power tosimultaneously powers multiple devices at a distance of up to three feet, while also charging multiple devices at once. Our WattUp Mid Fieldfeet. This transmitter underwent rigorous, multi-month testing to verify that it met consumer safety and regulatory requirements. We believe this achievement representswas the first certification of a Part 18 FCC approvedpower-at-a-distanceFCC-approved non-contact wireless charging transmitter, and alsothat it establishes a precedentengineering design precedents that willcan streamline bothfuture regulatory approvals for our future FCCtechnology and international regulatory approvals,for our customers’ end-products that employ our technology.

Our technology solution consists principally of transmitter controller ICs, power amplifier ICs and receiver ICs, as well as novel antenna designs, application prototypes and proprietary software algorithms. We submitted our first IC design for wafer fabrication in 2013 and have developed many generations of transmitter and receiver ICs, antenna designs, and software algorithms.  We have endeavored to optimize our technology by reducing size and cost, while at the regulatory approvalssame time increasing performance which enables our designs to be integrated into a broad range of devices. We have developed a “building block” approach that allows us to scale our product implementations by combining multiple transmitter building blocks or multiple receiver building blocks to meet the power, distance, size and cost requirements of customer applications requirements. Our technology is readily scalable because the same ICs that are used for contact-based charging can be used for distance-based charging solutions. We have developed two classes of chip solutions, a CMOS-based technology focused on low cost, small footprint and low power (less than 5 watts) and a GaAs/GAn-based technology capable of delivering higher power with greater efficiency. We intend to continue to invest in research and development with high power capabilities of 20 watts and beyond at high levels of efficiency. We also intend to continue to invest in improving product performance, efficiency, cost-performance and miniaturization as required to reach multiple markets and expand the power-at-a-distance ecosystem, while maintaining a technology lead on potential competitors.

We deliver evaluation kits to potential licensees of our customers fortechnology, to allow their respectiveend-products. engineering and product management departments to test and evaluate the technology. Our customers’ product development, technology integration and product introduction cycles occur over multiple quarters and generally more than a year can elapse before first evaluation and final shipment of the customer’s product. Once our customers begin to sell products to end customers that incorporate our technology, we would expect the commercialization cycle to shorten over time as the technology matures and market acceptance grows.

We generally maintain exclusive rights to all intellectual property in our technology. We have recruitedimplemented an aggressive intellectual property strategy and hiredare continuing to pursue patent protection for new innovations. As of February 13, 2020, we had more than 110 pending patent applications in the U.S. and abroad. Additionally, the U.S. Patent and Trademark Office and international patent offices have issued 220 patents to us. In addition to the inventions covered by these patents, we have also identified specific inventions that we believe are novel and patentable. In addition to the inventions covered by these patents and patent applications, we have also identified specific inventions that we believe are novel and patentable. We intend to file for patent protection for the most valuable of these, and for other inventions that we expect to develop. This is a significant annual expense and we continually monitor the costs and benefits of each patent application and pursue those that we believe are most protective for our business and expand the core value of the Company.

Our seasoned management team withhas both private and public company experience, andas well as relevant industry experience to develop and execute our operating plan.experience. In addition, we have identified and hired key engineering resources in the areas of IC development, antenna development, hardware, software and firmware engineering as well as integration and testing, which will allow us to continue to expand our technology and intellectual property as well asand to meet theour customers’ support requirements of our licensees.requirements. 

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

Critical Accounting Estimates and Policies

The following discussion and analysis of financial condition and results of operations is based upon our financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America. Certain accounting policies and estimates are particularly important to the understanding of our financial position and results of operations and require the application of significant judgment by our management or can be materially affected by changes from period to period in economic factors or conditions that are outside of our control. As a result, they are subject to an inherent degree of uncertainty. In applying these policies, our management uses their judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on our historical operations, our future business plans and projected financial results, the terms of existing contracts, our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate. Please see Note 3 to our financial statements for a more complete description of our significant accounting policies.

Basis of Presentation. The accompanying audited financial statements and footnotes for the years ended December 31, 20172019 and 20162018 have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding financial information.

Revenue Recognition. We On January 1, 2018, we adopted Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers" (Topic 606).

In accordance with Topic 606, we recognize revenue whenusing the following criteria have been met: persuasive evidence of an arrangement exists, services have been rendered, collection of the revenue is reasonably assured, and the fees are fixed or determinable.five-step approach:

We record revenue associated with product development projects that we enter into with certain customers. In general, these development projects are associated with complex, technology development, and as such we do not have certainty about our ability to achieve the programproject milestones. AchievementThe achievement of thea milestone is dependent on our performance obligation and the milestone typically needs to be acceptedrequires acceptance by the customer.  We recognize revenue based on when the performance obligation is met. However, we do not recognize revenue in excess of an accepted milestone, as there would be uncertainty of payment for work that has not been accepted. The payment associated with achieving the milestoneperformance obligation is generally commensurate with our effort or the value of the deliverable and is nonrefundable. We record the expenses related to these projects generally included in research and development expense, in the periods such expenses were incurred.

We also receive nonrefundable payments, typically at the beginning of a customer relationship, for which there are no milestones. We recognize thisrecord royalty revenue ratably over the initial engineering product development period. We record the expenses relatedfrom our manufacturing partner, Dialog, based on shipments from Dialog to these projects, generally included in research and development expense, in the periods incurred.its customers.

During the years ended December 31, 2017, 20162019 and 2015,2018, we recorded revenue of $1,154,009, $1,451,941$200,143 and $2,500,000,$514,823, respectively.

Research and Development. Research and development expenses are charged to operations as incurred. For internally developed patents, all patent application costs are expensed as incurred as research and development expense. Patent application costs, generally legal costs, are expensed as research and development costs until such time as the future economic benefits of such patents become more certain. The CompanyWe incurred research and development costs of $33,230,668, $32,832,677$23,228,810 and $18,825,041$32,871,685 for the years ended December 31, 2017, 20162019 and 2015,2018, respectively.

Income Taxes. The Company recognizesWe recognize deferred tax assets and liabilities for the expected future tax consequences of items that have been included in or excluded in thefrom our financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse.

For the years ended December 31, 2017, 20162019 and 2015, the Company2018, we had $23,601,688, $31,848,990$17,137,156 and $15,464,406,$22,248,651, respectively, of research and development expenses capitalized for federal income tax purposes, with amortization commencing upon the Companyour receiving an economic benefit from the related research. As of December 31, 2017, the Company2019, we had approximately $84,418,000$169,405,000 gross federal net operating loss carryoverscarryforwards (“NOLs”) and a federal research and development tax credit carryovercarryforward of approximately $2,686,000.$4,471,000. As of December 31, 20172019 and 2016,2018, deferred tax assets consisted principally of net operating loss and tax credit carryovers,carryforwards, the research and development costs and stock-based compensation, and such deferred tax assets were fully reserved. Accordingly, the Company’sour effective tax rate for the years ended December 31, 2017, 20162019 and 20152018 was 0%.nil.

Internal Revenue Code Section 382 imposes limitations on the use of net operating loss carryoverscarryforwards when the stock ownership of one or more 5% shareholders (shareholdersstockholders (stockholders owning 5% or more of the Company’sour 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. The Companycarryforward. We completed a Section 382 analysis as of December 31, 20172019 and determined that none of its NOLsour federal net operating loss carryforwards or R&Dfederal research and development tax credits would beare limited.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that all or 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’sour tax returns that do not meet these recognition and measurement standards. As of December 31, 20172019 and 2016,2018, 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’sOur 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, 2017, 20162019 and 2015.2018.

Common Stock Purchase Warrants and Other Derivative Financial Instruments. The Company classifies We classify as equity any contracts that (i) require physical settlement ornet-share settlement or (ii) providesprovide a choice ofnet-cash settlement or settlement in the Company’s ownour shares (physical settlement ornet-share settlement) providing that such contracts are indexed to the Company’s own stockour shares as defined in ASC815-40 “Contracts in Entity’s Own Equity” (“ASC815-40”). The Company classifies We classify 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’sour control) or (ii) give the counterparty a choice ofnet-cash settlement or settlement in shares (physical settlement ornet-share settlement). The Company assessesWe assess classification of common stock purchase warrants and other free standingfree-standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities or equity is required.

Leases. We have adopted the new lease standard as of January 1, 2019, ASU No. 2016-02, “Leases (Topic 842).” The new lease standard requires the recognition on the balance sheet of right-of-use assets and operating lease liabilities. We elected the optional transition method and adopted the new guidance on January 1, 2019 on a modified retrospective basis with no restatement of prior period amounts.

Results of Operations

For the Years Ended December 31, 20172019 and 20162018

Revenues. During the years ended December 31, 20172019 and 2016,2018, we recorded revenue of $1,154,009$200,143 and $1,451,941, respectively, upon the achievement of milestones under a development and licensing agreement.$514,823, respectively. The

$314,680 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.a decrease in engineering services revenue.

Operating Expenses. Operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Operating expenses for the years ended December 31, 20172019 and 20162018 were $50,541,837$39,008,043 and $47,282,661,$51,444,233, 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, 20172019 and 20162018 were $33,230,668$23,228,810 and $32,832,677,$32,871,685, respectively. The $397,991 increase$9,642,875 decrease in research and development expenses is primarily due to a $5,939,073 increase in compensation, including a $4,296,494 increase$4,256,529 decrease in stock-based compensation and a $1,642,579 increase in payroll and related compensation expense, from a greater average headcount and the issuance of additional restricted stock unit (RSU) awards, and a $390,072 increase in depreciation due to a higher asset base in lab equipmentlower headcount and perpetual engineering software licenses, partially offset bycertain equity awards reaching full expense amortization during 2018, a $3,966,298$1,963,313 decrease in chip development, manufacturing and engineering component costs due to more transmitter and receiver chip development work being done in house,project timing, a $973,467$1,185,783 decrease in term-based engineering software licensespayroll and $931,834related compensation expense, as a result of lower average headcount, a $487,764 decrease in consulting costs.regulatory testing costs, a $470,904 decrease in legal patent costs, a $318,508 decrease in legal costs pertaining to obtaining regulatory approvals and a $248,799 decrease in depreciation expense from a full year of depreciation expense in 2018 of older lab equipment and hardware.

Sales and Marketing Expenses. Sales and marketing expenses for the years ended December 31, 20172019 and 20162018 were $5,207,746$5,418,967 and $3,201,549,$6,185,159, respectively. The $2,006,197 increase$766,192 decrease in sales and marketing expenses is primarily due to an increase of $1,753,758 in compensation, including a $969,398 increase$510,685 decrease in payroll and related compensation expense due to lower bonus payouts and lower overall headcount within the department, a $189,759 decrease in supplies utilized for customer demonstrations, a $123,881 decrease in promotional and graphic design costs and a $784,360$65,000 decrease in recruiting fees, partially offset by a $145,183 increase in stock-based compensation, due to a higher average headcount and the issuance of additional RSU grants and a $235,506 increase in tradeshow expenses.compensation.

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, 20172019 and 20162018 were $12,103,423$10,360,266 and $11,248,435,$12,387,389, respectively. The $854,988 increase$2,027,123 decrease in general and administrative expense is primarily due to a $1,180,146 increase in compensation, including a $1,213,790 increase$1,995,828 decrease in stock-based compensation due to certain equity awards reaching full expense amortization during 2018 and a $33,644$156,815 decrease in payroll costs,and related compensation expense, primarily from lower bonus payments, partially offset by a $136,122 decrease$177,199 increase in general office expenses,insurance expense, primarily as a result of higher premiums for directors and a $117,692 decrease in consulting and third party service costs.officers insurance.

Loss from Operations. Loss from operations for the years ended December 31, 20172019 and 20162018 was $49,387,828$38,807,900 and $45,830,720,$50,929,410, respectively.

Interest Income. Interest income for the year ended December 31, 20172019 was $11,679,$416,274, compared to $13,326$89,288 for 2018, primarily due to higher interest rates for the year ended December 31, 2016.savings account.

Net Loss. As a result of the above, net loss for the year ended December 31, 20172019 was $49,376,875,$38,399,089, compared to $45,817,394$50,840,122 for the year ended December 31, 2016.2018.

For the Years Ended December 31, 2016Liquidity and 2015Capital Resources

Revenues.During the years ended December 31, 20162019 and 2015,2018, we recorded revenue of $1,451,941$200,143 and $2,500,000, respectively, upon the achievement of milestones under a development and licensing agreement. The decrease in revenue of $1,048,059 is due to the rescoping 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 costs. Research and development costs for the years ended December 31, 2016 and 2015 were $32,832,677 and $18,825,041, respectively. The increase in research and development costs of $14,007,636 is primarily due to a $4,640,880 increase in compensation (including an increase in stock-based compensation of $1,409,597) from a 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 management of our patent portfolio, an $883,272 increase in software expense due to incurring a full year of the hosted design solution package and an increase in various engineering software licenses needed to support a larger staff and an $819,503 increase in consulting fees to assist in our quality assurance, design and regulatory efforts.

Sales and Marketing Expenses. Sales and marketing expenses for the years ended December 31, 2016 and 2015 were $3,201,549 and $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. 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, 2016 and 2015 were $11,248,435 and $8,030,995, respectively. The increase in general and administrative expense of $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, 2016 and 2015 was $45,830,720 and $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.

Net Loss. 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,$514,823, respectively. We incurred a net loss of $49,376,875$38,399,089 and $45,817,394$50,840,122 for the years ended December 31, 20172019 and 2016,2018, respectively. Net cash used in operating activities was $34,430,298$26,621,145 and $33,062,247$32,527,023 for the years ended December 31, 20172019 and 2016,2018, respectively. Since inception, we have met our liquidity requirements principally through the private placementplacements of convertible notes, the sale of our common stock in a registered initial public offering theof common stock, sale of our common stock to a strategic investor, the issuance of our common stock to the Company’sour landlord to reduce its monthly base rent obligationobligations and pay for certain tenant improvements, the sale of common stock in twofollow-on public offerings, salesprivate placements of common stock to investors, in private placements,an “at-the-market” equity offering of our common stock, and revenue received under product development projects entered into with customers.

As of December 31, 2017,2019, we had cash and cash equivalents of $12,795,254. Also, as noted in the subsequent event section of our 2017 audited financial statements, during January 2018, we raised $38,999,989 (net of underwriters’ discount of $1,000,000) from the sale of stock to the public in an“at-the-market” equity offering of our common stock.$21,684,089.

We believe our current cash on hand, together with anticipated payments under product development projects entered into with customers,revenues and expected financing, will be sufficient to fund our operations into the second quarter of 2019. However, depending on how soonMarch 2021. Although we are ableintend to achieve meaningful commercialcontinue our research and development activities, there can be no assurance that our available resources will be sufficient to enable us to generate revenues sufficient to sustain operations. Accordingly, 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 towill likely pursue additional financing, to, amongwhich could include offerings of equity or debt securities, bank financings, commercial agreements with customers or strategic partners, and other reasons, accelerate our product development efforts, regulatory activities and business development and support functions with a view to capitalizingalternatives, depending upon market conditions. There is no assurance that such financing would be available on the market opportunityterms that 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 debtwould find acceptable, 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.at all.

During the year ended December 31, 2017,2019, cash flows used in operating activities were $34,430,298,$26,621,145, consisting of a net loss of $49,376,875,$38,399,089, lessnon-cash expenses aggregating $17,194,309$12,256,613 (representing principally stock-based compensation of $15,802,819$10,646,580, increase in right-of-use lease assets of $786,342 and depreciation expense of $1,309,980)$781,228), a $2,683,073$284,748 increase in accrued expenses and a $130,809 decrease in prepaid expenses and other current assets, partially offset by a $662,766 increase in operating lease liabilities and a $189,866 decrease in accounts payable. During 2018, cash flows used in operating activities were $32,527,023, consisting of a net loss of $50,840,122, less non-cash expenses aggregating $17,889,258 (representing principally stock-based compensation of $16,753,754 and depreciation expense of $1,054,720), a $163,305 decrease in accounts payable, partially offset by a $348,275$445,270 decrease in prepaid expenses and other current assets and a $149,500 decrease in accounts receivable. During the year ended December 31, 2016, cash flows used in operating activities were $33,062,247, consisting of a net loss of $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$156,324 increase in accrued expenses, partially offset by a $652,336 increase in prepaid expenses and other current assets.expenses.

During the years ended December 31, 20172019 and 2016,2018, cash flows used in investing activities were $814,648$196,199 and $1,137,446,$859,819, respectively. The cash used for year ended December 31, 2017in 2019 primarily consisted of purchased leasehold improvements related to the construction of a regulatory testing chamber within our office space. The cash used in 2018 consisted of purchases of laboratory equipmentcomputer hardware and software to help withfor chip development and testing. The cash used for the year ended December 31, 2016 consisted of purchases of laboratory and software to accommodate a larger engineering staff and to help with chip development and testing.development.

During the year ended December 31, 2017,2019, cash flows provided by financing activities were $16,781,563,$28,394,948, which consisted of $23,319,156 in net proceeds from an offering of $14,932,547shares and warrants pursuant to a shelf registration statement, $4,557,693 in net proceeds from the issuancesales of shares to private investors,the public in at-the-market (“ATM”) transactions, proceeds from contributions to the employee stock purchase program (“ESPP”) of $457,362 and proceeds from the exercise of stock options of $979,950$400,103, offset by $339,366 in shares withheld for the payment of payroll taxes for the delivery of RSUs and PSUs. During 2018, cash flows provided by financing activities were $40,698,073, which consisted of $38,846,815 in net proceeds from the sale of shares to the public, proceeds from the exercise of stock options of $1,319,461 and proceeds from contributions to the employee stock purchase program (“ESPP”) of $869,066. During the year ended December 31, 2016, cash flows provided by financing activities were $35,585,766, which primarily consisted of net 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 exercise of stock options of $382,351, offset by a total of $312,680 in shares repurchased for tax withholdings on vesting of RSUs and PSUs.$531,797.

Research and development of new technologies is, by its nature, unpredictable. Although we intend to continue our research and undertake development efforts with commercially reasonable diligence,activities, 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 earngenerate revenues sufficient to support our operations, or that we will ever be profitable. sustain operations.

Furthermore, since we have no committed source of financing, there 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, If we routinely enter into purchase commitments for various aspects ofare unable to raise sufficient additional

capital, we may be required to delay, reduce or severely curtail our research and development or other operations, such as purchases of engineering supplies, lab equipment, chip design engineering, engineering

consulting services and software licenses. We do not believe these commitments willwhich would have a material adverse effect on our business, operating results, financial condition, results of operations or cash flows.long-term prospects and continue to be a viable business.

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

INDEX TO FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTEREDREGISTERED PUBLIC ACCOUNTING FIRM

To the ShareholdersStockholders and Board of Directors of

of Energous Corporation

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Energous Corporation (the(the “Company”) as of December 31, 20172019 and 2016,2018, the related statements of operations, changes in stockholders’ equity and cash flows for each of the threetwo years in the period ended December 31, 2017,2019, 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, 20172019 and 2016,2018 and the results of its operations and its cash flows for each of the threetwo years in the period ended December 31, 2017,2019, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2019, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated March 13, 2020, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’sCompany's management. Our responsibility is to express an opinion on the Company’sCompany'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”)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 PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material 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. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.

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 regarding the amounts and disclosures in the financial statements. 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 statements. We believe that our audits provide a reasonable basis for our opinion.

Adoption of New Accounting Standards

ASU No. 2016-02

As discussed in Note 6 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842), as amended, effective January 1, 2019, using the modified retrospective approach.

/s/ Marcum llp

Marcum llp

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

/S/ Marcum LLP

MarcumLLP

Melville, NY
March 13, 2020

March 16, 2018

Energous Corporation

BALANCE SHEETS

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

Energous Corporation

STATEMENTS OF OPERATIONS

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

Energous Corporation

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY