Will Energous Enable you with Wireless Mobile Charging?
In past articles, we highlighted companies such as Witricity and Plugless Power that are looking to charge electric vehicles using wireless electricity transmission. Another company looking to develop a wire-free charging device for consumer electronics devices is recent IPO Energous.
Energous (NASDAQ:WATT) began as DvineWave Holdings which was formed by the parents of Michael Leabman, the Chief Technology Officer of Energous, in order to make an investment of $10,000 in the Company when it was founded in exchange for 1,924,812 shares of common stock. In January 2014, DvineWave Holdings was renamed to Energous. The Company has 8 full-time employees. As of May 8, 2014, Energous had 50 pending U.S. patents and provisional patent applications and no granted patents. Energous has signed joint development agreements (JDAs) with Hanbit and Dong-Hwa just today. The Company has not generated any revenues since its inception and has incurred net losses so far of around $36 million. Just one month ago, Energous had an IPO of 4 million shares at $6 per share. At yesterday’s closing price of $10.68 per share, Energous has a market cap of just over $100 million.
Energous is developing a product called WattUp™, a wire-free charging technology that will transform the way people charge and power their electronic devices at home, in the office, and in the car. A technology that can use wireless to charge electronic devices such as mobile and laptops would be a disruptive one. The basic idea of wireless charging is conceptualized below:
However, it’s difficult to see how the company will get from the current status mentioned in their 10-Q filing made several weeks ago:
In our laboratory, our prototype devices have enabled wireless transmission of energy from a transmitter (similar in size and shape to a Wi-Fi router) to multiple receiver test boards at a distance of up to 15 feet. Our test boards are constructed from commercially available parts and components, are not optimized for our receiver application and are too large to be incorporated in commercially marketed products. We intend to develop a receiver chip to integrate into additional test devices.
All the way to the future aspirations made in the same 10-Q:
We expect that our remote charging technology will be made commercially available to potential licensees during the fourth quarter of 2014; however, we believe that potential licensees of our remote charging technology will take at least one to two years to incorporate the Company’s technology into commercial products available for sale.
An intention to develop a receiver chip is quite different from having a receiver chip in alpha or beta stages of development. Based on the above statement, Energous is claiming that their technology will be made available to potential licensees in 2014 but what good will this be if the test boards are too large to incorporate into commercial devices? How quickly can they transfer this technology from a device the size of a router onto a small chip?
Conflicts of Interest?
In looking through the Energous S1 filing, there seems to be some strange transactions. That original $10,000 invested by the CTO’s parents is now worth over $20 million in just less than 2 years which equates to a 200,000% gain in only 19 months. Essentially 20% of the company was sold to a Company officer’s parents for just $10,000. On March 1, 2013, an affiliate of a director of the Company, Greg Brewer, purchased 668,337 shares of common stock in exchange for $160,000. This lucky affiliate would have seen their investment appreciate from $160,000 to over $7 million for a 4375% gain in just 14 months. Energous is also leasing their 3,562 square foot office space from an affiliate of Mr. Brewers for $6,055 per month. This affiliate isn’t doing Energous any favors since monthly rent is stated to increase by 41% to $8,548 by next month. At least at this point, their rent will exceed the $8,000 monthly payment they are making to their “investor relations” firm. Could any of these transactions be considered a conflict of interest?
Regardless of what transactions may have taken place in Energous’ past, what is most concerning about the company is that they admittedly are at the earliest stages of development having no granted patents, a prototype that is too large to be used in commercial devices, a small amount of cash on hand ($700 thousand), no revenues, assets of only 1.5 million, just 8 full-time employees, and a founder who seems to have been involved in only failed ventures prior to this. Will Energous’ technology enable the wireless charging of mobile devices and possibly all other portable consumer electronics? While speculators may take notice, for investors, Energous (NASDAQ:WATT) seems to be quite a long shot.
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