Energous Corporation (Nasdaq: WATT) — 2022 Form 10-K
Business and reporting period: Annual report for the fiscal year ended December 31, 2022; the filing does not provide separate fourth-quarter financial results. Energous is a development-stage, fabless semiconductor company developing WattUp RF wireless-charging technology and related systems for IoT and other devices. It began shipping at-a-distance PowerBridge transmitters in late 2021 and remains dependent on commercialization and customer adoption.
Financial results and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $851,321 | $756,793 |
| Cost of revenue | $1,277,565 | $0 |
| Gross profit (loss), calculated | ($426,244) | $756,793 |
| Research and development | $12,497,781 | $20,572,580 |
| Total operating expenses | $27,537,646 | $42,189,578 |
| Operating loss | ($26,686,325) | ($41,432,785) |
| Net loss | ($26,275,260) | ($41,427,293) |
| Basic and diluted loss per share | ($0.34) | ($0.64) |
| Net cash used in operating activities | ($23,636,747) | ($28,720,389) |
- Revenue increased approximately 12.5%. Cost of revenue exceeded revenue in 2022, resulting in a calculated gross margin of approximately negative 50%; no gross-margin measure is reported directly.
- Net loss narrowed by approximately $15.2 million, mainly alongside lower operating expenses and stock-based compensation. R&D expense decreased $8.1 million; sales and marketing decreased $3.7 million. The prior year included substantially higher stock-based compensation.
- Cash and cash equivalents were $26.3 million at year-end, down from $49.1 million. Total assets were $29.8 million and stockholders’ equity was $24.6 million. Current assets were $27.4 million versus current liabilities of $3.8 million.
- The balance sheet reports no borrowings; operating lease liabilities totaled approximately $2.0 million. Operating cash burn remained substantial. Financing provided $1.0 million in 2022, primarily from ATM share sales and the employee stock purchase plan.
- Management stated that year-end cash, first-quarter 2023 financing proceeds and anticipated revenue were expected to fund operations into March 2024. It also said further financing may be needed; availability and terms are not assured.
Changes, outlook and notable risks
- Commercial progress: Energous reported regulatory approvals for WattUp products in more than 110 countries by March 20, 2023, and described partner demonstrations and IoT applications. These developments do not establish broad commercial adoption; annual revenue remained below $1 million.
- Concentration: One customer generated approximately 50% of 2022 revenue, and one customer represented approximately 87% of year-end accounts receivable.
- Subsequent financing and dilution: From January 1 through March 1, 2023, the company raised $2.7 million net through its ATM. On March 24, it completed an offering of 8.25 million shares and warrants for up to 8.25 million additional shares, receiving approximately $2.7 million net. The warrants are immediately exercisable, have a six-year term and a $0.40 exercise price. The company reported 91,032,030 shares outstanding as of March 28, 2023.
- Listing risk: Energous disclosed a Nasdaq notice dated January 20, 2023, for falling below the $1.00 minimum bid price, with an initial compliance deadline of July 19, 2023. Regaining compliance was not assured.
- Key risks: Limited product revenue, continuing losses and cash consumption; need for additional capital; uncertain customer adoption and technical commercialization; competition; regulatory requirements; supply-chain and macroeconomic disruption; intellectual-property risks; and potential stock dilution. The company cited inflation, rising interest rates, geopolitical uncertainty and pandemic-related disruption.
- Other disclosures: No material pending legal proceeding was reported. Management concluded internal control over financial reporting was effective at year-end; the auditor issued an unqualified opinion on the financial statements and reported no critical audit matters. No formal revenue or profitability guidance was provided.
Investor verification priorities
- Confirm the current cash balance, spending pace and whether the stated March 2024 runway estimate remains valid after the 2023 financings and subsequent operations.
- Track revenue growth, production shipments, customer adoption and reliance on the largest customer; verify whether demonstrations and regulatory approvals translate into recurring commercial sales.
- Review share and warrant counts, potential warrant exercises, and any additional equity or debt financing for dilution and funding needs.
- Check current Nasdaq listing compliance and any subsequent notices or corporate actions.
- Assess gross economics of production-level systems, including whether revenue can exceed product costs as volumes change.