Energous : Transcript Q1 2021

Energous Corporation

Q1 2021 Financial Results Conference Call

Wednesday, May 12, 2021, 4:30 PM Eastern

CORPORATE PARTICIPANTS

Brian Sereda - Chief Financial Officer

Cesar Johnston - Chief Operating Officer

Neeraj Sahejpal - Senior Vice President of Marketing and Business Development

Mike Bishop - Investor Relations

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PRESENTATION

Operator

Good day and welcome to the Energous Corporation's First Quarter 2021 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the "*" key followed by "0." After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press "*", then "1" on your touchtone phone, and to withdraw your question, please press "*", then "2." Please note, this event is being recorded.

I would now like to turn the conference over to Mike Bishop of Investor Relations. Please go ahead sir.

Mike Bishop

Thank you Chuck, and welcome everyone. Before we begin, I would like to remind participants that during today's call, the company will make forward-looking statements. These statements, whether in prepared remarks, or during the Q&A session, are subject to inherent risks and uncertainties that are detailed in the company's filings with the Securities and Exchange Commission. Except as otherwise required by Federal Securities Laws, Energous disclaims any obligation or undertaking to publicly release updates or revisions to the forward-looking statements contained herein or elsewhere to reflect changes and expectations with regard to those events, conditions and circumstances.

Also, please note that during this call, Energous will be discussing non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release, which is posted on the company's website.

Now I would like to turn the call over to Brian Sereda, CFO of Energous. Go ahead Brian.

Brian Sereda

Hi, thanks Mike. I'm Brian Sereda, Chief Financial Officer at Energous. And joining me today on the call is, Cesar Johnston, our Chief Operating Officer, and Neeraj Sahejpal, our Senior Vice President of Marketing and Business Development.

At the close of market today, we announced our results and highlights for our first quarter of 2021 ended on March 31. The team would like to give you an update on several aspects of our business beginning with an update on customers and markets, along with engineering and regulatory, followed by an update on our operating results before opening the call up for Q&A.

On our last quarterly call, we had stated that we were expecting quarterly revenue growth to occur. Accordingly, we recognized $145,000 versus $90,000 in the prior fourth quarter. In combination with this modest growth, we also saw an expansion of interest in our technology, including notable potential customers, owing to the release of our WattUp PowerHub Developer Kit in March.

This technology continues to evolve in terms of power levels and at-a-distance charging capabilities, and we are excited to see the varied potential applications that are being considered by our partners. Previously announced, contact to charging base partners such as

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NewSound, Gokhale, and American Equus continue to progress towards general commercial availability.

We and our partners continue to navigate the challenges associated with the direct impact of COVID-19 related closures, IC parts shortages, and working remotely. This is leading to some delays but we are excited about these upcoming product releases as they further highlight RF as the next generation and next evolution of wireless charging for both at contact and at-a- distance or over-the-air charging.

In addition, we continue to work with these customers as they prepare to bring their respective products to market in the coming months. We're also working with a number of additional partners who have not been announced that are looking to implement our RF-based contact charging technology, due to certain advantages over coil-based charging.

In general, interest in true wireless power as an industry continues to grow, especially regarding RF-based charging as evident from the recently announced early and early conceptual demonstrations by the likes of Xiaomi, Oppo, and Motorola Mobility. It is clear the freedom to charge at a distance is the next barrier to overcome and we believe Energous with its portfolio of chips, system, software and regulatory understanding is uniquely positioned to create the ecosystem of next generation wireless power at a distance.

Case in point, our PowerHub technologies value proposition is to allow device manufacturers, consumer, medical, industrial, and other markets to enable over-the-air wireless charging in the most cost effective and practical way. Something that we believe is not possible with older, first generation, coil-based charging technologies. Backed by our ability to secure early regulatory approvals using proprietary non-beamforming technology, we are seeing various distance tech- charging opportunities evolve at a faster pace than our earlier expectations.

In addition, the availability of our PowerHub transmitter reference kit has brought device manufacturers to the table that need to solve at-a-distance charging requirements that can only be currently solved with RF-based solutions. And we believe that our first partner product enabled with true over-the-air wireless power will be launched later this year.

While we also continue to make progress with opportunities in near field, we see three trends emerging in distance-based charging. Number one, new medical devices especially wearables are being designed in various sizes and shapes with a clear need for no open contact points that you find with Pogo pins. Difficulty in embedding coils into these devices along with a desire or requirement to offer charging at a distance has led to companies to RF charging to solve these issues. We are seeing the same trend in consumer IoT applications that we are working with partners on today.

Number two, the industrial segment is also quickly evolving, thanks to the introduction of faster communication standards and data gathering via Bluetooth with more display, sensor, and control applications. We believe this will require charging solutions in difficult environments capable of charging at much longer distances where batteries cannot be easily accessed.

And third, active harvesting is growing especially in commercial and industrial settings and is evolving into applications where a dedicated charger transmitter is needed to ensure that required amounts of energy are reliably available. Receivers in this category will most likely not have batteries but will need to receive enough energy to power data-gathering sensors in areas such as logistics and manufacturing.

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Our strategy involves bringing an ecosystem together where more of our partners can enable our transmitter technology, providing a complete range of power and distance solutions. Our announcement yesterday of European regulatory approval is just one example of where Energous is leading the worldwide effort to expand the reach of wireless power transfer.

We are seeing an increase in the number of potential partners with industrial and medical applications, needing functionality that can't be supported by older, first generation wireless charging technologies. Our continued evolution of our PowerHub technology and future introduction of longer range capabilities with meaningful power at distance is expected to continue to expand our prospects in these areas, and we expect could lead to future higher volume commercial opportunities.

To summarize, what is becoming evident with our most recent customer engagements is the scale of the opportunity and the prominence of the customers and their respective applications that are pulling us and our technology into emerging opportunities, especially into markets such as medical devices, logistics, and other potentially high-volume opportunities where contact- based charging is either not an option, or is not ideal. We believe this is a testament to the progress we have made in establishing Energous as the leader in next generation wireless charging solutions.

I'd like to now turn the call over to Caesar, our COO, who will bring you up to date on our innovation, technology and regulatory progress, Cesar?

Cesar Johnston

Yes, thank you and good afternoon everyone. Energous continues to be the industry leader in radio frequency wireless power transmission, driven by our work in developing standards, new technologies, and most important accelerated product development, operating within a system for novel approaches, while meeting international regulatory rules. And I really want to emphasize the latter. Energous develops products that meet regulatory safety rules. As such, we are a unique company whose mission and vision are to develop second generation wireless charging technology supporting charging at contact, as well as at a distance or over-the-air functionality.

Thus our target is to continue our leadership in the deployment of RF wireless power transmission by increasing transmission power levels and transmission distance, while developing a state of the art semiconductors and systems which increment our unique IP portfolio. We at Energous continue to make progress on worldwide frequency harmonization and by innovating advanced systems and processes on RF wireless power transmission compliance as part of our R&D model.

Today, we're happy to report, as announced in our press release yesterday, that our latest efforts have now resulted in the European regulatory approval of our WattUp PowerHub. This certification is the first of its kind in the EU and it opens up the promise of RF wireless power transmission at distances beyond one meter, and now well beyond 15 feet. The result of this effort is an unheard 4.5 times increment at 15 feet in distance from our previous one meter record and very well beyond, as there's no distance limitation on this certification.

This achievement was made while maintaining the WattUp PowerHub conducted power well within its operational limits. We pushed the transmission distance and we pushed the power within regulatory limits and are well within safety limits as well. We have accomplished a major

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achievement that many people thought was impossible. Our efforts on the regulatory front will continue as we develop our technologies to meet RF and safety regulations. Our current worldwide efforts include contributions in the ITU, ETSI, BWF and the FCC, where for instance, a new proposed rulemaking under Part 18 is under consideration to allow higher power and distance for wireless power transmission regulations. Our efforts are showing a positive impact as multiple countries have now recognized the need for RF wireless power transmission- dedicated rules.

Now, on the technology side, our patent portfolio now includes 236 patents with 3 patents allowed in Q1. Last quarter, we presented WattUp PowerHub for creating a workspace or desktop charging environment up to one meter transmission in distance. We are seeing increased interest on WattUp PowerHub from a number of potential customers as developer kit orders are being delivered.

The one meter WattUp PowerHub architecture that uses our DA4100, the EN3921 and EN3913 devices was retargeted for applications on active harvesting, with the goal to support IoT receivers, with up to 250 milli watts in a power broadcast configuration. This means a simultaneous power transmission to multiple receiver devices at a distance and with up to 250 milliwatt delivery supported by each receiver. Our webinar presenting the WattUp power harvesting technology was held on March 16 this year and a demonstration of this technology, using our new partner e-peas Power Management Device was shown on a video clip at the same webinar.

The PowerHub transmitter for the WattUp active power harvesting system is the same product that has now been certified in Europe and was also launched on our site as the WattUp power harvest and developer kit, which can safely operate in a 15-feet typical IoT distance requirement. Thus, mid-field and far-field WattUp PowerHub can now safely operate in Europe, opening up a new vertical market, which we're now ready to develop and penetrate.

WattUp active harvesting guarantees RF-powered delivery levels in an IoT environment where critical devices must be changed to provide time-sensitive information and deterministic operation. Active harvesting also opens up a new level of IoT-smart devices that require more power to operate, and where typical low-power passive harvesting architecture is incapable to support.

Our roadmap to cover more country certifications and to push the transmission power level continues, and we will be updating and informing of our progress as technical and regulatory progress is achieved.

In the first quarter, we have made many advances on the technology and regulatory fronts, and we are now introducing these capabilities to potential customers, so that they may begin to add it into their product roadmaps.

I will now turn the call over to Brian.

Brian Sereda

Thanks Cesar. I'd like to remind everybody once again that we issued a press release today at close of market announcing our financial results for the first quarter of 2021. And now I'll go through our customary review of our financials.

Energous Corporation Wednesday, May 12, 2021, 4:30 PM Eastern