A Stunning Admission By Energous

| About: Energous Corp. (WATT)

Summary

Energous is unable to charge multiple devices from one transmitter, even in the lab, according to one of the company's risk disclosures.

If that is true, many of the demonstrations of the technology performed last year have to be hoaxes.

The test by Underwriters Laboratories that “validated” sending power to multiple devices from a single transmitter can no longer be relied upon.

No charging of multiple devices

Buried in the risks section on page 12 of Energous (NASDAQ:WATT) 10-K filing is the following statement:

For example, while we believe recharging multiple devices on one transmitter at a commercially acceptable level may be possible theoretically, we have not yet achieved these results, even in the laboratory.

The statement is important because (re)charging multiple devices is supposedly one of the three key differentiating advantages of Energous' WattUp technology, as stated on the Q1 2014 results call, and is featured prominently in all of the company's investor presentations.

Not even in the lab

This particular risk disclosure is not new - it can be found in registration statements going back to March 2014 (see this S-1A filing), as well as in the 10-K filing for year 2014, but its implications have become increasingly significant over the past year, because the multiple-device feature was demoed as functional and validated by a prominent independent lab.

All those demos must be fake

Since early January 2015, the company has been conducting invite-only "demonstrations" intended to prove that the WattUp technology is working. Publicly-available videos made during some of those demos show charging multiple devices from a single transmitter, which should be impossible, if that feature has not been achieved even in the lab. Therefore, these demos must be hoaxes.

Here are the details:

CES demo, January 2015:

Energous CTO is heard at 0:51 into the video:

The first thing I am going to do is I am actually going to tell the transmitter to find these different devices [LED "votive" candles], and one at a time it will communicate over Bluetooth and start powering the devices.

And then surely, at 1:01, the four candles appear "powered on," simultaneously, by one transmitter:

Energous CTO performing magic

Later on, at 1:05 to 1:14, a transmitter that supposedly focuses energy just up the wall can be seen "powering" a different set of four candles simultaneously:

Up the wall

Another CES demo, January 2015:

At 1:50 to 1:59, a transmitter is supposedly simultaneously "charging" an iPhone 5, an iPhone 6, headphones, and a watch, according to data on its display:

Transmitter display

Yahoo demo, June 2015:

Energous CEO states at 1:00:

This is our second generation transmitter and with this we are going to wirelessly charge the smartphone and also simultaneously charge the votive candle here, which is representative of a wearable.

And at 2:20, both the smartphone and the candle are shown as "charging" from the transmitter:

Smartphone and a candle charging

Note that this demo is obviously a fake, anyway - Energous CEO insists at 1:45:

As you can see, it is now charging, currently charging...

Yet the phone screen clearly shows the power level is exactly zero (0 mW) - that is, whatever "charging" there is, it is done without any power:

currently charging, without power

KTVU segment, August 2015

At 2:01 the transmitter embedded in a TV is "charging 6 out of 15 devices in range:"

A TV can do it

At 2:15 those 6 candles are all "powered" by the transmitter:

At 2:33 Energous CTO explains:

[the transmitter] really is focused individually on each of those receiver devices...

The UL test results are now suspect

In November last year, ahead of an equity offering, the company announced that Underwriters Laboratories, Inc., or UL, had completed an independent evaluation and validated the performance of Energous' WattUp wireless charging solution. According to the press release, in the "multiple device" test, a single transmitter was sending power to two receivers, thereby confirming the "simultaneous multiple device receive capability." The diagram of the setup (found on page 11 of the UL report) is shown below (not to scale):

The power was within commercially acceptable levels because it exceeded the target of 4W (received). Yet, according to Energous risk disclosures, that result - sending power to multiple devices at commercially acceptable levels - would have been impossible.

On a side note, the diagram above shows that the distance to each of the receivers was 2.5 ft, but Energous press release falsely claims that the distance was 5 ft:

UL tested a single transmitter sending power simultaneously to multiple receivers at a distance of five feet

The same false claim was repeated by Energous CTO on the January investor call that was supposed to "address misinformation about the company's technology and direction":

As people can read from our UL report, we achieved a variety of power over a variety of distances, including 5 to 6 watts at 5 feet

According to the UL report, that power, 5 to 6 Watts, was actually achieved at 2.5 ft only.

The company has been misusing the report in other ways, too. The file name of the report was improperly (re?)named "FCC-Electromagnetic-Wireless-Power-Delivery-Test-Report.pdf" when uploaded for public viewing. By putting "FCC," that is, the "Federal Communications Commission," in the file name, Energous is likely violating UL's requirement that the "report must not be used by the client to claim product certification, approval, or endorsement by... any agency of the Federal Government."

In a tweet about the UL report, the company described the tests as "product safety testing:"

But there are absolutely no safety test results in the report - and that is intentional - the report was prepared under the strict instructions by Energous in "ENERGOUS TEST PLAN 8-02" and that "plan" has not been made public. However, UL, in a round-about way, does appear to acknowledge that the equipment, as tested, would violate the safety limits, and, therefore, cannot be authorized by the FCC (personal communication):

With regard to your comments on the maximum exposure limits, UL tests many products that exceed RF Exposure limits at separation distances that are less than the distance required to meet those limits.

Implications for Energous investors

Energous' management was contacted and asked to confirm the accuracy of the disclosure about charging multiple devices and to comment on the authenticity of the demonstrations and the validity of the UL test. Despite given ample time to respond, management has not responded. Investors now face a peculiar choice - either the CEO and CFO signed a false statement about the status of a key element of the company's technology and submitted it to the SEC, or many of the company's technology demonstrations have been hoaxes and the UL test is invalid. Either way, if Energous transmitters were able to deliver power to various devices safely and without causing harmful interference, as advertised, "validated," and "demonstrated," then why has Energous failed, for years now, to obtain FCC authorization?

Disclosure: I am/we are short WATT.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.