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Energous A Once In A Lifetime Risk/Reward Opportunity

Summary

Energous is a risk/reward attractive investment that can either go to zero or skyrocket as a real game changer.

To analyze the risk of Energous I evaluate the product, business model, management team, revenue and cost management and the status of regulatory affairs.

The product and management team spur confidence, but patent protection and regulatory approval are the main risks.

The risk of investing in Energous (NASDAQ:WATT) will be analyzed using some of the key variables, namely: product, business model, management team, revenue and cost management and the status of regulatory affairs. Each section shall be rated between one ("very risky") and ten ("very safe"). While there is a subjective component in each rating, it should be considered as indicative of personal views on areas where work still needs to be done.

To analyze the potential reward I will provide a bit of color on the market size for wireless charging.

Product

Most of the evidence available tends to indicate that WattUp works. They have demonstrated their product at CES15 and CES16. They also are receiving milestone payments from a partner and have been able to develop a receiver that is very cheap, just 3mm x 3mm in size, and much better than the inductive coil that can be seen, say, in the Apple Watch.

They also recently went through a process to independently validate the performance of their product from Underwriters Laboratories. Although the conditions in a laboratory cannot replicate the conditions that might be found in real life, the ability to get an independent certification is enough evidence that the product works. Given that this technology is in its early stages there is still time for it to be improved in the future if necessary.

Energous recently demonstrated at CES16 a USB-stick-sized transmitter that works with the same technology but for a shorter range of up to around six inches. This product can be built to replace existing chargers that come with the purchase of wearables, without significantly increasing their cost. Even though this is not the ideal solution, it might still be much better than the coil for inductive charging that is found in items like the Apple Watch.

Some leads tend to indicate that Energous is ready for production. One of them is the fact that they just hired Jeff McNeil, the former Cypress Semi's SVP of Operations and a 21-year experienced professional, as VP of Operations. Energous also shared that they contracted TSMC to manufacture their products. Being ready for production is a significant milestone for a company like Energous. It means that Energous believes their product is ready for commercialization, they are confident they will have their first customer, and will get FCC approval.

Some people claim that Energous is a scam, especially the author of "Energous: don't buy the companies story or stock." During the past few weeks, this article created many controversies, leading to a conference call by Energous where they refuted the arguments from the article. Claims have been made that the real purpose of the article was just to push the stock price down, especially because an anonymous author wrote the article. There does not seem to be much merit in the article, and the statements Energous has made so far are credible. However, if someone wants to invest, the best they can do is read everything they can find and make their judgment. It is difficult to believe that Energous' product does not work, especially after they demonstrated their technology at CES15 and CES16. Scamming so many people is not only difficult, but it is also punishable by law because Energous is a public company.

Regarding product design, while the receiver is extremely small, the transmitter for a long-range...


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