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Energous Corporation (WATT): Game Over

Question:
Is WATT (a) not in the iPhone 8, (b) promoting a technology that Apple itself called
inefficient, complicated, and hazardous, or (c) both?

Answer:
Based on our analysis of the facts (with some directional help from Dialog), we
believe the answer is (c), and as one bullish stock promoter wrote, the evidence is
hidden in plain sight.

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------------------------------------------------------------------There has been no shortage of thoughtful public analysis deconstructing WATTs stock promotion. Skeptical
analysts, investors, and industry experts have shared excruciating detail debunking WATTs technology claims.
Nonetheless, logic and facts have thus far failed to influence a retail investor base suffering from the most
extreme cognitive dissonance we have witnessed since Uni-Pixel or OCZ Technology Group. The WATT bull
case has eschewed substance, and instead focused on the tea leaves of an Apple iPhone 8 wireless charging
design win.
While bulls and bears argue the merits of WATTs technology and whether WattUp demonstrations were
conducted fraudulently,1 Apples actual wireless charging intentions have continued to crystalize. This report is
devoid of our preferred forensic analysis (there are no meaningful financial reports to analyze), and we will not
delve into the myriad of existing bull/bear arguments. We will instead focus on the only variable underpinning
the WATT promotion an iPhone 8 wireless charging design win.
But what happens when it becomes indisputably clear that Apple is not using WATTs RF technology for
iPhone 8 wireless charging, an opinion we understand executives at BOTH Energous and Dialog
Semiconductor are tacitly confirming to institutional investors? What happens when chat rooms and
technology stock blogs pick up that Apple itself declared WATTs core technology inefficient,
complicated, and hazardous to objects or people in a patent filing? Will any of that matter? Were about
to find out.
Thus far, the bull/bear case has been Apple hope vs. factual red flags. Retail investors have extrapolated a
series of developments to conclude WATT will win an iPhone design: Energous hiring former Apple employees,
the Dialog investment, a [misleading] reference to Apple in SEC filings from 2014, and extreme secrecy about
the Tier 1 consumer partner. Stock promoters and investment websites have speculated that these dots must
be connected. Bears have raised meaningful red flags, including: the bankruptcy fiasco of CTO Leabmans prior
whiz-bang company Wi-Sky (listed in Germany), WATTs repeated failure to hit revenue milestones, meet
commercial launch promises and certification targets (consistent with other MDB Capital IPOs), the closed door
UL certification, and basic laws of physics that prevent WATTs RF charging within the allowable FCC power
thresholds (Bears have yet to discuss neighborly institutional investments or the background behind
Dialog/Tyndalls option).
With WATTs investment case squarely anchored to wireless charging for the iPhone 8, we will focus
exclusively on what Apple is actually doing. While this factual information has surprisingly been absent from the
WATT debate, Apples wireless charging initiatives are now clear. We believe the WATT debate is effectively
over. Who will get caught holding the bag?
1) Apples recent patent filings center on iPhone inductive charging
Apple has filed more than 16 patent applications covering aspects of inductive charging, which is the magnetic
coil based wireless charging used in Samsung phones and Apple Watches. As a reminder, WATTs technology
uses RF waves.
The extensive Apple patent portfolio covers both the design and manufacturing of coils, as well as transmitters
and receivers. Further, Apples engineering focus in its patent filings explicitly incorporates inductive charging
into handsets. We have presented salient extracts of these patent applications below (a more complete list can be
found in the Appendix).
Just one month ago (12/22/16), Apple filed what we believe to be its most significant and relevant patent
application for wireless charging (shown below). As clearly seen in the patent details, Apple has developed a
platform that incorporates inductive charging coils into a retail table top (similar to those used in Apple stores).
Apples inductive charging platform will allow devices like iPhones to be charged wirelessly anywhere on the
tables surface. This novel approach would eliminate todays wireless charging pads that require devices
maintain specific points of contact and orientation. Apple diagrams clearly illustrate how iPhones and iPads will
elegantly turn an entire surface into an inductive charging platform.

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------------------------------------------------------------------Description: Retail table top

incorporating multiple inductive
charging coils

Source: US Patent and Trademark Office (www.uspto.gov)

The 12/22/16 patent dovetails with an Apple patent application from 3/31/16 that clearly illustrates an inductive
charging coil placed under an iPhone. We would again note Apples focus on inductive charging as opposed to
RF.
Description: Inductive charging
assembly for iPhone

Source: US Patent and Trademark Office (www.uspto.gov)

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------------------------------------------------------------------Another patent application published in March 2016 (shown below) seeks to protect a method for charging
iPhones from other devices. Not only does Apples description specifically refer to Inductive Charging, the
diagram unequivocally illustrates inductive charging coils in a MacBook charging iPhone handsets.
Description: Inductive charging of
one device by another device (e.g.
MacBook charging an iPhone)

Source: US Patent and Trademark Office (www.uspto.gov)

Apples recent flurry of inductive charging patents appears to be a methodical evolution of iPhone inductive
charging coil designs found in patent applications published in October 2015 (shown below) and April 2014.

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------------------------------------------------------------------Description: Inductive charging

coil design

Source: US Patent and Trademark Office (www.uspto.gov)

Description: Inductive charging

coil design

Source: US Patent and Trademark Office (www.uspto.gov)

As far back as September 2013, Apple was actively filing patents to protect a more comprehensive approach to a
desktop/tabletop wireless charging environment. As can be seen below, Apples incorporation of Near Field
Magnetic Resonance (NFRM) charging technology, which is another variant of magnetic coil based charging,
allows devices to be charged wirelessly from greater distances than inductive charging. Apples patent involved
a desktop computer that acted as a power source for nearby devices like keyboards, mice, and unsurprisingly
iPhones.

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------------------------------------------------------------------Description: Desktop wireless

charging environment using Near
Field Magnetic Resonance (NFRM)
charging

Source: US Patent and Trademark Office (www.uspto.gov)

And to belabor the point, some of Apples earlier inductive charging patent applications from 2012 (shown
below) illustrate a rudimentary charging pad. The commonality across Apples evolving patent portfolio
continues to be a desktop/tabletop charging environment powered by inductive charging.

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------------------------------------------------------------------Description: Inductive charging

docking station

Source: US Patent and Trademark Office (www.uspto.gov)

WATT zealots will undoubtedly retort, If Apple was so far ahead of the Inductive Wireless Charging curve,
why have they not yet incorporated inductive charging into iPhones?
Those familiar with Apples DNA widely understand that Apple is rarely the first adopter of a new technology.
Competitors often introduce leading edge applications first (frequently with an unsatisfactory user experience),
while Apple culturally obsesses over user satisfaction. The original iPod was not the first flash-based MP3
player. Samsung and other OEMs have consistently beaten Apple to market incorporating new handset
technologies. We are convinced Apple will introduce inductive charging in iPhones, but will do so on its own
timeline (iPhone 8) and with its own IP. This latter point is meaningful because of Apples previously
documented concerns around extra circuitry for wireless charging.
In patent application 2016/0094074, published on March 31, 2016 and shown below, Apple unambiguously
explained why it had yet to introduce inductive charging. Apple stated that placing an inductive charging system
into a phone not only reduced the available area for the battery, but also unnecessarily drained the battery when
it was not in use. By using its own IP, as confirmed by the industrys largest supplier of wireless charging silicon
(discussed in the next section), Apple appears to have found a viable solution to this conundrum.

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------------------------------------------------------------------Description: Inductive charging

system with improved power
efficiency

Apple highlights
inefficiencies of
existing Inductive
Charging

~~~

Source: US Patent and Trademark Office (www.uspto.gov)

2) It appears likely Apple will introduce inductive charging in iPhones using its own technology
WATTs retail investor base seems complacently unaware that IDTI, the dominant supplier of inductive wireless
charging chips for Samsung Galaxy phones and Apple Watches, has stated Apple will use an internal solution
for iPhone wireless charging. Considering IDTIs incumbent merchant position at Samsung and Apple, it would
seem logical IDTI has unique insight into Apples wireless charging roadmap. IDTIs management has provided
concise and specific opinions about Apples roadmap that are wholly inconsistent with the WATT bull thesis.
After marketing with IDTI in mid-November, Doughertys semiconductor analyst Charlie Anderson published
the following comments on November 14, 2016 (emphasis added):
Don't bet on IDTI wireless charging on the iPhone, but bet on it many other places (above and
beyond expectations). Despite IDTI management warning off the investment community from
modeling a 2017 iPhone win, our sense is that some investors may still be holding out hope. On this
subject it strikes us as pretty clear that Apple is going down the road of a custom ASIC (similar to
how they approach touchscreen controllers), which is low margin business IDTI management has
previously indicated they wouldn't even bid on. That said, we would treat wireless charging on the
2017 iPhone (if it happens, which seems likely) as a big positive for IDTI. We believe IDTI has multiple
design wins with important OEMs outside of Samsung for 2017 models and that it will be difficult for

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------------------------------------------------------------------many handset makers to justify not including the feature if both Apple and Samsung have it. And if
Apple goes the custom ASIC route (with someone like TI, Broadcom, etc.), we would not treat this as
net new merchant competition since the part would be custom to Apple.
Historically, Apple has used a custom ASIC when its in-house technology exceeds the performance of solutions
from merchant suppliers. In these situations, Apple contracts a chip vendor for the relatively basic task of putting
the design into an ASIC chip and managing the manufacturing and testing. Apples patent progressions illustrate
a steady refinement and evolution of its inductive charging technology (behind the curtains), which would be
consistent with their historical approach to internal silicon and IDTIs public commentary.
Adding further credence to Apples inductive charging roadmap are the consistent leaks from Asian sources that
the next iPhone will feature glass casing. Inductive charging does not penetrate aluminum cases effectively,
which is the material for the current iPhone casing. One reason Samsung adopted plastic material for its cases is
to improve the performance of wireless charging.
A major misperception among tech blogs and WATT investors is that Apples switch to a glass casing somehow
confirms the inclusion of WATTs charging technology. This is ridiculous. The efficacy of RF wireless charging
(WATTs technology) is not affected by aluminum or plastic cases. As such, if Apples decision to switch to a
glass casing was influenced by the wireless charging technology, WATTs RF approach was not the reason.
But all of these arguments are semantics if Apple has no interest in WATTs technology. Even if WATT
somehow obtained FCC approval for any of its novel wireless charging products (mini WattUp doesnt count),
Apple appears to have already said it will never use WATTs RF technology.
3) Apple has dismissed WATTs technology as inefficient, complicated, and hazardous
When Apple filed its seminal desktop area wireless charging patent application, a detailed analysis of wireless
charging alternatives to Near Field Magnetic Resonance (NFRM) was included. As a reminder, NFRM is a
magnetic coil based charging method that can charge at greater distances than traditional inductive. In the patent
application, Apples scientists discussed radiative wireless charging, which is the RF wave technology behind
the WATT curtain.
Apple could not have been clearer in its critique of WATTs base technology (RF) when highlighting:
i)

The technology is inherently inefficient delivering energy because massive power is lost in
transmission.
ii) The complication of forcing a charging source to track charged devices and steer radiation to them,
(which Apple notes still fails if an object blocks the line-of-sight between the transmitter and the device
being charged),
iii) The radiation poses hazards to people who find themselves in the path of such directed radiation beams.
Apples succinct disparagement of WATTs RF technology would seem to upend the bedrock of the bull case.
For those who distrust our paraphrasing, the relevant section from Apples patent application is pasted below.

In black and white Apple thinks WATTs technology wouldnt work and is a hazard to
people!!!

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------------------------------------------------------------------Description: Desktop wireless

charging environment using Near
Field Magnetic Resonance (NFRM)
charging

Source: US Patent and Trademark Office (www.uspto.gov)

It is worth noting that the same line-of-sight limitations and radiation hazards noted by Apple are also detailed in
WATTs own FCC approval petition (shown below). As shown in WATTs own diagram, wireless charging is
purportedly halted when a cat walks by or a couch blocks the transmission line-of-sight. A Seeking Alpha article
from December 19, 2016 analyzed the FCC petition in great detail, including WATTs ridiculous promise to turn
off harmful power transmission if a living object is detected.2

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Source: US Federal Communications Commission (www.fcc.gov)

4) Lite-On Semi completes the mosaic: Apple is using its own inductive charging solution
On January 19th, it was widely reported that Taiwan-based Lite-On Semi, an existing supplier of components to
Apple, will be supplying GPP bridge rectifiers for iPhone 8 wireless charging. 3 Bridge rectifiers are used to
convert alternating current (AC) to direct current (DC). 4 We believe this is important for two reasons:
1) It confirms Apple is using inductive charging.
This type of AC to DC conversion is used for inductive wireless charging. When electricity is sent thru
magnetic coils it arrives at the receiving end as AC and must be converted to DC before being used by the
phones electronics.5
2) It confirms Apple is not working with WATT
If Apple were using WATTs solution, we believe the entire transmit and receive modules would need to be
purchased. Individual components such as bridge rectifiers from Lite-On Semi would not be procured
separately.
The mounting evidence makes it clear that Apple is using a proprietary inductive charging solution, with its own
IP (as IDTI suggested), and will outsource production of individual components to merchant vendors.
5) WATT is raising money as if the perpetual motion machine (Apple iPhone 8) is about to die
To be clear, we believe Apple approved an engagement with WATT. But why wouldnt they if the relationship
was riskless to Apple?
WATT raised $97.1 million over the last three years and spent the majority of its cash on R&D. WATTs science
project has been a free R&D project for Apple, which has been funded by MDB Capitals clients, a generalist

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------------------------------------------------------------------hedge fund manager and his family, and Mark Tyndall at Dialog. Apple has lost zilch. Further, in the remote
scenario where WATTs technology bends the laws of physics and FCC limitations, Apple would keep the
technology away from its competitors (WATTs Tier 1 partner has exclusivity on the primary market segment,
i.e. handsets). Apple has no risk and no financial liability engaging with WATT. As long as the general public
funds WATTs $9 million quarterly cash burn, there is no incentive for Apple to terminate its strategic
partnership with WATT.
Does this mean Apple will ever use WATTs technology?
No. Based on the overwhelmingly conclusive mosaic, Apple will deploy in-house inductive charging on the next
iPhone. Story over.
We believe WATTs management recognizes its window to raise capital will close once inductive charging is
confirmed for the next iPhone. As such, the Company continues to desperately raise capital. In August 2016,
WATT raised $20 million, including 100% warrant coverage. In November 2016, WATT raised another $10
million, which again came with penny-stock-esque 100% warrant coverage. In December WATT raised yet
another $5 million from Jersey Telecom. Moreover, we recently learned that despite all the good news around
CES and the cash flow break-even Q317 target, management engaged a boutique New York bank within the last
few weeks for another meaningful capital raise. The deal subsequently fell through.
So well ask again, who will be holding the WATT bag in a few months when ODM and supplier leaks of
iPhone 8 inductive wireless charging begin in earnest?

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------------------------------------------------------------------APPENDIX
AAPLs Patent Applications Related to Inductive Wireless Charging
Date: December 22, 2016
No.: US 2016/0372961
Date: September 8, 2016
No.: US 2016/0256931
Date: March 31, 2016
No.: US 2016/0094078
Date: March 31, 2016
No.: US 2016/0094076
Date: March 31, 2016
No.: US 2016/0094074
Date: January 7, 2016
No.: US 2016/0006288
Date: November 5, 2015
No.: US 2015/0318709
Date: October 29, 2015
No.: US 2015/0311740
Date: October 22, 2015
No.: US 2015/0298207
Date: October 22, 2015
No.: US 2015/0302971
Date: October 1, 2015
No.: US 2015/0280483
Date: September248, 2015
No.: US 2015/0270046
Date: September 19, 2013
No.: US 2013/0241308

Date: November 29, 2012

No.: US 2012/0303980
Date: September 27, 2012
No.: US 2012/0246374

Title: WIRELESS CHARGING RETAIL SYSTEMS

Description: Retail table top incorporating multiple inductive charging coils
Title: POLISHING AND BRUSHING TECHNIQUES FOR CYLINDRICAL AND
CONTOURED SURFACES
Description: Metal case housing for inductive charging coil in the charging pad
Title: INDUCTIVE COUPLING ASSEMBLY FOR AN ELECTRONIC DEVICE
Description: Inductive charging assembly for iPhone
Title: INDUCTIVE CHARGING BETWEEN ELECTRONIC DEVICES
Description: Inductive charging of one device by another device (e.g. MacBook
charging an iPhone)
Title: METHOD AND APPARATUS FOR INDUCTIVE POWER TRANSFER
Description: Inductive charging system with improved power efficiency
Title: INDUCTIVE POWER TRANSMISSION GEOMETRY
Description: Inductive charging power transmitter design
Title: SELF-LOCATING INDUCTIVE COIL
Description: Inductive charging coil design
Title: ENCAPSULATED INDUCTIVE CHARGING COIL
Description: Inductive charging coil design
Title: INDUCTIVE COIL DESIGNS FOR THE MELTING AND MOVEMENT OF
AMORPHOUS METALS
Description: Inductive charging coil design
Title: INDUCTION COIL HAVING A CONDUCTIVE WINDING FORMED ON A
SURFACE OF A MOLDED SUBSTRATE
Description: Inductive charging coil design
Title: TEMPERATURE MANAGEMENT FOR INDUCTIVE CHARGING
SYSTEMS
Description: Thermal management of inductive charging systems
Title: MAGNETIC CONNECTION AND ALIGNMENT OF CONNECTABLE
DEVICES
Description: Magnetic alignment for inductive charging
Title: WIRELESS POWER UTILIZATION IN A LOCAL COMPUTING
ENVIRONMENT
Description: Desktop wireless charging environment using Near Field Magnetic
Resonance (NFRM) charging
Title: WIRELESS POWER UTILIZATION IN A LOCAL COMPUTING
ENVIRONMENT
Description: Wireless charging environment at up to 1 meter distances
Title: DEVICE ORIENTATION BASED DOCKING FUNCTIONS
Description: Inductive charging pad

Source: US Patent and Trademark Office (www.uspto.gov)

http://seekingalpha.com/article/3960298-stunning-admission-energous
http://seekingalpha.com/article/4031486-energous-admits-wattup-unsafe-humans-get-fcc-approval
3
http://www.digitimes.com/news/a20170119PB205.html
4
http://www.futureelectronics.com/en/diodes/bridge-rectifiers.aspx
5
http://www.nutsvolts.com/magazine/article/august2013_Bates
2

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