Commitments and Contingencies | Note 4 – Commitments and Contingencies Operating Leases San Jose Lease On May 20, 2022, the Company signed a lease amendment to the existing lease for its office space at its corporate headquarters in San Jose, California, extending the term of the lease for an additional three years. Upon signing the lease amendment, the Company recorded a new ROU lease asset of $2,071,336 and operating lease liability of $2,071,336, using a present value discount rate of 3.0%. Upon expiration of the original lease on September 30, 2022, the new monthly lease payment starting October 1, 2022 is $58,903, subject to annual escalations up to a maximum monthly lease payment of $62,490. Costa Mesa Lease On September 22, 2021, the Company signed a new lease for office space for its engineers based in Costa Mesa, California. Per the lease, the lease commencement date is October 1, 2021 and the expiration date is September 30, 2023. The Company did not have control of the new office space until October 2021, at which time the Company recorded a new ROU lease asset of $104,563 and operating lease liability of $104,563. The new Costa Mesa lease has an initial monthly lease payment of $4,369 starting October 1, 2021 and is subject to an annual escalation up to a maximum monthly lease payment of $4,522. Operating Lease Commitments The Company follows ASC 842, Leases, A reconciliation of undiscounted cash flows to lease liabilities recognized as of March 31, 2023 is as follows: Amount (unaudited) 2023 562,555 2024 733,497 2025 562,408 Total future lease payments 1,858,460 Present value discount (2.9% weighted average) (65,041 ) Total operating lease liabilities $ 1,793,419 Hosted Design Software Agreement In June 2021, the Company entered into an electronic design automation software in a hosted environment license agreement with a term of three-years $233,000 through the second quarter of 2024. Litigations, Claims, and Assessments The Company is from time to time involved in various disputes, claims, liens and litigation matters arising in the normal course of business. While the outcome of these disputes, claims, liens and litigation matters cannot be predicted with certainty, after consulting with legal counsel, management does not believe that the outcome of these matters will have a material adverse effect on the Company's combined financial position, results of operations or cash flows. MBO Bonus Plan On March 15, 2018, the Company’s Board of Directors (“Board”), on the recommendation of the Board’s Compensation Committee (“Compensation Committee”), approved the Energous Corporation MBO Bonus Plan (“Bonus Plan”) for executive officers of the Company. To be eligible to receive a bonus under the Bonus Plan, an executive officer must be continuously employed throughout the applicable performance period, and in good standing, and achieve the performance objectives selected by the Compensation Committee. Note 4 – Commitments and Contingencies, continued Under the Bonus Plan, the Compensation Committee is responsible for selecting the amounts of potential bonuses for executive officers, the performance metrics used to determine whether any such bonuses will be paid and determining whether those performance metrics have been achieved. During the three months ended March 31, 2023 and 2022, the Company recorded $62,001 and $125,468 in expense, respectively, under the Bonus Plan. As of December 31, 2022, $688,364 was accrued and unpaid under the Bonus Plan, of which $560,533 was paid during the three months ended March 31, 2023. The remaining $109,452 from 2022 is expected to be paid during the second quarter of 2023. As of March 31, 2023, the Company had accrued $171,453 under the Bonus Plan, including the $109,452 remaining accrual from 2022 and the additional $62,001 accrued during the first quarter of 2023, which is expected to be paid between the second quarter of 2023 and the first quarter of 2024. Severance and Change in Control Agreement On March 15, 2018, the Compensation Committee approved a form of Severance and Change in Control Agreement (“Severance Under the Severance Agreement, if an Executive is terminated in a qualifying change in control termination, the Company agrees to pay the Executive six to 12 months of that Executive’s monthly base salary. If an Executive elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) the Company will pay the full amount of the Executive’s premiums under the Company’s health, dental and vision plans, including coverage for the Executive’s eligible dependents, for the six to 12 month period following the Executive’s termination. Executive Employee Agreement – Cesar Johnston On December 9, 2021, the Company announced that Cesar Johnston had been appointed as the Company’s Chief Executive Officer. In connection with Mr. Johnston’s appointment as Chief Executive Officer, the Company and Mr. Johnston executed an offer letter dated as of December 6, 2021. Under the terms of his offer letter, Mr. Johnston will receive an annual base salary of $400,000 per year. Beginning in year 2022, he is eligible to receive a discretionary annual bonus of up to 100% of his base salary, at the recommendation of the Company’s Compensation Committee, with the approval of the Company’s Board. In add on a a nducemen accep h appo n men a Ch e Execu v O ce M ohn o received ub ec con nue emp oymen a pec a one m gn o bonu h amoun o $120 000 payab equa n a men o $60 00 eac o h pay o da 202 an h pay o da a e Decembe 6 2022 b g an o 150 00 acqu ha e o h Company commo ock on h o wh c vested o Decembe 6 202 an h ema n n w h d o wh c ve e gh equa n a men o 12 50 eac o eac qua e ann ve a he ea e an c g an o a op o pu cha ha e o h Company commo oc a a exe c p c equa h a ma ke va u o h Company commo oc o h g an da e ha o wh c ha ve o Decembe 31 2023 qua e o wh c ha ve o Decembe 31 202 an h ema nde o wh c ha ve o Decembe 31 2025 Also pursuant to the terms of his offer letter, Mr. at various amounts to be agreed upon each year by the Board each of Note 4 – Commitments and Contingencies, continued In connec o w M ohn on appo n men a Ch e Execu v O ce h Compan an M ohn o add ona en e e n a amende e a e eve anc an chang con o ag eemen da e a o Decembe 6 2021 I h even o termination ha no a one m um u paymen b h Compan a amoun equa 1 mon h o h mon h ba a a p u a amoun equa 100 o h a ge bonu p u ag ee b h Compen a o Comm ee d c e ona bonu o h yea wh c h termination occu b an ou and n unve e equ awa d he b M ohn o ha wou ve h nex 1 mon h o con nu n emp oymen o he ha an equ awa d ha ve upo a ac o o pe o manc c e a w acce e a an becom ve e an c M ohn o me e ec con nue cove ag unde COBRA h Compan o ucce o w pa h u amoun o M ohn on COBR p em um o h beha o 1 mon h Mr. Johnston’s agreement a Mr. Johnston is also eligible to receive all customary and usual benefits generally available to senior executives of the Company. Executive Transition Agreement – Stephen Rizzone On April 3, 2015, the Company entered into an Amended and Restated Executive Employment Agreement with Stephen R. Rizzone, the Company’s former President and Chief Executive Officer (“Employment Agreement”). The Employment Agreement effective as of January 1, 2015, had an initial term of four years and automatically renewed each year after the initial term. The Employment Agreement provided for an annual base salary of $365,000, and Mr. Rizzone was eligible to receive quarterly cash bonuses from the MBO Bonus Plan with a total target amount equal to 100% of his base salary based upon achievement of performance-based objectives established by the Board. On July 9, 2021, the Company announced that Stephen R. Rizzone had retired from his position as the Company’s President and Chief Executive Officer and as a member of the Board. In connection with Mr. Rizzone’s retirement, the Company and Mr. Rizzone entered into an Executive Transition Agreement (the “Separation Agreement”), providing for continued employment through August 31, 2021. Upon his termination of employment, the Separation Agreement provides severance payments and benefits to Mr. Rizzone consistent with the terms of his existing employment agreement with the Company, including without limitation: compensation-based payments of $1,460,000 in the aggregate, payable under a certain payment scheme as set forth therein, an additional lump sum cash payment of $2,000,000, a pro-rated bonus payment for the two months of employment during the current quarterly bonus period payable at the same time bonus payments are made to other executives of the Company, settlement of deferred vested RSUs and an extension of the exercise periods of all stock options held by Mr. Rizzone until the one year anniversary of his termination date, and additional benefits related to Mr. Rizzone’s medical insurance. In addition, the Company agreed to pay-off all amounts owed under a lease agreement relating to a company car and that Mr. Rizzone would receive the title to the vehicle. All compensation under the Separation Agreement has been or will be subject to applicable withholding. As of March 31, 2023, the Company had unpaid accrued severance expense of $249,610 pertaining to Mr. Rizzone’s Separation Agreement which is expected to be paid through August 31, 2023. Executive Transition Agreement – Neeraj Sahejpal On April 29, 2022, the Company announced the departure of Neeraj Sahejpal, former Senior Vice President of Marketing and Business Development, effective April 30, 2022. Pursuant to the terms of Mr. Sahejpal’s severance and change of control agreement with the Company, Mr. Sahejpal received payments and benefits including compensation equal to twelve months of Mr. Sahejpal’s then-current salary of $261,250, twelve months of maximum potential bonus of $261,250, and twelve months of COBRA reimbursements. In addition, all RSUs held by Mr. Sahejpal that were due to vest in the twelve months after his departure, totaling RSUs covering 85,943 shares, were accelerated. Note 4 – Commitments and Contingencies, continued As of March 31, 2023, the Company had no unpaid accrued severance expense pertaining to Mr. Sahejpal’s agreement. Strategic Alliance Agreement In November 2016, the Company and Dialog Semiconductor plc (“Dialog”), a related party (see Note 7—Related Party Transactions), entered into a Strategic Alliance Agreement (“Alliance Agreement”) for the manufacture, distribution and commercialization of products incorporating the Company’s wire-free charging technology (“Licensed Products”). Pursuant to the terms of the Alliance Agreement, the Company agreed to engage Dialog as the exclusive supplier of the Licensed Products for specified fields of use, subject to certain exceptions (the “Company Exclusivity Requirement”). Dialog agreed to not distribute, sell or work with any third party to develop any competing products without the Company’s approval. In addition, both parties agreed on a revenue sharing arrangement and will collaborate on the commercialization of Licensed Products based on a mutually-agreed upon plan. Each party will retain all of its intellectual property. The Alliance Agreement has an initial term of seven years, with automatic renewal annually thereafter unless terminated by either party upon 180 days’ prior written notice. The Company may terminate the Alliance Agreement at any time after the third anniversary of the Alliance Agreement upon 180 days’ prior written notice to Dialog, or if Dialog breaches certain exclusivity obligations. Dialog may terminate the Alliance Agreement if sales of Licensed Products do not meet specified targets. The Company Exclusivity Requirement had a termination date of the earlier of January 1, 2021 or the occurrence of certain events relating to the Company’s pre-existing exclusivity obligations. The Company Exclusivity Requirement renewed automatically on an annual basis unless the Company and Dialog agree to terminate the requirement. On September 20, 2021, the Company was notified by Dialog, recently acquired by Renesas Electronics Corporation, that it was terminating the Alliance Agreement between the Company and Dialog. There is a wind down period included in the Alliance Agreement which will conclude in September 2024. During the wind down period, the Alliance Agreement’s terms will continue to apply to the Company’s products that are covered by certain existing customer relationships, except that the parties’ respective exclusivity rights have terminated (see Note 9 – Related Party Transactions for expenses incurred by the Company from Renesas Electronics Corporation). |