Energous (WATT) - From Cables to Power-Over-the-Air: Building Wireless Power Networks for Ambient IoT

Welcome to the WTR SmallCAP Spotlight Podcast. I'm your host Tim Gurdeman, Vice Chair and Co-Founder and Chief Marketing Officer of Water Tower Research. Today, we're joined by GM Palo Marino, Senior Vice President of Strategy and Business Development at EnergyScore Corporation NASDAQ ticker symbol, W-A-T-T. EnergyS builds wireless power networks for the enterprise, using power bridge transmitters and battery-free sensors to deliver real-time visibility across warehouses, cold chain and retail. Also joining us is my Water Tower Research Equity Research colleague, James Kisner. Good morning, gentlemen, and thank you for joining today's podcast. - Morning. - Great. GM Palo, for listeners new to the company's investment thesis, could you please tell us about the company's business model and the important markets you're addressing, please? - Yeah, so I will say that let's talk about really some of the challenges that we address, which is proportional to the business model, but I will say that EnergyScore Corporation today is addressing some of the challenges in what we call ambient IoT, which is a carabout of the IoT ecosystem that we've been talking about for the last 10 years, and with its RF-based wireless power transfer technology. So the company basically primary problem that is aiming to solve include obviously battery dependency and maintenance, right? So elimination of the need to recharge batteries in IoT devices, by using what we call RF-based energy harvesting, right? At the same time also reducing maintenance costs up to 80% in trust mean, that is a huge cost that nobody talks about it, but it's always there minimizing e-waste and also ensuring continuous operation without battery replacement. So this is fundamentally the most important thing that we see in terms of pain point and cost, in terms of industry like supply chain for instance, where we go in and really start to look at some of the inefficiencies and by eliminating again all these constraints, we start enhancing things like visibility for instance, intelligence, automation, and making sure that we basically boost up their inefficiency within their supply chain. That's great, that's a really important huge market, so very exciting. I'll turn it over to James Kisner and ask a few questions. Thanks, Tim. So what have you seen lately that tells you the model is working? Yeah, that's a great question, James. I think it's always good, right? Every time you are experiencing with a new technology, I always like to think about that it's always like an adoption curve, right? That kind of takes shape. So in that adoption curve starts getting very real, when you're actually starting to see rapid adoption of your technology across different industry, different markets, and in our case, also adoption of our technology across some of the forced intent customers and international wide. That's really helpful. I think you guys have talked about a $4 million order backlog in Q225. Can you say more about what's in that backlog? And how do you think about converting it into deployments? Yes, so that backlog reflects our product. You know, it's basically our power bridge product solution. In essence, you know, we have a family of product, but specifically in that backlog, we're talking about our power bridge pro, which is a two watt conducted device, A watt IRP that we have released to market last year. And yeah, so I would say that's the bulk of the backlog that we have right now. In terms of, I will say that backlog will be converted as part of the deployment phase that we have started with one of the forced intent customers in Q4 throughout basically 2026 and beyond. Thank you for that. I was hoping for the listeners less familiar, perhaps in simple terms, you know, you could say more about what power bridge does, like what does it, a typical setup look like in a warehouse or a store? Yeah, that's a great question. So I always like to talk about in simple, simple term, I always like to use an analogy, right? So I'm sure we all, all the enough to remember, you know, the shift as we went through cable internet to Wi-Fi everywhere, right? Suddenly, you know, we have Wi-Fi everywhere. Great. So the same, in essence, we're doing the same with power, right? You know, we're going through the transition of cable power to basically power everywhere. And that's basically what energy is pushing right now in industry, like supply chain, you know, logistics, you know, some of the pharmaceutical industry. In more of a technical term, basically, I would say that energy power bridge is a radio frequency RF base wireless power transmitter. And that, that transmitter is designed to deliver over the air power and, and basically conductivity to basically battery-free IoT devices, such as sensors, you know, tags, you know, which basically are co-existing within the ambient IoT. It's, it's really a key component of the of the energy wireless power network solution because it's the backbone of what we call power for ambient IoT. And that basically what it provides, you know, constant power, you know, constant visibility, again, across, you know, some of the industry that I've just described. That sounds really neat. You know, I think you've said that battery-free sensors and tags are sensors of your approach. So where do customers feel the benefit for less maintenance, fewer manual scans, or kind of always on visibility? Absolutely. So, so again, you know, there are some fundamental benefits that we address in battery-free sensor tags that that basically our customers are basically benefiting from. No battery is again equivalent to low cost, right? If I take the battery out of the sensor right now, I'm reducing the overall bond cost of the sensor itself, right? Sometimes, you know, up to 50 percent. Believe it or not, those batteries are very, very expensive. But the devil is in the details. Also, I am addressing the maintenance cost of replacing those batteries. I'll just give you an example. You know, I started deploying thousands of sensors out there. There are battery-operated. Well, these batteries are not decaying at the same time, right? So, you know, I can predict when the battery is going to go off on specific sensors. So, and so, and when it does, I have to dispatch someone to go take that battery out, replace the battery, reset the sensor. That is cost associated with cost of maintenance. And so, that cost is actually very high, especially when there's not predictability or, you know, where you don't know when that battery is actually going to decay. So, what we do is, again, we don't only eliminate the cost of the battery itself. We eliminate a huge cost of maintenance and provide basically, you know, our customers benefit in terms of, well, you know, now they have the capability to deploy more sensors. More sensors means more data. More data means, well, I can fit now my AI engine, you know, with more data and make better decision. That sounds really compelling. It seems like there could be some regulatory tailwinds here. The US Food and Safety Modestation Act or FSMA and some new e-rules for supply-chain transparency. You just, he's talking about how these mandates are shaping demand and timelines. They are. They are. Actually, you know, I think, you know, these these mandates are actually creating a lot more urgency from our customers, you know, to start adopting, you know, technology and the likes of energies, right? You know, it creates urgency in terms of, well, for instance, you know, the FSMA, which is basically, you know, it's requiring transparency of food supply from the growers all the way to the store. So, it's requiring basically intelligence on top of RFID. It's requiring a lot more data. It's requiring about, you know, logging the history of whole chain application. So, all these is basically, it's in essence, what energy just does, right? And at the same time, also, for instance, we know that in Europe there is a mandate that will probably take into effect in 2027, where there is a ban on all disposable batteries. So, every sensor that is using a corn cell disposable battery would be banned, right? Because again, these batteries are toxic. And so, they're trying to eliminate, you know, the a number of e-waste, you know, that every year basically reaches landfill. So, I think again, like I said, you know, these are important mandates that are basically raising the bar and raising the urgency to do something different, to what the combat, you know, to what industry has done conventionally in the past. And that's something something different, different is again, ambi-entire-ty, and energy just being the being the backbone of power for ambi-entire-ty. How about that? Garvern, helping you guys out. Imagine that. So, you know, your materials, your materials, sites of big pain points around an immatory distortion and vaccine spoilage. Can you share an example of how your platform helps move those numbers in the right direction? Yes. So, and again, you know, the huge pain point that we are addressing, the huge pain point that we are addressing in coal chain, huge pain points that we are addressing in logistic application, you know, product diversion, right? Coal chain, product spoilage. But let me give you like really a tangible example that I was working, you know, really a couple of weeks ago, you know, with a leading force to 10 customer within the pharmaceutical space. So, these retailers basically grappling about $5 million in annual losses due to their incomplete disability of their supply chain. Well, you know, they have basically drugs that are supposed to go and ship to specific stores. And for some reason, they are not, you know, they're disappearing or they're shipping, you know, they're being shipped through different stores. So, that level of disability and automation, it's not there. And that is basically causing them to lose about $5 million a year, right? Every year. So by deploying our technology now, the retailer can achieve real-time and end-to-end visibility across basically their entire shipments. And again, our solution can help reduce product loss by an estimate of 35 to 50 percent, minimize diversion through again, automated re-routing, alerts, improve delivery, and obviously higher accuracy. And that basically saves millions of dollars annually. Like I said, they're losing about $5 million. That's not pinnance. That's a lot of money. Sounds like you're really solving some problems for your customers. Now, you guys have developed your own silicon, like the EN series and you hold 250 plus patents. So, how does one of the chips to act an IP matter for performance, cost, and scale? It's a make a big difference. It makes a huge difference, in my opinion. Again, ownership of the IP within our chip design really enables energy to continue to push higher and higher performance. At the same time, also increase the barrier of entries for our competition. For instance, right now, energy has the highest power solution available in the market. And our competition is basically four-time less than us in terms of power. But at the same time, I think controlling your IC is controlling your IP within those ICs also enables you to meet the stringent regulatory requirements in different countries. For example, here in the United States, or in Europe. So, by controlling our IP, by controlling our IC, we're able to basically meet those requirements and get basically our product to basically regulatory approval, like in the likes of what we've done lately. So, I think this is fundamental, especially for a new technology, and for a company like energy to control not only the system, but also the semiconductor inside. It looks like you have some chips in your background and your resume, so that probably comes in handy. So, if we were to reconnect in 12 months, what are the two or three proof points that you would point to that show energy is scaling? Yeah, I will say on top of my mind, over the next 12 months, we are aiming to increase the number of full scale retail deployment that we currently have and expand into more and more use cases. Obviously, increase ARR, which is obviously our revenue and make it obviously reoccurrent and really be on a good revenue growth projection. And also, which is very important, ecosystem extension, with three plus probably new enterprise partnerships under our belt that will enable us to continue to expand our technology and to continue to expand the rate of adoption of our technology. Awesome, thanks, James Palo. I'm going to hand it back to Tim for some closing comments. Thanks, James. When you were talking about the cold chain, all I could think about is seemingly rarely does a week go by anymore. There's not a food recall somewhere in the United States, sickening people and sadly even killing people. So, what a huge market just for that little niche alone. Absolutely. Thank you, Jim Palo, Marino, Senior Vice President of Strategy and Business Development and Energy Corporation, Nasdaq, ticker symbol WATT. We're joining us today and providing insights into energy and the ambient IoT opportunity. As I mentioned to you, Jim Palo, prior to the recording starting, I provided outsourced investor relations services for the world's largest industrial energy storage player, prior to co-fawning water tower research in 2020. So, I have a full appreciation for what a game changer your firm's technology will become over time. Also, thank you to James Kisner for the thoughtful Q&A and lastly a special thanks to the WTR producer and editor of the podcast, Christopher Fitzpatrick. 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