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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

COMMISSION FILE NUMBER 001-36379

ENERGOUS CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

 

46-1318953

(State of incorporation)

 

(I.R.S. Employer Identification No.)

3590 North First Street, Suite 210, San Jose, CA  95134

(Address of principal executive office)        (Zip code)

(408963-0200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.00001 par value

 

WATT

 

The Nasdaq Stock Market

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes      No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes      No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes           No 

As of November 11, 2021, there were 75,409,399 shares of our Common Stock, par value $0.00001 per share, outstanding.

 

 

 

 


 

ENERGOUS CORPORATION

FORM 10-Q

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021

INDEX

 

PART I - FINANCIAL INFORMATION

 

3

 

 

 

Item 1.  Financial Statements

 

3

 

 

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20

 

 

 

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

 

25

 

 

 

Item 4.  Controls and Procedures

 

25

 

 

 

PART II – OTHER INFORMATION

 

27

 

 

 

Item 1.  Legal Proceedings

 

27

 

 

 

Item 1A.  Risk Factors

 

27

 

 

 

Item 2.  Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

 

38

 

 

 

Item 3.  Defaults Upon Senior Securities

 

38

 

 

 

Item 4.  Mine Safety Disclosures

 

38

 

 

 

Item 5.  Other Information

 

38

 

 

 

Item 6.  Exhibits

 

38

 

 

 

 


 

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

Energous Corporation

BALANCE SHEETS

 

 

 

As of

 

 

 

September 30, 2021

 

 

December 31, 2020

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

28,282,188

 

 

$

50,729,661

 

Accounts receivable, net

 

 

176,683

 

 

 

75,850

 

Prepaid expenses and other current assets

 

 

708,776

 

 

 

636,702

 

Total current assets

 

 

29,167,647

 

 

 

51,442,213

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

518,068

 

 

 

402,711

 

Operating lease right-of-use assets

 

 

699,202

 

 

 

1,293,291

 

Other assets

 

 

11,991

 

 

 

1,610

 

Total assets

 

$

30,396,908

 

 

$

53,139,825

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

922,233

 

 

$

1,096,839

 

Accrued expenses

 

 

1,595,109

 

 

 

1,576,287

 

Accrued severance expense

 

 

1,102,832

 

 

 

 

Operating lease liabilities, current portion

 

 

765,209

 

 

 

825,431

 

Deferred revenue

 

 

12,000

 

 

 

12,000

 

Total current liabilities

 

 

4,397,383

 

 

 

3,510,557

 

 

 

 

 

 

 

 

 

 

Operating lease liabilities, long-term portion

 

 

 

 

 

576,762

 

Total liabilities

 

 

4,397,383

 

 

 

4,087,319

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred Stock, $0.00001 par value, 10,000,000 shares authorized

   at September 30, 2021 and December 31, 2020; no shares issued or

   outstanding.

 

 

 

 

 

 

Common Stock, $0.00001 par value, 200,000,000 shares authorized

   at September 30, 2021 and December 31, 2020, respectively;

   63,155,272 and 61,292,412 shares issued and outstanding at

   September 30, 2021 and December 31, 2020, respectively.

 

 

633

 

 

 

614

 

Additional paid-in capital

 

 

352,977,756

 

 

 

344,024,638

 

Accumulated deficit

 

 

(326,978,864

)

 

 

(294,972,746

)

Total stockholders’ equity

 

 

25,999,525

 

 

 

49,052,506

 

Total liabilities and stockholders’ equity

 

$

30,396,908

 

 

$

53,139,825

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

3


 

Energous Corporation

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

$

201,364

 

 

$

61,500

 

 

$

531,389

 

 

$

237,350

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

4,737,159

 

 

 

4,003,642

 

 

 

15,432,097

 

 

 

12,909,378

 

Sales and marketing

 

 

1,922,128

 

 

 

1,500,068

 

 

 

6,157,697

 

 

 

4,386,881

 

General and administrative

 

 

1,990,266

 

 

 

2,117,848

 

 

 

6,934,410

 

 

 

7,240,925

 

Severance expense

 

 

4,017,172

 

 

 

 

 

 

4,017,172

 

 

 

 

Cost of services revenue

 

 

 

 

 

 

 

 

 

 

 

126,539

 

Total operating expenses

 

 

12,666,725

 

 

 

7,621,558

 

 

 

32,541,376

 

 

 

24,663,723

 

Loss from operations

 

 

(12,465,361

)

 

 

(7,560,058

)

 

 

(32,009,987

)

 

 

(24,426,373

)

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

835

 

 

 

3,221

 

 

 

3,869

 

 

 

67,134

 

Total other income

 

 

835

 

 

 

3,221

 

 

 

3,869

 

 

 

67,134

 

Net loss

 

$

(12,464,526

)

 

$

(7,556,837

)

 

$

(32,006,118

)

 

$

(24,359,239

)

Basic and diluted loss per common share

 

$

(0.20

)

 

$

(0.18

)

 

$

(0.51

)

 

$

(0.62

)

Weighted average shares outstanding, basic and diluted

 

 

63,014,246

 

 

 

41,861,614

 

 

 

62,225,801

 

 

 

39,116,532

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

4


 

Energous Corporation

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance at January 1, 2021

 

 

61,292,412

 

 

$

614

 

 

$

344,024,638

 

 

$

(294,972,746

)

 

$

49,052,506

 

Stock-based compensation - restricted

   stock units ("RSUs")

 

 

 

 

 

 

 

 

2,088,910

 

 

 

 

 

 

2,088,910

 

Stock-based compensation - employee

   stock purchase plan ("ESPP")

 

 

 

 

 

 

 

 

57,316

 

 

 

 

 

 

57,316

 

Issuance of shares for RSUs

 

 

627,412

 

 

 

6

 

 

 

(6

)

 

 

 

 

 

 

Proceeds from contributions to the ESPP

 

 

 

 

 

 

 

 

117,013

 

 

 

 

 

 

117,013

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,525,763

)

 

 

(8,525,763

)

Balance March 31, 2021 (unaudited)

 

 

61,919,824

 

 

 

620

 

 

 

346,287,871

 

 

 

(303,498,509

)

 

 

42,789,982

 

Stock-based compensation - restricted

   stock units ("RSUs")

 

 

 

 

 

 

 

 

1,471,826

 

 

 

 

 

 

1,471,826

 

Stock-based compensation - performance

   share units ("PSUs")

 

 

 

 

 

 

 

 

2,695,847

 

 

 

 

 

 

2,695,847

 

Stock-based compensation - employee

   stock purchase plan ("ESPP")

 

 

 

 

 

 

 

 

60,651

 

 

 

 

 

 

60,651

 

Issuance of shares for RSUs

 

 

298,641

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

Issuance of shares for PSUs

 

 

494,608

 

 

 

5

 

 

 

(5

)

 

 

 

 

 

 

Proceeds from contributions to the ESPP

 

 

155,064

 

 

 

2

 

 

 

120,232

 

 

 

 

 

 

120,234

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(11,015,829

)

 

 

(11,015,829

)

Balance, June 30, 2021 (unaudited)

 

 

62,868,137

 

 

$

630

 

 

$

350,636,419

 

 

$

(314,514,338

)

 

$

36,122,711

 

Stock-based compensation - stock

   options

 

 

 

 

 

 

 

 

284,994

 

 

 

 

 

 

284,994

 

Stock-based compensation - restricted

   stock units ("RSUs")

 

 

 

 

 

 

 

 

1,010,990

 

 

 

 

 

 

1,010,990

 

Stock-based compensation - performance

   share units ("PSUs")

 

 

 

 

 

 

 

 

843,741

 

 

 

 

 

 

843,741

 

Stock-based compensation - employee

   stock purchase plan ("ESPP")

 

 

 

 

 

 

 

 

76,814

 

 

 

 

 

 

76,814

 

Issuance of shares for RSUs

 

 

287,135

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

Proceeds from contributions to the ESPP

 

 

 

 

 

 

 

 

124,801

 

 

 

 

 

 

124,801

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(12,464,526

)

 

 

(12,464,526

)

Balance, September 30, 2021 (unaudited)

 

 

63,155,272

 

 

$

633

 

 

$

352,977,756

 

 

$

(326,978,864

)

 

$

25,999,525

 

5


 

Energous Corporation

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

 

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance at January 1, 2020

 

 

33,203,806

 

 

$

333

 

 

$

282,153,201

 

 

$

(263,140,660

)

 

$

19,012,874

 

Stock-based compensation - restricted

   stock units ("RSUs")

 

 

 

 

 

 

 

 

2,321,820

 

 

 

 

 

 

2,321,820

 

Stock-based compensation - performance

   share units ("PSUs")

 

 

-

 

 

 

-

 

 

 

(88,348

)

 

 

-

 

 

 

(88,348

)

Stock-based compensation - employee

   stock purchase plan ("ESPP")

 

 

 

 

 

 

 

 

42,827

 

 

 

 

 

 

42,827

 

Issuance of shares for RSUs

 

 

396,559

 

 

 

4

 

 

 

(4

)

 

 

 

 

 

 

Proceeds from contributions to the ESPP

 

 

 

 

 

 

 

 

113,059

 

 

 

 

 

 

113,059

 

Issuance of shares in an at-the-market ("ATM")

   offering, net of $141,322 in issuance costs

 

 

4,351,652

 

 

 

44

 

 

 

5,506,836

 

 

 

 

 

 

5,506,880

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,597,736

)

 

 

(8,597,736

)

Balance, March 31, 2020 (unaudited)

 

 

37,952,017

 

 

$

381

 

 

$

290,049,391

 

 

$

(271,738,396

)

 

$

18,311,376

 

Stock-based compensation - restricted

   stock units ("RSUs")

 

 

 

 

 

 

 

 

2,028,599

 

 

 

 

 

 

2,028,599

 

Stock-based compensation - employee

   stock purchase plan ("ESPP")

 

 

 

 

 

 

 

 

41,308

 

 

 

 

 

 

41,308

 

Issuance of shares for RSUs

 

 

232,995

 

 

 

2

 

 

 

(2

)

 

 

 

 

 

 

Proceeds from contributions to the ESPP

 

 

144,370

 

 

 

1

 

 

 

104,144

 

 

 

 

 

 

104,145

 

Issuance of shares in an at-the-market ("ATM")

   offering, net of $236,528 in issuance costs

 

 

3,355,928

 

 

 

33

 

 

 

9,216,578

 

 

 

 

 

 

9,216,611

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,204,666

)

 

 

(8,204,666

)

Balance, June 30, 2020 (unaudited)

 

 

41,685,310

 

 

$

417

 

 

$

301,440,018

 

 

$

(279,943,062

)

 

$

21,497,373

 

Stock-based compensation - restricted

   stock units ("RSUs")

 

 

 

 

 

 

 

 

1,876,686

 

 

 

 

 

 

1,876,686

 

Stock-based compensation - employee

   stock purchase plan ("ESPP")

 

 

 

 

 

 

 

 

96,056

 

 

 

 

 

 

96,056

 

Issuance of shares for RSUs

 

 

361,608

 

 

 

4

 

 

 

(4

)

 

 

 

 

 

 

Proceeds from contributions to the ESPP

 

 

 

 

 

 

 

 

121,692

 

 

 

 

 

 

121,692

 

Issuance of shares in an at-the-market ("ATM")

   offering, net of $240,060 in issuance costs

 

 

1,016,026

 

 

 

10

 

 

 

3,007,048

 

 

 

 

 

 

3,007,058

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,556,837

)

 

 

(7,556,837

)

Balance, September 30, 2020 (unaudited)

 

 

43,062,944

 

 

$

431

 

 

$

306,541,496

 

 

$

(287,499,899

)

 

$

19,042,028

 

 

The accompanying notes are an integral part of these condensed financial statements.

6


Energous Corporation

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

For the Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(32,006,118

)

 

$

(24,359,239

)

Adjustments to reconcile net loss to:

 

 

 

 

 

 

 

 

Net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

195,361

 

 

 

286,990

 

Stock based compensation

 

 

8,591,089

 

 

 

6,318,948

 

Changes in operating lease right-of-use assets

 

 

594,089

 

 

 

570,460

 

Bad debt expense

 

 

10,850

 

 

 

33,000

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(111,683

)

 

 

3,794

 

Prepaid expenses and other current assets

 

 

(72,074

)

 

 

(331,367

)

Accounts payable

 

 

(174,606

)

 

 

(626,053

)

Accrued severance expense

 

 

1,102,832

 

 

 

 

Accrued expenses

 

 

18,822

 

 

 

(818,306

)

Other assets

 

 

(10,381

)

 

 

 

Operating lease liabilities

 

 

(636,984

)

 

 

(514,167

)

Net cash used in operating activities

 

 

(22,498,803

)

 

 

(19,435,940

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(310,718

)

 

 

(7,302

)

Net cash used in investing activities

 

 

(310,718

)

 

 

(7,302

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net proceeds from the sales of common stock

 

 

 

 

 

14,723,491

 

Proceeds from contributions to employee stock purchase plan

 

 

362,048

 

 

 

338,896

 

Net cash provided by financing activities

 

 

362,048

 

 

 

15,062,387

 

Net (decrease) in cash and cash equivalents

 

 

(22,447,473

)

 

 

(4,380,855

)

Cash and cash equivalents - beginning

 

 

50,729,661

 

 

 

21,684,089

 

Cash and cash equivalents – ending

 

$

28,282,188

 

 

$

17,303,234

 

Supplemental disclosure of non-cash financing activities:

 

 

 

 

 

 

 

 

At-the-market ("ATM") funds receivable

 

$

 

 

$

3,165,868

 

Common stock issued for RSUs

 

$

12

 

 

$

10

 

Common stock issued for PSUs

 

$

5

 

 

$

 

 

The accompanying notes are an integral part of these condensed financial statements.

7


Note 1 - Business Organization, Nature of Operations

Energous Corporation (the “Company”) was incorporated in Delaware on October 30, 2012. The Company has developed its WattUp® wireless power technology, consisting of proprietary semiconductor chipsets, software controls, hardware designs and antennas, that enables radio frequency (“RF”) based charging for electronic devices. The WattUp technology has a broad spectrum of capabilities, including near field wireless charging and at-a-distance wireless charging at various distances. The Company believes its proprietary WattUp technologies are well suited for many applications, including building and home automation, electronic shelf labels, industrial IoT sensors, surface and implanted medical devices, tracking devices, hearables, wearables, consumer electronics and public safety applications. Potential future applications include smartphones, commercial and industrial robotics, as well as automotive solutions and other devices with charging requirements that would otherwise require battery replacement or a wired power connection.

Note 2 – Liquidity and Management Plans

During the three and nine months ended September 30, 2021, the Company recorded revenue of $201,364 and $531,389, respectively, and during the three and nine months ended September 30, 2020, the Company recorded $61,500 and $237,350, respectively. During the three and nine months ended September 30, 2021, the Company recorded net losses of $12,464,526 and $32,006,118, respectively, and during the three and nine months ended September 30, 2020, the Company recorded net losses of $7,556,837 and $24,359,239, respectively. Net cash used in operating activities was $22,498,803 and $19,435,940 for the nine months ended September 30, 2021 and 2020, respectively. The Company is currently meeting its liquidity requirements through the proceeds of securities offerings that raised net proceeds of $53,556,202 during 2020, an at-the-market (“ATM”) offering during October 2021 (see Note 9 – Subsequent Events), proceeds from contributions to the employee stock purchase plan (“ESPP”), along with payments received from customers.

As of September 30, 2021, the Company had cash on hand of $28,282,188. The Company expects that cash on hand as of September 30, 2021, together with anticipated revenues and with ATM financing during October 2021, will be sufficient to fund the Company’s operations into November 2022.

Research and development of new technologies is by its nature unpredictable. Although the Company intends to continue its research and development activities, there can be no assurance that its available resources and revenue generated from its business operations will be sufficient to sustain its operations. Accordingly, the Company expects to pursue additional financing, which could include offerings of equity or debt securities, bank financings, commercial agreements with customers or strategic partners, and other alternatives, depending upon market conditions. There is no assurance that such financing would be available on terms that the Company would find acceptable, or at all.

The market for products using the Company’s technology is broad and evolving, but remains nascent and unproven, so the Company’s success is dependent upon many factors, including customer acceptance of its existing products, technical feasibility of future products, regulatory approvals, the development of complementary technologies, competition and global market fluctuations.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic. The pandemic continues to affect the United States and the world. The Company is monitoring the ongoing effects of COVID-19 (including continued outbreaks) and the related business and travel restrictions and changes to behavior intended to reduce its spread, and COVID-19’s impact on the Company’s operations, financial position, cash flows, inventory, supply chains, global regulatory approvals, purchasing trends, customer payments, and the industry in general, in addition to the impact on its employees. Due to the continuing developments and fluidity of this situation, the magnitude and duration of the pandemic and its impact on the Company's operations and liquidity are still uncertain as of the date of this report.

 

Note 3 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).

These unaudited condensed interim financial statements should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended December 31, 2020 included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 24, 2021.  The accounting policies used in preparing these unaudited condensed interim financial statements are consistent with those described in the Company’s December 31, 2020 audited financial statements.

8


Note 3 – Summary of Significant Accounting Policies, continued

 

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements as well as the reported expenses during the reporting periods.  

The Company’s significant estimates and assumptions include the valuation of stock-based compensation instruments, recognition of revenue, the useful lives of long-lived assets, and income tax expense. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. Although the Company believes that its estimates and assumptions are reasonable, they are based upon information available at the time the estimates and assumptions were made. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all short-term, highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. The Company maintains cash balances that may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation limits. The Company maintains its cash deposits with major financial institutions.

Revenue Recognition

The Company follows Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers" (Topic 606).

In accordance with Topic 606, the Company recognizes revenue using the following five-step approach:

 

 

1.

Identify the contract with a customer.

 

2.

Identify the performance obligations in the contract.

 

3.

Determine the transaction price of the contract.

 

4.

Allocate the transaction price to the performance obligations in the contract.

 

5.

Recognize revenue when the performance obligations are met or delivered.

The Company’s revenue primarily consists of product development projects revenue. The Company also provided contract services for Dialog in 2020. During the three months and nine months ended September 30, 2021, the Company recognized $201,364 and $531,389, respectively, in product development projects revenue, During the three and nine m