Good day and welcome to the Energous First Quarter 2016 Earnings Conference Call. All participants will be in listen mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Laurie Berman, Investor Relations for Energous. Please go ahead.

Thank you and hello everybody. I am Laurie Berman, Investor Relations for Energous. Joining me on today's call are Stephen Rizzone, President and CEO and Brian Sereda, CFO. After comments by Steve and Brian we will open the call with your questions. Before we begin, I would like to remind everyone that during today's call the Company will make forward-looking statements. These statements whether in prepared remarks or during the Q&A session are subject to inherent risks and uncertainties. These risks and uncertainties are detailed in the Company's filings with the Securities and Exchange Commission. Except as otherwise required by federal securities laws, Energous disclaims any obligation or undertaking to publicly release updates or revisions to forward-looking statements contained herein or elsewhere to reflect changes and expectations with regards to those events, conditions, and circumstances. Also please note that during this call the Company will be discussing non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release which is posted on the Company's website. Now, I would like to turn the call over to Steve Rizzone.

Thank you, Laurie. I would like to welcome everyone to the Energous first quarter 2016 conference call. Joining me today is Brian Sereda, our Chief Financial Officer. I will start the call wit an important update on the status of our Mini WattUp transmitter and small form factor receiver and what this technology means to Energous. I will then move to comments on our WattUp product rollout and regulatory strategies which are now well defined before discussing operational highlights of the first quarter. I will then turn the call over to Brian who will speak to the financial results for the first quarter. Following Brian, I will close with an update on the corporate goals for the year we laid out during our last conference call before opening the session to questions. We have a lot to talk about today, so let me begin by updating you on the status of our Mini WattUp transmitter and small form factor receiver. We are focusing on this technology as it represents the fastest path to revenue for Energous. As investors, you can appreciate and understand that as a company our entire profile changes once we start shipping product and generating revenues. Since announcing the availability of the Mini WattUp reference design, we have received very strong interest from a number of top-tier potential licensees looking for an immediate cost-effective, wire-free power solution for wearable and small form factor electronic devices. Couple this interest with the fact that the magnitude of the opportunity itself is measured in the hundreds of millions of devices shipping per year and it is a greenfield opportunity in that we have advantages in footprint and cost that cannot be matched by any alternative wire-free charging solution. You can understand why we are so excited about this opportunity. We…

Thanks, Steve. As you saw at the close of market today we issued a press release announcing our operating and financial results for our first quarter of fiscal 2016 ended March 31. In the quarter we recognized engineering services at approximately $136,000 compared to zero revenue in the fourth quarter last year and $200,000 in the same period of last year. When comparing revenues on a year-over-year or periodic basis, one must keep in mind the complexity and timing of the deliverables, and resulting impact on accounting for revenue recognition. The year-over-year decline is in no way indicative of any change in the direction or forecast future commercial potential or current customer. Our first quarter GAAP operating expense totaled $10.9 million, an increase of approximately $2 million over Q4 and $3.8 million higher when compared to the same period Q1 of last year. The primary driver of the increase in expense versus last quarter and last year is a $1.9 million increase in R&D in Q1 compared to Q4 and $3.4 million increase in R&D when compared to Q1 of 2015. As mentioned on the last call, we are in intense period of ship development and we expect to incur the bulk of these related costs in the first half of this fiscal year. Our net GAAP operating loss for the first quarter was approximately $10.8 million. The net income for the first quarter was also $10.8 million after netting out negligible interest income. Our Q1 loss on a per share basis was $0.66 on approximately 16.4 million weighted average shares outstanding. This compares to a $0.61 loss and a $0.54 loss in Q4 and Q1 of last year respectively. Let me now review with your non-GAAP results as we believe adjusted non-GAAP EBITDA provides a useful picture to investors…

Thank you, Brian. Before we turn the call over to the operator for questions, I would like to update our investors on the progress of the company as it relates to the primary goals we have set for the company for this year. As part of our last conference call we communicated six goals which the executive team felt were critical to maintain our dominant leadership position in true wire-free power and accelerate our path to meaningful revenue and sustainability. Specifically goal number one, to have WattUp enabled consumer products shipping late 2016 early 2017. Energous is absolutely on target to achieve this goal. The Mini WattUp reference design is actively being integrated into licensing consumer facing products which should hit the markets in time in a timeframe consistent with the goal. Goal number two, to have multiple licensees displaying WattUp enabled consumer products in their respective booths at the 2017 CES show. We are on track to meet this objective as the company continues to sign new licensees and expand our customer service and engineering department which will enable us to work on an ever increasing number of licensee integration projects. Goal number three, to obtain the required regulatory approvals for our WattUp implementations. Energous has spent a great deal of time, effort and money understanding the existing FCC regulations and the complexities associated with obtaining regulatory approval for all three product reference designs on our roadmap and our rollout plan. As previously stated, we believe we have identified a path to regulatory approval based on existing FCC rules and requirements for all three product reference designs on the roadmap. The actual timing for approval for some of these product reference designs is difficult to predict, but we have allowed for this contingency in the product release date incorporated…

[Operator Instructions] The first question comes from Daniel Amir of Ladenburg. Please go ahead.

Thanks a lot and congratulations on hitting milestones here. A few questions here, so first of all just to understand the comments around the financial side, so do you feel that despite the fact that it looks like you're pushing out by a quarter here the midsize and full-size transceivers, you will still be breakeven I guess at around kind of mid-2017, I mean is that still on plan?

Yes, I think that, again this is all about prioritization and the responses I said that we've received from the Mini WattUp transmitter and our ability to execute on it so quickly is really driving that focus. And the revenue projections and again we're not prepared to go out in any level of detail yet, but the revenue projections given the percentage of the bill of material that we believe that we can achieve in conjunction with this market segment is significant and near-term. And so while it does push out the midsize and the full-size transmitter reference designs by the quarter we believe that it more than makes up a for any delays there with respect to the revenue that we expect to be generating. I'll also tell you that that while this is a prioritization, we are aggressively working now with licensees on all three reference designs and part of the delay of the quarter rollout is also related to the complexity of integrating these two reference designs into consumer facing products. This is another reason that we're focusing so much attention on the Mini WattUp transmitter. It is much easier to integrate, time-to-market is much quicker, and so again, it really is all falling into place and I just want to reiterate the fact that we expect to see very significant revenues and a nice hockey stick coming out of our of our efforts related to the Mini WattUp transmitter and the licensees that were signing up for it.

Just in relation then to 2016, I mean in the past you said you might have mentioned mid-to-high single digits in sales, in revenues, excuse me, this year. I mean is that still on plan or really depends on, kind of the ramp of Mini WattUp in kind of the Q4 timeframe?

No, that's absolutely on plan. As you may recall, we made that forecast in conjunction with engineering services as it relates to our key strategic partner. I'm also pleased to report that we believe that we're also going to be generating engineering services in the not-too-distant future from at least one additional licensee. And so the basis of that forecast is really engineering services. The whole element of margins associated with our ASSPs and royalties based on shipping product is really additive to that forecast.

Okay, and then in terms of the investment that is required here on the Mini WattUp you had a big quarter year in R&D, clearly you're trying to you are taping out chips, but it looks like it's peeking in the first half and then it will decline in the second half, I mean is that what I understand correctly or are you pulling in R&D investment in order to get a faster time-to-market with these products?

Well, I think it really relates to, as Brian has spoken about and in the last couple of calls, our expense is a bit lumpy in that it is really focuses around when we are the development efforts for our silicon which is the most expensive element of the company. And a great deal of that development relating to silicon peaks in the first half of the year as Brian said. We could expect to continue to develop additional silicon, but not at the pace that we are at now. As I said earlier, the ASSPs that we are developing and are in qualification really form the basis of all three reference designs. And so follow-on versions will bring additional functionality, will provide a level of additional cost reduction, higher efficiency, so on and so forth, but the pace of the silicon efforts will not be at the same level it was in the first half of this year.

Okay then my last question and then I'll get back into the queue. Just regarding the regulatory approval with the midsize and full-size I mean has something changed here compared to six or nine months ago in terms of whether this is more complex than what you previously expected or is this at the same level and is just a prioritization issue?

Oh I think there are a number of facets here. Quite frankly, I think we're very, very fortunate to have the relationship with our top tier strategic partner who has shed a great deal of light and contributed a great deal to the development of our strategy. A year ago I think we were following down one path and subsequent to that that path has been refined and we are very, very focused on working and obtaining approval within the existing rule set that's currently in place within the regulatory agencies. And to that end, we modified our development strategy and our regulatory approval strategy to be compliant with these rules. So it represents a continuing and involved in the evolution of our strategy as we understand and engage more with the regulatory agencies as we understand the capabilities of the technology as it relates to in particular the rules relating to Saar [ph] and MPE and the functions that are associated with the current regulatory process. So I think it's more of an evolution than a change, but we're very, very confident and that's why we laid out the product roadmap that we did today. It includes I think the timelines associated with what we believe are necessary for regulatory approval. We think we've got it pretty well dialed in.

Okay, great, thanks a lot.

The next question comes from William Gibson of Roth Capital Partners. Please go ahead.

Hi, you mentioned converting to the evaluation partners to licenses already and I think you had a release on one of them being hearing devices. Can you share where the second is?

I believe we announce that one also with Pegatron.

Oh that was Pegatron, okay.

Yes, that was a large OEM and ODM out of the Far East that is really going to be very beneficial to us is as they will be a manufacturing landing site for a number of our strategic partners.

Okay, now that makes sense. Secondly on the medium-size transmitter which sort of devices does that apply to? Could that be used with the phone or is he phone dependent upon the full-size transmitter?

That's a very good question and the answer is that it's really more of an element of distance as opposed to power. We believe that the midsize transmitter reference design will be able to power devices including smart phones and tablets and computer accessories, wearables, so on, all within the desktop or within 3 feet of the WattUp enabled transmitter.

Okay, so it is still dependent upon the timeline of the tier 1 partner then?

Not necessarily, no. I think that there are - the timeline I think we need to separate that out because the timeline of the tier one partner is the timeline of the tier one partner. Our goal is to sign and I think we're very being very successful in this goal is to sign a number of additional licensees. I said 10 to 12 this year, and I think that's a very conservative number and so the licensees that we're talking about, as I mentioned we've focused on 35 and they go across the entire spectrum of markets that we're looking at in terms of toys and batteries and wearables and smart jewelry and Wi-Fi routers. And so, again it's a broad spectrum and it's separate and independent from the timelines associated with our top-tier strategic partner.

Thank you and one last question just related to additional milestones with your tier one partner in the second quarter, does that result in more money coming in?

It is possible. There are acceptance terms associated with these milestones. We believe that will be delivering whether or not they are accepted within the quarter is yet to be determined. And so, as it works our top-tier strategic partner accepts the milestone and then has a period of time to review and make the final acceptance with that triggers payments. And so I can’t commit to that now, but we will be delivering on the milestones whether or not they will make final acceptance I can tell you.

Okay, thank you.

The next question comes from Ilya Grozovsky of National Securities. Please go ahead.

Hello, Ilya?

Your line is open Mr. Grozovsky. Please go ahead with your question.

I think we’ve lost him.

Okay. Continuing on we have a question from David Pescherine of RNC Genter. Please go ahead.

Thank you. So Steve a few questions around the approval processes. I guess first, can you just clarify if you’ve actually started the process with all of the different size transmitters.

We have engaged or started the process. I’m not prepared to get into a lot of detail, but I will tell you that we have started the process.

Okay and so you don’t need final-final products to actually begin that process is that correct?

You do not need a final-final product to begin the process, that is correct.

Okay and then, I guess I was really pleased to hear your commentary about trying to get approval or expecting to get approval under the existing regulatory framework because there has been a lot of speculation that you guys were going to essentially try to go in there and get the rules changed because this is a brand new market. And so I guess I’m very interested in understanding or if you could may be characterize, what have you done either in terms of innovation or just changing the specifications is that allowing you to feel confident about getting approval under the existing framework has there been additional innovation in the technology, let’s say in the past 12 or 18 months or is the technology essentially the same and just the way that you are tasking it has changed?

Well, I think that’s a good question and I think the answer is a bit complex, but combines both. I think first of all the key is really understanding the regulatory rules as they exist today and the process and again this is, this relates back to my earlier comment about getting into the details. It is really getting underneath the covers and understanding the details at a very minute level. That has impacted our strategy as it relates to both submitting for approval and our development strategy. And so, again its, I mentioned that we’ve spent a lot of time, energy and money in this and that’s exactly the case and that under the existing rules I believe that we’ve developed methodology for transmitting power both locally that falls underneath the existing rules and requirements for the SEC. And we have to go through a process. Any time you are dealing with a government agency, especially one is complex as the SEC there are, we would anticipate a number of iterations and milestones along the way. And I think we just have to get into it in more detail get into it deeper and progress, but as I said we believe that our technology as it sits today after a number of irradiations and improvements in design, efficiency and the ability to work within definite frequencies is such that it meets the rules and will progress along those lines.

And then may be one final one from me, you characterize each transmitter as being at essentially at different stage of commercialization. So again, can you may be characterize for the mid and the full size, is there some gating factor to kind of pushing it to the goal line is it a matter of getting just the approval, is it about silicon is about getting size small enough, is there some key element or is it just about getting a customer to actually go ahead with that product to kind of push it over the goal line, how should we think of that?

Well, it's not about customer because customer is, I don't want to say it is the least of our concerns, but our problem is that we have more customers than we have the capacity to support by an order of magnitude. It really relates to the design, the priorities, they are different, but they are again combination of the same basic components. They have their own integration cycles as it relates to our strategic partners, they have their own approval cycles as it relates to the regulatory agencies and so they're different, and they're unique, and we prioritize them. And although we work on them in parallel, we believe that they will hit the market on a serial basis along the timeframes that we've talked about.

Okay, but sure again just to clarify then it has nothing really to do with innovating the product so that it even works in the first place is that - if you said tomorrow, hey we're going to really focus on the large scale transmitter, because that's what the main customer wants. You don't need to – there's no innovation that still has to really happen other than kind of a normal production cycle?

Well, let me say this that, that we exist in a very fluid relationship here and or a situation here and our priorities continue to change as the needs and requirements of our licensees change and the business change. From what we see today, I think that the roadmap that we've laid out makes a lot of sense and one that we can execute on. As far as the innovation, we've had a tremendous amount of innovation sense the inception of the company two and a half years ago. And it's allowed us to achieve levels of efficiency. It's allowed us to achieve antenna design and algorithms that control complex movements of our receivers. So we've made significant strides as evidenced by the fact that we filed upwards of 250 to almost 300 patents surrounding the technology. But we believe that it's imperative as a leader in the company in this industry for us to maintain our leadership position that we continue to invest in innovation. And so we have segmented out a completely separate engineering team called our advanced engineering team that focuses on the future that will ensure that we continue to innovate. And that innovation is a core part of our long term strategy and a core part of the company.

Great, well congratulations on the licenses that you signed and it looks like you've got a great pipeline of new opportunities ahead. Thank you.

Thank you.

And I believe we have time now for one last question that will come from Lou Basenese from Disruptive Tech Research. Please go ahead.

Thanks for taking my questions gentlemen. Just quick question on the most recent licensee in the hearing devices market, can you give us any color on what you think the addressable market might be here with this customer in hearing devices and then if there's any plans or possible expansion with that customer into other verticals like wireless ear buds or Bluetooth headsets?

Good question Lou. I don't think we signed this particular strategic partner and licensee quite frankly based on their ability to move very, very quickly. We do not expect millions of devices shipping in conjunction with this licensee. It is really more to get our first full integration steps complete to develop our processes to meet our commitment to get product through all of the necessary regulatory and fulfillment cycles and get it out to the consumer, which as we said makes us or turns us into a completely different company. And so the focus here on that particular licensee is really more on time to market than it is on revenue opportunity. Having said that, it's important to note that this licensee is a battery company in its core context, and so we're working with them in conjunction with battery and battery technology. So the technology and the reference designs that we're developing we believe will have broader applications, but not necessarily with this specific strategic partner. They are a great strategic partner they are working very, very aggressively with us and we want to be very supportive of them, and we think that they're going to be able to release a very, very differentiated product, but again the key is that we're going to do it quickly.

Okay just one quick follow-up on that maybe on the more technical side. Is the receiver chip small enough to fit into the smallest size hearing aid battery or is there a certain size that you can't get down to or?

I think that - we don’t know what the smallest size hearing aid battery might be. What I can tell you is that we have engaged with a broad cross section of wearable and small form factor electronic devices and we have not found any that we cannot meet their receiver requirements in terms of footprint and form factor. So I don’t know how small these hearing aids can get down to, but certainly with the broad base of licensees and prospective licensees that we're talking to we have not come across a hurdle in footprint.

Okay, thanks Steve. I appreciate it.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Steve Rizzone, President and CEO for any closing remarks.

Well I want to thank you again for your continued support. I think we've summarized our activity for the first quarter. I think we're confident that we're going to have continued positive results as we move forward in the second quarter and beyond. We believe that this year is a pivotal year for Energous. We've got a very, very detailed operating plan and we continue to execute against it and meet out milestones and again we'll look forward to our conference call in three months where we'll have more positive things to report. So thank you very much and we'll talk to you again.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.