Good afternoon and welcome to the Energous Corporation third quarter 2018 financial results conference call. All participants will be in listen-only mode. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Mike Bishop with Investor Relations. Please go ahead.

Thank you, Andrea, and welcome everyone. Before we begin, I would like to remind participants 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 that 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 the forward-looking statements contained herein or elsewhere to reflect changes and expectations with regard to those events, conditions, and circumstances. Also, please note that, during this call, Energous 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 to the company’s website. Now, I would like to turn the call over to Steve Rizzone, CEO of Energous. Please go ahead.

Thank you, Mike. Good afternoon and welcome to the Energous third quarter conference call and update. With me today is Brian Sereda, our Chief Financial Officer. I will begin the call by commenting on the overall performance Energous achieved in the third quarter, including major progress with our key strategic partner, as well as advancements we recently made in the WattUp GaAs and GaN chip solutions. I will then turn the call over to Brian for details on our financial performance and will close with a comment before turning the call over to the operator for questions. During the quarter, Energous further solidified its position as the only – the only – commercially viable contact through distance charging solution capable of powering the buildout of the wireless charging 2.0 ecosystem. While we have made significant progress in a variety of areas, we would like to begin by commenting on the latest technological breakthroughs in our GaAs and GaN transmitter, receiver and power amplifier chips, which are particularly of interest to our customers looking for higher power solutions. This new generation of GaAs and GaN chips currently support up to 15 W of fast charging contact power, with the ability to go higher, at efficiency levels that are more than 10% better than any other wireless charging options currently available in the market today. The efficiency numbers are especially important as increased efficiency means less heat while fast-charging devices such as smartphones, tablets, cordless power tools, drones and other large battery devices. While we cannot give you specific timeframes, indications are that the WattUp technology will be available in future releases of all of these devices. Couple of these breakthroughs with orientation freedom, small footprint, low cost and the elimination of foreign object detection problems plaguing the older first-generation coil charging…

Thanks, Steve. At the close of market today, we issued a press release announcing our operating and financial results for our third quarter of fiscal 2018 ended September 30. In the third quarter, revenue totaled $228,000 compared to $206,000 in the previous quarter. We believe we are on track to see growing revenues beginning in the fourth quarter. And as Steve explained, our expectations for 2019 revenue growth, both engineering services and chip royalties, remain on track. Although Q3 revenue was a modest increase over the prior quarter, our expansion within our top-tier partners continues, setting our expectation and foundation for growing services revenue and chip royalty growth from both recently announced customers and those that have been under engagement for some time. GAAP expenses for the third quarter totaled $12.9 million, approximately $0.4 million higher than the $12.5 million in the prior quarter and approximately $0.1 million lower than Q3 of last year. The increase over the prior quarter was primarily a result of higher engineering costs in the area of chip development, partially offset by lower stock compensation. We discussed on last quarter's call that we would see an increase in chip development in the third and fourth quarters of this year as we entered into a new chip development cycle to meet a potentially significant opportunity in the second half of 2019 with one or more customers. This investment has broad market applications, but, as Steve mentioned, is being driven primarily by our tier one partner. We expect spending to continue to rise in the fourth quarter as we complete the bulk of the chip development, then return to more of a normal engineering spend pattern in line with the first half of this fiscal year. Through a partnership with Dialog, we are managing our headcount and…

Thank you, Brian. Before I turn the call over to the operator for questions, I would like to make one final comment. I recently celebrated my fifth-year anniversary at Energous. It's hard to believe how far we have collectively come since we took the company public in March of 2014 with 10 people and a vision. Since then, we have stayed true to that vision, confident that Energous would one day lead a major paradigm shift as to how consumers charge their electronic devices. Many of our investors have been with us since the beginning. And together, we have experienced euphoria and disappointment as we discovered new chip technologies and worked through long development and customer integration cycles, as well as challenging domestic and global regulatory certification. Through it all, we have remained true and steadfast, always optimistic, comfortable in the belief that we were on the right path, we knew what needed to be done and we would do it. Let me end with this final thought that while we have been and continue to be optimistic, we have never – let me repeat, never – have we as an executive team, as a board of directors or have I as the CEO of Energous been as confident in our vision, our team and our ability to execute against our objectives and achieve our ultimate goals as we are today. We do not intend to disappoint. We fully expect to surprise to the upside. Thank you. Operator, I’ll now take questions.

[Operator Instructions]. Our first question comes from Ilya Grozovsky of National Securities. Please go ahead.

Thanks, guys. On Q3, can you confirm that you had royalty revenue or is the revenue purely from R&D offset?

Yeah. Ilya, we’re not breaking our revenue out at this point. We did ship chips in the quarter and we’ve got an arrangement with dialog and there are certain terms and conditions under that arrangement. So, right now, given the numbers, we’re not required to break out the numbers. So, with that, I’ll just leave the total revenue numbers as displayed.

Okay. And then, if we look at Q4, at the December quarter, do you think that patterns holds as well? Do you anticipate both R&D offset and royalties or kind of how are you thinking about it and how much visibility do you have? And, finally, just on that, how many different products, if you are anticipating royalties, do you think will contribute in Q4?

Just a quick note on that, yeah, we do expect growth in both areas, Ilya, both engineering services and chip royalties. Number of products, Steve, maybe…

Yeah, I think that we’ll see multiple – when you say products, you mean customer shipments or customers, I should say, taking shipments of chips in preparation for launches in 2019. We’ll see multiple customers. We’re looking for at least one, if not two, top-tier customers taking a significant number of chips. And so, it's still early in the quarter, but all indications are, as I said earlier, that we’re going to expect a material ramp in our revenue in the fourth quarter and it will have both shipments of chips as well as increases in engineering services revenue.

Great, thank you.

[Operator Instructions]. Our next question comes from William Gibson of ROTH Capital Partners. Please go ahead.

Thank you. You talked about the near-field certification. How is the process going for mid-field?

We’re working in parallel with that, Bill. The strategy has always been that we go in first with near-field, engage the regulators and then migrate the discussions to distance. Our clear focus is on near-field now because that is going to be the bulk of our revenue, I think, going into 2019. And so, it’s really all about getting these near-field certifications, first of all, on a regional basis and then, ultimately, on a global basis, so we can launch multiple products from multiple customers. But, again, we do both, but the strategy right now, as I said, is to lead with near-field and then migrate the discussions to distance.

Thank you. And you mentioned 68 employees, how many would you expect to have at year-end 2019?

No, I don't expect we’re going to grow headcount by that much. I would say maybe upwards of 75.

Thank you.

I think you can expect – we’ve been able to manage our headcount, I think, pretty effectively. Of course, we have a tremendous advantage with the Dialog relationship because we’re not building out operations team and, of course, we’re not building out our sales organization. We’re leveraging Dialog for both of those. We will expect to move more of our engineering expertise from core development, though, over to customer-facing engineering as we continue to expand our customer and prospect base.

Thanks, Steve.

Our next question comes from Jon Hickman of Ladenburg Thalmann. Please go ahead.

Hi. Thanks for taking my question. You mentioned a number of products, consumer products, that you thought might include the WattUp technology. If you look out to 2019, could you maybe narrow it down to which one or two consumer products might be the bulk of your shipments? I would imagine [indiscernible].

Yeah. As I mentioned, I think the smaller form factor products will be the majority of our revenue in 2019. We have clear greenfield opportunities there. Since these products contain our first-generation CMOS chips, which are generally available now, these are the ones that are in the final stages of integration and the ones that we can expect to see come into the market in the first half of 2019. The higher power applications are just starting the integration process now as these chips, these new GaAs and GaN chips are just coming in from qualification, and so I think that those will be starting to hit towards the latter part of next year. Again, to conclude or summarize, the smaller form factor, CMOS-based technologies will be driving the majority of the revenue in 2019. Towards the end of the year, we’ll see the larger high-power opportunities that we talked about coming into fruition.

And then, if I could just pin you down little bit, when you say your key strategic partner, so previous to your comments for this quarter, they've been kind of studying and qualifying the technology, so to speak, and now they're actually putting that technology in individual products that might hit the shelves some quarters out.

Again, we really cannot comment – we can't comment beyond what I’ve said in the prepared remarks. The relationship has moved to a new level and we’re pleased with our progress. But, again, we can't make any definitive statements nor can we make any commitments as to whether or not this technology will ever be available in their consumer electronic products.

Can you define product engineering then?

It is where we are engaged in exploring specific products as opposed to general research and develop into the potential of the technology.

Okay, thanks. That helps. Appreciate it.

This concludes our question-and-answer session. I would like to turn the conference back to Mr. Stephen Rizzone for any closing remarks.

Thank you, everyone, today for participating. We look forward to reporting even more progress in our next quarterly call and we look forward to talking to you then. Thank you. And good day.

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