Good afternoon, and welcome to the Energous Second Quarter 2022 Financial Results Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Matt Sullivan, Investor Relations. Please go ahead.

Thank you, Joe, and welcome, everyone. Before we begin, I would like to remind participants that during today's call, the company will be making 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 in expectations with regards 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 on the company's website. Now I'd like to turn the call over to Cesar Johnston, CEO of Energous. Please go ahead, Cesar.

Thanks, Matt. Good afternoon, and welcome to the Energous 2022 second quarter conference call. Joining me is Bill Mannina, our acting Chief Financial Officer. We would like to start this call by sharing our latest news with you. As announced in our earlier press release this afternoon, we received a breakthrough FCC approval for our new 15-watt WattUp PowerBridge. This significant achievement not only allows us and our partners to deploy wireless power networks capable of higher power delivery to support a broader range of IoT devices, but it also enables us to deliver such power at even further distances than previously authorized. Energous 15 power - 15-watt PowerBridge transmitters can enhance the wireless charging network performance in applications where high receiver coverage and high signal penetration are needed to energize hard to charge hidden receivers. These milestones support our long-term goal of advancing regulatory approvals for wireless power that allow for higher power and greater distances. This is why we are thrilled to announce that our new generation of WattUp PowerBridge transmitters that are capable of charging at 15x higher power than our 1-watt WattUp PowerBridges with no distance limitations are now fully FCC certified. Additionally, on August 1, 2022, we announced the first retail WattUp PowerBridge deployment in the company's history. A wireless power network implementing multiple 1-Watt WattUp PowerBridges, energizing thousands and thousands of smart RF tags or IoT pixels from our partner, Wiliot, under the software control of our customer flagship. Flagship's innovative software technology automatically tracks the movement of items in the store, fitting room or warehouse helping retailers understand and garner insights into in-store customer behavior. Beyond retail, similar applications of Energous technology can also be replicated in multiple additional markets, including industrial IoT, medical, smart home and smart office, opening new exciting opportunities…

Thanks, Cesar. At the close of the market today, we issued our Q2 earnings press release announcing the operating and financial results for our fiscal 2022 second quarter ended June 30. For the second quarter, we recognized approximately $233,000 in revenue, an increase of 8% compared to approximately $216,000 in the prior quarter and a 26% increase compared to approximately $185,000 in the same quarter of last year. Cost of revenue for Q2 was approximately $271,000, an increase of $68,000 over the prior quarter, which was due to product sales making up a larger percentage of our revenue in Q2. We did not report any cost of revenue in Q2 of 2021. Total GAAP costs and expenses for the second quarter totaled $7.3 million. Approximately even with a total expense of last quarter and approximately $3.9 million lower than the second quarter of last year. The main reason for the large year-over-year decrease was an approximately $3.7 million decrease in stock compensation expense. Year-to-date, our total GAAP costs and expenses was $14.7 million. Approximately $5.2 million lower than the $19.9 million of year-to-date GAAP expense in fiscal 2021. And the decrease year-over-year was primarily tied to lower stock compensation expense, which accounted for $5 million of the decrease. The net loss for the second quarter on a GAAP basis was $7 million or a $0.09 loss per share on 77.1 million weighted average shares outstanding. This compares to a $7.2 million net loss in Q1 or $0.09 per share and an $11 million net loss or $0.18 loss per share in Q2 of 2021. Also, our weighted average shares were 62.1 million shares in Q2 of 2021. The year-over-year increase in the share count was mainly due to the completion of our at-the-market offering, or ATM, in the fourth quarter…

[Operator Instructions] Our first question will come from Jon Hickman with Ladenburg. Please go ahead.

Can you talk more about your - the flagship, they've started with one retailer down in Australia. Is that it?

Yes. The announcement that we made two days ago is in reference to our first deployment of our tens of our power bridges with thousands of with RF tags in store.

And then is there a plan to like - is that a store a change by any hands? Like is there a chance that this expands beyond one store.

It's a retail company that has multiple sites. And at this point in time, there's not been any further information as far - that we can release our flagship has released in reference to the potential retailer, with respect to retail store, yes.

Are there other retailers on the horizon with flagship?

We, in general, work not just with flagship with a number of potential customers that we'll use this technology and by actually showing and we'll let to build partially as we show the first one, we're opening up plenty of opportunities, not just in retail but for the potential markets. So yes, it is likely.

Okay. And then you probably won't answer this question, but you're talking about year-over-year revenue growth and last year revenues were $757,000. Do you have some kind of percentage in mind that would make you happy?

Jon, it's Bill. At the moment, we're advising that it's going to be year-over-year growth. And that's the guidance we're giving right now. We can possibly look at giving more guidance next quarter, but that's what we're doing right now.

And just the first two quarters, we have shown actually 26% and 49% growth.

Our next question will come from Suji Desilva with ROTH Capital. Please go ahead.

Hi, Cesar. Hi, Bill. Congrats on the progress and the cost execution as well here. So, the markets you talked about, RF-tags, ESL and now the new one IoT sensors. Can you give us a sense of the relative addressable market of each to get a sense of how big this new opportunity is relative to what you're already targeting?

Yes, I can tell you that all these markets together, they're in the order of $280 billion. That includes smart office, smart home as well as retail industrial IoT and Medical. As far as the relative sizes of each one of them, I mean as per IDC, by the way, so these are - this is data that we get from IDC. My recollection right now is - they're somewhere between each of those around 70 billion or so average, [technical difficulty] yes. So, it's a total addressable market that's extremely respectable.

And each is pretty similar in size, it sounds like, Cesar.

These IoT industrial is probably the one that is a little higher, I would say, closer to, call it, $89 billion or so, but most of them are in the €70 billion and health care medical now there, remember, somewhere around $50 billion or so.

And I know you're planning to update us on the newer vertical IoT sensor. But can you talk about maybe what some of the earliest opportunity areas are in that large market just to understand where you might see traction?

Yes. Suji, thanks for the question. I would like to remind everyone that this is a very exciting time. And while we talk about independent applications and multiple markets. What we're really doing here at Energous is we are actually deploying what's basically the next generation of wireless power networks. And what we announced today is really the next generation of wireless power networks 15 watt. And what I'm trying to say here is that with the moment we deploy those wireless power networks, for any of the applications that we talk about, we are basically enabling the world of effectively any potential receiver, taking advantage of that deployed network. Now along those lines, when it comes to IoT sensors, which is your particular question, we're looking at possibility of sensing the environment, being able to look at temperature, humidity, being able to look at air quality. Air quality has become very, very important as lately, being able to track offices that now with COVID has been shut down and being able to have sensors that allow you to look at the light levels and being able to actually tap savings when it comes to electricity and being able to also sense people as people go into offices and areas [indiscernible]. So, we're talking about sensing the environment and provide an automated way moving forward to change how those spaces are managed. That's basically what we're looking at, and we will give more updates as we move forward. We will announce technology that's been developed today for that purpose. And that will complement our strategy so far, dealing with ESL and our stacks. And if you remember what I said before, the same transmitters that we have can actually power all three of those applications and more.

Okay. Great. A few more questions. On the flagship customer pilot, what would be the stages of that pilot? What should we think about happening next and how long would each take before perhaps production starts?

That's a very good question and is relative to the different customers that we have. I don't have one single generic template for that. But what we can say is effectively, what happens is they do one. And after that, they do multiple ones. And as they prove that their automation is in place, then they move into a product level. And it's going to be basically a function of the different people that are evaluating our technology today.

Okay. So next will be piloting multiple sites, you're saying.

That will be next.

Got it. Okay. That helps. And then I just want to make sure I heard this right. On the 15-Watt, it sounds like along with obviously being more power, you can now recharge sensors that might be hard to reach, hidden or buried to kind of use that language. I'm curious what an example of that would be because that sounds interesting.

Yes, there is my question. So, two things about 15-Watt. Number one, it's a new generation, it's a new product, and it can be absolutely targeted in two different directions. One direction is complementing our 1-watt PowerBridge wireless tower network where you deploy 15-watt systems that allow you to have further penetration into hidden areas or hidden receivers. Therefore, expanding the amount of coverage that you have and exceeding in the case of BLE tags, the type of coverage that you would have with, let's say, an RFID type of implementation. So that's one possibility. The second is watt based wireless power networks that allow you now to have further range, I mean, 15x more power than we previously have reported. And by the way, so far, the only product out there in the market that actually is certified at this level. And if you look at our transmitters, very, very small transmitters and only one-inch thickness and 8-inch. And being able to actually deploy it in similar to our Wireless 1 systems. But now being able to do two things, either give you more range on the horizontal side or giving you more power as you also go up in height. So, we are now in a position where we can have wider areas that we can power with the system. And most important, because now we have 15-watt systems, it opens up the possibilities of other markets that we're not focused on today that we will be working on probably towards that next year. So, there's other levels of IoT devices that now we can enable that we haven't even focused on because as a small company, we need to be very focused on what we're doing right now. So there's plenty of opportunities with 15-watt.

That provides some good color. And then maybe last question perhaps for Bill. You did a good job managing OpEx while you're trying to grow the top line as well. Can you talk about what areas or how you approached reducing OpEx and maybe certain projects were pushed out? Or any sort of impact to the business from the cost management you're doing?

I mean some of those costs were mainly attributed to the headcount. So it was just managing the hires. And there are also G&A costs we're targeting, like we have renewed our lease at a lower rate that will kick in, in Q4. But as I mentioned, some of those are headcount related, those decreases. And then other it's also managing just general costs, legal, Annual Shareholder Meeting.

Some cost on luxury restructuring that was done in general, yes.

This concludes our question-and-answer session. I would now like to turn the conference back over to the CEO, Cesar Johnston, for any closing remarks.

Thank you. We would like to thank our shareholders and stakeholders for their support as Energous continues to lead the industry in the development of the deployment of next-generation RF-based wireless power networks. We are an innovative company, and our successful wireless power network deployment will generate revenue growth through the increased shipment of products. So far, we have achieved that this quarter, and we have reported the progress of our short term and our long-term goals. The Energous team will continue to focus on this important core goal, and we'll update on news as we move forward. Thank you for your support.

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