Good morning, ladies and gentlemen, and welcome to the Ocean Power Technologies Fiscal 2014 Second Quarter Conference Call. At this time, all participants are in a listen-only mode. Following [management's] prepared remarks, we'll hold a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded and webcast. I would now like to turn the conference over to your moderator, Mr. Chris Witty of Darrow Associates, Investor Relations Adviser. Please go ahead, sir.

Thank you, and welcome to Ocean Power Technologies Earnings Conference Call for the fiscal second quarter ended October 31, 2013. OPT issued its earnings press release earlier today, and the company will soon file its quarterly report on Form 10-Q with the Securities and Exchange Commission. All public filings can be viewed on the SEC website at sec.gov, or you may go to the OPT website at oceanpowertechnologies.com. With me on today's call from the company is Chuck Dunleavy, OPT's Chief Executive Officer. Please turn to the Slide 2 of our presentation that's on the website. During the course of this conference call, management may make projections or other forward-looking statements regarding future events or financial performance of the company within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. As indicated in the slide, these forward-looking statements are subject to numerous assumptions made by management regarding future circumstances over which the company may have little or no control and involve risks and uncertainties and other factors that may cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. We refer you to the company's Form 10-K and other recent filings with the Securities and Exchange Commission for a description of these and other risk factors. Now, let me turn the call over to Chuck Dunleavy, OPT's CEO. Chuck?

Thanks, Chris, and good morning, everyone. I'll begin by providing an update on key activities, after which I'll briefly go over our financial results for the second quarter. I'll then be available to answer any questions. Turning now to Slide 3. Let me first review OPT's recent developments since our last earnings call a few months ago. It's been a very busy period with notable news in the Pacific Rim where we signed a groundbreaking commercial agreement with our partner in Japan, Mitsui Engineering & Shipbuilding, and also signed a contract with Mitsui for further work advancing our utility PowerBuoys. In a moment, I'll discuss details of these developments, which were largely responsible for increasing our backlog to $5.8 million at the end of the quarter from $3.5 million at the end of the prior quarter. At our October 3, 2013 Annual Meeting of Stockholders, David Keller was elected as a Director of OPT. Dave has a distinguished career most recently having served as CEO of Global Power Equipment Group and previously as President and Chief Operating Officer of Babcock & Wilcox. We're very pleased to have Dave on the Board. We also just announced the addition of Mark Featherstone as OPT's new Chief Financial Officer. Mark has significant experience as a Senior Finance and Accounting Officer at private and public companies including Heat Transfer Products Group, Quaker Chemical Corporation, Coty Inc., and Scott Paper. He formerly practiced as a CPA with Arthur Andersen. It is great to have him on Board as a member of our Senior Management team as we move the company forward. We completed ocean testing of an enhanced Autonomous PowerBuoy over this past August and September off the coast of New Jersey for the Department of Homeland Security and with excellent results. Finally, we recently…

I will now open the call for questions. (Operator Instructions) Our first question comes from George Santana with Ascendiant. Please proceed.

Hi. Thanks for taking the question, and congratulations, Chuck, and then to you and the team because this agreement with Mitsui Engineering & Shipbuilding sounds really, really significant and a real dramatic change for the company. Can you give us any color on the thought process of including the technology licensing model for Ocean Power?

Sure. Good morning, George. Well, first of all, from a strategic standpoint, I think it's important to say that we view licensing as a complement to our fundamental strategy of directly selling product and services related to the PowerBuoy technology. Licensing is an important part of our overall strategy, but certainly not a new direction for our company. The key for us in considering the licensing model I think is important to say that our approach is to identify how we can leverage our technology, but also assets of the prospective licensee. And as we noted in the first part of our presentation, a couple of central strengths of Mitsui reside in their manufacturing capability as well as their international sales presence. And I think that's the key is really to draw on the strengths of the licensee in the territories that are under consideration. In this exact instance of the Mitsui license the countries that we mentioned are all countries in which Mitsui has a presence, in a number of cases those presences that I'm referring to include manufacturing facilities. So it seem to be a very good fit for both Mitsui and OPT as we considered it, and licensing in this case I think is just the right approach particularly in these areas and given the strengths of Mitsui.

Yes. Thanks for that. And I mean, certainly, as I've gone out to investors over the last few years, one of the main questions that's always come back, and I'm sure you've heard it at nauseam is how do you get this company to scale and get it to profitability, and how many buoys do you need to get out there? I mean, certainly something like this similar to a biotech where you go with a commercialization partner really advances you towards that goal. Is that a correct assessment?

Oh! Absolutely, and it’s very, very important for us as a company moving forward. We do conduct direct sales ourselves, but we are seeking to leverage these relationships not only with Mitsui as we just talked about, but also in the case of Lockheed Martin. We had, about a year ago, talked about teaming with them in Australia in connection with the project there. And so, I think as we look at our execution and how we are going to establish profitability for our company increasing the top line, those relationships are very important part of getting there and we're very dedicated to achieving that.

Thanks. And when does this current project of the $2.6 million, when will that begin construction or at least begin to show up in revenues for Ocean Power?

Sure. At the very tail end of October we actually got a couple -- a week or so of revenues in albeit a relatively small portion of the quarters' reported revenues. But we have begun work under it, and the overall timeframe in terms of realization of that is certainly well within the next 12 months. That is say realization of that $2.6 million contract as revenues. What it's pointing towards though is, and we try to give little color to this extent in our earlier presentation, is one buoy to be put in the water of Japan and it would be grid connected with it being a very important step towards what we hope would and expect to be a greater roll out of PowerBuoys within the territory of Mitsui. So the steps are the current project, which we have the current contract, which is for us to build the PTO as well as to do certain aspects of the design and the structure for Mitsui to build that structure and then the next phase would be actual deployment of that device, of that PowerBuoy in Japan as well as it's grid connection.

So the current contract actually has the buoy being grid connected from the outside?

The program is yes. The current contract in terms of its exact scope just to be specific a little more detail. For the existing contract we have is getting the device all built, land tested and ready for deployment. That's the current contract which we have.

Okay.

And it's in [backlog]. Then the next stage would be the actual deployment of the device and its grid connection as you asked.

That's great. I mean, obviously you want to be careful what you say, but I mean it doesn't really make sense to grid connect just one buoy, right? I mean it's a -- that's a significant cost and venture like you can't just eat one, right?

Right.

Okay. All right. Fair enough. Well, thank you. Appreciate that. And Chris, I'll jump back in the queue.

No problem, George. Thanks. Good talking with you.

(Operator Instructions) There are no further questions in the queue. I will now turn the call back over to Mr. Dunleavy for any closing remarks. Please proceed.

Thank you all once again for attending today's all. If you have any further questions, please don't hesitate to contact us either by email or telephone. Otherwise, we'll look forward to speaking with you next quarter.

Thank you everyone. This concludes our call. You may now disconnect.