Good afternoon and welcome to the Energous Second Quarter 2016 Earnings 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 also note that this event is being recorded. I would now like to turn the conference over to Laurie Berman. Please go ahead.

Thank you, Andria, 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 to 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. Go ahead, Steve.

Thank you, Laurie. I would like to welcome everyone to the Energous second quarter 2016 update call. As Laurie said, joining me today is Brian Sereda, our Chief Financial Officer. I will begin the call with some brief remarks on the $20 million private placement we just announced, followed by a review of the significant milestone achievements and progress the company has made since our last update. I will then turn the call over to Brian, who will review the financial results for the second quarter. Following Brian, I will close with an update on the corporate goals the management team set for the year and then we will open the session to questions. As you are aware, today we announced a private placement of $20 million from Malcolm Fairbairn and the principal of Ascend Capital LLC. Ascend is a multibillion-dollar hedge fund based in California. Malcolm and Ascend invested in Energous at its founding stage and have been valued long-term investors. There are two important elements to discuss with respect to this investment. The first is the use of proceeds. We now have $20 million of additional cash in the bank and expect to see cash coming in from licensees and strategic partners in the last-half of the year in line with our earlier estimates of a range in the mid-seven figures. As Brian will confirm in his remarks, last quarter appears to be the high-point of our spending for the foreseeable future. Due to the fact that during this period, we completed the development and tapeout of five separate ASICs. As a result, we expect to see our working capital requirements decline for the second-half of the year. The additional cash infusion allows us to increase our engineering hiring plan for the year to support current and expected…

Thank you, Steve. As you saw at the close of market today, we issued a press release announcing our operating and financial results for our fiscal 2016 second quarter ended June 30. In the quarter, we recognized engineering services revenue of approximately $182,000, compared with a $136,000 in the first quarter of this year and $225,000 in last year’s second quarter. Although, we now have two additional milestone-based engineering services agreements that we expect to generate future engineering services revenue, Q2’s revenue was derived solely from our current Tier 1 partner. When looking at our revenue generation, it’s important to keep in mind the complexity and timing of changing deliverables and resulting impact on revenue recognition accounting. As such, we expect revenues will continue to be uneven over the next few quarters as the company continues to engage multiple customers each with unique applications and integration requirements. Second quarter GAAP operating expenses totaled $10.5 million, a decrease of approximately $0.5 million over Q1, driven primarily by lower stock compensation expense in the quarter. Year over year GAAP operating expense increased by $4.1 million, the majority of this increase or approximately $3.7 million was driven by expenditures for chip development work and increasing related headcount. As we have discussed, we anticipated heavier expenditures in the first-half of this fiscal year, mainly related to third-party chip development activity. I’ll provide some additional color around this in a moment. Our operating loss of $10.3 million for the quarter was also lower by $500,000 compared with our first quarter loss of $10.8 million. Taking into account, negligible other income and expense, our GAAP net loss for the second quarter was essentially the same as our operating loss or $10.3 million. On a per share basis, our Q2 net loss was $0.62, on approximately $16.7…

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 they relate to the primary goals we have set for this year. At the beginning of the year, Energous management team laid out six strategic goals for 2016 that we felt were critical to maintain our leadership position in true wire-free power and accelerate our path to meaningful revenue. I would like to update you on the progress against each of these goals. Goal number one is to have WattUp-enabled consumer products shipping late 2016, early 2017. We remain on target to achieve this goal. Counting the new licensing and proof-of-concept agreements, we have seven partners actively engaged in various stages of WattUp integration efforts. Coupled this level of activity with the fact that our full chipset will be qualified for mass production this quarter, we believe this goal remains on track. Goal number two is to have multiple licensees displaying WattUp-enabled consumer product in their respective booths at the 2017 CES show. As we have stated, the pace of expanding our licensing partners remains brisk, as do the integration efforts associated with these partner agreements. While, we do not yet have clear visibility as to how many partners will actually have fully integrated WattUp consumer product to display, we believe we will be very well represented at the show. Goal number three is to obtain the required regulatory approvals for our WattUp implementation. As noted earlier, we received the regulatory approval for our Mini WattUp transmitter design, clearing the way for shipments of the first WattUp integrated consumer product late this year, early next year. We are also actively engaged with the appropriate regulatory agencies to obtain the necessary approvals for…

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from William Gibson of ROTH Capital Partners. Please go ahead.

Do you expect your share count to be when you exit the third quarter?

Brian, could you answer?

Sure. Bill, we’re expecting about 18.6 million, 18.7 million of…

Okay, good. And then, in terms of the revenue expectations mid-seven figure is it possible that essentially you’ve gotten the revenue, but it didn’t book for GAAP purposes?

Now, we…

Well…

Go ahead, Brian, I’m sorry.

Go ahead, no, no, you can see, Bill, on our balance sheet we have a small balance of deferred revenue. We expect the activity level based on with the way our engineering services, deliverables is lining up with our customers, to take place in the third and fourth quarter.

Okay and then just last one question. I know you’re focused on 30 companies for the next licensing, but did I hear you say that 15 are already in evaluation, Steve?

Yes, we have - as I mentioned, we have active engagements with licensees. We’re doing two proof-of-concepts as well as working aggressively with 15 other prospective licensees in various stages of evaluation of the technology.

Okay, good. Thank you.

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

Hi, can I ask you to elaborate a little bit on the R&D expenses? You stated that your external costs are going to go down but your internal engineering hires, you are going to increase headcount. So if you add those two together, is this quarter, that June quarter still that kind of the peak for R&D expenditures?

Yes, Steve, I’ll take this. Yes, Jon, as we talked to the third-party design services peaked in Q2 and we expect those cost to tail-off. However, we’re not adding headcount at that same rate. It’s very expensive to utilize third-parties in design work. And the selective headcounts - headcount that we are adding, will increase our spend rate over same period last year, for example, but not to the level that we’ve been spending on third-party services.

Okay. And then to Bill’s question, can you just clarify the mid-seven figure revenues? That’s over the next two quarters, right?

Correct, by the…

The remainder of this year, yes, okay. Thank you, that’s all I have.

[Operator Instructions] Our next question comes from Charles Gonzalez of Newbridge Securities. Please go ahead.

Yes, hello. Can you hear me?

Hello, Charles. Yes, we can hear you.

I apologize. Okay, I had it on mute there. I just wanted to get a little - I’ve been looking and I can’t seem to find. And I came late on the call. What were the terms on the $20 million? Could you give me little clarity on that?

So the filing will come out tomorrow. It’s a $20 million investment. The price is equivalent to the rolling 21-day average of our stock price or $12.36 per share. There is a 100% warrant coverage associated with it. And the warrants are priced at a premium of $23 a piece and have a 5-year term to them.

Okay. That’s all I needed. I mean, I just want to congratulate you guys on everything. I think this is a great deal, this $20 million raise. I’ve just been waiting on the sidelines, because I knew you guys needed some capital. And I think it’s awesome and I just want to congratulate on the quarter. Thank you.

Thank you. We’re very pleased with the investment also, because as we said this goes into the hand of a very committed and long-term shareholder. And so, not only as it - I think it’s beneficial from a capital infusion perspective, but it’s also in the right hands from an investment perspective. And Ascend is a very, very credible top-tier hedge fund.

Now - and the fact is that’s - yes, that’s exactly what I was thinking as well. I mean, I’m the maniac that called you guys when I spoke to your IR department when the stock was getting pummeled and I’m the maniac that started screaming, all excited or what from the call that you guys have put up. So there has been a lot of progress since that $4 level. And again, I want to congratulate you guys on a great quarter.

Thank you.

Thank you.

Bye-bye.

Our next question comes from Scott Reed of Vict10n Capital Strategies. Please go ahead.

Hi there, guys.

Hello.

So just real quick on the use of proceeds, it sounds like you’re going to have a little bit more capacity to bring on some more partners, more development partners. Now, in the past you had specified that your earlier partners would sort of be - would be those companies that you sought to be convert to more near-term revenue. Is that sort of the case with the newer partners as well, the additional partners you are going to bring on?

No, as I mentioned earlier, in particular the proof-of-concept agreements that we put in place are an excellent example. These are both from what you would call top-tier consumer electronic companies, very top-tier consumer electronic companies. And as such, their product horizons and their product cycles extend out to a degree from the smaller partners that we are working with in order to get the products out as quickly as possible. The benefit of course is that the releases, the number of SKUs, the magnitude of the chip sales and the royalties is also substantially higher. And so the - what we will look to do as I said will be to expand our application engineering team, so that we can now focus on a broader set of strategic partners and licensees simultaneously. And I will make one comment. Our potential licensees have remained very, very patient. We’ve made it clear to them that we will not engage until we are in a position to support and to assist them with their integration efforts. But we have not lost anybody; we have not had anybody that defers their interest. On the contrary we had to line them up and prioritize them. And the expansion of our licensee base is only gated by our ability to identify and hire application engineer and expand our ability to support these opportunities.

Okay, well, that’s a good problem to have and it sounds like you now have the capital to allow you to execute, so that’s great. One follow-up question to that, it does sounds like in the past you have guided to cash-flow breakeven towards the end of 2017 or maybe third quarter. And just wanted to see with this additional investment and the additional potential partners, it doesn’t sound like you’re adjusting that just yet. But do you think there might be some upside, once we get three months, six months down the road from here?

Well, I think it’s appropriate for us to maintain that forecast. Again, we have both the tactical view of our strategic partners in terms of getting out our technology as quickly as possible as we can to the consumer. At the same time, we have a more strategic view. We want to target the top two or three market leaders in each of the markets that we are looking to penetrate. And with all market leaders, with all large companies, they just take more time. And so, I think it makes sense for us to continue to hold on to that forecast, but it does look very realistic in terms of meeting that goal.

Sounds good, thanks a lot guys.

Our next question comes from Peter Ruggiere from Dawson James. Please go ahead.

I have a couple of questions for you guys. Your wireless charging can go 15 feet, correct?

Our full-featured transmitter reference design has the ability to go that far, that’s correct.

Have you planned on maybe like teaming up with somebody else that might have conductive charging also to make the best of both worlds or…?

Well, I mean, I think that as you may be aware, we actually provide a - and our shipping - will be shipping a - what we call a near field or contact-based transmitter design as our first iteration of the technology. And so, we’ve divided up the development efforts into three distinct efforts that all have or all maintain the common core technology, but they are distinct efforts. The first release is for our Mini WattUp transmitter, which is contact-based, and will be out by the end of this year, the beginning of next year. The second release is what we are calling our Midsize or another way to look at it is the desktop or automotive transmitter release, which has the ability to send power to multiple devices out about 3 feet. And then the third is the Full-size transmitter that we expect to see in early 2018, that sends again to multiple devices out to 15 or 20 feet depending on the application. What’s important and what’s key, and what’s all of our technology partners have bought into is the fact that all three reference designs, all three transmitter designs can transmit power. And all three - and all of our receivers - I’m sorry, not all three - all of our WattUp-enabled receiving devices can receive power from any of the transmitter iteration. And so it is part of our vision of building out a total and complete ecosystem with contact-based desktop or Midsize based and full featured or Full-size transmitters that extend all the way from the contact based desktop to 15 to 20 feet from the transmitter.

What’s the maximum watts you can transmit? And FCC says, isn’t it like 5.8 watts or…?

All of our elements as it relates to our FCC approvals are really part of our proprietary and trade-secret information right now. As I mentioned earlier, we have had significant and ongoing contacts with the regulatory services. Our key strategic partner is very well grounded in the regulatory requirements. And as a result, combined with our key strategic partner we developed a strategy that will allow us to gain approval for all three of our transmitter reference designs. We’ve gotten one. We’re in the process of gaining the second. And then, we’ll go on to the third. And ultimately, once they are released their power, if you will, will be largely dependent on applications, on distances, on requirements of the technology. And so, what we’re capable of and what may be released, occupies a very broad spectrum of possibilities.

That’s great. Thank you.

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

Well, I want to thank you all for your continued support of our company. And I do have one final comment that I would like to make for our investors and potential investors. Consumerism in general sense continues to demand more power. Consumption habits are clearly more online, with a high and increasing percentage being mobile. This point to the need for a fundamental shift in the way consumers charge their mobile devices. Improvements in battery technology are not going to solve the problem. A proliferation of charging mats is not going to solve the problem. Harvesting and recycling microwatt of energy is not going to solve the problem by a long shot. The only solution, the only solution to the continuing and expanding need for power is a fundamental paradigm shift resulting in the build-out of a true wire-free charging ecosystem. Assuming Energous continues to execute, and we will, Energous will be at the epicenter of this paradigm shift. I want to thank you again for your attention today, and we look forward to reporting our continued progress at our next call in November. Thank you very much.

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