Good day and welcome to the Energous Corporation Fourth Quarter 2018 Financial Results Conference Call. All participants will be in listen-only 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 Mike Bishop with the Company’s Investor Relations. Please go ahead.

Thank you, Andrew, 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 in 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’d like to turn the call over to Steve Rizzone, CEO of Energous. Please go ahead, Steve.

Thank you, Mike. Good morning and thank you for attending the Energous fourth quarter conference call. Brian Sereda, our Chief Financial Officer is joining me today. We have a number of things to talk about this morning. So, I want to get right into my comments on the Company. First, I want to address upfront the Company’s revenue performance for the quarter. During the last quarterly conference call, we messaged that we saw the potential for a material increase in revenue over previous quarters. We communicated this because we were tracking to schedule two large revenue opportunities. One was our key strategic partner and the second involves another top 10 consumer electronics company who is in the final decision stages of a global launch. For reasons completely unrelated to Energous, both of these opportunities were delayed. Regarding our key strategic partner, we were tracking a large engineering services payment in conjunction with the delivery of the first iteration of a system we have been developing to their specifications. While the system was delivered, our partner decided to extend the review and acceptance cycle, which meant we were not able to invoice for the delivery. This is a common occurrence when working with large product companies and especially common when they are considering a new, groundbreaking technology, which has the potential to be adopted across a variety of products. A similar situation befell us with the second top-tier opportunity we were tracking for Q4 revenue. The customer was planning a second quarter product launch, which would have triggered a meaningful order in the fourth quarter of last year to support preproduction and initial mass production manufacturing ramp. After substantive [ph] internal reviews of the original product design and functionality, the customer refined some of the specifications to enhance both the user…

Thanks, Steve. Before I get started, as you saw before market open today, we issued press releases announcing financial results for our fourth quarter and fiscal year ended December 31, 2018 along with the news of $25 million financing transaction through Roth Capital Partners. Summarizing our financial results for fiscal 2018, we recognized approximately $0.5 million in revenues compared to $1.2 million in revenue in the prior year, mainly from engineering services in both this year and in 2017. Revenue for the fourth quarter was $56,000 compared to $29,000 in the same quarter last year. As you’ve garnered from Steve’s comments, regardless of the size of the customer, the commercialization cycle is a lengthy and complex process involving many elements from engineering to commercial and regulatory issues. GAAP expenses for 2018 were $51.4 million compared to $50.5 million in the prior year. Underlying charges for stock compensation account for most of the increase over last year with only a modest increase year-over-year for underlying operating expenses, which I’ll highlight shortly. For the fourth quarter, total GAAP expenses declined to $12.6 million from $12.9 million in the third quarter but increased by $1.3 million over the same period last year's. This year-over-and and quarterly difference was also driven primarily by stock compensation charges. Net loss on a GAAP basis for 2018 was $50.8 million compared to $49.4 million in 2017. This equates to a $1.99 loss per share on 25.5 million weighted average shares outstanding versus $2.31 per share on 21.3 million shares weighted average outstanding last year. For the fourth quarter, our net loss was $12.5 million or $0.48 per share, compared to a loss of $12.6 or $0.49 per share in the third quarter. Compared to the prior year, fourth quarter’s net loss was $11.2 million or $0.50 per…

Thanks, Brian. I think, we’re going to go ahead and move directly to questions. So, operator, questions please?

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

Thanks. Steve, the delay in the strategic partners research R&D offset payment, given that we’re little over halfway through Q1, has that come in, in Q1?

No. Maybe to provide some more color on that, we have delivered the prototype on schedule. We were informed that due to internal changes within the company the review cycle would be delayed. We continued to work with the customer regarding this review cycle. They have the technology. We understand that they have tested it to some extent. We’re not in a position really to push back on this. As you can appreciate, when you're a small company dealing with a very, very large company, a very-large company, their priorities, their approach to the situation really dominates the way we engage and operate. So, it is our belief that this will be resolved and reviewed at some point in time. But, today, I cannot tell you exactly when that will be or how that will roll out. We’re very pleased with the technology that we’ve developed. We think it is really groundbreaking. But at this point in time, the ball is really in our strategic partner’s court.

The next question comes from John Always of WATT Investors Network. [Ph] Please go ahead.

We have a few questions that are we think germane. So, I’m going to jump right in. What’s the status of your contract with Energous.

It is my intent to remain as part of the company. We have -- I think we’ve had ongoing discussions with it. Quite frankly, it’s not been a priority. I am totally committed. I understand that there is a level of disappointment here now. I can only assure you that I believe very strongly in the future of the Company. I am absolutely totally committed to see that we realize the shareholder value that we have communicated as the potential for this Company. And so, while it's not -- the contract is not finalized, it’s not been a priority. But, as I said, I fully intend to see that the vision and the potential opportunity that we started working with four years ago is achieved.

Thanks. Given direction, foreign approvals, have there been any foreign regulatory approvals for at a distance?

There are -- there have been I believe two or three but not in the major markets. In particular, the Chinese, the Japanese and the Korean markets are really the gating items, and this is where we have been focusing the bulk of our attention. We believe that these represent the biggest obstacles, because our ability to leverage the FCC approval has met with limited response in these jurisdictions. These three jurisdictions have decided to do their own surveys and studies. And so, we have changed course where we originally were submitting Energous devices like we did to the FCC. We backed off of that strategy and are now engaging with top-tier companies in these respective jurisdictions to work with them to submit their own devices and indicate a national interest in seeing that these regulatory approvals are awarded. We are confident that the issue of regulatory approval for the rest of world is really an issue of when and not if. Our focus right now is on these three jurisdictions because we see them as the biggest gating items. And at the same time, our clear focus as a company is really on generating revenue and closing the gap -- the expense cap and rolling over to profitability. So, the real dominant focus of the Company internally is on near-term revenue opportunities to get us to the point of self sustainability. I know that’s long-winded answer. But, there were several points I wanted to communicate with that.

A little bit of follow-up on that, the regulatory approvals that have been obtained and are now being obtained, will they suffice for the GaAs and GaN chips or are we going to need another round of approval?

No, no. Again, the bulk of our effort has really been around contact, and that's where we have 111 countries that have been approved because that as I said, represents our -- the shortest distance to profitability and to significant revenues. The regulatory approvals are not chip-sensitive, if you will; they are technology-sensitive. So, changes in -- from CMOS to GaAs and GaN would not necessitate an approval in and of itself. It would likely though be in a different device. We are pleased with the results, the preliminary results that we’ve received on our GaAs and GaN technology. They are well within their regulatory limits. And so, we don't see a problem with this technology from a regulatory perspective.

The next question comes from Kevin Windsor [ph] of Oppenheimer. Please go ahead.

Do you have any approval to do any of the wireless charging that you show in all your videos, so where somebody walks into a room and puts their phone or watch down and can charge? Because that’s what -- I look to your website and it shows all these people walking into a room charging things wirelessly. But, what I’m hearing, you guys don’t actually have the approval to charge wirelessly. Could you just enlighten us on that?

Yes, Kevin. That’s not the case. The major announcement in December of last year for the FCC approval was clearly all about distance charging. It was a groundbreaking announcement because it really opens up the whole area of next-generation technology. So, we believe that FCC approval is -- can be leveraged across a broad number of jurisdictions. The troublesome ones that we have, I spoke earlier, is the complexities of the three Asian jurisdictions. At the same time, as I said, from a corporate perspective, we understand that revenue is really the validation point that our shareholders are expecting us to deliver. And as I said, the closest and fastest and most expeditious point to achieve that is through the contact technology. And that is where we have focused the bulk of attention, not only on development and customer funnel and customer applications but also from a regulatory perspective.

[Audio gap] answer my question. You go to your video on your website, it shows people walking into the room and putting their watch down on their desk and it’s charging that. Now, contact, I went to TJ Maxx the other day and they have dozens of contact chargers…

Kevin, I’ve answered your question.

Okay. Do you have a product that actually charges wirelessly that’s available right now? That’s my question.

We have -- do we do not have a product that after -- that charges wirelessly, when you say at a distance in the market. We have a number of engagements with customers who are developing products for that market. Again, remember, we do not sell products, we engage with customers to integrate our technology into their technology. We do have FCC approval, the most important regulatory agency in the world for distance charging, the ability to charge products or like your watch or like your wearable at a distance wirelessly. We have that since December of 2018.

[Operator Instructions] The next question comes from Raymond Vahaski, [ph] a private investor. Please go ahead. Mr. Vahaski, [ph] your line is open. Please go ahead with your question. Okay. We’ll go on to the next question, Karen Chasky [ph] a private investor. Please go ahead.

Can you please give us a status on the tier 1 that you’ve been talking about for the last several years? You really haven’t said anything about on this call yet.

Hello, Karen. I believe that the start of the call was really focused on our tier 1 strategic partner and the fact that we continue to work with them on the development of the WattUp technology. We were looking to have a substantial engineering services payment as part of the deliverable in the fourth quarter. And for internal reasons to base -- I mean, internal reasons -- excuse me, the strategic partner made the decision to elongate the cycle and delay the decision. So, we’re continuing to engage with the strategic partner. There has been no change other than, as I said, their decision for their own internal reasons due to changes in organization and operations within their company to elongate or delay the review cycle. And so…

I’m sorry to interrupt you. But, I saw that there were two top tier 1 customers, so to speak that you’re working with. And one of them is the one that you have a contract with, and this is supposed to be a very important top tier 1 partner. So, is this -- this must be the same one then that you were expecting sales from for the fourth quarter because again you are working with I guess at least two top tier 1. And I had thought that the last time you had the conference call that this one very special important top tier 1 that you were starting to look into putting your product into their devices that you had left the R&D stage and that you were now looking to actually putting your product into their devices. So, are you saying then that this special top tier client you are working with for many years that this is the same one that you were expecting sales from fourth quarter?

So, let's try and clear up some of the confusion. First of all, we’re working with a number of top-tier consumer electronic companies. We have a very-enviable position and that the strength of our technology has allowed us to engage with a number of top-tier consumer electronic companies. There are two in particular that occupy the top 10 consumer electronic companies in the world. These two are the ones that I referenced at the beginning of my remarks. One of them is -- we have continuously referred to as our key strategic partner. And we’ve been engaged with them for multiple years now. I do not believe that I have ever signaled that they have begun to integrate into their devices. I would not comment on that because I have never made any specific references to the status of integration other than the milestone deliverables that we have developed in conjunction with their specifications and requirements. I have always maintained that we are not privy to their integration, the details of their integration. And at the same time, we have no guarantee that they will integrate this technology at all, even though the relationship continues to move forward. That is the one key strategic partner with whom we were expecting a large engineering services payment, based on the deliverable of a next-generation system that we had built to their specification. But, as I said, they decided to elongate the review cycle, and that has not been completed today as we speak. The second company is also one of the largest consumer electronic companies in the world. And it was a different scenario where they were engaged in a product launch cycle. And in conjunction with that product launch cycle, we anticipated early chip sale that would allow them to begin the prototype and preproduction and early stages of mass production cycles necessary to carry a product into a full product launch. As I said, they made the decision based on their own research and market surveys that they wanted to add more functionality and enhance the product. And as a result, the launch has been delayed to the latter part of this year, which in turn delays the chip order that we’re expecting because there's usually a four to six-month delay in the time when we receive an order between the time that you actually see the products hit the consumer market. So, hopefully, that corrects your understanding. But, there are in fact two top tier consumer electronic companies, both of which changed their own schedules, not something that we could control, something that we have to deal with, but at the same time, we are very, very fortunate to have these relationships.

This concludes the Q&A session. I will now turn the call back to Mr. Rizzone for concluding remarks.

Since, there are no more questions, we would like to thank you for joining our Q4 earnings call. We very much look forward to speaking to you again in three months where we expect to report continued acceleration of the Company towards our primary goal of self-sustaining revenues, expanding our market presence and increased shareholder value. We understand that there may be a degree of frustration with our investors just as we are frustrated with some of the delays that we have experienced. However, we do believe that we are on a path to revenues which ultimately, I think are the key validator. We remain extremely confident and excited about the future despite these setbacks and look forward to reporting, as I said, improved results in the next quarter. Thank you and we’ll look forward to talking to you again then.

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