Good afternoon. And welcome to the Energous Corporation Second Quarter 2019 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 Investor Relations. Please go ahead.

Thank you, operator, 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 on the company's Web site. Now, I would like to turn the call over to Steve Rizzone, CEO of Energous. Go ahead, Steve.

Thank you, Mike. Good afternoon, and thank you for attending the Energous second quarter conference call. Brian Sereda, our Chief Financial Officer, is joining me today. As in past conference calls, I will begin with comments on the company's progress and provide a general business update before turning the call over to Brian for a financial update. We will then open the call to questions. As many of you know, two days ago, our customer, Delight, in conjunction with SK Telesys, announced that their Oasis-RC Personnel Sounds Amplification Product, or PSAP, is now available to sale on Amazon. The launch of the Oasis-RC on Amazon is a major milestone and validation point for our WattUp wireless charging technology. We have always noted that a strong leadership position in an industry is traceable to a few key elements with first to market being one of these elements. We are looking forward to additional products from partners coming to Amazon over the coming months as the launch of WattUp Wireless Charging 2.0 accelerates. We also saw the announcement this week from NewSound, a leading hearing-aid manufacturer based in China. NewSound will be launching a next generation hearing-aid at EUAH in Germany in October, with expected availability in the U.S. and Europe by the end of this year. As we've noted on prior calls, we're seeing very strong interest for our RF based charging technology in the hearing aid and PSAP markets, as our technology removes the major pain point for these types of product, that being constant battery replacement. In June, we announced the availability of a hearing-aid and PSAP developer kit, which enables faster integration for manufacturers looking to finally remove the chore of endless battery swaps by their users. Delight was the first to market. NewSound will be the second.…

Thanks Steve. As you saw at the close of market today, we issued our Q2 earnings press release announcing operating and financial results for our second quarter fiscal 2019, ended June 30th. Summarizing the second quarter, we recognized $48,000 in revenue compared to $67,000 in the prior quarter and $206,000 in the second quarter of last year. As Steve discussed, with two recent customer announcements, we expect additional customer releases in the company chip orders in the next two quarters as we complete final integration and production related work. Like all new ground breaking technologies, the first customers require a significant amount of engineering support, and we expect this to decrease overtime as the technology matures and knowledge base of RF wireless power transfer expertise builds at customers and other partners. In addition, the introduction of reference design, such as the recent one we announced and expected future reference design releases for a variety of vertical markets will also help improve future integration and sales cycle timelines. Total GAAP expense for the second quarter totaled $10 million, the lowest in over three years and approximately $1.2 million lower than $11.2 million recorded for the prior quarter, and $2.5 million lower than the same period last year. The decrease compared to the prior quarter and prior year is mainly a result of lower engineering cost and lower stock compensation expense. We expect this trend to continue through the balance of this fiscal year and potentially through 2020, with the bulk of the expensive ground up shift innovation behind us for the current generation of our core technology. However, we could see minor spikes due to chip take out costs, depending on production plan and direction from Dialog who will take up the operational aspects of order fulfillment. Leveraging Dialog's global operations…

Thank you, Brian. To this point, today's comments have centered around the fact that Energous is building a profitable business with its [Technical Difficulty] technology. There is more than enough opportunity and momentum for the WattUp Near Field technology in and of itself to drive a sustainable profit model for the company. It is important to keep in mind that distance opportunities are equally, if not more compelling, in terms of chip sales and potential revenue. The same WattUp core technology that is driving the near field market will also power midfield and far field. Our investors can expect to see distant product launches begin to layer on top of Near Field in the latter part of next year. This is what makes Energous so unique and compelling. We are the only company, the only company with a mature technology and a viable roadmap to deliver Wireless Charging 2.0 to the consumer across a broad spectrum, spanning contact through distance. I am sure we will continue to have skeptics who will have doubts about this technology and our ability to [Technical Difficulty]. But I am equally sure that with each passing quarter, we will demonstrate continuing and accelerating process to the end goal of being a wireless charging 2.0 ecosystem dominated by Energous. Operator, I will now take questions.

[Operator instructions] The first question comes from Ilya Grozovsky of National Securities.

Steve, the Delight hearing aids have been available on Alibaba's Web site, since the product launch, I believe six months ago. There hasn't -- obviously, given the chip volumes that you are reporting, there really hasn't been much traction on the product from the Alibaba Web site, which is very popular Web site. What gives you the confidence that them being available on Amazon's Web site is going to change some dynamic? Thanks.

Well, I think that there have been some traction and first of all, at the PSAP product, it's not a hearing aid product. And this is a whole new category of product. I believe that the primary driver or benefit is that the -- at least to Energous, is the fact that the product is now available in the U.S. for delivery to the consumer. And that is a major milestone that it's shifting to U.S. We're unsure of the revenue ramp as it relates to this -- until this -- until we start to see how the sales play out here. I think they've issued a very conservative forecast as this is their first adventure, not only into the PSAP but also into the U.S. market. And so I think the importance of Delight is the fact that we have a product now shipping and available to the consumer in the U.S. market. We expect that this will that these revenues will ramp from this customer. And we also expect, I think it's important that we'll begin to layer on additional customers. That's the important element. Each one of these product launches, as I mentioned, has a two to three year product life associated with it. They start small as you know and then may begin to build quarter-on-quarter depending on the success of the sales. But as we continue to layer in additional customers, you can expect to see the revenues we believe ramp, as I said, gradually to the end of this year and then accelerating into next year.

Shifting gears a little bit to the mid-range. I think you have said that you anticipate a mid-range roll out, product roll-out by a partner in the latter half of 2020. What type of a -- do you think that would be married to? Thanks.

I think that there are a number of possibilities. I think Smart Speaker is certainly one of them that we're seeing interest in. I think a standalone transmitter in conjunction with devices like hearables and the smart glasses might be another option. Again, there are a significant number, dual digit number of efforts currently underway with distance opportunities and how these unfold in the coming months will really determine which will be the first. Again, the good news here is that it's the same technology. The same chips that are driving the near field product are the ones that are going to be used in the initial launches of the distance technology. So it's a matter of application and product decisions and product rollout as to how and which will come out, which -- or what will come out at the end of next year.

The next question will come from William Gibson of ROTH Capital.

Steve, do you think there's a chance of any non-recurring engineering revenue this year?

I think there's a chance. I don't want to forecast it, certainly, because there are a number of variables that are coming into play here. Our focus quite frankly is on chip revenue, because chip revenue translates directly to product launch, and our clear focus is on chip revenue. I would see engineering services revenue is as possible. But I'm not prepared to make any kind of a commitment at this time as to if that will happen. And if so, what the magnitude or the level of this revenue might be.

And you mentioned potential IoT devices from a top-tier company. Is that a separate company from the two we talked about before your strategic partner, and then the second top-tier consumer products company that, whose products pushed out?

We were actually quite excited about our portfolio of top tier opportunity. It's expanded significantly and it continues to expand. And this category of customer reports has a tremendous impact potentially on our revenue ramp. Initially, there was concerns because the product launches that we're focused or targeting were global in nature. And as you know, the Asian regulatory certifications have taken longer than we originally anticipated. Fortunately, we now identified a number of applications and opportunities with top-tier companies, and they are realigning their launch focus on a regional basis, covering the U.S. and the EU, as the primary drivers for their product launch decisions. And so, we have a significant number of top-tier opportunities. And as I said, we think it is highly likely that at least one will commit to a formal product launch with initial product or chip sales hitting before the end of this year.

The next question will come from Jon Hickman of Ladenburg.

I was wondering if you could -- I don't -- maybe you don't want to answer this question. But is there any frustration building with the fact that the progress has been limited with your strategic partner?

Well, I don't think it's a question of frustration. Anytime you're dealing with very, very large companies, there are always issues that crop up, there is the changes that are made, so on and so forth. I don't think there's a level of frustration, because as I said, the changes are not product or technology based. And the fact that we are seeing very significant interest and have a significant number, high single digit of top-tier companies that are interested and active in their engagements in the technology. Again, I think is really what is caused for optimism internally. Would we like things to happen quicker? Certainly. Have we been disappointed in some of the directions and the movement? Absolutely. And if this were involved, or because of the viability of the core technology, we would certainly have concerns. But that is not the case. The core technology is solid. The applications are real. We're now shipping to consumers. And so any question of viability, hopefully, will have been answered. And as I said, there are a number of top-tier consumer opportunities, both contact and distance based that we're actively engaged in. They'll certainly take longer than our second-tier opportunities typically, because of their product cycles and distance cycles. But as we begin to layer these things on, again, we are optimistic and confident in terms of the roll out of this technology, the momentum that's being built and the fact that we can build a very, very profitable and sustainable business.

I have one more. As you mentioned, you expect some other product announcements later this year. Do you think you'll be able name-names, like you've done with Delight and…?

Yes, I think we'll be able to name-names. And as I said, I think you'll see additional markets start to kick in. We see smart classes as a very, very interesting market for us. Hearing aids and PSAP, we're really establishing a very significant position in these markets. Wearables and medical sensors, all of these markets I think that we'll have announcements in the coming months in terms of actual customers participating in these markets.

And this concludes our question and answer session. I would now like to turn the conference back over to Steve Rizzone for any closing remarks.

Thank you very much for your attention. As Brian said, we want to thank our investors for your patients as we continue to drive the company forward. Certainly, it has taken us longer than we thought. But I think that we've now reached an inflection point where we have customers that are shipping product to the consumer, which should eliminate any concern about viability of technology. And we are extremely confident that we are now on a path of continuing advancements in revenues and additional customer placements. And so I believe that each follow on quarterly call is going to be able to -- we're going to be in a position to announce better results and aggressive movement as we continue to roll out wireless power 2.0. So thank you again. And we'll look forward to talking to you all in three months.

Thank you. The conference has now concluded. Thank you all for attending today's presentation. You may disconnect your lines. Have a great day.