Energous Corporation
Q3 2014 Earnings Call Transcript

Published: 12 Nov 2014

[Operator:]

Good day and welcome to the Energous Corporation Third Quarter Update Call. Today’s call is being recorded. At this time, I would like to turn conference to over Mr. Matt Hayden, Chairman of MZ North America. Please go ahead, sir.

[Matt Hayden:]

Thank you, Lisa. Good morning. We like to thank everyone for joining us today for Energous Corporation’s third quarter update call. Your host today will be Mr. Stephen Rizzone, Chairman, President and CEO. The press release detailing the quarterly update crossed the wire yesterday afternoon and is available on the company’s website at energous.com. We can also find additional information on the company. After management’s prepared comments today, we will open the floor for your questions. Before we get underway, I would like to ask everyone to take note of the Safe Harbor paragraphs in the press release, also appears at the end of the financial results issued yesterday afternoon. Any forward-looking statements that may be made today speak to the date thereof and are subject to inherent risks and uncertainties included in all of our filings with the SEC. Except as otherwise required by federal securities laws, we disclaim any obligation or undertaking to publicly release updates or revisions to forward-looking statements contained therein or elsewhere to reflect changes and expectations with regards to those events, conditions, and circumstances. At this time, I would like to turn the call over to Mr. Rizzone. Steve, the floor is yours.

[Stephen R. Rizzone:]

Thank you, Matt. Good morning. I would like to welcome everyone to our third quarter update call. Joining me today are George Holmes, our Senior VP of Sales and Marketing; and Howard Yeaton, our CFO. Before we get into the details of our third quarter performance, I would like to take a few minutes for those of you who maybe new to Energous and talk about our revolutionary, patent and trademark pending solution that delivers intelligent, scalable power via the same frequencies as a Wi-Fi router. We call this technology WattUp. WattUp is a wire-free charging technology that will transform the way people charge and power their electronic devices at home, in the office, in the car and beyond. WattUp differs from current wireless charging systems and that it delivers meaningful usable power at a distance allowing users to roam while charging all controlled through a robust software platform. The result is a wire-free experience that saved users from having to remember to plug in their devices or place them on a mat. Energous is pursuing a licensing model and form relationships with 12 companies, several of them major global players quite we’re expecting will incorporate WattUp transmitters and receivers into a myriad of consumer facing products thus creating the initial ecosystem for future WattUp commercialization. Now, I would like to dive into the overall status of the company and comment on some of our exciting progress. In November of 2013, just after joining Energous, we put a business plan together, which was shared on the IPO road show in February and March of 2014. We thought to identify the important milestones for our investors to gauge our progress during the coming year. One of the most critical milestone surrounded Energous’ ability to engage with strategic partners. As a licensing company, engaging with strategic partners, who build products for the consumer, is absolutely essential to the adoption of our WattUp technology, our revenue trajectory and ultimately the overall success of the company. We laid out what we considered would be a successful 2014 in terms of strategic partnerships. We thought we would first be able to first attract early adopters OEMs and ODMs from Asia, who build products and components for the major consumer facing companies and are looking to differentiate from one another. We would then engage consumer facing companies directly. Finally, in two to three years, we would partner with silicon companies, as they are typically slower to react and adopt. As we have mentioned on prior calls, silicon companies are the key to ubiquity as getting our technology into Bluetooth and power management chips that are all already integrated in a number of consumer products. It’s a broadest least expensive of way of integrating WattUp into these front. Out coming our priority occurred at CES in January 2014, and after gauging the interest level from the major players of that event. Our team knew we had something very special in terms of technology, which was meeting a market opportunity with the major (indiscernible). From that point through to today, we have been pleasantly surprised by going through our initial expectations and currently have more interest from companies who are interested in incorporating WattUp into their products, subassemblies, silicon, then we can support. We have over 100 active partner engagements, let me repeat that. We have over 100 active partner engagement with the veritable Who’s Who in consumer product companies, chip manufacturers, OEM and ODM. I would now like to turn the call over to George Holmes, who will provide you with details on the development of our WattUp demand ecosystems and our progress on our joint development agreements as well as our progress on the regulatory front. George?

[George Holmes:]

Thank you, Steve. As Steve mentioned, we laid out our development plan in late 2013. We begin by focusing our reference on smartphone accessories, wearables, and transmitters. As it means of it to ensure the level discipline on our customer engagements. We were focused on signing tier 2 players that we felt had a strategic significance because of their partners, channels, product focus and those were nimble fast moving early adopters as the right strategy. Our plan once the initial partners were secured in the technology and market model validated is to focus our efforts on the tier ones in each of these segments. Our plan for 2014 was 2 to 4 JDAs in total and segments identified. Additionally, we felt the long-term validation and success of our model will be driven by our engagement with semiconductor companies. We felt we should engage early, but wouldn’t be interested in partnerships until they have seen market validation and volume growth for at least two years. What we witnessed has been a strong market demand from all corners of the mobile and battery power devices market. The demand has been impressive and even quite overwhelming. When Global 100 players are contacting you directly, it confirms that you are doing the right things. So let me give you an accounting of what we’ve done up until today. In Q2, we announced relationships with router manufacturers Hanbit and Pocons, better manufacturer Dong-Hwa. In Q3, smartphone accessory engagements with Anymode, iPowerUp and a large Asian consumer electronics company, wearables engagements with a niche wearables player, semiconductor engagements with Dialog and a large U.S. power IC company, in the battery segment with a company called Highpower. Since October 1 or the beginning of Q4, we’ve announced engagements with power router companies, Haier and SK Telesys and we will soon be announcing relationship with a wearable company. What the agreement signifies is not only we have been able to meet and truly exceed our original objects for strategic partnership engagements like greater than 200% we’ve also been able to secure relationships with key Tier 1 consumer product companies and semiconductor companies. While these agreements in and out of themselves are exciting, we still have a very strong funnel and are currently engaged with a variety of different levels with greater than a 100 companies as Steve just mentioned. Our challenge remains focused in prioritization, but we also need to be intelligent and should we don’t miss the next big opportunity to keep our first mover advantage intact. Let me also give you a brief update on our regulatory progress. In Q3, we expanded our regulatory team to include Hans Mellberg. Hans joined us from BACL, one of the major telecommunications certification bodies [TCBs] (ph) where he was the CTO. He was also responsible for their FCC, TCB, their IT in Canada, their MIC in Japan and the OFK in Hong Kong, as well as the CE European agency certifier. Hans is leading our regulatory team and is assisted by Chris Harvey, one of the leading experts in the field of SEC certification. In Q3, we conducted tests on our early prototypes, which is designed to help us with our test development and planning, which was very successful. During the course of Q4, we will be back in the labs to continue testing of our solution and expect to be able to obtain certification for our receivers perhaps as early as the end of this year. We are very happy with our progress. And through our engagements with the regulatory bodies to date, we have received no showstoppers that would stand between and us and complete certification in 2015. Following the data would be helpful, walk you through our case studies, show you the steps involved in transition from a JDA to a licensing agreement and then through commercialization. This will give you an idea of the resources, deliverables required from Energous. Since our partners will take the commercialized and the associated timelines (indiscernible) component partner and even according to the product verticals they are going after. The processes is as follows

[Howard Yeaton:]

Thank you, George. As you saw at the close of the market yesterday, we issued a press release announcing our operating and financial results for the third quarter ended September 30, 2014. Our net loss for the third quarter of 2014 was $5.8 million and net loss for the nine months ended September 30, 2014 was $36.6 million. The nine-month loss included a $26.3 million charge for the change in the market value of derivative liabilities and a $2.1 million gain on debt extinguishment, all related to our Q2 and prior financing events. Adjusted EBITDA was negative $5 million in the third quarter of 2014, a negative $9.5 million in the nine months ended September 30, 2014. We believe adjusted EBITDA provides useful information to investors by providing a more focused measure of operating results. To provide some more detail on our expenses, we spent $3.7 million and $6.2 million toward R&D for the three and for the nine months ended September 30. Our G&A marketing expenses were $2.1 million or $5.2 million for the same three and nine-month periods. We have been expanding both our senior and development teams of engineers, as we aggressively pursue our growth strategy. In terms of cash flows, during the nine months ended September 30, 2014, net cash used in operating activities was approximately $8.5 million. Net cash used in investing activities was $0.08 million and net cash provided by financing activities brought in $25.8 million. Turning to the balance sheet, we ended September 30, 2014 with $18.4 million in cash and cash equivalent with no debt outstanding. We tend to use our cash principally for research and development, product certifications, and sales and marketing efforts. At the end of September 2014, we moved into our new office and lab facility in San Jose, California. As of end of the third quarter, we had 23 employees and 18 consultants. Steve, let me turn it back over to you, now.

[Stephen R Rizzone:]

Thank you, Howard. Let me provide you with some additional updates on the company. We met our initial objectives for integrating our discrete components used in our second generation demonstration prototype transmitter and receiver into application specific integrated circuits, otherwise none ASICs. And we have either tapped out or we are above to tape out our second generation transmitter and receiver ASICs. Another major objective for the company was to sell prototypical consumer facing product at CES show in January. We are on target to meet this objective. I’d like to note that we will be holding an investor night at CEF on January 07, 2015 from 5

[Operator:]

Thank you, sir. (Operator Instructions) And we will take our first question from Brett Conrad from Longboard Capital.

[Brett Conrad:]

Good morning, good morning.

[George B. Holmes:]

Good morning.

[Stephen R. Rizzone:]

Hi, Brett.

[Brett Conrad:]

Hi, good morning, George. Good morning, Steve. Question on the JDAs, your pipelines super impressive you got a 100 people I realize its lot of work congratulations on that. Your ability to scale seems pretty dependent upon your ability to find quality experienced engineers. So I’d imagine your move to San Jose is making that easier, I’m just interested in how hard it is to find people to scale up and has that move helped things is the word out buzz in the valley that you guys are on to something, so you got people contacting you or is that just so competitive there that it’s difficult to find anyone for any project.

[Stephen R. Rizzone:]

Well, yes. I think there are some significant factors that have positively impacted our ability to recruit what we want in terms of a world class team. First, we moved from what was considered a geographically undesirable place in Pleasanton to the heart of the Silicon Valley. We’re on North First Street in Tasman were right off the light rail and look to – we spend considerable time looking at the geographies of Silicon Valley and to commute ray – the commute route and a place the corporate headquarters strategically right in the center in a very, very effective commute route surrounded by the types of engineers that we are looking to recruit. I think second thing that’s positively impacted us is the hiring of our Senior Vice President of Engineering, Cesar Johnston. Cesar is a beacon. He is well experienced in the valley, he has great contacts and as a result in a very, very short period of time, he has been able to bring a number of what we consider to be world-class people into the company. We’ve literally doubled the size of our engineering team since we’ve been here. We made four additional offers yesterday. And so I think we’re gaining significant traction. Also the words kind of getting out above the opportunity, it’s an exciting opportunity at a very, very early stage and engineers that come on board with this now have the ability to really do leading edge work. They also have the ability to come in early and contribute on a daily basis and make an impact. And finally, I think the other big advantage that we have is that while we are a small company, we’re also a public company. And since we are a public company, the RSUs that we provide as part of our equity package are liquid when they vest. And so, this is a very significant recruiting advantage and we found that the momentum has really started to shift in our favor. We expect to be able to fill the necessary requisitions for our engineering teams as well as our support teams and our application engineering teams. And so, again, while it was a bit of a slow start, we’ve really gained momentum and are very, very pleased with the progress that we’ve made and also believe that we have the ability to continue to hire the necessary resources as the requisitions become available.

[Brett Conrad:]

Okay, great. And then just in terms of timing for actual product releases saying about 11 months from now given that where you guys are with the ASICs and the rate of development with these partners. What’s your take on that? Is that still pretty much on schedule given that you will have regulatory clearance as well? And is there any – in terms of regulatory clearance globally, is there any – do you think there will be any issues in other countries? Or do you think once the SEC files then the other countries are extremely easy after that and only be a few weeks or does that take months or years or just kind of give us a little bit of color on that?

[Stephen R. Rizzone:]

Let me – there are two questions there. So let me answer the first on the products and then let me turn it over to George to speak to the regulatory issue. On products, our stated objective is to have consumer products available in the fourth quarter of next year. And as I said earlier in the remarks, I think we’re on target to do that. And then we’ll see those products continue to ramp obviously in 2016, but we want to get this our early products into the hands of the consumer as quickly as possible because as we said all along we believe that once the consumer sees this true wire-free solution and understands the utility of this solution that there is going to aggressively a demand adoption of the technology. And again, so our objective as I said is the fourth quarter of next year. George, do you want to touch on the regulatory piece?

[George Holmes:]

Yes, let me do that. So on the regulatory front, well, I mentioned earlier, we have a great trajectory and meetings we’ve had with the FCC, they’ve gone extremely well. So, not having any showstoppers from them just really puts us in the high reward category, we believe. So that really does bode well from a regulatory perspective here in the U.S. But you mentioned overseas, each country, each market you go into has its own regulatory environment. In most cases, they heavily rely on the FCC and UL as underpinnings of their own internal specifications, but they all have their own. So it’s key that you have strategic partners in those markets. So, for example, the announcement of the [hire] (ph) in China very, very important. They are very tightly coupled with the regulatory agencies in China, and will basically be in charge driving that through the regulatory process with our support. All of our partnerships in Korea, were clearly were to support us in that market as well. SK Telesys, in particular, is very tightly coupled to the regulatory body there and having companies that are in the telecom space that really understand that regulatory process is going to be key. So each market has its own requirements. The FCC and UL are big anchor points for that, but we’ve basically chosen our strategic partners in those new markets. We’re trying to address based on their ability to actually help with the certification process. And then clearly we have worldwide partners, so they can work that those issues in the markets that they’re trying to serve.

[Brett Conrad:]

Okay, great. And just one…

[George Holmes:]

That helps?

[Brett Conrad:]

Yes, that helps a lot. One quick last question. Are you getting interest from laptop and computer makers to embed the transmitters in laptops? It seems to make sense to me just the way people are doing.

[George Holmes:]

Keep in mind there is two pieces of the puzzle here for us

[Stephen R. Rizzone:]

Again, our focus is 10 watts or less the market opportunity that we have with this focus is huge and difficult really to get our arms around, and the computers of course, are significantly greater in power. The other key issue for us is portable versus mobile. Computer is portable, it once you set it down, you’ve typically don’t move it. And our big advantage is with for mobility and so again the two elements of the market that that we work with and are really focusing on a 10 watts or less, and mobility or the mobile markets.

[Brett Conrad:]

Okay, great. Okay. Thank you.

[Stephen R. Rizzone:]

You’re welcome. Thanks for the question.

[Operator:]

We go now to Quinn Goldman with Park City Capital.

[Quinn Goldman:]

Hi, guys. A couple of questions, Steve can you just talk a little bit about the capital rates and expectations for timing there?

[Stephen R. Rizzone:]

I really can’t, I’m precluded from speaking really in anymore details then we give out already. The only thing we can do is talk about in all our plans and what we’re considering, and any details will have to wait until the registration is filed, I can tell you that, if we do, I like to do this is I said it will be a public offering and we will file a registration statement.

[Quinn Goldman:]

Okay, but what about timing for filings.

[Stephen R. Rizzone:]

I really, again, I’ve been very specific – I’ve been even very specific instructions and in terms of what I can say and until there is a filing, if there is going to be one, until there is one I cannot really make any comments that all about timing, size, anything along those lines.

[Quinn Goldman:]

Okay, fair enough. What’s the sound like you trying to be for active here and getting for in a competition? So maybe can you just dive a deeper, in terms of the opportunities that you see that additional cash can really help you attack?

[Stephen R. Rizzone:]

Well, as we said we have – I’m sorry.

[Quinn Goldman:]

I’ll just say the anything different along the lines, what you guys are currently doing, I mean what are the other kind of touch points you guys could see the need for this cash for?

[Stephen R. Rizzone:]

Well, it’s an acceleration of what we’re doing now. I mean we’re engaging with partners, we have a process, a very specific process that we go through the George alluded to that starts with the generation discussions moves to the GVA – JDA and then we go through the licensing and commercialization. So we have a specific process. And while there are some common elements especially at the beginning, each one of these relationships has unique elements to it. And so there are resource requirements from a development perspective, there are resource requirements from a support perspective as well as the continued core development of the technology for the commercialization purposes and the regulatory efforts. And so really it’s a matter of cycles. It’s not so much a matter of invention; it’s just purely a matter of how many cycles we have. And right now we just do not have enough people and enough cycles to put on the opportunity. The money that we’re talking about here would go to expanding our resources and accelerating our ASIC effort. The ASICs of course are the key to the commercialization. And so that’s where we would make the investments. And so, it’s an acceleration of what we’re doing now. We can see, as I said, also the potential expansion into some new markets. We’re very, very focused on smartphones and tablets and accessories, but the additional capital would also allow us to expand into toys and batteries and some other markets that we’re looking to get into And so, it’s an investment strategy to fully capitalize on the opportunity and to maintain our position as a leader. I mean the time to do this is now. The time to accelerate is now. The wire-free charging is getting a lot visibility. You’re seeing more and more about it in the press. It’s gaining some solid traction. Major companies are looking at this. And so, the time to be industry leader and to capitalize on our first market opportunity is now and that’s – again that’s the reasoning behind the intent to consider raising additional capital.

[Quinn Goldman:]

Okay, Steve, I appreciate that color. And maybe lastly would that accelerate revenue – a go forward revenue, I know you’ve talked about or the guidance were the kind of backend of next fiscal year or next calendar year…

[Stephen R. Rizzone:]

No, no, it would not accelerate revenue. It would expand our strategic relationship and accelerate commercialization for second and third generation integration that we’re looking to. But it would not – the earliest that we will see revenues is some small amount of revenue at the end of the next year ramping significantly in 2016.

[George Holmes:]

I’ve got another little bit of color here and the real thing from a customer acquisition perspective that is important. We announced two weeks ago, the relationship with Haier Wireless, this is a great example of an opportunity that we don’t want to have to walk away from. This is a company that came in at the end and has been pushing us very, very hard to work with them and get engaged. I mean, we have – we’re 200% over quarter as it were based on our plan, as it relates to customer engagements, companies like Haier create tremendous opportunity to create the ubiquity that Steve has talked about in the past. And there these Tier 1 companies like that that we continue to be pursued by that we want to have the ability to execute and deliver on the solution that they are looking for, because it will expand the footprint and that’s really what we are trying to do here.

[Stephen R. Rizzone:]

Keep in mind where we started from also when we went out on the IP roadshow – IPO roadshow in February and March, we talked about standalone transmitters and connecting to battery backpack. At the CES show in January, you’re going to see transmitters now integrated into the vessel of a television, standalone speakers, speaker bars. We are talking to Haier about incorporating transmitters in refrigerators. And so, as you can see this is just kind of snowball in terms of our original thinking and the opportunity that’s been brought to bear here. And so, as I said, it’s something that if we don’t capitalize on it, given the momentum of the market, somebody else may well do so. And so, we want to ensure that that doesn’t happen, we want to maintain our position of market leadership and capitalize on these opportunities and establish a very, very broad-based acceptance leading to our objective of ubiquitous solution.

[Quinn Goldman:]

Okay, great. Thanks for the color guys.

[Operator:]

We will take our next question from Lou Basanese with Disruptive Tech Research.

[Lou Basanese:]

Hi guys, it’s a couple of quick questions. You are talking about the reference design for CES, can you just give as an idea of how many reference designs do you expect out of those 12 JDAs to be at CES.

[Stephen R. Rizzone:]

To be clear what we’re doing at CES, these are validations of the technology with our strategic partners, some of them are going to be bringing their own products. Mostly in the case area, many of the companies are coming with industrial design to what future transmitters will look like. Most of them are using the platforms that we’ve worked on with them and we’re demonstrating that we’re building here for them to demonstrate and use internally. So it’s a combination of those different aspects. And as Steve described, we’ve been asked to build four major platforms and those are the ones that we’re focused on for CES and then a multitude of receiver-based technologies. So, four different manufactures of cases, a couple of different manufacturers of wearables we’re doing, as well as some other demonstration of wearable designs. So it’s a combination of both, but it’s lots of activity and a lot of what’s going to be happening here over the course of the next four to six weeks is the collaboration up to CES to make sure that we’ve got story lines and basically demonstrations for each of these companies. What’s happening for most of them is they’re actually singing up to bring their customers to our suite over the Hard Rock. So we’ve given time slots to each of our partners and allowing them to book demonstrations for their customers at our suite, so they can see the full functionality. Because in any case even with a given OEM or ODM partner they have a single point solution. What we’re demonstrating at CES is more of a wireless home, so a fully integrated solution. So that’s really where they want to bring their partners to and their customers to, to see the demonstration.

[George Holmes:]

One other quick point I’d like to make on that is not only are we going to be demonstrating the prototypical devices, we’re going to be demonstrating a very, very robust cloud-based software management system. This is becoming more and more of a factor with our strategic partners, the fact that we’ll have mobile apps available for demonstration purposes at the show to be able to download our interfaces that will be demonstrating a cloud, an enterprise cloud capability and the ability to interface with third-party management and billing systems. And so, again, not only will this be a demonstration of the prototypical devices themselves and also a significant demonstration of our whole software architecture and capability, which is, I think, a very compelling element of our Total Package solution.

[Lou Basanese:]

Yes. So I just wanted a good range across the lot. I appreciate that color. One other quick question. Excuse me if I got the line item number wrong here, but I think it was about $3.6 million in R&D spending. Is the majority of that related to work on the reference to designs? And more significantly, is that spend being matched by your JDA partners? Are you seeing them invest similar resources, any color on that?

[Stephen Rizzone:]

The bulk of the investment is on our end now because we’re still developing the technology. As this begins to rollout and move from the initial prototypical devices to commercialization, the burden shifts to our strategic partner. So the investments that we’ve made are in two categories. One is in the core capability itself, which of course is transferrable across the entire range of our opportunities. And then the second category is for the prototypical devices themselves. And as I said, the majority of investment for these is on our end initially and then as we pass CES and move into the commercialization phases in 2015 that burden rests with our strategic – the majority of that burden will then rest with our strategic partners.

[Lou Basanese:]

Okay. And then one last question, we’ve got time probably for George on the regulatory front. Can you just give us some more color on what’s involved with Part 18? I think there is just some questions about whether its SAR ratings versus interference? I know you mentioned in the prepared remarks that you’re very confident in complete certification. But can you just give us some more color and why you are confident in relation to those.

[George Holmes:]

Yes, it’s a couple of things. And let’s say, we’re not confuse that you have Part 15, which is the interference back of Part 18, which is a large part safety. And then you have SAR. You also have CEC testing. So as we go through the process, I think as we’ve stated in the past. Part 15 is very, very predictable. There is very well-defined spec. We could actually go through and get ourselves certified to be a self certifier of that specification. We’ll have what we believe kind of early indication maybe even approval on our receivers for Part 15 this year. From a SAR testing perspective that’s kind of one of the anchor point for safety. It’s the anchor point for cellphones and tablets and other transmitting electronic devices. We’ve already done reference sample testing of SAR, working with the local labs. We’ve got a great trajectory on that. So when we look at the SAR testing, have a plan, execute a plan, we didn’t see anything that would show stoppers when we went through and did our initial testing. That testing will take longer. It is something that will take a little bit longer to complete and probably happen sometime in the first half of next year. Because we’ll be doing it with multiple devices and it has to be end-to-end and then we’ll also be showing a variety of different applications that we have to get certified. On part 18 it’s developing the use case and the test methodology for the entire end-to-end system. And so what we did and what you have to do is you clearly – the first thing you do is, you can’t throw it over the valve about and just throw your request into the FCC, smart money as you go meet them, meet with the OET, the office of engineering and technology. You get all of their key thought leaders in the room which we did. You explain to them what your technology is, how you’re planning on testing it, and what your methodology for testing is. They either give a, hey, we’re really concerned or, okay, we understand. We will like to see you take the next step and move this forward, so that we can work with you. We got the ladder. We have a very collaborative working relationship with the OET. I think that’s in large part to the team we have on board. And so we’re going through the process, I mean, we have some work that we have to do as it relates to filing people work with them, which we’re going to be doing over the course of the next couple of months. Once we do that we’ll be meeting with – the likelihood we’ll meet with all the commissioners at CES and give them a real live demonstration. And then that will really be the kickoff to the deep intense work that we’ll be doing with them in the first and second quarter, which will be to complete our test plan and then conduct testing. And so, it is a process. First things first as you go, sit down with them and make sure that there aren’t any gadgets, which are really preexisting indications that they’ve made for other technologies and that they want to impose on your technology. We got none of those when we met with them and now it’s just a matter of working through the process. And we’re going to be publishing a paper on our roadmap for regulatory here in the coming weeks.

[Lou Basanese:]

Okay, great. No, I think that’s great. I appreciate it.

[Stephen R. Rizzone:]

Yes, no worries.

[Operator:]

And we’ll take our next questions from Daniel Amir from Ladenburg.

[Daniel Amir:]

Yes, thanks for taking my call. So I had one question here. With regarding to the regulatory with JVs that you’re signing, how much of these companies have a certain knowledge of the process? Is this a major concern of theirs with regards to the FCC approval or they just have a high confidence level that this is already approved? They’ve done the due diligence and they just think it’s a matter of time given that they’ve signed these agreements with you? Thanks.

[Stephen R. Rizzone:]

No worries. Daniel, so I mean fundamentally one of the first things we’ve do when we sit down with these JDA partners is we talked about our regulatory plan. All of these companies being consumer electronics companies themselves, have gone through this process included with the big consumer electronics companies this is what they do every day, because every product they put in the market as to go through FCC or UL certification. And so it’s a process, they want to make sure that we understood the process, that we had a plan, they want to make sure that there weren’t any holes in the plan. And basically everybody we’ve met with up to this point has approved our process that we’re going through to they read that they have signed a JDA with us. So that’s one of the first things they look at, it’s one of the first things that they asked us questions about and they know for well that once we get through our process and they integrated this technology into theirs’, they have to go through and capitalize on our approval to get their products approved. So I think it’s a good leading economic indicator the fact we’ve have 12 companies, four of which are global power [balances] (ph) that have looked at this technology, understood our roadmap, understood our regulatory plan and know that once we get through with that, they are going to go through and do the exact same thing. And they feel confident about it.

[Daniel Amir:]

Okay great thanks. Thanks for the clarification there, I appreciate it.

[Operator:]

And we’ll take our next question from (indiscernible) EMC.

[Unidentified Analyst:]

Hello yes my quick question really is more around the installation of the product often seem that there is a few difference from competitors out there developing similar product such as (indiscernible) you all are aware of that. I just want to know what are your differentiation strategies coming up and what would you plan to do if they are planning on releasing their product

[Stephen R. Rizzone:]

Well, hi [Clarins] (ph) thanks for the question. First and foremost I think we want to start off by saying we’re very excited that we’re seeing folks like Coda, and Ubeam and others enter the uncoupled wireless power market, because it’s for their validation that that is a segment that is really what consumers are looking for, having the ability to move around and charge we do believe this going to be fundamental, to getting real deep consumer adoption. But I here’s the thing, we had at this for about two years now we have a product that is very close to begin fully commercialized, its small, its compact, it does what it’s targeted to do. We look at that comparatively to our competitors, specifically the two that you mentioned. And they are great companies and they’ve got a opportunity ahead of them, but they’ve got a long way to go to catch up to where we are. I mean if you look at the transmitters that they demonstrate either on their Youtube videos or in person, they are much larger, they are a long way from commercialization. They’ve got some challenges ahead of them. And just like every company, they’ve got a lot of work to do to get from where they are to where they want to be. I think for us we are very mindful of these companies. We watch their behaviors in the marketplace, most importantly we watch with our customers and to see if they are looking at those technologies and comparing us to those technologies. And so far every JDA that we’ve signed, they’ve evaluated the other competitors both (indiscernible). And at this juncture, the JDAs have been signed with us. We’ve got to do – as Steve said, we’ve got to do everything we can do to keep our first to market advantage and to keep pressing this technology forward aggressively and quickly because that was in the details and it’s not what you know, it’s what you don’t know they get you. And we’re always looking of our shoulder and making sure we understand what our competitors are doing, but today, I think we have a clear market advantage. And from a technology implementation perspective, I think we deliver on the promise of true mobility while charging better than anybody in this space at this point. Steve, any comment?

[Matt Hayden:]

No, I just think that this is again reaffirmation of the – our intents to accelerate the company. We do have – and this doesn’t come from us. This comes from our strategic partners and also from the potential strategic partners that we engage with. It’s their job to understand the market to understand the status of technology and the space that we occupy. And they’ve made it very clear to us that we are the only real technology that’s ready for prime time from a commercialization perspective. We’re just an awful a lot of do from – moving from an experimental stage when you’re demonstrating a technology to positioning it from a integration and a cost and a testing and validation and replication perspective and commercializing it. And so we understand full well firsthand all of the issues and problems associated with that. And so our strategic partners and potential strategic partners have told us that we have the clear lead and this is something as I said that we really want to capitalize on we believe that a first move in market advance this year is very, very significant to lay the groundwork for the ubiquitous solution that we want to move forward into a combination of a Wi-Fi router and power router in the not too distant future and again to work with silicon companies to provide the technology in the form of chips that are integrated in all sorts of devices. So again, a lots to do but we’ve got a clear advantage where we’re ahead in the marketplace and we intend to maintain that advantage. Does that answer your question?

[Unidentified Analyst:]

Yes. Thank you very much. I appreciate it.

[Operator:]

We’ll go now to John Shaw, a Private Investor.

[Unidentified Analyst:]

Good morning. Can you give me a little bit more detail to drill down on the partners roll and financing the development? When you talked about burden shifting next year somewhere between January and full commercialization, but what is that actually look like? When does that actually start to begin? And do your JDA partners – is there any exclusivity provision in those agreements?

[Stephen R. Rizzone:]

None of the agreements at this juncture have any exclusivity to them nor do they have any claims on the technology, part of the reason we have chosen to fund the development of the technologies, we complete the technologies, we don’t want to have any overwriting – overbearing rights given to any of our partners. So we are carrying the load on completing the development. They are investing in their own products as they will integrate the technology into. We have some partners that are further ahead in that and you’ll see them demonstrating either a proof of concepts or actual real product at CES. We have some customers that are waiting on the demonstration at CES to make the full blown investment to move forward. So there are different stages of the engagements, but clearly if we look at the different partners that we have and the amount of funding that will be required for them to go develop products in and around our technology will be significant and we expect that to start in Q1 and in Q2 of next year.

[Unidentified Analyst:]

Thank you.

[Operator:]

And we’ll take our final question from (indiscernible)

[Unidentified Analyst:]

Hi, guys. How are you doing?

[Stephen R. Rizzone:]

Good.

[Unidentified Analyst:]

Hello…

[Stephen R. Rizzone:]

Yes, we’re hearing, go head.

[Unidentified Analyst:]

I want to go back to part 18. Do you guys feel right now that your complaint with part 18 or that you’re going to be have to ask some sort modifications waver or something for part 18?

[Stephen R. Rizzone:]

No, we do not expect to have that’s for waver on part 18.

[Unidentified Analyst:]

I don’t mean to waver of the entire (indiscernible) but I mean some of sort of modification. Do you think your existing technology as you guys are developing it right now? You think it meets all of the standards of part 18?

[Stephen R. Rizzone:]

There isn’t in all of the standards of part 18. Part 18 is a very loosely defined set of standards. So what you do when you go through and go to get certification under Part 18. You can ask for a rule change, which is a long run out process. We don’t want to ask for a rule change and the commissioners that we met with at the OET don’t believe a rule change would be required. They believe KDB would be required and that’s what they’ve asked us to participate in. That’s the standard process by which you get approved under it. Part 18 is submitting a KDB, which defines your use case, defines how your products will be used and how you intend to deliver them to consumer and that’s what we’re working on right now in collaboration with the OET.

[Unidentified Analyst:]

Okay, great. Now I assume that before any product comes to market obviously you’d have to have all regulatory approvals. And assuming the Part 18 is not received until – I think you mentioned it could be as late as sort of the second half of next year. Is it reasonable to have products sort of ready for Christmas, the lead times and so forth, if Part 18 wasn’t received until sort of late in the quarter, second quarter of next year?

[George Holmes:]

Well, I can tell you that history is kind of on our side in that regard. If you look at all of the major consumer electronics companies, they tend to go back and forth with the OET up until the time of shipment and product hitting the shelves. You’ll only have to have Part 18 certification by the time the product is on the shelf. We do believe we’ll have it sooner than that, but keep in mind our job is to get our references certified and we intend to have that done in the first half of next year. And when it comes to integration with our partners’ products, they have tremendous amount of additional resources and they tend to have people on-site with these different regulatory agencies. So their ability to get through the process is much faster than our ability to get through the process, which is why in some cases we’re partnering with them to get the regulatory approvals in the different markets that we’re going after.

[Unidentified Analyst:]

Okay, great. Thank you, gentlemen.

[George Holmes:]

Yes. No worries.

[Operator:]

And this concludes today’s question-and-answer session. I would like to turn the conference back over to Steve Rizzone for any additional comments or closing remarks.

[Stephen R. Rizzone:]

Thank you very much for your attention today. Again, as I said, we believe that we have a tremendous opportunity here, a significant first-to-market advantage with a market that has a tremendous tamp to it. And so we’re looking to capitalize on this market. We thank you for your support. We’ll continue to provide information as it becomes available in terms of our financing plans. And, again, we look forward to reporting favorable results at the end of next quarter. Finally, I hope that if it’s at all possible if you are, it’s going to be attending CES that you’ll let us know we very much like as many of our investors as possible to see firsthand, the home of the future. So thank you very much, we appreciate your attention. And we’ll talk to you again soon.

[Operator:]

Ladies and gentlemen, this does conclude today’s conference. And we do thank you for your participation.