Evan Pondel - IR Stephen Rizzone - CEO Brian Sereda - CFO

Daniel Amir - Ladenburg Thalmann Lou Basenese - Disruptive Tech Research William Gibson - Roth Capital Partners Marc Estigarribia - Chardan Capital Market Ilya Grozovsky - National Securities

Good afternoon and welcome to the Energous Corporation Fourth Quarter 2015 Earnings Conference Call. All participants will be in listen mode. [Operator Instruction] After today’s presentation there will be an opportunity to ask questions. [Operator Instruction] Please note this event is being recorded. I'd now like to turn the conference over to Evan Pondel Investor Relations for Energous. Please go ahead.

Thank you and good afternoon everyone I am Evan Pondel, Investor Relations for Energous. Joining me on today's call are Stephen Rizzone, President and CEO and Brian Sereda, CFO. After comments, Steve and Brian will open the call with 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 risk and uncertainties. These risk and uncertainties are detailed in the Company's filing 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 and contained therein 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 define by SEC regulation G. reconciliations of these non-GAAP financial measures for the most directly comparable GAAP measures and included in today's press release which is posted on the Company's Website. With that I'd now like to turn the call over to you Steve Rizzone. Steve?

Thank you Evan. Good afternoon I would like to welcome everyone to the Energous fourth quarter 2015 update call. As Evan said joining me today is Brian Sereda, our Chief Financial Officer. As in past calls I’ll begin with highlights from the last quarter. I’ll also provide a level of detail on some recent developments. Brian will then speak to the financial highlights for the fourth quarter and for fiscal 2015. And I’ll then close with final remarks, before opening the session to questions. Let me begin by saying that Energous continues to move aggressively forward and execute on its vision of changing the way users charge their mobile and IOT devices. We are nearing completion of our initial development phase and are entering the fulfillment stage leading to our objective of shipping a fully WattUp integrated product, ready for sale to the consumer late 2016, early 2017. I am pleased to report that we are on track to meet this objective. In conjunction with achieving this objective, Energous will need to pass the required regulatory and safety approvals prior to any products being made available to the consumer. We are confident we have a path to these approvals and have begun the process of seeking regulatory certification. It is important to note that we are interacting with the federal government agency and regulatory approval is not a foregone conclusion. However, we continue to have a high level of confidence that our company and our partners have a clear understanding of the rules and regulations of the various regulatory agencies and that we have designed the WattUp technology in such a way that will enable us to receive the necessary approvals. We are very fortunate to have three key assets effectively supporting Energous on this issue. First, Martin Cooper, inventor and pioneer of the cell phone, is a very active member of our Board of Directors. Martin has been engaged with all the relevant regulatory bodies for over 30 years and he is currently a member of the technical advisory council of the FCC. Second, our key strategic partner has been instrumental in the development of the Energous plan for submittal and approval. Our partner brings to the table considerable experience with the regulatory approval agency as well as the resources and capabilities to test and verify. Finally, our own internal team of regulatory specialists coupled with our consultant and attorneys have diligently worked together with Martin and our key strategic partner to develop a very specific strategy that provides a path to approval and we have taken great pains to ensure that the implementation of our technology and our prepared submittals to the regulatory energies agencies will fall within this strategy. We believe the first approval for what we are calling the miniature WattUp transmitter reference design will be completed in the next quarter. The approval process for our mid-size and full-size transmitter reference design will take longer, but we are targeting to have these higher power reference design approved well before our plans to ship this products to the consumer in mid to late 2017. Turning now to the highlights, in the fourth quarter of 2015 Energous completed a very timely follow on offering that resulted in $19.3 million coming into the company. We believe this money coupled with existing cash and anticipated revenues from engineering services and expected future licensing royalties and chip sales could provide the company with adequate run rate to reach the third quarter of 2017, at which time our current forecast points to our operating cash flow breakeven point. As always we will continue to monitor market conditions and growth opportunities and we will adjust our financing and cash management strategy accordingly. Next, consistent with our announced plans, over the last several weeks we began distributing reference design and evaluation kits to a broad spectrum of potential strategic partners. These kits consist of transmitter, a receiver and sample antenna designs. They are designed to allow potential licensees to test the WattUp technology in their own labs and begin the engineering and design phases of product integration. We are pleased to report that the demand has been exceedingly strong, well above the level we can support with our current resources. Over 100 top Tier and second Tier companies have requested kits. Given our limited resources we have focused our attention on 30 highly qualified potential licensees and are actively working with them in various stages of evaluation and integration. Further, now that potential licensees are working with the actual silicon integration requirement in form factors. Our product roll-out strategy is crystallized. Specifically, because of the relative ease of integration and regulatory approval requirements, we anticipate the first iteration of the WattUp technology actually shipping into the market will be the mini-WattUp transmitter paired with small form factor receivers integrated into wearable and IOT devices. As previously stated we anticipate these WattUp enabled devices will start to roll out to the consumer at the end of this year, the beginning of next year. We expect to see the more complicated integration associated with transmitters and receivers that support greater distances and power as well as more features and functionality will start to hit the consumer markets mid to late 2017. In parallel we anticipate seeing a number of WattUp enabled receiving devices coming to the market in the same time frame either bundled with the transmitter or unbundled, depending on the application and the licensee’s distribution plans. Continuing on, our relationship with our key strategic partner continues to move forward. Earlier this year we signed an additional amendment to our joint development and licensing agreement, which strengthens our relationship and provides additional benefits to both parties. We also meet certain milestones that resulted in a $500,000 payment, which we have invoiced. While there continues to be no guarantees that our joint development efforts will ultimately be integrated into one or more of their consumer devices, the scope of our joint development efforts continue to expand, and Energous is on target to complete a number of key milestones schedule for the second quarter of this year. Also as we mentioned earlier, the relationship has been of great assistance in the formulation of our regulatory approval strategy that is also advancing forward. From a development perspective, our engineering team has completed the third and final iteration of our receiver ASSP and it is now in the process of qualification. By the way ASSP stands for Application Specific Standard Product - a term we will use to describe products resulting from our ASIC development that Energous intends to sell to its licensees. Moving on, we expect to have the final integration of our transmitter ASSP and our power amplifier ASSPs at a similar qualification status by mid-April. Finally from an engineering perspective, all of the associated control software and tracking software is near completion and it in the final stages of integration and test, which leads to me to our next major highlight, the addition of Jeff McNeil to our executive team. Late last year we announced the Jeff, who has over 30 years of operations experience, joined our executive team and has been tasked to lead the company to the next level. Specifically, being a fully qualified fabless semi-conductor company. We are extremely fortunate to be able attract an executive with the experience and background Jeff has. Jeff's career started in the early 80s as a process engineer with Memorex and progressed over a 20 year span at Cypress Semiconductor to where before leaving to join us, Jeff was responsible for all of operations which is essentially the fabrication, qualification, planning and logistics for all of the chips and modules for a multi-billion dollar semiconductor company. Jeff is truly well qualified to lead the way as Energous successfully transitions from development to fulfillment. In January of this year, the company had a highly successful CES show, as we showcased the state of the WattUp technology, the strength of its underlying capabilities like its network management and control system, and we launched the mini WattUp transmitter. The objective of the show and the various demonstrations in the suite was to close the gap on a number of licensing discussions underway with top Tier and second Tier potential partners. To this end, this is exactly what was accomplished beyond our expectations. Fast Company even named WattUp “One of the Seven Best Ideas from CES 2016.” The interest we have received in the new mini WattUp transmitter has been exceptionally strong largely based on this comparative low cost and compact size. These significant competitive advantages will allow a licensee to bundle the transmitter with a WattUp enabled receiver at very favorable price points while adding the benefits of hermetically sealing the receiver which eliminates the power port and makes the device waterproof, as well as providing receiver compatibility across the entire Energous transmitter platform spectrum. Further the extremely small size of the WattUp receivers has opened up a whole new world of opportunity for Energous in wearables and IoT markets unserved by any wireless power solution because of cost and size. What this means to Energous is that for the foreseeable future we have an unchallenged opportunity to engage with top tier wearable and IoT companies to integrate the WattUp technology into their devices. To give you an idea of the magnitude of the opportunity, industry projections are that more than 500 million wearables will be purchased by consumers in 2018. Allowing for the possibility of bundling one WattUp transmitter with one receiver the total market opportunity equates to more than one billion units. Even single digit penetration means that there is a very real opportunity for Energous to be shipping millions of licensed units with our ASSPs in two years’ time. This is a very real scenario that we are aggressively looking to execute on. Finally intellectual property continues to be a major focus of Energous. As of December 31st, we have applied for over 250 patents and have been awarded the first five and received notification three more will soon be granted. We believe we will continue to receive additional awards this year at an accelerated pace as the bulk of our filings make their way through the USPO. We also have a number of additional developments that we believe are patentable and will add to the significant barriers to competition that we are developing. In short Energous continues to execute on scheduled against its master plan and complex agenda. Energous is focused on two parallel and synergistic paths. One is to continue to actively support our key strategic partner as the adoption process moves through their organization. And the second is to expand our licensee base ultimately resulting in WattUp enabled products shipping to the consumer late this year, early next year. I will now turn the call over to Brian who will report on our fiscal highlights for the quarter and fiscal 2015. Brian?

Thanks Steve. As you saw after close of market today we issued a press release announcing our operating and financial results for the fourth quarter and fiscal year ended December 31st, 2015. Let me start by reviewing our full year results. In fiscal 2015 we generated $2.5 million of revenue from our key partner under the development of license agreements signed in 2015. The revenue was recognized upon achievement of various technology milestones and other engineering deliverables in the first phase of our engagement with this partner. This compares to zero revenues generated in 2014. Our full year 2015 GAAP operating expenses were $30.1 million compared to 20.4 million in 2014. Breaking the increase down across the categories, R&D increased 6.3 million, sales and marketing increased by approximately 0.4 million and G&A expense rose to approximately 3 million when compared to 2014. Included in this $9.7 million increase is an approximate increase of 3.8 million of non-cash operating expenses such as stock compensation and depreciation and amortization. Including negligible interest income our net GAAP loss for 2015 totaled $27.6 million or $2.07 per share on 13.3 million weighted average shares outstanding. Compared to a loss of $45.6 million or $5.75 per share on 7.9 million weighted average shares outstanding in 2014. I'd like to point out that in 2014 there was one time non-operating charge of 26.3 million related to the conversion of convertible notes into equity. The primary difference in the share count year over year was approximately 3 million shares issued in connection with the follow on offering completed in November 2015 and a secondary offering completed in late December 2014 of approximately 3.3 million. Breaking down the quarter we did not generate revenues in the fourth quarter of 2015, which was expected due to the timing of milestones and deliverables on engineering development work we are performing for our key partner. On our Q3 earnings call I mentioned that we were expecting unevenness in regards to quarterly revenues, over the next several quarters. As we may not be able to invoice and recognize revenue for work being performed if tied to deliverables spanning multiple quarters. Operating expenses for the fourth quarter of 2015 on a GAAP basis were essentially flat year over year at $8.9 million compared to $9 million in 2014 and 1.2 million higher than our Q3 2015 operating expense of 7.7 million. The increase over the third quarter is primarily attributable to higher engineering cost in the fourth quarter as we launched a new multichip development cycle in the quarter. The loss per share for the fourth quarter was $0.61 on approximately 40.5 million weighted average share outstanding versus $0.89 on approximately 7.9 million weighted average shares for the same period in 2014, as I mentioned the big driver for the share count difference to follow on offering in November 15, and December 14. I would like to now provide a quick non-GAAP overview which we believe when using conjunction with GAAP information gives a useful picture to investors, by providing a more focused major of operating results. Included in our GAAP operating expense with $30.1 million in 2015 with 6.8 million of non-cash expenses comprised of 6 million of stock compensation and approximately 0.8 million of depreciation and amortization expense. Excluding these non-cash cost our net non-GAAP operating expense for 2015 was 23.3 million, compared to 17.5 million in 2014. Breaking our 2015 non-GAAP operating expense view down further non-GAAP R&D expense was 15.5 million, non-GAAP sales and marketing was $2.4 million and non-GAAP G&A spend was 5.4 million. The increase of 5.8 million over the total non-GAAP operating expense in 2014 was mainly driven by $3.9 million increase in R&D spend. Comparing the fourth quarter of 2015 to the prior third quarter, non-GAAP operating expense rose to 7 million from approximately 6 million, the increase of the 1 million was mainly driven by the increase investment in core R&D, as mentioned chip development activity picked up considerably in the fourth quarter in response to future deliverable for our key partner involving newer generation of chips and enhancing version of existing chips with the broader market. Regarding our balance sheet, at December 31, 2015 we had 29.9 million of cash and cash equivalents and zero debt. This is a $14.4 million increase over ending Q3 cash balance, a direct result of the follow on offering completed in November 2015 which raised 19.3 million netted against operating requirements in the fourth quarter. Our cash requirements remain consistent with our previously shared views, given our existing cash resources combined with a reviews on engineering services revenue from our key partner and potential revenue from our current base of customers in a valuation phase we are forecasting having adequate working capital carry us through fiscal 2016 and potentially sufficient enough to reach our estimated cash flow breakeven point in approximately Q3 of 2017. I’ll now turn it back to Steve for his closing remarks.

Thank you, Brian. Before we turn the call over to the operator for questions, I would like to summarize the primary goals we have set this year for the company. Specifically one, to have WattUp enabled consumer products shipping late 2016, early 2017. Two, to have multiple licensees displaying WattUp enabled consumer products in their respective booths at 2017 CES show. Three, to obtain the required regulatory approvals for our WattUp implementation. Four, to successfully transition from a development company to a fabless semiconductor company. Five, to maintain our current momentum with our key strategic partner while expanding our licensee base. And six, to maintain adequate fiscal controls, liquidity and runway to meet our objectives and the demand for our technology. These are the six objectives we have set for our company this year. We appreciate the aggressive nature of the objectives and the challenges we will face in achieving them, having said this the management team and the Board of Directors is fully committed to meet our exceed these objectives as we also clearly understand the prize at the end of the tunnel assuming we are successful. The momentum at Energous continues to accelerate, as our vision crystallizes and we have a clearer view on how we will achieve this vision from both of tactical and strategic perspective. We intend to keep our heads down, execute and take full advantage of the opportunity we have in front of us, knowing full well that the most important validation we will ever had will be to ship product, generate revenues and get to cash flow positive while continuing to expand the business and build barriers to competition. This is exactly what we intend to do. Operator, we will now take questions.

Thank you. We will now begin the question-and-answer session. [Operator Instruction] And our first question will come from Daniel Amir of Ladenburg Thalmann.

So, I guess there are couple questions. First of all, in terms of your relationship with your strategic partner with this $500,000 invoice coming in this quarter, I mean is this -- is overall the milestone on plan here with this partner? And follow up to that, in the past you kind of mentioned that you could be looking at mid to high single digit revenues this year around engineering services mostly, is that still the target here in terms of how you look at -- how the year will play out?

Daniel, yes so two points, first the invoice was for $500 million -- $500,000 I’m sorry. 500 million is next year. 500,000. And we continue to progress I think with the relationship. There are a number of hurdles that we've had overcome and we have consistently overcome those hurdles. There are significant milestones that I've mentioned that are expected to hit in the second quarter and we are on target for those milestones. So overall the relationship is moving forward, there are number of moving parts to it, we have multiple developments in conjunction with our strategic partner and we remain cautiously optimistic that ultimately our technology will be integrated into one or more of their consumer devices. As it relates to the revenue forecast we’re standing firm on that. We have said all along that we think it will increase from low single digits to mid-seven digits in terms of revenue in this year and then looking to stretch that and expand that next year to help us achieve cash flow breakeven in the third quarter and we were on target for that, so we remain committed to that forecast.

Okay. And then I guess on the FCC regulatory approval and I guess has it changed since last quarter, I mean in terms of data or is it pretty much consistent all along that it's still on plan as you expected or has something kind of change in the past few months gives you more confidence that you would get the at least initial approval here in Q2 and for the receiver?

Well. I think that our strategy that continues to evolve and has now reached the point with the all of the assets that we discussed converged on the development of this strategy it's now reached the point where we’re pretty comfortable we have a clear path to approval. We -- to be clear we understand very clearly all of the rules and regulations and guidelines that the FCC has put in place that either are related or not related to wireless technology, so we understand the rules. Second, we have in conjunction with this understanding, a developed the strategy that we believe allows the technology to be viewed as fitting with in these rules, and that is the fundamental premise of our strategy. As it relates to the mini WattUp transmitter it falls within regulatory approvals that have already been awarded in the past and so it is much more of the by reference approval cycle, than a complete new approval cycle. And that's why we are very comfortable as I said that we can accelerate that particular process and get the mini WattUp transmitter approved by the FCC in the second quarter, which of course is key to our strategy to focus attention on that technology as the first iteration that we’ll deliver to consumers by the end of this year and also represents the very significant revenue opportunity that we talked about relating to variable and IoT devices. I also want to make it clear thought that we remain absolutely focused on our other two transmitter iterations, the mid-size and the full-size transmitters, they are more complex, they are going to take longer to both integrate into the products of our key strategic partners as well as go through the approval cycle, but we believe as I said that all of our products will ultimately receive the necessary regulatory approval to make them available to the consumer.

Well I guess this is the final question, so beyond the Q2 WattUp transmitter approval what else do you need in terms to get a milestone of commercialization by the end of 2016 early 2017 from a capacity perspective?

We have the approval and that's all that we will need, of course our strategic partners that are actually implementing the process -- excuse me, the technology, will need to get their own approvals for their devices. However since we will have the first approval, all subsequent approvals for the mini WattUp transmitter will by reference and will be a much shorter and straight forward approval process.

Okay, alright. Thanks a lot.

And the next question will come from Lou Basenese with Disruptive Tech Research.

Just continuing on this talk on a regulatory front. Do you anticipate any problems, are you shifting away a little bit from the mid-size and full-size transmitter? Do you do any feedback you've gotten from the regulators or lack of interest from partners or things still intact there?

We are not, absolutely not shifting away from our mid-size or full-size transmitter technology, it's a key part of our strategy and a key differentiator. Ultimately we believe that will have mini WattUp transmitters, mid-size and full-size transmitters in the market and receivers that are compatible with all three iterations and so this is really a timing issue and we're fully committed to the technology for all three iterations of their transmitter. All three iterations are working they have different regulatory paths, some are more time consuming than others, they also have different integration paths as it relates to the actual integration with consumer facing devices and so it's really a timing issue, but I want to make it very, very clear that we remain fully committed to both near field and far field type of technologies, we believe that we'll obtain regulatory approval for all of the technologies we've discussed and ultimately they'll be fully engaged in the consumer marketplace.

Great, just on the mini transmitter, how do you see it competing against currently deployed A4WP solutions I'm thinking about companies like IDTI, I think they recently shipped over 70 million units and it sounds like your product would have benefits that can enable you to garner a lot of market share from them, how do you see the mini transmitter fitting into the competitive landscape right now

Well, the mini transmitter as coupled with the mini receiver or the miniaturization that we've been able to achieve with our receiver and the overall cost reduction of both units gives us a very, very clear advantage in wearable and IoT small form factor market, and in those markets there is really no conductive, inductive or magnetic resonance participation because those technologies are either too big to fit within the restrictions of a wearable or they're too costly. And so for the foreseeable future, Energous has an unchallenged position that we can capitalize on in wearable and IoT devices. The other technologies just can't compete there because of the restrictions in their technologies and so we'll focus on our attention on those markets. We're not looking to go upstream and compete with them now at higher levels of power and larger transmitters, our focus is going to be to capitalize on the very real and significant competitive advantages that we've been able to realize based on our efforts to miniaturize the technology and cost reduce it, and put us in a position where as I said, we have an unchallenged market opportunity that has TAMS measured in the billions of units and so again it's very, very significant for us and something that we're going to focus a lot of attention on.

That makes a sense and just last question, just any color you can provide on the expansion of the agreement with the Tier 1, and you noted in the prepared remarks about an addendum. Any color you can provide us with what that might entail in terms of different verticals or accelerated timelines or there anything like that?

We've really can't and again I know it's frustrating, but the nature of agreement is very proprietary and we need to maintain that proprietary nature. We have a very, very good relationship with our key strategic partner, I believe that we garnered a lot of respect internally for our technical capability and our ability to deliver essentially what we say, we're going to deliver and so, again we've really can't speak other than to say that it was a good thing, it was good for them, it was good for us and I believe that we'll continue down the path like we talked about. And the second quarter is an important one for us, there are a number of key milestones that have significant revenue attached them as well as significant repercussions as it relates to product adoption, and so we're very, very focused now on the second quarter milestones which is the good news, we're on track to achieve.

Great. Thanks for taking my question, gentlemen. Appreciate it.

The next question comes from William Gibson of Roth Capital Partners.

Hi, Steve. You stated that over 100 copies of requested kits and roughly 30 have made the cut, how do you deal with the other 70, I mean, I assume they get kits and work on their own, but how do you keep moving them forward as well?

It's a good question. I think, it's a good problem to have, but nonetheless it is the problem. We're doing a couple of things, first of all, we are expanding our resources, we'll be making an announcement very soon on an addition to our executive team that's going to have an impact in this arena and we'll continue to expand our support organizations to meet the demand that we're seeing. Also, the initial interactions are the most time consuming because we're paving the way in developing a custom solutions that will become standard solutions as our library of intellectual property expands and so, I think that's again our goal is to focus our attention on 30, keep the other 70 or so moving along and ultimately be in a position to service all of them. I think that again the technology and the draw of the technology is such where our partners and potential licensees have while they’re very interested in getting the technology, have been showing willingness to work with this, so we will look to focus, make sure we’re successful with the first month and then continue to expand our ability to support and expand the base of customers that we are working with.

Good. Second question, what kind of margins do you expect in the early quarters on the chip sales?

This Brian, I think we going to see very strong margins and certainly well into the 50%. I think there is with any emerging technology you have got a value component and we intend to play very strongly as a main supplier for those chips really with all of our major relationships. So -- we are targeting -- this is a developing science, but we are targeting north of 60% margins. Somewhere between 60% to 70% gross margin on chips.

Good, thank you. And then just one last question, is software development one of the milestone payments, one of the milestones?

We really can't talk about it. Yes as I said there is -- the whole relationship and the internal development are really shrouded in secrecy. They’re compartmentalized even within our key strategic partner, there is an element of secrecy to them and so we really just can't speak to any component or any specifics as it relates to the milestone or development, I am sorry but that’s just the way it is.

Thanks Steve.

The next question will come from Marc Estigarribia of Chardan Capital Market.

Steve, maybe you can help me on just understand, we have the mini that is coming out in terms of regulatory approvals and sort of that’s helping us with the product development launch in the fourth and first quarter next year. What is the -- can sort of on a technical level, give us a difference in terms of power distance between this product and the product that is coming out next year, in terms of the mid and large size?

The mini WattUp transmitter is a few centimeters distance from the transmitter. The mid-size transmitter has a range of about three feet. And the full size transmitter has a range of 15 feet or greater. And so that’s kind of how it's been broken down. Mini is very compact, it's portable, very, very inexpensive, will likely be bundled with devices as a replacement for cabling and wall connectors. We see the mid-size serving the desktop and bed side markets. And then the full size, that provides the full level of functionality and multiple receiving capability, this is the technology that we see being integrated into the large standalone units. The third party products like refrigerator doors and also the units that will be combined with Wi-Fi routers to form a single combined wire free power and Wi-Fi router. So that's how it's broken down.

Thank you. And the Tier 1 is -- client is it I mean should we break up the expectations there in terms of mini or full size or they capturing most as the mini first launch start at the end of the year?

I can’t speak to that. They are a strategic partner they have very, very specific development efforts underway some of them we’re privileged to know, others we do not know and we simply are supplying the technology and they are doing the internal work on it. And so we really can't speak beyond what we've talked about with our strategic relationship.

Okay, that's fair. I appreciate that. So I guess more general in terms of, can you give us a couple of examples of what you mean -- obviously without being so specific, but sort of broad stroke on when you talk about wearables and IoT in terms of the mini, those end markets or those end market products, what are we talking about specifically if you can give us some example? Please.

Well. We're talking about fitness wearables, we’re talking about the intelligent jeweler wearables that are coming out, in terms of IoT we are talking about cameras and security devices, remotes. So there is a broad spectrum of wearables and IoTs that fit within the boundaries of the transmitter that we’re looking to deliver. I think that the basic advantage of the transmitter as I said its cost and size and we do see it as a real opportunity to displace the cable solutions the wall connecting solutions in wearables, and not impacting the ASP to any degree which has been a problem so far. There are competitive technologies that we've talked about earlier that have tried to penetrate this market, but they had a negative effect on the ASP and it's difficult to sell a wearable for a $100 or $200 and have a $25 or $35 or $40 hit to the ASP by adding a wireless transmitter capability to it. Our transmitters we believe can be added and bundled together with the wearables and not have any meaningful impact on the ASP and that's one of the reasons besides the mineralization we've been able to achieve and the receiver that we are getting such interest in the whole wearables arena.

Great. So that's for example can you talk a little bit more on the technology side with regards to I understand the distance, but a little bit on the power in terms of the contact, for example, charging a wearable watch or a fitness watch, given that the receiver-transmitter and piece of cloth of the say wearing a shirt, you put it into the button of the shirt and you are wearing a watch. Is that sort of something that we can think of in terms of being able to power up through Energous technology and how long would that take in terms of recharging or how should we think about priming that up?

Well I'm little confused on the question but let me say this that the power requirement for wearables are comparatively small as compared with smartphones and tablets and so were talking about miliwatts of power as opposed to watts of power. I think that we’re -- our transmitters are well capable of transmitting sufficient power to charge a wearable at the same rate as if it was plugged into the USB port via a cabling solution or plugged into a wall via a wall plug solution. Again this involves hundreds of miliwatts of power and that's what we can expect to send out of our micro WattUp transmitter. As it relates to being on a person, yes and again keeping in mind that wearables require very little power to be charged and so we believe that our technology will be able to charge these variables while they are on your person, while they are on the desk in front of you, while they are on the night stand at night or while you walk around from office to office.

Great, I appreciate it. And one for Bryan on the OpEx, should we expect the run rate of $9 million per quarter? To be the run rate of the OpEx for this year?

You are going to see some lumpiness I mentioned, when we launch a new chip development cycle, and you will see a lot of that expense hit in the first half of the year and then it will trail off a little bit. So I think on average it won't be $9 million per quarter or anywhere near that, it will be higher than last year. I think we're going to be running in the average of about $6 million to $7 million for the year in total, but again we had expect some lumpiness as we complete some of the chip work we’re doing early on in the year.

Thank you guys.

The next question will come from Ilya Grozovsky of National Securities.

Just wanted to clarify the mini transmitter is plugged into what? The wall or is it plugged into a laptop, USB where is it getting its power from?

USB port.

Okay. Not the wall?

Well it could be connected to the wall with a USB connection running through a wall plug. So it will have a USB connector on the end that it can be connected in to any kind of USB receptacle.

Okay, got it. And the mid-size and the full-size are they plugging into also the same USB or they are going to the wall?

Those are wall connected.

Okay. Those are wall connected. Okay great. So I just wanted to understand the -- so you guys in this current quarter billed $0.5 million to your partner, at what point in the quarter did you bill that, which month?

That was early in the quarter. So [Multiple Speakers].

And normally they pay at what terms or what --?

I can’t get into the specific business terms with our key partner, but --.

No but I'm just saying in your past they paid in the same quarter that they have been billed.

Yes, we hope to receive it this quarter and recognize it in the quarter and it all depends on when we invoice in the quarter and if there is an opportunity to collect it in that same period of time. But this quarter we expect that we will collect it.

Okay. And you also have work that's going on in the first quarter that you plan on billing for on top of what you've already billed in the last quarter and are expecting this quarter?

I think that I answered that, the bulk of our milestones, and again this is a milestone based relationship, really focus on the second quarter and so beyond what we've taken in so far I don't see any additional revenue coming in in this quarter. We will look to have more revenue hit in the second quarter.

Got it, okay, and then my other question is just sort of a bigger picture, on the wearables that potentially will have at the end of the year with your WattUp technology and do you expect that it'll be branded that way, in other words your partners in the IoT and wearable space will sort of put it on the outside of the box, WattUp or kind of how do you think of that?

I think that that's going to depend largely on the strategic partner. I think it's very early in those conversations. My sense is that the Top Tier strategic partners typically will not brand at least initially and I wouldn’t anticipate that that would be the case here. I think that that may be different for some of the Second Tier companies, but I think it'll be fairly obvious what our technology is and it'll certainly be obvious in our balance sheet. So again I don't see -- branding right now is really not a major concern for us, it's more about being the drive for revenue and generating as much revenue as quickly as we can to aggressively reach a point of cash flow breakeven.

Okay, thank you.

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

Thank you, Operator. In closing, we're excited to share the advancements we've made on our WattUp technology and our amplified partner engagements and the overall progress we've made in the past quarter and year. We want to thank you for your continued support and we look forward to reporting again favorable results at our next quarterly conference call. Thank you very much for your attention and we will talk to you in three months. Good day.

The conference is now concluded, thank you for attending today's presentation you may now disconnect.