Energous Corporation

by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note that this event is being recorded. I would now like to turn the conference over to Craig McPhail of Investor Relations. Please go ahead.

Thank you 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 laws Energist 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, Energist will be discussing non-GAAP financial measures as defined by SEC Regulation G. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release, which is posted on the company's website. Now I'd like to turn the call over to Cesar Johnson, CEO of EnerGIS. Please go ahead, Cesar.

Thanks, Greg. Good afternoon and welcome to the EnerGIS 2023 Second Quarter Conference Call. Joining me today is Susan Kim Van Dongen, our Interim Chief Financial Officer. For those of you unfamiliar with our technology, Energes develops IoT wireless charging or wireless power networks through its advanced semiconductor and power bridge products based on its proprietary technologies. Our strategy is to energize IoT devices in RF tags, electronic shelf labels, and sensor applications across the smart home, smart office, industrial, retail, and healthcare markets. Energes power IoT devices operate without depending on large and costly replaceable batteries and the related operations replacement maintenance overhead. We aim to enable smart IoT devices with placement freedom, mobility, and lower installation costs by removing wires and electrical outlet requirements. Additionally, wireless power networks provide energy and connectivity to smart IoT devices enabling control, monitoring, and tracking of the IoT device in its environment. For example, a warehouse or a shell label or medical equipment in a hospital environment. Since the beginning of 2022, Energist has focused on developing differentiated and optimized RF products to build IoT wireless power networks. And then, to put the correct strategic partnerships in place, to create a cloud-enabled end-to-end smart IoT market ecosystem for our customers. We are focused on selected markets, namely IoT devices in RF tags, electronic shift labels, and sensor applications across the smart home, smart office, industrial, retail, and healthcare markets. We aim to work with leading customers or those emerging customers with the highest potential in these markets. In a typical rollout of a wireless power network, Our customers conduct a wireless power network technology evaluation and then a proof of concept installation, or POC, for their particular application. This is then followed by a proof of validation phase and a final production phase. Understanding how Energes is progressing with its current customers and the addition of new customers through these POC and POV implementation phases is, in our view, an important indicator of increased interest in energies technology and potential revenue in future quarters. On that note, I am incredibly pleased to report that energies continues progressing on a positive POC trend from when we first reported two POCs in the third quarter of 2022. This grew to 10 POCs in Q4 2022 and 14 POCs in the first quarter of 2023, and we are now glad to report that the total number of active POCs has grown to 20. We are really in early discussions or early implementation phases with additional POCs. We have achieved 10 times POC growth since we started our IoT wireless power efforts in Q3 2022. From the 20 POCs, we have now eight systems in the proof of validation phase, so remember that's the second phase, or are waiting to move into this phase. We are also happy to report that one of the wireless power network installations has entered the production phase with a Fortune 100 company in partnership with ThinAir. We are proud of Energy's progress in developing cloud-enabled end-to-end smart IoT wireless power network ecosystems. Let me provide a live example of one of our customers to give you an appreciation of how the energy technology is being deployed. In this example, our technologies are applied to the transportation and logistics supply chain markets. Power bridges are installed in multiple areas, energized in warehouses as the power bridges are mounted on the ceiling, in multiple corridor walls, and inside merchandise shelves. Power bridges energized BLE-based RF tags, and collect digitized information from smart IoT devices, which are attached to the customer's products sitting at a warehouse. As the customer products are moved inside and outside of the warehouse, the power bridges at the corridor walls or doors provide expanded coverage compared to old technologies, and offer complete product mapping visibility as components enter or leave the storage area. As the customer products leave the storage area, forklifts can load the merchandise into trucks, which are also equipped with power bridges to track the products for distribution as trucks are loaded and unloaded. Finally, in this example, using our system integration partners cloud software, IoT devices with real-time visibility and transparency can now be analyzed using predictive capability for self-optimization, resulting in cost efficiency improvements and full automation. Energy's efforts in developing and identifying new POCs and technical collaboration with our customers in our focused applications and markets continue. As we identify and onboard new system integrators and distributors, we will continue to update you. Today we stand at 14 technology partners, two distribution partners, and four IoT system integrator partners with more expected to be added in the second half of 2023. Let's now move our discussion to update the first half of 2023 specific progress. Earlier this week, we announced the next phase of our partnership with WIGL, sponsored by the Air Force Research Lab at the U.S. Department of Defense, DOD. Energy Power Bridges will continue to provide radio frequency-based wireless power over distance for WIGL's WPT networks in this second phase. Also, as we close, As we close our first half of 2023, we would like to give an update of our 2023 goals as presented in our Q4 2022 earnings call. First, maintain our technical and growing market leadership through innovative IoT, WP, and product development. In the first half of 2023, We completed the 1-watt power bridge certification in the world's largest markets, and we introduced our 2-watt power bridge. The new 2-watt power transmitter provides extended range, better coverage, and RF signal penetration than the 1-watt power bridge transmitter. We also offer evaluation kits featuring our technologies for RF sensors, as well as connectivity and PMIC devices for our customers to evaluate our technologies. Work closely with our power bridge production partners to optimize the cost and corresponding gross margin as we move to higher volume production. In the first half of 2023, we identify and enable production lines with a well-known Asia-based contract manufacturer supporting our power bridge assembly for low cost and large volume execution. Third, continue to identify key technology and systems partners to expand our potential markets and facilitate access to new potential customers through our industry-leading technologies. As of the end of Q2, we have 14 technology partners, 2 distribution partners, and 4 system integration partners. We continue our efforts to find new potential partners to support or develop new market applications. Our current and future customers are steadily along the path to commercialization from POC to proof of validation, and then to full production. As of first half 2023, we now have 20 POCs, eight proof of validation, and one customer at the production installation phase, from just two POCs in third quarter 2022, a 10 times increase since our first early installations. And finally, support the rollout of power bridge production ramps with our key customers and partners, and achieve expected annual revenue growth over 2022. As part of the POC efforts, we now have several IoT wireless power networks installed across multiple markets in the US, Europe, and APAC regions. We expect POCs to result in production installations to bring revenue generation with a target to achieve annual revenue growth over 2022. Given these assumptions, we currently anticipate year-over-year growth of 20% or more, which will be weighted towards the second half of the year. On the financial side, we continue to make efficiency improvements and achieve a 7% reduction compared to Q2 2022 in our non-GAAP costs and expenses. We recognize revenue of... $117,000 for Q2 2023, representing a growth of 21% over the prior quarter, in addition to adding six new proof of concept installations in this quarter. The number of proof of concept customers moving along the path to final production has increased compared with the prior quarter, which we view as an important indicator of future revenue potential. We have made good progress in the last year with 20 POC installations as of today, and we're working to secure additional POC installations and higher production volumes in the future. I will now turn the call to Susan.