Energous Corp (WATT) 2014 Q1 法說會逐字稿

Good morning. Thank you very much for joining us today for Energous Corporation first-quarter update call. Joining us for the call are Mr. Stephen R. Rizzone, President and Chief Executive Officer; George Holmes, VP, Sales and Marketing; and Mr. Thomas Iwanski, Chief Financial Officer. A press release detailing the quarterly update crossed the wire at 8:00 AM this morning and is available on the Company's website at energous.com. After management's prepared comments, we will open up the floor for your questions. We also have incorporated questions that will come over via webcast.

In addition, we would encourage you to visit the Company's website for further information about the technology, IP portfolio, team and to view the WattUp demonstration videos.

Before we get underway, I would like to ask everyone to take note of the Safe Harbor paragraph that appears at the end of the financial results issued this morning. Any forward-looking statements that we make speak only as of the date made, are subject to inherent risks and uncertainties including those described in our recently filed registration statement on Form S-1 and subsequent filed quarterly reports and should not be unduly relied upon. Except as otherwise required by federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to forward-looking statements contained herein or elsewhere to reflect changes in expectations with regard thereto to changes in events, conditions or circumstances.

At this time, I would like to turn the call over to Mr. Rizzone. The floor is yours.

Thank you, Matt. Good morning, everyone. I would like to add my welcome to our first quarterly update.

Before we move into the body of our remarks, I would like to thank our initial shareholders who supported us on our recent IPO. Thanks to you the IPO was very successful, and we now have the capital necessary to execute on our vision of holding a predictable and a valuable business that really disrupts the current thinking on wire-free power.

For many of you listening in today, this will be the first time we have had the opportunity to talk to you about Energous and our plans for the future. As a result, I think we'd like to take the next 25 minutes or so to discuss our technology, our product development plans, our business model, the competitive environment and our go-to-market business strategy. Basically, where we are today, where we are going and how best to to track our progress along the way.

As Matt noted, joining me today are two of my partners, George Holmes, who is our Senior Vice President of Sales and Marketing, and Tom Iwanski, our CFO.

Before we get started, let each of us provide you some background on ourselves. For my part, Energous is my ninth CEO or Executive Chairman opportunity. I've had eight liquidity transactions totaling just under $5 billion in return shareholder value. I've come up through the ranks in sales and marketing of high tech companies like Timeplex, Bridge Communications and 3Com, and I got my first CEO opportunity in 1995 at NetVantage, which was a networking company, and Tom and I worked together there. NetVantage was followed shortly thereafter by Ortel in 2000, where I met George. I've run both the public and private companies in a broad range of technologies, including fabless semiconductors, optical components, networking, enterprise software, IP telephony and storage media. I believe I bring experienced leadership and a history of company growth, strategic planning, execution and value appreciation to the table.

So that's enough about me. George, how about a little on you?

Thanks, Steve. Well, I began my career in the early 1980s in finance and operations before moving into telecom equipment as a sales guy. I started with Telecom Solutions, which became Symmetricom. I built their worldwide sales presence. From there I moved into semiconductors at Level One Communications, where I grew sales from $25 million to over $150 million in revenue. From there, I moved into Optical Components at Ortel, where I joined Steve, and we turned that company around and sold it to Lucent in the late 1990s.

After the sale to Lucent, I ran North American sales for Lucent Microelectronics, about 85% of their worldwide revenue. From there, I did a number of startups, two of which were in the wireless power arena, before transitioning into solar, where I ran sales for a microcomputer company based in Austin before joining the team here in October.

Most relevant from my career as it relates to this opportunity is my time at Lucent, when we built the early days of the Wi-Fi infrastructure, selling components into that space, as well as systems and infrastructure equipment.

Additionally, I've done two wireless power companies, both PowerCast and PureEnergy, which gave me a great deal of market knowledge.

Tom, let me hand it over to you.

Thank you, George. For me, Energous is my 11th CFO opportunity. I have been an officer and director for a total of seven public companies. Prior to this, I had almost 10 years of audit experience working for the Big Four accounting firm of KPMG.

During my career, I've worked with over 65 companies. During that time, I have raised over $150 million and have had liquidity transactions exceeding $400 million in the aggregate. I have an active CPA license. I have significant technology and industry experience, including established semiconductors, in addition to the consumer products experience. I practice full disclosure of company information and look forward to what this executive team will accomplish. More detailed information about me is available on (inaudible).

Back to you, Steve.

Thank you, Tom. One of our key team members, Michael Leabman, who is our Founder and CTO, could not be with us today. He's on a plane to Europe. But he does send his regards. You can see Michael present the technology on our website, www.energous.com Michael is certainly a key member of our team, and I want to give you a little bit about his background because it is very, very important and relevant to the Company.

His background is very unique. After graduating from MIT with a dual-major in Computer Science and Electrical Engineering, he received his Bachelor's and Masters degrees. Michael then went on to work for the Defense Department designing complex antenna arrays. He founded his first startup, PureWave, which is a successful LTE and WiMAX company. Michael left PureWave and founded his second company, TruePath, which is very successful company today. It has multi-antenna technology that delivers Wi-Fi 50 miles offshore to cruise ships. The combined background of antenna arrays, signal isolation, tracking, Wi-Fi and the complex algorithms associated with these technologies, they really set the basis for the highly disruptive technology that Michael invented for Energous.

I think that, again, if you take a look at our website, you can get more detail on all of us, but let's go ahead and talk about Energous.

As I mentioned earlier, our mission is to build a predictable, highly-valued business that disrupts the current thinking on wireless power and is used as a gamechanger. There are some key words here. First of all, to be successful, we are going to have to be predictable. We understand that for the first two years we are not going to have EBITDA and earnings growth that you would expect from a public company. So to track us, you are really going to have to be able to watch our progresses, our operation plan and our strategic partnerships. And so predictability is a key element for us.

We believe we can build a very valuable business because we have the technology that disrupts the current thinking on wireless power, and we really believe, again, that Energous can be a gamechanger. We believe that we have the solution to finally deliver on the promise of wire-free power. Our one-off technology delivers power at a distance that is completely mobile and software controlled. We believe that this is exactly what the consumer has been waiting for and that it addresses a major pain point head on.

We're going to transform what is today a very active charging process where the consumer continually monitors the charge status of their portable devices. And at some point in time, they seek out a power outlet or a charging station to meet that need. With our WattUp technology, this very active process is going to become passive. Consumers will be charging the devices when they walk into a room, when the devices are in their pockets, on their desks or sitting on the front seat of their car.

In short, our WattUp technology is going to completely transform the way consumers use electricity. We believe we can effect a paradigm change that fosters adoption of our technology along the same lines and to the same extent as Wi-Fi. We want and expect WattUp to become a ubiquitous solution.

The WattUp technology is very scalable. We could be targeting a number of markets and opportunities, but we have decided that our sweet spot is going to be 10 watts or less. George can go into this in more detail when he talks about our development of the ecosystem. But we expect our additional market penetration, they will be in the cell phone and cell phone accessory and wearables markets.

We have adopted a licensing model, which will allow us to focus our resources effectively and with the highest return on investment. Energous will develop technology, intellectual property and engineering reference designs that will enable our strategic partners to incorporate our WattUp technology in consumer-facing products that they develop and market. This will allow us to quickly scale as consumer adoption accelerates.

Our first reference designs are due out later this year. These will enable transmitters built by our early adopters and strategic partners to send 6 watts of received power to up to 24 devices simultaneously in a space 15 feet from the transmitter or along a radius 30 feet in diameter. Again, 6 watts of received power. This is power converted and is actually going into the device. For up to 24 devices simultaneously, 15 feet from a transmitter or along a 30-foot radius, the average power received will be in the 2 watt neighborhood, depending on the distance from the transmitter. And two very important elements. It will have the full roaming capabilities. So the receiver will be charged anywhere within this radius and can be charged while moving within the radius, and it's all under software control.

Now, one of the questions we often get asked surrounds the safety of the WattUp technology and the SEC regulatory approvals. Safety is a key element of our technology. And I want to make that very, very clear. It is a key element of our technology. We have just begun the regulatory approval process, which is a major priority for us, and we will continue to report our progress in follow-on conference calls and in public announcements.

To let you know, we're going to go through FCC Part 15 and Part 18 testing. We are also going to do the STAR testing and the CEC or California Energy Commission testing. The latter two are really not requirements, but we are going to go ahead and do these tests because we want to enable our strategic partners. Again, our strategic partners are the ones that are going to have the image and will project the technology to the consumer. So we want to enable them, and we believe that this will also foster adoption. If you are buying a cell phone from Samsung or a wearable from Fitbit, you have the belief that it is safe technology. And so, again, we will leverage our strategic partners going forward as it relates to the safety and regulatory requirements.

It's important to note that our 3G energy pocket uses the same unlicensed ISM bands as Wi-Fi. It operates in the same band. We also operate at 1.5 watts, which is similar to the energy that is emitted when your cell phone is in operation. And again, these are just two data points, but we believe that we will successfully complete the FCC regulatory approvals and both the STAR and CEC testing within the coming months.

As we noticed in our public announcement this morning, Energous is going to continue to invest in the expansion of its IP patent portfolio to develop defensible barriers to competition. To date we have filed 50 patents surrounding the WattUp technology, 13 since the IPO, and we believe that we will have over 100 patents filed within the next 12 months. And we will continue to invest on an ongoing basis and believe that intellectual property will be one of the core values of the Company.

With respect to our business roadmap, our initial prototypes were developed with discrete components. In order to meet our power foot rent and cost requirements, the technology must be incorporated into separate transmitter and receive ASICs. We've taped out both the transmitter and receive ASICs, and we expect to receive our first transmitter chips back next week and our first receiver ASICs back in early July.

The intent is to take these components and to begin the formal regulatory processes -- or approval processes, as well as develop the reference design that will enable our strategic partners to have demonstrable prototypical products available for public viewing at the CES show in 2015. This is a major milestone for us, and we are looking to work with early adopters with our reference design.

So at CES in January of next year, we are going to be able to demonstrate again very early stage in prototypical products, but to demonstrate the technology incorporated into third-party products.

We believe that we will have actual consumer products in the market in the third quarter of 2015. And as a result, we should start to see our royalties flow in the fourth quarter of 2015.

That gives you some background and overview to our business and our business strategy. I'm going to turn the session now over to George, who will give you some visibility into the developments of our ecosystem, our strategic partners and the competitive landscape. George?

Thank you, Steve. I want to spend a few minutes now on our go-to-market strategy and competition.

Our goal is to enable wire-free power, much in the way Wi-Fi enables wireless data. Much like the early adopters and innovators in Wi-Fi, we need to be very focused. We are going to be carefully selecting our initial target markets. We are building components and chips to further that technology. We are partnering with leading market product companies and creating reference designs to reduce our partners' risk and enable early adoption. And we are going to be validating these applications with aftermarket accessories in the early days.

For our initial target markets, we have been systematically identifying those markets, identifying well over 50 early potential markets. We've narrowed that to 15 markets that we believe have near-term opportunities and have prioritized, as Steve noted, the smartphones, smartphone accessories and wearables.

As we look at our ecosystem development, we look at everything from the semiconductor companies all the way through to the consumer. Obviously, with this new technology, we need to educate the consumer on the market opportunity and what the viability is of this technology. We are doing that through partnerships with the broadband service providers, the cellular service providers and big-box retail. We have ongoing relationships with all three segments. We are working with them to help them understand what this technology can do today and what it can do in the future.

More closely, we are working specifically with the OEMs and ODMs, identifying key market opportunities where we can deliver this technology into the market very quickly.

And then we are also working with the semiconductor and chipset manufacturers, as we want to further drive costs down and make the deployment of this technology ubiquitous.

Part of the process we use to engage customers is to identify strategic partners and, once we've identified strategic partners, work with them to very quickly enter into a memorandum of understanding. Through that memorandum of understanding, we will work together to deeply understand the technology, how our technology fits with their products. Assuming we vet that well, we will move into a Joint Development Agreement where we will identify a specific product we are going to join develop together.

As we announced earlier this morning, we have signed four MOUs. One of those MOUs has currently transitioned to a JDA, and we are moving forward with the development of our product that we expect to show at CES in 2015.

I want to spend a few minutes on the competitive landscape. As we look at the competition in this market, clearly there are companies that have been in the market doing what they call wireless power. There are four key segments in that space. There is your standard radiofrequency, there is the inductive mask, there is magnetic resonance, and then there is what we believe we are doing, which is 3G pocket forming that allows for a tremendous amount of utility.

As we look at the different segments, the typical radiofrequency solutions are low power, they have short distance, and they are not yet commercially viable. If we look at the inductive masks, there is three competitive consortiums -- PMA, GE and A4WP, causing a relatively disjointed market today. The problem with those solutions is they don't provide a lot of utility to the consumer. They are one-to-one targeting solutions. They require you to be connected. There's no mobility -- as I said, limited utility.

Recently magnetic resonance has come into play. Magnetic resonance, while similar to inductive in that it is connected, does have limited mobility, very near field types of applications. It does also have the expanded capability of one too many. Then there's the conductive masks. Conductive masks are one too many, higher power, yet the technology is not currently viable.

Then we have what we are doing at Energous, 3G pocket forming. As Steve described, three key elements that we believe add tremendous utility to our technology -- power to distance; multiple devices under charge, 4 to 24; and the ability to roam while charging -- all of which, we believe, puts us strategically in the best position to provide the greatest utility to consumers.

Steve?

Thanks, George. Tom, a few financial comments?

Thank you. In April, we completed our IPO, raising a net of $24.8 million. Our stock commenced trading on March 28, but we did not close the transaction until April 2. That is why the IPO cash proceeds are not reflected on the balance sheet for the first quarter ended March 31, 2014. Our proceeds will be utilized, as Steve said, for product research and development, reference design and price certifications, further building out our patent portfolio in addition to being the cog for sales, marketing and traditional G&A expenses.

All notes outstanding and accrued interest were converted at the IPO closing to approximately 1.9 million common shares, which eliminated all debt and gives us a clean balance sheet going forward. Please note that accrued interest, along with options and warranties, created several non-cash charges, which led to our reported GAAP loss of $31 million.

Included in this number was a $28 million charge for the change in market value of derivative liabilities, a $500,000 charge for stock-based compensation expense and $1 million in interest expense. By converting the notes and accrued interest to common stock, any future non-cash expenses related to the notes will have been eliminated, making our income statements much cleaner going forward.

For the first quarter, the Company incurred $2 million in operating expenses, which consisted of approximately $900,000 in R&D, $700,000 of G&A and $400,000 of marketing expenses. This $2 million included $500,000 in non-cash stock-based expenses.

The Company reported and adjusted dividend non-GAAP disclosure loss of $1.5 million for the first quarter of 2014. Please see our disclosure information on the press release and filings pertaining to non-GAAP financial measures.

I wanted to quickly walk through the current capital structure post-IPO, as the share count on the financial statements is also not relevant to what it is today.

The Company currently has approximately 9.4 million shares outstanding and approximately 2.7 million warrants and options outstanding. These warrants and options create non-cash losses and gains on a quarterly basis as the public share price moves relative to the underlying stock prices. The float consists of 4.6 million shares, and those shares converted from the notes have a six-month lockup from the date of the IPO.

Thanks very much, and let me go back to Steve.

Thank you, Tom. We would like to thank you for your participation today. We believe that Energous has all of the necessary tools and capabilities to build a highly disruptive, game-changing company.

The market opportunity is real and now. The consumer wants to be free from tethering. They want a true wire-free charging solution. They want a solution that has high utility and brings the element of power at a distance with full mobility.

We have the technology to capitalize on this opportunity. Our technology is highly scalable. It's developed. It's real. And it's a matter of cycle, not invention, to commercialize it.

We have a very significant first-to-market opportunity. We are not sticking our heads in the sand and believe that we will be the only wire-free power company out there. But we certainly are the one today that has the significant time to market advantage and a clear field going forward in the immediate future that we intend to take maximum benefits of. Time is very, very to us, and we believe that if we get our solutions out into the marketplace, that there will be significant social media drive behind it, the consumer will be pushing it, and this will accelerate adoption of the technology.

There's a lot of momentum surrounding Energous, and the technology is extremely strong, and it's building. We anticipate a number of strategic partnership announcements in the coming months because there are a number of consumer-facing companies that understand that this problem needs to be solved and that we are in the best position to solve it.

We have got a very, very experienced management team that has a history of execution and building value. And, thanks to our investors, we have the capital, the proceeds from the IPO and the private placement that give us 18 to 24 months of runway, which is sufficient time, in our minds, to gain solid traction and solidify our position as the market leader.

We look forward to continuing to update you on our progress, and we will methodically change the way the consumer uses electricity and charges their mobile devices.

Thank you very much, and I'm going to turn the session now back over to Matt. Matt?

(Operator Instructions). Brett Conrad, Longboard Capital Advisors.

I was just wondering in terms of the different versions of the ASICs you guys are making, what version will be ready to be embedded in, say, a cell phone, Version 1, 2 or 3?

So when it comes to embedding into the cell phone, we are currently engaged with a number of the cell phone manufacturers. They will be having an opportunity to look at the different versions of the technology. When we believe we get to commercial viability is in the first half of next year. So that's when we think that cell phone manufacturers will have an opportunity to start taking those chips that are coming off the line here in the late fourth quarter and actually doing evaluations to integrate them into the devices. And, as you may now, when you were doing an OEM solution, 12 to 18 months is not atypical as it relates to design-in process.

I'd also make a couple comments on that. There's a couple different ways for us to gain traction in the cell phone market. They have the ODMs and OEMs that provide a significant proportion of the components for cell phones. And, as George mentioned earlier, we are actively engaged with those strategic partners or potential strategic partners.

There's also what we believe is the long pole in the tent, the incorporation of the technology into semiconductors, into the Bluetooth chips and the power amplifiers. And this is another area where we have already begun significant discussions. Our RTL will fit very, very nicely into any one of these components. It will add pennies to the components, and ultimately we see that as the final form of ubiquity.

So there's a number of directions into the cell phone market, and we are engaged in all of them in terms of building out the ecosystem. As we mentioned earlier, getting into the market is the most important thing for us right now. Time is critical. And so the decisions that we've made surrounding cell phone accessories and wearables is the most expeditious way to get the technology into the marketplace, get the consumer to see it and understand it and, again, to begin to drive a basis of adoption support. Ultimately, we do see this in the cell phones. But again, this is a period of time, and we will continue to progress through various markets getting to that point.

Okay. Great, great. And so something like headphones sounds like it's also -- when you say Bluetooth headphone, which would probably be more popular if you didn't have to charge them all the time, would be a possible product rollout as well over the course of the next 18-24 months or something?

Yes. I think we could sit around the table and develop 50 applications for the technology in a 10-minute session. It's just so broad. And so what's important for us, again, is for us to focus and to demonstrate the viability of the technology in the consumer hands. And again, this gets back to the time to market decisions that we've made. But the applications in the markets are broad and large.

Okay. Great. Do you see this 15-foot radius -- will that expand over time, or will that, say, in the next 24 months as you go into development pretty much stay the same, or does it get a little bit wider?

Well, I think that really depends on our strategic partners, their view of the product that they want to release and the consumer. As I mentioned earlier, the technology is extremely scalable. We could be sending more power at greater distance. It would have a larger footprint and would cost more, or we could scale it down to a very, very small transmitter and incorporate it into a wearable.

So the capabilities are very, very scalable, and they are really going to be driven by the strategic partners, the products that they want to incorporate and the consumer.

Okay. Thanks. And one just quick last question. In terms of the number of stock options and warrants, it seems like there was quite a few issues. Now, what can we expect during the future in terms of options, adding more solutions over the next, say, I don't know, couple years?

Well, I think that this is -- certainly, the options are the fundamental driver for the employees, current employees and new employees. And I think that options will be required to attract the top engineers, sales/marketing professionals that we look to bring into the Company. We don't anticipate a large company, per se, but we do want to continue along the lines that we have and bring in very, very experienced and very senior people. And to do that, it's a function of equity. So stock options will continue to be a major element for the employee base going forward.

Okay. Thank you.

[Lou Basenese], [Basenese Group].

Two quick questions. On the MOUs, I know you can't reveal the identity outside of Hanbit. Can you at least give us a breakdown in terms of target markets or whether they are on the receive or transmit side or both?

Right now, of the four MOUs we have signed, one is both. The other three are on the transmit side.

Okay. Great. And just pardon my ignorance here. I just want to -- on the SEC, on the safety approvals, I'm assuming these are being done in parallel, going after all four of them. Is that right? And also is there one that we should expect before the other?

Well, this is a process. FCC Part 15 is very specific. There's a very detailed spec to it. It can be done by a third-party lab, and it will likely be the first regulatory approval that we will obtain. FCC Part 18 is less well-defined, and it really relates to use cases. And so you have to spend time with the FCC to understand their position on the technology and develop use cases surrounding any concerns that they may have. This is a longer process. How long we really won't know until we fully engage with them.

As I mentioned earlier, we are doing the preliminary work now. But the formal work won't start until we have the ASICs incorporated because we need to be testing the technology that ultimately will be incorporated in consumer-facing products.

So the current work we are doing now with our discrete technology is giving us a basis of information. We have engaged a number of labs to assist us. We have also engaged very, very experienced consultants who have worked with FCC along the same lines as the regulatory requirements that we have.

The STAR testing and the CEC testing will be done in parallel. And as I said, we are quite confident that we will be able to pass those requirements.

Okay. Great. Thanks a lot, guys.

Patrick Lin, Primarius Capital.

I have got two quick questions here. One is, can you give us perhaps a range of what the initial selling price or the price points might be? And also, secondly, once the volume ramps up, what do you think that impact might be on the prices for the product at that point?

Well, let me answer that question specifically as it relates to cell phone accessories and our standard consumer transmitter. As we look at that and with our different OEM and ODM partners, part of the end market price will be determined on their brand and how they want to position it. Most of the companies we are talking to are benchmarking the NEST Thermostat as the utility that they are trying to provide. So that plus or minus $300 price point as initial market entry price point on the transmitter is where they are looking.

And then on the receiver, as we are integrating into battery back packs, as you may know, battery backpacks sell from about $75 to $125, depending on the brand. And the partners that we are looking at are looking at not having to change that price point by integrating our technology. They will create a secondary offering with a smaller battery and wireless power integrated. So they will basically have two offerings, one with a larger battery, no wireless power in their same price point, as well as a wireless-enabled solution as well.

So on the receive side, $75 to $125; on the transmit side, plus or minus $300.

And just a quick follow-up. In terms of potential licensing deals, can you maybe provide some color as to what type of deals you might be looking for and looking to sign?

Well, we can't really give much detail now because we're in the early stages here. What I think we can tell you is that likely each deal will have some unique elements to it. They will be royalty-based. We do not see significant upfront royalties coming out of any of the licensing opportunities that we are talking about, but they are more backend performance-oriented.

So, as the product is sold, we will see the revenue stream. We do see these annuities because, once engaged with the strategic partner, we can continue to expand within the product portfolio of that partner. So we are building flexible and -- excuse me. George, do you want to comment on that?

Yes, I mean maybe just pop in real quick. There are two fundamental types of licenses that we are looking at. One, as Steve described earlier, there's two go-to-market strategies in any of these markets, one of which is working with a semiconductor company, in which case we will license our RTL to them. They will integrate our RTL into their chip and create an integrated solution.

The second is where we will be actually allowing our partners to buy chips from our fabs that will have a license associated with it. So two different fundamental licenses: one is straight technology license, one is technology plus a chip. But those are the two core go-to-markets that we have with the early adopters.

Terrific. Thank you and congrats on the successful IPO.

[Gary Ford], [Post Partners].

Two quick questions, one on the market. Before I get to that, just in understanding how your milestones are going to be achieved and possibly communicated to your new public audience here over the next 12 to 18 months, obviously, you have some on the joint development side and also on the regulatory side. If you could get into a little bit more detail, which ones do you expect to come sooner?

Well, I think that we will see a series of strategic partnership announcements. And I think those are -- those will continue for the next 18 months. I think we will announce the receiving of the ASICs and the conversion of those ASICs into productized versions of the technology. I think we will talk about the first commercial reference designs that are made available to our strategic partner and the regulatory approvals. And those will come in phases. As I said, I think that you can expect FCC Part 15 to come before Part 18, and then we will do in parallel with the STAR and CEC. And I can't give you a real timeline here because we are not that deep into it. But clearly, over the next 12 months, we want to complete all of these regulatory milestones.

Super. Thanks, Stephen. That's a good answer.

George, a quick question for you on the market. It sounds like you have got a really deep background in understanding this wireless marketplace. Right now, how large is the pad-based recharging market? I think there are some products commercialized out there. Do you know some of the annual sales of those?

Well, not by customer, per se. We've done a lot of work with IHS, so we understand what their analysis looks like. They've just published the 2014 world market for wireless power. The 2013 number was a bit anemic. The market was projected to be almost $1 billion a couple of years ago, in 2013, and it was a little bit under $100 million, so a little over 1 million units sold. 2015, about $1.5 billion now, and 2017 is $7.5 billion.

A couple things that are happening here, though, that I think is key to note. Wireless power, as it has been currently marketed, has been out there for about five years. I think one of the things that we see and as we have evaluated this market and, quite frankly, as we evaluated joining the Company is we really wanted to understand where the market was and where the potential was and whether OEMs and ODMs really saw the potential today. They still do.

The challenge they have is there's not a lot of utility in a connected solution. A consumer having a pad-based charging solution is a little bit better than having a bunch of wall boards but really doesn't capitalize on mobility. And in the last 15 years, we have gone from a very connected market to a very mobile market, and people expected it from their power. So in order to capitalize on this market potential, we believe that mobility is going to be key, which is why we think we are very well positioned.

Does that answer your question?

Yes, it certainly does. It sounds like the reported statistics are based on those older line solutions.

Yes, because up until our market entry, there has been basically science projects out there and disconnected powering solutions. There have been some very large government-funded programs that have done some big transmitters that are $10 million transmitters, $4 million receivers, and they can throw a kilowatt at a mile. But we are not putting that in our backyard.

And so, short of having something that's very expensive, you don't see a lot of great utility in the truly wire-free solutions that are out there today until the advent of this technology. One of the things that we've done is Steve has been able to attract a very key board member to our team. His name is Bob Griffin. Bob is the principal at Griffin International. Griffin actually does all the merchandising for big-box retail: Best Buy, Target, Walmart and the Apple stores. So we get a great deal of insight into what is happening in that space. And he's also one of the ones that we used to gain access to those delivery vehicles to the consumer.

So, as I said earlier in our -- part of our go-to-market strategy, we are very focused on making sure we have a keen eye on what the consumer wants and doesn't want, what they are seeing great utility in, which is what gives us a lot of confidence in our ability to penetrate the market with the solution we are developing.

Does that help?

It helps a lot. One last question -- Steve, maybe this is for you. But if anyone (inaudible) as you are just getting started on building up your team, you've got a great capital base and a neat market opportunity here. Do you think you are going to be doing this -- the real question is, where do you think year-end headcount is going to end up, and are you going to be carving out teams of other players that are developing similar solutions? Because this is a pretty specific skill set that you are looking for, or are you just going to go and try to get the best of breed, one by one?

Well, I think we have laid out -- again, one of the strengths of the teams that we have in place is that we've done this before. We've built out companies. And so we have put together a pretty effective operating plan for the next 18 months. And I think we have a real good idea of the types of individuals that we are going to be bringing onboard, and they are fundamentally engineers and developers. I think that you can expect to see the Company north of 30 people in the next 12 months. The vast majority of those, 20-some-plus, would be in the engineering department, arranged around four core disciplines -- software, RF, antenna technology and ASICs.

And so we believe that we have a very special opportunity here. And so we are looking to really get the best-of-breed development challenge in each of these disciplines.

Again, I don't think that we are going to have a large company, per se. I don't think we need that, and we are going to be very cost-conscious and roll the Company up as our market expansion develops.

So we will keep focused. We will work with our initial early adopters with a clear objective of demonstrable product at CES in 2015. And then, as we gain traction with those partners, we will begin to expand with additional partners and move into tangential markets.

Great. Thanks very much, guys.

There appear to be no further questions. I will now hand back over to Matt for closing remarks.

And we would like to thank everyone again for taking their time to join the call. Management will be out at a few upcoming conferences, including Markham in New York and the LD Micro in LA in early June. And if you have an interest in scheduling a call and/or meeting with them in person, you can feel free to contact me directly. All those details are on the bottom of the press release.

Thanks so much, and we look forward to hosting our next call in a few months.

Thank you. This concludes our conference call for today. Thank you for participating. You may now disconnect.