Energous Corp (WATT) 2014 Q4 法說會逐字稿

Good day and welcome to the Energous Corporation's fourth-quarter and full-year 2014 corporate update call. Today's conference is being recorded.

At this time I'd like to turn the conference over to Mr. Ted Haberfield. Please go ahead, sir.

Good morning. We'd like to thank everyone for joining us today for Energous Corporation's fourth-quarter and full-year 2014 update call.

Your host today will be Mr. Stephen Rizzone, President and CEO. Also will be joined by George Holmes, Senior Vice President of Sales and Marketing and also Howard Yeaton, interim CFO. Steve will also introduce his team as the call progresses.

The press release detailing the quarterly update crossed the wire yesterday afternoon -- or excuse me, just after the market bell today and it is available on the Company's website at Energous.com where you 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'd like to ask everyone to take note of the Safe Harbor paragraph on the press release that also appears at the end of the financial results issued this 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 in our expectations with regards to those events, conditions and circumstances.

At this time I'd like to turn the call over to Mr. Rizzone. Steve, the floor is yours.

Thank you, Ted, and good afternoon. I'd like to welcome everyone to our fourth-quarter and full-year 2014 update call. As Ted said, joining me today are George Holmes, our Senior Vice President of Sales and Marketing, and Howard Yeaton, our interim CFO.

I would like to lay out the agenda for our call today as we have a lot to cover including some recent developments which I know most of you will want to hear more about. I will provide a summary of key accomplishments for 2014 and then move into comments on our first development and license agreement that was just recently signed with a Tier 1 consumer electronics company. George will then run through our partnership pipeline development schedule and regulatory affairs in more detail. Howard will cover the financials and I will conclude with a brief summary and a list of key milestones for 2015. We will end the call with a question-and-answer session.

Let me start by saying it was a sincere pleasure to see many of our listeners and investors at the 2015 CES show in January which was the high point of an incredibly productive year for Energous. George will speak more about CES but clearly the show reaffirmed our position as the leader in the uncoupled wire-free power segment.

As a pre-revenue company the management team takes our obligation to build credibility with our investors by executing against our annual operating plan very, very seriously. I am pleased to report that Energous met or exceeded all of our key 2014 objectives while making meaningful progress on a number of additional fronts which are paving the way forward to our strategic goal of full commercialization and ubiquitous adoption of the WattUp technology.

In early 2014 we communicated our strategy as a technology licensing company that we believed would develop strategic partnerships which would lead to licensing agreements in 2015. Our plan was to first engage with OEMs and ODMs from Asia who are early adopters of new technology and who build products and components for the major consumer facing companies. The next phase of the plan was to engage directly with consumer facing companies followed in two to three years with partnerships with the slower to adopt silicon companies.

The engagement strategy was balanced to include both receivers and transmitters as both are essential to broadscale consumer adoption. Having laid out the strategy we invited a number of key potential strategic partners to see the demonstration of the WattUp technology at the CES show in January of 2014. The interest level was so strong that these potential partners or from these potential partners that it became clear very, very quickly that the WattUp technology was well-positioned to fill a very significant void in the mobile consumer products market.

Also in speaking with executives from these companies who are in a position to know the state of the market, it was also made clear to us that the WattUp technology had a very significant first-to-market advantage against its nearest competitor. As any of you who have been following us know the Company surpassed all of our initial business development objectives by a wide margin.

To be specific, our original goal was to sign between four to five joint development agreements in 2014 and have engagements with 25 to 30 additional prospective partners. In actuality we signed JDAs with 16 companies, covering a myriad of consumer and business product applications and representing all three key segments of the customer ecosystem I just detailed.

We also exited 2014 with greater than 100 active engagements with a veritable Who's Who in consumer products. In fact the interest in the WattUp technology was so strong that we decided to go back to the capital markets in December and raise an additional $21 million to accelerate the commercialization process and expand our business development capabilities to respond to the demand.

While our initial focus was on smaller second-tier early adopters who move quickly into markets in parallel we entered into discussions with a number of top-tier firms culminating in the recent signing of our first development and licensing agreement with a Tier 1 consumer products company. The agreement is to jointly develop and to embed WattUp wire-free charging capabilities into our new partner's consumer products.

Before we get into the specifics of what we can say I want to make sure everyone understands the confidential nature of this relationship. We cannot name the company and we cannot provide any real details of the agreement other than to say that it is a joint development agreement that involves both NRE and the potential of licensing fees assuming the WattUp technology is successfully integrated into the Company's consumer product.

I want to make it very clear that while Energous and our new partner are actively engaged in joint development efforts there are a number of significant technological milestones that we must successfully achieve and there is no guarantee that we will be able to meet all of the product requirements or expectations. Further, while we will be receiving NRE payments this year in conjunction with the agreement, there is no guarantee that the WattUp technology will achieve final integration into the consumer facing products. While there is risk this is obviously a very exciting relationship that has tremendous upside potential that could ultimately provide a clear path to gaining major marketshare and to generating meaningful licensing revenue for Energous.

At the same time we also need to make it clear that the specifics of the agreement and the focus required to reduce risks will result in a significant reshuffling of our development priorities, a change in our initial product release strategy and the timing of some of our major milestones. George will elaborate on this in a minute.

I also want to mention that the Energous management team and Board have spent extensive time analyzing this opportunity in great detail. We have weighed all the pros and cons and given proper care to the risks involved. With this being said, this is an opportunity which deserves our full attention and prioritization.

Regarding additional objectives we established for 2014 we have repeatedly stated that the core of our Company is its IP and the continuing development of this asset. To this end I am also pleased to report that we have exceeded our intellectual property objective for the fourth quarter of the year by adding over 45 new patent applications to the 80 previously announced bringing the total to over 125 patent applications surrounding the WattUp technology.

In addition we have identified several new key areas of IP expansion that we will be focusing on with the end objective to build both significant core value and beachheads to any future competition. Our objective of filing over 150 patents for the WattUp technology remains on track and we expect our first four patents which were filed in 2012 to be awarded in late 2015, early 2016.

With respect to our hiring and Company expansions objectives using the proceeds from our secondary we have accelerated our hiring timeline. We now have 38 full-time employees and 13 consultants, approximately 75% of which are associated with engineering in one way or another.

Further regarding our silicon development objective, we set out in 2014 to tape our first-generation TX and RX chips. Both objectives were accomplished as evidenced by their use at the very successful 2015 CES show.

Additionally in January we announced that Martin Cooper, known as the father of the cell phone for his pioneering work in radio spectrum management, has joined our board of advisors. Martin Cooper brings a tremendous knowledge and experience base to the Company especially in the field of antenna development. His association with Energous is also another validation of the potential of the WattUp wire-free charging technology.

Consistent with our intent to be a well governed company we separated the Chairman and CEO roles earlier this year with the announcement that John Gaulding, a 30-year technology veteran with over two decades of public company board service, has assumed the role of Chairman of our Board of Directors. We are extremely fortunate to have a proven leader like John assume this position as we move through the next steps in the development and commercialization of the WattUp technology and Company growth.

Finally in late 2014 we joined the PMA consortium which as most of you know is in the process of merging with A4WP to form a super consortium supporting all aspects of wire-free power, specifically the combined PMA A4WP merger will support the existing tightly and loosely coupled market segments plus the newly formed uncoupled segment. The consortium also supports standards for network management which Energous will be especially active in and regulatory. The fact that Energous was asked to assume and we accepted the Chairmanship of this newly formed uncoupled workgroup within PMA is further validation of our leadership position in this emerging market segment.

In short, the Company is executing and accelerating at a rapid pace. All of our 2014 objectives have been met and we intend to continue this level of performance in 2015.

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 ecosystem and on our progress on our joint development agreement as well as progress on the regulatory front. George?

Thanks, Steve. As many of you know one of our major objectives was to show prototypical customer facing products at the CES show in January 2015. We successfully met our long-standing objective of demonstrating WattUp wire-free charging solutions that were representative of our strategic partner's product.

Since this was our first time to demonstrate the technology in a real-world environment I want to start by recapping this event. Approximately 300 invitees viewed the demonstration of various electronic devices employing the WattUp technology included embedded transmitters and speakers, soundbars, bedside units and TV sets which all integrated seamlessly into a common residential setting and provided the ability to charge a multitude of devices free of any wired connection or charging pad. What we delivered was an end-to-end wire-free solution which included integrated reference design that included our ASICs coupled with full mobile app and cloud-based software management system.

We also won several prestigious awards competing against some of the biggest and best consumer products companies in the world. Energous won a total of six awards: three CES innovation awards for embedded technologies, portable power and smart homes; two best of CES awards from Engadget for disruptive technology and best connected home product; and finally, from Boy Genius the very best of CES award.

Our development progress in the last year has far outpaced other wireless power companies with much more development experience and our timing has been exceptional. Throughout the week our leadership position in the newly uncoupled wireless power working group segment solidified by the overwhelming strong response we received from approximately 150 private demonstration sessions with over 100 current and potential strategic partners and their customers. In addition over 70 investors, many of you joining us on this call today, took time to join our reception and see what the new technology was all about.

So what does this mean as we plan for the next chapter of Energous? Continuing to build, prioritize and rationalize our JDA pipeline is a priority. In addition working to convert key JDA partners signed during the past year to development and licensing partners is a major priority.

While we are committed to being fully transparent to the extent possible as we move from JDAs to licensing agreements we will share what we are able to within the context of those agreements. Some licensees will be less stringent while others will demand complete anonymity as they view WattUp technology is a major competitive advantage for their future products.

As Steve mentioned and keeping up with what I mentioned in mind we're pleased to announce that we have signed the development licensing deal with a Tier 1 consumer electronics company to embed wire-free WattUp wire-free charging technology into their products which are but not limited to mobile consumer electronics and their related accessories. I will refer to these product categories on a few occasions as we proceed.

During the development phase and through our first customer shipment of their product Energous will afford this customer an exclusive time-to-market advantage in the licensed product categories. This development and licensing agreement includes both invention and development milestones that the Company will need to achieve during the next two years.

The most challenging development milestone from Energous' point of view will occur by the end of 2015. Energous will receive revenues in the form of milestone-based development payments.

If the Company moves into 2016 with this partner the development payments are expected to be more than sufficient to cover our total development expenses required for this project. This agreement will enable Energous to accelerate commercial development on a number of fronts with the Company.

If successful this agreement paves the way and a very clear path to attaining critical mass in the market for WattUp wire-free power. The goal of promoting the establishment of a wire-free charging ecosystem based on the WattUp technology Energous and this partner plan to collaborate to introduce WattUp technology potential partner companies including router and accessory manufacturers.

Obviously each step of the way we have been trying to calculate and cover which JDA partners with the most committed to the product development and commercialization of the WattUp technology. Our product introduction priorities which have been historically determined by our own estimates for the market will now be determined by development and licensing partners as they integrate the WattUp technology into their end consumer products.

Our priorities are now pivoting on existing JDAs where we do have a green light to proceed. These include companies that are focused on transmitter and receiver technologies for products like the Internet of Things, cylindrical and packed batteries and gaming. We anticipate announcing additional licensing agreements in the balance of the year for these types of products.

In relation to our first commercial products hitting the shelves while we hit initially targeted backpack batteries as the initial product that would hit the shelves by the end of 2015 these products -- these first products to market will now likely be low powered bedside unit charging cylindrical batteries, toys, gaming consoles and other markets that are outside the exclusivity requirements set forth by our partner. We intend to demonstrate these strategic partner developed products at the 2016 CES show.

Let me give you a brief update on the regulatory process for Part 15 and Part 18. Each product that goes to market will require FCC approval testing but the first products will receive approval that will set the precedent.

In Q3 we conducted tests on our early prototypes which were designed to help us with our test development and planning. During the course of Q4 we made progress on Part 15 and had anticipated having certification on our receivers by mid-2015. However, due to this new project and re-prioritization with partners for commercialization we now expect this to happen towards the end of 2015.

A big positive though is that our partner is aggressively working with us on this front and will be involved in the FCC process on each product they launch and launch with us. To date we have received no showstoppers that would stand between us and complete certification in 2015.

Now I'd like to turn the call over to Howard Yeaton to provide you some details on the financial results for the recently completed fourth quarter and the full-year of 2014. Afterwards we will turn the call back over to Steve for additional comments. Howard?

Thank you, George. As you saw at the close of the market today we issued a press release announcing our operating and financial results for the fourth quarter and full-year ended December 31, 14. Our net loss for the fourth quarter of 2014 was $9 million and our net loss for the full-year ended December 31, 2014 was $45.6 million.

The full-year 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 of these related to our recent financing events. Adjusted EBITDA was negative $8 million in the fourth quarter of 2014 and negative $17.5 million for the full-year 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 $6.3 million and $12.5 million toward R&D for the 3 and 12 months ended December 31, 2014. Our G&A expenses were $1.9 million and $5.1 million for the 3 and 12 months ended December 31, 2014. And our marketing expenses were $766,000 and $2.8 million for the same 3 and 12 month periods.

On December 15, 2014 we closed a secondary offering of our common stock at a price of $7 per share. We sold approximately 3.3 million shares of common stock in the offering for an aggregate of $21 million of net proceeds after deducting the underwriting discount and expenses of the offering paid by the Company.

Turning now to the balance sheet, we ended December 31, 2014 with a $31.5 million in cash and cash equivalents with no debt outstanding. We intend to use our cash principally for research and development, product certifications and sales and marketing efforts. We believe that our cash on hand will be sufficient to fund our operations into the second quarter of 2016.

Steve, let me turn a back over to you now.

Thank you, Howard. Earlier this year the Energous management team and its Board of Directors established a set of objectives for 2015 which include the continued acceleration of our ASIC development program by taping out four new chips this year, the expansion of our headcount from current levels to approximately 60 FTEs reducing the number of consultants supporting the Company; the majority of the new hires will continue to be in the engineering group.

With the reshuffling of our priorities brought about by our first development and licensing agreement we now intend to have WattUp technology fully integrated into products from strategic partners supporting the Internet of Things at the 2016 CES show and available to the consumer by the end of the first quarter, beginning of the second quarter of 2016. We will sign additional development and licensing agreements that are consistent with our rollout objectives and the first-to-market stipulations of our initial development and licensing agreement.

We will maintain fiscal responsibility and extend our current cash while accelerating the Company into the second quarter of 2016. We will successfully complete our FCC Part 15 and 18 testing and approval cycles in the 2015 time period.

Now let like to provide some final thoughts. Our first development and licensing agreement with a top-tier consumer product company obviously has the potential to transform our Company. Despite this potential we will continue to work on multiple additional development and integration paths to the consumer.

We anticipate that a number of new development and licensing agreements with top-tier consumer product companies will be announced in the coming weeks and months. Our initial goal of getting the WattUp technology in front of the consumer as soon as possible remains on track. The recent events in Barcelona are an indication that wire-free power solutions are gaining traction.

The timing is right for Energous and its truly wire-free power at a distance technology. It is our belief and the belief of our partners that once the consumer becomes aware of the utility WattUp-enabled products bring to the mobile market, especially compared to the alternatives today in the form of tightly and loosely coupled solutions, adoption will be swift and the path to ubiquity will be accelerated.

In summary, we are executing as a company. We continue to say what we are going to do and do it. We intend to fully capitalize on this great opportunity before us with the end objective of a ubiquitous WattUp solution as prevalent as WiFi.

I will now turn the conference over to the operator for any questions. Operator?

(Operator Instructions) Ilya Grozovsky, National Securities.

Thanks for taking my question. Can you guys just talk a little bit about what you're seeing on the competitive front as far as other technologies and give an update on that as well? Thank you.

Yes, this is George. So as you probably saw there is a tremendous amount of activity in the news in the last week or so with all of the activities over in Barcelona. And I think that as Steve described this really further enhances the awareness that wire-free and wireless charging is getting.

Currently today all of the solutions that are currently available are still limited by the length of the power cord. Whether it be a tightly coupled solution or a loosely coupled solution all of these solutions still are limited by the length of their power cord and really don't play in the same market segment that we participate in which is totally uncoupled solutions that allow you to power your products at a distance.

As it relates to companies in our segment we continue to keep an eye on the companies that are out there that have gotten some notoriety of late whether they be in the RF space or in the ultrasound segments but those two companies do not really appear to be close to commercialization in the next two years. I think the information that we're getting from our partners much as Steve described is that we are significantly ahead from a time-to-market advantage perspective. And that's what we continue to see in the marketplace.

Okay, great. Thanks.

(Operator Instructions) Ben Padnos Done! Ventures.

Afternoon, guys. Congrats on the licensing and development agreement. That's a great achievement.

I was out this morning and wasn't able to listen to all the furor around Apple's iWatch. But I just was curious if there's any commentary on anything those guys are thinking about or doing with the iWatch this morning if anything specifically that addresses Energous? Thanks.

Well I think the only comment we would make is that the power solutions that they continue to advocate still don't solve the fundamental problem with the watch as with all wearables and that's the requirement to charge frequently and to remove the device from your person while it's being charged. So I think that's consistent with all of the charging solutions for wearables today and it's why we see this as a long-term significant market opportunity for the true wire-free solution that Energous brings to the market. So again nothing new from our perspective as it relates to the charging element.

Great. And then I guess IKEA had the announcement, that's Samsung I believe is their partner on that on the furniture play that they're doing.

Well they actually have multiple partners there, Ben, their focus on the WPC or Qi standard. And it's interesting because if you look at the announcement everybody announced that they were in the new Samsung phone.

The only one that can actually say they were in the Samsung phone is IDT who has a tri-band receiver solution, so they have a Qi, PMA and A4WP receiver chip that is actually embedded in the phone. They are the big winner here but still all of these solutions that they can integrate and that phone can charge on whether it be a WPC solution from IKEA or it be a Powermat solution in Starbucks you're still limited by the fact that you have to go drop your phone on a pad.

We see further I don't want to say categorization of the market. While all the notoriety is good I think from our perspective it is positive and it increases the consumer awareness of the possibility but the fact of the matter is that the market looks to be segmenting. The loosely coupled and the tightly coupled segments are really designed for portable devices, devices where you can either drive your EV over a large coil in the ground or drop your PC on a mat sitting underneath the desk and leaving it there.

Our market segment as we've indicated all along is in the 10 watts or less with full mobility. And this segment as evidenced by the fact that there's now a workgroup that's been established at the PMA for the uncoupled segment and that we've been asked to chair that group, I think this segment especially in the mobile arena is really going to start to get a lot of visibility. Because the utility it brings for mobile devices far surpasses anything that can be achieved with either tightly or loosely coupled solutions.

Great. Well thanks for taking my questions. Keep up the good work, guys.

Jim Collins, (technical difficulty)

Good afternoon guys. Thanks for taking my question. I got on late so I apologize if I missed this but can you just give us an update on regulatory in terms of the different standards that you're going for and where you are in all those individual standards, California outside the US and US?

So let me take that. Clearly our initial focus is the US. It will be closely followed by a tossup between Korea, China, Japan is the secondary markets that we address.

And then we'll be pulled into European market as our partners dictate. But as we look at our partners today that is their focus -- excuse me, I should have included Taiwan. But that's really the focus that we have today.

I think what you'll see from us over the course of this year is we're going to start treating our regulatory planning and our regulatory assets as truly a strategic asset. One of the things that we've learned through this partnership with this newly announced strategic partner is some of the things we're doing for regulatory approval is very, very novel and they have suggested that we be relatively stealthy about it. So while we want to be transparent and communicate what our plans are, we're probably going to be a little bit less communicative in this front on an ongoing basis.

The plan today for us is clearly Part 15, Part 18 as Steve described and the associated approvals required to sell products in the US is our first priority. And as Steve described earlier we expect to have those early certifications for first products before the end of this year.

Okay, so does that still jive with I mean my knowledge is a little dated here but does that still jive with getting a product out there for Black Friday? On the market I mean to say.

You might have missed this but because of the implications internally to Energous of the working relationship and the joint development that is going on with our newly formed strategic partnership as well as the first-to-market or the time advantages associated with the agreement for our strategic partners, we are -- we have in fact changed our development priority. Initially we talked about battery backpacks coming to the market by Black Friday. We will not be doing battery backpacks as our first product rollouts because those are part of the first-to-market advantage agreement with our strategic partner.

We will be now focusing on the Internet of Things, on game controllers and cylindrical batteries and strategic partnerships with consumer facing products that incorporate these type of products into their lines. Our intent now is to have these products with fully integrated WattUp solutions at CES in 2016 and then available to the consumer in late -- the first-quarter 2016, early second-quarter 2016. So again the priorities and reshuffling caused by or brought about by our newly formed partnership as well is their time-to-market advantage that we've agreed to in this agreement has caused us to reshuffle our priorities resulting in that change.

Sure, it's a big change strategically without a doubt. Does that mean that the JDAs you had with partners specifically to work on battery backpacks do they expire or they're just sort of on the back burner or how does that work with those particular partners?

So with those particular partners it's not that they expire. We're actually working on other products within our product categories that they have that are not excluded during this development time frame. But also there's an opportunity for them to participate with this partner coincident with their product launch when they launch their product.

So while there is a little bit of delay for them in early products they have a tremendous opportunity for pull through products when both products are released. So a little bit of near-term push out from their perspective. We're getting engaged with them on other products in our product portfolios which are things like Bluetooth headsets and other things in that product line that would be of that power category that are not excluded through this agreement.

But I think what you can see is as we go through and turn JDA partners into full-blown development and licensing agreements while our priorities historically have been our own as we get into these licensing agreements those priorities may change, we may see shuffle as we are working towards revenue. And so as you work with these partners on developing actual products that will get out in the marketplace our priorities will be tightly coupled to their priorities such that as we execute and deliver, as we have always done, that it ultimately results in a revenue stream that we feel comfortable in.

I would like to make also one additional point so it's very, very clear. The agreement with our new strategic partner is a time-to-market advantage agreement, it is not an exclusive agreement. And so we've granted to our new strategic partner certain time-to-market advantages for certain product types for certain category types of products.

But by no means are these exclusive. These have specific time elements to them and then we will be able to broadly expand with other consumer products companies in those same market segments.

Okay and then just I hope I'm not taking up too much time here but that's the sort of agreement that Toyota used to have for instance with Nippon Denso where they would have 18 months of time-to-market advantage but Nippon Denso had this staff they could still be working on commercializing that product for Ford and Honda and people like that.

So I'm just wondering if Energous as currently configured has enough staff or engineering resources to keep working on things other than what this partner is directing you to toward? I know you can but I'm asking if you will be able to given the amount of capital that you have and resources?

Well, first of all let's be clear that we're not going to be working on the potential competitive elements there. What we're going to be focusing our resources on are other market segments that are not contained within the first-to-market advantage exclusions.

And keep in mind there is such a broad spectrum of product markets that we can participate in and every one of them has a huge TAM associated with it. Our focus really now is to reset and to work with potential partners that can get us quickly into the market that can accelerate their product development cycles and can meet at the expectations that we have for CES. And in answer to your question, yes, as I mentioned earlier, we are expanding our staff and we will be able to work on those segments in parallel.

Okay, that's great. That's really exciting. Thanks a lot, guys.

Greg Felt, Freedom Finders.

My question got answered. Thank you.

(Operator Instructions) Matthew Stewart, private investor.

Hey guys I know that you all have touched on the fact that you all are the only private charging technology in your segment completely wire free. And I was just curious will the consumer side see a price difference on this and if so how significant are you expecting this to be?

I don't think again our initial indications are that depending on the product and the segment or market segment that we go into that there will be a price appreciation as you would expect for the initial release of a new technology like this. But over time that this will be absorbed in the rollout of the technology and the integration of the technology into silicon that's already resident in devices. So I would think that our strategic partners are telling us that there will be a pricing element for the transmitters depending on the segment and that the inclusion of the technology in the receivers will have some minor impact but not a major impact on pricing.

Let me also add to make sure it's clear we are not the only company that is doing uncoupled solutions. We are just the Company that's out ahead of everyone else.

There are competitors in this space in both the RF and in lasers and in ultrasound that have technology that they are developing. Because from our investigation and that of our partners it appears that they are significantly behind us from a commercialization perspective.

Okay, great. Thank you.

Ilya Grozovsky, National Securities.

Hi, thanks for taking another question. I just wanted to be clear just so that we understand what is -- what do you mean when you say Tier 1? Just wanted to clarify, thanks.

Well as I just had to go through that clarification, we basically took the CEA's listing of the top 10 companies in the consumer electronics space and used that as the classification for Tier 1. And then the next 10 to 50 would be Tier 2 and below 50 would be Tier 3. So it was based on revenue in the consumer electronics space and we used CEA, the people that put on CES, as their guideline to create that bucket of companies in that segment.

Okay, thanks. And also the new partner is one of the previously announced JDAs or it's a new player? Thanks.

We really can't speak to that. Again this is a very, very confidential agreement that we have and we are obligated really not to shed any light on prior status or prior elements of discussion.

It's a new agreement. It's our first licensing and development agreement and that's as far as we can take it.

Okay, thank you.

(Operator Instructions) At this time I show no further questions in the queue.

All right, thank you, operator. Listen, I want to thank all of you on the call for your continued support and interest in the Company. As I said I believe that the Company is executing.

We have a clear path for execution in 2015. We have a very, very detailed annual operating plan.

We know exactly the steps that we want to take and the time that we have to take these steps and we'll be managing and progressing through the year and look to communicate our progress to you at future calls. And also we're going to be very, very active on the investor conference circuit and we will be happy to meet with you in person if we do get the opportunity.

Again thank you for your interest and your support and we look forward to a very, very productive 2015. Thank you.

That does conclude our conference for today. Thank you for your participation.