Q2 2020 Neonode Inc Earnings Call
After the speaker's remarks, there will be a question and answer session with the company's covering analysts.
If you would like to ask a question at that time is simply press Star then the number one on your telephone keypad. If you would like to withdraw your question press. The pound key. Thank you at this time for opening remarks, and introductions I would like to turn the call over to David Brunton Neonodes head of corporate Investor Relations Stephen Please go.
Uh huh.
Welcome and thank you for joining us.
Today's call, we will review, our second quarter 2020 financial resorts results and provide a corporate update.
Update will include details of customer activities technology developments and other items of interest.
Before turning the call over to our CEO dr. been or sell and CFO Maria I would like to make the following remarks concerning forward looking statements.
All statements in this conference call other than historical facts are forward looking statements. The words anticipate believe estimate expect Panda will guide it's confidence targets projects and other similar expressions typically are used to identify forward looking statements.
These forward looking statements do not guarantee the future performance that may be may involve or be subject to risks uncertainties and other factors that may affect neonodes business financial position and other operating results, which include but are not limited to the risk factors. Another qualifications contained get Neonodes annual report.
On 10-K quarterly reports on 10-Q, and other reports filed by Neonode with the FCC, what's your attention is directly.
Therefore, actual outcomes and results may differ materially from what is expected or implied by these forward looking statements.
Another expressly disclaims any intention or obligation to update these forward looking statements.
At this time, it's my pleasure to turn the call over to urban Kevin. Please go ahead.
Thank you Dave Hello, This is sort of on for cell I'm, the CEO neonode since the beginning of the year.
Thank you for joining the call I've been to take you through a business instructed update today.
And I would like to start with this slide here showing a summary, all the neonodes legacy and.
As many of you know Neonode started as a smartphone company back in 2001 and launched what is the world's first yester based mobile phone in 2004.
This phone.
Made several made headlines and several newspapers about a lot of attention.
And that featured.
Huh.
Neonodes IR based touch already back in 2004, so the origins of our touch technology. It can be traced back to these early smartphone years.
Later on Neonode shifted focus and.
Into more business when you read their manufacturers printer manufacturers on alternative tier one suppliers.
And the business model changes from offering business, the consumer products to technology licensing mainly.
[music].
Today in transit Fenty.
We are working to establish a new strategy and a new direction for the company.
And we are aiming at substantially growing the business and making neonode much more profitable company.
And we have presented a the outline some of this strategy in other presentations for instance, with Red I had a bring second and also with Red eye in June 2nd and.
Some information has also been included in our first quarter Uh Huh.
A press release.
As an interesting journey for me being quite human their company I'm little bit more than six months in and.
That's all you know Twentytwenty has not been what we saw thought it would be in 20 to 19, mainly because of this guy a summary, you have heard him Kobin nine team.
For Us this has meant both headwinds and tailwinds.
Headwinds have even come back to because he is some slower sales in the printer market an alternative market.
But regarding Tailwinds, we have seen and are seeing a huge increases in demand for our contact lets touch solutions.
From customers all over the world and we.
We simply see it gives us a starting point now floor.
New normal in society and also.
You normal for Neonode huh.
What we certainly believe is that going forward.
People do not want to touch buttons and elevators on vending machines and other self service kiosks.
Just a new normal people are afraid of getting infected by bacteria and viruses like to cope with virus.
And.
People have done obviously trying to avoid getting effected and companies are scrambling now to find technical solutions to these problems and the risks. So for instance, how can we find different ways to interact with machines and here we have the what we believe.
The right answer a simple intuitive solution to many of these problems.
So our belief is that we are one or the few companies in the world today that has.
Very suitable proven technology and.
The fact is that are the force touch technology is already implemented in over 75 million different products out there.
Tom leading Oems in the consumer electronics, the printer business and automotive.
We have over the last 15 20 years fill up an extensive technical expertise and know how around this technology a different application areas.
Technology is protected by more than 120 patents.
And we are today in a position where we have existing products that could be are shifting to customers and that are easy to use that our scalable.
And the.
Yes.
Allows for short time to market.
Yeah, we have Neonode also have build up the last couple of years and especially this year strong focus has been to expand our ecosystem of partners. So for instance, today, we have well established a corporations with digikey inferior.
Two large fulfillment distributors.
We have the partnerships with.
This other types of distributors and value added partners like highlighted in Germany advanced silicon It helix in Switzerland, and other companies.
Also cooperates with a lot of.
Interesting tech companies.
Like us get three D. Yes, our Espeed hollow industries, and further engineering firms and integrators like.
Happy hover.
We also have a network of the sales reps and sense partners in the U.S. for instance, we work through the network called convergence that has some hundred.
Sales reps meeting customers every week and promoting our technology.
So this is guiding us now going forward.
And to explain a little bit.
More adult our technology I would take you through a couple of slides regarding that before we go into more examples and more information about their business.
So the key technology for our contact lets touch on our normal touch business is called to see force, it's an optical.
Touch technology based on.
Infra Red light, so invisible student human eye, but still.
Like based.
It supports contract just touched applications together to displace so in this slide if you look bottom left for instance, you see a typical example, other medical display and can decide about patients do you have a doctor or a nurse that operates assistance through.
The interface that the display provides.
They often have rubber gloves on their fingers are the club's could be covered with.
Different kinds of fluid could be contrast, fluid water could be blogs or.
They don't want to touch the screen for that reason or because the screen sits in a state run environment like a surgeon room.
Then our technology.
Can be adopted and applied in a way that's the operator doesn't need to touch the display so.
It's still.
Touch display, but there's no requirement to physically touch anything to control it.
This can be extended done.
Two.
Touching me they're.
Using holographic displays or you can also offer solutions will touch on any other surface like glass window.
She told that wouldn't panel and so on.
Also gesture sensing is another way to eat interact with machines and the.
If you take the example here in the slide bottom right kitchen fan.
So using our technology, you can turn to fend off and on and you can also regulate the speed of the fan using simple hand gestures in me there.
So all this is possible with see force, our patented technology and it's a very versatile technology and so.
Some of the.
Unique selling points, we have is that.
We can offer a safer way to interact with machines equipment and the engender a different types of IP systems. There are no requirements to physically touch the display are tough surface. When you work and to see for six not a different me on old also very robust it's based on light beams.
Being either.
Broken or reflected so no moving parts no thinks that can wear out or break.
Very flexible.
In this a few slides here on the following slides you will see a number of examples we've had our technology has been applied.
Different ways.
Phil It's the same core technologies from us So our technologies that are flexible scalable and easy to integrate also like I mentioned in this case with the medical display or in other demanding a display applications like military displays shown here, an example bottom right.
Our technology is more or less ideal because they don't interfere at all with a display itself. We have an I can add on feature to this system.
And if desirable you can have the touch functionality sit.
A few millimeters in front of the display or that surface that you're using.
So.
Overall, we think and we believe they have customer feedback telling us that RC Force technology is a very strong offer in many different application areas.
And looking at typical application examples I've already mentioned contact us in a touch and.
Holographic displays and those that do that follow US you have seen our press releases for different corporations in these fields.
This year I also want to highlight here that possibility to do mechanical controls replacement using RC Force technology.
So when you realize that you can have in their touch or holographic displays and if you think them a little bit longer you realize that.
I don't necessarily need to keep.
Mechanical controls the Buckminster switches like you have in an elevator for instance, you can replace.
Fiscal buttons that we show in the picture here and second left.
By simply having printed symbols to guide to use or where to place his finger or two point.
To control the elevator. Another example of the show here is a front of the washing machine normally more than washing machines has a combination of display with the touch or without and physical button switches and routers and similar using our sensor modules not that at the top of the washing machine or on on the side.
And programming the software application a sensible way, we could touch enabled the whole in front of this.
Washing machine and then you could remove all the physical buffington switches still you can control.
Turning to machine on and off you can change the program you can set timers and temperatures and so on.
So it's pretty neat can be very cost saving and also offer more or less and less opportunities to develop really good.
User friendly.
Interfaces to in this case of washing machine, but it could be basically anything so I wasn't highlighted here.
Moving over to our business.
So what we're doing in the company.
Is that from the last 10 years focus on technology licensing.
With customers like printer manufacturers manufactures of E readers and automotive tier one suppliers.
This has been.
The main business for Neonode. The last 10 years. It has generated something like five to seven or $5 million to $10 million per year in revenue.
This has mainly been royalties so there's a good margin on this but still the potential thats been.
Little bit limited.
We are now doing.
We are shifting our main focus into.
Yes.
And right now we have a range of sensor module products that we produce in our own subsidiary Protomold in the west on Sweden.
And going forward, we may also add other product lines and new variants.
But where we see the biggest potential for growth and expansion is with contact lets touch is full scope with environment.
And the flexibility application of our technologies and these products that to the offer.
Give us basically endless verticals or segments to operate and in many of them. We have both the new equipment play and the retrofit play.
And to give you. Some examples we are very much focusing and working on different types of kiosks.
Directed kiosks self started his kiosks that could be.
In airports in the retail stores.
To be Tecan machines could be ATM, and similar Oh elevators Super interesting segment.
Where we see a lot of interest and he says a lot of opportunity again, both for new equipment.
Installations.
And then our customers will be Oems elevator awareness or.
Companies.
Producing the control panels for the elevator wins.
Well to retrofit could be a retrofit business with the Oems, but also and what we see it right now happening already is with third party companies.
Service companies maintenance companies could be installation companies could be tech companies.
So elevators is a very interesting.
Opportunity for us.
Next to except to fight this morning, and give you a little bit more color to this we will take you through some of our pipeline opportunities that we are working on.
To show the breadth of.
These opportunities and also give you examples of interactions with large OEM customers and smaller and local engineering firms.
So next I wanted to go through.
This opportunity with self checkout kiosk.
Here, we are working with a leading kiosk manufacturing the world and then one of the really the largest on the market leaders here with him multinationals reach.
The application is a touchless display intended for self checkout kiosks in retail.
Let me show an example on the right here in the picture.
[music].
Customer reach up to us in April may timeframe, and told us that they have been.
And using our touch sensor modules in their labs and develop different kinds of prototypes and tested them.
For instance for this type application and they now decided that they want to start a pilot.
We had.
Initially it was said one major retail from in the U.S. right now we are in the middle of this pilot and it involves than total seven major retailers. It was six but I guess to recently learned that they added a seventh retail chain in Russia.
So this is started in the U.S., but now it also includes a retail chains that either they are multinational or they are local about in different parts of the world like Australia, Colombia, Singapore and Russia.
We are looking here at at this project only and.
At an initial stage.
Depending on the success of this pilot and how many of these major retailers will.
Except offer to have this type of retrofit solution that we are developing together with this OEM.
We expect.
And our customer told us that the potential is 50000 to 200000 units in the initial order and here, we estimate that our sales price can be.
30 to $50 per unit.
Maybe little bit higher.
Today, we are selling.
The sensor modules for between 50, an $80 per unit.
Yeah.
Those prices that we have today for customers buying from for instance, digikey that they gave us on the gross margin of 40% to 50%.
If you talk here about a bigger commitment from a large OEM.
And there could also be multiyear commitment.
I think that we will be forced to go a little bit lower and price still we think we can maintain a pretty good gross margin in this case.
Probably the distribution.
We'll be directly from us to these OEM customer.
We see this is a very very strong we have advanced discussions with this customer and this pilots is well underway and we have some initial feedback.
We also know that this OEM.
Has prioritise this project due to pressure they have from the market them from customers to develop this type of contract less touched interfaces on their devices and they also have pressure from other competitors and also local engineering firms and I will show. An example, later what type of competence.
This OEM is facing out there.
So we know that they are targeted to have something production ready and be shipped to customers before the end of year. So it's also.
Quite soon and lead times are not too long. So it's a super interesting and this company to be working with here of course, there are many self checkout kiosks and similar kiosks in the world, but this company they're doing a lot of these type of products, but they also do ATM.
So that's the next case I want to take you through here.
Similar to the previous one but slightly different ATM Saar found all over the world. There are millions of 80 EMS.
Only use some 500008 dams and 3.2 million something ATM over all over the world.
There are an example of a self service kiosk, obviously, but they are also money transaction equipments. So they are subject to different types of.
Regulations and safety measures so both the banks and the authorities in different countries and the Oems that sell these they they want to take measures. So that people cannot act these ATM or installed skimming devices on them and so on.
So what we can expect is a higher complexity. It's also very much more business with Oems I'm not so much with third party engineering firms or tech companies.
But since we were already engaged with this larger when that also is a major player in 18 months.
We basically have together with them developed some proposals to replace the physical keypads and this is an example of removing the mechanical controls to save cost and there have been quite open to US here this customer and say that they have I appreciate that possibility to save cost both in there.
Section.
They don't need to keep as many skews active in the production, but especially for keeping these eight ends up and running so for maintenance and service operations out there in the world. They see huge potential say costs. So in addition to this demand for our contact lets touch into.
Face driven by the co bid.
Concerns out there.
They have here really point to that the cost saving potential. So this motivates us and.
Tells us that.
Yes could be a also very very interesting opportunity and for many of the ATM today, we see actually multiple opportunities in the same equipment. So we could touch enabled the screen and also replaced the key pad, we had two sensors or three depending on the sites on the screen.
So in some cases, it's actually possible to have an increased sales on this type of equipment. If you do it right and the of course, we are trying to do it right.
The third example, I want to talk about this elevators actually this is a number of opportunities compare listen this is not just one.
We see incredibly deep market potential in the elevator segment because.
We can interact with Oems and manufacturers of control panels.
With them, we can have both the new equipment and the retrofit play.
Then we also have engagements and corporations with several medium sized and small tech companies maintenance companies and.
Engineering firms two examples is be than GSR. There are companies offering holographic displays and they have developed special applications of their technology for elevators and they have also secured some significant contracts the retrofit elevators in China with their solution.
So we see Pictures example, left VSR and right he speed in these pictures.
You also have other examples from.
Anywhere from Hong Kong to Europe to U.S.
And another company it commences novo elevators in the U.S. that have developed pretty neat solution for contact less interface in their elevators in the U.S.
There are some 19 million elevators in the world.
And this number is growing by 5% to 7% or a 1.3 million per year.
We estimate that at least 10% of the elevators out there.
Our being refurbished upgraded updated every year.
That's why it for me personally elevators is super interesting segment to operate in and we are already there there are more and more companies adopting this and launching this type of solutions out there in the field.
So I think this shows that we are already underway from Neonode side, we focus our resources on the direct says to elevator Oems and.
In the future also control panel suppliers and we have also many partners in our ecosystem that are also trying to penetrate this market with their offers and for US doesn't matter. We are selling the same type of sensor modules.
And we see that they're growing volume's going into elevators in the future.
Super interesting.
The fourth opportunity isn't different example, again.
This is strong the Sandy airport in Singapore.
And.
For.
I would say all airports or airlines in the world passenger safeties key now in the post Kobin World Enron in this business.
Want people to return to traveling into flying.
And what I'm, telling you hear about Sanghi and.
Our transportation also is applicable to trains subways and buses and similar.
So.
Thank you airport ranked as the number one airports in the world top modern and New airport. They decided early on this year in during the early phases. Other pandemic something like February March that.
They want to make sure that their airport is not only the best airport in the world, but also the safest.
For travelers and believes working in the airport and they found our technology and they zoom in on on using that.
Two.
Update upgrade their different ticketing chicken kiosks and similar to contact less touch operation.
And there was a local it engineering firm that we cooperated with here that saw this opportunity they quickly develop different retrofit solutions and install them.
In the different terminals in the airport.
It's working well passengers find this very attractive and intuitive easy to use the airport management Super happy They have actually asked this engineering firm to come back and retrofit of elevators and other equipment in the airport with a similar solution.
For US. This is just one example, but here we are using a channel with a local engineering firm, we are covering actually multiple verticals. So self second kiosks elevators and vending machines and so on.
And that there are some 17000 airports in the world. There if you add to this as I mentioned train stations bus stations, even hotel lobbies and you can add shopping malls that are men is similar.
Opportunities out there and mainly we have local partners that are addressing this markets, but for US shows also the flexibility on the applicability of those sensor modules on our technology.
And also at Shoals here and you can go and see a in the Internet Shangri Airport has also posted several promotional videos and instructional videos how to operate this equipment. In airport also there are several TV features newspaper articles written about this so very good.
Sample and sure enough, we're getting calls now basically every week from other airports around the world from the U.S. from Europe and Asia. So how can they also do this whatever shanghvi has done in their airport.
So thats why we want to highlight is here and that shows the trend that we think is also coming into other transportation hubs and and shopping malls and similar.
50 example, just wrong this off and to make it complete.
We will of course.
Keep our existing license agreements with the printer manufacturers and it really companies and we will also try to expand and extend that those relationships.
We are also today in active discussions on the in some development projects with other customers like.
Yeah.
Companies.
Manufacturing displays for military avionics applications and industrial control systems.
So here's where we will have the main focus for our technology licensing and is going to be more niche applications and more demanding more high performance applications them printers.
So that's a clear shift in strategy and clear focus now going forward.
To really used the power of our technology and.
The quality and.
Good for instance.
The good resolution on the good the image quality that can get using our touch technology compared to competing solutions like pickup and resistive touch.
At a difference here is that again this is technology licensing. So what you can expect is a slightly lower average sales price because it's a royalty that we get in the and also we should be aware of the longer lead times first there is typically the customer is large OEM.
The company they have their own processes or lead times are longer.
Here, we will also be involved in pretty extensive development projects.
Ranging from one year, two maybe three years, depending on application and that type of industry.
On the other hand if.
We have in this type of business and B and carry out this development.
The underlying product will typically be in production and generate royalty revenues to us for between five to 10 years.
And this is what we see today, obviously with the printers and out demoted displays on the E readers say in many cases, they generate a revenues from licensing many many years after labor first launched.
So we will can definitely continue this I also want to mention here too you listening into this call that I see certainly also opportunities that elevator Oems or a kiosk Oems may if these girls and when these gross.
They may want to integrate the hardware that we use in our sensor modules tighter into their designs into their hardware and they ask also if they can license our technology and I think we will of course offer this.
And that the strength of our offer our total offered to these customers. They can grow with us starting out very small it's very quick to buy for instance from Digikey. They can use the if the case that they can download from our website create the first application when this growth they are typically.
Reaching out to us and we will help them to develop a little bit more refined solution and this could be.
Further refine that into an integrated solution, where in the end that they will produce or the hardware and they were licensed the fee for a second order from us so still that business model. Its viable we have not certainly not given up on that.
The main focus in the next couple of years will be to drive the product sales.
So thats also true.
These two business areas.
That we have introduced in April.
They certainly go well together and they are mutually supporting their separate but neutral supporting and the big differences the business model, we use technology licensing or product sales.
Technology or software licensing is also what we do in our third business area.
We called that business area remote sensing.
And the here, we are offering a software platform.
The called Multisensing and the focus here is driver monitoring and in cabin monitoring mainly for automotive, but maybe or other types of applications.
We are here entering a very interesting market opportunity because in Europe in North America also China there are already.
Laws and regulations in place that require some time ago camera based driver or in cabin monitoring system in the vehicles in Europe.
The regulation is called GSR. It comes into effect from 20 to 24, it applies to all light vehicle, but also commercial vehicles.
And the typically all the Oems and many of the tier ones are now rapidly trying to develop.
Features driver monitoring feature in cabin ones features that meet the safety requirements, but that also offer additional convenience.
Eight years.
And here, we are working very hard to.
Further develop our software platform to market this and to sell it and we have some good resonance with several European Oems and some Asian Oems and also been tier ones.
And the.
Our targets here is to establish ourselves as a very reliable an innovative tier two supplier of this software package.
That's a tier one can integrate with their camera system and then offer to Oems.
So this is the business model, we use here and the focus we have here.
Similar to technology licensing regarding our seaports technology, we must expect here.
That there is certain lead time to sell this.
And still be have to wait some months before we can announce the first major of design win we are in the progress of developing in evaluation.
But then it's typically fall over development project.
Extends through two or three years.
And then the discourse in production maybe 2024.
Something like this.
So this is the opportunity we are looking at here and.
The interesting thing with all this six or seven opportunities I discussed with you is that they span actually several application areas and.
Some are shorter lead times in the summer requires on more patients they have longer lead times.
But neonode is using only two technology platforms to achieve all this and that internally that makes me.
Certain that our efficiency can be kept the quite good level, although we span many different verticals on application areas and that's the beauty of our solutions to see force technology, which is ideal for contact lets touch and the month of sensing technology, which is ideal for driver monitoring and in cabin monitoring here.
Yeah.
So this hopefully gives you a good feeling for what we are working on in the company right now and of course, we continue as we speak so while we are having this call. Other people in there on those are actively continuing to market this and sell it for customers and develop the underlying technical solutions.
I also want to move on here and that briefly summarize the news about our private placement that we closed last week on August seven.
Those of you that follow US you will have of course seem the press releases that read all the details about this.
But on August seven we close this private placement.
That generated.
Some 13 million.
Dollar and cash net.
In total we raised close to 14 million, but.
Due to cost being the transaction the net was some 13.1 million.
In connection to this placement, we also converted the loans from people in downloads roseburg.
Into.
Third stock and that gave us another.
1 million contribution to our financing.
At in connection to this transaction.
Management the members of the board participated.
We did.
3.1 million in new cash contribution plus the.
1 million conversion of the loans to the company.
And.
I'm quite happy about this the outcome of this financing round is very quick we managed to race this money and just a matter of weeks and the.
We also think that the the amongst the because rates it's very good.
Looking at our for instance, our market cap and our needs. So we have now the means and.
But the cash.
Go after and accelerate our growth and to go after new customers in these target segments for instance, elevators interactive kiosks.
And the military Onyx rugged.
Industrial and automotive dry I'm wondering in cabin monitoring so really this will be growth money to accelerate what we already have been working on earlier this year and what we've been certainly focus more on going forward. So I'm very happy to announce this private placements.
And.
It will certainly strengths in the house and motivate us.
In the months to come.
In connection to this I also want to cover our patent agreement with Equitas technologies.
This is certainly not.
Money in the bank yet.
So all of you should see that rather us an embedded call option in the national share.
Yeah.
The background as many of you know is.
No no one was the smartphone company has lot of.
Innovation power has developed a lot of a new innovations and new technology on this protected most of this in patents and this is already from the early years, so the competence existence.
In particular.
We have.
Sometimes contaminants relating to smartphone technology.
Some of these patents have actually featured in lawsuits between major smartphone companies in the world.
And.
Some of them, especially a patent.
Related to feature that we refer to us swyft to unlock.
Featured in a patent or lawsuit between Apple and Samsung in 2012 and also in another lawsuit between.
And the Motorola and 2013.
Uh huh.
They're judges in the U.S. concluded that actually Neonode and not anyone of the parties involved in those losses.
Hello.
Original.
Patent or the prior art patent.
However, neonode didn't want to.
Process and start their own lawsuits and.
There are different reasons for that.
But last year Neonode found a way.
To try to capitalize on these patents that we have and that we are no longer use and because they are closely linked to smartphones.
So through the agreement with Equitas, we will split 50, 50 or the net proceeds that they can generate by licensing or selling.
The rights to this.
Patterns.
If they are successful.
And.
We are not it's very important dimension, we are not part of any lawsuits.
This is 100%.
Managed.
By Equitas, they bear all the costs all the risks.
And.
This is good news for us, but if they're successful we were split the net proceeds 50 50. So that's why we call it the call option and the.
In some of these similar cases or other.
Cases related to.
Smartphones and.
And.
Features in smartphones that can be substantial money, but we will not comment any further.
One of them bring this everyones attention and also clarify that we are not part of the law suits.
That.
Equity was filed in June this year in the Western district of Texas.
So I hope that is clear and we have to.
Standby here to see if and when the lawsuits are finalized on what they can generate in terms of revenue from neonode, but hopefully a good cash contribution later on.
And with this I will turn the call over to Maria Eric who is the CFO and Neonode.
Area.
Thanks Aaron.
You can find I second quarter earnings release, and 10-Q available for download from the Investor section on the web site at me on Dot Com.
I'd like to set up the summary on the quarter.
Revenues are down by $1.0 million compared to the same quarter 2019.
Our operating expenses are lower than planned and for the quarter 2.4 million known as compared to three points here I mean, the same quarter 2019.
Due to the abandon.
Britain north of $5.4 million compared to the same quarter in 2019.
We have net revenues of $4.7 million.
For the second quarter 2020.
Which is the decreased by 56% from the compared to 40 last year and decreased by 41% compared to the first quarter.
The main me.
Is that we have no estimations of a license revenue business area Asian isolation used to cover 19.
That we see indications that at least automotive and coming a little better than expected.
For the second quarter 2020 customers a license our technology shipped share point 7 million devices with an average license fee of one dollar.
Compared to second quarter last year.
Where a customer shipped 1.9 million units within Evans licensee 70 cents.
Total licensees.
To business in the second quarter 2020, with 147000 compared to $440000. The same period last year.
For consumer business, the licensees were 508000 compared to previous years $1.2 million.
This is mainly in effect of the pandemic and we expected to be bound.
Within a decent their age metro that we have a low number she is correct, but with increasing marketing trust.
That.
Sales during the second quarter was slow due to the pandemic related knockdown.
Hi, gross margin was 84% the second quarter 2020.
That's a 96% in 2019.
Primarily due to inventory write ups made in 2020.
For the same reason, there's a negative gross margin from business area. It's my products.
Operating expenses decreased by 19% to $2.4 million and the second quarter 2020 compared to 2019.
Which is partly due to covered 19 doesn't mention support package no with professional fees and less traveling.
As a result of these making loans increased by 34% to $81.8 million for the second quarter 2020.
Compared to 2019.
Our net loss for the second quarter 2020 was $1.6 million were 18 cents per share compared to net loss of $1.3 million.14 per share for the second quarter.
Nothing 19.
Yeah as I said, the private placement last week generated a cash inflow of 13.1 million units dollars, which strengthens our cash cash position and gives us the possibility to execute I studied and to accelerate efforts.
Operating activities used $1.7 million in cash during second quarter 2020, as well as 2019.
Yes, I would like to hand over back to urban for some closing remarks again, thank you Maria.
So yes, we are approaching the end of this call and the presentations.
Highlights that we want to draw your attention to is that private placements.
The close last week.
And through this we have now what we feel adequate resources to accelerate our growth and to capitalize on the current or future opportunities in practice works, we will do.
As to continue on the path that we have been operating on but we have now the means to strengthen our for instance, our international sales force.
To go more aggressively.
With our marketing and to reach new customers and.
To drive sales.
We will also use some of the proceeds to strengthen our engineering in our operation and the overall.
The proceeds will mainly be used to.
To our payroll.
So very little or if it if anything is going to be used for capex investments. So, it's mainly human resource related and adding.
People to our our already strong team.
We have the technology.
For contactless touch as mentioned this is available robust proven technology, we can offer products, we can offer technology licensing.
It's ideally suited it's very intuitive to create contact lets touch interface is using this technology and the demand for this type of solution and this type of technology is simply exploding enormous market opportunity to integrate this technology from from Neonode into both new and retrofitted equipment.
And again I repeat that two of our main focus area of his interactive Kinston elevators.
And within this we see.
Huge opportunities that are all the other segments that we could operate in.
To some extent our partners are doing this already and of course, we are not stopping them because we are offering.
The same products to them and that is only shows to strengthen the applicability of our technology.
We are also happy to note that we we are finding a new customers for our C. Touch for instance, in the military avionics and the industrial control systems markets and that they also have a good resonance with several Oems and tier ones regarding our multisensing driver monitoring in cabin monitoring software.
Solutions.
So we're very motivated also to expand our customer portfolio, there and the product portfolio in these business areas.
And the the final comment is that with all these opportunities and now with financing secured for the next.
Yes, the focus obviously the rest of this year and also next year will be an execution.
Increasing sales and.
Making neonode known to all kiosk manufacturers, all elevator companies and third party companies operating in these markets.
So with this.
Thank you for your attention and.
We will open up for some questions.
Thank you at this time I would like to inform everyone. If you would like to ask your question. Please press Star then the number one on your telephone keypad. If your question has been answered and you wish term of yourself from Nick you press the pound key once again, if you would like to ask your question. Please press star one.
Again, if you'd like to ask your question. Please press star one.
There are no questions at this time are there any closing comments.
There are.
I will take the opportunity here to answer questions.
Forward and by Victor investment analysts from Red eye.
Before the call.
And.
For instance, one question that Victor asks was how we are dealing with furlong.
And as we have announced in for instance to Q1 release in May we are working short had been working.
Shorter.
Hours.
For four months from mid of April until today actually.
And.
We are now returning to 100% working hours and.
Actually we we will increase as are.
Our headcount so what we're doing is everyone is coming back 100% from today as a vehicle of the further resources.
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And regarding transportation hubs, there's a question that.
This is.
And what Victor sees maybe smaller markets, but as I pointed out when I was covering the example on the sank airport.
There are simply.
And more than 10000, therefore, it's actually a 17000 commercial airports in the world. If you add to this other types of transportation hubs.
Like train stations.
Subway stations bus stations and if you count that there are number of.
Today self service kiosks vending machines elevators in all these type of transportation hubs. If you further add shopping malls hotel lobby and similar.
Honestly I think this is the big market and the huge opportunity for neonode than our products going forward.
And.
Another question from Victor here is about lead times to enter into.
Corporations with bigger Oems for instance, in the elevator segment and.
As we mentioned.
Some minutes ago.
What we expect is that the typical sales cycle to come in with a new large OEM customer.
Is three to six months in some cases, we are only already in active dialogue with customers in some other cases. This is yet to come. So overall, we think that over the next.
Three 612.
18 months.
This is randy should be able to announce.
Some major contracts with large OEM customers both regarding.
Interactive kiosks elevators.
On the other guys a licensing business.
And that over the next two three years, we will see.
Certainly a growth of our product portfolio and also a growth of ancillary revenues because of the growth of the.
Product portfolio.
But.
We do not expect any major increase of our royalty revenues in the next couple of years maybe.
But certainly for our product sales and this is why we have this as our main focus now in the next six to 12 months as I mentioned here at them.
And closing slide.
And.
I mentioned through the presentation that we are certainly not terminating and existing license agreements or terminating any relations or contacts we have been printer manufacturers E reader manufacturers competence in bad debt Council.
In fact in some of these cases, we see both possibility and opportunity to do repeat business.
Simply.
Sell them same type of solutions that they're already using but for new products new models new variants.
But in some cases, we are shifting from touch on displays to disgusting contact lets touch solutions. Both on this place and other types of assistance.
So.
There is a lot of new opportunities new customers for us this year and.
Basically every month, we are getting to know new customers working in different segments and in different parts of the world, but of course, we maintain a close.
Tacked on the good relationships through all our existing and all our old customers as well.
So thank you Victor for submitting these questions and.
I think.
This takes us to the end of this call. Thank everyone for your intention for joining.
Please follow whats going forward and the.
Have a good weekend. Thank you.
Thank you that does conclude today's Neonode second quarter 2020 earnings Conference call. You May now disconnect your lines and have a wonderful day.
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