Hello everyone. Thank you for standing by and welcome to Neonode’s Third Quarter ended September 30, 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. At this time for opening remarks and introductions, I would like to turn the call over to David Brunton, Neonode's Senior Vice President of Corporate Investor Relations. David, please go ahead and start the conference.

Welcome and thank you for joining us. On today’s call, we will review our third quarter financial results, and provide a corporate update. Our update will include the details of customer activities, technology developments, and other items of interest. The prepared remarks will be provided by Thomas Eriksson, our CEO and Lars Lindqvist, our Chief Financial Officer. Before turning the call over to Thomas and Lars, 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, tend, will, guides, 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 involved or are subject to risks, uncertainties and other factors that may affect Neonode’s business, financial position, and other operating results, which include, but are not limited to the risk factors and other qualifications contained in Neonode’s Annual Report on 10-K, quarterly reports on 10-Q and other reports filed by Neonode with the SEC to which your attention is directed. Therefore, actual outcomes and results may differ materially from what is expected or implied by these forward-looking statements. Neonode expressly disclaims any intent or obligation to update these forward-looking statements. At this time, it is now my pleasure to turn the call over to Thomas Eriksson, Chief Executive Officer of Neonode. Thomas, please go ahead.

Thank you, David. Good morning, everyone and welcome to the call. Neonode posted September quarter revenues of US$1.1 million, which was in line with our internal expectations. Lars will go into the financials in more detail later on. We see a steady growth on our printer and automotive customers and we expect to see an increase in e-reader revenues. On this call, we're going to talk about customers and activities in different market segments. So let's start with our printers. Our printer customers are progressing nicely and we've seen an increase of printers in the market and license fee revenues. HP has now 12 printer models on the shelves, up nine from last quarter. We expect revenues from our printer customers to keep growing and we expect the second licensee to start shipping printers with our technology in Q4 next year. We recently signed a technology development agreement with a leading Japanese printer OEM. We currently engage with other major printer OEMs that are evaluating our technology and have also expanded our presence in Japan to local support to growing demand from our customers in this region. Our technology has been proven to the most compelling touch solution for the printer OEMs and we're on track with our strategy for the printer market and our ambition to expand our market share even further with our latest technology that will further reduce our cost, so we can maintain our royalty level. And now let's move over to talk about our exciting PC opportunities. Last quarter we talked a lot about our PC opportunities and that we're working with major PC companies to integrate our Windows certified touch technology. Our first major contract in the PC space has taken a bit longer to finish than we originally estimated. We've moved from a…

Thanks Thomas. Earlier today, we filed a Form 10-Q with the SEC and released our third quarter financial results in the press release. Both of these are available for download from the Investors section of our website at neonode.com. Our third quarter revenues were approximately $1.1 million, compared to approximately $1.1 for the third quarter last year. Our revenues for the quarter include $600,000 of license fees and $500,000 NRE fees, compared to $900,000 of license fee and $200,000 of NRE fees for the same quarter last year. The 5% increase in net revenues for the third quarter 2014 as compared to the same period in 2013 is due to revenues for new product shipment of interest and PC our engineering design services for automotive, which fully offset 74% decrease in license fees earned from customer shipping e-reading and tablet product. We have been experiencing declining license fee revenues from Sony and Barnes & Noble and continue to see a general weakness in the overall e-reader market. In September, Amazon released its latest e-reader using app touch and we expect the revenues from this customer to more than offset the decline. Our total operating expenses were $3.9 million for the quarter ended compared to $3.6 million for the same quarter last year. The 10% increase in total operating expense is due to several factors including legal expense related to patent filings and increase in headcount, primarily in our sales and engineering departments due to increased activity in the printer and PC segment. Our net loss for the third quarter was $3.2 million or $0.08 per share as compared to a net loss of $3.3 million or $0.09 a share in the same quarter last year. For the nine months just ended, revenues were approximately $3 million compared to approximately $2.7…

Thank you, Lars. To recap, we expect to be cash flow breakeven in 2015 due to the expansion of PC, printer and automotive customers, combined with our additional revenues from e-readers, tablets and other products. And finally I would like to address the IR communication and performance going forward. We have been very unhappy as you may understand that our IR performance and communication for a while and we have been carefully listening to feedback from our investor base and others. We have therefore taken actions to find a more professional way of communicating our company's status to our shareholders and other stakeholders. We are in the process to outline a comprehensive investor relations strategy and program that provides current and potential investors with -- and as accurate as possible to trade of Neonode's strategy, performance and prospects. As part of that process, we will also recruit and Investor Relations professional with international experience from both United States and Asia. We're planning for management to have a more frequent investor meeting and we're also working on the refresher and consumer and Investor Relations website. This concludes our prepared remarks and we'll open the call for questions. Thank you very much.

(Operator Instructions) Our first question comes from the line of Cody Acree of Ascendiant Capital.

Thanks for taking my questions guys, a few on the PC progress. Thomas in your prepared remarks, you talked about an expansion of maybe that initial relationship, can you just talk about where you are today in that progress when you expect to wrap some things up maybe and to the extent that you can talk about where things started and then where they've expanded to in those discussions?

We've expanded in a way that we have set up a partnership with a module manufacturer and this module manufacturer has been delivering modules for other customers already. And this is the way for us to make sure that these customers get fully tested modules that they can have as a drop in into their current products and make sure we speed up the integration time and make sure they get more shorter time to market, make sure our business model is still scalable. Cody Acree – Ascendiant Capital: But I guess Thomas as you, so I can see how that working with the module maker or an ODM that might be able to just give you some turnkey would speed up the process and maybe help to extend you into other OEMs. But can you talk about, you made the announcement of that first OEM, where do things stand with that partner and you think that you are close to being able to give us more details on what that relationship looks like?

Yeah, I mean we're working with basically all of the large PC OEMs right now and I think you will see that these products we’re working on is mainly at the moment the larger size displays, so monitors and all-in-ones. And we're looking at products coming out during 2015. So this is [Inaudible] custom design which we do, but also retrofitting our technology into replacing capacitive touch and [factory bulking] [Ph], working on both type of integrations. And these products as I said are targeting 2015. And I guess you have a few different events during that CES in January and you have Computex later on in the year. These two events are potential launch for these products. Cody Acree – Ascendiant Capital: So we could see products as early, the node as early as CES of calendar 2016, am I getting that correct?

It is 2015. This is product target in 2015, so what we're working on right now. Of course… Cody Acree – Ascendiant Capital: I'm sorry, I thought you said 2016. Okay, so you think revenue then from those designs to help you get to that breakeven, so when do you expect we will see the first meaningful material revenue from those products?

I mean that's always depends on our customers and when they exactly are going to launch their products, but it is during 2015 we're looking at. Cody Acree – Ascendiant Capital: Okay, very good. And I guess as you look at that relationship with your first announced customer, has that expanded, has that accelerated or you said that those things have taken longer, is it anything more than just your efforts to get your supply chain in line or I guess what are some of the delays or hesitations that maybe you run into and how you've been able to address this?

I think it’s expanded as we thought it with one category of products, but now we're looking at as we said earlier also on the monitor type applications and also of course notebooks and also accessories to PC like keyboards and mouse pad. So we have sort of a whole, a lot of different types of opportunities in the PC space. It's not only touch on a display. So, it is a variety of different products we're looking at. Cody Acree – Ascendiant Capital: And then last from me, from a retail pricing standpoint given now with a maybe a more established cost structure that you have with an ODM module maker, when you look at sort of apples-to-apples, say monitor 15, 17, 19 inch monitor with or without touch, what's the impact that you expect that might have on the consumer price point?

If you look at capacitive sensor today capacity systems we’re about half of that costs for 20 inch monitor for example. And again if you look at the monitor segment a real limitation today is that capacitive touch cost a lot of extra cost which limits really the adoption of touch in that type of products, and the same with of course with all-in-ones and notebooks and so on. I think touch penetration of monitors is very low as about 5% and in notebooks about 20%, so there is a big opportunity for us in this different PC segments really make sure that they can roll out these products with touch. And basically [Inaudible] they must - they want to have touch but they don’t want to pay anything for it. And of course in all-in-one or in a monitor you might not use it that much but still want it and that's something that we can address with this technology, we can really reduce the cost to make sure they don’t to add so much cost on the street price to get this functionality. Cody Acree – Ascendiant Capital: Very good guys, thanks for the time.

Thank you.

Our next question comes from the line of Rob Stone of Cowen & Company Rob Stone - Cowen & Company: Hi guys, first I want to ask are there 10% customers in this quarter?

Are they what? I didn’t catch that. Rob Stone - Cowen & Company: Customers who represented more than 10% of revenue this quarter.

There were four believe. Rob Stone - Cowen & Company: And can you offer any color on that?

Well, we didn’t disclose it in the 10-Q, really the requirement according to everybody we talked to is just we have to say the number and so, if we want it, if we were going to disclose it we would have put it there. Rob Stone - Cowen & Company: Okay, looking for a little more color if you can then on the engineering fees, it's been running at a fairly high level for a couple of quarters now. Do you expect that trend to continue based on the volume of projects you have? And can you comment at all on, for example how many projects were included in the 500,000 this quarter?

It's Lars here. I mean I'll comment on number of projects it was related to, but I can say that in 2014 a major part of the NREs is related to the automotive segment and that’s a big [Inaudible] step for us forward because that means that a customer’s basically moving into the market and launching new products with our touch solution in them for infotainment systems. Rob Stone - Cowen & Company: That's very helpful Lars. Thank you. I actually had a couple of other auto related questions. Volvo, you mentioned the system and the model, can you say if the other OEMs that you said are going into production, is this on an aftermarket product or is this factory equipped, the other auto OEMs who are starting production?

No, this is Thomas here. The customer is global companies and the cars are global launched over the world. So we have also some - some of them are in China for the China market, South America and global penetration of [Inaudible] car.

They are factory equipped, not after market.

So, there is nothing aftermarket type of, it's infotainment systems that are installed from the beginning in the car, same as the Volvo, for example. Rob Stone - Cowen & Company: And if I recall correctly, a fair amount of the deferred revenue that was on the balance sheet historically was within the auto segment. I know that ticked down slightly from the second quarter. Is that related the auto customers trying to ship.

No, about a third of it was related to the auto customers and no, it hasn’t. The reduction is associated with others. Rob Stone - Cowen & Company: Okay, excellent. Finally just a housekeeping question for Lars. You've mentioned you have the people in place that you need. What is the total headcount at the moment?

We are today at 60, roughly 60 totally in our organization of which still the dominating part being in Stockholm, Sweden. Rob Stone - Cowen & Company: Great, thank you.

We have a[Inaudible] strength in our organization in the sales dimension due to the fact that we need to be out and working multi-parallel opportunities on the PC and the printer markets. Rob Stone - Cowen & Company: So are you going to be adding headcount you think in the next year or do you have what you need for a while?

Our view is that we have the resources we need for managing the opportunities in 2015. So we have been very focused on [Inaudible] as to have research & development people, engineers and also sales, the core people being [Inaudible]. Rob Stone - Cowen & Company: Okay, thank you, that's all the questions I had.

Our next question comes from the line of Mike Malouf of Craig-Hallum Capital Group.

Great, thanks for taking my questions. I'm wondering if you could expand a little bit more on your comment on the printer side. You said that you expect the second printer to ship in Q4 of next year, but I don’t think that you have anything officially signed yet, so I'm a little confused about that, can you help us out?

This is Dave. Yeah actually we do, I think we talked about some in the past having the second printer, I think we actually named them with Lexmark. So Lexmark is actually we've been working on that for quite some time and we probably talked about it in previous calls that they were, in their inkjet group, which they discontinued back in I think it was the end of 2012 or some time maybe around there, but we still are in the laser side of the house and those printers are slated to come out in the second half or late third, early fourth quarter of 2015.

Okay, all right, that makes sense. And if I could just ask a question on the PC side, I know that you talked about having PC revenue next year. But without anything signed now and I know you've seen things push out, I mean what gives you confidence that that isn’t really more like a 2016 story instead of 2015 story? I mean what gives you the confidence around that? Thanks.

This is Dave again. I'll take that question. Really what gives us confidence is we have to separate the two functions that are going on here, the license function and the engineering function. So the license, the signing of the license has taken a little bit longer, but the engineering side which is the more important to get to revenue is going full steam ahead and actually faster than anyone could have imagined. And so, both the OEMs and our team have been working just incredibly hard in Taiwan and in Stockholm and in the U.S. on these projects, these identified projects. These are not sales efforts. These are not prototype projects. These are identified product lines that they are currently shipping, that they are either retrofitting or they are redesigning and so they have a plan in place.

And what will be the next, so what will be the next, let's call it, the next official step for them to lock in this plan with you?

I think the next official step would be the actual signing of the license agreement which we expect to take place. We have every confidence that both this and others are going to move forward rather rapidly and then I think the next step that you will see is probably one of the shows that Thomas mentioned, probably the January show. There may be some product show.

So at CES in January Thomas do you think, you still don’t know if there will be product shown there or do you have confidence that it will be shown there now?

No, we can’t talk about that because our signed NDAs with this company that is quite a secret still. As I said before it’s two opportunities for us next year to show products, one is CES, other one is Computex and then a few smaller shows. But these two are really the major events. And exactly when these companies are putting up products and when they're going to show it it's really something they have to decide and we can't really influence. We can only make sure that which we have done with securing the whole module business and everything so they can get it into their products as fast as possible, and the rest is really up to them to decide and we can’t discuss that unfortunately.

Okay, great, thanks for taking my questions.

Thanks.

Our next question comes on the line of Jared Cohen of J. M. Cohen & Company. Jared Cohen - J.M. Cohen & Company: My question has been answered. Thank you.

Okay, thanks.

(Operator Instructions) Our next question comes the line of Yitzy Weitman of J.H. Darbie.

Yeah, thanks for taking my call, but I think you might have touched upon again the PC that you talked about last quarter that was, a contract that was supposed to be announced and we didn’t hear a contact. Do you have any more to say about time on that? Could you say will it be in the next couple of weeks or in a couple of months this quarter? That same PC deal is there a contract that’d going to be signed within sort time notice?

Yitzy, we would love to be able to say yes and give you a timeframe. But all I can say at this point is as Thomas said the contract is a little more complicated than a simple license agreement and we have been working and our head of sales has been working with them continually to get all of the points, Is dotted and Ts crossed and you know we have every confidence that will get signed. We just don't know what date it will be.

So you do have all confidence that it's going to get signed, it's only a matter of timing and coming to the conclusion, but there is no reason to concern anyone this is still the same commitment to this OEM as before.

Yes, of course. On our side I would say absolutely yes, but I want to caution until things are signed, they are not signed and so, you know who knows. Yes we have all, every confidence in the world that is going to be signed and we are going to be moving forward and product will be in the market in 2015 and I believe they do too. You know, what can I say?

Okay, and as far as, as case on hand, you’re confident until then because - do you have a chance to getting pre-paid for these contracts from any of these OEMs?

Yes. And that's for sure, this stays always a thought of the sales process to review that and balance it, we always consider that possibility when it comes to NRE prepayment. That's always in the sales process because we want to get funding for the customer related development project. So answer is yes, we always review that [thought over] [ph] sales process and keep it in the negotiation that’s always a balancing act.

Okay, thank you.

Okay, thanks for calling.

Our next question comes from the line of Michael Malouf of Craig-Hallum Capital. Michael Malouf – Craig-Hallum: Just one follow up question and based on timing on the PC side, if you were able to have product at CES in January and that was out there for people to see and one of your OEMs were to presented it, would you have had license agreement signed prior to that or could they actually put the product out there without a license agreement?

You know that, I say the answer is yes, that would be our hope and I think that that would be a reasonable expectation. Michael Malouf – Craig-Hallum: Great, thanks a lot. That’s all I have.

Okay, thank you Mike. Michael Malouf – Craig-Hallum: Thanks.

(Operator Instructions) I'm showing no further questions at this time. I will now like to turn the floor back over to Thomas Eriksson for any closing or additional remarks.

Okay, thank you very much for this call. I want to thank everyone for joining us. We believe this is a very exciting time for us in the market and we'll keep you posted on our progress as it happens. Thank you and have a very good day.

Thank you for joining Neonode's third quarter 2014 earnings conference call. You may disconnect your lines at this time and have a wonderful day.