Thank you for standing-by and welcome to Neonode's Third Quarter 2018 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]. I would like to direct your attention to the accompanied PowerPoint slide-deck that you can view when you logged on to this call. The company will control the navigation through the slide-deck to coincide with their prepared remarks. Thank you. At this time, for opening remarks and introductions, I would like to turn the call over to David Brunton, Neonode's Head 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 2018 financial results and provide a corporate update. Our update will include details of customer activities, technology developments and other items of interest. On the call today with us is Hakan Persson, our CEO; and Lars Lindqvist, our CFO. Before turning the call over to Mr. Persson, 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, tends, will, guides, confidence, targets, projects or 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 be subject to risks, uncertainties or 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 Form 10-K, quarterly report on Form 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 my pleasure to turn the call over to Hakan Persson, Chief Executive Officer of Neonode. Hakan, please go ahead.

We have been very busy this quarter defining our markets and sales focus. We’ve identified segments and use cases that best suits our technology whether with zFORCE CORE or zForce AIR. We’re also attended numerous trade shows and customer meeting and I more encouraged than ever. In these meetings we’ve presented concrete use cases and how our technology can be used to support OEMs differentiate their product, to growth their business and the feedback has been very positive. I will later bring some more detail on how we plan to capture new business and elaborate on current customer development activities but it is encouraging to conclude that we are engaged in several OEM development projects across different markets. Our third quarter revenues decreased by 17%. To a large extent this is due to the previous decision of shifting from licensing to only selling sensor modules. We have revisited this decision and reengaging with all our license customers. However to regain our position would take time from a sales implementation and customer production perspective. Lars will discuss the impact in more detail later in the presentation. The net loss for the quarter was reduced year-over-year from $1.1 million to $800,000. We also reduced our cash used to $800,000 down from $1.7 million during the third quarter last year. We had some significant events that have taken place after the quarter. We received confirmation of acceptance of our zForce AIR sensor for use in the medical display device and an imaging solution. This is a significant growth area and has one of the largest supplies to the medical industry. We also received a purchase order for sensor modules for our new tax meter solution. We expect both opportunities to begin initial shipments in 2019. I’m also happy to announce that we won…

Thanks, Håkan. You can find our third quarter earnings release and 10-Q available for download from the Investors section of our website at neonode.com. You can also find a slide deck that we present today available from the Investors section of our website. I'm going to start by giving you a summarized view of our third quarter revenues and results. Our total revenue for the third quarter decreased 17% compared to last year. We experienced a decrease in revenues related to license fees and AirBar sales which was offset partially by increased NRE fees related to ongoing automotive projects. Our total license fees decreased 23%, related to printer and automotive. Part of the decrease is related to some adjustment to second quarter revenues recorded in the third quarter. I am going to talk more about the license fees on the next slide. Sensor modules sales decreased by 82% due to our decision to move our focus from AirBar to B2B sales. We have been evaluating different options to transition sales and marketing of AirBar to one or more partners. Sales of our sensor modules to B2B embedded customers increased slightly. Although not a huge increase, this is an encouraging sign and we expect to see continued increase in B2B sensor module sales as we focus sales efforts on selected markets. Revenue generated from NRE design activities increased by $265,000 because of completion of a key milestone in one of our automotive project. NRE revenues typically fluctuate between comparable reporting periods due to the number and price of projects completed. Our operating expenses for the quarter are $2.5 million compared to $3.6 million for the same quarter last year, a reduction of more than 29%. Our net loss was $800,000 or $0.14 per share in the third quarter of 2018 compared…

Okay. Thank you, Lars. So before I turn the call over to questions, I want to finish with my outlook on the business. And we have a strong and versatile product offering covering several use cases and segments. And we are focusing our efforts on markets where we have a distinct advantage in cost and/or function. Our mission is to help our customers unlock growth by fueling innovation and driving deeper. We have the building blocks to increase our revenues from licensees, NRE and sensor sales. And I'm very pleased that technology evaluations by OEMs and tier 1s in automotive, medical, white goods and consumer product segments are increasing at an accelerated pace. We have been accepted as a sensor module supplier in a very demanding medical display product and have received our first sensor module PO for our next generation taxi meter system. This is I would say real progress. We participated in several industry-specific trade and technology shows and our technology has been received a very positive feedback. We would increase our marketing efforts to showcase the capabilities of our technology. So in short, my confidence is very high that we are on the right path again to profitability. Now, I will hand over the call to the moderator.

Thank you. [Operator Instructions]. We do have a question from Mike Malouf with Craig-Hallum Capital. Please go ahead.

Okay, great. I have a couple questions with regards to manufacturing, where are you with that, are you still going to try to manufacture some of these modules and if not what’s the plan there?

Okay, yes, I mean today our manufacturing facility is the one what we have and obviously in order to place and meet the demand we’re going to use that one. And obviously as I said we are also looking at alternatives, how can we improve on the capabilities of our production and also the cost reduction. So that’s our processes that we are working on at this point.

Yes, okay. And then you have a lot of let’s just call it, irons in the fire with regards to some of these announcements. How soon can we expect and to what extent do you expect a ramp in actual products?

You mean shipments of -- okay. Well, as I said, we will -- we are expecting initial shipment. In the end, it always comes down to what is the production and shipment schedule of our customer. So it's variable, and we are not privy to that information. That's why we feel rather certain about that we will have a -- shipments going on during 2019 cases that I described.

And those have the end of the modules or under licenses?

Well, the two cases I described, the medical case and the taxi meter case, they are both module case.

What was that second one? I didn't quite hear you on the second one. We have medical, and what was the second?

It's a taxi meter case. They are doing an interactive taxi meter that is going to be deployed.

Taxi meter, okay.

Yes, right.

Yes. And those are modules, is that what you said?

Yes. Those are both modules.

And what do those typically sell for?

Well, we don't comment on specific pricing because that could differ between application to application depending on what work we're doing to make it happen for them.

Can you give us a sense of sort of roughly where they are?

No, not in actual numbers, but we are satisfied. Put it that way.

In the taxi meters, would that -- do you have a go-to-market for that as well?

Yes.

Is that here in the U.S. or in Europe?

Sorry?

What geographic area is that?

That's primarily Europe.

Europe, okay. And then maybe a question for Lars. I know you mentioned a little bit on the cash situation. How do you feel about that going forward? You're losing about just under $1 million a quarter. You have a couple million. It sounds like you have a runway of about six to nine months. Is that sort of the run rate to think about it?

Yes. Well, as you can understand, we monitor the cash very carefully, and then cash is always a concern for every small growing company. And we will, for sure do what the -- board think is necessary to make sure we have sufficient operating cash running in the company. And so we monitor this very carefully for sure.

The next question is from John Nelson, Private Investor.

Do you have any estimate as to -- can you give us any estimate as to when you could get to EBITDA breakeven?

Okay. We're still on. So I can't give any specific time line at this point. But obviously, this is something work towards and then every action, every move we take has the capacity -- of the capacity objective.

Okay. And then maybe asking Mike's question in a different way. Do you have any -- can you give us an idea as to what the signs of the market might be for the medical device displays and the taximeters?

I mean, potentially, they can be rather large. I think from the medical perspective, we are looking at the specific device, make sure that the device -- I don't think it sells in millions. It's rather in the thousands. When it comes to the taximeter, I mean, the European play. We need to see how that progress, but I mean there are a lot of factors on it.

[Operator Instructions]. We do have a question from [Ron Chech], private investor.

Gentlemen, what will you do to mitigate the cash concerns here? Are you going to buy -- are the officers going to buy stock? Directors?

Ron, we didn't really hear your question, so I don't know if it's the system or could you speak a little bit louder?

Yes. What are you going to do to help the cash situation? Are the officers and directors going to consider buying stock? What will you plan to do?

Well, I mean, from my perspective, as Lars said, we are monitoring the cash position very closely and having discussions with Board of Directors obviously how we should act (inaudible). And at this point, we do not have any other decision taken on what obviously has come to that.

I'm sorry, I missed the very last part of that. You don't have any...

Today, we cannot give any other information. And then what Lars said that we are closely monitoring the situation, having an active discussion with our stakeholders and we need to take it from there.

How about the sale of AirBar? Is that pursuing, being pursued, the sale to somebody who can effectively market the product?

Yes. Yes. We are looking for partners that we can place it with, that better suited and sell to make it to market. So we have a number of tracks that we are pursuing. I don't want to comment at this stage as to what and when, but this is a matter that is obviously of great importance and that we -- at the end this year, I tell you, we work on that diligently.

Did you say something about by the end of this year? I'm sorry, I didn't understand.

No. I said that, that is a -- this is an important topic for us. We are working on it very diligently. We are pursuing a number of ultimate tracks to get it played to somebody who's better suited than ourselves to take it to market.

Okay. And is there any expectation as to when you may accomplish something?

Well, it's hard to say. It's part of the negotiation. But from my perspective, it needs to be soon. That is what we are aiming for.

I'm -- you're aiming for what? I'm sorry.

We are aiming for having it done soon.

So that would indicate that you're in negotiations, is that right?

We are at least in discussions, yes. But it's -- the negotiation that needs to be had, and you are not there until you have had it, you conclude it.

So there are no active negotiations taking place or there are?

There are discussions, yes.

And would that not go a long way to solving or could it go a long way to solving the cash difficulties?

Well, it will certainly help.

And one more time, somebody else asked about this before. EBITDA breakeven, can you give us a better idea of what you hope to accomplish there?

No, I don't want to promise things that don't need to go back on. But as I said to that question previously, that is what's driving me right now. We need to get to that point in everything we do, both from a sales focus perspective, market addressing customers that we are addressing, controlling costs, always done with that aim.

Is there -- last question, is there any active pursuit of -- by the Board of Directors to evaluate a sale of the company, a merger or something or other?

Not to my knowledge, no.

Okay. Got to get to breakeven.

We do. We will.

At this time, there are no further questions. I would like to turn the conference back over to David Brunton for any closing comments.

Thank you everybody for joining us today and have a good rest of your day. Bye, bye.