Neonode, Inc's CEO Discusses Second Quarter Results - Earnings Call Transcript

Neonode, Inc. (NEON)

Q2 2012 Earnings Call

August 7, 2012, 10:00 am ET

Executives

Garth Russell – KCSK Strategic Communication

Thomas Eriksson – CEO

David Brunton - CFO

Analysts

(James Mezedeith) – Cowen & Company

Jay Sirvatsa – Chardan Capital

(Peter Cardillo – Peter Company)

Orin Hirschman – AIGH Investment

Daniel Gelbtuch - HTR

Presentation

Operator

Ladies and gentlemen, thank you for standing by and welcome to Neonode's second quarter 2012 earnings conference call. All lines have been placed on mute to prevent any background noise. (Operation instructions). I would now like to turn the conference over to Mr. Garth Russell, the KCSK Strategic Communication. Sir, you may begin your conference.

Garth Russell

Thank you. Before turning the call over to management, I'd 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,' 'sense', 'will,' 'guides', 'confidence,' 'targets,' 'projects,' and other similar expressions are typically used to identify forward-looking statements.

These forward-looking statements do not guarantee the future performance that may involve 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 Form 10-K, quarterly reports 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 to any intent or obligation to update these forward-looking statements. During this call, we may also present certain non-GAAP financial measures such as EBITDA, adjusted EBITDA, non-GAAP net income and certain ratios that use these measures.

In our press release with the financial tables issued earlier today which is located on our website at www.neonode.com, you'll find our definition of these non-GAAP financial measures or a reconciliation of these measures that are disclosed as non-GAAP financial measures and a discussion about why these non-GAAP measures are relevant.

These financial measures are included for the benefit of investors and shall now be considered an addition and/or instead of GAAP measures.

At this time, it is my pleasure to turn the floor over to Thomas Eriksson, Chief Executive Officer of Neonode. Tom, the floor is yours.

Thomas Eriksson

Thank you, Garth. Good morning, everyone, and welcome to our second quarter conference call. With me today is David Brunton, our CFO. Today I will give you an overview of our performance for the quarter ending June 30, 2012. Then David will walk you through our financial results for the same period. Also after prepared remarks, David and I will be available for questions.

To start with, let me express my excitement regarding our unique position with the OEM. Thanks to the high performance in which (inaudible) offered, Neonode is regarded by many in the industry as the go-to provider of what we anticipate will be one of the preferred (inaudible) any type of device in the years to come.

I'm please to note that in the past 18 months, our customers shipped approximately 10 million units in (inaudible). We see all of the (inaudible) established the notion (inaudible) components and not in what we can do with our recently launched MultiSensing controller chip which I'm (inaudible) is a true game-changer for entire market.

The amount of interest (inaudible) from delivered technology mainly (inaudible) into other markets such as mobile phones, tablet, office equipment and (inaudible). The MultiSensing controller chip has made (inaudible) possible. Last quarter, I talked about our controller chip that was going into mass production and now I want to report it's now in full mass production and shipping to our customers.

Our next important mission is is (inaudible) qualification. We now have an (inaudible) qualified technology which makes it possible for us to deliver state-of-the-art solutions to the automotive industry. Our success in this space show that our technology has clear advantages over existing touch technologies and as we deliver a compelling solution together with our hardware partners.

We also started development of the next generation controller chips for further cost reduction for our customers and higher integration for larger systems with new function. We also have got some projects ongoing with special versions of the controller optimized for different products (inaudible).

I want to talk to you a little bit about progress with our custom design (inaudible). More than anything, I look at the (inaudible) as a good measure of future growth. I already talked about the importance of the controller chip has been verified with a number of (inaudible) this year. They reported 17 design wins last quarter

In this quarter, we now opened an additional 23 design wins which makes a total 40 design wins so far this year and (inaudible) 800% of the design wins are in the growth markets like (inaudible) entertainment systems, toys and games, and also office equipment. Some will go into production this year but the majority next year.

Also look at actual customer contracts and I think this is also an important metric to our success. As previously reported in the first quarter of this year, we signed four customer contracts. During this quarter, we signed another three contract and another one in July. So of today, we have a total of 20 customer license agreement signed and several more in the pipeline.

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