Earnings Call: Q2 2020

Aug 14, 2020

Hello, everyone. Thank you for standing by, and welcome to Neonode's Second Quarter 2020 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 with the company's covering analysts. 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. Welcome, and thank you for joining us. On today's call, we will review our Q2 2020 financial results and provide a corporate update. Our update will include details of customer activities, technology developments and other items of interest. Before turning the call over to our CEO, Doctor. Erwin Porcell and CFO, Maria Epp, 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, can, 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 involve or be 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 ks, 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's my pleasure to turn the call over to Irvin. Irvin, please go ahead. Thank you, Dave. Hello. This is Urban Purcell and CEO of Neonode since the beginning of the year. Thank you for joining the call. I will take you through business and strategy update today. And I would like to start with this slide here showing a summary of Neonode's legacy. And as many of you know, Neonode started as a smart phone company back in 2,001 and launched what is the world's 1st gesture based mobile phone in 2,004. This phone made several made headlines in several newspapers. It got a lot of attention and featured Neonode's IR based touch already back in 2004. So the origins of our touch technology can be traced back to these early smartphone years. Later on, Neonode is focused and into more business with e reader manufacturers, printer manufacturers and automotive Tier 1 suppliers. And the business model changed from offering business to consumer products to technology licensing mainly. Today, in 2020, 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. We have presented the outlines of this strategy in other presentations, for instance, with Red Eye in April 2 and also with Red Eye in June 2. And some information has also been included in our Q1 press release. This is an interesting journey for me being quite new in the company, a little bit more than 6 months in. And as all of you know, 2020 has not been what we saw or thought it would be in 2019, mainly because of this guy. Some of you have heard of him, COVID-nineteen. For us, this has meant both headwinds and tailwinds. Headwinds have we will come back to. We can see some slower sales in the printer market and also automotive market. But regarding tailwinds, we have seen and are seeing a huge increase in demand for our contactless touch solutions from customers all over the world. And we simply see this as a starting point now for new normal in society and also new normal for Neonode. What we certainly believe is that going forward, people do not want to touch buttons in elevators on vending machines and other self-service kiosks. This is the new normal. People are afraid of getting infected by bacteria viruses like the COVID virus. And people are obviously trying to avoid getting affected, 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 of the few companies in the world today that has a very suitable, proven technology. And the fact is that our Z Force Tufts technology is already implemented in over 75,000,000 different products out there from leading OEMs in the consumer electronics, the printer business and automotive. We have over the last 15, 20 years built up an extensive technical expertise and know how around this technology and different application areas. Our technology is protected by more than 120 patents. And we are today in a position where we have existing products that we are shipping to customers and that are easy to use, that are scalable and that allows for short time to market. We at Neonode also have built up the last couple of years and especially this year, strong focus has been to expand our ecosystems of partners. So for instance, today, we have well established, cooperations with DidiKey and CERIAL, to large fulfillment distributors. We have partnerships with other types of distributors and value added partners like Hailiang in Germany, Advanced Silicon and Helix in Switzerland and other companies. We also cooperate with a lot of interesting tech companies like Aska 3d, ESR, Eastfield, Hollow Industries and further engineering firms and integrators like Happy Hover. We also have a network of sales reps and sales partners. In the U. S, for instance, we work with a network called Convergence that has some 100 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 about our technology, I will take you through a couple of slides regarding that before we go into more examples and more information about our business. So the key technology for our contactless touch and our normal touch business is called C Force. It's an optical touch technology based on infrared light, so invisible to the human eye, but still light based. It supports contactless touch applications, together the displays. So in this slide, if you look bottom left, for instance, you see a typical example of a medical display. In these applications, you have a doctor or a nurse that operates the system through the interface that the display provides. They often have rubber gloves on their fingers. The gloves could be covered with different kinds of fluid, could be contrast fluid, water, could be they don't want to touch the screen for that reason or because the screen sits in a sterile environment like a surgery room. Then our technology can be adapted and applied in a way that the operator doesn't need to touch the display. So it's still a touch display, but there is no requirement to physically touch anything to control it. This can be extended then to touch in mid air using holographic displays or we can also offer solutions with touch on any other surface like a glass window, sheet of metal, wooden panel and so on. Also, gesture sensing is another way to interact with machines. And if you take example here in the slide bottom right, kitchen fan. So using our technology, you can turn the fan off and on, and you can also regulate speed of the fan using simple hand gestures in midair. So all this is possible with C Force, our patented technology, and it's a very versatile technology. So some of the unique selling points we have is that we can offer a safer way to interact with machines, equipment and in general, different types of IT systems. There are no requirements to physically touch the display or touch surface when we work with the C Force technology for NeoNord. Also very robust. It's based on light beams being either broken or reflected. So no moving parts, no things that can wear out or break. Very flexible. In these few slides here and the following slides, you will see a number of examples where our technology has been applied in different ways, but still it's the same core technology from us. So our technology is very flexible, scalable and easy to integrate. Also, like I mentioned, in this case, with the medical display or in other demanding applications like military displays, shown here an example bottom right, Our technology is more or less ideal because we don't interfere at all with the display itself. We have like an add on feature to the 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 and we have customer feedback telling us that our GeForce technology is a very strong offer in many different application areas. And looking at typical application examples, I've already mentioned contactless in air touch and holographic displays. And those of you that follow us, you have seen our press releases for different corporations in these fields this year. I also want to highlight here the possibility to do mechanical controls replacement using our C Force technology. So when you realize that you can have in touch or with holographic displays and if you think then a little bit longer, you realize that you don't necessarily need to keep the mechanical controls, the buttons, the switches like you have in an elevator, for instance. You can replace the physical buttons that we show in the picture here, second left, by simply having printed symbols to guide the user where to place his finger or to point to control the elevator. The other example we show here is the front of a washing machine. Normally, modern washing machines have a combination of display with, touch or without and physical button switches and rulers and similar using our sensor modules mounted at the top of the washing machine or on the side and programming the software application in a suitable way, we could touch enable the whole front of this washing machine, and then you could remove all the physical buttons and switches. Still, you can control, turn the machine on and off. You can change the program. You can set timers and temperatures and so on. So it's pretty neat. It can be very cost saving and also offer more or less endless opportunities to develop really good user friendly interfaces to, in this case, washing machine, but it will be basically anything. So I want to highlight it Moving over to our business. So what we are doing in the company is that from the last 10 years, focus on technology licensing with customers like printer manufacturers, manufacturers of e readers and automotive Tier 1 suppliers. It has been the main business for Neon over the last 10 years. It has generated something like $5,000,000 to $7,000,000 or $5,000,000 to $10,000,000 per year in revenue. This has mainly been royalties, so there's a good margin on this. But still, the potential has been a little bit limited. What we are now doing, we are shifting our main focus into products. And right now, we have a range of sensor module products that we produce in our own subsidiary, Promod, in the west of Sweden. 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 contactless touch in this post COVID environment. And the flexibility of application of our technology and these products that we offer give us basically endless verticals or segments to operate. And in many of them, we have both a new equipment play and a retrofit play. And to give you some examples, we are very much focusing and working on different types of kiosks. So interactive kiosks, self-service kiosks, that could be in airports, in retail stores, could be ticketing machines, could be ATMs and similar. Also, elevators, super interesting segment where we see a lot of interest and we see a lot of opportunity, again, both for new equipment, installations. And then our customers will be OEMs, elevator OEMs or companies producing the control panels for the elevator OEMs. Auto retrofit could be retrofit business with the OEMs, but also and what we see right now happening already is with 3rd 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 exemplify this more 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 cloth manufacturer in the world and then one of the really the largest and the market leaders here with a multinational reach. The application is a touchless display intended for self checkout kiosks in retail. We show an example on the right here in the picture. Customer reached out to us in April, May time frame and told us that they have been using our touch sensor modules in their labs and developed different kinds of prototypes and tested them, for instance, for this type of application. And they now decided that they want to start a pilot with initially, it was said, 1 major retail firm in the U. S. Right now, we are in the middle of this pilot, and it involves, in total, 7 major retailers. It was 6, but I just recently learned that they added a 7th retail chain in Russia. So this is started in the U. S, but now it also includes retail chains that either they are multinational or they are local but in different parts of the world like Australia, Colombia, Singapore and Russia. We are looking here at this project only and at an initial stage. Depending on the success of this pilot and how many of these maybe retailers will accept the offer to have this type of retrofit solution we are developing, if you can, with this OEM. We expect and our customer told us that the potential is 50,000 to 200,000 units in the initial order. And here, we estimate that our sales price can be $30 to $50 per unit, maybe a little bit higher. Today, we are selling these sensors modules for between $50 $80 per unit. Those prices that we have today for customers buying from, for instance, Digi Key, that they give us a gross margin of 40% to 50%. If you talk here about a big year commitment from a large OEM, there can also be multiyear commitment. I think that we will be forced to go a little bit lower in price. Still, we think we can maintain a pretty good gross margin in this case. Probably the distribution will be directed from us to this OEM customer. We see this as a very, very strong we have advanced discussions with this customer. This pilot is well underway. We have some initial feedback. We also know that this OEM has prioritized this project due to pressure they have from the market and from customers to develop this type of contactless touch interfaces on their devices. And they also have pressure from other competitors and also local engineering firms. And I will show you an example later what type of competition this OEM is facing out there. So we know that their target is to have something production ready and be shipped to customers before the end of the year. So it's also quite soon. Lead times are not too long, so it's super And these times are not too long, so it's super interesting. And this company we're working with here, of course, there are many self checkout kiosks and similar kiosks in the world. But this company, they are doing a lot of these type of products, but they also do ATMs. So that's the next case I want to take you through here. It's similar to the previous one, but slightly different. ATMs are found all over the world. There are millions of ATMs, only in U. S, some 500,000 ATMs and 3,200,000 something ATMs all over the world. They are an example of a self-service kiosk, obviously, but they are also money transaction equipment. 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 want to take measures so that people cannot hack these ATMs or install skimming devices on them and so on. So what we can expect is a higher complexity. It's also very much more business with the OEMs and not so much with 3rd party engineering firms or tech companies. But since we were already engaged with this large OEM that also is a major player in ATMs, 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 they have been quite open to us to hear this customer and say that they have appreciated the possibility to save cost, both in their production. They don't need to keep as many SKUs active in the production, but especially for keeping these ATMs up and running. So for maintenance and service operations out there in the world, they see huge potential to save costs. So in addition to this demand for a contactless touch interface driven by the COVID concerns out there, they have here really pointed at the cost saving potential. So this motivates us and tells us that ATMs could be also a very, very interesting opportunity. And for many of the ATMs today, we see actually multiple opportunities in the same equipment. So we could touch enable the screen and also replace the key pad with 2 sensors or 3, depending on the size of the screen. So in some cases, it's actually possible to have an increased sales on this type of equipment if we do it right. And of course, we're trying to do it right. The third example I want to talk about is elevators. Actually, this is a number of opportunities in parallel, so 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 a new equipment and retrofit played. Then we also have engagements and corporations with several medium sized and small tech companies, maintenance companies and engineering firms. Two examples is Speed and VSR. They are companies offering holographic displays, and they have developed special applications of their technology for elevators. And they have also secured some significant contracts to retrofit elevators in China with their solution. So we see pictures example left DSR and right e speed in these pictures. We also have other examples from anywhere from Hong Kong to Europe to U. S. And another company I can mention is Nubo Elevators in the U. S. That have developed a pretty neat solution for contactless interface in their elevators in the U. S. There are some 19,000,000 elevators in the world. This number is growing by 5% to 7% or 1,300,000 per year. We estimate that at least 10% of the elevators out there are being refurbished. That's why for me personally, elevators is a 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 direct sales 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, it doesn't matter. We are selling the same type of sensor modules, and we see that there are growing volumes going into elevators in the future. Super interesting. The 4th opportunity is a different example again. This is from the Changi Airport in Singapore. And for, I would say, all airports and all airlines in the world, passenger safety is key now in the post COVID world. Everyone in this business wants people to return to traveling and to flying. And what I'm telling you here about Changi and air transportation also is applicable to trains, subways and buses and similar. So Changi Airport ranked as the number one airport in the world, top modern and new airport. They decided early on this year during the early phases of the 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 employees working in the airport. And they found our technology, and they zoomed in on using that to update upgrade their different ticketing, check-in kiosks and similar to contactless touch operation. And there was a local engineering firm that we have cooperated with here that saw this opportunity. They quickly developed different retrofit solutions and installed 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 is super happy. They have actually asked this engineering firm to come back and retrofit all elevators and other equipment in the airport with a similar solution. For us, this is just one example. But here, we using a channel with a local engineering firm, we are covering actually multiple verticals. So self check-in kiosks, elevators and the vending machines and so on. And there are some 17,000 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. So there are many similar opportunities out there. And mainly, we have local partners that are addressing this market. But for us, it shows also the flexibility and the and has also posted several promotional videos and instructional videos how to operate this equipment in the airport. Also, there are several TV features and newspaper articles written about this. So a very good example. And sure enough, we are getting calls now basically every week from other airports around the world, from the U. S, from Europe and also Asia. So how can they also do this, what Schengen has done in their airport? So that's why we want to highlight this here and shows the trend that we think is also coming into other transportation hubs and shopping malls and similar. 5th example, we have to round this off and to make it complete. We will, of course, keep our existing license agreements with the printer manufacturers and e wheeler companies, and we will also try to expand and extend that both relationships. We are also today in active discussions and in some development projects with other customers like companies manufacturing displays for military and avionics applications and industrial control systems. So here is where we will have the main focus for our technology licensing, and it's going to be more niche applications and more demanding, more high performance applications than printers. So that's a clear shift in strategy and a clear focus now going forward. To really use the power of our technology and the quality and the good for instance, the good resolution and good image quality that you can get using our touch technology compared to competing solutions like PCAP and Resisting Touch. A difference here is that, again, this is technology licensing. So what we can expect is a slightly lower average sales price because it's a royalty that we get in the end. Also, we should be aware of the longer lead times. First, there is typically the customer is a large OEM company. They have their own processes. The lead times are longer. Here, we will also be involved in pretty extensive development projects ranging from 1 year to maybe 3 years, depending on application and the type of industry. On the other hand, if we win this type of business and we carry out this development, the underlying product will typically be in production and generate royalty revenues to us for between 5 to 10 years. And this is what we see today, obviously, with the printers and the automotive displays and the e readers. In many cases, they generate revenues from licensing many, many years after they were first launched. So we will definitely continue this. I also want to mention here to you listening in to this call that I see certainly also opportunities that elevator OEMs or exhaust OEMs may, if this grows and when this grows, they may want to integrate the hardware that we use in our sensor modules tighter into their designs, into their hardware, and they may ask also if they can license our technology. And I think we will, of course, offer this. And that's the strength of our offer, our total offer to these customers. They can grow with us. Starting out very small, it's very quick to buy, for instance, from Digi Key. They can use the SDK that they can download from our website, create a first application. When this grows, 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 refined into an integrated solution where, in the end, they will produce all the hardware and they will license the Z Force technology from us. So still, that business model is viable. We have not certainly not given up on that, but the main focus in the next couple of years will be to drive the product sales. So that's also true. But these two business areas that we have introduced in April, They certainly go well together, and they are mutually supporting. They are separate but mutually supporting. And the big difference is the business model we use, technology licensing or product sales. Technology or software licensing is also what we do in our 3rd business area. We call that business area remote sensing. And here, we are offering a software platform that we call multi sensing. And the focus here is driver monitoring and in cabin monitoring, mainly for automotive, but maybe also 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 kind of camera based driver or in cabin monitoring system in the vehicles. In Europe, the regulation is called GSR. It comes into effect from 2024. It applies to all light vehicles but also commercial vehicles. And typically, all the OEMs and many of the Tier 1s are now rapidly trying to develop features, driving monitoring feature, in cabin monitoring features that meet the safety requirements, but that also offer additional convenience features. 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 with Tier 1s. And our target here is to establish ourselves as a very reliable and innovative Tier 2 supplier of this software package that Tier 1 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 C Force technology, we must expect here that there is a certain lead time to sell this. And still, we have to wait some months before we can announce the first major design win. We are in the progress of developing an evaluation. But then it will typically follow a development project that extends through 2 or 3 years and then this goes in production maybe 20, 24 or something like So this is the opportunity we are looking at here. And the interesting thing with all these 6 or 7 opportunities I've discussed with you is that they span actually several application areas and some are shorter lead times in and some requires more patients and they have longer lead times. But Neonode is using only 2 technology platforms to achieve all this. And internally, that makes me certain that our efficiency can be kept at a quite good level, although we span many different verticals and application areas. And that's the beauty of our solutions, the C Force technology, which is ideal for contactless touch and the multi sensing technology, which is ideal for driver monitoring and in cabin monitoring here. 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 Neonode are actively continuing to market this and sell this to customers and develop underlying solutions. I also want to move on here and briefly summarize the news about our private placement that we closed last week on August 7. Those of you that follow us, you have, of course, seen the press releases, read all the details about this. But on August 7, we closed this private placement that generated some $13,000,000 in cash. Net, in total, we raised close to $14,000,000 but due to cost in the transaction, the net was some SEK 13,100,000. In connection to this placement, we also converted the loans from Pieter Lindel of Ruzberg into preferred stock, and that gave another €1,000,000 contribution to our financing. In connection to this transaction, management and members of the Board participated with SEK 3,100,000 in new cash contribution plus the SEK 1,000,000 conversion of the loans to the company. I'm quite happy about this. The outcome of this financing round is very quick. We managed to raise this money in just a matter of weeks. And we also think that the amount that we could raise is very good looking at our, for instance, our market cap and our needs. So we have now the means and the cash to go after and accelerate our growth and to go after new customers in these target segments. For instance, elevators, interactive kiosks and military Onyx, rugged, industrial and automotive dryer monitoring and 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 will certainly focus more on going forward. So I'm very happy to announce this private placement, and it will certainly strengthen us 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 it rather as an embedded call option in the Neonode share. The background, as many of you know, is Neonode was a smartphone company, has a lot of innovation power, has developed a lot of new innovations and new technology and has protected most of this in patents. And this is already from the early years of the company's existence. In particular, we have patent families relating to smartphone technology. And 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 as swipe to unlock, featured in a patent or lawsuit between Apple and Samsung in 2012 and also in another lawsuit between Apple and Motorola in 2013. There, judges in the U. S. Concluded that actually Neonode and not any one of the parties involved in both lawsuits held the 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 using because they are closely linked to smartphones. So through the agreement with Equitas, we will split fifty-fifty of the net proceeds that they can generate by licensing or selling rights to these patents if they are successful. And we are not it's very important to mention, 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 will split the net proceeds fifty-fifty. So that's why we call it a call option. And in some of these similar cases or other cases related to smartphones and features in smartphones. That can be substantial money, but we will not comment any further. We just want to bring this to everyone's attention and also clarify that we are not part of the lawsuit that Equitas filed in June this year in the Western District of Texas. So I hope that is clear, and we have to stand by here to see if and when the lawsuits are finalized and what they can generate in terms of revenue for Neonode, but hopefully, a good cash contribution later on. And with this, I will turn the call over to Maria Ick, who is the CFO of Neonode. Maria? Thanks, Laurent. You can find our 2nd quarter earnings release and 10 Q available for download from the Investors section of our website at neonount.com. I'd like to start out with the summary of the quarter. Revenues are down by $1,000,000 compared to the same quarter 2019. Our operating expenses are lower than planned and for the quarter $2,400,000 compared to 3 $100,000 in the same quarter 2019. Due to the above, our operating loss was up by $400,000 compared to the same quarter 2019. We have net revenues of $700,000 for the Q2 of 2020, which is a decrease by 56 percent from the comparable quarter last year and a decrease by 41% compared to the Q1. The main reason of the decrease is that we have no estimations of our license revenues in our business area, HMI Solutions, due to COVID-nineteen. But we see indications that at least automotive will come in a little better than we expected. For the Q2 of 20 20, our customers who licensed our technologies shipped 700,000 devices with an average license fee of $1 compared to the Q2 last year, where a customer shipped 1,900,000 units with an average license fee of €0.78 Total license fees for our automotive business for the Q2 2020 was $147,000 compared to $440,000 for the same period last year. For Consumer Business, the license fees were 5 1,000 compared to previous year's $1,000,000 This is mainly in effect of the pandemic and we expect this to rebound. Within our business area HMI Products, we have a low number of shipped products, but we've increased market interest. The sales during the Q2 were slow due to the pandemic related lockdowns. Our gross margin was 84% for the Q2 2020 compared to 96% in 2019, primarily due to inventory write offs in 2020. And for the same reason, there is a negative gross margin for our business area HMI Products. Operating expenses decreased by 19% to $2,400,000 for the Q2 2020 compared to 2019, which is partly due to COVID-nineteen governmental support package, lower professional fees and less traveling. As a result of this, our operating loss increased by 34% to $1,800,000 for the Q2 2020 compared to 2019. Our net loss for the Q2 2020 was $1,600,000 or $0.18 per share compared to net loss of $1,300,000 or $0.14 per share for the Q2 in 2019. As Urban said, the private placement last week generated a cash in possibility to execute on our strategy and to accelerate our efforts. Possibility to execute on our strategy and to accelerate our efforts. Operating activities used $1,000,000 in cash during the Q2 of 2020 as well as 2019. With this, I would like to hand over back to Urban for some closing remarks. Okay. Thank you, Maria. So we are approaching the end of this call and the presentation. Highlights that we want to draw your attention to is the private placement that we closed last week. And through this, we have now what we feel adequate resources to accelerate our growth and to capitalize on the current and future opportunities. In practice, what we will do is 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 and our operation. And overall, the proceeds will mainly be used to our payroll. So very little or if anything is going to be used for CapEx investments. So it's mainly human resource related and adding people to 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 contactless touch interfaces 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 Neonode into both new and retrofitted equipment. And again, I repeat that 2 of our main focus areas is interactive kiosks and elevators. And within this, we see huge opportunities. There are also other segments that we could operate in. And 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 this only shows the strength and applicability of our technology. We are also happy to note that we are finding new customers for our C4 Touch, for instance, in the military avionics and industrial control systems markets and that we also have a good resonance with several OEMs and Tier 1s regarding our multi sensing, driver monitoring, in cabin monitoring software solutions. So we are very motivated also to expand our customer portfolio there and the product portfolio in these business areas. And the final comment is that with all these opportunities and now with the financing secured for the next years, The focus, obviously, the rest of this year and also next year will be on 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, we thank you for your attention, and we will open up for some questions. Thank you. There are no questions at this time. Are there any closing comments? I will take the opportunity here to answer questions forwarded by Victor Wessmann, analyst from Redeye, before the call. And for instance, one question that Victor asked was how we are dealing with furloughing. And as we have announced in, for instance, the Q1 release in May, we are working short have been working shorter hours for 4 months from mid of April until today actually. And we are now returning to 100% working hours. And actually, we will increase also our headcount. So what we are doing is everyone is coming back to 100% from today, and we will also add further resources. And regarding transportation hubs, there is a question that this is what Victor sees maybe a smaller market. But as I pointed out when I was covering the example on the Changi Airport, there are simply 10 more than 10,000 airports, actually 17,000 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 a number of today self-service kiosks, vending machines, elevators in all these type of transportation hubs, If you further add shopping malls, hotel lobbies and similar, honestly, I think this is a big market and a huge opportunity for Neonode and our products going forward. And another question from Victor here is about lead times to enter into cooperations 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 3 to 6 months. In some cases, we are already in active dialogue with customers. In some other cases, this is yet to come. So overall, we think that over the next 3, 6, 12, 18 months, This is when we should be able to announce some major contracts with large OEM customers, both regarding interactive kiosks, elevators and other types of licensing business. And that over the next 2, 3 years, we will see certainly a growth of our project portfolio and also a growth of MRE 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 6 to 12 months, as I mentioned here at the closing slide. And I mentioned through the presentation that we are certainly not terminating any existing license agreements or terminating any relations or contacts we have with printer manufacturers, e reader manufacturers, companies in medtech and so on. 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 discussing contactless touch solutions, both on displays and on other types of systems. 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 contact and a good relationship to all our existing and all our own customers as well. So thank you, Victor, for submitting these questions. And I think that this takes us to the end of this call. Thank everyone for your attention and for joining. Please follow us going forward, and have a good weekend. Thank you. Thank you. That does conclude today's NeoNode Q2 2020 earnings conference call. You may now disconnect your lines and have a wonderful day.