Ladies and gentlemen, thank you. Welcome to today's eMagin Second Quarter 2020 Earnings Call. Once more we wish to thank you all for your patience while we experienced our technical difficulty this morning. For today's meeting, all lines will be in a listen only mode, but later you will have the opportunity to ask questions. As a reminder, today's session is being recorded. And now for opening remarks and introductions, I'm pleased to turn the floor over to CFO Mr. Mark Koch.

Good morning, everyone, and welcome to our second quarter 2020 conference call. We're very glad to have you join us today. During today's call, we may make forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the company's current expectations, projections, and beliefs and are subject to a number of risks and uncertainties. Such statements may include references to projections of future revenues, plans for product development and production, the company's ability to ramp up production, the company's ability to reduce its cost structure, future contracts and agreements, product benefits, operations, future financing, liquidity and capital resources; as well as statements containing words like believe, expect, plan, target, et cetera. You should not place undue reliance on these forward-looking statements because they involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. Please refer to our earnings release for the second quarter of 2020 and the company's filings with the Securities and Exchange Commission for information concerning factors that could cause actual results to differ materially from those expressed or implied by such statements. We undertake no obligation to update or revise any forward-looking statements to reflect future events or circumstances. During this call, we will also refer to adjusted EBITDA, a non-GAAP financial measure, to provide additional information to investors. A reconciliation of adjusted EBITDA to net income, which is the most directly comparable GAAP financial measure, is provided in the press release that we issued this morning. Non-GAAP financial measures such as adjusted EBITDA are not meant to be considered in isolation or as a substitute for our GAAP financial measures and financial statements. With that, I would like to turn the call over to our CEO, Andrew Sculley.

Thank you, Mark, and welcome everyone to our second quarter earnings call this morning. I hope that everyone is staying safe and healthy during these challenging times with the COVID-19 pandemic. On today's call, I will be discussing our quarterly results and then provide an overview of our new Department of Defense funding, followed by the trends in our military, industrial and consumer end markets, as well as advances we are making in regard to our production and Direct Patterning, including comments on today's dPd press release. Mark will then discuss our consolidated results in greater detail. Our revenue for the second quarter reached $7.7 million, an increase of 44% year-over-year, and 15% sequentially from the first quarter of 2020. We had solid bookings during the quarter and ended the quarter with a backlog of $13.3 million of product to be shipped within the next 12-months. Our operating loss declined to $1.3 million from a loss of $2.8 million a year ago. It was sequentially flat with the first quarter of 2020. This resulted from higher R&D expenditures. Our R&D in Q2 compared to Q1 was higher as we focused on the installation and qualification of the redesigned dPd tool and our new OLED XLE display, both of these efforts are extremely valuable to eMagin. We are very excited to have received the vote of confidence and funding from the Department of Defense for our U.S. produced OLED microdisplays. As we announced in July, these were two separate grants totaling $39.1 million for equipment and tooling to further advance our technology, as well as enhance our manufacturing processes. We are currently defining our specifications and expect to begin the procurement process within the next few weeks. Based on our past experience, we do not expect to begin receiving the initial equipment until sometime in the second quarter of 2021. At that point, we will test and qualify the machinery and the processes. Equipment deliveries will continue throughout the three year program. Included in this program will be a new production tool for our patented proprietary dPd technology. This is an enormous endorsement of our technology and gratifying for the entire team. We continue to see strong demand trends for our microdisplays. In the military end-market, we supported the ENVG-B program, which led to successful prototypes for both prime contractors. As a result, we are currently preparing for new production orders with delivery starting at the end of 2020 and into 2021. Additionally, we continue to produce parts for the F-35 program and have received significant orders from other military programs worldwide. In the medical end-market, we continue to see traction with medical imaging companies and have received numerous follow-on orders from existing customers in the diagnostic field as well as neurological imaging and veterinary medicine. As well we had six new non-military customers this past quarter with applications ranging from HMDs to scope upgrades and industrial welding. On the consumer front, we have a display design, which we'll complete by directly patterning the OLED on the displays. In addition, we have another display whose backplane design is ready to be fabricated, after which we will directly pattern the OLED on the displays. This has contributed to the Q2 contract revenue. Additionally, we're in discussions with a number of tier 1 companies, some of which we know very well, who need bright OLED microdisplays for their AR/VR work, couple of these discussions have been with companies with whom we have existing agreements. Turning to our production, we have made significant progress on improving our processes and yields, demonstrated by our ongoing on-time delivery of customer orders remaining at over 95% for the first half of 2020. We also have additional enhancements due shortly that we believe will have a major impact on the bottom-line. As volume increases, and we continue to advance our dPd and R&D efforts, the funding of additional production equipment should alleviate bottlenecks and allow us to produce our leading-edge microdisplays more efficiently. During the second quarter, we fabricated full color displays using our newly upgraded dPd tool. We will qualify the tool and ship products in the second half. We had said previously that with our dPd technology we're on track to achieve 10,000 candela per meter squared or nits in the fourth quarter of this year. And still comfortable with that statement, and also that we expect to achieve 28,000 candela per meter squared or nit by 2023 using the funded dPd production tool. Finally, our technology for dPd is not limited to purely microdisplays. It can be more broadly applied or licensed to other OLED display manufacturers for sizes beyond microdisplays. This morning, we also issued a release on two additional patents for our Direct Patterning that relate to methods and fabrication of OLED microdisplays. These two new patents are in addition to the existing 16 foundational patents that we already have obtained for our dPd technology. And there are more to come. Our technology enables us to directly pattern the red, green and blue color OLED emitters at over 2,700 pixels per inch. Products using light with color filters lose approximately 80% of the light which is clearly an issue for brightness. In addition, for the red and green sub-pixels, we use highly efficient phosphorescent emitters. This, plus no color filters is what is driving our brightness to 10,000 candela per meter square this year. One more thing is worth mentioning here about our technology. We can also apply other brightness enhancing technologies to our direct patterned OLED displays. For example, we can use two or more or OLED stacks for each of the red, green and blue OLED. This can be done more easily with our Direct Patterning technology than using multiple stacks of white OLED with color filters that others are using. The bottom line is, we're ahead in brightness today, and we expect to remain ahead. To our knowledge, we are the only company who has demonstrated Direct Patterning technology on high resolution, high pixels per inch microdisplays with very high brightness. As I mentioned above, our technology can be used for other OLED displays. I also want to take the opportunity this morning to welcome Scott Bukofsky to our team. He has joined us as the Vice President of Business Development. For the past five years he was with GlobalFoundries as a Senior Director of Sales responsible for over $800 million in annual revenue from a mix of large commercial accounts, small customers and start-ups, as well as aerospace and defense clients. In summary, despite some employee health and safety measures, we had a very productive quarter and continue to advance our industry-leading dPd technology. I want to thank all of our team members, without whom we would not have been able to reach our current production volumes, advance our R&D efforts and attain this high level of recognition from the Department of Defense. With that, I'll turn the call to Mark. Mark?

Thank you, Andrew. Before I discuss our second quarter 2020 results for the period ended June 30, 2020, I'd like to provide you with a few key financial takeaways from the quarter. We reported revenue of $7.7 million at the high end of our guidance and 44% over the comparable quarter and 15% better than the first quarter 2020. R&D contract work remains strong with work for the consumer markets and a number of additional increase during the quarter as interest in AR/VR appears to be increasing. We are receiving $39.1 million over the next three years in U.S. government DoD awards for equipment and tooling, including for dPd technology. As of August 1, 2020, we had a cash balance of approximately $11.5 million including proceeds of $6.5 million from our July ATM funding, plus availability of $2.5 million under our ABL facility. Moving to the second quarter, total revenues for the second quarter of 2020 were $7.7 million, an increase of $2.3 million or 44% from revenues of $5.4 million reported in the prior year period and a 15% increase from the $6.7 million in the first quarter of 2020. Total revenues consist of both product revenue and contract revenue. Product revenues for the second quarter of 2020 were $6.3 million, an increase of $1.3 million from product revenues of $5 million reported in the prior year period. The increase in product revenue was due to an increase in demand from military and higher average selling prices and was achieved despite some minor disruptions resulting from the COVID-19 pandemic. Contract revenues were $1.4 million compared to $0.4 million reported in the prior year. The increase in contract R&D work reflects the contribution from contract work for the consumer market. Gross Margin for the second quarter was 26% on gross product of $2 million compared to a gross margin of 4% and gross profit of $0.2 million in the prior year period. The improvement in gross margin resulted from both favorable margins on contract revenues for the consumer market and improvements in product margins. Second quarter 2020 product gross margin of 20% compares favorably to 1% in the prior year, which was impacted by lower throughput due to manufacturing challenges that has continued from the first quarter of 2019. Operating expenses for the second quarter of 2020, including R&D expenses were $3.3 million as compared to $3.1 million reported in the prior year period. Operating expenses as a percentage of sales were 43% in the second quarter of 2020, compared to 57% reported in the prior year period. R&D expenses were higher in the second quarter, primarily reflecting a focus on R&D projects related to dPd technology and our XLE display development, partially offset by costs charged to contract R&D work for the consumer market. SG&A expenses were lower in the second quarter versus a year ago period due to salary reductions implemented in October 2019, a reduction in non-cash stock compensation for the Board of Directors implemented in December 2019 and lower travel and other discretionary expenses. Operating loss for the second quarter of 2020 was $1.3 million compared to an operating loss of $2.9 million in the prior year period. Net loss for the second quarter of 2020 was $2.8 million or $0.05 per share, compared to a loss of $2.3 million or $0.05 per share in the prior year period. Net loss for the current and prior year periods reflects a $1.5 million non-cash loss and a $0.5 million non-cash gain related to the change in fair value of a warrant liability, respectively. Adjusted net loss for Q2 2020, excluding the change in the fair value of the warrant liability was $1.4 million or $0.02 per share compared to $2.9 million or $0.06 per share in the year ago period. Adjusted EBITDA for the second quarter was negative $0.8 million compared to a negative $2.3 million in the prior year period. At June 30, 2020, the company had cash and cash equivalents of $5.4 million compared to $3.5 million at December 31, 2019, and had working capital of $12 million. Borrowings and availability under the ABL facility was $0.4 million and $3.1 million respectively at June 30th. During the quarter, we received $1.96 million of PPP funding under the SBA loan program, and for which we attend to apply for forgiveness. In November of 2019, eMagin entered into an aftermarket sales agreement with H.C. Wainwright for the sale of common stock. During the quarter, we raised $1.8 million under our ATM facility and raised $3.3 million for this first six months of the year. Subsequent to the end of the quarter, we raised the remaining amount available under this facility of $6.5 million, which provides us with ample liquidity and no near-term need for additional fundraising. As of June 30, 2020, the company's backlog of orders shippable within 12 months was $13.3 million compared to a backlog of $11.7 million as of December 31, 2019. With that, we will open the call for questions.

[Operator Instructions]. We will hear first from Kevin Dede at H.C. Wainwright.

I was wondering Andrew if you could dive in a little bit deeper on XLE specifically, what are the characteristics there? When does it become available? What the size that you think will be available? How does the new machine help you? Just some more color on that, please.

Okay. On XLE, it's high brightness color. It's not the direct pattern. So, it's an interim steps that a number of the programs in military want. For example, ground programs are very interested in that. And that's going to be next quarter. It is a qualification goal for us. And that's where we're going there. What was your other question on dPd you are interested in?

Right. Yes. dPd, the new machine, and how -- I guess also Andrew how -- because you referenced a few times in your prepared remarks, how your technology is licensable and I was hoping you could sort of expand on that as well?

Okay. So there's two new machines to talk about. So, I'm going to talk about both of them. Then, the new tool that we have redesigned now is installed and we're working on qualification of it. We have produced parts, of course, as part of the qualification and that we're going to continue. We expect to ship parts this second half to customers and which customer will be based on, which one is very important to us. So, we're still working with the customers on timing for that. The other new tool I want to mention is that, part of the governmental funding is for a new direct pattern tool, and that's significant, and it would be a production tool as opposed to an R&D tool we have right now. So, that's very significant for us. And we mentioned licensable. There is -- when you think about very high volume, like in the consumer market, the tool we have right now, this R&D tool obviously can't handle it. And although the government tool is going to be able to satisfy the military volume, and then some, it's not a huge volume. So we're -- we've always talked about licensing this Direct Patterning technology which we have developed to mass production partner. And the other thing in the prepared remarks we talked about is, it can -- we can license it for technologies beyond microdisplays. It can be used for a larger display. And you can think of watch cellphone type thing. And in that case, if you've ever seen, which I know you have, very magnified picture of an OLED cellphone, there's a lot of black space. So, the amount of lighting spaces may be 23% of the total area. If you made the sub-pixels bigger and filled up that space, you'd actually be able to dial the phone up brighter when you went outside. And when you're inside, you don't need that brightness or you dial down the OLED light, its efficiency et cetera goes up significantly. So, that's what we're talking about.

Okay. You mentioned 28 -- I think 28,000 nits by 2023 using the new using the new tool now. Would you expect that has to be double stack or do you think you'd be able to do that in single stack?

Well, I don't want to tell you how we're doing it. But -- and I did mention the double stack idea. To do a double stack with green, a double stack with red and a double stack with blue is much easier to do than doing white. And that's why we said, we're ahead today and we can remain ahead. And the other thing is the new tool will be able to handle double stack more easily than our R&D tool. So, we're already seeing that that's a possibility.

I see. Okay. You also mentioned about processing yields, and something about customer orders. And I apologize because I missed the number you referenced, Andrew. I think you said something about 95%. Could you just -- I apologize to have to ask you about that. I just didn't -- couldn't keep up with you?

Yes, no problem at all. So, the on-time delivery, we keep track of that. And we're rather strict in the way we do that. So, that if we have partial ship that town says it's not on time until we ship everything. That's the time we shipped it. So, it's been over 95% for the first half of this year. So, our work is in terms of improvement of throughput, improvement of yield/efficiency has been good in the first half.

Okay. Last question from me is more I guess sort of a redundancy thing. With the new tool coming online that you’d expect, I hope you meet government volumes. I'm wondering -- I know that -- I've been watching you guys for many, many years. And occasionally there's a production hiccup. I'm just wondering how well you think you have your arms around that and what you might have to do in order to backup and ensure that you will deliver the volumes you think with that new tool?

Okay. So I'll talk about the government funding. What does that do for us is to eliminate single point failure. So you've heard in the past, we haven't had that. We've been very good at keeping this going now. But if their tool goes down, and that's a single tool in a production line, we have to worry about that and fix it. That's why we build a little inventory. So in this case, the government program will eliminate single point failures. It'll also work to improve throughput and yield with new advanced equipment that we have -- we're designing. And that will give us more capacity. It will also therefore allow us to do R&D on separate tools. And the final one I should have brought upfront really was -- is the dPd tool. It's a real production tool. I'm not saying huge volume, but I'm saying it will satisfy all the military volume and then some. And it's also capable of doing our current displays, no problem. So it'll give us capacity for Direct Patterning, capacity for our current displays. And so it is -- and that also allows us therefore to do R&D on separately and run production on the new tool. So it is a great benefit.

[Operator Instructions]. Next we'll hear from shareholder [John Pearson].

Hey. On the future licensing idea, I was hoping to drill into that a little bit. It's my understanding your dPd production tool won't go live until third quarter 2023 I think you said. But if you license other customers, and they already have the correct equipment, I believe you mentioned earlier, they could actually be producing dPd items before you. Is that correct?

That's certainly plausible depending upon how fast we go and the equipment they already have. And it will be certainly into 2023 for the dPd tool. That is correct. And it'll be online sooner than what we have said in the press releases. But we want to qualify it and we're being a little bit cautious here, which we should to say the third quarter produced parts. So the answer to your question though is, yes, it could happen sooner.

Okay. And what does that technology transfer look like? Is it just a matter of -- yes, you can use our patents kind of thing? Or is it more involved where you have to possibly rotate employees over to their location to transfer that technology?

Well, certainly patents are one thing and knowhow and other. We've developed all this already. So we have it. That's why we -- that's why the government can trust us to put in a real tool. So yes, the employees are very important as well as the patents.

Do you envision eMagin going completely away from color filters eventually and what kind of timeframe?

Yes, I think, obviously, we can't do that until the new tool is up because we can satisfy the military there. But if you look at this, and you say, color filters lose a significant fraction of the light, 80%, you pick the number, you perhaps can do better than that. But if that is the case, then why would you want to spend the energy to make white with colored filter at a given brightness, when it's much more efficient to do red, green and blue. And obviously, the brightness can be better, but even at the same brightness, it's much more efficient.

Okay. I was wondering, should I think as far as yields go -- I know that, yields is always a big issue, is it -- does it change -- has the yield concept changed significantly without the color filters or is it still basically the same concept? Does it get easier?

Certainly, yes. Color filters can impact yield, yes. It's another step. Absolutely. So, just let me repeat. So you can get very high brightness without color filters, you can get more efficient operation i.e. much better power, and why did the military choose our OLED displays in the first place? Well, one of the key things was power. So you can get better power, and the other thing on the OLED side is better lifetime with the OLED. So your question, I would ask, why wouldn't you do Direct Patterning and eliminate color filters?

It sounds like you certainly have some game-changing technology going on here. I guess, are you dependent on -- as far as brightness goes, are you somewhat dependent on OLED material advances to get where you want to go?

Well, of course our plan is with materials that exist today. So, as materials get better, you might remember and this might be too technical, I apologize. But the phosphorescent we mentioned, green and red. We didn't mentioned blue, that's because there isn't a good phosphorescent blue. I apologize to any of those material companies out there who might think they have it. It's not perfect yet. So, when phosphorescent blue comes, of course, that will make it even better. So we will depend on them to get better beyond what we're saying today, and that was 10,000 by this year, 10,000 nits and then 28,000 nits in 2023. It can go beyond that with better material.

Alright. Thanks a lot. Andrew, I guess just my last question. I’m just kind of interested in knowing as far as wafer sizes that you will continue on to smaller size. I think is it 200 or you envision yourself leaping towards the 300 size?

Well, our equipment today is 200 and we’re -- we think about that sort of thing with 300. It would require new equipment. So that's something to think about. Certainly, I'll just mention that, if you're in the consumer market and you're building a high resolution display and it's a little bigger, and although we would like to make it smaller and smaller, sometimes the optics make it difficult. So, you need a bigger display. In that case, I'm putting a larger rectangle in a circle, the circle being bigger makes it more easily done. So, I think in the future, the consumer market will be on 300 millimeter wafers. And [regarding] the design of that dPd tool, we'll think about that, but we don’t want to take too much risk. Okay?

And John I should also mention that we did do a second release about two patents we were awarded. So, that's out there on as far as dPd with some further information about the benefits of the technology.

[Operator instructions]. And gentlemen, we have no signals from our phone audience. I'll turn it back to you for any additional or closing remarks that you have.

Thank you. Again, I want to thank everyone for joining us on the conference call this morning. And I wish everyone stays healthy again, it’s very important. And we're very happy with the eMagin team with what they've managed to accomplish. The government funding is because of all the great work that the team has done from a very long time ago. The government is very interested in our displays. Otherwise, they wouldn't be doing this. And the Direct Patterning, the government obviously sees this as a fundamental change in microdisplays. And that's why they're funding it. We're very pleased to have this opportunity. And the team again has been doing well in terms of yield and throughput. So, I want to thank the eMagin team for all their efforts, even during this very tough time. And we have done a good job with COVID-19 as well. So, again, everybody, I thank you very much for joining us on the call and talk to you again. Thank you.