�neonode® Neonode Inc. Second Quarter 2021 Presentation Dr. Urban Forssell, CEO Mr. Fredrik Nihlén, CFO Mr. David Brunton, Head of Investor Relations August 11, 2021 Disclaimer This presentation contains oral and written statements of Neonode Inc. ("Neonode" or the "Company") and its management and may contain, forward‐looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information about current expectations, potential financial p ...

PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201%20Financial%20Statements) Neonode Inc. reported a 65% revenue increase to $3.39 million for H1 2021, yet net loss widened to $3.23 million due to higher operating expenses [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $11.86 million by June 30, 2021, driven by reduced cash, while liabilities and equity also declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | | :--- | :--- | :--- | | **Assets** | | | | Cash | $6,611 | $10,473 | | Total current assets | $10,571 | $14,650 | | **Total assets** | **$11,859** | **$16,572** | | **Liabilities & Equity** | | | | Total current liabilities | $3,427 | $4,210 | | **Total liabilities** | **$3,540** | **$4,682** | | **Total stockholders' equity** | **$8,319** | **$11,890** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2021 revenues more than doubled to $1.72 million, but a 38% rise in operating expenses resulted in a net loss of $1.66 million Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | **$1,720** | **$758** | **$3,385** | **$2,052** | | License fees | $1,358 | $674 | $2,653 | $1,843 | | Sensor modules | $346 | $66 | $701 | $164 | | Total gross margin | $1,499 | $635 | $2,887 | $1,885 | | Total operating expenses | $3,295 | $2,391 | $6,312 | $4,730 | | Operating loss | $(1,796) | $(1,756) | $(3,425) | $(2,845) | | **Net loss attributable to Neonode Inc.** | **$(1,657)** | **$(1,612)** | **$(3,225)** | **$(2,622)** | | Basic and diluted loss per share | $(0.14) | $(0.18) | $(0.28) | $(0.29) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to $3.41 million for H1 2021, leading to a $3.86 million decrease in cash balance Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,405) | $(1,928) | | Net cash used in investing activities | $(67) | $(7) | | Net cash (used in) provided by financing activities | $(295) | $1,344 | | **Net decrease in cash** | **$(3,862)** | **$(584)** | | Cash at beginning of period | $10,473 | $2,357 | | **Cash at end of period** | **$6,611** | **$1,773** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, liquidity, revenue streams, and commitments, addressing going concern despite historical operating losses and negative cash flows - The company has incurred significant operating losses and negative cash flows since inception, with a net loss of **$3.2 million** for the first six months of 2021 and an accumulated deficit of **$199.4 million** as of June 30, 2021[28](index=28&type=chunk) - Management believes the current operating plan and potential capital sources are sufficient to alleviate going concern concerns[29](index=29&type=chunk) - As of June 30, 2021, four customers represented approximately **70%** of consolidated accounts receivable, with Hewlett Packard Company (**31%**), Seiko Epson Corporation (**14%**), and LG Electronics Inc. (**13%**) as top revenue contributors for H1 2021[52](index=52&type=chunk)[53](index=53&type=chunk) - An "at the market" (ATM) offering program was established on May 10, 2021, to sell up to **$25.0 million** of common stock[97](index=97&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue growth for H1 2021 was driven by license fees and contactless touch solutions, while increased operating expenses and decreased liquidity led to establishing a $25 million ATM facility [Overview](index=31&type=section&id=Overview) Neonode offers advanced optical sensing solutions for B2B markets, generating revenue through technology licensing and sensor module sales, primarily in automotive and printer industries - The business model relies on licensing zForce and MultiSensing technology platforms and selling sensor module products[144](index=144&type=chunk) - As of June 30, 2021, Neonode had **35** valid technology license agreements, with approximately **82 million** devices sold using its technology since 2010, primarily in automotive and printer industries[145](index=145&type=chunk)[146](index=146&type=chunk) [Impact of COVID-19](index=32&type=section&id=Impact%20of%20COVID-19) COVID-19 continues to impact supply chains and customer sales, yet it has also increased demand for contactless touch products - The COVID-19 pandemic causes component delivery challenges and affects customer sales volumes, but also increases demand for contactless touch products[154](index=154&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Q2 2021 net revenues surged 127% to $1.72 million, driven by license fees and sensor module sales, but a 37.8% rise in operating expenses resulted in a $1.66 million net loss Q2 2021 vs Q2 2020 Financial Performance (in thousands) | Metric | Q2 2021 | Q2 2020 | Variance ($) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$1,720** | **$758** | **$962** | **126.9%** | | License fees | $1,358 | $674 | $684 | 101.5% | | Sensor modules | $346 | $66 | $280 | 424.2% | | Total Gross Margin | $1,499 | $635 | $864 | 136.1% | | Total Operating Expenses | $3,295 | $2,391 | $904 | 37.8% | | **Operating Loss** | **$(1,796)** | **$(1,756)** | **$(40)** | **2.3%** | - The increase in license fees is attributed to a pandemic-related rebound from depressed levels in 2020[159](index=159&type=chunk) - Growing interest in contactless touch solutions, with Asia as the first adopter, is the primary driver for increased sensor module sales[161](index=161&type=chunk) - Higher staff costs, compared to 2020 when government pandemic support reduced working hours, primarily drove increases in R&D, Sales & Marketing, and G&A expenses[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) Cash decreased to $6.6 million by June 30, 2021, with $3.4 million used in operations, leading to the establishment of a $25 million ATM program for future funding Key Liquidity Metrics (in millions) | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash | $6.6 | $10.5 | | Working Capital | $7.1 | $10.4 | - Net cash used in operating activities was **$3.4 million** for H1 2021, primarily due to a net loss of **$3.5 million**[186](index=186&type=chunk) - An "at the market" (ATM) offering program was established in May 2021 to sell up to **$25 million** of common stock for future operations[195](index=195&type=chunk) - Subsequent to quarter-end, on July 2 and 6, 2021, the company raised net proceeds of **$100,000** by selling shares under the ATM facility[197](index=197&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=41&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No quantitative and qualitative disclosures about market risk are applicable for the reporting period - The company has indicated that there are no quantitative and qualitative disclosures about market risk to report[201](index=201&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective as of June 30, 2021, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2021[202](index=202&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter[205](index=205&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=43&type=section&id=Item%201%20Legal%20Proceedings) The company faces a legal matter regarding a voluntarily dismissed shareholder class action, with intent to vigorously defend against a potential fee petition - A putative stockholder class action lawsuit filed on September 2, 2020, was voluntarily dismissed by the plaintiff on October 20, 2020[116](index=116&type=chunk) - Plaintiff's counsel informed Neonode on February 11, 2021, of their intent to file a fee petition, which the company plans to vigorously defend against[116](index=116&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A%20Risk%20Factors) No material changes to risk factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes to risk factors have occurred since the filing of the Annual Report on Form 10-K for the year ended December 31, 2020[208](index=208&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206%20Exhibits) Exhibits filed with this report include corporate governance documents, the At Market Issuance Sales Agreement, and officer certifications - Exhibits include the At Market Issuance Sales Agreement with B. Riley Securities, Inc., and Sarbanes-Oxley Act of 2002 certifications[210](index=210&type=chunk)

Neonode Inc. (NASDAQ:NEON) Q1 2021 Earnings Conference Call May 12, 2021 10:00 AM ET Company Participants David Brunton - IR Urban Forssell - CEO Maria Ek - CFO Johan Swartz - VP, Sales APAC Jonas W??rn - VP, Sales EMEA Anthony Uhrick - VP, Sales Americas Conference Call Participants Jesper Henrikson - Redeye Christian Schwab - Craig-Hallum Capital Viktor Westman - Redeye Operator Hello, everyone. Thank you for standing by, and welcome to Neonode???s First Quarter 2021 Earnings Conference Call. All lines ha ...

() neonode® Neonode Inc. First Quarter 2021 Presentation Dr. Urban Forssell, CEO Ms. Maria Ek, CFO Mr. Anthony Uhrick, Vice President Sales AMER Mr. Johan Swartz, Vice President Sales APAC Mr. Jonas Wærn, Vice President Sales EMEA Mr. David Brunton, Head of Investor Relations May 12, 2021 Disclaimer This presentation contains oral and written statements of Neonode Inc. ("Neonode" or the "Company") and its management and may contain, forward-looking statements within the meaning of the Private Securities Lit ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2021 ☐ Transition report pursuant to section 13 or 15(d) of the Securities and Exchange Act of 1934 For the transition period from _______ to ________ Commission file number 1-35526 NEONODE INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or ...

Neonode Inc. (NASDAQ:NEON) Q4 2020 Results Conference Call March 10, 2021 10:00 AM ET Company Participants David Brunton - Investor Relations Urban Forssell - Chief Executive Officer Maria Ek - Chief Financial Officer Johan Swartz - Vice President of HMI Products Jonas W??rn - Vice President of HMI Solutions Conference Call Participants Tyler Burmeister - Craig-Hallum Viktor Westman - Redeye Operator Hello, everyone. Thank you for standing by, and welcome to Neonode???s Fourth Quarter 2020 Earnings Conferen ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 (Address of Principal Executive Of ice and Zip Code) +46 (0) 8 667 17 17 (Registrant's Telephone Number, including Area Code) Securities registered pursuant to Section 12(b) of the Act: or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition ...

Neonode, Inc. (NASDAQ:NEON) Q3 2020 Earnings Conference Call November 10, 2020 10:00 AM ET Company Participants David Brunton - IR Urban Forssell - CEO Maria Ek - CFO Conference Call Participants Viktor Westman - Redeye Operator Hello, everyone. Thank you for standing by, and welcome to Neonode???s Third 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 coverin ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201%20Financial%20Statements) This section presents Neonode Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, financial position, and performance for the periods ended September 30, 2020 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | Sep 30, 2020 (Unaudited, $ thousands) | Dec 31, 2019 (Audited, $ thousands) | | :----- | :------------------------------------ | :---------------------------------- | | Total Assets | 16,625 | 7,436 | | Total Liabilities | 3,642 | 3,589 | | Total Stockholders' Equity | 12,983 | 3,847 | - Total assets significantly increased from **$7.4 million** to **$16.6 million**, primarily driven by an increase in cash from **$2.4 million** to **$12.2 million**[9](index=9&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) **Three months ended September 30:** | Metric | 2020 ($ thousands) | 2019 ($ thousands) | YoY Change ($ thousands) | YoY Change (%) | | :----- | :----------------- | :----------------- | :----------------------- | :------------- | | Total Revenues | 1,495 | 1,310 | 185 | 14.1% | | Total Gross Margin | 1,294 | 1,246 | 48 | 3.9% | | Operating Loss | (1,746) | (1,189) | (557) | (46.8)% | | Net Loss attributable to Neonode Inc. | (1,638) | (1,086) | (552) | 50.8% | | Basic and Diluted Loss per Share | (0.16) | (0.12) | (0.04) | 33.3% | **Nine months ended September 30:** | Metric | 2020 ($ thousands) | 2019 ($ thousands) | YoY Change ($ thousands) | YoY Change (%) | | :----- | :----------------- | :----------------- | :----------------------- | :------------- | | Total Revenues | 3,547 | 5,032 | (1,485) | (29.5)% | | Total Gross Margin | 3,179 | 4,796 | (1,617) | (33.7)% | | Operating Loss | (4,591) | (3,171) | (1,420) | 44.8% | | Net Loss attributable to Neonode Inc. | (4,260) | (2,923) | (1,337) | 45.7% | | Basic and Diluted Loss per Share | (0.45) | (0.33) | (0.12) | 36.4% | [Unaudited Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) | Metric | Three months ended Sep 30, 2020 ($ thousands) | Three months ended Sep 30, 2019 ($ thousands) | Nine months ended Sep 30, 2020 ($ thousands) | Nine months ended Sep 30, 2019 ($ thousands) | | :----- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net loss | (1,748) | (1,199) | (4,626) | (3,213) | | Foreign currency translation adjustments | (228) | (145) | (251) | (300) | | Comprehensive loss attributable to Neonode Inc. | (1,866) | (1,231) | (4,511) | (3,223) | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) | Metric | Sep 30, 2020 ($ thousands) | Dec 31, 2019 ($ thousands) | | :----- | :------------------------- | :------------------------- | | Common stock | 11 | 9 | | Additional paid-in capital | 211,587 | 197,543 | | Accumulated other comprehensive loss | (890) | (639) | | Accumulated deficit | (194,813) | (190,520) | | Total Neonode Inc. stockholders' equity | 15,895 | 6,393 | - Total stockholders' equity increased significantly from **$3.8 million** at December 31, 2019, to **$12.9 million** at September 30, 2020, primarily due to the issuance of shares for cash and preferred stock conversions[11](index=11&type=chunk)[16](index=16&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric | Nine months ended Sep 30, 2020 ($ thousands) | Nine months ended Sep 30, 2019 ($ thousands) | | :----- | :------------------------------------------- | :------------------------------------------- | | Net cash used in operating activities | (3,707) | (2,873) | | Net cash used in investing activities | (17) | (89) | | Net cash provided by (used in) financing activities | 13,778 | (403) | | Net increase (decrease) in cash | 9,855 | (3,530) | | Cash at end of period | 12,212 | 3,025 | - A significant increase in cash at the end of the period (from **$3.0 million** to **$12.2 million**) was primarily driven by net cash provided by financing activities, including proceeds from preferred and common stock issuance[19](index=19&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. Interim Period Reporting](index=9&type=section&id=1.%20Interim%20Period%20Reporting) - Neonode develops optical touch and gesture control solutions for human interaction with devices and remote sensing solutions for driver and cabin monitoring in automotive and other applications[23](index=23&type=chunk) - The company incurred net losses attributable to Neonode Inc. of approximately **$1.6 million** for the three months and **$4.3 million** for the nine months ended September 30, 2020, and had an accumulated deficit of approximately **$194.8 million** as of September 30, 2020[25](index=25&type=chunk) - On August 7, 2020, Neonode completed a private placement, issuing common stock and convertible preferred stock for an aggregate purchase price of **$13.9 million** in gross proceeds, which are being used for working capital purposes[30](index=30&type=chunk)[32](index=32&type=chunk) - Management believes the company's cash position after the private placement, current operating plan, and sources of potential capital are sufficient to alleviate concerns about its ability to continue as a going concern[36](index=36&type=chunk) [2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - The financial statements are prepared in accordance with U.S. GAAP and include Neonode Inc. and its majority-owned subsidiary, Pronode Technologies AB[39](index=39&type=chunk) - Revenue is recognized when control of products or services is transferred to customers, disaggregated into HMI Solutions (license fees, engineering) and HMI Products (sensor modules, engineering)[63](index=63&type=chunk)[65](index=65&type=chunk)[108](index=108&type=chunk) **Disaggregated Revenues by Market (Three months ended Sep 30, 2020):** | Market | Amount ($ thousands) | Percentage | | :----- | :------------------- | :--------- | | HMI Solutions (Automotive) | 538 | 44% | | HMI Solutions (Consumer Electronics) | 673 | 56% | | HMI Products (Medical) | 56 | 20% | | HMI Products (Distributors and other) | 228 | 80% | - The company has significant customer concentration, with four customers representing approximately **75% of consolidated accounts receivable and unbilled revenues** as of September 30, 2020[61](index=61&type=chunk) [3. Short-Term Borrowings](index=24&type=section&id=3.%20Short-Term%20Borrowings) - Neonode received a **$563 thousand** Swedish government COVID-19 tax credit, which was repaid in August 2020[109](index=109&type=chunk) - The company entered into short-term loan facilities totaling approximately **$1.7 million** with two directors, drawing down **$1.0 million**, which was subsequently repaid or settled by issuing Series C-2 Preferred Stock in August 2020[110](index=110&type=chunk)[112](index=112&type=chunk) [4. Stockholders' Equity](index=26&type=section&id=4.%20Stockholders'%20Equity) | Metric | Sep 30, 2020 ($ thousands) | Dec 31, 2019 ($ thousands) | | :----- | :------------------------- | :------------------------- | | Common stock | 11 | 9 | | Additional paid-in capital | 211,587 | 197,543 | | Accumulated other comprehensive loss | (890) | (639) | | Accumulated deficit | (194,813) | (190,520) | | Total Neonode Inc. stockholders' equity | 15,895 | 6,393 | - Total stockholders' equity increased significantly from **$3.8 million** at December 31, 2019, to **$12.9 million** at September 30, 2020, primarily due to the issuance of shares for cash and preferred stock conversions[11](index=11&type=chunk)[16](index=16&type=chunk) [5. Stock-Based Compensation](index=28&type=section&id=5.%20Stock-Based%20Compensation) - No stock-based compensation expense was recorded for the three and nine months ended September 30, 2020 and 2019[121](index=121&type=chunk) - As of September 30, 2020, the company had **10,500 stock options outstanding** with an aggregate intrinsic value of **$0**[125](index=125&type=chunk) [6. Commitments and Contingencies](index=29&type=section&id=6.%20Commitments%20and%20Contingencies) - Neonode is a defendant in a putative class action lawsuit in the Delaware Court of Chancery for alleged breach of fiduciary duty related to disclosures concerning a private placement, which management believes is without merit[128](index=128&type=chunk) - A separate class action lawsuit in the U.S. District Court with similar allegations was voluntarily dismissed by the plaintiff on October 20, 2020[129](index=129&type=chunk) - The company has a bank guarantee of **$210 thousand** for AirBar inventory at a manufacturing partner, which management expects to sell, thereby avoiding the need to record a liability[134](index=134&type=chunk)[135](index=135&type=chunk) - An Aequitas subsidiary, Neonode Smartphone LLC, filed patent infringement lawsuits against Apple Inc. and Samsung Electronics Co. Ltd. in U.S. federal court in September 2020[137](index=137&type=chunk) [7. Segment Information](index=31&type=section&id=7.%20Segment%20Information) **Net Revenues by Geographic Area (Three months ended Sep 30):** | Region | 2020 Amount ($ thousands) | 2020 Percentage | 2019 Amount ($ thousands) | 2019 Percentage | | :----- | :------------------------ | :---------------- | :------------------------ | :---------------- | | United States | 486 | 33% | 548 | 42% | | Japan | 395 | 26% | 498 | 38% | | South Korea | 240 | 16% | - | -% | | China | 154 | 10% | 49 | 4% | | Germany | 130 | 9% | 106 | 8% | | Switzerland | 54 | 4% | 52 | 4% | | Other | 36 | 2% | 57 | 3% | | **Total** | **1,495** | **100%** | **1,310** | **100%** | **Net Revenues by Geographic Area (Nine months ended Sep 30):** | Region | 2020 Amount ($ thousands) | 2020 Percentage | 2019 Amount ($ thousands) | 2019 Percentage | | :----- | :------------------------ | :---------------- | :------------------------ | :---------------- | | United States | 1,340 | 38% | 2,510 | 50% | | Japan | 1,229 | 35% | 1,515 | 30% | | Germany | 274 | 8% | 477 | 9% | | South Korea | 267 | 7% | - | -% | | China | 203 | 6% | 177 | 4% | | Switzerland | 161 | 4% | 109 | 2% | | France | - | -% | 152 | 3% | | Other | 72 | 2% | 61 | 1% | | **Total** | **3,547** | **100%** | **5,032** | **100%** | **Total Assets by Geographic Region:** | Region | Sep 30, 2020 ($ thousands) | Dec 31, 2019 ($ thousands) | | :----- | :------------------------- | :------------------------- | | U.S. | 6,602 | 2,898 | | Sweden | 9,914 | 4,430 | | Asia | 109 | 108 | | **Total** | **16,625** | **7,436** | [8. Leases](index=33&type=section&id=8.%20Leases) - The company has operating leases for corporate offices and a manufacturing facility, and finance leases for equipment, with remaining lease terms ranging from two months to 2.42 years[142](index=142&type=chunk) **Lease Costs (Three months ended Sep 30):** | Lease Type | 2020 ($ thousands) | 2019 ($ thousands) | | :--------- | :----------------- | :----------------- | | Operating lease cost | 139 | 145 | | Total finance lease cost | 167 | 161 | **Lease Liabilities (as of Sep 30, 2020):** | Metric | Sep 30, 2020 ($ thousands) | Dec 31, 2019 ($ thousands) | | :----- | :------------------------- | :------------------------- | | Total operating lease liabilities | 118 | 390 | | Total finance lease liabilities | 927 | 1,076 | [9. Net Loss per Share](index=36&type=section&id=9.%20Net%20Loss%20per%20Share) **Basic and Diluted Loss per Share (Three months ended Sep 30):** | Metric | 2020 | 2019 | | :----- | :--- | :--- | | Weighted average number of common shares outstanding (thousands) | 10,128 | 8,811 | | Net loss attributable to common shareholders of Neonode Inc. ($ thousands) | (1,671) | (1,086) | | Net loss per share - basic and diluted | (0.16) | (0.12) | **Basic and Diluted Loss per Share (Nine months ended Sep 30):** | Metric | 2020 | 2019 | | :----- | :--- | :--- | | Weighted average number of common shares outstanding (thousands) | 9,492 | 8,804 | | Net loss attributable to common shareholders of Neonode Inc. ($ thousands) | (4,293) | (2,923) | | Net loss per share - basic and diluted | (0.45) | (0.33) | - Potential common stock equivalents (stock options, warrants, and shares issuable upon conversion of preferred stock) were excluded from the diluted earnings per share calculation due to their anti-dilutive effect[153](index=153&type=chunk) [10. Subsequent Events](index=36&type=section&id=10.%20Subsequent%20Events) - No subsequent events requiring recognition or disclosure occurred through the filing date, other than the ongoing analysis of COVID-19's potential impacts on the company's operational and financial performance[155](index=155&type=chunk)[156](index=156&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Neonode's financial condition and results of operations, covering business overview, the impact of COVID-19, detailed financial performance analysis, off-balance sheet arrangements, contractual obligations, liquidity, and critical accounting policies for the periods ended September 30, 2020 [Overview](index=38&type=section&id=Overview) - Neonode provides advanced optical sensing solutions for human-machine interface (HMI) and remote sensing for driver and cabin monitoring, primarily operating in B2B markets[160](index=160&type=chunk)[161](index=161&type=chunk) - HMI Solutions involves licensing technology to OEMs and Tier 1 suppliers, with **36 valid agreements** and **15 customers** currently shipping products[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - HMI Products includes designing and manufacturing sensor modules for OEMs/ODMs/Tier 1 suppliers, and previously included the consumer product AirBar, for which no new branded products are planned[166](index=166&type=chunk)[170](index=170&type=chunk) - Remote Sensing Solutions is a newly formed business area focused on cost-effective driver and cabin monitoring systems, expecting revenues from technology licensing and engineering consulting services[171](index=171&type=chunk) [Impact of COVID-19](index=39&type=section&id=Impact%20of%20COVID-19) - The COVID-19 pandemic has adversely impacted the company's near-term growth, causing challenges in obtaining component deliveries and potential difficulties in product delivery to customers[172](index=172&type=chunk) - Neonode implemented cost-reduction measures, including a Swedish government-backed program of short-term layoffs, to mitigate the financial effects of the pandemic[172](index=172&type=chunk) - The pandemic has created an increased interest in the company's germ-free contactless touch technology[156](index=156&type=chunk)[172](index=172&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) [Net Revenues](index=42&type=section&id=Net%20Revenues) - Total net revenues increased by **14.1%** for the three months ended September 30, 2020, primarily due to significantly higher sensor module sales, but decreased by **29.5%** for the nine-month period due to lower license revenues within HMI Solutions[177](index=177&type=chunk) **Revenue Distribution by Business Area (Three months ended Sep 30):** | Business Area | 2020 Amount ($ thousands) | 2020 Percentage | 2019 Amount ($ thousands) | 2019 Percentage | | :------------ | :------------------------ | :---------------- | :------------------------ | :---------------- | | HMI Solutions | 1,211 | 81.0% | 1,214 | 92.7% | | HMI Products | 284 | 19.0% | 96 | 7.3% | | **Total** | **1,495** | **100%** | **1,310** | **100%** | **Revenue Distribution by Business Area (Nine months ended Sep 30):** | Business Area | 2020 Amount ($ thousands) | 2020 Percentage | 2019 Amount ($ thousands) | 2019 Percentage | | :------------ | :------------------------ | :---------------- | :------------------------ | :---------------- | | HMI Solutions | 3,071 | 86.6% | 4,625 | 91.9% | | HMI Products | 476 | 13.4% | 407 | 8.1% | | **Total** | **3,547** | **100%** | **5,032** | **100%** | [Gross Margin](index=43&type=section&id=Gross%20Margin) - The combined total gross margin decreased from **95% in 2019 to 87%** for the three months and **90%** for the nine months ended September 30, 2020, primarily due to higher costs relating to inventory write-offs in 2020[179](index=179&type=chunk) [Research and Development](index=43&type=section&id=Research%20and%20Development) **R&D Expenses:** | Period | 2020 ($ thousands) | 2019 ($ thousands) | YoY Change ($ thousands) | YoY Change (%) | | :----- | :----------------- | :----------------- | :----------------------- | :------------- | | Three months | 901 | 1,167 | (266) | (22.8)% | | Nine months | 2,939 | 3,878 | (939) | (24.2)% | - The decrease in R&D expenses was primarily related to lower staff expenses for the nine months ended September 30, 2020, and a large number of scrapped inventory during the three months ended September 30, 2019[182](index=182&type=chunk) [Sales and Marketing](index=43&type=section&id=Sales%20and%20Marketing) **Sales and Marketing Expenses:** | Period | 2020 ($ thousands) | 2019 ($ thousands) | YoY Change ($ thousands) | YoY Change (%) | | :----- | :----------------- | :----------------- | :----------------------- | :------------- | | Three months | 604 | 491 | 113 | 23.0% | | Nine months | 1,797 | 1,431 | 366 | 25.6% | - The increase in sales and marketing expenses was primarily due to higher staff expenses resulting from a reallocation of employees to the marketing function[183](index=183&type=chunk) [General and Administrative](index=43&type=section&id=General%20and%20Administrative) **G&A Expenses:** | Period | 2020 ($ thousands) | 2019 ($ thousands) | YoY Change ($ thousands) | YoY Change (%) | | :----- | :----------------- | :----------------- | :----------------------- | :------------- | | Three months | 1,535 | 777 | 758 | 97.6% | | Nine months | 3,034 | 2,658 | 376 | 14.1% | - The increase in G&A expenses was primarily due to costs relating to a lawsuit, as further described in Note 8 – Commitments and Contingencies – Litigation[185](index=185&type=chunk) [Income Taxes](index=43&type=section&id=Income%20Taxes) - The effective tax rate was **0%** for both the three and nine months ended September 30, 2020 and 2019, with valuation allowances recorded for deferred tax assets due to the uncertainty of realization[186](index=186&type=chunk) [Preferred Dividends](index=43&type=section&id=Preferred%20Dividends) - Preferred dividends of **$33 thousand** were accrued for the Series C-1 and C-2 Preferred Stock issued pursuant to the Securities Purchase Agreement on August 7, 2020[187](index=187&type=chunk) [Net Loss](index=43&type=section&id=Net%20Loss) **Net Loss attributable to common shareholders of Neonode Inc.:** | Period | 2020 ($ thousands) | 2019 ($ thousands) | YoY Change ($ thousands) | YoY Change (%) | | :----- | :----------------- | :----------------- | :----------------------- | :------------- | | Three months | (1,671) | (1,086) | (585) | 53.9% | | Nine months | (4,293) | (2,923) | (1,370) | 46.9% | [Off-Balance Sheet Arrangements](index=45&type=section&id=Off-Balance%20Sheet%20Arrangements) - The company has a bank guarantee of **$210 thousand** for AirBar packaging material held at a manufacturing partner[190](index=190&type=chunk) - Neonode does not have any other significant off-balance sheet arrangements that are reasonably likely to affect its liquidity or capital resources[190](index=190&type=chunk) [Contractual Obligations and Commercial Commitments](index=45&type=section&id=Contractual%20Obligations%20and%20Commercial%20Commitments) [Non-Recurring Engineering Development Costs](index=45&type=section&id=Non-Recurring%20Engineering%20Development%20Costs) - Neonode has an agreement with Texas Instruments to pay **$500 thousand** in non-recurring engineering costs at a rate of **$0.25 per ASIC** for the first **2 million ASICs** sold, with no payments made as of September 30, 2020[191](index=191&type=chunk) [Operating Leases](index=45&type=section&id=Operating%20Leases) - The company has various operating lease agreements for office and workshop spaces in Sweden, South Korea, Taiwan, Japan, and the U.S., with varying terms and renewal options[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) - A new lease for **621 square meters** of office space in Stockholm, Sweden, is effective December 1, 2020, valid through November 2022, with yearly extension options[196](index=196&type=chunk) [Finance Leases](index=46&type=section&id=Finance%20Leases) - Neonode has several finance lease agreements for specialized milling and component production equipment, with obligations to purchase the equipment at the end of the lease terms[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) - The implicit interest rates for these finance leases range from approximately **1.5% to 4% per annum**[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) **Liquidity Metrics:** | Metric | Sep 30, 2020 ($ millions) | Dec 31, 2019 ($ millions) | | :----- | :------------------------ | :------------------------ | | Cash | 12.2 | 2.4 | | Working Capital | 12.0 | 2.4 | - Net cash used in operating activities was **$3.7 million** for the nine months ended September 30, 2020, primarily due to a net loss of **$4.6 million**[204](index=204&type=chunk) - Net cash provided by financing activities was **$13.7 million** for the nine months ended September 30, 2020, mainly from proceeds of preferred and common stock issuance (**$13.5 million**) and short-term borrowings (**$1.0 million**)[209](index=209&type=chunk) - The company has incurred significant operating losses and negative cash flows from operations since inception, with an accumulated deficit of **$194.8 million** as of September 30, 2020[210](index=210&type=chunk) - A private placement in August 2020 generated **$13.9 million** in gross proceeds, used for working capital, and involved the conversion of preferred shares into **684,378 shares of common stock**[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) - Management believes current cash and operating plans are sufficient, but future capital may be required, potentially through equity investments or debt arrangements, which could dilute existing shareholders[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) [Critical Accounting Policies](index=50&type=section&id=Critical%20Accounting%20Policies) - Significant judgment is required for revenue recognition, particularly in determining distinct performance obligations for contracts with multiple products and services, and in estimating product returns and credits[224](index=224&type=chunk)[225](index=225&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=50&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there are no quantitative and qualitative disclosures about market risk applicable to the company for the reporting period - This section is marked as 'Not applicable' for the current report[227](index=227&type=chunk) [Item 4. Controls and Procedures](index=50&type=section&id=Item%204%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of disclosure controls and procedures](index=50&type=section&id=Evaluation%20of%20disclosure%20controls%20and%20procedures) - Management, including the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective as of September 30, 2020[228](index=228&type=chunk) [Changes in internal control over financial reporting](index=50&type=section&id=Changes%20in%20internal%20control%20over%20financial%20reporting) - There were no changes in internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[230](index=230&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=52&type=section&id=Item%201%20Legal%20Proceedings) This section refers to the detailed description of legal proceedings provided in the notes to the financial statements and confirms no other material legal proceedings are currently ongoing - For a description of legal proceedings, the company refers to Note 8 – Commitments and Contingencies – Litigation in the Notes to Unaudited Condensed Consolidated Financial Statements[232](index=232&type=chunk) - The company is not currently involved in any other material legal proceedings[232](index=232&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A%20Risk%20Factors) This section updates the risk factors, highlighting new and heightened risks related to the COVID-19 pandemic and ongoing litigation - The company faces heightened risks related to the impact of the COVID-19 pandemic, affecting its workforce, operations, customers, vendors, suppliers, and partners[234](index=234&type=chunk)[235](index=235&type=chunk) - Neonode and its directors are defendants in a purported class action lawsuit in the Delaware Court of Chancery concerning disclosures related to a private placement, with potential for additional lawsuits[236](index=236&type=chunk) [Item 6. Exhibits](index=53&type=section&id=Item%206%20Exhibits) This section provides a comprehensive list of all exhibits filed as part of this Form 10-Q, including corporate governance documents, agreements, and certifications - The section lists various exhibits filed with the Form 10-Q, including the Restated Certificate of Incorporation, Loan Agreements, Securities Purchase Agreement, Registration Rights Agreement, and certifications[238](index=238&type=chunk) [SIGNATURES](index=54&type=section&id=SIGNATURES) This section contains the official signature certifying the accuracy and completeness of the report on behalf of the registrant - The report is signed by Maria Ek, Chief Financial Officer, Vice President, Finance, Treasurer and Secretary, on behalf of Neonode Inc. on November 10, 2020[241](index=241&type=chunk)

Neonode, Inc (NASDAQ:NEON) Q2 2020 Results Conference Call August 14, 2020 10:00 AM ET Company Participants David Brunton - Head of Corporate Investor Relations Urban Forssell - Chief Executive Officer Maria Ek - Chief Financial Officer Operator 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 th ...