Financial Performance - Total revenues for Q3 2024 were $838,000, a slight decrease from $840,000 in Q3 2023[8] - License fees contributed $731,000 to revenues in Q3 2024, down from $836,000 in Q3 2023, representing a decrease of approximately 12.6%[8] - The net loss for Q3 2024 was $1,087,000, compared to a net loss of $1,266,000 in Q3 2023, indicating an improvement of about 14.1%[9] - The company reported a gross margin of $815,000 for Q3 2024, compared to $840,000 in Q3 2023, showing a decline of about 3%[8] - Total revenues for the three months ended September 30, 2024, were $0.8 million, a decrease of 0.2% compared to $0.8 million for the same period in 2023[72] - License fees for the three months ended September 30, 2024, were $0.7 million, down 12.6% from $0.8 million in the same period of 2023[74] - Total revenues for the nine months ended September 30, 2024, were $2.5 million, a decrease of 21.0% compared to $3.1 million for the same period in 2023[72] - License fees for the nine months ended September 30, 2024, were $2.1 million, down 31.2% from $3.1 million in the same period in 2023[74] Operating Expenses - Operating expenses for Q3 2024 totaled $2,040,000, a decrease from $2,097,000 in Q3 2023, reflecting a reduction of approximately 2.7%[8] - Total operating expenses for the three months ended September 30, 2024, were $2.04 million, a decrease of 2.7% compared to $2.1 million in the same period of 2023[72] - The company reported an operating loss of $4.84 million for the nine months ended September 30, 2024, compared to an operating loss of $3.93 million in the same period of 2023, representing an increase of 23.1%[72] - General and administrative expenses for Q3 2024 were $0.7 million, a decrease of 12.5% from $0.8 million in Q3 2023, while expenses for the nine months ended September 30, 2024, increased by 8.0% to $2.7 million compared to $2.5 million in the same period in 2023[81] Cash and Liquidity - Cash and cash equivalents increased to $17,599,000 as of September 30, 2024, up from $16,155,000 at the end of 2023, representing an increase of approximately 8.9%[7] - Cash and cash equivalents at the end of the period were $17.6 million as of September 30, 2024, compared to $18.5 million at the end of the previous quarter[13] - As of September 30, 2024, cash and cash equivalents were $17.6 million, an increase from $16.2 million as of December 31, 2023, indicating improved liquidity[87] - Net cash used in operating activities for the nine months ended September 30, 2024, was $4.4 million, primarily due to a net loss of $4.9 million[88] Accumulated Deficit - The accumulated deficit as of September 30, 2024, was $222,480,000, compared to $217,614,000 at the end of 2023, indicating an increase in the deficit of approximately 2.6%[7] - The company incurred an accumulated deficit of approximately $222.5 million as of September 30, 2024, compared to $217.6 million as of December 31, 2023[92] Discontinued Operations - The company decided to phase out the TSM product business, terminating production at Pronode Technologies AB facilities in Sweden, with the facility lease ending on September 30, 2024[23] - As of September 30, 2024, total current assets of discontinued operations amounted to $364,000, including accounts receivable of $178,000 and inventory of $172,000[27] - Total current liabilities of discontinued operations were $142,000, with accounts payable and accrued payroll each at $50,000[27] - For the three months ended September 30, 2024, the net loss from discontinued operations was $44,000, compared to a net loss of $204,000 for the same period in 2023[29] Legal and Compliance - A material weakness in internal controls over financial reporting was identified, related to insufficient segregation of duties and lack of IT general controls[126] - The company is committed to remediating the identified material weakness through training, policy enhancements, and improved documentation[127] - The management is actively developing a remediation plan to address the material weakness, which could impact the accuracy of financial statements if not resolved[135] - The company is not currently involved in any pending legal proceedings, but may face claims in the ordinary course of business[131] Strategic Initiatives - The company has shifted its strategy to focus solely on the licensing business, allowing customers to license its technology for bespoke products[17] - The company anticipates that current customers will continue to ship products incorporating its technology in 2024 and expects to expand its customer base with new clients[64] - The company entered into an At The Market Offering Agreement with Ladenburg Thalmann & Co. Inc. to issue and sell up to approximately $10 million of shares of common stock[50] - The company raised approximately $5.8 million in net proceeds from the issuance of 1,423,441 shares of common stock during the three months ending September 30, 2024[19] Foreign Currency Impact - The company experienced a foreign currency translation adjustment loss of $61, impacting cash and cash equivalents[13] - The company reported foreign currency translation losses of $(30,000) for the three months ended September 30, 2024, compared to $(96,000) for the same period in 2023[33] Research and Development - Research and development expenses remained stable at $0.8 million for the three months ended September 30, 2024, consistent with the same period in 2023[78] Customer Concentration - As of September 30, 2024, five customers represented approximately 94.8% of consolidated accounts receivable, up from three customers representing 77.8% as of December 31, 2023[34]
Neonode(NEON) - 2024 Q3 - Quarterly Report