Neonode(NEON) - 2022 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION This section details the company's unaudited financial statements, management's discussion, and related disclosures Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Neonode Inc. for the three months ended March 31, 2022, and 2021 Condensed Consolidated Balance Sheets The balance sheet shows a decrease in total assets from $23.0 million at the end of 2021 to $21.3 million as of March 31, 2022, primarily due to a reduction in cash Balance Sheet Summary | | March 31, 2022 (Unaudited, in thousands) | December 31, 2021 (Audited, in thousands) | | :--- | :--- | :--- | | Total Current Assets | $20,535 thousand | $22,032 thousand | | Total Assets | $21,307 thousand | $22,992 thousand | | Total Current Liabilities | $2,639 thousand | $2,973 thousand | | Total Liabilities | $2,835 thousand | $3,155 thousand | | Total Stockholders' Equity | $18,472 thousand | $19,837 thousand | Condensed Consolidated Statements of Operations For the three months ended March 31, 2022, total revenues decreased to $1.32 million, while net loss improved slightly to $1.38 million Statements of Operations Summary | Metric | Three months ended March 31, 2022 (in thousands) | Three months ended March 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total Revenues | $1,318 thousand | $1,665 thousand | | Total Gross Margin | $1,258 thousand | $1,388 thousand | | Operating Loss | $(1,391) thousand | $(1,629) thousand | | Net Loss attributable to Neonode Inc. | $(1,380) thousand | $(1,568) thousand | | Basic and Diluted Loss per Share | $(0.10) | $(0.14) | Condensed Consolidated Statements of Cash Flows Cash flows from operating activities resulted in a net use of $2.3 million for Q1 2022, decreasing the cash position to $15.1 million Statements of Cash Flows Summary | Cash Flow Activity | Three months ended March 31, 2022 (in thousands) | Three months ended March 31, 2021 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,279) thousand | $(1,990) thousand | | Net cash used in investing activities | $(5) thousand | $(62) thousand | | Net cash used in financing activities | $(61) thousand | $(148) thousand | | Net decrease in cash | $(2,257) thousand | $(2,328) thousand | | Cash at end of period | $15,126 thousand | $8,145 thousand | Notes to Unaudited Condensed Consolidated Financial Statements The notes provide detailed information on accounting policies, business operations, liquidity, revenue recognition, and other financial statement items - The company develops advanced optical sensing solutions for contactless touch, gesture sensing, and scene analysis, marketing its zForce and MultiSensing technology platforms to various markets including office equipment, automotive, and medical[26] - Neonode has incurred significant operating losses since inception, with a net loss of approximately $1.4 million for Q1 2022, cash used in operating activities of $2.3 million, and an accumulated deficit of $204.0 million as of March 31, 2022[28] - As of March 31, 2022, five customers represented approximately 85% of consolidated accounts receivable, with major customers accounting for over 10% of net revenues including Hewlett-Packard (32%), Seiko Epson (17%), LG (15%), and Alps Alpine (11%)[56][58] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2022 financial results, noting a revenue decrease due to component shortages and lockdowns, but an improved operating loss Results of Operations Total net revenues for Q1 2022 decreased by 20.8% to $1.32 million, while operating loss improved due to lower expenses Results of Operations Summary | Metric | Q1 2022 (in thousands) | Q1 2021 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $1,318k | $1,665k | $(347)k | (20.8)% | | License fees | $1,104k | $1,295k | $(191)k | (14.7)% | | Products | $147k | $355k | $(208)k | (58.6)% | | Total Gross Margin | $1,258k | $1,388k | $(130)k | (9.4)% | | Total Operating Expenses | $2,649k | $3,017k | $(368)k | (12.2)% | | Operating Loss | $(1,391)k | $(1,629)k | $238k | (14.6)% | | Net loss attributable to Neonode Inc. | $(1,380)k | $(1,568)k | $188k | (12.0)% | - The decrease in total net revenues was mainly caused by component shortages within the printer and automotive industries and COVID-19 related lockdowns in the APAC region[154] - Gross margin improved to 95% for Q1 2022 from 83% in Q1 2021, with product gross margin specifically increasing significantly to 65% from 24% in the prior year period[159] Liquidity and Capital Resources The company's cash position decreased to $15.1 million, with management believing current capital is sufficient for the next twelve months - As of March 31, 2022, the company had cash of $15.1 million, down from $17.4 million at December 31, 2021, with working capital at $17.9 million[180][181] - Net cash used in operating activities was $2.3 million for Q1 2022, primarily due to a net loss of $1.4 million and an increase in inventory of $1.1 million[184][186] - The company has an At-the-Market (ATM) offering program allowing it to sell up to $25 million of common stock, though no shares were sold under this facility during Q1 2022[194][197] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section is noted as not applicable in the report - The company states that quantitative and qualitative disclosures about market risk are not applicable[202] Item 4. Controls and Procedures Management evaluated the company's disclosure controls and procedures as effective, with no material changes in internal control over financial reporting - Based on an evaluation as of March 31, 2022, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective[203] - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[205] PART II OTHER INFORMATION This section covers legal proceedings, risk factors, and exhibits filed with the report Item 1. Legal Proceedings The company reports that it is not a party to any pending legal proceedings but may become subject to them in the ordinary course of business - As of the filing date, Neonode Inc. is not a party to any pending legal proceedings[208] Item 1A. Risk Factors The company states that there have been no material changes from the risk factors previously disclosed in its Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's 2021 Annual Report on Form 10-K[209] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL documents - The exhibits filed with this report include corporate governance documents, Sarbanes-Oxley certifications by the Principal Executive Officer and Principal Financial Officer, and interactive data files (Inline XBRL)[210]