Neonode Inc
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
NEON$0.63+4.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0001213900-24-040663
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001213900-24-066356
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 91 previous paragraphs and 96 current paragraphs.
51 unchanged; 28 reworded; 16 added; 12 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 3 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Total revenues were $1.4 million and $2.4 million for the three and six months ended June 30 2024, respectively, compared to $1.2 million and $2.5 million for the same periods in 2023, respectively. The increase in total revenues by 18.7% and decrease by 0.6% for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023 are explained by higher products revenues and non-recurring revenues offset by lower license fees.
Current report
Products
Current report
Sales and marketing expenses were $0.5 million and $1.4 million for the three and six months ended June 30, 2024, respectively, compared to $0.7 million and $1.3 million for the three and six months ended June 30, 2023, respectively. The decrease of 21.0% for the three months ended June 30, 2024 compared to the same period in 2023 was primarily related to lower payroll and related costs. The increase of 6.2% for the six months ended June 30, 2024 compared to the same period in 2023 was primarily related to higher costs for participation in technology events offset by lower payroll and related costs.
Current report
General and administrative expenses were $1.2 million and $2.4 million for the three and six months ended June 30, 2024, respectively, compared to $1.0 million and $2.4 million for the three and six months ended June 30, 2023, respectively. The increase of 18.2% for the three months ended June 30, 2024 compared to the same period in 2023 was primarily due to higher cost for professional fees. The decrease of 1.4% for the six months ended June 30, 2024 compared to the same period in 2023 was primarily due to moving overhead costs to finished goods.
Current report
Inventory decreased by approximately $89,000 during the six months ended June 30, 2024, compared to December 31, 2023, mainly as a result of increased sales of TSMs to customers and decreased purchases after the factory closure.
Current report
On May 29, 2024, we terminated the B. Riley Sales Agreement with B. Riley Securities.
Current report
Patent Assignment
Current report
On May 6, 2019, the Company assigned a portfolio of patents to Aequitas Technologies LLC (“Aequitas”), an unrelated third party. The assignment provides the Company the right to share the potential net proceeds generated from possible licensing and monetization program that Aequitas may enter into. Under the terms of the assignment, net proceeds mean gross proceeds less out of pocket expenses and legal fees paid by Aequitas. The Company’s share would also be net of the Company’s own fees and expenses, including a brokerage fee payable by the Company in connection with the original assignment to Aequitas.
Current report
As reflected in publicly available court filings, on June 8, 2020, Neonode Smartphone LLC, an unrelated third party that is a subsidiary of Aequitas (“Aequitas Sub”), filed complaints against Apple Inc. (“Apple”) (assigned docket number 6:20-cv-00507-ADA, current docket number 6:23-cv-00204-ADA), and Samsung Electronics Co., Ltd., and Samsung Electronics America, Inc. (collectively, “Samsung”) (assigned docket number 6:20-cv-00505-ADA), in the Western District of Texas alleging infringement of two patents, U.S. Patent Nos. 8,095,879, and 8,812,993.
Current report
U.S. Patent No. 8,095,879
Current report
In November 2020, Samsung and Apple filed a petition for inter partes review of certain challenged claims in U.S. Patent No. 8,095,879, assigned proceeding number IPR2021-00144. As reflected in publicly available records, the U.S. Patent and Trademark Office Patent Trial and Appeal Board (“PTAB”) denied the petition in June 2021. Apple and Samsung filed a request for rehearing, which was ultimately granted on December 3, 2021, and inter partes review was instituted. The court case against Apple was subsequently transferred to the Northern District of California in November 2021 and assigned docket number 3:21-cv-08872, which was subsequently stayed pending the PTAB’s decision. The case against Samsung in the Western District of Texas was likewise stayed pending PTAB ruling.
Current report
Meanwhile, in June 2021, Google LLC (“Google”) filed a separate petition with the PTAB seeking inter partes review of certain challenged claims in U.S. Patent No. 8,095,879, assigned proceeding number IPR2021-01041. As reflected in publicly available records, the PTAB granted the petition in January 2022
Current report
The PTAB found in favor of Aequitas Sub and against Apple and Samsung in December 2022 in connection with the inter partes review proceedings, ruling that none of the challenged claims were unpatentable. The PTAB similarly held in favor of Aequitas Sub and against Google in January 2023. Apple and Samsung appealed to the United States Court of Appeals for the Federal Circuit (the “Federal Circuit”) in February 2023 (assigned docket number 23-1464, and Google filed its appeal in the Federal Circuit in March 2023 (assigned docket number 23-1638. On July 18, 2024, the Federal Circuit affirmed the PTAB’s rulings, found in favor of Aequitas Sub and against Google and Apple/Samsung, and held that none of the challenged claims in U.S. Patent No. 8,095,879 are unpatentable.
Current report
As reflected in publicly available court records, on July 14, 2023, the United States District Court for the Western District of Texas entered its final claim constructions in the Samsung case, and based on those claim constructions, entered judgment in favor of Samsung and against Aequitas Sub. Aequitas Sub filed an appeal with the Federal Circuit in August 2023 (assigned docket number 23-2304)[, and oral argument was held on June 6, 2024]. No decision from the Federal Circuit has yet been issued. The case against Apple remains pending in the United States District Court for the Northern District of California, and the PTAB stay has not yet been lifted.
Current report
U.S. Patent No. 8,812,993
Current report
Based on information in public records, in November 2020, Samsung and Apple collectively sought inter partes review of certain claims in U.S. Patent No. 8,812,993 (assigned proceeding number IPR2021-00145). In June 2022, the PTAB invalidated U.S. Patent No. 8,812,993, which Aequitas Sub appealed to the Federal Circuit in August 2022 (assigned docket number 22-2134). The Federal Circuit affirmed the PTAB’s decision on June 11, 2024.
Removed paragraphs (12)
Previous report
Total net revenues were $1.0 million and $1.3 million for the three months ended March 31 2024 and 2023, respectively. The decrease in total net revenues by 19.1% for the three months ended March 31, 2024 as compared to the same period in 2023 was caused by lower license revenues offset by higher products and NRE revenues.
Previous report
Product
Previous report
Sales and marketing expenses for the three months ended March 31, 2024 and 2023 were $0.8 million and $0.6 million, respectively. The increase of 37.8% for the three months ended March 31, 2024 compared to the same period in 2023 was primarily related to participation in technology events.
Previous report
General and administrative expenses for the three months ended March 31, 2024 and 2023 were $1.2 million and $1.4 million, respectively. The decrease of 16.2% from the same period 2023 was primarily due to lower cost for professional fees.
Previous report
Inventory decreased by approximately $0.3 million during the three months ended March 31, 2024, compared to December 31, 2023.
Previous report
See Note 7 – Leases in the Notes to Unaudited Condensed Consolidated Financial Statements (Part I, Item 1) for further discussions.
Previous report
Equipment Subject to Finance Lease
Previous report
Between the second and fourth quarters of 2016, we entered into six leases for component production equipment. Under the terms of five of the lease agreements, we are obligated to purchase the equipment at the end of the original 3-5 year lease terms for 5.0-10.0% of the original purchase price of the equipment. In accordance with relevant accounting guidance the leases are classified as finance leases. The lease payments and depreciation periods began between June and November 2016 when the equipment went into service. The implicit interest rate of the leases is currently approximately 3.0% per annum. One of the leases is a hire-purchase agreement where the equipment is required to be paid off after five years. In accordance with relevant accounting guidance the lease is classified as a finance lease. The lease payments and depreciation period began on July 1, 2016 when the equipment went into service. The implicit interest rate of the lease is currently approximately 3.0% per annum. On April 1, 2022, one of lease contracts was extended for three years. The implicit interest rate of the extended lease period is 2.7% per annum.
Previous report
In 2017, we entered into a lease for component production equipment. Under the terms of the lease agreement the lease will be renewed within one year of the end of the original four-year lease term. In accordance with relevant accounting guidance the lease is classified as a finance lease. The lease payments and depreciation periods began in May 2017 when the equipment went into service. The implicit interest rate of the lease was approximately 1.5% per annum. In November, 2021, the lease contract was extended for two years. The implicit interest rate of the extended lease period was 1.5% per annum. In November, 2023, the equipment was purchased.
Previous report
In 2018, we entered into a lease for component production equipment. Under the terms of the agreement, the lease will be renewed within one year of the original four-year lease term. In accordance with relevant accounting guidance the lease is classified as a finance lease. The lease payments and depreciation periods began in August 2018 when the equipment went into service. The implicit interest rate of the lease is currently approximately 1.5% per annum.
Previous report
In 2022, we entered into a lease for soundproof office pods. Under the terms of the agreement, the lease will be renewed within one year of the original three-year lease term. In accordance with relevant accounting guidance the lease is classified as a finance lease. The lease payments and depreciation periods began in May 2022 when the equipment went into service. The implicit interest rate of the lease is currently approximately 3.0% per annum.
Previous report
See Note 7 – Leases in the Notes to Unaudited Condensed Consolidated Financial Statements (Part I, Item 1) for further discussion.
Reworded paragraphs (28)
Previous wording
This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, adopted pursuant to the Private Securities Litigation Reform Act of 1995. Statements that are not purely historical may be forward-looking. For example, statements in this Quarterly Report regarding our plans, strategy and focus areas are forward-looking statements. You can identify some forward-looking statements by the use of words such as “believe,” “anticipate,” “expect,” “intend,” “goal,” “plan,” and similar expressions. Forward-looking statements involve inherent risks and uncertainties regarding events, conditions and financial trends that may affect our future plans of operation, business strategy, results of operations and financial position. A number of important factors could cause actual results to differ materially from those included within or contemplated by such forward-looking statements, including, but not limited to our history of losses since inception, our dependence on a limited number of customers, our reliance on our customers’ ability to design, manufacture and sell products that incorporate our touch technology, the length of a product development and release cycle, our and our customers’ reliance on component suppliers, the difficulty in verifying royalty amounts owed to us, our ability to remain competitive in response to new technologies, our dependence on key members of our management and development team, the costs to defend, as well as risks of losing, patents and intellectual property rights, our ability to obtain adequate capital to fund future operations, and general economic conditions, including inflation, or other effects related to the COVID-19 pandemic or future pandemics or epidemics, or geopolitical conflicts such as the ongoing war in Ukraine or the Gaza Strip. For a discussion of these and other factors that could cause actual results to differ from those contemplated in the forward-looking statements, please see the discussion under “Risk Factors” and elsewhere in this Quarterly Report, our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and in our publicly available filings with the Securities and Exchange Commission. Forward-looking statements reflect our analysis only as of the date of this Quarterly Report. Because actual events or results may differ materially from those discussed in or implied by forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statement. We do not undertake responsibility to update or revise any of these factors or to announce publicly any revision to forward-looking statements, whether as a result of new information, future events or otherwise.
Current wording
This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, adopted pursuant to the Private Securities Litigation Reform Act of 1995. Statements that are not purely historical may be forward-looking. For example, statements in this Quarterly Report regarding our plans, strategy and focus areas are forward-looking statements. You can identify some forward-looking statements by the use of words such as “believe,” “anticipate,” “expect,” “intend,” “goal,” “plan,” and similar expressions. Forward-looking statements involve inherent risks and uncertainties regarding events, conditions and financial trends that may affect our future plans of operation, business strategy, results of operations and financial position. A number of important factors could cause actual results to differ materially from those included within or contemplated by such forward-looking statements, including, but not limited to our history of losses since inception, our dependence on a limited number of customers, our reliance on our customers’ ability to design, manufacture and sell products that incorporate our touch technology, the length of a product development and release cycle, our and our customers’ reliance on component suppliers, the difficulty in verifying royalty amounts owed to us, our ability to remain competitive in response to new technologies, our dependence on key members of our management and development team, the costs to defend, as well as risks of losing, patents and intellectual property rights, our ability to obtain adequate capital to fund future operations, and general economic conditions, including inflation, or other effects related to future pandemics or epidemics, or geopolitical conflicts such as the ongoing war in Ukraine or the Gaza Strip. For a discussion of these and other factors that could cause actual results to differ from those contemplated in the forward-looking statements, please see the discussion under “Risk Factors” and elsewhere in this Quarterly Report, our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and in our publicly available filings with the Securities and Exchange Commission. Forward-looking statements reflect our analysis only as of the date of this Quarterly Report. Because actual events or results may differ materially from those discussed in or implied by forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statement. We do not undertake responsibility to update or revise any of these factors or to announce publicly any revision to forward-looking statements, whether as a result of new information, future events or otherwise.
Previous wording
As of March 31, 2024, we had 34 valid technology license agreements with global OEMs, Original Design Manufacturers (“ODMs”) and automotive Tier 1 suppliers.
Current wording
As of June 30, 2024, we had 36 valid technology license agreements with global OEMs, Original Design Manufacturers (“ODMs”) and automotive Tier 1 suppliers.
Previous wording
We began selling our TSMs to customers in the industrial and consumer electronics segments in 2017. We will phase out the TSM product business during 2024 through licensing of the TSM technology to strategic partners or outsourcing.*** ***
Current wording
We began selling our TSMs to customers in the industrial and consumer electronics segments in 2017. We commenced the phase out of our TSM product business during the first quarter of 2024 through licensing of the TSM technology to strategic partners or outsourcing.*** ***In May 2024, we stopped producing TSMs and started to shut down the factory.
Previous wording
All of our sales for the three months ended March 31, 2024 were to customers located in the United States, Europe, Asia and Oceania. All of our sales for the months ended March 31, 2023 were to customers located in the United States, Europe and Asia.
Current wording
All of our sales for the three and six months ended June 30, 2024 were to customers located in the United States, Europe, Asia and Oceania. All of our sales for the three and six months ended June 30, 2023 were to customers located in the United States, Europe, Asia and Oceania.
Previous wording
Revenues from license fees were $0.8 million and $1.1 million for the three months ended March 31, 2024 and 2023, respectively. The decrease of 32.7% for the three months ended March 31, 2024 as compared to the same period in 2023, mainly due to lower demand for our legacy customers’ products, resulting in high inventory levels at some customers and thus lower revenues for us.
Current wording
Revenues from license fees were $0.6 million and $1.4 million for the three and six months ended June 30, 2024, respectively, compared to $1.1 million and $2.2 million for the three and six months ended June 30, 2023, respectively. The decrease of 43.9% and 38.1% for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023, are mainly due to lower demand for our legacy customers’ products, resulting lower revenues for us.
Previous wording
Revenues from product were $0.2 million and $0.1 million for the three months ended March 31, 2024 and 2023, respectively. The increase of 96.1% for the three months ended March 31, 2024 as compared to the same period in 2023 was primarily due to customers securing TSM inventory after receiving news about our company phasing out TSM manufacturing.
Current wording
Revenues from products were $0.6 million and $0.8 million for the three and six months ended June 30, 2024, respectively, compared to $0.1 million and $0.2 million for the three and six months ended June 30, 2023, respectively. The increase of 641.7% and 342.5% for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023 was primarily due to customers securing TSM inventory after receiving news about our company phasing out TSM manufacturing.
Previous wording
Revenues from non-recurring engineering were $41,000 and $3,000 for the three months ended March 31, 2024 and 2023. Most of our non-recurring engineering revenues are related to application development and proof-of-concept projects related to our TSMs or to our zForce and MultiSensing technology platforms. The increase for the three months ended March 31, 2024, compared to the same periods in 2023 was the result of a potential TSM licensing project after announcing our change in strategy, with full focus on our licensing business and a phase-out of our products business.
Current wording
Revenues from non-recurring engineering were $187,000 and $228,000 for the three and six months ended June 30, 2024, respectively, compared to $22,000 and $25,000 for the three and six months ended June 30, 2023, respectively. Most of our non-recurring engineering revenues are related to application development and proof-of-concept projects related to our TSMs or to our zForce and MultiSensing technology platforms. The increase of 750.0% and 812.0% for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023 was the result of a potential TSM licensing project and the new MultiSensing project with a commercial vehicle OEM.
Previous wording
The following tables presents the net revenues by market and revenue stream for the three months ended March 31, 2024 and 2023 (dollars in thousands):
Current wording
The following tables presents the net revenues by market and revenue stream for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):
Previous wording
Our combined total gross margin was 60.8% and 96.2% for the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024 and 2023, gross margin related to products was (90.0)% and 53.9%, respectively. The gross margin for products for the three months ended March 31, 2024 was impacted by a cost of $278,000 related to a write-down on inventory due to the phasing out of the TSM manufacturing.
Current wording
Our combined total gross margin was 65.9% and 63.8% for the three and six months ended June 30, 2024, respectively, compared to 96.9% and 96.6% for the three and six months ended June 30, 2023, respectively. For the three and six months ended June 30, 2024, gross margin related to products was 26.0% and (2.2)%, respectively, compared to 66.7% and 59.7% for the three and six months ended June 30, 2023, respectively. The decrease in gross margin for products for the three and six months ended June 30, 2024 as compared to the same periods in 2023 was primarily due to a cost of $8,000 and $286,000 incurred during the three and six months ended June 30, 2024, respectively, related to a write-down on inventory due to the phasing out of the TSM manufacturing.
Previous wording
Research and development (“R&D”) expenses for the three months ended March 31, 2024 and 2023 were $0.9 million and $0.8 million, respectively. R&D expenses primarily consist of personnel-related costs in addition to external consultancy costs, such as testing, certifying and measurements, along with costs related to developing and building new product prototypes. The increase of 11.6% for the three months ended March 31, 2024 compared to the same period in 2023 was primarily related to higher product development costs.
Current wording
Research and development (“R&D”) expenses were $1.0 million and $1.9 million for the three and six months ended June 30, 2024, respectively, compared to $1.1 million and $1.9 million for the three and six months ended June 30, 2023, respectively. R&D expenses primarily consist of personnel-related costs in addition to external consultancy costs, such as testing, certifying and measurements, along with costs related to developing and building new product prototypes. The decrease of 8.3% for the three months ended June 30, 2024 compared to the same period in 2023 was primarily related to lower payroll and related costs.
Previous wording
Other income for the three months ended March 31, 2024 and 2023 were $0.2 million and $0.2 million, respectively. The other income for both periods was mainly related to interest income earned.
Current wording
Other income were $0.1 million and $0.3 million for the three and six months ended June 30, 2024, respectively compared to $0.2 million and $0.3 million for the three and six months ended June 30, 2023, respectively. The other income for the periods was mainly related to interest income earned.
Previous wording
Our effective tax rate was (0.5)% for the three months ended March 31, 2024 and (0.8)% for the three months ended March 31, 2023. The negative tax rate is due to withholding taxes from sales.
Current wording
Our effective tax rate was (0.7)% and (0.6)% for the three and six months ended June 30, 2024, respectively, compared to (3.4)% and (2.1)% and for the three and six months ended June 30, 2023, respectively. The negative tax rate is due to withholding taxes from sales and the decrease is due to lower license revenue during 2024.
Previous wording
As a result of the factors discussed above, we recorded a net loss of $2.1 million for the three months ended March 31, 2024, and $1.4 million for the same period in 2023.
Current wording
As a result of the factors discussed above, we recorded a net loss of $1.7 million and $3.8 million for the three and six months ended June 30, 2024, respectively, and $1.5 million and $2.9 million for the same periods in 2023.
Previous wording
As of March 31, 2024, we had cash and cash equivalents of $14.3 million, as compared to $16.2 million as of December 31, 2023. Based on our current cash position, and assuming currently planned expenditures and level of operations, we believe we have sufficient capital to fund operations for the twelve-month period subsequent to the date of this Report.
Current wording
As of June 30, 2024, we had cash and cash equivalents of $13.1 million, as compared to $16.2 million as of December 31, 2023. Based on our current cash position, and assuming currently planned expenditures and level of operations, we believe we have sufficient capital to fund operations for the twelve-month period subsequent to the date of this Report.
Previous wording
Working capital (current assets less current liabilities) was $14.7 million as of March 31, 2024, compared to $16.8 million as of December 31, 2023.
Current wording
Working capital (current assets less current liabilities) was $13.2 million as of June 30, 2024, compared to $16.8 million as of December 31, 2023.
Previous wording
Net cash used in operating activities for the three months ended March 31, 2024, was $1.9 million and was primarily the result of a net loss of $2.1 million and approximately $0.3 million in non-cash operating expenses, comprised of stock-based compensation expense, depreciation and amortization, amortization of operating lease right-of-use assets and inventory impairment loss and changes in operating assets and liabilities of $0.2 million. Net cash used in financing activities for the three months ended March 31, 2024, was approximately $9,000 and was primarily the result of principal payments on finance lease.
Current wording
Net cash used in operating activities for the six months ended June 30, 2024, was $3.1 million and was primarily the result of a net loss of $3.8 million and approximately $0.4 million in non-cash operating expenses, comprised of stock-based compensation expense, depreciation and amortization, amortization of operating lease right-of-use assets and inventory impairment loss and changes in operating assets and liabilities of $0.2 million. Net cash used in financing activities for the six months ended June 30, 2024, was approximately $13,000 and was primarily the result of principal payments on finance lease.
Previous wording
Accounts receivable and unbilled revenues decreased by approximately $0.2 million as of March 31, 2024, compared to December 31, 2023. This was mainly due to the timing of receipts of customer payments.
Current wording
Accounts receivable and unbilled revenues increased by approximately $0.3 million as of June 30, 2024, compared to December 31, 2023. This was mainly due to the timing of receipts of customer payments.
Previous wording
Accounts payable and accrued expenses increased approximately $76,000 during the three months ended March 31, 2024 compared to December 31, 2023.
Current wording
Accounts payable, accrued payroll and employee benefits, and accrued expenses increased approximately $149,000 during the six months ended June 30, 2024 compared to December 31, 2023, due to various payroll related expenses.
Previous wording
Net cash provided by financing activities of $7.8 million during the three months ended March 31, 2023 was the result of issuance of common stock under the ATM Facility (as defined below).
Current wording
Net cash provided by financing activities of $7.8 million during the six months ended June 30, 2023 was the result of issuance of common stock under the B. Riley ATM Facility (as defined below).
Previous wording
We have incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net losses of approximately $2.1 million and $1.4 million for the three months ended March 31, 2024, and 2023, respectively, and had an accumulated deficit of approximately $219.7 million and $217.6 million as of March 31, 2024 and December 31, 2023, respectively. In addition, operating activities used cash of approximately $1.9 million and $1.7 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
We have incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net losses of approximately $1.7 million and $3.8 million for the three and six months ended June 30, 2024, respectively, compared to $1.5 million and $2.9 million for the three and six months ended June 30, 2023, respectively, and had an accumulated deficit of approximately $221.4 million and $217.6 million as of June 30, 2024 and December 31, 2023, respectively. In addition, operating activities used cash of approximately $3.1 million and $2.3 million for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
The condensed consolidated financial statements included herein have been prepared on a going concern basis, which contemplates continuity of operations and the realization of assets and the repayment of liabilities in the ordinary course of business. Management has evaluated the significance of the Company’s operating loss and has determined that the Company’s current operating plan and sources of potential capital (including the Company’s ATM Facility) are sufficient to alleviate concerns about the Company’s ability to continue as a going concern.
Current wording
The condensed consolidated financial statements included herein have been prepared on a going concern basis, which contemplates continuity of operations and the realization of assets and the repayment of liabilities in the ordinary course of business. Management evaluated the significance of the Company’s operating loss and negative cash flows from operations and determined that the Company’s current operating plan and sources of liquidity would be sufficient to alleviate concerns about the Company’s ability to continue as a going concern. Management has prepared an operating plan and believes that the Company has sufficient cash to meet its obligations as they come due for a year from the date the financial statements were issued. During July 2024, we sold an aggregate of 107,087 of our common stock under the ATM Facility with aggregate net proceeds to us of $341,000, after payment of commissions to Ladenburg and other expenses of $11,000.
Previous wording
In the future, we may require sources of capital in addition to cash on hand and our ATM Facility to continue operations and to implement our strategy. If our operations do not become cash flow positive, we may be forced to seek equity investments or debt arrangements. Historically, we have been able to access the capital markets through sales of common stock and warrants to generate liquidity. Our management believes it could raise capital through public or private offerings if needed to provide us with sufficient liquidity.
Current wording
In the future, we may require sources of capital in addition to cash on hand and our Ladenburg ATM Facility to continue operations and to implement our strategy. If our operations do not become cash flow positive, we may be forced to seek equity investments or debt arrangements. Historically, we have been able to access the capital markets through sales of common stock and warrants to generate liquidity. Our management believes it could raise capital through public or private offerings if needed to provide us with sufficient liquidity.
Previous wording
For the three months ended March 31, 2024 and 2023, we recorded approximately $126,000 and $122,000, respectively, for total rent expense.
Current wording
For total rent expense, we recorded $123,000 and $249,000 for the three and six months ended June 30, 2024, respectively, compared to $123,000 and $245,000, respectively, for the three and six months ended June 30, 2023.
Previous wording
On May 10, 2021, we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley Securities”) with respect to an “at the market” offering program (the “ATM Facility”), under which we may, from time to time, in our sole discretion, issue and sell through B. Riley Securities, acting as sales agent, up to $25 million of shares of our common stock.
Current wording
On May 10, 2021, we entered into an At Market Issuance Sales Agreement (the “B. Riley Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley Securities”) with respect to an “at the market” offering program (the “B. Riley ATM Facility”), under which we may, from time to time, in our sole discretion, issue and sell through B. Riley Securities, acting as sales agent, up to $25 million of shares of our common stock, in any method permitted that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended.
Previous wording
Pursuant to the Sales Agreement, we may sell the shares through B. Riley Securities by any method permitted that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended. B. Riley Securities will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon instructions from us (including any price or size limits or other customary parameters or conditions we may impose). We will pay B. Riley Securities a commission of 3.0% of the gross sales price per share sold under the Sales Agreement.
Current wording
Pursuant to the Ladenburg Sales Agreement, we may sell the shares through Ladenburg by any method permitted that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended. Ladenburg will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon instructions from us (including any price or size limits or other customary parameters or conditions the Company may impose). We will pay Ladenburg a commission of 3.0% of the gross sales price per Share sold under the Ladenburg Sales Agreement.
Previous wording
We are not obligated to sell any shares under the Sales Agreement. The offering of shares pursuant to the Sales Agreement will terminate upon the earlier to occur of (i) the issuance and sale, through B. Riley Securities, of all of the shares subject to the Sales Agreement and (ii) termination of the Sales Agreement in accordance with its terms.
Current wording
We are not obligated to sell any shares under the Ladenburg Sales Agreement. The offering of the shares pursuant to the Ladenburg Sales Agreement will terminate upon the earlier to occur of (i) the issuance and sale, through or to Ladenburg, of all of the shares of our common stock subject to the Ladenburg Sales Agreement and (ii) termination of the Ladenburg Sales Agreement in accordance with its terms.
Previous wording
Subsequent to the filing of our Form 10-K on February 28, 2024, the aggregate market value of our outstanding common stock held by non-affiliates was approximately $26.7 million. Pursuant to General Instruction I.B.6 of Form S-3, since the aggregate market value of our outstanding common stock held by non-affiliates was below $75.0 million at the time of such Form 10-K filing, the aggregate amount of securities that we are permitted to offer and sell was reduced to $ 8,901,792, which was equal to one-third of the aggregate market value of our common stock held by non-affiliates as of February 27, 2024.
Current wording
Subsequent to the filing of our Form 10-K on February 28, 2024, the aggregate market value of our outstanding common stock held by non-affiliates was approximately $26.7 million. Pursuant to General Instruction I.B.6 of Form S-3, since the aggregate market value of our outstanding common stock held by non-affiliates was below $75.0 million at the time of such Form 10-K filing, the aggregate amount of securities that we are permitted to offer and sell was reduced to $12,909,525, which was equal to one-third of the aggregate market value of our common stock held by non-affiliates as of June 3, 2024. On June 4, 2024, we filed a prospectus supplement to the prospectus, dated May 16, 2024, to the Form S-3 (File No. 333-279252) that reflects the sale restrictions pursuant to General Instruction I.B.6 of Form S-3 and to register for sale of up to $10,366,156 of our common stock through the Ladenburg ATM Facility.
Previous wording
During the three months ended March 31, 2024, we sold no shares. During the three months ended March 31, 2023, we sold an aggregate of 903,716 shares of our common stock under the ATM Facility with aggregate net proceeds to us of $7,866,000, after payment of commissions to B. Riley Securities and other expenses of $244,000.
Current wording
During the six months ended June 30, 2024, we did not sell shares of our common stock under the B. Riley ATM Facility or the Ladenburg ATM Facility. During the three and six months ended June 30, 2023, we sold an aggregate of zero and 903,716 shares of our common stock, respectively, under the B. Riley ATM Facility with aggregate net proceeds to us of $7,866,000, after payment of commissions to B. Riley Securities and other expenses of $244,000.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
On June 4, 2024, we entered into an At The Market Offering Agreement (the “Ladenburg Sales Agreement”) with Ladenburg Thalmann & Co. Inc. (“Ladenburg”) with respect to an “at the market” offering program (the “Ladenburg ATM Facility”), under which we may, from time to time, in our sole discretion, issue and sell through Ladenburg, acting as agent or principal, up to approximately $10 million of shares of our common stock.