Neonode Inc.

Previous wording

Our company provides advanced optical sensing solutions for touch, contactless touch, and gesture sensing. We also provide software solutions for machine perception that feature advanced machine learning algorithms to detect and track persons and objects in video streams for cameras and other types of imagers. We base our contactless touch, touch, and gesture sensing products and solutions using our zForce technology platform and our machine perception solutions on our MultiSensing technology platform. We market and sell our solutions to customers in many different markets and segments including, but not limited to, office equipment, automotive, industrial automation, medical, military and avionics.

Current wording

Neonode provides advanced optical sensing solutions for touch, contactless touch, and gesture sensing. We also provide software solutions for machine perception that feature advanced machine learning algorithms to detect and track persons and objects in video streams from cameras and other types of imagers. We base our contactless touch, touch, and gesture sensing products and solutions using our zForce technology platform and our machine perception solutions on our MultiSensing technology platform. We market and sell our solutions to customers in many different markets and segments including, but not limited to, office equipment, automotive, industrial automation, medical, military and avionics.

Previous wording

We license our zForce technology to Original Equipment Manufacturers (“OEMs”) and automotive Tier 1 suppliers who embed our technology into products that they develop, manufacture and sell. Since 2010, our licensing customers have sold approximately 95 million devices that use our patented technology.

Current wording

We license our zForce technology to Original Equipment Manufacturers (“OEMs”) and automotive Tier 1 suppliers who embed our technology into products that they develop, manufacture and sell. Since 2010, our licensing customers have sold over 95 million devices that use our patented technology.

Previous wording

A summary of our financial results is as follows (in thousands, except percentages):

Current wording

A summary of our financial results is as follows:

Previous wording

All of our sales for the three and nine months ended September 30, 2024 and 2023 were to customers located in the United States, Europe and Asia.

Current wording

All of our sales for the three months ended March 31, 2025 and 2024 were to customers located in the United States, Europe and Asia.

Previous wording

Total revenues were $0.8 million and $2.5 million for the three and nine months ended September 30 2024, respectively, compared to $0.8 million and $3.1 million for the same periods in 2023, respectively. The decrease in total revenues of 0.2% and 21.0% for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023, are explained by lower license fees offset by higher non-recurring revenues.

Current wording

Total revenues were $0.5 million for the three months ended March 31 2025, compared to $0.8 million for the same period in 2024. The decrease in total revenues of 37.0% for the three months ended March 31, 2025, as compared to the same period in 2024, is explained by lower license fees and non-recurring revenues.

Previous wording

Revenues from license fees were $0.7 million and $2.1 million for the three and nine months ended September 30, 2024, respectively, compared to $0.8 million and $3.1 million for the three and nine months ended September 30, 2023, respectively. The decrease of 12.6% and 31.2% for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023, were mainly due to lower demand for our legacy customers products within printer and passenger car touch applications offset by revenues from new licensing customers.

Current wording

Revenues from license fees were $0.5 million for the three months ended March 31, 2025, compared to $0.8 million for the three months ended March 31, 2024. The decrease of 35.7% for the three months ended March 31, 2025, as compared to the same period in 2024, was mainly due to lower demand for our legacy customers products within printer and passenger car touch applications.

Previous wording

Revenues from non-recurring engineering were $107,000 and $335,000 for the three and nine months ended September 30, 2024, respectively, compared to $4,000 and $29,000 for the three and nine months ended September 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 2,575.0% and 1,055.2% for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023 was the result of TSM licensing projects and the new MultiSensing project with a commercial vehicle OEM.

Current wording

Revenues from non-recurring engineering were $16,000 for the three months ended March 31, 2025, compared to $41,000 for the three months ended March 31, 2024. Most of our non-recurring engineering revenues are related to application development and proof-of-concept projects related to our zForce and MultiSensing technology platforms. The decrease of 61.0% for the three months ended March 31, 2025, as compared to the same period in 2024 was the result of fewer projects.

Previous wording

The following tables presents the net revenues by market and revenue stream for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

Current wording

The following tables presents the net revenues by market and revenue stream:

Previous wording

Our total gross margin was 97.1% and 97.3% for the three and nine months ended September 30, 2024, respectively, compared to 100.0% and 99.7% for the three and nine months ended September 30, 2023, respectively.

Current wording

Our total gross margin was 98.2% for the three months ended March 31, 2025, compared to 97.9% for the three months ended March 31, 2024.

Previous wording

Research and development (“R&D”) expenses were $0.8 million and $2.7 million for the three and nine months ended September 30, 2024, respectively, compared to $0.8 million and $2.7 million for the three and nine months ended September 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 R&D expenses for the three and nine months ended September 30, 2024 were in line with the same periods in 2023.

Current wording

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.

Previous wording

Sales and marketing expenses were $0.5 million and $1.8 million for the three and nine months ended September 30, 2024, respectively, compared to $0.5 million and $1.8 million for the three and nine months ended September 30, 2023, respectively. The decrease of 6.2% for the three months ended September 30, 2024 compared to the same period in 2023 was primarily related to lower payroll and related costs offset by higher professional fees. The decrease of 2.6% for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily related to lower payroll and related costs offset by higher professional fees and advertising costs.

Current wording

Sales and marketing expenses were $0.6 million for the three months ended March 31, 2025, compared to $0.8 million for the three months ended March 31, 2024. The decrease of 21.3% for the three months ended March 31, 2025 compared to the same period in 2024 was primarily related to lower payroll and related costs.

Previous wording

General and administrative expenses were $0.7 million and $2.7 million for the three and nine months ended September 30, 2024, respectively, compared to $0.8 million and $2.5 million for the three and nine months ended September 30, 2023, respectively. The decrease of 2.7% for the three months ended September 30, 2024 compared to the same period in 2023 was primarily related to lower professional fees. The increase of 6.1% for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily related to payroll and related expense.

Current wording

General and administrative expenses were $0.9 million for the three months ended March 31, 2025, compared to $1.0 million for the three months ended March 31, 2024. The decrease of 12.3% for the three months ended March 31, 2025, compared to the same period in 2024 was primarily related to lower payroll and related costs.

Previous wording

Other income was $0.2 million and $0.5 million for the three and nine months ended September 30, 2024, respectively compared to $0.2 million and $0.6 million for the three and nine months ended September 30, 2023, respectively. The other income for the periods was mainly related to interest income earned.

Current wording

Other income was $0.2 million for the three months ended March 31, 2025, compared to $0.2 million for the three months ended March 31, 2024. The other income for the period was mainly related to interest income earned.

Previous wording

As a result of the factors discussed above, we recorded a net loss from continuing operations of $1.1 million and $4.4 million for the three and nine months ended September 30, 2024, respectively, and $1.1 million and $3.5 million for the same periods in 2023.

Current wording

As a result of the factors discussed above, we recorded a loss from continuing operations of $1.8 million for the three months ended March 31, 2025, and $1.7 million for the same periods in 2024.

Previous wording

As of September 30, 2024, we had cash and cash equivalents of $17.6 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 March 31, 2025, we had cash and cash equivalents of $15.0 million, as compared to $16.4 million as of December 31, 2024. 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 $17.7 million as of September 30, 2024, compared to $16.1 million as of December 31, 2023.

Current wording

Working capital (current assets less current liabilities) was $14.1 million as of March 31, 2025, compared to $16.1 million as of December 31, 2024.

Previous wording

Net cash used in operating activities for combined continuing and discontinued operations for the nine months ended September 30, 2024, was $4.4 million and was primarily the result of a net loss of $4.9 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 $28,000. Net cash provided by financing activities for the nine months ended September 30, 2024, was approximately 5.8 million and was primarily the result of proceeds from issuance of common stock, net of offering costs.

Current wording

Net cash used in operating activities for combined continuing and discontinued operations for the three months ended March 31, 2025, was $1.4 million and was primarily the result of a net loss of $1.7 million and approximately $0.1 million in non-cash operating expenses, comprised of depreciation and amortization and amortization of operating lease right-of-use assets and changes in operating assets and liabilities of $0.2 million. Net cash used in operating activities for combined continuing and discontinued operations 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.

Previous wording

We have incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net losses for combined continuing and discontinued operations of approximately $1.1 million and $4.9 million for the three and nine months ended September 30, 2024, respectively, compared to $1.3 million and $4.2 million for the three and nine months ended September 30, 2023, respectively, and had an accumulated deficit of approximately $222.5 million and $217.6 million as of September 30, 2024 and December 31, 2023, respectively. In addition, operating activities used cash of approximately $4.4 million and $4.1 million for the nine months ended September 30, 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 for combined continuing and discontinued operations of approximately $1.7 million for the three ended March 31, 2025, compared to $1.7 million for the three months ended March 31, 2024, and had an accumulated deficit of approximately $225.8 million and $224.1 million as of March 31, 2025 and December 31, 2024, respectively. In addition, operating activities used cash of approximately $1.4 million and $1.9 million for the three months ended March 31, 2025 and 2024, 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 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 the three months ended September 30, 2024, we sold an aggregate of 1,423,441 of our common stock under the ATM Facility with aggregate net proceeds to us of $5.8 million, after payment of commissions to Ladenburg and other expenses of $0.2 million.

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.

Previous wording

For total rent expense for combined continuing and discontinued operations, we recorded $127,000 and $376,000 for the three and nine months ended September 30, 2024, respectively, compared to $120,000 and $365,000, respectively, for the three and nine months ended September 30, 2023.

Current wording

For total rent expense for combined continuing and discontinued operations, we recorded $104,000 for the three months ended March 31, 2025, compared to $126,000 for the three months ended March 31, 2024.

Previous 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.

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. On May 29, 2024, we terminated the B. Riley Sales Agreement with B. Riley Securities.

Previous 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.

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 we 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 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.

Current wording

We are not obligated to sell any shares under the Ladenburg Sales Agreement. The offering of shares pursuant to the Ladenburg Sales Agreement will terminate upon the earlier to occur of (i) the issuance and sale, through 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

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 As reflected on the public court docket, on August 20, 2024, the Federal Circuit issued its written opinion, reversing and remanding the case to the Western District of Texas for further proceedings. Specifically, the Federal Circuit held that claim 1 of the ‘879 patent was not indefinite. Mandate issued returning the case to the Western District of Texas on September 26, 2024.

Current wording

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 (docket number 6:20-cv-507), 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 As reflected on the public court docket, on August 20, 2024, the Federal Circuit issued its written opinion, reversing and remanding the case to the Western District of Texas for further proceedings. Specifically, the Federal Circuit held that claim 1 of the ‘879 patent was not indefinite. Mandate issued returning the case to the Western District of Texas on September 26, 2024. On November 5, 2024, Samsung filed its Answer to the Complaint. Under the current schedule order, the parties are set to conclude fact discovery on May 23, 2025. Trial is scheduled to begin on October 24, 2025.

Previous wording

The case against Apple remains pending in the United States District Court for the Northern District of California. The stay has not yet been lifted, and on October 17, 2024, the parties indicated that they will soon jointly request that the California case continue to be stayed until resolution of the Samsung case pending in the Western District of Texas (case number 20-cv-00507-ADA).

Current wording

The case against Apple remains pending in the United States District Court for the Northern District of California. On November 13, 2024, the Court granted the parties’ motion to continue the stay pending resolution of the Samsung case pending in the Western District of Texas (case number 20-cv-00507-ADA) by settlement or final judgment.