8-K
Neonode Inc. (NEON)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934
Date of Report (Date of earliest event reported):May 12, 2021
NEONODE INC.
(Exact name of issuer of securities held pursuantto the plan)
Commission File Number 1-35526
| Delaware | 94-1517641 |
|---|---|
| (State or other jurisdiction<br><br> <br>of incorporation) | (I.R.S. Employer<br><br> <br>Identification No.) |
Karlavägen 100, 115 26 Stockholm, Sweden
(Address of Principal Executive Office, includingZip Code)
+46 (0) 8 667 17 17
Registrant’s telephone number, includingarea code:
Not Applicable
(Former name or former address, if changed sincelast report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written<br>communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br>material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement<br>communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement<br>communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.001 per share | NEON | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry Into a Material DefinitiveAgreement.
On May 10, 2021, Neonode Inc. (the “Company”) entered into an At Market Issuance Sales Agreement^SM^ (the “Sales Agreement”) with B. Riley Securities with respect to an “at the market” offering program, under which the Company may, from time to time, in its sole discretion, issue and sell through B. Riley Securities, acting as sales agent, up to $25.0 million of the Company’s common stock, par value $0.001 per share (the “Shares”).
The issuance and sale, if any, of the Shares by the Company under the Sales Agreement is subject to the effectiveness of the Company’s registration statement on Form S-3 (File No. 333-255964) (the “Registration Statement”), filed with the Securities and Exchange Commission on May 10, 2021.
Pursuant to the Sale Agreement, B. Riley Securities may sell the Shares 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 (the “Securities Act”). 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 the Company (including any price or size limits or other customary parameters or conditions the Company may impose).
The Company will pay B. Riley Securities a commission of 3.0% of the gross sales price per Share sold under the Sales Agreement.
The Company is not obligated to sell any Shares under the Sale Agreement. The offering of the Shares pursuant to the Sale 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 Sale Agreement in accordance with its terms.
The Sales Agreement contains representations, warranties and covenants that are customary for transactions of this type. In addition, the Company has agreed to indemnify B. Riley Securities against certain liabilities, including liabilities under the Securities Act and the Securities Exchange Act of 1934, as amended.
The foregoing description of the Sales Agreement is not complete and is qualified in its entirety by reference to the full text of the Sales Agreement, a copy of which is filed herewith as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy the securities discussed herein, nor shall there be any offer, solicitation or sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
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Item 2.02. Results of Operations and FinancialCondition.
On May 12, 2021, the Company reported its earnings for the three months ended March 31, 2021 (the “Earnings Release”) and posted on the Neonode website the First Quarter 2021 Presentation (the “Presentation”). A copy of the Earnings Release and the Presentation are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by reference.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01 Regulation FD Disclosure
As previously announced, the Company will conduct a conference call today, Wednesday, May 12, 2021 at 10:00 a.m. ET. The presentation slides to be used during the call, attached hereto as Exhibit 99.2, will be available on the “Investor Relations” section of the Company’s website at www.neonode.com immediately prior to the call. The information contained in, or that can be accessed through the Company’s website is not a part of this filing.
The information furnished pursuant to this Item 7.01, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: May 12, 2021 | NEONODE INC. | |
|---|---|---|
| By: | /s/ Maria Ek | |
| Name: | Maria Ek | |
| Title: | Chief Financial Officer |
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Exhibit 99.1
PRESS RELEASE
For Release, 9:10AM EST May 12, 2021
Neonode Reports Quarter Ended March 31,2021 Financial Results
STOCKHOLM,SWEDEN – May 12, 2021– Neonode Inc. (NASDAQ: NEON), today reported financial results for the three months ended March 31, 2021.
FINANCIAL SUMMARY FOR THE QUARTER ENDED MARCH 31, 2021:
| ● | Revenue of $1.7 million, an increase of 28.7% compared to the same period in the prior year. |
|---|---|
| ● | Operating expenses of $3.0 million, an increase of 29.0% compared to the same period in the prior year. |
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| ● | Net loss of $1.6 million, or $0.14 per share, compared to $1.0 million, or $0.11 per share, for the same period in the prior year. |
| --- | --- |
| ● | Cash used by operations of $2.0 million compared to $1.0 million for the same period in the prior year. |
| --- | --- |
| ● | Cash and accounts receivable of $9.5 million as of March 31, 2021 compared to $12.2 million as of December 31, 2020. |
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THE CEO’S COMMENTS
“During the first quarter we continued to build our business pipeline. Our main focus was and continues to be contactless touch solutions for elevators and kiosks, where our touch sensor modules provide an intuitive and safe user experience. The demand for our solutions is very high in Japan and Korea, where customers now have numerous development and onsite pilot projects underway for elevators and an array of different kiosks. We also have customers in other countries in Asia who are rolling out and installing retrofit contactless touch systems in airport ticketing and retail self-service checkout kiosks. In addition, we are seeing increasing interest in our contactless touch technology from European and North American customers. To better support our customers in these regions, as well as in Asia, we recently changed to a regional sales organization, which will help us accelerate growth,” said Dr. Urban Forssell, CEO of Neonode.
“Our license revenue from existing legacy customers increased during the first quarter compared to the same period in 2020. We believe this to be a rebound effect from the slow printer and automotive sales last year due to the COVID-19 pandemic. Long term, we expect this legacy business to continue to decrease (a trend we observed prior to the pandemic) and to offset this we are focusing on growing our products business with elevator and kiosk customers. We are also continuing to promote our technology to new customers in the Military & Avionics, Industrial and Automotive segments. The sales and development cycles are much longer in these industries than in the elevator and kiosk industries, and although we do not expect royalty revenues from new customers in the short term, we strongly believe in these segments and we do expect to earn non-recurring engineering revenues related to product development,” continued Dr. Forssell.
“During the quarter, we continued to strengthen our team of talented and experienced people in sales, marketing, and engineering who will help us create and capitalize on the developing market opportunities. We have also deepened our relationship with our partner network and are actively exploring further partnerships as a means to drive growth. We believe that our contactless touch solution is the best technology in the market that supports the new health and pandemic-driven paradigm shift where users are becoming more and more reluctant to touch public space devices,” concluded Dr. Forssell.
FINANCIAL OVERVIEW FOR THE QUARTER ENDED MARCH 31, 2021
Net revenues for the quarter ended March 31, 2021 were $1.7 million, a 28.7% increase, compared to the same quarter in 2020. HMI Solutions revenues were $1.3 million, an increase of 9.9% compared to the same quarter in 2020. This is primarily due to higher license fees from our automotive customers. Our HMI Products revenues were $0.4 million, an increase of 226.8% compared to the same period in 2020. The increase was driven by a growing market demand for contactless touch solutions for elevators and self-service kiosks where our touch sensor modules is a good fit.
Our combined total gross margin was 83.4% in the quarter just ended compared to 96.6% in the same period in 2020. The decrease in total gross margin in the quarter ended March 31, 2021 as compared to the same period in 2020 was primarily due to the change in the mix of the components of overall revenue with an increase in sales of sensor modules, which have a lower overall gross margin compared to the 100% gross margin license business. Our operating expenses increased 29.0% in the quarter ended March 31, 2021 compared to the same period in 2020. Operating expenses increased as we added employees and external consultants in our sales, marketing and engineering groups to service an increasing number of customers.
Net loss for the three months ended March 31, 2021 was $1.6 million, or $0.14 per share, compared to a net loss of $1.0 million, or $0.11 per share, in the same period 2020. Cash used by operations was $2.0 million in the first quarter of 2021 compared to $1.0 million in the same period of 2020. This was primarily the result of a higher net loss and increased inventory to secure our future deliveries.
Cash and accounts receivable totaled $9.5 million and working capital was $8.8 million as of March 31, 2021 compared to $12.2 million and $10.4 million as of December 31, 2020.
We entered into an At Market Issuance Sales Agreement with B. Riley Securities on May 10, 2021, under which we may, from time to time, in our sole discretion, sell shares of common stock having an aggregate offering price of up to $25.0 million, through B. Riley Securities as sales agent. To facilitate the at-the-market facility, we filed a shelf registration statement on Form S-3 registering up to $100.0 million of securities that may be offered and sold by us from time to time, including the shares that may be sold under the At Market Issuance Sales Agreement. The issuance and sale, if any, of these securities is subject to the effectiveness of the registration statement.
For more information, please contact:
Investor Relations
David Brunton
Email: [email protected]
Chief Financial Officer
Maria Ek
E-mail: [email protected]
About Neonode
Neonode Inc. (NASDAQ:NEON) is a publicly traded company, headquartered in Stockholm, Sweden and established in 2001. The company provides advanced optical sensing solutions for contactless touch, touch, gesture control, and in-cabin monitoring. Building on experience acquired during years of advanced R&D and technology licensing, Neonode’s technology is currently deployed in more than 80 million products and the company holds more than 100 patents worldwide. Neonode’s customer base includes some of the world’s best-known Fortune 500 companies in the consumer electronics, office equipment, automotive, elevator, and self-service kiosk markets.
NEONODE and the NEONODE logo are trademarks of Neonode Inc. registered in the United States and other countries.
For further information please visit www.neonode.com
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Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.These include, but are not limited to, statements relating to expectations, future performance or future events. These statements arebased on current assumptions, expectations and information available to Neonode management and involve a number of known and unknown risks,uncertainties and other factors that may cause Neonode's actual results, levels of activity, performance or achievements to be materiallydifferent from any expressed or implied by these forward-looking statements.
These risks, uncertainties, and factors are discussed under "RiskFactors" and elsewhere in Neonode's public filings with the SEC from time to time, including Neonode's annual report on Form 10-K,quarterly reports on Form 10-Q, and current reports on Form 8-K. You are advised to carefully consider these various risks, uncertaintiesand other factors. Although Neonode management believes that the forward-looking statements contained in this press release are reasonable,it can give no assurance that its expectations will be fulfilled. Forward-looking statements are made as of today's date, and Neonodeundertakes no duty to update or revise them.
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NEONODE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
| December 31, | |||||
|---|---|---|---|---|---|
| 2020 | |||||
| ASSETS | (Audited) | ||||
| Current assets: | |||||
| Cash | 8,145 | $ | 10,473 | ||
| Accounts receivable and unbilled revenue, net | 1,326 | 1,743 | |||
| Inventory | 1,675 | 1,273 | |||
| Prepaid expenses and other current assets | 820 | 1,161 | |||
| Total current assets | 11,966 | 14,650 | |||
| Property and equipment, net | 814 | 1,003 | |||
| Operating lease right-of-use assets | 743 | 919 | |||
| Total assets | 13,523 | $ | 16,572 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
| Current liabilities: | |||||
| Accounts payable | 491 | $ | 1,084 | ||
| Accrued payroll and employee benefits | 1,071 | 1,170 | |||
| Accrued expenses | 464 | 545 | |||
| Deferred revenues | 120 | 138 | |||
| Current portion of finance lease obligations | 624 | 769 | |||
| Current portion of operating lease obligations | 377 | 504 | |||
| Total current liabilities | 3,147 | 4,210 | |||
| Finance lease obligations, net of current portion | 48 | 95 | |||
| Operating lease obligations, net of current portion | 251 | 377 | |||
| Total liabilities | 3,446 | 4,682 | |||
| Commitments and contingencies | |||||
| Stockholders’ equity: | |||||
| Common stock, 25,000,000 shares authorized, with par value of 0.001; 11,504,665 shares issued and outstanding at March 31, 2021 and December 31, 2020 | 12 | 12 | |||
| Additional paid-in capital | 211,686 | 211,663 | |||
| Accumulated other comprehensive loss | (570 | ) | (404 | ) | |
| Accumulated deficit | (197,726 | ) | (196,158 | ) | |
| Total Neonode Inc. stockholders’ equity | 13,402 | 15,113 | |||
| Noncontrolling interests | (3,325 | ) | (3,223 | ) | |
| Total stockholders’ equity | 10,077 | 11,890 | |||
| Total liabilities and stockholders’ equity | 13,523 | $ | 16,572 |
All values are in US Dollars.
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NEONODE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Three months ended<br> March 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Revenues: | ||||||
| HMI Solutions | $ | 1,299 | $ | 1,182 | ||
| HMI Products | 366 | 112 | ||||
| Total revenues | 1,665 | 1,294 | ||||
| Cost of revenues: | ||||||
| HMI Solutions | — | (1 | ) | |||
| HMI Products | (277 | ) | (43 | ) | ||
| Total cost of revenues | (277 | ) | (44 | ) | ||
| Total gross profit | 1,388 | 1,250 | ||||
| Operating expenses: | ||||||
| Research and development | 1,142 | 995 | ||||
| Sales and marketing | 788 | 545 | ||||
| General and administrative | 1,087 | 799 | ||||
| Total operating expenses | 3,017 | 2,339 | ||||
| Operating loss | (1,629 | ) | (1,089 | ) | ||
| Other expense: | ||||||
| Interest expense | 5 | 7 | ||||
| Total other expense | 5 | 7 | ||||
| Loss before provision for income taxes | (1,634 | ) | (1,096 | ) | ||
| Provision for income taxes | 36 | 16 | ||||
| Net loss including noncontrolling interests | (1,670 | ) | (1,112 | ) | ||
| Less: net loss attributable to noncontrolling interests | 102 | 102 | ||||
| Net loss attributable to Neonode Inc. | $ | (1,568 | ) | $ | (1,010 | ) |
| Loss per common share: | ||||||
| Basic and diluted loss per share | $ | (0.14 | ) | $ | (0.11 | ) |
| Basic and diluted – weighted average number of common shares outstanding | 11,504 | 9,171 |
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NEONODE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVELOSS
(In thousands)
(Unaudited)
| Three months ended<br> March 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Net loss including noncontrolling interests | $ | (1,670 | ) | $ | (1,112 | ) |
| Other comprehensive loss: | ||||||
| Foreign currency translation adjustments | (166 | ) | (87 | ) | ||
| Comprehensive loss | (1,836 | ) | (1,199 | ) | ||
| Less: Comprehensive loss attributable to noncontrolling interests | 102 | 102 | ||||
| Comprehensive loss attributable to Neonode Inc. | $ | (1,734 | ) | $ | (1,097 | ) |
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NEONODE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’EQUITY
(In thousands, except for Preferred Stock Shares Issued)
(Unaudited)
For the Quarter to Date periods ended March31, 2020 through March 31, 2021
| Preferred Stock Shares Issued | Preferred Stock Amount | Common Stock Shares Issued | Common Stock Amount | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Neonode Inc. Stockholders’ Equity | Noncontrolling Interests | Total Stockholders’ Equity | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balances, December 31, 2019 | - | $ | - | 9,171 | $ | 9 | $ | 197,543 | $ | (639 | ) | $ | (190,520 | ) | $ | 6,393 | $ | (2,546 | ) | $ | 3,847 | |||||||||
| Foreign currency translation adjustment | - | - | - | - | - | (87 | ) | - | (87 | ) | - | (87 | ) | |||||||||||||||||
| Net loss | - | - | - | - | - | - | (1,010 | ) | (1,010 | ) | (102 | ) | (1,112 | ) | ||||||||||||||||
| Balances, March 31, 2020 | - | $ | - | 9,171 | $ | 9 | $ | 197,543 | $ | (726 | ) | $ | (191,530 | ) | $ | 5,296 | $ | (2,648 | ) | $ | 2,648 | |||||||||
| Foreign currency translation adjustment | - | - | - | - | - | 64 | - | 64 | - | 64 | ||||||||||||||||||||
| Net loss | - | - | - | - | - | - | (1,612 | ) | (1,612 | ) | (154 | ) | (1,766 | ) | ||||||||||||||||
| Balances, June 30, 2020 | - | $ | - | 9,171 | $ | 9 | $ | 197,543 | $ | (662 | ) | $ | (193,142 | ) | $ | 3,748 | $ | (2,802 | ) | $ | 946 | |||||||||
| Issuance of shares for cash, net of offering costs | 3,932 | 3,932 | 1,612 | 1 | 9,597 | - | - | 13,530 | - | 13,530 | ||||||||||||||||||||
| Series C-2 Preferred Stock issued for repayment of short-term borrowings and accrued interest | 517 | 517 | - | - | (1) | - | - | 516 | - | 516 | ||||||||||||||||||||
| Conversion of Series C-1 and C-2 Preferred Stock to common stock | (4,449 | ) | (4,449 | ) | 684 | 1 | 4,448 | - | - | - | - | - | ||||||||||||||||||
| Preferred dividends | - | - | - | - | - | - | (33) | (33) | - | (33) | ||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | (228 | ) | - | (228 | ) | - | (228 | ) | |||||||||||||||||
| Net loss | - | - | - | - | - | - | (1,638 | ) | (1,638 | ) | (110 | ) | (1,748 | ) | ||||||||||||||||
| Balances, September 30, 2020 | - | $ | - | 11,467 | $ | 11 | $ | 211,587 | $ | (890 | ) | $ | (194,813 | ) | $ | 15,895 | $ | (2,912 | ) | $ | 12,983 | |||||||||
| Stock-based compensation | - | - | 37 | 1 | 76 | - | - | 77 | - | 77 | ||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | 486 | - | 486 | - | 486 | ||||||||||||||||||||
| Net loss | - | - | - | - | - | - | (1,345 | ) | (1,345 | ) | (311 | ) | (1,656 | ) | ||||||||||||||||
| Balances, December 31, 2020 | - | $ | - | 11,504 | $ | 12 | $ | 211,663 | $ | (404 | ) | $ | (196,158 | ) | $ | 15,113 | $ | (3,223 | ) | $ | 11,890 | |||||||||
| Stock-based compensation | - | - | - | - | 23 | - | - | 23 | - | 23 | ||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | (166 | ) | - | (166 | ) | - | (166 | ) | |||||||||||||||||
| Net loss | - | - | - | - | - | - | (1,568 | ) | (1,568 | ) | (102 | ) | (1,670 | ) | ||||||||||||||||
| Balances, March 31, 2021 | - | $ | - | 11,504 | $ | 12 | $ | 211,686 | $ | (570 | ) | $ | (197,726 | ) | $ | 13,402 | $ | (3,325 | ) | $ | 10,077 |
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NEONODE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three months ended<br> March 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Cash flows from operating activities: | ||||||
| Net loss (including noncontrolling interests) | $ | (1,670 | ) | $ | (1,112 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
| Stock based compensation expense | 23 | - | ||||
| Depreciation and amortization | 199 | 195 | ||||
| Amortization of operating lease right-of-use assets | 129 | 91 | ||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable and unbilled revenue, net | 405 | 188 | ||||
| Projects in process | - | (51 | ) | |||
| Inventory | (493 | ) | (16 | ) | ||
| Prepaid expenses and other current assets | 299 | 45 | ||||
| Accounts payable and accrued expenses | (657 | ) | (224 | ) | ||
| Deferred revenues | (15 | ) | 6 | |||
| Operating lease obligations | (210 | ) | (91 | ) | ||
| Net cash used in operating activities | (1,990 | ) | (969 | ) | ||
| Cash flows from investing activities: | ||||||
| Purchase of property and equipment | (62 | ) | (5 | ) | ||
| Net cash used in investing activities | (62 | ) | (5 | ) | ||
| Cash flows from financing activities: | ||||||
| Principal payments on finance lease obligations | (148 | ) | (132 | ) | ||
| Net cash used in financing activities | (148 | ) | (132 | ) | ||
| Effect of exchange rate changes on cash | (128 | ) | (64 | ) | ||
| Net decrease in cash | (2,328 | ) | (1,170 | ) | ||
| Cash at beginning of period | 10,473 | 2,357 | ||||
| Cash at end of period | $ | 8,145 | $ | 1,187 | ||
| Supplemental disclosure of cash flow information: | ||||||
| Cash paid for income taxes | $ | 36 | $ | 16 | ||
| Cash paid for interest | $ | 5 | $ | 7 |
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Exhibit99.2
Neonode Inc. First Quarter 2021 Presentation D r . Ur b an F o r s sell, C E O 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
2 Disclaimer Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON 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 performance or future events. These may also include statements about market and sales growth, financial results, use of free cash flow, product development and introduction, regulatory matters and sales efforts. They are based on assumptions, expectations and information available to the Company and its management and involve a number of known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, levels of activity, performance or achievements to be materially different from any expressed or implied by these forward-looking statements. These uncertainties and risks include, but are not limited to, those outlined in filings of the Company with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended, including sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You are advised to carefully consider these various risks, uncertainties and other factors. Forward-looking statements are made as of today’s date. The Company and its management undertake no duty to update or revise forward - looking statements. This presentation has been prepared by the Company based on its own information, as well as information from public sources. Certain of the information contained herein may be derived from information provided by industry sources. The Company believes such information is accurate and that the sources from which it has been obtained are reliable. However, the Company has not independently verified such information and cannot guarantee the accuracy of such information.
3 Introduction Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
4 Summary Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON • We continue to execute on our strategies and build our business pipeline • The demand for contactless touch solutions continues to increase giving us an enormous market opportunity to integrate Neonode technology into new and retrofitted equipment, for instance in » Elevators » Interactive Kiosks • We also see significant interest for our zForce and MultiSensing technologies from customers in the Military & Avionics, Industrial, and Automotive segments • To be able to capitalize on more of these opportunities we continue to strengthen our Sales, Marketing, and Engineering teams in Sweden and internationally
5 New Sales Organization • To increase our customer focus and support further growth, we are migrating from a global business area organization to a regional sales organization » Anthony Uhrick, who joined the company last month, will lead our sales work in AMER » Jonas Wærn, who previously led the business area HMI Solutions, will lead our sales work in EMEA » Johan Swartz, who previously led the business area HMI Products, will lead our sales work in APAC CEO Urban Forssell Sales APAC Johan Swartz Sales EMEA Jonas Wærn Sales AMER A n th o n y Uh r ick Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
6 Team On This Call Dr. Urban Forssell CEO Ms. Maria Ek CFO Mr. David Brunton Head of IR Mr. Anthony Uhrick VP Sales AMER Mr. Johan Swartz VP Sales APAC Mr. Jonas Wærn VP Sales EMEA Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
7 1Q 2021 Financials Update Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
8 1Q 2021 Financial Update - Overview Total revenues of $ 1 . 7 million compared to $ 1 . 3 million the same quarter previous year 29% Operating expenses of $3.0 million compared to $2.3 million the same quarter previous year 29% Total gross margin of 83% compared to 97% the same quarter previous year 14% 0 500 1 000 1 500 2 000 2 500 3 000 USD in thousands Revenues by Revenue Stream Q1 - 18Q2 - 18Q3 - 18Q4 - 18Q1 - 19Q2 - 19Q3 - 19Q4 - 19Q1 - 20Q2 - 20Q3 - 20Q4 - 20Q1 - 21 License Revenues NRE Revenues Product Revenues Operating Expenses - 4 0 0 0 - 3 5 0 0 - 3 0 0 0 - 2 5 0 0 - 2 0 00 - 1 5 0 0 - 1 0 0 0 - 500 0 USD in thousands Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
9 1Q 2021 Financial Update – Revenues • Revenues from our HMI Solutions business area • $1.3 million for Q1 2021 • Up by 9.9% compared to the first quarter 2020 • The major part is license revenues from our existing customers • Still rebounding from the slow - down in the first half of 2020 due to the pandemic • Revenues from our HMI Product business area • $0.4 million for Q1 2021 • Up by 227% compared to the first quarter 2020 • Due to growing deployment of contactless touch solutions, mainly in Asia, and mostly driven by our partner network • Major part product sales but also some non - recurring engineering (“NRE”) projects - 500 0 500 1 000 1 500 2 000 2 500 Q 1 - 19 Q 2 - 19 Q 3 - 19 Q 4 - 19 Q 1 - 20 Q 2 - 20 Q 3 - 20 Q 4 - 20 Q 1 - 21 USD in thousands Revenues HMI Solutions Printers Automotive A v i o n i c s Ot h e r 0 100 200 300 400 500 600 Q 1 - 19 Q 2 - 19 Q 3 - 19 Q 4 - 19 Q 1 - 20 Q 2 - 20 Q 3 - 20 Q 4 - 20 Q 1 - 21 USD in thousands Revenues HMI Products Distributors and others Medical Automotive Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
1 0 1Q 2021 Financial Update – Gross Profit/Margin • The total gross margin was 83% for Q1 2021 compared to 97% Q1 2020 • Higher share of product sales with lower margin • The gross margin for our HMI Solutions business area was 100% for Q1 2021 and 2020 as there were no NRE revenues • The gross margin for our HMI Products business area was 24 % for Q 1 2021 compared to 62 % Q 1 2020 • The margin 2021 depressed by low - margin AirBar sales • 27% margin for touch sensor modules sales alone 0% 20% 40% 60% 80% 100% 120% 0 500 1 000 1 500 2 000 2 5 00 Q 4 - 20 Q 1 - 21 USD in thousands Total Gross Profit/Margin Q1 - 19 Q2 - 19 Q3 - 19 Q4 - 19 Q1 - 20 Q2 - 20 Q3 - 20 Gross Profit Gross Margin - 15 0 % - 10 0 % - 50% 0% 50% 100% 100 50 0 - 50 - 100 - 150 - 200 - 250 - 300 200 150 Q 1 - 19 Q 2 - 19 Q 3 - 19 Q 4 - 19 Q 1 - 20 Q 2 - 20 Q 3 - 20 Q 4 - 20 Q 1 - 20 USD in thousands Gross Profit/Margin HMI Products G r o s s P r o fit Gross Margin Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
1 1 1Q 2021 Financial Update – Operating Expenses and Net Result • Operating expenses Q1 2021 of $3.0 million compared to $2.3 million Q1 2020 • Increase by 29% from Q1 2020 • Decrease by 9% from Q4 2020 • Operating loss Q1 2021 of $1.6 million compared to $1.1 million Q1 2020 • Increase by 50% from Q1 2020 • Increase by 2% from Q4 2020 • Net loss of $ 1 . 6 million or $ 0 . 14 per share Q 1 2021 compared to a net loss of $ 1 . 0 million or $ 0 . 11 per share Q 1 2020 - 4 0 0 0 - 3 5 0 0 - 2 0 0 0 - 2 5 0 0 - 3 0 0 0 - 1 5 0 0 - 1 0 0 0 - 500 0 Operating Expenses Q1 - 18 Q2 - 18 Q3 - 18 Q4 - 18 Q1 - 19 Q2 - 19 Q3 - 19 Q4 - 19 Q1 - 20 Q2 - 20 Q3 - 20 Q4 - 20 Q1 - 21 - 3 0 0 0 Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON - 2 5 0 0 - 2 0 0 0 - 1 5 0 0 - 500 - 1 0 0 0 0 Operating Loss Q1 - 18 Q2 - 18 Q3 - 18 Q4 - 18 Q1 - 19 Q2 - 19 Q3 - 19 Q4 - 19 Q1 - 20 Q2 - 20 Q3 - 20 Q4 - 20 Q1 - 21
1 2 1Q 2021 Financial Update – Cash • Net cash used in operating activities during Q1 2021 increased by $1.0 million compared to Q1 2020 • Increase in net loss • Capital tied up in inventory • Cash and accounts receivables of $9.5 million as of March 31, 2021 • A shelf registration statement filed and a $25 million ATM agreement entered into on May 10, 2021 - 25 0 0 Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON - 20 0 0 - 15 0 0 - 10 0 0 - 50 0 0 Net cash used in operating activities Q1 - 18 Q2 - 18 Q3 - 18 Q4 - 18 Q1 - 19 Q2 - 19 Q3 - 19 Q4 - 19 Q1 - 20 Q2 - 20 Q3 - 20 Q4 - 20 Q1 - 21
1 3 Strategy and Business Update Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
1 4 Our Values One Team With Purpose Customer Focus Make Tomorrow Better Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
1 5 Earlier Business Area Organization HMI Products Co nt a c tl es s Ge s t u r e T o u c h Touch Sensing Elevators Interactive Kiosks Other, misc. HMI Solutions ( R u g g e d ) Ge s t u r e Co nt a c tl ess Touch Sensing Touch M i li t a r y & In d u s t r i al Avionics Other, misc. Remote Sensing Solutions In - Cabin Driver Moni t o ring Moni t o ring Automotive Other, misc. Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
1 6 Next Step for Improved Efficiency, Effectiveness, and Growth Focus Neonode ”Smart, intuitive, multimodal HMI solutions” Object Detection Touch Contactless Touch Gesture Sensing Scene Anal y sis Medi c al Military Main Elevators Focus Interactive Kiosks Industrial Retail Au t omot iv e Consumer Electronics Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
1 7 New Organization Neonode ”Smart, intuitive, multimodal HMI solutions” Sales APAC Sales EMEA Sales AMER Platform Development & Maintenance Application Development & Customer Support Marketing and Sales Support Business and Technology Partnerships Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
1 8 Current Status and Outlook Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON • We feel that we are on the right track and have momentum • The demand for our contactless touch solutions is increasing and our product sales is ramping up • Medium and long term we are also optimistic about our licensing business • We have an excellent team – and continue to add talent and experience to it
1 9 Sales and Business Development Update AMER Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
2 0 Anthony Uhrick Resume Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON • 20 year’s sales experience in the touchscreen industry • Career focused on new product introduction • Channel and direct sales development experience • Experience working with Fortune 100 companies and start - ups
2 1 Neonode Contactless Touch Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON Contactless touch - The new normal! Safe, intuitive, and easy to use • High degree of design freedom – holographic touch or in - air touch with multiple configurations • Germ - free – preventing the spread of germs in public environments • Fast and simple integration – Neonode’s touch sensor module available off - the - shelf Neonode’s Technology at a Glance: x IR - based touch and gesture sensing technology x No need for overlays that compromises image quality x Works with any input (fingers, pens etc.) x High scanning frequency x Allows for contactless operation, i.e., in - air touch and gesture control x Suitable for both retrofit and new equipment x Enables replacement of mechanical switches and controls
2 2 Market Potential New Installs R&D OEM decision maker Medium sales cycle Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON Engineering resources Longest sales cycle Solution Dynamics Sa l es C y cle Target Customer Highest volume End - user decision makers Retrofits End - Users Integrators Shortest sales cycle Solution providers Partner solutions VARs End - Users I nt eg r at o r s OEMs O E Ms
2 3 Elevator Control Panels MAD Elevator • MAD Elevator is a leading supplier of elevator fixtures and elevator car interiors • Contactless (parallel plane) elevator control panel for existing and new elevator installations • Powered by Neonode Touch Sensor Modules • Marketed and sold as ‘PHANTOM Touchless Sensor’ in North America and beyond since 2020 Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
2 4 Sales and Business Development Update EMEA Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
2 5 2Q Execution Plan – Sales EMEA 1. My goal is to drive succesful business in the EMEA - region within the corporate mission and vision statement: ”Smart, intuitive, multimodal HMI Solutions” x Review and update of segmentation, positioning, business models, GTM strategies etc. for EMEA • How can Neonode become easier to buy from? Quicker fail & scale, broader menu, different types of purchase options etc. • Continuously evaluate and develop our ecosystem (partners, VARs, distributors) • Keep analysing the Military, Industrial business plans but main focus is on the Elevators and Interactive Kiosks segments • Number 1 priority is top - line growth! x Development of updated, comprehensive ”Now” and ”Next” execution plans for EMEA focusing on growth 2. Sell, sell, sell! Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
2 6 Elevator Control Panels Dewhurst • Dewhurst is a leading supplier of components to the global elevator market • Contactless (parallel plane) elevator control panel for existing or new elevator installations • Powered by Neonode Touch Sensor Modules • Marketed and sold as ‘HALO’ in Europe and beyond from beginning of 2021 Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
2 7 QSR PoS Kiosks Merim Groupe • Contactless (parallel plane) self - ordering system for quick service restaurants • Adaptable solution ideal for retrofitting on existing kiosks • Powered by Neonode Touch Sensor Modules • Marketed and sold as ‘AIR - CLICK’ in Europe from beginning of 2021 • Currently engaged with Burger King in successful ‘AIR - CLICK’ trials in France Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
2 8 Sales and Business Development Update APAC Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
2 9 APAC – Leading the Migration Towards Contactless Touch Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON • Japan • Airport Check - in • Retail SCO • POS Terminals • South Korea • Elevator COP • Greater China • Elevator COP • Reception • Holographic • South East Asia • Airport Check - in • Elevator COP
3 0 Japan Aerospace • Contactless self - check in and self - service bag drop terminals for retrofit • Powered by Neonode Touch Sensor Modules • Selected by a major Asian airline to retrofit on existing kiosks at multiple airports in Asia • Additional contactless kiosk applications are being evaluated by other airports/airlines Airport Kiosks Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
3 1 Japan Aerospace • Contactless self - checkout terminals for retrofit in retail environments • Powered by Neonode Touch Sensor Modules • Selected by a major Japanese retail chain to retrofit on the chain’s existing self - checkout kiosks • Deployment of the solution called ‘Air Click’ started in 32 stores throughout Japan and will continue to be rolled out at additional locations Retail Self - Checkout Kiosks Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
3 2 Finetek • Contactless elevator control panels for retrofit and new equipment • Powered by Neonode Touch Sensor Modules • Selected by a major elevator OEM in South Korea to install in existing elevators . Three pilots announced • Finetek also engaged with several other elevator companies and in parallel also marketing contactless touch solutions to kiosk manufacturers Elevator Control Panels Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
3 3 HKPC • Contactless (parallel plane) elevator control panels for retrofit powered by Neonode Touch Sensor Modules • Marketed and sold as ‘kNOw Touch’ in Hong Kong and China • Deployed in many locations across Hong Kong and recently launched by Jardine Schindler to promote wider adoption in overseas markets • Winner of gold medal with congratulations of jury at 2021 Geneva International Exhibition of Inventions Elevator Control Panels Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
3 4 Summarizing Remarks Σ Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
3 5 Summarizing Remarks Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON • We see a high and increasing demand for our contactless touch solutions and our touch sensor modules • Our focus continues to be » Elevators » Interactive Kiosks • We are also optimistic about our licensing business » Military & Avionics » Industrial » Automotive • We are well positioned to accelerate growth and capitalize on current and future opportunities
3 6 Q & A Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
3 7 New Website • Please, make sure to check in at neonode . com to experience our new website Copyright Neonode © 2001 - 2021 w w w.n e onod e.com NASD A Q: N E ON
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