UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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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).
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Item 2.02. Results of Operations and Financial Condition.
On May 11, 2022, Neonode Inc. (the “Company”) reported its earnings for the three months year ended March 31, 2022 (the “Earnings Release”) and posted on the Neonode website the First Quarter 2022 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 Exhibits 99.1 and 99.2, 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 (the “Securities Act”), 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 11, 2022 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.
| (d) | Exhibits |
| Exhibit No. | Description | |
| Exhibit 99.1 | Earnings Release of the Company dated May 11, 2022 | |
| Exhibit 99.2 | First Quarter 2022 Presentation of Neonode | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
1
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 11, 2022 | NEONODE INC. | |
| By: | /s/ Fredrik Nihlén | |
| Name: | Fredrik Nihlén | |
| Title: | Chief Financial Officer | |
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Exhibit 99.1
Press Release
For Release, 09:10AM ET May 11, 2022
Neonode Reports Quarter Ended March 31, 2022 Financial Results
STOCKHOLM, SWEDEN, May 11, 2022 — Neonode Inc. (NASDAQ: NEON), today reported financial results for the three months ended March 31, 2022.
FINANCIAL SUMMARY FOR THE QUARTER ENDED MARCH 31, 2022:
| ● | Revenue of $1.3 million, a decrease of 20.8% compared to the same period in the prior year. | |
| ● | Operating expenses of $2.6 million, a decrease of 12.2% compared to the same period in the prior year. | |
| ● | Net loss of $1.4 million, or $0.10 per share, compared to $1.6 million, or $0.14 per share, for the same period in the prior year. | |
| ● | Cash used by operations of $2.3 million compared to $2.0 million for the same period in the prior year. | |
| ● | Cash and accounts receivable of $16.3 million as of March 31, 2022, compared to $18.7 million as of December 31, 2021. |
THE CEO’S COMMENTS
“Despite challenging market conditions that continued to affect our overall business in the first quarter of 2022, I am pleased to see that our revised strategy, with a focus on our Touch Sensor Modules (“TSM”) business for leading elevator and interactive kiosk customers as well as new applications for automotive customers, is beginning to show results. We are encouraged by the growing interest in our contactless touch solutions and our TSMs from elevator and interactive kiosk customers in Asia, Europe and North America, which we are working to capitalize on,” said Dr. Urban Forssell, Neonode’s CEO.
“We are also continuing to see a growing interest in our solutions for object detection, gesture sensing and driver and in-cabin monitoring from automotive customers and continue to see opportunities to license our well-proven, high-performance touch technology to customers in the military and avionics, medical and industrial automation segments. We are working to win new development projects with customers in these segments that will pave the way for increased license revenues in the future when their products enter mass production. We continue to execute on our strategy and continue to see big potential to grow in the coming years,” continued Dr. Forssell.
“Despite these promising developments, our overall results for the first quarter of 2022 were impacted by the fact that customers in several of our key markets, particularly Asia, are still being affected by lock-downs associated with the COVID-19 pandemic and many of them are also experiencing supply chain constraints due to a shortage of semiconductor components, which in turn is negatively affecting their businesses and delaying their development projects and new product launches, which ultimately affects our business” concluded Dr. Urban Forssell.
FINANCIAL OVERVIEW FOR THE QUARTER ENDED MARCH 31, 2022
Net revenues for the quarter ended March 31, 2022 were $1.3 million, a 20.8% decrease compared to the same period in 2021. For the 2022 period, license revenues were $1.1 million, a decrease of 14.7% compared to the 2021 period. The decrease is primarily the result of component shortages within the printer and automotive markets related to the COVID-19 pandemic, which in turn impacted our license revenues for the first quarter of 2022.
Revenues from product sales were $0.1 million, a decrease of 58.6%. In the first half of 2021 we saw an increase in product sales. In the second half of 2021 and continuing in the first quarter of 2022, product sales were negatively impacted due to COVID-19 driven lock-downs in Asia. Our elevator and kiosks customers in Asia have been first adopters of our contactless touch technology and as expected, most of our initial TSM sales are related to retrofit solutions, and are more limited. New customer equipment launches can take 6 to 18 months, or even longer, before a customer is ready to begin mass producing.
Gross margin related to products was 65.3% for the first quarter of 2022 compared to 23.9% for the same period in 2021. Adjusting for AirBar revenues and costs, the products gross margin was 61.9% for the first quarter of 2022 compared to 25.9% for the same period in 2021. Our operating expenses decreased 12.2% for the first quarter of 2022 compared to the same period in 2021, primarily due to lower professional fees and depreciation and amortization.
Net loss attributable to Neonode for the three months ended 2022 was $1.4 million, or $0.10 per share, compared to a net loss of $1.6 million, or $0.14 per share, for the same period in 2021. Cash used by operations was $2.3 million in the first quarter of 2022 compared to $2.0 million for the same period in 2021. The increase is primarily the result of increased inventory to secure our future product deliveries.
Cash and accounts receivable totaled $16.3 million and working capital was $17.9 million as of March 31, 2022 compared to $18.7 million and $19.1 million as of December 31, 2021, respectively.
A reconciliation of adjusted gross margin products to gross margin for the three months ended March 31, 2022 and 2021, is provided in the financial schedules that are part of this press release. An explanation of this non-GAAP financial measure is also included under the heading “Non-GAAP Financial Measures.”
For more information, please contact:
Chief Financial Officer
Fredrik Nihlén
E-mail: [email protected]
Chief Executive Officer
Urban Forssell
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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Non-GAAP Financial Measures
In addition to presenting our financial results in accordance with accounting principles generally accepted in the United States (“GAAP”), we use adjusted gross margin to measure our financial performance. We define adjusted gross margin products as gross margin products excluding AirBar sales revenues and costs. We believe adjusted gross margin products is a meaningful measure because it reflects the performance of our TSM business, which is our current focus. Non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measures. Our use of adjusted gross margin products, a non-GAAP financial measure, has important limitations as an analytical tool because it excludes some, but not all, items that affect the most directly comparable GAAP financial measure. You should not consider adjusted gross margin in isolation or as substitutes for analysis of our results as reported under GAAP. Our definition of non-GAAP adjusted gross margin may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
2
The following tables presents a reconciliation of adjusted gross margin to gross margin, the most directly comparable GAAP financial measure.
| Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenue Products | $ | 147 | $ | 355 | ||||
| Cost of Sales Products | 51 | 270 | ||||||
| Gross Profit Products | 96 | 85 | ||||||
| Adjustments: | ||||||||
| Revenue AirBar | (13 | ) | (43 | ) | ||||
| Cost of Sales and write-down AirBar | - | 39 | ||||||
| Adjusted Gross Profit Products | $ | 83 | $ | 81 | ||||
| Gross Margin Products | 65.3 | % | 23.9 | % | ||||
| Adjusted Gross Margin Products | 61.9 | % | 25.9 | % | ||||
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 our expectations for growth and the growing demand for our products, future performance or future events. These statements are based 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 materially different from any expressed or implied by these forward-looking statements.
These risks, uncertainties, and factors include risks related to our reliance on the ability of our customers to design, manufacture and sell their products with our touch technology, the length of a customer’s product development cycle, our dependence and our customers’ dependence on suppliers, the global economy generally and other risks discussed under “Risk Factors” and elsewhere in Neonode’s public filings with the SEC from time to time, including Neonode’s annual reports 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, uncertainties and 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 Neonode undertakes 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)
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 15,126 | $ | 17,383 | ||||
| Accounts receivable and unbilled revenues, net | 1,142 | 1,293 | ||||||
| Inventory | 3,553 | 2,520 | ||||||
| Prepaid expenses and other current assets | 714 | 836 | ||||||
| Total current assets | 20,535 | 22,032 | ||||||
| Property and equipment, net | 322 | 376 | ||||||
| Operating lease right-of-use assets, net | 450 | 584 | ||||||
| Total assets | $ | 21,307 | $ | 22,992 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 804 | $ | 776 | ||||
| Accrued payroll and employee benefits | 940 | 1,037 | ||||||
| Accrued expenses | 397 | 371 | ||||||
| Contract liabilities | 103 | 106 | ||||||
| Current portion of finance lease obligations | 150 | 258 | ||||||
| Current portion of operating lease obligations | 245 | 425 | ||||||
| Total current liabilities | 2,639 | 2,973 | ||||||
| Finance lease obligations, net of current portion | 101 | 65 | ||||||
| Operating lease obligations, net of current portion | 95 | 117 | ||||||
| Total liabilities | 2,835 | 3,155 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, 25,000,000 shares authorized, with par value of $0.001; 13,575,952 shares issued and outstanding at March 31, 2022 and December 31, 2021 | 14 | 14 | ||||||
| Additional paid-in capital | 226,919 | 226,880 | ||||||
| Accumulated other comprehensive loss | (375 | ) | (408 | ) | ||||
| Accumulated deficit | (203,988 | ) | (202,608 | ) | ||||
| Total Neonode Inc. stockholders’ equity | 22,570 | 23,878 | ||||||
| Noncontrolling interests | (4,098 | ) | (4,041 | ) | ||||
| Total stockholders’ equity | 18,472 | 19,837 | ||||||
| Total liabilities and stockholders’ equity | $ | 21,307 | $ | 22,992 | ||||
4
NEONODE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenues: | ||||||||
| License fees | $ | 1,104 | $ | 1,295 | ||||
| Products | 147 | 355 | ||||||
| Non-recurring engineering | 67 | 15 | ||||||
| Total revenues | 1,318 | 1,665 | ||||||
| Cost of revenues: | ||||||||
| Products | 51 | 270 | ||||||
| Non-recurring engineering | 9 | 7 | ||||||
| Total cost of revenues | 60 | 277 | ||||||
| Total gross margin | 1,258 | 1,388 | ||||||
| Operating expenses: | ||||||||
| Research and development | 1,023 | 1,142 | ||||||
| Sales and marketing | 616 | 788 | ||||||
| General and administrative | 1,010 | 1,087 | ||||||
| Total operating expenses | 2,649 | 3,017 | ||||||
| Operating loss | (1,391 | ) | (1,629 | ) | ||||
| Other expense: | ||||||||
| Interest expense | 2 | 5 | ||||||
| Total other expense | 2 | 5 | ||||||
| Loss before provision for income taxes | (1,393 | ) | (1,634 | ) | ||||
| Provision for income taxes | 44 | 36 | ||||||
| Net loss including noncontrolling interests | (1,437 | ) | (1,670 | ) | ||||
| Less: Net loss attributable to noncontrolling interests | 57 | 102 | ||||||
| Net loss attributable to Neonode Inc. | $ | (1,380 | ) | $ | (1,568 | ) | ||
| Loss per common share: | ||||||||
| Basic and diluted loss per share | $ | (0.10 | ) | $ | (0.14 | ) | ||
| Basic and diluted – weighted average number of common shares outstanding | 13,576 | 11,504 | ||||||
5
NEONODE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
| Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net loss | $ | (1,437 | ) | $ | (1,670 | ) | ||
| Other comprehensive income (loss): | ||||||||
| Foreign currency translation adjustments | 33 | (166 | ) | |||||
| Comprehensive loss | (1,404 | ) | (1,836 | ) | ||||
| Less: Comprehensive loss attributable to noncontrolling interests | 57 | 102 | ||||||
| Comprehensive loss attributable to Neonode Inc. | $ | (1,347 | ) | $ | (1,734 | ) | ||
6
NEONODE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
For the Quarter to Date periods ended March 31, 2021 through March 31, 2022
| 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, 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 | ||||||||||||||
| Stock-based compensation | - | - | 22 | - | - | 22 | - | 22 | ||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | 56 | - | 56 | - | 56 | ||||||||||||||||||||||||
| Net loss | - | - | - | - | (1,657 | ) | (1,657 | ) | (179 | ) | (1,836 | ) | ||||||||||||||||||||
| Balances, June 30, 2021 | 11,504 | $ | 12 | $ | 211,708 | $ | (514 | ) | $ | (199,383 | ) | $ | 11,823 | $ | (3,504 | ) | $ | 8,319 | ||||||||||||||
| Issuance of common stock under the ATM, net | 94 | - | 593 | - | - | 593 | - | 593 | ||||||||||||||||||||||||
| Stock-based compensation | 13 | - | 46 | - | - | 46 | - | 46 | ||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | (37 | ) | - | (37 | ) | - | (37 | ) | |||||||||||||||||||||
| Net loss | - | - | - | - | (1,721 | ) | (1,721 | ) | (135 | ) | (1,856 | ) | ||||||||||||||||||||
| Balances, September 30, 2021 | 11,611 | $ | 12 | $ | 212,347 | $ | (551 | ) | $ | (201,104 | ) | $ | 10,704 | $ | (3,639 | ) | $ | 7,065 | ||||||||||||||
| Issuance of shares for cash, net of offering costs | 1,950 | 2 | 14,467 | - | - | 14,469 | - | 14,469 | ||||||||||||||||||||||||
| Stock-based compensation | 15 | - | 66 | - | - | 66 | - | 66 | ||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | 143 | - | 143 | - | 143 | ||||||||||||||||||||||||
| Net loss | - | - | - | - | (1,504 | ) | (1,504 | ) | (402 | ) | (1,906 | ) | ||||||||||||||||||||
| Balances, December 31, 2021 | 13,576 | $ | 14 | $ | 226,880 | $ | (408 | ) | $ | (202,608 | ) | $ | 23,878 | $ | (4,041 | ) | $ | 19,837 | ||||||||||||||
| Stock-based compensation | - | - | 39 | - | - | 39 | - | 39 | ||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | 33 | - | 33 | - | 33 | ||||||||||||||||||||||||
| Net loss | - | - | - | - | (1,380 | ) | (1,380 | ) | (57 | ) | (1,437 | ) | ||||||||||||||||||||
| Balances, March 31, 2022 | 13,576 | $ | 14 | $ | 226,919 | $ | (375 | ) | $ | (203,988 | ) | $ | 22,570 | $ | (4,098 | ) | $ | 18,472 | ||||||||||||||
7
NEONODE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss (including noncontrolling interests) | $ | (1,437 | ) | $ | (1,670 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation expense | 39 | 23 | ||||||
| Depreciation and amortization | 45 | 199 | ||||||
| Amortization of operating lease right-of-use assets | 114 | 129 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable and unbilled revenue, net | 146 | 405 | ||||||
| Inventory | (1,121 | ) | (493 | ) | ||||
| Prepaid expenses and other current assets | 98 | 299 | ||||||
| Accounts payable and accrued expenses | 22 | (657 | ) | |||||
| Deferred revenues | (1 | ) | (15 | ) | ||||
| Operating lease obligations | (184 | ) | (210 | ) | ||||
| Net cash used in operating activities | (2,279 | ) | (1,990 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (5 | ) | (62 | ) | ||||
| Net cash used in investing activities | (5 | ) | (62 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Principal payments on finance lease obligations | (61 | ) | (148 | ) | ||||
| Net cash used in financing activities | (61 | ) | (148 | ) | ||||
| Effect of exchange rate changes on cash | 88 | (128 | ) | |||||
| Net decrease in cash | (2,257 | ) | (2,328 | ) | ||||
| Cash at beginning of period | 17,383 | 10,473 | ||||||
| Cash at end of period | $ | 15,126 | $ | 8,145 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for income taxes | $ | 44 | $ | 36 | ||||
| Cash paid for interest | $ | 2 | $ | 5 | ||||
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Exhibit 99.2
Q1 2022 Earnings Call May 11, 2022 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 1
Today’s Presenters 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 2 Urban Forssell CEO Fredrik Nihlén CFO
Legal Disclaimer 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 3 This presentation contains, and related oral and written statements of Neonode Inc. (the “Company”) and its management 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, strategy, plans, potential financial performance or future events. They also may include statements about market opportunity and sales growth, financial results, use of cash, product development and introduction, regulatory matters and sales efforts. Forward - looking statements 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, our ability to secure financing when needed on acceptable terms, ris ks related to new product development, our ability to protect our intellectual property, our ability to compete, general economi c conditions including as a result of the ongoing COVID - 19 pandemic or geopolitical conflicts such as the war in Ukraine, as well as other risks 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 the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Prospective investors are advised to carefully consider these various risks, uncertainties and other factors. Any forward - looking statements included in this presentation 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.
Agenda 2022 - 05 - 11 4 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 1. Q1 2022 Financial Results 2. Strategy and Business Update 3. Concluding Remarks 4. Q&A Neonode Inc. Q1 2022 | May 11, 2022
Q1/’22 Financial Results – Revenues 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 5 Lorem $1.3 million Revenue Total Q1, 2022 ▼ 21 % YoY $0.1 million Revenue Products Q1, 2022 ▲ 24 % QoQ -200 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Thousands Revenues by Revenue Stream License fees Products NRE -200 0 200 400 600 800 1,000 1,200 1,400 AMER APAC EMEA AMER APAC EMEA AMER APAC EMEA AMER APAC EMEA AMER APAC EMEA AMER APAC EMEA AMER APAC EMEA AMER APAC EMEA AMER APAC EMEA Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Thousands Revenues by Revenue Stream and Region License fees Products NRE
Q1/’22 Financial Results – Gross Profit/Margin 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 6 62% Adjusted GM TSMs Q1, 2022 ▲ 10pp QoQ 65% GM Products Q1, 2022 ▲ 41pp YoY -250% -200% -150% -100% -50% 0% 50% 100% -200 -150 -100 -50 0 50 100 150 200 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Thousands Gross Profit/Margin Products Gross profit Gross margin 0% 10% 20% 30% 40% 50% 60% 70% 0 20 40 60 80 100 120 140 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Thousands Gross Profit/Margin TSMs Adjusted Gross profit Gross margin
Q1/’22 Financial Results – Operating Expenses 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 7 Lorem $2.6 million Operating Expenses Q1, 2022 ▼ 12 % YoY -3,500 -3,000 -2,500 -2,000 -1,500 -1,000 -500 0 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Thousands Operating Expenses
Q1/’22 Financial Results – Cash 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 8 Lorem $2.3 million Net Cash Burn Operating Activities Q1, 2022 ▼ 16% QoQ $16.3 million Cash and Accounts Receivables Mar. 31, 2022 ▼ 2,4 Million Dec. 31,2021 -3,000 -2,500 -2,000 -1,500 -1,000 -500 0 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Thousands Net cash used in operating activities
Agenda 2022 - 05 - 11 9 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 1. Q1 2022 Financial Results 2. Strategy and Business Update 3. Concluding Remarks 4. Q&A Neonode Inc. Q1 2022 | May 11, 2022
VISION To transform the way humans interact with machines 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 10
Business Model – Technology Licensing and Product Sales 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 11 Customer Offerings Product Sales Technology Licensing
Business Model – Technology Licensing and Product Sales 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 12 Customer Offerings Product Sales Technology Licensing Non - Recurring Engineering Services
Business Model – Technology Licensing and Product Sales 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 13 Customer Offerings Product Sales Technology Licensing Touch Sensor Modules zForce MultiSensing Non - Recurring Engineering Services
Business Model – Technology Licensing and Product Sales 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 14 Customer Offerings Product Sales Technology Licensing Medical Equipment Industrial Automation Elevators Interactive Kiosks Touch Sensor Modules zForce MultiSensing Non - Recurring Engineering Services Digital Signage Target Segments
Business Model – Technology Licensing and Product Sales 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 15 Customer Offerings Product Sales Technology Licensing Printer Automotive Military & Avionics Medical Equipment Industrial Automation Elevators Interactive Kiosks Industrial Automation Touch Sensor Modules zForce MultiSensing Non - Recurring Engineering Services Digital Signage Retail Target Segments
2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 16 x Advanced IR - based technology platform x Patent protected x Featured in over 85 million products Touch Sensing Applications • Touch on displays • Touch on other surfaces Gesture Sensing Applications • Contactless touch • Gesture control Object Detection Applications • Foreign object detection • Proximity sensing zForce
2022 - 05 - 11 17 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) MultiSensing x Smart AI - based algorithms x Flexible, hardware agnostic solution x Scalable; supports efficient development Driver Monitoring • Drowsiness and distraction • Positioning ; gaze direction In - cabin Monitoring • Occupancy ; object detection • Positioning; gaze direction Retail Analytics • Occupancy ; gender, age, mood • Gaze direction, gesture sensing etc.
Licensing Business Development Portfolio 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 18 M/P Development Expected Commercial Launch Prototype Development Expected Prototype Approval Evaluation Expected Go - Ahead Decision EMEA OEM Automotive DMS Automotive HUD OD Tier 1 #1 Tier 1 #2 Tier 1 #3 Tier 1 #4 Printer Touch APAC OEM Avionics Touch AMER OEM AMER OEM EMEA OEM AMER OEM 2022 2023 2024 2025
2022 - 05 - 11 © Neonode 2001 - 2021 · www.neonode.com · Nasdaq (NEON) 19 Neonode Touch Sensor Modules COTS products featuring zForce Reflective technology 374mm 101mm
2022 - 05 - 11 20 Contactless Touch Solutions Two ways to go with our Touch Sensor Modules! Parallel plane solution Touch interaction area hovering above or in front of a display or surface Holographic solution Touch interaction on an in - air display © Neonode 2001 - 2021 · www.neonode.com · Nasdaq (NEON)
2022 - 05 - 11 © Neonode 2001 - 2021 · www.neonode.com · Nasdaq (NEON) 21 Application Examples • Self - Ordering Kiosks • Vending Machines • Coffee Machines • Self Check - in Kiosks • Digital Signage • Medical Screens • Point - of - Sale Terminals • Elevators
Why Contactless Touch In a changing world, the requirements for safe interactions in public spaces are increasing at an unprecedented level, puttin g pressure on providers of self - service, multi - user kiosks, elevators and everyone whose product involves physical interactions. With Neonode’s Touch Sensor Modules you can mount a sensing field in parallel with your existing control panel or touchscreen or design a completely new experience with touch on a holographic projection. 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 22 0% Contact With our Touch Sensor Module, there is no physical contact with any display or surface that might contain pathogens. A Familiar Interface No need to rebuild - work with your existing GUI when enabling in - air touch interaction Keep the Gloves On Stay safe while enabling stable touch interaction using gloves or other input methods. Ready for Integration Our Touch Sensor Modules can work as touch HID devices over USB or I2C, giving integrators a fast out of the box experience.
2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 23 Large OEMs Broad market customers ; small tech companies , engineering firms etc . Mid size OEMs, system integrators , engineering firms , and maintenance companies Large , often multi - national, corporations with v olume potential >100k per year . Mid - size corporations , often with regional or national focii , with volume potential 10k - 100k per year . Small, local tech companies , engineering firms etc. with limited vo lume potential < 10k per year . Go - To - Market Strategy
Sales Cycle and Market Potential 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 24 Retrofits New Installs R&D Highest volume End - user decision makers Shortest sales cycle Partner solutions Sales Cycle OEM decision maker Medium sales cycle Engineering resources Longest sales cycle Solution Dynamics Target Customers Integrators Tech companies (OEMs) Integrators OEMs OEMs Volume Potential
2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 25 Partner Network Distributors Value Added Resellers North American Manufacturer's Reps SYNERGISTIC TECHNOLOGIES
2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 26 Elevator Customers Xianghang OEM #1 OEM #2 Elevator Control Panel Manufacturers Elevator OEMs
2022 2023 2024 2025 TSM Business Development Portfolio – Elevators 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 27 OEM #6 OEM #7 OEM #5 OEM #8 OEM #9 OEM #3 OEM #4 OEM #10 M/P Development Expected Commercial Launch Prototype Development Expected Prototype Approval Evaluation Expected Go - Ahead Decision
2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 28 Interactive Kiosk Customers OEM #1 OEM #2 OEM #3 OEM #4 OEM #5 OEM #6 OEM #7 Interactive Kiosk Manufacturers
2022 2023 2024 2025 TSM Business Development Portfolio - Interactive Kiosks 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 29 EMEA OEM TRP APAC OE APAC O APAC OEM TRP APAC OEM QSR APAC OEM POS APAC OEM OTHER EMEA OEM VEN AMER OEM OTHER APAC OEM TRP APAC OEM TRP APAC OEM TRP AMER ODM TRP AMER ODM MED M/P Development Expected Commercial Launch Prototype Development Expected Prototype Approval Evaluation Expected Go - Ahead Decision
Agenda 2022 - 05 - 11 30 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 1. Q1 2022 Financial Results 2. Strategy and Business Update 3. Concluding Remarks 4. Q&A Neonode Inc. Q1 2022 | May 11, 2022
Concluding Remarks Highlights in today’s presentation 2022 - 05 - 11 31 • We see an increasing interest in our TSMs and our solutions for contactless touch • We also see a growing interest in our zForce and MultiSensing technologis from automotive and avionics customers • COVID - 19 continues to bring challenges to our sales and business development • Lockdowns and travel restrictions • Semiconductor shortage affecting our customers • We believe we are well positioned and well financed to expand our products business and also to revitalize and grow our NRE and licensing business © Neonode 2001 - 2021 · www.neonode.com · Nasdaq (NEON)
Agenda 2022 - 05 - 11 32 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 1. Q1 2022 Financial Results 2. Strategy and Business Update 3. Concluding Remarks 4. Q&A Neonode Inc. Q1 2022 | May 11, 2022
2022 - 05 - 11 33 © Neonode 2001 - 2021 · www.neonode.com · Nasdaq (NEON) [email protected] neonode.com Subscribe to Neonode newsletter 2022 - 05 - 11 33 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) Thank you.
Appendix 2022 - 05 - 11 34 © Neonode 2001 - 2021 · www.neonode.com · Nasdaq (NEON)
Non - GAAP Financial Measures 2022 - 05 - 11 © Neonode 2001 - 2022 · www.neonode.com · Nasdaq (NEON) 35 In addition to presenting our financial results in accordance with accounting principles generally accepted in the United Sta tes (“GAAP”), we use adjusted gross margin to measure our financial performance. We define adjusted gross margin as gross margin excluding AirBar sales revenues and costs and adjusting for costs and lost revenues caused by a quality issue and one - time write - down of inventory. We believe a djusted gross margin is a meaningful measure because it reflects the performance of our TSM business, which is our current focus. Non - GAAP fin ancial measures should not be considered as alternatives to the most directly comparable GAAP financial measures. Our use of adjuste d g ross margin, a non - GAAP financial measure, has important limitations as an analytical tool because it excludes some, but not all, items that affect the most directly comparable GAAP financial measure. You should not consider adjusted gross margin in isolation or as substitutes for ana lysis of our results as reported under GAAP. Our definition of non - GAAP adjusted gross margin may not be comparable to similarly titled measu res of other companies, thereby diminishing its utility. The following tables presents a reconciliation of adjusted gross margin to gross margin, the most directly comparable GAAP fi nan cial measure. kUSD Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Revenue Products 98 66 284 502 355 346 136 118 147 Cost of Sales Products -36 -72 -198 -496 -270 -212 -98 -342 -51 Gross Profit Products 62 -6 86 6 85 134 38 -224 96 Lost revenues TSM quality issue - - - - - -14 12 92 - Cost of sales TSM quality issue - - - - - 4 27 -61 - Inventory write-down TSM quality issue - - - - - - - 154 - Revenue AirBar 1 -0 -60 -21 -43 - - - -13 Cost of Sales AirBar -23 27 86 123 39 -4 -7 149 - Adjusted Gross Profit Products 40 21 112 109 81 120 70 110 83 Gross Margin Products 63% -9% 30% 1% 23,9% 39% 28% -190% 65% Adjusted Gross Margin Products 40% 32% 50% 23% 25,9% 36% 47% 52% 62%