Item 9A. Controls and Procedures
ITEM
9A. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Under the supervision of and with the participation of our management,
including our Interim Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2024. Based upon that
evaluation, our Interim Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were
not effective at the reasonable assurance level as of December 31, 2024 due to material weaknesses in our internal control over financing
reporting described below.
Material
Weaknesses
We
identified a material weakness in the design and operation of our internal controls over financial reporting in the “Control Activities”
component of the Committee of Sponsoring Organizations (COSO) framework related to a lack of information technology general controls
to prevent the risk of management override. Specifically, we identified system limitations that do not facilitate proper segregation
of duties within multiple systems and a lack of mitigating business process level controls to address the risk of management override
of controls over the preparation and review of manual journal entries and in key accounting processes.
We identified another material weakness in the design and operation
of our internal controls over financial reporting in the “Control Activities” component of the Committee of Sponsoring Organizations
(COSO) framework related to a lack of sufficient controls to prevent the risk of material misstatements in the income tax calculations and related disclosures.
While neither of the deficiencies resulted in any material misstatements
of our consolidated interim or annual financial statements, they do represent material weaknesses in our internal control over financial
reporting.
Remediation
Efforts to Address the Material Weaknesses
We are committed to maintaining a strong internal control environment
and will implement corrective actions to support the remediation of the material weaknesses noted above. This includes, but is not limited
to, providing training to process and control owners, enhancing relevant policies, procedures, guidelines and documentation templates,
implementing new controls and improving documentation supporting existing controls, and enhancing segregation of duties.
24
We will not be able to fully remediate these material weaknesses until
the applicable controls operate for a sufficient period of time and can be tested and concluded by management to be designed and operating
effectively. Our management will continue to monitor the effectiveness of our remediation plans in future periods and will make changes
we determine to be appropriate.
In
designing and evaluating disclosure controls and procedures, our management recognized that any controls and procedures, no matter how
well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Changes
in Internal Control over Financial Reporting
Except for the identification of the material weaknesses described
above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) during the fourth quarter ended December 31, 2024 that have materially affected or are reasonably likely to materially affect, our
internal control over financial reporting.
Management’s
Annual Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act.
A
control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s
objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints. Because of
the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and
instances of fraud, if any, within our Company have been detected.
Under the supervision and with the participation of our interim Chief
Executive Officer and Chief Financial Officer, our management assessed the effectiveness of our internal control over financial reporting
as of December 31, 2024. In making their assessment, our management used criteria established in the framework on Internal Control
– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon
that assessment, our management concluded that our internal control over financial reporting was not effective as of December 31, 2024,
due to the material weaknesses described above.
This
report does not include an attestation report of our independent registered public accounting firm regarding our internal control over
financial reporting in accordance with applicable SEC rules that permit us to provide only management´s report in this report.
ITEM
9B. OTHER INFORMATION
None
ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not
applicable.
25
PART
III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The
information required by this Item will be included in our definitive proxy statement for the 2025 Annual Meeting of Stockholders and
is incorporated herein by reference.
Insider
Trading Policy and Procedures
We
have adopted an insider trading policy governing the purchase, sale, and/or other dispositions of our securities by our directors, officers
and employees and other covered persons. We believe these policies and procedures are reasonably designed to promote compliance with
insider trading laws, rules and regulations and applicable listing standards. A copy of our Insider Trading Policy is filed as Exhibit
19.1 to this Annual Report on Form 10-K.
ITEM 11 .
EXECUTIVE COMPENSATION
The
information required by this Item will be included in our definitive proxy statement for the 2025 Annual Meeting of Stockholders and
is incorporated herein by reference.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The
information required by this Item will be included in our definitive proxy statement for the 2025 Annual Meeting of Stockholders and
is incorporated herein by reference.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The
information required by this Item will be included in our definitive proxy statement for the 2025 Annual Meeting of Stockholders and
is incorporated herein by reference.
ITEM 14.
Principal AccountANT Fees and Services
The
information required by this Item will be included in our definitive proxy statement for the 2025 Annual Meeting of Stockholders and
is incorporated herein by reference.
26
PART
IV
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Financial
Statements
The
consolidated financial statements of the registrant are listed in the index to the consolidated financial statements and filed under
Item 8 of this Annual Report.
Financial
Statement Schedules
Not
Applicable.
Exhibits
Number
Description
3.1
Restated Certificate of Incorporation of Neonode Inc., ( incorporated by reference to Exhibit 3.1 of the registrant’s current report on Form 8-K filed on December 11, 2020)
3.2
Amended and Restated Bylaws ( incorporated by reference to Exhibit 3.1 of the registrant’s current report on Form 8-K filed on March 10, 2023 )
4.1
Description of registrant’s Common Stock (incorporated by reference to Exhibit 4.1 to the registrant’s Form S-3 (No. 333-255964), filed on May 10, 2021)
4.2
Form of Senior Indenture (incorporated by reference to Exhibit 4.5 to the registrant’s Form S-3 (No. 333-279252), filed on May 9, 2024)
4.3
Form of Subordinated Indenture (incorporated by reference to Exhibit 4.6 to the registrant’s Form S-3 (No. 333-279252), filed on May 9, 2024)
10.1
Assignment Agreement with Aequitas Technologies LLC, dated May 6, 2019 ( incorporated by reference to Exhibit 10.1 of the registrant’s current report on Form 8-K filed May 8, 2019 )
10.2
Form of Purchase Warrant ( incorporated by reference to Exhibit 4.1 of the registrant’s current report on Form 8-K filed on August 16, 2016 )
10.3
Form of Warrant, dated as of August 8, 2017 (incorporated by reference to Exhibit 4.1 of the registrant’s current report on Form 8-K, filed on August 8, 2017)
10.4+
Employment
Agreement of Fredrik Nihlén, dated March 30, 2021 (incorporated by reference to Exhibit 10.1 of the registrant’s current
report on Form 8-K, filed on March 31, 2021)
10.5
Neonode Inc. 2015 Stock Incentive Plan ( incorporated by reference to Exhibit 10.4 of the registrant’s annual report on Form 10-K filed on March 11, 2016 )
10.6
Form of Notice of Grant of Stock Option used in connection with the 2015 Stock Incentive Plan ( incorporated by reference to Exhibit 10.5 of the registrant’s annual report on Form 10-K filed on March 11, 2016 )
10.7
Form of Notice of Grant of Restricted Stock used in connection with the 2015 Stock Incentive Plan ( incorporated by reference to Exhibit 10.6 of the registrant’s annual report on Form 10-K filed on March 11, 2016 )
10.8
Form of Notice of Grant of Restricted Stock Units used in connection with the 2015 Stock Incentive Plan ( incorporated by reference to Exhibit 10.7 of the registrant’s annual report on Form 10-K filed on March 11, 2016 )
10.9
Form of Notice of Grant of Stock Option to Swedish residents used in connection with the 2015 Stock Incentive Plan ( incorporated by reference to Exhibit 10.8 of the registrant’s annual report on Form 10-K filed on March 11, 2016 )
10.10
Neonode Inc. 2020 Stock Incentive Plan ( incorporated by reference to Exhibit 99.1 to the registration statement on Form S-8 (No. 333-249806) filed on November 2, 2020).
10.11
Placement Agency Agreement, dated October 21, 2021, by and among the registrant and Pareto Securities Inc. and Pareto Securities AB (incorporated by reference to Exhibit 10.1 of the registrant's current report on Form 8-K filed on October 21, 2021).
10.12+
Termination Agreement, dated April 10, 2024, by and among Dr. Urban Forssell, the Company, and Neonode Technologies AB (incorporated by reference to Exhibit 10.1 of the registrant’s current report on Form 8-K, filed on April 16, 2024)
10.13
At The Market Offering Agreement, dated June 3, 2024, by and between Neonode Inc. and Ladenburg Thalmann & Co. Inc. (incorporated by reference to Exhibit 10.1 of the registrant’s current report on Form 8-K, filed on June 4, 2024)
16.1
Letter from KMJ Corbin & Company LLP, dated June 24, 2024 (incorporated by reference to Exhibit 16.1 of the registrant’s current report on Form 8-K, filed on June 24, 2024)
19.1
Neonode Inc. Insider Trading Policy
21
Subsidiaries of the registrant
23.1
Consent of Crowe LLP, Independent Registered Public Accounting Firm
23.2
Consent of KMJ Corbin & Company LLP, Independent Registered Public Accounting Firm
31.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002
31.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002
32
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
97.1
Clawback Policy (incorporated by reference to Exhibit 97.1 of the registrant’s annual report on Form 10-K filed on February 28, 2024)
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
+
Management contract or
compensatory plan or arrangement
ITEM 16.
FORM 10-K SUMMARY
None.
27
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) 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.
NEONODE INC.
(Registrant)
Date: March 21, 2025
By:
/s/
Fredrik Nihlén
Fredrik Nihlén
Interim Chief Executive Officer and Chief Financial
Officer
Pursuant
to the requirements for the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant
and in the capacity and dates indicated.
Name
Title
Date
/s/
Fredrik Nihlén
Interim Chief Executive
Officer and Chief Financial Officer
March
21, 2025
Fredrik Nihlén
(Principal Executive Officer and Financial and Accounting
Officer)
/s/ Ulf Rosberg
Chairman of the Board of Directors
March 21, 2025
Ulf Rosberg
/s/ Per Löfgren
Director
March 21, 2025
Per Löfgren
/s/ Peter
Lindell
Director
March 21, 2025
Peter Lindell
/s/ Cecilia
Edström
Director
March 21, 2025
Cecilia Edström
/s/ Peter
Kruk
Director
March 21, 2025
Peter Kruk
28