What changed in this filing

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Item 1. Financial Statements

2022-11-10 compared with 2022-08-11 · 237 added, 199 removed, 821 unchanged (35% of the section changed)

2 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

Current assets:

19 unchanged sentences

Common stock, 25,000,000 shares authorized, with par value of $ 0.001 ;

13,579,952 and 13,575,952 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

13,569,700 and 13,575,952 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

11 unchanged sentences

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Non-recurring engineering

26 unchanged sentences

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Other comprehensive income (loss):

7 unchanged sentences

(In thousands)

For the Quarter to Date periods ended June 30,

2021 through June 31, 2022

For the Quarter to Date periods ended September

30, 2021 through September 30, 2022

Comprehensive

3 unchanged sentences

Balances, December 31, 2020

$ ( 196,158 )

Stock-based compensation

1 unchanged sentence

Balances, March 31, 2021

$ ( 197,726 )

Stock-based compensation

1 unchanged sentence

Balances, June 30, 2021

$ ( 199,383 )

Issuance of common stock under the ATM, net

2 unchanged sentences

Balances, September 30, 2021

$ ( 201,104 )

Issuance of shares for cash, net of offering costs

2 unchanged sentences

Balances, December 31, 2021

$ ( 202,608 )

Stock-based compensation

1 unchanged sentence

Balances, March 31, 2022

$ ( 203,988 )

Stock-based compensation

1 unchanged sentence

Balances, June 30, 2022

$ ( 205,536 )

Stock-based compensation

Repurchase and retirement of stock

Foreign currency translation adjustment

Balances, September 30, 2022

The accompanying notes are an integral part of

2 unchanged sentences

(In thousands)

Six months ended

Nine months ended

September 30,

Cash flows from operating activities:

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Cash flows from financing activities:

Proceeds from issuance of common stock, net of offering costs

Repurchase of common stock

Principal payments on finance lease obligations

Net cash used in financing activities

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash

6 unchanged sentences

Supplemental disclosure of non-cash investing and financial activities:

Property and equipment obtained in exchange for lease obligations

Property and equipment obtained in exchange for finance lease

The accompanying notes are an integral part of

6 unchanged sentences

period presented.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of results

The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of results

for a full fiscal year or any other period.

The accompanying condensed

consolidated financial statements for the three and six months ended June 30, 2022 and 2021 have been prepared by us, pursuant to the

rules and regulations of the United States Securities and Exchange Commission (“SEC”).

Certain information and footnote disclosures

normally contained in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S.

consolidated financial statements for the three and nine months ended September 30, 2022 and 2021 have been prepared by us, pursuant to

the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

Certain information and footnote

disclosures normally contained in financial statements prepared in accordance with accounting principles generally accepted in the United

States (“U.S.

GAAP”) have been condensed or omitted.

These condensed consolidated financial statements should be read in conjunction with the

audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended December 31,

Neonode Inc., which is collectively

with its subsidiaries referred to as “Neonode” or the “Company” in this report, develops advanced optical sensing

solutions for contactless touch, touch, gesture sensing, and scene analysis solutions using advanced machine learning algorithms to detect

and track persons and objects in video streams for cameras and other types of imagers.

We market and sell our contactless touch, touch,

and gesture sensing products and solutions based on our zForce technology platform, and our scene analysis solutions based on our MultiSensing

technology platform.

We offer our solutions to customers in many different markets and segments including, but not limited to, office

equipment, automotive, industrial automation, medical, military and avionics.

These condensed consolidated financial statements should be read in conjunction

with the audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended

December 31, 2021.

Neonode Inc., which is collectively with its subsidiaries referred

to as “Neonode” or the “Company” in this report, develops advanced optical sensing solutions for contactless touch,

touch, gesture sensing, and object detection and scene analysis solutions using advanced machine learning algorithms to detect and track

persons and objects in video streams for cameras and other types of imagers.

We market and sell our contactless touch, touch, gesture

sensing, and object detection products and solutions based on our zForce technology platform, and our scene analysis solutions based on

our MultiSensing technology platform.

We offer our solutions to customers in many different markets and segments including, but not limited

to, office equipment, automotive, industrial automation, medical, military and avionics.

In our operations, we have

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The Company incurred net losses of approximately $ 0.8 million

and $ 2.9 million and $ 1.7 million and $ 3.2 million for the three and six months ended June 30, 2022 and 2021, respectively, and had an

accumulated deficit of approximately $ 205.5 million and $ 202.6 million as of June 30, 2022 and December 31, 2021, respectively.

operating activities used cash of approximately $ 5.2 million and $ 3.4 million for the six months ended June 30, 2022 and 2021, respectively.

and $ 3.7 million and $ 1.7 million and $ 4.9 million for the three and nine months ended September 30, 2022 and 2021, respectively, and

had an accumulated deficit of approximately $ 206.3 million and $ 202.6 million as of September 30, 2022 and December 31, 2021, respectively.

In addition, operating activities used cash of approximately $ 5.7 million and $ 5.0 million for the nine months ended September 30, 2022

and 2021, respectively.

The condensed consolidated

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and the realization of assets and the repayment of liabilities in the ordinary course of business.

Management evaluated the significance

of the Company’s operating loss and determined that the Company’s current operating plan and sources of potential capital

would be sufficient to alleviate concerns about the Company’s ability to continue as a going concern.

In the future, we may require

sources of capital in addition to cash on hand to continue operations and to implement our strategy.

If our operations do not become cash

flow positive, we may be forced to seek equity investments or debt arrangements.

No assurances can be given that we will be successful

in obtaining such additional financing on reasonable terms, or at all.

If adequate funds are not available to us on acceptable terms,

or at all, we may be unable to adequately fund our business plans, which could have a negative effect on our business, results of operations

and financial condition.

If funds are available through the issuance of equity or debt securities, the issuance of equity securities or

securities convertible into equity could dilute the value of shares of our common stock and cause the market price to fall, and the issuance

of debt securities could impose restrictive covenants on us that could impair our ability to engage in certain business transactions.

Management evaluated the significance of the Company’s operating

loss and determined that the Company’s current operating plan and sources of potential capital (including the Company’s at-the-market

facility described below) would be sufficient to alleviate concerns about the Company’s ability to continue as a going concern.

In the future, we may require additional sources of capital to continue

operations and to implement our strategy.

If our operations do not become cash flow positive, we may be forced to seek equity investments

or debt arrangements.

No assurances can be given that we will be successful in obtaining such additional financing on reasonable terms,

If adequate funds are not available to us on acceptable terms, or at all, we may be unable to adequately fund our business

plans, which could have a negative effect on our business, results of operations and financial condition.

If funds are available through

the issuance of equity or debt securities, the issuance of equity securities or securities convertible into equity could dilute the value

of shares of our common stock and cause the market price to fall, and the issuance of debt securities could impose restrictive covenants

on us that could impair our ability to engage in certain business transactions.

We expect revenues will enable

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The condensed consolidated

balance sheets at June 30, 2022 and December 31, 2021 and the condensed consolidated statements of operations, comprehensive loss, stockholders’

equity and cash flows for the three and six months ended June 30, 2022 and 2021 include our accounts and those of our wholly-owned subsidiaries

as well as Pronode Technologies AB.

balance sheets at September 30, 2022 and December 31, 2021 and the condensed consolidated statements of operations, comprehensive loss,

stockholders’ equity and cash flows for the three and nine months ended September 30, 2022 and 2021 include our accounts and those

of our wholly-owned subsidiaries as well as Pronode Technologies AB.

Estimates and Judgments

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based on certain other factors including the length of time the receivables are past due and historical collection experience with customers.

Our allowance for doubtful accounts was zero and approximately $ 79,000 as of June 30, 2022 and December 31, 2021, respectively.

Our allowance for doubtful accounts was approximately $ 30,000 and $ 79,000 as of September 30, 2022 and December 31, 2021, respectively.

Projects in Process

6 unchanged sentences

There were no costs capitalized to projects

in process as of June 30, 2022 and December 31, 2021.

in process as of September 30, 2022 and December 31, 2021.

The Company’s inventory

10 unchanged sentences

Management has further decided to reserve for a portion of AirBar finished goods, depending on type of AirBar and in which location it

The AirBar inventory reserve was $ 0.3 million and $ 0.8 million as of June 30, 2022 and December 31, 2021, respectively.

The AirBar inventory reserve was $ 0.3 million and $ 0.8 million as of September 30, 2022 and December 31, 2021, respectively.

Raw materials, work-in-process,

and finished goods are as follows (in thousands):

and finished goods are as follows for the periods indicated (in thousands):

September 30,

Raw materials

9 unchanged sentences

Furniture and fixtures

Equipment purchased under

a finance lease is recognized over the term of the lease if that lease term is shorter than the estimated useful life.

Depreciation of

equipment purchased under a finance lease is recognized over the term of the lease if that lease term is shorter than the estimated

Upon retirement or sale of

2 unchanged sentences

Maintenance and repairs are charged to expense as incurred.

Right-of-Use Asstes

Right-of-Use Assets

A right-of-use asset represents

1 unchanged sentence

Our right-of-use assets generally consist of operating leases

for buildings and finance leases for manufacturing equipment.

for buildings.

Right-of-use assets are measured

9 unchanged sentences

we may incur charges for impairment of these assets.

As of June 30, 2022, we believe there was no impairment of our long-lived assets.

There can be no assurance, however, that market conditions will not change or sufficient demand for our products and services will continue,

which could result in impairment of long-lived assets in the future.

As of September 30, 2022, we believe there was no impairment of our long-lived

There can be no assurance, however, that market conditions will not change or sufficient demand for our products and services

will continue, which could result in impairment of long-lived assets in the future.

Foreign Currency Translation and Transaction

Gains and Losses

The functional currency of our foreign subsidiaries is the applicable

local currency, the Swedish Krona, the Japanese Yen, the South Korean Won and the Taiwan Dollar.

The translation from Swedish Krona, Japanese

Yen, South Korean Won and Taiwan Dollar to U.S.

Dollars is performed for balance sheet accounts using current exchange rates in effect

at the balance sheet date and for income statement accounts using a weighted-average exchange rate during the period.

Gains or (losses)

resulting from translation are included as a separate component of accumulated other comprehensive income (loss).

Foreign currency translation

gains (losses) were $ 41,000 and $ 74,000 and $ 56,000 and $( 110,000 ) during the three and six months ended June 30, 2022 and 2021, respectively.

Gains (losses) resulting from foreign currency transactions are included in general and administrative expenses in the accompanying condensed

consolidated statements of operations and were $ 30,000 and $ 29,000 during the three and six months ended June 30, 2022, respectively,

compared to $( 54,000 ) and $ 28,000 during the same periods in 2021, respectively.

The functional currency of

our foreign subsidiaries is the applicable local currency, the Swedish Krona, the Japanese Yen, the South Korean Won and the Taiwan Dollar.

The translation from Swedish Krona, Japanese Yen, South Korean Won and Taiwan Dollar to U.S.

Dollars is performed for balance sheet accounts

using current exchange rates in effect at the balance sheet date and for income statement accounts using a weighted-average exchange rate

during the period.

Gains or (losses) resulting from translation are included as a separate component of accumulated other comprehensive

income (loss).

Foreign currency translation gains (losses) were $ 30,000 and $ 104,000 and $( 37,000 ) and $( 147,000 ) during the three and

nine months ended September 30, 2022 and 2021, respectively.

Gains (losses) resulting from foreign currency transactions are included

in general and administrative expenses in the accompanying condensed consolidated statements of operations and were $ 18,000 and $ 47,000

during the three and nine months ended September 30, 2022, respectively, compared to $ 40,000 and $ 68,000 during the same periods in 2021,

respectively.

Concentration of Credit and Business Risks

1 unchanged sentence

in the United States, Europe and Asia.

As of June 30, 2022, four

of our customers represented approximately 69 % of our consolidated accounts receivable and unbilled revenues.

As of September 30, 2022, four of our customers represented approximately

75 % of our consolidated accounts receivable and unbilled revenues.

As of December 31, 2021, four

1 unchanged sentence

Customers who accounted for

10 % or more of our net revenues during the three months ended June 30, 2022 are as follows:

10 % or more of our net revenues during the three months ended September 30, 2022 are as follows:

● Hewlett-Packard Company – 26 %

1 unchanged sentence

● LG Electronics Inc.

● Alps Alpine – 11 %

Customers who accounted for

10 % or more of our net revenues during the six months ended June 30, 2022 are as follows:

10 % or more of our net revenues during the nine months ended September 30, 2022 are as follows:

● Hewlett-Packard Company – 28 %

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Customers who accounted for

10 % or more of our net revenues during the three months ended June 30, 2021 are as follows:

10 % or more of our net revenues during the three months ended September 30, 2021 are as follows:

● Hewlett-Packard Company – 34 %

2 unchanged sentences

Customers who accounted for

10 % or more of our net revenues during the six months ended June 30, 2021 are as follows:

10 % or more of our net revenues during the nine months ended September 30, 2021 are as follows:

● Hewlett-Packard Company – 32 %

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not offered to customers.

There have been no returns through June 30, 2022.

There have been no returns through September 30, 2022.

Product Sales

28 unchanged sentences

The reserve for future sales returns is recorded as a reduction of our accounts receivable and revenue and was

$ 61,000 as of June 30, 2022 and $ 69,000 as of December 31, 2021.

If the actual future returns were to deviate from the historical data

on which the reserve had been established, our revenue could be adversely affected.

$ 56,000 as of September 30, 2022 and $ 69,000 as of December 31, 2021.

If the actual future returns were to deviate from the historical

data on which the reserve had been established, our revenue could be adversely affected.

Non-Recurring Engineering

25 unchanged sentences

projects are recognized in full as soon as they become evident.

During the three and six months ended June 30, 2022 and 2021, no losses

related to SOW projects were recorded.

During the three and nine months ended September 30, 2022 and 2021, no

losses related to SOW projects were recorded.

The following tables present

the net revenues distribution by geographical area and market for the three and six months ended June 30, 2022 and 2021 (dollars in thousands):

the net revenues distribution by geographical area and market for the three and nine months ended September 30, 2022 and 2021 (dollars

in thousands):

Three months ended

June 30, 2022

September 30, 2022

Three months ended

June 30, 2021

September 30, 2021

Net revenues from consumer electronics

6 unchanged sentences

Net revenues from distributors and other

Six months ended

June 30, 2022

Six months ended

June 30, 2021

Nine months ended

September 30, 2022

Nine months ended

September 30, 2021

Net revenues from consumer electronics

7 unchanged sentences

Significant Judgments

Our contracts with customers may include promises to transfer multiple

products and services to a customer, particularly when one of our customers contracts with us for a product and related engineering services

for customizing that product for our customer.

Determining whether products and services are considered distinct performance obligations

that should be accounted for separately may require significant judgment.

Judgment may also be required to determine the SSP for each

distinct performance obligation identified, although we generally structure our contracts such that performance obligations and pricing

for each performance obligation are specifically addressed.

We currently have no outstanding contracts with multiple performance obligations;

however, we recently negotiated a contract that may include multiple performance obligations in the future.

Our contracts with customers

may include promises to transfer multiple products and services to a customer, particularly when one of our customers contracts with us

for a product and related engineering services for customizing that product for our customer.

Determining whether products and services

are considered distinct performance obligations that should be accounted for separately may require significant judgment.

also be required to determine the SSP for each distinct performance obligation identified, although we generally structure our contracts

such that performance obligations and pricing for each performance obligation are specifically addressed.

We currently have no outstanding

contracts with multiple performance obligations;

however, we recently negotiated a contract that may include multiple performance obligations

in the future.

Judgment is also required

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The following table presents

accounts receivable and deferred revenues as of June 30, 2022 and December 31, 2021 (in thousands):

accounts receivable and deferred revenues as of September 30, 2022 and December 31, 2021 (in thousands):

September 30,

Accounts receivable and unbilled revenue, net

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the activity related to the product warranty liability (in thousands):

September 30,

Balance at beginning of period

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our deferred revenues by source (in thousands):

September 30,

Deferred revenues license fees

1 unchanged sentence

Deferred revenues non-recurring engineering

During the three and six months ended June 30, 2022, the Company recognized

revenues of approximately $ 7,000 and $ 16,000 , respectively, related to contract liabilities outstanding at the beginning of the year.

During the three and nine months ended September 30, 2022, the Company

recognized revenues of approximately $ 8,000 and $ 24,000 , respectively, related to contract liabilities outstanding at the beginning of

Advertising costs are expensed

Advertising costs for the three and six months ended June 30, 2022 and 2021 amounted to approximately $ 38,000 and $ 84,000

Advertising costs for the three and nine months ended September 30, 2022 and 2021 amounted to approximately $ 21,000 and $ 105,000

and $ 12,000 and $ 70,000 , respectively.

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Noncontrolling Interests

We recognize any noncontrolling interest, also known as a minority

interest, as a separate line item in stockholders’ equity in the condensed consolidated financial statements.

A noncontrolling interest

represents the portion of equity ownership in a less-than-wholly owned subsidiary not attributable to us.

Generally, any interest that

holds less than 50 % of the outstanding voting shares is deemed to be a noncontrolling interest;

however, there are other factors, such

as decision-making rights, that are considered as well.

We include the amount of net income (loss) attributable to noncontrolling interests

in consolidated net income (loss) on the face of the condensed consolidated statements of operations.

We recognize any noncontrolling

interest, also known as a minority interest, as a separate line item in stockholders’ equity in the condensed consolidated financial

A noncontrolling interest represents the portion of equity ownership in a less-than-wholly owned subsidiary not attributable

Generally, any interest that holds less than 50 % of the outstanding voting shares is deemed to be a noncontrolling interest;

there are other factors, such as decision-making rights, that are considered as well.

We include the amount of net income (loss) attributable

to noncontrolling interests in consolidated net income (loss) on the face of the condensed consolidated statements of operations.

The Company provides either

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Based on the uncertainty of

future pre-tax income, we fully reserved our net deferred tax assets as of June 30, 2022 and December 31, 2021.

In the event we were to

determine that we would be able to realize our deferred tax assets in the future, an adjustment to the deferred tax asset would increase

future pre-tax income, we fully reserved our net deferred tax assets as of September 30, 2022 and December 31, 2021.

In the event we were

to determine that we would be able to realize our deferred tax assets in the future, an adjustment to the deferred tax asset would increase

income in the period such determination was made.

5 unchanged sentences

As a result, we did not recognize a liability for unrecognized tax benefits.

As of June 30, 2022 and December

31, 2021, we had no unrecognized tax benefits.

As of September 30, 2022 and

December 31, 2021, we had no unrecognized tax benefits.

Net Loss per Share

Net loss per share amounts

have been computed based on the weighted average number of shares of common stock outstanding during the three and six months ended June

have been computed based on the weighted average number of shares of common stock outstanding during the three and nine months ended September

Net loss per share, assuming dilution amounts from common stock equivalents, is computed based on the weighted-average number

1 unchanged sentence

The weighted-average number of shares

of common stock and potential common stock equivalents used in computing the net loss per share for the three and six months ended June

of common stock and potential common stock equivalents used in computing the net loss per share for the three and nine months ended September

30, 2022 and 2021 exclude the potential common stock equivalents, as the effect would be anti-dilutive (see Note 8).

10 unchanged sentences

exchange rate for the condensed consolidated statements of operations was as follows:

Six months ended

Nine months ended

September 30,

Swedish Krona

3 unchanged sentences

condensed consolidated balance sheets was as follows:

September 30, December 31,

Swedish Krona 11.11 9.03

Japanese Yen 144.71 115.12

South Korean Won 1,437.33 1,190.75

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(ii) termination of the Sale Agreement in accordance with its terms.

As of June 30, 2022 and December 31, 2021, our Restated Certificate

of Incorporation, as amended, authorized us to issue up to 25,000,000 shares of common stock, par value $ 0.001 per share.

On December 29, 2020, we issued

37,288 shares of our common stock to key employees pursuant to our 2020 long-term incentive program (“2020 LTIP”) (see Note

As of September 30, 2022 and

December 31, 2021, our Restated Certificate of Incorporation, as amended, authorized us to issue up to 25,000,000 shares of common stock,

par value $ 0.001 per share.

On August 12, 2021, we issued

12,830 shares of our common stock to key employees pursuant to our 2020 LTIP (see Note 4).

12,830 shares of our common stock to key employees pursuant to our 2020 long-term incentive program (“2020 LTIP”) (see Note

On December 29, 2021, we issued

3 unchanged sentences

2020 Stock Incentive Plan (the “2020 Plan”) (see

During the twelve months ended

During the 12 months ended

December 31, 2021, we sold an aggregate of 235,722 shares of common stock under the ATM Facility, resulting in net proceeds to us of approximately

1 unchanged sentence

Riley Securities and other expenses of $ 66,000 .

During the nine months ended September 30,

2022, no shares were sold under the ATM Facility.

On October 21, 2021, we entered

5 unchanged sentences

after deducting placement agent fees and offering expenses.

On September 15, 2022, we repurchased 10,252 shares of common stock

from an employee who resigned during the two-year lock up period associated with such shares for $ 12,000 , pursuant to the terms of the

Preferred Stock

As of June 30, 2022 and December

31, 2021, our Restated Certificate of Incorporation, as amended, authorized us to issue up to 1,000,000 shares of preferred stock, par

value $ 0.001 per share.

As of September 30, 2022 and

December 31, 2021, our Restated Certificate of Incorporation, as amended, authorized us to issue up to 1,000,000 shares of preferred stock,

par value $ 0.001 per share.

There were no transactions

in our preferred stock during the three and six months ended June 30, 2022 and 2021.

No shares of preferred stock were issued and outstanding

as of June 30, 2022.

As of June 30, 2022 and December

31, 2021, the Company had outstanding warrants to purchase zero and 431,368 shares of common stock, respectively.

During the six months

ended June 30, 2022, 431,368 warrants expired and no warrants were exercised.

in our preferred stock during the three and nine months ended September 30, 2022 and 2021.

No shares of preferred stock were issued and

outstanding as of September 30, 2022.

As of September 30, 2022 and

December 31, 2021, the Company had outstanding warrants to purchase zero and 431,368 shares of common stock, respectively.

nine months ended September 30, 2022, 431,368 warrants expired and no warrants were exercised.

Stock-Based Compensation

We have adopted equity incentive plans for which stock options and

restricted stock awards are available for grants to employees, consultants and directors.

Except for certain options granted to certain

Swedish employees, all employee, consultant and director stock options granted under our stock option plans have an exercise price equal

to the market value of the underlying common stock on the grant date.

There are no vesting provisions tied to performance conditions for

Vesting for all outstanding option grants is based solely on continued service as an employee, consultant or director.

of our outstanding stock options and restricted stock awards are classified as equity instruments.

Stock Options

We have adopted equity incentive

plans for which stock options and restricted stock awards are available for grants to employees, consultants and directors.

certain options granted to certain Swedish employees, all employee, consultant and director stock options granted under our stock option

plans have an exercise price equal to the market value of the underlying common stock on the grant date.

There are no vesting provisions

tied to performance conditions for any options.

Vesting for all outstanding option grants is based solely on continued service as an employee,

consultant or director.

All of our outstanding stock options and restricted stock awards are classified as equity instruments.

Stock Options and Long Term Incentive Plan

During the year ended December

31, 2020, our stockholders approved the 2020 Plan which replaced our 2015 Stock

Incentive Plan (the “2015 Plan”), which in turn replaced our Neonode Inc.

31, 2020, our stockholders approved the 2020 Plan which replaced our 2015 Stock Incentive Plan (the “2015 Plan”), which in

turn replaced our Neonode Inc.

2006 Equity Incentive Plan (the “2006 Plan”).

Although no new awards may be made under the 2006 Plan or 2015 Plan, the 2015 Plan is still operative for awards previously granted under

There are no awards outstanding under the 2006 Plan.

Under the 2020 Plan, 750,000 shares of common stock have been reserved

for awards, including nonqualified stock option grants and restricted stock grants to officers, employees, non-employee directors and

The terms of the awards granted under the 2020 Plan are set by our compensation committee at its discretion.

Although no new awards may be made under the

2006 Plan or 2015 Plan, the 2015 Plan is still operative for awards previously granted under such plan.

There are no awards outstanding

under the 2006 Plan.

Under the 2020 Plan, 750,000 shares of common stock have been reserved for awards, including nonqualified stock option

grants and restricted stock grants to officers, employees, non-employee directors and consultants.

The terms of the awards granted under

the 2020 Plan are set by our compensation committee at its discretion.

In 2020, we established the

2020 Long Term Incentive Plan (the “2020 LTIP”) to provide eligible persons with the opportunity to acquire an

equity interest, or otherwise increase their equity interest, in the Company as an incentive for them to remain in the service of the

Through the 2020 LTIP, eligible employees of Neonode may waive between 50 % to 67 % of future unearned bonuses that may be awarded

to them under the Company’s annual bonus arrangement in exchange for the grant of shares of the Company’s common stock.

2020 LTIP to provide eligible persons with the opportunity to acquire an equity interest, or otherwise increase their equity interest,

in the Company as an incentive for them to remain in the service of the Company.

Through the 2020 LTIP, eligible employees of Neonode

may waive between 50 % to 67 % of future unearned bonuses that may be awarded to them under the Company’s annual bonus arrangement

in exchange for the grant of shares of the Company’s common stock.

On December 29, 2020, we issued

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The Company has reported and paid Swedish social charges of $ 5,000 for the issued shares but only 30 % of the stock-based compensation

(totaling $ 5,000 ) was recognized immediately in the consolidated statements of operations for the three and six months ended June 30,

(totaling $ 5,000 ) was recognized immediately in the consolidated statements of operations for the nine months ended September 30, 2022,

with the remainder to be recognized ratably over the two-year lock-up period.

For the three and six months ended June 30, 2022 and 2021, we recognized

$ 45,000 and $ 84,000 and $ 22,000 and $ 45,000 , respectively, of stock-based compensation for the amortization of the 2020 LTIP and 2020

Plan over the respective lock-up periods.

On September 15, 2022, we repurchased 10,252 shares of common stock

from an employee who resigned during the two-year lock up period associated with such shares for $ 12,000 , pursuant to the terms of the

For the three and nine months ended September 30, 2022 and 2021, we

recognized $ 5,000 and $ 89,000 and $ 46,000 and $ 91,000 , respectively, of stock-based compensation for the amortization of the 2020 LTIP

and 2020 Plan over the respective lock-up periods.

A summary of the combined

1 unchanged sentence

Outstanding at January 1, 2022

Outstanding at June 30, 2022

Outstanding at September 30, 2022

The aggregate intrinsic value

of the 2,500 stock options that are outstanding, vested and expected to vest as of June 30, 2022 was $ 0 .

For the three and six months

ended June 30, 2022 and 2021, we recorded no compensation expense related to the vesting of stock options.

During the three and six months

ended June 30, 2022, we did not grant any options to purchase shares of our common stock to employees or members of our board of directors.

of the 2,500 stock options that are outstanding, vested and expected to vest as of September 30, 2022 was $ 0 .

For the three and nine months

ended September 30, 2022 and 2021, we recorded no compensation expense related to the vesting of stock options.

During the three and nine

months ended September 30, 2022, we did not grant any options to purchase shares of our common stock to employees or members of our board

of directors.

Stock options granted under

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insurance policy coverage, we believe the estimated fair value of these indemnification agreements is minimal and we have no liabilities

recorded for these agreements as of June 30, 2022 and December 31, 2021.

recorded for these agreements as of September 30, 2022 and December 31, 2021.

We enter into indemnification

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fair value of these agreements is minimal.

Accordingly, we have no liabilities recorded for these indemnification provisions as of June

Accordingly, we have no liabilities recorded for these indemnification provisions as of September

30, 2022 and December 31, 2021.

14 unchanged sentences

Non-Recurring Engineering Development Costs

On April 25, 2013, we entered

into an Analog Device Development Agreement with an effective date of December 6, 2012 (the “NN1002 Agreement”) with Texas

Instruments (“TI”) pursuant to which TI agreed to integrate our intellectual property into an ASIC.

Under the terms of the

NN1002 Agreement, we agreed to pay TI $500,000 of non-recurring engineering costs at the rate of $0.25 per ASIC for each of the first

2,000,000 ASICs sold.

As of June 30, 2022, we had made no payments to TI under the NN1002 Agreement.

On April 25, 2013, we entered into an Analog Device Development Agreement

with an effective date of December 6, 2012 (the “NN1002 Agreement”) with Texas Instruments (“TI”) pursuant to

which TI agreed to integrate our intellectual property into an Application Specific Integrated Circuit (“ASIC”).

terms of the NN1002 Agreement, we agreed to pay TI $500,000 of non-recurring engineering costs at the rate of $0.25 per ASIC for each

of the first 2,000,000 ASICs sold.

As of September 30, 2022, we had made no payments to TI under the NN1002 Agreement.

Segment Information

4 unchanged sentences

The following table presents

net revenues by geographic area for the three and six months ended June 30, 2022 and 2021, respectively (dollars in thousands):

net revenues by geographic area for the three and nine months ended September 30, 2022 and 2021, respectively (dollars in thousands):

Three months ended

June 30, 2022

September 30, 2022

Three months ended

June 30, 2021

September 30, 2021

United States

Six months ended

June 30, 2022

Six months ended

June 30, 2021

Nine months ended

September 30, 2022

Nine months ended

September 30, 2021

United States

The following table presents

our total assets by geographic region as of June 30, 2022 and December 31, 2021 (in thousands):

our total assets by geographic region as of September 30, 2022 and December 31, 2021 (in thousands):

September 30,

United States

27 unchanged sentences

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Operating lease cost (1)

3 unchanged sentences

Total finance lease cost

(1) Includes short-term lease costs of $ 37,000 and $ 81,000 and $ 38,000 and $ 76,000 for the three and six months ended June 30, 2022 and 2021, respectively.

(1) Includes short-term lease costs of $ 30,000 and $ 111,000 and $ 41,000

and $ 117,000 for the three and nine months ended September 30, 2022 and 2021, respectively.

Supplemental cash flow information

1 unchanged sentence

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Cash paid for amounts included in leases:

6 unchanged sentences

information related to leases was as follows (in thousands):

September 30,

Operating leases

10 unchanged sentences

Total finance lease liabilities

September 30,

Weighted Average Remaining Lease Term

4 unchanged sentences

Finance leases

adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019

(2) Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019 .

A summary of future minimum

payments under non-cancellable operating lease commitments as of June 30, 2022 is as follows (in thousands):

payments under non-cancellable operating lease commitments as of September 30, 2022 is as follows (in thousands):

Year ending December 31,

4 unchanged sentences

The following is a schedule

of minimum future rentals on the non-cancellable finance leases as of June 30, 2022 (in thousands):

of minimum future rentals on the non-cancellable finance leases as of September 30, 2022 (in thousands):

Year ending December 31,

6 unchanged sentences

Basic net loss per common

share for the three and six months ended June 30, 2022 and 2021 was computed by dividing the net loss attributable to common shareholders

share for the three and nine months ended September 30, 2022 and 2021 was computed by dividing the net loss attributable to common shareholders

of Neonode Inc.

5 unchanged sentences

There were no potentially

dilutive common stock equivalents for the three and six months ended June 30, 2022 and 2021, respectively.

dilutive common stock equivalents for the three and nine months ended September 30, 2022 and 2021, respectively.

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

(in thousands, except per share amounts)

4 unchanged sentences

Subsequent Events

On October 1, 2022, we acquired

the remaining 49 % of the shares in Pronode Technologies AB for a nominal cash payment.

On October 18, 2022, we sold

622 shares of our common stock under the ATM Facility with aggregate net proceeds to us of $ 3,000 .

No other subsequent events

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements