What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-02-28 compared with 2023-03-09 · 137 added, 150 removed, 152 unchanged (65% of the section changed)

Our company provides advanced optical sensing solutions

for contactless touch, touch, and gesture sensing.

for touch, contactless touch, and gesture sensing.

We also provide software solutions for machine perception that feature advanced machine

learning algorithms to detect and track persons and objects in video streams from cameras and other types of imagers.

We base our contactless

touch, touch, and gesture sensing products and solutions using our zForce technology platform and our machine perception solutions on

our MultiSensing technology platform.

zForce (zero force) is the name for our patented optical sensing technology built on infrared light,

invisible to the human eye.

Our MultiSensing platform was designed to provide advanced, safe and traceable software applications to provide

situational context.

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

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

We base our touch,

contactless touch, and gesture sensing products and solutions using our zForce technology platform and our machine perception solutions

on our MultiSensing technology platform.

zForce (zero force) is the name for our patented optical sensing technology built on infrared

light, invisible to the human eye.

Our MultiSensing platform was designed to provide advanced, safe, and scalable software solutions

to provide situational context.

We market and sell our solutions to customers in many different markets and segments including, but not

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

In 2010, we began licensing to Original Equipment

Manufacturers (“OEMs”) and Tier 1 suppliers who embed our technology into products they develop, manufacture, and sell.

2010, our licensing customers have sold approximately 90 million devices that use our technology.

In October 2017, we augmented our licensing

business and began manufacturing and shipping touch sensor modules (“TSMs”) that incorporate our patented technology.

these TSMs to OEMs, Original Design Manufacturers (“ODMs”), and systems integrators for use in their products.

As of December 31, 2022, we had 10 agreements with

value added resellers (“VARs”) for integration of our TSMs in the products they offer to global OEMs, ODMs and systems integrators.

In addition to this, we distribute our TSMs through Digi-Key Corporation, Serial Microelectronics HK Ltd, and Nexty Electronics Corporation.

In our operations, we have

since the beginning of 2020 focused on three different business areas, HMI Solutions, HMI Products and Remote Sensing Solutions (“HMI”

is short for Human-Machine Interaction).

On May 4, 2021, we announced a new strategy and organizational update targeting an increased

focus on our contactless touch business and on current market opportunities in North America (“AMER”), Asia-Pacific (“APAC”),

and Europe, Middle East and Africa (“EMEA”).

As a result, we transitioned from a business area organization to a regional

sales organization going forward.

Revenues are however primarily monitored for each of our revenue streams consisting of license fees,

product sales and non-recurring engineering (“NRE”) services.

During 2022 and 2021 we continued

to focus our efforts on maintaining our current licensing customers and achieving design wins for new products both with current and future

We made investments enhancing the design and improving the production yield of our TSMs and improving the related firmware

and configuration tools software platforms.

We also made investments to expand our partner networks for sales and distribution of TSMs.

We intend to continue expanding our TSM product offerings in 2023 and beyond, including new TSM variants and new sensor products for delivery

to our key markets.

We expect that over time the sales of HMI products and Remote Sensing Solutions may constitute the majority of our

We license our zForce technology

to OEMs and Tier 1 suppliers who embed our technology into products they develop, manufacture and sell.

Since 2010, our licensing customers

have sold approximately 90 million devices that use our patented technology.

As of December 31, 2022, we

had 35 valid technology license agreements with global OEMs, ODMs and Tier 1 suppliers.

Manufacturers (“OEMs”) and automotive Tier 1 suppliers who embed our technology into products they develop, manufacture, and

Since 2010, our licensing customers have sold approximately 95 million products that feature our technology.

In October 2017, we

augmented our licensing business and began manufacturing and shipping touch sensor modules (“TSMs”) that incorporate our patented

We sell these TSMs to OEMs, Original Design Manufacturers (“ODMs”), and systems integrators for use in their products.

As of December 31, 2023, we had nine agreements

with value added resellers (“VARs”) for integration of our TSMs in the products they offer to global OEMs, ODMs and systems

In addition to this, we distribute our TSMs through Digi-Key Corporation, Serial Microelectronics HK Ltd., and Nexty Electronics

During 2023, we continued to focus our efforts on

maintaining our current licensing customers and achieving design wins for new programs both with current and future customers.

we continued to market and sell TSMs directly and indirectly through partners.

We made investments enhancing the design and improving

the production yield of our TSMs in our production unit Pronode Technologies AB and improving the related firmware and configuration tools

software platforms.

On December 12, 2023, we announced a new, sharpened

strategy with full focus on the licensing business.

Consequently, we will phase out the TSM product business during 2024 through licensing

of the TSM technology to strategic partners or outsourcing.

We license our zForce technology to OEMs and automotive

Tier 1 suppliers who embed our technology into products that they develop, manufacture and sell.

Since 2010, our licensing customers have

sold approximately 95 million devices that use our patented technology.

As of December 31, 2023, we had 34 valid technology

license agreements with global OEMs, ODMs and automotive Tier 1 suppliers.

Our licensing customer base is primarily in the

automotive and printer segments.

Eleven of our licensing customers are currently shipping products that embed our technology.

Ten of our licensing customers are currently shipping products that embed our technology.

We anticipate

6 unchanged sentences

Product Sales

In addition to our technical

solutions business, we design and manufacture TSMs that incorporate our patented technology.

We sell our TSMs to OEMs, ODMs and systems

integrators for use in their products.

We also sell our Neonode branded AirBar product that incorporates one of our TSMs through distributors.

We utilize a robotic manufacturing

process designed specifically for our components.

Our TSMs are commercial-off-the-shelf products based on our patent-protected zForce

technology platform and can support the development of contactless touch, touch, gesture and object sensing solutions that, paired with

our technology licensing offering, give us a full range of options to enter and compete in key markets.

In October 2017, we began selling

our TSMs to customers in the industrial and consumer electronics segments.

Over time, we expect a significant portion of our revenues

will be derived from TSM sales.

In addition to our licensing business, we design

and manufacture TSMs that incorporate our patented technology.

We sell our TSMs to OEMs, ODMs and systems integrators for use in their

We utilize a robotic manufacturing process designed

specifically for our TSMs.

The TSMs are commercial-off-the-shelf products based on our patent-protected zForce technology platform and

can support the development of contactless touch, touch, gesture and object sensing solutions that, paired with our technology licensing

offering, give us a full range of options to enter and compete in key markets.

We began selling our TSMs to customers in the industrial

and consumer electronics segments in 2017.

We will phase out the TSM product business during 2024 through licensing of the TSM technology

to strategic partners or outsourcing.

Non-recurring Engineering Services

We also offer NRE services

We also offer non-recurring engineering (“NRE”) services

related to application development linked to our TSMs and our zForce and MultiSensing technology platforms on a flat rate or hourly rate

11 unchanged sentences

We have the following wholly owned subsidiaries:

Neonode Technologies AB (Sweden) (established in 2008 to develop and license touchscreen technology);

Neonode Japan Inc., (Japan) (established

and Neonode Korea Ltd.

Neonode Technologies

AB (Sweden) (established in 2008 to develop and license touchscreen technology);

Neonode Japan Inc., (Japan) (established in 2013);

Neonode Korea Ltd.

(South Korea) (established in 2014).

In 2015, we established a 51% majority owned consolidated subsidiary,

Pronode Technologies AB (Sweden).

On October 1, 2022, we acquired the remaining shares in Pronode Technologies AB.

Neonode Korea Ltd.

is currently dormant.

In 2015, we established a 51% majority

owned consolidated subsidiary, Pronode Technologies AB (Sweden).

On October 1, 2022, we acquired the remaining shares in Pronode Technologies

Strategy and Focus Areas

Our customers use contactless touch, touch, gesture

sensing, and computer vision technologies to grow their businesses, drive efficiencies, and seek competitive advantages.

Our customers use touch, contactless touch, gesture

sensing, and machine perception technologies to grow their businesses, drive efficiencies, and seek competitive advantages.

is to deliver value-adding human-machine interaction (“HMI”) and machine perception solutions and products that enable our

2 unchanged sentences

systems and products to ensure that optimal functionality and performance is achieved.

Our goal is to become a market leader in the area of contactless touch

interfaces, expanding our TSM sales in the elevator and interactive kiosk segments where our contactless touch technology provides end-customer

value and increased competitiveness for our customers, value-added resellers, and technology partners, while continuing to be a leader

in optical touch and gesture sensing by licensing our zForce technology to customers in the printer, automotive, and other sectors.

also aim to capture a share of the growing automotive driver and in-cabin monitoring market by developing our machine perception business.

We are innovators in the HMI and machine perception areas and our goal is to introduce next-generation products in these areas that offer

better price and performance and architectural advantages compared to our current offers and those of our competitors.

We intend to execute

on this strategy through portfolio transformation, internal innovation, and co-development of products with our customers and the building

of strategic partnerships with other technology companies.

With the new, sharpened strategy, announced in

December 2023, we focus solely on the licensing business.

This allows customers to license our unique and advanced TSM technology to create

bespoke products and solutions that bring value to end customers.

We continue to be a leader in optical touch and gesture sensing by licensing

our zForce technology to customers in the printer, automotive, and other sectors.

We also aim to capture a significant share of the growing

automotive driver and in-cabin monitoring market by developing our machine perception business.

We are innovators in the HMI and machine

perception areas and our goal is to introduce next-generation products in these areas that offer better price, performance, and architectural

advantages compared to our current offers and those of our competitors.

We intend to execute on this strategy through portfolio transformation,

internal innovation, and co-development of products with our customers and the building of strategic partnerships with other technology

The automotive value chain consists of OEMs (vehicle

4 unchanged sentences

In some cases, we are also engaged directly by OEMs, following the trend that OEMs are

insourcing more and more of their systems and software development directly.

During each of 2022 and 2021, our Automotive customers

shipped approximately 0.8 million products.

insourcing more and more of their systems and software development.

During 2023 and 2022, our automotive customers shipped approximately

0.9 million and 0.8 million products with our technology, respectively.

Accumulated, since 2014, our automotive customers have shipped

approximately 8 million products featuring our technology.

Printers and Office Equipment

3 unchanged sentences

printers and office equipment OEMs.

During 2022 our customers shipped approximately 4 million printers using our touch technology and

During 2023 our customers shipped more than 3 million printers using our touch technology and

since mid-2014 they have shipped approximately 55 million printers using our touch technology.

Military and Avionics

Mechanical switches and buttons and older types

of touch displays in airplane cockpits are increasingly being replaced with larger touch displays with higher performance capabilities.

Our zForce technology has demonstrable advantages for these types of applications, as it provides low latency, superior image clarity,

can be operated by pilots wearing gloves, has excellent electro-magnetic interference and electro-magnetic compatibility properties, and

works well with night vision systems.

zForce is also suitable for other military applications for these reasons.

Industrial Automation

5 unchanged sentences

selling medical imaging systems with touch screens.

Looking to the future, we see interesting opportunities for our TSMs to be incorporated

into similar touch applications, and for various contactless touch applications, and opportunities for our zForce-based optical touch

and gesture control solutions in the medical touchscreen market.

Looking to the future, we see interesting opportunities to license our zForce-based

optical touch and gesture control solutions to manufacturers of different medtech systems.

Elevators and Interactive Kiosks

The COVID-19 pandemic has created strong consumer demand

for technologies that eliminate direct physical contact between users and different types of machines and systems in public environments

There is strong consumer demand for HMI technologies that improve

the user experience and eliminate direct physical contact between users and different types of machines and systems in public environments

such as self-service kiosks, vending machines, and elevators.

4 unchanged sentences

in their respective markets.

We have a strong and increasing demand for our TSMs from customers in these markets and expect to grow this

business significantly in the coming years.

Customer demand has decreased after the COVID-19 pandemic ended and in 2024 we will phase out the TSM product

OEM customers, value-added resellers, and technology partners can still access our technology through licensing.

Product Backlog

16 unchanged sentences

Europe and Asia.

As of December 31, 2022, five of our customers represented

approximately 83% of our consolidated accounts receivable and unbilled revenues.

As of December 31, 2021, four of our customers represented

approximately 76% of our consolidated accounts receivable and unbilled revenues.

Customers who accounted for 10% or more of our revenues

during the year ended December 31, 2022 are as follows.

As of December 31, 2023, four of our customers

represented approximately 76.4% of our consolidated accounts receivable and unbilled revenues.

As of December 31, 2022, five of our customers

represented approximately 82.5% of our consolidated accounts receivable and unbilled revenues.

Customers who accounted for 10% or more of our

revenues during the year ended December 31, 2023 are as follows.

Hewlett-Packard Company – 22.1%

1 unchanged sentence

Alpine Electronics – 16.6%

Customers who accounted for 10% or more of our revenues

during the year ended December 31, 2021 are as follows.

Customers who accounted for 10% or more of our

revenues during the year ended December 31, 2022 are as follows.

Hewlett-Packard Company – 27.1%

Seiko Epson – 19.4%

Alpine Electronics – 10.0%

Customers by Market

1 unchanged sentence

as a percentage of total revenues for the years ended December 31:

Automotive (license fees)

Consumer electronics (license fees)

TSMs (products)

Non-recurring engineering

Net license revenues from automotive

Net license revenues from consumer electronics

Net product revenues from TSMs

Net non-recurring engineering services revenues

Geographical Data

1 unchanged sentence

region as a percentage of total revenues for the years ended December 31:

United States

The following table presents our total assets by

geographic region as of December 31 (in thousands):

United States

There are various technologies for touch and gesture

14 unchanged sentences

resolution and cost are the main differentiators.

For contactless touch opportunities, competing technologies

include camera-based technologies for detecting finger placement and gestures in the airspace in front of a kiosk or button panel, capacitive

sensors capable of detecting a finger hovering above a display or button, as well as voice-activated interfaces and interfaces using one’s

mobile phone to interact with a kiosk or button panel.

There are various driver and in-cabin monitoring solutions that compete

with our MultiSensing technology.

Our competitors among Tier 2 software providers include SmartEye, Cipia, Xperi, EyeSight, Seeing Machines,

PUX and Jungo.

For contactless touch opportunities, competing

technologies include camera-based technologies for detecting finger placement and gestures in the airspace in front of a kiosk or button

panel, capacitive sensors capable of detecting a finger hovering above a display or button, as well as voice-activated interfaces and

interfaces using one’s mobile phone to interact with a kiosk or button panel.

There are various driver and in-cabin monitoring

solutions that compete with our MultiSensing technology.

Our competitors among Tier 2 software providers include SmartEye, Cipia, Xperi,

Seeing Machines, PUX and Jungo.

Intellectual Property

6 unchanged sentences

United States

Patent Convention Treaty

Not Applicable

Our patents cover optical blocking technologies for

touchscreens and head-up displays, optical reflective technologies for contactless interaction with kiosks and elevators, as well as machine

perception solutions for driver and in-cabin monitoring.

Our software may also be protected by copyright laws

in most countries, including Sweden and the European Union, if the software is deemed new and original.

Protection can be claimed from

the date of creation.

In 2022 we filed six new patent applications and had

two new patent grants issued;

certain other patents have lapsed.

The duration of our patent protection for utility patents

is generally 20 years.

The duration of our patent protection for design patents varies throughout the world between 10 and 25 years, depending

on the jurisdiction.

We believe the duration of our intellectual property rights is adequate relative to the expected lives of our products.

Our patents cover optical blocking technologies

for touchscreens and head-up displays, optical reflective technologies for contactless interaction with kiosks and elevators, as well

as machine perception solutions for driver and in-cabin monitoring.

Our software may also be protected by copyright

laws in most countries, including Sweden and the European Union, if the software is deemed new and original.

Protection can be claimed

from the date of creation.

In 2023 we filed eleven new patent applications

and had nine new patent grants issued;

five patents have lapsed.

The duration of our patent protection for utility

patents is generally 20 years.

The duration of our patent protection for design patents varies throughout the world between 10 and 25

years, depending on the jurisdiction.

We believe the duration of our intellectual property rights is adequate relative to the expected

lives of our products.

We also protect and promote our brand by registering

24 unchanged sentences

a diverse workforce provides different viewpoints on business strategy, risk and innovation.

Since the COVID-19 pandemic has subsided we have

adopted a hybrid workplace.

While we encourage employees to come into the office as much as possible, employees are permitted to work

from home a few days each week

Since the COVID-19 pandemic has subsided we have adopted a hybrid

While we encourage employees to come into the office as much as possible, employees are permitted to work part time from home.

As of December 31, 2023, we had 53 employees (including

49 full-time employees) and 8 consultants.

There was a total of 13 employees in our general and administrative team, 8 in our sales and

marketing team, 26 in our engineering team, and 8 in our production team at Pronode Technologies AB.

We have employees and/or consultants

located in the United States, Sweden, United Kingdom, Japan, South Korea and Taiwan.

None of our employees are represented by a labor

We have employees and/or consultants located in the United States, Sweden, United Kingdom,

Japan, South Korea and Taiwan.

None of our employees are represented by a labor union.

We have experienced no work stoppages.

We believe our employee relations are positive.

our employee relations are positive.

Additional Information

5 unchanged sentences

Our website is www.neonode.com .

We make available

free of charge through our website all of our filings with the SEC, including our annual reports on Form 10-K, quarterly reports on Form

10-Q, and current reports on Form 8-K as well as Form 3, Form 4, and Form 5 reports for our directors, officers, and principal

stockholders, together with amendments to those reports filed or furnished pursuant to Sections 13(a), 15(d), or 16 under the Exchange

available free of charge through our website all of our filings with the SEC, including our annual reports on Form 10-K, quarterly reports

on Form 10-Q, and current reports on Form 8-K as well as Form 3, Form 4, and Form 5 reports for our directors, officers,

and principal stockholders, together with amendments to those reports filed or furnished pursuant to Sections 13(a), 15(d), or 16 under

the Exchange Act.

These reports are available as soon as reasonably practicable after their electronic filing or furnishing with the SEC.

also includes corporate governance information, such as our Code of Business Conduct (including a Code of Ethics for the Chief Executive

Officer and Senior Financial Officers) and our Board of Directors’ Committee Charters.

The information contained on our website

is not a part of, nor is it incorporated by reference into, this Annual Report.

Our website also includes corporate governance information, such as our Code of Business Conduct (including a Code of Ethics for the Chief

Executive Officer and Senior Financial Officers) and our Board of Directors’ Committee Charters.

The information contained on our

website is not a part of, nor is it incorporated by reference into, this Annual Report.

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-K

Item 1. Business