What changed in this filing

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Item 1. Financial Statements

2024-11-06 compared with 2024-08-08 · 231 added, 115 removed, 297 unchanged (54% of the section changed)

2 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

Current assets:

2 unchanged sentences

Prepaid expenses and other current assets

Current assets of discontinued operations

Total current assets

1 unchanged sentence

Operating lease right-of-use assets, net

Noncurrent assets of discontinued operations

LIABILITIES AND STOCKHOLDERS’ EQUITY

6 unchanged sentences

Current portion of operating lease obligations

Current liabilities of discontinued operations

Total current liabilities

Finance lease obligations, net of current portion

Noncurrent liabilities of discontinued operations

Total liabilities

2 unchanged sentences

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

15,359,481 shares issued and outstanding at June 30, 2024 and December 31, 2023

16,782,922 and 15,359,481 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

8 unchanged sentences

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Non-recurring engineering

12 unchanged sentences

Interest income, net

Other expense

Other income (expense)

Total other income, net

1 unchanged sentence

Provision for income taxes

Net loss from continuing operations

Net loss from discontinued operations

Loss per common share:

Basic and diluted loss per share from continuing operations

Basic and diluted loss per share from discontinued operations

Basic and diluted loss per share

4 unchanged sentences

(In thousands)

comprehensive loss:

currency translation adjustments

comprehensive loss

Three months ended

September 30,

Nine months ended

September 30,

Other comprehensive loss:

Foreign currency translation adjustments

Other comprehensive loss

The accompanying notes are an integral part of

2 unchanged sentences

(In thousands)

For the three and six months ended June 30,

For the three and nine months ended September

30, 2024 and 2023

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$ ( 221,393 )

Stock-based compensation

Issuance of shares for cash, net of offering costs

Foreign currency translation adjustment

Balances, September 30, 2024

$ ( 222,480 )

Comprehensive

Income (Loss)

Stockholders’

10 unchanged sentences

$ ( 210,423 )

Stock-based compensation

Foreign currency translation adjustment

Balances, September 30, 2023

$ ( 211,689 )

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:

19 unchanged sentences

Principal payments on finance lease obligations

Net cash (used in) provided by financing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

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opinion of management, necessary for a fair presentation of the financial position and results of operations and cash flows for the interim

period presented.

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of results

for a full fiscal year or any other period.

periods presented.

The results of operations for the three and nine months ended September 30, 2024 and 2023 and cash flows for the nine

months ended September 30, 2024 and 2023 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, 2024 and 2023 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, 2024 and 2023 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,

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, 2023.

Neonode Inc., which is collectively

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our unique and advanced technology to create bespoke products and solutions that bring value to end customers.

We have incurred significant

operating losses and negative cash flows from operations since our inception.

The Company incurred net losses of approximately $ 1.7 million

and $ 3.8 million and $ 1.5 million and $ 2.9 million for the three and six months ended June 30, 2024 and June 30, 2023, respectively and

had an accumulated deficit of approximately $ 221.4 million and $ 217.6 million as of June 30, 2024 and December 31, 2023, respectively.

In addition, operating activities used cash of approximately $ 3.1 million and $ 2.3 million for the six months ended June 30, 2024 and

2023, respectively.

We have incurred significant operating losses and negative cash flows

from operations since our inception.

The Company incurred net losses of approximately $ 1.1 million and $ 4.9 million and $ 1.3 million and

$ 4.2 million for the three and nine months ended September 30, 2024 and September 30, 2023, respectively and had an accumulated deficit

of approximately $ 222.5 million and $ 217.6 million as of September 30, 2024 and December 31, 2023, respectively.

In addition, operating

activities used cash of approximately $ 4.4 million and $ 4.1 million for the nine months ended September 30, 2024 and 2023, respectively.

The condensed consolidated

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a year from the date the financial statements were issued.

During July 2024, we sold an aggregate of 107,087 of our common stock under

the ATM Facility with aggregate net proceeds to us of $ 341,000 , after payment of commissions to Ladenburg and other expenses of $ 11,000 .

During the three months ending September 30, 2024, we sold an aggregate of

1,423,441 shares of our common stock under the ATM Facility with aggregate net proceeds to us of $ 5.8 million, after payment of commissions

to Ladenburg and other expenses of $ 0.2 million.

In the future, we may require

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

Discontinued Operations

As described in the

Company’s 2023 Annual Report on Form 10-K, the Company’s plan to phase out TSM manufacturing meets the criteria to be

reported as discontinued operations.

In accordance with U.S.

GAAP, assets and liabilities of discontinued operations are presented

separately in the condensed consolidated balance sheets, and results of discontinued operations are reported as a separate component

of net loss in the condensed consolidated statements of operations, for all periods presented, resulting in changes to the

presentation of certain prior period amounts.

Cash flows from discontinued operations are not reported separately in the condensed

consolidated statements of cash flows.

to Note 2 for additional discussion of discontinued operations.

All other notes to these consolidated financial statements present the

results of continuing operations and exclude amounts related to discontinued operations for all periods presented unless otherwise stated.

Discontinued Operations

During the fourth quarter

of 2023 the Company decided to phase out the product business and as a consequence terminate production at the Pronode Technologies AB

facilities in Kungsbacka, Sweden.

Subsequently, we commenced the phase out of our TSM product business during the first quarter of 2024

through licensing of the TSM technology to strategic partners or outsourcing.

In May 2024, we stopped producing TSMs

and started to shut down the factory.

The facility lease terminated as of September 30, 2024 and was not renewed.

The Company concluded that, in aggregate, the termination of TSM manufacturing

met the criteria for discontinued operations.

As a result, this business has been reclassified to discontinued operations in these condensed

consolidated financial statements for all periods presented.

Assets and Liabilities of Discontinued Operations

Assets and liabilities of discontinued operations are presented separately

in the condensed consolidated balance sheets for all periods presented.

On September 30, 2024 and December 31, 2023, these balances consisted

of assets and liabilities of the Company’s Products business.

Pronode Technologies AB is expected to be merged into Neonode Technologies

AB before the end of the year, upon receipt of regulatory approval.

The following table presents

a reconciliation of the carrying amounts of the major classes of these assets and liabilities to the current assets and liabilities of

discontinued operations as presented on the Company’s condensed consolidated balance sheets:

September 30,

ASSETS OF DISCONTINUED OPERATIONS

Current assets:

Accounts receivable and unbilled revenues, net

Prepaid expenses and other current assets

Total current assets of discontinued operations

Property and equipment, net

Operating lease right-of-use assets, net

Total assets of discontinued operations

LIABILITIES OF DISCONTINUED OPERATIONS

Current liabilities:

Accounts payable

Accrued payroll and employee benefits

Accrued expenses

Contract liabilities

Current portion of finance lease obligations

Current portion of operating lease obligations

Total current liabilities of discontinued operations

Finance lease obligations, net of current portion

Total liabilities of discontinued operations

Loss from Discontinued Operations

Discontinued operations for

the three and nine months ended September 30, 2024 and 2023, respectively, consists of results from the Company’s products business.

The following table provides

details about the major classes of line items constituting “Net loss from discontinued operations” as presented on the Company’s

condensed consolidated statements of operations:

Three months ended

September 30,

Nine months ended

September 30,

Total revenues

Cost of revenues:

Total cost of revenues

Total gross margin

Operating expenses:

General and administrative

Total operating expenses

Operating loss

Other income (expense):

Interest income, net

Other income (expense)

Total other income (expense), net

Net loss from discontinued operations

Cash Flows Information

The following table presents

cash flow information for discontinued operations (in thousands):

Three months ended

September 30,

Nine months ended

September 30,

Depreciation and amortization

Amortization of operating lease ROU assets

Inventory impairment loss

Purchase of property and equipment

Proceeds from sale of property and equipment

Summary of Significant Accounting Policies

6 unchanged sentences

The condensed consolidated

balance sheets at June 30, 2024 and December 31, 2023 and the condensed consolidated statements of operations, comprehensive loss, stockholders’

equity and cash flows for the three and six months ended June 30, 2024 and 2023 include our accounts and those of our intercompany subsidiaries.

balance sheets at September 30, 2024 and December 31, 2023 and the condensed consolidated statements of operations, comprehensive loss,

stockholders’ equity and cash flows for the three and nine months ended September 30, 2024 and 2023 include our accounts and those

of our intercompany subsidiaries.

Foreign Currency Translation and Transaction

8 unchanged sentences

comprehensive income (loss).

Foreign currency translation gains (losses) were ($ 32,000 ) and ($ 66,000 ) and $( 141,000 ) and $( 106,000 ) during

the three and six months ended June 30, 2024 and 2023, 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 $( 3,000 ) and $ 2,000

during the three and six months ended June 30, 2024, respectively, compared to $ 0 and $( 5,000 ) during the same periods in 2023, respectively.

Foreign currency translation losses were $( 30,000 ) and $( 96,000 ) and $( 48,000 ) and $( 154,000 ) during the

three and nine months ended September 30, 2024 and 2023, 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 $( 3,000 )

and $( 1,000 ) during the three and nine months ended September 30, 2024, respectively, compared to $ 7,000 and $ 2,000 during the same periods

in 2023, respectively.

Concentration of Credit and Business Risks

Our customers are located in

the United States, Europe, Oceania and Asia.

As of June 30, 2024, six of

our customers represented approximately 82.0 % of our consolidated accounts receivable and unbilled revenues.

As of December 31, 2023, four

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

Our customers are located

in the United States, Europe, Oceania and Asia.

As of September 30, 2024,

five of our customers represented approximately 94.8 % of our consolidated accounts receivable and unbilled revenues.

As of December 31, 2023, three of our customers represented approximately

77.8 % of our consolidated accounts receivable and unbilled revenues.

Customers who accounted for

10.0% or more of our net revenues during the three months ended June 30, 2024 are as follows:

10.0% or more of our net revenues during the three months ended September 30, 2024 are as follows:

● Seiko Epson – 30.6 %

● Commercial Vehicle OEM – 13.9 %

● Nexty Electronics – 17.9 %

● Alps Alpine – 15.3 %

● Propoint – 11.5 %

● Hewlett-Packard Company – 14.6 %

● Commercial Vehicle OEM – 12.35 %

Customers who accounted for

10.0% or more of our net revenues during the six months ended June 30, 2024 are as follows:

10.0% or more of our net revenues during the nine months ended September 30, 2024 are as follows:

● Seiko Epson – 25.2 %

● Hewlett-Packard Company – 20.7 %

● Alps Alpine – 20.4 %

● Seiko Epson – 14.9 %

● Commercial Vehicle OEM – 13.4 %

Customers who accounted for

10.0% or more of our net revenues during the three months ended June 30, 2023 are as follows:

10.0% or more of our net revenues during the three months ended September 30, 2023 are as follows:

● Seiko Epson – 25.5 %

● Hewlett-Packard Company – 24.8 %

● Alps Alpine – 19.5 %

● Seiko Epson – 13.7 %

● LG – 13.6 %

● Automotive Tier-1 – 11.1 %

Customers who accounted for

10.0% or more of our net revenues during the six months ended June 30, 2023 are as follows:

10.0% or more of our net revenues during the nine months ended September 30, 2023 are as follows:

● Hewlett-Packard Company – 33.5 %

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● LG – 14.0 %

The following tables present

the net revenues distribution by geographical area and market for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

The following tables present the net revenues distribution by geographical

area and market for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

Three months ended

June 30, 2024

September 30, 2024

Three months ended

June 30, 2023

September 30, 2023

North America

6 unchanged sentences

Net revenues from IT & Industrial

Six months ended

June 30, 2024

Six months ended

June 30, 2023

Nine months ended

September 30, 2024

Nine months ended

September 30, 2023

North America

6 unchanged sentences

Net revenues from IT & Industrial

Product Warranty

The following table summarizes

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

Balance at beginning of period

Provisions for (adjustments to) warranty issued

Balance at end of period

The Company accrues for warranty

costs as part of its cost of sales of TSMs based on estimated costs.

The Company’s products are generally covered by a warranty

for a period of 12 months from the customer receipt of the product included as a component of accrued expenses on the condensed consolidated

balance sheet.

Contract Liabilities

The following table presents

our deferred revenues by source (in thousands):

The following table presents our deferred revenues by source (in thousands):

September 30,

Deferred revenues license fees

Deferred revenues products

Deferred revenues non-recurring engineering

During the three and six

months ended June 30, 2024, the Company recognized revenues of approximately $ 7,000 and $ 10,000 , respectively, related to contract liabilities

outstanding at the beginning of the year.

During the three and six months ended June 30, 2023, the Company recognized revenues of approximately

$ 9,000 and 14,000 , respectively, related to contract liabilities outstanding at the beginning of the year.

We recognize deferred tax liabilities

and assets for the expected future tax consequences of items that have been included in the condensed consolidated financial statements

or tax returns.

During the three and nine

months ended September 30, 2024, the Company recognized revenues of approximately $ 25,000 and $ 2,000 , respectively, related to contract

liabilities outstanding at the beginning of the period.

During the three and nine months ended September 30, 2023, the Company recognized

revenues of approximately $ 7,000 and 17,000 , respectively, related to contract liabilities outstanding at the beginning of the period.

We recognize deferred tax

liabilities and assets for the expected future tax consequences of items that have been included in the condensed consolidated financial

statements or tax returns.

We estimate income taxes based on rates in effect in each of the jurisdictions in which we operate.

Deferred income tax

assets and liabilities are determined based upon differences between the financial statement and income tax bases of assets and liabilities

using enacted tax rates in effect for the year in which the differences are expected to reverse.

The realization of deferred tax assets

is based on historical tax positions and expectations about future taxable income.

Valuation allowances are recorded against net deferred

tax assets when, in our opinion, realization is uncertain based on the “more likely than not” criteria of the accounting guidance.

income tax assets and liabilities are determined based upon differences between the financial statement and income tax bases of assets

and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

The realization of deferred

tax assets is based on historical tax positions and expectations about future taxable income.

Valuation allowances are recorded against

net deferred tax assets when, in our opinion, realization is uncertain based on the “more likely than not” criteria of the

accounting guidance.

Based on the uncertainty of

future pre-tax income, we fully reserved our net deferred tax assets as of June 30, 2024 and December 31, 2023.

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, 2024 and December 31, 2023.

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, 2024 and December

31, 2023, we had no unrecognized tax benefits.

As of September 30, 2024 and

December 31, 2023, 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

30, 2024 and 2023.

2 unchanged sentences

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 30, 2024 and 2023 exclude the potential common stock equivalents, as the effect would be anti-dilutive (see Note 6).

shares 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, 2024 and 2023 exclude the potential common stock equivalents, as the effect would be anti-dilutive (see Note 6).

Recent Accounting Pronouncements

32 unchanged sentences

Riley Securities.

On June 4, 2024, we entered into an At The Market Offering Agreement

(the “Ladenburg Sales Agreement”) with Ladenburg Thalmann & Co.

(“Ladenburg”) with respect to an “at

the market” offering program (the “Ladenburg ATM Facility”), under which we may, from time to time, in our sole discretion,

issue and sell through Ladenburg, acting as agent or principal, up to approximately $ 10 million of shares of our common stock.

June 4, 2024, we entered into an At The Market Offering Agreement (the “Ladenburg Sales Agreement”) with Ladenburg Thalmann

(“Ladenburg”) with respect to an “at the market” offering program (the “Ladenburg ATM Facility”),

under which we may, from time to time, in our sole discretion, issue and sell through Ladenburg, acting as agent or principal, up to approximately

$ 10 million of shares of our common stock.

to the Ladenburg Sales Agreement, we may sell the shares through Ladenburg by any method permitted that is deemed an “at the market”

9 unchanged sentences

to the Ladenburg Sales Agreement and (ii) termination of the Ladenburg Sales Agreement in accordance with its terms.

and Contingencies

The Company is subject to legal

proceedings and claims that may arise in the ordinary course of business.

The Company is not aware of any pending or threatened litigation

matters at this time that would have a material impact on the operations of the Company.

Commitments and Contingencies

The Company is subject to

legal proceedings and claims that may arise in the ordinary course of business.

The Company is not aware of any pending or threatened

litigation matters at this time that would have a material impact on the operations of the Company.

Patent Assignment

9 unchanged sentences

Net Loss per Share

Basic net loss per common share

for the three and six months ended June 30, 2024 and 2023 was computed by dividing the net loss attributable to common shareholders of

Basic net loss per common

share for the three and nine months ended September 30, 2024 and 2023 was computed by dividing the net loss attributable to common shareholders

of Neonode Inc.

for the relevant period by the weighted average number of shares of common stock outstanding.

Diluted loss per common share

is computed by dividing net loss attributable to common shareholders of Neonode Inc.

for the relevant period by the weighted average number

of shares of common stock and common stock equivalents outstanding.

Diluted loss per common

share is computed by dividing net loss attributable to common shareholders of Neonode Inc.

for the relevant period by the weighted average

number of shares of common stock and common stock equivalents outstanding.

The Company had no potential

common stock equivalents for the three and six months ended June 30, 2024 and 2023, respectively.

common stock equivalents for the three and nine months ended September 30, 2024 and 2023, respectively.

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

(in thousands, except per share amounts)

1 unchanged sentence

Weighted average number of common shares outstanding

Net loss attributable to Neonode Inc.

Net loss from continuing operations

Net loss from discontinued operations

Net loss per share from continuing operations - basic and diluted

Net loss per share from discontinued operations - basic and diluted

Net loss per share - basic and diluted

Subsequent Events

During July 2024, we sold

an aggregate of 107,087 of our common stock under the ATM Facility with aggregate net proceeds to us of $ 341,000 , after payment of commissions

to Ladenburg and other expenses of $ 11,000 .

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