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What changed in Neonode Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Neonode Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+172 added−206 removedSource: 10-K (2025-03-21) vs 10-K (2024-02-28)

Top changes in Neonode Inc.'s 2024 10-K

172 paragraphs added · 206 removed · 113 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeAs of December 31, 2022, five of our customers represented approximately 82.5% of our consolidated accounts receivable and unbilled revenues. 3 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% ● Seiko Epson – 17.7% ● Alpine Electronics – 16.6% 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% ● LG – 12.2% ● Alpine Electronics – 10.0% Customers by Market The following table presents our revenues by market as a percentage of total revenues for the years ended December 31: 2023 2022 Net license revenues from automotive 35.1 % 27.4 % Net license revenues from consumer electronics 50.4 % 51.5 % Net product revenues from TSMs 13.9 % 17.5 % Net non-recurring engineering services revenues 0.6 % 3.6 % Total 100.0 % 100.0 % Geographical Data The following table presents our revenues by geographic region as a percentage of total revenues for the years ended December 31: 2023 2022 United States 35.8 % 32.5 % Japan 33.5 % 30.7 % South Korea 11.3 % 15.2 % Germany 9.0 % 5.3 % Switzerland 5.0 % 7.0 % China 1.8 % 2.3 % France 1.5 % 3.4 % Sweden 1.2 % 2.7 % Other 0.9 % 0.9 % Total 100.0 % 100.0 % The following table presents our total assets by geographic region as of December 31 (in thousands): 2023 2022 United States $ 16,084 $ 15,630 Sweden 2,888 5,511 Asia 42 57 Total $ 19,014 $ 21,198 Competition There are various technologies for touch and gesture control solutions available that compete with our optical zForce technology.
Biggest changeCustomers who accounted for 10% or more of our revenues during the year ended December 31, 2024 are as follows. ● Seiko Epson – 27.3% ● Alpine Electronics – 20.7% ● Hewlett-Packard Company – 20.4% ● Commercial Vehicle OEM – 11.8% Customers who accounted for 10% or more of our revenues during the year ended December 31, 2023 are as follows. ● Hewlett-Packard Company – 33.3% ● Seiko Epson – 20.2% ● Alpine Electronics – 18.2% ● LG Electronics – 13.1% 3 Customers by Market The following table presents our revenues by market as a percentage of total revenues: Years ended December 31, 2024 2023 Net license revenues from amusement 4.8 % - % Net license revenues from automotive 30.5 % 40.7 % Net license revenues from consumer electronics 51.2 % 58.6 % Net non-recurring engineering services revenues 13.5 % 0.7 % Total 100.0 % 100.0 % Geographical Data The following table presents our revenues by geographic region as a percentage of total revenues: Years ended December 31, 2024 2023 Japan 55.8 % 38.5 % United States 24.5 % 38.0 % Sweden 11.7 % - % Germany 3.7 % 9.9 % South Korea 3.1 % 13.1 % China 1.0 % 0.5 % Other 0.2 % - % Total 100.0 % 100.0 % The following table presents our total assets by geographic region: December 31, (in thousands) 2024 2023 United States $ 16,951 $ 16,084 Sweden 1,406 1,682 Asia 24 42 Total $ 18,381 $ 17,808 Competition There are various technologies for touch and gesture control solutions available that compete with our optical zForce technology.
Our strategy is to deliver value-adding human-machine interaction (“HMI”) and machine perception solutions and products that enable our customers to achieve these targets. We offer specialized NRE services related to the integration of our solutions and products into customer systems and products to ensure that optimal functionality and performance is achieved.
Our strategy is to deliver value-adding human-machine interaction (“HMI”) and machine perception solutions that enable our customers to achieve these targets. We offer specialized NRE services related to the integration of our solutions into customer systems and products to ensure that optimal functionality and performance is achieved.
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. 2 Markets Automotive The automotive value chain consists of OEMs (vehicle manufacturers) and tiered suppliers (Tier 1 system suppliers, Tier 2 component suppliers etc.).
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. Markets Automotive The automotive value chain consists of OEMs (vehicle manufacturers) and tiered suppliers (Tier 1 system suppliers, Tier 2 component suppliers etc.).
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 We rely on a combination of intellectual property laws and contractual provisions to establish and protect the proprietary rights in our technology.
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. 4 Intellectual Property We rely on a combination of intellectual property laws and contractual provisions to establish and protect the proprietary rights in our technology.
We focus on skills enhancement, leadership development, innovation excellence and professional growth throughout our employees’ careers. Our leadership program provides leadership trainings to our high-potential emerging leaders. We provide market competitive compensation aligned with company performance. We provide a comprehensive benefits package to our employees, including healthcare and retirement plans.
We focus on skills enhancement, leadership development, innovation excellence and professional growth throughout our employees’ careers. Our leadership program provides leadership trainings to our high-potential emerging leaders. 5 We provide market competitive compensation aligned with company performance. We provide a comprehensive benefits package to our employees, including healthcare and retirement plans.
Our research and development is performed predominantly in-house, but may also be performed in collaboration with external partners and specialists. 5 Human Capital We recognize that the development, attraction and retention of employees is critical to our success. For this reason, we strive to provide a positive work culture for our employees.
Our research and development is performed predominantly in-house, but may also be performed in collaboration with external partners and specialists. Human Capital We recognize that the development, attraction and retention of employees is critical to our success. For this reason, we strive to provide a positive work culture for our employees.
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.
With the 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.
The information contained on our website is not a part of, nor is it incorporated by reference into, this Annual Report. 6
The information contained on our website is not a part of, nor is it incorporated by reference into, this Annual Report.
In 2010, we began licensing to Original Equipment Manufacturers (“OEMs”) and automotive Tier 1 suppliers who embed our technology into products they develop, manufacture, and sell. Since 2010, our licensing customers have sold approximately 95 million products that feature our technology.
In 2010, we began licensing to Original Equipment Manufacturers (“OEMs”) and automotive Tier 1 suppliers who embed our technology into products they develop, manufacture, and sell. Since 2010, our licensing customers have sold over 95 million products that feature our technology.
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.
We have employees and/or consultants located in the United States, Sweden, United Kingdom, Japan 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.
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. 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.
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. During 2024 and 2023, our automotive customers shipped approximately 0.5 million and 0.9 million products with our technology, respectively. Accumulated, since 2014, our automotive customers have shipped approximately 8.5 million products featuring our technology.
The number of our issued and pending patents and patents filed in each jurisdiction as of December 31, 2023 is set forth in the following table: Jurisdiction No. of Reg.
The number of our issued and pending patents and patents filed in each jurisdiction as of December 31, 2024 is set forth in the following table: Jurisdiction No. of Reg.
We also protect and promote our brand by registering trademarks in key markets around the world. Our trademarks include: Neonode (26 registrations, 2 pending applications), the Neonode logo (8 registrations), zForce (10 registrations), and MultiSensing (3 registrations). Research and Development In fiscal years 2023 and 2022, we incurred $3.8 million and $4.0 million, respectively, on research and development activities.
We also protect and promote our brand by registering trademarks in key markets around the world. Our trademarks include: Neonode (26 registrations, 1 pending applications), the Neonode logo (8 registrations), zForce (10 registrations), and MultiSensing (3 registrations). Research and Development In fiscal years 2024 and 2023, we incurred $3.4 million and $3.8 million, respectively, on research and development activities.
ITEM 1. BUSINESS Our company provides advanced optical sensing solutions 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.
ITEM 1. BUSINESS About Us Neonode provides advanced optical sensing solutions 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.
Detection range, resolution and cost are the main differentiators. 4 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.
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.
For gesture control the main competition comes from other optical technologies and from both ultrasonic and radar technologies. Examples of competitors active in the area of gesture sensing include Ultraleap and suppliers of radar and ultrasonic sensor chips, for instance Texas Instruments and Acconeer.
For gesture control the main competition comes from other optical technologies and from both ultrasonic and radar technologies. Examples of competitors active in the area of gesture sensing include Ultraleap and suppliers of radar and ultrasonic sensor chips, for instance Texas Instruments and Acconeer. Detection range, resolution and cost are the main differentiators.
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.
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 2024 we filed four new patent applications and had seven new patent grants issued; eleven patents lapsed, and one patent application was abandoned.
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 part time from home. As of December 31, 2023, we had 53 employees (including 49 full-time employees) and 8 consultants.
Since the COVID-19 pandemic has subsided we have adopted a hybrid workplace. While we encourage employees to work from the office as much as possible, employees are permitted to work part time from home. As of December 31, 2024, we had 43 employees (including 40 full-time employees) and 7 consultants.
We also expect to expand our customer base with a number of new customers who will be looking to ship new products incorporating our zForce and MultiSensing technologies as they complete final product development and release cycles.
We anticipate current customers, except of one, will continue to ship products with our technology in 2025 and in future years. We also expect to expand our customer base with a number of new customers who will be looking to ship new products incorporating our zForce and MultiSensing technologies as they complete final product development and release cycles.
In this market, we mainly act as a Tier 2 technology provider to Tier 1 suppliers who license our technology and deliver different types of systems to OEMs (e.g. infotainment system displays featuring our touch technology).
In this market, we mainly act as a Tier 2 technology provider to Tier 1 suppliers who license our technology and deliver different types of systems to OEMs (e.g. our driver and in-cabin monitoring solution or our touch technology).
Designs No. of Issued Patents No. of Patents Pending United States 5 53 10 Europe - 11 4 Japan - 7 2 China - 6 2 South Korea - 6 2 Total: 5 83 20 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.
Designs No. of Issued Patents No. of Patents Pending United States 5 46 6 Europe - 13 4 Japan - 8 1 China - 6 2 South Korea - 6 2 Patent Convention Treaty Not Applicable Not Applicable 1 Total: 5 79 16 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.
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.
As of December 31, 2024, we had 37 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. Nine of our licensing customers are currently shipping products that embed our technology.
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.
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. 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 typically earn our license fees on a per unit basis when our customers ship products using our technology, but in the future we may use other business models as well. Product Sales In addition to our licensing business, we design and manufacture TSMs that incorporate our patented technology.
We typically earn our license fees on a per unit basis when our customers ship products using our technology, but in the future we may use other business models as well. 1 Non-recurring Engineering Services We also offer NRE services related to application development linked to our zForce and MultiSensing technology platforms on a flat rate or hourly rate basis.
As of December 31, 2023, four of our customers represented approximately 76.4% of our consolidated accounts receivable and unbilled revenues.
Customers Our customers are primarily located in North America, Europe and Asia. As of December 31, 2024, four of our customers represented approximately 80.9% 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.
Typically, our licensing customers require engineering support during the development and initial manufacturing phase for their products using our technology, while our TSM customers require hardware or software modifications to our standard products or support during the development and initial manufacturing phases of their products using our technology. In both cases we can offer NRE services and earn NRE revenues.
Typically, our licensing customers require engineering support during the development and initial manufacturing phase for their products using our technology. In this case we can offer NRE services and earn NRE revenues. Strategy and Focus Areas Our customers use touch, contactless touch, gesture sensing, and machine perception technologies to grow their businesses, drive efficiencies, and seek competitive advantages.
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.
Consequently, we phased out the TSM product business during 2024 through licensing of the TSM technology to strategic partners and in parallel we sold parts of the remaining TSMs. The phase out of our TSM product business meets the criteria to be reported as discontinued operations.
Consequently, we will phase out the TSM product business during 2024 through licensing of the TSM technology to strategic partners or outsourcing. 1 Licensing We license our zForce technology to OEMs and automotive Tier 1 suppliers who embed our technology into products that they develop, manufacture and sell.
Licensing We license our zForce and MultiSensing 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 over 95 million devices that use our patented technology.
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. In parallel we continued to market and sell TSMs directly and indirectly through partners.
Refer to Note 2 of Notes to the Consolidated Financial Statements for additional discussion of discontinued operations. All following information present continuing operations. During 2024, we also continued to focus our efforts on maintaining our current licensing customers and achieving design wins for new programs both with current and future customers.
In October 2017, we augmented our licensing business and began manufacturing and shipping touch sensor modules (“TSMs”) that incorporate our patented technology. We sell these TSMs to OEMs, Original Design Manufacturers (“ODMs”), and systems integrators for use in their products.
In October 2017, we augmented our licensing business and began manufacturing and shipping touch sensor modules (“TSMs”) that incorporate our patented technology. On December 12, 2023, we announced a new, sharpened strategy with full focus on the licensing business.
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. Industrial Automation We see interesting opportunities for our optical touch and gesture control solutions in the rugged industrial touchscreen market.
During 2024 our customers shipped approximately 2.4 million printers using our touch technology and since mid-2014 they have shipped approximately 57.3 million printers using our touch technology.
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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.
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Typically, our licensing customers require engineering support during the development and initial manufacturing phase for their products using our technology. For more details on non-recurring engineering (“NRE”) services please refer to the section below.
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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 integrators. In addition to this, we distribute our TSMs through Digi-Key Corporation, Serial Microelectronics HK Ltd., and Nexty Electronics Corporation.
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Rugged and Larger Touch Displays Following the decision in December 2023 to transform our zForce business to a licensing only business model, we see an increasing number of opportunities for our optical touch and gesture control solutions in the rugged industrial touchscreen market as well as for cost efficient touch solutions for larger touch displays i.e. 21 inch and above where we offer lower cost per inch on larger displays compared to PCAP.
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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.
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Easily integrated using a single-sided TSM sensor or a full-frame zForce implementation, Neonode’s licensable touch interaction technology platforms deliver exceptional performance and value to any touch-operated application.
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Ten of our licensing customers are currently shipping products that embed our technology. We anticipate current customers will continue to ship products with our technology in 2024 and in future years.
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We also see potential demand for our machine perception solutions in industrial settings. 2 Amusement Following the announcement that Nexty Electronics has selected Neonode’s TSM technology for sensor development and manufacturing of the next-generation slot machines for a leading manufacturer in Japan’s amusement market, we see further potential to deliver our technology to companies in the Japanese amusement market as well as in other markets that desire high quality, cost-effective touch functionality on large displays and surfaces.
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We sell our TSMs to OEMs, ODMs and systems integrators for use in their products. We utilize a robotic manufacturing process designed specifically for our TSMs.
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Holographic Interaction Using our TSM technology to facilitate interaction with a hologram, allows us to create immersive experiences with a “wow factor” in the infotainment sector e.g. museums, receptions, AI avatars etc. We also see an increasing potential for surgical planning and education, enabling virtual explorations and interactive learning.
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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.
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Non-recurring Engineering 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 basis.
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Our Organization Neonode Inc. was incorporated in the State of Delaware on September 4, 1997. Our principal executive office is located in Stockholm, Sweden. Our office in the United States is located in San Jose, California.
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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 in 2013); and Neonode Korea Ltd. (South Korea) (established in 2014). Neonode Korea Ltd. is currently dormant. In 2015, we established a 51% majority owned consolidated subsidiary, Pronode Technologies AB (Sweden).
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On October 1, 2022, we acquired the remaining shares in Pronode Technologies AB. Strategy and Focus Areas Our customers use touch, contactless touch, gesture sensing, and machine perception technologies to grow their businesses, drive efficiencies, and seek competitive advantages.
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We also see potential demand for our machine perception solutions in industrial settings. Medtech We sell our TSMs to customers manufacturing and selling medical imaging systems with touch screens. 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.
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Elevators and Interactive Kiosks 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.
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Using our TSMs, OEMs can easily create safe, intuitive, and easy-to-use contactless touch interfaces for their elevator and kiosk products. Our TSMs are also very suitable for retrofit applications and many of our OEM customers, value-added resellers, and technology partners have or are developing such solutions and marketing and selling them in their respective markets.
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Customer demand has decreased after the COVID-19 pandemic ended and in 2024 we will phase out the TSM product business. OEM customers, value-added resellers, and technology partners can still access our technology through licensing. Product Backlog Our TSM product backlog as of December 31, 2023 was approximately $34,000.
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The product backlog includes orders confirmed for products planned to be shipped within 12 months to one customer. Our cycle time between order and shipment is generally short and customers occasionally change delivery schedules. Additionally, orders can be cancelled without significant penalties.
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As a result of these factors, we do not believe that our product backlog, as of any particular date, is necessarily indicative of actual product revenue for any future period. Customers As of December 31, 2023 we had 34 valid technology license agreements. As of December 31, 2022, that number was 35.
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During the year ended December 31, 2023, we had 10 customers using our touch technology in products that were being shipped to their customers. The products related to these license agreements include e-readers, tablets, commercial and consumer printers, automotive infotainment system displays, and global positioning system (GPS) devices. Our customers are primarily located in North America, Europe and Asia.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny debt financing, if available, may include financial and other covenants that could restrict our use of the proceeds from such financing or impose other business and financial restrictions on us. In addition, we may consider alternative approaches such as licensing, joint venture, or partnership arrangements to provide long-term capital. We are dependent on a limited number of customers.
Biggest changeIn addition, we may consider alternative approaches such as licensing, joint venture, or partnership arrangements to provide long-term capital. We are dependent on a limited number of customers. Our license revenues for the year ended December 31, 2024 were earned from eight OEM, ODM and Tier 1 customers.
The loss of intellectual property rights may adversely impact our ability to generate revenues and expand our business. We may not be successful in our strategic efforts around patent monetization. Our success depends in part on our ability to effectively utilize our intellectual property. Our policy is to always try to protect our innovations using patents.
The loss of intellectual property rights may adversely impact our ability to generate revenues and expand our business. 9 We may not be successful in our strategic efforts around patent monetization. Our success depends in part on our ability to effectively utilize our intellectual property. Our policy is to always try to protect our innovations using patents.
No assurance can be given that we will enter into agreements related to our patent portfolio or that we will be successful in any strategic efforts around patent monetization. 10 If third parties infringe upon our intellectual property, we may expend significant resources enforcing our rights or suffer competitive injury.
No assurance can be given that we will enter into agreements related to our patent portfolio or that we will be successful in any strategic efforts around patent monetization. If third parties infringe upon our intellectual property, we may expend significant resources enforcing our rights or suffer competitive injury.
Any such events could result in legal claims or proceedings, liability or penalties under privacy laws, disruption in operations, and damage to our reputation, which could materially adversely affect our business. 11 Third parties that maintain our confidential and proprietary information could experience a cybersecurity incident.
Any such events could result in legal claims or proceedings, liability or penalties under privacy laws, disruption in operations, and damage to our reputation, which could materially adversely affect our business. Third parties that maintain our confidential and proprietary information could experience a cybersecurity incident.
A significant portion of our business is conducted in currencies other than the U.S. dollar (the currency in which our consolidated financial statements are reported), primarily the Swedish Krona and, to a lesser extent, the Euro, Japanese Yen, Korean Won, and Taiwan dollar.
A significant portion of our business is conducted in currencies other than the U.S. dollar (the currency in which our consolidated financial statements are reported), primarily the Swedish Krona and, to a lesser extent, the Euro, Japanese Yen and Korean Won.
These factors may also have the effect of delaying or preventing a change in our management or our voting control. Our certificate of incorporation and bylaws and the Delaware General Corporation Law contain provisions that could delay or prevent a change in control.
These factors may also have the effect of delaying or preventing a change in our management or our voting control. 13 Our certificate of incorporation and bylaws and the Delaware General Corporation Law contain provisions that could delay or prevent a change in control.
The majority of our license fees earned in 2023 and 2022 were from customer shipments of printer products and automotive infotainment systems. We continue to rely on licensing revenue from current and new customers whose products are still in the development cycle.
The majority of our license fees earned in 2024 and 2023 were from customer shipments of printer products and automotive infotainment systems. We continue to rely on licensing revenue from current and new customers whose products are still in the development cycle.
A limited number of stockholders, including directors, hold a significant number of shares of our outstanding common stock. Our two largest stockholders, who both are members of our Board of Directors, hold approximately one-fourth of the shares of our outstanding voting stock.
A limited number of stockholders, including directors, hold a significant number of shares of our outstanding common stock. Our two largest stockholders, who both are members of our Board of Directors, hold approximately one-fifth of the shares of our outstanding voting stock.
The response of customers to our sensor products, loss of a major customer, a reduction in net revenues of a major customer for any reason, or a failure of a major customer to fulfill its financial or other obligations due to us could have a material adverse effect on our business, financial condition, and future revenue stream.
The loss of a major customer, a reduction in net revenues of a major customer for any reason, or a failure of a major customer to fulfill its financial or other obligations due to us could have a material adverse effect on our business, financial condition, and future revenue stream.
These broad market fluctuations may negatively affect the market price of our common stock. You may not be able to resell your shares at or above the price you pay for those shares due to fluctuations in the market price of our common stock caused by changes in our operating performance or prospects, and other factors.
You may not be able to resell your shares at or above the price you pay for those shares due to fluctuations in the market price of our common stock caused by changes in our operating performance or prospects, and other factors.
Section 12(g)(4) of the Exchange Act allows for the registration of any class of securities to be terminated after a company files a certification with the SEC that the number of holders of record of such class of security is fewer than 300 persons. As of January 26, 2024, there were 55 stockholders of record of our common stock.
Section 12(g)(4) of the Exchange Act allows for the registration of any class of securities to be terminated after a company files a certification with the SEC that the number of holders of record of such class of security is fewer than 300 persons. As of January 28, 2025, there were 53 stockholders of record of our common stock.
We are dependent on the services of our key personnel. We are highly dependent on our senior management team, including Dr. Urban Forssell, our Chief Executive Officer, and Fredrik Nihlén, our Chief Financial Officer.
We are dependent on the services of our key personnel. We are highly dependent on our senior management team, including Fredrik Nihlén, our interim Chief Executive Officer and Chief Financial Officer.
If we are unable to detect material weaknesses in our internal control, our financial reporting and our business may be adversely affected.
While we have identified material weaknesses in our internal control, if we are unable to detect additional material weaknesses in our internal control, our financial reporting and our business may be adversely affected.
In addition, the following factors, among others, may negatively affect and cause fluctuations in our operating results: ● the announcement or introduction of new products or technologies by our competitors; ● our ability to upgrade and develop our infrastructure to accommodate growth; ● our ability to attract and retain key personnel in a timely and cost-effective manner; ● technical difficulties; ● the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations, and infrastructure; ● economic conditions specific to the industries and segments where we are active, for instance printers, automotive, elevators, and interactive kiosks; and ● general economic conditions including as a result of pandemics or epidemics, or geopolitical conflicts such as the ongoing war in Ukraine or the Israel-Palestine conflict. 9 Further, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service, or marketing decisions that could have a material and adverse effect on our business, results of operations, and financial condition.
In addition, the following factors, among others, may negatively affect and cause fluctuations in our operating results: ● the announcement or introduction of new products or technologies by our competitors; ● our ability to upgrade and develop our infrastructure to accommodate growth; ● our ability to attract and retain key personnel in a timely and cost-effective manner; ● technical difficulties; ● the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations, and infrastructure; ● economic conditions specific to the industries and segments where we are active, for instance printers, automotive, elevators, and interactive kiosks; and 8 ● general economic conditions including as a result of pandemics or epidemics, or geopolitical conflicts such as the ongoing war in Ukraine or the Israel-Palestine conflict.
Over time, controls may become ineffective because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Over time, controls may become ineffective because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. As described below, we have identified material weaknesses in our internal control over financial reporting.
If we were to terminate our registration and suspend our reporting obligations under the Exchange Act, we would no longer be required to comply with U.S. public company disclosure requirements under the Exchange Act, including, but not limited to, annual and quarterly report filings, proxy statement filings and filings by insiders to disclose the acquisition and disposition of our securities.
If we were to terminate our registration and suspend our reporting obligations under the Exchange Act, we would no longer be required to comply with U.S. public company disclosure requirements under the Exchange Act, including, but not limited to, annual and quarterly report filings, proxy statement filings and filings by insiders to disclose the acquisition and disposition of our securities. 12 Our stock price has been volatile, and your investment in our common stock could suffer a decline in value.
The trading market for our common stock may rely in part on the research and reports that securities analysts and other third parties choose to publish about us. We do not control these analysts or other third parties.
If securities analysts do not publish research or if securities analysts or other third parties publish inaccurate or unfavorable research about us, the price of our common stock could decline. The trading market for our common stock may rely in part on the research and reports that securities analysts and other third parties choose to publish about us.
For the year ended December 31, 2023, our revenues from Asia, North America and Europe were 47.2%, 36.0%, and 16.8%, respectively. We incur a significant portion of our expenses in Swedish Krona, including a significant portion of our research and development expenses and a substantial portion of our general and administrative expenses.
For the year ended December 31, 2024, our revenues from Asia, North America and Europe were 59.8%, 24.5%, and 15.7%, respectively. We incur a significant portion of our expenses in Swedish Krona, including a significant portion of our research and development expenses and a substantial portion of our general and administrative expenses.
Due to the foregoing factors, our revenues and operating results are and will remain difficult to forecast. We must enhance our sales and technology development organizations. If we are unable to identify, hire, or retain qualified sales, marketing, and technical personnel, our ability to achieve future revenue may be adversely affected.
We must enhance our sales and technology development organizations. If we are unable to identify, hire, or retain qualified sales, marketing, and technical personnel, our ability to achieve future revenue may be adversely affected.
The development and release cycle for customer products is lengthy and unpredictable. Our customers often undertake significant evaluation and design in the qualification of our products, which contributes to a lengthy product release cycle. The typical product development and release cycle is 18 to 36 months.
Our customers often undertake significant evaluation and design in the qualification of our solutions, which contributes to a lengthy product release cycle. The typical product development and release cycle is 18 to 36 months. The development and release cycle may be longer in some cases, particularly for automotive vehicle products.
The price of our common stock could be negatively impacted by insufficient analyst coverage or if one or more analysts or other third parties publish inaccurate or unfavorable research about us. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
We do not control these analysts or other third parties. The price of our common stock could be negatively impacted by insufficient analyst coverage or if one or more analysts or other third parties publish inaccurate or unfavorable research about us.
The development and release cycle may be longer in some cases, particularly for automotive vehicle products. There is no assurance that a customer will adopt our technology after the evaluation or design phase, in which case we would not be entitled to any revenues from the customer moving forward.
There is no assurance that a customer will adopt our technology after the evaluation or design phase, in which case we would not be entitled to any revenues from the customer moving forward.
From time to time, we audit certain of our licensees to verify independently the accuracy of the information contained in their royalty reports in an effort to decrease the likelihood that we will not receive the royalty revenues to which we are entitled under the terms of our license agreements, but we can give no assurances that these audits will be effective. 8 If we fail to develop and introduce new technology successfully, and in a cost-effective and timely manner, we will not be able to compete effectively and our ability to generate revenues will suffer .
From time to time, we audit certain of our licensees to verify independently the accuracy of the information contained in their royalty reports in an effort to decrease the likelihood that we will not receive the royalty revenues to which we are entitled under the terms of our license agreements, but we can give no assurances that these audits will be effective.
If adequate funds are not available when needed on acceptable terms, or at all, we may be unable to adequately fund our business plan, which could have a negative effect on our business, results of operations, and financial condition.
If adequate funds are not available when needed on acceptable terms, or at all, we may be unable to adequately fund our business plan, which could have a negative effect on our business, results of operations, and financial condition. 6 We may, in the short and long-term, seek to raise capital through the issuance of equity securities or through other financing sources.
Although our standard license terms give us the right to audit books and records of our licensees to verify this information, audits can be expensive, time consuming, incomplete, and subject to dispute.
Our license agreements typically require our licensees to document the sale of licensed products and report this data to us on a quarterly basis. Although our standard license terms give us the right to audit books and records of our licensees to verify this information, audits can be expensive, time consuming, incomplete, and subject to dispute.
If our internal controls over financial reporting are not considered effective, we may experience a loss of public confidence, which could have an adverse effect on our business and on the market price of our common stock.
Consequently, we may experience a loss of public confidence, which could have an adverse effect on our business and on the market price of our common stock.
Furthermore, certain other provisions of our certificate of incorporation and bylaws may have the effect of delaying or preventing changes in control or management, which could adversely affect the market price of our common stock.
Furthermore, certain other provisions of our certificate of incorporation and bylaws may have the effect of delaying or preventing changes in control or management, which could adversely affect the market price of our common stock. In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, an anti-takeover law.
If our customers are unable to obtain ASICs that incorporate our patented technology, we may not be able to meet demand, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If our customers are unable to obtain ASICs that incorporate our patented technology, we may not be able to meet demand, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. 7 It can be difficult for us to verify royalty amounts owed to us under licensing agreements, and this may cause us to lose potential revenue.
A negative reaction by investors and securities analysts to any discounted sale of our equity securities could result in a decline in the trading price of our common stock. 12 We currently have fewer than 300 stockholders of record and, therefore, are eligible to terminate the registration of our common stock under the Exchange Act and cease being a U.S. public company with reporting obligations.
We currently have fewer than 300 stockholders of record and, therefore, are eligible to terminate the registration of our common stock under the Exchange Act and cease being a U.S. public company with reporting obligations.
Our stock price has been volatile, and your investment in our common stock could suffer a decline in value. There has been significant volatility in the market price and trading volume of equity securities, which is unrelated to the financial performance of the companies issuing the securities.
There has been significant volatility in the market price and trading volume of equity securities, which is unrelated to the financial performance of the companies issuing the securities. These broad market fluctuations may negatively affect the market price of our common stock.
We cannot assure you that we or our independent registered public accounting firm will not identify a material weakness in our internal controls in the future. A material weakness in our internal controls over financial reporting would require management and our independent registered public accounting firm to consider our internal controls as ineffective.
We cannot assure you that we or our independent registered public accounting firm will not identify an additional material weakness in our internal controls in the future. 11 We have identified material weaknesses in our internal control over financial reporting.
If our customers are not able to design, manufacture and sell their products, or are delayed in producing and selling their products, our revenues, profitability, and liquidity, as well as our brand image, may be adversely affected. 7 The length of a customer’s product development and release cycle depends on many factors outside of our control and any delays could cause us to incur significant expenses without offsetting revenues, or revenues that vary significantly from quarter to quarter.
The length of a customer’s product development and release cycle depends on many factors outside of our control and any delays could cause us to incur significant expenses without offsetting revenues, or revenues that vary significantly from quarter to quarter. The development and release cycle for customer products is lengthy and unpredictable.
As a result, appreciation of the value of the Swedish Krona relative to the other currencies, particularly the U.S. dollar, could adversely affect operating results. We do not currently undertake hedging transactions to cover our currency exposure, but we may choose to hedge a portion of our currency exposure in the future as we deem appropriate.
As a result, appreciation of the value of the Swedish Krona relative to the other currencies, particularly the U.S. dollar, could adversely affect operating results.
Our customer concentration may change significantly from period-to-period depending on a customer’s product cycle and changes in our industry.
We generated NRE revenues from four customers for the year ended December 31, 2024. During the year ended December 31, 2024, four customers represented approximately 80.2% of our consolidated net revenues. Our customer concentration may change significantly from period-to-period depending on a customer’s product cycle and changes in our industry.
We may, in the short and long-term, seek to raise capital through the issuance of equity securities or through other financing sources. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution.
To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Any debt financing, if available, may include financial and other covenants that could restrict our use of the proceeds from such financing or impose other business and financial restrictions on us.
Removed
Our license revenues for the year ended December 31, 2023 were earned from 10 OEM, ODM and Tier 1 customers. We generated NRE revenues from two customers for the year ended December 31, 2023. During the year ended December 31, 2023, three customers represented approximately 56.4% of our consolidated net revenues.
Added
If our customers are not able to design, manufacture and sell their products, or are delayed in producing and selling their products, our revenues, profitability, and liquidity, as well as our brand image, may be adversely affected.
Removed
It can be difficult for us to verify royalty amounts owed to us under licensing agreements, and this may cause us to lose potential revenue. Our license agreements typically require our licensees to document the sale of licensed products and report this data to us on a quarterly basis.
Added
If we fail to develop and introduce new technology successfully, and in a cost-effective and timely manner, we will not be able to compete effectively and our ability to generate revenues will suffer .
Removed
In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, an anti-takeover law. 13 If securities analysts do not publish research or if securities analysts or other third parties publish inaccurate or unfavorable research about us, the price of our common stock could decline.
Added
Further, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service, or marketing decisions that could have a material and adverse effect on our business, results of operations, and financial condition. Due to the foregoing factors, our revenues and operating results are and will remain difficult to forecast.
Added
We do not currently undertake hedging transactions to cover our currency exposure, but we may choose to hedge a portion of our currency exposure in the future as we deem appropriate. 10 We have concentration of cash balance at various banks in the United States, Japan and Sweden.
Added
Cash and cash equivalents balances are maintained at various banks in the United States, Japan and Sweden. For deposits held with financial institutions in the United States, the U.S. Federal Deposit Insurance Corporation provides basic deposit coverage with limits up to $250,000 per owner.
Added
The Swedish government provides insurance coverage up to 1,050,000 Krona per customer and covers deposits in all types of accounts. For bank accounts of the category held by Neonode, the Japanese government provides full insurance coverage. At times, deposits held with financial institutions may exceed the amount of insurance provided.
Added
As a result of the material weaknesses, our management concluded that our internal control over financial reporting was not effective based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission.
Added
If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations.
Added
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended.
Added
In the course of our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2024, our management identified material weaknesses in our internal control over financial reporting. The material weaknesses are discussed in more detail in this Annual Report under “Item 9A.
Added
Controls and Procedures.” A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Added
Our management is actively engaged in developing a remediation plan designed to address these material weaknesses. We cannot assure you that any measures we may take in the near future will be sufficient to remediate these material weaknesses or avoid potential future material weaknesses.
Added
In addition, we may suffer adverse regulatory or other consequences, as well as negative market reaction, as a result of any material weaknesses, and we will incur additional costs as we seek to remediate these material weaknesses.
Added
If we are unable to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, or identify any additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, the accuracy and timing of our financial reporting may be negatively impacted, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting, and our stock price may decline as a result.
Added
A negative reaction by investors and securities analysts to any discounted sale of our equity securities could result in a decline in the trading price of our common stock.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Board of Directors has oversight responsibility for risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements, cooperation with law enforcement, and related effects on financial and other risks. Senior management regularly discusses cyber risks and trends and, should they arise, any material incidents with the Board of Directors.
Biggest changeWe consult with outside counsel as appropriate, including on materiality analysis and disclosure matters, and our senior management makes the final materiality determinations and disclosure and other compliance decisions. 14 The Board of Directors has oversight responsibility for risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements, cooperation with law enforcement, and related effects on financial and other risks.
Our team consists of professionals with deep cybersecurity expertise across multiple industries, including our Information Security & Quality Manager. Our executive leadership team, along with input from the above professionals, are responsible for our overall enterprise risk management process and regularly consider cybersecurity risks in the context of other material risks to the Company.
Our executive leadership team, along with input from the above professionals, are responsible for our overall enterprise risk management process and regularly consider cybersecurity risks in the context of other material risks to the Company.
Any incident assessed as potentially being or potentially becoming material is immediately escalated for further assessment, and then reported to designated members of our senior management. We consult with outside counsel as appropriate, including on materiality analysis and disclosure matters, and our senior management makes the final materiality determinations and disclosure and other compliance decisions.
Any incident assessed as potentially being or potentially becoming material is immediately escalated for further assessment, and then reported to designated members of our senior management.
Added
Our team and external partners include professionals with deep cybersecurity expertise across multiple industries, including our IT, Information security & Quality Manager who oversees our cybersecurity operations.
Added
Senior management regularly discusses cyber risks and trends and, should they arise, any material incidents with the Board of Directors.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe our facilities are adequate and suitable for our current needs and that suitable additional or alternative space will be available to accommodate our operations if needed.
Biggest changeITEM 2. PROPERTIES As of December 31, 2024, we leased office facilities of approximately 6,700 square feet for our corporate headquarter in Stockholm. We believe our facilities are adequate and suitable for our current needs and that suitable additional or alternative space will be available to accommodate our operations if needed.
Removed
ITEM 2. PROPERTIES As of December 31, 2023, we leased office facilities of approximately 6,700 square feet for our corporate headquarters in Stockholm. In addition, our subsidiary Pronode Technologies AB leases a workshop of approximately 9,000 square feet in Kungsbacka, Sweden.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS We are not a party to any pending legal proceedings. From time to time, we may become subject to legal proceedings, claims, and litigation arising in the ordinary course of business, including, but not limited to, employee, customer and vendor disputes. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 14 PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS We are not a party to any pending legal proceedings. From time to time, we may become subject to legal proceedings, claims, and litigation arising in the ordinary course of business, including, but not limited to, employee, customer and vendor disputes. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 15 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is quoted on the Nasdaq Stock Market under the symbol “NEON.” Holders As of January 26, 2024, there were 55 stockholders of record of our common stock.
Biggest changeITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is quoted on the Nasdaq Stock Market under the symbol “NEON.” Holders As of January 28, 2025, there were 53 stockholders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

41 edited+37 added−72 removed6 unchanged
Biggest changeThe following table presents our deferred revenues by source (in thousands): Years ended December 31, 2023 2022 Deferred revenues license fees $ 2 $ 20 Deferred revenues products 8 9 Deferred revenues non-recurring engineering - 7 $ 10 $ 36 19 Results of Operations A summary of our financial results for the years ended December 31, 2023 and 2022 is as follows (in thousands, except percentages): 2023 2022 Variance in Dollars Variance in Percent Revenues: License fees $ 3,803 $ 4,470 $ (667 ) (14.9 )% Percentage of revenue 85.5 % 78.8 % Products 620 995 (375 ) (37.7 )% Percentage of revenue 13.9 % 17.5 % Non-recurring engineering 26 205 (179 ) (87.3 )% Percentage of revenue 0.6 % 3.6 % Total revenues $ 4,449 $ 5,670 $ (1,221 ) (21.5 )% Cost of revenues: Products $ 4,168 $ 776 $ 3,392 437.1 % Percentage of revenue 93.7 % 13.7 % Non-recurring engineering 12 28 (16 ) (57.1 )% Percentage of revenue 0.3 % 0.5 % Loss on purchase commitment 362 - 362 - % Percentage of revenue 8.1 % - % Total cost of revenues $ 4,542 $ 804 $ 3,738 464.9 % Total gross (loss) margin $ (93 ) $ 4,866 $ (4,959 ) (101.9 )% Operating expenses: Research and development $ 3,833 $ 3,963 $ (130 ) (3.3 )% Percentage of revenue 86.2 % 69.9 % Sales and marketing 2,455 2,034 421 20.7 % Percentage of revenue 55.2 % 35.9 % General and administrative 4,363 4,155 208 5.0 % Percentage of revenue 98.1 % 73.3 % Total operating expenses $ 10,651 $ 10,152 $ 499 4.9 % Percentage of revenue 239.4 % 179.0 % Operating loss $ (10,744 ) $ (5,286 ) $ (5,458 ) 103.3 % Percentage of revenue (241.5 )% (93.2 )% Other income 736 121 615 508.3 % Percentage of revenue 16.5 % 2.1 % Provision for income taxes 115 118 (3 ) (2.5 )% Percentage of revenue 2.6 % 2.1 % Less: net loss attributable to noncontrolling interests - 400 (400 ) (100.0 )% Percentage of revenue - % 7.1 % Net loss attributable to Neonode Inc.
Biggest changeResults of Operations The following table provides our consolidated results for the continuing operations: Years ended December 31, Variance in Variance in (in thousands) 2024 2023 Dollars Percent Revenues: License fees $ 2,687 $ 3,803 $ (1,116 ) (29.3 )% Percentage of revenue 86.5 % 99.3 % Non-recurring engineering 421 26 395 1,519.2 % Percentage of revenue 13.5 % 0.7 % Total revenues $ 3,108 $ 3,829 $ (721 ) (18.8 )% Cost of revenues: Non-recurring engineering 116 12 104 866.7 % Percentage of revenue 3.7 % 0.3 % Total cost of revenues $ 116 $ 12 $ 104 866.7 % Gross margin $ 2,992 $ 3,817 $ (825 ) (21.6 )% Operating expenses: Research and development $ 3,444 $ 3,833 $ (389 ) (10.1 )% Percentage of revenue 110.8 % 100.1 % Sales and marketing 2,328 2,455 (127 ) (5.2 )% Percentage of revenue 74.9 % 64.1 % General and administrative 3,767 3,266 501 15.3 % Percentage of revenue 121.2 % 85.3 % Total operating expenses $ 9,539 $ 9,554 $ (15 ) (0.2 )% Percentage of revenue 306.9 % 249.5 % Operating loss $ (6,547 ) $ (5,737 ) $ (810 ) 14.1 % Percentage of revenue (210.6 )% (149.8 )% Other income, net 687 736 (49 ) (6.7 )% Percentage of revenue 22.1 % 19.2 % Provision for income taxes 15 115 (100 ) (87.0 )% Percentage of revenue 0.5 % 3.0 % Loss from continuing operations $ (5,875 ) $ (5,116 ) $ (759 ) 14.8 % Percentage of revenue (189.0 )% (133.6 )% Loss per share from continuing operations $ (0.37 ) $ (0.33 ) $ (0.04 ) 12.1 % Revenues All of our sales for the years ended December 31, 2024 and 2023 were to customers located in the United States, Europe and Asia.
We also provide software solutions for machine perception that feature advanced machine learning algorithms to detect and track persons and objects in video streams for 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.
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.
Our future liquidity will be affected by, among other things: ● licensing of our technology; ● purchases of our TSMs; ● operating expenses; ● timing of our OEM customer product shipments; ● timing of payment for our technology licensing agreements; ● gross profit margin; and ● ability to raise additional capital, if necessary.
Our future liquidity will be affected by, among other things: ● licensing of our technology; ● operating expenses; ● timing of our OEM customer product shipments; ● timing of payment for our technology licensing agreements; ● gross profit margin; and ● ability to raise additional capital, if necessary.
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. They are subject to foreign currency exchange rate risk. Any increase or decrease in the exchange rate of the U.S.
The functional currency of our foreign subsidiaries is the applicable local currency, the Swedish Krona, the Japanese Yen and the South Korean Won. They are subject to foreign currency exchange rate risk. Any increase or decrease in the exchange rate of the U.S.
Operating Leases Neonode Inc. operates solely through a virtual office in California. 23 On December 1, 2020, Neonode Technologies AB entered into a lease for 6,684 square feet of office space located at Karlavägen 100, Stockholm, Sweden. The lease agreement has been extended and is valid through November 2024.
Operating Leases Neonode Inc. operates solely through a virtual office in California. On December 1, 2020, Neonode Technologies AB entered into a lease for 6,684 square feet of office space located at Karlavägen 100, Stockholm, Sweden. The lease agreement has been extended and is valid through November 2026.
As of December 31, 2023, we had cash and cash equivalents of $16.2 million, as compared to $14.8 million as of December 31, 2022. Based on our current cash position, and assuming currently planned expenditures and level of operations, we believe we have sufficient capital to fund operations for the twelve-month period subsequent to the date of this Annual Report.
As of December 31, 2024, we had cash and cash equivalents of $16.4 million, as compared to $16.2 million as of December 31, 2023. Based on our current cash position, and assuming currently planned expenditures and level of operations, we believe we have sufficient capital to fund operations for the twelve-month period subsequent to the date of this Annual Report.
Net cash provided by financing activities for the year ended December 31, 2023 was $7.8 million and was primarily the result of issuance of common stock under the ATM Facility (as defined and described below).
Net cash provided by financing activities for the year ended December 31, 2024 was $5.8 million and was primarily the result of issuance of common stock under the ATM Facility (as defined and described below).
Under the terms of the lease agreement the lease will be renewed within one year of the end of the original four-year lease term. In accordance with relevant accounting guidance the lease is classified as a finance lease. The lease payments and depreciation periods began in May 2017 when the equipment went into service.
Under the terms of the agreement, the lease will be renewed within one year of the original three-year lease term. In accordance with relevant accounting guidance the lease is classified as a finance lease. The lease payments and depreciation periods began in May 2022 when the equipment went into service.
Riley Securities will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon instructions from us (including any price or size limits or other customary parameters or conditions we may impose). We will pay B.
Ladenburg will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon instructions from us (including any price or size limits or other customary parameters or conditions we may impose).
Riley Securities and other expenses of $167,000. 26 Future Sources of Liquidity In the future, we may require sources of capital in addition to cash on hand and our ATM Facility 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.
Future Sources of Liquidity In the future, we may require sources of capital in addition to cash on hand and our Ladenburg ATM Facility 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.
Net Loss As a result of the factors discussed above, we recorded a net loss of $10.1 million for the year ended December 31, 2023, compared to a net loss of $4.9 million for the year ended December 31, 2022.
Net Loss As a result of the factors discussed above, we recorded a net loss of $5.9 million for the year ended December 31, 2024, compared to a net loss of $5.1 million for the year ended December 31, 2023.
Working capital (current assets less current liabilities) was $16.8 million as of December 31, 2023, compared to working capital of $19.1 million as of December 31, 2022.
Working capital (current assets less current liabilities) was $16.1 million as of December 31, 2024, compared to working capital of $16.1 million as of December 31, 2023.
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.
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 December 31, 2024, we had made no payments to TI under the NN1002 Agreement.
Net cash used in operating activities for the year ended December 31, 2023 was $6.3 million and was primarily the result of a net loss of $10.1 million and approximately $3.8 million in non-cash operating expenses, comprised of stock-based compensation expense, inventory impairment loss, depreciation and amortization and amortization of operating lease right-of-use assets, and changes in operating assets and liabilities of $25,000.
Net cash used in operating activities for combined continuing and discontinued operations for the year ended December 31, 2024 was $5.6 million and was primarily the result of a net loss of $6.4 million and approximately $0.5 million in non-cash operating expenses, comprised of stock-based compensation expense, inventory impairment loss, depreciation and amortization and amortization of operating lease right-of-use assets, and changes in operating assets and liabilities of $0.3 million.
Contractual Obligation and Off-Balance Sheet Arrangements We do not have any transactions, arrangements, or other relationships with unconsolidated entities that are reasonably likely to affect our liquidity or capital resources other than the operating leases incurred in the normal course of business.
Dollar compared to the Swedish Krona, Japanese Yen or South Korean Won will impact our future operating results. 20 Contractual Obligation and Off-Balance Sheet Arrangements We do not have any transactions, arrangements, or other relationships with unconsolidated entities that are reasonably likely to affect our liquidity or capital resources other than the operating leases incurred in the normal course of business.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report. Overview Our company provides advanced optical sensing solutions for touch, contactless touch, and gesture sensing.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report.
R&D expenses primarily consist of personnel-related costs in addition to external consultancy costs, such as testing, certifying and measurements, along with costs related to developing and building new product prototypes. The decrease of 3.3% in 2023 compared to 2022 was primarily related to lower product development costs.
Research and Development R&D expenses for 2024 and 2023 were $3.4 million and $3.8 million, respectively. R&D expenses primarily consist of personnel-related costs in addition to external consultancy costs, such as testing, certifying and measurements, along with costs related to developing and building new product prototypes.
Riley Securities, of all of the shares subject to the Sales Agreement and (ii) termination of the Sales Agreement in accordance with its terms. During the year ended December 31, 2023, we sold an aggregate of 903,716 shares of our common stock under the ATM Facility with aggregate net proceeds to us of $7,866,000, after payment of commissions to B.
During the year ended December 31, 2023, we sold an aggregate of 903,716 shares of our common stock under the ATM Facility with aggregate net proceeds to us of $7.9 million, after payment of commissions to B. Riley Securities and other expenses of $0.2 million.
The increase of 5.0% from 2022 was primarily due to higher cost for professional fees. There is approximately $50,000 of non-cash stock-based compensation included in G&A expenses for the year ended December 31, 2023 compared to $114,000 for the year ended December 31, 2022.
There is approximately $3,000 of non-cash stock-based compensation included in G&A expenses for the year ended December 31, 2024 compared to $50,000 for the year ended December 31, 2023. Other Income Other income for the year ended December 31, 2024 was $0.7 compared to $0.7 million for the year ended December 31, 2023.
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.
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.
Riley Securities a commission of 3.0% of the gross sales price per share sold under the Sales Agreement. We are not obligated to sell any shares under the Sales Agreement. The offering of shares pursuant to the Sales Agreement will terminate upon the earlier to occur of (i) the issuance and sale, through B.
We will pay Ladenburg a commission of 3.0% of the gross sales price per share sold under the Ladenburg Sales Agreement. We are not obligated to sell any shares under the Ladenburg Sales Agreement.
Income Taxes Our effective tax rate was (1.1)% for the year ended December 31, 2023 and (2.3)% for the year ended December 31, 2022. We recorded valuation allowances in 2023 and 2022 for deferred tax assets related to net operating losses due to the uncertainty of realization.
We recorded valuation allowances in 2024 and 2023 for deferred tax assets related to net operating losses due to the uncertainty of realization.
As of December 31, 2023, we had made no payments to TI under the NN1002 Agreement. 24 Liquidity and Capital Resources Our liquidity is dependent on many factors, including sales volume, operating profit and the efficiency of asset use and turnover.
Liquidity and Capital Resources Our liquidity is dependent on many factors, including sales volume, operating profit and the efficiency of asset use and turnover.
Riley Securities”) with respect to an “at the market” offering program (the “ATM Facility”), under which we may, from time to time, in our sole discretion, issue and sell through B. Riley Securities, acting as sales agent, up to $25 million of shares of our common stock. Pursuant to the Sales Agreement, we may sell the shares through B.
(“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. 21 Pursuant to the Ladenburg Sales Agreement, we may sell the shares through Ladenburg by any method permitted that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended.
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 or the Taiwan Dollar to U.S.
The functional currency of our foreign subsidiaries is the applicable local currency, the Swedish Krona, the Japanese Yen and the South Korean Won. They are subject to foreign currency exchange rate risk. Any increase or decrease in the exchange rate of the U.S.
Riley Securities by any method permitted that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended. B.
Riley Securities, acting as sales agent, up to $25 million of shares of our common stock, in any method permitted that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended. On May 29, 2024, we terminated the B. Riley Sales Agreement with B. Riley Securities.
Net cash used in operating activities for the year ended December 31, 2022 was $6.8 million and was primarily the result of a net loss including noncontrolling interests of $5.3 million and approximately $0.6 million in non-cash operating expenses, comprised of stock-based compensation expense, depreciation and amortization and amortization of operating lease right-of-use assets and recoveries of bad debt, and changes in operating assets and liabilities of $(2.1) million.
Net cash used in operating activities for the year ended December 31, 2023 was $6.3 million and was primarily the result of a net loss of $10.1 million and approximately $3.8 million in non-cash operating expenses, comprised of stock-based compensation expense, inventory impairment loss, depreciation and amortization and amortization of operating lease right-of-use assets, and changes in operating assets and liabilities of $25,000. 19 Accounts receivable and unbilled revenues for combined continuing and discontinued operations decreased by approximately $134,000 as of December 31, 2024 compared to December 31, 2023, due to lower revenues.
Accounts receivable and unbilled revenues decreased by approximately $539,000 as of December 31, 2023 compared to December 31, 2022, due to lower revenues. Inventory increased by approximately $395,000 as of December 31, 2023, not considering the $3.6 million non-cash impairment charge recorded during 2023, compared to December 31, 2022.
Inventory for discontinued operations increased by approximately $223,000 as of December 31, 2024, not considering the $357,000 non-cash impairment charge recorded during 2024, compared to December 31, 2023. Accounts payable and accrued expenses for combined continuing and discontinued operations decreased approximately $342,000 as of December 31, 2024 compared to December 31, 2023.
The lease payments and depreciation periods began in May 2022 when the equipment went into service. The implicit interest rate of the lease is currently approximately 3.0% per annum.
The implicit interest rate of the lease is currently approximately 3.0% per annum.
Riley Securities and other expenses of $244,000. During the year ended December 31, 2022, we sold an aggregate of 886,065 shares of common stock under the ATM Facility, resulting in net proceeds of approximately $4,686,000 after payment of commissions to B.
During the year ended December 31, 2024, we sold an aggregate of 1,423,441 shares of our common stock under the Ladenburg 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.
Accounts payable and accrued expenses increased approximately $173,000 as of December 31, 2023 compared to December 31, 2022. 25 For the year ended December 31, 2023, we purchased $123,000 of fixed assets, consisting primarily of manufacturing equipment. For the year ended December 31, 2022, we purchased $52,000 of fixed assets, consisting primarily of office equipment.
For the year ended December 31, 2024, we purchased $37,000 of fixed assets, consisting primarily of ERP software. For the year ended December 31, 2023, we purchased $123,000 of fixed assets, consisting primarily of manufacturing equipment.
Our sales and marketing activities focus on OEM, ODM and Tier 1 customers who will license our technology or purchase and embed our TSMs into their products. 22 General and Administrative General and administrative (“G&A”) expenses for 2023 and 2022 were $4.4 million and $4.2 million, respectively.
Our sales and marketing activities focus on OEM, ODM and Tier 1 customers who will license our technology. General and Administrative General and administrative (“G&A”) expenses for 2024 and 2023 were $3.8 million and $3.3 million, respectively. The increase of 15.3% from 2023 was primarily due to higher for cost payroll and related costs and professional fees.
Dollar compared to the Swedish Krona, Japanese Yen, South Korean Won or Taiwan Dollar will impact our future operating results.
Dollar compared to the Swedish Krona, Japanese Yen or South Korean Won will impact our future operating results. Patent Assignment On May 6, 2019, the Company assigned a portfolio of patents to Aequitas Technologies LLC (“Aequitas”), an unrelated third party.
Sales and Marketing Sales and marketing expenses for were $2.5 million and $2.0 million, respectively. Sales and marketing expenses in 2023 increased 20.7% compared to 2022 primarily due to higher cost for personnel and related costs and higher cost for marketing.
The decrease of 10.1% in 2024 compared to 2023 was primarily related to lower payroll and related costs. 18 Sales and Marketing Sales and marketing expenses for were $2.3 million and $2.5 million, respectively.
There is approximately $8,000 of stock-based compensation expense included in sales and marketing expenses for each of the years ended December 31, 2023 and 2022.
Sales and marketing expenses in 2024 decreased 5.2% compared to 2023 primarily due to lower cost for personnel and related costs offset by higher cost for marketing. There is no non-cash stock-based compensation included in sales and marketing expenses for the year ended December 31, 2024 compared to $8,000 for the year ended December 31, 2023.
Consequently, we will phase out the TSM product business during 2024 through licensing of the TSM technology to strategic partners or outsourcing. Critical Accounting Policies and Estimates Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
Recent Accounting Pronouncements The information set forth under Note 1 to the consolidated financial statements is incorporated herein by reference. 16 Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
Revenues from non-recurring engineering revenues were $26,000 and $0.2 million for the years ended December 31, 2023 and 2022. Most of our non-recurring engineering revenues are related to application development and proof-of-concept projects related to our TSMs or to our zForce and MultiSensing technology platforms. The decrease of 87.3% in 2023 compared to 2022 was mainly due to fewer projects.
Our non-recurring engineering revenues are related to application development and proof-of-concept projects related to our zForce and MultiSensing technology platforms.
All of our sales for the years ended December 31, 2022 were to customers located in the United States, Europe and Asia. Total net revenues were $4.4 million and $5.7 million for the years ended December 31, 2023 and 2022, respectively.
Total net revenues were $3.1 million and $3.8 million for the years ended December 31, 2024 and 2023, respectively.
The gross margin for products for the year ended December 31, 2022 was impacted by a one-time cost of $262,000 related to inventory write-down. Our cost of revenues includes the direct cost of production of certain customer prototypes, costs of engineering personnel, engineering consultants to complete the engineering design contracts.
Gross Margin Our gross margin was 96.3% in 2024 compared to 99.7% in 2023. The decrease in 2024 compared to 2023 were due to more NRE projects. Our cost of revenues includes the direct cost of production of certain customer prototypes, costs of engineering personnel, engineering consultants to complete the engineering design contracts.
The following tables present the net revenues distribution by geographical area and revenue stream for the years ended December 31, 2023 and 2022 (dollars in thousands): 2023 2022 Amount Percentage Amount Percentage North America License fees $ 1,455 90.9 % $ 1,812 98.5 % Products 145 9.1 % 27 1.5 % Non-recurring engineering - - % - - % $ 1,600 100.0 % $ 1,839 100.0 % Asia Pacific License fees $ 1,988 94.7 % $ 2,369 85.7 % Products 105 5.0 % 348 12.6 % Non-recurring engineering 7 0.3 % 46 1.7 % $ 2,100 100.0 % $ 2,763 100.0 % Europe, Middle East and Africa License fees $ 360 48.1 % $ 289 27.1 % Products 370 49.4 % 620 58.0 % Non-recurring engineering 19 2.5 % 159 14.9 % $ 749 100.0 % $ 1,068 100.0 % 21 The following table presents disaggregated revenues by revenue stream for the years ended December 31, 2023 and 2022 (dollars in thousands): Year ended December 31, 2023 Year ended December 31, 2022 Amount Percentage Amount Percentage Net license revenues from automotive $ 1,559 35.1 % $ 1,551 27.4 % Net license revenues from consumer electronics 2,244 50.4 % 2,919 51.5 % Net product revenues from TSMs 620 13.9 % 995 17.5 % Net non-recurring engineering services revenues 26 0.6 % 205 3.6 % $ 4,449 100.0 % $ 5,670 100.0 % Revenues from license fees were $3.8 million and $4.5 million for the years ended December 31, 2023 and 2022, respectively.
The decrease in total net revenues by 18.8% for the year ended December 31, 2024 as compared to 2023 was caused by lower revenues from license revenues offset by higher revenues from non-recurring engineering. 17 The following table present the net revenues distribution by business area and revenue stream: Years ended December 31, 2024 2023 (in thousands) Amount Percentage Amount Percentage Automotive License fees $ 949 77.9 % $ 1,560 98.8 % Non-recurring engineering 270 22.1 % 19 1.2 % $ 1,219 100.0 % $ 1,579 100.0 % IT & Industrial License fees $ 1,738 92.0 % $ 2,243 99.7 % Non-recurring engineering 151 8.0 % 7 0.3 % $ 1,889 100.0 % $ 2,250 100.0 % The following table presents disaggregated revenues by revenue stream: Years ended December 31, 2024 2023 (in thousands) Amount Percentage Amount Percentage Net license revenues from amusement $ 150 4.8 % $ - - % Net license revenues from automotive 948 30.5 % 1,559 40.7 % Net license revenues from consumer electronics 1,589 51.2 % 2,244 58.6 % Net non-recurring engineering services revenues 421 13.5 % 26 0.7 % $ 3,108 100.0 % $ 3,829 100.0 % Revenues from license fees were $2.7 million and $3.8 million for the years ended December 31, 2024 and 2023, respectively.
Other Income Other income for the year ended December 31, 2023 was $736,000 compared to $121,000 for the year ended December 31, 2022. The other income for 2023 was mainly related to interest income earned. The other income for 2022 was related to interest income earned and gain from recovery of bad debt offset by primarily finance leases.
The other income for 2024 and 2023 was mainly related to interest income earned. Income Taxes Our effective tax rate was (0.3)% for the year ended December 31, 2024 and (2.3)% for the year ended December 31, 2023.
Removed
Since 2010, our licensing customers have sold approximately 95 million devices that use our technology. In 2017, we augmented our licensing business and began manufacturing and shipping touch sensor modules (“TSMs”) that incorporate our patented technology. We sell these TSMs to OEMs, Original Design Manufacturers (“ODMs”), and systems integrators for use in their products.
Added
All information in the following discussion and analysis present the results of continuing operations and exclude amounts related to discontinued operations for all periods presented unless otherwise stated. Overview Neonode provides advanced optical sensing solutions for touch, contactless touch, and gesture sensing.
Removed
As of December 31, 2023, we had 34 valid technology license agreements with global OEMs, ODMs and Tier 1 suppliers. As of December 31, 2022, that number was 35. During the year ended December 31, 2023, we had 10 customers using our touch technology in products that were being shipped to their customers.
Added
GAAP”), which requires us to make certain estimates, judgments and assumptions that can affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure. Critical accounting estimates are those estimates that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on our financial condition or results of operations.
Removed
The majority of our license fees earned in 2023 and 2022 were from customer shipments of printers. 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 integrators.
Added
We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. To the extent that there are differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected.
Removed
In addition to this, we distribute our TSMs through Digi-Key Corporation, Serial Microelectronics HK Ltd, and Nexty Electronics Corporation.
Added
We have not identified any critical accounting estimate. Refer to Note 1 of our consolidated financial statements for more discussion of our significant accounting policies.
Removed
During 2023, our three distributors sold and shipped approximately 7,400 TSMs and related development kits. 15 During 2023 and 2022, we continued to focus our efforts on maintaining our current licensing customers and achieving design wins for new products both with current and future customers. In parallel we continued to market and sell TSMs directly and indirectly via partners.
Added
The decreased of 29.3% in 2024 as compared to 2023 were mainly due to lower demand for our legacy customers products within printer and passenger car touch applications offset by revenues from new licensing customers. Revenues from non-recurring engineering revenues were $0.4 million and $26,000 for the years ended December 31, 2024 and 2023.
Removed
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. On December 12, 2023, the Company announced a new, sharpened strategy with full focus on the licensing business.
Added
The increase of 1,519.2% in 2024 compared to 2023 was mainly attributable to the DMS project with the commercial vehicle OEM customer that was announced at the end of 2023 and the new agreement with NEXTY Electronics for an evolution of our licensable Touch Sensor Module (“TSM”) technology.
Removed
GAAP”) and include the accounts of Neonode Inc. and its wholly owned subsidiaries, as well as Pronode Technologies AB (Sweden), wholly owned subsidiary of Neonode Technologies AB, one of our wholly owned subsidiaries.
Added
Net cash provided by financing activities for the year ended December 31, 2023 was $7.8 million and was primarily the result of issuance of common stock under the ATM Facility (as defined and described below). We have incurred significant operating losses and negative cash flows from operations since our inception.
Removed
The noncontrolling interests are reported below net loss including noncontrolling interests under the heading “Net loss attributable to noncontrolling interests” in the consolidated statements of operations, below comprehensive loss under the heading “Comprehensive loss attributable to noncontrolling interests” in the consolidated statements of comprehensive loss and shown as a separate component of stockholders’ equity in the consolidated balance sheets.
Added
The Company incurred net losses for combined continuing and discontinued operations of approximately $6.5 million and $10.1 million for the years ended December 31, 2024 and 2023, respectively, and had an accumulated deficit of approximately $224.1 million and $217.6 million as of December 31, 2024 and 2023, respectively.
Removed
See “Noncontrolling Interests” below for further discussion. All inter-company accounts and transactions have been eliminated in consolidation. The accounting policies affecting our financial condition and results of operations are more fully described in Note 2 of our consolidated financial statements.
Added
In addition, operating activities used cash of approximately $5.6 million and $6.3 million for the years ended December 31, 2024 and 2023, respectively. The consolidated financial statements included herein have been prepared on a going concern basis, which contemplates continuity of operations and the realization of assets and the repayment of liabilities in the ordinary course of business.
Removed
Certain of our accounting policies require the application of judgment by management in selecting appropriate assumptions for calculating financial estimates, which inherently contain some degree of uncertainty. Management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances.
Added
Management evaluated the significance of the Company’s operating loss and negative cash flows from operations and determined that the Company’s current operating plan and sources of liquidity would be sufficient to alleviate concerns about the Company’s ability to continue as a going concern.
Removed
The historical experience and assumptions form the basis for making judgments about the reported carrying values of assets and liabilities and the reported amounts of revenue and expenses that may not be readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Added
Management has prepared an operating plan and believes that the Company has sufficient cash to meet its obligations as they come due for a year from the date the financial statements were issued.
Removed
We believe the following are critical accounting policies and related judgments and estimates used in the preparation of our consolidated financial statements. Estimates The preparation of financial statements in conformity with U.S.
Added
During the year ended December 31, 2024, we sold an aggregate of 1,423,441 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.
Removed
GAAP requires making estimates and judgments that affect, at the date of the financial statements, the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Actual results could differ from these estimates and judgments.
Added
In the future, we may require sources of capital in addition to cash on hand and our Ladenburg ATM Facility 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.
Removed
Significant estimates and judgments include, but are not limited to: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, the standalone selling price of performance obligations, and transaction prices and assessing transfer of control; measuring variable consideration and other obligations such as product returns and refunds, and product warranties; provisions for uncollectible receivables; determining the net realizable value of inventory; recoverability of long-lived asset; for leases, determining whether a contract contains a lease, allocating consideration between lease and non-lease components, determining incremental borrowing rates, and identifying reassessment events, such as modifications; the valuation allowance related to our deferred tax assets; and the fair value of options issued for stock-based compensation. 16 Revenue Recognition We recognize revenue when control of products is transferred to our customers, and when services are completed and accepted by our customers; the amount of revenue we recognize reflects the consideration we expect to receive for those products or services.
Added
It is extended on a yearly basis unless written notice is provided nine months prior to the expiration date. For the years ended December 31, 2024 and 2023, we recorded approximately $449,000 and $428,000, respectively, for rent expense in continuing operations. Equipment Subject to Finance Leases In 2022, we entered into a lease for soundproof office pods.
Removed
Our contracts with customers may include combinations of products and services (e.g., a contract that includes products and related engineering services). We structure our contracts such that distinct performance obligations, such as product sales or license fees, and related engineering services, are clearly defined in each contract. License fees and sales of our TSMs are on a per-unit basis.
Added
At-the-Market Offering Program On May 10, 2021, we entered into an At Market Issuance Sales Agreement (the “B. Riley Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley Securities”) with respect to an “at the market” offering program (the “B. Riley ATM Facility”), under which we may, from time to time, in our sole discretion, issue and sell through B.
Removed
Therefore, we generally satisfy performance obligations as units are shipped to our customers. Non-recurring engineering service performance obligations are satisfied as work is performed and accepted by our customers. We recognize revenue net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.
Added
On June 4, 2024, we entered into an At The Market Offering Agreement (the “Ladenburg Sales Agreement”) with Ladenburg Thalmann & Co. Inc.
Removed
We treat all product shipping and handling charges (regardless of when they occur) as activities to fulfill the promise to transfer goods. Therefore, we treat all shipping and handling charges as expenses. License fees We earn revenue from licensing our internally developed intellectual property (“IP”).
Added
The offering of shares pursuant to the Ladenburg Sales Agreement will terminate upon the earlier to occur of (i) the issuance and sale, through Ladenburg, of all of the shares of our common stock subject to the Ladenburg Sales Agreement and (ii) termination of the Ladenburg Sales Agreement in accordance with its terms.
Removed
We enter into IP licensing agreements that generally provide licensees the right to incorporate our IP components into their products, with terms and conditions that vary by licensee. Fees under these agreements may include license fees relating to our IP, and royalties payable to us following the distribution by our licensees of products incorporating the licensed technology.
Added
Historically, we have been able to access the capital markets through sales of common stock and warrants to generate liquidity. Our management believes it could raise capital through public or private offerings if needed to provide us with sufficient liquidity.
Removed
The license for our IP has standalone value and can be used by the licensee without maintenance and support. For technology license arrangements that do not require significant modification or customization of the underlying technology, we recognize technology license revenue when the license is made available to the customer and the customer has a right to use that license.
Added
No assurances can be given, however, that we will be successful in obtaining such additional financing on reasonable terms, or at all. If adequate funds are not available on acceptable terms, or at all, we may be unable to adequately fund our business plans and it could have a negative effect on our business, results of operations and financial condition.
Removed
At the end of each reporting period, we record unbilled license fees, using prior royalty revenue data by customer to make estimates of those royalties. Explicit return rights are not offered to customers. There have been no returns through December 31, 2023.

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