Neonode Reports Quarter Ended September 30, 2021 Financial Results

STOCKHOLM, SWEDEN – November 10, 2021 – Neonode Inc. (NASDAQ: NEON), today reported financial results for the three and nine months ending September 30, 2021.

FINANCIAL SUMMARY FOR THE THREE MONTHS ENDED September 30, 2021:

• Revenue of $1.0 million, a decrease of 36% compared to the same period in the prior year.
• Operating expenses of $2.7 million, a decrease of 12% compared to the same period in the prior year.
• Net loss of $1.7 million, or $0.15 per share, compared to $1.6 million, or $0.16 per share, for the same period in the prior year.
• Cash used by operations of $1.6 million compared to $1.8 million for the same period in the prior year.
• Cash and accounts receivable of $6.3 million as of September 30, 2021, compared to $12.2 million as of December 31, 2020.

FINANCIAL SUMMARY FOR THE NINE MONTHS ENDED September 30, 2021:

• Revenue of $4.3 million, an increase of 23% compared to the same period in the prior year.
• Operating expenses of $9.0 million, an increase of 16% compared to the same period in the prior year.
• Net loss of $4.9 million, or $0.43 per share, compared to $4.3 million, or $0.45 per share, for the same period in the prior year.
• Cash used by operations of $5.0 million compared to $3.7 million for the same period in the prior year.

THE CEO’S COMMENTS

“During the third quarter our revenue was negatively impacted by COVID-19 driven lock-downs in our key Asian markets. The impact of these lock-downs was exacerbated by global supply chain constraints due to semiconductor component shortages, which resulted in a reduction in license fees earned from our printer and automotive customers. These developments resulted in a temporary slowdown in the progress we experienced in the first half of the year where we saw increasing traction with elevator and kiosk customers using our Touch Sensor Modules (”TSMs”) and stable license revenues. During this renewed lock-down phase, sales of our TSMs have been negatively impacted because our partners who are providing retrofit solutions have been unable to freely access their customer locations to install their contactless touch kits. Some elevator and kiosk projects have also been delayed due to of supply-chain issues related to semiconductor component shortages,” commented Dr. Urban Forssell, CEO of Neonode.

“We continue to build our sales pipeline with an increasing number of development and pilot projects underway for elevators plus an array of public space kiosks, such as contactless touch systems in airport and retail self-check-in/out kiosks, and our sales pipeline continues to improve. We are pleased to see that these sales efforts are now being turned into commercial decisions to install our solutions with the next step to place purchase orders. Asian customers are leading the way, but we see increasing interest in our contactless touch technology and our TSM solutions from European and North American customers as well,” said Dr. Urban Forssell.

“To ensure we maintain ample liquidity during this current period of market uncertainty related to the ongoing pandemic, in October 2021, we sold an aggregate of 1,808,000 shares of our common stock in a registered direct offering to certain Swedish and European investors, which, combined with sales under our existing at-the-market facility provided approximately $14.5 million of cash, net of placement agent fees and other offering expenses. The net proceeds will be used for continued investments in sales and marketing to create greater awareness and support for the expected growth of our TSM production volumes. We believe we are now well capitalized to navigate the current headwinds and continue to grow the company and increase shareholder value,” concluded Dr. Forssell.

FINANCIAL OVERVIEW FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

Net revenues decreased by 36% for the three months ended September 30, 2021 as compared to the same period in 2020. The decrease is primarily due to overall global supply-chain constraints and more specifically semiconductor component shortages within the printer and automotive markets combined with renewed pandemic-driven lock-downs in our key markets. For the nine months ended September 30, 2021 as compared to the same period in 2020 we saw a 23% increase in total net revenues. The increase was mainly due to higher license fees and higher TSM sales earned primarily in the first half of the year before COVID-19 driven lock-downs were implemented in our key markets. Elevator and kiosks customers in Asia have been first adopters for our contactless touch technology and as expected, most of our sales are related to retrofit solutions due to long product development cycles.

Our total gross margin was 90% and 86% for the three and nine months ended September 30, 2021, respectively, and 87% and 90% for the three and nine months ended September 30, 2020, respectively. For the three and nine months ended September 30, 2021, gross margin related to product sales was 28% and 31%, respectively compared to 30% and 31% for the same periods in 2020, respectively. Our operating expenses decreased 14% in the three months ended September 30, 2021 compared to the same period in 2020, primarily due to one-time legal costs in 2020. Operating expenses increased 15% in the nine months ended September 30, 2021, compared to the same period in 2020, primarily due to adding headcount in all departments in 2021 to position the company for future growth.

Net loss attributable to Neonode was $1.7 million and $4.9 million for the three and nine months ended September 30, 2021, respectively, and $1.6 million and $4.3 million for the same periods in 2020 respectively. Cash used by operations was $1.6 million and $5.0 million for three and nine months ended September 30, 2021, respectively, compared to $1.8 million and $3.7 million in the same periods of 2020, respectively. This was primarily the result of a higher net loss and increased inventory to secure our future product deliveries.

Cash and accounts receivable totaled $6.3 million and working capital was $6.2 million as of September 30, 2021, compared to $12.2 million and $10.4 million as of December 31, 2020, respectively. During the three and nine months ended September 30, 2021, we sold an aggregate of 93,553 shares of common stock under our at-the-market facility (“ATM facility”), resulting in net proceeds of approximately $593,000 after payment of commissions of $18,000.

In October 2021, we sold an aggregate of 1,808,000 shares of our common stock at a price of $7.75 per share to certain Swedish and other European investors in a registered direct offering. We received net proceeds of approximately $13.1 million from the offering after deducting placement agent fees and other offering expenses. We also sold an aggregate of 142,169 shares under our ATM facility with aggregate net proceeds to us of $1.4 million.

For more information, please contact:

Investor Relations
David Brunton
E-mail: david.brunton@neonode.com 

Chief Financial Officer
Fredrik Nihlén
E-mail: fredrik.nihlen@neonode.com