Neonode Reports 2022 Financial Results

STOCKHOLM, SWEDEN, March 9, 2023 — Neonode Inc. (NASDAQ: NEON), today reported financial results for the fiscal year ended December 31, 2022.

FINANCIAL SUMMARY FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022:

• Revenue of $5.7 million, a decrease of 2.8% compared to prior year.
• Operating expenses of $10.2 million, a decrease of 15.3% compared to prior year.
• Net loss of $4.9 million, or $0.36 per share, compared to $6.5 million, or $0.54 per share, for prior year.
• Cash used by operations of $6.8 million compared to $7.7 million for prior year.
• Cash and accounts receivable of $16.3 million as of December 31, 2022 compared to $18.7 million for the prior year-end.

THE CEO’S COMMENTS

“During 2022 we continued to execute on our strategy, with a dual focus on technology licensing and product sales. In our licensing business we focused on expanding the business with automotive customers and on solutions for driver and in-cabin monitoring, head-up display (“HUD”) obstruction detection and interior controls, which generated project-related NRE revenues. We also continued to support our existing printer and automotive customers, who license our zForce technology for touch display applications. In our products business we focused on promoting and selling our Touch Sensor Module (“TSM”) products to customers in the elevator and interactive kiosk sectors,” said Dr. Urban Forssell, Neonode’s CEO

“During the first half of the year our sales and business development continued to be hampered by pandemic-driven lock-downs and uncertain market outlooks for several of our customers, causing them to push new product development and launches into the future. Global supply chain constraints also affected several of our customers due to the lack of semi-conductors and other key components. Both factors had an adverse effect on our growth and financial performance. During the third and fourth quarters we saw indications that the situation in several of our key markets, for instance China, Japan, and Korea, started to normalize, a trend which we expect to continue in 2023. We therefore remain optimistic about our ability to significantly grow our business in 2023 and the years to come,” continued Dr. Urban Forssell.

“We are confident that the key market segments and application areas we are active in: touchless interaction with elevator control panels and interactive kiosks and driver and in-cabin monitoring, and HUD obstruction detection in vehicles will increase in relevance and grow in the future, and that we are in a good position to capitalize on this growth with our TSM products and our MultiSensing and zForce technology platforms. We also believe we have good potential to grow in the medtech sector with our TSM products and zForce licensing offerings. Finally, we believe that our current sources of liquidity and capital will be sufficient to execute on our strategy and continue to grow the company and increase shareholder value,” concluded Dr. Forssell.

FINANCIAL OVERVIEW FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022

Net revenues for fiscal 2022 were $5.7 million, a 2.8% decrease, compared to 2021. For 2022, license revenues were $4.5 million, a decrease of 6.6% compared to 2021. The decrease is primarily the result of component shortages within the printer and automotive markets related to the COVID-19 pandemic, which in turn impacted our license revenues for 2022. However, we saw a recovery of license revenues in the second half of 2022 compared to the same period in 2021.

Revenues from product sales were $1.0 million, and in line with 2021. We saw a recovery in the second half of 2022 compared to the same period in 2021, but for the full year 2022 our product sales continued to be negatively impacted by COVID-19 driven lock-downs in Asia. We are also affected by the comparatively long development and launch periods, often 12 to 18 months, or longer, for our customers’ new equipment solutions, which slows our sales growth.

Gross margin related to products was 22.0% in 2022 compared to 3.5% in 2021. In 2022 and 2021 product sales gross margin was impacted by one-time adjustments related to TSM stock write-downs.

Our operating expenses decreased by 15.3% in 2022 compared to 2021, primarily due to lower staff expenses, professional fees, as well as depreciation and amortization. Operating expenses were also affected by a favorable exchange rate from Swedish Krona to US Dollar.

Net loss attributable to Neonode for fiscal 2022 was $4.9 million, or $0.36 per share, compared to a net loss of $6.5 million, or $0.54 per share, in fiscal 2021. Cash used by operations was $6.8 million fiscal 2022 compared to $7.7 million fiscal 2021. The decrease is primarily the result of a lower net loss.

Cash and accounts receivable totaled $16.3 million and working capital was $19.1 million as of December 31, 2022 compared to $18.7 million and $19.1 million as of December 31, 2021, respectively.

During the twelve months 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. Riley Securities and other expenses of $167,000. During January 2023, we sold an aggregate of 903,716 shares of our common stock under the ATM Facility with aggregate net proceeds to us of $7,868,000, after payment of commissions to B. Riley Securities and other expenses of $244,000.

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