Neonode Reports Quarter Ended June 30, 2023 Financial Results

STOCKHOLM, SWEDEN, August 10, 2023 - Neonode Inc. (NASDAQ: NEON) today reported financial results for the three and six months ended June 30, 2023.

FINANCIAL SUMMARY FOR THE THREE MONTHS ENDED JUNE 30, 2023:

• Revenue of $1.2 million, a decrease of 5.3% compared to the same period in the prior year.
• Operating expenses of $2.8 million, a decrease of 1.9% compared to the same period in the prior year.
• Net loss of $1.5 million, or $0.10 per share, compared to $1.5 million, or $0.11 per share, for the same period in the prior year.
• Cash used by operations of $0.6 million compared to $2.9 million for the same period in the prior year.
• Cash and accounts receivable of $21.6 million as of June 30, 2023 compared to $16.3 million as of December 31, 2022.

FINANCIAL SUMMARY FOR THE SIX MONTHS ENDED JUNE 30, 2023:

• Revenue of $2.5 million, a decrease of 5.1% compared to the same period in the prior year.
• Operating expenses of $5.6 million, an increase of 1.4% compared to the same period in the prior year.
• Net loss of $2.9 million, or $0.19 per share, compared to $2.9 million, or $0.22 per share, for the same period in the prior year.
• Cash used by operations of $2.3 million compared to $5.2 million for the same period in the prior year.

THE CEO’S COMMENTS

“Our licensing revenues in Q2 were at the same level as in Q1 and 15% higher than in the same period last year, showing good stability. Our product sales revenues in Q2 were low and much below expectations, which we are addressing with different kinds of activities and changes in our strategies and tactics to ensure that we come back to a growth path for this business in the coming quarters”, said Dr. Urban Forssell, Neonode’s CEO.

“The changes we have started to implement include an increased focus on markets and sectors where we have good traction, supported by intensified marketing – both online and through participation in tradeshows and other types of events – to create beachheads from which we may continue to grow our licensing and products businesses. To help us drive these changes and become more effective in our marketing and sales efforts we have recruited experienced core competence to strengthen our sales and engineering teams in Stockholm. We remain optimistic about our ability to grow our business and return to profitability,” concluded Dr. Forssell.

FINANCIAL OVERVIEW FOR THE QUARTER ENDED JUNE 30, 2023

Net revenues for the quarter ended June 30, 2023 were $1.2 million, a 5.3% decrease compared to the same period in 2022. For the 2023 period, license revenues were $1.1 million, an increase of 14.8% compared to the 2022 period. The increase is primarily volume related as the global supply chain challenges related to semiconductor supply
shortages that hampered our printer and automotive customers’ production and sales for the last two years have improved and the demand for our customers’ products remains strong.

Revenues from product sales for the quarter ended June 30, 2023 were $0.1 million, a 60.0% decrease compared to the same period in 2022. The reason for the decrease is mainly low customer demand, which we are addressing with focused marketing and sales campaigns and updates to our partner network.

Gross margin related to products was 66.7% for the second quarter of 2023 compared to 55.7% in the same period in 2022. The gross margin for products is higher for lower order volumes and also varies with the product mix.
Our operating expenses decreased by 1.9% for the second quarter of 2023 compared to the same period in 2022, primarily due to lower payroll and related costs.

Net loss attributable to Neonode for the three months ended June 30, 2023 was $1.5 million, or $0.10 per share, compared to a net loss of $1.5 million, or $0.11 per share, for the same period in 2022. Cash used by operations was $0.6 million in the second quarter of 2023 compared to $2.9 million for the same period in 2022. The decrease is primarily the result of less component purchases.

Cash and accounts receivable totaled $21.6 million and working capital was $24.0 million as of June 30, 2023 compared to $16.3 million and $19.1 million as of December 31, 2022, respectively.

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