Neonode Reports Quarter Ended September 30, 2023 Financial Results

STOCKHOLM, SWEDEN, November 9, 2023 — Neonode Inc. (NASDAQ: NEON) today reported financial results for the three and nine months ended September 30, 2023.

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

• Revenue of $1.0 million, a decrease of 17.5% compared to the same period in the prior year.
• Operating expenses of $2.2 million, an increase of 6.3% compared to the same period in the prior year.
• Net loss of $1.3 million, or $0.08 per share, compared to $0.8 million, or $0.06 per share, for the same period in the prior year.
• Cash used by operations of $1.8 million compared to $0.5 million for the same period in the prior year.
• Cash and accounts receivable of $19.4 million as of September 30, 2023 compared to $16.3 million as of December 31, 2022.

FINANCIAL SUMMARY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023:

• Revenue of $3.5 million, a decrease of 9.1% compared to the same period in the prior year.
• Operating expenses of $7.8 million, an increase of 2.8% compared to the same period in the prior year.
• Net loss of $4.2 million, or $0.27 per share, compared to $3.7 million, or $0.27 per share, for the same period in the prior year.
• Cash used by operations of $4.1 million compared to $5.7 million for the same period in the prior year.

THE CEO’S COMMENTS

“Our licensing revenues in Q3 were slightly lower than in Q2 and the same period last year, but our licensing business shows good long-term stability and licensing revenues year-to-date are on a similar level as last year. Our product sales revenues in Q3 were higher than in Q2 but, because of the slow sales in the first half of the year, products sales revenues during the first nine months are significantly lower than in the same period last year,” said Dr. Urban Forssell, Neonode’s CEO.

“We are addressing the lack of growth in our business in different ways. Strategically we continue to evaluate the different market segments in which we are active and prioritize the ones where our products have the greatest potential. Tactically we also constantly monitor our sales performance and adjust resource allocation to maximize our chances of winning new businesses and creating beachheads from which we can expand further. We feel that we are on the right track in the challenge to grow our business and return to profitability and are encouraged by the interest for our different products and offerings that we receive from customers, especially in the Automotive, Medtech, and Interactive Kiosk sectors. We are therefore optimistic about the future growth potential for our business,” concluded Dr. Forssell.

FINANCIAL OVERVIEW FOR THE QUARTER ENDED SEPTEMBER 30, 2023

Net revenues for the quarter ended September 30, 2023 were $1.0 million, a 17.5% decrease compared to the same period in 2022. For the 2023 period, license revenues were $0.8 million. This is a decrease of 20.0% compared to the 2022 period and is caused by lower sales volumes for our customers during the third quarter of 2023.

Revenues from product sales for the quarter ended September 30, 2023 were $0.2 million, a 5.2% increase compared to the same period in 2022. We continue with the focused marketing and sales campaigns and updates to our partner network.

Gross margin related to products was negative 39.3% for the third quarter of 2023 compared to 48.4% in the same period in 2022. The gross margin for products varies with the product mix. The gross margin for products for the three months ended September 30, 2023 is impacted by a one-time cost related to a customer claim.

Our operating expenses increased by 6.3% for the third quarter of 2023 compared to the same period in 2022, primarily due to higher professional fees.

Net loss attributable to Neonode for the three months ended September 30, 2023 was $1.3 million, or $0.08 per share, compared to a net loss of $0.8 million, or $0.06 per share, for the same period in 2022. Cash used by operations was $1.8 million in the third quarter of 2023 compared to $0.5 million for the same period in 2022. The increase is primarily the result of component purchases in the third quarter of 2023.

Cash and accounts receivable totaled $19.4 million and working capital was $22.7 million as of September 30, 2023 compared to $16.3 million and $19.1 million as of December 31, 2022, respectively.

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