Neonode Inc. (NASDAQ:NEON), the optical interactive sensing
technology company, today reported financial results for the three
and nine months ended September 30, 2016.
Highlights:
- First shipments of AirBar to Ingram Micro U.S. and Europe for
online distribution is now available for purchase from
www.provantage.com
- Signed our first supply agreement for a sensor module with a
U.S. automotive OEM with expected revenues of $11 million for the
production lifecycle of this vehicle
- Agreement for sensor modules with leading automotive Tier 1
supplier for door handles and tailgates for global automotive
OEMs
- Initial printer shipments from Canon and other U.S. based
printer customer to be included in Q4 revenue
- Signed agreement with Autoliv to bring our zForce DRIVE
steering wheel module to market
“Our business model is based on generating
revenue from three sources; royalty based license fees, B2B sensor
modules and consumer products incorporating our sensor modules. We
have built a scalable, fully automatic manufacturing processes to
build our sensor modules. We can expand and locate these
manufacturing facilities anywhere in the world. Our first consumer
product is AirBar. Our partner, Salutica Allied Solutions does the
final assembly and packaging of AirBar and ships it to Ingram Micro
for both the U.S. and European markets. We made our first shipments
of AirBar to Ingram Micro U.S. and Europe for online distribution
and they are now available for purchase,” said Thomas Eriksson,
Neonode CEO.
“Our automotive market presence is expanding
with new product offerings. This quarter we signed our first B2B
sensor module supply agreement with a U.S. based auto OEM taking a
significant step towards expanding our automotive market. We are
growing our business beyond infotainment systems by supplying
sensors for door handles, car and truck tailgates and steering
wheels,” continued Mr. Eriksson.
“To complete my remarks, we are finally starting to see some
rewards from the work we have put into growing our licensing
business in the printer markets. Canon and another U.S. based
printer customers have begun their initial shipment of printers and
we now have customer diversification beyond HP. We have been
engaged with these customers for the past couple of years and
expect this to have a positive impact on future revenues beginning
in the fourth quarter of this year,” concluded Mr.
Eriksson.
Financial Results for the three and nine months ended
September 30, 2016
Our net revenues decreased by 47% from $3.1 million to $1.6
million for the third quarter 2015 compared to the same quarter in
2016, respectively. The decrease is primarily due to lower NRE fees
recognized in the third quarter 2016 compared to 2015. The decrease
in NRE fees was expected and is due to the transition from custom
design solutions where we collect up-front fees to standardized
sensor modules which require limited to no custom design services.
In addition, there was an overall 20% decrease in license fees from
$2.0 million to $1.6 million in the third quarter of 2015 compared
to 2016. This is comprised of a decrease of 64% of license fees
from our E-reader and tablet customers, which was partially offset
by an increase in license fees from our automotive and printer
customers. The decrease in license fees from our E-reader and
tablet customer is primarily related to a one time revenue
recognition of $0.7 million of license fees from customers who
discontinued their products in the third quarter 2015. We
experienced some challenges in our automotive market in the third
quarter due to a 46% decrease in the sales volume of one of the
most popular SUVs in China. We are therefore revising our
previously stated goal of reaching 1.3 million cars with our
technology in 2016 to be in the range of to 1.0 million to 1.1
million cars.
The 10% decrease from $8.2 million to $7.3 million of net
revenues for the nine month period 2015 as compared to the same
period in 2016 is primarily due to a decrease in license fees from
E-reader and tablet customers and NRE services from all segments,
partially offset by an increase in license fees from automotive and
printer customers.
Gross margin as a percentage of net revenue was 71% and 76% for
the three and nine months ended September 30, 2015, compared to 98%
and 86% for the same periods in 2016, respectively. The increase in
gross margin is due to a higher percentage of 100% gross margin
license fees in our total net revenue in 2016 as compared to 2015.
Operating expenses were $3.7 million and $11.1 million for the
three and nine months ended September 30, 2016, respectively,
compared to $3.6 million and $11.3 million for the same periods in
2015, respectively. Included in the research and development
expense are $0.2 million and $0.6 million of pre-production
manufacturing start-up costs for the three and nine months ended
September 30, 2016, respectively. Also included in the three and
nine months 2016 are non-recurring expenses of approximately $0.6
million related to final development of the new NN1003 ASIC plus
non-recurring costs related to staff reductions and lease
termination.
As a result of the factors discussed above, we recorded a net
loss of $2.2 million or $(0.05) loss per share and $4.9 million, or
$(0.11) loss per share for the three and nine months ended
September 30, 2016, respectively, compared to a net loss of $1.4
million, or $(0.03) loss per share and $5.2 million, or $(0.13)
loss per share in the comparable periods in 2015.
Cash and accounts receivable totaled $6.6 million at September
30, 2016 compared to $4.4 million at December 31, 2015.
Conference Call Information
The Company will host a conference call
Wednesday November 9, 2016 at 10AM Eastern Standard Time (EST)/4PM
Central European Time (CET) featuring remarks by, and Q&A with,
Thomas Eriksson, CEO, Lars Lindqvist, CFO and David Brunton, Head
of Investor Relations.
The dial-in number for the conference call is
toll-free: (877) 539-0733 (U.S. domestic) or +1 (678) 607-2005
(international). To access the call all participants must use the
following Conference ID: #4673205. Please make sure to call at
least five minutes before the scheduled start time.
To register for the call, and listen online, please click:
http://event.on24.com/r.htm?e=1294348&s=1&k=FBFA195DE15A308A65F264B64704E0FB
For interested individuals unable to join the
live event, a digital recording for replay will be available for 30
days after the call's completion – 11/9/2016 (13:00PM EST) to
12/9/2016 (23:59PM EST). To access the recording, please use one of
these Dial-In Numbers (800) 585-8367 or (404) 537-3406, and the
Conference ID #4673205.
About Neonode
Neonode Inc. (NASDAQ:NEON) develops and licenses optical
interactive sensing technologies. Neonode’s patented optical
interactive sensing technology is developed for a wide range of
devices like automotive systems, printers, PC devices,
monitors, mobile phones, tablets and e-readers. NEONODE and
the NEONODE Logo are trademarks of Neonode Inc. registered in the
United States and other countries. AIRBAR is a trademark of Neonode
Inc. All other trademarks are the property of their respective
owners.
For more information please visit www.neonode.com
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These include, but are not limited to, statements relating to
expectations, future performance or future events, and product
cost, performance, and functionality matters. These statements are
based on current assumptions, expectations and information
available to Neonode management and involve a number of known and
unknown risks, uncertainties and other factors that may cause
Neonode’s actual results, levels of activity, performance or
achievements to be materially different from any expressed or
implied by these forward-looking statements.
These risks, uncertainties, and factors are discussed under
“Risk Factors” and elsewhere in Neonode’s public filings with the
U.S. Securities and Exchange Commission from time to time,
including Neonode’s Annual report on Form 10-K, quarterly reports
on Form 10-Q, and current reports on Form 8-K. You are advised to
carefully consider these various risks, uncertainties and other
factors. Although Neonode management believes that the
forward-looking statements contained in this press release are
reasonable, it can give no assurance that its expectations will be
fulfilled. Forward-looking statements are made as of today’s date,
and Neonode undertakes no duty to update or revise them.
Copyright Neonode Inc. 2015. All rights reserved. Neonode is a
registered trademark of Neonode Inc.
NEONODE INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(In thousands, except share and
per share amounts) |
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2016 |
|
|
2015 |
|
ASSETS |
|
(Unaudited) |
|
|
(Audited) |
|
Current assets: |
|
|
|
|
|
|
Cash |
|
$ |
6,278 |
|
|
$ |
3,082 |
|
Accounts receivable, net |
|
|
278 |
|
|
|
1,346 |
|
Projects in process |
|
|
64 |
|
|
|
158 |
|
Inventory |
|
|
919 |
|
|
|
- |
|
Prepaid expenses and other current
assets |
|
|
1,173 |
|
|
|
747 |
|
Total current assets |
|
|
8,712 |
|
|
|
5,333 |
|
|
|
|
|
|
|
|
|
|
Investment in joint
venture |
|
|
3 |
|
|
|
- |
|
Property and equipment,
net |
|
|
2,142 |
|
|
|
594 |
|
Total assets |
|
$ |
10,857 |
|
|
$ |
5,927 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,074 |
|
|
$ |
965 |
|
Accrued payroll and employee
benefits |
|
|
944 |
|
|
|
932 |
|
Accrued expenses |
|
|
540 |
|
|
|
382 |
|
Deferred revenues |
|
|
2,212 |
|
|
|
1,475 |
|
Current portion of capital lease
obligations |
|
|
237 |
|
|
|
57 |
|
Total current liabilities |
|
|
5,007 |
|
|
|
3,811 |
|
|
|
|
|
|
|
|
|
|
Capital lease
obligations, net of current portion |
|
|
1,061 |
|
|
|
283 |
|
Total liabilities |
|
|
6,068 |
|
|
|
4,094 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
|
|
Series B Preferred stock, 54,425
shares authorized with par value $0.001 per share; 83
shares issued and outstanding at September 30, 2016 and December
31, 2015. (In the event of dissolution, each share of
Series B Preferred stock has a liquidation preference
equal to par value of $0.001 per share over the shares of
common stock) |
|
|
- |
|
|
|
- |
|
Common stock, 70,000,000 shares
authorized with par value $0.001 per share;
48,844,503 and 43,805,586 shares issued and outstanding at
September 30, 2016 and December 31, 2015,
respectively |
|
|
49 |
|
|
|
44 |
|
Additional paid-in
capital |
|
|
183,634 |
|
|
|
175,504 |
|
Accumulated other
comprehensive (loss) income |
|
|
(56 |
) |
|
|
46 |
|
Accumulated
deficit |
|
|
(178,609 |
) |
|
|
(173,749 |
) |
Total Neonode Inc. stockholders’
equity |
|
|
5,018 |
|
|
|
1,845 |
|
Noncontrolling interests |
|
|
(229 |
) |
|
|
(12 |
) |
Total stockholders’
equity |
|
|
4,789 |
|
|
|
1,833 |
|
Total liabilities and stockholders’
equity |
|
$ |
10,857 |
|
|
$ |
5,927 |
|
NEONODE INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except
per share amounts)(Unaudited) |
|
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
1,639 |
|
|
$ |
3,113 |
|
|
$ |
7,345 |
|
|
$ |
8,152 |
|
Cost of revenues |
|
|
33 |
|
|
|
909 |
|
|
|
1,013 |
|
|
|
1,984 |
|
Gross margin |
|
|
1,606 |
|
|
|
2,204 |
|
|
|
6,332 |
|
|
|
6,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product research and
development |
|
|
2,014 |
|
|
|
1,555 |
|
|
|
5,734 |
|
|
|
4,763 |
|
Sales and
marketing |
|
|
666 |
|
|
|
845 |
|
|
|
2,151 |
|
|
|
2,648 |
|
General and
administrative |
|
|
1,067 |
|
|
|
1,152 |
|
|
|
3,167 |
|
|
|
3,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses |
|
|
3,747 |
|
|
|
3,552 |
|
|
|
11,052 |
|
|
|
11,319 |
|
Operating loss |
|
|
(2,141 |
) |
|
|
(1,348 |
) |
|
|
(4,720 |
) |
|
|
(5,151 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense,
net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
17 |
|
|
|
4 |
|
|
|
32 |
|
|
|
12 |
|
Other expense, net |
|
|
49 |
|
|
|
- |
|
|
|
91 |
|
|
|
28 |
|
Total other expense,
net |
|
|
66 |
|
|
|
4 |
|
|
|
123 |
|
|
|
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision
for income taxes |
|
|
(2,207 |
) |
|
|
(1,352 |
) |
|
|
(4,843 |
) |
|
|
(5,191 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
|
55 |
|
|
|
16 |
|
|
|
234 |
|
|
|
41 |
|
Net loss including
noncontrolling interests |
|
|
(2,262 |
) |
|
|
(1,368 |
) |
|
|
(5,077 |
) |
|
|
(5,232 |
) |
Less: Net loss
attributable to noncontrolling interests |
|
|
100 |
|
|
|
- |
|
|
|
217 |
|
|
|
- |
|
Net loss attributable
to Neonode Inc. |
|
$ |
(2,162 |
) |
|
$ |
(1,368 |
) |
|
$ |
(4,860 |
) |
|
$ |
(5,232 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss
per share |
|
$ |
(0.05 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.13 |
) |
Basic and diluted –
weighted average number of common shares outstanding |
|
|
46,252 |
|
|
|
40,525 |
|
|
|
44,627 |
|
|
|
40,493 |
|
NEONODE INC.CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(In
thousands)(Unaudited) |
|
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,262 |
) |
|
$ |
(1,368 |
) |
|
$ |
(5,077 |
) |
|
$ |
(5,232 |
) |
Other comprehensive
income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments |
|
|
(36 |
) |
|
|
(20 |
) |
|
|
(102 |
) |
|
|
(67 |
) |
Comprehensive loss |
|
|
(2,298 |
) |
|
|
(1,388 |
) |
|
|
(5,179 |
) |
|
|
(5,299 |
) |
Less: Comprehensive
loss attributable to Noncontrolling interests |
|
|
100 |
|
|
|
- |
|
|
|
217 |
|
|
|
- |
|
Comprehensive loss
attributable to Neonode Inc. |
|
$ |
(2,198 |
) |
|
$ |
(1,388 |
) |
|
$ |
(4,962 |
) |
|
$ |
(5,299 |
) |
NEONODE INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands)(Unaudited) |
|
|
|
Nine months ended September 30, |
|
|
|
2016 |
|
|
2015 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
Net loss (including
noncontrolling interests) |
|
$ |
(5,077 |
) |
|
$ |
(5,232 |
) |
Adjustments to
reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Stock-based compensation
expense |
|
|
224 |
|
|
|
948 |
|
Loss on disposal of property and
equipment |
|
|
91 |
|
|
|
28 |
|
Depreciation and amortization |
|
|
206 |
|
|
|
138 |
|
|
|
|
|
|
|
|
|
|
Changes in operating
assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
1,066 |
|
|
|
617 |
|
Projects in process |
|
|
95 |
|
|
|
(847 |
) |
Inventory |
|
|
(940 |
) |
|
|
- |
|
Prepaid expenses and other current
assets |
|
|
(438 |
) |
|
|
(231 |
) |
Accounts payable and accrued
expenses |
|
|
319 |
|
|
|
1,221 |
|
Deferred revenues |
|
|
737 |
|
|
|
(1,528 |
) |
Net cash used in operating
activities |
|
|
(3,717 |
) |
|
|
(4,886 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Purchase of property and
equipment |
|
|
(851 |
) |
|
|
(137 |
) |
Investment in joint venture |
|
|
(3 |
) |
|
|
- |
|
Proceeds from sale of property and
equipment |
|
|
5 |
|
|
|
- |
|
Net cash used in investing
activities |
|
|
(849 |
) |
|
|
(137 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance
of common stock, net of offering |
|
|
7,911 |
|
|
|
- |
|
Contributions from
noncontrolling interests |
|
|
- |
|
|
|
3 |
|
Principal payments on
capital lease obligations |
|
|
(57 |
) |
|
|
(43 |
) |
Net cash provided by
(used in) financing activities |
|
|
7,854 |
|
|
|
(40 |
) |
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash |
|
|
(92 |
) |
|
|
(116 |
) |
|
|
|
|
|
|
|
|
|
Net change in cash |
|
|
3,196 |
|
|
|
(5,179 |
) |
Cash at beginning of
period |
|
|
3,082 |
|
|
|
6,129 |
|
Cash at end of
period |
|
$ |
6,278 |
|
|
$ |
950 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure
of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for income taxes |
|
$ |
179 |
|
|
$ |
41 |
|
Cash paid for interest |
|
$ |
15 |
|
|
$ |
12 |
|
|
|
|
|
|
|
|
|
|
For more information, please contact:
Investor Relations:
David Brunton
Email: david.brunton@neonode.com
CFO
Lars Lindqvist
E-mail: lars.lindqvist@neonode.com
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