NEONODE
INC.
|
(Exact
name of registrant as specified in its
charter)
|
Delaware
|
94-1517641
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
|
Identification
No.)
|
Sweden
Linnegatan 89,
SE-115 23 Stockholm, Sweden
|
USA
651 Byrdee Way,
Lafayette, CA. 94549
|
(Address
of principal executive offices and zip
code)
|
Sweden
+ 46 8 667 17
17
|
USA
+ 1 925 768
0620
|
(Registrant's
telephone number, including area
code)
|
Yes
¨
|
No
¨
|
Large
accelerated filer
¨
|
Accelerated
filer
¨
|
|
Non-accelerated
filer
¨
|
Smaller
reporting company
x
|
June
|
December
|
|||||||
30, 2009
|
31, 2008
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 7 | $ | 17 | ||||
Prepaid
expense
|
25 | 46 | ||||||
Other
receivables
|
63 | — | ||||||
Total
current assets
|
95 | 63 | ||||||
Property
plant and equipment, net
|
16 | 116 | ||||||
Total
assets
|
$ | 111 | $ | 179 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Current
portion of debt
|
$ | 65 | $ | 17 | ||||
Accounts
payable
|
730 | 688 | ||||||
Accrued
expenses
|
291 | 320 | ||||||
Embedded
derivatives of warrants
|
2,860 | — | ||||||
Total
current liabilities
|
3,956 | 1,025 | ||||||
Long
term convertible debt and leases
|
139 | 207 | ||||||
Total
liabilities
|
4,085 | 1,232 | ||||||
Commitments
and contingencies (note 8)
|
||||||||
Stockholders'
deficit:
|
||||||||
Series
A Preferred Stock, 899,081 shares authorized with par value $0.001 at June
30, 2009 and December 31, 2008, respectively; 248,333 shares issued and
outstanding at June 30, 2009 and 855,522 at December 31, 2008,
respectively. (In the event of dissolution, each share of
Series A Preferred Stock has a liquidation preference equal to par value
of $0.001 over the shares of Common Stock)
|
1,061 | 3,531 | ||||||
Series
B Preferred Stock, 108,850 shares authorized with par value $0.001at June
30, 2009 and December 31, 2008, respectively; 35,559 shares issued and
outstanding at June 30, 2009 and 92,796 at December 31, 2008,
respectively. (In the event of dissolution, each share of Series B
Preferred Stock has a liquidation preference equal to par value
of $0.001 over the shares of Common Stock)
|
1 | 2 | ||||||
Common
stock, 700,000,000 shares authorized with par value $0.001at June 30, 2009
and December 31, 2008, respectively; 323,791,735 and 35,058,011 shares
issued and outstanding at June 30, 2009 and December 31, 2008,
respectively
|
324 | 35 | ||||||
Additional
paid in capital
|
69,194 | 60,090 | ||||||
Stock
subscription receivable
|
— | (1,035 | ) | |||||
Accumulated
deficit
|
(74,554 | ) | (64,602 | ) | ||||
Total
stockholders' deficit
|
(3,974 | ) | (1,053 | ) | ||||
Total
liabilities and stockholders' deficit
|
$ | 111 | $ | 179 |
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Total
net sales
|
$ | — | $ | 401 | $ | — | $ | 792 | ||||||||
Cost
of sales
|
— | 8,382 | — | 9,023 | ||||||||||||
Gross
loss
|
— | (7,981 | ) | — | (8,231 | ) | ||||||||||
Operating
expenses:
|
||||||||||||||||
Product
research and development
|
211 | 1,173 | 432 | 2,665 | ||||||||||||
Sales
and marketing
|
82 | 1,136 | 139 | 2,966 | ||||||||||||
General
and administrative
|
237 | 1,645 | 681 | 4,158 | ||||||||||||
Amortization
of fair value of stock issued to related parties for purchase of AB
Cypressen
|
1,584 | — | 3,168 | — | ||||||||||||
Total
operating expenses
|
2,114 | 3,954 | 4,420 | 9,789 | ||||||||||||
Operating
loss
|
(2,114 | ) | (11,935 | ) | (4,420 | ) | (5,071 | ) | ||||||||
Other
income (expense, net):
|
||||||||||||||||
Interest
and other income, net
|
— | 21 | (30 | ) | 186 | |||||||||||
Interest
expense
|
(4 | ) | (84 | ) | (6 | ) | (93 | ) | ||||||||
Foreign
currency loss
|
(2 | ) | — | (17 | ) | — | ||||||||||
Gain
on conversion and forgiveness of accounts payable
|
— | — | 55 | — | ||||||||||||
Non-cash
items related to debt discounts and deferred financing fees and the
valuation of conversion features and warrants
|
15 | (600 | ) | (2,793 | ) | (6,110 | ) | |||||||||
Total
other income (expense), net
|
9 | (663 | ) | (2,791 | ) | (6,017 | ) | |||||||||
Net
loss
|
(2,105 | ) | (12,598 | ) | (7,191 | ) | (24,037 | ) | ||||||||
Deemed
dividend to Preferred Stockholders
|
— | — | (2,741 | ) | — | |||||||||||
Net
loss attributable to common stockholders
|
$ | (2,105 | ) | $ | (12,598 | ) | $ | (9,952 | ) | $ | (24,037 | ) | ||||
Loss
attributable to common stockholders per common share:
|
||||||||||||||||
Basic
and diluted loss per share
|
$ | (0.01 | ) | $ | (0.45 | ) | $ | (0.10 | ) | $ | (0.92 | ) | ||||
Basic
and diluted – weighted average shares used in per share
computations
|
167,523 | 27,807 | 102,022 | 26,115 |
Six months ended
|
||||||||
June 30,
|
||||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (9,952 | ) | $ | (24,037 | ) | ||
Adjustments
to reconcile net loss to net cash used by operating
activities:
|
||||||||
Stock
based compensation expense
|
3,244 | 949 | ||||||
Depreciation
and amortization
|
4 | 257 | ||||||
Loss
on retirement of assets
|
30 | — | ||||||
Deemed
dividend related to debt and warrant conversion expense
|
2,741 | — | ||||||
Write-down
of inventory to net realizable value
|
— | 7,704 | ||||||
Gain
on conversion to equity and forgiveness of accounts
payable
|
(55 | ) | — | |||||
Debt
discounts and deferred financing fees and the valuation of conversion
features and warrants
|
2,793 | 6,110 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
— | 849 | ||||||
Inventories
|
— | (6,592 | ) | |||||
Other
assets
|
(63 | ) | (219 | ) | ||||
Prepaid
expenses
|
21 | (100 | ) | |||||
Accounts
payable and other accrued expense
|
187 | 1,759 | ||||||
Deferred
revenue
|
— | (612 | ) | |||||
Other
liabilities
|
— | 1,064 | ||||||
Net
cash used in operating activities
|
(1,050 | ) | (12,868 | ) | ||||
Cash
flows from investing activities:
|
||||||||
Proceeds
from sale of property and equipment
|
— | 32 | ||||||
Purchase
of property, plant and equipment
|
(17 | ) | (312 | ) | ||||
Net
cash used in investing activities
|
(17 | ) | (280 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from issuance of notes
|
65 | — | ||||||
Proceeds
from exercise of stock options
|
— | 39 | ||||||
Proceeds
from issuance of common stock
|
— | 4,500 | ||||||
Proceeds
from issuance of preferred stock
|
1,035 | — | ||||||
Equity
issuance costs
|
(46 | ) | (486 | ) | ||||
Proceeds
from exercise of option to invest in August note
|
— | 375 | ||||||
Proceeds
from exercise of re-priced warrants
|
— | 4,756 | ||||||
Warrant
re-pricing costs
|
— | (651 | ) | |||||
Restricted
cash
|
— | 5,994 | ||||||
Net
cash provided by financing activities
|
1,054 | 14,527 | ||||||
Effect
of exchange rate changes on cash
|
3 | (430 | ) | |||||
Net
increase (decrease) in cash and cash equivalents
|
(10 | ) | 949 | |||||
Cash
and cash equivalents at beginning of period
|
17 | 1,147 | ||||||
Cash
and cash equivalents at end of period
|
$ | 7 | $ | 2,096 | ||||
Supplemental
disclosure of cash flow information:
|
||||||||
Interest
paid
|
$ | 6 | $ | 218 | ||||
Supplemental
disclosure of non-cash transactions:
|
||||||||
Fair
value of warrants issued in warrant re-pricing
|
$ | — | $ | 13,786 | ||||
Fair
value of warrants issued to financial advisor
|
$ | — | $ | 2,018 | ||||
Fair
value of warrants issued to bridge note holder
|
$ | — | $ | 842 | ||||
Conversion
of September convertible notes
|
$ | — | $ | 35 | ||||
Value
of August note surrendered towards the exercise of re-priced
warrants
|
$ | — | $ | 375 | ||||
Fair
value of conversion to common stock of Series A and B Preferred
stock issued to note and warrant holders related to corporate
restructuring in excess of amounts recorded in equity at
December 31, 2008
|
$ | 2,741 | $ | — | ||||
Fair
value of warrants
|
$ | 2,860 | — | |||||
Fair
value of 762,912 shares of common stock issued to convert accounts payable
to equity
|
$ | 23 | — | |||||
Fair
value of conversion to common stock of 495,000 shares of Series A
Preferred stock issued to related parties for 100% of AB Cypressen
recorded as compensation expense
|
$ | 3,168 | $ | — |
Shares of
Preferred
Stock Not
Exchanged
as of June
30, 2009
|
Conversion
Ratio
|
Shares of
Common Stock
after Conversion
of all
Outstanding
Shares of
Preferred Stock
to Common
Stock as of June
30, 2009
|
||||||||||
Series
A Preferred stock
|
273,333.47 | 480.63 | 131,372,266 | |||||||||
Series
B Preferred stock
|
38,080.47 | 132.07 | 5,029,288 | |||||||||
Total
|
311,413.94 | - | 136,401,554 |
June 30,
|
December 31,
|
|||||||
2009
|
2008
|
|||||||
Senior
Convertible Secured Notes
|
$ | 139 | $ | 139 | ||||
June
2009 Bridge Notes
|
65 | — | ||||||
Capital leases
|
— | 85 | ||||||
Total
|
204 | 224 | ||||||
Less:
short-term portion of long-term debt
|
65 | 17 | ||||||
Long-term
debt
|
$ | 139 | $ | 207 |
Year ended December 31,
|
Future
Maturity of
Notes Payable
|
|||
2009
|
$
|
—
|
||
2010
|
139
|
|||
Total
principal payments
|
$
|
139
|
|
·
|
The revalued liability of the
embedded conversion feature related to the August Bridge Notes amounted to
$1.2 million at June 30, 2008 which is an increase for the three months
ended June 30, 2008 of $2.0 million from the $3.2 million recorded at
March 31, 2008.
|
|
·
|
The revalued liability of the
embedded conversion feature related to the August Bridge Notes amounted to
$1.2 million at June 30, 2008 which is a decrease for the six months ended
June 30, 2008 of $0.9 million from the $2.1 million recorded at December
31, 2007.
|
|
·
|
At
June 30, 2008, the revalued liability related to the Bridge Notes1st
Extension Warrants to purchase up to 219,074 shares of our common stock at
a price of $3.92 per share amounted to $21,000 resulting in a decrease of
$451,000 for the three months ended June 30, 2008 and is included in
“Non-cash financial items” .
|
|
·
|
At June 30, 2008, the revalued
liability related to the Bridge Notes 1st Extension Warrants to purchase
up to 219,074 shares of our common stock at a price of $3.92 per share
amounted to $21,000 resulting in a decrease of $587,000 for the six months
ended June 30, 2008 and is included in “Non-cash financial
items”.
|
|
·
|
At
June 30, 2008, the liability of the 2nd Extension Warrants
amounted to $694,000 resulting in a decrease from May 21, 2008 in
“Non-cash financial items” of $148,000 in the three and six months
ended June 30, 2008. The assumptions used for the Black-Scholes
option pricing model when calculating the value of the 2
nd
Extension Warrants at June 30, 2008 were a term of 2.9 years, volatility
of 132.08% and a risk-free interest rate of
2.9%.
|
|
·
|
The fair value of the option to
purchase $750,000 of the August Bridge Notes originally issued on August
8, 2007 and due to expire on December 31, 2007 was extended in conjunction
with a proposed financing transaction until March 15, 2008 and revalued
based on the Black-Scholes option pricing model. The assumptions used when
calculating the fair value of the extended option to invest were a term of
0.21 years, volatility of 99% and interest rate of 3.36%. The fair value
of the extension totaled $475,000 and was recorded as a deferred financing
fee and was to be allocated to interest expense using the effective
interest rate method over the 12 month remaining term of the August Bridge
Notes with the offset recorded as other current liability. When this
proposed financing transaction was abandoned in February 2008, the
$475,000 value of the revalued option recorded as deferred financing fees
was charged to “Financing fees and other non-cash financing
items”.
|
|
·
|
On
March, 31, 2008, the expiration of the option was extended again to June
30, 2008. The value of the extension of this option was calculated using
the Black-Scholes option pricing model and amounted to $43,000. The
assumptions used for the Black-Scholes option pricing model were a term of
0.27 years, volatility of 72% and interest rate of 1.24%. The $43,000
value of the warrants was recorded as a liability with the corresponding
amount recorded as a non-cash finance
expense.
|
|
·
|
On
April 17, 2008, the option holder exercised $375,000 of the original
$750,000 option amount and was issued a note, at the same terms and
conditions as the August Bridge Notes. The option to invest the $375,000
unexercised portion was extended until December 31, 2008 in conjunction
with the May 2008 financing. The fair value of the
unexercised option to purchase $375,000 of the August Bridge Notes was
revalued based on the Black-Scholes option pricing model. The assumptions
used when calculating the fair value of the extended option to invest were
a term of 0.5 years, volatility of 107% and interest rate of 1.23%. The
fair value of the extension totaled $324,000 and was recorded as a
deferred financing fee to be allocated to interest expense using the
effective interest rate method over the six months remaining term of the
August Bridge Notes with the offset recorded as other current liability.
The exercise of $375,000 of the original $750,000 option reduced the
liability for the option by
$314,000.
|
|
·
|
On
May 21, 2008, as part of the May 21, 2008 warrant repricing financing
transaction, the $375,000 of Bridge Note debt was cancelled and
was converted into 295,275 shares common stock and 590,550 5-year warrants
at an exercise price of $1.45 per share. The fair value of the 5-year
warrants totaled $1.1 million and was calculated using the Black-Scholes
option pricing model. The assumptions used for the Black-Scholes option
pricing model were a term of 5 years, volatility of 110.28% and interest
rate of 3.09%. The warrants were recorded among “Liability for warrants to
purchase common stock” and are valued at fair valued at the end of each
reporting period.
|
|
·
|
The
liability of the embedded conversion feature of the debt issued in
conjunction with the September 26, 2007 financing decreased to $1,000 at
June 30, 2008 compared to $791,000 at March 31, 2008 with the offset of
$790,000 for the three months ended June 30, 2009 recorded in “Non-cash
financial items.” The assumptions used for the Black-Scholes option
pricing model at June 30, 2008 were a term of .24 years, volatility of
184.27% and a risk-free interest rate of
1.90%.
|
|
·
|
The
liability of the embedded conversion feature was $1,000 at June 30, 2008
compared to $1.5 million at December 31, 2007 with the decrease of $1.5
million for the six months ended June 30, 2008 recorded in “
Non-cash items
related to debt discounts and deferred financing fees and the valuation of
conversion features and warrants” on the Condensed Consolidated Statements
of Operations
”. The assumptions used for the Black-Scholes option
pricing model at June 30, 2008 were a term of .24 years, volatility of
184.27% and a risk-free interest rate of
1.90%.
|
|
·
|
The fair value of the warrants
issued in conjunction with the September 26, 2007 financing at June 30,
2008 decreased to $1.4 million compared to $6.6 million at March 31, 2008
and the offsetting amount of $5.2 million was recorded for the three
months ended June 30, 2008 in “Non-cash charges for conversion
features and warrants.” The assumptions used for the Black-Scholes option
pricing model at June 30, 2008 were a term of 4.24 years, volatility of
117% and a risk-free interest rate of
3.18%.
|
|
·
|
The value of these warrants at
June 30, 2008 decreased to $1.4 million compared to $3.7 million at
December 31, 2007and the offsetting amount of $2.3 million was recorded
for the six months ended June 30, 2008 in
Non-cash
items related to debt discounts and deferred financing fees and the
valuation of conversion features and warrants”
on the
Condensed
Consolidated Statements of Operations.
The assumptions used for the
Black-Scholes option pricing model at June 30, 2008 were a term of 4.24
years, volatility of 117% and a risk-free interest rate of
3.18%.
|
|
·
|
At
June 30, 2008, the fair value of the unit purchase warrants issued to
Empire decreased to $132,000 from $402,000 at December 31, 2007 with the
adjusting offset of $270,000 recorded for the three months ended June 30,
2008 in “
Non-cash items
related to debt discounts and deferred financing fees and the valuation of
conversion features and warrants” on the Condensed Consolidated Statements
of Operations.
The assumptions used for the Black-Scholes option
pricing model at June 30, 2008 were a term of 4.24 years, volatility of
100% and a risk-free interest rate of
3.18%.
|
|
·
|
At
June 30, 2008, the fair value of the unit purchase warrants issued to
Empire in conjunction with the September 26, 2007 financing decreased to
$132,000 from $509,000 at December 31, 2007 with the adjusting offset of
$377,000 recorded for the six months ended June 30, 2008 in “Non-cash
charges for conversion features and warrants.” The assumptions used for
the Black-Scholes option pricing model at June 30, 2008 were a term of
4.24 years, volatility of 100% and a risk-free interest rate of
3.18%.
|
|
·
|
At June 30, 2009, the fair value
of the outstanding warrants is $2.9 million and had been record as a
liability recorded in “
Embedded
derivatives of warrants” with
the corresponding expense, net of $67,000 that was previously recorded in
equity, recorded in
“
Non-cash
items related to debt discounts and deferred financing fees and the
valuation of conversion features and warrants” on the Condensed
Consolidated Statements of Operations.
During the six months ended June
30, 2009, the revalued fair value of the outstanding warrants
decreased by $34,000 from the initial $2.9 million at January 1, 2009 of
which $15,000 of the total $34,000 reduction is recorded in the three
months ended June 30, 2009. The assumptions used for the
Black-Scholes option pricing model at June 30, 2009 were a term of 4
years, volatility of 193% and a risk-free interest rate of
1.875%.
|
June 30,
2009
|
Decrease
|
Increase
|
December 31,
2008
|
|||||||||||||
Series
A Preferred stock
|
$ | 1,061 | $ | (2,470 | ) | $ | - | $ | 3,531 | |||||||
Series
B Preferred stock
|
1 | (1 | ) | - | 2 | |||||||||||
Fair
value of Warrants
|
2,860 | - | 2,860 | - | ||||||||||||
Total
Preferred stock and warrants at Fair Value
|
$ | 3,922 | $ | (2,471 | ) | $ | 2,860 | $ | 3,533 |
·
|
The
1996 Stock Option Plan (the 1996 Plan), which terminated in January
2006;
|
|
·
|
The
1998 Non-Officer Stock Option Plan (the 1998 Plan), which terminated in
June 2008 ;
|
|
·
|
The
2007 Neonode Stock Option Plan (the Neonode Plan), we will not grant any
additional
equity awards out of the Neonode Plan; and
|
|
·
|
The
2006 Equity Incentive Plan (the 2006 Plan).
|
·
|
The
2001 Non-Employee Director Stock Option Plan (the Director
Plan).
|
Plan
|
Shares
Reserved
|
Options
Outstanding
|
Available
for Issue
|
Outstanding
Options
Vested
|
||||||
1996
Plan
|
45,000
|
45,000
|
—
|
45,000
|
||||||
1998
Plan
|
51,495
|
51,495
|
—
|
51,495
|
||||||
Neonode
Plan
|
353,190
|
353,190
|
—
|
353,190
|
||||||
2006
Plan
|
1,300,000
|
241,505
|
141,049
|
144,004
|
||||||
Director
Plan
|
68,000
|
42,500
|
—
|
42,500
|
||||||
Total
|
1,817,685
|
733,690
|
141,049
|
636,189
|
|
Weighted
Average
Number of
Shares
|
Exercise Price
Per Share
|
Weighted
Average Exercise
Price
|
|||||||||
Outstanding
at December 31, 2008
|
1,322,978 | $ | 0.60 - $ 27.50 | $ | 2.85 | |||||||
Granted
|
— | — | — | |||||||||
Cancelled
or expired
|
(589,288 | ) | $ | 0.60 - $ 12.95 | 2.08 | |||||||
Exercised
|
— | — | — | |||||||||
Outstanding
at June 30, 2009
|
733,690 | $ | 1.41- $ 27.50 | $ | 3.46 |
Three months
ended
June
31, 2009
|
Three months
ended June
30, 2008
|
|||||||
Stock
based compensation
|
$ | 35 | $ | 59 |
Six months ended
June
30, 2009
|
Six months ended
June
30, 2008
|
Remaining
unamortized
expense
at June 30,
2009
|
||||||||||
Stock
based compensation
|
$ | 76 | $ | 949 | $ | 300 |
Options
granted in the three months ended June 30
|
2008
|
2008
|
||||||
Expected
life (in years)
|
N/A
|
4.08 | ||||||
Risk-free
interest rate
|
N/A
|
1.68 | % | |||||
Volatility
|
N/A
|
117.01 | % | |||||
Dividend
yield
|
N/A
|
0.00 | % |
Options
granted in the six months ended June 30
|
2008
|
2008
|
||||||
Expected
life (in years)
|
N/A
|
2.67 | ||||||
Risk-free
interest rate
|
N/A
|
2.86 | % | |||||
Volatility
|
N/A
|
150.56 | % | |||||
Dividend
yield
|
N/A
|
0.00 | % |
|
·
|
The
weighted average grant-date fair value of options granted during the three
and six months ended June 30, 2008 was $1.82 and $2.43,
respectively.
|
|
·
|
No options were granted or
exercised during the three and six months ended June 30,
2009.
|
Description
|
Issue
Date
|
Exercise
Price
|
Shares
|
Expiration
Date
|
|||||||
September
2007 Investor Warrants
|
9/26/2007
|
$
|
1.45
|
5,804
|
9/26/2012
|
||||||
May
2008 Broker Warrants
|
5/20/2008
|
|
$
|
1.27
|
161,074
|
5/20/2013
|
|||||
May
2008 Broker Warrants
|
5/20/2008
|
$
|
1.45
|
481,457
|
5/20/2013
|
||||||
May
2008 Investor Warrants
|
5/20/2008
|
$
|
1.45
|
1,476,068
|
5/20/2013
|
||||||
Total
warrants outstanding
|
2,124,403
|
Three months ended
|
Six months ended
|
|||||||||||||||
(in thousands, except per share
amounts)
|
June 30,
|
June 30,
|
||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
BASIC
AND DILUTED
|
||||||||||||||||
Weighted
average number of common shares outstanding
|
167,523 | 27,807 | 102,022 | 26,115 | ||||||||||||
Number
of shares for computation of net loss per share
|
137,523 | 27,807 | 102,022 | 26,115 | ||||||||||||
Net
loss
|
$ | (2,105 | ) | $ | (12,598 | ) | $ | (9,952 | ) | $ | (24,037 | ) | ||||
Net
loss per share basic and diluted
|
$ | (0.01 | ) | $ | (0.45 | ) | $ | (0.10 | ) | $ | (0.92 | ) |
(a)
|
In
loss periods, common share equivalents would have an anti-dilutive effect
on net loss per share and therefore have been
excluded.
|
|
-
|
all
prices are fixed and determinable at the time of
sale;
|
|
-
|
title
and risk of loss pass at the time of shipment (FOB shipping
point);
|
|
-
|
collectibility
of the sales price is probable (the OEM is creditworthy, the OEM is
obligated to pay and such obligation is not contingent on the ultimate
sale of the OEM’s integrated
solution);
|
|
-
|
the
OEM’s obligation to us will not be changed in the event of theft or
physical destruction or damage of the
product;
|
|
-
|
we
do not have significant obligations for future performance to directly
assist in the resale of the product by the OEMs;
and
|
|
-
|
there
is no contractual right of return other than for defective
products.
|
·
|
At June 30, 2009, the fair value
of the outstanding warrants is $2.9 million and had been record as a
liability recorded in “
Embedded
derivatives of warrants” with
the corresponding expense, net of $67,000 that was previously recorded in
equity, recorded in
“
Non-cash
items related to debt discounts and deferred financing fees and the
valuation of conversion features and warrants” on the Condensed
Consolidated Statements of Operations.
During the six months ended June
30, 2009, the revalued fair value of the outstanding warrants
decreased by $34,000 from the initial $2.9 million at January 1, 2009 of
which $15,000 of the total $34,000 reduction is recorded in the three
months ended June 30, 2009. The assumptions used for the
Black-Scholes option pricing model at June 30, 2009 were a term of 4
years, volatility of 193% and a risk-free interest rate of
1.875%.
|
|
·
|
actual
versus anticipated licensing of our
technology;
|
|
·
|
our
actual versus anticipated operating
expenses;
|
|
·
|
the
timing of our OEM customer product
shipments;
|
|
·
|
the
timing of payment for our technology licensing
agreements;
|
|
·
|
our
actual versus anticipated gross profit
margin;
|
|
·
|
our
ability to raise additional capital, if necessary;
and
|
|
·
|
our
ability to secure credit facilities, if
necessary.
|
Depreciation
and amortization
|
$ | 4 | ||
Stock-based
compensation expense
|
3,244 | |||
Debt
and warrant conversion expense
|
2,741 | |||
Debt
discounts and deferred financing fees and the valuation of conversion
features and warrants
|
2,793 | |||
Loss
of retirement of assets
|
30 | |||
Gain
on conversion and forgiveness of accounts payable
|
(55 | ) | ||
Total
net non-cash items included in cash used in our operations
|
$ | 8,757 |
|
·
|
adding personnel to our financial
department, consultants, or other resources (including those with public
company reporting experience) to enhance our policies and procedures,
including those related to revenue
recognition;
|
|
·
|
exploring the suitability of
further upgrades to our accounting system to complement the new management
reporting system software described above;
and
|
|
·
|
engaging a qualified consultant
in 2009 to perform an assessment of the effectiveness of our internal
control over financial reporting and assist us in implementing appropriate
internal controls on weaknesses determined, if any, documenting, and then
testing the effectiveness of those
controls.
|
ITEM 3.
|
Defaults
Upon Security Securities
|
ITEM
4.
|
Submission of
Matters to a Vote of Security
Holders
|
ITEM
6.
|
Exhibits
and Reports on Form 8-K
|
Exhibit #
|
Description
|
|
2.1
|
Agreement
and Plan of Merger and Reorganization between SBE, Inc. and Neonode Inc.,
dated January 19, 2007
(incorporated by reference to
Exhibit 2.1 of our Current Report on Form 8-K filed on January
22, 2007
) (
In
accordance with Commission rules, we supplementally will furnish a copy of
any omitted schedule to the Commission upon request
)
|
|
2.2
|
Amendment
No. 1 to the Agreement and Plan of Merger and Reorganization between SBE,
Inc. and Neonode Inc., dated May 18, 2007, effective May 25, 2007 (
incorporated by reference to
Exhibit 2.1 of our Current Report on Form 8-K filed on May 29,
2007
)
|
|
3.1
|
Amended
and Restated Certificate of Incorporation, dated December 20, 2007,
effective December 21, 2007
|
|
3.2
|
Bylaws,
as amended through December 5, 2007
|
|
4.1
|
Certificate
of Designations, Preferences and Rights of the Series A and Series B
Preferred Stock dated 29 December 2008 (
incorporated by reference as
Exhibit 4.1 of our Current Report on Form 8-K filed on December
31, 2008
)
|
|
4.2
|
Certificate
of Increase of Designation of Series B Preferred Stock dated 2 January
2009
|
|
4.3
|
Certificate
of Increase of Designation of Series B Preferred Stock dated 28 January
2009
|
10.1
|
Senior
Secured Note, dated August 8, 2007 (
incorporated by reference to
Exhibit 10.22(a) of our Current Report on Form 8-K filed on
October 2, 2007
)
|
|
10.2
|
Amendment
to Senior Secured Note, dated September 10, 2007 (
incorporated by reference to
Exhibit 10.22(b) of our Current Report on Form 8-K filed on
October 2, 2007
)
|
|
10.3
|
Form
of Common Stock Purchase Warrant issued pursuant to Amendment to Senior
Secured Notes, dated September 10, 2007 (
incorporated by reference to
Exhibit 10.22(c) of our Current Report on Form 8-K filed on
October 2, 2007
)
|
|
10.4
|
Subscription
Agreement, dated September 10, 2007 (
incorporated by reference to
Exhibit 10.23 of our Current Report on Form 8-K filed on October
2, 2007
)
|
|
10.5
|
Convertible
Promissory Note (
incorporated by reference to
Exhibit 10.24 of our Current Report on Form 8-K filed on October
2, 2007
)
|
|
10.6
|
Form
of Common Stock Purchase Warrant (
incorporated by reference to
Exhibit 10.25 of our Current Report on Form 8-K filed on October
2, 2007
)
|
|
10.7
|
Form
of Unit Purchase Warrant (
incorporated by reference to
Exhibit 10.26 of our Current Report on Form 8-K filed on October
2, 2007
)
|
|
10.8
|
Subscription
Agreement, dated March 4, 2008 (
incorporated by reference to
Exhibit 10.1 of our Current Report on Form 8-K filed on March 3,
2008
)
|
|
10.8
|
Asset
Purchase Agreement with One Stop Systems, Inc., dated January 11, 2007 (
incorporated by
reference to Exhibit 2.1 of our Current Report on Form 8-K filed
on January 12, 2007
)
|
|
10.9
|
Asset
Purchase Agreement with Rising Tide Software, dated August 15, 2007 (
incorporated by
reference to Exhibit 2.1 of our Current Report on Form 8-K filed
on August 24, 2007
)
|
|
10.10
|
Lease
for 4000 Executive Parkway, Suite 200 dated July 27, 2005 with Alexander
Properties Company
|
|
10.11
|
1998
Non-Officer Stock Option Plan, as amended (
incorporated by reference to
Exhibit 99.2 of our Registration Statement on Form S-8
(333-63228) filed on June 18, 2001
)+
|
|
10.12
|
2001
Non-Employee Directors’ Stock Option Plan, as amended (
incorporated by reference to
Exhibit 10.2 of our Annual Report on Form 10-K for the fiscal
year ended October 31, 2002, as filed on January 27, 2003
)+
|
|
10.13
|
Director
and Officer Bonus Plan, dated September 21, 2006 (
incorporated by reference to
Exhibit 10.1 of our Current Report on Form 8-K filed on
September 26, 2006
)+
|
|
10.14
|
Executive
Severance Benefits Agreement with David W. Brunton, dated April 12, 2004 (
incorporated by
reference to Exhibit 10.13 of our Quarterly Report on Form 10-Q
for the period ended January 31, 2005, as filed on March 2, 2005
)+
|
|
10.15
|
Note
Conversion Agreement, dated December 31, 2008 (
incorporated by reference to
Exhibit 10.1 of our Current Report on Form 8-K filed on December
31, 2008
)
|
|
10.16
|
Share
Exchange Agreement, dated December 30, 2008 (
incorporated by reference to
Exhibit 10.4 of our Current Report on Form 8-K filed on December
31, 2008
)
|
|
10.17
|
Series
A Stock Subscription Agreement, dated December31, 2008 (
incorporated by reference to
Exhibit 10.3 of our Current Report on Form 8-K filed on December
31, 2008
)
|
|
10.18
|
Warrant
Conversion Agreement, dated December 31, 2008 (
incorporated by reference to
Exhibit 10.2 of our Current Report on Form 8-K filed on December
31, 2008
)
|
|
10.19
|
Employment
Agreement with Per Bystedt(
incorporated by reference
exhibit to our Current Report on Form 10-K filed on April 15,
2009
)
|
|
10.20
|
Employment
Agreement with Thomas Eriksson (
incorporated by reference
exhibit to our Current Report on Form 10-K filed on April 15,
2009
)
|
|
10.21
|
Employment
Agreement with Magnus Goertz(
incorporated by reference
exhibit to our Current Report on Form 10-K filed on April 15,
2009
)
|
|
10.22
|
Amended
and Restated Certificate of Incorporation of Neonode Inc. dated April 17,
2009
|
|
31.1
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act Of 2002
|
|
31.2
|
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act Of 2002
|
|
32
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley
Act
of 2002
|
Neonode Inc.
|
||
Registrant
|
||
Date: August
4, 2009
|
By:
|
/s/ David W. Brunton
|
David
W. Brunton
|
||
Chief
Financial Officer,
|
||
Vice
President, Finance
|
||
and
Secretary
|
||
(Principal
Financial and
|
||
Accounting
Officer)
|
|
1.
|
The
Company’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2009, to which this Certification is attached as Exhibit 32.1 (the
“Quarterly Report”), fully complies with the requirements of Section 13(a)
or Section 15(d) of the Exchange Act, as amended;
and
|
|
2.
|
The
information contained in the Quarterly Report fairly presents, in all
material respects, the financial condition and results of operation of the
Company.
|
/s/ Per Bystedt
|
/s/ David W. Brunton
|
|
Per
Bystedt
|
David
W. Brunton
|
|
Chief
Executive Officer
|
Chief
Financial Officer
|