þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the fiscal year ended December 31, 2010
|
|
or
|
|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ________ to _________
|
Delaware
|
94-1517641
|
(State or Other Jurisdiction of
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(I.R.S. Employer
|
Incorporation or Organization)
|
Identification Number)
|
Title of Each Class
|
Name of Each Exchange on Which Registered
|
Common Stock, par value $0.001 per share
|
NONE
|
Large accelerated filer
¨
|
Accelerated filer
¨
|
|
Non-accelerated filer
¨
|
Smaller reporting company
ý
|
PART I
|
|||
4 | |||
13 | |||
18 | |||
18 | |||
18 | |||
19 | |||
PART II
|
|||
19 | |||
19 | |||
19 | |||
32 | |||
33 | |||
73 | |||
73 | |||
74 | |||
PART III
|
|||
75 | |||
80 | |||
85 | |||
87 | |||
89 | |||
PART IV
|
|||
90 | |||
92 |
BUSINESS
|
●
|
On December 9, 2008, Neonode AB filed a petition for bankruptcy in compliance with the Swedish Bankruptcy Act (1987:672). As of that date, Neonode AB ceased to be owned and operated by Neonode Inc., and Neonode Inc. ceased to have any financial obligations related to the accounts payable or other debts of Neonode AB.
|
●
|
On December 29, 2008, we entered into a Share Exchange Agreement with Neonode Technologies AB (f/k/a AB Cypressen AB nr 9683), a Swedish engineering company, and the stockholders of Neonode Technologies AB: Iwo Jima SARL, Wirelesstoys Sweden AB, and Athemis Ltd., pursuant to which we agreed to acquire all of the issued and outstanding shares of Neonode Technologies AB in exchange for the issuance of shares of Company’s Series A Preferred Stock to the Neonode Technologies AB stockholders. Upon the closing of the transaction, Neonode Technologies AB became a wholly-owned subsidiary of the Company. The Neonode Technologies AB stockholders were employees of the Company and/or Neonode AB and, as such were related parties. The acquisition of Neonode Technologies AB by Neonode Inc. did not qualify as a business combination, and accordingly the fair value of the shares of Series A Preferred Stock issued to the sellers of Neonode Technologies AB shares were accounted for as compensation. As there was an 18 month service requirement related to the Neonode Inc. shares issued to the Neonode Technologies AB shareholders, the value of the Series A Preferred Stock was amortized to compensation expense over the 18 month service period beginning January 1, 2009.
|
●
|
On December 30, 2008, we entered into a restructuring transaction in which we converted the majority of the outstanding warrants and convertible debt that had been issued in previous financing transactions to shares of Series A and B Preferred Stock, respectively, that were convertible into shares of our common stock in accordance with the Company’s Certificate of Designation filed with the Delaware Secretary of State.
|
●
|
During the period from August 25, 2009 through December 31, 2009, we completed a private placement of convertible notes totaling $987,000 that can be converted, at the holder’s option, into 1,973,966 shares of our Common Stock at a conversion price of $0.50 per share. The convertible note holders have the right to have the conversion price adjusted to equal the lower stock price if we issue stock or convertible notes at a lower conversion price than $0.50 during the period that the notes are outstanding. These convertible notes were originally due on December 31, 2010, but the due date has been extended until June 30, 2011. They bear an annual interest rate of 7%, payable on June 30 and December 31 of each year that the convertible notes are outstanding. In addition, we issued 986,983 three-year warrants to the convertible note holders with an exercise price of $1.00 per share. The warrants may be exercised and converted to Common Stock, at the warrant holder’s option, beginning on the six-month anniversary date of issuance until the warrant expiration date. We are not obligated to register the Common Stock related to the convertible debt or the warrants.
|
●
|
During the period from January 1, 2010 through May 20, 2010, we received $1.8 million in proceeds related to a private placement of convertible notes and stock purchase warrants that can be converted, at the holder’s option, into 3,518,287 shares of our Common Stock at a conversion price of $0.50 per share and 1,760,711 stock purchase warrants that have an exercise price of $1.00 per share. The convertible note holders have the right to have the conversion price adjusted to equal the lower stock price if we issue stock or convertible notes at a lower conversion price than $0.50 during the period that the notes are outstanding. These convertible notes were originally due on December 31, 2010, but the due date has been extended until June 30, 2011. They bear an annual interest rate of 7%, payable on June 30 and December 31 of each year that the convertible notes are outstanding. The warrants may be exercised and converted to Common Stock, at the warrant holder’s option, beginning on the six month anniversary date of the issuance until the warrant expiration date. We are not obligated to register the Common Stock related to the convertible debt or the warrants.
|
●
|
During September and October 2010, we entered into two different types of amendments with the holders of the convertible notes and the holders of the stock purchase warrants issued in the Fall 2009 and Spring 2010 financing transactions. All of the holders of the convertible notes entered into an amendment pursuant to which the due date of the convertible notes was extended until June 30, 2011. A majority of the holders of the stock purchase warrants entered into an amendment pursuant to which they exercised their previously granted warrants at a discounted exercise price of $0.88 per share and was granted a replacement three-year warrant for each original warrant exercised. When exercised, the replacement warrants can be converted into 2,766,856 shares of our common stock at an exercise price of $1.38 per share. A total of 2,766,856 warrants were exercised at the discounted exercise price of $0.88 per share, and a total of $2.4 million was raised by the Company through these warrant exercises. We issued a total of 2,766,856 shares of common stock and replacement warrants to the exercising warrant holders.
|
●
|
No additional layers are added to the screen that may dilute the screen contrast and clarity. Layering technology is required to activate the capacitive and resistive technologies and can be very costly;
|
|
●
|
The zForce® grid technology is more responsive than the capacitive screen technology and, as a result, is quicker and less prone to misreads. It allows movement and sweeping motions as compared to point-sensitive, stylus-based resistive screens;
|
|
●
|
zForce®, an abbreviation for zero force necessary, obviates the need to use any force to select or move items on the screen as would be the case with a stylus;
|
|
●
|
zForce® is cost-efficient due to the lower cost of materials and extremely simple manufacturing process when compared to the expensive layered capacitive and resistive screens;
|
●
|
zForce® allows multiple methods of input, such as simple finger taps to hit keys, sweeps to zoom in or out, and gestures to write text or symbols directly on the screen;
|
|
●
|
zForce® is one of the few viable touch screen solution that will operate on well on the new revolutionary reflective display panels that will offer paper-like reading experience in almost any ambient lighting condition while greatly reducing power consumption. Manufacturers of reflective display panels are targeting eReader, mobile phone and tablet PC markets because these devices require the clear viewing screen and low power consumption of the reflective display panels; and
|
|
●
|
zForce® incorporates some of the best functionalities of both the capacitive and resistive touch screen technologies. It works in all climates and, unlike the competing technologies, can be used with thick gloves. In addition, zForce® allows for waterproofing of the device.
|
●
|
Software
|
●
|
Optical
|
●
|
Mechanical
|
●
|
Electrical
|
●
|
On March 25, 2011, we filed a Certificate of Amendment of our Amended and Restated Certificate of Incorporation affecting a reverse stock split of the Company’s issued and outstanding shares of Common stock and Preferred Stock at a ratio of twenty-five-to-one (the “Reverse Split”). The Certificate of Amendment provides that each twenty-five (25) outstanding shares of the Corporation’s Common Stock, par value $0.001 per share, will be exchanged and combined, automatically, without further action, into one (1) share of common stock, and each twenty-five (25) outstanding shares of the Corporation’s Preferred Stock, par value $0.001 per share, will be exchanged and combined, automatically, without further action, into one (1) share of Preferred stock.
The Reverse Split was declared effective on March 28, 2011 and has been reflected in this Annual Report on Form 10-K
.
|
●
|
In March 2011, we entered into new convertible loan agreements (each a “Convertible Loan Agreement”) with investors who participated in our 2009 and 2010 financing transactions (the “Investors”) and who had been issued common stock purchase warrants with exercise prices of $0.50 per share, $1.00 per share, and $1.38 per share (the “Current Warrants”). Pursuant to the Convertible Loan Agreements, each Investor exercised some or all of its outstanding Current Warrants at the applicable exercise price ($0.50 per share, $1.00 per share, and/or $1.38 per share), and provided us with a convertible loan, bearing interest at a rate of seven percent (7%) per annum, that matures on March 1, 2014.
|
●
|
We have recently developed prototype products and are engaged in product design discussions with several large global OEMs and ODMs that are in the process of qualifying our touchscreen technology for incorporation in various products, such as digital picture frames, GPS devices, eReaders, Touch PC, mobile phones, printer and mobile internet devices. The development and product release cycle for these products may take 6 to 18 months.
|
●
|
On March 4, 2011, we signed a technology licensing agreement with a top ten global OEM to integrate our zForce® touch screen technology into a series of products. In conjunction with the signing of this technology license agreement, the OEM agreed to pay us $50,000 in non-recurring engineering development fees. We are deferring the engineering development fee revenue until such time as the engineering work has been completed. We expect to complete all services under this contract by June 30, 2011.
|
●
|
On January 28, 2011, our Board of Directors approved certain changes to Neonode’s management team. Thomas Eriksson, one of our founders and current Chief Executive Officer of Neonode Technologies AB, Neonode’s wholly-owned subsidiary, was appointed Neonode’s Chief Executive Officer, effective as of January 28, 2011, replacing Mr. Per Bystedt who resigned from his position as Neonode’s Chief Executive Officer, effective as of January 28, 2011. Mr. Bystedt assumed the role of Executive Chairman and continues to serve as the Chairman of the Board of Directors.
|
●
|
On January 4, 2011, we signed a technology licensing agreement with a global retail and internet based OEM to integrate our zForce® touch screen technology into a series of products. In conjunction with the signing of this technology license agreement, the OEM agreed to pay us $65,000 in non-recurring engineering development fees. We are deferring the engineering development fee revenue until such time as the engineering work has been completed. We expect to complete all services under this contract by March 31, 2011.
|
●
|
On December 30, 2010, we signed a technology license agreement with an OEM related to our touchscreen technology for a series of eReaders. In conjunction with the signing of this technology license agreement, the OEM agreed to pay us $65,000 in non-recurring engineering development fees. We are deferring the engineering development fee revenue until such time as the engineering work has been completed. We expect to complete all services under this contract by March 31, 2011.
|
●
|
On June 18, 2010, we signed a technology license agreement with Sony Corporation related to our touchscreen technology for a series of eReaders. In conjunction with the signing of this technology license agreement, Sony Corporation issued an initial purchase order for $475,000 of touchscreen licenses. We are deferring the technology license fee revenue until such time as the warranty period expires on March 18, 2011.
|
●
|
Resistive -- uses conductive and resistive layers separated by thin space;
|
●
|
Surface acoustic wave -- uses ultrasonic waves that pass over the touchscreen panel;
|
●
|
Capacitive and projected capacitive -- a capacitive touchscreen panel is coated with a material, typically indium tin oxide, that conducts a continuous electrical current across the sensor. When the sensor's 'normal' capacitance field (its reference state) is altered by another capacitance field, e.g., someone's finger, electronic circuits located at each corner of the panel measure the resultant 'distortion' in the sine wave characteristics to detect a touch;
|
●
|
Infrared -- uses infrared beams that are broken by finger or heat from the finger sensed from a camera to detect a touch;
|
●
|
Strain gauge -- uses a spring mounted on the four corners and strain gauges are used to determine deflection when the screen is touched;
|
●
|
Optical imaging -- uses two or more image sensors placed around the edges (mostly the corners) of the screen and a light source to create a shadow of the finger;
|
●
|
In-cell optical touch technology -- embeds photo sensors or conductive sensors directly into an LCD glass. By integrating the touch function directly into an LCD glass, the LCD acts like a low resolution camera to “see” the shadow of the finger;
|
●
|
Dispersive signal technology -- uses sensors to detect the mechanical energy in the glass that occur due to a touch; and
|
●
|
Acoustic pulse recognition -- uses more than two piezoelectric transducers located at some positions of the screen to turn the mechanical energy of a touch (vibration) into an electronic signal.
|
Company
|
Technology
|
3M
|
Capacitive, Dispersive Signal Touch
|
Synaptics
|
Capacitive sensors and IC controllers
|
ATMEL
|
Capacitive touch IC controllers
|
Cypress
|
Capacitive touch IC controllers
|
Maxim
|
Capacitive touch IC controllers
|
RPO
|
Optical wave guide
|
Nextwindow
|
Optical with camera sensor
|
Zytronic
|
Capacitive
|
Tyco Electronics
|
Capacitive, Resistive, Surface Wave,
|
Touch International
|
Resistive and Capacitive
|
Mass Multimedia Inc.
|
All touchscreen technologies
|
Young Fast
|
Capacitive sensor and module maker
|
TPK
|
Capacitive (provides the capacitive touch sensor for the Apple iPhone) |
ITEM 1A. RISK FACTORS |
|
●
the growth of touchscreen interface usage;
|
|
●
the efforts and success of our OEM and other customers;
|
|
●
the level of competition faced by us; and
|
|
●
our ability to meet customer demand for engineering support, new technology and ongoing service.
|
●
|
actual or anticipated fluctuations in our operating results or future prospects;
|
|
●
|
our announcements or our competitors’ announcements of new products;
|
|
●
|
the public’s reaction to our press releases, our other public announcements, and our filings with the SEC;
|
|
●
|
strategic actions by us or our competitors, such as acquisitions or restructurings;
|
|
●
|
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
|
|
●
|
changes in accounting standards, policies, guidance, interpretations or principles;
|
|
●
|
changes in our growth rates or our competitors’ growth rates;
|
|
●
|
developments regarding our patents or proprietary rights or those of our competitors;
|
|
●
|
our inability to raise additional capital as needed;
|
|
●
|
concern as to the efficacy of our products;
|
|
●
|
changes in financial markets or general economic conditions;
|
|
●
|
sales of common stock by us or members of our management team; and
|
|
●
|
changes in stock market analyst recommendations or earnings estimates regarding our common stock, other
comparable companies, or our industry generally.
|
ITEM 1B . UNRESOLVED STAFF COMMENTS |
ITEM 2. PROPERTIES |
ITEM 3. LEGAL PROCEEDINGS |
ITEM 4. (Removed and Reserved) |
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Fiscal Quarter Ended
|
||||||||||||||||
March 31
|
June 30
|
September 30
|
December 31
|
|||||||||||||
Fiscal 2010
|
||||||||||||||||
High
|
$ | 1.00 | $ | 1.25 | $ | 2.00 | $ | 2.00 | ||||||||
Low
|
$ | 0.50 | $ | 0.50 | 0.75 | $ | 1.50 | |||||||||
Fiscal 2009
|
||||||||||||||||
High
|
$ | 1.50 | $ | 1.25 | $ | 1.25 | $ | 1.00 | ||||||||
Low
|
$ | 0.50 | $ | 0.50 | $ | 0.50 | $ | 0.50 |
ITEM 6. SELECTED FINANCIAL DATA |
ITEM 7 . MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Computer equipment
|
3 years
|
Furniture and fixtures
|
5 years
|
|
●
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
|
$
|
11
|
||
Stock-based compensation expense
|
5,430
|
|||
Loss on debt extinguishment
|
2,416
|
|||
Fair value of stock issued in settlements
|
647
|
|||
Debt discounts and deferred financing fees and the valuation of conversion
features and warrants
|
19,963
|
|||
Total adjustments to reconcile net loss to net cash used in operating activities
|
$
|
28,467
|
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Index to the Financial Statements
|
Page
|
|||
Financial Statements
|
||||
Report of Independent Registered Public Accounting Firm
|
34 | |||
Consolidated Balance Sheets at December 31, 2010 and 2009
|
35 | |||
Consolidated Statements of Operations for the years ended December 31, 2010 and 2009
|
36 | |||
Consolidated Statements of Stockholders’ Deficit and Comprehensive Loss for the years
ended December 31, 2010 and 2009
|
37-38 | |||
Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009
|
39 | |||
Notes to Consolidated Financial Statements
|
40 | |||
As of
December
31, 2010
|
As of
December
31, 2009
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash
|
$ | 911 | $ | 28 | ||||
Accounts receivable
|
151 | — | ||||||
Debt issuance costs, net
|
4 | 26 | ||||||
Prepaid expenses and other current assets
|
161 | 110 | ||||||
Total current assets
|
1,227 | 164 | ||||||
Property, plant and equipment, net
|
24 | 20 | ||||||
Other assets
|
— | 28 | ||||||
Total assets
|
$ | 1,251 | $ | 212 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 442 | $ | 699 | ||||
Accrued expenses
|
643 | 993 | ||||||
Deferred revenue
|
540 | — | ||||||
Convertible debt, net of discounts
|
2,772 | 361 | ||||||
Embedded derivatives of convertible debt and warrants
|
6,718 | 4,507 | ||||||
Total current liabilities
|
11,115 | 6,560 | ||||||
Total liabilities
|
$ | 11,115 | $ | 6,560 | ||||
Commitments and contingencies (Note 11)
|
||||||||
Stockholders’ deficit:
|
||||||||
Series A Preferred Stock, 899,081 shares authorized with par value of $0.001 per share; 166 and 3,446 shares issued and outstanding at December 31, 2010 and 2009, 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)
|
— | — | ||||||
Series B Preferred Stock, 108,850 shares authorized with par value of $0.001; 141 and 691 shares issued and outstanding at December 31, 2010 and 2009, 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)
|
— | — | ||||||
Common stock, 848,000,000 and 698,000,000 shares authorized at December 31, 2010 and 2009, respectively, with par value of $0.001; 21,816,602 and 16,658,894 shares issued and outstanding at December 31, 2010 and 2009, respectively
|
22 | 17 | ||||||
Additional paid-in-capital
|
102,360 | 74,288 | ||||||
Accumulated other comprehensive loss
|
(63 | ) | (96 | ) | ||||
Accumulated deficit
|
(112,183 | ) | (80,557 | ) | ||||
Total stockholders’ deficit
|
(9,864 | ) | (6,348 | ) | ||||
Total liabilities and stockholders’ deficit
|
$ | 1,251 | $ | 212 |
Years ended
December 31,
|
||||||||
2010
|
2009
|
|||||||
Net revenues
|
$ | 440 | $ | — | ||||
Cost of revenues
|
268 | — | ||||||
Gross margin
|
172 | — | ||||||
Operating expenses:
|
||||||||
Product research and development
|
1,873 | 999 | ||||||
Sales and marketing
|
566 | 346 | ||||||
General and administrative
|
3,588
|
1,623
|
||||||
Amortization of fair value of stock issued to related parties for purchase of
|
3,168 | 6,337 | ||||||
Neonode Technologies AB (formerly AB Cypressen)
|
||||||||
Total operating expenses
|
9,195
|
9,305
|
||||||
Operating loss
|
(9,023 | ) | (9,305 | ) | ||||
Other (expense) income:
|
||||||||
Interest and other expense
|
(179 | ) | (60 | ) | ||||
Gain on conversion and forgiveness of accounts payable
|
— | 30 | ||||||
Loss on troubled debt restructuring
|
— | (2,741 | ) | |||||
Loss on extinguishment of debt
|
(2,416 | ) | — | |||||
Non-cash items related to debt discounts and deferred financing fees and the valuation of conversion features and warrants
|
(19,963 | ) | (2,844 | ) | ||||
Total other expense
|
(22,558 | ) | (5,615 | ) | ||||
Loss before provision for income taxes | (31,581 | ) | (14,920 | ) | ||||
Provision for income taxes
|
45 | 1 | ||||||
Net loss
|
(31,626 | ) | (14,921 | ) | ||||
Deemed dividend to preferred stockholders
|
— | (1,035 | ) | |||||
Net loss attributable to common stockholders
|
$ | (31,626 | ) | $ | (15,956 | ) | ||
Loss attributable to common stockholders per common share:
|
||||||||
Basic and diluted loss per share
|
$ | (1.73 | ) | $ | (1.61 | ) | ||
Basic and diluted – weighted average shares used in per share computations
|
18,293 | 9,898 |
|
Common
stock shares
issued
|
Common
stock
amount
|
Additional
paid-in- capital
|
Series A
Preferred
stock
shares
issued
|
Series A
Preferred
stock amount
|
Series B
Preferred
stock
shares
issued
|
Series B
Preferred
stock amount
|
Stock
subscription
receivable
|
Accumulated
other
comprehensive
loss
|
Accumulated
deficit
|
Total
Stockholders’
equity (deficit)
|
Other
comprehensive
loss
|
||||||||||||||||||||||||||||||||||||
Balances, January 1, 2009
|
1,402
|
$ |
2
|
$ |
64,583
|
34
|
$ |
—
|
4
|
$ |
—
|
$ |
(1,035
|
)
|
$ |
—
|
$ |
(64,601
|
)
|
$ |
(1,051
|
)
|
$ |
—
|
||||||||||||||||||||||||
Employee stock option and warrant compensation expense
|
—
|
—
|
453
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
453
|
—
|
||||||||||||||||||||||||||||||||||||
Amortization of fair value of stock issued to related parties for purchase of Neonode Technologies AB (formerly AB Cypressen)
|
—
|
—
|
6,337
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
6,337
|
—
|
||||||||||||||||||||||||||||||||||||
Common stock issued to settle accounts payable
|
31
|
—
|
23
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
23
|
—
|
||||||||||||||||||||||||||||||||||||
Common stock issued to settle lawsuit
|
48
|
—
|
35
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
35
|
—
|
||||||||||||||||||||||||||||||||||||
Exchange of Series A Preferred Stock for common stock
|
14,779
|
15
|
(15
|
) |
(31
|
)
|
—
|
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||
Exchange of Series B Preferred Stock for common stock |
399
|
—
|
—
|
—
|
—
|
(3
|
)
|
—
|
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||||||||||||
Loss on troubled debt restructuring related to the modification of conversion feature of preferred stock
|
—
|
—
|
2,741
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
2,741
|
—
|
||||||||||||||||||||||||||||||||||||
Fair value of warrants reclassified to derivative liabilities due to adoption of new accounting standard
|
—
|
—
|
(67
|
)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(67
|
)
|
—
|
||||||||||||||||||||||||||||||||||
Deemed dividend to preferred stockholders
|
—
|
—
|
1,035
|
—
|
—
|
—
|
—
|
—
|
—
|
(1,035
|
)
|
—
|
—
|
|||||||||||||||||||||||||||||||||||
Proceeds received from subscription receivable
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
1,035
|
—
|
—
|
1,035
|
—
|
||||||||||||||||||||||||||||||||||||
Reclassification of warrants to derivative liabilities due to insufficient authorized shares
|
—
|
—
|
(837
|
)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(837
|
)
|
—
|
||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(96
|
)
|
—
|
(96
|
)
|
(96
|
) | |||||||||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(14,921
|
)
|
(14,921
|
)
|
|
(14,921
|
)
|
||||||||||||||||||||||||||||||||
Comprehensive loss
|
$ |
(15,017
|
)
|
|||||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2009
|
16,659
|
$
|
17
|
$
|
74,288
|
3
|
$
|
—
|
1
|
$
|
—
|
$
|
—
|
$
|
(96
|
)
|
$
|
(80,557
|
)
|
$
|
(6,348
|
)
|
|
|
|
Years ended
December 31,
|
||||||||
2010
|
2009
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (31,626 | ) | $ | (14,921 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Stock-based compensation expense
|
5,430 | 6,790 | ||||||
Fair value of common stock issued in settlements
|
647 | 35 | ||||||
Depreciation and amortization
|
11 | 8 | ||||||
Loss on sale of property and equipment
|
— | 30 | ||||||
Gain on conversion of accounts payable to equity
|
— | (30 | ) | |||||
Loss on troubled debt restructuring
|
— | 2,741 | ||||||
Loss on extinguishment of debt
|
2,416 | — | ||||||
Debt discounts and deferred financing fees and the valuation of conversion features and warrants
|
19,963 | 2,844 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(146 | ) | (52 | ) | ||||
Prepaid expenses and other current assets
|
(16 | ) | (12 | ) | ||||
Other assets
|
— | (28 | ) | |||||
Accounts payable and other accrued expense
|
(414 | ) | 696 | |||||
Deferred revenue
|
540 | — | ||||||
Net cash used in operating activities
|
( 3,195 | ) | (1,899 | ) | ||||
Cash flows from investing activities:
|
||||||||
Purchase of property, plant and equipment
|
(14 | ) | (27 | ) | ||||
Net cash used in investing activities
|
(14 | ) | (27 | ) | ||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of convertible debt
|
1,597 | 908 | ||||||
Proceeds from issuance of warrants | 49 | — | ||||||
Proceeds from issuance of common stock, warrant repricing and preferred stock
|
2,421 | 1,035 | ||||||
Net cash provided by financing activities
|
4,067 | 1,943 | ||||||
Effect of exchange rates on cash
|
28 | (6 | ) | |||||
Net increase in cash
|
883 | 11 | ||||||
Cash at beginning of year
|
28 | 17 | ||||||
Cash at end of year
|
$ | 911 | $ | 28 | ||||
Supplemental disclosure of cash flow information:
|
||||||||
Interest paid
|
$ | 180 | $ | 32 | ||||
Supplemental disclosure of non-cash transactions:
|
||||||||
Fair value of conversion to common stock of 19,800 shares of Series A Preferred stock issued to related parties for 100% of Neonode Technologies AB (formerly AB Cypressen) recorded as compensation expense
|
$ | — | $ | 4,555 | ||||
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 reclassified to derivative liabilities due to adoption of new accounting standard
|
$ | — | $ | 67 | ||||
Deemed dividend to investors who received Series A Preferred stock issued related to corporate restructuring at December 31,2008 based on the fair value of the conversion to common stock at March 31, 2009
|
$ | — | $ | 1,035 | ||||
Debt discount recorded as a result from embedded derivative liabilities
|
$ | — | $ | 987 | ||||
Fair value of warrants issued to broker as debt issuance costs
|
$ | — | $ | 26 | ||||
Fair value of 30,517 shares of common stock issued to convert accounts payable
|
$ | — | $ | 23 | ||||
Conversion of accrued expenses to convertible debt
|
$ | — | $ | 79 | ||||
Removal of capital lease and related fixed assets
|
$ | — | $ | 85 | ||||
Exchange of preferred stock for common stock
|
$ | 806 | $ | 2,692 | ||||
Reclassification of previously issued warrants to derivative liabilities due to insufficient authorized shares on a fully diluted basis
|
$ | — | $ | 837 | ||||
Reclassification of derivative liabilities to additional paid-in-capital
|
$ | 14,950 | $ | — | ||||
Value of shares of common stock and warrants issued to brokers in connection with financing, recorded as debt issuance costs and debt discount
|
$ | 129 | $ | — | ||||
Debt discount recorded as part of 2010 financing transaction
|
$ | 1,761 | $ | — | ||||
Accounts payable converted in 2010 convertible debt offering
|
$ | 163 | $ | — | ||||
Conversion of debt to common stock
|
$ | 179 | $ | — | ||||
Debt issuance costs recorded in connection of debt extinguishment transactions
|
$ | 8 | $ | — | ||||
Reduction of derivative liabilities upon conversion of debt and exercise of warrants
|
$ | 4,336 | $ | — |
Estimated useful lives
|
|
Computer equipment
|
3 years
|
Furniture and fixtures
|
5 years
|
As of December 31,
|
||||||||
2010
|
2009
|
|||||||
Prepaid insurance
|
$ | 32 | $ | 30 | ||||
Prepaid rent
|
11 | 6 | ||||||
Receivable from suppliers
|
15 | 33 | ||||||
VAT receivable
|
62 | -- | ||||||
Other
|
41 | 41 | ||||||
Total prepaid expenses and other current assets
|
$ | 161 | $ | 110 |
As of December 31,
|
||||||||
2010
|
2009
|
|||||||
Computers, furniture and fixtures
|
$ | 42 | $ | 27 | ||||
Less: accumulated depreciation
and amortization
|
(18 | ) | (7 | ) | ||||
Property, plant and equipment, net
|
$ | 24 | $ | 20 | ||||
Depreciation and amortization expense for the year ended
|
$ | 11 | $ | 8 |
As of December 31,
|
||||||||
2010
|
2009
|
|||||||
Earned salary, payroll taxes, vacation and benefits
|
$ | 205 | $ | 28 | ||||
Accrued legal and audit fees
|
- | 409 | ||||||
Accrued consulting fees and other
|
438 | 556 | ||||||
Total accrued expenses
|
$ | 643 | $ | 993 |
As of December 31,
|
||||||||
2010
|
2009
|
|||||||
Senior Convertible Secured Notes - 2010
|
$ | 1,750 | $ | -- | ||||
Senior Convertible Secured Notes - 2009
|
937 | 987 | ||||||
Senior Convertible Secured Notes - 2007
|
85 | 139 | ||||||
Total convertible debt
|
2,772 | 1,126 | ||||||
Less: unamortized debt discounts
|
- | (765 | ) | |||||
Convertible debt, net of debt discounts
|
$ | 2,772 | $ | 361 |
Year ended December 31,
|
Future Maturity of Notes Payable
|
|||
2011
|
$
|
2,772
|
||
Total principal payments
|
$
|
2,772
|
For The Year
|
||||
Ended
December 31, 2010
|
||||
Annual dividend yield
|
-- | |||
Expected life (years)
|
0.50 - 4.8 | |||
Risk-free interest rate
|
0.18% - 1.90 | % | ||
Expected volatility
|
117% - 221 | % |
December 31, 2008
|
|
$
|
--
|
|
Derivatives added in connection with issuance of debt and equity
|
|
3,293
|
||
Net increase in fair value
|
|
|
1,214
|
December 31, 2009
|
|
4,507
|
||
Derivatives added in connection with issuance of debt
and equity
|
|
5,236
|
||
Derivatives reclassified to equity
|
|
(19,286)
|
||
Net increase in fair value
|
|
|
16,261
|
|
December 31, 2010
|
$
|
6,718
|
●
|
4,492 shares to investors in a private placement who invested $1,121,904.
|
|
●
|
9,771 shares to convertible debt holders who converted $6,195,805 of principal and accrued interest;
|
|
●
|
19,800 shares to acquire Neonode Technologies AB; and
|
|
●
|
163 shares for brokerage services in regards to the refinancing and capital raising transactions.
|
Shares of Preferred Stock Not Exchanged as of December 31, 2010
|
Conversion Ratio
|
Shares of Common Stock after Conversion of all Outstanding Shares of Preferred Stock Not yet Exchanged at December 31, 2010
|
||||||||||
Series A Preferred stock
|
166 | 480.63 | 79,785 | |||||||||
Series B Preferred stock
|
141 | 132.07 | 18,622 | |||||||||
Total Remaining Not Exchanged
|
307 | 98,407 |
●
|
The 1996 Stock Option Plan (the “1996 Plan”), which expired in January 2006;
|
|
●
|
The 1998 Non-Officer Stock Option Plan (the “1998 Plan”), which expired in June 2008;
|
|
●
|
The 2007 Neonode Stock Option Plan (the “Neonode Plan”), from which we will not grant any
additional equity awards; and
|
|
●
|
The 2006 Equity Incentive Plan (the “2006 Plan”).
|
●
|
The 2001 Non-Employee Director Stock Option Plan (the “Director Plan”).
|
Plan
|
Options
Outstanding
|
Available
for Issue
|
Outstanding
Options Vested
|
|||||||||
1996 Plan
|
1,000 | --- | 1,000 | |||||||||
1998 Plan
|
1,120 | --- | 1,120 | |||||||||
Neonode Plan
|
7,064 | --- | 7,064 | |||||||||
2006 Plan
|
9,000 | 6,303 | 7,800 | |||||||||
Director Plan
|
1,620 | --- | 1,620 | |||||||||
Total
|
19,804 | 6,303 | 18,604 |
|
Weighted
Average
Number of
Shares
|
Exercise Price
Per Share
|
Weighted-Average
Exercise Price
|
|||||||||
Outstanding at January 1, 2009
|
52,920 | $ | 15.00 - $446.25 | $ | 71.25 | |||||||
Granted
|
-- | $ | -- | $ | -- | |||||||
Cancelled or expired
|
(33,036 | ) | $ | 15.00 - $323.75 | $ | 51.50 | ||||||
Exercised
|
-- | $ | -- | $ | -- | |||||||
Outstanding at December 31, 2009
|
19,884 | $ | 15.00 - $446.25 | $ | 51.50 | |||||||
Granted
|
-- | $ | -- | $ | -- | |||||||
Cancelled or expired
|
(80 | ) | $ | $ 348.75 | $ | 348.75 | ||||||
Exercised
|
-- | $ | -- | $ | -- | |||||||
Outstanding, vested and expected to vest at December 31, 2010
|
19,804 | $ | 35.50 - $446.25 | $ | 102.75 |
Year ended
December
31, 2009
|
Year ended
December
31, 2010
|
Remaining unamortized expense at
December 31, 2010
|
||||||||||
Stock-based compensation
|
$ | 6,790 | $ | 5,430 | $ | 276 |
Warrants issued during the year ended December 31
|
2009
|
|||
Expected life (in years)
|
7.0 | |||
Risk-free interest rate
|
2.28 | % | ||
Volatility
|
166.13 | % | ||
Dividend yield
|
0.00 | % |
Warrants issued during the year ended December 31
|
2010 | |||
Expected life (in years)
|
3.0 – 5.0 | |||
Risk-free interest rate
|
0.59%-1.64 | % | ||
Volatility
|
162.50%- 195.59 | % | ||
Dividend yield
|
0.00 | % |
2010
|
||||||||||||
Outstanding and exercisable
|
Warrants
|
Weighted Average Exercise Price
|
Weighted Average
Remaining Contractual Life
|
|||||||||
Beginning of year
|
7,751,795 | $ | 0.57 | 3.56 | ||||||||
Issued
|
6,240,500 | $ | 1.27 | - | ||||||||
Expired/forfeited
|
- | - | - | |||||||||
Exercised
|
(8,852,806 | ) | $ | 0.62 | - | |||||||
Outstanding and exercisable, end of year
|
5,139,489 | $ | 1.27 | 3.23 |
Year
Ended
December 31,
|
Year
Ended
December 31,
|
|||||||
2010
|
2009
|
|||||||
Domestic
|
$ | ( 31,667 | ) | $ | (13,300 | ) | ||
Foreign
|
41 | (1,621 | ) | |||||
Total
|
$ | ( 31,626 | ) | $ | (14,921 | ) |
2010
|
2009
|
|||||||
Current
|
||||||||
Federal
|
$ | -- | $ | -- | ||||
State
|
1 | 1 | ||||||
Foreign
|
44 | -- | ||||||
Total current
|
$ | 45 | $ | 1 |
Year Ended
December 31,
|
Year Ended
December 31,
|
||||
2010
|
2009
|
||||
Amount at standard tax rates
|
(34)%
|
(34)%
|
|||
Non-deductible loss on revaluation of embedded conversion features and extinguishment of convertible debt
|
(24)%
|
6.5%
|
|||
Loss on debt restructuring
|
--
|
6.2%
|
|||
Stock compensation
|
5.2%
|
14.4%
|
|||
Foreign losses not benefited
|
--
|
3.7%
|
|||
Valuation allowance
|
5.0%
|
3.2%
|
|||
Effective tax rate
|
0.20%
|
0%
|
December 31,
|
||||||||
2010
|
2009
|
|||||||
Deferred tax assets:
|
||||||||
Accruals
|
$
|
85
|
$
|
64
|
||||
Stock compensation
|
897
|
494
|
||||||
Net operating losses
|
2,455
|
813
|
||||||
Total deferred tax assets
|
$
|
3,437
|
$
|
1,371
|
||||
Valuation allowance
|
(3,437
|
)
|
(1,371
|
)
|
||||
Total net deferred tax assets
|
$
|
--
|
$
|
--
|
Balance at January 1, 2010
|
$
|
0
|
||
Additions for tax positions of prior years
|
---
|
|||
Reductions for tax position of prior years
|
---
|
|||
Additions based on tax positions related to the current year
|
---
|
|||
Decreases - Settlements
|
---
|
|||
Reductions - Settlements
|
---
|
|||
Balance at December 31, 2010
|
$
|
0
|
(in thousands, except per share amounts)
|
Year ended
December 31,
|
|||||||
2010
|
2009
|
|||||||
BASIC AND DILUTED
|
||||||||
Weighted average number of common shares outstanding
|
18,293
|
9,898
|
||||||
Number of shares for computation of net loss per share
|
18,293
|
9,898
|
||||||
Net loss attributable to common stockholders
|
$
|
(31,626
|
)
|
$
|
(15,956
|
)
|
||
Net loss per shares basic and diluted
|
$
|
(1.73
|
)
|
$
|
(1.61
|
) |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
I TEM 9A. CONTROLS AND PROCEDURES |
·
|
adding personnel to our finance 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
|
|
·
|
Management will perform an assessment of the effectiveness of our internal control over financial reporting and implement appropriate internal controls on weaknesses determined, if any, documenting, and then testing, the effectiveness of those controls.
|
ITEM 9B . OTHER INFORMATION |
ITEM 1
0
.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
NAME
|
AGE
|
POSITION
|
DATE FIRST ELECTED OR APPOINTED
|
|||
Per Bystedt
|
46
|
Executive Chairman – Chairman of the Board of Directors
|
May 2008
|
|||
John Reardon
|
50
|
Director
|
February 2004
|
|||
Thomas Eriksson
|
42
|
Director, and CEO of Neonode Inc. and of Neonode Technologies AB
|
February 2006
|
|||
David Brunton
|
60
|
Vice President, Finance, Chief Financial Officer, Treasurer and Secretary
|
November 2000
|
●
|
evaluates the performance of and assesses the qualifications of the independent registered public accounting firm;
|
●
|
determines and approves the engagement of the independent registered public accounting firm;
|
●
|
determines whether to retain or terminate the existing independent registered public accounting firm or to appoint and engage a new independent registered public accounting firm;
|
●
|
reviews and approves the retention of the independent registered public accounting firm to perform any proposed permissible non-audit services;
|
●
|
monitors the rotation of partners of the independent registered public accounting firm on the Company’s audit engagement team as required by law;
|
|
●
|
confers with management and the independent registered public accounting firm regarding the effectiveness of internal controls over financial reporting;
|
●
|
establishes procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters;
|
●
|
reviews the financial statements to be included in the Company’s Annual Report on Form 10-Q and 10-K; and
|
●
|
discusses with management and the independent registered public accounting firm the results of the annual audit and the results of the Company’s quarterly financial statements.
|
●
|
reviews and approves corporate performance goals and objectives relevant to the compensation of the Company’s executive officers and other senior management;
|
●
|
reviews and approves the compensation and other terms of employment of the Company’s Chief Executive Officer;
|
●
|
reviews and approves the compensation and other terms of employment of the other executive officers; and
|
●
|
administers and reviews the Company’s stock option and warrant and purchase plans, pension and profit sharing plans, stock bonus plans, deferred compensation plans and other similar programs.
|
●
|
reviewing and evaluating incumbent directors;
|
●
|
recommending candidates to the Board for election to the Board; and
|
●
|
making recommendations to the Board regarding the membership of the committees of the Board.
|
Name and Principal Position
|
Year
(a)
|
Salary
($)
|
Bonus
($)
|
Stock Awards
($)
|
Option or Warrant Awards
($)
(b)
|
All Other Compensation ($)
|
Total ($)
|
|||||||||||||||||||||
Per Bystedt
|
2010
|
$ | 208,189 | (c) | $ | 29,091 | (e) | - | $ | 440,000 | - | $ | 677,280 | |||||||||||||||
2009
|
$ | 218,302 | (d) | - | - | - | - | $ | 218,302 | |||||||||||||||||||
Thomas Eriksson
|
2010 | $ | 215,128 | (g) | $ | 36,364 | (i) | - | $ | 550,000 | $ | 12,491 | (j) | $ | 813,983 | |||||||||||||
Chief Executive Officer(f) | 2009 | $ | 216,417 | (h) | - | - | - | - | $ | 216,417 | ||||||||||||||||||
Magnus Goertz,
|
2010 | $ | 151,746 | (k) | - | - | - | - | $ | 151,746 | ||||||||||||||||||
Lead Engineer | 2009 | $ | 216,471 | (l) | - | - | - | - | $ | 216,471 | ||||||||||||||||||
David W. Brunton, |
2010
|
$ |
132,000
|
- | - | $ | 220,000 | (m) | - | $ | 352,000 | |||||||||||||||||
Chief Financial Officer (a) |
2009
|
$ |
85,000
|
- | - | $ | 77,934 | - | $ | 162,934 |
(a)
|
The amounts in this table are displayed in U.S. Dollars (USD). All compensation paid in 2010 in Swedish Krona have been converted from the SEK to USD using the average exchange rate for fiscal 2010 year - 7.21 SEK to the USD. All compensation paid in 2009 in Swedish Krona have been converted from the SEK to USD using the average exchange rate for fiscal 2009 year - 7.65 SEK to the USD.
|
(b)
|
The amounts are calculated as of the grant date of the option or warrant award in accordance with the provisions of applicable Accounting Standards. Please see Note 10. “Stock Based Compensation” in the Notes to the consolidated financial statements as filed on Neonode Inc.’s annual report on Form 10-K for the valuation assumptions made in the Black-Scholes option pricing model used to calculate the fair value of the option or warrant awards.
|
(c)
|
Mr. Bystedt through a consulting agreement with his company, Iwo Jima SARL, earned a total of $208,189 in salary plus applicable Swedish payroll taxes for his services as CEO of Neonode Inc for the year ended December 31, 2010. We converted $166,551 of the amount owed to Iwo Jima SARL to a convertible note and a warrant as discussed above and paid $41,638 in cash. Mr. Bystedt accrued salary and applicable Swedish payroll taxes of 134,000 SEK per month.
|
(d)
|
Mr. Bystedt through his company, Iwo Jima SARL, entered into a consulting agreement with us whereby he earned a total of $218,302 salary plus applicable Swedish payroll taxes for his services as CEO of Neonode Inc for the year ended December 31, 2009. We converted $51,303 of the amount owed to Iwo Jima SARL to a convertible note and a warrant as discussed above and $159,445 is included in our accrued expenses at December 31, 2009. Mr. Bystedt accrued a salary and applicable Swedish payroll taxes of 134,000 SEK per month.
|
(e)
|
On October 15, 2010, Mr. Bystedt purchased a warrant to purchase 320,000 shares of our common stock at an exercise price of $1.38 per share. Mr. Bystedt paid $13,060 for the warrant. The company granted Mr. Bystedt a $29,901 bonus including applicable Swedish payroll taxes to purchase the warrant. The warrant vested on the date of purchase. The amounts in this table are displayed in U.S. Dollars (USD) and are converted from the SEK to USD using the average exchange rate for fiscal 2010 year 7.21 SEK to the USD.
|
(f)
|
On September 15, 2009, Mr. Eriksson was appointed to our Board. Mr. Eriksson serves as our Chief Executive Officer of Neonode Technologies AB and his compensation is related to his duties as CEO of this company. Mr. Eriksson does not receive any fees for his duties as a member of our Board. Mr. Eriksson was appointed CEO of Neonode Inc. on January 28, 2011.
|
(g)
|
Mr. Eriksson through a consulting agreement with his company, Wirelesstoys Sweden AB, earned a total of $111,034 for his services for the six months ended June 30, 2010. Mr. Eriksson converted from a consultant to a full time employee on July 1, 2010, and earned a total of $104,094 for his services from July 1 to December 31, 2010. We paid to Wirelesstoys Sweden AB during the year ended December 31, 2010, the $125,468 for services earned but unpaid as of December 31, 2009. Mr. Eriksson accrued salary and applicable Swedish payroll taxes of 134,000 SEK per month as a consultant and 125,000 SEK per month excluding applicable Swedish payroll taxes as an employee.
|
(h)
|
Mr. Eriksson through his company, Wirelesstoys Sweden AB, entered into a consulting agreement whereby he earned a total of $216,417 for his services for the year ended December 31, 2009. We paid $90,247 of the amount owed to Wirelesstoys Sweden AB during the year ended December 31, 2009 and $126,170 is included in our accrued expenses at December 31, 2009. Mr. Eriksson accrued salary and applicable Swedish payroll taxes of 134,000 SEK per month.
|
(i)
|
On October 15, 2010, Mr. Eriksson purchased a warrant to purchase 400,000 shares of our common stock at an exercise price of $1.38 per share. Mr. Eriksson paid $16,325 for the warrant. The company granted Mr. Eriksson a $36,364 bonus including applicable Swedish payroll taxes to purchase the warrant.
|
(j)
|
On October 1, 2010, the Company rented an apartment for Mr. Eriksson for six months at cost of 30,000 SEK per month.
|
(k)
|
Mr. Goertz through a consulting agreement with his company, Rector AB, earned a total of $151,746 for his services for the year ended December 31, 2010. During the year ended December 31, 2010, we paid $87,994 of the amount owed to Rector AB as of December 31, 2009, and $146,750 is included in our accrued expenses at December 31, 2010. Mr. Goertz is paid on a per hour basis and earns 1,000 SEK per hour for each hour worked.
|
(l)
|
Mr. Goertz through his company, Rector AB, entered into a consulting agreement to perform duties as a lead engineer with us whereby he earned a total of $216,471 for his services for the year ended December 31, 2009. We paid $70,628 of the amount owed to Rector AB during the year ended December 31, 2009, and $146,967 is included in our accrued expenses at December 31, 2009. Mr. Goertz accrued salary and applicable Swedish payroll taxes of 134,000 SEK per month.
|
(m)
|
On October 15, 2010, Mr. Brunton was granted a warrant to purchase 160,000 shares of our common stock at an exercise price of $1.38 per share. The warrant vested on the date of grant.
|
OPTION AWARDS
|
|||||||||||||||||||
Name & Principal Position
|
Grant Date
|
Number of Securities Underlying Unexercised Options or Warrants (#) Exercisable
|
Number of Securities Underlying Unexercised Options(#) Unexercisable
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
|
Option
Exercise
price ($)
|
Option
Expiration
Date
|
|||||||||||||
Per Bystedt, CEO and Chairman of Board of Directors (7)
|
1/2/2008
|
1,600 | (3) | - | - | $ | 86.25 |
1/2/2015
|
|||||||||||
10/15/2010 (5)
|
320,000 | - | - | $ | 1.38 |
10/15/2013
|
|||||||||||||
David W. Brunton, CFO
|
4/12/2004
|
200 | - | - | $ | 556.25 |
4/12/2011
|
||||||||||||
|
3/31/2005
|
800 | - | - | $ | 368.75 |
8/8/2012
|
||||||||||||
3/21/2006
|
200 | - | - | $ | 125.00 |
3/21/2013
|
|||||||||||||
5/30/2007
|
600 | - | - | $ | 58.25 |
5/30/2014
|
|||||||||||||
8/10/2007
|
7,800 | 30,002 | (1) | - | $ | 122.50 |
8/10/2014
|
||||||||||||
8/25/2009 (2)
|
160,000 | - | - | $ | 0.50 |
8/25/2016
|
|||||||||||||
10/15/2010 (4)
|
160,000 | - | - | $ | 1.38 |
10/15/2013
|
|||||||||||||
Thomas Eriksson, CEO of Neonode Technologies AB (7)
|
10/15/2010(6)
|
400,000 | - | - | $ | 1.38 |
10/15/2013
|
(1)
|
Stock option grants vest 25% on first anniversary date of grant and monthly thereafter for the next 36 months.
|
(2)
|
On August 25, 2009, Mr. Brunton was granted a warrant to purchase 160,000 shares of our common stock at an exercise price of $0.50 per share. The warrant vested on date of grant.
|
(3)
|
Mr. Bystedt was granted 16,000 stock options that vested one year after the grant date for services as a member of our Board of Directors.
|
(4)
|
On October 15, 2010, Mr. Brunton was granted a warrant to purchase 160,000 shares of our common stock at an exercise price of $1.38 per share. The warrant vested on the date of grant.
|
(5)
|
On October 15, 2010, Mr. Bystedt purchased a warrant to purchase 320,000 shares of pour common stock at an exercise price of $1.38 per share. Mr. Bystedt paid $13,060 for the warrant. The warrant vested on the date of purchase.
|
(6)
|
On October 15, 2010, Mr. Eriksson purchased a warrant to purchase 400,000 shares of pour common stock at an exercise price of $1.38 per share. Mr. Bystedt paid $16,325 for the warrant. The warrant vested on the date of purchase.
|
(7)
|
On January 28, 2011, Mr. Bystedt resigned his position as CEO and Mr. Eriksson was appointed CEO of the company. Mr. Bystedt remains Chairman of the Board of Directors and Mr. Eriksson remains as a member of the Board of Directors
|
1.
|
Salary Continuation. Mr. Brunton shall receive an amount equal to six (6) months of Base Salary ($13,000 per month). Such amount shall be paid in equal monthly installments over the six (6) months following Change in Control Termination and shall be subject to all required tax withholding.
|
2.
|
Bonus Payment. Within fifteen (15) days following the last day of the fiscal quarter during which Change in Control Termination occurs Mr. Brunton shall receive the pro-rata share of any bonus to which he would have been entitled had his employment with the Company
continued. The bonus amount paid will be the product of the bonus percentage of Base Salary derived per his bonus plan
multiplied by his
Base Salary from the beginning of the Fiscal Year through the date of his Involuntary Termination Without Cause. Such payment shall be subject to all required tax withholding.
|
3.
|
Acceleration of Option Vesting. Effective as of the date of Change in Control Termination, Mr. Brunton shall be credited with full vesting under all options to purchase the Company’s Common Stock that he holds on such date.
|
1.
|
Salary Continuation. Mr. Eriksson shall receive an amount equal to six (6) months of Base Salary (125,000 SEK per month). Such amount shall be paid in equal monthly installments over the six (6) months following Change in Control Termination and shall be subject to all required tax withholding.
|
Name(a)
|
Fees Earned or
Paid in
Cash
($)
|
Stock
Awards
($)
|
Option or
Warrant Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||
John Reardon (c)
|
$ | 18,000 | - | $ | 110,000 | - | - | - | $ | 128,000 |
(a)
|
All compensation paid to Per Bystedt and Thomas Eriksson is disclosed in the footnotes to the Summary Compensation Table. Neither Mr. Bystedt nor Mr. Eriksson received any fees for serving on the Company’s Board of Directors.
|
(b)
|
Amounts are calculated as of the grant date of the option or warrant award in accordance with the provisions of applicable Accounting Standards. Please see Note 14. “Stock Based Compensation” in the Notes to the consolidated financial statements as filed on Neonode Inc.’s annual report Form 10-K for the valuation assumptions made in the Black-Scholes option pricing used to calculate fair value of the option or warrant awards.
|
(c)
|
On October 15, 2010, Mr. Reardon was granted a warrant to purchase 80,000 shares of our common stock at an exercise price of $1.38 per share. The warrant vested on the date of grant. Mr. Reardon holds 9,204 stock options to purchase our Common Stock with exercise prices ranging from $35.50 to $687.50 per share.
|
Beneficial Ownership (1)
|
||||||
Beneficial Owner
|
Number of Shares
|
Percent of Total
|
||||
Per Bystedt (2)(3)(4)
CEO and Director
|
4,608,765
|
14.18
|
%
|
|||
Thomas Eriksson (5)
|
3,199,730
|
9.85
|
%
|
|||
CEO Neonode Technologies AB and Director
|
||||||
Magnus Goertz
|
2,830,368
|
8.71
|
%
|
|||
Founder
|
||||||
Mats Dahlin (6)
|
1,057,345
|
3.25
|
%
|
|||
Director of Neonode Technologies AB
|
||||||
David Brunton (2)(7)(8)
CFO
|
622,378
|
1.92
|
%
|
|||
John Reardon (2)(7)(8)
Director
|
292,313
|
0.90
|
%
|
|||
All executive officers and directors as a group (6 persons) (2)
|
12,610,899
|
38.81
|
%
|
|||
(1)
|
This table is based upon information supplied by officers, directors and principal stockholders. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned.
|
(2)
|
Includes, 1,600, 9,000 and 9,204 shares of common stock that Messrs. Bystedt, Brunton and Reardon, respectively, have the right to acquire within 60 days after the date of this table under outstanding stock options.
|
(3)
|
Includes 3,333,095 shares of common stock, warrants to purchase 227,654 shares of common stock at an exercise price of $1.38 per share, and $227,661 of convertible debt that can be converted into 455,323 shares of common stock that is held by Iwo Jima SARL. Iwo Jima SARL may be deemed an affiliate of Mr. Bystedt.
|
(4)
|
Includes 67,773 shares of common stock, warrants to purchase 387,773 shares of common stock at an exercise price of $1.38 per share, and $67,773 of convertible debt that can be converted into 135,226 shares of common stock that is held by Mr. Bystedt.
|
(5)
|
Includes warrants to purchase 400,000 shares of common stock at an exercise price of $1.38 per share held by Mr. Eriksson.
|
(6)
|
Includes 315,724 shares of common stock, warrants to purchase 260,171 shares of common stock at an exercise price of $1.38 per share, warrants to purchase 50,000 shares of common stock at an exercise price of $1.00 per share, and $215,724 of convertible debt that can be converted into 431,449 shares of common stock that is held by Davisa Ltd. Davisa Ltd may be deemed an affiliate of Mr. Dahlin.
|
(7)
|
Includes 160,000 and 200,000 warrants to purchase shares of common stock at an exercise price of $0.50 per share held by Messrs. Brunton and Reardon, respectively.
|
(8)
|
Includes 160,000 and 80,000 warrants to purchase shares of common stock at an exercise price of $1.38 per share held by Messrs. Brunton and Reardon, respectively.
|
Plan category
|
Number of securities to be issued upon exercise of outstanding options,
warrants and rights
|
Weighted-average exercise price of outstanding options, warrants
and rights
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities
reflected in column (a)
|
|||||||||
(a)
|
(b)
|
(c)
|
||||||||||
Equity compensation plans and warrants approved by security holders
|
2,766,611 | $ | 2.00 | 6,303 | ||||||||
Equity compensation plans and warrants not approved by security holders
|
2,392,682 | $ | 1.25 | 3,192 | ||||||||
Total
|
5,159,293 | $ | 1.75 | 9,495 |
Plan
|
Options
Outstanding
|
Available
for Issue
|
Outstanding
Options Vested
|
|||||||||
1996 Plan
|
1,000 | --- | 1,000 | |||||||||
1998 Plan (1)
|
1,120 | --- | 1,120 | |||||||||
Neonode Plan (2)
|
7,064 | --- | 7,064 | |||||||||
2006 Plan
|
9,000 | 6,303 | 7,800 | |||||||||
Director Plan
|
1,620 | --- | 1,620 | |||||||||
Total
|
19,804 | 6,303 | 18,604 |
Fiscal Year Ended
(in thousands)
|
||||||||
2010
|
2009
|
|||||||
Audit Fees
|
$ | 239 | $ | 13 | ||||
Audit-related Fees(1)
|
- | - | ||||||
Tax Fees (2)
|
- | - | ||||||
All Other Fees
|
- | - | ||||||
Total Fees
|
$ | 239 | $ | 13 |
(1)
|
Fees paid for registration, proxy and review of other regulatory filings.
|
(2)
|
Fees paid for preparation and filing of our federal and state income tax returns.
|
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
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 of Neonode Inc., dated April 17, 2009 (
incorporated by reference to Exhibit 10.22 of our Quarterly Report on Form 10-Q filed on August 4, 2009
).
|
||
3.1.1
|
Certificate of Amendment, dated December 13, 2010 (filed herewith)
|
||
3.1.2 | Certificate of Amendment, dated March 18, 2011 ( incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed on March 28, 2011 ) | ||
3.2
|
Bylaws, as amended through December 5, 2007 (
incorporated by reference as Exhibit 3.2 of our Annual Report on Form 10-K filed on April 15, 2008
)
|
||
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
|
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
)+
|
||
10.2
|
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
)+
|
||
10.3
|
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
)+
|
||
10.4
|
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
)+
|
||
10.5
|
Employment Agreement with Per Bystedt (
incorporated by reference to Exhibit 10.19 to our Annual Report on Form 10-K filed on April 15, 2009)
+
|
||
10.6
|
Employment Agreement with Thomas Eriksson (
incorporated by reference to Exhibit 10.20 to our Annual Report on Form 10-K filed on April 15, 2009)
+
|
||
10.7
|
Employment Agreement with Magnus Goertz (
incorporated by reference to Exhibit 10.21 to our Annual Report on Form 10-K filed on April 15, 2009)
+
|
||
10.8
|
Convertible Note Agreement, dated September 9, 2009 (
incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on September14, 2009
)
|
||
10.9
|
Convertible Promissory Note (
incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed on September 14, 2009
)
|
||
10.10
|
Form of Common Stock Purchase Warrant (
incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K filed on September 14, 2009
)
|
||
10.11
|
Convertible Note Agreement, dated January 18, 2010 (
incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on February 23, 2010
)
|
||
10.12
|
Convertible Promissory Note (
incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed on February 23, 2010
)
|
||
10.13
|
Form of Common Stock Purchase Warrant (
incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K filed on February 23, 2010
)
|
||
10.14
|
Form of Amendment Convertible Note Agreement(
incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on October 18, 2010
)
|
||
10.15
|
Form of Amendment Convertible Note Agreement(incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed on October 18, 2010 )
|
||
10.16 | Form of Common Stock Purchase Warrant ( incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K filed on October 18, 2010 ) | ||
10.17 | Consulting Agreement with Per Bystedt, dated January 28, 2011 (filed herewith) + | ||
10.18 | Form of Convertible Loan Agreement for the March 2011 Financing (filed herewith) | ||
10.19 | Form of Convertible Promissory Note for the March 2011 Financing (filed herewith) | ||
10.20 | Form of Common Stock Purchase Warrant for the March 2011 Financing (filed herewith) | ||
21 | Subsidiaries of the registrant | ||
23.1 | Consent of independent registered public accounting firm (filed herewith) | ||
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: March 31, 2011
|
By:
|
/s/ David W. Brunton
|
David W. Brunton
Chief Financial Officer,
Vice President, Finance
and Secretary
|
||
Name
|
Title
|
Date
|
||
/s/ Thomas Eriksson
|
Chief Executive Officer,
|
March 31, 2011
|
||
Thomas Eriksson Per Bystedt
|
and Director
|
|||
(Principal Executive Officer)
|
||||
/s/ David W. Brunton
|
Chief Financial Officer, Vice President, Finance
|
March 31, 2011
|
||
David W. Brunton
|
and Secretary
|
|||
(Principal Financial and Accounting Officer)
|
||||
/s/ John Reardon
|
Director
|
March 31, 2011
|
||
John Reardon
|
||||
/s/ Per Bystedt
|
Director and Chairman of the Board
|
March 31, 2011
|
||
Per Bystedt
|
||||
Neonode Inc. | Per Bystedt | |||
/s/
Per Bystedt
|
||||
Name:
|
Name: Per Bystedt
|
|||
Title:
|
Title: Executive Chairman
|
|||
Date: | Date: January 28, 2011 |
1.1.
|
Maintain an active, ongoing, positive and collaborative relationship with the Board of Directors and CEO.
|
1.2.
|
Advise the CEO and work hand-in-hand with him regarding strategic initiatives, business development and financing the Company's operations.
|
1.3.
|
Schedule and preside at executive sessions with the Directors. Give the Board of Directors and CEO feedback on matters discussed.
|
1.4. | Participate with the CEO in preparation for Board and Board committee meetings. |
2.1. |
Assist in the definition of corporate strategy and the business plan:
|
2.1.1. | product/service definition of corporate strategy and the business plan |
2.1.2. | marketing strategy |
2.1.3. | distribution channels |
2.1.4. | financial projections |
2.2. |
Assist the CEO in presenting the Company's potential, vision, and mission to potential
strategic and business
partners
|
2.3. |
Advise on Company structure, characteristics, positioning and differentiation
|
3.2.
|
Identify and approach potential investors (VCs, institutional investors, etc.) 3.3. Present the Company's potential, vision, and mission to potential investors |
3.4. |
Participate in negotiations in order to achieve the best possible terms for the Company with the selected investors.
|
4.1. |
Lead the Board, ensuring its overall effectiveness in all aspects of its role
|
4.2.
|
Ensure that the Board remains focused on its role and the achievement of key tasks |
4.3. |
Plan effectively and proactively by concentrating on strategic matters
|
4.4. | Take the chair at general meetings, Board meetings, and strategy meetings |
4.5. | Represent the Company, along with the CEO. at the highest level |
4.6. |
Ensure effective communication and maintain a positive ongoing dialogue with the Company's shareholders and investors
|
Investor Name
|
Address
|
|
|
Number of Current Warrants
|
Current Warrants Being Exercised – Current Warrant Shares Issuable upon Exercise
|
Current Warrants Exercise Price
|
Aggregate Warrant Exercise Price
|
Number of Replacement Warrants
(50% coverage)
|
$0.0____ per Share
|
Dated:___________________
|
(Signature must conform to name of holder as specified on the face of the Warrant)
(Address)
|
Investor Name
|
Loan
|
Number of Warrants
(25% coverage
)
|
$
|
Principal Amount: $ | Issue Date: March , 2011 |
NEONODE INC.
|
|||
|
By:
|
/s/ | |
Name: David W Brunton | |||
Title: CFO | |||
Right to Purchase
________
shares of Common Stock of Neonode Inc. (subject to adjustment as provided herein)
|
No. 2011-[ insert warrant designation code ] | Issue Date: March __, 2011 |
Where
|
X=
|
the number of shares of Common Stock to be issued to the holder |
|
Y=
|
the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such calculation)
|
|
A=
|
the average of the closing sale prices of the Common Stock for the five (5) Trading Days immediately prior to (but not including) the Exercise Date, or Fair Market Value, whichever is less
|
|
B=
|
Purchase Price (as adjusted to the date of such calculation)
|
NEONODE INC. | |||
By:
|
|||
Name: | |||
Dated:___________________
|
(Signature must conform to name of holder as specified on the face of the Warrant)
(Address)
|
Transferees
|
Percentage Transferred
|
Number Transferred
|
Dated: ______________, ___________
Signed in the presence of:
(Name)
ACCEPTED AND AGREED:
[TRANSFEREE]
(Name)
|
(Signature must conform to name of holder as specified on the face of the warrant)
(address)
(address)
|
Name
|
Jurisdiction
|
|
Neonode Technologies AB
|
Sweden
|
/s/ KMJ Corbin & Company
LLP
|
Costa Mesa, California
|
March 31, 2011
|
/s/ Thomas Eriksson
|
||
Thomas Eriksson
|
||
Chief Executive Officer
|
/s/ David W. Brunton
|
||
David W. Brunton
|
||
Chief Financial Officer, Vice President, Finance and Secretary
|
1.
|
The report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, except for the audit of our financial statements by our independent registered public accounting firm ; and
|
2.
|
The information contained in the report fairly presents, in all material respects, the financial condition and results of operation of the Company.
|
/s/ Thomas Eriksson
|
/s/ David W. Brunton
|
|
Thomas Eriksson
|
David W. Brunton
|
|
Chief Executive Officer
|
Chief Financial Officer
|