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Stockholders' Equity
 12 Months Ended
Dec. 31, 2016
Stockholders' Equity [Abstract]  
Stockholders' Equity
8. Stockholders’ Equity

 

Common Stock

 

Securities Purchase Agreement

 

In August 2016, Neonode entered into the Securities Purchase Agreement with institutional and accredited investors as part of a private placement pursuant to which Neonode agreed to issue a total of 8,627,352 shares of Neonode common stock, as described below, and warrants for an aggregate purchase price of $7.9 million in net proceeds. The total number of shares includes (i) an aggregate of 427,352 Employee Investor Shares at $1.17 per share for gross proceeds of approximately $500,000, (ii) an aggregate of 4,600,000 Outside Investor Shares at a price of $1.00 per share for gross proceeds of $4,600,000, and (iii) up to 3,600,000 Pre-Funded Warrant Shares issuable upon exercise of the Pre-Funded Warrants for which Neonode received $3,564,000 pre-funded in gross proceeds. The Pre-Funded Warrants were issued to certain outside investors whose purchase of shares of Neonode common stock would make them the beneficial owners of more than 9.99% of the outstanding common stock of Neonode. Each of the Pre-Funded Warrants were pre-funded upon closing of the private placement at $0.99 per Pre-Funded Warrant Share and have an exercise price of $0.01 per Pre-Funded Warrant Share. The Pre-Funded Warrants are immediately exercisable upon issuance and will not expire prior to exercise.

 

Warrants and Other Common Stock Activity

 

In addition to the Pre-Funded Warrants described above, under the terms of the Securities Purchase Agreement, Neonode issued the Purchase Warrants to all investors in the private placement to purchase up to a total of 4,313,676 shares of Neonode common stock at an exercise price of $1.12 per share. The Purchase Warrants will expire five and one-half years from issuance and are non-exercisable for the first six months. The terms of the Purchase Warrants require that exercise may only be for cash and not on a cashless basis unless, after a period of six months from closing of the private placement.  

 

During the year ended December 31, 2016, a warrant holder exercised warrants to purchase 80,000 shares of common stock using the cashless exercise provisions allowed in the warrant and received 11,565 shares of our common stock.

 

During the year ended December 31, 2015, we issued 3,200,000 shares of our common stock to investors in connection with an equity financing transaction. These shares of common stock were a portion of the 5,000,000 shares previously registered in 2014 under a shelf registration statement. We issued the stock at $1.90 per share and raised approximately $6.1 million gross and received approximately $5.4 million in cash, net of direct offering costs including underwriting discounts and legal, audit and other regulatory costs of approximately $0.7 million. Per Bystedt (Chairman of our Board of Directors), Thomas Eriksson (our Chief Executive Officer and a member of our Board of Directors), and Mats Dahlin (a member of our Board of Directors) purchased an aggregate of 157,893 shares of common stock in the offering at the public offering price per share for an aggregate purchase price of approximately $300,000.

 

During the year ended December 31, 2015, warrant holders exercised warrants to purchase 280,000 shares of common stock using the cashless net exercise provision allowed in the warrant and received 150,234 shares of our common stock.

 

During the year ended December 31, 2014, we sold 2,500,000 shares of our common stock at a price of $4.00 per share to an accredited institutional investor for an aggregate purchase price of $10,000,000 in gross proceeds and net proceeds of approximately $9.3 million after expenses and fees, including a $600,000 placement agent fee. 

 

In addition, we issued a warrant to purchase up to an aggregate of 2,500,000 shares of our common stock at an exercise price of $5.09 per share that expired on November 15, 2015. In addition, we issued to the placement agent a warrant to acquire up to an aggregate of 75,000 shares of our common stock that also expired on November 15, 2015. 

 

During the year ended December 31, 2014, warrant holders exercised warrants to purchase 17,000 shares of common stock using the cashless net exercise provision allowed in the warrant and received 10,053 shares of our common stock. In addition, warrant holders exercised warrants to purchase 11,500 shares of common stock at an exercise price of $3.13 per share for total cash proceeds of approximately $36,000.

 

A summary of all warrant activity is set forth below:

 

Outstanding and exercisable   Warrants     Weighted Average Exercise Price     Weighted Average 
Remaining Contractual Life		  
January 1, 2014     828,573       2.39       2.06  
Issued     2,575,000       5.09       -  
Expired/forfeited     (40,000 )     3.98       -  
Exercised     (28,500 )     2.85       -  
December 31, 2014     3,335,073       4.45       0.93  
Issued     -       -       -  
Expired/forfeited     (2,591,000 )     5.06       -  
Exercised     (280,000 )     1.30       -  
December 31, 2015     464,073       3.02       0.19  
Issued (Prefunded)     3,600,000       0.01       -  
Issued (Purchase)     4,313,676       1.12          
Expired/forfeited     (384,073 )     3.13       -  
Exercised     (80,000 )     2.00       -  
Outstanding and exercisable, December 31, 2016     7,913,676     $ 0.62       5.13  

 

Outstanding Warrants to Purchase Common Stock as of December 31, 2016:
                     
Description   Issue Date   Exercise
Price		     Shares     Expiration
Date
                         
August 2016 Prefunded Warrants   08/16/16   $ 1.00       3,600,000     02/16/22
August 2016 Purchase Warrants   08/17/16   $ 1.12       4,313,676     02/17/22
Total Warrants Outstanding                 7,913,676      

 

Preferred Stock

 

The terms of our Series B Preferred stock are as follows:

 

Dividends and Distributions

 

The holders of shares of Series B Preferred stock are entitled to participate with the holders of our common stock with respect to any dividends declared on the common stock in proportion to the number of shares of common stock issuable upon conversion of the shares of Series B Preferred stock held by them.

 

Liquidation Preference

 

In the event of any liquidation, dissolution, or winding up of our operations, either voluntary or involuntary, subject to the rights of the Series B Preferred stock and Senior Preferred stock, shall be entitled to receive, after any distribution to the holders of senior preferred stock and prior to and in preference to any distribution to the holders of common stock, $0.001 for each share of Series B Preferred stock then outstanding.

 

Voting

 

The holders of shares of Series B Preferred stock have one vote for each share of Series B Preferred stock held by them.

 

Conversion

 

Initially, each share of Series B Preferred stock was convertible into one share of our common stock. On March 31, 2009, our stockholders approved a resolution to increase the authorized share capital, and to increase the conversion ratio to 132.07 shares of our common stock for each share of Series B Preferred stock.  

  

Conversion of Preferred Stock Issued to Common Stock

 

The following table summarizes the amounts as of December 31, 2016:

 

    Shares of Preferred Stock Not Exchanged as of December 31, 2016     Conversion Ratio     Shares of Common Stock after Conversion of all Outstanding Shares of Preferred Stock Not yet Exchanged at December 31, 2016  
                         
Series B Preferred Stock     83       132.07       10,962