XML 19 R8.htm IDEA: XBRL DOCUMENT

Note 1 - Organization and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2025

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

1. Organization and Summary of Significant Accounting Policies

Basis of Presentation and Preparation

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of Neonode Inc. and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements have been prepared by us, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally contained in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Recently Issued Accounting Pronouncement Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires, among other updates, enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker. The ASU also clarifies that entities with a single reportable segment are subject to both new and existing reporting requirements under Topic 280. We adopted ASU 2023-07 in the interim period ended March 31, 2025 using a retrospective method to all periods presented. See Note 6 Segment Information for further details.

Recently Issued Accounting Pronouncements Pending Adoption

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which updates several disclosures regarding the accounting for income taxes. ASU 2023-09 is effective for public business entities for fiscal years beginning after December 15, 2024. We are currently evaluating the impact ASU 2023-09 will have on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of adopting ASU 2024-03.

In July 2025, the FASB issued ASU 2025‑05, Financial Instruments—Credit Losses (Topic 32): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which provides a practical expedient to measure credit losses on current accounts receivable and current contracts assets. The practical expedient allows companies to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when measuring credit losses. This standard is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those fiscal years, with early adoption permitted, and should be applied on a prospective basis. We are currently evaluating the impact of adopting ASU 2025-05.

Foreign Currency Translation and Transaction Gains and Losses

The functional currency of our foreign subsidiaries is the applicable local currency, the Swedish Krona, the Japanese Yen, the South Korean Won and the Taiwan Dollar. The translation from Swedish Krona, Japanese Yen, South Korean Won and Taiwan Dollar to U.S. Dollars is performed for balance sheet accounts using current exchange rates in effect at the condensed consolidated balance sheet date and for income statement accounts using a weighted-average exchange rate during the period. Gains or (losses) resulting from translation are included as a separate component of accumulated other comprehensive income (loss). Foreign currency translation losses were $(33,000) and $(222,000) and $(30,000) and $(96,000) during the three and nine months ended September 30, 2025 and 2024, respectively. Gains resulting from foreign currency transactions are included in general and administrative expenses in the accompanying condensed consolidated statements of operations and were $(13,000)and $67,000 and $(3,000) and $(1,000) during the three and nine months ended September 30, 2025 and 2024, respectively.

Liquidity

We have incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net income for combined continuing and discontinued operations of approximately $14.2 million and $10.6 million and net loss of $1.1 million and $4.9 million for the three and nine months ended September 30, 2025 and 2024, respectively and had an accumulated deficit of approximately $213.5 million and $224.1 million as of September 30, 2025 and December 31, 2024, respectively. In addition, operating activities used cash of approximately $4.6 million and $4.4 million for the nine months ended September 30, 2025 and 2024, respectively.

The condensed consolidated financial statements included in this report have been prepared on a going concern basis, which contemplates continuity of operations and the realization of assets and the repayment of liabilities in the ordinary course of business.

Management has prepared an operating plan and believes that the Company has sufficient cash to meet its obligations as they come due for a year from the date the condensed consolidated financial statements were issued.

Concentration of Credit and Business Risks

Our customers are located in the United States, Europe and Asia.

As of September 30, 2025, three of our customers represented approximately 83.8% of our consolidated accounts receivable and unbilled revenues.

As of December 31, 2024, four of our customers represented approximately 80.9% of our consolidated accounts receivable and unbilled revenues.

Customers who accounted for 10.0% or more of our net revenues during the three months ended September 30, 2025 are as follows:

	●	Seiko Epson – 46.3%

	●	Hewlett-Packard – 21.5%

	●	Alps Alpine – 15.0%

Customers who accounted for 10.0% or more of our net revenues during the nine months ended September 30, 2025 are as follows:

	●	Seiko Epson – 35.1%

	●	Alps Alpine – 20.2%

	●	Hewlett-Packard – 19.9%

	●	Commercial Vehicle OEM – 17.8%

Customers who accounted for 10.0% or more of our net revenues during the three months ended September 30, 2024 are as follows:

	●	Seiko Epson – 30.6%

	●	Nexty Electronics – 17.9%

	●	Alps Alpine – 15.3%

	●	Hewlett-Packard – 14.6%

	●	Commercial Vehicle OEM – 12.35%

Customers who accounted for 10.0% or more of our net revenues during the nine months ended September 30, 2024 are as follows:

	●	Seiko Epson – 25.2%

	●	Hewlett-Packard – 20.7%

	●	Alps Alpine – 20.4%

	●	Commercial Vehicle OEM – 13.4%

Revenues

The following tables present the net revenues distribution by geographical area and market (in thousands):

		Three months ended September 30,
		2025								2024
		Amount				Percentage				Amount				Percentage
North America:
Net revenues from IT & Industrial		$	101				100.0	%		$	163				100.0	%
		$	101				100.0	%		$	163				100.0	%

Asia Pacific:
Net revenues from Automotive		$	65				23.2	%		$	143				25.9	%
Net revenues from IT & Industrial			215				76.8	%			409				74.1	%
		$	280				100.0	%		$	552				100.0	%

Europe, Middle East and Africa:
Net revenues from Automotive		$	49				100.0	%		$	123				100.0	%
		$	49				100.0	%		$	123				100.0	%

		Nine months ended September 30,
		2025								2024
		Amount				Percentage				Amount				Percentage
North America:
Net revenues from IT & Industrial		$	329				100.0	%		$	589				100.0	%
		$	329				100.0	%		$	589				100.0	%

Asia Pacific:
Net revenues from Automotive		$	313				34.6	%		$	597				41.7	%
Net revenues from IT & Industrial			591				65.4	%			834				58.3	%
		$	904				100.0	%		$	1,431				100.0	%

Europe, Middle East and Africa:
Net revenues from Automotive		$	309				100.0	%		$	433				100.0	%
		$	309				100.0	%		$	433				100.0	%

Contract Liabilities

The following table presents our deferred revenues by source (in thousands):

		September 30, 2025				December 31, 2024
Deferred revenues license fees		$	25			$	-
Deferred revenues non-recurring engineering			37				-
		$	62			$	-

During the three and nine months ended September 30, 2025 and 2024, the Company recognized revenues of approximately $38,000 and $0 and $25,000 and $2,000 respectively, related to contract liabilities outstanding at the beginning of the period.

Gain from Patent Assignment and Broker Fee from Patent Assignment

In May 2019, the Company assigned a portfolio of patents to an unrelated third party. In exchange for assigning the patents, the Company was granted a limited non-exclusive, perpetual, royalty-free license to use the patents and is entitled to share in proceeds from the assignee’s monetization efforts related to the patents. The Company accounts for the patent assignment as a transfer of nonfinancial assets in accordance with Subtopic 610-20, Other Income--Gains and Losses from the Derecognition of Nonfinancial Assets, which refers to a number of principles of Topic 606 including those related to determining whether a contract exists, identifying distinct promises, determining when control is transferred and determining the transaction price including constraining estimates of variable consideration.

During the third quarter of 2025, the Company determined that approximately $19.4 million of the transaction price from the patent assignment was no longer constrained and recorded a receivable and gain on patent assignment for that amount. In addition, during the third quarter of 2025, the Company recorded a broker fee liability and expense of $3.9 million related to the patent assignment gain.

Income Taxes

We recognize deferred tax liabilities and assets for the expected future tax consequences of items that have been included in the condensed consolidated financial statements or tax returns. We estimate income taxes based on rates in effect in each of the jurisdictions in which we operate. Deferred income tax assets and liabilities are determined based upon differences between the financial statement and income tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The realization of deferred tax assets is based on historical tax positions and expectations about future taxable income. Valuation allowances are recorded against net deferred tax assets when, in our opinion, realization is uncertain based on the “more likely than not” criteria of the accounting guidance.

Based on the uncertainty of future pre-tax income, we fully reserved our net deferred tax assets as of September 30, 2025 and December 31, 2024. In the event we were to determine that we would be able to realize our deferred tax assets in the future, an adjustment to the deferred tax asset would increase income in the period such determination was made. The provision for income taxes represents the net change in deferred tax amounts, plus income taxes paid or payable for the current period.

We follow U.S. GAAP related accounting for uncertainty in income taxes, which provisions include a two-step approach to recognizing, de-recognizing and measuring uncertainty in income taxes. As a result, we did not recognize a liability for unrecognized tax benefits. As of September 30, 2025 and December 31, 2024, we had no unrecognized tax benefits.

On July 4, 2025, new U.S tax legislation was signed into law (known as the "One Big Beautiful Bill Act" or the "OBBBA") which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, but many are generally not effective until 2026. The enactment of the OBBBA does not have a material impact on our results from operations for the current year nor do we expect the OBBBA to have a material impact on our results from operations in future years.