NEONODE INC., 10-Q filed on 12 May 21
v3.21.1
Document And Entity Information - shares
3 Months Ended
Mar. 31, 2021
May 10, 2021
Document Information Line Items    
Entity Registrant Name Neonode Inc.  
Document Type 10-Q  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding   11,504,665
Amendment Flag false  
Entity Central Index Key 0000087050  
Entity Current Reporting Status Yes  
Entity Filer Category Non-accelerated Filer  
Document Period End Date Mar. 31, 2021  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q1  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity File Number 1-35526  
Entity Incorporation, State or Country Code DE  
Entity Interactive Data Current Yes  
v3.21.1
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Mar. 31, 2021
Dec. 31, 2020
Current assets:    
Cash $ 8,145 $ 10,473
Accounts receivable and unbilled revenue, net 1,326 1,743
Inventory 1,675 1,273
Prepaid expenses and other current assets 820 1,161
Total current assets 11,966 14,650
Property and equipment, net 814 1,003
Operating lease right-of-use assets 743 919
Total assets 13,523 16,572
Current liabilities:    
Accounts payable 491 1,084
Accrued payroll and employee benefits 1,071 1,170
Accrued expenses 464 545
Deferred revenues 120 138
Current portion of finance lease obligations 624 769
Current portion of operating lease obligations 377 504
Total current liabilities 3,147 4,210
Finance lease obligations, net of current portion 48 95
Operating lease obligations, net of current portion 251 377
Total liabilities 3,446 4,682
Commitments and contingencies
Stockholders’ equity:    
Common stock, 25,000,000 shares authorized, with par value of $0.001; 11,504,665 shares issued and outstanding at March 31, 2021 and December 31, 2020 12 12
Additional paid-in capital 211,686 211,663
Accumulated other comprehensive loss (570) (404)
Accumulated deficit (197,726) (196,158)
Total Neonode Inc. stockholders’ equity 13,402 15,113
Noncontrolling interests (3,325) (3,223)
Total stockholders’ equity 10,077 11,890
Total liabilities and stockholders’ equity $ 13,523 $ 16,572
v3.21.1
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares
Mar. 31, 2021
Dec. 31, 2020
Statement of Financial Position [Abstract]    
Common stock, shares authorized 25,000,000 25,000,000
Common stock, par value (in Dollars per share) $ 0.001 $ 0.001
Common stock, shares issued 11,504,665 11,504,665
Common stock, shares outstanding 11,504,665 11,504,665
v3.21.1
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Revenues:    
HMI Solutions $ 1,299 $ 1,182
HMI Products 366 112
Total revenues 1,665 1,294
Cost of revenues:    
HMI Solutions   (1)
HMI Products (277) (43)
Total cost of revenues (277) (44)
Total gross profit 1,388 1,250
Operating expenses:    
Research and development 1,142 995
Sales and marketing 788 545
General and administrative 1,087 799
Total operating expenses 3,017 2,339
Operating loss (1,629) (1,089)
Other expense:    
Interest expense 5 7
Total other expense 5 7
Loss before provision for income taxes (1,634) (1,096)
Provision for income taxes 36 16
Net loss including noncontrolling interests (1,670) (1,112)
Less: net loss attributable to noncontrolling interests 102 102
Net loss attributable to Neonode Inc. $ (1,568) $ (1,010)
Loss per common share:    
Basic and diluted loss per share (in Dollars per share) $ (0.14) $ (0.11)
Basic and diluted – weighted average number of common shares outstanding (in Shares) 11,504 9,171
v3.21.1
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Statement of Comprehensive Income [Abstract]    
Net loss including noncontrolling interests $ (1,670) $ (1,112)
Other comprehensive loss:    
Foreign currency translation adjustments (166) (87)
Comprehensive loss (1,836) (1,199)
Less: Comprehensive loss attributable to noncontrolling interests 102 102
Comprehensive loss attributable to Neonode Inc. $ (1,734) $ (1,097)
v3.21.1
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) - USD ($)
$ in Thousands
Series B Preferred Stock
Preferred Stock
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Income (Loss)
Accumulated Deficit
Total Neonode Inc. Stockholders’ Equity
Noncontrolling Interests
Total
Balance at Dec. 31, 2019 $ 9 $ 197,543 $ (639) $ (190,520) $ 6,393 $ (2,546) $ 3,847
Balance (in Shares) at Dec. 31, 2019 [1] 9,171            
Foreign currency translation adjustment   (87)   (87)   (87)
Net loss     (1,010) (1,010) (102) (1,112)
Balance at Mar. 31, 2020 $ 9 197,543 (726) (191,530) 5,296 (2,648) 2,648
Balance (in Shares) at Mar. 31, 2020 [1] 9,171            
Foreign currency translation adjustment   64   64   64
Net loss     (1,612) (1,612) (154) (1,766)
Balance at Jun. 30, 2020 $ 9 197,543 (662) (193,142) 3,748 (2,802) 946
Balance (in Shares) at Jun. 30, 2020 [1] 9,171            
Foreign currency translation adjustment       (228)   (228)   (228)
Issuance of shares for cash, net of offering costs $ 3,932 $ 1 9,597     13,530   13,530
Issuance of shares for cash, net of offering costs (in Shares) 3,932 [1] 1,612            
Series C-2 Preferred Stock issued for repayment of short-term borrowings and accrued interest $ 517 (1)     516   516
Series C-2 Preferred Stock issued for repayment of short-term borrowings and accrued interest (in Shares) [1] 517              
Conversion of Series C- and C-2 Preferred Stock to common stock $ (4,449)   4,448       1
Conversion of Series C- and C-2 Preferred Stock to common stock (in Shares) (4,449) [1] 684            
Preferred dividends         (33) (33)   (33)
Net loss         (1,638) (1,638) (110) (1,748)
Balance at Sep. 30, 2020 $ 11 211,587 (890) (194,813) 15,895 (2,912) 12,983
Balance (in Shares) at Sep. 30, 2020 [1] 11,467            
Foreign currency translation adjustment       486   486   486
Stock-based compensation   $ 1 76     77   77
Stock-based compensation (in Shares)   37            
Net loss         (1,345) (1,345) (311) (1,656)
Balance at Dec. 31, 2020   $ 12 211,663 (404) (196,158) 15,113 (3,223) 11,890
Balance (in Shares) at Dec. 31, 2020 [1] 11,504            
Foreign currency translation adjustment       (166)   (166)   (166)
Stock-based compensation     23     23   23
Net loss         (1,568) (1,568) (102) (1,670)
Balance at Mar. 31, 2021 $ 12 $ 211,686 $ (570) $ (197,726) $ 13,402 $ (3,325) $ 10,077
Balance (in Shares) at Mar. 31, 2021 [1] 11,504            
[1] Preferred Shares Issued per series can be found under the equity footnote (see Note 3).
v3.21.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Cash flows from operating activities:    
Net loss (including noncontrolling interests) $ (1,670) $ (1,112)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock based compensation expense 23
Depreciation and amortization 199 195
Amortization of operating lease right-of-use assets 129 91
Changes in operating assets and liabilities:    
Accounts receivable and unbilled revenue, net 405 188
Projects in process (51)
Inventory (493) (16)
Prepaid expenses and other current assets 299 45
Accounts payable and accrued expenses (657) (224)
Deferred revenues (15) 6
Operating lease obligations (210) (91)
Net cash used in operating activities (1,990) (969)
Cash flows from investing activities:    
Purchase of property and equipment (62) (5)
Net cash used in investing activities (62) (5)
Cash flows from financing activities:    
Principal payments on finance lease obligations (148) (132)
Net cash used in financing activities (148) (132)
Effect of exchange rate changes on cash (128) (64)
Net decrease in cash (2,328) (1,170)
Cash at beginning of period 10,473 2,357
Cash at end of period 8,145 1,187
Supplemental disclosure of cash flow information:    
Cash paid for income taxes 36 16
Cash paid for interest $ 5 $ 7
v3.21.1
Interim Period Reporting
3 Months Ended
Mar. 31, 2021
Interim Period Reporting [Abstract]  
Interim Period Reporting

1. Interim Period Reporting


The accompanying unaudited interim condensed consolidated financial statements include all adjustments consisting of normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations and cash flows for the interim periods presented. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of results for a full fiscal year or any other period.


The accompanying condensed consolidated financial statements for the three months ended March 31, 2021 and 2020 have been prepared by us, pursuant to the rules and regulations of the United States (“U.S.”) 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 U.S. (“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, 2020.


Operations


Neonode Inc., collectively with its subsidiaries is referred to as “Neonode” or the “Company”, develops advanced optical sensing solutions for contactless touch, touch, gesture sensing, and in-cabin monitoring. We market and sell our contactless touch, touch, and gesture sensing products and solutions using our zForce technology platform, and our in-cabin monitoring solutions using our MultiSensing technology platform. Neonode offers customized optical touch and gesture control solutions for many different markets and segments.


In our operations for the three months ended March 31, 2021, we focused on three different business areas, human machine interface (“HMI”) Solutions, HMI Products and Remote Sensing Solutions. On May 4, 2021, we announced a new strategy and organizational update targeting an increased focus on the Company’s contactless touch business and on current market opportunities in North America, Asia, and Europe. We thereby changed to a regional sales organization to replace our business area structure going forward.


In HMI Solutions, Neonode offered customized optical touch and gesture control solutions for many different markets and segments. In HMI Products, the Company provided plug-and-play sensor modules that enable touch on any surface, in-air touch, and gesture control for a wide range of applications. In Remote Sensing Solutions, Neonode offered driver and cabin monitoring solutions for vehicles based on the Company’s flexible, scalable and hardware-agnostic software platform.


Revenues are derived from three different revenue streams: license fees, non-recurring engineering fees and the sale of sensor modules.


Liquidity


We have incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net losses attributable to Neonode Inc. of approximately $1.6 million and $1.0 million for the three months ended March 31, 2021 and 2020, respectively, and had an accumulated deficit of approximately $197.7 million and $196.2 million as of March 31, 2021 and December 31, 2020, respectively. In addition, operating activities used cash of approximately $2.0 million and $1.0 million for the three months ended March 31, 2021 and 2020, 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 evaluated the significance of the Company’s operating loss and determined that the Company’s current operating plan and sources of potential capital would be sufficient to alleviate concerns about the Company’s ability to continue as a going concern.


In the future, we may require sources of capital in addition to cash on hand to continue operations and to implement our strategy. If our operations do not become cash flow positive, we may be forced to seek equity investments or debt arrangements. No assurances can be given that we will be successful in obtaining such additional financing on reasonable terms, or at all. If adequate funds are not available to us on acceptable terms, or at all, we may be unable to adequately fund our business plans which could have a negative effect on our business, results of operations and financial condition. If funds are available through the issuance of equity or debt securities, the issuance of equity securities or securities convertible into equity could dilute the value of shares of our common stock and cause the market price to fall, and the issuance of debt securities could impose restrictive covenants that could impair our ability to engage in certain business transactions.


We expect revenues will enable us to reduce our operating losses in coming years. In addition, we intend to continue to implement various measures to improve our operational efficiencies. No assurances can be given that management will be successful in meeting its revenue targets and reducing its operating loss.


v3.21.1
Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2021
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies


Principles of Consolidation


The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. GAAP and include the accounts of Neonode Inc. and its wholly owned subsidiaries, as well as Pronode Technologies AB, a 51% majority owned subsidiary of Neonode Technologies AB. The remaining 49% of Pronode Technologies AB is owned by 2X-Communication AB, located in Kungsbacka, Sweden. Pronode Technologies AB was organized to sell engineering services within the automotive markets. All inter-company accounts and transactions have been eliminated in consolidation.


Neonode consolidates entities in which it has a controlling financial interest. We consolidate subsidiaries in which we hold, directly or indirectly, more than 50% of the voting rights.


The condensed consolidated balance sheets at March 31, 2021 and December 31, 2020 and the condensed consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for the three months ended March 31, 2021 and 2020 include our accounts and those of our wholly owned subsidiaries as well as Pronode Technologies AB.


Estimates and Judgments


The preparation of financial statements in conformity with U.S. GAAP requires making estimates and judgments that affect, at the date of the financial statements, the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Actual results could differ from these estimates and judgments.


Significant estimates and judgments include, but are not limited to: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, the standalone selling price of performance obligations, and transaction prices and assessing transfer of control; measuring variable consideration and other obligations such as product returns and refunds, and product warranties; provisions for uncollectible receivables; determining the net realizable value of inventory; recoverability of capitalized project costs and long-lived assets; for leases, determining whether a contract contains a lease, allocating consideration between lease and non-lease components, determining incremental borrowing rates, and identifying reassessment events, such as modifications; the valuation allowance related to our deferred tax assets; and the fair value of options issued for stock-based compensation. 


Cash and Cash Equivalents


We have not had any liquid investments other than normal cash deposits with bank institutions to date. The Company considers all highly liquid investments with original maturities of three months of less to be cash equivalents.


Concentration of Cash Balance Risks


Cash balances are maintained at various banks in the U.S., Japan, Korea, Taiwan and Sweden. For deposits held with financial institutions in the U.S., the U.S. Federal Deposit Insurance Corporation, provides basic deposit coverage with limits up to $250,000 per owner. The Swedish government provides insurance coverage up to 950,000 Krona per customer and covers deposits in all types of accounts. For bank accounts of the category held by Neonode, the Japanese government provides full insurance coverage. The Korea Deposit Insurance Corporation provides insurance coverage up to 50,000,000 Won per customer. The Central Deposit Insurance Corporation in Taiwan provides insurance coverage up to 3,000,000 Taiwan Dollar per customer. At times, deposits held with financial institutions may exceed the amount of insurance provided. 


Accounts Receivable and Allowance for Doubtful Accounts


Accounts receivable is stated at net realizable value. Our policy is to maintain allowances for estimated losses resulting from the inability of our customers to make required payments. Credit limits are established through a process of reviewing the financial history and stability of each customer. Should all efforts fail to recover the related receivable, we will write off the account. We also record an allowance for all customers based on certain other factors including the length of time the receivables are past due and historical collection experience with customers. Our allowance for doubtful accounts was approximately $79,000 as of March 31, 2021 and December 31, 2020, respectively.


Projects in Process


Projects in process consist of costs incurred toward the completion of various projects for certain customers. These costs are primarily comprised of direct engineering labor costs and project-specific equipment costs. These costs are capitalized on our balance sheet as an asset and deferred until revenue for each project is recognized in accordance with our revenue recognition policy. There were no costs capitalized in projects as of March 31, 2021 and December 31, 2020, respectively.


Inventory


The Company’s inventory consists primarily of components that will be used in the manufacturing of our sensor modules. We classify inventory for reporting purposes as raw materials, work-in-process, and finished goods.


Inventory is stated at the lower of cost or net realizable value, using the first-in, first-out (“FIFO”) valuation method. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.


Due to the low sell-through of our AirBar products, management has decided to fully reserve work-in-process for AirBar components, as well as AirBar related raw materials. Management has further decided to reserve for a portion of AirBar finished goods, depending on type of AirBar and in which location it is stored. The AirBar inventory reserve was $0.8 million and $0.9 million as of March 31, 2021 and December 31, 2020, respectively.


To protect our manufacturing partner from losses in relation to AirBar production, we agreed to secure the value of the inventory with a bank guarantee covering the production of 20,000 AirBars. Excess inventory was purchased from our manufacturing partner in 2019 and has been fully reserved.


Raw materials, work-in-process, and finished goods are as follows (in thousands):


   March 31,   December 31, 
   2021   2020 
Raw materials  $815   $550 
Work-in-process   45    21 
Finished goods   815    702 
Ending inventory  $1,675   $1,273 

Property and Equipment


Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method based upon estimated useful lives of the assets as follows:


Estimated useful lives


Computer equipment   3 years
Furniture and fixtures   5 years
Equipment   7 years

Equipment purchased under a finance lease is recognized over the term of the lease if that lease term is shorter than the estimated useful life.


Upon retirement or sale of property and equipment, cost and accumulated depreciation and amortization are removed from the accounts and any gains or losses are reflected in the condensed consolidated statement of operations. Maintenance and repairs are charged to expense as incurred. 


Right of Use Assets


A right-of-use asset represents a lessee’s right to use a leased asset for the term of the lease. Our right-of-use assets generally consist of operating leases for buildings and finance leases for manufacturing equipment.


Right-of-use assets are measured initially at the present value of the lease payments, plus any lease payments made before a lease begins and any initial direct costs, such as commissions paid to obtain a lease.


Right-of-use assets are subsequently measured at the present value of the remaining lease payments, adjusted for incentives, prepaid or accrued rent, and any initial direct costs not yet expensed.


Long-Lived Asset Recoverability


We assess the recoverability of long-lived assets by estimating the future cash flow from the associated assets in accordance with relevant accounting guidance. If the estimated undiscounted future cash flow related to these assets decreases or the useful life is shorter than originally estimated, we may incur charges for impairment of these assets. As of March 31, 2021, we believe there was no impairment of our long-lived assets. There can be no assurance, however, that market conditions will not change or sufficient demand for our products and services will continue, which could result in impairment of long-lived assets in the future.


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 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 gains (losses) were $(166,000) and $(87,000) during the three months ended March 31, 2021 and 2020, respectively. Gains (losses) resulting from foreign currency transactions are included in general and administrative expenses in the accompanying condensed consolidated statements of operations and were $82,000 and $49,000 during the three months ended March 31, 2021 and 2020, respectively.


Concentration of Credit and Business Risks


Our customers are located in the U.S., Europe and Asia.


As of March 31, 2021, five customers represented approximately 78% of our consolidated accounts receivable and unbilled revenues.


As of December 31, 2020, three customers represented approximately 62% of our consolidated accounts receivable and unbilled revenues.


Customers who accounted for 10% or more of our net revenues during the three months ended March 31, 2021 are as follows:


  Hewlett Packard Company – 19%
     
  LG – 17%
     
  Seiko Epson Corporation – 15%
     
  Lexmark Intl Inc – 14%
     
  Alpine – 13%

Customers who accounted for 10% or more of our net revenues during the three months ended March 31, 2020 are as follows:


  Hewlett Packard Company – 36%
     
  Epson – 19%
     
  Alpine – 17%

Revenue Recognition


We recognize revenue when control of products is transferred to our customers, and when services are completed and accepted by our customers. The amount of revenue we recognize reflects the consideration we expect to receive for those products or services. Our contracts with customers may include combinations of products and services, for example, a contract that includes products and related engineering services. We structure our contracts such that distinct performance obligations, such as product sales or license fees, and related engineering services, are clearly defined in each contract.


License fees for products and sales of AirBar and sensor modules are recognized on a per-unit basis; therefore, we generally satisfy performance obligations as units are shipped to our customers. Non-recurring engineering service performance obligations are satisfied as work is performed and accepted by our customers.


We recognize revenue net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. We treat all product shipping and handling charges (regardless of when they occur) as activities to fulfill the promise to transfer goods, therefore we treat all shipping and handling charges as expenses.


Revenues from our business areas derive from three different revenue streams: license fees, non-recurring engineering fees and the sale of sensor modules.


Licensing Revenues:


We earn revenue from licensing our internally developed intellectual property (“IP”). We enter into IP licensing agreements that generally provide licensees the right to incorporate our IP components in their products, with terms and conditions that vary by licensee. Fees under these agreements may include license fees relating to our IP, and royalties payable to us following the distribution by our licensees of products incorporating the licensed technology. The license for our IP has standalone value and can be used by the licensee without maintenance and support.


For technology license arrangements that do not require significant modification or customization of the underlying technology, we recognize technology license revenue when the license is made available to the customer and the customer has a right to use that license. At the end of each reporting period, we record unbilled license fees, using prior royalty revenue data by customer to make estimates of those royalties.


Explicit return rights are not offered to customers. There have been no returns through March 31, 2021.


Engineering Services:


For technology license or sensor module contracts that require modification or customization of the underlying technology to adapt that technology to the customer’s desired use, we determine whether the technology license or sensor module, and engineering consulting services represent separate performance obligations. We perform our analysis on a contract-by-contract basis. If there are separate performance obligations, we determine the standalone selling price (“SSP”) of each separate performance obligation to properly recognize revenue as each performance obligation is satisfied. We provide engineering consulting services to our customers under a signed Statement of Work (“SOW”). Deliverables and payment terms are specified in each SOW. We generally charge an hourly rate for engineering services, and we recognize revenue as engineering services specified in contracts are completed and accepted by our customers. Any upfront payments we receive for future non-recurring engineering services are recorded as unearned revenue until that revenue is earned.


We believe that recognizing non-recurring engineering service revenues as progress towards completion of engineering services and customer acceptance of those services occurs best reflects the economics of those transactions, because engineering services as tracked in our systems correspond directly with the value to our customers of our performance completed to date. Hours performed for each engineering project are tracked and reflect progress made on each project and are charged at a consistent hourly rate.


Revenues from engineering services contracts that are short-term in nature are recorded when those services are complete and accepted by customers.


Revenues from engineering services contracts with substantive defined deliverables for which payment terms in the SOW are commensurate with the efforts required to produce such deliverables are recognized as they are completed and accepted by customers.


Estimated losses on all SOW projects are recognized in full as soon as they become evident. During the three months ended March 31, 2021 and 2020, no losses related to SOW projects were recorded.


Optical Sensor Modules Revenues:


We earn revenue from sales of sensor modules hardware products to our Original Equipment Manufacturers (“OEM”) and Tier 1 supplier customers, who embed our hardware into their products, and from sales of branded consumer products that incorporate our sensor modules sold through distributors or directly to end users. These distributors are generally given business terms that allow them to return unsold inventory, receive credits for changes in selling prices, and participate in various cooperative marketing programs. Our sales agreements generally provide customers with limited rights of return and warranty provisions.


The timing of revenue recognition related to AirBar modules depends upon how each sale is transacted - either point-of-sale or through distributors. We recognize revenue for AirBar modules sold point-of-sale when we provide the promised product to the customer.


We generally use distributors to provide AirBar and sensor modules to our customers and analyze the terms of distributor agreements to determine when control passes from us to our distributors. For sales of AirBar and sensor modules sold through distributors, revenues are recognized when our distributors obtain control over our products. Control passes to our distributors when we have a present right to payment for products sold to distributors, the distributors have legal title to and physical possession of products purchased from us, and the distributors have significant risks and rewards of ownership of products purchased.


Distributors participate in various cooperative marketing and other incentive programs, and we maintain estimated accruals and allowances for these programs. If actual credits received by distributors under these programs were to deviate significantly from our estimates, which are based on historical experience, our revenue could be adversely affected.


Under U.S. GAAP, companies may make reasonable aggregations and approximations of returns data to accurately estimate returns. Our AirBar and Module returns and warranty experience to date has enabled us to make reasonable returns estimates, which are supported by the fact that our product sales involve homogenous transactions. The reserve for future sales returns is recorded as a reduction of our accounts receivable and revenue and was $74,000 as of March 31, 2021 and $74,000 as of December 31, 2020. If the actual future returns were to deviate from the historical data on which the reserve had been established, our revenue could be adversely affected.


The following table presents disaggregated revenues by market for the three months ended March 31, 2021 and 2020 (dollars in thousands):


   Three months ended
March 31, 2021
   Three months ended
March 31, 2020
 
   Amount   Percentage   Amount   Percentage 
HMI Solutions                
Net revenues from automotive  $502    39%  $401    39%
Net revenues from consumer electronics   797    61%   781    61%
   $1,299    100%  $1,182    100%
                     
HMI Products                

  

  
Net revenues from medical  $21    6%  $53    47%
Net revenues from distributors   184    50%   39    35%
Net revenues from other   161    44%   20    18%
   $366    100%  $112    100%

Significant Judgments


Our contracts with customers may include promises to transfer multiple products and services to a customer, particularly when the contract is for a product and related engineering services fees for customizing that product for our customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately may require significant judgment. Judgment may also be required to determine the SSP for each distinct performance obligation identified, although we generally structure our contracts such that performance obligations and pricing for each performance obligation are specifically addressed. We currently have no outstanding contracts with multiple performance obligations.


Judgment is also required to determine when control of products passes from us to our distributors, as well as the amounts of product that may be returned to us. Our products are sold with a right of return, and we may provide other credits or incentives to our customers, which could result in variability when determining the amount of revenue to recognize. At the end of each reporting period, we use product returns history and additional information that becomes available to estimate returns and credits. We do not recognize revenue if it is probable that a significant reversal of any incremental revenue would occur.


Finally, judgment is required to determine the amount of unbilled license fees at the end of each reporting period.


Contract Balances


Timing of revenue recognition may differ from the timing of invoicing to customers. We record a receivable when we have an unconditional right to receive future payments from customers, and we record unearned deferred revenue when we receive prepayments or upfront payments for goods or services from our customers.


The following table presents accounts receivable and deferred revenues as of March 31, 2021 and 2020 (in thousands):


   March 31,
2021
   December 31,
2020
 
Accounts receivable and unbilled revenue  $1,326   $1,743 
Deferred revenues   120    138 

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled revenues (contract assets), and customer advances and deposits or deferred revenue (contract liabilities) on the consolidated balance sheets. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets; contract assets are generally classified as current. The Company sometimes receives advances or deposits from its customers before revenue is recognized, which are reported as contract liabilities and are generally classified as current. These assets and liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period.


We do not anticipate impairment of our contract asset related to license fee revenues, given the creditworthiness of our customers whose invoices comprise the balance in that asset account. We will continue to monitor the timeliness of receipts from those customers, however, to assess whether the contract asset has been impaired.


The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence. Our allowance for doubtful accounts was approximately $79,000 as of March 31, 2021 and December 31, 2020.


Payment terms and conditions vary by the type of contract; however, payments generally occur 30-60 days after invoicing for license fees and sensor modules to our resellers and distributors. Where revenue recognition timing differs from invoice timing, we have determined that our contracts do not include a significant financing component. Our intent is to provide our customers with consistent invoicing terms for the convenience of our customers, not to receive financing from our customers.


Costs to Obtain Contracts


We record the incremental costs of obtaining a contract with a customer as an asset, if we expect the benefit of those costs to cover a period greater than one year. We currently have no incremental costs that must be capitalized.


We expense as incurred costs of obtaining a contract when the amortization period of those costs would have been less than or equal to one year.


Product Warranty


The following table summarizes the activity related to the product warranty liability (in thousands):


   March 31,
2021
   December 31,
2020
 
Balance at beginning of period  $25   $24 
Provisions for warranty issued   2    1 
Balance at end of period  $27   $25 

The Company accrues for warranty costs as part of its cost of sales of sensor modules based on estimated costs. The Company’s products are generally covered by a warranty for a period of 12 months from the customer receipt of the product.


Deferred Revenues


Deferred revenues consist primarily of prepayments for license fees, and other products or services for which we have been paid in advance and earn the revenue when we transfer control of the product or service. Deferred revenues may also include upfront payments for consulting services to be performed in the future, such as non-recurring engineering services.


We defer license fees until we have met all accounting requirements for revenue recognition, which is when a license is made available to a customer and that customer has a right to use the license. Engineering development fee revenues are deferred until engineering services have been completed and accepted by our customers.


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


    March 31,
2021
    December 31,
2020
 
Deferred revenues HMI Solutions   $ 33     $ 37  
Deferred revenues HMI Products     87       101  
    $ 120     $ 138  

During the three months ended March 31, 2021, the Company recognized revenues of approximately $18,000 related to contract liabilities outstanding at the beginning of the year.


Advertising


Advertising costs are expensed as incurred. Advertising costs for the three months ended March 31, 2021 and 2020 amounted to approximately $19,000 and $7,000, respectively.


Research and Development


Research and development (“R&D”) costs are expensed as incurred. R&D costs consist primarily of personnel related costs in addition to external consultancy costs such as testing, certifying and measurements.


Stock-Based Compensation Expense


We measure the cost of employee services received in exchange for an award of equity instruments, including share options, based on the estimated fair value of the award on the grant date, and recognize the value as compensation expense over the period the employee is required to provide services in exchange for the award, usually the vesting period.


We account for equity instruments issued to non-employees at their estimated fair value.


When determining stock-based compensation expense involving options and warrants, we determine the estimated fair value of options and warrants using the Black-Scholes option pricing model.


Noncontrolling Interests


We recognize any noncontrolling interest, also known as a minority interest, as a separate line item in equity in the consolidated financial statements. A noncontrolling interest represents the portion of equity ownership in a less-than-wholly owned subsidiary not attributable to us. Generally, any interest that holds less than 50% of the outstanding voting shares is deemed to be a noncontrolling interest; however, there are other factors, such as decision-making rights, that are considered as well. We include the amount of net income (loss) attributable to noncontrolling interests in consolidated net income (loss) on the face of the consolidated statements of operations.


The Company provides either in the condensed consolidated statement of stockholders’ equity, if presented, or in the notes to condensed consolidated financial statements, a reconciliation at the beginning and the end of the period of the carrying amount of total equity (net assets), equity (net assets) attributable to the parent, and equity (net assets) attributable to the noncontrolling interest that separately discloses:


  (1) Net income or loss;
     
  (2) Transactions with owners acting in their capacity as owners, showing separately contributions from and distributions to owners; and
     
  (3) Each component of other comprehensive income or loss.

Income taxes


We recognize deferred tax liabilities and assets for the expected future tax consequences of items that have been included in the 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 March 31, 2021 and December 31, 2020. 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 March 31, 2021 and December 31, 2020, we had no unrecognized tax benefits.


Net Loss per Share


Net loss per share amounts has been computed based on the weighted average number of shares of common stock outstanding during the three months ended March 31, 2021 and 2020. Net loss per share, assuming dilution amounts from common stock equivalents, is computed based on the weighted-average number of shares of common stock and potential common stock equivalents outstanding during the period. The weighted-average number of shares of common stock and potential common stock equivalents used in computing the net loss per share for the three months ended March 31, 2021 and 2020 exclude the potential common stock equivalents, as the effect would be anti-dilutive (see Note 8).


Other Comprehensive Income (Loss)


Our other comprehensive income (loss) includes foreign currency translation gains and losses. The cumulative amount of translation gains and losses are reflected as a separate component of stockholders’ equity in the condensed consolidated balance sheets.


Cash Flow Information


Cash flows in foreign currencies have been converted to U.S. Dollars at an approximate weighted-average exchange rate for the respective reporting periods. The weighted-average exchange rate for the condensed consolidated statements of operations was as follows:


   Three months ended
March 31,
 
   2021   2020 
Swedish Krona   

8.40

    9.68 
Japanese Yen   106.03    108.97 
South Korean Won   1,114.49    1,192.79 
Taiwan Dollar   28.08    30.12 

Exchange rate for the consolidated balance sheets was as follows:


    As of  
    March 31,     December 31,  
    2021     2020  
Swedish Krona     8.71       8.22  
Japanese Yen     110.60       103.23  
South Korean Won     1,127.17       1,088.59  
Taiwan Dollar     28.47       28.09  

Fair Value of Financial Instruments


We disclose the estimated fair values for all financial instruments for which it is practicable to estimate fair value. Financial instruments including cash, accounts receivable, accounts payable and accrued expenses and are deemed to approximate fair value due to their short maturities.


New Accounting Pronouncements


In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326)-Measurement of Credit Losses on Financial Instruments, (“ASU 2016-13”), supplemented by subsequent accounting standards updates. The new standard requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13, as amended, is scheduled to become effective for fiscal years beginning after December 15, 2023, with early adoption permitted. In the future, we will evaluate the impact that ASU 2016-13, as amended, will have on our consolidated financial statements, specifically regarding our trade receivables; however, we do not expect any significant impact from implementation of the new standard.


In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Tax, which simplifies the accounting for income taxes. We adopted ASU 2019-12 on January 1, 2021 and the adoption of this ASU did not have a significant impact on our consolidated financial statements.


v3.21.1
Stockholders' Equity
3 Months Ended
Mar. 31, 2021
Stockholders' Equity Note [Abstract]  
Stockholders' Equity

3. Stockholders’ Equity


On August 7, 2020, we closed a private placement (the “Private Placement”) with certain institutional and accredited investors. We issued a total of 1,611,845 shares of common stock at a price of $6.50 per share, and a total of 365 shares of Series C-1 Preferred Stock and 3,050 shares of Series C-2 Preferred Stock, each with a conversion price of $6.50 per share and a stated value of $1,000 per share, for approximately $13.9 million in aggregate gross proceeds.


Common Stock


At our annual meeting of our stockholders held on September 29, 2020, stockholders approved a proposal to increase the number of authorized shares of our common stock to 25,000,000 shares. Accordingly, on November 5, 2020, we filed an amendment to the Neonode Inc. Restated Certificate of Incorporation, as amended (our “Certificate of Incorporation”), with the Secretary of State of the State of Delaware to increase the number of authorized shares of our common stock to 25,000,000 shares.


On December 29, 2020, we issued 37,288 shares of our common stock to key employees pursuant to our 2020 long term incentive program (“2020 LTIP”) see Note 4.


During the three months ended March 31, 2021, there were no activities that affected common stock.


Preferred Stock


On August 6, 2020, in connection with the closing of the Private Placement, the Company designated (i) 365 shares of its authorized and unissued preferred stock as Series C-1 Preferred Stock by filing a Series C-1 Certificate of Designation of Preferences, Rights and Limitations with the Secretary of State of the State of Delaware and (ii) 4,084 shares of its authorized and unissued preferred stock as Series C-2 Preferred Stock by filing a Series C-2 Certificate of Designation of Preferences, Rights and Limitations with the Secretary of State of the State of Delaware.


On September 24 and 29, 2020, respectively, the Series C-1 Preferred Stock and Series C-2 Preferred Stock (together, the “Series C Preferred Shares”) were converted into 684,378 shares of Neonode common stock.


The holders of the Series C-1 and C-2 Preferred Shares were entitled to receive dividends at the rate per share of 5% per annum, totaling $33,000. As of December 31, 2020, all of the preferred dividends had been paid.


On December 7, 2020, we filed Certificates of Elimination with the Secretary of State of the State of Delaware to eliminate the Series A Preferred Stock, Series B Preferred Stock, Series C-1 Preferred Stock and Series C-2 Preferred Stock.


There were no transactions in our preferred stock during the three months ended March 31, 2021 and 2020. No shares of preferred stock were issued and outstanding as of March 31, 2021.


Details of the preferred stock activities are set forth below:


    Series C-1
Preferred
Stock
Shares
Issued
   Series C-1
Preferred
Stock
Amount
   Series C-2
Preferred
Stock
Shares
Issued
   Series C-2
Preferred
Stock
Amount
 
                  
Balances, December 31, 2019    -    -    -    - 
                      
Issuance of Preferred Shares for cash    365    365    3,567    3,567 
                      
Series C-2 Preferred Stock issued for repayment of short-term borrowings and accrued interest    -    -    517    517 
                      
Conversion of Preferred Shares to common stock    (365)   (365)   (4,084)   (4,084)
                      
Balances, December 31, 2020    -   $-    -   $- 

Warrants


As of March 31, 2021 and December 31, 2020, there were 431,368 warrants to purchase common stock outstanding.


v3.21.1
Stock-Based Compensation
3 Months Ended
Mar. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation

4. Stock-Based Compensation


We have adopted equity incentive plans under which we may grant stock options and restricted stock awards to employees, consultants and directors. Except for certain options granted to certain Swedish employees, all employee, consultant and director stock options granted under our stock option plans have an exercise price equal to the market value of the underlying common stock on the grant date. There are no vesting provisions tied to performance conditions for any options, as vesting for all outstanding option grants was based only on continued service as an employee, consultant or director. All of our outstanding stock options and restricted stock awards are classified as equity instruments.


Stock Options / Stock awards


During the year ended December 31, 2020, our stockholders approved the Neonode Inc. 2020 Stock Incentive Plan (the “2020 Plan”) which replaced our 2015 Stock Incentive Plan (the “2015 Plan”), which in turn replaced our Neonode Inc. 2006 Equity Incentive Plan (the “2006 Plan”). Although no new awards may be made under the 2015 or 2006 Plans, these plans are still operative for previously granted awards. Under the 2020 Plan, 750,000 shares of common stock have been reserved for awards, including nonqualified stock option grants and restricted stock grants to officers, employees, non-employee directors and consultants. The terms of the awards granted under the 2020 Plan are set by our compensation committee at its discretion.


Accordingly, as of March 31, 2021, we had three equity incentive plans:


  The 2006 Equity Incentive Plan (the “2006 Plan”).  
     
  The 2015 Equity Incentive Plan (the “2015 Plan”).
     
  The 2020 Equity Incentive Plan (the “2020 Plan”).

In 2020 we established the Neonode Inc. 2020 Long Term Incentive Plan (the “2020 LTIP”) to provide eligible persons with the opportunity to acquire an equity interest, or otherwise increase their equity interest, in the Company as an incentive for them to remain in the service of the Company. Through the 2020 LTIP, eligible employees of Neonode may waive between 50% to 67% of future unearned bonuses that may be awarded to them under the Company’s annual bonus arrangement in exchange for the grant of shares of the Company’s common stock.


On December 29, 2020, we issued 37,288 shares of common stock to key employees pursuant to the 2020 LTIP. The shares were immediately vested but subject to a two-year lock-up period after issuance. In the event the participant’s employment with Neonode is terminated by the participant during the two-year lock-up period, the Company will repurchase the shares at a price equal to 30% of the lower of market value at issuance and the termination date. The shares issued on December 29, 2020 represent two-thirds of the total shares available for issuance under the 2020 LTIP and the last one-third is planned to be issued at the end of December 2021. Neonode has reported and paid Swedish social charges of $75,000 for the issued shares but only 30% of the stock-based compensation (totaling $77,000) was included in the consolidated statement of operations for the year ended December 31, 2020, with the remainder to be recognized ratably over the two-year lock-up period. For the three months ended March 31, 2021, $23,000 of stock-based compensation was included in our condensed consolidated statement of operations. Unrecognized compensation expense related to the 2020 LTIP as of March 31, 2021 was $154,000, which will be recognized over two years from issuance of the shares of common stock.


A summary of the combined activity under all of the stock option plans is set forth below:


    Number of
Options
Outstanding
    Weighted
Average
Exercise
Price
 
Outstanding at January 1, 2021     10,500     $ 29.61  
Expired     (1,000 )     61.10  
Outstanding at March 31, 2021     9,500     $ 26.19  

The aggregate intrinsic value of the 9,500 stock options that are outstanding, vested and expected to vest as of March 31, 2021 was $0.


For the three months ended March 31, 2021 and 2020, we recorded no stock-based compensation expense related to the vesting of stock options. The estimated fair value of the stock options is calculated using the Black-Scholes option pricing model as of the grant date of the stock option.


During the three months ended March 31, 2021, we did not grant any options to purchase shares of our common stock to employees or members of our board of directors.


Stock options granted under the 2006 and 2015 Plans are exercisable over a maximum term of ten years from the date of grant, vest in various installments over a one to four-year period and have exercise prices reflecting the market value of the shares of common stock on the date of grant.


v3.21.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

5. Commitments and Contingencies


Litigation


On August 26, 2020, a putative stockholder of Neonode filed a purported class action lawsuit (C.A. No. 2020-0701-AGB) in the Delaware Court of Chancery (the “Court”) against Neonode and the Board of Directors of Neonode for alleged breach of fiduciary duty in connection with disclosure of information concerning Proposal 5 and Proposal 6 in the proxy statement filed with the SEC by Neonode on August 20, 2020 for the 2020 Annual Meeting of Stockholders of Neonode (the “Proxy Statement”). These proposals for shareholder approval related to the Private Placement by Neonode on August 5, 2020 in which two directors and the chief executive officer of Neonode participated. The relief sought by the plaintiff included a preliminary injunction to enjoin the stockholder votes on Proposal 5 and Proposal 6. On September 13, 2020, the plaintiff amended his complaint to also enjoin the stockholder vote on Proposal 1 in the Proxy Statement concerning election of directors. Neonode and the other named defendants believe that the disclosures set forth in the Proxy Statement complied fully with all applicable law, that no supplemental disclosure was required, and that the plaintiffs’ allegations are without merit. However, in an effort to avoid the nuisance and ongoing expense relating to the claims in the lawsuit, Neonode filed definitive additional materials to the Proxy Statement on September 18, 2020. The plaintiff withdrew his motion to preliminarily enjoin the stockholder votes on Proposals 1, 5, and 6 based upon the definitive additional materials to the Proxy Statement. On November 23, 2020, the Court entered an order to dismiss the lawsuit.


On September 2, 2020, a separate putative stockholder of Neonode filed a purported class action lawsuit (Case No. 1:20-cv-01174-UNA) in the United States District Court for the District of Delaware against Neonode, the Board of Directors of Neonode, and the Chief Executive Officer of Neonode for alleged violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended, in connection with disclosure of information concerning Proposal 5 and Proposal 6 in the Proxy Statement, and generally containing the same substantive allegations as in the above previously-filed Delaware Court of Chancery action. On October 20, 2020, the plaintiff voluntarily dismissed the lawsuit in the United States District Court. However, on February 11, 2021, the plaintiff’s counsel informed Neonode that they would file a fee petition as a result of Neonode filing the definitive additional materials to the Proxy Statement on September 18, 2020.  Neonode intends to vigorously defend against any attempt by the plaintiff’s counsel to obtain any fee award.  


Indemnities and Guarantees


Our bylaws require that we indemnify each of our executive officers and directors for certain events or occurrences arising because of the officer or director serving in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited. However, we have a directors’ and officers’ liability insurance policy that should enable us to recover a portion of future amounts paid. As a result of our insurance policy coverage, we believe the estimated fair value of these indemnification agreements is minimal and we have no liabilities recorded for these agreements as of March 31, 2021 and December 31, 2020.


We enter into indemnification provisions under our agreements with other companies in the ordinary course of business, typically with business partners, contractors, customers and landlords. Under these provisions we generally indemnify and hold harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of our activities or, in some cases, as a result of the indemnified party’s activities under the agreement. These indemnification provisions often include indemnifications relating to representations made by us regarding intellectual property rights. These indemnification provisions generally survive termination of the underlying agreement. The maximum potential amount of future payments we could be required to make under these indemnification provisions is unlimited. We have not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, we believe the estimated fair value of these agreements is minimal. Accordingly, we have no liabilities recorded for these indemnification provisions as of March 31, 2021 and December 31, 2020.


One of our manufacturing partners has previously purchased material for the final assembly of AirBars. To protect the manufacturer from losses in relation to AirBar production, we agreed to secure the value of the inventory in a bank guarantee. At March 31, 2021, the guaranteed amount is $100,000 and represents the value of the remaining material in inventory at March 31, 2021.


Management’s judgment is that the bank guarantee is a contingent guarantee and management will record a liability when it is probable we will have to purchase the inventory. As of May 12, 2021, management’s judgment is that we will sell the remaining AirBars and thereby purchase the components and the assembly service from the manufacturing partner. No liability has therefore been recorded for the period ended March 31, 2021.


Patent Assignment


On May 6, 2019, the Company assigned a portfolio of patents to Aequitas Technologies LLC. The assignment provides the Company the right to share potential proceeds generated from a licensing and monetization program.


On June 8, 2020, Neonode Smartphone LLC, a subsidiary of Aequitas Technologies LLC filed complaints against Apple and Samsung in the Western District of Texas for infringing two patents. These litigation matters are still ongoing.


Non-Recurring Engineering Development Costs


On April 25, 2013, we entered into an Analog Device Development Agreement with an effective date of December 6, 2012 (the “NN1002 Agreement”) with Texas Instruments (“TI”) pursuant to which TI agreed to integrate our intellectual property into an ASIC. Under the terms of the NN1002 Agreement, we agreed to pay TI $500,000 of non-recurring engineering costs at the rate of $0.25 per ASIC for each of the first 2 million ASICs sold. As of March 31, 2021, we had made no payments to TI under the NN1002 Agreement.


v3.21.1
Segment Information
3 Months Ended
Mar. 31, 2021
Segment Reporting [Abstract]  
Segment Information

6. Segment Information


We have one reportable segment, which is comprised of the touch technology licensing and sensor module business. All of our sales for the three months ended March 31, 2021 and 2020 were to customers located in the U.S., Europe and Asia. The Company reports revenues from external customers based on the country where the customer is located.


The following table presents net revenues by geographic area for the three months ended March 31, 2021 and 2020 (dollars in thousands):


    Three months ended
March 31, 2021
    Three months ended
March 31, 2020
 
    Amount     Percentage     Amount     Percentage  
United States   $ 693       42 %   $ 589       46 %
Japan     405       24 %     474       37 %
South Korea     284       17 %     1       - %
China     134       8 %     34       3 %
Germany     109       7 %     120       9 %
Switzerland     21       1 %     55       4 %
Other     19       1 %     21       1 %
    $ 1,665       100 %   $ 1,294       100 %

The following table presents our total assets by geographic region as of March 31, 2021 and December 31, 2020 (in thousands):


    March 31,
2021
    December 31,
2020
 
U.S.   $ 7,933     $ 7,253  
Sweden     5,504       9,210  
Asia     86       109  
Total   $ 13,523     $ 16,572  

v3.21.1
Leases
3 Months Ended
Mar. 31, 2021
Leases [Abstract]  
Leases

7. Leases


We have operating leases for our corporate offices and our manufacturing facility, and finance leases for equipment. Our leases have remaining lease terms of six months to two years. One of our primary operating leases includes options to extend the lease for one to three years and the other primary lease includes an option to annually extend; those operating leases also include options to terminate the leases within one year. Future renewal options that are not likely to be executed as of the balance sheet date are excluded from right-of-use assets and related lease liabilities.


Our operating leases represent building leases for our Stockholm corporate offices and our Kungsbacka manufacturing facility. Our Stockholm corporate office lease has a remaining lease term of two years and both of our leases are automatically renewed at a cost increase of 2% on an annual basis, unless we provide written notice nine months prior to the respective expiration dates.


We report operating lease right-of-use assets, as well as current and noncurrent operating lease obligations on our consolidated balance sheets for the right to use those buildings in our business. Our finance leases represent manufacturing equipment; we report the manufacturing equipment, as well as current and noncurrent finance lease obligations on our condensed consolidated balance sheets for our manufacturing equipment.


Generally, interest rates are stated in our leases for equipment. When no interest rate is stated in a lease, however, we review the interest rates implicit in our recent finance leases to estimate our incremental borrowing rate. We determine the rate implicit in a lease by using the most recent finance lease rate, or other method we think most closely represents our incremental borrowing rate.


The components of lease expense were as follows (in thousands):


   Three Months
Ended
March 31,
2021
   Three Months
Ended
March 31,
2020
 
Operating lease cost (1)  $176   $119 
           
Finance lease cost:          
Amortization of leased assets  $169   $151 
Interest on lease liabilities   4    7 
Total finance lease cost  $173   $158 

(1)Includes short term lease costs of $38,000 and $24,000 for the three months ended March 31, 2021 and 2020, respectively.

Supplemental cash flow information related to leases was as follows (in thousands):


   Three  Months
Ended
March 31,
2021
   Three  Months
Ended
March 31,
2020
 
Cash paid for amounts included in leases:        
Operating cash flows from operating leases  $(210)  $(91)
Operating cash flows from finance leases   (4)   (7)
Financing cash flows from finance leases   (148)   (132)
           
Right-of-use assets obtained in exchange for lease obligations:          
Operating leases   -    - 

Supplemental balance sheet information related to leases was as follows (in thousands):


   March 31,
2021
   December 31,
2020
 
Operating leases        
Operating lease right-of-use assets  $743   $919 
           
Current portion of operating lease obligations  $377   $504 
Operating lease liabilities, net of current portion   251    377 
Total operating lease liabilities  $628   $881 
           
Finance leases          
Property and equipment, at cost  $3,589   $3,806 
Accumulated depreciation   (2,937)   (2,941)
Property and equipment, net  $652   $865 
           
Current portion of finance lease obligations  $624   $769 
Finance lease liabilities, net of current portion   48    95 
Total finance lease liabilities  $672   $864 

   Three  Months
Ended
March 31,
2021
   Three  Months
Ended
March 31,
2020
 
Weighted Average Remaining Lease Term        
Operating leases   1.5 years    1.0 years 
Finance leases   0.9 years    1.4 years 
           
Weighted Average Discount Rate:          
Operating leases   5%   5%
Finance leases   2%   2%

A summary of future minimum payments under non-cancellable operating lease commitments as of March 31, 2021 is as follows (in thousands):


Years ending December 31,   Total  
2021(remaining months)   $ 293  
2022     364  
      657  
Less imputed interest     (29 )
Total lease liabilities   $ 628  
Less current portion     (377
    $ 251  

The following is a schedule of minimum future rentals on the non-cancellable finance leases as of March 31, 2021 (in thousands):


Year ending December 31,  Total 
2021 (remaining months)  $589 
2022   82 
2023   8 
Total minimum payments required:   679 
Less amount representing interest:   (7)
Present value of net minimum lease payments:   672 
Less current portion   (624)
   $48 

v3.21.1
Net Loss Per Share
3 Months Ended
Mar. 31, 2021
Earnings Per Share [Abstract]  
Net Loss per Share

8. Net Loss per Share


Basic net loss per common share for the three months ended March 31, 2021 and 2020 was computed by dividing the net loss attributable to Neonode Inc. for the relevant period by the weighted average number of shares of common stock outstanding. Diluted loss per common share is computed by dividing net loss attributable to Neonode Inc. by the weighted average number of shares of common stock and common stock equivalents outstanding.


Potential common stock equivalents of approximately 0 and 0 outstanding stock options and 0 and 0 outstanding stock warrants under the treasury stock method, and 0 and 0 shares issuable upon conversion of preferred stock are excluded from the diluted earnings per share calculation for the three months ended March 31, 2021 and 2020, respectively, due to their anti-dilutive effect.


  Three months ended
March 31,
 
(in thousands, except per share amounts)  2021   2020 
BASIC AND DILUTED        
Weighted average number of common shares outstanding   11,504    9,171 
Net loss attributable to Neonode Inc.  $(1,568)  $(1,010)
           
Net loss per share - basic and diluted  $(0.14)  $(0.11)

v3.21.1
Subsequent Events
3 Months Ended
Mar. 31, 2021
Subsequent Events [Abstract]  
Subsequent Events

9. Subsequent Events


On May 10, 2021, the Company entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with B. Riley Securities, Inc. (“B Riley”), under which the Company may offer and sell from time to time, at its sole discretion, shares of its common stock having an aggregate offering price of up to $25 million through B. Riley as its sales agent. The Company agreed to pay B. Riley a commission of 3.0% of the gross proceeds of the sales price per share of any common stock sold through B. Riley under the ATM Agreement.


In connection its entering into the ATM Agreement, on May 10, 2021, the Company filed a shelf registration statement on Form S-3 with the SEC for a maximum aggregate offering price of $100,000,000, which included a base prospectus and a sales agreement prospectus covering the shares to be sold under the ATM Agreement.


v3.21.1
Accounting Policies, by Policy (Policies)
3 Months Ended
Mar. 31, 2021
Accounting Policies [Abstract]  
Principles of Consolidation

Principles of Consolidation


The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. GAAP and include the accounts of Neonode Inc. and its wholly owned subsidiaries, as well as Pronode Technologies AB, a 51% majority owned subsidiary of Neonode Technologies AB. The remaining 49% of Pronode Technologies AB is owned by 2X-Communication AB, located in Kungsbacka, Sweden. Pronode Technologies AB was organized to sell engineering services within the automotive markets. All inter-company accounts and transactions have been eliminated in consolidation.


Neonode consolidates entities in which it has a controlling financial interest. We consolidate subsidiaries in which we hold, directly or indirectly, more than 50% of the voting rights.


The condensed consolidated balance sheets at March 31, 2021 and December 31, 2020 and the condensed consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for the three months ended March 31, 2021 and 2020 include our accounts and those of our wholly owned subsidiaries as well as Pronode Technologies AB.

Estimates and Judgments

Estimates and Judgments


The preparation of financial statements in conformity with U.S. GAAP requires making estimates and judgments that affect, at the date of the financial statements, the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Actual results could differ from these estimates and judgments.


Significant estimates and judgments include, but are not limited to: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, the standalone selling price of performance obligations, and transaction prices and assessing transfer of control; measuring variable consideration and other obligations such as product returns and refunds, and product warranties; provisions for uncollectible receivables; determining the net realizable value of inventory; recoverability of capitalized project costs and long-lived assets; for leases, determining whether a contract contains a lease, allocating consideration between lease and non-lease components, determining incremental borrowing rates, and identifying reassessment events, such as modifications; the valuation allowance related to our deferred tax assets; and the fair value of options issued for stock-based compensation.

Cash and Cash Equivalents

Cash and Cash Equivalents


We have not had any liquid investments other than normal cash deposits with bank institutions to date. The Company considers all highly liquid investments with original maturities of three months of less to be cash equivalents.

Concentration of Cash Balance Risks

Concentration of Cash Balance Risks


Cash balances are maintained at various banks in the U.S., Japan, Korea, Taiwan and Sweden. For deposits held with financial institutions in the U.S., the U.S. Federal Deposit Insurance Corporation, provides basic deposit coverage with limits up to $250,000 per owner. The Swedish government provides insurance coverage up to 950,000 Krona per customer and covers deposits in all types of accounts. For bank accounts of the category held by Neonode, the Japanese government provides full insurance coverage. The Korea Deposit Insurance Corporation provides insurance coverage up to 50,000,000 Won per customer. The Central Deposit Insurance Corporation in Taiwan provides insurance coverage up to 3,000,000 Taiwan Dollar per customer. At times, deposits held with financial institutions may exceed the amount of insurance provided.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts


Accounts receivable is stated at net realizable value. Our policy is to maintain allowances for estimated losses resulting from the inability of our customers to make required payments. Credit limits are established through a process of reviewing the financial history and stability of each customer. Should all efforts fail to recover the related receivable, we will write off the account. We also record an allowance for all customers based on certain other factors including the length of time the receivables are past due and historical collection experience with customers. Our allowance for doubtful accounts was approximately $79,000 as of March 31, 2021 and December 31, 2020, respectively.

Projects in Process

Projects in Process


Projects in process consist of costs incurred toward the completion of various projects for certain customers. These costs are primarily comprised of direct engineering labor costs and project-specific equipment costs. These costs are capitalized on our balance sheet as an asset and deferred until revenue for each project is recognized in accordance with our revenue recognition policy. There were no costs capitalized in projects as of March 31, 2021 and December 31, 2020, respectively.

Inventory

Inventory


The Company’s inventory consists primarily of components that will be used in the manufacturing of our sensor modules. We classify inventory for reporting purposes as raw materials, work-in-process, and finished goods.


Inventory is stated at the lower of cost or net realizable value, using the first-in, first-out (“FIFO”) valuation method. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.


Due to the low sell-through of our AirBar products, management has decided to fully reserve work-in-process for AirBar components, as well as AirBar related raw materials. Management has further decided to reserve for a portion of AirBar finished goods, depending on type of AirBar and in which location it is stored. The AirBar inventory reserve was $0.8 million and $0.9 million as of March 31, 2021 and December 31, 2020, respectively.


To protect our manufacturing partner from losses in relation to AirBar production, we agreed to secure the value of the inventory with a bank guarantee covering the production of 20,000 AirBars. Excess inventory was purchased from our manufacturing partner in 2019 and has been fully reserved.


Raw materials, work-in-process, and finished goods are as follows (in thousands):


   March 31,   December 31, 
   2021   2020 
Raw materials  $815   $550 
Work-in-process   45    21 
Finished goods   815    702 
Ending inventory  $1,675   $1,273 
Property and Equipment

Property and Equipment


Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method based upon estimated useful lives of the assets as follows:


Estimated useful lives


Computer equipment   3 years
Furniture and fixtures   5 years
Equipment   7 years

Equipment purchased under a finance lease is recognized over the term of the lease if that lease term is shorter than the estimated useful life.


Upon retirement or sale of property and equipment, cost and accumulated depreciation and amortization are removed from the accounts and any gains or losses are reflected in the condensed consolidated statement of operations. Maintenance and repairs are charged to expense as incurred.

Right of Use Assets

Right of Use Assets


A right-of-use asset represents a lessee’s right to use a leased asset for the term of the lease. Our right-of-use assets generally consist of operating leases for buildings and finance leases for manufacturing equipment.


Right-of-use assets are measured initially at the present value of the lease payments, plus any lease payments made before a lease begins and any initial direct costs, such as commissions paid to obtain a lease.


Right-of-use assets are subsequently measured at the present value of the remaining lease payments, adjusted for incentives, prepaid or accrued rent, and any initial direct costs not yet expensed.

Long-Lived Asset Recoverability

Long-Lived Asset Recoverability


We assess the recoverability of long-lived assets by estimating the future cash flow from the associated assets in accordance with relevant accounting guidance. If the estimated undiscounted future cash flow related to these assets decreases or the useful life is shorter than originally estimated, we may incur charges for impairment of these assets. As of March 31, 2021, we believe there was no impairment of our long-lived assets. There can be no assurance, however, that market conditions will not change or sufficient demand for our products and services will continue, which could result in impairment of long-lived assets in the future.

Foreign Currency Translation and Transaction Gains and Losses

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 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 gains (losses) were $(166,000) and $(87,000) during the three months ended March 31, 2021 and 2020, respectively. Gains (losses) resulting from foreign currency transactions are included in general and administrative expenses in the accompanying condensed consolidated statements of operations and were $82,000 and $49,000 during the three months ended March 31, 2021 and 2020, respectively.

Concentration of Credit and Business Risks

Concentration of Credit and Business Risks


Our customers are located in the U.S., Europe and Asia.


As of March 31, 2021, five customers represented approximately 78% of our consolidated accounts receivable and unbilled revenues.


As of December 31, 2020, three customers represented approximately 62% of our consolidated accounts receivable and unbilled revenues.


Customers who accounted for 10% or more of our net revenues during the three months ended March 31, 2021 are as follows:


  Hewlett Packard Company – 19%
     
  LG – 17%
     
  Seiko Epson Corporation – 15%
     
  Lexmark Intl Inc – 14%
     
  Alpine – 13%

Customers who accounted for 10% or more of our net revenues during the three months ended March 31, 2020 are as follows:


  Hewlett Packard Company – 36%
     
  Epson – 19%
     
  Alpine – 17%
Revenue Recognition

Revenue Recognition


We recognize revenue when control of products is transferred to our customers, and when services are completed and accepted by our customers. The amount of revenue we recognize reflects the consideration we expect to receive for those products or services. Our contracts with customers may include combinations of products and services, for example, a contract that includes products and related engineering services. We structure our contracts such that distinct performance obligations, such as product sales or license fees, and related engineering services, are clearly defined in each contract.


License fees for products and sales of AirBar and sensor modules are recognized on a per-unit basis; therefore, we generally satisfy performance obligations as units are shipped to our customers. Non-recurring engineering service performance obligations are satisfied as work is performed and accepted by our customers.


We recognize revenue net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. We treat all product shipping and handling charges (regardless of when they occur) as activities to fulfill the promise to transfer goods, therefore we treat all shipping and handling charges as expenses.


Revenues from our business areas derive from three different revenue streams: license fees, non-recurring engineering fees and the sale of sensor modules.


Licensing Revenues:


We earn revenue from licensing our internally developed intellectual property (“IP”). We enter into IP licensing agreements that generally provide licensees the right to incorporate our IP components in their products, with terms and conditions that vary by licensee. Fees under these agreements may include license fees relating to our IP, and royalties payable to us following the distribution by our licensees of products incorporating the licensed technology. The license for our IP has standalone value and can be used by the licensee without maintenance and support.


For technology license arrangements that do not require significant modification or customization of the underlying technology, we recognize technology license revenue when the license is made available to the customer and the customer has a right to use that license. At the end of each reporting period, we record unbilled license fees, using prior royalty revenue data by customer to make estimates of those royalties.


Explicit return rights are not offered to customers. There have been no returns through March 31, 2021.


Engineering Services:


For technology license or sensor module contracts that require modification or customization of the underlying technology to adapt that technology to the customer’s desired use, we determine whether the technology license or sensor module, and engineering consulting services represent separate performance obligations. We perform our analysis on a contract-by-contract basis. If there are separate performance obligations, we determine the standalone selling price (“SSP”) of each separate performance obligation to properly recognize revenue as each performance obligation is satisfied. We provide engineering consulting services to our customers under a signed Statement of Work (“SOW”). Deliverables and payment terms are specified in each SOW. We generally charge an hourly rate for engineering services, and we recognize revenue as engineering services specified in contracts are completed and accepted by our customers. Any upfront payments we receive for future non-recurring engineering services are recorded as unearned revenue until that revenue is earned.


We believe that recognizing non-recurring engineering service revenues as progress towards completion of engineering services and customer acceptance of those services occurs best reflects the economics of those transactions, because engineering services as tracked in our systems correspond directly with the value to our customers of our performance completed to date. Hours performed for each engineering project are tracked and reflect progress made on each project and are charged at a consistent hourly rate.


Revenues from engineering services contracts that are short-term in nature are recorded when those services are complete and accepted by customers.


Revenues from engineering services contracts with substantive defined deliverables for which payment terms in the SOW are commensurate with the efforts required to produce such deliverables are recognized as they are completed and accepted by customers.


Estimated losses on all SOW projects are recognized in full as soon as they become evident. During the three months ended March 31, 2021 and 2020, no losses related to SOW projects were recorded.


Optical Sensor Modules Revenues:


We earn revenue from sales of sensor modules hardware products to our Original Equipment Manufacturers (“OEM”) and Tier 1 supplier customers, who embed our hardware into their products, and from sales of branded consumer products that incorporate our sensor modules sold through distributors or directly to end users. These distributors are generally given business terms that allow them to return unsold inventory, receive credits for changes in selling prices, and participate in various cooperative marketing programs. Our sales agreements generally provide customers with limited rights of return and warranty provisions.


The timing of revenue recognition related to AirBar modules depends upon how each sale is transacted - either point-of-sale or through distributors. We recognize revenue for AirBar modules sold point-of-sale when we provide the promised product to the customer.


We generally use distributors to provide AirBar and sensor modules to our customers and analyze the terms of distributor agreements to determine when control passes from us to our distributors. For sales of AirBar and sensor modules sold through distributors, revenues are recognized when our distributors obtain control over our products. Control passes to our distributors when we have a present right to payment for products sold to distributors, the distributors have legal title to and physical possession of products purchased from us, and the distributors have significant risks and rewards of ownership of products purchased.


Distributors participate in various cooperative marketing and other incentive programs, and we maintain estimated accruals and allowances for these programs. If actual credits received by distributors under these programs were to deviate significantly from our estimates, which are based on historical experience, our revenue could be adversely affected.


Under U.S. GAAP, companies may make reasonable aggregations and approximations of returns data to accurately estimate returns. Our AirBar and Module returns and warranty experience to date has enabled us to make reasonable returns estimates, which are supported by the fact that our product sales involve homogenous transactions. The reserve for future sales returns is recorded as a reduction of our accounts receivable and revenue and was $74,000 as of March 31, 2021 and $74,000 as of December 31, 2020. If the actual future returns were to deviate from the historical data on which the reserve had been established, our revenue could be adversely affected.


The following table presents disaggregated revenues by market for the three months ended March 31, 2021 and 2020 (dollars in thousands):


   Three months ended
March 31, 2021
   Three months ended
March 31, 2020
 
   Amount   Percentage   Amount   Percentage 
HMI Solutions                
Net revenues from automotive  $502    39%  $401    39%
Net revenues from consumer electronics   797    61%   781    61%
   $1,299    100%  $1,182    100%
                     
HMI Products                

  

  
Net revenues from medical  $21    6%  $53    47%
Net revenues from distributors   184    50%   39    35%
Net revenues from other   161    44%   20    18%
   $366    100%  $112    100%
Significant Judgments

Significant Judgments


Our contracts with customers may include promises to transfer multiple products and services to a customer, particularly when the contract is for a product and related engineering services fees for customizing that product for our customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately may require significant judgment. Judgment may also be required to determine the SSP for each distinct performance obligation identified, although we generally structure our contracts such that performance obligations and pricing for each performance obligation are specifically addressed. We currently have no outstanding contracts with multiple performance obligations.


Judgment is also required to determine when control of products passes from us to our distributors, as well as the amounts of product that may be returned to us. Our products are sold with a right of return, and we may provide other credits or incentives to our customers, which could result in variability when determining the amount of revenue to recognize. At the end of each reporting period, we use product returns history and additional information that becomes available to estimate returns and credits. We do not recognize revenue if it is probable that a significant reversal of any incremental revenue would occur.


Finally, judgment is required to determine the amount of unbilled license fees at the end of each reporting period.

Contract Balances

Contract Balances


Timing of revenue recognition may differ from the timing of invoicing to customers. We record a receivable when we have an unconditional right to receive future payments from customers, and we record unearned deferred revenue when we receive prepayments or upfront payments for goods or services from our customers.


The following table presents accounts receivable and deferred revenues as of March 31, 2021 and 2020 (in thousands):


   March 31,
2021
   December 31,
2020
 
Accounts receivable and unbilled revenue  $1,326   $1,743 
Deferred revenues   120    138 

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled revenues (contract assets), and customer advances and deposits or deferred revenue (contract liabilities) on the consolidated balance sheets. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets; contract assets are generally classified as current. The Company sometimes receives advances or deposits from its customers before revenue is recognized, which are reported as contract liabilities and are generally classified as current. These assets and liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period.


We do not anticipate impairment of our contract asset related to license fee revenues, given the creditworthiness of our customers whose invoices comprise the balance in that asset account. We will continue to monitor the timeliness of receipts from those customers, however, to assess whether the contract asset has been impaired.


The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence. Our allowance for doubtful accounts was approximately $79,000 as of March 31, 2021 and December 31, 2020.


Payment terms and conditions vary by the type of contract; however, payments generally occur 30-60 days after invoicing for license fees and sensor modules to our resellers and distributors. Where revenue recognition timing differs from invoice timing, we have determined that our contracts do not include a significant financing component. Our intent is to provide our customers with consistent invoicing terms for the convenience of our customers, not to receive financing from our customers.

Costs to Obtain Contracts

Costs to Obtain Contracts


We record the incremental costs of obtaining a contract with a customer as an asset, if we expect the benefit of those costs to cover a period greater than one year. We currently have no incremental costs that must be capitalized.


We expense as incurred costs of obtaining a contract when the amortization period of those costs would have been less than or equal to one year.

Product Warranty

Product Warranty


The following table summarizes the activity related to the product warranty liability (in thousands):


   March 31,
2021
   December 31,
2020
 
Balance at beginning of period  $25   $24 
Provisions for warranty issued   2    1 
Balance at end of period  $27   $25 

The Company accrues for warranty costs as part of its cost of sales of sensor modules based on estimated costs. The Company’s products are generally covered by a warranty for a period of 12 months from the customer receipt of the product.

Deferred Revenues

Deferred Revenues


Deferred revenues consist primarily of prepayments for license fees, and other products or services for which we have been paid in advance and earn the revenue when we transfer control of the product or service. Deferred revenues may also include upfront payments for consulting services to be performed in the future, such as non-recurring engineering services.


We defer license fees until we have met all accounting requirements for revenue recognition, which is when a license is made available to a customer and that customer has a right to use the license. Engineering development fee revenues are deferred until engineering services have been completed and accepted by our customers.


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


    March 31,
2021
    December 31,
2020
 
Deferred revenues HMI Solutions   $ 33     $ 37  
Deferred revenues HMI Products     87       101  
    $ 120     $ 138  

During the three months ended March 31, 2021, the Company recognized revenues of approximately $18,000 related to contract liabilities outstanding at the beginning of the year.

Advertising

Advertising


Advertising costs are expensed as incurred. Advertising costs for the three months ended March 31, 2021 and 2020 amounted to approximately $19,000 and $7,000, respectively.

Research and Development

Research and Development


Research and development (“R&D”) costs are expensed as incurred. R&D costs consist primarily of personnel related costs in addition to external consultancy costs such as testing, certifying and measurements.

Stock-Based Compensation Expense

Stock-Based Compensation Expense


We measure the cost of employee services received in exchange for an award of equity instruments, including share options, based on the estimated fair value of the award on the grant date, and recognize the value as compensation expense over the period the employee is required to provide services in exchange for the award, usually the vesting period.


We account for equity instruments issued to non-employees at their estimated fair value.


When determining stock-based compensation expense involving options and warrants, we determine the estimated fair value of options and warrants using the Black-Scholes option pricing model.

Noncontrolling Interests

Noncontrolling Interests


We recognize any noncontrolling interest, also known as a minority interest, as a separate line item in equity in the consolidated financial statements. A noncontrolling interest represents the portion of equity ownership in a less-than-wholly owned subsidiary not attributable to us. Generally, any interest that holds less than 50% of the outstanding voting shares is deemed to be a noncontrolling interest; however, there are other factors, such as decision-making rights, that are considered as well. We include the amount of net income (loss) attributable to noncontrolling interests in consolidated net income (loss) on the face of the consolidated statements of operations.


The Company provides either in the condensed consolidated statement of stockholders’ equity, if presented, or in the notes to condensed consolidated financial statements, a reconciliation at the beginning and the end of the period of the carrying amount of total equity (net assets), equity (net assets) attributable to the parent, and equity (net assets) attributable to the noncontrolling interest that separately discloses:


  (1) Net income or loss;
     
  (2) Transactions with owners acting in their capacity as owners, showing separately contributions from and distributions to owners; and
     
  (3) Each component of other comprehensive income or loss.
Income Taxes

Income taxes


We recognize deferred tax liabilities and assets for the expected future tax consequences of items that have been included in the 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 March 31, 2021 and December 31, 2020. 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 March 31, 2021 and December 31, 2020, we had no unrecognized tax benefits.

Net Loss per Share

Net Loss per Share


Net loss per share amounts has been computed based on the weighted average number of shares of common stock outstanding during the three months ended March 31, 2021 and 2020. Net loss per share, assuming dilution amounts from common stock equivalents, is computed based on the weighted-average number of shares of common stock and potential common stock equivalents outstanding during the period. The weighted-average number of shares of common stock and potential common stock equivalents used in computing the net loss per share for the three months ended March 31, 2021 and 2020 exclude the potential common stock equivalents, as the effect would be anti-dilutive (see Note 8).

Other Comprehensive Income (Loss)

Other Comprehensive Income (Loss)


Our other comprehensive income (loss) includes foreign currency translation gains and losses. The cumulative amount of translation gains and losses are reflected as a separate component of stockholders’ equity in the condensed consolidated balance sheets.

Cash Flow Information

Cash Flow Information


Cash flows in foreign currencies have been converted to U.S. Dollars at an approximate weighted-average exchange rate for the respective reporting periods. The weighted-average exchange rate for the condensed consolidated statements of operations was as follows:


   Three months ended
March 31,
 
   2021   2020 
Swedish Krona   

8.40

    9.68 
Japanese Yen   106.03    108.97 
South Korean Won   1,114.49    1,192.79 
Taiwan Dollar   28.08    30.12 

Exchange rate for the consolidated balance sheets was as follows:


    As of  
    March 31,     December 31,  
    2021     2020  
Swedish Krona     8.71       8.22  
Japanese Yen     110.60       103.23  
South Korean Won     1,127.17       1,088.59  
Taiwan Dollar     28.47       28.09  
Fair Value of Financial Instruments

Fair Value of Financial Instruments


We disclose the estimated fair values for all financial instruments for which it is practicable to estimate fair value. Financial instruments including cash, accounts receivable, accounts payable and accrued expenses and are deemed to approximate fair value due to their short maturities.

New Accounting Pronouncements

New Accounting Pronouncements


In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326)-Measurement of Credit Losses on Financial Instruments, (“ASU 2016-13”), supplemented by subsequent accounting standards updates. The new standard requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13, as amended, is scheduled to become effective for fiscal years beginning after December 15, 2023, with early adoption permitted. In the future, we will evaluate the impact that ASU 2016-13, as amended, will have on our consolidated financial statements, specifically regarding our trade receivables; however, we do not expect any significant impact from implementation of the new standard.


In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Tax, which simplifies the accounting for income taxes. We adopted ASU 2019-12 on January 1, 2021 and the adoption of this ASU did not have a significant impact on our consolidated financial statements

v3.21.1
Summary of Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2021
Accounting Policies [Abstract]  
Schedule of inventory
   March 31,   December 31, 
   2021   2020 
Raw materials  $815   $550 
Work-in-process   45    21 
Finished goods   815    702 
Ending inventory  $1,675   $1,273 
Schedule of estimated useful lives of property and equipment
Computer equipment   3 years
Furniture and fixtures   5 years
Equipment   7 years
Schedule of disaggregated revenues
   Three months ended
March 31, 2021
   Three months ended
March 31, 2020
 
   Amount   Percentage   Amount   Percentage 
HMI Solutions                
Net revenues from automotive  $502    39%  $401    39%
Net revenues from consumer electronics   797    61%   781    61%
   $1,299    100%  $1,182    100%
                     
HMI Products                

  

  
Net revenues from medical  $21    6%  $53    47%
Net revenues from distributors   184    50%   39    35%
Net revenues from other   161    44%   20    18%
   $366    100%  $112    100%
Schedule of prepayments or upfront payments for goods or services from our customers
   March 31,
2021
   December 31,
2020
 
Accounts receivable and unbilled revenue  $1,326   $1,743 
Deferred revenues   120    138 
Schedule of activity related to the product warranty liability
   March 31,
2021
   December 31,
2020
 
Balance at beginning of period  $25   $24 
Provisions for warranty issued   2    1 
Balance at end of period  $27   $25 
Schedule of deferred revenues
    March 31,
2021
    December 31,
2020
 
Deferred revenues HMI Solutions   $ 33     $ 37  
Deferred revenues HMI Products     87       101  
    $ 120     $ 138  
Schedule of weighted average exchange rate for the condensed consolidated statements of operations
   Three months ended
March 31,
 
   2021   2020 
Swedish Krona   

8.40

    9.68 
Japanese Yen   106.03    108.97 
South Korean Won   1,114.49    1,192.79 
Taiwan Dollar   28.08    30.12 
Schedule of exchange rate for the consolidated balance sheets
    As of  
    March 31,     December 31,  
    2021     2020  
Swedish Krona     8.71       8.22  
Japanese Yen     110.60       103.23  
South Korean Won     1,127.17       1,088.59  
Taiwan Dollar     28.47       28.09  
v3.21.1
Stockholders' Equity (Tables)
3 Months Ended
Mar. 31, 2021
Stockholders' Equity Note [Abstract]  
Schedule of preferred stock activities
    Series C-1
Preferred
Stock
Shares
Issued
   Series C-1
Preferred
Stock
Amount
   Series C-2
Preferred
Stock
Shares
Issued
   Series C-2
Preferred
Stock
Amount
 
                  
Balances, December 31, 2019    -    -    -    - 
                      
Issuance of Preferred Shares for cash    365    365    3,567    3,567 
                      
Series C-2 Preferred Stock issued for repayment of short-term borrowings and accrued interest    -    -    517    517 
                      
Conversion of Preferred Shares to common stock    (365)   (365)   (4,084)   (4,084)
                      
Balances, December 31, 2020    -   $-    -   $- 
v3.21.1
Stock-Based Compensation (Tables)
3 Months Ended
Mar. 31, 2021
Share-based Payment Arrangement [Abstract]  
Schedule of stock option plans
    Number of
Options
Outstanding
    Weighted
Average
Exercise
Price
 
Outstanding at January 1, 2021     10,500     $ 29.61  
Expired     (1,000 )     61.10  
Outstanding at March 31, 2021     9,500     $ 26.19  
v3.21.1
Segment Information (Tables)
3 Months Ended
Mar. 31, 2021
Segment Reporting [Abstract]  
Schedule of net revenues by geographic region area
    Three months ended
March 31, 2021
    Three months ended
March 31, 2020
 
    Amount     Percentage     Amount     Percentage  
United States   $ 693       42 %   $ 589       46 %
Japan     405       24 %     474       37 %
South Korea     284       17 %     1       - %
China     134       8 %     34       3 %
Germany     109       7 %     120       9 %
Switzerland     21       1 %     55       4 %
Other     19       1 %     21       1 %
    $ 1,665       100 %   $ 1,294       100 %
Schedule of total assets by geographic region
    March 31,
2021
    December 31,
2020
 
U.S.   $ 7,933     $ 7,253  
Sweden     5,504       9,210  
Asia     86       109  
Total   $ 13,523     $ 16,572  
v3.21.1
Leases (Tables)
3 Months Ended
Mar. 31, 2021
Leases [Abstract]  
Schedule of components of lease expense
   Three Months
Ended
March 31,
2021
   Three Months
Ended
March 31,
2020
 
Operating lease cost (1)  $176   $119 
           
Finance lease cost:          
Amortization of leased assets  $169   $151 
Interest on lease liabilities   4    7 
Total finance lease cost  $173   $158 
(1)Includes short term lease costs of $38,000 and $24,000 for the three months ended March 31, 2021 and 2020, respectively.
Schedule of supplemental cash flow information related to leases
   Three  Months
Ended
March 31,
2021
   Three  Months
Ended
March 31,
2020
 
Cash paid for amounts included in leases:        
Operating cash flows from operating leases  $(210)  $(91)
Operating cash flows from finance leases   (4)   (7)
Financing cash flows from finance leases   (148)   (132)
           
Right-of-use assets obtained in exchange for lease obligations:          
Operating leases   -    - 
Schedule of supplemental balance sheet information
   March 31,
2021
   December 31,
2020
 
Operating leases        
Operating lease right-of-use assets  $743   $919 
           
Current portion of operating lease obligations  $377   $504 
Operating lease liabilities, net of current portion   251    377 
Total operating lease liabilities  $628   $881 
           
Finance leases          
Property and equipment, at cost  $3,589   $3,806 
Accumulated depreciation   (2,937)   (2,941)
Property and equipment, net  $652   $865 
           
Current portion of finance lease obligations  $624   $769 
Finance lease liabilities, net of current portion   48    95 
Total finance lease liabilities  $672   $864 
   Three  Months
Ended
March 31,
2021
   Three  Months
Ended
March 31,
2020
 
Weighted Average Remaining Lease Term        
Operating leases   1.5 years    1.0 years 
Finance leases   0.9 years    1.4 years 
           
Weighted Average Discount Rate:          
Operating leases   5%   5%
Finance leases   2%   2%
Schedule of future minimum payments under non-cancellable operating lease commitments
Years ending December 31,   Total  
2021(remaining months)   $ 293  
2022     364  
      657  
Less imputed interest     (29 )
Total lease liabilities   $ 628  
Less current portion     (377
    $ 251  
Schedule of minimum future rentals under on non-cancellable finance leases
Year ending December 31,  Total 
2021 (remaining months)  $589 
2022   82 
2023   8 
Total minimum payments required:   679 
Less amount representing interest:   (7)
Present value of net minimum lease payments:   672 
Less current portion   (624)
   $48 
v3.21.1
Net Loss Per Share (Tables)
3 Months Ended
Mar. 31, 2021
Earnings Per Share [Abstract]  
Schedule of basic and diluted for net loss per share
  Three months ended
March 31,
 
(in thousands, except per share amounts)  2021   2020 
BASIC AND DILUTED        
Weighted average number of common shares outstanding   11,504    9,171 
Net loss attributable to Neonode Inc.  $(1,568)  $(1,010)
           
Net loss per share - basic and diluted  $(0.14)  $(0.11)
v3.21.1
Interim Period Reporting (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Dec. 31, 2020
Interim Period Reporting [Abstract]      
Iincurred net losses $ 1.6 $ 1.0  
Retained earnings 197.7   $ 196.2
Net Cash Provided By Used In Operating Activities $ 2.0 $ 1.0  
v3.21.1
Summary of Significant Accounting Policies (Details)
3 Months Ended 12 Months Ended
Mar. 31, 2021
USD ($)
Mar. 31, 2020
USD ($)
Dec. 31, 2020
USD ($)
Summary of Significant Accounting Policies (Details) [Line Items]      
Noncontrolling interest, description Neonode consolidates entities in which it has a controlling financial interest. We consolidate subsidiaries in which we hold, directly or indirectly, more than 50% of the voting rights.    
Insurance coverage, description For deposits held with financial institutions in the U.S., the U.S. Federal Deposit Insurance Corporation, provides basic deposit coverage with limits up to $250,000 per owner. The Swedish government provides insurance coverage up to 950,000 Krona per customer and covers deposits in all types of accounts. For bank accounts of the category held by Neonode, the Japanese government provides full insurance coverage. The Korea Deposit Insurance Corporation provides insurance coverage up to 50,000,000 Won per customer. The Central Deposit Insurance Corporation in Taiwan provides insurance coverage up to 3,000,000 Taiwan Dollar per customer. At times, deposits held with financial institutions may exceed the amount of insurance provided.    
Allowance for doubtful accounts (in Dollars) $ 79,000   $ 79,000
Foreign currency translation adjustments (in Dollars) (166,000) $ (87,000)  
Foreign currency transactions, general and administrative expenses (in Dollars) 82,000 49,000  
Reduction of accounts receivable (in Dollars) 74,000   $ 74,000
Recognized revenues (in Dollars) 18,000    
Advertising costs (in Dollars) $ 19,000 $ 7,000  
Accounts Receivable [Member]      
Summary of Significant Accounting Policies (Details) [Line Items]      
Number of customers 5   3
Concentration risk, percentage 78.00%   62.00%
Sales Revenue, Net [Member]      
Summary of Significant Accounting Policies (Details) [Line Items]      
Concentration risk, percentage 10.00% 10.00%  
Pronode Technologies AB [Member]      
Summary of Significant Accounting Policies (Details) [Line Items]      
Noncontrolling interest owned by Pronode Technologies AB 51.00%    
Noncontrolling interest owned by Propoint AB 49.00%    
Airbar Sales [Member]      
Summary of Significant Accounting Policies (Details) [Line Items]      
Inventory reserve amount (in Dollars) $ 800,000   $ 900,000
Hewlett Packard Company [Member] | Sales Revenue, Net [Member]      
Summary of Significant Accounting Policies (Details) [Line Items]      
Concentration risk, percentage 19.00% 36.00%  
LG [Member] | Sales Revenue, Net [Member]      
Summary of Significant Accounting Policies (Details) [Line Items]      
Concentration risk, percentage 17.00%    
Seiko Epson Corporation [Member] | Sales Revenue, Net [Member]      
Summary of Significant Accounting Policies (Details) [Line Items]      
Concentration risk, percentage 15.00% 19.00%  
Lexmark Intl Inc [Member] | Sales Revenue, Net [Member]      
Summary of Significant Accounting Policies (Details) [Line Items]      
Concentration risk, percentage 14.00%    
Alpine [Member] | Sales Revenue, Net [Member]      
Summary of Significant Accounting Policies (Details) [Line Items]      
Concentration risk, percentage 13.00% 17.00%  
Noncontrolling Interest [Member]      
Summary of Significant Accounting Policies (Details) [Line Items]      
Equity ownership percentage 50.00%    
v3.21.1
Summary of Significant Accounting Policies (Details) - Schedule of inventory - USD ($)
$ in Thousands
Mar. 31, 2021
Dec. 31, 2020
Schedule of inventory [Abstract]    
Raw materials $ 815 $ 550
Work-in-process 45 21
Finished goods 815 702
Ending inventory $ 1,675 $ 1,273
v3.21.1
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of property and equipment
3 Months Ended
Mar. 31, 2021
Computer equipment [Member]  
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of property and equipment [Line Items]  
Estimated useful lives 3 years
Furniture and fixtures [Member]  
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of property and equipment [Line Items]  
Estimated useful lives 5 years
Equipment [Member]  
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of property and equipment [Line Items]  
Estimated useful lives 7 years
v3.21.1
Summary of Significant Accounting Policies (Details) - Schedule of disaggregated revenues - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
HMI Solutions [Member]    
HMI Solutions    
Net revenues $ 1,299 $ 1,182
Percentage of net revenues 100.00% 100.00%
HMI Products [Member]    
HMI Solutions    
Net revenues $ 366 $ 112
Percentage of net revenues 100.00% 100.00%
Automotive [Member] | HMI Solutions [Member]    
HMI Solutions    
Net revenues $ 502 $ 401
Percentage of net revenues 39.00% 39.00%
Consumer electronics [Member] | HMI Solutions [Member]    
HMI Solutions    
Net revenues $ 797 $ 781
Percentage of net revenues 61.00% 61.00%
Medical [Member] | HMI Products [Member]    
HMI Solutions    
Net revenues $ 21 $ 53
Percentage of net revenues 6.00% 47.00%
Distributors [Member] | HMI Products [Member]    
HMI Solutions    
Net revenues $ 184 $ 39
Percentage of net revenues 50.00% 35.00%
other [Member] | HMI Products [Member]    
HMI Solutions    
Net revenues $ 161 $ 20
Percentage of net revenues 44.00% 18.00%
v3.21.1
Summary of Significant Accounting Policies (Details) - Schedule of prepayments or upfront payments for goods or services from our customers - USD ($)
$ in Thousands
Mar. 31, 2021
Dec. 31, 2020
Schedule of prepayments or upfront payments for goods or services from our customers [Abstract]    
Accounts receivable and unbilled revenue $ 1,326 $ 1,743
Deferred revenues $ 120 $ 138
v3.21.1
Summary of Significant Accounting Policies (Details) - Schedule of activity related to the product warranty liability - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2021
Dec. 31, 2020
Schedule of activity related to the product warranty liability [Abstract]    
Balance at beginning of period $ 25 $ 24
Provisions for warranty issued 2 1
Balance at end of period $ 27 $ 25
v3.21.1
Summary of Significant Accounting Policies (Details) - Schedule of deferred revenues - USD ($)
$ in Thousands
Mar. 31, 2021
Dec. 31, 2020
Summary of Significant Accounting Policies (Details) - Schedule of deferred revenues [Line Items]    
Deferred revenues $ 120 $ 138
Deferred revenues HMI Solutions [Member]    
Summary of Significant Accounting Policies (Details) - Schedule of deferred revenues [Line Items]    
Deferred revenues 33 37
Deferred revenues HMI Products [Member]    
Summary of Significant Accounting Policies (Details) - Schedule of deferred revenues [Line Items]    
Deferred revenues $ 87 $ 101
v3.21.1
Summary of Significant Accounting Policies (Details) - Schedule of weighted average exchange rate for the condensed consolidated statements of operations - $ / shares
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Swedish Krona [Member]    
Summary of Significant Accounting Policies (Details) - Schedule of weighted average exchange rate for the condensed consolidated statements of operations [Line Items]    
Weighted-average exchange rate for statements of operations $ 8.40 $ 9.68
Japanese Yen [Member]    
Summary of Significant Accounting Policies (Details) - Schedule of weighted average exchange rate for the condensed consolidated statements of operations [Line Items]    
Weighted-average exchange rate for statements of operations 106.03 108.97
South Korean Won [Member]    
Summary of Significant Accounting Policies (Details) - Schedule of weighted average exchange rate for the condensed consolidated statements of operations [Line Items]    
Weighted-average exchange rate for statements of operations 1,114.49 1,192.79
Taiwan Dollar [Member]    
Summary of Significant Accounting Policies (Details) - Schedule of weighted average exchange rate for the condensed consolidated statements of operations [Line Items]    
Weighted-average exchange rate for statements of operations $ 28.08 $ 30.12
v3.21.1
Summary of Significant Accounting Policies (Details) - Schedule of exchange rate for the consolidated balance sheets
Mar. 31, 2021
Dec. 31, 2020
Swedish Krona [Member]    
Summary of Significant Accounting Policies (Details) - Schedule of exchange rate for the consolidated balance sheets [Line Items]    
Exchange rate 8.71 8.22
Japanese Yen [Member]    
Summary of Significant Accounting Policies (Details) - Schedule of exchange rate for the consolidated balance sheets [Line Items]    
Exchange rate 110.60 103.23
South Korean Won [Member]    
Summary of Significant Accounting Policies (Details) - Schedule of exchange rate for the consolidated balance sheets [Line Items]    
Exchange rate 1,127.17 1,088.59
Taiwan Dollar [Member]    
Summary of Significant Accounting Policies (Details) - Schedule of exchange rate for the consolidated balance sheets [Line Items]    
Exchange rate 28.47 28.09
v3.21.1
Stockholders' Equity (Details) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Aug. 07, 2020
Aug. 06, 2020
Dec. 29, 2020
Sep. 29, 2020
Sep. 24, 2020
Mar. 31, 2021
Dec. 31, 2020
Nov. 05, 2020
Dec. 31, 2019
Stockholders' Equity (Details) [Line Items]                  
Common stock price (in Dollars per share) $ 6.50                
Conversion price (in Dollars per share) 6.50                
Common stock, price (in Dollars per share) $ 1,000                
Gross proceeds (in Dollars) $ 13,900,000                
Number of common stock authorized       25,000,000   25,000,000 25,000,000 25,000,000  
Description of preferred stock designated   (i) 365 shares of its authorized and unissued preferred stock as Series C-1 Preferred Stock by filing a Series C-1 Certificate of Designation of Preferences, Rights and Limitations with the Secretary of State of the State of Delaware and (ii) 4,084 shares of its authorized and unissued preferred stock as Series C-2 Preferred Stock by filing a Series C-2 Certificate of Designation of Preferences, Rights and Limitations with the Secretary of State of the State of Delaware.              
2020 long-term incentive program [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Number of common shares issued to employees     37,288            
Warrant [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Common stock, shares           431,368 431,368    
Private Placement [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Common stock, shares 1,611,845                
Series C-1 Preferred Stock [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Preferred stock, shares 365                
Number of common stock converted by preferred stock       684,378 684,378        
Rate of dividend to preferred shares holders       5.00% 5.00%        
Total dividend received by preferred shares holders (in Dollars)       $ 33,000 $ 33,000        
Series C-2 Preferred Stock [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Preferred stock, shares 3,050