Our licensing revenues during Q1 were stable indicating that the global supply chain challenges related to semiconductor supply shortages that have hampered our printer and automotive customers’ production and sales for the last two years are beginning to improve and that demand for our customers’ products is still strong.

Our product sales in Q1 were below expectations with many markets starting the year very slowly. On a positive note, we are seeing strong interest for our solutions in China where businesses and markets have begun to rebound following the lifting of COVID-related shutdowns. We are working together with different partners to try to capitalize on this and plan to increase our marketing efforts in China going forward, which we hope will start to bear fruit later this year and the next.

While continuously monitoring our performance and adjusting our strategies and tactics, we continue to execute on our overall business strategy to establish beachheads in key segments from which we later can expand to further grow our business. As part of this strategy, we are using our strong cash position to intensify our marketing work – both online and through participation in tradeshows and other types of events – and are recruiting experienced core competence to strengthen our sales and engineering teams, which is key for accelerating growth.

During 2022 we continued to execute on our strategy, with a dual focus on technology licensing and product sales. In our licensing business we focused on expanding the business with automotive customers and on solutions for driver and in-cabin monitoring, head-up display (“HUD”) obstruction detection and interior controls, which generated project-related NRE revenues. We also continued to support our existing printer and automotive customers, who license our zForce technology for touch display applications. In our products business we focused on promoting and selling our Touch Sensor Module (“TSM”) products to customers in the elevator and interactive kiosk sectors.

During the first half of the year our sales and business development continued to be hampered by pandemic-driven lock-downs and uncertain market outlooks for several of our customers, causing them to push new product development and launches into the future. Global supply chain constraints also affected several of our customers due to the lack of semi-conductors and other key components. Both factors had an adverse effect on our growth and financial performance. During the third and fourth quarters we saw indications that the situation in several of our key markets, for instance China, Japan, and Korea, started to normalize, a trend which we expect to continue in 2023. We therefore remain optimistic about our ability to significantly grow our business in 2023 and the years to come.

We are confident that the key market segments and application areas we are active in: touchless interaction with elevator control panels and interactive kiosks and driver and in-cabin monitoring, and HUD obstruction detection in vehicles will increase in relevance and grow in the future, and that we are in a good position to capitalize on this growth with our TSM products and our MultiSensing and zForce technology platforms. We also believe we have good potential to grow in the medtech sector with our TSM products and zForce licensing offerings. Finally, we believe that our current sources of liquidity and capital will be sufficient to execute on our strategy and continue to grow the company and increase shareholder value.

The integration of Neonode’s contactless touch technology into the BOWL eco-system is a must-have for creating phygitalproducts. Our customers can now easily and quickly transform any physical object into a smart surface.

Out collaboration with EPICNPOC opens up new market opportunities for us and we see great potential in the combination of their offerings and our zForce and MultiSensing technologies.

Our net revenues were higher and our operating expenses were lower during the third quarter than in the corresponding period last year. We are pleased to see that our efforts to grow sales and control costs generated results. We continue our focused work to expand our business and remain optimistic about the potential of our products and technology platforms. This said, we are not satisfied with the results we have achieved so far. Our sales and growth continue to be affected by several factors, including long sales and product launch cycles in the segments where we are active. Our business is also affected by COVID-19 lockdowns and semi-conductor shortage issues that our customers must navigate. We continue to take measures to mitigate these issues

Our products business continues to develop and we are seeing a growing interest in our Touch Sensor Modules (“TSM”) from both elevator and interactive kiosk customers. One driver is the increased interest for holographic display applications we are seeing from different equipment manufacturers and end customers. We continue to work to expand the TSM business and increase our sales volumes in Japan, South Korea, and in other markets

In developing our licensing business we focus on automotive OEM and tier 1 customers mainly, and we are encouraged by the interest we are seeing for our object detection, gesture sensing, and driver and in-cabin monitoring solutions. Short- and medium-term the revenue potential in this segment is from sales of non-recurring engineering services in application development projects linked to new vehicle platforms. Long-term these projects may lead to increased license revenues, typically through royalty payments per vehicle produced

We selected Neonode technology because the Touch Sensor Modules could fit in the existing design of the equipment and meet the performance requirements. Alternative projected capacitive touch solutions would have meant a redesign and compliance recertification of the medical devices.

We are delighted and excited that our business with Elix in the medical segment continues and expands. We look forward to continuing our great ongoing cooperation with them.

I am looking forward to working with the teams in Stockholm and Kungsbacka to strengthen the operations for this innovative deep tech organization and contributing to the company’s future success

I am excited about contributing to Neonode’s business strategy with my people management expertise and look forward to continuing to build upon the great company culture and values

I am very glad to welcome Helena and Thierry to the company. Both bring expertise in their respective fields and have considerable experience from similar roles in several different companies, which will strengthen our team and help us achieve our ambitious growth and profitability targets

Our overall sales and results for the second quarter of 2022 were below expectations and were impacted by the fact that customers in several of our key markets, particularly Asia, are still being affected by lock-downs associated with the COVID-19 pandemic. Many of our customers are also having to navigate supply chain constraints due to a shortage of semiconductor components and other issues they are faced with in the current economic climate, slowing their product sales, and in some cases their development and launches of new products, which affects our business negatively

Our products business continues to develop and we are seeing a growing interest in our Touch Sensor Modules (“TSM”) from elevator customers and interactive kiosk manufacturers in the transportation, retail, hospitality, and medical segments. To date we have had the best traction in Japan and South Korea, but other markets such as China, Western Europe, and North America are also showing potential. Together with our distributors and value-added resellers we continue to work to expand the TSM business and increase our sales volumes.

In our efforts to re-vitalize our licensing business we focus on automotive OEM and tier 1 customers, and we are encouraged by the interest we are seeing for our object detection, gesture sensing and driver and in-cabin monitoring solutions. Short- and medium-term the revenue potential is sales of non-recurring engineering services in application development projects linked to new vehicle platforms. These projects pave the way for increased license revenues in the medium- and long-term when vehicles based on the new platforms start being produced. We continue to execute on our strategy and remain optimistic about the potential to grow this business in the coming years.

Neonode’s go-to-market strategy relies on direct sales combined with indirect sales via a network of partners with a wide technical skillset. We are pleased to have found in MZ Technologie, a partner, who has demonstrated high competency to design compelling touchless solutions using our Touch Sensor Modules. We look forward to continuing to work with their team to replicate their successes in France in the Middle East

We produce high-end touchless experiences by focusing on the user experience. Our talented team of engineers builds with Neonode technology, world-class solutions that we look forward to exporting globally

I am very pleased to be joining the Board at Neonode. Demand for contactless interfaces is increasing and I believe the company has an extremely interesting and commercially proven technology to address this market. I look forward to contributing to the future success of the business.

We are so pleased that Cecilia will join our Board of Directors and contribute her experience to the collective knowledge of Neonode. We also want to thank Mattias for his dedicated and professional work as director from 2019 to 2022.

2021 was another challenging year where pandemic-driven lock-downs negatively impacted our financial performance. The impact of these lock-downs was exacerbated by global supply chain constraints affecting several of our customers due to lack of semiconductor and other key components. These unprecedented events resulted in a temporary slowdown in the progress we experienced in the first half of the year where we saw increasing traction with elevator and kiosk customers using our Touch Sensor Modules (“TSMs”) and stable license revenues. During this time of uncertainty, we refined and improved our product lines, increased marketing and business development activities, solidified our cash position and as a result added many new partners and customers. Customers have accelerated the adoption TSM-powered retrofit solutions for contactless touch in self-service kiosks in some large fast-food restaurants, airports and convenience stores, and in elevators, in Asia and Europe. We have also seen increased interest from kiosk and elevator OEMs to develop and start to sell their own contactless touch solutions, for retrofit and new equipment. We expect these activities to continue to increase over the next few years, with Asian customers leading the way

We are more confident than ever that we are in the right place at the right time with our contactless touch technology and our TSM products. We and our partners are all experiencing growing demand for intuitive, easy to use and safe contactless touch solutions. We also see a growing wave of interest in our solutions for driver and in-cabin monitoring, gesture sensing and object detection from automotive customers and continue to see opportunities to license our well-proven, high-performance touch technology to customers in the automotive, military and avionics, medical and industrial automation segments. We believe that we are well capitalized to navigate the current headwinds and continue to grow the company and increase shareholder value

We are pleased and excited to see this initiative, where our technology is simplifying and enhancing the customer experience and making the interaction with the underlying device or system safer, more hygienic, and more convenient to use, which further emphasizes the importance of Neonode’s contactless touch technology in the retail segment. Thanks to a well-functioning partnership with our distributor NEXTY Electronics and Kanda Kogyo we have paved the way for a successful deployment

We value the compact design and easy calibration system of the Neonode Touch Sensor Modules, and quickly concluded it was a perfect fit for this new product

During the third quarter our revenue was negatively impacted by COVID-19 driven lock-downs in our key Asian markets. The impact of these lock-downs was exacerbated by global supply chain constraints due to semiconductor component shortages, which resulted in a reduction in license fees earned from our printer and automotive customers. These developments resulted in a temporary slowdown in the progress we experienced in the first half of the year where we saw increasing traction with elevator and kiosk customers using our Touch Sensor Modules (”TSMs”) and stable license revenues. During this renewed lock-down phase, sales of our TSMs have been negatively impacted because our partners who are providing retrofit solutions have been unable to freely access their customer locations to install their contactless touch kits. Some elevator and kiosk projects have also been delayed due to of supply-chain issues related to semiconductor component shortages

We continue to build our sales pipeline with an increasing number of development and pilot projects underway for elevators plus an array of public space kiosks, such as contactless touch systems in airport and retail self-check-in/out kiosks, and our sales pipeline continues to improve. We are pleased to see that these sales efforts are now being turned into commercial decisions to install our solutions with the next step to place purchase orders. Asian customers are leading the way, but we see increasing interest in our contactless touch technology and our TSM solutions from European and North American customers as well

To ensure we maintain ample liquidity during this current period of market uncertainty related to the ongoing pandemic, in October 2021, we sold an aggregate of 1,808,000 shares of our common stock in a registered direct offering to certain Swedish and European investors, which, combined with sales under our existing at-the-market facility provided approximately $14.5 million of cash, net of placement agent fees and other offering expenses. The net proceeds will be used for continued investments in sales and marketing to create greater awareness and support for the expected growth of our TSM production volumes. We believe we are now well capitalized to navigate the current headwinds and continue to grow the company and increase shareholder value

This is a breakthrough order for Neonode in QSRs (Quick Service Restaurants), a kiosk segment that is important to Neonode’s contactless business and is growing rapidly worldwide. I am happy to see yet another competitive solution making its way into a large number of sushi restaurants all over Japan

This is a significant step forward for us and proves the relevance and competitiveness of our technology in the elevator segment. It also confirms that our strategy to address the elevator segment indirectly via partners offering different types of retrofit solutions initially, to introduce our contactless touch technology to end users and elevator manufacturers to increase awareness and drive demand, works. In the next step we will ramp up our efforts to win more businesses with elevator manufacturers and to continue to scale our retrofit business with both elevator manufacturers and other types of customers active in the important aftermarket for elevators

We are excited to work with EIL and increase our footprint in China. EIL is an experienced and capable company and we see a great potential to grow our contactless business in China together with them

We are impressed with the performance and versatility of Neonode’s contactless technology, and we look forward to better solving our customers’ challenges and a pure win-win collaboration

The interactive kiosk segment is important to Neonode’s contactless business and I am delighted having a new customer in Doostek with a capable solution that is now making its way into the Korean airport kiosks

I am proud of Touch Catch and the self check-in airport installation. Thanks to Neonode’s contactless touch technology, we will contribute to a virus free travel and I am looking forward to expanding Doostek through product adoption at many Korean airports.

We are impressed by MZ Technologie’s achievements so far and believe their strong position and customer base will be key to our success in France

We are happy to partner with Neonode to realize the full potential of the contactless touch market in France for now, and are keen to accelerate adoption in interactive kiosks and elevators, by working closely with the Neonode team

I am happy to have SYIT as a customer and look forward to the market adoption of their competitive product offering as a great addition to our already strong presence of contactless touch solutions in the airport domain

We are impressed by the versatility and performance of the Neonode products and found it a perfect fit for the uGO airport trolleys. We are now eager to accelerate the rollout at airports.

During the second quarter we continued to execute on our strategies and build our business pipeline. As I have discussed over the past few quarters, our focus continues to be on contactless touch solutions for elevators and kiosks where our Touch Sensor Modules (”TSMs”) can offer an intuitive and safer user experience. We expected that the first adopters of our TSM solutions would be in Asia and our first and second quarter sales confirmed our expectations. Over 70% of our TSM sales during the first six months this year is to Asian customers, who are using the TSMs for contactless touch applications for elevators and different types of kiosk applications. We also have numerous development and pilot projects underway for elevators plus an array of different public space kiosks, such as contactless touch systems in airport self check-in and retail self check-out kiosks, in Asia. Asian customers are leading the way but we continue to see increasing interest in our contactless touch technology and our TSM solutions from European and North American customers as well

This solution by MiTAC is breaking new ground as it opens up for new kiosk segments with larger displays that we haven’t addressed before. Further, it’s suggestive to see how our contactless technology come into play in a context with sensor fusion and artificial intelligence and we look forward to growing our smart kiosk business with MiTAC

We are excited about the ever-increasing interest in Neonode’s contactless touch technology in the air transportation domain and the fact that it is now being extensively tested and will be available to international travelers during the Olympics and Paralympics. This is one step towards realizing our vision to transform the way people around the world interact with multi-user machines in public environments

The elevator segment is important to Neonode’s contactless touch business and I am happy to see Dewhurst’s achievements so far and look forward to deepen our win-win cooperation going forward

We are very impressed by Neonode’s contactless products and are keen to expand our contactless business together with Neonode. This partnership is a natural next step to accelerate adoption of contactless features as well as the product development efforts

During the first quarter we continued to build our business pipeline. Our main focus was and continues to be contactless touch solutions for elevators and kiosks, where our touch sensor modules provide an intuitive and safe user experience. The demand for our solutions is very high in Japan and Korea, where customers now have numerous development and onsite pilot projects underway for elevators and an array of different kiosks. We also have customers in other countries in Asia who are rolling out and installing retrofit contactless touch systems in airport ticketing and retail self-service checkout kiosks. In addition, we are seeing increasing interest in our contactless touch technology from European and North American customers. To better support our customers in these regions, as well as in Asia, we recently changed to a regional sales organization, which will help us accelerate growth

Our license revenue from existing legacy customers increased during the first quarter compared to the same period in 2020. We believe this to be a rebound effect from the slow printer and automotive sales last year due to the COVID-19 pandemic. Long term, we expect this legacy business to continue to decrease (a trend we observed prior to the pandemic) and to offset this we are focusing on growing our products business with elevator and kiosk customers. We are also continuing to promote our technology to new customers in the Military & Avionics, Industrial and Automotive segments. The sales and development cycles are much longer in these industries than in the elevator and kiosk industries, and although we do not expect royalty revenues from new customers in the short term, we strongly believe in these segments and we do expect to earn non-recurring engineering revenues related to product development

During the quarter, we continued to strengthen our team of talented and experienced people in sales, marketing, and engineering who will help us create and capitalize on the developing market opportunities. We have also deepened our relationship with our partner network and are actively exploring further partnerships as a means to drive growth. We believe that our contactless touch solution is the best technology in the market that supports the new health and pandemic-driven paradigm shift where users are becoming more and more reluctant to touch public space devices

I am very pleased to have Anthony join our team. Anthony’s extensive experience and track record in the touch screen industry and in B2B sales is a perfect fit to grow our business in the Americas. Further, the new regional sales organization will increase our customer focus and our ability to meet the market demands in all three regions, which will help us accelerate our topline growth

The quick service restaurant (QSR) segment is a key segment in the interactive kiosk market and we look forward to growing our contactless touch business for QSRs with Merim Groupe