AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 26,
2008
REGISTRATION
NO.
333-152163
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
NEONODE
INC.
(Exact
name of registrant as specified in its charter)
Delaware
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94-1517641
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer Identification Number)
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Warfvingesväg
45
SE-112
51 Stockholm
Sweden
+468
678 18 50
(Address,
including zip code, and telephone number, including area code,
of
registrant’s principal executive offices)
David
Brunton
Chief
Financial Officer
Neonode
Inc.
4000
Executive Parkway, Suite 200
San
Ramon, CA 94583
(925)
355-7700
(Address,
including zip code, and telephone number, including area code, of agent for
service)
Copies
to:
Don
Reinke, Esq.
Reed
Smith LLP
Two
Embarcadero Center, Suite 2000
San
Francisco, California 94111
(415)
543-8700
Approximate
date of commencement of proposed sale to the public: From
time
to time after the effective date of this registration statement, as determined
by the selling stockholders.
If
the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box: o
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. x
If
this
Form is filed to register additional securities for an offering pursuant to
Rule 462(b) under the Securities Act, please check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. o
If
this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If
this
Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. o
If
this
Form is a post-effective amendment to a registration statement filed pursuant
to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act,
check the following box. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company.
See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting company x
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The
Registrant hereby amends this Registration Statement on such date or dates
as
may be necessary to delay its effective date until the Registrant shall file
a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a),
may
determine.
The
information in this preliminary prospectus is not complete and may be changed.
The selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities, and the selling
stockholders are not soliciting offers to buy these securities, in any
jurisdiction where the offer or sale of these securities is not
permitted.
SUBJECT
TO COMPLETION, DATED AUGUST 26, 2008
PROSPECTUS
6,408,480 SHARES
COMMON
STOCK
This
prospectus relates to the resale of (i)1,662,467 shares of common
stock, $0.001 par value per share (“Common Stock”), of Neonode Inc., a Delaware
corporation, and (ii) 4,746,013 shares of Common Stock issuable upon the
exercise of warrants, that the selling stockholders named in this prospectus
or
any prospectus supplement may offer from time to time. The selling stockholders
are those holders named in the table under the section entitled “Selling
Stockholders” beginning on page 15 of this prospectus or named in a supplement
to this prospectus.
We
will
not receive any of the proceeds from the sale of the shares of our common
stock
by the selling stockholders,
although we may receive proceeds from the exercise of warrants for shares
of our
common stock. We will bear the cost of the registration of these
shares.
Subject
to the restrictions described in this prospectus, the selling stockholders
(directly, or through agents or dealers designated from time to time) may sell
the shares of our common stock being offered by this prospectus from time to
time, on terms to be determined at the time of sale. The prices at which these
selling stockholders may sell the shares will be determined by the prevailing
market price for the shares or in negotiated transactions.
Our
common stock is listed on the NASDAQ Capital Market under the symbol “NEON.” On
August 25, 2008, the last reported sales price of our common stock, as reported
on the NASDAQ Capital Market, was $0.24 per share.
INVESTING
IN OUR COMMON STOCK INVOLVES SUBSTANTIAL RISKS. SEE THE SECTION ENTITLED “RISK
FACTORS” BEGINNING ON PAGE 4 OF THIS PROSPECTUS TO READ ABOUT FACTORS YOU SHOULD
CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION
HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The
date of this prospectus
is
,
2008.
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Page
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About
This Prospectus
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1
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Prospectus
Summary
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2
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Risk
Factors
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4
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Cautionary
Statement Concerning Forward-Looking Information
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14
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Use
of Proceeds
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14
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Selling
Stockholders
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15
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Relationship
of Selling Stockholders to the Company
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21
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Plan
of Distribution
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22
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Legal
Matters
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23
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Experts
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23
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24
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Incorporation
of Certain Documents by Reference
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24
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You
should rely only on the information contained or incorporated by reference
in
this prospectus and in any prospectus supplement hereto. We have not authorized,
and the selling stockholders may not authorize, any other person to provide
you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the selling
stockholders are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate only as of the date
on
the front cover of this prospectus. Our business, financial condition, results
of operations and prospectus may have changed since that date.
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement on Form S-3 that we filed with
the Securities and Exchange Commission, or SEC, on behalf of the selling
stockholders, who are named in the table under the section entitled “Selling
Stockholders” beginning on page 15 of this prospectus, using a “shelf”
registration or continuous offering process. Under this shelf registration
process, the selling stockholders may from time to time until the registration
statement is withdrawn from registration by us, sell the shares of our common
stock being offered pursuant to this prospectus in one or more
offerings.
This
prospectus provides you with a general description of the securities that the
selling stockholders may offer. To the extent required, the number of shares
of
our common stock to be sold, the purchase price, the public offering price,
the
names of any agent or dealer and any applicable commission or discount with
respect to a particular offering by any selling stockholder may be set forth
in
an accompanying prospectus supplement. The prospectus supplement may also add,
update or change information contained in this prospectus. You should read
both
this prospectus and any prospectus supplement together with the additional
information described in the section entitled “Where You Can Find More
Information.”
To
the
extent permitted by applicable law, rules or regulations, we may add, update
or
change the information contained in this prospectus by means of a prospectus
supplement or post-effective amendments to the registration statement of which
this prospectus forms a part, through filings we make with the SEC that are
incorporated by reference into this prospectus or by another method as may
then
be permitted under applicable law, rules or regulations.
You
should rely only on the information contained in this prospectus or any related
prospectus supplement, including the content of all documents now or in the
future incorporated by reference into the registration statement of which this
prospectus forms a part. The selling stockholders may not authorize anyone
to
provide you with different information. We are not, and the selling stockholders
are not, making an offer of the shares of our common stock to be sold under
this
prospectus in any jurisdiction where the offer or sale is not permitted. You
should not assume that the information contained in this prospectus or any
related prospectus supplement is accurate as of any date other than the date
on
the front cover of this prospectus or the related prospectus supplement, or
that
the information contained in any document incorporated by reference is accurate
as of any date other than the date of the document incorporated by reference.
Other than as required under the federal securities laws, we undertake no
obligation to publicly update or revise such information, whether as a result
of
new information, future events or any other reason.
PRIOR
TO MAKING A DECISION ABOUT INVESTING IN OUR COMMON STOCK, YOU SHOULD CAREFULLY
CONSIDER THE SPECIFIC RISKS CONTAINED IN THE SECTION ENTITLED “RISK FACTORS” IN
THIS PROSPECTUS, AND ANY APPLICABLE PROSPECTUS SUPPLEMENT, TOGETHER WITH ALL
OF
THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT
OR APPEARING IN THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS FORMS A
PART.
In
this
prospectus, we refer to Neonode Inc. as “we,” “us,” “our,” the “company” or
“Neonode.” References to “selling stockholders” refers to those holders of our
common stock listed herein under “Selling Stockholders,” who may sell shares
from time to time as described in this prospectus. All trade names used in
this
prospectus are either our registered trademarks or trademarks of their
respective holders.
PROSPECTUS
SUMMARY
The
following is only a summary and therefore does not contain all of the
information you should consider before investing in our securities. We urge
you
to read this entire prospectus, including the more detailed consolidated
financial statements, notes to the consolidated financial statements and
other
information incorporated by reference herein, carefully. See “Where You Can Find
More Information” on page 24 for information regarding the documents
incorporated by reference herein. In addition, investing in our common stock
involves risks. You should carefully consider the information provided under
the
heading “Risk Factors” beginning on page 4.
Overview
Historically,
we designed, manufactured and sold embedded communications hardware and storage
software products. Our hardware business generated the overwhelming majority
of
our sales and cash flow. Our business was characterized by a concentration
of
sales to a small number of OEMs and distributors who provide products and
services to the communications and data storage markets. On March 30, 2007,
we
sold our hardware business to One Stop Systems, Inc. for $2.2 million in cash.
We received $1.7 million of the cash on the date of the sale and an additional
$500,000 in cash on June 5, 2007. In addition, One Stop assumed the lease for
the building housing our San Ramon offices and certain equipment leases. As
part
of the sale, we transferred our entire inventory and the engineering and test
equipment used to support the hardware business to One Stop. As of March 30,
2007, we no longer participate in the embedded communications hardware
business.
On
August
10, 2007, we completed a merger with Old Neonode, a Delaware corporation,
pursuant to the terms of the Agreement and Plan of Merger and Reorganization,
dated January 19, 2007 and amended on May 16, 2007, referred to in this
prospectus as the Merger Agreement. The merger was treated as a recapitalization
and issuance of shares by Old Neonode for the net cash of SBE for accounting
purposes and as such, the historical financial statements of Old Neonode became
the historical financial statements of New Neonode. As a result of the merger,
we changed our name from “SBE, Inc.” to “Neonode Inc.” Effective as of the
merger, the business and operations of Old Neonode prior to the merger became
our primary business and operations. Unless the context otherwise requires,
all
references herein to “Neonode” refer to Private Neonode prior to the Merger, and
Neonode Inc. (formally known as SBE, Inc.) and its wholly-owned subsidiaries
after the Merger.
Our
business is now focused on a combination of licensing our touchscreen technology
to other companies and developing and selling our own products using our
technology in mobile device markets. The cornerstone of our business is our
innovative patent pending touchscreen solutions. We believe that in the future
keyboards and keypads with moving parts will become obsolete and that our
touchscreen solutions and technologies will be at the forefront of a new wave
of
input technologies that will be able to run everything from small mobile devices
to large industrial applications.
We
believe our current product, the Neonode N2, is the world’s smallest touchscreen
mobile phone handset. The N2 fits in the palm of your hand and is designed
to
allow the user to navigate the menus and functions with simple finger-based
taps
and sweeps. The N2 incorporates our patent pending touchscreen and other
proprietary technologies to deliver a mobile phone with a completely unique
user
experience that doesn’t require keypads, buttons or other moving parts.
The
first
model of our touchscreen multimedia mobile phone, the N1, was released in
November 2004. The N1 was primarily a concept phone that was sold in limited
quantities from late 2004 to early 2006. The N2 is our first production-quality
product. We began shipping the N2 to customers in mid-July 2007 and resumed
shipments of the N2 in the second quarter of 2008 following our voluntary
recall
and stopping shipments in the first quarter of 2008.
Corporate
Headquarters
As
a
result of the merger with Old Neonode, our corporate headquarters moved to
Stockholm, Sweden, although we continue to maintain a U.S. office in San Ramon,
California. Our headquarters are located at Warfvingesväg 45, SE-112 51
Stockholm, Sweden and our telephone number at this address is 468 678 18 50.
Our
office in the U.S. is located at 4000 Executive Parkway, Suite 200, San Ramon,
California 94583 and our telephone number at this address is (925) 355-7700.
Our
website address is www.neonode.com. Information contained on our website, or
that can be accessed through our website, is not a part of this
prospectus.
See
the
section entitled “Where You Can Find More Information” on page 24.
The
Offering
This
prospectus relates to the resale by certain selling stockholders of up
to 6,408,480 shares of our common stock, including 4,746,013 shares
issuable upon the exercise of certain warrants to purchase shares of our
common
stock. The
number of shares (and shares issuable upon exercise of warrants) being
registered represents 18.4%
of
our shares issued and outstanding and 49.5% of our shares issued and outstanding
held by persons other than the selling stockholders, affiliates of our Company
or affiliates of the selling stockholders, in each case based on 29,979,493
shares of common stock issued and outstanding as of August 12, 2008
(and assuming the exercise of the warrants for the shares being registered
hereby). We will not receive any proceeds from the sale of
securities by the selling stockholders listed herein.
The
selling stockholders may sell the shares of common stock subject to this
prospectus from time to time and may also decide not to sell all the shares
they
are allowed to sell under this prospectus. The selling stockholders will act
independently of us in making decisions with respect to the timing, manner
and
size of each sale. Furthermore, the selling stockholders may effectuate such
transactions by selling the securities to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions
or
commissions from the selling stockholders and/or the purchasers of the
securities for whom such broker-dealers may act as agent or to whom they sell
as
principal, or both. The selling stockholders may be deemed to be “underwriters,”
as defined in the Securities Act. If any broker-dealers are used by the selling
stockholders, any commissions paid to broker-dealers and, if broker-dealers
purchase any selling stockholders’ securities as principals, any profits
received by such broker-dealers on the resale of the selling stockholders’
securities may be deemed to be underwriting discounts or commissions under
the
Securities Act. In addition, any profits realized by the selling stockholders
may be deemed to be underwriting commissions. All costs, expenses and fees
in
connection with the registration of the selling stockholders’ securities offered
by selling stockholders will be borne by us. Brokerage commission, if any,
attributable to the sale of the selling stockholders’ securities will be borne
by the selling stockholders. Based
on
information provided to us by the selling stockholders, to our knowledge, none
of the selling stockholders have an existing short position in our common stock
as of the date of this prospectus.
See
the
section entitled “Plan of Distribution” beginning on page 22.
Our
common stock is traded on the NASDAQ Capital Market under the symbol “NEON.” Our
common stock is currently at risk for delisting from the NASDAQ Capital Market.
See “Risk Factors
–
Risks
Related to Our Business”
for more
information
regarding this risk.
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. Before investing
in our common stock, you should consider carefully the specific risks detailed
in this “Risk Factors” section and any applicable prospectus supplement,
together with all of the other information contained in this prospectus and
any
prospectus supplement or incorporated by reference herein or therein. If any
of
these risks occur, our business, results of operations and financial condition
could be harmed, the price of our common stock could decline, and you may lose
all or part of your investment.
RISKS
RELATED TO OUR BUSINESS
We
will require additional capital in the future to fund our operations, which
capital may not be available on commercially attractive terms or at
all.
We
will
require sources of capital in addition to cash on hand to continue operations
and to implement our strategy. In March 2008, we closed an aggregate of $4.0
million, net of offering expenses, of private equity financing and in May
2008,
we closed an aggregate of $4.2 million, net of offering expenses, of private
equity financing. We
project that we have sufficient liquid assets to continue operating into
the end
of the third quarter of 2008. We estimate that we will need a minimum of
approximately $7 million to $10 million of additional cash from a
combination of revenue growth and additional financings to fund operating
expenses and capital expenditures for the twelve-months ending June 30, 2009.
We
are currently evaluating different financing alternatives including, but
not
limited to, selling shares of our common stock or issuing notes that may
be
converted in shares of our common stock, which could result in the issuance
of
additional shares. If our operations do not become cash flow positive as
projected, we will be forced to seek credit line facilities from financial
institutions, additional private equity investment 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
on
acceptable terms, or at all, we may be unable to adequately fund our business
plans and it could have a negative effect on our business, results of operations
and financial condition. We may even be required to cease operations. In
such
event, you may lose a portion or all of your investment. In addition, if
funds
are available, 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.
Our
common stock is at risk for delisting from the NASDAQ Capital Market. If it
is
delisted, our stock price and your liquidity may be
impacted.
Our
common stock is listed on the NASDAQ Capital Market under the symbol NEON.
In
order for our common stock to continue to be listed on the NASDAQ Capital
Market, we must satisfy various listing maintenance standards established
by
NASDAQ. Among other things, as such requirements pertain to us, we are required
to have stockholders’ equity of at least $2.5 million or a market capitalization
of $35 million and our common stock must have a minimum closing bid price
of
$1.00 per share. On May 29, 2008, we received a NASDAQ Staff deficiency letter
indicating that the market value of our listed securities had been below
the
minimum $35 million requirement for continued inclusion under its listing
standards (the “Market Capitalization Rule”), and provided us until June 30,
2008 to demonstrate compliance. On July 1, 2008, we received a NASDAQ Staff
Determination letter stating that we had not regained compliance with the
Market
Capitalization Rule and, unless we request an appeal of this determination,
trading of our common stock will be suspended at the opening of business
on July
10, 2008 and NASDAQ will remove our securities from listing and registration
on
the NASDAQ Capital Market. We have requested an appeal of the determination
with
the NASDAQ Listing Qualifications Panel (the “Panel”), which stays the
suspension of our securities pending the Panel’s decision and are scheduled to
appear before the Panel on August 28, 2008. In addition, on
July
3, 2008, we received a NASDAQ Staff deficiency letter indicating that for
the
last 30 consecutive days, the bid price for our common stock had closed below
the $1.00 minimum requirement for continued inclusion under its listing
standards (the “Minimum Bid Price Rule”), and provided us 180 days (or until
December 30, 2008) to regain compliance. In light of the recent
closing bid prices for shares of our common stock and our results of operations,
there is no guarantee that we will be able to meet the continued listing
standards of the NASDAQ Capital Market during this period of time and there
can
be no assurance that the Panel will grant our appeal. If our appeal is not
successful, our common stock will be delisted from the NASDAQ Capital Market
and
our stock price and your liquidity may be impacted.
Our
vendors may deny our requests to delay or reduce the payment of amounts
owed to
them or to cancel shipments of materials and products purchased from and
to
allow us to return unused materials and products already received from
them.
We
are
indebted to vendors in excess of $8 million and have cash resources totaling
$2.1 million at June 30, 2008. We
are
not generating cash from operations and have been incurring significant
losses.
We
have
been funding our operations primarily with cash proceeds raised through
the sale
of notes that are convertible into our common stock, shares of our common
stock
and warrants. Unless
we
are able to increase our revenues and decrease expenses substantially and
secure
an external funding source, we
may
not be able to pay our vendors the amount due them and we
will
not have sufficient cash to support our operations for the next six months.
Our
vendors may
not
allow us to return unused materials or renegotiate amounts owed them, or
they
may resort to legal action to try to enforce payment in full pursuant to
the
terms or the original payment commitment.
Our
independent registered public accounting firm issued a going concern opinion
on
our financial statements, questioning our ability to continue as a going
concern.
Due
to
our need to raise additional financing to fund our operations and satisfy
obligations as they become due, our independent registered public accounting
firm has included an explanatory paragraph in its report on our December
31,
2007 consolidated financial statements regarding its substantial doubt as
to our
ability to continue as a going concern. This may have a negative impact on
the
trading price of our common stock and adversely impact our ability to obtain
necessary financing.
We
have never been profitable and we anticipate significant additional losses
in
the future.
Neonode
was formed in 2006 as a holding company owning and operating Neonode AB, which
was formed in 2004 and has been primarily engaged in the business of developing
and selling mobile phones. We have a limited operating history on which to
base
an evaluation of our business and prospects. Our prospects must be considered
in
light of the risks and uncertainties encountered by companies in the early
stages of development, particularly companies in new and rapidly evolving
markets. Our success will depend on many factors, including, but not limited
to:
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the
growth of mobile telephone usage;
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the
efforts of our marketing partners;
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the
level of competition faced by us; and
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our
ability to meet customer demand for products and ongoing service.
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In
addition, we have experienced substantial net losses in each fiscal period
since
our inception. These net losses resulted from a lack of substantial revenues
and
the significant costs incurred in the development of our products and
infrastructure. Our ability to continue as a going concern is dependent on
our
ability to raise additional funds and implement our business plan. In
addition, in accordance with Swedish law, our subsidiary, Neonode AB,
is required to maintain positive shareholder equity, and in certain
circumstances, its board members may incur personal liability if such
requirement is not met, or it may face forced liquidation. We are currently
addressing this issue, and are considering raising additional equity sufficient
to restore shareholder equity to a positive balance.
Our
limited operating history and the emerging nature of our market, together with
the other risk factors set forth in this report, make prediction of our future
operating results difficult. There can also be no assurance that we will ever
achieve significant revenues or profitability or, if significant revenues and
profitability are achieved, that they could be sustained.
If
we fail to develop and introduce new products and services successfully and
in a
cost effective and timely manner, we will not be able to compete effectively
and
our ability to generate revenues will suffer.
We
operate in a highly competitive, rapidly evolving environment, and our success
depends on our ability to develop and introduce new products and services that
our customers and end users choose to buy. If we are unsuccessful at developing
and introducing new products and services that are appealing to our customers
and end users with acceptable quality, prices and terms, we will not be able
to
compete effectively and our ability to generate revenues will suffer.
The
development of new products and services is very difficult and requires high
levels of innovation. The development process is also lengthy and costly.
If we
fail to anticipate our end users’ needs or technological trends accurately, or
we are unable to complete the development of products and services in a cost
effective and timely fashion, we will be unable to introduce new products
and
services into the market or successfully compete with other providers. In
addition, there may be unexpected problems with our new products. For example,
we stopped shipments of our N2 phones in the first quarter of 2008 and undertook
a voluntary recall after we discovered a technical issue that affected the
quality of reception of our phones in the 900 Megahertz bandwith and lower.
Although we corrected the problem and resumed shipments in the second quarter
of
2008, we neverthless have since had to reevaluate our selling efforts, and
had
to record a $7.7 million write-down of our inventory in the second quarter
of
2008 (reducing the value of our inventory to $6.0 million as at June 30,
2008).
As
we
introduce new or enhanced products or integrate new technology into new or
existing products, we face risks including, among other things, disruption
in
customers’ ordering patterns, excessive levels of older product inventories,
inability to deliver sufficient supplies of new products to meet customers’
demand, possible product and technology defects, and a potentially different
sales and support environment. Premature announcements or leaks of new products,
features or technologies may exacerbate some of these risks. Our failure to
manage the transition to newer products or the integration of newer technology
into new or existing products could adversely affect our business, results
of
operations and financial condition.
We
are dependent on third parties to manufacture and supply our products and
components of our products.
Our
products are built by a production partner. Although we provide our production
partner with key performance specifications for the phones, our production
partner could:
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manufacture
phones with defects that fail to perform to our specifications;
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fail
to meet delivery schedules; or
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fail
to properly service phones or honor warranties.
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Any
of
the foregoing could adversely affect our ability to sell our products and
services, which, in turn, could adversely affect our revenues, profitability
and
liquidity, as well as our brand image.
We
may become highly dependent on wireless carriers for the success of our
products.
Our
business strategy includes significant efforts to establish relationships with
international wireless carriers. We cannot assure you that we will be successful
in establishing new relationships, or maintaining such relationships, with
wireless carriers or that these wireless carriers will act in a manner that
will
promote the success of our multimedia phone products. Factors that are largely
within the control of wireless carriers, but which are important to the success
of our multimedia phone products, include:
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testing
of our products on wireless carriers’
networks;
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quality
and coverage area of wireless voice and data services offered by
the
wireless carriers;
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the
degree to which wireless carriers facilitate the introduction of
and
actively market, advertise, promote, distribute and resell our multimedia
phone products;
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the
extent to which wireless carriers require specific hardware and software
features on our multimedia phone to be used on their
networks;
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timely
build out of advanced wireless carrier networks that enhance the
user
experience for data centric services through higher speed and other
functionality;
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contractual
terms and conditions imposed on them by wireless carriers that, in
some
circumstances, could limit our ability to make similar products available
through competitive carriers in some market
segments;
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wireless
carriers’ pricing requirements and subsidy programs;
and
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pricing
and other terms and conditions of voice and data rate plans that
the
wireless carriers offer for use with our multimedia phone
products.
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For
example, flat data rate pricing plans offered by some wireless carriers may
represent some risk to our relationship with such carriers. While flat data
pricing helps customer adoption of the data services offered by carriers and
therefore highlights the advantages of the data applications of its products,
such plans may not allow its multimedia phones to contribute as much average
revenue per user to wireless carriers as when they are priced by usage, and
therefore reduces our differentiation from other, non-data devices in the view
of the carriers. In addition, if wireless carriers charge higher rates than
consumers are willing to pay, the acceptance of our wireless solutions could
be
less than anticipated and our revenues and results of operations could be
adversely affected.
Wireless
carriers have substantial bargaining power as we enter into agreements with
them. They may require contract terms that are difficult for us to satisfy,
which could result in higher costs to complete certification requirements and
negatively impact our results of operations and financial condition. Moreover,
we may not have agreements with some of the wireless carriers with whom they
will do business and, in some cases, the agreements may be with third-party
distributors and may not pass through rights to us or provide us with recourse
or contact with the carrier. The absence of agreements means that, with little
or no notice, these wireless carriers could refuse to continue to purchase
all
or some of our products or change the terms under which they purchase our
products. If these wireless carriers were to stop purchasing our products,
we
may be unable to replace the lost sales channel on a timely basis and our
results of operations could be harmed.
Wireless
carriers could also significantly affect our ability to develop and launch
products for use on their wireless networks. If we fail to address the needs
of
wireless carriers, identify new product and service opportunities, or modify
or
improve our multimedia phone products in response to changes in technology,
industry standards or wireless carrier requirements, our products could rapidly
become less competitive or obsolete. If we fail to timely develop products
that
meet carrier product planning cycles or fail to deliver sufficient quantities
of
products in a timely manner to wireless carriers, those carriers may choose
to
emphasize similar products from our competitors and thereby reduce their focus
on its products which would have a negative impact on our business, results
of
operations and financial condition.
Carriers,
who control most of the distribution and sale of, and virtually all of the
access for, multimedia phone products could commoditize multimedia phones,
thereby reducing the average selling prices and margins for our products which
would have a negative impact on our business, results of operations and
financial condition. In addition, if carriers move away from subsidizing the
purchase of mobile phone products, this could significantly reduce the sales
or
growth rate of sales of mobile phone products. This could have an adverse impact
on our business, revenues and results of operations.
As
we build strategic relationships with wireless carriers, we may be exposed
to
significant fluctuations in revenue for our multimedia phone
products.
Because
of their large sales channels, wireless carriers may purchase large quantities
of our products prior to launch so that the products are widely available.
Reorders of products may fluctuate quarter to quarter, depending on end-customer
demand and inventory levels required by the carriers. As we develop new
strategic relationships and launch new products with wireless carriers, our
revenue could be subject to significant fluctuation based on the timing of
carrier product launches, carrier inventory requirements, marketing efforts
and
our ability to forecast and satisfy carrier and end-customer demand. We do
not
have a history of selling to wireless carriers and as a result do not have
do
not have a basis for estimating what the potential fluctuations in our revenue
will be from the sale of our multimedia phones.
The
mobile communications industry is highly competitive and many of our competitors
have significantly greater resources to engage in product development,
manufacturing, distribution and marketing.
The
mobile communications industry, in which we are engaged, is a highly competitive
business with companies of all sizes engaged in business in all areas of the
world, including companies with far greater resources than we have. There can
be
no assurance that other competitors, with greater resources and business
connections, will not compete successfully against us in the future. Our
competitors may adopt new technologies that reduce the demand for our products
or render our technologies obsolete, which may have a material adverse effect
on
the cost structure and competitiveness of our products, possibly resulting
in a
negative effect on our revenues, profitability or liquidity.
Our
future results could be harmed by economic, political, regulatory and other
risks associated with international sales and
operations.
Because
we sell our products worldwide and most of the facilities where our devices
are
manufactured, distributed and supported are located outside the United States,
our business is subject to risks associated with doing business internationally,
such as:
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changes
in foreign currency exchange rates;
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the
impact of recessions in the global economy or in specific sub
economies;
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changes
in a specific country’s or region’s political or economic conditions,
particularly in emerging markets;
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changes
in international relations;
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trade
protection measures and import or export licensing
requirements;
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compliance
with a wide variety of laws and regulations which may have civil
and/or
criminal consequences for them and our officers and directors who
they
indemnify;
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difficulty
in managing widespread sales operations;
and
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difficulty
in managing a geographically dispersed workforce in compliance with
diverse local laws and customs.
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In
addition, we are subject to changes in demand for our products resulting from
exchange rate fluctuations that make our products relatively more or less
expensive in international markets. If exchange rate fluctuations occur, our
business and results of operations could be harmed by decreases in demand for
our products or reductions in margins.
While
we
sell our products worldwide, one component of our strategy is to expand our
sales efforts in countries with large populations and propensities for adopting
new technologies. We have limited experience with sales and marketing in some
of
these countries. There can be no assurance that we will be able to market and
sell our products in all of our targeted international markets. If our
international efforts are not successful, our business growth and results of
operations could be harmed.
We
must significantly enhance our sales and product development
organizations.
We
will
need to improve the effectiveness and breadth of our sales operations in order
to increase market awareness and sales of our products, especially as we expand
into new markets. Competition for qualified sales personnel is intense, and
we
may not be able to hire the kind and number of sales personnel we are targeting.
Likewise, our efforts to improve and refine our products require skilled
engineers and programmers. Competition for professionals capable of expanding
our research and development organization is intense due to the limited number
of people available with the necessary technical skills. If we are unable to
identify, hire or retain qualified sales, marketing and technical personnel,
our
ability to achieve future revenue may be adversely affected.
We
are dependent on the services of our key personnel.
We
are
dependent on our current management for the foreseeable future. The loss of
the
services of any member of management could have a materially adverse effect
on
our operations and prospects.
If
third parties infringe our intellectual property or if we are unable to secure
and protect our intellectual property, we may expend significant resources
enforcing our rights or suffer competitive injury.
Our
success depends in large part on our proprietary technology and other
intellectual property rights. We rely on a combination of patents, copyrights,
trademarks and trade secrets, confidentiality provisions and licensing
arrangements to establish and protect our proprietary rights. Our intellectual
property, particularly our patents, may not provide us a significant competitive
advantage. If we fail to protect or to enforce our intellectual property rights
successfully, our competitive position could suffer, which could harm our
results of operations.
Our
pending patent and trademark applications for registration may not be allowed,
or others may challenge the validity or scope of our patents or trademarks,
including patent or trademark applications or registrations. Even if our patents
or trademark registrations are issued and maintained, these patents or
trademarks may not be of adequate scope or benefit to them or may be held
invalid and unenforceable against third parties.
We
may be
required to spend significant resources to monitor and police our intellectual
property rights. Effective policing of the unauthorized use of our products
or
intellectual property is difficult and litigation may be necessary in the future
to enforce our intellectual property rights. Intellectual property litigation
is
not only expensive, but time consuming, regardless of the merits of any claim,
and could divert attention of our management from operating the business.
Despite our efforts, we may not be able to detect infringement and may lose
competitive position in the market before they do so. In addition, competitors
may design around our technology or develop competing technologies. Intellectual
property rights may also be unavailable or limited in some foreign countries,
which could make it easier for competitors to capture market share.
Despite
our efforts to protect our proprietary rights, existing laws, contractual
provisions and remedies afford only limited protection. Intellectual property
lawsuits are subject to inherent uncertainties due to, among other things,
the
complexity of the technical issues involved, and we cannot assure you that
we
will be successful in asserting intellectual property claims. Attempts may
be
made to copy or reverse engineer aspects of our products or to obtain and use
information that we regard as proprietary. Accordingly, we cannot assure you
that we will be able to protect our proprietary rights against unauthorized
third party copying or use. The unauthorized use of our technology or of our
proprietary information by competitors could have an adverse effect on our
ability to sell our products.
We
have an international presence in countries whose laws may not provide
protection of our intellectual property rights to the same extent as the laws
of
the United States, which may make it more difficult for us to protect our
intellectual property.
As
part
of our business strategy, we target customers and relationships with suppliers
and original distribution manufacturers in countries with large populations
and
propensities for adopting new technologies. However, many of these countries
do
not address misappropriation of intellectual property or deter others from
developing similar, competing technologies or intellectual property. Effective
protection of patents, copyrights, trademarks, trade secrets and other
intellectual property may be unavailable or limited in some foreign countries.
In particular, the laws of some foreign countries in which we do business may
not protect our intellectual property rights to the same extent as the laws
of
the United States. As a result, we may not be able to effectively prevent
competitors in these regions from infringing our intellectual property rights,
which would reduce our competitive advantage and ability to compete in those
regions and negatively impact our business.
If
we do not correctly forecast demand for our products, we could have costly
excess production or inventories or we may not be able to secure sufficient
or
cost effective quantities of our products or production materials, and our
revenues, cost of revenues and financial condition could be adversely
impacted.
The
demand for our products depends on many factors, including pricing and channel
inventory levels, and is difficult to forecast due in part to variations in
economic conditions, changes in consumer and enterprise preferences, relatively
short product life cycles, changes in competition, seasonality and reliance
on
key sales channel partners. It is particularly difficult to forecast demand
by
individual variations of the product, such as the color of the casing or size
of
memory. Significant unanticipated fluctuations in demand, the timing and
disclosure of new product releases or the timing of key sales orders could
result in costly excess production or inventories or the inability to secure
sufficient, cost-effective quantities of our products or production materials.
This could adversely impact our revenues, cost of revenues and financial
condition.
We
rely on third parties to sell and distribute our products and we rely on their
information to manage our business. Disruption of our relationship with these
channel partners, changes in their business practices, their failure to provide
timely and accurate information or conflicts among its channels of distribution
could adversely affect our business, results of operations and financial
condition.
The
distributors, wireless carriers, retailers and resellers who sell or distribute
our products also sell products offered by our competitors. If our competitors
offer our sales channel partners more favorable terms or have more products
available to meet their needs or utilize the leverage of broader product lines
sold through the channel, those wireless carriers, distributors, retailers
and
resellers may de-emphasize or decline to carry our products. In addition,
certain of our sales channel partners could decide to de-emphasize the product
categories that we offer in exchange for other product categories that they
believe provide higher returns. If we are unable to maintain successful
relationships with these sales channel partners or to expand our distribution
channels, our business will suffer.
Because
we intend to sell our products primarily to distributors, wireless carriers,
retailers and resellers, we are subject to many risks, including risks related
to product returns, either through the exercise of contractual return rights
or
as a result of its strategic interest in assisting them in balancing
inventories. In addition, these sales channel partners could modify their
business practices, such as inventory levels, or seek to modify their
contractual terms, such as return rights or payment terms. Unexpected changes
in
product return requests, inventory levels, payment terms or other practices
by
these sales channel partners could negatively impact our business, results
of
operations and financial condition.
We
will
rely on distributors, wireless carriers, retailers and resellers to provide
us
with timely and accurate information about their inventory levels as well as
sell-through of products purchased from us. We will use this information as
one
of the factors in our forecasting process to plan future production and sales
levels, which in turn will influence our public financial forecasts. We will
also use this information as a factor in determining the levels of some of
our
financial reserves. If we do not receive this information on a timely and
accurate basis, our results of operations and financial condition may be
adversely impacted.
Distributors,
retailers and traditional resellers experience competition from Internet-based
resellers that distribute directly to end-customers, and there is also
competition among Internet-based resellers. We also sell our products directly
to end-customers from our Neonode.com web site. These varied sales channels
could cause conflict among our channels of distribution, which could harm our
business, revenues and results of operations.
If
our multimedia phone products do not meet wireless carrier and governmental
or
regulatory certification requirements, we will not be able to compete
effectively and our ability to generate revenues will
suffer.
We
are
required to certify our multimedia phone products with governmental and
regulatory agencies and with the wireless carriers for use on their networks.
The certification process can be time consuming, could delay the offering of
our
products on carrier networks and affect our ability to timely deliver products
to customers. As a result, carriers may choose to offer, or consumers may choose
to buy, similar products from our competitors and thereby reduce their purchases
of our products, which would have a negative impact on our products sales
volumes, our revenues and our cost of revenues.
We
depend on our suppliers, some of which are the sole source and some of which
are
our competitors, for certain components, software applications and elements
of
our technology, and our production or reputation could be harmed if these
suppliers were unable or unwilling to meet our demand or technical requirements
on a timely and/or a cost-effective basis.
Our
multimedia products contain software applications and components, including
liquid crystal displays, touch panels, memory chips, microprocessors, cameras,
radios and batteries, which are procured from a variety of suppliers, including
some who are our competitors. The cost, quality and availability of software
applications and components are essential to the successful production and
sale
of our device products. For example, media player applications are critical
to
the functionality of our multimedia phone devices.
Some
components, such as screens and related integrated circuits, digital signal
processors, microprocessors, radio frequency components and other discrete
components, come from sole source suppliers. Alternative sources are not always
available or may be prohibitively expensive. In addition, even when we have
multiple qualified suppliers, we may compete with other purchasers for
allocation of scarce components. Some components come from companies with whom
we compete in the multimedia phone device market. If suppliers are unable or
unwilling to meet our demand for components and if we are unable to obtain
alternative sources or if the price for alternative sources is prohibitive,
our
ability to maintain timely and cost-effective production of our multimedia
phone
will be harmed. Shortages affect the timing and volume of production for some
of
our products as well as increasing our costs due to premium prices paid for
those components. Some of our suppliers may be capacity-constrained due to
high
industry demand for some components and relatively long lead times to expand
capacity.
If
we are unable to obtain key technologies from third parties on a timely basis
and free from errors or defects, we may have to delay or cancel the release
of
certain products or features in our products or incur increased
costs.
We
license third-party software for use in our products, including the operating
systems. Our ability to release and sell our products, as well as our
reputation, could be harmed if the third-party technologies are not delivered
to
customers in a timely manner, on acceptable business terms or contain errors
or
defects that are not discovered and fixed prior to release of our products
and
we are unable to obtain alternative technologies on a timely and cost effective
basis to use in our products. As a result, our product shipments could be
delayed, our offering of features could be reduced or we may need to divert
our
development resources from other business objectives, any of which could
adversely affect our reputation, business and results of
operations.
Our
product strategy is to base our products on software operating systems that
are
commercially available to competitors.
Our
multimedia phone is based on a commercially available version of Microsoft’s
Windows CE. We cannot assure you that we will be able to maintain this licensing
agreement with Microsoft and that Microsoft will not grant similar rights to
our
competitors or that we will be able to sufficiently differentiate our multimedia
phone from the multitude of other devices based on Windows CE.
In
addition, there is significant competition in the operating system software
and
services market, including proprietary operating systems such as Symbian and
Palm OS, open source operating systems, such as Linux, other proprietary
operating systems and other software technologies, such as Java and RIM’s
licensed technology. This competition is being developed and promoted by
competitors and potential competitors, some of which have significantly greater
financial, technical and marketing resources than we have, such as Access,
Motorola, Nokia, Sony-Ericsson and RIM. These competitors could provide
additional or better functionality than we do or may be able to respond more
rapidly than we can to new or emerging technologies or changes in customer
requirements. Competitors in this market could devote greater resources to
the
development, promotion and sale of their products and services and the
third-party developer community, which could attract the attention of
influential user segments.
If
we are
unable to continue to differentiate the operating systems that we include in
our
mobile computing devices, our revenues and results of operations could be
adversely affected.
The
market for multimedia phone products is volatile, and changing market
conditions, or failure to adjust to changing market conditions, may adversely
affect our revenues, results of operations and financial condition, particularly
given our size, limited resources and lack of
diversification.
We
operate in the multimedia phone market, which has seen significant growth during
the past years. We cannot assure you that this significant growth in the sales
of multimedia devices will continue. If we are unable to adequately respond
to
changes in demand for our products, our revenues and results of operations
could
be adversely affected. In addition, as our products mature and face greater
competition, we may experience pressure on our product pricing to preserve
demand for our products, which would adversely affect our margins, results
of
operations and financial condition.
This
reliance on the success of and trends in our industry is compounded by the
size
of our organization and our focus on multimedia phones. These factors also
make
us more dependent on investments of our limited resources. For example, we
face
many resource allocation decisions, such as: where to focus our research and
development, geographic sales and marketing and partnering efforts; which
aspects of our business to outsource; and which operating systems and email
solutions to support. Given the size and undiversified nature of our
organization, any error in investment strategy could harm our business, results
of operations and financial condition.
Our
products are subject to increasingly stringent laws, standards and other
regulatory requirements, and the costs of compliance or failure to comply may
adversely impact our business, results of operations and financial
condition.
Our
products must comply with a variety of laws, standards and other requirements
governing, among other things, safety, materials usage, packaging and
environmental impacts and we must obtain regulatory approvals and satisfy
other regulatory concerns in the various jurisdictions where our products are
sold. Many of our products must meet standards governing, among other things,
interference with other electronic equipment and human exposure to
electromagnetic radiation. Failure to comply with such requirements can subject
us to liability, additional costs and reputational harm and in severe cases
prevent us from selling our products in certain jurisdictions.
For
example, many of our products are subject to laws and regulations that restrict
the use of lead and other substances and require producers of electrical and
electronic equipment to assume responsibility for collecting, treating,
recycling and disposing of our products when they have reached the end of their
useful life. In Europe, substance restrictions began to apply to the products
sold after July 1, 2006, when new recycling, labeling, financing and related
requirements came into effect. Failure to comply with applicable environmental
requirements can result in fines, civil or criminal sanctions and third-party
claims. If products we sell in Europe are found to contain more than the
permitted percentage of lead or another listed substance, it is possible that
we
could be forced to recall the products, which could lead to substantial
replacement costs, contract damage claims from customers, and reputational
harm.
We expect similar requirements in the United States, China and other parts
of
the world.
As
a
result of these new European requirements and anticipated developments
elsewhere, we are facing increasingly complex procurement and design challenges,
which, among other things, require us to incur additional costs identifying
suppliers and contract manufacturers who can provide, and otherwise obtain,
compliant materials, parts and end products and re-designing products so that
they comply with these and the many other requirements applicable to
them.
Allegations
of health risks associated with electromagnetic fields and wireless
communications devices, and the lawsuits and publicity relating to them,
regardless of merit, could adversely impact our business, results of operations
and financial condition.
There
has
been public speculation about possible health risks to individuals from exposure
to electromagnetic fields, or radio signals, from base stations and from the
use
of mobile devices. While a substantial amount of scientific research by various
independent research bodies has indicated that these radio signals, at levels
within the limits prescribed by public health authority standards and
recommendations, present no evidence of adverse effect to human health, we
cannot assure you that future studies, regardless of their scientific basis,
will not suggest a link between electromagnetic fields and adverse health
effects. Government agencies, international health organizations and other
scientific bodies are currently conducting research into these issues. In
addition, other mobile device companies have been named in individual plaintiff
and class action lawsuits alleging that radio emissions from mobile phones
have
caused or contributed to brain tumors and the use of mobile phones pose a health
risk. Although our products are certified as meeting applicable public health
authority safety standards and recommendations, even a perceived risk of adverse
health effects from wireless communications devices could adversely impact
use
of wireless communications devices or subject them to costly litigation and
could harm our reputation, business, results of operations and financial
condition.
Changes
in financial accounting standards or practices may cause unexpected fluctuations
in and may adversely affect our reported results of
operations.
Any
change in financial accounting standards or practices that cause a change in
the
methodology or procedures by which we track, calculate, record and report our
results of operations or financial condition or both could cause fluctuations
in
and adversely affect our reported results of operations and cause our historical
financial information to not be reliable as an indicator of future results.
Wars,
terrorist attacks or other threats beyond our control could negatively impact
consumer confidence, which could harm our operating
results.
Wars,
terrorist attacks or other threats beyond our control could have an adverse
impact on the United States, Europe and world economy in general, and consumer
confidence and spending in particular, which could harm our business, results
of
operations and financial condition.
RISKS
RELATED TO OWNING OUR COMMON STOCK
If
we continue to experience losses, we could experience difficulty meeting our
business plan and our stock price could be negatively
affected.
If
we are
unable to gain market acceptance of our mobile phone handsets, we will
experience continuing operating losses and negative cash flow from our
operations. Any failure to achieve or maintain profitability could negatively
impact the market price of our common stock. We anticipate that we will continue
to incur product development, sales and marketing and administrative expenses.
As a result, we will need to generate significant quarterly revenues if we
are
to achieve and maintain profitability. A substantial failure to achieve
profitability could make it difficult or impossible for us to grow our business.
Our business strategy may not be successful, and we may not generate significant
revenues or achieve profitability. Any failure to significantly increase
revenues would also harm our ability to achieve and maintain profitability.
If
we do achieve profitability in the future, we may not be able to sustain or
increase profitability on a quarterly or annual basis.
Our
certificate of incorporation and bylaws and the Delaware General Corporation
Law
contain provisions that could delay or prevent a change in
control.
Our
board
of directors has the authority to issue up to 2,000,000 shares of preferred
stock and to determine the price, rights, preferences and privileges of those
shares without any further vote or action by the stockholders. The rights of
the
holders of common stock will be subject to, and may be materially adversely
affected by, the rights of the holders of any preferred stock that may be issued
in the future. The issuance of preferred stock could have the effect of making
it more difficult for a third party to acquire a majority of our outstanding
voting stock. Furthermore, certain other provisions of our certificate of
incorporation and bylaws may have the effect of delaying or preventing changes
in control or management, which could adversely affect the market price of
our
common stock. In addition, we are subject to the provisions of Section 203
of
the Delaware General Corporation Law, an anti-takeover law.
Our
stock price has been volatile, and your investment in our common stock could
suffer a decline in value.
There
has
been significant volatility in the market price and trading volume of equity
securities, which is unrelated to the financial performance of the companies
issuing the securities. These broad market fluctuations may negatively affect
the market price of our common stock. You may not be able to resell your shares
at or above the price you pay for those shares due to fluctuations in the market
price of our common stock caused by changes in our operating performance or
prospects and other factors.
Some
specific factors that may have a significant effect on our common stock market
price include:
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actual
or anticipated fluctuations in our operating results or future
prospects;
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our
announcements or our competitors’ announcements of new
products;
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the
public’s reaction to our press releases, our other public announcements
and our filings with the SEC;
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strategic
actions by us or our competitors, such as acquisitions or
restructurings;
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new
laws or regulations or new interpretations of existing laws or regulations
applicable to our business;
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changes
in accounting standards, policies, guidance, interpretations or
principles;
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changes
in our growth rates or our competitors’ growth
rates;
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developments
regarding our patents or proprietary rights or those of our
competitors;
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our
inability to raise additional capital as
needed;
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concern
as to the efficacy of our products;
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changes
in financial markets or general economic
conditions;
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sales
of common stock by us or members of our management
team;
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certain
anti-dilution features included in certain securities issued in
prior
financing transactions; and
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changes
in stock market analyst recommendations or earnings estimates regarding
our common stock, other comparable companies or our industry
generally.
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Future
sales of our common stock could adversely affect its price and our future
capital-raising activities could involve the issuance of equity securities,
which would dilute your investment and could result in a decline in the trading
price of our common stock.
We
may
sell securities in the public or private equity markets if and when conditions
are favorable, even if we do not have an immediate need for additional capital
at that time. Sales of substantial amounts of common stock, or the perception
that such sales could occur, could adversely affect the prevailing market price
of our common stock and our ability to raise capital. We may issue additional
common stock in future financing transactions or as incentive compensation
for
our executive management and other key personnel, consultants and advisors.
Issuing any equity securities would be dilutive to the equity interests
represented by our then-outstanding shares of common stock. The market price
for
our common stock could decrease as the market takes into account the dilutive
effect of any of these issuances. Furthermore, we may enter into financing
transactions at prices that represent a substantial discount to the market
price
of our common stock. A negative reaction by investors and securities analysts
to
any discounted sale of our equity securities could result in a decline in the
trading price of our common stock.
If
registration rights that we have previously granted are exercised, then the
price of our common stock may be adversely affected.
In
addition to the shares being registered in this registration statement (of
which
this prospectus forms a part), we have also agreed to register with the SEC
the
shares of common stock issued to former Neonode stockholders in connection
with
the merger and to participants in private placement fundings we completed in
March 2008 and May 2008. In the event these securities are registered with
the
SEC, they may be freely sold in the open market, subject to trading restrictions
to which our insiders holding the shares may be subject from time to time.
In
the event that we fail to register such shares in a timely basis, we may have
liabilities to such stockholders. We expect that we also will be required to
register any securities sold in future private financings. The sale of a
significant amount of shares in the open market, or the perception that these
sales may occur, could cause the trading price of our common stock to decline
or
become highly volatile.
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This
prospectus contains “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995 with respect to the financial
condition, results of operations, business strategies, operating efficiencies
or
synergies, competitive positions, growth opportunities for existing patents,
technologies, products, plans and objectives of management, markets for stock
of
Neonode and other matters. Statements in this prospectus that are not historical
facts are hereby identified as “forward-looking statements” for the purpose of
the safe harbor provided by Section 21E of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and Section 27A of the Securities
Act. Such forward-looking statements, including, without limitation, those
relating to the future business prospects, revenues and income of Neonode,
wherever they occur, are necessarily estimates reflecting the best judgment
of
our senior management on the date on which they were made, or if no date is
stated, as of the date of this prospectus. These forward-looking statements
are
subject to risks, uncertainties and assumptions, including those described
in
the section entitled “Risk Factors,” may affect the operations, performance,
development and results of our business. Because the factors discussed in this
prospectus could cause actual results or outcomes to differ materially from
those expressed in any forward-looking statements made by us or on our behalf,
you should not place undue reliance on any such forward-looking statements.
New
factors emerge from time to time, and it is not possible for us to predict
which
factors will arise. In addition, we cannot assess the impact of each factor
on
our business or the extent to which any factor, or combination of factors,
may
cause actual results to differ materially from those contained in any
forward-looking statements.
You
are
advised to read carefully the section titled “Risk Factors” beginning on page 4
of this prospectus.
We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or any other
reason. All subsequent forward-looking statements attributable to Neonode or
any
person acting on our behalf are expressly qualified in their entirety by the
cautionary statements contained or referred to herein. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in this
prospectus may not occur. Except as required under the federal securities laws
and the rules and regulations of the SEC, we do not have any intention or
obligation to update publicly any forward-looking statements after we distribute
this prospectus, whether as a result of new information, future events or
otherwise.
USE
OF PROCEEDS
All
of
our common stock being offered under this prospectus is being sold by or for
the
account of the selling stockholders. We will not receive any proceeds from
the
sale of our common stock by or for the account of the selling stockholders.
Any
proceeds that we receive from the exercise of outstanding warrants will be
used for general corporate purposes. General corporate purposes may include
capital expenditures, repayment of debt, possible acquisitions, investments
and
any other purposes that we may specify in any prospectus supplement. There
can
be no assurance that any of the warrants will be exercised.
SELLING
STOCKHOLDERS
On
August
10, 2007, in connection with the Merger and pursuant to the terms of the
Merger
Agreement, we issued approximately 20.4 million shares of our common stock
and
assumed outstanding options and warrants to purchase an additional 7.9
million
shares of our common stock. For more information regarding the Merger,
see
“Prospectus Summary—Overview.” Pursuant to the terms of the Merger Agreement, we
are still required to register for resale the shares of common stock issuable
upon the exercise of the warrants issued or assumed in connection with
the
Merger, of which 2,096,156 warrants exercisable at a price of $2.83
per share remain issued and outstanding, and for which 1,659,449 shares of
common stock issuable upon the exercise of warrants exercisable at a price
of
$2.83 per share are being registered for resale
hereunder.
On
March
4, 2008, we sold an aggregate 1,800,000 shares of our common stock in a private
placement to accredited investors (the “March Investors”) for $2.50 per share
and received net proceeds of approximately $4,000,000 after placement agent
fees
and offering expenses (the “March Financing”). Under the terms of the
Subscription Agreement dated March 4, 2008 relating to the March Financing,
we
granted the March Investors piggyback registration rights in respect of the
1,800,000 shares of common stock acquired in the March Financing. Piggyback
registration means that we agreed to include such shares in the next
registration statement we filed with the SEC, subject to limited exceptions.
In
addition to the 1,800,000 shares of our common stock we issued to the March
Investors in the March Financing, of which 752,000 shares are being registered
for resale hereunder, we also issued an aggregate of 207,492 shares of our
common stock to investors who participated in the September 2007 private
placement pursuant to anti-dilution provisions contained in the September
2007
private placement transaction documents (the “Anti-Dilution Shares”). We had
previously agreed to register the Anti-Dilution Shares for resale under the
provisions contained in the September 2007 private placement transaction
documents and 131,829 such Anti-Dilution Shares are being registered for
resale hereunder. Empire Asset Management Company acted as financial advisor
in
the private placement, and in addition to investing $30,000 for shares as
an investor in the transaction, Empire Asset Management Company received
compensation in connection with the March Financing of approximately $450,000
in
cash and 120,000 shares of our common stock. We did not grant Empire Asset
Management Company piggyback registration rights with respect to the 120,000
shares of common stock received as compensation, and consequently, such shares
are not being registered for resale hereunder.
On
May
21, 2008, we sold an aggregate 4,004,796 shares of our common stock and issued
warrants exercisable for an aggregate 9,721,319 shares of our common stock
in a
private placement with accredited investors (the “May Financing”), all of which
we agreed to register for resale under the provisions contained in Warrant
Exercise Subscription Agreement dated May 16, 2008, pursuant to which
778,638 shares and 3,086,564 shares issuable upon the exercise of warrants
are
being registered for resale hereunder. We received net proceeds of approximately
$4,200,000 after placement agent fees and offering expenses from the May
Financing. In the May Financing, 4,004,796 of our outstanding warrants were
exercised at a reduced strike price of $1.27 per warrant (including $375,000
of
surrender of debt) for an aggregate of 4,004,796 shares of our common stock
(the
“May Warrant Shares”). Members of our then Board of Directors and
management contributed approximately $500,000 of the new capital. In addition
to
the May Warrant Shares, we issued two new common stock purchase warrants,
with
an exercise price of $1.45, for each outstanding warrant exercised, for a
total
of 8,009,586 new warrants exercisable for 8,009,586 shares of our common
stock.
As part of the May Financing, we also extended the maturity date of $2.85
million of convertible debt that was due on June 30, 2008 until December
31,
2008 by issuing the note holders 510,294 common stock purchase warrants,
with an exercise price of $1.45, exercisable for 510,294 shares of our common
stock. Empire Asset Management Company acted as financial advisor for the
transaction and received 1,201,439 warrants exercisable at prices ranging
from
$1.27 to $1.45 per share and a cash fee. We also agreed to register for resale
the 1,201,439 shares of our common stock issuable upon exercise of the warrants
issued to Empire Asset Management Company.
The
table
below presents information regarding the selling stockholders and the shares
of
our common stock that they may offer and sell from time to time under this
prospectus. Percentages of beneficial ownership are based upon 29,979,493
shares
of common stock issued and outstanding as of August 12, 2008.
We
considered the following factors and made the following assumptions regarding
the table:
·
|
except
as otherwise noted in footnote (2) to the table, beneficial ownership
is
determined under Section 13(d) of the Securities Exchange Act of 1934
and generally includes voting or investment power with respect to
securities and including any securities that grant the selling stockholder
the right to acquire common stock within 60 days of July 1,
2008;
|
·
|
unless
otherwise indicated below, to our knowledge, the selling stockholders
named below have sole voting and investment power with respect to
their
shares of common stock, except to the extent authority is shared
by
spouses under applicable law; and
|
·
|
the
selling stockholders may sell all of the securities offered by this
prospectus under certain
circumstances.
|
Notwithstanding
these assumptions, the selling stockholders may sell less than all of the shares
listed on the table. In addition, the selling stockholders may have sold or
transferred, in transactions exempt from the registration requirements of the
Securities Act, some or all of the shares since the date on which the
information in the table below is presented. The shares listed below may be
sold
pursuant to this prospectus or in privately negotiated transactions.
Accordingly, we cannot estimate the number of shares of common stock that the
selling stockholders will sell under this prospectus. Information about the
selling stockholders may change over time.
|
|
|
NUMBER
OF SHARES BENEFICIALLY
OWNED
|
|
|
SHARES
OF COMMON
STOCK
|
|
|
SHARES
BENEFICIALLY OWNED AFTER OFFERING
|
|
|
|
|
BEFORE
|
|
|
BEING
|
|
|
|
|
|
|
|
SELLING
STOCKHOLDERS(1)
|
|
|
OFFERING
|
|
|
OFFERED(2)
|
|
|
NUMBER(2)
|
|
|
PERCENTAGE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A
& S Levy Family Holdings LLP (3)
|
|
|
40,000
|
|
|
40,000
|
|
|
0
|
|
|
*
|
|
AIGH
Investment Partners, LLC (4)
|
|
|
4,965,447
|
|
|
1,688,150
|
|
|
3,277,297
|
|
|
10.9
|
%
|
Jeffrey
Allard (5)
|
|
|
59,370
|
|
|
59,370
|
|
|
0
|
|
|
*
|
|
AME
Capital Group LLC (6)
|
|
|
372,746
|
|
|
322,746
|
|
|
50,000
|
|
|
*
|
|
Robert
Baratta (7)
|
|
|
20,000
|
|
|
20,000
|
|
|
0
|
|
|
*
|
|
Susan
Bergtraum (8)
|
|
|
39,685
|
|
|
39,685
|
|
|
0
|
|
|
*
|
|
Hershel
Berkowitz (9)
|
|
|
987,139
|
|
|
331,818
|
|
|
655,321
|
|
|
2.2%
|
|
David
Berman (10)
|
|
|
345,826
|
|
|
345,826
|
|
|
0
|
|
|
*
|
|
Block
Family Trust (11)
|
|
|
10,000
|
|
|
10,000
|
|
|
0
|
|
|
*
|
|
Joseph
Bronner (12)
|
|
|
53,670
|
|
|
53,670
|
|
|
0
|
|
|
*
|
|
Frank
Lennart Brunnberg (13)
|
|
|
2,183
|
|
|
728
|
|
|
1,455
|
|
|
*
|
|
CAM
ELM Company LLC (14)
|
|
|
372,746
|
|
|
322,746
|
|
|
50,000
|
|
|
*
|
|
Richard
Cardinale (15)
|
|
|
33,998
|
|
|
16,838
|
|
|
17,160
|
|
|
*
|
|
Charles
A. Carver (16)
|
|
|
20,000
|
|
|
20,000
|
|
|
0
|
|
|
*
|
|
Thomas
H. Cruikshank (17)
|
|
|
80,000
|
|
|
80,000
|
|
|
0
|
|
|
*
|
|
EL
Equities LLC (18)
|
|
|
124,175
|
|
|
29,516
|
|
|
94,659 |
|
|
* |
|
Electrum
Capital Partners LP (19)
|
|
|
21,324
|
|
|
21,324
|
|
|
0
|
|
|
*
|
|
Empire
Asset Management Company (20)
|
|
|
487,871
|
|
|
487,871
|
|
|
0
|
|
|
*
|
|
Fame
Associates (21)
|
|
|
67,150
|
|
|
62,150
|
|
|
5,000
|
|
|
*
|
|
Michael
L. Fields (22)
|
|
|
39,370
|
|
|
39,370
|
|
|
0
|
|
|
*
|
|
Gilbert
A. Flores Irrevocable Management Trust (23)
|
|
|
40,000
|
|
|
40,000
|
|
|
0
|
|
|
*
|
|
Giorgio
USA (24)
|
|
|
118,110
|
|
|
118,110
|
|
|
0
|
|
|
*
|
|
Garr
W. Godfrey (25)
|
|
|
59,370
|
|
|
59,370
|
|
|
0
|
|
|
*
|
|
Mikael
Hagman (26)
|
|
|
153,254
|
|
|
22,965
|
|
|
130,289
|
|
|
*
|
|
Gary
D. Heihn (27)
|
|
|
10,000
|
|
|
10,000
|
|
|
0
|
|
|
*
|
|
Kevin
Howe (28)
|
|
|
10,000
|
|
|
10,000
|
|
|
0
|
|
|
*
|
|
Robert
E. Irelan (29)
|
|
|
98,740
|
|
|
98,740
|
|
|
0
|
|
|
*
|
|
Iroquois
Master Fund Ltd (30)
|
|
|
450,828
|
|
|
25,000
|
|
|
425,828
|
|
|
1.4
|
%
|
William
B. Jones, MD (31)
|
|
|
20,000
|
|
|
20,000
|
|
|
0
|
|
|
*
|
|
James
Kardon (32)
|
|
|
7,893
|
|
|
5,944
|
|
|
1,949
|
|
|
*
|
|
Arthur
Kohn (33)
|
|
|
324,192
|
|
|
108,064
|
|
|
216,128
|
|
|
*
|
|
Jesper
H. Lagercrantz (34)
|
|
|
42,647
|
|
|
14,216
|
|
|
28,431
|
|
|
*
|
|
Robert
Lange (35)
|
|
|
20,000
|
|
|
20,000
|
|
|
0
|
|
|
*
|
|
The
Lanovara Family Trust (36)
|
|
|
10,000
|
|
|
10,000
|
|
|
0
|
|
|
*
|
|
LaPlace
Group LLC (37)
|
|
|
543,258
|
|
|
456,258
|
|
|
87,000
|
|
|
*
|
|
James
A. or Judy B. Lesley (38) |
|
|
20,000 |
|
|
20,000 |
|
|
0 |
|
|
*
|
|
Jonas
G. Litborn (39)
|
|
|
9,247
|
|
|
728
|
|
|
8,519
|
|
|
*
|
|
Longview
Fund LP (40)
|
|
|
648,282
|
|
|
35,162
|
|
|
613,120
|
|
|
2.0
|
%
|
Samuel
S. Nebenzahl (41)
|
|
|
146,684
|
|
|
125,984
|
|
|
20,700
|
|
|
*
|
|
Jan
Nylander (42)
|
|
|
22,854
|
|
|
1,261
|
|
|
21,593
|
|
|
*
|
|
Valdimiro
Panichi (43)
|
|
|
48,695
|
|
|
39,636
|
|
|
9,059
|
|
|
*
|
|
Randall
Eugene James Oil Co. MPP (44)
|
|
|
50,000
|
|
|
50,000
|
|
|
0
|
|
|
*
|
|
Eliyohu
Rechnitzer (45)
|
|
|
10,662
|
|
|
10,662
|
|
|
0
|
|
|
*
|
|
Robho
Properties, Inc. (46)
|
|
|
40,000
|
|
|
40,000
|
|
|
0
|
|
|
*
|
|
Rockmore
Investment Master Fund Ltd (47)
|
|
|
204,180
|
|
|
16,667
|
|
|
187,513
|
|
|
*
|
|
|
|
|
NUMBER
OF SHARES BENEFICIALLY
OWNED
|
|
|
SHARES
OF COMMON
STOCK
|
|
|
SHARES
BENEFICIALLY OWNED AFTER OFFERING
|
|
|
|
|
BEFORE
|
|
|
BEING
|
|
|
|
|
|
|
|
SELLING
STOCKHOLDERS(1)
|
|
|
OFFERING
|
|
|
OFFERED(2)
|
|
|
NUMBER(2)
|
|
|
PERCENTAGE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gabor
M. Rubanyi (48)
|
|
|
49,370
|
|
|
49,370
|
|
|
0
|
|
|
*
|
|
Charles
Schumann (49)
|
|
|
40,000
|
|
|
40,000
|
|
|
0
|
|
|
*
|
|
Steven
W. Spira (50)
|
|
|
151,608
|
|
|
127,148
|
|
|
24,460
|
|
|
*
|
|
Symetrix
Solutions Inc. (51)
|
|
|
49,370
|
|
|
49,370
|
|
|
0
|
|
|
*
|
|
Transpro
Property & Casualty Insurance Corp. (52)
|
|
|
60,000
|
|
|
60,000
|
|
|
0
|
|
|
*
|
|
Whalehaven
Capital Fund Limited (53)
|
|
|
1,850,792
|
|
|
373,250
|
|
|
1,477,542
|
|
|
4.9
|
%
|
Wolfson
Equities (54)
|
|
|
1,218,107
|
|
|
307,074
|
|
|
911,033 |
|
|
3.0 |
% |
Aaron
Wolfson (55)
|
|
|
893,563
|
|
|
33,683
|
|
|
859,880 |
|
|
2.9 |
% |
Abraham
Wolfson (56)
|
|
|
27,015
|
|
|
9,005
|
|
|
18,010 |
|
|
* |
|
Morris
Wolfson (57)
|
|
|
27,015
|
|
|
9,005
|
|
|
18,010
|
|
|
*
|
|
_____
* less
than one percent
|
(1)
Unless otherwise noted, this table is based on information supplied
to us
by the selling stockholders and certain records of the
company.
|
|
(2)
We do not know when or in what amounts a selling stockholder
may offer
shares for sale. The selling stockholders might not sell any
or all of the
shares offered by this prospectus. Because the selling stockholders
may
offer all or some of the shares pursuant to this offering and
because
there are currently no agreements, arrangements or understandings
with
respect to the sale of any of the shares, we cannot estimate
the number of
the shares that will be held by the selling stockholders after
completion
of the offering. However, for purposes of this table, we have
assumed
that, after completion of the offering, none of the shares covered
by this
prospectus will be held by the selling stockholders.
|
|
(3)
The shares of common stock being offered in this offering are
40,000
shares of common stock held directly. Arthur J. Levy MD and Susan
Levy
have shared voting and investment control over such shares. The
business
address for the selling stockholder is 29256 N. 108th
Place, Scottsdale, AZ 85262.
|
|
(4)
The shares of common stock being offered in this offering are
1,688,150
shares of common stock issuable upon the exercise of warrants.
The shares
beneficially owned before this offering include an additional
3,277,297
shares of common stock held directly. Orin Hirschman has voting
and
investment control over such shares. The business address for
the selling
stockholder is 6006 Berkeley Avenue, Baltimore, MD
21209-4014.
|
|
(5)
The shares of common stock being offered in this offering are
comprised of
20,000 shares of common stock held directly and 39,370 shares
of common
stock issuable upon the exercise of warrants.
|
|
(6)
The shares of common stock being offered in this offering are
comprised of
107,582 shares of common stock held directly and 215,164 shares
of common
stock issuable upon the exercise of warrants. The shares beneficially
owned before this offering include an additional 50,000 shares
of common stock held directly. Avi Schron has voting and investment
control over such shares. The business address for the selling
stockholder
is 45 Broadway, 25th
Floor, New York, NY 10006.
|
|
(7)
The shares of common stock being offered in this offering are
20,000
shares of common stock held directly.
|
|
(8)
The shares of common stock being offered in this offering are
comprised of
20,000 shares of common stock held directly and 19,685 shares
of common
stock issuable upon the exercise of warrants.
|
|
(9)
The shares of common stock being offered in this offering are
331,818
shares of common stock issuable upon the exercise of warrants.
The shares
beneficially owned before this offering include an aggregate
654,092
shares of common stock held directly and 333,047 shares of common
stock
issuable upon the exercise of warrants.
|
|
(10)
The shares of common stock being offered in this offering are
comprised of
252,913 shares of common stock held directly and 92,913 shares
of common
stock issuable upon the exercise of warrants.
|
|
(11)
The shares of common stock being offered in this offering are
10,000
shares of common stock held directly. Carleton Block has voting
and
investment control over such shares. The business address for
the selling
stockholder is 19401 Hiawatha Street, Northridge, CA
91326.
|
|
(12)
The shares of common stock being offered in this offering are
comprised of
17,890 shares of common stock held directly and 35,780 shares
of common
stock issuable upon the exercise of warrants.
|
|
(13)
The shares of common stock being offered in this offering are
728 shares
of common stock issuable upon the exercise of warrants. The
shares
beneficially owned before this offering include an additional 1,455
shares of common stock held directly.
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(14)
The shares of common stock being offered in this offering are
comprised
of 107,582 of common stock held directly and 215,164 shares of common
stock issuable upon the exercise of warrants. The shares beneficially
owned before this offering include an additional 50,000 shares
of common
stock held directly. Avi Schron has voting and investment control
over
such shares. The business address for the selling stockholder
is 45
Broadway, 25th Floor, New York, NY
10006.
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(15)
The shares of common stock being offered in this offering are
16,838
shares of common stock issuable upon the exercise of warrants.
The shares
beneficially owned before this offering include an additional
17,160 shares of common stock issuable upon the exercise of warrants.
Mr. Cardinale received the shares being registered hereby as
compensation
paid to Empire Asset Management Company by the Company. Empire
Asset
Management Company has acted as a professional advisor to the
Company. See
“Relationship of Selling Stockholders to the Company”
below.
|
|
(16)
The shares of common stock being offered in this offering are
20,000
shares of common stock held directly.
|
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(17)
The shares of common stock being offered in this offering are
80,000
shares of common stock held directly.
|
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(18)
The shares of common stock being offered in this offering are
comprised
of 2,500 shares of common stock held directly and 27,016 shares
of common stock issuable upon the exercise of warrants. The shares
beneficially owned before this offering include an aggregate
69,032 shares of common stock held directly, 10,714 shares of common
stock issuable upon the conversion of notes and 44,429 shares of
common stock issuable upon the exercise of warrants. Eli Levitin
has
voting and investment control over such shares. The business
address for
the selling stockholder is One State Street Plaza, 29th
Floor, New York, NY 10004.
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(19)
The shares of common stock being offered in this offering are
comprised of
7,108 shares of common stock held directly and 14,216 shares
of common
stock issuable upon the exercise of warrants. Tallie Taylor has
voting and
investment control over such shares. The business address for
the selling
stockholder is 114 Ames Avenue, Leonia, NJ 07605.
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|
(20)
The shares of common stock being offered in this offering are
comprised of
12,000 shares of common stock held directly and 475,871 shares
of common
stock issuable upon the exercise of warrants. Christian Coluccio
has
voting and investment control over such shares. The business
address of
the selling stockholder is 2 Rector Street, 15th
Floor, New York, NY 10271. Empire Asset Management Company has
acted as a
professional advisor to the Company. See “Relationship of Selling
Stockholders to the Company” below.
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(21)
The shares of common stock being offered in this offering are
comprised of
18,050 shares of common stock held directly and 44,100 shares
of common
stock issuable upon the exercise of warrants. The shares beneficially
owned before this offering include an additional 5,000 shares
of common
stock issuable upon the exercise of warrants. Alan Schechter
has voting
and investment power over such shares. The business address for
the
selling stockholder is 111 Broadway, 20th
Floor, New York, NY 10006.
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(22)
The shares of common stock being offered in this offering are
comprised of
19,685 shares of common stock held directly and 19,685 shares
of common
stock issuable upon the exercise of warrants.
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(23)
The shares of common stock being offered in this offering are
40,000
shares of common stock held directly. Gilbert M. Flores, Trustee,
has
voting and investment control over such shares. The business
address for
the selling stockholder is 15055 Henry Road, Houston, TX
77060.
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(24)
The shares of common stock being offered in this offering are
comprised of
59,055 shares of common stock held directly and 59,055 shares
of common
stock issuable upon the exercise of warrants. Roberto Masolo has
voting and investment control over such shares. The business
address for
the selling stockholder is 200 Lexington Avenue, New York, NY
10016.
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(25)
The shares of common stock being offered in this offering are
comprised of
39,685 shares of common stock held directly and 19,685 shares
of common
stock issuable upon the exercise of warrants.
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(26)
The shares of common stock being offered in this offering are
22,965
shares of common stock issuable upon the exercise of warrants.
The shares
beneficially owned before this offering include an additional
41,992
shares of common stock held directly and 88,297 shares of common
stock
issuable upon the exercise of options. Mr. Hagman is the former
President
and Chief Executive Officer of the Company. See “Relationship of Selling
Stockholders to the Company” below.
|
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(27)
The shares of common stock being offered in this offering are
10,000
shares of common stock held directly.
|
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(28)
The shares of common stock being offered in this offering are
10,000
shares of common stock held directly.
|
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(29)
The shares of common stock being offered in this offering are
comprised of
59,370 shares of common stock held directly and 39,370 shares
of common
stock issuable upon the exercise of warrants.
|
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(30)
The shares of common stock being offered in this offering are
25,000
shares of common stock held directly. The shares beneficially
owned before
this offering include an additional 425,828 shares of common
stock
issuable upon the exercise of warrants. Joshua Silverman has
voting and
investment control over the shares held by Iroquois Master Fund
Ltd. Mr.
Silverman disclaims beneficial ownership of these shares. The
business
address for the selling stockholder is 641 Lexington Ave., 26th
Floor, New York, NY 10022.
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(31)
The shares of common stock being offered in this offering are
20,000
shares of common stock held directly.
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(32)
The shares of common stock being offered in this offering are
5,944 shares
of common stock issuable upon the exercise of warrants. The shares
beneficially owned before this offering include an aggregate
1,806 shares
of common stock held directly and 6,087 shares of common stock
issuable
upon the exercise of warrants. Mr. Kardon is an attorney at Hahn
&
Hessen LLP and has acted as a professional advisor to the Company.
See
“Relationship of Selling Stockholders to the Company”
below.
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(33)
The shares of common stock being offered in this offering are
108,064
shares of common stock issuable upon the exercise of warrants.
The shares
beneficially owned before this offering include an additional
216,128
shares of common stock held directly.
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(34)
The shares of common stock being offered in this offering are
14,216
shares of common stock issuable upon the exercise of warrants.
The shares
beneficially owned before this offering include an additional 28,431
shares of common stock held directly.
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(35)
The shares of common stock being offered in this offering are
20,000
shares of common stock held directly.
|
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(36)
The shares of common stock being offered in this offering are 10,000
shares of common stock held directly. Vincent S. Lanovara has
voting and
investment control over such shares. The business address for
the selling
stockholder is 524 E. Mariners Circle, Fresno CA 93730.
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(37)
The shares of common stock being offered in this offering are
comprised of
144,086 shares of common stock held directly and 312,172 shares
of common
stock issuable upon the exercise of warrants. The shares beneficially
owned before this offering include an additional 87,000 shares
of common
stock held directly. Reuven Dessler has voting and investment
control over
such shares. The business address of the selling stockholder
is 3666
Shannon Road, Cleveland Heights, OH 44118.
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(38)
The shares of common stock being offered in this offering are
20,000
shares of common stock held directly.
|
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(39)
The shares of common stock being offered in this offering are
728 shares
of common stock issuable upon the exercise of warrants. The shares
beneficially owned before the offering include an aggregate 1,455
shares
of common stock held directly, 7,064 shares of common stock issuable
upon
the exercise of options and 728 shares of common stock issuable
upon the
exercise of warrants. Mr. Litborn is an employee of the Company.
See
“Relationship of Selling Stockholders to the Company”
below.
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(40)
The shares of common stock being offered in this offering are
35,162
shares of common stock held directly. The shares beneficially owned
before the offering include 201,829 shares held directly, 214,286
shares
of common stock issuable upon conversion of notes and 232,167
shares of
common stock issuable upon the exercise of warrants. Peter T.
Benz has
sole voting and investment control over such shares. The business
address
for the selling stockholder is 600 Montgomery Street, 44th Floor,
San
Francisco, CA 94111.
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(41)
The shares of common stock being offered in this offering are
comprised of
62,992 shares of common stock held directly and 62,992 shares
of common
stock issuable upon the exercise of warrants. The shares beneficially
owned before this offering include an additional 20,700 shares
of common stock held directly.
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(42)
The shares of common stock being offered in this offering are
1,261 shares
of common stock issuable upon the exercise of warrants. The shares
beneficially owned before this offering include an additional
21,593
shares of common stock held directly.
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(43)
The shares of common stock being offered in this offering are
comprised of
10,000 shares of common stock held directly and 29,636 shares
of common
stock issuable upon the exercise of warrants. The shares beneficially
owned before the offering include an additional 9,059 shares
of common
stock held directly. Mr. Panichi received a portion of the
shares being registered hereby as compensation paid to Empire
Asset
Management Company by the Company. Empire Asset Management Company
has
acted as a professional advisor to the Company. See “Relationship of
Selling Stockholders to the Company” below.
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(44)
The shares of common stock being offered in this offering are
50,000
shares of common stock held directly. Randall James has voting
and
investment control over such shares. The business address for
the selling
stockholder is 1800 N. Santa Fe, Guthrie, OK 73044.
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(45)
The shares of common stock being offered in this offering are
comprised of
3,554 shares of common stock held directly and 7,108 shares of
common
stock issuable upon the exercise of warrants.
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(46)
The shares of common stock being offered in this offering are
40,000
shares of common stock held directly. Richard A. Hohman and Robert
Hohman
have shared voting and investment control over such shares The
business
address for the selling stockholder is 951 Pacific Avenue, Long
Beach, CA
90813.
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(47)
The shares of common stock being offered in this offering are
16,667
shares of common stock held directly. The shares beneficially
owned before
this offering include an additional 71,429 shares of common
stock issuable upon conversion of notes and 116,084 shares of
common stock
issuable upon the exercise of warrants. The business address
for the
selling stockholder is 150 East 58th
Street, New York, NY 10155. Rockmore Capital, LLC (“Rockmore Capital”) and
Rockmore Partners, LLC (“Rockmore Partners”), each a limited liability
Company formed under the laws of the State of Delaware, serve
as the
investment manager and general partner, respectively, to Rockmore
Investments (US) LP, a Delaware limited partnership, which invests
all of
its assets through Rockmore Investment Master Fund Ltd., an exempted
company formed under the laws of Bermuda (“Rockmore Master Fund”). By
reason of such relationships, Rockmore Capital and Rockmore Partners
may
be deemed to share dispositive power over the shares of our common
stock
owned by Rockmore Master Fund. Rockmore Capital and Rockmore
Partners
disclaim beneficial ownership of such shares of our common stock.
Rockmore
Partners has delegated authority to Rockmore Capital regarding
the
portfolio management decisions with respect to the shares of
common stock
owned by Rockmore Master Funs and, as of July 8, 2008, Mr. Bruce
T.
Bernstein and Mr. Brian Daly, as officers of Rockmore Capital,
are
responsible for the portfolio management decisions of the shares
of common
stock owned by Rockmore Master Fund. By reason of such authority,
Messrs.
Bernstein and Daly may be deemed to share dispositive power over
the
shares of our common stock owned by Rockmore Master Fund. Messrs.
Bernstein and Daly disclaim any beneficial ownership of such
shares of our
common stock and neither of such persons has any legal right
to maintain
such authority. No other person has sole or shared voting or
dispositive
power with respect to the shares of our common stock as those
terms are
used for purposes under Regulation 13D-G of the Securities Exchange
Act of
1934, as amended. No person or “group” (as that term is used in Section
13(d) of the Securities Exchange Act of 1934, as amended, or
the SEC’s
Regulation 13D-G) controls Rockmore Master
Fund.
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(48)
The shares of common stock being offered in this offering are
comprised of
29,685 shares of common stock held directly and 19,685 shares
of common
stock issuable upon the exercise of warrants.
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(49)
The shares of common stock being offered in this offering are
comprised of
20,000 shares of common stock held directly and 20,000 shares of
common stock issuable upon the exercise of warrants.
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(50)
The shares of common stock being offered in this offering are
comprised of
39,716 shares of common stock held directly and 87,432 shares
issuable
upon the exercise of warrants. The shares beneficially owned
before this
offering include an additional 24,460 shares of common stock
held directly.
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(51)
The shares of common stock being offered in this offering are
comprised of
29,685 shares of common stock held directly and 19,685 shares
of common
stock issuable upon the exercise of warrants. Mark Sterland has
voting and investment control over such shares. The business
address for
the selling stockholder is 105 W. Jackson Avenue Suite 2, Napersville,
IL
60540.
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(52)
The shares of common stock being offered in this offering are
60,000
shares of common stock held directly. Gilbert M. Flores has voting
and
investment control as President of Transpro Property and Casualty
Insurance Corporation over such shares. Gilbert M. Flores disclaims
any
beneficial ownership of such shares of common stock. The business
address
for the selling stockholder is 15055 Henry Road, Houston TX
77060.
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(53)
The shares of common stock being offered in this offering are
comprised of
25,000 shares of common stock held directly and 348,250 shares
of common
stock issuable upon the exercise of warrants. The shares beneficially
owned before this offering include an aggregate 1,047,149 shares of
common stock held directly, 107,143 shares of common stock issuable
upon
conversion of notes and 696,500 shares of common stock issuable
upon the
exercise of warrants. Brian Mazzella, as CFO, and Arthur Jones
and Trevor
Williams, as Directors, have voting and investment control over
such
shares. The business address for the selling stockholder is 560
Sylvan
Avenue, 3rd
Floor, Englewood Cliffs, NJ 07632.
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(54)
The shares of common stock being offered in this offering are 20,833
shares of common stock held directly and 286,241 shares of common
stock
issuable upon the exercise of warrants. The shares beneficially
owned
before this offering include an aggregate 697,479 shares of common
stock
held directly, 89,285 shares of common stock issuable upon conversion
of
notes and 431,343 shares of common stock issuable upon the exercise
of warrants. Aaron Wolfson is Managing General Partner of Wolfson
Equities
and has sole voting and dispositive power over the shares held
by Wolfson
Equities. Mr. Wolfson disclaims beneficial ownership over these
shares
except to the extent of his pecuniary interest therein. The business
address for the selling stockholder is 209 Second Street, PMB
#57,
Lakewood, NJ 08701.
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(55)
The shares of common stock being offered in this offering are
comprised
of 6,667 shares of common stock held directly and 27,016 shares
of common stock issuable upon the exercise of warrants. The shares
beneficially owned before this offering include an aggregate
94,033 shares of common stock held directly, 28,571 shares of
common stock issuable upon conversion of notes, 73,480 shares of
common stock issuable upon the exercise of warrants, and 697,479
shares of common stock beneficially owned by Wolfson Equities.
Aaron
Wolfson is Managing General Partner of Wolfson Equities and has
sole
voting and dispositive power over the shares of common stock
beneficially owned by Wolfson Equities. Mr. Wolfson disclaims
beneficial
ownership over these shares except to the extent of his pecuniary
interest
therein.
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(56)
The shares of common stock being offered in this offering are
comprised
of 9,005 shares of common stock issuable upon the exercise of
warrants. The shares beneficially owned before this offering
include an additional 18,010 shares of common stock held
directly.
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(57)
The shares of common stock being offered in this offering are
9,005 shares
of common stock issuable upon the exercise of warrants. The shares
beneficially owned before this offering include an additional
18,010
shares of common stock held
directly.
|
Selling
stockholders who are affiliates of registered broker-dealers may be deemed
to be
“underwriters” within the meaning of the Securities Act if such selling
stockholders (a) did not acquire its Common Stock in the ordinary course of
business or (b) had any agreement or understanding, directly or indirectly,
with any person to distribute the Common Stock.
RELATIONSHIP
OF SELLING STOCKHOLDERS TO THE COMPANY
Empire
Asset Management Company previously acted as a financial advisor to
our company and acted in such capacity in both the March Financing and May
Financing. Richard Cardinale and Valdimiro Panichi are, to the knowledge
of the
Company, employees of Empire Asset Management Company, and a portion of the
shares being registered hereunder by Mr. Panichi and all of the shares being
registered hereunder by Mr. Cardinale were issued as compensation to Empire
Asset Management Company in connection with the May Financing. James
Kardon is an attorney at Hahn & Hessen, LLP, which firm has provided
professional services to us, and is opining on the shares issued in the May
Financing. See “Legal Matters.” Mikael Hagman is our former President and Chief
Executive Officer and Jonas Litborn is an employee of the Company.
None of the other selling stockholders listed above has held any position
or office, or has had any material relationship, with us or any of our
affiliates within the past three years.
PLAN
OF DISTRIBUTION
We
are
registering the sale of shares of our common stock on behalf of the selling
stockholders. A selling stockholder is a person named in the section entitled
“Selling Stockholders” and also includes any donee, pledgee, transferee or other
successor-in-interest selling shares received after the date of this prospectus
from a selling stockholder as a gift or other non-sale related
transfer.
We
do not
know of any plan of distribution for the resale of our common stock by the
selling stockholders. We will not receive any of the proceeds from the sale
by
the selling stockholders of any of the resale shares,
although we may receive proceeds from the exercise of warrants for shares
of our
common stock. See “Use of Proceeds.”
Each
selling stockholder of the common stock may, from time to time, sell any or
all
of their shares of common stock on the NASDAQ Capital Market or any other stock
exchange, market or trading facility on which the shares are traded or in
private transactions. These sales may be at fixed or negotiated prices. A
selling stockholder may use any one or more of the following methods when
selling shares:
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ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
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·
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block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
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·
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purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
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an
exchange distribution in accordance with the rules of the applicable
exchange;
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privately
negotiated transactions;
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settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a part;
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broker-dealers
may agree with the selling stockholders to sell a specified number
of such
shares at a stipulated price per
share;
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through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or
otherwise;
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a
combination of any such methods of sale;
or
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any
other method permitted pursuant to applicable
law.
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The
selling stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, as amended (the “Securities Act”), if available, rather than under
this prospectus.
Broker-dealers
engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, but,
except as set forth in a supplement to this prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in compliance
with
FINRA Rule 2440; and in the case of a principal transaction a markup or markdown
in compliance with FINRA IM-2440.
In
connection with the sale of the common stock or interests therein, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
stock in the course of hedging the positions they assume. The selling
stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
The
selling stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each selling stockholder has informed our
company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In
no
event shall any broker-dealer receive fees, commissions and markups which,
in
the aggregate, would exceed eight percent (8%).
We
are
required to pay certain fees and expenses incurred by our company incident
to
the registration of the shares. We have agreed to indemnify the selling
stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
Because
selling stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder. In addition, any securities
covered by this prospectus that qualify for sale pursuant to Rule 144 under
the
Securities Act may be sold under Rule 144 rather than under this prospectus.
There is no underwriter or coordinating broker acting in connection with the
proposed sale of the resale shares by the selling stockholders.
We
agreed
to keep this prospectus effective until the earlier of (i) the date on which
the
shares may be resold by the selling stockholders without registration and
without regard to any volume or manner-of-sale limitations by reason of Rule
144, without the requirement for us to be in compliance with the current public
information under Rule 144 under the Securities Act or any other rule of similar
effect or (ii) all of the shares have been sold pursuant to this prospectus
or
Rule 144 under the Securities Act or any other rule of similar effect. The
resale shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states, the resale shares may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is complied
with.
Under
applicable rules and regulations under the Exchange Act, any person engaged
in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the selling stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases
and
sales of shares of the common stock by the selling stockholders or any other
person. We will make copies of this prospectus available to the selling
stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale (including
by
compliance with Rule 172 under the Securities Act).
LEGAL
MATTERS
The
validity of our common stock offered hereby that is issuable pursuant to
warrants issued in the Merger and that was issued in the March Financing
will be
passed upon for us by Reed Smith LLP, San Francisco, California. The validity
of
our common stock offered hereby that was issued in the May Financing (or
issuable pursuant to warrants issued in the May Financing) will be passed
upon
for us by Hahn & Hessen LLP, New York, New York.
EXPERTS
The
consolidated financial statements and financial statement schedule of Neonode
Inc. as of December 31, 2007 and 2006 have been incorporated by reference
herein
in reliance upon the report (the
report on the consolidated financial statements contains an explanatory
paragraph regarding the Company’s ability to continue as a going concern)
of BDO Feinstein International AB, independent registered public
accounting firm, given upon the authority of that firm as experts in accounting
and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
electronically file annual, quarterly and special reports, proxy and information
statements and other information with the SEC. The public may read and copy
any
materials we file with the SEC at the SEC’s Public Reference Room at 100 F
Street, N.E., Washington, D.C. 20549. The public may obtain information on
the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The
SEC also maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC. The address of that site is http://www.sec.gov. Our website
address is www.neonode.com. Information contained in, or accessible through,
our
website is not a part of this prospectus.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC
allows us to “incorporate by reference” the information we file with them, which
means that we can disclose important information to you by referring you to
those documents. The information incorporated by reference is considered to
be
part of this prospectus, and information that we file later with the SEC will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any filings that we will make with the SEC (other
than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and
exhibits filed on such form that are related to such items) under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the initial
filing date of the registration statement of which this prospectus forms a
part
and prior to the termination of this offering:
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Our
Annual Report on Form 10-K for the year ended December 31, 2007 filed
with the SEC on April 15,
2008;
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Our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2008
filed with the SEC on May 20, 2008;
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Our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2008
filed
with the SEC on August 14, 2008;
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Our
Current Reports on Form 8-K filed with the SEC on April 17, 2008;
May 27,
2008; May 28, 2008; June 2, 2008; June 9, 2008; July 2, 2008; July
15,
2008; July 28, 2008; and August 12,
2008;
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The
information specifically incorporated by reference into our annual
report
on Form 10-K for the fiscal year ended December 31, 2007 from our
definitive proxy statement on Schedule 14A, filed with the SEC on
April
29, 2008; and
|
|
·
|
The
description of our common stock included in our registration statement
on
Form 8-A.
|
We
will
furnish without charge to you, upon written or oral request, a copy of any
or
all of the documents incorporated by reference, including exhibits to these
documents. You should direct any requests for documents to:
Corporate
Secretary
Neonode
Inc.
4000
Executive Parkway, Suite 200
San
Ramon, CA 94853
(925)
355-7700
You
should rely only on the information contained or incorporated by reference
in
this prospectus. We have not authorized anyone to provide you with different
information. If anyone provides you with different or inconsistent information,
you should not rely on it. The selling stockholders will not make an offer
to
sell these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in this prospectus,
as well as information we previously filed with the SEC and incorporated by
reference in this prospectus, is accurate only as of the date on the front
cover
of this prospectus. Our business, financial condition, results of operations
and
prospects may have changed since that date.
PART
II
INFORMATION
NOT REQUIRED IN THE PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution
The
following table lists the costs and expenses payable by the registrant in
connection with the sale of the common stock covered by this prospectus other
than any sales commissions or discounts, which expenses will be paid by the
selling stockholders. All amounts shown are estimates except for the SEC
registration fee.
SEC
registration fee
|
|
$
|
186
|
|
Legal
fees and expenses
|
|
$
|
30,000
|
|
Accounting
fees and expenses
|
|
$
|
10,000
|
|
Miscellaneous
fees and expenses
|
|
$
|
10,000
|
|
Total
|
|
$
|
50,186
|
|
Item
15. Indemnification of Directors and Officers
The
registrant is incorporated under the laws of the State of Delaware. Section
145
of the Delaware General Corporation Law (“DGCL”) provides that a Delaware
corporation may indemnify any persons who are, or are threatened to be made,
parties to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of such corporation), by reason of the fact that such person
was an officer, director, employee or agent of such corporation, or is or was
serving at the request of such person as an officer, director, employee or
agent
of another corporation or enterprise. The indemnity may include expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided that such person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the
corporation’s best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his or her conduct was
illegal. A Delaware corporation may indemnify any persons who are, or are
threatened to be made, a party to any threatened, pending or completed action
or
suit by or in the right of the corporation by reason of the fact that such
person was a director, officer, employee or agent of such corporation, or is
or
was serving at the request of such corporation as a director, officer, employee
or agent of another corporation or enterprise. The indemnity may include
expenses (including attorneys’ fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit
provided such person acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the corporation’s best interests except that
no indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him or her against the
expenses which such officer or director has actually and reasonably incurred.
The registrant’s certificate of incorporation and bylaws provide for the
indemnification of directors and officers of the Registrant to the fullest
extent permitted under the DGCL.
Section
102(b)(7) of the DGCL permits a corporation to provide in its certificate of
incorporation that a director of the corporation shall not be personally liable
to the corporation or its stockholders for monetary damages for breach of
fiduciary duties as a director, except for liability:
|
·
|
for
any transaction from which the director derives an improper personal
benefit;
|
|
·
|
for
acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law;
|
|
·
|
for
improper payment of dividends or redemptions of shares;
or
|
|
·
|
for
any breach of a director’s duty of loyalty to the corporation or its
stockholders.
|
As
permitted by Section 145 of the DGCL, our Bylaws provide that (i) we are
required to indemnify our directors and executive officers to the fullest extent
permitted by the DGCL, (ii) we may, in our discretion, indemnify other officers,
employees and agents as set forth in the DGCL, (iii) to the fullest extent
permitted by the DGCL, we are required to advance all expenses incurred by
our
directors and executive officers in connection with a legal proceeding (subject
to certain exceptions), (iv) the rights conferred in our Bylaws are not
exclusive, (v) we are authorized to enter into indemnification agreements with
our directors, officers, employees and agents and (vi) we may not retroactively
amend the Bylaws provisions relating to indemnity.
We
have
entered into agreements with our directors and officers that require us to
indemnify such persons against expenses, judgments, fines, settlements and
other
amounts that such person becomes legally obligated to pay (including expenses
of
a derivative action) in connection with any proceeding, whether actual or
threatened, to which any such person may be made a party by reason of the fact
that such person is or was our director or officer or any of our affiliated
enterprises. Our obligation to indemnify our officers and directors is subject
to certain limitations set forth in the indemnification agreements. The
indemnification agreements also set forth certain procedures that will apply
in
the event of a claim for indemnification thereunder.
At
present, there is no pending litigation or proceeding involving any of the
registrant’s directors, officers or key employees as to which indemnification is
being sought nor is the registrant aware of any threatened litigation that
may
result in claims for indemnification by any of its officers or
directors.
The
selling stockholders have entered into an agreement with us whereby they jointly
and severally agree, to the extent permitted by law, to indemnify and hold
harmless the registrant, each officer of the registrant who signs this
registration statement and each director of the registrant, against all losses,
claims, damages or liabilities, joint or several, to which the registrant or
such officer or director may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in this registration statement,
any preliminary prospectus or final prospectus contained therein, or any
amendment or exhibit thereof, or arise out of or are based upon the omission
or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
in
which they were made, not misleading in each case, and will reimburse the
registrant and each such officer and director for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action, provided, however, that the
selling stockholders will be liable hereunder in any such case if and only
to
the extent that any such loss, claim, damage or liability arises out of or
is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with information
pertaining to such selling stockholders, as such, furnished in writing to the
registrant by or on behalf of a selling stockholder specifically for use in
such
registration statement or prospectus, and provided, further, however, that
the
liability of the selling stockholders hereunder shall be limited to the gross
proceeds (net of the amount of any damages the selling stockholders have
otherwise been required to pay by reason of such untrue statement or omission
or
alleged untrue statement or omission) received by the selling stockholders
from
the sale of the common stock covered by this registration statement. The
agreement also sets forth certain procedures that will apply in the event of
a
claim for indemnification thereunder.
The
registrant has an insurance policy covering its officers and directors with
respect to certain liabilities, including liabilities arising under the
Securities Act or otherwise.
The
above
discussion of the DGCL and our Certificate of Incorporation and Bylaws is not
intended to be exhaustive and is qualified in its entirety by such statutes,
Certificate of Incorporation and Bylaws.
Item
16. Exhibits
Number
|
|
Exhibit
|
5.1
|
|
Opinion
of Reed Smith LLP
|
5.2
|
|
Opinion
of Hahn & Hessen LLP
|
23.1
|
|
Consent
of Independent Registered Public Accounting Firm
|
23.2
|
|
Consent
of Reed Smith LLP (included in the opinion filed as Exhibit
5.1)
|
23.3
|
|
Consent
of Hahn & Hessen LLP (included in the opinion filed as Exhibit
5.2)
|
24.1
|
|
Power
of Attorney*
|
*
Previously filed
Item
17. Undertakings
(a) The
undersigned registrant hereby undertakes:
|
(1)
|
To
file, during any period in which offers or sales are being made,
a
post-effective amendment to this registration
statement:
|
|
(i)
|
To
include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933, as amended (the “Securities
Act”);
|
|
(ii)
|
To
reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent
a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease
in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation
from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Securities and
Exchange
Commission pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the “Calculation of Registration
Fee” table in the effective registration
statement.
|
|
(iii)
|
To
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration
statement.
|
Provided,
however,
that
paragraphs (a)(1)(i), (ii) and (iii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement, or is contained in
a
form of prospectus filed pursuant to Rule 424(b) that is part of the
registration statement.
|
(2)
|
That,
for the purpose of determining any liability under the Securities
Act,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein,
and the
offering of such securities at that time shall be deemed to be the
initial
bona
fide
offering thereof.
|
|
(3)
|
To
remove from registration by means of a post-effective amendment any
of the
securities being registered which remain unsold at the termination
of the
offering.
|
|
(4)
|
That,
for the purpose of determining liability under the Securities Act
of 1933
to any purchaser:
|
|
(i)
|
Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall
be
deemed to be part of the registration statement as of the date the
filed
prospectus was deemed part of and included in the registration statement;
and
|
|
(ii)
|
Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5),
or
(b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii),
or (x)
for the purpose of providing the information required by section
10(a) of
the Securities Act of 1933 shall be deemed to be part of and included
in
the registration statement as of the earlier of the date such form
of
prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of the
issuer
and any person that is at that date an underwriter, such date shall
be
deemed to be a new effective date of the registration statement relating
to the securities in the registration statement to which that prospectus
relates, and the offering of such securities at that time shall be
deemed
to be the initial bona fide offering thereof. Provided, however,
that no
statement made in a registration statement or prospectus that is
part of
the registration statement or made in a document incorporated or
deemed
incorporated by reference into the registration statement or prospectus
that is a part of the registration statement will, as to a purchaser
with
a time of contract sale prior to such effective date, supersede or
modify
any statement that was made in the registration statement or prospectus
that was a part of the registration statement or made in any such
document
immediately prior to such effective
date.
|
(b) The
undersigned registrant hereby undertakes that, for purposes of determining
any
liability under the Securities Act, each filing of the registrant’s annual
report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934, as amended (and, where applicable, each filing of an
employee benefit plan’s annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934, as amended) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide
offering
thereof.
(c) Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of
such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, the registrant
certifies that it has reasonable grounds to believe that it meets all of
the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Ramon, State of California, on the 26th day
of August, 2008.
|
NEONODE
INC.
|
|
|
|
By:
|
/s/David
W. Brunton
|
|
|
David
W. Brunton
|
|
|
Chief
Financial Officer, Vice President, Finance
and
Secretary
|
Pursuant
to the requirements of the Securities Act of 1933, as amended, this registration
statement has been signed by the following persons in the capacities and on
the
dates indicated.
|
|
Title(s)
|
|
Date
|
|
|
|
|
|
*
|
|
Interim
Chief Executive Officer, Chairman
|
|
August
26, 2008
|
Per
Bystedt
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
/s/ David
W. Brunton
|
|
Chief
Financial Officer, Vice President, Finance
|
|
|
David
W. Brunton
|
|
and Secretary |
|
|
|
|
(Principal
Financial and Accounting Officer)
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
|
Susan
Major
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
|
Kenneth
Olson
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
John
Reardon
|
|
|
|
|
|
|
|
|
*By:
/s/ David W. Brunton |
|
|
|
David
W. Brunton |
|
|
|
(as
Attorney-in-Fact) |
|
|
|
EXHIBIT
INDEX
Number
|
|
Exhibit
|
5.1
|
|
Opinion
of Reed Smith LLP
|
5.2
|
|
Opinion
of Hahn & Hessen LLP
|
23.1
|
|
Consent
of Independent Registered Public Accounting Firm
|
23.2
|
|
Consent
of Reed Smith LLP (included in the opinion filed as Exhibit
5.1)
|
23.3
|
|
Consent
of Hahn & Hessen LLP (included in the opinion filed as Exhibit
5.2)
|
24.1
|
|
Power
of Attorney*
|
*
Previously filed