0001213900-16-013109.txt : 20160510 0001213900-16-013109.hdr.sgml : 20160510 20160510094207 ACCESSION NUMBER: 0001213900-16-013109 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 54 CONFORMED PERIOD OF REPORT: 20160331 FILED AS OF DATE: 20160510 DATE AS OF CHANGE: 20160510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Neonode, Inc CENTRAL INDEX KEY: 0000087050 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 941517641 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-35526 FILM NUMBER: 161633977 BUSINESS ADDRESS: STREET 1: STORGATAN 23C, 114 55 CITY: STOCKHOLM STATE: V7 ZIP: 00000 BUSINESS PHONE: 46 0 8 667 17 17 MAIL ADDRESS: STREET 1: STORGATAN 23C, 114 55 CITY: STOCKHOLM STATE: V7 ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: SBE INC DATE OF NAME CHANGE: 19920703 10-Q 1 f10q0316_neonodeinc.htm QUARTERLY REPORT

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2016

☐ Transition report pursuant to section 13 or 15(d) of the Securities and Exchange Act of 1934

For the transition period from _______ to ________

Commission file number 1-35526

	NEONODE INC.
	(Exact name of registrant as specified in its charter)

Delaware		94-1517641
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

Storgatan 23C, 114 55 Stockholm, Sweden

(Address of principal executive offices and zip code)

	+46 (0) 8 667 17 17
	(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

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”, “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Smaller reporting company	☐	Non-accelerated filer	☐
(do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ☒

The number of shares of the registrant’s common stock outstanding as of May 5, 2016 was 43,817,151.

NEONODE INC.

Form 10-Q

For the Fiscal Quarter Ended March 31, 2016

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION		1

	Item 1	Financial Statements	1

		Condensed Consolidated Balance Sheets as of March 31, 2016 (Unaudited) and December 31, 2015 (Audited)	1

		Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015	2

		Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2016 and 2015	3

		Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015	4

		Notes to Unaudited Condensed Consolidated Financial Statements	5

	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

	Item 3	Quantitative and Qualitative Disclosures about Market Risk	25

	Item 4	Controls and Procedures	25

PART II	OTHER INFORMATION

	Item 1	Legal Proceedings	26

	Item 1A	Risk Factors	26

	Item 6	Exhibits	26

SIGNATURES			27

EXHIBITS

PART I. Financial Information

Item 1. Financial Statements

NEONODE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	March 31,			December 31,
	2016			2015
ASSETS	(Unaudited)			(Audited)
Current assets:
Cash	$	2,940		$	3,082
Accounts receivable, net		648			1,346
Projects in process		122			158
Prepaid expenses and other current assets		1,106			747
Total current assets		4,816			5,333

Property and equipment, net		673			594
Total assets	$	5,489		$	5,927

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,232		$	965
Accrued payroll and employee benefits		1,102			932
Accrued expenses		369			382
Deferred revenues		1,936			1,475
Current portion of capital lease obligation		59			57
Total current liabilities		4,698			3,811

Capital lease obligation, net of current portion		278			283
Total liabilities	$	4,976		$	4,094

Commitments and contingencies

Stockholders’ equity:
Series B Preferred stock, 54,425 shares authorized with par value $0.001 per share; 83 shares issued and outstanding at March 31, 2016 and December 31, 2015. (In the event of dissolution, each share of Series B Preferred stock has a liquidation preference equal to par value of $0.001 per share over the shares of common stock)		--			--
Common stock, 70,000,000 shares authorized with par value $0.001 per share; 43,817,151 and 43,805,586 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively		44			44
Additional paid-in capital		175,618			175,504
Accumulated other comprehensive income		11			46
Accumulated deficit		(175,116	)		(173,749	)
Total Neonode Inc. stockholders’ equity		557			1,845
Noncontrolling interests		(44	)		(12	)
Total stockholders' equity		513			1,833
Total liabilities and stockholders’ equity	$	5,489		$	5,927

The accompanying notes are an integral part of these condensed consolidated financial statements.

NEONODE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three months ended March 31,
	2016			2015

Net revenues	$	3,132		$	2,263
Cost of revenues		595			338
Gross margin		2,537			1,925

Operating expenses:
Research and development		1,949			1,579
Sales and marketing		816			850
General and administrative		1,060			1,562

Total operating expenses		3,825			3,991
Operating loss		(1,288	)		(2,066	)

Other expense:
Interest expense		3			4
Other expense, net		41			-
Total other expense		44			4

Loss before provision for income taxes		(1,332	)		(2,070	)

Provision for income taxes		67			2
Net loss including noncontrolling interests		(1,399	)		(2,072	)
Less: Net loss attributable to noncontrolling interests		32			-
Net loss attributable to Neonode Inc.	$	(1,367	)	$	(2,072	)

Loss per common share:
Basic and diluted loss per share	$	(0.03	)	$	(0.05	)
Basic and diluted – weighted average number of common shares outstanding		43,810			40,455

The accompanying notes are an integral part of these condensed consolidated financial statements.

NEONODE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

	Three months ended March 31,
	2016			2015

Net loss	$	(1,399	)	$	(2,072	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(35	)		2
Comprehensive loss		(1,434	)		(2,070	)
Less: Comprehensive loss attributable to noncontrolling interests		32			-
Comprehensive loss attributable to Neonode Inc.	$	(1,402	)	$	(2,070	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

NEONODE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three months ended March 31,
	2016			2015
Cash flows from operating activities:
Net loss (including noncontrolling interests)	$	(1,399	)	$	(2,072	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation expense		114			598
Loss on disposal of property and equipment		41			-
Depreciation and amortization		57			51

Changes in operating assets and liabilities:
Accounts receivable		697			(935	)
Projects in process		36			(417	)
Prepaid expenses and other current assets		(325	)		(58	)
Accounts payable and accrued expenses		339			502
Deferred revenues		461			746
Net cash provided by (used in) operating activities		21			(1,585	)

Cash flows from investing activities:
Purchase of property and equipment		(156	)		(3	)
Net cash used in investing activities		(156	)		(3	)

Cash flows from financing activities:
Principal payments on capital lease obligation		(15	)		(14	)
Net cash used in financing activities		(15	)		(14	)

Effect of exchange rate changes on cash		8			(74	)

Net decrease in cash		(142	)		(1,676	)
Cash at beginning of period		3,082			6,129
Cash at end of period	$	2,940		$	4,453

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	7		$	2
Cash paid for interest	$	3		$	4

The accompanying notes are an integral part of these condensed consolidated financial statements.

NEONODE INC.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. Interim Period Reporting

The accompanying unaudited interim condensed consolidated financial statements, include all adjustments, consisting of normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations and cash flows for the interim periods presented. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of results for a full fiscal year or any other period.

The accompanying condensed consolidated financial statements for the three months ended March 31, 2016 and 2015 have been prepared by us, pursuant to the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally contained in financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Operations

Neonode Inc. (collectively with its subsidiaries, is referred to in this Form 10-Q Report as “Neonode”, “we”, “us”, “our” or the “Company”), develops and licenses user interfaces and optical infrared touch technology. We license our multi-touch technology to Original Equipment Manufacturers (“OEMs”) and Original Design Manufacturers (“ODMs”) who incorporate it into devices that they produce and sell. Neonode is in a transition phase to also offer current and new customers a sensor module.

Reclassifications

Accrued payroll and employee benefits as of December 31, 2015 is now reported under its own caption, separate from accrued expenses, in the accompanying condensed consolidated balance sheet, in order to conform to the current period presentation.

Liquidity

We have incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net losses of approximately $1.4 million and $2.1 million for the three months ended March 31, 2016 and 2015, respectively, and had an accumulated deficit of approximately $175.1 million and $173.7 million as of March 31, 2016 and December 31, 2015, respectively. Working capital (current assets less current liabilities) was $118,000 as of March 31, 2016 compared to $1.5 million as of December 31, 2015. In addition, operating activities provided cash of approximately $21,000 for the three months ended March 31, 2016 and we used cash in operating activities of approximately ($1.6 million) for the three months ended March 31, 2015.

In June 2014, we filed a shelf registration statement with the SEC that became effective on June 12, 2014. We may from time to time issue shares of our common stock under our shelf registration in amounts, at prices, and on terms to be announced when and if the securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in a prospectus supplement and any other offering materials, at the time of the offering. Our shelf registration statement will expire on June 12, 2017.

On October 13, 2015, we issued 3,200,000 shares of our common stock from our shelf registration statement to investors in connection with an equity financing transaction. We sold the stock at $1.90 per share and raised approximately $6.1 million gross and received approximately $5.4 million in cash, net of direct offering costs including underwriting discounts and legal, audit and other regulatory costs of approximately $0.7 million.

As of March 31, 2016 there were 1,800,000 shares remaining for issuance under our existing shelf registration statement.

We believe that, based upon our current operating plan, our existing cash and cash provided by operations will be sufficient to meet our anticipated cash needs for at least the next twelve months. We expect that our revenues from license fees and non-recurring engineering fees will enable us to reduce, or eliminate, our operating losses in 2016. We also have undertaken steps to reduce operating expenses, including (i) termination of consulting contracts associated with our research and development operations, and (ii) improving overall cost efficiency of our operations. Depending on our cash flow, we intend to continue to implement various measures to improve our financial condition, such as reducing further expenses to conserve cash and pursuing strategic transactions and relationships with third parties. While there is no assurance that the Company can meet its projected cash flows, management anticipates that it can continue operations for at least the next twelve months.

In the future, we may require sources of capital in addition to cash on hand to continue operations and to implement our strategy. If our operations do not become cash flow positive, we may be forced to seek credit line facilities from financial institutions, equity investments or debt arrangements. No assurances can be given that we will be successful in obtaining such additional financing on reasonable terms, or at all. If adequate funds are not available 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. 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.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of Neonode Inc. and its wholly owned subsidiaries, as well as Pronode Technologies AB, a 51% majority owned subsidiary of Neonode Technologies AB. The remaining 49% of Pronode Technologies AB is owned by Propoint AB, located in Gothenburg, Sweden. Pronode Technologies AB was organized to enable and build a master platform for a successful mass production of sensor modules. All inter-company accounts and transactions have been eliminated in consolidation.

The unaudited condensed consolidated balance sheet at March 31, 2016 and the condensed consolidated statements of operations, comprehensive loss and cash flows for the three months ended March 31, 2016 include our accounts and those of our wholly owned subsidiaries, Neonode Technologies AB (Sweden), Neonode Americas Inc. (U.S.), Neonode Japan Inc. (Japan), NEON Technology Inc. (U.S.), Neno User Interface Solutions AB (Sweden), Neonode Korea Ltd. (South Korea) and Neonode Taiwan Ltd. (Taiwan), and the majority-owned subsidiary of Neonode Technologies AB, Pronode Technologies AB.

The consolidated balance sheet at December 31, 2015 include our accounts and those of our wholly owned subsidiaries, Neonode Technologies AB (Sweden), Neonode Americas Inc. (U.S.), Neonode Japan Inc. (Japan), NEON Technology Inc. (U.S.), Neno User Interface Solutions AB (Sweden), Neonode Korea Ltd. (South Korea) and Neonode Taiwan Ltd. (Taiwan), and the majority-owned subsidiary of Neonode Technologies AB, Pronode Technologies AB.

The unaudited condensed consolidated statements of operations, comprehensive loss and cash flows for the three months ended March 31, 2015 include our accounts and those of our wholly owned subsidiaries, Neonode Technologies AB (Sweden), Neonode Americas Inc. (U.S.), Neonode Japan Inc. (Japan), NEON Technology Inc. (U.S.), Neno User Interface Solutions AB (Sweden), Neonode Korea Ltd. (South Korea) and Neonode Taiwan Ltd. (Taiwan).

Estimates

The preparation of financial statements in conformity with U.S. GAAP requires making estimates and assumptions that affect, at the date of the financial statements, the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Actual results could differ from these estimates. Significant estimates include, but are not limited to, collectability of accounts receivable, the achievement of substantive milestones and vendor-specific objective evidence (“VSOE”) of fair value for purposes of revenue recognition (or deferral of revenue), recoverability of capitalized project costs and long-lived assets, the valuation allowance related to our deferred tax assets, and the fair value of options and warrants issued for stock-based compensation.

Cash

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

Concentration of Cash Balance Risks

Cash balances are maintained at various banks in the U.S., Japan, Korea, Taiwan and Sweden. For deposits held with financial institutions in the U.S. the U.S. Federal Deposit Insurance Corporation, provides basic deposit coverage with limits up to $250,000 per owner. The Swedish government provides insurance coverage up to 100,000 Euro per customer and covers deposits in all types of accounts. The Japanese government provides insurance coverage up to 10,000,000 Yen per customer. The Korea Deposit Insurance Corporation provides insurance coverage up to 50,000,000 Won per customer. The Central Deposit Insurance Corporation in Taiwan provides insurance coverage up to 3,000,000 Taiwan Dollar per customer. At times, deposits held with financial institutions may exceed the amount of insurance provided.

Accounts Receivable and Allowance for Doubtful Accounts

Our accounts receivable are stated at net realizable value. Our policy is to maintain allowances for estimated losses resulting from the inability of our customers to make required payments. Credit limits are established through a process of reviewing the financial history and stability of each customer. Where appropriate, we obtain credit rating reports and financial statements of the customer when determining or modifying its credit limits. We regularly evaluate the collectability of our trade receivable balances based on a combination of factors. When a customer’s account balance becomes past due, we initiate dialogue with the customer to determine the cause. If it is determined that the customer will be unable to meet its financial obligation, such as in the case of a bankruptcy filing, deterioration in the customer’s operating results or financial position or other material events impacting its business, we record a specific allowance to reduce the related receivable to the amount we expect to recover. Should all efforts fail to recover the related receivable, we will write-off the account. We also record an allowance for all customers based on certain other factors including the length of time the receivables are past due and historical collection experience with customers. Our allowance for doubtful accounts was approximately $167,000 as of March 31, 2016 and December 31, 2015.

Projects in Process

Projects in process consist of costs incurred toward the completion of various projects for certain customers. These costs are primarily comprised of direct engineering labor costs and project-specific equipment costs. These costs are capitalized on our condensed consolidated balance sheet as an asset and deferred until revenue for each project is recognized in accordance with our revenue recognition policy. Costs capitalized in projects in process were $122,000 and $158,000 as of March 31, 2016 and December 31, 2015, respectively.

Property and Equipment

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

Estimated useful lives

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

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

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

Long-lived Assets

We assess any impairment by estimating the future cash flow from the associated asset in accordance with relevant accounting guidance. If the estimated undiscounted future cash flow related to these assets decreases or the useful life is shorter than originally estimated, we may incur charges for impairment of these assets. As of March 31, 2016, we believe there was no impairment of our long-lived assets. There can be no assurance, however, that market conditions will not change or sufficient demand for our products and services will continue, which could result in impairment of long-lived assets in the future.

Foreign Currency Translation and Transaction Gains and Losses

The functional currency of our foreign subsidiaries is the applicable local currency, the Swedish Krona, the Japanese Yen, the South Korean Won and the Taiwan Dollar. The translation from Swedish Krona, Japanese Yen, South Korean Won and Taiwan Dollar to U.S. Dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for income statement accounts using a weighted-average exchange rate during the period. Gains or (losses) resulting from translation are included as a separate component of accumulated other comprehensive income (loss). Foreign currency translation gains (losses) were $(35,000) and $2,000 during the three months ended March 31, 2016 and 2015, respectively. Gains resulting from foreign currency transactions are included in general and administrative expenses in the accompanying condensed consolidated statements of operations and were $13,000 and $26,000 during the three months ended March 31, 2016 and 2015, respectively.

Concentration of Credit and Business Risks

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

As of March 31, 2016, five customers represented approximately 100% of the Company’s accounts receivable.

As of December 31, 2015, three customers represented approximately 78% of the Company’s accounts receivable.

Our net revenues for the three months ended March 31, 2016 were earned from twenty customers. Customers who accounted for 10% or more of our net revenues during the three months ended March 31, 2016 are as follows:

	●	Hewlett Packard Company – 40%
	●	Amazon – 18%
	●	Autoliv Development AB – 12%

Our net revenues for the three months ended March 31, 2015 were earned from twenty-four customers. Customers who accounted for 10% or more of our net revenues during the three months ended March 31, 2015 are as follows:

	●	Hewlett Packard Company – 30%
	●	Amazon – 28%

Revenue Recognition

Licensing Revenues:

We derive revenue from the licensing of internally developed intellectual property (“IP”). We enter into IP licensing agreements that generally provide licensees the right to incorporate our IP components in their products with terms and conditions that vary by licensee. Fees under these agreements may include license fees relating to our IP and royalties payable following the distribution by our licensees of products incorporating the licensed technology. The license for our IP has standalone value and can be used by the licensee without maintenance and support. We follow U.S. GAAP for revenue recognition as per unit royalty products are distributed or licensed by our customers. For technology license arrangements that do not require significant modification or customization of the underlying technology, we recognize technology license revenue when: (1) we enter into a legally binding arrangement with a customer for the license of technology; (2) the customer distributes or licenses the products; (3) the customer payment is deemed fixed or determinable and free of contingencies or significant uncertainties; and (4) collection is reasonably assured. Our customers report to us the quantities of products distributed or licensed by them after the end of the reporting period stipulated in the contract, generally 30 to 45 days after the end of the month or quarter. We recognize licensing revenue in the period in which royalty reports are received, rather than the period in which the products are distributed or to which the license relates.

Explicit return rights are not offered to customers. There have been no returns through March 31, 2016.

Engineering Services:

We may sell engineering consulting services to our customers on a flat rate or hourly rate basis. We recognize revenue from these services when all of the following conditions are met: (1) evidence existed of an arrangement with the customer, typically consisting of a purchase order or contract; (2) our services were performed and risk of loss passed to the customer; (3) we completed all of the necessary terms of the contract; (4) the amount of revenue to which we were entitled was fixed or determinable; and (5) we believed it was probable that we would be able to collect the amount due from the customer. To the extent that one or more of these conditions has not been satisfied, we defer recognition of revenue.

Generally, we recognize revenue as the engineering services stipulated under the contract are completed and accepted by our customers. Engineering services are performed under a signed Statement of Work (“SOW”) with a customer. The deliverables and payment terms stipulated under the SOW provide guidance on the project revenue recognition.

Revenues from contracts that are short-term in nature and related costs that are difficult to estimate are accounted for under the completed contract method.

Revenues from contracts with substantive defined milestones that we have determined are reasonable, relevant to all the deliverables and payment terms in the SOW that are commensurate with the efforts required to achieve the milestones are recognized under the milestone recognition method.

Estimated losses on all SOW projects are recognized in full as soon as they become evident. In the quarters ended March 31, 2016 and 2015, no losses related to SOW projects were recorded.

Deferred Revenues

From time-to-time we receive pre-payments from our customers related to future services or future license fee revenues. We defer the license fees until we have met all accounting requirements for revenue recognition as per unit royalty products are distributed and royalty reports are received. Engineering development fee revenues are deferred until such time as the engineering work has been completed and accepted by our customers.

Advertising

Advertising costs are expensed as incurred. Advertising costs for the three months ended March 31, 2016 and 2015 amounted to approximately $80,000 and $20,000, respectively.

Research and Development

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

Stock-Based Compensation Expense

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

We account for equity instruments issued to non-employees at their estimated fair value. The measurement date for the estimated fair value for the equity instruments issued is determined at the earlier of (1) the date at which a commitment for performance by the consultant or vendor is reached, or (2) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instruments is primarily recognized over the term of the consulting agreement. The estimated fair value of the stock-based compensation is periodically re-measured and income or expense is recognized during the vesting term.

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

Noncontrolling Interests

The Company recognizes noncontrolling interests as equity in the condensed consolidated financial statements separate from the parent company’s equity. Noncontrolling interests’ partners have less than 50% share of voting rights at any one of the subsidiary level companies. The amount of net income (loss) attributable to non-controlling interests is included in consolidated net income (loss) on the face of the condensed consolidated statements of operations. Changes in a parent entity’s ownership interest in a subsidiary that do not result in deconsolidation are treated as equity transactions if the parent entity retains its controlling financial interest. The Company recognizes a gain or loss in net income (loss) when a subsidiary is deconsolidated. Such gain or loss is measured using the fair value of the noncontrolling equity investment on the deconsolidation date. Additionally, operating losses are allocated to noncontrolling interests even when such allocation creates a deficit balance for the noncontrolling interest partner.

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

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

Income Taxes

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

Based on the uncertainty of future pre-tax income, we fully reserved our net deferred tax assets as of March 31, 2016 and December 31, 2015. In the event we were to determine that we would be able to realize our deferred tax assets in the future, an adjustment to the deferred tax asset would increase income in the period such determination was made. The provision for income taxes represents the net change in deferred tax amounts, plus income taxes paid or payable for the current period.

We follow U.S. GAAP related accounting for uncertainty in income taxes, which provisions include a two-step approach to recognizing, de-recognizing and measuring uncertainty in income taxes. As a result, we did not recognize a liability for unrecognized tax benefits. As of March 31, 2016 and December 31, 2015, we had no unrecognized tax benefits.

Net Loss per Share

Net loss per share amounts has been computed based on the weighted average number of shares of common stock outstanding during the three months ended March 31, 2016 and 2015. Net loss per share, assuming dilution amounts from common stock equivalents, is computed based on the weighted-average number of shares of common stock and potential common stock equivalents outstanding during the period. The weighted-average number of shares of common stock and potential common stock equivalents used in computing the net loss per share for the three months ended March 31, 2016 and 2015 exclude the potential common stock equivalents, as the effect would be anti-dilutive (See Note 8).

Other Comprehensive Income (Loss)

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

Cash Flow Information

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

	Three months ended March 31,
	2016		2015
Swedish Krona		8.45		8.32
Japanese Yen		115.36		119.15
South Korean Won		1,193.75		1,100
Taiwan Dollar		33.06		31.56

Exchange rate for the condensed consolidated balance sheets was as follows:

	March 31,		December 31,
	2016		2015
Swedish Krona		8.12		8.42
Japanese Yen		112.39		120.36
South Korean Won		1,141.29		1,174.67
Taiwan Dollar		32.20		32.84

Fair Value of Financial Instruments

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

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. On July 9, 2015, the FASB approved amendments deferring the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date and permitting early adoption of the standard, but not before the original effective date or for reporting periods beginning after December 15, 2016. We have not yet selected a transition method and are currently assessing the impact the adoption of ASU 2014-09 will have on our consolidated financial statements and disclosures.

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. The amendments in this update provide guidance in U.S. GAAP about management's responsibilities to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The main provision of the amendments are for an entity's management, in connection with the preparation of financial statements, to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. Management's evaluation should be based on relevant conditions and events that are known or reasonably knowable at the date the consolidated financial statements are issued. When management identifies conditions or events that raise substantial doubt about an entity's ability to continue as a going concern, the entity should disclose information that enables users of the consolidated financial statements to understand all of the following: (1) principal conditions or events that raised substantial doubt about the entity's ability to continue as a going concern (before consideration of management's plans); (2) management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations; and (3) management's plans that alleviated substantial doubt about the entity's ability to continue as a going concern or management's plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. The amendments in this update are effective for interim and annual reporting periods beginning after December 15, 2016 and early application is permitted. We are currently assessing this guidance for future implementation.

In November 2015, FASB issued ASU 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), which eliminates the current requirement for an entity to separate deferred income tax liabilities and assets into current and non-current amounts in a classified balance sheet. Instead, the ASU requires deferred tax liabilities, deferred tax assets and valuation allowances be classified as non-current in a classified balance sheet. ASU 2015-17 will be effective for annual reporting periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. Additionally, this guidance may be applied either prospectively or retrospectively to all periods presented. The Company elected not to early adopt ASU 2015-17 and is evaluating the effect of the adoption of this ASU to its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees may not apply a full retrospective transition approach. The Company elected not to early adopt ASU 2016-02 and is evaluating the effect of the adoption of this ASU to its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-07, Investments- Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting (“ASU 2016-07”). ASU 2016-07 eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. ASU 2016-07 is effective for years beginning after December 15, 2016. The Company is currently evaluating the impact of this ASU to its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which simplified certain aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities and classification in the statement of cash flows. ASU 2016-09 will be effective for annual reporting periods beginning after December 15, 2016 and interim periods within those annual periods. The Company is currently evaluating the impact of adopting the new stock compensation standard on its consolidated financial statements.

3. Deferred Revenues

We defer license fees until we have met all accounting requirements for revenue recognition as per unit royalty products are distributed and royalty reports are received. Engineering development fee revenues are deferred until such time as the engineering work has been completed and accepted by our customers. As of March 31, 2016 and December 31, 2015, we have $1.9 million and $1.1 million, respectively, of deferred license fee revenue related to prepayments for future license fees from three and two customers, respectively, and a total of $17,000 and $0.4 million, respectively, of deferred engineering development fees from one customer.

4. Stockholders’ Equity

Common Stock

During the three months ended March 31, 2016, a warrant holder exercised warrants to purchase 80,000 shares of common stock using the cashless net exercise provision allowed in the warrant and received 11,565 shares of our common stock.

Preferred Stock

We have one class of preferred stock outstanding. The terms of the Series B Preferred stock are as follows:

Dividends and Distributions

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

Liquidation Preference

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

Voting

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

Conversion

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

Conversion of Preferred Stock Issued to Common Stock

The following table summarizes the amounts as of March 31, 2016.

	Shares of Preferred Stock Not Exchanged as of March 31, 2016		Conversion Ratio		Shares of Common Stock after Conversion of all Outstanding Shares of Preferred Stock Not yet Exchanged at March 31, 2016

Series B Preferred stock		83		132.07		10,962

5. Stock-Based Compensation

The stock-based compensation expense for the three months ended March 31, 2016 and 2015 reflects the estimated fair value of the vested portion of options granted to employees, directors and eligible consultants. Stock-based compensation expense in the accompanying condensed consolidated statements of operations is as follows (in thousands):

	Three months ended March 31,
	2016		2015
Research and development	$	43	$	223
Sales and marketing		62		106
General and administrative		9		269
Total stock-based compensation expense	$	114	$	598

		Remaining unrecognized expense at March 31, 2016
Stock-based compensation		$	385

The remaining unrecognized expense related to stock options will be recognized on a straight line basis monthly as compensation expense over the remaining vesting period, which approximates 1.5 years.

The estimated fair value of stock-based awards is calculated using the Black-Scholes option pricing model, even though this model was developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions, which differ significantly from our stock options. The Black-Scholes model also requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. The expected term and forfeiture rate of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior, as well as expected behavior on outstanding options. The risk-free rate is based on the U.S. Treasury rates in effect during the corresponding period of grant. The expected volatility is based on the historical volatility of our stock price. These factors could change in the future, which would affect fair values of stock options granted in such future periods, and could cause volatility in the total amount of the stock-based compensation expense reported in future periods.

Stock Options

We have adopted equity incentive plans for which stock options and restricted stock awards are available to grant to employees, consultants and directors. Except for 265,000 options issued to certain Swedish employees during 2015, all employee, consultant and director stock options granted under our stock option plans have an exercise price equal to the market value of the underlying common stock on the grant date. There are no vesting provisions tied to performance conditions for any options, as vesting for all outstanding option grants was based only on continued service as an employee, consultant or director. All of our outstanding stock options and restricted stock awards are classified as equity instruments.

As of March 31, 2016 we had two equity incentive plans:

	●	The 2006 Equity Incentive Plan; and
	●	The 2015 Stock Incentive Plan

We also had expired one non-employee director stock option plan.

●

The 2001 Non-Employee Director Stock Option Plan (the “Director Plan”), which expired in March 2011.

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

	Number of Options Outstanding			Weighted Average Exercise Price
Outstanding at January 1, 2016		2,184,117		$	4.48
Granted		-			-
Forfeited		(111,922	)		4.47
Outstanding at March 31, 2016		2,072,195		$	4.48

The aggregate intrinsic value of the 2,072,195 stock options that are outstanding, vested and expected to vest as of March 31, 2016 was approximately $0.

For the three months ended March 31, 2016 and 2015, we recorded $0.1 million and $0.6 million, respectively, of compensation expense related to the vesting of stock options. The fair value of the stock-based compensation was calculated using the Black-Scholes option pricing model as of the date of grant of the stock option.

During the three months ended March 31, 2016, we did not grant any options to purchase shares of our common stock to employees or members of our board of directors.

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

Warrants

A summary of all warrant activity is set forth below:

	March 31, 2016
	Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Outstanding and exercisable, January 1, 2016		464,073		$	3.02		0.19
Granted		--			--		--
Expired/cancelled		(349,973	)		3.13		--
Exercised		(80,000	)		2.00		--
Outstanding and exercisable, March 31, 2016		34,100		$	3.13		0.02

Outstanding Warrants to Purchase
Common Stock as of March 31, 2016:

Description

Issue Date

Exercise Price

Expiration Date

March 2011 Investor Warrants

4/7/2011

3.13

34,100

4/7/2016

Total Warrants Outstanding

34,100

The 34,100 warrants outstanding as of March 31, 2016 expired on April 7, 2016.

6. Commitments and Contingencies

Indemnities and Guarantees

Our bylaws require that we indemnify each of our executive officers and directors for certain events or occurrences arising as a result of the officer or director serving in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited. However, we have a directors’ and officers’ liability insurance policy that should enable us to recover a portion of future amounts paid. As a result of our insurance policy coverage, we believe the estimated fair value of these indemnification agreements is minimal and we have no liabilities recorded for these agreements as of March 31, 2016 and December 31, 2015.

We enter into indemnification provisions under our agreements with other companies in the ordinary course of business, typically with business partners, contractors, customers and landlords. Under these provisions we generally indemnify and hold harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of our activities or, in some cases, as a result of the indemnified party’s activities under the agreement. These indemnification provisions often include indemnifications relating to representations made by us with regard to intellectual property rights. These indemnification provisions generally survive termination of the underlying agreement. The maximum potential amount of future payments we could be required to make under these indemnification provisions is unlimited. We have not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, we believe the estimated fair value of these agreements is minimal. Accordingly, we have no liabilities recorded for these indemnification provisions as of March 31, 2016 and December 31, 2015.

Non-recurring Engineering Development Costs

On February 4, 2011, we entered into an Analog Device Development Agreement with an effective date of January 24, 2010 (the “NN1001 Agreement”) with Texas Instruments pursuant to which Texas Instruments integrated Neonode’s intellectual property into an Application Specific Integrated Circuit (“ASIC”). The NN1001 ASIC only can be sold by Texas Instruments exclusively to licensees of Neonode. Under the terms of the NN1001 Agreement, we have reimbursed Texas Instruments $500,000 of non-recurring engineering development costs based on shipments of the NN1001. Under the terms of the NN1001 Agreement, we have reimbursed Texas Instruments a non-recurring engineering fee of $0.08 per unit for each of the first one million units sold and $0.05 for the next eight million units sold. During the three months ended March 31, 2016 and 2015, approximately $20,000 and $93,000, respectively of non-recurring engineering expense related to the NN1001 Agreement is included in research and development in the condensed consolidated statements of operations. As of March 31, 2016, all payments under the NN1001 Agreement have been made.

On April 25, 2013, we entered into an additional Analog Device Development Agreement with an effective date of December 6, 2012 (the “NN1002 Agreement”) with Texas Instruments pursuant to which Texas Instruments will integrate Neonode’s intellectual property into an ASIC. The NN1002 ASIC only can be sold by Texas Instruments exclusively to licensees of Neonode. Under the terms of the NN1002 Agreement, we will reimburse Texas Instruments up to $500,000 of non-recurring engineering costs based on shipments of the NN1002. Under the terms of the NN1002 Agreement we will reimburse Texas Instruments a non-recurring engineering fee of $0.25 per unit for each of the first two million units sold. The NN1002 began sampling to customers in May 2014. As of March 31, 2016, we had made no payments under the NN1002 Agreement.

On December 4, 2014, we entered into an additional Analog Device Development Agreement (the “NN1003 Agreement”) with STMicroelectronics International N.V pursuant to which STMicroelectronics will integrate Neonode’s intellectual property into an ASIC. The NN1003 ASIC only can be sold by STMicroelectronics exclusively to licensees of Neonode. Under the terms of the NN1003 Agreement, we will reimburse STMicroelectronics up to $885,000 of non-recurring engineering costs as follows:

	●	$235,000 at the feasibility review and contract signature (paid on January 20, 2015)
	●	$300,000 on completion of tape-out (paid on October 31, 2015)
	●	$300,000 on completion on product validation (not completed as of March 31, 2016)

Under the terms of the NN1003 Agreement, we also will reimburse STMicroelectronics a non-recurring engineering fee of $5.00 per each of the first 10,000 units sold. As of March 31, 2016, we had made no payments under the NN1003 Agreement.

7. Segment Information

We have one reportable segment, which is comprised of the touch technology licensing business. All of our sales for the three months ended March 31, 2016 and 2015 were to customers located in the U.S., Europe and Asia. Of our total assets, 62% and 73% were held in the U.S. as of March 31, 2016 and December 31, 2015, respectively, and 36% and 22% were held in Sweden, respectively.

The following table presents net revenues by geographic region for the three months ended March 31, 2016 and 2015 (in thousands):

	Three months ended March 31, 2016					Three months ended March 31, 2015
	Amount		Percentage			Amount		Percentage
Net revenues from customers in the Americas	$	2,005		64	%	$	1,693		75	%
Net revenues from customers in Asia		560		18	%		413		18	%
Net revenues from customers in Europe		567		18	%		157		7	%
	$	3,132		100	%	$	2,263		100	%

8. Net Loss per Share

Basic net loss per common share for the three months ended March 31, 2016 and 2015 was computed by dividing the net loss attributable to Neonode Inc. for the relevant period by the weighted average number of shares of common stock outstanding. Diluted loss per common share is computed by dividing net loss attributable to Neonode Inc. by the weighted average number of shares of common stock and common stock equivalents outstanding.

Potential common stock equivalents of approximately 1,000 and 11,000 outstanding stock options and 0 and 173,000 outstanding stock warrants under the treasury stock method, and 11,000 and 11,000 shares issuable upon conversion of preferred stock are excluded from the diluted earnings per share calculation for the three months ended March 31, 2016 and 2015, respectively, due to their anti-dilutive effect.

(in thousands, except per share amounts)	Three months ended March 31,
	2016			2015
BASIC AND DILUTED
Weighted average number of common shares outstanding		43,810			40,455
Net loss attributable to Neonode Inc.	$	(1,367	)	$	(2,072	)

Net loss per share - basic and diluted	$	(0.03	)	$	(0.05	)

9. Subsequent Events

We have evaluated subsequent events through the filing date of this Form 10-Q, and determined that no subsequent events have occurred that would require recognition in the condensed consolidated financial statements or disclosure in the notes thereto other than as discussed in the accompanying notes.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, adopted pursuant to the Private Securities Litigation Reform Act of 1995. Statements that are not purely historical may be forward-looking. You can identify some forward-looking statements by the use of words such as “believes,” “anticipates,” “expects,” “intends” and similar expressions. Forward looking statements involve inherent risks and uncertainties regarding events, conditions and financial trends that may affect our future plans of operation, business strategy, results of operations and financial position. A number of important factors could cause actual results to differ materially from those included within or contemplated by such forward-looking statements, including, but not limited to risks relating to the uncertainty of growth in market acceptance for our technology, our history of losses since inception, our ability to remain competitive in response to new technologies, the costs to defend, as well as risks of losing, patents and intellectual property rights, a reliance on our future customers’ ability to develop and sell products that incorporate our technology, our customer concentration and dependence on a limited number of customers, the uncertainty of demand for our technology in certain markets, the length of a product development and release cycle, our ability to manage growth effectively, our dependence on key members of our management and development team, our limited experience manufacturing hardware devices and our ability to obtain adequate capital to fund future operations, For a discussion of these and other factors that could cause actual results to differ from those contemplated in the forward-looking statements, please see the discussion under “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and in our publicly available filings with the Securities and Exchange Commission. Forward-looking statements reflect our analysis only as of the filing date of this Quarterly Report on Form 10-Q. Because actual events or results may differ materially from those discussed in or implied by forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statement. We do not undertake responsibility to update or revise any of these factors or to announce publicly any revision to forward-looking statements, whether as a result of new information, future events or otherwise.

The following Management’s Discussion and Analysis should be read in conjunction with the condensed consolidated financial statements and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q and consolidated financial statements for the year ended December 31, 2015 included in our Annual Report on Form 10-K.

Neonode Inc., collectively with its subsidiaries, is referred to in this Form 10-Q as “Neonode”, “we”, “us”, “our”, “registrant”, or the “Company”.

Overview

We develop and license user interface and touch technology. We also are developing, and intend to manufacture and sell, hardware sensor solutions incorporating our interface and touch technology.

We offer a patented family of optical touch solutions under the zForce and Multi-Sensing brands.Our optical touch technology is capable of projecting a full plane of light beams in free air or over any flat touch surface. Our technology can also send light into a fluid or a glass to achieve a flush design without a bezel. An object touching the touch surface obstructs a portion of the projected light beams. This small variance of signal is detected with sensitive light sensors connected to our touch controllers that process the analog signals and produce touch object coordinates.

Licensing Solutions

As of March 31, 2016, we had forty technology license agreements with global OEMs and ODMs. During the three months ended March 31, 2016, we had fifteen customers using our touch technology in products that were being shipped to customers. In addition, we are currently developing prototype products and are engaged in product engineering design discussions with numerous global OEMs and ODMs who are in the process of qualifying our touch technology for incorporation in various products. The development and release cycle for these products typically takes six to thirty-six months.

We also offer engineering consulting services to our OEM and ODM customers on a flat rate or hourly rate basis.

Hardware Solutions

In December 2015, we announced the development of our first sensor module called AirBar. Through a simple USB connection, the AirBar hardware module can touch enable non-touch PCs. The AirBar “Plug-and-Touch” solution is based on our zForce AIR sensing platform.

We expect to begin manufacturing and selling AirBar for PCs in the second quarter of 2016 at our fully automated manufacturing facility located in Gothenburg, Sweden. We currently have signed agreements with Ingram Micro for Europe and North America to act as our direct customer and distribution channel. We expect to market AirBar through consumer electronics retailers, online stores, and resellers to the education and enterprise customers in the U.S., Europe and Asia. Beyond direct purchaser of AirBar by consumers, we anticipate demand from PC OEMs to bundle AirBar with their non-touch notebooks to add greater value and functionality to their low to mid-end notebooks.

In 2015, Neonode entered into a joint development and cooperation agreement, with Autoliv Development AB (“Autoliv”) to develop a new Human Machine Interface ("HMI") sensing product for vehicle steering wheel applications. Neonode will license its zForce DRIVE technology to Autoliv as part of the agreement. On April 9, 2015, Autoliv paid an initial $1.5 million to Neonode under the agreement and an additional $1.5 million in three staggered payments subject to and after achievement of project milestones during a 12 months period. The initial payment of $1.5 million was initially recorded as deferred revenue and is being amortized to revenue during the 12 month development period, beginning in the second quarter of 2015. The additional $1.5 million will be recognized as revenue as project milestones are completed. During the three months ended March 31, 2016, $375,000 of the initial payment and $0 related to completion of project milestones was recognized as revenue. No revenue was recognized under the agreement during the three months ended March 31, 2015.

Results of Operations

Net Revenues

Net revenues for the three months ended March 31, 2016 and 2015 were $3.1 million and $2.3 million, respectively. Our net revenues for the three months ended March 31, 2016 and 2015 included $2.5 million and $1.8 million, respectively, from technology license fees and $0.6 million and $0.5 million, respectively, in non-recurring engineering services (“NRE”) related to our touch solutions for customers.

The increase of 38% in net revenues for the three month period 2016 as compared to the same period in 2015 is primarily due to an increase in license fees from printer and automotive customers, offset by a decrease in license fees from E-reader customers.

The license fee revenue distribution per market for the first quarter 2016 is 51% for printers, 23% for automotive and 26% for E-Readers compared to 34% for printers, 5% for automotive and 61% for E-Readers in the first quarter 2015.

Gross Margin

Gross margin was $2.5 million and $1.9 million for the three months ended March 31, 2016 and 2015, respectively. Gross margin as a percentage of net revenue was 81% and 85% for the three months ended March 31, 2016 and 2015, respectively, the 4% decrease is primarily due to higher costs in our automotive customer projects. Our cost of revenues includes the direct cost of production of certain customer prototypes, costs of Company employed engineering personnel and engineering consultants to complete the engineering design contract. Our gross margin has increased in the three months ended March 31, 2016 compared to the same period in 2015 due to the increase in our total revenues. The gross margin related to our license fees is 100%. As license fees as a percentage of our total revenue increase, our gross margin will increase.

Research and Development

Research and development (“R&D”) expenses for the three months ended March 31, 2016 and 2015 were $1.9 million and $1.6 million, respectively. The increase is mainly related to higher costs due to hires of new personnel and external consultants during 2015. R&D costs mainly consist of personnel related costs in addition to some external consultancy costs, such as testing, certifying and measurements, along with costs related to developing and building new product prototypes. Included in R&D expenses is $43,000 and $223,000 of non-cash stock-based compensation expense for the three months ended March 31, 2016 and 2015, respectively.

Sales and Marketing

Sales and marketing expenses for the three months ended March 31, 2016 and 2015 were $0.8 million and $0.9 million, respectively. The expenses for the three months ended March 31, 2016 had a slight reduction compared to the same period in 2015 primarily due to a reduction of non-cash stock-based compensation expense to $62,000 for the three months ended March 31, 2016 compared to $106,000 for the same period in 2015. Our sales activities focus primarily on OEM customers who will integrate our touch technology into their products and the sale of our AirBar sensor module for PC to qualified global distributors.

General and Administrative

General and administrative (“G&A”) expenses for the three months ended March 31, 2016 and 2015 were $1.1 million and $1.6 million, respectively. This overall decrease in 2016 as compared to 2015 was primarily related to a decrease in stock option expenses and professional fees. Included in G&A expenses is $9,000 and $269,000 of non-cash stock-based compensation expense for the three months ended March 31, 2016 and 2015, respectively. These are stock options issued to employees, consultants and members of our Board of Directors.

Income Taxes

Our effective tax rate was (5%) and 0% for the three months ended March 31, 2016 and 2015, respectively. The negative tax rate in the three months ended March 31, 2016 is due to withholding taxes from sales in Asia. We recorded valuation allowances for the three month periods ended March 31, 2016 and 2015 for deferred tax assets related to net operating losses due to the uncertainty of realization.

Net Loss

As a result of the factors discussed above, we recorded a net loss of $1.4 million and $2.1 million for the three months ended March 31, 2016 and 2015, respectively.

Off-Balance Sheet Arrangements

We do not have any transactions, arrangements, or other relationships with unconsolidated entities that are reasonably likely to affect our liquidity or capital resources other than operating leases. We have no special purpose or limited purpose entities that provide off-balance sheet financing, liquidity, or market or credit risk support; or engage in leasing, hedging, research and development services, or other relationships that expose us to liability that is not reflected on the face of the condensed consolidated financial statements.

Contractual Obligations and Commercial Commitments

Non-Recurring Engineering Development Costs

On February 4, 2011, we entered into an Analog Device Development Agreement with an effective date of January 24, 2010 (the “NN1001 Agreement”) with Texas Instruments pursuant to which Texas Instruments integrated Neonode’s intellectual property into an Application Specific Integrated Circuit (“ASIC”). The NN1001 ASIC only can be sold by Texas Instruments exclusively to licensees of Neonode. Under the terms of the NN1001 Agreement, we have reimbursed Texas Instruments $500,000 of non-recurring engineering development costs based on shipments of the NN1001. Under the terms of the NN1001 Agreement, we have reimbursed Texas Instruments a non-recurring engineering fee of $0.08 per unit for each of the first one million units sold and $0.05 for the next eight million units sold. During the years ended December 31, 2015 and 2014, approximately $20,000 and $93,000, respectively of non-recurring engineering expense related to the NN1001 Agreement is included in research and development in the consolidated statements of operations. As of March 31, 2016, all payments under the NN1001 Agreement have been made.

●

$235,000 at the feasibility review and contract signature (paid on January 20, 2015)

●

$300,000 on completion of tape-out (paid on October 31, 2015)

●

$300,000 on completion on product validation (not completed as of March 31, 2016)

Operating Leases

On March 22, 2012, we entered into a three year lease for 3,185 square feet of office space located at 2350 Mission College Blvd, Suite 190, Santa Clara, CA 95054 USA. The initial lease payment was $7,007 per month, increasing to $7,657 per month over the term of the lease. This lease was valid through July 31, 2015. The annual payment for this space equated to approximately $86,000 per year. On May 28, 2015, we entered into a three year lease for 6,508 square feet of office space located at 2674 North First Street, San Jose, CA 95134 USA. The annual payment for this space is $160,000. This lease is effective on August 1, 2015 and is valid through July 31, 2018.

On October 12, 2012, we entered into a two year lease for office space located at 608 Bureau Shinagawa, 4-1-6 Konan, Minato-ku, 108-0075 Tokyo, Japan. The lease payment is approximately $2,300 per month. This lease was valid through October 12, 2014. The lease was extended for two years and is valid until October 31, 2016 under the same terms and conditions. The annual payment for this space equates to approximately $29,000 per year.

On July 1, 2013, NTAB entered into a lease for 5,900 square feet of office space located at Storgatan 23C, Stockholm, Sweden for approximately $38,000 per month including property tax (excluding VAT). The annual payment for this space equated to approximately $458,000 per year including property tax (excluding VAT). This lease was valid through June 30, 2014. On July 1, 2014, the lease was extended and is valid through November 30, 2017. As from November 1, 2015 we lease 7,007 square feet for approximately $447,000 per year. It is lower now compared to 2013 due to exchange rate differences. The lease can be extended on a yearly basis with three months written notice. On December 1 2015, Neonode Technologies AB’s majority-owned subsidiary Pronode Technologies AB entered into a lease agreement for 9,040 square feet of workshop located at Faktorvägen 17, Kungsbacka, Sweden for approximately $8,000 per month. The annual payment for this space equates to approximately $98,000 per year. The lease is valid through December 9, 2017.

In January 2015, our subsidiary Neonode Korea Ltd. entered into a lease agreement located at B-1807, Daesung D-Polis. 543-1, Seoul, South Korea. The annual payment for this space equates to approximately $23,000 per year. The lease is valid through February 13, 2017.

In May 2015, our subsidiary Neonode Taiwan Ltd. entered into a lease agreement located at 16F, No. 89 Songren Rd, Taipei, Taiwan. This lease is valid through May 24, 2016 but was terminated on November 30, 2015. The annual payment for this space equated to approximately $46,000 per year. On December 1, 2015, Neonode Taiwan Ltd. entered into a lease agreement located at Rm. 2406, International Trade Building, Keelung Rd., Sec.1, Taipei, Taiwan. This lease is valid through April 30, 2016. The lease is renewed every three months unless termination is notified. The annual payment for this space equates to approximately $32,000 per year.

For the three months ended March 31, 2016 and 2015, we recorded approximately $218,000 and $141,000, respectively, for rent expense.

A summary of future minimum payments under non-cancellable operating lease commitments as of March 31, 2016 is as follows (in thousands):

Year ending December 31,	Total
2016 (remaining nine months)	$	574
2017		664
2018		93
	$	1,331

Equipment Subject to Capital Lease

In April 2014, we entered into a lease for certain specialized milling equipment. Under the terms of the lease agreement we are obligated to purchase the equipment at the end of the original 6 year lease term for 10% of the original purchase price of the equipment. In accordance with relevant accounting guidance the lease is classified as a capital lease. The lease payments and depreciation period began on July 1, 2014 when the equipment went into service. The implicit interest rate of the lease is 4% per annum.

Liquidity and Capital Resources

Our liquidity is dependent on many factors, including sales volume, operating profit and the efficiency of asset use and turnover. Our future liquidity will be affected by, among other things:

● actual versus anticipated licensing of our technology;

● actual versus anticipated operating expenses;

● timing of our OEM customer product shipments;

● timing of payment for our technology licensing agreements;

● actual versus anticipated gross profit margin;

● ability to raise additional capital, if necessary; and

● ability to secure credit facilities, if necessary.

As of March 31, 2016, we had cash of $2.9 million compared to $3.1 million as of December 31, 2015.

Working capital (current assets less current liabilities) was $118,000 as of March 31, 2016, compared to $1.5 million as of December 31, 2015.

Net cash provided by operating activities for the three months ended March 31, 2016 was $21,000 and was primarily the result of (1) a net loss of approximately $1.4 million and (2) approximately $1.2 million in net cash provided by changes in operating assets and liabilities and (3) approximately $0.2 million in non-cash operating expenses, comprised of depreciation and amortization, loss on disposal of property and equipment and stock-based compensation.

Accounts receivable decreased by approximately $0.7 million as of March 31, 2016 compared with December 31, 2015. This is due to the timing of the payments received from customers.

Deferred revenues increased by approximately $0.5 million during the three months ended March 31, 2016 compared with December 31, 2015, due to a prepayment of $850,000 in license fees from a customer offset by the completion of NRE services.

Net cash used in operating activities for the three months ended March 31, 2015 was $1.6 million and was primarily the result of (1) a net loss of approximately $2.1 million and (2) approximately $0.2 million in net cash provided by changes in operating assets and liabilities and (3) approximately $0.6 million in non-cash operating expenses, comprised of depreciation and amortization and stock-based compensation.

In the three months ended March 31, 2016 and 2015, we purchased approximately $156,000 and $3,000 respectively, of property and equipment, primarily furniture and test equipment.

Net cash used in financing activities of $15,000 during the three months ended March 31, 2016 was the result of principal payments of $15,000 on a capital lease.

Net cash used in financing activities of $14,000 was the result of principal payments on capital lease during the three months ended March 31, 2015.

We incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net losses of approximately $1.4 million and $2.1 million for the three months ended March 31, 2016 and 2015, respectively, and had an accumulated deficit of approximately $175.1 million and $173.7 million as of March 31, 2016 and December 31, 2015, respectively. In addition, the Company has cash provided by (used in) operating activities of approximately $21,000 and ($1.6 million) for the three months ended March 31, 2016 and 2015, respectively.

On October 13, 2015, we issued 3,200,000 shares of our common stock to investors in connection with an equity financing transaction. These shares of common stock were a portion of the 5,000,000 shares previously registered in 2014 under a shelf registration statement. We issued the stock at $1.90 per share and raised approximately $6.1 million gross and received approximately $5.6 million in cash, net of direct offering costs including underwriting discounts and legal, audit and other regulatory costs of approximately $0.5 million. Per Bystedt (Board of Directors Chairman), Thomas Eriksson (Chief Executive Officer), and Mats Dahlin (member of our Board of Directors) purchased from the underwriter an aggregate of 157,893 shares of common stock in the offering at the public offering price per share for an aggregate purchase price of approximately $300,000. We anticipate using the net proceeds primarily for general corporate purposes, including capital expenditures and working capital.

We expect that our revenues will continue to increase, which will provide us with improved cash flows from operations for at least the next twelve months. In the event that we are unable to meet our revenue targets, we will have to explore alternative methods to conserve our cash position. Should we find it necessary to delay or scale back certain activities, our business, financial condition, and results of operations could be materially affected. While there is no assurance that the Company can meet its revenue targets, management anticipates that it can continue operations for at least the next twelve months.

The functional currency of our foreign subsidiaries is the applicable local currency, the Swedish Krona, the Japanese Yen, the South Korean Won and the Taiwan Dollar. They are subject to foreign currency exchange rate risk. Any increase or decrease in the exchange rate of the U.S. Dollar compared to the Swedish Krona, Japanese Yen, South Korean Won or Taiwan Dollar will impact our future operating results.

Critical Accounting Policies

There have been no material changes from the critical accounting policies as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The functional currency of our foreign subsidiaries is the applicable local currency, the Swedish Krona, the Japanese Yen, the South Korean Won and the Taiwan Dollar, and is subject to foreign currency exchange rate risk. Any increase or decrease in the exchange rate of the U.S. Dollar compared to the Swedish Krona, Japanese Yen, South Korean Won or Taiwan Dollar will impact our future operating results. Our consolidated net revenues for the three months ended March 31, 2016 are denominated in U.S. Dollars and approximately 71% of our consolidated operating costs for the three months ended March 31, 2016 are denominated in Swedish Krona, Japanese Yen, South Korean Won and Taiwan Dollar. We do not currently enter into forward-exchange contracts to hedge exposure denominated in foreign currencies or any other derivative financial instruments for trading or speculative purposes. In the future, if our operations change and we determine that our foreign exchange exposure has increased, we may consider entering into hedging transactions to mitigate such risk.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

Under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2016. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this report that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. Other Information

Item 1. Legal Proceedings

We are not currently involved in any material legal proceedings. However, from time to time, we may become subject to legal proceedings, claims, and litigation arising in the ordinary course of business, including, but not limited to, employee, customer and vendor disputes.

Item 1A. Risk Factors

There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 6. Exhibits

Exhibit #		Description
3.1		Amended and Restated Certificate of Incorporation of Neonode Inc., dated April 17, 2009 (incorporated by reference to Exhibit 10.22 of our Quarterly Report on Form 10-Q filed on August 4, 2009 (file no. 0-08419))
3.1.1		Certificate of Amendment, dated December 13, 2010 (incorporated by reference to Exhibit 3.1.1 of our Annual Report on Form 10-K filed on March 31, 2011 (file no. 0-08419))
3.1.2		Certificate of Amendment, dated March 18, 2011 (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed on March 28, 2011 (file no. 0-08419))
3.1.3		Certificate of Correction, dated February 29, 2011 (incorporated by reference to Exhibit 3.1.3 of our Annual Report on Form 10-K filed on March 30, 2012 (file no. 0-08419))
3.2		Bylaws (incorporated by reference to Exhibit 3.2 of our Annual Report on Form 10-K filed on April 15, 2008 (file no. 0-08419))
31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002*
31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002*
32		Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NEONODE INC.

Date: May 10, 2016	By:	/s/ Lars Lindqvist
		Lars Lindqvist
		Chief Financial Officer,
		Vice President, Finance,
		Treasurer and Secretary
		(Principal Financial and Accounting Officer)

EX-31.1 2 f10q0316ex31i_neonodeinc.htm CERTIFICATION

Exhibit 31.1

Certification OF PRINCIPAL EXECUTIVE OFFICER Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002

I, Thomas Eriksson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Neonode Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2016	By:	/s/ Thomas Eriksson
		Thomas Eriksson
		President and Chief Executive Officer

EX-31.2 3 f10q0316ex31ii_neonodeinc.htm CERTIFICATION

Exhibit 31.2

Certification OF PRINCIPAL FINANCIAL OFFICER Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002

I, Lars Lindqvist, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Neonode Inc.

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fiscal fourth quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2016

By:

/s/ Lars Lindqvist

Lars Lindqvist

Chief Financial Officer,

Vice President, Finance,

Treasurer and Secretary

EX-32.1 4 f10q0316ex32i_neonodeinc.htm CERTIFICATION

Exhibit 32.1

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Neonode Inc. (the “Company”) on Form 10-Q for the fiscal period ended March 31, 2016 as filed with the Securities and Exchange Commission (the “Report”), the undersigned principal executive officer and principal financial officer of the Company, each hereby certify, solely for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to our knowledge:

The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 10, 2016	By:	/s/ Thomas Eriksson
		Thomas Eriksson
		President and Chief Executive Officer

Date: May 10, 2016

By:

/s/ Lars Lindqvist

Lars Lindqvist

Chief Financial Officer,

Vice President, Finance,

Treasurer and Secretary

This certification is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Act of 1934, as amended, whether made before or after the date of the Report, irrespective of any general incorporation language contained in such filing.

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<div> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">2.   Summary of Significant Accounting Policies <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 0.5in; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Principles of Consolidation <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 0.5in; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">The consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of Neonode Inc. and its wholly owned subsidiaries, as well as Pronode Technologies AB, a 51% majority owned subsidiary of Neonode Technologies AB. The remaining 49% of Pronode Technologies AB is owned by Propoint AB, located in Gothenburg, Sweden. Pronode Technologies AB was organized to enable and build a master platform for a successful mass production of sensor modules. All inter-company accounts and transactions have been eliminated in consolidation. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">The unaudited condensed consolidated balance sheet at March 31, 2016 and the condensed consolidated statements of operations, comprehensive loss and cash flows for the three months ended March 31, 2016 include our accounts and those of our wholly owned subsidiaries, Neonode Technologies AB (Sweden), Neonode Americas Inc. (U.S.), Neonode Japan Inc. (Japan), NEON Technology Inc. (U.S.), Neno User Interface Solutions AB (Sweden), Neonode Korea Ltd. (South Korea) and Neonode Taiwan Ltd. (Taiwan), and the majority-owned subsidiary of Neonode Technologies AB, Pronode Technologies AB. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">The consolidated balance sheet at December 31, 2015 include our accounts and those of our wholly owned subsidiaries, Neonode Technologies AB (Sweden), Neonode Americas Inc. (U.S.), Neonode Japan Inc. (Japan), NEON Technology Inc. (U.S.), Neno User Interface Solutions AB (Sweden), Neonode Korea Ltd. (South Korea) and Neonode Taiwan Ltd. (Taiwan), and the majority-owned subsidiary of Neonode Technologies AB, Pronode Technologies AB. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">The unaudited condensed consolidated statements of operations, comprehensive loss and cash flows for the three months ended March 31, 2015 include our accounts and those of our wholly owned subsidiaries, Neonode Technologies AB (Sweden), Neonode Americas Inc. (U.S.), Neonode Japan Inc. (Japan), NEON Technology Inc. (U.S.), Neno User Interface Solutions AB (Sweden), Neonode Korea Ltd. (South Korea) and Neonode Taiwan Ltd. (Taiwan).   <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Estimates <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">The preparation of financial statements in conformity with U.S. GAAP requires making estimates and assumptions that affect, at the date of the financial statements, the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Actual results could differ from these estimates. Significant estimates include, but are not limited to, collectability of accounts receivable, the achievement of substantive milestones and vendor-specific objective evidence (“VSOE”) of fair value for purposes of revenue recognition (or deferral of revenue), recoverability of capitalized project costs and long-lived assets, the valuation allowance related to our deferred tax assets, and the fair value of options and warrants issued for stock-based compensation. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; text-align: justify; color: #000000; text-transform: none; text-indent: 0pt; letter-spacing: normal; margin-top: 0px; margin-bottom: 0px; margin-left: 0pt; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Cash <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">We have not had any liquid investments other than normal cash deposits with bank institutions to date. The Company considers all highly liquid investments with original maturities of three months of less to be cash equivalents. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Concentration of Cash Balance Risks <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Cash balances are maintained at various banks in the U.S., Japan, Korea, Taiwan and Sweden. For deposits held with financial institutions in the U.S. the U.S. Federal Deposit Insurance Corporation, provides basic deposit coverage with limits up to $250,000 per owner. The Swedish government provides insurance coverage up to 100,000 Euro per customer and covers deposits in all types of accounts. The Japanese government provides insurance coverage up to 10,000,000 Yen per customer. The Korea Deposit Insurance Corporation provides insurance coverage up to 50,000,000 Won per customer. The Central Deposit Insurance Corporation in Taiwan provides insurance coverage up to 3,000,000 Taiwan Dollar per customer. At times, deposits held with financial institutions may exceed the amount of insurance provided. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 0.5in; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">   <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Accounts Receivable and Allowance for Doubtful Accounts   <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 0.5in; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Our accounts receivable are stated at net realizable value. Our policy is to maintain allowances for estimated losses resulting from the inability of our customers to make required payments. Credit limits are established through a process of reviewing the financial history and stability of each customer. Where appropriate, we obtain credit rating reports and financial statements of the customer when determining or modifying its credit limits. We regularly evaluate the collectability of our trade receivable balances based on a combination of factors. When a customer’s account balance becomes past due, we initiate dialogue with the customer to determine the cause. If it is determined that the customer will be unable to meet its financial obligation, such as in the case of a bankruptcy filing, deterioration in the customer’s operating results or financial position or other material events impacting its business, we record a specific allowance to reduce the related receivable to the amount we expect to recover. Should all efforts fail to recover the related receivable, we will write-off the account. We also record an allowance for all customers based on certain other factors including the length of time the receivables are past due and historical collection experience with customers. Our allowance for doubtful accounts was approximately $167,000 as of March 31, 2016 and December 31, 2015. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 0.5in; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Projects in Process <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 0.5in; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Projects in process consist of costs incurred toward the completion of various projects for certain customers. These costs are primarily comprised of direct engineering labor costs and project-specific equipment costs. These costs are capitalized on our condensed consolidated balance sheet as an asset and deferred until revenue for each project is recognized in accordance with our revenue recognition policy. Costs capitalized in projects in process were $122,000 and $158,000 as of March 31, 2016 and December 31, 2015, respectively. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 0.5in; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Property and Equipment <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method based upon estimated useful lives of the assets as follows: <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Estimated useful lives <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; font-size: 10pt; word-spacing: 0px; border-collapse: collapse; widows: 1; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top; background-color: #cceeff;"> <td style="width: 0.5in; background-color: white;"> </td> <td style="line-height: 14.26px;">Computer equipment</td> <td style="width: 705px; line-height: 14.26px;">3 years</td> </tr> <tr style="vertical-align: top; background-color: white;"> <td style="background-color: white;"> </td> <td style="line-height: 14.26px;">Furniture and fixtures</td> <td style="line-height: 14.26px;">5 years</td> </tr> <tr style="vertical-align: top; background-color: #cceeff;"> <td style="background-color: white;"> </td> <td style="line-height: 14.26px;">Equipment</td> <td style="line-height: 14.26px;">7 years</td> </tr> </table> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Equipment purchased under a capital lease is recognized over the term of the lease, if that lease term is shorter than the estimated useful life. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Upon retirement or sale of property and equipment, cost and accumulated depreciation and amortization are removed from the accounts and any gains or losses are reflected in the condensed consolidated statement of operations. Maintenance and repairs are charged to expense as incurred. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 0.5in; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Long-lived Assets <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 0.5in; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">We assess any impairment by estimating the future cash flow from the associated asset in accordance with relevant accounting guidance. If the estimated undiscounted future cash flow related to these assets decreases or the useful life is shorter than originally estimated, we may incur charges for impairment of these assets. As of March 31, 2016, we believe there was no impairment of our long-lived assets. There can be no assurance, however, that market conditions will not change or sufficient demand for our products and services will continue, which could result in impairment of long-lived assets in the future. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">   <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Foreign Currency Translation and Transaction Gains and Losses <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 0.5in; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">The functional currency of our foreign subsidiaries is the applicable local currency, the Swedish Krona, the Japanese Yen, the South Korean Won and the Taiwan Dollar. The translation from Swedish Krona, Japanese Yen, South Korean Won and Taiwan Dollar to U.S. Dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for income statement accounts using a weighted-average exchange rate during the period. Gains or (losses) resulting from translation are included as a separate component of accumulated other comprehensive income (loss). Foreign currency translation gains (losses) were $(35,000) and $2,000 during the three months ended March 31, 2016 and 2015, respectively. Gains resulting from foreign currency transactions are included in general and administrative expenses in the accompanying condensed consolidated statements of operations and were $13,000 and $26,000 during the three months ended March 31, 2016 and 2015, respectively. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.55in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Concentration of Credit and Business Risks <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Our customers are located in U.S., Europe and Asia. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">As of March 31, 2016, five customers represented approximately 100% of the Company’s accounts receivable.  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">As of December 31, 2015, three customers represented approximately 78% of the Company’s accounts receivable.  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Our net revenues for the three months ended March 31, 2016 were earned from twenty customers. Customers who accounted for 10% or more of our net revenues during the three months ended March 31, 2016 are as follows: <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; font-size: 10pt; word-spacing: 0px; widows: 1; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 72px;"> </td> <td style="width: 24px; line-height: 14.26px;">●</td> <td style="line-height: 14.26px;">Hewlett Packard Company – 40%</td> </tr> <tr style="vertical-align: top;"> <td style="width: 72px;"> </td> <td style="width: 24px; line-height: 14.26px;">●</td> <td style="line-height: 14.26px;">Amazon – 18%</td> </tr> <tr style="vertical-align: top;"> <td style="width: 72px;"> </td> <td style="width: 24px; line-height: 14.26px;">●</td> <td style="line-height: 14.26px;">Autoliv Development AB – 12%</td> </tr> </table> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Our net revenues for the three months ended March 31, 2015 were earned from twenty-four customers. Customers who accounted for 10% or more of our net revenues during the three months ended March 31, 2015 are as follows: <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; font-size: 10pt; word-spacing: 0px; widows: 1; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 72px;"> </td> <td style="width: 24px; line-height: 14.26px;">●</td> <td style="line-height: 14.26px;">Hewlett Packard Company – 30%</td> </tr> <tr style="vertical-align: top;"> <td style="width: 72px;"> </td> <td style="width: 24px; line-height: 14.26px;">●</td> <td style="line-height: 14.26px;">Amazon – 28%</td> </tr> </table> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">   <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Revenue Recognition <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Licensing Revenues: <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">We derive revenue from the licensing of internally developed intellectual property (“IP”). We enter into IP licensing agreements that generally provide licensees the right to incorporate our IP components in their products with terms and conditions that vary by licensee. Fees under these agreements may include license fees relating to our IP and royalties payable following the distribution by our licensees of products incorporating the licensed technology. The license for our IP has standalone value and can be used by the licensee without maintenance and support. We follow U.S. GAAP for revenue recognition as per unit royalty products are distributed or licensed by our customers. For technology license arrangements that do not require significant modification or customization of the underlying technology, we recognize technology license revenue when: (1) we enter into a legally binding arrangement with a customer for the license of technology; (2) the customer distributes or licenses the products; (3) the customer payment is deemed fixed or determinable and free of contingencies or significant uncertainties; and (4) collection is reasonably assured. Our customers report to us the quantities of products distributed or licensed by them after the end of the reporting period stipulated in the contract, generally 30 to 45 days after the end of the month or quarter. We recognize licensing revenue in the period in which royalty reports are received, rather than the period in which the products are distributed or to which the license relates. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Explicit return rights are not offered to customers. There have been no returns through March 31, 2016. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Engineering Services: <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">We may sell engineering consulting services to our customers on a flat rate or hourly rate basis. We recognize revenue from these services when all of the following conditions are met: (1) evidence existed of an arrangement with the customer, typically consisting of a purchase order or contract; (2) our services were performed and risk of loss passed to the customer; (3) we completed all of the necessary terms of the contract; (4) the amount of revenue to which we were entitled was fixed or determinable; and (5) we believed it was probable that we would be able to collect the amount due from the customer. To the extent that one or more of these conditions has not been satisfied, we defer recognition of revenue.   <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Generally, we recognize revenue as the engineering services stipulated under the contract are completed and accepted by our customers.  Engineering services are performed under a signed Statement of Work (“SOW”) with a customer. The deliverables and payment terms stipulated under the SOW provide guidance on the project revenue recognition. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Revenues from contracts that are short-term in nature and related costs that are difficult to estimate are accounted for under the completed contract method. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Revenues from contracts with substantive defined milestones that we have determined are reasonable, relevant to all the deliverables and payment terms in the SOW that are commensurate with the efforts required to achieve the milestones are recognized under the milestone recognition method. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Estimated losses on all SOW projects are recognized in full as soon as they become evident. In the quarters ended March 31, 2016 and 2015, no losses related to SOW projects were recorded. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Deferred Revenues <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> From time-to-time we receive pre-payments from our customers related to future services or future license fee revenues. We defer the license fees until we have met all accounting requirements for revenue recognition as per unit royalty products are distributed and royalty reports are received. Engineering development fee revenues are deferred until such time as the engineering work has been completed and accepted by our customers. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">   <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Advertising <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Advertising costs are expensed as incurred. Advertising costs for the three months ended March 31, 2016 and 2015 amounted to approximately $80,000 and $20,000, respectively. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">   <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Research and Development <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Research and development (“R&D”) costs are expensed as incurred. R&D costs consist mainly of personnel related costs in addition to some external consultancy costs such as testing, certifying and measurements. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Stock-Based Compensation Expense <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">We measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the estimated fair value of the award on the grant date, and recognize the value as compensation expense over the period the employee is required to provide services in exchange for the award, usually the vesting period, net of estimated forfeitures. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> We account for equity instruments issued to non-employees at their estimated fair value. The measurement date for the estimated fair value for the equity instruments issued is determined at the earlier of (1) the date at which a commitment for performance by the consultant or vendor is reached, or (2) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instruments is primarily recognized over the term of the consulting agreement. The estimated fair value of the stock-based compensation is periodically re-measured and income or expense is recognized during the vesting term. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">When determining stock-based compensation expense involving options and warrants, we determine the estimated fair value of options and warrants using the Black-Scholes option pricing model. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Noncontrolling Interests <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> The Company recognizes noncontrolling interests as equity in the condensed consolidated financial statements separate from the parent company’s equity. Noncontrolling interests’ partners have less than 50% share of voting rights at any one of the subsidiary level companies. The amount of net income (loss) attributable to non-controlling interests is included in consolidated net income (loss) on the face of the condensed consolidated statements of operations. Changes in a parent entity’s ownership interest in a subsidiary that do not result in deconsolidation are treated as equity transactions if the parent entity retains its controlling financial interest. The Company recognizes a gain or loss in net income (loss) when a subsidiary is deconsolidated. Such gain or loss is measured using the fair value of the noncontrolling equity investment on the deconsolidation date. Additionally, operating losses are allocated to noncontrolling interests even when such allocation creates a deficit balance for the noncontrolling interest partner. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">The Company provides either in the condensed consolidated statement of stockholders’ equity, if presented, or in the notes to condensed consolidated financial statements, a reconciliation at the beginning and the end of the period of the carrying amount of total equity (net assets), equity (net assets) attributable to the parent, and equity (net assets) attributable to the noncontrolling interest that separately discloses: <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; font-size: 10pt; word-spacing: 0px; widows: 1; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 0.5in;"> </td> <td style="width: 0.25in; line-height: 14.26px;">(1)</td> <td style="line-height: 14.26px;">Net income or loss.</td> </tr> <tr style="vertical-align: top;"> <td> </td> <td style="line-height: 14.26px;">(2)</td> <td style="line-height: 14.26px;">Transactions with owners acting in their capacity as owners, showing separately contributions from and distributions to owners.</td> </tr> <tr style="vertical-align: top;"> <td> </td> <td style="line-height: 14.26px;">(3)</td> <td style="line-height: 14.26px;">Each component of other comprehensive income or loss.</td> </tr> </table> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">   <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Income Taxes <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">We recognize deferred tax liabilities and assets for the expected future tax consequences of items that have been included in the consolidated financial statements or tax returns. We estimate income taxes based on rates in effect in each of the jurisdictions in which we operate. Deferred income tax assets and liabilities are determined based upon differences between the financial statement and income tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The realization of deferred tax assets is based on historical tax positions and expectations about future taxable income. Valuation allowances are recorded against net deferred tax assets when, in our opinion, realization is uncertain based on the “more likely than not” criteria of the accounting guidance. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Based on the uncertainty of future pre-tax income, we fully reserved our net deferred tax assets as of March 31, 2016 and December 31, 2015. In the event we were to determine that we would be able to realize our deferred tax assets in the future, an adjustment to the deferred tax asset would increase income in the period such determination was made. The provision for income taxes represents the net change in deferred tax amounts, plus income taxes paid or payable for the current period. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">We follow U.S. GAAP related accounting for uncertainty in income taxes, which provisions include a two-step approach to recognizing, de-recognizing and measuring uncertainty in income taxes. As a result, we did not recognize a liability for unrecognized tax benefits. As of March 31, 2016 and December 31, 2015, we had no unrecognized tax benefits. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">   <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Net Loss per Share <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Net loss per share amounts has been computed based on the weighted average number of shares of common stock outstanding during the three months ended March 31, 2016 and 2015. Net loss per share, assuming dilution amounts from common stock equivalents, is computed based on the weighted-average number of shares of common stock and potential common stock equivalents outstanding during the period. The weighted-average number of shares of common stock and potential common stock equivalents used in computing the net loss per share for the three months ended March 31, 2016 and 2015 exclude the potential common stock equivalents, as the effect would be anti-dilutive (See Note 8). <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Other Comprehensive Income (Loss) <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Our other comprehensive income (loss) includes foreign currency translation gains and losses. The cumulative amount of translation gains and losses are reflected as a separate component of stockholders’ equity in the condensed consolidated balance sheets as accumulated other comprehensive income. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Cash Flow Information <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Cash flows in foreign currencies have been converted to U.S. Dollars at an approximate weighted-average exchange rate for the respective reporting periods. The weighted-average exchange rate for the condensed consolidated statements of operations was as follows: <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; widows: 1; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="font-size: 10pt;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="6">Three months ended March 31,</td> <td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td> </tr> <tr style="vertical-align: bottom;"> <td style="font-size: 10pt;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">2016</td> <td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">2015</td> <td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td> </tr> <tr style="vertical-align: bottom; background-color: #cceeff;"> <td style="font: 10pt/normal 'times new roman', times, serif; width: 1191px; text-align: left; font-stretch: normal;">Swedish Krona</td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 142px; text-align: right; font-stretch: normal;">8.45</td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; font-stretch: normal;">8.32</td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;">Japanese Yen</td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">115.36</td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">119.15</td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> </tr> <tr style="vertical-align: bottom; background-color: #cceeff;"> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;">South Korean Won</td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">1,193.75</td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">1,100</td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;">Taiwan Dollar</td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">33.06</td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">31.56</td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> </tr> </table> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">   <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Exchange rate for the condensed consolidated balance sheets was as follows: <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.55in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; widows: 1; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="font-size: 10pt;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; font-stretch: normal;" colspan="2">March 31,</td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; font-stretch: normal;" colspan="2">December 31,</td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> </tr> <tr style="vertical-align: bottom;"> <td style="font-size: 10pt;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">2016</td> <td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">2015</td> <td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td> </tr> <tr style="vertical-align: bottom; background-color: #cceeff;"> <td style="font: 10pt/normal 'times new roman', times, serif; width: 1191px; text-align: left; font-stretch: normal;">Swedish Krona</td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 142px; text-align: right; font-stretch: normal;">8.12</td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; font-stretch: normal;">8.42</td> <td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;">Japanese Yen</td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">112.39</td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">120.36</td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> </tr> <tr style="vertical-align: bottom; background-color: #cceeff;"> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;">South Korean Won</td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">1,141.29</td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">1,174.67</td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;">Taiwan Dollar</td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">32.20</td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">32.84</td> <td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td> </tr> </table> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.55in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">   <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Fair Value of Financial Instruments <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">We disclose the estimated fair values for all financial instruments for which it is practicable to estimate fair value. Financial instruments including cash, accounts receivable, accounts payable and accrued expenses and are deemed to approximate fair value due to their short maturities. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">   <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">New Accounting Pronouncements <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. On July 9, 2015, the FASB approved amendments deferring the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date and permitting early adoption of the standard, but not before the original effective date or for reporting periods beginning after December 15, 2016. We have not yet selected a transition method and are currently assessing the impact the adoption of ASU 2014-09 will have on our consolidated financial statements and disclosures. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. The amendments in this update provide guidance in U.S. GAAP about management's responsibilities to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The main provision of the amendments are for an entity's management, in connection with the preparation of financial statements, to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. Management's evaluation should be based on relevant conditions and events that are known or reasonably knowable at the date the consolidated financial statements are issued. When management identifies conditions or events that raise substantial doubt about an entity's ability to continue as a going concern, the entity should disclose information that enables users of the consolidated financial statements to understand all of the following: (1) principal conditions or events that raised substantial doubt about the entity's ability to continue as a going concern (before consideration of management's plans); (2) management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations; and (3) management's plans that alleviated substantial doubt about the entity's ability to continue as a going concern or management's plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. The amendments in this update are effective for interim and annual reporting periods beginning after December 15, 2016 and early application is permitted. We are currently assessing this guidance for future implementation. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">In November 2015, FASB issued ASU 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), which eliminates the current requirement for an entity to separate deferred income tax liabilities and assets into current and non-current amounts in a classified balance sheet. Instead, the ASU requires deferred tax liabilities, deferred tax assets and valuation allowances be classified as non-current in a classified balance sheet. ASU 2015-17 will be effective for annual reporting periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. Additionally, this guidance may be applied either prospectively or retrospectively to all periods presented. The Company elected not to early adopt ASU 2015-17 and is evaluating the effect of the adoption of this ASU to its consolidated financial statements. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">   <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees may not apply a full retrospective transition approach. The Company elected not to early adopt ASU 2016-02 and is evaluating the effect of the adoption of this ASU to its consolidated financial statements. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">In March 2016, the FASB issued ASU No. 2016-07, Investments- Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting (“ASU 2016-07”). ASU 2016-07 eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. ASU 2016-07 is effective for years beginning after December 15, 2016. The Company is currently evaluating the impact of this ASU to its consolidated financial statements. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which simplified certain aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities and classification in the statement of cash flows. ASU 2016-09 will be effective for annual reporting periods beginning after December 15, 2016 and interim periods within those annual periods. The Company is currently evaluating the impact of adopting the new stock compensation standard on its consolidated financial statements. </div>

<div>4.   Stockholders’ Equity Common Stock During the three months ended March 31, 2016, a warrant holder exercised warrants to purchase 80,000 shares of common stock using the cashless net exercise provision allowed in the warrant and received 11,565 shares of our common stock.  Preferred Stock We have one class of preferred stock outstanding. The terms of the Series B Preferred stock are as follows: Dividends and Distributions The holders of shares of Series B Preferred stock are entitled to participate with the holders of our common stock with respect to any dividends declared on the common stock in proportion to the number of shares of common stock issuable upon conversion of the shares of Series B Preferred stock held by them. Liquidation Preference In the event of any liquidation, dissolution, or winding up of our operations, either voluntary or involuntary, subject to the rights of the Series B Preferred stock and Senior Preferred stock, shall be entitled to receive, after any distribution to the holders of senior preferred stock and prior to and in preference to any distribution to the holders of common stock, $0.001 for each share of Series B Preferred stock then outstanding. Voting The holders of shares of Series B Preferred stock have one vote for each share of Series B Preferred stock held by them.  Conversion Initially, each share of Series B Preferred stock was convertible into one share of our common stock. On March 31, 2009, our stockholders approved a resolution to increase the authorized share capital, and to increase the conversion ratio to 132.07 shares of our common stock for each share of Series B Preferred stock.    Conversion of Preferred Stock Issued to Common Stock The following table summarizes the amounts as of March 31, 2016.   <table style="width: 1567px; border-collapse: collapse;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Shares of Preferred Stock Not Exchanged as of March 31, 2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Conversion Ratio</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Shares of Common Stock after Conversion of all Outstanding Shares of Preferred Stock Not yet Exchanged at March 31, 2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="width: 1003px; font-size: 10pt;"> </td><td style="width: 16px; font-size: 10pt;"> </td><td style="width: 16px; text-align: left; font-size: 10pt;"> </td><td style="width: 142px; text-align: right; font-size: 10pt;"> </td><td style="width: 16px; text-align: left; font-size: 10pt;"> </td><td style="width: 16px; font-size: 10pt;"> </td><td style="width: 16px; text-align: left; font-size: 10pt;"> </td><td style="width: 141px; text-align: right; font-size: 10pt;"> </td><td style="width: 15px; text-align: left; font-size: 10pt;"> </td><td style="width: 15px; font-size: 10pt;"> </td><td style="width: 15px; text-align: left; font-size: 10pt;"> </td><td style="width: 141px; text-align: right; font-size: 10pt;"> </td><td style="width: 15px; text-align: left; font-size: 10pt;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; padding-bottom: 4pt; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Series B Preferred stock</td><td style="font: 10pt/normal 'times new roman', times, serif; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; padding-bottom: 4pt; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">83</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; padding-bottom: 4pt; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; padding-bottom: 4pt; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">132.07</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; padding-bottom: 4pt; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; padding-bottom: 4pt; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">10,962</td></tr></table></div>

<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">5.   Stock-Based Compensation<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">The stock-based compensation expense for the three months ended March 31, 2016 and 2015 reflects the estimated fair value of the vested portion of options granted to employees, directors and eligible consultants. Stock-based compensation expense in the accompanying condensed consolidated statements of operations is as follows (in thousands):<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="6">Three months ended   March 31,</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">2015</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 1191px; text-align: left; font-stretch: normal;">Research and development</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 142px; text-align: right; font-stretch: normal;">43</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; font-stretch: normal;">223</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;">Sales and marketing</td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">62</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">106</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;">General and administrative</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">9</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">269</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-stretch: normal;">Total stock-based compensation expense</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">114</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">598</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-stretch: normal;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Remaining unrecognized  expense at  March 31, 2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 1379px; text-align: left; padding-bottom: 4pt; font-stretch: normal;">Stock-based compensation</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">385</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; padding-bottom: 4pt; font-stretch: normal;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">The remaining unrecognized expense related to stock options will be recognized on a straight line basis monthly as compensation expense over the remaining vesting period, which approximates 1.5 years.<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.55in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">The estimated fair value of stock-based awards is calculated using the Black-Scholes option pricing model, even though this model was developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions, which differ significantly from our stock options. The Black-Scholes model also requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. The expected term and forfeiture rate of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior, as well as expected behavior on outstanding options. The risk-free rate is based on the U.S. Treasury rates in effect during the corresponding period of grant. The expected volatility is based on the historical volatility of our stock price. These factors could change in the future, which would affect fair values of stock options granted in such future periods, and could cause volatility in the total amount of the stock-based compensation expense reported in future periods.<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">Stock Options<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">We have adopted equity incentive plans for which stock options and restricted stock awards are available to grant to employees, consultants and directors. Except for 265,000 options issued to certain Swedish employees during 2015, all employee, consultant and director stock options granted under our stock option plans have an exercise price equal to the market value of the underlying common stock on the grant date. There are no vesting provisions tied to performance conditions for any options, as vesting for all outstanding option grants was based only on continued service as an employee, consultant or director. All of our outstanding stock options and restricted stock awards are classified as equity instruments.<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">As of March 31, 2016 we had two equity incentive plans:<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; font-size: 10pt; word-spacing: 0px; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top;"><td style="width: 48px; line-height: 14.26px;"> </td><td style="width: 24px; line-height: 14.26px;">●</td><td style="line-height: 14.26px;">The 2006 Equity Incentive Plan; and</td></tr><tr style="vertical-align: top;"><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;">●</td><td style="line-height: 14.26px;">The 2015 Stock Incentive Plan</td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">We also had expired one non-employee director stock option plan.<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; font-size: 10pt; word-spacing: 0px; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top;"><td style="width: 48px;"> </td><td style="width: 24px; line-height: 14.26px;">●</td><td style="line-height: 14.26px;">The 2001 Non-Employee Director Stock Option Plan (the “Director Plan”), which expired in March 2011.</td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">A summary of the combined activity under all of the stock option plans is set forth below:<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Number of Options Outstanding</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Weighted Average Exercise Price</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 1191px; font-stretch: normal;">Outstanding at January 1, 2016</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 142px; text-align: right; font-stretch: normal;">2,184,117</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; font-stretch: normal;">4.48</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">Granted</td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">-</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">-</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;">Forfeited</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">(111,922</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;">)</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">4.47</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;">Outstanding at March 31, 2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">2,072,195</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">4.48</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">The aggregate intrinsic value of the 2,072,195 stock options that are outstanding, vested and expected to vest as of March 31, 2016 was approximately $0.<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">For the three months ended March 31, 2016 and 2015, we recorded $0.1 million and $0.6 million, respectively, of compensation expense related to the vesting of stock options. The fair value of the stock-based compensation was calculated using the Black-Scholes option pricing model as of the date of grant of the stock option.<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">During the three months ended March 31, 2016, we did not grant any options to purchase shares of our common stock to employees or members of our board of directors.<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">Stock options granted under the 2006 and 2015 Plans are exercisable over a maximum term of ten years from the date of grant, vest in various installments over a one to four-year period and have exercise prices reflecting the market value of the shares of common stock on the date of grant.<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">Warrants<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">A summary of all warrant activity is set forth below:<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="10">March 31, 2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom;"><td style="font: 10pt/normal 'times new roman', times, serif; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;"></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Warrants</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Weighted Average Exercise Price</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Weighted Average  Remaining Contractual Life</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 1003px; font-stretch: normal;">Outstanding and exercisable, January 1, 2016</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 142px; text-align: right; font-stretch: normal;">464,073</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; font-stretch: normal;">3.02</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; font-stretch: normal;">0.19</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">   Granted</td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">--</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">--</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">--</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">   Expired/cancelled</td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">(349,973</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;">)</td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">3.13</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">--</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;">   Exercised</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">(80,000</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;">)</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">2.00</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">--</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-stretch: normal;">Outstanding and exercisable, March 31, 2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">34,100</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">3.13</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">0.02</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-stretch: normal;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; text-align: center; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; margin-top: 0px; margin-bottom: 0px; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; text-align: center; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; margin-top: 0px; margin-bottom: 0px; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><p style="font: 10pt/14.13px 'times new roman', times, serif; text-align: center; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; margin-top: 0px; margin-bottom: 0px; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">Outstanding Warrants to Purchase Common Stock as of March 31, 2016:<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><p style="font: 13px/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; -webkit-text-stroke-width: 0px;"> <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font: 10pt/normal 'times new roman', times, serif; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">Description</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">Issue Date</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Exercise Price</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Shares</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">Expiration Date</td></tr><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;" colspan="2"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;" colspan="2"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 491px; padding-bottom: 1.5pt; font-stretch: normal;">March 2011 Investor Warrants</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 23px; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 221px; text-align: right; padding-bottom: 1.5pt; font-stretch: normal;">4/7/2011</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 23px; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 23px; text-align: left; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 222px; text-align: right; font-stretch: normal;">3.13</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 24px; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 24px; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 24px; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 222px; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">34,100</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 24px; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 24px; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 222px; text-align: right; padding-bottom: 1.5pt; font-stretch: normal;">4/7/2016</td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-stretch: normal;">Total Warrants Outstanding</td><td style="padding-bottom: 4pt; font-size: 10pt;"> </td><td style="text-align: right; padding-bottom: 4pt; font-size: 10pt;"> </td><td style="padding-bottom: 4pt; font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="text-align: right; font-size: 10pt;"> </td><td style="text-align: left; padding-bottom: 4pt; font-size: 10pt;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">34,100</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="padding-bottom: 4pt; font-size: 10pt;"> </td><td style="text-align: right; padding-bottom: 4pt; font-size: 10pt;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">The 34,100 warrants outstanding as of March 31, 2016 expired on April 7, 2016.

<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">Other Comprehensive Income (Loss)<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"> <p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;">Our other comprehensive income (loss) includes foreign currency translation gains and losses. The cumulative amount of translation gains and losses are reflected as a separate component of stockholders’ equity in the condensed consolidated balance sheets as accumulated other comprehensive income. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">Cash Flow Information<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">Cash flows in foreign currencies have been converted to U.S. Dollars at an approximate weighted-average exchange rate for the respective reporting periods. The weighted-average exchange rate for the condensed consolidated statements of operations was as follows:<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="6">Three months ended March 31,</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">2015</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 1191px; text-align: left; font-stretch: normal;">Swedish Krona</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 142px; text-align: right; font-stretch: normal;">8.45</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; font-stretch: normal;">8.32</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;">Japanese Yen</td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">115.36</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">119.15</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;">South Korean Won</td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">1,193.75</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">1,100</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;">Taiwan Dollar</td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">33.06</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">31.56</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">Exchange rate for the condensed consolidated balance sheets was as follows:<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.55in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; font-stretch: normal;" colspan="2">March 31,</td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; font-stretch: normal;" colspan="2">December 31,</td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">2015</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 1191px; text-align: left; font-stretch: normal;">Swedish Krona</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 142px; text-align: right; font-stretch: normal;">8.12</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; font-stretch: normal;">8.42</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;">Japanese Yen</td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">112.39</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">120.36</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;">South Korean Won</td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">1,141.29</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">1,174.67</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;">Taiwan Dollar</td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">32.20</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">32.84</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.55in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">

<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; font-size: 10pt; word-spacing: 0px; border-collapse: collapse; widows: 1; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top; background-color: #cceeff;"><td style="width: 0.5in; background-color: white;"> </td><td style="line-height: 14.26px;">Computer equipment</td><td style="width: 705px; line-height: 14.26px;">3 years</td></tr><tr style="vertical-align: top; background-color: white;"><td style="background-color: white;"> </td><td style="line-height: 14.26px;">Furniture and fixtures</td><td style="line-height: 14.26px;">5 years</td></tr><tr style="vertical-align: top; background-color: #cceeff;"><td style="background-color: white;"> </td><td style="line-height: 14.26px;">Equipment</td><td style="line-height: 14.26px;">7 years</td></tr></table>

<div> <table style="width: 1567px; border-collapse: collapse;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Shares of Preferred Stock Not Exchanged as of March 31, 2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Conversion Ratio</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Shares of Common Stock after Conversion of all Outstanding Shares of Preferred Stock Not yet Exchanged at March 31, 2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="width: 1003px; font-size: 10pt;"> </td><td style="width: 16px; font-size: 10pt;"> </td><td style="width: 16px; text-align: left; font-size: 10pt;"> </td><td style="width: 142px; text-align: right; font-size: 10pt;"> </td><td style="width: 16px; text-align: left; font-size: 10pt;"> </td><td style="width: 16px; font-size: 10pt;"> </td><td style="width: 16px; text-align: left; font-size: 10pt;"> </td><td style="width: 141px; text-align: right; font-size: 10pt;"> </td><td style="width: 15px; text-align: left; font-size: 10pt;"> </td><td style="width: 15px; font-size: 10pt;"> </td><td style="width: 15px; text-align: left; font-size: 10pt;"> </td><td style="width: 141px; text-align: right; font-size: 10pt;"> </td><td style="width: 15px; text-align: left; font-size: 10pt;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; padding-bottom: 4pt; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Series B Preferred stock</td><td style="font: 10pt/normal 'times new roman', times, serif; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; padding-bottom: 4pt; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">83</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; padding-bottom: 4pt; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; padding-bottom: 4pt; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">132.07</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; padding-bottom: 4pt; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; padding-bottom: 4pt; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">10,962</td></tr></table></div>

<table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">Three months ended   March 31,</td><td style="padding-bottom: 1.5pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2016</td><td style="padding-bottom: 1.5pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td style="padding-bottom: 1.5pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1191px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;">Research and development</td><td style="width: 16px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="width: 16px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;">$</td><td style="width: 142px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">43</td><td style="width: 16px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="width: 15px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="width: 15px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;">$</td><td style="width: 141px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">223</td><td style="width: 15px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;">Sales and marketing</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">62</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">106</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt;">General and administrative</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">9</td><td style="padding-bottom: 1.5pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">269</td><td style="padding-bottom: 1.5pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left; padding-bottom: 4pt;">Total stock-based compensation expense</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 4pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;">$</td><td style="border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">114</td><td style="padding-bottom: 4pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 4pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;">$</td><td style="border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">598</td><td style="padding-bottom: 4pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td></tr></table><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"> <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Remaining unrecognized  expense at  March 31, 2016</td><td style="padding-bottom: 1.5pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1379px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left; padding-bottom: 4pt;">Stock-based compensation</td><td style="width: 16px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 4pt;"> </td><td style="width: 16px; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;">$</td><td style="width: 141px; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">385</td><td style="width: 15px; padding-bottom: 4pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td></tr></table><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;">

<div> <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; widows: 1; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;" colspan="2">Number of Options Outstanding</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;" colspan="2">Weighted Average Exercise Price</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 1191px; font-size-adjust: none; font-stretch: normal;">Outstanding at January 1, 2016</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 142px; text-align: right; font-size-adjust: none; font-stretch: normal;">2,184,117</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-size-adjust: none; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; font-size-adjust: none; font-stretch: normal;">4.48</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; font-size-adjust: none; font-stretch: normal;">Granted</td><td style="font: 10pt/normal 'times new roman', times, serif; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-size-adjust: none; font-stretch: normal;">-</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-size-adjust: none; font-stretch: normal;">-</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;">Forfeited</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">(111,922</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;">)</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">4.47</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;">Outstanding at March 31, 2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">2,072,195</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">4.48</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"></td></tr></table></div>

<div><p style="font: 10pt/14.13px 'times new roman', times, serif; text-align: center; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; margin-top: 0px; margin-bottom: 0px; word-spacing: 0px; white-space: normal; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;"><table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; widows: 1; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font: 10pt/normal 'times new roman', times, serif; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">Description</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">Issue Date</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;" colspan="2">Exercise Price</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;" colspan="2">Shares</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">Expiration Date</td></tr><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;" colspan="2"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;" colspan="2"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 491px; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;">March 2011 Investor Warrants</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 23px; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 221px; text-align: right; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;">4/7/2011</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 23px; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 23px; text-align: left; font-size-adjust: none; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 222px; text-align: right; font-size-adjust: none; font-stretch: normal;">3.13</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 24px; text-align: left; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 24px; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 24px; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 222px; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">34,100</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 24px; text-align: left; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 24px; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 222px; text-align: right; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;">4/7/2016</td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;">Total Warrants Outstanding</td><td style="padding-bottom: 4pt; font-size: 10pt;"> </td><td style="text-align: right; padding-bottom: 4pt; font-size: 10pt;"> </td><td style="padding-bottom: 4pt; font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="text-align: right; font-size: 10pt;"> </td><td style="text-align: left; padding-bottom: 4pt; font-size: 10pt;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;">34,100</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;"></td></tr></table></div>

<table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="10">March 31, 2016</td><td style="padding-bottom: 1.5pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"></td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Warrants</td><td style="padding-bottom: 1.5pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Weighted Average Exercise Price</td><td style="padding-bottom: 1.5pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Weighted Average  Remaining Contractual Life</td><td style="padding-bottom: 1.5pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1003px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">Outstanding and exercisable, January 1, 2016</td><td style="width: 16px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="width: 16px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="width: 142px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">464,073</td><td style="width: 16px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="width: 16px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="width: 16px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;">$</td><td style="width: 141px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">3.02</td><td style="width: 15px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="width: 15px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="width: 15px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="width: 141px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">0.19</td><td style="width: 15px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">   Granted</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">--</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">--</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">--</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">   Expired/cancelled</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">(349,973</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;">)</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">3.13</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">--</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;">   Exercised</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">(80,000</td><td style="padding-bottom: 1.5pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;">)</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">2.00</td><td style="padding-bottom: 1.5pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">--</td><td style="padding-bottom: 1.5pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 4pt;">Outstanding and exercisable, March 31, 2016</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 4pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">34,100</td><td style="padding-bottom: 4pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 4pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;">$</td><td style="border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">3.13</td><td style="padding-bottom: 4pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 4pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">0.02</td><td style="padding-bottom: 4pt; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td></tr></table><div> </div>

<div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;"><table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; font-size: 10pt; word-spacing: 0px; border-collapse: collapse; widows: 1; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="text-align: center; line-height: 14.26px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">Three months ended  March 31, 2016</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="text-align: center; line-height: 14.26px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">Three months ended  March 31, 2015</td><td style="line-height: 14.26px;"> </td></tr><tr style="vertical-align: bottom;"><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="text-align: center; line-height: 14.26px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Amount</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="text-align: center; line-height: 14.26px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Percentage</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="text-align: center; line-height: 14.26px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Amount</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="text-align: center; line-height: 14.26px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Percentage</td><td style="line-height: 14.26px;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 815px; line-height: 14.26px;">Net revenues from customers in the Americas</td><td style="width: 16px; line-height: 14.26px;"> </td><td style="width: 16px; line-height: 14.26px;">$</td><td style="width: 142px; text-align: right; line-height: 14.26px;">2,005</td><td style="width: 16px; line-height: 14.26px;"> </td><td style="width: 16px; line-height: 14.26px;"> </td><td style="width: 16px; line-height: 14.26px;"> </td><td style="width: 142px; text-align: right; line-height: 14.26px;">64</td><td style="width: 16px; line-height: 14.26px;">%</td><td style="width: 15px; line-height: 14.26px;"> </td><td style="width: 15px; line-height: 14.26px;">$</td><td style="width: 141px; text-align: right; line-height: 14.26px;">1,693</td><td style="width: 15px; line-height: 14.26px;"> </td><td style="width: 15px; line-height: 14.26px;"> </td><td style="width: 15px; line-height: 14.26px;"> </td><td style="width: 141px; text-align: right; line-height: 14.26px;">75</td><td style="width: 15px; line-height: 14.26px;">%</td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="line-height: 14.26px;">Net revenues from customers in Asia</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="text-align: right; line-height: 14.26px;">560</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="text-align: right; line-height: 14.26px;">18</td><td style="line-height: 14.26px;">%</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="text-align: right; line-height: 14.26px;">413</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="text-align: right; line-height: 14.26px;">18</td><td style="line-height: 14.26px;">%</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="line-height: 14.26px;">Net revenues from customers in Europe</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; line-height: 14.26px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">567</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; line-height: 14.26px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">18</td><td style="line-height: 14.26px;">%</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; line-height: 14.26px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">157</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; line-height: 14.26px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">7</td><td style="line-height: 14.26px;">%</td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px; border-bottom-color: black; border-bottom-width: 4.5pt; border-bottom-style: double;">$</td><td style="text-align: right; line-height: 14.26px; border-bottom-color: black; border-bottom-width: 4.5pt; border-bottom-style: double;">3,132</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px; border-bottom-color: black; border-bottom-width: 4.5pt; border-bottom-style: double;"> </td><td style="text-align: right; line-height: 14.26px; border-bottom-color: black; border-bottom-width: 4.5pt; border-bottom-style: double;">100</td><td style="line-height: 14.26px;">%</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px; border-bottom-color: black; border-bottom-width: 4.5pt; border-bottom-style: double;">$</td><td style="text-align: right; line-height: 14.26px; border-bottom-color: black; border-bottom-width: 4.5pt; border-bottom-style: double;">2,263</td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px;"> </td><td style="line-height: 14.26px; border-bottom-color: black; border-bottom-width: 4.5pt; border-bottom-style: double;"> </td><td style="text-align: right; line-height: 14.26px; border-bottom-color: black; border-bottom-width: 4.5pt; border-bottom-style: double;">100</td><td style="line-height: 14.26px;">%</td></tr></table></div>

<div> <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; widows: 1; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font: 10pt/normal 'times new roman', times, serif; font-size-adjust: none; font-stretch: normal;">(in thousands, except per share amounts)</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;" colspan="6">Three months ended  March 31,</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;" colspan="2">2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;" colspan="2">2015</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom;"><td style="font: bold 10pt/normal 'times new roman', times, serif; font-size-adjust: none; font-stretch: normal;">BASIC AND DILUTED</td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;" colspan="2"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;" colspan="2"> </td><td style="font-size: 10pt;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 1191px; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;">Weighted average number of common shares outstanding</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 142px; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">43,810</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">40,455</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;">Net loss attributable to Neonode Inc.</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;">(1,367</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;">)</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;">(2,072</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;">)</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="text-align: right; font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="text-align: right; font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;">Net loss per share - basic and diluted</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;">(0.03</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;">)</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;">$</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;">(0.05</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;">)</td></tr></table></div>

3200000

1.90

6100000

5400000

700000

1800000

1500000 118000000

P3Y

P5Y

P7Y

8.32 119.15 1100 31.56 8.45 115.36 1193.75 33.06

8.42

120.36

1174.67

32.84

8.12

112.39

1141.29

32.20

10000000

100000

50000000

250000

3000000

167000

158000

122000

26000

13000

0.10

0.30

0.28

0.73

0.22

0.78

0.62

0.10

0.40

0.18

0.36

1.00

0.12

20000

80000

24 20

0.51

0.49

Noncontrolling interests' partners have less than 50% share of voting rights at any one of the subsidiary level companies

1 2 1 3

132.07

10962

83 132.07 80000

11565

598000

223000

106000

269000

600000

114000

43000

62000

9000

100000

385000

464073

2184117

34100

2072195

111922

3.02

4.48

3.13

4.48

3.13

4.47

349973

-80000

2.00

P2M9D

P7D 2011-04-07 3.13 34100 34100

2016-04-07

265000

P1Y6M

34100

2016-04-07 500000 500000 885000 Under the terms of the NN1001 Agreement, we have reimbursed Texas Instruments a non-recurring engineering fee of $0.08 per unit for each of the first one million units sold and $0.05 for the next eight million units sold. Under the terms of the NN1002 Agreement we will reimburse Texas Instruments a non-recurring engineering fee of $0.25 per unit for each of the first two million units sold. 0.08 0.05 0.25 93000 20000 <div> <table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; font-size: 10pt; word-spacing: 0px; border-collapse: collapse; widows: 1; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top;"><td style="width: 48px; line-height: 14.26px;"> </td><td style="width: 24px; line-height: 14.26px;">●</td><td style="line-height: 14.26px;">$235,000 at the feasibility review and contract signature (paid on January 20, 2015)</td></tr><tr style="vertical-align: top;"><td style="width: 48px; line-height: 14.26px;"> </td><td style="width: 24px; line-height: 14.26px;">●</td><td style="line-height: 14.26px;">$300,000 on completion of tape-out (paid on October 31, 2015)</td></tr><tr style="vertical-align: top;"><td style="width: 48px; line-height: 14.26px;"> </td><td style="width: 24px; line-height: 14.26px;">●</td><td style="line-height: 14.26px;">$300,000 on completion on product validation (not completed)</td></tr></table></div> 5.00 Under the terms of the NN1003 Agreement, we also will reimburse STMicroelectronics a non-recurring engineering fee of $5.00 per each of the first 10,000 units sold. 1.00 0.07 0.18 0.75 1.00 0.18 0.18 0.64

40455000

43810000

173000

11000

1000

11000

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(In the event of dissolution, each share of Series B Preferred stock has a liquidation preference equal to par value of $0.001 per share over the shares of common stock) Preferred Stock, Value, Issued, Total Preferred Stock, Value, Issued, Beginning Balance Preferred Stock, Value, Issued, Ending Balance Common Stock, Value, Issued Common Stock, Value Common stock, 70,000,000 shares authorized with par value $0.001 per share; 43,817,151 and 43,805,586 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively Common Stock, Value, Issued, Total Common Stock, Value, Issued, Beginning Balance Common Stock, Value, Issued, Ending Balance Additional Paid In Capital Additional paid-in capital Additional paid-in-capital Additional Paid in Capital, Beginning Balance Additional Paid in Capital, Ending Balance Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net Of Tax Accumulated other comprehensive income Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax, Beginning Balance Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax, Ending Balance Accumulated deficit Accumulated deficit Accumulated deficit Retained Earnings (Accumulated Deficit), Beginning Balance Retained Earnings (Accumulated Deficit), Ending Balance Stockholders' Equity Attributable to Parent Total Neonode Inc. stockholders' equity Stockholders' Equity Attributable to Noncontrolling Interest Noncontrolling interests Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest Total stockholders' equity Liabilities and Equity Total liabilities and stockholders' deficit Total liabilities and stockholders' equity Preferred Stock, Shares Authorized Preferred stock, shares authorized Preferred Stock, Par Or Stated Value Per Share Preferred stock, par value Preferred Stock, Shares Issued Preferred stock, shares issued Preferred Stock, Shares Issued, Total Preferred Stock, Shares Outstanding Preferred stock, shares outstanding Preferred Stock, Shares Outstanding, Beginning Balance Preferred Stock, Shares Outstanding, Ending Balance Preferred Stock, Liquidation Preference Per Share Preferred stock, liquidation preference Common stock, shares authorized Common stock, shares authorized Common Stock, Par Or Stated Value Per Share Common stock, par value Common Stock, Shares, Issued Common stock, shares issued Common Stock, Shares, Issued, Total Common Stock, Shares, Outstanding Common stock, shares outstanding Common Stock, Shares, Outstanding, Beginning Balance Common Stock, Shares, Outstanding, Ending Balance Statements of Operations [Abstract] Revenues Amount Net revenues Net revenues Cost of Revenue Cost of revenues Cost of revenues Gross Profit Gross profit Gross margin Gross margin Operating Expenses [Abstract] Operating expenses: Product research and development Research and development Research and development Product research and development Sales and marketing Sales and marketing General and Administrative Expense General and administrative Operating Expenses Neonode Technologies AB (formerly AB Cypressen) Total operating expenses Total operating expenses Total operating expenses Operating Income (Loss) Operating loss Operating loss Other Expense, Nonoperating [Abstract] Other expense: Interest Expense Interest expense Interest expense Other Nonoperating Income (Expense) Other expense, net Nonoperating Income (Expense) Total other expense Total other expense Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest Loss before provision for income taxes Income Tax Expense (Benefit) Provision for income taxes Provision for income taxes Provision for income taxes Net Income (Loss), Including Portion Attributable to Noncontrolling Interest Net loss Net loss (including noncontrolling interests) Net loss including noncontrolling interests Net Income (Loss) Attributable to Noncontrolling Interest Less: Net loss attributable to noncontrolling interests Net Income (Loss) Attributable to Parent Net loss attributable to Neonode Inc. Net loss Net loss (including noncontrolling interests) Net loss attributable to Neonode Inc. Net Loss Per Share [Abstract] Loss per common share: Earnings Per Share, Basic and Diluted Net loss per share - basic and diluted Basic and diluted loss per share Net loss per share - basic and diluted Net loss per basic and diluted common share Weighted Average Number Of Shares Outstanding, Basic and Diluted Basic and diluted - weighted average number of common shares outstanding Statements of Comprehensive Loss [Abstract] Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent [Abstract] Other comprehensive income (loss): Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax Foreign currency translation adjustment Foreign currency translation adjustments Foreign currency translation adjustment Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest Comprehensive loss Comprehensive loss Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest Less: Comprehensive loss attributable to noncontrolling interests Comprehensive Income (Loss), Net of Tax, Attributable to Parent Comprehensive loss attributable to Neonode Inc. Comprehensive loss attributable to Neonode Inc. Statements of Cash Flows [Abstract] Net Cash Provided by (Used in) Operating Activities [Abstract] Cash flows from operating activities: Adjustments To Reconcile Net Income (Loss) To Cash Provided By (Used In) Operating Activities [Abstract] Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Stock-Based Compensation Expense Stock-based compensation expense Stock-based compensation expense Stock-based compensation expense Stock-based compensation expense Gain (Loss) on Disposition of Property Plant Equipment Loss on disposal of property and equipment Loss on disposal of property and equipment Depreciation, Depletion and Amortization Depreciation and amortization expense for the year ended Depreciation and amortization Depreciation and amortization expense Depreciation and amortization Increase (Decrease) In Operating Capital [Abstract] Changes in operating assets and liabilities: Increase (Decrease) In Accounts Receivable Accounts receivable Accounts receivable Increase Decrease In Projects In Process Projects in process The increase (decrease) during the reporting period in the projects in process. Projects in process Prepaid expenses and other current assets Prepaid expenses and other assets Prepaid expenses and other current assets Increase (Decrease) In Other Accounts Payable and Accrued Liabilities Accounts payable and accrued expenses Increase (Decrease) In Deferred Revenue Deferred revenues Net Cash Provided by (Used in) Operating Activities Net cash used in operating activities Net cash provided by (used in) operating activities Net Cash Provided By (Used In) Investing Activities [Abstract] Cash flows from investing activities: Payments to Acquire Property, Plant, and Equipment Purchase of property and equipment Purchase of property, plant and equipment Purchase of property and equipment Net Cash Provided by (Used in) Investing Activities Net cash used in investing activities Net cash used in investing activities Net cash used in investing activities Net Cash Provided By (Used In) Financing Activities [Abstract] Cash flows from financing activities: Repayments of Long-term Capital Lease Obligations Principal payments on capital lease Principal payments on capital lease obligation Net Cash Provided By (Used In) Financing Activities Net cash provided by financing activities Net cash used in financing activities Effect Of Exchange Rate On Cash and Cash Equivalents Effect of exchange rate changes on cash Effect of exchange rates on cash Cash and Cash Equivalents, Period Increase (Decrease) Net increase in cash Net decrease in cash Supplemental Cash Flow Information [Abstract] Supplemental disclosure of cash flow information: Income Taxes Paid Cash paid for income taxes Interest Paid Cash paid for interest Interim Period Reporting [Abstract] Interim Period Reporting [Text Block] Interim Period Reporting Interim period reporting. Summary of Significant Accounting Policies [Abstract] Accounting Policies [Abstract] Significant Accounting Policies [Text Block] Summary of Significant Accounting Policies Deferred Revenues [Abstract] Deferred Revenue Disclosure [Abstract] Deferred Revenue Disclosure [Text Block] Deferred Revenues Stockholders' Equity [Abstract] Stockholders Equity Note Disclosure [Text Block] Stockholders' Equity Stock-Based Compensation [Abstract] Disclosure of Compensation Related Costs, Share-based Payments [Abstract] Disclosure Of Compensation Related Costs, Share-Based Payments [Text Block] Stock-Based Compensation Commitments and Contingencies [Abstract] Commitments and Contingencies Disclosure [Abstract] Commitments and Contingencies Disclosure [Text Block] Commitments and Contingencies Segment Information [Abstract] Segment Reporting [Abstract] Segment Reporting Disclosure [Text Block] Segment Information Earnings Per Share [Text Block] Net Loss per Share Subsequent Events [Abstract] Subsequent Events [Abstract] Subsequent Events [Text Block] Subsequent Events Consolidation, Policy [Policy Text Block] Principles of Consolidation Use Of Estimates, Policy [Policy Text Block] Estimates Cash and Cash Equivalents, Policy [Policy Text Block] Cash Concentration Of Cash Balance Risks [Policy Text Block] Concentration of Cash Balance Risks Disclosure of accounting policy for concentration of cash balance risks. Receivables, Trade and Other Accounts Receivable, Allowance For Doubtful Accounts, Policy Accounts Receivable and Allowance for Doubtful Accounts Projects In Process [Policy Text Block] Projects in Process Disclosure of accounting policy for projects in Process. Property, Plant and Equipment, Policy [Policy Text Block] Property and Equipment Impairment Or Disposal Of Long-Lived Assets, Policy [Policy Text Block] Long-lived Assets Foreign Currency Transactions and Translations Policy [Policy Text Block] Foreign Currency Translation and Transaction Gains and Losses Concentration Risk, Credit Risk, Policy [Policy Text Block] Concentration of Credit and Business Risks Revenue Recognition, Policy [Policy Text Block] Revenue Recognition Revenue Recognition, Deferred Revenue [Policy Text Block] Deferred Revenues Advertising Costs, Policy [Policy Text Block] Advertising Research and Development Expense, Policy [Policy Text Block] Research and Development Share-Based Compensation, Option and Incentive Plans Policy [Policy Text Block] Stock-Based Compensation Expense Noncontrolling Interests [Policy Text Block] Noncontrolling Interests Disclosure of accounting policy for non controlling interests. Income Tax, Policy [Policy Text Block] Income Taxes Earnings Per Share, Policy [Policy Text Block] Net Loss per Share Other Comprehensive Income [Policy Text Block] Other Comprehensive Income (Loss) Disclosure of accounting policy for other comprehensive income. Cash Flow Information [Policy Text Block] Cash Flow Information Disclosure of accounting policy for determining the cash flow information. Fair Value of Financial Instruments, Policy [Policy Text Block] Fair Value of Financial Instruments New Accounting Pronouncements, Policy [Policy Text Block] New Accounting Pronouncements Property, Plant and Equipment [Table Text Block] Estimated useful lives of property and equipment Condensed Income Statement [Table Text Block] Schedule of weighted average exchange rate for consolidated statements of operations Condensed Balance Sheet [Table Text Block] Schedule of exchange rate for consolidated balance sheets Schedule of Conversions of Stock [Table Text Block] Schedule of conversion of preferred stock issued to common stock Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Table] Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Table] Award Type [Axis] Award Type [Axis] Equity Award [Domain] Award Type [Domain] Employee Stock Option [Member] Stock Options [Member] Warrant [Member] Warrant [Member] Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Stock Based Compensation Expense Related To Stock Options and Warrants [Table Text Block] Summary of stock-based compensation expense Summary of stock-based compensation expense Stock based compensation expense related to stock options and warrants. Schedule of Stock Options Roll Forward [Table Text Block] Summary of all stock option plans / warrant activity Summary of combined activity under stock option plans Summary Of All Warrant Activity [Table Text Block] Summary of all warrant activity Summary of all warrant activity. Schedule Of Revenue By Major Customers By Reporting Segments [Table Text Block] Summary of net revenues by geographic region Schedule Of Earnings Per Share, Basic and Diluted [Table Text Block] Basic and diluted for net loss per share Interim Period Reporting [Table] Subsequent Event Type [Axis] Subsequent Event Type [Domain] Subsequent Event [Member] Interim Period Reporting [Line Items] Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table. Interim Period Reporting Textual [Abstract] Interim Period Reporting (Textual) Sale of Stock, Number of Shares Issued in Transaction Issuance of common stock, shares Sale of Stock, Price Per Share Share price Sale of Stock, Consideration Received Per Transaction Gross proceeds from issuance of shares Sale of Stock, Consideration Received on Transaction Cash received from issuance of shares Payments of Stock Issuance Costs Stock issuance cost Common Stock, Capital Shares Reserved for Future Issuance Common stock available for issuance under shelf registration Working Capital Working capital Difference between current assets and current liabilities. Property, Plant and Equipment [Table] Schedule of Property, Plant and Equipment [Table] Property, Plant and Equipment, Type [Axis] Property, Plant and Equipment, Type [Axis] Property, Plant and Equipment, Type [Domain] Property, Plant and Equipment, Type [Domain] Computer Equipment [Member] Computer equipment [Member] Furniture and Fixtures [Member] Furniture and fixtures [Member] Equipment [Member] Property, Plant and Equipment [Line Items] Property, Plant and Equipment [Line Items] Estimated Useful Life Of Assets [Abstract] Estimated useful lives of property and equipment Estimated useful life of the assets. Property, Plant and Equipment, Useful Life Estimated useful lives Condensed Income Statement [Table] Geographical [Axis] Geographical [Domain] Sweden, Kronor Swedish Krona Japan, Yen Japanese Yen Korea (South), Won South Korean Won EX-101.PRE 10 neond-20160331_pre.xml XBRL PRESENTATION FILE XML 11 R1.htm IDEA: XBRL DOCUMENT

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2016	May. 05, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	Neonode, Inc
Entity Central Index Key	0000087050
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		43,817,151

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Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash	$ 2,940	$ 3,082
Accounts receivable, net	648	1,346
Projects in process	122	158
Prepaid expenses and other current assets	1,106	747
Total current assets	4,816	5,333
Property and equipment, net	673	594
Total assets	5,489	5,927
Current liabilities:
Accounts payable	1,232	965
Accrued payroll and employee benefits	1,102	932
Accrued expenses	369	382
Deferred revenues	1,936	1,475
Current portion of capital lease obligation	59	57
Total current liabilities	4,698	3,811
Capital lease obligation, net of current portion	278	283
Total liabilities	$ 4,976	$ 4,094
Commitments and contingencies
Stockholders' equity:
Common stock, 70,000,000 shares authorized with par value $0.001 per share; 43,817,151 and 43,805,586 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively	$ 44	$ 44
Additional paid-in capital	175,618	175,504
Accumulated other comprehensive income	11	46
Accumulated deficit	(175,116)	(173,749)
Total Neonode Inc. stockholders' equity	557	1,845
Noncontrolling interests	(44)	(12)
Total stockholders' equity	513	1,833
Total liabilities and stockholders' equity	$ 5,489	$ 5,927
Series B Preferred Stock
Stockholders' equity:
Series B Preferred stock, 54,425 shares authorized with par value $0.001 per share; 83 shares issued and outstanding at March 31, 2016 and December 31, 2015. (In the event of dissolution, each share of Series B Preferred stock has a liquidation preference equal to par value of $0.001 per share over the shares of common stock)

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Common stock, shares authorized	70,000,000	70,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares issued	43,817,151	43,805,586
Common stock, shares outstanding	43,817,151	43,805,586
Series B Preferred Stock
Preferred stock, shares authorized	54,425	54,425
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares issued	83	83
Preferred stock, shares outstanding	83	83
Preferred stock, liquidation preference	$ 0.001	$ 0.001

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Statements of Operations [Abstract]
Net revenues	$ 3,132	$ 2,263
Cost of revenues	595	338
Gross margin	2,537	1,925
Operating expenses:
Research and development	1,949	1,579
Sales and marketing	816	850
General and administrative	1,060	1,562
Total operating expenses	3,825	3,991
Operating loss	(1,288)	(2,066)
Other expense:
Interest expense	3	$ 4
Other expense, net	41
Total other expense	44	$ 4
Loss before provision for income taxes	(1,332)	(2,070)
Provision for income taxes	67	2
Net loss including noncontrolling interests	(1,399)	$ (2,072)
Less: Net loss attributable to noncontrolling interests	32
Net loss attributable to Neonode Inc.	$ (1,367)	$ (2,072)
Loss per common share:
Basic and diluted loss per share	$ (0.03)	$ (0.05)
Basic and diluted - weighted average number of common shares outstanding	43,810	40,455

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Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Statements of Comprehensive Loss [Abstract]
Net loss	$ (1,399)	$ (2,072)
Other comprehensive income (loss):
Foreign currency translation adjustments	(35)	2
Comprehensive loss	(1,434)	$ (2,070)
Less: Comprehensive loss attributable to noncontrolling interests	32
Comprehensive loss attributable to Neonode Inc.	$ (1,402)	$ (2,070)

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash flows from operating activities:
Net loss (including noncontrolling interests)	$ (1,399)	$ (2,072)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation expense	114	$ 598
Loss on disposal of property and equipment	41
Depreciation and amortization	57	$ 51
Changes in operating assets and liabilities:
Accounts receivable	697	(935)
Projects in process	36	(417)
Prepaid expenses and other current assets	(325)	(58)
Accounts payable and accrued expenses	339	502
Deferred revenues	461	746
Net cash provided by (used in) operating activities	21	(1,585)
Cash flows from investing activities:
Purchase of property and equipment	(156)	(3)
Net cash used in investing activities	(156)	(3)
Cash flows from financing activities:
Principal payments on capital lease obligation	(15)	(14)
Net cash used in financing activities	(15)	(14)
Effect of exchange rate changes on cash	8	(74)
Net decrease in cash	(142)	(1,676)
Cash at beginning of period	3,082	6,129
Cash at end of period	2,940	4,453
Supplemental disclosure of cash flow information:
Cash paid for income taxes	7	2
Cash paid for interest	$ 3	$ 4

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Interim Period Reporting	3 Months Ended
Interim Period Reporting	Mar. 31, 2016
Interim Period Reporting [Abstract]
Interim Period Reporting	1. Interim Period Reporting The accompanying unaudited interim condensed consolidated financial statements, include all adjustments, consisting of normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations and cash flows for the interim periods presented. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of results for a full fiscal year or any other period. The accompanying condensed consolidated financial statements for the three months ended March 31, 2016 and 2015 have been prepared by us, pursuant to the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally contained in financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. *Operations* Neonode Inc. (collectively with its subsidiaries, is referred to in this Form 10-Q Report as “Neonode”, “we”, “us”, “our” or the “Company”), develops and licenses user interfaces and optical infrared touch technology. We license our multi-touch technology to Original Equipment Manufacturers (“OEMs”) and Original Design Manufacturers (“ODMs”) who incorporate it into devices that they produce and sell. Neonode is in a transition phase to also offer current and new customers a sensor module. *Reclassifications* Accrued payroll and employee benefits as of December 31, 2015 is now reported under its own caption, separate from accrued expenses, in the accompanying condensed consolidated balance sheet, in order to conform to the current period presentation. *Liquidity* We have incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net losses of approximately $1.4 million and $2.1 million for the three months ended March 31, 2016 and 2015, respectively, and had an accumulated deficit of approximately $175.1 million and $173.7 million as of March 31, 2016 and December 31, 2015, respectively. Working capital (current assets less current liabilities) was $118,000 as of March 31, 2016 compared to $1.5 million as of December 31, 2015. In addition, operating activities provided cash of approximately $21,000 for the three months ended March 31, 2016 and we used cash in operating activities of approximately ($1.6 million) for the three months ended March 31, 2015. In June 2014, we filed a shelf registration statement with the SEC that became effective on June 12, 2014. We may from time to time issue shares of our common stock under our shelf registration in amounts, at prices, and on terms to be announced when and if the securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in a prospectus supplement and any other offering materials, at the time of the offering. Our shelf registration statement will expire on June 12, 2017. On October 13, 2015, we issued 3,200,000 shares of our common stock from our shelf registration statement to investors in connection with an equity financing transaction. We sold the stock at $1.90 per share and raised approximately $6.1 million gross and received approximately $5.4 million in cash, net of direct offering costs including underwriting discounts and legal, audit and other regulatory costs of approximately $0.7 million. As of March 31, 2016 there were 1,800,000 shares remaining for issuance under our existing shelf registration statement. We believe that, based upon our current operating plan, our existing cash and cash provided by operations will be sufficient to meet our anticipated cash needs for at least the next twelve months. We expect that our revenues from license fees and non-recurring engineering fees will enable us to reduce, or eliminate, our operating losses in 2016. We also have undertaken steps to reduce operating expenses, including (i) termination of consulting contracts associated with our research and development operations, and (ii) improving overall cost efficiency of our operations. Depending on our cash flow, we intend to continue to implement various measures to improve our financial condition, such as reducing further expenses to conserve cash and pursuing strategic transactions and relationships with third parties. While there is no assurance that the Company can meet its projected cash flows, management anticipates that it can continue operations for at least the next twelve months. In the future, we may require sources of capital in addition to cash on hand to continue operations and to implement our strategy. If our operations do not become cash flow positive, we may be forced to seek credit line facilities from financial institutions, equity investments or debt arrangements. No assurances can be given that we will be successful in obtaining such additional financing on reasonable terms, or at all. If adequate funds are not available 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. 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.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2016

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principles of Consolidation

Estimates

Cash

Concentration of Cash Balance Risks

Accounts Receivable and Allowance for Doubtful Accounts

Projects in Process

Property and Equipment

Estimated useful lives

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

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

Long-lived Assets

Foreign Currency Translation and Transaction Gains and Losses

Concentration of Credit and Business Risks

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

As of March 31, 2016, five customers represented approximately 100% of the Company’s accounts receivable.

As of December 31, 2015, three customers represented approximately 78% of the Company’s accounts receivable.

	●	Hewlett Packard Company – 40%
	●	Amazon – 18%
	●	Autoliv Development AB – 12%

	●	Hewlett Packard Company – 30%
	●	Amazon – 28%

Revenue Recognition

Licensing Revenues:

Explicit return rights are not offered to customers. There have been no returns through March 31, 2016.

Engineering Services:

Revenues from contracts that are short-term in nature and related costs that are difficult to estimate are accounted for under the completed contract method.

Estimated losses on all SOW projects are recognized in full as soon as they become evident. In the quarters ended March 31, 2016 and 2015, no losses related to SOW projects were recorded.

Deferred Revenues

Advertising

Advertising costs are expensed as incurred. Advertising costs for the three months ended March 31, 2016 and 2015 amounted to approximately $80,000 and $20,000, respectively.

Research and Development

Stock-Based Compensation Expense

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

Noncontrolling Interests

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

Income Taxes

Net Loss per Share

Other Comprehensive Income (Loss)

Cash Flow Information

	Three months ended March 31,
	2016		2015
Swedish Krona		8.45		8.32
Japanese Yen		115.36		119.15
South Korean Won		1,193.75		1,100
Taiwan Dollar		33.06		31.56

Exchange rate for the condensed consolidated balance sheets was as follows:

	March 31,		December 31,
	2016		2015
Swedish Krona		8.12		8.42
Japanese Yen		112.39		120.36
South Korean Won		1,141.29		1,174.67
Taiwan Dollar		32.20		32.84

Fair Value of Financial Instruments

New Accounting Pronouncements

XML 19 R9.htm IDEA: XBRL DOCUMENT

Deferred Revenues

3 Months Ended

Mar. 31, 2016

Deferred Revenues [Abstract]

Deferred Revenues

3. Deferred Revenues

- Definition

The entire disclosure for deferred revenues at the end of the reporting period, and description and amounts of significant changes that occurred during the reporting period. Deferred revenue is a liability as of the balance sheet date related to a revenue producing activity for which revenue has not yet been recognized. Generally, an entity records deferred revenue when it receives consideration from a customer before achieving certain criteria that must be met for revenue to be recognized in conformity with GAAP.

+ References + Details

XML 20 R10.htm IDEA: XBRL DOCUMENT

Stockholders' Equity

3 Months Ended

Mar. 31, 2016

Stockholders' Equity [Abstract]

Stockholders' Equity

4. Stockholders’ Equity

Common Stock

Preferred Stock

We have one class of preferred stock outstanding. The terms of the Series B Preferred stock are as follows:

Dividends and Distributions

Liquidation Preference

Voting

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

Conversion

Conversion of Preferred Stock Issued to Common Stock

The following table summarizes the amounts as of March 31, 2016.

	Shares of Preferred Stock Not Exchanged as of March 31, 2016		Conversion Ratio		Shares of Common Stock after Conversion of all Outstanding Shares of Preferred Stock Not yet Exchanged at March 31, 2016

Series B Preferred stock		83		132.07		10,962

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 4
-Subparagraph (SAB Topic 4.E)
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-Subparagraph (SX 210.4-08(e))
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-Name Accounting Standards Codification
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-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

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-Publisher FASB
-Name Accounting Standards Codification
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XML 21 R11.htm IDEA: XBRL DOCUMENT

Stock-Based Compensation

3 Months Ended

Mar. 31, 2016

Stock-Based Compensation [Abstract]

Stock-Based Compensation

5. Stock-Based Compensation

	Three months ended March 31,
	2016		2015
Research and development	$	43	$	223
Sales and marketing		62		106
General and administrative		9		269
Total stock-based compensation expense	$	114	$	598

		Remaining unrecognized expense at March 31, 2016
Stock-based compensation		$	385

Stock Options

As of March 31, 2016 we had two equity incentive plans:

	●	The 2006 Equity Incentive Plan; and
	●	The 2015 Stock Incentive Plan

We also had expired one non-employee director stock option plan.

●

The 2001 Non-Employee Director Stock Option Plan (the “Director Plan”), which expired in March 2011.

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

	Number of Options Outstanding			Weighted Average Exercise Price
Outstanding at January 1, 2016		2,184,117		$	4.48
Granted		-			-
Forfeited		(111,922	)		4.47
Outstanding at March 31, 2016		2,072,195		$	4.48

The aggregate intrinsic value of the 2,072,195 stock options that are outstanding, vested and expected to vest as of March 31, 2016 was approximately $0.

During the three months ended March 31, 2016, we did not grant any options to purchase shares of our common stock to employees or members of our board of directors.

Warrants

A summary of all warrant activity is set forth below:

	March 31, 2016
	Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Outstanding and exercisable, January 1, 2016		464,073		$	3.02		0.19
Granted		--			--		--
Expired/cancelled		(349,973	)		3.13		--
Exercised		(80,000	)		2.00		--
Outstanding and exercisable, March 31, 2016		34,100		$	3.13		0.02

Outstanding Warrants to Purchase
Common Stock as of March 31, 2016:

Description

Issue Date

Exercise Price

Expiration Date

March 2011 Investor Warrants

4/7/2011

3.13

34,100

4/7/2016

Total Warrants Outstanding

34,100

The 34,100 warrants outstanding as of March 31, 2016 expired on April 7, 2016.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References + Details

XML 22 R12.htm IDEA: XBRL DOCUMENT

Commitments and Contingencies

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies [Abstract]

Commitments and Contingencies

6. Commitments and Contingencies

Indemnities and Guarantees

Non-recurring Engineering Development Costs

	●	$235,000 at the feasibility review and contract signature (paid on January 20, 2015)
	●	$300,000 on completion of tape-out (paid on October 31, 2015)
	●	$300,000 on completion on product validation (not completed as of March 31, 2016)

XML 23 R13.htm IDEA: XBRL DOCUMENT

Segment Information

3 Months Ended

Mar. 31, 2016

Segment Information [Abstract]

Segment Information

7. Segment Information

The following table presents net revenues by geographic region for the three months ended March 31, 2016 and 2015 (in thousands):

	Three months ended March 31, 2016					Three months ended March 31, 2015
	Amount		Percentage			Amount		Percentage
Net revenues from customers in the Americas	$	2,005		64	%	$	1,693		75	%
Net revenues from customers in Asia		560		18	%		413		18	%
Net revenues from customers in Europe		567		18	%		157		7	%
	$	3,132		100	%	$	2,263		100	%

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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+ Details

XML 24 R14.htm IDEA: XBRL DOCUMENT

Net Loss Per Share

3 Months Ended

Mar. 31, 2016

Net Loss Per Share [Abstract]

Net Loss per Share

8. Net Loss per Share

(in thousands, except per share amounts)	Three months ended March 31,
	2016			2015
BASIC AND DILUTED
Weighted average number of common shares outstanding		43,810			40,455
Net loss attributable to Neonode Inc.	$	(1,367	)	$	(2,072	)

Net loss per share - basic and diluted	$	(0.03	)	$	(0.05	)

XML 25 R15.htm IDEA: XBRL DOCUMENT

Subsequent Events

3 Months Ended

Mar. 31, 2016

Subsequent Events [Abstract]

Subsequent Events

9. Subsequent Events

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2016

Summary of Significant Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

Estimates

Estimates

Cash

Cash

Concentration of Cash Balance Risks

Concentration of Cash Balance Risks

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

Projects in Process

Projects in Process

Property and Equipment

Property and Equipment

Estimated useful lives

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

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

Long-lived Assets

Long-lived Assets

Foreign Currency Translation and Transaction Gains and Losses

Foreign Currency Translation and Transaction Gains and Losses

Concentration of Credit and Business Risks

Concentration of Credit and Business Risks

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

As of March 31, 2016, five customers represented approximately 100% of the Company’s accounts receivable.

As of December 31, 2015, three customers represented approximately 78% of the Company’s accounts receivable.

	●	Hewlett Packard Company – 40%
	●	Amazon – 18%
	●	Autoliv Development AB – 12%

	●	Hewlett Packard Company – 30%
	●	Amazon – 28%

Revenue Recognition

Revenue Recognition

Licensing Revenues:

Explicit return rights are not offered to customers. There have been no returns through March 31, 2016.

Engineering Services:

Revenues from contracts that are short-term in nature and related costs that are difficult to estimate are accounted for under the completed contract method.

Estimated losses on all SOW projects are recognized in full as soon as they become evident. In the quarters ended March 31, 2016 and 2015, no losses related to SOW projects were recorded.

Deferred Revenues

Deferred Revenues

Advertising

Advertising

Advertising costs are expensed as incurred. Advertising costs for the three months ended March 31, 2016 and 2015 amounted to approximately $80,000 and $20,000, respectively.

Research and Development

Research and Development

Stock-Based Compensation Expense

Stock-Based Compensation Expense

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

Noncontrolling Interests

Noncontrolling Interests

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

Income Taxes

Income Taxes

Net Loss per Share

Net Loss per Share

Other Comprehensive Income (Loss)

Other Comprehensive Income (Loss)

Cash Flow Information

Cash Flow Information

	Three months ended March 31,
	2016		2015
Swedish Krona		8.45		8.32
Japanese Yen		115.36		119.15
South Korean Won		1,193.75		1,100
Taiwan Dollar		33.06		31.56

Exchange rate for the condensed consolidated balance sheets was as follows:

	March 31,		December 31,
	2016		2015
Swedish Krona		8.12		8.42
Japanese Yen		112.39		120.36
South Korean Won		1,141.29		1,174.67
Taiwan Dollar		32.20		32.84

Fair Value of Financial Instruments

Fair Value of Financial Instruments

New Accounting Pronouncements

New Accounting Pronouncements

XML 27 R17.htm IDEA: XBRL DOCUMENT

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2016

Summary of Significant Accounting Policies [Abstract]

Estimated useful lives of property and equipment

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

Schedule of weighted average exchange rate for consolidated statements of operations

	Three months ended March 31,
	2016		2015
Swedish Krona		8.45		8.32
Japanese Yen		115.36		119.15
South Korean Won		1,193.75		1,100
Taiwan Dollar		33.06		31.56

Schedule of exchange rate for consolidated balance sheets

	March 31,		December 31,
	2016		2015
Swedish Krona		8.12		8.42
Japanese Yen		112.39		120.36
South Korean Won		1,141.29		1,174.67
Taiwan Dollar		32.20		32.84

XML 28 R18.htm IDEA: XBRL DOCUMENT

Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2016

Stockholders' Equity [Abstract]

Schedule of conversion of preferred stock issued to common stock

	Shares of Preferred Stock Not Exchanged as of March 31, 2016		Conversion Ratio		Shares of Common Stock after Conversion of all Outstanding Shares of Preferred Stock Not yet Exchanged at March 31, 2016

Series B Preferred stock		83		132.07		10,962

XML 29 R19.htm IDEA: XBRL DOCUMENT

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2016

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Summary of stock-based compensation expense

	Three months ended March 31,
	2016		2015
Research and development	$	43	$	223
Sales and marketing		62		106
General and administrative		9		269
Total stock-based compensation expense	$	114	$	598

		Remaining unrecognized expense at March 31, 2016
Stock-based compensation		$	385

Summary of all warrant activity

	March 31, 2016
	Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Outstanding and exercisable, January 1, 2016		464,073		$	3.02		0.19
Granted		--			--		--
Expired/cancelled		(349,973	)		3.13		--
Exercised		(80,000	)		2.00		--
Outstanding and exercisable, March 31, 2016		34,100		$	3.13		0.02

Employee Stock Option [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Summary of all stock option plans / warrant activity

	Number of Options Outstanding			Weighted Average Exercise Price
Outstanding at January 1, 2016		2,184,117		$	4.48
Granted		-			-
Forfeited		(111,922	)		4.47
Outstanding at March 31, 2016		2,072,195		$	4.48

Warrant [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Summary of all stock option plans / warrant activity

Description

Issue Date

Exercise Price

Expiration Date

March 2011 Investor Warrants

4/7/2011

3.13

34,100

4/7/2016

Total Warrants Outstanding

34,100

XML 30 R20.htm IDEA: XBRL DOCUMENT

Segment Information (Tables)

3 Months Ended

Mar. 31, 2016

Segment Information [Abstract]

Summary of net revenues by geographic region

	Three months ended March 31, 2016					Three months ended March 31, 2015
	Amount		Percentage			Amount		Percentage
Net revenues from customers in the Americas	$	2,005		64	%	$	1,693		75	%
Net revenues from customers in Asia		560		18	%		413		18	%
Net revenues from customers in Europe		567		18	%		157		7	%
	$	3,132		100	%	$	2,263		100	%

XML 31 R21.htm IDEA: XBRL DOCUMENT

Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2016

Net Loss Per Share [Abstract]

Basic and diluted for net loss per share

(in thousands, except per share amounts)	Three months ended March 31,
	2016			2015
BASIC AND DILUTED
Weighted average number of common shares outstanding		43,810			40,455
Net loss attributable to Neonode Inc.	$	(1,367	)	$	(2,072	)

Net loss per share - basic and diluted	$	(0.03	)	$	(0.05	)

XML 32 R22.htm IDEA: XBRL DOCUMENT

Interim Period Reporting (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		12 Months Ended
	Oct. 13, 2015	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Interim Period Reporting (Textual)
Net loss		$ (1,367)	$ (2,072)
Accumulated deficit		(175,116)		$ (173,749)
Net cash used in operating activities		$ 21	$ (1,585)
Issuance of common stock, shares	3,200,000
Share price	$ 1.90
Gross proceeds from issuance of shares	$ 6,100
Cash received from issuance of shares	5,400
Stock issuance cost	$ 700
Common stock available for issuance under shelf registration		1,800,000
Working capital		$ 118,000		$ 1,500

XML 33 R23.htm IDEA: XBRL DOCUMENT

Summary of Significant Accounting Policies (Details)	3 Months Ended
Summary of Significant Accounting Policies (Details)	Mar. 31, 2016
Computer equipment [Member]
Estimated useful lives of property and equipment
Estimated useful lives	3 years
Furniture and fixtures [Member]
Estimated useful lives of property and equipment
Estimated useful lives	5 years
Equipment [Member]
Estimated useful lives of property and equipment
Estimated useful lives	7 years

XML 34 R24.htm IDEA: XBRL DOCUMENT

Summary of Significant Accounting Policies (Details 1)	3 Months Ended
Summary of Significant Accounting Policies (Details 1)	Mar. 31, 2016	Mar. 31, 2015
Swedish Krona
Weighted average exchange rate consolidated statements of operations
Weighted-average exchange rate for consolidated statements of operations	8.45	8.32
Japanese Yen
Weighted average exchange rate consolidated statements of operations
Weighted-average exchange rate for consolidated statements of operations	115.36	119.15
South Korean Won
Weighted average exchange rate consolidated statements of operations
Weighted-average exchange rate for consolidated statements of operations	1,193.75	1,100
Taiwan Dollar
Weighted average exchange rate consolidated statements of operations
Weighted-average exchange rate for consolidated statements of operations	33.06	31.56

XML 35 R25.htm IDEA: XBRL DOCUMENT

Summary of Significant Accounting Policies (Details 2)	Mar. 31, 2016	Dec. 31, 2015
Swedish Krona
Exchange Rate for Consolidated Balance Sheets
Exchange rate for the consolidated balance sheets	8.12	8.42
Japanese Yen
Exchange Rate for Consolidated Balance Sheets
Exchange rate for the consolidated balance sheets	112.39	120.36
South Korean Won
Exchange Rate for Consolidated Balance Sheets
Exchange rate for the consolidated balance sheets	1,141.29	1,174.67
Taiwan Dollar
Exchange Rate for Consolidated Balance Sheets
Exchange rate for the consolidated balance sheets	32.20	32.84

XML 36 R26.htm IDEA: XBRL DOCUMENT

Summary of Significant Accounting Policies (Details Textual)	3 Months Ended		12 Months Ended
	Mar. 31, 2016 USD ($) Customers	Mar. 31, 2015 USD ($) Customers	Dec. 31, 2015 USD ($)	Mar. 31, 2016 JPY (¥)	Mar. 31, 2016 SEK	Mar. 31, 2016 KRW (₩)	Mar. 31, 2016 TWD
Summary of Significant Accounting Policies (Textual)
Basic deposit coverage limits per owner and customer	$ 250,000			¥ 10,000,000	SEK 100,000	₩ 50,000,000	TWD 3,000,000
Allowance for doubtful accounts	167,000		$ 167,000
Environmental costs recognized	122,000		$ 158,000
Foreign currency translation adjustments	(35,000)	$ 2,000
Foreign currency translation included in general and administrative expense	13,000	26,000
Advertising costs	$ 80,000	$ 20,000
Number of customers \| Customers	20	24
Noncontrolling interest owned by Pronode Technologies AB	51.00%			51.00%	51.00%	51.00%	51.00%
Noncontrolling interest owned by Propoint AB	49.00%			49.00%	49.00%	49.00%	49.00%
Noncontrolling interest, description	Noncontrolling interests' partners have less than 50% share of voting rights at any one of the subsidiary level companies
Accounts Receivable [Member]
Summary of Significant Accounting Policies (Textual)
Concentration risk, percentage	100.00%		78.00%
Sales Revenue, Net [Member]
Summary of Significant Accounting Policies (Textual)
Concentration risk, percentage	10.00%	10.00%
Hewlett Packard [Member] \| Sales Revenue, Net [Member]
Summary of Significant Accounting Policies (Textual)
Concentration risk, percentage	40.00%	30.00%
Amazon Inc [Member] \| Sales Revenue, Net [Member]
Summary of Significant Accounting Policies (Textual)
Concentration risk, percentage	18.00%	28.00%
Autoliv Development AB [Member] \| Sales Revenue, Net [Member]
Summary of Significant Accounting Policies (Textual)
Concentration risk, percentage	12.00%

XML 37 R27.htm IDEA: XBRL DOCUMENT

Deferred Revenues (Details)	3 Months Ended	12 Months Ended
Deferred Revenues (Details)	Mar. 31, 2016 USD ($) Customers	Dec. 31, 2015 USD ($) Customers
Deferred Revenues (Textual)
Deferred license fee revenue	$ 1,936,000	$ 1,475,000
Prepayments for Future License Fees [Member]
Deferred Revenues (Textual)
Deferred license fee revenue	$ 1,900,000	$ 1,100,000
Number of customer \| Customers	3	2
Deferred Engineering Development Fees [Member]
Deferred Revenues (Textual)
Deferred license fee revenue	$ 17,000	$ 400,000
Number of customer \| Customers	1	1

- Definition

The carrying amount of consideration received or receivable as of the balance sheet date on potential earnings that were not recognized as revenue in conformity with GAAP, and which are expected to be recognized as such within one year or the normal operating cycle, if longer, including sales, license fees, and royalties, but excluding interest income.

+ References + Details

XML 38 R28.htm IDEA: XBRL DOCUMENT

Stockholders' Equity (Details) - Series B Preferred Stock [Member]	1 Months Ended	3 Months Ended
	Mar. 31, 2009 shares	Mar. 31, 2016 shares
Schedule of conversion of preferred stock issued to common stock
Shares of Common Stock after Conversion of all Outstanding Shares of Preferred Stock Not yet Exchanged	132.07	10,962
Shares of Preferred Stock Not Exchanged		83
Conversion Ratio		132.07

XML 39 R29.htm IDEA: XBRL DOCUMENT

Stockholders' Equity (Details Textual) - $ / shares	1 Months Ended	3 Months Ended
Stockholders' Equity (Details Textual) - $ / shares	Mar. 31, 2009	Mar. 31, 2016	Dec. 31, 2015
Series B Preferred Stock [Member]
Stockholders' Equity (Textual)
Preferred stock, liquidation preference		$ 0.001	$ 0.001
Conversion of shares	132.07	10,962
Common Stock [Member]
Stockholders' Equity (Textual)
Warrants issued to purchase shares of common stock		80,000
Common stock purchased by exercise of warrants		11,565

XML 40 R30.htm IDEA: XBRL DOCUMENT

Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
Stock-Based Compensation (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Mar. 31, 2015
Summary of stock-based compensation expense
Total stock based compensation expense	$ 114	$ 598
Remaining unrecognized expense of stock-based compensation	385
Product Research and Development [Member]
Summary of stock-based compensation expense
Total stock based compensation expense	43	223
Sales and Marketing [Member]
Summary of stock-based compensation expense
Total stock based compensation expense	62	106
General and Administrative [Member]
Summary of stock-based compensation expense
Total stock based compensation expense	$ 9	$ 269

XML 41 R31.htm IDEA: XBRL DOCUMENT

Stock-Based Compensation (Details 1) - Stock Options [Member]	3 Months Ended
	Mar. 31, 2016 $ / shares shares
Summary of all stock option plans
Number of Options/Warrants Outstanding, Beginning Balance \| shares	2,184,117
Number of Options Outstanding, Granted \| shares
Number of Options Outstanding, Forfeited \| shares	(111,922)
Number of Options/Warrants Outstanding, Ending Balance \| shares	2,072,195
Weighted Average Exercise Price, Outstanding, Beginning Balance \| $ / shares	$ 4.48
Weighted Average Exercise Price, Granted \| $ / shares
Weighted Average Exercise Price, Forfeited \| $ / shares	$ 4.47
Weighted Average Exercise Price, Outstanding, Ending Balance \| $ / shares	$ 4.48

XML 42 R32.htm IDEA: XBRL DOCUMENT

Stock-Based Compensation (Details 2) - Warrant [Member]	3 Months Ended
Stock-Based Compensation (Details 2) - Warrant [Member]	Mar. 31, 2016 $ / shares shares
Summary of all stock option plans
Number of Options/Warrants Outstanding, Beginning Balance \| shares	464,073
Warrants, Granted \| shares
Warrants, Expired/cancelled \| shares	(349,973)
Warrants, Exercised \| shares	(80,000)
Number of Options/Warrants Outstanding, Ending Balance \| shares	34,100
Weighted Average Exercise Price, Outstanding, Beginning Balance \| $ / shares	$ 3.02
Weighted Average Exercise Price, Granted \| $ / shares
Weighted Average Exercise Price, Forfeited \| $ / shares	$ 3.13
Weighted Average Exercise Price, Exercised \| $ / shares	2.00
Weighted Average Exercise Price, Outstanding, Ending Balance \| $ / shares	$ 3.13
Weighted Average Remaining Contractual Life, Outstanding and exercisable, Beginning Balance	2 months 9 days
Weighted Average Remaining Contractual Life, Outstanding and exercisable, Ending Balance	7 days

XML 43 R33.htm IDEA: XBRL DOCUMENT

Stock-Based Compensation (Details 3)	3 Months Ended
Stock-Based Compensation (Details 3)	Mar. 31, 2016 $ / shares shares
Summary of outstanding warrants to purchase common stock
Shares	34,100
March 2011 Investor Warrants [Member]
Summary of outstanding warrants to purchase common stock
Issue Date	Apr. 07, 2011
Exercise Price \| $ / shares	$ 3.13
Shares	34,100
Expiration Date	Apr. 07, 2016

XML 44 R34.htm IDEA: XBRL DOCUMENT

Stock Based Compensation (Details Textual) - USD ($)	3 Months Ended
Stock Based Compensation (Details Textual) - USD ($)	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Stock-Based Compensation (Textual)
Vesting period	1 year 6 months
Share-based compensation expense	$ 114,000	$ 598,000
Warrants outstanding	34,100
Expiration date of warrants	Apr. 07, 2016
Stock Options [Member]
Stock-Based Compensation (Textual)
Aggregate vested options to purchase shares	265,000
Number of Options Outstanding	2,072,195		2,184,117
Options outstanding, vested and expected to vest, aggregate intrinsic value	$ 0
Share-based compensation expense	$ 100,000	$ 600,000

XML 45 R35.htm IDEA: XBRL DOCUMENT

Commitments and Contingencies (Details) - USD ($)

3 Months Ended

Dec. 04, 2014

Dec. 06, 2012

Jan. 24, 2010

Mar. 31, 2016

Mar. 31, 2015

Commitments and Contingencies (Textual)

Non-recurring engineering development costs contributed to TI

$ 885,000

$ 500,000

Description of NRE cost contributed to TI

Under the terms of the NN1002 Agreement we will reimburse Texas Instruments a non-recurring engineering fee of $0.25 per unit for each of the first two million units sold.

Under the terms of the NN1001 Agreement, we have reimbursed Texas Instruments a non-recurring engineering fee of $0.08 per unit for each of the first one million units sold and $0.05 for the next eight million units sold.

NRE cost contributed for each of first one million unit sold, Per unit

$ 0.08

NRE cost contributed for next eight million unit sold, Per unit

$ 0.05

NRE fee contributed for each of first two million unit sold, Per unit

$ 0.25

Non recurring expense included in product research and development

$ 20,000

$ 93,000

Non recurring engineering costs description

	●	$235,000 at the feasibility review and contract signature (paid on January 20, 2015)
	●	$300,000 on completion of tape-out (paid on October 31, 2015)
	●	$300,000 on completion on product validation (not completed)

Non recurring engineering fee of first ten thousands units sold, Per unit shares

$ 5.00

Non recurring engineering fee description

Under the terms of the NN1003 Agreement, we also will reimburse STMicroelectronics a non-recurring engineering fee of $5.00 per each of the first 10,000 units sold.

XML 46 R36.htm IDEA: XBRL DOCUMENT

Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended
Segment Information (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Mar. 31, 2015
Summary of net revenues by geographic region
Net revenues	$ 3,132	$ 2,263
Revenues percentage	100.00%	100.00%
Americas [Member]
Summary of net revenues by geographic region
Net revenues	$ 2,005	$ 1,693
Revenues percentage	64.00%	75.00%
Asia [Member]
Summary of net revenues by geographic region
Net revenues	$ 560	$ 413
Revenues percentage	18.00%	18.00%
Europe [Memeber]
Summary of net revenues by geographic region
Net revenues	$ 567	$ 157
Revenues percentage	18.00%	7.00%

XML 47 R37.htm IDEA: XBRL DOCUMENT

Segment Information (Details Textual) - Segment	3 Months Ended	12 Months Ended
Segment Information (Details Textual) - Segment	Mar. 31, 2016	Dec. 31, 2015
Segment Information (Textual)
Number of reportable segments	1
U.S.
Segment Information (Textual)
Percentage of sales	62.00%	73.00%
Sweden
Segment Information (Textual)
Percentage of sales	36.00%	22.00%

XML 48 R38.htm IDEA: XBRL DOCUMENT

Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
BASIC AND DILUTED
Weighted average number of common shares outstanding	43,810	40,455
Net loss attributable to Neonode Inc.	$ (1,367)	$ (2,072)
Net loss per share - basic and diluted	$ (0.03)	$ (0.05)

XML 49 R39.htm IDEA: XBRL DOCUMENT

Net Loss Per Share (Details Textual) - shares	3 Months Ended
Net Loss Per Share (Details Textual) - shares	Mar. 31, 2016	Mar. 31, 2015
Stock Option [Member]
Net Loss Per Share (Textual)
Antidilutive securities excluded from computation of earnings per share	1,000	11,000
Warrant [Member]
Net Loss Per Share (Textual)
Antidilutive securities excluded from computation of earnings per share	0	173,000
Convertible Preferred Stock [Member]
Net Loss Per Share (Textual)
Antidilutive securities excluded from computation of earnings per share	11,000	11,000

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