Neonode: Strong Sell On Shell Games, Fraud Litigation And Hyping Obsolete Technology

| About: Neonode, Inc. (NEON)
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Neonode AB has gone bankrupt twice, and is now in its THIRD attempt to hype an obsolete IR-touch technology, and I believe facing inevitable bankruptcy again.

Swedish court documents show NEON Exec. Chairman Bystedt faces an ongoing lawsuit alleging fraud and shell games, where investors were wiped out after bankruptcy.

NEON management has issued over 160 promotional press releases, yet lacks material revenue after 3 years. Meanwhile, NEON insiders have made millions from stock sales and compensation.

US customs import documents show NEON's much-touted HP printer deal has produced only $154k in estimated total revenue to NEON as of 6/9/2014.

NEON's technology is commoditized, appears worthless and is rapidly becoming even less relevant as infrared touchscreens lose market share, while capacitive becomes relentlessly cheaper.

Neonode (NASDAQ:NEON) is a reverse merger that traded for $0.50 per share on the OTC market just a few years ago, that has gone bankrupt twice already. With promises of future revenue, 160 promotional press releases and questionable ties to an alleged paid stock promotion scandal, NEON now trades at an eye-popping "bubble valuation" of $153m, despite just $4.3m of trailing 12-month revenue, which is a -31% decline from 2011 revenue.

Most importantly, Swedish court documents show NEON executive Chairman faces fraud allegations from profiting off of the sale of a shell company that went bankrupt and wiped the investors out. This, along with the multiple bankruptcies of Neonode in the past paints an interesting pattern to me.

NEON has consistent cash burn, and has only survived thus far due to consistently issuing dilutive equity to fund cash needs. Primary industry research shows current contracts are not generating material revenue, while NEON's fundamentals are rapidly deteriorating due to obsolete and commoditized "technology". I expect as NEON's story continues to come unwound, NEON will need to continue issuing an increasingly large number of shares, diluting shareholders in an accelerating manner, to fund its cash burn.

I believe NEON stock is literally worthless, and my price target is $0.00, as I believe investors will soon refuse to fund Erikson and Bystedt's compensation and obviously unviable project, driving NEON into bankruptcy (again).

(Diagram Source: Me, logical thought)

The Neonode "Shell Game": Recycling the Same Story to Investors After Two Bankruptcies (so far)

Neonode has gone bankrupt twice (so far) using a similar playbook: hype an unviable business idea within a publicly traded shell, issuing optimistic forecasts, raising investor capital and then going bankrupt. It seems this playbook also includes multiple shell companies, subsidiaries, and often results in lawsuits and investor wipe-outs.

The first two "iterations" of Neonode, both Swedish companies, as today, named "Neonode AB", resulted in bankruptcy and investor wipe-outs. "NEON 1.0" was formed in 2000, with current CEO, Thomas Erikson and current NEON chairman, Per Bystedt apparently both involved. Despite extremely bullish revenue "projections" of $200m, NEON 1.0 generated just ~$2m. Shortly after a supplier sued, alleging shell games to deliberately avoid paying its bills, "NEON 1.0" is reported to go bankrupt in 2005.

NEON 2.0 rebooted in 2007 with a reverse merger onto Nasdaq, but its product flopped again, resulting in another swift bankruptcy restructuring and investor wipe-out in 2008. Swedish patents and trademarks are apparently valued at a mere ~$30k per bankruptcy documents (translated version here).

Did NEON insiders pay back their compensation after these brutal investor wipe-outs? With two bankruptcies already, what makes you think "this time will be different"?

For detailed background and timeline with cited sources of "NEON 1.0" and "NEON 2.0", please read the supporting document HERE.

(Chart built by me using public information)

Perhaps the increased involvement of Per Bystedt as a leader at NEON in 2008 means fresh blood from a competent and ethical individual? Perhaps the "new NEON" is led by trustworthy people?

Per Bystedt: Undisclosed Swedish Lawsuit Describes Fraud Allegations and Shell Companies

Per Swedish court documents I found through Private Investigators and translated by professionals, I have uncovered an ongoing lawsuit (case T-2795-13) alleging NEON's executive chairman (joined the team in 2008) is also involved in questionable shell companies, where he profited personally but investors were wiped out. Plaintiffs allege fraud and deception.

Summary of Lawsuit (Full Swedish and Translated English versions)

Through a complex chain of questionable shell companies, Per Bystedt appears to me to have sold shell company Pjaxen to another empty shell company he controls, IABO, and ultimately to investors with a hotel in Sweden called Högfjällshotellet AB.

(Chart from Swedish lawsuit documents, with my commentary)

(Chart from Swedish lawsuit documents, with my commentary)

Per Bystedt apparently profited to the tune of 3 million SKR on the deal by, undisclosed to the buyer, issuing himself shares and immediately selling them at a premium to the buyer! Unfortunately for the investors, though, this purchased company allegedly had undisclosed liabilities, and the seller was technically IABO, an empty shell controlled by Bystedt with no assets to pay for the debts it owed.

(Chart from Swedish lawsuit documents, with my commentary)

This lawsuit is ongoing, and I believe, is very telling about the people in charge of NEON. It is also interesting to me that it appears Bystedt, et al are not refuting the fact of undisclosed liabilities, but are instead apparently arguing that the Hotel did not complain quickly enough. Read the translated Plaintiff (Hotel) and Respondents' grounds for yourself. With potential judgement given Thursday, the uncertainty here is a very dangerous catalyst investors should consider, in my view.

Furthermore, Executive Chairman Per Bystedt also seems to have a history of failing to notify regulators properly about his ownership and insider status changes. He was fined 15,000 Skr in 2006 for failing to notify Swedish regulators in a timely manner. (English translation)

For much more detailed notes on the background and timeline of this lawsuit, I strongly encourage you to read my translated notes here.

Note, I am not a Swedish lawyer, and I strongly encourage investors to look up the court documents themselves and form their own view. I paid two translators to interpret these documents, and made my best good faith effort to summarize these complex issues for you. In addition, I shared the documents I view as most vital here for the public good to try and help you with your research. If NEON had disclosed this in a transparent manner, we wouldn't have this issue.

Why were these issues not disclosed to US investors? What does this tell you about NEON and the people running it today?

NEON Technology is Obsolete and Has Already Lost the Market to Capacitive Touch

Even if you believe NEON is not a shell company heading for bankruptcy (again) while insiders get rich, the technology is so hopelessly obsolete, in my view, I question how NEON management can honestly believe what they are doing is financially viable. Let me explain.

There is no disputing the global touchscreen market has been growing rapidly for many years now.

(Chart source, page 8)

1. Despite rapid touchscreen industry growth, NEON's trailing 12-month revenue is just $4.18m, which is actually a -31% decrease from 2011 revenue of $6.06m, as cash burn has simultaneously accelerated. If NEON has some amazing technology, how could this be? The financial reality NEON seems to find itself in and the wildly optimistic press releases NEON continues to put forth don't seem to mesh...

(Chart built by me using NEON SEC filings)

2. The reason is Optical Infrared seems to be the modern touchscreen equivalent of an "8-track" player. Don't believe me? Go find someone who is in charge of deciding what kind of touchscreen gets integrated into a phone or electronic device. If you choose to NOT do this, then admit to yourself you are blindly following what biased management or conflicted Wall Street analysts are telling you.

(Image source)

3. We can see from the "Other Technologies" category at the top of the chart below that Optical Infrared does not seem to have had meaningful market share in global touchscreens even going back to 2007. Even worse, that tiny market share has been shrinking rapidly, with expectations of that trend continuing.

(Chart source, page 5)

In 2007, resistive touch had 93% market share, capacitive was 4% and the various other types (including optical infrared) were a tiny 2.8% market share. Worst of all (for NEON), this "Other" market share has shrunk to just 0.3% of the market now, and is forecasted to continue to shrink, according to the presentation from touchscreen industry consulting group Walker Mobile above. Other sources further support that infrared has the smallest market (page 13 on the right) share of any touchscreen technology.

4. Why have NEON and the other optical infrared technologies lost their relevance? There are many reasons why infrared optical touch has fallen, but primarily, there are very specific performance issues with this technology that haven't been fixed yet. Meanwhile, capacitive touch continues the relentless march of improved performance and decreased cost. While you can argue with me or quote whatever management has told you, the years of shrinking market share, declining sales and NEON's continued cash burn with inability to generate material revenue seem hard to ignore.

(Charts source)

5. Optical infrared touchscreen technology is OLD, and was originally developed as far back as 1965 and offered to consumers in 1983 with the HP-150 PC. The fundamental technology here is not cutting-edge, and many superior touchscreen technologies have been invented since. Even if a company has the best, A+, top-tier, "8-track" technology, that technology has little value in the modern world that is generations ahead.

(Image source, page 269)

  1. Even in the niche IR-touch space, NEON is a weak competitor: Even if you are stuck on the idea that optical infrared is the superior tech, which will suddenly reverse its years of market share losses, there are many other competitors offering optical infrared touchscreen that seem to be years ahead of NEON.
    1. Winstron and Quanta were reported to be launching infrared optical touch notebooks with Windows as far back as 2009. If NEON had critical IP or patents in this space, why hasn't it sued Winstron or Quanta or Elotouch?
      1. General Touch's proprietary Projected Infrared Touch meets Win8 Logo, and is extremely flat with small bezel. PQ Labs has 40 patents in infrared touchscreen technology, and boasts "the thinnest infrared screen". TimeLink appears to offer up to 48 points of touch on a 100" LCD panel using infrared touch as well. PulseIR has multi-touch infrared touchscreens as well in up to 103" sizes.
      2. Per this 2012 document, NEON was not listed as a supplier capable of providing 48-touch infrared touchscreen technology.
        1. Per discussion with NEON investor relations, NEON appears to only be capable of 10 fingers touch. How can NEON be expected to compete, when competitors appear to me to offer more advanced infrared touchscreen technology?
      3. There appear to be countless other Chinese suppliers of cheap infrared touchscreens as well.
      4. Perhaps most telling, what appears to be the global leader in infrared/optical touchscreen technology, "NextWindow", has recently shut down after restructuring due to the uneconomic reality of the business, as optical infrared has faced declining sales for some time now.
        1. NextWindow had over $60m in 2010 sales, with 120 employees, not to mention partnerships with HP, Sony, Dell, Asus, Lenovoa, Medion, NEC, etc. while based in South Korea, presumably giving it superior access to companies such as LG, Samsung, etc.
      5. NextWindow was acquired in 2010 by SmartTech, and is now shut down.
      6. If the global leader with revenue 10x higher than NEON with 3x the employees and vastly superior partnerships decided pursuing optical infrared wasn't worth doing, why is NEON still spending shareholder cash on this unviable market?
      7. BOTTOM LINE: Infrared touchscreen technology is a shrinking, uneconomic, obsolete and commoditized industry, where NEON is not even the leader. It is not surprising to me that NEON is failing, and I question why and how NEON management apparently is ignorant of the uneconomic position they find themselves in.

2. Lastly, NEON seems to make it more difficult to do business with it by selling its offering in a format that customers apparently do not prefer. Remember, NEON doesn't sell the touchscreen component, it just licenses the technology so the customer can then have the component built themselves. NEON sells design specs to its version of an infrared touchscreen, and it typically bundles that with some engineering support. The problem is that most electronics manufacturers aren't in the business of adding complexity to their already complex manufacturing processes and partnerships. Based on NEON's tiny and declining revenue, customers would apparently prefer to simply have one source for their touchscreen and display and leave it at that, rather than expend additional time and money on integrating and manufacturing some alternate touchscreen option.

3. NEON's position is unviable now, and rapidly getting worse.

  1. While infrared touchscreen technology is currently inferior and losing market share, it is actually expected to get worse.
  2. Capacitive touchscreen costs declined by -20% in 2013, and is expected to decline by another -20% in 2014, likely putting the costs at $0.40-0.70 per diagonal inch or cheaper. It is tough for a small company to compete with global giants, where the price of the competition relentlessly drops by -20% year after year as their performance improves.
  3. Capacitive touchscreen performance is improving rapidly as well. Capacitive has been useful in gloved applications for years too; this is not an advantage specific to NEON.
  4. The last time NEON and these executives went up against global giants in cell phones, they quickly went bankrupt.
  5. NEON is attempting to tout a technology that the market has said is inferior, faces declining volumes and decreasing market share, at the same time, pricing (revenue) is declining -20% year-over-year, while its competition, Samsung and Apple (NASDAQ:AAPL), are spending fortunes on R&D.

(Chart built by me with SEC filings)

Considering NEON is already burning a tremendous amount of cash with immaterial revenue, how long can NEON survive before going bankrupt again?

4. NEON's much-touted Hewlett-Packard printer deal appears to have produced only $154k of estimated revenue for NEON. This can be calculated using public US customs documents. HP has already made the decision to use capacitive touchscreens in its higher-end printers and not NEON, so increased market penetration at HP is apparently not happening. Why did NEON not press release this important piece of news to its shareholders?

  1. It is possible to track the shipment of products imported into the US with surprising accuracy using publicly available US customs documents. There are many services that offer this, and some of them are even free.
  2. For reference, here is an example of an HP US Customs Bill of Lading document for a shipment of HP Officejet 8620 printers that occurred 2/17/2014. I have data as recent as 6/9/2014 for shipment volume of these HP Officejet printers.

(from portexaminer)

2. We can go through every one of these since last year, searching by product number, and tally up the total volume of HP Officejet 8610, 8620 and 8630 printers shipped into the US. For example, this exercise shows us there have been 136 containers of 8620 HP Officejet printers shipped to the US since the launch.

  1. This gives us a "real-time" estimated revenue model for the royalty that NEON will be paid. I have been surprised at how little revenue from this much-touted deal actually goes to NEON. Since this printer was launched, even though HP has shipped 255k of these, the total royalty to NEON for the first 6 months of 2014 seems to be only $154k. Note that NEON is burning ~$1m per month, so this $154k of estimated revenue over 6 months is barely even a drop in the bucket towards stemming NEON's consistent cash burn.

(Chart built with my own estimates and US Customs data)

Note, I am using what I consider generous assumptions for NEON on the royalty rate for the 8620/8630 printers. I believe true NEON royalty amount could likely be far lower.

  1. Also note that these initial printer shipments likely contain excess volume necessary to fill the supply chain, retailer inventory, etc. It is possible the run rate printer volumes could be lower than what is stated here.

5. NEON has a history of customer loss and partnership resulting in lawsuit.

  1. NEON lost Amazon (NASDAQ:AMZN) as its customer in 2012, which is well known.
  2. However, NEON also appears to have lost Volvo now as:
    1. ""Volvo has been the best because Volvo's new infotainment system comes with a capacitive display."
    2. Where is the NEON press release about this?
    3. NEON used to tout a relationship with Nvidia (NASDAQ:NVDA), but that appears to have resulted in a contentious lawsuit. Where is the NEON press release about this also?

6. I Believe NEON Analyst Estimates are far too high, and will need to be revised downward.

  1. Given the deteriorating fundamentals for NEON, market dominance of capacitive and the immaterial revenue from the HP deal, along with HP's announcement to use capacitive touch in other applications, the consensus estimates for NEON appear far too high and will need to be revised downward again.
  2. Disgraced and allegedly illegal paid stock pumper "Tech Guru" was forecasting $58m in 2014 revenue. Slightly less credible analysts (in my opinion) from Ascendiant and Craig Hallum have apparently pushed out revenue estimates (again), with 2015 now expected to be "the big year!" with estimates for $50-76m in sales, per CapIQ.
  3. According to data obtained on CapIQ, NEON paid Craig Hallum almost a million dollars in fees when Craig Hallum acted as lead underwriter for NEON's follow-on equity offering in September, 2013. Ascendient also earned large fees for their participation in the May 2014 offering -- $600,000 in fees for underwriting the shares, and another $600,000 in connection with warrant exercises, as well as 117,879 warrants for Ascendient. Are these fees influencing the sell side's bullish estimates that seem to me to be essentially impossible? Should investors be relying on these estimates, despite this obvious conflict of interest?
  4. How long will NEON shareholders tolerate this endless moving of the goal posts before they begin to feel manipulated and misled?
  5. We can see that again (not surprisingly) NEON will fail to produce the sales hockey stick estimates that NEON analysts have been predicting literally for years. I believe it is obvious 2014 will (again) underwhelm, as will 2015.
  6. We can go end-market by end-market to show this:
    1. The much-hyped HP Printer "Opportunity" has already been debunked thoroughly above, so it's clearly off the table and I won't repeat myself.
    2. Auto: NEON's only tiny deal with Volvo never materialized into anything substantial, and then Volvo switched to capacitive touch for its newest generation of in-car offerings.
      1. Virtually every car company in the world has already developed an in-car touchscreen offering, and they are all capacitive, or in some rare cases, resistive technology. I was unable to find even one large car manufacturer with any optical infrared touchscreen in their entertainment system.
      2. Toyota, Cadillac & GM, Ford, VW, Honda and BMW all use capacitive touchscreens, with Ferrari choosing resistive, and with Volvo finally catching up and using capacitive technology now too.
    3. Handsets: NEON IR has told me that it has essentially stopped pursuing this market diligently, as capacitive is already dominant; Apple and Samsung are ~70% of the market, and both of those vendors have invested in capacitive touchscreen technology, so there seems to me to be essentially zero chance any optical infrared touchscreen (let alone NEON) gets in any major handset. As evidence, no major vendor has done this yet, and capacitive touch is only increasing in performance, while decreasing in cost.
      1. Furthermore, NVDA has sued NEON recently, and so that relationship is clearly not going well.
  1. E-readers: NEON has already demonstrated an inability to generate meaningful revenue in this segment when they partnered with AMZN, who is one of the world's largest e-reader producers. Since NEON lost AMZN as a customer, though, the e-reader market is now shrinking rapidly, -28% or more depending on the source.
    1. Computers: Same situations as handsets, where performance is far too important to compromise using a cheaper, inferior touchscreen technology.
      1. NEON seems years behind the curve in computer and notebooks anyway, not even receiving Windows 8 certification until early 2014, while competitors are already selling optical touchscreen PCs. I am guessing the delay is likely because it is extremely difficult to meet the required specs with infrared touchscreen technology.
        1. Unfortunately for NEON, the competition had Windows 8-compliant touchscreens already on the market for 2 years, while it appears other optical infrared touchscreen vendors are already on the market. If they are theoretically infringing on NEON's IP, then where are the lawsuits?
        2. There were computer and tablets proposed back in 2009 with optical infrared touchscreens, and those never really caught on. I don't see why any computer company would want to repeat a decision that was already shown to be a failure.
        3. AAPL is already firmly entrenched in capacitive touch, while MSFT recently acquired its own touchscreen company.
  1. Small Appliance Buttons: The only other application that seems even remotely possible is the touted appliance or small button market. We have seen how much revenue NEON generates from the HP opportunity, and refrigerators are a much lower-volume market than printers. Furthermore, there are dozens of apparently superior competitors any appliance manufacturer could choose over NEON. If NEON is generating an immaterial amount of revenue from the HP printer deal with 3-4" screens, how can selling much smaller screens in lower volumes save NEON? Furthermore, pricing in the touchscreen market is declining -20% every year, so any future deals will likely have to be signed with lower pricing?

The sad truth is that NEON only receives a very tiny piece of its apparently very weak value proposition to potential customers. Even years back, before touchscreen pricing declined dramatically, despite selling into the enormous Kindle e-reader market with 100% market share for that product at the time, NEON generated only $3m of revenue from that customer, despite Kindle e-reader sales of $3-4b. With NEON focusing on smaller screens with lower industry touchscreen pricing, what does this say about NEON's future revenue potential?

7. NEON patent value is dubious, and I believe clearly worth $0.00

  1. NEON bulls claim NEON has a slide-to-lock patent worth "BILLIONS!" but I believe it is obvious to anyone at a cursory glance that the patent is actually without any value.
  2. In addition to other expert analysis, my own analysis indicates NEON's patents are worthless. More importantly, if you look at NEON's actions, it seems clear to me they are worthless also.
    1. NEON's head of IP quoted it was actively seeking licensing deals and would be contacting AAPL back in 2/2012.
    2. Yet, NEON has not monetized a single patent yet, as far as I can tell.
    3. Instead, NEON has sold more stock to get cash. If the patents could be monetized, it would have done so by now to raise cash and dilute everyone.
  3. If the patents were worth anything, they would presumably have been sold by the court back when NEON went bankrupt. Instead, the outcome shows there is apparently nothing of material value there.
  4. Furthermore, if there was some enormously valuable treasure trove of IP and patents, Neonode would have monetized them years back, instead of going bankrupt.
  5. If NEON's touchscreen IP and patents were so comprehensive and valuable, how are there dozens of competitors offering what appear to be equivalent or superior technology, and yet, NEON has not sued any of them, despite announcing intentions to do so a long time ago?

If NEON's "technology" is clearly obsolete with decreasing relevance, how does management not know this? What are they honestly doing with this reverse-merger shell company?

1. NEON Insiders Collect $11.18m estimated proceeds from 2013 Stock Offering Alone

NEON CEO, Thomas Erikson collected $1.38m in compensation in 2012 alone, per CapIQ.

2. NEON previously tied to disgraced Seeking Alpha stock pumper "Tech Guru", who had all his public NEON articles removed by Seeking Alpha after the "Dream Team Group" illegal paid stock pumping scandal.

  1. "Tech Guru" appears to have written 8 NEON articles (1, 2, 3, 4, 5, 6, 7, 8) in a short period of time.
  2. NEON also featured on Dream Team Group's website several times.
  3. What legitimate company would be involved with an alleged paid stock tout scandal? What was NEON's connection to "Tech Guru"?
  4. Could investors who bought NEON stock or who participated in a NEON capital raise over this time frame (3/2013-10/2013) sue NEON, based on concerns about a potentially illegally inflated stock price? Could these investors demand to get their money back?

3. I find the following "estimates" from NEON in its 2011 investor presentation very "questionable". Did NEON management honestly believe they were going to take an old technology that has been losing market share for years, which apparently saw no serious interest from global technology giants during bankruptcy, with estimated 9-18 month sales cycles, and then grow revenue 2,100% in 2 years?

(From 2011 NEON Investor Presentation)

  1. NEON seems very "good" to me at issuing press releases about "design wins" and selling stock to investors, but seems to me it is bad at actually generating revenue. See this slide stating dozens of "design wins" back in 2011; despite these promotional proclamations, NEON failed to generate meaningful revenue and actually lost its largest customer .

(From 2011 NEON Investor Presentation)

4. NEON Seems To Me To Be Collapsing Internally. Technology and R&D-based companies are just teams of individuals in the lab. NEON seems to me to have constant turmoil and turnover in key R&D, engineering and sales positions, indicating to me NEON is falling apart from the inside out.

  1. CEO Erikson is apparently so difficult to work with that the CFO allegedly complained about discriminating against the elderly. The CFO is ~62 years old also, by the way.
  2. How do you feel about these alleged comments from NEON CEO Eriksson towards head of North American sales, Young, that Young is "old and tired and should just go home for a drink"? Does this make you think NEON CEO Eriksson is an inspirational leader set to dominate the world of technology?

(Quoted from 2013 Lawsuits against NEON)

  1. NEON senior VP of Global Sales, Xerxes Malekani left Neonode 2 months ago, while the head of North American sales was fired in 2013.
    1. I checked LinkedIn data, and I was surprised by the number of key players that have left the company in recent years. Of course, some level of turnover is expected at any public company, but how can Neonode realistically expect to have dramatic sales growth when key designers, engineers and sales people are leaving? If the technology was legitimate and the stock about to go up a million %, why are these people leaving?

(Chart built by me using public LinkedIn information)

  1. Some of these employees had long tenures at Neonode - the employment date listed here only reflects their most recent job. When key employees leave, it takes time to replace them and often results in delays.
    1. Xerxes Malekani, former senior vice president of Global Sales, for example, had high-quality prior experience at VeriSign AB and Vodafone AB, so it's likely he is highly capable. I have not spoken to Xerxes, but presumably, he would have stayed at Neonode if sales really were going to dramatically ramp.
    2. Quoting directly from Xerxes' LinkedIn profile:

Part of the Executive team. Responsible for entire enterprise global sales operation, with HQ in Stockholm, and offices in US Japan & Korea. Targeted customers/partners are OEM's, ODM's, EMS's.

Considering that Neonode didn't have any material OEM, ODM or EMS revenue during this period, my guess is that Xerxes left for greener pastures.

5. NEON management has a very questionable "pattern" of consistently failing to meet their own estimates given to investors.

(Chart sourced from NEON Press releases and my opinion on the implications)

a. Based on my chart above using some of NEON's press releases, I find NEON management's consistent failure to apparently even meet their own guidance to be highly questionable.

NEON Management Response: I was able to finally get in touch with NEON investor relations. With multiple phone calls, though, I was unable to get an extensive call, and unfortunately, I found his commentary to be promotional and without detailed insight on the questions I asked. Instead of detailed explanation of industry dynamics along with strengths and weaknesses or lawsuit disclosure, I instead received extensive discussion about NEON's current definition of "design wins" that I found disappointing. When asked about future business prospects for NEON, I only got vague platitudes. Instead of details on revenue or why past design wins do not seem to me to become revenue, I got broad statements about how large the market opportunity is. Given NEON's inability to generate meaningful revenue or cash flow, I believe shareholders deserve more than that.

The Plunger of Gotham City Makes His Call: NEON Price Target $0.00 and Eventual Bankruptcy (Again)

(Picture I created)

Based on NEON's apparent links to paid stock promotion organizations (Tech Guru on SA), wildly optimistic "estimates", failure to generate meaningful revenue despite years of press releases, and consistently dilutive equity raises with high cash compensation, either management is the most incompetent team of individuals I have ever seen or there is something much worse going on. Even if you dismiss the fraud allegations and striking similarities between NEON and the other bankrupted shell companies NEON insiders have been tied to, NEON's fundamentals are currently very bad and rapidly deteriorating, according to industry specialists and in my view.

NEON was a $0.50 stock trading on OTC just a few short years ago. With a much larger share count now, I believe NEON will end up trading at a lower price on its way to eventual bankruptcy as this obsolete and uncompetitive technology becomes increasingly irrelevant.

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Disclosure: The author is short NEON. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.